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CC Media Holdings, Inc. Reports Results for 2014 First QuarterSAN ANTONIO --(Business Wire)-- CC Media Holdings, Inc. (OTCBB:CCMO) today reported financial results for the first quarter ended March 31, 2014. "We continued to make progress this quarter in advancing our strategy of providing customized, multi-platform market solutions that nobody else can," Chairman and Chief Executive Officer Bob Pittman said. "In keeping with our promise to be everywhere our listeners want to find us, our Media+Entertainment business continued to build strong partnerships - making iHeartRadio available on Amazon Fire TV, Apple's Car Play and the Samsung Gear 2 smartwatch. Our growing events business, which is extending the iHeartRadio brand across an increasing number of media platforms, successfully staged the first-ever iHeartRadio Country Music Festival in Austin. Another newcomer to our events line-up, the iHeartRadio Music Awards, will be televised live from Los Angeles on NBC on May 1. At Outdoor, we launched 'Connect,' the first global out-of-home mobile interactive advertising platform that enables customers to access interactive content via their smartphones. We are also enhancing our Americas Outdoor national sales capabilities and optimizing our global digital footprint." "Despite a difficult advertising environment due to disruptive winter weather across the U.S., we maintained our level of consolidated revenues, and also continued to invest in our businesses, to reinforce our foundation for growth," said Rich Bressler, President and Chief Financial Officer. "At Media + Entertainment we flattened our management structure in order to move us closer to the business and make it run more efficiently, better serving our listeners and advertising partners, while staying focused on managing our expenses at both Americas and International Outdoor. First Quarter 2014 Results Consolidated revenues were essentially flat in the first quarter of 2014 compared to the same period of 2013. Excluding the effects of movements in foreign exchange rates, revenues declined $1.0 million or less than 1%.
The Company's OIBDAN1 was down 2%, or $6 million, to $261 million for the three months ended March 31, 2014, versus $267 million for the same period of 2013. Included in the 2014 first quarter OIBDAN of $261 million were $3 million and $10 million of operating and corporate expenses, respectively, associated with the Company's strategic revenue and efficiency initiatives to attract additional advertising dollars to its businesses and improve operating efficiencies. OIBDAN for the three months ended March 31, 2013 included $8 million and $1 million of such expenses, respectively. The consolidated net loss attributable to the Company was $424 million in the first quarter of 2014 compared to a consolidated net loss attributable to the Company of $203 million in the same period of 2013. The increase was primarily attributable to non-cash deferred income taxes, as well as higher interest expense, and equity in losses of non-consolidated affiliates. Key Highlights The Company's recent key highlights include: Media+Entertainment
Outdoor
Certain prior period amounts have been reclassified to conform to the 2014 presentation of financials throughout the press release. 1 See the end of this press release for reconciliations of (i) OIBDAN for each segment to consolidated operating income (loss); (ii) revenues excluding effects of foreign exchange to revenues; (iii) direct operating and SG&A expenses excluding effects of foreign exchange to expenses; (iv) OIBDAN excluding effects of foreign exchange to OIBDAN; (v) revenues excluding effects of political revenues to revenues; (vi) corporate expenses excluding non-cash compensation expenses to corporate expenses; and (vii) OIBDAN to net income (loss). See also the definition of OIBDAN under the Supplemental Disclosure section in this release. 2 The Company's operating expenses include direct operating expenses and SG&A expenses. 3 Includes Corporate for Clear Channel Outdoor Holdings, Inc. of $29 million and $26 million for the three months ended March 31, 2014 and 2013, respectively. Media+Entertainment Media+Entertainment revenues rose $14 million, or 2% compared to the same period of 2013, driven primarily by higher revenues at our traffic and weather business reflecting new product offerings and the impact of strategic sales initiatives, as well as higher national sales fueled by growth in the telecommunications, healthcare and automotive categories, and higher digital advertising revenue benefitting from an increase in total listening hours on our iHeartRadio platform. Partially offsetting these revenue gains was a decline in our local revenues. Operating expenses were up $26 million during the first quarter of 2014 versus the same period in 2013, due primarily to higher compensation expenses driven by investments in our national and digital sales forces, and increased production costs for events such as the iHeartRadio Country Music Festival, as well as greater digital streaming and performance rights expenses driven by increased total listening hours and revenues. OIBDAN decreased $13 million, or 6%, to $200 million in the first quarter of 2014. Americas Outdoor Advertising Americas outdoor revenues decreased $18 million, or 6% compared to the same period of 2013, driven primarily by lower revenues in our Los Angeles market as a result of the absence of revenue from 77 digital bulletins that were turned off due to a court ruling, as well as the loss of certain national accounts and the nonrenewal of certain airport contracts. Increased capacity and occupancy for our digital displays partially offset these declines. Operating expenses decreased $7 million during the first quarter of 2014 versus the same period in 2013. Driving this decline were lower variable site lease costs and reduced compensation expenses relating to reduced revenues. OIBDAN declined $11 million, or 11%, to $84 million in the first quarter of 2014, including expenses related to investments and strategic cost savings programs of $1 million compared to $1 million in 2013. International Outdoor Advertising International outdoor revenues rose $3 million, or 1% compared to the same period of 2013, driven primarily by growth in street furniture sales across emerging markets, including China, and street furniture and digital advertising sales in certain developed markets including the UK and France. These revenue increases were partially offset by declines in other countries, including those in Northern and Eastern Europe, primarily due to challenging macroeconomic conditions. Operating expenses decreased $4 million during the first quarter of 2014 versus the same period in 2013. Driving this reduction were the benefits from previous strategic efficiency initiatives across multiple countries. OIBDAN was up $7 million, or 25%, to $36 million in the first quarter of 2014, including expenses related to investments and strategic cost savings programs of $2 million compared to $5 million in 2013. Conference Call CC Media Holdings, Inc. along with its wholly owned subsidiary, Clear Channel Communications, Inc., and its publicly traded subsidiary, Clear Channel Outdoor Holdings, Inc., will host a conference call to discuss results on April 24, 2014 at 8:30 a.m. Eastern Time. The conference call number is (866) 233-3842 (U.S. callers) and (612) 326-1036 (International callers) and the passcode for both is 325341. A live audio webcast of the conference call will also be available on the investor section of www.clearchannel.com and www.clearchanneloutdoor.com. After the live conference call, a replay will be available for 30 days. The replay numbers are 800-475-6701 (U.S. callers) and 320-365-3844 (International callers) and the passcode for both is 325341. An archive of the webcast will be available beginning 24 hours after the call for 30 days.
For the three months ended March 31, 2014, foreign exchange rate movements increased the Company's revenues by less than $1 million and also increased direct operating and SG&A expenses by less than $1 million.
The current portion of long-term debt was $414 million and $454 million as of March 31, 2014 and December 31, 2013, respectively. Liquidity and Financial Position For the three months ended March 31, 2014, cash used for operating activities was $92 million, cash flow provided by investing activities totaled $153 million, cash flow used for financing activities was $106 million, and the effect of exchange rate changes on cash was less than $3 million. The net decrease in cash was $47 million. The sale of our 50% interest in Australian Radio Network resulted in proceeds of $221 million. Capital expenditures for the three months ended March 31, 2014 were approximately $67 million compared to $62 million for the same period in 2013. During the first quarter of 2014, subsidiaries of the Company entered into the following debt transactions: Clear Channel Communications, Inc. (a subsidiary of CC Media Holdings, Inc.)
CC Finco, LLC. (a subsidiary of CC Media Holdings, Inc.)
The senior secured credit facilities require Clear Channel to comply on a quarterly basis with a financial covenant limiting the ratio of consolidated secured debt, net of cash and cash equivalents, to consolidated EBITDA (as defined by Clear Channel's senior secured credit facilities) for the preceding four quarters. Clear Channel's secured debt consists of the senior secured credit facilities, the receivables-based credit facility, the priority guarantee notes and certain other secured subsidiary debt. As required by the definition of consolidated EBITDA in Clear Channel's senior secured credit facilities, Clear Channel's consolidated EBITDA for the preceding four quarters of $1.9 billion is calculated as operating income (loss) before depreciation, amortization, impairment charges and other operating income, net plus share-based compensation and is further adjusted for the following items: (i) costs incurred in connection with the closure and/or consolidation of facilities, retention charges, consulting fees and other permitted activities; (ii) extraordinary, non-recurring or unusual gains or losses or expenses and severance; (iii) non-cash charges; (iv) cash received from nonconsolidated affiliates; and (v) various other items. The following table reflects a reconciliation of consolidated EBITDA (as defined by Clear Channel's senior secured credit facilities) to operating income and net cash provided by operating activities for the four quarters ended March 31, 2014:
The maximum ratio under this financial covenant is currently set at 9.00:1 and reduces to 8.75:1 for the four quarters ended December 31, 2014. At March 31, 2014, the ratio was 6.3:1. Supplemental Disclosure Regarding Non-GAAP Financial Information The following tables set forth the Company's OIBDAN for the three months ended March 31, 2014 and 2013. The Company defines OIBDAN as consolidated net income (loss) adjusted to exclude non-cash compensation expenses and the following line items presented in its Statement of Operations: Income tax benefit; Other income (expense), net; Equity in earnings (loss) of nonconsolidated affiliates; Loss on extinguishment of debt; Interest expense; Other operating income, net; D&A and Impairment charges. The Company uses OIBDAN, among other things, to evaluate the Company's operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of the Company's operational strength and performance of its business because it provides a link between profitability and net income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company's management. The Company believes it helps improve investors' ability to understand the Company's operating performance and makes it easier to compare the Company's results with other companies that have different capital structures, stock option structures or tax rates. In addition, the Company believes this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry. Since OIBDAN is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. OIBDAN is not necessarily a measure of the Company's ability to fund its cash needs. As it excludes certain financial information compared with operating income and net loss, the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded. In addition, because a significant portion of the Company's advertising operations are conducted in foreign markets, principally the Euro area, the U.K. and China, management reviews the operating results from its foreign operations on a constant dollar basis. A constant dollar basis (in which a foreign currency adjustment is made to show the 2014 actual foreign revenues, expenses and OIBDAN at average 2013 foreign exchange rates) allows for comparison of operations independent of foreign exchange rate movements. As required by the SEC, the Company provides reconciliations below to the most directly comparable amounts reported under GAAP, including (i) OIBDAN for each segment to consolidated operating income (loss); (ii) Revenues excluding the effects of foreign exchange to revenues; (iii) Expenses excluding the effects of foreign exchange to expenses; (iv) OIBDAN excluding the effects of foreign exchange to OIBDAN; (v) Revenues excluding effects of political revenue to revenues; (vi) Corporate expenses excluding non-cash compensation expenses to Corporate expenses; and (vii) OIBDAN to net loss.
About CC Media Holdings, Inc. CC Media Holdings, Inc. (OTCBB: CCMO), the parent company of Clear Channel Communications, is one of the leading global multi-platform media and entertainment companies specializing in radio, digital, out-of-home, mobile, live events, and on-demand entertainment and information services for local communities and providing premier opportunities for advertisers. Its Clear Channel Media+Entertainment division has the largest reach of any radio or television outlet in America, serving 150 cities through 840 owned radio stations in addition to its iHeartRadio digital platform. Its publicly traded Clear Channel Outdoor Holdings, Inc. division (NYSE: CCO) is one of the world's largest out-of-home advertising companies, with more than 675,000 displays in over 40 countries across five continents, including 47 of the 50 largest markets in the United States. More information is available at www.clearchannel.com. Certain statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CC Media Holdings, Inc. and its subsidiaries, including Clear Channel Communications, Inc. and Clear Channel Outdoor Holdings, Inc., to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The words or phrases "guidance," "believe," "expect," "anticipate," "estimates," "forecast" and similar words or expressions are intended to identify such forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this release include, but are not limited to: the impact of the Company's substantial indebtedness, including the use of cash from operations and other liquidity-generating transactions to make payments on its indebtedness; changes in business, political and economic conditions in the United States and in other countries in which the Company currently does business (both general and relative to the advertising industry); changes in operating performance; changes in governmental regulations and policies and actions of regulatory bodies; changes in the level of competition for advertising dollars; fluctuations in operating costs; technological changes and innovations; changes in labor conditions; changes in capital expenditure requirements; fluctuations in exchange rates and currency values; the outcome of litigation; fluctuations in interest rates; taxes and tax disputes; shifts in population and other demographics; access to capital markets and borrowed indebtedness; risks relating to the integration of acquired businesses; and risks that we may not achieve or sustain anticipated cost savings. Other unknown or unpredictable factors also could have material adverse effects on the Company's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this document. Other key risks are described in the Company's reports filed with the U.S. Securities and Exchange Commission, including in the section entitled "Item 1A. Risk Factors" of CC Media Holdings, Inc.'s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Except as otherwise stated in this release, the Company does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
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