BBGI Beasley Broadcast Group Inc

Beasley Broadcast Group, Inc. (Nasdaq: BBGI), a large- and mid-size market radio broadcaster, today announced operating results for the for the three- and six-month periods ended June 30, 2006 as summarized below: Summary of Second Quarter and Year-to-date Results -0- *T Three Months Six Months In millions, except per Ended Ended share data June 30, June 30, ---------------------------------------------------------------------- 2006 2005 Change 2006 2005 Change ---------------------------------------------------------------------- Net revenue $32.2 $33.0 (2.4)% $59.3 $61.6 (3.8)% ---------------------------------------------------------------------- Station operating income (SOI - non-GAAP) 10.0 10.8 (8.1)% 17.3 17.4 (1.0)% ---------------------------------------------------------------------- Operating income 7.2 8.1 (12.0)% 11.6 12.4 (6.3)% ---------------------------------------------------------------------- Net income 3.2 3.8 (16.3)% 4.8 5.4 (11.4)% ---------------------------------------------------------------------- Net income per diluted share $0.13 $0.16 $0.20 $0.22 ---------------------------------------------------------------------- Diluted shares outstanding 24.1 24.3 24.3 24.4 ---------------------------------------------------------------------- *T The $0.8 million decline in revenue during the second quarter ended June 30, 2006 compared with the second quarter of 2005 primarily reflects the current radio advertising environment and a reduction in non-cash trade sales revenue at our radio stations, which accounted for approximately half of the total decline. The Company recorded year-over-year revenue gains from its Philadelphia, Ft. Myers, Boca Raton and Augusta clusters while revenue fell in the six other markets in which it operates. The $1.0 million decline in second quarter 2006 operating income reflects the revenue decline, higher cost of services and $0.5 million of stock-based compensation expense that more than offset declines in selling, general and administrative expenses, corporate general and administrative expenses and depreciation and amortization expenses. In the 2005 second quarter the Company incurred $0.1 million of asset purchase agreement termination costs but had no expense for stock-based compensation. Quarterly Station Operating Income (SOI), a non-GAAP financial measure, fell $0.9 million from the 2005 second quarter. Please refer to the "Calculation of SOI" and "Reconciliation of SOI to Net Income" tables at the end of this announcement for a discussion regarding SOI, and a break down of stock-based compensation expense between the station and corporate levels. Reported and same-station results were the same for the periods presented above, as no station acquisitions or dispositions were completed in the relevant periods. Commenting on the results, George G. Beasley, Chairman and Chief Executive Officer, said, "In the second quarter, Beasley Broadcast Group again exceeded the revenue guidance provided at the time we reported our first quarter results as we realized some initial benefits from operational, personnel and programming changes that we believe will result in continued improvements in future periods. Net revenues for the period reflect a decrease in trade sales revenue due to a company-wide effort to reduce the non-cash use of our station advertising inventory. This initiative accounted for half of the year-over-year decline in quarterly revenue levels. In addition, we continued to prudently manage expenses during the period as we limited operating expense growth to less than 1% over 2005 levels. "We are fortunate to operate in relatively healthy regional economies where local advertisers continue to see value in radio advertising. A number of our stations are doing an excellent job of capturing the available revenue in their markets. As always, we continue to invest in our stations to keep them competitive and hope to report on financial progress in the periods ahead. In the meantime, reflecting our confidence in our assets and our station managers, during the second quarter ended June 30, 2006, the Company repurchased an additional 100,000 shares of Beasley Broadcast Group common stock and we have repurchased 190,000 shares in the year-to-date." Third Quarter 2006 Guidance For the three-month period ending September 30, 2006, the Company anticipates reporting a net revenue decrease of 5% compared to the same period last year. This guidance assumes no material changes in economic conditions or extraordinary events. The Company can give no assurance as to whether these conditions will continue, or if they change, how such changes may affect the Company's current expectations. While the Company may, from time to time, issue updated guidance, it assumes no obligation to do so. Conference Call Information The Company will host a conference call and simultaneous webcast today, August 3, 2006, at 11:00 a.m. EDT to discuss its financial results and operations. Both the call and webcast are open to the general public. The dial in number for the conference call is 973/935-8599; please call five minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at the Company's Web site at www.bbgi.com; allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for 14 days on the Internet from the Company's Web site or for 24 hours via telephone at 973/341-3080 (reservation #7610850). Founded in 1961, Beasley Broadcast Group, Inc. is a radio broadcasting company that owns or operates 41 stations (26 FM and 15 AM) located in ten large- and mid-size markets in the United States. The Company expects to complete its pending acquisition of Las Vegas' KDWN-AM shortly. Definitions Station Operating Income (SOI) consists of net revenue less station operating expenses. We define station operating expenses as cost of services (excluding depreciation and amortization), selling, general and administrative expenses, and stock-based compensation related to employees at our radio stations. SOI and same-station SOI are financial measures of performance that are not calculated in accordance with U.S. generally accepted accounting principles, which we refer to as GAAP. We use these non-GAAP financial measures for internal budgeting purposes. We also use SOI to make decisions as to the acquisition and disposition of radio stations. SOI excludes corporate-level costs and expenses, stock-based compensation related to stock grants to corporate employees, and depreciation and amortization, which may be material to an assessment of the Company's overall operating performance. Management compensates for this limitation by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of the Company's operating performance. Moreover, the corresponding amounts of the non-cash and corporate-level costs and expenses excluded from the calculation are available to investors as they are presented as separate line items on our statements of operations contained in our periodic reports filed with the Securities and Exchange Commission (SEC). While the Company recognizes that because SOI is not calculated in accordance with GAAP, it is not necessarily comparable to similarly titled measures employed by other companies, SOI is a measure widely used in the radio broadcast industry. Management believes that SOI provides meaningful information to investors because it is an important measure of how effectively we operate our business (i.e., operate radio stations) and assists investors in comparing our operating performance with that of other radio companies. We also believe that providing SOI on a same-station basis is a useful measure of our performance because it presents SOI before the impact of any acquisitions or dispositions completed during the relevant periods. This allows investors to measure the performance of radio stations we owned and operated during the entirety of two operating periods being compared. Note Regarding Forward-Looking Statements: Statements in this release that are "forward-looking statements" are based upon current expectations and assumptions, and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "intends," "expects," "expected," "anticipates" or variations of such words and similar expressions are intended to identify such forward-looking statements. Key risks are described in our reports filed with the SEC including in our Annual Report on Form 10-K for the year ended December 31, 2005. Readers should note that forward-looking statements are subject to change and to inherent risks and uncertainties and may be impacted by several factors, including: economic and regulatory changes, the effect of radio station acquisitions or dispositions that we may make, the loss of key personnel, a downturn in the performance of our radio stations, our substantial debt levels and changes in the radio broadcast industry generally. Our actual performance and results could differ materially because of these factors and other factors discussed in the "Management's Discussion and Analysis of Results of Operations and Financial Condition" of our SEC filings, including but not limited to annual reports on Form 10-K or quarterly reports on Form 10-Q, copies of which can be obtained from the SEC, www.sec.gov, or our website, www.bbgi.com. All information in this release is as of August 3, 2006, and we undertake no obligation to update the information contained herein to actual results or changes to our expectations. - tables follow - -0- *T BEASLEY BROADCAST GROUP, INC. Consolidated Statements of Operations (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Net revenue $32,205,500 $33,011,479 $59,284,819 $61,647,662 ------------ ------------ ------------ ------------ Costs and expenses: Cost of services (excluding stock-based compensation and depreciation and amortization)(1) 11,440,616 10,884,464 20,666,090 20,734,411 Selling, general and administrative (excluding stock-based compensation)(1) 10,782,272 11,295,228 21,257,339 23,469,601 Corporate general and administrative (excluding stock-based compensation) 1,704,825 1,834,815 3,480,554 3,467,033 Stock-based compensation (2) 454,233 - 923,570 - Depreciation and amortization 668,241 723,716 1,362,952 1,466,114 Asset purchase agreement termination costs - 141,449 - 141,449 ------------ ------------ ------------ ------------ Total costs and expenses 25,050,187 24,879,672 47,690,505 49,278,608 Operating income 7,155,313 8,131,807 11,594,314 12,369,054 Interest expense (1,984,830) (1,920,951) (3,768,927) (3,784,036) Interest income 114,277 129,786 234,779 254,440 Other non-operating income (expense) 12,655 (73,979) 7,231 126,310 ------------ ------------ ------------ ------------ Income before income taxes 5,297,415 6,266,663 8,067,397 8,965,768 Income tax expense 2,127,655 2,478,899 3,267,071 3,550,444 ------------ ------------ ------------ ------------ Net income $3,169,760 $3,787,764 $4,800,326 $5,415,324 ============ ============ ============ ============ Basic and diluted net income per share: $0.13 $0.16 $0.20 $0.22 ============ ============ ============ ============ Basic common shares outstanding 24,057,497 24,236,547 24,080,981 24,235,766 ============ ============ ============ ============ Diluted common shares outstanding 24,104,701 24,291,863 24,253,255 24,423,467 ============ ============ ============ ============ (1) We refer to our "Cost of services (excluding depreciation and amortization)," "Selling, general and administrative" and "stock-based compensation related to restricted stock grants to employees at our radio stations" together as our "station operating expenses" for the "Calculation of SOI" and "Reconciliation of SOI to Net Income" below. (2) On July 1, 2005, we began granting shares of restricted stock under our 2000 Equity Plan to certain employees and our directors and recorded $0.4 million and $0.8 million of stock-based compensation related to these grants during the three and six months ended June 30, 2006, respectively. In addition, effective January 1, 2006, we adopted SFAS 123(R) which requires entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. As a result of the adoption of SFAS 123(R), we recorded $0.1 million and $0.2 million of stock-based compensation during the three and six months ended June 30, 2006, respectively related to previous grants of stock options. Selected Balance Sheet Data - Unaudited (in thousands) June 30, December 31, 2006 2005 --------------------------- Cash and cash equivalents $13,049 $16,279 Working capital 29,331 32,402 Total assets 280,073 280,817 Long term debt, less current installments 139,125 144,375 Total stockholders' equity 88,146 87,998 Selected Statement of Cash Flows Data - Unaudited (in thousands) Six Months Ended June 30, -------------------------- 2006 2005 -------------------------- Net cash provided by operating activities $ 8,201 $ 5,660 Net cash used in investing activities (2,181) (498) Net cash used in financing activities (9,249) (7,213) Net decrease in cash and cash equivalents (3,229) (2,051) Calculation of SOI - Unaudited Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------------ 2006 2005 2006 2005 ------------------------------------------------ Net revenue $32,205,500 $33,011,479 $59,284,819 $61,647,662 Station operating expenses (22,222,888)(22,179,692)(41,923,429)(44,204,012) Station stock-based compensation (31,882) - (96,767) - ------------------------------------------------ SOI $ 9,950,730 $10,831,787 $17,264,623 $17,443,650 ================================================ Reconciliation of SOI to Net Income - Unaudited Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------------ 2006 2005 2006 2005 ----------------------------------- ------------ SOI $ 9,950,730 $10,831,787 $17,264,623 $17,443,650 Corporate general and administrative (1,704,825) (1,834,815) (3,480,554) (3,467,033) Corporate stock- based compensation (422,351) - (826,803) - Depreciation and amortization (668,241) (723,716) (1,362,952) (1,466,114) Asset purchase agreement termination costs - (141,449) - (141,449) Interest expense (1,984,830) (1,920,951) (3,768,927) (3,784,036) Interest income 114,277 129,786 234,779 254,440 Other non-operating income (expense) 12,655 (73,979) 7,231 126,310 Income tax expense (2,127,655) (2,478,899) (3,267,071) (3,550,444) ------------------------------------------------ Net income $ 3,169,760 $ 3,787,764 $ 4,800,326 $ 5,415,324 ================================================ *T