Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bishop Sheen - Wachovia.
Bishop Sheen – Wachovia
I want to focus on two things. It looks like on the leverage ratio, they are more aligned than I have ever seen them, the technicals between the credit facilities and the bond. You’ve got three-quarters of the turn roughly in the credit facility with no stepdowns coming for the bond facility; I think you moved a stepdown in April right through March of ’09. Is that correct?
Evan D. Masyr
That’s correct. March of ’09, we have the step down, Bishop.
Bishop Sheen – Wachovia
Right to a full-term 5.75 cents in April 1. So it appears that you have certainly more cushion than you came into the year with. I want your thoughts about that and how you can keep that cushion there so you have something to draw from. Secondly, I want your thoughts about long-form advertising which we’ve seen in other media far more than yours has. Certainly it’s stated that you do so much on the Web and I was wondering if you could talk about anything that you are feeling that is monopolizing long-form.
Evan D. Masyr
Bishop, let me address your first question which was why the bond leverage and the bank leverage ratios are closer than they have been in the past. On June 30, we affected a reorganization from a tax legal entity perspective where by we folded in what was previously an unrestricted subsidiary under our indenture back under Salem Holding Company. So those two numbers should stay pretty close in line going forward.
Bishop Sheen – Wachovia
That makes it a little easier to track.
Evan D. Masyr
Correct.
Bishop Sheen – Wachovia
How do you feel about the cushion you have?
Edward G. Atsinger III
It’s a challenged and we’ll continue to deal with it both in terms of focusing on improving adjusted EBITDA each quarter, getting costs down as we had announced earlier we are doing. Generally improving efficiency continues to identify some assets that are non-strategic and even if they are strategic if their purpose will continue such as this WRFD situation, continue to spin off a few things to get to that point where we can hit it with a comfortable margin. That’s our goal and we are very focused on it. We’ll continue to report on that. To be as candid as we can be, one of the things that you have to face as you go forward is this economy has been about as opaque as any as we’ve seen so as we try to do our own internal analysis looking at trends and looking at pacing, it just seems to be a little different because of the softness in the economy. So we have to be very conservative in our approach but optimistic. We want to hope for the best but be prepared for the worst so to speak. It’s difficult to project with great specificity what the fourth quarter or first quarter of next year will look like. We got a pretty good handle going forward on the third quarter, but Bishop, we’re focused on it. We want to get there with a reasonable cushion in mind.
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