Grupo Radio Centro Reports Second Quarter and First Half 2010 Results

MEXICO CITY, July 27 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A.B. de C.V. (NYSE: RC, BMV: RCENTRO-A) (the "Company"), one of Mexico's leading radio broadcasting companies, announced today its results of operations for the second quarter and first half ended June 30, 2010. All figures were prepared in accordance with the Financial Reporting Standards issued by the Mexican Board for Research and Development of Financial Information Standards.

Second Quarter Results

Broadcasting revenue for the second quarter of 2010 was Ps. 208,589,000, a 17.2% increase compared to the Ps. 177,990,000 reported for the second quarter of 2009. This increase was mainly attributable to higher advertising expenditures by the Company's clients in Mexico during the second quarter of 2010 compared to the same period of 2009, as well as broadcasting revenue, for the full quarter, from the Los Angeles radio station, KXOS-FM, which the Company began to operate on April 15, 2009.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the second quarter of 2010 were Ps. 167,245,000, a 10.6% increase compared to the Ps. 151,161,000 reported for the second quarter of 2009. This increase was primarily due to (i) expenses incurred in connection with mass media advertising campaigns undertaken by the Company during the second quarter of 2010, (ii) higher commissions paid to the Company's sales force due to higher broadcasting revenue in the second quarter of 2010 compared to the same period of 2009, and (iii) to higher expenses from Los Angeles for the full second quarter of 2010.

For the second quarter of 2010, the Company recorded broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) of Ps. 41,344,000, a 54.1% increase compared to the Ps. 26,829,000 reported for the second quarter of 2009. This increase was mainly attributable to the aforementioned increase in broadcasting revenue.

Depreciation and amortization expenses for the second quarter of 2010 were Ps. 6,145,000, a slight decrease compared to the Ps. 6,614,000 reported for the second quarter of 2009, as a result of a reduction in the amount of depreciable assets.

The Company's corporate, general and administrative expenses were Ps. 3,779,000 in both the second quarter of 2009 and 2010.

The Company recorded operating income of Ps. 31,420,000 in the second quarter of 2010, a 91.2% increase compared to the Ps. 16,436,000 in operating income reported for the second quarter of 2009. This increase was due to increased broadcasting revenue during the second quarter of 2010 compared to the second quarter of 2009, as described above, as well as a decrease in the operating loss from radio station KXOS-FM, in Los Angeles.

During the second quarter of 2010, other expenses, net, were Ps. 13,010,000, a 15.5% decrease compared to the Ps. 15,398,000 reported for the second quarter of 2009. This decrease was mainly attributable to legal expenses incurred during the second quarter of 2009 in connection with the agreements related to the Los Angeles radio station.  

The Company's comprehensive financing cost for the second quarter of 2010 was Ps. 5,480,000, compared to Ps. 24,710,000 in the second quarter of 2009. This change was primarily due to (i) a Ps. 16,030,000 loss on net foreign currency exchange in the second quarter of 2009 which was attributable to a decline in the peso value of a U.S. denominated loan from the Company to a U.S. subsidiary compared to a Ps. 425,000 loss in the second quarter of 2010, and (ii) a lower interest expense associated with the Company's loan from Banco Inbursa, S.A. due to a reduction in interest rate since March 18, 2010 from an annual rate of 13% to an annual rate of 9.5%.

During the second quarter of 2010, the Company recorded an income before taxes of Ps. 12,930,000, compared to a loss before taxes of Ps. 23,672,000 reported for the second quarter of 2009, which was primarily attributable to the increase in broadcasting income as well as the decrease in the Company's comprehensive financing cost and, to a lesser extent, the decrease in other expenses, net during the second quarter of 2010, and to a lower operating loss from Los Angeles, as described above.

The Company recorded income taxes of Ps. 9,809,000 in the second quarter of 2010, an increase of 112.5% compared to the Ps. 4,615,000 recorded in the second quarter of 2009. This increase was due to higher taxable income in the second quarter of 2010 than in the second quarter of 2009.

As a result of the foregoing, the Company recorded a net income for the second quarter of 2010 of Ps. 3,121,000, compared to net loss of Ps. 28,287,000 in the second quarter of 2009.

First Half Results

For the six months ended June 30, 2010, broadcasting revenue was Ps. 374,870,000, a 12.3% increase compared to the Ps. 333,781,000 reported for the same period of 2009. The increase was mainly attributable to an increase in advertising expenditures by the Company's clients, who purchased more airtime during the first half of 2010 than the comparable period of 2009 as well as the incorporation of the Company's Los Angeles radio station, KXOS-FM.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the first six months of 2010 were Ps. 328,028,000, a 24.6% increase compared to the Ps. 263,311,000 reported for the same period of 2009. This increase was primarily due to (i) broadcasting expenses incurred in connection with the provision of programming to KXOS-FM, beginning in April 2009, resulting in a comparison between six months for the period of 2010 and two and a half months for the same period of 2009, (ii) higher sales commissions due to the increase in broadcasting revenue, and (iii) expenses related to the Company's mass media advertising campaigns.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the first six months of 2010 was Ps. 46,842,000, a 33.5% decrease compared to the Ps. 70,470,000 reported for the same period of 2009.

Depreciation and amortization expenses for the first six months of 2010 were Ps. 12,289,000, a 6.6% decrease compared to the Ps. 13,154,000 reported for the same period of 2009. This decrease was due to a reduction in the amount of depreciable assets.

The Company's corporate, general and administrative expenses for the first six months of 2010 were Ps. 7,557,000, the same amount reported for the same period of 2009.

As a result of the foregoing, the Company recorded operating income of Ps. 26,996,000 for the first six months of 2010, a 45.7% decrease compared to the Ps. 49,759,000 reported for the same period of 2009.

Other expenses, net, for the first six months of 2010 were Ps. 26,465,000, a 3.0% decrease compared to the Ps. 27,283,000 reported for the same period of 2009. This decrease was mainly attributable to legal expenses incurred during the second quarter of 2009 in connection with the agreements related to the Los Angeles radio station.

The Company's comprehensive cost of financing for the first six months of 2010 was Ps. 12,840,000, compared to Ps. 25,782,000 in the same period of 2009. This change was primarily due to (i) a lower loss on net foreign currency exchange from Ps. 174,000 in the first six months of 2010 compared to a Ps. 15,241,000 loss on net foreign currency exchange attributable to a decline in the peso value of a U.S. denominated loan from the Company to a U.S. subsidiary in the second quarter of 2009.

For the first six months of 2010, the Company recorded a loss before taxes of Ps. 12,309,000 compared to a loss before taxes of Ps. 3,306,000 in the same period of 2009, mainly due to the aforementioned increase in broadcasting expenses that were partially offset by the increase in broadcasting revenue and the decrease in the Company's comprehensive cost of financing.

The Company recorded income taxes of Ps. 12,167,000 for the first six months of 2010, compared to the Ps. 10,318,000 recorded in the same period of 2009.

As a result of the foregoing, the Company recorded a net loss of Ps. 24,476,000 in the first six months of 2010, compared to a net loss of Ps. 13,624,000 in the first six months of 2009.

Other Matters:

As of June 30, 2010, the Company's outstanding bank debt totaled Ps. 180 million. The Company was not in compliance with one of the financial covenants of its credit facility, the fixed charges coverage ratio for the first and second quarter of 2010. The Company obtained a waiver from the lender of this non-compliance for the first and second quarter of 2010. No assurance can be made as to whether the Company will be able to comply with the fixed charges coverage ratio for the third quarter of 2010. Although the Company has obtained a waiver for its past non-compliance, the lender may not provide future waivers and could accelerate the amounts due under the loan.

Company Description

Grupo Radio Centro owns and/or operates 15 radio stations. Of these 15 radio stations, 12 are located in Mexico City, two AM stations, in Guadalajara and Monterrey, and one FM station in Los Angeles. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs.  Revenue is primarily derived from the sale of commercial airtime. In addition to the Organizacion Radio Centro radio stations, the Company also operates Grupo RED radio stations and Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to, 108 Grupo Radio Centro-affiliated radio stations throughout Mexico.

Note on Forward Looking Statements

This release may contain projections or other forward-looking statements related to Grupo Radio Centro that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Grupo Radio Centro with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Grupo Radio Centro on the date hereof, and Grupo Radio Centro assumes no obligation to update such statements.

SOURCE Grupo Radio Centro, S.A.B. de C.V.