Grupo Radio Centro Reports First Quarter 2009 Results

Grupo Radio Centro Reports First Quarter 2009 Results

MEXICO CITY, April 27 /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 quarter ended March 31, 2009. All figures were prepared in accordance with the Mexican Financial Reporting Standards ("MFRS") issued by the Mexican Board for Research and Development of Financial Information Standards.

First Quarter Results

Broadcasting revenue in the first quarter of 2009 was Ps. 155,791,000, 21.5% higher than Ps. 128,258,000 in the first quarter of 2008. This increase was attributable to higher advertising expenditures by the Company's clients during the first quarter of 2009 compared to the first quarter of 2008.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) in the first quarter of 2009 totaled Ps. 112,150,000, a 7.9% increase compared to Ps. 103,981,000 in the first quarter of 2008. This increase was primarily attributable to: (i) higher sales commissions due to the increase in broadcasting revenue, (ii) an increase in the peso cost of U.S. dollar-denominated rental payments pursuant to the Company's agreement to operate XHFO-FM, due to the depreciation of the Mexican peso, and (iii) higher marketing research expenses.

The Company's broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) in the first quarter was Ps. 43,641,000, a 79.8% increase compared to Ps. 24,277,000 in the first quarter of 2008. This increase was attributable to the 21.5% increase in broadcasting revenue described above combined with the much smaller increase in broadcasting expenses.

Depreciation and amortization expenses in the first quarter of 2009 were Ps. 6,540,000, a 14.9% decrease compared to Ps. 7,681,000 in the first quarter of 2008. This decrease was attributable to a reduction in the amount of depreciable assets.

The Company's corporate, general and administrative expenses in the first quarter of 2009 totaled Ps. 3,778,000, a slight increase compared to Ps. 3,495,000 in the first quarter 2008.

The Company's operating income in the first quarter of 2009 was Ps. 33,323,000, a 154.4% increase compared to Ps. 13,101,000 in the first quarter of 2008. This increase was due to the increase in broadcasting revenue during the first quarter of 2009 combined with a relatively stable level of expenses.

Other expenses, net, remained stable during the first quarter of 2009 at Ps. 11,885,000, compared to Ps. 11,823,000 in the first quarter 2008.

The Company's comprehensive financing cost in the first quarter of 2009 increased to Ps. 1,072,000 from Ps. 137,000 in the first quarter of 2008. This increase was mainly attributable to a 116.6% increase in interest expense in the first quarter of 2009, which resulted primarily from an increase in the fees payable under the Company's credit facility beginning in June 2008, as well as the higher peso cost of such fees, which are U.S. dollar-denominated. Moreover, in the first quarter of 2009 the Company borrowed under this credit facility an aggregate principal amount of Ps. 200 million in connection with the transaction described below under "Recent Events," and the loan began accruing interest on March 26, 2009 at a fixed rate of 13.0% per annum. The Company will repay principal under this loan in 20 quarterly installments through 2014.

Income before income taxes in the first quarter of 2009 totaled Ps. 20,366,000, a substantial increase compared to Ps. 1,141,000 in the first quarter of 2008, primarily as a result of the increase in broadcasting revenue.

The Company recorded income taxes of Ps. 5,703,000 in the first quarter 2009, compared to Ps. 331,000 in the first quarter 2008, due to higher taxable income.

As a result of the foregoing, the Company's net income in the first quarter of 2009 reached Ps. 14,663,000, compared to Ps. 810,000 in the first quarter of 2008.

Recent Events

On April 3, 2009, the Company entered into a local marketing agreement (the "LMA") with Emmis Communications Corporation ("Emmis"), a U.S. radio broadcasting company. Under the LMA, the Company will provide programming to, and sell advertising time on, KMVN-FM, a radio station broadcasting in Los Angeles, California on the 93.9 FM frequency, for up to seven years. The Company began providing programming to KMVN-FM on April 15, 2009.

Under the LMA, the Company will pay Emmis US$7 million per year, plus expenses incurred by Emmis with respect to the station. On April 7, 2009, the Company advanced US$14 million (approximately Ps. 200 million) as prepayment for the first two years of fees under the LMA. The Company financed the prepayment with a bank loan in an aggregate principal amount of Ps. 200 million.

The Company also entered into a seven-year call and put option agreement (the "Option Agreement") with Emmis to purchase the assets of KMVN-FM. The Company is entitled to exercise its call option to purchase the KMVN-FM station assets under the Option Agreement at any time during its seven-year term, and Emmis is entitled to require the Company to purchase the station assets during the seventh year of the term. If, at the time of the exercise of the call or put, the Company is not qualified under U.S. law to own a U.S. radio station, the Company must assign the Option Agreement to a qualified third party. The purchase price under the Option Agreement is US$110 million.

On March 31, 2009, the shareholders approved, in accordance with the recommendation of the Company's Board of Directors, a dividend payment to all shareholders from retained earnings for fiscal year 2008 in the amount of Ps. 100,000,000, or approximately Ps. 0.614535380433443 per each of the 162,724,561 Series A Shares outstanding. The dividend was paid in one disbursement on April 13, 2009.

Company Description

Grupo Radio Centro owns and/or operates 15 radio stations. Of these 15 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, 108 Grupo Radio Centro-affiliated radio stations throughout Mexico.

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 SHEET                       as of March 31, 2009 and 2008             (figures in thousands of Mexican pesos ("Ps.") and                         U.S. dollars ("U.S. $")(1)                                            March 31                                       2009       2008                              U.S. $(1)    Ps.        Ps.            ASSETS   Current assets:     Cash and temporary      investments               24,225    347,183     66,849    Accounts receivable:     Broadcasting, net          13,596    194,848    154,903     Other                         559      8,008      5,205     Prepaid taxes                 186      2,672      3,413                                14,341    205,528    163,521    Prepaid expenses              2,399     34,391     33,159     Total current assets       40,965    587,102    263,529    Property and equipment, net  32,851    470,810    470,351   Deferred charges, net           312      4,478      5,614   Excess of cost over book    value of net assets of    subsidiaries, net           57,834    828,863    828,863   Other assets                    232      3,325      3,239         Total assets          132,194  1,894,578  1,571,596          LIABILITIES   Current:     Short-term debt             2,123     30,433          0     Advances from customers     6,953     99,652    115,253     Suppliers and other      accounts payable           5,083     72,850     69,969     Taxes payable                 420      6,022     17,054        Total current         liabilities            14,579    208,957    202,276    Long-Term:     Long-term debt             11,862    170,000          0     Reserve for labor      liabilities                4,316     61,862     59,726     Deferred taxes                440      6,309      2,762         Total liabilities      31,197    447,128    264,764      SHAREHOLDERS' EQUITY   Capital stock                78,875  1,130,410  1,130,409   Cumulative earnings          19,011    272,457    131,898   Reserve for repurchase of    shares                       3,059     43,837     43,839   Majority shareholders'    equity                     100,945  1,446,704  1,306,146   Minority interest                52        746        686        Total shareholders'         equity                100,997  1,447,450  1,306,832    Total liabilities and     shareholders' equity      132,194  1,894,578  1,571,596    (1) Peso amounts have been translated into U.S. dollars, solely for the   convenience of the reader, at the rate of Ps. 14.3317 per U.S. dollar,   the rate on March 31, 2009.                        GRUPO RADIO CENTRO, S.A.B. DE C.V.                 CONSOLIDATED UNAUDITED STATEMENT OF INCOME         for the three-month periods ended March 31, 2009 and 2008      (figures in thousands of Mexican pesos ("Ps.") and U.S. dollars            ("U.S.$")(1), except per Share and per ADS amounts)                                                         March 31                                                 2009               2008                                        U.S.$ (1)      Ps.          Ps.    Broadcasting revenue (2)                10,870      155,791      128,258   Broadcasting expenses, excluding    depreciation,     amortization and corporate,      general and administrative      expenses                              7,825      112,150      103,981   Broadcasting income                      3,045       43,641       24,277    Depreciation and amortization              456        6,540        7,681   Corporate, general and    administrative expenses                   264        3,778        3,495   Operating income                         2,325       33,323       13,101    Other expenses, net                       (829)     (11,885)     (11,823)    Comprehensive financing income    (cost):     Interest expense                        (132)      (1,893)        (874)     Interest income (2)                        2           32          767     Gain (loss) on foreign currency      exchange, net                            55          789          (30)                                              (75)      (1,072)        (137)    Income before income taxes               1,421       20,366        1,141    Income taxes                               398        5,703          331   Net income                               1,023       14,663          810    Net income applicable to:     Majority interest                      1,021       14,639          801     Minority interest                          2           24            9                                            1,023       14,663          810    Net income (loss) per Series A    Share (3)                               0.060       0.8637       0.5830   Net income (loss) per ADS (3)            0.542       7.7733       5.2470   Weighted average common shares    outstanding  (000's) (3)                           162,724      162,724    (1) Peso amounts have been translated into U.S. dollars, solely for the   convenience of the reader, at the rate of Ps. 14.3317 per U.S. dollar,   the rate on March 31, 2009.   (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 airtime 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 airtime has been transmitted.   Interest earned and treated as broadcasting revenue for the first quarter   of 2009 and 2008 was Ps. 1,348,000 and Ps. 555,000, 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.    IR 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:

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

CONTACT: Mexico, Pedro Beltran or Alfredo Azpeitia,
+011-52-55-5728-4800, Ext. 7018, aazpeitia@grc.com.mx, both of Grupo Radio
Centro; or New York, Maria Barona or Peter Majeski, +1-212-406-3690, grc@i-
advize.com.mx, both of i-advize Corporate Communications

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

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Profile: International Entertainment