Outdoor Channel Holdings Reports Third Quarter 2009 Results

Outdoor Channel Holdings Reports Third Quarter 2009 Results

Temecula, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Outdoor Channel Holdings, Inc. (NASDAQ:OUTD) today reported an increase in total revenues of 58 percent for the three-month period ended September 30, 2009 due largely to the acquisition of Winnercomm Inc.

Total revenues amounted to $23.6 million for the 2009 third quarter, compared with $15.0 million in the corresponding period a year ago. For the first nine months of 2009, total revenues were $59.8 million, compared with $39.7 million in the corresponding period a year ago.

Advertising revenue for the 2009 third quarter decreased 5.6 percent to $9.9 million from $10.5 million in the prior-year period. For the first nine months of 2009, advertising revenues were $24.8 million compared to $26.6 million in the prior-year period.

Subscriber fees totaled $4.4 million for the third quarter of 2009 compared to subscriber fees of $4.5 million in the prior-year period. This slight decrease is generally a result of adding a significant number of subscribers during the quarter. For the first nine months of 2009, subscriber fees totaled $14.4 million compared to $13.1 million in the prior-year period.

In January of 2009, Outdoor Channel Holdings acquired certain assets of Winnercomm Inc. and its related entities. The revenues generated by Winnercomm are reported as "Production services." Production services revenue totaled $9.3 million and $20.6 million during the 2009 third quarter and nine month period, respectively. These revenues were comprised primarily of production services for customer-owned telecasts and marketing.

"During the third quarter we continued to execute our growth strategy through further investments in our category leading content, securing broad distribution gains nationwide, and strengthening our presence across multiple platforms," said Roger L. Werner, President and Chief Executive Officer. "We successfully expanded the distribution of our network through a series of tier migrations and system launches and have demonstrated industry-leading subscriber growth over the past year. While our advertising revenues continue to be impacted by the challenging environment, we remain confident in our long term growth prospects given our current market position. Looking forward, we believe we will be able to strengthen our growth profile by building on our compelling programming, multi-platform presence and strong advertising and distribution relationships."

Outdoor Channel Holdings posted a net income of $1.4 million, or $0.05 per diluted share, for the 2009 third quarter, compared with net income of $2.4 million, or $0.09 per diluted share, in the prior-year period. For the 2009 nine-month period, the Company posted a net loss of $0.9 million, or ($0.04) per diluted share compared to a net income of $1.9 million, or $0.07 for the prior-year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, amounted to $4.2 million for the 2009 third quarter, compared with $5.4 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $3.8 million for the 2009 third quarter compared to $5.4 million in the prior-year period.

For the nine month period, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $5.3 million compared to $7.0 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $8.0 million for the 2009 nine month period compared to $7.0 million in the prior-year period.

Investor Conference Call

Outdoor Channel Holdings' management will host an investor conference call today, November 3, 2009, at 2 p.m. PST (5 p.m. EST) to review the company's financials and operations for its 2009 third quarter ended September 30, 2009. Investment professionals are invited to participate in the live call by dialing 866-788-0543 (domestic) or 857-350-1681 (international) and using participant passcode 66500972. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the company's Web site, www.outdoorchannel.com. For those who are not able to listen to the live broadcast, the call will be archived on the web site for one year. A telephonic playback of the conference call also will be available through 5 p.m. PST (8 p.m. EST), November 10, 2009, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 92704107.

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's largest and highest quality producers of live sporting events and sports series for cable and broadcast television. Winnercomm also owns and operates the patented Skycam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information please visit www.outdoorchannel.com.

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 33.1 million cable and satellite subscribers for November 2009. 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 share-based compensation expense and acquisition and integration costs, 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 share-based compensation expense and acquisition and integration costs 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) service providers discontinuing or refraining from carrying Outdoor Channel; (2) 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; (3) liabilities resulting from an aerial camera falling; (4) a decrease in advertising revenue as a result of a deterioration in general economic conditions; (5) managing the company's growth and the integration of acquisitions; 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.

                 OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES                 Condensed Consolidated Statements of Operations                 (unaudited, in thousands, except per share data)                                       Three Months Ended   Nine Months Ended                                        September 30,       September 30,                                       2009      2008      2009      2008    Revenues:     Advertising                     $9,881   $10,472   $24,780   $26,594     Subscriber fees                  4,427     4,484    14,428    13,089     Production services              9,322         -    20,611         -        Total revenues                23,630    14,956    59,819    39,683    Cost of services:     Programming                        875     1,437     3,983     5,133     Satellite transmission fees        400       398     1,195     1,573     Production and operations        9,155     1,454    23,960     4,477     Other direct costs                 175        98       382       290        Total cost of services        10,605     3,387    29,520    11,473    Other expenses:     Advertising                        676       567     2,032     2,593     Selling, general and      administrative                  9,328     6,592    26,998    21,342     Depreciation and amortization    1,010       672     2,897     1,904        Total other expenses          11,014     7,831    31,927    25,839    Income (loss) from operations      2,011     3,738    (1,628)    2,371    Interest and other income, net        15       454        66     1,400    Income (loss) from operations before    income taxes                      2,026     4,192    (1,562)    3,771    Income tax provision (benefit)       643     1,798      (663)    1,887    Net income (loss)                 $1,383    $2,394     $(899)   $1,884    Earnings (loss) per common share data:     Basic                            $0.06     $0.10    $(0.04)    $0.07     Diluted                          $0.05     $0.09    $(0.04)    $0.07    Weighted average number of common    shares outstanding:     Basic                           24,426    25,114    24,434    25,719     Diluted                         25,819    25,890    24,434    26,287                   OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES                      Condensed Consolidated Balance Sheets                            (unaudited, in thousands)                                         September 30,      December 31,                                            2009               2008                                        (unaudited)                     Assets    Current assets:     Cash and cash equivalents            $23,223           $60,257     Investment in available-for-sale      securities                           31,990                 -     Accounts receivable, net of allowance      for doubtful accounts                13,681             9,448     Other current assets                  10,712             6,854       Total current assets                79,606            76,559    Property, plant and equipment, net      15,049            10,042   Goodwill and amortizable intangible    assets, net                            44,052            43,302   Investment in auction-rate securities    5,945             6,456   Deferred tax assets, net                 5,614             4,949   Deposits and other assets                5,507             1,646       Totals                            $155,773          $142,954          Liabilities and Stockholders'          Equity    Current liabilities                    $16,465            $6,309   Long-term liabilities                    1,222               236       Total liabilities                   17,687             6,545    Total stockholders' equity             138,086           136,409      Totals                             $155,773          $142,954                      OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES                   Condensed Consolidated Statements of Cash Flows                              (unaudited, in thousands)                                      Three Months Ended   Nine Months Ended                                        September 30,       September 30,                                       2009      2008      2009      2008    Operating activities:     Net income (loss)               $1,383    $2,394     $(899)   $1,884     Adjustments to reconcile net      income (loss) to net cash      provided by operating activities:       Depreciation and amortization  1,010       672     2,897     1,904       Amortization of subscriber        acquisition fees                255       125       553       367       Loss on sale of equipment          6        46        21        41       Gain on sale of available-for-sale        securities                        -      (119)       (7)      (75)       Other-than-temporary impairment        on auction-rate securities        -         -         -       336       Provision for doubtful accounts  145       125       335       589       Share-based employee and service        provider compensation         1,199       992     3,322     2,704       Deferred tax provision       (benefit), net                   641     1,798      (695)    1,885    Changes in operating assets and liabilities:       Accounts receivable            2,170    (1,084)    1,122    (1,459)       Income tax refund receivable       -        (7)     (251)      (12)       Prepaid programming costs     (1,320)     (749)   (1,683)     (551)       Other current assets            (186)      (26)      400      (218)       Deposits and other assets     (1,758)     (209)   (4,203)     (209)       Accounts payable and accrued        expenses                      1,527      (133)       87     1,469       Deferred revenue                (247)      129     2,000       139       Customer deposits                  -         -         -       (14)       Accrued severance payments        32       (14)       18      (239)       Deferred obligations              (6)       23       (33)      (74)       Unfavorable lease obligations     31         -       (89)        -         Net cash provided by operating          activities                  4,882     3,963     2,895     8,467    Investing activities:       Purchases of property, plant        and equipment                  (714)     (166)   (2,075)     (644)       Proceeds from sale of equipment  111         -       111        15       Cash paid to purchase assets of        Winnercomm, net  of cash         acquired                         -         -    (5,746)        -       Purchases of available-for-sale        and auction-rate securities  (4,998)       (5)  (31,990)  (27,181)       Proceeds from sale of        available-for-sale and        auction-rate securities         500     2,480       600    65,952         Net cash provided by (used in)          investing activities       (5,101)    2,309   (39,100)   38,142    Financing activities:       Proceeds from exercise of        stock options                     -         -         -        11       Purchase of treasury stock       (84)      (99)     (482)     (389)       Purchase and retirement of stock        related to stock repurchase        program                           -    (9,363)     (347)  (14,174)         Net cash used in financing          activities                    (84)   (9,462)     (829)  (14,552)      Net increase (decrease) in cash      and cash equivalents             (303)   (3,190)  (37,034)   32,057     Cash and cash equivalents,      beginning of period            23,526    60,507    60,257    25,260     Cash and cash equivalents,      end of period                 $23,223   $57,317   $23,223   $57,317    Supplemental disclosure of cash    flow information:        Income taxes paid                $99        $7      $381       $13    Supplemental disclosures of non-cash    investing and financing activities:        Effect of net increase (decrease)        in fair value of auction-rate        securities, net of deferred        taxes                           $12     $(216)      $82     $(157)       Property, plant and equipment        costs incurred but not paid    $168       $37      $168       $37       Retirement of treasury stock     $84       $98      $482      $389                  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 share-based compensation expense and acquisition   and integration costs:                                       Three Months Ended  Nine Months Ended                                        September 30,       September 30,                                       2009      2008      2009      2008    Net income (loss)                 $1,383    $2,394     $(899)   $1,884    Add/Subtract:     Interest and other income, net      15       454        66     1,400     Income tax provision (benefit)     643     1,798      (663)    1,887     Depreciation and amortization    1,010       672     2,897     1,904    EBITDA                             3,021     4,410     1,269     4,275    Adjusted for:     Share-based compensation expense 1,199       992     3,322     2,704     Acquisition and integration costs    -         -       680         -    EBITDA as adjusted for share-based    compensation expense and    acquisition and integration    costs                            $4,220    $5,402    $5,271    $6,979    Summary of cost of services     Share-based compensation expense   $22      $155      $236      $329     Cost of services                10,583     3,232    29,284    11,144       Total cost of services       $10,605    $3,387   $29,520   $11,473    Summary of selling, general and    administrative     Share-based compensation      expense                        $1,177      $837    $3,086    $2,375     Acquisition and integration costs    -         -       680         -     Selling, general and      administrative                  8,151     5,755    23,232    18,967       Total selling, general and        administrative               $9,328    $6,592   $26,998   $21,342    Summary of interest and other    income, net     Interest income, net               $15      $335       $66    $1,629     Dividend income                      -         -         -        32     Other income (loss)                  -       119         -      (261)       Total interest and other income,        net                             $15      $454       $66    $1,400    EBITDA as adjusted by segment     Legacy Outdoor Channel          $3,823    $5,402    $8,042    $6,979     Production Services                397         -    (2,771)        -       EBITDA as adjusted for        share-based compensation        expense and acquisition and        integration costs            $4,220    $5,402    $5,271    $6,979  

First Call Analyst:
FCMN Contact:

Source: Outdoor Channel Holdings, Inc.

CONTACT: Tom Hornish, Chief Operating Officer, +1-951-699-6991, ext.
104, thornish@outdoorchannel.com; or Investors, Brad Edwards,
edwards@braincomm.com, or Media, Nancy Zakhary, nancy@braincomm.com, both of
Brainerd Communicators, Inc., +1-212-986-6667

Web Site: http://www.outdoorchannel.com/

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Profile: International Entertainment