EXHIBIT 99.1
NEWS RELEASE |
Contacts: | Thomas Hornish | Angie Yang | ||||
Chief Operating Officer | PondelWilkinson Inc. | |||||
951.699.6991, ext. 104 | 310.279.5967 | |||||
thornish@outdoorchannel.com | ayang@pondel.com |
OUTDOOR CHANNEL HOLDINGS REPORTS DOUBLE-DIGIT REVENUE GAINS
FOR THE 2008 SECOND QUARTER
FOR THE 2008 SECOND QUARTER
TEMECULA, Calif. – July 31, 2008– Outdoor Channel Holdings, Inc. (NASDAQ: OUTD) today reported increases in total revenues of 14.4 percent and 9.8 percent, respectively, for the three- and six-month periods ended June 30, 2008.
Total revenues from continuing operations amounted to $13.0 million for the 2008 second quarter, compared with $11.4 million in the corresponding period a year ago. For the first half of 2008, total revenues from continuing operations equaled $24.7 million, compared with $22.5 million in the 2007 six-month period.
Advertising revenue for the 2008 second quarter rose 28.0 percent to $8.5 million from $6.6 million in the prior-year period. For the first six months of 2008, advertising sales rose 24.1 percent to $16.1 million from $13.0 million in the first half of 2007.
Subscriber fees totaled $4.6 million for the second quarter of 2008 and $8.6 million year-to-date. This reflects reductions of 4.6 percent and 9.6 percent, respectively, from $4.8 million and $9.5 million in the 2007 second quarter and six months. The company attributed the reductions in subscriber fees to the successful completion of carriage negotiations with the National Cable Television Cooperative (NCTC), Charter Communications and Comcast Corporation during the preceding three quarters.
“The positive momentum we witnessed in recent quarters has continued throughout the second quarter, and moving forward we remain hopeful that we can continue those trends,” said Roger L. Werner, president and chief executive officer. “In particular, we are pleased with the continued growth of our advertising revenues, despite a challenging economic environment. We believe the continued improvement in our ad sales is a clear testament to the advertising community’s growing acknowledgement of Outdoor Channel’s leadership in its genre.”
Outdoor Channel achieved another quarter of ratings increases over prior-year periods. For the 2008 second quarter, each night of the network’s primetime themed blocks, between 7 p.m. to midnight, delivered strong double-digit increases in household delivery. Leading the week was Outdoor Channel’s Thursday night hunting block, posting a 169 percent increase in household delivery. The Channel’s Friday night fishing, Wednesday night shooting and Monday night off-road motorsports blocks also achieved very strong double-digit gains in household delivery of 75 percent, 58 percent and 57 percent, respectively.
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Werner said household delivery ratings were generally higher throughout the entire day, citing a 36 percent increase Saturday and Sunday, between 6 a.m. to 7 p.m. and an 82 percent gain Monday through Friday, during the fringe hours between 4 p.m. to 7 p.m.
Outdoor Channel Holdings posted net income of $271,000, or $0.01 per diluted share, for the 2008 second quarter, compared with a net loss of $1.1 million, or $0.04 per share, in the prior-year period. For the 2008 six-month period, the company narrowed its net loss to $510,000, or $0.02 per share, from a net loss of $1.8 million, or $0.07 per share, for the first half of 2007.
Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense, amounted to $1.6 million for the 2008 second quarter, compared with $2.4 million in the prior-year period. For the year-to-date period, EBITDA, adjusted for the effects of discontinued operations and share-based compensation expense, equaled $1.6 million, compared with $4.9 million for the first six months of 2007.
Investor Conference Call
Outdoor Channel Holdings’ management will host an investor conference call today, July 31, 2008, at 2 p.m. PDT (5 p.m. EDT) to review the company’s financials and operations for its 2008 second quarter ended June 30, 2008. Investment professionals are invited to participate in the live call by dialing800-901-5217(domestic) or617-786-2964(international) and using participant passcode61535980. 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 able to listen to the live broadcast, the call will be archived for one year at both web sites. A telephonic playback of the conference call also will be available through 5 p.m. PDT (8 p.m. EDT), August 7, 2008, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 12208469.
About Outdoor Channel Holdings, Inc.
Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America’s leader in outdoor TV. The national network offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle. Outdoor Channel can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic new broadband website. For more information about the company or Outdoor Channel, please visit 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 30.1 million
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cable and satellite subscribers for August 2008. 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 discontinued operations and 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 discontinued operations and 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) 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; (3) the company’s ability to grow the subscriber base of Outdoor Channel; (4) a change in Nielsen’s methodology of estimating the number of subscribers to Outdoor Channel, or an inaccuracy in Nielsen’s such estimated number; (5) a decrease in operating results from offering reduced subscriber fee rates, launch support fees and other incentives to grow the subscriber base; 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.
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OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues: | ||||||||||||||||
Advertising | $ | 8,491 | $ | 6,634 | $ | 16,122 | $ | 12,991 | ||||||||
Subscriber fees | 4,556 | 4,775 | 8,605 | 9,524 | ||||||||||||
Total revenues | 13,047 | 11,409 | 24,727 | 22,515 | ||||||||||||
Cost of services: | ||||||||||||||||
Programming | 1,773 | 1,633 | 3,696 | 3,104 | ||||||||||||
Satellite transmission fees | 549 | 636 | 1,175 | 1,232 | ||||||||||||
Production and operations | 1,162 | 904 | 3,023 | 2,274 | ||||||||||||
Other direct costs | 95 | 17 | 192 | 55 | ||||||||||||
Total cost of services | 3,579 | 3,190 | 8,086 | 6,665 | ||||||||||||
Other expenses: | ||||||||||||||||
Advertising | 1,488 | 1,816 | 2,026 | 2,530 | ||||||||||||
Selling, general and administrative | 7,133 | 6,801 | 14,750 | 15,001 | ||||||||||||
Depreciation and amortization | 617 | 658 | 1,232 | 1,307 | ||||||||||||
Total other expenses | 9,238 | 9,275 | 18,008 | 18,838 | ||||||||||||
Income (loss) from operations | 230 | (1,056 | ) | (1,367 | ) | (2,988 | ) | |||||||||
Interest and other income, net | 408 | 812 | 946 | 1,515 | ||||||||||||
Income (loss) from continuing operations before income taxes | 638 | (244 | ) | (421 | ) | (1,473 | ) | |||||||||
Income tax provision | 367 | 819 | 89 | 353 | ||||||||||||
Income (loss) from continuing operations | 271 | (1,063 | ) | (510 | ) | (1,826 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | — | (7 | ) | — | 29 | |||||||||||
Net income (loss) | $ | 271 | $ | (1,070 | ) | $ | (510 | ) | $ | (1,797 | ) | |||||
Basic earnings (loss) per common share data: | ||||||||||||||||
From continuing operations | $ | 0.01 | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.07 | ) | |||||
From discontinued operations | $ | — | $ | — | $ | — | $ | — | ||||||||
Basic earnings per common share | $ | 0.01 | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.07 | ) | |||||
Diluted earnings (loss) per common share data: | ||||||||||||||||
From continuing operations | $ | 0.01 | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.07 | ) | |||||
From discontinued operations | $ | — | $ | — | $ | — | $ | — | ||||||||
Diluted earnings per common share | $ | 0.01 | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.07 | ) | |||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 25,965 | 25,857 | 26,049 | 25,728 | ||||||||||||
Diluted | 26,059 | 25,857 | 26,049 | 25,728 | ||||||||||||
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 60,507 | $ | 25,260 | ||||
Investment in available-for-sale securities | 6,856 | 46,155 | ||||||
Accounts receivable, net of allowance for doubtful accounts | 8,210 | 8,299 | ||||||
Other current assets | 5,625 | 5,626 | ||||||
Total current assets | 81,198 | 85,340 | ||||||
Property, plant and equipment, net | 10,910 | 11,632 | ||||||
Goodwill and amortizable intangible assets, net | 43,296 | 43,473 | ||||||
Investment in auction-rate securities | 2,683 | — | ||||||
Deferred tax assets, net | 9,239 | 9,326 | ||||||
Deposits and other assets | 1,688 | 1,930 | ||||||
Totals | $ | 149,014 | $ | 151,701 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | $ | 5,993 | $ | 4,833 | ||||
Long-term liabilities | 273 | 291 | ||||||
Total liabilities | 6,266 | 5,124 | ||||||
Total stockholders’ equity | 142,748 | 146,577 | ||||||
Totals | $ | 149,014 | $ | 151,701 | ||||
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Operating activities: | ||||||||||||||||
Net income (loss) | $ | 271 | $ | (1,070 | ) | $ | (510 | ) | $ | (1,797 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Income (loss) from discontinued operations | — | 7 | — | (29 | ) | |||||||||||
Depreciation and amortization | 617 | 658 | 1,232 | 1,307 | ||||||||||||
Amortization of subscriber acquisition fees | 120 | 128 | 242 | 244 | ||||||||||||
Gain on sale of equipment | — | — | (5 | ) | — | |||||||||||
Loss on sale of available-for-sale securities | — | — | 44 | — | ||||||||||||
Other-than-temporary impairment on auction-rate securities | 76 | — | 336 | — | ||||||||||||
Provision for doubtful accounts | 187 | 13 | 464 | 68 | ||||||||||||
Share-based employee and service provider compensation | 800 | 2,751 | 1,712 | 6,531 | ||||||||||||
Deferred tax provision, net | 366 | 806 | 87 | 360 | ||||||||||||
Tax benefits from exercise of stock options in excess of recognized expense | — | (7 | ) | — | (7 | ) | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (321 | ) | (1,115 | ) | (375 | ) | (1,148 | ) | ||||||||
Income tax refund receivable | — | — | (5 | ) | 2,077 | |||||||||||
Prepaid programming costs | (148 | ) | 253 | 198 | 500 | |||||||||||
Other current assets | 741 | (355 | ) | (192 | ) | (315 | ) | |||||||||
Deposits and other assets | 62 | (129 | ) | — | (314 | ) | ||||||||||
Accounts payable and accrued expenses | 669 | (132 | ) | 1,602 | 398 | |||||||||||
Deferred revenue | 79 | (5 | ) | 10 | (84 | ) | ||||||||||
Customer deposits | (12 | ) | — | (14 | ) | (41 | ) | |||||||||
Accrued severance payments | (38 | ) | (113 | ) | (225 | ) | (173 | ) | ||||||||
Deferred obligations | (112 | ) | (8 | ) | (97 | ) | (17 | ) | ||||||||
Net cash provided by operating activities | 3,357 | 1,682 | 4,504 | 7,560 | ||||||||||||
Investing activities: | ||||||||||||||||
Purchases of property, plant and equipment | (170 | ) | (492 | ) | (478 | ) | (709 | ) | ||||||||
Proceeds from sale of equipment | — | — | 15 | — | ||||||||||||
Proceeds from sale of discontinued operations | — | 3,589 | — | 3,589 | ||||||||||||
Purchases of available-for-sale and auction-rate securities | — | (42,824 | ) | (27,176 | ) | (59,550 | ) | |||||||||
Proceeds from sale of available-for-sale and auction-rate securities | 22,949 | 26,610 | 63,472 | 53,890 | ||||||||||||
Net cash provided by (used in) investing activities | 22,779 | (13,117 | ) | 35,833 | (2,780 | ) | ||||||||||
Financing activities: | ||||||||||||||||
Proceeds from exercise of stock options | 11 | 152 | 11 | 598 | ||||||||||||
Purchase and retirement of stock | (4,811 | ) | — | (4,811 | ) | — | ||||||||||
Purchase of treasury stock | (226 | ) | (105 | ) | (290 | ) | (272 | ) | ||||||||
Tax benefits from exercise of stock options in excess of recognized expense | — | 7 | — | 7 | ||||||||||||
Net cash provided by (used in) financing activities | (5,026 | ) | 54 | (5,090 | ) | 333 | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Cash flows from discontinued operations: | ||||||||||||||||
Net cash used in operating activities of discontinued operations | — | (334 | ) | — | (581 | ) | ||||||||||
Net cash used in investing activities of discontinued operations | — | (69 | ) | — | (69 | ) | ||||||||||
Net cash used in discontinued operations | — | (403 | ) | — | (650 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 21,110 | (11,784 | ) | 35,247 | 4,463 | |||||||||||
Cash and cash equivalents, beginning of period | 39,397 | 30,473 | 25,260 | 14,226 | ||||||||||||
Cash and cash equivalents, end of period | $ | 60,507 | $ | 18,689 | $ | 60,507 | $ | 18,689 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||
Income taxes paid | $ | 1 | $ | 7 | $ | 6 | $ | 8 | ||||||||
Supplemental disclosures of non-cash investing and financing activities: | ||||||||||||||||
Effect of net increase (decrease) in fair value of available-for-sale securities, net of deferred taxes | $ | — | $ | (33 | ) | $ | 59 | $ | (34 | ) | ||||||
Property, plant and equipment costs incurred but not paid | $ | 36 | $ | 30 | $ | 36 | $ | 30 | ||||||||
Retirement of treasury stock | $ | 354 | $ | 105 | $ | 290 | $ | 272 | ||||||||
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(unaudited, in thousands)
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(unaudited, in thousands)
The following table sets forth the reconciliation of net income (loss) to earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income (loss) | 271 | (1,070 | ) | (510 | ) | (1,797 | ) | |||||||||
Add/Subtract: | ||||||||||||||||
Interest and other income, net | 408 | 812 | 946 | 1,515 | ||||||||||||
Income tax provision | 367 | 819 | 89 | 353 | ||||||||||||
Depreciation and amortization | 617 | 658 | 1,232 | 1,307 | ||||||||||||
EBITDA | 847 | (405 | ) | (135 | ) | (1,652 | ) | |||||||||
Adjusted for: | ||||||||||||||||
Income (loss) from discontinued operations, net of tax | — | (7 | ) | — | 29 | |||||||||||
EBITDA as adjusted for discontinued operations, net of tax | 847 | (398 | ) | (135 | ) | (1,681 | ) | |||||||||
Adjusted for: | ||||||||||||||||
Share-based compensation expense | 800 | 2,751 | 1,712 | 6,531 | ||||||||||||
EBITDA as adjusted for discontinued operations, net of tax and share based compensation expense | 1,647 | 2,353 | 1,577 | 4,850 | ||||||||||||
Summary of Cost of Services | ||||||||||||||||
Share based compensation expense | $ | 76 | $ | 88 | $ | 175 | $ | 79 | ||||||||
Cost of Services | $ | 3,503 | $ | 3,102 | $ | 7,911 | $ | 6,586 | ||||||||
Total Cost of Services | $ | 3,579 | $ | 3,190 | $ | 8,086 | $ | 6,665 | ||||||||
Summary of Selling, general and administrative | ||||||||||||||||
Share based compensation expense | $ | 724 | $ | 2,663 | $ | 1,537 | $ | 6,452 | ||||||||
Selling, general and administrative | $ | 6,409 | $ | 4,138 | $ | 13,213 | $ | 8,549 | ||||||||
Total Selling, general and administrative | $ | 7,133 | $ | 6,801 | $ | 14,750 | $ | 15,001 |