KING CITY, ONTARIO -- 08/06/08 --
ClubLink Corporation ("ClubLink") (TSX: LNK) For the three months ended June 29, 2008, ClubLink's operating revenue decreased 3.8% to $45,753,000 from $47,546,000 in 2007, and net operating income decreased 22.8% to $7,490,000 from $9,708,000 in 2007. Net membership fee income increased 14.7% to $2,759,000 from $2,405,000 in 2007. Net income (loss) was a loss of $488,000 compared to income of $1,313,000 in 2007. Earnings (loss) per share for the three months ended June 29, 2008 decreased to a loss of 3 cents from earnings of 8 cents in 2007. Cash flow from operations per share was 37 cents compared to 63 cents in 2007.
For the 3 Months Ended For the 6 Months Ended
June 29, July 1, June 29, July 1,
Financial Highlights 2008 2007 2008 2007
Operations
Operating revenue ($000) 45,753 47,546 62,240 62,174
Net operating income
($000)(1) 7,490 9,708 9,907 11,275
Operating margin (%)(1) 16.4% 20.4% 15.9% 18.1%
Net membership fee
income ($000)(1) 2,759 2,405 5,805 4,977
Earnings before interest,
taxes, amortization
and other ($000)(1) 10,249 12,113 15,712 16,252
Net income (loss) ($000) (488) 1,313 (4,223) (2,167)
Cash flow from operations
($000)(1) 6,342 10,625 8,459 10,810
Membership Data
Sales and transfer
fees ($000) 7,050 9,764 9,658 13,487
Sales (Members) 542 1,213 707 1,476
Resignations and
terminations ($000) 1,010 1,036 2,116 1,907
Resignations and
terminations (Members) 220 186 458 375
Cash collected, net of
origination costs ($000) 5,102 7,150 7,464 9,522
Deferred membership fees,
net at period end ($000) 58,684 52,410
Golf members at period end 16,468 15,603
Per Common Share Data ($)
Basic and diluted
earnings (loss) (0.03) 0.08 (0.25) (0.13)
Basic and diluted cash
flow from operations(1) 0.37 0.63 0.37 0.64
Eligible cash dividends 0.06 0.06 0.12 0.12
Net book value at end
of period(1) 9.59 9.67
Common Share Data (000)
Shares outstanding at
end of period 16,988 17,012
Weighted average shares
outstanding 17,009 16,976
Second Quarter 2008 Operating Highlights
Championship golf rounds declined 7.2% to 346,292 from 373,078 in 2007 due to heavy snow fall during the winter causing a late start (average of 7 days) to the golf season. In addition, very wet weather conditions in 2008 as compared to the second quarter of 2007 had a negative impact on rounds.
Operating revenue decreased 3.8% to $45,753,000 from $47,546,000 in the second quarter of 2007. This decrease is primarily the result of a decline in golf rounds and related discretionary revenue as compared to 2007.
Operating expenses and costs of goods sold increased 2.1% to $35,353,000 from $34,621,000 in 2007 due to the addition of Wyndance Golf Club in the third quarter of 2007.
Sales and marketing costs decreased 14.7% to $656,000 from $769,000 in 2007 primarily due to less sales and marketing initiatives in 2008. These costs were 1.4% of operating revenue compared to 1.6% in 2007.
General and administrative expenses and provincial capital taxes decreased 7.9% to $2,254,000 from $2,448,000 in 2007 due to a decline in provincial capital tax rates and were 4.9% of operating revenue in 2008 compared to 5.1% in 2007.
Net operating income decreased 22.8% to $7,490,000 from $9,708,000 in 2007 primarily due to the decline in operating revenue from reduced rounds and the addition of Wyndance Golf Club to operating costs in the third quarter of 2007.
Total Golf Members increased 5.5% to 16,468 on June 29, 2008 from 15,603 on July 1, 2007. New membership sales during the second quarter of 2008 decreased 28.4% to $6,142,000 (542 members) from $8,582,000 (1,213 members) during the second quarter of 2007 due to no new product being available for sale compared to the 2007 additions of Eagle Creek and Islesmere Golf Clubs. The average price of a new membership was $11,332 during the second quarter of 2008 compared to $7,075 during the second quarter in 2007. This increase is due to a lower price point for 2007 membership sales at Eagle Creek and Islesmere Golf Club relative to other ClubLink properties. Transfer fees during the second quarter of 2008 decreased 23.2% to $908,000 compared to $1,182,000 in 2007. Resignations and terminations decreased to $1,010,000 (220 members) from $1,036,000 (186 members) in 2007. Membership fee instalments collected decreased to $5,857,000 from $8,020,000 in 2007 primarily due to Islesmere memberships of $1,732,000 being fully paid in 2007 as part of the acquisition of the club.
Direct costs of originating membership fees decreased 13.2% to $755,000 from $870,000 in 2007 primarily due to advertising costs in 2007 related to the Eagle Creek and Islesmere Golf Club acquisitions.
Net membership fee income increased 14.7% to $2,759,000 in 2008 from $2,405,000 in 2007 primarily due to increased membership fee revenue from the 865 additional members that have joined since July 1, 2007.
Earnings before interest, amortization, taxes and other decreased 15.4% to $10,249,000 from $12,113,000 in 2007.
Interest, net has increased 7.0% to $5,360,000 from $5,009,000 in 2007. This results from a decrease in interest capitalized to development projects under construction to nil from $634,000 in 2007 due to no construction activity during the second quarter of 2008.
Net operating income from Golf Club operations decreased to $10,774,000 from $13,263,000 in 2007.
Net operating income from Resort operations decreased to $85,000 from $89,000 in 2007.
The statutory income tax rate has declined to 28.79% in 2008 from 32.34% in 2007.
Net income (loss) changed to a loss of $488,000 in 2008 compared to earnings of $1,313,000 in 2007.
Basic and diluted earnings (loss) changed to a loss of 3 cents compared to earnings of 8 cents in 2007.
Cash flow from operations per share decreased to 37 cents from 63 cents in 2007 due to reduced earnings resulting from the decline in operating revenue from reduced rounds, the addition of Wyndance Golf Club to operating costs in the third quarter of 2007 and a decrease in membership fee collections due to Islesmere memberships of $1,732,000 being fully paid in 2007 as part of the acquisition of the club.
Eligible Dividend
The Board of Directors has declared an eligible cash dividend of 6 cents per common share payable September 15, 2008 to shareholders of record on August 31, 2008.
Normal Course Issuer Bid
On February 29, 2008, ClubLink announced a normal course issuer bid which expires on March 3, 2009 to purchase up to 850,700 common shares of ClubLink Corporation. As of August 6, 2008, ClubLink has purchased 30,500 common shares for a total purchase price of $301,000 or $9.87 per share including commissions.
Additional Information
Additional information concerning ClubLink is available on the SEDAR website (www.sedar.com) and the investor relations section of ClubLink's website (www.clublink.ca).
ClubLink is Canada's largest owner and operator of member golf clubs.
(1) Net operating income, operating margin, net membership fee income, earnings before interest, taxes, amortization and other, cash flow from operations, basic and diluted cash flow from operations per share and net book value per share are not recognized measures under Canadian generally accepted accounting principles (GAAP). Management believes these measures are useful supplemental information. Investors should be cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities, as a measure of liquidity and cash flows. ClubLink's method of calculating these measures is consistent from year to year, but may be different than those used by other companies.
Contacts:
ClubLink Corporation
Mr. Robert Visentin
Chief Financial Officer
(905) 841-3730
Email: rvisentin@clublink.ca
ClubLink Corporation
Mr. K. (Rai) Sahi
President & CEO
(905) 841-3730
Email: rsahi@clublink.ca
Website: www.clublink.ca
