Clear Channel Outdoor Reports Third Quarter 2009 Results
SAN ANTONIO--(BUSINESS WIRE)-- Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) today reported results for its third quarter September 30, 2009.
The Company reported revenues of $660.6 million in the third quarter of 2009, a 19% decrease from the $813.4 million reported for the third quarter of 2008. Included in the Company's revenue is a $10.2 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, the revenue decline would have been 20%. See reconciliation of revenue excluding effects of foreign exchange to revenue at the end of this press release.
Clear Channel Outdoor's operating expenses decreased 16% to $507.6 million during the third quarter of 2009 compared to 2008. Included in the Company's third quarter 2009 expenses is a $9.8 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, decline in expenses would have been 18%. See reconciliation of expenses excluding effects of foreign exchange to expenses at the end of this press release. Also included in the Company's third quarter 2009 direct operating expenses, SG&A expenses and corporate expenses are $6.6 million of restructuring charges and approximately $2.5 million of non-cash compensation expense, compared to non-cash compensation expense of $3.2 million in the third quarter of 2008.
Clear Channel Outdoor's net loss and diluted loss per share were $34.4 million and $0.10, respectively, during the third quarter of 2009. This compares to net income of $9.1 million or $0.03 per diluted share in the third quarter of 2008. See reconciliation of net income and diluted earnings per share at the end of this press release.
The Company's OIBDAN was $140.0 million in the third quarter of 2009, a 28% decrease from the third quarter of 2008. The Company defines OIBDAN as Operating Income before Depreciation and amortization, Non-cash compensation expense and Other operating income (expense) - net. See reconciliation of OIBDAN to net income at the end of this press release.
The Company filed its Quarterly Report with the Securities and Exchange Commission (SEC) on Form 10Q earlier today. This Quarterly Report includes further details and discussion of the Company's third quarter results.
Revenue, Direct Operating and SG&A Expenses, and OIBDAN by Division
Three Months Ended %
(In thousands)
September 30, Change
2009 2008
Revenue
Americas $ 312,537 $ 369,730 (15 %)
International 348,085 443,645 (22 %)
Consolidated revenue $ 660,622 $ 813,375 (19 %)
Direct Operating and SG&A Expenses by Division
Americas $ 194,852 $ 222,655
Less: Non-cash compensation expense (1,775 ) (2,388 )
193,077 220,267 (12 %)
International 312,738 382,839
Less: Non-cash compensation expense (537 ) (630 )
312,201 382,209 (18 %)
Plus: Non-cash compensation expense 2,312 3,018
Consolidated direct operating and SG&A $ 507,590 $ 605,494 (16 %)
expenses
The Company's 2009 revenue and direct operating and SG&A expenses increased approximately $10.2 million and $9.8 million, respectively, from foreign exchange movements during the third quarter of 2009 as compared to the same period of 2008.
OIBDAN Americas $ 119,460 $ 149,463 (20 %) International 35,884 61,436 (42 %) Corporate (15,365 ) (16,314 ) Consolidated OIBDAN $ 139,979 $ 194,585 (28 %)
See reconciliation of OIBDAN to net income at the end of this press release.
Restructuring Program
On January 20, 2009, CC Media Holdings announced that it had commenced a restructuring program targeting a reduction of fixed costs. For the third quarter of 2009, the Company recognized approximately $6.6 million of expenses related to the restructuring program.
Restructuring Expenses
(In millions)
Three Months Ended Nine Months Ended
September 30, 2009 September 30, 2009
Americas $ 2.4 $ 8.0
International 3.5 11.9
Corporate 0.7 3.7
Total $ 6.6 $ 23.6
TABLE 1 - Financial Highlights of Clear Channel Outdoor Holdings, Inc. and
Subsidiaries - Unaudited
Period from Period from
(In thousands, Three Months Three Months %
except per Ended July 31 July 1 Ended
share data) September through through July September 30, Change
30, September 30,
30,
2009 2008 2008 2008
Post-Merger Post-Merger Pre-Merger Combined
Revenue $ 660,622 $ 541,699 $ 271,676 $ 813,375 (19 %)
Direct
operating 398,766 304,763 158,354 463,117 (14 %)
expenses
Selling,
general and 108,824 93,175 49,202 142,377 (24 %)
administrative
expenses
Corporate 15,547 11,231 5,311 16,542 (6 %)
expenses
Depreciation
and 111,053 81,015 37,783 118,798 (7 %)
amortization
Other operating 1,160 1,528 2,506 4,034
income - net
Operating 27,592 53,043 23,532 76,575
income
Interest 37,775 29,640 14,582 44,222
expense
Loss on
marketable (11,315 ) -- -- --
securities
Equity in loss
of (2,046 ) (947 ) (8,867 ) (9,814 )
nonconsolidated
affiliates
Other income 492 (977 ) 3,067 2,090
(expense) - net
Income (loss)
before income (23,052 ) 21,479 3,150 24,629
taxes
Income tax
benefit
(expense):
Current (13,025 ) (5,032 ) (4,808 ) (9,840 )
Deferred 2,026 (82 ) 1,119 1,037
Income tax (10,999 ) (5,114 ) (3,689 ) (8,803 )
expense
Consolidated
net income (34,051 ) 16,365 (539 ) 15,826
(loss)
Amount
attributable to 325 5,551 1,160 6,711
noncontrolling
interest
Net income
(loss) $ (34,376 ) $ 10,814 $ (1,699 ) $ 9,115
attributable to
the Company
Diluted net
earnings (loss) $ (.10 ) $ .03 $ (.00 ) $ .03
per share
Weighted
average shares 355,389 355,655 355,294
outstanding -
Diluted
The information in Table 1 is presented for two periods: post-merger and pre-merger. Clear Channel Communications consummated its merger with a wholly-owned subsidiary of CC Media Holdings, Inc. on July 30, 2008. Purchase accounting adjustments were pushed down to the opening balance sheet of the Company on July 31, 2008 as the merger occurred at the close of business on July 30, 2008 and the results of operations subsequent to this date reflect the impact of the new basis of accounting. The financial reporting periods are presented as follows:
-- The three and nine month periods ended September 30, 2009 and the period
from July 31 through September 30, 2008 reflect the Company's
post-merger period, including the purchase accounting adjustments
related to the merger that were pushed down to the Company.
-- The periods from January 1 through July 30, 2008 and July 1 through July
30, 2008 reflect the Company's pre-merger period. The consolidated
financial statements for all pre-merger periods were prepared using the
historical basis of accounting for Clear Channel Communications. As a
result of the merger and the associated purchase accounting, the
consolidated financial statements of the post-merger periods are not
comparable to periods preceding the merger.
Supplemental Disclosure Regarding Non-GAAP Financial Information
Operating Income (Loss) before Depreciation and Amortization (D&A), Non-cash Compensation Expense and Other Operating Income - Net (OIBDAN)
The following tables set forth Clear Channel Outdoor's OIBDAN for the three months ended September 30, 2009 and 2008. The Company defines OIBDAN as consolidated net income adjusted to exclude non-cash compensation expense and the following line items presented in its Statement of Operations: Income tax benefit (expense); Other income (expense) - net; Equity in earnings (loss) of nonconsolidated affiliates; Loss on marketable securities; Interest expense; Other operating income - net; and D&A.
The Company uses OIBDAN, among other things, to evaluate the Company's operating performance. This measure is among the primary measures used by management for planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. This measure is an important indicator of the Company's operational strength and performance of its business because it provides a link between profitability and cash flows from operating activities. It is also a primary measure used by management in evaluating companies as potential acquisition targets.
The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company's management. It helps improve investors' ability to understand the Company's operating performance and makes it easier to compare the Company's results with other companies that have different capital structures, stock option structures or tax rates. In addition, this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry.
Since OIBDAN is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. OIBDAN is not necessarily a measure of the Company's ability to fund its cash needs. As it excludes certain financial information compared with operating income and net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions, which are excluded.
In addition, because a significant portion of the Company's advertising operations are conducted in foreign markets, principally France and the United Kingdom, management reviews the operating results from its foreign operations on a constant dollar basis. A constant dollar basis (i.e. a foreign currency adjustment is made to the 2009 actual foreign revenues and expenses at average 2008 foreign exchange rates) allows for comparison of operations independent of foreign exchange movements.
As required by the SEC, the Company provides reconciliations below to the most directly comparable amounts reported under GAAP, including: (i) OIBDAN for each segment to consolidated operating income; (ii) Revenue excluding foreign exchange effects to revenue; (iii) Expense excluding foreign exchange effects to expense and (iv) OIBDAN to net income:
Other
Operating Non-cash Depreciation operating
(In income compensation and income - OIBDAN
thousands) (loss) expense amortization net and
Impairment
Charge
Three Months Ended September 30, 2009
Americas $ 63,583 $ 1,775 $ 54,102 $ -- $ 119,460
International (21,604 ) 537 56,951 -- 35,884
Corporate (15,547 ) 182 -- -- (15,365 )
Other
operating 1,160 -- -- (1,160 ) --
income - net
Consolidated $ 27,592 $ 2,494 $ 111,053 $ (1,160 ) $ 139,979
Three Months Ended September 30, 2008
Americas $ 91,208 $ 2,388 $ 55,867 $ -- $ 149,463
International (2,125 ) 630 62,931 -- 61,436
Corporate (16,542 ) 228 -- -- (16,314 )
Other
operating 4,034 -- -- (4,034 ) --
income - net
Consolidated $ 76,575 $ 3,246 $ 118,798 $ (4,034 ) $ 194,585
Reconciliation of Revenue excluding Foreign Exchange Effects to Revenue
Three Months Ended %
(In thousands) September 30,
Change
2009 2008
Revenue $ 660,622 $ 813,375 (19 %)
Excluding: Foreign exchange decrease (increase) (10,161 ) --
Revenue excluding effects of foreign exchange $ 650,461 $ 813,375 (20 %)
International revenue $ 348,085 $ 443,645 (22 %)
Excluding: Foreign exchange decrease (increase) (11,120 ) --
International revenue excluding effects of $ 336,965 $ 443,645 (24 %)
foreign exchange
Reconciliation of Expense (Direct Operating and SG&A Expenses)
Excluding Foreign Exchange Effects to Expense
Three Months Ended %
(In thousands) September 30,
Change
2009 2008
Expense $ 507,590 $ 605,494 (16 %)
Excluding: Foreign exchange decrease (increase) (9,796 ) --
Expense excluding effects of foreign exchange $ 497,794 $ 605,494 (18 %)
International expense $ 312,738 $ 382,839 (18 %)
Excluding: Foreign exchange decrease (increase) (10,448 ) --
International expense excluding effects of $ 302,290 $ 382,839 (21 %)
foreign exchange
Reconciliation of OIBDAN to Net income
Three Months Ended %
(In thousands) September 30,
Change
2009 2008
OIBDAN $ 139,979 $ 194,585 (28 %)
Non-cash compensation expense 2,494 3,246
Depreciation and amortization 111,053 118,798
Other operating income - net 1,160 4,034
Operating income (loss) 27,592 76,575
Interest expense 37,775 44,222
Gain (loss) on marketable securities (11,315 ) --
Equity in earnings (loss) of nonconsolidated (2,046 ) (9,814 )
affiliates
Other income (expense) - net 492 2,090
Income (loss) before income taxes (23,052 ) 24,629
Income tax benefit (expense):
Current (13,025 ) (9,840 )
Deferred 2,026 1,037
Income tax benefit (expense) (10,999 ) (8,803 )
Consolidated net income (loss) (34,051 ) 15,826
Amount attributable to noncontrolling interest 325 6,711
Net income (loss) attributable to the Company $ (34,376 ) $ 9,115
About Clear Channel Outdoor Holdings
Clear Channel Outdoor, headquartered in San Antonio, Texas, is a global leader in the outdoor advertising industry providing clients with advertising opportunities through billboards, street furniture displays, transit displays, and other out-of-home advertising displays.
For further information contact: Lisa Dollinger, Chief Communications Officer, (210) 832-3474, or visit the Company's web site at www.clearchanneloutdoor.com.
Certain statements in this document constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Clear Channel Outdoor to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The words or phrases "guidance," "believe," "expect," "anticipate," "estimates" and "forecast" and similar words or expressions are intended to identify such forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this document include, but are not limited to: changes in business, political and economic conditions in the U.S. and in other countries in which Clear Channel Outdoor currently does business (both general and relative to the advertising industry); fluctuations in interest rates; changes in operating performance; shifts in population and other demographics; changes in the level of competition for advertising dollars; fluctuations in operating costs; technological changes and innovations; changes in labor conditions; changes in governmental regulations and policies and actions of regulatory bodies; fluctuations in exchange rates and currency values; changes in tax rates; and changes in capital expenditure requirements and access to capital markets. Other unknown or unpredictable factors also could have material adverse effects on Clear Channel Outdoor's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this document may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this document. Other key risks are described in Clear Channel Outdoor's reports and other documents filed with the U.S. Securities and Exchange Commission, including in the section entitled "Item 1A. Risk Factors" of the Company's Third Quarter Report on Form 10-Q for the period ended September 30, 2009 or the Company's Annual Report on Form 10-K for the period ended December 31, 2008. Except as otherwise stated in this document, Clear Channel Outdoor does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
Source: Clear Channel Outdoor Holdings, Inc.
Released November 9, 2009
