Outdoor Channel Holdings Reports Strong 2008 Third Quarter Results

Outdoor Channel Holdings Reports Strong 2008 Third Quarter Results

Temecula, Calif., Oct. 30 /PRNewswire-FirstCall/ -- Outdoor Channel Holdings, Inc. (NASDAQ:OUTD) today reported increases in total revenues of 18.2 percent and 12.8 percent, respectively, for the three- and nine-month periods ended September 30, 2008.

Total revenues from continuing operations amounted to $15.0 million for the 2008 third quarter, compared with $12.7 million in the corresponding period a year ago. For the first nine months of 2008, total revenues from continuing operations equaled $39.7 million, compared with $35.2 million in the 2007 nine-month period.

Advertising revenue for the 2008 third quarter rose 32.3 percent to $10.5 million from $7.9 million in the prior-year period. For the first nine months of 2008, advertising sales rose 27.2 percent to $26.6 million from $20.9 million in the first nine months of 2007.

Subscriber fees totaled $4.5 million for the third quarter of 2008 and $13.1 million year-to-date. This reflects reductions of 5.4 percent and 8.2 percent, respectively, from $4.7 million and $14.3 million in the 2007 third quarter and nine months. The company attributed the reductions in subscriber fees to the successful completion of carriage negotiations with the majority of its distributors during the preceding year.

"Our strong third quarter financial performance demonstrates our continued progress in implementing our growth strategy and building upon our leadership position in outdoor TV," said Roger L. Werner, President and Chief Executive Officer. "During the quarter, we generated double digit advertising growth, as we continued to capitalize on our audience gains and improved programming. Looking ahead, we remain focused on further strengthening our brand, monetizing our audience growth, maximizing our distribution relationships and expanding our digital presence."

Outdoor Channel Holdings posted net income of $2.4 million, or $0.09 per diluted share, for the 2008 third quarter, compared with a net income of $1.5 million, or $0.06 per diluted share, in the prior-year period. For the 2008 nine-month period, the company posted net income of $1.9 million, or $0.07 per share, compared to a net loss of $299,000, or ($0.01) per share, for the first nine months of 2007.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense, amounted to $5.4 million for the 2008 third quarter, compared with $3.1 million in the prior-year period. For the year-to-date period, EBITDA, adjusted for the effects of discontinued operations and share-based compensation expense, equaled $7.0 million, compared with $8.0 million for the first nine months of 2007.

Investor Conference Call Outdoor Channel Holdings' management will host an investor conference call today, October 30, 2008, at 2 p.m. PDT (5 p.m. EDT) to review the company's financials and operations for its 2008 third quarter ended September 30, 2008. Investment professionals are invited to participate in the live call by dialing 800-659-1942 (domestic) or 617-614-2710 (international) and using participant passcode 70817379. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the company's Web site, www.outdoorchannel.com. For those who are not able to listen to the live broadcast, the call will be archived on the web site for one year. A telephonic playback of the conference call also will be available through 5 p.m. PDT (8 p.m. EDT), November 6, 2008, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 23551543.

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV. The national network offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle. Outdoor Channel can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic new broadband website. For more information about the company or Outdoor Channel, please visit www.outdoorchannel.com.

Nielsen Media Research Universe Estimates for Outdoor Channel

Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide. Nielsen estimated that Outdoor Channel had approximately 29.6 million cable and satellite subscribers for November 2008. Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.

Use of Non-GAAP Financial Information

This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. The company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense, provides greater comparability regarding its ongoing operating performance. This information is not intended to be considered in isolation or as a substitute for net income (loss) calculated in accordance with U.S. GAAP. A reconciliation of the company's U.S. GAAP information to EBITDA, adjusted for the effects of discontinued operations and share-based compensation expense is provided in the attached table.

Safe Harbor Statement

Statements in this news release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements, without limitation, about our expectations, beliefs, intentions, strategies regarding the future long-term value of the company resulting from the company's current actions or strategic initiatives and the future anticipated value of Outdoor Channel to our audience, distributors and advertisers. The company's actual results could differ materially from those discussed in any forward-looking statements. The company intends that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such statements involve significant risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) service providers discontinuing or refraining from carrying Outdoor Channel; (2) a decline in the number of viewers from having Outdoor Channel placed in unpopular cable or satellite packages, or increases in subscription fees, established by the service providers; (3) the company's ability to grow the subscriber base of Outdoor Channel; (4) a change in Nielsen's methodology of estimating the number of subscribers to Outdoor Channel, or an inaccuracy in Nielsen's such estimated number; (5) economic conditions causing a decrease, or slowing of growth, in our advertising revenue; and other factors which are discussed in the company's filings with the Securities and Exchange Commission. For these forward-looking statements, the company claims the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Revenues:
Advertising $10,472 $7,917 $26,594 $20,908
Subscriber fees 4,484 4,739 13,089 14,263

Total revenues 14,956 12,656 39,683 35,171

Cost of services:
Programming 1,437 1,521 5,133 4,625
Satellite transmission
fees 398 637 1,573 1,869
Production and
operations 1,454 1,101 4,477 3,375
Other direct costs 98 46 290 101

Total cost of
services 3,387 3,305 11,473 9,970

Other expenses:
Advertising 567 1,558 2,593 4,088
Selling, general and
administrative 6,592 6,524 21,342 21,525
Depreciation and
amortization 672 686 1,904 1,993

Total other
expenses 7,831 8,768 25,839 27,606

Income (loss) from
operations 3,738 583 2,371 (2,405)

Interest and other
income, net 454 882 1,400 2,397

Income (loss) from
continuing operations
before income taxes 4,192 1,465 3,771 (8)

Income tax provision
(benefit) 1,798 (33) 1,887 320

Income (loss) from
continuing
operations 2,394 1,498 1,884 (328)

Income from discontinued
operations,
net of tax - - - 29

Net income (loss) $2,394 $1,498 $1,884 $(299)

Basic earnings (loss) per
common share data:
From continuing
operations $0.10 $0.06 $0.07 $(0.01)
From discontinued
operations $ - $ - $ - $ -
Basic earnings per
common share $0.10 $0.06 $0.07 $(0.01)

Diluted earnings (loss) per
common share data:
From continuing
operations $0.09 $0.06 $0.07 $(0.01)
From discontinued
operations $ - $ - $ - $ -
Diluted earnings per
common share $0.09 $0.06 $0.07 $(0.01)

Weighted average
number of common
shares outstanding:
Basic 25,114 26,054 25,719 25,846
Diluted 25,890 26,747 26,287 25,846

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited, in thousands)

September 30, December 31,
2008 2007
Assets (unaudited)
Current assets:
Cash and cash equivalents $57,317 $25,260
Investment in available-for-sale
securities 150 46,155
Accounts receivable, net of
allowance for doubtful accounts 9,221 8,299
Other current assets 6,407 5,626
Total current assets 73,095 85,340

Property, plant and equipment, net 10,394 11,632
Goodwill and amortizable intangible
assets, net 43,208 43,473
Investment in available-for-sale
securities 6,684 -
Deferred tax assets, net 7,574 9,326
Deposits and other assets 1,772 1,930
Totals $142,727 $151,701

Liabilities and Stockholders' Equity

Current liabilities $6,016 $4,833
Long-term liabilities 255 291
Total liabilities 6,271 5,124

Total stockholders' equity 136,456 146,577
Totals $142,727 $151,701

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Operating activities:
Net income (loss) $2,394 $1,498 $1,884 $(299)
Adjustments to reconcile
net income (loss) to
net cash provided
by operating
activities:
Income from discontinued
operations - - - (29)
Depreciation and
amortization 672 686 1,904 1,993
Amortization of
subscriber
acquisition fees 125 122 367 366
Loss (gain) on sale
of equipment 46 (1) 41 (1)
Loss (gain) on sale
Of available-for-sale
and auction-rate
securities (119) - (75) -
Other-than-temporary
impairment on
auction-rate
securities - - 336 -
Provision for
doubtful accounts 125 32 589 100
Share-based
employee and
service provider
compensation 992 1,861 2,704 8,392
Deferred tax
provision
(benefit), net 1,798 (115) 1,885 245

Changes in operating assets
and liabilities:
Accounts receivable (1,084) (973) (1,459) (2,121)
Income tax refund
receivable (7) 18 (12) 2,095
Prepaid programming costs (749) (795) (551) (295)
Other current assets (26) (171) (218) (486)
Deposits and other assets (209) 64 (209) (250)
Accounts payable and
accrued expenses (133) 1,160 1,469 1,558
Deferred revenue 129 (304) 139 (388)
Customer deposits - - (14) (41)
Accrued severance payments (14) (84) (239) (257)
Deferred obligations 23 32 (74) 15
Net cash provided by
operating activities 3,963 3,030 8,467 10,597

Investing activities:
Purchases of property,
plant and equipment (166) (234) (644) (943)
Proceeds from sale
of equipment - 4 15 4
Proceeds from sale
of discontinued
operations - - - 3,589
Purchases of
available-for-sale
and auction-rate
securities (5) (44,451) (27,181) (104,001)
Proceeds from sale
of available-for-sale
and auction-rate
securities 2,480 46,921 27,181 100,811
Net cash provided
by (used in) investing
activities 2,309 2,240 38,142 (540)

Financing activities:
Proceeds from
exercise of stock
options - 6 11 604
Purchase and
retirement of
stock related to
stock repurchase
program (9,363) (37) (14,174) (308)
Purchase of
treasury stock (99) - (389) -
Net cash provided
by (used in) financing
activities (9,462) (31) (14,552) 296

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Cash flows from discontinued
operations:
Net cash used in operating
activities of discontinued
operations - - - (582)
Net cash used in
investing activities
of discontinued
operations - - - (69)
Net cash used in
discontinued
operations - - - (651)

Net increase (decrease)
in cash and cash
equivalents (3,190) 5,239 32,057 9,702
Cash and cash
equivalents,
beginning of period 60,507 18,689 25,260 14,226
Cash and cash
equivalents, end of
period $57,317 $23,928 $57,317 $23,928
Supplemental disclosure of cash
flow information:

Income taxes paid $7 $4 $13 $99

Supplemental disclosures of
non-cash investing and
financing activities:

Effect of net decrease
in fair value of
available-for-sale
securities, net of
deferred taxes $(216) $(15) $(157) $(49)
Property, plant and
equipment costs incurred
but not paid $37 $122 $37 $122
Retirement of treasury
stock $98 $36 $389 $308

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
(unaudited, in thousands)

The following table sets forth the reconciliation of net income (loss) to
earnings before interest, taxes, depreciation and amortization (EBITDA),
adjusted for the effects of discontinued operations and share-based
compensation expense:

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Net income (loss) $2,394 $1,498 $1,884 $(299)

Add/Subtract:
Interest and other income, net 454 881 1,400 2,397
Income tax provision (benefit) 1,798 (33) 1,887 320
Depreciation and amortization 672 686 1,904 1,993

EBITDA 4,410 1,270 4,275 (383)

Adjusted for:
Income from discontinued
operations, net of tax - - - 29

EBITDA as adjusted for
discontinued operations,
net of tax 4,410 1,270 4,275 (412)

Adjusted for:

Share-based compensation expense 992 1,861 2,704 8,392

EBITDA as adjusted for
discontinued operations, net of
tax and share based
compensation expense $5,402 $3,131 $6,979 $7,980

Summary of Cost of Services
Share based compensation expense $155 $46 $329 $125
Cost of Services 3,232 3,259 11,144 9,845
Total Cost of Services $3,387 $3,305 $11,473 $9,970

Summary of Selling, general and
administrative
Share based compensation expense $837 $1,815 $2,375 $8,267
Selling, general and
administrative 5,755 4,709 18,967 13,258
Total Selling, general and
administrative $6,592 $6,524 $21,342 $21,525

Source: Outdoor Channel Holdings, Inc.

CONTACT: Thomas Hornish, Chief Operating Officer, Outdoor Channel
Holdings, Inc., +1-951-699-6991, ext. 104, thornish@outdoorchannel.com, or
Brad Edwards, Brainerd Communicators, Inc., +1-212-986-6667,
edwards@braincomm.com

Web Site: http://www.outdoorchannel.com/

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