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 AUGUST 31, 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
August 31, 1999 and February 28, 1999 3
Consolidated Statements of Operations and
Members' Deficiency for the Three Months
Ended August 31, 1999 and 1998 and
Six Months Ended August 31, 1999 and 1998 4
Consolidated Statements of Cash Flows for the
Six Months Ended August 31, 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 14
II 6 EXHIBITS AND REPORTS ON FORM 8-K 16
2
PART I
ITEM 1. FINANCIAL STATEMENTS
Brill Media Company, LLC
(A Limited Liability Company)
Consolidated Statements of Financial Position
August 31 February 28
1999 1999
------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,309,013 $ 2,740,244
Accounts receivable, net 5,753,675 5,021,759
Inventories 478,522 495,377
Other current assets 548,440 368,183
------------------------------
Total current assets 8,089,650 8,625,563
Notes receivable from managed affiliates 19,091,745 18,263,747
Property and equipment 23,577,034 23,118,587
Less: Accumulated depreciation 10,894,389 10,295,485
------------------------------
Net property and equipment 12,682,645 12,823,102
Goodwill and FCC licenses, net 13,811,629 13,808,957
Covenants not to compete, net 3,519,194 3,977,407
Other assets, net 5,847,737 5,672,201
Amounts due from related parties 3,779,166 3,654,279
------------------------------
$ 66,821,766 $ 66,825,256
==============================
Liabilities and members' deficiency
Current liabilities:
Amounts payable to related parties $ 1,269,591 $ 637,141
Accounts payable 1,143,302 1,288,100
Accrued payroll and related expenses 897,132 750,334
Accrued interest 1,709,578 1,642,244
Other accrued expenses 571,750 437,185
Current maturities of long-term obligations 1,186,316 3,960,435
------------------------------
Total current liabilities 6,777,669 8,715,439
Long-term notes and other obligations 114,252,848 112,206,419
Members' deficiency (54,208,751) (54,096,602)
------------------------------
$ 66,821,766 $ 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 August 31 Six Months Ended August 31
1999 1998 1999 1998
------------------------------------------------------------
Revenues $ 10,838,580 $ 10,088,578 $ 22,028,691 $ 20,693,099
Operating expenses:
Operating departments 7,797,003 7,392,968 15,765,624 14,793,133
Management fees 676,816 642,345 1,380,509 1,326,789
Time brokerage agreement fees 3,000 12,000 3,000 24,000
Consulting 4,998 61,997 9,996 123,996
Depreciation 369,576 362,159 737,611 705,473
Amortization 348,257 335,829 720,066 672,187
------------------------------------------------------------
9,199,650 8,807,298 18,616,806 17,645,578
------------------------------------------------------------
Operating income 1,638,930 1,281,280 3,411,885 3,047,521
Other income (expense):
Interest managed affiliates 569,441 526,016 1,129,719 1,026,366
Interest - affiliates, net 50,886 (2,410) 98,719 (9,256)
Interest - other, net (3,478,357) (3,333,012) (6,994,703) (6,583,784)
Amortization of deferred financing costs (149,949) (153,059) (302,812) (299,632)
Loss on sale of assets, net -- -- (125,734) --
Other, net (43,978) (54,874) (87,283) (95,936)
------------------------------------------------------------
(3,051,957) (3,017,339) (6,282,094) (5,962,242)
------------------------------------------------------------
Loss before income taxes and cumulative
effect of change in accounting principle (1,413,027) (1,736,059) (2,870,209)
Income tax provision 44,783 41,100 90,961 81,600
------------------------------------------------------------
Loss before cumulative effect of change in
accounting principle (1,457,810) (1,777,159) (2,961,170) (2,996,321)
Cumulative effect of change in accounting
principle -- -- 150,979 --
------------------------------------------------------------
Net loss (1,457,810) (1,777,159) (3,112,149) (2,996,321)
Members' deficiency, beginning of period (55,750,941) (48,713,120) (54,096,602) (47,509,998)
Capital contributions 3,000,000 -- 3,000,000 16,040
Dividends -- -- -- --
------------------------------------------------------------
Members' deficiency, end of period $(54,208,751) $(50,490,279) $(54,208,751) $(50,490,279)
============================================================
See accompanying notes to the consolidated financial statements.
4
Brill Media Company, LLC
(A Limited Liability Company)
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended August 31
1999 1998
----------------------------
Operating activities
Net loss $ (3,112,149) $ (2,996,321)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,457,677 1,377,660
Amortization of deferred financing costs and original issue 2,661,502 2,636,109
discount
Management fees accrual 461,136 341,305
Related parties interest accrual (133,222) (110,578)
Loss on sale of assets, net 125,734 --
Cumulative effect of change in accounting principle 150,979 --
Changes in operating assets and liabilities, net of effect of
acquisition:
Accounts receivable (731,916) (2,237,252)
Other current assets (163,402) (103,834)
Accounts payable (144,798) 1,132,188
Other accrued expenses 348,697 781,588
----------------------------
Net cash provided by operating activities 920,238 820,865
Investing activities
Purchase of property and equipment (583,356) (904,614)
Purchase of newspaper, net of cash required (61,235) --
Proceeds from sale of assets 115,587 17,410
Loans to managed affiliates (827,998) (1,000,000)
Loans to affiliates -- (3,000,000)
Increase in other assets (26,427) (38,085)
----------------------------
Net cash used in investing activities (1,383,429) (4,925,289)
Financing Activities
Increase (decrease) in amounts due to affiliates 179,909 (506,854)
Payment of deferred financing costs (605,439) (490,991)
Principal payments on long-term obligations (3,558,759) (502,324)
Proceeds from long-term borrowings 16,249 34,518
Capital contributions 3,000,000 16,040
----------------------------
Net cash used in financing activities (968,040) (1,449,611)
----------------------------
Net decrease in cash and cash equivalents (1,431,231) (5,554,035)
Cash and cash equivalents at beginning of period 2,740,244 10,917,613
----------------------------
Cash and cash equivalents at end of period $ 1,309,013 $ 5,363,578
============================
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 six month periods ended August 31, 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 ground 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 has been
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 Company anticipates
FCC approval of the transfer applications, as amended in accordance with the
settlement agreement, by the FCC in November 1999 and closing on the transfers
prior to the calendar year end.
In November 1998, the Company acquired three weekly shopping guide
publications and a print distribution operation reaching approximately 66,000
households in the north-western portion of the lower peninsula of Michigan (the
1999 News acquisition). Total consideration was $1,408,644, which consisted of
$557,640 cash and a secured seller note valued at $851,004. The Company also
entered into a six-year covenant not to compete valued at $405,890.
6
In April 1999, the Company acquired a real estate magazine which has
monthly distribution of approximately 20,000 in the north-western portion of the
lower peninsula of Michigan (the 2000 News acquisition) for consideration of
approximately $276,000, which consisted of $61,253 cash, a secured seller note
and a six-year covenant not to compete.
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 $156,000. In addition, the Company
entered into a TBA beginning August 9, 1999, that will permit it 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. Based on its initial analysis of the application, the FCC has
issued a public notice indicating concerns over market control issues and has
asked for additional information concerning the degree of ownership
concentration in the market, and the effect of such ownership on competition and
diversity in the relevant radio market. The Company intends to submit additional
information in response to the FCC's initial analysis, and to demonstrate that
the acquisition will not constitute undue ownership concentration.
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 other than Media (the Guarantors), 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 Guarantors have not been presented
because management has determined that they would not be material to investors.
Media has minimal assets and liabilities ($392 cash, $292 due to related
parties and $100 capital at August 31, 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.
4. Affiliate Transaction
During fiscal year 2000, the Company has advanced $827,998 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 2000 and wrote-off,
as required, approximately $150,000 of previously capitalized start-up costs as
a cumulative effect of change in accounting principle.
7
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 six month periods ended August 31 regarding
the Company's major operating segments is presented in the following table:
Three Months Six Months
Ended August 31 Ended August 31
1999 1998 1999 1998
-----------------------------------------------------
Revenues:
Radio $ 4,022,130 $ 3,614,262 $ 8,099,891 $ 7,489,463
News 6,816,450 6,474,316 13,928,800 13,203,636
-----------------------------------------------------
Total 10,838,580 10,088,578 22,028,691 20,693,099
Operating income:
Radio 716,354 388,541 1,495,010 937,224
News 922,576 892,739 1,916,875 2,110,297
-----------------------------------------------------
Total 1,638,930 1,281,280 3,411,885 3,047,521
Total assets:
Radio 42,332,794 40,167,666 42,332,794 40,167,666
News 24,488,972 26,802,728 24,488,972 26,802,728
-----------------------------------------------------
Total 66,821,766 66,970,394 66,821,766 66,970,394
Depreciation and amortization expense:
Radio 358,761 390,042 747,143 774,644
News 359,027 307,946 710,534 603,016
-----------------------------------------------------
Total 717,833 697,988 1,457,677 1,377,660
Capital expenditures:
Radio 46,131 116,280 172,827 486,967
News 224,018 181,601 410,529 417,647
-----------------------------------------------------
Total 270,149 297,881 583,356 904,614
7. Subsequent Events
The Company submitted the winning bid in accordance with the FCC rules
involving the auctioning of broadcast spectrum for a new FM radio broadcast
signal in our Colorado radio market and licensed to Wellington, Colorado. The
amount of the winning bid is $1,561,000 and must be paid in accordance with
rules that permit, among other things, the filing of petitions to deny the
Company's application. If no petitions to deny or objections to the Company's
application are filed, the Company anticipates that the FCC authorization for
the station will be issued prior to the end of the Company's fiscal year.
8
ITEM 2. MANAGEMENTS 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 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, a 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 August 31, 1999 Compared to Three Months Ended August 31,
1998
Revenues for the three months ended August 31, 1999 were $10.8 million, a
$.7 million or 7.4% increase from the prior comparative period. For the current
quarter, Stations' revenues represented $4.0 million and Newspapers' revenues
represented $6.8 million.
Stations' revenues, excluding the Missouri Properties, increased $.4
million or 11.0% from the prior comparative period. This increase is due to
continuing operations growth within each market.
The Newspapers' revenues increased $.3 million or 5.3% from the prior
comparative period. The 2000 and 1999 News acquisitions accounted for the
increase.
Operating expenses for the three months ended August 31, 1999 were $9.2
million, a $.4 million or 4.4% increase from the prior comparative period.
The Stations' operating expenses, excluding the Missouri Properties,
increased $.1 million primarily as a result of compensation and occupancy
related expenditures.
9
The Newspapers' operating expenses increased $.3 million or 5.6% 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
August 31, 1999 was $1.6 million, an increase of $.3 million or 27.9% for the
prior comparative period.
Other income (expense) for the three months ended August 31, 1999 was $3.1
million of net expense, which remained relatively unchanged from the prior
comparative period.
Six Months Ended August 31, 1999 Compared to Six Months Ended August 31, 1998
Revenues for the six months ended August 31, 1999 were $22.0 million, a
$1.3 million or 6.5% increase from the prior comparative period. For the current
fiscal year, Stations' revenues represented $8.1 million and Newspapers'
revenues represented $13.9 million.
The Stations' revenues, excluding the Missouri Properties, grew $.6 million
or 7.8% from the prior comparative period due to continued operations growth.
The Newspapers' revenues increased $.7 million or 5.5% from the prior
comparative period. The 2000 and 1999 News acquisitions accounted for the
increase.
Operating expenses for the six months ended August 31, 1999 were $18.6
million, a $1.0 million or 5.5% increase from the prior comparative period.
The Stations' operating expenses, excluding the Missouri Properties,
increased $.1 million from the prior comparative period.
The Newpapers' operating expenses increased $.9 million or 8.3% from the
prior comparative period. The 2000 and 1999 News acquisitions represented the
increased.
As a result of the above, operating income for the six months ended August
31, 1999 was $3.4 million, an increase of $.3 million or 12.0% from the prior
comparative period.
Other income (expense) for the six months ended August 31, 1999 was $6.3
million of net expense, an increase of $.3 million or 5.4% over the prior
comparative period. Primarily due to increased interest expense.
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.
10
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 $.9 million for the six
months ended August 31, 1999, an increase of $.1 million from the comparative
fiscal 1999 period.
Net cash used in investing activities was $1.4 million for the six months
ended August 31, 1999. The cash used in investing activities for the current
reporting period is primarily attributable to the additional loans to Managed
Affiliates and purchase of property and equipment. The decrease of $3.5 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.
Net cash used in financing activities was $1.0 million for the six months
ended August 31, 1999. The use of cash for the current reporting period is
attributable primarily to payments of long-term obligations, deferred financing
costs and the $3 million of Appreciation Notes that were redeemed by proceeds
provided by a capital contribution made by Mr. Brill. The decrease of $.5
million in cash used in financing activities from the prior comparative
reporting period is related primarily to a increase in amounts due to related
parties and additional payments of deferred financing costs.
Media Cashflow was $7.4 million and $7.2 million for the six month periods
ended August 31, 1999 and 1998, respectively. 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 under which the Company's Senior Notes were issued (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 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.
11
The Company has loaned approximately $19.1 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, intangibles and 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 six month period ended August 31, 1999, the
Managed Affiliates reported combined revenues of $2.4 million, net loss of $1.2
million and Media Cashflow of $0.6 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 the Senior Notes 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 its 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 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.
12
The Company is working to close prior to month end a $15 million secured
credit facility which has recently been approved by a major lender.
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 six month period ended August 31, 1999, the Company has expended
$0.5 million to purchase property and equipment.
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 status of the Companys process to ensure year 2000 compliance of all
hardware, software, Station broadcast systems, Newspaper publishing, production
and distribution systems, business office systems and ancillary equipment that
are date dependent has not changed since the issuance of the Company's Annual
Report on Form 10-K for the year ended February 28, 1999.
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.
13
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 August 31, 1999, the Company has debt outstanding of
approximately $115.4 million. The Senior Notes with a carrying value of $101.7
million have an estimated fair value of approximately $78.8 million. The fair
market value of the Company's remaining debt of $13.7 million approximates its
carrying value.
Fixed interest rate debt totals approximately $113.9 million as of August
31, 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.)
Long-term debt matures as follows:
------------------------------------------------------------------------
(in Millions)
------------------------------------------------------------------------
2000 2001 2002 2003 2004 Thereafter Total
------------------------------------------------------------------------
Senior Notes, net
of unamortized
discount of $3.30 $ -- $ -- $ -- $ -- $ -- $ 101.70 $ 101.70
Other 1.19 1.29 1.23 1.2 3.08 5.71 13.70
------------------------------------------------------------------------
Total long-term debt $ 1.19 $ 1.29 $ 1.23 $ 1.2 $ 3.08 $ 107.41 $ 115.40
=========================================================================
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.
14
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
October 15, 1999 By /s/ Alan R. Brill
----------------------------------
Alan R. Brill
DIRECTOR, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
October 15, 1999 By /s/ Donald C. TenBarge
----------------------------------
Donald C. TenBarge
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
15
EXHIBIT INDEX
Exhibit Number Description of Exhibits
-------------- -----------------------
27 Financial Data Schedule
99 Press Release
16