CKX, Inc. Reports Fourth Quarter and Full Year 2009 Results

CKX, Inc. (NASDAQ: CKXE) reported financial results for its fourth quarter and full year ended December 31, 2009.

Revenue for the fourth quarter of 2009 grew $42.5 million, or 113.7%, to $79.9 million as compared to the prior year period. Operating income before depreciation, amortization and non-cash stock compensation (“OIBDAN”) declined to $6.5 million from $10.3 million in the prior year period. The decline in OIBDAN reflects an unfavorable swing between the 2009 and 2008 periods of $10.0 million in non-cash foreign exchange gains and losses and the prior year’s net gain of $7.7 million from the terminated merger, which was partially offset by a decline in acquisition-related costs of $2.2 million in 2009. Excluding these items, adjusted OIBDAN in the fourth quarter of 2009 was $6.7 million as compared to a loss of $5.3 million in 2008.

For the full year, revenue grew $40.2 million, or 13.9%, to $328.3 million in 2009 compared to 2008. OIBDAN declined to $67.5 million in 2009 from $96.7 million in 2008. The 2009 results include $10.0 million of non-recurring revenue from terminated license agreements, an unfavorable swing in non-cash foreign exchange gains and losses of $20.0 million, as well as the unfavorable impact of $9.9 million of unusual and one-time items. Adjusting for the non-recurring revenue, foreign exchange gains/losses and unusual and one-time items, OIBDAN declined from $77.3 million to $68.0 million.

Results for the Three Months Ended December 31, 2009

Revenue for the Company grew $42.5 million, or 113.7%, to $79.9 million in the fourth quarter as compared to the prior year due to an increase of $42.1 million at 19 Entertainment. $36.8 million of the increase was due to an additional broadcast series of So You Think You Can Dance which aired in the fall season. Presley Business revenue increased $0.6 million and the Ali Business revenue declined $0.2 million.

OIBDAN declined to $6.5 million in the fourth quarter of 2009 from $10.3 million in the fourth quarter of 2008. The decrease in OIBDAN as compared to the prior year period primarily reflects an unfavorable swing of $10.0 million in non-cash foreign exchange gains and losses, 2008’s net benefit of $7.7 million related to the gain on the terminated merger, partially offset by a decline in acquisition-related costs of $2.2 million which more than offset the impact of the increase in revenue. 19 Entertainment OIBDAN declined $0.2 million as the $10.0 million reduction in foreign exchange gains offset the contribution from the additional season of So You Think You Can Dance. Presley Business OIBDAN increased $2.2 million due to higher licensing revenue and cost management. Adjusting for the foreign exchange gains and losses, the merger impact and the decline in acquisition-related costs, OIBDAN increased to $6.7 million in 2009 from a loss of $5.3 million in 2008.

Operating loss was $1.6 million in the three months ended December 31, 2009, as compared to an operating loss of $31.1 million for the same period in 2008. Excluding impairment charges in both years, operating income was $0.9 million and $4.6 million for the three months ended December 31, 2009 and 2008, respectively.

Net loss attributable to CKX, Inc. was $4.5 million and $14.7 million for the three months ended December 31, 2009 and 2008, respectively. Diluted loss per common share was $0.05 and $0.15 for the three months ended December 31, 2009 and 2008, respectively.

Results for the Year Ended December 31, 2009

For the year ended December 31, 2009, revenue increased $40.2 million, or 13.9%, to $328.3 million from $288.1 million in 2008. Revenue for 19 Entertainment increased $34.3 million due to an additional broadcast series of So You Think You Can Dance, which aired in the fall season, and other additional television programming which was partially offset by declines in American Idol-related revenue. The decrease in revenue attributable to American Idol was due to reduced foreign syndication revenue and weaker on-air, off-air and tour sponsorship revenue resulting from the global recession. Revenue at the Presley Business and the Ali Business included $9.0 million and $1.0 million, respectively, of non-recurring revenue from terminated license agreements to develop real estate projects around these brands. Excluding the non-recurring revenue from the terminated license agreements, revenue declined $3.3 million at the Presley Business as an increase in attendance at Graceland of 1.2% and an increase in visitor spending of 2.4% over the prior year was more than offset by declines in royalty and licensing revenue due primarily to prior year sales of a limited edition collectible DVD box set of Elvis movies and the impact of general declines in consumer spending amid the economic downturn. Excluding the non-recurring revenue from the terminated license agreements, revenue declined $0.8 million at the Ali Business due to lower signed memorabilia sales offset in part by an increase in licensing revenue.

OIBDAN declined to $67.5 million in 2009 from $96.7 million in 2008. The decrease in OIBDAN as compared to the prior year reflects a decline in American Idol syndication, sponsorship and management revenue, which was partially offset by the recognition of the $10.0 million in fees from the terminated license agreements, the additional season of So You Think You Can Dance and additional television programming. Also unfavorably impacting OIBDAN in the current year was an unfavorable swing in non-cash foreign exchange gains and losses of $20.0 million; the write-off of $0.9 million of previously capitalized costs related to the proposed re-development of Graceland; a $1.4 million restructuring charge at the Ali Business; $0.8 million in incremental payroll-related taxes incurred due to the redemption of redeemable restricted common stock; an increase in acquisition-related costs of $0.3 million; and $0.7 million in merger and distribution-related costs as compared to a gain of $5.8 million in 2008. Adjusting for the unusual and one-time items noted above of $9.9 million, the swing in non-cash foreign exchange gains and losses and the non-recurring revenue from the terminated license agreement, OIBDAN declined to $68.0 million in 2009 from $77.3 million in 2008.

Operating income was $44.2 million in 2009 compared to $36.9 million in 2008. Excluding impairment charges of $2.5 million and $35.7 million in 2009 and 2008, respectively, operating income declined $25.9 million primarily for the reasons noted above.

Net income attributable to CKX, Inc. was $22.8 million in 2009 as compared to $17.1 million in 2008. Diluted income per common share was $0.24 in 2009 as compared to $0.18 in 2008.