Arbitron Inc. Reports 2009 Second Quarter Financial Results

Arbitron Inc. Reports 2009 Second Quarter Financial Results

Reports earnings per share (diluted) of $0.13; Lowers full-year revenue guidance; maintains full-year earnings per share guidance

COLUMBIA, Md., July 21 /PRNewswire-FirstCall/ -- Arbitron Inc. (NYSE:ARB) today announced financial results for the second quarter ended June 30, 2009.

Net income for the quarter was $3.5 million or $0.13 per share (diluted), compared with $600 thousand or $0.02 per share (diluted) for the second quarter of 2008.

For the second quarter of 2009, the Company reported revenues of $86.8 million, an increase of 10.4 percent over revenue of $78.7 million during the second quarter of 2008. As anticipated, revenue growth in the quarter benefited from the Company's commercialization of its Portable People Meter(TM) (PPM(TM)) ratings service in Boston as well as the recognition of pre-currency revenue in five new PPM markets - Miami-Ft. Lauderdale-Hollywood, Seattle-Tacoma, Phoenix, Minneapolis-St. Paul and San Diego.

Costs and expenses for the second quarter increased by 4.2 percent, from $82.4 million in 2008 to $85.9 million in 2009, due primarily to planned expenditures for the commercialization of the PPM ratings service and the introduction of cell-phone-only household sampling in 151 diary markets. These increases were offset in part by cost reduction initiatives implemented in prior quarters.

In the second quarter of both 2009 and 2008, share-based compensation totaled $2.7 million.

Earnings before interest and income tax expense (EBIT) for the quarter were $6.5 million, compared with EBIT of $1.4 million for the second quarter of 2008.

For the six months ended June 30, 2009, revenue was $185.3 million, an increase of 7.3 percent over revenue of $172.7 million for the same period in 2008.

EBIT decreased 5.8 percent from $28.2 million in the first six months of 2008 to $26.6 million for the same period in 2009 due primarily to $8.4 million of reorganization and restructuring expense recorded year-to-date. Net income for the six-month period decreased 6.1 percent to $15.8 million compared with $16.9 million in 2008. Earnings per share (diluted) for the six months in 2009 were $0.60 compared with $0.61 per share (diluted) last year.

Management Comment on Second Quarter 2009 Results

"In the second quarter of 2009, Arbitron commercialized the Portable People Meter radio ratings service in Boston, and continued the work of building PPM panels for the additional markets we plan to commercialize in 2009," said Michael Skarzynski, President and Chief Executive Officer.

"We signed a three-year agreement with Clear Channel Radio for diary-based radio ratings services in 105 markets. Additionally, Arbitron signed multi-year diary market agreements with a number of other customers.

"We also successfully introduced cell-phone-only household sampling in an initial 151 diary markets in the Spring 2009 survey. As a result, we saw significant sample quality gains for young adults, age 18-34, in the first month of the survey.

"We also continue to make the hard choices required to reduce costs and target our resources on initiatives that we believe can best enhance the long-term value of Arbitron's services to the radio industry-deploying the Portable People Meter radio ratings service in additional markets, expanding cell-phone-only household measurement in PPM and diary markets and working toward MRC accreditation for the PPM service through our continuous improvement programs," said Mr. Skarzynski.

2009 Guidance

Arbitron is revising downward its revenue guidance for the full-year 2009, while maintaining its earnings per share guidance for the year.

Due largely to the overall economic conditions and the impact of the continuing advertising recession, Arbitron now expects revenue for the full year 2009 to increase between 2 percent and 6 percent compared to the 2008 revenue of $368.8 million. The Company originally projected revenue would increase between 6 percent and 10 percent for the year as compared to 2008.

Arbitron continues to expect that earnings per share (diluted) for the full-year 2009 will be between $1.40 and $1.55 versus $1.36 in 2008.

"In light of the reduced revenue visibility associated with the challenging economy, we have taken difficult yet appropriate steps to rationalize our cost structure to suit the uncertain environment in which we are operating," said Sean Creamer, Executive Vice President, Finance & Planning & Chief Financial Officer.

"We are monitoring events closely, including overall economic conditions as well as legislative, regulatory and judicial developments affecting the Company. Should future events change our current thinking, we will, as appropriate, re-evaluate our guidance with the benefit of that knowledge."

Earnings conference call: schedule and access

Arbitron will host a conference call at 10:00 a.m. Eastern Time. The Company invites you to listen to the call by dialing (toll free) 888-873-8496. The conference call can be accessed from outside of the United States by dialing 973-935-8513. To participate, users will need to use the following code: 19150443. The call will also be available live on the Internet at the following sites: www.arbitron.com, www.ccbn.com and www.streetevents.com.

A replay of the call will be available from 12:00 p.m. on July 21, 2009 through 11:59 p.m. on August 21, 2009. To access the replay, please call (toll free) 800-642-1687 in the United States, or 706-645-9291 if you're calling from outside of the United States. To access the replay, users will need to enter the following code: 19150443

Presentation of Non-GAAP Information

The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. These non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to, either income from continuing operations, as an indicator of Arbitron's operating performance, or cash flow, as a measure of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

About Arbitron

Arbitron Inc. (NYSE:ARB) is a media and marketing research firm serving the media - radio, television, cable, online radio and out-of-home - as well as advertisers and advertising agencies. Arbitron's core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data. The Company has developed the Portable People Meter, a new technology for media and marketing research.

Portable People Meter(TM) and PPM(TM) are marks of Arbitron Inc.

PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.

Arbitron Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," or "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

   --  absorb costs related to legal proceedings and governmental entity       interactions and avoid related fines, limitations, or conditions on       our business activities;   --  successfully commercialize our Portable People Meter service;   --  successfully manage the impact on our business of the current economic       downturn generally, and in the advertising market, in particular,       including, without limitation, the insolvency of any of our customers       or the impact of such downturn on our customers' ability to fulfill       their payment obligations to us;   --  successfully maintain and promote industry usage of our services, a       critical mass of broadcaster encoding, and the proper understanding of       our audience measurement services and methodology in light of       governmental regulation, legislation, litigation, activism, or adverse       public relations efforts;   --  compete with companies that may have financial, marketing, sales,       technical, or other advantages over us;   --  successfully design, recruit and maintain PPM panels that       appropriately balance research quality, panel size, and operational       cost;   --  successfully develop, implement, and fund initiatives designed to       increase sample sizes;   --  complete the Media Rating Council, Inc. ("MRC") audits of our local       market PPM ratings services in a timely manner and successfully obtain       and/or maintain MRC accreditation for our audience measurement       business;   --  renew contracts with key customers;   --  successfully execute our business strategies, including entering into       potential acquisition, joint-venture or other material third-party       agreements;   --  effectively manage the impact, if any, of any further ownership shifts       in the radio and advertising agency industries;   --  effectively respond to rapidly changing technological needs of our       customer base, including creating new proprietary software systems,       such as software systems to support our cell phone-only sampling       plans, and new customer services that meet these needs in a timely       manner;   --  successfully manage the impact on costs of data collection due to       lower respondent cooperation in surveys, consumer trends including a       trend toward increasing incidence of cell phone-only households,       privacy concerns, technology changes, and/or government regulations;   --  successfully develop and implement technology solutions to encode       and/or measure new forms of media content, delivery and advertising in       an increasingly competitive environment; and    --  realize the anticipated savings from the Company's workforce and       expense reduction program.   

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption "ITEM 1A. -- RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2008, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

In addition, any forward-looking statements contained in this document represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

                                    Arbitron Inc.                          Consolidated Statements of Income                      Three Months Ended June 30, 2009 and 2008                         (In thousands, except per share data)                                    (Unaudited)                                   Three Months Ended                                       June 30,                     %                                   2009        2008    Change     Change    Revenue                      $86,799     $78,655    $8,144      10.4%   Costs and expenses     Cost of revenue             55,762      52,585     3,177       6.0%     Selling, general and      administrative             19,351      19,977      (626)    (3.1%)     Research and development    10,584       9,864       720       7.3%     Restructuring and                                               NM      reorganization                185           -       185       Total costs and expenses  85,882      82,426     3,456       4.2%    Operating income (loss)          917      (3,771)    4,688        NM      Equity in net income of      affiliate(s)                5,581       5,166       415       8.0%    Earnings before interest    and income taxes (1)          6,498       1,395     5,103     365.8%     Interest income                 14         271      (257)   (94.8%)     Interest expense               365         682      (317)   (46.5%)    Income from continuing    operations before income    taxes                         6,147         984     5,163     524.7%     Income tax expense           2,651         359     2,292     638.4%    Income from continuing    operations                    3,496         625     2,871     459.4%    Discontinued Operations     Loss from discontinued                                          NM      operations, net of taxes        -           -         -     Loss from sale of                                               NM      discontinued operations,      net of taxes                    -         (25)       25     Total loss from                                                 NM      discontinued operations,      net of taxes                    -         (25)       25    Net Income                    $3,496        $600    $2,896     482.7%     Basic weighted average    common share     Income from continuing      operations                  $0.13       $0.02     $0.11     550.0%       Total loss from        discontinued operations,        net of taxes                  -           -         -         -     Net income                   $0.13       $0.02     $0.11     550.0%    Diluted weighted average    common share     Income from continuing      operations                  $0.13       $0.02     $0.11     550.0%       Total loss from        discontinued operations,        net of taxes                  -           -         -         -     Net income                   $0.13       $0.02     $0.11     550.0%    Weighted average shares    used in calculations     Basic                       26,486      27,183      (697)    (2.6%)     Diluted                     26,655      27,434      (779)    (2.8%)    Dividends per common share     $0.10       $0.10         -         -    Other data:   EBITDA  (1)                  $12,156      $5,574    $6,582     118.1%    (1) The terms EBIT (earnings before interest and income taxes) and EBITDA   (earnings before interest, income taxes, depreciation and amortization)   are non-GAAP financial measures that the management of Arbitron believes   are useful to investors in evaluating the Company's results. For a   reconciliation of these non-GAAP financial measures to the most comparable   GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along   with related footnotes, below.   NM= Not meaningful                                    Arbitron Inc.                        Consolidated Statements of Income                       Six Months Ended June 30, 2009 and 2008                       (In thousands, except per share data)                                   (Unaudited)                                    Six Months Ended                                        June 30,                     %                                    2009        2008    Change     Change    Revenue                      $185,288    $172,720   $12,568       7.3%   Costs and expenses     Cost of revenue              95,291      87,695     7,596       8.7%     Selling, general and      administrative              37,775      38,529      (754)    (2.0%)     Research and development     19,890      19,528       362       1.9%     Restructuring and                                                NM      reorganization               8,356           -     8,356       Total costs and expenses  161,312     145,752    15,560      10.7%    Operating income               23,976      26,968    (2,992)   (11.1%)      Equity in net income of      affiliate(s)                 2,581       1,221     1,360     111.4%    Earnings before interest    and income taxes (1)          26,557      28,189    (1,632)    (5.8%)     Interest income                  33         455      (422)   (92.7%)     Interest expense                698         880      (182)   (20.7%)    Income from continuing    operations before income    taxes                         25,892      27,764    (1,872)    (6.7%)     Income tax expense           10,055      10,827      (772)    (7.1%)    Income from continuing    operations                    15,837      16,937    (1,100)    (6.5%)    Discontinued Operations     Loss from discontinued                                           NM      operations, net of taxes         -        (495)      495     Gain from sale of                                                NM      discontinued operations,      net of taxes                     -         425      (425)     Total loss from                                                  NM      discontinued operations,      net of taxes                     -         (70)       70    Net Income                    $15,837     $16,867   $(1,030)    (6.1%)     Basic weighted average    common share     Income from continuing      operations                   $0.60       $0.61    $(0.01)    (1.6%)       Total loss from        discontinued operations,        net of taxes                   -           -         -         -     Net income                    $0.60       $0.61    $(0.01)    (1.6%)    Diluted weighted average    common share     Income from continuing      operations                   $0.60       $0.61    $(0.01)    (1.6%)       Total loss from        discontinued operations,        net of taxes                   -           -         -         -     Net income                    $0.60       $0.61    $(0.01)    (1.6%)    Weighted average shares    used in calculations     Basic                        26,458      27,687    (1,229)    (4.4%)     Diluted                      26,600      27,873    (1,273)    (4.6%)    Dividends per common share      $0.20       $0.20         -         -    Other data:   EBITDA  (1)                   $37,438     $36,290    $1,148       3.2%    (1) The terms EBIT (earnings before interest and income taxes) and EBITDA   (earnings before interest, income taxes, depreciation and amortization)   are non-GAAP financial measures that the management of Arbitron believes   are useful to investors in evaluating the Company's results. For a   reconciliation of these non-GAAP financial measures to the most comparable   GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along   with related footnotes, below.   NM=Not meaningful.                                   Arbitron Inc.                    EBIT and EBITDA Non-GAAP Reconciliation               Three and Six Months Ended June 30, 2009 and 2008                                 (In thousands)                                   (Unaudited)                              Three Months Ended         Six Months Ended                                   June 30,                  June 30,                               2009       2008           2009      2008    Income from continuing    operations               $3,496       $625        $15,837   $16,937   Income tax expense         2,651        359         10,055    10,827   Net interest expense         351        411            665       425    EBIT (2)                  $6,498     $1,395        $26,557   $28,189    Depreciation and    amortization              5,658      4,179         10,881     8,101    EBITDA (2)               $12,156     $5,574        $37,438   $36,290    (2) Arbitron's management believes that presenting EBIT (earnings before   interest and income taxes) and EBITDA (earnings before interest, income   taxes, depreciation and amortization), both non-GAAP financial measures,   as supplemental information helps investors, analysts, and others, if they   so choose, in understanding and evaluating Arbitron's operating   performance in some of the same manners that management does because EBIT   and EBITDA exclude certain items that are not directly related to   Arbitron's core operating performance. Arbitron's management references   these non-GAAP financial measures in assessing current performance and   making decisions about internal budgets, resource allocation and financial   goals. EBIT is calculated by adding back net interest expense and income   tax expense to income from continuing operations. EBITDA is calculated by   adding back net interest expense, income tax expense, and depreciation and   amortization to income from continuing operations. EBIT and EBITDA should   not be considered substitutes either for income from continuing   operations, as indicators of Arbitron's operating performance, or for cash   flow, as measures of Arbitron's liquidity. In addition, because EBIT and   EBITDA may not be calculated identically by all companies, the   presentation here may not be comparable to other similarly titled measures   of other companies.                                    Arbitron Inc.                      Condensed Consolidated Balance Sheets                       June 30, 2009 and December 31, 2008                                 (In thousands)                                                      June 30,    December 31,                                                       2009         2008                                                   (Unaudited)    (Audited)   Assets:   Cash and cash equivalents                          $12,669       $8,658   Trade receivables                                   64,959       50,037   Property and equipment, net                         67,209       62,930   Goodwill, net                                       38,500       38,500   Other assets                                        37,492       39,472       Total assets                                   $220,829     $199,597    Liabilities and Stockholders' Equity (Deficit):   Deferred revenue                                   $56,566      $57,304   Other liabilities                                   59,026       71,788   Long term debt                                     105,000       85,000   Stockholders' equity (deficit)                         237      (14,495)       Total liabilities and stockholders' equity       (deficit)                                     $220,829     $199,597    Note: The December 31, 2008 Condensed Consolidated Balance Sheet is   derived from the audited Balance Sheet included in the Company's Annual   Report on Form 10-K for the fiscal year ended December 31, 2008.  

First Call Analyst:
FCMN Contact:

Source: Arbitron Inc.

CONTACT: Investor, Thom Mocarsky, +1-410-312-8239,
thom.mocarsky@arbitron.com, or Press Contacts, Didi Blackwood,
+1-410-312-8523, didi.blackwood@arbitron.com, or Jessica Benbow,
+1-410-312-8363, jessica.benbow@arbitron.com, all of Arbitron Inc.

Web Site: http://www.arbitron.com/

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