RenFaire: RPFI: News: 1998-11.01-REC-Earnings

News: 1998-11.01-REC-Earnings

From: "John Galt Productions" 
To: jgp@wonderland.com
Subject: [JGP] ChuckleNews: RenFaire results 3Q98 (long...)
Date: Wed, 11 Nov 1998 13:51:33 PST
Precedence: list
Status: R

News looks pretty good, but they've kept results to 9 months. Whenever they post results for a full year, they look really bad, because of the three months (the ones we're entering) during the winter when they don't make squat. So, while things look good (*especially* working capital) keep an eye out for end-of-year results before making any decisions. By the way, analysts seem very unimpressed with the results -- stock only rose a few 32nds. When you look long-term, the Faire needs to do more consolidation (i.e do the thing the Faire circuit hates: buy more Faires) or growth (i.e. build more Virginias, but ones that MAKE money) to get better value for holders. Right now REC seems to be in a waiting pattern trying to make up for Virginia's massive losses, which, according to Leavell, are "decreasing steadily." It'll be 2 to 3 years before any real movement on the stock looks likely.

As an added bonus to the mystery, Northern site '99? If that Faire doesn't happen (and to this analyst, it seems that every month that goes by with no news makes this possibility greater and greater) revenues will drop DRASTICALLY, but so will *operating expenses*. I don't think it would kill the company, not in just one year, but REC can hardly afford to throw together a money-losing quick-fix Faire to make the performers and staff happy. (Think burst pipes in Sacramento.) If I were in charge, I would seriously consider the option of sitting this RPFN out, while a suitable permanent site was arranged for RPFN 2000. Concentrate on getting Virginia bulked up with fans and cash, work hard on the permanence of Southern, keep pumping up New York and Bristol. Know when to hold 'em, know when to fold 'em.

Also very important, note the following: "a schedule change for the Northern Faire, which caused the bulk of its revenues to be accounted for in this quarter." What this means: all revenue for Northern and Southern Faires (+ NY, Bristol and Wis.) has already been accounted for in the 3rd quarter. All revenue and profit activity for REC has occurred for fiscal year '98. The fourth quarter will, as a result, be even worse than usual -- _total_loss_, due to no business activity (unless -- unlikely -- the Halloween action on the Virginia site made any money). (They've also got this "Winter Wonderland" thing going. I have no idea what it's about. They list it as "Winter Wonderland in Wisconsin" on the site, http://www.recfair.com/, but then it's actually taking place in Virginia... http://www.recfair.com/vawinter/index.html.)

Because only a partial balance sheet was provided, it is also unclear how much outstanding debt remains for the company. Assets dropped dramatically when they had to sell land last year to create working capital. They seem to have some of that back now, but liabilities are still hovering around 6 million. That's a lot of liability. In fact, it's almost three times current assets. This is not a good sign. They need to reduce those liabilities fast.

Intersting in their choice of dates for figures. The balance sheet given shows Sept. this year, but Dec. last year. They did the same thing in reports last year. That means that the best figures the Faire can show to current date are being compared to the second-to-worst figures last year with the 4th quarter showing no action. The perceived improvement then is pumped up artificially. If I have time, I'm going to try to compile reports going as far back as I can to show the history of REC and how they've done with the Faires. The problem becomes one of logistics, because they change their fiscal year when things are bad to make SEC reports look better -- an old juggle-the-books trick.

Finally, I really have no idea what I'm doing. Do not take this information and utilize it in stock purchasing or selling decisions. I take no responsibility, except for myself going broke or making a million, for any info contained herein. I'm learning as I go...

SNIP

Company Press Release

SOURCE: Renaissance Entertainment Corporation

Renaissance Entertainment Announces 1998 Third Quarter Results

LOUISVILLE, Colo., Nov. 10 /PRNewswire/ -- Renaissance Entertainment Corporation (Nasdaq: FAIRC - news) today announced net income of $2,142,895 or $1.00 per share on sales of $9,350,396 for its third quarter ended September 30, 1998. The results compare with a year-ago net income of $833,873, or $0.43 per share on sales of $8,208,373. The 14% increase in revenue is the result of increased attendance at the Wisconsin and New York Faires, as well as a schedule change for the Northern Faire, which caused the bulk of its revenues to be accounted for in this quarter.

For the nine months, revenues increased $1,458,296 or 11% from $13,093,969 in 1997 to $14,552,265 in 1998. The increase in revenue is the result of increased attendance at the Virginia, Wisconsin, New York and Southern California Faires, and the re-scheduling of the Northern California Faire. Net operating income for the nine months increased $1,919,660 from a loss of ($427,648) for the 1997 period to income of $1,492,012 for the 1998 period. Operating expenses (year-round operating costs and corporate overhead) decreased $561,055 or 6%, from $9,253,238 in 1997 to $8,692,183 in 1998.

Charles Leavell, Chairman and CEO, said, ``These results reflect our ongoing commitment to streamlining our operations. Reduced operating expenses and increased profits are proof-positive of the success of these programs. We are very proud to announce that this year the New York Faire had a record year for revenue, the Virginia Faire has steadily decreased its losses, and we had a record-breaking year for attendance overall.''

Renaissance Entertainment Corporation is the only publicly traded company in the Renaissance Faire industry. The company's Faires currently serve five of the largest metro areas in the country including New York, Chicago/Milwaukee, Los Angeles, San Francisco, and the greater Washington, D.C./Richmond area.

The Renaissance Faire is an outdoor family entertainment event which romanticizes the ambiance of a Renaissance era marketplace and includes craft shops, period food, dancers, jousters, musicians and historical characters from Elizabethan England.

FINANCIAL SUMMARY (UNAUDITED)
RENAISSANCE ENTERTAINMENT CORPORATION
THREE MONTHS ENDED SEPTEMBER 30

1998 1997
Sales $9,350,396 $8,208,373
Net Operating Income 2,261,923 973,132
Net Income Before Taxes 2,142,895 833,873
Net Income to Common Shareholders 2,142,895 833,873
Net Income Per Common Share $1.00 $0.43

Weighted Average Number of
Shares Outstanding 2,139,894 1,927,252

NINE MONTHS ENDED SEPTEMBER 30
1998 1997
Sales $14,552,265 $13,093,969
Net Operating Income (Loss) 1,492,012 (427,648)
Net Income (Loss) Before Taxes 1,132,621 (419,725)
Net Income (Loss) to Common
Shareholders 1,132,621 (419,725)
Net Income (Loss) Per Common Share $0.54 ($0.22)

Weighted Average Number of
Shares Outstanding 2,113,150 1,914,839

BALANCE SHEET DATA

Sept. 30 1998 Dec. 31 1997

Total Assets $10,758,027 $9,877,683
Total Current Assets 2,285,206 1,235,606
Total Current Liabilities 5,993,029 6,303,925
Working Capital $1,119,119 ($204,821)
Total Stockholders' Equity $10,758,027 $9,877,683

SOURCE: Renaissance Entertainment Corporation