Entravision Communications Corporation Reports First Quarter 2010 Results

Three-Month Period

Ended March 31,

2010

2009

% Change

Net revenue

$      43,073

$      41,715

3%

Operating expenses (1)

29,824

31,813

(6)%

Corporate expenses (2)

3,748

3,873

(3)%

Consolidated adjusted EBITDA (3)

9,528

6,716

42%

Free cash flow (4)

$      (2,600)

$      (1,099)

137%

Free cash flow per share, basic and diluted (4)

$        (0.03)

$        (0.01)

200%

Net loss applicable to common stockholders

$      (2,184)

$    (14,494)

(85)%

Net loss per share applicable to common stockholders, basic and diluted

$        (0.03)

$        (0.17)

(82)%

Weighted average common shares outstanding, basic

84,430,204

84,284,427

Weighted average common shares outstanding, diluted

84,430,204

84,284,427

(1)  Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.3 million and $0.4 million of non-cash stock-based compensation for the three-month periods ended March 31, 2010 and 2009, respectively. Operating expenses do not include corporate expenses, depreciation and amortization, impairment charge, gain (loss) on sale of assets and gain (loss) on debt extinguishment.

(2)  Corporate expenses include $0.2 million and $0.4 million of non-cash stock-based compensation for the three-month periods ended March 31, 2010 and 2009, respectively.

(3)  Consolidated adjusted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our syndicated bank credit facility and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate and syndication programming amortization and does include syndication programming payments. While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income.  As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate and syndication programming amortization and includes syndication programming payments, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important non-cash financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business.  Consolidated adjusted EBITDA is also used to make executive compensation decisions.  

(4)  Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense and capital expenditures. Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, less interest income and less the change in the fair value of our interest rate swaps. Free cash flow per share is defined as free cash flow divided by the basic or diluted weighted average common shares outstanding.

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

(Unaudited)

Three-Month Period

Ended March 31,

2010

2009

% Change

Net revenue

$ 43,073

$  41,715

3%

Operating expenses (1)

29,824

31,813

(6)%

Corporate expenses (1)

3,748

3,873

(3)%

Depreciation and amortization

4,723

5,430

(13)%

Operating income

4,778

599

NM

Interest expense, net

(5,431)

(4,813)

13%

Loss on debt extinguishment

-

(4,716)

NM

Loss before income taxes

(653)

(8,930)

(93)%

Income tax expense

(1,410)

(5,410)

(74)%

Net loss before equity in net loss of nonconsolidated affiliates

(2,063)

(14,340)

(86)%

Equity in net loss of nonconsolidated affiliates, net of tax

(121)

(154)

(21)%

Net loss

$ (2,184)

$ (14,494)

(85)%

(1)  Operating expenses and corporate expenses are defined on page 1.

Three-Month Period

Ended March 31,

2010

2009

% Change

Net Revenue

Television

$ 29,645

$ 28,272

5%

Radio

13,428

13,443

(0)%

Total

$ 43,073

$ 41,715

3%

Operating Expenses (1)

Television

$ 17,957

$ 19,355

(7)%

Radio

11,867

12,458

(5)%

Total

$ 29,824

$ 31,813

(6)%

Corporate Expenses (1)

$   3,748

$   3,873

(3)%

Consolidated adjusted EBITDA (1)

$   9,528

$   6,716

42%

(1)  Operating expenses, Corporate expenses, and Consolidated adjusted EBITDA are defined on page 1.

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

Three-Month Period

Ended March 31,

2010

2009

Net revenue

$      43,073

$      41,715

Expenses:

Direct operating expenses (including related parties of $2,351 and $1,727) (including non-cash stock-based compensation of $105 and $166)

20,768

21,861

Selling, general and administrative expenses (including non-cash stock-based compensation of $148 and $207)

9,056

9,952

Corporate expenses (including non-cash stock-based compensation of $206 and $406)

3,748

3,873

Depreciation and amortization (includes direct operating of $3,467 and $4,074; selling, general and administrative of $959 and $1,021; and corporate of $297 and $334) (including related parties of $580 and $580)

4,723

5,430

38,295

41,116

Operating income

4,778

599

Interest expense (including related parties of $29 and $31)

(5,514)

(5,061)

Interest income

83

248

Loss on debt extinguishment

-

(4,716)

Loss before income taxes

(653)

(8,930)

Income tax expense

(1,410)

(5,410)

Loss before equity in net loss of nonconsolidated affiliate

(2,063)

(14,340)

Equity in net loss of nonconsolidated affiliate, net of tax

(121)

(154)

Net loss applicable to common stockholders

$      (2,184)

$    (14,494)

Basic and diluted earnings per share:

Net loss per share applicable to common stockholders, basic and diluted

$        (0.03)

$        (0.17)

Weighted average common shares outstanding, basic

84,430,204

84,284,427

Weighted average common shares outstanding, diluted

84,430,204

84,284,427

Entravision Communications Corporation

Consolidated Statements of Cash Flows

(Unaudited; in thousands)

Three-Month Period

Ended March 31,

2010

2009

Cash flows from operating activities:

Net loss

$     (2,184)

$ (14,494)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

4,723

5,430

Deferred income taxes

1,213

5,500

Amortization of debt issue costs

104

89

Amortization of syndication contracts

272

621

Payments on syndication contracts

(704)

(713)

Equity in net loss of nonconsolidated affiliate

121

154

Non-cash stock-based compensation

459

779

Gain on sale of media properties and other assets

-

(100)

Non-cash expenses related to debt extinguishment

-

945

Change in fair value of interest rate swap agreements

(3,930)

(1,681)

Changes in assets and liabilities, net of effect of acquisitions and dispositions:

Decrease in accounts receivable

4,957

4,319

(Increase) decrease in prepaid expenses and other assets

(9)

138

Increase (decrease) in accounts payable, accrued expenses and other liabilities

112

(782)

Net cash provided by operating activities

5,134

205

Cash flows from investing activities:

Proceeds from sale of property and equipment and intangibles

-

100

Purchases of property and equipment and intangibles

(2,674)

(1,500)

Deposits on acquisitions

-

(3,800)

Net cash used in investing activities

(2,674)

(5,200)

Cash flows from financing activities:

Proceeds from issuance of common stock

150

202

Payments on long-term debt

(3,458)

(41,000)

Repurchase of Class A common stock

-

(543)

Payments of deferred debt and offering costs

(362)

(1,182)

Net cash used in financing activities

(3,670)

(42,523)

Net decrease in cash and cash equivalents

(1,210)

(47,518)

Cash and cash equivalents:

Beginning

27,666

64,294

Ending

$     26,456

$  16,776

Entravision Communications Corporation

Reconciliation of Consolidated Adjusted EBITDA to Cash Flows From Operating Activities

(Unaudited; in thousands)

The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:

Three-Month Period

Ended March 31,

2010

2009

Consolidated adjusted EBITDA (1)

$       9,528

$       6,716

Interest expense

(5,514)

(5,061)

Interest income

83

248

Loss on debt extinguishment

-

(4,716)

Income tax expense

(1,410)

(5,410)

Amortization of syndication contracts

(272)

(621)

Payments on syndication contracts

704

713

Non-cash stock-based compensation included in direct operating expenses

(105)

(166)

Non-cash stock-based compensation included in selling, general  and administrative expenses

(148)

(207)

Non-cash stock-based compensation included in corporate expenses

(206)

(406)

Depreciation and amortization

(4,723)

(5,430)

Equity in net loss of nonconsolidated affiliates

(121)

(154)

Net loss

(2,184)

(14,494)

Depreciation and amortization

4,723

5,430

Deferred income taxes

1,213

5,500

Amortization of debt issue costs

104

89

Amortization of syndication contracts

272

621

Payments on syndication contracts

(704)

(713)

Equity in net loss of nonconsolidated affiliate

121

154

Non-cash stock-based compensation

459

779

Gain on sale of media properties and other assets

-

(100)

Non-cash expenses related to debt extinguishment

-

945

Change in fair value of interest rate swap agreements

(3,930)

(1,681)

Changes in assets and liabilities, net of effect of acquisitions and dispositions:

Decrease in accounts receivable

4,957

4,319

(Increase) decrease in prepaid expenses and other assets

(9)

138

Increase (decrease) in accounts payable, accrued expenses and other liabilities

112

(782)

Cash flows from operating activities

$       5,134

$          205

(1)   Consolidated adjusted EBITDA is defined on page 1.

Entravision Communications Corporation

Reconciliation of Free Cash Flow to Net Loss

(Unaudited; in thousands)

The most directly comparable GAAP financial measure is net loss. A reconciliation of this non-GAAP measure to net loss for each of the periods presented is as follows:

Three-Month Period

Ended March 31,

2010

2009

Consolidated adjusted EBITDA (1)

$      9,528

$        6,716

Net interest expense (1)

9,257

6,405

Cash paid (refunded) for income taxes

197

(90)

Capital expenditures (2)

2,674

1,500

Free cash flow (1)

(2,600)

(1,099)

Capital expenditures (2)

2,674

1,500

Amortization of debt issue costs

(104)

(89)

Change in fair value of interest rate swap agreements

3,930

1,681

Loss on debt extinguishment

-

(4,716)

Non-cash income tax expense

(1,213)

(5,500)

Amortization of syndication contracts

(272)

(621)

Payments on syndication contracts

704

713

Non-cash stock-based compensation included in direct operating expenses

(105)

(166)

Non-cash stock-based compensation included in selling, general and administrative expenses

(148)

(207)

Non-cash stock-based compensation included in corporate expenses

(206)

(406)

Depreciation and amortization

(4,723)

(5,430)

Equity in net loss of nonconsolidated affiliates

(121)

(154)

Net loss

$     (2,184)

$    (14,494)

(1)  Consolidated adjusted EBITDA, net interest expense and free cash flow are defined on page 1.

(2)  Capital expenditures is not part of the consolidated statement of operations.