Dangerous Incorporated
12-05-2006, 09:07 PM
WWE announces its financial results for second quarter
Press Release - Tuesday, December 5 2006
World Wrestling Entertainment, Inc. Reports Q2 Results
STAMFORD, Conn.--(BUSINESS WIRE)--World Wrestling Entertainment, Inc., (NYSE:WWE - News) today announced financial results for its second fiscal quarter ended October 27, 2006. Revenues totaled $96.2 million as compared to $88.9 million in the prior year quarter and operating income was $11.7 million as compared to $18.9 million in the prior year quarter. The Company reported net income of $10.4 million, or $0.15 per share, as compared to $11.7 million, or $0.17 per share, in the prior year quarter.
"We are very pleased with our revenue growth in the current quarter," stated Linda McMahon, Chief Executive Officer. "This reflects the continued expansion of our home video and digital media businesses along with increased attendance at our live events."
"We accomplished several operational objectives in the second fiscal quarter that are important for our continued development. We launched Friday Night SmackDown® on the new CW network, allowing us to broadcast into three million additional homes domestically. We successfully released our second feature film, The Marine, in October and the results are firmly in line with our expectations. We have also positioned our home video business for long-term growth by securing a new distribution deal," continued Mrs. McMahon.
Comparability of Quarters
The current quarter reflects the absence of all domestic cable advertising revenues under our arrangement with USA Network, which accounted for revenues of approximately $5.6 million in the prior year quarter. Our effective tax rate in the current quarter was significantly lower as a result of a beneficial settlement of a state and local tax audit. The prior year quarter also included approximately $3.4 million in positive legal settlements.
Results By Business Segment for the 2nd Quarter
We modified our business segment reporting to include four reportable segments in the fourth quarter of Fiscal 2006. Results from the prior year have been adjusted for comparability to the new segment reporting structure. Based on our decision to change the financial reporting to a calendar year basis, we are currently in an eight month transition period from May 1, 2006 through December 31, 2006. Consequently, this quarter is referred to as Q2 of the 2006 transition period.
Live and Televised Entertainment
Revenues from our Live and Televised Entertainment businesses were $64.3 million for the current quarter as compared to $63.0 million in the prior year quarter, a 2% increase.
Pay-Per-View revenues were $18.6 million as compared to $18.8 million in the prior year quarter. There were three Pay-Per-View events produced in each quarter.
Beginning in Q1 of the 2006 Transition Period, the North American retail price of our Pay-Per-View events was increased by $5.00 to $39.95 in order to bring the price more in line with similar live events.
International buys comprised approximately 36% of total buys in the current quarter as compared to 40% of total buys in the prior year quarter.
Live Event revenues were $17.6 million as compared to $13.0 million in the prior year quarter, primarily due to the timing of our international tours.
There were 101 events, including 11 international events and 27 ECW(R) branded events, during the current quarter. In the prior year, there were 78 events, including only 2 international events.
International events generated approximately $4.6 million in the current quarter as compared to $1.3 million in the prior year quarter.
North American average attendance was approximately 4,000 in the current quarter as compared to 4,300 in the prior year quarter. Excluding the ECW events, our North American average attendance was 5,200 as compared to 4,300 in the prior year. The ECW live events generated approximately $0.8 million with an average ticket price of approximately $25.00 and average attendance of approximately 1,200.
Venue Merchandise revenues were $4.2 million as compared to $3.0 million in the second quarter of last year, primarily reflecting the increase in North American attendance. Also, the venue merchandise per capita spending by our fans increased by approximately $1.40 to $11.20 in the current quarter.
Television Rights Fees revenues were $21.8 million as compared to $20.4 million in the prior year quarter. This increase is primarily due to the rights fees received from our ECW telecasts.
Television Advertising revenues were $1.5 million as compared to $7.7 million in the prior year quarter. This decline was due to our television distribution agreement with USA Network, which became effective in October 2005. Due to this change, we no longer participate in domestic television advertising sales. Advertising revenues in the current quarter include sales of advertising on our Canadian television programs.
Consumer Products
Revenues from our Consumer Products businesses were $25.4 million versus $21.6 million in the prior year quarter, an 18% increase.
Home Video net revenues were $14.5 million as compared to $11.9 million in the prior year quarter, reflecting a 67% increase in gross DVD units sold. Our Hulk Hogan: The Ultimate Anthology 3-disc DVD sold approximately 200,000 gross units in the current year quarter. Other successful titles released in the current quarter included McMahon, a 2-disc DVD which chronicles infamous moments of the WWE Chairman and a 3-disc title, The History of the WWE Championship.
Licensing revenues were $7.3 million as compared to $6.4 million in the prior year quarter, reflecting increases in novelty and music related sales.
Magazine publishing net revenues were $3.4 million as compared to $3.1 million in the prior year quarter. Beginning in July 2006, we began publishing WWE® Magazine, which replaced our two former magazines, Raw® and SmackDown®. There were five issues of the WWE Magazine published in the current quarter as compared to eight combined Raw and SmackDown magazines published in the prior year quarter.
Digital Media
Revenues from our Digital Media related businesses were $6.5 million as compared to $4.3 million in the prior year quarter, a 51% increase.
WWE.com revenues were $2.7 million as compared to $2.3 million in the prior year quarter, reflecting additional revenues from advertising.
WWEShop revenues were $3.6 million as compared to $1.6 million in the prior year quarter, primarily due to a 99% increase in the number of orders processed during the current quarter. The average amount paid by our customers per order increased by approximately $5.00 to $51.00 in the current quarter.
WWE Films
Our second feature film, The Marine, was released on October 13th and generated approximately $18.5 million in gross domestic box office receipts to date and is currently being distributed in international theatrical markets. Our first featured film, See No Evil, was released domestically on DVD on November 28, 2006. During the current quarter we incurred approximately $4.1 million in capitalized production costs for our third feature film, The Condemned. Currently, we have $18.0 million in capitalized feature film production assets related to The Condemned. WWE does not participate in any revenues associated with these film projects until the print and advertising costs incurred by our distributors have been recouped. Accordingly, no revenues have been recorded in the current quarter.
Profit Contribution (Net revenues less cost of revenues)
Profit contribution for the quarter was $38.4 million as compared to $41.6 million in the prior year quarter. Total profit contribution margin was approximately 40% for the current quarter as compared to 47% for the prior year quarter. The decline in the profit contribution is due in part to the absence of domestic television advertising revenues in our Live and Televised Entertainment segment and the increase of revenues from businesses with lower profit margins than advertising, such as live events and venue merchandise.
Selling, general and administrative expenses
SG&A expenses were $24.6 million for the current quarter as compared to $19.9 million in the prior year quarter. The prior year quarter included approximately $3.4 million in positive legal settlements.
EBITDA
EBITDA was approximately $13.7 million in the current quarter as compared to $21.7 million in the prior year quarter.
Summary Results for the Six Months Ended
Total revenues through the six months ended October 27, 2006 were $189.5 million as compared to $182.7 million in the prior year period. Operating income for the current period was $27.3 million versus $34.7 million in the prior year period. Net income was $21.7 million, or $0.30 per share, as compared to $22.9 million, or $0.33 per share, in the prior year period. EBITDA was $31.2 million for the current six month period as compared to $40.2 million in the prior year period. As discussed above, prior year operating income includes approximately $3.4 million in positive legal settlements.
Cash Flows
Net cash provided by continuing operations was $9.3 million for the six months ended October 27, 2006, as compared to $41.7 million for the prior year period. In the current year period we spent approximately $16.7 million on the production of feature films and approximately $1.6 million for the purchase of additional film libraries.
Change in Fiscal Year
As previously disclosed, the Company will switch to a calendar year basis beginning with calendar year 2007. Our next report to be issued will be for the period of the eight months ended December 31, 2006.
Transition Period Outlook
We continue to expect the results of our 2006 transition period to be approximately even with the $30 million of Net Income and $0.43 EPS from continuing operations in the comparable prior year period.
Press Release - Tuesday, December 5 2006
World Wrestling Entertainment, Inc. Reports Q2 Results
STAMFORD, Conn.--(BUSINESS WIRE)--World Wrestling Entertainment, Inc., (NYSE:WWE - News) today announced financial results for its second fiscal quarter ended October 27, 2006. Revenues totaled $96.2 million as compared to $88.9 million in the prior year quarter and operating income was $11.7 million as compared to $18.9 million in the prior year quarter. The Company reported net income of $10.4 million, or $0.15 per share, as compared to $11.7 million, or $0.17 per share, in the prior year quarter.
"We are very pleased with our revenue growth in the current quarter," stated Linda McMahon, Chief Executive Officer. "This reflects the continued expansion of our home video and digital media businesses along with increased attendance at our live events."
"We accomplished several operational objectives in the second fiscal quarter that are important for our continued development. We launched Friday Night SmackDown® on the new CW network, allowing us to broadcast into three million additional homes domestically. We successfully released our second feature film, The Marine, in October and the results are firmly in line with our expectations. We have also positioned our home video business for long-term growth by securing a new distribution deal," continued Mrs. McMahon.
Comparability of Quarters
The current quarter reflects the absence of all domestic cable advertising revenues under our arrangement with USA Network, which accounted for revenues of approximately $5.6 million in the prior year quarter. Our effective tax rate in the current quarter was significantly lower as a result of a beneficial settlement of a state and local tax audit. The prior year quarter also included approximately $3.4 million in positive legal settlements.
Results By Business Segment for the 2nd Quarter
We modified our business segment reporting to include four reportable segments in the fourth quarter of Fiscal 2006. Results from the prior year have been adjusted for comparability to the new segment reporting structure. Based on our decision to change the financial reporting to a calendar year basis, we are currently in an eight month transition period from May 1, 2006 through December 31, 2006. Consequently, this quarter is referred to as Q2 of the 2006 transition period.
Live and Televised Entertainment
Revenues from our Live and Televised Entertainment businesses were $64.3 million for the current quarter as compared to $63.0 million in the prior year quarter, a 2% increase.
Pay-Per-View revenues were $18.6 million as compared to $18.8 million in the prior year quarter. There were three Pay-Per-View events produced in each quarter.
Beginning in Q1 of the 2006 Transition Period, the North American retail price of our Pay-Per-View events was increased by $5.00 to $39.95 in order to bring the price more in line with similar live events.
International buys comprised approximately 36% of total buys in the current quarter as compared to 40% of total buys in the prior year quarter.
Live Event revenues were $17.6 million as compared to $13.0 million in the prior year quarter, primarily due to the timing of our international tours.
There were 101 events, including 11 international events and 27 ECW(R) branded events, during the current quarter. In the prior year, there were 78 events, including only 2 international events.
International events generated approximately $4.6 million in the current quarter as compared to $1.3 million in the prior year quarter.
North American average attendance was approximately 4,000 in the current quarter as compared to 4,300 in the prior year quarter. Excluding the ECW events, our North American average attendance was 5,200 as compared to 4,300 in the prior year. The ECW live events generated approximately $0.8 million with an average ticket price of approximately $25.00 and average attendance of approximately 1,200.
Venue Merchandise revenues were $4.2 million as compared to $3.0 million in the second quarter of last year, primarily reflecting the increase in North American attendance. Also, the venue merchandise per capita spending by our fans increased by approximately $1.40 to $11.20 in the current quarter.
Television Rights Fees revenues were $21.8 million as compared to $20.4 million in the prior year quarter. This increase is primarily due to the rights fees received from our ECW telecasts.
Television Advertising revenues were $1.5 million as compared to $7.7 million in the prior year quarter. This decline was due to our television distribution agreement with USA Network, which became effective in October 2005. Due to this change, we no longer participate in domestic television advertising sales. Advertising revenues in the current quarter include sales of advertising on our Canadian television programs.
Consumer Products
Revenues from our Consumer Products businesses were $25.4 million versus $21.6 million in the prior year quarter, an 18% increase.
Home Video net revenues were $14.5 million as compared to $11.9 million in the prior year quarter, reflecting a 67% increase in gross DVD units sold. Our Hulk Hogan: The Ultimate Anthology 3-disc DVD sold approximately 200,000 gross units in the current year quarter. Other successful titles released in the current quarter included McMahon, a 2-disc DVD which chronicles infamous moments of the WWE Chairman and a 3-disc title, The History of the WWE Championship.
Licensing revenues were $7.3 million as compared to $6.4 million in the prior year quarter, reflecting increases in novelty and music related sales.
Magazine publishing net revenues were $3.4 million as compared to $3.1 million in the prior year quarter. Beginning in July 2006, we began publishing WWE® Magazine, which replaced our two former magazines, Raw® and SmackDown®. There were five issues of the WWE Magazine published in the current quarter as compared to eight combined Raw and SmackDown magazines published in the prior year quarter.
Digital Media
Revenues from our Digital Media related businesses were $6.5 million as compared to $4.3 million in the prior year quarter, a 51% increase.
WWE.com revenues were $2.7 million as compared to $2.3 million in the prior year quarter, reflecting additional revenues from advertising.
WWEShop revenues were $3.6 million as compared to $1.6 million in the prior year quarter, primarily due to a 99% increase in the number of orders processed during the current quarter. The average amount paid by our customers per order increased by approximately $5.00 to $51.00 in the current quarter.
WWE Films
Our second feature film, The Marine, was released on October 13th and generated approximately $18.5 million in gross domestic box office receipts to date and is currently being distributed in international theatrical markets. Our first featured film, See No Evil, was released domestically on DVD on November 28, 2006. During the current quarter we incurred approximately $4.1 million in capitalized production costs for our third feature film, The Condemned. Currently, we have $18.0 million in capitalized feature film production assets related to The Condemned. WWE does not participate in any revenues associated with these film projects until the print and advertising costs incurred by our distributors have been recouped. Accordingly, no revenues have been recorded in the current quarter.
Profit Contribution (Net revenues less cost of revenues)
Profit contribution for the quarter was $38.4 million as compared to $41.6 million in the prior year quarter. Total profit contribution margin was approximately 40% for the current quarter as compared to 47% for the prior year quarter. The decline in the profit contribution is due in part to the absence of domestic television advertising revenues in our Live and Televised Entertainment segment and the increase of revenues from businesses with lower profit margins than advertising, such as live events and venue merchandise.
Selling, general and administrative expenses
SG&A expenses were $24.6 million for the current quarter as compared to $19.9 million in the prior year quarter. The prior year quarter included approximately $3.4 million in positive legal settlements.
EBITDA
EBITDA was approximately $13.7 million in the current quarter as compared to $21.7 million in the prior year quarter.
Summary Results for the Six Months Ended
Total revenues through the six months ended October 27, 2006 were $189.5 million as compared to $182.7 million in the prior year period. Operating income for the current period was $27.3 million versus $34.7 million in the prior year period. Net income was $21.7 million, or $0.30 per share, as compared to $22.9 million, or $0.33 per share, in the prior year period. EBITDA was $31.2 million for the current six month period as compared to $40.2 million in the prior year period. As discussed above, prior year operating income includes approximately $3.4 million in positive legal settlements.
Cash Flows
Net cash provided by continuing operations was $9.3 million for the six months ended October 27, 2006, as compared to $41.7 million for the prior year period. In the current year period we spent approximately $16.7 million on the production of feature films and approximately $1.6 million for the purchase of additional film libraries.
Change in Fiscal Year
As previously disclosed, the Company will switch to a calendar year basis beginning with calendar year 2007. Our next report to be issued will be for the period of the eight months ended December 31, 2006.
Transition Period Outlook
We continue to expect the results of our 2006 transition period to be approximately even with the $30 million of Net Income and $0.43 EPS from continuing operations in the comparable prior year period.