Net income totaled $3.6 million or $0.03 per share for the three months ended March 31, 2001, compared to net income of $5.2 million or $0.05 per share in the same period of 2000. After-tax cash flow, an important measure of the Company’s performance, decreased 4.5% to $13.5 million, or $0.12 per share for the three months ended March 31, 2001, compared to $14.2 million or $0.13 per share in the same period of 2000.
For the three months ended March 31, 2001, same station net revenues and broadcast cash flow each increased 0.7% over the same period of 2000 to $43.6 million and $16.9 million, respectively. The Company’s FM same stations posted a net revenue and broadcast cash flow increase of approximately 2.6% and 7.5%, respectively, for the three months ended March 31, 2001 over the comparable period of 2000. The Company’s AM stations posted an 8.9% decline in net revenues and an operating loss (before depreciation and amortization) compared to the same period of 2000. The decrease in AM station performance was due in part to a decision to reformat two news/talk stations operating in Los Angeles and Dallas during the first quarter.
During the quarter, the Company operated start-up stations in four markets including two new start-up stations in San Antonio that were launched in September 2000. As a group, the start-up stations were marginally profitable. HBCi, the Company’s Internet subsidiary, incurred an operating loss (before depreciation and amortization) of $1.0 million on net revenues of $0.2 million during the three months ended March 31, 2001, compared to an operating loss (before depreciation and amortization) of $0.3 million on net revenues of $0.02 million for the comparable period of 2000. Other sources of revenues and cash flow each declined by approximately $0.6 million during the quarter due primarily to the elimination of a non-recurring time brokerage agreement fee received last year.
Operating expenses increased 8.6% for the three months ended March 31, 2001, compared to the same period of 2000. Excluding HBCi, operating expenses increased approximately 5.7% for the three months ended March 31, 2001, compared to the same period of 2000. Radio station operating expense growth was primarily the result of higher operating expenses associated with the Company’s start-up stations, costs associated with sales and marketing initiatives that began last year, and higher rent associated with the expansion of the Company’s studio facilities in Los Angeles. The higher costs were offset somewhat by a lower provision for bad debts and lower promotional expense for the quarter compared to the same period of 2000.
Commenting on the Company’s results, McHenry Tichenor Jr., president and chief executive officer said, Our results in the first quarter reflect the effects of a generally weak environment which saw radio advertising revenues fall across the country. We are pleased that we were able, nonetheless, to post a modest top-line increase.
During the quarter we took steps to reduce our fixed costs where appropriate. At the same time we continued investing in certain key strategic areas including upgrading and expanding our sales staff, developing our non-traditional revenue and online efforts, and, in two markets, upgrading our physical plants. We believe these investments are positioning us for strong growth as the economy recovers and advertisers react to the dramatic increases in the U.S. Hispanic population and growth rate revealed by the 2000 census.
The Company anticipates that second quarter net revenue growth will be in the range of 1% to 3%. Broadcast cash flow is anticipated to be in the range of $24.0 to $25.5 million, EBITDA to range from $21.7 to $23.2 million, and after-tax cash flow per share to range from $0.17 to $0.18 per share. Company net revenue estimates assume that second quarter advertising demand will be weaker than previously expected. In addition, second quarter estimates reflect the Company’s decision to increase promotion and programming costs in selected markets.
