Outdoor Channel Holdings Reports Third Quarter 2009 Results

November 3, 2009

Temecula, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Outdoor Channel Holdings, Inc. (Nasdaq: OUTD) today reported an increase in total revenues of 58 percent for the three-month period ended September 30, 2009 due largely to the acquisition of Winnercomm Inc.

Total revenues amounted to $23.6 million for the 2009 third quarter, compared with $15.0 million in the corresponding period a year ago. For the first nine months of 2009, total revenues were $59.8 million, compared with $39.7 million in the corresponding period a year ago.

Advertising revenue for the 2009 third quarter decreased 5.6 percent to $9.9 million from $10.5 million in the prior-year period. For the first nine months of 2009, advertising revenues were $24.8 million compared to $26.6 million in the prior-year period.

Subscriber fees totaled $4.4 million for the third quarter of 2009 compared to subscriber fees of $4.5 million in the prior-year period. This slight decrease is generally a result of adding a significant number of subscribers during the quarter. For the first nine months of 2009, subscriber fees totaled $14.4 million compared to $13.1 million in the prior-year period.

In January of 2009, Outdoor Channel Holdings acquired certain assets of Winnercomm Inc. and its related entities. The revenues generated by Winnercomm are reported as "Production services." Production services revenue totaled $9.3 million and $20.6 million during the 2009 third quarter and nine month period, respectively. These revenues were comprised primarily of production services for customer-owned telecasts and marketing.

"During the third quarter we continued to execute our growth strategy through further investments in our category leading content, securing broad distribution gains nationwide, and strengthening our presence across multiple platforms," said Roger L. Werner, President and Chief Executive Officer. "We successfully expanded the distribution of our network through a series of tier migrations and system launches and have demonstrated industry-leading subscriber growth over the past year. While our advertising revenues continue to be impacted by the challenging environment, we remain confident in our long term growth prospects given our current market position. Looking forward, we believe we will be able to strengthen our growth profile by building on our compelling programming, multi-platform presence and strong advertising and distribution relationships."

Outdoor Channel Holdings posted a net income of $1.4 million, or $0.05 per diluted share, for the 2009 third quarter, compared with net income of $2.4 million, or $0.09 per diluted share, in the prior-year period. For the 2009 nine-month period, the Company posted a net loss of $0.9 million, or ($0.04) per diluted share compared to a net income of $1.9 million, or $0.07 for the prior-year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, amounted to $4.2 million for the 2009 third quarter, compared with $5.4 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $3.8 million for the 2009 third quarter compared to $5.4 million in the prior-year period.

For the nine month period, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $5.3 million compared to $7.0 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $8.0 million for the 2009 nine month period compared to $7.0 million in the prior-year period.

Investor Conference Call

Outdoor Channel Holdings' management will host an investor conference call today, November 3, 2009, at 2 p.m. PST (5 p.m. EST) to review the company's financials and operations for its 2009 third quarter ended September 30, 2009. Investment professionals are invited to participate in the live call by dialing 866-788-0543 (domestic) or 857-350-1681 (international) and using participant passcode 66500972. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the company's Web site, www.outdoorchannel.com. For those who are not able to listen to the live broadcast, the call will be archived on the web site for one year. A telephonic playback of the conference call also will be available through 5 p.m. PST (8 p.m. EST), November 10, 2009, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 92704107.

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's largest and highest quality producers of live sporting events and sports series for cable and broadcast television. Winnercomm also owns and operates the patented Skycam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information please visit www.outdoorchannel.com.

Nielsen Media Research Universe Estimates for Outdoor Channel

Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide. Nielsen estimated that Outdoor Channel had approximately 33.1 million cable and satellite subscribers for November 2009. Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.

Use of Non-GAAP Financial Information

This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. The company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, provides greater comparability regarding its ongoing operating performance. This information is not intended to be considered in isolation or as a substitute for net income (loss) calculated in accordance with U.S. GAAP. A reconciliation of the company's U.S. GAAP information to EBITDA, adjusted for the effects of share-based compensation expense and acquisition and integration costs is provided in the attached table.

Safe Harbor Statement

Statements in this news release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements, without limitation, about our expectations, beliefs, intentions, strategies regarding the future long-term value of the company resulting from the company's current actions or strategic initiatives and the future anticipated value of Outdoor Channel to our audience, distributors and advertisers. The company's actual results could differ materially from those discussed in any forward-looking statements. The company intends that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such statements involve significant risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) service providers discontinuing or refraining from carrying Outdoor Channel; (2) a decline in the number of viewers from having Outdoor Channel placed in unpopular cable or satellite packages, or increases in subscription fees, established by the service providers; (3) liabilities resulting from an aerial camera falling; (4) a decrease in advertising revenue as a result of a deterioration in general economic conditions; (5) managing the company's growth and the integration of acquisitions; and other factors which are discussed in the company's filings with the Securities and Exchange Commission. For these forward-looking statements, the company claims the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

                  OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
                  Condensed Consolidated Statements of Operations
                  (unaudited, in thousands, except per share data)


                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                        2009      2008      2009      2008

    Revenues:
      Advertising                     $9,881   $10,472   $24,780   $26,594
      Subscriber fees                  4,427     4,484    14,428    13,089
      Production services              9,322         -    20,611         -

        Total revenues                23,630    14,956    59,819    39,683

    Cost of services:
      Programming                        875     1,437     3,983     5,133
      Satellite transmission fees        400       398     1,195     1,573
      Production and operations        9,155     1,454    23,960     4,477
      Other direct costs                 175        98       382       290

        Total cost of services        10,605     3,387    29,520    11,473

    Other expenses:
      Advertising                        676       567     2,032     2,593
      Selling, general and
       administrative                  9,328     6,592    26,998    21,342
      Depreciation and amortization    1,010       672     2,897     1,904

        Total other expenses          11,014     7,831    31,927    25,839

    Income (loss) from operations      2,011     3,738    (1,628)    2,371

    Interest and other income, net        15       454        66     1,400

    Income (loss) from operations before
     income taxes                      2,026     4,192    (1,562)    3,771

    Income tax provision (benefit)       643     1,798      (663)    1,887

    Net income (loss)                 $1,383    $2,394     $(899)   $1,884

    Earnings (loss) per common share data:
      Basic                            $0.06     $0.10    $(0.04)    $0.07
      Diluted                          $0.05     $0.09    $(0.04)    $0.07

    Weighted average number of common
     shares outstanding:
      Basic                           24,426    25,114    24,434    25,719
      Diluted                         25,819    25,890    24,434    26,287

                  OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
                       Condensed Consolidated Balance Sheets
                             (unaudited, in thousands)

                                         September 30,      December 31,
                                             2009               2008
                                         (unaudited)
                      Assets

    Current assets:
      Cash and cash equivalents            $23,223           $60,257
      Investment in available-for-sale
       securities                           31,990                 -
      Accounts receivable, net of allowance
       for doubtful accounts                13,681             9,448
      Other current assets                  10,712             6,854
        Total current assets                79,606            76,559

    Property, plant and equipment, net      15,049            10,042
    Goodwill and amortizable intangible
     assets, net                            44,052            43,302
    Investment in auction-rate securities    5,945             6,456
    Deferred tax assets, net                 5,614             4,949
    Deposits and other assets                5,507             1,646
        Totals                            $155,773          $142,954

          Liabilities and Stockholders'
           Equity

    Current liabilities                    $16,465            $6,309
    Long-term liabilities                    1,222               236
        Total liabilities                   17,687             6,545

    Total stockholders' equity             138,086           136,409
       Totals                             $155,773          $142,954

                    OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
                    Condensed Consolidated Statements of Cash Flows
                               (unaudited, in thousands)

                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                        2009      2008      2009      2008

    Operating activities:
      Net income (loss)               $1,383    $2,394     $(899)   $1,884
      Adjustments to reconcile net
       income (loss) to net cash
       provided by operating activities:
        Depreciation and amortization  1,010       672     2,897     1,904
        Amortization of subscriber
         acquisition fees                255       125       553       367
        Loss on sale of equipment          6        46        21        41
        Gain on sale of available-for-sale
         securities                        -      (119)       (7)      (75)
        Other-than-temporary impairment
         on auction-rate securities        -         -         -       336
        Provision for doubtful accounts  145       125       335       589
        Share-based employee and service
         provider compensation         1,199       992     3,322     2,704
        Deferred tax provision
        (benefit), net                   641     1,798      (695)    1,885

    Changes in operating assets and liabilities:
        Accounts receivable            2,170    (1,084)    1,122    (1,459)
        Income tax refund receivable       -        (7)     (251)      (12)
        Prepaid programming costs     (1,320)     (749)   (1,683)     (551)
        Other current assets            (186)      (26)      400      (218)
        Deposits and other assets     (1,758)     (209)   (4,203)     (209)
        Accounts payable and accrued
         expenses                      1,527      (133)       87     1,469
        Deferred revenue                (247)      129     2,000       139
        Customer deposits                  -         -         -       (14)
        Accrued severance payments        32       (14)       18      (239)
        Deferred obligations              (6)       23       (33)      (74)
        Unfavorable lease obligations     31         -       (89)        -
          Net cash provided by operating
           activities                  4,882     3,963     2,895     8,467

    Investing activities:
        Purchases of property, plant
         and equipment                  (714)     (166)   (2,075)     (644)
        Proceeds from sale of equipment  111         -       111        15
        Cash paid to purchase assets of
         Winnercomm, net  of cash
          acquired                         -         -    (5,746)        -
        Purchases of available-for-sale
         and auction-rate securities  (4,998)       (5)  (31,990)  (27,181)
        Proceeds from sale of
         available-for-sale and
         auction-rate securities         500     2,480       600    65,952
          Net cash provided by (used in)
           investing activities       (5,101)    2,309   (39,100)   38,142

    Financing activities:
        Proceeds from exercise of
         stock options                     -         -         -        11
        Purchase of treasury stock       (84)      (99)     (482)     (389)
        Purchase and retirement of stock
         related to stock repurchase
         program                           -    (9,363)     (347)  (14,174)
          Net cash used in financing
           activities                    (84)   (9,462)     (829)  (14,552)

      Net increase (decrease) in cash
       and cash equivalents             (303)   (3,190)  (37,034)   32,057
      Cash and cash equivalents,
       beginning of period            23,526    60,507    60,257    25,260
      Cash and cash equivalents,
       end of period                 $23,223   $57,317   $23,223   $57,317

    Supplemental disclosure of cash
     flow information:

        Income taxes paid                $99        $7      $381       $13

    Supplemental disclosures of non-cash
     investing and financing activities:

        Effect of net increase (decrease)
         in fair value of auction-rate
         securities, net of deferred
         taxes                           $12     $(216)      $82     $(157)
        Property, plant and equipment
         costs incurred but not paid    $168       $37      $168       $37
        Retirement of treasury stock     $84       $98      $482      $389

                OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
             RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP
                            (unaudited, in thousands)

    The following table sets forth the reconciliation of net income (loss) to
    earnings before interest, taxes, depreciation and amortization (EBITDA),
    adjusted for the effects share-based compensation expense and acquisition
    and integration costs:


                                      Three Months Ended  Nine Months Ended
                                         September 30,       September 30,
                                        2009      2008      2009      2008

    Net income (loss)                 $1,383    $2,394     $(899)   $1,884

    Add/Subtract:
      Interest and other income, net      15       454        66     1,400
      Income tax provision (benefit)     643     1,798      (663)    1,887
      Depreciation and amortization    1,010       672     2,897     1,904

    EBITDA                             3,021     4,410     1,269     4,275

    Adjusted for:
      Share-based compensation expense 1,199       992     3,322     2,704
      Acquisition and integration costs    -         -       680         -

    EBITDA as adjusted for share-based
     compensation expense and
     acquisition and integration
     costs                            $4,220    $5,402    $5,271    $6,979

    Summary of cost of services
      Share-based compensation expense   $22      $155      $236      $329
      Cost of services                10,583     3,232    29,284    11,144
        Total cost of services       $10,605    $3,387   $29,520   $11,473

    Summary of selling, general and
     administrative
      Share-based compensation
       expense                        $1,177      $837    $3,086    $2,375
      Acquisition and integration costs    -         -       680         -
      Selling, general and
       administrative                  8,151     5,755    23,232    18,967
        Total selling, general and
         administrative               $9,328    $6,592   $26,998   $21,342

    Summary of interest and other
     income, net
      Interest income, net               $15      $335       $66    $1,629
      Dividend income                      -         -         -        32
      Other income (loss)                  -       119         -      (261)
        Total interest and other income,
         net                             $15      $454       $66    $1,400

    EBITDA as adjusted by segment
      Legacy Outdoor Channel          $3,823    $5,402    $8,042    $6,979
      Production Services                397         -    (2,771)        -
        EBITDA as adjusted for
         share-based compensation
         expense and acquisition and
         integration costs            $4,220    $5,402    $5,271    $6,979

SOURCE Outdoor Channel Holdings, Inc.