WWE Reports 2011 Third Quarter Results - Details

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Profit Contribution (Net revenues less cost of revenues)

Profit contribution decreased to $144.4 million in the current year period as compared to $156.6 million in the prior year period primarily driven by the performance of our WWE Studios business and the absence of domestic television rights fees for our NXT and WWE Superstars programs. Adjusted Profit contribution (excluding the film impairment charges in the current year period) of $155.6 million was essentially flat to the prior year period as increased profits from Licensing and Pay-Per-View were offset by the absence of the domestic television rights fees as discussed above. Adjusted Profit contribution margin declined to approximately 42% as compared to 44% in the prior year period, primarily reflecting the resulting change in product mix.

Selling, general and administrative expenses

SG&A expenses were $83.4 million for the current year period as compared to $80.3 million in the prior year period, led by increases in salary, severance and benefit costs, as well as higher legal and professional fees, partially offset by a reduction in accrued management incentive compensation.

EBITDA

EBITDA for the current year period decreased to approximately $61.0 million as compared to $76.3 million in the prior year period, reflecting lower profit contribution and higher SG&A expenses as described above. Adjusted EBITDA (excluding the film impairment charges in the current year period) declined to $72.2 million from $76.3 million in the prior year period.

Investment and Other Income (Expense)

Investment and Other Income (Expense) was essentially unchanged from the prior year period.

Effective tax rate

The effective tax rate was 33% in both the current and prior year periods. The decrease in our current period tax rate from our anticipated rate of 35% was primarily due to a $0.6 million benefit relating to the shutdown of a Canadian subsidiary. Additionally, rates were positively impacted by the recognition of tax benefits previously unrecognized of $0.5 million and $1.3 million for the current year and prior year periods, respectively. These benefits were primarily a result of the statute of limitations expiring in jurisdictions where the Company had previously taken uncertain tax positions.

Cash Flows

Net cash provided by operating activities was $47.8 million for the nine months ended September 30, 2011 as compared to $27.9 million in the prior year period. This increase was primarily driven by the timing of feature film production activities.

On September 9th, 2011, WWE entered into a $200 million revolving credit agreement because we believed there was generally a favorable climate in the capital markets for loans of this type. While we do not have specific plans to borrow at this time, we have announced initiatives for which we may borrow going forward. These initiatives include, but are not limited to, the formation of a WWE television network and the expansion and update of our media center as well as initiatives associated with the execution of our strategy.

Thanks to Devin Cutting for contributing to this article. Got a news tip? Send it to us by clicking here.

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