ATLANTA, May 7, 2009 (GLOBE NEWSWIRE) -- Premier Exhibitions, Inc. (Nasdaq:PRXI), a major developer of touring museum quality exhibits, today announced financial results for the fourth quarter and fiscal year ended February 28, 2009 (fiscal 2009). Revenues for the fourth quarter decreased 41.2 %, to $10.1 million, compared to $17.2 million in the same period last year. The Company incurred a net loss of $8.2 million for the fourth quarter compared to net income of $0.8 million in the same quarter last year. Diluted income (loss) per common share for each of the quarters ended February 2009 and 2008 was ($0.28) and $0.02, respectively. EBITDA (a non-GAAP measure) for the fourth quarter ended February 28, 2009 and for the same quarter last year was ($9.8) million and $2.0 million, respectively. Adjusted EBITDA (a non-GAAP measure) for the fourth quarter ended February 28, 2009 and for the same quarter last year was ($7.9) million and $3.3 million, respectively. Reconciled GAAP and non-GAAP financial measures are provided as an exhibit.
Revenues for fiscal 2009 decreased 12.3%, to $54.0 million, compared to $61.5 million in the Company's fiscal year ended February 29, 2008 (fiscal 2008). Net income for fiscal 2009 decreased 181.4% to a net loss of $10.0 million, compared to net income of $12.3 million in the prior year ended February 29, 2008. Diluted income (loss) per common share for the years ended February 28, 2009 and February 29, 2008 was ($0.34) and $0.37, respectively. EBITDA (a non-GAAP measure) for fiscal year 2009 and 2008 was ($9.0) million and $20.9 million, respectively. Adjusted EBITDA (a non-GAAP measure) for fiscal year 2009 and 2008 was ($7.5) million and $25.6 million, respectively.
Overview
On January 28, 2009, Sellers Capital Master Fund, Ltd., the Company's largest shareholder, was successful in a consent solicitation and succeeded in having four new independent directors elected to the Company's Board. Upon election of the Sellers nominees, the Board terminated Arnie Geller as President and Chief Executive Officer of the Company and replaced him as Chairman of the Board. Mark Sellers, the managing member of Sellers Capital LLC, the investment manager of Sellers Capital Master Fund, Ltd., became the Chairman of the Board and Christopher Davino, one of the independent board members elected as a result of the consent solicitation, was appointed interim President and Chief Executive Officer.
Operating profit for the current quarter, before non-recurring items, was $(5.6) million. The Company's attendance levels at the Company's exhibitions declined due to the Company's inability to locate and open new profitable exhibition venues and the impact of current economic conditions that significantly reduced consumer discretionary spending. The Company's operating results for the fourth quarter and fiscal year reflect the impact of these challenges.
Overall attendance at the Company's Bodies and Titanic exhibitions was down 18% in the current quarter compared to the same quarter last year. This decline resulted from days of operations decreasing 19% and a Bodies and Titanic operating venue decrease from 26 to 22. The attendance decline was due to having one inactive exhibition and having ten exhibitions in storage for a period of time during the quarter and reduced attendance per venue - average attendance per venue declined from 49,408 to 43,872 in the quarter compared to the same quarter last year. However, there was continued strength and, in some cases improvement, at certain of the Company's locations. In addition, the Company's attendance results were very strong during the fourth quarter at the newly opened Bodies exhibitions in Athens, Dublin and Warsaw. The Company also saw continued strength at the Bodies exhibition in San Juan, Puerto Rico as well as at the Titanic exhibitions in Milwaukee and Montreal.
The results for the Company's exhibitions are driven by a number of factors including, but not limited to: (i) the size and quality of the market; (ii) self-run or promoter/museum relationship; and (iii) the costs to the Company associated with the exhibition. The market in the U.S. for Bodies...The Exhibition has been saturated and the Company has been forced into secondary and tertiary markets for its self-run opportunities. Many of these self-run exhibitions have been in commercial venues that required significant costs to renovate or prepare to house the exhibition. The Company's partners have also failed to find sufficient numbers of suitable markets and venues to keep the Company's Bodies specimen sets working sufficiently to cover the Company's costs to acquire these specimens.
The overhead costs associated with unused specimen sets for the Company's Bodies exhibitions unable to be placed in the market were a significant drag on operating profit. Annual payment obligations on the Bodies specimen sets total $8,000,000. If the Company is unable to keep these specimen sets working, operating profit is adversely affected. Over the past fiscal year, the average days of use for the Company's Bodies specimen sets has decreased dramatically. Profitability is driven off the continued use of these specimen sets to offset the fixed costs associated with them. Similarly, while the overhead with the Titanic exhibitions is less significant than for Bodies, the Company's inability to adequately book exhibitions into the future and manage its calendar has resulted in significant increases in operating costs for the Company.
For the most recent quarter and the fiscal year ended February 28, 2009, as compared to the fourth quarter and fiscal year ended February 28, 2008, gross margins for the Bodies and Titanic properties declined. The combination of increased operating costs, venues situated in smaller markets and reduced attendance has reduced the amount of income available to cover overhead expenses.
Gross Margin Contribution
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FY '09 FY '08 Qtr 2/28/09 Qtr 2/28/08
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Bodies $16.7 million $30.7 million $2.4 million $7.2 million
Titanic $5.6 million $10.1 million $1.3 million $1.6 million
Attendance at exhibitions has been negatively impacted by the domestic and world economic situation. Currently, the Company has five operating Titanic exhibitions located in Atlanta, GA; Las Vegas, NV; Idaho Falls, ID; Milwaukee, WI and Montreal, Canada with one exhibition in storage. The Company also currently has ten operating Bodies exhibitions located in Mashantucket, CT; Atlanta, GA; Las Vegas, NV; New York, NY; Tallahassee, FL; San Juan, Puerto Rico; Athens, Greece; Dublin, Ireland; Warsaw, Poland and Porto Alegre, Brazil and six exhibitions in storage. The Company recently completed Titanic exhibitions in Madrid, Spain and plans to open three new Titanic, three new Bodies and one Star Trek exhibition in the next 30 days.
For the fourth quarter ended February 28, 2009, there were a number of non-recurring items that were reflected in the financial results (all of which are discussed in more detailed in the following narrative). In total, there were $5.6 million in non-recurring charges that included:
1) Write-offs due to the disposition of the MGR merchandising
operation totaling $1.9 million.
2) An impairment charge of $1.5 million and a write-off of
$0.4 million in related assets due to the cessation of the Sports
Immortals project.
3) $1.5 million related to the expense recognition associated with
the acceleration of option awards for terminated employees,
primarily Mr. Geller.
4) $0.3 million in proxy related expenses to contest the Sellers
consent solicitation.
The MGR costs relate to a decision by prior management to partially unwind the MGR acquisition that occurred last year. The charge relates primarily to the write-off of goodwill and other intangibles totaling $1.1 million which was the excess of the amount paid over the fair market value of the assets acquired. The Sports Immortals charges relate to a decision by current management not to pursue this opportunity given the potential costs to bring this opportunity to market, the lack of apparent interest in the concept from venue operators and promoters, and the potential licensing issues that would need to be resolved to exhibit many of the artifacts.
When new management arrived, it was immediately apparent that the Company lacked a structured "go-to-market" approach to get its exhibit properties booked timely and well in advance of the opening date to facilitate sufficient marketing, public relations and advertising to support the venue's ultimate profitability. Moreover, the process of initiating license agreements such as Sports Immortals lacked any ROI measures or other measures one might expect when committing large sums of money to purchase a concept that requires significant additional resources to convert into a marketable exhibit.
The Company has embarked on several new initiatives to address these challenges which are designed to stabilize the company, operationally and financially. These initiatives include achieving a break even cash flow, making the core operations more efficient and profitable, assessing all of the Company's third-party and contractual relationships, and assessing and reducing the Company's infrastructure.
The Company believes it is imperative for the Company to maintain an overhead cost structure consistent with current market and economic conditions. The Company is reviewing all departments to identify cost savings and efficiencies that can be implemented immediately. This includes internal costs as well as spending on outside consultants and advisors. The Company intends to significantly reduce its general and administrative spending for fiscal year 2010.
Another focus is on maximizing the benefit of the Company's contractual partner arrangements. Management's goal is to have the Company's partners more engaged and active in placing the Company's properties in suitable venues and markets with sufficient lead time to increase the probability of success. This effort is coupled with the development of the Company's internal "go-to-market" process, which will enable the Company to better assess potential markets, provide adequate lead time for planning and advertising and create accountability for engaging in successful self-run exhibitions.
The team is committed to engaging in a turnaround plan for the Company that will not only stabilize the Company but will also strengthen it to grow over time.
Other developments include:
Live Nation Agreement: On November 30, 2008, the Company executed an amendment to an agreement with Live Nation for the combined sales, marketing and operation of human anatomy exhibitions on an international basis (excluding North America). This amendment provides for an upfront license fee to be paid to the Company of $4.0 million in exchange for the right to jointly promote 8 exhibitions. $3.0 million of such license fee was paid to the Company on December 5, 2008 and another $0.5 million was paid to the Company on January 9, 2009. The remaining $0.5 million is recorded as a receivable as of year-end and the amount was subsequently paid in April 2009. While this is an exclusive arrangement between the parties, the new arrangement includes best efforts by both the Company and its partners to secure new locations and possible arrangements with third party promoters.
Luxor: The Company's permanent Titanic exhibition at the Luxor Hotel and Casino opened on December 20, 2008. This exhibition was newly designed for the Luxor and includes more than 20 never before seen artifacts including gaming chips, passenger personal papers and decorative sections from Titanic's famed Grand Staircase. This new exhibition is located adjacent to the Company's Bodies exhibition at the Luxor. The Company expects to be able to leverage the presence of two exhibitions in a single location in terms of sales and marketing efforts and costs of operation.
Dialog in the Dark: The Company's "Dialog in the Dark" exhibition continues to draw increasing numbers of attendees to the Company's location in Atlanta. This new exhibition has been well received by visitors and the media. The Company's Dialog in the Dark exhibit in Kansas City was not profitable and closed early. The loss on that exhibition was $(0.9) million. The Company continues to have difficulty identifying venues for this exhibit and is exploring alternatives to improve the commercial viability of the project.
Sports Immortals: On March 13, 2008, the Company entered into an exclusive license agreement with Sports Immortals, Inc. for the promotion of Joel Platt's extensive sports memorabilia collection of both fixed and touring exhibitions. The Company has determined that the capital required to develop, build and install this exhibition is beyond the Company's financial capabilities at this time. Due to the significant capital requirements to produce, develop and bring to market the Sports Immortals exhibition, the Company has put these plans on hold.
MGR: On December 29, 2008, the Company completed the closing of a transaction to sell selected assets and liabilities of the Company's merchandising operation that were acquired from MGR Entertainment for $1.0 million. These assets and liabilities were focused on the live music business and were purchased by us in March, 2008. This aspect of the merchandising business was not consistent with the Company's current business strategy, required ongoing capital commitments and achieved low operating margins. As a result of the disposition, the Company recorded a loss of $1.9 million comprised of goodwill, intangible assets and other assets in the amount $0.9 million, $0.2 million, net of amortization and $0.8 million, respectively. The Company continues to focus on merchandising activities at all the Company's exhibition locations to increase revenue per attendee and the Company's margins on this activity.
Titanic Litigation: On March 25, 2008, the court entered an order granting permission to the U.S. to file an amicus curiae (friend of the court) response regarding the motion of R.M.S. Titanic, Inc. ("RMST") for an interim salvage award. The U.S. response states that an interim in specie award with limitations, made by the court to RMST, could serve as an appropriate mechanism to satisfy RMST's motion for a salvage award and to help ensure that the artifacts recovered by RMST from the wreck of the Titanic are conserved and curated together in an intact collection that is available to the public for historical review, educational purposes, and scientific research in perpetuity. The District Court has not yet ruled on the motion for an interim in specie salvage award. On April 15, 2008, the District Court entered an order requesting RMST to propose suggested covenants that would be included in an in specie award. The order also outlines a process for further discussion pertaining to such covenants should the court decide to issue an in specie award. In September 2008, RMST submitted revised covenants and conditions in connection with the Company's request for an in specie award for the remaining Titanic artifacts. This submission was made pursuant to the order issued by the U.S. District Court in April 2008. As part of developing the revised covenants and restrictions, the Company engaged in consultative discussions with the U.S. government over the past several months. On October 14, 2008, the U.S. filed an amicus response to RMST's proposed revised covenants, and by leave of the District Court granted on October 31, 2008, RMST in turn filed a reply brief on November 12, 2008. On November 18, 2008, the Company attended a status conference at the District Court. At the conclusion of that hearing, the District Court asked for certain additional submissions from RMST and the U.S. which were provided. The District Court indicated it would complete its review of the proposed revised covenants and conditions, and any final areas of disagreement between the U.S. government and RMST, and likely issue its final version of the covenants and order in the future. There have not been any further decisions or announcements from the District Court since the November 18 hearing. The Company cannot predict how the District Court will ultimately rule on RMST's motion for an interim salvage award.
Fiscal 2009 was a challenging year for the Company with a very difficult economic climate coupled with significant organizational changes and numerous external distractions and challenges. The Company is actively focused on finalizing and implementing a revised business plan that addresses the need for new and profitable venue locations and a streamlined organizational structure. The Company intends to focus on improving the Company's "go-to-market" practices, stabilizing the Company's operating and financial results and significantly improving communication with partners and shareholders while steadily increasing shareholder value.
Fourth Quarter Comparison
Outlined below are explanations for significant variances in the Company's income statement between the fourth quarter of Fiscal 2009 and the fourth quarter of Fiscal 2008.
Revenue
The decrease in revenue was primarily due to:
* Overall attendance at the Company's Bodies and Titanic exhibitions was down 18% in the current quarter compared to the same quarter last year. Despite Star Trek and Dialog in the Dark adding 93,866 attendees compared to the same quarter last year, overall attendance at the Company's exhibitions decreased 11% compared to the same quarter last year. Attendance at the Company's human anatomy exhibits was down 26% due to a decrease in the number of operating "Bodies...The Exhibition", "Bodies Revealed" and "Our Body: The Universe Within" locations to 16 in the current quarter compared to 19 in the same quarter last year. Moreover, there were 786 operating days in the current quarter compared to 1,159 operating days in the same quarter last year. Attendance at the Company's Titanic exhibits was up 13% driven by a 16% increase in operating days to 492 in the current quarter compared to 423 operating days in the same quarter last year. The overall decrease in attendance primarily resulted from having one inactive exhibition and having ten exhibitions in storage for a period of time during the quarter and underperforming venues primarily due to reduced attendance associated with the economic downturn. * License revenue, a component of exhibition revenue, decreased to $0.9 million for the current quarter compared to $1.5 million for the same quarter last year. This decrease is primarily the result of having fewer partnered engagements operating beyond six months which provides the Company with a monthly license fee. This coupled with having multiple exhibits in storage contributed to the quarter over quarter license revenue decrease. * Merchandise revenue decreased $0.2 million primarily as a result of having one inactive exhibition and having ten exhibitions in storage for a period of time during the quarter.
Cost of Sales
The decrease in cost of sales was primarily due to:
* Marketing expense reduced by $1.8 million due to having one inactive exhibition and having ten exhibitions in storage for a period of time during the quarter. * Venue operational expenses were also down due to having one inactive exhibition and having ten exhibitions in storage for a period of time during the quarter. * These decreases were partially offset by increased production costs associated with Dialog in the Dark, Star Trek and Sports Immortals.
Operating expenses:
SG&A
The increase in SG&A was primarily due to:
* The Company recorded impairment charges of $2.8, consisting of $0.9 million for the loss on the MGR disposition, the Sports Immortals license fee of $1.5 million and $0.4 million of Sports Immortals assets. * An increase in the Company's other general and administrative expenses of $0.3 million for accrued consulting expenses and a $0.3 million increase in bad debt expense. * An increase in professional fees of approximately $1.5 million associated with a $0.6 million consulting and professional fees increase attributable to the Company's Sarbanes-Oxley testing, higher tax costs for several projects, higher audit fees and various other internal projects. Increased legal fees of $0.9 million for various matters. * Stock Compensation increased due to the acceleration of stock options associated with the departure of the Company's former Chairmen and CEO. * As a result of the halted Caracas exhibition, the company incurred additional artifact shipping expenses of approximately $0.2 million. * These increases were offset by a total compensation decrease as a result of the departure of certain officers.
Depreciation and Amortization
The increase in depreciation and amortization was primarily due to:
* An increase in the depreciation of maintenance capital related to the increased number of self-run exhibitions and depreciation of significant capital projects, such as the Luxor project and Dialog in the Dark, compared to the prior year three month period. * An increase in amortization as it relates to the acquisition of MGR, as well as the Company's licensing arrangement with The Universe Within Project LTD, pursuant to which the Company promotes three "Our Body: The Universe Within" exhibitions.
Net Income
The decrease in net income in the fourth quarter of fiscal 2009 compared to the fourth quarter of fiscal 2008 is primarily due to a decrease in revenue, higher general and administrative expenses, as well as higher depreciation and amortization.
Full Fiscal Year Comparison
Outlined below are explanations for significant variances in the Company's income statement between Fiscal 2009 and Fiscal 2008.
Revenue
The decrease in revenue was primarily due to:
* Overall attendance at the Company's Bodies and Titanic exhibitions was down 13% for the current fiscal year compared to the prior fiscal year primarily resulting from having multiple exhibitions in storage for an extended period of time during the year causing a significant decrease in days of operation. Despite Star Trek and Dialog in the Dark adding 204,608 attendees compared to last year, overall attendance at the Company's exhibitions decreased 10% compared to last year fiscal year ended February 29, 2008. Attendance at the Company's human anatomy exhibits was down 6% despite an increase in the number of operating "Bodies...The Exhibition", "Bodies Revealed" and "Our Body: The Universe Within" locations to 33, which provided 4,335 operating days in the current fiscal year compared to 28 operating locations, which provided 3,359 operating days for the same period last fiscal year. Although the Company increased the number of operating venues in the current year, decreases of 22% or $8.0 million in total admissions revenue were experienced compared to the prior year period. Attendance at the Company's Titanic exhibits was down 31% despite a 4% increase in operating days to 1,854 in the current fiscal year period compared to 1,788 operating days for the same period last fiscal year. Although, the number of operating days increased by 66 in the current year period, the Company experienced decreases of 14% or $1.1 million in admissions revenue compared to the prior year period. The decrease in attendance was primarily attributable to underperforming venues coupled with the economic downturn. * License revenue, a component of exhibition revenue, decreased to $9.5 million for the current fiscal year period compared to $14.1 million for the same period last fiscal year. The decrease in license revenue is related to the first amendment to the Live Nation agreement, discussed in greater detail above, having fewer partnered engagements operating beyond six months which provides the Company with a monthly license fee and an increase in self run operations. * The decrease in exhibition revenue was partially offset by a $4.9 million increase in merchandise revenue for the twelve month period, primarily as a result of the Company's acquisition of MGR Entertainment in March 2008. * The Company operated seventeen "Bodies...The Exhibition" locations (Barcelona, Spain; Madrid, Spain; Vienna, Austria; Budapest, Hungary; Indianapolis, IN; Honolulu, Hawaii; Cincinnati, OH; Ft. Lauderdale, FL; Las Vegas, NV (two locations); New York, NY; Pittsburgh, PA; Atlanta, GA; Athens, Greece; Dublin, Ireland; Warsaw, Poland and Atlantic City, NJ) in the current twelve month period compared to eighteen (Prague, Czech Republic; Lisbon, Portugal; Amsterdam,, The Netherlands; Arlington, VA; Las Vegas, NV; Durham, NC; San Diego, CA; New York, NY; Branson, MO; Columbus, OH; Seattle, WA; Ft. Lauderdale, FL; Pittsburgh, PA; Barcelona, Spain; Framingham, MA; Madrid, Spain; Cincinnati, OH and Miami, FL) in the same period last year. * The Company operated nine "Bodies Revealed" locations (Hartford, CT; Kansas City, MO; Redding, CA; Sacramento, CA; Copenhagen, Denmark; Rio de Janeiro; Panama City, Panama; San Juan, Puerto Rico and Santiago, Chile) in the current twelve month period compared to five (Buenos Aires, Argentina; Sarasota, FL; Sacramento, CA; Hartford, CT and Sao Paulo, Brazil) in the same period last year. * The Company operated seven "Our Body: The Universe Within" locations (Mobile, AL; Oklahoma City, OK; Wichita, KS; San Antonio, TX; Harrisburg, PA; Tallahassee, FL and Hot Springs, AR) in the current twelve month period and five (Detroit, MI; San Antonio, TX; Rochester, NY; Mobile, AL; and Oklahoma City, OK) in the same period last year following their acquisition by the Company in December 2007.
Cost of Sales
The increase in cost of sales was primarily due to:
* An increase in the number of the Company's self-run exhibitions from nine to eleven. In self-run exhibitions all costs are recorded by the Company, as compared to partnership arrangements where costs are shared between the Company and a partner. The addition of operating two Dialog in the Dark and three Star Trek exhibitions along with the movement of the Company's Las Vegas Bodies and Titanic exhibitions from the Tropicana to the Luxor during the twelve month period contributed to the exhibition costs increase as compared to last year. * A $2.4 million increase in cost of merchandise to $2.8 million for the current twelve month period, primarily as a result of the Company's acquisition of MGR. * Increased specimen licensing costs in relation to the December 2007 licensing agreement which permits the Company to promote three "Our Body: The Universe Within" exhibitions, coupled with a full year of license fees for the Company's sixth human anatomy specimen set acquired mid year for fiscal year ended 2008. * An increase in marketing costs primarily attributable to additional marketing campaigns associated with Star Trek, Dialog in the Dark and additional self-run exhibitions.
Operating expenses:
SG&A
The increase in SG&A was primarily due to:
* Restructuring of the Company's senior management team that occurred during the second quarter and accounted for an increase in compensation of approximately $2.4 million. As a result of certain officers that departed the Company, reversed stock compensation of $2.6 million was partially offset by severance of $2.4 million. * Increases in headcount during the year in certain support departments (Accounting, Marketing, and Administrative) and in connection with the Company's Dialog in the Dark, Sports Immortals and Star Trek exhibitions. * An increase in professional fees of approximately $3.6 million associated with a $2.2 million consulting and professional fees increase attributable to the Company's Sarbanes-Oxley testing, higher tax costs for several projects, higher audit fees and various other internal projects. Increased legal fees of $1.4 million for various matters. * The Company recorded impairment charges of $2.8 consisting of $0.9 million for the loss on the MGR disposition, the Sports Immortals license fee of $1.5 million and $0.4 million of Sports Immortals assets. * An increase in the Company's other general and administrative expenses, which are attributable to a royalty settlement of approximately $0.3 million and an increase in bad debt expense of approximately $0.6 million. * As a result of exhibitions placed into storage during the twelve month period, the Company has classified approximately $0.4 million of specimen license payments to general and administrative expenses and $0.5 million for the Company's marketing function provided by an outside vendor. * An increase in office expenses as it relates to headcount increased at the beginning of the year, coupled with rent expense for the MGR office and warehouse. * As a result of the halted Caracas exhibition, the company incurred additional artifact shipping expenses of approximately $0.2 million.
Depreciation and Amortization
The increase in depreciation and amortization was primarily due to:
* An increase in the depreciation of maintenance capital related to the increased number of self-run exhibitions and depreciation of significant capital projects, such as the Luxor project and Dialog in the Dark, compared to the prior year twelve month period. * An increase in amortization as it relates to the acquisition of MGR, as well as the Company's licensing arrangement with The Universe Within Project LTD, pursuant to which the Company promotes three "Our Body: The Universe Within" exhibitions and the amortization of contract costs related to the addition of Dialog in the Dark, Sports Immortals and Star Trek.
Net Income
The decrease in net income for fiscal 2009 compared to fiscal 2008 was due to a decrease in revenue, higher cost of sales and general and administrative expenses, as well as higher depreciation and amortization.
Balance Sheet Changes
The Company continues to take actions to reduce capital expenditures in light of the current economic condition. The balance sheet changes between the end of Fiscal 2008 and the end of the fourth quarter of Fiscal 2009 reflect investments the Company made to grow the business. The Company remains committed to fulfill its long term capital investment obligations; however, the Company is refraining from initiating new capital projects at this time.
The decrease in cash is primarily attributable to the decline in operating income, the acquisition of MGR Entertainment, which was completed early in the first quarter, as well as the initiation of several significant capital projects, including the Luxor, Dialog in the Dark and Sports Immortals.
The increase in prepaid expenses and other current assets is primarily attributable to the acquisition of MGR Entertainment.
The increase in property and equipment is primarily attributable to an increase in exhibition assets as a result of an increase in the number of the Company's self-run exhibitions, as well as the acquisition of MGR Entertainment. In addition, the Company has acquired fixed assets in support of the new Bodies exhibition at the Luxor and the Dialog in the Dark and Sports Immortals exhibitions.
The decrease in licenses and other rights was primarily due to the impairment of certain intangibles associated with the long-term license agreement with Sports Immortals, Inc. to present, promote, and conduct "Sports Immortals" exhibitions featuring sports artifacts and memorabilia.
During fiscal year ended 2009, the Company recorded additional goodwill of $1.2 million related to the "Our Body: The Universe Within" acquisition for certain pre-acquisition tax liabilities.
Q4 2009 and Fiscal Year End Earnings Conference Call
The Company will hold its Fiscal 2009 and fourth quarter earnings conference call on May 7, 2009 at 9:00 a.m. (EDT). Investors can access the call by dialing 1 (877) 741-4253 in the U.S. and 1 (719) 325-4839 internationally. Callers should reference confirmation code 5120343. A transcript of the conference call will be made available on the Company's website: www.prxi.com.
Annual Meeting
The Company's board of directors has set Thursday, August 6, 2009 as the date for the Company's 2009 annual meeting of shareholders, and Wednesday, June 17, 2009 as the record date for the annual meeting.
Safe Harbor Statement
Except for historical information, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve certain risks and uncertainties. The actual results or outcomes of Premier Exhibitions, Inc. may differ materially from those anticipated. Although Premier Exhibitions believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any such assumptions could prove to be inaccurate. Therefore, Premier Exhibitions can provide no assurance that any of the forward-looking statements contained in this press release will prove to be accurate.
In light of the significant uncertainties and risks inherent in the forward-looking statements included in this press release, such information should not be regarded as a representation by Premier Exhibitions that its objectives or plans will be achieved. Included in these uncertainties and risks are, among other things, fluctuations in operating results, general economic conditions, uncertainty regarding the results of certain legal proceedings and competition. Forward-looking statements consist of statements other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may," "intend," "expect," "will," "anticipate," "estimate" or "continue" or the negatives thereof or other variations thereon or comparable terminology. Because they are forward-looking, such statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Premier Exhibitions' most recent Annual and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled "Risk Factors." Premier Exhibitions does not undertake an obligation to update publicly any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Statement Regarding Use of Non-GAAP Measures
This press release contains certain financial measures that are not prepared in accordance with GAAP (generally accepted accounting principles in the U.S.). Such financial measures are referred to herein as "non-GAAP" and are presented in this press release in accordance with Regulation G as promulgated by the Securities and Exchange Commission. A reconciliation of each such non-GAAP measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes each such non-GAAP financial measure provides useful information to investors, is provided below.
EBITDA
EBITDA is defined as income from operations before other income and expenses, income taxes, interest and depreciation and amortization. EBITDA does not represent cash flows from operations as defined by GAAP, and should not be considered as either an alternative to net income as an indicator of operating performance or as an alternative to cash flows as a measure of the Company's liquidity. Nevertheless, the Company believes that providing non-GAAP information regarding EBITDA is important for investors and other readers of its financial statements, as it provides a measure of liquidity. In addition, EBITDA is commonly used as an analytical indicator within the entertainment and exhibitions industries. Because EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA, as presented, may not be directly comparable to other similarly titled measures used by other companies. A table reconciling the non-GAAP information presented above to GAAP follows the financial statements included with this press release.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that the Company defines as earnings before certain unusual and/or non-cash charges, depreciation and amortization, loss (gain) on sale of operating assets and non-cash compensation expense. The Company uses Adjusted EBITDA to evaluate the performance of its operating segments. The Company believes that information about Adjusted EBITDA assists investors by allowing them to evaluate changes in the operating results of the Company's portfolio of businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with GAAP. A limitation on the use of Adjusted EBITDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in the Company's business. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies. Therefore, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies.
Free Cash Flow
Free Cash Flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Free Cash Flow does not represent cash flows from operations as defined by GAAP, and should not be considered as either an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of its liquidity. Nevertheless, the Company believes that providing non-GAAP information regarding Free Cash Flow is important for investors and other readers of its financial statements, as it provides a measure of liquidity. Because Free Cash Flow is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Free Cash Flow, as presented, may not be directly comparable to other similarly titled measures used by other companies. A table reconciling the non-GAAP information presented above to GAAP follows the financial statements included with this press release.
Total Gross Revenue
Total Gross Revenue is defined by the Company as total gross revenue from co-promoted or partnered arrangements plus revenues generated from the Company's self-run venues plus merchandise and other revenues. The majority of the Company's exhibitions are operated through co-production or partnership agreements. With these agreements, the Company recognizes revenue based on its contractual percentage of net profits (gross revenue less exhibition expenses). The Company believes that it is important to provide investors with the total scale of its exhibitions through the metric Total Gross Revenue. GAAP revenue is defined as the Company's contractual percentage of the net profits (gross revenue less exhibition expenses) of co-promoted or partnered exhibitions plus revenue generated from the Company's self-runs plus merchandise and other revenue. Total Gross Revenue does not represent total revenue as defined by GAAP and should not be considered an alternative to total revenue as an indicator of the Company's operating performance.
Premier Exhibitions, Inc. and Subsidiaries
Consolidated Balance Sheets
February 29, February 28,
2008 2009
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 16,426,000 $ 4,452,000
Certificates of deposit and other
investments 1,055,000 1,277,000
Accounts receivable, net of allowance
for doubtful accounts of $378,000 and
$1,193,000, respectively 3,590,000 5,009,000
Carpathia receivable, related party 2,500,000 --
Merchandise inventory, net of reserve
of $0 and $143,000, respectively 291,000 431,000
Income taxes receivable 982,000 3,806,000
Deferred income taxes -- 1,408,000
Prepaid expenses and other current
assets 3,682,000 4,981,000
------------ ------------
Total current assets 28,526,000 21,364,000
Artifacts owned, at cost 3,088,000 3,081,000
Salvor's lien 1,000 1,000
Property and equipment, net of
accumulated depreciation of
$4,707,000 and $7,503,000 respectively 7,308,000 15,706,000
Exhibition licenses, net of accumulated
amortization of $2,752,000 and
$4,846,000, respectively 8,450,000 7,225,000
Goodwill, net 1,377,000 2,567,000
Deferred income taxes 1,660,000 2,685,000
Note receivable -- 625,000
Other assets 251,000 521,000
------------ ------------
$ 50,661,000 $ 53,775,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities 3,565,000 11,712,000
Deferred revenue -- 2,340,000
------------ ------------
Total current liabilities 3,565,000 14,052,000
Long-Term liabilities:
Income taxes payable -- 1,166,000
------------ ------------
Total long-term liabilities -- 1,166,000
Shareholders' equity:
Common stock; $.0001 par value;
authorized 40,000,000 shares issued
and outstanding 30,166,614 and
30,481,448 shares at February 29, 2008
and February 28, 2009, respectively 3,000 3,000
Additional paid-in capital 43,147,000 44,691,000
Retained earnings 11,406,000 1,384,000
Accumulated other comprehensive loss (270,000) (331,000)
Less treasury stock, at cost;
1,066,449 shares at February 29, 2008
and February 28, 2009 (7,190,000) (7,190,000)
------------ ------------
Total shareholders' equity 47,096,000 38,557,000
------------ ------------
$ 50,661,000 $ 53,775,000
============ ============
Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended Year Ended
-------------------------- --------------------------
February 29, February 28, February 29, February 28,
2008 2009 2008 2009
------------ ------------ ------------ ------------
Revenue:
Exhibition
revenue $ 16,425,000 $ 9,549,000 $ 59,231,000 $ 46,722,000
Merchandise
and other 762,000 491,000 2,142,000 7,073,000
Sale of coal 4,000 64,000 81,000 98,000
------------ ------------ ------------ ------------
Total revenue 17,191,000 10,104,000 61,454,000 53,893,000
Cost of
revenue:
Exhibition
costs 8,286,000 7,260,000 20,457,000 28,406,000
Cost of
merchandise
sold 229,000 74,000 457,000 2,816,000
Cost of
coal sold 4,000 13,000 19,000 19,000
------------ ------------ ------------ ------------
Total cost
of revenue
(exclusive of
depreciation
and amorti-
zation shown
separately
below) 8,519,000 7,347,000 20,933,000 31,241,000
Gross profit 8,672,000 2,757,000 40,521,000 22,652,000
------------ ------------ ------------ ------------
Operating
expenses:
General and
administra-
tive 6,714,000 8,763,000 19,626,000 27,926,000
Depreciation
and
amortization 1,243,000 1,250,000 2,911,000 4,941,000
Net (gain)
loss on
disposal of
assets (2,000) 941,000 (2,000) 2,132,000
Impairment of
intangibles
and goodwill -- 2,849,000 -- 1,663,000
------------ ------------ ------------ ------------
Total operating
expenses 7,955,000 13,803,000 22,535,000 36,662,000
Income (loss)
from operations 717,000 (11,046,000) 17,986,000 (14,010,000)
Other income
and expenses:
Interest
income 237,000 36,000 973,000 245,000
Interest
expense -- (165,000) -- (169,000)
Other income -- 12,000 10,000 106,000
------------ ------------ ------------ ------------
Total other
income and
expenses 237,000 (117,000) 983,000 182,000
Income (loss)
before income
taxes 954,000 (11,163,000) 18,969,000 (13,828,000)
Provision for
(benefit from)
income taxes 175,000 (2,956,000) 6,660,000 (3,806,000)
------------ ------------ ------------ ------------
Net income
(loss) $ 779,000 $ (8,207,000) $ 12,309,000 $(10,022,000)
============ ============ ============ ============
Net income
(loss) per
share:
Basic income
(loss) per
common
share $ 0.03 $ (0.28) $ 0.42 $ (0.34)
============ ============ ============ ============
Diluted income
(loss) per
common
share $ 0.02 $ (0.28) $ 0.37 $ (0.34)
============ ============ ============ ============
Shares used in
basic per
share
calculations 29,633,671 29,333,332 29,653,994 29,213,768
============ ============ ============ ============
Shares used in
diluted per
share
calculations 33,270,790 29,333,332 33,379,462 29,213,768
============ ============ ============ ============
Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
Year Ended
February 28 (29),
--------------------------
2008 2009
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 12,309,000 $(10,022,000)
------------ ------------
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 2,911,000 4,850,000
Stock based compensation 4,671,000 1,428,000
Increase (decrease) in cost of
artifacts -- (7,000)
Allowance for doubtful accounts 126,000 815,000
Excess tax benefit on the exercise
of employee stock options (1,440,000) 140,000
Gain on sale of Carpathia, related
party -- --
Net loss on disposal of assets -- 2,132,000
Impairment of intangibles -- 1,663,000
Changes in operating assets and
liabilities: -- --
(Increase) in accounts receivable (666,000) (2,219,000)
(Increase) in merchandise
inventory, net of reserve -- (899,000)
Decrease (increase) in deferred
income taxes (1,422,000) (1,693,000)
Decrease (increase) in prepaid
expenses and other assets (1,639,000) 42,000
(Increase) in income taxes receivable -- (3,791,000)
Decrease in other assets -- --
Decrease (increase) in deferred
revenue (562,000) 1,385,000
Increase in accounts payable and
accrued liabilities 2,114,000 7,693,000
(Decrease) in common stock payable -- --
Increase in income taxes payable 740,000 --
------------ ------------
Total adjustments 4,833,000 11,539,000
------------ ------------
Net cash provided by operating
activities 17,142,000 1,517,000
------------ ------------
Cash flows from investing activities:
Proceeds from Carpathia receivable -- 2,500,000
Purchases of property and equipment (5,250,000) (11,612,000)
Purchase of exhibition licenses (2,906,000) (1,886,000)
Acquisitions, net of cash received (5,000,000) (2,101,000)
Purchase of subrogation rights (250,000) --
Unrealized gain or loss on certificate
deposit (55,000) --
Net increase in marketable securities -- (222,000)
Purchase/sale of certificate of deposit (1,000,000) --
Proceeds from disposal of assets -- 400,000
Note receivable -- (625,000)
------------ ------------
Net cash used in investing activities (14,461,000) (13,546,000)
------------ ------------
Cash flows from financing activities:
Proceeds from revolving line of credit -- 9,833,000
Payments on revolving line of credit -- (9,833,000)
Proceeds from notes payable -- --
Company stock repurchase (6,777,000) --
Reduction in marketable securities -- --
Principal payments on notes payable -- --
Proceeds from option and warrant
exercises 2,412,000 256,000
Excess tax benefit on the exercise of
employee stock options 1,440,000 (140,000)
------------ ------------
Net cash provided by financing
activities (2,925,000) 116,000
------------ ------------
Effects of exchange rate changes on
cash and cash equivalents (141,000) (61,000)
------------ ------------
Net increase (decrease) in cash and
cash equivalents (385,000) (11,974,000)
Cash and cash equivalents at beginning
of year 16,811,000 16,426,000
------------ ------------
Cash and cash equivalents at end of
year $ 16,426,000 $ 4,452,000
============ ============
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ -- $ --
============ ============
Cash paid during the period for taxes $ 7,252,000 $ 1,529,000
============ ============
Supplemental disclosure of non-cash
operating activities:
Non-cash withholding taxes receivable $ -- $ 2,189,000
============ ============
Non-cash withholding taxes payable $ -- $ (2,189,000)
============ ============
Uncertain tax position $ -- $ 1,166,000
============ ============
Supplemental disclosure of non-cash
investing and financing activities:
Cashless exercise of stock options $ 90,500 $ --
============ ============
Note receivable $ -- $ (625,000)
============ ============
EBITDA and Adjusted EBITDA
Three Months Ended Year Ended
-------------------------- --------------------------
February 29, February 28, February 29, February 28,
2008 2009 2008 2009
------------ ------------ ------------ ------------
Net Income $ 779,000 $ (8,207,000) $ 12,309,000 $(10,022,000)
Provision for
income taxes 175,000 (2,956,000) 6,660,000 (3,806,000)
Interest
(income)
expense (237,000) 129,000 (983,000) (76,000)
Depreciation &
Amortization 1,243,000 1,250,000 2,911,000 4,941,000
------------ ------------ ------------ ------------
EBITDA $ 1,960,000 $ (9,784,000) $ 20,897,000 $ (8,963,000)
Stock
Compensation 1,376,000 1,826,000 4,671,000 1,428,000
------------ ------------ ------------ ------------
Adjusted
EBITDA $ 3,336,000 $ (7,958,000) $ 25,568,000 $ (7,535,000)
------------ ------------ ------------ ------------
Non - GAAP Measure:
EBITDA is defined as net income from continuing operations before interest and other income, income taxes, depreciation and amortization. EBITDA should not be considered as an alternative to net income, cash flows from operations or any other indicator of the Company's performance or liquidity, determined in accordance with U.S. GAAP.
Adjusted EBITDA is defined as net income from continuing operations before interest and other income, income taxes, depreciation, amortization and stock compensation. Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP.
Free Cash Flow
Three Months Ended Year Ended
-------------------------- --------------------------
February 29, February 28, February 29, February 28,
2008 2009 2008 2009
------------ ------------ ------------ ------------
Operating
Cash Flow $ 1,012,000 $ 608,000 $ 17,142,000 $ 1,517,000
Capital
Expenditures (1,785,000) (2,638,000) (5,250,000) (11,612,000)
------------ ------------ ------------ ------------
Free Cash
Flow $ (773,000) $ (2,030,000) $ 11,892,000 $(10,095,000)
------------ ------------ ------------ ------------
Non - GAAP Measure:
Free Cash Flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Free Cash Flow does not represent cash flows from operations as defined by GAAP, and should not be considered as either an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of the Company's liquidity.
Total Gross Revenue:
Three Months Twelve Months
Ended Ended
------------ ------------
February 28, February 28,
2009 2009
------------ ------------
Revenue:
Gross revenue partnership arrangements $ 11,760,000 $ 73,193,000
Revenue generated from self runs 5,698,000 17,768,000
Merchandise and other 491,000 7,073,000
Sale of Coal 64,000 98,000
------------ ------------
Total Gross Revenue (Non-GAAP) $ 18,013,000 $ 98,132,000
============ ============
Gross revenue partnership arrangements $ 11,760,000 $ 73,193,000
Less: venue costs from partnership
arrangements (10,580,000) (41,457,000)
------------ ------------
Gross profit from partnership
arrangements $ 1,180,000 $ 31,736,000
Less: partners share of exhibition
revenue generated from partnership
arrangements 2,192,000 (2,025,000)
------------ ------------
Premier share of revenue generated
from partnership arrangements 3,372,000 29,711,000
Revenue generated from self-run
operations 6,177,000 17,011,000
Merchandise and other 491,000 7,073,000
Sale of Coal 64,000 98,000
------------ ------------
Premier Total Revenue (GAAP) $ 10,104,000 $ 53,893,000
------------ ------------
Non - GAAP Measure:
The majority of the Company's exhibitions are operated through co-production or partnership agreements. With these agreements, the Company recognizes revenue based on its contractual percentage of net profits (gross revenue less exhibition expenses). The Company believes that it is important to provide investors with the total scale of its exhibitions through the metric Total Gross Revenue. Total Gross Revenue is defined by the Company as total gross revenue from co-promoted or partnered arrangements plus revenues generated from the Company's self run venues plus merchandise and other revenues. GAAP revenue is defined as the Company's contractual percentage of the net profits (gross revenue less exhibition expenses) of the co-promoted or partnered exhibitions plus revenue generated from the Company's self-run exhibitions plus merchandise and other revenue. Total Gross Revenue does not represent total revenue as defined by GAAP and should not be considered an alternative to total revenue as an indicator of the Company's operating performance.