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The Madison Square Garden Company Reports Fiscal 2014 Third Quarter Results

The Madison Square Garden Company Reports Fiscal 2014 Third Quarter Results  NEW YORK, May 2, 2014 (GLOBE NEWSWIRE) -- The Madison Square Garden Company (Nasdaq:MSG) today reported financial results for the fiscal 2014 third quarter ended March 31, 2014.  Fiscal 2014 third quarter revenues of $459 million grew 11%, as compared to the prior year period, with increases in all three of the Company's business segments. Fiscal 2014 third quarter adjusted operating cash flow ("AOCF")^(1) of $65.7 million decreased 28%, as compared to the prior year period, due to an increase in unallocated corporate expenses ("Other"), as well as lower AOCF results in all three of the Company's business segments. Fiscal 2014 third quarter operating income of $27.4 million decreased 57% and net income of $19.1 million ($0.24 per diluted share) decreased 50%, both as compared to the prior year third quarter.  Fiscal 2014 third quarter reported results were impacted by certain items. This includes executive management transition costs, which are included in unallocated corporate expenses ("Other") on an AOCF and operating income basis. MSG Entertainment results reflect increased direct operating expenses related to a planned 2014 limited engagement run of a new large-scale theatrical production, which was subsequently postponed until 2015. Excluding the impact of the above items, fiscal 2014 third quarter total company AOCF would have been approximately $88 million. In addition, unallocated share-based compensation expense, which is included in "Other" on an operating income basis, but not on an AOCF basis, reflects additional executive management transition costs. Excluding the impact of all of the above items, fiscal 2014 third quarter operating income would have been approximately $54 million.  President and CEO Tad Smith said: "This fiscal year will bring a successful end to MSG's first chapter as a public company, as we are now concluding a significant, multi-year capital investment cycle. As we look ahead, our priority is to generate attractive long-term growth for our shareholders. To achieve this, we plan to maximize the growth and profitability of our current businesses, while exploring new strategic opportunities with attractive rates of return. We look forward to our Company's next chapter as one of the country's leading media, entertainment and sports companies."  Results from Operations  Segment results for the quarters ended March 31, 2014 and 2013 are as follows:               Revenues             AOCF                     Operating Income                                                             (Loss) $ millions    F'Q3   F'Q3   %      F'Q3   F'Q32013 %      F'Q3   F'Q3   %               2014   2013   Change 2014              Change 2014   2013  Change MSG Media     $190.8 $184.7 3%     $92.0  $95.4      (4)%   $87.1  $89.8  (3)% MSG           52.8   35.5   49%    (20.2) (13.1)     (54)%  (24.2) (17.1) (41)% Entertainment MSG Sports    233.7  208.1  12%    9.8    11.6       (15)%  5.9    8.1    (28)% Other (includes     (18.4) (15.8) (16)%  (15.9) (2.2)      --     (41.3) (17.0) (142)% eliminations) Total Company $459.0 $412.4 11%    $65.7  $91.7      (28)%  $27.4  $63.8  (57)%  Note: Does not foot due to rounding    1. See definition of adjusted operating cash flow ("AOCF") included in the   discussion of non-GAAP financial measures below.  MSG Media  For the fiscal 2014 third quarter as compared to the prior year period, MSG Media revenues of $190.8 million increased 3%. Affiliation fee revenue increased $10 million, primarily due to higher affiliation rates, partially offset by the impact of a small decrease in subscribers at MSG Networks. Advertising revenue increased $0.3 million, primarily due to higher sales generated from the telecast of NHL games and, to a lesser extent, original programming on MSG Networks, partially offset by lower Knicks-related advertising sales. Other revenues decreased $4.1 million, primarily due to the expiration in April 2013 of a short-term programming licensing agreement. Third quarter AOCF of $92 million decreased 4% and operating income of $87.1 million decreased 3%, both primarily due to an increase in direct operating expenses, largely offset by the increase in revenues.The increase in direct operating expenses was mainly due to the return to a full NHL regular season schedule.  MSG Entertainment  For the fiscal 2014 third quarter as compared to the prior year period, MSG Entertainment revenues of $52.8 million increased 49%. The increase was primarily due to higher event-related revenues at The Garden (primarily due to more events, mainly additional MSG Entertainment-promoted events), event-related revenues at the Forum (which re-opened on January 15, 2014) and higher venue-related sponsorship and signage and suite rental fee revenues.This was partially offset by lower event-related revenues at Radio City Music Hall, which was unavailable for events for the majority of the quarter due to the load-in and rehearsal of the Company's new, large-scale theatrical production, which was subsequently postponed until 2015.Third quarter AOCF loss of $20.2 million increased $7.1 million and operating loss of $24.2 million increased $7.1 million, both due to an increase in direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses, largely offset by the increase in revenues.The increase in direct operating expenses includes a $9.5 million increase related to the Company's new, large-scale theatrical production.Excluding the $9.5 million increase in expenses, MSG Entertainment AOCF would have improved by $2.4 million versus the prior year third quarter.  MSG Sports  For the fiscal 2014 third quarter as compared to the prior year period, MSG Sports revenues of $233.7 million increased 12%.The increase in revenues was primarily due to higher event-related revenues from other live sporting events, professional sports team regular season ticket-related revenue, professional sports team sponsorship and signage revenues, inter-segment broadcast rights fees and suite rental fee revenue.Third quarter AOCF of $9.8 million decreased by $1.8 million and operating income of $5.9 million decreased by $2.3 million, both primarily due to an increase in direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses, largely offset by the increase in revenues.The increase in direct operating expenses was primarily due to higher net provisions for NBA luxury tax and NBA and NHL revenue sharing expense, team personnel compensation expense and other team operating costs.  About The Madison Square Garden Company  The Madison Square Garden Company is a fully-integrated sports, media and entertainment business. The Company is comprised of three business segments: MSG Sports, MSG Media and MSG Entertainment, which are strategically aligned to work together to drive the Company's overall business, which is built on a foundation of iconic venues and compelling content that the company creates, produces, presents and/or distributes through its programming networks and other media assets. MSG Sports owns and operates the following sports franchises: the New York Knicks (NBA), the New York Rangers (NHL), the New York Liberty (WNBA), the Hartford Wolf Pack (AHL) and an NBA Development League franchise.MSG Sports also features the presentation of a wide variety of live sporting events including professional boxing, college basketball, bull riding and tennis. MSG Media is a leader in production and content development for multiple distribution platforms, including content originating from the Company's venues. MSG Media's television networks consist of regional sports networks, MSG Network and MSG+, collectively referred to as MSG Networks, and Fuse, a national television network dedicated to music.MSG Entertainment is one of the country's leaders in live entertainment. MSG Entertainment creates, produces and/or presents a variety of live productions, including the Radio City Christmas Spectacular featuring the Rockettes.MSG Entertainment also presents or hosts other live entertainment events such as concerts, family shows and special events in the Company's diverse collection of venues. These venues consist of Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum in Inglewood, CA, The Chicago Theatre, and the Wang Theatre in Boston, MA. More information is available at www.themadisonsquaregardencompany.com.  The Madison Square Garden Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=15647  Non-GAAP Financial Measures  We define adjusted operating cash flow ("AOCF"), which is a non-GAAP financial measure, as operating income (loss) before 1) depreciation, amortization and impairments of property and equipment and intangible assets, 2) share-based compensation expense or benefit, and 3) restructuring charges or credits. Because it is based upon operating income (loss), AOCF also excludes interest expense (including cash interest expense) and other non-operating income and expense items. 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 either the distortive effects of fluctuating stock prices or the settlement of an obligation that is not expected to be made in cash.  We believe AOCF is an appropriate measure for evaluating the operating performance of our business segments and the Company on a consolidated basis. AOCF and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and AOCF measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. AOCF 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 U.S. generally accepted accounting principles ("GAAP"). Since AOCF 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 AOCF to operating income (loss), please see below.  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 or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry 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.  Conference Call Information:  The conference call will be Webcast live today at 10:00 a.m. ET at www.themadisonsquaregardencompany.com  Conference call dial-in number is 877-347-9170 / Conference ID Number 31587884  Conference call replay number is 855-859-2056 / Conference ID Number 31587884 until May 9, 2014    THE MADISON SQUARE GARDEN COMPANY CONSOLIDATED OPERATIONS DATA AND RECONCILIATION (In thousands, except per share data) (Unaudited)                                   Three Months Ended   Nine Months Ended                                   March 31,            March 31,                                  2014      2013       2014        2013                                                                 Revenues                        $458,956 $ 412,406 $1,183,920 $1,004,458 Adjusted operating cash flow     $ 65,713  $ 91,739   $257,785   $263,336 Share-based compensation expense (8,590)   (4,958)    (17,057)    (13,898) Operating income before           57,123    86,781     240,728     249,438 depreciation and amortization Depreciation and amortization    (29,674)  (22,995)   (76,869)    (64,439) Operating income                 27,449    63,786     163,859     184,999 Other income (expense):                                          Equity in earnings (loss) of      663       --         (75)        -- nonconsolidated affiliates Interest expense, net            (1,135)   (1,193)    (3,636)     (3,607) Miscellaneous                    72        3,373      95          3,475 Income from operations before     27,049    65,966     160,243     184,867 income taxes Income tax expense               (7,995)   (27,517)   (56,812)    (78,902) Net income                       $19,054  $38,449   $103,431   $105,965 Basic earnings per common share  $0.25   $0.50    $1.34     $1.39 Diluted earnings per common       $0.24   $0.49    $1.32     $1.36 share                                                                 Basic weighted-average number of  77,162    76,537     77,069      76,022 common shares outstanding Diluted weighted-average number   78,211    78,041     78,142      77,900 of common shares outstanding                                                                    ADJUSTMENTS TO RECONCILE ADJUSTED OPERATING CASH FLOW TO OPERATING INCOME                                     (LOSS)  The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating cash flow as described in this earnings release:    *Depreciation and amortization.This adjustment eliminates depreciation,     amortization and impairments of property and equipment and intangible     assets in all periods.   *Share-based compensation expense. This adjustment eliminates the     compensation expense relating to restricted stock, restricted stock units,     stock options and stock appreciation rights granted under our employee     stock plans and non-employee director plans in all periods.    THE MADISON SQUARE GARDEN COMPANY CONSOLIDATED OPERATIONS DATA (Dollars in thousands) (Unaudited)  REVENUES                                               Three Months Ended                                                    March 31,                                                                                   %                                              2014        2013        Change                                                                     MSG Media                                    $ 190,825   $ 184,666   3% MSG Entertainment                            52,785      35,491      49% MSG Sports                                    233,739     208,080     12% Other (including Inter-segment eliminations) (18,393)    (15,831)    (16)% Total Madison Square Garden Company           $ 458,956   $ 412,406   11%                                                                                                                                                                                      Nine Months Ended                                                     March 31,                                                                    %                                              2014        2013        Change MSG Media                                    $ 538,149   $ 500,974   7% MSG Entertainment                            244,510     217,390     12% MSG Sports                                    455,293     329,547     38% Other (including Inter-segment eliminations) (54,032)    (43,453)    (24)% Total Madison Square Garden Company           $ 1,183,920 $ 1,004,458 18%                                                                      ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)                           Adjusted Operating        Operating Income                              Cash Flow                  (Loss)                          Three Months Ended  %      Three Months Ended %                           March 31,                  March 31,                          2014      2013      Change 2014      2013     Change                                                                    MSG Media                $91,950  $95,390  (4)%   $87,071  $89,786 (3)% MSG Entertainment       (20,200) (13,078) (54)%  (24,186)  (17,102) (41)% MSG Sports                9,846     11,649    (15)%  5,872     8,143    (28)% All other                (15,883)  (2,222)   -      (41,308)  (17,041) (142)% Total Madison Square     $65,713  $91,739  (28) % $27,449  $63,786 (57)% Garden Company                                                                                               Adjusted Operating        Operating Income                              Cash Flow                  (Loss)                         Nine Months Ended   %      Nine Months Ended   %                          March 31,                  March 31,                         2014      2013      Change 2014      2013      Change                                                                    MSG Media               $259,194 $267,712 (3)%   $244,438 $250,982 (3)% MSG Entertainment       7,110    4,399     62%    (4,412)  (6,904)  36% MSG Sports               13,871    (1,374)   -      2,551     (12,279)  - All other               (22,390)  (7,401)   (203)% (78,718)  (46,800)  (68)% Total Madison Square     $257,785 $263,336 (2)%   $163,859 $184,999 (11)% Garden Company                                          THE MADISON SQUARE GARDEN COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)                                                  March 31,2014 June 30,2013 ASSETS                                           Current Assets:                                                 Cash and cash equivalents                      $76,545        $277,913 Restricted cash                                16,663          8,413 Accounts receivable, net                       200,107         145,728 Net related party receivables                  25,968          18,565 Prepaid expenses                               39,877          41,215 Other current assets                           28,038          20,339 Total current assets                           387,198         512,173 Investments in and loans to nonconsolidated     186,927         -- affiliates Property and equipment, net                    1,273,760       1,135,180 Amortizable intangible assets, net             82,906          90,705 Indefinite-lived intangible assets             163,839         158,636 Goodwill                                       742,492         742,492 Other assets                                   101,997         93,028 Total assets                                   $ 2,939,119     $ 2,732,214                                                                 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:                                            Accounts payable                               $20,075       $16,006 Net related party payables                     862           283 Accrued liabilities:                                            Employee related costs                         82,149         70,663 Other accrued liabilities                      246,656         221,405 Deferred revenue                               274,275         237,537 Total current liabilities                      624,017         545,894 Defined benefit and other postretirement        61,091          59,726 obligations Other employee related costs                   46,315          45,370 Other liabilities                              63,069          58,536 Deferred tax liability                         549,725         543,753 Total liabilities                              1,344,217       1,253,279 Commitments and contingencies                                   Stockholders' Equity:                                           Class A Common stock, par value $0.01, 360,000 shares authorized; 63,589 and 63,268 shares     639             639 outstanding as of March 31, 2014 and June 30, 2013, respectively Class B Common stock, par value $0.01, 90,000 shares authorized; 13,589 shares outstanding as 136             136 of March 31, 2014 and June 30, 2013 Preferred stock, par value $0.01, 45,000 shares --              -- authorized; none outstanding Additional paid-in capital                      1,076,097       1,070,764 Treasury stock, at cost, 317 and 596 shares as of March 31, 2014 and June 30, 2013,            (7,537)         (14,179) respectively Retained earnings                               541,225         437,794 Accumulated other comprehensive loss            (15,658)        (16,219) Total stockholders' equity                      1,594,902       1,478,935 Total liabilities and stockholders' equity      $ 2,939,119     $ 2,732,214    THE MADISON SQUARE GARDEN COMPANY SELECTED CASH FLOW INFORMATION (Dollars in thousands) (Unaudited)                                                   Nine Months Ended March 31,                                                  2014          2013 Net cash provided by operating activities        $217,048     $180,762 Net cash used in investing activities            (413,126)      (152,551) Net cash used in financing activities            (5,290)        (6,294) Net increase (decrease) in cash and cash          (201,368)      21,917 equivalents Cash and cash equivalents at beginning of period 277,913        206,500 Cash and cash equivalents at end of period       $76,545       $228,417  CONTACT: Kimberly Kerns          Senior Vice President          Communications          The Madison Square Garden Company          (212) 465-6442                   Ari Danes, CFA          Vice President          Investor Relations          The Madison Square Garden Company          (212) 465-6072  The Madison Square Garden Company logo  
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