Press Release Details

Arbitron Inc. Reports 2009 Fourth Quarter and Full Year Financial Results

02/18/2010

2009 full year earnings per share (diluted) is $1.58;

One-time state tax benefit contributes $0.17 per share to fourth quarter EPS of $0.47;

33 Portable People Meter markets commercialized as of year-end 2009;

Revenue and earnings per share guidance provided for full year 2010.

COLUMBIA, Md., Feb. 18 /PRNewswire-FirstCall/ -- Arbitron Inc. (NYSE: ARB) today announced results for the fourth quarter and year ended December 31, 2009.

Computed in accordance with U.S. Generally Accepted Accounting Principles (GAAP), net income for the fourth quarter 2009 was $12.6 million, or $0.47 per share (diluted), compared with $3.4 million, or $0.13 per share (diluted) for the fourth quarter of 2008.

Net income for the fourth quarter of 2009 included a one-time tax benefit of $4.7 million, or $0.17 per share (diluted), related to a favorable state tax ruling received by the Company during the quarter. Net income in the fourth quarter was also impacted by a $1.3 million pre-tax, non-cash charge, or $0.03 per share (diluted), related to a partial reversal of insurance reimbursement accruals that were recorded in 2008 and 2009.

Net income for the full year 2009 increased 13.4 percent to $42.2 million compared with $37.2 million in 2008.  GAAP earnings per share (diluted) for the full year 2009 were $1.58 compared with $1.36 per share (diluted) in 2008.  

Excluding the fourth quarter tax benefit, earnings per share (diluted) for the fourth quarter and full year 2009 would have been $0.30 and $1.41, respectively.

Additional Fourth Quarter Financial Highlights

Revenue for the fourth quarter of 2009 was $101.5 million, an increase of 8.5 percent over revenue of $93.6 million during the fourth quarter of 2008.

Costs and expenses for the fourth quarter increased by 0.9 percent, from $94.5 million in 2008 to $95.3 million in 2009. Planned expenditures for the commercialization of the Portable People MeterTM (PPMTM) ratings service, planned sample quality improvement initiatives such as the further introduction of cell-phone-only household sampling and the partial reversal of insurance recovery accruals were offset, in part, by cost savings resulting from the Company's first quarter reorganization.

Earnings before interest and income tax expense (EBIT) for the quarter were $13.2 million, an increase of 95.8 percent compared with EBIT of $6.7 million for the fourth quarter of 2008.

Income tax expense for the fourth quarter of 2009 was $280 thousand, benefiting significantly from the previously noted state tax ruling.  In the fourth quarter of 2008, income tax expense was $2.7 million.

Full Year 2009 Financial Highlights

For the full year ended December 31, 2009, revenue was $385.0 million, an increase of 4.4 percent over revenue of $368.8 million for the same period in 2008.  While the continued PPM commercialization contributed significantly to revenue growth, the increase in PPM revenue was offset, to an extent, by the impact of the radio industry's economic and business challenges. The Company believes these challenges contributed to a decline in the sales of Arbitron software, qualitative and custom services, as well as to lower rates of renewals and fewer new business signings.

Costs and expenses for the year increased by 5.7 percent from $312.4 million in 2008 to $330.1 million in 2009, due primarily to planned expenditures for the commercialization of the PPM ratings service and planned sample quality initiatives such as the further introduction of cell-phone-only household sampling.  Share-based compensation in 2009 was $10.0 million as compared to $8.4 million in 2008.

Earnings before interest and income tax expense (EBIT) decreased 1.1 percent from $63.1 million in the full year 2008 to $62.5 million for the same period in 2009

Management comment on 2009 results

William T. Kerr, President and Chief Executive Officer, Arbitron Inc., made the following comments:

"In 2009, we commercialized the Portable People Meter ratings service in 19 new markets, for a total of 33 markets by year-end.  We have also continued our significant focus on the needs of the radio customers in diary markets by working to enhance the quality and utility of our diary-based ratings services. We established Arbitron's relevance in new markets through our efforts to leverage our Portable People Meter technology and panels in our cross platform and away-from-home television services.

"Our priorities for 2010 are straightforward.  We will work to complete the planned commercialization of our PPM ratings service while continuing our programs designed to improve key sample quality metrics, our efforts toward Media Rating Council® accreditation, and our work toward resolving responsibly the remaining concerns of certain customers and governmental entities.

"We also intend to strengthen and defend our core radio service, while, at the same time, leveraging the important assets we have in our PPM technology and panel. We will use these assets to further explore new lines of business such as our away-from-home television service and our cross platform measurement service.

"And, importantly, I intend to work to evolve a long-term management structure capable of driving and supporting Arbitron's growth and expansion," said Mr. Kerr.

Company Guidance for 2010

Sean R. Creamer, Executive Vice President and Chief Financial Officer, Arbitron Inc., provided the following comments regarding Company guidance for 2010:

"We believe the guidance ranges we have provided are appropriate to contemplate various potential outcomes in 2010 both for revenue and for costs.  Substantial uncertainties remain in terms of the economic realities of the marketplace as well as the potential impact on revenue and costs of the ongoing legislative, regulatory and judicial actions related to the commercialization of our PPM service."

Mr. Creamer continued: "Our revenue guidance also reflects the impact of the roughly $10 million in lost revenue in 2010 for the Fall 2009 and the Spring 2010 surveys due to the previously announced Cumulus and Clear Channel signings with Nielsen in certain small to mid-sized markets.

"Our 2010 guidance also includes $15 million that we plan to invest for cell-phone-only household sampling in PPM and diary markets, a costly, yet necessary, initiative that is designed to help ensure our services are competitive from a quality and customer service perspective.

"As always, should future events change our current thinking, including economic conditions and legislative, regulatory or judicial actions, we will, as appropriate, re-evaluate our guidance with the benefit of that knowledge," said Mr. Creamer.

For the full year 2010, Arbitron expects revenue to increase between two percent and six percent compared to the 2009 revenue of $385.0 million.

Earnings per share (diluted) for the full year 2010 are expected to be between $1.50 and $1.75.

Earnings conference call: schedule and access

Arbitron will host a conference call today at 10:00 a.m. Eastern Time. The Company invites you to listen to the call by dialing (toll free) 888-562-3356.  The conference call can be accessed from outside of the United States by dialing 973-582-2700. To participate, users will need to use the following code: 52425977. The call will also be available live on the Internet at the following sites: www.streetevents.com and www.arbitron.com/investors/.

A replay of the call will be available from 1:00 p.m. on February 18 through 11:59 p.m. on February 25, 2010. To access the replay, please call (toll free) 800-642-1687 in the United States, or 706-645-9291 if you're calling from outside of the United States. To access the replay, users will need to enter the following code: 52425977.

Presentation of Non-GAAP Information

Arbitron provides Non-GAAP measures that, in conjunction with GAAP results, offer additional analytic tools to help investors understand the Company's core operations.  

In particular, the terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are Non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results.  

These Non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to, either income from continuing operations, as an indicator of Arbitron's operating performance, or cash flow, as a measure of Arbitron's liquidity.  In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies.  

For a reconciliation of these Non-GAAP financial measures to the most comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, which are included in this press release.  

About Arbitron

Arbitron Inc. (NYSE: ARB) is a media and marketing information services firm primarily serving radio, television, cable, advertising agencies, advertisers, retailers, out-of-home media, and online media. Arbitron's core businesses are measuring and estimating network and local market radio audiences across the United States; providing application software used for analyzing our media audience and marketing information data; and providing consumer, shopping, and other media usage information services. The Company has developed the Portable People Meter, a new technology for media and marketing research.

Portable People MeterTM and PPMTM are marks of Arbitron Inc.

Media Rating Council® and the "double checkmark" logo design are registered marks of the Media Rating Council.

PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.

Arbitron Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," or "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

    --  successfully maintain and promote industry usage of our services, a
        critical mass of broadcaster encoding, and the proper understanding of
        our audience measurement services and methodology in light of
        governmental actions, including investigation, regulation, legislation,
        or litigation, customer or industry group activism, or adverse community
        or public relations efforts;
    --  complete the Media Rating Council, Inc. ("MRC") audits of our local
        market Arbitron Portable People MeterTM ("PPMTM") ratings services in a
        timely manner and successfully obtain and/or maintain MRC accreditation
        for our audience measurement services;
    --  successfully commercialize our PPM service;
    --  design, recruit and maintain PPM panels that appropriately balance
        research quality, panel size, and operational cost;
    --  absorb costs related to legal proceedings and governmental entity
        interactions and avoid related fines, limitations, or conditions on our
        business activities, including, without limitation, by meeting or
        exceeding our commitments and agreements with various governmental
        entities;
    --  successfully develop, implement, and fund initiatives designed to
        increase sample quality;
    --  successfully manage the impact on costs of data collection due to lower
        respondent cooperation in surveys, consumer trends including a trend
        toward increasing incidence of cell phone-only households, privacy
        concerns, technology changes, and/or government regulations;
    --  provide appropriate levels of operational capacity and funding to
        support the more labor intensive identification and recruitment of
        cell-phone-only households into our panels and samples;
    --  successfully manage the impact on our business of the current economic
        downturn generally, and in the advertising market, in particular,
        including, without limitation, the insolvency of any of our customers or
        the impact of such downturn on our customers' ability to fulfill their
        payment obligations to us;
    --  compete with companies that may have financial, marketing, sales,
        technical, or other advantages over us;
    --  effectively respond to rapidly changing technological needs of our
        customer base, including creating new proprietary software systems, such
        as software systems to support our cell phone-only sampling plans, and
        new customer services that meet these needs in a timely manner;
    --  successfully execute our business strategies, including entering into
        potential acquisition, joint-venture or other material third-party
        agreements;
    --  effectively manage the impact, if any, of any further ownership shifts
        in the radio and advertising agency industries;
    --  successfully develop and implement technology solutions to encode and/or
        measure new forms of media content, delivery and advertising in an
        increasingly competitive environment;
    --  successfully launch our cross-platform measurement initiatives; and
    --  renew contracts with key customers.

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption "ITEM 1A. — RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2008, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

In addition, any forward-looking statements contained in this document represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

    
    
    
    
    
                   Arbitron Inc. Consolidated Statements of Income
                    Three Months Ended December 31, 2009 and 2008
                        (In thousands, except per share data)
                                     (Unaudited)
    
                                       Three Months Ended
                                          December 31,                    %
                                         2009        2008    Change   Change
    
    Revenue                          $101,541     $93,578     $7,963      8.5%
    Costs and expenses
      Cost of revenue                  56,524      56,142        382      0.7%
      Selling, general and
       administrative                  27,183      26,728        455      1.7%
      Research and
       development                     11,733      11,610        123      1.1%
      Restructuring and
       reorganization                    (106)          -       (106)      NM
       Total costs and
        expenses                       95,334      94,480        854      0.9%
    
    Operating income                    6,207        (902)     7,109       NM
    
      Equity in net income of
       affiliate                        7,004       7,650       (646)   (8.4%)
    
    Earnings before
     interest and income
     taxes  (1)                        13,211       6,748      6,463     95.8%
      Interest income                       5          41        (36)  (87.8%)
      Interest expense                    332         692       (360)  (52.0%)
    
    Income from continuing
     operations before
     income taxes                      12,884       6,097      6,787    111.3%
      Income tax expense                  280       2,715     (2,435)  (89.7%)
    
    Income from continuing
     operations                        12,604       3,382      9,222    272.7%
    
    Discontinued Operations
      Loss from discontinued
       operations, net of
       taxes                                -         (24)        24       NM
      Loss from sale of
       discontinued
       operations, net of
       taxes                                -           -          -       NM
      Net loss from
       discontinued
       operations, net of
       taxes                                -         (24)        24       NM
    
    Net Income                        $12,604      $3,358     $9,246    275.3%
    
    
    Basic weighted average common
     share
      Income from continuing
       operations                       $0.47       $0.13      $0.34    261.5%
       Net loss from
        discontinued
        operations, net of
        taxes                               -           -          -        -
      Net income                        $0.47       $0.13      $0.34    261.5%
    
    Diluted weighted average common
     share
      Income from continuing
       operations                       $0.47       $0.13      $0.34    261.5%
       Net loss from
        discontinued
        operations, net of
        taxes                               -           -          -        -
      Net income                        $0.47       $0.13      $0.34    261.5%
    
    
    Weighted average shares used in
     calculations
      Basic                            26,538      26,381        157      0.6%
      Diluted                          26,815      26,422        393      1.5%
    
    
    Dividends per common
     share                              $0.10       $0.10          -        -
    
    
    Other data:
    EBITDA   (1)                      $19,715     $11,552     $8,163     70.7%
    
    (1) The terms EBIT (earnings before interest and income taxes)
     and EBITDA (earnings before interest, income taxes,
     depreciation and amortization) are Non-GAAP financial
     measures that the management of Arbitron believes are useful
     to investors in evaluating the Company's results.  For a
     reconciliation of these Non-GAAP financial measures to the
     most comparable GAAP equivalent, see the EBIT and EBITDA Non-
     GAAP Reconciliation, along with related footnotes, below.
    
    Certain per share amounts may not total due to rounding.  NM=
     Not meaningful.
    
    
    
    
    
                   Arbitron Inc. Consolidated Statements of Income
                       Years Ended December 31, 2009 and 2008
                        (In thousands, except per share data)
                                     (Unaudited)
    
                                         Years Ended
                                         December 31,                    %
                                        2009        2008    Change   Change
    
    Revenue                         $384,952    $368,824    $16,128      4.4%
    Costs and expenses
      Cost of revenue                196,269     185,632     10,637      5.7%
      Selling, general and
       administrative                 81,866      85,315     (3,449)   (4.0%)
      Research and
       development                    42,008      41,412        596      1.4%
      Restructuring and
       reorganization                  9,968           -      9,968       NM
       Total costs and
        expenses                     330,111     312,359     17,752      5.7%
    
    Operating income                  54,841      56,465     (1,624)   (2.9%)
    
      Equity in net income
       of affiliate(s)                 7,637       6,677        960     14.4%
    
    Earnings before
     interest and income
     taxes  (2)                       62,478      63,142       (664)   (1.1%)
      Interest income                     49         623       (574)  (92.1%)
      Interest expense                 1,395       2,216       (821)  (37.0%)
    
    Income from continuing
     operations before
     income taxes                     61,132      61,549       (417)   (0.7%)
      Income tax expense              18,972      24,330     (5,358)  (22.0%)
    
    Income from continuing
     operations                       42,160      37,219      4,941     13.3%
    
    Discontinued Operations
      Loss from discontinued
       operations, net of
       taxes                               -        (462)       462       NM
      Gain from sale of
       discontinued
       operations, net of
       taxes                               -         423       (423)      NM
      Net loss from
       discontinued
       operations, net of
       taxes                               -         (39)        39       NM
    
    Net Income                       $42,160     $37,180     $4,980     13.4%
    
    
    Basic weighted average common
     share
      Income from continuing
       operations                      $1.59       $1.37      $0.22     16.1%
       Net loss from
        discontinued
        operations, net of
        taxes                              -           -          -        -
      Net income                       $1.59       $1.37      $0.22     16.1%
    
    Diluted weighted average common
     share
      Income from continuing
       operations                      $1.58       $1.37      $0.21     15.3%
       Net loss from
        discontinued
        operations, net of
        taxes                              -           -          -        -
      Net income                       $1.58       $1.36      $0.22     16.2%
    
    
    Weighted average shares used in
     calculations
      Basic                           26,493      27,094       (601)   (2.2%)
      Diluted                         26,676      27,259       (583)   (2.1%)
    
    
    Dividends per common
     share                             $0.40       $0.40          -        -
    
    
    Other data:
    EBITDA   (2)                     $85,847     $80,605     $5,242      6.5%
    
    (2) The terms EBIT (earnings before interest and income
     taxes) and EBITDA (earnings before interest, income taxes,
     depreciation and amortization) are Non-GAAP financial
     measures that the management of Arbitron believes are useful
     to investors in evaluating the Company's results.  For a
     reconciliation of these Non-GAAP financial measures to the
     most comparable GAAP equivalent, see the EBIT and EBITDA
     Non-GAAP Reconciliation, along with related footnotes,
     below.
    
    Certain per share amounts may not total due to rounding.
     NM=Not meaningful.
    
    
    
    
    
                                    Arbitron Inc.
                       EBIT and EBITDA Non-GAAP Reconciliation
               Three Months and Years Ended December 31, 2009 and 2008
                                   (In thousands)
                                     (Unaudited)
    
                                     Three Months Ended           Years Ended
                                        December 31,             December 31,
                                        2009        2008        2009      2008
    
    Income from continuing
     operations                      $12,604      $3,382     $42,160   $37,219
    Income tax expense                   280       2,715      18,972    24,330
    Net interest expense
     (income)                            327         651       1,346     1,593
    
    EBIT (3)                         $13,211      $6,748     $62,478   $63,142
    
    Depreciation and
     amortization                      6,504       4,804      23,369    17,463
    
    EBITDA (3)                       $19,715     $11,552     $85,847   $80,605
    
    (3) Arbitron's management believes that presenting EBIT (earnings
     before interest and income taxes) and EBITDA (earnings before
     interest, income taxes, depreciation and amortization), both Non-
     GAAP financial measures, as supplemental information helps
     investors, analysts, and others, if they so choose, in
     understanding and evaluating Arbitron's operating performance in
     some of the same manners that management does because EBIT and
     EBITDA exclude certain items that are not directly related to
     Arbitron's core operating performance.  Arbitron's management
     references these Non-GAAP financial measures in assessing current
     performance and making decisions about internal budgets, resource
     allocation and financial goals.  EBIT is calculated by deducting
     net interest income from income from continuing operations and
     adding back net interest expense and income tax expense to income
     from continuing operations.  EBITDA is calculated by deducting net
     interest income from income from continuing operations and adding
     back net interest expense, income tax expense, and depreciation and
     amortization to income from continuing operations.  EBIT and EBITDA
     should not be considered substitutes either for income from
     continuing operations, as indicators of Arbitron's operating
     performance, or for cash flow, as measures of Arbitron's liquidity.
     In addition, because EBIT and EBITDA may not be calculated
     identically by all companies, the presentation here may not be
     comparable to other similarly titled measures of other companies.
    
    In addition to GAAP earnings per share (diluted), we have reported
     earnings per share (diluted) excluding a one-time tax benefit of
     $4.7 million or $0.17 per share (diluted).   Due to the size and
     non-recurring nature of this benefit we have included this Non-
     GAAP measure, which we believe provides useful supplemental
     information for investors in understanding the Company's
     performance.
    
    
    
    
    
                                 Arbitron Inc.
                     Condensed Consolidated Balance Sheets
                          December 31, 2009 and, 2008
                                 (In thousands)
    
                                               December 31,  December 31,
                                                       2009          2008
                                               (Unaudited)     (Audited)
    
    Assets:
    Cash and cash equivalents                        $8,217        $8,658
    Trade receivables                                52,607        50,037
    Property and equipment, net                      67,903        62,930
    Goodwill, net                                    38,500        38,500
    Other assets                                     36,602        39,472
    
       Total assets                                $203,829      $199,597
    
    Liabilities and Stockholders' Equity (Deficit):
    Deferred revenue                                $43,148       $57,304
    Other liabilities                                62,106        71,788
    Long term debt                                   68,000        85,000
    Stockholders' equity (deficit)                   30,575       (14,495)
    
       Total liabilities and stockholders'
        equity (deficit)                           $203,829      $199,597
    
    
    Note:  The December 31, 2008 Condensed Consolidated Balance Sheet
     is derived from the audited Balance Sheet included in the
     Company's Annual Report on Form 10-K for the fiscal year ended
     December 31, 2008.
    
    

SOURCE Arbitron Inc.

Contact: Investor Contact: Thom Mocarsky, Arbitron Inc., +1-410-312-8239, thom.mocarsky@arbitron.com; Press Contacts: Didi Blackwood, +1-410-312-8523, didi.blackwood@arbitron.com, or Jessica Benbow, +1-410-312-8363, jessica.benbow@arbitron.com, both of Arbitron Inc.