LBI Media, Inc. Reports Third Quarter 2008 Results

LBI Media, Inc. Reports Third Quarter 2008 Results

Third Quarter 2008 Net Revenues Increase 2% to $30.8 million

BURBANK, Calif., Nov. 14 /PRNewswire/ -- LBI Media, Inc. today reported its financial results for the three and nine months ended September 30, 2008.

"We delivered solid results during the third quarter, despite a very challenging advertising market," said Lenard Liberman, the company's Executive Vice President and Secretary. "Our third quarter revenue growth was primarily driven by our radio operations, which outperformed our peers and the industry. We saw strength across all of our radio markets during the quarter, as we converted our strong audience shares into advertising dollars. At our Texas stations, we continue to benefit from the changes we made to our programming, which have led to audience growth and a strong advertiser response, despite very difficult comparisons to last year and the negative impact of Hurricane Ike during the period. We own nine radio stations and one television station in Houston, and estimate that lost air-time and ad cancellations caused by the hurricane negatively affected our third quarter net revenues by about 100 basis points. In Los Angeles, revenue growth from our radio cluster continues to outpace the market, as we capitalize on the programming success of our flagship television station, KRCA-TV, and offer creative advertising solutions for our clients.

"While net revenues declined at our television group, we are encouraged by strong sequential improvement at KRCA-TV in Los Angeles. Similar to our peers, the station has been impacted by softness in infomercial advertising and weakness in the mortgage and auto categories. However, during the quarter, we demonstrated success in leveraging our improved programming and increased audience shares to drive strong results in our national and agency driven business.

"Looking ahead, I am encouraged by LBI's performance during these very challenging times. Despite difficult near-term economic conditions, we are committed to executing our strategy and investing in our content with the goal of further increasing our market share. Our programming investments are leading to audience growth and we remain on track in our plans to launch a new Spanish language television network, Estrella TV, in early 2009. Our station portfolio has never been stronger and we believe the steps we are taking will strengthen our strategic position and ability to serve the rapidly growing and vibrant Hispanic community."

Results for the Three Months Ended September 30, 2008

Net revenues increased 1.7% to $30.8 million for the three months ended September 30, 2008, as compared to $30.3 million for the same period in 2007. The increase was primarily attributable to increased advertising revenue in the company's radio segment and incremental revenue in the company's Utah television market. These gains were partially offset by (i) declines in net revenues in the company's California and Texas television markets, primarily resulting from lower infomercial advertising and (ii) lost advertising revenue associated with Hurricane Ike, which caused substantial damage and power outages throughout Houston in September 2008.

Total operating expenses increased by $46.0 million, or 210.2%, to $67.9 million for the three months ended September 30, 2008, as compared to $21.9 million for the same period in 2007. This increase was primarily attributable to a $43.6 million increase in non-cash broadcast license impairment charges as a result of a decrease in advertising revenue growth projections for the broadcast industry, an increase in discount rates, and a decline in cash flow multiples for recent station sales. The increase was also attributable to a $1.0 million increase in program and technical expenses primarily related to (i) higher music license fees, including charges associated with the settlement of a royalty dispute with ASCAP, (ii) an increase in the production of new television programs and (iii) incremental expenses related to the company's Salt Lake City television station, which the company acquired in November 2007. The increase in total operating expenses also resulted from (a) a $0.4 million increase in depreciation and amortization, primarily due to incremental expenses relating to the company's 2007 asset acquisitions and the completion of construction on two radio tower sites in Texas in the fourth quarter of 2007, (b) a $0.8 million increase in loss on disposal of property and equipment, primarily reflecting damage caused by Hurricane Ike in September 2008, (c) a $0.1 million increase in selling, general and administrative expense, primarily related to expenses incurred to restore power and repair several tower sites damaged by Hurricane Ike, and (d) a $0.1 million increase in promotional expenses.

Adjusted EBITDA(1) increased by $6.9 million, or 113.0%, to $13.0 million for the three months ended September 30, 2008, as compared to $6.1 million for the same period in 2007. The change primarily resulted from the absence of a $7.6 million early redemption premium paid to redeem the company's former 10 1/8% senior subordinated notes in the third quarter of 2007 and a modest increase in net revenues. These increases were partially offset by incremental expenses incurred for KPNZ-TV, the company's Utah television station acquired in November 2007, and the increase in program and technical expenses, as previously discussed. Excluding the $7.6 million early redemption premium incurred in the third quarter of 2007, Adjusted EBITDA decreased 5.0% during the three months ended September 30, 2008, as compared to the same period in 2007.

The company reported a net loss of $29.4 million for the three months ended September 30, 2008, as compared to a net loss of $11.1 million for the same period of 2007, an increase of $18.3 million. This change was primarily attributable to the $43.6 million increase in non-cash broadcast license impairment charges, partially offset by the $16.7 million net tax benefit primarily resulting from this increase in impairment losses, the absence of the loss on note redemption during the third quarter of 2008, and a decrease in net interest and interest rate swap expenses.

Results for the Nine Months Ended September 30, 2008

Net revenues increased by $3.3 million, or 3.7% to $91.3 million for the nine months ended September 30, 2008, as compared to $88.0 million for the same period in 2007. The increase was primarily attributable to increased advertising revenue in the company's radio markets and incremental revenue in the company's Utah television market. These gains were partially offset by declines in the company's California and Texas television markets, primarily resulting from lower infomercial advertising.

Total operating expenses increased by $53.1 million, or 96.6%, to $108.0 million for the nine months ended September 30, 2008 as compared to $54.9 million for the same period in 2007. This increase was primarily attributable to a $43.6 million increase in non-cash broadcast license impairment charges, based on the factors previously discussed. The increase was also attributable to (a) a $4.0 million decrease in deferred compensation benefit, reflecting the impact of the accrual reduction that the company recorded in the first nine months of 2007, (b) a $2.1 million increase in program and technical expenses, (c) a $1.6 million increase in selling, general and administrative expenses, (d) a $0.8 million increase in loss on disposal of property and equipment, primarily reflecting damage caused by Hurricane Ike in September 2008, (e) a $0.7 million increase in depreciation and amortization, primarily attributable to the incremental expenses relating to the company's 2007 asset acquisitions and the completion of construction on two radio tower sites in Texas in the fourth quarter of 2007 and (f) a $0.3 million increase in promotional expenses, primarily reflecting new events conducted by the company's radio stations in 2008.

Adjusted EBITDA increased by $2.9 million, or 8.4%, to $38.2 million for the nine months ended September 30, 2008, as compared to $35.3 million for the same period in 2007. The change primarily resulted from the absence of a $7.6 million early redemption premium paid to redeem the company's former 10 1/8% senior subordinated notes in the third quarter of 2007 and a modest increase in net revenues. These increases were partially offset by the $4.0 million decrease in deferred compensation benefit, and an increase in programming and technical and selling, general and administrative expenses, as previously discussed. However, excluding the $7.6 million early redemption premium and $4.0 million deferred compensation benefit, each incurred during the first nine months of 2007, Adjusted EBITDA decreased 1.8% during the nine months ended September 30, 2008, as compared to the same period in 2007.

The company reported a net loss of $28.9 million for the nine months ended September 30, 2008, as compared to a net loss of $49.0 million for the same period in 2007, a decrease of $20.1 million. This change partially reflects the $61.1 million decrease in the company's income tax provision and the absence of the $8.8 million loss on note redemption, partially offset by the $43.6 million increase in non-cash impairment of broadcast license charges, the $4.0 million decrease in deferred compensation benefit and higher net interest expense. In March 2007, the company's indirect parent, Liberman Broadcasting, Inc., issued shares of Class A common stock to certain investors, and as a result, the company lost its status as an S corporation. As a result of the conversion to a C corporation, the company recorded a non-cash charge of $46.8 million to adjust its deferred tax accounts during the nine months ended September 30, 2007. The change in the company's income tax benefit (provision) during the nine months ended September 30, 2008, as compared to the same period in 2007, also resulted from the impact of the $43.6 million increase in broadcast license charges, as previously discussed.

Third Quarter 2008 Conference Call

The company will host a conference call to discuss its financial results for the third quarter of 2008 on Friday, November 14, 2008 at 4:00 PM Eastern Time. Interested parties may participate in the conference call by dialing (877) 719-9795 beginning fifteen minutes prior to the scheduled start time of the call, asking for the "LBI Media, Inc. Third Quarter 2008 Results Conference Call", and providing confirmation code 7172242 to the operator. The conference call will be recorded and made available for replay through Friday, November 21, 2008. Investors may listen to the replay of the call by dialing (888) 203-1112 and then entering the passcode 7172242.

Information for Holders of LBI Media's 8 1/2% Senior Subordinated Notes due 2017

Results for LBI Media, Inc.'s three and nine months ended September 30, 2008 will be posted on its website at http://www.lbimedia.com/investors. Holders and beneficial owners of LBI Media, Inc.'s 8 1/2% Senior Subordinated Notes due 2017 may access this information by contacting Wisdom Lu at (818) 729-5316 to receive a temporary username and password.

About LBI Media, Inc.

LBI Media, Inc. is one of the largest owners and operators of Spanish-language radio and television stations in the United States, based on revenues and number of stations. The company owns 22 radio stations (fifteen FM and seven AM) and five television stations in greater Los Angeles, CA (including Riverside, San Bernardino and Orange counties), Houston, TX, Dallas-Ft. Worth, TX, San Diego, CA and Salt Lake City, Utah. The company also owns three television production facilities that it uses to produce television programming.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the U.S. securities laws. These statements are based upon current expectations and involve certain risks and uncertainties, including those related to the expected future operating performance of the company's radio stations, television stations and studio operations. Forward-looking statements include, but are not limited to, information preceded by, or that include the words, "believes", "expects", "prospects", "pacings", "anticipates", "could", "estimates", "forecasts" or similar expressions. The reader should note that these statements may be impacted by several factors, including economic changes, regulatory changes, increased competition, the timing of announced acquisitions or station upgrades, changes in the broadcasting industry generally, and changes in interest rates. Accordingly, the company's actual performance and results may differ from those anticipated in the forward-looking statements. Please see the recent public filings of the company's parent, LBI Media Holdings, Inc., for information about these and other risks that may affect them. The company and LBI Media Holdings undertake no obligation to update or revise the information contained herein because of new information, future events or otherwise.

(1) We define Adjusted EBITDA as net income or loss plus income tax expense or benefit, net interest expense, interest rate swap expense, impairment of equity method investment, equity in loss of equity method investment, impairment of broadcast licenses, loss on disposal of property and equipment, depreciation and amortization and other non-cash gains and losses. Management considers this measure an important indicator of our liquidity relating to our operations because it eliminates the effects of certain non- cash items and our capital structure. This measure 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 U.S. generally accepted accounting principles, such as cash flows from operating activities, operating income or loss and net income or loss. In addition, our definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures. See tables at the end of this press release for a reconciliation of net cash provided by (used in) operating activities to Adjusted EBITDA.

   Results of Operations:                               LBI MEDIA, INC.         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                               (In thousands)                                     Three Months Ended     Nine Months Ended                                       September 30,         September 30,                                      2008       2007       2008       2007    Net revenues                     $30,843    $30,323    $91,258    $87,983    Operating expenses:   Program and technical,    exclusive of depreciation    and amortization, loss on    disposal of property and    equipment, and impairment of    broadcast licenses shown below    6,892      5,852     19,415     17,321   Promotional, exclusive of    depreciation and amortization,    loss on disposal of property    and equipment and impairment    of broadcast licenses shown    below                             1,026        938      2,339      2,046   Selling, general and    administrative, exclusive of    deferred compensation benefit    of $0 for the three months    ended September 30, 2008 and    2007, respectively, and $0    and $(3,952) for the nine    months ended September 30,    2008 and 2007, respectively,    depreciation and amortization,    loss on disposal of property    and equipment and impairment    of broadcast licenses shown    below                             9,913      9,831     31,280     29,700     Deferred compensation benefit       --         --         --     (3,952)     Depreciation and amortization    2,596      2,228      7,460      6,755     Loss on disposal of property      and equipment                     829         --        829         --     Impairment of broadcast      licenses                       46,666      3,046     46,666      3,046   Total operating expenses          67,922     21,895    107,989     54,916    Operating (loss) income          (37,079)      8,428   (16,731)    33,067   Interest expense, net of    amount capitalized               (7,380)    (8,559)   (22,430)   (23,001)   Interest rate swap expense           (88)    (1,713)       (14)      (586)   Loss on subordinated note    redemption                           --     (8,776)        --     (8,776)   Equity in loss of equity method    investment                         (213)        --       (213)        --   Impairment of equity method    investment                         (161)        --       (161)        --   Interest and other (expense)    income                              (38)       659         18        764   (Loss) income before benefit from    (provision for) income taxes    (44,959)    (9,961)   (39,531)     1,468   Benefit from (provision for)    income taxes                     15,575     (1,141)    10,666    (50,460)   Net (loss) income               $(29,384)  $(11,102)  $(28,865)  $(48,992)    Adjusted EBITDA (1)              $13,012     $6,108     $38,224   $35,274    Adjusted EBITDA Margin (2)          42.2%      20.1%       41.9%     40.0%    (1)  Refer to the company's definition of Adjusted EBITDA on page 1. Also,        see the tables at the end of this press release for a reconciliation        of net cash provided by (used in) operating activities to Adjusted        EBITDA.   (2)  The company defines Adjusted EBITDA margin as Adjusted EBITDA divided        by net revenues.      Results of Operations (continued):                               LBI MEDIA, INC.                           SELECTED SEGMENT DATA                               (In thousands)                                 Three Months Ended     Nine Months Ended                                  September 30,           September 30,   Net revenues:     Radio               $17,486   $16,537      6%  $50,946   $45,673     12%     Television           13,357    13,786     -3%   40,312    42,310     -5%     Total               $30,843   $30,323      2%  $91,258   $87,983      4%    Total operating expenses    before deferred    compensation benefit,    depreciation and    amortization, loss    on disposal of property    and equipment and    impairment of    broadcast licenses:     Radio                $8,662    $8,105      7%  $24,735   $21,811     13%     Television            9,169     8,516      8%   28,299    27,256      4%     Total               $17,831   $16,621      7%  $53,034   $49,067      8%    Deferred compensation    benefit:     Radio                   $--       $--      --      $--   $(3,952)  -100%     Total                   $--       $--      --      $--   $(3,952)  -100%    Depreciation and    amortization:     Radio                $1,299    $1,080     20%   $3,821    $3,311     15%     Television            1,297     1,148     13%    3,639     3,444      6%     Total                $2,596    $2,228     17%   $7,460    $6,755     10%    Loss on disposal of    property and equipment:     Radio                  $430       $--    100%     $430       $--    100%     Television              399        --    100%      399        --    100%     Total                  $829       $--    100%     $829       $--    100%    Impairment of broadcast    licenses:     Radio               $33,989    $3,046  1,016%  $33,989    $3,046  1,016%     Television           12,677        --    100%   12,677        --    100%     Total               $46,666    $3,046  1,432%  $46,666    $3,046  1,432%    Operating (loss)    income:     Radio              $(26,894)   $4,306   -725% $(12,029)  $21,457   -156%     Television          (10,185)    4,122   -347%   (4,702)   11,610   -141%     Total              $(37,079)   $8,428   -540% $(16,731)  $33,067   -151%    Adjusted EBITDA (3)     Radio                $8,824    $8,432      5%  $26,211   $27,814     -6%     Television            4,188     5,270    -21%   12,013    15,054    -20%     Corporate                --    (7,594)   100%       --    (7,594)   100%     Total               $13,012    $6,108    113%  $38,224   $35,274      8%    (3)  See footnote (1). Also, see the tables at the end of this press        release for a reconciliation of operating (loss) income for each        segment to Adjusted EBITDA for such segment.      Results of Operations (continued):                               LBI MEDIA, INC.                   CONDENSED CONSOLIDATED BALANCE SHEETS                               (In thousands)                                                   September 30,  December 31,                                                       2008          2007                                                   (unaudited)   Assets   Current assets:     Cash and cash equivalents                         $357        $ 1,697     Accounts receivable, net                        22,344         17,780     Current portion of program rights, net             433            321     Amounts due from related parties                    53             14     Current portion of notes receivable from      related parties                                   454            449     Current portion of employee advances                83             81     Prepaid expenses and other current assets        1,198          1,163   Total current assets                              24,922         21,505    Property and equipment, net                       95,674         96,990   Broadcast licenses, net                          336,020        382,574   Deferred financing costs, net                      7,457          7,872   Notes receivable from related parties              2,385          2,340   Employee advances, excluding current portion       1,543          1,127   Program rights, excluding current portion            862            228   Other assets                                       3,987          2,775   Total assets                                    $472,850       $515,411    Liabilities and shareholder's equity   Current liabilities:     Accounts payable                                $3,285         $3,739     Accrued expenses                                 3,188          3,642     Accrued interest                                 3,647          8,701     Current portion of long-term debt                1,343          1,239   Total current liabilities                         11,463         17,321    Long-term debt, excluding current portion        361,193        358,637   Fair value of interest rate swap                   4,208          4,194   Deferred and other income taxes                   38,702         49,515   Other liabilities                                  2,250          1,603   Total liabilities                                417,816        431,270    Shareholder's equity:     Common stock                                        --             --     Additional paid-in capital                     101,859        102,101     Retained deficit                               (46,825)       (17,960)   Total shareholder's equity                        55,034         84,141    Total liabilities and shareholder's equity      $472,850       $515,411      Results of Operations (continued):   

The table set forth below reconciles net cash provided by (used in) operating activities, calculated and presented in accordance with U.S. generally accepted accounting principles, to Adjusted EBITDA:

                                   Three Months Ended     Nine Months Ended                                      September 30,          September 30,                                    2008         2007      2008        2007                                                 (In thousands)   Net cash provided by    (used in) operating     activities                    $1,345     $(8,757)    $5,410     $(3,121)   Add:     Income tax (benefit) expense (15,575)      1,141    (10,666)     50,460     Interest expense and other      income, net                   7,418       7,901     22,412      22,238   Less:     Amortization of deferred      financing costs                (285)       (276)      (914)       (778)     Amortization of discount on      subordinated notes              (64)        (46)      (189)        (46)     Amortization of program rights  (133)       (133)      (413)       (455)     Provision for doubtful accounts (292)       (300)      (929)       (821)     Loss on sale of property and      equipment                       (62)         --        (62)         --     Deferred compensation benefit     --          --         --       3,952   Changes in operating assets and    liabilities:     Accounts receivable             (100)        475      5,493       3,101     Deferred compensation payments    --       3,003         --       4,377     Program rights                    --          --      1,159          --     Amounts due from related parties   4           3         39         (12)     Prepaid expenses and other      current assets                  154          57         35        (126)     Employee advances                 14          (2)       418         (10)     Accounts payable and accrued      expenses                       (673)        741        497       2,051     Accrued interest               4,850       3,332      5,054       4,715     Deferred taxes payable        15,585      (1,041)    10,813     (50,125)     Other assets and liabilities     825          10         67        (126)   Adjusted EBITDA                $13,012      $6,108    $38,224     $35,274     

The following is a reconciliation of operating (loss) income to Adjusted EBITDA for the company's radio division:

                                   Three Months Ended      Nine Months Ended                                      September 30,          September 30,                                      2008      2007        2008       2007                                                  (In thousands)   Radio division operating    (loss) income                  $(26,894)   $4,306    $(12,029)    $21,457     Depreciation and amortization    1,299     1,080       3,821       3,311     Loss on disposal of property      and equipment                     430        --         430          --     Impairment of broadcast      licenses                       33,989     3,046      33,989       3,046   Radio division Adjusted EBITDA    $8,824    $8,432     $26,211     $27,814     

The following is a reconciliation of operating (loss) income to Adjusted EBITDA for the company's television division:

                                   Three Months Ended      Nine Months Ended                                      September 30,          September 30,                                      2008      2007        2008      2007                                                 (In thousands)   Television division operating    (loss) income                  $(10,185)   $4,122     $(4,702)   $11,610     Depreciation and amortization    1,297     1,148       3,639      3,444     Loss on disposal of property      and equipment                     399        --         399         --     Impairment of broadcast      licenses                       12,677        --      12,677         --   Television division Adjusted    EBITDA                           $4,188    $5,270     $12,013    $15,054      Results of Operations (continued):   

The following is a reconciliation of Adjusted EBITDA, as reported, to Adjusted EBITDA excluding the early redemption premium on the company's former 10 1/8% senior subordinated notes and deferred compensation benefit:

                                        Three Months Ended  Nine Months Ended                                           September 30,      September 30,                                           2008     2007     2008      2007                                                   (In thousands)   Adjusted EBITDA, as reported          $13,012   $6,108  $38,224   $35,274     Early redemption premium on      former 10 1/8% subordinated notes       --    7,594       --     7,594     Deferred compensation benefit            --       --       --    (3,952)   Adjusted EBITDA, excluding    early redemption premium and    deferred compensation benefit        $13,012  $13,702  $38,224   $38,916   Adjusted EBITDA Margin, excluding    early redemption premium and    deferred compensation benefit           42.2%    45.2%    41.9%     44.2%     

The following is a reconciliation of Adjusted EBITDA, as reported, to Adjusted EBITDA excluding the early redemption premium on the company's former 10 1/8% senior subordinated notes:

                                        Three Months Ended  Nine Months Ended                                           September 30,     September 30,                                          2008      2007     2008      2007                                                    (In thousands)   Adjusted EBITDA, as reported          $13,012   $6,108  $38,224   $35,274     Early redemption premium on      former 10 1/8% subordinated notes       --    7,594       --     7,594   Adjusted EBITDA, excluding    early redemption premium             $13,012  $13,702  $38,224   $42,868   Adjusted EBITDA Margin, excluding    early redemption premium                42.2%    45.2%    41.9%     48.7%  

First Call Analyst:
FCMN Contact:

Source: LBI Media, Inc.

CONTACT: Wisdom Lu, CFA, Chief Financial Officer of LBI Media, Inc.,
+1-818-729-5316

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

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Profile: International Entertainment