EX-99.1 2 c98786exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
         
(EMMIS LOGO)    

A conference call regarding this earnings release is scheduled for
  9 a.m. Eastern, Thursday, Sept. 29, 2005. Dial in at 1.517.623.4891
  or listen online at www.emmis.com
 
        
  Contacts:
  Walter Berger, EVP & CFO
  Kate Snedeker, Media & Investor Relations
      317.266.0100
For Immediate Release
Thursday, Sept. 29, 2005
Emmis Communications Reports 2nd Quarter Results
Reported Net Revenue jumps 11%; 6th straight quarter radio outperforms its markets
Indianapolis...Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its second fiscal quarter ended August 31, 2005.
For the second fiscal quarter, reported net revenue was $107.9 million, compared to $97.1 million for the same quarter of the prior year, an increase of 11%.
Reported net revenues for all periods presented exclude the results of Emmis’ television stations, which have been classified as discontinued operations. The net revenues and station operating expenses, excluding noncash compensation, of the television stations were $60.3 million and $39.8 million, respectively, for the quarter. If these stations had been included in reported results, as opposed to discontinued operations, reported net revenues and station operating expenses, excluding noncash compensation, for the three months ended Aug. 31, 2005 would have been $168.1 million and $105.7 million, respectively.
Diluted net income per common share was $0.15, compared to $0.23 for the same quarter of the prior year. The decrease in EPS relates to higher interest expense resulting from debt incurred to effectuate the company’s Dutch Auction stock repurchase in June 2005.
“We’re encouraged with how strong the quarter finished for our radio stations, which outperformed their markets for the sixth straight quarter,” Emmis Chairman and CEO Jeff Smulyan said. “As we continue to focus on operations, the disposition of our TV assets continues. The sale of 9 of our 16 stations will result in proceeds that exceed expectations.”
For the second quarter, reported radio net revenues increased 11%, while pro forma radio net revenues (including WLUP-FM and the Emmis radio network in Slovakia) increased 4%. Publishing net revenues increased 10%.
For the second quarter, operating income was $28.5 million, compared to $25.2 million for the same quarter of the prior year. Emmis’ station operating income for the second quarter was $42.0 million, compared to $39.1 million for the same quarter of the prior year.
Emmis has included supplemental pro forma net revenues, station operating expenses, excluding non-cash compensation, and certain other financial data on its website, www.emmis.com. This information, which includes all consummated station acquisitions and dispositions, can be found under the “Investors” tab.
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Add One/Emmis
International radio net revenues and station operating expenses for the quarter ended Aug. 31, 2005 were $8.3 million and $5.4 million, respectively.
Emmis has announced definitive agreements to sell 9 of its 16 television stations in three separate transactions. LIN TV Corp (NYSE: TVL) signed an agreement to purchase WALA-TV (Ch. 10, Fox affiliate) and WBPG-TV (Ch. 55, WB affiliate) in Mobile, Ala./Pensacola, Fla.; WTHI-TV (Ch. 10, CBS affiliate) in Terre Haute, Ind.; WLUK-TV (Ch. 11, Fox affiliate) in Green Bay, Wis.; and KRQE-TV (Ch. 13, CBS affiliate) in Albuquerque, New Mexico, plus regional satellite stations. The sale price for the five stations is $260 million. Journal Communications (NYSE: JRN) signed an agreement to purchase WFTX-TV (Ch. 4, Fox affiliate) in Fort Myers, Fla.; KMTV-TV (Ch. 3, CBS affiliate) in Omaha, Neb.; and KGUN-TV (Ch. 9, ABC affiliate) in Tucson, Ariz. The sale price for the three stations is $235 million. Gray Television (NYSE: GTN; GTN.A) signed an agreement to purchase WSAZ-TV (Ch. 3, NBC affiliate) in Huntington/Charleston, West Virginia, for $186 million. The closings are subject to customary prorations, adjustments and conditions, including approval from the Federal Communications Commission and other regulatory agencies. Emmis expects to begin closing these transactions before the end of the year.
On June 21, 2005, the company repurchased 39% of its outstanding shares of Class A common stock pursuant to a Dutch Auction tender offer. To finance this transaction, the company issued $350 million of floating rate senior notes. Emmis may purchase additional shares of its Class A common stock in open market transactions from time to time.
Subsequent to the quarter end, the company announced the sale of St. Louis’ WRDA-FM to Radio One for $20 million.
Pro forma calculations assume the following events all had occurred on March 1, 2004: (a) the acquisition of WLUP-FM in Chicago in January 2005 and (b) the acquisition of a radio network in Slovakia in March 2005.
The following table reconciles reported results to pro forma results (dollars in thousands):
                                                 
    3 months ended Aug. 31,     %   6 months ending Aug .31,     %
    2005     2004     Change   2005     2004     Change
Radio
                                                
Reported net revenues
   $ 87,098     $ 78,176       11%   $ 162,198     $ 144,886       12%
Plus: Revenues from assets acquired
     —       5,313               882       9,788          
Less: net revenues from assets disposed
     —       —               —       —          
 
                                        
Pro forma net revenues
   $ 87,098     $ 83,489       4%   $ 163,080     $ 154,674       5%
 
                                        
 
                                                
Publishing
                                                
Reported net revenues
   $ 20,794     $ 18,943       10%   $ 40,896     $ 36,838       11%
Plus: Revenues from assets acquired
     —       —               —       —          
Less: net revenues from assets disposed
     —       —               —       —          
 
                                        
Pro forma net revenues
   $ 20,794     $ 18,943       10%   $ 40,896     $ 36,838       11%
 
                                        

 

                                                 
Total Company
                                                
Reported net revenues
   $ 107,892     $ 97,119       11%   $ 203,094     $ 181,724       12%
Plus: Revenues from assets acquired
     —       5,313               882       9,788          
Less: Revenues from assets disposed
     —       —               —                  
 
                                          
Pro forma net revenues
   $ 107,892     $ 102,432       5%   $ 203,976     $ 191,512       7%
 
                                        
On a pro forma basis, the Company expects its radio net revenues for its quarter ended Nov. 30, 2005, to be up 5-6% and its station operating expenses, excluding noncash compensation, to be up 3-4%.
Emmis will host a call regarding this information on Thurs., Sept. 29 at 9 a.m. Eastern at 1.517.623.4891, with a replay available until Thurs., Oct. 6, at 1.203.369.3961. 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 non-cash compensation.
Emmis Communications – Great Media, Great People, Great Service®
Emmis is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 23 FM and 2 AM domestic radio stations serving the nation’s largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, IN. In May Emmis announced its intent to seek strategic alternatives for its 16 television stations, and the Company has announced signed definitive agreements to sell 13 of them. In September the Company announced it had signed an agreement to sell St. Louis radio station WRDA-FM. Emmis owns a radio network, international radio stations, regional and specialty magazines and ancillary businesses in broadcast sales and book publishing.
The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission’s Regulation FD.
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 statements. 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; the attraction and retention of quality talent and other programming; public and governmental reaction to Emmis programming decisions; changes in the costs of programming; changes in interest rates; inability to grow through suitable acquisitions; inability or delay in closing previously announced acquisitions or divestitures; terrorist attacks or other large-scale disasters; wars and other events creating economic uncertainty; 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.
Note: Financial schedule attached.

 

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited, dollars in thousands, except per share data)
                                 
    Three months ended August 31,     Six months ended August 31,  
    2005     2004     2005     2004  
OPERATING DATA:
                                
Net revenues:
                                
Radio
   $ 87,098     $ 78,176     $ 162,198     $ 144,886  
Publishing
     20,794       18,943       40,896       36,838  
Total net revenues
     107,892       97,119       203,094       181,724  
Operating expenses, excluding noncash compensation:
                                
Radio
     46,723       41,233       89,098       77,550  
Publishing
     19,166       16,793       38,012       33,232  
Total station operating expenses, excluding noncash compensation
     65,889       58,026       127,110       110,782  
Corporate expenses, excluding noncash compensation
     6,483       7,616       13,601       16,036  
Noncash compensation (a)
     2,695       2,729       5,895       5,962  
Depreciation and amortization
     4,346       3,591       8,239       8,209  
 
                        
 
                                
Operating income
     28,479       25,157       48,249       40,735  
Interest expense
     (18,341 )     (8,151 )     (28,586 )     (21,653 )
Loss on debt extinguishment (b)
     —       (273 )     —       (97,248 )
Other income (expense), net
     198       55       118       354  
 
                        
 
                                
Income (loss) before income taxes, minority interest, discontinued operations and accounting change
     10,336       16,788       19,781       (77,812 )
Provision (benefit) for income taxes
     4,529       6,260       8,635       (7,147 )
Minority interest expense, net of tax
     1,634       788       2,419       1,382  
 
                        
 
                                
Income (loss) from continuing operations
     4,173       9,740       8,727       (72,047 )
Income (loss) from discontinued operations, net of tax
     4,257       5,556       10,081       13,773  
 
                        
Net income (loss)
     8,430       15,296       18,808       (58,274 )
Preferred stock dividends
     2,246       2,246       4,492       4,492  
 
                        
Net income (loss) available to common shareholders
   $ 6,184     $ 13,050     $ 14,316     $ (62,766 )
 
                        
 
                                
Basic net income (loss) per common share:
                                
Continuing operations
   $ 0.05     $ 0.13     $ 0.09     $ (1.37 )
Discontinued operations, net of tax
     0.10       0.10       0.20       0.25  
 
                        
Net income (loss) available to common shareholders
   $ 0.15     $ 0.23     $ 0.29     $ (1.12 )
 
                        
 
                                
Diluted net income (loss) per common share:
                                
Continuing operations
   $ 0.05     $ 0.13     $ 0.09     $ (1.37 )
Discontinued operations, net of tax
     0.10       0.10       0.20       0.25  
 
                        
Net income (loss) available to common shareholders
   $ 0.15     $ 0.23     $ 0.29     $ (1.12 )
 
                        
 
                                
Weighted average shares outstanding:
                                
Basic
     40,893       56,060       48,769       55,959  
Diluted
     41,434       56,230       49,266       55,959  
 
                                
(a) Noncash compensation by segment:
                                
Radio
   $ 655     $ 1,156     $ 1,655     $ 2,637  
Publishing
     200       484       550       1,145  
Corporate
     1,840       1,089       3,690       2,180  
 
                        
Total
   $ 2,695     $ 2,729     $ 5,895     $ 5,962  
 
                        
 
                                
(b) Reflects costs associated with our debt recapitalization, which closed on May 10, 2004 and a subsequent subordinated debt
extinguishment on June 10, 2004.
    
 
                                
 
                                
OTHER DATA:
                                
Station operating income (See below)
     42,003       39,093       75,984       70,942  
Cash paid for taxes
     33       150       33       271  
Capital expenditures
     3,462       1,712       5,226       4,683  
 
                                
 
                                
COMPUTATION OF STATION OPERATING INCOME:
                                
Operating income
   $ 28,479     $ 25,157     $ 48,249     $ 40,735  
Plus: Depreciation and amortization
     4,346       3,591       8,239       8,209  
Plus: Corporate expenses, excluding noncash compensation
     6,483       7,616       13,601       16,036  
Plus: Noncash compensation
     2,695       2,729       5,895       5,962  
 
                        
Station operating income
   $ 42,003     $ 39,093     $ 75,984     $ 70,942  
 
                        
 
                                
 
                                
SELECTED BALANCE SHEET INFORMATION:
   August 31, 2005     February 28, 2005  
 
                                
Total Cash and Cash Equivalents
   $ 26,777     $ 16,054                  
 
                                
Senior Debt
   $ 851,437     $ 804,313                  
Senior Subordinated Debt
     375,000       375,000                  
Senior Discount Notes
     1,325       1,245                  
Senior Floating Rate Notes
     350,000       —                  
 
                        
Total Senior, Senior Subordinated and Holding Company Debt
   $ 1,577,762     $ 1,180,558