SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 31-1492857 (I.R.S. Employer Identification No.) |
511 Walnut Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip Code)
(513) 651-1190
(Registrant’s telephone number, including area code)
(Title of class)
(Title of class)
(Name of exchange on which registered)
Large accelerated filero | Accelerated filerþ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller Reporting Companyo |
ON FORM 10-K
Page | ||||
Part I | ||||
Item 1 Business | 2 | |||
Item 1A Risk Factors | 21 | |||
Item 1B Unresolved Staff Comments | 26 | |||
Item 2 Properties | 26 | |||
Item 3 Legal Proceedings | 27 | |||
Item 4 Submission of Matters to a Vote of Security Holders | 27 | |||
Part II | ||||
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 27 | |||
Item 6 Selected Financial Data | 30 | |||
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 | |||
Item 7A Quantitative and Qualitative Disclosures about Market Risk | 52 | |||
Item 8 Financial Statements and Supplementary Data | 53 | |||
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 92 | |||
Item 9A Controls and Procedures | 92 | |||
Item 9B Other Information | 93 | |||
Part III | ||||
Item 10 Directors, Executive Officers and Corporate Governance | 94 | |||
Item 11 Executive Compensation | 94 | |||
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 94 | |||
Item 13 Certain Relationships and Related Transactions, and Director Independence | 95 | |||
Item 14 Principal Accounting Fees and Services | 95 | |||
Part IV | ||||
Item 15 Exhibits, Financial Statement Schedules | 95 |
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– | a greater use of radio advertising compared to the national average; | ||
– | lower overall susceptibility to fluctuations in general economic conditions due to a lower percentage of national versus local advertising revenues; | ||
– | greater growth potential for advertising revenues as national and regional retailers expand into mid-sized markets; and | ||
– | less direct format competition due to a smaller number of owners in any given market. |
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Sale | ||||||||||||||
Price | ||||||||||||||
No. of | (in | Date | ||||||||||||
Purchaser | Market | Stations | Call Letters | millions) | Completed | |||||||||
Stephens Media Group Watertown, LLC | Watertown, NY | 4 | WCIZ-FM WFRY-FM WTNY-AM WNER-AM | $ | 6.25 | 02/01/08 | ||||||||
Capital Broadcasting, Inc. | Albany, NY | 1 | WTMM-AM(1) | $ | 0.85 | 02/05/08 | ||||||||
Culver Communications II, Inc. and related entities | Buffalo, NY | 1 | WECK-AM | $ | 1.30 | 03/11/08 |
(1) | Effective November 1, 2007, Capital Broadcasting, Inc. began operating WTMM-AM under a time brokerage agreement. |
– | greater revenue and station operating income diversity; | ||
– | improved station operating income through the consolidation of facilities and the elimination of redundant expenses; | ||
– | enhanced revenue by offering advertisers a broader range of advertising packages; |
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– | improved negotiating leverage with various key vendors; | ||
– | enhanced appeal to top industry management talent; and | ||
– | increased overall scale, which should facilitate our capital raising activities. |
– | assess format quality and effectiveness so that we can refine or change station formats in order to increase audience and revenue share; | ||
– | upgrade transmission, audio processing and studio facilities; | ||
– | expand and strengthen sales staff through active recruiting and in-depth training; | ||
– | convert acquired stations to our communications network and centralized networked accounting system; and | ||
– | establish revenue and expense budgets consistent with the programming and sales strategy and corresponding cost adjustments. |
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– | creating distinct content and highly visible profiles for our on-air personalities; | ||
– | utilizing market research to formulate recognizable brand names for select stations; and | ||
– | supporting localism through active participation in community events and charities. |
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– | The abbreviation “MSA” in the table means the market’s rank among the largest metropolitan statistical areas in the United States. | ||
– | The abbreviation “REV” in the table means the ranking of the market by BIAfn’s estimate of 2007 market gross radio advertising revenues in the United States. | ||
– | In the Primary Demographic Target column, the letter “A” designates adults, the letter “W” designates women and the letter “M” designates men. The numbers following each letter designate the range of ages included within the demographic group. | ||
– | Station Cluster Rank by Market Revenue Share in the table is the ranking, by radio cluster market revenue, of each of our radio clusters in its market among all other radio clusters in that market. | ||
– | We obtained all metropolitan statistical area rank information, market revenue information and station cluster market rank information for all of our markets from Investing in Radio 2007 Market Report, published by BIA Publications, Inc. The information was obtained from that database on March 4, 2008. | ||
– | We obtained all audience share information from the Fall 2007 Radio Market Report published by The Arbitron Company, the radio broadcast industry’s principal ratings service. We derived station cluster audience share based on persons ages 12 and over, listening Monday through Sunday, 6:00 a.m. to 12:00 midnight. | ||
– | N/A indicates the market has no MSA rank and is not rated by Arbitron. |
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Station | ||||||||||||||||||||||||
Cluster | Station | |||||||||||||||||||||||
Rank by | Cluster | |||||||||||||||||||||||
Station | Primary | Market | 12+ | |||||||||||||||||||||
Radio Market/ | MSA | REV | Programming | Demographic | Revenue | Audience | ||||||||||||||||||
Station Call Letters | Rank | Rank | Format | Target | Share | Share | ||||||||||||||||||
Albany, NY | 63 | 59 | 3 | 16.0 | ||||||||||||||||||||
WQBJ-FM | Rock | M 18-49 | ||||||||||||||||||||||
WQBK-FM | Rock | M 18-49 | ||||||||||||||||||||||
WBZZ-FM | Adult Contemporary | A 25-54 | ||||||||||||||||||||||
WGNA-FM | Country | A 25-54 | ||||||||||||||||||||||
WTMM-FM | Sports | M 35+ | ||||||||||||||||||||||
Bloomington, IL | 242 | 186 | 1 | 27.9 | ||||||||||||||||||||
WJBC-AM | News/Talk | A 35-54 | ||||||||||||||||||||||
WBNQ-FM | Hot Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WBWN-FM | Country | A 25-54 | ||||||||||||||||||||||
WTRX-FM | Oldies | A 35+ | ||||||||||||||||||||||
WJEZ-FM | Adult Contemporary | A 25-54 | ||||||||||||||||||||||
Buffalo, NY | 52 | 42 | 2 | 27.8 | ||||||||||||||||||||
WYRK-FM | Country | A 25-54 | ||||||||||||||||||||||
WJYE-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WBUF-FM | JACK Adult Hits | A 18-34 | ||||||||||||||||||||||
WBLK-FM | Urban | A 25-54 | ||||||||||||||||||||||
El Paso, TX | 76 | 75 | 2 | 11.1 | ||||||||||||||||||||
KSII-FM | Hot Adult Contemporary | W 25-54 | ||||||||||||||||||||||
KLAQ-FM | Rock | M 18-49 | ||||||||||||||||||||||
KROD-AM | News/Talk | A 35+ | ||||||||||||||||||||||
Evansville, IN | 161 | 121 | 2 | 32.6 | ||||||||||||||||||||
WKDQ-FM | Country | A 25-54 | ||||||||||||||||||||||
WJLT-FM | Oldies | A 35+ | ||||||||||||||||||||||
WDKS-FM | CHR | A 18-34 | ||||||||||||||||||||||
WGBF-FM | Rock | A 18-34 | ||||||||||||||||||||||
WGBF-AM | News/Talk | A 35+ | ||||||||||||||||||||||
Flint, MI | 127 | 125 | 1 | 24.1 | ||||||||||||||||||||
WCRZ-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WWBN-FM | Active Rock | M 18-34 | ||||||||||||||||||||||
WFNT-AM | Adult Standards | A 35+ | ||||||||||||||||||||||
WRCL-FM | Rhythmic CHR | A 18-34 | ||||||||||||||||||||||
WQUS-FM | Classic Rock | A 25-54 | ||||||||||||||||||||||
WLCO-AM | Classic Country | A 35+ | ||||||||||||||||||||||
Ft.Collins-Greeley, CO | 123 | 160 | 1 | 16.5 | ||||||||||||||||||||
KUAD-FM | Country | A 25-54 | ||||||||||||||||||||||
KTRR-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
KMAX-FM | Classic Rock | M 25-54 | ||||||||||||||||||||||
KKPL-FM | Alternative | A 18-34 | ||||||||||||||||||||||
KARS-FM | Oldies | A 35+ | ||||||||||||||||||||||
Grand Rapids, MI | 67 | 62 | 2 | 17.1 | ||||||||||||||||||||
WLHT-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WGRD-FM | New Rock | M 18-49 | ||||||||||||||||||||||
WTRV-FM | Soft Adult Contemporary | W 35+ | ||||||||||||||||||||||
WNWZ-AM | Spanish | A 25-54 | ||||||||||||||||||||||
WFGR-FM | Oldies | A 35+ |
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Station | ||||||||||||||||||||||||
Cluster | Station | |||||||||||||||||||||||
Rank by | Cluster | |||||||||||||||||||||||
Station | Primary | Market | 12+ | |||||||||||||||||||||
Radio Market/ | MSA | REV | Programming | Demographic | Revenue | Audience | ||||||||||||||||||
Station Call Letters | Rank | Rank | Format | Target | Share | Share | ||||||||||||||||||
Lafayette, LA | 104 | 106 | 1 | 31.5 | ||||||||||||||||||||
KPEL-FM | News/Talk | A 35+ | ||||||||||||||||||||||
KTDY-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
KRKA-FM | Rhythmic CHR | A 18-34 | ||||||||||||||||||||||
KFTE-FM | Alternative | A 18-34 | ||||||||||||||||||||||
KMDL-FM | Country | A 25-54 | ||||||||||||||||||||||
KPEL-AM | Sports | A 35+ | ||||||||||||||||||||||
KROF-AM | Cajun | A 35+ | ||||||||||||||||||||||
Owensboro, KY | N/A | N/A | N/A | N/A | ||||||||||||||||||||
WOMI-AM | News/Talk | A 35+ | ||||||||||||||||||||||
WBKR-FM | Country | A 25-54 | ||||||||||||||||||||||
Peoria, IL | 150 | 129 | 2 | 23.6 | ||||||||||||||||||||
WVEL-AM | Gospel | A 35+ | ||||||||||||||||||||||
WGLO-FM | Classic Rock | M 25-54 | ||||||||||||||||||||||
WIXO-FM | Active Rock | A 18-34 | ||||||||||||||||||||||
WZPW-FM | Rhythmic CHR | A 18-34 | ||||||||||||||||||||||
WFYR-FM | Country | A 25-54 | ||||||||||||||||||||||
St. Cloud, MN | 217 | 164 | 2 | 28.7 | ||||||||||||||||||||
KMXK-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WWJO-FM | Country | A 25-54 | ||||||||||||||||||||||
WJON-AM | News/Talk | A 35+ | ||||||||||||||||||||||
KLZZ-FM | Classic Rock | M 25-54 | ||||||||||||||||||||||
KZRV-FM | New Rock | A 18-34 | ||||||||||||||||||||||
KXSS-AM | Sports | M 35+ | ||||||||||||||||||||||
Utica-Rome, NY | 162 | 197 | 1 | 36.6 | ||||||||||||||||||||
WODZ-FM | Oldies | A 35+ | ||||||||||||||||||||||
WLZW-FM | Adult Contemporary | W 25-54 | ||||||||||||||||||||||
WFRG-FM | Country | A 25-54 | ||||||||||||||||||||||
WIBX-AM | News/Talk | A 35+ |
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– | the supply of, and demand for, radio advertising time; | ||
– | a station’s share of audiences in the demographic groups targeted by advertisers, as measured by ratings surveys estimating the number of listeners tuned to the station at various times; and | ||
– | the number of stations in the market competing for the same demographic groups. |
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– | assigns frequency bands for broadcasting; | ||
– | determines the particular frequencies, locations, operating powers and other technical parameters of stations; | ||
– | issues, renews, revokes, conditions and modifies station licenses; | ||
– | determines whether to approve changes in ownership or control of station licenses; | ||
– | regulates equipment used by stations; and | ||
– | adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations. |
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Expiration | ||||||||||||
Date of | ||||||||||||
Station Call | FCC | HAAT in | Power in | FCC | ||||||||
Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||
Albany, NY | WQBJ-FM | B | 150 | 50.0 | 103.5 MHz | 06/01/14 | ||||||
WQBK-FM | A | 92 | 6.0 | 103.9 MHz | Pending | |||||||
WBZZ-FM | B1 | 187 | 7.1 | 105.7 MHz | 06/01/14 | |||||||
WGNA-FM | B | 300 | 12.5 | 107.7 MHz | 06/01/14 | |||||||
WTMM-FM | A | 107 | 5.0 | 104.5 MHz | 06/01/14 | |||||||
Bloomington, IL | WJBC-AM | C | N/A | 1.0 | 1230 kHz | 12/01/12 | ||||||
WBNQ-FM | B | 142 | 50.0 | 101.5 MHz | 12/01/12 | |||||||
WBWN-FM | B1 | 100 | 25.0 | 104.1 MHz | 12/01/12 | |||||||
WTRX-FM | B1 | 144 | 12.0 | 93.7 MHz | 12/01/12 | |||||||
WJEZ-FM | A | 149 | 1.3 | 98.9 MHz | 12/01/12 | |||||||
Buffalo, NY | WYRK-FM | B | 142 | 50.0 | 106.5 MHz | 06/01/14 | ||||||
WJYE-FM | B | 154 | 47.0 | 96.1 MHz | 06/01/14 | |||||||
WBUF-FM | B | 195 | 76.0 | 92.9 MHz | 06/01/14 | |||||||
WBLK-FM | B | 154 | 47.0 | 93.7 MHz | 06/01/14 | |||||||
El Paso, TX | KSII-FM | C | 433 | 100.0 | 93.1 MHz | 08/01/13 | ||||||
KLAQ-FM | C | 424 | 100.0 | 95.5 MHz | 08/01/13 | |||||||
KROD-AM | B | N/A | 5.0 | 600 kHz | 08/01/13 | |||||||
Evansville, IN | WKDQ-FM | C | 300 | 100.0 | 99.5 MHz | 08/01/12 | ||||||
WDKS-FM | A | 100 | 6.0 | 106.1 MHz | 08/01/12 | |||||||
WJLT-FM | B | 150 | 50.0 | 105.3 MHz | 08/01/12 | |||||||
WGBF-FM | A | 138 | 3.2 | 103.1 MHz | 08/01/12 | |||||||
WGBF-AM | B | N/A | 5.0 daytime | 1280 kHz | 08/01/12 | |||||||
1.0 night |
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Expiration | ||||||||||||
Date of | ||||||||||||
Station Call | FCC | HAAT in | Power in | FCC | ||||||||
Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||
Flint, MI | WCRZ-FM | B | 101 | 50.0 | 107.9 MHz | 10/01/12 | ||||||
WWBN-FM | A | 149 | 1.8 | 101.5 MHz | 10/01/12 | |||||||
WFNT-AM | B | N/A | 5.0 daytime | 1470 kHz | 10/01/12 | |||||||
1.0 night | ||||||||||||
WRCL-FM | A | 133 | 3.5 | 93.7 MHz | 10/01/12 | |||||||
WQUS-FM | A | 91 | 3.0 | 103.1 MHz | 10/01/12 | |||||||
WLOC-AM | B | N/A | 5.0 daytime | 1530 kHz | 10/01/12 | |||||||
1.0 night | ||||||||||||
Ft.Collins-Greeley, CO | KUAD-FM | C1 | 255 | 100.0 | 99.1 MHz | 04/01/13 | ||||||
KTRR-FM | C2 | 234 | 17.0 | 102.5 MHz | 04/01/13 | |||||||
KMAX-FM | C3 | 168 | 8.7 | 94.3 MHz | 04/01/13 | |||||||
KKPL-FM | C2 | 150 | 50.0 | 99.9 MHz | 10/01/13 | |||||||
KARS-FM | C | 372 | 100.0 | 102.9 MHz | 10/01/13 | |||||||
Grand Rapids, MI | WLHT-FM | B | 168 | 40.0 | 95.7 MHz | 10/01/12 | ||||||
WGRD -FM | B | 180 | 13.0 | 97.9 MHz | 10/01/12 | |||||||
WTRV-FM | A | 92 | 3.5 | 100.5 MHz | 10/01/12 | |||||||
WNWZ -AM | D | N/A | 1.0 daytime | 1410 kHz | 10/01/12 | |||||||
.048 night | ||||||||||||
WFGR-FM | A | 150 | 2.75 | 98.7 MHz | 10/01/12 | |||||||
Lafayette, LA | KMDL-FM | C2 | 171 | 38.0 | 97.3 MHz | 06/01/12 | ||||||
KRKA-FM | C1 | 263 | 100.0 | 107.9 MHz | 06/01/12 | |||||||
KFTE-FM | C2 | 163 | 42.0 | 96.5 MHz | 06/01/12 | |||||||
KTDY-FM | C | 300 | 100.0 | 99.9 MHz | 06/01/12 | |||||||
KPEL-FM | C3 | 89 | 25.0 | 105.1 MHz | 06/01/12 | |||||||
KPEL-AM | B | N/A | 1.0 daytime | 1420 kHz | 06/01/12 | |||||||
0.75 night | ||||||||||||
KROF-AM | D | N/A | 1.0 daytime | 960 kHz | 06/01/12 | |||||||
.095 night | ||||||||||||
Owensboro, KY | WOMI-AM | C | N/A | 0.83 | 1490 kHz | 08/01/12 | ||||||
WBKR-FM | C | 320 | 91.0 | 92.5 MHz | 08/01/12 | |||||||
Peoria, IL | WGLO-FM | B1 | 189 | 7.0 | 95.5 MHz | 12/01/12 | ||||||
WZPW-FM | B1 | 114 | 19.0 | 92.3 MHz | 12/01/12 | |||||||
WVEL-AM | D | N/A | 5.0 daytime | 1140 kHz | 12/01/12 | |||||||
WFYR-FM | B1 | 103 | 23.5 | 97.3 MHz | 12/01/12 | |||||||
WIXO-FM | B | 169 | 32.0 | 105.7 MHz | 12/01/12 | |||||||
St. Cloud, MN | KMXK-FM | C2 | 150 | 50.0 | 94.9 MHz | 04/01/13 | ||||||
WJON-AM | C | N/A | 1.0 | 1240 kHz | 04/01/13 | |||||||
WWJO-FM | C | 305 | 100.0 | 98.1 MHz | 04/01/13 | |||||||
KZRV-FM | C2 | 138 | 50.0 | 96.7 MHz | 04/01/13 | |||||||
KLZZ-FM | C3 | 126 | 9.0 | 103.7 MHz | 04/01/13 | |||||||
KXSS-AM | B | N/A | 2.5 daytime | 1390 kHz | 04/01/13 | |||||||
1.0 night |
- 13 -
Expiration | ||||||||||||
Date of | ||||||||||||
Station Call | FCC | HAAT in | Power in | FCC | ||||||||
Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||
Utica-Rome, NY | WODZ-FM | B1 | 184 | 7.4 | 96.1 MHz | 06/01/14 | ||||||
WLZW-FM | B | 201 | 25.0 | 98.7 MHz | 06/01/14 | |||||||
WFRG-FM | B | 151 | 100.0 | 104.3 MHz | 06/01/14 | |||||||
WIBX-AM | B | N/A | 5.0 | 950 kHz | 06/01/14 |
– | compliance with the various rules limiting common ownership of media properties in a given market; | ||
– | the character of the licensee and those persons holding attributable interests in the licensee; and | ||
– | compliance with the Communications Act’s limitations on alien ownership as well as compliance with other FCC regulations and policies. |
– | in markets with 45 or more radio stations, ownership is limited to eight commercial stations, no more than five of which can be either AM or FM; | ||
– | in markets with 30 to 44 radio stations, ownership is limited to seven commercial stations, no more than four of which can be either AM or FM; |
- 14 -
– | in markets with 15 to 29 radio stations, ownership is limited to six commercial stations, no more than four of which can be either AM or FM; and | ||
– | in markets with 14 or fewer radio stations, ownership is limited to five commercial stations or no more than 50.0% of the market’s total, whichever is lower, and no more than three of which can be either AM or FM. |
– | in markets where 20 media voices will remain after the consummation of the proposed transaction, an owner may own an additional five radio stations, or, if the owner only has one television station, an additional six radio stations; and | ||
– | in markets where ten media voices will remain after the consummation of the proposed transaction, an owner may own an additional three radio stations. |
- 15 -
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– | proposals to impose regulatory, spectrum use or other fees on FCC licensees; | ||
– | proposals to impose streaming fees for radio; | ||
– | changes to foreign ownership rules for broadcast licenses; | ||
– | revisions to political broadcasting rules, including requirements that broadcasters provide free air time to candidates; | ||
– | technical and frequency allocation matters; | ||
– | proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages; | ||
– | further changes in the FCC’s attribution and multiple ownership policies; | ||
– | changes to broadcast technical requirements; and | ||
– | proposals to limit the tax deductibility of advertising expenses by advertisers. |
- 18 -
- 19 -
- 20 -
– | changing economic conditions, both generally and relative to the radio broadcasting industry; | ||
– | shifts in population, listenership, demographics, or audience tastes; | ||
– | the level of competition for advertising revenues with other radio stations, satellite radio, television stations, newspapers, Internet-based media, and other communications media; | ||
– | technological changes and innovations; and | ||
– | changes in governmental regulations and policies and actions of federal regulatory bodies, including the U.S. Department of Justice, the Federal Trade Commission, and the Federal Communications Commission (FCC). |
- 21 -
– | a substantial portion of our cash flow is, and will be, dedicated to debt service and is not, and will not be, available for other purposes; | ||
– | our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate or other purposes may be impaired in the future; | ||
– | certain of our borrowings are, and will be, at variable rates of interest, which may expose us to the risk of increases in interest rates; | ||
– | approximately $163.9 million of our borrowings have been swapped from a variable rate of interest to a fixed rate of interest through December 2011. Accordingly, if interest rates would decline substantially from the current rates, we may not receive the benefit of such reductions in interest rates; and | ||
– | our level of indebtedness could make us more vulnerable to economic downturns, limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions. |
- 22 -
– | increase in prices for radio stations due to increased competition for acquisition opportunities; | ||
– | reduction in the number of suitable acquisition targets resulting from continued industry consolidation; | ||
– | state of general broadcast industry valuations; | ||
– | inability to negotiate definitive purchase agreements on satisfactory terms; | ||
– | inability to obtain additional financing; | ||
– | current adverse credit conditions; | ||
– | inability to sell any under-performing station; and | ||
– | failure or unanticipated delays in completing acquisitions due to difficulties in obtaining required regulatory approvals. |
- 23 -
– | satellite-delivered digital audio radio service, which has resulted in the introduction of new subscriber-based satellite radio services with numerous niche formats; |
- 24 -
– | audio programming by cable systems, direct-broadcast satellite systems, personal communications systems, Internet content providers and other digital audio broadcast formats; | ||
– | in-band on-channel digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services; | ||
– | low-powered FM radio, which could result in additional FM radio broadcast outlets; and | ||
– | MP3 players and other personal audio systems that create new ways for individuals to listen to music and other content of their own choosing. |
- 25 -
– | permit the Board of Directors to increase its own size and fill the resulting vacancies; | ||
– | permit the Board of Directors, without stockholder approval, to issue preferred stock with such dividend, liquidation, conversion, voting and other rights as the Board may determine; and | ||
– | limit the persons who may call special meetings of stockholders. |
- 26 -
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
High | Low | |||||||
2007 | ||||||||
First quarter | $ | 3.22 | $ | 2.80 | ||||
Second quarter | $ | 3.60 | $ | 2.97 | ||||
Third quarter | $ | 3.50 | $ | 2.40 | ||||
Fourth quarter | $ | 2.81 | $ | 1.40 | ||||
2006 | ||||||||
First quarter | $ | 5.01 | $ | 3.97 | ||||
Second quarter | $ | 4.82 | $ | 3.38 | ||||
Third quarter | $ | 4.76 | $ | 3.76 | ||||
Fourth quarter | $ | 3.89 | $ | 2.74 |
- 27 -
Approximate | ||||||||||||||||
Total Number of | Dollar Value of | |||||||||||||||
Total Number | Shares Purchased | Shares that May | ||||||||||||||
of Shares | Average Price Paid | as Part of Publicly | Yet be Purchased | |||||||||||||
Period | Purchased | per Share | Announced Plan(1) | Under the Plan(1) | ||||||||||||
(in thousands) | ||||||||||||||||
October 1, 2007 – October 31, 2007 | 833 | (2) | $ | 2.38 | 0 | $ | 1,593 | |||||||||
November 1, 2007 – November 30, 2007 | 0 | — | 0 | $ | 1,593 | |||||||||||
December 1, 2007 – December 31, 2007 | 0 | — | 0 | $ | 1,593 | |||||||||||
Total | 833 | $ | 2.38 | 0 | $ | 1,593 |
(1) | On June 1, 2000, Regent’s Board of Directors approved a stock buyback program which authorized the Company to repurchase shares of its common stock at certain market price levels. Through December 31, 2007, the Board has authorized the Company to repurchase approximately $56.7 million of Regent common stock, of which amount the Company has utilized approximately $55.1 million, leaving available repurchases of approximately $1.6 million, subject to the terms and conditions of the Company’s credit agreement. There were no repurchases of common stock under the program during 2007. | |
(2) | Represents shares of common stock surrendered for the payment of employee withholding taxes related to the vesting of shares granted under The Regent Communications, Inc. 2005 Incentive Compensation Plan. |
- 28 -
AMONG REGENT COMMUNICATIONS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND
THE S&P 400 BROADCASTING & CABLE TV INDEX
Cumulative Total Return | ||||||||||||||||||||||||||||||||
12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | |||||||||||||||||||||||||||
REGENT COMMUNICATIONS, INC. | $ | 100.00 | $ | 107.45 | $ | 89.68 | $ | 78.51 | $ | 47.88 | $ | 26.06 | ||||||||||||||||||||
NASDAQ STOCK MARKET (U.S.) | $ | 100.00 | $ | 150.36 | $ | 163.00 | $ | 166.58 | $ | 183.68 | $ | 201.91 | ||||||||||||||||||||
S&P 400 BROADCASTING & CABLE TV | $ | 100.00 | $ | 118.92 | $ | 87.13 | $ | 65.89 | $ | 45.19 | $ | 22.69 | ||||||||||||||||||||
- 29 -
SELECTED CONSOLIDATED FINANCIAL DATA | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
YEAR ENDED DECEMBER 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
OPERATING RESULTS(1) (3): | ||||||||||||||||||||
Net broadcast revenues | $ | 97,912 | $ | 82,706 | $ | 76,439 | $ | 75,467 | $ | 64,744 | ||||||||||
Operating (loss) income | (141,681 | ) | (31,465 | ) | (8,020 | ) | 13,257 | 10,680 | ||||||||||||
(Loss) income from continuing operations before income taxes | (163,431 | ) | (36,956 | ) | (11,380 | ) | 9,869 | 7,578 | ||||||||||||
Net (loss) income from continuing operations | (102,870 | ) | (22,522 | ) | (7,558 | ) | 6,009 | 4,434 | ||||||||||||
Net income (loss) from discontinued operations | 296 | (4,074 | ) | 919 | 7,226 | 1,272 | ||||||||||||||
Net (loss) income | $ | (102,574 | ) | $ | (26,596 | ) | $ | (6,639 | ) | $ | 13,235 | $ | 5,706 | |||||||
NET (LOSS) INCOME PER COMMON SHARE: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
(Loss) income from continuing operations | $ | (2.69 | ) | $ | (0.57 | ) | $ | (0.17 | ) | $ | 0.13 | $ | 0.09 | |||||||
Income (loss) from discontinued operations | 0.01 | (0.10 | ) | 0.02 | 0.16 | 0.03 | ||||||||||||||
Net (loss) income | $ | (2.68 | ) | $ | (0.67 | ) | $ | (0.15 | ) | $ | 0.29 | $ | 0.12 | |||||||
Weighted average number of common shares used in basic calculation | 38,308 | 39,807 | 43,214 | 45,780 | 46,515 | |||||||||||||||
Diluted: | �� | |||||||||||||||||||
(Loss) income from continuing operations | $ | (2.69 | ) | $ | (0.57 | ) | $ | (0.17 | ) | $ | 0.13 | $ | 0.09 | |||||||
Income (loss) from discontinued operations | 0.01 | (0.10 | ) | 0.02 | 0.16 | 0.03 | ||||||||||||||
Net (loss) income | $ | (2.68 | ) | $ | (0.67 | ) | $ | (0.15 | ) | $ | 0.29 | $ | 0.12 | |||||||
Weighted average number of common shares used in fully diluted calculation:(2) | 38,308 | 39,807 | 43,214 | 46,164 | 46,837 |
DECEMBER 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
BALANCE SHEET DATA(1) (3): | ||||||||||||||||||||
Current assets | $ | 25,813 | $ | 22,721 | $ | 16,053 | $ | 16,218 | $ | 16,068 | ||||||||||
Total assets | 339,250 | 451,645 | 374,481 | 397,361 | 373,301 | |||||||||||||||
Current liabilities | 12,175 | 9,311 | 12,441 | 11,625 | 7,958 | |||||||||||||||
Long-term debt and capital leases, less current portion | 202,866 | 213,923 | 78,349 | 72,560 | 67,714 | |||||||||||||||
Total stockholders’ equity | $ | 117,614 | $ | 219,160 | $ | 262,056 | $ | 288,826 | $ | 283,798 |
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(1) | Acquisitions and dispositions affect comparability among years (see Note 2 in Notes to Consolidated Financial Statements, as well as our prior Annual Reports on Form 10-K). | |
(2) | Shares for fully diluted are the same as basic in years 2007, 2006 and 2005 as the effect of outstanding common stock options and warrants was antidilutive in those years. | |
(3) | Impairment of indefinite-lived intangible assets recorded in 2007, 2006 and 2005 will affect comparability among years (see Note 7 in Notes to Consolidated Financial Statements, as well as our prior Annual Reports on Form 10-K). |
- 31 -
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• | On February 1, 2008, we disposed of four stations in Watertown, New York for approximately $6.3 million in cash. The Watertown transaction represents a continuation of our strategy to operate in broadcast markets ranked in size from 50 to 150 and follows the similar disposition of our Chico and Redding, California radio stations in late 2006. Additionally during the first quarter of 2008, we completed two transactions involving the disposition of non-strategic assets: the sale of WTMM-AM in Albany, New York; and the sale of WECK-AM in Buffalo, New York. The sale of these assets represent a continuation of our strategy to dispose of individual radio stations with weaker broadcast signals, as we have in the past with the sales of WYNG-FM in Evansville, Indiana, WGNA-AM in Albany, New York, and WRUN-AM in Utica, New York. | ||
• | As a result of lower long-term interest rates at the end of the year, we recorded an unrealized loss of approximately $6.2 million related to the interest rate swap agreements we have in place on the term loan portions of our credit agreement. This unrealized loss was partially offset by a realized gain of approximately $1.0 million in 2007 related to favorable short-term interest rates compared to our fixed interest rates. | ||
• | As a result of the annual impairment testing of our indefinite-lived intangible assets, we recorded approximately $163.6 million of non-cash impairment expense in 2007. This charge is representative of the current market value of Regent’s common stock, which reflects increased risk associated with long-term advertising growth rates. | ||
• | In the third quarter of 2007, we expended approximately $600,000 in activist defense costs (primarily legal fees) related to stockholder demands. On September 14, 2007, we entered into an agreement with the parties to the demand which resulted in the expansion of Regent's Board of Directors to seven directors and the appointment of two new directors to the board. |
• | We have continued to develop our Interactive initiative in 2007, which focuses on generating revenues through our stations’ websites. In the third quarter of 2007, we hired a vice president of technology and digital media to lead our Interactive efforts. We have also hired interactive sales managers and interactive program directors in several of our larger markets. While revenues and operating income from Regent Interactive was immaterial to the Company in 2007, we anticipate increased economic benefits in 2008 and beyond. |
- 33 -
• | We began a consolidation capital expenditure project in the fourth quarter of 2007 related to a new operating facility for our Evansville, Indiana market. We anticipate this project will cost approximately $0.9 million. We also anticipate the sale of our existing facility, which will offset a portion of the cost of the new facility. We expect to see many benefits as a result of this project, including increased sales due to an expansion of our sales force and improved employee morale. | ||
• | Currently, and including the Buffalo stations, we have 24 FM stations and one AM station broadcasting in digital, or high definition radio (HD Radio). We expended approximately $1.0 million in cash in 2007 to convert nine stations to digital radio and enable one secondary channel for each of two previously converted radio stations. The conversion to HD Radio will enable the stations to broadcast digital-quality sound and also provide additional services, such as on-demand traffic, weather and sports scores. Additionally, this new technology will enable each converted radio station to broadcast additional channels of programming for public, private or subscription services. The economic benefit, if any, to our stations that have converted to HD Radio currently cannot be measured. Any future economic benefit to our stations as a result of digital conversion is not known at this time. |
- 34 -
- 35 -
- 36 -
- 37 -
Increase | ||||||||
(decrease) in net | ||||||||
broadcast | % | |||||||
revenue | Change | |||||||
Local revenue | $ | 13,152 | 19.7 | % | ||||
National revenue | 1,992 | 21.0 | % | |||||
Political revenue | (1,040 | ) | 64.0 | % | ||||
Barter revenue | 486 | 15.6 | % | |||||
Other | 616 | 33.8 | % | |||||
Net broadcast revenue variance | $ | 15,206 | 18.4 | % | ||||
Increase in | ||||||||
station operating | % | |||||||
expense | Change | |||||||
Technical expense | $ | (626 | ) | 21.6 | % | |||
Programming expense | (1,795 | ) | 11.4 | % | ||||
Promotion expense | (91 | ) | 2.9 | % | ||||
Interactive expense | (735 | ) | N/M | |||||
Sales expense | (3,269 | ) | 19.9 | % | ||||
Administrative expense | (862 | ) | 6.2 | % | ||||
Barter expense | (338 | ) | 10.6 | % | ||||
Station operating expense variance | $ | (7,716 | ) | 13.9 | % | |||
- 38 -
- 39 -
- 40 -
2007 | 2006 | |||||||
Net broadcast revenue | $ | 2,410 | $ | 8,292 | ||||
Station operating expense | 1,739 | 6,773 | ||||||
Depreciation and amortization expense | 91 | 356 | ||||||
Allocated interest expense | 145 | 367 | ||||||
Impairment of indefinite-lived intangible assets | – | 4,700 | ||||||
Other income, net | – | (1 | ) | |||||
(Gain) loss on sale of radio stations | (49 | ) | 206 | |||||
Gain (loss) before income taxes | 484 | (4,109 | ) | |||||
Income tax (expense) benefit(1) | ( 188 | ) | 35 | |||||
Net income (loss) | $ | 296 | $ | (4,074 | ) | |||
(1) | The income tax benefit in 2006 includes approximately $1.5 million of income tax expense related to the write-off of non-deductible goodwill associated with the Chico and Redding, California disposals. |
2007 | 2006 | |||||||||||
Quarter 1 | Net | Net | % | |||||||||
(57 stations in 12 markets) | Revenue | Revenue | Change | |||||||||
Net broadcast revenue | $ | 21,508 | $ | 16,617 | ||||||||
Less remaining stations and barter effect | 5,271 | 601 | ||||||||||
Same station net broadcast revenue | $ | 16,237 | $ | 16,016 | 1.4 | % | ||||||
- 41 -
2007 | 2006 | |||||||||||
Quarter 2 | Net | Net | % | |||||||||
(57 stations in 12 markets) | Revenue | Revenue | Change | |||||||||
Net broadcast revenue | $ | 25,736 | $ | 20,446 | ||||||||
Less remaining stations and barter effect | 5,844 | 816 | ||||||||||
Same station net broadcast revenue | $ | 19,892 | $ | 19,630 | 1.3 | % | ||||||
Quarter 3 | 2007 | 2006 | ||||||||||
(57 stations in 12 markets) | Net Revenue | Net Revenue | % Change | |||||||||
Net broadcast revenue | $ | 25,729 | $ | 20,606 | ||||||||
Less remaining stations and barter effect | 6,123 | 837 | ||||||||||
Same station net broadcast revenue | $ | 19,606 | $ | 19,769 | (0.8 | %) | ||||||
2007 | 2006 | |||||||||||
Quarter 4 | Net | Net | % | |||||||||
(58 stations in 12 markets) | Revenue | Revenue | Change | |||||||||
Net broadcast revenue | $ | 24,939 | $ | 25,037 | ||||||||
Less remaining stations and barter effect | 5,271 | 5,899 | ||||||||||
Same station net broadcast revenue | $ | 19,668 | $ | 19,138 | 2.8 | % | ||||||
�� |
- 42 -
Increase | ||||||||
(decrease) in net | ||||||||
broadcast | % | |||||||
revenue | Change | |||||||
Local revenue | $ | 4,704 | 7.6 | % | ||||
National revenue | 399 | 4.4 | % | |||||
Political revenue | 1,334 | 458.9 | % | |||||
Barter revenue | (197 | ) | 6.0 | % | ||||
Other | 27 | 1.5 | % | |||||
Net broadcast revenue variance | $ | 6,267 | 8.2 | % | ||||
- 43 -
Increase in | ||||||||
station operating | % | |||||||
expense | Change | |||||||
Technical expense | $ | (345 | ) | 13.5 | % | |||
Programming expense | (154 | ) | 1.0 | % | ||||
Promotion expense | (333 | ) | 11.7 | % | ||||
Sales expense | (606 | ) | 3.8 | % | ||||
Administrative expense | (3,125 | ) | 28.9 | % | ||||
Barter expense | (50 | ) | 1.6 | % | ||||
Station operating expense variance | $ | (4,613 | ) | 9.1 | % | |||
- 44 -
- 45 -
2006 | 2005 | |||||||
Net broadcast revenue | $ | 8,292 | $ | 9,161 | ||||
Station operating expense | 6,773 | 6,861 | ||||||
Depreciation and amortization expense | 356 | 566 | ||||||
Allocated interest expense | 367 | 293 | ||||||
Impairment of indefinite-lived intangible assets | 4,700 | – | ||||||
Other (income) expense, net | (1 | ) | 27 | |||||
Loss on sale of radio stations | 206 | – | ||||||
(Loss) gain before income taxes | (4,109 | ) | 1,414 | |||||
Income tax benefit (expense)(1) | 35 | (495 | ) | |||||
Net (loss) income | $ | (4,074 | ) | $ | 919 | |||
(1) | The income tax benefit in 2006 includes approximately $1.5 million of income tax expense related to the write-off of non-deductible goodwill associated with the Chico and Redding, California disposals. |
- 46 -
- 47 -
Payments Due by Period | ||||||||||||||||||||
Contractual | One year | Two to | Four to | |||||||||||||||||
Obligation | Total | or less | three years | five years | Thereafter | |||||||||||||||
Long-term debt(1) | $ | 206,350 | $ | 3,650 | $ | 14,800 | $ | 24,800 | $ | 163,100 | ||||||||||
Purchase obligations(2) | 27,839 | 13,330 | 11,688 | 2,045 | 776 | |||||||||||||||
Capital leases | 296 | 115 | 135 | 42 | 4 | |||||||||||||||
Interest payment obligations(3) | 74,017 | 13,981 | 25,090 | 23,936 | 11,010 | |||||||||||||||
High Definition radio capital obligations(4) | 6,720 | 1,120 | 5,600 | – | – | |||||||||||||||
Asset retirement obligations | 971 | – | 50 | 675 | 246 | |||||||||||||||
Operating leases(5) | 8,291 | 1,811 | 2,541 | 1,727 | 2,212 | |||||||||||||||
Total contractual cash obligations(6) | $ | 324,484 | $ | 34,007 | $ | 59,904 | $ | 53,225 | $ | 177,348 | ||||||||||
(1) | If we would default on the terms of our credit agreement, approximately $202.7 million of long-term debt could be accelerated to currently due and payable. Under the terms of our credit agreement, our maximum borrowings began reducing over a seven-year period commencing in 2007. Based upon our outstanding borrowings at December 31, 2007, these payments would be required to maintain compliance with the terms and conditions of our credit agreement. | |
(2) | Includes employment contracts of approximately $7.1 million, sports rights, ratings services, music license fees and other programming contracts of approximately $19.8 million, and obligation for leasehold build-out of approximately $0.9 million. Employment contracts, sports rights, ratings services and programming contracts are expensed over the life of the contract in station operating expense or corporate general and administrative expense. | |
(3) | Represents interest payments on the amortizing balances of the term loan and revolving credit facilities, assuming all-in interest rates ranging from 7% to 9%. | |
(4) | Represents estimated capital requirements to implement HD radio per a contractual agreement with Ibiquity Digital Corporation. Regent may choose to accelerate the expenditures if the economic benefits of broadcasting HD radio make it advantageous to do so. | |
(5) | Operating leases are included in station operating expense. |
- 48 -
(6) | Excluded from the table is approximately $465,000 related to unrecognized tax benefits recorded pursuant to Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” which has no specific contractual commitment or maturity. |
Total | ||||||||||||
Term A Loan | Term B Loan | Paydowns | ||||||||||
2008 | 2,500 | 1,150 | 3,650 | |||||||||
2009 | 5,000 | 1,150 | 6,150 | |||||||||
2010 | 7,500 | 1,150 | 8,650 | |||||||||
2011 | 10,000 | 1,150 | 11,150 | |||||||||
2012 | 12,500 | 1,150 | 13,650 | |||||||||
2013 | 12,500 | 108,100 | 120,600 | |||||||||
$ | 50,000 | $ | 113,850 | $ | 163,850 |
- 49 -
Excess cash | ||||
flow | ||||
Consolidated leverage ratio | percentage | |||
Greater than 6.75:1.00 | 75 | % | ||
5.00:1.00 to 6.74:1.00 | 50 | % | ||
Less than 5.00:1.00 | 0 | % |
- 50 -
- 51 -
- 52 -
Index to Financial Statements
Page | ||||
Financial Statements: | ||||
Management’s Report on Internal Control Over Financial Reporting | 54 | |||
Report of Independent Registered Public Accounting Firm | 55 | |||
Report of Independent Registered Public Accounting Firm | 57 | |||
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2007, 2006 and 2005 | 58 | |||
Consolidated Balance Sheets at December 31, 2007 and 2006 | 59 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 | 60 | |||
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2007, 2006 and 2005 | 61 | |||
Notes to Consolidated Financial Statements | 62 | |||
Financial Statement Schedule: | ||||
For each of the three years in the period ended December 31, 2007: | ||||
II — Valuation and Qualifying Accounts | 92 |
- 53 -
• | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; | ||
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and | ||
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
/s/ William L. Stakelin | ||||
William L. Stakelin, Chief Executive Officer | ||||
/s/ Anthony A. Vasconcellos | ||||
Anthony A. Vasconcellos, Chief Financial Officer |
- 54 -
- 55 -
March 17, 2008
- 56 -
March 17, 2008
- 57 -
YEAR ENDED DECEMBER 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Broadcast revenues, net of agency commissions of $10,291, $8,924 and $8,100 for the years ended December 31, 2007, 2006 and 2005, respectively | $ | 97,912 | $ | 82,706 | $ | 76,439 | ||||||
Station operating expenses | 63,064 | 55,348 | 50,735 | |||||||||
Depreciation and amortization | 4,982 | 4,994 | 4,782 | |||||||||
Corporate general and administrative expenses | 7,296 | 6,743 | 7,945 | |||||||||
Activist defense costs | 599 | – | – | |||||||||
Impairment of indefinite-lived intangible assets | 163,600 | 43,698 | 20,800 | |||||||||
Local marketing agreement fee | – | 1,716 | – | |||||||||
Loss on sale of radio stations | – | 1,585 | – | |||||||||
Loss on sale of long-lived assets | 52 | 87 | 197 | |||||||||
Operating loss | (141,681 | ) | (31,465 | ) | (8,020 | ) | ||||||
Interest expense | (16,757 | ) | (7,503 | ) | (4,482 | ) | ||||||
Realized and unrealized (loss) gain on derivatives | (5,155 | ) | 1,770 | – | ||||||||
Other income, net | 162 | 242 | 1,122 | |||||||||
Loss from continuing operations before income taxes | (163,431 | ) | (36,956 | ) | (11,380 | ) | ||||||
Income tax benefit | 60,561 | 14,434 | 3,822 | |||||||||
Loss from continuing operations | (102,870 | ) | (22,522 | ) | (7,558 | ) | ||||||
Discontinued operations: | ||||||||||||
Results from operations of discontinued operations, net of income taxes | 266 | (2,449 | ) | 919 | ||||||||
Gain (loss) on sale of discontinued operations, net of income taxes | 30 | (1,625 | ) | – | ||||||||
Gain (loss) on discontinued operations, net of income taxes | 296 | (4,074 | ) | 919 | ||||||||
NET LOSS | (102,574 | ) | (26,596 | ) | (6,639 | ) | ||||||
Other comprehensive loss, net of tax: | ||||||||||||
Net unrealized (loss) gain on cash flow hedge | – | (94 | ) | 238 | ||||||||
NET COMPREHENSIVE LOSS | $ | (102,574 | ) | $ | (26,690 | ) | $ | (6,401 | ) | |||
BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE: | ||||||||||||
Loss from continuing operations | $ | (2.69 | ) | $ | (0.57 | ) | $ | (0.17 | ) | |||
Discontinued operations | 0.01 | (0.10 | ) | 0.02 | ||||||||
Net loss | $ | (2.68 | ) | $ | (0.67 | ) | $ | (0.15 | ) | |||
Weighted average number of common shares used in basic and diluted calculation | 38,308 | 39,807 | 43,214 |
- 58 -
DECEMBER 31, | ||||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,391 | $ | 4,250 | ||||
Accounts receivable, net of allowance of $651 and $898 at December 31, 2007 and 2006, respectively | 15,685 | 16,538 | ||||||
Assets held for sale | 6,429 | – | ||||||
Other current assets | 2,308 | 1,933 | ||||||
Total current assets | 25,813 | 22,721 | ||||||
Property and equipment, net | 34,554 | 36,753 | ||||||
Intangible assets, net | 202,067 | 342,100 | ||||||
Goodwill | 19,272 | 43,655 | ||||||
Deferred tax assets | 53,774 | – | ||||||
Other assets | 3,770 | 6,416 | ||||||
Total assets | $ | 339,250 | $ | 451,645 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 3,650 | $ | 1,150 | ||||
Accounts payable | 1,495 | 1,710 | ||||||
Accrued compensation | 1,765 | 1,953 | ||||||
Other current liabilities | 5,265 | 4,498 | ||||||
Total current liabilities | 12,175 | 9,311 | ||||||
Long-term debt, less current portion | 202,700 | 213,850 | ||||||
Other long-term liabilities | 6,761 | 2,576 | ||||||
Deferred taxes | – | 6,748 | ||||||
Total liabilities | 221,636 | 232,485 | ||||||
Commitments and Contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $.01 par value, 100,000,000 shares authorized; 48,615,192 and 48,344,292 shares issued at December 31, 2007 and 2006, respectively | 486 | 483 | ||||||
Treasury stock, 9,745,095 and 9,953,216 shares, at cost at December 31, 2007 and 2006, respectively | (51,970 | ) | (53,099 | ) | ||||
Additional paid-in capital | 348,495 | 348,518 | ||||||
Accumulated deficit | (179,397 | ) | (76,742 | ) | ||||
Total stockholders’ equity | 117,614 | 219,160 | ||||||
Total liabilities and stockholders’ equity | $ | 339,250 | $ | 451,645 | ||||
- 59 -
YEAR ENDED DECEMBER 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (102,574 | ) | $ | (26,596 | ) | $ | (6,639 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Impairment of indefinite-lived intangible assets and goodwill | 163,600 | 48,398 | 20,800 | |||||||||
Depreciation and amortization | 5,073 | 5,349 | 5,348 | |||||||||
Provision for doubtful accounts | 286 | 632 | 462 | |||||||||
Deferred income tax benefit | (60,590 | ) | (14,572 | ) | (3,256 | ) | ||||||
Write-off of unamortized deferred finance costs | – | 742 | – | |||||||||
Non-cash interest expense | 556 | 348 | 423 | |||||||||
Non-cash charge for compensation | 1,124 | 819 | 994 | |||||||||
Unrealized loss (gain) on derivatives | 6,150 | (1,710 | ) | – | ||||||||
(Gain) loss on sale of radio stations, net | (49 | ) | 1,791 | – | ||||||||
Loss on sale of long-lived assets | 52 | 86 | 224 | |||||||||
Other, net | (105 | ) | 44 | (264 | ) | |||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||
Accounts receivable | 458 | (4,000 | ) | 48 | ||||||||
Other assets | (309 | ) | (98 | ) | (29 | ) | ||||||
Current and long-term liabilities | (60 | ) | 1,354 | (605 | ) | |||||||
Net cash provided by operating activities | 13,612 | 12,587 | 17,506 | |||||||||
Cash flows from investing activities: | ||||||||||||
Acquisitions of radio stations, acquisition-related costs, and escrow deposits on pending acquisitions, net of cash acquired | (4,630 | ) | (137,798 | ) | (506 | ) | ||||||
Capital expenditures | (3,064 | ) | (2,787 | ) | (3,848 | ) | ||||||
Proceeds from the sale of radio stations | – | 20,875 | – | |||||||||
Proceeds from sale of long-lived assets and other | 67 | 11 | 453 | |||||||||
Net cash used in investing activities | (7,627 | ) | (119,699 | ) | (3,901 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of common stock | 165 | 168 | 12 | |||||||||
Proceeds from borrowings of long-term debt | 5,500 | 258,300 | 22,000 | |||||||||
Principal payments on long-term debt | (14,150 | ) | (127,750 | ) | (14,067 | ) | ||||||
Payment of financing costs | (175 | ) | (2,906 | ) | (39 | ) | ||||||
Treasury stock purchases | (84 | ) | (17,194 | ) | (21,787 | ) | ||||||
Repayment of capital lease obligations | (100 | ) | (102 | ) | (124 | ) | ||||||
Net cash (used in) provided by financing activities | (8,844 | ) | 110,516 | (14,005 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (2,859 | ) | 3,404 | (400 | ) | |||||||
Cash and cash equivalents at beginning of year | 4,250 | 846 | 1,246 | |||||||||
Cash and cash equivalents at end of year | $ | 1,391 | $ | 4,250 | $ | 846 | ||||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||||||
Capital lease obligations for property and equipment | $ | 221 | $ | 108 | $ | 64 | ||||||
Note receivable for sale of radio stations | $ | – | $ | 925 | $ | – | ||||||
Accrued capital expenditures | $ | 108 | $ | 49 | $ | – | ||||||
Supplemental data: | ||||||||||||
Cash paid for interest | $ | 16,646 | $ | 6,103 | $ | 4,377 | ||||||
Cash paid for income taxes | $ | 184 | $ | 103 | $ | 252 | ||||||
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Accumulated | ||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||
Common | Treasury | Paid-In | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||||
Stock | Stock | Capital | Deficit | (Loss) Income | Equity | |||||||||||||||||||
Balance, December 31, 2004 | $ | 481 | $ | (15,994 | ) | $ | 347,990 | $ | (43,507 | ) | $ | (144 | ) | $ | 288,826 | |||||||||
Stock bonus award (37,517 shares) | – | 235 | (40 | ) | – | – | 195 | |||||||||||||||||
Issuance of 88,975 shares of treasury stock for 401(k) match, net of forfeitures | – | 498 | (20 | ) | – | – | 478 | |||||||||||||||||
Issuance of 49,126 shares of treasury stock for employee stock purchase plan | – | 274 | (49 | ) | – | – | 225 | |||||||||||||||||
Purchase of 3,692,911 shares of treasury stock | – | (21,787 | ) | – | – | – | (21,787 | ) | ||||||||||||||||
Stock-based compensation expense | – | – | 508 | – | – | 508 | ||||||||||||||||||
Exercise of 2,500 common stock options | – | – | 12 | – | – | 12 | ||||||||||||||||||
Net loss | – | – | – | (6,639 | ) | – | (6,639 | ) | ||||||||||||||||
Other comprehensive income, net of tax | – | – | – | – | 238 | 238 | ||||||||||||||||||
Balance, December 31, 2005 | 481 | (36,774 | ) | 348,401 | (50,146 | ) | 94 | 262,056 | ||||||||||||||||
Issuance of 258,300 nonvested shares, net of forfeitures | 2 | – | 310 | – | – | 312 | ||||||||||||||||||
Issuance of 113,819 shares of treasury stock for 401(k) match | – | 604 | (129 | ) | – | – | 475 | |||||||||||||||||
Issuance of 48,837 shares of treasury stock for employee stock purchase plan | – | 265 | (97 | ) | – | – | 168 | |||||||||||||||||
Purchase of 3,640,113 shares of treasury stock | – | (17,194 | ) | – | – | – | (17,194 | ) | ||||||||||||||||
Stock-based compensation expense related to employee stock purchase plan | – | – | 33 | – | – | 33 | ||||||||||||||||||
Net loss | – | – | – | (26,596 | ) | – | (26,596 | ) | ||||||||||||||||
Other comprehensive loss, net of tax | – | – | – | – | (94 | ) | (94 | ) | ||||||||||||||||
Balance, December 31, 2006 | 483 | (53,099 | ) | 348,518 | (76,742 | ) | – | 219,160 | ||||||||||||||||
Cumulative effect of FIN 48 adoption | – | – | – | (81 | ) | – | (81 | ) | ||||||||||||||||
Issuance of 270,900 nonvested shares, net of forfeitures | 3 | – | (3 | ) | – | – | – | |||||||||||||||||
Amortization of nonvested shares | – | – | 508 | – | – | 508 | ||||||||||||||||||
Issuance of 160,449 shares of treasury stock for 401(k) match | – | 826 | (336 | ) | – | – | 490 | |||||||||||||||||
Issuance of 76,443 shares of treasury stock for employee stock purchase plan | – | 387 | (222 | ) | – | – | 165 | |||||||||||||||||
Purchase of 28,771 shares of treasury stock | – | (84 | ) | – | – | – | (84 | ) | ||||||||||||||||
Stock-based compensation expense related to employee stock purchase plan | – | – | 30 | – | – | 30 | ||||||||||||||||||
Net loss | – | – | – | (102,574 | ) | – | (102,574 | ) | ||||||||||||||||
Balance, December 31, 2007 | $ | 486 | $ | (51,970 | ) | $ | 348,495 | $ | (179,397 | ) | $ | – | $ | 117,614 | ||||||||||
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1. | SUMMARY OF ACCOUNTING POLICIES |
a. | CONSOLIDATION: | ||
The consolidated financial statements include the accounts of Regent Communications, Inc. (“Regent” or the “Company”) and its subsidiaries, all of which are wholly owned, and entities for which Regent is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. | |||
b. | DESCRIPTION OF BUSINESS: | ||
Regent is a radio broadcasting company whose primary business is to acquire, develop, and operate radio stations in mid-sized markets throughout the United States. The Company owns radio stations in the following markets: Ft. Collins-Greeley, Colorado; Bloomington and Peoria, Illinois; Evansville, Indiana; Owensboro, Kentucky; Lafayette, Louisiana; Flint and Grand Rapids, Michigan; St. Cloud, Minnesota; Albany, Buffalo and Utica, New York; and El Paso, Texas. | |||
c. | USE OF ESTIMATES: | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
d. | CASH AND CASH EQUIVALENTS: | ||
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. | |||
e. | PROPERTY AND EQUIPMENT: | ||
Property and equipment are stated at cost. Major additions or improvements are capitalized, while repairs and maintenance are charged to expense. Property and equipment are depreciated on a straight-line basis over the estimated useful life of the assets. Buildings are depreciated over thirty-nine years, broadcasting equipment over a three-to-twenty-year life, computer equipment and software over a three-to-five year life, and furniture and fixtures generally over a ten-year life. Leasehold improvements are amortized over the shorter of their useful lives or the terms of the related leases. Upon sale or disposition of an asset, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is recognized as a component of operating loss in the Consolidated Statements of Operations and Comprehensive Loss. |
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f. | GOODWILL AND OTHER INTANGIBLE ASSETS: | ||
Intangible assets consist principally of the value of FCC licenses and other definite-lived intangible assets. Goodwill represents the excess of the purchase price over the fair value of net assets of acquired radio stations. The Company follows the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) (See Note 7), which requires that a company perform impairment testing annually, or more frequently if events or circumstances indicate that the asset may be impaired, using a direct valuation methodology for those assets determined to have an indefinite life. To test goodwill for potential impairment, the Company compares the fair value of the reporting unit with its carrying amount. Consistent with prior years, in 2007, the Company determined the reporting unit as a radio market. If the fair value of any reporting unit is less than its carrying amount, an indication exists that the amount of goodwill attributed to the reporting unit may be impaired and the Company is required to perform a second step of the impairment test. In the second step, the Company compares the implied fair value of each reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets and liabilities, to the carrying amount of the reporting unit. If the fair value is less than the carrying value, the Company will record an impairment charge up to the carrying value of the recorded goodwill, with a corresponding impairment charge to operating expense. | |||
SFAS 142 also requires the Company to test its FCC licenses and other indefinite-lived intangible assets for impairment by comparing their estimated fair values to their carrying values. If the carrying amount of an intangible asset exceeds its fair value, an impairment charge is recorded to operating expense for the amount equal to the excess. The Company utilizes the greenfield methodology, a widely-used direct valuation methodology, to value its FCC licenses. This method assumes an inception value for FCC licenses and employs a discounted cash flow methodology and accepted appraisal techniques to estimate the fair value of each license. | |||
Acquired advertising contracts are amortized on a straight-line basis over a six-month period. Intangible assets related to non-competition agreements, sports rights agreements, and employment agreements are amortized on a straight-line basis over the life of the respective agreement, while advertiser lists and advertiser relationships are amortized over a three-year period. | |||
g. | IMPAIRMENT OF LONG-LIVED ASSETS: | ||
Long-lived assets (including property, equipment, and intangible assets subject to amortization) to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposal of the asset. If it were determined that the carrying amount of an asset was not recoverable, an impairment loss would be recorded for the difference between the carrying amount and the fair value of the asset. The Company determines the fair value of its long-lived assets based upon the market value of similar assets, if available, or independent appraisals, if necessary. Long-lived assets to be disposed of and/or held for sale are reported at the lower of carrying amount or fair value, less cost to sell. The fair value of assets held for sale is determined in the same manner as described for assets held and used. |
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h. | DEFERRED FINANCING COSTS: | ||
Deferred financing costs are amortized to interest expense using the effective interest method over the term of the related debt. | |||
i. | CONCENTRATIONS OF CREDIT RISK: | ||
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The credit risk is limited due to the large number of customers comprising the Company’s customer base and their dispersion across several different geographic areas of the country. The Company also maintains cash in bank accounts at financial institutions where the balance, at times, exceeds federally insured limits. | |||
j. | REVENUE RECOGNITION: | ||
Broadcast Revenue | |||
Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast. Revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for advertisers that use agencies. | |||
Barter Transactions | |||
Barter transactions (advertising provided in exchange for goods and services) are reported at the estimated fair value of the products or services received. Revenue from barter transactions is recognized when advertisements are broadcast, and merchandise or services received are charged to expense when received or used. If merchandise or services are received prior to the broadcast of the advertising, a liability (deferred barter revenue) is recorded. If advertising is broadcast before the receipt of the goods or services, a receivable is recorded. Barter revenue was approximately $3.6 million, $3.1 million, and $3.3 million and barter expense was approximately $3.5 million, $3.2 million, and $3.1 million for the years ended December 31, 2007, 2006 and 2005 respectively. | |||
Time Brokerage Agreements | |||
At times, the Company enters into time brokerage agreements or local marketing agreements (together “TBAs”) in connection with the purchase or sale of radio stations. In most cases, a TBA is in effect from the signing of the acquisition agreement, or shortly thereafter, through the closing date of the purchase or sale. Generally, under the contractual terms of a TBA, the buyer agrees to furnish the programming content for and provide other services to the stations, and in return, receives the right to sell and broadcast advertising on the station and collect receipts for such advertising. During the period the Company operates stations under TBAs for the purchase of a station, Regent recognizes revenue and expense for such stations in the same manner as for owned stations, and includes such revenues and expenses related to such stations in operations since the effective dates of the TBAs. At December 31, 2007, one station held for sale by Regent was operated under a |
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TBA by the purchaser to the agreement. At December 31, 2006, the Company operated one station under a TBA. | |||
k. | FAIR VALUE OF FINANCIAL INSTRUMENTS: | ||
Short-Term Instruments | |||
Due to their short-term maturity, the carrying amount of accounts receivable, accounts payable and accrued expenses approximated their fair value at December 31, 2007 and 2006. | |||
Investments in Debt Securities | |||
In connection with Regent’s 2006 sale of three radio stations in Peoria, Illinois, the Company received a note receivable for $925,000 of the $2.8 million purchase price. In accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (“SFAS 115”) and based on the Company’s intent and ability to hold the investment to maturity, Regent has classified the debt security as held-to-maturity and accounts for the investment at cost. Additionally, the Company routinely assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Declines in fair value that are considered other than temporary are recorded as a component of expense in the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2007, the cost of the debt security approximated the fair value. | |||
Investments in Equity Securities | |||
Regent accounts for its investments in equity securities in accordance with the provisions of SFAS 115. The Company has classified its investments in marketable equity securities, primarily mutual funds, as trading securities, which are reported at fair value, with changes in fair value recorded in consolidated net loss. The fair value of marketable securities is estimated based on quoted market prices for those securities. The marketable securities are included in other current assets. | |||
Long-Term Debt | |||
The fair value of the Company’s long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities. Based on borrowing rates currently available, the fair value of long-term debt approximates its carrying value at December 31, 2007 and 2006. | |||
Interest Rate Swaps | |||
At times, the Company enters into interest rate swap agreements to manage its exposure to interest rate movements by effectively converting a portion of its debt from variable to fixed rates. The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended by SFAS 137, SFAS 138 and SFAS 149, which requires that all derivative financial instruments, such as interest rate swap agreements, be recognized in the financial statements as assets or liabilities and be measured at fair value. If certain |
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conditions are met, a derivative may be designated as a cash flow hedge, a fair value hedge or a foreign currency hedge. An entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use for assessing the effectiveness of the hedge and the measurement method it will use to assess the fair value of the hedge. Changes in the fair value of derivative instruments are either recognized periodically in income or as a component of stockholders’ equity, in accumulated other comprehensive income (loss). The fair value of the hedge instruments is determined by obtaining quotations from the financial institutions that are counterparties to the Company’s hedge agreements. If the Company chooses to apply hedge accounting, it formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also formally assesses, both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in cash flows of the hedged item. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, the Company will discontinue hedge accounting prospectively. If hedge accounting is not applied to an interest rate swap agreement, revaluation gains and losses associated with changes in the fair value measurement of the swap are recorded within realized and unrealized gain (loss) on derivatives in the Consolidated Statements of Operations and Comprehensive Loss. There were no hedging relationships in place as of December 31, 2007 or 2006. | |||
l. | INCOME TAXES: | ||
Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. | |||
m. | ADVERTISING AND PROMOTION COSTS: | ||
Costs of media advertising and associated production costs are expensed to station operating expenses the first time the advertising takes place. The Company recorded advertising expenses of approximately $2.2 million, $1.8 million, and $2.0 million for the years ended December 31, 2007, 2006, and 2005, respectively. | |||
n. | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: | ||
The Company’s trade accounts receivable are generally non-interest bearing. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance is calculated based on a percentage of cash revenue, and includes a provision for known issues. Customer account activity is routinely reviewed to assess the adequacy of the allowance provided for potential losses. Account balances are charged off against the allowance when it is probable the receivable will not be recovered. | |||
o. | VARIABLE INTEREST ENTITIES: | ||
The Company follows the provisions of Financial Accounting Standards Board Interpretation No. 46R, “Consolidation of Variable Interest Entities, an Interpretation of |
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ARB No. 51” (“FIN 46R”), as revised. Under the provisions of FIN 46R, the Company is required to consolidate the operations of entities for which it is the primary beneficiary, and deconsolidate those entities for which it is no longer the primary beneficiary. The Company may be required to consolidate the operations of stations it operates as a lessee under time brokerage or local marketing agreements, or deconsolidate those stations it leases to other broadcasting entities under time brokerage or local marketing agreements. | |||
p. | STOCK-BASED COMPENSATION PLANS: | ||
In January 2006, the Company implemented the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (“SFAS 123R”). SFAS 123R is applicable to share-based compensation arrangements, including stock options, restricted share plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. Under the provisions of SFAS 123R, companies are required to record compensation expense for share-based payment transactions. At December 31, 2007, the Company had five stock-based employee compensation plans, which are more fully described in Note 5. | |||
q. | DISCONTINUED OPERATIONS: | ||
Disposal of Markets | |||
At December 31, 2007, the Company had entered into an agreement to dispose of its Watertown, New York radio stations. During 2006, the Company disposed of its Chico and Redding, California markets. Regent applied the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” (“SFAS 144”), to the transactions, which requires that in a period in which a component of an entity has been disposed of or is classified as held for sale, the income statement of a business enterprise for current and prior periods shall report the results of operations of the component, including any gain or loss recognized, in discontinued operations. The Company’s policy is to allocate a portion of interest expense to discontinued operations, based upon guidance in EITF 87-24, “Allocation of Interest to Discontinued Operations,” as updated by SFAS 144. As there was no debt required to be repaid as a result of these disposals, nor was there any debt assumed by the buyers, interest expense was allocated to discontinued operations in proportion to the net assets disposed of to total net assets of the Company. | |||
Selected financial information related to all discontinued operations for the years ended December 31, 2007, 2006, and 2005 is as follows (in thousands): |
2007 | 2006 | 2005 | ||||||||||
Net revenue | $ | 2,410 | $ | 8,292 | $ | 9,161 | ||||||
Depreciation and amortization | 91 | 356 | 566 | |||||||||
Allocated interest expense | 145 | 367 | 293 | |||||||||
Gain (loss) before income taxes | 484 | (4,109 | ) | 1,414 |
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Assets Held | ||||
for Sale | ||||
Land and improvements | $ | 330 | ||
Building and improvements | 635 | |||
Equipment | 2,411 | |||
FCC licenses | 4,630 | |||
Goodwill | 166 | |||
8,172 | ||||
Accumulated depreciation | (1,743 | ) | ||
$ | 6,429 | |||
r. | BUSINESS SEGMENTS: | ||
The Company has 13 distinct operating segments. These segments meet the criteria for aggregation under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” (“SFAS 131”), and therefore the Company has aggregated these operating segments to create one reportable segment. | |||
s. | ASSET RETIREMENT OBLIGATIONS: | ||
The Company follows the provisions of SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS 143”), as amended by Financial Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”). Under the provisions of these statements, a company is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if fair value can be reasonably estimated. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The amount of accretion recorded by the Company during all years presented is immaterial. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
t. | INTERNAL USE SOFTWARE: | ||
Included in computer equipment is the capitalized cost of website development costs. The Company follows the provisions of Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” (“SOP 98-1”), which provides that costs incurred during the application development stage related to the development of internal-use software are capitalized and amortized over the estimated useful life. Costs incurred related to the conceptual design and maintenance of internal-use software are expensed as incurred. Regent amortizes the costs of capitalized internal-use software over a three-year period. |
2. | ACQUISITIONS AND DISPOSITIONS |
Subsequently Completed Dispositions |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. | LONG-TERM DEBT |
2007 | 2006 | |||||||
Senior secured Term A Loan | $ | 50,000 | $ | 50,000 | ||||
Senior secured Term B Loan | 113,850 | 115,000 | ||||||
Senior secured revolving credit facility | 42,500 | 50,000 | ||||||
206,350 | 215,000 | |||||||
Less: current portion of long-term debt | (3,650 | ) | (1,150 | ) | ||||
$ | 202,700 | $ | 213,850 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Term B Loan | Term A Loan | |||||||
December 31, | Commitment | Commitment | ||||||
2007 | $ | 113,850 | $ | 50,000 | ||||
2008 | 112,700 | 47,500 | ||||||
2009 | 111,550 | 42,500 | ||||||
2010 | 110,400 | 35,000 | ||||||
2011 | 109,250 | 25,000 | ||||||
2012 | 108,100 | 12,500 |
Excess cash | ||
flow | ||
Consolidated leverage ratio | percentage | |
Greater than 6.75:1.00 | 75% | |
5.00:1.00 to 6.74:1.00 | 50% | |
Less than 5.00:1.00 | 0% |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2008 | $ | 3,650 | ||
2009 | 6,150 | |||
2010 | 8,650 | |||
2011 | 11,150 | |||
2012 | 13,650 | |||
Thereafter | 163,100 | |||
$ | 206,350 | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. | CAPITAL STOCK |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. | STOCK-BASED COMPENSATION PLANS |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended | ||||
December 31, 2005 | ||||
Net loss, as reported | $ | (6,639 | ) | |
Add: Stock-based employee compensation included in reported net loss, net of related tax effects | 335 | |||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (4,195 | ) | ||
Pro forma net loss | $ | (10,499 | ) | |
Pro forma loss applicable to common shares | $ | (10,499 | ) | |
Basic loss per share: | ||||
As reported | $ | (0.15 | ) | |
Pro forma | $ | (0.24 | ) | |
Diluted loss per share: | ||||
As reported | $ | (0.15 | ) | |
Pro forma | $ | (0.24 | ) |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2005 | ||||||||
ISOs | NQSOs | |||||||
Dividends | None | None | ||||||
Volatility | 63.5 | % | 64.8 | % | ||||
Risk-free interest rate | 3.82 | % | 3.75 | % | ||||
Expected term | 5 years | 5 years |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WEIGHTED | ||||||||
AVERAGE | ||||||||
SHARES | EXERCISE PRICE | |||||||
Company options held by employees and Directors: | ||||||||
At December 31, 2004 | 3,874,789 | $ | 6.07 | |||||
Granted | 561,250 | $ | 5.36 | |||||
Exercised | (2,500 | ) | $ | 5.00 | ||||
Forfeited/expired | (163,500 | ) | $ | 5.50 | ||||
Company options held by employees and Directors: | ||||||||
At December 31, 2005 | 4,270,039 | $ | 5.94 | |||||
Granted | – | – | ||||||
Exercised | – | – | ||||||
Forfeited/expired | (101,000 | ) | $ | 6.74 | ||||
Company options held by employees and Directors: | ||||||||
At December 31, 2006 | 4,169,039 | $ | 5.92 | |||||
Granted | – | – | ||||||
Exercised | – | – | ||||||
Forfeited/expired | (86,000 | ) | $ | 6.28 | ||||
Company options held by employees and Directors: | ||||||||
At December 31, 2007 | 4,083,039 | $ | 5.91 | |||||
OPTIONS OUTSTANDING | OPTIONS EXERCISABLE | ||||||||||||||||||||
WEIGHTED | |||||||||||||||||||||
AVERAGE | WEIGHTED | WEIGHTED | |||||||||||||||||||
REMAINING | AVERAGE | AVERAGE | |||||||||||||||||||
EXERCISE | CONTRACTUAL | EXERCISE | EXERCISE | ||||||||||||||||||
PRICE | SHARES | LIFE (YEARS) | PRICE | SHARES | PRICE | ||||||||||||||||
$6.13 - $7.83 | 1,515,373 | 4.4 | $ | 7.07 | 1,515,373 | $ | 7.07 | ||||||||||||||
$5.00 - $5.89 | 2,567,666 | 2.7 | $ | 5.23 | 2,567,666 | $ | 5.23 | ||||||||||||||
4,083,039 | 4,083,039 | ||||||||||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WEIGHTED AVERAGE | ||||||||
GRANT-DATE FAIR | ||||||||
SHARES | VALUE | |||||||
Company nonvested shares held by employees and Directors: | ||||||||
At December 31, 2005 | — | — | ||||||
Granted | 274,100 | $ | 4.64 | |||||
Vested | (7,800 | ) | $ | 4.74 | ||||
Forfeited/expired | (15,800 | ) | $ | 4.43 | ||||
Company nonvested shares held by employees and Directors: | ||||||||
At December 31, 2006 | 250,500 | $ | 4.65 | |||||
Granted | 282,900 | $ | 2.85 | |||||
Vested | (80,125 | ) | $ | 4.43 | ||||
Forfeited/expired | (12,000 | ) | $ | 3.53 | ||||
Company nonvested shares held by employees and Directors: | ||||||||
At December 31, 2007 | 441,275 | $ | 3.57 | |||||
6. | EARNINGS PER SHARE |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Net loss from continuing operations | $ | (102,870 | ) | $ | (22,522 | ) | $ | (7,558 | ) | |||
Income (loss) from discontinued operations, net of applicable income taxes of $188, $35, and $495, respectively | 296 | (4,074 | ) | 919 | ||||||||
Net loss | $ | (102,574 | ) | $ | (26,596 | ) | $ | (6,639 | ) | |||
Weighted average basic common shares | 38,308 | 39,807 | 43,214 | |||||||||
Dilutive effect of stock options and warrants | – | – | – | |||||||||
Weighted average diluted common shares | 38,308 | 39,807 | 43,214 | |||||||||
Net loss per common share: | ||||||||||||
Basic and diluted: | ||||||||||||
Net loss from continuing operations | $ | (2.69 | ) | $ | (0.57 | ) | $ | (0.17 | ) | |||
Discontinued operations | 0.01 | (0.10 | ) | 0.02 | ||||||||
Net loss | $ | (2.68 | ) | $ | (0.67 | ) | $ | (0.15 | ) | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. | GOODWILL AND OTHER INTANGIBLE ASSETS |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Non-compete agreements | $ | 219 | $ | 97 | $ | 219 | $ | 24 | ||||||||
Acquired advertising contracts | — | — | 1,535 | 774 | ||||||||||||
Sports rights, employment agreements and advertiser lists and relationships | 779 | 529 | 779 | 365 | ||||||||||||
Total | $ | 998 | $ | 626 | $ | 2,533 | $ | 1,163 | ||||||||
- 82 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FCC Licenses | ||||
Balance as of December 31, 2005 | $ | 289,300 | ||
Purchase of radio station FCC licenses | 107,768 | |||
Sale of radio station FCC licenses | (15,048 | ) | ||
Impairment of FCC licenses | (41,300 | ) | ||
Balance as of December 31, 2006 | 340,720 | |||
Purchase of radio station FCC licenses | 4,953 | |||
Acquisition-related adjustment | (158 | ) | ||
FCC licenses related to assets held for sale | (4,630 | ) | ||
Impairment of FCC licenses | (139,200 | ) | ||
Balance as of December 31, 2007 | $ | 201,685 | ||
Goodwill | ||||
Balance as of December 31, 2005 | $ | 30,736 | ||
Impairment of goodwill | (7,098 | ) | ||
Acquisition-related goodwill | 25,277 | |||
Disposition-related goodwill | (5,260 | ) | ||
Balance as of December 31, 2006 | 43,655 | |||
Impairment of goodwill | (24,400 | ) | ||
Acquisition-related goodwill | 75 | |||
Goodwill related to assets held for sale | (166 | ) | ||
Acquisition-related adjustment | 108 | |||
Balance as of December 31, 2007 | $ | 19,272 | ||
- 83 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. | INCOME TAXES |
2007 | 2006 | 2005 | ||||||||||
Current federal | $ | 49 | $ | (55 | ) | $ | 339 | |||||
Current state | 168 | 103 | (410 | ) | ||||||||
Total current | 217 | 48 | (71 | ) | ||||||||
Deferred federal | (54,165 | ) | (12,254 | ) | (3,752 | ) | ||||||
Deferred state | (6,400 | ) | (2,063 | ) | (9 | ) | ||||||
Total deferred | (60,565 | ) | (14,317 | ) | (3,761 | ) | ||||||
Valuation allowance | (213 | ) | (165 | ) | 10 | |||||||
Net income tax benefit | $ | (60,561 | ) | $ | (14,434 | ) | $ | (3,822 | ) | |||
2007 | 2006 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 27,574 | $ | 19,493 | ||||
Miscellaneous accruals and credits | 832 | 561 | ||||||
Derivative financial instruments | 1,709 | – | ||||||
Intangible assets | 27,614 | – | ||||||
Accounts receivable reserve | 250 | 338 | ||||||
Total deferred tax assets | 57,979 | 20,392 | ||||||
Valuation allowance | (2,906 | ) | (3,119 | ) | ||||
Net deferred tax assets | 55,073 | 17,273 | ||||||
Deferred tax liabilities: | ||||||||
Property and equipment | (748 | ) | (1,331 | ) | ||||
Derivative financial instruments | – | (643 | ) | |||||
Intangible assets | – | (21,564 | ) | |||||
Total deferred tax liabilities | (748 | ) | (23,538 | ) | ||||
Net deferred tax assets (liabilities) | $ | 54,325 | $ | (6,265 | ) | |||
- 84 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | 2005 | ||||||||||
Federal tax expense at statutory rate | (34.0 | )% | (34.0 | )% | (34.0 | )% | ||||||
Other non-deductible expenses | 0.8 | 0.2 | 0.9 | |||||||||
(Decrease) increase of valuation allowance | (0.1 | ) | (0.4 | ) | 0.1 | |||||||
Expiration of net operating losses | 0.2 | 0.2 | 0.5 | |||||||||
State tax, net of federal tax benefit | (3.9 | ) | (5.0 | ) | 0.7 | |||||||
Other | (0.1 | ) | (0.1 | ) | (1.8 | ) | ||||||
Effective tax rate | (37.1 | )% | (39.1 | )% | (33.6 | )% | ||||||
- 85 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 86 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||
Equipment | $ | 40,279 | $ | 40,506 | ||||
Furniture and fixtures | 2,399 | 2,453 | ||||||
Building and improvements | 13,693 | 14,142 | ||||||
Land and improvements | 4,179 | 4,484 | ||||||
60,550 | 61,585 | |||||||
Less accumulated depreciation | (25,996 | ) | (24,832 | ) | ||||
Net property and equipment | $ | 34,554 | $ | 36,753 | ||||
2007 | 2006 | |||||||
Accrued interest | $ | 234 | $ | 633 | ||||
Accrued professional fees | 567 | 390 | ||||||
Deferred revenue | 601 | 385 | ||||||
Accrued medical costs | 557 | – | ||||||
Accrued state, local, franchise and property taxes | 641 | 322 | ||||||
Deferred compensation plan obligation | 698 | 510 | ||||||
Accrued national representation fees | 407 | 490 | ||||||
Accrued other | 1,560 | 1,768 | ||||||
$ | 5,265 | $ | 4,498 | |||||
- 87 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating | Capital | |||||||
Leases | Leases | |||||||
2008 | $ | 1,811 | $ | 115 | ||||
2009 | 1,334 | 81 | ||||||
2010 | 1,207 | 54 | ||||||
2011 | 1,095 | 34 | ||||||
2012 | 632 | 8 | ||||||
Thereafter | 2,212 | 4 | ||||||
Total minimum payments | $ | 8,291 | 296 | |||||
Amount representing interest | 30 | |||||||
Present value of net minimum lease payments | $ | 266 | ||||||
- 88 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||||||
ended | ended | ended | ended | Total | ||||||||||||||||
March 31 | June 30 | Sept. 30 | Dec. 31 | Year | ||||||||||||||||
2007(1) | ||||||||||||||||||||
Net broadcast revenues: | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | 22,045 | $ | 26,392 | $ | 25,729 | $ | 24,939 | ||||||||||||
Amount reclassified to discontinued operations | (537 | ) | (656 | ) | – | – | ||||||||||||||
Net broadcast revenues | $ | 21,508 | $ | 25,736 | $ | 25,729 | $ | 24,939 | $ | 97,912 | ||||||||||
Operating income (loss): | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | 2,521 | $ | 6,399 | $ | 6,464 | $ | (156,824 | ) | |||||||||||
Amount reclassified to discontinued operations | (83 | ) | (158 | ) | – | – | ||||||||||||||
Operating income (loss) | $ | 2,438 | $ | 6,241 | $ | 6,464 | $ | (156,824 | ) | $ | (141,681 | ) | ||||||||
(Loss) income from continuing operations: | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | (1,205 | ) | $ | 3,039 | $ | (1,351 | ) | $ | (103,252 | ) | |||||||||
Amount reclassified to discontinued operations | (28 | ) | (73 | ) | – | – | ||||||||||||||
Income (loss) from continuing operations | $ | (1,233 | ) | $ | 2,966 | $ | (1,351 | ) | $ | (103,252 | ) | $ | (102,870 | ) | ||||||
NET (LOSS) INCOME: | $ | (1,199 | ) | $ | 3,040 | $ | (1,289 | ) | $ | (103,126 | ) | $ | (102,574 | ) | ||||||
BASIC AND DILUTED NET | ||||||||||||||||||||
(LOSS) INCOME PER COMMON SHARE(2)(3) | ||||||||||||||||||||
Net income (loss) per common share | $ | (0.03 | ) | $ | 0.08 | $ | (0.03 | ) | $ | (2.69 | ) | $ | (2.68 | ) |
- 89 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||||||
ended | ended | ended | ended | Total | ||||||||||||||||
March 31 | June 30 | Sept. 30 | Dec. 31 | Year | ||||||||||||||||
2006(1) | ||||||||||||||||||||
Net broadcast revenues: | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | 17,118 | $ | 21,067 | $ | 20,606 | $ | 25,037 | ||||||||||||
Amount reclassified to discontinued operations | (501 | ) | (621 | ) | – | – | ||||||||||||||
Net broadcast revenues | $ | 16,617 | $ | 20,446 | $ | 20,606 | $ | 25,037 | $ | 82,706 | ||||||||||
Operating income (loss): | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | 1,292 | $ | 4,229 | $ | 2,475 | $ | (39,255 | ) | |||||||||||
Amount reclassified to discontinued operations | (62 | ) | (144 | ) | – | – | ||||||||||||||
Operating income (loss) | $ | 1,230 | $ | 4,085 | $ | 2,475 | $ | (39,255 | ) | $ | (31,465 | ) | ||||||||
Income (loss) from continuing operations: | ||||||||||||||||||||
Amount reported in previously issued Form 10-Q | $ | 64 | $ | 1,880 | $ | 600 | $ | (24,981 | ) | |||||||||||
Amount reclassified to discontinued operations | (19 | ) | (66 | ) | – | – | ||||||||||||||
Income (loss) from continuing operations | $ | 45 | $ | 1,814 | $ | 600 | $ | (24,981 | ) | $ | (22,522 | ) | ||||||||
NET INCOME (LOSS): | $ | 64 | $ | 2,012 | $ | 837 | $ | (29,509 | ) | $ | (26,596 | ) | ||||||||
BASIC AND DILUTED NET | ||||||||||||||||||||
INCOME (LOSS) PER COMMON SHARE(2)(4) | ||||||||||||||||||||
Net income (loss) per common share | $ | 0.00 | $ | 0.05 | $ | 0.02 | $ | (0.77 | ) | $ | (0.67 | ) |
(1) | The first and second quarters of 2007 and all four quarters of 2006 have been restated for comparative purposes to remove the effect of discontinued operations. | |
(2) | The sum of the quarterly net income (loss) per share amounts may not equal the annual amount reported, as per share amounts are computed independently for each quarter. | |
(3) | Despite net income for the second quarter of 2007, net income per common share was the same for both the basic and diluted calculation. | |
(4) | Despite net income for the first three quarters of 2006, net income per common share was the same for both the basic and diluted calculation. |
- 90 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- 91 -
(In thousands)
ADDITIONS | ||||||||||||||||||||
BALANCE | CHARGED | BALANCE | ||||||||||||||||||
AT | TO | CHARGED TO | AT | |||||||||||||||||
BEGINNING | COSTS AND | OTHER | THE END | |||||||||||||||||
OF PERIOD | EXPENSES | ACCOUNTS | DEDUCTIONS(1) | OF PERIOD | ||||||||||||||||
Allowance for doubtful accounts: | ||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||
2007 | $ | 898 | 286 | – | 533 | $ | 651 | |||||||||||||
2006 | $ | 802 | 632 | – | 536 | $ | 898 | |||||||||||||
2005 | $ | 844 | 462 | – | 504 | $ | 802 | |||||||||||||
Deferred tax asset valuation allowance: | ||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||
2007 | $ | 3,119 | 64 | (6) | – | 277 | (7) | $ | 2,906 | |||||||||||
2006 | $ | 3,283 | 84 | (4) | – | 248 | (5) | $ | 3,119 | |||||||||||
2005 | $ | 3,273 | 57 | (2) | – | 47 | (3) | $ | 3,283 |
(1) | Represents accounts written off to the reserve. | |
(2) | Represents a valuation allowance recorded for state net operating loss carryforwards generated in 2005 and scheduled to expire prior to 2017. | |
(3) | Represents the release of valuation allowance for federal and state net operating loss carryforwards that expired or were utilized in 2005. | |
(4) | Represents a valuation allowance recorded for state net operating loss carryforwards generated in 2006 and scheduled to expire prior to 2017. | |
(5) | Represents the release of valuation allowance for federal and state net operating loss carryforwards that expired or were utilized in 2006. | |
(6) | Represents a valuation allowance recorded for state net operating loss carryforwards generated in 2007 and scheduled to expire prior to 2017. | |
(7) | Represents the release of valuation allowance for federal and state net operating loss carryforwards that expired or were utilized in 2007. |
- 92 -
- 93 -
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
- 94 -
Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities to | Weighted average | issuance under equity | ||||||||||
be issued upon exercise | exercise price of | compensation plans | ||||||||||
of outstanding options, | outstanding options, | (excluding securities | ||||||||||
warrants and rights | warrants and rights | reflected in column (a)) | ||||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | 4,083,039 | $ | 5.91 | 3,504,824 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 4,083,039 | $ | 5.91 | 3,504,824 |
ITEM 13. | CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
- 95 -
- 96 -
REGENT COMMUNICATIONS, INC. | ||||
Date: March 17, 2008 | By: | /s/ William L. Stakelin | ||
William L. Stakelin, President and | ||||
Chief Executive Officer | ||||
Signature | Title | Date | ||
/s/ William L. Stakelin | President, Chief Executive Officer, and Director (Principal Executive Officer) | March 17, 2008 | ||
/s/ Anthony A. Vasconcellos | Executive Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer) | March 17, 2008 | ||
/s/ John J. Ahn | Director | March 17, 2008 | ||
/s/ Joseph P. Hannan | Director | March 17, 2008 | ||
/s/ Andrew L. Lewis, IV | Director | March 17, 2008 | ||
/s/ Timothy M. Mooney | Director | March 17, 2008 | ||
/s/ William P. Sutter, Jr. | Director | March 17, 2008 | ||
/s/ John H. Wyant | Director | March 17, 2008 |
S-1
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
2(a)* | Asset Purchase Agreement dated as of September 1, 2006 by and among Regent Broadcasting of Buffalo, Inc. and CBS Radio Stations Inc. (excluding schedules and exhibits not deemed material) (previously filed as Exhibit 2.1 to the Registrant’s Form 8-K dated December 15, 2006 and incorporated herein by this reference) | |
3(a)* | Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended by a Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series G Preferred Stock of Regent Communications, Inc., filed January 21, 1999 (previously filed as Exhibit 3(a) to the Registrant’s Form 10-K for the year ended December 31, 1998 and incorporated herein by this reference) | |
3(b)* | Certificate of Amendment of Amended and Restated Certificate of Incorporation of Regent Communications, Inc. filed with the Delaware Secretary of State on November 19, 1999 (previously filed as Exhibit 3(b) to the Registrant’s Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by this reference) | |
3(c)* | Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(c) to the Registrant’s Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) | |
3(d)* | Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series H Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(d) to the Registrant’s Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) | |
3(e)* | Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(e) to the Registrant’s Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) |
E-1
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
3(f)* | Certificate of Increase of Shares Designated as Series H Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(f) to the Registrant’s Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) | |
3(g)* | Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional, and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series K Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on December 13, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(g) to Amendment No. 1 to the Registrant’s Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) | |
3(h)* | Certificate of Amendment of Amended and Restated Certificate of Incorporation of Regent Communications, Inc. filed with the Delaware Secretary of State on March 13, 2002 (previously filed as Exhibit 3(h) to the Registrant’s Form 10-K for the year ended December 31, 2001 and incorporated herein by this reference) | |
3(i)* | Amended and Restated By-Laws of Regent Communications, Inc. adopted October 24, 2007 (previously filed as Exhibit 3(i) to the Registrant’s Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by this reference) | |
4(a)* | Credit Agreement dated as of November 21, 2006 among Regent Broadcasting, LLC, Regent Communications, Inc. and the lenders identified therein (without schedules and exhibits, which Regent has determined are not material) (previously filed as Exhibit 4 to the Registrant’s Form 8-K filed November 28, 2006 and incorporated herein by this reference) | |
4(b)* | Amendment No. 1 to the Credit Agreement, dated as of February 23, 2007 among Regent Broadcasting, LLC, Regent Communications, Inc. and the lenders identified therein (without schedules and exhibits, which Regent has determined are not material) (previously filed as Exhibit 4(a) to the Registrant’s Form 8-K filed March 1, 2007 and incorporated herein by this reference) | |
4(c)* | Rights Agreement dated as of May 19, 2003 between Regent Communications, Inc. and Fifth Third Bank (previously filed as Exhibit 4.1 to the Registrant’s Form 8-K filed May 20, 2003 and incorporated herein by this reference) | |
4(d)* | First Amendment to Rights Agreement dated and effective as of February 27, 2004 between Regent Communications, Inc., Fifth Third Bank, and Computershare Services, LLC (previously filed as Exhibit 4(c) to the Registrant’s Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by this reference) | |
10(a)*# | Regent Communications, Inc. 1998 Management Stock Option Plan, as amended through May 17, 2001 and restated as of October 24, 2002 (previously filed as |
E-2
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
Exhibit 10(b) to the Registrant’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by this reference) | ||
10(b)*# | Grant of Incentive Stock Option under the Regent Communications, Inc. 1998 Management Stock Option Plan, as amended | |
10(c)*# | Regent Communications, Inc. 2001 Directors’ Stock Option Plan dated May 17, 2001 (previously filed as Exhibit 10(b) to the Registrant’s Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by this reference) | |
10(d)*# | Grant of Stock Option under the Regent Communications, Inc. 2001 Directors’ Stock Option Plan | |
10(e)*# | Regent Communications, Inc. Employee Stock Purchase Plan, as amended on October 24, 2002 and effective January 1, 2003 (previously filed as Exhibit 10(a) to the Registrant’s Form 10-Q for the quarter ended September 30, 2002 and incorporated herein by this reference) | |
10(f)*# | Regent Communications, Inc. Deferred Compensation Plan dated July 25, 2002 and effective October 1, 2002 (previously filed as Exhibit 10(e) to the Registrant’s Form 10-K for the year ended December 31, 2002 and incorporated herein by this reference) | |
10(g)*# | Regent Communications, Inc. 2005 Incentive Compensation Plan as adopted February 3, 2005 (previously filed as Exhibit 4.1 to the Registrant’s Form S-8 Registration Statement No. 333-130616 filed December 22, 2005 and incorporated herein by this reference) | |
10(h)*# | Amendment No. 1 to the Regent Communications, Inc. 2005 Incentive Compensation Plan, effective as December 14, 2005 (previously filed as Exhibit 4.2 to the Registrant’s Form S-8 Registration Statement No. 333-130616 filed December 22, 2005 and incorporated herein by this reference) | |
10(i)*# | Form of Restricted Stock Award pursuant to the Regent Communications, Inc. 2005 Incentive Compensation Plan, as amended (previously filed as Exhibit 10.3 to the Registrant’s Form 8-K filed January 4, 2006 and incorporated herein by this reference) | |
10(j)*# | Regent Communications, Inc. 2006 Directors Equity Compensation Plan as adopted May 10, 2006 (previously filed as Exhibit 4.1 to the Registrant’s Form S-8 Registration Statement No. 333-133959 filed May 10, 2006 and incorporated herein by this reference) | |
10(k)*# | Form of Restricted Stock Award pursuant to the Regent Communications, Inc. 2006 Directors Equity Compensation Plan (previously filed as Exhibit 10.2 to the Registrant’s Form 8-K filed May 12, 2006 and incorporated herein by this reference) | |
10(l)*# | Separation Agreement and General Release by and between Terry S. Jacobs and Regent Communications, Inc. dated September 1, 2005 (previously filed as |
E-3
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
Exhibit 10(a) to the Registrant’s Form 8-K filed September 8, 2005 and incorporated herein by reference) | ||
10(m)*# | Employment Agreement between Regent Communications, Inc. and William L. Stakelin (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed January 4, 2008 and incorporated herein by this reference) | |
10(n)*# | Employment Agreement between Regent Communications, Inc. and Anthony A. Vasconcellos (previously filed as Exhibit 10.2 to the Registrant’s Form 8-K filed January 4, 2008 and incorporated herein by this reference) | |
10(o)# | Schedule of Director Compensation | |
10(p)* | Registration Rights Agreement dated June 15, 1998 among Regent Communications, Inc., PNC Bank, N.A., Trustee, Waller-Sutton Media Partners, L.P., WPG Corporate Development Associates V, L.C.C., WPG Corporate Development Associates (Overseas) V, L.P., BMO Financial, Inc., General Electric Capital Corporation, River Cities Capital Fund Limited Partnership, Terry S. Jacobs, William L. Stakelin, William H. Ingram, Blue Chip Capital Fund II Limited Partnership, Miami Valley Venture Fund L.P. and Thomas Gammon (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(e) to the Registrant’s Form 8-K filed June 30, 1998 and incorporated herein by this reference) | |
10(q)* | Warrant for the Purchase of 650,000 Shares of Common Stock issued by Regent Communications, Inc. to Waller-Sutton Media Partners, L.P. dated June 15, 1998 (See Note 1 below) (previously filed as Exhibit 4(f) to the Registrant’s Form 8-K filed June 30, 1998 and incorporated herein by this reference) |
E-4
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
10(r)* | First Amendment to Registration Rights Agreement dated as of August 31, 1999 among Regent Communications, Inc., PNC Bank, N.A., as trustee, Waller-Sutton Media Partners, L.P., WPG Corporate Development Associates V, L.L.C., WPG Corporate Development Associates (Overseas) V, L.P., BMO Financial, Inc., General Electric Capital Corporation, River Cities Capital Fund Limited Partnership, Terry S. Jacobs, William L. Stakelin, William H. Ingram, Blue Chip Capital Fund II Limited Partnership, Miami Valley Venture Fund L.P. and Thomas P. Gammon (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(gg) to the Registrant’s Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) | |
10(s)* | Second Amendment to Registration Rights Agreement dated as of December 13, 1999, among Regent Communications, Inc., Terry S. Jacobs, William L. Stakelin, Blue Chip Capital Fund II Limited Partnership, Blue Chip Capital Fund III Limited Partnership, Miami Valley Venture Fund, L.P., PNC Bank, N.A., as trustee, PNC Bank, N.A., Custodian, Waller-Sutton Media Partners, L.P., River Cities Capital Fund Limited Partnership, Mesirow Capital Partners VII, WPG Corporate Development Associates V, L.L.C., WPG Corporate Development Associates V (Overseas) L.P., General Electric Capital Corporation, William H. Ingram, The Roman Arch Fund L.P., The Roman Arch Fund II L.P. and The Prudential Insurance Company of America (previously filed as Exhibit 4(hh) to Amendment No. 1 to the Registrant’s Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) | |
10(t)* | Third Amendment to Registration Rights Agreement, dated August 28, 2001, among Regent Communications, Inc. and the Stockholders who are signatories thereto (previously filed as Exhibit 10(b) to the Registrant’s Form 10-Q for the quarter ended September 30, 2001 and incorporated herein by this reference) | |
10(u)* | Fourth Amendment to Registration Rights Agreement, dated as of November 26, 2001, among Regent Communications, Inc. and the Stockholders who are signatories thereto (previously filed as Exhibit 10(t) to the Registrant’s Form 10-K for the year ended December 31, 2001 and incorporated herein by this reference) | |
10(v)* | Settlement Agreement dated September 14, 2007, including Release as Exhibit A thereto (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed September 17, 2007 and incorporated herein by this reference) | |
21 | Subsidiaries of Registrant |
E-5
EXHIBIT | ||
NUMBER | EXHIBIT DESCRIPTION | |
23.1 | Consent of Independent Registered Public Accounting Firm | |
31(a) | Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification | |
31(b) | Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification | |
32(a) | Chief Executive Officer Section 1350 Certification | |
32(b) | Chief Financial Officer Section 1350 Certification |
* | Incorporated by reference. | |
# | Constitutes a management contract or compensatory plan or arrangement. |
E-6
1. | Six substantially identical warrants for the purchase of shares of Registrant’s common stock were initially issued, of which the following remain outstanding: |
Shares | ||||
WPG Corporate Development Associates V, L.L.C. | 112,580 | |||
WPG Corporate Development Associates (Overseas) V, L.P. | 17,420 | |||
William H. Ingram | 10,000 |
E-7