06.05.2008 11:00:00
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Young Broadcasting Station Group Operating Income Increases 41% in First Quarter
Young Broadcasting Inc. ("YBI”
or the "Company”)
(NASDAQ:YBTVA) today announced its results for the first quarter ended
March 31, 2008. The Company, which previously disclosed a strategic cost
reduction program, saw its operating income increase 41% over the first
quarter of 2008 resulting in a 4.6% increase in station operating
performance over the prior year first quarter.
Young Broadcasting unveiled a streamlining of operations plan in
February that will save the Company an estimated $15 million on an
annualized basis and approximately $13 million during the remainder of
2008. Because most of these savings were implemented late in the first
quarter of 2008, the positive impact of the plan will be felt in the
last nine months of the year. The Company incurred one-time severance
costs during the quarter of $750,000 in connection with these savings.
The implementation of the expense reduction initiative followed the
Company’s announcement in January of the
hiring of Moelis & Company to sell its San Francisco station, KRON-TV.
The Company continues to pursue this process with interested parties.
Despite a challenging advertising environment coupled with a weakening
economy, Young Broadcasting‘s net revenue for
the first quarter was down a modest 1.8%. Net revenue for the quarter
was $35.0 million as compared to $35.6 million in the same period the
prior year. Counterbalancing the generally weak advertising market and
the economy were the Company’s continued
emphasis on revenue enhancement at the local level and a major gain in
political revenues. Political revenue for the quarter totaled $1.8
million, up significantly from $497,000 in the first quarter of 2007.
Corporate expenses were flat year to year and operating expenses were
$29.6 million, a decrease of 3.8%, as compared to $30.8 million in the
same year earlier quarter.
Vincent Young, Chairman of Young Broadcasting Inc. stated, "Our
results for the quarter were superior to other companies in
broadcasting. We believe the Company’s
financial performance is turning the corner based on our stringent cost
reduction and revenue enhancement programs.”
He added, "We anticipate benefiting from
increased political revenue later this year and retransmission fees in
future periods. Political revenue is already contributing significantly
to our bottom line and we are still only in the primary portion of the
presidential race. Our cable retransmission negotiations are proceeding
in a direction which also makes us optimistic about our Company’s
future.” Use of Non-GAAP Measures
Station operating performance ("SOP") is not a financial measure
calculated in accordance with generally accepted accounting principles
(GAAP) in the United States. The Company defines SOP as operating
income, plus non-cash compensation to employees, corporate overhead,
depreciation and amortization. The Company believes that SOP is useful
information for investors because it enables them to assess the
Company's television stations' performance in a manner similar to the
method used by management and it provides a measure that can be used to
analyze, value and compare companies in the television industry. A
limitation of this measure, however, is that it excludes depreciation
and amortization, which represent the periodic costs of capitalized
tangible and intangible assets used in the Company's business. It also
excludes the cost of corporate overhead required to manage the group of
stations owned by the Company and non-cash compensation of employees
which principally represents the Company's contribution of stock to the
401(k) plan offered to employees and the costs recognized from certain
stock compensation transactions.
SOP should not be regarded as an alternative to either operating income
or net loss as an indicator of operating performance or to the statement
of cash flows as a measure of liquidity, nor should it be considered in
isolation or as a substitute for financial measures prepared in
accordance with GAAP. The Company believes that operating income (loss)
is the most directly comparable GAAP financial measure to the SOP
financial measure. Reconciliations of historical presentations of SOP to
operating income (loss), its most directly comparable GAAP financial
measure, are provided in the attachment to this release.
First Quarter Conference Call
Young Broadcasting has scheduled a conference call for Tuesday, May 6,
2008 at 3:00 PM (ET). You may participate in the conference call by
dialing 888-552-9135 (Passcode: YOUNG, Leader: Vincent Young). This will
enable you to listen to the presentation. At the end of the presentation
you will have the opportunity to participate in a Q&A session with
Vincent Young, Chairman of Young Broadcasting Inc. and with James
Morgan, the company’s CFO.
You may listen to a live webcast of the call via the Company's website
at www.youngbroadcasting.com.
The archive will be available for replay through June 3, 2008. The
webcast is also being distributed through the Thomson StreetEvents
Network. Individual investors can listen to the call at www.earnings.com,
Thomson’s individual investor portal, powered
by StreetEvents. Institutional investors can access the call via Thomson
StreetEvents (www.streetevents.com),
a password-protected event management site. You may listen to a
telephone replay of the entire call by dialing 888-566-0692 through May
12, 2008.
About Young Broadcasting
Young Broadcasting owns ten television stations and the national
television representation firm, Adam Young Inc. Five stations are
affiliated with the ABC Television Network (WKRN-TV –
Nashville, TN, WTEN-TV – Albany, NY, WRIC-TV –
Richmond, VA, WATE-TV – Knoxville, TN, and
WBAY-TV – Green Bay, WI), three are
affiliated with the CBS Television Network (WLNS-TV –
Lansing, MI, KLFY-TV – Lafayette, LA and
KELO-TV – Sioux Falls, SD) and one is
affiliated with the NBC Television Network (KWQC-TV –
Davenport, IA). KRON-TV – San Francisco, CA,
which had been the largest independent station in the U.S. and the only
independent VHF station in its market, became a MyNetwork TV
affiliate on September 5, 2006. In addition, KELO-TV-Sioux Falls, SD is
also the MyNetwork affiliate in that market through the use of its
digital channel capacity.
Any statements in this press release that are not historical facts are
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
regarding a prospective sale of KRON-TV are inherently subject to risks
and uncertainties. Many factors could cause our plans to change or to
not be realized as contemplated. Our ability to complete a sale of
KRON-TV, on a timely basis or otherwise, is subject to any potential
buyer's ability to finance and close its acquisition of KRON-TV, to
potential regulatory reviews, to changes in the national or San
Francisco broadcast markets or economies, pricing fluctuations in
national and local advertising, and to other factors beyond our control.
Our ability to redeploy the proceeds of a sale of KRON-TV, net of
transaction costs and expenses, to further our future corporate
initiatives may be impacted by, among other factors, our substantial
indebtedness. Additional information concerning these and other
important factors may be found in our filings with the Securities and
Exchange Commission. Statements in this press release are based upon
information known to us as of the date of this press release, and we
assume no obligation to revise or update any forward-looking statements,
whether as a result of new information, future events or otherwise.
YOUNG BROADCASTING INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31,
2007
2008
(dollars in thousands, except per share data)
Net revenue
$
35,604
$
34,956
Operating expenses
30,793
29,621
Depreciation and amortization
3,511
3,507
Operating income
1,300
1,828
Interest expense, net
(17,040
)
(16,691
)
Other (expenses) income, net
206
(223
)
(16,834
)
(16,914
)
Loss from continuing operations before expense for income taxes
(15,534
)
(15,086
)
Income tax (expense) benefit
(1,111
)
732
Loss from discontinued operations
(8,727
)
(618
)
Net loss
$
(25,372
)
$
(14,972
)
Net loss per common share - basic
$
(1.15
)
$
(0.65
)
Weighted average shares - basic
22,044,967
23,018,883
Other Financial Data (continuing operations only):
Amortization of program license rights
$
2,254
2,223
Payments for program license liabilities
2,263
2,234
Capital expenditures
1,790
287
Other Financial Data (KRON only):
Net revenue
11,244
11,006
Operating expenses
12,638
11,718
Depreciation and amortization
787
-
Operating income
(2,181
)
(712
)
Other income (expense)
99
94
Provision for income taxes
(6,645
)
-
Loss from discontinued operations
(8,727
)
(618
)
Amortization of program license rights
3,816
3,412
Payments for program license liabilities
4,584
4,690
Capital expenditures
48
188
Reconciliation of Station Operating Performance to Operating Loss
(Continuing operations only):
Operating loss
1,300
1,828
Plus:
Non-cash compensation
1,565
1,541
Depreciation and amortization
3,511
3,507
Corporate overhead
3,673
3,634
Station Operating Performance $ 10,049
$ 10,510
(1) Non-cash compensation and corporate overhead pertain to
continuing operations only.
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