World Poker Tour
Enterprises (WPTE) took another net loss in its current reporting
quarter, carrying on the trend set last quarter. But the company still
has impressive plans and assets totalling almost $34 million.
Announcing the results this week for the third quarter ended October
3, 2004, the company said that revenue for the three months ended
October 3, 2004 totaled $3.0 million, compared to $0.4 million in
the prior year period.
Net loss for the quarter was $0.5 million and basic and diluted losses
were $0.03 per share. This compares with a net loss of $0.4 million
and basic and diluted losses of $0.03 per share for the quarter ended
September 28, 2003.
Revenues for the current and prior year quarters were derived primarily
from television license fees related to the WORLD POKER TOUR®
(WPT) series. The increase in revenue is primarily due to an increase
in the number of episodes delivered to the Travel Channel, LLC (TRV)
during the third quarter of 2004 compared to the number of episodes
delivered to TRV during the third quarter of 2003. The WORLD POKER
TOUR airs on Travel Channel Wednesday nights at 9 PM ET/PT.
Also contributing to the increase was revenue of approximately $0.6
million related to international television licensing, product licensing,
host fees, sponsorship, and merchandise included in total revenue
for the three months ended October 3, 2004. In April 2004, TRV exercised
its option to broadcast Season Three, the first of a possible five
additional seasons of WORLD POKER TOUR covered by the option. WPT
Season
Three episodes are currently in production, and are scheduled to begin
airing in March 2005. WPT receives fixed license payments from TRV
subject to satisfaction of production milestones and other conditions.
Domestic television license revenue is recognized upon delivery of
completed episodes to TRV.
Production costs increased from $0.3 million for the three months
ended September 28, 2003 to $1.9 million for the three months ended
October 3, 2004. The increase in production costs is primarily due
to an increase in the number of episodes delivered to TRV during the
third quarter of 2004 compared to the number of episodes delivered
to TRV during the third quarter of 2003. Overall gross margins were
35% for the three months ended October 3, 2004 compared to 26% for
the three months ended September 28, 2003.
The higher gross margins in the current year period were due primarily
to higher international television and product licensing revenues
in 2004 compared to the same quarter in 2003.
Selling and administrative expenses increased from $0.5 million for
the three months ended September 28, 2003 to $1.5 million for the
three months ended October 3, 2004. This increase is primarily due
to additional legal and consulting fees incurred during the 2004 period
associated with business development and an increase in payroll costs
resulting from growth related to becoming an independent public company.
WPTE completed its initial public offering on August 13, 2004, at
which time WPTE sold 4,000,000 shares of common stock with WPTE receiving
proceeds of approximately $28.5 million, net of estimated offering
expenses and underwriting discounts. On September 17, 2004, the company's
underwriters exercised their over-allotment option to acquire an additional
600,000 common shares, resulting in additional net proceeds of $4.4
million to WPTE. Net proceeds from the offering, other than $0.2 million
used to repay amounts outstanding under WPTE's promissory note to
its majority stockholder, have been used and are expected to be used
for working capital and to expand WPTE's entertainment production
business.
At the end of the quarter, WPTE had cash, cash equivalents, and short-term
investments of $33.6 million.
"We executed well this past quarter," commented
Steve Lipscomb, President of WPT Enterprises, Inc. "We
completed our initial public offering, expanded our international
distribution, and introduced branded consumer products to the marketplace
in time for the holidays. As the WORLD POKER TOUR continues its strong
run with Season Three, we remain equally excited about the extension
of the WORLD POKER TOUR brand into new business opportunities outside
of the world of television."