Company News: Page (1) of 1 - 08/20/14

The Madison Square Garden Company Reports Fourth Quarter and Fiscal 2014 Results

August 20, 2014 --


NEW YORK, Aug. 20, 2014 (GLOBE NEWSWIRE) -- The Madison Square Garden Company (Nasdaq:MSG) today reported financial results for the fourth quarter and fiscal year ended June 30, 2014.



Fiscal 2014 revenues of approximately $1.56 billion grew 16%, as compared to the prior year, with increases in all three of the Company's business segments. Adjusted operating cash flow ("AOCF")(1) of $312.8 million decreased 12%, as compared to the prior year, primarily due to lower AOCF results in the MSG Sports segment and an increase in unallocated corporate expenses ("Other"). Operating income of $184.1 million decreased 27% and net income of $115.1 million ($1.47 per diluted share) decreased 19%, both as compared to the prior year. Excluding the impact of the exercise of an NHL compliance buyout in the fourth quarter, as well as increased expenses related to executive management transition costs and the postponement of the Company's new large-scale theatrical production in the third quarter, fiscal 2014 total company AOCF would have been $363.7 million and operating income would have been $239.5 million.



Fiscal 2014 fourth quarter revenues of $371.7 million grew 10%, as compared to the prior year fourth quarter, primarily due to an increase in revenues in the MSG Entertainment and MSG Sports segments. AOCF of $55.0 million decreased 40%, as compared to the prior year fourth quarter, due to lower AOCF results in the MSG Sports segment along with an increase in unallocated corporate expenses, partially offset by improved AOCF results at the MSG Media and MSG Entertainment segments. Operating income of $20.3 million decreased 69% and net income of $11.6 million ($0.15 per diluted share) decreased 68%, both as compared to the prior year fourth quarter. Excluding the impact of the exercise of the NHL compliance buyout, AOCF would have been $84.6 million and operating income would have been $49.8 million.


President and CEO Tad Smith said: "Over the course of fiscal 2014, we strengthened our Company's foundation in many ways, which should benefit MSG for years to come. This includes the successful completion of the Transformation project and the reinvention of the Forum. The Company also reached an agreement to sell Fuse and successfully concluded the transaction in July. We remain focused on creating meaningful value for our shareholders and, looking ahead, believe that our Company has ample opportunities to drive growth."




Results from Operations



Segment results for the quarters ended June 30, 2014 and 2013 are as follows:






















































































































 

 

 

Revenues

AOCF

Operating Income (Loss)

 

F'Q4

F'Q4

%

F'Q4

F'Q4

%

F'Q4

F'Q4

%

$ millions

2014

2013

Change

2014

2013

Change

2014

2013

Change

MSG Media

$176.4

$176.8

(0)%

$84.3

$81.8

3%

$78.7

$77.6

1%

MSG Entertainment

56.5

34.8

62%

(11.4)

(14.6)

22%

(15.3)

(17.8)

14%

MSG Sports

156.8

140.7

11%

(10.3)

28.4

--

(16.0)

25.8

--

Other (includes eliminations)

(18.0)

(15.9)

(13)%

(7.6)

(3.4)

(126)%

(27.1)

(19.4)

(40)%

Total Company

$371.7

$336.4

10%

$55.0

$92.2

(40)%

$20.3

$66.1

(69)%

 

 

 

 

 

 

 

 

 

 

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 fourth quarter as compared to the prior year period, MSG Media revenues of $176.4 million decreased slightly. Affiliation fee revenue increased $6.4 million, primarily due to higher affiliation rates, partially offset by the impact of a small decrease in subscribers at MSG Networks. Advertising revenue decreased $5.8 million, primarily due to lower New York Knicks-related advertising revenue, mainly a result of the absence of playoff telecasts versus the prior year quarter, as well as lower advertising revenue at Fuse. Other revenues decreased $1.0 million, primarily due to the expiration in April 2013 of a short-term programming licensing agreement. Fourth quarter AOCF of $84.3 million increased 3% and operating income of $78.7 million increased 1%, both primarily due to a decrease in direct operating expenses, partially offset by an increase in selling, general and administrative expenses and, to a lesser extent, the slight decrease in revenues. The decrease in direct operating expenses was due to lower programming expenses at Fuse. 



MSG Entertainment



For the fiscal 2014 fourth quarter as compared to the prior year period, MSG Entertainment revenues of $56.5 million increased 62%. The increase was primarily due to higher event-related revenues at all of the Company's venues, led by The Theater at Madison Square Garden, the Madison Square Garden Arena, the Forum and The Chicago Theatre, as well as higher venue-related sponsorship and signage and suite rental fee revenues. Fourth quarter AOCF loss of $11.4 million improved by $3.2 million and operating loss of $15.3 million improved by $2.5 million, both due to the increase in revenues, mostly offset by an increase in direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses. The increase in direct operating expenses was primarily due to higher event-related operating expenses.   



MSG Sports



For the fiscal 2014 fourth quarter as compared to the prior year period, MSG Sports revenues of $156.8 million increased 11%. The increase in revenues was primarily due to higher playoff-related revenues, inter-segment media rights revenue, professional sports team regular season ticket-related revenue, suite rental fee revenue, revenues from other live sporting events and professional sports team sponsorship and signage revenues. AOCF decreased by $38.7 million to a loss of $10.3 million and operating income decreased by $41.8 million to a loss of $16.0 million, both primarily due to an increase in direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses, partially offset by the increase in revenues. The increase in direct operating expenses was primarily due to a $37.3 million increase in net provisions for certain team personnel transactions and, to a lesser extent, higher net provisions for NBA luxury tax and NBA and NHL revenue sharing expense, other team operating expenses and team personnel compensation expense.  Excluding the impact of the exercise of the NHL compliance buyout, MSG Sports AOCF would have been $19.2 million and operating income would have been $13.5 million.



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 Westchester Knicks (NBADL) and the Hartford Wolf Pack (AHL). 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. 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 72305196  

Conference call replay number is 855-859-2056 / Conference ID Number 72305196 until August 27, 2014































































































































































































 

THE MADISON SQUARE GARDEN COMPANY

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

Twelve Months Ended

 

June 30,

June 30,

 

2014

2013

2014

2013

 

 

 

 

 

Revenues 

$ 371,674

$ 336,360

$ 1,555,594

$ 1,340,818

 

 

 

 

 

Operating expenses:

 

 

 

 

Direct operating

(217,337)

(164,669)

(899,383)

(691,029)

Selling, general and administrative

(104,002)

(80,908)

(365,148)

(309,568)

Depreciation and amortization

(30,081)

(24,693)

(106,950)

(89,132)

Operating income

20,254

66,090

184,113

251,089

Other income (expense):

 

 

 

 

Equity in earnings (loss) of nonconsolidated affiliates

(1,248)

--

(1,323)

--

Interest expense, net

(1,262)

(2,115)

(4,898)

(5,722)

Miscellaneous

(1,441)

22

(1,346)

3,497

Income from operations before income taxes

16,303

63,997

176,546

248,864

Income tax expense

 (4,666)

(27,580)

 (61,478)

(106,482)

Net income

$ 11,637

$ 36,417

$ 115,068

$ 142,382

Basic earnings per common share

$ 0.15

$ 0.47

$ 1.49

$ 1.87

Diluted earnings per common share

$ 0.15

$ 0.47

$ 1.47

$ 1.83

 

 

 

 

 

Basic weighted-average number of  common shares outstanding

77,361

77,009

77,142

76,268

Diluted weighted-average number of  common shares outstanding

78,244

78,067

78,167

77,940

 

 

 

 

 


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.


























































 

Three Months Ended

Twelve Months Ended

 

June 30,

June 30,

 

2014

2013

2014

2013

 

 

 

 

 

Operating income

$ 20,254

$ 66,090

$ 184,113

$ 251,089

Share-based compensation

4,693

1,442

21,750

15,340

Depreciation and amortization                                     

30,081

24,693

106,950

89,132

Adjusted operating cash flow

$ 55,028

$ 92,225

$ 312,813

$ 355,561

































































































































































 

 

THE MADISON SQUARE GARDEN COMPANY

 

 

 

 

CONSOLIDATED OPERATIONS DATA

(Dollars in thousands)

(Unaudited)

REVENUES

 

 

 

 

Three Months Ended

 

 

June 30,

 

 

 

 

 %

 

2014

2013

 Change

 

 

 

MSG Media 

$176,365

$176,759

(0)%

MSG Entertainment 

56,488

34,805

62%

MSG Sports

156,778

140,743

11%

Other (including Inter-segment eliminations) 

 (17,957)

 (15,947)

(13)%

Total Madison Square Garden Company 

$371,674

$336,360

10%

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

June 30,

 

 

 

 

 %

 

2014

2013

 Change

 

 

 

MSG Media 

$714,514

$677,733

5%

MSG Entertainment 

300,998

252,195

19%

MSG Sports

612,071

470,290

30%

Other (including Inter-segment eliminations) 

 (71,989)

 (59,400)

(21)%

Total Madison Square Garden Company 

$1,555,594

$1,340,818

16%































































































































































































































 

 

ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)

 

 

 

 

 

 

 

 

Adjusted Operating 

 

Operating Income 

 

 

Cash Flow

 

(Loss)

 

 

Three Months Ended 

 

Three Months Ended 

 

 

June 30,

%

June 30,

%

 

2014

2013

Change

2014

2013

Change

 

 

 

 

 

 

 

MSG Media

$84,303

$81,794

3%

$78,730

$77,587

1%

MSG Entertainment

 (11,394)

 (14,604)

22%

 (15,338)

 (17,828)

14%

MSG Sports

 (10,296)

 28,388

--

 (16,014)

 25,753

--

All other

 (7,585)

 (3,353)

(126)%

 (27,124)

 (19,422)

(40)%

Total Madison Square Garden Company

$55,028

$92,225

(40)%

$20,254

$66,090

(69)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating 

 

Operating Income 

 

 

Cash Flow

 

(Loss)

 

 

Twelve Months Ended 

 

Twelve Months Ended 

 

 

June 30,

%

June 30,

%

 

2014

2013

Change

2014

2013

Change

 

 

 

 

 

 

 

MSG Media

$343,497

$349,506

(2)%

$323,168

$328,569

(2)%

MSG Entertainment

 (4,284)

 (10,205)

58%

 (19,750)

 (24,732)

20%

MSG Sports

 3,575

 27,014

(87)%

 (13,463)

 13,474

--

All other

 (29,975)

 (10,754)

(179)%

 (105,842)

 (66,222)

(60)%

Total Madison Square Garden Company

$312,813

$355,561

(12)%

$184,113

$251,089

(27)%


 


































































































































































































































































THE MADISON SQUARE GARDEN COMPANY

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

June 30,

June 30,

 

2014

2013

ASSETS

 

Current Assets:

 

 

Cash and cash equivalents

$ 92,251

$ 277,913

Restricted cash

9,823

8,413

Accounts receivable, net

135,369

145,728

Net related party receivables

25,156

18,565

Prepaid expenses

37,108

41,215

Other current assets

23,216

20,339

Assets held for sale

77,056

--

Total current assets

399,979

512,173

 

 

 

Investments in and loans to nonconsolidated affiliates

225,632

--

Property and equipment, net

1,252,467

1,135,180

Amortizable intangible assets, net

80,306

90,705

Indefinite-lived intangible assets

163,850

158,636

Goodwill

701,674

742,492

Other assets

102,053

93,028

Total assets

$ 2,925,961

$ 2,732,214

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Current Liabilities:

 

 

Accounts payable

 $ 16,710

 $ 16,006

Net related party payables

  283

  283

Accrued liabilities:

 

 

Employee related costs

 102,097

 70,663

Other accrued liabilities

173,003

221,405

Deferred revenue

300,937

237,537

Liabilities held for sale

11,171

--

Total current liabilities 

604,201

545,894

 

 

 

Defined benefit and other postretirement obligations

75,728

59,726

Other employee related costs

61,284

45,370

Other liabilities

59,970

58,536

Deferred tax liability

520,334

543,753

Total liabilities

1,321,517

1,253,279

Commitments and contingencies

 

 

Stockholders' Equity:

 

 

Class A Common stock, par value $0.01, 360,000 shares authorized; 63,606 and 63,268 shares outstanding as of June 30, 2014 and 2013, respectively.

639

639

Class B Common stock, par value $0.01, 90,000 shares authorized; 13,589 shares outstanding as of June 30, 2014 and 2013

136

136

Preferred stock, par value $0.01, 45,000 shares authorized; none outstanding

--

--

Additional paid-in capital

1,081,055

1,070,764

Treasury stock, at cost, 317 and 596 shares as of June 30, 2014 and 2013,  respectively

(7,537)

(14,179)

Retained earnings

552,862

437,794

Accumulated other comprehensive loss

(22,711)

(16,219)

Total stockholders' equity

 1,604,444

1,478,935

Total liabilities and stockholders' equity

$ 2,925,961

$ 2,732,214









































































 

 

THE MADISON SQUARE GARDEN COMPANY

 

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

 

 

 

Twelve Months Ended

 

June 30,

 

 2014

 2013

Net cash provided by operating activities

$ 342,555 

$ 263,055 

Net cash used in investing activities

(516,398)

(185,361)

Net cash used in financing activities

(11,819)

(6,281)

Net increase (decrease) in cash and cash equivalents                    

(185,662)

71,413

Cash and cash equivalents at beginning of period

277,913

206,500

Cash and cash equivalents at end of period

$ 92,251

$ 277,913

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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