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| 8-K - FORM 8-K FILING DOCUMENT - OUTDOOR CHANNEL HOLDINGS INC | document.htm |
EXHIBIT 99.1
Outdoor Channel Holdings Reports Third Quarter 2011 Results
TEMECULA, Calif., Nov. 3, 2011 (GLOBE NEWSWIRE) -- Outdoor Channel Holdings, Inc. (Nasdaq:OUTD) today reported its financial results for the third quarter ended September 30, 2011.
Total revenues for the quarter were $18.9 million, a decrease of 17% compared with $22.9 million in the third quarter of 2010 due primarily to the planned reduction of projects in the Company's Production Services segment. Advertising revenue for the quarter was $10.7 million, a decrease of 4% percent from the third quarter of 2010 due primarily to lower online revenues. Subscriber fees for the quarter were $5.0 million, a 20% increase compared to the prior-year period due to a combination of rate increases and lower year-over-year changes in estimated reserves for potential most-favored nations ("MFN") liabilities with distribution partners. Production Services revenue totaled $3.2 million for the quarter, a decrease of 58% compared to the third quarter of 2010 due primarily to a combination of the Company's prior decision to reduce Winnercomm's non-core and low-margin business.
The Company's operating income for the third quarter 2011 was $3.5 million compared to an operating income of $4.5 million in the third quarter of 2010. The decline in the Company's operating income was primarily attributable to increased losses at the Production Services unit on lower revenues.
The Company's consolidated net income for the 2011 third quarter was $2.1 million, or $0.08 per basic and diluted share, compared to a net income of $2.4 million, or $0.10 per basic and diluted share, in the third quarter of 2010.
"During the third quarter we maintained profitability at our core network business as subscriber revenue growth and reduced advertising expense offset lower ad revenues and increased program expenses," said Roger Werner, President & Chief Executive Officer. "The performance of our Production Services unit was largely impacted by our earlier decision to streamline our Winnercomm operation and increasingly focus them on produciong shows for the Outdoor Channel. With the bulk of our ActionCam litigation expense now behind us and our recent office moves at both Winnercomm and our aerial camera businesses we believe that unit will be on better footing for profitability next year."
Review of Segment Operating Results
The Outdoor Channel ("TOC") posted operating income of $4.8 million for the quarter compared to operating income of $4.9 million for the third quarter of 2010. The slight reduction in TOC's operating income was the result of increased programming costs, net of increased subscription revenue and reduced selling, general and administrative costs.
The Production Services unit posted an operating loss for the quarter, before the effect of intercompany eliminations, of $948,000 compared to an operating loss of $89,000 for the third quarter of 2010. The majority of the increased loss was attributable to reduced margin contribution from cancelled and non-renewed projects, and, to a lesser extent, from costs associated with the office moves of both our Winnercomm and aerial camera businesses.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense (adjusted EBITDA), was $5.0 million for the quarter, compared to $6.0 million in the prior-year period. TOC's adjusted EBITDA totaled $5.8 million for the quarter compared to $5.9 million in the prior-year period, a 2% decline. Production Services' adjusted EBITDA was negative $784,000 for the quarter compared to $115,000 in the prior-year period due primarily to reduced gross margin contributions at Winnercomm.
Investor Conference Call
Outdoor Channel Holdings' management will host an investor conference call on November 3, 2011, at 2:00 p.m. PT (5:00 p.m. ET) to review the Company's financials and operations for its third quarter ended September 30, 2011. Investment professionals and shareholders are invited to participate in the live call by dialing 866-831-5605 (domestic) or 617-213-8851 (international) and using participant passcode 81923356. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the Company's Web site, www.outdoorchannel.com.
For those who are not available to listen to the live broadcast, the call will be archived online for one year. A telephonic playback of the conference call also will be available through Thursday, November 10, 2011, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 71377769.
About Outdoor Channel Holdings, Inc.
Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's Leader in Outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's leading and highest quality producers of live sporting events and sports series for cable and broadcast television. Outdoor Channel Holdings, Inc. also owns and operates the SkyCam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information please visit http://www.outdoorchannel.com.
Nielsen Media Research Universe Estimates for Outdoor Channel
Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide. Nielsen estimated that Outdoor Channel had approximately 35.0 million cable and satellite subscribers for November 2011. Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.
Use of Non-GAAP Financial Information
This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. The company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense, provides greater comparability regarding its ongoing operating performance. This information is not intended to be considered in isolation or as a substitute for net income (loss) calculated in accordance with U.S. GAAP. A reconciliation of the company's U.S. GAAP information to EBITDA, adjusted for the effects of share-based compensation expense is provided in the attached table.
Safe Harbor Statement
Statements in this news release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements, without limitation, about our expectations, beliefs, intentions, strategies regarding the future long-term value of the company resulting from the Company's current actions or strategic initiatives and the future anticipated value of Outdoor Channel to our audience, distributors and advertisers. The Company's actual results could differ materially from those discussed in any forward-looking statements. The Company intends that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such statements involve significant risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) service providers discontinuing or refraining from carrying Outdoor Channel; (2) changes in Nielsen methodology and estimates; (3) a decline in the number of viewers from having Outdoor Channel placed in unpopular cable or satellite packages, or increases in subscription fees, established by the service providers; (4) increased competition in demand in price from broadcast networks; (5) a decrease in advertising revenue as a result of a deterioration in general economic conditions; and other factors which are discussed in the Company's filings with the Securities and Exchange Commission. For these forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Operations | ||||
| (unaudited, in thousands) | ||||
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Revenues: | ||||
| Advertising | $ 10,732 | $ 11,225 | $ 25,630 | $ 25,770 |
| Subscriber fees | 5,018 | 4,194 | 14,760 | 13,529 |
| Production services | 3,175 | 7,480 | 7,874 | 18,250 |
| Total revenues | 18,925 | 22,899 | 48,264 | 57,549 |
| Cost of services: | ||||
| Programming | 1,758 | 1,583 | 5,323 | 4,807 |
| Satellite transmission fees | 389 | 397 | 1,188 | 1,181 |
| Production and operations | 4,655 | 7,500 | 13,127 | 20,219 |
| Other direct costs | 77 | 132 | 241 | 353 |
| Total cost of services | 6,879 | 9,612 | 19,879 | 26,560 |
| Other expenses: | ||||
| Advertising | 446 | 752 | 1,921 | 2,017 |
| Selling, general and administrative | 7,387 | 7,241 | 23,569 | 26,174 |
| Depreciation and amortization | 695 | 748 | 2,139 | 2,587 |
| Total other expenses | 8,528 | 8,741 | 27,629 | 30,778 |
| Total operating expenses | 15,407 | 18,353 | 47,508 | 57,338 |
| Income from operations | 3,518 | 4,546 | 756 | 211 |
| Interest and other income, net | (2) | (5) | 15 | 22 |
| Income before income taxes | 3,516 | 4,541 | 771 | 233 |
| Income tax provision | 1,437 | 2,101 | 381 | 462 |
| Net income (loss) | 2,079 | 2,440 | 390 | (229) |
| Net income (loss) attributable to noncontrolling interest | -- | -- | -- | -- |
| Net income (loss) attributable to Outdoor Channel Holdings, Inc. | $ 2,079 | $ 2,440 | $ 390 | $ (229) |
| Earnings (loss) per common share data: | ||||
| Basic | $ 0.08 | $ 0.10 | $ 0.02 | $ (0.01) |
| Diluted | $ 0.08 | $ 0.10 | $ 0.02 | $ (0.01) |
| Weighted average number of common shares outstanding | ||||
| Basic | 24,874 | 24,460 | 24,791 | 24,482 |
| Diluted | 25,634 | 25,399 | 25,609 | 24,482 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Segment Operating Results | ||||
| (unaudited, in thousands) | ||||
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Revenues | ||||
| TOC | $ 15,750 | $ 15,419 | $ 40,390 | $ 39,299 |
| Production Services | 4,935 | 8,684 | 10,634 | 20,182 |
| Eliminations | (1,760) | (1,204) | (2,760) | (1,932) |
| Total revenues | $ 18,925 | $ 22,899 | $ 48,264 | $ 57,549 |
| Cost of Services | ||||
| TOC | $ 4,353 | $ 3,874 | $ 13,091 | $ 11,958 |
| Production Services | 3,980 | 6,689 | 9,258 | 16,388 |
| Eliminations | (1,454) | (951) | (2,470) | (1,786) |
| Total cost of services | $ 6,879 | $ 9,612 | $ 19,879 | $ 26,560 |
| Other Expenses | ||||
| TOC | $ 6,625 | $ 6,657 | $ 22,061 | $ 23,087 |
| Production Services | 1,903 | 2,084 | 5,568 | 7,691 |
| Eliminations | -- | -- | -- | -- |
| Total other expenses | $ 8,528 | $ 8,741 | $ 27,629 | $ 30,778 |
| Income (Loss) from Operations | ||||
| TOC | $ 4,772 | $ 4,888 | $ 5,238 | $ 4,254 |
| Production Services | (948) | (89) | (4,192) | (3,897) |
| Eliminations | (306) | (253) | (290) | (146) |
| Income from operations | $ 3,518 | $ 4,546 | $ 756 | $ 211 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Reconciliation of U.S. GAAP Measures to U.S. Non-GAAP Measures | ||||
| (unaudited, in thousands) | ||||
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Net income (loss) | $ 2,079 | $ 2,440 | $ 390 | $ (229) |
| Add/Subtract: | ||||
| Interest and other income, net | 2 | 5 | (15) | (22) |
| Income tax | 1,437 | 2,101 | 381 | 462 |
| Depreciation and amortization | 695 | 748 | 2,139 | 2,587 |
| EBITDA | $ 4,213 | $ 5,294 | $ 2,895 | $ 2,798 |
| Adjusted for: | ||||
| Share-based compensation expense | 775 | 677 | 2,351 | 2,486 |
| EBITDA as adjusted for share-based compensation expense | $ 4,988 | $ 5,971 | $ 5,246 | $ 5,284 |
| Summary of Cost of Services | ||||
| Share-based compensation expense | $ 59 | $ 36 | $ 178 | $ 194 |
| Cost of services | 6,820 | 9,576 | 19,701 | 26,366 |
| Total cost of services | $ 6,879 | $ 9,612 | $ 19,879 | $ 26,560 |
| Summary of Selling, General and Administrative | ||||
| Share-based compensation expense | $ 716 | $ 641 | $ 2,173 | $ 2,292 |
| Selling, general and administrative | 6,671 | 6,600 | 21,396 | 23,882 |
| Total selling, general and administrative | $ 7,387 | $ 7,241 | $ 23,569 | $ 26,174 |
| Summary of Other Income | ||||
| Interest income | $ 24 | $ 19 | $ 86 | $ 83 |
| Interest and other expense | (26) | (24) | (71) | (61) |
| Total other income | $ (2) | $ (5) | $ 15 | $ 22 |
| EBITDA as adjusted by Segment | ||||
| Outdoor Channel network | $ 5,772 | $ 5,856 | $ 8,324 | $ 7,608 |
| Production Services * | (784) | 115 | (3,078) | (2,324) |
| EBITDA as adjusted for share-based compensation expense | $ 4,988 | $ 5,971 | $ 5,246 | $ 5,284 |
| * - eliminations included in Production Services segment | ||||
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands) | ||
| September 30, 2011 | December 31, 2010 | |
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 28,129 | $ 32,578 |
| Investment in available-for-sale securities | 33,047 | 26,995 |
| Accounts receivable, net of allowance for doubtful accounts | 11,790 | 16,754 |
| Other current assets | 13,781 | 10,990 |
| Total current assets | 86,747 | 87,317 |
| Property, plant and equipment, net | 12,259 | 12,315 |
| Goodwill and amortizable intangible assets, net | 43,593 | 43,673 |
| Investments in auction-rate securities | 5,020 | 5,075 |
| Deferred tax assets, net | 1,432 | 1,774 |
| Deposits and other assets | 2,210 | 3,498 |
| Totals | $ 151,261 | $ 153,652 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities | $ 12,960 | $ 17,129 |
| Long-term liabilities | 873 | 981 |
| Total liabilities | 13,833 | 18,110 |
| Total Outdoor Channel Holdings, Inc. stockholders' equity | 137,428 | 135,542 |
| Noncontrolling interest | -- | -- |
| Total equity | 137,428 | 135,542 |
| Totals | $ 151,261 | $ 153,652 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (unaudited, in thousands) | ||
|
Nine Months Ended September 30, |
||
| 2011 | 2010 | |
| Operating activities: | ||
| Net income (loss) | $ 390 | $ (229) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 2,139 | 2,587 |
| Amortization of subscriber acquisition fees | 1,166 | 1,189 |
| Loss on sale of equipment | 31 | 109 |
| Gain on sale of available-for-sale and auction-rate securities | -- | (11) |
| Provision for doubtful accounts | 123 | 457 |
| Share-based employee and service provider compensation | 2,351 | 2,486 |
| Deferred tax provision, net | 342 | 462 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 4,841 | 1,312 |
| Income tax refund receivable and payable, net | (2,685) | (785) |
| Prepaid programming costs | (775) | 1,240 |
| Other current assets | (1,730) | (861) |
| Deposits and other assets | 97 | 108 |
| Subscriber acquisition fees | (191) | (2,116) |
| Accounts payable and accrued expenses | (3,562) | (2,845) |
| Deferred revenue | 1,586 | 545 |
| Deferred obligations | 7 | (150) |
| Unfavorable lease obligations | (111) | (101) |
| Net cash provided by operating activities | 4,019 | 3,397 |
| Investing activities: | ||
| Purchases of property, plant and equipment | (1,531) | (943) |
| Purchase of intangibles | (85) | -- |
| Proceeds from sale of equipment | -- | 107 |
| Purchases of available-for-sale securities | (64,570) | (76,973) |
| Proceeds from sale of available-for-sale and auction-rate securities | 58,618 | 87,900 |
| Net cash provided by (used in) investing activities | (7,568) | 10,091 |
| Financing activities: | ||
| Purchase of treasury stock | (900) | (673) |
| Purchase and retirement of stock related to repurchase program | -- | (341) |
| Net cash used in financing activities | (900) | (1,014) |
| Net increase (decrease) in cash and cash equivalents | (4,449) | 12,474 |
| Cash and cash equivalents, beginning of period | 32,578 | 20,848 |
| Cash and cash equivalents, end of period | $ 28,129 | $ 33,322 |
| Supplemental disclosure of cash flow information: | ||
| Income taxes paid | $ 2,594 | $ 785 |
| Supplemental disclosure of non-cash investing and financing activities: | ||
| Effect of net increase in fair value of available-for-sale and auction-rate securities | $ 45 | $ 75 |
| Property, plant and equipment costs incurred but not paid | $ 389 | $ 47 |
CONTACT: For Company:
Tom Allen
Executive Vice President / Chief Financial Officer
951-699-6991, ext. 287
tallen@outdoorchannel.com
For Investors:
Brad Edwards
Brainerd Communicators, Inc.
212-986-6667
edwards@braincomm.com
For Media:
Nancy Zakhary
Brainerd Communicators, Inc.
212-986-6667
nancy@braincomm.com