EX-99.1 3 g84551exv99w1.txt EX-99.1 PRESS RELEASE DATED AUGUST 14, 2003 EXHIBIT 99.1 [COX RADIO, INC. LOGO] NEWS =============================================================================== COX RADIO REPORTS RECORD SECOND QUARTER 2003 REVENUE AND STATION OPERATING INCOME ATLANTA, AUGUST 14, 2003 -- Cox Radio, Inc. (NYSE: CXR) today reported financial results for the three-month and six-month periods ended June 30, 2003. Financial highlights (in thousands, except per share data and percentages) are as follows:
Three Months Six Months Ended June 30, Ended June 30, ----------------------- % ----------------------- % 2003 2002 Change 2003 2002 Change -------- -------- ------ -------- -------- ------ Net revenues $115,246 $113,910 1.2% $206,815 $199,940 3.4% Station operating expenses (1) 68,730 67,722 1.5% 128,160 123,703 3.6% Station operating income (2) 46,516 46,188 0.7% 78,655 76,237 3.2% Station operating income margin (3) 40.4% 40.5% -- 38.0% 38.1% -- Operating income 39,081 38,797 0.7% 64,012 61,205 4.6% Income before cumulative effect of accounting change 18,068 17,478 3.4% 27,445 24,798 10.7% Income before cumulative effect of accounting change per common share - diluted $ 0.18 $ 0.17 5.9% $ 0.27 $ 0.25 8.0% Net income 18,068 17,478 3.4% 27,445 10,864 152.6% Net income per common share - diluted $ 0.18 $ 0.17 -- $ 0.27 $ 0.11 --
--------- (1) Station operating expenses includes cost of services (exclusive of depreciation) and selling, general and administrative expenses. (2) Station operating income (previously broadcast cash flow) is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"). Please see the attached table for a reconciliation to net income, the most directly comparable GAAP financial measure. (3) Station operating income margin is station operating income as a percentage of net revenues. Robert F. Neil, President and Chief Executive Officer, commented, "Our growth this quarter in net revenues and station operating income are the best radio results of the three largest radio operators, once again demonstrating our ability to grow revenues and market share in a challenging and uncertain economic environment. Excluding the results of WFOX-FM, our recent start-up in Atlanta, our revenues for the quarter were up 2%. We are especially pleased that 11 of our 18 clusters delivered revenue growth that either matched or outpaced their respective markets. We look forward to a successful second half and remain focused on running our business with our consistent long-term focus." OPERATING RESULTS - SECOND QUARTER 2003 Net revenues for the second quarter of 2003 increased $1.3 million to $115.2 million, a 1.2% increase compared to the second quarter of 2002. National revenues increased 7.9% and local revenues decreased 1.6%. Overall growth in revenues was primarily a result of the focus on our core strategy, which includes managing our inventories, maintaining our competitive rates, and the Page 2 of 7 successful execution of our consultative selling strategy. The leaders in revenue growth were Louisville, Long Island, Honolulu, Greenville-Spartanburg, Tampa, Orlando, Houston and Dayton. These increases in revenues were partially offset by decreases in Southern Connecticut, Birmingham, Tulsa and Atlanta. In February 2003, in order to increase audience share, WFOX-FM was reformatted to an urban contemporary format in response to the changing preferences of its targeted audience in the Atlanta market. Revenues at WFOX-FM decreased $1.1 million compared to the second quarter of 2002, primarily as a result of this change. Excluding WFOX-FM, net revenues at Cox Radio's stations in Atlanta were flat, as compared to the total market's revenue performance of down 1% for the second quarter 2003. Station operating expenses, which are the combination of cost of services and selling, general and administrative expenses, increased $1.0 million to $68.7 million, an increase of 1.5% from the second quarter of 2002. This increase was primarily due to higher programming costs related to sports programming, primarily in Atlanta, and an increase in promotional spending. The increases were partially offset by a decrease in sales costs as a result of changes in the sales compensation structure in Atlanta and Southern Connecticut. Station operating income increased $0.3 million to $46.5 million, an increase of 0.7% from the second quarter of 2002, for the reasons discussed above. Station operating income margin remained flat over the second quarter of 2002. Operating income for the second quarter of 2003 increased $0.3 million to $39.1 million. This was primarily as a result of an increase in net revenues and operating expenses, as discussed above. Interest expense during the second quarter of 2003 decreased $1.2 million to $8.9 million as a result of a lower overall outstanding debt, primarily due to the repayment of the $100.0 million principal amount of our 6.25% notes at maturity, as well as a decrease in the average interest rate on our outstanding floating rate debt. Income before cumulative effect of accounting change increased $0.6 million to $18.1 million, an increase of 3.4% from the second quarter of 2002, for the reasons discussed above. Net income increased $0.6 million to $18.1 million for the second quarter of 2003, for the reasons discussed above. Capital expenditures for the second quarter of 2003 totaled $3.2 million. OPERATING RESULTS - FIRST SIX MONTHS 2003 Net revenues for the first six months of 2003 increased $6.9 million to $206.8 million, a 3.4% increase compared to the first six months of 2002. National revenues increased 7.5% and local revenues increased 1.8%. Overall growth in revenues was primarily a result of the focus on our core strategy, which includes managing our inventories, maintaining our competitive rates, and the successful execution of our consultative selling strategy. The leaders in revenue growth were Louisville, Greenville-Spartanburg, Honolulu, Long Island, Houston, Jacksonville and Tampa. These increases in revenues were partially offset by decreases in Southern Connecticut, Tulsa, Birmingham and Atlanta. In February 2003, in order to increase audience share, WFOX-FM was reformatted to an urban contemporary format in response to the changing preferences of its targeted audience in the Atlanta market. Revenues at WFOX-FM decreased $2.2 million compared to the Page 3 of 7 first six months of 2002, primarily as a result of this change. Excluding WFOX-FM, net revenues at Cox Radio's radio stations in Atlanta were up 3% for the first six months of 2003. Station operating expenses, which are the combination of cost of services and selling, general and administrative expenses, increased $4.5 million to $128.2 million, an increase of 3.6% from the first six months of 2002. This increase was primarily due to an increase in sales commissions from increased revenues during 2003, costs associated with the reformat of WFOX-FM in Atlanta, higher programming costs related to sports programming primarily in Atlanta, and an increase in promotion costs. The increases were partially offset by a decrease in sales costs as a result of changes in the sales compensation structure in Atlanta and Southern Connecticut. Station operating income increased $2.4 million to $78.7 million, an increase of 3.2% from the first six months of 2002, for the reasons discussed above. Station operating income margin remained flat over the first six months of 2002. Operating income for the first six months of 2003 increased $2.8 million to $64.0 million. This was primarily as a result of an increase in net revenues and operating expenses, as discussed above. Interest expense during the first six months of 2003 decreased $2.2 million to $18.1 million as a result of a lower overall outstanding debt, primarily due to the repayment of the $100.0 million principal amount of our 6.25% notes at maturity. as well as a decrease in the average interest rate on our outstanding floating rate debt. Income before cumulative effect of accounting change increased $2.6 million to $27.4 million, an increase of 10.7% from the first six months of 2002 for the reasons discussed above. Net income increased $16.6 million to $27.4 million for the first six months of 2003, primarily as a result of a $13.9 million after-tax loss related to the cumulative effect of accounting change as a result of adopting SFAS No. 142 in the first quarter of 2002 and for the reasons discussed above. Capital expenditures for the first six months of 2003 totaled $5.9 million. As of June 30, 2003, Cox Radio had consolidated debt of $591.8 million and generated $153.1 million of adjusted EBITDA during the twelve months ended June 30, 2003. As a result, Cox Radio's ratio of consolidated debt to adjusted EBITDA was 3.87x at June 30, 2003. Please see the attached table for (1) a reconciliation of consolidated debt, a non-GAAP financial measure, to balance sheet debt, the most directly comparable GAAP financial measure, and (2) a reconciliation of adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable GAAP financial measure. BUSINESS OUTLOOK Robert F. Neil, continued, "While national business is strong, visibility on local business continues to be a challenge. As a result, we remain cautious in our guidance for the third quarter and expect to deliver revenue growth in the 0% to 2% range. Our strong second quarter results combined with our success in the Spring ratings, demonstrate the strength of our operations and provide a solid foundation for future success." Page 4 of 7 Cox Radio is the third largest radio company in the United States based on revenues. Cox Radio owns, operates or provides sales and marketing services for 78 stations (67 FM and 11 AM) clustered in 18 markets, including major markets such as Atlanta, Houston, Miami, Orlando, San Antonio and Tampa. Cox Radio shares are traded on the New York Stock Exchange under the symbol: CXR. Cox Radio will host a teleconference to discuss its results today at 11:00 a.m. Eastern Time. To access the teleconference, please dial 973-582-2710 ten minutes prior to the start time. The teleconference will also be available via live webcast on the investor relations portion of the Company's website, located at www.coxradio.com. If you cannot listen to the teleconference at its scheduled time, there will be a replay available through Thursday, August 21, 2003, which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080 (Int'l), passcode 4040804. The webcast will also be archived on Cox Radio's website for one month. FORWARD-LOOKING STATEMENTS Statements in this release, including statements relating to any earnings or revenue projections, are "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which are statements that relate to Cox Radio's future plans, earnings, objectives, expectations, performance, and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements due to various risks, uncertainties or other factors. These factors include competition within the radio broadcasting industry, advertising demand in our markets, the possibility that advertisers may cancel or postpone schedules in response to political events, competition for audience share, our success in executing and integrating acquisitions, our ability to generate sufficient cash flow to meet our debt service obligations and finance operations, our ability to execute our Internet strategy effectively, and other risk factors described from time to time in Cox Radio's filings with the Securities and Exchange Commission, including Cox Radio's Form 10-K for the year ended December 31, 2002. Cox Radio assumes no responsibility to update the forward-looking statements contained in this release as a result of new information, future events or otherwise. (SEE ATTACHED FINANCIAL TABLES) CONTACT: Analysts and Investors Analysts, Investors, Press or Media Neil Johnston John Buckley or Catherine Wang Vice President & Chief Financial Officer Brainerd Communicators, Inc. Cox Radio, Inc. 212-986-6667 678-645-4310 buckley@braincomm.com Page 5 of 7 COX RADIO, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ------------------------- 2003 2002 2003 2002 --------- --------- --------- --------- NET REVENUES: Local ................................................... $ 83,020 $ 84,396 $ 149,959 $ 147,295 National ................................................ 26,010 24,109 45,268 42,118 Other ................................................... 6,216 5,405 11,588 10,527 --------- --------- --------- --------- Total revenues ........................................ 115,246 113,910 206,815 199,940 OPERATING EXPENSES: Cost of services (exclusive of depreciation shown separately below) ..................................... 25,434 25,092 46,654 44,958 Selling, general and administrative ..................... 43,296 42,630 81,506 78,745 Corporate general and administrative .................... 4,400 4,365 8,635 8,466 Depreciation ............................................ 2,977 3,028 5,921 6,030 Amortization ............................................ 29 29 59 59 Loss (gain) on sales of assets .......................... 29 18 28 375 Loss (gain) on sales of radio stations .................. -- (49) -- 102 --------- --------- --------- --------- OPERATING INCOME ........................................... 39,081 38,797 64,012 61,205 OTHER INCOME (EXPENSE): Interest income .......................................... 1 1 2 9 Interest expense ......................................... (8,877) (10,049) (18,053) (20,238) Other - net .............................................. (115) (119) (239) (237) --------- --------- --------- --------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE ....................................... 30,090 28,630 45,722 40,739 --------- --------- --------- --------- Current income tax expense ................................. 6,143 5,000 9,487 7,053 Deferred income tax expense ................................ 5,879 6,152 8,790 8,888 --------- --------- --------- --------- Total income tax expense ................................... 12,022 11,152 18,277 15,941 --------- --------- --------- --------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE ....... 18,068 17,478 27,445 24,798 Cumulative effect of accounting change, net of tax ....... -- -- -- (13,934) --------- --------- --------- --------- NET INCOME ................................................. $ 18,068 $ 17,478 $ 27,445 $ 10,864 ========= ========= ========= ========= BASIC NET INCOME PER SHARE Income before cumulative effect of accounting change ..... $ 0.18 $ 0.17 $ 0.27 $ 0.25 Cumulative effect of accounting change ................... -- -- -- (0.14) --------- --------- --------- --------- Net income per common share ............................ $ 0.18 $ 0.17 $ 0.27 $ 0.11 ========= ========= ========= ========= DILUTED NET INCOME PER SHARE Income before cumulative effect of accounting change ..... $ 0.18 $ 0.17 $ 0.27 $ 0.25 Cumulative effect of accounting change ................... -- -- -- (0.14) --------- --------- --------- --------- Net income per common share ............................ $ 0.18 $ 0.17 $ 0.27 $ 0.11 ========= ========= ========= ========= Weighted average basic common shares outstanding ........... 100,217 100,235 100,208 100,137 ========= ========= ========= ========= Weighted average diluted common shares outstanding ......... 100,622 100,862 100,598 100,680 ========= ========= ========= =========
Page 6 of 7 USE OF NON-GAAP FINANCIAL MEASURES Cox Radio utilizes certain financial measures that are not calculated in accordance with GAAP to assess its financial performance. A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented. The non-GAAP financial measures used in this release are station operating income (previously broadcast cash flow), station operating income margin, adjusted EBITDA and consolidated debt. Station operating income is net income excluding the cumulative effect of accounting change, total income tax expense, total other expenses, the gain (loss) on sales of assets and radio stations, depreciation, amortization and corporate general and administrative expenses. Station operating income margin is station operating income as a percentage of net revenues calculated in accordance with GAAP. Adjusted EBITDA is net income excluding income tax expense, other expenses, the gain (loss) on sales of assets and radio stations, depreciation and amortization. Consolidated debt is the combination of notes payable, amounts due to/from Cox Enterprises and an off-balance sheet liability, which is a guarantee of third party indebtedness. Cox Radio's management believes that station operating income and station operating income margin provide useful data to evaluate Cox Radio's overall financial condition and operating results and the means to evaluate our radio stations' performance and operations. Management also believes that these measures are useful to an investor in evaluating our performance because they are commonly used financial analysis tools for measuring and comparing media companies. In addition, management uses these measures to evaluate individual radio station and market-level performance, as well as our overall operations. Management uses adjusted EBITDA and consolidated debt to monitor compliance with certain financial covenants in Cox Radio's credit agreements and as a gauge of Cox Radio's ability to service long-term debt and other fixed obligations and to fund continued growth with internally generated funds. Station operating income should not be considered as an alternative to operating income or net income as an indicator of Cox Radio's financial performance. Adjusted EBITDA should not be considered as an alternative to net cash provided by operating activities as a measure of liquidity. Each of these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies. The following table reconciles net income, from Cox Radio's financial statements presented in accordance with GAAP, to station operating income, a non-GAAP financial measure.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- -------------------------- 2003 2002 2003 2002 -------- -------- -------- -------- (UNAUDITED) (IN THOUSANDS) Net income ....................................... $ 18,068 $ 17,478 $ 27,445 $ 10,864 Adjustments: Cumulative effect of accounting change ....... -- -- -- 13,934 Total income tax expense ..................... 12,022 11,152 18,277 15,941 Total other expense .......................... 8,991 10,167 18,290 20,466 (Gain) loss on sales of radio stations ....... -- (49) -- 102 Loss on sales of assets ...................... 29 18 28 375 Amortization ................................. 29 29 59 59 Depreciation ................................. 2,977 3,028 5,921 6,030 Corporate general and administrative ......... 4,400 4,365 8,635 8,466 -------- -------- -------- -------- STATION OPERATING INCOME ......................... $ 46,516 $ 46,188 $ 78,655 $ 76,237 ======== ======== ======== ========
Page 7 of 7 The following table reconciles net income for the twelve months ended June 30, 2003, from Cox Radio's financial statements presented in accordance with GAAP, to adjusted EBITDA, a non-GAAP financial measure.
TWELVE MONTHS ENDED JUNE 30, 2003 ------------- (UNAUDITED) (IN THOUSANDS) Net income .................................. $ 62,522 Adjustments: Total income tax expense ................ 40,634 Total other expense ..................... 37,982 Gain on sales of radio stations ......... (406) Loss on sales of assets ................. 270 Amortization ............................ 118 Depreciation ............................ 11,987 --------- ADJUSTED EBITDA ............................. $ 153,107 =========
The following table reconciles balance sheet debt, from Cox Radio's financial statements presented in accordance with GAAP, to consolidated debt, a non-GAAP financial measure.
AS OF JUNE 30, 2003 -------------- (UNAUDITED) (IN THOUSANDS) Balance sheet debt: Due to Cox Enterprises ................................ $ 10,565 Notes payable ......................................... 574,677 Off-balance sheet guarantee: Guarantee of Honolulu Broadcasting, Inc. loan ......... 6,564 -------- CONSOLIDATED DEBT ........................................ $591,806 ========