Start player for Always Elvis Radio

News createt: 11-05-2010

CKX 2010 First Quarter Results


Bookmark and Share

 

First Quarter Results Decline Due Primarily to Prior Year Non-Recurring Revenue and 2010 Restructuring Charges
CKX, Inc. (CKXE 5.76, +0.18, +3.23%)  today reported financial results for its 2010 first quarter.
Revenue for the first quarter of 2010 declined $14.9 million, or 18.3%, to $66.6 million as compared to the prior year period. The decline in revenue is largely due to $10.0 million of non-recurring revenue in 2009 from terminated license agreements at the Presley Business and the Ali Business. Revenue at 19 Entertainment declined $7.9 million due to $12.1 million in revenue from a one-time limited run television program in 2009, offset by a $4.4 million increase in American Idol revenue. Excluding the prior year terminated license agreement, revenue at the Presley Business increased $2.7 million due to higher licensing revenue and royalty revenue from the Viva ELVIS Cirque du Soleil show in Las Vegas, which opened in February. Excluding the prior year terminated license agreement, revenue at the Ali Business increased $0.3 million due to higher licensing fees.
OIBDAN declined to $7.7 million in 2010 from $28.4 million in 2009. This decline was primarily a result of $6.4 million of costs incurred in connection with our deal with Ryan Seacrest, $2.7 million of costs related to the new profit-sharing arrangement with Simon Fuller, $1.5 million of increased development spending associated with our new multimedia project If I Can Dream, which launched in March, and an $11.8 million net negative impact of non-recurring items in 2010 as against 2009. The primary non-recurring items include a provision for severance and other restructuring-related charges at 19 Entertainment of $5.6 million in the 2010 quarter and the $10.0 million in non-recurring revenue recognized in 2009 from the terminated license agreements referenced above. Excluding these and certain other non-recurring items, OIBDAN declined from $22.2 million to $13.4 million.
Commenting on the results, Thomas P. Benson, Chief Financial Officer, said, "The first quarter marked a number of important developments for the company including entering into a new long-term agreement with Simon Fuller to continue as the creative force behind American Idol and So You Think You Can Dance, the gala opening of Viva ELVIS in Las Vegas and the launch of If I Can Dream. American Idol has continued its reign as the #1 rated show on network television for a seventh consecutive season. We are also nearing completion of our restructuring of 19 Entertainment which is increasing our focus on our hit properties while significantly reducing spending on new development projects and general overhead. Although our first quarter results were negatively impacted by restructuring costs, the benefit of $15 million in annual cost savings that we are currently implementing will positively impact our operating results beginning in the third quarter of 2010."
The Company reported a loss on its profit participation in the Viva ELVIS Cirque du Soleil show of $0.5 million in 2010 due to certain one-time costs associated with the opening of the show in February, a limited number of performances in the quarter and initial weaker than expected ticket sales in large part due to low occupancy rates at the hotels within CityCenter where the theater is located. This loss is reflected in equity in earnings (losses) of affiliates in the Company's statement of operations.
The Company reported an operating loss of $3.3 million in 2010 compared to operating income of $23.6 million in 2009. Excluding impairment charges of $4.9 million in 2010 related to the write-down of a rental property at Graceland and a goodwill write-down of a business that 19 Entertainment is closing, operating income declined $22.0 million primarily for the reasons noted above.
Net loss attributable to CKX, Inc. was $5.0 million in 2010, as compared to net income attributable to CKX, Inc. of $12.1 million in the first quarter of 2009 and diluted loss per common share was $0.05 in 2010 compared to $0.13 of diluted income per share in the first quarter of 2009.
Segment Results
The following table summarizes segment operating results for the three months ended March 31, 2010 and 2009 (in millions):
                         March 31,      March 31,
                           2010           2009         Change
                       -------------  -------------  ----------
Revenue
  19 Entertainment       $ 53.4         $ 61.3       (12.9 )%
  Presley Business         12.3           18.6       (33.7 )%
  Ali Business              0.9            1.6       (43.8 )%
                           ----           ----       ----- ---
         Total           $ 66.6         $ 81.5       (18.2 )%
                       === ====       === ====       ===== ===
                         March 31,      March 31,
                           2010           2009         Change
                       -------------  -------------  ----------
OIBDAN
19 Entertainment (1)     $  9.5         $ 23.9       (60.4 )%
  Presley Business          2.7           10.3       (73.4 )%
  Ali Business (2)          0.5           (0.3 )       N/A
  Corporate (3)            (4.9 )         (5.5 )      10.6 %
                           ---- ---       ---- ---   ----- ---
         Total           $  7.8         $ 28.4       (72.4 )%
                       === ====       === ====       ===== ===
 
                              March 31,      March 31,
                                2010           2009         Change
                           --------------  -------------  -----------
Operating Income (Loss)
19 Entertainment (1) (4)     $   2.8         $ 20.6        (86.2 )%
  Presley Business (4)          (1.2 )          9.0          N/A
  Ali Business (2)               0.5           (0.3 )        N/A
  Corporate (3)                 (5.4 )         (5.7 )        4.2 %
                               ----- ---       ---- ---   ------ ---
     Total                     ($3.3 )       $ 23.6       (114.0 )%
                               ===== ===   === ====       ====== ===
(1) 2010 OIBDAN includes $5.6 million provision for severance and other restructuring-related costs. 2010 operating income includes $6.1 million provision for severance and other restructuring-related costs. Operating income includes a charge of $0.5 million for non-cash compensation.
(2) 2009 includes $1.4 million provision for severance and other restructuring-related costs.
(3) 2009 includes $1.5 million in acquisition-related costs.
(4) 2010 includes $2.6 million non-cash impairment charge at the Presley Business and $2.3 million non-cash impairment charge at 19 Entertainment.
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 (loss) under U.S. GAAP (in millions) for the three months ended March 31, 2010 and 2009:
                                   March 31,      March 31,
                                     2010           2009
                                --------------  -------------
OIBDAN                            $   7.8         $ 28.4
Depreciation and amortization        (5.1 )         (4.5 )
Impairment charges                   (4.9 )            -
Non-cash compensation                (1.1 )         (0.3 )
                                    ----- ---       ---- ---
Operating income (loss)             ($3.3 )       $ 23.6
                                    ===== ===   === ====
Cash and Borrowing
The Company had total cash on hand of $55.1 million as of March 31, 2010. Outstanding debt at December 31, 2009 totaled $100.6 million, including the current portion of $0.5 million.

 

First Quarter Results Decline Due Primarily to Prior Year Non-Recurring Revenue and 2010 Restructuring Charges
CKX, Inc. (CKXE 5.76, +0.18, +3.23%)  today reported financial results for its 2010 first quarter.


Revenue for the first quarter of 2010 declined $14.9 million, or 18.3%, to $66.6 million as compared to the prior year period. The decline in revenue is largely due to $10.0 million of non-recurring revenue in 2009 from terminated license agreements at the Presley Business and the Ali Business.

 Revenue at 19 Entertainment declined $7.9 million due to $12.1 million in revenue from a one-time limited run television program in 2009, offset by a $4.4 million increase in American Idol revenue. Excluding the prior year terminated license agreement, revenue at the Presley Business increased $2.7 million due to higher licensing revenue and royalty revenue from the Viva ELVIS Cirque du Soleil show in Las Vegas, which opened in February. Excluding the prior year terminated license agreement, revenue at the Ali Business increased $0.3 million due to higher licensing fees.


OIBDAN declined to $7.7 million in 2010 from $28.4 million in 2009. This decline was primarily a result of $6.4 million of costs incurred in connection with our deal with Ryan Seacrest, $2.7 million of costs related to the new profit-sharing arrangement with Simon Fuller, $1.5 million of increased development spending associated with our new multimedia project If I Can Dream, which launched in March, and an $11.8 million net negative impact of non-recurring items in 2010 as against 2009.

The primary non-recurring items include a provision for severance and other restructuring-related charges at 19 Entertainment of $5.6 million in the 2010 quarter and the $10.0 million in non-recurring revenue recognized in 2009 from the terminated license agreements referenced above. Excluding these and certain other non-recurring items, OIBDAN declined from $22.2 million to $13.4 million.

Commenting on the results, Thomas P. Benson, Chief Financial Officer, said, "The first quarter marked a number of important developments for the company including entering into a new long-term agreement with Simon Fuller to continue as the creative force behind American Idol and So You Think You Can Dance, the gala opening of Viva ELVIS in Las Vegas and the launch of If I Can Dream. American Idol has continued its reign as the #1 rated show on network television for a seventh consecutive season. We are also nearing completion of our restructuring of 19 Entertainment which is increasing our focus on our hit properties while significantly reducing spending on new development projects and general overhead. Although our first quarter results were negatively impacted by restructuring costs, the benefit of $15 million in annual cost savings that we are currently implementing will positively impact our operating results beginning in the third quarter of 2010."


The Company reported a loss on its profit participation in the Viva ELVIS Cirque du Soleil show of $0.5 million in 2010 due to certain one-time costs associated with the opening of the show in February, a limited number of performances in the quarter and initial weaker than expected ticket sales in large part due to low occupancy rates at the hotels within CityCenter where the theater is located. This loss is reflected in equity in earnings (losses) of affiliates in the Company's statement of operations.

 
The Company reported an operating loss of $3.3 million in 2010 compared to operating income of $23.6 million in 2009. Excluding impairment charges of $4.9 million in 2010 related to the write-down of a rental property at Graceland and a goodwill write-down of a business that 19 Entertainment is closing, operating income declined $22.0 million primarily for the reasons noted above.


Net loss attributable to CKX, Inc. was $5.0 million in 2010, as compared to net income attributable to CKX, Inc. of $12.1 million in the first quarter of 2009 and diluted loss per common share was $0.05 in 2010 compared to $0.13 of diluted income per share in the first quarter of 2009.
 

Segment Results
The following table summarizes segment operating results for the three months ended March 31, 2010 and 2009 (in millions):

 

                        March 31,      March 31,
                           2010           2009         Change
                       -------------  -------------  ----------
Revenue
  19 Entertainment       $ 53.4         $ 61.3       (12.9 )%
  Presley Business         12.3           18.6       (33.7 )%
  Ali Business              0.9            1.6       (43.8 )%
                           ----           ----       ----- ---
         Total           $ 66.6         $ 81.5       (18.2 )%
                       === ====       === ====       ===== ===
                         March 31,      March 31,
                           2010           2009         Change
                       -------------  -------------  ----------
OIBDAN
19 Entertainment (1)     $  9.5         $ 23.9       (60.4 )%
  Presley Business          2.7           10.3       (73.4 )%
  Ali Business (2)          0.5           (0.3 )       N/A
  Corporate (3)            (4.9 )         (5.5 )      10.6 %
                           ---- ---       ---- ---   ----- ---
         Total           $  7.8         $ 28.4       (72.4 )%
                       === ====       === ====       ===== ===




                              March 31,      March 31,
                                2010           2009         Change
                           --------------  -------------  -----------
Operating Income (Loss)
19 Entertainment (1) (4)     $   2.8         $ 20.6        (86.2 )%
  Presley Business (4)          (1.2 )          9.0          N/A
  Ali Business (2)               0.5           (0.3 )        N/A
  Corporate (3)                 (5.4 )         (5.7 )        4.2 %
                               ----- ---       ---- ---   ------ ---
     Total                     ($3.3 )       $ 23.6       (114.0 )%
                               ===== ===   === ====       ====== ===

 

 

(1) 2010 OIBDAN includes $5.6 million provision for severance and other restructuring-related costs. 2010 operating income includes $6.1 million provision for severance and other restructuring-related costs. Operating income includes a charge of $0.5 million for non-cash compensation.
(2) 2009 includes $1.4 million provision for severance and other restructuring-related costs.
(3) 2009 includes $1.5 million in acquisition-related costs.
(4) 2010 includes $2.6 million non-cash impairment charge at the Presley Business and $2.3 million non-cash impairment charge at 19 Entertainment.

 
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.

Cash and Borrowing

The Company had total cash on hand of $55.1 million as of March 31, 2010. Outstanding debt at December 31, 2009 totaled $100.6 million, including the current portion of $0.5 million.