Form 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 3, 2005

SALEM COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in its Charter)

[form8kthirdquarterearning001.jpg]



Delaware

 

000-26497

 

77-0121400

(State or Other Jurisdiction

of Incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

     

4880 Santa Rosa Road, Camarillo, California

   

93012

(Address of Principal Executive Offices)

   

(Zip Code)


Registrant’s telephone number, including area code: (805) 987-0400

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

    

[  

]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  

]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  

]Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  

]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 











TABLE OF CONTENTS


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

ITEM 7.01 REGULATION FD DISCLOSURE

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

EXHIBITS

SIGNATURE

EXHIBIT INDEX

Exhibit 99.1





ITEM 2.02     RESULTS OF OPERATIONS AND FINANCIAL CONDITION


On November 3, 2005, Salem Communications Corporation (“Salem”) issued a press release regarding its results of operations for the quarter ended September 30, 2005.



ITEM 7.01     REGULATION FD DISCLOSURE


On November 3, 2005, Salem issued a press release regarding its results of operations for the quarter ended September 30, 2005.


ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS


(c)

Exhibits. The following exhibit is furnished with this report on Form 8-K:


Exhibit No.

 

Description

99.1

 

Press release, dated November 3, 2005, of Salem Communications Corporation regarding its results of operations for the quarter ending September 30, 2005.





SIGNATURE


      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


  

SALEM COMMUNICATIONS CORPORATION

Date: November 3, 2005

  
  

By: /s/ EVAN D. MASYR

  

Evan D. Masyr

  

Vice President, Accounting and Finance



EXHIBIT INDEX






Exhibit No.

 

Description

99.1

 

Press release, dated November 3, 2005, of Salem Communications Corporation regarding its results of operations for the quarter ending September 30, 2005.



Exhibit 99.1

[form8kthirdquarterearning003.gif]



SALEM COMMUNICATIONS ANNOUNCES STRONG THIRD QUARTER 2005 RESULTS


Third Quarter Same Station Net Broadcasting Revenue and Same Station Operating Income

Increase 6.5% and 7.9%, Respectively


CAMARILLO, CA November 3, 2005 – Salem Communications Corporation (Nasdaq: SALM), the leading radio broadcaster focused on Christian and family-themed programming, announced today results for the three month and nine month periods ended September 30, 2005.


Commenting on the company’s results, Edward G. Atsinger III, president and CEO said, “We continue to report same station net broadcasting revenue and station operating income growth rates that are among the best in the radio industry. Our growth during the quarter is due to strong same station performance at our News Talk stations, where revenue grew 15.3% and at our contemporary Christian music (“CCM”) stations in Atlanta and Los Angeles, which increased revenue by 13.5% and 12.1%, respectively.  Our Christian Teaching and Talk stations extended their consistent performance as same station revenue improved by 5.2% in the quarter.”


Mr. Atsinger continued, “Looking ahead, we are focused on five strategic growth initiatives: growing to maturity our CCM radio stations; continuing to deliver consistent growth at our Christian Teaching and Talk stations; rapid expansion of our News Talk stations;  further development of our national advertising platform; and rapid expansion of our Internet business. We have made substantial progress in each of these key areas this year and are confident we will continue this growth well into the future.”


Third Quarter 2005 Results


For the quarter ended September 30, 2005 compared to the quarter ended September 30, 2004:

·

Net broadcasting revenue increased 8.3% to $51.2 million from $47.3 million;

·

Operating income increased 41.4% to $11.5 million from $8.1 million;

·

Net income increased 33.7% to $3.4 million, or $0.13 net income per diluted share, from net income of $2.6 million, or $0.10 net income per diluted share;

·

Station operating income (“SOI”) increased 8.4% to $19.8 million from $18.3 million;

·

EBITDA increased 27.9% to $14.5 million from $11.4 million;

·

Adjusted EBITDA increased 6.3% to $15.1 million from $14.2 million;

·

Same station net broadcasting revenue increased 6.5% to $44.7 million from $42.0 million;

·

Same station SOI increased 7.9% to $18.6 million from $17.2 million; and

·

Same station SOI margin increased to 41.6% from 41.1%.


Included in the results for the quarter ended September 30, 2005 is:

·

A $0.5 million loss on disposal of assets ($0.3 million loss, net of tax, or $0.01 loss per share).


Included in the results for the quarter ended September 30, 2004 are:

·

A $3.1 million loss on disposal of assets ($1.9 million loss, net of tax, or $0.07 loss per share); and

·

A $0.2 million gain from discontinued operations, net of tax, or $0.01 per diluted share.

  

Other comprehensive income of $1.2 million, net of tax, is due to the change in fair market value of the company’s interest rate swaps.


Per share numbers are calculated based on 25,784,072 diluted weighted average shares for the quarter ended September 30, 2005, and 26,056,807 diluted weighted average shares for the comparable 2004 period.


Year to Date 2005 Results


For the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004:

·

Net broadcasting revenue increased 8.9% to $150.5 million from $138.2 million;

·

Operating income increased 13.8% to $31.6 million from $27.8 million;

·

Net income increased to $9.4 million, or $0.36 per diluted share, from net income of $3.6 million, or $0.15 per diluted share;

·

SOI increased 8.1% to $57.1 million from $52.8 million;

·

EBITDA increased to 35.6% to $41.3 million from $30.5 million;

·

Adjusted EBITDA increased 5.1% to $42.6 million from $40.5 million;

·

Same station net broadcasting revenue increased 7.8% to $129.0 million from $119.7 million;

·

Same station SOI increased 11.6% to $53.7 million from $48.1 million; and

·

Same station SOI margin increased to 41.6% from 40.2%.


Included in the results for the nine months ended September 30, 2005 are:

·

A $0.7 million litigation cost ($0.4 million loss, net of tax, or $0.02 loss per share); and

·

A $0.6 million loss on disposal of assets ($0.4 million loss, net of tax, or $0.01 loss per share).


Included in the results for the nine months ended September 30, 2004 are:

·

A $3.3 million loss on disposal of assets ($1.9 million loss, net of tax, or $0.07 loss per share);

·

A $6.6 million loss from the early retirement of $55.6 million of the company’s 9.0% senior subordinated notes due 2011 ($4.0 million loss, net of tax, or $0.16 loss per share); and

·

A $0.1 million loss from discontinued operations, net of tax.


Other comprehensive loss of $0.1 million, net of tax, is due to the change in fair market value of the company’s interest rate swaps.


Per share numbers are calculated based on 25,915,394 diluted weighted average shares for the nine months ended September 30, 2005, and 25,049,018 diluted weighted average shares for the comparable 2004 period.


SOI Margin Composition Analysis


The following analysis, which is for analytical purposes only, has been created by assigning each station in the company’s radio station portfolio to one of four categories based upon the station’s third quarter SOI margin.  The company believes this analysis is helpful in assessing the portfolio’s financial and operational development.


  

Three Months Ended September 30,

  

(Net Broadcasting Revenue and SOI in millions)

  

2004

 

2005

        

Average

       

Average

SOI Margin %

 

Stations

 

Revenue

 

SOI

 

SOI %

 

Stations

 

Revenue

 

SOI

 

SOI %

50% or greater

 

12

 

$16.2

 

$10.0

 

61.7%

 

17

 

 $18.7

 

 $11.4

 

60.8%

30% to 49%

 

33

 

14.4

 

6.0

 

41.2%

 

24

 

 15.4

 

 6.5

 

42.3%

0% to 29%

 

32

 

11.0

 

2.4

 

22.2%

 

37

 

 10.3

 

 1.9

 

19.1%

Less than 0%

 

21

 

2.0

 

(0.4)

 

(20.3%)

 

27

 

 2.6

 

 (0.7)

 

(25.4%)

Subtotal

 

98

 

43.6

 

18.0

 

41.2%

 

105

 

 47.0

 

 19.1

 

40.8%

Other

 

-

 

3.7

 

0.3

 

8.8%

 

-

 

 4.2

 

 0.7

 

15.5%

Total

 

98

 

$47.3

 

$18.3

 

38.7%

 

105

 

 $51.2

 

 $19.8

 

38.7%




Balance Sheet


As of September 30, 2005, the company had net debt of $309.6 million and was in compliance with all of its covenants under its credit facilities and bond indentures.  Salem’s bank leverage ratio was 4.97 as of September 30, 2005 versus a compliance covenant of 6.75.  Salem’s bond leverage ratio was 5.43 as of September 30, 2005 versus a compliance covenant of 7.0.  


Acquisitions and Divestitures

During the quarter ended September 30, 2005, Salem closed the following acquisition transactions:

·

WGUL (860 AM) in Dunedin, Fla. (Tampa-St. Petersburg-Clearwater market) and WLSS (930 AM) in Sarasota, Fla. (Sarasota-Bradenton market) were acquired for a total of $8.7 million on August 12, 2005; and

·

KCRO (660 AM) in Omaha, Neb. (Omaha-Council Bluffs market) was acquired for $3.2 million on September 1, 2005.

The following acquisition and divestiture transactions were pending as of September 30, 2005:

·

KHLP (1420 AM) in Omaha, Neb. (Omaha-Council Bluffs market) to be acquired for $0.9 million;

·

WCCD (1000 AM) in Parma, Ohio (Cleveland market) to be sold for $2.1 million (now operated by the acquirer under a local marketing agreement);

·

KKFS (103.9 FM) in Lincoln, Calif. (Sacramento market) to be acquired from Bustos Media, which will also pay Salem $0.5 million of additional consideration, in exchange for Salem’s KLMG (94.3 FM) in Jackson, Calif. (Sacramento market) and KBBA (103.3 FM) in Grass Valley, Calif. (the three stations involved in the exchange are now operated under local marketing agreements);

·

WORL (660 AM) in Alamonte Springs, Fla., (Orlando market) to be acquired in exchange for Salem’s KNIT (1480 AM) in Dallas, Texas;

·

WLQV (1500 AM) in Detroit, Mich., to be acquired in exchange for Salem’s WTSJ (1050 AM) in Cincinnati, Ohio, WBOB (1160 AM) in Florence, Ky. (Cincinnati market) and $6.8 million;

·

WTLN (950 AM) in Orlando, Fla. and WHIM (1520 AM) in Apopka, Fla. (Orlando market) to be acquired for $10.7 million (now operated under a local marketing agreement); and

·

The Singing News Magazine and its related Internet properties to be acquired for $4.5 million.


Fourth Quarter 2005 Outlook

For the fourth quarter of 2005, Salem is projecting:

·

Net broadcasting revenue to be between $51.5 million and $52.0 million reflecting mid single digit growth compared to fourth quarter 2004 net broadcasting revenue of $49.3 million;

·

SOI to be between $19.2 million and $19.7 million reflecting low to mid single digit growth compared to fourth quarter 2004 SOI of $18.8 million; and

·

Net income per diluted share to be between $0.11 and $0.13.



Fourth quarter 2005 outlook reflects the following:

·

Same station net broadcasting revenue growth in the low single digits compared to fourth quarter 2004;

·

Same station SOI approximately even with fourth quarter 2004;

·

The absence of political advertising revenue in fourth quarter 2005 compared to $1.0 million of political advertising in fourth quarter 2004;

·

Excluding political advertising revenue, same station net broadcasting revenue growth in the low to mid single digits and same station SOI growth in the mid single digits;

·

Reduced inventory loads at KLTY (94.9 FM), our CCM radio station in Dallas;

·

Continued growth from Salem’s underdeveloped radio stations, particularly our News Talk and CCM stations;

·

Start up costs associated with recently acquired stations in the Chicago, Cleveland, Detroit, Honolulu, Houston, Miami, Omaha, Orlando, Sacramento and Tampa markets; and

·

The impact of recent acquisition, exchange and divestiture transactions.

Full Year 2005 Outlook

For the full year 2005, Salem is projecting net broadcasting revenue between $202.0 million and $202.5 million and station operating income between $76.3 million and $76.8 million.

Salem also expects acquisition related and income producing capital expenditures of approximately $19.0 million and maintenance capital expenditures of approximately $5.5 million for full year 2005. Acquisition related and income producing capital expenditures include the upgrades of our radio station signals at WYLL (1160 AM) Chicago, Ill., WFSH (104.7 FM) Athens, Ga. (Atlanta market), KKOL (1300 AM) Seattle, Wash., KCBQ (1170 AM) San Diego, Calif., and KRLA (870 AM) Glendale, Calif. (Los Angeles market) as well as studio and office construction costs in Honolulu, Hawaii that will allow the company to eliminate office rent expense in that market.

Stock Repurchases

During the quarter ended September 30, 2005, the company repurchased 154,932 shares of its Class A common stock for $2.8 million.  Since the inception of the stock repurchase program through September 30, 2005, the company has repurchased 365,251 shares of its Class A common stock for $6.6 million.


Salem will host a teleconference to discuss its results today, November 3rd at 12:00 p.m. Eastern Time.  To access the teleconference, please dial 973-582-2734 ten minutes prior to the start time.  The teleconference also will be available via live webcast on the investor relations portion of the company’s website, located at www.salem.cc.   If you are unable to listen to the live teleconference at its scheduled time, a replay will be available through November 17, 2005. This replay can be accessed by dialing 973- 341-3080, pass-code 6658078 or heard on the company’s website.




Salem Communications Corporation (Nasdaq: SALM), headquartered in Camarillo, is the leading U.S. radio broadcaster focused on Christian and family-themed programming. Upon the close of all announced transactions, the company will own 105 radio stations, including 66 stations in 24 of the top 25 markets. In addition to its radio properties, Salem owns Salem Radio Network®, which syndicates talk, news and music programming to approximately 1,900 affiliates; Salem Radio Representatives™, a national radio advertising sales force; Salem Web Network™, a leading Internet provider of Christian content and online streaming; and Salem Publishing™, a leading publisher of Christian-themed magazines. Additional information about Salem may be accessed at the company’s website, www.salem.cc.


Media Contact:

Investor / Analyst Contact:

Denise Davis

Eric Jones

Director of Communications

Investor Relations

Salem Communications

Salem Communications

(805) 987-0400 ext. 1081

(805) 987-0400 ext. 1048

denised@salem.cc

ericj@salem.cc


Forward Looking Statements


Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem’s radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem's reports on Forms 10-K, 10-Q, 8-K and other filings filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.


Regulation G


Station operating income, EBITDA and Adjusted EBITDA are financial measures not prepared in accordance with generally accepted accounting principles (“GAAP”). Station operating income is defined as net broadcasting revenues minus broadcasting operating expenses.  EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before loss on early redemption of long-term debt, discontinued operations (net of tax), litigation costs and gain or loss on the disposal of assets.  In addition, Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company’s operating performance.   

Station operating income, EBITDA and Adjusted EBITDA are generally recognized by the broadcasting industry as important measures of performance and are used by investors as well as analysts who report on the industry to provide meaningful comparisons between broadcasting. Station operating income, EBITDA and Adjusted EBITDA  are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company’s results of operations presented on a GAAP basis such as operating income and net income. In addition, Salem’s definition of station operating income, EBITDA and Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies.




Salem Communications Corporation

     

Condensed Consolidated Statements of Operations

     

(in thousands, except share, per share and margin data)

     
      
 

 Three Months Ended

 

 Nine Months Ended

 

 September 30,

 

 September 30,

 

 2004

 2005

 

 2004

 2005

  

(unaudited)

 

Net broadcasting revenue

 $       47,255

 $       51,196

 

 $     138,212

 $     150,519

Other media revenue

            2,404

            2,647

 

            6,702

            7,815

Total revenue

          49,659

          53,843

 

        144,914

        158,334

Operating expenses:

     

  Broadcasting operating expenses

          28,971

          31,376

 

          85,390

          93,420

  Other media operating expenses

            2,029

            2,457

 

            6,221

            7,328

  Corporate expenses

            4,285

            4,688

 

          12,836

          14,671

  Litigation costs

                  -   

                  -   

 

                  -   

               650

  Depreciation and amortization

            3,150

            3,276

 

            9,376

          10,079

  Loss on disposal of assets

            3,087

               544

 

            3,311

               559

Total operating expenses

          41,522

          42,341

 

        117,134

        126,707

Operating income

            8,137

          11,502

 

          27,780

          31,627

Other income (expense):

     

  Interest income

                 27

                 92

 

               149

               137

  Interest expense

           (4,482)

           (5,856)

 

         (15,518)

         (16,561)

  Loss on early redemption of debt

                  -   

                (24)

 

           (6,588)

                (24)

  Other income (expense), net

              (167)

              (224)

 

                   1

              (363)

Income before income taxes and discontinued operations

            3,515

            5,490

 

            5,824

          14,816

Provision for income taxes

            1,199

            2,067

 

            2,093

            5,448

Income before discontinued operations

            2,316

            3,423

 

            3,731

            9,368

Discontinued operations, net of tax

               244

                  -   

 

                (91)

                  -   

Net income

 $         2,560

 $         3,423

 

 $         3,640

 $         9,368

Other comprehensive loss, net of tax

                    -

            1,208

 

                    -

              (118)

Comprehensive income

 $         2,560

 $         4,631

 

 $         3,640

 $         9,250

      

Basic income per share before discontinued operations

 $           0.09

 $           0.13

 

 $           0.15

 $           0.36

Discontinued operations

 $           0.01

 $               -   

 

 $               -   

 $               -   

Basic income per share after discontinued operations

 $           0.10

 $           0.13

 

 $           0.15

 $           0.36

      

Diluted income per share before discontinued operations

 $           0.09

 $           0.13

 

 $           0.15

 $           0.36

Discontinued operations

 $           0.01

 $               -   

 

 $               -   

 $               -   

Diluted income per share after discontinued operations

 $           0.10

 $           0.13

 

 $           0.15

 $           0.36

      

Basic weighted average shares outstanding

   25,923,093

   25,714,684

 

   24,884,849

   25,855,197

Diluted weighted average shares outstanding

   26,056,807

   25,784,072

 

   25,049,018

   25,915,394

      
 

   

   

   

   

   

Other Data:

   

   

 

   

   

Station operating income

 $       18,284

 $       19,820

 

 $       52,822

 $       57,099

Station operating margin

38.7%

38.7%

 

38.2%

37.9%





Salem Communications Corporation

    

Condensed Consolidated Balance Sheets

    

(in thousands)

    
     
     
  

 December 31,

 

 September 30,

  

 2004

 

 2005

    

(unaudited)

Assets

    

Cash

 

 $       10,994

 

 $         8,702

Accounts receivable, net

 

          29,535

 

          31,243

Deferred income taxes

 

            4,683

 

            4,583

Other current assets

 

            3,712

 

            3,056

Property, plant and equipment, net

 

        102,987

 

        111,399

Intangible assets, net

 

        420,466

 

        468,345

Bond issue costs

 

            3,342

 

            2,892

Bank loan fees

 

            3,710

 

            3,864

Fair value of interest rate swap

 

            4,142

 

               271

Other assets

 

            2,213

 

            2,709

Total assets

 

 $     585,784

 

 $     637,064

     

Liabilities and Stockholders' Equity

    

Current liabilities

 

 $       20,045

 

 $       20,385

Long-term debt and capital lease obligations

 

        281,024

 

        320,778

Deferred income taxes

 

          32,715

 

          37,700

Other liabilities

 

            4,363

 

            7,861

Stockholders' equity

 

        247,637

 

        250,340

Total liabilities and stockholders' equity

 

 $     585,784

 

 $     637,064






Salem Communications Corporation

     

Supplemental Information

     

(in thousands)

     
      
 

 Three Months Ended

 

 Nine Months Ended

 

 September 30,

 

 September 30,

 

 2004

 2005

 

 2004

 2005

  

(unaudited)

 

Capital expenditures

     

Acquisition related / income producing

 $      3,903

 $      2,063

 

 $      9,098

 $      5,744

Maintenance

         1,052

         1,653

 

         4,521

         5,573

      

Total capital expenditures

 $      4,955

 $      3,716

 

 $    13,619

 $    11,317

      
      

Tax information

     

Cash tax expense

 $           40

 $           15

 

 $         220

 $         164

Deferred tax expense

         1,159

         2,052

 

         1,873

         5,284

    

            894

 

Provision for income taxes

 $      1,199

 $      2,067

 

 $      2,093

 $      5,448

      

Tax benefit of non-book amortization

 $      3,007

 $      2,925

 

 $      8,809

 $      9,060

      
      

Reconciliation of Same Station Net Broadcasting Revenue to

     

  Total Net Broadcasting Revenue

     

Net broadcasting revenue - same station

 $    42,000

 $    44,713

 

 $  119,695

 $  129,030

Net broadcasting revenue - acquisitions / dispositions / format changes

         5,255

         6,483

 

       18,517

       21,489

      

Total net broadcasting revenue

 $    47,255

 $    51,196

 

 $  138,212

 $  150,519

 

 

 

 

 

 

      

Reconciliation of Same Station Broadcasting Operating Expenses to

     

  Total Broadcasting Operating Expenses

     

Broadcasting operating expenses - same station

 $    24,757

 $    26,112

 

 $    71,590

 $    75,354

Broadcasting operating expenses - acquisitions / dispositions / format changes

         4,214

         5,264

 

       13,800

       18,066

      

Total broadcasting operating expenses

 $    28,971

 $    31,376

 

 $    85,390

 $    93,420

 

 

 

 

 

 

      

Reconciliation of Same Station Station Operating Income to

     

  Total Station Operating Income

     

Station operating income - same station

 $    17,243

 $    18,601

 

 $    48,105

 $    53,676

Station operating income - acquisitions / dispositions / format changes

         1,041

         1,219

 

         4,717

         3,423

      

Total station operating income

 $    18,284

 $    19,820

 

 $    52,822

 $    57,099

 

 

 

 

 

 

      
      
      
      
      
      
      
      
      
      

Salem Communications Corporation

     

Supplemental Information

     

(in thousands)

     
      
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 2004

 2005

 

 2004

 2005

  

(unaudited)

 

Reconciliation of Station Operating Income to Operating Income

     

Station operating income

 $    18,284

 $    19,820

 

 $    52,822

 $    57,099

Plus:

     

  Other media revenue

         2,404

         2,647

 

         6,702

         7,815

Less:

     

  Other media operating expenses

        (2,029)

        (2,457)

 

        (6,221)

        (7,328)

  Litigation costs

               -   

               -   

 

               -   

           (650)

  Corporate expenses

        (4,285)

        (4,688)

 

      (12,836)

      (14,671)

  Depreciation and amortization

        (3,150)

        (3,276)

 

        (9,376)

      (10,079)

  Loss on disposal of assets

        (3,087)

           (544)

 

        (3,311)

           (559)

      

Operating income

 $      8,137

 $    11,502

 

 $    27,780

 $    31,627

      
      

Reconciliation of Adjusted EBITDA to EBITDA to Net Income

     

Adjusted EBITDA

 $    14,207

 $    15,098

 

 $    40,468

 $    42,552

Less:

     

  Loss on early redemption of long-term debt

                 -

             (24)

 

        (6,588)

             (24)

  Discontinued operations, net of tax

            244

                 -

 

             (91)

                 -

  Loss on disposal of assets

        (3,087)

           (544)

 

        (3,311)

           (559)

  Litigation costs

                 -

                 -

 

                 -

           (650)

      

EBITDA

       11,364

       14,530

 

       30,478

       41,319

Plus:

     

  Interest income

              27

              92

 

            149

            137

Less:

     

  Depreciation and amortization

        (3,150)

        (3,276)

 

        (9,376)

      (10,079)

  Interest expense

        (4,482)

        (5,856)

 

      (15,518)

      (16,561)

  Provision for income taxes

        (1,199)

        (2,067)

 

        (2,093)

        (5,448)

      

Net income

 $      2,560

 $      3,423

 

 $      3,640

 $      9,368




Salem Communications Corporation

   

Supplemental Information

   

(in millions)

   
 

Projected

 
 

 Three Months Ending

Three Months

 

 December 31, 2005

Ended

 

 Low

 High

December 31, 2004

    

Reconciliation of Station Operating Income to Operating Income

   

Station operating income

 $           19.2

 $           19.7

 

Plus:

   

  Other media revenue

                3.0

                3.0

 

Less:

   

  Other media operating expenses

               (2.7)

               (2.7)

 

  Corporate expenses

               (5.0)

               (5.0)

 

  Depreciation and amortization

               (3.4)

               (3.4)

 
    

Operating income

 $           11.1

 $           11.6

 
    
    

Reconciliation of Same Station Net Broadcasting Revenue to

   

  Total Net Broadcasting Revenue

   

Net broadcasting revenue - same station

 $           49.6

 $           50.1

 $                        47.5

Net broadcasting revenue - acquisitions / dispositions / format changes

                1.9

                1.9

                             1.8

    

Total net broadcasting revenue

 $           51.5

 $           52.0

 $                        49.3

    
    

Reconciliation of Same Station Station Operating Income to

   

  Total Station Operating Income

   

Station operating income - same station

 $           19.3

 $           19.8

 $                        19.1

Station operating income - acquisitions / dispositions / format changes

               (0.1)

               (0.1)

                            (0.3)

    

Total station operating income

 $           19.2

 $           19.7

 $                        18.8