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Salem Communications Announces First Quarter 2012 Total Revenue of $54.3 Million

(May 03, 2012)

CAMARILLO, CA -- (Marketwire) -- 05/03/12 -- Salem Communications Corporation (NASDAQ: SALM), a leading U.S. radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and conservative opinion content, released its results for the three months ended March 31, 2012.

First Quarter 2012 Results

For the quarter ended March 31, 2012 compared to the quarter ended March 31, 2011:

Consolidated


  • Total revenue increased 6.1% to $54.3 million from $51.2 million;
  • Operating expenses increased 18.1% to $46.4 million from $39.2 million;
  • Operating expenses excluding gain or loss on disposal of assets increased 6.3% to $46.5 million from $43.8 million;
  • Operating income decreased 33.5% to $7.9 million from $11.9 million;
  • Net income decreased to $0.8 million, or $0.03 net income per diluted share, from $2.6 million, $0.10 net income per diluted share in the prior year;
  • EBITDA decreased 26.4% to $11.5 million from $15.6 million; and
  • Adjusted EBITDA increased 2.9% to $11.7 million from $11.4 million.

Broadcast

  • Net broadcast revenue increased 2.9% to $44.0 million from $42.7 million;
  • Station operating income ("SOI") decreased 0.8% to $14.8 million from $14.9 million;
  • Same station net broadcast revenue increased 3.0% to $43.5 million from $42.2 million;
  • Same station SOI increased 0.7% to $14.8 million from $14.7 million; and
  • Same station SOI margin decreased to 33.9% from 34.7%.

Internet

  • Internet revenue increased 32.9% to $7.4 million from $5.6 million; and
  • Internet operating income increased 99.7% to $1.5 million from $0.8 million.

Publishing

  • Publishing revenue increased 1.8% to $2.9 million from $2.8 million; and
  • Publishing operating loss increased to $80,000 from $40,000 in the prior year.

Included in the results for the quarter ended March 31, 2012 are:

  • A $0.2 million gain ($0.1 million, net of tax) on disposal of assets related to the gain from the sale of WBZS-AM, Pawtucket, Rhode Island; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of:
    • $0.2 million non-cash compensation included in corporate expenses; and
    • $0.1 million non-cash compensation included in broadcast operating expenses.

Included in the results for the quarter ended March 31, 2011 are:

  • A $4.5 million gain ($2.7 million, net of tax, or $0.11 per diluted share) on disposal of assets comprised of a $2.4 million pre-tax gain from the sale of KKMO-AM in Seattle, Washington and a $2.1 million pre-tax gain from the sale of KXMX-AM in Los Angeles, California, partially offset by losses from various fixed asset and equipment disposals; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of:
    • $0.2 million non-cash compensation included in corporate expenses; and
    • $0.1 million non-cash compensation included in broadcast operating expenses.

These results reflect the reclassification of the operations of Samaritan Fundraising to discontinued operations for the three months ended March 31, 2012 and 2011.

Per share numbers are calculated based on 24,753,671 diluted weighted average shares for the quarter ended March 31, 2012, and 24,759,253 diluted weighted average shares for the quarter ended March 31, 2011.

Balance Sheet

As of March 31, 2012, the company had $235.0 million of 95/8% senior secured second lien notes outstanding and $36.3 million drawn on its revolver. The company was in compliance with the covenants of its credit facility and bond indenture. The company's bank leverage ratio was 5.02 versus a compliance covenant of 6.25.

Cash Distribution

Salem paid a cash distribution of $0.035 per share on its Class A and Class B common stock on March 30, 2012 to shareholders of record as of March 23, 2012. The distribution totaled approximately $0.9 million.

Acquisitions and Divestitures

The following transactions were completed since January 1, 2012:

  • On January 13, 2012, we completed the acquisition of KTNO-AM, Dallas, Texas for $2.2 million;
  • On March 16, 2012, we sold radio station WBZS-AM in Pawtucket, Rhode Island for $0.8 million; and
  • On April 10, 2012, we completed the acquisition of WKDL-AM in Warrenton, Virginia for $30,000.

Conference Call Information

Salem will host a teleconference to discuss its results on May 3, 2012 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (719) 325-2289, passcode 7084153 or listen via the investor relations portion of the company's website, located at www.salem.cc. A replay of the teleconference will be available through May 17, 2012 and can be heard by dialing (719) 457-0820, passcode 7084153 or on the investor relations portion on the company's website, located at www.salem.cc.

Second Quarter 2012 Outlook

For the second quarter of 2012, Salem is projecting total revenue to increase 1% to 3% over second quarter 2011 total revenue of $55.4 million. Salem is also projecting operating expenses before gain or loss on disposal of assets, terminated transaction costs and abandoned license upgrades and impairments to increase 2% to 5% as compared to the second quarter of 2011 operating expenses of $45.4 million.

Salem Communications Corporation is the largest commercial U.S. radio broadcasting company that provides programming targeted at audiences interested in Christian and conservative opinion radio content, as measured by the number of stations and audience coverage. Upon completion of all announced transactions, the company will own and/or operate a national portfolio of 96 radio stations in 37 markets, including 60 stations in 22 of the top 25 markets. We also program the Family Talk™ Christian-themed talk format on SiriusXM Channel 131.

Salem also owns Salem Radio Network, a national radio network that syndicates talk, news and music programming to approximately 2,000 affiliated radio stations and Salem Media Representatives, a national media advertising sales firm with offices across the country.

In addition to its radio broadcast business, Salem owns an Internet and a publishing division. Salem Web Network is a provider of online Christian and conservative-themed content and streaming and includes websites such as Christian faith focused Christianity.com, Questions and Answers about Jesus Christ at Jesus.org, Christian living focused Crosswalk.com®, online Bible at BibleStudyTools.com, Christian videos at GodTube.com, a leading website providing church media at WorshipHouseMedia.com and Christian radio ministries online at OnePlace.com. Additionally Salem owns conservative news leader Townhall.com® and conservative political blog HotAir.com, providing conservative commentary, news and blogging. Salem Publishing™ circulates Christian and conservative magazines such as Homecoming® The Magazine, YouthWorker Journal™, The Singing News, FaithTalk Magazine, Preaching and Townhall Magazine™. Xulon Press™ is a provider of self publishing services targeting the Christian audience.

Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem's radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem's reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

Regulation G
Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). Station operating income is defined as net broadcast revenues minus broadcast operating expenses. Non-broadcast operating income is defined as non-broadcast revenue minus non-broadcast operating expenses. EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before gain or loss on the disposal of assets and non-cash compensation expense. In addition, Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company's operating performance.

Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are generally recognized by the broadcast industry as important measures of performance and are used by investors as well as analysts who report on the industry to provide meaningful comparisons between broadcast. Station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company's results of operations presented on a GAAP basis such as operating income and net income. In addition, Salem's definitions of station operating income, non-broadcast operating income, EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.

Salem Communications Corporation Condensed Consolidated Statements of Operations (in thousands, except share, per share and margin data) Three Months Ended March 31, ---------------------------- 2011 2012 ------------- ------------- (Unaudited) Net broadcast revenue $ 42,730 $ 43,957 Net Internet revenue 5,592 7,434 Net publishing revenue 2,841 2,893 ------------- ------------- Total revenue 51,163 54,284 Operating expenses: Broadcast operating expenses 27,802 29,142 Internet operating expenses 4,836 5,924 Publishing operating expenses 2,880 2,971 Corporate expenses 4,551 4,867 Depreciation and amortization 3,701 3,619 Gain on disposal of assets (4,525) (169) ------------- ------------- Total operating expenses 39,245 46,354 ------------- ------------- Operating income from continuing operations 11,918 7,930 Other income (expense): Interest income 43 31 Interest expense (7,235) (6,396) Other (income) expense, net (11) 7 ------------- ------------- Income from continuing operations before income taxes 4,715 1,572 Provision for income taxes 2,156 687 ------------- ------------- Income from continuing operations 2,559 885 ------------- ------------- Income (loss) from discontinued operations, net of tax 28 (42) ------------- ------------- Net income $ 2,587 $ 843 ============= ============= Basic income per share before discontinued operations $ 0.10 $ 0.04 Income (loss) from discontinued operations, net of tax - - Basic income per share after discontinued operations $ 0.11 $ 0.03 Diluted income per share before discontinued operations $ 0.10 $ 0.04 Income (loss) from discontinued operations, net of tax - - Diluted income per share after discontinued operations $ 0.10 $ 0.03 Dividends per share $ - $ 0.04 Basic weighted average shares outstanding 24,520,858 24,564,947 ============= ============= Diluted weighted average shares outstanding 24,759,253 24,753,671 ============= ============= Other Data: Station operating income $ 14,928 $ 14,815 Station operating margin 34.9% 33.7% Salem Communications Corporation Condensed Consolidated Balance Sheets (in thousands) December 31, March 31, 2011 2012 -------------- -------------- (Unaudited) Assets Cash $ 67 $ 312 Restricted cash 110 - Trade accounts receivable, net 31,001 30,502 Deferred income taxes 6,403 6,812 Other current assets 4,385 4,509 Property, plant and equipment, net 111,222 111,761 Intangible assets, net 399,942 400,119 Deferred financing costs 5,489 5,175 Other assets 2,691 2,750 -------------- -------------- Total assets $ 561,310 $ 561,940 ============== ============== Liabilities and Stockholders' equity Current liabilities 36,515 30,411 Long-term debt and capital lease obligations 265,679 271,001 Deferred income taxes 48,077 49,130 Other liabilities 7,991 8,019 Stockholders' equity 203,048 203,379 -------------- -------------- Total liabilities and stockholders' equity $ 561,310 $ 561,940 ============== ============== Salem Communications Corporation Supplemental Information (in thousands) Three Months Ended March 31, ---------------------------- 2011 2012 ---------------------------- (Unaudited) Capital expenditures Acquisition related / income producing $ 954 $ 920 Maintenance 1,458 1,841 ------------- ------------- Total capital expenditures $ 2,412 $ 2,761 ============= ============= Reconciliation of Same Station Net Broadcast Revenue to Total Net Broadcast Revenue Net broadcast revenue - same station $ 42,244 $ 43,524 Net broadcast revenue - acquisitions 117 286 Net broadcast revenue - dispositions 222 6 Net broadcast revenue - format changes 147 141 ------------- ------------- Total net broadcast revenue $ 42,730 $ 43,957 ============= ============= Reconciliation of Same Station Broadcast Operating Expenses to Total Broadcast Operating Expenses Broadcast operating expenses - same station $ 27,578 $ 28,756 Broadcast operating expenses - acquisitions 109 172 Broadcast operating expenses - dispositions (42) 69 Broadcast operating expenses - format changes 157 145 ------------- ------------- Total broadcast operating expenses $ 27,802 $ 29,142 ============= ============= Reconciliation of Same Station Operating Income to Total Station Operating Income Station operating income - same station $ 14,666 $ 14,768 Station operating income - acquisitions 8 114 Station operating income - dispositions 264 (63) Station operating income - format changes (10) (4) ------------- ------------- Total station operating income $ 14,928 $ 14,815 ============= ============= Salem Communications Corporation Supplemental Information (in thousands) Three Months Ended March 31, ---------------------------- 2011 2012 ------------- ------------- (Unaudited) Reconciliation of Station Operating Income, Internet Operating Income and Publishing Operating Loss to Operating Income Station operating income $ 14,928 $ 14,815 Internet operating income 756 1,510 Publishing operating loss (39) (78) Less: Corporate expenses (4,551) (4,867) Depreciation and amortization (3,701) (3,619) Gain on disposal of assets 4,525 169 ------------- ------------- Operating income $ 11,918 $ 7,930 ============= ============= Reconciliation of Adjusted EBITDA to EBITDA to Net Income Adjusted EBITDA $ 11,389 $ 11,714 Less: Stock-based compensation (306) (327) Discontinued operations, net of tax 28 (42) Gain on disposal of assets 4,525 169 ------------- ------------- 15,636 11,514 EBITDA Plus: Interest income 43 31 Less: Depreciation and amortization (3,701) (3,619) Interest expense (7,235) (6,396) Provision for income taxes (2,156) (687) ------------- ------------- Net income $ 2,587 $ 843 ============= ============= Reconciliation of Adjusted EBITDA to Free Cash Flow Adjusted EBITDA $ 11,389 $ 11,714 Less: Cash interest (354) (410) Cash taxes (13) (8) Capital expenditures (2,412) (2,761) ------------- ------------- Free Cash Flow $ 8,610 $ 8,535 ============= ============= Outstanding at Applicable March 31, Interest 2012 Rate ------------ ------------- Selected Debt Data 95/8% senior subordinated notes $ 235,000 9.63% Revolving credit facility $ 36,310 3.36%

Company Contact:
Evan D. Masyr
Salem Communications
(805) 384-4512
Email Contact


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