Premier Exhibitions Inc. (PRXI, Financial) filed Quarterly Report for the period ended 2009-05-31.
Premier Exhibitions Inc. is a major provider of museum quality touring exhibitions throughout the world. It is Premier Exhibitions Inc. the parent company of RMS Titanic Inc. has developed two new touring exhibitions called Bodies...The Exhibition and Bodies Revealed. Premier Exhibitions Inc. has a market cap of $20.4 million; its shares were traded at around $0.72 with and P/S ratio of 0.3.
Merchandise and other revenue decreased approximately $0.9 million or 44.9% to $1.1 million during the quarter ended May 31, 2009 as compared to the quarter ended May 31, 2008, is primarily the result of the disposition of the live music aspect of our merchandising business, in which we recognized an additional $1.3 million of merchandise revenue during the quarter last year.
Operating expenses. Our general and administrative expenses of $7.3 million decreased $0.7 million or approximately 8.7% during the quarter ended May 31, 2009 as compared to the quarter ended May 31, 2008. The decrease in general and administrative expenses is primarily attributable to reduced compensation expense of 35.6%, reduced travel and office expense of 89.9% and reduced stock compensation expense of 83.8%. These reductions were partially offset by licensing fees for non-operating human anatomy sets and the marketing function provided by an outside vendor totaling $1.1 million.
Benefit from income taxes. We recorded an income tax benefit of $1.9 million for the three months ended May 31, 2009 at an effective rate of 25% versus a tax benefit of $0.4 million at an effective rate of 32% for the same period in the prior year. The decrease in the effective rate is primarily due to the impairment charge of $4.5 million that is not a tax deductible item; accordingly, it is not considered in the tax benefit calculation. Not considering the non-deductibility of the impairment charge, our effective tax rate would have been 37%.
Financing Activities. Cash from financing activities was $6.3 million for the three months ended May 31, 2009 compared to none for the three months ended May 31, 2008. Of the cash from financing activities for the three months ended May 31, 2009, $6.0 million was proceeds from the issuance of convertible notes and $0.3 million was proceeds from option exercises.
On May 6, 2009, we entered into a convertible note purchase agreement with Sellers Capital Master Fund, Ltd. (Sellers Capital), pursuant to which we sold our unsecured convertible promissory notes (the Notes) in the aggregate principal amount of $12.0 million in two closings. Sellers Capital acquired Notes in the principal amount of $6.0 million on May 11, 2009 and Notes in the principal amount of $5.55 million on June 15, 2009. SAF Capital Fund LLC acquired Notes in the principal amount of $0.45 million on June 15, 2009. The Notes bear interest at an initial rate of 6.0% per annum, payable monthly in cash, and become due in three years from the issue date, if not prepaid by us or converted prior to such date. Subject to shareholder approval at our 2009 annual meeting of shareholders, the Notes are convertible into shares of our common stock at a conversion price of $0.75 per share, a premium of approximately 7.1% to the closing price of our common stock on the NASDAQ Global Market immediately preceding the execution of the convertible note purchase agreement. In addition, if our shareholders approve the issuance of our common stock upon conversion of the Notes and the increase in the number of our authorized shares, we will have the right to convert the Notes into our common stock if the closing price of our common stock exceeds $1.00 per share for five successive trading days. In the event that the Notes are converted into shares of our common stock, pursuant to the convertible note purchase agreement, the noteholders will be restricted from voting the shares received by them in connection with such conversion except upon specific events outside the normal course.
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Premier Exhibitions Inc. is a major provider of museum quality touring exhibitions throughout the world. It is Premier Exhibitions Inc. the parent company of RMS Titanic Inc. has developed two new touring exhibitions called Bodies...The Exhibition and Bodies Revealed. Premier Exhibitions Inc. has a market cap of $20.4 million; its shares were traded at around $0.72 with and P/S ratio of 0.3.
Highlight of Business Operations:
Revenue. During the quarter ended May 31, 2009, our revenue decreased by $4.3 million or 28.2% to $10.9 million. Our exhibition revenue decrease of $3.4 million or 25.7% to $9.8 million is primarily attributable to the general decline in economic conditions, which resulted in a decrease in total attendance at our exhibition venues. Attendance decreased to 1,188,219 for the three months ended May 31, 2009 compared to 1,520,046 for the same three month period ended May 31, 2008. Total days of operation, a non-financial measurement, which is the total number of days in which our venues were in operations, increased to 1,624 for the three months ended May 31, 2009 compared to 1,598 for the same three months ended May 31, 2008.Merchandise and other revenue decreased approximately $0.9 million or 44.9% to $1.1 million during the quarter ended May 31, 2009 as compared to the quarter ended May 31, 2008, is primarily the result of the disposition of the live music aspect of our merchandising business, in which we recognized an additional $1.3 million of merchandise revenue during the quarter last year.
Operating expenses. Our general and administrative expenses of $7.3 million decreased $0.7 million or approximately 8.7% during the quarter ended May 31, 2009 as compared to the quarter ended May 31, 2008. The decrease in general and administrative expenses is primarily attributable to reduced compensation expense of 35.6%, reduced travel and office expense of 89.9% and reduced stock compensation expense of 83.8%. These reductions were partially offset by licensing fees for non-operating human anatomy sets and the marketing function provided by an outside vendor totaling $1.1 million.
Benefit from income taxes. We recorded an income tax benefit of $1.9 million for the three months ended May 31, 2009 at an effective rate of 25% versus a tax benefit of $0.4 million at an effective rate of 32% for the same period in the prior year. The decrease in the effective rate is primarily due to the impairment charge of $4.5 million that is not a tax deductible item; accordingly, it is not considered in the tax benefit calculation. Not considering the non-deductibility of the impairment charge, our effective tax rate would have been 37%.
Financing Activities. Cash from financing activities was $6.3 million for the three months ended May 31, 2009 compared to none for the three months ended May 31, 2008. Of the cash from financing activities for the three months ended May 31, 2009, $6.0 million was proceeds from the issuance of convertible notes and $0.3 million was proceeds from option exercises.
On May 6, 2009, we entered into a convertible note purchase agreement with Sellers Capital Master Fund, Ltd. (Sellers Capital), pursuant to which we sold our unsecured convertible promissory notes (the Notes) in the aggregate principal amount of $12.0 million in two closings. Sellers Capital acquired Notes in the principal amount of $6.0 million on May 11, 2009 and Notes in the principal amount of $5.55 million on June 15, 2009. SAF Capital Fund LLC acquired Notes in the principal amount of $0.45 million on June 15, 2009. The Notes bear interest at an initial rate of 6.0% per annum, payable monthly in cash, and become due in three years from the issue date, if not prepaid by us or converted prior to such date. Subject to shareholder approval at our 2009 annual meeting of shareholders, the Notes are convertible into shares of our common stock at a conversion price of $0.75 per share, a premium of approximately 7.1% to the closing price of our common stock on the NASDAQ Global Market immediately preceding the execution of the convertible note purchase agreement. In addition, if our shareholders approve the issuance of our common stock upon conversion of the Notes and the increase in the number of our authorized shares, we will have the right to convert the Notes into our common stock if the closing price of our common stock exceeds $1.00 per share for five successive trading days. In the event that the Notes are converted into shares of our common stock, pursuant to the convertible note purchase agreement, the noteholders will be restricted from voting the shares received by them in connection with such conversion except upon specific events outside the normal course.
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