BEASLEY BROADCAST GROUP INC - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2003

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-29253

BEASLEY BROADCAST GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		65-0960915
(State of Incorporation)		(I.R.S. Employer Identification Number)

3033 Riviera Drive, Suite 200

Naples, Florida 34103

(Address of Principal Executive Offices and Zip Code)

(239) 263-5000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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.

Class A Common Stock, $.001 par value, 7,440,698 Shares Outstanding as of May 15, 2003

Class B Common Stock, $.001 par value, 16,832,743 Shares Outstanding as of May 15, 2003

INDEX

		Page No.

PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item 2.	Changes in Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	18

Item 5.	Other Information	18

Item 6.	Exhibits and Reports on Form 8-K	18

SIGNATURES		19

CERTIFICATIONS		20

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2002			March 31, 2003
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,447,604		$	9,422,421
Accounts receivable, less allowance for doubtful accounts of $415,814 in 2002 and $361,772 in 2003		21,057,358			16,671,899
Barter receivables		1,015,641			971,313
Other receivables		1,094,539			1,187,369
Prepaid expenses and other		1,978,492			2,379,094
Assets of discontinued operations		992,996			—
Deferred tax assets		3,399,952			3,824,819

Total current assets		34,986,582			34,456,915
Notes receivable		7,910,070			7,873,036
Property and equipment, net		18,078,438			17,663,916
FCC broadcasting licenses		201,328,987			201,328,987
Goodwill		11,973,571			11,973,571
Other intangibles, net		4,512,352			4,287,284
Investments		550,002			4,250,002
Other assets		2,750,568			2,931,415

Total assets	$	282,090,570		$	284,765,126

Total Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt	$	7,318,961		$	7,316,585
Accounts payable		1,478,872			1,011,679
Accrued expenses		4,020,636			4,572,265
Barter payables		1,485,219			1,369,356
Liabilities of discontinued operations		27,303			—
Derivative financial instruments		1,590,000			1,154,000

Total current liabilities		15,920,991			15,423,885
Long-term debt, less current installments		189,040,209			184,711,261
Derivative financial instruments		219,000			249,000
Deferred tax liabilities		22,730,705			25,892,541

Total liabilities		227,910,905			226,276,687
Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued		—			—
Class A common stock, $.001 par value, 150,000,000 shares authorized, 7,440,698 issued and outstanding		7,441			7,441
Class B common stock, $.001 par value, 75,000,000 shares authorized, 16,832,743 issued and outstanding		16,832			16,832
Additional paid-in capital		106,633,932			106,633,932
Accumulated deficit		(52,478,540	)		(50,502,206	)
Accumulated other comprehensive income		—			2,332,440

Stockholders' equity		54,179,665			58,488,439

Total liabilities and stockholders' equity	$	282,090,570		$	284,765,126

See accompanying notes to condensed consolidated financial statements

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended March 31,
	2002			2003
	(Unaudited)
Net revenue	$	24,872,458		$	24,519,616

Costs and expenses:
Program and production		5,930,764			6,185,126
Sales and advertising		7,963,087			7,657,519
Station general and administrative		4,009,584			3,725,042
Corporate general and administrative		1,229,175			1,393,170
Depreciation and amortization		995,768			901,425

Total costs and expenses		20,128,378			19,862,282
Operating income from continuing operations		4,744,080			4,657,334
Other income (expense):
Interest expense		(4,024,772	)		(3,088,990	)
Other non-operating expenses		(332,858	)		(55,499	)
Gain on increase in fair value of derivative financial instruments		1,151,000			406,000
Gain on sale of investments		—			799,548
Interest income		101,061			167,392
Other non-operating income		3,200			—

Income from continuing operations before income taxes		1,641,711			2,885,785
Income tax expense		458,369			1,176,291

Income from continuing operations before cumulative effect of accounting change and discontinued operations		1,183,342			1,709,494
Cumulative effect of accounting change (net of income tax benefit of $5,162,204)		(11,676,516	)		—
Discontinued operations (net of income tax benefit of $224,723 in 2002 and income tax expense of $137,463 in 2003)		(489,741	)		266,840

Net income (loss)	$	(10,982,915	)	$	1,976,334

Basic and diluted net income (loss) per share:
Income from continuing operations before cumulative effect of accounting change and discontinued operations	$	0.05		$	0.07
Cumulative effect of accounting change		(0.48	)		—
Discontinued operations		(0.02	)		0.01

Net income (loss)	$	(0.45	)	$	0.08

Basic common shares outstanding		24,273,441			24,273,441

Diluted common shares outstanding		24,304,630			24,285,116

See accompanying notes to condensed consolidated financial statements

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three months ended March 31,
	2002			2003
	(Unaudited)
Net income (loss)	$	(10,982,915	)	$	1,976,334
Other comprehensive income:
Unrealized gain on investments (net of income tax expense of $1,467,560)		—			2,332,440

Comprehensive income (loss)	$	(10,982,915	)	$	4,308,774

See accompanying notes to condensed consolidated financial statements

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31,
	2002			2003
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	(10,982,915	)	$	1,976,334
(Income) loss from discontinued operations		489,741			(266,840	)

Income (loss) from continuing operations		(10,493,174	)		1,709,494
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operations:
Cumulative effect of accounting change		11,676,516			—
(Income) loss from barter transactions		185,918			(82,019	)
Depreciation and amortization		995,768			901,425
Gain on increase in fair value of derivative financial instruments		(1,151,000	)		(406,000	)
Gain on sale of investments		—			(799,548	)
Change in assets and liabilities net of effects of acquisitions and dispositions of radio stations:
Decrease in receivables		3,193,951			4,294,985
Increase in prepaid expenses and other		(2,339,207	)		(400,602	)
Increase in other assets		(112,300	)		(180,847	)
Increase (decrease) in payables and accrued expenses		(2,836,619	)		84,436
Increase in deferred income taxes		396,645			1,209,750

Net cash provided by (used in) continuing operations		(483,502	)		6,331,074
Net cash used in discontinued operations		(63,599	)		(199,626	)

Net cash provided by (used in) operating activities		(547,101	)		6,131,448

Cash flows from investing activities:
Expenditures for property and equipment		(131,163	)		(259,533	)
Proceeds from disposition of radio stations		19,650,000			1,500,000
Proceeds from sale of investments		—			899,548
Payments from related parties		32,501			34,678

Net cash provided by investing activities		19,551,338			2,174,693

Cash flows from financing activities:
Principal payments on indebtedness		(22,764,698	)		(4,331,324	)

Net cash used in financing activities		(22,764,698	)		(4,331,324	)

Net increase (decrease) in cash and cash equivalents		(3,760,461	)		3,974,817
Cash and cash equivalents at beginning of period		4,998,526			5,447,604

Cash and cash equivalents at end of period	$	1,238,065		$	9,422,421

Cash paid for interest	$	4,304,476		$	3,061,164

Cash paid for income taxes	$	293,132		$	58,950

Supplement disclosure of non-cash operating, investing and financing activities:
Barter revenue	$	1,324,029		$	1,319,037

Barter expense	$	1,509,947		$	1,237,018

Property and equipment acquired through placement of advertising air time	$	370,084		$	10,484

Note received as partial consideration for disposition of radio stations	$	3,350,000		$	—

See accompanying notes to condensed consolidated financial statements

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Interim Financial Statements

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments deemed necessary to summarize fairly and reflect the financial position and results of operations of Beasley Broadcast Group, Inc. (“the Company”) for the interim periods presented. Results of the first quarter of 2003 are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2002.

(2) Accounting Change

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) 142, Goodwill and Other Intangible Assets. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the adoption of SFAS 142. In accordance with the provisions of SFAS 142, as of January 1, 2002, the Company tested its FCC broadcasting licenses, which were identified as intangible assets having indefinite useful lives, and goodwill for impairment. To estimate the fair value of its FCC broadcasting licenses and goodwill, the Company obtained appraisals from an independent appraisal company. As a result of the testing, the Company recognized an impairment of $17.5 million related to FCC broadcasting licenses and goodwill in the Radio Group Three segment and recorded the loss as a cumulative effect of accounting change in the condensed consolidated statement of operations for the three months ended March 31, 2002. The cumulative effect of the accounting change, net of income taxes, decreased net income $12.1 million and earnings per share $0.50, of which $0.4 million or $0.02 per share is reported in discontinued operations.

(3) Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS 143, Accounting for Asset Retirement Obligations. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 amends SFAS 19 and is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted SFAS 143 with no material impact on its condensed consolidated financial statements.

In June 2002, FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. SFAS 146 nullifies Emerging Issues Task Force Issue No. 94-3 and is effective for exit or disposal activities that are initiated after December 31, 2002. The Company adopted SFAS 146 with no material impact on its condensed consolidated financial statements.

In November 2002, FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (the Interpretation), which addresses the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees. The Interpretation also requires the recognition of a liability by a guarantor at the inception of certain guarantees. The Interpretation requires the guarantor to recognize a liability for the non-contingent component of the guarantee, which is the obligation to stand ready to perform in the event that specified triggering events or conditions occur. The initial measurement of this liability is the fair value of the guarantee at inception. The recognition of the liability is required even it is not probable that payments will be required under the guarantee or if the guarantee was issued with a premium payment or as part of a transaction with multiple elements. As noted above, the Company has adopted the disclosure requirements of the Interpretation and will apply the recognition and measurement provisions for all applicable guarantees entered into after December 31, 2002. To date, the Company has not entered into guarantees, which would require recognition and measurement pursuant to the provisions of the Interpretation.

In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (the Interpretation), which clarifies the application of Accounting Research Bulletin No. 51, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. At the present time, the adoption of the Interpretation is not expected to have a material impact on the Company’s condensed consolidated financial statements.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

(4) Completed Disposition

On February 5, 2003, the Company completed the sale of WBYU-AM to ABC, Inc for $1.5 million. The proceeds from the sale were used to reduce the outstanding balance of the revolving credit loan under the Company’s credit facility. The Company recorded a pre-tax gain of $436,365 on the disposition. Upon completion of this sale the Company no longer has operations in New Orleans therefore the results of operations for WBYU-AM have been reported as discontinued operations in the condensed consolidated statements of operations for all periods presented.

A summary of discontinued operations is as follows:

	Three months ended March 31,
	2002			2003
Net revenue	$	21,895		$	3,027

Gain on disposal	$	—		$	436,365

Income (loss) before income taxes	$	(71,467	)	$	404,303
Income tax expense (benefit)		(27,601	)		137,463

Income (loss) before cumulative effect of accounting change		(43,866	)		266,840
Cumulative effect of accounting change (net of income benefit of $197,122)		(445,875	)		—

Net income (loss) from discontinued operations	$	(489,741	)	$	266,840

(5) Investments

As of March 31, 2003, the Company’s investment in FindWhat.com is classified as available-for-sale and carried at fair value based on its quoted market price. The unrealized gain on FindWhat.com is reported, net of income taxes, as a component of accumulated other comprehensive income in stockholders’ equity. The investment in FindWhat.com was originally recorded at historical cost due to restrictions that limited the Company’s ability to sell or otherwise dispose of the securities. These restrictions were completely removed as of March 31, 2003. The investment in iBiquity is recorded at historical cost due to restrictions that limit the Company’s ability to sell or otherwise dispose of the securities.

Investments are comprised of the following:

	Cost		Unrealized gain		Fair value
March 31, 2003
Available-for-sale	$	400,000	$	3,800,000	$	4,200,000
Historical cost		50,002		—		50,002

	$	450,002	$	3,800,000	$	4,250,002

December 31, 2002
Historical cost	$	550,002	$	—	$	550,002

(6) Long-Term Debt

Long-term debt is comprised of the following:

	December 31, 2002		March 31, 2003
Credit facility:
Revolving credit loan	$	58,461,262	$	55,961,262
Term loan A		37,894,736		36,315,788
Term loan B		100,000,000		99,750,000

		196,355,998		192,027,050
Other notes payable		3,172		796

		196,359,170		192,027,846

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Less current installments		(7,318,961	)		(7,316,585	)

	$	189,040,209		$	184,711,261

As of March 31, 2003, the maximum commitment for the revolving credit loan under the credit facility was $103.5 million; however, as of March 31, 2003, the Company’s maximum total leverage covenant would have limited additional borrowings to $14.3 million. The revolving credit loan includes a $50.0 million sub-limit for letters of credit. The revolving credit loan and term loan A bear interest at either the base rate or LIBOR plus a margin that is determined by the Company’s debt to operating cash flow ratio. The base rate is equal to the higher of the prime rate or the overnight federal funds rate plus 0.5%. The revolving credit loan and term loan A carried interest at 4.4375% and 4.3125% as of December 31, 2002 and March 31, 2003, respectively. Term loan B bears interest at either the base rate plus 2.75% or LIBOR plus 4.0%. Term loan B carried interest at 5.4375% and 5.3125% as of December 31, 2002 and March 31, 2003. Interest is payable monthly through maturity. The revolving credit loan and term loan A mature on June 30, 2008 and term loan B matures on December 31, 2009. The scheduled reductions in the amount available under the revolving credit loan may require principal repayments if the outstanding balance at that time exceeds the new maximum amount available under the revolving credit loan.

The credit facility is secured by substantially all of the Company’s assets and guaranteed jointly and severally by all of the Company’s subsidiaries. The guarantees were issued to the Company’s lenders for repayment of the outstanding balance of the credit facility. If the Company defaults on a payment under the terms of the credit facility, the subsidiaries may be required to perform under their guarantees. The maximum amount of undiscounted payments the subsidiaries would have to make in the event of default is $192.0 million. The guarantees for the revolving credit loan and term loan A expire on June 30, 2008 and the guarantees for term loan B expire on December 31, 2009.

As of March 31, 2003, the scheduled repayments of the credit facility for the remainder of fiscal 2003, the next four years and thereafter are as follows:

	Revolving Credit Loan		Term Loan A		Term Loan B		Total Credit Facility
2003	$	—	$	4,736,841	$	750,000	$	5,486,841
2004		—		6,315,789		1,000,000		7,315,789
2005		—		6,315,789		1,000,000		7,315,789
2006		—		6,315,789		1,000,000		7,315,789
2007		14,571,262		8,421,053		1,000,000		23,992,315
Thereafter		41,390,000		4,210,527		95,000,000		140,600,527

Total	$	55,961,262	$	36,315,788	$	99,750,000	$	192,027,050

The Company has entered into interest rate collar, cap and swap agreements to reduce the potential impact of changes in interest rates on its credit facility. The fair value of these derivative financial instruments is reported in the accompanying condensed consolidated balance sheets and the change in fair value is reported in the accompanying condensed consolidated statements of operations.

The Company is required to satisfy financial covenants, which require us to maintain specified financial ratios and to comply with financial tests, such as ratios for maximum total leverage, minimum interest coverage and minimum fixed charges. As of March 31, 2003, these financial covenants included:

•

Maximum Total Leverage Test. As of March 31, 2003, the Company’s total debt must not have exceeded 6.5 times its operating cash flow for the four quarters ending on that day (as such terms are defined in our amended and restated credit agreement). For the period from April 1, 2003 through June 30, 2003, the maximum ratio is 6.25 times. For the period from July 1, 2003 through December 31, 2003, the maximum ratio is 6.0 times. For the period from January 1, 2004 through June 30, 2004, the maximum ratio is 5.75 times. For the period from July 1, 2004 through December 31, 2004, the maximum ratio is 5.25 times. For the period from January 1, 2005 through December 31, 2005, the maximum ratio is 4.5 times. For all periods after January 1, 2006, the maximum ratio is 4.0 times.

•

Minimum Interest Coverage Test. The Company’s operating cash flow for the four quarters ending on the last day of each quarter must not have been less than 2.0 times the amount of its interest expense.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

•

Minimum Fixed Charges Test. The Company’s operating cash flow for any four consecutive quarters must not be less than 1.1 times the amount of its fixed charges. Fixed charges include interest expense, current income tax expense, capital expenditures, and scheduled principal repayments.

As of March 31, 2003, management of the Company believed it was in compliance with applicable financial covenants.

Failure to comply with these financial covenants, scheduled interest payments, scheduled principal repayments, or any other terms of our credit facility could result in the acceleration of the maturity of its outstanding debt. The Company believes that it will have sufficient liquidity and capital resources to permit it to meet its financial obligations for at least the next twelve months.

(7) Income Taxes

The Company’s effective tax rate is approximately 40%, which differs from the federal statutory rate of 34% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes. For the three months ended March 31, 2002, the effective tax rate was decreased by adjustments totaling $0.2 million as a result of the completion of Company’s 2001 income tax returns.

(8) Income Per Share

Income from continuing operations before cumulative effect of accounting change and discontinued operations per share calculation information is as follows:

	Three months ended March 31,
	2002		2003
Income from continuing operations before cumulative effect of accounting change and discontinued operations	$	1,183,342	$	1,709,494

Weighted-average shares outstanding:
Basic		24,273,441		24,273,441
Effect of dilutive stock options		31,189		11,675

Diluted		24,304,630		24,285,116

Income from continuing operations before cumulative effect of accounting change and discontinued operations per basic and diluted share	$	0.05	$	0.07

(9) Segment Information

Segment information is as follows:

	Radio Group One			Radio Group Two			Radio Group Three			Corporate		Total
Three months ended March 31, 2003
Net revenue	$	14,024,638		$	7,983,557		$	2,511,421		$	—	$	24,519,616
Depreciation and amortization		434,778			336,707			112,243			17,697		901,425
Interest expense		(1,139,528	)		(1,200,586	)		(748,876	)		—		(3,088,990	)
Gain on increase in fair value of derivative financial instruments		—			—			—			406,000		406,000
Gain on equity investments		447,747			351,801			—			—		799,548
Interest income		37,106			41,630			75,407			13,249		167,392
Income (loss) from continuing operations before income taxes		2,021,264			591,514			(128,545	)		401,552		2,885,785
Income tax expense		—			—			—			1,176,291		1,176,291
Discontinued operations		—			—			266,840			—		266,840

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

Capital expenditures	$	137,411		$	116,593		$	13,914		$	2,099	$	270,017

Three months ended March 31, 2002
Net revenue	$	14,370,706		$	8,217,009		$	2,284,743		$	—	$	24,872,458
Depreciation and amortization		439,758			431,498			110,406			14,106		995,768
Interest expense		(1,353,253	)		(1,425,545	)		(1,245,974	)		—		(4,024,772	)
Gain on increase in fair value of derivative financial instruments		—			—			—			1,151,000		1,151,000
Interest income		38,443			43,364			9,726			9,528		101,061
Income (loss) from continuing operations before income taxes		1,401,753			236,389			(1,142,853	)		1,146,422		1,641,711
Income tax expense		—			—			—			458,369		458,369
Cumulative effect of accounting change		—			—			(11,676,516	)		—		(11,676,516	)
Discontinued operations		—			—			(489,741	)		—		(489,741	)

Capital expenditures	$	210,196		$	263,134		$	27,917		$	—	$	501,247

Total Assets
March 31, 2003	$	100,015,407		$	104,253,633		$	64,566,167		$	15,929,919	$	284,765,126
December 31, 2002		100,288,772			103,976,841			68,996,395			8,828,562		282,090,570

Radio Group One includes radio stations located in Miami-Ft. Lauderdale, FL, West Palm Beach-Boca Raton, FL, Ft. Myers-Naples, FL and Greenville-New Bern-Jacksonville, NC. Radio Group Two includes radio stations located in Boston, MA, Atlanta, GA, Philadelphia, PA, Fayetteville, NC, and Augusta, GA. Radio Group Three includes radio stations located in Las Vegas, NV. Corporate total assets include cash and cash equivalents, deferred tax assets, property and equipment and certain other assets.

(10) Stock-Based Employee Compensation

As of March 31, 2003, the Company has one stock-based employee compensation plan. The Company accounts for this plan under the recognition and measurement principles of APB Opinion 25, Accounting for Stock Issued to Employees. No stock-based employee compensation cost is reflected in the accompanying condensed consolidated statements of operations, as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on the net loss and net loss per share as if the Company had applied the fair value recognition provisions of SFAS 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	Three months ended March 31,
	2002			2003
Net income (loss)	$	(10,982,915	)	$	1,976,334
Total stock-based employee compensation expense determined under fair value based methods for all awards (net of income tax benefit of $725,512 in 2002 and $377,583 in 2003)		(1,153,079	)		(600,104	)

Adjusted net income (loss)	$	(12,135,994	)	$	1,376,230

Net income (loss) per share:
Basic and diluted—as reported	$	(0.45	)	$	0.08

Basic and diluted—as adjusted	$	(0.50	)	$	0.06

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with the financial statements and related notes included elsewhere in this report. The results discussed below are not necessarily indicative of the results to be expected in any future periods. This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” and other similar words. Such forward-looking statements may be contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” among other places. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as unforeseen events that would cause us to broadcast commercial-free for any period of time, and changes in the radio broadcasting industry generally. We do not intend, and undertake no obligation, to update any forward-looking statement. Key risks to our company are described in our annual report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2003.

General

A radio broadcasting company derives its revenues primarily from the sale of broadcasting time to local and national advertisers. The advertising rates that a radio station is able to charge and the number of advertisements that can be broadcast without jeopardizing listener levels largely determine those revenues. Advertising rates are primarily based on three factors:

•

a radio station’s audience share in the demographic groups targeted by advertisers, as measured principally by quarterly reports issued by The Arbitron Ratings Company;

•

the number of radio stations in the market competing for the same demographic groups; and

•

the supply of, and demand for, radio advertising time.

Our operations are divided into three reportable segments, Radio Group One, Radio Group Two, and Radio Group Three. Our Radio Group One segment includes the operations of our Miami-Ft. Lauderdale, FL, West Palm Beach-Boca Raton, FL, Ft. Myers-Naples, FL and Greenville-New Bern-Jacksonville, NC market clusters. Our Radio Group Two segment includes the operations of our Boston, MA, Atlanta, GA, Philadelphia, PA, Fayetteville, NC and Augusta, GA market clusters. Radio Group Three segment includes the operations of our Las Vegas, NV market cluster. A market cluster consists of all of the radio stations we own in a designated or specified radio market. Net revenues and other financial information for these segments are contained in the notes to our unaudited condensed consolidated financial statements included in Item 1 of this report and an analysis of the results of operations of our segments is contained herein in this Item 2.

Several factors may adversely affect a radio broadcasting company’s performance in any given period. In the radio broadcasting industry, seasonal revenue fluctuations are common and are due primarily to variations in advertising expenditures by local and national advertisers. Typically, revenues are lowest in the first calendar quarter of the year. We generally incur advertising and promotional expenses to increase listenership and Arbitron ratings. However, because Arbitron reports ratings quarterly in most of our markets, any change in ratings, and therefore changes in advertising revenues, tend to lag behind the incurrence of advertising and promotional spending.

In the broadcasting industry, radio stations often utilize trade or barter agreements to reduce cash paid for expenses by exchanging advertising time for goods or services. In order to maximize cash revenue from our inventory, we minimize our use of trade agreements and during the three months ended March 31, 2003, barter revenue was $1.3 million or 5.4% of our net revenue and barter expenses were $1.2 million or 7.0% of our station operating expenses.

We calculate same station results by comparing the performance of radio stations operated by us at the end of a relevant period to the performance of those same stations in the prior year’s corresponding period, including the effect of barter revenues and expenses.

For the three months ending March 31, 2002, these results exclude two radio stations that were sold in New Orleans during the first quarter of 2002.

Recent Events

On October 3, 2002, we entered into a definitive agreement with ABC, Inc. to sell WBYU-AM in New Orleans for $1.5 million, subject to certain adjustments. On February 5, 2003, we completed the sale of WBYU-AM to ABC, Inc for $1.5 million. The proceeds from the sale were used to reduce the outstanding balance of the revolving credit loan under our credit facility. Upon completion of this sale we no longer have operations in New Orleans, therefore the results of operations for WBYU-AM have been reported as discontinued operations in the condensed consolidated statements of operations for all periods presented.

Results of Operations

Effective January 1, 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) 142, Goodwill and Other Intangible Assets. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the adoption of SFAS 142. In accordance with the provisions of SFAS 142, as of January 1, 2002, we tested our FCC broadcasting licenses, which were identified as intangible assets having indefinite useful lives, and goodwill for impairment. To determine the fair value of our FCC broadcasting licenses and goodwill, we obtained appraisals from an independent appraisal company. As a result of the testing, we recognized an impairment of $17.5 million related to FCC broadcasting licenses and goodwill in the Radio Group Three segment and recorded the loss as a cumulative effect of accounting change in the condensed consolidated statement of operations for the three months ended March 31, 2002. The cumulative effect of the accounting change, net of income tax effect, decreased net income $12.1 million and earnings per share $0.50, of which $0.4 million or $0.02 per share is reported in discontinued operations.

Three Months Ended March 31, 2003 Compared to the Three Months Ended March 31, 2002

Consolidated

Net Revenue. Net revenue decreased 1.4% to $24.5 million for the three months ended March 31, 2003 from $24.9 million for the three months ended March 31, 2002. On a same station basis, net revenue decreased 0.9% to $24.5 million for the three months ended March 31, 2003 from $24.7 million for the three months ended March 31, 2002. The change was partially due to a $0.4 million decrease in revenue from our Miami-Ft. Lauderdale market cluster due to increased competition and the absence of play-off revenue from the Miami Dolphins in 2003. The change was also partially due to a $0.2 million decrease in revenue from our Fayetteville market cluster as a result of the geopolitical uncertainties affecting that radio market. These decreases were partially offset by a $0.4 million increase in revenue from our Las Vegas market cluster due to improved performance. The following table reconciles reported net revenue to same station net revenue for the three months ended March 31, 2002 and 2003.

	2002			2003		Change
Reported net revenue	$	24,872,458		$	24,519,616	(1.4	)%
Sold stations in New Orleans		(135,043	)		—

Same station net revenue	$	24,737,415		$	24,519,616	(0.9	)%

Station Operating Expenses. Station operating expenses decreased 1.9% to $17.6 million for the three months ended March 31, 2003 from $17.9 million for the three months ended March 31, 2002. On a same station basis, station operating expenses decreased 1.8% to $17.6 million for the three months ended March 31, 2003 from $17.9 million for the three months ended March 31, 2002. Station operating expenses consist of program and production expenses, sales and advertising expenses and general and administrative expenses incurred at our radio stations. The change was primarily due to a decrease in station operating expenses at our Miami-Ft. Lauderdale market cluster due to decreased sales commissions associated with the decreased revenue and the absence of program rights associated with the absence of a Miami Dolphins play-off game in 2003. The following table reconciles reported station operating expenses to same station operating expenses for the three months ended March 31, 2002 and 2003.

	2002			2003		Change
Reported station operating expenses	$	17,903,435		$	17,567,687	(1.9	)%
Sold stations in New Orleans		(11,715	)		—

Same station operating expenses	$	17,891,720		$	17,567,687	(1.8	)%

Corporate General and Administrative Expenses. Corporate general and administrative expenses increased 13.3% to $1.4 million for the three months ended March 31, 2003 from $1.2 million for the three months ended March 31, 2002. Corporate general and administrative expenses consist primarily of salaries, insurance, rent and other expenses incurred at our corporate offices. The increase is primarily due to increased compensation, insurance premiums and legal expenses associated with operating as a public company.

Depreciation and Amortization. Depreciation and amortization decreased 9.5% to $0.9 million for the three months ended March 31, 2003 from $1.0 million for the three months ended March 31, 2002. The decrease was primarily due to a decrease in amortization expense as a result of the write-down of loan fees related to the extinguishment of long-term debt in the third quarter of 2002.

Interest Expense. Interest expense decreased 23.3% to $3.1 million for the three months ended March 31, 2003 from $4.0 million for the three months ended March 31, 2002. The decrease was partially due to a reduction of the outstanding balance under our credit facility with $1.5 million of proceeds from the sale of one radio station in New Orleans and $9.2 million of repayments during the past twelve months. The decrease was also partially due to a reduction of the outstanding balance under our credit facility with $19.5 million of proceeds from the sale of two radio stations in New Orleans on March 20, 2002.

Gain on Increase in Fair Value of Derivative Financial Instruments. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, our interest rate collar, cap and swap agreements are carried at fair value. The estimated fair value of each agreement is based on the amounts we would expect to receive or pay to terminate the agreement. The gain on increase in fair value of derivative financial instruments of $0.4 million for the three months ended March 31, 2003 and $1.2 million for the three months ended March 31, 2002 reflects the decrease in the amounts we would expect to pay to terminate our interest rate collar, cap and swap agreements.

Gain on Sale of Investments. The $0.8 million gain on sale of investments in 2003 was the result of several sales totaling 100,000 shares of common stock of FindWhat.com during the three months ended March 31, 2003.

Income Tax Expense. Our effective tax rate is approximately 40%, which differs from the federal statutory rate of 34% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes. For the three months ended March 31, 2002, the effective tax rate was decreased by adjustments totaling $0.2 million as a result of the completion of our 2001 income tax returns.

Cumulative Effect of Accounting Change. As a result the adoption of SFAS 142 effective January 1, 2002, we recognized an impairment loss of $17.5 million related to FCC broadcasting licenses and goodwill in the Radio Group Three segment, of which $11.7 million, net of income taxes, was reported as a cumulative effect of accounting change and $0.4 million, net of income taxes, was reported in discontinued operations for the three months ended March 31, 2002.

Discontinued Operations. On October 3, 2002, we entered into a definitive agreement with ABC, Inc. to sell WBYU-AM in the New Orleans market for $1.5 million, subject to certain adjustments. Upon completion of this sale on February 5, 2003, we no longer have operations in New Orleans therefore the results of operations for WBYU-AM have been reported as discontinued operations in the condensed consolidated statements of operations for all periods presented. Net income from discontinued operations was $0.3 million for the three months ended March 31, 2003, which included a gain on sale of $0.3 million, net of income taxes, compared to a net loss from discontinued operations of $0.5 million for the three months ended March 31, 2002, which included the $0.4 million impairment loss, net of income taxes, due to the adoption of SFAS 142.

Net Income (Loss). As a result of the factors described above, net income for the three months ended March 31, 2003 was $2.0 million compared to a net loss of $11.0 million for the three months ended March 31, 2002.

Radio Group One Segment

Net Revenue. Net revenue decreased 2.4% to $14.0 million for the three months ended March 31, 2003 from $14.4 million for the three months ended March 31, 2002. The decrease was primarily due to a $0.4 million decrease in revenue from our Miami-Ft. Lauderdale market cluster due to increased competition and the absence of play-off revenue from the Miami Dolphins in 2003.

Station Operating Expenses. Station operating expenses decreased 3.7% to $10.1 million for the three months ended March 31, 2003 from $10.5 million for the three months ended March 31, 2002. The decrease was primarily due to a decrease in station operating expenses at our Miami-Ft. Lauderdale market cluster due to decreased sales commissions associated with the decreased revenue and the absence of program rights associated with the absence of a Miami Dolphins play-off game in 2003.

Operating Income from Continuing Operations. Operating income from continuing operations remained stable at $2.7 million for the three months ended March 31, 2003 and 2002. The increase in net revenue from our Miami-Ft. Lauderdale market cluster was offset by the decrease in station operating expenses in that market cluster.

Radio Group Two Segment

Net Revenue. Net revenue decreased 2.8% to $8.0 million for the three months ended March 31, 2003 from $8.2 million for the three months ended March 31, 2002. The decrease was primarily due to a $0.2 million decrease in revenue from our Fayetteville market cluster as a result of the geopolitical uncertainties affecting that radio market.

Station Operating Expenses. Station operating expenses remained stable at $5.7 million for the three months ended March 31, 2003 and 2002.

Operating Income from Continuing Operations. Operating income from continuing operations was $1.4 million for the three months ended March 31, 2003 compared to $1.6 million for the three months ended March 31, 2002. The decrease was primarily due to the decrease in net revenue from our Fayetteville market cluster.

Radio Group Three Segment

Net Revenue. Net revenue increased 9.9% to $2.5 million for the three months ended March 31, 2003 from $2.3 million for the three months ended March 31, 2002. The increase was primarily due to a $0.4 million increase in revenue from our Las Vegas market cluster due to improved performance. This increase was partially offset by a $0.1 million decrease in net revenue as a result of the sale of two radio stations in New Orleans during the first quarter of 2002.

Station Operating Expenses. Station operating expenses remained stable at $1.7 million for the three months ended March 31, 2003 and 2002.

Operating Income from Continuing Operations. Operating income from continuing operations was $0.5 million for the three months ended March 31, 2003 compared to $0.4 million for the three months ended March 31, 2002. The increase was primarily due to the increase in net revenue from our Las Vegas market cluster, which was partially offset by the decrease in net revenue as a result of the sale of two radio stations in New Orleans.

Liquidity and Capital Resources

Overview. Our primary sources of liquidity are internally-generated cash flow and our credit facility. Our liquidity needs have been, and for the next twelve months and thereafter are expected to continue to be, for working capital, debt service, radio station acquisitions and other general corporate purposes, including capital expenditures. We expect to provide for future liquidity needs through one or a combination of the following:

•

internally-generated cash flow;

•

our credit facility;

•

additional borrowings, other than under our existing credit facility, to the extent permitted; and

•

additional equity offerings.

We believe these sources will provide sufficient liquidity and capital resources to permit us to meet our financial obligations for at least the next twelve months. Poor financial results, unanticipated opportunities or unanticipated expenses could give rise to additional debt servicing requirements or other additional financing requirements sooner than we expect; and, we may not secure financing when needed or on acceptable terms.

As of March 31, 2003, we held $9.4 million in cash and cash equivalents and had $47.5 million in remaining commitments available under our credit facility; however, as of March 31, 2003 our maximum total leverage covenant would have limited additional borrowings to $14.3 million. Our ability to reduce our total leverage ratio by increasing operating cash flow and/or decreasing long-term debt will determine how much, if any, of the remaining commitments under our credit facility will be available to us in the

future. Poor financial results or unanticipated expenses could result in our failure to maintain or lower our total leverage ratio and we may not be permitted to make any additional borrowings under our credit facility.

Net Cash Provided By (Used In) Operating Activities. Net cash provided by operating activities was $6.1 million in 2003. Net cash used in operating activities was $0.5 million in 2002. The change was primarily due to a $0.8 million increase in cash receipts from sales and a $5.7 million decrease in cash paid for station operating expenses.

Net Cash Provided By (Used In) Investing Activities. Net cash provided by investing activities was $2.2 million in 2003. Net cash provided by investing activities was $20.0 million in 2002. The change is primarily due to the receipt of cash proceeds totaling $1.5 million from the sale of one radio station in New Orleans in 2003 compared to the receipt of cash proceeds totaling $19.65 million from the sale of two radio stations in New Orleans for $23.0 million in 2002. Net cash provided by investing activities also included $0.9 million from the sale of available-for-sale investments in 2003.

Net Cash Provided By (Used In) Financing Activities. Net cash used in financing activities was $4.3 million in 2003. Net cash used in financing activities was $22.8 million in 2002. The change is primarily due to the repayment of borrowings under our credit facility with $1.5 million of cash proceeds from the sale of one radio in New Orleans and $2.8 million of repayments in 2003 compared to the repayment of borrowings under our credit facility with $19.5 million of cash proceeds from the sale of two radio stations in New Orleans and $3.3 million of repayments in 2002.

Credit Facility. As of March 31, 2003, the maximum commitment for the revolving credit loan under the credit facility was $103.5 million; however, as of March 31, 2003, our maximum total leverage covenant would have limited additional borrowings to $14.3 million. The revolving credit loan includes a $50.0 million sub-limit for letters of credit. The revolving credit loan and term loan A bear interest at either the base rate or LIBOR plus a margin that is determined by our debt to operating cash flow ratio. The base rate is equal to the higher of the prime rate or the overnight federal funds rate plus 0.5%. The revolving credit loan and term loan A carried interest at 4.4375% and 4.3125% as of December 31, 2002 and March 31, 2003, respectively. Term loan B bears interest at either the base rate plus 2.75% or LIBOR plus 4.0%. Term loan B carried interest at 5.4375% and 5.3125% as of December 31, 2002 and March 31, 2003. Interest is payable monthly through maturity. The revolving credit loan and term loan A mature on June 30, 2008 and term loan B matures on December 31, 2009. The scheduled reductions in the amount available under the revolving credit loan may require principal repayments if the outstanding balance at that time exceeds the new maximum amount available under the revolving credit loan.

The credit facility is secured by substantially all of our assets and guaranteed jointly and severally by all of our subsidiaries. The guarantees were issued to our lenders for repayment of the outstanding balance of the credit facility. If we default on a payment under the terms of the credit facility, the subsidiaries may be required to perform under their guarantees. The maximum amount of undiscounted payments the subsidiaries would have to make in the event of default is $192.0 million. The guarantees for the revolving credit loan and term loan A expire on June 30, 2008 and the guarantees for term loan B expire on December 31, 2009.

As of March 31, 2003, the scheduled repayments of the credit facility for the remainder of fiscal 2003, the next four years and thereafter are as follows:

	Revolving Credit Loan		Term Loan A		Term Loan B		Total Credit Facility
2003	$	—	$	4,736,841	$	750,000	$	5,486,841
2004		—		6,315,789		1,000,000		7,315,789
2005		—		6,315,789		1,000,000		7,315,789
2006		—		6,315,789		1,000,000		7,315,789
2007		14,571,262		8,421,053		1,000,000		23,992,315
Thereafter		41,390,000		4,210,527		95,000,000		140,600,527

Total	$	55,961,262	$	36,315,788	$	99,750,000	$	192,027,050

We must pay a quarterly unused commitment fee, which is based upon our total leverage to operating cash flow ratio and ranges from 0.25% to 0.375% of the unused portion of the maximum commitment. If the unused portion exceeds 50% of the maximum commitment, the fee is increased by 0.375%. For the three months ended March 31, 2003, our unused commitment fee was approximately $43,000.

We are required to satisfy financial covenants, which require us to maintain specified financial ratios and to comply with financial tests. As of March 31, 2003, these financial covenants included:

•

Maximum Total Leverage Test. As of March 31, 2003, our total debt must not have exceeded 6.5 times our consolidated operating cash flow for the four quarters ending on that day (as such terms are defined in our amended and restated credit agreement). For the period from April 1, 2003 through June 30, 2003, the maximum ratio is 6.25 times. For the period from July 1, 2003 through December 31, 2003, the maximum ratio is 6.0 times. For the period from January 1, 2004 through June 30, 2004, the maximum ratio is 5.75 times. For the period from July 1, 2004 through December 31, 2004, the maximum ratio is 5.25 times. For the period from January 1, 2005 through December 31, 2005, the maximum ratio is 4.5 times. For all periods after January 1, 2006, the maximum ratio is 4.0 times.

•

Minimum Interest Coverage Test. Our consolidated operating cash flow for the four quarters ending on the last day of each quarter must not have been less than 2.0 times the amount of its interest expense.

•

Minimum Fixed Charges Test. Our consolidated operating cash flow for any four consecutive quarters must not be less than 1.1 times the amount of its fixed charges. Fixed charges include interest expense, current income tax expense, capital expenditures, and scheduled principal repayments.

As of March 31, 2003, we believe that we were in compliance with all applicable financial covenants. As of March 31, 2003, as calculated pursuant to the terms of our credit agreement, our total leverage ratio was 6.05 times consolidated operating cash flow, our interest coverage ratio was 2.22 times interest expense, and our fixed charges ratio was 1.32 times fixed charges.

The credit facility also prohibits us from paying cash dividends and restricts our ability to make other distributions with respect to our capital stock. The credit facility also contains other customary restrictive covenants. These covenants limit our ability to:

•

incur additional indebtedness and liens;

•

enter into certain investments or joint ventures;

•

consolidate, merge or effect asset sales;

•

enter sale and lease-back transactions;

•

sell or discount accounts receivable;

•

enter into transactions with affiliates or stockholders;

•

sell, assign, pledge, encumber or dispose of capital stock; or

•

change the nature of our business.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. We base our estimates on historical experience and assumptions we consider reasonable at the time of making those estimates. We evaluate our estimates on an on-going basis. Actual results may differ from these estimates under different circumstances or using different assumptions.

Revenue from the sale of broadcast air time is recognized when commercials are broadcast. Revenues are reported net of advertising agency commissions in the condensed consolidated financial statements.

Barter transactions are recorded at the estimated fair value of the products or services received. Revenue from barter transactions is recognized when commercials are broadcast. Products or services are recorded when the products or services are received. If commercials are broadcast before the receipt of products or services, a barter receivable is recorded. If products or services are received before the broadcast of commercials, a barter payable is recorded.

We have recorded an allowance for doubtful accounts for estimated losses resulting from customers’ inability to make payments to us. We review specific accounts by station, the current financial condition of our customers and historical write-off experience when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, then additional allowances may be required.

We have recorded certain deferred tax assets, which we consider realizable due to the existence of certain deferred tax liabilities that are anticipated to reverse during similar future periods; however, we have recorded a valuation allowance to reduce our deferred tax assets related to net operating losses in certain states. If we were to determine that we would be unable to fully realize some or all of our remaining deferred tax assets in the future, an adjustment to our deferred tax assets would be recorded as an expense in the period such determination was made.

We have significant property and equipment recorded in our financial statements. We assess the recoverability of our property and equipment on an on-going basis using estimates of future undiscounted cash flows that we expect to generate from these assets. Our radio stations operate in competitive markets and as such could experience adverse changes in listenership and cash flows. These adverse changes may result in an impairment of our property and equipment in the future.

We have significant FCC broadcasting licenses and goodwill recorded in our financial statements. We test FCC broadcasting licenses and goodwill for impairment at least annually using estimates of fair value based on an appraisal from a qualified independent appraisal company or management’s estimates of future discounted cash flows. Such estimates of fair value, whether by appraisal or management estimate, may result in an impairment of our FCC broadcasting licenses and goodwill in the future. In addition, the use of different underlying assumptions by an appraisal company or management, such as determining future cash flows and discount rates, could result in materially different estimates of fair value and therefore could result in a material impairment of our FCC broadcasting licenses and goodwill.

Recent Pronouncements

In June 2001, FASB issued SFAS 143, Accounting for Asset Retirement Obligations. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 amends SFAS 19 and is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted SFAS 143 with no material impact on its condensed consolidated financial statements.

In June 2002, FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. SFAS 146 nullifies Emerging Issues Task Force Issue No. 94-3 and is effective for exit or disposal activities that are initiated after December 31, 2002. We have adopted SFAS 146 with no material impact on its condensed consolidated financial statements.

In November 2002, FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (the Interpretation), which addresses the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees. The Interpretation also requires the recognition of a liability by a guarantor at the inception of certain guarantees. The Interpretation requires the guarantor to recognize a liability for the non-contingent component of the guarantee, which is the obligation to stand ready to perform in the event that specified triggering events or conditions occur. The initial measurement of this liability is the fair value of the guarantee at inception. The recognition of the liability is required even it is not probable that payments will be required under the guarantee or if the guarantee was issued with a premium payment or as part of a transaction with multiple elements. As noted above, we have adopted the disclosure requirements of the Interpretation and will apply the recognition and measurement provisions for all applicable guarantees entered into after December 31, 2002. To date, we have not entered into guarantees, which would require recognition and measurement pursuant to the provisions of the Interpretation.

additional subordinated financial support from other parties. At the present time, the adoption of the Interpretation is not expected to have a material impact on our condensed consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk is the risk of loss arising from adverse changes in market rates and prices such as interest rates, foreign currency exchange rate and commodity prices. Our primary exposure to market risk is interest rate risk associated with our credit facility. Amounts borrowed under the credit facility incur interest at the London Interbank Offered Rate, or LIBOR, plus additional basis points depending on the outstanding principal balance under the credit facility. As of December 31, 2002, $196.4 million was outstanding under our credit facility. We evaluate our exposure to interest rate risk by monitoring changes in interest rates in the market place.

To manage interest rate risk associated with our credit facility, we have entered into three interest rate collar agreements, one cap agreement, and one swap agreement. Under the collar agreements, our base LIBOR cannot exceed the cap interest rate and our base LIBOR cannot fall below our floor interest rate. Under the cap agreement, our base LIBOR cannot exceed the cap interest rate. Under the swap agreement, we pay a fixed interest rate of 2.26% and the other party pays us a variable amount based on LIBOR. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. As of December 31, 2002 and March 31, 2003, the notional amount upon maturity of these cap and collar agreements was $100.0 million. Our collar, cap and swap agreements as of March 31, 2003 are summarized in the following table:

Agreement	Notional Amount		Floor		Cap		Swap		Expiration Date	Estimated Fair Value
Interest rate collar	$	55,000,000	4.95	%	7.0	%	—		October 2003	$	(1,154,000	)
Interest rate cap		10,000,000	—		6.0		—		May 2004		—
Interest rate collar		15,000,000	1.50		4.5		—		November 2004		(54,000	)
Interest rate collar		10,000,000	1.50		4.4		—		November 2004		(36,000	)
Interest rate swap		10,000,000	—		—		2.26	%	November 2004		(159,000	)

										$	(1,403,000	)

ITEM 4. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit pursuant to the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and, in reaching its conclusion that our disclosure controls and procedures are effective at providing this reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Within the 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date we carried out our evaluation.

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, but we are not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)

Exhibits

Exhibit Number		Description

3.1		Amended certificate of incorporation of the Registrant.(1)

3.2		Third amended and restated bylaws of the Registrant.(2)

10.1		Amended and restated credit agreement between Beasley Mezzanine Holdings, LLC, Fleet National Bank, as syndication agent, Bank of America, as documentation agent, the Bank of New York, as co-documentation agent and managing agent, the Bank of Montreal, Chicago Branch, as administrative agent, and other financial institutions, dated September 30, 2002.(3)

99.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.(4)

99.2		Certification of Vice President, Chief Financial Officer, Secretary and Treasurer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.(4)

(1)

Incorporated by reference to Beasley Broadcast Group’s Registration Statement on Form S-1 (333-91683).

(2)

Incorporated by reference to Exhibit 3.1 to Beasley Broadcast Group’s Annual Report on Form 10-K dated February 13, 2001.

(3)

Incorporated by reference to Exhibit 10.1 to Beasley Broadcast Group’s Quarterly Report on Form 10-Q dated November 13, 2002.

(4)

Furnished herewith. This certification is not being filed under the Exchange Act and is not to be incorporated by reference into any filing of the Company under the Securities Act or Exchange Act.

(b)

Reports on Form 8-K during the three months ended March 31, 2003. No reports on Form 8-K were filed during the three months ended March 31, 2003.

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 thereunto duly authorized.

Certification of Chief Executive Officer

I, George G. Beasley, certify that:

I have reviewed this quarterly report on Form 10-Q of Beasley Broadcast Group, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003


		/s/ GEORGE G. BEASLEY
Title:		Chairman of the Board and Chief Executive Officer

Certification of Vice President, Chief Financial Officer, Secretary and Treasurer

I, Caroline Beasley, certify that:

I have reviewed this quarterly report on Form 10-Q of Beasley Broadcast Group, Inc.;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: May 15, 2003


		/s/ CAROLINE BEASLEY
Title:		Vice President, Chief Financial Officer, Secretary, Treasurer and Director

Date: May 15, 2003

BEASLEY BROADCAST GROUP, INC.

/s/ GEORGE G. BEASLEY

Name:

Title:

George G. Beasley

Chairman of the Board and Chief
Executive Officer