Grupo Radio Centro Reports Second Quarter and First Half 2007 Results

Grupo Radio Centro Reports Second Quarter and First Half 2007 Results

MEXICO CITY, July 25 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A.B. de C.V. (NYSE:RC) (NYSE:BMV:) (NYSE:RCENTRO-A) (the "Company"), one of Mexico's leading radio broadcasting companies, announced today its results of operations for the second quarter and first half ended June 30, 2007. All figures were prepared in accordance with the Financial Reporting Standards issued by the Mexican Board for Research and Development of Financial Information Standards and have been restated in constant pesos as of June 30, 2007.

Second Quarter Results

Broadcasting revenue for the second quarter of 2007 was Ps. 145,498,000, representing a decrease of 40.5% compared to Ps. 244,518,000 reported for the second quarter of 2006. This decrease was mainly attributable to a decrease in advertising expenditures by political parties, which purchased more airtime last year in connection with the July 2006 presidential and congressional elections.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the second quarter of 2007 were Ps. 100,808,000, representing a decrease of 21.1% compared to Ps. 127,781,000 reported for the second quarter of 2006. This decrease was primarily due to lower sales commissions to the Company's general sales force as a result of the decrease in broadcasting revenue, a smaller allowance for doubtful accounts than in the second quarter of 2006 (when the Company had a larger-than-usual reserve in connection with receivables that the Company ultimately sold in December 2006) and lower expenses relating to the Company's advertising and marketing campaigns than in the second quarter of 2006, when the political election season impacted the Company's advertising and marketing campaign expenses.

For the second quarter of 2007, the Company reported broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) of Ps. 44,690,000, a 61.7% decline compared to Ps. 116,737,000 reported for the second quarter of 2006. This decrease in broadcasting income was mainly attributable to the aforementioned decrease in broadcasting revenue.

Depreciation and amortization expenses for the second quarter of 2007 were Ps. 8,609,000, a 16.5% increase compared to Ps. 7,392,000 reported for the second quarter of 2006. Depreciation and amortization expenses were lower in the second quarter of 2006 than in the second quarter of 2007 primarily because the Company reduced depreciation and amortization expenses for the second quarter of 2006 to offset excess depreciation and amortization expenses recorded for the first quarter of 2006.

The Company's corporate, general and administrative expenses were Ps. 3,729,000 for the second quarter of 2007, a 7.3% increase compared to Ps. 3,474,000 reported for the second quarter of 2006.

The Company reported operating income of Ps. 32,352,000 for the second quarter of 2007, compared to operating income of Ps. 105,871,000 in the second quarter of 2006. This decrease was due to lower broadcasting revenue in the second quarter of 2007 compared to the second quarter of 2006, as described above.

The Company's comprehensive financing cost for the second quarter of 2007 was Ps. 2,505,000, compared to a comprehensive financing gain of Ps. 2,319,000 reported for the second quarter of 2006. This unfavorable change was mainly due to a loss on foreign currency exchange, net of Ps. 31,000 in the second quarter of 2007, compared to a gain of Ps. 3,785,000 in the second quarter of 2006. This gain in the second quarter of 2006 resulted from the impact of peso appreciation on the Company's US dollar-denominated contingent liability provision. The Company cancelled this provision in June 2006, as described below.

During the second quarter of 2007, other expenses, net were Ps. 9,260,000, a 37.6% decrease compared to Ps. 14,849,000 reported for the second quarter of 2006. This decrease was mainly attributable to lower legal expenses during the second quarter of 2007 compared to the second quarter of 2006.

In the second quarter of 2007, the Company reported income before extraordinary items and provisions for income tax and employee profit sharing of Ps. 20,587,000, a 77.9% decrease compared to Ps. 93,341,000 reported for the second quarter of 2006, mainly as a result of the decrease in broadcasting revenue described above.

For the second quarter of 2007, the Company reported income before provisions for income tax and employee profit sharing of Ps. 20,587,000, compared to Ps. 349,657,000 for the second quarter of 2006. In addition to higher broadcasting revenue, as described above, the 2006 period benefited from extraordinary income of Ps. 256,316,000, which resulted from the cancellation of the provision for a contingent liability recorded by the Company in 2003 in connection with arbitration proceedings. The Company cancelled the provision in June 2006 after a Mexican court set aside and refused to enforce in Mexico an arbitration award issued against the Company. The status of these arbitration proceedings is discussed below.

The Company recorded provisions for income tax and employee profit sharing of Ps. 4,977,000 for the second quarter of 2007, compared to Ps. 28,517,000 for the second quarter of 2006. This decrease in provisions was primarily due to lower taxable income for the second quarter of 2007 compared to the second quarter of 2006.

As a result of the foregoing, the Company's net income for the second quarter of 2007 was Ps. 15,610,000, compared to net income of Ps. 321,140,000 in the second quarter of 2006.

First Half Results

For the six months ended June 30, 2007, broadcasting revenue was Ps. 270,518,000, representing a 36.9% decrease compared to Ps. 428,388,000 reported for the same period of 2006. The decrease in broadcasting revenue was mainly attributable to a decrease in advertising expenditures by political parties, which purchased more airtime last year in connection with the July 2006 presidential and congressional elections.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the first six months of 2007 were Ps. 207,770,000, a 10.3% decrease compared to Ps. 231,657,000 reported for the same period of 2006. This decrease was primarily due to the decrease in sales commissions to the Company's general sales force as a result of the decrease in broadcasting revenue, as well as the smaller allowance for doubtful accounts during the first six months of 2007 compared to the same period of 2006.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the first six months of 2007 was Ps. 62,748,000, representing a decrease of 68.1% compared to Ps. 196,731,000 reported for the same period of 2006. This decrease was mainly attributable to the decrease in broadcasting revenue described above.

Depreciation and amortization expenses for the first six months of 2007 were Ps. 17,294,000, a decrease of 6.1% compared to Ps. 18,422,000 reported for the same period of 2006. This decrease resulted from the Company no longer recording depreciation on Company vehicles whose useful lives ended in the second quarter of 2006, which more than offset the increase in depreciation and amortization expenses in the second quarter of 2007 relative to the second quarter of 2006, described above.

The Company's corporate, general and administrative expenses for the first six months of 2007 were Ps. 7,074,000, a slight decrease compared to Ps. 7,239,000 reported for the same period of 2006.

As a result of the foregoing, the Company reported operating income of Ps. 38,380,000 for the first six months of 2007, a 77.6% decrease compared to Ps. 171,070,000 reported for the same period of 2006.

The Company's comprehensive cost of financing for the first six months of 2007 was Ps. 2,009,000, a 73.9% decrease compared to Ps. 7,711,000 reported for the same period of 2006. This favorable change was mainly due to a decrease in interest expense for the first six months of 2007 compared to the same period of 2006 as a result of the Company no longer recording interest on bank debt after paying off the remaining balance of its bank debt in May 2006. The favorable effect of this decrease was partially offset by a loss on net monetary position of Ps. 774,000 for the first six months of 2007, compared to a gain on net monetary position of Ps. 1,327,000 reported for the same period of 2006.

Other expenses, net for the first six months of 2007 were Ps. 19,937,000, a 17.7% decrease compared to Ps. 24,236,000 reported for the same period of 2006. This decrease was mainly attributed to lower legal expenses during the second quarter of 2007 compared to the same period of 2006.

For the first six months of 2007, the Company had income before extraordinary items and provisions for income tax and employee profit sharing of Ps. 16,434,000, an 88.2% decrease compared to Ps. 139,123,000 reported for the same period of 2006, mainly as a result of the decrease in broadcasting revenue described above.

For the first six months of 2007, the Company reported income before provisions for income tax and employee profit sharing of Ps. 16,434,000, compared to Ps. 395,439,000 reported for the same period of 2006. In addition to higher broadcasting revenue, the 2006 period benefited from extraordinary income of Ps. 256,316,000, which resulted from the cancellation in June 2006 of the provision for the contingent liability relating to the arbitration proceedings described below.

The Company recorded provisions for income tax and employee profit sharing of Ps. 3,711,000 for the first six months of 2007, compared to Ps. 38,992,000 for the same period of 2006.

As a result of the foregoing, the Company reported net income of Ps. 12,723,000 for the first half of 2007, compared to net income of Ps. 356,447,000 for the same period of 2006.

Legal Proceedings

On January 30, 2007, the Mexican Supreme Court (Suprema Corte de Justicia de la Nacion) asked the Federal District's Thirteenth Circuit Court of Civil Matters to analyze again the procedure and to resolve the case as Indirect Amparo. The Federal District's Thirteenth Circuit Court of Civil Matters' June 2006 decision had ratified a lower court's ruling to set aside a 2004 arbitration award issued against the Company in an arbitration proceeding brought by Infored, S.A. de C.V. ("Infored") and Mr. Jose Gutierrez Vivo. The Company can give no assurance about the outcome of these proceedings or their duration.

Company Description

Grupo Radio Centro owns and/or operates 14 radio stations. Of these 14 radio stations, Grupo Radio Centro operates 11 in Mexico City. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs. Revenue is primarily derived from the sale of commercial airtime. In addition to the Organizacion Radio Centro radio stations, the Company also operates Grupo RED radio stations and Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to, Grupo Radio Centro-affiliated radio stations.

Note on Forward-Looking Statements

This release may contain projections or other forward-looking statements related to Grupo Radio Centro that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Grupo Radio Centro with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Grupo Radio Centro on the date hereof, and Grupo Radio Centro assumes no obligation to update such statements.

                     GRUPO RADIO CENTRO, S.A.B. DE C.V.                   CONSOLIDATED UNAUDITED BALANCE SHEETS                        as of June 30, 2007 and 2006  

in Mexican Pesos ("Ps.") with purchasing power as of June 30, 2007 (figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per Share

                            and per ADS amounts)                                                           June 30,                                                     2007           2006                                           U.S. $(1)     Ps.         Ps.            ASSETS   Current assets:     Cash and temporary investments          4,320     46,941     87,100    Accounts receivable:     Broadcasting, net                      16,996    184,684    254,081     Other                                     515      5,596      8,883     Income taxes recoverable                  581      6,311          0                                            18,092    196,591    262,964    Prepaid expenses                          2,072     22,515     17,676     Total current assets                   24,484    266,047    367,740    Property and equipment, net              42,346    460,139    483,817   Deferred charges, net                       358      3,895     10,693   Excess of cost over book value of    net assets of subsidiaries, net         74,193    806,194    806,068   Other assets                                303      3,288      3,352         Total assets                      141,684  1,539,563  1,671,670          LIABILITIES   Current:     Advances from customers                 9,218    100,161     66,471     Suppliers and other accounts payable    5,713     62,077     53,700     Taxes payable                           2,191     23,813     75,127        Total current liabilities           17,122    186,051    195,298    Long-Term:     Reserve for labor liabilities           4,936     53,636     48,956     Deferred taxes                            472      5,134     24,619         Total liabilities                  22,530    244,821    268,873      SHAREHOLDERS' EQUITY   Capital stock                           101,186  1,099,494  1,220,506   Cumulative earnings                      23,073    250,717    239,039   Reserve for repurchase of shares          3,924     42,640     41,303   Cumulative effect of    deferred income taxes                   (9,517)  (103,411)  (103,413)   Effects from labor liabilities              (28)      (302)      (265)   Surplus on restatement of capital           455      4,944      4,945   Minority interest                            61        660        682        Total shareholders' equity         119,154  1,294,742  1,402,797    Total liabilities and     stockholders' equity                  141,684  1,539,563  1,671,670    (1) Peso amounts have been translated into U.S. dollars, solely for the       convenience of the reader, at the rate of Ps. 10.8661 per U.S. dollar,       the noon buying rate for Mexican pesos on June 30, 2007.                       GRUPO RADIO CENTRO, S.A.B. DE C.V.                CONSOLIDATED UNAUDITED STATEMENTS OF INCOME   for the three-month and six-month periods ended June 30, 2007 and 2006  

expressed in Mexican Pesos ("Ps.") with purchasing power as of June 30, 2007 (figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per Share

                            and per ADS amounts)                                    2nd Quarter         Accumulated 6 months                                   2007      2006            2007     2006                           U.S.$ (1)   Ps.    Ps.   U.S.$ (1)   Ps.    Ps.    Broadcasting    revenue (2)          13,390   145,498  244,518  24,896  270,518  428,388   Broadcasting expenses,    excluding depreciation,    amortization and    corporate expenses    9,277   100,808  127,781  19,121  207,770  231,657   Broadcasting    income                4,113    44,690  116,737   5,775   62,748  196,731    Depreciation and    amortization            792     8,609    7,392   1,592   17,294   18,422   Corporate, general    and administrative    expenses                343     3,729    3,474     651    7,074    7,239   Operating income       2,978    32,352  105,871   3,532   38,380  171,070    Comprehensive financing gain (cost):   Interest expense         (78)     (847)    (879)   (125)  (1,361)  (9,581)   Interest income (2)     (150)   (1,627)    (603)     12      125      510   Gain (loss) on foreign    currency exchange, net   (3)      (31)   3,785       0        1       33   Gain (loss) on net    monetary position         0         0       16     (71)    (774)   1,327                           (231)   (2,505)   2,319    (184)  (2,009)  (7,711)    Other expenses, net     (852)   (9,260) (14,849) (1,835) (19,937) (24,236)   Income before    extraordinary item    and provisions:       1,895    20,587   93,341   1,513   16,434  139,123    Extraordinary item         0         0  256,316       0        0  256,316   Income before    provisions            1,895    20,587  349,657   1,513   16,434  395,439    Provisions for income    tax & employee profit    sharing                 458     4,977   28,517     342    3,711   38,992   Net income             1,437    15,610  321,140   1,171   12,723  356,447    Net income applicable to:   Majority interest      1,437    15,606  321,083   1,170   12,714  356,353   Minority interest          0         4       57       1        9       94                          1,437    15,610  321,140   1,171   12,723  356,447    Net income (loss) per    Series A Share (3)                               0.045    0.486    2.588   Net income (loss) per    ADS (3)                                          0.405    4.374   23.292   Weighted average common    shares outstanding    (000's) (3)                                             162,592  162,722     (1) Peso amounts have been translated into U.S. dollars, solely for the       convenience of the reader, at the rate of Ps. 10.8661 per U.S. dollar,       the noon buying rate for Mexican pesos on June 30, 2007.   (2) Broadcasting revenue for a particular period includes (as a       reclassification of interest income) interest earned on funds received       by the Company pursuant to advance sales of commercial air time to the       extent that the underlying funds were earned by the Company during the       period in question. Advances from advertisers are recognized as       broadcasting revenue only when the corresponding commercial air time       has been transmitted. Interest earned and treated as broadcasting       revenue for the second quarter of 2007 and 2006 was Ps. 537,000 and       Ps. 1,243,000, respectively. Interest earned and treated as       broadcasting revenue for the six months ended June 30, 2007 and 2006       was Ps. 934,000 and Ps. 1,846,000, respectively.   (3) Earnings per share calculations are made for the last twelve months as       of the date of the income statement, as required by the Mexican Stock       Exchange.     RI Contacts   In Mexico:   Pedro Beltran/Alfredo Azpeitia   Grupo Radio Centro, S.A.B. de C.V.   Tel (5255) 5728-4800 Ext. 7018   aazpeitia@grc.com.mx    In NY:   Maria Barona/Peter Majeski   i-advize Corporate Communications, Inc.   Tel: (212) 406-3690   grc@i-advize.com.mx  

First Call Analyst:
FCMN Contact: PMajeski@I-Advize.com

Source: Grupo Radio Centro, S.A.B. de C.V.

CONTACT: RI Contacts, in Mexico: Pedro Beltran or Alfredo Azpeitia, both
of Grupo Radio Centro, S.A.B. de C.V., +011-5255-5728-4800, Ext. 7018,
aazpeitia@grc.com.mx; or in NY: Maria Barona or Peter Majeski, both of i-
advize Corporate Communications, Inc., +1-212-406-3690, grc@i-advize.com.mx

Web site: http://www.radiocentro.com.mx/

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