Delaware
|
000-26497
|
77-0121400
|
||
(State
or Other Jurisdiction
|
(Commission
|
(IRS
Employer
|
||
of
Incorporation)
|
File
Number)
|
Identification
No.)
|
4880
Santa Rosa Road, Camarillo, California
|
93012
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
release, dated August 7, 2007, of Salem Communications Corporation
regarding its results of operations for the quarter ended June 30,
2007.
|
|
|
SALEM
COMMUNICATIONS CORPORATION
|
|
|
|
Date:
August 7, 2007
|
|
By:
/s/ EVAN D. MASYR
|
|
|
Evan
D. Masyr
|
|
|
Senior
Vice President and
Chief
Financial
Officer
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
release, dated August 7, 2007, of Salem Communications Corporation
regarding its results of operations for the quarter ended June 30,
2007.
|
·
|
Total
revenue increased 3.4% to $60.0 million from $58.1
million;
|
·
|
Operating
income decreased 58.2% to $10.9 million from $26.1
million;
|
·
|
Net
income decreased 74.7% to $2.9 million, or $0.12 per diluted share,
from
$11.6 million, or $0.47 per diluted
share;
|
·
|
EBITDA
decreased 50.3% to $14.8 million from $29.8
million;
|
·
|
Adjusted
EBITDA increased 4.5% to $16.3 million from $15.6
million;
|
·
|
Net
broadcasting revenue increased 0.5% to $53.7 from $53.4
million;
|
·
|
Station
operating income (“SOI”) increased 0.7% to $20.0 million from $19.9
million;
|
·
|
Same
station net broadcasting revenue increased 1.5% to $52.9 million
from
$52.1 million;
|
·
|
Same
station SOI increased 0.8% to $20.2 million from $20.0
million;
|
·
|
Same
station SOI margin decreased to 38.1% from
38.4%;
|
·
|
Non-broadcast
revenue increased 36.4% to $6.4 million from $4.7 million;
and
|
·
|
Non-broadcast
operating income decreased to $0.7 million from $0.9
million.
|
·
|
A
$0.6 million gain ($0.4 million gain, net of tax, or $0.02 per
diluted
share) on the disposal of assets;
|
·
|
A
$0.9 million non-cash compensation charge ($0.5 million, net of
tax, or
$0.02 per share) related to the expensing of stock options consisting
primarily of:
|
o
|
$0.6
million non-cash compensation included in corporate expenses;
and
|
o
|
$0.2
million non-cash compensation included in broadcasting operating
expenses.
|
·
|
A
$15.5 million gain ($9.4 million gain, net of tax, or $0.38 per
diluted
share) on the disposal of assets;
and
|
·
|
A
$1.3 million non-cash compensation charge ($0.8 million, net of
tax, or
$0.03 per share) related to the expensing of stock options consisting
primarily of:
|
o
|
$1.1
million non-cash compensation included in corporate expenses;
and
|
o
|
$0.2
million non-cash compensation included in broadcasting operating
expenses.
|
·
|
Total
revenue increased 5.5% to $116.1 million from $110.1
million;
|
·
|
Operating
income decreased 38.0% to $22.8 million from $36.8
million;
|
·
|
Net
income decreased 58.8% to $5.9 million, or $0.25 net income per
diluted
share, from net income of $14.3 million or $0.58 net income per
diluted
share;
|
·
|
EBITDA
decreased 30.4% to $30.6 million from $43.9
million;
|
·
|
Adjusted
EBITDA increased 8.6% to $29.6 million from $27.2
million
|
·
|
Net
broadcasting revenue increased 1.9% to $104.1 million from $102.2
million;
|
·
|
SOI
increased 2.7% to $38.0 million from $37.0
million;
|
·
|
Same
station net broadcasting revenue increased 2.5% to $102.3 million
from
$99.8 million;
|
·
|
Same
station SOI increased 1.8% to $38.1 million from $37.4
million;
|
·
|
Same
station SOI margin decreased to 37.2% from
37.5%;
|
·
|
Non-broadcast
revenue increased 51.7% to $12.0 million from $7.9 million;
and
|
·
|
Non-broadcast
operating income increased 65.3% to $1.1 million from $0.7
million
|
·
|
A
$2.6 million gain ($1.5 million gain, net of tax or $0.06 gain
per diluted
share) from the disposal of assets;
and
|
·
|
A
$1.6 million non-cash compensation charge ($0.9 million, net of
tax, or
$0.4 per share) related to the expensing of stock options consisting
of:
|
o
|
$1.1
million non-cash compensation included in corporate
expenses;
|
o
|
$0.4
million non-cash compensation included in broadcasting operating
expenses;
and
|
o
|
$0.1
million non-cash compensation included in non-broadcast operating
expenses.
|
·
|
A
$19.0 million gain ($11.5 million gain, net of tax, or $0.47 per
diluted
share) on the disposal of assets;
|
·
|
A
$0.3 million loss from discontinued operations, net of tax or $0.01
per
diluted share; and
|
·
|
A
$2.6 million non-cash compensation charge ($1.6 million, net of
tax, or
$0.06 per share) related to the expensing of stock options consisting
of:
|
o
|
$2.2
million non-cash compensation included in corporate expenses;
and
|
o
|
$0.4
million non-cash compensation included in broadcasting operating
expenses.
|
2006
|
2007
|
|||||||||||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||||||||||
SOI
Margin %
|
Stations
|
Revenue
|
SOI
|
SOI
%
|
Stations
|
Revenue
|
SOI
|
SOI
%
|
||||||||||||||||||||||||
50%
or greater
|
27
|
$ |
23.6
|
$ |
14.7
|
62.1 | % |
21
|
$ |
21.7
|
$ |
13.3
|
61.5 | % | ||||||||||||||||||
30%
to 49%
|
22
|
11.8
|
4.7
|
40.1 | % |
25
|
13.6
|
5.4
|
39.6 | % | ||||||||||||||||||||||
0%
to 29%
|
31
|
10.8
|
1.8
|
16.9 | % |
30
|
10.4
|
2.1
|
19.5 | % | ||||||||||||||||||||||
Less
than 0%
|
19
|
3.0
|
(1.0 | ) | (33.8 | %) |
22
|
3.7
|
(0.9 | ) | (23.9 | %) | ||||||||||||||||||||
Subtotal
|
99
|
49.2
|
20.2
|
41.0 | % |
98
|
49.4
|
19.9
|
40.2 | % | ||||||||||||||||||||||
Other
|
-
|
4.2
|
(0.3 | ) | (7.0 | %) |
-
|
4.3
|
0.1
|
3.5 | % | |||||||||||||||||||||
Total
|
99
|
$ |
53.4
|
$ |
19.9
|
37.2 | % |
98
|
53.7
|
20.0
|
37.3 | % |
·
|
WVRY
(105.1 FM) in Waverly, Tennessee was sold on May 29, 2007 for $0.9
million.
|
·
|
KKSN
(910 AM) in Portland, Oregon will be acquired for approximately
$4.5
million (this station is operated by Salem under a local marketing
agreement beginning February 1, 2007 with call letters
KTRO).
|
·
|
Total
revenue to be between $58.0 million and $58.5 million compared
to third
quarter 2006 total revenue of $57.9
million;
|
·
|
Adjusted
EBITDA to be between $13.8 million and $14.3 million compared to
third
quarter 2006 Adjusted EBITDA of $15.9 million;
and
|
·
|
Net
income per diluted share to be between $0.08 and
$0.09.
|
·
|
Same
station net broadcasting revenue to be between $51.3 million to
$51.8 million compared to $51.3 million in third quarter
2006;
|
·
|
Non-broadcast
revenue increasing to approximately $5.9 million from $5.4 million
in
third quarter 2006;
|
·
|
Same
station SOI declining to between $18.7 million and $19.2 million
from
$20.7 million in third quarter
2006;
|
·
|
Non-cash
compensation expense of $0.6 million compared to third quarter
2006
non-cash compensation expense of $0.9
million;
|
·
|
Increased
marketing and programming costs of $0.9 million primarily on News
Talk
stations in Chicago, Denver, Louisville and Phoenix, and on Contemporary
Christian Music stations in Dallas, Atlanta and
Sacramento;
|
·
|
Continued
growth from our core block programming business and our underdeveloped
radio stations, particularly our News Talk
stations;
|
·
|
Ongoing
softness in the radio advertising market;
and
|
·
|
The
impact of recent acquisition and divestiture
transactions.
|
Salem
Communications Corporation
Condensed
Consolidated
Statements
of Operations
|
||||||||||||||||
(in
thousands, except share, per share and margin
data)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
(unaudited)
|
||||||||||||||||
Net
broadcasting revenue
|
$ |
53,381
|
$ |
53,650
|
$ |
102,155
|
$ |
104,090
|
||||||||
Non-broadcast
revenue
|
4,684
|
6,388
|
7,936
|
12,042
|
||||||||||||
Total
revenue
|
58,065
|
60,038
|
110,091
|
116,132
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Broadcasting
operating expenses
|
33,498
|
33,629
|
65,192
|
66,112
|
||||||||||||
Non-broadcast
operating expenses
|
3,827
|
5,652
|
7,259
|
10,923
|
||||||||||||
Corporate
expenses
|
6,256
|
5,496
|
12,696
|
11,310
|
||||||||||||
Depreciation
and amortization
|
3,866
|
3,699
|
7,161
|
7,600
|
||||||||||||
(Gain)
loss on disposal of assets
|
(15,510 | ) |
634
|
(19,039 | ) | (2,635 | ) | |||||||||
Total
operating expenses
|
31,937
|
49,110
|
73,269
|
93,310
|
||||||||||||
Operating
income
|
26,128
|
10,928
|
36,822
|
22,822
|
||||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
-
|
48
|
46
|
108
|
||||||||||||
Interest
expense
|
(6,779 | ) | (6,308 | ) | (13,367 | ) | (12,762 | ) | ||||||||
Other
income (expense), net
|
(174 | ) |
182
|
(346 | ) |
147
|
||||||||||
Income
from continuing operations before income taxes
|
19,175
|
4,850
|
23,155
|
10,315
|
||||||||||||
Provision
for income taxes
|
7,584
|
1,926
|
9,178
|
4,426
|
||||||||||||
Income
from continuing operations
|
11,591
|
2,924
|
13,977
|
5,889
|
||||||||||||
Discontinued
operations, net of tax
|
(25 | ) |
-
|
304
|
-
|
|||||||||||
Net
income
|
$ |
11,566
|
$ |
2,924
|
$ |
14,281
|
$ |
5,889
|
||||||||
Other
comprehensive income, net of tax
|
894
|
1,112
|
1,930
|
824
|
||||||||||||
Comprehensive
income
|
$ |
12,460
|
$ |
4,036
|
$ |
16,211
|
$ |
6,713
|
||||||||
Basic
income per share before discontinued operations
|
$ |
0.48
|
$ |
0.12
|
$ |
0.57
|
$ |
0.25
|
||||||||
Discontinued
operations, net of tax
|
$ |
-
|
$ |
-
|
$ |
0.01
|
$ |
-
|
||||||||
Basic
income per share after discontinued operations
|
$ |
0.48
|
$ |
0.12
|
$ |
0.58
|
$ |
0.25
|
||||||||
Diluted
income per share before discontinued operations
|
$ |
0.48
|
$ |
0.12
|
$ |
0.57
|
$ |
0.25
|
||||||||
Discontinued
operations, net of tax
|
$ |
-
|
$ |
-
|
$ |
0.01
|
$ |
-
|
||||||||
Diluted
income per share after discontinued operations
|
$ |
0.47
|
$ |
0.12
|
$ |
0.58
|
$ |
0.25
|
||||||||
Basic
weighted average shares outstanding
|
24,347,520
|
23,850,020
|
24,516,432
|
23,849,312
|
||||||||||||
Diluted
weighted average shares outstanding
|
24,356,275
|
23,855,967
|
24,525,718
|
23,854,518
|
||||||||||||
Other
Data:
|
||||||||||||||||
Station
operating income
|
$ |
19,883
|
$ |
20,021
|
$ |
36,963
|
$ |
37,978
|
||||||||
Station
operating margin
|
37.2 | % | 37.3 | % | 36.2 | % | 36.5 | % |
Salem
Communications Corporation
|
||||||||
Condensed
Consolidated Balance Sheets
|
||||||||
(in
thousands)
|
||||||||
December
31,
|
June
30,
|
|||||||
2006
|
2007
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Cash
|
$ |
710
|
$ |
752
|
||||
Trade
accounts receivable, net
|
31,984
|
31,335
|
||||||
Deferred
income taxes
|
5,020
|
5,009
|
||||||
Other
current assets
|
2,881
|
3,036
|
||||||
Property,
plant and equipment, net
|
128,713
|
130,808
|
||||||
Intangible
assets, net
|
508,410
|
502,916
|
||||||
Bond
issue costs
|
593
|
518
|
||||||
Bank
loan fees
|
2,996
|
2,488
|
||||||
Fair
value of interest rate swaps
|
1,290
|
2,663
|
||||||
Other
assets
|
3,667
|
4,449
|
||||||
Total
assets
|
$ |
686,264
|
$ |
683,974
|
||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities
|
$ |
27,295
|
$ |
25,672
|
||||
Long-term
debt and capital lease obligations
|
358,978
|
344,951
|
||||||
Deferred
income taxes
|
53,935
|
60,810
|
||||||
Other
liabilities
|
8,340
|
8,507
|
||||||
Stockholders'
equity
|
237,716
|
244,034
|
||||||
Total
liabilities and stockholders' equity
|
$ |
686,264
|
$ |
683,974
|
Salem
Communications Corporation
|
||||||||||||||||
Supplemental
Information
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
(unaudited)
|
||||||||||||||||
Capital
expenditures
|
||||||||||||||||
Acquisition
related / income producing
|
$ |
4,520
|
$ |
2,047
|
$ |
7,793
|
$ |
3,771
|
||||||||
Maintenance
|
1,708
|
2,342
|
3,465
|
5,017
|
||||||||||||
Total
capital expenditures
|
$ |
6,228
|
$ |
4,389
|
$ |
11,258
|
$ |
8,788
|
||||||||
Tax
information
|
||||||||||||||||
Cash
tax expense
|
$ |
76
|
$ |
47
|
$ |
76
|
$ |
215
|
||||||||
Deferred
tax expense
|
7,508
|
1,879
|
9,102
|
4,211
|
||||||||||||
Provision
for income taxes
|
$ |
7,584
|
$ |
1,926
|
$ |
9,178
|
$ |
4,426
|
||||||||
Tax
benefit of non-book amortization
|
$ |
3,685
|
$ |
3,936
|
$ |
7,262
|
$ |
8,112
|
||||||||
Reconciliation
of Same Station Net Broadcasting Revenue to
|
||||||||||||||||
Total
Net Broadcasting Revenue
|
||||||||||||||||
Net
broadcasting revenue - same station
|
$ |
52,096
|
$ |
52,901
|
$ |
99,785
|
$ |
102,300
|
||||||||
Net
broadcasting revenue - acquisitions
|
-
|
146
|
172
|
623
|
||||||||||||
Net
broadcasting revenue - dispositions
|
840
|
66
|
1,427
|
66
|
||||||||||||
Net
broadcasting revenue - format changes
|
445
|
537
|
771
|
1,101
|
||||||||||||
Total
net broadcasting revenue
|
$ |
53,381
|
$ |
53,650
|
$ |
102,155
|
$ |
104,090
|
||||||||
Reconciliation
of Same Station Broadcasting Operating Expenses
to
|
||||||||||||||||
Total
Broadcasting Operating Expenses
|
||||||||||||||||
Broadcasting
operating expenses - same station
|
$ |
32,103
|
$ |
32,745
|
$ |
62,377
|
$ |
64,216
|
||||||||
Broadcasting
operating expenses - acquisitions
|
-
|
228
|
176
|
657
|
||||||||||||
Broadcasting
operating expenses - dispositions
|
844
|
64
|
1,511
|
106
|
||||||||||||
Broadcasting
operating expenses - format changes
|
551
|
592
|
1,128
|
1,133
|
||||||||||||
Total
broadcasting operating expenses
|
$ |
33,498
|
$ |
33,629
|
$ |
65,192
|
$ |
66,112
|
||||||||
Reconciliation
of Same Station Station Operating Income to
|
||||||||||||||||
Total
Station Operating Income
|
||||||||||||||||
Station
operating income - same station
|
$ |
19,993
|
$ |
20,156
|
$ |
37,408
|
$ |
38,084
|
||||||||
Station
operating income - acquisitions
|
-
|
(82 | ) | (4 | ) | (34 | ) | |||||||||
Station
operating income - dispositions
|
(4 | ) |
2
|
(84 | ) | (40 | ) | |||||||||
Station
operating income - format changes
|
(106 | ) | (55 | ) | (357 | ) | (32 | ) | ||||||||
Total
station operating income
|
$ |
19,883
|
$ |
20,021
|
$ |
36,963
|
$ |
37,978
|
Salem
Communications Corporation
|
||||||||||||||||
Supplemental
Information
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2006
|
2007
|
2006
|
2007
|
|||||||||||||
(unaudited)
|
||||||||||||||||
Reconciliation
of Station Operating Income and Non-Broadcast
|
||||||||||||||||
Operating
Income to Operating Income
|
||||||||||||||||
Station
operating income
|
$ |
19,883
|
$ |
20,021
|
$ |
36,963
|
$ |
37,978
|
||||||||
Non-broadcast
operating income
|
857
|
736
|
677
|
1,119
|
||||||||||||
Less:
|
||||||||||||||||
Corporate
expenses
|
(6,256 | ) | (5,496 | ) | (12,696 | ) | (11,310 | ) | ||||||||
Depreciation
and amortization
|
(3,866 | ) | (3,699 | ) | (7,161 | ) | (7,600 | ) | ||||||||
Gain
(loss) on disposal of assets
|
15,510
|
(634 | ) |
19,039
|
2,635
|
|||||||||||
Operating
income
|
$ |
26,128
|
$ |
10,928
|
$ |
36,822
|
$ |
22,822
|
||||||||
Reconciliation
of Adjusted EBITDA to EBITDA to Net Income
|
||||||||||||||||
Adjusted
EBITDA
|
$ |
15,622
|
$ |
16,323
|
$ |
27,218
|
$ |
29,568
|
||||||||
Less:
|
||||||||||||||||
Stock-based
compensation
|
(1,312 | ) | (880 | ) | (2,620 | ) | (1,634 | ) | ||||||||
Discontinued
operations, net of tax
|
(25 | ) |
-
|
304
|
-
|
|||||||||||
Gain
(loss) on disposal of assets
|
15,510
|
(634 | ) |
19,039
|
2,635
|
|||||||||||
EBITDA
|
29,795
|
14,809
|
43,941
|
30,569
|
||||||||||||
Plus:
|
||||||||||||||||
Interest
income
|
-
|
48
|
46
|
108
|
||||||||||||
Less:
|
||||||||||||||||
Depreciation
and amortization
|
(3,866 | ) | (3,699 | ) | (7,161 | ) | (7,600 | ) | ||||||||
Interest
expense
|
(6,779 | ) | (6,308 | ) | (13,367 | ) | (12,762 | ) | ||||||||
Provision
for income taxes
|
(7,584 | ) | (1,926 | ) | (9,178 | ) | (4,426 | ) | ||||||||
Net
income
|
$ |
11,566
|
$ |
2,924
|
$ |
14,281
|
$ |
5,889
|
||||||||
Applicable
|
||||||||||||||||
Outstanding
|
Interest
|
|||||||||||||||
at
6/30/2007
|
Rate
|
|||||||||||||||
Selected
Debt and Swap Data
|
||||||||||||||||
7
3/4% senior subordinated notes
|
$ |
100,000
|
7.75 | % | ||||||||||||
Senior
bank term loan B debt (1)
|
73,125
|
7.13 | % | |||||||||||||
Senior
bank term loan C debt (swap matures 7/1/2012) (2)
|
30,000
|
6.74 | % | |||||||||||||
Senior
bank term loan C debt (swap matures 7/1/2012) (2)
|
30,000
|
6.45 | % | |||||||||||||
Senior
bank term loan C debt (swap matures 7/1/2012) (2)
|
30,000
|
6.28 | % | |||||||||||||
Senior
bank term C debt (at variable rates) (1)
|
73,350
|
7.13 | % | |||||||||||||
Senior
bank revolving debt
(at
variable rates) (1)
|
8,500
|
7.13 | % | |||||||||||||
Swingline
credit facility (3)
|
293
|
8.25 | % | |||||||||||||
(1) Subject
to rolling LIBOR plus a spread currently at 1.75% and incorporated
into
the rate set forth above.
|
||||||||||||||||
(2) Under
its swap agreements, the Company pays a fixed rate plus a spread
based on
the Company's leverage, as defined in its
|
||||||||||||||||
credit
agreement. As of June 30, 2007, that spread was 1.75% and is incorporated
into the applicable interest rates set
|
||||||||||||||||
forth
above.
|
||||||||||||||||
(3) Subject
to prime interest rate.
|
Salem
Communications Corporation
|
||||||||||||
Supplemental
Information
|
||||||||||||
(in
millions)
|
||||||||||||
Projected
|
|
|
||||||||||
Three
Months Ending
|
Three
Months
|
|||||||||||
September
30, 2007
|
Ended
|
|||||||||||
Low
|
High
|
September
30, 2006
|
||||||||||
(unaudited)
|
||||||||||||
Reconciliation
of Station Operating Income to Operating Income
|
||||||||||||
Station
operating income
|
$ |
18.8
|
$ |
19.3
|
||||||||
Plus:
|
||||||||||||
Non-broadcast
revenue
|
5.9
|
5.9
|
||||||||||
Less:
|
||||||||||||
Non-broadcast
operating expenses
|
(5.7 | ) | (5.7 | ) | ||||||||
Corporate
expenses
|
(5.2 | ) | (5.2 | ) | ||||||||
Stock-based
compensation (corporate expense portion)
|
(0.4 | ) | (0.4 | ) | ||||||||
Depreciation
and amortization
|
(3.8 | ) | (3.8 | ) | ||||||||
Operating
income
|
$ |
9.6
|
$ |
10.1
|
||||||||
Reconciliation
of Same Station Net Broadcasting Revenue to
|
||||||||||||
Total
Net Broadcasting Revenue
|
||||||||||||
Net
broadcasting revenue - same station
|
$ |
51.3
|
$ |
51.8
|
$ |
51.3
|
||||||
Net
broadcasting revenue - acquisitions / dispositions / format
changes
|
0.8
|
0.8
|
1.2
|
|||||||||
Total
net broadcasting revenue
|
$ |
52.1
|
$ |
52.6
|
$ |
52.5
|
||||||
Reconciliation
of Same Station Station Operating Income to
|
||||||||||||
Total
Station Operating Income
|
||||||||||||
Station
operating income - same station
|
$ |
18.7
|
$ |
19.2
|
$ |
20.7
|
||||||
Station
operating income - acquisitions / dispositions / format
changes
|
0.1
|
0.1
|
-
|
|||||||||
Total
station operating income
|
$ |
18.8
|
$ |
19.3
|
$ |
20.7
|