LBI Media, Inc. Reports Third Quarter 2010 Results

LBI Media, Inc. Reports Third Quarter 2010 Results

BURBANK, Calif., Nov. 15, 2010 /PRNewswire-FirstCall/ -- LBI Media, Inc. reported its financial results today for the three and nine months ended September 30, 2010.

The following discussion and analysis of our financial condition and results of operations incorporates restated financial results for the three and nine months ended September 30, 2009. Due to our restatement for accounting errors relating to the classification and valuation of certain deferred tax accounts relating to our indefinite-lived intangible assets, all comparisons to September 30, 2009 contained within this press release reflect restated financial results.

For the three months ended September 30, 2010, net revenues increased by $3.2 million, or 11.6%, to $30.7 million, from $27.5 million for the same period in 2009. Net revenues for the nine months ended September 30, 2010 increased by $7.9 million, or 10.3%, to $85.0 million, from $77.1 million for the same period in 2009.

Commenting on the company's earnings results, Lenard Liberman, Chief Executive Officer and President said, "This quarter marks the one-year anniversary of the launch of our national television network, EstrellaTV. We are pleased with EstrellaTV's performance and it is already contributing to the company as we leverage the strength of our programming across the nation.

EstrellaTV has demonstrated consistent and competitive network ratings results and it continues to secure additional distribution. We have signed agreements with two additional affiliates in Salinas-Monterey, CA and Yuma, AZ. In addition, in September, we entered into a nationwide carriage deal with AT&T to offer EstrellaTV to Hispanic viewers across the country. We also recently purchased a television station in Denver, CO, the nation's 15th largest Hispanic television market, and we expect to close on another television station in Chicago, IL, the 6th largest Hispanic television market, in the near future. This will increase EstrellaTV's reach to over 77% of all US Hispanic television households.

"Our results this quarter represent the third consecutive quarter of year-over-year revenue growth, led primarily by the performance of our core television markets and the contribution of EstrellaTV. We are pleased that our investments in original programming are now starting to produce additional returns through the development of a Hispanic television network. Going forward, we will continue to invest in and strengthen our content through new and compelling programming, as well as continuing to improve our distribution platform, so that EstrellaTV could one day be enjoyed by all Hispanic viewers in the US."

Results for the Three Months Ended September 30, 2010

Net revenues increased by $3.2 million, or 11.6%, to $30.7 million for the three months ended September 30, 2010, from $27.5 million for the same period in 2009. The change was primarily attributable to increased advertising revenue in our television segment, partially offset by a slight decline in our radio segment.

Net revenues for our radio segment decreased by $0.1 million, or 0.4%, to $16.4 million for the three months ended September 30, 2010, from $16.5 million for the same period in 2009.

Net revenues for our television segment increased by $3.3 million, or 29.6%, to $14.3 million for the three months ended September 30, 2010, from $11.0 million for the same period in 2009. This increase was primarily attributable to increased advertising revenue in our television segment, reflecting incremental revenue from our EstrellaTV television network, as well as growth in our California market.

Total operating expenses decreased by $65.3 million, or 69.2%, to $29.1 million for the three months ended September 30, 2010, as compared to $94.4 million for the same period in 2009. This decrease was primarily attributable to a $69.6 million decrease in broadcast license and long-lived asset impairment charges. Excluding the impact of the impairment charges, total operating expenses increased by $4.3 million, or 22.4%, to $23.6 million for the three months ended September 30, 2010. This increase was primarily attributable to (1) a $3.7 million increase in program and technical expenses primarily due to an increase in amortization of capitalized costs related to the production of original programming content and incremental costs related to our EstrellaTV network, (2) a $0.4 million increase in promotional and selling, general and administrative expenses, primarily due to additional sales personnel and increased commissions associated with the expansion of our EstrellaTV network, and (3) a $0.2 million increase in depreciation expense and loss on sale and disposal of property and equipment.

Adjusted EBITDA(1) decreased by $0.9 million, or 8.8%, to $9.7 million for the three months ended September 30, 2010, as compared to $10.6 million for the same period in 2009. The decrease was primarily the result of the increase in program and technical expenses, partially offset by increased advertising revenues in our television segment, as discussed above.

We recognized a net loss of $5.2 million for the three months ended September 30, 2010, as compared to a loss of $70.3 million for the same period of 2009, a decrease in net loss of $65.1 million. This change was primarily attributable to the decrease in broadcast license impairment charges and higher net revenues, partially offset by increases in program and technical and selling, general and administrative expenses and higher income tax expense, as noted above.

(1) We define Adjusted EBITDA as net income or loss less discontinued operations, net of income taxes, plus income tax expense or benefit, gain or loss on sale and disposal of property and equipment, net interest expense, interest rate swap expense or income, impairment of broadcast licenses and long-lived assets, depreciation, stock-based compensation expense and other non-cash gains and losses. Management considers this measure an important indicator of our liquidity relating to our operations because it eliminates the effects of certain non-cash items, our discontinued operations and our capital structure. This measure 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 U.S., such as cash flows from operating activities, operating income or loss and net income or loss. In addition, our definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures. See tables at the end of this press release for a reconciliation of net cash (used in) provided by operating activities to Adjusted EBITDA.

Results for the Nine Months Ended September 30, 2010

Net revenues increased by $7.9 million, or 10.3%, to $85.0 million for the nine months ended September 30, 2010, from $77.1 million for the same period in 2009. The change was primarily attributable to increased advertising revenue in our television segment, partially offset by a slight decline in our radio segment.

Net revenues for our radio segment decreased by $0.3 million, or 0.7%, to $44.7 million for the nine months ended September 30, 2010, from $45.0 million for the same period in 2009. The decrease was primarily the result of lower advertising revenue in our Southern California market, partially offset by an increase in our Texas market.

Net revenues for our television segment increased by $8.2 million, or 25.8%, to $40.3 million for the nine months ended September 30, 2010, from $32.1 million for the same period in 2009. This increase was primarily attributable to increased advertising revenue in our television segment, reflecting incremental revenue from our EstrellaTV television network, as well as growth in our California and Texas markets.

Total operating expenses decreased by $110.2 million, or 60.1%, to $73.3 million for the nine months ended September 30, 2010, as compared to $183.5 million for the same period in 2009. This decrease was primarily the result of a $119.3 million reduction in broadcast license and long-lived asset impairment charges. Excluding the impact of the impairment charges, total operating expenses increased by $9.1 million, or 16.0%, to $66.1 million for the nine months ended September 30, 2010. This increase was primarily attributable to (1) an $11.1 million increase in program and technical expenses, resulting from an increase in amortization of capitalized costs related to the production of original programming content and incremental costs related to our EstrellaTV network, and (2) a $0.5 million increase in selling, general and administrative and depreciation expenses. These increases were partially offset by a $1.6 million gain on our assignment of the asset purchase agreement to acquire radio station KDES-FM , a $0.8 million reduction in loss on sale and disposal of property and equipment, resulting from the absence in 2010 of the disposal of certain analog transmission equipment and a $0.1 million decline in promotional expenses.

Adjusted EBITDA decreased by $1.8 million, or 6.3%, to $26.5 million for the nine months ended September 30, 2010, as compared to $28.3 million for the same period in 2009. The decrease was primarily the result of the increase in program and technical expenses, as described above, partially offset by the $1.6 million cash gain realized on the assignment of the asset purchase agreement related to radio station KDES-FM, and increased advertising revenues in our television segment

We recognized a net loss of $9.0 million for the nine months ended September 30, 2010, as compared to a net loss of $107.5 million for the same period of 2009, a decrease in net loss of $98.3 million. This change was primarily attributable to the $119.3 million decrease in broadcast license and long-lived asset impairment charges, partially offset by the $19.2 million change in income tax (provision) benefit and the other changes noted above.

Third Quarter 2010 Conference Call

We will host a conference call to discuss our financial results for the three and nine months ended September 30, 2010 on Monday, November 15, 2010 at 4:30 PM Eastern Time. Interested parties may participate in the conference call by dialing (800) 967-7184 beginning fifteen minutes prior to the scheduled start time of the call, asking for the "LBI Media, Inc. Third Quarter 2010 Results Conference Call", and providing confirmation code 3456230 to the operator. The conference call will be recorded and made available for replay through Friday, November 19, 2010. Investors may listen to the replay of the call by dialing (888) 203-1112, then entering the passcode 3456230.

Information for Holders of LBI Media's 8-1/2% Senior Subordinated Notes due 2017

The financial results for LBI Media, Inc.'s third quarter ended September 30, 2010 will be posted on our website at www.lbimedia.com/investors.html. Holders and beneficial owners of LBI Media, Inc.'s 8-1/2% Senior Subordinated Notes due 2017 may access this information by contacting Wisdom Lu at (818) 729-5316 to receive a temporary username and password.

About LBI Media, Inc.

We are one of the largest owners and operators of Spanish-language radio and television stations in the United States, based on revenues and number of stations. We own 21 radio stations (fifteen FM and six AM) and eight television stations in greater Los Angeles, California (including Riverside, San Bernardino and Orange counties), Houston, Texas, Dallas-Ft. Worth, Texas, San Diego, California, New York, New York, Salt Lake City, Utah, Phoenix, Arizona and Denver, Colorado, and have entered into an asset purchase agreement to purchase the selected assets of an additional television station serving the Chicago, Illinois market. We use one of our television production facilities, located in Burbank, California, to produce our television programming. We are affiliated with twenty-eight television stations in various states serving specific market areas including seven in Texas, four in Florida, seven in California, two in Nevada and Arizona, and one each in Kansas, Nebraska, New Mexico, New York, North Carolina, Oklahoma and Oregon.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the U.S. securities laws. These statements are based upon current expectations and involve certain risks and uncertainties, including those related to the expected future operating performance of our radio stations, television stations and studio operations. Forward-looking statements include but are not limited to information preceded by, or that include the words, "believes", "expects", "prospects", "pacings", "anticipates", "could", "estimates", "forecasts" or similar expressions. The reader should note that these statements may be impacted by several factors, including economic changes, regulatory changes, increased competition, the timing of announced acquisitions or station upgrades, the successful integration of television and radio assets we acquire, changes in the broadcasting industry generally, and changes in interest rates. Accordingly, our actual performance and results may differ significantly from those anticipated in the forward-looking statements. Please see the recent public filings of our parent, LBI Media Holdings, Inc., for information about these and other risks that may affect us. We and our parent, LBI Media Holdings, Inc., undertake no obligation to update or revise the information contained herein because of new information, future events or otherwise.

Results of Operations:

LBI MEDIA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(As (As
Restated) Restated)
Net revenues $30,720 $27,520 $85,022 $77,062
Operating expenses:
Program and technical,
exclusive of
depreciation shown
below 9,663 5,914 27,322 16,130
Promotional, exclusive
of depreciation shown
below 945 878 2,038 2,139
Selling, general and
administrative,
exclusive of
depreciation shown
below 10,406 10,084 30,757 30,522
Depreciation 2,548 2,441 7,506 7,259
Loss on sale and
disposal of property
and equipment 88 - 63 941
Impairment of broadcast
licenses and long-
lived assets 5,450 75,077 7,222 126,543
Gain on assignment of
asset purchase
agreement - - (1,599) -
--- --- ------ ---
Total operating
expenses 29,100 94,394 73,309 183,534
------ ------ ------ -------
Operating income (loss) 1,620 (66,874) 11,713 (106,472)
Interest expense, net
of amounts capitalized (7,077) (7,159) (21,076) (21,214)
Interest rate swap
income 481 234 1,338 1,591
Equity in losses of
equity method
investment - (40) - (103)
Interest and other
income 191 146 567 366
--- --- --- ---
Loss before (provision
for) benefit from
income taxes and
discontinued
operations (4,785) (73,693) (7,458) (125,832)
(Provision for) benefit
from income taxes (426) 3,272 (1,576) 17,607
---- ----- ------ ------
Loss from continuing
operations (5,211) (70,421) (9,034) (108,225)
Income from
discontinued
operations, net of
income tax benefit of
$0, $77, $0 and $20 - 132 - 708
--- --- --- ---
Net loss $(5,211) $(70,289) $(9,034) $(107,517)
======= ======== ======= =========
Adjusted EBITDA (2) $9,712 $10,650 $26,523 $28,292
====== ======= ======= =======

___________________________________
(2) Refer to our definition of Adjusted EBITDA in footnote (1). Also,
see the tables at the end of this press release for a reconciliation
of net cash (used in) provided by operating activities to Adjusted
EBITDA.

Results of Operations (continued):

LBI MEDIA, INC.
UNAUDITED SELECTED SEGMENT DATA
(In thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
& %
2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- -------

Net
revenues:
Radio $16,392 $16,465 0% $44,667 $44,982 -1%
Television 14,328 11,055 30% 40,355 32,080 26%
------ ------ --- ------ ------ ---
Total $30,720 $27,520 12% $85,022 $77,062 10%

Total
operating
expenses
before
stock-
based
compensation
expense,
depreciation,
loss on
sale and
disposal
of
property
and
equipment
and
impairment
of
broadcast
licenses
and
long-
lived
assets:
Radio $8,829 $8,761 1% $23,679 $25,421 -7%
Television 12,179 8,109 50% 34,820 23,349 49%
------ ----- --- ------ ------ ---
Total $21,008 $16,870 25% $58,499 $48,770 20%

Stock-
based
compensation
expense:
Corporate $6 $6 0% $19 $21 -10%
--- --- --- --- --- ---
Total $6 $6 0% $19 $21 -10%

Depreciation:
Radio $1,343 $1,203 12% $4,022 $3,600 12%
Television 1,205 1,238 -3% 3,484 3,659 -5%
----- ----- --- ----- ----- ---
Total $2,548 $2,441 4% $7,506 $7,259 3%

Loss on
sale and
disposal
of
property
and
equipment:
Radio $70 $- 100% $70 $32 119%
Television 18 - 100% (7) 909 -101%
--- --- --- --- --- ----
Total $88 $- 100% $63 $941 -93%

Impairment
of
broadcast
licenses
and
long-
lived
assets:
Radio $39 $47,154 -100% $39 $79,040 -100%
Television 5,411 27,923 -81% 7,183 47,503 -85%
----- ------ --- ----- ------ ---
Total $5,450 $75,077 -93% $7,222 $126,543 -94%

Operating
income
(loss):
Radio $6,111 $(40,653) -115% $16,857 $(63,111) 127%
Television (4,485) (26,215) -83% (5,125) (43,340) 88%
Corporate (6) (6) 0% (19) (21) 10%
--- --- --- --- --- ---
Total $1,620 $(66,874) -102% $11,713 $(106,472) 111%
Adjusted
EBITDA
(3)
Radio $7,563 $7,704 -2% $20,988 $19,561 7%
Television 2,149 2,946 -27% 5,535 8,731 -37%
----- ----- --- ----- ----- ---
Total $9,712 $10,650 -9% $26,523 $28,292 -6%

(3) See footnote (1). Also, see the tables at the end of this release for
a reconciliation of operating income (loss) for each segment to Adjusted
EBITDA for such segment.

Results of Operations (continued):

LBI MEDIA, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

September 30, December 31,
2010 2009
---- ----

Assets
Current assets:
Cash and cash equivalents $194 $178
Accounts receivable, net 22,709 18,745
Current portion of program rights, net 595 507
Amounts due from related parties 551 387
Current portion of employee advances 252 241
Prepaid expenses and other current assets 1,301 1,258
Assets held for sale - 1,403
--- -----
Total current assets 25,602 22,719

Property and equipment, net 89,134 91,989
Broadcast licenses, net 165,404 161,660
Deferred financing costs, net 4,942 5,915
Notes receivable from related parties 3,033 3,024
Employee advances, excluding current portion 1,643 1,529
Program rights, excluding current portion 9,605 6,734
Amounts due from parent 180 -
Notes receivable from parent 22,116 17,839
Other assets 4,632 4,747
----- -----
Total assets $326,291 $316,156
======== ========

Liabilities and shareholder's deficiency
Current liabilities:
Cash overdraft $855 $494
Accounts payable 3,219 2,874
Accrued liabilities 8,031 5,535
Accrued interest 3,742 8,610
Amounts due to parent - 1,956
Current portion of long-term debt 1,362 1,355
----- -----
Total current liabilities 17,209 20,824

Long-term debt, excluding current portion 397,438 375,486
Fair value of interest rate swap 3,896 5,234
Deferred income taxes 19,727 18,482
Other liabilities 2,494 1,579
----- -----
Total liabilities 440,764 421,605

Shareholder's deficiency:
Common stock - -
Additional paid-in capital 101,784 101,774
Accumulated deficit (216,257) (207,223)
-------- --------
Total shareholder's deficiency (114,473) (105,449)
-------- --------
Total liabilities and shareholder's
deficiency $326,291 $316,156
======== ========

Results of Operations (continued):

The table set forth below reconciles net cash (used in) provided by
operating activities, calculated and presented in accordance with
U.S. generally accepted accounting principles, to Adjusted EBITDA:

Three Months Ended Nine Months Ended
September 30, -----------------
------------- September 30,
-------------
2010 2009 2010 2009
---- ---- ---- ----
(In thousands)
Net cash (used in)
provided by
operating
activities $(1,511) $(1,402) $(3,293) $171
Add:
Income tax expense
(benefit) 426 (3,272) 1,576 (17,607)
Interest expense and
interest and other
income, net 6,886 7,013 20,509 20,848
Less:
Effect of
discontinued
operations - (424) - (1,035)
Gain on assignment
of asset purchase
agreement - - 1,599 -
Amortization of
deferred financing
costs (326) (318) (973) (950)
Amortization of
discount on
subordinated notes (76) (69) (223) (204)
Amortization of
program rights (3,107) (1,093) (8,605) (2,107)
Provision for
doubtful accounts (647) (969) (1,556) (1,660)
Changes in operating
assets and
liabilities:
Cash overdraft (168) - (361) 395
Accounts receivable 841 1,460 5,084 3,904
Program rights 3,648 2,284 11,564 6,238
Amounts due from
related parties 1 - 4 20
Prepaid expenses and
other current
assets 161 (17) 43 (232)
Employee advances 114 7 125 14
Accounts payable (311) 237 89 1,271
Accrued liabilities (536) (661) (2,500) (2,676)
Accrued interest 4,864 4,832 4,868 4,662
Deferred income
taxes (382) 3,350 (1,245) 17,328
Other assets and
liabilities (165) (308) (182) (88)
---- ---- ---- ---
Adjusted EBITDA $9,712 $10,650 $26,523 $28,292
====== ======= ======= =======

The following is a reconciliation of operating income (loss) to
Adjusted EBITDA for the company's radio division:

Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(In thousands)
Radio division operating
income (loss) $6,111 $(40,653) $16,857 $(63,111)
Depreciation 1,343 1,203 4,022 3,600
Loss on sale and disposal of
property and equipment 70 - 70 32
Impairment of broadcast
licenses and long-lived
assets 39 47,154 39 79,040
--- ------ --- ------
Radio division Adjusted
EBITDA $7,563 $7,704 $20,988 $19,561
====== ====== ======= =======

The following is a reconciliation of operating loss to Adjusted
EBITDA for the company's television division:

Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(In thousands)
Television division
operating loss $(4,485) $(26,215) $(5,125) $(43,340)
Depreciation 1,205 1,238 3,484 3,659
Loss (gain) on sale and
disposal of property and
equipment 18 - (7) 909
Impairment of broadcast
licenses and long-lived
assets 5,411 27,923 7,183 47,503
----- ------ ----- ------
Television division Adjusted
EBITDA $2,149 $2,946 $5,535 $8,731
====== ====== ====== ======

SOURCE LBI Media, Inc.

LBI Media, Inc.

CONTACT: Wisdom Lu, CFA, Chief Financial Officer, of LBI Media, Inc., +1-818-729-5316

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

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