Emmis Communications Reports 2nd Quarter Results

Emmis Communications Reports 2nd Quarter Results

International successes deliver strong results

INDIANAPOLIS, Oct. 10 /PRNewswire-FirstCall/ -- Emmis Communications Corporation (NASDAQ:EMMS) today announced results for its second fiscal quarter ended August 31, 2008.

"Our team at Emmis continues to deliver during these challenging times for the U.S. economy," Emmis Chairman and CEO Jeff Smulyan said. "We delivered 2 percent growth in operating income during the first six months of the fiscal year based in no small part on the explosive growth in our International operations. During the second quarter, net revenue at our radio operations in Slovakia, Hungary, Bulgaria and Belgium grew an amazing 38 percent. This type of performance, coupled with responsible actions to manage our expenses and balance sheet, position Emmis well to benefit from the U.S. economy's inevitable recovery."

For the second fiscal quarter, net revenue was $94.2 million, compared to $95.7 million for the same quarter of the prior year.

Diluted net income per common share from continuing operations was $0.02, compared to $0.04 for the same quarter of the prior year.

For the second quarter, pro forma radio net revenues decreased 1.7 percent and pro forma publishing net revenues decreased 6.6 percent. Domestic radio net revenues for the second quarter decreased 8.4 percent compared to the same period of the prior year.

For the second quarter, operating income was flat at $17.1 million compared to the same quarter of the prior year, while Emmis' station operating income was down slightly to $26.4 million, compared to $26.5 million for the same quarter of the prior year.

Emmis has included supplemental pro forma net revenues, station operating expenses, and certain other financial data on its website, www.emmis.com under the "Investors" tab.

International radio net revenues and station operating expenses, excluding depreciation and amortization, for the quarter ended August 31, 2008, were $14.9 million and $9.0 million, respectively, representing a pro forma increase of 38 percent and 22 percent, respectively, over the same period of the prior year.

During the quarter, Emmis completed the sale of its remaining television station, WVUE-TV in New Orleans, to Louisiana Media Company for $41 million, with after-tax proceeds of approximately $38.1 million. Gross proceeds from the sale of the company's 16 television stations were $1.24 billion. In addition, during the quarter, Emmis received $3.1 million as a final settlement of its business interruption claim due to Hurricane Katrina's impact on the station.

Also during the quarter, Emmis Publishing suspended publication of Tu Ciudad Los Angeles because the magazine's financial performance did not meet the Company's expectations. The magazine's operating expenses for the second fiscal quarter of $1.2 million include all shut-down-related costs, and the magazine's operating results have been classified as discontinued operations for all periods presented.

Subsequent to the quarter's end, Emmis began a program that uses a portion of the cash from the sale of WVUE-TV in New Orleans, and possibly Emmis' common stock, to pay quarterly bonuses to 64 employees to offset temporary salary reductions. Although the employees will be receiving the same amount of pay under the program, the structure of the program lowers operating costs under the terms of our credit agreement.

Emmis Interactive, a wholly owned subsidiary of Emmis Communications Corporation, announced in April that it would begin to market its services to radio broadcasters and other local media companies. Since that announcement, Emmis Interactive has signed on more than 100 non-Emmis stations to its successful interactive platform, with another dozen signing up for Emmis Interactive's exclusive iTunes storefront technology.

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

                            3 months ended             6 months ending                                Aug. 31,       %          Aug. 31,       %                             2007    2008    Change   2007      2008   Change   Radio   Reported net revenues   $74,416  $73,278  -1.5%  $139,416  $137,469  -1.4%   Plus: Revenues    from assets acquired       149        -              293         -   Pro forma net revenues  $74,565  $73,278  -1.7%  $139,709  $137,469  -1.6%    Publishing   Reported net revenues   $21,288  $20,949  -1.6%   $42,733   $42,781   0.1%   Plus: Revenues    from assets acquired     1,142        -            2,774   Pro forma net revenues  $22,430  $20,949  -6.6%   $45,507   $42,781   -.0%    Total Company   Reported net revenues   $95,704  $94,227  -1.5%  $182,149  $180,250  -1.0%   Plus: Revenues    from assets acquired     1,291        -            3,067         -   Pro forma net revenues  $96,995  $94,227  -2.9%  $185,216  $180,250  -2.7%    

Emmis will host a call regarding this information on Friday, October 10 at 9 a.m. Eastern at 1.517.623.4891, with a replay available through Friday, October 17 at 1.203.369.3289. 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 depreciation, amortization and non-cash compensation.

Emmis Communications -- Great Media, Great People, Great Service(R)

Emmis is an Indianapolis-based diversified media firm with radio 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. 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 report or in the financial statements contained herein 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;

-- increases in the costs of programming, including on-air talent; inability to grow through suitable acquisitions;

-- changes in audience measurement systems

-- 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,          August 31,                                          2008      2007      2008      2007   OPERATING DATA:     Net revenues:       Radio                           $73,278   $74,416  $137,469  $139,416       Publishing                       20,949    21,288    42,781    42,733         Total net revenues             94,227    95,704   180,250   182,149     Station operating expenses      excluding depreciation and      amortization expense:       Radio                            48,882    51,152    92,040    97,490       Publishing                       19,491    18,521    39,595    36,881         Total station operating          expenses excluding          depreciation and          amortization expense          68,373    69,673   131,635   134,371     Corporate expenses excluding      depreciation and amortization      expense                            4,661     5,211    10,294    10,919     Depreciation and amortization       4,051     3,629     7,986     7,076     Loss on disposal of assets             22        94        15        94      Operating income                   17,120    17,097    30,320    29,689     Interest expense                   (6,564)   (8,654)  (13,621)  (17,986)     Other income (expense), net        (1,224)      289    (1,374)      225      Income before income taxes,      minority interest and      discontinued operations            9,332     8,732    15,325    11,928     Provision for income taxes          4,579     3,625     8,498     5,823     Minority interest expense, net      of tax                             1,918     1,328     3,325     2,521      Income from continuing      operations                         2,835     3,779     3,502     3,584     Income from discontinued      operations, net of tax               647    10,277     1,176    10,783     Net income                          3,482    14,056     4,678    14,367     Preferred stock dividends           2,246     2,246     4,492     4,492     Net income available to common      shareholders                      $1,236   $11,810      $186    $9,875      Basic net income (loss) per      common share:       Continuing operations             $0.02     $0.04    $(0.03)   $(0.02)       Discontinued operations, net        of tax                            0.01      0.27     $0.04      0.28         Net income available to          common shareholders            $0.03     $0.31     $0.01     $0.26      Diluted net income (loss) per      common share:       Continuing operations             $0.02     $0.04    $(0.03)   $(0.02)       Discontinued operations, net        of tax                            0.01      0.27      0.04      0.28         Net income available to          common shareholders            $0.03     $0.31     $0.01     $0.26      Weighted average shares      outstanding:         Basic                          36,313    37,546    36,220    37,536         Diluted                        36,547    37,821    36,220    37,536     OTHER DATA:     Station operating income (See      below)                            26,411    26,507    50,225    49,519     Cash paid for taxes, net of      refunds                            1,405       751     2,004     2,334     Cash paid for interest              6,752     8,641    14,596    12,022     Capital expenditures                1,881     1,912     2,633     2,886     Noncash compensation by segment:              Radio                       $403      $426    $1,092    $1,201              Publishing                   154        50       518       540              Corporate                    613     1,002     2,169     2,104                     Total              $1,170    $1,478    $3,779    $3,845    COMPUTATION OF STATION OPERATING    INCOME:     Operating income                  $17,120   $17,097   $30,320   $29,689     Plus:  Depreciation and             amortization                4,051     3,629     7,986     7,076     Plus:  Corporate expenses           4,661     5,211    10,294    10,919     Plus:  Station noncash             compensation                  557       476     1,610     1,741     Plus:  Loss on disposal of      assets                                22        94        15        94     Station operating income          $26,411   $26,507   $50,225   $49,519     SELECTED BALANCE SHEET            August 31, February 29,    INFORMATION:                        2008      2008    Total Cash and Cash Equivalents     $67,513   $19,498   Senior Debt                        $436,503  $438,693  

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

Source: Emmis Communications Corporation

CONTACT: Patrick Walsh, CFO, or Kate Snedeker, Media & Investor
Relations, both of Emmis Communications Corporation, +1-317-266-0100

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

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Profile: International Entertainment