SOURCE: Tix Corporation

Tix Corporation

November 12, 2012 09:00 ET

Tix Corporation Reports Third Quarter and First Nine Months 2012 Results

STUDIO CITY, CA--(Marketwire - Nov 12, 2012) - Tix Corporation (the "Company") (OTCQX: TIXC), a leading provider of discount ticketing services, today reported results for the third quarter and first nine months ended September 30, 2012.

In July 2012, the Company announced that it completed the sale of principally all of the assets of its subsidiary, Exhibit Merchandising, LLC. In prior periods, the Company had reported its financial results in two operating segments -- Discount Ticketing Services and Exhibit Merchandising. The financial statements for the third quarter and first nine months ended September 30, 2012 and 2011 reflect the reclassification of the Exhibit Merchandising segment to discontinued operations. As the Company now operates under only one operating segment, Discount Ticketing Services, it will no longer provide segment reporting. 

Tix Corporation's business is operated by its wholly owned subsidiary Tix4Tonight, which sells discount show tickets from ten locations in Las Vegas. Tix4Tonight obtains its inventory of discount tickets under short-term exclusive and non-exclusive agreements with nearly every Las Vegas show along with numerous attractions and tours. Each discount ticket location also offers discount dinner reservations at various restaurants surrounding the Las Vegas strip and downtown, with dining at specific times on the same day or advance in some cases. 

Three Months Ended September 30, 2012 and 2011

Third quarter 2012 revenues decreased 10% to $6.4 million compared with $7.1 million for the same period a year ago. The decline in revenues of $712,000 is due to a general overall decrease in travel to, and consumer spending in Las Vegas; the closing of three of our bestselling shows for which there has been no comparable replacement; and recent demolition work on the Las Vegas strip requiring us to close one of our discount ticket locations at the end of April 2012.

Third quarter 2012 direct operating expenses decreased 8% to $2.5 million compared with $2.7 million for the same period a year ago. Included in these expenses are payroll costs, rents, and utilities. The decrease in expense of $209,000 was primarily due to reduced rents realized from the closure of one of our discount ticket locations in April 2012 and the recent successful negotiation of reduced rents at one of our largest discount ticket locations. 

Third quarter 2012 selling, general and administrative expenses were $2.8 million compared with $3.5 million for the same period a year ago. Included in these expenses are $636,000 of aggregate expenses during the third quarter of 2012 and $1.3 million of aggregate expenses during the same period a year ago, in each case relating to ordinary course legal expenses, expenses for certain non-recurring matters requiring legal and advisory services relating to corporate and governance matters and litigation expenses. Excluding these expenses, selling, general and administrative expenses decreased $42,000, or 2%, to $2.1 million compared to $2.2 million for the same period of the prior year. 

Third quarter 2012 gain from discontinued operations was $55,000 compared to a gain from discontinued operations of $170,000 for the same period a year ago. The Company recently announced that it completed the sale of principally all of the assets and certain of the liabilities of its subsidiary, Exhibit Merchandising, LLC. 

Third quarter 2012 net income was $768,000, or $0.03 per diluted common share, as compared to a net income of $647,000, or $0.03 per diluted common share, reported for the same period a year ago. Adjusted Earnings (as defined and explained below) for the third quarter 2012, which includes adjustments for items such as discontinued operations and expenses related to litigation and related legal matters described below, decreased $476,000, or 19%, to $2.0 million, or $0.08 per diluted common share, as compared to Adjusted Earnings of $2.5 million, or $0.10 per diluted common share, reported for the same period a year ago.

Nine Months Ended September 30, 2012 and 2011

For the first nine months of 2012, revenues decreased 2% to $18.4 million compared to $18.8 million for the same period a year ago. The decrease in revenues of $390,000 is due to a general overall decrease in travel to, and consumer spending in, Las Vegas; the closing of three of our bestselling shows for which there has been no comparable replacement; a large show that closed temporarily to reopen in a smaller venue; and recent demolition work on the Las Vegas strip requiring us to close one of our discount ticket locations at the end of April 2012. 

For the first nine months of 2012, direct operating expenses increased 3% to $7.9 compared to $7.6 million for the same period a year ago. Included in these expenses are payroll costs, rents, and utilities. The increase in expense of $246,000 was due to increases in payroll costs of $331,000, due primarily to the expansion of the number of locations at the end of the first quarter of 2011 leading to a higher year-over-year expense. Rents and utilities expense decreased $85,000 primarily due to reduced rents realized from the closure of one of our discount ticket locations in April 2012 and the recent successful negotiation of reduced rents at one of our largest discount ticket locations. 

For the first nine months of 2012, selling, general and administrative expenses were $8.4 million compared with $8.3 million for the same period a year ago. Included in these expenses are $2.0 million of aggregate expenses during the first nine months of 2012 and $2.2 million of aggregate expenses during the same period a year ago, in each case relating to ordinary course legal expenses, expenses for certain non-recurring matters requiring legal and advisory services relating to corporate and governance matters and litigation expenses. Excluding these expenses, selling, general and administrative expenses increased $249,000, or 4%, to $6.3 million compared to $6.1 million for same period of the prior year. The increase in expense was due to an increase of $141,000 in general legal expenses and an increase in non-cash stock based compensation expense of $188,000. These increases were offset by a decrease of $80,000 in expenses across our remaining operating accounts. 

For the first nine months of 2012, loss from discontinued operations was $544,000 compared to a gain from discontinued operations of $315,000 for the same period a year ago. The Company recently announced that it completed the sale of principally all of the assets and certain of the liabilities of its subsidiary, Exhibit Merchandising, LLC, for a total consideration of $125,000. The sale led to the recording of a loss on sale of discontinued operations of $244,000 and Exhibit Merchandising realized a loss from operations of $300,000 which included $162,000 of depreciation expense, for the first nine months of 2012. 

For the first nine months of 2012, net income was $568,000, or $0.02 per diluted common share, as compared to a net income of $2.2 million, or $0.09 per diluted common share, reported for the same period a year ago. Adjusted Earnings (as defined and explained below) for the first nine months of 2012, which includes adjustments for items such as discontinued operations, expenses related to the litigation and related legal matters and non-routine corporate expenses related primarily to certain non-recurring matters requiring legal and advisory services described below, decreased $696,000, or 12%, to $5.0 million, or $0.20 per diluted common share, as compared to Adjusted Earnings of $5.7 million, or $0.22 per diluted common share, reported for the same period a year ago.

Conclusion

Mitch Francis, Chief Executive Officer of the Company, stated, "Our third quarter 2012 revenue decline reflects the economic realities of the current Las Vegas marketplace. There are a number of large scale construction projects negatively impacting foot traffic along the Strip, including one demolition project which necessitated the closure of one of our locations earlier this year. We were also recently notified that another location, which generated about 17% of our total sales this year, will have to close in January 2013 due to a major hotel renovation project. In response, we are pursuing strong replacement locations that will hopefully open in the middle to end of 2013. We expect these new locations will return us back to continued revenue growth. 

Mr. Francis continued, "We have also experienced the closing of three large shows for which we sold hundreds of tickets daily, without immediate comparable replacements. However, Cirque du Soleil's 'Zarkana' just opened and Cirque du Soleil's 'Michael Jackson' is scheduled to open during the first quarter of next year. Finally, we believe the national reduction in consumer spending has had a negative effect in Las Vegas, contributing to lower ticket sales. We will continue to monitor our performance and profitability and will adjust our operations as much as possible to meet the expectations of both our customers and shareholders." 

Investor Conference Call

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

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 the Company believes is useful to investors. The Company defines Adjusted Earnings as net income plus (a) loss on discontinued operations, (b) interest expense, net, (c) income taxes, (d) depreciation and amortization charges, (e) stock based compensation expense (f) unusual litigation, and (g) expenses for certain non-recurring matters requiring legal and advisory services relating to corporate and governance matters. The Company believes that Adjusted Earnings is a useful measure of 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 as non-cash items over their remaining useful lives in accordance with GAAP. The Company's presentation of Adjusted Earnings may help investors assess the Company's performance before the effect of various items that do not directly affect the Company's ongoing operating performance. The Company also believes that measures similar to the Company's measurement of Adjusted Earnings are widely used in similar entertainment companies to measure operating performance, although Adjusted Earnings as calculated by the Company is not necessarily comparable to similarly titled measures by such other companies. Adjusted Earnings (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.

About Tix Corporation

Tix Corporation (OTCQX: TIXC) provides discount ticketing services. It currently operates ten discount ticket stores in Las Vegas under its Tix4Tonight marquee, which offers up to a 50 percent discount for same-day shows, concerts, attractions and sporting events, as well as discount reservations for dining.

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 historical filings with the Securities and Exchange Commission and, since November 2010, the Company's filings with the OTCQX. The Company assumes no obligation to update these forward-looking statements. A copy of the Company's report for the twelve months ended December 31, 2011 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,  
    2012     2011  
    (Unaudited)        
Assets  
Current assets:            
  Cash   $ 4,081,000     $ 8,077,000  
  Short-term investments - U.S. Treasury securities available-for-sale     2,990,000       -  
  Accounts receivable     52,000       55,000  
  Prepaid expenses and other current assets     206,000       624,000  
  Current assets of operations held for sale     -       1,210,000  
    Total current assets     7,329,000       9,966,000  
                 
Property and equipment, net     1,205,000       1,399,000  
                 
Other assets:                
  Intangible assets:                
    Goodwill     3,120,000       3,120,000  
    Intangibles, net     1,133,000       1,520,000  
    Total intangible assets     4,253,000       4,640,000  
  Deposits and other assets     111,000       319,000  
  Long-term assets of operations held for sale     -       12,000  
    Total other assets     4,364,000       4,971,000  
      Total assets   $ 12,898,000     $ 16,336,000  
                 
Liabilities and Stockholders' Equity  
Current liabilities:                
  Accounts payable and accrued expenses   $ 2,262,000     $ 3,286,000  
  Deferred revenue     154,000       111,000  
  Other current liabilities     154,000       133,000  
  Note payable - short term - net     121,000       584,000  
  Obligation for share purchases - short term     311,000       417,000  
  Share repurchase obligation - short term -- net     -       2,313,000  
  Liabilities of operations held for sale     5,000       663,000  
    Total current liabilities     3,007,000       7,507,000  
                 
Note payable - net     873,000       879,000  
Obligation for share purchases     244,000       453,000  
      Total liabilities     4,124,000       8,839,000  
                 
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; 23,669,831 shares net of 9,955,544 treasury shares, and 23,669,831 shares net of 9,943,247 treasury shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively     2,691,000       2,690,000  
  Additional paid-in capital     92,107,000       91,313,000  
  Obligation for share purchases     (2,018,000 )     (1,968,000 )
  Cost of shares held in treasury     (14,654,000 )     (14,631,000 )
  Accumulated deficit     (69,339,000 )     (69,907,000 )
  Accumulated other comprehensive loss     (13,000 )     -  
    Total stockholders' equity     8,774,000       7,497,000  
      Total liabilities and stockholders' equity   $ 12,898,000     $ 16,336,000  
                       
                       
                       
TIX CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
 
             
    Three Months Ended September 30,  
    2012     2011  
    (Unaudited)     (Unaudited)  
                 
Revenues   $ 6,362,000     $ 7,074,000  
Operating expenses:                
  Direct costs of revenues     2,512,000       2,721,000  
  Selling, general and administrative expenses     2,762,000       3,491,000  
  Depreciation and amortization     288,000       316,000  
    Total costs and expenses     5,562,000       6,528,000  
Income from continuing operations     800,000       546,000  
Other expense:                
  Other expense     (2,000 )     -  
  Interest income     10,000       8,000  
  Interest expense     (26,000 )     (27,000 )
    Other expense, net     (18,000 )     (19,000 )
Income from continuing operations before income tax expense     782,000       527,000  
Income tax expense     69,000       50,000  
Income from continuing operations     713,000       477,000  
Discontinued operations:                
  Income from operations of discontinued operations     55,000       170,000  
    Gain from discontinued operations     55,000       170,000  
Net income     768,000       647,000  
Other comprehensive loss                
  Loss on available-for-sale securities arising during period     (4,000 )     -  
Comprehensive income   $ 764,000     $ 647,000  
                 
Net income per common share - continuing operations                
  Net income per common share - continuing operations - basic   $ 0.03     $ 0.02  
  Net income per common share - continuing operations - diluted   $ 0.03     $ 0.02  
                 
Net income per common share - discontinued operations                
  Net income per common share - discontinued operations - basic   $ 0.00     $ 0.01  
  Net income per common share - discontinued operations - diluted   $ 0.00     $ 0.01  
                 
Net income per common share                
  Net income per common share - basic   $ 0.03     $ 0.03  
  Net income per common share - diluted   $ 0.03     $ 0.03  
                 
Weighted average common shares outstanding - basic     23,669,831       24,355,987  
Weighted average common shares outstanding - diluted     24,421,731       25,233,355  
                 
                 
                 
             


TIX CORPORATION AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
 
             
    Nine Months Ended September 30,  
    2012     2011  
    (Unaudited)     (Unaudited)  
                 
Revenues   $ 18,423,000     $ 18,813,000  
Operating expenses:                
  Direct costs of revenues     7,885,000       7,639,000  
  Selling, general and administrative expenses     8,390,000       8,295,000  
  Depreciation and amortization     872,000       868,000  
    Total costs and expenses     17,147,000       16,802,000  
Income from continuing operations     1,276,000       2,011,000  
Other expense:                
  Other income     1,000       -  
  Interest income     23,000       17,000  
  Interest expense     (78,000 )     (75,000 )
    Other expense, net     (54,000 )     (58,000 )
Income from continuing operations before income tax expense     1,222,000       1,953,000  
Income tax expense     110,000       50,000  
Income from continuing operations     1,112,000       1,903,000  
Discontinued operations:                
  Income (loss) from operations of discontinued operations     (300,000 )     315,000  
  Loss on sale of discontinued operations     (244,000 )     -  
    Gain (loss) from discontinued operations     (544,000 )     315,000  
Net income     568,000       2,218,000  
Other comprehensive loss                
  Loss on available-for-sale securities arising during period     (13,000 )     -  
Comprehensive income   $ 555,000     $ 2,218,000  
                 
Net income per common share - continuing operations                
  Net income per common share - continuing operations - basic   $ 0.05     $ 0.08  
  Net income per common share - continuing operations - diluted   $ 0.05     $ 0.08  
                 
Net income (loss) per common share - discontinued operations                
  Net income (loss) per common share - discontinued operations - basic   $ (0.02 )   $ 0.01  
  Net income (loss) per common share - discontinued operations - diluted   $ (0.02 )   $ 0.01  
                 
Net income per common share                
  Net income per common share - basic   $ 0.02     $ 0.09  
  Net income per common share - diluted   $ 0.02     $ 0.09  
                 
Weighted average common shares outstanding - basic     23,670,732       24,585,410  
Weighted average common shares outstanding - diluted     24,537,725       25,371,477  
                 
   
                 
TIX CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  
   
    Nine Months Ended September 30,  
    2012     2011  
    (Unaudited)     (Unaudited)  
Cash flows from operating activities:                
  Net income   $ 568,000     $ 2,218,000  
  Loss (gain) on discontinued operations     544,000       (315,000 )
  Adjustments to reconcile net income to cash provided by operating activities:                
  Depreciation     485,000       479,000  
  Non-cash interest     82,000       75,000  
  Amortization of intangible assets     387,000       386,000  
  Fair value of options and warrants issued to employees and directors     765,000       577,000  
  Loss on maturity of available-for-sale securities     3,000       -  
  (Increase) decrease in:                
    Accounts receivable     3,000       112,000  
    Prepaid expenses and other assets     626,000       (242,000 )
  Increase (decrease) in:                
    Accounts payable and accrued expenses     (1,024,000 )     (75,000 )
    Deferred revenue     43,000       18,000  
    Other current liabilities     21,000       24,000  
  Net cash provided by operating activities from continuing operations     2,503,000       3,257,000  
  Net cash provided by operating activities from discontinued operations     20,000       1,018,000  
    Net cash provided by operating activities     2,523,000       4,275,000  
                 
Cash flows from investing activities:                
  Purchases of property and equipment     (291,000 )     (164,000 )
  Purchase of available-for-sale securities     (3,006,000 )     -  
  Acquisitions, net of cash acquired     -       (2,000,000 )
    Net cash used in investing activities     (3,297,000 )     (2,164,000 )
                 
Cash flows from financing activities:                
  Cost of treasury stock, net of fees     (23,000 )     (2,526,000 )
  Payment of share repurchase obligation     (2,364,000 )     (1,180,000 )
  Repayment of acquisition note     (500,000 )     (375,000 )
  Payment of obligation for share purchases     (335,000 )     (985,000 )
    Net cash used in financing activities     (3,222,000 )     (5,066,000 )
                 
Net decrease     (3,996,000 )     (2,955,000 )
Cash balance at beginning of period     8,077,000       8,816,000  
Cash balance at end of period   $ 4,081,000     $ 5,861,000  
                 
                 
                 
RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS  
(UNAUDITED)  
   
The following table set forth a reconciliation of consolidated net income to consolidated Adjusted Earnings:  
   
    Three months ended     Three months ended  
    September 30, 2012     September 30, 2011  
                 
Net income   $ 768,000     $ 647,000  
Gain from discontinued operations     (55,000 )     (170,000 )
Income tax expense     69,000       50,000  
Interest expense, net     16,000       19,000  
Litigation expense and non-routine legal and advisory services for corporate and governance matters     636,000       1,323,000  
Stock based compensation expense     253,000       266,000  
Depreciation & amortization     288,000       316,000  
                 
Adjusted Earnings   $ 1,975,000     $ 2,451,000  
                 
                 
    Nine months ended   Nine months ended  
    September 30, 2012   September 30, 2011  
           
Net income   $ 568,000   $ 2,218,000  
Loss (gain) from discontinued operations     544,000     (315,000 )
Income tax expense     110,000     50,000  
Interest expense, net     55,000     58,000  
Litigation expense and non-routine legal and advisory services for corporate and governance matters     2,044,000     2,198,000  
Stock based compensation expense     765,000     577,000  
Depreciation & amortization     872,000     868,000  
               
Adjusted Earnings   $ 4,958,000   $ 5,654,000  
               

Contact Information

  • Contact:
    Steve Handy
    CFO
    818-761-1002