TVL Lin TV Corp

LIN TV Corp. (NYSE: TVL) today reported financial results for the quarter ended September 30, 2006. Net revenues for the third quarter of 2006 increased 27% to $115.8 million compared to net revenues of $91.0 million in the third quarter of 2005. Net revenues in 2006 include revenue from stations acquired in 2005. On a pro forma basis, as if the acquisition of these stations had occurred January 1, 2005, net revenues increased 9% in the third quarter of 2006 compared to the third quarter of 2005. Operating income for the third quarter of 2006 increased 25% to $23.0 million compared to operating income of $18.5 million for the third quarter of 2005. Net income for the third quarter of 2006 increased slightly to $3.9 million, or $0.08 per diluted share, compared to a net income of $3.8 million, or $0.07 per diluted share, in the third quarter of 2005. Operating income and net income for the three months ended September 30, 2006, as compared to the three months ended September 30, 2005, was impacted by the acquisition of stations in 2005 and $1.5 million in non-cash stock-based compensation costs as a result of our adoption of SFAS 123R, �Share Based Payment,� in the fourth quarter of 2005. Net revenues for the nine months ended September 30, 2006 increased 23% to $332.0 million compared to net revenues of $268.9 million for the nine months ended September 30, 2005. Net revenues in 2006 include revenue from stations acquired in 2005. On a pro forma basis, as if the acquisition of these stations had occurred January 1, 2005, net revenues increased 5% in the first nine months of 2006 compared to the same period in 2005. Operating loss for the nine months ended September 30, 2006 was $283.2 million compared to operating income of $51.0 million for nine months ended September 30, 2005. Net loss for the first nine months of 2006 was $244.8 million, or $4.99 per diluted share, compared to net income of $3.6 million, or $0.07 per diluted share, for the first nine months of 2005. Operating income and net income for the nine months ended September 30, 2006, as compared to the nine months ended September 30, 2005, was impacted by the acquisition of stations in 2005, a $333.6 million impairment of goodwill and broadcast licenses in 2006, $5.6 million of severance costs, excluding stock-based compensation, relating to the retirement of our former CEO in 2006 and $7.1 million in non-cash stock-based compensation expense as a result of our adoption of SFAS 123R, �Share Based Payment, in the fourth quarter of 2005. As previously announced, we entered into an agreement in July 2006 to acquire KASA-TV, the FOX affiliated station, in Albuquerque, New Mexico. This acquisition will create a duopoly with our CBS affiliated station, KRQE-TV. We have not yet completed the transaction; however, we began operating the station pursuant to a local marketing agreement on September 15, 2006. The results of the KASA-TV operations are included in our reported results from September 15, 2006. Also as previously announced, we entered into an agreement in October 2006, to sell our Puerto Rico television operations to InterMedia Partners VII, L.P. for $130 million. 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 third quarter of 2006, led by better than expected political revenue and revenue from our new stations. Our leading stations garner significant political revenues in election years, as candidates want to advertise on strong local news stations. And we continue to be pleased with the performance of the TV stations we acquired last year. Revenue growth for these stations in the third quarter again outpaced growth from our core TV stations. We expect political advertising to continue to increase demand and drive results in the fourth quarter of 2006. We are also pleased to have reached an agreement during the quarter to sell our Puerto Rico television operations, which will enable us to achieve our goal of reducing our debt and corresponding leverage.� Balance Sheet Total debt outstanding on September 30, 2006 was $966.3 million, and cash and cash equivalent balances on September 30, 2006 were $19.0 million. Our net consolidated leverage as defined in our credit facility was approximately 6.7x as of September 30, 2006. Guidance Based on current pacings, we expect that fourth quarter revenue will increase in the low 30% range compared to net revenue of $92.0 million for the fourth quarter of 2005, excluding the Puerto Rico operations that will be reclassified as discontinued operations as of the fourth quarter. We expect same station revenue (on a pro forma basis as if the acquisition of the eight stations had occurred January 1, 2005 and excluding the Puerto Rico operations) to increase in the mid-teens from the fourth quarter of 2005. Expense guidance for the full year 2006 has been updated, excluding the Puerto Rico operations for the entire year and including KASA-TV from September 15, 2006, as follows: Direct operating and SG&A expenses(a) Approximately $237-$238 million Program amortization Approximately $26-$27 million Cash payments for programming Approximately $26-$27 million Cash interest expense Approximately $62-$63 million Corporate overhead(b) Approximately $31-$32 million Depreciation and amortization of intangible assets Approximately $37-$38 million Capital expenditures Approximately $23-$25 million � (a) Includes approximately $2.9 million of non-cash stock-based compensation expense. � (b) Includes approximately $5.7 million of non-cash stock-based compensation expense and $5.6 million charges related to the retirement of the former CEO. The guidance set forth above supersedes all expense guidance for the full year 2006 previously issued by us, and all such previous guidance should no longer be relied upon. About LIN TV We own and operate 31 television stations in 18 mid-sized markets in the U.S. and Puerto Rico, three of which are LMAs. We own approximately 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California through a joint venture with NBC, and are a 50% non-voting investor in Banks Broadcasting, Inc., which owns KWCV-TV in Wichita, Kansas and KNIN-TV in Boise, Idaho. We are also a 1/3 owner of WAND-TV, the NBC affiliate in Decatur, Illinois, which we manage pursuant to a management services agreement. Financial information and overviews of our stations are available on our company website at www.lintv.com. Conference Call We will hold a conference call to discuss our third quarter 2006 results TODAY, Thursday, November 9, 2006, at 8:30 AM Eastern Time. To participate in the call, please call 800-231-9012 (U.S. callers) or 719-457-2617 (international callers) at least 10 minutes prior to the scheduled start of the call and reference 7378418. 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 (Eastern Time) on Thursday, November 16, 2006. The replay can be accessed by dialing 888203-1112 (U.S. callers) or 719 457-0820 (international callers), and using reference code 7378418. Safe Harbor Statement This press release may include statements that may constitute �forward-looking statements,� including 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. LIN TV CORP. Unaudited Condensed Consolidated Statements of Operations (in thousands) Three Months Ended September 30, Nine Months Ended September 30, � 2006� � 2005� � 2006� � 2005� Net revenues $ 115,753� $ 91,003� $ 331,972� $ 268,857� Operating costs and expenses: Direct operating (excluding depreciation of $8.6 million and $6.6 million for the three months ended September 30, 2006 and 2005, respectively, and $27.9 million and $22.8 million for the nine months ended September 30, 2006 and 2005, respectively) 33,883� 27,964� 100,028� 82,008� Selling, general and administrative 35,431� 26,192� 102,714� 77,838� Amortization of program rights 7,421� 6,833� 22,475� 19,222� Corporate 6,248� 4,362� 24,827� 14,716� Impairment of broadcast licenses and goodwill -� -� 333,553� -� Depreciation and amortization of intangible assets � 9,735� � 7,151� � 31,600� � 24,063� Total operating costs � 92,718� � 72,502� � 615,197� � 217,847� Operating income (loss) 23,035� 18,501� (283,225) 51,010� � Other expense (income): Interest expense, net 18,269� 11,115� 52,397� 32,860� Share of income in equity investments (696) (410) (1,705) (2,119) Minority interest in loss of Banks Broadcasting, Inc. (161) (96) (4,352) (382) Gain on derivative instruments (1,446) (1,860) (954) (3,455) Loss on extinguishment of debt -� 1,082� -� 13,412� Other, net � (279) � 95� � 4,860� � 261� Total other expense, net � 15,687� � 9,926� � 50,246� � 40,577� Income (loss) before provision for (benefit from) income taxes 7,348� 8,575� (333,471) 10,433� Provision for (benefit from) income taxes � 3,495� � 4,789� � (88,648) � 6,872� Net income (loss) $ 3,853� $ 3,786� $ (244,823) $ 3,561� Basic income (loss) per common share: Net income (loss) $ 0.08� $ 0.07� $ (4.99) $ 0.07� Weighted - average number of common shares outstanding used in calculating basic income (loss) per common share 48,944� 50,702� 49,049� 50,632� Diluted income (loss) per common share: Net income (loss) $ 0.08� $ 0.07� $ (4.99) $ 0.07� Weighted - average number of common shares outstanding used in calculating diluted income (loss) per common share 48,999� 50,801� 49,049� 50,731� LIN TV Corp. Unaudited Supplemental Financial Data (in thousands) As of September 30, � 2006� � 2005� Supplemental Financial Data: Debt outstanding $ 966,275� $ 739,196� Cash and cash equivalents 18,994� 13,145� � Three Months Ended September 30, Nine Months Ended September 30, � 2006� � 2005� � 2006� � 2005� � Capital expenditures 3,815� 3,368� 9,384� 8,581� Program rights payments 7,734� 7,728� 23,055� 21,545� Distributions from equity investments 1,834� 409� 3,871� 3,464� Cash taxes, net 631� 322� 3,315� 1,984� Stock-based compensation: Direct operating expense 197� -� 866� -� Selling, general and administrative 335� 56� 1,450� 325� Corporate � 965� � 45� � 4,760� � 1,548� Total $ 1,497� $ 101� $ 7,076� $ 1,873� Interest Expense Components: Credit Facility $ 6,253� $ 2,667� $ 16,245� $ 6,980� $375,000 6 1/2% Senior Subordinated Notes 6,094� 6,094� 18,349� 17,532� $190,000, 6 1/2% Senior Subordinated Notes - Class B 3,088� 68� 9,297� 68� $125,000, 2.50% Exchangeable Senior Subordinated Debentures 799� 799� 2,370� 2,387� $0, 8% Senior Notes -� -� -� 1,356� Other interest (income) expense, net � (133) � 40� � (360) � (117) Interest expense before amortization of discount and deferred financing fees 16,101� 9,668� 45,901� 28,206� Amortization of discount and deferred financing fees � 2,168� � 1,447� � 6,496� � 4,654� Total interest expense, net $ 18,269� $ 11,115� $ 52,397� $ 32,860� The following sets forth pro forma information as if the acquisition of television stations had occurred on January 1, 2005: Net revenues $ 118,946� $ 108,801� $ 341,784� $ 325,447� Operating income (loss) 23,306� 21,825� (282,536) 57,746� Net income (loss) 3,509� 3,736� (246,064) 814� Basic income (loss) per common share: Net income (loss) $ 0.07� $ 0.07� $ (5.02) $ 0.02� Weighted - average number of common shares outstanding used in calculating basic income (loss) per common share 48,944� 50,702� 49,049� 50,632� Diluted income (loss) per common share: Net income (loss) $ 0.07� $ 0.07� $ (5.02) $ 0.02� Weighted - average number of common shares outstanding used in calculating diluted income (loss) per common share 48,999� 50,801� 49,049� 50,731� Supplemental pro forma information: Depreciation and amortization of intangible assets $ 10,781� $ 9,893� $ 35,158� $ 32,892� Amortization of program rights 7,841� 8,420� 23,803� 26,305� Payments of program rights 8,154� 9,455� 24,383� 28,159� LIN TV Corp. (NYSE: TVL) today reported financial results for the quarter ended September 30, 2006. Net revenues for the third quarter of 2006 increased 27% to $115.8 million compared to net revenues of $91.0 million in the third quarter of 2005. Net revenues in 2006 include revenue from stations acquired in 2005. On a pro forma basis, as if the acquisition of these stations had occurred January 1, 2005, net revenues increased 9% in the third quarter of 2006 compared to the third quarter of 2005. Operating income for the third quarter of 2006 increased 25% to $23.0 million compared to operating income of $18.5 million for the third quarter of 2005. Net income for the third quarter of 2006 increased slightly to $3.9 million, or $0.08 per diluted share, compared to a net income of $3.8 million, or $0.07 per diluted share, in the third quarter of 2005. Operating income and net income for the three months ended September 30, 2006, as compared to the three months ended September 30, 2005, was impacted by the acquisition of stations in 2005 and $1.5 million in non-cash stock-based compensation costs as a result of our adoption of SFAS 123R, "Share Based Payment," in the fourth quarter of 2005. Net revenues for the nine months ended September 30, 2006 increased 23% to $332.0 million compared to net revenues of $268.9 million for the nine months ended September 30, 2005. Net revenues in 2006 include revenue from stations acquired in 2005. On a pro forma basis, as if the acquisition of these stations had occurred January 1, 2005, net revenues increased 5% in the first nine months of 2006 compared to the same period in 2005. Operating loss for the nine months ended September 30, 2006 was $283.2 million compared to operating income of $51.0 million for nine months ended September 30, 2005. Net loss for the first nine months of 2006 was $244.8 million, or $4.99 per diluted share, compared to net income of $3.6 million, or $0.07 per diluted share, for the first nine months of 2005. Operating income and net income for the nine months ended September 30, 2006, as compared to the nine months ended September 30, 2005, was impacted by the acquisition of stations in 2005, a $333.6 million impairment of goodwill and broadcast licenses in 2006, $5.6 million of severance costs, excluding stock-based compensation, relating to the retirement of our former CEO in 2006 and $7.1 million in non-cash stock-based compensation expense as a result of our adoption of SFAS 123R, "Share Based Payment, in the fourth quarter of 2005. As previously announced, we entered into an agreement in July 2006 to acquire KASA-TV, the FOX affiliated station, in Albuquerque, New Mexico. This acquisition will create a duopoly with our CBS affiliated station, KRQE-TV. We have not yet completed the transaction; however, we began operating the station pursuant to a local marketing agreement on September 15, 2006. The results of the KASA-TV operations are included in our reported results from September 15, 2006. Also as previously announced, we entered into an agreement in October 2006, to sell our Puerto Rico television operations to InterMedia Partners VII, L.P. for $130 million. 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 third quarter of 2006, led by better than expected political revenue and revenue from our new stations. Our leading stations garner significant political revenues in election years, as candidates want to advertise on strong local news stations. And we continue to be pleased with the performance of the TV stations we acquired last year. Revenue growth for these stations in the third quarter again outpaced growth from our core TV stations. We expect political advertising to continue to increase demand and drive results in the fourth quarter of 2006. We are also pleased to have reached an agreement during the quarter to sell our Puerto Rico television operations, which will enable us to achieve our goal of reducing our debt and corresponding leverage." Balance Sheet Total debt outstanding on September 30, 2006 was $966.3 million, and cash and cash equivalent balances on September 30, 2006 were $19.0 million. Our net consolidated leverage as defined in our credit facility was approximately 6.7x as of September 30, 2006. Guidance Based on current pacings, we expect that fourth quarter revenue will increase in the low 30% range compared to net revenue of $92.0 million for the fourth quarter of 2005, excluding the Puerto Rico operations that will be reclassified as discontinued operations as of the fourth quarter. We expect same station revenue (on a pro forma basis as if the acquisition of the eight stations had occurred January 1, 2005 and excluding the Puerto Rico operations) to increase in the mid-teens from the fourth quarter of 2005. Expense guidance for the full year 2006 has been updated, excluding the Puerto Rico operations for the entire year and including KASA-TV from September 15, 2006, as follows: -0- *T Direct operating and SG&A expenses(a) Approximately $237-$238 million ---------------------------------------------------------------------- Program amortization Approximately $26-$27 million ---------------------------------------------------------------------- Cash payments for programming Approximately $26-$27 million ---------------------------------------------------------------------- Cash interest expense Approximately $62-$63 million ---------------------------------------------------------------------- Corporate overhead(b) Approximately $31-$32 million ---------------------------------------------------------------------- Depreciation and amortization of Approximately $37-$38 million intangible assets ---------------------------------------------------------------------- Capital expenditures Approximately $23-$25 million ---------------------------------------------------------------------- (a) Includes approximately $2.9 million of non-cash stock-based compensation expense. (b) Includes approximately $5.7 million of non-cash stock-based compensation expense and $5.6 million charges related to the retirement of the former CEO. *T The guidance set forth above supersedes all expense guidance for the full year 2006 previously issued by us, and all such previous guidance should no longer be relied upon. About LIN TV We own and operate 31 television stations in 18 mid-sized markets in the U.S. and Puerto Rico, three of which are LMAs. We own approximately 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California through a joint venture with NBC, and are a 50% non-voting investor in Banks Broadcasting, Inc., which owns KWCV-TV in Wichita, Kansas and KNIN-TV in Boise, Idaho. We are also a 1/3 owner of WAND-TV, the NBC affiliate in Decatur, Illinois, which we manage pursuant to a management services agreement. Financial information and overviews of our stations are available on our company website at www.lintv.com. Conference Call We will hold a conference call to discuss our third quarter 2006 results TODAY, Thursday, November 9, 2006, at 8:30 AM Eastern Time. To participate in the call, please call 800-231-9012 (U.S. callers) or 719-457-2617 (international callers) at least 10 minutes prior to the scheduled start of the call and reference 7378418. 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 (Eastern Time) on Thursday, November 16, 2006. The replay can be accessed by dialing 888203-1112 (U.S. callers) or 719 457-0820 (international callers), and using reference code 7378418. Safe Harbor Statement This press release may include statements that may constitute "forward-looking statements," including 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 Nine Months Ended September 30, September 30, ------------------ -------------------- 2006 2005 2006 2005 --------- -------- ---------- --------- Net revenues $115,753 $91,003 $ 331,972 $268,857 Operating costs and expenses: Direct operating (excluding depreciation of $8.6 million and $6.6 million for the three months ended September 30, 2006 and 2005, respectively, and $27.9 million and $22.8 million for the nine months ended September 30, 2006 and 2005, respectively) 33,883 27,964 100,028 82,008 Selling, general and administrative 35,431 26,192 102,714 77,838 Amortization of program rights 7,421 6,833 22,475 19,222 Corporate 6,248 4,362 24,827 14,716 Impairment of broadcast licenses and goodwill - - 333,553 - Depreciation and amortization of intangible assets 9,735 7,151 31,600 24,063 --------- -------- ---------- --------- Total operating costs 92,718 72,502 615,197 217,847 --------- -------- ---------- --------- Operating income (loss) 23,035 18,501 (283,225) 51,010 Other expense (income): Interest expense, net 18,269 11,115 52,397 32,860 Share of income in equity investments (696) (410) (1,705) (2,119) Minority interest in loss of Banks Broadcasting, Inc. (161) (96) (4,352) (382) Gain on derivative instruments (1,446) (1,860) (954) (3,455) Loss on extinguishment of debt - 1,082 - 13,412 Other, net (279) 95 4,860 261 --------- -------- ---------- --------- Total other expense, net 15,687 9,926 50,246 40,577 --------- -------- ---------- --------- Income (loss) before provision for (benefit from) income taxes 7,348 8,575 (333,471) 10,433 Provision for (benefit from) income taxes 3,495 4,789 (88,648) 6,872 --------- -------- ---------- --------- Net income (loss) $ 3,853 $ 3,786 $(244,823) $ 3,561 ========= ======== ========== ========= Basic income (loss) per common share: Net income (loss) $ 0.08 $ 0.07 $ (4.99) $ 0.07 Weighted - average number of common shares outstanding used in calculating basic income (loss) per common share 48,944 50,702 49,049 50,632 Diluted income (loss) per common share: Net income (loss) $ 0.08 $ 0.07 $ (4.99) $ 0.07 Weighted - average number of common shares outstanding used in calculating diluted income (loss) per common share 48,999 50,801 49,049 50,731 *T -0- *T LIN TV Corp. Unaudited Supplemental Financial Data (in thousands) As of September 30, ------------------- 2006 2005 --------- --------- Supplemental Financial Data: Debt outstanding $966,275 $739,196 Cash and cash equivalents 18,994 13,145 Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2006 2005 2006 2005 --------- --------- ---------- --------- Capital expenditures 3,815 3,368 9,384 8,581 Program rights payments 7,734 7,728 23,055 21,545 Distributions from equity investments 1,834 409 3,871 3,464 Cash taxes, net 631 322 3,315 1,984 Stock-based compensation: Direct operating expense 197 - 866 - Selling, general and administrative 335 56 1,450 325 Corporate 965 45 4,760 1,548 --------- --------- ---------- --------- Total $ 1,497 $ 101 $ 7,076 $ 1,873 ========= ========= ========== ========= Interest Expense Components: Credit Facility $ 6,253 $ 2,667 $ 16,245 $ 6,980 $375,000 6 1/2% Senior Subordinated Notes 6,094 6,094 18,349 17,532 $190,000, 6 1/2% Senior Subordinated Notes - Class B 3,088 68 9,297 68 $125,000, 2.50% Exchangeable Senior Subordinated Debentures 799 799 2,370 2,387 $0, 8% Senior Notes - - - 1,356 Other interest (income) expense, net (133) 40 (360) (117) --------- --------- ---------- --------- Interest expense before amortization of discount and deferred financing fees 16,101 9,668 45,901 28,206 Amortization of discount and deferred financing fees 2,168 1,447 6,496 4,654 --------- --------- ---------- --------- Total interest expense, net $ 18,269 $ 11,115 $ 52,397 $ 32,860 ========= ========= ========== ========= The following sets forth pro forma information as if the acquisition of television stations had occurred on January 1, 2005: Net revenues $118,946 $108,801 $ 341,784 $325,447 Operating income (loss) 23,306 21,825 (282,536) 57,746 Net income (loss) 3,509 3,736 (246,064) 814 Basic income (loss) per common share: Net income (loss) $ 0.07 $ 0.07 $ (5.02) $ 0.02 Weighted - average number of common shares outstanding used in calculating basic income (loss) per common share 48,944 50,702 49,049 50,632 Diluted income (loss) per common share: Net income (loss) $ 0.07 $ 0.07 $ (5.02) $ 0.02 Weighted - average number of common shares outstanding used in calculating diluted income (loss) per common share 48,999 50,801 49,049 50,731 Supplemental pro forma information: Depreciation and amortization of intangible assets $ 10,781 $ 9,893 $ 35,158 $ 32,892 Amortization of program rights 7,841 8,420 23,803 26,305 Payments of program rights 8,154 9,455 24,383 28,159 *T