UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______.
Commission File Number: 333-44177
BRILL MEDIA COMPANY, LLC
(Exact name of registrant as specified in its charter)
Virginia 52-2071822
(State of Formation) (I.R.S. Employer Identification No.)
420 N.W. Fifth Street
Evansville, Indiana 47708
(address of principal executive offices)
(812) 423-6200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] YES [_] NO
TABLE OF CONTENTS
PART NO. ITEM NO. Page No.
- --------------------------------------------------------------------------------
I 1 FINANCIAL STATEMENTS
Consolidated Statements of Financial Position
November 30, 1999 and February 28, 1999 3
Consolidated Statements of Operations and
Members' Deficiency for the Three Months
Ended November 30, 1999 and 1998 and
Nine Months Ended November 30, 1999 and 1998 4
Consolidated Statements of Cash Flows for the
Nine Months Ended November 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
2 MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 9
3 QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 15
II 6 EXHIBITS AND REPORTS ON
FORM 8-K 16
PART I
ITEM 1. FINANCIAL STATEMENTS
Brill Media Company, LLC
(A Limited Liability Company)
Consolidated Statements of Financial Position
November 30 February 28
1999 1999
---------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 14,755,843 $ 2,740,244
Accounts receivable, net 5,978,549 5,021,759
Inventories 532,097 495,377
Other current assets 663,005 368,183
---------------------------------
Total current assets 21,929,494 8,625,563
Notes receivable from managed affiliates 19,554,931 18,263,747
Property and equipment 24,239,599 23,118,587
Less: Accumulated depreciation 11,268,085 10,295,485
---------------------------------
Net property and equipment 12,971,514 12,823,102
Goodwill and FCC licenses, net 13,721,186 13,808,957
Covenants not to compete, net 3,277,374 3,977,407
Other assets, net 6,355,695 5,672,201
Amounts due from related parties 5,204,333 3,654,279
---------------------------------
$ 83,014,527 $ 66,825,256
=================================
Liabilities and members' deficiency Current liabilities:
Amounts payable to related parties $ 1,387,102 $ 637,141
Accounts payable 1,245,153 1,288,100
Accrued payroll and related expenses 1,068,612 750,334
Accrued interest 3,938,665 1,642,244
Other accrued expenses 356,493 437,185
Current maturities of long-term obligations 1,436,030 3,960,435
---------------------------------
Total current liabilities 9,432,055 8,715,439
Long-term notes and other obligations 130,228,672 112,206,419
Members' deficiency (56,646,200) (54,096,602)
---------------------------------
$ 83,014,527 $ 66,825,256
=================================
See accompanying notes to the consolidated financial statements.
3
Brill Media Company, LLC
(A Limited Liability Company)
Consolidated Statements of Operations and Members' Deficiency
(Unaudited)
Three Months Ended Nine Months Ended
November 30 November 30
1999 1998 1999 1998
------------------------------------------------------------------------
Revenues $ 11,052,966 $ 10,789,764 $ 33,081,657 $ 31,482,863
Operating expenses:
Operating departments 8,317,340 7,718,187 24,082,964 22,511,320
Management fees 706,764 695,106 2,087,273 2,021,895
Time brokerage agreement fees 9,000 12,000 12,000 36,000
Consulting 4,998 92,025 14,994 216,021
Depreciation 437,299 369,453 1,174,910 1,074,926
Amortization 349,744 347,855 1,069,810 1,020,042
-------------------------------------------------------------------------
9,825,145 9,234,626 28,441,951 26,880,204
-------------------------------------------------------------------------
Operating income 1,227,821 1,555,138 4,639,706 4,602,659
Other income (expense):
Interest - managed affiliates 579,117 525,291 1,708,836 1,551,657
Interest - affiliates, net 80,541 49,066 179,260 39,810
Interest - other, net (3,624,524) (3,385,574) (10,619,227) (9,969,358)
Amortization of deferred financing costs (611,859) (149,615) (914,671) (449,247)
Gain (loss) on sale of assets, net 3,357 4,278 (122,377) 4,278
Other, net (36,152) (34,371) (123,435) (130,307)
-------------------------------------------------------------------------
(3,609,520) (2,990,925) (9,891,614) (8,953,167)
-------------------------------------------------------------------------
Loss before income taxes and cumulative
effect of change in accounting (2,381,699) (1,435,787) (5,251,908) (4,350,508)
principle
Income tax provision 55,750 55,183 146,711 136,783
-------------------------------------------------------------------------
Loss before cumulative effect of change in
accounting principle (2,437,449) (1,490,970) (5,398,619) (4,487,291)
Cumulative effect of change in accounting
principle -- -- 150,979 --
-------------------------------------------------------------------------
Net loss (2,437,449) (1,490,970) (5,549,598) (4,487,291)
Members' deficiency, beginning of period (54,208,751) (50,490,279) (54,096,602) (47,509,998)
Capital contributions -- -- 3,000,000 16,040
-------------------------------------------------------------------------
Members' deficiency, end of period $(56,646,200) $(51,981,249) $(56,646,200) $(51,981,249)
=========================================================================
See accompanying notes to the consolidated financial statements.
4
Brill Media Company, LLC
(A Limited Liability Company)
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended November 30
1999 1998
------------------------------------
Operating activities
Net loss $ (5,549,598) $ (4,487,291)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 2,244,720 2,094,968
Amortization of deferred financing costs and original issue 4,363,136 3,961,109
discount
Management fees accrual 554,851 560,172
Related parties interest accrual (176,913) 283,448
(Gain) loss on sale of assets, net 122,377 (4,278)
Cumulative effect of change in accounting principle 150,979 --
Changes in operating assets and liabilities, net of effect of
acquisitions:
Accounts receivable (956,790) (2,520,357)
Other current assets (331,542) (59,294)
Accounts payable (42,947) 983,445
Other accrued expenses 2,534,007 2,809,119
------------ ------------
Net cash provided by operating activities 2,912,280 3,621,041
Investing activities
Purchase of property and equipment (961,801) (1,348,001)
Purchase of newspaper, net of cash required (55,035) (50,000)
Proceeds from sale of assets 145,870 54,895
Payment for noncompetition agreement -- (450,000)
Loans to managed affiliates (1,291,184) (1,710,000)
Loans to related parties (1,357,000) (3,000,000)
Increase in other assets (411,090) (46,510)
------------ ------------
Net cash used in investing activities (3,930,240) (6,549,616)
Financing Activities
Decrease in amounts due to related parties 179,342 (690,819)
Payment of deferred financing costs (1,364,268) (491,802)
Principal payments on long-term obligations (5,229,717) (758,769)
Proceeds from long-term borrowings 16,448,202 54,447
Capital contributions 3,000,000 16,040
------------ ------------
Net cash provided by (used in) financing activities 13,033,559 (1,870,903)
------------ ------------
Net increase (decrease) in cash and cash equivalents 12,015,599 (4,799,478)
Cash and cash equivalents at beginning of period 2,740,244 10,917,613
------------ ------------
Cash and cash equivalents at end of period $ 14,755,843 $ 6,118,135
============ ============
See accompanying notes to the consolidated financial statements.
5
Brill Media Company, LLC
Notes to the Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Brill Media Company, LLC (BMC) and its subsidiaries, all of which
are wholly owned (collectively the Company). BMC's members are directly owned by
Alan R. Brill (Mr. Brill). These statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been included along
with the elimination of all intercompany balances and transactions. Operating
results for both the three month and the nine month periods ended November 30,
1999 are not necessarily indicative of the results that may be expected for the
year ending February 29, 2000. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended February 28, 1999.
2. Dispositions and Acquisitions
On October 24, 1997, the Company entered into contracts to sell the
operating assets of its Missouri radio stations (collectively, the Missouri
Properties), for a net cash price of $7,419,000, plus assumed liabilities of
$256,000. The expected pretax gain will be approximately $5.5 million, net of
related expenses, which will be recognized upon transfer of the Federal
Communications Commission (FCC) licenses. The Company further contracted to
permit the buyer to provide certain programming on the combined radio stations
under Time Brokerage Agreements (TBAs) beginning November 1, 1997, for $50,000
per month, until transfer of the FCC licenses is complete. Accordingly, other
than pursuant to the TBAs, no broadcast revenue or operating expenses were
recorded for the Missouri Properties subsequent to October 31, 1997.
Applications for transfer of the Missouri Properties were filed with the FCC in
October 1997; however, they were protested by a local market competitor and by
the Attorney General of the State of Missouri on the grounds that the proposed
buyers of the Missouri Properties would own or control too many radio broadcast
stations and too large a portion of the radio advertising dollars in Jefferson
City, Missouri. As a result, FCC approval of the transfer application was
delayed. On August 2, 1999, the proposed buyers of the Missouri Properties
executed a settlement agreement with the protestant and the Attorney General
under which the transfer applications would be granted. The FCC approved the
transfer applications, as amended in accordance with the settlement agreement,
in November 1999 and closing is anticipated prior to the fiscal year end.
6
In November 1998, the Company acquired three weekly shopping guide
publications and a print distribution operation reaching approximately 66,000
households in the northwestern portion of Michigan (the 1999 News acquisition).
Total consideration was $958,644, which consisted of $107,640 cash and a secured
seller note valued at $851,004. The Company also entered into a six-year
covenant not to compete valued at $855,890.
In April 1999, the Company acquired a real estate magazine which has
monthly distribution of approximately 20,000 in the northwestern portion of the
lower peninsula of Michigan (the 2000 News acquisition). Total consideration was
$216,892, which consisted of $55,035 cash and a secured seller note valued at
$161,857. The Company also entered into a six-year covenant not to compete
valued at $53,901.
In August 1999, the Company entered into a contract to acquire a radio
station located in the Duluth, Minnesota market for $1,000,000 in cash and a
five-year covenant not to compete valued at $155,778. In addition, the Company
entered into a TBA beginning August 9, 1999, which allows the Company to provide
certain programming on the radio station for $3,000 per month for the first
three months and $5,000 per month thereafter until transfer of the FCC license
is complete. In December 1999, the FCC approved the license transfer. The
Company expects to complete the acquisition prior to fiscal year end.
In October 1999, the Company submitted the winning bid of $1,561,000 in
accordance with the FCC rules for auctioning broadcast spectrum for a new FM
radio broadcast signal in Wellington, Colorado. The Company paid the FCC
$312,000 in October 1999 with the balance due after final FCC authorization. The
Company anticipates FCC authorization and licensing of the station will be
completed prior to the Company's fiscal year end. The Company will begin
construction of the radio station in fiscal year 2001.
3. Long-Term Debt
Long-term obligations include the Company's 12% senior notes due 2007 (the
Senior Notes). The Senior Notes are senior unsecured obligations of BMC and a
subsidiary of BMC, Brill Media Management, Inc. (Media). The Senior Notes are
unconditionally guaranteed, fully, jointly, and severally, by each of the direct
and indirect subsidiaries of BMC, all of which are wholly owned. BMC is a
holding company and has no operations, assets, or cash flows separate from its
investments in its subsidiaries. Accordingly, separate financial statements
concerning the subsidiaries have not been presented because management has
determined that they would not be material to investors.
Media has minimal assets and liabilities ($100 cash, and $100 capital at
November 30, 1999; and $50 cash, $50 due from related parties and $100 capital
at February 28, 1999) and no income or expenses since its formation in October
1997.
7
In October 1999, as permitted under the indenture governing the Company's
Senior Notes (the Indenture), the Company entered into a five year $15 million
secured credit facility with a senior lender (the Senior Credit Facility). The
facility bears interest, payable monthly, at the prime rate plus 1% with a
minimum interest rate of 8% per annum. The facility restricts the Company from
essentially the same defined limitations as contained in the Indenture and
includes certain financial covenants with respect to interest and fixed charge
coverage. The facility is secured by substantially all assets of the restricted
subsidiaries (other than the Missouri Properties), as defined in the Indenture.
4. Affiliate Transactions
During fiscal year 2000, the Company has advanced $1,357,000 to certain
related parties, which own and are renovating newspaper and radio facilities,
and which will be leased to and occupied by the Company upon completion of
planned renovations. In addition, during fiscal year 2000, the Company advanced
$1,291,184 to certain of its affiliates (the Managed Affiliates) under the
existing Managed Affiliates Notes which are described in Item 2 below.
5. Cumulative Effect of Change in Accounting Principle
The Company adopted AcSEC Statement of Position 98-5 "Reporting on the
Costs of Start-Up Activities" in the first quarter of fiscal year 2000 and
wrote-off, as required, approximately $150,000 of previously capitalized
start-up costs as a cumulative effect of change in accounting principle.
8
6. Operating Segments
The Company has two operating segments: operation of AM and FM radio
stations and publication of daily and weekly newspapers and shoppers.
Information for the three month and nine month periods ended November 30
regarding the Company's major operating segments is presented in the following
table:
Three Months Ended Nine Months Ended
November 30 November 30
1999 1998 1999 1998
--------------------------------------------------------------------
Revenues:
Radio $ 4,115,195 $ 4,129,042 $12,215,086 $11,618,505
News 6,937,771 6,660,722 20,866,571 19,864,358
--------------------------------------------------------------------
Total 11,052,966 10,789,764 33,081,657 31,482,863
Operating income:
Radio 516,492 669,640 2,011,502 1,606,864
News 711,329 885,498 2,628,204 2,995,795
--------------------------------------------------------------------
Total 1,227,821 1,555,138 4,639,706 4,602,659
Total assets:
Radio 50,036,759 41,056,437 50,036,759 41,056,437
News 31,620,768 28,653,418 31,620,768 28,653,418
--------------------------------------------------------------------
Total 81,657,527 69,709,855 81,657,527 69,709,855
Depreciation and amortization expense:
Radio 383,300 388,096 1,130,442 1,162,740
News 403,743 329,212 1,114,278 932,228
--------------------------------------------------------------------
Total 787,043 717,308 2,244,720 2,094,968
Capital expenditures:
Radio 160,430 275,519 333,257 762,486
News 218,015 167,868 628,544 585,515
--------------------------------------------------------------------
Total 378,445 443,387 961,801 1,348,001
ITEM 2. MANAGEMENT'S DISSCUSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General Information and Basis of Presentation
The Company is a diversified media enterprise that acquires, develops,
manages, and operates radio stations, newspapers and related businesses in
middle markets. The Company presently owns, operates, or manages sixteen radio
stations (the Stations) serving five markets located in Pennsylvania,
Kentucky/Indiana, Colorado, Minnesota/Wisconsin, and Missouri. The Company's
newspaper businesses (the Newspapers) operate integrated newspaper publishing,
printing and print advertising
9
distribution operations, providing total-market print advertising coverage
throughout a thirty-six-county area in the central and northern portions of the
lower peninsula of Michigan. This operation offers a three-edition daily
newspaper, twenty-five weekly publications, four monthly real estate guides, web
offset printing operations for Newspapers' publications and outside customers,
and private distribution systems. Mr. Brill founded the business and began its
operations in 1981. The Company's overall operations, including its sales and
marketing strategy, long-range planning, and management support services are
managed by Brill Media Company, L.P., a limited partnership indirectly owned by
Mr. Brill.
Results of Operations
The Company's unaudited consolidated financial statements tend not to be
directly comparable from period to period due to pending and completed
acquisitions and dispositions. These activities are identified in the notes to
the audited and unaudited consolidated financial statements of the Company.
Three Months Ended November 30, 1999 Compared to Three Months Ended November 30,
1998
Revenues for the three months ended November 30, 1999 were $11.1 million, a
$.3 million or 2. 4% increase from the prior comparative period. For the current
quarter, Stations' revenues represented $4.1 million and Newspapers' revenues
represented $7.0 million.
Stations' revenues remained constant from the prior comparative period.
The Newspapers' revenues increased $.3 million or 4.2% from the prior
comparative period. The 2000 and 1999 News acquisitions accounted for the
increase.
Operating expenses for the three months ended November 30, 1999 were $9.8
million, a $.6 million or 6.4% increase from the prior comparative period.
The Stations' operating expenses increased $.1 million primarily as a
result of compensation and occupancy related expenditures.
The Newspapers' operating expenses increased $.5 million or 7.8% from the
prior comparative period. The 2000 and 1999 News acquisitions accounted for
the increase.
As a result of the above, operating income for the three months ended
November 30, 1999 was $1.3 million, a decrease of $.3 million or 21% from the
prior comparative period.
10
Other income (expense) for the three months ended November 30, 1999 was
$3.6 million of net expense, an increase of $.6 million or 20.7% from the prior
comparative quarter. The increase was primarily the result of costs associated
with a non-executed financing transaction.
Nine Months Ended November 30, 1999 Compared to Nine Months Ended November 30,
1998
Revenues for the nine months ended November 30, 1999 were $33.1 million, a
$1.6 million or 5.1% increase from the prior comparative period. For the current
fiscal year, Stations' revenues represented $12.2 million and Newspapers'
revenues represented $20.9 million.
The Stations' revenues grew $.6 million or 5.1% from the prior comparative
period due to continued operations growth.
The Newspapers' revenues increased $1.0 million or 5.0% from the prior
comparative period. The 2000 and 1999 News acquisitions accounted for the
increase.
Operating expenses for the nine months ended November 30, 1999 were $28.4
million, a $1.6 million or 5.8% increase from the prior comparative period.
The Stations' operating expenses increased $.2 million from the prior
comparative period.
The Newpapers' operating expenses increased $1.4 million or 8.1% from the
prior comparative period. The 2000 and 1999 News acquisitions accounted for
the increase.
As a result of the above, operating income for the nine months ended
November 30, 1999 was $4.6 million and remained constant with the prior
comparative period.
Other income (expense) for the nine months ended November 30, 1999 was $9.9
million of net expense, an increase of $.9 million or 10.5% over the prior
comparative period. The increase was primarily due to increased interest
expense, costs associated with a non-executed financing transaction and the loss
on the sale of fixed assets in 1999.
Net loss was also effected by the $150,000 write-off of previously
capitalized start-up costs accounted for as a cumulative effect of change in
accounting principle.
11
Liquidity and Capital Resources
Generally, the Company's operating expenses are paid before its advertising
revenues are collected. As a result, working capital requirements have increased
as the Company has grown and will likely increase in the future.
Net cash provided by operating activities was $2.9 million for the nine
months ended November 30, 1999. The decrease of $.7 million from the comparative
fiscal 1999 period is primarily attributable to a decrease in collection of
accrued related party interest.
For the nine months ended November 30, 1999, net cash used in investing
activities was $3.9 million. The cash used in investing activities for the
current reporting period is primarily attributable to the additional loans to
related parties and Managed Affiliates, purchase of property and equipment and
the deposit with the FCC for the Wellington, Colorado radio station (see
Dispositions and Acquisitions). The decrease of $4.0 million in cash used in
investing activities from the prior comparative reporting period is related
primarily to the loan to a related party in August 1998 and a decrease in the
purchase of property and equipment and loans to Managed Affiliates, as well as a
payment for a noncompetition agreement during the prior comparative reporting
period.
Net cash provided by financing activities was $13.0 million for the nine
months ended November 30, 1999, an increase of $14.9 million from the prior
comparative reporting period. The increase is primarily due to $15 million in
proceeds from the Senior Credit Facility entered into during October 1999. The
increase was offset by payment of costs associated with the credit facility, and
principal payments of long-term obligations. Included in the principal payments
of long-term obligations was $3 million of Appreciation Notes that were redeemed
by proceeds provided by a capital contribution made by Mr. Brill.
Media Cashflow was $10.8 million for both nine month periods ended November
30, 1999 and 1998. Media Cashflow represents EBITDA plus incentive plan expense,
management fees, time brokerage fees paid, acquisition related consulting
expense, income from temporary cash investments and interest income from loans
made by the Company to Managed Affiliates. EBITDA is generally defined as net
income (loss) plus the income tax provision, consolidated interest expense,
depreciation expense, amortization expense, extraordinary items and cumulative
effect of change in accounting principle. Media Cashflow and EBITDA as used
above include the results of operations from unrestricted subsidiaries and
therefore differ from the same terms as defined in the Indenture.
Although Media Cashflow is not a measure of performance calculated in
accordance with GAAP, management believes it is useful in evaluating the Company
and is widely used in the media industry to evaluate a media company's
performance. However, Media Cashflow should not be considered in isolation or as
a substitute for net income, cash flows from operating activities and other
income or cash flow statements
12
prepared in accordance with GAAP as a measure of liquidity or profitability. In
addition, Media Cashflow as determined by the Company may not be comparable to
related or similar measures as reported by other companies and does not
represent funds available for discretionary use.
The Company has loaned approximately $19.6 million to Managed Affiliates
and received in return the Managed Affiliate Notes which are unsecured, mature
on January 1, 2001 and bear interest at a rate of 12% per annum. The proceeds of
such loans have been used by the Managed Affiliates to purchase property,
equipment and intangibles and to provide working capital. It is anticipated that
similar relationships may be initiated with other affiliates in the future. The
aggregate amount of Managed Affiliate Notes may not exceed $20 million unless
the Company first obtains a written opinion of an independent investment bank of
nationally recognized standing that such transaction is fair to the Company from
a financial point of view. For the nine month period ended November 30, 1999,
the Managed Affiliates reported combined revenues of $3.6 million, net loss of
$2.1 million and Media Cashflow of $0.5 million.
The Senior Notes require semi-annual cash interest payments on each June 15
and December 15 of $3.9 million through December 15, 1999 and $6.3 million from
June 15, 2000 until maturity.
The Company's ability to pay interest on both the Senior Notes and the
Secured Credit Facility and to satisfy its other obligations depends upon its
future operating performance, and will be affected by financial, business,
market, technological, competitive and other conditions, developments,
pressures, and factors, many of which are beyond the control of the Company. The
Company is highly leveraged, and many of its competitors are believed to operate
with much less leverage and to have significantly greater operating and
financial flexibility and resources.
Historically, the Company has achieved significant growth through
acquisitions. In order for the Company to achieve needed future growth in
revenues and earnings and to replace the revenues and earnings of properties
that may be sold by one or more of the Subsidiaries from time to time,
additional acquisitions may be necessary. Meeting this need for acquisitions
will depend upon several factors, including the continued availability of
suitable financing. There can be no assurance that the Company can or will
successfully acquire and integrate future operations. In connection with future
acquisition opportunities, the Company, or one or more of its subsidiaries, may
need to incur additional indebtedness or issue additional equity or debt
instruments. There can be no assurance that debt or equity financing for such
acquisitions will be available on acceptable terms, or that the Company will be
able to identify or consummate any new acquisitions.
The Indenture limits the Company's ability to incur additional
indebtedness. In addition to certain other permitted indebtedness, the Indenture
permits the Company to incur indebtedness under revolving credit facilities.
Limitations in the Indenture on the
13
Company's ability to incur additional indebtedness, together with the highly
leveraged nature of the Company, could limit operating activities, including the
Company's ability to respond to market conditions, to provide for unanticipated
capital investments and to take advantage of business opportunities.
The Company's primary liquidity needs are to fund capital expenditures,
provide working capital, meet debt service requirements and make acquisitions.
The Company's principal sources of liquidity are expected to be cashflow from
operations, cash on hand, consummation of the sale of the Missouri Properties
and indebtedness permitted under the Indenture. The Company believes that
liquidity from such sources should be sufficient to permit the Company to meet
its debt service obligations, capital expenditures and working capital needs for
the next 12 months, although additional capital resources may be required in
connection with the further implementation of the Company's acquisition
strategy.
During the nine month period ended November 30, 1999, the Company has
expended $1.0 million to purchase property and equipment and projects
approximately $.3 million will be required during the fourth quarter of fiscal
year 2000. The increase in projected capital expenditures for fiscal 2000 is
primarily due to additional enhancement of computer software, improvements at
broadcast transmission facilities and radio acquisition activities.
Seasonality
Seasonal revenue fluctuations are common in the newspaper and radio
broadcasting industries, caused by localized fluctuations in advertising
expenditures. Accordingly, the Stations' and Newspapers' quarterly operating
results have fluctuated in the past and will fluctuate in the future as a result
of various factors, including seasonal demands of retailers and the timing and
size of advertising purchases. Generally, in each calendar year the lowest level
of advertising revenues occurs in the first quarter and the highest levels occur
in the second and fourth quarters.
Impact of Year 2000
The Company is not aware of any interruption to its hardware, software,
Station broadcast systems, Newspaper publishing, production and distribution
systems, business office systems and ancillary equipment related to the passing
of January 1, 2000.
Forward-Looking Statements
Certain items in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Federal Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate," and similar
expressions. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and that matters
referred to in such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, but are not limited to, risks and
uncertainties relating to leverage, the need for additional funds, consummation
of the pending acquisitions, integration of the recently completed acquisitions,
the ability of the Company to achieve certain cost savings, the management of
growth, the introduction of new technology, changes in the regulatory
environment, the popularity of radio and newsprint as a
communication/advertising medium and changing consumer tastes. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk sensitive instruments do not subject the Company
to material risk exposures, except for such risks related to interest rate
fluctuations. As of November 30, 1999, the Company has debt outstanding of
approximately $131.7 million. The Senior Notes with a carrying value of $102.8
million have an estimated fair value of approximately $73.5 million. The fair
market value of the Company's remaining debt of $28.9 million approximates its
carrying value.
Fixed interest rate debt has a carrying value of approximately $115.2
million as of November 30, 1999 and includes: the Senior Notes which bear cash
interest, payable semiannually, at a rate of 7 1/2 % through December 15, 1999
and at 12% after such date until maturity on December 15, 2007; and other debt,
the majority of which have stated rates of 7% to 8% (all of which are described
in the notes to the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the year ended February 28, 1999.)
The remainder of the debt totaling $16.5 million, or 12.5% of the total, is
variable rate debt. The majority of such debt is the Secured Credit Facility,
which currently bears interest at 9.5%.
Long-term debt matures as follows:
- -------------------------------------------------------------------------------------------------------------
(in Millions)
- -------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 Thereafter Total
- -------------------------------------------------------------------------------------------------------------
Senior Notes, net
of unamortized
discount of $2.20 $ -- $ -- $ -- $ -- $ -- $102.80 $102.80
Secured Credit Facility -- -- -- -- 15.00 -- 15.00
Other 1.44 1.29 1.23 1.20 3.08 5.66 13.90
--------------------------------------------------------------------------------
Total long-term debt $ 1.44 $ 1.29 $ 1.23 $ 1.20 $ 18.08 $108.46 $131.70
================================================================================
15
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are furnished with this report:
Exhibit 27 -- Financial Data Schedule and Exhibit 99 - Press Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRILL MEDIA COMPANY, LLC
By: BRILL MEDIA MANAGEMENT, INC.,
Manager
January 14, 2000 By /s/ Alan R. Brill
----------------------------------
Alan R. Brill
DIRECTOR, PRESIDENT, CHIEF
EXECUTIVE OFFICER AND TREASURER
January 14, 2000 By /s/ Donald C. TenBarge
----------------------------------
Donald C. TenBarge
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND ASSISTANT
TREASURER (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
EXHIBIT INDEX
Exhibit Number Description of Exhibits
27 Financial Data Schedule
99 Press Release