CAPE CORAL, Fla., Aug. 17 /PRNewswire-FirstCall/ -- Whitney Information Network, Inc. (BULLETIN BOARD: RUSS) , a provider of educational training seminars, conferences and services across multiple delivery channels that help customers become financially literate through specialized instruction and mentoring on real estate and financial instruments investing, personal finance, entrepreneurism and self-development, today reported financial results for its second quarter of fiscal year 2009, which ended on June 30, 2009.
Revenue for the quarter ended June 30, 2009 was $29.1 million, or a decrease of $13.5 million or 31.7%, from $42.6 million for the quarter ended June 30, 2008. The decrease in revenue in the second quarter of 2009 compared with the second quarter of 2008 is primarily due to the discontinuation of several Proprietary Brands. Net loss before non-controlling interest for the second quarter was ($7.4) million; net loss attributable to Whitney Information Network, Inc. was ($3.3) million, or ($0.28) per basic and diluted share. For the comparable quarter in 2008, the net loss was ($1.9) million or ($0.16) per basic and diluted share. On a non-GAAP basis, Adjusted EBITDA for the quarter was ($1.4) million compared to ($1.6) million for the second quarter 2008. Adjusted EBITDA is calculated as net income (loss) before non-controlling interest excluding the impact of special items; interest income; interest expense; other income (expense), net; income tax (provision) benefit; stock option compensation expense; depreciation and amortization expense; and equity income (loss) from related parties; adjusted for the net change in deferred revenue less the net change in deferred course expenses. A reconciliation of Adjusted EBITDA to net loss for the three- and six-month periods ended June 30, 2009 and 2008 is attached to this press release.
Deferred revenue grew by $6.2 million in the second quarter of 2009 compared with an increase of $0.9 million in the second quarter of 2008. This faster rate in the growth of the deferred revenue balance primarily is attributable to the deferral of revenue related to unattended courses of RDE Brand customers. In December 2009, we will have two years of expired RDE Brands contract data and will begin to recognize breakage revenue on these brands at that time.
For the six-month period ended June 30, 2009, revenue was $61.6 million, or a decrease of $23.6 million or 27.7%, from $85.2 million for six months ended June 30, 2008. Net loss before non-controlling interest for the first six months of 2009 was ($10.6) million; net loss attributable to Whitney Information Network, Inc. was ($2.4) million, or ($.20) per basic and diluted share. For the comparable six-month period in 2008, our net loss was ($5.8) million, or ($.50) per share. Adjusted EBITDA for the six-month period ended June 30, 2009 was ($0.1) million compared to $4.2 million for the first six months of 2008.
Deferred revenue grew by $12.1 million in the first half of 2009 compared with an increase of $15.2 million in the first half of 2008. This slower rate in the growth of the deferred revenue balance is primarily due to lower sales and the result of expansion of the options for course delivery in order to reduce the number of expired contracts and the resulting breakage determination. In December 2009, we will have two years of expired RDE Brands contract data and will begin to recognize breakage revenue on these brands at that time. We have increased the number of courses offered on DVDs and via the Internet and expanded the number of location options for customers in the United States. Additionally, we have implemented an outreach notification program, contacting our customers by email and the United States mail as courses near expiration.
"Decreased sales in second quarter 2009 were significantly affected by the suspension of proprietary brands," said Charles M. Peck, Chief Executive Officer. "However, revenue from our Rich Dad Education brands remains stable quarter over quarter. We were particularly pleased that our test of a Rich Dad 'Launch Your Business' brand targeted at entrepreneurs met with an enthusiastic marketplace response. We will continue to test in specific markets and roll out in the near future."
"Our geographic expansion into the Asia-Pacific region also proceeded as planned, with our initial launch in Australia," Peck continued. "Following tests of an online model as well as a seminar model for our strategic alliance with the Dolans, we are evaluating performance results and fine tuning our future approach. Regarding our alliance with Montel Williams, an initial test revealed that greater emphasis should be placed on health and wellness products along with financial products to fully maximize the 'Living Well with Montel' positioning."
Peck commented, "We continue to cut costs in relation to current business conditions through select staff rightsizing moves and a restructuring of the commission structure for our independent contractors and telemarketing staff. Like many companies in today's tough economic climate, we are holding the line on staffing and facilities expenses. Additionally, we are working hard to reduce administrative costs and fees."
About Whitney Information Network, Inc.
Whitney Information Network, Inc. (BULLETIN BOARD: RUSS) is a provider of educational training seminars, conferences and services across multiple delivery channels that help customers become financially literate through specialized instruction and mentoring. The company provides customers with comprehensive instruction and mentoring in real estate investing, financial instruments investing, personal finance, entrepreneurism and self-development in the United States, United Kingdom, Canada, Costa Rica and the Asia-Pacific region. Additional information can be found at http://www.wincorporate.com/.
Non-GAAP Financial Measures - Adjusted EBITDA
As used in our operating data, EBITDA is defined as net income (loss) excluding the impact of special items (including the costs associated with the SEC and the DOJ investigations and the related class action and derivative lawsuits); interest income; interest expense; other income (expense), net; income tax (provision) benefit; stock option compensation expense; depreciation and amortization expense; and equity income (loss) from related parties. We define "Adjusted EBITDA" as EBITDA adjusted for the net change in deferred revenue less the net change in deferred course expenses. Adjusted EBITDA is not a financial performance measurement according to accounting principles generally accepted in the United States ("GAAP").
We use Adjusted EBITDA as a key measure in evaluating our operations and decision-making. We feel it is a useful measure in determining our performance since it takes into account the change in deferred revenue and deferred course expenses in combination with our operating expenses. We reference Adjusted EBITDA frequently, since it provides supplemental information that facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors' historical operating performance in our industry. We plan and forecast our business using Adjusted EBITDA, with comparisons of actual to planned and forecasted Adjusted EBITDA and we provide incentives to management based on Adjusted EBITDA goals. In addition, we provide Adjusted EBITDA because we believe investors and security analysts find it to be a useful measure for evaluating our performance.
Many costs to acquire customers have been expended before a customer attends any basic or advanced training. Those costs include media, travel, facilities and instructor fees for the preview workshops and are expensed when incurred. Licensing fees paid to Rich Global and telemarketing and speaker commissions are deferred and recognized when the related revenue is recognized. Revenue recognition of tuition paid by customers to enroll in any basic or advanced training courses at registration is deferred until (i) the course is attended by the customer, (ii) the customer has received the course content in an electronic format, (iii) the contract expires, or (iv) revenue is recognized through course breakage. It is only after one of those four occurrences that revenue is considered earned. Thus, reporting in accordance with GAAP creates significant timing differences between the receipt and disbursement of cash with the recognition of the related revenue and expenses, both in our Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Operations. As a result of these factors, our operating cash flows can vary significantly from our results of operations for the same period. For this reason, we believe Adjusted EBITDA is an important non-GAAP financial measure.
Adjusted EBITDA has material limitations and should not be considered as an alternative to net income (loss), cash flows provided by operations, investing or financing activities or other financial statement data presented in the Condensed Consolidated Financial Statements as indicators of financial performance or liquidity. Items excluded from Adjusted EBITDA are significant components in understanding our financial performance. Because Adjusted EBITDA is not a financial measurement calculated in accordance with GAAP and is subject to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of performance used by other companies.
The table below is a reconciliation of the Company's net loss to EBITDA and Adjusted EBITDA for the periods set forth below (in millions):
Three months ended Six months ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net loss $(7.4) $(1.9) $(10.6) $(5.8) Impairment of assets 0.4 - 0.4 - Special items 0.2 - 0.3 0.2 Other income, net - (0.6) (0.3) (0.9) Provision for income taxes 0.3 0.2 0.4 0.4 Gain on sale of assets - - - (1.1) Stock-based compensation - 0.2 - 0.3 Depreciation and amortization expense 0.3 0.4 0.5 0.8 Equity loss from related parties - 0.2 - 0.4 - --- - --- EBITDA (6.2) (1.5) (9.3) (5.7) Net change in deferred revenue 6.2 0.9 12.1 15.2 Net change in deferred course costs (1.4) (1.0) (2.9) (5.3) ---- ---- ---- ---- Adjusted EBITDA $(1.4) $(1.6) $(0.1) $4.2 ===== ===== ===== ==== Adjusted EBITDA as a percentage of cash received from course and product sales (4.0)% (3.7)% (0.1)% 4.2% ==== ==== ==== === Special Note Regarding Forward Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include all statements other than those made solely with respect to historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include those factors which can be found in our Form 10-K for the year ended December 31, 2008 and our other filings with the Securities and Exchange Commission. Forward-looking statements in this press release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot provide any assurances regarding future results. We undertake no obligation to revise or update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands) June 30, December 31, 2009 2008 ---- ---- (unaudited) Assets Current assets: Cash and cash equivalents $23,700 $23,594 Restricted cash 12,752 13,492 Deferred course expenses, current portion 24,953 22,070 Other current assets 1,357 2,452 Inventories 763 953 Assets held for sale - 3,748 - ----- Total current assets 63,525 66,309 ------ ------ Notes receivable, net of current portion 9,368 9,677 Property, equipment and intangible assets, net 3,686 4,241 Other assets 1,572 1,381 ----- ----- Total assets $78,151 $81,608 ======= ======= Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $3,014 $4,516 Income taxes payable 615 799 Deferred revenue, current portion 128,710 116,642 Accrued course expenses 1,285 1,440 Accrued salaries, wages and benefits 1,036 851 Other accrued expenses 4,967 6,611 Other current liabilities 290 288 --- --- Total current liabilities 139,917 131,147 ------- ------- Long-term debt, net of current portion 2,867 2,913 Other long-term liabilities 154 222 --- --- Total liabilities 142,938 134,282 ------- ------- Commitments and contingencies Whitney Information Network, Inc.'s stockholders' deficit: Preferred stock - - Common stock 2,591 2,591 Paid-in capital 2,527 2,507 Cumulative foreign currency translation adjustment 328 1,236 Accumulated deficit (61,393) (59,008) ------- ------- Total Whitney Information Network, Inc.'s stockholders' deficit (55,947) (52,674) Noncontrolling interest (8,840) - ------ - Total stockholders' deficit (64,787) (52,674) ------- ------- Total liabilities and stockholders' deficit $78,151 $81,608 ======= ======= WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited, in thousands, except per share data) Three months ended Six months ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue $29,139 $42,605 $61,601 $85,209 Direct course expenses 15,792 23,497 32,937 45,626 Advertising and sales expenses 12,040 12,300 23,416 28,453 General and administrative expenses 8,506 8,856 15,714 18,131 ----- ----- ------ ------ Loss from operations (7,199) (2,048) (10,466) (7,001) Other income, net 97 380 194 1,624 -- --- --- ----- Loss before income taxes (7,102) (1,668) (10,272) (5,377) Provision for income taxes (280) (223) (373) (448) ---- ---- ---- ---- Net loss (7,382) (1,891) (10,645) (5,825) Net loss attributable to the noncontrolling interest (4,122) - (8,260) - ------ - ------ - Net loss attributable to Whitney Information Network, Inc. $(3,260) $(1,891) $(2,385) $(5,825) ======= ======= ======= ======= Basic and diluted net loss per share attributable to Whitney Information Network, Inc. common stockholders $(0.28) $(0.16) $(0.20) $(0.50) ====== ====== ====== ====== Basic and diluted weighted average shares outstanding 11,739 11,739 11,739 11,739 ====== ====== ====== ====== Comprehensive loss: Net loss $(7,382) $(1,891) $(10,645) $(5,825) Foreign currency translation adjustments (1,493) (76) (1,232) 3 ------ --- ------ - Comprehensive loss (8,875) (1,967) (11,877) (5,822) Comprehensive loss attributable to noncontrolling interest (4,522) - (8,584) - ------ - ------ - Comprehensive loss attributable to Whitney Information Network, Inc. $(4,353) $(1,967) $(3,293) $(5,822) ======= ======= ======= ======= WHITNEY INFORMATION NETWORK, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) Six months ended June 30, ---------------- 2009 2008 ---- ---- Cash flows from operating activities: Net loss $(10,645) $(5,825) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 530 811 Impairment of assets 350 - Stock-based compensation expense 20 332 Gain on sale of assets - (1,080) Equity loss from related parties 32 400 Changes in operating assets and liabilities: Restricted cash 740 (1,713) Deferred course expenses (2,887) (5,302) Other current assets 1,052 1,006 Inventories 190 (490) Other assets (73) (56) Accounts payable (1,502) (1,920) Income taxes payable (184) 117 Deferred revenue 12,097 15,236 Accrued course expenses (155) 403 Accrued salaries, wages and benefits 185 (1,138) Other accrued expenses (1,646) 9 Other liabilities (96) (1,194) --- ------ Net cash used in operations (1,992) (404) ------ ---- Cash flows from investing activities: Purchase of property and equipment (76) (62) Proceeds from notes receivable 105 43 Investments and advances to related parties (146) - Proceeds from the sale of assets 3,748 3,040 ----- ----- Net cash provided by investing activities 3,631 3,021 ----- ----- Cash flows from financing activities: Distribution to noncontrolling interest (256) (1,576) Proceeds from issuance of long-term debt - 7 Principal payments on long-term debt (45) (99) --- --- Net cash used in financing activities (301) (1,668) ---- ------ Effect of foreign currency translation (1,232) 3 ------ - Net increase in cash and cash equivalents 106 952 Cash and cash equivalents, at beginning of period 23,594 33,012 ------ ------ Cash and cash equivalents, at end of period $23,700 $33,964 ======= ======= Supplemental non-cash disclosures: Accounts receivable converted to a note receivable $- $335 == ====
Whitney Information Network, Inc.
CONTACT: Investor Relations, Booke and Company, Inc., +1-212-490-9095
Web Site: http://www.wincorporate.com/
