Spin-off of Traditional Live Entertainment
Business Completed in April
Sale of Majority Interest in Tao Group
Hospitality Completed Earlier this Month
Sphere in Las Vegas on Track to Open in
September 2023
Sphere Entertainment Co. (NYSE: SPHR) ("Sphere Entertainment" or
the "Company") today reported financial results for the fiscal
third quarter ended March 31, 2023.
On April 20, 2023, the Company completed the spin-off of its
traditional live entertainment business. As a result of the timing
of the spin-off, the Company’s fiscal 2023 third quarter
consolidated results include the financial results of the
traditional live entertainment business.
In addition, on May 3, 2023, the Company completed the sale of
its 66.9% majority interest in Tao Group Hospitality. As a result,
Tao Group Hospitality's results are reported as discontinued
operations for all periods presented.
For the fiscal 2023 third quarter, the Company reported revenues
of $363.3 million, an increase of $10.8 million, or 3%, as compared
to the prior year quarter. In addition, the Company reported an
operating loss of $70.3 million, a decrease of $71.1 million, and
adjusted operating income of $19.4 million, a decrease of $19.0
million, both as compared to the prior year period.(1)
Executive Chairman and CEO James L. Dolan said, “With the
completion of the spin-off of our traditional live entertainment
business and the sale of our interest in Tao Group Hospitality, our
Company has enhanced flexibility to execute its business strategy.
As we approach the opening of Sphere in Las Vegas, we remain
confident that this next chapter for our Company will drive
long-term shareholder value.”
Segment Results for the Three and Nine
Months Ended March 31, 2023 and 2022:
Three Months Ended
Nine Months Ended
March 31,
Change
March 31,
Change
$ millions
2023
2022
$
%
2023
2022
$
%
Revenues
Entertainment
$
201.9
$
194.6
$
7.3
4
%
$
705.5
$
476.4
$
229.0
48
%
MSG Networks
161.4
167.6
(6.1
)
(4
)%
442.8
469.0
(26.2
)
(6
)%
Other(2)
—
(9.6
)
9.6
100
%
(8.8
)
(17.0
)
8.2
48
%
Total Revenues
$
363.3
$
352.5
$
10.8
3
%
$
1,139.5
$
928.4
$
211.1
23
%
Operating Income
(Loss)
Entertainment
$
(81.1
)
$
(44.8
)
$
(36.3
)
(81
)%
$
(119.9
)
$
(172.8
)
$
52.9
31
%
MSG Networks
10.4
45.9
(35.5
)
(77
)%
62.9
104.3
(41.5
)
(40
)%
Other(2)
0.4
(0.3
)
0.7
NM
0.7
(0.9
)
1.6
NM
Total Operating Income (Loss)
$
(70.3
)
$
0.9
$
(71.1
)
NM
$
(56.4
)
$
(69.4
)
$
13.0
19
%
Adjusted
Operating Income (Loss)
Entertainment
$
(39.3
)
$
(12.3
)
$
(27.0
)
NM
$
(20.7
)
$
(71.7
)
$
51.1
71
%
MSG Networks
58.3
50.8
7.5
15
%
130.5
150.5
(19.9
)
(13
)%
Other(2)
0.4
(0.1
)
0.5
NM
1.3
(0.4
)
1.7
NM
Total Adjusted Operating Income
$
19.4
$
38.5
$
(19.0
)
(49
)%
$
111.2
$
78.3
$
32.8
42
%
Note:
Amounts may not foot due to
rounding
(1)
See page 4 of this earnings
release for the definition of adjusted operating income (loss)
included in the discussion of non-GAAP financial measures.
(2)
Includes inter-segment
eliminations and, for operating income (loss), purchase accounting
adjustments.
Entertainment
For the fiscal 2023 third quarter, the Entertainment segment
generated revenues of $201.9 million, an increase of $7.3 million,
or 4%, as compared to the prior year period. Revenues related to
the Company's arena license agreements with the Knicks and Rangers
increased $11.7 million. This included a $10.1 million increase in
revenues subject to the sharing of economics with Madison Square
Garden Sports Corp. ("MSG Sports"), primarily reflecting higher
food, beverage and merchandise sales and higher suite license fees
revenues at Knicks and Rangers games. Revenues from the
presentation of the Christmas Spectacular production increased $3.5
million, which reflected seven performances during the current year
quarter as compared to no performances in the prior year quarter.
The increase in revenues was partially offset by a decrease in
advertising sales commissions of $9.6 million in the current year
period due to the termination of MSG Networks' advertising sales
representation agreement.
Fiscal 2023 third quarter direct operating expenses of $120.8
million increased $10.1 million, or 9%, as compared to the prior
year quarter. Expenses associated with the sharing of economics
with MSG Sports pursuant to the arena license agreements increased
$4.5 million, reflecting the increase in related revenues, while
direct operating expenses also included $4.4 million associated
with the Company's Sphere initiative.
Fiscal 2023 third quarter selling, general and administrative
expenses of $120.3 million increased $24.1 million, or 25%, as
compared with the prior year quarter. This increase primarily
reflected higher professional fees of $11.4 million, mainly due to
costs related to the Company's spin-off of its live entertainment
business, as well as higher employee compensation and related
benefits of $8.0 million and other general administrative expenses
of $4.7 million, both primarily due to the Company's Sphere
initiative.
Fiscal 2023 third quarter operating loss of $81.1 million
increased by $36.3 million and adjusted operating loss of $39.3
million increased by $27.0 million, both as compared to the prior
year period. The increases in operating loss and adjusted operating
loss were primarily due to higher selling, general and
administrative expenses and, to a lesser extent, higher direct
operating expenses, partially offset by the increase in revenues.
The increase in operating loss also reflected the impact of higher
restructuring charges in the current year period.
MSG Networks
For the fiscal 2023 third quarter, the MSG Networks segment
generated revenues of $161.4 million, a decrease of $6.1 million,
or 4%, as compared to the prior year period. Affiliation fee
revenue decreased $11.1 million, primarily due to a decrease in
subscribers of approximately 10%, partially offset by the impact of
higher affiliation rates in the current year quarter. Advertising
revenue increased $4.5 million, primarily reflecting higher
advertising sales related to professional sports telecasts due to a
higher number of live telecasts and an increase in per-game
advertising sales as compared to the prior year period, as well as
higher sales related to MSG Networks' non-ratings-based advertising
initiatives.
Fiscal 2023 third quarter direct operating expenses of $89.3
million increased $2.1 million, or 2%, as compared to the prior
year quarter, primarily due to higher rights fees expense of $2.5
million, which mainly reflects annual contractual rate increases in
the current year period.
Fiscal 2023 third quarter selling, general and administrative
expenses of $60.1 million increased $27.8 million, or 86%, as
compared to the prior year quarter. This mainly reflects a $44.6
million net increase in expenses, primarily litigation-related,
associated with the Company's acquisition of MSG Networks. This was
partially offset by net lower advertising sales commission expenses
of $8.3 million in the current year period due to the termination
of MSG Networks' advertising sales representation agreement, lower
advertising and marketing expenses of $5.0 million, lower employee
compensation and related benefits of $1.3 million and other cost
decreases.
Fiscal 2023 third quarter operating income of $10.4 million
decreased $35.5 million, or 77%, as compared to the prior year
quarter, primarily due to the increase in selling, general and
administrative expenses (including merger and acquisition-related
costs), and, to a lesser extent, the decrease in revenues and the
increase in direct operating expenses. Adjusted operating income of
$58.3 million increased $7.5 million, or 15%, as compared to the
prior year quarter, primarily due to the decrease in selling,
general and administrative expenses (excluding merger and
acquisition-related costs), partially offset by the decrease in
revenues and increase in direct operating expenses.
Other Matters
The Company continues to make significant progress in its final
phases of construction of Sphere in Las Vegas. This includes
completing LED installation on the Exosphere earlier in the third
quarter, and the interior LED display plane this month, while
continuing to build out the venue's interior spaces, including the
suites and hospitality areas. Global rock band U2 will open the
venue on September 29th with the start of its five-week, 17-show
run. “Sphere Experiences,” one of the core content categories to be
featured at Sphere, will debut to the public on October 6th with
Postcard from Earth. Tickets are now on sale for this
first-of-its-kind immersive production, which will run multiple
times per day, year-round and is designed to utilize the full
breadth of the venue’s next-generation technologies. And in
mid-November, Formula 1 will have a multi-day takeover of Sphere
for its inaugural Las Vegas Grand Prix.
As construction nears completion of Sphere in Las Vegas, the
Company has adjusted its construction cost estimate, inclusive of
core technology and soft costs, to approximately $2.3 billion, from
its prior estimate of $2.175 billion, with the increase primarily
reflecting the overall complexity of the project. Actual
construction costs paid through May 9, 2023 were approximately
$2.08 billion, which was net of $65 million received from The
Venetian Resort.
As of May 9, 2023, the Company had over $230 million in
unrestricted cash and cash equivalents, including proceeds from the
sale of Tao Group Hospitality, and full availability under its $65
million delayed draw term loan facility with Madison Square Garden
Entertainment Corp. In addition, the Company owns approximately 17
million shares of Class A common stock (equivalent to an
approximately 33% economic interest) of Madison Square Garden
Entertainment Corp., which had a fair market value of approximately
$575 million as of May 9, 2023.
About Sphere Entertainment Co.
Sphere Entertainment Co. is a premier live entertainment and
media company. The Company includes Sphere, a next-generation
entertainment medium powered by cutting-edge technologies to
redefine the future of entertainment. The first Sphere venue is
currently under construction in Las Vegas. In addition, the Company
includes MSG Networks, which operates two regional sports and
entertainment networks, MSG Network and MSG Sportsnet, as well as a
companion streaming service, MSG GO, delivering a wide range of
live sports content and other programming. More information is
available at www.sphereentertainmentco.com.
Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP
financial measure, as operating income (loss) before (i) the impact
of non-cash straight-line leasing revenue associated with the arena
license agreements with MSG Sports, (ii) depreciation, amortization
and impairments of property and equipment, goodwill and other
intangible assets, (iii) amortization for capitalized cloud
computing arrangement costs, (iv) share-based compensation expense
or benefit, (v) restructuring charges or credits, (vi) merger and
acquisition-related costs, including litigation expenses, (vii)
gains or losses on sales or dispositions of businesses and
associated settlements, (viii) the impact of purchase accounting
adjustments related to business acquisitions, and (ix) gains and
losses related to the remeasurement of liabilities under the
Company’s Executive Deferred Compensation Plan (which was
established in November 2021). We believe that given the length of
the arena license agreements and resulting magnitude of the
difference in leasing revenue recognized and cash revenue received,
the exclusion of non-cash leasing revenue provides investors with a
clearer picture of the Company's operating performance. We believe
that this adjustment is beneficial for other incremental reasons as
well. This adjustment provides senior management, investors and
analysts with important information regarding a long-term related
party agreement with MSG Sports. In addition, this adjustment is
included under the Company’s debt covenant compliance calculations
and is a component of the performance measures used to evaluate,
and compensate, senior management of the Company. We believe that
the exclusion of share-based compensation expense or benefit allows
investors to better track the performance of the various operating
units of our business without regard to the settlement of an
obligation that is not expected to be made in cash. We eliminate
merger and acquisition-related costs because the Company does not
consider such costs to be indicative of the ongoing operating
performance of the Company as they result from an event that is of
a non-recurring nature, thereby enhancing comparability. In
addition, management believes that the exclusion of gains and
losses related to the remeasurement of liabilities under the
Company’s Executive Deferred Compensation Plan (which was
established in November 2021), provides investors with a clearer
picture of the Company’s operating performance given that, in
accordance with U.S. generally accepted accounting principles
(“GAAP”), gains and losses related to the remeasurement of
liabilities under the Company’s Executive Deferred Compensation
Plan are recognized in Operating (income) loss whereas gains and
losses related to the remeasurement of the assets under the
Company’s Executive Deferred Compensation Plan, which are equal to
and therefore fully offset the gains and losses related to the
remeasurement of liabilities, are recognized in Miscellaneous
income (expense), net, which is not reflected in Operating income
(loss).
We believe adjusted operating income (loss) is an appropriate
measure for evaluating the operating performance of our business
segments and the Company on a consolidated basis. Adjusted
operating income (loss) and similar measures with similar titles
are common performance measures used by investors and analysts to
analyze our performance. Internally, we use revenues and adjusted
operating income (loss) as the most important indicators of our
business performance, and evaluate management’s effectiveness with
specific reference to these indicators. Adjusted operating income
(loss) should be viewed as a supplement to and not a substitute for
operating income (loss), net income (loss), cash flows from
operating activities, and other measures of performance and/or
liquidity presented in accordance with GAAP. Since adjusted
operating income (loss) is not a measure of performance calculated
in accordance with GAAP, this measure may not be comparable to
similar measures with similar titles used by other companies. For a
reconciliation of operating income (loss) to adjusted operating
income (loss), please see page 6 of this release.
Forward-Looking Statements
This press release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
that any such forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties,
and that actual results, developments or events may differ
materially from those in the forward-looking statements as a result
of various factors, including financial community perceptions of
the Company and its business, operations, financial condition and
the industries in which it operates and the factors described in
the Company’s filings with the Securities and Exchange Commission,
including the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” contained therein. The Company disclaims any obligation
to update any forward-looking statements contained herein.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per
share data)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2023
2022
2023
2022
Revenues
$
363,297
$
352,534
$
1,139,492
$
928,442
Direct operating expenses
(210,141
)
(197,967
)
(658,935
)
(536,076
)
Selling, general and administrative
expenses
(179,870
)
(118,788
)
(442,054
)
(384,280
)
Depreciation and amortization
(22,999
)
(20,463
)
(68,090
)
(63,050
)
Impairment and other (losses) gains,
net
(51
)
245
7,361
245
Restructuring charges
(20,498
)
(14,690
)
(34,180
)
(14,690
)
Operating (loss) income
(70,262
)
871
(56,406
)
(69,409
)
Interest income
2,640
767
10,161
2,311
Interest expense
—
(5,528
)
—
(22,051
)
Other income (expense), net
4,994
(10,052
)
1,939
(32,304
)
Loss from continuing operations before
income taxes
(62,628
)
(13,942
)
(44,306
)
(121,453
)
Income tax benefit (expense)
8,649
(6,349
)
4,717
10,112
Loss from continuing operations
(53,979
)
(20,291
)
(39,589
)
(111,341
)
(Loss) income from discontinued
operations, net of taxes
(4,576
)
985
7,548
20,399
Net loss
(58,555
)
(19,306
)
(32,041
)
(90,942
)
Less: Net loss attributable to
nonredeemable noncontrolling interests from continuing
operations
—
(212
)
(554
)
(579
)
Less: Net loss attributable to
nonredeemable noncontrolling interests from discontinued
operations
(216
)
(1,161
)
(128
)
(323
)
Less: Net (loss) income attributable to
redeemable noncontrolling interests from discontinued
operations
(1,492
)
(442
)
2,661
4,412
Net loss attributable to Sphere
Entertainment Co.’s stockholders
$
(56,847
)
$
(17,491
)
$
(34,020
)
$
(94,452
)
Basic and diluted (loss) earnings per
common share
Continuing operations
$
(1.55
)
$
(0.59
)
$
(1.13
)
$
(3.24
)
Discontinued operations
$
(0.09
)
$
0.08
$
0.15
$
0.48
Basic and diluted loss per common share
attributable to Sphere Entertainment Co.’s stockholders
$
(1.64
)
$
(0.51
)
$
(0.98
)
$
(2.76
)
Basic and Diluted weighted-average number
of common shares outstanding
34,727
34,320
34,604
34,230
ADJUSTMENTS TO RECONCILE OPERATING INCOME
(LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(Unaudited)
The following is a description of the adjustments to operating
income (loss) in arriving at adjusted operating income as described
in this earnings release:
- Non-cash portion of arena license fees
from MSG Sports. This adjustment removes the impact of
non-cash straight-line leasing revenue associated with the arena
license agreements with MSG Sports.
- Share-based compensation. This
adjustment eliminates the compensation expense relating to
restricted stock units and stock options granted under the Sphere
Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan,
MSG Networks Employee Stock Plan, as amended and assumed by Sphere
Entertainment, Sphere Entertainment Non-Employee Director Plan and
MSG Networks Non-Employee Director Plan in all periods.
- Depreciation and amortization.
This adjustment eliminates depreciation and amortization of
property and equipment and intangible assets in all periods.
- Impairment and other (gains) losses,
net. This adjustment eliminates non-cash impairment charges
and the impact of gains or losses from the disposition of assets or
businesses in all periods.
- Restructuring charges. This
adjustment eliminates costs related to termination benefits
provided to employees as part of the Company's full-time workforce
reductions.
- Merger and acquisition related
costs. This adjustment eliminates costs related to mergers
and acquisitions, including litigation expenses, in all
periods.
- Amortization for capitalized cloud
computing arrangement costs. This adjustment eliminates
amortization of capitalized cloud computing arrangement costs.
- Purchase accounting adjustments.
This adjustment eliminates the impact of various purchase
accounting adjustments related to business acquisitions, primarily
favorable / unfavorable lease agreements of the acquiree.
- Remeasurement of deferred compensation
liabilities. This adjustment eliminates the impact of gains
and losses related to the remeasurement of liabilities under the
Company's executive deferred compensation plan.
Three Months Ended
Nine Months Ended
March 31,
March 31,
2023
2022
2023
2022
Operating (loss) income
$
(70,262
)
$
871
$
(56,406
)
$
(69,409
)
Non-cash portion of arena license fees
from MSG Sports(1)
(12,149
)
(12,073
)
(25,078
)
(23,962
)
Share-based compensation
10,899
12,157
39,846
51,987
Depreciation and amortization(2)
22,999
20,463
68,090
63,050
Restructuring charges
20,498
14,690
34,180
14,690
Impairment and other (losses) gains,
net
51
(245
)
(7,361
)
(245
)
Merger and acquisition related costs, net
of insurance recovery
47,041
2,513
57,179
42,036
Amortization for capitalized cloud
computing costs
228
81
584
176
Remeasurement of deferred compensation
plan liabilities
126
$
—
132
—
Adjusted operating income
$
19,431
$
38,457
$
111,166
$
78,323
_________________
(1)
This adjustment represents the
non-cash portion of operating lease revenue related to the
Company’s Arena License Agreements with MSG Sports. Pursuant to
GAAP, recognition of operating lease revenue is recorded on a
straight-line basis over the term of the agreement based upon the
value of total future payments under the arrangement. As a result,
operating lease revenue is comprised of a contractual cash
component plus or minus a non-cash component for each period
presented. Operating income on a GAAP basis includes lease income
of (i) $19,014 and $39,234 of revenue collected in cash for the
three and nine months ended March 31, 2023, respectively, and
$17,543 and $34,836, for the three and nine months ended March 31,
2022, respectively, and (ii) a non-cash portion of $12,149 and
$25,078 for the three and nine months ended March 31, 2023,
respectively, and $12,073 and $23,962, for the three and nine
months ended March 31, 2022, respectively.
(2)
Includes depreciation and
amortization related to purchase accounting adjustments.
SEGMENT RESULTS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31,
2023
Entertainment
MSG Networks
Other(1)
Total
Revenues
$
201,861
$
161,436
$
—
$
363,297
Direct operating expenses
(120,835
)
(89,251
)
(55
)
(210,141
)
Selling, general and administrative
expenses
(120,307
)
(60,052
)
489
(179,870
)
Depreciation and amortization
(21,310
)
(1,689
)
—
(22,999
)
Impairment and other losses, net
(51
)
—
—
(51
)
Restructuring charges
(20,498
)
—
—
(20,498
)
Operating (loss) income
$
(81,140
)
$
10,444
$
434
$
(70,262
)
Reconciliation to adjusted operating
(loss) income:
Non-cash portion of arena license fees
from MSG Sports(2)
(12,149
)
—
—
(12,149
)
Share-based compensation
10,259
640
—
10,899
Depreciation and amortization
21,310
1,689
—
22,999
Restructuring charges
20,498
—
—
20,498
Impairment and other losses, net
51
—
—
51
Merger and acquisition related costs, net
of insurance recovery
1,528
45,513
—
47,041
Amortization for capitalized cloud
computing costs
185
43
—
228
Remeasurement of deferred compensation
plan liabilities
126
—
—
126
Adjusted operating (loss) income
$
(39,332
)
$
58,329
$
434
$
19,431
Three Months Ended March 31,
2022
Entertainment
MSG Networks
Other(1)
Total
Revenues
$
194,585
$
167,569
$
(9,620
)
$
352,534
Direct operating expenses
(110,688
)
(87,174
)
(105
)
(197,967
)
Selling, general and administrative
expenses
(96,198
)
(32,237
)
9,647
(118,788
)
Depreciation and amortization
(18,522
)
(1,764
)
(177
)
(20,463
)
Impairment and other gains, net
245
—
—
245
Restructuring charges
(14,238
)
(452
)
—
(14,690
)
Operating (loss) income
$
(44,816
)
$
45,942
$
(255
)
$
871
Reconciliation to adjusted operating
(loss) income:
Non-cash portion of arena license fees
from MSG Sports(2)
(12,073
)
—
—
(12,073
)
Share-based compensation
10,399
1,758
—
12,157
Depreciation and amortization
18,522
1,764
177
20,463
Restructuring charges
14,238
452
—
14,690
Impairment and other gains, net
(245
)
—
—
(245
)
Merger and acquisition related costs, net
of insurance recovery
1,647
866
—
2,513
Amortization for capitalized cloud
computing costs
38
43
—
81
Adjusted operating (loss) income
$
(12,290
)
$
50,825
$
(78
)
$
38,457
Nine Months Ended March 31,
2023
Entertainment
MSG Networks
Other(1)
Total
Revenues
$
705,481
$
442,813
$
(8,802
)
$
1,139,492
Direct operating expenses
(403,642
)
(255,071
)
(222
)
(658,935
)
Selling, general and administrative
expenses
(336,421
)
(115,951
)
10,318
(442,054
)
Depreciation and amortization
(62,514
)
(4,944
)
(632
)
(68,090
)
Impairment and other gains, net
7,361
—
—
7,361
Restructuring charges
(30,192
)
(3,988
)
—
(34,180
)
Operating (loss) income
$
(119,927
)
$
62,859
$
662
$
(56,406
)
Reconciliation to adjusted operating
(loss) income:
Non-cash portion of arena license fees
from MSG Sports(2)
(25,078
)
—
—
(25,078
)
Share-based compensation
34,204
5,642
—
39,846
Depreciation and amortization
62,514
4,944
632
68,090
Restructuring charges
30,192
3,988
—
34,180
Impairment and other gains, net
(7,361
)
—
—
(7,361
)
Merger and acquisition related costs, net
of insurance recovery
4,221
52,958
—
57,179
Amortization for capitalized cloud
computing costs
453
131
—
584
Remeasurement of deferred compensation
plan liabilities
132
—
—
132
Adjusted operating (loss) income
$
(20,650
)
$
130,522
$
1,294
$
111,166
Nine Months Ended March 31,
2022
Entertainment
MSG Networks
Other(1)
Total
Revenues
$
476,434
$
469,023
$
(17,015
)
$
928,442
Direct operating expenses
(294,333
)
(241,521
)
(222
)
(536,076
)
Selling, general and administrative
expenses
(283,715
)
(117,404
)
16,839
(384,280
)
Depreciation and amortization
(57,202
)
(5,317
)
(531
)
(63,050
)
Impairment and other gains, net
245
—
—
245
Restructuring charges
(14,238
)
(452
)
—
(14,690
)
Operating (loss) income
$
(172,809
)
$
104,329
$
(929
)
$
(69,409
)
Reconciliation to adjusted operating
(loss) income:
Non-cash portion of arena license fees
from MSG Sports(2)
(23,962
)
—
—
(23,962
)
Share-based compensation
36,697
15,290
—
51,987
Depreciation and amortization
57,202
5,317
531
63,050
Restructuring charges
14,238
452
—
14,690
Impairment and other gains, net
(245
)
—
—
(245
)
Merger and acquisition related costs, net
of insurance recovery
17,095
24,941
—
42,036
Amortization for capitalized cloud
computing costs
45
131
—
176
Adjusted operating (loss) income
$
(71,739
)
$
150,460
$
(398
)
$
78,323
_________________
(1)
Includes inter-segment
eliminations and, for operating (loss) income, purchase accounting
adjustments.
(2)
This adjustment represents the
non-cash portion of operating lease revenue related to the
Company’s Arena License Agreements with MSG Sports. Pursuant to
GAAP, recognition of operating lease revenue is recorded on a
straight-line basis over the term of the agreement based upon the
value of total future payments under the arrangement. As a result,
operating lease revenue is comprised of a contractual cash
component plus or minus a non-cash component for each period
presented. Operating income on a GAAP basis includes lease income
of (i) $19,014 and $39,234 of revenue collected in cash for the
three and nine months ended March 31, 2023, respectively, and
$17,543 and $34,836, for the three and six months ended March 31,
2022, respectively, and (ii) a non-cash portion of $12,149 and
$25,078 for the three and nine months ended March 31, 2023,
respectively, and $12,073 and $23,962, for the three and nine
months ended March 31, 2022, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 31, 2023
June 30, 2022
ASSETS
Current Assets:
Cash, cash equivalents and restricted
cash
$
327,245
$
822,885
Accounts receivable, net
214,443
188,012
Prepaid expenses and other current
assets
145,838
135,671
Current assets (Held for Sale)
502,567
72,088
Total current assets
1,190,093
1,218,656
Non-Current Assets:
Property and equipment, net
3,690,234
2,853,656
Right-of-use lease assets
339,601
337,305
Goodwill
498,817
498,817
Intangible assets, net
82,490
86,464
Other non-current assets
248,246
173,298
Non-current assets (Held for Sale)
—
400,430
Total assets
$
6,049,481
$
5,568,626
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Current Liabilities:
Accounts payable, accrued and other
current liabilities
$
699,769
$
529,083
Current portion of long-term debt
98,750
74,762
Operating lease liabilities, current
46,086
45,559
Deferred revenue
265,611
208,895
Current liabilities (Held for Sale)
289,817
102,801
Total current liabilities
1,400,033
961,100
Non-Current Liabilities:
Long-term debt, net of deferred financing
costs
1,781,748
1,584,446
Operating lease liabilities,
non-current
342,629
338,534
Deferred tax liabilities, net
209,742
209,907
Other non-current liabilities
142,531
144,103
Non-current liabilities (Held for
Sale)
—
170,960
Total liabilities
3,876,683
3,409,050
Redeemable noncontrolling interests
138,812
184,192
Equity:
Class A Common Stock(1)
277
273
Class B Common Stock(2)
69
69
Additional paid-in capital
2,391,409
2,301,970
Accumulated deficit
(324,756
)
(290,736
)
Accumulated other comprehensive loss
(46,439
)
(48,355
)
Total Sphere Entertainment Co.
stockholders’ equity
2,020,560
1,963,221
Nonredeemable noncontrolling interests
13,426
12,163
Total equity
2,033,986
1,975,384
Total liabilities, redeemable
noncontrolling interests and equity
$
6,049,481
$
5,568,626
_________________
(1)
Class A Common stock, par value
$0.01, 120,000 shares authorized; 27,692 and 27,368 shares
outstanding as of March 31, 2023 and June 30, 2022,
respectively.
(2)
Class B Common stock, par value
$0.01, 30,000 shares authorized; 6,867 shares outstanding as of
March 31, 2023 and June 30, 2022.
SELECTED CASH FLOW
INFORMATION
(Dollars in thousands)
(Unaudited)
Nine Months Ended
March 31,
2023
2022
Net cash provided by operating
activities
$
137,824
$
106,201
Net cash used in investing activities
(825,484
)
(547,926
)
Net cash provided by (used in) financing
activities
200,485
(77,520
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
(729
)
22
Net decrease in cash, cash equivalents and
restricted cash
(487,904
)
(519,223
)
Cash, cash equivalents and restricted cash
from continuing operations, beginning of period
822,885
1,508,174
Cash, cash equivalents and restricted cash
from discontinued operations, beginning of period
23,125
31,802
Cash, cash equivalents and restricted
cash at beginning of period
846,010
1,539,976
Cash, cash equivalents and restricted cash
from continuing operations, end of period
327,245
987,922
Cash, cash equivalents and restricted cash
from discontinued operations, end of period
30,861
32,831
Cash, cash equivalents and restricted
cash at end of period
$
358,106
$
1,020,753
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005360/en/
Ari Danes, CFA Investor Relations and Financial Communications
(212) 465-6072
Justin Blaber Financial Communications (212) 465-6109
Grace Kaminer Investor Relations (212) 631-5076
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