Indianapolis…Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its second fiscal quarter ended August 31, 2008.
“Our team at Emmis continues to deliver during these challenging times for the U.S. economy,” Emmis Chairman and CEO Jeff Smulyan said. “We delivered 2 percent growth in operating income during the first six months of the fiscal year based in no small part on the explosive growth in our International operations. During the second quarter, net revenue at our radio operations in Slovakia, Hungary, Bulgaria and Belgium grew an amazing 38 percent. This type of performance, coupled with responsible actions to manage our expenses and balance sheet, position Emmis well to benefit from the U.S. economy’s inevitable recovery.”
For the second fiscal quarter, net revenue was $94.2 million, compared to $95.7 million for the same quarter of the prior year.
Diluted net income per common share from continuing operations was $0.02, compared to $0.04 for the same quarter of the prior year.
For the second quarter, pro forma radio net revenues decreased 1.7 percent and pro forma publishing net revenues decreased 6.6 percent. Domestic radio net revenues for the second quarter decreased 8.4 percent compared to the same period of the prior year.
For the second quarter, operating income was flat at $17.1 million compared to the same quarter of the prior year, while Emmis’ station operating income was down slightly to $26.4 million, compared to $26.5 million for the same quarter of the prior year.
Emmis has included supplemental pro forma net revenues, station operating expenses, and certain other financial data on its website, www.emmis.com under the “Investors” tab.
International radio net revenues and station operating expenses, excluding depreciation and amortization, for the quarter ended August 31, 2008, were $14.9 million and $9.0 million, respectively, representing a pro forma increase of 38 percent and 22 percent, respectively, over the same period of the prior year.
During the quarter, Emmis completed the sale of its remaining television station, WVUE-TV in New Orleans, to Louisiana Media Company for $41 million, with after-tax proceeds of approximately $38.1 million. Gross proceeds from the sale of the company’s 16 television stations were $1.24 billion. In addition, during the quarter, Emmis received $3.1 million as a final settlement of its business interruption claim due to Hurricane Katrina’s impact on the station.
Also during the quarter, Emmis Publishing suspended publication of Tu Ciudad Los Angeles because the magazine’s financial performance did not meet the Company’s expectations. The magazine’s operating expenses for the second fiscal quarter of $1.2 million include all shut-down-related costs, and the magazine’s operating results have been classified as discontinued operations for all periods presented.
Subsequent to the quarter’s end, Emmis began a program that uses a portion of the cash from the sale of WVUE-TV in New Orleans, and possibly Emmis’ common stock, to pay quarterly bonuses to 64 employees to offset temporary salary reductions. Although the employees will be receiving the same amount of pay under the program, the structure of the program lowers operating costs under the terms of our credit agreement.
Emmis Interactive, a wholly owned subsidiary of Emmis Communications Corporation, announced in April that it would begin to market its services to radio broadcasters and other local media companies. Since that announcement, Emmis Interactive has signed on more than 100 non-Emmis stations to its successful interactive platform, with another dozen signing up for Emmis Interactive’s exclusive iTunes storefront technology.
The following table reconciles reported results to pro forma results (dollars in thousands):
| 3 months ended Aug. 31, | % | 6 months ending Aug. 31, | % | |||
| 2007 | 2008 | Change | 2007 | 2008 | Change | |
| Radio | ||||||
| Reported net revenues | $74,416 | $73,278 | -1.5% | $139,416 | $137,469 | -1.4% |
| Plus: Revenues from assets acquired |
149 | – | 293 | – | ||
| Pro forma net revenues | $74,565 | $73,278 | -1.7% | $139,709 | $137,469 | -1.6% |
| Publishing | ||||||
| Reported net revenues | $21,288 | $20,949 | -1.6% | $42,733 | $42,781 | 0.1% |
| Plus: Revenues from assets acquired |
1,142 | – | 2,774 | – | ||
| Pro forma net revenues | $22,430 | $20,949 | -6.6% | $45,507 | $42,781 | -6.0% |
| Total Company | ||||||
| Reported net revenues | $95,704 | $94,227 | -1.5% | $182,149 | $180,250 | -1.0% |
| Plus: Revenues from assets acquired |
1,291 | – | 3,067 | – | ||
| Pro forma net revenues | $96,995 | $94,227 | -2.9% | $185,216 | $180,250 | -2.7% |
Emmis will host a call regarding this information on Friday, October 10 at 9 a.m. Eastern at 1.517.623.4891, with a replay available through Friday, October 17 at 1.203.369.3289. Listen online at www.emmis.com.
Emmis generally evaluates the performance of its operating entities based on station operating income. Management believes that station operating income is useful to investors because it provides a meaningful comparison of operating performance between companies in the industry and serves as an indicator of the market value of a group of stations or publishing entities. Station operating income is generally recognized by the broadcast and publishing industries as a measure of performance and is used by analysts who report on the performance of broadcasting and publishing groups. Station operating income does not take into account Emmis’ debt service requirements and other commitments, and, accordingly, station operating income is not necessarily indicative of amounts that may be available for dividends, reinvestment in Emmis’ business or other discretionary uses.
Station operating income is not a measure of liquidity or of performance, in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to, and not a substitute for, our results of operations presented on the basis of accounting principles generally accepted in the United States. Moreover, station operating income is not a standardized measure and may be calculated in a number of ways. Emmis defines station operating income as revenues net of agency commissions and station operating expenses, excluding depreciation, amortization and non-cash compensation.
Emmis Communications — Great Media, Great People, Great Service®
Emmis is an Indianapolis-based diversified media firm with radio broadcasting and magazine publishing operations. Emmis owns 21 FM and 2 AM domestic radio stations serving the nation’s largest markets of New York, Los Angeles and Chicago, as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. Emmis also owns a radio network, international radio stations, regional and specialty magazines, an interactive business and ancillary businesses in broadcast sales.
The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission’s Regulation FD.
Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words “expect,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company 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 and demand for different types of advertising media;
- our ability to service our outstanding debt;
- increased competition in our markets and the broadcasting industry;
- our ability to attract and secure programming, on-air talent, writers and photographers;
- inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;
- increases in the costs of programming, including on-air talent;
- inability to grow through suitable acquisitions;
- changes in audience measurement systems
- new or changing regulations of the Federal Communications Commission or other governmental agencies;
- competition from new or different technologies;
- war, terrorist acts or political instability; and
- other factors mentioned in documents filed by the Company 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.