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CKX, Inc. Reports Second Quarter and Six Month 2009 Results
PR Newswire
Aug 10, 2009
NEW YORK, Aug. 10 /PRNewswire-FirstCall/ -- CKX, Inc. (Nasdaq: CKXE) today reported financial results for its second quarter and six months ended June 30, 2009.
For the six months ended June 30, 2009, revenue increased to $161.0 million from $153.7 million for the comparable period in 2008. Operating income declined to $34.8 million from $45.3 million in 2008. The 2009 results include a non-cash swing of $6.0 million in foreign exchange losses, as well as $5.8 million in unusual one-time costs.
Commenting on the results, Robert F.X. Sillerman, Chairman and CEO said, "I am pleased at where the company sits at this time. The predictability of our core business permitted us to more than double our development budget for 2009. With American Idol increasing its lead among the key demographics to unprecedented heights, with So You Think You Can Dance beginning an additional season in September of this year, with attendance at Graceland running ahead of last year in this quarter and with the Las Vegas-based Cirque du Soleil show on track to open at the end of this year, the base of our business continues to be solid. With others cutting back on development, we anticipate greater opportunities in both Television and Internet opportunities."
Simon Fuller, CEO of 19 Entertainment commented, "I could not be more excited by the diversity and quality of our forthcoming projects. With the decision to invest more time and resource into a strong development programme, this initiative is now beginning to bear fruit. We are negotiating new TV shows in reality, comedy, drama and music, including an intriguing multimedia show that will push the boundaries of television, the Internet and live events. With our Sport, Fashion, Music and online presence also growing, 19 and CKX have more new initiatives than ever before."
Results for the Three Months Ended June 30, 2009
Revenue in the second quarter of 2009 declined to $79.5 million from $88.5 million for the second quarter of 2008 primarily due to reduced revenue for American Idol. The decrease in revenue attributable to American Idol was due to a decrease in the number of hours broadcast in the quarter as compared to the prior year, reduced foreign syndication revenue, lower ratings bonus and weaker on and off air sponsorship revenue resulting from the global recession. Revenue was flat at the Presley Business, as an increase in attendance over the prior year offset a small decrease in licensing revenue as a result of general declines in consumer spending amid the economic downturn. Revenue declined at the Ali Business due to fewer memorabilia signings.
Operating income before depreciation, amortization and non-cash stock compensation ("OIBDAN") declined to $16.2 million for the second quarter of 2009 from $31.5 million for the second quarter of 2008. The decrease in OIBDAN as compared to the prior year period reflects the decline in revenue described above, $0.7 million of costs incurred with respect to a potential acquisition, $5.7 million in non-cash foreign exchange losses due to the weakened U.S. dollar, $0.8 million in incremental payroll-related taxes incurred due to the redemption of redeemable restricted common stock, $0.5 million in costs related to the terminated merger and a $0.4 million increase in development spending for new projects. OIBDAN in the second quarter of 2008 included $1.1 million of merger and distribution-related costs and foreign exchange losses of $0.1 million. Adjusting for foreign exchange losses, acquisition-related and merger and distribution-related costs and the payroll taxes related to the redeemable restricted common stock redemption, OIBDAN declined to $23.9 million in the second quarter of 2009 from $32.7 million for the second quarter of 2008.
Net income attributable to CKX, Inc. was $4.0 million, a decrease of $7.9 million from the second quarter of 2008 and diluted income per common share of $0.05 represented a decrease of $0.07 from the second quarter of 2008.
Operating income was $11.2 million in the second quarter of 2009 compared to $25.2 million in the second quarter of 2008.
Results for the Six Months Ended June 30, 2009
Revenue for the Company grew to $161.0 million in the six months from $153.7 million for the same period in 2008. Revenue was flat at 19 Entertainment as new television programming offset declines in American Idol. The decrease in revenue attributable to American Idol was due to reduced foreign syndication revenue, lower ratings bonus and weaker on and off air sponsorship revenue resulting from the global recession. Revenue at the Presley Business and the Ali Business included $9.0 million and $1.0 million, respectively, of non-recurring revenue from the terminated license agreements to develop real estate projects around these brands. Excluding the non-recurring revenue, revenue was flat at the Presley Business as an increase in attendance over the prior year offset a small decrease in licensing revenue as a result of general declines in consumer spending amid the economic downturn. Excluding the non-recurring revenue, revenue declined at the Ali Business due to fewer memorabilia signings and a slight decline in licensing revenue.
Operating income before depreciation, amortization and non-cash stock compensation ("OIBDAN") declined to $44.5 million for the six months ended June 30, 2009 from $57.5 million for the prior year period. The decrease in OIBDAN as compared to the prior year's period reflects the recognition of the $10.0 million in fees from the terminated license agreements, which was offset by the decline in recurring revenue described above, a $1.4 million restructuring charge at the Ali Business, $2.2 million of costs incurred with respect to a potential acquisition, the write-off of $0.9 million of previously capitalized costs related to the proposed re-development of Graceland, $5.8 million in non-cash foreign exchange losses due to the weakened U.S. dollar, $0.8 million in incremental payroll-related taxes incurred due to the redemption of redeemable restricted common stock, $0.5 million in costs related to the terminated merger and a $0.9 million increase in development spending for new projects. OIBDAN in the first six months of 2008 included $1.7 million of merger and distribution-related costs and foreign currency exchange gains of $0.2 million. Adjusting for the non-recurring revenue, the write-down of the capitalized costs, the foreign exchange losses, the payroll taxes related to the redeemable restricted common stock redemption and the acquisition-related and merger and distribution-related costs, OIBDAN declined to $46.1 million in the first six months of 2009 from $59.0 million for the same period in 2008.
Net income attributable to CKX, Inc. was $16.1 million, a decrease of $7.0 million from the first six months of 2008, and diluted income per common share of $0.17 represented a decrease of $0.07 from the first half of 2008.
Operating income was $34.8 million for the first half of 2009 compared to $45.3 million in the 2008 period.
Segment Results
The following table summarizes segment operating results for the three months ended June 30, 2009 and 2008 (in millions):
June 30, June 30,
2009 2008 Change
---- ---- ------
Revenue
19 Entertainment $64.6 $72.5 -10.9%
Presley Business 14.5 14.6 -0.8%
Ali Business 0.4 1.4 -74.0%
--- --- -----
Total $79.5 $88.5 -10.1%
===== ===== =====
June 30, June 30,
2009 2008 Change
---- ---- ------
OIBDAN
19 Entertainment (1) $17.4 $30.1 -42.3%
Presley Business 5.5 5.7 -4.6%
Ali Business 0.0 0.3 -96.8%
Corporate (6.7) (4.6) 45.89%
---- ---- -----
Total $16.2 $31.5 -48.7%
===== ===== =====
June 30, June 30,
2009 2008 Change
---- ---- ------
Operating Income
19 Entertainment (1) $14.1 $25.3 -44.3%
Presley Business 4.2 4.4 -4.9%
Ali Business 0.0 0.3 -99.7%
Corporate (2) (7.1) (4.8) 47.3%
---- ---- ----
Total $11.2 $25.2 -55.6%
===== ===== =====
(1) 2009 and 2008 results include foreign exchange losses of $5.7 million
and $0.1 million, respectively.
(2) 2009 results include $0.7 million of acquisition-related costs in
accordance with a new accounting standard and $0.5 million of merger
and distribution-related costs. 2008 includes $1.1 million of merger
and distribution-related costs.
The following table summarizes segment operating results for the six months ended June 30, 2009 and 2008 (in millions):
June 30, June 30,
2009 2008 Change
---- ---- ------
Revenue
19 Entertainment $125.9 $126.2 -0.3%
Presley Business 33.1 25.0 32.0%
Ali Business 2.0 2.5 -19.7%
--- --- -----
Total $161.0 $153.7 4.7%
====== ====== ===
June 30, June 30,
2009 2008 Change
---- ---- ------
OIBDAN
19 Entertainment (1) $41.3 $58.6 -29.6%
Presley Business 15.7 7.8 100.8%
Ali Business (2) (0.3) 0.6 -144.9%
Corporate (3) (12.2) (9.5) 28.90%
----- ---- -----
Total $44.5 $57.5 -22.6%
===== ===== =====
June 30, June 30,
2009 2008 Change
---- ---- ------
Operating Income (Loss)
19 Entertainment (1) $34.7 $49.4 -29.7%
Presley Business 13.2 5.3 148.5%
Ali Business (2) (0.3) 0.6 -153.6%
Corporate (3) (12.8) (10.0) 27.8%
----- ----- ----
Total $34.8 $45.3 -23.2%
===== ===== =====
(1) 2009 results include foreign exchange losses of $5.8 million. 2008
OIBDAN includes $0.2 million in foreign exchange gains.
(2) 2009 results include severance costs of $1.4 million at the Ali
Business due to a restructuring of the business.
(3) 2009 results include $2.2 million of acquisition-related costs in
accordance with a new accounting standard and $0.5 million of merger
and distribution-related costs. 2008 includes $1.7 million of costs
relating to merger and distribution-related costs.
Use of Operating Income before Depreciation, Amortization and Non-cash Stock Compensation
We evaluate our operating performance based on several factors, including a financial measure of operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets, and non-cash compensation and other non-cash charges, such as charges for impairment of intangible assets (which we refer to as "OIBDAN"). The Company considers OIBDAN to be an important indicator of the operational strengths and performance of our businesses and the critical measure the chief operating decision maker (CEO) uses to manage and evaluate our businesses, including the ability to provide cash flows to service debt. However, a limitation of the use of OIBDAN as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our businesses or stock-based compensation expense. Accordingly, OIBDAN should be considered in addition to, not as a substitute for, operating income, net income and other measures of financial performance reported in accordance with US GAAP as OIBDAN is not a GAAP equivalent measurement.
The following table reconciles consolidated OIBDAN to consolidated operating income under U.S. GAAP (in millions) for the three months ended June 30, 2009 and 2008:
June 30, June 30,
2009 2008
---- ----
OIBDAN $16.2 $31.5
Depreciation and amortization (4.6) (5.5)
Non-cash compensation (0.4) (0.8)
---- ----
Operating income $11.2 $25.2
===== =====
The following table reconciles consolidated OIBDAN to consolidated operating income under U.S. GAAP (in millions) for the six months ended June 30, 2009 and 2008:
June 30, June 30,
2009 2008
---- ----
OIBDAN $44.5 $57.5
Depreciation and amortization (9.0) (11.1)
Non-cash compensation (0.7) (1.1)
---- ----
Operating income $34.8 $45.3
===== =====
Cash and Borrowing
The Company had total cash on hand of $72.9 million as of June 30, 2009. Outstanding debt at June 30, 2009 totaled $101.4 million including the current portion of $0.8 million.
Form 10-Q Filing
Additional information concerning the Company's first quarter results of operations and financial position is included in the Company's Form 10-Q for the quarter ended June 30, 2009 which was filed today with the Securities and Exchange Commission. A copy of the Company's 10-Q filing is available on our website at www.ckx.com.
Conference Call
Robert F.X. Sillerman, Chairman and Chief Executive Officer, and Thomas P. Benson, Executive Vice President and Chief Financial Officer, will be hosting a conference call for investors today at 10:00 a.m. EDT to discuss the quarterly results. The conference call numbers are:
719-457-2715 (International)
888-617-5714 (United States)
Those interested in listening to the conference call live via the Internet may do so by visiting the Company's Investor Relations web site at http://ir.ckx.com. To listen to the live call, please go to the web site fifteen minutes prior to its start to register, download, and install the necessary audio software.
An audio replay of the conference call will also be available after the call on the Company's Investor Relations website.
About CKX, Inc.
CKX, Inc. is engaged in the ownership, development and commercial utilization of entertainment content. To date, the Company has focused on acquiring globally recognized entertainment content and related assets, including the rights to the name, image and likeness of Elvis Presley, the operations of Graceland, the rights to the name, image and likeness of Muhammad Ali and proprietary rights to the IDOLS television brand, including the American Idol series in the United States and local adaptations of the IDOLS television show format which, collectively, air in more than 100 countries. For more information about CKX, Inc., visit its corporate website at www.ckx.com.
Forward Looking Statements
In addition to historical information, this document contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words "believe," "expect," "will," "anticipate," "intend," "estimate," "project," "assume" or other similar expressions, although not all forward-looking statements contain these identifying words. All statements in this Annual Report regarding our future strategy, future operations, projected financial position, estimated future revenue, projected costs, future prospects, and results that might be obtained by pursuing management's current plans and objectives are forward-looking statements. You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date on which this Annual Report was filed with the Securities and Exchange Commission ("SEC"). We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and materially adverse to our stockholders.
CKX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
June 30, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $72,904 $101,895
Receivables, net of allowance for doubtful
accounts of $923 at June 30, 2009 and $803 at
December 31, 2008 70,641 37,085
Due from related party 55 274
Inventories, net of allowance for obsolescence
of $725 at June 30, 2009 and $649 at December
31, 2008 1,984 1,988
Prepaid expenses and other current assets 9,328 8,119
Deferred tax assets 3,020 4,941
----- -----
Total current assets 157,932 154,302
Property and equipment - net 50,333 47,818
Receivables 2,512 3,267
Loans to related parties 1,766 1,765
Other assets 25,695 26,797
Goodwill 120,170 108,771
Other intangible assets - net 123,936 127,403
Deferred tax assets 4,300 5,938
----- -----
TOTAL ASSETS $486,644 $476,061
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $24,323 $19,648
Accrued expenses 25,394 22,373
Current portion of long-term debt 773 489
Income taxes payable 6,011 5,526
Deferred revenue 14,801 30,745
------ ------
Total current liabilities 71,302 78,781
Long-term liabilities:
Long-term debt 100,656 101,429
Deferred revenue 2,875 3,515
Other long-term liabilities 3,215 2,850
Deferred tax liabilities 21,030 23,744
------ ------
Total liabilities 199,078 210,319
------- -------
Redeemable restricted common stock - 534,082
shares outstanding at June 30, 2009 and
1,672,170 shares outstanding at December 31,
2008 7,347 23,002
Commitments and contingencies
CKX, Inc. stockholders' equity:
Preferred stock, $.01 par value, authorized
75,000,000 shares:
Series B - 1,491,817 shares outstanding 22,825 22,825
Series C - 1 share outstanding - -
Common stock, $0.01 par value: authorized
200,000,000 shares, 96,811,040 shares issued
at June 30, 2009 and 95,634,685 issued at
December 31, 2008 968 956
Additional paid-in-capital 393,930 377,617
Accumulated deficit (90,548) (106,619)
Common stock in treasury - 4,477,438 shares at
June 30, 2009 and 3,339,350 shares at
December 31, 2008 (22,647) (7,647)
Accumulated other comprehensive income (loss) (29,239) (49,671)
-------- --------
CKX, Inc. stockholders' equity 275,289 237,461
Noncontrolling interests 4,930 5,279
----- -----
Total equity 280,219 242,740
------- -------
TOTAL LIABILITIES AND EQUITY $486,644 $476,061
======== ========
CKX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(amounts in thousands, except share and per share data)
Three Three
Months Months
Ended Ended
June 30, June 30,
2009 2008
---------- ----------
Revenue $79,533 $88,510
Operating expenses:
Cost of sales 32,904 33,310
Selling, general and administrative expenses 18,210 19,656
Corporate expenses 5,734 3,704
Depreciation and amortization 4,560 5,457
Merger and distribution-related costs 525 1,092
Acquisition-related costs 696 -
Other expense 5,712 58
----- --
Total operating expenses 68,341 63,277
------ ------
Operating income 11,192 25,233
Interest income 100 327
Interest expense (906) (1,424)
----- -------
Income before income taxes and equity in earnings
(losses) of affiliates 10,386 24,136
Income tax expense 5,035 11,515
----- ------
Income before equity in earnings (losses)of
affiliates 5,351 12,621
Equity in earnings (losses) of affiliates (321) 445
----- ---
Net income 5,030 13,066
Dividends on preferred stock (456) (456)
----- -----
Net income available to CKX, Inc. 4,574 12,610
Less: Net income attributable to noncontrolling
interests (566) (678)
----- -----
Net income attributable to CKX, Inc. $4,008 $11,932
====== =======
Income per share:
Basic income per share $0.05 $0.12
===== =====
Diluted income per share $0.05 $0.12
===== =====
Average number of common shares outstanding:
Basic 93,702,530 97,045,279
Diluted 93,702,531 97,090,538
CKX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(amounts in thousands, except share and per share data)
Six Months Six Months
Ended Ended
June 30, June 30,
2009 2008
---------- ----------
Revenue $161,039 $153,747
Operating expenses:
Cost of sales 61,214 50,381
Selling, general and administrative expenses 37,552 37,160
Corporate expenses 9,909 8,301
Depreciation and amortization 8,998 11,089
Merger and distribution-related costs 525 1,683
Acquisition-related costs 2,233 -
Other expense (income) 5,840 (159)
----- -----
Total operating expenses 126,271 108,455
------- -------
Operating income 34,768 45,292
Interest income 203 1,105
Interest expense (1,956) (3,041)
------- -------
Income before income taxes and equity in earnings
(losses) of affiliates 33,015 43,356
Income tax expense 14,329 19,880
------ ------
Income before equity in earnings (losses) of
affiliates 18,686 23,476
Equity in earnings (losses) of affiliates (259) 1,657
----- -----
Net income 18,427 25,133
Dividends on preferred stock (912) (912)
----- -----
Net income available to CKX, Inc. 17,515 24,221
Less: Net income attributable to noncontrolling
interests (1,444) (1,075)
------- -------
Net income attributable to CKX, Inc. $16,071 $23,146
======= =======
Basic income per share:
Income attributable to CKX, Inc. before preferred
dividends $0.18 $0.24
Dividends on preferred stock (0.01) -
------ -
Basic income per share $0.17 $0.24
===== =====
Diluted income per share:
Income attributable to CKX, Inc. before dividends
on preferred stock $0.18 $0.24
Dividends on preferred stock (0.01) -
------ -
Diluted income per share $0.17 $0.24
===== =====
Average number of common shares outstanding:
Basic 93,749,330 97,036,692
Diluted 93,827,784 97,085,647
CKX, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in thousands)
Six Months Six Months
Ended Ended
June 30, June 30,
2009 2008
---------- ----------
Cash flows from operating activities:
Net income available to CKX, Inc. $17,515 $24,221
Adjustments to reconcile net income
available to CKX, Inc. to net cash (used
in) provided by operating activities:
Depreciation and amortization 8,998 11,089
Dividends on preferred stock 912 912
Write-off of deferred costs 874 -
Unrealized foreign currency gains (losses) 6,018 (72)
Share-based payments 752 1,124
Equity in earnings (losses) of affiliates,
net of cash received 259 (474)
Deferred income taxes 845 (857)
Non-cash interest expense 383 331
Provision for inventory and accounts
receivable allowance 240 (34)
Changes in operating assets and
liabilities:
Receivables (33,935) (40,805)
Accounts payable and accrued expenses 7,551 9,053
Deferred revenue (16,993) 11,326
Income taxes payable 485 8,981
Other 2,079 3,076
----- -----
Net cash (used in) provided by operating
activities (4,017) 27,871
------- ------
Cash flows from investing activities:
Purchases of property and equipment (4,838) (3,990)
Investment in Cirque du Soleil partnership (2,219) -
------- -
Net cash used in investing activities (7,057) (3,990)
------- -------
Cash flows from financing activities:
Purchase of redeemable restricted common
stock (15,000) -
Distributions to noncontrolling interest
shareholders (1,750) (850)
Principal payments on debt (489) (526)
Dividends paid on preferred stock (912) (912)
----- -----
Net cash used in financing activities (18,151) (2,288)
-------- -------
Effect of exchange rate changes on cash
and cash equivalents 234 (32)
--- ----
Net (decrease) increase in cash and cash
equivalents (28,991) 21,561
-------- ------
Cash and cash equivalents - beginning of
period 101,895 50,947
------- ------
Cash and cash equivalents - end of period $72,904 $72,508
======= =======
Supplemental cash flow data:
Cash paid during the period for:
Interest $1,312 $2,636
Income taxes 13,983 11,736
Supplemental Cash Flow Information
The Company had the following non-cash investing and financing
activities in the six months ended June 30, 2009 (in thousands):
Accrued but unpaid Series B Convertible Preferred Stock Dividends $456
Accrued but unpaid investment in Cirque du Soleil partnership $3,831
The Company had the following non-cash investing and financing
activities in the six months ended June 30, 2008 (in thousands):
Distribution of final 2% ownership interest in FX Real Estate
and Entertainment Inc. $6,175
Accrued but unpaid Series B Convertible Preferred Stock Dividends 456
ckxe-g
SOURCE CKX, Inc.
Copyright (2009) PR Newswire. All Rights Reserved.
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