Emmis Communications Reports 2nd Quarter Results

Emmis Communications Reports 2nd Quarter Results

INDIANAPOLIS, Oct. 5 /PRNewswire-FirstCall/ -- Emmis Communications Corporation (NASDAQ:EMMS) today announced results for its second fiscal quarter ended August 31, 2007.

"We're pleased that our radio ratings have generally improved, and we anticipate better sales performance from our new national-sales rep Katz Media Group," said Jeff Smulyan, Emmis Chairman and CEO. "That said, expected weakness in our radio division persisted. Our results were in line with our guidance for the quarter, and we continue to face a challenging market environment."

For the second fiscal quarter, net revenue was $96.4 million, compared to $99.9 million for the same quarter of the prior year, a decrease of 3.5 percent. The decrease related primarily to revenue declines at Emmis' New York and Los Angeles radio stations.

Diluted net income per common share from continuing operations for the quarter was $0.03, a decrease of $0.03 from the same quarter of the prior year.

For the second quarter, radio net revenues decreased 6.0 percent, while pro forma publishing net revenues increased 5.3 percent.

For the second quarter, operating income was $16.5 million, compared to $22.1 million for the same quarter of the prior year. Emmis' station operating income for the first quarter was $26.4 million, compared to $34.4 million for the same quarter of the prior year.

Emmis has included supplemental financial data on its Web site, www.emmis.com, under the "Investors" tab.

International radio net revenues for the quarter ended August 31, 2007, were $10.7 million, up 14.7 percent compared to the same quarter of the prior year. International radio station operating expenses were $7.0 million, up 28.7 percent.

On June 4, 2007, Emmis closed on its sale of KGMB-TV in Honolulu to HITV Operating Co, Inc. for $40.0 million in cash. Emmis used a portion of the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $10.4 million, net of tax, in its quarter ended August 31, 2007, which is included in discontinued operations.

On July 25, 2007, Emmis completed its acquisition of Orange Coast Kommunications, Inc., whose sole business is the publication of Orange Coast Magazine, for $6.8 million in cash including acquisition costs of $0.2 million.

On August 8, 2007, Emmis' Board of Directors authorized a share repurchase program pursuant to which Emmis is authorized to purchase up to an aggregate value of $50 million of its outstanding Class A common stock within the parameters of SEC Rule 10b-18. Transactions may occur from time to time according to the company's discretion, either on the open market or in privately negotiated purchases, subject to prevailing market conditions and other considerations. To date, the company has repurchased 2.2 million shares for $13.8 million.

Pro forma calculations assume the acquisition of Orange Coast Magazine in July 2007 occurred on March 1, 2006.

The following table reconciles reported results to pro forma results (dollars in thousands):

                               3 months ended            6 months ended                                  Aug. 31,       %          Aug. 31,      %                               2007     2006  Change     2007     2006 Change   Radio   Reported net revenues     $74,416   $79,132   -6%  $139,416  $147,926  -6%   Plus: Revenues     from assets acquired          -         -               -         -   Pro forma net revenues    $74,416   $79,132   -6%  $139,416  $147,926  -6%     Publishing   Reported net revenues     $21,983   $20,777    6%   $44,246   $41,770   6%   Plus: Revenues     from assets acquired      1,142     1,177           2,774     2,540   Pro forma net revenues    $23,125   $21,954    5%   $47,020   $44,310   6%    Total Company   Reported net revenues     $96,399   $99,909   -4%  $183,662  $189,696  -3%   Plus: Revenues     from assets acquired      1,142     1,177           2,774     2,540   Pro forma net revenues    $97,541  $101,086   -4%  $186,436  $192,236  -3%   

On a pro forma basis, the company expects its radio net revenues for the quarter ending Nov. 30, 2007, to decrease from the prior year in the mid-single-digit range on a percentage basis. The company expects its radio station operating expenses for the quarter ending Nov. 30, 2007, to increase from the prior year in the mid- to high-single-digit range on a percentage basis. International radio revenues and expenses are expected to grow at a faster rate than our domestic radio operations.

Emmis will host a call regarding this information on Friday, October 5, at 9 a.m. Eastern at 1.517.623.4891, with a replay available through 12 a.m. Eastern on Friday, Oct. 12, at 1.203.369.1644. 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(R)

Emmis is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 21 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago, as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. In May 2005, Emmis announced its intent to seek strategic alternatives for its 16 television stations, and has since sold 15 of them. Emmis also owns a radio network, international radio stations, regional and specialty magazines, an interactive business and ancillary businesses in broadcast sales.

The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission's Regulation FD.

Note: Certain statements included in this release or in the attached financial data which are not statements of historical fact, including but not limited to those identified with the words "expect," "will" or "look," are intended to be, and are, by this Note, identified as "forward-looking statements," as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

   -- general economic and business conditions;   -- fluctuations in the demand for advertising and demand for different      types of advertising media;   -- our ability to service our outstanding debt;   -- increased competition in our markets and the broadcasting industry;   -- our ability to attract and secure programming, on-air talent, writers      and photographers;   -- inability to obtain (or to obtain timely) necessary approvals for      purchase or sale transactions or to complete the transactions for other      reasons generally beyond our control;   -- changes in radio audience measurement methodologies;   -- increases in the costs of programming, including on-air talent;   -- inability to grow through suitable acquisitions;   -- new or changing regulations of the Federal Communications Commission or      other governmental agencies;   -- competition from new or different technologies;   -- war, terrorist acts or political instability; and   -- other factors mentioned in documents filed by the company 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.

             EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES                   CONDENSED CONSOLIDATED FINANCIAL DATA          (Unaudited, dollars in thousands, except per share data)                                       Three months ended   Six months ended                                       August 31, 2007     August 31, 2007                                         2007      2006      2007      2006   OPERATING DATA:     Net revenues:       Radio                           $74,416   $79,132  $139,416  $147,926       Publishing                       21,983    20,777    44,246    41,770         Total net revenues             96,399    99,909   183,662   189,696     Operating expenses:       Radio                            50,640    47,830    96,360    91,581       Publishing                       19,806    18,553    39,493    38,438         Total station operating          expenses                      70,446    66,383   135,853   130,019     Corporate expenses                  5,723     8,187    12,049    14,969     Depreciation and amortization       3,641     3,223     7,099     6,498     (Gain) loss on disposal of      assets                                94         3        94         3      Operating income                   16,495    22,113    28,567    38,207     Interest expense                   (8,654)  (11,554)  (17,986)  (24,116)     Loss on debt extinguishment (a)       -        (537)      -      (3,380)     Other income (expense), net           289       442       225       785      Income before income taxes,      minority interest and       discontinued operations           8,130    10,464    10,806    11,496     Provision for income taxes          3,371     4,576     5,363     4,644     Minority interest expense, net      of tax                             1,328     1,551     2,521     2,722      Loss from continuing operations     3,431     4,337     2,922     4,130     Income from discontinued      operations, net of tax            10,625   108,007    11,445   116,930     Net income                         14,056   112,344    14,367   121,060     Preferred stock dividends           2,246     2,246     4,492     4,492     Net income (loss) available to      common shareholders              $11,810  $110,098    $9,875  $116,568      Basic net income (loss) per      common share:       Continuing operations             $0.03     $0.06    $(0.04)   $(0.01)       Discontinued operations, net        of tax                            0.28      2.90      0.30      3.14         Net income available to          common shareholders            $0.31     $2.96     $0.26     $3.13      Diluted net income (loss) per      common share:       Continuing operations             $0.03     $0.06    $(0.04)   $(0.01)       Discontinued operations, net        of tax                            0.28      2.89      0.30      3.14         Net income available to          common shareholders            $0.31     $2.95     $0.26     $3.13      Weighted average shares      outstanding:         Basic                          37,546    37,242    37,536    37,184         Diluted                        37,821    37,346    37,536    37,184     (a) Reflects costs of our senior floating rate notes and senior        discount notes redemptions and costs associated with permanent        paydowns of our senior credit facility.     OTHER DATA:     Station operating income      (See below)                       26,435    34,370    49,562    61,643     Cash paid for taxes                   751       373     2,334       574     Cash paid for interest              8,641     5,264    12,022    24,757     Capital expenditures                1,951       563     2,925     1,157     Noncash compensation by segment:              Radio                       $426      $589    $1,201    $1,346              Publishing                    56       255       552       620              Corporate                  1,002     1,215     2,104     2,565                     Total              $1,484    $2,059    $3,857    $4,531    COMPUTATION OF STATION OPERATING    INCOME:     Operating income (loss)           $16,495   $22,113   $28,567   $38,207     Plus:  Depreciation and      amortization                       3,641     3,223     7,099     6,498     Plus:  Corporate expenses           5,723     8,187    12,049    14,969     Plus:  Station noncash      compensation                         482       844     1,753     1,966     Plus:  (Gain) loss on disposal      of assets                             94         3        94         3     Station operating income          $26,435   $34,370   $49,562   $61,643     SELECTED BALANCE SHEET             Aug. 31,   Feb. 28,    INFORMATION:                        2007      2007    Total Cash and Cash Equivalents     $19,363   $20,747   Senior Debt                        $461,895  $498,000  

First Call Analyst:
FCMN Contact: ir@emmis.com

Source: Emmis Communications Corporation

CONTACT: Patrick Walsh, CFO, or Jodi Wright, Media & Investor Relations,
+1-317-266-0100

Web site: http://www.emmis.com/

NOTE TO EDITORS: A conference call regarding this earnings release is scheduled for 9 a.m. Eastern, Friday, October 5, 2007. Dial in at 1.517.623.4891 or listen online at www.emmis.com

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Profile: International Entertainment