CKX, Inc. Reports Fourth Quarter and Full Year 2009 Results
FOURTH QUARTER REVENUE INCREASES 113.7% AND ADJUSTED OIBDAN IMPROVES TO $6.7 MILLION FROM PRIOR YEAR LOSS OF $5.3 MILLION
CONFERENCE CALL SCHEDULED TO DISCUSS RESULTS
NEW YORK, March 16 /PRNewswire-FirstCall/ -- CKX, Inc. (Nasdaq: CKXE) today reported financial results for its fourth quarter and full year ended December 31, 2009.
Revenue for the fourth quarter of 2009 grew $42.5 million, or 113.7%, to $79.9 million as compared to the prior year period. Operating income before depreciation, amortization and non-cash stock compensation ("OIBDAN") declined to $6.5 million from $10.3 million in the prior year period. The decline in OIBDAN reflects an unfavorable swing between the 2009 and 2008 periods of $10.0 million in non-cash foreign exchange gains and losses and the prior year's net gain of $7.7 million from the terminated merger, which was partially offset by a decline in acquisition-related costs of $2.2 million in 2009. Excluding these items, adjusted OIBDAN in the fourth quarter of 2009 was $6.7 million as compared to a loss of $5.3 million in 2008.
For the full year, revenue grew $40.2 million, or 13.9%, to $328.3 million in 2009 compared to 2008. OIBDAN declined to $67.5 million in 2009 from $96.7 million in 2008. The 2009 results include $10.0 million of non-recurring revenue from terminated license agreements, an unfavorable swing in non-cash foreign exchange gains and losses of $20.0 million, as well as the unfavorable impact of $9.9 million of unusual and one-time items. Adjusting for the non-recurring revenue, foreign exchange gains/losses and unusual and one-time items, OIBDAN declined from $77.3 million to $68.0 million.
Commenting on the results, Robert F.X. Sillerman, Chairman and CEO said, "The strong fourth quarter results reflect the continuing strength of our core brands. For the full year we were able to generate significant revenue growth and experienced only modest declines in adjusted OIBDAN despite the reductions in advertising and promotion spending arising from the global recession and our increase in development spending. We remain optimistic that our 2010 results will benefit from strong ratings for the current season of American Idol; last month's opening of Viva ELVIS, our Elvis-themed Cirque du Soleil show in Las Vegas; and our new multimedia project, If I Can Dream, which launched on March 2, 2010. Our recent decision to enter into a new long-term producer agreement with Simon Fuller, together with our announcement that we will be restructuring 19 Entertainment to focus more clearly on our hit properties American Idol and So You Think You Can Dance as well as If I Can Dream, will also drive improved performance by significantly reducing unproductive development spending and related overhead."
Results for the Three Months Ended December 31, 2009
Revenue for the Company grew $42.5 million, or 113.7%, to $79.9 million in the fourth quarter as compared to the prior year due to an increase of $42.1 million at 19 Entertainment. $36.8 million of the increase was due to an additional broadcast series of So You Think You Can Dance which aired in the fall season. Presley Business revenue increased $0.6 million and the Ali Business revenue declined $0.2 million.
OIBDAN declined to $6.5 million in the fourth quarter of 2009 from $10.3 million in the fourth quarter of 2008. The decrease in OIBDAN as compared to the prior year period primarily reflects an unfavorable swing of $10.0 million in non-cash foreign exchange gains and losses, 2008's net benefit of $7.7 million related to the gain on the terminated merger, partially offset by a decline in acquisition-related costs of $2.2 million which more than offset the impact of the increase in revenue. 19 Entertainment OIBDAN declined $0.2 million as the $10.0 million reduction in foreign exchange gains offset the contribution from the additional season of So You Think You Can Dance. Presley Business OIBDAN increased $2.2 million due to higher licensing revenue and cost management. Adjusting for the foreign exchange gains and losses, the merger impact and the decline in acquisition-related costs, OIBDAN increased to $6.7 million in 2009 from a loss of $5.3 million in 2008.
Operating loss was $1.6 million in the three months ended December 31, 2009, as compared to an operating loss of $31.1 million for the same period in 2008. Excluding impairment charges in both years, operating income was $0.9 million and $4.6 million for the three months ended December 31, 2009 and 2008, respectively.
Net loss attributable to CKX, Inc. was $4.5 million and $14.7 million for the three months ended December 31, 2009 and 2008, respectively. Diluted loss per common share was $0.05 and $0.15 for the three months ended December 31, 2009 and 2008, respectively.
Results for the Year Ended December 31, 2009
For the year ended December 31, 2009, revenue increased $40.2 million, or 13.9%, to $328.3 million from $288.1 million in 2008. Revenue for 19 Entertainment increased $34.3 million due to an additional broadcast series of So You Think You Can Dance, which aired in the fall season, and other additional television programming which was partially offset by declines in American Idol-related revenue. The decrease in revenue attributable to American Idol was due to reduced foreign syndication revenue and weaker on-air, off-air and tour 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 terminated license agreements to develop real estate projects around these brands. Excluding the non-recurring revenue from the terminated license agreements, revenue declined $3.3 million at the Presley Business as an increase in attendance at Graceland of 1.2% and an increase in visitor spending of 2.4% over the prior year was more than offset by declines in royalty and licensing revenue due primarily to prior year sales of a limited edition collectible DVD box set of Elvis movies and the impact of general declines in consumer spending amid the economic downturn. Excluding the non-recurring revenue from the terminated license agreements, revenue declined $0.8 million at the Ali Business due to lower signed memorabilia sales offset in part by an increase in licensing revenue.
OIBDAN declined to $67.5 million in 2009 from $96.7 million in 2008. The decrease in OIBDAN as compared to the prior year reflects a decline in American Idol syndication, sponsorship and management revenue, which was partially offset by the recognition of the $10.0 million in fees from the terminated license agreements, the additional season of So You Think You Can Dance and additional television programming. Also unfavorably impacting OIBDAN in the current year was an unfavorable swing in non-cash foreign exchange gains and losses of $20.0 million; the write-off of $0.9 million of previously capitalized costs related to the proposed re-development of Graceland; a $1.4 million restructuring charge at the Ali Business; $0.8 million in incremental payroll-related taxes incurred due to the redemption of redeemable restricted common stock; an increase in acquisition-related costs of $0.3 million; and $0.7 million in merger and distribution-related costs as compared to a gain of $5.8 million in 2008. Adjusting for the unusual and one-time items noted above of $9.9 million, the swing in non-cash foreign exchange gains and losses and the non-recurring revenue from the terminated license agreement, OIBDAN declined to $68.0 million in 2009 from $77.3 million in 2008.
Operating income was $44.2 million in 2009 compared to $36.9 million in 2008. Excluding impairment charges of $2.5 million and $35.7 million in 2009 and 2008, respectively, operating income declined $25.9 million primarily for the reasons noted above.
Net income attributable to CKX, Inc. was $22.8 million in 2009 as compared to $17.1 million in 2008. Diluted income per common share was $0.24 in 2009 as compared to $0.18 in 2008.
Segment Results
The following table summarizes segment operating results for the three months ended December 31, 2009 and 2008: December 31, December 31, 2009 2008 Change ---- ---- ------ Revenue 19 Entertainment $66.2 $24.1 174.1% Presley Business 12.7 12.1 5.5% Ali Business 1.0 1.2 (17.5)% Corporate - --- --- --- Total $79.9 $37.4 113.7% ===== ===== ===== December 31, December 31, 2009 2008 Change ---- ---- ------ OIBDAN 19 Entertainment (1) $7.0 $7.2 (3.0)% Presley Business 5.4 3.2 70.2% Ali Business 0.5 0.4 46.8% Corporate (2) (6.4) (0.5) ---- ---- Total $6.5 $10.3 (36.2)% ==== ===== ====== December 31, December 31, 2009 2008 Change ---- ---- ------ Operating Income (Loss) 19 Entertainment(1)(3) $0.6 ($4.9) N/A Presley Business 4.1 1.9 114.1% Ali Business (4) 0.5 (27.4) N/A Corporate and other (2) (6.8) (0.7) ---- ---- Total ($1.6) ($31.1) (94.9)% ===== ====== ====== (1) 2009 and 2008 results include non-cash foreign exchange gains of $0.1 million and $10.1 million, respectively. (2) 2009 results include $0.2 million in merger and distribution-related costs and $0.1 million in acquisition-related costs. 2008 results include a net gain of $7.7 million related to a terminated merger agreement and $2.2 million in acquisition-related costs. (3) 2009 and 2008 results include non-cash impairment charges of $2.5 million and $7.9 million, respectively. (4) 2008 results include non-cash impairment charges of $27.8 million. The following table summarizes segment operating results for the years ended December 31, 2009 and 2008: December 31, December 31, 2009 2008 Change ---- ---- ------ Revenue 19 Entertainment $263.5 $229.2 15.0% Presley Business 60.6 54.9 10.4% Ali Business 4.2 4.0 5.1% Corporate --- --- Total $328.3 $288.1 13.9% ====== ====== ==== December 31, December 31, 2009 2008 Change ---- ---- ------ OIBDAN 19 Entertainment (1) $63.3 $92.8 (31.8)% Presley Business 26.7 16.7 60.3% Ali Business (2) 1.1 1.0 7.4% Corporate (3) (23.6) (13.8) (71.3)% ----- ----- ------ Total $67.5 $96.7 (30.2)% ===== ===== ====== December 31, December 31, 2009 2008 Change ---- ---- ------ Operating Income 19 Entertainment (1)(4) $46.5 $66.7 (30.3)% Presley Business 21.7 11.7 84.5% Ali Business (2)(5) 1.0 (26.8) N/A Corporate and other (3) (25.0) (14.7) 70.3% ----- ----- ---- Total $44.2 $36.9 19.6% ===== ===== ==== (1) 2009 and 2008 results include non-cash foreign exchange gains and (losses) of ($4.1) million and $15.9 million, respectively. (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 $0.7 million in merger and distribution-related costs and 2008 includes a net gain of $5.8 million related to the terminated merger. 2009 results also include $0.8 million in incremental payroll-related taxes incurred due to the redemption of redeemable restricted common stock. (4) 2009 and 2008 results include non-cash impairment charges of $2.5 million and $7.9 million, respectively. (5) 2008 results include non-cash impairment charges of $27.8 million.
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 loss under U.S. GAAP (in millions) for the three months ended December 31, 2009 and 2008: December 31, December 31, 2009 2008 ---- ---- OIBDAN $6.5 $10.3 Depreciation and amortization (5.2) (4.8) Impairment charges (2.5) (35.7) Non-cash compensation (0.4) (0.9) Operating loss ($1.6) ($31.1) ===== ====== The following table reconciles consolidated OIBDAN to consolidated operating income under U.S. GAAP (in millions) for the years ended December 31, 2009 and 2008: December 31, December 31, 2009 2008 ---- ---- OIBDAN $67.5 $96.7 Depreciation and amortization (19.2) (21.2) Impairment charges (2.5) (35.7) Non-cash compensation (1.6) (2.9) Operating income $44.2 $36.9 ===== =====
Cash and Borrowing
The Company had total cash on hand of $66.6 million as of December 31, 2009. Outstanding debt at December 31, 2009 totaled $101.1 million, including the current portion of $101.1 million.
Form 10-K Filing
Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-K for the year ended December 31, 2009 which was filed today with the Securities and Exchange Commission. A copy of the Company's 10-K 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 11:00 a.m. EDT to discuss the results. The conference call numbers are:
(877) 303-9237 (United States)
(760) 666-3570 (International)
The conference ID (for replay) is 63082427.
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 website 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.
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SOURCE CKX, Inc.
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