Clear Channel Communications, Inc. (NYSE: CCU) today reported results for its first quarter ended March 31, 2008.
The Company reported revenues of $1.6 billion in the first quarter of 2008, a 4% increase over the $1.5 billion reported for the first quarter of 2007. Included in the Company’s revenue is a $48.1 million increase due to movements in foreign exchange; strictly excluding the effects of these movements in foreign exchange, revenue growth would have been 1%. See reconciliation of revenue excluding effects of foreign exchange to revenue at the end of this press release.
Clear Channel’s expenses increased 8% to $1.1 billion during the first quarter of 2008 compared to 2007. Included in the Company’s 2008 expenses is a $41.9 million increase due to movements in foreign exchange. Strictly excluding the effects of movements in foreign exchange in the 2008 expenses, expense growth would have been 4%. Also included in the Company’s 2008 expenses is approximately $9.6 million of non-cash compensation expense. This compares to non-cash compensation expense of $8.2 million in the first quarter of 2007.
Clear Channel’s income before discontinued operations increased 70% to $161.4 million, as compared to $95.1 million for the same period in 2007. The Company’s diluted earnings before discontinued operations per share increased 68% to $0.32, compared to $0.19 for the same period in 2007. The Company’s first quarter 2008 net income included an approximate $67.2 million nontaxable gain, which includes the minority interest expense on the gain, or $0.13 per diluted share, on the divestiture of its 50% interest in Clear Channel Independent, a South African outdoor advertising company. Excluding this gain, Clear Channel’s first quarter 2008 income before discontinued operations would have been $94.2 million or $0.19 per diluted share. See reconciliation of net income and diluted earnings per share at the end of this press release.
The Company’s OIBDAN (defined as Operating Income before Depreciation & amortization, Non-cash compensation expense and Gain on disposition of assets – net) was $394.8 million in the first quarter of 2008, a 6% decrease from the first quarter of 2007. See reconciliation of OIBDAN to net income at the end of this press release.
“We continued to execute on our strategic plan during first quarter in the face of a challenging macro-economic climate,” commented Mark P. Mays, Chief Executive Officer of Clear Channel Communications. “While our results were affected by the soft advertising market, we continued to out-deliver the majority of our media industry peers. Our Outdoor results benefited from the global diversification of our footprint, as well as our ongoing efforts to expand our digital presence. We are solidly on track in rolling out our digital installation plan, which continues to strengthen our long-term growth potential. Our radio operations out-performed the majority of our markets in the quarter and we continued to invest in our content and online assets in an effort to strengthen our value proposition to both our listeners and advertisers. We believe our concerted investment strategy will position our businesses for growth over the long-term.”
Second Quarter and 2008 Outlook
Due to the pending merger transaction and the Company not hosting a teleconference to discuss financial and operating results, the Company is providing the following information regarding its expectations and current information related to 2008 operating results.
Pacing information presented below reflects revenues booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth at the end of the period. The Company’s revenue pacing information includes an adjustment to prior periods to include all acquisitions and exclude all divestitures in both periods presented for comparative purposes. All pacing metrics exclude the effects of foreign exchange movements.
As of May 8, 2008, revenues for the consolidated Company are pacing down 2.7% for the second quarter of 2008 as compared to the second quarter of 2007, and are pacing down 1.2% for the full year of 2008 as compared to the full year of 2007. As of the first week of May, the Company has historically experienced revenues booked of approximately 85% of the actual revenues recorded for the second quarter and approximately 65% of the actual revenues recorded for the full year.
As of May 8, 2008, revenues for the Radio division are pacing down 5.3% for the second quarter of 2008 as compared to the second quarter of 2007, and are pacing down 4.3% for the full year of 2008 as compared to the full year of 2007. As of the first week of May, the Radio division has historically experienced revenues booked of approximately 80% of the actual revenues recorded for the second quarter and approximately 60% of the actual revenues recorded for the full year. The Company’s Radio division currently forecasts total operating expense growth to be in a range of down low single-digits to up low single-digits for the full year 2008 as compared to the full year 2007.
Also as of May 8, 2008, revenues in the Outdoor division are pacing up 0.3% with the Americas above and International below the 0.3% pacing for the second quarter 2008 as compared to the second quarter of 2007. For the full year 2008 versus the full year 2007, the Outdoor division revenues are pacing up 2.3% with the Americas slightly below and International slightly above the full-year pacing of 2.3%. As of the first week of May, the Outdoor division has historically experienced revenues booked of approximately 85% of the actual revenues recorded for the second quarter and approximately 65% of the actual revenues recorded for the full year. Excluding the effects of movements in foreign exchange, the Company’s Outdoor division currently forecasts total operating expense growth to be in a range of low single-digit to mid single-digit growth for the full year 2008 as compared to the full year 2007.
For the consolidated company, current management forecasts show corporate expenses of $180 to $190 million for the full year 2008. This projection does not include any ongoing management fees that may be paid to the Sponsors post closing of the merger. Non-cash compensation expense (i.e. FAS No. 123 (R): share-based payments) are currently projected to be in the range of $40 million to $50 million for the full year of 2008. These projections do not consider any expense associated with the pending merger transaction.
The Company currently forecasts overall capital expenditures for 2008 of $475 to $500 million, excluding any capital expenditures associated with any new contract wins the Company may have during 2008. Increases over the 2007 level would be primarily due to new contract wins during 2007 and 2008 and any acceleration of the roll-out of digital boards.
Income tax expense as a percent of ‘Income before income taxes and minority interest’ is currently projected to be approximately 38%. Current income tax expense as a percent of ‘Income before income taxes and minority interest’ is currently expected to be 20% to 25%. This percentage does not include any tax expense or benefit related to the pending merger transaction, the recently completed divestitures of the Company’s television stations and certain of its radio stations or other capital gain transactions, or the effects of any resolution of governmental examinations.
About Clear Channel Communications
Clear Channel Communications, Inc. (NYSE:CCU), headquartered in San Antonio, Texas, is a global leader in the out-of-home advertising industry with radio stations and outdoor displays in various countries around the world.
For more information, visit http://www.clearchannel.com/