ANNUAL REPORT 2006 World Wrestling Entertainment, Inc
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WORLD WRESTLING ENTERTAINMENT ® ANNUAL REPORT 2006 World Wrestling Entertainment, Inc. 1241 East Main Street Stamford, CT. 06902 1128980CVR28980CVR 2 77/26/06/26/06 66:17:23:17:23 PPMM Board of Directors Transfer Agent, Dividend Paying Agent and Registrar Vincent K. McMahon Chairman of the Board American Stock Transfer & Trust Company 59 Maiden Lane Linda E. McMahon New York, NY 10038 Chief Executive Officer 877.937.54 49 Lowell P. Weicker, Jr. Former Governor of the State of Connecticut and Independent Registered Public United States Senator Accounting Firm Chairman of Compensation Committee Robert A. Bowman Deloitte & Touche LLP President and Chief Executive Officer of MLB Stamford Harbor Park Advanced Media, LP 333 Ludlow Street Chairman of Audit Committee Stamford, CT 06902-6982 203.708.4600 David Kenin Executive Vice President of Programming, Crown Media United States, LLC Corporate Headquarters Member of Audit and Compensation Committees World Wrestling Entertainment, Inc. Michael B. Solomon 1241 E. Main Street Managing Principal of Gladwyne Partners, LLC P.O. Box 1241 Member of Audit and Compensation Committees Stamford, CT 06902 203.352.8600 Joseph Perkins Former President, Communications Consultants, Inc. Michael Sileck Chief Financial Offi cer Management Certifications In accordance with Section 3.03A.12(a) of the New York Stock Exchange Listed Company Manual, in connection with our last annual meeting Linda McMahon submitted a certification to the NYSE stating that she was not aware of any violations by the Company of the NYSE’s Corporate Governance listing standards. The certifications required by Section 302 of the Sarbanes-Oxley Act with respect to the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2006 have been filed with the Securities and Exchange Commission as Exhibits 31.1 through 31.4 thereto. To request a copy of the Company’s Annual Report on Form 10-K, which will be provided without charge, please write the Company’s Investor Relations Department at the address provided herein. You may also find a copy on our website at corporate.wwe.com Shareholder Information World Wrestling Entertainment stock is listed for trading on the New York Stock Exchange under the ticker symbol WWE. For investor information, please visit our website at corporate.wwe.com or write to Corporate Headquarters, Attention: Investor Relations or call 203.352.8600. If you hold WWE Stock in your own name or through a broker, we invite you to enroll for electronic delivery of WWE’s Annual Report and proxy materials. Electronic delivery of these materials is quicker, saves the Company money, and helps the environment by reducing the use of paper. To enroll in this program, please use the “Get Stockholder information emailed directly to you!” link at corporate.wwe.com. The names of all World Wrestling Entertainment televised and live programming, talent names, images, likenesses, slogans and wrestling moves and all World Wrestling Entertainment logos are trademarks which are the exclusive property of World Wrestling Entertainment, Inc. All other trademarks are the property of their respective owners. © 2006 World Wrestling Entertainment, Inc. All Rights Reserved. 1128980CVR28980CVR 3 77/26/06/26/06 66:17:53:17:53 PPMM iscal 2006 was a very LIVE AND TELEVISED ENTERTAINMENT successful year for WWE. We RAW COMES HOME TO USA generated strong performances In October 2005, Monday Night Raw made its Ffrom our core businesses, relaunched our fl agship triumphant return to the USA Network and helped to Monday Night Raw program on the USA Network, propel USA to No. 1 among cable networks in the and made investments in new initiatives that will be fourth quarter of 2005. As part of our agreement integral to the global long-term success of our company. with NBC Universal, and after a 13-year hiatus, we also revived our hit show Saturday Night’s Main Event with DOUBLING THE DIVIDEND a 90 minute special on NBC in March 2006. Raw In December 2005, WWE announced that we would consistently remains one of the top-rated cable again double our regular quarterly dividend for television programs week in and week out. shareholders to $0.24 on all Class A and Class B common shares. Based upon our dependable free CHANGES ON SMACKDOWN cash fl ow, we have demonstrated the sustainability In the fall, SmackDown successfully transitioned to of this increased dividend rate as our fi scal 2006 broadcasting on Friday nights on UPN. As Friday cash balance has increased from the prior year. Night SmackDown, the program continues as a This impressive dividend yield is one of the many ratings winner for the network it will continue to ways we strive to bring value to our stockholders. anchor Friday nights this fall on the new CW Network, which was created by the merger between UPN and The WB. The CW network should provide 1128980NAR_R128980NAR_R1 1 77/26/06/26/06 66:49:59:49:59 PPMM Friday Night SmackDown with a stronger station CONSUMER PRODUCTS platform and a larger potential audience. THE POWER OF THE WWE BRAND Our Home Video and Licensing businesses TOURING THE WORLD continued to excel as we released 26 new home In addition to our profi table domestic Live Event video titles and shipped approximately three tours, which generated increased average million units in fi scal 2006. Ten of the 26 new attendance, we continued our global expansion releases hit No. 1 on the Sports DVD charts, by performing 52 international Live Events to and our WrestleMania 22 DVD set debuted in throngs of passionate fans. Our tours not only June 2006 at No. 5 among all DVD releases included sold-out shows in popular international in the United States. Our worldwide Licensing locations, such as the United Kingdom and Italy, program, including branded toys, video games, but also reached several emerging territories, apparel and books, generated a 50% increase such as New Zealand and the Philippines. in revenues as compared to the prior year. 1128980NAR_R128980NAR_R1 2 77/26/06/26/06 66:50:18:50:18 PPMM DIGITAL MEDIA our brands 24 hours a day, 365 days a year. TECHNOLOGICAL CONVERGENCE WWE.com has created a growing fan community, WWE.com continues to feature original video and has expanded as a platform for the direct, content, pay-per-view events and classic matches worldwide sale of our mobile products. Our that are available for direct purchase from the e-commerce storefront, WWEShop, had a vast WWE video library. We also generate revenue terrifi c year, increasing the number of orders through the sale of online advertising. We plan to by 140%, refl ecting strong demand for our continue to expand the product offerings available products and increased product offerings. on our site, as we are just beginning to see the full potential of these revenue sources. WWE.com WWE FILMS has seen sizable increases in traffi c and other NEW HEROES AND VILLAINS performance metrics, becoming a signifi cant Pursuing options in fi lmed entertainment is another means to touch our fan base and to cross-promote signifi cant focus for WWE, which showcases 1128980NAR_R128980NAR_R1 3 77/26/06/26/06 66:50:37:50:37 PPMM 1128980NAR_R128980NAR_R1 4 77/26/06/26/06 66:50:45:50:45 PPMM various WWE Superstars. We look at fi lms as a digital library of professional wrestling content, logical extension of our brand and a way to whether produced internally or acquired leverage our Superstars and promotional strength. strategically from a host of national and regional We released our fi rst feature production, See promoters. We plan to monetize this asset by No Evil, a horror thriller starring WWE Superstar investing in emerging businesses based on the Kane, on May 19, 2006. The fi lm, distributed by new distribution channels created by these Lionsgate, has already earned more than $15 technologies, including a slate of original “made- million in domestic box offi ce receipts from its for-mobile” content, which will launch this year. run in the United States. Our second feature, The Marine, which features WWE Raw Superstar “E-C-W!, E-C-W!, E-C-W!” John Cena, will be released by 20th Century Fox This May, WWE announced the re-launch of in October. Additionally, production has begun on Extreme Championship Wrestling (“ECW”) as a WWE’s third fi lm, The Condemned, starring Stone third brand and an extension to our current Raw Cold Steve Austin, which will be distributed and SmackDown franchises. The time was right to theatrically by Lionsgate in 2007. WWE Films launch ECW as a separate brand since consumer is also looking to produce made-for-television interest had been high, as evidenced by the movies featuring WWE Superstars. success of ECW-themed DVDs, the pay-per-view events, and the worldwide fans chanting “E-C-W!, LOOKING AHEAD E-C-W!, E-C-W!” at all of our Live Events. A one-hour CHAMPIONS OF TECHNOLOGY ECW television program began a summer run on While we continue to strengthen our presence on the Sci-Fi Channel on Tuesday nights, affording us television, we are aggressively moving our content a new television presence on a second cable to new broadband and mobile media platforms. network. To date, ratings have outpaced our These initiatives are driven by the world’s largest expectations. Additionally, the ECW brand has its 1128980NAR_R128980NAR_R1 5 77/26/06/26/06 66:51:04:51:04 PPMM own Live Events schedule, line of merchandise, travel into war zones to entertain our troops, and pay-per-view events all generating incremental participate in WWE-sponsored programs to revenue on a very low investment.