Arbitron Inc. Reports 2013 Second Quarter Financial Results Revenue increased 2.9 percent to $107.4 million;

GAAP earnings per share (diluted) for the quarter were $0.26;

Excluding costs related to pending merger with Nielsen, second quarter EPS would have been $0.43, an increase of 16.2 percent over the second quarter of 2012

COLUMBIA, Md., Aug. 1, 2013 /PRNewswire/ -- Arbitron Inc. (NYSE: ARB) today announced results for the second quarter ended June 30, 2013.

Computed in accordance with U.S. generally accepted accounting principles (GAAP), net income for the second quarter was $7.1 million or $0.26 per share (diluted), compared with $10.0 million, or $0.37 per share (diluted), for the second quarter of 2012.

Costs and expenses in the second quarter 2013 included $6.1 million of consulting, legal, and other expenses related to the pending acquisition of Arbitron by Nielsen Holdings N.V. ("Nielsen")—which impacted net income by $0.17 per share (diluted).

Excluding the expenses directly related to the pending acquisition, earnings per share (diluted) for the second quarter 2013 would have been $0.43 per share (diluted), an increase of 16.2 percent over second quarter 2012 earnings per share (diluted) of $0.37.

Additional Financial Highlights

For the second quarter of 2013, the Company reported revenue of $107.4 million, an increase of $3.0 million or 2.9 percent compared to revenue of $104.4 million during the second quarter of 2012.

Costs and expenses for the second quarter 2013 were $100.0 million, an increase of $6.2 million compared to $93.8 million in the second quarter 2012.

EBIT (earnings before interest and income tax expense) for the second quarter 2013 was $12.9 million compared with EBIT of $16.0 million for the second quarter of 2012, yielding an EBIT margin of 12.0 percent as compared to 15.3 percent in the second quarter of 2012.

Excluding the $6.1 million in costs for the pending Nielsen transaction incurred during the quarter, EBIT in the second quarter 2013 would have been $19.0 million, an increase of 19.0 percent compared to the second quarter 2012, yielding an EBIT margin of 17.7 percent as compared to 15.3 percent in the second quarter of 2012.

The net pre-tax investment in our cross platform initiatives and in Arbitron Mobile during the second quarter of 2013 was $3.3 million, compared to $3.6 million in the second quarter last year.

EBITDA (earnings before interest, income taxes, depreciation and amortization) was $19.7 million in the second quarter of 2013 compared with EBITDA of $23.6 million in the second quarter of 2012, with a resultant EBITDA margin of 18.3 percent versus 22.6 percent in the second quarter of 2012.

Excluding the costs for the pending Nielsen transaction, EBITDA in the second quarter 2013 would have been $25.8 million, an increase of $2.2 million or 9.2 percent compared to the second quarter 2012, with a resultant EBITDA margin of 24.0 percent versus 22.6 percent in the second quarter of 2012.

Six Month 2013 Financial Highlights

For the six months ended June 30, 2013, net income, when computed in accordance with U.S. generally accepted accounting principles (GAAP), was $23.3 million or $0.85 per share (diluted), compared with $27.8 million, or $1.02 per share (diluted), for the second quarter of 2012.

Excluding expenses directly related to the pending acquisition, earnings per share (diluted) for the first six months of 2013 would have been $1.14 per share (diluted), an increase of $0.12 per share (diluted) or 11.8 percent compared to the first six months of 2012.

Revenue for the first six months of 2013 was $219.2 million, an increase of $8.4 million or 4.0 percent compared to revenue of $210.8 million for the same period in 2012.

Costs and expenses for the six months ended June 30, 2013 was $181.4 million, an increase of $12.4 million or 7.4 percent compared to $169.0 million in 2012. These six-month 2013 expenses included $9.4 million in costs related to the pending Nielsen transaction.

EBITDA for the first six months of 2013 was $54.4 million compared to $60.2 million for the same period in 2012.

Excluding the costs for the pending Nielsen transaction, EBITDA in the first six months of 2013 would have been $63.7 million, an increase of 5.8 percent compared to the first six months of 2012.

Management Comment on Second Quarter 2013 Results

Said Sean R. Creamer, President and Chief Executive Officer:

"I am pleased with the financial performance and operating results of the business for the second quarter and year-to-date.

"In the second quarter, we maintained focus on our long term priorities: investing in and growing our core radio services, evaluating and implementing quality initiatives to enhance the value and utility of our offerings, and exploring emerging opportunities with an emphasis on those that allow us to highlight the power and advantages of radio.

"As the media and advertising marketplaces continue to evolve and new technologies permit consumers to consume content virtually anytime and anywhere, it is important we keep pace with these changes to ensure radio gets full credit for its audience – regardless of the delivery platform. Radio is growing and vibrant - and we are committed to helping the radio industry tell and validate its complete and compelling story."

Presentation of Non-GAAP Information

The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. These non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to either net income as an indicator of Arbitron's operating performance, or cash flow, as a measure of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

About Arbitron

Arbitron Inc. (NYSE: ARB) is an international media and marketing research firm serving the media—radio, television, cable, and out-of-home; the mobile industry; as well as advertising agencies and advertisers around the world. Arbitron's businesses include: measuring network and local market radio audiences across the United States; surveying the retail, media, and product patterns of U.S. consumers; providing mobile audience measurement and analytics in the United States, Europe, Asia, and Australia; and developing application software used for analyzing media audience and marketing information data.

The Company has developed the Portable People Meter (PPM®) and the PPM 360, new technologies for media and marketing research.

Portable People Meter, PPM® and PPM 360 are marks of Arbitron Inc.

PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.

Arbitron Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

  • successfully operate our business without disruption due to the pending merger transaction with Nielsen Holdings N.V. ("Nielsen");
  • obtain required regulatory approval and satisfy other conditions to closing of the merger with Nielsen and successfully complete the merger;
  • manage unexpected costs, liabilities, or delays in completing the merger with Nielsen;
  • successfully obtain and/or maintain Media Rating Council, Inc. ("MRC") accreditation for our audience ratings services;
  • renew contracts with key customers;
  • collect, manage, and process the consumer information we utilize in our media marketing and information services in compliance with applicable data protection and privacy statutes, regulations, and other requirements;
  • successfully execute and maintain our cross platform and mobile measurement initiatives;
  • support our current and future services by designing, recruiting, and maintaining research samples that appropriately balance quality, size, and operational cost;
  • successfully develop, implement, and fund initiatives designed to enhance sample quality;
  • successfully manage costs associated with cell phone household recruitment, targeted in-person recruitment, and address-based sampling;
  • successfully maintain and promote industry usage of our media and marketing information services, a critical mass of broadcaster encoding, and the proper understanding of our services and methodologies in light of governmental actions, including investigation, regulation, legislation or litigation, customer or industry group activism, or adverse community or public relations efforts;
  • successfully manage the impact on our business of the current economic environment generally, and in the advertising market, including, without limitation, the insolvency of any of our customers or the impact of economic environment on our customers' ability to fulfill their payment obligations to us;
  • successfully integrate acquired operations, including differing levels of management and internal control effectiveness at the acquired entity;
  • effectively respond to rapidly changing technologies by creating proprietary systems to support our research initiatives and by developing new services that meet marketplace demands in a timely manner;
  • successfully execute our business strategies, including evaluating, and where appropriate, entering into potential acquisition, joint-venture or other material third-party agreements;
  • successfully develop and implement technology solutions to identify and report consumer use of new and existing forms of media content and delivery, and advertising in an increasingly competitive environment; and
  • compete with companies that may have financial, marketing, sales, technical or other advantages over us.

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption "ITEM 1A. — RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2012, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

In addition, any forward-looking statements contained in this document represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

(Tables to follow)

 

 

Arbitron Inc.

Consolidated Statements of Income

Three Months Ended June 30, 2013 and 2012

(In thousands, except per share data)

(Unaudited)

 



Three Months Ended




June 30,


%


2013

2012

Change

Change






Revenue

$107,410

$104,407

$3,003

2.9%

Costs and expenses





Cost of revenue

65,323

63,205

2,118

3.4%

Selling, general and administrative

24,547

20,701

3,846

18.6%

Research and development

10,117

9,896

221

2.2%

Total costs and expenses

99,987

93,802

6,185

6.6%






Operating income

7,423

10,605

(3,182)

(30.0%)






Equity in net income of affiliate

5,495

5,391

104

1.9%











Earnings before interest and income taxes (1)

12,918

15,996

(3,078)

(19.2%)

Interest income

20

11

9

81.8%

Interest expense

131

132

(1)

(0.8%)






Earnings before income taxes

12,807

15,875

(3,068)

(19.3%)

Income tax expense

5,754

5,912

(158)

(2.7%)






Net income

7,053

9,963

(2,910)

(29.2%)






Income per weighted-average common share





Basic

$0.26

$0.38

$(0.12)

(31.6%)

Diluted

$0.26

$0.37

$(0.11)

(29.7%)











Weighted-average shares used in calculations





Basic

26,878

26,318

560

2.1%

Diluted

27,445

26,804

641

2.4%











Dividends per common share

$0.10

$0.10

-

-
















Other data:





EBITDA (1)

$19,665

$23,610

$(3,945)

(16.7%)

Non-cash share-based compensation

$1,654

$2,209

$(555)

(25.1%)

 

(1) The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

 

 

Arbitron Inc.

Consolidated Statements of Income

Six Months Ended June 30, 2013 and 2012

(In thousands, except per share data)

(Unaudited)

 



Six Months Ended




June 30,


%


2013

2012

Change

Change






Revenue

$219,194

$210,801

$8,393

4.0%

Costs and expenses





Cost of revenue

114,924

110,653

4,271

3.9%

Selling, general and administrative

47,045

38,704

8,341

21.6%

Research and development

19,431

19,614

(183)

(0.9%)

Total costs and expenses

181,400

168,971

12,429

7.4%






Operating income

37,794

41,830

(4,036)

(9.6%)






Equity in net income of affiliate

3,108

3,035

73

2.4%











Earnings before interest and income taxes (1)

40,902

44,865

(3,963)

(8.8%)

Interest income

42

31

11

35.5%

Interest expense

296

261

35

13.4%






Earnings before income taxes

40,648

44,635

(3,987)

(8.9%)

Income tax expense

17,305

16,865

440

2.6%






Net income

23,343

27,770

(4,427)

(15.9%)






Income per weighted-average common share





Basic

$0.87

$1.04

$(0.17)

(16.3%)

Diluted

$0.85

$1.02

$(0.17)

(16.7%)











Weighted-average shares used in calculations





Basic

26,786

26,782

4

0.0%

Diluted

27,366

27,273

93

0.3%











Dividends per common share

$0.20

$0.20

-

-
















Other data:





EBITDA (1)

$54,368

$60,222

$(5,854)

(9.7%)

Non-cash share-based compensation

$3,903

$4,377

$(474)

(10.8%)

 

(1) The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

 

 

Arbitron Inc.

EBIT and EBITDA Non-GAAP Reconciliation

Three Months and Six Months Ended June 30, 2013 and 2012

(In thousands)

(Unaudited)

 



Three Months Ended

Six Months Ended


June 30,

June 30,


2013

2012

2013

2012






Net income

$7,053

$9,963

$23,343

$27,770

Income tax expense

5,754

5,912

17,305

16,865

Net interest expense

111

121

254

230






EBIT (2)

$12,918

$15,996

$40,902

$44,865






Depreciation and amortization

6,747

7,614

13,466

15,357






EBITDA (2)

$19,665

$23,610

$54,368

$60,222






EBIT Margin (2)

12.0%

15.3%

18.7%

21.3%

EBITDA Margin (2)

18.3%

22.6%

24.8%

28.6%

 

(2) Arbitron's management believes that presenting EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization), both non-GAAP financial measures, as supplemental information helps investors, analysts, and others, if they so choose, in understanding and evaluating Arbitron's operating performance in some of the same manners that management does because EBIT and EBITDA exclude certain items that are not directly related to Arbitron's core operating performance. Arbitron's management references these non-GAAP financial measures in assessing current performance and making decisions about internal budgets, resource allocation and financial goals.

EBIT is calculated by adding back net interest expense and income tax expense to net income. EBITDA is calculated by adding back net interest expense, income tax expense, and depreciation and amortization to net income.

EBIT and EBITDA should not be considered substitutes either for net income as indicators of Arbitron's operating performance, or for cash flow as measures of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies.

 

 

Arbitron Inc.

Condensed Consolidated Balance Sheets

June 30, 2013 and December 31, 2012

(In thousands)

 



June 30,

December 31,


2013

2012


(Unaudited)

(Audited)

Assets:



Cash and cash equivalents

$95,065

$66,469

Trade receivables

61,919

59,185

Property and equipment, net

58,028

61,669

Goodwill, net

45,461

45,540

Other assets

39,616

36,229




Total assets

$300,089

$269,092




Liabilities and Stockholders' Equity:



Deferred revenue

$50,996

$38,497

Other liabilities

68,193

77,186

Stockholders' equity

180,900

153,409




Total liabilities and stockholders' equity

$300,089

$269,092

 

Note: The December 31, 2012 Condensed Consolidated Balance Sheet is derived from the audited Balance Sheet included in the Company's Form 10-K for the fiscal year ended December 31, 2012.

 

SOURCE Arbitron Inc.



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