News Column

The Madison Square Garden Company Reports Fiscal 2014 Third Quarter Results

May 2, 2014

NEW YORK, May 2, 2014 (GLOBE NEWSWIRE) -- The Madison Square Garden Company (Nasdaq:MSG) today reported financial results for the fiscal 2014 third quarter ended March 31, 2014.

Fiscal 2014 third quarter revenues of $459 million grew 11%, as compared to the prior year period, with increases in all three of the Company's business segments. Fiscal 2014 third quarter adjusted operating cash flow ("AOCF")(1) of $65.7 million decreased 28%, as compared to the prior year period, due to an increase in unallocated corporate expenses ("Other"), as well as lower AOCF results in all three of the Company's business segments. Fiscal 2014 third quarter operating income of $27.4 million decreased 57% and net income of $19.1 million ($0.24 per diluted share) decreased 50%, both as compared to the prior year third quarter.

Fiscal 2014 third quarter reported results were impacted by certain items. This includes executive management transition costs, which are included in unallocated corporate expenses ("Other") on an AOCF and operating income basis. MSG Entertainment results reflect increased direct operating expenses related to a planned 2014 limited engagement run of a new large-scale theatrical production, which was subsequently postponed until 2015. Excluding the impact of the above items, fiscal 2014 third quarter total company AOCF would have been approximately $88 million. In addition, unallocated share-based compensation expense, which is included in "Other" on an operating income basis, but not on an AOCF basis, reflects additional executive management transition costs. Excluding the impact of all of the above items, fiscal 2014 third quarter operating income would have been approximately $54 million.

President and CEO Tad Smith said: "This fiscal year will bring a successful end to MSG's first chapter as a public company, as we are now concluding a significant, multi-year capital investment cycle. As we look ahead, our priority is to generate attractive long-term growth for our shareholders. To achieve this, we plan to maximize the growth and profitability of our current businesses, while exploring new strategic opportunities with attractive rates of return. We look forward to our Company's next chapter as one of the country's leading media, entertainment and sports companies."

Results from Operations

Segment results for the quarters ended March 31, 2014 and 2013 are as follows:

 RevenuesAOCFOperating Income (Loss)
$ millionsF'Q3 2014 F'Q3 2013% ChangeF'Q3 2014 F'Q3  2013% ChangeF'Q3 2014 F'Q3  2013% Change
MSG Media$190.8$184.7 3%$92.0$95.4 (4)%$87.1$89.8 (3)%
MSG Entertainment52.8 35.5 49%(20.2) (13.1) (54)%(24.2) (17.1) (41)%
MSG Sports233.7 208.1 12%9.8 11.6 (15)%5.9 8.1 (28)%
Other (includes eliminations)(18.4) (15.8) (16)%(15.9) (2.2) --(41.3) (17.0) (142)%
Total Company$459.0$412.4 11%$65.7$91.7 (28)%$27.4$63.8 (57)%


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 third quarter as compared to the prior year period, MSG Media revenues of $190.8 million increased 3%. Affiliation fee revenue increased $10 million, primarily due to higher affiliation rates, partially offset by the impact of a small decrease in subscribers at MSG Networks. Advertising revenue increased $0.3 million, primarily due to higher sales generated from the telecast of NHL games and, to a lesser extent, original programming on MSG Networks, partially offset by lower Knicks-related advertising sales. Other revenues decreased $4.1 million, primarily due to the expiration in April 2013 of a short-term programming licensing agreement. Third quarter AOCF of $92 million decreased 4% and operating income of $87.1 million decreased 3%, both primarily due to an increase in direct operating expenses, largely offset by the increase in revenues. The increase in direct operating expenses was mainly due to the return to a full NHL regular season schedule.

MSG Entertainment

For the fiscal 2014 third quarter as compared to the prior year period, MSG Entertainment revenues of $52.8 million increased 49%. The increase was primarily due to higher event-related revenues at The Garden (primarily due to more events, mainly additional MSG Entertainment-promoted events), event-related revenues at the Forum (which re-opened on January 15, 2014) and higher venue-related sponsorship and signage and suite rental fee revenues. This was partially offset by lower event-related revenues at Radio City Music Hall, which was unavailable for events for the majority of the quarter due to the load-in and rehearsal of the Company's new, large-scale theatrical production, which was subsequently postponed until 2015. Third quarter AOCF loss of $20.2 million increased $7.1 million and operating loss of $24.2 million increased $7.1 million, both due to an increase in direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses, largely offset by the increase in revenues. The increase in direct operating expenses includes a $9.5 million increase related to the Company's new, large-scale theatrical production. Excluding the $9.5 million increase in expenses, MSG Entertainment AOCF would have improved by $2.4 million versus the prior year third quarter.

MSG Sports

For the fiscal 2014 third quarter as compared to the prior year period, MSG Sports revenues of $233.7 million increased 12%. The increase in revenues was primarily due to higher event-related revenues from other live sporting events, professional sports team regular season ticket-related revenue, professional sports team sponsorship and signage revenues, inter-segment broadcast rights fees and suite rental fee revenue. Third quarter AOCF of $9.8 million decreased by $1.8 million and operating income of $5.9 million decreased by $2.3 million, both primarily due to an increase in direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses, largely offset by the increase in revenues. The increase in direct operating expenses was primarily due to higher net provisions for NBA luxury tax and NBA and NHL revenue sharing expense, team personnel compensation expense and other team operating costs.

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 Hartford Wolf Pack (AHL) and an NBA Development League franchise. 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, and Fuse, a national television network dedicated to music. 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 31587884

Conference call replay number is 855-859-2056 / Conference ID Number 31587884 until May 9, 2014

 
 
THE MADISON SQUARE GARDEN COMPANY
CONSOLIDATED OPERATIONS DATA AND RECONCILIATION
(In thousands, except per share data)
(Unaudited)
 
  Three Months Ended

March 31,
Nine Months Ended

March 31,
  2014 2013 2014 2013
         
Revenues   $ 458,956 $  412,406 $ 1,183,920 $ 1,004,458
Adjusted operating cash flow $ 65,713$ 91,739 $ 257,785 $ 263,336
Share-based compensation expense  (8,590) (4,958) (17,057) (13,898)
Operating income before depreciation and amortization 57,123 86,781 240,728 249,438
Depreciation and amortization  (29,674) (22,995) (76,869) (64,439)
Operating income  27,449 63,786 163,859 184,999
Other income (expense):        
Equity in earnings (loss) of nonconsolidated affiliates 663 -- (75) --
Interest expense, net  (1,135) (1,193) (3,636) (3,607)
Miscellaneous  72 3,373 95 3,475
Income from operations before income taxes  27,049 65,966 160,243 184,867
Income tax expense  (7,995) (27,517) (56,812) (78,902)
Net income  $ 19,054 $ 38,449 $ 103,431 $ 105,965
Basic earnings per common share  $ 0.25  $ 0.50  $ 1.34  $ 1.39 
Diluted earnings per common share  $ 0.24  $ 0.49  $ 1.32  $ 1.36 
         
Basic weighted-average number of common shares outstanding 77,162 76,537 77,069 76,022
Diluted weighted-average number of common shares outstanding 78,211 78,041 78,142 77,900
         

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.

 
 
THE MADISON SQUARE GARDEN COMPANY
CONSOLIDATED OPERATIONS DATA
(Dollars in thousands)
(Unaudited)
 
REVENUES
 
  Three Months Ended  
 March 31,  
       %
  2014 2013  Change
       
MSG Media $ 190,825$ 184,6663%
MSG Entertainment 52,78535,49149%
MSG Sports233,739208,08012%
Other (including Inter-segment eliminations)  (18,393) (15,831) (16)%
Total Madison Square Garden Company$ 458,956$ 412,40611%
       
       
  Nine Months Ended  
 March 31,
       %
  2014 2013  Change
MSG Media $ 538,149$ 500,9747%
MSG Entertainment 244,510217,39012%
MSG Sports455,293329,54738%
Other (including Inter-segment eliminations)  (54,032) (43,453) (24)%
Total Madison Square Garden Company$ 1,183,920$ 1,004,45818%
       


ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)

  Adjusted Operating

Cash Flow
  Operating Income

(Loss)
 
  Three Months Ended

March 31,
% Three Months Ended

March 31,
%
  2014 2013 Change 2014 2013 Change
             
MSG Media $ 91,950$ 95,390(4)%$ 87,071$ 89,786(3)%
MSG Entertainment   (20,200) (13,078)(54)%(24,186)(17,102)(41)%
MSG Sports9,84611,649(15)%5,872 8,143 (28)%
All other  (15,883) (2,222)- (41,308) (17,041) (142)%
 Total Madison Square Garden Company$ 65,713$ 91,739(28) %$ 27,449$ 63,786(57)%
         
  Adjusted Operating

Cash Flow
  Operating Income

(Loss)
 
  Nine Months Ended

March 31,
% Nine Months Ended

March 31,
%
  2014 2013 Change 2014 2013 Change
             
MSG Media $ 259,194$ 267,712(3)%$ 244,438$ 250,982(3)%
MSG Entertainment  7,1104,39962% (4,412) (6,904)36%
MSG Sports13,871(1,374)-2,551(12,279)-
All other  (22,390) (7,401) (203)% (78,718) (46,800) (68)%
Total Madison Square Garden Company$ 257,785$ 263,336 (2)%$ 163,859$ 184,999(11)%

 

THE MADISON SQUARE GARDEN COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

 
 
  March 31, 2014  June 30,  2013
ASSETS  
Current Assets:    
Cash and cash equivalents  $ 76,545 $ 277,913
Restricted cash  16,663 8,413
Accounts receivable, net  200,107 145,728
Net related party receivables  25,968 18,565
Prepaid expenses  39,877 41,215
Other current assets  28,038 20,339
Total current assets  387,198 512,173
Investments in and loans to nonconsolidated affiliates  186,927 --
Property and equipment, net  1,273,760 1,135,180
Amortizable intangible assets, net  82,906 90,705
Indefinite-lived intangible assets  163,839 158,636
Goodwill  742,492 742,492
Other assets  101,997 93,028
Total assets $ 2,939,119$ 2,732,214
 

 

LIABILITIES AND STOCKHOLDERS' EQUITY
  
Current Liabilities:    
Accounts payable   $ 20,075  $ 16,006
Net related party payables    862   283
Accrued liabilities:    
Employee related costs   82,149  70,663
Other accrued liabilities  246,656 221,405
Deferred revenue  274,275 237,537
Total current liabilities  624,017 545,894
Defined benefit and other postretirement obligations  61,091 59,726
Other employee related costs  46,315 45,370
Other liabilities  63,069 58,536
Deferred tax liability  549,725 543,753
Total liabilities  1,344,217 1,253,279
Commitments and contingencies  
Stockholders' Equity:  
Class A Common stock, par value $0.01, 360,000 shares authorized; 63,589 and 63,268 shares outstanding as of March 31, 2014 and June 30, 2013, respectively 639 639
Class B Common stock, par value $0.01, 90,000 shares authorized; 13,589 shares outstanding as of March 31, 2014 and June 30, 2013 136 136
Preferred stock, par value $0.01, 45,000 shares authorized; none outstanding -- --
Additional paid-in capital 1,076,097 1,070,764
Treasury stock, at cost, 317 and 596 shares as of March 31, 2014 and June 30, 2013, respectively (7,537) (14,179)
Retained earnings 541,225 437,794
Accumulated other comprehensive loss (15,658) (16,219)
Total stockholders' equity 1,594,902 1,478,935
Total liabilities and stockholders' equity$ 2,939,119$ 2,732,214
 
 
THE MADISON SQUARE GARDEN COMPANY
SELECTED CASH FLOW INFORMATION
(Dollars in thousands)
(Unaudited)
 
  Nine Months Ended  March 31,
   2014  2013
Net cash provided by operating activities  $ 217,048  $ 180,762 
Net cash used in investing activities  (413,126) (152,551)
Net cash used in financing activities  (5,290) (6,294)
Net increase (decrease) in cash and cash equivalents  (201,368) 21,917
Cash and cash equivalents at beginning of period  277,913 206,500
Cash and cash equivalents at end of period  $ 76,545 $ 228,417

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

Source: The Madison Square Garden Company


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