NEW YORK, May 06, 2016 (GLOBE NEWSWIRE) -- The Madison Square Garden Company (NYSE:MSG) today reported financial results for the
third quarter ended March 31, 2016.
On September 30, 2015, The Madison Square Garden Company completed its spin-off from MSG Networks Inc. The fiscal 2016
third quarter reflects the Company's financial results on a standalone basis, including the Company's actual corporate general and
administrative costs.
Reported results for the fiscal 2015 third quarter are presented as the combined results of the sports and entertainment
businesses, which, prior to the completion of the spin-off, had been consolidated with MSG Networks Inc. Please note that
results for the fiscal 2015 third quarter reflect the allocation of corporate general and administrative costs based on accounting
requirements for the preparation of carve-out financial statements. As a result, fiscal 2015 third quarter results do not
reflect all of the actual expenses that the Company would have incurred had it been a standalone public company for that
quarter.
On a reported basis for the fiscal 2016 third quarter, the Company generated revenues of $336.3 million,
adjusted operating cash flow loss (“AOCF”)(1) of $23.8 million, and operating loss of $56.9 million. Excluding the
impact of a $41.8 million non-cash write-off recorded during the quarter, adjusted operating cash flow would have been $18.1
million, an increase of 8%, and operating loss would have been $15.1 million, an increase of $5.5 million, both as compared to the
prior year period.
President and CEO David O'Connor said, "We are pleased with our continued success in creating exceptional live
experiences for our fans and partners. Looking ahead, we remain focused on delivering excellence across our operations and
see ample opportunities to continue to grow our live sports and entertainment businesses, all with the goal of creating meaningful
long-term asset value for our Company and shareholders."
Results from Operations
Segment results for the quarters ended March 31, 2016 and 2015 are as follows:
| |
Revenues |
AOCF |
Operating Income (Loss) |
| $ millions |
F’Q3
2016 |
F’Q3
2015 |
%
Change |
F’Q3
2016 |
F’Q3
2015 |
%
Change |
F’Q3
2016 |
F’Q3
2015 |
%
Change |
| MSG Entertainment |
$ |
73.2 |
|
$ |
61.6 |
|
19 |
% |
$ |
(53.4 |
) |
$ |
(11.2 |
) |
(378 |
)% |
$ |
(58.4 |
) |
$ |
(14.4 |
) |
(306 |
)% |
| MSG Sports |
|
262.9 |
|
|
239.1 |
|
10 |
% |
|
42.5 |
|
|
31.0 |
|
37 |
% |
|
36.5 |
|
|
27.7 |
|
32 |
% |
| Other |
|
0.2 |
|
|
0.2 |
|
NM |
|
|
(12.8 |
) |
|
(3.0 |
) |
(326 |
)% |
|
(35.0 |
) |
|
(22.9 |
) |
(53 |
)% |
| Total Company |
$ |
336.3 |
|
$ |
300.9 |
|
12 |
% |
$ |
(23.8 |
) |
$ |
16.8 |
|
NM |
|
$ |
(56.9 |
) |
$ |
(9.6 |
) |
(494 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 on page 3 of this earnings release.
MSG Entertainment
For the fiscal 2016 third quarter as compared to the prior year period, MSG Entertainment revenues of $73.2 million increased
19%. The increase was primarily due to higher event-related revenues at all of the Company’s venues, led by The Garden and
Radio City Music Hall, and revenue from the New York production of the Radio City Christmas Spectacular, as well as higher
venue-related sponsorship, signage and suite rental fee revenues. Partially offsetting the overall increase in revenues was
the impact from the Company's decision to shift the timing of the production, now called the New York Spectacular Starring The
Radio City Rockettes, from the spring to the summer.
On a reported basis, third quarter AOCF loss was $53.4 million and operating loss was $58.4 million. These
results include the impact of a $41.8 million non-cash write-off of deferred production costs due to the creative decision to not
include certain prior scenes in the production, now called the New York Spectacular Starring The Radio City
Rockettes. Excluding the write-off, fiscal 2016 third quarter AOCF loss would have been $11.6 million, an increase of
4%, and operating loss would have been $16.6 million, an increase of 15%, both as compared to the prior year quarter. The
increase in AOCF loss (excluding the write-off) as compared to the prior year quarter reflects higher selling, general and
administrative expenses and, to a lesser extent, direct operating expenses, offset by the increase in revenues.
The increase in selling, general and administrative expenses primarily reflects higher corporate general and
administrative costs and employee compensation and related benefits. As noted above, selling, general and administrative
expenses in the prior year third quarter do not include all of the actual expenses that the Company would have incurred had it been
a standalone public company for that period. The increase in direct operating expenses (excluding the write-off) primarily
reflects higher event-related expenses at the Company's venues and expenses for the New York production of the Radio City
Christmas Spectacular, partially offset by lower expenses for the New York Spectacular Starring The Radio City
Rockettes production.
MSG Sports
For the fiscal 2016 third quarter as compared to the prior year period, MSG Sports revenues of $262.9 million increased 10%.
The increase in revenues was primarily due to higher broadcast rights fees from MSG Networks Inc. as a result of new long-term
media rights agreements between the New York Knicks and New York Rangers and MSG Networks Inc. In addition, the overall
increase in segment revenues reflects the new advertising sales representation agreement with MSG Networks Inc. and higher
professional sports teams' sponsorship, signage and ticket-related revenues. Excluding the impact of the new long-term media
rights agreements and advertising sales representation agreement, MSG Sports revenues would have increased 2%, as compared to the
prior year period.
Third quarter AOCF increased by $11.5 million to $42.5 million and operating income increased by $8.8 million to
$36.5 million. The increase in AOCF and operating income was primarily due to the increase in revenues and, to a
lesser extent, a decrease in direct operating expenses, partially offset by higher selling, general and administrative
expenses.
The decrease in direct operating expenses was primarily due to lower net provisions for certain team personnel
transactions and lower event-related expenses associated with other live sporting events. This was partially offset by higher
net provisions for NBA and NHL revenue sharing expense and NBA luxury tax, team personnel compensation costs, and other team
operating expenses. The increase in selling, general and administrative expenses was primarily due to higher corporate
general and administrative costs, employee compensation and related benefits, and costs associated with the new advertising sales
representation agreement with MSG Networks Inc. As noted above, selling, general and administrative expenses in the prior
year third quarter do not include all of the actual expenses that the Company would have incurred had it been a standalone public
company for that period.
About The Madison Square Garden Company
The Madison Square Garden Company (MSG) is a world leader in live sports and entertainment with a portfolio of legendary sports
teams, exclusive entertainment productions and celebrated venues. MSG Sports owns and operates some of the most widely
recognized sports franchises: the New York Knicks (NBA), the New York Rangers (NHL) and the New York Liberty (WNBA), along with two
development league teams - the Westchester Knicks (NBADL) and the Hartford Wolf Pack (AHL). MSG Sports also presents a broad
array of world-class sporting events, including: professional boxing, college basketball, tennis, bull riding and e-gaming
events. MSG Entertainment features exclusive, original productions that include the Radio City Christmas Spectacular
and New York Spectacular Starring The Radio City Rockettes. MSG Entertainment also presents or hosts a wide variety
of live entertainment offerings, including concerts, family shows and special events, in the Company’s diverse collection of iconic
venues. These venues are: New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall and Beacon
Theatre; the Forum in Inglewood, California; The Chicago Theatre; and the Wang Theatre in Boston, MA. More information is
available at www.themadisonsquaregardencompany.com.
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, 3) restructuring charges or credits and 4) gains or losses on sales or dispositions of businesses. 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 page 4 of this release.
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, developments and events
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 94963430
Conference call replay number is 855-859-2056 / Conference ID Number 94963430 until May 13, 2016
| |
| THE MADISON SQUARE GARDEN
COMPANY |
| |
| CONSOLIDATED/COMBINED STATEMENTS OF
OPERATIONS |
| (In thousands, except per share
data) |
| (Unaudited) |
| |
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
March 31, |
|
March 31, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Revenues |
|
$ |
336,328 |
|
|
$ |
300,856 |
|
|
$ |
897,547 |
|
|
$ |
816,586 |
|
| Direct operating expenses |
|
275,118 |
|
|
231,098 |
|
|
596,100 |
|
|
568,004 |
|
| Selling, general and administrative expenses |
|
92,352 |
|
|
53,786 |
|
|
236,982 |
|
|
168,188 |
|
| Depreciation and amortization |
|
25,794 |
|
|
25,556 |
|
|
76,939 |
|
|
85,119 |
|
| Operating loss |
|
(56,936 |
) |
|
(9,584 |
) |
|
(12,474 |
) |
|
(4,725 |
) |
| Other income (expense): |
|
|
|
|
|
|
|
|
| Loss in equity-method investments |
|
(5,173 |
) |
|
(2,294 |
) |
|
(4,969 |
) |
|
(35,049 |
) |
| Interest income |
|
1,965 |
|
|
768 |
|
|
4,370 |
|
|
2,216 |
|
| Interest expense |
|
(489 |
) |
|
(606 |
) |
|
(1,543 |
) |
|
(1,881 |
) |
| Miscellaneous income (expense) |
|
— |
|
|
116 |
|
|
(4,080 |
) |
|
191 |
|
| Loss from operations before income taxes |
|
(60,633 |
) |
|
(11,600 |
) |
|
(18,696 |
) |
|
(39,248 |
) |
| Income tax benefit (expense) |
|
(123 |
) |
|
129 |
|
|
(175 |
) |
|
(317 |
) |
| Net loss |
|
$ |
(60,756 |
) |
|
$ |
(11,471 |
) |
|
$ |
(18,871 |
) |
|
$ |
(39,565 |
) |
| Basic loss per common share |
|
$ |
(2.47 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.59 |
) |
| Diluted loss per common share |
|
$ |
(2.47 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.59 |
) |
| Basic weighted-average number of common shares outstanding |
|
24,635 |
|
|
24,928 |
|
|
24,845 |
|
|
24,928 |
|
| Diluted weighted-average number of common shares outstanding |
|
24,635 |
|
|
24,928 |
|
|
24,845 |
|
|
24,928 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
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:
- Share-based compensation expense. This adjustment
eliminates the compensation expense relating to restricted stock units granted under our employee stock plans and non-employee
director plans in all periods.
- Depreciation and amortization. This adjustment
eliminates depreciation, amortization and impairments of property and equipment and intangible assets in all periods.
| |
|
|
|
|
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
March 31, |
|
March 31, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Operating loss |
|
$ |
(56,936 |
) |
|
$ |
(9,584 |
) |
|
$ |
(12,474 |
) |
|
$ |
(4,725 |
) |
| Share-based compensation |
|
7,388 |
|
|
785 |
|
|
17,647 |
|
|
7,872 |
|
| Depreciation and amortization |
|
25,794 |
|
|
25,556 |
|
|
76,939 |
|
|
85,119 |
|
| Adjusted operating cash flow |
|
$ |
(23,754 |
) |
|
$ |
16,757 |
|
|
$ |
82,112 |
|
|
$ |
88,266 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE MADISON SQUARE GARDEN COMPANY
CONSOLIDATED/COMBINED OPERATIONS DATA
(Dollars in thousands)
(Unaudited)
REVENUES
| |
|
Three Months Ended |
|
|
| |
|
March 31, |
|
|
| |
|
2016 |
|
2015 |
|
% Change |
| MSG Entertainment |
|
$ |
73,235 |
|
|
$ |
61,566 |
|
|
19 |
% |
| MSG Sports |
|
262,875 |
|
|
239,114 |
|
|
10 |
% |
| All other |
|
218 |
|
|
176 |
|
|
NM |
|
| The Madison Square Garden Company Total |
|
$ |
336,328 |
|
|
$ |
300,856 |
|
|
12 |
% |
| |
|
Nine Months Ended |
|
|
| |
|
March 31, |
|
|
| |
|
2016 |
|
2015 |
|
% Change |
| MSG Entertainment |
|
$ |
331,348 |
|
|
$ |
320,926 |
|
|
3 |
% |
| MSG Sports |
|
565,556 |
|
|
495,131 |
|
|
14 |
% |
| All other |
|
643 |
|
|
529 |
|
|
NM |
|
| The Madison Square Garden Company Total |
|
$ |
897,547 |
|
|
$ |
816,586 |
|
|
10 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
| |
|
2016 |
|
2015 |
|
% Change |
|
2016 |
|
2015 |
|
% Change |
| MSG Entertainment |
|
$ |
(53,430 |
) |
|
$ |
(11,188 |
) |
|
(378 |
)% |
|
$ |
(58,391 |
) |
|
$ |
(14,372 |
) |
|
(306 |
)% |
| MSG Sports |
|
42,489 |
|
|
30,954 |
|
|
37 |
% |
|
36,491 |
|
|
27,676 |
|
|
32 |
% |
| All other |
|
(12,813 |
) |
|
(3,009 |
) |
|
(326 |
)% |
|
(35,036 |
) |
|
(22,888 |
) |
|
(53 |
)% |
| The Madison Square Garden Company Total |
|
$ |
(23,754 |
) |
|
$ |
16,757 |
|
|
NM |
|
|
$ |
(56,936 |
) |
|
$ |
(9,584 |
) |
|
(494 |
)% |
| |
|
Adjusted Operating Cash
Flow |
|
|
|
Operating Income (Loss) |
|
|
| |
|
Nine Months Ended
March 31, |
|
|
|
Nine Months Ended
March 31, |
|
|
| |
|
2016 |
|
2015 |
|
% Change |
|
2016 |
|
2015 |
|
% Change |
| MSG Entertainment |
|
$ |
(1,405 |
) |
|
$ |
45,769 |
|
|
NM |
|
|
$ |
(14,472 |
) |
|
$ |
35,663 |
|
|
NM |
|
| MSG Sports |
|
112,658 |
|
|
56,136 |
|
|
101 |
% |
|
97,004 |
|
|
34,959 |
|
|
177 |
% |
| All other |
|
(29,141 |
) |
|
(13,639 |
) |
|
(114 |
)% |
|
(95,006 |
) |
|
(75,347 |
) |
|
(26 |
)% |
| The Madison Square Garden Company Total |
|
$ |
82,112 |
|
|
$ |
88,266 |
|
|
(7 |
)% |
|
$ |
(12,474 |
) |
|
$ |
(4,725 |
) |
|
(164 |
)% |
| THE MADISON SQUARE GARDEN
COMPANY |
| |
| CONSOLIDATED AND COMBINED BALANCE
SHEETS |
| (In thousands, except per share
data) |
| (Unaudited) |
| |
| |
|
March 31,
2016 |
|
June 30,
2015 |
| ASSETS |
|
|
|
|
| Current Assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
1,451,687 |
|
|
$ |
14,211 |
|
| Restricted cash |
|
28,102 |
|
|
12,590 |
|
| Accounts receivable, net |
|
109,492 |
|
|
51,734 |
|
| Net related party receivables, current |
|
14,331 |
|
|
327 |
|
| Prepaid expenses |
|
33,280 |
|
|
23,879 |
|
| Loan receivable from MSG Networks |
|
— |
|
|
30,836 |
|
| Other current assets |
|
19,893 |
|
|
35,058 |
|
| Total current assets |
|
1,656,785 |
|
|
168,635 |
|
| Net related party receivables, noncurrent |
|
1,637 |
|
|
— |
|
| Investments and loans to nonconsolidated affiliates |
|
273,063 |
|
|
249,394 |
|
| Property and equipment, net |
|
1,173,126 |
|
|
1,188,693 |
|
| Amortizable intangible assets, net |
|
17,114 |
|
|
22,324 |
|
| Indefinite-lived intangible assets |
|
166,850 |
|
|
166,850 |
|
| Goodwill |
|
277,166 |
|
|
277,166 |
|
| Other assets |
|
44,428 |
|
|
75,880 |
|
| Total assets |
|
$ |
3,610,169 |
|
|
$ |
2,148,942 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
| Current Liabilities: |
|
|
|
|
| Accounts payable |
|
$ |
12,270 |
|
|
$ |
3,307 |
|
| Net related party payables |
|
28,028 |
|
|
1,588 |
|
| Accrued liabilities: |
|
|
|
|
| Employee related costs |
|
95,367 |
|
|
95,997 |
|
| Other accrued liabilities |
|
131,966 |
|
|
121,509 |
|
| Deferred revenue |
|
327,682 |
|
|
311,317 |
|
| Total current liabilities |
|
595,313 |
|
|
533,718 |
|
| Defined benefit and other postretirement obligations |
|
58,426 |
|
|
80,900 |
|
| Other employee related costs |
|
39,470 |
|
|
53,337 |
|
| Deferred tax liabilities, net |
|
194,461 |
|
|
206,944 |
|
| Other liabilities |
|
49,165 |
|
|
50,768 |
|
| Total liabilities |
|
936,835 |
|
|
925,667 |
|
| Commitments and contingencies |
|
|
|
|
| Stockholders’ Equity: |
|
|
|
|
| Class A Common stock, par value $0.01, 120,000 shares authorized; 19,937 shares
outstanding as of March 31, 2016 |
|
204 |
|
|
— |
|
| Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of
March 31, 2016 |
|
45 |
|
|
— |
|
| Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of March 31,
2016 |
|
— |
|
|
— |
|
| Additional paid-in capital |
|
2,799,233 |
|
|
— |
|
| Treasury stock, at cost, 511 shares as of March 31, 2016 |
|
(74,682 |
) |
|
— |
|
| Accumulated deficit |
|
(17,268 |
) |
|
— |
|
| MSG Networks investment |
|
— |
|
|
1,263,490 |
|
| Accumulated other comprehensive loss |
|
(34,198 |
) |
|
(40,215 |
) |
| Total stockholders’ equity |
|
2,673,334 |
|
|
1,223,275 |
|
| Total liabilities and stockholders’ equity |
|
$ |
3,610,169 |
|
|
$ |
2,148,942 |
|
| THE MADISON SQUARE GARDEN
COMPANY |
| |
| SELECTED CASH FLOW INFORMATION |
| (Dollars in thousands) |
| (Unaudited) |
| |
| |
|
Nine Months Ended |
| |
|
March 31, |
| |
|
2016 |
|
2015 |
| Net cash provided by operating activities |
|
$ |
84,021 |
|
|
$ |
22,456 |
|
| Net cash used in investing activities |
|
(94,493 |
) |
|
(88,396 |
) |
| Net cash provided by financing activities |
|
1,447,948 |
|
|
73,938 |
|
| Net increase in cash and cash equivalents |
|
1,437,476 |
|
|
7,998 |
|
| Cash and cash equivalents at beginning of period |
|
14,211 |
|
|
6,143 |
|
| Cash and cash equivalents at end of period |
|
$ |
1,451,687 |
|
|
$ |
14,141 |
|
Contacts: Kimberly Kerns Senior Vice President Communications The Madison Square Garden Company (212) 465-6442 Ari Danes, CFA Senior Vice President Investor Relations The Madison Square Garden Company (212) 465-6072
