First-Quarter 2015
Highlights
- Revenues increased 40% to $176.2
million, the highest quarterly revenue in WWE history
- OIBDA of $21.0 million increased $28.2
million from the prior year quarter
- Financial results surpassed the
Company's public guidance
- WWE Network reached 1.3 million total
subscribers, representing a 99% increase from the prior year
WrestleMania (which was held on April 6, 2014)
WWE (NYSE:WWE) today announced financial results for its first
quarter ended March 31, 2015. For the quarter, the Company
reported Net income of $9.8 million, or $0.13 per share, compared
to a Net loss of $8.0 million, or $0.11 per share, in the first
quarter last year.
“During the quarter, we generated record quarterly revenue and
strong earnings growth, reflecting our strategy to realize greater
value from our content across multiple platforms,” said WWE
Chairman & CEO Vince McMahon. “We believe that we are on a path
to significant growth as we continue to expand WWE Network and
innovate faster than ever.”
“Our strong earnings growth was driven primarily by the
escalation of our television rights fees and the expansion of WWE
Network subscribers. For the quarter, our OIBDA surpassed our
public guidance,” added George Barrios, Chief Strategy &
Financial Officer. “WWE Network subscribers watched an estimated
average of 53 hours of content per household over the quarter
putting it among Netflix and the top cable and broadcast networks
in terms of viewers per household. Additionally, WrestleMania 31
was viewed in more homes globally than ever before. Our ability to
engage our global fan base reinforces our view that successful
execution of our WWE Network strategy can generate meaningful
economic returns.”
WWE Network Update: First
Quarter Highlights
Network segment revenues increased 104% from the prior year
quarter. WWE Network surpassed 1.3 million subscribers1 following
WrestleMania 31 (as of March 29, 2015), making it the most viewed
WrestleMania in history. The subscriber level at quarter-end was
nearly double the number of subscribers reported on April 7, 2014 -
the day after WrestleMania last year - and represented a 33%
increase since January 27, 2015, when the network surpassed the 1
million subscriber milestone. Subscriber growth since January was
driven by the iconic attraction of the Company’s WrestleMania event
and the success of WWE Network’s February free promotion. During
the quarter, the Company continued to broaden the network’s global
distribution, launching it in the U.K. and Middle East, and
expanding distribution in Canada. From inception through March 31,
2015, WWE Network had attracted nearly 1.8 million unique
subscribers with 74% of these subscribers active as of that
date.
- WWE Network’s compelling live and new
original content continued to drive viewer engagement. WWE
Network’s most viewed programs were led by the Company’s
pay-per-views, original series, NXT Live, and other specials.
- During the quarter, 94% of total
subscribers accessed WWE Network at least once per month. WWE
Network subscribers watched an estimated average of 53 hours of
content per household over the quarter putting it among Netflix and
the top cable and broadcast networks in terms of viewer hours per
household.
(For additional information, see the Company’s First-Quarter
2015 Earnings Presentation, which can be found on the Company’s web
site at ir.corporate.wwe.com)
- WWE Network added 511,000 subscribers
to reach 1,327,000 paid subscribers at March 31, 2015, representing
a 63% increase from year-end 2014. The subscriber growth reflected
the acquisition of 795,000 subscribers, which was 13% above the
gross subscriber additions in the prior year period from the
network’s launch through WrestleMania (February 24, 2014 - April 6,
2014).
- WWE Network attracted an average of
approximately 927,000 paid subscribers for the first quarter 2015,
representing a 29% increase from the fourth quarter 2014 average.2
The network’s February free promotion contributed to that growth,
attracting approximately 201,000 trial subscribers, of which
154,000, or 77%, converted to paying subscribers in March.
- The Company continued to broaden the
global distribution of WWE Network. During the quarter, the network
was made available in the U.K. and Ireland in mid-January for £9.99
per month and €12.99 per month, respectively, and was launched in
the Middle East and North Africa in late March as a premium linear
channel. Additionally, Rogers Communications, the Company’s
exclusive network distribution partner in Canada, reached
agreements that made WWE Network available nationally in Canada
before WrestleMania (March 29). At quarter-end, WWE Network had
approximately 196,000 international subscribers.3
(1),(3) Subscriber numbers in UK/Ireland are subject to local
consumer protection laws and regulations governing fee charges.
(2) Average paid subscribers are calculated based on the
arithmetic daily mean over the relevant period, and may differ
substantially from paid subscribers at the end of any period due to
the timing of paid subscriber additions. Trial subscribers acquired
during a promotional period are not counted as paying subscribers
until they convert after the end of the free period.
WWE Network Update: Future
Plans
To grow WWE Network, the Company is executing a five-part
strategy, including creating new content, implementing high impact
customer acquisition and retention programs, introducing new
features, expanding distribution platforms, and entering new
geographies. Over the remainder of 2015, the Company is focused on
expanding the network’s line-up of compelling original content as a
critical element of this strategy.
Programming: In addition to the premium monthly live
pay-per-view events, WWE Network unveiled new programming for the
remainder of 2015, which includes eight brand new original
series and partnerships with director Jeff Tremaine, Seth Green’s
Stoopid Buddy Stoodios and legendary talk show host Jerry Springer.
In addition, in the new show, Diva Search, WWE will span the globe
in search of the most beautiful, athletic and charismatic women in
the world to find the next stunning WWE Diva. WWE Network will also
produce compelling special programming and short form content while
continuing to add 1,000 hours to its robust video-on-demand
library, which currently has more than 3,000 hours of content. (For
more details of WWE Network’s programming line-up, please see the
Company’s March 30, 2015 programming release).
Promotions: Based on the successful execution of the
network’s free trial offerings, the Company will continue its
sampling program. All new subscribers who register for the network
in May will receive the network for free in that month, including
WWE Payback live on Sunday, May 17.
Features/Distribution: Other important elements of the
Company’s network strategy include improving the user experience
and content discovery across devices, while continuing to expand
distribution platforms.
Geographies: The Company is developing plans for
geographic expansion to India, China, Germany, Japan, Italy,
Thailand and Malaysia.
2015 Business Outlook
The rate of WWE Network subscriber adoption is a critical
determinant of the Company’s projected future financial
performance.
In 2015, the Company expects year-over-year adjusted OIBDA
growth in every quarter, with growth driven by the performance of
WWE Network, the contractual escalation of television rights fees,
and continued innovation across all of the Company’s
businesses.
For the second quarter 2015, the table below outlines ranges of
potential Company performance at different subscriber levels
(Reconciliation of Operating Income to Adjusted OIBDA can be found
in the Supplemental Information included in this release).
Total Company - 2015 Q2 Adjusted OIBDA (in
millions) Average Paid Subscribers
4 2015 Q2 ($M) 1,000
$1 - $3
1,050
$2 - $4
1,100
$3 - $5
1,200
$6 - $8
1,300
$9 - $11
(For the full-year 2015 Business Outlook, see the Company’s Q4
2014 Earnings Release - February 12, 2015.)
(4) Average paid subscribers shown in thousands. The average
number of paid subscribers in 2015 Q1 was approximately
927,000.
Comparability of Results
WrestleMania 31 occurred on March 29, 2015 and is included in
first quarter 2015 results, whereas the comparable prior year event
occurred on April 6, 2014 and was included as part of second
quarter 2014 results. Given that a significant portion of first
quarter network subscriber growth occurred in late March of 2015,
the timing impact of the event on WWE Network profits within the
quarter is not considered to be material. Therefore, the Company
believes the timing impact of WrestleMania, is best estimated from
the direct contribution of the event to ticket sales, merchandise
sales, pay-per-view revenue, pay-per-view production costs
(excluding any attribution from WWE Network). In aggregate, these
items increased revenue by $24.9 million and reduced OIBDA and EPS
by $0.4 million and $0.00, respectively. In order to facilitate an
analysis of the Company’s financial results, the Company has
prepared a pro forma statement, which excludes these items from
reported amounts. (See Supplemental Information - Pro Forma Income
Statement & Reconciliation to GAAP Measures.)
The impact of WrestleMania is measured using a pro forma
statement rather than as an adjusting item to the Company’s
reported results because adjustments to the Company’s financial
measures are limited by definition to items that are difficult to
predict and are considered unusual or non-recurring in nature. As
defined, adjusted financial measures would exclude certain material
items, including but not limited to, non-cash impairments of film,
intangible and fixed assets, gains and losses on asset sales, as
well as material restructuring charges. No such items were reported
in or have been adjusted from first quarter 2015 or first quarter
2014 results.
Three Months Ended March 31, 2015
- Results by Region and Business Segment
Revenues increased 40% to $176.2 million. North American
revenues increased 38% driven primarily by the expansion of WWE
Network subscribers and the escalation of television rights fees as
reflected in the Company’s Media Division, as well as increased
Live Event revenue from the performance of North American events
and the timing of WrestleMania. Revenues from outside North America
increased 50% driven by the increased monetization of content as
reflected in the Media Division across the EMEA and Asia Pacific
regions. Changes in foreign exchange rates did not have a material
impact on first quarter 2015 revenue.
The following tables reflect net revenues by region and by
segment (in millions):
Three Months Ended
Net Revenues By
Region:
March 31, 2015 March 31, 2014
North America $ 140.3 $ 101.7 Europe/Middle East/Africa (EMEA) 21.6
12.9 Asia Pacific (APAC) 12.0 9.0 Latin America 2.3 2.0
Total net revenues $ 176.2 $ 125.6
Three Months Ended
Net Revenues by
Segment:
March 31, 2015 March 31, 2014
Media Division $ 104.8 $ 76.2 Live Events 39.3 21.7 Consumer
Products Division 30.2 23.2 WWE Studios 1.5 4.3 Corporate and Other
0.4 0.2 Total net revenues $ 176.2 $ 125.6
Media Division
Revenues from the Company's Media division increased 38% to
$104.8 million with growth driven by the ramp up of WWE Network and
the escalation of television rights fees, partially offset by
declines in Home Entertainment and Digital Media.
The following table reflects Media Division revenues (in
millions):
Three Months Ended
Media Division
Revenues
March 31, 2015 March 31, 2014
Network
$ 37.6 $ 18.4 Television 58.2 40.6 Home Entertainment 4.7 10.5
Digital Media 4.3 6.7 Total Media Division revenues $ 104.8
$ 76.2
- Network revenues, which include
revenue generated by WWE Network and pay-per-view, increased 104%
or $19.2 million from the prior year quarter.
WWE Network generated $28.6 million in revenue based on an
average of 927,000 paid subscribers over the quarter. WWE Network
had approximately 1,327,000(5) paid subscribers at March 31, 2015
as compared to 816,000 paid subscribers at December 31, 2014
and 495,000 paid subscribers at March 31, 2014.
The following table reflects WWE Network paid subscribers (in
thousands):
Three Months Ended
Twelve Months Ended
Mar. 31,
2015
Mar. 31,
2014
Dec. 31,
2014
Ending paid
subscribers
U.S. 1,131 495 772 International(6) 196 — 44 Total paid
subscribers 1,327 495 816
Average Paid
Subscribers
Quarter 927 147 — Year-to-date(7) 927 147 567
(5)(6) Subscriber numbers in UK/Ireland are subject to local
consumer protection laws and regulations governing fee charges.
(7) The calculation of average paid subscribers for the twelve
months ending Dec. 2014 uses a year-to-date period beginning
January 1, 2014 and is below the average that would be calculated
using the actual WWE Network launch date, February 24, 2014.
Pay-per-view revenue contributed $9.0 million in revenue with
approximately 505,000 buys as three events were produced in the
quarter. On a comparable basis (for the events produced in both the
current and prior year quarter), current period pay-per-view buys
declined 71%, reflecting the availability of pay-per-view events on
WWE Network.
The details for the number of buys are as follows (in
thousands):
Three Months Ended
Broadcast
Month
Events (in
chronological order)
March 31, 2015 March 31, 2014
January Royal Rumble® 145 467 February
Fast Lane™/Elimination Chamber™
46 183 March WrestleMania 31 259 Prior events 55 28 Total
505 678
- Television revenues increased
43% to $58.2 million from $40.6 million in the prior year quarter
primarily due to the renegotiation of key domestic and
international distribution agreements, the largest of which became
effective in the fourth quarter 2014 and the first quarter 2015.
Additionally, the increase in revenue reflected the production and
monetization of a third season of Total Divas, which had 10
episodes in the quarter as compared to 3 episodes of the second
season in the prior year quarter.
- Home Entertainment net revenues
decreased to $4.7 million from $10.5 million in the prior year
quarter primarily due to a 43% decline in units shipped and the
recognition of a $2.5 million minimum guarantee in the prior year
quarter. The decline in DVD units shipped reflected reduced
shipments of WWE's catalog titles attributable, in-part, to the
decline in the DVD industry. As catalog titles are typically
characterized by lower prices and profit margins than new releases,
the resulting change in product mix contributed to an 11% increase
in the average effective price to $8.74.
- Digital Media net revenues were
$4.3 million compared to $6.7 million in the prior year quarter.
The decline reflected lower advertising across various platforms as
well as lower monetization of the Company's pay-per-view webcasts
via WWE.com as these events became available on WWE Network.
Additionally, the decline reflected the absence of revenues
associated with the Company’s Magazine Publishing business, which
was discontinued in the third quarter 2014.
Live Events
Live Event revenues increased 81% to $39.3 million from $21.7
million in the prior year quarter primarily due to the timing of
the Company's annual WrestleMania event, which occurred in the
first quarter 2015 as compared to the second quarter 2014, and
stronger performance of the Company’s other live events in North
America.
- There were 76 total events in the
current quarter, including 73 events in North America and 3 events
in international markets, as compared to 80 events in the prior
year quarter, which were held in North America.
- North American live event revenue
increased 68% to $38.3 million from $21.7 million in the prior year
quarter, driven in part by the timing of WrestleMania, which
generated revenue of approximately $15.7 million in the current
year quarter. Excluding the impact of WrestleMania, revenue growth
from the Company’s North American live events reflected a 7%
increase in average ticket prices to $44.88 and a 4% increase in
average attendance to 6,700 fans. These factors more than offset
the impact of 8 fewer events in the region.
- International live event revenue
increased $1.0 million reflecting the staging of 3 events in the
current year quarter. (There were no international live events in
the prior year quarter.)
Consumer Products
Division
Revenues from Consumer Products increased 30% to $30.2 million
from $23.2 million in the prior year quarter, with growth across
our businesses as described below.
- Licensing revenues increased 18%
to $16.5 million primarily driven by increased video game revenues
that derived from both higher unit sales and effective royalty
rates than in the prior year quarter. Estimated unit sales of our
newest franchise game, WWE2K15, increased globally by approximately
30%. Additionally, the increase in licensing revenue benefited from
higher sales of downloadable content associated with our franchise
video game, WWE2K14, and a WWE branded game, WWE Supercard.
- Venue Merchandise revenues
increased 68% to $8.4 million from $5.0 million in the prior year
quarter reflecting an increase due to the timing of WrestleMania.
WrestleMania 31 generated venue merchandise sales of $3.3 million
in the current year quarter.
- WWEShop revenues increased 26%
to $5.3 million as compared to $4.2 million in the prior year
quarter as a 42% rise in the number of online merchandise sales to
approximately 113,000 orders was partially offset by a 11% decrease
in revenue per order to $46.51. The significant rise in orders was
driven by increased marketing, and improved product
assortment.
WWE Studios
WWE Studios recognized revenue of $1.5 million as compared to
revenue of $4.3 million in the prior year quarter. The decline in
revenue was primarily due to the performance and timing of results
from the Company’s portfolio of movies as the prior year quarter
reflected the strong performance of The Call (released theatrically
in March 2013).
WWE Studios' movie portfolio generated a loss of $0.4 million in
the quarter compared to income of $1.6 million in the prior year
quarter. In March 2015, WWE Studios released The Flintstones &
WWE Stone Age Smackdown (direct-to-DVD), which continues the
Company's successful partnership with Warner Bros. Animation.
Corporate and Other
Corporate and Other expenses of $38.1 million were essentially
unchanged from the prior year quarter. As defined, these expenses
include corporate G&A expenses as well as sales, marketing,
international management and talent development costs, which are
not allocated to specific segments.
Operating Income Before Depreciation
and Amortization (OIBDA)
OIBDA reached $21.0 million as compared to a loss of $7.2
million in the prior year quarter. The $28.2 million increase was
driven by the escalation of television rights fees, higher profits
from live events, the expansion of WWE Network, and increased video
game sales. Television profits increased $15.0 million
predominantly from the renegotiation of key distribution
agreements. Live event profits increased $13.8 million with $11.1
million attributable to WrestleMania and the remainder to the
strong performance of the Company’s other North American events.
Network segment OIBDA increased $2.1 million as significant growth
in subscription revenue was partially offset by the production
costs associated with WrestleMania. Reduced profits from Home
Entertainment and WWE Studios also partially offset the overall
OIBDA growth. With such growth across most of the Company’s
businesses, its OIBDA margin improved to 12% in the current year
quarter as compared to (6%) in the prior year quarter.
Depreciation and
Amortization
Depreciation and amortization expense totaled $5.9 million for
the current year quarter as compared to $5.0 million in the prior
year quarter. Depreciation and amortization expense in both the
current and prior year periods derived from investment in assets to
support the Company's content initiatives, including efforts to
launch WWE Network.
Investment Income, Interest and Other
Expense, Net
Investment income, interest and other expense, net yielded
expense of $0.6 million compared to an expense of $0.3 million in
the prior year quarter.
Effective tax rate
The effective tax rate of 32% decreased four percentage points
from the prior year quarter, reflecting increased deductions
for domestic production activities.
Cash Flows &
Liquidity
Cash flows provided by operating activities were $14.3 million
in the current year quarter. The source of cash was driven by the
Company's operating profit.
Purchases of property and equipment and other assets increased
by $1.5 million from the prior year period.
As of March 31, 2015, the Company held $113.6 million in
cash and short-term investments and currently estimates debt
capacity under the Company’s revolving line of credit to be
approximately $161 million.
Additional Information
Additional business metrics are made available to investors on a
monthly basis on the corporate website - ir.corporate.wwe.com.
Note: As previously announced, WWE will host a conference call on
April 30, 2015 at 11:00 a.m. ET to discuss the Company's
earnings results for the first quarter of 2015. All interested
parties are welcome to listen to a live web cast that will be
hosted through the Company’s web site at ir.corporate.wwe.com.
Participants can access the conference call by dialing
1-855-200-4993 (toll free) or 913-489-5104 from outside the U.S.
(conference ID for both lines: 6696160). Please reserve a line 5-10
minutes prior to the start time of the conference call.
The earnings presentation referenced during the call will be
made available on April 30, 2015 at ir.corporate.wwe.com. A replay
of the call will be available approximately two hours after the
conference call concludes, and can be accessed on the Company’s web
site.
About WWE
WWE, a publicly traded company (NYSE:WWE), is an integrated
media organization and recognized leader in global entertainment.
The company consists of a portfolio of businesses that create and
deliver original content 52 weeks a year to a global audience. WWE
is committed to family friendly entertainment on its television
programming, pay-per-view, digital media and publishing platforms.
WWE programming reaches more than 650 million homes worldwide in 35
languages. WWE Network, the first-ever 24/7 over-the-top premium
network that includes all 12 live pay-per-views, scheduled
programming and a massive video-on-demand library, is currently
available in more than 170 countries. The company is headquartered
in Stamford, Conn., with offices in New York, Los Angeles, London,
Mexico City, Mumbai, Shanghai, Singapore, Dubai, Munich and
Tokyo.
Additional information on WWE (NYSE:WWE) can be found at wwe.com
and corporate.wwe.com. For information on our global activities, go
to http://www.wwe.com/worldwide/.
Trademarks: All WWE programming,
talent names, images, likenesses, slogans, wrestling moves,
trademarks, logos and copyrights are the exclusive property of WWE
and its subsidiaries. All other trademarks, logos and copyrights
are the property of their respective owners.
Forward-Looking Statements: This
press 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, without limitation, risks relating
to: WWE Network; major distribution agreements; our need to
continue to develop creative and entertaining programs and events;
a decline in the popularity of our brand of sports entertainment;
the continued importance of key performers and the services of
Vincent K. McMahon; possible adverse changes in the regulatory
atmosphere and related private sector initiatives; the highly
competitive, rapidly changing and increasingly fragmented nature of
the markets in which we operate and greater financial resources or
marketplace presence of many of our competitors; uncertainties
associated with international markets; our difficulty or inability
to promote and conduct our live events and/or other businesses if
we do not comply with applicable regulations; our dependence on our
intellectual property rights, our need to protect those rights, and
the risks of our infringement of others’ intellectual property
rights; the complexity of our rights agreements across distribution
mechanisms and geographical areas; potential substantial liability
in the event of accidents or injuries occurring during our
physically demanding events including, without limitation, claims
relating to CTE; large public events as well as travel to and from
such events; our feature film business; our expansion into new or
complementary businesses and/or strategic investments; our computer
systems and online operations; a possible decline in general
economic conditions and disruption in financial markets; our
accounts receivable; our revolving credit facility; litigation; our
potential failure to meet market expectations for our financial
performance, which could adversely affect our stock; Vincent K.
McMahon exercising control over our affairs, and his interests may
conflict with the holders of our Class A common stock; a
substantial number of shares which are eligible for sale by the
McMahons and the sale, or the perception of possible sales, of
those shares could lower our stock price; and the relatively small
public “float” of our Class A common stock. In addition, our
dividend is dependent on a number of factors, including, among
other things, our liquidity and cash flow, strategic plan
(including alternative uses of capital), our financial results and
condition, contractual and legal restrictions on the payment of
dividends (including under our revolving credit facility), general
economic and competitive conditions and such other factors as our
Board of Directors may consider relevant. Forward-looking
statements made by the Company speak only as of the date made, are
subject to change without any obligation on the part of the Company
to update or revise them, and undue reliance should not be placed
on these statements.
World Wrestling Entertainment,
Inc.
Consolidated Income Statements
(In millions, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2015 March 31, 2014
Net revenues $ 176.2 $ 125.6 Cost of revenues 109.7 84.8
Selling, general and administrative expenses 45.5 48.0 Depreciation
and amortization 5.9 5.0 Operating income (loss) 15.1
(12.2 ) Investment income, net 0.2 0.3 Interest expense (0.5
) (0.5 ) Other expense, net (0.3 ) (0.1 ) Income (loss) before
income taxes 14.5 (12.5 ) Provision for (benefit from)
income taxes 4.7 (4.5 ) Net income (loss) $ 9.8 $
(8.0 ) Earnings (loss) per share: Basic and diluted $ 0.13 $
(0.11 ) Weighted average common shares outstanding: Basic 75.5 75.1
Diluted
76.0
75.1 Dividends declared per common share (Class A and B) $ 0.12
$ 0.12
World Wrestling Entertainment,
Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
As of March 31,
2015 December 31, 2014 ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 46.9 $ 47.2 Short-term
investments, net 66.7 68.2 Accounts receivable, net 54.9 40.1
Inventory 5.9 4.7 Deferred income tax assets 22.4 24.1 Prepaid
expenses and other current assets 12.3 12.9 Total
current assets 209.1 197.2 PROPERTY AND EQUIPMENT,
NET 113.9 114.1 FEATURE FILM PRODUCTION ASSETS, NET 27.3 26.5
TELEVISION PRODUCTION ASSETS, NET 2.4 5.8 INVESTMENT SECURITIES
21.7 7.2 NON-CURRENT DEFERRED INCOME TAX ASSETS 19.4 10.9 OTHER
ASSETS, NET 20.4 20.9 TOTAL ASSETS $ 414.2 $
382.6
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT
LIABILITIES: Current portion of long-term debt $ 4.4 $ 4.3 Accounts
payable and accrued expenses 75.9 57.6 Deferred income 41.6
38.7 Total current liabilities 121.9 100.6
LONG-TERM DEBT 20.5 21.6 NON-CURRENT INCOME TAX LIABILITIES 1.8 1.7
NON-CURRENT DEFERRED INCOME 60.5 52.8 Total
liabilities 204.7 176.7 COMMITMENTS AND
CONTINGENCIES STOCKHOLDERS’ EQUITY: Class A common stock 0.3 0.3
Class B convertible common stock 0.4 0.4 Additional paid-in-capital
356.6 353.7 Accumulated other comprehensive income 3.3 3.3
Accumulated deficit (151.1 ) (151.8 ) Total stockholders’ equity
209.5 205.9 TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $ 414.2 $ 382.6
World Wrestling Entertainment,
Inc.
Consolidated Statements of Cash
Flows
(In millions)
(Unaudited)
Three Months Ended
March 31, 2015 March 31, 2014
OPERATING ACTIVITIES: Net income (loss) $ 9.8 $ (8.0 ) Adjustments
to reconcile net income (loss) to net cash provided by/(used in)
operating activities: Amortization and impairments of feature film
production assets 0.7 1.4 Amortization of television production
assets 6.8 2.8 Depreciation and amortization 6.9 5.0 Services
provided in exchange for equity instruments (0.1 ) (0.2 ) Other
Amortization 0.5 0.5 Stock-based compensation 2.5 3.1 Provision for
(recovery from) doubtful accounts 0.2 (0.1 ) (Benefit from)
provision for deferred income taxes (6.8 ) 5.1 Cash provided
by/(used in) changes in operating assets and liabilities: Accounts
receivable (15.1 ) (7.7 ) Inventory (1.2 ) (1.5 ) Prepaid expenses
and other assets (0.5 ) (11.1 ) Feature film production asset spend
(1.5 ) (4.4 ) Television production asset spend (3.4 ) (5.2 )
Accounts payable, accrued expenses and other liabilities
18.7
(3.3 ) Deferred income (3.2 ) 14.2 Net cash provided
by/(used in) operating activities
14.3
(9.4 ) INVESTING ACTIVITIES: Purchases of property and
equipment and other assets
(5.7
) (4.2 ) Net proceeds from infrastructure improvement incentives —
2.9 Purchases of short-term investments (4.6 ) (2.5 ) Proceeds from
sales and maturities of investments 6.1 12.8 Purchase of investment
securities (0.7 ) (2.0 ) Net cash (used in)/provided by investing
activities
(4.9
) 7.0 FINANCING ACTIVITIES: Proceeds from the issuance of
note payable — 0.4 Repayment of long-term debt (1.1 ) (0.9 )
Dividends paid (9.1 ) (9.0 ) Proceeds from issuance of stock 0.5
0.4 Net cash used in financing activities (9.7 ) (9.1
) NET DECREASE IN CASH AND CASH EQUIVALENTS (0.3 ) (11.5 ) CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD 47.2 32.9 CASH
AND CASH EQUIVALENTS, END OF PERIOD $ 46.9 $ 21.4
NON-CASH INVESTING TRANSACTIONS: Non-cash purchase of property and
equipment $
1.2
$ 0.6
Non-cash purchase of investment
securities
$ 13.8 $ —
World Wrestling Entertainment,
Inc.
Supplemental Information - Free Cash
Flow
(In millions)
(Unaudited)
Three Months Ended
March 31, 2015 March 31, 2014 Net cash
provided by/(used in) operating activities $
14.3
$ (9.4 ) Less cash used for capital expenditures: Purchase
of property and equipment and other assets
(5.7
) (4.2 ) Free Cash Flow $ 8.6 $ (13.6 )
Non-GAAP Measure:
We define Free Cash Flow as net cash provided by
operating activities less cash used for capital expenditures.
Although it is not a recognized measure of liquidity under U.S.
GAAP, Free Cash Flow provides useful information regarding the
amount of cash our continuing business is generating after capital
expenditures, available for reinvesting in the business, servicing
and repaying debt, and for payment of dividends.
World Wrestling Entertainment,
Inc.
Supplemental Information - Schedule of
Adjustments
(In millions, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2015
Three Months Ended March 31,
2014
As reported Adjusted As reported
Adjusted Operating income (loss) $ 15.1
$ 15.1 $ (12.2 ) $
(12.2 ) Investment, interest and other expense, net
(0.6 ) (0.6 ) (0.3 ) (0.3 ) Income (loss) before income
taxes 14.5 14.5 (12.5 ) (12.5 ) Provision for (benefit from) income
taxes
4.7
4.7
(4.5
)
(4.5
)
Net income (loss) $ 9.8 $ 9.8 $ (8.0 ) $ (8.0
) Earnings (loss) per share: $ 0.13 $ 0.13 $
(0.11 ) $ (0.11 )
Reconciliation of Operating income to
OIBDA Operating income (loss)
15.1
15.1
(12.2 )
(12.2 ) Depreciation and amortization 5.9 5.9 5.0
5.0 OIBDA $ 21.0 $ 21.0 $ (7.2 ) $ (7.2
)
Non-GAAP Measures:
The Company defines OIBDA as operating income before
depreciation and amortization, excluding feature film and
television production asset amortization and impairments, as well
as the amortization of costs related to content delivery and
technology assets utilized for WWE Network. OIBDA is a
non-GAAP financial measure and may be different than
similarly-titled non-GAAP financial measures used by other
companies. A limitation of OIBDA is that it excludes depreciation
and amortization, which represents the periodic charge for certain
fixed assets and intangible assets used in generating revenues for
the Company's business. OIBDA should not be regarded as an
alternative to operating income or net income as an indicator of
operating performance, or to the statement of cash flows as a
measure of liquidity, nor should it be considered in isolation or
as a substitute for financial measures prepared in accordance with
GAAP. We believe that operating income is the most directly
comparable GAAP financial measure to OIBDA.
Adjusted OIBDA, Adjusted Operating income, Adjusted Net
income and Adjusted Earnings per share exclude certain material
items, which otherwise would impact the comparability of results
between periods. These items include, but are not limited to,
non-cash impairments of film, intangible and fixed assets, gains
and losses on asset sales, as well as material restructuring
charges. The adjusted measures should not be considered as an
alternative to net income, cash flows from operations or any other
indicator of WWE's performance or liquidity, determined in
accordance with U.S. GAAP.
World Wrestling Entertainment,
Inc.Supplemental Information - Reconciliation of Operating
income to Adjusted OIBDA(In millions, except per share
data)(Unaudited)
WWE 2015 Q2 potential performance at different subscriber
Levels Average Subscribers (000s) Operating
Income Depreciation OIBDA
Adjustments to OIBDA1
Adjusted OIBDA
1,000
$(6)
-
$(4)
$7
$1
-
$3
$0
$1
-
$3
1,050
$(5)
-
$(3)
$7
$2
-
$4
$0
$2
-
$4
1,100
$(4)
-
$(2)
$7
$3
-
$5
$0
$3
-
$5
1,200
$(1)
-
$1
$7
$6
-
$8
$0
$6
-
$8
1,300
$2
-
$4
$7
$9
-
$11
$0
$9
-
$11
Non-GAAP Measures:
The Company defines OIBDA as operating income before
depreciation and amortization, excluding feature film and
television production asset amortization and impairments, as well
as the amortization of costs related to content delivery and
technology assets utilized for WWE Network. OIBDA is a non-GAAP
financial measure and may be different than similarly-titled
non-GAAP financial measures used by other companies. A limitation
of OIBDA is that it excludes depreciation and amortization, which
represents the periodic charge for certain fixed assets and
intangible assets used in generating revenues for the Company's
business. OIBDA should not be regarded as an alternative to
operating income or net income as an indicator of operating
performance, or to the statement of cash flows as a measure of
liquidity, nor should it be considered in isolation or as a
substitute for financial measures prepared in accordance with GAAP.
We believe that operating income is the most directly comparable
GAAP financial measure to OIBDA.
Adjusted OIBDA, Adjusted Operating income, Adjusted Net
income and Adjusted Earnings per share exclude certain material
items, which otherwise would impact the comparability of results
between periods. These items include, but are not limited to,
non-cash impairments of film, intangible and fixed assets, gains
and losses on asset sales, as well as material restructuring
charges. The adjusted measures should not be considered as an
alternative to net income, cash flows from operations or any other
indicator of WWE's performance or liquidity, determined in
accordance with U.S. GAAP.
(1) Unknown at this time, there may be other items that would be
adjusted for in the presentation above.
World Wrestling Entertainment,
Inc.
Supplemental Information - Pro Forma
Income Statement & Reconciliation to GAAP Measures
Pro forma Excludes Timing Impact of
WrestleMania 31
(In millions, except per share
data)(Unaudited)
Q1 2015
Q1 2015 Q1 2015 Q1 2014
Revenues:
Reported WM 31 Timing
Pro forma
Reported
Media
Division
Pay-per-view $ 9.0 $ (4.9 ) $ 4.1 $ 13.8 WWE Classics On Demand — —
— 0.2 Subscriptions 28.6 — 28.6
4.4 Network 37.6 (4.9 )
32.7 18.4 Television 58.2 (1.0 ) 57.2
40.6 Home Entertainment 4.7 — 4.7 10.5 Digital Media 4.3
— 4.3 6.7
Media
Division 104.8 (5.9 ) 98.9
76.2
Live Events 39.3 (15.7 ) 23.6 21.7
Consumer Products
Division
Licensing 16.5 — 16.5 14.0 Venue Merchandise 8.4 (3.3 ) 5.1 5.0
WWEShop 5.3 — 5.3
4.2
Consumer Products Division 30.2
(3.3 ) 26.9 23.2
WWE
Studios 1.5 — 1.5 4.3
Corporate and Other 0.4
— 0.4 0.2
Total
Revenues $ 176.2 $ (24.9 ) $ 151.3 $ 125.6
OIBDA:
Media Division $ 26.4 $ 12.7 $ 39.1 $ 13.2 Live Events 17.6 (11.1 )
6.5 3.8 Consumer Products Division 15.1 (1.2 ) 13.9 11.9 WWE
Studios (0.4 ) — (0.4 ) 1.6 Corporate and Other (37.7 )
— (37.7 ) (37.7 )
OIBDA
21.0 0.4 21.4 (7.2 )
Depreciation & amortization
(5.9 ) — (5.9 ) (5.0 )
Operating income (loss)
15.1 0.4 15.5
(12.2 )
Interest and other, net
(0.6 ) (0.6 ) (0.3 )
Income (loss) before taxes
14.5 0.4 14.9 (12.5 )
Provision for (benefit from) for taxes
4.7
0.1
4.8
(4.5
)
Income (loss) from Continuing
Operations
9.8 0.3 10.1 (8.0
)
Net income (loss)
$ 9.8 $ 0.3 $ 10.1 $ (8.0 ) EPS - basic
and diluted $ 0.13 $ — $ 0.13 $ (0.11 )
Given that a significant portion of first quarter WWE Network
subscriber growth occurred in late March, 2015, the timing impact
of WrestleMania on WWE Network profits within the current year
quarter is not considered to be material. With the evolution to a
subscription based platform, the Company believes that the value of
WrestleMania is reflected in the acquisition and retention of
subscribers over longer periods of time as opposed to solely in the
period in which the event occurs.
WWEInvestors:Michael Weitz,
203-352-8642orMedia:Tara Carraro, 203-352-8625
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