Hearst-Argyle Television Announces Results for the First Quarter.Business Editors NEW YORK--(BUSINESS WIRE)--May 1, 2000 Hearst-Argyle Television Hearst-Argyle Television, Inc., is a broadcasting company in the United States. Hearst-Argyle is majority-owned by the New York City-based Hearst Corporation, and holds joint ventures in television production with NBC Universal Television Distribution, has an Internet partnership , Inc. (NYSE NYSE See: New York Stock Exchange : HTV HTV H-II Transfer Vehicle HTV Harlech Television (Wales, UK) HTV Hrvatska Televizija (Croatian television) HTV Heidenheimer Tarifverbund (German) HTV Habitual Traffic Violator ) today announced operating results for the first quarter. On a GAAP-reported basis, revenues for the three months ended March 31, 2000, grew 49.8%, to $169.9 million; broadcast cash flow grew 64.4%, to $74 million. After-tax cash flow (income before extraordinary item, plus depreciation and amortization), a key financial measurement for broadcast companies, grew 89%, to $36.1 million, or $0.39 per share. Net income grew 64.3% to $4.6 million, or $0.05 per share. A substantial portion of the growth in revenues and cash flow is attributable to the Company's acquisition of Pulitzer Broadcasting, completed late in the first quarter of 1999. In order to provide "same-station" comparable results, the Company also presented pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma results as though it had owned all its existing stations at the beginning of 1999. On a pro forma basis for the quarter, revenues grew 7.5%, to $169.9 million, as compared to the first quarter of 1999. Broadcast cash flow grew 18.4%, to $74 million. After-tax cash flow grew 20.3%, to $36.1 million or $0.39 per share. Earnings per share climbed to $0.05, from a $0.01 loss in the first quarter of 1999. The Company received approximately $9 million of gross political advertising revenues during the quarter, compared to $1 million (on a pro forma basis) in the first quarter of 1999.
The following table summarizes the Company's results.
(Please note: Prior-year figures are in left column; current year
in right)
Three Months Ended March 31
($ in millions, except per share data)
GAAP - Reported
1999 2000 Change
Total Revenues $113.4 $169.9 49.8%
Broadcast Cash Flow(a) $ 45.0 $ 74.0 64.4%
Operating Cash Flow(a) $ 41.0 $ 69.9 70.5%
After-Tax Cash Flow(a) $ 19.1 $ 36.1 89.0%
After-Tax Cash Flow/Share $ 0.33 $ 0.39 18.2%
Net Income (Loss) $ 2.8 $ 4.6 64.3%
Income (Loss) per Share $ 0.04 $ 0.05 25.0%
-diluted
Pro Forma
Same-station
1999 2000 Change
Total Revenues $158.1 $169.9 7.5%
Broadcast Cash Flow(a) $ 62.5 $ 74.0 18.4%
Operating Cash Flow(a) $ 58.5 $ 69.9 19.5%
After-Tax Cash Flow(a) $ 30.0 $ 36.1 20.3%
After-Tax Cash Flow/Share $ 0.32 $ 0.39 21.9%
Net Income (Loss) $ (0.4) $ 4.6 N/A
Income (Loss) per Share $(0.01) $ 0.05 N/A
-diluted
(a) Definitions for Broadcast Cash Flow, Operating Cash Flow and
After-tax Cash Flow are provided in the Notes to the accompanying
financial statements.
During the quarter, the Company announced it had made a $25 million equity investment in Consumer Financial Network, Inc. (CFN CFN Center for Functional Nanomaterials CFN Companhia Ferroviaria do Nordeste (Brazil) CFN Commercial Fueling Network CFN Conselho Federal de Nutricionistas (Brazil) ), an Internet-based (www.youdecide.com) provider of information and e-commerce in the personal finance and health benefits areas. As part of the relationship, CFN has become an advertiser and content provider on Hearst-Argyle television stations as well as the Company's websites, currently being developed by Internet Broadcasting Internet Broadcasting (formerly Internet Broadcasting Systems), or IBS, is a provider of television station web sites. IBS hosts over 70 local stations' sites, and co-produced NBCOlympics. Systems, Inc. (IBS IBS Irritable bowel syndrome, see there ) (www.ibsys.com), which is creating a national network of local web `channels.' Hearst-Argyle's investment in CFN, which is majority-owned by iXL Enterprises, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : IIXL), was part of a larger round of financing from investors such as Chase Capital Partners, First Union and Royal Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. . The financing, totaling more than $130 million, was one of the largest yet for an Internet company. Among CFN's inaugural investors was GE Capital. "CFN is an ideal partner for us," noted Bob Marbut, Hearst-Argyle Television chairman and co-chief executive officer. "They are a fast-growing authority in the Internet space on finding the best in personal financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and they already have a relationship with SmartMoney.com and Women.com, both of which are part-owned by The Hearst Corporation The Hearst Corporation is a privately-held American-based media conglomerate based in the Hearst Tower in New York City, USA. Founded by William Randolph Hearst as an owner of newspapers, the company's holdings now include a wide variety of media. . CFN's expertise will greatly benefit personal-finance reporting on our stations and web channels. "Meanwhile," Marbut continued, "our partners at Geocast Network Systems continue to line up important technology alliances as they prepare for the 2001 roll-out of their highly anticipated digital datacasting service, which will include the content of our television stations. Geocast has leased space aboard GE Americom's GE-4 satellite, and announced agreements with numerous technology and infrastructure providers, including Harris Corp.; DiviCom, an encoding See encode. and compression technology provider; and SkyStream Networks, an Internet technology provider. Just today, Geocast announced the success of its first field trial, in the Bay Area, wherein where·in adv. In what way; how: Wherein have we sinned? conj. 1. In which location; where: the country wherein those people live. 2. it datacast video clips A short video presentation. , utility software, MP3 audio, games and more to PCs. Geocast is an exciting opportunity to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data our investment in digital spectrum initiatives." "We're pleased with our strong first quarter performance, which reflects an improved television ad economy and our stations' ability to translate market ratings leadership into revenue growth," said David J David J. Haskins (b. April 24, 1957, in Northampton, England) is a British alternative rock musician. He was the bassist for the seminal gothic rock band Bauhaus. Life and work . Barrett, Hearst-Argyle president and co-chief executive officer. "We successfully capitalized on the Super Bowl and political revenue opportunities as well as ABC's improved prime time ratings. We're also making very good progress in developing non-traditional revenue opportunities at our stations. "Importantly," Barrett continued, "our efforts to contain and control operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are also having a positive effect on bottom-line performance; this quarter, we converted 96% of our incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue growth to broadcast cash flow, improving overall margins." "We anticipate accelerating ad demand in the second half of the year, sparked by political spending and the Olympics," noted Anthony J. Vinciquerra, executive vice president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "And with the roll-out of our new Web channels in partnership with IBS, we are aggressively advancing our Internet strategy. We're seeing impressive pageviews on our recently launched channels -- including TheBostonChannel.com, for our WCVB-TV; ThePittsburghChannel.com, for WTAE-TV; ChannelCincinnati.com, for WLWT-TV; NewsChannel2000.com for WESH-TV, Orlando; and TheKCRAchannel.com, for KCRA-TV, Sacramento -- as well as the first signs of a new revenue stream resulting from a sharply focused sales effort. "The perfect combination of a strong local television station and a content-rich local Web channel benefits our viewers and advertisers," Vinciquerra continued. "Our web `channels' serving Pittsburgh, Cincinnati, Orlando and Sacramento, all of which were launched by March 1, collectively generated more than 2.2 million pageviews during March, more than quadrupling quad·ru·ple adj. 1. Consisting of four parts or members. 2. Four times as much in size, strength, number, or amount. 3. Music Having four beats to the measure. n. the total monthly pageviews served by these stations' predecessor websites. TheBostonChannel launched on April 10 and recorded more than 90,000 pageviews that first day. On April 17, the day of the Boston Marathon Boston marathon famous 26-mile race held annually for long-distance runners. [Am. Pop. Culture: Misc.] See : Endurance , TheBostonChannel.com logged 136,000 pageviews. This compares to an average 35,000 daily pageviews for its predecessor site. "For the month of March," Vinciquerra continued, "pageviews served by the nine `channels' then in the IBS network totaled an impressive 21 million, and unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. for the month totaled an equally impressive 1.4 million. We're taking aggressive advantage of our local television strength to leverage new growth opportunities in the Internet space." Hearst-Argyle Television, Inc. owns and/or manages 26 television stations and seven radio stations, in geographically diverse U.S. markets. The Company's television stations reach about 17.5% of U.S. TV households, making it one of the two largest U.S. television station groups not primarily aligned with a single network, as well as one of the seven largest television groups overall as measured by audience delivered. The Company also is a leader in the convergence of broadcast television and interactivity and is engaged in partnerships with several fast-growing interactive-media companies. Hearst-Argyle trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "HTV." This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties. Forward looking statements include those preceded by, followed by, or that include the words "believes," "expects," "anticipates," "could," or similar expressions. For these statements, the Company claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The following important factors, among them, could affect the future results of the Company and could cause those results to differ materially from those expressed in each forward-looking statement: material adverse changes in economic conditions in the markets served by the Company; future regulatory actions and conditions in the television stations' operating areas; and competition from others in the broadcast television markets served by the business. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and pro forma financial results and related notes follow (Please note: Prior-year figures are in left column; current year in right.)
Hearst-Argyle Television, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
1999 (1) 2000 (2)
(In thousands, except per share data)
Total revenues $ 113,424 $ 169,930
Station operating expenses 55,902 81,073
Amortization of program rights 12,827 15,019
Depreciation and amortization 16,269 31,508
Station operating income 28,426 42,330
Corporate general and
administrative expenses 4,017 4,035
Operating income 24,409 38,295
Interest expense, net 19,216 28,966
Equity in loss of affiliate (3) - 907
Income before income taxes and
extraordinary item 5,193 8,422
Income taxes 2,364 3,866
Net income 2,829 4,556
Less preferred stock
dividends (4) (356) (356)
Income applicable to common
stockholders $ 2,473 $ 4,200
Income per common share -
basic $ 0.04 $ 0.05
Number of common shares used in
the calculation 57,419 92,768
Income per common share -
diluted $ 0.04 $ 0.05
Number of common shares used in
the calculation 57,528 92,790
Supplemental Financial Data:
Broadcast cash flow (5) $ 44,971 $ 73,952
Broadcast cash flow margin 39.6% 43.5%
Operating cash flow (5) $ 40,954 $ 69,917
Operating cash flow margin 36.1% 41.1%
After-tax cash flow (5) $ 19,098 $ 36,064
After-tax cash flow per
share (6) $ 0.33 $ 0.39
Program payments $ 12,551 $ 14,905
Long-term debt, net of cash $ 1,671,064 $ 1,536,615
Common shares outstanding
at 3/31/00, net 92,791
See notes on the following page. Notes to Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Income (1) Includes results from: (i) WCVB WCVB Warren County Visitors Bureau (Pennsylvania) , WTAE, WBAL WBAL West Bay Athletic League (San Francisco Bay Area) , KMBC KMBC Kentucky Mountain Bible College KMBC Kickapoo Mountain Bike Club (Champaign, IL) , WISN WISN Wireless Integrated Services Network , WLWT, KOCO KOCO Kenwood-Oakland Community Organization (Chicago, Illinois) , KITV, WAPT WAPT Web Application Penetration Test WAPT Web Application Performance Testing , KHBS/KHOG, KSBW, WPTZ/ WNNE and KCRA KCRA Kentucky Court Reporters Association , fees from stations managed by the Company and the time-brokerage agreement for KQCA for the entire period presented; and, (ii) nine television stations and five radio stations from the acquisition of Pulitzer Broadcasting Company Noun 1. broadcasting company - a company that manages tv or radio stations company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" from March 19 to March 31, 1999. (2) Includes results from: (i) the Company's 22 owned television stations (which excludes KQCA), five owned radio stations and fees from the three television and five radio stations managed by the Company for the entire period presented; and, (ii) the time-brokerage agreement for KQCA from January 1 to January 31, 2000 and the results of KQCA, after its acquisition by the Company, from February 1 through March 31, 2000. (3) Represents the Company's equity interest in Internet Broadcasting Systems, Inc. (pursuant to the equity method of accounting). (4) Reflects preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the preferred stock issued in conjunction with the acquisition of KHBS/KHOG. (5) Broadcast cash flow is defined as station operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , plus depreciation and amortization, plus amortization of program rights, minus program payments. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , also known as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , is defined as broadcast cash flow less corporate general and administrative expenses. After-tax cash flow is defined as income before extraordinary item plus depreciation and amortization (does not give effect to deferred income taxes). The Company has included these measures because management believes that such data are commonly used as a measure of performance among companies in the broadcast industry. These measures are also frequently used by investors, analysts, valuation firms and lenders. Broadcast cash flow, operating cash flow and after-tax cash flow should not be considered in isolation or as an alternative to operating income (as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) as a measure of liquidity. These measures are believed to be, but may not be, comparable to similarly titled measures used by other companies. (6) After-tax cash flow per share represents after-tax cash flow divided by the number of shares used in the calculation of income per common share - diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. .
Hearst-Argyle Television, Inc.
Pro Forma Combined Condensed Statements of Income
(Unaudited)
Three Months Ended
March 31,
1999 2000
(In thousands, except per share data)
Total revenues $ 158,052 $ 169,930
Station operating expenses (1) 80,665 81,073
Amortization of program rights 15,406 15,019
Depreciation and amortization (2) 30,367 31,508
Station operating income 31,614 42,330
Corporate general and
administrative expenses 4,017 4,035
Operating income 27,597 38,295
Interest expense, net (3) 28,424 28,966
Equity in loss of affiliate (4) - 907
Income (loss) before income taxes (827) 8,422
Income taxes (422) 3,866
Net income (loss) (405) 4,556
Less preferred stock dividends (5) (356) (356)
Income (loss) applicable to common
stockholders $ (761) $ 4,200
Income (loss) per common share
- basic $ (0.01) $ 0.05
Number of common shares used in the
calculation 92,844 92,768
Income (loss) per common share
- diluted $ (0.01) $ 0.05
Number of common shares used in the
calculation 92,844 92,790
Supplemental Financial Data:
Broadcast cash flow (6) $ 62,507 $ 73,952
Broadcast cash flow margin 39.5% 43.5%
Operating cash flow (6) $ 58,490 $ 69,917
Operating cash flow margin 37.0% 41.1%
After-tax cash flow (6) $ 29,962 $ 36,064
After-tax cash flow per share (7) $ 0.32 $ 0.39
Program payments $ 14,880 $ 14,905
Long-term debt, net of cash $ 1,536,615
The pro forma combined condensed statements of income include the historical results of the Company's owned stations and the fees from stations managed by the Company adjusted to reflect: (i) the acquisition of the Pulitzer Broadcasting Company, the related draw-down of $725 million from the New Credit Facility and the related issuance of approximately 37.1 million shares of the Company's Series A Common Stock to Pulitzer Publishing, Inc.; and, (ii) the issuance of approximately 3.7 million shares of the Company's Series A Common Stock to The Hearst Corporation for $100 million as if the acquisition, the related financing and the equity issuances In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to had occurred on January 1, 1999. See notes on the following page. Notes to Pro Forma Combined Condensed Statements of Income (1) Reflects the elimination of certain expenses which would have been eliminated under the Company's management. (2) Reflects the change in depreciation and amortization expense due to purchase accounting adjustments, net of depreciation and amortization already recorded in the historical financial statements. (3) Reflects interest expense, net, calculated using the pro forma debt balances (in thousands):
Three Months Ended
March 31,
1999 2000
Senior Notes due 2007 - 2027 at
interest rates of 7.0% - 7.5% $ 8,968 $ 8,968
Private Placement Debt at an interest
rate of 7.18% 8,078 8,078
Senior Subordinated Notes due 2005 at
an interest rate of 9.75% 63 63
New Credit Facility at an interest
rate of 6.5% - 7.1% 10,156 10,919
Commitment fees for the unused
New Credit Facility 438 370
Amortization of deferred financing
costs and other 721 568
=========================
$ 28,424 $ 28,966
(4) Represents the Company's equity interest in Internet Broadcasting Systems, Inc. (pursuant to the equity method of accounting). (5) Reflects preferred stock dividends relating to the preferred stock issued in conjunction with the acquisition of KHBS/KHOG. (6) Broadcast cash flow is defined as station operating income, plus depreciation and amortization, plus amortization of program rights, minus program payments. Operating cash flow, also known as EBITDA, is defined as broadcast cash flow less corporate general and administrative expenses. After-tax cash flow is defined as income before extraordinary item plus depreciation and amortization (does not give effect to deferred income taxes). The Company has included these measures because management believes that such data are commonly used as a measure of performance among companies in the broadcast industry. These measures are also frequently used by investors, analysts, valuation firms and lenders. Broadcast cash flow, operating cash flow and after-tax cash flow should not be considered in isolation or as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as a measure of liquidity. These measures are believed to be, but may not be, comparable to similarly titled measures used by other companies. (7) After-tax cash flow per share represents after-tax cash flow divided by the number of shares used in the calculation of income (loss) per common share - diluted. |
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