-Net Revenue Decreases 7% in 2008-
SANTA MONICA, Calif., Feb. 26 /PRNewswire-FirstCall/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and twelve-month periods ended December 31, 2008.
Historical results, which are attached, are in thousands of U.S. dollars (except share and per share data). The results of our outdoor operations are presented in discontinued operations within the statements of operations in accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a table reconciling each of these non-GAAP financial measures to its most directly comparable GAAP financial measure, is included beginning on page 8. Unaudited financial highlights are as follows:
Three Months Ended
December 31,
2008 2007 % Change
Net revenue $52,762 $62,514 (16)%
Operating expenses (1) 35,226 36,119 (2)%
Corporate expenses (2) 4,414 4,669 (5)%
Consolidated adjusted EBITDA (3) 13,948 22,283 (37)%
Free cash flow (4) $3,532 $13,064 (73)%
Free cash flow per share, basic
and diluted (4) $0.04 $0.13 (69)%
Income (loss) from continuing
operations $(134,126) $26,114 NM
Net loss applicable to
common stockholders $(136,483) $(47,051) 190%
Net income (loss) per share from
continuing operations applicable
to common stockholders,
basic and diluted $(1.56) $0.26 NM
Net loss per share applicable
to common stockholders,
basic and diluted $(1.58) $(0.48) 229%
Weighted average common shares
outstanding, basic 86,185,661 98,806,107
Weighted average common shares
outstanding, diluted 86,185,661 99,276,283
Twelve Months Ended
December 31,
2008 2007 % Change
Net revenue $232,335 $250,046 (7)%
Operating expenses (1) 144,510 143,875 0%
Corporate expenses (2) 17,117 17,353 (1)%
Consolidated adjusted EBITDA (3) 74,104 91,779 (19)%
Free cash flow (4) $26,572 $50,383 (47)%
Free cash flow per share, basic
and diluted (4) $0.29 $0.49 (41)%
Income (loss) from continuing
operations $(484,007) $40,040 NM
Net loss applicable to
common stockholders $(487,937) $(43,117) NM
Net income (loss) per share from
continuing operations applicable
to common stockholders,
basic and diluted $(5.34) $0.39 NM
Net loss per share applicable
to common stockholders,
basic and diluted $(5.39) $(0.42) NM
Weighted average common shares
outstanding, basic 90,560,685 102,382,307
Weighted average common shares
outstanding, diluted 90,560,685 103,020,657
(1) Operating expenses include direct operating, selling, general and
administrative expenses. Included in operating expenses are $0.4
million and $0.2 million of non-cash stock-based compensation for the
three-month periods ended December 31, 2008 and 2007, respectively
and $1.4 million and $1.1 million of non-cash stock-based compensation
for the twelve-month periods ended December 31, 2008 and 2007,
respectively. Operating expenses do not include corporate expenses,
depreciation and amortization, impairment loss, gain (loss) on sale of
assets and gain on debt extinguishment.
(2) Corporate expenses include $0.5 million and $0.5 million of non-cash
stock-based compensation for the three-month periods ended December
31, 2008 and 2007, respectively and $1.9 million and $1.9 million of
non-cash stock-based compensation for the twelve-month periods ended
December 31, 2008 and 2007, respectively.
(3) Consolidated adjusted EBITDA means operating income (loss) plus (gain)
loss on sale of assets, depreciation and amortization, non-cash
impairment loss, non-cash stock-based compensation included in
operating and corporate expenses and syndication programming
amortization less syndication programming payments. We use the term
consolidated adjusted EBITDA because that measure is defined in our
syndicated bank credit facility and does not include (gain) loss on
sale of assets, depreciation and amortization, non-cash impairment
loss, non-cash stock-based compensation, net interest expense, gain
on debt extinguishment, income tax expense (benefit), equity in net
income (loss) of nonconsolidated affiliate, loss from discontinued
operations and syndication programming amortization and does include
syndication programming payments. The definition of operating income
(loss), and thus consolidated adjusted EBITDA, excludes (gain) loss
on sale of assets, depreciation and amortization, non-cash impairment
loss, non-cash stock-based compensation, net interest expense, gain on
debt extinguishment, income tax expense (benefit), equity in net
income (loss) of nonconsolidated affiliate, loss from discontinued
operations and syndication programming amortization and includes
syndication programming payments. While many in the financial
community and we consider consolidated adjusted EBITDA to be
important, it should be considered in addition to, but not as a
substitute for or superior to, other measures of liquidity and
financial performance prepared in accordance with accounting
principles generally accepted in the United States of America, such
as cash flows from operating activities, operating income and net
income. As consolidated adjusted EBITDA excludes non-cash (gain) loss
of sales of assets, non-cash depreciation and amortization, non-cash
impairment loss, non-cash stock-based compensation, net interest
expense, gain on debt extinguishment, income tax expense (benefit),
equity in net income (loss) of nonconsolidated affiliate, loss from
discontinued operations and syndication programming amortization and
includes syndication programming payments, consolidated adjusted
EBITDA has certain limitations because it excludes and includes
several important non-cash financial line items. Therefore, we
consider both non-GAAP and GAAP measures when evaluating our business.
Consolidated adjusted EBITDA is also used to make executive
compensation decisions.
(4) Free cash flow is defined as consolidated adjusted EBITDA less cash
paid for income taxes, net interest expense and capital expenditures.
Net interest expense is defined as interest expense, less non-cash
interest expense relating to amortization of debt finance costs, less
interest income less the change in the fair value of our interest rate
swaps. Free cash flow per share is defined as free cash flow divided
by the diluted weighted average common shares outstanding.
Commenting on the Company's earnings results, Walter F. Ulloa, Chairman and Chief Executive Officer, said, "Our fourth quarter results reflect the continuing impact of the global financial crisis and the recession, resulting in an advertising downturn. We are continuing to focus on debt reduction and are committed to further reducing our costs and operating as efficiently as possible in order to maximize our cash flows, without sacrificing the quality of our content or marketing efforts. Our audience shares remain strong in the nation's most densely populated Hispanic markets."
The Company also announced that it repurchased 3.3 million shares of Class A common stock for approximately $4.2 million in the fourth quarter of 2008. The Company repurchased 12.1 million shares of Class A common stock for approximately $50.4 million in 2008. The Company's Board of Directors has approved the retirement of all treasury stock repurchased as of December 31, 2008, and a total of 14.1 million treasury shares were retired on December 31, 2008.
Impairment of Television and Radio Segment Intangibles
In the fourth quarter of 2008, the Company recorded an impairment charge of $170 million, primarily related to television and radio FCC broadcasting licenses and goodwill as a result of an appraisal recently conducted on certain television and radio assets. For the 2008 year, the Company recorded an impairment charge of $610 million, primarily related to television and radio FCC broadcasting licenses and goodwill.
Financial Results
Cautionary Note Regarding Preliminary Quarterly Results
In connection with the preparation of our financial statements for the three- and twelve-month periods ended December 31, 2008, we are currently in the process of finalizing the provision for income taxes, which we intend to complete in time to permit a timely filing of our annual report for the period ended December 31, 2008.
Three Months Ended December 31, 2008 Compared to
Three Months Ended December 31, 2007
(Unaudited)
Three Months Ended
December 31,
2008 2007 % Change
Net revenue $52,762 $62,514 (16)%
Operating expenses(1) 35,226 36,119 (2)%
Corporate expenses(1) 4,414 4,669 (5)%
Depreciation and amortization 6,227 5,572 12%
Impairment charge 170,436 - NM
Operating income (loss) (163,541) 16,154 NM
Interest expense, net (14,943) (17,266) (13)%
Gain on debt extinguishment 9,813 - NM
Loss before income taxes (168,671) (1,112) NM
Income tax benefit 34,538 27,295 27%
Net income (loss) before equity in
net loss of nonconsolidated
affiliates and discontinued
operations (134,133) 26,183 NM
Equity in net income (loss) of
nonconsolidated affiliates 7 (69) NM
Net income (loss) before
discontinued operations (134,126) 26,114 NM
Loss from discontinued operations,
net of tax (2,357) (73,165) (97)%
Net loss $(136,483) $(47,051) 190%
(1) Operating expenses and corporate expenses are defined on page 1.
Net revenue decreased to $52.8 million for the three-month period ended December 31, 2008 from $62.5 million for the three-month period ended December 31, 2007, a decrease of $9.7 million. Of the overall decrease, $6.0 million came from our television segment and was primarily attributable to a decrease in local and national advertising sales and advertising rates, which in turn was primarily due to the continuing weak economy. Additionally, $3.7 million of the decrease came from our radio segment and was primarily attributable to a decrease in local advertising sales and advertising rates as a result of the continuing weak economy, partially offset by revenue associated with the expansion of our radio division in Orlando.
Operating expenses decreased to $35.2 million for the three-month period ended December 31, 2008 from $36.1 million for the three-month period ended December 31, 2007, a decrease of $0.9 million. The decrease was primarily attributable to a decrease in expenses associated with the decrease in net revenue.
Corporate expenses decreased to $4.4 million for the three-month period ended December 31, 2008 from $4.7 million for the three-month period ended December 31, 2007, a decrease of $0.3 million. The decrease was attributable to the elimination of bonuses paid to executive officers.
The Company recorded an impairment charge of $170 million, primarily related to television and radio FCC broadcasting licenses and goodwill as a result of an appraisal recently conducted on certain television and radio assets for the three-month period ended December 31, 2008.
Twelve Months Ended December 31, 2008 Compared to
Twelve Months Ended December 31, 2007
(Unaudited)
Twelve Months Ended
December 31,
2008 2007 % Change
Net revenue $232,335 $250,046 (7)%
Operating expenses (1) 144,510 143,875 0%
Corporate expenses (1) 17,117 17,353 (1)%
Depreciation and amortization 23,412 22,565 4%
Impairment charge 610,456 - NM
Operating income (loss) (563,160) 66,253 NM
Interest expense, net (41,199) (44,596) (8)%
Gain on debt extinguishment 9,813 - NM
Income (loss) before income taxes (594,546) 21,657 NM
Income tax benefit 110,705 18,047 NM
Net income (loss) before equity in
net income (loss) of
nonconsolidated affiliates and
discontinued operations (483,841) 39,704 NM
Equity in net income (loss) of
nonconsolidated affiliates (166) 336 NM
Net income (loss) before
discontinued operations (484,007) 40,040 NM
Loss from discontinued operations,
net of tax (3,930) (83,157) (95)%
Net loss $(487,937) $(43,117) NM
(1) Operating expenses and corporate expenses are defined on page 1.
Net revenue decreased to $232.3 million for the twelve-month period ended December 31, 2008 from $250.0 million for the twelve-month period ended December 31, 2007, a decrease of $17.7 million. Of the overall decrease, $10.4 million came from our television segment and was primarily attributable to a decrease in local and national advertising sales and advertising rates, which in turn was primarily due to the continuing weak economy. Additionally, $7.3 million of the decrease came from our radio segment and was primarily attributable to a decrease in local advertising sales and advertising rates as a result of the continuing weak economy, partially offset by revenue associated with the expansion of our radio division in Orlando.
Operating expenses increased to $144.5 million for the twelve-month period ended December 31, 2008 from $143.9 million for the twelve-month period ended December 31, 2007, an increase of $0.6 million. The increase was primarily attributable to expenses associated with the expansion of our radio division in Orlando, an increase in rating services and an increase in rent and utility expense, partially offset by a decrease in expenses associated with the decrease in net revenue.
Corporate expenses decreased to $17.1 million for the twelve-month period ended December 31, 2008 from $17.4 million for the twelve-month period ended December 31, 2007, a decrease of $0.3 million. The decrease was attributable to the elimination of bonuses paid to executive officers.
The Company recorded an impairment charge of $610 million, primarily related to television and radio FCC broadcasting licenses and goodwill for the twelve-month period ended December 31, 2008.
Segment Results
The following represents selected unaudited segment information:
Three Months Ended
December 31,
2008 2007 % Change
Net Revenue
Television $33,410 $39,380 (15)%
Radio 19,352 23,134 (16)%
Total $52,762 $62,514 (16)%
Operating Expenses (1)
Television $21,082 $22,112 (5)%
Radio 14,144 14,007 1%
Total $35,226 $36,119 (2)%
Corporate Expenses (1) $4,414 $4,669 (5)%
Consolidated adjusted
EBITDA (1) $13,948 $22,283 (37)%
(1) Operating expenses, Corporate expenses, and Consolidated adjusted
EBITDA are defined on page 1.
Entravision Communications Corporation will hold a conference call to discuss its 2008 fourth quarter results on February 26, 2009 at 5 p.m. Eastern Time. To access the conference call, please dial 412-858-4600 ten minutes prior to the start time. The call will be webcast live and archived for replay at www.entravision.com.
Entravision Communications Corporation is a diversified Spanish-language media company utilizing a combination of television and radio operations to reach Hispanic consumers across the United States, as well as the border markets of Mexico. Entravision is the largest affiliate group of both the top-ranked Univision television network and Univision's TeleFutura network, with television stations in 20 of the nation's top 50 Hispanic markets. The Company also operates one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 48 owned and operated radio stations. Entravision shares of Class A Common Stock are traded on The New York Stock Exchange under the symbol: EVC.
This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission.
(Financial Table Follows)
Entravision Communications Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three-Month Period Twelve-Month Period
Ended December 31, Ended December 31,
2008 2007 2008 2007
Net revenue (including
related parties of $0, $165,
$182 and $615) $52,762 $62,514 $232,335 $250,046
Expenses:
Direct operating expenses
(including related
parties of $2,873, $3,048,
$11,455 and $12,180)
(including non-cash
stock-based compensation
of $171, $75, $633
and $431) 24,543 25,179 100,801 99,608
Selling, general and
administrative expenses
(including non-cash
stock-based compensation
of $215, $143, $794
and $678) 10,683 10,940 43,709 44,267
Corporate expenses
(including non-cash
stock-based compensation
of $517, $470, $1,926
and $1,884) 4,414 4,669 17,117 17,353
Depreciation and
amortization (includes
direct operating of $4,912,
$4,362, $18,344 and $17,700;
selling, general and
administrative of $1,000,
$1,003, $3,991 and $4,007;
and corporate of $315,
$207, $1,077 and $858)
(including related
parties of $580, $580,
$2,320 and $2,320) 6,227 5,572 23,412 22,565
Impairment charge 170,436 - 610,456 -
216,303 46,360 795,495 183,793
Operating income (loss) (163,541) 16,154 (563,160) 66,253
Interest expense (including
related parties of $43, $58,
$199 and $257) (15,498) (18,184) (43,093) (49,405)
Interest income 555 918 1,894 4,809
Gain on debt extinguishment 9,813 - 9,813 -
Income (loss) before
income taxes (168,671) (1,112) (594,546) 21,657
Income tax benefit 34,538 27,295 110,705 18,047
Income (loss) before
equity in net income
(loss) of
nonconsolidated
affiliate and
discontinued
operations (134,133) 26,183 (483,841) 39,704
Equity in net income
(loss) of
nonconsolidated affiliate 7 (69) (166) 336
Income (loss) from
continuing operations (134,126) 26,114 (484,007) 40,040
Loss from discontinued
operations, net of tax (2,357) (73,165) (3,930) (83,157)
Net loss applicable to
common stockholders $(136,483) $(47,051) $(487,937) $(43,117)
Basic and diluted earnings
per share:
Net income (loss) per share
from continuing operations
applicable to common
stockholders, basic
and diluted $(1.56) $0.26 $(5.34) $0.39
Net loss per share from
discontinued operations,
basic and diluted $(0.03) $(0.74) $(0.04) $(0.81)
Net loss per share applicable
to common stockholders,
basic and diluted $(1.58) $(0.48) $(5.39) $(0.42)
Weighted average common
shares outstanding,
basic 86,185,661 98,806,107 90,560,685 102,382,307
Weighted average common
shares outstanding,
diluted 86,185,661 99,276,283 90,560,685 103,020,657
Entravision Communications Corporation
Consolidated Statements of Cash Flows
(Unaudited; in thousands)
Three-Month Period Twelve-Month Period
Ended December 31, Ended December 31,
2008 2007 2008 2007
Cash flows from operating
activities:
Net loss $(136,483) $(47,051) $(487,937) $(43,117)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Depreciation and
amortization 6,227 5,572 23,412 22,565
Impairment charge 170,436 - 610,456 -
Deferred income taxes (34,653) (26,152) (112,190) (18,589)
Amortization of debt issue
costs 157 101 459 404
Amortization of
syndication contracts 628 720 2,883 1,798
Payments on syndication
contracts (705) (851) (2,840) (1,830)
Equity in net (income)
loss of nonconsolidated
affiliate (7) 69 166 (336)
Non-cash stock-based
compensation 903 688 3,353 2,993
Gain on debt extinguishment (9,813) - (9,813) -
Change in fair value of
interest rate swap
agreements 8,001 10,200 11,648 17,667
Changes in assets and
liabilities, net of effect
of acquisitions and
dispositions:
(Increase) decrease in
accounts receivable 7,508 3,098 11,156 (4,015)
Decrease in prepaid
expenses and other
assets 903 1,327 803 84
Increase (decrease) in
accounts payable,
accrued expenses and
other liabilities (2,860) 120 (6,065) (938)
Effect of discontinued
operations 957 75,039 (1,273) 86,579
Net cash provided by
operating activities 11,199 22,880 44,218 63,265
Cash flows from investing
activities:
Proceeds from sale of
property and equipment and
intangibles - 17 101,498 37
Purchases of property and
equipment and intangibles (3,458) (12,687) (16,873) (26,177)
Purchase of a business - - (22,885) -
Deposits on acquisitions - - (200) -
Distribution from
nonconsolidated affiliate - 250 - 250
Effect of discontinued
operations - (347) (194) (1,610)
Net cash provided by
(used in) investing
activities (3,458) (12,767) 61,346 (27,500)
Cash flows from financing activities:
Proceeds from issuance of
common stock - 561 785 7,353
Payments on long-term debt (56,666) (11,272) (67,702) (13,692)
Repurchase of Class U common
stock - - (10,380) -
Repurchase of Class A common
stock (4,299) (15,561) (50,837) (61,006)
Excess tax benefits from
exercise of stock options (56) (573) (81) -
Net cash used in
financing activities (61,021) (26,845) (128,215) (67,345)
Net decrease in cash
and cash equivalents (53,280) (16,732) (22,651) (31,580)
Cash and cash equivalents:
Beginning 117,574 103,677 86,945 118,525
Ending $64,294 $86,945 $64,294 $86,945
Entravision Communications Corporation
Reconciliation of Consolidated Adjusted EBITDA to Cash Flows
From Operating Activities
(Unaudited; in thousands)
The most directly comparable GAAP financial measure is operating
cash flow. A reconciliation of this non-GAAP measure to cash flows
from operating activities for each of the periods presented is
as follows:
Three-Month Period Twelve-Month Period
Ended December 31, Ended December 31,
2008 2007 2008 2007
Consolidated
adjusted EBITDA (1) $13,948 $22,283 $74,104 $91,779
Interest expense (15,498) (18,184) (43,093) (49,405)
Interest income 555 918 1,894 4,809
Gain on debt
extinguishment 9,813 - 9,813 -
Income tax benefit 34,538 27,295 110,705 18,047
Amortization of
syndication contracts (628) (720) (2,883) (1,798)
Payments on
syndication
contracts 705 851 2,840 1,830
Non-cash stock-based
compensation included
in direct operating
expenses (171) (75) (633) (431)
Non-cash stock-based
compensation included
in selling, general
and administrative
expenses (215) (143) (794) (678)
Non-cash stock-based
compensation
included in
corporate expenses (517) (470) (1,926) (1,884)
Depreciation and
amortization (6,227) (5,572) (23,412) (22,565)
Impairment charge (170,436) - (610,456) -
Equity in net income
(loss) of
nonconsolidated
affiliates 7 (69) (166) 336
Loss from discontinued
operations (2,357) (73,165) (3,930) (83,157)
Net loss (136,483) (47,051) (487,937) (43,117)
Depreciation and
amortization 6,227 5,572 23,412 22,565
Impairment charge 170,436 - 610,456 -
Deferred income taxes (34,653) (26,152) (112,190) (18,589)
Amortization of debt
issue costs 157 101 459 404
Amortization of
syndication contracts 628 720 2,883 1,798
Payments on syndication
contracts (705) (851) (2,840) (1,830)
Equity in net
(income) loss of
nonconsolidated
affiliate (7) 69 166 (336)
Non-cash stock-based
compensation 903 688 3,353 2,993
Gain on debt
extinguishment (9,813) - (9,813) -
Change in fair value
of interest rate
swap agreements 8,001 10,200 11,648 17,667
Changes in assets and
liabilities, net of
effect of acquisitions
and dispositions:
(Increase) decrease in
accounts receivable 7,508 3,098 11,156 (4,015)
Decrease in prepaid
expenses and other
assets 903 1,327 803 84
Increase (decrease) in
accounts payable,
accrued expenses
and other liabilities (2,860) 120 (6,065) (938)
Effect of discontinued
operations 957 75,039 (1,273) 86,579
Cash flows from
operating activities $11,199 $22,880 $44,218 $63,265
(1) Consolidated adjusted EBITDA is defined on page 1.
Entravision Communications Corporation
Reconciliation of Free Cash Flow to Net Loss
(Unaudited; in thousands)
The most directly comparable GAAP financial measure is net income.
A reconciliation of this non-GAAP measure to net income for each of the
periods presented is as follows:
Three-Month Period Twelve-Month Period
Ended December 31, Ended December 31,
2008 2007 2008 2007
Consolidated adjusted EBITDA (1) $13,948 $22,283 $74,104 $91,779
Net interest expense (1) 6,787 6,965 29,093 26,526
Cash paid for income taxes 171 (569) 1,566 542
Capital expenditures (2) 3,458 2,823 16,873 14,328
Free cash flow (1) 3,532 13,064 26,572 50,383
Capital expenditures (2) 3,458 2,823 16,873 14,328
Non-cash interest (expense)
income relating to amortization
of debt finance costs and
interest rate swap agreements (8,156) (10,301) (12,106) (18,070)
Non-cash income tax benefit 34,709 26,726 112,271 18,589
Gain on debt extinguishment 9,813 - 9,813 -
Amortization of syndication
contracts (628) (720) (2,883) (1,798)
Payments on syndication contracts 705 851 2,840 1,830
Non-cash stock-based compensation
included in direct operating
expenses (171) (75) (633) (431)
Non-cash stock-based compensation
included in selling, general
and administrative expenses (215) (143) (794) (678)
Non-cash stock-based compensation
included in corporate expenses (517) (470) (1,926) (1,884)
Depreciation and amortization (6,227) (5,572) (23,412) (22,565)
Impairment charge (170,436) - (610,456) -
Equity in net income (loss) of
nonconsolidated affiliates 7 (69) (166) 336
Loss from discontinued
operations (2,357) (73,165) (3,930) (83,157)
Net loss $(136,483) $(47,051) $(487,937) $(43,117)
(1) Consolidated adjusted EBITDA, net interest expense and free cash
flow are defined on page 1.
(2) Capital expenditures is not part of the consolidated statement of
operations.
