WWE loses $1.6 million in second quarter

[Guest oldschoolwrestling]

from 411.com

WWE releases the following earlier today. The second quarter was not a good one for WWE as they actually ended up with a LOSS of $1.6 million.

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World Wrestling Entertainment, Inc. Reports Second Fiscal Quarter Results

 

STAMFORD, Conn.--(BUSINESS WIRE)--Nov. 21, 2002--World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its second fiscal quarter ended October 25, 2002.

 

Total revenues were $92.8 million as compared to $98.2 million in the prior year. The net loss for the quarter was $1.6 million versus net income of $4.8 million in the second fiscal quarter last year. In the current quarter, the Company recorded a $5.9 million charge ($3.7 million after-tax or $0.05 per common share), for the settlement of previously disclosed litigation with William Morris Agency, Inc. The net loss per common share was $0.02 for the quarter as compared to earnings per common share of $0.07 last year.

 

Earnings before interest, taxes, depreciation and amortization, and the impact of the William Morris Agency, Inc. settlement (EBITDA) were $7.2 million versus $8.4 million last year.

 

"We are continuing our rebuilding phase to strengthen television ratings, live event attendance, and pay-per-view buys," said Linda E. McMahon, Chief Executive Officer. "Our primary strategy is to continue to focus on developing new talent and compelling storylines, since history has proven that our success in developing new talent, whom we creatively interweave into our story lines, has reinvigorated the WWE brand time and time again. The increase in our talent roster and the emergence of new talent are also key to both our brand extension and international expansion strategies."

 

"In the international arena, our success is ahead of our expectations," continued Mrs. McMahon. "So far in calendar year 2002, we have conducted four international tours and have played to audiences totaling nearly 180,000 fans. This week we are in India and will perform three live events in New Delhi, Mumbai, and Bangalore. Based on the enthusiastic reaction that we witnessed from the fans who attended our recent tours, we accelerated our plans to launch future live event tours and have scheduled eight international tours for calendar year 2003 in Europe, Asia, Australia, Africa, and South America," said Mrs. McMahon.

 

"During the quarter, we extended our partnership with Total Sports Asia and inked new deals encompassing our licensing, home video/DVD, and publishing businesses. We are renewing our television contract with J Sky Sports in Japan which will result in a significant increase in television rights fees. The successful expansion of our international live event tours, in conjunction with the subsequent introduction of a wide array of WWE branded merchandise, ensures that we now have all of the critical elements in place to further increase our penetration in markets across the globe," added Mrs. McMahon.

 

Second Quarter Results

 

Total revenues were $92.8 million for the quarter versus $98.2 million in the prior year quarter.

 

Live and Televised Entertainment

 

Total revenues for Live and Televised businesses were $70.7 million as compared to $72.7 million in the same period last year.

 

-- Live Event revenues increased 12% to $18.1 million.

 

-- There were 87 events, including 3 international events, during the quarter as compared to 55 domestic events during the same period last year.

 

-- Attendance for the quarter was approximately 458,000 as compared to 472,000 in the prior year quarter. The current quarter includes attendance of approximately 72,000 from our international live event tours.

 

-- The average ticket price increased approximately 15% to $39.05 primarily attributable to the impact of higher international ticket prices which averaged approximately $59.00 for the quarter.

 

-- Pay-Per-View revenues declined 14% to $19.0 million from $22.2 million in the prior year quarter.

 

-- Total domestic pay-per-view buys for the quarter were 1.1 million as compared to 1.5 million in the prior year quarter.

 

-- The retail price of our domestic pay-per-views increased 17% from $29.95 to $34.95 effective April 2002.

 

-- Television Rights Fees revenues increased slightly to $13.8 million due to the executive producer fee that we received from the upcoming feature film, Helldorado, starring The Rock™.

 

-- Television Advertising revenues were $19.7 million as compared to $20.9 million last year. This decrease was principally due to the impact of lower television ratings and a decrease in sponsorship revenues in the quarter.

 

Branded Merchandise

 

Total revenues were $22.1 million for the quarter versus $25.5 million last year.

 

-- Licensing revenues were $5.2 million as compared to $9.2 million in the prior year quarter.

 

-- The variance was impacted by the timing of cash receipts of $2.0 million which were received and recorded in the prior year second quarter.

 

-- Revenues from our book publishing and toy categories declined versus the prior year quarter and were offset in part by increased revenues from SmackDown! Records reflecting the recent release of WWE Forceable Entry.

 

-- Merchandise revenues decreased 4% to $5.3 million. The increase in merchandise sold at our venues was more than offset by declines in WWE Shopzone.com and catalog revenues.

 

-- Publishing revenues increased 12% to $3.9 million primarily due to the increase in the number of special magazine titles and an increase in the cover price of Raw Magazine.

 

-- Home video revenues increased 37% to $4.5 million from $3.3 million.

 

-- The total number of units sold increased 9%.

 

-- The number of DVD units sold, which wholesale for approximately $5.00 more than a VHS unit, accounted for approximately 72% of total units sold compared to approximately 31% in the prior year quarter.

 

-- According to Billboard Magazine, 6 of our home videos ranked among the 10 best selling home videos in the "Recreational Sports" category as of November 16, 2002.

 

-- The World™revenues declined 32% to $2.0 million due to decreased traffic in the restaurant and bar at the venue.

 

Profit Contribution

 

Total profit contribution for the quarter was $28.6 million as compared to $35.4 million in the prior year quarter. Total profit contribution margin decreased to 31% from 36%.

 

The profit contribution margin for the Live and Televised businesses was approximately 30% versus 36% in the second quarter last year principally reflecting the decline in pay-per-view revenues and the charge of $3.5 million for the William Morris Agency, Inc. settlement.

 

The profit contribution margin for the Branded Merchandise businesses was 34% as compared to 37% during the same period last year primarily due to the decline in revenues at The World.™

 

Selling, General and Administrative Expenses

 

SG&A expenses for the quarter were $27.3 million as compared to $27.0 million last year. SG&A for the quarter includes approximately $2.4 million associated with the William Morris Agency, Inc. settlement. Excluding the settlement and the absence of the expenses associated with the WWE Hotel and Casino, SG&A expenses for the quarter decreased approximately 6% reflecting the positive impact of the Company's initiatives to reduce and realign its operating budgets.

 

Six Months ended October 25, 2002

 

Total revenues for the six-month period ended October 25, 2002 were $180.9 million versus $188.9 million last year. Net income was $0.9 million and earnings per common share was $0.01 compared to $16.8 million and $0.23 respectively, in the prior fiscal year. The prior year results included a $5.8 million after-tax gain, or $0.08 per common share, associated with the revaluation and sale of certain equity instruments.

 

Live and Televised Entertainment

 

Total revenues for the Live and Televised businesses were $138.5 million as compared to $145.1 million in the same period last year.

 

-- Live Event revenues increased 20% to $37.0 million.

 

-- There were 174 events, including 7 international events year-to-date. This compares to 98 events, including 1 international event, during the same period last year.

 

-- Attendance increased 8% to approximately 958,000. This includes attendance of 109,000 from our international live event tours in the current year and approximately 16,000 in the prior year.

 

-- The average ticket price increased approximately 11% to $38.50 primarily due to the impact of higher international ticket prices in the current year.

 

-- The average ticket price for international events in the current year was approximately $59.30.

 

-- Pay-Per-View revenues declined 20% to $38.2 million from $47.6 million in the prior year.

 

-- Total domestic pay-per-view buys were 2.3 million as compared to 3.1 million in the prior year.

 

-- Television Rights Fees revenues increased slightly to $26.7 million primarily due to our Divas Undressed special that aired on TNN.

 

-- Television Advertising revenues were $36.5 million as compared to $40.4 million last year. This decrease was principally due to the impact of lower television ratings and decreased sponsorship revenues in the current year.

 

Branded Merchandise

 

Total revenues were $42.4 million versus $43.8 million last year.

 

-- Licensing revenues were $8.4 million as compared to $10.4 million in the prior year. Strength in the video game software category was more than offset by declines in our book publishing and toy categories.

 

-- Merchandise revenues increased 11% to $11.6 million. The growth in revenues was primarily due to an increase in per capita spending at our live events to $8.78 from $7.87 in the prior year period.

 

-- Publishing revenues increased slightly to $7.8 million primarily due to the increase in the number of special magazine titles and an increase in the cover price of Raw Magazine.

 

-- Home video revenues increased 32% to $8.0 million from $6.1 million due to a 20% increase in the number of units sold. The number of units sold in DVD format accounted for about 62% of total units sold versus approximately 26% in the prior year.

 

-- The World revenues declined 32% to $4.3 million due to decreased traffic in the restaurant and bar at the venue.

 

Profit Contribution

 

Total profit contribution for the six months ended October 25, 2002 was $58.2 million as compared to $67.8 million in the prior year. Total profit contribution margin decreased to 32% from 36%.

 

The profit contribution margin for the Live and Televised businesses was approximately 32% versus 37% in the prior year primarily reflecting the decline in pay-per-view revenues and the William Morris Agency, Inc. settlement.

 

The profit contribution margin for the Branded Merchandise businesses was 34% versus 32% in the prior year primarily due to increases in home video revenues and the positive impact on expenses arising from the expiration in December 2001 of a prior licensing agreement with National Hot Rod Association (NHRA).

 

Selling, General and Administrative Expenses

 

SG&A expenses decreased approximately 2% to $51.2 million as compared to $52.3 million last year. The decrease was due to the absence of expenses associated with the WWE Hotel and Casino and the impact of the $1.1 million net gain from the settlements of outstanding litigation in the current year. Increases in advertising and promotion expenses were partially offset by the impact of the Company's expense reduction initiatives.

 

Balance Sheet

 

Total assets as of quarter end were $445.7 million which included $263.9 million in cash, cash equivalents and short-term investments and $49.0 million in receivables. Long-term debt, including the current portion, as of quarter end was $9.6 million and shareholders' equity totaled $361.1 million.

 

Capital expenditures for the six months ended totaled approximately $6.9 million.

 

World Wrestling Entertainment, Inc.

 

Consolidated Statements of Operations

 

(dollars in thousands, except per share data)

 

(Unaudited)

 

 

Three Months Ended Six Months Ended

 

October 25, October 26, October 25, October 26,

 

2002 2001 2002 2001

 

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Net revenues $92,768 $98,208 $180,915 $188,877

 

 

 

Cost of revenues (a) 64,189 62,835 122,708 121,101

 

Selling, general

 

and

 

administrative

 

expenses (a) 27,252 27,017 51,155 52,273

 

Depreciation and

 

amortization 2,915 2,645 5,729 4,885

 

--------------------------------------------------

 

 

 

Operating (loss)

 

income (1,588) 5,711 1,323 10,618

 

 

 

Interest (expense)

 

income, net and

 

other income

 

(loss), net (b) (918) 2,105 11 16,645

 

--------------------------------------------------

 

 

 

(Loss) income

 

before income

 

taxes (2,506) 7,816 1,334 27,263

 

 

 

(Benefit)

 

provision for

 

income taxes (902) 2,975 410 10,430

 

--------------------------------------------------

 

 

 

Net (loss) income (1,604) 4,841 924 16,833

 

==================================================

 

 

 

(Loss) earnings

 

per share - Basic

 

and Diluted $(0.02) $0.07 $0.01 $0.23

 

==================================================

 

 

 

Weighted average

 

common and common

 

equivalent

 

shares:

 

 

 

Basic 70,407,229 72,837,879 70,749,703 72,884,339

 

==================================================

 

Diluted 70,407,229 72,837,879 70,749,703 72,884,588

 

==================================================

 

 

 

(a) Included in the results for the three and six months ended

 

October 25, 2002 was the impact of the Company's settlement of

 

litigation with William Morris, Inc., of which $3.5 million

 

was recorded to Cost of revenues and $2.4 million was recorded

 

to Selling, general and administrative expenses.

 

 

 

(b) Included in the results for the six months ended October 26,

 

2001 was a $9.3 million gain ($5.8 million, net of tax)

 

associated with the revaluation and sale of certain equity

 

instruments.

[Guest RavishingRickRudo]

This should tell them to develop more DVD's - fans want em.

 

"We are continuing our rebuilding phase to strengthen television ratings, live event attendance, and pay-per-view buys," said Linda E. McMahon, Chief Executive Officer. "Our primary strategy is to continue to focus on developing new talent and compelling storylines, since history has proven that our success in developing new talent, whom we creatively interweave into our story lines, has reinvigorated the WWE brand time and time again. The increase in our talent roster and the emergence of new talent are also key to both our brand extension and international expansion strategies."

 

-Fuck, I wish just once a shareholder or reporter would call her on this.

[Guest Brian]

Geez, they would have made a profit if they would have written off that contract purchases from Morris as liabilities. They would have turned 2.1 million, which is pretty good considering they were just in the red.