TVL Lin TV Corp

LIN TV Corp. (NYSE:TVL), the parent of LIN Television Corporation, today reported financial results for the quarter ended June 30, 2006. Net revenues for the second quarter of 2006 increased 17% to $115.4 million compared to net revenues of $99.0 million in the second quarter of 2005. Net revenues in 2006 include revenue from seven stations acquired in 2005. On a pro forma basis, as if the acquisition of these seven stations had occurred January 1, 2005, pro forma net revenues increased 1% in the second quarter of 2006 compared to the second quarter of 2005. Total operating costs for the second quarter of 2006 were $430.5 million compared to total operating costs of $75.0 million for the second quarter of 2005. Expenses for the second quarter of 2006 included expenses of the stations acquired in 2005 as well as an impairment charge of $333.6 million related to the impairment of goodwill and broadcast licenses. Direct operating expenses, selling, general and administrative expenses and corporate overhead included stock-based compensation of $3.6 million and $0.6 million for the quarters ended June 30, 2006 and 2005, respectively, pursuant to SFAS 123(R), "Share Based Payment." Corporate overhead expense increased to $12.8 million in the second quarter of 2006 from $5.1 million in the second quarter of 2005. Corporate overhead expense in the second quarter of 2006 included a $5.6 million charge, excluding stock-based compensation, related to the retirement of the Company's former Chief Executive Officer. Operating loss for the second quarter of 2006 was $315.1 million compared to operating income of $24.0 million for the second quarter of 2005. Net loss for the second quarter of 2006 was $244.4 million, or $4.87 per diluted share, compared to a net income of $10.1 million, or $0.17 per diluted share, in the second quarter of 2005. Net revenues for the first half of 2006 increased 22% to $216.2 million compared to net revenues of $177.9 million in the first half of 2005. Net revenues in 2006 include revenue from seven stations acquired in 2005. On a pro forma basis as if the acquisition of these seven stations had occurred January 1, 2005, pro forma net revenues increased 3% in the first half of 2006 compared to the same period in 2005. Net loss for the first half of 2006 was $248.7 million, or $4.92 per diluted share, compared to $0.2 million, or $0.00 per diluted share, for the first half of 2005. The net loss for the first half of 2006 included expenses of the stations acquired in 2005 as well as an impairment charge of $333.6 million related to the impairment of goodwill and broadcast licenses. The net loss for the first half of 2005 included a pre-tax $12.3 million loss on the early extinguishment of debt. Direct operating expenses, selling, general and administrative expenses and corporate overhead included stock-based compensation of $5.6 million and $1.8 million for the six months ended June 30, 2006 and 2005, respectively, pursuant to SFAS 123(R), "Share Based Payment." Capital expenditures for the first half of 2006 were $5.6 million compared to $5.2 million in the comparable 2005 period. The Company received $2.0 million in capital distributions from equity investments for the first half of 2006 compared to $3.1 in the comparable 2005 period. CEO Comment Vincent L. Sadusky, LIN TV's President and Chief Executive Officer, said "We were pleased to have exceeded our revenue guidance for the second quarter of 2006, led by better than expected political revenue and revenue from our new stations. We expect political advertising to increase demand and drive results in the second half of 2006." Balance Sheet Total debt outstanding on June 30, 2006 was $989.8 million, and cash and cash equivalent balances were $11.6 million on June 30, 2006. The Company's net consolidated leverage as defined in its credit facility was approximately 7.2x as of June 30, 2006. Guidance Based on current pacings, LIN TV expects that third quarter revenue will increase in the low 20% range compared to net revenue of $91.0 million for the third quarter of 2005. The Company expects same station revenue (on a pro forma basis as if the acquisition of the seven stations had occurred January 1, 2005) to increase in the mid single digits from the third quarter of 2005. Expense guidance for the full year 2006 has been updated as follows: -0- *T Direct operating and SG&A expenses* Approximately $271-$274 million ---------------------------------------------------------------------- Program amortization Approximately $31-$33 million ---------------------------------------------------------------------- Cash payments for programming Approximately $30-$32 million ---------------------------------------------------------------------- Cash interest expense Approximately $58-$61 million ---------------------------------------------------------------------- Corporate overhead** Approximately $29-$31 million ---------------------------------------------------------------------- Depreciation and amortization of Approximately $39-$41 million intangible assets ---------------------------------------------------------------------- Capital expenditures Approximately $23-$25 million ---------------------------------------------------------------------- Cash taxes Approximately $7-$10 million ---------------------------------------------------------------------- * Includes approximately $3.1 million of non-cash stock-based compensation expense. ** Includes approximately $5.9 million of non-cash stock-based compensation expense and charges related to the retirement of the former CEO payment of $5.6 million. *T The guidance set forth above supersedes all expense guidance for the full year 2006 previously issued by the Company, and all such previous guidance should no longer be relied upon. About LIN TV LIN TV Corp. is the owner and operator of 30 television stations in 18 mid-sized markets in the U.S. and Puerto Rico. LIN TV owns approximately 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California through a joint venture with NBC, and is a 50% non-voting investor in Banks Broadcasting, Inc., which owns KSCW-TV in Wichita, Kansas and KNIN-TV in Boise, Idaho. LIN TV also is a one-third owner of WAND-TV, the NBC affiliate in Decatur, Illinois, which it manages pursuant to a management services agreement. Financial information and overviews of LIN TV's stations are available on the Company's website at www.lintv.com. Conference Call LIN TV will hold a conference call to discuss its second quarter 2006 results TODAY, Monday, August 7, 2006, at 8:30 am ET. To participate in the call, please call (719) 457-2679 (U.S. callers) or (800) 500-0177 (international callers) at least 10 minutes prior to the scheduled start of the call and reference 9014429. The call can also be accessed via the investor relations section of the company's website at www.lintv.com (listen-only). If you are unable to participate in the live call, a taped replay will be available from 11:30 am ET today through midnight ET on Monday, August 14, 2006. The replay can be accessed by dialing (719) 457-0820 (U.S. callers) or (888) 203-1112 (international callers), and using reference code 9014429. Safe Harbor Statement This press release may include statements that may constitute "forward-looking statements," including the information under the captions "CEO Comment" and "Guidance" and other estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect," or similar expressions. Forward-looking statements inherently involve risks and uncertainties, including, among other factors, general economic conditions, demand for advertising, the war in Iraq or other geopolitical events, competition for audience and programming, government regulations and new technologies, that could cause actual results of LIN TV to differ materially from the forward-looking statements. Factors that could contribute to such differences include the risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revision or changes after the date of this release. -0- *T LIN TV CORP. Unaudited Condensed Consolidated Statements of Operations (in thousands) Three Months Ended Six Months Ended June 30, June 30, ---------------------------------------- 2006 2005 2006 2005 ---------- -------- ---------- --------- Net revenues $115,405 $99,010 $216,219 $177,854 Operating costs and expenses: Direct operating (excluding depreciation of $8.8 million and $8.5 million for the three months ended June 30, 2006 and 2005, respectively, and $19.3 million and $16.2 million for the six months ended June 30, 2006 and 2005, respectively) 32,798 27,628 66,145 54,044 Selling, general and administrative 33,807 26,884 67,283 51,646 Amortization of program rights 7,636 6,534 15,054 12,389 Corporate 12,807 5,099 18,579 10,354 Impairment of broadcast licenses and goodwill 333,553 - 333,553 - Depreciation and amortization of intangible assets 9,913 8,873 21,865 16,912 ---------- -------- ---------- --------- Total operating costs 430,514 75,018 522,479 145,345 ---------- -------- ---------- --------- Operating (loss) income (315,109) 23,992 (306,260) 32,509 Other (income) expense: Interest expense, net 17,380 10,835 34,128 21,745 Share of (loss) income in equity investments 571 (1,463) (1,009) (1,709) Minority interest in loss of Banks Broadcasting (3,952) (74) (4,191) (286) Loss (gain) on derivative instruments 1,538 (2,096) 492 (1,595) Loss on extinguishment of debt - 21 - 12,330 Other, net 5,129 (235) 5,139 166 ---------- -------- ---------- --------- Total other expense, net 20,666 6,988 34,559 30,651 ---------- -------- ---------- --------- (Loss) income before (benefit from) provision for income taxes (335,775) 17,004 (340,819) 1,858 (Benefit from) provision for income taxes (91,418) 6,909 (92,143) 2,083 ---------- -------- ---------- --------- Net (loss) income $(244,357) $10,095 $(248,676) $(225) ========== ======== ========== ========= Basic (loss) income per common share: Net (loss) income $(4.87) $0.20 $(4.92) $- Weighted - average number of common shares outstanding used in calculating basic (loss) income per common share 50,217 50,633 50,502 50,573 Diluted (loss) income per common share: Net (loss) income (4.87) 0.17 (4.92) - Weighted - average number of common shares outstanding used in calculating diluted (loss) income per common share 50,217 54,236 50,502 50,573 LIN TV Corp. Unaudited Supplemental Financial Data (in thousands) As of June 30, ------------------- 2006 2005 --------- --------- Supplemental Financial Data: Debt outstanding $989,753 $709,391 Cash and cash equivalents 11,571 10,960 Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Capital expenditures 4,379 3,669 5,569 5,213 Program rights payments 8,113 7,471 15,321 13,817 Distributions from equity investments 1,019 - 2,037 3,055 Cash taxes, net 2,260 1,406 2,684 1,662 Stock-based compensation: Direct operating expense 356 - 669 - Selling, general and administrative 590 124 1,115 269 Corporate 2,699 518 3,794 1,502 --------- --------- --------- --------- Total $3,645 $642 $5,578 $1,771 ========= ========= ========= ========= Interest Expense Components: Credit Facility $5,162 $2,306 $9,991 $4,313 $375,000 6 1/2% Senior Subordinated Notes 6,161 6,229 12,255 11,438 $190,000 and $0 as of March 31, 2006 and 2005, respectively, 3,122 - 6,210 - 6 1/2% Senior Subordinated Notes - Class B $125,000, 2.50% Exchangeable Senior Subordinated Debentures 789 807 1,570 1,588 $0 as of March 31, 2006 and 2005, 8% Senior Notes - - - 1,356 Other interest income, net (19) 55 (225) (157) --------- --------- --------- --------- Interest expense before amortization of discount and 15,215 9,397 29,801 18,538 deferred financing fees Amortization of discount and deferred financing fees 2,165 1,438 4,327 3,207 --------- --------- --------- --------- Total interest expense, net $17,380 $10,835 $34,128 $21,745 ========= ========= ========= ========= The following sets forth pro forma information as if the acquisition of the seven television stations had occurred on January 1, 2005: Net revenues $115,405 $114,361 $216,219 $210,094 Operating (loss) income (315,109) 27,545 (306,260) 35,464 Net (loss) income (244,357) 10,780 (248,676) (2,463) Basic (loss) income per common share: Net (loss) income $(4.87) $0.21 $(4.92) $(0.05) Weighted - average number of common shares outstanding used in calculating basic (loss) income per common share 50,217 50,633 50,502 50,573 Diluted (loss) income per common share: Net (loss) income $(4.87) $0.18 $(4.92) $(0.05) Weighted - average number of common shares outstanding used in calculating diluted (loss) income per common share 50,217 54,236 50,502 50,573 Supplemental pro forma information: Depreciation and amortization of intangible assets $9,913 $10,359 $21,864 $20,487 Amortization of program rights 7,636 7,785 15,054 17,193 Payments of program rights 8,113 8,672 15,321 17,742 *T