ClubLink Corporation
TSX : LNK

ClubLink Corporation

August 09, 2005 12:49 ET

ClubLink Announces Second Quarter 2005 Results

KING CITY, ONTARIO--(CCNMatthews - Aug. 9, 2005) - For the three months ended July 3, 2005, ClubLink's (TSX:LNK) operating revenue increased 15.7% to $39,948,000 from $34,535,000 in 2004, and net operating income increased 10.7% to $8,162,000 from $7,370,000 in 2004. Net membership fee income decreased 12.9% to $1,444,000 from $1,657,000 in 2004. Earnings changed to a loss of $303,000 from a profit of $64,000 in 2004. Loss per share for the three months ended July 3, 2005 increased to $0.02 cents from breakeven in 2004. Cash flow from operations per share was $0.45 compared to $0.40 in 2004.



For the For the
3 Months Ended 6 Months Ended
July 3, June 27, July 3, June 27,
Financial Highlights 2005 2004 (1) 2005 2004 (1)
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Operations
Operating revenue ($000) 39,948 34,535 51,591 45,274
Net operating income
($000) (2) 8,162 7,370 8,453 7,632
Operating margin (%) (2) 20.4% 21.3% 16.4% 16.9%

Net membership fee
income ($000) (2) 1,444 1,657 3,208 3,245

Earnings before
interest, taxes,
amortization and
other items ($000) (2) 9,606 9,027 11,661 10,877

Net income (loss) ($000) (303) 64 (5,162) (4,334)

Cash flow from
operations ($000) (2) 7,799 7,088 6,538 6,568

Membership Data
Sales and transfer
fees ($000) 8,598 9,554 10,909 12,129
Sales (Members) 555 638 678 788
Resignations and
terminations ($000) 614 202 1,688 1,263
Resignations and
terminations (Members) 80 26 259 162
Cash collected,
net of origination
costs ($000) 5,048 4,858 6,819 6,909
Deferred membership
fees, net at period
end ($000) 34,275 25,662
Golf members at
period end 12,308 11,590

Per Common Share
Data ($)
Basic and diluted
loss (0.02) - (0.30) (0.25)
Basic and diluted
cash flow from
operations (2) 0.45 0.40 0.38 0.37
Cash dividends 0.040 0.035 0.08 0.070
Net book value at
end of period (2) 10.02 10.33
Common Share Data (000)
Shares outstanding
at end of period 17,124 17,403
Weighted average
shares outstanding 17,142 17,560
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Second Quarter 2005 Operating Highlights

Championship golf rounds increased 18.9% to 333,549 from 280,624 in the second quarter of 2004.

Operating revenue increased 15.7% to $39,948,000 from $34,535,000 in the second quarter of 2004. This increase is primarily the result of increases in golf, merchandise, and food and beverage revenue resulting from the additional rounds played during the quarter and annual dues from 718 additional golf members, net of resignations that have joined since June 27, 2004.

Operating expenses and costs of goods sold increased 19.7% to $28,934,000 from $24,169,000 in 2004. This is primarily due to incremental costs from Glencairn Golf Club, National Pines Golf Club and the Talon course at GreyHawk Golf Club which all opened for play in the second quarter of 2004 in addition to new clubhouses at Eagle Ridge and Highland Gate Golf Clubs and the new 9 championship golf holes at Emerald Hills, which all opened in the second quarter of 2005.

Sales and marketing costs decreased 30.2% to $609,000 from $873,000 in 2004 due to cost savings from a reduction in sales and marketing programs. These costs were 1.5% of operating revenue compared to 2.5% in 2004.

General and administrative expenses and provincial capital taxes increased 5.7% to $2,243,000 from $2,123,000 in 2004 and were 5.6% of operating revenue in 2005 compared to 6.1% in 2004.

Net operating income increased 10.7% to $8,162,000 from $7,370,000 in 2004.

Total Golf Members increased 6.2% to 12,308 on July 3, 2005 from 11,590 on June 27, 2004. New membership sales during the second quarter of 2005 decreased 12.3% to $7,204,000 (555 members) from $8,210,000 (638 members) during the second quarter of 2004. The average price of a new membership was $12,980 during the second quarter of 2005 compared to $12,868 during the second quarter in 2004. Transfer fees during the second quarter of 2005 increased to $1,394,000 from $1,344,000 in 2004. Resignations and terminations increased to $614,000 (80 members) from $202,000 (26 members) in 2004. Membership fee instalments received in cash increased to $5,861,000 from $5,215,000 in 2004.

Direct costs of originating membership fees increased to $813,000 from $357,000 in 2004 primarily due to higher advertising activity and the introduction of the Board of Trade Country Club.

Net membership fee income decreased 12.9% to $1,444,000 in 2005 from $1,657,000 in 2004 primarily due to the increase in direct costs of originating membership fees.

Earnings before interest, amortization, taxes and other increased 6.4% to $9,606,000 from $9,027,000 in 2004.

Interest expense increased 27.1% to $5,299,000 from $4,170,000 in 2004 as a result of a 5.6% increase in aggregate debt outstanding on a year-over-year basis and the placement of $95 million long-term (20 years) fully amortizing fixed rate debt during 2004, replacing short-term lower cost floating rate debt.

Earnings declined to a loss of $303,000 from a profit of $64,000 in 2004.

Earnings per share declined to a loss of 2 cents from breakeven in 2004.

Cash flow from operations per share increased to 45 cents from 40 cents in 2004.

Dividends per share increased to 4 cents from 3.5 cents in 2004.

Dividend

The Board of Directors has declared a dividend of 4 cents per common share payable September 15, 2005 to shareholders of record on August 31, 2005.

Normal Course Issuer Bid

On January 25, 2005, ClubLink announced a normal course issuer bid, expiring on January 26, 2006 to purchase up to 858,700 common shares of ClubLink. As of August 9, 2005, ClubLink has repurchased for cancellation 69,700 common shares for an aggregate purchase price of $626,000 or $8.98 per share, excluding commissions. The number of common shares issued and outstanding as of August 9, 2005 is 17,143,589.

ClubLink is Canada's largest owner, operator and developer of golf clubs.

(1) Certain comparative amounts have been restated from those previously presented to conform to the presentation of the 2005 consolidated financial statements.

(2) Net operating income, operating margin, net membership fee income, earnings before interest, taxes, amortization and other items, cash flow from operations, cash flow from operations per share and net book value per share are not recognized measures under Canadian generally accepted accounting principles (GAAP). Management believes these measures are useful supplemental information. Investors should be cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities, as a measure of liquidity and cash flows. ClubLink's method of calculating these measures is consistent from year to year, but may be different than those used by other companies.

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