Emmis Communications Reports 3rd Quarter Results

Emmis Communications Reports 3rd Quarter Results

INDIANAPOLIS, Jan. 9 /PRNewswire-FirstCall/ -- Emmis Communications Corporation (NASDAQ:EMMS) today announced results for its third fiscal quarter ended Nov. 30, 2006.

"While we have been disappointed with the continued softness in our New York and Los Angeles markets, we are beginning to see signs that the worst is behind us. I'm confident that programming and management actions taken in recent months are beginning to deliver and point to better results in 2007," Emmis Chairman and CEO Jeff Smulyan said.

For the third fiscal quarter, reported net revenue was $91.2 million, compared to $97.9 million for the same quarter of the prior year, a decrease of 6.9%. The decrease related primarily to revenue declines at Emmis' New York and Los Angeles radio stations.

Diluted net loss per common share from continuing operations was $0.09, compared to a loss of $0.01 for the same quarter of the prior year. Emmis recorded a charge of $10.0 million in the quarter ended Nov. 30, 2006, related to debt extinguishment and refinancing activity in the quarter.

For the third quarter, reported radio net revenues decreased 9.2%, while publishing net revenues were flat.

For the third quarter, operating income was $17.5 million, compared to $24.4 million for the same quarter of the prior year, a decrease of 28.4%. Emmis' station operating income for the third quarter was $30.2 million, compared to $37.1 million for the same quarter of the prior year, a decrease of 18.8%.

Emmis has included supplemental pro forma net revenues, station operating expenses, and certain other financial data on its website, www.emmis.com under the "Investors" tab.

International radio net revenues and station operating expenses for the quarter ended Nov. 30, 2006 were $6.9 million and $5.3 million, respectively.

On Sept. 21, Emmis announced that Emmis Operating Company ("EOC") had commenced an offer to purchase, at par, $339.6 million of the outstanding 6-7/8% Senior Subordinated Notes due 2012, pursuant to an asset sale offer required under the indenture for a portion of the Notes and a separate tender offer for the balance of the Notes. On Oct. 20, approximately $374.9 million of the $375.0 million outstanding Notes were redeemed at par plus accrued and unpaid interest. The redemption was financed with available cash on hand from the sale of WKCF-TV in August of 2006, coupled with additional borrowings under the Company's senior credit facility. On Dec. 29, 2006, Emmis redeemed the remaining $0.1 million of outstanding notes.

On Nov. 2, 2006, EOC amended and restated its Revolving Credit and Term Loan Agreement to provide for total borrowings of up to $600 million, including (i) a $455 million term loan and (ii) a $145 million revolver, of which $50 million may be used for letters of credit. The credit facility also provides for the ability to have incremental facilities of up to $450 million, a portion of which may be allocated to a revolver.

In connection with the redemption of substantially all of the Notes and the amendment and restatement of the credit facility, the Company recorded a loss on debt extinguishment of $10.0 million, which is recorded in its quarter ended Nov. 30, 2006.

On Nov. 2, Emmis' Board of Director declared a special one-time dividend of $4 per common share to all shareholders. The dividend was paid on Nov. 22, which reduced shareholders' equity by $150.2 million.

Subsequent to quarter end, the company increased its ownership in Radio Fresh! in Bulgaria. Emmis moved from minority to majority shareholder in the highly-rated national CHR station.

The following table reconciles reported results to pro forma results (dollars in thousands):

3 months ended Nov. 30, 9 months ending Nov. 30,
% %
2006 2005 Change 2006 2005 Change
Radio
Reported net
revenues $66,704 $73,492 -9.2% $214,630 $229,631 -6.5%
Plus: Revenues
from assets
acquired - 401 - 2,153
Pro forma net
revenues $66,704 $73,893 -9.7% $214,630 $231,784 -7.4%

Publishing
Reported net
revenues $24,501 $24,500 0.0% $66,271 $65,396 1.3%
Plus: Revenues
from assets
acquired - - - -
Pro forma net
revenues $24,501 $24,500 0.0% $66,271 $65,396 1.3%

Total Company
Reported net
revenues $91,205 $97,992 -6.9% $280,901 $295,027 -4.8%
Plus: Revenues
from assets
acquired - 401 - 2,153
Pro forma net
revenues $91,205 $98,393 -7.3% $280,901 $297,180 -5.5%

On a pro forma basis, the Company expects its radio net revenues for its quarter ending Feb. 28, 2007 to decrease low-to mid single digits and its station operating expenses to increase low single digits.

Emmis will host a call regarding this information on Tuesday, Jan. 9 at 9 a.m. Eastern at 1.517.623.4891, with a replay available through Tuesday, Jan. 16 at 1.402.220.9725. Listen online at www.emmis.com.

Emmis generally evaluates the performance of its operating entities based on station operating income. Management believes that station operating income is useful to investors because it provides a meaningful comparison of operating performance between companies in the industry and serves as an indicator of the market value of a group of stations or publishing entities. Station operating income is generally recognized by the broadcast and publishing industries as a measure of performance and is used by analysts who report on the performance of broadcasting and publishing groups. Station operating income does not take into account Emmis' debt service requirements and other commitments, and, accordingly, station operating income is not necessarily indicative of amounts that may be available for dividends, reinvestment in Emmis' business or other discretionary uses.

Station operating income is not a measure of liquidity or of performance, in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to, and not a substitute for, our results of operations presented on the basis of accounting principles generally accepted in the United States. Moreover, station operating income is not a standardized measure and may be calculated in a number of ways. Emmis defines station operating income as revenues net of agency commissions and station operating expenses, excluding non-cash compensation.

Emmis Communications - Great Media, Great People, Great Service(R)

Emmis is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 21 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago, as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. In May 2005, Emmis announced its intent to seek strategic alternatives for its 16 television stations, and has sold 14 of them. Emmis also owns a radio network, international radio stations, regional and specialty magazines, an interactive business and ancillary businesses in broadcast sales.

The information in this news release is being widely disseminated in accordance with the Securities & Exchange Commission's Regulation FD.

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words "expect," "will" or "look" are intended to be, and are, by this Note, identified as "forward- looking statements," as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

- general economic and business conditions;
- fluctuations in the demand for advertising and demand for different
types of advertising media;
- our ability to service our outstanding debt;
- increased competition in our markets and the broadcasting industry;
- our ability to attract and secure programming, on-air talent, writers
and photographers;
- inability to obtain (or to obtain timely) necessary approvals for
purchase or sale transactions or to complete the transactions for other
reasons generally beyond our control;
- increases in the costs of programming, including on-air talent;
- inability to grow through suitable acquisitions;
- new or changing regulations of the Federal Communications Commission or
other governmental agencies;
- competition from new or different technologies;
- war, terrorist acts or political instability; and
- other factors mentioned in documents filed by the Company with the
Securities and Exchange Commission.

Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited, dollars in thousands,
except per share data)

Three months ended Nine months ended
November 30, November 30,

2006 2005 2006 2005
OPERATING DATA:
Net revenues:
Radio $66,704 $73,492 $214,630 $229,631
Publishing 24,501 24,500 66,271 65,396

Total net revenues 91,205 97,992 280,901 295,027
Operating expenses:
Radio 41,665 41,877 133,246 128,846
Publishing 20,189 20,077 58,627 58,716
Total station operating
expenses 61,854 61,954 191,873 187,562
Corporate expenses 8,444 7,360 23,623 23,921
Depreciation and amortization 3,417 4,225 9,915 12,278
(Gain) loss on disposal of
assets 2 40 5 85

Operating income 17,488 24,413 55,485 71,181
Interest expense (9,505) (20,487) (33,621) (49,073)
Loss on debt extinguishment (a) (10,023) - (13,403) -
Other income, net 1,885 (48) 2,670 115

Income before income taxes,
minority interest and
discontinued operations (155) 3,878 11,131 22,223
Provision for income taxes 461 872 5,019 8,919
Minority interest expense, net
of tax 654 1,092 3,376 3,511

Income from continuing
operations (1,270) 1,914 2,736 9,793
Income from discontinued
operations, net of tax 4,400 198,107 121,330 209,036
Net income 3,130 200,021 124,066 218,829
Preferred stock dividends 2,246 2,246 6,738 6,738
Net income available to common
shareholders $884 $197,775 $117,328 $212,091

Basic net income (loss) per
common share:
Continuing operations $(0.09) $(0.01) $(0.11) $0.07
Discontinued operations, net
of tax 0.11 5.37 3.26 4.67
Net income available to
common shareholders $0.02 $5.36 $3.15 $4.74

Diluted net income (loss) per
common share:
Continuing operations $(0.09) $(0.01) $(0.11) $0.07
Discontinued operations, net
of tax 0.11 5.37 3.26 4.64
Net income available to
common shareholders $0.02 $5.36 $3.15 $4.71

Weighted average shares
outstanding:
Basic 37,290 36,879 37,214 44,700
Diluted 37,290 36,879 37,214 45,056

(a) Reflects (i) costs of our senior floating rate notes and senior
discount notes and senior subordinated notes redemptions in the
quarter ended May 31, 2006 (ii) costs associated with permanent
paydowns of our senior credit facility in the quarter ended August
31, 2006 and (iii) costs of our senior subordinated notes redemption
and costs related to the amendment and restatement of our senior
credit facility in the quarter ended November 30, 2006.

OTHER DATA:
Station operating income (See
below) 30,154 37,127 91,797 111,116
Cash paid for taxes 5,414 6 5,988 39

Capital expenditures 1,149 2,985 2,306 8,174

Noncash compensation by segment:
Radio $600 $861 $1,946 $2,796
Publishing 203 228 823 855
Corporate 1,150 1,570 3,715 4,530
Total $1,953 $2,659 $6,484 $8,181

COMPUTATION OF STATION OPERATING
INCOME:
Operating income $17,488 $24,413 $55,485 $71,181
Plus: Depreciation and
amortization 3,417 4,225 9,915 12,278
Plus: Corporate expenses 8,444 7,360 23,623 23,921
Plus: Station noncash
compensation 803 1,089 2,769 3,651
Plus: (Gain) loss on disposal
of assets 2 40 5 85
Station operating income $30,154 $37,127 $91,797 $111,116

SELECTED BALANCE SHEET November 30, February 28,
INFORMATION: 2006 2006

Total Cash and Cash Equivalents $16,063 $140,822

Senior Debt $500,000 $296,174
Senior Subordinated Debt 118 375,000
Senior Discount Notes - 1,406
Senior Floating Rate Notes - 120,000
Total Senior, Senior
Subordinated and Holding
Company Debt $500,118 $792,580

First Call Analyst:
FCMN Contact:

Source: Emmis Communications

CONTACT: Patrick Walsh, CFO and Kate Snedeker, Media & Investor
Relations of Emmis Communications, +1-317-266-0100

Web site: http://www.emmis.com/

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