Salem Communications Announces Fourth Quarter 2009 Total Revenue of $50.8 Million
CAMARILLO, CA -- (MARKET WIRE) -- 03/03/10 -- Salem Communications Corporation (NASDAQ: SALM), a leading U.S. radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and family-themed content and conservative values, released its results for the three and twelve months ended December 31, 2009.
Fourth Quarter 2009 Results
For the quarter ended December 31, 2009 compared to the quarter ended
December 31, 2008:
Consolidated
-- Total revenue decreased 7.9% to $50.8 million from $55.2 million;
-- Operating expenses decreased 58.2% to $40.2 million from
$96.2 million;
-- Operating expenses excluding impairment of indefinite-lived
intangible assets, cost of denied tower site and abandoned projects
and gain or loss on disposal of assets decreased 7.5% to $40.1
million from $43.3 million;
-- Operating income from continued operations was $10.6 million for
the current quarter as compared to an operating loss of $41.1
million in the prior year;
-- Net loss was $1.6 million, or $0.07 net loss per share, as compared
to $30.6 million, or $1.29 net loss per share in the prior year;
-- EBITDA was $12.5 million for the quarter as compared to a loss of
$32.6 million in the prior year; and
-- Adjusted EBITDA decreased 7.9% to $14.7 million from $15.9 million.
Broadcast
-- Net broadcast revenue decreased 8.8% to $43.3 million from $47.5
million;
-- Station operating income ("SOI") decreased 6.6% to $17.1 million
from $18.3 million;
-- Same station net broadcast revenue decreased 8.9% to $42.9 million
from $47.1 million;
-- Same station SOI decreased 7.0% to $17.0 million from $18.3 million;
and
-- Same station SOI margin increased to 39.6% from 38.8%.
Non-broadcast
-- Non-broadcast revenue decreased 2.1% to $7.5 million from $7.7
million; and
-- Non-broadcast operating income decreased 1.2% to $1.3 million from
$1.4 million.
Included in the results for the quarter ended December 31, 2009 are:
-- A $0.1 million loss, net of tax, from discontinued operations of
radio stations in Milwaukee, Wisconsin;
-- A $0.2 million impairment of indefinite-lived intangible assets
($0.1 million, net of tax) related to the impairment of radio
broadcasting licenses in our Detroit market;
-- A $2.3 million charge ($1.4 million, net of tax, or $0.09 per
share) related to the change in fair value of our interest rate
swaps;
-- A $1.7 million loss ($1.0 million, net of tax, or $0.04 per share)
on early redemption of long-term debt due to the repurchase of our
7 3/4% senior subordinated notes due in 2010; and
-- A $0.2 million non-cash compensation charge ($0.1 million, net of
tax) related to the expensing of stock options.
Included in the results for the quarter ended December 31, 2008 are:
-- A $0.2 million loss, net of tax, from discontinued operations of
radio stations in Milwaukee, Wisconsin;
-- A $1.0 million gain ($0.7 million, net of tax, or $0.3 per diluted
share) on the disposal of assets;
-- A $52.7 million impairment of indefinite-lived intangible assets
($34.4 million, net of tax, or $1.45 per share) related to the
impairment of radio broadcasting licenses and goodwill in our
Boston, Detroit, Cleveland, Louisville, Nashville, Tampa, Miami,
Orlando, Sacramento, and Omaha markets;
-- A $1.3 million charge ($0.8 million, net of tax, or $0.05 per
share) related to terminated transaction costs and abandoned
license upgrades;
-- A $4.8 million charge ($3.2 million, net of tax, or $0.20 per
share) related to the change in fair value of our interest rate
swaps; and
-- A $4.7 million gain ($3.0 million, net of tax, or $0.13 per
diluted share) on early redemption of long-term debt due to the
repurchase of $9.4 million of our 7 3/4% senior subordinated notes
due in 2010.
These results reflect the reclassification of the operations of our Milwaukee, Wisconsin radio stations to discontinued operations for all periods presented. These stations had no net broadcast revenue and operating income for the quarter ended December 31, 2008 and no net broadcast revenue and generated a loss of $0.2 million for the quarter ended December 31, 2009.
Per share numbers are calculated based on 23,933,940 diluted weighted average shares for the quarter ended December 31, 2009, and 23,673,788 diluted weighted average shares for the quarter ended December 31, 2008.
Year to Date 2009 Results
For the twelve month period ended December 31, 2009 compared to the twelve month period ended December 31, 2008:
Consolidated
-- Total revenue decreased 10.5% to $199.2 million from $222.5 million;
-- Operating expenses decreased 24.7% to $191.6 million from $254.3
million;
-- Operating expenses excluding impairment of goodwill and
indefinite-lived assets, cost of denied tower site and abandoned
projects and gain or loss on disposal of assets decreased 14.0% to
$160.8 million from $186.9 million;
-- Operating income from continued operations was $7.6 million as
compared to an operating loss of $31.8 million in the prior year;
-- Net loss was $8.3 million, or $0.35 net loss per share, as compared
to $33.1 million, or $1.40 net loss per share;
-- EBITDA increased to $23.1 million from a loss of $9.1 million in
the prior year; and
-- Adjusted EBITDA decreased 2.2% to $54.0 million from $55.2 million.
Broadcast
-- Net broadcast revenue decreased 11.4% to $172.1 million from $194.1
million;
-- SOI decreased 7.7% to $63.9 million from $69.2 million;
-- Same station net broadcast revenue decreased 11.7% to $167.4
million from $189.7 million;
-- Same station SOI decreased 7.7% to $63.3 million from $68.6 million;
and
-- Same station SOI margin increased to 37.8% from 36.2%.
Non-broadcast
-- Non-broadcast revenue decreased 4.3% to $27.2 million from $28.4
million; and
-- Non-broadcast operating income increased 43.5% to $3.6 million from
$2.5 million.
Included in the results for the twelve month period ended December 31, 2009
are:
-- A $1.1 million charge ($0.7 million, net of tax, or $0.05 per
share) related to the costs of a denied tower site relocation
project for radio station KDOW-AM, San Francisco, California, which
was rejected by the City of Hayward and an abandoned tower site
relocation for KKLA-FM, Los Angeles, California;
-- A $28.0 million impairment of indefinite-lived intangible assets
($18.5 million, net of tax, or $0.78 per share) consisting of a
$26.8 million impairment of radio broadcasting licenses and
goodwill in our Dallas, Atlanta, Detroit, Portland and Cleveland
markets and a $1.2 million impairment of goodwill and mastheads in
our non-broadcast segment;
-- A $1.7 million loss ($1.1 million, net of tax, or $0.05 per share)
on disposal of assets primarily from the sale of radio station
KPXI-FM in Tyler-Longview, Texas;
-- A $0.8 million charge ($0.5 million, net of tax, or $0.03 per
share) related to the change in fair value of our interest rate
swaps;
-- A $1.6 million gain of bargain purchase ($1.0 million, net of tax,
or $0.05 per diluted share) related to the purchase of WZAB-AM in
Miami, Florida of $1.0 million;
-- A $1.1 million loss ($0.7 million, net of tax, or $0.03 per share)
on early redemption of long-term debt due to the repurchase of our
7 3/4% senior subordinated notes due in 2010;
-- A $0.1 million loss, net of tax, from discontinued operations of
our radio station in Milwaukee, Wisconsin; and
-- A $0.6 million non-cash compensation charge ($0.4 million, net of
tax, or $0.02 per share) related to the expensing of stock options
consisting of:
- $0.3 million non-cash compensation included in corporate
expenses; and
- $0.2 million non-cash compensation included in broadcast
operating expenses; and
- $0.1 million non-cash compensation included in non-broadcast
operating expenses.
Included in the results for the twelve month period ended December 31, 2008
are:
-- A $1.8 million income ($0.07 per diluted share), net of tax, from
discontinued operations consisting primarily of:
- A $1.3 million gain, net of tax, from the sale of WRRD-AM
in Milwaukee, Wisconsin;
- A $0.8 million gain, net of tax, from the sale of WFZH-FM
in Milwaukee, Wisconsin; and
- The operating results of CCM Magazine.
-- A $6.9 million gain ($4.4 million, net of tax, or $0.19 per diluted
share) on disposal of assets consisting primarily of a $6.1 million
pre-tax gain from the disposal of the assets of KTEK-AM in Houston,
Texas and a $1.1 million pre-tax gain from the disposal of the
assets of WRVI-FM in Louisville, Kentucky.
-- A $73.0 million impairment of indefinite-lived intangible assets
($47.1 million, net of tax, or $1.99 per share) related to the
impairment of radio broadcasting licenses and goodwill in our
Boston, Detroit, Cleveland, Louisville, Nashville, Tampa, Miami,
Orlando, Sacramento, and Omaha markets;
-- A $1.3 million charge ($0.8 million, net of tax, or $0.05 per
share) related to terminated transaction costs and abandoned
license upgrades;
-- A $4.8 million charge ($3.2 million, net of tax, or $0.20 per
share) related to the change in fair value of our interest rate
swaps;
-- A $4.7 million gain ($3.0 million, net of tax, or $0.13 per
diluted share) on early redemption of long-term debt due to the
repurchase of $9.4 million of our 7 3/4% senior subordinated notes
due in 2010; and
-- A $3.4 million non-cash compensation charge ($2.2 million, net of
tax, or $0.09 per share) related to the expensing of stock options.
This charge included approximately $1.6 million related to the
voluntary surrender of unvested stock options by senior management.
The charge consists of:
- $2.8 million non-cash compensation included in corporate
expenses;
- $0.5 million non-cash compensation included in broadcast
operating expenses; and
- $0.1 million non-cash compensation included in non-broadcast
operating expenses.
These results reflect the reclassification of the operations of our Milwaukee, Wisconsin radio stations to discontinued operations for all periods presented. These stations had net broadcast revenue of approximately $0.4 million and generated a loss of $0.1 million for the twelve months ended December 31, 2008 and no net broadcast revenue and generated a loss of $0.2 million for the twelve months ended December 31, 2009.
Additionally, these results reflect the reclassification of the operations of CCM Magazine to discontinued operations for all periods presented. The magazine had non-broadcast revenue of $0.4 million and generated a profit of $0.1 million for the twelve months ended December 31, 2008.
The company had no other comprehensive income or loss for the twelve months ended December 31, 2009 due to the interest rate swaps becoming ineffective during the fourth quarter of 2008. Other comprehensive loss $0.5 million, net of tax, for the twelve months ended December 31, 2008 is due to the change in fair market value of the company's interest rate swaps.
Per share numbers are calculated based on 23,803,864 diluted weighted average shares for the twelve months ended December 31, 2009 and 23,671,288 diluted weighted average shares for the comparable 2008 period.
Balance Sheet
As of December 31, 2009, the company had net debt of $305.1 million and was in compliance with the covenants of its credit facilities and bond indentures. The company's bank leverage ratio was 5.83 versus a compliance covenant of 7.0.
Acquisitions and Divestitures
-- On February 12, 2010, the company completed the acquisition of
HotAir.com, a popular conservative Internet blog, for $2.0 million;
and
-- On December 30, 2009, the potential buyer of radio station WRFD-AM,
Columbus, Ohio, advised the company that they would not be able to
meet the terms of the asset purchase agreement entered into on
July 31, 2008. Because of the buyer terminating the agreement, the
accompanying financial information for all periods presented
reflects the results of this market in continuing operations. In
January 2010, the company collected a $0.2 million termination fee
from the buyer pursuant to the asset purchase agreement.
Conference Call Information
Salem will host a teleconference to discuss its results today, on March 3, 2010 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (719) 325-2249, passcode 3481356 or listen via the investor relations portion of the company's website, located at www.salem.cc. A replay of the teleconference will be available through March 17, 2010 and can be heard by dialing (719) 457-0820, passcode 3481356 or on the investor relations portion of the company's website, located at www.salem.cc.
First Quarter 2010 Outlook
For the first quarter of 2010, Salem is projecting total revenue to decrease 1% to 3% over first quarter 2009 total revenue of $48.7 million. Salem is also projecting operating expenses before gain or loss on disposal of assets, terminated transaction costs and abandoned license upgrades and impairments to increase 1% to 4% as compared to the first quarter of 2009 operating expenses of $39.7 million.
In addition to its radio properties, Salem owns Salem Radio Network®, which syndicates talk, news and music programming to approximately 2,000 affiliates; Salem Media Representatives, a national radio advertising sales force; Salem Web Network, an Internet provider of Christian content and online streaming; and Salem Publishing, a publisher of Christian-themed magazines. Upon the close of all announced transactions, the company will own 94 radio stations, including 58 stations in 22 of the top 25 markets. Additional information about Salem may be accessed at the company's website, www.salem.cc.
Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem's radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem's reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.
Regulation G
Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). Station operating income is defined as net broadcast revenues minus broadcast operating expenses. Non-broadcast operating income is defined as non-broadcast revenue minus non-broadcast operating expenses. EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before discontinued operations (net of tax), impairment of indefinite-lived intangible assets, gain or loss on the disposal of assets and non-cash compensation expense. In addition, Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company's operating performance.
Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are generally recognized by the broadcast industry as important measures of performance and are used by investors as well as analysts who report on the industry to provide meaningful comparisons between broadcast. Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company's results of operations presented on a GAAP basis such as operating income and net income. In addition, Salem's definitions of station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.
Salem Communications Corporation
Condensed Consolidated Statements of Operations
(in thousands, except share, per share and margin data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2009 2008 2009
---------- ---------- ---------- ----------
(unaudited)
Net broadcast revenue $ 47,530 $ 43,347 $ 194,113 $ 172,055
Non-broadcast revenue 7,654 7,491 28,377 27,158
---------- ---------- ---------- ----------
Total revenue 55,184 50,838 222,490 199,213
Operating expenses:
Broadcast operating
expenses 29,215 26,249 124,881 108,149
Non-broadcast operating
expenses 6,302 6,155 25,867 23,555
Corporate expenses 3,726 3,951 20,040 14,005
Depreciation and
amortization 4,066 3,697 16,136 15,120
Cost of denied tower site
and abandoned projects 1,275 - 1,275 1,111
Impairment of
indefinite-lived
intangible assets 52,690 187 73,010 27,996
(Gain) loss on disposal of
assets (1,030) 6 (6,892) 1,676
---------- ---------- ---------- ----------
Total operating expenses 96,244 40,245 254,317 191,612
---------- ---------- ---------- ----------
Operating income (loss) (41,060) 10,593 (31,827) 7,601
Other income (expense):
Interest income 66 52 247 290
Interest expense (5,366) (7,150) (22,381) (20,079)
Change in fair value of
interest rate swaps (4,827) (2,315) (4,827) (781)
Gain on bargain purchase - - - 1,634
Gain (loss) on early
redemption of long-term
debt 4,664 (1,710) 4,664 (1,050)
Other income (expense), net (57) (16) 121 (88)
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes (46,580) (546) (54,003) (12,473)
Provision for (benefit
from) income taxes (16,173) 945 (19,151) (4,210)
---------- ---------- ---------- ----------
Loss from continuing
operations (30,407) (1,491) (34,852) (8,263)
Income (loss) from
discontinued operations,
net of tax (184) (91) 1,766 (83)
---------- ---------- ---------- ----------
Net loss $ (30,591) $ (1,582) $ (33,086) $ (8,346)
========== ========== ========== ==========
Other comprehensive loss,
net of tax - - (480) -
---------- ---------- ---------- ----------
Comprehensive loss $ (30,591) $ (1,582) $ (33,566) $ (8,346)
========== ========== ========== ==========
Basic (loss) per share
before discontinued
operations $ (1.28) $ (0.06) $ (1.47) $ (0.35)
Income (loss) from
discontinued operations,
net of tax $ (0.01) $ - $ 0.07 $ -
Basic (loss) per share
after discontinued
operations $ (1.29) $ (0.07) $ (1.40) $ (0.35)
Diluted (loss) per share
before discontinued
operations $ (1.28) $ (0.06) $ (1.47) $ (0.35)
Income (loss) from
discontinued operations,
net of tax $ (0.01) $ - $ 0.07 $ -
Diluted (loss) per share
after discontinued
operations $ (1.29) $ (0.07) $ (1.40) $ (0.35)
Basic weighted average
shares outstanding 23,673,788 23,933,940 23,671,288 23,803,864
========== ========== ========== ==========
Diluted weighted average
shares outstanding 23,673,788 23,933,940 23,671,288 23,803,864
========== ========== ========== ==========
Other Data:
Station operating income $ 18,315 $ 17,098 $ 69,232 $ 63,906
Station operating margin 38.5% 39.4% 35.7% 37.1%
Salem Communications Corporation
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2008 2009
------------ ------------
Assets
Cash $ 1,892 $ 8,945
Restricted cash - 100
Trade accounts receivable, net 28,530 27,289
Deferred income taxes 5,670 4,700
Other current assets 2,844 3,459
Property, plant and equipment, net 133,910 121,174
Intangible assets, net 423,709 397,801
Bond issue costs 268 7,078
Bank loan fees 981 1,515
Other assets 9,914 6,984
------------ ------------
Total assets $ 607,718 $ 579,045
============ ============
Liabilities and Stockholders' Equity
Current liabilities $ 22,897 $ 20,373
Long-term debt and capital lease obligations 329,507 313,969
Deferred income taxes 43,106 38,973
Other liabilities 9,092 8,531
Stockholders' equity 203,116 197,199
------------ ------------
Total liabilities and stockholders' equity $ 607,718 $ 579,045
============ ============
Salem Communications Corporation
Supplemental Information
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2009 2008 2009
--------- --------- --------- ---------
(unaudited)
Capital expenditures
Acquisition related / income
producing $ 48 $ - $ 3,949 $ 294
Maintenance 1,085 737 5,135 3,437
--------- --------- --------- ---------
Total capital expenditures $ 1,133 $ 737 $ 9,084 $ 3,731
========= ========= ========= =========
Tax information
Cash tax expense $ (71) $ (4) $ 279 $ 314
Deferred tax expense (16,102) 949 (19,430) (4,524)
--------- --------- --------- ---------
Provision for (benefit from)
income taxes $ (16,173) $ 945 $ (19,151) $ (4,210)
========= ========= ========= =========
Tax benefit of non-book
amortization $ 1,623 $ 3,138 $ 11,398 $ 9,280
========= ========= ========= =========
Reconciliation of Same Station
Net Broadcast
Revenue to Total Net Broadcast
Revenue
Net broadcast revenue - same
station $ 47,077 $ 42,907 $ 189,668 $ 167,402
Net broadcast revenue -
acquisitions 153 153 153 732
Net broadcast revenue -
dispositions 75 - 600 8
Net broadcast revenue - format
changes 225 287 3,692 3,913
--------- --------- --------- ---------
Total net broadcast revenue $ 47,530 $ 43,347 $ 194,113 $ 172,055
========= ========= ========= =========
Reconciliation of Same Station
Broadcast Operating Expenses
to Total Broadcast
Operating Expenses
Broadcast operating expenses -
same station $ 28,814 $ 25,917 $ 121,086 $ 104,071
Broadcast operating expenses -
acquisitions 45 147 45 632
Broadcast operating expenses -
dispositions 126 - 672 12
Broadcast operating expenses -
format changes 230 185 3,078 3,434
--------- --------- --------- ---------
Total broadcast operating
expenses $ 29,215 $ 26,249 $ 124,881 $ 108,149
========= ========= ========= =========
Reconciliation of Same Station
Operating Income to Total
Station Operating Income
Station operating income - same
station $ 18,263 $ 16,990 $ 68,582 $ 63,331
Station operating income -
acquisitions 108 6 108 100
Station operating income -
dispositions (51) - (72) (4)
Station operating income -
format changes (5) 102 614 479
--------- --------- --------- ---------
Total station operating income $ 18,315 $ 17,098 $ 69,232 $ 63,906
========= ========= ========= =========
Salem Communications Corporation
Supplemental Information
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2009 2008 2009
--------- --------- --------- ---------
(unaudited)
Reconciliation of Station
Operating Income and Non-
Broadcast Operating Income to
Operating Income (Loss)
Station operating income $ 18,315 $ 17,098 $ 69,232 $ 63,906
Non-broadcast operating income 1,352 1,336 2,510 3,603
Less:
Corporate expenses (3,726) (3,951) (20,040) (14,005)
Depreciation and amortization (4,066) (3,697) (16,136) (15,120)
Cost of denied tower site and
abandoned projects (1,275) - (1,275) (1,111)
Impairment of indefinite-lived
intangible assets (52,690) (187) (73,010) (27,996)
Gain (loss) on disposal of
assets 1,030 (6) 6,892 (1,676)
--------- --------- --------- ---------
Operating income (loss) $ (41,060) $ 10,593 $ (31,827) $ 7,601
========= ========= ========= =========
Reconciliation of Adjusted
EBITDA to EBITDA to Net
Income (Loss)
Adjusted EBITDA $ 15,928 $ 14,676 $ 55,197 $ 54,004
Less:
Stock-based compensation (44) (209) (3,374) (588)
Impairment of indefinite-lived
intangible assets (52,690) (187) (73,010) (27,996)
Cost of denied tower site and
abandoned projects (1,275) - (1,275) (1,111)
Gain on bargain purchase - - - 1,634
Gain (loss) on early
redemption of long-term debt 4,664 (1,710) 4,664 (1,050)
Discontinued operations, net
of tax (184) (91) 1,766 (83)
Gain (loss) on disposal of
assets 1,030 (6) 6,892 (1,676)
--------- --------- --------- ---------
EBITDA (32,571) 12,473 (9,140) 23,134
Plus:
Interest income 66 52 247 290
Less:
Depreciation and amortization (4,066) (3,697) (16,136) (15,120)
Interest expense (5,366) (7,150) (22,381) (20,079)
Change in fair value of
interest rate swaps (4,827) (2,315) (4,827) (781)
(Provision for) benefit from
income taxes 16,173 (945) 19,151 4,210
--------- --------- --------- ---------
Net loss $ (30,591) $ (1,582) $ (33,086) $ (8,346)
========= ========= ========= =========
Outstanding
at Applicable
December 31, Interest
2009 Rate
--------- ---------
Selected Debt and Swap Data
95/8% senior subordinated notes $ 300,000 9.63%
Revolving credit facility 15,000 3.73%
(1) Subject to rolling LIBOR plus a spread currently at 3.5% and
incorporated into the rate set forth above.
Company Contact: Evan D. Masyr Salem Communications (805) 987-0400 ext. 1053 Email Contact
Released March 3, 2010