Grupo Radio Centro Reports Second Quarter and First Half 2005 Results

Grupo Radio Centro Reports Second Quarter and First Half 2005 Results

MEXICO CITY, July 20 /PRNewswire/ -- Grupo Radio Centro, S.A. de C.V. (NYSE: RC; BMV: RCENTRO-A) (the "Company"), Mexico's leading radio broadcasting company, announced today its results of operations for the second quarter and first half ended June 30, 2005. All figures were prepared in accordance with generally accepted accounting principles in Mexico and have been restated in constant pesos as of June 30, 2005.

Second Quarter Results

For the second quarter of 2005, broadcasting revenue was Ps. 140,645,000, representing an increase of 14.9% compared to Ps. 122,431,000 reported for the same period of 2004. This increase was mainly attributable to higher advertising expenditures by the Company's principal clients during the second quarter of 2005 compared to the same period of 2004.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) during the second quarter of 2005 were Ps. 99,900,000, representing an increase of 7.4% compared to Ps. 93,009,000 reported for the same period of 2004. This increase was mainly attributable to higher costs of new programming (including news programs) produced for the Company as well as an increase in expenses for publicity and promotions of the Company during the second quarter of 2005 compared to the same period of 2004 due to efforts to promote the new programming.

For the second quarter ended June 30, 2005, the Company reported broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) of Ps. 40,745,000, representing an increase of 38.5% compared to broadcasting income of Ps. 29,422,000 reported for the same period in 2004. This increase was mainly attributable to the increase in broadcasting revenue described above.

Depreciation and amortization for the second quarter of 2005 amounted to Ps. 9,550,000, a 60.8% decrease compared to Ps. 24,382,000 reported for the same period of 2004. This decrease was due to the implementation of a new accounting principle in Mexico (Bulletin B-7 "Adquisicion de Negocios"). As a result, the Company no longer amortizes goodwill as of January 1, 2005, but instead tests goodwill for impairment at least once a year.

For the second quarter of 2005, the Company's corporate, general and administrative expenses were Ps. 3,766,000, compared to Ps. 4,944,000 reported for the same period of 2004. This 23.8% decrease was, primarily because the Company no longer records the compensation of an executive officer in corporate, general and administrative expenses, but rather records it in costs of personnel, which is included in broadcasting expenses.

The Company reported operating income of Ps. 27,429,000 for the second quarter of 2005 compared to operating income of Ps. 96,000 reported for the same period of 2004. The significant increase in operating income resulted primarily from (i) higher advertising expenditures by the Company's principal clients during the second quarter of 2005 compared to the same period of 2004 and (ii) the implementation of a new accounting principle that eliminates amortization of goodwill.

The Company's comprehensive financing gain for the second quarter of 2005 was Ps. 2,355,000 compared to a comprehensive financing cost of Ps. 15,220,000 reported for the same period of 2004. This favorable change was primarily attributable to (1) a gain on foreign currency exchange, net of Ps. 9,469,000 for the second quarter of 2005 compared to a loss on foreign currency exchange, net of Ps. 7,382,000 for the same period in 2004, resulting from the appreciation of the Peso against the U.S. Dollar and (2) a gain on net monetary position of Ps. 1,195,000 for the second quarter of 2005 compared to a gain on net monetary position of Ps. 307,000 reported in the same period of 2004, due to an increase in net monetary liabilities for the second quarter of 2005 as compared to the same period of 2004.

During the second quarter of 2005, other expenses, net, were Ps. 11,836,000, a slight decrease compared to Ps. 11,942,000 reported for the same period in 2004. This decrease was mainly attributable to lower legal expenses in the second quarter of 2005 compared to the same period of 2004.

For the second quarter of 2005, the Company reported income before provisions for income tax and employee profit sharing of Ps. 17,948,000, compared to a loss before provisions for income tax and employee profit sharing of Ps. 27,066,000 reported for the same period of 2004.

The Company recorded a provision for income tax and employee profit sharing for the second quarter of 2005 of Ps. 5,552,000 compared to a reduction in provisions for income tax and employee profit sharing of Ps. 2,864,000 for the same period of 2004.

As a result of the foregoing, the Company's net income for the second quarter 2005 was Ps. 12,396,000, compared to a net loss of Ps. 24,202,000 reported for same period of 2004.

First Half Results

For the six months ended June 30, 2005, broadcasting revenue was Ps. 247,036,000, a 1.2% increase compared to Ps. 244,051,000 reported for the same period of 2004. This increase was mainly attributable to higher advertising expenditures by the Company's principal clients during 2005.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) reported for the first half of 2005 were Ps. 186,263,000, a 11.5% decrease compared to Ps. 210,389,000 reported for the first half of 2004. This decrease in broadcasting expenses was primarily attributable to lower costs from the production of news programming, which a third party produced for the Company until the end of the first quarter of 2004, which decrease more than offset the second quarter 2005 increase in other broadcasting expenses.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) was Ps. 60,773,000, representing an increase of 80.5% compared to Ps. 33,662,000 reported for the first half of 2004. This increase was mainly attributable to the decrease in broadcasting expenses described above.

Depreciation and amortization was Ps. 19,285,000, a decrease of 60.4% compared to Ps. 48,749,000 reported for the first half of 2004. This decrease was due to the implementation of a new accounting principle in Mexico (Bulletin B-7 "Adquisicion de Negocios"). As a result, the Company no longer amortizes goodwill as of January 1, 2005, but instead tests goodwill for impairment at least once a year.

The Company's corporate, general and administrative expenses during the first half of 2005 were Ps. 8,050,000, a decrease of 36.0% compared to Ps. 12,585,000 reported for the same period of 2004. This decrease was mainly due to lower fees paid by the Company to a third party, which ceased production of news services for the Company at the end of the first quarter of 2004, and to a lesser extent the recording of executive compensation in the second quarter of 2005 as compared to the same period of 2004.

As a result of the foregoing, the Company reported operating income of Ps. 33,438,000 for the first half of 2005, compared to an operating loss of Ps. 27,672,000 reported for the same period of 2004.

The Company's comprehensive financing cost for the first half of 2005 was Ps. 3,789,000, a decrease of 79.8% compared to a comprehensive financing cost of Ps. 18,787,000 for the first half of 2004. This favorable change is mainly attributable to a gain on foreign currency exchange, net of Ps. 8,880,000 reported for the first half of 2005 compared to a loss on foreign currency exchange, net of Ps. 5,650,000 for the first half of 2004, which resulted from the appreciation of the Peso against the U.S. Dollar.

Other expenses, net, for the first half of 2005 were Ps. 20,869,000, a 7.8% decrease compared to Ps. 22,626,000 reported for the same period of 2004. This decrease is mainly attributable to lower legal expenses during the first half of 2005, compared to the same period of 2004.

For the first half of 2005, the Company reported income before provisions for income tax and employee profit sharing of Ps. 8,780,000, compared to a loss before provisions for income tax and employee profit sharing of Ps. 69,085,000 reported for the same period in 2004. During the first half of 2005, the Company recorded a provision for income tax and employee profit sharing of Ps. 5,596,000 compared to a reduction in provisions for income tax and employee profit sharing of Ps. 2,864,000 for the same period in 2004.

As a result of the foregoing, the Company had net income of Ps. 3,184,000 for the first half of 2005 compared to a net loss of Ps. 66,221,000 for the same period of 2004.

Other Matters:

From June 30, 2004 to June 30, 2005, the Company's total bank debt decreased from Ps. 207.3 million to Ps. 141.5 million as a result of scheduled payments.

Company Description:

Grupo Radio Centro owns and/or operates 14 radio stations. Of these 14 radio stations, Grupo Radio Centro operates 11 in Mexico City. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs. Revenue is primarily derived from the sale of commercial airtime. In addition to the Organizacion Radio Centro radio stations, the Company also operates Grupo RED radio stations and Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to, Grupo Radio Centro-affiliated radio stations.

Note on Forward Looking Statements:

This release may contain projections or other forward-looking statements related to Grupo Radio Centro that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Grupo Radio Centro with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Grupo Radio Centro on the date hereof, and Grupo Radio Centro assumes no obligation to update such statements.

GRUPO RADIO CENTRO, S.A. DE C.V.
CONSOLIDATED NOT AUDITED BALANCE SHEETS
as of June 30, 2005 and 2004

in Mexican Pesos ("Ps.") with purchasing power as of June 30, 2005 (figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per Share

and per ADS amounts)

June 30,
2005 2004
U.S. $(1) Ps. Ps.
ASSETS
Current assets:
Cash and temporary
investments 6,908 74,901 27,001

Accounts receivable:
Broadcasting, net 14,090 152,772 150,321
Other 515 5,569 8,890
Income tax recoverable 315 3,420 13,051
14,920 161,761 172,262

Guarantee deposit 0 0 4,220
Prepaid expenses 1,228 13,319 9,234
Total current assets 23,056 249,981 212,717

Property and equipment, net 44,002 477,108 493,710
Deferred charges, net 1,167 12,656 15,134
Excess of cost over book
value of subsidiaries 68,535 743,111 777,290
Other assets 297 3,220 3,305
Total assets 137,057 1,486,076 1,502,156

LIABILITIES
Current:
Notes payable 5,222 56,618 59,227
Advances from customers 4,703 50,997 42,302
Other accounts payable
and accrued expenses 3,793 41,129 44,939
Taxes payable 1,914 20,754 14,192
Contingent liability 22,208 240,793 250,877
Total current
liabilities 37,840 410,291 411,537

Long-Term:
Deferred income tax 3,394 36,800 19,990
Notes payable 7,833 84,927 148,070
Reserve for labor
obligations 3,193 34,617 30,342
Total liabilities 52,260 566,635 609,939

STOCKHOLDERS' EQUITY
Capital stock 105,105 1,139,635 1,138,745
Retained (deficit) earnings (15,662) (169,819) (195,585)
Provision for repurchase of
shares 3,760 40,768 40,229
Accumulated effect of
deferred income tax (8,882) (96,306) (96,306)
Surplus on restatement of
capital 425 4,605 4,605
Minority interest 51 558 529
Total stockholders'
equity 84,797 919,441 892,217
Total liabilities and
stockholders' equity 137,057 1,486,076 1,502,156

(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 10.8428 per U.S.
dollar, the noon buying rate for Mexican pesos on June 30, 2005.

GRUPO RADIO CENTRO, S.A. DE C.V.
CONSOLIDATED NOT AUDITED STATEMENTS OF INCOME

for the three-month and six-month periods ended June 30, 2005 and 2004 expressed in Mexican Pesos ("Ps.") with purchasing power as of June 30, 2005 (figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per Share

and per ADS amounts)

2nd Quarter Accumulated 6 months
2005 2004 2005 2004
U.S.$(1) Ps. Ps. U.S.$(1) Ps. Ps.

Broadcasting
revenue (2) 12,971 140,645 122,431 22,783 247,036 244,051
Broadcasting expenses,
excluding depreciation,
amortization and
corporate expenses 9,213 99,900 93,009 17,178 186,263 210,389
Broadcasting income 3,758 40,745 29,422 5,605 60,773 33,662

Depreciation and
amortization 881 9,550 24,382 1,779 19,285 48,749
Corporate general and
administrative expenses 347 3,766 4,944 742 8,050 12,585
Operating (loss) income 2,530 27,429 96 3,084 33,438 (27,672)

Comprehensive financing
income (cost):
Interest expense (738) (7,999) (8,245) (1,487) (16,141)(14,881)
Interest income (2) (29) (310) 100 25 273 279
Gain (loss) on foreign
currency exchange, net 873 9,469 (7,382) 819 8,880 (5,650)
Gain (loss) on net
monetary position 110 1,195 307 295 3,199 1,465
216 2,355 (15,220) (348) (3,789)(18,787)

Other expenses, net (1,092) (11,836) (11,942) (1,925) (20,869)(22,626)
Income (loss) before
provisions: 1,654 17,948 (27,066) 811 8,780 (69,085)
Provisions for income
tax & employee profit
sharing 512 5,552 (2,864) 516 5,596 (2,864)
Net income (loss) 1,142 12,396 (24,202) 295 3,184 (66,221)

Net income (loss)
applicable to:
Majority interest 1,140 12,378 (24,203) 293 3,161 (66,209)
Minority interest 2 18 1 2 23 (12)
1,142 12,396 (24,202) 295 3,184 (66,221)

Net (loss) income per
Series A Share (3) 0.017 0.190 (2.430)
Net (loss) income per ADS (3) 0.153 1.710 (21.870)
Weighted average common shares
outstanding (000's) (3) 162,558 162,643

(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 10.8428 per U.S. dollar,
the noon buying rate for Mexican pesos on June 30, 2005.

(2) Broadcasting revenue for a particular period includes (as a
reclassification of interest income) interest earned on funds received
by the Company pursuant to advance sales of commercial air time to the
extent that the underlying funds were earned by the Company during
the period in question. Advances from advertisers are recognized as
broadcasting revenue only when the corresponding commercial air
time has been transmitted. Interest earned and treated as broadcasting
revenue for the second quarter of 2005 and 2004 was Ps. 995,000 and
Ps. 811,000, respectively. Interest earned and treated as broadcasting
revenue for the six months ended June 30, 2005 and 2004 was Ps.
1,101,000 and Ps. 1,385,000, respectively.

(3) Earnings per share calculations are made for the last twelve months as
of the date of the income statement, as required by the Mexican Stock
Exchange.

Source: Grupo Radio Centro, S.A. de C.V.

CONTACT: In Mexico: Pedro Beltran or Alfredo Azpeitia, both of Grupo
Radio Centro, S.A. de C.V., +5255-5728-4800 Ext. 7018, aazpeitia@grc.com.mx;
or In NY: Maria Barona or Peter Majeski, i-advize Corporate Communications,
Inc., +1-212-406-3690, grc@i-advize.com.mx

Web site: http://www.radiocentro.com.mx/

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