Citadel Broadcasting Reports 2008 3Q Operating Results

CDL | Quote | Chart | News | PowerRating -- Citadel Broadcasting Corp. has reported its results for the third quarter of 2008.

The Company noted in its report that net revenues for the third quarter of 2008 were $213.9 million as compared to $240.2 million for the third quarter of 2007, a decrease of $26.3 million, or 10.9 percent. This decline is due principally to lower revenues of $20.9 million from our Radio Markets and $5.4 million at the Radio Network, due primarily to lower revenues from the Paul Harvey and Reach Media shows.

Operating income for the third quarter of 2008 was $45.2 million as compared to an operating loss of $427.4 million in the corresponding 2007 period. The third quarter of 2007 reflected an asset impairment and disposal charge of $495.8 million compared to $7.3 million in 2008. Excluding the impairment charges, the decrease in operating income of $15.8 million is primarily the result of the decrease in revenues of $26.3 million partially offset by a decrease in operating expenses.

Segment operating income (a non-GAAP financial measure generally defined as operating income adjusted to exclude depreciation and amortization, stock-based compensation, corporate general and administrative expenses, non-cash amounts related to contract obligations, local marketing agreement fees, asset impairment and disposal charges and other, net) was $73.3 million for the third quarter of 2008, compared to $92.3 million for the third quarter of 2007. This decrease of $19.0 million, or 20.6 percent, resulted from a $17.2 million decline in segment operating income from our Radio Markets and a $1.9 million decline from the Radio Network.

Net interest expense decreased to $30.0 million for the quarter ended September 30, from $39.0 million for the quarter ended September 30, 2007, a decrease of $9.0 million. The decrease in net interest expense was primarily the result of lower interest rates under the Company's senior credit facility and a decrease in the principal balance of the Company's long-term debt.

In the third quarter of 2008, the Company repurchased $160.0 million of its debt, comprised of approximately $74.3 million of its convertible subordinated notes and approximately $85.7 million of its senior debt resulting in a gain on extinguishment of debt, net of costs, of approximately $32.5 million. During the nine months ended September 30, the Company has reduced its convertible debt by $254.8 million and its senior debt by $109.0 million. As a result of these transactions and based on the current interest rates in effect on its senior debt and convertible subordinated notes, the Company expects interest expense will decrease by approximately $5.2 million over the next twelve months as compared to the same period in the prior year.

Income tax expense for the quarter ended September 30, was $15.9 million (substantially all non-cash), compared to an income tax benefit of $20.0 million (substantially all non-cash) for the quarter ended September 30, 2007. The income tax expense for the quarter ended September 30, includes a state tax benefit of approximately $2.8 million, net of federal expense resulting from a change in the Company's effective state tax rate. Income tax benefit for the quarter ended September 30, 2007 is related to the $495.8 million asset impairment and disposal charges, which resulted in an income tax benefit of approximately $32.6 million, partially offset by the tax expense on pre-tax income excluding impairment loss.

Net income for the quarter ended September 30, was $28.0 million, or $0.11 per basic share, as compared to net loss of $447.8 million, or $(1.71) per basic share, for the same period in 2007. Included in net income for the quarter ended September 30, was a $17.3 million gain on the extinguishment of debt less write-off of deferred financing costs and debt discount, net of tax, or $0.07 per basic share and approximately $4.7 million asset impairment and disposal charges, net of tax, or $(0.02) per basic share. Included in net loss for the quarter ended September 30, 2007 was approximately $463.2 million asset impairment and disposal charges, net of tax, or $(1.77) per basic share and $4.6 million of stock-based compensation expense, net of tax, or $(0.02) per basic share.

Free cash flow (as detailed in the attached table, a non-GAAP financial measure, generally defined as net (loss) income (i) plus depreciation and amortization, stock-based compensation expense, non-cash amounts related to contract obligations, asset impairment and disposal charges, other, net, non-cash debt-related amounts, write-off of deferred financing costs and debt discount, and income tax expense (ii) less capital expenditures, gain on extinguishment of debt and cash taxes) was $33.8 million for the three months ended September 30, compared to $41.6 million for the three months ended September 30, 2007, a decrease of $7.8 million. The decrease in free cash flow is a result of the decrease in revenues partially offset by decreases in operating expenses, interest expense and capital expenditures. For the three months ended September 30, the basic weighted average common shares outstanding were approximately 262.8 million as compared to 261.5 million for the three months ended September 30, 2007.

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