WWE Reports 2009 Third Quarter Results

http://www.businesswire.com/news/home/20091105005453/en

STAMFORD, Conn.--(Business Wire)--
World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results
for its third quarter ended September 30, 2009. Revenues totaled $111.3 million
as compared to $108.8 million in the prior year quarter. Operating income was
$14.5 million as compared to $7.9 million in the prior year quarter. Net income
was $8.9 million, or $0.12 per share, as compared to $5.3 million, or $0.07 per
share, in the prior year quarter.

"We are pleased with our solid performance. During the quarter we achieved an
84% increase in our operating income and managed a 26% increase for the first
nine months of the year," stated Vince McMahon, Chairman and Chief Executive
Officer. "Entering the year, we established clear goals to reduce our cost
structure and to improve our operating efficiency. Our results to date,
including significant and sustained improvement in our profit margins,
demonstrate our ongoing commitment in meeting these objectives."

"Looking ahead, we believe WWE can achieve meaningful growth by taking advantage
of our strategic opportunities and maintaining our focus on managing costs. Our
portfolio of businesses exhibit significant operating leverage and, through
disciplined cost management, we expect that leverage to drive future earnings
growth."

Results by Business Segment

The following charts reflect net revenues by segment and by geographical region
for the three months ended September 30, 2009 and September 30, 2008. (Dollars
in millions)

Revenues from outside North America increased 17% led by the timing and
performance of our live events in Asia Pacific.

Net Revenues by Segment
Three Months Ended
September 30, September 30,

2009
2008
Live and Televised Entertainment $ 77.9 $ 68.7
Consumer Products 23.0 26.6
Digital Media 7.4 7.9
WWE Studios 3.0 5.6
Total $ 111.3 $ 108.8

Net Revenues by Region
Three Months Ended
September 30, September 30,

2009
2008
North America $ 81.3 $ 83.2
Europe, Middle East & Africa (EMEA) 14.4 17.1
Asia Pacific (APAC) 12.5 6.8
Latin America 3.1 1.7
Total $ 111.3 $ 108.8

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were $77.9 million
for the current quarter as compared to $68.7 million in the prior year quarter,
representing a 13% increase.

* Live Event revenues were $27.2 million as compared to $20.3 million in the
prior year quarter. Revenues increased 34% primarily due to higher average
attendance and an increase in the number of international events.
* There were 94 events, including 17 international events, during the current
quarter as compared to 89 events, including 12 international events, in the
prior year quarter.
* North American events generated $16.6 million of revenues from 77 events as
compared to $15.5 million from 77 events in the prior year quarter. North
American average attendance increased 9% to approximately 5,800 from 5,300 in
the prior year quarter. The average ticket price for North American events was
$36.26 in the current quarter as compared to $38.21 in the prior year quarter.
* International events generated approximately $10.6 million of revenues as
compared to $4.8 million in the prior year quarter. The quarter-over-quarter
increase reflected five additional events in the current quarter and a 38%
increase in average attendance to approximately 9,100 fans. These factors were
partially offset by a 19% reduction in average ticket prices to $65.59, in part
due to changes in foreign exchange rates.
* Pay-Per-View revenues were $14.5 million as compared to $16.4 million in the
prior year quarter reflecting a 10% decline in total pay-per-view buys and a
higher percentage of international buys, which are generally lower in price. For
the comparable pay-per-view events which occurred in both the current and prior
year periods, pay-per-view buys declined 22% in the quarter and 9% on a
year-to-date basis.

The details for the number of buys (in 000s) are as follows:

Events (in chronological order) Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008

The Bash - 196
Night of Champions 267 -
SummerSlam 369 477
Breaking Point/Unforgiven 169 211

Prior events 31 42
Total 836 926

* Venue Merchandiserevenues were $4.3 million as compared to $4.2 million in the
prior year quarter, as higher average attendance and the impact of five
additional international events was offset by an 11% decline in lower domestic
per capita merchandise sales to $8.71 in the current quarter.
* Television Rights Fees revenues were $28.3 million as compared to $24.4
million in the prior year quarter. This increase was primarily due to fees
received from our new WWE Superstars television show and contractual increases
from our existing programs.
* WWE Classics On Demand revenues were$1.2 million as compared to $1.4 million
in the prior year quarter.

Consumer Products

Revenues from our Consumer Products businesses were $23.0 million versus $26.6
million in the prior year quarter, representing a 14% decrease.

* Home Video net revenues were $11.2 million as compared to $11.0 million in the
prior year quarter. The increase reflects the performance of our new releases
and catalog titles.
* Licensing revenues were $7.9 million as compared to $10.6 million in the prior
year quarter. The decrease primarily reflects the reduction in royalties earned
on the sales of toys and videogames, particularly in international markets.
* Magazine publishing net revenues were $3.4 million as compared to $4.7 million
in the prior year quarter. The decrease primarily reflects a reduction in
subscription revenue and the publication of one fewer issue of WWE Magazine in
the current quarter.

Digital Media

Revenues from our Digital Media related businesses were $7.4 million as compared
to $7.9 million in the prior year quarter, representing a 6% decrease.

* WWE.com revenues were $4.5 million as compared to $4.0 million in the prior
year quarter, reflecting increased sales of online advertising and expanded
licensing of our website for international markets.
* WWEShop revenues were $2.9 million as compared to $3.9 million in the prior
year quarter. The number of orders declined by 21% to approximately 55,000 and
the average revenue per order decreased by approximately 8% to $50.46 from the
prior year quarter.

WWE Studios

During the current quarter, we recorded revenue of $3.0 million related to four
previously released films, including Behind Enemy Lines: Colombia as compared to
$5.6 million in the prior year quarter related to See No Evil, The Marine, and
The Condemned. In the prior year quarter, we recorded a $1.9 million charge
related to revised expectations for our film See No Evil. During the first
quarter of 2009, we released our fourth feature film, 12 Rounds, as well as a
Direct-to-DVD film, Behind Enemy Lines: Colombia. 12 Rounds generated
approximately $12.2 million in gross domestic box office receipts and was
released on DVD on June 30, 2009. We participate in revenues generated by the
distribution of these films after the print, advertising and distribution costs
incurred by our distributors have been recouped and the results have been
reported to us. As such, no revenues have been recorded for 12 Rounds to-date.

Profit Contribution (Net revenues less cost of revenues)

Profit contribution increased to $51.2 million in the current quarter as
compared to $42.5 million in the prior year quarter. Gross profit margins
increased to 46% as compared to 39% in the prior year quarter, reflecting
increased efficiencies in our Live and Televised Entertainment segment. Improved
margins were driven by continued cost reductions in marketing and TV production,
and by the impact of the staff reduction at the beginning of the 2009 year.

Selling, general and administrative expenses

SG&A expenses were $33.1 million for the current quarter as compared to $31.3
million in the prior year quarter, reflecting an increase in accrued incentive
compensation, partially offset by decreases in advertising, travel expenses, as
well as legal and professional fees.

EBITDA

EBITDA was approximately $18.1 million in the current quarter as compared to
$11.2 million in the prior year quarter, primarily due to the improved
efficiencies discussed above.

Investment and Other Income (Expense)

The decline in investment income of $0.6 million in the current quarter reflects
lower interest rates. Other income of $0.2 million, as compared to other expense
of $1.4 million in the prior year quarter, reflected changes in realized foreign
exchange gains and losses and the revaluation of warrants held in certain
licensees.

Effective tax rate

In the current quarter the effective tax rate was 42% as compared to 32% in the
prior year quarter. The effective tax rate reflects differences between the
taxes provided for as compared to actual amounts calculated on returns for both
periods.

Summary Results for the Nine Months Ended

Total revenues through the nine months ended September 30, 2009 were $357.9
million as compared to $401.1 million in the prior year period. Operating income
for the current period was $59.3 million versus $47.0 million in the prior year
period. Net income was $39.1 million, or $0.53 per share, as compared to $31.8
million, or $0.43 per share, in the prior year period. EBITDA was $70.3 million
for the current nine month period as compared to $56.5 million in the prior year
period.

The following charts reflect net revenues by segment and by geographical region
for the nine months ended September 30, 2009 and September 30, 2008. (Dollars in
millions)

Net Revenues by Segment
Nine Months Ended
September 30, September 30,

2009
2008
Live and Televised Entertainment $ 251.2 $ 255.3
Consumer Products 77.0 102.4
Digital Media 22.2 23.9
WWE Studios 7.5 19.5
Total $ 357.9 $ 401.1

Net Revenues by Region
Nine Months Ended
September 30, September 30,

2009
2008
North America $ 268.6 $ 298.3
Europe, Middle East & Africa (EMEA) 55.8 69.5
Asia Pacific (APAC) 25.1 28.4
Latin America 8.4 4.9
Total $ 357.9 $ 401.1

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were $251.2
million for the current period as compared to $255.3 million in the prior year,
a decrease of 2%.

September 30, September 30,

2009
2008

Live Events $ 79.6 $ 80.2
Pay-Per-View $ 63.7 $ 75.5
Venue Merchandise $ 15.2 $ 15.0
Television Rights Fees $ 81.5 $ 73.1
Television Advertising $ 5.5 $ 5.3
WWE Classics On Demand $ 4.2 $ 4.8

Consumer Products

Revenues from our Consumer Products businesses were $77.0 million versus $102.4
million in the prior year, a decrease of 25%.

September 30, September 30,

2009
2008

Home Video $ 29.0 $ 43.5
Licensing $ 36.7 $ 45.8
Magazine Publishing $ 9.9 $ 11.9

Digital Media

Revenues from our Digital Media related businesses were $22.2 million as
compared to $23.9 million in the prior year, a decrease of 7%.

September 30, September 30,

2009
2008

WWE.com $ 12.9 $ 12.5
WWEShop $ 9.3 $ 11.4

WWE Studios

We recorded revenue of $7.5 million in the current period related to four of our
releases, See No Evil, The Marine, The Condemned, and Behind Enemy Lines:
Colombia as compared to $19.5 million in the prior year period, which was led by
the performance of The Marine. During the first quarter of 2009, we released our
fourth feature film, 12 Rounds, as well as a Direct-to-DVD film, Behind Enemy
Lines: Colombia.

Profit Contribution (Net revenues less cost of revenues)

Profit contribution increased to $165.6 million in the current period as
compared to $158.4 million in the prior year period, as improved efficiencies
essentially offset the impact of revenue declines as discussed above. Total
profit contribution margin increased to approximately 46% as compared to 39% in
the prior year period, reflecting increased efficiencies in our Live and
Televised Entertainment segment.

Selling, general and administrative expenses

SG&A expenses were $95.3 million for the current period as compared to $101.9
million in the prior year period, reflecting decreases in advertising, legal and
professional fees and travel expenses, offset by an increase in accrued
incentive compensation and bad debt expense. Current period expenses include the
impact of our corporate restructuring of approximately $2.2 million in severance
costs while expenses in the prior year included $3.5 million associated with our
McMahon`s Million Dollar Mania brand awareness campaign.

EBITDA

EBITDA for the current period was approximately $70.3 million as compared to
$56.5 million in the prior year period.

Investment and Other Income (Expense)

The $2.0 million decline in investment income in the current period reflects
lower average interest rates. Other income of $0.3 million as compared to other
expense of $3.7 million in the prior year period includes the revaluation of
warrants held in certain licensees.

Effective tax rate

The effective tax rate was 37% in the current period as compared to 33% in the
prior year period. The prior year rate reflects tax benefits related to
previously unrecognized tax positions.

Cash Flows

Net cash provided by operating activities was $92.8 million for the nine months
ended September 30, 2009 as compared to $17.7 million in the prior year period.
The increase was driven by the timing of feature film investments, favorable
changes in working capital and reduced capital expenditures. Capital
expenditures were $3.7 million for the current period as compared to $19.8
million in the prior year period as the prior year reflected an approximate
$11.5 million investment in High Definition broadcasting equipment.

Additional Information

Additional business metrics are made available to investors on a monthly basis
on our corporate website - corporate.wwe.com.

Note: World Wrestling Entertainment, Inc. will host a conference call on
November 5, 2009 at 11:00 a.m. ET to discuss the Company`s earnings results for
the third quarter of 2009. All interested parties can access the conference call
by dialing 888-647-2706 (conference ID: WWE). Please reserve a line 15 minutes
prior to the start time of the conference call. A presentation that will be
referenced during the call can be found at the Company web site at
corporate.wwe.com. A replay of the call will be available approximately three
hours after the conference call concludes, and can be accessed at
corporate.wwe.com.

World Wrestling Entertainment, Inc. (NYSE: WWE) is an integrated media and
entertainment company headquartered in Stamford, Conn. Additional information on
the Company can be found at wwe.com and corporate.wwe.com.

Trademarks: All WWE programming, talent names, images, likenesses, slogans,
wrestling moves, trademarks, copyrights and logos are the exclusive property of
World Wrestling Entertainment, Inc. and its subsidiaries. All other trademarks,
logos and copyrights are the property of their respective owners.

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, feature films,
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; risks relating to maintaining and renewing key agreements, including
television distribution agreements; 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. In addition to these risks and uncertainties, our dividend is based
on a number of factors, including our liquidity and historical and projected
cash flow, strategic plan, our financial results and condition, contractual and
legal restrictions on the payment of dividends and such other factors as our
board of directors may consider relevant.

World Wrestling Entertainment, Inc.
Consolidated Income Statements
(in thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008

Net revenues $ 111,254 $ 108,782 $ 357,873 $ 401,072

Cost of revenues 60,077 66,279 192,264 242,655
Selling, general and administrative expenses 33,108 31,263 95,337 101,884
Depreciation and amortization 3,578 3,330 10,954 9,521

Operating income 14,491 7,910 59,318 47,012

Investment income, net 704 1,290 2,495 4,511
Interest expense (82 ) (110 ) (261 ) (324 )
Other income (expense), net 168 (1,356 ) 300 (3,649 )

Income before income taxes 15,281 7,734 61,852 47,550

Provision for income taxes 6,342 2,460 22,717 15,720

Net income $ 8,939 $ 5,274 $ 39,135 $ 31,830

Earnings per share - basic:
Net income $ 0.12 $ 0.07 $ 0.53 $ 0.44

Earnings per share - diluted:
Net income $ 0.12 $ 0.07 $ 0.53 $ 0.43

Shares used in per share calculations:
Basic 73,944 73,191 73,646 72,725
Diluted 74,419 73,735 74,207 73,469

World Wrestling Entertainment, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(Unaudited)
As of As of
September 30, December 31,
2009 2008
ASSETS

CURRENT ASSETS:

Cash and equivalents $ 152,706 $ 119,655
Short-term investments 53,058 57,686
Accounts receivable, net 60,613 60,133
Inventory, net 2,847 4,958
Prepaid expenses and other current assets 23,691 37,596
Total current assets 292,915 280,028

PROPERTY AND EQUIPMENT, NET 85,990 92,367

FEATURE FILM PRODUCTION ASSETS 28,799 31,657

INVESTMENT SECURITIES 22,878 22,299

INTANGIBLE ASSETS, NET 339 1,184

OTHER ASSETS 1,734 1,875

TOTAL ASSETS $ 432,655 $ 429,410

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt $ 1,062 $ 1,002
Accounts payable 21,192 18,334
Accrued expenses and other liabilities 35,647 27,121
Deferred income 12,538 11,875
Total current liabilities 70,439 58,332

LONG-TERM DEBT 3,068 3,872
NON-CURRENT TAX LIABILITY 15,431 7,232

STOCKHOLDERS' EQUITY:
Class A common stock 256 252
Class B common stock 477 477
Additional paid-in capital 323,056 317,105
Accumulated other comprehensive income 2,333 1,171
Retained earnings 17,595 40,969
Total stockholders' equity 343,717 359,974

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 432,655 $ 429,410

World Wrestling Entertainment, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
2009 2008
OPERATING ACTIVITIES:
Net income $ 39,135 $ 31,830
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization/write-off of feature film production assets 3,723 13,220
Revaluation of warrants 802 2,198
Depreciation and amortization 10,954 9,521
Realized (gains)/losses on sale of investments (863 ) 348
Amortization of investment income 805 384
Stock compensation costs 5,659 7,953
Provision for doubtful accounts 3,115 179
Provision for inventory obsolescence 1,745 2,316
Reimbursement of operating expenses by principal shareholder - 1,950
Provision (benefit) from deferred income taxes 6,000 (1,010 )
Excess tax benefits from stock-based payment arrangements (74 ) (1,091 )
Changes in assets and liabilities:
Accounts receivable (3,596 ) (12,177 )
Inventory 366 (3,721 )
Prepaid expenses and other assets 12,615 (3,138 )
Feature film production assets (1,496 ) (24,742 )
Accounts payable 2,859 (1,870 )
Accrued expenses and other liabilities 10,025 (6,539 )
Deferred income 1,033 2,084
Net cash provided by operating activities 92,807 17,695

INVESTING ACTIVITIES:
Purchases of property and equipment (3,640 ) (19,591 )
Purchase of film library assets (92 ) (212 )
Purchase of investment securities (41,489 ) (104,736 )
Proceeds from sales or maturities of investment securities 45,586 143,634
Net cash provided by investing activities 365 19,095

FINANCING ACTIVITIES:
Repayments of long-term debt (744 ) (688 )
Dividends paid (61,605 ) (60,929 )
Issuance of stock, net 864 771
Proceeds from exercise of stock options 1,290 6,251
Excess tax benefits from stock-based payment arrangements 74 1,091
Net cash used in financing activities (60,121 ) (53,504 )

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 33,051 (16,714 )
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 119,655 135,805
CASH AND EQUIVALENTS, END OF PERIOD $ 152,706 $ 119,091

World Wrestling Entertainment, Inc.
Supplemental Information - EBITDA
(dollars in thousands)
(Unaudited)

Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008

Net income reported on U.S. GAAP basis $ 8,939 $ 5,274 $ 39,135 $ 31,830

Provision for income taxes 6,342 2,460 22,717 15,720

Investment, interest and other income (expense), 790 (176 ) 2,534 538
net
Depreciation and amortization 3,578 3,330 10,954 9,521

EBITDA $ 18,069 $ 11,240 $ 70,272 $ 56,533

Non-GAAP Measure:

EBITDA is defined as net income before investment, interest and other income,
income taxes, depreciation and amortization. The Company`s definition of EBITDA
does not adjust its U.S. GAAP basis earnings for the amortization of Feature
Film production assets. Although it is not a recognized measure of performance
under U.S. GAAP, EBITDA is presented because it is a widely accepted financial
indicator of a company`s performance. The Company uses EBITDA to measure its own
performance and to set goals for operating managers. EBITDA should not be
considered as an alternative to net income, cash flows from operations or any
other indicator of World Wrestling Entertainment Inc.`s performance or
liquidity, determined in accordance with U.S. GAAP.

World Wrestling Entertainment, Inc.
Supplemental Information- Free Cash Flow
(dollars in thousands)
(Unaudited)

Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008

Net cash provided by operating activities $ 17,778 $ 14,617 $ 92,807 $ 17,695

Less cash used in capital expenditures:
Purchase of property and equipment and other assets (820) (4,160) (3,732) (19,803)

Free Cash Flow $ 16,958 $ 10,457 $ 89,075 $ (2,108)

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 and for payment of
dividends.

World Wrestling Entertainment, Inc.
Media:
Robert Zimmerman 203-359-5131
or
Investors:
Michael Weitz 203-352-8642

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