PRXI » Topics » Fiscal 2007 as Compared to Fiscal 2006

These excerpts taken from the PRXI 10-K filed May 7, 2008.
Fiscal 2007 as Compared to Fiscal 2006
 
During fiscal 2007, our revenue increased approximately 131% to $30,087,000 as compared to $13,041,000 in the year ended February 28, 2006, which we refer to as fiscal 2006. This increase was primarily attributable to an increase in exhibition revenue of approximately 137% to $28,916,000 during fiscal 2007 as compared to $12,217,000 for fiscal 2006. This increase in exhibition revenue reflects an increase in the number of locations of our directly managed Titanic exhibitions from five in the prior year period to seven in the current year. In addition, our five operating “Bodies...The Exhibition” and one “Bodies Revealed” exhibitions contributed significant revenue for fiscal 2007. During fiscal 2006 we had two operating “Bodies...The Exhibition” and one “Bodies Revealed” exhibitions. During fiscal 2007, our Titanic exhibitions contributed approximately 28% of our revenue and our “Bodies...The Exhibition” and “Bodies Revealed” exhibitions contributed approximately 72% of our revenue.
 
Merchandise and other revenue increased approximately 47% from $722,000 to $1,061,000, during fiscal 2006 as compared to fiscal 2007. This increase is attributable to an increase in the number of locations of our Titanic exhibitions with gift shops that sell our merchandise to seven as compared to five in the prior year period. Our sale of coal recovered from the Titanic increased to $110,000 from $102,000, or approximately 8%, during fiscal 2007 as compared to fiscal 2006.
 
We incurred exhibition costs of $7,707,000 and $2,672,000 for fiscal 2007 and 2006, respectively. Titanic exhibition costs primarily relate to costs directly associated with presenting our exhibitions, usually at museum venues for which we incur costs for advertising, marketing, promotion, and installation and removal of exhibitry and artifacts. Exhibition costs related to our anatomical exhibitions primarily consist of the rental costs of the specimens, as well as costs directly associated with presenting our own exhibitions, costs for advertising, marketing, promotion, operations and administration, installation and removal of exhibitry and specimens and venue rent. Exhibition costs as a percentage of exhibition revenues were 27% and 22%, respectively, for fiscal 2007 and 2006. We had an increase in exhibition costs during fiscal 2007 primarily as a result of an increase in our anatomical


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exhibits for which we incur rental costs for the specimens in each exhibition. We also had exhibition costs in the current fiscal year related to presenting our own anatomical exhibitions independently without JAM, where we incurred all related exhibition costs.
 
During fiscal 2007, our gross profit increased approximately 116% to $22,185,000 as compared to $10,257,000 in fiscal 2006. Gross profit was 74% and 79% of revenue for fiscal 2007 and 2006, respectively. This decrease in the gross profit percentage was principally attributable to an increase in the number of our independent anatomical exhibitions during fiscal 2007. When we present our own anatomical exhibitions without third-party participation, we incur all related exhibition costs, which further reduces our gross margin percentage. However, under our arrangement with JAM, JAM incurred the majority of the related exhibition costs and remitted our share of the exhibition profit to us, which ranged from 50/50 to 80/20 in our favor. When we present our anatomical exhibitions without third-party participation, there is no profit sharing and we retain up to 100% of the gross profit.
 
Our general and administrative expenses increased to $9,773,000 from $6,620,000, or approximately 48%, during fiscal 2007 as compared to fiscal 2006. This increase is primarily attributable to increased personnel necessary to organize, administer and manage our exhibitions. We also recorded additional non-cash charges in the form of stock compensation costs of approximately $2,241,000 during fiscal 2007. We fully charge our operations for stock options issued in the year such options are granted, subject to vesting schedules.
 
Our depreciation and amortization expenses increased $549,000 or 56% to $1,529,000 during fiscal 2007 as compared to $980,000 for fiscal 2006. This increase primarily reflects additional investments made in fixed assets for our exhibitions, primarily consisting of exhibitry. Depreciation expense was $770,000 and $395,000 during fiscal 2007 and 2006, respectively. In addition, amortization expense associated with amortization of exhibition licenses was $759,000 and $585,000 during fiscal 2007 and 2006, respectively.
 
We recorded a $350,000 charge for the settlement of a dispute related to commissions under an alleged agency agreement during fiscal 2007. This settlement requires us to make five installment payments of $70,000, which installment payments commenced June 2006 and continue every six months thereafter until June 2008.
 
In May 2001, we acquired ownership of the wreck of the Carpathia, which was sunk by a German torpedo during World War I off the coast of Ireland. On February 28, 2007, our wholly-owned subsidiary R.M.S. Titanic, Inc. entered into a sale agreement with Seaventures, Ltd. pursuant to which Seaventures acquired from the R.M.S. Titanic all of its ownership interest in the Carpathia for $3,000,000. We received $500,000 from Seaventures on February 28, 2007 and we received the remaining $2,500,000 from Seaventures on April 15, 2008. Also, on February 28, 2007, Seaventures purchased an option from us to present the first exhibition of objects recovered from the R.M.S. Carpathia together with certain of our Titanic artifacts. We received payment of $1,500,000 from Seaventures for the sale of this option on February 28, 2007.
 
We realized income from operations of $12,159,000 during fiscal 2007 as compared to income of $2,573,000 from operations in the prior year. This increase in income from operations was attributable to the increase in the number of our ongoing Titanic exhibitions and a greater contribution from an increase in the number of our ongoing “Bodies...The Exhibition” and “Bodies Revealed” exhibitions. As of February 28, 2007, we had thirteen individual exhibitions being presented (seven Titanic and six Bodies exhibitions), as compared to eight individual exhibitions as of February 28, 2006 (five Titanic and three Bodies exhibitions).
 
Interest income of $224,000 was primarily associated with interest earned on our bank cash balances during fiscal 2007. We incurred interest expense of $51,000 and $47,000 for fiscal 2007 and 2006, respectively. Interest expense primarily pertained to interest payments made by us under a shareholder loan of $500,000 that we incurred in 2004 that supplemented our capital needs as we transitioned to the direct management of an increasing number of our exhibitions. This loan was repaid in April 2006.
 
We realized net income before provision for income taxes of $12,369,000 for fiscal 2007 as compared to net income before provision for income taxes of $2,779,000 in the prior year period. Our provision for income taxes was $4,948,000 or 40% for fiscal 2007. We recorded a benefit for income taxes of $2,504,000 during fiscal 2006 relating to the realizability of our net operating loss carryforwards during fiscal 2007. We realized net income of $7,421,000 during fiscal 2007 as compared to net income of $5,283,000 in fiscal 2006.


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Basic income per common share for each of the years ended February 28, 2007 and 2006 was $0.27 and $0.22, respectively. The basic weighted average shares outstanding for each of the years ended February 28, 2007 and 2006 was 27,674,221 and 24,081,186, respectively. Diluted income per common share for each of the years ended February 28, 2007 and 2006 was $0.24 and $0.19, respectively. The diluted weighted average shares outstanding for the years ended February 28, 2007 and 2006 was 31,047,056 and 28,230,491, respectively.
 
Fiscal
2007 as Compared to Fiscal 2006



 



During fiscal 2007, our revenue increased approximately 131% to
$30,087,000 as compared to $13,041,000 in the year ended
February 28, 2006, which we refer to as fiscal 2006. This
increase was primarily attributable to an increase in exhibition
revenue of approximately 137% to $28,916,000 during fiscal 2007
as compared to $12,217,000 for fiscal 2006. This increase in
exhibition revenue reflects an increase in the number of
locations of our directly managed Titanic exhibitions from five
in the prior year period to seven in the current year. In
addition, our five operating “Bodies...The Exhibition”
and one “Bodies Revealed” exhibitions contributed
significant revenue for fiscal 2007. During fiscal 2006 we had
two operating “Bodies...The Exhibition” and one
“Bodies Revealed” exhibitions. During fiscal 2007, our
Titanic exhibitions contributed approximately 28% of our revenue
and our “Bodies...The Exhibition” and “Bodies
Revealed” exhibitions contributed approximately 72% of our
revenue.


 



Merchandise and other revenue increased approximately 47% from
$722,000 to $1,061,000, during fiscal 2006 as compared to fiscal
2007. This increase is attributable to an increase in the number
of locations of our Titanic exhibitions with gift shops that
sell our merchandise to seven as compared to five in the prior
year period. Our sale of coal recovered from the Titanic
increased to $110,000 from $102,000, or approximately 8%, during
fiscal 2007 as compared to fiscal 2006.


 



We incurred exhibition costs of $7,707,000 and $2,672,000 for
fiscal 2007 and 2006, respectively. Titanic exhibition costs
primarily relate to costs directly associated with presenting
our exhibitions, usually at museum venues for which we incur
costs for advertising, marketing, promotion, and installation
and removal of exhibitry and artifacts. Exhibition costs related
to our anatomical exhibitions primarily consist of the rental
costs of the specimens, as well as costs directly associated
with presenting our own exhibitions, costs for advertising,
marketing, promotion, operations and administration,
installation and removal of exhibitry and specimens and venue
rent. Exhibition costs as a percentage of exhibition revenues
were 27% and 22%, respectively, for fiscal 2007 and 2006. We had
an increase in exhibition costs during fiscal 2007 primarily as
a result of an increase in our anatomical





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exhibits for which we incur rental costs for the specimens in
each exhibition. We also had exhibition costs in the current
fiscal year related to presenting our own anatomical exhibitions
independently without JAM, where we incurred all related
exhibition costs.


 



During fiscal 2007, our gross profit increased approximately
116% to $22,185,000 as compared to $10,257,000 in fiscal 2006.
Gross profit was 74% and 79% of revenue for fiscal 2007 and
2006, respectively. This decrease in the gross profit percentage
was principally attributable to an increase in the number of our
independent anatomical exhibitions during fiscal 2007. When we
present our own anatomical exhibitions without third-party
participation, we incur all related exhibition costs, which
further reduces our gross margin percentage. However, under our
arrangement with JAM, JAM incurred the majority of the related
exhibition costs and remitted our share of the exhibition profit
to us, which ranged from 50/50 to 80/20 in our favor. When we
present our anatomical exhibitions without third-party
participation, there is no profit sharing and we retain up to
100% of the gross profit.


 



Our general and administrative expenses increased to $9,773,000
from $6,620,000, or approximately 48%, during fiscal 2007 as
compared to fiscal 2006. This increase is primarily attributable
to increased personnel necessary to organize, administer and
manage our exhibitions. We also recorded additional non-cash
charges in the form of stock compensation costs of approximately
$2,241,000 during fiscal 2007. We fully charge our operations
for stock options issued in the year such options are granted,
subject to vesting schedules.


 



Our depreciation and amortization expenses increased $549,000 or
56% to $1,529,000 during fiscal 2007 as compared to $980,000 for
fiscal 2006. This increase primarily reflects additional
investments made in fixed assets for our exhibitions, primarily
consisting of exhibitry. Depreciation expense was $770,000 and
$395,000 during fiscal 2007 and 2006, respectively. In addition,
amortization expense associated with amortization of exhibition
licenses was $759,000 and $585,000 during fiscal 2007 and 2006,
respectively.


 



We recorded a $350,000 charge for the settlement of a dispute
related to commissions under an alleged agency agreement during
fiscal 2007. This settlement requires us to make five
installment payments of $70,000, which installment payments
commenced June 2006 and continue every six months thereafter
until June 2008.


 



In May 2001, we acquired ownership of the wreck of the
Carpathia, which was sunk by a German torpedo during World War I
off the coast of Ireland. On February 28, 2007, our
wholly-owned subsidiary R.M.S. Titanic, Inc. entered into a sale
agreement with Seaventures, Ltd. pursuant to which Seaventures
acquired from the R.M.S. Titanic all of its ownership interest
in the Carpathia for $3,000,000. We received $500,000 from
Seaventures on February 28, 2007 and we received the
remaining $2,500,000 from Seaventures on April 15, 2008.
Also, on February 28, 2007, Seaventures purchased an option
from us to present the first exhibition of objects recovered
from the R.M.S. Carpathia together with certain of our Titanic
artifacts. We received payment of $1,500,000 from Seaventures
for the sale of this option on February 28, 2007.


 



We realized income from operations of $12,159,000 during fiscal
2007 as compared to income of $2,573,000 from operations in the
prior year. This increase in income from operations was
attributable to the increase in the number of our ongoing
Titanic exhibitions and a greater contribution from an increase
in the number of our ongoing “Bodies...The Exhibition”
and “Bodies Revealed” exhibitions. As of
February 28, 2007, we had thirteen individual exhibitions
being presented (seven Titanic and six Bodies exhibitions), as
compared to eight individual exhibitions as of February 28,
2006 (five Titanic and three Bodies exhibitions).


 



Interest income of $224,000 was primarily associated with
interest earned on our bank cash balances during fiscal 2007. We
incurred interest expense of $51,000 and $47,000 for fiscal 2007
and 2006, respectively. Interest expense primarily pertained to
interest payments made by us under a shareholder loan of
$500,000 that we incurred in 2004 that supplemented our capital
needs as we transitioned to the direct management of an
increasing number of our exhibitions. This loan was repaid in
April 2006.


 



We realized net income before provision for income taxes of
$12,369,000 for fiscal 2007 as compared to net income before
provision for income taxes of $2,779,000 in the prior year
period. Our provision for income taxes was $4,948,000 or 40% for
fiscal 2007. We recorded a benefit for income taxes of
$2,504,000 during fiscal 2006 relating to the realizability of
our net operating loss carryforwards during fiscal 2007. We
realized net income of $7,421,000 during fiscal 2007 as compared
to net income of $5,283,000 in fiscal 2006.





25





Table of Contents






Basic income per common share for each of the years ended
February 28, 2007 and 2006 was $0.27 and $0.22,
respectively. The basic weighted average shares outstanding for
each of the years ended February 28, 2007 and 2006 was
27,674,221 and 24,081,186, respectively. Diluted income per
common share for each of the years ended February 28, 2007
and 2006 was $0.24 and $0.19, respectively. The diluted weighted
average shares outstanding for the years ended February 28,
2007 and 2006 was 31,047,056 and 28,230,491, respectively.


 




This excerpt taken from the PRXI 10-K filed May 10, 2007.
Year Ended February 28, 2007 as Compared to Year Ended February 28, 2006
 
During the fiscal year ended February 28, 2007, our revenue increased approximately 131% to $30,087,000 as compared to $13,041,000 in the year ended February 28, 2006. This increase was primarily attributable to an increase in exhibition revenue of approximately 137% to $28,916,000 during the year ended February 28, 2007 as compared to $12,217,000 for the year ended February 28, 2006. This increase in exhibition revenue reflects an increase in the number of locations of our directly managed Titanic exhibitions from five in the prior year period to seven in the current year. In addition, our five operating “Bodies...The Exhibition” and one “Bodies Revealed” exhibitions contributed significant revenue for the year ended February 28, 2007. During the year ended February 28, 2006 we had two operating “Bodies...The Exhibition” and one “Bodies Revealed” exhibitions. During the


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year ended February 28, 2007, our Titanic exhibitions contributed approximately 28% of our revenue and our “Bodies...The Exhibition” and “Bodies Revealed” exhibitions contributed approximately 72% of our revenue.
 
Merchandise and other revenue increased approximately 47% from $722,000 to $1,061,000, during the year ended February 28, 2006 as compared to the year ended February 28, 2007. This increase is attributable to an increase in the number of locations of our Titanic exhibitions with gift shops that sell our merchandise to seven as compared to five in the prior year period. Our sale of coal recovered from the Titanic increased to $110,000 from $102,000, or approximately 8%, during the year ended February 28, 2007 as compared to the year ended February 28, 2006.
 
We incurred exhibition costs of $7,707,000 and $2,672,000 for the years ended February 28, 2007 and 2006, respectively. Titanic exhibition costs primarily relate to costs directly associated with presenting our exhibitions, usually at museum venues for which we incur costs for advertising, marketing, promotion and installation and removal of exhibitry and artifacts. Exhibition costs related to our anatomical exhibitions primarily consist of the rental costs of the specimens as well as, costs directly associated with presenting our own exhibitions, costs for advertising, marketing, promotion, operations and administration, installation and removal of exhibitry and specimens, and venue rent. Exhibition costs as a percentage of exhibition revenues were 27% and 22%, respectively, for the years ended February 28, 2007 and 2006. We had an increase in exhibition costs during the year ended February 28, 2007 primarily as a result of our anatomical exhibits for which we incur rental costs for the specimens in each exhibition. We also had exhibition costs in the current fiscal year related to presenting our own anatomical exhibitions independently without JAM, where we incurred all related exhibition costs.
 
During the year ended February 28, 2007, our gross profit increased approximately 116% to $22,185,000 as compared to $10,257,000 in the year ended February 28, 2006. Gross profit was 74% and 79% of revenue for the years ended February 28, 2007 and 2006, respectively. This decrease in the gross profit percentage was principally attributable to an increase in the number of our independent anatomical exhibitions during the year ended February 28, 2007. As we present our own anatomical exhibitions without third party participation, we will incur all related exhibition costs, which will further reduce our gross margin percentage. However, under the JAM arrangement, JAM incurred the majority of the related exhibition costs and remitted our share of the exhibition profit to us, which ranged from 50/50 to 80/20 in our favor. As we present more of our anatomical exhibitions without third party participation, there will be no profit sharing and we will retain up to 100% of the gross profit.
 
Our general and administrative expenses increased to $9,773,000 from $6,620,000, or approximately 48%, during the year ended February 28, 2007 as compared to the year ended February 28, 2006. This increase is primarily attributable to increased personnel necessary to organize, administer, and manage our exhibitions. We also recorded additional non-cash charges in the form of stock compensation costs of approximately $2,241,000 during the year ended February 28, 2007. We fully charge our operations for stock options issued in the year such options are granted, subject to vesting schedules.
 
Our depreciation and amortization expenses increased $549,000 or 56% to $1,529,000 during the year ended February 28, 2007 as compared to $980,000 for the year ended February 28, 2006. This increase primarily reflects additional investments made in fixed assets for our exhibitions, primarily consisting of exhibitry. Depreciation expense was $770,000 and $395,000 during the years ended February 28, 2007 and 2006, respectively. In addition, amortization expense associated with amortization of exhibition licenses was $759,000 and $585,000 during the years ended February 28, 2007 and 2006, respectively.
 
We recorded a $350,000 charge for the settlement of a dispute related to commissions under an alleged agency agreement during the year ended February 28, 2007. This settlement requires us to make five installment payments of $70,000, which installment payments commenced June 2006 and continue every six months thereafter until June 2008.
 
On February 28, 2007, our wholly-owned subsidiary RMS Titanic, Inc. entered into a sale agreement with Seaventures Ltd. pursuant to which Seaventures Ltd. acquired all of its ownership interest in the RMS Carpathia for $3,000,000. Of such amount, $500,000 was paid to us on the date the sale agreement was entered into, with the balance of the purchase price being due and payable by Seaventures Ltd. to the Company on or before February 29, 2008. We recorded a gain on the sale of artifacts of $1,626,000 as a result of this sale. Also, on February 28, 2007,


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Seaventures Ltd. purchased an option from the Company to present the first exhibition of objects recovered from the RMS Carpathia together with certain of the Company’s RMS Titanic artifacts. The Company received payment of $1,500,000 from Seaventures Ltd. for the sale of this option. The principal of Seaventures Ltd., Joseph Marsh, is also a holder of more than 5% of our common stock. The above referenced agreements were negotiated by us on an arm’s length basis.
 
We realized income from operations of $12,159,000 during the year ended February 28, 2007 as compared to income of $2,573,000 from operations in the prior year. We attribute this increase in income from operations to the increase in the number of our ongoing Titanic exhibitions and a greater contribution from an increase in the number of our ongoing “Bodies...The Exhibition” and “Bodies Revealed” exhibitions. As of February 28, 2007, we had 13 individual exhibitions being presented (seven Titanic and six Bodies exhibitions), as compared to eight individual exhibitions in the same prior year period (five Titanic and three Bodies exhibitions).
 
Interest income of $224,000 was primarily associated with interest earned on our bank cash balances during the year ended February 28, 2007. We incurred interest expense of $51,000 and $47,000 for the years ended February 28, 2007 and 2006. Interest expense primarily pertained to interest payments made by us under a shareholder loan of $500,000 that we incurred in 2004 that supplemented our capital needs as we transitioned to the direct management of an increasing number of our exhibitions. This loan was repaid in April 2006.
 
We realized net income before provision for income taxes of $12,369,000 for the year ended February 28, 2007 as compared to net income before provision for income taxes of $2,779,000 in the prior year period. Our provision for income taxes was $4,948,000 or 40% for the year ended February 28, 2007. We recorded a benefit for income taxes of $2,504,000 during the year ended February 28, 2006 relating to the realizability of our net operating loss carryforwards during our fiscal year ended February 28, 2007. We realized net income of $7,421,000 during the year ended February 28, 2007 as compared to net income of $5,283,000 in the prior year.
 
Basic and diluted income before provision for income taxes per common share for the year ended February 28, 2007 was $0.45 and $0.40, respectively. Basic and diluted income before provision for income taxes per common share for the year ended February 28, 2006 was $0.12 and $0.10, respectively. We believe that basic and diluted income before provision for income taxes is relevant for comparability purposes since there was a provision for income taxes in the year ended February 28, 2007 and a benefit for income taxes in the year ended February 28, 2006.
 
Basic income per common share for each of the years ended February 28, 2007 and 2006 was $0.27 and $0.22, respectively. The basic weighted average shares outstanding for each of the years ended February 28, 2007 and 2006 was 27,674,221 and 24,081,186, respectively. Diluted income per common share for each of the years ended February 28, 2007 and 2006 was $0.24 and $0.19, respectively. The diluted weighted average shares outstanding for the years ended February 28, 2007 and 2006 was 31,047,056 and 28,230,491, respectively.
 
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