WWE Reports 2011 Third Quarter Results - Details

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* Magazine publishing net revenues were $1.9 million as compared to $2.6 million in the prior year quarter, reflecting lower newsstand sales in the current year quarter.

Digital Media

Revenues from our Digital Media related businesses were $6.9 million as compared to $6.8 million in the prior year quarter, representing a 1% increase.

* WWE.com revenues were $3.7 million as compared to $4.0 million in the prior year quarter, primarily reflecting a decline in mobile content revenues.

* WWEShop revenues were $3.2 million as compared to $2.8 million in the prior year quarter. This was driven by a 15% increase in the number of orders to approximately 68,000 and a 2% increase in average revenue per order to $46.94.

WWE Studios

During the quarter, we recorded revenue of $3.7 million as compared to $7.6 million in the prior year quarter, with the decline in revenue driven by the relative performance of our current film releases compared to the prior year quarter release. Film profits declined $5.5 million from the prior year quarter reflecting the performance of recent releases; i.e., Inside Out, The Chaperone, and Knucklehead. Lower home video sales than anticipated contributed to revised ultimate projections, which resulted in a $5.1 million impairment charge for these films. The decline in film profits also reflected lower receipts from our licensed films and the previously disclosed change in our distribution model for films. Under our self-distribution model, we record a film's advertising costs and distribution expenses in our results as incurred and recognize film receipts as earned.

Profit Contribution (Net revenues less cost of revenues)

Profit contribution decreased to $44.0 million in the current year quarter as compared to $47.8 million in the prior year quarter, reflecting a loss in our WWE Studios segment and lower Licensing profits. Gross profit contribution margin decreased to approximately 41% as compared to 44% in the prior year quarter, primarily driven by the performance of our film business, which reflected the recognition of film impairment charges. Excluding these charges, Adjusted Profit contribution increased to $49.1 million in the current year quarter as compared to $47.8 million in the prior year quarter and Adjusted profit margins increased to 45% as compared to 44% in the prior year quarter.

Selling, general and administrative expenses

SG&A expenses were $24.5 million for the current year quarter as compared to $24.3 million in the prior year quarter, led by increases in salary, severance and benefit costs, as well as higher legal and professional fees, in-part related to the anticipated launch of a WWE Network. These were partially offset by a reduction in accrued management incentive compensation.

Depreciation and amortization

Depreciation and amortization expense was $3.6 million for the current year quarter as compared to $3.2 million in the prior year quarter.

EBITDA

EBITDA was approximately $19.5 million in the current year quarter as compared to $23.5 million in the prior year quarter. The decrease was primarily driven by reduced profits from our film business. Adjusted EBITDA (excluding the film impairment charges in the current year quarter) increased 5% to $24.6 million in the current quarter as compared to $23.5 million in the prior year quarter.

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