INCORPORATION OR ORGANIZATION) Class A Outstanding at Class B Outstanding at ☒ MARCH 31,SEPTEMBER 30, 2021☐ (§Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☐ May 1,November 2, 2021Common Stock, $0.01 par value per share 21,315,44921,431,824 shares May 1,November 2, 2021Common Stock, $0.01 par value per share 5,553,696 shares
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December 31, 2020 (Note 1) | March 31, 2021 (Unaudited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,325 | $ | 23,394 | ||||
Trade accounts receivable (net of allowances of $14,069 in 2020 and $13,225 in 2021) | 24,469 | 22,974 | ||||||
Unbilled revenue | 3,192 | 2,548 | ||||||
Other receivables (net of allowances of $124 in 2020 and $424 in 2021) | 1,122 | 1,006 | ||||||
Inventories (net of reserves of $1,499 in 2020 and $1,439 in 2021) | 495 | 588 | ||||||
Prepaid expenses | 6,847 | 7,597 | ||||||
Assets held for sale | 3,346 | — | ||||||
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Total current assets | 45,796 | 58,107 | ||||||
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Notes receivable (net of allowance of $461 in 2020 and $831 in 2021) | 721 | 696 | ||||||
Property and equipment (net of accumulated depreciation of $180,336 in 2020 and $183,136 in 2021) | 79,122 | 78,598 | ||||||
Operating lease right-of-use assets | 48,203 | 46,508 | ||||||
Financing lease right-of-use assets | 152 | 138 | ||||||
Broadcast licenses | 319,773 | 319,773 | ||||||
Goodwill | 23,757 | 23,757 | ||||||
Amortizable intangible assets (net of accumulated amortization of $58,897 in 2020 and $59,478 in 2021) | 4,017 | 3,563 | ||||||
Deferred financing costs | 213 | 187 | ||||||
Other assets | 2,817 | 2,627 | ||||||
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Total assets | $ | 524,571 | $ | 533,954 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,006 | $ | 1,312 | ||||
Accrued expenses | 11,002 | 9,932 | ||||||
Accrued compensation and related expenses | 10,242 | 11,153 | ||||||
Accrued interest | 1,225 | 4,875 | ||||||
Contract liabilities | 11,652 | 12,600 | ||||||
Deferred rent income | 147 | 149 | ||||||
Income taxes payable | 563 | 584 | ||||||
Current portion of operating lease liabilities | 8,963 | 8,615 | ||||||
Current portion of financing lease liabilities | 60 | 60 | ||||||
Current portion of long-term debt | 5,000 | — | ||||||
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Total current liabilities | 50,860 | 49,280 | ||||||
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Long-term debt, less current portion | 213,764 | 225,143 | ||||||
Operating lease liabilities, less current portion | 47,740 | 46,058 | ||||||
Financing (capital) lease liabilities, less current portion | 107 | 94 | ||||||
Deferred income taxes | 68,883 | 69,071 | ||||||
Contract liabilities, long-term | 1,869 | 2,159 | ||||||
Deferred rent income, less current portion | 3,864 | 3,841 | ||||||
Other long-term liabilities | 2,205 | 2,236 | ||||||
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Total liabilities | 389,292 | 397,882 | ||||||
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Commitments and contingencies (Note 16) | ||||||||
Stockholders’ Equity: |
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Class A common stock, $0.01 par value; authorized 80,000,000 shares; 23,447,317 and 23,633,099 issued and 21,129,667 and 21,315,449 outstanding at December 31, 2020 and March 31, 2021, respectively | 227 | 229 | ||||||
Class B common stock, $0.01 par value; authorized 20,000,000 shares; 5,553,696 issued and outstanding at December 31, 2020 and March 31, 2021, respectively | 56 | 56 | ||||||
Additional paid-in capital | 247,025 | 247,493 | ||||||
Accumulated deficit | (78,023 | ) | (77,700 | ) | ||||
Treasury stock, at cost (2,317,650 shares at December 31, 2020 and March 31, 2021) | (34,006 | ) | (34,006 | ) | ||||
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Total stockholders’ equity | 135,279 | 136,072 | ||||||
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Total liabilities and stockholders’ equity | $ | 524,571 | $ | 533,954 | ||||
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See accompanying notes
December 31, 2020 (Note 1) | September 30, 2021 (Unaudited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,325 | $ | 23,781 | ||||
Trade accounts receivable (net of allowances of $14,069 in 2020 and $11,680 in 2021) | 24,469 | 24,429 | ||||||
Unbilled revenue | 3,192 | 3,300 | ||||||
Other receivables (net of allowances of $124 in 2020 and $455 in 2021) | 1,122 | 1,589 | ||||||
Inventories | 495 | 907 | ||||||
Prepaid expenses | 6,847 | 7,970 | ||||||
Assets held for sale | 3,346 | 1,875 | ||||||
Total current assets | 45,796 | 63,851 | ||||||
Notes receivable (net of allowance of $461 in 2020 and $996 in 2021) | 721 | 364 | ||||||
Property and equipment (net of accumulated depreciation of $180,336 in 2020 and $185,127 in 2021) | 79,122 | 78,425 | ||||||
Operating lease right-of-use | 48,203 | 44,100 | ||||||
Financing lease right-of-use | 152 | 121 | ||||||
Broadcast licenses | 319,773 | 320,008 | ||||||
Goodwill | 23,757 | 23,986 | ||||||
Amortizable intangible assets (net of accumulated amortization of $58,897 in 2020 and $57,769 in 2021) | 4,017 | 2,785 | ||||||
Deferred financing costs | 213 | 895 | ||||||
Other assets | 2,817 | 3,678 | ||||||
Total assets | $ | 524,571 | $ | 538,213 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,006 | $ | 2,180 | ||||
Accrued expenses | 11,002 | 11,740 | ||||||
Accrued compensation and related expenses | 10,242 | 10,752 | ||||||
Accrued interest | 1,225 | 2,750 | ||||||
Contract liabilities | 11,652 | 11,561 | ||||||
Deferred rent income | 147 | 114 | ||||||
Income taxes payable | 563 | 626 | ||||||
Current portion of operating lease liabilities | 8,963 | 8,604 | ||||||
Current portion of financing lease liabilities | 60 | 59 | ||||||
Current portion of long-term debt | 5,000 | 0 | ||||||
Total current liabilities | 50,860 | 48,386 | ||||||
Long-term debt, less current portion | 213,764 | 208,559 | ||||||
Operating lease liabilities, less current portion | 47,740 | 43,180 | ||||||
Financing (capital) lease liabilities, less current portion | 107 | 79 | ||||||
Deferred income taxes | 68,883 | 69,287 | ||||||
Contract liabilities, long-term | 1,869 | 2,081 | ||||||
Deferred rent income, less current portion | 3,864 | 3,795 | ||||||
Other long-term liabilities | 2,205 | 2,248 | ||||||
Total liabilities | 389,292 | 377,615 | ||||||
Commitments and contingencies (Note 14) | 0 | 0 | ||||||
Stockholders’ Equity: | ||||||||
Class A common stock, $0.01 par value; authorized 80,000,000 shares; 23,447,317 and 23,639,824 issued and 21,129,667 and 21,322,174 outstanding at December 31, 2020 and September 30, 2021, respectively | 227 | 229 | ||||||
Class B common stock, $0.01 par value; authorized 20,000,000 shares; 5,553,696 issued and outstanding at December 31, 2020 and September 30, 2021, respectively | 56 | 56 | ||||||
Additional paid-in capital | 247,025 | 247,668 | ||||||
Accumulated deficit | (78,023 | ) | (53,349 | ) | ||||
Treasury stock, at cost (2,317,650 shares at December 31, 2020 and September 30, 2021) | (34,006 | ) | (34,006 | ) | ||||
Total stockholders’ equity | 135,279 | 160,598 | ||||||
Total liabilities and stockholders’ equity | $ | 524,571 | $ | 538,213 | ||||
See accompanying notes |
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2021 | |||||||
Net broadcast revenue | $ | 45,180 | $ | 44,048 | ||||
Net digital media revenue | 9,104 | 9,619 | ||||||
Net publishing revenue | 3,966 | 5,686 | ||||||
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Total net revenue | 58,250 | 59,353 | ||||||
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Operating expenses: | ||||||||
Broadcast operating expenses, exclusive of depreciation and amortization shown below (including $431 and $443 for the three months ended March 31, 2020 and 2021, respectively, paid to related parties) | 37,327 | 33,343 | ||||||
Digital media operating expenses, exclusive of depreciation and amortization shown below | 8,326 | 8,673 | ||||||
Publishing operating expenses, exclusive of depreciation and amortization shown below | 5,062 | 5,205 | ||||||
Unallocated corporate expenses exclusive of depreciation and amortization shown below (including $180 and $3 for the three months ended March 31, 2020 and 2021, respectively, paid to related parties) | 4,210 | 4,288 | ||||||
Depreciation | 2,713 | 2,589 | ||||||
Amortization | 987 | 581 | ||||||
Change in the estimated fair value of contingent earn-out consideration | (5 | ) | — | |||||
Impairment of indefinite-lived long-term assets other than goodwill | 17,254 | — | ||||||
Impairment of goodwill | 307 | — | ||||||
Net (gain) loss on the disposition of assets | 79 | 318 | ||||||
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Total operating expenses | 76,260 | 54,997 | ||||||
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Operating income (loss) | (18,010 | ) | 4,356 | |||||
Other income (expense): | ||||||||
Interest income | — | 1 | ||||||
Interest expense | (4,032 | ) | (3,926 | ) | ||||
Gain on early retirement of long-term debt | 49 | — | ||||||
Net miscellaneous income and expenses | (52 | ) | 22 | |||||
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Net income (loss) before income taxes | (22,045 | ) | 453 | |||||
Provision for income taxes | 33,159 | 130 | ||||||
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Net income (loss) | $ | (55,204 | ) | $ | 323 | |||
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Basic earnings (loss) per share data: | ||||||||
Basic earnings (loss) per share Class A and Class B common stock | $ | (2.07 | ) | $ | 0.01 | |||
Diluted earnings (loss) per share data: | ||||||||
Diluted earnings (loss) per share Class A and Class B common stock | $ | (2.07 | ) | $ | 0.01 | |||
Basic weighted average Class A and Class B shares outstanding | 26,683,363 | 26,736,639 | ||||||
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Diluted weighted average Class A and Class B shares outstanding | 26,683,363 | 27,138,773 | ||||||
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See accompanying notes
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
Net broadcast revenue | $ | 45,391 | $ | 49,591 | $ | 130,041 | $ | 140,422 | ||||||||
Net digital media revenue | 9,808 | 10,645 | 28,355 | 30,603 | ||||||||||||
Net publishing revenue | 5,442 | 5,747 | 13,366 | 18,093 | ||||||||||||
Total net revenue | 60,641 | 65,983 | 171,762 | 189,118 | ||||||||||||
Operating expenses: | ||||||||||||||||
Broadcast operating expenses, exclusive of depreciation and amortization shown below (including $447 and $480 for the three months ended September 30, 2020 and 2021, respectively, and $1,313 and $1,369 for the nine months ended September 30, 2020 and 2021, respectively, paid to related parties) | 34,283 | 37,463 | 104,704 | 106,968 | ||||||||||||
Digital media operating expenses, exclusive of depreciation and amortization shown below | 7,144 | 8,269 | 23,123 | 25,280 | ||||||||||||
Publishing operating expenses, exclusive of depreciation and amortization shown below | 5,814 | 5,213 | 16,443 | 16,844 | ||||||||||||
Unallocated corporate expenses exclusive of depreciation and amortization shown below (including $18 and $0 for the three months ended September 30, 2020 and 2021, respectively, and $198 and $5 for the nine months ended September 30, 2020 and 2021, respectively, paid to related parties) | 3,849 | 4,284 | 11,909 | 12,764 | ||||||||||||
Debt modification costs | — | 2,347 | — | 2,347 | ||||||||||||
Depreciation | 2,677 | 2,788 | 8,108 | 8,118 | ||||||||||||
Amortization | 751 | 427 | 2,578 | 1,553 | ||||||||||||
Change in the estimated fair value of contingent earn-out consideration | (10 | ) | — | (12 | ) | — | ||||||||||
Impairment of indefinite-lived long-term assets other than goodwill | — | — | 17,254 | — | ||||||||||||
Impairment of goodwill | — | — | 307 | — | ||||||||||||
Net (gain) loss on the disposition of assets | 1,381 | (10,607 | ) | 1,494 | (10,552 | ) | ||||||||||
Total operating expenses | 55,889 | 50,184 | 185,908 | 163,322 | ||||||||||||
Operating income (loss) | 4,752 | 15,799 | (14,146 | ) | 25,796 | |||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 1 | — | 1 | 1 | ||||||||||||
Interest expense | (4,024 | ) | (4,026 | ) | (12,069 | ) | (11,887 | ) | ||||||||
Gain on the forgiveness of PPP loans | — | 11,212 | — | 11,212 | ||||||||||||
Gain (loss) on the early retirement of long-term debt | — | (56 | ) | 49 | (56 | ) | ||||||||||
Net miscellaneous income and (expenses) | 1 | 2 | (45 | ) | 87 | |||||||||||
Net income (loss) before income taxes | 730 | 22,931 | (26,210 | ) | 25,153 | |||||||||||
Provision for income taxes | 401 | 837 | 31,180 | 479 | ||||||||||||
Net income (loss) | $ | 329 | $ | 22,094 | $ | (57,390 | ) | $ | 24,674 | |||||||
Basic income (loss) per share data: | ||||||||||||||||
Basic income (loss) per share | $ | 0.01 | $ | 0.82 | $ | (2.15 | ) | $ | 0.92 | |||||||
Diluted income (loss) per share data: | ||||||||||||||||
Diluted income (loss) per share | $ | 0.01 | $ | 0.81 | $ | (2.15 | ) | $ | 0.91 | |||||||
Basic weighted average shares outstanding | 26,683,363 | 26,870,664 | 26,683,363 | 26,825,483 | ||||||||||||
Diluted weighted average shares outstanding | 27,791,353 | 27,280,949 | 26,683,363 | 27,217,382 | ||||||||||||
See accompanying notes |
Class A | Class B | |||||||||||||||||||||||||||||||
Common Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||
Paid-In | Accumulated | Treasury | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Total | |||||||||||||||||||||||||
Stockholders’ equity, December 31, 2019 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,680 | $ | (23,294 | ) | $ | (34,006 | ) | $ | 189,663 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 103 | — | — | 103 | ||||||||||||||||||||||||
Cash distributions | — | — | — | — | — | (667 | ) | — | (667 | ) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (55,204 | ) | — | (55,204 | ) | ||||||||||||||||||||||
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Stockholders’ equity, March 31, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,783 | $ | (79,165 | ) | $ | (34,006 | ) | $ | 133,895 | ||||||||||||||||
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Distributions per share | $ | 0.025 | $ | 0.025 | ||||||||||||||||||||||||||||
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Common Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||
Paid-In | Accumulated | Treasury | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Total | |||||||||||||||||||||||||
Stockholders’ equity, December 31, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 247,025 | $ | (78,023 | ) | $ | (34,006 | ) | $ | 135,279 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 78 | — | — | 78 | ||||||||||||||||||||||||
Options exercised | 185,782 | 2 | — | — | 390 | — | — | 392 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 323 | — | 323 | ||||||||||||||||||||||||
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Stockholders’ equity, March 31, 2021 | 23,633,099 | $ | 229 | 5,553,696 | $ | 56 | $ | 247,493 | $ | (77,700 | ) | $ | (34,006 | ) | $ | 136,072 | ||||||||||||||||
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data
Class A | Class B | |||||||||||||||||||||||||||||||
Common Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||
Paid-In | Accumulated | Treasury | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Total | |||||||||||||||||||||||||
Stockholders’ equity, December 31, 2019 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,680 | $ | (23,294 | ) | $ | (34,006 | ) | $ | 189,663 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 103 | — | — | 103 | ||||||||||||||||||||||||
Cash distributions | — | — | — | — | — | (667 | ) | — | (667 | ) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (55,204 | ) | — | (55,204 | ) | ||||||||||||||||||||||
Stockholders’ equity, March 31, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,783 | $ | (79,165 | ) | $ | (34,006 | ) | $ | 133,895 | ||||||||||||||||
Distributions per share | $ | 0.025 | $ | 0.025 | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 96 | — | — | 96 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (2,515 | ) | — | (2,515 | ) | ||||||||||||||||||||||
Stockholders’ equity, June 30, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,879 | $ | (81,680 | ) | $ | (34,006 | ) | $ | 131,476 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 74 | — | — | 74 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 329 | — | 329 | ||||||||||||||||||||||||
Stockholders’ equity, September 30, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 246,953 | $ | (81,351 | ) | $ | (34,006 | ) | $ | 131,879 | ||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||||||
Common Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||
Paid-In | Accumulated | Treasury | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Total | |||||||||||||||||||||||||
Stockholders’ equity, December 31, 2020 | 23,447,317 | $ | 227 | 5,553,696 | $ | 56 | $ | 247,025 | $ | (78,023 | ) | $ | (34,006 | ) | $ | 135,279 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 78 | — | — | 78 | ||||||||||||||||||||||||
Options exercised | 185,782 | 2 | — | — | 390 | — | — | 392 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 323 | — | 323 | ||||||||||||||||||||||||
Stockholders’ equity, March 31, 2021 | 23,633,099 | $ | 229 | 5,553,696 | $ | 56 | $ | 247,493 | $ | (77,700 | ) | $ | (34,006 | ) | $ | 136,072 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 84 | — | — | 84 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 2,257 | — | 2,257 | ||||||||||||||||||||||||
Stockholders’ equity, June 30, 2021 | 23,633,099 | $ | 229 | 5,553,696 | $ | 56 | $ | 247,577 | $ | (75,443 | ) | $ | (34,006 | ) | $ | 138,413 | ||||||||||||||||
Stock-based compensation | — | — | — | — | 78 | — | — | 78 | ||||||||||||||||||||||||
Options exercised | 6,725 | — | — | — | 13 | — | — | 13 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 22,094 | — | 22,094 | ||||||||||||||||||||||||
Stockholders’ equity, September 30, 2021 | 23,639,824 | $ | 229 | 5,553,696 | $ | 56 | $ | 247,668 | $ | (53,349 | ) | $ | (34,006 | ) | $ | 160,598 | ||||||||||||||||
Three Months Ended March 31, | ||||||||
2020 | 2021 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (55,204 | ) | $ | 323 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Non-cash stock-based compensation | 103 | 78 | ||||||
Depreciation and amortization | 3,700 | 3,170 | ||||||
Amortization of deferred financing costs | 227 | 213 | ||||||
Non-cash lease expense | 2,252 | 2,161 | ||||||
Provision for bad debts | 1,900 | (295 | ) | |||||
Deferred income taxes | 33,084 | 188 | ||||||
Change in the estimated fair value of contingent earn-out consideration | (5 | ) | — | |||||
Impairment of indefinite-lived long-term assets other than goodwill | 17,254 | — | ||||||
Impairment of goodwill | 307 | — | ||||||
Gain on early retirement of long-term debt | (49 | ) | — | |||||
Net (gain) loss on the disposition of assets | 79 | 318 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and unbilled revenue | 2,419 | 2,549 | ||||||
Inventories | 70 | (93 | ) | |||||
Prepaid expenses and other current assets | (587 | ) | (750 | ) | ||||
Accounts payable and accrued expenses | 4,478 | 2,490 | ||||||
Operating lease liabilities | (2,407 | ) | (2,497 | ) | ||||
Contract liabilities | 133 | 1,122 | ||||||
Deferred rent income | (84 | ) | 170 | |||||
Other liabilities | 6 | 29 | ||||||
Income taxes payable | 57 | 21 | ||||||
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Net cash provided by operating activities | 7,733 | 9,197 | ||||||
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INVESTING ACTIVITIES | ||||||||
Cash paid for capital expenditures net of tenant improvement allowances | (1,587 | ) | (1,859 | ) | ||||
Capital expenditures reimbursable under tenant improvement allowances and trade agreements | (84 | ) | — | |||||
Deposit on broadcast assets and radio station acquisitions | — | (100 | ) | |||||
Proceeds from sale of assets | 2 | 3,501 | ||||||
Other | (428 | ) | (238 | ) | ||||
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Net cash provided by (used in) investing activities | (2,097 | ) | 1,304 | |||||
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FINANCING ACTIVITIES | ||||||||
Payments to repurchase 6.75% Senior Secured Notes | (3,392 | ) | — | |||||
Proceeds from borrowings under ABL Facility | 33,319 | 16 | ||||||
Payments on ABL Facility | (31,745 | ) | (5,016 | ) | ||||
Proceeds from borrowings under PPP Loans | — | 11,195 | ||||||
Payments of debt issuance costs | (1 | ) | (3 | ) | ||||
Proceeds from the exercise of stock options | — | 392 | ||||||
Payments on financing lease liabilities | (18 | ) | (16 | ) | ||||
Payment of cash distribution on common stock | (667 | ) | — | |||||
Book overdraft | (1,885 | ) | — | |||||
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Net cash provided by (used in) financing activities | (4,389 | ) | 6,568 | |||||
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Net increase in cash and cash equivalents | 1,247 | 17,069 | ||||||
Cash and cash equivalents at beginning of year | 6 | 6,325 | ||||||
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Cash and cash equivalents at end of period | $ | 1,253 | $ | 23,394 | ||||
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Nine Months Ended September 30, | ||||||||
2020 | 2021 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (57,390 | ) | $ | 24,674 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Non-cash stock-based compensation | 273 | 240 | ||||||
Depreciation and amortization | 10,686 | 9,671 | ||||||
Amortization of deferred financing costs | 675 | 690 | ||||||
Non-cash lease expense | 6,745 | 6,527 | ||||||
Provision for bad debts | 4,122 | (248 | ) | |||||
Deferred income taxes | 30,954 | 404 | ||||||
Change in the estimated fair value of contingent earn-out consideration | (12 | ) | — | |||||
Impairment of indefinite-lived long-term assets other than goodwill | 17,254 | — | ||||||
Impairment of goodwill | 307 | — | ||||||
Gain on the forgiveness of PPP loans | — | (11,212 | ) | |||||
Gain (loss) on the early retirement of long-term debt | (49 | ) | 56 | |||||
Net (gain) loss on the disposition of assets | 1,494 | (10,552 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and unbilled revenue | 2,565 | (67 | ) | |||||
Inventories | 99 | (412 | ) | |||||
Prepaid expenses and other current assets | (1,343 | ) | (1,218 | ) | ||||
Accounts payable and accrued expenses | 5,871 | 2,596 | ||||||
Operating lease liabilities | (6,396 | ) | (7,317 | ) | ||||
Contract liabilities | 5,274 | 782 | ||||||
Deferred rent income | (268 | ) | 28 | |||||
Other liabilities | 2,254 | 41 | ||||||
Income taxes payable | 30 | 63 | ||||||
Net cash provided by operating activities | 23,145 | 14,746 | ||||||
INVESTING ACTIVITIES | ||||||||
Cash paid for capital expenditures net of tenant improvement allowances | (3,565 | ) | (6,952 | ) | ||||
Capital expenditures reimbursable under tenant improvement allowances and trade agreements | (140 | ) | (138 | ) | ||||
Deposit on broadcast assets and radio station acquisitions | — | (100 | ) | |||||
Purchases of broadcast assets and radio stations | — | (600 | ) | |||||
Purchases of digital media businesses and assets | (400 | ) | (3,980 | ) | ||||
Proceeds from sale of long-lived assets | 188 | 15,771 | ||||||
Proceeds from the cash surrender value of life insurance policies | 2,363 | — | ||||||
Other | (353 | ) | (1,227 | ) | ||||
Net cash provided by (used in) investing activities | (1,907 | ) | 2,774 | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from 2028 Notes | — | 114,731 | ||||||
Payments to repurchase or exchange 2024 Notes | (3,392 | ) | (119,443 | ) | ||||
Proceeds from borrowings under ABL Facility | 38,626 | 16 | ||||||
Payments on ABL Facility | (34,452 | ) | (5,016 | ) | ||||
Proceeds from borrowings under PPP Loans | — | 11,195 | ||||||
Payments under PPP loans | — | 17 | ||||||
Payments of debt issuance costs | (124 | ) | (1,921 | ) | ||||
Proceeds from the exercise of stock options | — | 405 | ||||||
Payments on financing lease liabilities | (52 | ) | (48 | ) | ||||
Payment of cash distribution on common stock | (667 | ) | — | |||||
Book overdraft | (1,885 | ) | — | |||||
Net cash used in financing activities | (1,946 | ) | (64 | ) | ||||
Net increase in cash and cash equivalents | 19,292 | 17,456 | ||||||
Cash and cash equivalents at beginning of year | 6 | 6,325 | ||||||
Cash and cash equivalents at end of period | $ | 19,298 | $ | 23,781 | ||||
Three Months Ended March 31, | ||||||||
2020 | 2021 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Cash paid for interest, net of capitalized interest | $ | 163 | $ | 51 | ||||
Cash paid for interest on finance lease liabilities | $ | 2 | $ | 2 | ||||
Net cash paid for (received from) income taxes | $ | 18 | $ | (79 | ) | |||
Other supplemental disclosures of cash flow information: | ||||||||
Barter revenue | $ | 1,192 | $ | 391 | ||||
Barter expense | $ | 1,034 | $ | 373 | ||||
Non-cash investing and financing activities: | ||||||||
Capital expenditures reimbursable under tenant improvement allowances | $ | 84 | $ | — | ||||
Right-of-use assets acquired through operating leases | $ | 575 | $ | 553 | ||||
Right-of-use assets acquired through financing leases | $ | — | $ | 2 | ||||
Non-cash capital expenditures for property & equipment acquired under trade agreements | $ | 4 | $ | 6 | ||||
Net assets and liabilities assumed in a non-cash acquisition | $ | — | 127 | |||||
Estimated present value of contingent-earn out consideration | $ | — | $ | 11 |
See accompanying notes
Nine Months Ended September 30, | ||||||||
2020 | 2021 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Cash paid for interest, net of capitalized interest | $ | 7,731 | $ | 9,628 | ||||
Cash paid for interest on finance lease liabilities | $ | 6 | $ | 6 | ||||
Net cash paid for (received from) income taxes | $ | 196 | $ | 13 | ||||
Other supplemental disclosures of cash flow information: | ||||||||
Barter revenue | $ | 2,152 | $ | 1,647 | ||||
Barter expense | $ | 1,971 | $ | 1,699 | ||||
Non-cash investing and financing activities: | ||||||||
Capital expenditures reimbursable under tenant improvement allowances | $ | 140 | $ | 138 | ||||
Deferred payments on acquisitions | $ | 708 | 0 | |||||
Right-of-use | $ | 2,715 | $ | 3,466 | ||||
Right-of-use | $ | — | $ | 17 | ||||
Non-cash capital expenditures for property & equipment acquired under trade agreements | $ | 4 | $ | 27 | ||||
Net assets and liabilities assumed in a non-cash acquisition | $ | — | $ | 311 | ||||
Estimated present value of contingent-earn out consideration | $ | — | $ | 11 | ||||
See accompanying notes |
Lower revenue and longer days to collect receivables negatively impacts future availability under our credit facility. Availability under our Asset Based Loan (“ABL Facility”) is subject to a borrowing base consisting of (a) 90% of the eligible accounts receivable plus (b) a calculated amount based on the value of certain real property. The maximum amount available under our ABL Facility was $26.1 million at March 31, 2021 compared to $24.8 million at December 31, 2020, of which none was outstanding at March 31, 2021 compared to $5.0 million outstanding at December 31, 2020.
Wewe implemented several measures during 2020 to reduce costs and conserve cash to ensure that we havehad adequate cash to meet our debt servicing requirements, including:
On March 27, 2020, the
We believe that our customers have benefited frombasis; and
We continue to review and consider any available potential benefit under the CARES Act and the CAA for which we qualify. We cannot predict the manner in which such benefits or any of the other benefits described herein will be allocated or administered and we cannot assure you that we will be able to access such benefits in a timely manner or at all. If the U.S. government or any other governmental authority agrees to provide such aid under the CARES Act, the CAA, or any other crisis relief assistance it may impose certain requirements on the recipients of the aid, including restrictions on executive officer compensation, dividends, prepayment of debt, limitations on debt and other similar restrictions that may apply for a period of time after the aid is repaid or redeemed in full.
July 2021.
Certain reclassifications have been made to the prior year financial statements to conform to the presentation in the current year, which had no impact on the previously reported financial statements.
uncertain tax positions; and
Changes to
In January 2021, the FASB issued ASU 2021-01,Reference Rate Reform (Topic 848): Scope, which refines the scope of ASC 848, Reference Rate Reform, and clarifies guidance as part of the FASB’s ongoing monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and calculating price alignment interest in connection with reference rate reform activities under way in global financial markets. The ASU is effective upon issuance and did not have a material impact on our consolidated financial position, results of operations, cash flows, or presentation thereof.
In June 2016, the FASB issued ASU 2016-13,Financial Instruments-Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. Subsequent to issuing ASU 2016-13, the FASB issued ASU 2018-19,Codification Improvements to Topic 326, Financial Instruments—Credit Losses, for the purpose of clarifying certain aspects of ASU 2016-13. ASU 2018-19 has the same effective date and transition requirements as ASU 2016-13. In April 2019, the FASB issued ASU 2019-04,Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which is effective with the adoption of ASU 2016-13. In May 2019, the FASB issued ASU 2019-05,Financial Instruments – Credit Losses (Topic 326), which is also effective with the adoption of ASU 2016-13. In October 2019, the FASB voted to delay the implementation date for certain companies, including those, such as Salem, that qualify as a smaller reporting company under SEC rules, until January 1, 2023. We will adopt this ASU on its effective date of January 1, 2023. We do not expect the adoption of this ASU to have a material impact on our consolidated financial position, results of operations, cash flows, or presentation thereof.
Acquisitions
On March 8, 2021, we acquired the Triple Threat Trader newsletter. We paid no cash at the time of closing and assumed deferred subscription liabilities of $0.1 million. As part of the purchase agreement, we may pay up to an additional $11,000 in contingent
Acquisition Date | Description | Total Consideration | ||||
(Dollars in thousands) | ||||||
July 2, 2021 | SeniorResource.com (asset acquisition) | $ | 80 | |||
July 1, 2021 | ShiftWorship.com (business acquisition) | 2,600 | ||||
June 1, 2021 | KDIA-AM andKDYA-AM San Francisco, California (business acquisition) | 600 | ||||
April 28, 2021 | Centerline New Media (business acquisition) | 1,300 | ||||
March 8, 2021 | Triple Threat Trader (asset acquisition) | 127 | ||||
$ | 4,707 | |||||
Description | Total Consideration | |||
(Dollars in thousands) | ||||
Cash payments made upon closing | $ | 4,580 | ||
Deferred payments | 116 | |||
Present value of estimated fair value of contingent earn-out consideration | 11 | |||
Total purchase price consideration | $ | 4,707 | ||
Net Broadcast Assets Acquired | Net Digital Assets Acquired | Total Net Assets | ||||||||||||
(Dollars in thousands) | ||||||||||||||
Assets | ||||||||||||||
Property and equipment | $ | 361 | $ | 3,221 | $ | 3,582 | ||||||||
Broadcast licenses | 235 | 0 | 235 | |||||||||||
Goodwill | 4 | 225 | 229 | |||||||||||
Customer lists and contracts | 0 | 789 | 789 | |||||||||||
Domain and brand names | 0 | 66 | 66 | |||||||||||
$ | 600 | $ | 4,301 | $ | 4,901 | |||||||||
Liabilities | ||||||||||||||
Contract liabilities, short-term | 0 | (194 | ) | (194 | ) | |||||||||
$ | 600 | $ | 4,107 | $ | 4,707 | |||||||||
Principal versus Agent Considerations
When another party is involved in providing goods or services to
Contract Assets
Contract Assets—Costs to Obtain a Contract: We capitalize commissions paid to sales personnel in our self-publishing business when customer contracts are signed and advance payment is received. These capitalized costs are recorded as prepaid commission expense in the Consolidated Balance Sheets. The amount capitalized is incremental to the contract and would not have been incurred absent the execution of the customer contract. Commissions paid upon the initial acquisition of a contract are expensed at the point in time that related revenue is recognized. Prepaid commission expenses are periodically reviewedsource for impairment. At March 31, 2021, our prepaid commission expense was $0.7 million.
Contract Liabilities
Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. Additionally, new customers, existing customers without approved credit terms and authors purchasing specific self-publishing services, are required to make payments in advance of the delivery of the products or performance of the services. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities were historically recorded under the caption “deferred revenue” and are reported as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under termseach of our contracts is less than one year. Long-term contract liabilities represent the amountoperating segments:
Nine Months Ended September 30, 2021 | ||||||||||||||||
Broadcast | Digital Media | Publishing | Consolidated | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
By Source of Revenue: | ||||||||||||||||
Block Programming – National | $ | 35,824 | $ | 0— | $ | 0— | $ | 35,824 | ||||||||
Block Programming – Local | 18,072 | 0— | 0— | 18,072 | ||||||||||||
Spot Advertising – National | 10,565 | 0— | 0— | 10,565 | ||||||||||||
Spot Advertising – Local | 30,123 | 0— | 0— | 30,123 | ||||||||||||
Infomercials | 682 | 0— | 0— | 682 | ||||||||||||
Network | 14,729 | 0— | 0— | 14,729 | ||||||||||||
Digital Advertising | 18,415 | 13,859 | 132 | 32,406 | ||||||||||||
Digital Streaming | 3,559 | 2,579 | 0— | 6,138 | ||||||||||||
Digital Downloads and eBooks | 509 | 4,637 | 1,294 | 6,440 | ||||||||||||
Subscriptions | 828 | 9,227 | 262 | 10,317 | ||||||||||||
Book Sales and e-commerce, net of estimated sales returns and allowances | 289 | 163 | 10,851 | 11,303 | ||||||||||||
Self-Publishing Fees | 0— | 0— | 4,730 | 4,730 | ||||||||||||
Print Advertising | 2 | 0— | 123 | 125 | ||||||||||||
Other Revenues | 6,825 | 138 | 701 | 7,664 | ||||||||||||
$ | 140,422 | $ | 30,603 | $ | 18,093 | $ | 189,118 | |||||||||
Timing of Revenue Recognition | ||||||||||||||||
Point in Time | $ | 138,540 | $ | 30,603 | $ | 18,093 | $ | 187,236 | ||||||||
Rental Income (1) | 1,882 | 0— | 0— | 1,882 | ||||||||||||
$ | 140,422 | $ | 30,603 | $ | 18,093 | $ | 189,118 | |||||||||
Nine Months Ended September 30, 2020 | ||||||||||||||||
Broadcast | Digital Media | Publishing | Consolidated | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
By Source of Revenue: | ||||||||||||||||
Block Programming – National | $ | 35,536 | $ | — | $ | — | $ | 35,536 | ||||||||
Block Programming – Local | 18,211 | — | — | 18,211 | ||||||||||||
Spot Advertising – National | 10,179 | — | — | 10,179 | ||||||||||||
Spot Advertising – Local | 28,630 | — | — | 28,630 | ||||||||||||
Infomercials | 750 | — | — | 750 | ||||||||||||
Network | 13,505 | — | — | 13,505 | ||||||||||||
Digital Advertising | 10,676 | 14,473 | 216 | 25,365 | ||||||||||||
Digital Streaming | 1,981 | 2,611 | — | 4,592 | ||||||||||||
Digital Downloads and eBooks | 3,049 | 4,291 | 960 | 8,300 | ||||||||||||
Subscriptions | 868 | 6,679 | 519 | 8,066 | ||||||||||||
Book Sales and e-commerce, net of estimated sales returns and allowances | 1,128 | 108 | 6,849 | 8,085 | ||||||||||||
Self-Publishing Fees | — | — | 3,860 | 3,860 | ||||||||||||
Print Advertising | 1 | — | 278 | 279 | ||||||||||||
Other Revenues | 5,527 | 193 | 684 | 6,404 | ||||||||||||
$ | 130,041 | $ | 28,355 | $ | 13,366 | $ | 171,762 | |||||||||
Timing of Revenue Recognition | ||||||||||||||||
Point in Time | $ | 128,157 | $ | 28,319 | $ | 13,366 | $ | 169,842 | ||||||||
Rental Income (1) | 1,884 | 36 | — | 1,920 | ||||||||||||
$ | 130,041 | $ | 28,355 | $ | 13,366 | $ | 171,762 | |||||||||
(1) | Rental income is not applicable to FASB ASC Topic 606, but shown for the purpose of identifying each revenue source presented in total revenue on our Condensed Consolidated Financial Statements within this report on Form 10-Q. |
Significant changes in our contract liabilities balances during the period are as follows:
Short- Term | Long- Term | |||||||
(Dollars in thousands) | ||||||||
Balance, beginning of period January 1, 2021 | $ | 11,652 | $ | 1,869 | ||||
Revenue recognized during the period that was included in the beginning balance of contract liabilities | (3,814 | ) | — | |||||
Additional amounts recognized during the period | 7,087 | 524 | ||||||
Revenue recognized during the period that was recorded during the period | (2,559 | ) | — | |||||
Transfers | 234 | (234 | ) | |||||
|
|
|
| |||||
Balance, end of period March 31, 2021 | $ | 12,600 | 2,159 | |||||
|
|
|
| |||||
Amount refundable at beginning of period | $ | 11,607 | 1,869 | |||||
Amount refundable at end of period | $ | 12,588 | 2,159 |
We expect to satisfy these performance obligations as follows:
Amount | ||||
For the Twelve Months Ended March 31, | (Dollars in thousands) | |||
2022 | $ | 12,600 | ||
2023 | 1,365 | |||
2024 | 472 | |||
2025 | 184 | |||
2026 | 55 | |||
Thereafter | 83 | |||
|
| |||
$ | 14,759 | |||
|
|
Significant Financing Component
The length of our typical sales agreement is less than 12 months; however, we may sell subscriptions with a two-year term. The balance of our long-term contract liabilities represents the unsatisfied performance obligations for subscriptions with a remaining term in excess of one year. We review long-term contract liabilities that are expected to be completed in excess of one year to assess whether the contract contains a significant financing component. The balance includes subscriptions that will be satisfied at various dates between April 1, 2021 and March 31, 2026. The difference between the promised consideration and the cash selling price of the publications is not significant. Therefore, we have concluded that subscriptions do not contain a significant financing component under ASC 606.
Our self-publishing contracts may exceed a one-year term due to the length of time for an author to submit and approve a manuscript for publication. The author may pay for publishing services in installments over the production timeline with payments due in advance of performance. The timing of the transfer of goods and services under self-publishing arrangements are at the discretion of the author and based on future events that are not substantially within our control. We require advance payments to provide us with protection from incurring costs for products that are unique and only sellable to the author. Based on these considerations, we have concluded that our self-publishing contracts do not contain a significant financing component under ASC 606.
Variable Consideration
Like former revenue recognition guidance, we continue to make significant estimates related to variable consideration at the point of sale, including estimates for refunds and product returns. Under ASC 606, estimates of variable consideration are to be recognized before contingencies are resolved in certain circumstances, including when it is probable that a significant reversal in the amount of any estimated cumulative revenue will not occur.
We enter into agreements under which the amount of revenue we earn is contingent upon the amount of money raised by our customer over the contract term. Our customer is typically a charity or programmer that purchases blocks of programming time or spots to generate revenue from our audience members. Contract terms can range from a few weeks to a few months, depending the charity or programmer. If the campaign does not generate a pre-determined level of donations or revenue to our customer, the consideration that we expect to be entitled to may vary above a minimum base level per the contract. Historically, under ASC Topic 605, we reported variable consideration as revenue when the amount was fixed and determinable. Under ASC 606, variable consideration is to be estimated using the expected value or the most likely amount to the extent it is probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Based on the constraints for using estimates of variable consideration within ASC 606, and our historical experience with these campaigns, we will continue to recognize revenue at the base amount of the campaign with variable consideration recognized when the uncertainty of each campaign is resolved. These constraints include: (1) the amount of consideration received is highly susceptible to factors outside of our influence, specifically the extent to which our audience donates or contributes to our customer or programmer, (2) the length of time in which the uncertainty about the amount of consideration expected is to be resolved, and (3) our experience has shown these contracts have a large number and broad range of possible outcomes.
Practical Expedients and Exemptions
We elected certain practical expedients and policy elections as follows:
We do not adjust the promised amount of consideration for the effects of a significant financing component if the period between transfer of product and customer payment is expected to be less than one year at the time of contract inception;
We do not assess promised goods or services as performance obligations if they are immaterial in the context of the contract with the customer;
We exclude sales and similar taxes from the transaction price;
We treat shipping and handling costs that occur after control transfers as fulfillment activities instead of assessing such activities as separate performance obligations; and
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
A summary of our principal sources of revenue is as follows:
Block Programming revenue may also include variable consideration for charities and programmers that purchase blocks of airtime to generate donations and contributions from our audience.
Broadcast digital advertising revenue consists of local digital advertising, such as the sale of banner advertisements on our owned and operated websites, the sale of advertisements on our own and operated mobile applications, and advertisements in digital newsletters that we produce, as well as national digital advertising, or the sale of custom digital advertising solutions, such as web pages and social media campaigns, that we offer to our customers. Advertising revenue is recorded on a gross basis unless an agency represents the advertiser, in which case, revenue is reported net of the commission retained by the agency.
responsible for delivering the campaign results to our customer with or without the third-party. We are responsible for any payments due to the third-party regardless of the campaign results and without regard to the status of payment from our customer. We have discretion in setting the price to our customer without input or approval from the third-party. Accordingly, revenue is reported gross, as principal, as the performance obligation is delivered, which represents the point in time that control is transferred to the customer thereby completing our performance obligation.
Advertising—
agency
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2021 | |||||||
Net broadcast barter revenue | $ | 1,166 | $ | 391 | ||||
Net digital media barter revenue | — | — | ||||||
Net publishing barter revenue | 26 | — | ||||||
Net broadcast barter expense | $ | 1,034 | $ | 373 | ||||
Net digital media barter expense | — | — | ||||||
Net publishing barter expense | — | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net broadcast barter revenue | $ | 444 | $ | 582 | $ | 2,118 | $ | 1,647 | ||||||||
Net digital media barter revenue | — | — | — | — | ||||||||||||
Net publishing barter revenue | 3 | — | 34 | — | ||||||||||||
Net broadcast barter expense | $ | 413 | $ | 619 | $ | 1,971 | $ | 1,704 | ||||||||
Net digital media barter expense | — | 0— | — | 0— | ||||||||||||
Net publishing barter expense | — | (2 | ) | — | (5 | ) |
Three Months Ended March 31, 2021 | ||||||||||||||||
Broadcast | Digital Media | Publishing | Consolidated | |||||||||||||
(dollars in thousands) | ||||||||||||||||
By Source of Revenue: | ||||||||||||||||
Block Programming—National | $ | 11,461 | $ | — | $ | — | $ | 11,461 | ||||||||
Block Programming—Local | 5,956 | — | — | 5,956 | ||||||||||||
Spot Advertising—National | 3,660 | — | — | 3,660 | ||||||||||||
Spot Advertising—Local | 8,895 | — | — | 8,895 | ||||||||||||
Infomercials | 237 | — | — | 237 | ||||||||||||
Network | 4,871 | — | — | 4,871 | ||||||||||||
Digital Advertising | 5,781 | 4,413 | 62 | 10,256 | ||||||||||||
Digital Streaming | 853 | 844 | — | 1,697 | ||||||||||||
Digital Downloads and eBooks | 60 | 1,479 | 339 | 1,878 | ||||||||||||
Subscriptions | 286 | 2,773 | 158 | 3,217 | ||||||||||||
Book Sales and e-commerce, net of estimated sales returns and allowances | 89 | 31 | 3,208 | 3,328 | ||||||||||||
Self-Publishing Fees | — | — | 1,624 | 1,624 | ||||||||||||
Print Advertising | — | — | 68 | 68 | ||||||||||||
Other Revenues | 1,899 | 79 | 227 | 2,205 | ||||||||||||
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| |||||||||
$ | 44,048 | $ | 9,619 | $ | 5,686 | $ | 59,353 | |||||||||
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| |||||||||
Timing of Revenue Recognition | ||||||||||||||||
Point in Time | $ | 43,425 | $ | 9,619 | 5,686 | $ | 58,730 | |||||||||
Rental Income (1) | 623 | — | — | 623 | ||||||||||||
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| |||||||||
$ | 44,048 | $ | 9,619 | $ | 5,686 | $ | 59,353 | |||||||||
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|
Three Months Ended March 31, 2020 | ||||||||||||||||
Broadcast | Digital Media | Publishing | Consolidated | |||||||||||||
(dollars in thousands) | ||||||||||||||||
By Source of Revenue: | ||||||||||||||||
Block Programming—National | $ | 12,034 | $ | — | $ | — | $ | 12,034 | ||||||||
Block Programming—Local | 6,808 | — | — | 6,808 | ||||||||||||
Spot Advertising—National | 3,957 | — | — | 3,957 | ||||||||||||
Spot Advertising—Local | 11,357 | — | — | 11,357 | ||||||||||||
Infomercials | 308 | — | — | 308 | ||||||||||||
Network | 4,388 | — | — | 4,388 | ||||||||||||
Digital Advertising | 3,326 | 4,713 | 99 | 8,138 | ||||||||||||
Digital Streaming | 608 | 915 | — | 1,523 | ||||||||||||
Digital Downloads and eBooks | — | 1,245 | 254 | 1,499 | ||||||||||||
Subscriptions | 282 | 2,135 | 177 | 2,594 | ||||||||||||
Book Sales and e-commerce, net of estimated sales returns and allowances | 76 | 28 | 1,723 | 1,827 | ||||||||||||
Self-Publishing Fees | — | — | 1,402 | 1,402 | ||||||||||||
Print Advertising | 1 | — | 102 | 103 | ||||||||||||
Other Revenues | 2,035 | 68 | 209 | 2,312 | ||||||||||||
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| |||||||||
$ | 45,180 | $ | 9,104 | $ | 3,966 | $ | 58,250 | |||||||||
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| |||||||||
Timing of Revenue Recognition | ||||||||||||||||
Point in Time | $ | 44,563 | $ | 9,104 | $ | 3,966 | $ | 57,633 | ||||||||
Rental Income (1) | 617 | — | — | 617 | ||||||||||||
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| |||||||||
$ | 45,180 | $ | 9,104 | $ | 3,966 | $ | 58,250 | |||||||||
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|
Short-Term | Long-Term | |||||||
(Dollars in thousands) | ||||||||
Balance, beginning of period January 1, 2021 | $ | 11,652 | $ | 1,869 | ||||
Revenue recognized during the period that was included in the beginning balance of contract liabilities | (7,770 | ) | 0— | |||||
Additional amounts recognized during the period | 19,742 | 883 | ||||||
Revenue recognized during the period that was recorded during the period | (12,734 | ) | 0— | |||||
Transfers | 671 | (671 | ) | |||||
Balance, end of period September 30, 2021 | $ | 11,561 | $ | 2,081 | ||||
Amount refundable at beginning of period | $ | 11,607 | $ | 1,869 | ||||
Amount refundable at end of period | $ | 11,549 | $ | 2,081 |
Amount | ||||
For the Twelve Months Ended September 30, | (Dollars in thousands) | |||
2022 | $ | 11,561 | ||
2023 | 979 | |||
2024 | 787 | |||
2025 | 238 | |||
2026 | 77 | |||
Thereafter | 0 | |||
$ | 13,642 | |||
The following table provides details of inventory on hand:
December 31, 2020 | March 31, 2021 | |||||||
(Dollars in thousands) | ||||||||
Book inventories | $ | 1,994 | $ | 2,027 | ||||
Reserve for obsolescence | (1,499 | ) | (1,439 | ) | ||||
|
|
|
| |||||
Inventory, net— | $ | 495 | $ | 588 | ||||
|
|
|
|
”
As of December 31, 2020 | As of March 31, 2021 | |||||||
(Dollars in thousands) | ||||||||
Land | $ | 30,254 | $ | 30,254 | ||||
Buildings | 28,922 | 28,993 | ||||||
Office furnishings and equipment | 36,875 | 37,289 | ||||||
Antennae, towers and transmitting equipment | 78,057 | 78,152 | ||||||
Studio, production and mobile equipment | 29,023 | 29,389 | ||||||
Computer software and website development costs | 33,928 | 34,085 | ||||||
Record and tape libraries | 17 | 17 | ||||||
Automobiles | 1,514 | 1,514 | ||||||
Leasehold improvements | 18,187 | 18,208 | ||||||
Construction-in-progress | 2,681 | 3,833 | ||||||
|
|
|
| |||||
$ | 259,458 | $ | 261,734 | |||||
Less accumulated depreciation | (180,336 | ) | (183,136 | ) | ||||
|
|
|
| |||||
$ | 79,122 | $ | 78,598 | |||||
|
|
|
|
December 31, 2020 | September 30, 2021 | |||||||
(Dollars in thousands) | ||||||||
Buildings | $ | 28,922 | $ | 28,567 | ||||
Office furnishings and equipment | 36,875 | 36,592 | ||||||
Antennae, towers and transmitting equipment | 78,057 | 77,543 | ||||||
Studio, production, and mobile equipment | 29,023 | 29,333 | ||||||
Computer software and website development costs | 33,928 | 38,272 | ||||||
Record and tape libraries | 17 | — | ||||||
Automobiles | 1,514 | 1,492 | ||||||
Leasehold improvements | 18,187 | 18,703 | ||||||
$ | 226,523 | $ | 230,502 | |||||
Less accumulated depreciation | (180,336 | ) | (185,127 | ) | ||||
46,187 | 45,375 | |||||||
Land | $ | 30,254 | $ | 27,040 | ||||
Construction-in-progress | 2,681 | 6,010 | ||||||
$ | 79,122 | $ | 78,425 | |||||
significant unobservable inputs that reflect our own assumptions about the estimates that market participants would use in measuring fair value, including assumptions about risk. If actual future results are less favorable than the assumptions and estimates we used, we are subject to future impairment charges, the amount of which may be material. There were no indications of impairment during the three monthsthree- and nine-month period ended March 31, 2021.
September 30, 2021
March 31, 2021 | ||||||||||||
(Dollars in thousands) | ||||||||||||
Related Party | Other | Total | ||||||||||
Operating Leases | ||||||||||||
Operating leases ROU assets | $ | 6,642 | $ | 39,866 | $ | 46,508 | ||||||
Operating lease liabilities (current) | $ | 938 | $ | 7,677 | $ | 8,615 | ||||||
Operating lease liabilities (non-current) | 5,860 | 40,198 | 46,058 | |||||||||
|
|
|
|
|
| |||||||
Total operating lease liabilities | $ | 6,798 | $ | 47,875 | $ | 54,673 | ||||||
|
|
|
|
|
|
September 30, 2021 | ||||||||||||
(Dollars in thousands) | ||||||||||||
Operating Leases | Related Party | Other | Total | |||||||||
Operating leases ROU assets | $ | 6,303 | $ | 37,797 | $ | 44,100 | ||||||
Operating lease liabilities (current) | $ | 1,004 | $ | 7,600 | $ | 8,604 | ||||||
Operating lease liabilities (non-current) | 5,479 | 37,701 | 43,180 | |||||||||
Total operating lease liabilities | $ | 6,483 | $ | 45,301 | $ | 51,784 | ||||||
Weighted Average Remaining Lease Term | ||||
| ||||
Operating leases | 7.8 years | |||
Finance leases | 2.9 years | |||
Weighted Average Discount Rate | ||||
| 7.98 | % | ||
| 5.74 | % | ||
|
Three Months Ended March 31, 2021 | ||||
(Dollars in thousands) | ||||
Amortization of finance lease ROU Assets | $ | 16 | ||
Interest on finance lease liabilities | 2 | |||
|
| |||
Finance lease expense | 18 | |||
Operating lease expense | 3,214 | |||
Variable lease expense | 190 | |||
Short-term lease expense | 157 | |||
|
| |||
Total lease expense | $ | 3,579 | ||
|
|
Nine Months Ended September 30, 2021 | ||||
(Dollars in thousands) | ||||
Amortization of finance lease ROU Assets | $ | 48 | ||
Interest on finance lease liabilities | 6 | |||
Finance lease expense | 54 | |||
Operating lease expense | 9,656 | |||
Variable lease expense | 430 | |||
Short-term lease expense | 444 | |||
Total lease expense | $ | 10,584 | ||
Three Months Ended March 31, 2021 | ||||
(Dollars in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | 3,569 | ||
Operating cash flows from finance leases | 1 | |||
Financing cash flows from finance leases | 16 | |||
Leased assets obtained in exchange for new operating lease liabilities | $ | 553 | ||
Leased assets obtained in exchange for new finance lease liabilities | 2 |
Nine Months Ended September 30, 2021 | ||||
(Dollars in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | 10,403 | ||
Operating cash flows from finance leases | 4 | |||
Financing cash flows from finance leases | 48 | |||
Leased assets obtained in exchange for new operating lease liabilities | $ | 3,466 | ||
Leased assets obtained in exchange for new finance lease liabilities | 17 |
Future minimum lease | Operating Leases | |||||||||||||||||||
Related Party | Other | Total | Finance Leases | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
2021 (Apr-Dec) | $ | 1,466 | $ | 11,042 | $ | 12,508 | $ | 65 | $ | 12,573 | ||||||||||
2022 | 1,620 | 10,744 | 12,364 | 57 | 12,421 | |||||||||||||||
2023 | 1,018 | 9,209 | 10,227 | 31 | 10,258 | |||||||||||||||
2024 | 1,014 | 7,030 | 8,044 | 12 | 8,056 | |||||||||||||||
2025 | 1,043 | 5,928 | 6,971 | 4 | 6,975 | |||||||||||||||
Thereafter | 3,797 | 24,763 | 28,560 | — | 28,560 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Undiscounted Cash Flows | $ | 9,958 | $ | 68,716 | $ | 78,674 | $ | 169 | $ | 78,843 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less: imputed interest | (3,160 | ) | (20,841 | ) | (24,001 | ) | (15 | ) | (24,016 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 6,798 | $ | 47,875 | $ | 54,673 | $ | 154 | $ | 54,827 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Reconciliation to lease liabilities: | ||||||||||||||||||||
Lease liabilities—current | $ | 938 | $ | 7,677 | $ | 8,615 | $ | 60 | $ | 8,675 | ||||||||||
Lease liabilities—long-term | 5,860 | 40,198 | 46,058 | 94 | 46,152 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Lease Liabilities | $ | 6,798 | $ | 47,875 | $ | 54,673 | $ | 154 | $ | 54,827 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Operating Leases | ||||||||||||||||||||
Related Party | Other | Total | Finance Leases | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
2021 (Oct-Dec) | $ | 1,505 | $ | 10,789 | $ | 12,294 | $ | 66 | $ | 12,360 | ||||||||||
2022 | 1,370 | 10,908 | 12,278 | 47 | 12,325 | |||||||||||||||
2023 | 1,070 | 8,533 | 9,603 | 24 | 9,627 | |||||||||||||||
2024 | 1,021 | 6,890 | 7,911 | 10 | 7,921 | |||||||||||||||
2025 | 1,089 | 5,640 | 6,729 | 1 | 6,730 | |||||||||||||||
Thereafter | 3,293 | 22,222 | 25,515 | — | 25,515 | |||||||||||||||
Undiscounted Cash Flows | $ | 9,348 | $ | 64,982 | $ | 74,330 | $ | 148 | $ | 74,478 | ||||||||||
Less: imputed interest | (2,865 | ) | (19,681 | ) | (22,546 | ) | (10 | ) | (22,556 | ) | ||||||||||
Total | $ | 6,483 | $ | 45,301 | $ | 51,784 | $ | 138 | $ | 51,922 | ||||||||||
Reconciliation to lease liabilities: | ||||||||||||||||||||
Lease liabilities – current | $ | 1,004 | $ | 7,600 | $ | 8,604 | $ | 59 | $ | 8,663 | ||||||||||
Lease liabilities – long-term | 5,479 | 37,701 | 43,180 | 79 | 43,259 | |||||||||||||||
Total Lease Liabilities | $ | 6,483 | $ | 45,301 | $ | 51,784 | $ | 138 | $ | 51,922 | ||||||||||
| Twelve Months Ended December 31, 2020 | Three Months Ended March 31, 2021 | ||||||
(Dollars in thousands) | ||||||||
Balance before cumulative loss on impairment, beginning of period | $ | 441,143 | $ | 440,052 | ||||
Accumulated loss on impairment, beginning of period | (103,285 | ) | (120,279 | ) | ||||
|
|
|
| |||||
Balance after cumulative loss on impairment, beginning of period | 337,858 | 319,773 | ||||||
|
|
|
| |||||
Dispositions of radio stations | (1,091 | ) | — | |||||
Impairments based on the estimated fair value of broadcast licenses | (16,994 | ) | — | |||||
|
|
|
| |||||
Balance, end of period after cumulative loss on impairment | $ | 319,773 | $ | 319,773 | ||||
|
|
|
| |||||
Balance, end of period before cumulative loss on impairment | $ | 440,052 | $ | 440,052 | ||||
Accumulated loss on impairment, end of period | (120,279 | ) | (120,279 | ) | ||||
|
|
|
| |||||
Balance, end of period after cumulative loss on impairment | $ | 319,773 | $ | 319,773 | ||||
|
|
|
|
Broadcast Licenses | Twelve Months Ended December 31, 2020 | Nine Months Ended September 30, 2021 | ||||||
(Dollars in thousands) | ||||||||
Balance before cumulative loss on impairment, beginning of period | $ | 435,300 | $ | 434,209 | ||||
Accumulated loss on impairment, beginning of period | (97,442 | ) | (114,436 | ) | ||||
Balance after cumulative loss on impairment, beginning of period | 337,858 | 319,773 | ||||||
Acquisitions of radio stations | — | 235 | ||||||
Dispositions of radio stations | (1,091 | ) | — | |||||
Impairments based on the estimated fair value of broadcast licenses | (16,994 | ) | — | |||||
Balance, end of period after cumulative loss on impairment | $ | 319,773 | $ | 320,008 | ||||
Balance, end of period before cumulative loss on impairment | $ | 434,209 | $ | 434,444 | ||||
Accumulated loss on impairment, end of period | (114,436 | ) | (114,436 | ) | ||||
Balance, end of period after cumulative loss on impairment | $ | 319,773 | $ | 320,008 | ||||
Goodwill | Twelve Months Ended December 31, 2020 | Three Months Ended March 31, 2021 | ||||||
(Dollars in thousands) | ||||||||
Balance, beginning of period before cumulative loss on impairment, | $ | 28,454 | $ | 28,520 | ||||
Accumulated loss on impairment | (4,456 | ) | (4,763 | ) | ||||
|
|
|
| |||||
Balance, beginning of period after cumulative loss on impairment | 23,998 | 23,757 | ||||||
|
|
|
| |||||
Acquisitions of radio stations | 66 | — | ||||||
Impairments based on the estimated fair value goodwill | (307 | ) | — | |||||
|
|
|
| |||||
Ending period balance | $ | 23,757 | $ | 23,757 | ||||
|
|
|
| |||||
Balance, end of period before cumulative loss on impairment | 28,520 | 28,520 | ||||||
Accumulated loss on impairment | (4,763 | ) | (4,763 | ) | ||||
|
|
|
| |||||
Ending period balance | $ | 23,757 | $ | 23,757 | ||||
|
|
|
|
Goodwill | Twelve Months Ended December 31, 2020 | Nine Months Ended September 30, 2021 | ||||||
(Dollars in thousands) | ||||||||
Balance, beginning of period before cumulative loss on | $ | 28,454 | $ | 28,520 | ||||
Accumulated loss on impairment | (4,456 | ) | (4,763 | ) | ||||
Balance, beginning of period after cumulative loss on impairment | 23,998 | 23,757 | ||||||
Acquisitions of radio stations | 66 | 4 | ||||||
Acquisitions of digital media entities | — | 225 | ||||||
Impairments based on the estimated fair value goodwill | (307 | ) | — | |||||
Ending period balance | $ | 23,757 | $ | 23,986 | ||||
Balance, end of period before cumulative loss on impairment | 28,520 | 28,749 | ||||||
Accumulated loss on impairment | (4,763 | ) | (4,763 | ) | ||||
Ending period balance | $ | 23,757 | $ | 23,986 | ||||
As of March 31, 2021 | ||||||||||||
Accumulated | ||||||||||||
Cost | Amortization | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Customer lists and contracts | $ | 24,139 | $ | (22,690 | ) | $ | 1,449 | |||||
Domain and brand names | 20,350 | (19,367 | ) | 983 | ||||||||
Favorable and assigned leases | 2,188 | (1,947 | ) | 241 | ||||||||
Subscriber base and lists | 9,886 | (9,087 | ) | 799 | ||||||||
Author relationships | 2,771 | (2,767 | ) | 4 | ||||||||
Non-compete agreements | 2,041 | (1,991 | ) | 50 | ||||||||
Other amortizable intangible assets | 1,666 | (1,629 | ) | 37 | ||||||||
|
|
|
|
|
| |||||||
$ | 63,041 | $ | (59,478 | ) | $ | 3,563 | ||||||
|
|
|
|
|
|
As of December 31, 2020 | ||||||||||||
Accumulated | ||||||||||||
Cost | Amortization | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Customer lists and contracts | $ | 24,012 | $ | (22,533 | ) | $ | 1,479 | |||||
Domain and brand names | 20,350 | (19,127 | ) | 1,223 | ||||||||
Favorable and assigned leases | 2,188 | (1,943 | ) | 245 | ||||||||
Subscriber base and lists | 9,886 | (8,974 | ) | 912 | ||||||||
Author relationships | 2,771 | (2,765 | ) | 6 | ||||||||
Non-compete agreements | 2,041 | (1,954 | ) | 87 | ||||||||
Other amortizable intangible assets | 1,666 | (1,601 | ) | 65 | ||||||||
|
|
|
|
|
| |||||||
$62,914 | $(58,897) | $4,017 | ||||||||||
|
|
|
|
|
|
September 30, 2021 | ||||||||||||
Accumulated | ||||||||||||
Cost | Amortization | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Customer lists and contracts | $ | 23,700 | $ | (21,987 | ) | $ | 1,713 | |||||
Domain and brand names | 19,875 | (19,340 | ) | 535 | ||||||||
Favorable and assigned leases | 2,188 | (1,955 | ) | 233 | ||||||||
Subscriber base and lists | 8,647 | (8,343 | ) | 304 | ||||||||
Author relationships | 2,771 | (2,771 | ) | — | ||||||||
Non-compete agreements | 2,041 | (2,041 | ) | — | ||||||||
Other amortizable intangible assets | 1,332 | (1,332 | ) | — | ||||||||
$ | 60,554 | $ | (57,769 | ) | $ | 2,785 | ||||||
December 31, 2020 | ||||||||||||
Accumulated | ||||||||||||
Cost | Amortization | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Customer lists and contracts | $ | 24,012 | $ | (22,533 | ) | $ | 1,479 | |||||
Domain and brand names | 20,350 | (19,127 | ) | 1,223 | ||||||||
Favorable and assigned leases | 2,188 | (1,943 | ) | 245 | ||||||||
Subscriber base and lists | 9,886 | (8,974 | ) | 912 | ||||||||
Author relationships | 2,771 | (2,765 | ) | 6 | ||||||||
Non-compete agreements | 2,041 | (1,954 | ) | 87 | ||||||||
Other amortizable intangible assets | 1,666 | (1,601 | ) | 65 | ||||||||
$ | 62,914 | $ | (58,897 | ) | $ | 4,017 | ||||||
| Amortization Expense | |||
(Dollars in thousands) | ||||
2021 (Apr – Dec) | $ | 1,297 | ||
2022 | 1,252 | |||
2023 | 717 | |||
2024 | 92 | |||
2025 | 8 | |||
Thereafter | 197 | |||
|
| |||
Total | $ | 3,563 | ||
|
|
Year Ended December 31, | Amortization Expense | |||
(Dollars in thousands) | ||||
2021 (Oct – Dec) | $ | 341 | ||
2022 | 1,219 | |||
2023 | 796 | |||
2024 | 205 | |||
2025 | 21 | |||
Thereafter | 203 | |||
Total | $ | 2,785 | ||
Salem Media Group, Inc. has no independent assets or operations,
December 31, 2020 | September 30, 2021 | |||||||
(Dollars in thousands) | ||||||||
7.125% Senior Secured Notes | $ | — | $ | 114,731 | ||||
Less unamortized discount and debt issuance costs based on imputed interest rate of 7.64% | — | (4,048 | ) | |||||
7.125% Senior Secured Notes net carrying value | — | 110,683 | ||||||
6.75% Senior Secured Notes | 216,341 | 98,815 | ||||||
Less unamortized debt issuance costs based on imputed interest rate of 7.10% | (2,577 | ) | (939 | ) | ||||
6.75% Senior Secured Notes net carrying value | 213,764 | 97,876 | ||||||
Asset-Based Revolving Credit Facility principal outstanding (1) | 5,000 | — | ||||||
SBA Paycheck Protection Program loans | — | 0— | ||||||
Long-term debt less unamortized discount and debt issuance costs | $ | 218,764 | $ | 208,559 | ||||
Less current portion | (5,000 | ) | — | |||||
Long-term debt less unamortized discount and debt issuance costs, net of current portion | $ | 213,764 | $ | 208,559 | ||||
(1) | As of September 30, 2021, the Asset-Based Revolving Credit Facility (“ABL”), had a borrowing base of $24.6 million, 0 outstanding borrowings and $0.3 million of outstanding letters of credit, resulting in a $24.3 million borrowing base availability. |
SBA PPP Loans
We received $11.2September 30, 2021:
6.75% Senior Secured Notes
On May 19, 2017, we issued the Notes in a private placement. 470.
The Notes are secured by a first-priority lien on substantially all assets of ours and the Subsidiary Guarantors other than the ABL Facility Priority Collateral (as described below) (the “Notes Priority Collateral”). There is no direct lien on our FCC licenses to the extent prohibited by law or regulation (other than the economic value and proceeds thereof).
The Notes were redeemable, in whole or in part, at any time on or beforeprior to June 1, 20202024 at a price equal to 100% of the principal amount of the 2028 Notes plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but not including, the redemption date. At any time on or after June 1, 2020,2024, we may redeem some or all of the 2028 Notes are redeemable at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forth in the 2028 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including the redemption date.
In addition, we may redeem up to 35% of the aggregate principal amount of the 2028 Notes before June 1, 2024 with the net cash proceeds from certain equity offerings at a redemption price of 107.125% of the principal amount plus accrued and unpaid interest, if any, to, but not including the redemption date. We may also redeem up to 10% of the aggregate original principal amount of the 2028 Notes per twelve-month period, in connection with up to two redemptions in such twelve-month period, at a redemption price of 101% of the principal amount plus accrued and unpaid interest to, but not including, the redemption date.
The Indenture provides for the following events of default (each, an “Event of Default”): (i) default in payment of principal or premium on the Notes at maturity, upon repurchase, acceleration, optional redemption or otherwise; (ii) default for At September 30, days in payment of interest on the Notes; (iii) the failure by us or certain restricted subsidiaries to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (iv) the failure of any guarantee by certain significant Subsidiary Guarantors to be in full force and effect and enforceable in accordance with its terms, subject to notice and lapse of time; (v) certain accelerations (including failure to pay within any grace period) of other indebtedness of ours or any restricted subsidiary if the amount accelerated (or so unpaid) is at least $15 million; (vi) certain judgments for the payment of money in excess of $15 million; (vii) certain events of bankruptcy or insolvency with respect to us or any significant subsidiary; and (viii) certain defaults with respect to any collateral having a fair market value in excess of $15 million. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare the principal of the Notes and any accrued interest on the Notes to be due and payable immediately, subject to remedy or cure in certain cases. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. At March 31, 2021, we were, and we remain, in compliance with all of the covenants under the Indenture.
Based on the balance
As described above, on September 10, 2021, we exchanges of $112.8 million of the 2024 Notes for $114.7 million of newly issued 2028 Notes, reflecting a call premium of 1.688%. Bond issuance costs of $1.1 million associated with the $112.8 million of the 2024 Notes are being amortized as part of the effective yield on the 2028 Notes.
Date | Principal Repurchased | Cash Paid | % of Face Value | Bond Issue Costs | Net Gain | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
January 30, 2020 | $ | 2,250 | $ | 2,194 | 97.50 | % | $ | 34 | $ | 22 | ||||||||||
January 27, 2020 | 1,245 | 1,198 | 96.25 | % | 20 | 27 | ||||||||||||||
December 27, 2019 | 3,090 | 2,874 | 93.00 | % | 48 | 167 | ||||||||||||||
November 27, 2019 | 5,183 | 4,548 | 87.75 | % | 82 | 553 | ||||||||||||||
November 15, 2019 | 3,791 | 3,206 | 84.58 | % | 61 | 524 | ||||||||||||||
March 28, 2019 | 2,000 | 1,830 | 91.50 | % | 37 | 134 | ||||||||||||||
March 28, 2019 | 2,300 | 2,125 | 92.38 | % | 42 | 133 | ||||||||||||||
February 20, 2019 | 125 | 114 | 91.25 | % | 2 | 9 | ||||||||||||||
February 19, 2019 | 350 | 319 | 91.25 | % | 7 | 24 | ||||||||||||||
February 12, 2019 | 1,325 | 1,209 | 91.25 | % | 25 | 91 | ||||||||||||||
January 10, 2019 | 570 | 526 | 92.25 | % | 9 | 35 | ||||||||||||||
December 21, 2018 | 2,000 | 1,835 | 91.75 | % | 38 | 127 | ||||||||||||||
December 21, 2018 | 1,850 | 1,702 | 92.00 | % | 35 | 113 | ||||||||||||||
December 21, 2018 | 1,080 | 999 | 92.50 | % | 21 | 60 | ||||||||||||||
November 17, 2018 | 1,500 | 1,357 | 90.50 | % | 29 | 114 | ||||||||||||||
May 4, 2018 | 4,000 | 3,770 | 94.25 | % | 86 | 144 | ||||||||||||||
April 10, 2018 | 4,000 | 3,850 | 96.25 | % | 87 | 63 | ||||||||||||||
April 9, 2018 | 2,000 | 1,930 | 96.50 | % | 43 | 27 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
$ | 38,659 | $ | 35,586 | $ | 706 | $ | 2,367 | |||||||||||||
|
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|
|
|
|
|
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a reduction of the debt proceeds that are being amortized to
The ABL Facility is a five-year $30.0 million revolving credit facility due March 1, 2024, which includes a $5.0 million subfacility for standby letters of credit and a $7.5 million subfacility for swingline loans. All borrowings under the ABL Facility accrue interest at a rate equal to a base rate or LIBOR plus a spread. The spread, which is based on an availability-based measure, ranges from 0.50% to 1.00% for base rate borrowings and 1.50% to 2.00% for LIBOR borrowings. If an event of default occurs, the interest rate may increase by 2.00% per annum. Amounts outstanding under the ABL Facility may be paid and then reborrowed at our discretion without penalty or premium. Additionally, we pay a commitment fee on the unused balance from 0.25% to 0.375% per year based on the level of borrowings.
On October 20, 2020, we entered into a fourth amendment to our ABL Facility that provides a one-time waiver with respect to the current covenant testing period allowing the covenant trigger event date be the first day after the availability on the ABL Facility had equaled or exceeded (1) 15% of the maximum revolver amount and (2) $4.5 million and a waiver permitting our July 2020 financial statements to be issued on or before September 30, 2020 due to delays that were caused by a ransomware attack.
On April 7, 2020, we entered into a third amendment to ABL Facility that increased the advance rate on eligible accounts receivable from 85% to 90% and extended the maturity date from May 19, 2022 to March 1, 2024. The April 7, 2020 amendment also allows for an alternative benchmark rate that may include SOFR due to LIBOR being scheduled to be discontinued at the end of calendar year 2021.
The Credit Agreement includes a springing fixed charge coverage ratio of 1.0 to 1.0, which is tested during the period commencing on the last day of the fiscal month most recently ended prior to the date on which Availability (as defined in the Credit Agreement) is less than the greater of 15% of the Maximum Revolver Amount (as defined in the Credit Agreement) and $4.5 million and continuing for a period of 60 consecutive days after the first day on which Availability exceeds such threshold amount. The Credit Agreement also includes other negative covenants that are customary for credit facilities of this type, including covenants that, subject to exceptions described in the Credit Agreement, restrict our ability and the ability of our subsidiaries (i) to incur additional indebtedness; (ii) to make investments; (iii) to make distributions, loans or transfers of assets; (iv) to enter into, create, incur, assume or suffer to exist any liens, (v) to sell assets; (vi) to enter into transactions with affiliates; (vii) to merge or consolidate with, or dispose of all assets to a third party, except as permitted thereby; (viii) to prepay indebtedness; and (ix) to pay dividends.
The Credit Agreement provides for the following events of default: (i) default for non-payment of any principal or letter of credit reimbursement when due or any interest, fees or other amounts within five days of the due date; (ii) the failure by any borrower or any subsidiary to comply with any covenant or agreement contained in the Credit Agreement or any other loan document, in certain cases subject to applicable notice and lapse of time; (iii) any representation or warranty made pursuant to the Credit Agreement or any other loan document is incorrect in any material respect when made; (iv) certain defaults of other indebtedness of any borrower or any subsidiary of indebtedness of at least $10 million; (v) certain events of bankruptcy or insolvency with respect to any borrower or any subsidiary; (vi) certain judgments for the payment of money of $10 million or more; (vii) a change of control; and (viii) certain defaults relating to the loss of FCC licenses, cessation of broadcasting and termination of material station contracts. If an event of default occurs and is continuing, the Administrative Agent and the Lenders may accelerate the amounts outstanding under the ABL Facility and may exercise remedies in respect of the collateral. At March 31,September 30, 2021, we were, and we remain, in compliance with all of the covenants under Credit Agreement.
During the three and nine-month periods ended September 30, 2020, $30,000 and $0.1 million, respectively, of debt issue costs associated with the ABL was amortized to interest expense.
Summary
$216.3 million aggregate principal amount of Notes with semi-annual interest payments at an annual rate of 6.75%; and
Commitment fee of 0.25% to 0.375% per annum on the unused portion of the ABL Facility.
For the Year Ended March 31,
Amount | ||||
(Dollars in thousands) | ||||
2022 | $ | — | ||
2023 | — | |||
2024 | 216,341 | |||
2025 | — | |||
2026 | 11,195 | |||
Thereafter | — | |||
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$ | 227,536 | |||
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Amount | ||||
For the Year Ended September 30, | (Dollars in thousands) | |||
2022 | $ | 0 | ||
2023 | 0 | |||
2024 | 98,815 | |||
2025 | 0 | |||
2026 | 0 | |||
Thereafter | 114,731 | |||
$ | 213,546 | |||
Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” FASB ASC Topic 820 “Fair Value Measurements and Disclosures,” (“ASC 820”) established a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring fair value. This framework defines three levels of inputs to the fair value measurement process and requires that each fair value measurement be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety. The three broad levels of inputs defined by the ASC 820 hierarchy are as follows:
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Under ASC 820, a fair value measurement of a nonfinancial asset considers a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. Therefore, fair value is a market-based measurement and not an entity-specific measurement. It is determined based on assumptions that market participants would use in pricing the asset or liability. The exit price objective of a fair value measurement applies regardless of the reporting entity’s intent and/or ability to sell the asset or transfer the liability at the measurement date.
As of March 31,September 30, 2021, the carrying value of cash and cash equivalents, trade accounts receivables, accounts payable, accrued expenses and accrued interest approximates fair value due to the short-term nature of such instruments. The carrying amount andof the Notes at September 30, 2021 was $213.5 million compared to the estimated fair value of the Notes at March 31, 2021 was $216.3$213.3 million, respectively, based on the prevailing interest rates and trading activity of our Notes.
March 31, 2021 | ||||||||||||||||
Carrying Value on Balance Sheet | Fair Value Measurement Category | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Liabilities: | ||||||||||||||||
Estimated fair value of contingent earn-out consideration included in accrued expenses | $ | 11 | — | — | $ | 11 | ||||||||||
Long-term debt less unamortized debt issuance costs | 225,143 | — | 213,948 | — |
September 30, 2021 | ||||||||||||||||
Carrying Value on Balance Sheet | Fair Value Measurement Category | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Liabilities: | ||||||||||||||||
Estimated fair value of contingent earn-out consideration included inaccrued expenses | $ | 11 | — | — | $ | 11 | ||||||||||
Long-term debt less unamortized discount and debt issuance costs | 208,559 | — | 208,314 | — |
quarter. For tax purposes, we considered these debt modification costs in our operating loss utilization analysis.
We review and reevaluate uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of a tax benefit or an additional charge to the tax provision.
The company enters
The company also records
The company
A maximum of 8,000,000 shares are authorized under the Plan. All awards have restriction periods tied primarily to employment and/or service. The Plan allows for accelerated or continued vesting in certain circumstances as defined in the Plan including death, disability, a change in control, and termination or retirement. The Board of Directors, or a committee appointed by the Board, has discretion subject to limits defined in the Plan, to modify the terms of any outstanding award. Awards granted to non-employee directors are made in exchange for their services to the company as directors and therefore, the guidance in FASB ASC Topic 505-50Equity Based Payments to Non-Employees is not applicable.
Under the Plan, the Board, or a committee appointed by the Board, may impose restrictions on the exercise of awards during pre-defined blackout periods. Insiders may participate in plans established pursuant to Rule
Three Months Ended March 31, | ||||||||
2020 | 2021 | |||||||
(Dollars in thousands) | ||||||||
Stock option compensation expense included in corporate expenses | $ | 50 | $ | 28 | ||||
Stock option compensation expense included in broadcast operating expenses | 37 | 28 | ||||||
Stock option compensation expense included in digital media operating expenses | 15 | 22 | ||||||
Stock option compensation expense included in publishing operating expenses | 1 | — | ||||||
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Total stock-based compensation expense, pre-tax | $ | 103 | $ | 78 | ||||
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Tax benefit (expense) for stock-based compensation expense | (27 | ) | 20 | |||||
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Total stock-based compensation expense, net of tax | $ | 76 | $ | 58 | ||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
Stock option compensation expense included in unallocated corporate expenses | $ | 30 | $ | 23 | $ | 122 | $ | 75 | ||||||||
Stock option compensation expense included in broadcast operating expenses | 32 | 31 | 106 | 92 | ||||||||||||
Stock option compensation expense included in digital media operating expenses | 12 | 24 | 44 | 73 | ||||||||||||
Stock option compensation expense included in publishing operating expenses | — | — | 1 | — | ||||||||||||
Total stock-based compensation expense, pre-tax | $ | 74 | $ | 78 | $ | 273 | $ | 240 | ||||||||
Tax expense for stock-based compensation expense | (19 | ) | (20 | ) | (71 | ) | (62 | ) | ||||||||
Total stock-based compensation expense, net of tax | $ | 55 | $ | 58 | $ | 202 | $ | 178 | ||||||||
Three Months Ended | Three Months Ended | |||||||
March 31, 2020 | March 31, 2021 | |||||||
Expected volatility | 53.96 | % | 74.83 | % | ||||
Expected dividends | 7.30 | % | 0.00 | % | ||||
Expected term (in years) | 7.6 | 7.7 | ||||||
Risk-free interest rate | 1.14 | % | 0.96 | % |
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||
September 30, 2020 | September 30, 2020 | September 30, 2021 | September 30, 2021 | |||||||||||||
Expected volatility | n/a | 53.96 | % | 79.99 | % | 75.98 | % | |||||||||
Expected dividends | n/a | 7.30 | % | 0.00 | % | 0.00 | % | |||||||||
Expected term (in years) | n/a | 7.6 | 8.0 | 7.8 | ||||||||||||
Risk-free interest rate | n/a | 1.14 | % | 1.27 | 1.03 | % |
Options | Shares | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||||
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value) | ||||||||||||||||||||
Outstanding at January 1, 2021 | 2,291,020 | $ | 3.23 | $ | 1.52 | 4.3 years | $ | — | ||||||||||||
Granted | 210,000 | 2.01 | 1.44 | — | ||||||||||||||||
Exercised | (185,782 | ) | 2.11 | 0.97 | 188 | |||||||||||||||
Forfeited or expired | (151,946 | ) | 6.77 | 4.82 | — | |||||||||||||||
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Outstanding at March 31, 2021 | 2,163,292 | $ | 2.96 | $ | 1.33 | 4.8 years | $ | 1,360 | ||||||||||||
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Exercisable at March 31, 2021 | 1,086,417 | $ | 3.92 | $ | 1.76 | 2.8 years | $ | 248 | ||||||||||||
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Expected to Vest | 1,022,493 | $ | 2.98 | $ | 1.34 | 4.7 years | $ | 1,056 | ||||||||||||
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Options | Shares | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||||
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value) | ||||||||||||||||||||
Outstanding at January 1, 2021 | 2,291,020 | $ | 3.23 | $ | 1.52 | 4.3 years | $ | — | ||||||||||||
Granted | 270,000 | 2.14 | 1.55 | — | ||||||||||||||||
Exercised | (192,507 | ) | 2.11 | 0.97 | 200 | |||||||||||||||
Forfeited or expired | (157,446 | ) | 6.73 | 4.74 | — | |||||||||||||||
Outstanding at September 30, 2021 | 2,211,067 | $ | 2.95 | $ | 1.34 | 4.4 years | $ | 2,484 | ||||||||||||
Exercisable at September 30, 2021 | 1,209,942 | $ | 3.84 | $ | 1.75 | 2.6 years | $ | 640 | ||||||||||||
Expected to Vest | 950,568 | $ | 2.97 | $ | 1.35 | 4.3 years | $ | 2,391 | ||||||||||||
Restricted Stock Awards | Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value) | ||||||||||||||||
Outstanding at January 1, 2021 | 107,990 | $ | 1.85 | 1.67 years | $ | 112 | ||||||||||
Granted | — | — | — | — | ||||||||||||
Lapsed | — | — | — | — | ||||||||||||
Forfeited | — | — | — | — | ||||||||||||
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Outstanding at March 31, 2021 | 107,990 | $ | 1.85 | 0.4 years | $ | 317 | ||||||||||
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Restricted Stock Awards | Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||
(Dollars in thousands, except weighted average exercise price and weighted average grant date fair value) | ||||||||||||||||
Outstanding at January 1, 2021 | 107,990 | $ | 1.85 | 1.67 years | $ | 112 | ||||||||||
Granted | — | — | — | — | ||||||||||||
Lapsed | (41,323 | ) | 2.42 | — | 100 | |||||||||||
Forfeited | — | — | — | — | ||||||||||||
Outstanding at September 30, 2021 | 66,667 | $ | 1.50 | 0.02 years | $ | 247 | ||||||||||
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Our web content is accessible through all of our radio station websites that feature content of interest to local audiences throughout the United States.
Press.
Broadcast | Digital Media | Publishing | Unallocated Corporate Expenses | Consolidated | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended March 31, 2021 | ||||||||||||||||||||
Net revenue | $ | 44,048 | $ | 9,619 | $ | 5,686 | $ | — | $ | 59,353 | ||||||||||
Operating expenses | 33,343 | 8,673 | 5,205 | 4,288 | 51,509 | |||||||||||||||
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Net operating income (loss) before depreciation, amortization, and net (gain) loss on the disposition of assets | $ | 10,705 | $ | 946 | $ | 481 | $ | (4,288 | ) | $ | 7,844 | |||||||||
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Depreciation | 1,525 | 781 | 47 | 236 | 2,589 | |||||||||||||||
Amortization | 4 | 432 | 145 | — | 581 | |||||||||||||||
Net (gain) loss on the disposition of assets | 318 | — | — | — | 318 | |||||||||||||||
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Net operating income (loss) | $ | 8,858 | $ | (267 | ) | $ | 289 | $ | (4,524 | ) | $ | 4,356 | ||||||||
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Three Months Ended March 31, 2020 | ||||||||||||||||||||
Net revenue | $ | 45,180 | $ | 9,104 | $ | 3,966 | $ | — | $ | 58,250 | ||||||||||
Operating expenses | 37,327 | 8,326 | 5,062 | 4,210 | 54,925 | |||||||||||||||
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Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairments and net (gain) loss on the disposition of assets | $ | 7,853 | $ | 778 | $ | (1,096 | ) | $ | (4,210 | ) | $ | 3,325 | ||||||||
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Depreciation | 1,645 | 771 | 69 | 228 | 2,713 | |||||||||||||||
Amortization | 9 | 768 | 210 | — | 987 | |||||||||||||||
Change in the estimated fair value of contingent earn-out consideration | — | (5 | ) | — | — | (5 | ) | |||||||||||||
Impairment of indefinite-lived long-term assets other than goodwill | 16,994 | — | 260 | — | 17,254 | |||||||||||||||
Impairment of goodwill | 184 | 10 | 105 | 8 | 307 | |||||||||||||||
Net (gain) loss on the disposition of assets | 79 | — | — | — | 79 | |||||||||||||||
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Net operating income (loss) | $ | (11,058 | ) | $ | (766 | ) | $ | (1,740 | ) | $ | (4,446 | ) | $ | (18,010 | ) | |||||
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Broadcast | Digital Media | Publishing | Unallocated Corporate | Consolidated | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
As of March 31, 2021 | ||||||||||||||||||||
Inventories, net | $ | — | $ | — | $ | 588 | $ | — | $ | 588 | ||||||||||
Property and equipment, net | 63,671 | 5,977 | 732 | 8,218 | 78,598 | |||||||||||||||
Broadcast licenses | 319,773 | — | — | — | 319,773 | |||||||||||||||
Goodwill | 2,746 | 19,565 | 1,446 | — | 23,757 | |||||||||||||||
Amortizable intangible assets, net | 242 | 3,129 | 192 | — | 3,563 | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Inventories, net | $ | — | $ | — | $ | 495 | $ | — | $ | 495 | ||||||||||
Property and equipment, net | 64,231 | 6,221 | 741 | 7,929 | 79,122 | |||||||||||||||
Broadcast licenses | 319,773 | — | — | — | 319,773 | |||||||||||||||
Goodwill | 2,746 | 19,565 | 1,446 | — | 23,757 | |||||||||||||||
Amortizable intangible assets, net | 246 | 3,434 | 337 | — | 4,017 |
Broadcast | Digital Media | Publishing | Unallocated Corporate Expenses | Consolidated | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||||||
Net revenue | $ | 49,591 | $ | 10,645 | $ | 5,747 | $ | — | $ | 65,983 | ||||||||||
Operating expenses | 37,463 | 8,269 | 5,213 | 4,284 | 55,229 | |||||||||||||||
Net operating income (loss) before depreciation, amortization, and net (gain) loss on the disposition of assets | $ | 12,128 | $ | 2,376 | $ | 534 | $ | (4,284 | ) | $ | 10,754 | |||||||||
Debt modification costs | — | — | — | 2,347 | 2,347 | |||||||||||||||
Depreciation | 1,539 | 965 | 43 | 241 | 2,788 | |||||||||||||||
Amortization | 4 | 375 | 48 | — | 427 | |||||||||||||||
Net (gain) loss on the disposition of assets | (10,505 | ) | (148 | ) | 22 | 24 | (10,607 | ) | ||||||||||||
Net operating income (loss) | $ | 21,090 | $ | 1,184 | $ | 421 | $ | (6,896 | ) | $ | 15,799 | |||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||||||
Net revenue | $ | 45,391 | $ | 9,808 | $ | 5,442 | $ | — | $ | 60,641 | ||||||||||
Operating expenses | 34,283 | 7,144 | 5,814 | 3,849 | 51,090 | |||||||||||||||
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairments, and net(gain) loss on the disposition of assets | $ | 11,108 | $ | 2,664 | $ | (372 | ) | $ | (3,849 | ) | $ | 9,551 | ||||||||
Depreciation | 1,626 | 746 | 70 | 235 | 2,677 | |||||||||||||||
Amortization | 4 | 537 | 210 | — | 751 | |||||||||||||||
Change in the estimated fair value of contingent earn-out consideration | — | (10 | ) | — | — | (10 | ) | |||||||||||||
Net (gain) loss on the disposition of assets | 1,380 | — | 1 | — | 1,381 | |||||||||||||||
Net operating income (loss) | $ | 8,098 | $ | 1,391 | $ | (653 | ) | $ | (4,084 | ) | $ | 4,752 | ||||||||
Broadcast | Digital Media | Publishing | Unallocated Corporate Expenses | Consolidated | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Nine Months Ended September 30, 2021 | ||||||||||||||||||||
Net revenue | $ | 140,422 | $ | 30,603 | $ | 18,093 | $ | — | $ | 189,118 | ||||||||||
Operating expenses | 106,968 | 25,280 | 16,844 | 12,764 | 161,856 | |||||||||||||||
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairments, and net(gain) loss on the disposition of assets | $ | 33,454 | $ | 5,323 | $ | 1,249 | $ | (12,764 | ) | $ | 27,262 | |||||||||
Debt modification costs | — | — | — | �� | 2,347 | 2,347 | ||||||||||||||
Depreciation | 4,667 | 2,606 | 134 | 711 | 8,118 | |||||||||||||||
Amortization | 12 | 1,204 | 337 | — | 1,553 | |||||||||||||||
Net (gain) loss on the disposition of assets | (10,187 | ) | (83 | ) | (306 | ) | 24 | (10,552 | ) | |||||||||||
Net operating income (loss) | $ | 38,962 | $ | 1,596 | $ | 1,084 | $ | (15,846 | ) | $ | 25,796 | |||||||||
Nine Months Ended September 30, 2020 | ||||||||||||||||||||
Net revenue | $ | 130,041 | $ | 28,355 | $ | 13,366 | $ | — | $ | 171,762 | ||||||||||
Operating expenses | 104,704 | 23,123 | 16,443 | 11,909 | 156,179 | |||||||||||||||
Net operating income (loss) before depreciation, amortization, change in the estimated fair value of contingent earn-out consideration, impairments, and net(gain) loss on the disposition of assets | $ | 25,337 | $ | 5,232 | $ | (3,077 | ) | $ | (11,909 | ) | $ | 15,583 | ||||||||
Depreciation | 4,912 | 2,284 | 212 | 700 | 8,108 | |||||||||||||||
Amortization | 18 | 1,928 | 631 | 1 | 2,578 | |||||||||||||||
Change in the estimated fair value of contingent earn-out consideration | — | (12 | ) | — | — | (12 | ) | |||||||||||||
Impairment of indefinite-lived long-term assets other than goodwill | 16,994 | — | 260 | — | 17,254 | |||||||||||||||
Impairment of goodwill | 184 | 10 | 105 | 8 | 307 | |||||||||||||||
Net (gain) loss on the disposition of assets | 1,489 | — | 1 | 4 | 1,494 | |||||||||||||||
Net operating income (loss) | $ | 1,740 | $ | 1,022 | $ | (4,286 | ) | $ | (12,622 | ) | $ | (14,146 | ) | |||||||
Broadcast | Digital Media | Publishing | Unallocated Corporate | Consolidated | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
As of September 30, 2021 | ||||||||||||||||||||
Inventories, net | $ | — | $ | — | $ | 907 | $ | — | $ | 907 | ||||||||||
Property and equipment, net | 60,502 | 8,619 | 723 | 8,581 | 78,425 | |||||||||||||||
Broadcast licenses | 320,008 | — | — | — | 320,008 | |||||||||||||||
Goodwill | 2,750 | 19,790 | 1,446 | — | 23,986 | |||||||||||||||
Amortizable intangible assets, net | 233 | 2,552 | — | — | 2,785 | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Inventories, net | $ | — | $ | — | $ | 495 | $ | — | $ | 495 | ||||||||||
Property and equipment, net | 64,231 | 6,221 | 741 | 7,929 | 79,122 | |||||||||||||||
Broadcast licenses | 319,773 | — | — | — | 319,773 | |||||||||||||||
Goodwill | 2,746 | 19,565 | 1,446 | — | 23,757 | |||||||||||||||
Amortizable intangible assets, net | 246 | 3,434 | 337 | — | 4,017 |
On April 28, 2021, we closed on the acquisition
On April 20, 2021 we entered into an APA to sell Singing News Magazine and Singing News Radio (formerly Solid Gospel Network) for $0.1 million in cash. The buyer will assume the deferred subscription liability of $0.4 million. The sale is expected to close in the second quarter of 2021.
On April 10, 2021, we entered into an agreement to sell approximately 34 acres of land in Lewisville, Texas, currently being used as the transmitter site for company owned radio station KSKY-AM, for $12.1 million in cash. We will retain enough of the property in the southwest corner of the site to operate the station. Following a due diligence period and satisfaction of several contingencies, we expect to close on this transaction in the third quarter of 2021.
Shelf Registration Statement and At-the-Market Facility
In April 2021, we filed a prospectus supplement to our shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $15.0 million of the company’s Class A Common Stock pursuant to an at-the-market facility, with B. Riley Securities, Inc. acting as sales agent.
Date | Principal Repurchased | Cash Paid | % of Face Value | Bond Issue Costs | Net Loss | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
October 25, 2021 | $ | 2,000 | $ | 2,020 | 101.00 | % | $ | 19 | $ | 39 | ||||||||||
October 12, 2021 | 250 | 251 | 100.38 | % | 2 | 3 | ||||||||||||||
October 5, 2021 | 763 | 766 | 100.38 | % | 7 | 10 | ||||||||||||||
October 4, 2021 | 628 | 629 | 100.13 | % | 6 | 7 | ||||||||||||||
$ | 3,641 | $ | 3,666 | $ | 34 | 59 | ||||||||||||||
obsolescence charges.
Lower revenue and longer days to collect receivables negatively impacts future availability under our credit facility. Availability under our Asset Based Loan (“ABL Facility”) is subject to a borrowing base consisting of (a) 90% of the eligible accounts receivable plus (b) a calculated amount based on the value of certain real property. The maximum amount available under our ABL Facility was $26.1 million at March 31, 2021 compared to $24.8 million at December 31, 2020, of which none was outstanding at March 31, 2021 compared to $5.0 million outstanding at December 31, 2020.
statements.
Revenue from print magazines, including advertising revenue and subscription revenue, is challenged due to lower demand from the audiences that increasingly use other mediums that deliver comparable information. Book sales are contingent upon overall economic conditions and our ability to attract and retain authors. Decreases in digital revenue could adversely affect our operating results, financial condition and results of operations.
We define EBITDA as net income before interest, taxes, depreciation, and amortization. We define Adjusted EBITDA as EBITDA before gains or losses on the sale or disposition of assets, before changes in the estimated fair value of contingent
Three Months Ended March 31, | ||||||||
2020 | 2021 | |||||||
(Dollars in thousands) | ||||||||
Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue |
| |||||||
Net broadcast revenue | $ | 45,180 | $ | 44,048 | ||||
Net broadcast revenue – acquisitions | — | — | ||||||
Net broadcast revenue – dispositions | (223 | ) | 4 | |||||
Net broadcast revenue – format change | (176 | ) | (140 | ) | ||||
|
|
|
| |||||
Same Station net broadcast revenue | $ | 44,781 | $ | 43,912 | ||||
|
|
|
|
Reconciliation of Broadcast Operating Expenses To Same Station Broadcast Operating Expenses |
| |||||||
Broadcast operating expenses | $ | 37,327 | $ | 33,343 | ||||
Broadcast operating expenses – acquisitions | — | — | ||||||
Broadcast operating expenses – dispositions | (502 | ) | (106 | ) | ||||
Broadcast operating expenses – format change | (260 | ) | (178 | ) | ||||
|
|
|
| |||||
Same Station broadcast operating expenses | $ | 36,565 | $ | 33,059 | ||||
|
|
|
|
Reconciliation of Operating Income (Loss) to Same Station Operating Income |
| |||||||
Station Operating Income | $ | 7,853 | $ | 10,705 | ||||
Station operating loss –acquisitions | — | — | ||||||
Station operating loss – dispositions | 279 | 110 | ||||||
Station operating loss – format change | 84 | 38 | ||||||
|
|
|
| |||||
Same Station – Station Operating Income | $ | 8,216 | $ | 10,853 | ||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue | ||||||||||||||||
Net broadcast revenue | $ | 45,391 | $ | 49,591 | $ | 130,041 | $ | 140,422 | ||||||||
Net broadcast revenue – acquisitions | — | (264 | ) | — | (343 | ) | ||||||||||
Net broadcast revenue – dispositions | (192 | ) | 2 | (635 | ) | (36 | ) | |||||||||
Net broadcast revenue – format change | (104 | ) | (216 | ) | (384 | ) | (561 | ) | ||||||||
Same Station net broadcast revenue | $ | 45,095 | $ | 49,113 | $ | 129,022 | $ | 139,482 | ||||||||
Reconciliation of Broadcast Operating Expenses To Same Station Broadcast Operating Expenses | ||||||||||||||||
Broadcast operating expenses | $ | 34,283 | $ | 37,463 | $ | 104,704 | $ | 106,968 | ||||||||
Broadcast operating expenses – acquisitions | — | (168 | ) | — | (206 | ) | ||||||||||
Broadcast operating expenses – dispositions | (344 | ) | (14 | ) | (1,225 | ) | (199 | ) | ||||||||
Broadcast operating expenses – format change | (252 | ) | (209 | ) | (771 | ) | (593 | ) | ||||||||
Same Station broadcast operating expenses | $ | 33,687 | $ | 37,072 | $ | 102,708 | $ | 105,970 | ||||||||
Reconciliation of Operating Income to Same Station Operating Income | ||||||||||||||||
Station Operating Income | $ | 11,108 | $ | 12,128 | $ | 25,337 | $ | 33,454 | ||||||||
Station operating (income) loss –acquisitions | — | (96 | ) | — | (137 | ) | ||||||||||
Station operating loss – dispositions | 152 | 16 | 590 | 163 | ||||||||||||
Station operating (income) loss – format change | 148 | (7 | ) | 387 | 32 | |||||||||||
Same Station – Station Operating Income | $ | 11,408 | $ | 12,041 | $ | 26,314 | $ | 33,512 | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2021 | |||||||
(Dollars in thousands) | ||||||||
Calculation of Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss) |
| |||||||
Net broadcast revenue | $ | 45,180 | $ | 44,048 | ||||
Less broadcast operating expenses | (37,327 | ) | (33,343 | ) | ||||
|
|
|
| |||||
Station Operating Income | $ | 7,853 | $ | 10,705 | ||||
|
|
|
| |||||
Net digital media revenue | $ | 9,104 | $ | 9,619 | ||||
Less digital media operating expenses | (8,326 | ) | (8,673 | ) | ||||
|
|
|
| |||||
Digital Media Operating Income | $ | 778 | $ | 946 | ||||
|
|
|
| |||||
Net publishing revenue | $ | 3,966 | $ | 5,686 | ||||
Less publishing operating expenses | (5,062 | ) | (5,205 | ) | ||||
|
|
|
| |||||
Publishing Operating Income (Loss) | $ | (1,096 | ) | $ | 481 | |||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Calculation of Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss) | ||||||||||||||||
Net broadcast revenue | $ | 45,391 | $ | 49,591 | $ | 130,041 | $ | 140,422 | ||||||||
Less broadcast operating expenses | (34,283 | ) | (37,463 | ) | (104,704 | ) | (106,968 | ) | ||||||||
Station Operating Income | $ | 11,108 | $ | 12,128 | $ | 25,337 | $ | 33,454 | ||||||||
Net digital media revenue | $ | 9,808 | $ | 10,645 | $ | 28,355 | $ | 30,603 | ||||||||
Less digital media operating expenses | (7,144 | ) | (8,269 | ) | (23,123 | ) | (25,280 | ) | ||||||||
Digital Media Operating Income | $ | 2,664 | $ | 2,376 | $ | 5,232 | $ | 5,323 | ||||||||
Net publishing revenue | $ | 5,442 | $ | 5,747 | $ | 13,366 | $ | 18,093 | ||||||||
Less publishing operating expenses | (5,814 | ) | (5,213 | ) | (16,443 | ) | (16,844 | ) | ||||||||
Publishing Operating Income (Loss) | $ | (372 | ) | $ | 534 | $ | (3,077 | ) | $ | 1,249 | ||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2021 | |||||||
(Dollars in thousands) | ||||||||
Reconciliation of Net Income (Loss) to Operating Income and Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss) |
| |||||||
Net income (loss) | $ | (55,204 | ) | $ | 323 | |||
Plus provision for income taxes | 33,159 | 130 | ||||||
Plus net miscellaneous income and (expenses) | 52 | (22 | ) | |||||
Plus gain on early retirement of long-term debt | (49 | ) | — | |||||
Plus interest expense, net of capitalized interest | 4,032 | 3,926 | ||||||
Less interest income | — | (1 | ) | |||||
|
|
|
| |||||
Net operating income (loss) | $ | (18,010 | ) | $ | 4,356 | |||
|
|
|
| |||||
Plus net (gain) loss on the disposition of assets | 79 | 318 | ||||||
Plus change in the estimated fair value of contingent earn-out consideration | (5 | ) | — | |||||
Plus impairment of indefinite-lived long-term assets other than goodwill | 17,254 | — | ||||||
Plus impairment of goodwill | 307 | — | ||||||
Plus depreciation and amortization | 3,700 | 3,170 | ||||||
Plus unallocated corporate expenses | 4,210 | 4,288 | ||||||
|
|
|
| |||||
Combined Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss) | $ | 7,535 | $ | 12,132 | ||||
|
|
|
| |||||
Station Operating Income | $ | 7,853 | $ | 10,705 | ||||
Digital Media Operating Income | 778 | 946 | ||||||
Publishing Operating Income (Loss) | (1,096 | ) | 481 | |||||
|
|
|
| |||||
$ | 7,535 | $ | 12,132 | |||||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Reconciliation of Net Income (Loss) to Operating Income and Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss) | ||||||||||||||||
Net income (loss) | $ | 329 | $ | 22,094 | $ | (57,390 | ) | $ | 24,674 | |||||||
Plus provision for income taxes | 401 | 837 | 31,180 | 479 | ||||||||||||
Plus net miscellaneous income and (expenses) | (1 | ) | (2 | ) | 45 | (87 | ) | |||||||||
Plus gain on the forgiveness of PPP loans | — | (11,212 | ) | — | (11,212 | ) | ||||||||||
Plus (gain) loss on early retirement of long-term debt | — | 56 | (49 | ) | 56 | |||||||||||
Plus interest expense, net of capitalized interest | 4,024 | 4,026 | 12,069 | 11,887 | ||||||||||||
Less interest income | (1 | ) | — | (1 | ) | (1 | ) | |||||||||
Net operating income (loss) | $ | 4,752 | $ | 15,799 | $ | (14,146 | ) | $ | 25,796 | |||||||
Plus net (gain) loss on the disposition of assets | 1,381 | (10,607 | ) | 1,494 | (10,552 | ) | ||||||||||
Plus change in the estimated fair value of contingent earn-out consideration | (10 | ) | — | (12 | ) | — | ||||||||||
Plus debt modification costs | — | 2,347 | — | 2,347 | ||||||||||||
Plus impairment of indefinite-lived long-term assets other than goodwill | — | — | 17,254 | — | ||||||||||||
Plus impairment of goodwill | — | — | 307 | — | ||||||||||||
Plus depreciation and amortization | 3,428 | 3,215 | 10,686 | 9,671 | ||||||||||||
Plus unallocated corporate expenses | 3,849 | 4,284 | 11,909 | 12,764 | ||||||||||||
Combined Station Operating Income, Digital Media Operating Income and Publishing Operating Loss | $ | 13,400 | $ | 15,038 | $ | 27,492 | $ | 40,026 | ||||||||
Station Operating Income | $ | 11,108 | $ | 12,128 | $ | 25,337 | $ | 33,454 | ||||||||
Digital Media Operating Income | 2,664 | 2,376 | 5,232 | 5,323 | ||||||||||||
Publishing Operating Income (Loss) | (372 | ) | 534 | (3,077 | ) | 1,249 | ||||||||||
$ | 13,400 | $ | 15,038 | $ | 27,492 | $ | 40,026 | |||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2021 | |||||||
(Dollars in thousands) | ||||||||
Reconciliation of Adjusted EBITDA to EBITDA to Net Income (Loss) |
| |||||||
Net income (loss) | $ | (55,204 | ) | $ | 323 | |||
Plus interest expense, net of capitalized interest | 4,032 | 3,926 | ||||||
Plus provision for income taxes | 33,159 | 130 | ||||||
Plus depreciation and amortization | 3,700 | 3,170 | ||||||
Less interest income | — | (1 | ) | |||||
|
|
|
| |||||
EBITDA | $ | (14,313 | ) | $ | 7,548 | |||
|
|
|
| |||||
Plus net (gain) loss on the disposition of assets | 79 | 318 | ||||||
Plus change in the estimated fair value of contingent earn-out consideration | (5 | ) | — | |||||
Plus impairment of indefinite-lived long-term assets other than goodwill | 17,254 | — | ||||||
Plus impairment of goodwill | 307 | — | ||||||
Plus net miscellaneous (income) and expenses | 52 | (22 | ) | |||||
Plus gain on early retirement of long-term debt | (49 | ) | — | |||||
Plus non-cash stock-based compensation | 103 | 78 | ||||||
|
|
|
| |||||
Adjusted EBITDA | $ | 3,428 | $ | 7,922 | ||||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Reconciliation of Adjusted EBITDA to EBITDA to Net Income (Loss) | ||||||||||||||||
Net income (loss) | $ | 329 | $ | 22,094 | $ | (57,390 | ) | $ | 24,674 | |||||||
Plus interest expense, net of capitalized interest | 4,024 | 4,026 | 12,069 | 11,887 | ||||||||||||
Plus provision for income taxes | 401 | 837 | 31,180 | 479 | ||||||||||||
Plus depreciation and amortization | 3,428 | 3,215 | 10,686 | 9,671 | ||||||||||||
Less interest income | (1 | ) | — | (1 | ) | (1 | ) | |||||||||
EBITDA | $ | 8,181 | $ | 30,172 | $ | (3,456 | ) | $ | 46,710 | |||||||
Plus net (gain) loss on the disposition of assets | 1,381 | (10,607 | ) | 1,494 | (10,552 | ) | ||||||||||
Plus change in the estimated fair value of contingent earn-out consideration | (10 | ) | — | (12 | ) | — | ||||||||||
Plus debt modification costs | — | 2,347 | — | 2,347 | ||||||||||||
Plus impairment of indefinite-lived long-term assets other than goodwill | — | — | 17,254 | — | ||||||||||||
Plus impairment of goodwill | — | — | 307 | — | ||||||||||||
Plus net miscellaneous (income) and expenses | (1 | ) | (2 | ) | 45 | (87 | ) | |||||||||
Plus (gain) loss on early retirement of long-term debt | — | 56 | (49 | ) | 56 | |||||||||||
Plus gain on the forgiveness of PPP loans | — | (11,212 | ) | — | (11,212 | ) | ||||||||||
Plus non-cash stock-based compensation | 74 | 78 | 273 | 240 | ||||||||||||
Adjusted EBITDA | $ | 9,625 | $ | 10,832 | $ | 15,856 | $ | 27,502 | ||||||||
Three months ended March 31, 2021 compared to the three months ended March 31, 2020
flows:
costs.
Distributions
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Net Broadcast Revenue | $ | 45,180 | $ | 44,048 | $ | (1,132 | ) | (2.5 | )% | 77.6 | % | 74.2 | % | |||||||||||
Same Station Net Broadcast Revenue | $ | 44,781 | $ | 43,912 | $ | (869 | ) | (1.9 | )% |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Broadcast Revenue | $ | 45,391 | $ | 49,591 | $ | 4,200 | 9.3 | % | 74.9 | % | 75.2 | % | ||||||||||||
Same Station Net Broadcast Revenue | $ | 45,095 | $ | 49,113 | $ | 4,018 | 8.9 | % |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Block Programming: | ||||||||||||||||
National | $ | 12,034 | 26.6 | % | $ | 11,461 | 26.0 | % | ||||||||
Local | 6,808 | 15.1 | % | 5,956 | 13.5 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
18,842 | 41.7 | % | 17,417 | 39.5 | % | |||||||||||
Broadcast Advertising: | ||||||||||||||||
National | 3,957 | 8.8 | % | 3,660 | 8.3 | % | ||||||||||
Local | 11,357 | 25.1 | % | 8,895 | 20.2 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
15,314 | 33.9 | % | 12,555 | 28.5 | % | |||||||||||
Station Digital (local) | 4,293 | 9.5 | % | 7,069 | 16.0 | % | ||||||||||
Infomercials | 308 | 0.7 | % | 237 | 0.5 | % | ||||||||||
Network | 4,388 | 9.7 | % | 4,871 | 11.1 | % | ||||||||||
Other Revenue | 2,035 | 4.5 | % | 1,899 | 4.3 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Broadcast Revenue | $ | 45,180 | 100.0 | % | $ | 44,048 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Block Programming: | ||||||||||||||||
National | $ | 11,732 | 25.8 | % | $ | 12,502 | 25.2 | % | ||||||||
Local | 5,771 | 12.7 | 6,299 | 12.7 | % | |||||||||||
17,503 | 38.5 | 18,801 | 37.9 | % | ||||||||||||
Broadcast Advertising: | ||||||||||||||||
National | 3,635 | 8.0 | 3,447 | 7.0 | % | |||||||||||
Local | 9,485 | 20.9 | 10,682 | 21.5 | % | |||||||||||
13,120 | 28.9 | 14,129 | 28.5 | % | ||||||||||||
Broadcast Digital (local) | 7,754 | 17.1 | 8,805 | 17.8 | % | |||||||||||
Infomercials | 214 | 0.5 | 220 | 0.4 | % | |||||||||||
Network | 4,891 | 10.8 | 4,908 | 9.9 | % | |||||||||||
Other Revenue | 1,909 | 4.2 | 2,728 | 5.5 | % | |||||||||||
Net Broadcast Revenue | $ | 45,391 | 100.0 | % | $ | 49,591 | 100.0 | % | ||||||||
Stationthe sale of radio station
Declines in infomercial revenue
advertising.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Net Digital Media Revenue | $ | 9,104 | $ | 9,619 | $ | 515 | 5.7 | % | 15.6 | % | 16.2 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Digital Media Revenue | $ | 9,808 | $ | 10,645 | $ | 837 | 8.5 | % | 16.2 | % | 16.1 | % |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Digital Advertising, net | $ | 4,713 | 51.8 | % | $ | 4,413 | 45.9 | % | ||||||||
Digital Streaming | 915 | 10.0 | 844 | 8.8 | ||||||||||||
Digital Subscriptions | 2,135 | 23.5 | 2,773 | 28.8 | ||||||||||||
Digital Downloads | 1,245 | 13.7 | 1,479 | 15.4 | ||||||||||||
e-commerce | 28 | 0.3 | 31 | 0.3 | ||||||||||||
Other Revenues | 68 | 0.7 | 79 | 0.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Digital Media Revenue | $ | 9,104 | 100.0 | % | $ | 9,619 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Digital advertising
Three Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Digital Advertising, net | $ | 5,213 | 53.2 | % | $ | 5,053 | 47.5 | % | ||||||||
Digital Streaming | 843 | 8.6 | 873 | 8.2 | ||||||||||||
Digital Subscriptions | 2,387 | 24.3 | 3,155 | 29.6 | ||||||||||||
Digital Downloads | 1,244 | 12.7 | 1,464 | 13.8 | ||||||||||||
e-commerce | 53 | 0.5 | 65 | 0.6 | ||||||||||||
Other Revenues | 68 | 0.7 | 35 | 0.3 | ||||||||||||
Net Digital Media Revenue | $ | 9,808 | 100.0 | % | $ | 10,645 | 100.0 | % | ||||||||
prior period.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Net Publishing Revenue | $ | 3,966 | $ | 5,686 | $ | 1,720 | 43.4 | % | 6.8 | % | 9.6 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Publishing Revenue | $ | 5,442 | $ | 5,747 | $ | 305 | 5.6 | % | 9.0 | % | 8.7 | % |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Book Sales | $ | 2,693 | 67.9 | % | $ | 4,301 | 75.6 | % | ||||||||
Estimated Sales Returns & Allowances | (970 | ) | (24.5 | ) | (1,093 | ) | (19.2 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Book Sales | 1,723 | 43.4 | 3,208 | 56.4 | ||||||||||||
E-Book Sales | 254 | 6.4 | 339 | 6.0 | ||||||||||||
Self-Publishing Fees | 1,402 | 35.3 | 1,624 | 28.6 | ||||||||||||
Print Magazine Subscriptions | 177 | 4.5 | 158 | 2.8 | ||||||||||||
Print Magazine Advertisements | 102 | 2.6 | 68 | 1.2 | ||||||||||||
Digital Advertising | 99 | 2.5 | 62 | 1.1 | ||||||||||||
Other Revenue | 209 | 5.3 | 227 | 4.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Publishing Revenue | $ | 3,966 | 100.0 | % | $ | 5,686 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Book Sales | $ | 4,310 | 79.2 | % | $ | 4,561 | 79.4 | % | ||||||||
Estimated Sales Returns & Allowances | (1,322 | ) | (24.3 | ) | (1,212 | ) | (21.1 | ) | ||||||||
Net Book Sales | 2,988 | 54.9 | 3,349 | 58.3 | ||||||||||||
E-Book Sales | 456 | 8.4 | 502 | 8.7 | ||||||||||||
Self-Publishing Fees | 1,407 | 25.8 | 1,556 | 27.1 | ||||||||||||
Print Magazine Subscriptions | 168 | 3.1 | — | — | ||||||||||||
Print Magazine Advertisements | 85 | 1.6 | — | — | ||||||||||||
Digital Advertising | 65 | 1.2 | — | — | ||||||||||||
Other Revenue | 273 | 5.0 | 340 | 5.9 | ||||||||||||
Net Publishing Revenue | $ | 5,442 | 100.0 | % | $ | 5,747 | 100.0 | % | ||||||||
Regnery
Digital adverting revenue was consistent with thatdigital advertising revenues reflect the sale of the prior year with no changes in sales volume and rates.
Singing News Magazine on May 25, 2021.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Broadcast Operating Expenses | $ | 37,327 | $ | 33,343 | $ | (3,984 | ) | (10.7 | )% | 64.1 | % | 56.2 | % | |||||||||||
Same Station Broadcast Operating Expenses | $ | 36,565 | $ | 33,059 | $ | (3,506 | ) | (9.6 | )% |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Broadcast Operating Expenses | $ | 34,283 | $ | 37,463 | $ | 3,180 | 9.3 | % | 56.5 | % | 56.8 | % | ||||||||||||
Same Station Broadcast Operating Expenses | $ | 33,687 | $ | 37,072 | $ | 3,385 | 10.0 | % |
facilities related expenses.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Digital Media Operating Expenses | $ | 8,326 | $ | 8,673 | $ | 347 | 4.2 | % | 14.3 | % | 14.6 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Digital Media Operating Expenses | $ | 7,144 | $ | 8,269 | $ | 1,125 | 15.7 | % | 11.8 | % | 12.5 | % |
business and overall gradual increase in adverting spending as the economy begins to return to
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Publishing Operating Expenses | $ | 5,062 | $ | 5,205 | $ | 143 | 2.8 | % | 8.7 | % | 8.8 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Publishing Operating Expenses | $ | 5,814 | $ | 5,213 | $ | (601 | ) | (10.3 | )% | 9.6 | % | 7.9 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Unallocated Corporate Expenses | $ | 4,210 | $ | 4,288 | $ | 78 | 1.9 | % | 7.2 | % | 7.2 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Unallocated Corporate Expenses | $ | 3,849 | $ | 4,284 | $ | 435 | 11.3 | % | 6.3 | % | 6.5 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Debt Modification Costs | $ | — | $ | 2,347 | $ | 2,347 | 100.0 | % | — | % | 3.6 | % |
for the period.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Depreciation Expense | $ | 2,713 | $ | 2,589 | $ | (124 | ) | (4.6 | )% | 4.7 | % | 4.4 | % |
The decrease in depreciation expense reflects
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Depreciation Expense | $ | 2,677 | $ | 2,788 | $ | 111 | 4.1 | % | 4.4 | % | 4.2 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Amortization Expense | $ | 987 | $ | 581 | $ | (406 | ) | (41.1 | )% | 1.7 | % | 1.0 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Amortization Expense | $ | 751 | $ | 427 | $ | (324 | ) | (43.1 | )% | 1.2 | % | 0.6 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net (Gain) Loss on the Disposition of assets | $ | 1,381 | $ | (10,607 | ) | $ | (11,988 | ) | (868.1 | )% | 2.3 | % | (16.1 | )% |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Interest Income | $ | 1 | $ | — | (1 | ) | (100.0 | )% | — | — | % | |||||||||||||
Interest Expense | (4,024 | ) | (4,026 | ) | 2 | — | % | (6.6 | )% | (6.1 | )% | |||||||||||||
Gain on the Forgiveness of PPP loans | — | 11,212 | 11,212 | 100.0 | % | — | 17.0 | % | ||||||||||||||||
Gain (Loss) on Early Retirement of Long-Term Debt | — | (56 | ) | (56 | ) | (100.0 | )% | — | % | (0.1 | )% | |||||||||||||
Net Miscellaneous Income and (Expenses) | 1 | 2 | 1 | — | % | — | % | — | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Provision for Income Taxes | $ | 401 | $ | 837 | $ | 436 | 108.7 | % | 0.7 | % | 1.3 | % |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Income (Loss) | $ | 329 | $ | 22,094 | $ | 21,765 | 6,615.5 | % | 0.5 | % | 33.5 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Broadcast Revenue | $ | 130,041 | $ | 140,422 | $ | 10,381 | 8.0 | % | 75.7 | % | 74.3 | % | ||||||||||||
Same Station Net Broadcast Revenue | $ | 129,022 | $ | 139,482 | $ | 10,460 | 8.1 | % |
Nine Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Block Programming: | ||||||||||||||||
National | $ | 35,536 | 27.3 | % | $ | 35,824 | 25.5 | % | ||||||||
Local | 18,211 | 14.0 | 18,072 | 12.9 | % | |||||||||||
53,747 | 41.3 | 53,896 | 38.4 | % | ||||||||||||
Broadcast Advertising: | ||||||||||||||||
National | 10,179 | 7.8 | 10,565 | 7.5 | % | |||||||||||
Local | 28,630 | 22.0 | 30,123 | 21.5 | % | |||||||||||
38,809 | 29.8 | 40,688 | 29.0 | % | ||||||||||||
Broadcast Digital (local) | 17,702 | 13.6 | 23,602 | 16.8 | % | |||||||||||
Infomercials | 750 | 0.6 | 682 | 0.5 | % | |||||||||||
Network | 13,505 | 10.4 | 14,729 | 10.4 | % | |||||||||||
Other Revenue | 5,528 | 4.3 | 6,825 | 4.9 | % | |||||||||||
Net Broadcast Revenue | $ | 130,041 | 100.0 | % | $ | 140,422 | 100.0 | % | ||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Digital Media Revenue | $ | 28,355 | $ | 30,603 | $ | 2,248 | 7.9 | % | 16.5 | % | 16.2 | % |
Nine Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Digital Advertising, net | $ | 14,473 | 51.0 | % | $ | 13,859 | 45.3 | % | ||||||||
Digital Streaming | 2,611 | 9.2 | 2,579 | 8.4 | ||||||||||||
Digital Subscriptions | 6,679 | 23.6 | 9,227 | 30.2 | ||||||||||||
Digital Downloads | 4,291 | 15.1 | 4,637 | 15.1 | ||||||||||||
e-commerce | 108 | 0.4 | 163 | 0.5 | ||||||||||||
Other Revenues | 193 | 0.7 | 138 | 0.5 | ||||||||||||
Net Digital Media Revenue | $ | 28,355 | 100.0 | % | $ | 30,603 | 100.0 | % | ||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Publishing Revenue | $ | 13,366 | $ | 18,093 | $ | 4,727 | 35.4 | % | 7.8 | % | 9.6 | % |
Nine Months Ended September 30, | ||||||||||||||||
2020 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Book Sales | $ | 9,701 | 72.5 | % | $ | 15,074 | 83.3 | % | ||||||||
Estimated Sales Returns & Allowances | (2,852 | ) | (21.3 | ) | (4,223 | ) | (23.3 | ) | ||||||||
Net Book Sales | 6,849 | 51.2 | 10,851 | 60.0 | ||||||||||||
E-Book Sales | 960 | 7.2 | 1,294 | 7.2 | ||||||||||||
Self-Publishing Fees | 3,860 | 28.9 | 4,730 | 26.1 | ||||||||||||
Print Magazine Subscriptions | 519 | 3.9 | 262 | 1.4 | ||||||||||||
Print Magazine Advertisements | 278 | 2.1 | 123 | 0.7 | ||||||||||||
Digital Advertising | 216 | 1.6 | 132 | 0.7 | ||||||||||||
Other Revenue | 684 | 5.1 | 701 | 3.9 | ||||||||||||
Net Publishing Revenue | $ | 13,366 | 100.0 | % | $ | 18,093 | 100.0 | % | ||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Broadcast Operating Expenses | $ | 104,704 | $ | 106,968 | $ | 2,264 | 2.2 | % | 61.0 | % | 56.6 | % | ||||||||||||
Same Station Broadcast Operating Expenses | $ | 102,708 | $ | 105,970 | $ | 3,262 | 3.2 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Digital Media Operating Expenses | $ | 23,123 | $ | 25,280 | $ | 2,157 | 9.3 | % | 13.5 | % | 13.4 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Publishing Operating Expenses | $ | 16,443 | $ | 16,844 | $ | 401 | 2.4 | % | 9.6 | % | 8.9 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Unallocated Corporate Expenses | $ | 11,909 | $ | 12,764 | $ | 855 | 7.2 | % | 6.9 | % | 6.7 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Debt Modification Costs | $ | — | $ | 2,347 | $ | 2,347 | 100.0 | % | — | % | 1.2 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Depreciation Expense | $ | 8,108 | $ | 8,118 | $ | 10 | 0.1 | % | 4.7 | % | 4.3 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Amortization Expense | $ | 2,578 | $ | 1,553 | $ | (1,025 | ) | (39.8 | )% | 1.5 | % | 0.8 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Impairment of Indefinite-Lived Long-Term Assets Other Than Goodwill | $ | 17,254 | $ | — | $ | (17,254 | ) | (100.0 | )% | 29.6 | % | — | % |
There were no indications of impairment at March 31, 2021.
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Impairment of Indefinite-Lived Long-Term Assets Other Than Goodwill | $ | 17,254 | $ | — | $ | (17,254 | ) | (100.0 | )% | 10.0 | % | — | % |
Impairment of Goodwill
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 20210 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Impairment of Goodwill | $ | 307 | $ | — | $ | (307 | ) | (100.0 | )% | 0.5 | % | — | % |
There were no indications of impairment at March 31,as of our interim review during the third quarter of 2021.
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Impairment of Goodwill | $ | 307 | $ | — | $ | (307 | ) | (100.0 | )% | 0.2 | % | — | % |
There were no indications of impairment as of our interim review during the third quarter of 2021.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Net (Gain) Loss on the Disposition of assets | $ | 79 | $ | 318 | $ | 239 | 302.5 | % | 0.1 | % | 0.5 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net (Gain) Loss on the Disposition of assets | $ | 1,494 | $ | (10,552 | ) | $ | (12,046 | ) | (806.3 | )% | 0.9 | % | (5.6 | )% |
Florida and various other fixed asset disposals.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Interest Income | $ | — | $ | 1 | $ | 1 | 100.0 | % | — | % | — | % | ||||||||||||
Interest Expense | (4,032 | ) | (3,926 | ) | 106 | (2.6 | )% | (6.9 | )% | (6.6 | )% | |||||||||||||
Gain on Early Retirement of Long-Term Debt | 49 | — | (49 | ) | (100.0 | )% | 0.1 | % | — | % | ||||||||||||||
Net Miscellaneous Income and (Expenses) | (52 | ) | 22 | 74 | (142.3 | )% | (0.1 | )% | — | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Interest Income | $ | 1 | $ | 1 | $ | — | — | % | — | % | — | % | ||||||||||||
Interest Expense | (12,069 | ) | (11,887 | ) | (182 | ) | (1.5 | )% | (7.0 | )% | (6.3 | )% | ||||||||||||
Gain on the Forgiveness of PPP Loans | — | 11,212 | 11,212 | 100.0 | % | — | 5.9 | % | ||||||||||||||||
Gain (Loss) on Early Retirement of Long-Term Debt | 49 | (56 | ) | (105 | ) | (214.3 | )% | — | % | — | % | |||||||||||||
Net Miscellaneous Income and (Expenses) | (45 | ) | 87 | 132 | (2,93.3 | )% | — | % | — | % |
$49,000 for the nine-month period ended September 30, 2020.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Provision for Income Taxes | $ | 33,159 | $ | 130 | $ | (33,029 | ) | (99.6 | )% | 56.9 | % | 0.2 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Provision for Income Taxes | $ | 31,180 | $ | 479 | $ | (30,701 | ) | (98.5 | )% | 18.2 | % | 0.3 | % |
attributable to deductible amortization on indefinite lived assets for fully valued state jurisdictions and projected utilization of operating loss carryforwards.
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) |
| % of Total Net Revenue | ||||||||||||||||||||||
Net Income (Loss) | $ | (55,204 | ) | $ | 323 | $ | 55,527 | (100.6 | )% | (94.8 | )% | 0.5 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2021 | Change $ | Change % | 2020 | 2021 | |||||||||||||||||||
(Dollars in thousands) | % of Total Net Revenue | |||||||||||||||||||||||
Net Income (Loss) | $ | (57,390 | ) | $ | 24,674 | $ | 82,064 | (143.0 | )% | (33.4 | )% | 13.0 | % |
Significant areas for which management uses estimates include:
going concern evaluations;
revenue recognition;
asset impairments, including broadcasting licenses, goodwill There have been no significant and other indefinite-lived intangible assets;
probabilities associated with the potential for contingent earn-out consideration;
fair value measurements;
contingency reserves;
allowance for doubtful accounts;
sales returns and allowances;
barter transactions;
inventory reserves;
reserves for royalty advances;
fair value of equity awards;
self-insurance reserves;
estimated lives for tangible and intangible assets;
assessment of contract-based factors, asset-based factors, entity-based factors and market-based factors to determine the lease term impacting Right-Of-Use (“ROU”) assets and lease liabilities;
determining the Incremental Borrowing Rate (“IBR”) for calculating ROU assets and lease liabilities
income tax valuation allowances; and
uncertain tax positions.
These estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty. The estimates will change as new events occur, as more experience is acquired and as more information is obtained. We evaluate and update our assumptions and estimates on an ongoing basis and we may consult outside experts to assist as considered necessary.
The COVID-19 pandemic continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could materially impact our estimates related to, but not limited to, revenue recognition, broadcast licenses, goodwill and income taxes. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. Our estimates may change as new events occur and additional information emerges, and suchmaterial changes are recognized or disclosed in our consolidated financial statements.
We believe the following accounting policies and the related judgments and estimates are critical accounting policies that affect the preparation of our Condensed Consolidated Financial Statements.
Going Concern
Management is responsible for evaluating conditions or events as related to uncertainties that raise substantial doubt about our ability to continue as a going concern and to provide related footnote disclosures, as applicable. Management’s estimates and assumptions, used in the evaluation of our ability to meet our obligations as they become due within one year after the date our financial statements are issued, are based on the facts and circumstances at such date and are subject to a material and high level of subjectivity and uncertainty due to the matters themselves being uncertain and subject to modification. The effect of any individual or aggregate changes in the estimates and assumptions, or the facts and circumstances, could be material to the financial statements.
Revenue Recognition
Significant management judgments and estimates must be made in connection with determining the amount of revenue to be recognized in any accounting period. We must assess the promises within each sales contract to determine if they are distinct performance obligations. Once the performance obligation(s) are determined, the transaction price is allocated to the performance obligation(s) based on a relative standalone selling price basis. If a sales contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price. If the stand-alone selling price is not determinable, an estimate is used.
We make significant estimates related to variable consideration at the point of sale, including estimates for refunds and product returns. Under ASC Topic 606, estimates of variable consideration are to be recognized before contingencies are resolved in certain circumstances, including when it is probable that a significant reversal in the amount of any estimated cumulative revenue will not occur.
A growing source of revenue is generated from digital product offerings, which allow for enhanced audience interaction and participation, and integrated digital advertising solutions. When offering digital products, another party may be involved in providing the goods or services that make up a performance obligation to the customer. These include the use of third-party websites for social media campaigns. We must evaluate if we are the principal or agent in order to determine if revenue should be reported gross as principal or net as agent. In this evaluation, we consider if we obtain control of the specified goods or services before they are transferred to our customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. The determination of whether we control a specified good or service immediately prior to the good or service being transferred requires us to make reasonable judgments on the nature of each agreement. We have determined that we are acting as principal when we manage all aspects of a social media campaign, including reviewing and approving target audiences, monitoring actual results and making modifications as needed and when we are responsible for delivering campaign results to our customers regardless of the use of a third-party or parties.
Trade and Barter Transactions
In broadcasting, trade or barter agreements are commonly used to reduce cash expenses by exchanging advertising time for goods or services. We may enter barter agreements to exchange airtime or digital advertising for goods or services that can be used in our business or that can be sold to our audience under Listener Purchase Programs. The terms of these barter agreements permit us to preempt the barter airtime or digital campaign in favor of customers who purchase the airtime or digital campaign for cash. The value of these non-cash exchanges is included in revenue in an amount equal to the fair value of the goods or services we receive. Each transaction must be reviewed to determine that the products, supplies and/or services we receive have economic substance, or value to us. We record barter operating expenses upon receipt and usage of the products, supplies and services, as applicable. We record barter revenue as advertising spots or digital campaigns are delivered, which represents the point in time that control is transferred to the customer thereby completing our performance obligation. Barter revenue is recorded on a gross basis unless an agency represents the programmer, in which case, revenue is reported net of the commission retained by the agency.
Broadcast Licenses, Goodwill and Other Indefinite-Lived Intangible Assets
Approximately 64% of our total assets at March 31, 2021 consisted of indefinite-lived intangible assets including broadcast licenses, goodwill and mastheads. These indefinite-lived intangible assets originated from acquisitions in which a significant amount of the purchase price was allocated to broadcast licenses and goodwill. We do not amortize indefinite-lived intangible assets, but rather test for impairment annually or more frequently if events or circumstances indicate that an asset may be impaired. We perform our annual impairment testing during the fourth quarter of each year, which coincides with our budget and planning process for the upcoming year.
Impairment testing requires an estimate of the fair value of our indefinite-lived intangible assets. We believe that these estimates of fair value are critical accounting estimates as the value is significant in relation to our total assets and the estimates incorporate variables and assumptions based on our experiences and judgment about our future operating performance. Fair value measurements use significant unobservable inputs that reflect our own assumptions about the estimates that market participants would use in measuring fair value, including assumptions about risk. If actual future results are less favorable than the assumptions and estimates used in our estimates, we are subject to future impairment charges, the amount of which may be material. The unobservable inputs are defined in FASB ASC Topic 820, Fair Value Measurements and Disclosures as Level 3 inputs discussed in Note 12 of our Financial Statements and Supplementary Data.
The first step of our impairment testing is to perform a qualitative assessment as to whether it is more likely than not that an indefinite-lived intangible asset is impaired. This qualitative assessment requires significant judgment when considering the events and circumstances that may affect the estimated fair value of our indefinite-lived intangible assets. These events and circumstances are not all-inclusive and are not by themselves indicators of impairment. We consider external and internal factors when reviewing the following events and circumstances, which are presented in the order of what we believe to be the strongest to weakest indicators of impairment:
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If it is more likely than not that an impairment exists, we are required to perform a second step to preparing a quantitative analysis to estimate the fair or enterprise value of the assets. We did not find reconciliation to our current market capitalization meaningful in the determination of our enterprise value given current factors that impact our market capitalization, including but not limited to: limited trading volume, the impact of our publishing segment operating losses and the significant voting control of our Chairman and Chief Executive Officer. We engage an independent third-party appraisal and valuation firm to assist us with determining the enterprise value as part of our quantitative review.
If the results of our quantitative analysis indicate that the fair value of a reporting unit is less than its carrying value, an impairment is recorded equal to the amount by which the carrying value exceeds the estimated fair value.
We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our indefinite-lived intangible assets, however, these estimates and assumptions are highly judgmental in nature. Actual results can be materially different from estimates and assumptions. If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the amounts reflected on our balance sheet, we may recognize future impairment charges, the amount of which may be material.
Business Acquisitions
We account for business acquisitions in accordance with the acquisition method of accounting as specified in FASB ASC Topic 805 Business Combinations. The total acquisition consideration is allocated to assets acquired and liabilities assumed based on their estimated fair values as of the date of the transaction. Estimates of the fair value include discounted estimated cash flows to be generated by the assets and their expected useful lives based on historical experience, market trends and any synergies believed to be achieved from the acquisition. The excess of consideration paid over the estimated fair values of the net assets acquired is recorded as goodwill and any excess of fair value of the net assets acquired over the consideration paid is recorded as a gain on bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether all acquired assets and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired, and liabilities assumed have been properly valued.
Acquisitions may include contingent earn-out consideration, the fair value of which is estimated as of the acquisition date as the present value of the expected contingent payments as determined using weighted probabilities of the payment amounts.
A majority of our radio station acquisitions have consisted primarily of the FCC licenses to broadcast in a particular market. We often do not acquire the existing format, or we change the format upon acquisition when we find it beneficial. As a result, a substantial portion of the purchase price for the assets of a radio station is allocated to the broadcast license. Under ASU 2017-01, a fewer number of our radio station acquisitions qualify as business acquisitions and instead are accounted for as asset purchases. Asset purchases are recognized based on their cost to acquire, including transaction costs. The cost to acquire an asset group is allocated to the individual assets acquired based on their relative fair value with no goodwill recognized.
We may retain a third-party appraiser to estimate the fair value of the acquired net assets as of the acquisition date. As part of the valuation and appraisal process, the third-party appraiser prepares a report assigning estimated fair values to the various asset categories in our financial statements. These fair value estimates are subjective in nature and require careful consideration and judgment. Management reviews the third-party reports for reasonableness of the assigned values. We believe that the purchase price allocations represent the appropriate estimated fair value of the assets acquired and we have not had to modify our purchase price allocations.
We estimate the economic life of each tangible and intangible asset acquired to determine the period of time in which the asset should be depreciated or amortized. A considerable amount of judgment is required in assessing the economic life of each asset. We consider our own experience with similar assets, industry trends, market conditions and the age of the property at the time of our acquisition to estimate the economic life of each asset. If the financial condition of the assets were to deteriorate, the resulting change in life or impairment of the asset could cause a material impact and volatility in our operating results. To date, we have not experienced changes in the economic life established for each major category of our assets.
Contingent Earn-Out Consideration
Our acquisitions may include contingent earn-out consideration as part of the purchase price. The fair value of the contingent earn-out consideration is estimated as of the acquisition date based on the present value of the contingent payments expected to be made using a weighted probability of possible payments. The unobservable inputs used in the determination of the fair value of the contingent earn-out consideration include our own assumptions about the likelihood of payment based on the established benchmarks and discount rates based on our internal rate of return analysis. The fair value measurements include inputs that are Level 3 measurement as discussed in Note 12 in the notes of our Condensed Consolidated Financial Statements contained in Part 1 in this quarterly report on Form 10-Q.
We review the probabilities of possible future payments to the estimated fair value of any contingent earn-out consideration on a quarterly basis over the earn-out period. Actual results are compared to the estimates and probabilities of achievement used in our forecasts. Should actual results increase or decrease as compared to the assumption usedthose disclosed in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our analysis, the fair value of the contingent earn-out consideration obligations will increase or decrease, up to the contracted limit, most recent Annual Report on Form
We believe that we have used reasonable estimates and assumptions to calculate the estimated fair value of any contingent earn-out consideration however, these estimates and assumptions are highly judgmental in nature. Actual results can be materially different from estimates and assumptions.
Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures established a single definition of fair value in generally accepted accounting principles and requires expanded disclosure requirements about fair value measurements. The provision applies to other accounting pronouncements that require or permit fair value measurements. This includes applying the fair value concept to (i) nonfinancial assets and liabilities initially measured at fair value in business combinations; (ii) reporting units or nonfinancial assets and liabilities measured at fair value in conjunction with goodwill impairment testing; (iii) other nonfinancial assets measured at fair value in conjunction with impairment assessments; and (iv) asset retirement obligations initially measured at fair value.
The fair value provisions include guidance on how to estimate the fair value of assets and liabilities in the current economic environment and reemphasize that the objective of a fair value measurement remains an exit price. If we were to conclude that there has been a significant decrease in the volume and level of activity of the asset or liability in relation to normal market activities, quoted market values may not be representative of fair value and we may conclude that a change in valuation technique or the use of multiple valuation techniques may be appropriate.
The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market, and the characteristics specific to the transaction. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have less (or no) pricing observability and a higher degree of judgment utilized in measuring fair value.
FASB ASC Topic 820 established a hierarchal disclosure framework associatedfiled with the level of pricing observability utilized in measuring fair value. This framework defined three levels of inputs to the fair value measurement process and requires that each fair value measurement be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety. The three broad levels of inputs defined by the FASB ASC Topic 820 hierarchy are as follows:
Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and
Level 3 Inputs—unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability and are developed basedSEC on the best information available in the circumstances (which might include the reporting entity’s own data).
We believe that we have used reasonable estimates and assumptions to calculate the estimated fair value of our financial assets as discussed in Note 12 in the notes to our Condensed Consolidated Financial Statements contained in Part 1 of this quarterly report on Form 10-Q.
Contingency Reserves
In the ordinary course of business, we are involved in various legal proceedings, lawsuits, arbitration and other claims that are complex in nature and have outcomes that are difficult to predict. Consequently, we are unable to ascertain the ultimate aggregate amount of monetary liability or the financial impact with respect to these matters. Certain of these proceedings are discussed in Note 14, Commitments and Contingencies, contained in our Condensed Consolidated Financial Statements.
We record contingency reserves to the extent we conclude that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. The establishment of the reserve is based on a review of all relevant factors, the advice of legal counsel, and the subjective judgment of management. The reserves we have recorded to date have not been material to our consolidated financial position, results of operations or cash flows. We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
While we believe that the final resolution of any known maters, individually and in the aggregate, will not have a material adverse effect upon our consolidated financial position, results of operations or cash flows, it is possible that we could incur additional losses. We maintain insurance that may provide coverage for such matters. Future claims against us, whether meritorious or not, could have a material adverse effect upon our consolidated financial position, results of operations or cash flows, including losses due to costly litigation and losses due to matters that require significant amounts of management time that can result in the diversion of significant operational resources.
Allowance for Doubtful Accounts
We evaluate the balance reserved in our allowance for doubtful accounts on a quarterly basis based on our historical collection experience, the age of the receivables, specific customer information and current economic conditions. We increased our reserve percentages based on the adverse economic conditions due to the COVID-19 pandemic and the expected impact on the ability of our customers to make payments. Past due balances are generally not written-off until all collection efforts have been unsuccessful, including use of a collection agency. A considerable amount of judgment is required in assessing the likelihood of ultimate realization of these receivables, including the current creditworthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. We have not modified our estimate methodology and we have not historically recognized significant losses from changes in our estimates. We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
Sales Returns and Allowances
We provide for estimated returns for products sold with the right of return, primarily book sales associated with Regnery® Publishing. We record an estimate of these product returns as a reduction of revenue in the period of the sale. Our estimates are based upon historical sales returns, the amount of current period sales, economic trends and any changes in customer demand and acceptance of our products. We regularly monitor actual performance to estimated return rates and make adjustments as necessary. Estimated return rates utilized for establishing estimated returns reserves have approximated actual returns experience. However, actual returns may differ significantly, either favorably or unfavorably, from these estimates if factors such as the historical data we used to calculate these estimates do not properly reflect future returns or as a result of changes in economic conditions of the customer and/or the market. We have not modified our estimate methodology and we have not historically recognized significant losses from changes in our estimates. We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
Inventory Reserves
Inventories consist of published books from Regnery® Publishing Inventory is recorded at the lower of cost or net realizable value as determined on a First-In First-Out cost method. We review historical data and our own experiences to estimate the fair value of inventory on hand. Our analysis includes reviewing actual sales returns, allowance estimates, royalty reserves, overall economic conditions and demand for each title. We record a provision to expense the balance of unsold inventory that we believe to be unrecoverable. We regularly monitor actual performance to our estimates and make adjustments as necessary. Estimated inventory reserves may be adjusted, either favorably or unfavorably, if factors such as the historical data we used to calculate these estimates do not properly reflect future returns or as a result of changes in economic conditions of the customer and/or the market. We have not modified our estimate methodology and we have not historically recognized significant losses from changes in our estimates. We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
Reserves for Royalty Advances
Royalties due to book authors are paid in advance and capitalized. Royalties are expensed as the related book revenues are earned or when we determine that future recovery of the royalty is not likely. We reviewed historical data associated with royalty advances, earnings and recoverability based on actual results of Regnery® Publishing. Historically, the longer the unearned portion of an advance remains outstanding, the less likely it is that we will recover the advance through the sale of the book. We apply this historical experience to outstanding royalty advances to estimate the likelihood of recovery. A provision was established to expense the balance of any unearned advance which we believe is not recoverable. Our analysis also considers other discrete factors, such as death of an author, any decision to not pursue publication of a title, poor market demand or other relevant factors. We have not modified our estimate methodology and we have not historically recognized significant losses from changes in our estimates. We believe that our estimates and assumptions are reasonable and that our reserves are accurately reflected.
Fair Value of Equity Awards
We account for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation. We record equity awards with stock-based compensation measured at the fair value of the award as of the grant date. We determine the fair value of each award using the Black-Scholes valuation model that requires the input of highly subjective assumptions, including the expected stock price volatility and expected term of the award granted. The exercise price for each award is equal to or greater than the closing market price of Salem Media Group, Inc. common stock as of the date of the award. We use the straight-line attribution method to recognize share-based compensation costs over the expected service period of the award. Upon exercise, cancellation, forfeiture, or expiration of the award, deferred tax assets for awards with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. We have not modified our estimates or assumptions used in our valuation model. We believe that our estimates and assumptions are reasonable and that our stock-based compensation is accurately reflected in our results of operations.
Partial Self-Insurance on Employee Health Plan
We provide health insurance benefits to eligible employees under a self-insured plan whereby we pay actual medical claims subject to certain stop loss limits. We record self-insurance liabilities based on actual claims filed and an estimate of those claims incurred but not reported. Our estimates are based on historical data and probabilities. Any projection of losses concerning our liability is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors such as future inflation rates, changes in severity, benefit level changes, medical costs and claim settlement patterns. Should the actual amount of claims increase or decrease beyond what was anticipated, we may adjust our future reserves. Our self-insurance liability was $0.5 million at March 31, 2021 and December 31, 2020. We have not modified our estimate methodology and we have not historically recognized significant losses from changes in our estimates.
Leases
We account for leases under the provisions of FASB ASC Topic 842, “Leases” (“ASC 842”). We consider all relevant facts and circumstances, to determine whether a contract is or contains a lease at inception. Our analysis includes whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This consideration involves judgment with respect to whether we have the right to obtain substantially all of the economic benefits from the use of the identified asset and whether we have the right to direct the use of the identified asset.
Lease Term – Impact on Right-of-Use Assets and Lease Liabilities
The lease term can materially impact the value of the Right-of-Use (“ROU”) assets and lease liabilities recorded on our balance sheet as required under ASC 842. We calculate the term for each lease agreement to include the noncancellable period specified in the agreement together with (1) the periods covered by options to extend the lease if we are reasonably certain to exercise that option, (2) periods covered by an option to terminate if we are reasonably certain not to exercise that option and (3) period covered by an option to extend (or not terminate) if controlled by the lessor. The assessment of whether we are reasonably certain to exercise an option to extend a lease requires significant judgement surrounding contract-based factors, asset-based factors, entity-based factors and market-based factors. These factors, detailed below, are evaluated based on the facts and circumstances at the time we enter a lease agreement.
Contract-Based Factors:
The existence of a bargain renewal option
The existence of contingent or variable payments
The nature and terms of renewal or termination options
The costs the lessee would incur to restore the asset before returning it to the lessor
Asset-Based Factors:
The existence of significant lessee-installed leasehold improvements that would still have economic value when the option becomes exercisable
The physical location of the asset
The costs that would be incurred to replace or find an alternative asset
Entity-Based Factors:
Historical practice
Management’s intent
Common industry practice
The financial impact on the entity of extending or terminating the lease
The importance of the leased asset to the entity’s operations
Market-Based Factors:
Market rental or purchase rates for comparable assets
Potential implications of local regulations and statutory requirements
We have not modified our estimate methodology since adopting ASC 842 on January 1, 2019.
Incremental Borrowing Rate
The ROU asset and related lease liabilities recorded under ASC 842 are calculated based on the present value of the lease payments using (1) the rate implicit in the lease or (2) the lessee’s Incremental Borrowing Rate (“IBR”). IBR is defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
We estimate the IBR applicable to Salem using significant judgement and estimates, including the estimated value of the underlying leased asset, and the following available evidence:
The credit history of Salem Media Group
Our most recent credit facility consisted of 6.75% Senior Secured Notes and an ABL revolver. As of each month end, the weighted average interest rate on outstanding debt is calculated.
The credit worthiness of Salem Media Group
We review our credit ratings from third parties, including Standard & Poor’s and Moody’s.
Class of the underlying asset and the remaining term of the arrangement
We use a portfolio approach applying a single IBR to all leases with reasonably similar characteristics, including the remaining lease term, the underlying assets and the economic environment. We group leases according to the nature of leased asset and the lease term. We have six main categories of leases, (1) Buildings, (2) Equipment, (3) Land, (4) Other (Parking Facilities), (5) Towers and (6) Vehicles.
We consider vehicles to have a higher risk for collateral that is mitigated by the shorter term of the lease that would typically range from three to five years. We consider building and towers to have a higher risk based on (1) the longer lease term of up to thirty years and (2) a higher outstanding balance that is mitigated by the lower risk that the collateralized asset would lose significant value.
The debt incurred under the lease liability as compared to amounts that would be borrowed
We review the cost to finance comparable amounts under our ABL and based on the current market environment as derived from available economic data.
We referred to the Bloomberg Single B Rated Communications Yield Curve (unsecured) and considered adjustments for industry risk factors and the estimated value of the underlying leased asset to be collateral for the debt incurred.
From this analysis, we develop a matrix to estimate the IBR for each major category of leases. We review our IBR estimates on a quarterly basis and update as necessary. We have not modified our estimate methodology since adopting ASC 842 on January 1, 2019.
Impairment of ROU Assets
ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.
ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
After a careful analysis of the guidance, we concluded that the appropriate unit of accounting for testing ROU assets for impairment is the broadcast market cluster level for radio station operations and the entity or division level for digital media entities, publishing entities and networks. Corporate ROU assets are tested on a consolidated level with consideration given to all cash flows of the company as corporate functions do not generate cash flows and are funded by revenue-producing activities at lower levels of the entity.
ASC 360 requires three steps to identify, recognize and measure the impairment of a long-lived asset (asset group) to be held and used:
Step 1 – Consider whether Indicators of Impairment are Present
As detailed in ASC 360-10-35-21, the following are examples of impairment indicators:
A significant decrease in the market price of a long-lived asset (asset group)
A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group)
A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group)
A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
Other indicators should be considered if we believe that the carrying amount of an asset (asset group) may not be recoverable.
Step 2—Test for Recoverability
If indicators of impairment are present, we are required to perform a recoverability test comparing the sum of the estimated undiscounted cash flows attributable to the long-lived asset or asset group in question to the carrying amount of the long-lived asset or asset group.
ASC 360 does not specifically address how operating lease liabilities and future cash outflows for lease payments should be considered in the recoverability test. Under ASC 360, financial liabilities, or long-term debt, generally are excluded from an asset group while operating liabilities, such as accounts payable, generally are included. ASC 842 characterizes operating lease liabilities as operating liabilities. Because operating lease liabilities may be viewed as having attributes of finance liabilities as well as operating liabilities, it is generally acceptable for a lessee to either include or exclude operating lease liabilities from an asset group when testing whether the carrying amount of an asset group is recoverable provided the approach is applied consistently for all operating leases and when performing Steps 2 and 3 of the impairment model in ASC 360.
In cases where we have received lease incentives, including operating lease liabilities in an asset group may result in the long-lived asset or asset group having a zero or negative carrying amount because the incentives reduce our ROU assets. We elected to exclude operating lease liabilities from the carrying amount of the asset group such that we test ROU assets for operating leases in the same manner that we test ROU assets for financing leases.
Undiscounted Future Cash Flows
The undiscounted future cash flows in Step 2 are based on our own assumptions rather than a market participant. If an election is made to exclude operating lease liabilities from the asset or asset group, all future cash lease payments for the lease should also be excluded. The standard requires lessees to exclude certain variable lease payments from lease payments and, therefore, from the measurement of a lessee’s lease liabilities. Because these variable payments do not reduce the lease liability, we include the variable payments we expect to make in our estimate of the undiscounted cash flows in the recoverability test (Step 2) using a probability-weighted approach.
Step 3—Measurement of an Impairment Loss
If the undiscounted cash flows used in the recoverability test are less than the carrying amount of the long-lived asset (asset group), we are required to estimate the fair value of the long-lived asset or asset group and recognize an impairment loss when the carrying amount of the long-lived asset or asset group exceeds the estimated fair value. We elected to exclude operating lease liabilities from the estimated fair value, consistent with the recoverability test. Any impairment loss for an asset group must reduce only the carrying amounts of a long-lived asset or assets of the group, including the ROU assets. The loss must be allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group must not reduce the carrying amount of that asset below its fair value whenever the fair value is determinable without undue cost and effort. ASC 360 prohibits the subsequent reversal of an impairment loss for an asset held and used.
Fair Value Considerations
When determining the fair value of a ROU asset, we must estimate what market participants would pay to lease the asset or what a market participant would pay up front in one payment for the ROU asset, assuming no additional lease payments would be due. The ROU asset must be valued assuming its highest and best use, in its current form, even if that use differs from the current or intended use. If no market exists for an asset in its current form, but there is a market for a transformed asset, the costs to transform the asset are considered in the fair value estimate. Refer to Note 12, Fair Value Measurements.
There were no indications of impairment during the period ended March 31, 2021.
Income Tax Valuation Allowances (Deferred Taxes)
In preparing our condensed consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax exposure and assessing temporary differences resulting from differing treatment of items for tax and financial statement purposes. Our judgments, assumptions and estimates relative to the current provision for income tax consider current tax laws, our interpretation of current tax laws and possible outcomes of audits conducted by tax authorities. Reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities are established if necessary. Although we believe our judgments, assumptions and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any future tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.
We calculate our current and deferred tax provisions based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the period when the tax returns are filed and the tax implications are known. Tax law and rate changes are reflected in the income tax provision in the period in which such changes are enacted.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period in which we make such a determination. Likewise, if we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the applicable portion of the previously provided valuation allowance.
Income Taxes and Uncertain Tax Positions
We are subject to audit and review by various taxing jurisdictions. We may recognize liabilities on our financial statements for positions taken on uncertain tax positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. It is inherently difficult and subjective to estimate such amounts, as this requires us to make estimates based on the various possible outcomes. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.
We review and reevaluate uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of a tax benefit or an additional charge to the tax provision. During the years ended December 31, 2019 and 2020, we recognized liabilities associated with uncertain tax positions around our subsidiary Salem Communications Holding Company’s Pennsylvania tax filing. The position taken on the tax returns follows Pennsylvania Notice 2016-01 which provides guidance for reversal of intercompany interest income and associated expense yielding a net loss for Pennsylvania. Beginning January 1, 2021, we no longer accrue intercompany interest, therefore, any liability associated with intercompany interest for future years is eliminated. The current liability recognized for the tax position is $0.3 million including interest and penalties. Our evaluation was performed for all tax years that remain subject to examination, which range from 2016 through 2020.
LIQUIDITY AND CAPITAL RESOURCES
Lower revenue and longer days to collect receivables negatively impacts future availability under our credit facility. Availability under our Asset Based Loan (“ABL Facility”) is subject to a borrowing base consisting of (a) 90% of the eligible accounts receivable plus (b) a calculated amount based on the value of certain real property. The maximum amount available under our ABL Facility was $26.1 million at March 31, 2021 compared to $24.8 million at December 31,statements.
In response to these developments we implemented several measures during 2020 to reduce costs and conserve cash to ensure that we havehad adequate cash to meet our debt servicing requirements, including:
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020. The CARES Act provided emergency economic assistance for individuals and businesses impacted by the
During 2020 we began to keep higher balances of cash and cash equivalents on-hand to meet operating needs due tothese loans with the adverse economic conditions of the COVID-19 pandemic. Historically, we kept the balance of cash and cash equivalents on-hand lowremaining PPP loan repaid in order to reduce the balance of outstanding debt. Our ABL Facility automatically covers any shortfalls in operating cash flows such that we are not required to hold excess cash balances on hand. Our cash and cash equivalents increased to $23.4 million at March 31, 2021 as compared to $1.3 million at March 31, 2020. Working capital increased $27.3 million to $8.8 million at March 31, 2021 compared to $(18.5) million at March 31, 2020 due to the $22.1 million increase in cash and cash equivalents and a $14.0 million decrease in the outstanding balance on the ABL Facility, that was partially offset by a decrease in trade accounts receivable of $3.9 million, a $2.6 million increase in net accounts payable and accrued expenses and an increase in contract liabilities of $3.0 million.
July 2021.
Net inventories on hand decreased $0.1 million to $0.6 million at March 31, 2021 compared to a $0.1 million decrease to $0.6 million for the same period of the prior year.
time
Proceeds of $11.2 million under PPP loans were received during the three-months ended March 31, 2021;
Net repayments on our ABL Facility were $5.0 million during the three months ended March 31, 2021 compared to net borrowings1.688%) of $1.6 million during the same period of the prior year.
Salem Media Group, Inc. has no independent assets or operations, the subsidiary guarantees relating to certain debt are full and unconditional and joint and several, and any subsidiaries of Salem Media Group, Inc. other than the subsidiary guarantors are minor.
SBA PPP Loans
December 31, 2020 | September 30, 2021 | |||||||
(Dollars in thousands) | ||||||||
7.125% Senior Secured Notes | $ | — | $ | 114,731 | ||||
Less unamortized discount and debt issuance costs based on imputed interest rate of 7.64% | — | (4,048 | ) | |||||
7.125% Senior Secured Notes net carrying value | — | 110,683 | ||||||
6.75% Senior Secured Notes | 216,341 | 98,815 | ||||||
Less unamortized debt issuance costs based on imputed interest rate of 7.10% | (2,577 | ) | (939 | ) | ||||
6.75% Senior Secured Notes net carrying value | 213,764 | 97,876 | ||||||
Asset-Based Revolving Credit Facility principal outstanding (1) | 5,000 | — | ||||||
SBA Paycheck Protection Program loans | — | — | ||||||
Long-term debt less unamortized discount and debt issuance costs | $ | 218,764 | $ | 208,559 | ||||
Less current portion | (5,000 | ) | — | |||||
Long-term debt less unamortized discount and debt issuance costs, net of current portion | $ | 213,764 | $ | 208,559 | ||||
(1) | As of September 30, 2021, the Asset-Based Revolving Credit Facility (“ABL”), had a borrowing base of $24.6 million, no outstanding borrowings and $0.3 million of outstanding letters of credit, resulting in a $24.3 million borrowing base availability. |
6.75% Senior Secured Notes
On May 19, 2017, we issued the Notes in a private placement. 470.
The Notes are secured by a first-priority lien on substantially all assets of ours and the Subsidiary Guarantors other than the ABL Facility Priority Collateral (as described below) (the “Notes Priority Collateral”). There is no direct lien on our FCC licenses to the extent prohibited by law or regulation (other than the economic value and proceeds thereof).
The Notes were redeemable, in whole or in part, at any time on or beforeprior to June 1, 20202024 at a price equal to 100% of the principal amount of the 2028 Notes plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but not including, the redemption date. At any time on or after June 1, 2020,2024, we may redeem some or all of the 2028 Notes are redeemable at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forth in the 2028 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including the redemption date.
In addition, we may redeem up to 35% of the aggregate principal amount of the 2028 Notes before June 1, 2024 with the net cash proceeds from certain equity offerings at a redemption price of 107.125% of the principal amount plus accrued and unpaid interest, if any, to, but not including the redemption date. We may also redeem up to 10% of the aggregate original principal amount of the 2028 Notes per twelve-month period, in connection with up to two redemptions in such twelve-month period, at a redemption price of 101% of the principal amount plus accrued and unpaid interest to, but not including, the redemption date
The Indenture provides for the following events of default (each, an “Event of Default”): (i) default in payment of principal or premium on the Notes at maturity, upon repurchase, acceleration, optional redemption or otherwise; (ii) default for At September 30, days in payment of interest on the Notes; (iii) the failure by us or certain restricted subsidiaries to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (iv) the failure of any guarantee by certain significant Subsidiary Guarantors to be in full force and effect and enforceable in accordance with its terms, subject to notice and lapse of time; (v) certain accelerations (including failure to pay within any grace period) of other indebtedness of ours or any restricted subsidiary if the amount accelerated (or so unpaid) is at least $15 million; (vi) certain judgments for the payment of money in excess of $15 million; (vii) certain events of bankruptcy or insolvency with respect to us or any significant subsidiary; and (viii) certain defaults with respect to any collateral having a fair market value in excess of $15 million. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare the principal of the Notes and any accrued interest on the Notes to be due and payable immediately, subject to remedy or cure in certain cases. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. At March 31, 2021, we were, and we remain, in compliance with all of the covenants under the Indenture.
Based on the balance of the Notes currently outstanding, we are required to pay $14.6 million per year in interest on the Notes. As of March 31, 2021, accrued interest on the Notes was $4.9 million.
We incurred debt issuance costs of $6.3 million that were recorded as a reduction of the debt proceeds that are being amortized to non-cash interest expense over the life of the Notes using the effective interest method. During the three-month periods ended March 31, 2021 and 2020, $0.2 million of debt issuance costs associated with the Notes was amortized to interest expense.
$56,000 after adjusting for bond issuance costs.
Date | Principal Repurchased | Cash Paid | % of Face Value | Bond Issue Costs | Net Gain | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
January 30, 2020 | $ | 2,250 | $ | 2,194 | 97.50 | % | $ | 34 | $ | 22 | ||||||||||
January 27, 2020 | 1,245 | 1,198 | 96.25 | % | 20 | 27 | ||||||||||||||
December 27, 2019 | 3,090 | 2,874 | 93.00 | % | 48 | 167 | ||||||||||||||
November 27, 2019 | 5,183 | 4,548 | 87.75 | % | 82 | 553 | ||||||||||||||
November 15, 2019 | 3,791 | 3,206 | 84.58 | % | 61 | 524 | ||||||||||||||
March 28, 2019 | 2,000 | 1,830 | 91.50 | % | 37 | 134 | ||||||||||||||
March 28, 2019 | 2,300 | 2,125 | 92.38 | % | 42 | 133 | ||||||||||||||
February 20, 2019 | 125 | 114 | 91.25 | % | 2 | 9 | ||||||||||||||
February 19, 2019 | 350 | 319 | 91.25 | % | 7 | 24 | ||||||||||||||
February 12, 2019 | 1,325 | 1,209 | 91.25 | % | 25 | 91 | ||||||||||||||
January 10, 2019 | 570 | 526 | 92.25 | % | 9 | 35 | ||||||||||||||
December 21, 2018 | 2,000 | 1,835 | 91.75 | % | 38 | 127 | ||||||||||||||
December 21, 2018 | 1,850 | 1,702 | 92.00 | % | 35 | 113 | ||||||||||||||
December 21, 2018 | 1,080 | 999 | 92.50 | % | 21 | 60 | ||||||||||||||
November 17, 2018 | 1,500 | 1,357 | 90.50 | % | 29 | 114 | ||||||||||||||
May 4, 2018 | 4,000 | 3,770 | 94.25 | % | 86 | 144 | ||||||||||||||
April 10, 2018 | 4,000 | 3,850 | 96.25 | % | 87 | 63 | ||||||||||||||
April 9, 2018 | 2,000 | 1,930 | 96.50 | % | 43 | 27 | ||||||||||||||
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$ | 38,659 | $ | 35,586 | $ | 706 | $ | 2,367 | |||||||||||||
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part of the effective yield on the 2028 Notes.
The ABL Facility is a five-year $30.0 million revolving credit facility due March 1, 2024, which includes a $5.0 million subfacility for standby letters of credit and a $7.5 million subfacility for swingline loans. All borrowings under the ABL Facility accrue interest at a rate equal to a base rate or LIBOR plus a spread. The spread, which is based on an availability-based measure, ranges from 0.50% to 1.00% for base rate borrowings and 1.50% to 2.00% for LIBOR borrowings. If an event of default occurs, the interest rate may increase by 2.00% per annum. Amounts outstanding under the ABL Facility may be paid and then reborrowed at our discretion without penalty or premium. Additionally, we pay a commitment fee on the unused balance from 0.25% to 0.375% per year based on the level of borrowings.
On October 20, 2020, we entered into a fourth amendment to our ABL Facility that provides a one-time waiver with respect to the current covenant testing period allowing the covenant trigger event date be the first day after the availability on the ABL Facility had equaled or exceeded (1) 15% of the maximum revolver amount and (2) $4.5 million and a waiver permitting our July 2020 financial statements to be issued on or before September 30, 2020 due to delays that were caused by a ransomware attack.
On April 7, 2020, we entered into a third amendment to ABL Facility that increased the advance rate on eligible accounts receivable from 85% to 90% and extended the maturity date from May 19, 2022 to March 1, 2024. The April 7, 2020 amendment also allows for an alternative benchmark rate that may include SOFR due to LIBOR being scheduled to be discontinued at the end of calendar year 2021.
The Credit Agreement includes a springing fixed charge coverage ratio of 1.0 to 1.0, which is tested during the period commencing on the last day of the fiscal month most recently ended prior to the date on which Availability (as defined in the Credit Agreement) is less than the greater of 15% of the Maximum Revolver Amount (as defined in the Credit Agreement) and $4.5 million and continuing for a period of 60 consecutive days after the first day on which Availability exceeds such threshold amount. The Credit Agreement also includes other negative covenants that are customary for credit facilities of this type, including covenants that, subject to exceptions described in the Credit Agreement, restrict our ability and the ability of our subsidiaries (i) to incur additional indebtedness; (ii) to make investments; (iii) to make distributions, loans or transfers of assets; (iv) to enter into, create, incur, assume or suffer to exist any liens, (v) to sell assets; (vi) to enter into transactions with affiliates; (vii) to merge or consolidate with, or dispose of all assets to a third party, except as permitted thereby; (viii) to prepay indebtedness; and (ix) to pay dividends.
The Credit Agreement provides for the following events of default: (i) default for non-payment of any principal or letter of credit reimbursement when due or any interest, fees or other amounts within five days of the due date; (ii) the failure by any borrower or any subsidiary to comply with any covenant or agreement contained in the Credit Agreement or any other loan document, in certain cases subject to applicable notice and lapse of time; (iii) any representation or warranty made pursuant to the Credit Agreement or any other loan document is incorrect in any material respect when made; (iv) certain defaults of other indebtedness of any borrower or any subsidiary of indebtedness of at least $10 million; (v) certain events of bankruptcy or insolvency with respect to any borrower or any subsidiary; (vi) certain judgments for the payment of money of $10 million or more; (vii) a change of control; and (viii) certain defaults relating to the loss of FCC licenses, cessation of broadcasting and termination of material station contracts. If an event of default occurs and is continuing, the Administrative Agent and the Lenders may accelerate the amounts outstanding under the ABL Facility and may exercise remedies in respect of the collateral. At March 31,September 30, 2021, we were, and we remain, in compliance with all of the covenants under Credit Agreement.
During the three and nine-month periods ended September 30, 2020, $30,000 and $0.1 million, respectively, of debt issue costs associated with the ABL was amortized to interest expense.
Summary of long-term debt obligations
Long-term debt consisted of the following:
As of December 31, 2020 | As of March 31, 2021 | |||||||
(Dollars in thousands) | ||||||||
6.75% Senior Secured Notes | $ | 216,341 | $ | 216,341 | ||||
Less unamortized debt issuance costs based on imputed interest rate of 7.08% | (2,577 | ) | (2,393 | ) | ||||
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6.75% Senior Secured Notes net carrying value | 213,764 | 213,948 | ||||||
Asset-Based Revolving Credit Facility principal outstanding | 5,000 | — | ||||||
SBA Paycheck Protection Plan loans | — | 11,195 | ||||||
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Long-term debt less unamortized debt issuance costs | $ | 218,764 | $ | 225,143 | ||||
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Less current portion | (5,000 | ) | — | |||||
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Long-term debt less unamortized debt issuance costs, net of current portion | $ | 213,764 | $ | 225,143 | ||||
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In addition to the outstanding amounts listed above, we also have interest payments related to our long-term debt as follows as of March 31, 2021:
$216.3 million aggregate principal amount of Notes with semi-annual interest payments at an annual rate of 6.75%; and
Commitment fee of 0.25% to 0.375% per annum on the unused portion of the ABL Facility.
Maturities of Long-Term Debt
Amount | ||||
For the Year Ended March 31, | (Dollars in thousands) | |||
2022 | $ | — | ||
2023 | — | |||
2024 | 216,341 | |||
2025 | — | |||
2026 | 11,195 | |||
Thereafter | — | |||
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$ | 227,536 | |||
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Amount | ||||
For the Year Ended September 30, | (Dollars in thousands) | |||
2022 | $ | — | ||
2023 | — | |||
2024 | 98,815 | |||
2025 | — | |||
2026 | — | |||
Thereafter | 114,731 | |||
$ | 213,546 | |||
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in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
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Exhibit Number | Exhibit Description | Form | File No. | Date of First Filing | Exhibit Number | Filed Herewith | ||||||||||||||||
31.1 | Certification of Edward G. Atsinger III Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act. | - | - | X | ||||||||||||||||||
31.2 | Certification of Evan D. Masyr Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act. | - | - | X | ||||||||||||||||||
32.1 | Certification of Edward G. Atsinger III Pursuant to 18 U.S.C. Section 1350. | - | - | X | ||||||||||||||||||
32.2 | Certification of Evan D. Masyr Pursuant to 18 U.S.C. Section 1350. | - | - | X |
101 | The following financial information from the Quarterly Report on Form 10Q for the three and nine months ended | - | - | X | ||||||||||||||||||||||||
104 | The cover page of this Quarterly Report on Form 10-Q, formatted in inline XBRL. | - | - | - | - | X |
SALEM MEDIA GROUP, INC. | ||||||
By: | /s/ EDWARD G. ATSINGER III | |||||
Edward G. Atsinger III | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
By: | /s/ EVAN D. MASYR | |||||
Evan D. Masyr | ||||||
Executive Vice President and Chief Financial Officer | ||||||
(Principal Financial Officer) |
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