This excerpt taken from the CCO 8-K filed Nov 10, 2008.
Clear Channel Outdoor Reports Third Quarter 2008 Results
San Antonio, Texas November 10, 2008 Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) today reported results for its third quarter ended September 30, 2008.
Clear Channel Communications completed the merger with a group of equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. on July 30, 2008. Clear Channel Communications is now owned indirectly by CC Media Holdings, Inc. (CC Media Holdings). The merger was accounted for as a purchase business combination in conformity with Statement of Financial Accounting Standards No. 141, Business Combinations (Statement 141), and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions (EITF 88-16). Staff Accounting Bulletin No. 54, Push Down Basis of Accounting Required in Certain Limited Circumstances (SAB 54), requires the application of push down accounting in situations where the ownership of an entity has changed. As a result, the post-merger financial statements of the Company reflect the new basis of accounting.
Accordingly, the financial statements as of September 30, 2008 reflect Clear Channel Communications fair value basis resulting from the merger that has been pushed down to the Company. A portion of the consideration paid by Clear Channel Communications has been allocated to the assets and liabilities acquired at their respective fair values at July 30, 2008. The remaining portion was recorded at the continuing shareholders basis, due to the fact that certain shares of Clear Channel Communications were exchanged for shares of CC Media Holdings Class A common stock. Excess consideration after this allocation was recorded as goodwill. Clear Channel Communications has estimated the fair value of the acquired assets and liabilities as of the merger date utilizing information available at the time the financial statements were prepared. These estimates are subject to refinement until all pertinent information is obtained. Clear Channel Communications is currently in the process of obtaining third-party valuations of certain of the acquired assets and liabilities in order to allocate the purchase price. Clear Channel Communications will complete its purchase price allocation within one year of the closing of the acquisition. The final allocation of the purchase price may be different than the initial allocation.
The Company reported revenues of $813.4 million in the third quarter of 2008, a 0.5% decrease from the $817.5 million reported for the third quarter of 2007. Included in the Companys revenue is a $20.2 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, the revenue decline would have been 3%. See reconciliation of revenue excluding effects of foreign exchange to revenue at the end of this press release.
Clear Channel Outdoors operating expenses increased 7% to $605.5 million during the third quarter of 2008 compared to 2007. Included in the Companys third quarter 2008 expenses is an $18.1 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, growth in expenses would have been 4%. See reconciliation of expenses excluding effects of foreign exchange to expenses at the end of this press release. Also included in the Companys third quarter 2008 operating expenses is approximately $3.0 million of non-cash compensation expense. This compares to non-cash compensation expense in operating expenses of $2.3 million in the third quarter of 2007.
Clear Channel Outdoors net income and diluted earnings per share were $9.1 million and $0.03, respectively, during the third quarter of 2008. This compares to net income of $54.7 million or $0.15 per diluted share in the third quarter of 2007. Clear Channel Outdoors third quarter 2008 net income included an approximate $9.0 million loss or $0.03 per diluted share on the impairment of a nonconsolidated affiliate. Excluding this loss, Clear Channel Outdoors third quarter 2008 net income would have been approximately $18.1 million or $0.06 per diluted share. See reconciliation of net income and diluted earnings per share at the end of this release.
The Companys OIBDAN was $194.6 million in the third quarter of 2008, an 18% decrease from the third quarter of 2007. The Company defines OIBDAN as net income adjusted to exclude non-cash compensation expense and the following line items presented in its Statement of Operations: Minority interest, net of tax; Income tax benefit (expense); Other (expense) incomenet; Equity in earnings of nonconsolidated affiliates; Interest expense; Gain on disposition of assetsnet; and, D&A. See reconciliation of OIBDAN to net income at the end of this press release.
Throughout its history, the Outdoor category has proven remarkably resilient. Still, economic pressures in the US and abroad are having their effect on our advertisers and our business performance. Overall revenues in the third quarter were virtually flat with the same period last year our international operations grew modestly while revenues in the Americas were off slightly. As we navigate these near-term difficulties, we are committed to measures that will position our businesses defensively. Cost efficiencies, disciplined capital spending and execution are paramount. We are confident that Clear Channel Outdoors strong and flexible assets are well-positioned for the long term our geographic diversity, digital platform and premium positioning world-wide are unique and valuable properties, commented Mark Mays, Chief Executive Officer of Clear Channel Outdoor.
Paul J. Meyer, Global President and Chief Operating Officer, commented, In the third quarter, the Americas results reflect overall a decline in national business and a more modest decline in local business, partially offset by another strong performance from our Latin American markets and our growing U.S. digital networks. We continue to control core expenses, but overall expenses are still being negatively impacted by new contracts. Internationally, we began to experience the impact of the growing global slowdown across our Western European businesses, particularly in France and the UK. The effect of this slowdown was mitigated somewhat by strong performances in our Eastern European markets and China, which benefited significantly from Olympic advertising.