Stamford Conn. June 12 2003 – World Wrestling Entertainment Inc. (NYSE:WWE) today announced financial results for its fourth quarter ended April 30 2003. The Company will host a conference call / web cast on Friday June 13 2003 at 11:00 a.m. EST to discuss these results. All interested parties are welcome to listen to the live web cast that will be hosted through the Company web site at corporate.wwe.com. A downloadable presentation will also be available on this site at that time. Participants can also access the conference call by dialing 800-362-0571 (conference ID: WWE). Please reserve a line 15 minutes prior to the start of the conference call. A replay of the web cast will be available approximately two hours after the web cast concludes and can be accessed on the homepage of the Company web site at corporate.wwe.com.

Net revenues from continuing operations were $105.9 million as compared to $131.6 million in the prior year quarter. Operating income from continuing operations for the quarter was $11.8 million versus $27.0 million in the prior year quarter. Income from continuing operations was $6.3 million or $0.09 per common share as compared to $18.4 million or $0.25 per common share in the prior year quarter.

EBITDA of $15.6 million in the current quarter was in line with management’s outlook provided in February 2003. Included in the $15.6 million was $2.3 million of cost related to legal settlements. EBITDA in the prior year quarter was $31.4 million.

In February 2003 the Company closed the restaurant operations of its entertainment complex The World and in April 2003 closed the retail operation. As a result the operations of The World as well as the estimated costs to shut down this business have been reflected in discontinued operations. The Company recorded an after-tax charge of $8.9 million in the fourth quarter related to the estimated costs to shut down this facility. This amount includes in addition to other costs rental payments required under the lease net of management’s current estimate of potential sub-rental income. This lease expires on October 31 2017. Loss from discontinued operations was $10.4 million or $0.15 per common share as compared to $2.4 million or $0.03 per common share in the prior year quarter.

After the impact of discontinued operations the Company reported a net loss in the quarter of $4.1 million or $0.06 per common share as compared to net income of $16.0 million or $0.22 per common share in the prior year quarter.

“In fiscal year 2003 we took a bold move by working to create two distinct television brands – Raw and SmackDown! – with their own storylines and talent. This allowed us to create two touring companies increase our live events globally and clear the way for us to increase our share of the entertainment business ” said Linda McMahon WWE CEO.

“The results for fiscal year 2003 were partially a reflection of the transition from who we were to who we intend to be compounded by a weak economy and the abundance of reality-based programming which we believe has drawn away some of our audience. We believe that this strategy makes sense and is beginning to take hold. Our business outside of North America has increased significantly. Like anything worth undertaking our strategy needs time to be put into effect. We are committed in fiscal year 2004 to display that positive feeling through improved financial performance ” concluded Mrs. McMahon.

Fourth Quarter Results

Net revenues for the quarter were $105.9 million versus $131.6 million in the prior year quarter.

Live and Televised Entertainment

Revenues from our Live and Televised businesses were $85.9 million as compared to $105.0 million in the prior year quarter.

• Live Event revenues were $19.0 million as compared to $27.9 million in the fourth quarter of last year.
  • There were 74 events including 5 international events during the quarter as compared to 78 events including 3 international events during the same period last year.
  • The average attendance at our events was approximately 6 600 as compared to approximately 8 900 in the prior year quarter.
  • The average ticket price decreased $0.53 to $37.37 for the quarter.
• Pay-Per-View revenues were $31.8 million versus $40.6 million in the prior year quarter.
  • Total domestic pay-per-view buys for the quarter were 1.8 million as compared to 2.4 million in the prior year quarter.
  • Buys for each of the three pay-per-view programs that aired in the quarter were lower than those recorded in the prior year quarter.
  • The decline in buys was partially offset by a 17% increase in the retail price of our domestic pay-per-views from $29.95 to $34.95 effective April 2002.
• Television Rights Fees revenues increased $1.4 million to $15.6 million due primarily to increased international rights fees.
• Television Advertising revenues were $19.0 million as compared to $21.9 million in the prior year quarter. This decline was principally due to the impact of lower television ratings and a decrease in sponsorship revenues. Average household ratings for the quarter for our Raw program according to Nielsen Media Research was 3.8 as compared to 4.7 for the prior year quarter. Average household ratings for the quarter for our SmackDown! program according to Nielsen Media Research was 3.2 as compared to 3.9 for the prior year quarter.

Branded Merchandise Revenues from our Branded Merchandise businesses were $20.0 million versus $26.6 million in the prior year quarter.

• Licensing revenues decreased $1.3 million to $5.0 million due to a decrease in toy sales.
• Merchandise revenues were $5.8 million as compared to $8.8 million in the prior year quarter due to a 50% decrease in revenues from WWEShopzone.com and catalog sales and a 27% reduction in revenues derived at our live events which was due to lower attendance in the quarter.
• Publishing revenues decreased $1.1 million to $4.2 million due to a decrease in net newsstand units sold which was due in part to the issuance of one less special magazine in the quarter as compared to the prior year quarter.
• Home Video revenues decreased $1.9 million to $3.1 million in the quarter.
  • 0.2 million units sold in the quarter as compared to 0.6 million units sold in the prior year quarter.

Profit Contribution (Net revenues less Cost of revenues)

Profit contribution for the quarter was $44.1 million as compared to $58.1 million in the prior year quarter. Total profit contribution margin was 42% as compared to 44% in the prior year quarter.

The profit contribution margin for the Live and Televised businesses was approximately 41% versus 44% in the fourth quarter last year reflecting in part the fixed nature of TV production costs.

The profit contribution margin for the Branded Merchandise businesses remained flat at 46%.

Selling General and Administrative Expenses

SG&A expenses for the quarter were $28.5 million as compared to $26.7 million in the prior year quarter. Excluding the $2.3 million of cost related to legal settlements SG&A expenses were relatively flat year over year. Reflected in the quarter was a reduction in advertising and promotion expenses and incentive compensation offset by an increase in bad debt reserves related to a pay-per-view service and a cable system that distribute our pay-per-view events.

Interest Income and Other net

Interest income and other net decreased by $1.9 million to ($0.3) million due primarily to a higher overall rate of return earned on investments in the prior year quarter.

Full Year Ended April 30 2003

Net revenues from continuing operations were $374.3 million as compared to $409.6 million in the prior year. Operating income from continuing operations for the current year was $27.0 million versus $50.0 million last year. Income from continuing operations was $16.4 million or $0.23 per common share as compared to $42.5 million or $0.58 per common share last year.

EBITDA was $37.6 million in the current year as compared to $60.2 million in the prior year. Included in the $37.6 million were $6.1 million of net costs related to legal settlements and a $0.7 million charge related to the early termination of a lease for office space.

Loss from discontinued operations related to the shut down of The World was $35.6 million or $0.50 per common share in fiscal year 2003. Included in this amount was an impairment charge of $32.9 million ($20.4 million after-tax) and an $8.9 million after-tax charge for estimated costs to shut down the facility. Loss from discontinued operations was $0.3 million or $0.00 loss per common share in the prior year. Included in the prior year results was a $4.6 million favorable adjustment related to the discontinuance of the XFL.

Net loss for the year was $19.2 million or $0.27 per common share as compared to net income of $42.2 million or $0.58 per common share in the prior year.

Live and Televised Entertainment

Total revenues for the Live and Televised businesses were $295.4 million as compared to $323.4 million last year.

• Live Event revenues were $72.2 million as compared to $74.1 million last year.
  • There were 327 events including 19 international events in the current year. This compares to 237 events last year including 5 international events.
  • The average attendance at our events was approximately 5 600 as compared to approximately 8 600 in the prior year.
  • The average ticket price increased approximately 9% to $38.82.
• Pay-Per-View revenues were $91.1 million as compared to $112.0 million in the prior year.
• Total domestic pay-per-view buys were 5.4 million as compared to 7.1 million in the prior year. Effective April 2002 the retail price of our pay-per-view increased from $29.95 to $34.95.
• Television Rights Fees revenues increased 10% to $58.5 million due to an increased number of television specials that aired in the year coupled with increased international rights fees.
• Television Advertising revenues were $72.9 million as compared to $83.6 million last year. This decrease was principally due to the impact of lower television ratings and decreased sponsorship revenues in the current year. Average household ratings for the year for our Raw program according to Nielsen Media Research was 3.7 as compared to 4.6 for the prior year. Average household ratings for the year for our SmackDown! program according to Nielsen Media Research was 3.4 as compared to 4.0 for the prior year.

Branded Merchandise

Total revenues for our Branded Merchandise businesses were $78.9 million as compared to $86.2 million last year.

• Licensing revenues were $21.8 million as compared to $24.4 million in the prior year the decrease due principally to lower toy sales.
• Merchandise revenues were $22.4 million as compared to $26.2 million in the prior year the decrease due primarily to declines in WWEShopzone.com and catalog sales.
• Publishing revenues were $15.2 million as compared to $16.3 million in the prior year the decrease due primarily to lower net newsstand and subscription units sold.
• Home Video revenues were relatively flat at approximately $13.8 million.

 

Profit Contribution (Net revenues less Cost of revenues)

Total profit contribution for the current year was $137.0 million as compared to $158.5 million in the prior year. Total profit contribution margin decreased to 37% from 39%.

The profit contribution margin for the Live and Televised businesses was approximately 36% versus 40% in the prior year primarily reflecting the impact of the William Morris Agency Inc. settlement the fixed nature of our television production costs and the decline in pay-per-view revenues in the current year.

The profit contribution margin for the Branded Merchandise businesses was 41% versus 34% in the prior year due to the absence of NHRA expenses and lower expenses associated with maintaining our web site in the current year and higher inventory write-offs in the Home Video category in the prior year.

Selling General and Administrative Expenses

SG&A expenses increased by $1.0 million to $99.3 million in the current year. Included in SG&A for the current year was a $3.8 million offer to settle a legal dispute and $1.1 million of net unfavorable litigation settlements. Excluding these items SG&A expenses decreased by 4% due primarily to lower staff related costs and advertising and promotion expenses as well as the absence of costs in the current year associated with our former hotel and casino. The decrease was partially offset by an increase in bad debt reserves related to a pay-per-view service and a cable system that distribute our pay-per-view events.

Interest Income and Other net

Interest income and other net decreased by $17.1 million to $0.3 million. Included in the prior year was $9.3 million related to the exercise and sale of certain warrants from our licensees as well as the revaluation of these warrants. In addition interest income decreased by $8.5 million due primarily to a higher overall rate of return earned on our investments in the prior year.

Outlook for Fiscal Year 2004

The Company has provided the following outlook for fiscal year 2004. This outlook is subject to various risks and uncertainties outlined in the forward-looking statement included in this release and other Securities and Exchange Commission filings of the Company. While the Company has provided a “range” for each estimate this in no way precludes actual results from being more or less than the range suggested by this outlook.

 

World Wrestling Entertainment Inc. (NYSE: WWE) is an integrated media and entertainment company headquartered in Stamford Conn. with offices in New York Los Angeles Toronto and London. Additional information on the Company can be found at wwe.com http://www.wwe.com/ and corporate.wwe.com http://corporate.wwe.com/. Information on television ratings and community activities can be found at parents.wwe.com http://parents.wwe.com/.

Media contact: Gary Davis 203-353-5066
Investor contact: Bob Finkel 203-352-8642

Trademarks: The names of all World Wrestling Entertainment televised and live programming talent names images likenesses slogans and wrestling moves and all World Wrestling Entertainment logos are trademarks which are the exclusive property of World Wrestling Entertainment Inc.

Forward-Looking Statements: This news release contains forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995 which are subject to various risks and uncertainties. These risks and uncertainties include the conditions of the markets for live events broadcast television cable television pay-per-view Internet entertainment professional sports and licensed merchandise; acceptance of the Company’s brands media and merchandise within those markets; uncertainties relating to litigation; risks associated with producing live events both domestically and internationally; uncertainties associated with international markets; and other risks and factors set forth from time to time in Company filings with the Securities and Exchange Commission. Actual results could differ materially from those currently expected or anticipated.

 

 

 

 

 

Copyright © 2005 by World Wrestling Entertainment Inc. and Shareholder.com. All rights reserved.