CONTINGENCIES, GUARANTOR ARRANGEMENTS AND COMMITMENTS (Block) | 12 Months Ended |
Dec. 31, 2013 |
Commitments And Contingencies Disclosure Abstract | ' |
Commitments And Contingencies Disclosure Text Block | ' |
20. CONTINGENCIES, GUARANTOR ARRANGEMENTS AND COMMITMENTS |
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Contingencies |
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The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company's financial position, results of operations or cash flows. |
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Insurance |
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The Company uses a combination of insurance and self-insurance mechanisms to mitigate the potential liabilities for workers' compensation, general liability, property, directors' and officers' liability, vehicle liability and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering claims experience, demographic factors, severity factors, outside expertise and other actuarial assumptions. Under one of these policies, the Company is required to maintain a letter of credit in the amount of $0.4 million. |
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Broadcast Licenses |
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The Company could face increased costs in the form of fines and a greater risk that the Company could lose any one or more of its broadcasting licenses if the Federal Communications Commission (the “FCC”) concludes that programming broadcast by a Company station was obscene, indecent or profane and such conduct warrants license revocation. The FCC's authority to impose a fine for the broadcast of such material is $325,000 for a single incident, with a maximum fine of up to $3,000,000 for a continuing violation. In the past, the FCC has issued Notices of Apparent Liability and a Forfeiture Order with respect to several of the Company's stations proposing fines for certain programming which the FCC deemed to have been indecent. These cases are the subject of pending administrative appeals. The FCC has also investigated other complaints from the public that some of the Company's stations broadcast indecent programming. These investigations remain pending. The FCC initiated an investigation into an incident where a person died after participating in a contest at one of the Company's stations and this investigation remains pending. The Company has determined that, at this time, the amount of potential fines and penalties, if any, is not fixed or determinable. |
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The Company has filed, on a timely basis, renewal applications for those radio stations with radio broadcasting licenses that are subject to renewal with the FCC. The Company's costs to renew its licenses with the FCC are nominal and are expensed as incurred rather than capitalized. Certain licenses were not renewed prior to the renewal date. The Company continues to operate these radio stations under their existing licenses until the licenses are renewed. The FCC may delay the renewal pending the resolution of open inquiries. The affected stations are, however, authorized to continue operations until the FCC acts upon the renewal applications. |
Commitments |
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Leases And Other Contracts |
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Rental expense is incurred principally for office and broadcasting facilities. Certain of the leases contain clauses that provide for contingent rental expense based upon defined events such as cost of living adjustments and/or maintenance costs in excess of pre-defined amounts. For the period prior to July 1, 2013, rental expense does not include any payments made in connection with financing method lease obligations as described under Note 8, Tower Sale And Leaseback. |
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The following table provides the Company's rent expense for the periods indicated: |
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| | Years Ended December 31, | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
| | (amounts in thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Rent Expense | | $ | 13,226 | | $ | 12,748 | | $ | 12,719 | | | | | | | | | | | | |
The Company also has various commitments under the following types of contracts: (1) operating leases; (2) sports programming; (3) on-air talent; and (4) other contracts with aggregate minimum annual commitments as of December 31, 2013 as follows: |
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| | | | Programming | | | | | | | | | | | | | | | | |
| Operating | | And Related | | | | | | | | | | | | | | | | |
| Leases | | Contracts | | Total | | | | | | | | | | | | | |
| (amounts in thousands) |
Years ending December 31, | | | | | | | | | | | | | | | | | | | | | |
2014 | $ | 13,798 | | $ | 72,235 | | $ | 86,033 | | | | | | | | | | | | | |
2015 | | 13,675 | | | 57,438 | | | 71,113 | | | | | | | | | | | | | |
2016 | | 13,358 | | | 49,240 | | | 62,598 | | | | | | | | | | | | | |
2017 | | 12,197 | | | 14,321 | | | 26,518 | | | | | | | | | | | | | |
2018 | | 10,049 | | | 956 | | | 11,005 | | | | | | | | | | | | | |
Thereafter | | 33,404 | | | 416 | | | 33,820 | | | | | | | | | | | | | |
| $ | 96,481 | | $ | 194,606 | | $ | 291,087 | | | | | | | | | | | | | |
Guarantor Arrangements |
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The Company recognizes, at the inception of a guarantee, a liability for the fair value of the obligation undertaken by issuing the guarantee. The following is a summary of agreements that the Company has determined are within the scope of guarantor arrangements: |
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The Company enters into indemnification agreements in the ordinary course of business. Under these agreements, the Company typically indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company believes that the estimated fair value of these agreements is minimal. Accordingly, the Company has not recorded liabilities for these agreements as of December 31, 2013. |
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Under the Company's Credit Facility, the Company is required to reimburse lenders for any increased costs that they may incur in the event of a change in law, rule or regulation resulting in their reduced returns from any change in capital requirements. The Company cannot estimate the potential amount of any future payment under this provision, nor can the Company predict if such an event will ever occur. |
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In connection with many of the Company's acquisitions, the Company enters into time brokerage agreements or local marketing agreements for specified periods of time, usually six months or less, whereby the Company typically indemnifies the owner and operator of the radio station, their employees, agents and contractors from liability, claims and damages arising from the activities of operating the radio station under such agreements. The maximum potential amount of any future payments the Company could be required to make for any such previous indemnification obligations is indeterminable at this time. The Company has not, however, previously incurred any significant costs to defend lawsuits or settle claims relating to any such indemnification obligation. |
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Financial Statements Of Parent |
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The condensed financial data of the Parent Company has been prepared in accordance with Rule 12-04 of Regulation S-X. The Parent Company's financial data includes the financial data of Entercom Communications Corp., excluding all subsidiaries. |
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The most significant restrictions on the payment of dividends by Radio (as contemplated by Rule 4-08(e) of Regulation S-X) are set forth in the Credit Facility and the indenture governing the Senior Notes. |
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Under both the Credit Facility and the indenture governing the Senior Notes, Radio is permitted to make distributions to the Parent Company in amounts, as defined, as follow: (a) amounts which are required to pay the Parent Company's reasonable overhead costs, including income taxes and other costs associated with conducting the operations of Radio and its subsidiaries; and (b) certain amounts which qualify as “Restricted Payments.” With respect to the Credit Facility, the permitted Restricted Payment is generally $40 million plus Cumulative Retained Excess Cash Flow. The Company's ability to make a Restricted Payment in these amounts under the Credit Facility is a function of its leverage ratio. With respect to the indenture governing the Senior Notes, the permitted Restricted Payment is generally $60 million plus a variable amount. The variable amount is a function of the Company's EBITDA and the Company's leverage ratio. |
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Effectively all of Radio's assets are subject to these distribution limitations to Parent. |
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The following tables set forth the condensed financial data (other than the statements of shareholders' equity and statements of comprehensive income as these statements are not condensed) of the Parent Company: |
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the balance sheets as of December 31, 2013 and 2012; |
the statements of operations for the years ended December 31, 2013, 2012 and 2011; |
the statements of comprehensive income (loss) for the years ended December 31, 2013, 2012 and 2011; |
the statements of shareholders' equity for the years ended December 31, 2013, 2012 and 2011; and |
the statements of cash flows for the years ended December 31, 2013, 2012 and 2011. |
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| ENTERCOM COMMUNICATIONS CORP. | | | | | | | | | | | | | | |
| CONDENSED PARENT COMPANY BALANCE SHEETS | | | | | | | | | | | | | | |
| (amounts in thousands) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2013 | | 2012 | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Current Assets | | $ | 4,330 | | $ | 1,968 | | | | | | | | | | | | | | |
| Property And Equipment - Net | | | 727 | | | 895 | | | | | | | | | | | | | | |
| Deferred Charges And | | | | | | | | | | | | | | | | | | | | |
| Other Assets - Net | | | 2,564 | | | 1,991 | | | | | | | | | | | | | | |
| Investment In Subsidiaries / Intercompany | | | 328,116 | | | 289,361 | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 335,737 | | $ | 294,215 | | | | | | | | | | | | | | |
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| LIABILITIES AND | | | | | | | | | | | | | | | | | | | | |
| SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | |
| Current Liabilities | | $ | 11,317 | | $ | 9,697 | | | | | | | | | | | | | | |
| Long Term Liabilities | | | 26,027 | | | 15,024 | | | | | | | | | | | | | | |
| Total Liabilities | | | 37,344 | | | 24,721 | | | | | | | | | | | | | | |
| Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | |
| Class A, B and C Common Stock | | | 385 | | | 384 | | | | | | | | | | | | | | |
| Additional Paid-In Capital | | | 604,721 | | | 601,847 | | | | | | | | | | | | | | |
| Accumulated Deficit | | | -306,713 | | | -332,737 | | | | | | | | | | | | | | |
| Total shareholders' equity | | | 298,393 | | | 269,494 | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND | | | | | | | | | | | | | | | | | | | | |
| SHAREHOLDERS' EQUITY | | $ | 335,737 | | $ | 294,215 | | | | | | | | | | | | | | |
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| See notes to condensed Parent Company financial statements. | | | | | | | | | | | | | | |
ENTERCOM COMMUNICATIONS CORP. | | | | | | | | | | | | |
CONDENSED PARENT COMPANY INCOME STATEMENTS | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | |
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| | YEARS ENDED DECEMBER 31, | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
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NET REVENUES | | $ | 615 | | $ | 659 | | $ | 652 | | | | | | | | | | | | |
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OPERATING (INCOME) EXPENSE: | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | 1,122 | | | 920 | | | 852 | | | | | | | | | | | | |
Corporate general and administrative expenses | | | 24,229 | | | 25,717 | | | 26,464 | | | | | | | | | | | | |
Merger and acquisition costs | | | - | | | - | | | 767 | | | | | | | | | | | | |
Net (gain) loss on sale or disposal of assets | | | -1,954 | | | - | | | -28 | | | | | | | | | | | | |
Total operating expense | | | 23,397 | | | 26,637 | | | 28,055 | | | | | | | | | | | | |
OPERATING INCOME (LOSS) | | | -22,782 | | | -25,978 | | | -27,403 | | | | | | | | | | | | |
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Net interest expense, including amortization | | | | | | | | | | | | | | | | | | | | | |
of deferred financing expense | | | 1 | | | -46 | | | 59 | | | | | | | | | | | | |
Other income | | | -165 | | | -118 | | | -32 | | | | | | | | | | | | |
Income from equity investment in subsidiaries | | | -71,118 | | | -49,556 | | | -79,496 | | | | | | | | | | | | |
TOTAL OTHER (INCOME) EXPENSE | | | -71,282 | | | -49,720 | | | -79,469 | | | | | | | | | | | | |
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INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) | | | 48,500 | | | 23,742 | | | 52,066 | | | | | | | | | | | | |
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INCOME TAXES (BENEFIT) | | | 22,476 | | | 12,474 | | | -18,988 | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | 26,024 | | $ | 11,268 | | $ | 71,054 | | | | | | | | | | | | |
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See notes to condensed Parent Company financial statements. | | | | | | | | | | | | |
ENTERCOM COMMUNICATIONS CORP. | | | | | | | | | | | | | |
PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | | |
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| YEARS ENDED DECEMBER 31, | | | | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | | | | |
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NET INCOME (LOSS) | $ | 26,024 | | $ | 11,268 | | $ | 71,054 | | | | | | | | | | | | | |
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OTHER COMPREHENSIVE INCOME (LOSS), | | | | | | | | | | | | | | | | | | | | | |
NET OF TAXES (BENEFIT): | | | | | | | | | | | | | | | | | | | | | |
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Net unrealized gain (loss) on derivatives, | | | | | | | | | | | | | | | | | | | | | |
net of taxes (benefit) | | 0 | | | 0 | | | 7,277 | | | | | | | | | | | | | |
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COMPREHENSIVE INCOME (LOSS) | $ | 26,024 | | $ | 11,268 | | $ | 78,331 | | | | | | | | | | | | | |
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See notes to Parent Company financial statements. | | | | | | | | | | | | | |
ENTERCOM COMMUNICATIONS CORP. |
PARENT COMPANY STATEMENTS OF SHAREHOLDERS' EQUITY |
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 |
(amounts in thousands, except share data) |
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| | | | | | | | | | | | | Retained | | Accumulated | | | |
| Common Stock | | Additional | | Earnings | | Other | | | |
| Class A | | Class B | | Paid-in | | (Accumulated | Comprehensive | | |
| Shares | | Amount | | Shares | | Amount | | Capital | | Deficit) | | Income (Loss) | | Total |
Balance, December 31, 2010 | 30,700,568 | | $ | 307 | | 7,367,532 | | $ | 74 | | $ | 592,643 | | $ | -415,080 | | $ | -7,277 | | $ | 170,667 |
Net income (loss) | - | | | - | | - | | | - | | | - | | | 71,054 | | | - | | | 71,054 |
Conversion of Class B common stock | | | | | | | | | | | | | | | | | | | | | |
to Class A common stock | 170,000 | | | 2 | | -170,000 | | | -2 | | | - | | | - | | | - | | | - |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of stock options | - | | | - | | - | | | - | | | 462 | | | - | | | - | | | 462 |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of restricted stock units | 416,906 | | | 4 | | - | | | - | | | 7,205 | | | - | | | - | | | 7,209 |
Exercise of stock options | 53,625 | | | - | | - | | | - | | | 71 | | | - | | | - | | | 71 |
Purchase of vested employee restricted | | | | | | | | | | | | | | | | | | | | | |
stock units | -297,098 | | | -3 | | - | | | - | | | -3,054 | | | - | | | - | | | -3,057 |
Forfeitures of dividend equivalents | - | | | - | | - | | | - | | | - | | | 5 | | | - | | | 5 |
Net unrealized gain (loss) on derivatives | - | | | - | | - | | | - | | | - | | | - | | | 7,277 | | | 7,277 |
Balance, December 31, 2011 | 31,044,001 | | | 310 | | 7,197,532 | | | 72 | | | 597,327 | | | -344,021 | | | - | | | 253,688 |
Net income (loss) | - | | | - | | - | | | - | | | - | | | 11,268 | | | - | | | 11,268 |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of stock options | - | | | - | | - | | | - | | | 210 | | | - | | | - | | | 210 |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of restricted stock units | 280,072 | | | 3 | | - | | | - | | | 5,541 | | | - | | | - | | | 5,544 |
Exercise of stock options | 101,350 | | | 1 | | - | | | - | | | 134 | | | - | | | - | | | 135 |
Purchase of vested employee restricted | | | | | | | | | | | | | | | | | | | | | |
stock units | -199,376 | | | -2 | | - | | | - | | | -1,365 | | | - | | | - | | | -1,367 |
Forfeitures of dividend equivalents | - | | | - | | - | | | - | | | - | | | 16 | | | - | | | 16 |
Balance, December 31, 2012 | 31,226,047 | | | 312 | | 7,197,532 | | | 72 | | | 601,847 | | | -332,737 | | | - | | | 269,494 |
ENTERCOM COMMUNICATIONS CORP. |
PARENT COMPANY STATEMENTS OF SHAREHOLDERS' EQUITY |
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 |
(amounts in thousands, except share data) |
| | | | | | | | | | | | | Retained | | Accumulated | | | |
| Common Stock | | Additional | | Earnings | | Other | | | |
| Class A | | Class B | | Paid-in | | (Accumulated | Comprehensive | | |
| Shares | | Amount | | Shares | | Amount | | Capital | | Deficit) | | Income (Loss) | | Total |
Net income (loss) | - | | | - | | - | | | - | | | - | | | 26,024 | | | - | | | 26,024 |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of stock options | - | | | - | | - | | | - | | | 41 | | | - | | | - | | | 41 |
Compensation expense related to granting | | | | | | | | | | | | | | | | | | | | | |
of restricted stock units | 96,560 | | | 1 | | - | | | - | | | 4,228 | | | - | | | - | | | 4,229 |
Exercise of stock options | 171,625 | | | 2 | | - | | | - | | | 243 | | | - | | | - | | | 245 |
Purchase of vested employee restricted | | | | | | | | | | | | | | | | | | | | | |
stock units | -186,038 | | | -2 | | - | | | - | | | -1,638 | | | - | | | - | | | -1,640 |
Balance, December 31, 2013 | 31,308,194 | | $ | 313 | | 7,197,532 | | $ | 72 | | $ | 604,721 | | $ | -306,713 | | $ | - | | $ | 298,393 |
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See notes to Parent Company financial statements. |
ENTERCOM COMMUNICATIONS CORP. | | | | | | | | | | | | |
CONDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS | | | | | | | | | | | | |
(amounts in thousands) | | | | | | | | | | | | |
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| | YEARS ENDED DECEMBER 31, | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
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OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities | | $ | -18,167 | | $ | -16,074 | | $ | -16,974 | | | | | | | | | | | | |
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INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | |
Additions to property and equipment | | | 1,893 | | | -500 | | | -349 | | | | | | | | | | | | |
Deferred charges and other assets | | | 4,668 | | | -842 | | | -1,154 | | | | | | | | | | | | |
Proceeds (distributions) from investments in subsidiaries | | | 13,033 | | | 18,712 | | | 21,810 | | | | | | | | | | | | |
Net cash provided by (used in) investing activities | | | 19,594 | | | 17,370 | | | 20,307 | | | | | | | | | | | | |
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FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | |
Proceeds from the exercise of stock options | | | 245 | | | 135 | | | 71 | | | | | | | | | | | | |
Purchase of vested employee restricted stock units | | | -1,640 | | | -1,367 | | | -3,057 | | | | | | | | | | | | |
Payment of dividend equivalents on vested restricted stock units | | | - | | | -43 | | | -512 | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | -1,395 | | | -1,275 | | | -3,498 | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 32 | | | 21 | | | -165 | | | | | | | | | | | | |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | | | 269 | | | 248 | | | 413 | | | | | | | | | | | | |
CASH AND CASH EQUIVALENTS, END OF YEAR | | $ | 301 | | $ | 269 | | $ | 248 | | | | | | | | | | | | |
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See notes to condensed Parent Company financial statements. | | | | | | | | | | | | |
Accounting Policies |
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The Parent Company follows the accounting policies as described in Note 2 except that the Parent Company accounts for its investment in its subsidiaries using the equity method. |
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Debt – For a discussion of debt obligations of the Company, refer to Note 7. |
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Other - For further information, reference should be made to the notes to the consolidated financial statements of the Company. |