Emmis Communications Corporation (NASDAQ: EMMS) today announced results for its third fiscal quarter ending November 30, 2012. Pro forma for station divestitures, Emmis’ domestic radio net revenues for the third fiscal quarter were up 5%. On a reported basis, total radio net revenues were up 1% and total net revenues were down slightly.”I couldn’t be more pleased with the company’s outstanding operating performance,” Jeff Smulyan, Emmis Chairman & CEO, said. “Emmis radio station’s revenue growth continues to outpace its markets.
While our markets were up 1 percent this quarter, Emmis stations saw an increase of 5 percent.” “With the refinancing of our entire capital structure that was completed after our quarter-end, we have dramatically reduced our interest expense and increased our ability to generate free cash flow going forward, completing the transformation of Emmis,” Smulyan concluded. Station operating income during the period was $13.8 million, compared to $10.0 million for the same quarter of the prior year. Diluted net income per common share from continuing operations was $0.02, compared to $1.26 for the same quarter of the prior year.
The decline is due primarily to the gain on the sale of stations WKQX-FM (101.1 MHz, Chicago, IL), WLUP-FM (97.9 MHz, Chicago, IL) and WRXP-FM (101.9 MHz, New York, NY) to Merlin Media coupled with related tax benefits recognized in 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. The following table reconciles reported results to pro forma results (dollars in thousands):
Three Months ended November 30,
%
Nine Months ended November 30,
%
2012
2011
Change
2012
2011
Change
Radio:
Reported net revenues
$ 37,238
$ 36,718
1%
$ 118,085
$ 126,292
-6%
Less: Net revenues from Merlinstations and WRKS (98.7FM)
(2,577)
(2,822)
(8,040)
(18,367)
Pro forma net revenues
$ 34,661
$ 33,896
2%
$ 110,045
$ 107,925
2%
Total Company:
Reported net revenues
$ 53,414
$ 53,568
0%
$ 161,318
$ 169,714
-5%
Less: Net revenues from Merlin stations and WRKS (98.7FM)
(2,577)
(2,822)
(8,040)
(18,367)
Pro forma net revenues
$ 50,837
$ 50,746
0%
$ 153,278
$ 151,347
1%
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. Operating Income is the most directly comparable financial measure in accordance with 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. A reconciliation of station operating income to operating income is attached to this press release. The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission’s Regulation FD.