Increases Annual Dividend by $0.10 to $0.70 Per Common Share
BALTIMORE, Oct. 31 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group,
Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today reported financial
results for the three months and nine months ended September 30, 2007.
Commenting on the quarter, David Smith, President and CEO of Sinclair,
stated, "Our announcement today regarding our Board of Directors' decision
to increase our common stock dividend once again represents our commitment
to growing cash flow and creating value for our shareholders. This is the
sixth time in the past three years we have increased the dividend, which is
now at a $0.70 per common share dividend rate, on an annualized basis. At a
$12.00 stock price, this represents a 5.8% dividend yield, one of the
highest in the broadcast sector.
In addition to returning some of our cash flow to our shareholders, we
have been evaluating other ways to put our capital to work. As discussed
below, we have made investments in non-television assets, such as
commercial real estate, that we expect to be accretive. We expect to close
on our previously announced sale of WGGB-TV in Springfield, MA on November
1, 2007, which will generate approximately $21.2 million in proceeds. Our
ability to successfully negotiate retransmission consent agreements
resulted in additional revenues which more than offset the loss of
political advertising spending in the third quarter. Operationally, we are
seeing some positive ratings trends on the MyNetworkTV stations and success
selling the commercial inventory locally."
Financial Results:
Net broadcast revenues from continuing operations were $149.4 million
for the three months ended September 30, 2007, a decrease of 0.6% versus
the prior year period result of $150.3 million. Operating income was $32.9
million in the three-month period as compared to $38.0 million in the prior
year period, a decrease of 13.4%. The Company had net income available to
common shareholders of $9.9 million in the three-month period versus net
income available to common shareholders of $22.6 million in the prior year
period. The Company reported diluted earnings per common share of $0.11 for
the three-month period versus diluted earnings per common share of $0.25 in
the prior year period.
Net broadcast revenues from continuing operations were $457.0 million
for the nine months ended September 30, 2007, down 0.2% versus the prior
year period result of $457.9 million. Operating income was $112.2 million
in the nine-month period, a decrease of 6.9% versus the prior year period
result of $120.5 million. The Company had net income available to common
shareholders of $9.7 million in the nine-month period, which included a
$30.7 million extinguishment of debt charge associated with the partial
call of the Company's 8% senior subordinated notes due 2012 and full
redemption of the Company's 8.75% senior subordinated notes due 2011. The
Company had net income available to common shareholders of $42.9 million in
the nine-month period ended September 30, 2006. Diluted earnings per common
share were $0.11 in the nine-month period versus diluted earnings per
common share of $0.50 in the prior year period.
Operating Statistics and Income Statement Highlights:
-- Political revenues were $1.1 million in the quarter versus $7.7 million
in the third quarter last year.
-- Local advertising revenues were flat in the quarter versus the third
quarter 2006, while national advertising revenues decreased 13.2%
primarily due to lower political revenues in a non-election year and
weakness on the MyNetworkTV stations. Excluding political revenues,
local advertising revenues were up 2.7% and national advertising
revenues were down 5.5%. Advertising spending by the automotive, fast
food, paid programming and movies categories were down while media,
medical, services and home products advertising spending was up. Local
revenues, excluding political revenues, represented 65.7% of
advertising revenues.
-- Time sales on our FOX and CBS stations were up 1.8% and 9.3% in the
quarter, respectively. Stations affiliated with ABC, CW, MyNetworkTV
and NBC were down 12.9%, 1.4%, 12.3% and 22.2%, respectively.
Excluding political revenues, our ABC stations were down 0.9%, our CW
stations were down 0.8%, our MyNetworkTV stations were down 11.5%, and
our NBC stations down 6.1%, while our FOX and CBS stations were up 6.0%
and 9.9%, respectively.
-- With all but four markets reported, market share survey results reflect
that our stations' share of the television advertising market in the
third quarter of 2007 increased from 16.1% to 16.8%, versus the same
period last year.
-- In July 2007, the Company entered into an agreement to sell the assets
of WGGB-TV, our ABC affiliate in Springfield, Massachusetts, to
Gormally Broadcasting LLC for $21.2 million in cash. The sale is
expected to close November 1, 2007.
-- In July 2007, the Company acquired a commercial warehouse property
located in Baltimore, Maryland, for $9.1 million consisting of $1.7
million in cash and $7.4 million in non-recourse debt.
-- In September 2007, the Company acquired a commercial office building
located in Baltimore, Maryland, for $17.1 million in cash.
-- In October 2007, the Company made a $5.2 million cash investment in
developmental land in Chapel Hill, North Carolina.
-- In October 2007, the Company made a $3.7 million cash investment in
developmental land in Annapolis, Maryland.
-- In October 2007, WTTA-TV (MYTV 38) in Tampa, Florida, entered into a
news share arrangement with WFLA-TV, the market's NBC affiliate, in
which WFLA-TV will produce a 10pm newscast for WTTA-TV. The news began
airing on October 8, 2007.
Balance Sheet and Cash Flow Highlights:
-- Debt on the balance sheet, net of $10.4 million in cash, was $1,343.9
million at September 30, 2007 versus net debt of $1,348.8 million at
June 30, 2007.
-- The Company repurchased $9.9 million face amount of its 8% senior
subordinated notes in the open market during the quarter.
-- As of September 30, 2007, 52.8 million Class A common shares and 34.5
million Class B common shares were outstanding, for a total of 87.3
million common shares outstanding.
-- Capital expenditures in the quarter were $3.8 million.
-- Common stock dividends paid in cash in the quarter were $13.0 million.
-- Program contract payments for continuing operations were $18.2 million
in the quarter.
Forward-Looking Statements:
The matters discussed in this press release, particularly those in the
section labeled "Outlook," include forward-looking statements regarding,
among other things, future operating results. When used in this press
release, the words "outlook," "intends to," "believes," "anticipates,"
"expects," "achieves," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a number of
risks and uncertainties. Actual results in the future could differ
materially and adversely from those described in the forward-looking
statements as a result of various important factors, including and in
addition to the assumptions identified in this release, the impact of
changes in national and regional economies, successful execution of
outsourcing agreements, pricing and demand fluctuations in local and
national advertising, volatility in programming costs, the market
acceptance of new programming, the CW Television Network and MyNetworkTV
programming, our news share strategy, our local sales initiatives, the
execution of retransmission consent agreements and the other risk factors
set forth in the Company's most recent reports on Form 10-Q and Form 10-K,
as filed with the Securities and Exchange Commission. There can be no
assurances that the assumptions and other factors referred to in this
release will occur. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements
except as required by law.
Outlook:
In accordance with Regulation FD, Sinclair is providing public
dissemination through this press release of its expectations for certain of
its fourth quarter 2007 and full year 2007 financial performance. The
Company assumes no obligation to update its expectations. All matters
discussed in the "Outlook" section are forward-looking and, as such,
persons relying on this information should refer to the "Forward-Looking
Statements" section above.
All assumptions and historical periods have been adjusted to exclude
WGGB-TV, which is accounted for under discontinued operations accounting.
"As expected in non-election years, we do not expect to have the level
of political revenues that we experienced in the fourth quarter of 2006,"
commented David Amy, EVP and CFO. "For Sinclair, this amounts to
approximately $19.3 million in lower political revenues. Unlike most other
broadcasters, however, our ability to secure retransmission consent fee
revenues will offset some of that shortfall. We are also seeing local sales
momentum building on the MyNetworkTV stations in response to some of the
network's program line-up changes."
-- The Company expects fourth quarter 2007 station net broadcast revenues
from continuing operations, before barter, to be approximately $160.4
to $162.0 million as compared to fourth quarter 2006 station net
broadcast revenues, before barter, of $169.2 million. This assumes
$1.8 million in political revenues versus $21.1 million received in the
fourth quarter last year.
-- The Company expects barter revenue and barter expense each to be
approximately $15.2 million in the fourth quarter.
-- The Company expects continuing operations station production expenses
and station selling, general and administrative expenses (together,
"television expenses"), before barter expense, but including stock-
based compensation expense, in the quarter to be approximately $75.3
million, a 4.3% increase from fourth quarter 2006 television expenses
of $72.2 million. On a full year basis, television expenses are
expected to be approximately $286.2 million, or up a nominal 1.4%, as
compared to 2006 television expenses of $282.2 million. The 2007
television expense forecast includes $0.4 million of stock-based
compensation expense for the quarter and $1.5 million for the year, as
compared to the 2006 actuals of $0.4 and $1.4 million for the quarter
and year, respectively.
-- The Company expects program contract amortization expense to be
approximately $22.6 million in the quarter and $96.1 million for the
year, as compared to the 2006 actuals of $25.3 million and $90.6
million for the quarter and year, respectively.
-- The Company expects program contract payments to be approximately $20.0
million in the quarter and $78.8 million for the year, as compared to
the 2006 actuals of $19.8 million and $87.8 million for the quarter and
year, respectively.
-- The Company expects corporate overhead, including stock-based
compensation expense, to be approximately $5.6 million in the quarter
and $24.5 million for the year. The 2007 corporate overhead forecast
includes $0.1 million of stock-based compensation expense for the
quarter and $2.2 million for the year.
-- The Company expects other operating division revenues less operating
expenses to be approximately $1.3 million in the fourth quarter,
assuming current equity interests.
-- The Company expects depreciation on property and equipment to be
approximately $10.8 million in the quarter and $43.5 million for the
year, assuming the capital expenditure assumptions below, and as
compared to the 2006 actuals of $10.1 million and $45.3 million for the
quarter and year, respectively.
-- The Company expects amortization of acquired intangibles to be
approximately $4.2 million in the quarter and $17.3 million for the
year, as compared to the 2006 actuals of $4.7 million and $17.5 million
for the quarter and year, respectively.
-- The Company expects net interest expense to be approximately $21.9
million in the quarter and $93.9 million for the year, assuming no
changes in the current interest rate yield curve, and changes in debt
levels based on the assumptions discussed in this "Outlook" section.
-- The Company expects the fourth quarter effective tax rate for
continuing operations to be approximately 44%, including a current tax
benefit from continuing operations of approximately $3.4 million in the
quarter based on the assumptions discussed in this "Outlook" section.
For the year, the effective tax rate on continuing operations is
expected to be approximately 36%, including a current tax benefit of
$16.6 million.
-- The Company expects dividends paid on the Class A and Class B common
shares to be approximately $13.1 million in the fourth quarter and
$49.6 million for the year, assuming current shares outstanding and a
$0.60 per share annual dividend rate. The increased dividend rate will
go into effect with the dividend paid in January 2008.
-- The Company expects to spend approximately $12.6 million in capital
expenditures in the quarter and approximately $26.0 million for the
year.
Sinclair Conference Call:
The senior management of Sinclair will hold a conference call to
discuss its third quarter results on Wednesday, October 31, 2007, at 8:30
a.m. ET. After the call, an audio replay will be available at
http://www.sbgi.net under "Investor Information/Earnings Webcast." The
press and the public will be welcome on the call in a listen-only mode. The
dial-in number is (877) 407-9205.
About Sinclair:
Sinclair Broadcast Group, Inc., one of the largest and most diversified
television broadcasting companies, will own and operate, program or provide
sales services to 57 television stations in 35 markets after the sale of
WGGB-TV. Sinclair's television group reaches approximately 22% of U.S.
television households and is affiliated with all major networks. Sinclair
owns equity interests in various non-broadcast related companies.
Notes:
"Discontinued Operations" accounting has been adopted in the financial
statements for all periods presented in this press release. As such, the
results from operations, net of related income taxes, have been
reclassified from income from operations and reflected as net income from
discontinued operations.
Prior year amounts have been reclassified to conform to current year
GAAP presentation.
Sinclair Broadcast Group, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
REVENUES:
Station broadcast revenues,
net of agency commissions $149,425 $150,272 $456,972 $457,863
Revenues realized from
station barter arrangements 14,786 12,750 44,218 38,112
Other operating divisions'
revenues 12,488 3,324 18,841 14,753
Total revenues 176,699 166,346 520,031 510,728
OPERATING EXPENSES:
Station production expenses 35,741 35,121 109,556 108,298
Station selling, general and
administrative expenses 33,710 34,237 101,357 101,754
Expenses recognized from
station barter arrangements 13,317 11,430 39,995 34,686
Amortization of program
contract costs and net
realizable value
adjustments 29,172 24,075 73,528 65,300
Other operating divisions'
expenses 11,227 3,346 18,852 15,108
Depreciation of property and
equipment 10,555 10,671 32,660 35,190
Corporate general and
administrative expenses 5,497 5,141 18,888 17,059
Amortization of definite-lived
intangible assets and other
assets 4,546 4,312 13,032 12,826
Total operating expenses 143,765 128,333 407,868 390,221
Operating income 32,934 38,013 112,163 120,507
OTHER INCOME (EXPENSE):
Interest expense and
amortization of debt
discount and deferred
financing costs (21,897) (28,448) (74,166) (86,783)
Interest income 89 913 2,178 1,263
(Loss) gain from sale of
assets (30) 4 (38) (265)
Loss from extinguishment of
debt (68) (25) (30,716) (904)
Gain from derivative
instruments 1,897 -- 1,300 2,907
Income (loss) from equity and
cost method investments 711 57 (181) 6,192
Other income (loss), net 268 (34) 944 448
Total other expense (19,030) (27,533) (100,679) (77,142)
Income from continuing
operations before income
taxes 13,904 10,480 11,484 43,365
INCOME TAX (PROVISION) BENEFIT (4,327) 12,350 (2,317) (2,594)
Income from continuing
operations 9,577 22,830 9,167 40,771
DISCONTINUED OPERATIONS:
Income (loss) from
discontinued operations,
net of related income tax
(provision) benefit of
$(436), $(307), $(176)
and $182, respectively 324 (265) 542 321
Gain from discontinued
operations, net of related
income tax provision of $0,
$0, $0 and $885, respectively -- -- -- 1,774
NET INCOME $9,901 $22,565 $9,709 $42,866
EARNINGS PER COMMON SHARE:
Basic earnings per common
share from continuing
operations $0.11 $0.27 $0.11 $0.48
Basic earnings per common
share from discontinued
operations $ -- $ -- $0.01 $0.02
Basic earnings per common
share $0.11 $0.26 $0.11 $0.50
Diluted earnings per common
share from continuing
operations $0.11 $0.26 $0.11 $0.48
Diluted earnings per common
share from discontinued
operations $ -- $ -- $0.01 $0.02
Diluted earnings per common
share $0.11 $0.25 $0.11 $0.50
Weighted average common
shares outstanding 87,175 85,719 86,816 85,650
Weighted average common and
common equivalent shares
outstanding 87,227 99,149 86,949 85,655
Dividends declared per common
share $0.15 $0.125 $0.45 $0.325
Unaudited Consolidated Historical Selected Balance Sheet Data:
(In thousands)
September 30, June 30,
2007 2007
Cash & cash equivalents $10,433 $9,181
Total current assets 256,496 241,728
Total long term assets 1,962,903 1,941,054
Total assets 2,219,399 2,182,782
Current portion of debt 46,158 47,245
Total current liabilities 220,991 197,384
Long term portion of debt 1,308,135 1,310,734
Total long term liabilities 1,743,014 1,727,697
Total liabilities 1,964,005 1,925,081
Minority interest in consolidated subsidiaries 1,098 705
Total stockholders' equity 254,296 256,996
Total liabilities & stockholders' equity $2,219,399 $2,182,782
Unaudited Consolidated Historical Selected Statement of Cash Flows Data:
(In thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
2007 2007
Net cash flow from operating activities $ 50,492 $91,126
Net cash flow used in investing activities (21,579) (46,806)
Net cash flow used in financing activities (27,651) (101,285)
Net decrease in cash & cash equivalents 1,262 (56,965)
Cash & cash equivalents, beginning of period 9,181 67,408
Cash & cash equivalents, end of period $10,443 $10,443
SOURCE Sinclair Broadcast Group, Inc.
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Related links:
http://www.sbgi.net
http://www.prnewswire.com/comp/110203.html/
CONTACT:
David Amy, EVP & Chief Financial Officer, or
Lucy Rutishauser, VP-Corporate Finance & Treasurer, both of
Sinclair Broadcast Group, Inc., +1-410-568-1500
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