World Wrestling
Entertainment, Inc. Reports Q3 Results
STAMFORD, Conn., Feb 23, 2005 (BUSINESS WIRE) -- World Wrestling
Entertainment, Inc. (NYSE:WWE) today announced financial results for its third
fiscal quarter ended January 28, 2005. The Company reported net revenues of
$82.7 million as compared to $79.1 million in the prior year quarter. Operating
income for the quarter was $12.4 million versus $12.1 million in the prior
year. Net income was $10.9 million, or $0.16 per share, as compared to $8.8
million, or $0.13 per share, in the prior year quarter. The 2005 third quarter
effective tax rate included a one-time benefit of $1.3 million resulting from
the assignment of the lease for the Company's former entertainment complex, The
World (R), in
EBITDA was $15.4 million in the current quarter as compared to $15.1
million in the prior year quarter.
In the current quarter we produced a newly branded pay-per-view event, New
Years Revolution(TM), which was our first-ever pay-per-view event held in
produced in the current quarter as compared to two events in the prior year
quarter.
"We continue to see the distribution of our creative content through
various emerging channels as growth opportunities," said Linda McMahon,
CEO of WWE. "This has been demonstrated in the current quarter by the
success of our Home Video business which has only begun to monetize our
extensive programming library. We will further monetize this asset through WWE
24/7, our SVOD service which will have its official launch shortly. The
international marketplace is another emerging channel for WWE. Our live event
tours and existing TV penetration drive brand awareness and have increased the
demand for our branded merchandise in these territories. As an integrated media
company, we are well positioned to take advantage of these new avenues in order
to distribute our content on a global basis."
Summary Results for the Nine Months Ended
Total net revenues through the first nine months of fiscal 2005 were $248.1
million as compared to $248.2 million in the prior year period. Operating
income for the current period was $27.8 million versus $40.8 million in the
prior year period. Net income was $23.0 million, or $0.33 per share, as
compared to $28.5 million, or $0.41 per share, in the prior year period. The
2005 effective tax rate includes a one-time benefit of $1.3 million resulting
from the assignment of the lease for the Company's former entertainment
complex, The World (R), in
City
EBITDA was $36.7 million for the first nine months of fiscal 2005 as
compared to $49.7 million in the prior year period. The Company's EBITDA in the
prior year period benefited from a $5.9 million favorable settlement of
litigation.
Results By Business Segment for the 3rd Quarter
Live and Televised Entertainment
Net revenues from the Company's Live and Televised businesses were $57.2
million for the current quarter as compared to $55.6 million in the prior year
quarter.
-- Pay-Per-View revenues were $15.5 million versus $13.2
million
in the prior year quarter. There were three
pay-per-view
events produced in the current quarter as
compared to only two
events in the prior year quarter. The details
for the number
of buys (in 000s) are as follows:
Event
Q3
FY05 Q3 FY04
------------------------------------------- ---------
------------
Survivor Series(R)
373
398
Armageddon(R)
242
217
New Years Revolution(TM)
275
-
Prior events
153
168
--------- ------------
Total
1,043 783
========= ============
-- New Years Revolution(TM) was a new
RAW(R) branded
pay-per-view event held in Puerto
Rico.
-- Live Event revenues were $11.3 million as compared to
$11.8
million in the third quarter of last year.
-- There were 77 events, including 1
international event,
during the quarter as compared to
74 events, including 3
international events, during the
same period last year.
-- The average attendance for our live
events was
approximately 4,000 as compared to
approximately 4,100 in
the prior year quarter.
-- The average ticket price was
approximately $36.00, as
compared to an average ticket
price of approximately
$38.00 during the prior year
quarter. The decrease in the
number of international events,
which produce higher
average ticket prices, contributed
to the decrease in the
average ticket price.
-- Television Advertising revenues were
$10.8 million as
compared to $11.6 million in the
prior year quarter. The
decline reflects lower sponsorship
revenues in the current
quarter as compared to the prior
year quarter.
-- The average household rating for the Company's RAW(R)
program
was 3.6 and the average household rating for
SmackDown! was
3.4, which are unchanged from the prior year
quarter.
-- Television Rights Fees revenues were $19.5 million as
compared
to $19.0 million in the prior year quarter. The
increase
relates to our international distribution
agreements.
Branded Merchandise
Net revenues from the Company's Branded Merchandise businesses were $25.5
million versus $23.4 million in the prior year quarter.
-- Merchandise revenues were $4.4 million which was
consistent
with $4.3 million in the prior year quarter.
-- Publishing revenues were $3.5 million as compared to
$3.0
million in the prior year quarter. The increase
was primarily
due to the release of three special edition
magazines in the
current quarter as compared to only one special
edition
release in the prior year quarter.
-- Home Video revenues were $4.8 million as compared to
$3.7
million in the prior year quarter. The increase
was due
primarily to an increase of approximately 0.1
million gross
units sold.
-- Licensing revenues were $10.6 million as compared to
$10.7
million in the prior year quarter. The quarter
reflects
increased revenues from the videogame and
novelty products
primarily in international territories, offset
by lower
revenues from book publishing.
-- New Media revenues were $2.1 million as compared to
$1.2
million in the prior year quarter. The increase
was primarily
due to higher advertising revenues on our
website.
Profit Contribution (Net revenues less cost of revenues)
Profit contribution for the quarter was $38.3 million as compared to $35.0
million in the prior year quarter. Total profit contribution margin was
approximately 46% for the current quarter as compared to 44% for the prior year
quarter.
The profit contribution margin for the Live and Televised businesses was
approximately 41% for the current quarter as compared to 40% in the prior year
quarter. This is primarily attributable to the increase in pay-per-view buys as
compared to the prior year.
The profit contribution margin for the Branded Merchandise businesses was
approximately 57% for the current quarter as compared to 54% in the prior year
quarter. The increase in Home Video, Publishing and New Media revenues
contributed to the higher Branded Merchandise margin.
Selling, general and administrative expenses
SG&A expenses were $21.7 million for the current quarter as compared to
$18.9 million in the prior year quarter. SG&A expenses increased
approximately $2.8 million primarily due to increased advertising and promotion
costs, and professional costs related to trademarks and Sarbanes-Oxley
compliance.
Fiscal 2005 Outlook
The Company continues to anticipate fiscal 2005 net revenues to be between
$345 - $355 million, income from continuing operations to be between $34 - $35
million, and earnings per share from continuing operations to be between $0.49
and $0.51 on a diluted basis. The Company currently anticipates EBITDA to be
between $60 - $62 million, as compared to budgeted EBITDA of $66 million. This
revision reflects key assumptions, which include certain levels of fourth
quarter pay-per-view buys and home video gross sales. Pay-per-view buys are
assumed to be approximately 2 million for three events, of which 1 million are
anticipated for WrestleMania 21, and Home Video total gross units sales of
approximately 0.6 million, including the six new titles to be released in the
quarter.
Note: World Wrestling Entertainment, Inc. will host a conference call on
Wednesday, February 23, 2005, at 10:00 a.m. ET to discuss the Company's third
quarter earnings results for fiscal year 2005. All interested parties can
access the conference call by dialing 800-901-2725 (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.
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
(in thousands,
except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
January 28, January 23, January 28, January 23,
2005 2004
2005 2004
-----------------------------------------------------
Net revenues $82,719 $79,070
$248,126 $248,176
Cost of revenues 44,426 44,055
145,336 145,543
Selling, general
and administrative
expenses 21,652
18,873 62,426
51,635
Depreciation and
amortization 3,004
3,047 8,975 8,853
Stock compensation
costs 1,240
1,011 3,625
1,327
--------------
-------- ----------- ---------
Operating income 12,397 12,084
27,764 40,818
Interest income 1,341 1,581
3,607 4,469
Interest expense 160
192 489
584
Other income, net 1,632 722
1,567 1,013
--------------
-------- ----------- ---------
Income before
income taxes 15,210 14,195
32,449 45,716
Provision for
income taxes 4,222
5,332 10,699 17,291
--------------
-------- ----------- ---------
Income from
continuing
operations 10,988
8,863 21,750 28,425
--------------
-------- ----------- ---------
Discontinued
operations:
(Loss) income
from discontinued
operations, net
of tax
(69) (76) 1,264
32
--------------
-------- ----------- ---------
Net income $10,919
$8,787 $23,014 $28,457
==============
======== =========== =========
Earnings per share
- Basic:
Continuing
operations $0.16
$0.13 $0.32
$0.41
==============
======== =========== =========
Discontinued
operations $0.00
$0.00 $0.02
$0.00
==============
======== =========== =========
Net income $0.16
$0.13 $0.34
$0.41
==============
======== =========== =========
Earnings per share
- Diluted:
Continuing
operations $0.16
$0.13 $0.31
$0.41
==============
======== =========== =========
Discontinued
operations $0.00
$0.00 $0.02
$0.00
==============
======== =========== =========
Net income $0.16
$0.13 $0.33
$0.41
==============
======== =========== =========
Weighted average
common shares
outstanding:
Basic 68,586
68,394 68,540
68,603
==============
======== =========== =========
Diluted 69,470
68,768 69,435
68,822
==============
======== =========== =========
World Wrestling
Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
January 28, April 30,
2005 2004
ASSETS
CURRENT ASSETS:
Cash and equivalents
$71,380
$48,467
Short-term investments
188,629 224,824
Accounts receivable, net
44,876 62,703
Inventory, net
935
856
Prepaid expenses and other
current assets
26,083
13,596
Assets of discontinued operations
542 691
---------------
----------------
Total current assets
332,445 351,137
PROPERTY AND EQUIPMENT, NET
67,887 71,369
FILM PRODUCTION ASSETS
23,202
431
INTANGIBLE ASSETS, NET
3,127
4,492
OTHER ASSETS
6,889
6,212
ASSETS OF DISCONTINUED OPERATIONS
- 20,703
---------------
----------------
TOTAL ASSETS
$433,550
$454,344
===============
================
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt
$742 $700
Accounts payable
17,730
13,118
Dividends payable
-
4,106
Accrued expenses and other
liabilities
18,326
42,131
Deferred income
21,755
23,512
Liabilities of discontinued
operations
426
2,401
---------------
----------------
Total current liabilities
58,979 85,968
LONG-TERM DEBT
7,395
7,955
LIABILITIES OF DISCONTINUED OPERATIONS
- 7,316
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock
209
136
Class B common stock
479
548
Additional paid-in capital
253,769 250,775
Accumulated other comprehensive
loss
(496) (1,120)
Retained earnings
113,215
102,766
---------------
----------------
Total stockholders' equity
367,176 353,105
---------------
----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$433,550
$454,344
===============
================
World Wrestling
Entertainment, Inc.
Consolidated
Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Nine Months Ended
January 28, January 23,
2005 2004
---------------------------------
OPERATING ACTIVITIES:
Net income
$23,014
$28,457
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from discontinued operations,
net of tax
(1,264)
(32)
Depreciation and amortization
8,975 8,853
Revaluation of warrants
(835)
(422)
Amortization of deferred income
(370) (836)
Stock compensation costs
3,625
469
Provision for doubtful accounts
(20) (1,994)
Provision for inventory obsolescence
911 19
Provision for deferred income taxes
1,086 -
Changes in assets and liabilities:
Accounts receivable
18,085
12,675
Inventory
(989) (179)
Prepaid expenses and other assets
(2,070) 1,987
Film production assets
(22,771)
(359)
Accounts payable
4,613
1,583
Accrued expenses and other liabilities (15,461)
6,410
Deferred income
(1,387)
(4,969)
------------------
------------
Net cash provided by continuing
operations
15,142
51,662
Net cash used in discontinued
operations
(7,057)
(2,370)
------------------
------------
Net cash provided by operating
activities
8,085
49,292
------------------
------------
INVESTING ACTIVITIES:
Purchase of property and equipment
(3,858) (3,485)
Purchase of corporate aircraft
- (20,122)
Purchase of other assets
(270)
(1,641)
Sale (purchase) of short-term
investments, net
35,305
(60,470)
------------------
------------
Net cash provided by (used in)
investing activities
31,177
(85,718)
------------------
------------
FINANCING ACTIVITIES:
Repayments of long-term debt
(518) (576)
Purchase of treasury stock
- (19,246)
Dividends paid
(16,454)
(8,218)
Issuance of stock
410
64
Proceeds from exercise of stock
options
213 65
------------------
------------
Net cash used in financing
activities
(16,349)
(27,911)
------------------
------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
22,913
(64,337)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD
48,467
128,473
------------------
------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $71,380
$64,136
==================
============
World Wrestling
Entertainment, Inc.
Supplemental
Information - EBITDA
(dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
January 28, January 23, January 28, January 23,
2005 2004
2005 2004
---------------------------------------------------
Net income reported
on GAAP basis $10,919
$8,787 $23,014 $28,457
Loss (income) from
discontinued operations,
net of tax 69
76 (1,264)
(32)
Provision for income
taxes
4,222 5,332 10,699
17,291
Interest and other, net (2,813) (2,111)
(4,685) (4,898)
Depreciation and
amortization 3,004
3,047 8,975 8,853
------------- ----------- ----------- -----------
EBITDA
$15,401 $15,131 $36,739
$49,671
============= =========== =========== ===========
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 Nine Months Ended
January 28, January 23, January 28, January 23,
2005 2004
2005 2004
------------------------------------------------
Net cash provided by
continuing operations $8,815
$17,825 $15,142 $51,662
Less cash provided for
capital expenditures:
Purchase of property
and equipment (980)
(1,027) (3,858) (3,485)
Purchase of
corporate aircraft -
(20,122) - (20,122)
Purchase of other
assets
(270) -
(270) (1,641)
------------- -------- ---------- --------
Free Cash Flow $7,565
$(3,324) $11,014 $26,414
============= ======== ========== ========
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.
