Official press release distributed today by World Wresling Entertainment, Inc.:
WWE-R- Reports Q1 Results
STAMFORD, Conn., Aug 23, 2004 (BUSINESS WIRE) — World Wrestling Entertainment, Inc. (NYSE:WWE)
— International Markets and Home Video Continue To Provide
Growth
— EPS $0.11 vs. $0.04 Last Year
World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its first quarter ended July 30, 2004. Total revenues were $81.6 million as compared to $74.7 million in the prior year quarter, and operating income was $11.2 million versus $2.9 million in the prior year quarter. Income from continuing operations was $7.8 million, or $0.11 per share, versus $2.7 million, or $0.04 per share, in the prior year. Net income was $7.6 million, or $0.11 per share, as compared to $2.6 million, or $0.04 per share, in the prior year quarter. EBITDA was $14.1 million in the current quarter as compared to $5.7 million in the prior year quarter.
During the quarter, the Company aired four pay-per-view events as compared to only two events in the prior year quarter. One of the additional events was due to the timing of our fiscal quarter end in the prior year resulting in our Vengeance(TM) event airing in our 2nd fiscal quarter. The second additional event, The Great American Bash(R), was a new pay-per-view event which debuted in June 2004. Revenues from the two additional pay-per-view events were approximately $6.8 million. The current quarter EBITDA includes $3.8 million related to these additional pay-per-view events. The Company plans to air 14 pay-per-view events in fiscal 2005, an increase of two events from the prior year.
Linda McMahon, CEO, stated that she was pleased with the progress of the Company’s strategic initiatives during the quarter. The monetization of the WWE video library, which has been a key driver in the success of the home video business in the quarter, will also be the basis for WWE 24/7(TM), the Company’s SVOD service. WWE’s global initiatives continued to perform well with three successful international tours consisting of 10 events in Europe and Asia in the quarter drawing approximately 93,000 fans. WWE Films has two film projects moving forward, with principal photography scheduled to begin on the first project in early Fall.
“Our growth initiatives continued to develop during the quarter. While we experienced these successes, certain of our key drivers did not perform as we had expected,” said Mrs. McMahon. “In contrast to the exceptional success we are seeing with our touring outside North America, it appears that we have not yet turned the corner on our live event attendance in the United States. Although our ratings for both RAW(R) and SmackDown!(TM) have been relatively flat, we continue to develop new talent and exciting storylines to motivate and captivate our fans and bolster our ratings.”
Results By Business Segment
Live and Televised Entertainment
Revenues from the Company’s Live and Televised businesses were $65.2 million as compared to $62.7 million in the prior year quarter.
— Pay-Per-View revenues were $16.9 million versus $13.8 million
in the prior year quarter. In the first quarter of fiscal
2005, four pay-per-view events were produced as compared to
two in the prior year quarter. The Company will produce 14
pay-per-view events in fiscal 2005.
— Total pay-per-view buys for the quarter were 1.1 million
as compared to 0.9 million in the prior year quarter.
— Buys for the two events that aired in both the current and
prior year quarter decreased 77,000 buys, from 561,000
buys to 484,000 buys.
— Live Event revenues were $17.9 million as compared to $18.1
million in the first quarter of last year.
— There were 89 events during the quarter as compared to 84
events during the same period last year, including 10
international events held in both periods.
— The average attendance at the Company’s North American
live events was approximately 3,800 as compared to
approximately 4,700 in the prior year quarter, while the
average international attendance was 9,300 as compared to
8,600 in the prior year quarter.
— The average ticket price was approximately $46.00 as
compared to an average ticket price of approximately
$41.00 in the prior year quarter, due primarily to the
increased number of international tickets sold. While
North American ticket prices were not increased, the
average ticket prices increased due to the mix of tickets
sold. International ticket prices averaged approximately
$72.00, as compared to an average North American ticket
price of approximately $37.00.
— Television Advertising revenues were $10.6 million as compared
to $16.1 million in the prior year quarter. This decline was
principally due to a new television distribution agreement
with UPN. Commencing with the new television season, which
began in October 2003, UPN sells all advertising inventory for
our SmackDown! broadcasts and pays us a rights fee. This
arrangement, which results in lower cost of revenues, yields a
higher profit margin to the Company as discussed below.
— Average household ratings for the Company’s RAW program
were 3.7 as compared to 3.9 in the prior year quarter and
SmackDown! ratings were 3.1 as compared to 3.3 in the
prior year quarter.
— Television Rights Fees revenues increased $5.1 million to
$19.8 million due primarily to the new UPN television
distribution agreement discussed above.
Branded Merchandise
Revenues from the Company’s Branded Merchandise businesses were $16.3 million versus $12.0 million in the prior year quarter.
— Merchandise revenues were $3.7 million as compared to $4.3
million in the prior year quarter. Revenues declined due to a
9% decrease in live events concession sales reflecting lower
attendance which was partially offset by increased per capita
spending. Additionally, revenue from our catalog and
Shopzone(TM) site decreased by $0.3 million.
— Home Video revenues were $5.7 million as compared to $2.5
million in the prior year quarter. The increase was due
primarily to an 88% increase in units sold in the current
quarter, including a recently released title documenting the
career of Chris Benoit(R) which sold approximately 65,000
units in the quarter, as well as increased home video sales of
our pay-per-view event titles, such as WrestleMania(R) XX.
— Licensing revenues increased $1.1 million to $3.3 million due
to increases in the Toy, Video Game, Publishing and
Collectibles categories.
Profit Contribution (revenues less cost of revenues)
Profit contribution for the quarter was $33.1 million as compared to $25.4 million in the prior year quarter. Profit contribution margin was approximately 41% as compared to 34% in the prior year quarter.
The profit contribution margin for the Live and Televised segment was approximately 39% as compared to 34% for the prior year period reflecting the change in the UPN agreement and a greater portion of revenue attributable to the pay-per-view business.
The profit contribution margin for the Branded Merchandise segment was approximately 44% as compared to 34% for the prior year period as a result of the higher profit margin associated with the home video business.
Selling, general and administrative expenses
SG&A expenses decreased approximately $1.7 million to $17.9 million as compared to $19.6 million in the prior year quarter, primarily due to $1.0 million of costs associated with an acquisition in fiscal 2004. In addition, included in the current quarter was a $2.1 million reduction of sales tax expense due to a tax refund. Included in the prior year was a reduction in bad debt expense of $2.0 million.
Fiscal 2005 Outlook
The Company anticipates revenue for fiscal 2005 of between $345.0 and $365.0 million, budgeted EBITDA of approximately $66.0 million, and income from continuing operations of between $32.0 and $35.0 million, or $0.46 to $0.50 per share on a diluted basis.
Note: World Wrestling Entertainment, Inc. will host a conference call on Monday, August 23, 2004, at 11:00 a.m. ET to discuss the Company’s first quarter earnings results for fiscal year 2005. All interested parties can access the conference call by dialing 800-862-9098 (conference ID: WWE). Please reserve a line 15 minutes prior to the start time of the conference call. A presentation that will be referenced during the call can be found at the Company web site at corporate.wwe.com. A replay of the call will be available approximately three hours after the conference call concludes, and can be accessed at corporate.wwe.com.
World Wrestling Entertainment, Inc. (NYSE: WWE) is an integrated media and entertainment company headquartered in Stamford, Conn. Additional information on the Company can be found at wwe.com and corporate.wwe.com. Information on television ratings and community activities can be found at parents.wwe.com.
Trademarks: The names of all World Wrestling Entertainment televised and live programming, talent names, images, likenesses, slogans and wrestling moves and all World Wrestling Entertainment logos are trademarks, which are the exclusive property of World Wrestling Entertainment, Inc.
Forward-Looking Statements: This news release contains forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties. These risks and uncertainties include the conditions of the markets for live events, broadcast television, cable television, pay-per-view, Internet, entertainment, professional sports, and licensed merchandise; acceptance of the Company’s brands, media and merchandise within those markets; uncertainties relating to litigation; risks associated with producing live events both domestically and internationally; uncertainties associated with international markets; risks relating to maintaining and renewing key agreements, including television distribution agreements; and other risks and factors set forth from time to time in Company filings with the Securities and Exchange Commission. Actual results could differ materially from those currently expected or
anticipated.
World Wrestling Entertainment, Inc.
Consolidated Income Statements
(dollars and shares in thousands, except per share data)
(Unaudited)
Three Months Ended
July 30, July 25,
2004 2003
——– ——–
Net revenues $81,551 $74,675
Cost of revenues 48,416 49,261
Selling, general and administrative expenses 17,875 19,561
Depreciation and amortization 2,920 2,829
Stock compensation costs 1,111 158
——– ——–
Operating income 11,229 2,866
Interest and other, net 1,282 1,520
——– ——–
Income from continuing operations before
income taxes 12,511 4,386
Provision for income taxes 4,754 1,643
——– ——–
Income from continuing operations 7,757 2,743
——– ——–
Loss from discontinued operations, net of taxes (111) (158)
——– ——–
Net income $7,646 $2,585
======== ========
Earnings per share – basic and diluted:
Continuing operations $0.11 $0.04
Discontinued operations – –
——– ——–
Net income $0.11 $0.04
======== ========
Shares used in per share calculations:
Basic 68,691 69,046
Diluted 69,574 69,154
World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
July 30, April 30,
2004 2004
——— ———
ASSETS
CURRENT ASSETS:
Cash and equivalents $72,398 $48,467
Short-term investments 205,357 224,824
Accounts receivable, net 51,290 62,703
Inventory, net 822 856
Prepaid expenses and other current assets 12,705 14,027
Assets of discontinued operations 489 691
——— ———
Total current assets 343,061 351,568
PROPERTY AND EQUIPMENT, NET 69,863 71,369
INTANGIBLE ASSETS, NET 3,995 4,492
OTHER ASSETS 6,423 6,212
ASSETS OF DISCONTINUED OPERATIONS 20,764 20,703
——— ———
TOTAL ASSETS $444,106 $454,344
========= =========
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $714 $700
Accounts payable 10,574 13,118
Dividends payable – 4,106
Accrued expenses and other liabilities 30,361 42,131
Deferred income 24,467 23,512
Liabilities of discontinued operations 2,007 2,401
——— ———
Total current liabilities 68,123 85,968
LONG-TERM DEBT 7,771 7,955
LIABILITIES OF DISCONTINUED OPERATIONS 6,884 7,316
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Class A common stock 137 136
Class B common stock 548 548
Treasury stock – –
Additional paid-in capital 251,409 250,775
Accumulated other comprehensive loss (1,171) (1,120)
Retained earnings 110,405 102,766
——— ———
Total stockholders’ equity 361,328 353,105
——— ———
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $444,106 $454,344
========= =========
World Wrestling Entertainment, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Three Months Ended
July 30, July 25,
2004 2003
——– ———
OPERATING ACTIVITIES:
Net income $7,646 $2,585
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss from discontinued operations, net of
taxes 111 158
Revaluation of warrants (212) –
Depreciation and amortization 2,920 2,829
Amortization of deferred income (123) (335)
Stock compensation costs 1,111 158
Provision for doubtful accounts 225 (1,976)
Provision for inventory obsolescence 46 (128)
Provision for deferred income taxes 581 –
Changes in assets and liabilities:
Accounts receivable 11,188 16,141
Inventory (11) 64
Prepaid expenses and other assets 1,302 993
Film production assets (386) –
Accounts payable (2,544) (1,420)
Accrued expenses and other liabilities (12,300) 3,475
Deferred income 1,078 (4,097)
——– ———
Net cash provided by continuing
operations 10,632 18,447
Net cash used in discontinued
operations (794) (1,236)
——– ———
Net cash provided by operating
activities 9,838 17,211
——– ———
INVESTING ACTIVITIES:
Additions to property and equipment (916) (980)
Purchase of other assets – (1,487)
Sale (purchase) of short-term investments,
net 19,084 (3,811)
——– ———
Net cash provided by (used in)
investing activities 18,168 (6,278)
——– ———
FINANCING ACTIVITIES:
Repayments of long-term debt (171) (179)
Purchase of treasury stock – (19,246)
Dividends paid (4,112) (2,744)
Issuance of stock, net 171 –
Proceeds from exercise of stock options 37 –
——– ———
Net cash used in financing
activities (4,075) (22,169)
——– ———
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 23,931 (11,236)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 48,467 128,473
——– ———
CASH AND EQUIVALENTS, END OF PERIOD $72,398 $117,237
======== =========
World Wrestling Entertainment, Inc.
Supplemental Information – EBITDA
(dollars in thousands)
(Unaudited)
Three Months Ended
July 30, July 25,
2004 2003
———— ———-
Net income reported on U.S. GAAP basis $7,646 $2,585
Loss from discontinued operations, net 111 158
Provision for income taxes 4,754 1,643
Interest and other, net (1,282) (1,520)
Depreciation and amortization 2,920 2,829
———— ———-
EBITDA $14,149 $5,695
============ ==========
Non-GAAP Measure:
EBITDA is defined as earnings from continuing operations before
interest, income taxes, depreciation and amortization. Although it is
not a recognized measure of performance under U.S. GAAP, EBITDA is
presented because it is a widely accepted financial indicator of a
company’s cash flow. The Company uses EBITDA to measure its own
performance and to set goals for operating managers. EBITDA should
not be considered as an alternative to income from continuing
operations, net income, cash flows from operations or any other
indicator of World Wrestling Entertainment Inc.’s performance or
liquidity, determined in accordance with U.S. GAAP.
World Wrestling Entertainment, Inc.
Supplemental Information- Free Cash Flow
(dollars in thousands)
(Unaudited)
Three Months Ended
July 30, July 25,
2004 2003
———- ———
Net cash provided by continuing operations $10,632 $18,447
Less cash provided for capital expenditures:
Purchase of property and equipment (916) (980)
Asset acquisitions – (1,487)
——— ———-
Free Cash Flow $9,716 $15,980
========= ==========
Non-GAAP Measure:
We define Free Cash Flow as net cash provided by continuing operations
less cash used for capital expenditures. Although it is not a
recognized measure of performance under U.S. GAAP, Free Cash Flow
provides useful information regarding the amount of cash our
continuing business is generating after capital expenditures,
available for reinvesting in the business and for payment of
dividends.
SOURCE: World Wrestling Entertainment, Inc.
