CKX, Inc. Reports First Quarter 2010 Results

NEW YORK, May 10 /PRNewswire-FirstCall/ -- CKX, Inc. (Nasdaq: CKXE) 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):

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:

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.

Form 10-K Filing

Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-Q for the quarter ended March 31, 2010  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

Michael G. Ferrel, Chief Executive Officer, and Thomas P. Benson, Executive Vice President and Chief Financial Officer, will be hosting a conference call for investors Tuesday, May 11 at 10:30 a.m. EDT to discuss the results. The conference call numbers are:

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 globally recognized entertainment content. The Company's current properties include 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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CKX, Inc.

Ed Tagliaferri, 212-981-5182

SOURCE CKX, Inc.