Arbitron Inc. Reports 2009 Second Quarter Financial Results

Arbitron Inc. Reports 2009 Second Quarter Financial Results

Reports earnings per share (diluted) of $0.13; Lowers full-year revenue guidance; maintains full-year earnings per share guidance

COLUMBIA, Md., July 21 /PRNewswire-FirstCall/ -- Arbitron Inc. (NYSE:ARB) today announced financial results for the second quarter ended June 30, 2009.

Net income for the quarter was $3.5 million or $0.13 per share (diluted), compared with $600 thousand or $0.02 per share (diluted) for the second quarter of 2008.

For the second quarter of 2009, the Company reported revenues of $86.8 million, an increase of 10.4 percent over revenue of $78.7 million during the second quarter of 2008. As anticipated, revenue growth in the quarter benefited from the Company's commercialization of its Portable People Meter(TM) (PPM(TM)) ratings service in Boston as well as the recognition of pre-currency revenue in five new PPM markets - Miami-Ft. Lauderdale-Hollywood, Seattle-Tacoma, Phoenix, Minneapolis-St. Paul and San Diego.

Costs and expenses for the second quarter increased by 4.2 percent, from $82.4 million in 2008 to $85.9 million in 2009, due primarily to planned expenditures for the commercialization of the PPM ratings service and the introduction of cell-phone-only household sampling in 151 diary markets. These increases were offset in part by cost reduction initiatives implemented in prior quarters.

In the second quarter of both 2009 and 2008, share-based compensation totaled $2.7 million.

Earnings before interest and income tax expense (EBIT) for the quarter were $6.5 million, compared with EBIT of $1.4 million for the second quarter of 2008.

For the six months ended June 30, 2009, revenue was $185.3 million, an increase of 7.3 percent over revenue of $172.7 million for the same period in 2008.

EBIT decreased 5.8 percent from $28.2 million in the first six months of 2008 to $26.6 million for the same period in 2009 due primarily to $8.4 million of reorganization and restructuring expense recorded year-to-date. Net income for the six-month period decreased 6.1 percent to $15.8 million compared with $16.9 million in 2008. Earnings per share (diluted) for the six months in 2009 were $0.60 compared with $0.61 per share (diluted) last year.

Management Comment on Second Quarter 2009 Results

"In the second quarter of 2009, Arbitron commercialized the Portable People Meter radio ratings service in Boston, and continued the work of building PPM panels for the additional markets we plan to commercialize in 2009," said Michael Skarzynski, President and Chief Executive Officer.

"We signed a three-year agreement with Clear Channel Radio for diary-based radio ratings services in 105 markets. Additionally, Arbitron signed multi-year diary market agreements with a number of other customers.

"We also successfully introduced cell-phone-only household sampling in an initial 151 diary markets in the Spring 2009 survey. As a result, we saw significant sample quality gains for young adults, age 18-34, in the first month of the survey.

"We also continue to make the hard choices required to reduce costs and target our resources on initiatives that we believe can best enhance the long-term value of Arbitron's services to the radio industry-deploying the Portable People Meter radio ratings service in additional markets, expanding cell-phone-only household measurement in PPM and diary markets and working toward MRC accreditation for the PPM service through our continuous improvement programs," said Mr. Skarzynski.

2009 Guidance

Arbitron is revising downward its revenue guidance for the full-year 2009, while maintaining its earnings per share guidance for the year.

Due largely to the overall economic conditions and the impact of the continuing advertising recession, Arbitron now expects revenue for the full year 2009 to increase between 2 percent and 6 percent compared to the 2008 revenue of $368.8 million. The Company originally projected revenue would increase between 6 percent and 10 percent for the year as compared to 2008.

Arbitron continues to expect that earnings per share (diluted) for the full-year 2009 will be between $1.40 and $1.55 versus $1.36 in 2008.

"In light of the reduced revenue visibility associated with the challenging economy, we have taken difficult yet appropriate steps to rationalize our cost structure to suit the uncertain environment in which we are operating," said Sean Creamer, Executive Vice President, Finance & Planning & Chief Financial Officer.

"We are monitoring events closely, including overall economic conditions as well as legislative, regulatory and judicial developments affecting the Company. Should future events change our current thinking, we will, as appropriate, re-evaluate our guidance with the benefit of that knowledge."

Earnings conference call: schedule and access

Arbitron will host a conference call at 10:00 a.m. Eastern Time. The Company invites you to listen to the call by dialing (toll free) 888-873-8496. The conference call can be accessed from outside of the United States by dialing 973-935-8513. To participate, users will need to use the following code: 19150443. The call will also be available live on the Internet at the following sites: www.arbitron.com, www.ccbn.com and www.streetevents.com.

A replay of the call will be available from 12:00 p.m. on July 21, 2009 through 11:59 p.m. on August 21, 2009. To access the replay, please call (toll free) 800-642-1687 in the United States, or 706-645-9291 if you're calling from outside of the United States. To access the replay, users will need to enter the following code: 19150443

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 income from continuing operations, 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 comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

About Arbitron

Arbitron Inc. (NYSE:ARB) is a media and marketing research firm serving the media - radio, television, cable, online radio and out-of-home - as well as advertisers and advertising agencies. Arbitron's core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data. The Company has developed the Portable People Meter, a new technology for media and marketing research.

Portable People Meter(TM) and PPM(TM) 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," or "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:

-- absorb costs related to legal proceedings and governmental entity
interactions and avoid related fines, limitations, or conditions on
our business activities;
-- successfully commercialize our Portable People Meter service;
-- successfully manage the impact on our business of the current economic
downturn generally, and in the advertising market, in particular,
including, without limitation, the insolvency of any of our customers
or the impact of such downturn on our customers' ability to fulfill
their payment obligations to us;
-- successfully maintain and promote industry usage of our services, a
critical mass of broadcaster encoding, and the proper understanding of
our audience measurement services and methodology in light of
governmental regulation, legislation, litigation, activism, or adverse
public relations efforts;
-- compete with companies that may have financial, marketing, sales,
technical, or other advantages over us;
-- successfully design, recruit and maintain PPM panels that
appropriately balance research quality, panel size, and operational
cost;
-- successfully develop, implement, and fund initiatives designed to
increase sample sizes;
-- complete the Media Rating Council, Inc. ("MRC") audits of our local
market PPM ratings services in a timely manner and successfully obtain
and/or maintain MRC accreditation for our audience measurement
business;
-- renew contracts with key customers;
-- successfully execute our business strategies, including entering into
potential acquisition, joint-venture or other material third-party
agreements;
-- effectively manage the impact, if any, of any further ownership shifts
in the radio and advertising agency industries;
-- effectively respond to rapidly changing technological needs of our
customer base, including creating new proprietary software systems,
such as software systems to support our cell phone-only sampling
plans, and new customer services that meet these needs in a timely
manner;
-- successfully manage the impact on costs of data collection due to
lower respondent cooperation in surveys, consumer trends including a
trend toward increasing incidence of cell phone-only households,
privacy concerns, technology changes, and/or government regulations;
-- successfully develop and implement technology solutions to encode
and/or measure new forms of media content, delivery and advertising in
an increasingly competitive environment; and

-- realize the anticipated savings from the Company's workforce and
expense reduction program.

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, 2008, 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.

Arbitron Inc.
Consolidated Statements of Income
Three Months Ended June 30, 2009 and 2008
(In thousands, except per share data)
(Unaudited)

Three Months Ended
June 30, %
2009 2008 Change Change

Revenue $86,799 $78,655 $8,144 10.4%
Costs and expenses
Cost of revenue 55,762 52,585 3,177 6.0%
Selling, general and
administrative 19,351 19,977 (626) (3.1%)
Research and development 10,584 9,864 720 7.3%
Restructuring and NM
reorganization 185 - 185
Total costs and expenses 85,882 82,426 3,456 4.2%

Operating income (loss) 917 (3,771) 4,688 NM

Equity in net income of
affiliate(s) 5,581 5,166 415 8.0%

Earnings before interest
and income taxes (1) 6,498 1,395 5,103 365.8%
Interest income 14 271 (257) (94.8%)
Interest expense 365 682 (317) (46.5%)

Income from continuing
operations before income
taxes 6,147 984 5,163 524.7%
Income tax expense 2,651 359 2,292 638.4%

Income from continuing
operations 3,496 625 2,871 459.4%

Discontinued Operations
Loss from discontinued NM
operations, net of taxes - - -
Loss from sale of NM
discontinued operations,
net of taxes - (25) 25
Total loss from NM
discontinued operations,
net of taxes - (25) 25

Net Income $3,496 $600 $2,896 482.7%

Basic weighted average
common share
Income from continuing
operations $0.13 $0.02 $0.11 550.0%
Total loss from
discontinued operations,
net of taxes - - - -
Net income $0.13 $0.02 $0.11 550.0%

Diluted weighted average
common share
Income from continuing
operations $0.13 $0.02 $0.11 550.0%
Total loss from
discontinued operations,
net of taxes - - - -
Net income $0.13 $0.02 $0.11 550.0%

Weighted average shares
used in calculations
Basic 26,486 27,183 (697) (2.6%)
Diluted 26,655 27,434 (779) (2.8%)

Dividends per common share $0.10 $0.10 - -

Other data:
EBITDA (1) $12,156 $5,574 $6,582 118.1%

(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 comparable
GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along
with related footnotes, below.
NM= Not meaningful

Arbitron Inc.
Consolidated Statements of Income
Six Months Ended June 30, 2009 and 2008
(In thousands, except per share data)
(Unaudited)

Six Months Ended
June 30, %
2009 2008 Change Change

Revenue $185,288 $172,720 $12,568 7.3%
Costs and expenses
Cost of revenue 95,291 87,695 7,596 8.7%
Selling, general and
administrative 37,775 38,529 (754) (2.0%)
Research and development 19,890 19,528 362 1.9%
Restructuring and NM
reorganization 8,356 - 8,356
Total costs and expenses 161,312 145,752 15,560 10.7%

Operating income 23,976 26,968 (2,992) (11.1%)

Equity in net income of
affiliate(s) 2,581 1,221 1,360 111.4%

Earnings before interest
and income taxes (1) 26,557 28,189 (1,632) (5.8%)
Interest income 33 455 (422) (92.7%)
Interest expense 698 880 (182) (20.7%)

Income from continuing
operations before income
taxes 25,892 27,764 (1,872) (6.7%)
Income tax expense 10,055 10,827 (772) (7.1%)

Income from continuing
operations 15,837 16,937 (1,100) (6.5%)

Discontinued Operations
Loss from discontinued NM
operations, net of taxes - (495) 495
Gain from sale of NM
discontinued operations,
net of taxes - 425 (425)
Total loss from NM
discontinued operations,
net of taxes - (70) 70

Net Income $15,837 $16,867 $(1,030) (6.1%)

Basic weighted average
common share
Income from continuing
operations $0.60 $0.61 $(0.01) (1.6%)
Total loss from
discontinued operations,
net of taxes - - - -
Net income $0.60 $0.61 $(0.01) (1.6%)

Diluted weighted average
common share
Income from continuing
operations $0.60 $0.61 $(0.01) (1.6%)
Total loss from
discontinued operations,
net of taxes - - - -
Net income $0.60 $0.61 $(0.01) (1.6%)

Weighted average shares
used in calculations
Basic 26,458 27,687 (1,229) (4.4%)
Diluted 26,600 27,873 (1,273) (4.6%)

Dividends per common share $0.20 $0.20 - -

Other data:
EBITDA (1) $37,438 $36,290 $1,148 3.2%

(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 comparable
GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along
with related footnotes, below.
NM=Not meaningful.

Arbitron Inc.
EBIT and EBITDA Non-GAAP Reconciliation
Three and Six Months Ended June 30, 2009 and 2008
(In thousands)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008

Income from continuing
operations $3,496 $625 $15,837 $16,937
Income tax expense 2,651 359 10,055 10,827
Net interest expense 351 411 665 425

EBIT (2) $6,498 $1,395 $26,557 $28,189

Depreciation and
amortization 5,658 4,179 10,881 8,101

EBITDA (2) $12,156 $5,574 $37,438 $36,290

(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 income from continuing operations. EBITDA is calculated by
adding back net interest expense, income tax expense, and depreciation and
amortization to income from continuing operations. EBIT and EBITDA should
not be considered substitutes either for income from continuing
operations, 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, 2009 and December 31, 2008
(In thousands)

June 30, December 31,
2009 2008
(Unaudited) (Audited)
Assets:
Cash and cash equivalents $12,669 $8,658
Trade receivables 64,959 50,037
Property and equipment, net 67,209 62,930
Goodwill, net 38,500 38,500
Other assets 37,492 39,472

Total assets $220,829 $199,597

Liabilities and Stockholders' Equity (Deficit):
Deferred revenue $56,566 $57,304
Other liabilities 59,026 71,788
Long term debt 105,000 85,000
Stockholders' equity (deficit) 237 (14,495)

Total liabilities and stockholders' equity
(deficit) $220,829 $199,597

Note: The December 31, 2008 Condensed Consolidated Balance Sheet is
derived from the audited Balance Sheet included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.

Source: Arbitron Inc.

CONTACT: Investor, Thom Mocarsky, +1-410-312-8239,
thom.mocarsky@arbitron.com, or Press Contacts, Didi Blackwood,
+1-410-312-8523, didi.blackwood@arbitron.com, or Jessica Benbow,
+1-410-312-8363, jessica.benbow@arbitron.com, all of Arbitron Inc.

Web Site: http://www.arbitron.com/

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