SOURCE: Tix Corporation

November 15, 2010 16:05 ET

Tix Corporation Reports 2010 Third Quarter and First Nine Months Results; Adjusted EBITDA Is $1.6 Million for the Third Quarter 2010; Cash Flows From Operations Improves to $2.3 Million

STUDIO CITY, CA--(Marketwire - November 15, 2010) - Tix Corporation (the "Company") (OTCQX: TIXC), a leading entertainment company providing discount and premium ticketing services, event and branded merchandising and production / promotion of live concert and theatrical events, today reported results for the third quarter and nine months ended September 30, 2010.

Total third quarter 2010 revenue increased 88% to $17.6 million compared with $9.4 million for the same period a year ago. All of the Company's operating segments reported increased revenues in the third quarter of fiscal year 2010 as compared to 2009. Ticketing Services increased 30% to a record $5.9 million, Live Entertainment unseasonably increased 268% to $9.3 million, and Exhibit Merchandising increased 5% to $2.4 million. Consolidated net loss for the third quarter was $3.3 million, which included a goodwill impairment charge of $4.2 million related to our Live Entertainment segment. Excluding the goodwill impairment charge, the Company would have reported a record quarterly net income of $927,000 or $0.03 per diluted common share for the third quarter 2010 as compared to a net loss of $161,000 or ($0.00) per diluted common share reported for the third quarter of 2009.

For the first nine months of the year, the Company reported revenue of $49.2 million compared with $56.1 million in 2009. The decline in revenue was primarily due to a decrease in revenue from our Live Entertainment and Exhibit Merchandising segments offset by an increase in revenues from our Ticketing Services segment. Consolidated net loss for the first nine months of the year was $4.6 million, which includes a goodwill impairment charge of $4.2 million discussed above, or a loss of $0.15 per diluted common share. Excluding the goodwill impairment charge, consolidated net loss for the first nine months would have been $378,000 or ($0.01) per diluted common share compared to net income of $793,000, or $0.02 per diluted common share reported in the first nine months of 2009.

The Company announced during the quarter that it hired an investment banker to explore certain strategic alternatives for its Live Entertainment segment, including its potential sale. During this process, it became apparent that the carrying value of the goodwill related to this segment was impaired and the Company recorded an impairment charge accordingly. Excluding the goodwill impairment charge, the Company had a strong third quarter. During the three months ended September 30, 2010, the Company's earnings before interest, taxes, depreciation, amortization and the goodwill impairment charge was $1.6 million compared to $457,000 in the prior year. In addition, for the nine months ended September 30, 2010, the Company's cash flows from operations increased to $2.3 million compared to $1.6 million for the same period of the prior year.

The primary driver of the increase in profitability came from the Tix4Tonight discount ticketing division which recorded record revenue of $5.7 million, a 26% increase over the $4.5 million in revenues in the prior year. Tix4Tonight's operating income for the third quarter 2010 was $2.3 million compared to $1.8 million in the prior year. The Company believes it is important to emphasize the volume of transactions that it conducts at its Tix4Tonight discount ticketing division. While the Company records revenues from its Tix4Tonight discount ticketing division on a net basis, which only includes fees and commissions, on a gross level the Company transacted approximately $25 million in gross ticket sales, a 26% increase over the comparable period in 2009.

As the Company announced last quarter, it expects to see continued revenue growth for the remainder of this fiscal year. Exhibit Merchandising now has four specialty store locations up and running with no location movements planned for the remainder of this year. Exhibit Merchandising also plans to open its Cairo, Egypt specialty store located at the Cairo museum in the latter half of the fourth quarter of this year. With regard to the Company's Live Entertainment segment, and as it announced last quarter, it anticipated an unseasonable increase in revenues due to the portfolio of shows and their schedules going into the third quarter of 2010. While the Company is still reviewing its strategic alternatives for this segment, the fourth quarter of this year is expected to be its strongest due to the seasonality of the holiday season. Lastly, the Company's ticketing services segment continues to grow steadily.

Third Quarter Segmental Operating Results

Ticketing Services Segment

Overall revenue from the Company's Ticketing Services segment, which includes revenue from discount and premium ticket sales, increased 30% to $5.9 million for the quarter compared to $4.6 million in the same period in 2009. The increase in Ticketing Services revenues is the result of a $1.2 million, or 26% increase in Tix4Tonight discount ticketing division revenues and an increase of $174,000 in Tix4AnyEvent premium ticket revenues.

Operating income was $2.1 million during the quarter compared to $1.9 million in the same period in 2009 due primarily to our increased ticket sales offset by a decline in our direct gross margins. Our gross margins declined to 57% in the third quarter of 2010 as compared to 64% in the comparable period in 2009 due to increased rent expense and planned increases in additional staff to manage our continued growth.

Exhibit Merchandising Segment

Overall revenues from the Company's Exhibit Merchandising segment, which operates retail specialty stores for touring museum exhibitions and touring theatrical productions, was $2.4 million for the quarter compared to $2.3 million for the same period in 2009. Revenue is primarily derived from the Company's specialty retail stores associated with the sale of merchandise related to touring exhibits and for the quarter was mainly derived from "Tutankhamun and The Golden Age of the Pharaohs."

The $113,000 increase in revenues during the third quarter of 2010 is due to the increased number of exhibits compared to the prior year period. The four current exhibits are titled, 'Tutankhamun and The Golden Age of the Pharaohs', 'Tutankhamun the Golden King and the Great Pharaohs', 'Real Pirates: The Untold Story of the Whydah from Slave Ship to Pirate Ship' and our newest exhibit 'Cleopatra: The Search for the Last Queen of Egypt' which opened in Philadelphia on June 5, 2010, and is anticipated to run until January 2, 2011, before moving to four other cities that are currently scheduled. Operating income for the third quarter of 2010 was $143,000 compared to $146,000 during the prior year period.

Live Entertainment Segment

Tix Productions, which produces and presents live entertainment events, generated revenues of $9.3 million during the third quarter of 2010, compared to $2.5 million in the prior year period. The $6.8 million increase in revenues was due to an increase in show dates in the third quarter of 2010. Historically, this segment experiences significant volatility from quarter to quarter.

As noted earlier, the Company announced during the third quarter that it hired an investment banker to explore certain strategic alternatives including the sale of the Live Entertainment segment. During this process, it became apparent that the carrying value of the goodwill related to this segment was impaired and we recorded a charge of $4.2 million, accordingly. Excluding this impairment charge, our Live Entertainment segment recorded an operating loss of $324,000 compared to an operating loss of $818,000 in the prior year period.

The Company continues to work with its investment banker to explore strategic alternatives for this segment, including the possible sale of this segment.

Conclusion

Mr. Francis, Chief Executive Officer of Tix Corporation, concluded, "We remain firmly committed to attaining profitable growth through the execution of our strategic plan. We are focused on becoming the leading discount ticket seller in the United States and we are evaluating the appropriate course of action on our other segments. Our strong balance sheet and debt-free position enable us to take advantage of the many growth opportunities we are seeing in our markets."

Investor Conference Call

The Company will not host a conference call following this earnings release. Investors are encouraged to contact the Company's investor relations officer, Steve Handy, CFO, at (818)761-1002 with any questions.

Update on Announcement to Delist from NASDAQ and Deregister its Common Stock

On September 28, 2010, the Company announced its plans to delist from the NASDAQ Capital Market and move its stock listing to the OTCQX marketplace. In addition, the Company announced its intention to deregister its common stock under the Securities Exchange Act of 1934, as amended, subject to the approval of the Securities and Exchange Commission (SEC). On October 15, 2010, the Company delisted its common stock from the NASDAQ Capital Market and moved its stock listing to the OTCQX marketplace. On November 5, 2010, the Company filed a Form 15 to deregister its common stock with the SEC. As a result, the Company will no longer file annual, quarterly and current reports with the SEC. As part of the OTCQX listing requirements, the Company is required to prepare and post material news, quarterly financial reports and annual audited financial reports on the OTCQX's website (www.otcqx.com).

Non-GAAP Financial Measure

Included in this press release is a "non-GAAP financial measure," which is a measure of the Company's historical or future performance that is different from measures calculated and presented in accordance with GAAP but that Tix Corporation believes is useful to investors. The following discussion defines Adjusted EBITDA and presents the reasons the Company believes it is a useful measure of the Company's performance. Tix Corporation defines Adjusted EBITDA as net income plus (a) interest expense, net, (b) income taxes, (c) depreciation and amortization, and (d) asset impairment charges. Adjusted EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures by other companies. In addition, Adjusted EBITDA (a) does not represent net income or cash flows from operations as defined by GAAP, (b) is not necessarily indicative of cash available to fund the Company's cash flow needs, and (c) should not be considered as an alternative to net income, operating income, cash flows from operating activities or the Company's other financial information as determined under GAAP. Management believes Adjusted EBITDA is useful to an investor in evaluating the Company's operating performance because a significant portion of its assets consists of goodwill and intangible assets and property and equipment that are amortized and depreciated over their remaining useful lives in accordance with GAAP. Because amortization and depreciation are non-cash items, management believes that presentation of Adjusted EBITDA is a useful measure of the Company's operating performance. Also, management believes measures such as Adjusted EBITDA are widely used in the entertainment industries to measure operating performance. Therefore, the Company presents Adjusted EBITDA because it may help investors to compare Tix Corporations' ongoing performance before the effect of various items that do not directly affect the Company's ongoing operating performance.

About TIX Corporation

Tix Corporation (OTCQX: TIXC) is an integrated entertainment company providing discount and premium ticketing services, event and branded merchandising, and production / promotion of live concert and theatrical events. It currently operates eleven discount ticket stores in Las Vegas under the Tix4Tonight marquee, and offers up to a 50 percent discount for same-day shows, concerts, attractions and sporting events, as well as discount reservations for dining. The Company also offers premium tickets to concerts, theater and sporting events throughout the United States under its Tix4AnyEvent brand. The Company's Exhibit Merchandising operation is engaged in branded merchandise development and sales activities related to museum exhibitions and other events, including the King Tutankhamun, Cleopatra and Real Pirates tours; selling themed souvenir memorabilia and collectors' items in specialty stores in conjunction with the specific events and venues. Tix Productions is dedicated to live concert and theatrical promotion and production throughout the United States, Canada and Europe, and operates under the banners of Magic Arts & Entertainment and NewSpace Entertainment.

Safe Harbor Statement

Except for the historical information contained herein, certain matters discussed in this press release are forward-looking statements which involve risks and uncertainties. These forward-looking statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are discussed in the Company's various filings with the Securities and Exchange Commission and the OTCQX. The Company assumes no obligation to update these forward-looking statements. A copy of the Company's quarterly report for the three and nine months ended September 30, 2010 can be found on the Company website at www.tixcorp.com or at www.otcqx.com.


                     TIX CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                              September 30,   December 31,
                                                  2010           2009
                                              -------------  -------------
                                               (Unaudited)
                             Assets
Current assets:
  Cash                                        $   9,145,000  $   9,885,000
  Accounts receivable, including show
   revenues earned but not billed                   214,000      1,911,000
  Advances to vendors, net                                -        964,000
  Inventory, net                                  1,952,000      2,172,000
  Capitalized theatrical costs                      567,000              -
  Prepaid expenses and other current assets       1,623,000      1,350,000
                                              -------------  -------------
     Total current assets                        13,501,000     16,282,000

Property and equipment, net                       1,533,000      1,308,000
                                              -------------  -------------
Other assets:
  Intangible assets:
     Goodwill                                     2,879,000      5,895,000
     Intangibles, net                             4,245,000      4,499,000
                                              -------------  -------------
     Total intangible assets                      7,124,000     10,394,000
  Investments in and advances to
   nonconsolidated affiliates                       699,000      1,052,000
  Capitalized theatrical costs                            -        368,000
  Deposits and other assets                         152,000        158,000
                                              -------------  -------------
     Total other assets                           7,975,000     11,972,000
                                              -------------  -------------
        Total assets                          $  23,009,000  $  29,562,000
                                              =============  =============

              Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                            $   3,790,000  $   6,357,000
  Accrued expenses                                1,138,000      1,797,000
  Deferred revenue                                  969,000        160,000
  Other current liabilities                         181,000        120,000
                                              -------------  -------------
     Total current liabilities                    6,078,000      8,434,000
                                              -------------  -------------

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value; 500,000
   shares authorized; none issued Common Stock,
   $.08 par value; 100,000,000 shares authorized;
   31,123,357 shares net of 2,340,103 treasury
   shares, issued at  September 30, 2010 and
   December 31, 2009 respectively                 2,678,000      2,678,000
  Additional paid-in capital                     90,362,000     89,955,000
  Cost of 2,340,103 shares held in treasury      (4,610,000)    (4,610,000)
  Accumulated deficit                           (71,505,000)   (66,902,000)
  Accumulated other comprehensive income              6,000          7,000
                                              -------------  -------------
     Total stockholders' equity                  16,930,000     21,128,000
                                              -------------  -------------
        Total liabilities and stockholders'
         equity                               $  23,009,000  $  29,562,000
                                              =============  =============





                     TIX CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                 (LOSS)
                               (UNAUDITED)

                                                  Three Months Ended
                                                     September 30,
                                              ----------------------------
                                                  2010           2009
                                              -------------  -------------
Revenues                                      $  17,603,000  $   9,362,000
                                              -------------  -------------
Operating expenses:
  Direct costs of revenues                       12,617,000      5,341,000
  Selling and marketing expenses                    165,000        229,000
  General and administrative expenses,
   including non-cash equity-based costs of
   $170,000 and $528,000 in 2010 and 2009,
   respectively (including $170,000 and
   $342,000 for officers, directors and
   employees in 2010 and 2009, respectively)      3,271,000      3,398,000
  Impairment of goodwill                          4,225,000              -
  Depreciation and amortization                     596,000        625,000
                                              -------------  -------------
Total costs and expenses                         20,874,000      9,593,000
                                              -------------  -------------
     Operating loss                              (3,271,000)      (231,000)
                                              -------------  -------------
Other:
  Other income                                       71,000         63,000
  Interest income                                     3,000         10,000
  Interest expense                                   (1,000)        (3,000)
                                              -------------  -------------
Other income, net                                    73,000         70,000
                                              -------------  -------------
     Net loss before income tax expense          (3,198,000)      (161,000)
Current income tax expense                          100,000              -
                                              -------------  -------------
Net loss                                         (3,298,000)      (161,000)
  Other comprehensive income (loss)
     Foreign currency translation adjustments       (17,000)         4,000
                                              -------------  -------------
Comprehensive loss                            $  (3,315,000) $    (157,000)
                                              =============  =============
Net loss per common share -
  Basic                                       $       (0.11) $       (0.00)
                                              =============  =============
  Diluted                                     $       (0.11) $       (0.00)
                                              =============  =============
Weighted average common shares outstanding -
  Basic                                          31,123,357     32,439,015
                                              =============  =============
  Diluted                                        31,123,357     32,439,015
                                              =============  =============





                      TIX CORPORATION AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                              INCOME (LOSS)
                               (UNAUDITED)

                                                    Nine Months Ended
                                                      September 30,
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------

Revenues                                        $ 49,159,000  $ 56,116,000
                                                ------------  ------------
Operating expenses:
   Direct costs of revenues                       34,707,000    41,677,000
   Selling and marketing expenses                    941,000     1,416,000
   General and administrative expenses,
    including non-cash equity-based costs of
    $407,000 and $1,379,000 in 2010 and 2009,
    respectively (including $407,000 and
    $1,035,000 for officers, directors and
    employees in 2010 and 2009, respectively)     11,915,000    10,491,000
   Impairment of goodwill                          4,225,000             -
   Depreciation and amortization                   1,884,000     1,872,000
                                                ------------  ------------
Total costs and expenses                          53,672,000    55,456,000
                                                ------------  ------------
      Operating income (loss)                     (4,513,000)      660,000
                                                ------------  ------------
Other:
   Other income                                       98,000       217,000
   Interest income                                    28,000        32,000
   Interest expense                                   (5,000)      (10,000)
                                                ------------  ------------
Other income, net                                    121,000       239,000
                                                ------------  ------------
      Net income (loss) before income tax
       expense                                    (4,392,000)      899,000
Current income tax expense                           211,000       106,000
                                                ------------  ------------
Net income (loss)                                 (4,603,000)      793,000
   Other comprehensive income (loss)
      Foreign currency translation adjustments        (1,000)       18,000
                                                ------------  ------------
Comprehensive income (loss)                     $ (4,604,000) $    811,000
                                                ============  ============
Net income (loss) per common share -
   Basic                                        $      (0.15) $       0.02
                                                ============  ============
   Diluted                                      $      (0.15) $       0.02
                                                ============  ============
Weighted average common shares outstanding -
   Basic                                          31,123,357    32,368,397
                                                ============  ============
   Diluted                                        31,123,357    32,677,535
                                                ============  ============





                       TIX CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                    Nine Months Ended
                                                      September 30,
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------

Cash flows from operating activities:
  Net income (loss)                             $ (4,603,000) $    793,000
    Adjustments to reconcile net income (loss)
     to cash provided by operating activities:
    Impairment of goodwill                         4,225,000             -
    Depreciation                                     443,000       397,000
    Amortization of intangible assets              1,441,000     1,475,000
    Fair value of common stock issued for
     services to employees                                 -         8,000
    Fair value of common stock issued for
     services to consultants                               -       119,000
    Fair value of options issued to employees
     and directors                                   407,000     1,027,000
    Fair value of warrants issued to
     consultants                                           -       225,000
    Loss on advance to vendors                       991,000             -
    Change in allowance of inventory                 (56,000)       10,000
    (Increase) decrease in:
      Accounts receivable                          1,697,000       387,000
      Advances to vendors                            (27,000)   (1,580,000)
      Advances to non consolidated affiliates         37,000             -
      Inventory                                      276,000     1,174,000
      Prepaid expenses and other current assets     (273,000)     (485,000)
      Capitalized theatrical costs, deposits
       and other assets                             (193,000)   (1,833,000)
    Increase (decrease) in:
      Accounts payable and accrued expenses       (2,952,000)      (42,000)
      Income taxes payable                                 -       (89,000)
      Deferred revenue                               809,000        43,000
      Deferred rent                                  106,000       (50,000)
                                                ------------  ------------
        Net cash provided by operating
         activities                                2,328,000     1,579,000
                                                ------------  ------------

Cash flows from investing activities:
  Purchases of property and equipment               (520,000)     (197,000)
  Purchase of All Access Entertainment            (1,500,000)            -
                                                ------------  ------------
        Net cash used in investing activities     (2,020,000)     (197,000)
                                                ------------  ------------

Cash flows from financing activities:
  Cost of Treasury Stock                                   -      (463,000)
  Payment of acquisition note                     (1,000,000)            -
  Payments on capital lease obligations              (47,000)      (39,000)
  Net proceeds from exercise of options and
   warrants                                                -        23,000
                                                ------------  ------------
        Net cash used in financing activities     (1,047,000)     (479,000)
                                                ------------  ------------

Effect of exchange rate changes on cash               (1,000)       18,000

Change in Cash:
  Net (decrease) increase                           (740,000)      921,000
  Balance at beginning of period                   9,885,000     9,192,000
                                                ------------  ------------
  Balance at end of period                      $  9,145,000  $ 10,113,000
                                                ============  ============





             Consolidating Statement of Operations (unaudited)
                       Three months ended September 30,

                           Exhibit                            Consolidated
               Ticketing   Merchand-     Live                      and
               Services     ising    Entertainment Corporate     Combined
               ---------- ---------- -----------  -----------  -----------
2010
Revenue        $5,906,000 $2,399,000 $ 9,298,000  $         -  $17,603,000
Direct cost of
 revenues       2,556,000  1,320,000   8,741,000            -   12,617,000
Selling,
 general and
 administrative
 expenses       1,029,000    726,000     682,000      999,000    3,436,000
Impairment of
 goodwill               -          -   4,225,000            -    4,225,000
Depreciation
 and
 amortization     178,000    210,000     199,000        9,000      596,000
               ---------- ---------- -----------  -----------  -----------
Operating
 income (loss) $2,143,000 $  143,000 $(4,549,000) $(1,008,000) $(3,271,000)
               ========== ========== ===========  ===========  ===========
2009
Revenue        $4,550,000 $2,286,000 $ 2,526,000  $         -  $ 9,362,000
Direct cost of
 revenues       1,613,000  1,321,000   2,407,000            -    5,341,000
Selling,
 general and
 administrative
 expenses         874,000    524,000     741,000    1,488,000    3,627,000
Depreciation
 and
 amortization     131,000    295,000     196,000        3,000      625,000
               ---------- ---------- -----------  -----------  -----------
Operating
 income (loss) $1,932,000 $  146,000 $  (818,000) $(1,491,000) $  (231,000)
               ========== ========== ===========  ===========  ===========



              Consolidating Statement of Operations (Unaudited)
                       Nine months ended September 30,

                          Exhibit
               Ticketing  Merchand-     Live
               Services    ising    Entertainment  Corporate  Consolidated
             ----------- ----------  -----------  -----------  -----------

2010
Revenue      $15,747,000 $6,767,000  $26,645,000  $         -  $49,159,000
Direct cost
 of revenues   6,738,000  3,900,000   24,069,000            -   34,707,000
Selling,
 general and
 administra-
 tive expen-
 ses           4,719,000  2,094,000    2,707,000    3,336,000   12,856,000
Impairment
 of goodwill           -          -    4,225,000            -    4,225,000
Depreciation
 and
 amortization    476,000    787,000      596,000       25,000    1,884,000
             ----------- ----------  -----------  -----------  -----------
Operating
 income
 (loss)      $ 3,814,000 $  (14,000) $(4,952,000) $(3,361,000) $(4,513,000)
             =========== ==========  ===========  ===========  ===========

2009
Revenue      $13,375,000 $7,396,000  $35,345,000  $         -  $56,116,000
Direct cost
 of revenues   4,876,000  4,424,000   32,377,000            -   41,677,000
Selling,
 general and
 administrative
 expenses      2,649,000  1,791,000    3,075,000    4,392,000   11,907,000
Depreciation
 and
 amortization    385,000    888,000      591,000        8,000    1,872,000
             ----------- ----------  -----------  -----------  -----------
Operating
 income
 (loss)      $ 5,465,000 $  293,000  $  (698,000) $(4,400,000) $   660,000
             =========== ==========  ===========  ===========  ===========





              RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
                                (Unaudited)

The following table set forth a reconciliation of consolidated net income
to consolidated Adjusted EBITDA:

                                    Three months   Three months
                                        ended          ended
                                    September 30,  September 30,
                                        2010           2009
                                    -------------  -------------
Net income (loss)                   $  (3,298,000) $    (161,000)
Interest, net                              (2,000)        (7,000)
Income taxes                              100,000              -
Goodwill impairment                     4,225,000              -
Depreciation and amortization               596,000        625,000
                                    -------------  -------------

Adjusted EBITDA                     $   1,621,000  $     457,000
                                    =============  =============


                                     Nine months    Nine months
                                        ended          ended
                                    September 30,  September 30,
                                        2010           2009
                                    -------------  -------------
Net income (loss)                   $  (4,603,000) $     793,000
Interest, net                             (23,000)       (22,000)
Income taxes                              211,000        106,000
Goodwill impairment                     4,225,000              -
Depreciation and amortization           1,882,000      1,872,000
                                    -------------  -------------

Adjusted EBITDA                     $   1,692,000  $   2,749,000
                                    =============  =============

Contact Information

  • Contact:
    Steve Handy
    CFO818-761-1002