NEW YORK, Aug. 13 /PRNewswire-FirstCall/ -- CKX, Inc. today reported financial results for its second quarter and six months ended June 30, 2010.
Results for the Three Months Ended June 30, 2010
For the three months ended June 30, 2010 revenue increased $9.9 million to $89.4 million, an increase of 12.5% over the prior year period. $6.9 million of this growth was from American Idol due primarily to more broadcast hours and higher license fees as compared to the prior year. Revenue at the Presley Business grew $1.8 million, or 12.8%, due to higher licensing revenue and royalty revenue from the Viva ELVIS Cirque du Soleil show in Las Vegas which opened in February, partially offset by a small decline in attendance-related revenue at Graceland.
Operating income before depreciation, amortization and non-cash stock compensation ("OIBDAN") decreased $0.2 million to $16.0 million. Excluding executive separation costs of $5.5 million and severance and restructuring costs of $3.8 million at 19 Entertainment, OIBDAN grew $9.1 million as compared to 2009. 19 Entertainment OIBDAN, excluding one-time severance and restructuring costs, increased $6.9 million due to higher American Idol revenue and a $4.8 million improvement in foreign exchange losses. Presley Business OIBDAN increased due to the higher revenue described above and cost reductions. Corporate expenses, excluding executive separation costs, declined $1.4 million.
The Company reported operating income of $9.1 million, a decrease of $2.1 million from 2009.
Net income attributable to CKX, Inc. was $6.6 million in 2010 compared to $4.0 million in the second quarter of 2009. Diluted income per common share was $0.07 in 2010 compared to $0.05 per share in 2009.
Commenting on the results, Michael G. Ferrel, Chief Executive Officer, said, "We are encouraged by our second quarter results across the Company. American Idol continued its reign as the #1 rated show on network television for a seventh consecutive season and we are excited about changes we will be implementing for the 2011 season. We have made major progress with our restructuring of 19 Entertainment, which is increasing our focus on our hit properties while significantly reducing spending on unproductive development projects and general overhead. Although our fiscal first half results were negatively impacted by restructuring costs, the benefit of $15 million in annual cost savings that we have implemented will positively impact our operating results beginning in the third quarter of 2010."
Results for the Six Months Ended June 30, 2010
For the six months ended June 30, 2010, revenue declined to $156.1 million, a decrease of 3.1% as compared to the prior year period. The decline in revenue is due to $10.0 million of non-recurring revenue recognized in 2009 from terminated license agreements at the Presley Business and the Ali Business and $12.1 million of revenue from a one-time limited run television program in 2009. Revenue at 19 Entertainment decreased $0.2 million due to the $12.1 million in revenue received in 2009 in respect of the one-time limited run television program referenced above and a decline in revenue for So You Think You Can Dance due to timing of the 2010 broadcast schedule which was offset by an $11.4 million increase in American Idol revenue. Excluding the prior year terminated license agreement, revenue at the Presley Business increased $4.7 million due to higher licensing revenue and royalty revenue from the Viva ELVIS Cirque du Soleil show in Las Vegas.
OIBDAN declined to $23.9 million in 2010 from $44.5 million in 2009. Excluding executive separation costs of $5.5 million, severance and restructuring costs of $9.3 million and the prior year's $1.4 million restructuring charge at the Ali Business, OIBDAN declined $7.2 million. Excluding the severance and restructuring costs, OIBDAN at 19 Entertainment decreased $2.0 million due to the impact of the new deal with Ryan Seacrest, which offset higher revenue and a $4.4 million improvement in foreign exchange losses. Excluding the terminated license agreements and the prior year write-off of capitalized costs at Graceland, OIBDAN at the Presley Business increased due to higher revenue. Corporate expenses, excluding executive separation costs, declined $2.0 million from the prior year primarily due to acquisition costs incurred in 2009.
The Company reported operating income of $5.8 million for the six month period in 2010 compared to $34.8 million in the first six months of 2009. 2010 includes $4.9 million of non-cash impairment charges.
Net income attributable to CKX, Inc. was $1.5 million in 2010 compared to $16.1 million in the first six months of 2009. Diluted income per common share was $0.02 in 2010 compared to $0.17 per share in 2009.
Segment Results
The following table summarizes segment operating results for the three months ended June 30, 2010 and 2009 (in millions):
June June 30, 30, 2010 2009 Change ---- ---- ------ Revenue 19 Entertainment $72.3 $64.6 11.9% Presley Business 16.4 14.6 12.8% Ali Business 0.7 0.3 102.8% --- --- ----- Total $89.4 $79.5 12.5% ===== ===== ==== June June 30, 30, 2010 2009 Change ---- ---- ------ OIBDAN 19 Entertainment (1) $20.5 $17.4 18.0% Presley Business 6.0 5.5 9.1% Ali Business 0.3 - - Corporate (2) (3) (10.8) (6.7) 60.7% ----- ---- ---- Total $16.0 $16.2 (0.7)% ===== ===== ===== June June 30, 30, 2010 2009 Change ---- ---- ------ Operating Income (Loss) 19 Entertainment (1) $16.7 $14.1 18.2% Presley Business 4.7 4.2 11.1% Ali Business 0.3 - - Corporate (2) (3) (12.6) (7.1) 76.9% ----- ---- ---- Total $9.1 $11.2 (18.7)% ==== ===== ====== (1) 2010 includes a $3.8 million provision for severance and other restructuring-related costs. (2) 2010 OIBDAN includes a $5.5 million provision for executive separation costs. 2010 Operating Income includes a $6.8 million provision for executive separation costs, including $1.3 million of non-cash stock compensation. (3) 2010 includes $1.0 million in merger and related advisory fee expenses. 2009 includes $0.7 million in acquisition-related costs and $0.5 million in merger termination costs.
The following table summarizes segment operating results for the six months ended June 30, 2010 and 2009 (in millions):
June June 30, 30, 2010 2009 Change ---- ---- ------ Revenue 19 Entertainment $125.7 $125.9 (0.1)% Presley Business 28.8 33.1 (13.3)% Ali Business 1.6 2.0 (19.5)% Corporate - - - --- --- --- Total $156.1 $161.0 (3.1)% ====== ====== ===== June June 30, 30, 2010 2009 Change ---- ---- ------ OIBDAN 19 Entertainment (1) $30.0 $41.3 (27.4)% Presley Business 8.7 15.7 (44.6)% Ali Business (2) 0.9 (0.3) - Corporate (3) (4) (15.7) (12.2) 28.5% ----- ----- ---- Total $23.9 $44.5 (46.4)% ===== ===== ====== June June 30, 30, 2010 2009 Change ---- ---- ------ Operating Income (Loss) 19 Entertainment (1) (5) $19.5 $34.7 (43.8)% Presley Business (5) 3.5 13.2 (73.7)% Ali Business (2) 0.9 (0.3) - Corporate (3) (4) (18.1) (12.8) 40.7% ----- ----- ---- Total $5.8 $34.8 (83.3)% ==== ===== ====== (1) 2010 OIBDAN includes a $9.3 million provision for severance and other restructuring-related costs. 2010 Operating Income includes a $9.9 million provision for severance and other restructuring- related costs, including $0.6 million of non-cash stock compensation. (2) 2009 includes a $1.4 million provision for severance and other restructuring-related costs. (3) 2010 OIBDAN includes a $5.5 million provision for executive separation costs. 2010 Operating Income includes a $6.8 million provision for executive separation costs, including $1.3 million of non-cash stock compensation. (4) 2010 includes $1.0 million in merger and related advisory fee expenses. 2009 includes $2.2 million in acquisition-related costs and $0.5 million in merger termination costs. (5) 2010 includes a $2.6 million non-cash impairment charge at the Presley Business and a $2.2 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 under U.S. GAAP (in millions) for the three months ended June 30, 2010 and 2009:
June 30, June 30, 2010 2009 ---- ---- OIBDAN $16.0 $16.2 Depreciation and amortization (5.2) (4.6) Non-cash compensation included in severance and other restructuring-related costs (1.3) - Non-cash compensation (0.4) (0.4) ---- ---- Operating income $9.1 $11.2 ==== =====
The following table reconciles consolidated OIBDAN to consolidated operating income under U.S. GAAP (in millions) for the six months ended June 30, 2010 and 2009:
June 30, June 30, 2010 2009 ---- ---- OIBDAN $23.9 $44.5 Depreciation and amortization (10.3) (9.0) Impairment charges (4.9) - Non-cash compensation included in severance and other restructuring-related costs (1.8) - Non-cash compensation (1.1) (0.7) ---- ---- Operating income $5.8 $34.8 ==== ===== Cash and Borrowing
The Company had total cash on hand of $59.9 million as of June 30, 2010. Outstanding debt at June 30, 2010 totaled $100.6 million, including the current portion of $100.5 million.
Form 10-Q 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 June 30, 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 http://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 Monday, August 16th at 10:00 a.m. EDT to discuss the results. The conference call numbers are:
(877) 303-9237 (United States) (760) 666-3570 (International)
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 http://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.
CONTACT: Media, Ed Tagliaferri, CKX, Inc., +1-212-981-5182
Web Site: http://www.ckx.com/
