Ascent Reports 1999 Results
DENVER, Mar 13, 2000 /PRNewswire via COMTEX/ -- Ascent Entertainment Group, Inc.
(Nasdaq: GOAL) today reported 1999 revenues from continuing operations of $275.4
million compared with revenues of $261.3 million in 1998. The Company reported
earnings before interest, taxes, depreciation and amortization (EBITDA) from
continuing operations of $61.9 million in 1999, as compared to 1998's $75.4
million. The Company's 1999 net loss from continuing operations was $51.1
million, or $1.72 per common share, compared to its 1998 net loss from
continuing operations of $31.9 million, or $1.07 per common share.
The increase in revenues from continuing operations is attributable to
improvements at On Command Corporation (Nasdaq: ONCO), Ascent's 56.5%
percent-owned subsidiary. While both On Command and the Company's Ascent Network
Services division reflected year-to-year improvements in EBITDA, these
improvements were more than offset by the costs incurred by the Company in 1999
for transaction expenses totaling $13.3 million relating to the Company's
unsuccessful efforts to sell its sports related businesses and have its
continuing operations acquired by Liberty Media Corporation (Liberty) (NYSE:
LMG.A, LMG.B), in a stock-for-stock merger, for expenses of $3.7 million
associated with the Company's stock appreciation rights and for severance
payments totaling $1.9 million made to the Company's former President and Chief
Executive Officer.
As previously announced, on February 22, 2000, Ascent signed a definitive merger
agreement with Liberty Media Corporation under which Liberty will pay Ascent
stockholders $15.25 in cash for each share of the Company's common stock.
Pursuant to the merger agreement, Liberty commenced a tender offer for all
shares of stock of Ascent on February 29, 2000 which will terminate on March 27,
2000, unless extended. The tender offer is conditioned on the tender of at least
a majority of the Ascent shares, as well as other customary conditions. If
Liberty purchases a majority of the Ascent shares in the tender offer, it will
then merge a wholly-owned subsidiary into Ascent and all remaining shareholders
will receive $15.25 per share.
1999 Summary Results
Multimedia Distribution
For 1999, the Company's Multimedia Distribution segment, which includes On
Command, had revenues of $252.9 million, up 5.9 percent from $238.8 million in
1998. The improvement in On Command's 1999 revenues as compared to 1998 was
primarily attributable to new hotel installations, continued conversions of
SpectraVision properties to the superior performing On Command systems, an
increase in cable programming revenues, an increase in the royalty payment
received from LodgeNet Entertainment Corporation, an increase in game and
equipment sales revenues and continued reductions in movie denial rates. Fourth
quarter 1999 revenues were $61.4 million compared to revenues of $59.1 million
reported in the fourth quarter of 1998. This increase is primarily attributable
to an increase in higher net movie revenues per room combined with an overall
increase in the number of rooms served, partially offset by a decrease in
equipment sales to licensees.
EBITDA for this segment in 1999 was $75.9 million, up 5.4 percent from $72.0
million in 1998. Fourth quarter 1999 EBITDA for the segment was $17.0 million
versus $18.1 million during the fourth quarter of 1998. The improvement in On
Command's year-to-date EBITDA is primarily attributable to the increased
revenues noted above. The decline in EBITDA during the fourth quarter of 1999 is
attributable to an increase in On Command's operating expenses. Specifically,
field service expenses have increased due to the deployment of On Command's new
digital platform, known as OCX, the expansion of On Command's international
operations and certain end-of-life write-offs associated with the Company's On
Command Video and SpectraVision systems.
The segment reported an operating loss for 1999 of $20.9 million compared to an
operating loss of $18.5 million in 1998. The increase in On Command's operating
loss during 1999 is primarily attributable to the increase in depreciation and
amortization expense from the significant capital expenditures made by On
Command during 1999 as it increased its room base and converted hotels served by
SpectraVision equipment, accelerated depreciation on certain end-of-life assets
and stock based compensation, offset in part by the termination of amortization
of SpectraVision equipment in October, 1999. The segment reported an operating
loss for the fourth quarter of 1999 of $6.5 million compared to an operating
loss of $5.2 million during the fourth quarter of 1998. The increase in the 1999
fourth quarter operating loss is primarily due to the lower EBITDA during the
quarter and an increase in interest expense.
At December 31, 1999, On Command's installed room base was approximately 956,000
as compared to approximately 929,000 at the end of 1998. In the fourth quarter
of 1999, On Command installed its on-demand system in approximately 25,000
rooms, of which approximately 6,000 were conversions of SpectraVision
properties, and approximately 18,000 were new hotel installations. In addition,
during the fourth quarter of 1999 the Company upgraded approximately 5,000 OCV
rooms to OCX with Internet capabilities. At December 31, 1999 rooms installed
with OCX Internet capable systems totaled approximately 30,000.
Network Services
For both 1999 and 1998, the Company's Network Services segment, which includes
the operations of the Company's Ascent Network Services division, had revenues
of $22.5 million. Fourth quarter 1999 revenues for this segment were $6.2
million, down 10 percent from $6.9 million in the comparable 1998 period. The
decrease in revenues during the fourth quarter of 1999 is attributable to the
non-recurrence of ancillary equipment sales and service revenues from NBC
affiliates and other private networks which occurred during the fourth quarter
of 1998.
The Network Services segment's EBITDA for 1999 was $12.2 million versus $11.0
million in 1998. Fourth quarter 1999 EBITDA for the segment was $3.1 million as
compared to $2.8 million in the fourth quarter of 1998. While revenues for both
the year and the quarter were relatively flat, EBITDA increased for both the
year and the quarter due primarily to cost containment efforts at Ascent Network
Services.
For 1999, the Network Services segment reported an operating income of $4.9
million versus an operating income of $3.5 million in 1998. The segment reported
an operating income for the fourth quarter of 1999 of $1.6 million compared to
operating income of $.9 million in the fourth quarter of 1998. Once again, the
increase in operating income for the year and quarter is primarily attributable
to cost containment efforts at Ascent Network Services.
Discontinued Operations
Ascent's discontinued operations are comprised of the results of the Company's
former entertainment segment, which includes the Denver Nuggets, the Colorado
Avalanche and Ascent Arena Company (the Arena Company), the owner and manager of
the Pepsi Center, the recently opened new sports and entertainment center in
Denver which is home to the Denver Nuggets and Colorado Avalanche. In addition,
discontinued operations also include the results of Beacon Communications LLC
(Beacon), which was sold on January 20, 1999. Loss from discontinued operations
for these entities totaled $26.3 million during 1999 as compared to a loss of
$17.8 million during 1998. The decline in operating results during 1999 from
discontinued operations is primarily attributable to the operations of the
Denver Nuggets and the Arena Company, partially offset by the absence of
operating losses from Beacon and improved year-to-year results from the
Avalanche. Specifically, the Nuggets incurred a significant increase in player
salaries during 1999 and have also incurred contract termination costs relating
to its former coach. While the Arena Company has realized improved financial
results since opening in September of 1999, its operating losses have increased
over 1998 due to an increase in both depreciation and interest costs
attributable to the Pepsi Center. The improvement in operating results for the
Avalanche during 1999 is primarily attributable to the teams participation in
three rounds of the NHL playoffs, compared to one round in 1998.
The Company reported a loss from discontinued operations of $12.9 million during
the fourth quarter of 1999 as compared to a loss of $1.2 million in the
comparable period in 1998. The decline in operating results during the fourth
quarter of 1999 is primarily attributable to the operations of the Denver
Nuggets and the Colorado Avalanche, which is primarily due to increases in
player salaries, and the NBA work stoppage, which was concluded in January of
1999. Specifically, the Avalanche had 2 fewer home games during the fourth
quarter of 1999 versus 1998 and accordingly, realized less incremental revenues
while incurring higher player costs. In addition, during the fourth quarter of
1998, the Nuggets did not play any games due to the NBA work stoppage and
accordingly, while minimal revenues were realized at this time, no player or
game operation costs were incurred as well. Partially offsetting the negative
operating results of the Teams is the improved financial performance of the
Arena Company (the Pepsi Center commenced operations in September, 1999 and
through the end of 1999, hosted over 50 events, including Avalanche and Nuggets
home games) and the absence of operating losses from Beacon in 1999 as compared
to 1998.
The $.2 million loss from the sale of discontinued operations, net of taxes,
during the year ended December 31, 1999 reflects the loss from the sale of 90%
of the Company's interest in Beacon.
Ascent Consolidated
General and administrative expenses at Ascent Corporate were $26.2 million for
1999 as compared to $7.6 million for 1998. This increase is primarily
attributable to an increase in costs of $13.3 million in connection with the
Company's unsuccessful efforts in 1999 to sell its sports related businesses and
have its continuing operations acquired by Liberty in a stock-for-stock merger,
expenses of $1.9 million associated with severance payments made to the
Company's former President and CEO, and an increase of $3.7 million in expenses
associated with the Company's outstanding stock appreciation rights due to
increases in the Company's stock price.
Interest expense, net of amounts capitalized, for 1999 was $29.3 million as
compared to $24.3 million during 1998. This increase is attributable to the
additional borrowings incurred during 1999 by On Command for capital
expenditures combined with increased borrowing costs at Ascent, primarily those
costs related to the Company's 11.875% Senior Secured Discount Notes issued in
December 1997.
Other income was $5.5 million for 1999 as compared to $1.7 million during 1998.
This increase is primarily attributable to the recognition of a gain of $1.8
million from the sale of investment securities and an increase in interest
income recognized on the Company's cash and cash equivalent balances during
1999.
Liquidity and Capital Resources
Cash and cash equivalents increased by $15.8 million since December 31, 1998 to
$60.4 million at December 31, 1999. The primary sources of cash during 1999 were
cash from continuing operating activities of approximately $69.4 million,
proceeds of $15.9 million from the sale of 90% of the Company's interest in
Beacon and borrowings under On Command's credit facility of $17.0 million. Cash
was expended primarily for property and equipment at On Command.
Long-term debt totaled $339.9 million at December 31, 1999 as compared to $305.5
million at December 31, 1998. The increase in long-term debt is attributable to
additional borrowings of $17.0 million under On Command's credit facility and
the accretion of interest on the Company's 11.875% Senior Secured Discount
Notes. The Arena Revenue Backed Notes of $139.8 million (the "Arena Notes")
which were issued by the Arena Company's beneficially owned trust are classified
in the Company's condensed consolidated balance sheet in the net assets of
discontinued operations. The Arena Notes are non-recourse to the Arena Company
but the Arena Company is obligated to the noteholders to operate the Pepsi
Center in a first-class manner. Based on borrowings outstanding at December 31,
1999, the Company had access to $42.5 million of long-term financing under the
Ascent credit facility and On Command had access to $20.0 million of long-term
financing under its credit facility, in each case, subject to certain covenant
restrictions.
Other
Ascent Entertainment Group's principal business is providing pay-per-view
entertainment and information services through its 56.5 percent-owned subsidiary
On Command Corporation. In addition, Ascent also provides video distribution
services to NBC and other private networks through its Ascent Network Services
division.
Some of the statements in this news release are forward-looking and relate to
anticipated future operating results. Forward-looking statements are based on
Ascent management's current expectations and assumptions, which may be affected
by subsequent developments and business conditions, and necessarily involve
risks and uncertainties. Therefore, there can be no assurance that actual future
results will not differ materially from anticipated results.
Readers should refer to Ascent's disclosure documents filed with the Securities
and Exchange Commission, including the Company's 1998 Annual Report on Form 10-K
for specific details on some of the factors that may affect operating results.
For a menu of Ascent Entertainment Group's news releases available by fax 24
hours (no charge) or to retrieve a specific release, please call 1-800-758-5804,
ext. 152850, or access the address prnewswire.com on the internet.
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Amounts in millions, except per share information)
Three Months Ended Years Ended
December 31, December 31,
1999 1998 1999 1998
Revenues $67.6 $66.0 $275.4 $261.3
Operating expenses 62.3 46.9 213.4 185.9
Depreciation and amortization 25.0 25.2 104.3 98.2
Operating Loss from continuing
operations (19.7) (6.1) (42.3) (22.8)
Interest expense, net (7.9) (6.7) (29.3) (24.3)
Other income (expense) 1.0 0.7 5.5 1.7
Loss from continuing operations
before taxes and minority interest (26.6) (12.1) (66.1) (45.4)
Income tax benefit 1.2 0.9 2.3 2.3
Loss from continuing operations (25.4) (11.2) (63.8) (43.1)
before minority interest
Minority interest in loss of
subsidiaries, net of tax 3.9 3.1 12.7 11.2
Loss from continuing operations (21.5) (8.1) (51.1) (31.9)
Loss from discontinued operations,
net of tax (12.9) (1.2) (26.3) (17.8)
Loss from sale of discontinued
operations, net of tax (3.5) 0.0 (0.2) 0.0
Net loss ($37.9) ($9.3) ($77.6) ($49.7)
EBITDA (from continuing operations) $5.3 $19.1 $61.9 $75.4
Basic and Diluted Net loss
per common share:
Loss from continuing operations ($0.72) ($0.27) ($1.72) ($1.07)
Discontinued operations (0.55) (0.04) (0.89) (0.60)
Net Loss ($1.27) ($0.31) ($2.61) ($1.67)
EBITDA per share $0.18 $0.64 $2.08 $2.53
Weighted average number of common
shares outstanding 29.8 29.8 29.8 29.8
Note: The condensed consolidated statements of operations for the year
ended December 31, 1998 has been restated to reflect the Company's
Sports related businesses as discontinued operations.
ASCENT ENTERTAINMENT GROUP, INC.
SELECTED FINANCIAL DATA
(UNAUDITED)
(Dollar amounts in millions, except for room data)
Three Months Ended Years Ended
December 31, December 31,
1999 1998 1999 1998
REVENUES:
Multimedia Distribution $61.4 $59.1 $252.9 $238.8
Network Services 6.2 6.9 22.5 22.5
Total $67.6 $66.0 $275.4 $261.3
EBITDA (from continuing operations):
Multimedia Distribution $17.0 $18.1 $75.9 $72.0
Network Services 3.1 2.8 12.2 11.0
Corporate (14.8) (1.8) (26.2) (7.6)
Total $5.3 $19.1 $61.9 $75.4
OPERATING LOSS (from continuing
operations):
Multimedia Distribution ($6.5) ($5.2) ($20.9) ($18.5)
Network Services 1.6 0.9 4.9 3.5
Corporate (14.8) (1.8) (26.3) (7.8)
Total ($19.7) ($6.1) ($42.3) ($22.8)
Room Data (at end of period):
Total Number of Guest -- pay rooms:
On - demand 884,000 829,000
Schedule only 72,000 100,000
956,000 929,000
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
December 31,December 31,
1999 1998
Assets
Current Assets:
Cash and cash equivalents $ 60.4 $ 44.6
Receivables, net 33.5 36.4
Other current assets 3.6 3.4
Net assets of discontinued operations 82.2 -
Total current assets 179.7 84.4
Property and equipment, net 294.5 296.5
Goodwill, net 90.1 96.5
Other assets 17.0 14.1
Net assets of discontinued operations - 132.1
Total Assets $581.3 $623.6
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long term debt $ - $ -
Accounts payable 33.9 30.2
Deferred income 0.8 2.4
Other current liabilities 33.0 24.7
Total current liabilities 67.7 57.3
Long - term debt 339.9 305.5
Other long-term liabilities 2.8 2.4
Total liabilities 410.4 365.2
Minority Interest 71.2 81.9
Stockholders' Equity 99.7 176.5
Total Liabilities and Stockholders' Equity $581.3 $623.6
Note: The condensed consolidated balance sheet as of December 31, 1998
has been restated to reflect the Company's Sports related
businesses as discontinued operations.
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
(in millions)
Years Ended
December 31,
1999 1998
Operating activities:
Net loss $(77.6) $(49.7)
Adjustments to reconcile net loss to net cash
provided from continuing operations:
Depreciation and amortization 104.3 98.2
Minority interest in losses of subsidiary (12.7) (11.2)
Loss from discontinued operations 26.5 17.8
Interest accretion on Senior Secured Notes 17.3 15.5
Provision for loss on investments - 0.9
(Gain)Loss on disposals of property and equipment - 0.1
Changes in operating assets and liabilities 11.6 2.3
Net cash provided by operating activities of 69.4 73.9
continuing operations
Net cash provided by discontinued operations 4.6 0.6
Net cash provided by operating activities 74.0 74.5
Investing activities:
Proceeds from sale of discontinued operations 15.9 -
Purchase of property and equipment (92.8) (86.6)
Other 1.7 3.1
Net cash used in investing activities (75.2) (83.5)
Financing activities - proceeds under credit facilities 17.0 30.0
Net increase in cash and cash equivalents 15.8 21.0
Cash and cash equivalents, beginning of year 44.6 23.6
Cash and cash equivalents, end of year $60.4 $44.6
Note: The condensed consolidated statements of cash flow for the year
ended December 31, 1998 has been restated to reflect the Company's
Sports related businesses as discontinued operations.
SOURCE Ascent Entertainment Group, Inc.
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