EX-99.1 2 a37583exv99w1.htm EXHIBIT 99.1 exv99w1
 

(OUTDOOR CHANNEL HOLDINGS INC. LOGO)   NEWS RELEASE
         
Contacts:
  Thomas Hornish
Chief Operating Officer
951.699.6991, ext. 104
thornish@outdoorchannel.com 		  Angie Yang
PondelWilkinson Inc.
310.279.5967
ayang@pondel.com
OUTDOOR CHANNEL HOLDINGS POSTS ANOTHER PERIOD OF STRONG REVENUE GAINS
FOR 2007 THIRD QUARTER
— Completes Accounting Review and Files Amended Consolidated Financial Statements —
Temecula, California — February 1, 2008 — Outdoor Channel Holdings, Inc. (NASDAQ: OUTD) today reported increases in total revenues of 12.4 percent and 12.1 percent, respectively, for its three and nine-month periods ended September 30, 2007.
The company also said it completed a review of its financial statements for the first three quarters of 2007 with its former and current independent registered public accounting firms. As previously announced, the company determined that a correction was needed in the amortization period for the recognition of non-cash, share-based compensation costs expensed in 2007 relating to performance units granted in the fourth quarter of 2006. These corrections, along with other adjustments to the company’s financial statements, are fully described in the company’s Form 10-Q/As for the quarters ended March 31 and June 30, 2007, filed today with the Securities and Exchange Commission.
“While the review took longer to complete than originally anticipated, we believe it was prudent for us to take the time necessary to get it done right,” said Roger L. Werner, president and chief executive officer. “We have significantly strengthened our finance team over the past several months with a number of new hires, including a chief accounting officer and two additional CPAs. We thank them, along with our new auditors, for their dedicated efforts to complete the review. With the restatements now behind us, we look forward to fully focusing our efforts on our strategic initiatives.”
THREE MONTHS ENDED SEPTEMBER 30, 2007
Total revenues from continuing operations increased to $12.7 million in the 2007 third quarter from $11.3 million in the three months ended September 30, 2006. Advertising revenue rose 12.9 percent to $7.9 million from $7.0 million in the third quarter of 2006. Subscriber fees grew 9.3 percent to $4.7 million from $4.3 million in the 2006 third quarter.
Income from operations totaled $583,000 for the 2007 third quarter. This compares with a loss from operations of $8.6 million for the prior-year period, which included a write-off of $9.5 million of the carrying value of multi-system operator (MSO) relationships as a result of a changed distribution strategy adopted by the board in September 2006.
Net income for the 2007 third quarter totaled $1.5 million, or $0.06 per diluted share, and earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations
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Outdoor Channel Holdings, Inc.
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and share-based compensation expense, equaled $3.1 million. For the 2006 third quarter, the company posted a net loss of $5.3 million, or $0.21 per share, and incurred a loss before interest, taxes, depreciation and amortization, adjusted for the effects of discontinued operations and share-based compensation expense, of $6.8 million.
“We have achieved significant progress with our strategic initiatives and made considerable investments in order to enhance the value proposition available to cable and satellite operators through broader carriage of Outdoor Channel,” Werner said. “In addition to our new rate card, we now have a meaningfully stronger affiliate sales force, with each region of the nation led by seasoned professionals. The re-branding of Outdoor Channel and launch of our new broadband web site ensures the company is well poised to extend the network’s segment leadership to the new media audience. While the broadband business model is still in the early stages of development, we believe its prospects are strong given its potential for expanded viewership and advertising revenue.”
NINE MONTHS ENDED SEPTEMBER 30, 2007
For the first nine months of 2007, advertising sales increased 13.6 percent to $20.9 million from $18.4 million during the prior-year period. Subscriber fee revenues grew 9.2 percent to $14.3 million from $13.1 million in the 2006 nine-month period. Total revenues for the 2007 nine months rose to $35.2 million from $31.4 million in the comparable period a year ago.
The company posted a loss from operations of $2.4 million for the first nine months of 2007, compared with a loss from operations of $9.9 million a year earlier. Outdoor Channel Holdings incurred a net loss of $299,000, or $0.01 per share, in the first nine months of 2007. EBITDA adjusted for the effects of discontinued operations and share-based compensation expense, equaled $8.0 million. For the 2006 nine-month period, the company sustained a net loss of $5.3 million, or $0.21 per share, and incurred a loss before interest, taxes, depreciation and amortization, adjusted for the effects of discontinued operations and share-based compensation expense, of $5.0 million.
Investor Conference Call
Outdoor Channel Holdings’ management will host an investor conference call today, February 1, 2008, at 8:00 a.m. PST (11:00 a.m. EST) to review the company’s financials and operations for its 2007 third quarter ended September 30, 2007. The call will be open to all interested investors through a live, listen-only audio web broadcast via the Internet at www.outdoorchannelholdings.com and www.earnings.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 5:00 p.m. PST (8:00 p.m. EST), Friday, February 8, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 62027122.
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, 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 web site. For more information about the company or Outdoor Channel, please visit www.outdoorchannel.com.
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Outdoor Channel Holdings, Inc.
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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 30.3 million cable and satellite subscribers as of February 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) the company’s ability to grow the subscriber base of Outdoor Channel; (2) a decrease in operating results from offering reduced subscriber fee rates, launch support fees and other incentives to grow the subscriber base; (3) the triggering of a “most favored nations” clause with service providers from offering launch support fees and other incentives; (4) 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; (5) service providers discontinuing or refraining from carrying Outdoor Channel; 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
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
                                         
    Three Months Ended     Nine Months Ended  
    9/30/07     6/30/07     3/31/07     9/30/07     9/30/06  
            (as restated)     (as restated)             (as restated)  
Revenues:
                                        
Advertising
   $ 7,917     $ 6,634     $ 6,357     $ 20,908     $ 18,350  
Subscriber fees
     4,739       4,775       4,749       14,263       13,072  
 
                              
 
                                        
Total revenues
     12,656       11,409       11,106       35,171       31,422  
 
                              
 
                                        
Cost of services:
                                        
Programming
     1,521       1,633       1,471       4,625       5,816  
Satellite transmission fees
     637       636       596       1,869       1,919  
Production and operations
     1,101       904       1,370       3,375       3,053  
Other direct costs
     46       17       38       101       54  
 
                              
 
                                        
Total cost of services
     3,305       3,190       3,475       9,970       10,842  
 
                              
 
                                        
Other expenses:
                                        
Advertising
     1,558       1,816       714       4,088       5,299  
Selling, general and administrative
     6,524       6,801       8,200       21,525       13,371  
Impairment of amortizable intangible assets
     —       —       —       —       9,540  
Depreciation and amortization
     686       658       649       1,993       2,227  
 
                              
 
                                        
Total other expenses
     8,768       9,275       9,563       27,606       30,437  
 
                              
 
Income (loss) from operations
     583       (1,056 )     (1,932 )     (2,405 )     (9,857 )
 
                                        
Interest expense
     12       —       —       12       227  
 
                                        
Other income
     894       812       703       2,409       1,981  
 
                          
 
                                        
Income (loss) from continuing operations before income taxes
     1,465       (244 )     (1,229 )     (8 )     (8,103 )
 
                                        
Income tax provision (benefit)
     (33 )     819       (466 )     320       (2,791 )
 
                              
 
                                        
Income (loss) from continuing operations
     1,498       (1,063 )     (763 )     (328 )     (5,312 )
 
                                        
Income (loss) from discontinued operations, net of tax
     —       (7 )     36       29       (2 )
 
                              
 
                                        
Net income (loss)
   $ 1,498     $ (1,070 )   $ (727 )   $ (299 )   $ (5,314 )
 
                              
 
                                        
Basic earnings (loss) per common share data:
                                        
From continuing operations
   $ 0.06     $ (0.04 )   $ (0.03 )   $ (0.01 )   $ (0.21 )
 
                              
From discontinued operations
   $ —     $ —     $ —     $ —     $ —  
 
                              
Basic earnings per common share
   $ 0.06     $ (0.04 )   $ (0.03 )   $ (0.01 )   $ (0.21 )
 
                              
 
                                        
Diluted earnings (loss) per common share data:
                                        
From continuing operations
   $ 0.06     $ (0.04 )   $ (0.03 )   $ (0.01 )   $ (0.21 )
 
                              
From discontinued operations
   $ —     $ —     $ —     $ —     $ —  
 
                              
Diluted earnings per common share
   $ 0.06     $ (0.04 )   $ (0.03 )   $ (0.01 )   $ (0.21 )
 
                              
 
                                        
Weighted average number of common shares outstanding:
                                        
Basic
     26,054       25,857       25,603       25,846       24,737  
 
                              
Diluted
     26,747       25,857       25,603       25,846       24,737  
 
                              

 

 

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
                                         
                                    Twelve Months  
    Three Months Ended     Ended  
    12/31/06     9/30/06     6/30/06     3/31/06     12/31/06  
    (as restated)     (as restated)     (as restated)     (as restated)     (as restated)  
Revenues:
                                        
Advertising
   $ 7,279     $ 6,957     $ 5,660     $ 5,733     $ 25,629  
Subscriber fees
     4,614       4,348       4,341       4,383       17,686  
 
                              
 
                                        
Total revenues
     11,893       11,305       10,001       10,116       43,315  
 
                              
 
                                        
Cost of services:
                                        
Programming
     2,504       2,095       2,180       1,541       8,320  
Satellite transmission fees
     631       667       614       638       2,550  
Production and operations
     993       986       898       1,169       4,046  
Other direct costs
     13       45       6       3       67  
 
                              
 
                                        
Total cost of services
     4,141       3,793       3,698       3,351       14,983  
 
                              
 
                                        
Other expenses:
                                        
Advertising
     1,711       1,537       1,601       2,161       7,010  
Selling, general and administrative
     8,527       4,184       4,455       4,732       21,898  
Impairment of amortizable intangible assets
     —       9,540       —       —       9,540  
Depreciation and amortization
     660       843       777       607       2,887  
 
                              
 
                                        
Total other expenses
     10,898       16,104       6,833       7,500       41,335  
 
                              
 
                                        
Income (loss) from operations
     (3,146 )     (8,592 )     (530 )     (735 )     (13,003 )
 
                                        
Interest expense
     18       73       76       78       245  
 
                                        
Other income
     709       715       643       623       2,690  
 
                              
 
                                        
Income (loss) from continuing operations before income taxes
     (2,455 )     (7,950 )     37       (190 )     (10,558 )
 
                                        
Income tax provision (benefit)
     (878 )     (2,982 )     219       (28 )     (3,669 )
 
                              
 
                                        
Income (loss) from continuing operations
     (1,577 )     (4,968 )     (182 )     (162 )     (6,889 )
 
                                        
Income (loss) from discontinued operations, net of tax
     (97 )     (331 )     319       10       (99 )
 
                              
 
                                        
Net income (loss)
   $ (1,674 )   $ (5,299 )   $ 137     $ (152 )   $ (6,988 )
 
                              
 
                                        
Basic earnings (loss) per common share data:
                                        
From continuing operations
   $ (0.06 )   $ (0.20 )   $ (0.01 )   $ (0.01 )   $ (0.22 )
 
                              
From discontinued operations
   $ —     $ (0.01 )   $ 0.01     $ —     $ —  
 
                              
Basic earnings per common share
   $ (0.07 )   $ (0.21 )   $ 0.01     $ (0.01 )   $ (0.22 )
 
                              
 
                                        
Diluted earnings (loss) per common share data:
                                        
From continuing operations
   $ (0.06 )   $ (0.20 )   $ (0.01 )   $ (0.01 )   $ (0.22 )
 
                              
From discontinued operations
   $ —     $ (0.01 )   $ 0.01     $ —     $ —  
 
                              
Diluted earnings per common share
   $ (0.07 )   $ (0.21 )   $ 0.01     $ (0.01 )   $ (0.22 )
 
                              
 
                                        
Weighted average number of common shares outstanding:
                                        
Basic
     25,344       25,000       24,752       24,445       24,893  
 
                              
Diluted
     25,344       25,000       24,752       24,445       24,893  
 
                              

 

 

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
                 
    September 30,     December 31,  
    2007     2006  
    (unaudited)     (as restated)  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 23,928     $ 14,226  
Investment in available-for-sale securities
     45,252       42,144  
Accounts receivable, net of allowance for doubtful accounts of $100 and $180
     8,837       6,816  
Other current assets
     5,074       6,455  
Assets of discontinued operations
     —       1,344  
 
            
Total current assets
     83,091       70,985  
 
            
 
                
Property, plant and equipment, net
     11,935       12,494  
Goodwill and amortizable intangible assets, net
     43,525       44,636  
Deferred tax assets, net
     11,140       11,344  
Deposits and other assets
     1,984       2,101  
Assets of discontinued operations
     —       3,390  
 
            
 
                
Totals
   $ 151,675     $ 144,950  
 
            
Liabilities and Stockholders’ Equity
                
 
                
Current liabilities of continuing operations
   $ 4,826     $ 3,809  
Long-term liabilities of continuing operations
     313       370  
Liabilities of discontinued operations
     —       1,825  
 
            
Total liabilities
     5,139       6,004  
 
            
 
                
 
                
Total stockholders’ equity
     146,536       138,946  
 
            
Totals
   $ 151,675     $ 144,950  
 
            

 

 

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
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 :
                                                                                 
                                                                            Twelve Months  
    Three Months Ended     Nine Months Ended     Ended  
    9/30/07     6/30/07     3/31/07     12/31/06     9/30/2006 (A)     6/30/06     3/31/06     9/30/07     9/30/2006 (A)     12/31/2006 (A)  
 
                                                                                
Net income (loss)
   $ 1,498     $ (1,070 )   $ (727 )   $ (1,674 )   $ (5,299 )   $ 137     $ (152 )   $ (299 )   $ (5,314 )   $ (6,988 )
 
                                                                                
Add:
                                                                                
Interest expense
     12       —       —       18       73       76       78       12       227       245  
Interest income
     893       812       703       709       715       643       623       2,408       1,981       2,690  
Income tax provision (benefit)
     (33 )     819       (466 )     (878 )     (2,982 )     219       (28 )     320       (2,791 )     (3,669 )
Depreciation and amortization
     686       658       649       660       843       777       607       1,993       2,227       2,887  
 
                                                            
 
                                                                                
EBITDA
   $ 1,270     $ (405 )   $ (1,247 )   $ (2,583 )   $ (8,080 )   $ 566     $ (118 )   $ (382 )   $ (7,632 )   $ (10,215 )
 
                                                                                
Adjusted for:
                                                                                
 
                                                                                
Income (loss) from discontinued operations, net of tax
     —       (7 )     36       (97 )     (331 )     319       10       29       (2 )     (99 )
 
                                                            
 
                                                                                
EBITDA as adjusted for discontinued operations, net of tax
     1,270       (398 )     (1,283 )     (2,486 )     (7,749 )     247       (128 )     (411 )     (7,630 )     (10,116 )
 
                                                                                
Adjusted for:
                                                                                
 
                                                                                
Shared based compensation expense
     1,861       2,751       3,780       3,898       915       848       831       8,392       2,594       6,492  
 
                                                            
EBITDA as adjusted for discontinued operations, net of tax and share based compensation expense
   $ 3,131     $ 2,353     $ 2,497     $ 1,412     $ (6,834 )   $ 1,095     $ 703     $ 7,981     $ (5,036 )   $ (3,624 )
 
                                                            
 
                                                                                
 
(A)       Included in EBITDA and EBITDA as adjusted is a $9,540 impairment charge related to MSO relationships during the quarter ended September 30, 2006.
 
                                                                                
Summary of Cost of Services
                                                                                
Share based compensation expense
   $ 46     $ 88     $ (9 )   $ 58     $ 57     $ 46     $ 36     $ 125     $ 139     $ 197  
Cost of Services
     3,259       3,102       3,484       4,083       3,736       3,652       3,315       9,845       10,703       14,786  
 
                                                            
Total Cost of Services
   $ 3,305     $ 3,190     $ 3,475     $ 4,141     $ 3,793     $ 3,698     $ 3,351     $ 9,970     $ 10,842     $ 14,983  
 
                                                                                
 
                                                                                
Summary of Selling, general and administrative
                                                                                
Share based compensation expense
   $ 1,815     $ 2,663     $ 3,789     $ 3,840     $ 858     $ 802     $ 795     $ 8,267     $ 2,455     $ 6,295  
Selling, general and administrative
     4,709       4,138       4,411       4,687       3,326       3,653       3,937       13,258       10,916       15,603  
 
                                                            
Total Selling, general and administrative
   $ 6,524     $ 6,801     $ 8,200     $ 8,527     $ 4,184     $ 4,455     $ 4,732     $ 21,525     $ 13,371     $ 21,898  
 
                                                                                
 
                                                                                
Summary of Other income
                                                                                
Interest income
   $ 875     $ 795     $ 684     $ 685     $ 694     $ 625     $ 607     $ 2,354     $ 1,926     $ 2,611  
Dividend income
     18       17       19       24       21       18       16       54       55       79  
Other income
     1       —       —       —       —       —       —       1       —       —  
 
                                                            
Total Other income
   $ 894     $ 812     $ 703     $ 709     $ 715     $ 643     $ 623     $ 2,409     $ 1,981     $ 2,690