06.25.02
EMMIS COMMUNICATIONS REPORTS 1ST Q RESULTS
BCF, ATCF UP FROM PRIOR YEAR
Indianapolis - Emmis Communications Corporation (NASDAQ: EMMS) today announced revenues and cash flow for its first fiscal quarter ending May 31, 2002. Net revenue for the quarter was $136.8 million, Broadcast Cash Flow (BCF) was $50.5 million, and After Tax Cash Flow (ATCF) for the quarter was $22.9 million or $0.44 per basic share. Compared to the same quarter for the prior year, net revenue was down slightly, whereas BCF was up 4.5%, and ATCF was up 33.9%.
"As demonstrated by our ratings successes and market share growth, Emmis continues to position itself for the future by exceeding expectations in every area of the business," Emmis Chairman and CEO Jeff Smulyan said. "With the bulk of our leverage issues addressed, we look forward to being opportunistic in the near term."
Another measure the company uses to determine performance is Free Cash Flow (FCF), which it defines as EBITDA before certain charges, less interest, cash taxes, capital expenditures and preferred stock dividends. For the 1st Quarter, FCF was $8.9 million compared to a negative $3.5 million in the prior year. Emmis deducts interest associated with its 12% Senior Discount Notes to arrive at FCF.
During the first quarter, the company offered 4.6 million shares of Class A common stock, raising $120.2 million in net proceeds. One half of the proceeds was used to repay outstanding indebtedness under its credit facility and one half is being used to redeem some of its outstanding 12% Senior Discount Notes due 2011. In addition, during the first quarter the company completed the sale of its Denver properties KALC-FM ("Alice") to Entercom Communications Corporation (ETM) for $88 million and KXPK-FM ("The Peak") to Entravision Communications Corporation (EVC) for $47.5 million. The proceeds from the sales were used to repay outstanding indebtedness under the credit facility and, with the stock offering and stock compensation program, served as a major step in Emmis' plan to deleverage its balance sheet.
Subsequent to the end of the 1st Quarter, the company amended its credit facility to provide for up to a $60.2 million redemption of its 12% Senior Discount Notes due in 2011. The amendment also reduced Emmis' interest cost on $500.0 million of its bank debt by at least 1%. In addition, the company announced in mid-June that it had appointed Ernst & Young LLP as the company's independent auditor, replacing Arthur Andersen LLP.
Effective March 1, 2002, the company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which requires that goodwill and intangible assets with indefinite lives be tested for impairment annually rather than amortized over time. While SFAS No. 142 has no impact on Emmis' cash flows or EBITDA, its adoption has resulted in a material impairment charge for the quarter ended May 31, 2002 and a significant reduction in the company's ongoing amortization expense. Emmis recorded an impairment charge of approximately $167.4 million, net of tax, related to the difference between the fair value and carrying value of its FCC licenses and goodwill. The impairment charge is reflected as a cumulative effect of an accounting change in Emmis' statement of operations for the quarter ended May 31, 2002. This adoption of SFAS No. 142 also decreased amortization expense in the 1st Quarter by approximately $13.9 million to about $1.9 million, and is expected to decrease amortization expense annually by approximately $58.5 million. While amortization expense for assets with indefinite lives will no longer be reflected on future financial statements, it will continue to be deductible for tax purposes.
Emmis Communications is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis' 18 FM and 3 AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, 15 television stations, award-winning regional and specialty magazines, and ancillary businesses in broadcast sales and publishing. In February, the company entered into agreements to sell its two Denver radio stations. Those sales are pending.
The information in this news release is being widely disseminated in accordance with Regulation FD, recently adopted by the Securities and Exchange Commission.
Certain statements included above which are not statements of historical fact, including financial data for quarters or other periods that are not yet completed and statements identified with the words "continues," "expect," "will," or "would" are intended to be, and are, identified as "forward-looking statements," as defined in the Securities and Exchange Act of 1934, as amended, and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Emmis to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others, general economic and business conditions; fluctuations in the demand for advertising; increased competition in the broadcasting industry; including the implementation of competing formats in large markets; inability to complete our pending divestitures; changes in the costs of programming; changes in interest rates; inability to grow through suitable acquisitions, including the desired radio; future terrorist attacks or other large scale disasters; and other factors mentioned in documents filed by Emmis with the Securities and Exchange Commission. Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
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