WPT Enterprises, Inc. (Nasdaq: WPTE) today announced financial
results for the first quarter of 2009. Business highlights for the
first quarter included the following:
- Excluding a non-cash asset
impairment charge, the Company was profitable from continuing
operations in the first quarter.
- Cash flow from operating
activities was positive in the first quarter.
- Production of the first 16
episodes of Season Seven of the World Poker Tour� (�WPT�)
television series was completed. Season Seven premiered in January
in the United States on Fox Sports Net (�FSN�) and the first
airings of the 26 all-new one hour episodes will run through July
2009. The first 13 episodes of Season Seven aired in the first
quarter.
- PokerStars agreed to be the
sponsor for Season Seven of the WPT television series in Canada,
certain European countries, Mexico and South America in deals
totaling $2.1 million.
- FSN agreed to air Season Eight
of the WPT television series.
- New marketing partnerships for
non-televised WPT tour stops in Barcelona, Cyprus, Morocco,
Slovakia and Venice were signed.
- The poker community at
ClubWPT.com continues to grow.
- The operations of WPT China were
shut down.
- Cost cutting measures designed
to right-size operations were implemented.
First Quarter Results
Revenues in the first quarter of 2009 increased to $5.5 million,
compared to $5.0 million in the first quarter of 2008, primarily a
result of higher ClubWPT.com revenues and higher WPT television
series hosting fees. ClubWPT.com began operations in the first
quarter of 2008, but significant growth in revenues began in the
fourth quarter of 2008 due to the airing of ten one hour ClubWPT
episodes on FSN. Three additional one hour ClubWPT episodes aired
in the first quarter of 2009. WPT television series hosting fees
increased because 13 episodes of Season Seven aired in 2009
compared to one episode of Season Six that aired in 2008.
Cost of revenues decreased to $2.1 million in the first quarter
of 2009, compared to $2.7 million in the first quarter of 2008. The
decrease was due to lower WPT television series Season Seven
production costs. The gross profit margins for the WPT television
series were 53% in 2009 compared to 34% in 2008.
Selling, general and administrative expenses decreased to $3.2
million in the first quarter of 2009, compared to $5.0 million in
the first quarter of 2008. Lower personnel-related costs and
litigation expenses in the current quarter were partially offset by
a higher bad debt provision.
The Company recorded a $1.0 million non-cash impairment charge
related to its investment in Cecure Gaming in the first quarter of
2009 due to ongoing difficulties Cecure Gaming is having in
obtaining capital to finance their business development.
The Company discontinued the operations of WPT China in March
2009. The cash needs to support the growth in this business were
greater than the Company was willing to expend. The Company
continues to look for a strategic investor to acquire the assets of
this business. WPT China lost $984,000 in the first quarter of
2009, including a $211,000 shutdown provision, compared to a
$528,000 loss in the first quarter of 2008.
Excluding the Cecure Gaming non-cash impairment charge, income
from continuing operations in the first quarter of 2009 was
$479,000 compared to a $2.3 million loss in the first quarter of
2008.
Liquidity and Balance Sheet
At March 28, 2009, the Company had total cash, cash equivalents
and investments in debt securities and put rights of $20.2 million,
which included $3.9 million of auction rate securities and put
rights. As a result of the liquidity issues experienced in the
global credit and capital markets, auctions for the Company�s
auction rate securities have not been successful since February
2008. The auction rate securities continue to pay interest in
accordance with the terms of the underlying security and are
guaranteed under the Federal Family Education Loan Program. The
broker that holds the auction rate security portfolio provided a
$2.7 million line of credit to provide liquidity for the auction
rate securities until the broker satisfies their commitment to
repurchase the portfolio during the period June 20, 2010 to July 2,
2012. $2,651,000 was outstanding under the line of credit at March
29, 2009.
�In the first quarter of 2009, we made significant progress in
our turnaround efforts to position the Company for future
profitability� said Steve Lipscomb, President and CEO of WPT
Enterprises. �We signed our first international sponsor for Season
Seven of the World Poker Tour television series, we signed
marketing partnerships for non-televised WPT tour stops, we shut
down the WPT China business and we reduced our ongoing costs. We
also completed the initial airing of the 13 episodes we produced
for our ClubWPT.com online subscription poker business. FSN began
airing 26 all-new episodes of Season Seven of the World Poker Tour
television series across the U.S. in January as a part of FSN�s
Sunday sports block. FSN also agreed to air Season Eight of the
World Poker Tour television series.�
The Company and current and potential customers and other
interested parties continue to discuss strategic ways to maximize
the value of the WPT brand in the U.S. and foreign markets. The
Company has provided confidential information to certain of these
parties in order to facilitate the discussions. The Company is not
able to predict the outcome of these discussions and no particular
strategic alternative has been chosen.
Second Quarter and Full Year 2009 Outlook
For the second quarter of 2009, revenues are expected to be in
the range of $4.0 � $4.3 million and the Company expects a small
loss from continuing operations. The Company also expects in
2009:
- FSN to air 26 all-new episodes
of Season Seven of the WPT television series: 13 episodes aired in
the first quarter, and eleven episodes will air in the second
quarter and two episodes will air in the third quarter.
- To recognize foreign sponsorship
revenues for Season Seven of the WPT television series beginning in
the fourth quarter. Foreign sponsorship revenues for the
Professional Poker Tour television series and Seasons Four through
Six of the WPT television series will also be recognized in
2009.
- To complete production of Season
Seven of the WPT television series and begin production of Season
Eight. Season Eight production costs should be lower than Season
Seven production costs.
Regarding operating expenses, the Company expects:
- Lower general and administrative
expenses compared to the same period in 2008.
- Lower selling and marketing
costs compared to the same period in 2008.
- To incur approximately $139,000
of additional costs to shut down the operations of WPT China in the
second quarter of 2009.
Investor Conference
Call
The Company�s quarterly earnings conference call is scheduled to
begin today, May 4, 2009, at 1:30 p.m. PT/4:30 p.m. ET.
To participate in the conference call, investors should dial
1-877-941-1467 ten minutes prior to the scheduled start time.
International callers should dial 1-480-629-9676. If you are unable
to participate in the live call, a replay will be available May 4,
2009 at 7:30 p.m. ET through May 25, 2009 at 12:00 a.m. ET. To
access the replay, dial 1-800-406-7325 (U.S.) or 1-303-590-3030
(International), and use pass code: 4039658.
The call will be open to all interested investors through a live
audio Web broadcast on the investor relations section of the
Company's website at www.worldpokertour.com and at
http://investor.shareholder.com/wpt/index.cfm. For those who are
not available to listen to the live broadcast, the call will be
archived.
About WPTE
WPT Enterprises, Inc. is one of the most recognized names in
internationally televised gaming and entertainment with brand
presence in land-based tournaments, television, online and mobile.
WPTE has led innovation in the sport of poker since 2002, when it
ignited the global poker boom with the creation of the World Poker
Tour television show. Based on a series of high stakes poker
tournaments, WPT is now broadcast globally and premiered its
all-new seventh season on Fox Sports Net�s national sports network
in the United States in January 2009. WPTE also offers a unique
online subscription and sweepstakes-based poker club, ClubWPT.com,
which operates in 38 states across the U.S. WPTE also participates
in strategic brand license, partnership and sponsorship
opportunities. For more information, see www.worldpokertour.com.
(WPTEG)
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. Certain information
included in this press release (as well as information included in
oral statements or other written statements made or to be made by
WPT Enterprises, Inc.) contains statements that are
forward-looking, such as expectations about producing and airing
Seasons Seven and Eight of the WPT television series, expectations
for revenue and net income for the second quarter of 2009, and
expectations for 2009 business activities and the development of
major business units. Such forward-looking information involves
important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results
may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These risks and uncertainties
include, but are not limited to, the risk that the Company may not
obtain sufficient sponsorship revenues for Seasons Seven and Eight
of the WPT television series; the risk that FSN or another viable
network does not air Seasons Seven and Eight of the WPT television
series; the risk that a more cost efficient method is not found to
drive new subscribers to the ClubWPT.com website; the risk that the
vendor operating the ClubWPT.com website is unable to avoid
interruptions in website service; and the risk that rules and
regulations governing sweepstakes, promotions and giveaways impact
our ability to obtain subscribers for ClubWPT.com. For more
information, review the Company�s filings with the Securities and
Exchange Commission.
WPT ENTERPRISES, INC. Condensed Consolidated Balance
Sheets (In thousands - unaudited) � �
March
29, 2009 December 28, 2008 Assets
Current assets: Cash and cash equivalents $ 14,244 $ 11,497
Investments in debt securities 2,084 2,088 Accounts receivable, net
1,858 2,099 Deferred television costs 1,727 2,285 Other 528 1,067
20,441 19,036 � Investments in debt securities and put rights 3,900
3,900 Property and equipment, net 1,136 1,293 Investment in Cecure
Gaming � 1,000 Other 537 652 $ 26,014 $ 25,881 �
Liabilities and
Stockholders� Equity Current liabilities: Accounts payable $
441 $ 487 Accrued payroll and related 299 269 Other accrued
expenses 1,064 1,149 Line of credit 2,651 � Deferred revenue 947
1,913 5,402 3,818 � Commitments and contingencies � Stockholders�
equity 20,612 22,063 $ 26,014 $ 25,881
WPT ENTERPRISES, INC.
Condensed Consolidated Statements of Loss (In thousands,
except per share data - unaudited) �
Three months ended
March 29, 2009 March 30, 2008 Revenues:
Television $ 3,565 $ 3,600 Product licensing 678 687 Online gaming
136 247 Event hosting and sponsorship fees 573 327 Other 575 101
5,527 4,962 �
Cost of revenues 2,065 2,670 Gross profit
3,462 2,292 �
Selling, general and administrative expense
3,183 4,956
Asset impairment 1,000 � Loss from operations
(721 ) (2,664 ) �
Other income: Gain on sale of investment �
11 Interest, net 71 353 Loss from continuing operations before
income taxes (650 ) (2,300 ) �
Income taxes 129 � Loss from
continuing operations (521 ) (2,300 ) �
Loss from discontinued
operations, net of income taxes (984 ) (528 ) �
Net loss
$ (1,505 ) $ (2,828 ) � Loss per common share from continuing
operations - basic and diluted $ (0.02 ) $ (0.11 ) Loss per common
share from discontinued operations - basic and diluted � (0.05 ) �
(0.03 )
Net loss per common share - basic and diluted $
(0.07 ) $ (0.14 ) �
Weighted-average common shares outstanding -
basic and diluted 20,603 20,603
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