ATLANTA, July 30 /PRNewswire-FirstCall/ -- Cox Radio, Inc. (NYSE:CXR)
today reported financial results for the three-month and six-month periods ended June 30, 2008.
Financial highlights (in thousands, except per share data and percentages) are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net revenues $108,228 $118,002 (8.3%) $206,030 $218,755 (5.8%)
Station operating
income (1) 41,294 47,790 (13.6%) 77,452 85,615 (9.5%)
Station operating
income margin (2) 38.2% 40.5% - 37.6% 39.1% -
Operating (loss)
income $(109,135) $38,204 * $(83,991) $66,255 *
Net (loss) income (75,357) 20,254 * (62,548) 33,787 *
Net (loss) income
per common share
- diluted $(0.88) $0.21 * $(0.72) $0.35 *
Free cash flow (3) 25,928 29,164 (11.1%) 47,872 49,404 (3.1%)
* Results are not statistically meaningful.
(1) Station operating income is not a measure of performance calculated in
accordance with accounting principles generally accepted in the United
States (GAAP). Please see the attached table for a reconciliation to
operating income, the most directly comparable GAAP financial measure.
(2) Station operating income margin is station operating income as a
percentage of net revenues.
(3) Free cash flow is not a measure of performance calculated in
accordance with GAAP. Please see the attached table for a
reconciliation to net income, the most directly comparable GAAP
financial measure.
Robert F. Neil, President and Chief Executive Officer, commented,
"During the second quarter we continued to execute our strategy in the
face of a difficult advertising market and slowing economy. Our radio
stations are performing well from an audience perspective, our sales
teams are working aggressively to attract advertisers and we are making
considerable progress in strengthening and expanding our digital media
presence. Given the current environment, we are focused on more
aggressively controlling our costs, but continue to make strategic
investments in programming and marketing where appropriate. Further,
our balance sheet remains exceptionally strong; and during the quarter,
we continued to execute on our share repurchase program."
Operating Results - Second Quarter 2008
Net revenues for the second quarter of 2008 were $108.2 million,
down 8.3% from the second quarter of 2007. Local revenues decreased
6.1% and national revenues decreased 17.5%, each as compared to the
second quarter of 2007. Other revenues, which include Internet and
other non-traditional revenues, decreased 4.0% during the current
quarter as compared to the prior-year quarter. Our stations in Long
Island, Birmingham and Tulsa delivered revenue growth during the second
quarter of 2008. Revenue growth at these stations was more than offset
by results of our stations in Atlanta, Orlando, Miami, Tampa, Houston
and Jacksonville, where net revenues were down for the quarter.
Cost of services is comprised of expenses incurred by our technical,
news and programming departments. Cost of services decreased $0.2
million, or 1.0% compared to the second quarter of 2007. For the second
quarter of 2008, increased technical costs were more than offset by a
reduction in compensation expense associated with performance unit
awards issued under our Long-Term Incentive Plan (LTIP). Compensation
expense for these awards is recognized over the five year vesting
period of the awards and is based on the amount that is ultimately
expected to be paid upon vesting.
Selling, general and administrative expenses are comprised of
expenses incurred by our sales, promotion and general and
administrative departments. These expenses decreased $7.4 million, or
15.2% when compared to the second quarter of 2007, due to decreased
promotions expenses, decreased compensation expense associated with
performance units awarded under our LTIP and a decline in sales
commissions and bonuses.
Corporate general and administrative expenses decreased $2.5 million
compared to the second quarter of 2007 due to a reduction in
compensation expense associated with performance units awarded to
corporate employees under our LTIP.
Our operating loss for the second quarter of 2008 was $109.1 million
compared to operating income of $38.2 million for the second quarter of
2007. During the second quarter of 2008 we recorded a $147.6 million
non-cash impairment charge ($96.8 million net of tax) to reduce the
carrying value of intangible assets in our Greenville, Honolulu,
Houston, Jacksonville, Louisville, Miami, Richmond, San Antonio,
Southern Connecticut and Tulsa markets to their estimated fair values.
The write-down was pursuant to Statement of Financial Accounting
Standard (SFAS) No. 142, "Goodwill and Other Intangible Assets," which
requires that goodwill and certain intangible assets be tested for
impairment at least annually, or more frequently if events or changes
in circumstances indicate the assets might be impaired.
Interest expense during the second quarter of 2008 decreased $2.3
million, or 43.2% when compared to the second quarter of 2007, due to a
lower borrowing rate under our credit facility. The average interest
rate on our credit facility was 3.3% during the second quarter of 2008
and 6.0% during the second quarter of 2007.
Income tax expense decreased to a net income tax benefit of $36.8
million in the second quarter of 2008, as compared to the second
quarter of 2007, due primarily to the non-cash impairment charge
discussed above. Our overall effective tax rate was 32.8% for the
second quarter of 2008 and 39% for the second quarter of 2007.
Our net loss for the second quarter of 2008 was $75.4 million,
compared to net income of $20.3 million in the second quarter of 2007,
due to the non-cash impairment charge discussed above.
Operating Results - First Six Months of 2008
Net revenues for the first six months of 2008 decreased $12.7
million, a 5.8% decrease compared to the first six months of 2007.
Local revenues decreased 5.3% and national revenues decreased 11.0%,
each as compared to the first six months of 2007. Other revenues, which
include Internet and other non-traditional revenue, increased 3.3% as
compared to the first six months of 2007. Our stations in Long Island,
Birmingham and Tulsa delivered revenue growth during the first six
months of 2008. Those increases were more than offset by results of our
stations in Atlanta, Orlando, Miami, Tampa, Jacksonville and Richmond,
where revenues were down for the first six months of 2008.
Cost of services increased $0.5 million, or 1.1% over the first six
months of 2007. This increase was primarily the result of additional
costs associated with programming talent.
Selling, general and administrative expenses decreased $8.4 million,
or 9.3% compared to the first six months of 2007, due to decreased
compensation expense associated with performance units awarded under
our LTIP and a decline in sales commissions and bonuses.
Corporate general and administrative expenses decreased 17.0%, or
$1.8 million compared to the second quarter of 2007, due to a reduction
in compensation expense associated with performance units awarded to
corporate employees under our LTIP.
Our operating loss for the first six months of 2008 was $84.0
million, compared to operating income of $66.3 million for the first
six months of 2007, due to the $147.6 million non-cash impairment
charge ($96.8 million net of tax) to reduce the carrying value of
intangible assets in certain markets to their estimated fair values.
Interest expense during the first six months of 2008 totaled $6.9
million, as compared to $11.1 million for the first six months of 2007.
This decrease was primarily attributable to a lower borrowing rate
under our credit facility. The average rate on our credit facility was
3.8% during the first six months of 2008 and 6.0% during the first six
months of 2007.
Income tax expense decreased to a net income tax benefit of $28.3
million in the first six months of 2008, as compared to the first six
months of 2007, due primarily to the non-cash impairment charge
discussed above. Our effective tax rate for the first six months of
2008 and 2007 was 31.2% and 39.1%, respectively.
Our net loss for the first six months of 2008 was $62.5 million,
compared to net income of $33.8 million for the first six months of
2007, due primarily to the non-cash impairment charge discussed above.
Other Matters
In January 2005, we acquired an option to purchase five radio
stations serving the Athens, Georgia market. In January 2008, we
exercised this option, and in February 2008, we entered into a
definitive asset purchase agreement to acquire the original five radio
stations subject to the option and an additional station in Washington,
Georgia, subsequently relocated to Athens, Georgia. The aggregate $60
million purchase price for the stations will be reduced by the $12
million we previously paid to the sellers and is subject to other
customary closing adjustments. We expect to close the acquisition in
August 2008.
As of June 30, 2008, we had implemented three share repurchase
programs through which Cox Radio, from time to time, may repurchase
shares of its Class A common stock in the open market or through
privately negotiated transactions, with the amount and timing of
repurchases to be determined by the company's management. Repurchased
shares are held in treasury, and we may commence, suspend or terminate
repurchases at any time, without prior notice, depending on market
conditions and various other factors.
During the second quarter of 2008, we repurchased 1.6 million shares
of Class A common stock for an aggregate purchase price of
approximately $18.6 million, including commissions and fees. As of June
30, 2008, we had purchased a total of approximately 16.2 million shares
under all of our repurchase programs for an aggregate purchase price of
approximately $210.0 million, including commissions and fees, at an
average price of $12.93 per share. Approximately $90.0 million remained
authorized for additional repurchases as of June 30, 2008.
Cox Radio is one of the largest radio companies in the United States
based on revenues. Upon the completion of all announced transactions,
Cox Radio will own, operate or provide sales or marketing services for
86 stations (71 FM and 15 AM) clustered in 19 markets, including major
markets such as Atlanta, Houston, Miami, Orlando, San Antonio and
Tampa. Cox Radio shares are traded on the New York Stock Exchange under
the symbol: CXR.