World Poker Tour Enterprises Releases Report for Third QuarterEarnings Are Down from Same Quarter Last Year |
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WPT Enterprises, Inc. (WPTE) today announced results for the three months ended Oct. 2, 2005.
On Oct. 2, 2005, WPTE had no debt, and cash, cash equivalents, and short-term investments totaling $30.5 million.
Revenues for the third quarter of 2005 were $2.1 million, compared to $3 million in the 2004 period, a 28.5 percent decrease. The net loss for the quarter was $1.6 million or a loss per fully diluted share of $0.08, compared to a net loss of $0.5 million, or $0.03 per fully diluted share, in the 2004 period.
Domestic television license revenues were $0.4 million in the third quarter of 2005, a decrease from $2.4 million in the third quarter of 2004. In a press release, WPTE wrote the decline was due to the delivery of only one season four episode during the third quarter of 2005. Six episodes of season two were delivered during the comparable prior year period.
Product licensing revenues were a highlight, increasing to $0.9 million in the third quarter of 2005 compared to $0.2 million in the third quarter of 2004. It appears WPTE is starting to see the fruits of its relationship with licensing and marketing company Brandgenuity, which helped broker deals with about 40 companies to produce more than 100 different WPT products. International television licensing revenues increased to $0.4 million in the third quarter of 2005 from $0.3 million in the third quarter of 2004. The increase was attributable to additional distribution agreements in place for 2005.
Cost of revenues decreased to $0.6 million in the third quarter of 2005 from $1.9 million in the third quarter of 2004. WPTE attribute the decrease to costs associated with the delivery of fewer episodes of the World Poker Tour television show. Production costs of approximately $0.2 million attributable to the premiere season of the Professional Poker Tour (PPT) were expensed during the quarter in accordance with WPTE's policy to expense production costs if a firm commitment or an executed distribution agreement is not in place.
Additionally, cost of revenues in the third quarter of 2005 included approximately $0.2 million of noncash compensation benefits related to consultant stock option awards compared to $0.3 million of noncash compensation expense related to consultant stock options in the comparable prior year period.
Overall gross margins were 73.6 percent in the third quarter of 2005 compared to 34.7 percent in the third quarter of 2004. The higher gross margins in the third quarter of 2005 primarily result from the reduction of delivery of television episodes in the quarter, and increased product licensing revenues.
Selling and administrative expenses increased to $3.3 million in the third quarter of 2005 compared to $1.5 million in the third quarter of 2004. This increase is primarily due to marketing and operating costs associated with the WPTE's new Internet gaming venture, WPTonline.com, as well as additional headcount costs, product licensing commissions, and legal and independent accountants' fees incurred during the 2005 period. Revenues in the fourth quarter of 2005 are forecast to range from $4.5 to $5.0 million. This is attributable to an expected decrease in WPT episodes delivered from eight in the fourth quarter of 2004 to four in the fourth quarter of 2005.
The remaining 16 episodes of season four are expected to be delivered during the first and second quarters of 2006. Additionally, WPTE does not expect to realize revenues associated with the PPT in the fourth quarter of 2005 as it does not expect to have a distribution agreement in place. The Company also expects to continue to increase its sales and marketing expenses related to WPTonline.com in the fourth quarter of 2005.
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