2010 Financial Results Overview
- Q4 revenue of $13.6 million; FY 2010 revenue of $55.3 million
- Q4 operating income of $1.7 million; FY 2010 operating income of $5.6 million
- Q4 net income from continuing operations of $0.8 million, or $0.04 per share; FY 2010 net income from continuing operations of $2.0 million, or $0.09 per share
- FY 2010 EBITDA of $7.4 million
- Reduced debt by $5.8 million during FY 2010
- Cash balance of $2.6 million at December 31, 2010
DENVER, March 30, 2011 (GLOBE NEWSWIRE) -- VCG Holding Corp. (Nasdaq:VCGH), a growing and leading consolidator and operator of adult nightclubs, today announced financial results for the fourth quarter and full year ended December 31, 2010 (see attached tables, including reconciliation tables).
Troy Lowrie, Chairman and Chief Executive Officer, stated, "We are pleased with our results for 2010, which reflect our success in introducing and cultivating new revenue streams, and strengthening our overall financial position. Cash flow from operations at December 31, 2010 was $7.8 million and free cash flow was $3.2 million. At December 31, 2010, we had reduced total debt to $24.9 million from $30.7 million at December 31, 2009, had access to liquidity of approximately $1.6 million, and a cash balance of $2.6 million."
Fourth Quarter 2010 Financial Results
Total revenue for the fourth quarter of 2010 increased to $13.6 million from $13.0 million in the fourth quarter of 2009. Revenue increased due to higher sales of food and merchandise, higher service revenue, and increased other income, which offset a decline in sales of alcohol. The 14.7% increase in service revenue reflected continued patron acceptance of table side services, wristband access to special areas, table dances, and suite fees, all of which were introduced company-wide in 2009.
Cost of goods sold (the cost of alcohol, food and merchandise) was $1.5 million, or 26.6% of attributable revenue, compared to $1.5 million, or 25.1% of attributable revenue, in the fourth quarter of 2009.
Total operating expenses for the fourth quarter of 2010 were $11.8 million compared to total operating expenses of $14.4 million for the 2009 fourth quarter. Operating expenses in the 2009 fourth quarter included $1.8 million or $0.10 per share, in non-cash impairment charges related to licenses and goodwill at certain of VCG's clubs, as well as higher legal and professional fees.
Advisory fees related to change in control were $0.3 million for the fourth quarter 2010, compared to $1.0 million in the fourth quarter 2009.
Operating income for the fourth quarter of 2010 was $1.7 million compared to an operating loss of $1.4 million in the fourth quarter of 2009. This improvement was due primarily to the effect of the above-referenced non-cash charges, change in control costs, and higher legal and professional fees.
Total interest expense declined to $0.7 million in the fourth quarter of 2010 from $0.8 million in the fourth quarter of 2009, reflecting the Company's ongoing efforts to pay down debt.
Income from continuing operations, net of income taxes for the fourth quarter of 2010 was $0.8 million, or $0.04 per share, compared to a loss of $1.3 million, or ($0.08) per share, in the fourth quarter of 2009.
Net income for the fourth quarter of 2010 was $0.7 million, or $0.05 per share, compared to a net loss of $1.3 million, or ($0.08) per share, in the 2009 fourth quarter. Excluding the impairment charges and advisory fees related to change in control, net income for the 2009 fourth quarter was $1.4 million, or $0.08 per share.
2010 Financial Results
Total revenue for 2010 increased to $55.3 million from $53.2 million last year, due to higher sales of food and merchandise, higher service revenues, and increased other income, offsetting a decline in sales of alcohol.
Cost of goods sold (the cost of alcohol, food and merchandise) was $6.0 million, or 26.1% of attributable revenue, compared to $5.9 million, or 23.8% of attributable revenue last year.
Salaries and wages increased by $1.7 million, or 12.5%, compared to the same period in 2009. This increase was due to the additional commission paid to TLC employees, which corresponds to an increase in service revenue, increased supervisor salaries, the fee structure used to compensate entertainers in Minnesota and a severance payment made to a departing executive officer.
Total operating expenses for 2010 were $49.7 million, up from $48.3 million last year. Total operating expenses for 2010 included a $2.1 million acquisition indemnification claim expense related to the 2007 acquisition of the Raleigh, NC club. For 2009, total operating expenses included $1.8 million, or $0.10 per share, in non-cash impairment charges related to licenses and goodwill at VCG's clubs and $0.3 million in other impairment charges.
Advisory fees related to change in control were $0.4 million for 2010 compared to $1.0 million in 2009.
Operating income for 2010 was $5.6 million compared to $4.9 million in 2009, which included the impact of the above-referenced charges and costs.
Total interest expense declined to $2.8 million for 2010 from $3.4 million in the comparable prior year period, for the reasons cited above.
Income from continuing operations, net of income taxes in 2010 was $2.0 million, or $0.09 per share, compared to $1.1 million, or $0.03 per share, last year.
As previously announced, on July 16, 2010, VCG sold its Jaguar's Gold Club in Fort Worth, Texas to a wholly-owned subsidiary of Rick's Cabaret International, Inc. The operations of Jaguar's are reflected as discontinued operations on VCG's Consolidated Statements of Income. Results for the twelve months ended December 31, 2010 included income from discontinued operations, net of tax, in the amount of $0.5 million, or $0.03 per diluted share. Results for the twelve months ended December 31, 2009 included income from discontinued operations, net of tax, in the amount of $0.1 million, or $0.01 per diluted share, associated with the Jaguar sale. Jaguar's assets and liabilities as of December 31, 2009 have been reclassified to Assets of business held for sale and Liabilities of business held for sale, respectively, in VCG's Consolidated Balance Sheet.
Net income for 2010 was $2.0 million, or $0.12 per share, compared to net income of $0.7 million, or $0.04 per share, last year.
EBITDA for 2010 was $7.4 million as compared to EBITDA of $8.0 million last year.
Potential Sale of the Company
A special meeting of shareholders of VCG will be held on April 11, 2011 at 1:30 p.m. Mountain Time at the Sheraton Denver West Hotel, located at 360 Union Boulevard, Lakewood, Colorado 80228. At the special meeting, shareholders will be asked to consider and vote upon a proposal to approve the Agreement and Plan of Merger that VCG entered into on November 9, 2010, with Family Dog, LLC, a Colorado limited liability company, its wholly-owned subsidiary, FD Acquisition Co., VCG's Chairman of the Board and Chief Executive Officer, Troy Lowrie, and VCG's President and Chief Operating Officer, Micheal Ocello.
Information regarding the matters to be acted on at the special meeting are available in the proxy statement filed by VCG with the Securities and Exchange Commission on March 18, 2011.
VCG will not be hosting a conference call in connection with the issuance of 2010 fourth quarter and full year financial results in light of the proposed merger.
ABOUT VCG HOLDING CORP.
VCG Holding Corp. is an owner, operator, and consolidator of adult nightclubs throughout the United States. The Company currently owns 19 adult nightclubs located in Anaheim, Indianapolis, St. Louis, Denver, Colorado Springs, Dallas, Raleigh, Minneapolis, Louisville, Miami, and Portland, ME.
The VCG Holding Corp. logo is available at
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this press release are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical fact, included in this press release that address activities, events or developments that we believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, including, without limitation, future financial performance and whether the parties to the merger agreement will successfully complete the merger. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous risks, uncertainties and factors identified from time to time in the Company's reports with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2010, which was filed on March 30, 2011, and other filings. All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these risks, uncertainties and factors. All guidance and forward-looking statements in this press release are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements, except as may be required by law.
CONTACT: VCG Holding Corp. Troy Lowrie Chief Executive Officer (303) 934-2424 tlowrie@vcgh.com The Equity Group Inc. Devin Sullivan Senior Vice President (212) 836-9608 dsullivan@equityny.com
