18.02.2004, 15:28
Selling, general and administrative expenses
SG&A expenses decreased by $5.5 million for the quarter to $18.9 million as compared to $24.4 million in the prior year quarter. SG&A expenses decreased primarily due to lower professional fees and, to a lesser extent, the favorable impact of the cost cutting measures taken during fiscal 2003. The prior year included a $1.5 million expense for a proposed litigation settlement as well as $0.7 million related to the termination of a lease for additional office space.
Stock compensation costs
Stock compensation costs were $1.0 million for the current quarter. During the third quarter, we completed an exchange offer that gave all active employees and independent contractors that held options with a grant price of $17 or higher the ability to exchange options, at a 6 to 1 ratio, for restricted stock units, or, for holders with fewer than 25,000 options, for cash at a 25% discounted rate. Overall, 4.2 million options were eligible for the offer, of which 4.1 million were exchanged for either cash or restricted stock units. As a result of the offer, we will record a total charge of $6.7 million, of which approximately $0.9 million was recorded in the current quarter and the remaining charge will be amortized over the 24-month vesting period of the restricted stock units. As of January 23, 2004, after the exchange offer, there were approximately 3.1 million options outstanding at an average exercise price of $12.60 and there were approximately 0.8 million restricted stock units outstanding.
Depreciation and amortization
Depreciation and amortization was $2.9 million for the current quarter as compared to $2.6 million for the prior year quarter.
-- In January 2004, the Company paid $20.1 million to pay off a lease on our corporate jet. The lease, which was the Company's only synthetic lease, had previously been accounted for as an operating lease. The transaction will be accounted for as a capital acquisition in the current period. In addition, this transaction should result in a reduction in the Company's net financing costs.
-- The purchase price of the jet, net of a $9.5 million estimated residual value, will be depreciated over a 10 year period commencing in February 2004.
Discontinued Operations
The discontinued operations of The World was a loss of $0.1 million, after tax, as compared to a loss of $22.0 million, after tax, in the prior year quarter. Included in the prior year quarter was a charge of $32.9 million ($20.4 million, net of tax) as a result of impairment tests conducted on goodwill and other long-lived assets related to The World.
Nine months ended results
Total revenues through the first nine months of fiscal 2004 were $248.2 million as compared to $268.3 million in the prior year period. EBITDA was $49.7 million for the nine month period as compared to $22.0 million in the prior year period. EBITDA for the current year period included $5.9 million related to the favorable settlement of litigation. EBITDA for the prior year period included $3.9 million in net unfavorable settlements of litigation. Operating income for the current period was $41.1 million versus $15.3 million in the prior year period. Net income was $28.7 million, or $0.42 per share, as compared to a net loss of $15.1 million, or $0.21 per share, in the prior year period. Included in net loss for the prior year was a $25.2 million loss after tax from discontinued operations related to the Company's New York restaurant.
Free cash flow (net cash provided by continuing operations less cash used for capital expenditures) for the nine months ended January 23, 2004 was $46.5 million as compared to $15.1 million for the prior year.
Fiscal 2004 Outlook
The Company has updated its outlook for fiscal 2004 and accordingly, now anticipates that its net revenue results will be between $335.0 and $350.0 million as compared to $325.0 and $350.0 million previously. The Company's EBITDA range was increased by $2.5 million and is currently estimated to be between $57.5 and $62.5 million; and income from continuing operations is currently estimated to be between $32.0 and $34.5 million, or between $0.48 and $0.50 per share, an increase from $0.45 to $0.48 per share.
Note: World Wrestling Entertainment, Inc. will host a conference call on Wednesday, February 18, 2004 at 1:00 p.m. ET to discuss the Company's third quarter earnings results for fiscal year 2004. All interested parties can access the conference call by dialing 800-895-0198 (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. For additional information on WrestleMania XX, to be broadcast live on pay-per-view from Madison Square Garden in New York City on March 14, 2004, go to wrestlemania.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; 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 Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
January 23, January 24, January 23, January 24,
2004 2003 2004 2003
-----------------------------------------------
Net revenues $ 79,070 $ 92,565 $ 248,176 $ 268,337
Cost of revenues 44,055 56,711 145,543 175,501
Selling, general and
administrative
expenses 18,873 24,409 51,635 70,831
Stock compensation
costs 1,011 - 1,327 -
Depreciation and
amortization 2,942 2,641 8,538 6,731
----------- ----------- ----------- -----------
Operating income 12,189 8,804 41,133 15,274
Interest and other, net 2,111 668 4,898 680
----------- ----------- ----------- -----------
Income before income
taxes 14,300 9,472 46,031 15,954
Provision for income
taxes 5,372 3,484 17,411 5,851
----------- ----------- ----------- -----------
Income from continuing
operations 8,928 5,988 28,620 10,103
(Loss) income from
discontinued
operations (76) (21,988) 32 (25,178)
----------- ----------- ----------- -----------
Net income (loss) $ 8,852 $ (16,000)$ 28,652 $ (15,075)
=========== =========== =========== ===========
Earnings (loss) per
share - Basic and
Diluted:
Continuing
operations $0.13 $ 0.09 $0.42 $ 0.14
=========== =========== =========== ===========
Discontinued
operations - $ (0.31) - $ (0.36)
=========== =========== =========== ===========
Net income (loss)$ 0.13 $ (0.23)$ 0.42 $ (0.21)
=========== =========== =========== ===========
Weighted average common
and common equivalent
shares:
Basic 68,394,341 70,407,085 68,602,818 70,633,799
=========== =========== =========== ===========
Diluted 68,767,927 70,407,085 68,822,331 70,633,799
=========== =========== =========== ===========
World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
January 23, April 30,
2004 2003
------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 70,367 $ 128,473
Short-term investments 196,321 142,641
Accounts receivable, net 39,048 49,729
Inventory, net 999 839
Prepaid expenses and other current assets 19,065 18,443
Assets of discontinued operations 20,844 21,129
--------- ---------
Total current assets 346,644 361,254
PROPERTY AND EQUIPMENT - NET 74,895 59,325
INTANGIBLE ASSETS - NET 12,735 12,055
OTHER ASSETS 4,890 4,623
--------- ---------
TOTAL ASSETS $ 439,164 $ 437,257
========= =========
SG&A expenses decreased by $5.5 million for the quarter to $18.9 million as compared to $24.4 million in the prior year quarter. SG&A expenses decreased primarily due to lower professional fees and, to a lesser extent, the favorable impact of the cost cutting measures taken during fiscal 2003. The prior year included a $1.5 million expense for a proposed litigation settlement as well as $0.7 million related to the termination of a lease for additional office space.
Stock compensation costs
Stock compensation costs were $1.0 million for the current quarter. During the third quarter, we completed an exchange offer that gave all active employees and independent contractors that held options with a grant price of $17 or higher the ability to exchange options, at a 6 to 1 ratio, for restricted stock units, or, for holders with fewer than 25,000 options, for cash at a 25% discounted rate. Overall, 4.2 million options were eligible for the offer, of which 4.1 million were exchanged for either cash or restricted stock units. As a result of the offer, we will record a total charge of $6.7 million, of which approximately $0.9 million was recorded in the current quarter and the remaining charge will be amortized over the 24-month vesting period of the restricted stock units. As of January 23, 2004, after the exchange offer, there were approximately 3.1 million options outstanding at an average exercise price of $12.60 and there were approximately 0.8 million restricted stock units outstanding.
Depreciation and amortization
Depreciation and amortization was $2.9 million for the current quarter as compared to $2.6 million for the prior year quarter.
-- In January 2004, the Company paid $20.1 million to pay off a lease on our corporate jet. The lease, which was the Company's only synthetic lease, had previously been accounted for as an operating lease. The transaction will be accounted for as a capital acquisition in the current period. In addition, this transaction should result in a reduction in the Company's net financing costs.
-- The purchase price of the jet, net of a $9.5 million estimated residual value, will be depreciated over a 10 year period commencing in February 2004.
Discontinued Operations
The discontinued operations of The World was a loss of $0.1 million, after tax, as compared to a loss of $22.0 million, after tax, in the prior year quarter. Included in the prior year quarter was a charge of $32.9 million ($20.4 million, net of tax) as a result of impairment tests conducted on goodwill and other long-lived assets related to The World.
Nine months ended results
Total revenues through the first nine months of fiscal 2004 were $248.2 million as compared to $268.3 million in the prior year period. EBITDA was $49.7 million for the nine month period as compared to $22.0 million in the prior year period. EBITDA for the current year period included $5.9 million related to the favorable settlement of litigation. EBITDA for the prior year period included $3.9 million in net unfavorable settlements of litigation. Operating income for the current period was $41.1 million versus $15.3 million in the prior year period. Net income was $28.7 million, or $0.42 per share, as compared to a net loss of $15.1 million, or $0.21 per share, in the prior year period. Included in net loss for the prior year was a $25.2 million loss after tax from discontinued operations related to the Company's New York restaurant.
Free cash flow (net cash provided by continuing operations less cash used for capital expenditures) for the nine months ended January 23, 2004 was $46.5 million as compared to $15.1 million for the prior year.
Fiscal 2004 Outlook
The Company has updated its outlook for fiscal 2004 and accordingly, now anticipates that its net revenue results will be between $335.0 and $350.0 million as compared to $325.0 and $350.0 million previously. The Company's EBITDA range was increased by $2.5 million and is currently estimated to be between $57.5 and $62.5 million; and income from continuing operations is currently estimated to be between $32.0 and $34.5 million, or between $0.48 and $0.50 per share, an increase from $0.45 to $0.48 per share.
Note: World Wrestling Entertainment, Inc. will host a conference call on Wednesday, February 18, 2004 at 1:00 p.m. ET to discuss the Company's third quarter earnings results for fiscal year 2004. All interested parties can access the conference call by dialing 800-895-0198 (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. For additional information on WrestleMania XX, to be broadcast live on pay-per-view from Madison Square Garden in New York City on March 14, 2004, go to wrestlemania.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; 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 Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
January 23, January 24, January 23, January 24,
2004 2003 2004 2003
-----------------------------------------------
Net revenues $ 79,070 $ 92,565 $ 248,176 $ 268,337
Cost of revenues 44,055 56,711 145,543 175,501
Selling, general and
administrative
expenses 18,873 24,409 51,635 70,831
Stock compensation
costs 1,011 - 1,327 -
Depreciation and
amortization 2,942 2,641 8,538 6,731
----------- ----------- ----------- -----------
Operating income 12,189 8,804 41,133 15,274
Interest and other, net 2,111 668 4,898 680
----------- ----------- ----------- -----------
Income before income
taxes 14,300 9,472 46,031 15,954
Provision for income
taxes 5,372 3,484 17,411 5,851
----------- ----------- ----------- -----------
Income from continuing
operations 8,928 5,988 28,620 10,103
(Loss) income from
discontinued
operations (76) (21,988) 32 (25,178)
----------- ----------- ----------- -----------
Net income (loss) $ 8,852 $ (16,000)$ 28,652 $ (15,075)
=========== =========== =========== ===========
Earnings (loss) per
share - Basic and
Diluted:
Continuing
operations $0.13 $ 0.09 $0.42 $ 0.14
=========== =========== =========== ===========
Discontinued
operations - $ (0.31) - $ (0.36)
=========== =========== =========== ===========
Net income (loss)$ 0.13 $ (0.23)$ 0.42 $ (0.21)
=========== =========== =========== ===========
Weighted average common
and common equivalent
shares:
Basic 68,394,341 70,407,085 68,602,818 70,633,799
=========== =========== =========== ===========
Diluted 68,767,927 70,407,085 68,822,331 70,633,799
=========== =========== =========== ===========
World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
January 23, April 30,
2004 2003
------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 70,367 $ 128,473
Short-term investments 196,321 142,641
Accounts receivable, net 39,048 49,729
Inventory, net 999 839
Prepaid expenses and other current assets 19,065 18,443
Assets of discontinued operations 20,844 21,129
--------- ---------
Total current assets 346,644 361,254
PROPERTY AND EQUIPMENT - NET 74,895 59,325
INTANGIBLE ASSETS - NET 12,735 12,055
OTHER ASSETS 4,890 4,623
--------- ---------
TOTAL ASSETS $ 439,164 $ 437,257
========= =========