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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-15392
REGENT COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 31-1492857
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 EAST RIVERCENTER BOULEVARD
9TH FLOOR
COVINGTON, KENTUCKY 41011
(Address of Principal Executive Offices)
(Zip Code)
(859) 292-0030
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No | |
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.01 par value - 48,042,024 shares outstanding as of August
5, 2002
REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2002
INDEX
PART I FINANCIAL INFORMATION Page
Number
------
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the three months and six months ended
June 30, 2002 (unaudited) and June 30, 2001 (unaudited)..... 3
Condensed Consolidated Balance Sheets
as of June 30, 2002 (unaudited) and December 31, 2001....... 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 2002 (unaudited)
and June 30, 2001 (unaudited)............................... 5
Notes to Condensed Consolidated Financial Statements (unaudited). 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 29
PART II OTHER INFORMATION
Item 1. Legal Proceedings................................................ 29
Item 2. Changes in Securities and Use of Proceeds........................ 29
Item 4. Submission of Matters to a Vote of Security Holders.............. 29
Item 5. Other Information................................................ 30
Item 6. Exhibits and Reports on Form 8-K................................. 30
-2-
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2002 2001 2002 2001
-------- -------- -------- --------
Gross broadcast revenues $ 19,140 $ 16,209 $ 33,458 $ 28,612
Less agency commissions 1,878 1,551 3,210 2,620
-------- -------- -------- --------
Net broadcast revenues 17,262 14,658 30,248 25,992
Station operating expenses 11,470 9,873 21,416 18,314
Depreciation and amortization 847 3,266 1,678 6,618
Corporate general and administrative
expenses 1,545 1,257 3,085 2,583
Gain on sale of long-lived assets -- -- 442 --
-------- -------- -------- --------
Operating income (loss) 3,400 262 4,511 (1,523)
Interest expense (597) (788) (1,482) (1,774)
Other expense, net (102) (196) (219) (272)
Gain on sale of radio stations -- 4,520 -- 4,459
-------- -------- -------- --------
Income before cumulative effect of
accounting change and income taxes 2,701 3,798 2,810 890
Income tax (expense) benefit (1,027) (1,300) (1,068) 600
-------- -------- -------- --------
Income before cumulative effect
of accounting change 1,674 2,498 1,742 1,490
Cumulative effect of accounting change,
net of applicable income taxes of $3,762 -- -- (6,138) --
-------- -------- -------- --------
Net income (loss) $ 1,674 $ 2,498 $ (4,396) $ 1,490
======== ======== ======== ========
Basic and diluted income (loss)
per common share:
Before cumulative effect of accounting
change $ 0.04 $ 0.07 $ 0.04 $ 0.04
======== ======== ======== ========
Net income (loss) $ 0.04 $ 0.07 $ (0.11) $ 0.04
======== ======== ======== ========
Weighted average number of common shares:
Basic 43,361 33,863 39,639 33,820
Diluted 44,258 34,674 40,384 34,674
The accompanying notes are an integral part of these
condensed consolidated financial statements
-3-
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
2002 2001
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,260 $ 1,765
Accounts receivable, less allowance of $757 and
$719 at June 30, 2002 and December 31,
2001, respectively 12,036 9,772
Other current assets 951 642
------------ ------------
Total current assets 14,247 12,179
Property and equipment, net 26,044 25,817
Intangible assets, net 249,366 253,643
Goodwill, net 12,632 12,777
Other assets, net 1,422 1,940
------------ ------------
Total assets $ 303,711 $ 306,356
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,929 $ 2,044
Accrued compensation 1,568 1,000
Accrued expenses and other current liabilities 2,882 3,010
------------ ------------
Total current liabilities 6,379 6,054
Long-term debt, less current portion 13,389 87,019
Deferred taxes and other long-term liabilities 2,206 4,945
------------ ------------
Total liabilities 21,974 98,018
Commitments and Contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000,000 shares
authorized; 48,032,815 and
36,948,362 shares issued at June 30, 2002
and December 31, 2001, respectively 480 369
Treasury shares, 1,293,452 and 1,308,173 shares, at cost,
at June 30, 2002 and December 31, 2001, respectively (6,676) (6,757)
Additional paid-in capital 348,297 270,694
Retained deficit (60,364) (55,968)
------------ ------------
Total stockholders' equity 281,737 208,338
------------ ------------
Total liabilities and stockholders' equity $ 303,711 $ 306,356
============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-4-
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Six Months Ended June 30,
------------------------
2002 2001
---------- ----------
Cash flows from operating activities:
Net cash provided by operating activities $ 1,451 $ 1,661
Cash flows from investing activities:
Acquisition of radio stations and related acquisition costs,
net of cash acquired (4,312) (4,952)
Capital expenditures (1,432) (1,552)
Net proceeds from sale of radio stations -- 13,440
Net proceeds from disposal of long-lived assets 1,829 --
Other -- 90
---------- ----------
Net cash (used in) provided by investing activities (3,915) 7,026
Cash flows from financing activities:
Net proceeds from issuance of common stock 75,765 14
Principal payments on long-term debt (74,630) (14,230)
Long-term debt borrowings 1,000 6,000
Payment of equity issuance costs (176) --
---------- ----------
Net cash provided by (used in) financing activities 1,959 (8,216)
---------- ----------
Net (decrease) increase in cash and cash equivalents (505) 471
Cash and cash equivalents at beginning of period 1,765 778
---------- ----------
Cash and cash equivalents at end of period $ 1,260 $ 1,249
========== ==========
Supplemental schedule of non-cash financing
and investing activities:
Common stock issued in conjunction with the
acquisition of option to purchase stations
in Grand Rapids, Michigan $ 999 $ --
Common stock issued in conjunction with the
acquisition of stations in Flint, Michigan $ 1,446 $ --
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-5-
REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Regent Communications, Inc. (including its wholly-owned subsidiaries, the
"Company" or "Regent") was formed to acquire, own and operate radio stations in
medium-sized and small markets in the United States.
The condensed consolidated financial statements of Regent have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, include all adjustments
necessary for a fair presentation of the results of operations, financial
position and cash flows for each period shown. All adjustments are of a normal
and recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations. Results for interim periods may not be indicative of results for
the full year. The December 31, 2001 condensed consolidated balance sheet was
derived from audited consolidated financial statements. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in Regent's Form 10-K for the
year ended December 31, 2001.
2. COMPLETED AND PENDING ACQUISITIONS AND DISPOSITIONS
Completed Dispositions and Acquisitions
On March 12, 2002, the Company completed the disposition of substantially
all the operating assets of WGNA-AM, serving the Albany, New York market, for
$2.0 million in cash to ABC, Inc. On February 15, 2002, ABC, Inc. began
providing programming and other services to the station under a time brokerage
agreement. The Company recognized a gain of approximately $442,000 on the sale.
The Company treated the disposal of WGNA-AM as the disposal of long-lived
assets, rather than a business or a component of a business, due to the fact
that the station had no independent revenue stream from its operations.
On June 1, 2002, the Company acquired, through a subsidiary merger with
The Frankenmuth Radio Co., Inc., WRCL-FM (formerly WZRZ-FM) serving the Flint,
Michigan market, for 208,905 shares of Regent common stock, valued at
approximately $1.4 million. The Company also purchased the land and broadcasting
assets used by WRCL-FM from MTE Corporation, a related entity, for approximately
$0.6 million in cash. In 2001, the Company placed $125,000 in escrow to secure
its obligations under these agreements. Prior to the closing, the Company
provided programming and other services to the station under a time brokerage
agreement, which began January 1, 2002. The Company has preliminarily allocated
approximately $0.6 million of the total purchase price to fixed assets and
approximately $1.4 million to FCC licenses. An additional 631 shares of common
stock were issued as payment for prorated expenses associated with the closing
of the acquisitions.
Also on June 1, 2002, the Company purchased the outstanding stock of Haith
Broadcasting Corporation, owner of WFGR-FM serving the Grand Rapids, Michigan
market for approximately $3.9 million in cash. In 2001, the Company placed
$250,000 in escrow to secure its obligations under this agreement. In
conjunction with the above stock purchase, on February 4, 2002, the Company
purchased the option to buy WFGR-FM from Connoisseur
-6-
Communications of Flint, L.L.P., paid by the issuance of 174,917 shares of
Regent common stock, valued at approximately $1.0 million. Prior to the closing
of the agreement, the Company provided programming and other services to the
station under a time brokerage agreement, which began January 1, 2002. The
Company has preliminarily allocated approximately $0.2 million of the purchase
price to fixed assets and approximately $4.7 million to FCC licenses.
Pending Acquisitions
On November 15, 2001, Regent entered into an agreement with Covenant
Communications Corporation to acquire substantially all of the assets of WRXF-FM
and WLSP-AM, serving the Flint, Michigan market, for $1.3 million in cash. In
2001, the Company placed $65,000 in escrow to secure its obligations under this
agreement. Applications from the Federal Communications Commission for the
transfer of the station licenses have been approved, and the Company expects to
close the transaction in the third quarter of 2002. On December 3, 2001, Regent
began providing programming and other services to the stations under a time
brokerage agreement.
The following unaudited pro forma data summarize the combined results of
operations of Regent, together with the operations of significant stations
acquired in 2001, but excluding the operations of the Palmdale, California
stations disposed of in the second quarter of 2001. The impact of the station
acquisitions in the first six months of 2002 was not significant as Regent
operated these stations under time brokerage agreements since January 1, 2002.
Six Months Ended
June 30,
2001
----
(unaudited)
(in thousands, except per share amounts)
Net broadcast revenues $ 29,861
Net income $ 1,613
Net income per common share:
Basic and diluted $ 0.04
These unaudited pro forma amounts do not purport to be indicative of the
results that might have occurred if the foregoing transactions had been
consummated at the beginning of the six-month period.
3. LONG-TERM DEBT
The Company has a credit agreement with a group of lenders which provides
for a senior reducing revolving credit facility expiring December 31, 2006 with
an initial aggregate revolving commitment of up to $125.0 million (including a
commitment to issue letters of credit of up to $25.0 million in aggregate face
amount, subject to the maximum revolving commitment available). Regent incurred
approximately $2.0 million in financing costs related to the credit facility,
which are being amortized over the life of the agreement. The credit facility is
available for working capital and acquisitions, including related acquisition
expenses. In accordance with the terms of the credit facility, at both March 31,
2002 and June 30, 2002, the available borrowings under the credit facility were
permanently reduced by $4,687,500, and will reduce by
-7-
an equal amount on the last day of each remaining quarter during 2002. At April
30, 2002, the available commitment amount under the credit facility was
permanently reduced by approximately $3.9 million due to the provisions of the
excess cash flow calculation. The Company received net proceeds of approximately
$74.6 million from the April 29, 2002 public sale of Regent common stock. Regent
used approximately $70.6 million of such proceeds to pay down outstanding
indebtedness under the facility. Under the terms and conditions of the credit
facility, the company exercised its option to provide a reinvestment notice to
the lender, which will allow Regent to re-borrow substantially all of the net
proceeds received from the common stock offering. The notice will allow Regent
to re-borrow such monies for acquisitions and other permitted investments which
are complete and/or for which binding agreements are obtained within 270 days of
such debt repayment. The Company is actively exploring acquisition opportunities
and anticipates fully reinvesting such monies within the applicable time
periods; however, there can be no assurances in this regard. If Regent is unable
to reinvest these monies in suitable acquisitions, the amount of the available
commitment would be permanently reduced by the amount of any un-reinvested
proceeds unless a waiver or modification of the credit facility terms could be
obtained. At June 30, 2002 and 2001 there were borrowings of approximately $13.0
million and $36.3 million, respectively, outstanding under this facility and
there were approximately $98.7 million and $88.7 million of available
borrowings, subject to the terms and conditions of the credit facility. At June
30, 2001, approximately $1.3 million of the available borrowings were committed
under letters of credit. There were no letters of credit outstanding at June 30,
2002.
Under the credit facility, the Company is required to maintain a minimum
interest rate coverage ratio, minimum fixed charge coverage ratio, maximum
corporate overhead, and maximum financial leverage ratio and to observe negative
covenants customary for facilities of this type. Borrowings under the credit
facility bear interest at a rate equal to, at the Company's option, either (a)
the higher of the rate announced or published publicly from time to time by the
agent as its corporate base of interest or the Overnight Federal Funds Rate plus
0.5%, in either case plus the applicable margin determined under the credit
facility, or (b) the reserve-adjusted Eurodollar Rate plus the applicable
margin, which varies between 1.25% and 2.75% depending upon the Company's
financial leverage. Borrowings under the credit facility bore interest at an
average rate of 4.3% and 5.4% as of June 30, 2002 and 2001, respectively. The
Company is required to pay certain fees to the agent and the lenders for the
underwriting commitment, administration and use of the credit facility. The
Company's indebtedness under this credit facility is collateralized by liens on
substantially all of its assets and by a pledge of its operating and license
subsidiaries' stock and is guaranteed by these subsidiaries.
-8-
4. SUPPLEMENTAL GUARANTOR INFORMATION
The Company conducts the majority of its business through its subsidiaries
("Subsidiary Guarantors"). The Subsidiary Guarantors are wholly-owned by Regent
Broadcasting, Inc. ("RBI"), which is a wholly-owned subsidiary of Regent
Communications, Inc. ("RCI"). The Subsidiary Guarantors are guarantors of any
debt securities that could be issued by RCI or RBI, and are therefore considered
registrants of such securities. RCI would also guarantee any debt securities
that could be issued by RBI. All such guarantees will be full and unconditional
and joint and several.
Set forth below are consolidating financial statements for RCI, RBI and
the Subsidiary Guarantors as of June 30, 2002 and December 31, 2001, and the
three and six month periods ended June 30, 2002 and 2001. The equity method of
accounting has been used by the Company to report its investment in
subsidiaries. Substantially all of RCI's and RBI's income and cash flow are
generated by their subsidiaries. Separate financial statements for the
Subsidiary Guarantors are not presented based on management's determination that
they do not provide additional information that is material to investors.
Condensed Consolidating Statements of Operations
(in thousands)
For the quarter ended June 30, 2002
-----------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Gross broadcast revenues $ -- $ -- $ 19,140 $ -- $ 19,140
Agency commissions -- -- 1,878 -- 1,878
-------- -------- ------------ ------------ --------
Net broadcast revenue -- -- 17,262 -- 17,262
Station operating expenses -- -- 11,470 -- 11,470
Depreciation and amortization -- -- 847 -- 847
Corporate general and
administrative expenses 1,545 -- -- -- 1,545
Equity in (loss in) earnings of
subsidiaries 1,491 3,003 -- (4,494) --
-------- -------- ------------ ------------ --------
Operating (loss) income (54) 3,003 4,945 (4,494) 3,400
Interest expense -- (597) -- -- (597)
Other expense -- -- (102) -- (102)
-------- -------- ------------ ------------ --------
(Loss) income before income taxes (54) 2,406 4,843 (4,494) 2,701
Income tax benefit (expense) 20 (915) (1,840) 1,708 (1,027)
-------- -------- ------------ ------------ --------
Net (loss) income $ (34) $ 1,491 $ 3,003 $ (2,786) $ 1,674
-------- -------- ------------ ------------ --------
-9-
Condensed Consolidating Statements of Operations
(in thousands)
For the quarter ended June 30, 2001
-----------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Gross broadcast revenues $ -- $ -- $ 16,209 $ -- $ 16,209
Agency commissions -- -- 1,551 -- 1,551
-------- -------- ------------ ------------ --------
Net broadcast revenue -- -- 14,658 -- 14,658
Station operating expenses -- -- 9,873 -- 9,873
Depreciation and amortization -- -- 3,266 -- 3,266
Corporate general and
administrative expenses 1,257 -- -- -- 1,257
Equity in (loss in) earnings of
subsidiaries 43 859 -- (902) --
-------- -------- ------------ ------------ --------
Operating (loss) income (1,214) 859 1,519 (902) 262
Interest expense -- (788) -- -- (788)
Gain on sale of assets 4,520 -- -- -- 4,520
Other expense (61) -- (135) -- (196)
-------- -------- ------------ ------------ --------
Income (loss) before income taxes 3,245 71 1,384 (902) 3,798
Income tax (expense) benefit (1,233) (28) (525) 486 (1,300)
-------- -------- ------------ ------------ --------
Net income (loss) $ 2,012 $ 43 $ 859 $ (416) $ 2,498
-------- -------- ------------ ------------ --------
-10-
Condensed Consolidating Statements of Operations
(in thousands)
For the Six Months ended June 30, 2002
--------------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Gross broadcast revenues $ -- $ -- $ 33,458 $ -- $ 33,458
Agency commissions -- -- 3,210 -- 3,210
-------- -------- ------------ ------------ --------
Net broadcast revenue -- -- 30,248 -- 30,248
Station operating expenses -- -- 21,416 -- 21,416
Depreciation and amortization -- -- 1,678 -- 1,678
Corporate general and
administrative expenses 3,085 -- -- -- 3,085
(Loss in) equity in earnings of
subsidiaries (1,889) (1,564) -- 3,453 --
Gain on sale of long-lived
assets -- -- 442 -- 442
-------- -------- ------------ ------------ --------
Operating (loss) income (4,974) (1,564) 7,596 3,453 4,511
Interest expense -- (1,482) -- -- (1,482)
Other expense -- -- (219) -- (219)
-------- -------- ------------ ------------ --------
(Loss) income before cumulative
effect of accounting change and
income taxes (4,974) (3,046) 7,377 3,453 2,810
Income tax benefit (expense) 1,890 1,157 (2,803) (1,312) (1,068)
-------- -------- ------------ ------------ --------
(Loss) income before cumulative
effect of accounting change (3,084) (1,889) 4,574 2,141 1,742
Cumulative effect of
accounting change, net of
income taxes -- -- (6,138) -- (6,138)
-------- -------- ------------ ------------ --------
Net (loss) income $ (3,084) $ (1,889) $ (1,564) $ 2,141 $ (4,396)
-------- -------- ------------ ------------ --------
-11-
Condensed Consolidating Statements of Operations
(in thousands)
For the Six Months ended June 30, 2001
--------------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Gross broadcast revenues $ -- $ -- $ 28,612 $ -- $ 28,612
Agency commissions -- -- 2,620 -- 2,620
-------- -------- ------------ ------------ --------
Net broadcast revenue -- -- 25,992 -- 25,992
Station operating expenses -- -- 18,314 -- 18,314
Depreciation and amortization -- -- 6,618 -- 6,618
Corporate general and
administrative expenses 2,583 -- -- -- 2,583
(Loss in) equity in earnings of
subsidiaries (797) 489 -- 308 --
-------- -------- ------------ ------------ --------
Operating (loss) income (3,380) 489 1,060 308 (1,523)
Interest expense -- (1,774) -- -- (1,774)
Gain on sale of assets 4,459 -- -- -- 4,459
Other expense -- -- (272) -- (272)
-------- -------- ------------ ------------ --------
Income (loss) before cumulative
effect of accounting change and
income taxes 1,079 (1,285) 788 308 890
Income tax (expense) benefit (410) 488 (299) 821 600
-------- -------- ------------ ------------ --------
Income (loss) before cumulative
effect of accounting change 669 (797) 489 1,129 1,490
Cumulative effect of
accounting change, net of
income taxes -- -- -- -- --
-------- -------- ------------ ------------ --------
Net income (loss) $ 669 $ (797) $ 489 $ 1,129 $ 1,490
-------- -------- ------------ ------------ --------
-12-
Condensed Consolidating Balance Sheets
(in thousands)
June 30, 2002
-------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
--------- --------- ------------ ------------ ---------
Cash and cash equivalents $ -- $ 1,260 $ -- $ -- $ 1,260
Accounts receivable, net -- -- 12,036 -- 12,036
Other current assets 418 -- 533 -- 951
--------- --------- ------------ ------------ ---------
Total current assets 418 1,260 12,569 -- 14,247
Intercompany receivable -- -- 20,110 (20,110) --
Investment in subsidiaries 282,086 312,820 -- (594,906) --
Property and equipment, net 370 -- 25,674 -- 26,044
Intangible assets, net -- -- 249,366 -- 249,366
Goodwill, net -- 1,290 11,342 -- 12,632
Other assets, net -- -- 1,422 -- 1,422
--------- --------- ------------ ------------ ---------
Total assets $ 282,874 $ 315,370 $ 320,483 $ (615,016) $ 303,711
--------- --------- ------------ ------------ ---------
Accounts payable and
accrued expenses $ 718 $ 205 $ 5,456 $ -- $ 6,379
Intercompany payable -- 20,110 -- (20,110) --
--------- --------- ------------ ------------ ---------
Total current liabilities 718 20,315 5,456 (20,110) 6,379
Long-term debt, less current
portion 420 12,969 -- -- 13,389
Deferred taxes and other
long-term liabilities -- -- 2,206 -- 2,206
--------- --------- ------------ ------------ ---------
Total liabilities 1,138 33,284 7,662 (20,110) 21,974
Stockholders' equity 281,736 282,086 312,821 (594,906) 281,737
--------- --------- ------------ ------------ ---------
Total liabilities and
stockholder's equity $ 282,874 $ 315,370 $ 320,483 $ (615,016) $ 303,711
--------- --------- ------------ ------------ ---------
-13-
Condensed Consolidating Balance Sheets
(in thousands)
December 31, 2001
-----------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
--------- --------- ------------ ------------ ---------
Cash and cash equivalents $ -- $ 1,765 $ -- $ -- $ 1,765
Accounts receivable, net -- -- 9,772 -- 9,772
Other current assets 221 -- 421 -- 642
--------- --------- ------------ ------------ ---------
Total current assets 221 1,765 10,193 -- 12,179
Intercompany receivable -- -- 15,587 (15,587) --
Investment in subsidiaries 209,591 308,998 -- (518,589) --
Property and equipment, net 403 -- 25,414 -- 25,817
Intangible assets, net -- -- 253,643 -- 253,643
Goodwill, net -- 1,290 11,487 -- 12,777
Other assets, net -- -- 1,940 -- 1,940
--------- --------- ------------ ------------ ---------
Total assets $ 210,215 $ 312,053 $ 318,264 $ (534,176) $ 306,356
--------- --------- ------------ ------------ ---------
Accounts payable and
accrued expenses $ 1,382 $ 351 $ 4,321 $ -- $ 6,054
Intercompany payable -- 15,587 -- (15,587) --
--------- --------- ------------ ------------ ---------
Total current liabilities 1,382 15,938 4,321 (15,587) 6,054
Long-term debt, less current
portion 495 86,524 -- -- 87,019
Deferred taxes and other
long-term liabilities -- -- 4,945 -- 4,945
--------- --------- ------------ ------------ ---------
Total liabilities 1,877 102,462 9,266 (15,587) 98,018
Stockholders' equity 208,338 209,591 308,998 (518,589) 208,338
--------- --------- ------------ ------------ ---------
Total liabilities and
stockholder's equity $ 210,215 $ 312,053 $ 318,264 $ (534,176) $ 306,356
--------- --------- ------------ ------------ ---------
-14-
Condensed Consolidating Statements of Cash Flows
(in thousands)
For the six months ended June 30, 2002
--------------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Cash flows (used in)
provided by operating
activities $ (1,525) $ (1,150) $ 4,126 $ -- $ 1,451
Acquisitions of radio
stations and related
acquisition costs -- (4,312) -- -- (4,312)
Capital expenditures -- -- (1,432) -- (1,432)
Net proceeds from sale of
radio stations -- -- 1,829 -- 1,829
-------- -------- ------------ ------------ --------
Net cash (used in) provided
by investing activities -- (4,312) 397 -- (3,915)
Net proceeds from issuance
of common stock 75,589 -- -- -- 75,589
Principal payments on long-
term debt -- (74,630) -- -- (74,630)
Long-term debt borrowings -- 1,000 -- -- 1,000
Net transfers (to)/from
subsidiaries (74,064) 78,587 (4,523) -- --
-------- -------- ------------ ------------ --------
Net cash provided by (used
in) financing activities 1,525 4,957 (4,523) -- 1,959
-------- -------- ------------ ------------ --------
Decrease in cash and cash
equivalents -- (505) -- -- (505)
Cash and cash equivalents at
beginning of period -- 1,765 -- -- 1,765
-------- -------- ------------ ------------ --------
Cash and cash equivalents at
end of period $ -- $ 1,260 $ -- $ -- $ 1,260
-------- -------- ------------ ------------ --------
-15-
Condensed Consolidating Statements of Cash Flows
(in thousands)
For the six months ended June 30, 2001
--------------------------------------
GUARANTOR
RCI RBI SUBSIDIARIES ELIMINATIONS TOTAL
-------- -------- ------------ ------------ --------
Cash flows (used in)
provided by operating
activities $ (954) $ (952) $ 3,567 $ -- $ 1,661
Acquisitions of radio
stations and related
acquisition costs -- (4,952) -- -- (4,952)
Other investments 90 -- -- -- 90
Capital expenditures -- -- (1,552) -- (1,552)
Net proceeds from sale of
radio stations 13,440 -- -- -- 13,440
-------- -------- ------------ ------------ --------
Net cash provided by (used in)
investing activities 13,530 (4,952) (1,552) -- 7,026
Principal payments on long-
term debt (30) (14,200) -- -- (14,230)
Long-term debt borrowings -- 6,000 -- -- 6,000
Net proceeds from issuance
of common stock 14 -- -- -- 14
Net transfers (to)/from
subsidiaries (12,560) 14,575 (2,015) -- --
-------- -------- ------------ ------------ --------
Net cash (used in) provided by
financing activities (12,576) 6,375 (2,015) -- (8,216)
-------- -------- ------------ ------------ --------
Increase in cash and cash
equivalents -- 471 -- -- 471
Cash and cash equivalents at
beginning of period -- 778 -- -- 778
-------- -------- ------------ ------------ --------
Cash and cash equivalents at
end of period $ -- $ 1,249 $ -- $ -- $ 1,249
-------- -------- ------------ ------------ --------
5. CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares of
common stock and 40,000,000 shares of preferred stock. No shares of preferred
stock were issued at June 30, 2002 or 2001. The Company has in the past
designated shares of preferred stock in several different series. Of the
available shares of preferred stock, 6,768,862 remain designated in several of
those series and 33,231,138 shares are currently undesignated.
On February 4, 2002, the Company issued 174,917 shares of common stock to
Connoisseur Communications of Flint, L.L.P., valued at approximately $1.0
million, for the option to purchase WFGR-FM, serving the Grand Rapids, Michigan
market.
On February 5, 2002, 200,000 shares of the Company's common stock and the
associated cash proceeds of approximately $1.2 million were released from an
escrow account. The shares,
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sold to a venture capital fund related to one of Regent's independent directors,
were part of the Company's November 2001 private placement offering of 900,000
shares issued at $5.75 per share, and were held in escrow pending confirmation
from Nasdaq that stockholder approval would not be required for such sale.
On April 29, 2002, the Company completed the sale of 10.5 million shares
of its common stock at a price of $7.50 per share. Net cash proceeds to the
Company after underwriting discounts and commissions were approximately $74.6
million. Approximately $70.6 million of the proceeds were used to pay down
outstanding indebtedness under the Company's credit facility. The remaining $4.0
million of proceeds were used to partially fund the Company's acquisitions of
WRCL-FM, serving the Flint, Michigan market, and WFGR-FM, serving the Grand
Rapids, Michigan market during the second quarter of 2002.
On June 1, 2002, the Company issued 208,905 shares of common stock, valued
at approximately $1.4 million, in conjunction with its subsidiary merger with
The Frankenmuth Radio Co., Inc. An additional 631 shares of common stock were
issued as payment for prorated expenses associated with the closing.
Based on the approval by Regent's Board of Directors of a program to buy
back up to $10.0 million of its common stock, during the third quarter of 2000,
Regent began buying back shares of its common stock at certain market price
levels. Regent acquired a total of 1,088,600 shares of its common stock for an
aggregate purchase price of approximately $5.6 million in 2000. No shares were
repurchased during 2001 or the first two quarters of 2002. During the first half
of 2002, Regent reissued 14,721 shares of treasury stock previously acquired,
net of forfeited shares, as an employer match to employee contributions under
the Company's 401(k) plan.
6. GOODWILL AND OTHER INTANGIBLE ASSETS
The Company's intangible assets consist principally of the value of FCC
licenses and the excess of the purchase price over the fair value of net assets
of acquired radio stations (goodwill). On January 1, 2002, the Company adopted
the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires that a Company no
longer amortize goodwill and intangible assets determined to have an indefinite
life and also requires an annual impairment testing of those assets. Consistent
with the application provisions of SFAS 142, the Company applied a fair value
approach to test impairment of both indefinite-lived intangible assets and
goodwill. Based on the results of this evaluation, during the first quarter of
2002, the Company recorded impairment charges against indefinite-lived
intangibles of approximately $3.9 million, net of income taxes of approximately
$2.4 million, and against goodwill of approximately $2.2 million, net of income
taxes of approximately $1.4 million. Regent has reflected this charge as a
component of cumulative effect of accounting change in its Statements of
Operations. In estimating future cash flows, the Company considered the impact
of the economic slow down in the radio industry at the end of 2001. These
conditions, combined with the change in methodology for testing for impairment,
which previously employed the utilization of undiscounted cash flow projections,
adversely impacted the cash flow projections used to determine the fair value of
the FCC licenses, as well as each reporting unit. No impairment charge was
appropriate under the FASB's previous goodwill impairment standard, which was
based on undiscounted cash flows.
Assuming amortization of goodwill and other indefinite-lived intangible
assets had been discontinued at January 1, 2001, the comparable net income
(loss) and net income (loss) per share (basic and diluted) for the prior-year
periods would have been:
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THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Reported net income (loss) $ 1,674 $ 2,498 $ (4,396) $ 1,490
Add back: Goodwill amortization -- 193 -- 253
Add back: FCC license amortization -- 1,492 -- 2,997
---------- ---------- ---------- ----------
Adjusted net income (loss) $ 1,674 $ 4,183 $ (4,396) $ 4,740
========== ========== ========== ==========
Basic and diluted income (loss) per share:
Reported net income (loss) per share $ 0.04 $ 0.07 $ (0.11) $ 0.04
Impact of goodwill amortization -- 0.01 -- 0.01
Impact of FCC license amortization -- 0.04 -- 0.09
---------- ---------- ---------- ----------
Adjusted net income (loss) per share $ 0.04 $ 0.12 $ (0.11) $ 0.14
========== ========== ========== ==========
DEFINITE-LIVED INTANGIBLE ASSETS
The Company has definite-lived intangible assets that continue to be
amortized in accordance with SFAS 142, consisting primarily of non-compete
agreements. These agreements are amortized over the life of the agreement. In
accordance with the transitional requirements of SFAS 142, the Company
reassessed the useful lives of these intangibles and made no changes to their
useful lives. The following table presents the gross carrying amount and
accumulated amortization for the Company's definite-lived intangibles at June
30, 2002 and December 31, 2001 (in thousands):
JUNE 30, 2002 DECEMBER 31, 2001
------------- -----------------
GROSS GROSS
CARRYING ACCUMULATED CARRYING ACCUMULATED
AMOUNT AMORTIZATION AMOUNT AMORTIZATION
---------- ------------ ---------- ------------
Non-compete agreements and other $ 762 $ 221 $ 862 $ 249
---------- ------------ ---------- ------------
Total $ 762 $ 221 $ 862 $ 249
========== ============ ========== ============
The aggregate amortization expense related to the Company's definite-lived
intangible assets for the three- and six-month periods ended June 30, 2002 and
for the year ended December 31, 2001 was approximately $37,000, $72,000 and
$220,000, respectively. The estimated annual amortization expense for the years
ending December 31, 2003, 2004, 2005 and 2006 is approximately $134,000,
$113,000, $100,000 and $42,000, respectively.
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INDEFINITE-LIVED INTANGIBLE ASSETS
The Company's indefinite-lived intangible assets consist of FCC licenses
for radio stations. Upon adoption of SFAS 142, the Company ceased amortizing
these assets, and instead will test the assets at least annually for impairment.
The following table presents the carrying amount for the Company's
indefinite-lived intangible assets at June 30, 2002 and December 31, 2001 (in
thousands):
JUNE 30, DECEMBER 31,
2002 2001
---- ----
FCC licenses $ 248,825 $ 253,030
-------------- --------------
Total $ 248,825 $ 253,030
============== ==============
GOODWILL
SFAS 142 requires the Company to test goodwill for impairment using a
two-step process. Step one identifies potential impairment, while step two
measures the amount of the impairment. The following table presents the changes
in the carrying amount of goodwill for the six-month period ended June 30, 2002
(in thousands):
GOODWILL
--------
Balance as of December 31, 2001 $ 12,777
Adjustments 2,867
Acquisition related goodwill 565
Impairment loss related to the adoption of SFAS 142
(pre-tax) (3,577)
--------
Balance as of June 30, 2002 $ 12,632
========
The adjustment to goodwill primarily relates to a reclassification to
goodwill from FCC licenses upon the adoption of SFAS 142.
7. EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128 ("SFAS 128") calls for
the dual presentation of basic and diluted earnings per share ("EPS"). Basic EPS
is calculated by dividing net income by the weighted average number of common
shares outstanding during the reporting period. The calculation of diluted
earnings per share is similar to basic except that the weighted average number
of shares outstanding includes the additional dilution that would occur if
potential common stock, such as stock options or warrants, were exercised. The
number of additional shares is calculated by assuming that outstanding stock
options and warrants with an exercise price in excess of the Company's average
stock price for the period were exercised, and that the proceeds from such
exercises were used to acquire shares of common stock at the average market
price during the reporting period.
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Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
-------- -------- -------- --------
(in thousands, except per share amounts)
Net income before cumulative
effect of accounting change $ 1,674 $ 2,498 $ 1,742 $ 1,490
Cumulative effective of accounting change,
net of applicable income taxes of $3,762 -- -- (6,138) --
-------- -------- -------- --------
Net income (loss) $ 1,674 $ 2,498 $ (4,396) $ 1,490
======== ======== ======== ========
Weighted average basic common shares 43,361 33,863 39,639 33,820
Dilutive effect of stock options and warrants 897 811 745 854
-------- -------- -------- --------
Weighted average diluted common shares 44,258 34,674 40,384 34,674
Basic and diluted net income (loss) per common share:
Income before cumulative effect of
accounting change $ 0.04 $ 0.07 $ 0.04 $ 0.04
Cumulative effect of accounting change -- -- (0.15) --
-------- -------- -------- --------
Net income (loss) $ 0.04 $ 0.07 $ (0.11) $ 0.04
======== ======== ======== ========
8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146, "Accounting for Exit or
Disposal Activities" ("SFAS 146"). SFAS 146 addresses the recognition,
measurement, and reporting of costs that are associated with exit and disposal
activities, including costs related to terminating contracts that are not
capital leases and termination benefits that employees who are involuntarily
terminated receive in certain instances. SFAS 146 supersedes Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring)" ("EITF 94-3") and requires liabilities
associated with exit and disposal activities to be expensed as incurred. SFAS
146 is effective for exit or disposal activities of the Company that are
initiated after December 31, 2002.
In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of SFAS Nos. 4, 44 and 64, Amendment of FASB Statement No.
13 and Technical Corrections" ("SFAS 145"). SFAS 145 rescinds FASB Statement No.
4, "Reporting Gains and Losses from Extinguishment of Debt," and an amendment of
that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements." As a result, gains and losses from extinguishments
of debt should be classified as extraordinary items only if they meet the
criteria in APB Opinion No. 30, "Reporting the Results of Operations, Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions" ("APB 30"). Applying the
provisions of APB 30 will distinguish transactions that are part of an entity's
recurring operations from those that are unusual or infrequent or that meet the
criteria for classification as an extraordinary item. SFAS 145 also amends FASB
Statement No. 13, "Accounting for Leases," to eliminate inconsistency
-20-
between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. This statement also rescinds FASB
Statement No. 44, "Accounting for Intangible Assets of Motor Carriers" and
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings or describe their applicability under changed
conditions. The Company will adopt this standard for lease transactions entered
into after May 15, 2002 and has determined the impact of adoption to be
immaterial. The provisions of SFAS 145 related to debt extinguishments will be
adopted on January 1, 2003, and could have an impact on the Company, to the
extent that the Company would make any changes to its credit facility. There
were no extinguishments of debt during the six months ended June 30, 2002 or
2001.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 addresses the financial accounting and reporting
for the impairment or disposal of long-lived assets, including the disposal of a
segment of a business. SFAS 144 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized for the amount by which the carrying amount of the asset exceeds
the fair value of the asset. SFAS 144 requires companies to separately report
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. Furthermore, future operating losses
relating to discontinued operations can no longer be recorded before they occur.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value, less costs to sell. The Company adopted SFAS 144, as required, in
the first quarter of 2002 and have deemed that the impact of adoption is not
material.
In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") that
addresses the recognition of asset retirement obligations. The objective of SFAS
143 is to provide guidance for legal obligations associated with the retirement
of tangible long-lived assets. The statement is effective for fiscal years
beginning after June 15, 2002. The Company has not yet determined the impact, if
any, of adopting SFAS 143.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The performance of a radio station group, such as ours, is customarily
measured by its ability to generate broadcast cash flow. The term "broadcast
cash flow" means operating income (loss) before depreciation and amortization
and corporate general and administrative expenses. Although broadcast cash flow
is not a measure of performance calculated in accordance with generally accepted
accounting principles, we believe that broadcast cash flow is accepted by the
broadcasting industry as a generally recognized measure of performance and is
used by analysts who report publicly on the performance of broadcasting
companies. Nevertheless, this measure should not be considered in isolation or
as a substitute for operating income (loss), net income (loss), net cash
provided by (used in) operating activities or any other measure for determining
our operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles.
-21-
This Form 10-Q includes certain forward-looking statements with respect to
our company that involve risks and uncertainties. These statements are
influenced by our financial position, business strategy, budgets, projected
costs, and plans and objectives of management for future operations. They may
use words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "project" and other similar expressions. Although we believe our
expectations reflected in these forward-looking statements are based on
reasonable assumptions, we cannot assure you that our expectations will prove
correct. Actual results and developments may differ materially from those
conveyed in the forward-looking statements. For these statements, we claim the
protections of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
Important factors that could cause actual results to differ materially
from the expectations reflected in the forward-looking statements include
changes in general economic, business and market conditions, as well as changes
in such conditions that may affect the radio broadcast industry or the markets
in which we operate, including, in particular, the ongoing impact of the war on
terrorism, increased competition for attractive radio properties and advertising
dollars, fluctuations in the cost of operating radio properties, possible
impairments of our goodwill and indefinite-lived intangible assets, our ability
to manage our growth, our ability to integrate our acquisitions, and changes in
the regulatory climate affecting radio broadcast companies. These
forward-looking statements speak only as of the date on which they are made, and
we undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date of this Form 10-Q. If we do update one or
more forward-looking statements, you should not conclude that we will make
additional updates with respect to those or any other forward-looking
statements.
RESULTS OF OPERATIONS
A comparison of the three and six months ended June 30, 2002 versus June 30,
2001 follows:
Comparison of three months ended June 30, 2002 to three months ended June 30,
2001
Our results from operations for the second quarter of 2002 showed
significant increases over the same period of 2001, primarily due to the
acquisitions of stations in Lafayette, Louisiana and Peoria, Illinois during the
second half of the 2001 year. These increases were partially offset by the sale
of our three stations in Palmdale, California during the second quarter of 2001.
Net broadcast revenues in the second quarter of 2002 increased by 17.8%, from
$14.7 million in the second quarter of 2001 to $17.3 million in the second
quarter of 2002, and station operating expenses increased 16.2%, from $9.9
million in the second quarter of 2001 to $11.5 million in the second quarter of
2002. This resulted in an increase in broadcast cash flow of 21.0%, from $4.8
million in the second quarter of 2001, to $5.8 million in the second quarter of
2002.
While the acquisitions mentioned above have affected the comparability of
our 2002 results from operations to those of 2001, we believe meaningful
quarter-to-quarter comparisons can be made for results of operations for those
markets in which we have been operating for five full quarters, exclusive of any
markets held for sale. This group of comparable markets is currently represented
by ten markets and 43 radio stations. In these comparable markets, for the three
months ended June 30, 2002, as compared to the same period in 2001, our net
broadcast revenues, excluding barter revenues, remained flat and broadcast cash
flow increased by 4.9%. The flat net revenue was due primarily to the sluggish
economic conditions present during the second quarter of 2002. Same station
operating expenses decreased by 3.1% due to lower
-22-
promotion and administrative expenses during the period, resulting in an
increase in broadcast cash flow.
Corporate general and administrative expense was $1.5 million in the
second quarter of 2002, compared to $1.3 million in the second quarter of 2001.
This increase was due to a combination of the following: salary components of
resources who were charged at the market level in 2001 and were charged to
corporate expense in 2002; increased legal fees, primarily related to the
implementation of various company benefit plans; and an increase in Directors'
and Officers' insurance premiums.
Interest expense decreased 24.2% from approximately $0.8 million during
the second quarter of 2001, to $0.6 million during the second quarter of 2002,
primarily as a result of the paydown of outstanding debt under our credit
facility with proceeds from our April stock offering. Lower interest rates
during the second quarter of 2002, as compared to the same period in 2001, also
contributed to the decrease in interest expense.
Depreciation and amortization expense decreased 74.1%, from $3.3 million
in 2001 to $0.8 million in 2002. Effective January 1, 2002, we adopted the
provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"), which eliminated the amortization of
goodwill and other intangible assets determined to have an indefinite life, and
also requires an annual impairment testing of those assets. Amortization expense
related to goodwill and indefinite-lived intangible assets was approximately
$2.7 million for the three months ended June 30, 2001.
We recognized a pre-tax gain on the sale of our Palmdale, California radio
stations of approximately $4.5 million during the second quarter of 2001.
The effective tax rate for the second quarter of 2002 differs from that
computed at the federal statutory rate of 34% principally because of the effect
of state income taxes of 4.0%, net of federal benefit.
Net income per common share for the second quarter of 2002 was $0.04
compared to a net income per share of $0.07 in the second quarter of 2001. The
variance was primarily the result of the gain from the sale of the Palmdale,
California stations during the second quarter of 2001, partially offset by the
decrease in amortization expense in the second quarter of 2002.
Comparison of six months ended June 30, 2002 to six months ended June 30, 2001
Our results of operations for the first six months of 2002 were
significantly higher than the same period in 2001, due primarily to the
acquisitions of stations in Lafayette, Louisiana and Peoria, Illinois during the
second half of 2001, offset partially by the sale of our three stations in
Palmdale, California during the second quarter of 2001. Net broadcast revenues
for the first six months of 2002 were $30.2 million, a 16.4% increase over net
revenue of $26.0 million for the first six months of 2001. For the same period,
station operating expenses increased 16.9%, from $18.3 million in 2001 to $21.4
million in 2002. This resulted in an increase in broadcast cash flow of 15.0%,
from $7.7 million for the first six months of 2001, to $8.8 million for the
first six months of 2002.
Corporate general and administrative expense was $3.1 million for the
first six months of 2002, compared with $2.6 million for the comparable 2001
period. The increase was due primarily to a combination of the following: salary
components of resources who were charged at
-23-
the market level in 2001 and were charged to corporate expense in 2002;
increased legal fees, primarily related to the implementation of various company
benefit plans; and an increase in Directors' and Officers' insurance premiums.
Interest expense decreased 16.5%, from approximately $1.8 million during
the first six months of 2001, to $1.5 million for the first six months of 2002,
primarily as a result of the paydown of outstanding debt under the credit
facility with proceeds from our April stock offering. Lower interest rates
during 2002, as compared to 2001, also contributed to the decrease in interest
expense.
Depreciation and amortization expense decreased 74.6%, from $6.6 million
for the first six months of 2001 to $1.7 million for the comparable period in
2002. Effective January 1, 2002, we adopted the provisions of SFAS 142, which
eliminated the amortization of goodwill and other intangible assets determined
to have an indefinite life, and also requires an annual impairment testing of
those assets. Amortization expense related to goodwill and indefinite-lived
intangible assets was approximately $5.2 million for the six months ended June
30, 2001.
On March 12, 2002, we completed the sale of WGNA-AM in Albany, New York
for $2.0 million in cash. We recorded a gain on the sale of long-lived assets of
approximately $442,000 from the sale.
We recognized a pre-tax gain on the sale of our Palmdale, California radio
stations of approximately $4.5 million during the second quarter of 2001.
The effective tax rate for the first six months of 2002 differs from that
computed at the federal statutory rate of 34% principally because of the effect
of state income taxes of 4.0%, net of federal benefit. For the first six months
of 2001, the effective tax rate differed from that computed at the federal
statutory rate of 34% due to the effect of state income taxes of 2.5%, net of
federal benefit, and an increase in deferred tax assets for a true-up of net
operating loss carryforwards in the first quarter of 2001.
Upon adoption of SFAS 142, we completed a transitional impairment analysis
of our indefinite-lived FCC licenses and recorded an impairment loss of
approximately $3.9 million, net of income tax benefit of approximately $2.4
million. Additionally, we completed the two-step transitional impairment
analysis of goodwill and recorded an impairment loss of approximately $2.2
million, net of income tax benefit of approximately $1.4 million. These losses
were recorded as a cumulative effect of accounting change during the first
quarter of 2002.
Net income per common share before cumulative effect of accounting change
for the first six months of both 2002 and 2001 was $0.04. The gain from the sale
of the Palmdale, California stations during the first six months of 2001 and the
income tax benefit from the adjustment of our net operating loss carryforwards
were offset by the decrease in amortization expense for the first six months of
2002.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents balance at June 30, 2002 was approximately
$1.3 million compared to $1.2 million at June 30, 2001. Net cash provided by
operating activities was $1.5 million in 2002 compared to $1.7 million in 2001.
The decrease was due primarily to the increase in accounts receivable during the
first six months of 2002, primarily the result of the Lafayette
-24-
acquisition during December 2001. Cash flow used in investing activities during
the first six months of 2002 was $3.9 million, compared to $7.0 million provided
by investing activities in 2001. The primary reason for the change was proceeds
received during 2001 for the sale of the Palmdale, California radio stations.
This was offset partially by proceeds received from the sale of WGNA-AM in
Albany, New York during the first quarter of 2002. Cash flows provided by
financing activities were $2.0 million in 2002 compared to $8.2 million used in
financing activities in 2001. The change is due primarily to the payment of
long-term debt with proceeds from our common stock offering in April 2002.
During the comparable 2001 period, proceeds from the sale of our Palmdale,
California radio stations were used to paydown borrowings under our credit
facility.
Sources of funds
On April 29, 2002, we completed the sale of 10.5 million shares of our
common stock at a price of $7.50 per share. Net cash proceeds after underwriting
discounts and commissions were approximately $74.6 million. Approximately $70.6
million of the proceeds were used to pay down outstanding borrowings under our
credit facility. The remaining $4.0 million of proceeds were used to fund a
portion of the Haith and Frankenmuth transactions.
We have a credit agreement with a group of lenders, which provides for a
senior reducing revolving credit facility in the initial amount of $125.0
million maturing December 31, 2006. The credit facility permits the borrowing of
available credit for working capital requirements and general corporate
purposes, including transaction fees and expenses, and to fund permitted
acquisitions. The facility also permits us to request from time to time that the
lenders issue letters of credit in an aggregate amount up to $25.0 million in
accordance with the same lending provisions. The commitment and our maximum
borrowings, including the permanent reduction due to excess cash flow in April
2002 and the scheduled quarterly reductions, reduce over five years beginning in
2002, as follows (in thousands):
December 31, Commitment Amount
------------ -----------------
2001 $125,000
2002 102,335
2003 83,585
2004 58,585
2005 33,585
2006 0
The scheduled reduction in available commitment amounts each year occurs
ratably over each quarter. For 2002, the quarterly reduction amount is
$4,687,500. The $25.0 million letter of credit sub-limit also reduces
proportionately but not below $15.0 million. Mandatory prepayments and
commitment reductions are also required upon certain asset sales, subordinated
debt proceeds, excess cash flow amounts and sales of equity securities. On April
30, 2002, the available commitment amount under the credit facility was
permanently reduced by approximately $3.9 million due to the provisions of the
excess cash flow calculation. We received net proceeds of approximately $74.6
million from the April 29, 2002 public sale of our common stock, which we used
to pay down approximately $70.6 million of outstanding indebtedness under the
facility. Under the terms and conditions of the credit facility, we exercised
our option to provide a reinvestment notice to the lender, which will allow us
to re-borrow substantially all of the net proceeds received from the common
stock offering. The notice will allow us to re-borrow such monies for
acquisitions and other permitted investments which we complete and/or for which
we obtain binding agreements within 270 days of our debt repayment. We are
actively exploring acquisition opportunities and anticipate fully
-25-
reinvesting such monies within the applicable time periods; however, there can
be no assurances in this regard. If we are unable to reinvest these monies in
suitable acquisitions, the amount of our available commitment would be reduced
by the amount of any un-reinvested proceeds unless we were able to obtain a
waiver or modification of the credit facility terms. At August 5, 2002 there
were borrowings of approximately $12.5 million outstanding under the facility,
and there were approximately $99.2 million of available borrowings, subject to
the terms and conditions of the credit facility.
Under the terms of the facility, we are required to maintain a minimum
interest rate coverage ratio, minimum fixed charge coverage ratio, maximum
corporate overhead and maximum financial leverage ratio and to observe negative
covenants customary for facilities of this type. Borrowings under the new credit
facility bear interest at a rate equal to (a) the higher of the rate announced
or published publicly from time to time by the agent as its corporate base of
interest or the Overnight Federal Funds Rate plus 0.5%, in either case plus the
applicable margin determined under the credit facility, or (b) the
reserve-adjusted Eurodollar Rate plus the applicable margin, which varies
between 1.25% and 2.75% depending upon our financial leverage. Borrowings
outstanding at June 30, 2002 bore interest at an average rate of 4.3%.
We are required to pay certain fees to the agent and the lenders for the
underwriting commitment, administration and use of the credit facility. Our
indebtedness under this credit facility is collateralized by liens on
substantially all of our assets and by a pledge of our operating and license
subsidiaries' stock and is guaranteed by these subsidiaries.
On February 5, 2002, we received approximately $1.2 million from the
release of an escrow account holding 200,000 shares of our common stock. The
shares, sold to a venture capital fund related to one of our independent
directors, were part of our November 2001 private placement offering of 900,000
shares issued at $5.75 per share, and were held in escrow pending confirmation
from Nasdaq that stockholder approval would not be required for such sale.
On March 12, 2002, we completed the sale of WGNA-AM in Albany, New York to
ABC, Inc. for $2.0 million. We recognized a pre-tax gain of approximately
$442,000 on the sale of the station assets, which was treated as the sale of
long-lived assets.
Uses of funds
On June 1, 2002, we acquired, by a subsidiary merger with The Frankenmuth
Radio Co., Inc., WRCL-FM (formerly WZRZ-FM) serving the Flint, Michigan market
for 208,905 shares of our common stock, valued at approximately $1.4 million. We
also acquired the land and broadcasting assets used by WRCL-FM from MTE
Corporation, a related entity, for approximately $0.6 million in cash. In 2001,
we placed $125,000 in escrow to secure our obligations under this agreement. We
had previously provided programming and other services to the station under a
time brokerage agreement, effective January 1, 2002. An additional 631 shares of
common stock were issued as payment for prorated expenses associated with the
closing of the acquisitions. The cash portion of the acquisition, net of the
escrow amount, was funded from the proceeds from our April 29, 2002 common stock
offering.
Also on June 1, 2002, we purchased the outstanding stock of Haith
Broadcasting Corporation, owner of WFGR-FM serving the Grand Rapids, Michigan
market for approximately $3.9 million in cash. In 2001, we placed $250,000 in
escrow to secure our obligations under this agreement. In conjunction with the
above stock purchase, on February 4, 2002, we purchased the option to buy
WFGR-FM from Connoisseur Communications of Flint, L.L.P. for approximately
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$1.0 million, paid by the issuance of 174,917 shares of Regent common stock. We
had previously provided programming and other services to the station under a
time brokerage agreement, effective January 1, 2002. The acquisition, net of the
escrow amount, was funded from the proceeds from our April 29, 2002 common stock
offering.
During the first six months of 2002, we used the remaining proceeds from
our April stock offering, net proceeds from the sale of WGNA-AM in Albany, New
York, the cash received from the release of our private placement shares held in
escrow, and cash from continuing operations to pay down approximately $74.6
million of indebtedness under our credit facility. Additionally during the first
half of 2002, we funded capital expenditures of approximately $1.4 million,
related primarily to expansion and relocation activities in our Flint and Grand
Rapids, Michigan and Utica, New York markets to accommodate and/or consolidate
our recently completed and pending acquisitions, and to create cost savings over
the long term. We expect capital expenditures to be approximately $4.0 million
for 2002.
Pending Acquisitions
On November 15, 2001, we entered into an agreement with Covenant
Communications Corporation to acquire substantially all of the assets of WRXF-FM
and WLSP-AM, serving the Flint, Michigan market, for $1.3 million in cash. In
2001, we placed in escrow $65,000 to secure our obligations under this
agreement. Applications seeking approval from the Federal Communications
Commission for the transfer of the station licenses have been received, and we
expect to consummate this transaction in the third quarter of 2002. On December
3, 2001, we began providing programming and other services to the stations under
a time brokerage agreement.
We believe the cash generated from operations and available borrowings
under our credit facility will be sufficient to complete our pending
acquisitions and to meet our requirements for corporate expenses and capital
expenditures for the foreseeable future, based on our projected operations and
indebtedness. After giving effect to all pending transactions, the outstanding
borrowings under our credit facility would be approximately $13.7 million with
available borrowings of approximately $98.0 million, subject to the terms and
conditions of the credit facility.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146, "Accounting for Exit or
Disposal Activities" ("SFAS 146"). SFAS 146 addresses the recognition,
measurement, and reporting of costs that are associated with exit and disposal
activities, including costs related to terminating contracts that are not
capital leases and termination benefits that employees who are involuntarily
terminated receive in certain instances. SFAS 146 supersedes Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)" ("EITF 94-3") and requires liabilities
associated with exit and disposal activities to be expensed as incurred. SFAS
146 is effective for exit or disposal activities of the Company that are
initiated after December 31, 2002.
In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of SFAS Nos. 4, 44 and 64, Amendment of FASB Statement No.
13 and Technical Corrections" ("SFAS 145"). SFAS 145 rescinds FASB Statement No.
4, "Reporting Gains and
-27-
Losses from Extinguishment of Debt," and an amendment of that Statement, FASB
Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements." As a result, gains and losses from extinguishments of debt should
be classified as extraordinary items only if they meet the criteria in APB
Opinion No. 30, "Reporting the Results of Operations, Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions ("APB 30"). Applying the provisions of APB 30
will distinguish transactions that are part of an entity's recurring operations
from those that are unusual or infrequent or that meet the criteria for
classification as an extraordinary item. SFAS 145 also amends FASB Statement No.
13, "Accounting for Leases," to eliminate inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also rescinds FASB Statement No. 44,
"Accounting for Intangible Assets of Motor Carriers" and amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. We will adopt
this standard for lease transactions entered into after May 15, 2002 and have
determined the impact of adoption to be immaterial. The provisions of the SFAS
145 related to debt extinguishments will be adopted on January 1, 2003, and
could have an impact on us, to the extent that we would make any changes to our
credit facility. We had no debt extinguishments during the three months ended
March 31, 2002 or 2001.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 addresses the financial accounting and reporting
for the impairment or disposal of long-lived assets, including the disposal of a
segment of a business. SFAS 144 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the asset. SFAS 144 requires companies to separately report
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. Furthermore, future operating losses
relating to discontinued operations can no longer be recorded before they occur.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value, less costs to sell. We have adopted SFAS 144, as required, in the
first quarter of 2002 and have deemed that the impact of adoption is not
material.
In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") that
addresses the recognition of asset retirement obligations. The objective of SFAS
143 is to provide guidance for legal obligations associated with the retirement
of tangible long-lived assets. The statement is effective for fiscal years
beginning after June 15, 2002. We have not yet determined the impact, if any, of
adopting SFAS 143.
UPDATE TO CRITICAL ACCOUNTING POLICIES
Due to the implementation of SFAS 142, our accounting policies related to
the carrying values of goodwill and indefinite-lived intangible assets have
changed. In accordance with the provisions of SFAS 142, goodwill is now tested
for impairment using a two-step process, which identifies any potential goodwill
impairment, and measures the amount of goodwill impairment loss to be
recognized, if any. In addition, the impairment test for indefinite-lived
intangibles
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consists of a comparison of the fair value of the intangible asset with its
carrying value. To test for any potential impairment of both goodwill and
indefinite-lived intangible assets, we employ a fair value approach, which is
based on discounted cash flows. Goodwill and indefinite-lived intangible assets
will be tested for impairment at least annually. We have made no changes to any
other critical accounting policies referenced in our Form 10-K for the year
ended December 31, 2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes as borrowings under
our credit facility bear interest at variable interest rates. It is our policy
to enter into interest rate transactions only to the extent considered necessary
to meet our objectives. As of June 30, 2002 we have not employed any financial
instruments to manage our interest rate exposure. Based on our exposure to
variable rate borrowings at June 30, 2002, a one percent (1%) change in the
weighted average interest rate would change our annual interest expense by
approximately $125,000.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We currently and from time to time are involved in litigation incidental
to the conduct of our business. Please see our Form 10-Q for the first quarter
of 2002 regarding the lawsuit filed against us relating to our initial public
offering. In the opinion of our management, we are not a party to any lawsuit or
legal proceeding, which is likely to have a material adverse effect on our
business or financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 1, 2002, we issued 208,905 shares of our common stock to acquire
by subsidiary merger The Frankenmuth Radio Co., Inc., owner of WZRZ-FM serving
the Flint, Michigan market. An additional 631 shares of common stock were issued
as payment of prorated closing costs associated with the acquisition. These
securities were issued pursuant to the exemptions contained in section 4(2) of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Regent Communications, Inc. 2002 Annual Meeting of Stockholders was
held on May 16, 2002. At the Annual Meeting, stockholders were asked to vote
upon (1) the election of directors, (2) a proposal to approve the adoption of
the Regent Communications, Inc. Employee Stock Purchase Plan, and (3) a proposal
to approve the adoption of the Regent Communications, Inc. Senior Management
Bonus Plan.
The specific matters voted upon and the results of the voting were as
follows:
(1) Our nine incumbent directors were re-elected to serve for an
additional one-year term expiring at the next annual meeting of
stockholders. The directors were elected as follows:
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Name of Director Shares Voted "FOR" Shares Withheld
---------------- ------------------ ---------------
Terry S. Jacobs 31,453,377 1,635,968
William L. Stakelin 31,454,163 1,635,182
Joel M. Fairman 32,897,143 192,202
Kenneth J. Hanau 32,831,843 257,502
William H. Ingram 32,835,143 254,202
R. Glen Mayfield 32,835,043 254,302
Richard H. Patterson 32,898,143 191,202
William P. Sutter, Jr. 32,894,743 194,602
John H. Wyant 32,898,143 191,202
(2) The proposal to approve the adoption of the Regent Communications,
Inc. Employee Stock Purchase Plan was adopted by an affirmative vote
as follows:
Shares Voted "FOR" 32,694,056
Shares Voted "AGAINST" 44,426
Shares "ABSTAINING" 350,863
(3) The proposal to approve the adoption of the Regent Communications,
Inc. Senior Management Bonus Plan was adopted by an affirmative vote
as follows:
Shares Voted "FOR" 29,496,599
Shares Voted "AGAINST" 3,235,391
Shares Voted "ABSTAINING" 357,355
ITEM 5. OTHER INFORMATION
On July 15, 2002, Hendrik "Henk" J. Hartong Jr., Managing General Partner
of Brynwood Partners, was appointed to Regent's Board of Directors. Mr. Hartong
assumed the role of Managing Partner of the Weiss, Peck and Greer Private
Equity Portfolio in May 2002. Mr. Hartong is replacing Kenneth J. Hanau, who
previously represented Weiss, Peck and Greer as Managing Partner, and who
served on the Board of Directors from August 1999 until his resignation in
July 2002.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits identified as Part II Exhibits on the following Exhibit
Index, which is incorporated herein by this reference, are filed or incorporated
by reference as exhibits to Part II of this Form 10-Q.
(b) Reports on Form 8-K
On April 11, 2002, we filed a Report on Form 8-K to announce our intention
to offer for sale shares of our common stock. Additionally, this Form 8-K
announced our preliminary results for the quarter ended March 31, 2002.
On April 25, 2002, we filed a Report on Form 8-K to announce the pricing
of our offering of 10,500,000 shares of common stock.
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SIGNATURES
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, hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: August 14, 2002 By: /s/ Terry S. Jacobs
-------------------------------------------
Terry S. Jacobs, Chairman of the Board
and Chief Executive Officer
Date: August 14, 2002 By: /s/ Anthony A. Vasconcellos
-------------------------------------------
Anthony A. Vasconcellos, Chief
Financial Officer and Senior Vice President
(Chief Accounting Officer)
S-1
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of Part II of this report on Form 10-Q:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
3(a)* Amended and Restated Certificate of Incorporation of Regent
Communications, Inc., as amended by a Certificate of
Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Special Rights and the
Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series G Preferred Stock of
Regent Communications, Inc., filed January 21, 1999
(previously filed as Exhibit 3(a) to the Registrant's Form
10-K for the year ended December 31, 1998 and incorporated
herein by this reference)
3(b)* Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Regent Communications, Inc. filed with the
Delaware Secretary of State on November 19, 1999 (previously
filed as Exhibit 3(b) to the Registrant's Form 10-Q for the
quarter ended June 30, 2001 and incorporated herein by this
reference)
3(c)* Certificate of Decrease of Shares Designated as Series G
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on June 21, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(c) to the Registrant's Form 10-Q for the quarter
ended June 30, 1999 and incorporated herein by this reference)
3(d)* Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and
the Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series H Preferred Stock of
Regent Communications, Inc., filed with the Delaware Secretary
of State on June 21, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc.,
as amended (previously filed as Exhibit 3(d) to the
Registrant's Form 10-Q for the quarter ended June 30, 1999 and
incorporated herein by this reference)
3(e)* Certificate of Decrease of Shares Designated as Series G
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on August 23, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(e) to the Registrant's Form 10-Q for the quarter
ended September 30, 1999 and incorporated herein by this
reference)
3(f)* Certificate of Increase of Shares Designated as Series H
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on August 23, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(f) to the Registrant's Form 10-Q for the quarter
ended September 30, 1999 and incorporated herein by this
reference)
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3(g)* Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional, and Other Special Rights
and the Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series K Preferred Stock of
Regent Communications, Inc., filed with the Delaware Secretary
of State on December 13, 1999 amending the Amended and
Restated Certificate of Incorporation of Regent
Communications, Inc., as amended (previously filed as Exhibit
3(g) to Amendment No. 1 to the Registrants Form S-1
Registration Statement No. 333-91703 filed December 29, 1999
and incorporated herein by this reference)
3(h)* Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Regent Communications, Inc. filed with the
Delaware Secretary of State on March 13, 2002 (previously
filed as Exhibit 3(h) to the Registrant's Form 10-K for the
year ended December 31, 2001 and incorporated herein by this
reference)
3(i)* Amended and Restated By-Laws of Regent Communications, Inc.
(previously filed as Exhibit 3(b) to Amendment No. 1 to the
Registrant's Form S-4 Registration Statement No. 333-46435
filed April 8, 1999 and incorporated herein by this
reference).
3(i)* Amendments to By-Laws of Regent Communications, Inc. adopted
December 13, 1999 (previously filed as Exhibit 3(h) to
Amendment No. 1 to the Registrant's Form S-1 Registration
Statement No. 333-91703 filed December 29, 1999 and
incorporated herein by this reference)
4(a)* Credit Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 4(a)
to the Registrant's Form 8-K filed February 10, 2000 and
incorporated herein by this reference)
4(b)* Omnibus Amendment No. 1 and Amendment No. 1 to Credit
Agreement dated as of February 4, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (previously filed as Exhibit 4(e) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
E-2
4(c)* Amendment No. 2 and Consent, dated as of August 23, 2000, to
the Credit Agreement dated as of January 27, 2000, as amended,
among Regent Broadcasting, Inc., Regent Communications, Inc.,
Fleet National Bank, as administrative agent, Fleet National
Bank, as issuing lender, General Electric Capital Corporation,
as syndication agent, Dresdner Bank AG, New York and Grand
Cayman Branches, as document agent, and the several lenders
party thereto (previously filed as Exhibit 4(c) to the
Registrant's Form 10-K for the year ended December 31, 2000
and incorporated herein by this reference)
4(d)* Amendment No. 3 dated as of December 1, 2000, to the Credit
Agreement dated as of January 27, 2000, as amended, among
Regent Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (previously filed as Exhibit 4(d) to the Registrant's
Form 10-K for the year ended December 31, 2000 and
incorporated herein by this reference)
4(e)* Revolving Credit Note dated as of February 7, 2000 made by
Regent Broadcasting, Inc. in favor of Fleet National Bank in
the original principal amount of $25 million (previously filed
as Exhibit 4(f) to the Registrant's Form 8-K filed February
10, 2000 and incorporated herein by this reference) (See Note
1 below)
4(f)* Subsidiary Guaranty Agreement dated as of January 27, 2000
among Regent Broadcasting, Inc., Regent Communications, Inc.
and each of their subsidiaries and Fleet National Bank, as
collateral agent (previously filed as Exhibit 4(c) to the
Registrant's Form 8-K filed February 10, 2000 and incorporated
herein by this reference)
4(g)* Pledge Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc. and each of
their subsidiaries and Fleet National Bank, as collateral
agent (previously filed as Exhibit 4(d) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
4(h)* Security Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc. and each of
their subsidiaries and Fleet National Bank, as collateral
agent (previously filed as Exhibit 4(b) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
99.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
- ----------------
* Incorporated by reference.
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NOTES:
1. Seven substantially identical notes were made by Regent Broadcasting, Inc.
as follows:
ORIGINAL HOLDER PRINCIPAL AMOUNT
--------------- ----------------
General Electric Capital Corporation $22,000,000
Dresdner Bank AG, New York and Cayman Island Branches $22,000,000
Mercantile Bank National Association $16,000,000
U.S. Bank National Association $10,000,000
Summit Bank $10,000,000
Michigan National Bank $10,000,000
The CIT Group Equipment Financing, Inc. $10,000,000
E-4