Grupo Radio Centro Reports Third Quarter and Nine Months of 2012 Results

Grupo Radio Centro Reports Third Quarter and Nine Months of 2012 Results





MEXICO CITY, Oct. 26, 2012 /PRNewswire/ -- Grupo Radio Centro, S.A.B. de C.V. (NYSE: RC, BMV: RCENTRO-A) (the "Company"), one of Mexico's leading radio broadcasting companies, announced today its results of operations for the third quarter and nine months ended September 30, 2012. All figures were prepared in accordance with International Financial Reporting Standards (IFRS).



Third Quarter Results



The Company's broadcasting revenue for the third quarter of 2012 totaled Ps. 264,474,000, a 3.6% increase compared to the Ps. 255,215,000 reported for the third quarter of 2011. This increase was mainly attributable to higher advertising expenditures by the Company's clients in Mexico, who purchased more airtime during the third quarter of 2012 compared to the same period of 2011.



The Company's broadcasting expenses (excluding depreciation, amortization and corporate expenses) for the third quarter of 2012 totaled Ps. 184,410,000, a 5.2% increase compared to the Ps. 175,318,000 reported for the third quarter of 2011. This increase was mainly due to (i) higher research expenses related to IBOPE, (ii)higher commissions paid to the Company's sales force and to advertising agencies due to the increase in broadcasting revenue and (iii) higher maintenance expenses.



The Company's depreciation and amortization expenses for the third quarter of 2012 totaled Ps. 5,225,000, a 17.5% decrease compared to the Ps. 6,337,000 reported for the third quarter of 2011. This decrease was attributable to a reduction in the amount of depreciable assets.



The Company's corporate expenses for the third quarter of 2012 totaled Ps. 2,808,000, the same amount reported for the third quarter of 2011.



The Company's operating income for the third quarter of 2012 totaled Ps. 72,031,000, a slight increase compared to the Ps. 70,752,000 reported for the third quarter of 2011.



The Company's other expenses, net for the third quarter of 2012 totaled Ps. 59,867,000, a significant increase compared to the Ps. 12,581,000 reported for the third quarter of 2011. This increase was mainly attributable to (i) legal expenses incurred during the third quarter of 2012 in connection with the transaction involving the KXOS-FM radio station assets, which is described in greater detail below, (ii) expenses incurred in connection with the Gutierrez Vivo and Infored legal proceedings, and (iii) higher expenses related to fees paid to the Company's executive committee.



The Company's finance costs for the third quarter of 2012 totaled Ps. 2,639,000, a 50.1% decrease compared to the Ps. 5,293,000 reported for the third quarter of 2011. This decrease was mainly attributable to the total repayment of the Company's loan with Banco Inbursa, S.A. on August 3, 2012.



The Company's profit before income taxes for the third quarter of 2012 totaled Ps. 9,525,000, a 82.0% decrease compared to the Ps. 52,878,000 reported for the same period of 2011. This decrease was mainly attributable to the increase in other expenses net, described above.



The Company's income tax provision for the third quarter of 2012 totaled Ps. 1,134,000, as a negative provision, a significant decrease compared to the Ps. 21,768,000 recorded in the third quarter of 2011. This decrease was mainly due to certain tax benefits obtained.



As a result of the foregoing, the Company's profit in the third quarter of 2012 totaled Ps. 10,659,000, a 65.7% decrease compared to the profit of Ps. 31,110,000 recorded for the third quarter of 2011.



Nine-Month Results



The Company's broadcasting revenue for the nine months ended September 30, 2012 totaled Ps. 742,020,000, a 10.0% increase compared to the Ps. 674,412,000 reported for the same period of 2011. This increase was mainly attributable to higher advertising expenditures by the Company's clients in Mexico, who purchased more airtime during the nine months of 2012 compared to the same period of 2011.



The Company's broadcasting expenses (excluding depreciation, amortization and corporate expenses) for the nine months of 2012 totaled Ps. 543,228,000, a 5.8% increase compared to the Ps. 513,516,000 reported for the same period of 2011. This increase was primarily due to (i) higher commissions paid to the Company's sales force and to advertising agencies due to the increase in broadcasting revenue, (ii) higher maintenance expensesand (iii) an increase in production costs for talk shows programs.



The Company's depreciation and amortization expenses for the nine months of 2012 totaled Ps. 15,676,000, a 10.6% decrease compared to the Ps. 17,525,000 reported for the same period of 2011. This decrease was due to a reduction in the amount of depreciable assets for the nine months of 2012 compared to the same period of 2011.



The Company's corporate expenses for the nine months of 2012 totaled Ps. 10,365,000, the same amount reported for the same period of 2011.



The Company's operating income for the nine months of 2012 totaled Ps. 172,751,000, a 29.9% increase compared to the Ps. 133,006,000 reported for the same period of 2011. This increase was mainly a result of the increase in broadcasting revenue during 2012.



The Company's other expenses, net for the nine months of 2012 totaled Ps. 103,572,000, a significant increase compared to the Ps. 43,784,000 reported for the same period of 2011. This increase was mainly attributable to (i) legal expenses incurred during the third quarter of 2012 in connection with the transaction involving KXOS-FM radio station assets, which is described in greater detail below, (ii) expenses incurred in connection with the Gutierrez Vivo and Infored legal proceedings, and (iii) higher expenses related to fees paid to the Company's executive committee.



The Company's finance costs for the nine months of 2012 totaled Ps. 9,812,000, a decrease of 37.4% compared to the Ps. 15,677,000 reported for the same period of 2011. This decrease was mainly attributable to the total repayment of the Company's loan with Banco Inbursa, S.A. on August 3, 2012.



The Company's profit before income tax for the nine months of 2012 totaled Ps. 59,367,000, a 19.3% decrease compared to the profit before income tax of Ps. 73,545,000 reported for the same period of 2011. This decrease was mainly due to the aforementioned increase in other expenses.



For the nine months of 2012, the Company's income tax provision totaled Ps. 3,652,000, as a negative provision compared to the income tax of Ps. 43,344,000 recorded for the same period of 2011. This decrease was mainly the result of certain tax benefits obtained.



As a result of the foregoing, the Company's profit in the nine months of 2012 totaled Ps. 63,019,000, an increase of 108.7% compared to Ps. 30,201,000 profit for the same period of 2011.



Other Matters:



In August 23, 2012, the Company announced that the KXOS-FM radio station assets have been acquired by a newly-formed entity, 93.9 Holdings, Inc., pursuant to the Put and Call Agreement entered into with Emmis Communications Corporation and certain of its subsidiaries (collectively, "Emmis") in April 2009, which was amended in April of this year to reduce the purchase price to US$85.5 million.



The acquiring entity, 93.9 Holdings, Inc., is controlled by 93.9 Investment, LLC, which is wholly owned by certain members of the Aguirre family who are U.S. citizens. GRC's wholly-owned subsidiary, Grupo Radio Centro LA, LLC ("GRC-LA"), owns a 25% equity stake in 93.9 Holdings, Inc., and GRC-LA and 93.9 Investment, LLC have entered into a shareholders' agreement relating to their interests in 93.9 Holdings, Inc. Pursuant to this shareholders' agreement, GRC-LA will have certain customary minority shareholder rights, including those relating to extraordinary corporate transactions, and has a call option to acquire, subject to compliance with the rules and regulations of the Federal Communications Commission, the equity in 93.9 Holdings, Inc. held by 93.9 Investment, LLC, at a purchase price based on the amount of capital contributed by 93.9 Investment, LLC to 93.9 Holdings, Inc.



In order to finance the acquisition, 93.9 Holdings, Inc. entered into a US$90 million senior secured credit facility guaranteed by GRC and certain of its operating subsidiaries with a group of lenders for which Credit Suisse Securities (USA) LLC acted as the lead arranger. The credit facility provides for a term loan in two tranches, one of which has a five-year term and the other of which has a seven-year term. The principal amounts borrowed under the credit facility are required to be repaid in accordance with a graduated amortization schedule that requires 93.9 Holdings, Inc. to start repaying, on a quarterly basis, the amounts borrowed under the five-year tranche in six months and the amounts borrowed under the seven-year tranche in 18 months. In addition to being guaranteed by GRC and certain of its operating subsidiaries, the credit facility is secured by a first priority lien on substantially all of 93.9 Holdings, Inc.'s and its subsidiary's assets and substantially all of GRC's property, including its corporate headquarters. The guarantee agreement entered into by GRC and certain of its subsidiaries requires GRC to maintain certain financial ratios, and comply with other financial conditions that, among other things, limit its ability to incur additional indebtedness, pay dividends, pledge assets and enter into transactions with affiliates.



As a result of this acquisition, the Local Programming and Marketing Agreement ("LMA") for the KXOS-FM radio station entered into between GRC-LA and Emmis on April 3, 2009 has been terminated. GRC-LA and 93.9 Holdings, Inc. have entered into a new LMA effective as of August 23, 2012 pursuant to which GRC-LA will continue to provide programming to, and sell advertising time, on KXOS-FM on substantially the same terms and conditions as the LMA that had been entered into with Emmis, except that the fees payable by GRC-LA will be equal, in any period, to the debt service requirements of 93.9 Holdings, Inc. for such period under the credit facility described above. GRC-LA will also be required to reimburse 93.9 Holdings, Inc. for any expenses incurred by it with respect to the KXOS-FM radio station



Company Description



Grupo Radio Centro owns and/or operates 15 radio stations. Of these 15 radio stations, 6 FM and 6 AM are located in Mexico City, one AM station in Guadalajara and Monterrey, respectively, and one FM station in Los Angeles. 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, the Company also operates Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to 130 Grupo Radio Centro-affiliated radio stations throughout Mexico.



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.





IR Contacts
In Mexico: In NY:
Pedro Beltran / Alfredo Azpeitia Maria Barona / Peter Majeski
Grupo Radio Centro, S.A.B. de C.V. i-advize Corporate Communications, Inc.
Tel: (5255) 5728-4800 Ext. 4910 Tel: (212) 406-3690
aazpeitia@grc.com.mx grc@i-advize.com.mx







GRUPO RADIO CENTRO, S.A.B. DE C.V.
CONSOLIDATED UNAUDITED BALANCE SHEETS
as of September 30, 2012 and 2011
(figures in thousands of Mexican pesos ("Ps.") and U.S.
dollars ("U.S. $") (1)
--------------------------------------------------------
September 30,
-------------
2012 2011
U.S.
$(1) Ps. Ps.
----- --- ---
ASSETS
------
Current assets:
Cash and cash equivalents 5,559 71,807 135,463
----- ------ -------

Accounts receivable:
Broadcasting receivables -
Net 19,404 250,647 252,946
Other receivables 1,651 21,320 8,976
Income taxes recoverable 2,777 35,872 1,782
----- ------ -----
23,832 307,839 263,704

Prepaid expenses 4,444 57,407 34,009
----- ------ ------
Total current assets 33,835 437,053 433,176

Property and equipment 37,354 482,502 427,820
Other Deposits 3,789 48,947 0
Other Investments 250 3,229 0
Deferred charges, net 169 2,181 3,723
Goodwill 64,168 828,863 828,863
Other assets 294 3,775 3,404
--- ----- -----
Total assets 139,859 1,806,550 1,696,986
======= ========= =========

LIABILITIES
-----------
Current liabilities:
Current portion of long-
term debt 0 0 40,792
Deferred revenue 7,821 101,019 100,581
Accounts payable and accrued
expenses 6,685 86,344 65,219
Taxes payable 2,626 33,919 35,845
Total current liabilities 17,132 221,282 242,437

Non-current liabilities:
Long-term debt 0 0 60,000
Employee benefits 6,048 78,125 62,361
Deferred taxes 2,195 28,351 23,842
----- ------ ------
Total liabilities 25,375 327,758 388,640
------ ------- -------

STOCKHOLDERS' EQUITY
--------------------
Common stock 82,059 1,059,962 1,059,962
Retained earnings 29,961 387,009 215,972
Reserve for repurchase of
shares 2,322 29,989 29,989
Other comprehensive income 125 1,618 2,105
--- ----- -----
Equity attributable to
owners of the Company 114,467 1,478,578 1,308,028
Non-controlling Interest 17 214 318
--- --- ---
Total equity 114,484 1,478,792 1,308,346
------- --------- ---------
Total liabilities and
Stockholders' equity 139,859 1,806,550 1,696,986
======= ========= =========


(1) Peso amounts have been translated into U.S.
dollars, solely for the convenience of the reader, at
the rate of Ps. 12.917 per U.S. dollar, the rate on
September 30, 2012









GRUPO RADIO CENTRO, S.A.B. DE C.V.
CONSOLIDATED UNAUDITED STATEMENTS OF INCOME
for the three-month and nine-month periods ended September 30, 2012 and 2011
(figures in thousands of Mexican pesos ("Ps.") and U.S. dollars ("U.S. $")(1),
except per Share and per ADS amounts)
-------------------------------------------------------------------------------
3rd Quarter Accumulated 9 months
----------- --------------------
2012 2011 2012 2011
U.S.$ U.S.$
(1) Ps. Ps. (1) Ps. Ps.
------ --- --- ----- --- ---

Broadcasting revenue
(2) 20,475 264,474 255,215 57,445 742,020 674,412
Broadcasting expenses,
excluding depreciation,
amortization and
corporate expenses 14,277 184,410 175,318 42,055 543,228 513,516

Depreciation and
amortization 405 5,225 6,337 1,214 15,676 17,525
Corporate expenses 217 2,808 2,808 802 10,365 10,365
--- ----- ----- --- ------ ------
Operating income 5,576 72,031 70,752 13,374 172,751 133,006

Other expenses, net (4,635) (59,867) (12,581) (8,018) (103,572) (43,784)

Finance costs:
Interest expense (233) (3,016) (4,895) (774) (9,993) (15,266)
Interest income (2) 5 65 0 15 190 2
Income (loss) on
foreign currency
exchange, net 24 312 (398) (1) (9) (413)
Net finance costs (204) (2,639) (5,293) (760) (9,812) (15,677)
---- ------ ------ ---- ------ -------

Profit before income
taxes 737 9,525 52,878 4,596 59,367 73,545

Income tax expense (88) (1,134) 21,768 (283) (3,652) 43,344
--- ------ ------ ---- ------ ------
Profit (loss) for the
period 825 10,659 31,110 4,879 63,019 30,201

Profit (loss) applicable to:
Majority interest 825 10,658 31,109 4,879 63,018 30,197
Minority interest 0 1 1 0 1 4

825 10,659 31,110 4,879 63,019 30,201
=== ====== ====== ===== ====== ======

Net income (loss) per Series A
Share (3) 0.099 1.2802 0.6335
Net income (loss) per ADS (3) 0.892 11.5218 5.7015
Weighted average common shares
outstanding (000's) (3) 162,725 162,725


(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 12.917 per U.S. dollar, the rate on
September 30, 2012

(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 third quarter of 2012 and 2011 was Ps. 1,470,000 and Ps. 1,215,000,
respectively. Interest earned and treated as broadcasting revenue for the nine
months ended September 30, 2012 and 2011 was Ps. 3,808,000 and Ps. 2,238,000,
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.B de C.V.

Grupo Radio Centro S.A.B de C.V.


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