Outdoor Channel Holdings Reports Second Quarter 2009 Results

Outdoor Channel Holdings Reports Second Quarter 2009 Results

Legacy Outdoor Channel business generates $2.7 million in adjusted EBITDA, up 69% year over year Winnercomm Inc. contributes $6.8 million in revenue

TEMECULA, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Outdoor Channel Holdings, Inc. (NASDAQ:OUTD) today reported an increase in total revenues of 47.3 percent for the three-month period ended June 30, 2009 due largely to the acquisition of Winnercomm Inc.

Total revenues amounted to $19.2 million for the 2009 second quarter, compared with $13.0 million in the corresponding period a year ago. For the first six months of 2009, total revenues were $36.2 million, compared with $24.7 million in the corresponding period a year ago.

Advertising revenue for the 2009 second quarter decreased 16.3 percent to $7.1 million from $8.5 million in the prior-year period. For the first six months of 2009, advertising revenues were $14.9 million compared to $16.1 million in the prior-year period.

Subscriber fees totaled $5.3 million for the second quarter of 2009 compared to subscriber fees of $4.6 million in the prior-year period. For the first six months of 2009, subscriber fees totaled $10.0 million compared to $8.6 million in the prior-year period.

In January of 2009, Outdoor Channel Holdings acquired certain assets of Winnercomm Inc. and its related entities. The revenues generated by Winnercomm are reported as "Production services." Production services revenue totaled $6.8 million and $11.3 million during the 2009 second quarter and six month period, respectively. These revenues were comprised primarily of production services for customer-owned telecasts and marketing.

"Our second quarter results reflect the impact of the industry-wide challenging advertising environment, offset in part by strong growth in our distribution revenues combined with our focus on cost-controls," said Roger L. Werner, President and Chief Executive Officer. "Despite the near-term impact of the national advertising market downturn, we have continued to execute our growth strategy in a disciplined and concerted manner and we have entered our seasonally stronger half of the year in solid position. During the quarter, we took additional steps to further strengthen our programming and bolster our category leadership position across multiple distribution platforms. Given our strong brand and track record in delivering highly targeted audiences to our advertising partners, we remain well positioned to grow the value of our business over the long-term."

Outdoor Channel Holdings posted a net loss of $0.9 million, or ($0.04) per diluted share, for the 2009 second quarter, compared with net income of $0.3 million, or $0.01 per diluted share, in the prior-year period. For the 2009 six-month period, the Company posted a net loss of $2.1 million, or ($0.09) per diluted share compared to a net loss of $0.5 million, or ($0.02) for the prior-year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, amounted to $1.1 million for the 2009 second quarter, compared with $1.6 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $2.7 million for the 2009 second quarter compared to $1.6 million in the prior-year period.

For the six month period, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $1.1 million compared to $1.6 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $4.2 million for the 2009 six month period compared to $1.6 million in the prior-year period.

Investor Conference Call

Outdoor Channel Holdings' management will host an investor conference call today, August 4, 2009, at 2 p.m. PDT (5 p.m. EDT) to review the company's financials and operations for its 2009 second quarter ended June 30, 2009. Investment professionals are invited to participate in the live call by dialing 866-713-8310 (domestic) or 617-597-5308 (international) and using participant passcode 95894795. 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), August 11, 2009, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 57390283.

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's largest and highest quality producers of live sporting events and sports series for cable and broadcast television. Winnercomm also owns and operates the patented Skycam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information 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 30.4 million cable and satellite subscribers for August 2009. 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 share-based compensation expense and acquisition and integration costs, 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 share-based compensation expense and acquisition and integration costs 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) liabilities resulting from an aerial camera falling; (4) a decrease in advertising revenue as a result of a deterioration in general economic conditions; (5) managing the company's growth and the integration of acquisitions; 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 Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----

Revenues:
Advertising $7,105 $8,491 $14,899 $16,122
Subscriber fees 5,338 4,556 10,001 8,605
Production services 6,770 - 11,289 -
----- - ------ -

Total revenues 19,213 13,047 36,189 24,727
------ ------ ------ ------

Cost of services:
Programming 1,333 1,773 3,081 3,696
Satellite transmission fees 400 549 795 1,175
Production and operations 8,337 1,162 14,809 3,023
Other direct costs 110 95 207 192
--- -- --- ---

Total cost of services 10,180 3,579 18,892 8,086
------ ----- ------ -----

Other expenses:
Advertising 924 1,488 1,383 2,026
Selling, general and
administrative 8,371 7,133 17,585 14,750
Depreciation and amortization 978 617 1,876 1,232
--- --- ----- -----

Total other expenses 10,273 9,238 20,844 18,008
------ ----- ------ ------

Income (loss) from operations (1,240) 230 (3,547) (1,367)

Interest and other income, net 55 408 103 946
-- --- --- ---

Income (loss) from operations
before income taxes (1,185) 638 (3,444) (421)

Income tax provision (benefit) (307) 367 (1,304) 89
---- --- ------ --

Net income (loss) $(878) $271 $(2,140) $(510)
===== ==== ======= =====

Earnings (loss) per common share
data:
Basic $(0.04) $0.01 $(0.09) $(0.02)
====== ===== ====== ======
Diluted $(0.04) $0.01 $(0.09) $(0.02)
====== ===== ====== ======

Weighted average number of
common shares outstanding:
Basic 24,366 25,965 24,412 26,049
====== ====== ====== ======
Diluted 24,366 26,059 24,412 26,049
====== ====== ====== ======

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

June 30, December 31,
2009 2008
-------- ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $23,526 $60,257
Investment in available-for-sale securities 27,492 --
Accounts receivable, net of allowance for
doubtful accounts 15,500 9,448
Other current assets 9,826 6,854
----- -----
Total current assets 76,344 76,559
------ ------

Property, plant and equipment, net 16,092 10,042
Goodwill and amortizable intangible assets, net 44,013 43,302
Investment in auction-rate securities 5,933 6,456
Deferred tax assets, net 6,255 4,949
Deposits and other assets 4,016 1,646
----- -----
Totals $152,653 $142,954
======== ========

Liabilities and Stockholders' Equity

Current liabilities $15,722 $6,309
Long-term liabilities 1,213 236
----- ---
Total liabilities 16,935 6,545

Total stockholders' equity 135,718 136,409
------- -------
Totals $152,653 $142,954
======== ========

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

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----

Operating activities:
Net Income (loss) $(878) $271 $(2,140) $(510)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depreciation and amortization 978 617 1,876 1,232
Amortization of subscriber
acquisition fees 176 120 298 242
Loss (gain) on sale of equipment 15 - 15 (5)
Loss (gain) on sale of
available-for-sale securities (7) - (7) 44
Other-than-temporary impairment on
auction-rate securities - 76 - 336
Provision for doubtful accounts 114 187 190 464
Share-based employee and service
provider compensation 1,109 800 2,123 1,712
Deferred tax provision (benefit),
net (309) 366 (1,336) 87

Changes in operating assets and
liabilities:
Accounts receivable (3,244) (321) (1,048) (375)
Income tax refund receivable 1 - (251) (5)
Prepaid programming costs (299) (148) (363) 198
Other current assets 151 741 586 (192)
Deposits and other assets (1,390) 62 (2,445) -
Accounts payable and
accrued expenses 2,379 669 (1,502) 1,602
Deferred revenue 1,303 79 2,247 10
Customer deposits - (12) - (14)
Accrued severance payments (6) (38) (14) (225)
Deferred obligations (165) (112) (27) (97)
Unfavorable lease obligations (100) - (189) -
---- - --- -
Net cash provided by (used in)
Operating activities (172) 3,357 (1,987) 4,504
---- ----- ----- -----

Investing activities:
Purchases of property, plant and
equipment (758) (170) (1,361) (478)
Proceeds from sale of equipment - - - 15
Cash paid to purchase assets of
Winnercomm, net of cash acquired - - (5,746) -
Purchases of available-for-sale
and auction-rate securities (16,998) - (26,992) (27,176)
Proceeds from sale of
available-for-sale and
auction-rate securities 100 22,949 100 63,472
--- ------ --- ------
Net cash provided by (used in)
investing activities (17,656) 22,779 (33,999) 35,833
------- ------ ------ ------

Financing activities:
Proceeds from exercise of stock
options - 11 - 11
Purchase of treasury stock (219) (226) (398) (290)
Purchase and retirement of stock
related to stock repurchase program (41) (4,811) (347) (4,811)
--- ----- --- -----
Net cash used in financing
activities (260) (5,026) (745) (5,090)
--- ----- --- -----

Net increase (decrease) in cash
and cash equivalents (18,088) 21,110 (36,731) 35,247
Cash and cash equivalents,
beginning of period 41,614 39,397 60,257 25,260
------ ------ ------ ------
Cash and cash equivalents, end of
period $23,526 $60,507 $23,526 $60,507
======= ======= ======= =======

Supplemental disclosure of cash
flow information:

Income taxes paid $- $1 $282 $6
== == ==== ==

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----

Supplemental disclosures of non-cash
investing and financing activities:

Effect of net increase (decrease)
in fair value of auction-rate
securities, net of deferred taxes $55 $- $70 $59
=== == === ===
Property, plant and equipment costs
incurred but not paid $296 $36 $296 $36
==== === ==== ===
Retirement of treasury stock $219 $354 $398 $290
==== ==== ==== ====

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 loss to earnings
before interest, taxes, depreciation and amortization (EBITDA), adjusted
for the effects of share-based compensation expense and acquisition and
integration costs:

Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----

Net income (loss) $(878) $271 $(2,140) $(510)

Add/Subtract:
Interest and other income, net 55 408 103 946
Income tax provision (benefit) (307) 367 (1,304) 89
Depreciation and amortization 978 617 1,876 1,232
--- --- ----- -----

EBITDA (262) 847 (1,671) (135)

Adjusted for: Share-based
compensation expense 1,109 800 2,123 1,712
Acquisition and integration costs 230 - 680 -
--- - --- -

EBITDA as adjusted for share-based
compensation expense and
acquisition and integration
costs $1,077 $1,647 $1,132 $1,577
====== ====== ====== ======

Summary of cost of services
Share-based compensation expense $109 $76 $214 $175
Cost of services 10,071 3,503 18,678 7,911
------ ----- ------ -----
Total cost of services $10,180 $3,579 $18,892 $8,086
======= ====== ======= ======

Summary of selling, general and
administrative Share-based
compensation expense $1,000 $724 $1,909 $1,537
Acquisition and integration costs 230 - 680 -
Selling, general and administrative 7,141 6,409 14,996 13,213
----- ----- ------ ------
Total selling, general and
administrative $8,371 $7,133 $17,585 $14,750
====== ====== ======= =======

Summary of other income
Interest income $55 $484 $103 $1,294
Dividend income - - - 32
Other income (loss) - (76) - (380)
- -- - ---
Total other income $55 $408 $103 $946
=== ==== ==== ====

EBITDA as adjusted by segment
Legacy Outdoor Channel $2,667 $1,647 $4,219 $1,577
Production Services (1,590) - (3,087) -
------ - ----- -
EBITDA as adjusted for share-based
compensation expense and
acquisition and integration costs $1,077 $1,647 $1,132 $1,577
====== ====== ====== ======

Source: Outdoor Channel Holdings, Inc.

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

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

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