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Tix Corporation Reports Third Quarter and First Nine Months 2012 Results

Monday, November 12, 2012 9:00 AM


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STUDIO CITY, CA -- (Marketwire) -- 11/12/12 -- 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   Three months
                                                   ended          ended
                                               September 30,  September 30,
                                                    2012           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   Nine months
                                                    ended         ended
                                                September 30, September 30,
                                                     2012          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:
Steve Handy
CFO
818-761-1002


(Source: Market Wire )
(Source: Quotemedia)

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