World Wrestling Entertainment, Inc. Reports Q1 Results; $15.6 Million Operating Income; $0.16 E.P.S.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn., -- World Wrestling Entertainment World Wrestling Entertainment, Inc. (WWE) is a publicly traded, privately controlled integrated media (focusing in television, Internet, and live events), and sports entertainment company dealing primarily in the professional wrestling industry, with major revenue sources , Inc., (NYSE NYSE See: New York Stock Exchange :WWE WWE World Wrestling Entertainment, Inc. (formerly World Wrestling Federation) WWE Witwe (German: Widow) WWE William Webb Ellis (inventor of rugby) WWE World Wide Education WWE Well Woman Exam ) today announced financial results for its first fiscal quarter ended July July: see month. 28, 2006. Revenues totaled $93.3 million as compared to $93.8 million in the prior year quarter and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $15.6 million as compared to $15.8 million in the prior year quarter. The Company reported net income of $11.3 million, or $0.16 per share, as compared to $11.2 million, or $0.16 per share, in the prior year quarter. "One of our key achievements in the current quarter was the successful re-launch of the ECW ECW Extreme Championship Wrestling ECW Episcopal Church Women ECW English Civil War ECW Enhanced Compressed Wavelet (Image compression format created by Earth Resource Mapping) ECW Extracellular Water (R) brand," stated Linda McMahon Linda Marie Edwards-McMahon (born October 4 1948 in New Bern, North Carolina) is the CEO of World Wrestling Entertainment, Inc. and is the wife of World Wrestling Entertainment Chairman Vince McMahon. , Chief Executive Officer. "The ECW resurgence re·sur·gence n. 1. A continuing after interruption; a renewal. 2. A restoration to use, acceptance, activity, or vigor; a revival. in the quarter included an ECW branded pay-per-view pay-per-view n. A service offered by cable television companies that allows subscribers to view special programs for an additional charge. pay event, a live event tour, and a summer cable television run on the SCI FI Channel Sci Fi Channel may refer to:
"Our results this quarter are positively impacted by the continued strength of our Home Video business," continued Mrs. McMahon McMahon is the family name of the following persons:
Comparability of Quarters Due to our arrangement with USA Network, the current quarter reflects the absence of all domestic cable advertising revenues, which accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8.0 million in revenues in the prior year quarter. Also, the Company aired four pay-per-view events during the current quarter as compared to five events in the prior year quarter. The additional event in the prior year quarter, Backlash(R), contributed approximately $4.3 million in revenues, and $2.1 million in profit contribution. Results By Business Segment for the 1st Quarter We modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. our business segment reporting Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. to include four reportable segments in the fourth quarter of Fiscal 2006. Results from the prior year quarter have been adjusted for comparability to the new segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four 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 Q1 of the 2006 transition period.
The following chart reflects net revenues and profit contribution by
segment for the quarters ended July 28, 2006, and July 29, 2005.
(Dollars in millions)
July 28, July 29,
Net Revenues 2006 2005
------------ ---------- ----------
Live and Televised Entertainment $ 64.4 $ 71.9
Consumer Products 23.3 18.2
Digital Media 5.6 3.7
WWE Films -- --
----------- ----------
Total $ 93.3 $ 93.8
=========== ==========
July 28, July 29,
Profit Contribution 2006 2005
---------- ----------
Live and Televised Entertainment $ 25.2 $ 29.7
Consumer Products 13.1 10.4
Digital Media 1.7 1.2
WWE Films -- --
----------- ----------
Total operating income $ 40.0 $ 41.3
=========== ==========
Profit contribution margin 43% 44%
----------- ----------
Live and Televised Entertainment Revenues from our Live and Televised Entertainment businesses were $64.4 million for the current quarter as compared to $71.9 million in the prior year quarter, a decrease of 10%, reflecting the absence of domestic cable advertising revenues. --Pay-Per-View revenues were $19.9 million as compared to $21.6 million in the prior year quarter. There were four pay-per-view events produced in the current quarter as compared to five events in the prior year quarter.
The details for the number of buys (in 000's) are as follows:
Event Q1 Transition 06 Q1 F06
--------- ---------------- -------
Backlash(R) - 273
Judgment Day(R) 231 236
ECW(R) One Night Stand 280 268
Vengeance(R) 313 320
Great American Bash(R) 224 233
Prior events 166 115
----------------- --------------
Total 1,214 1,445
================= ==============
--Beginning with the ECW One Night Stand pay-per-view, the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. retail price was increased by $5.00 to $39.99 in order to bring the price closer in line with similar sporting events. This represents our first increase in the Pay-Per-View retail price in more than four years. --International buys, which generate lower revenues per buy, comprised approximately 40% of total buys in the current quarter as compared to 28% of total buys in the prior year quarter. --Live Event revenues were $15.9 million as compared to $16.5 million in the first quarter of last year. --There were 86 events, including 2 international events, during the quarter as compared to 70 events, including 7 international events, during the same period last year. --North American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of average attendance increased to approximately 5,300 in the current quarter as compared to 4,600 in the prior year quarter. --International events generated approximately $0.3 million in the current quarter as compared to $5.7 million in the prior year quarter. The two events in the current quarter were performed in emerging territories in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. while the seven events in the prior year quarter consisted of two tours that performed in well established markets including Japan and the United Kingdom. --Seven ECW live events were produced in the current quarter, generating approximately $0.2 million with an average ticket price of approximately $26.00 and average attendance of approximately 1,000. While we continue to develop and grow the brand, ECW events are currently held in smaller venues which generate lower average attendance and revenues per event. --Venue Merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain revenues were $4.7 million as compared to $3.3 million in the first quarter of last year, primarily reflecting the increase in North American attendance. Also, the venue venue In law, the place or county in which the events giving rise to a legal action take place and from which a jury may be drawn to try the case. Venue statutes usually specify that a trial must take place in the district that has jurisdiction over the matter. merchandise per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. spending by our fans increased by approximately $0.40 to $11.00 in the current quarter. --Television Rights Fees revenues were $22.2 million as compared to $20.0 million in the prior year quarter. This increase is partially due to the rights fees received from our ECW telecasts. --Television Advertising revenues were $1.1 million as compared to $10.4 million in the prior year quarter. This decline was due to our television distribution agreement with USA Network, which became effective in October October: see month. 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 Canadian television may refer to:
Consumer Products Revenues from our Consumer Products businesses were $23.3 million versus $18.2 million in the prior year quarter, a 28% increase. --Home Video net revenues were $14.5 million as compared to $8.5 million in the prior year quarter, reflecting a 55% increase in gross units sold. Our WrestleMania
DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. sold approximately 345,000 gross units in the quarter, representing our best selling title to date. Based on the strength of this release, combined with the release of several other successful titles, we shipped approximately 1.1 million units in the current quarter. --Licensing revenues were $5.6 million as compared to $7.5 million in the prior year quarter, reflecting decreases in novelty Novelty is the quality of being new. Although it may be said to have an objective dimension (e.g. a new style of art coming into being, such as abstract art or impressionism) it essentially exists in the subjective perceptions of individuals. and multimedia game product sales. The prior year quarter reflected sales of our WrestleMania 21 videogame while no new videogames VideoGames may refer to:
--Magazine Publishing net revenues were $3.1 million as compared to $2.1 million in the prior year quarter, reflecting an additional issue sold in the current quarter. Beginning in July, we began publishing WWE(R) Magazine, which replaces our two former magazines, Raw(R) and SmackDown(R). Digital Media Revenues from our Digital Media related businesses were $5.6 million as compared to $3.7 million in the prior year quarter, a 51% increase. --WWE.com revenues were $2.1 million as compared to $1.7 million in the prior year quarter, reflecting additional revenues from advertising and wireless based content. --WWE Shop revenues were $3.3 million as compared to $1.8 million in the prior year quarter, primarily due to a 68% increase in the number of orders processed during the current quarter. WWE Films Our first feature film, See No Evil, was released on May 19, 2006, and generated approximately $15.0 million in gross domestic box office receipts and is currently being distributed in international theatrical markets. WWE does not participate in any revenues associated with this film project until the print and advertising costs incurred by our distributor 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 $40.0 million as compared to $41.3 million in the prior year quarter. Total profit contribution margin was approximately 43% for the current quarter as compared to 44% 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. Selling, general and administrative expenses SG&A expenses were $22.5 million for the current quarter as compared to $22.8 million in the prior year quarter. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become EBITDA was approximately $17.5 million in the current quarter as compared to $18.5 million in the prior year. Cash Flows Net cash provided by continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $2.4 million for the quarter ended July 28, 2006, as compared to $21.6 million for the quarter ended July 29, 2005. In the current quarter we spent approximately $12.6 million on the production of feature films and approximately $1.5 million for the purchase of additional film libraries. Change in Fiscal Year As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , the Company will switch to a calendar year basis beginning with calendar year 2007. This change is intended to simplify our communication with shareholders and will enable us to report our financial results in a timeframe consistent with the majority of our media and entertainment peers. We will issue one additional quarterly report for our second fiscal quarter ending October 27, 2006, and will subsequently file a transitional annual report for 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 (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. from continuing operations in the comparable prior year period. Note: World Wrestling Entertainment, Inc., will host a conference call on August 31, 2006, at 11:00 a.m. ET to discuss the Company's first quarter earnings results for the 2006 transition period. All interested parties can access the conference call by dialing 800-895-0231 (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 wrestling, sport in which two unarmed opponents grapple with one another. The object is to secure a fall, i.e., cause the opponent to lose balance and fall to the floor, and ultimately to pin the supine opponent's shoulders to the floor, through the use of body moves and all World Wrestling Entertainment logos are trademarks, which are the exclusive property of World Wrestling Entertainment, Inc. All other trademarks are the property of their respective owners. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This news release contains forward-looking statements pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , entertainment, professional sports The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , and licensed merchandise; acceptance of the Company's brands, media and merchandise within those markets; uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc litigation; risks associated with producing live events both domestically and internationally; uncertainties associated with international markets; risks relating to maintaining and renewing re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. 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 28, July 29,
2006 2005
--------- ---------
Net revenues $ 93,267 $ 93,812
Cost of revenues 53,266 52,501
Selling, general and administrative expenses 22,508 22,815
Depreciation and amortization 1,860 2,696
-------- --------
Operating income 15,633 15,800
Investment income, net 2,486 1,872
Interest expense 137 152
Other expense, net (496) (73)
--------- ---------
Income from continuing operations before
income taxes 17,486 17,447
Provision for income taxes 6,184 6,269
-------- --------
Income from continuing operations 11,302 11,178
-------- --------
Income from discontinued operations, net of taxes - 2
-------- --------
Net income $ 11,302 $ 11,180
======== ========
Earnings per share - basic and diluted:
Continuing operations $ 0.16 $ 0.16
Discontinued operations 0.00 0.00
-------- --------
Net income $ 0.16 $ 0.16
======== ========
Shares used in per share calculations:
Basic 70,708 68,899
Diluted 71,364 69,627
World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
July 28, April 30,
2006 2006
---------------------
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 130,869 $ 175,203
Short-term investments 133,417 105,655
Accounts receivable, net 57,858 67,775
Inventory, net 2,544 1,788
Prepaid expenses and other current assets 11,017 11,140
Assets of discontinued operations 461 457
--------- ---------
Total current assets 336,166 362,018
PROPERTY AND EQUIPMENT, NET 67,857 67,570
FEATURE FILM PRODUCTION ASSETS 48,656 36,094
INTANGIBLE ASSETS, NET 2,738 1,461
OTHER ASSETS 12,060 12,247
--------- ---------
TOTAL ASSETS $ 467,477 $ 479,390
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 833 $ 817
Accounts payable 15,305 19,826
Accrued expenses and other liabilities 33,979 36,017
Deferred income 18,211 19,874
Liabilities of discontinued operations 294 294
--------- ---------
Total current liabilities 68,622 76,828
LONG-TERM DEBT 6,167 6,381
STOCKHOLDERS' EQUITY:
Class A common stock 229 227
Class B common stock 479 479
Additional paid-in capital 280,314 277,693
Accumulated other comprehensive income 58 355
Retained earnings 111,608 117,427
--------- ---------
Total stockholders' equity 392,688 396,181
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 467,477 $ 479,390
========= =========
World Wrestling Entertainment, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
--------- ---------
OPERATING ACTIVITIES:
Net income $ 11,302 $ 11,180
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations, net of
taxes - (2)
Revaluation of warrants 866 (639)
Depreciation and amortization 1,860 2,696
Amortization of investment income (122) (263)
Stock compensation costs 1,534 579
Provision for doubtful accounts - 370
Provision for inventory obsolescence 448 307
(Benefit) provision for deferred income taxes (587) 308
Changes in assets and liabilities:
Accounts receivable 9,917 7,179
Inventory (1,204) (534)
Prepaid expenses and other assets 123 200
Feature film production assets (12,562) (1,952)
Accounts payable (4,520) 243
Accrued expenses and other liabilities (3,154) 4,537
Deferred income (1,541) (2,588)
-------- --------
Net cash provided by continuing
operations 2,360 21,621
Net cash provided by discontinued
operations - 136
-------- --------
Net cash provided by operating
activities 2,360 21,757
-------- --------
INVESTING ACTIVITIES:
Purchase of property and equipment (1,890) (255)
Purchase of other film library assets (1,534) -
Purchase of short-term investments (45,854) (1,325)
Proceeds from sales or maturities of short-term
investments 17,850 5,470
-------- --------
Net cash (used in) provided by
continuing operations (31,428) 3,890
Net cash used in discontinued
operations - -
-------- --------
Net cash (used in) provided by
investing activities (31,428) 3,890
-------- --------
FINANCING ACTIVITIES:
Repayments of long-term debt (199) (184)
Dividends paid (16,954) (8,267)
Issuance of stock, net 229 187
Proceeds from exercise of stock options 1,291 529
Excess tax benefit from stock-based payment
arrangements 367 -
-------- --------
Net cash used in continuing operations (15,266) (7,735)
Net cash used in discontinued
operations - -
-------- --------
Net cash used in financing activities (15,266) (7,735)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (44,334) 17,912
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 175,203 56,568
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $130,869 $ 74,480
======== ========
World Wrestling Entertainment, Inc.
Supplemental Information - EBITDA
(dollars in thousands)
(Unaudited)
Three Months Ended
July 28, July 29,
2006 2005
----------- -----------
Net income reported on U.S. GAAP basis $ 11,302 $ 11,180
Income from discontinued operations, net - (2)
Provision for income taxes 6,184 6,269
Interest and other, net (1,852) (1,647)
Depreciation and amortization 1,860 2,696
---------- ----------
EBITDA $ 17,494 $ 18,496
========== ==========
Non-GAAP Measure:
EBITDA is defined as net income from continuing operations before
interest and other income, 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 performance. 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 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 28, July 29,
2006 2005
Net cash provided by continuing operations $ 2,360 $ 21,621
Less cash used in capital expenditures:
Purchase of property and equipment (1,890) (255)
Purchase of other film library assets (1,534) -
----------- -----------
Free Cash Flow $ (1,064) $ 21,366
=========== ===========
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 liquidity 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.
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