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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 March 31, 2001
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: 001-14461
Entercom Communications Corp.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1701044
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
401 CITY AVENUE, SUITE 409
BALA CYNWYD, PENNSYLVANIA 19004
(Address of principal executive offices and Zip Code)
(610) 660-5610
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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. YES [X] NO []
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock, $.01 par value - 34,537,941 Shares Outstanding as of
May 7, 2001
Class B Common Stock, $.01 par value - 10,531,805 Shares Outstanding as of
May 7, 2001
Class C Common Stock, $.01 par value - 195,669 Shares Outstanding as of
May 7, 2001
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ENTERCOM COMMUNICATIONS CORP.
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements................................................................................ 3
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................................ 11
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.......................................... 15
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings................................................................................... 16
ITEM 2. Changes in Securities and Use of Proceeds........................................................... 16
ITEM 3. Defaults Upon Senior Securities..................................................................... 16
ITEM 4. Submission of Matters to a Vote of Security Holders................................................. 16
ITEM 5. Other Information................................................................................... 16
ITEM 6. Exhibits and Reports on Form 8-K.................................................................... 16
SIGNATURES .................................................................................................... 18
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENTERCOM COMMUNICATIONS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
ASSETS
DECEMBER 31, MARCH 31,
2000 2001
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 13,257 $ 13,087
Accounts receivable, net of allowance for doubtful accounts 70,937 53,592
Prepaid expenses and deposits 3,852 6,236
Prepaid and refundable federal and state income taxes 705 5,370
Deferred tax assets 1,499 4,089
Station deposits and acquisition costs 688 762
----------- -----------
Total current assets 90,938 83,136
----------- -----------
INVESTMENTS 12,116 16,948
----------- -----------
PROPERTY AND EQUIPMENT - AT COST
Land, land easements and land improvements 10,082 10,176
Buildings 10,404 10,446
Equipment 77,409 78,267
Furniture and fixtures 12,125 12,167
Leasehold improvements 8,967 8,986
----------- -----------
118,987 120,042
Accumulated depreciation and amortization (26,532) (29,204)
----------- -----------
92,455 90,838
Capital improvements in progress 1,498 4,301
----------- -----------
Net property and equipment 93,953 95,139
----------- -----------
RADIO BROADCASTING LICENSES AND OTHER INTANGIBLES -NET 1,265,816 1,257,512
----------- -----------
DEFERRED CHARGES AND OTHER ASSETS -NET 11,105 10,960
----------- -----------
TOTAL $ 1,473,928 $ 1,463,695
=========== ===========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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ENTERCOM COMMUNICATIONS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
DECEMBER 31, MARCH 31,
2000 2001
------------ ------------
CURRENT LIABILITIES
Accounts payable $ 18,967 $ 15,754
Accrued liabilities:
Salaries 6,042 4,373
Interest 1,744 3,735
Other 1,017 1,203
Derivative instruments -- 5,318
Long-term debt due within one year 11 13
----------- -----------
Total current liabilities 27,781 30,396
----------- -----------
SENIOR DEBT 461,249 445,322
DEFERRED TAX LIABILITIES 124,197 129,378
----------- -----------
Total liabilities 613,227 605,096
----------- -----------
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED SECURITIES OF SUBSIDIARY HOLDING SOLELY
CONVERTIBLE DEBENTURES OF THE COMPANY 125,000 125,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock -- --
Class A common stock 342 345
Class B common stock 105 105
Class C common stock 5 2
Additional paid-in capital 747,442 748,235
Accumulated deficit (11,850) (14,165)
Unearned compensation (329) (297)
Accumulated other comprehensive loss (14) (626)
----------- -----------
Total shareholders' equity 735,701 733,599
----------- -----------
TOTAL $ 1,473,928 $ 1,463,695
=========== ===========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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ENTERCOM COMMUNICATIONS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 2001
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------
2000 2001
---- ----
NET REVENUES $70,877 $69,455
------------ ------------
OPERATING EXPENSES:
Station operating expenses 46,193 46,360
Depreciation and amortization 10,477 11,496
Corporate general and administrative expenses 3,167 3,330
Net expense from time brokerage agreement fees 4 --
Net loss on sale of assets 7 23
------------ ------------
Total operating expenses 59,848 61,209
------------ ------------
OPERATING INCOME 11,029 8,246
------------ ------------
OTHER EXPENSE (INCOME):
Interest expense 9,390 7,911
Financing cost of Company-obligated mandatorily redeemable convertible
preferred securities of subsidiary holding solely convertible
debentures of the Company 1,953 1,953
Interest income (106) (95)
Equity loss from unconsolidated affiliate -- 850
Net loss on derivative instruments -- 478
------------ ------------
Total other expense 11,237 11,097
------------ ------------
LOSS BEFORE INCOME TAX BENEFIT & ACCOUNTING CHANGE (208) (2,851)
INCOME TAX BENEFIT (122) (1,102)
------------ ------------
LOSS BEFORE ACCOUNTING CHANGE (86) (1,749)
Cumulative effect of accounting change, net of taxes of $377 -- (566)
------------ ------------
NET LOSS ($86) ($2,315)
============ ============
NET LOSS PER SHARE - BASIC AND DILUTED:
Loss before accounting change ($0.00) ($0.04)
Cumulative effect of accounting change, net of taxes -- ($0.01)
------------ ------------
NET LOSS PER SHARE - BASIC AND DILUTED ($0.00) ($0.05)
============ ============
WEIGHTED AVERAGE SHARES:
Basic and Diluted 45,188,010 45,250,110
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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ENTERCOM COMMUNICATIONS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
THREE MONTHS ENDED MARCH 31, 2000 AND 2001
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------
2000 2001
---- ----
NET LOSS ($86) ($2,315)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX BENEFIT OR PROVISION
Unrealized income (loss) on investments - net of tax benefit of $0.9 million in 2000 and
tax provision of $1.2 million in 2001 (1,386) 1,727
Unrealized loss on hedged derivatives from cumulative effect of accounting
change- net of tax benefit of $0.5 million in 2001 -- (685)
Unrealized loss on hedged derivatives - net of tax benefit of $1.1 million in 2001 -- (1,653)
------- -------
COMPREHENSIVE LOSS ($1,472) ($2,926)
======= =======
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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ENTERCOM COMMUNICATIONS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 2001
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------
2000 2001
---- ----
OPERATING ACTIVITIES:
Net loss ($86) ($2,315)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 10,477 11,496
Deferred taxes 4,365 3,385
Provision for bad debts 967 1,130
Non-cash stock-based compensation expense 204 164
Loss on disposition of assets 7 23
Equity loss from unconsolidated affiliate -- 850
Net loss on derivative instruments -- 478
Cumulative effect of accounting change -- 943
Changes in assets and liabilities which provided (used) cash:
Accounts receivable (4,868) 16,215
Prepaid expenses (489) (2,384)
Prepaid and refundable income taxes -- (5,051)
Accounts payable, accrued liabilities and income taxes payable (7,479) (2,706)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,098 22,228
-------- --------
INVESTING ACTIVITIES:
Additions to property and equipment (2,596) (4,028)
Proceeds from sale of property, equipment and other assets 21 106
Purchases of radio station assets (8,000) --
Deferred charges and other assets (220) (333)
Purchase of investments (157) (2,804)
Station acquisition costs (324) (74)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (11,276) (7,133)
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 12,000 3,078
Payments of long-term debt (5,002) (19,004)
Proceeds from issuance of common stock related to incentive plans 364 145
Proceeds from exercise of stock options -- 516
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,362 (15,265)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (816) (170)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,262 13,257
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $10,446 $13,087
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION --
Cash paid during the period for:
Interest $9,030 $7,826
======== ========
Interest on TIDES $1,953 $1,953
======== ========
Income taxes $400 $25
======== ========
SUPPLEMENTAL DISCLOSURES ON NON-CASH INVESTING AND FINANCING ACTIVITIES -
In connection with the issuance of Restricted Stock during the three months
ended March 31, 2000, the Company issued 5,000 shares of Class A Common Stock
and increased its additional paid-in-capital by $266.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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ENTERCOM COMMUNICATIONS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 2001
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements for Entercom
Communications Corp. (the "Company") have been prepared in accordance with (1)
generally accepted accounting principles for interim financial information and
(2) the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 only normal recurring accruals,
considered necessary for a fair presentation have been included.
This Form 10-Q should be read in conjunction with the financial
statements and notes thereto included in the Company's audited financial
statements as of December 31, 2000, and filed with the Securities and Exchange
Commission (the "SEC") on March 21, 2001, as part of the Company's Form 10-K.
Operating results for the interim periods presented are not
necessarily indicative of the results that may be expected for the full fiscal
year. Certain prior year amounts have been reclassified to conform to the
current year's presentation, which had no effect on net loss or shareholders'
equity.
Effective January 1, 2001, Entercom adopted the Financial Accounting
Standards Board's Statement of Accounting Standards ("SFAS") No. 133 entitled
"Accounting for Derivative and Hedging Activities," that was amended by SFAS No.
137 and SFAS No. 138. SFAS No. 133 established accounting and reporting
standards for (1) derivative instruments, including certain derivative
instruments embedded in other contracts, which are collectively referred to as
derivatives and (2) hedging activities. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and the
resulting designation. All derivatives, whether designated in hedging
relationships or not, are required to be recorded on the balance sheet at fair
value. If the derivative is designated as a fair value hedge, the changes in the
fair value of the derivative and the hedged item are recognized in the statement
of operations. If the derivative is designated as a cash flow hedge, changes in
the fair value of the derivative are recorded in other comprehensive income
(loss) and are recognized in the statement of operations when the hedged item
affects net income (loss). SFAS No. 133 defines new requirements for designation
and documentation of hedging relationships as well as on going effectiveness
assessments in order to use hedge accounting under this standard. A derivative
that does not qualify as a hedge is marked to fair value through the statement
of operations. For those derivatives with a notional amount of $30.0 million
that did not qualify for hedge accounting treatment, for the three months ended
March 31, 2001, the Company recorded to the statement of operations a $0.4
million loss under the cumulative effect of accounting change as an accumulated
transition adjustment and a $0.8 million loss under loss on derivative
instruments as the adjustment for this period. For those derivatives designated
as cash flow hedges with a notional amount of $233.0 million, the Company
recorded: (1) the ineffective amount of the hedges to the statement of
operations as a $0.6 million loss under the cumulative effect of accounting
change as an accumulated transition adjustment and as a $0.3 million gain under
loss on derivative instruments as the adjustment for this period and (2) the
effective amount of the hedges to other comprehensive loss, as a $1.1 million
loss as an accumulated transition adjustment and as a $2.8 million loss as the
adjustment for this period. The Company has calculated the transition and
current period adjustments in accordance with tentative accounting guidance
issued by the Derivatives Implementation Group, and therefore, the guidance
could be subject to change.
The net income (loss) per share is calculated in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" which
requires presentation of basic net income (loss) per share and diluted net
income (loss) per share. Basic net income (loss) per share excludes dilution and
is computed by dividing net income (loss) available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
net income (loss) per share is computed in the same manner as basic net income
(loss) after assuming issuance of common stock for all potentially dilutive
equivalent shares, which includes (1) stock options (using the treasury stock
method) and (2) the Term Income Deferrable Equity Securities ("TIDES") after
eliminating from net income the interest expense, net of taxes, on the TIDES.
Anti-dilutive instruments are not considered in this calculation. For the
three-month periods ended March 31, 2001 and 2000, the effect of the TIDES and
stock options in the calculation of net loss per share was anti-dilutive.
2. UNAUDITED PRO FORMA INFORMATION FOR ACQUISITIONS AND DISPOSITIONS
The following unaudited pro forma summary presents the consolidated
results of operations as if the transactions which occurred during the period of
January 1, 2000 through March 31, 2001, had all occurred as of January 1, 2000,
after giving effect to certain adjustments, including depreciation and
amortization of assets and interest expense on any debt incurred to fund
acquisitions, net of dispositions, which would have been incurred had such
acquisitions, divestitures and other events occurred as of January 1, 2000. For
a discussion of these acquisitions, dispositions and other events, please refer
to the Company's Form 10-K filed with the Securities and Exchange Commission on
March 21, 2001. The effect of the accounting change was not included as an
adjustment for purposes of this presentation. These unaudited pro forma results
have been prepared for comparative purposes only and do not purport to be
indicative of (1) what would have occurred had the acquisitions and other
transactions been made as of that date or (2) results which may occur in the
future.
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THREE MONTHS ENDED
MARCH 31,
------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE)
2000 2001
---- ----
PRO FORMA ACTUAL
--------- ------
Net Revenues $72,362 $69,455
======= =======
Income before net loss on sale of assets and accounting change ($1,084) ($1,735)
Cumulative effect of accounting change, net of taxes -- (566)
------- -------
Net loss ($1,088) ($2,315)
======= =======
Net loss per share - basic and diluted ($0.02) ($0.05)
======= =======
3. DEBT
The Company has a bank credit agreement (the "Bank Facility") with a
syndicate of banks which provides for senior secured credit of $650.0 million
consisting of: (1) a $325.0 million reducing revolving credit facility
("Revolver") and (2) a $325.0 million multi-draw term loan ("Term Loan"). The
Revolver and Term Loan, which mature on September 30, 2007, each reduce on a
quarterly basis beginning September 30, 2002, in quarterly amounts that vary
from $12.2 million to $16.3 million for each loan. As of March 31, 2001, the
Company had $445.0 million of borrowings outstanding under the Bank Facility
($120.0 million under the Revolver and $325.0 million under the Term Loan), in
addition to an outstanding Letter of Credit in the amount of $5.8 million.
The Company enters into interest rate transactions with different
banks to diversify its risk associated with interest rate fluctuations against
the variable rate debt under the Bank Facility and to comply with certain
covenants under the Bank Facility. Under these transactions, the Company agrees
with other parties to exchange, at specified intervals, the difference between
fixed rate and floating rate interest amounts calculated by reference to an
agreed notional principal amount against the variable debt. The total notional
amount of these transactions was $263.0 million as of March 31, 2001. These
agreements, with initial terms that vary from 2 years to 7 years, effectively
fix the interest at rates that vary from 5.8% to 8.5% on current borrowings
equal to the total notional amount.
4. COMMITMENTS AND CONTINGENCIES
Pending Acquisition
The Company entered into a preliminary agreement on February 6, 1996,
to acquire the assets of radio station KWOD-FM, Sacramento, California, from
Royce International Broadcasting Corporation ("Royce"), subject to approval by
the FCC, for a purchase price of $25.0 million. Notwithstanding efforts by the
Company to pursue this transaction, Royce has been non-responsive. On July 28,
1999, the Company commenced a legal action seeking to enforce this agreement,
and subsequently Royce filed a cross-complaint against the Company asking for
treble damages, an injunction, attorney's fees and costs and filed a separate
action against the Company's President. This separate action against the
Company's President was dismissed without leave to amend in February 2000. The
Company is pursuing legal action against Royce and seeking dismissal of the
cross-complaint. The Company estimates that the impact of an unfavorable outcome
will not materially impact the financial position, results of operations or cash
flows of the Company. However, the Company cannot determine if and when the
transaction might occur.
Contingencies
In October 1999, The Radio Music License Committee, of which the
Company is a participant, filed a motion in the New York courts against
Broadcast Music, Inc. commencing a rate-making proceeding, on behalf of the
radio industry, seeking a determination of fair and reasonable industry-wide
license fees. The Company is currently operating under interim license
agreements for the period commencing January 1, 1997 at the rates and terms
reflected in prior agreements. The Company's management estimates that the
impact of an unfavorable outcome of the motion will not materially impact the
financial position, results of operations or cash flows of the Company.
In December 2000, the U.S. Copyright Office, under the Digital
Millennium Copyright Act, issued a final rule that AM and FM radio broadcast
signals transmitted simultaneously over a digital communications network, are
subject to the sound recording copyright owner's exclusive right of performance.
This would result in the imposition of license fees for Internet streaming and
other digital media. As a result of this decision, the Company must now
participate in an arbitration proceeding at the U.S. Copyright Office to
determine the amount of the fees that are due from the use of sound recordings
in Internet streaming. The Company, along with other broadcasters and the
National Association of Broadcasters, previously commenced a legal action in New
York challenging the imposition of these license fees. In addition, the Company
has
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commenced a legal action, together with other radio broadcasters, seeking
declaratory relief as to the impact of the final rule of the Copyright Office.
The Company intends to pursue this action. However, the Company cannot determine
the likelihood of success. The Company's management estimates that the impact of
an unfavorable determination will not materially impact the financial position,
results of operations or cash flows of the Company.
The Company is subject to various outstanding claims which arose in
the ordinary course of business and to other legal proceedings. In the opinion
of management, any liability of the Company which may arise out of or with
respect to these matters will not materially affect the financial position,
results of operations or cash flows of the Company.
5. CONVERTIBLE PREFERRED SECURITIES
On October 6, 1999, the Company sold 2,500,000 Convertible
Preferred Securities, Term Income Deferrable Equity Securities ("TIDES"),
including underwriters' over-allotments at an offering price of $50.00 per
security. The net proceeds to the Company after deducting underwriting discounts
and other offering expenses, was $120.5 million. Subject to certain deferral
provisions, the trust pays quarterly calendar distributions. The first
distribution was paid on December 31, 1999. The TIDES represent undivided
preferred beneficial ownership interest in the assets of the trust. The trust
used the proceeds to purchase from the Company an equal amount of 6.25%
Convertible Subordinated Debentures due 2014. The Company owns all of the common
securities issued by the trust. The trust exists for the sole purpose of issuing
the common securities and the TIDES. The trust is a wholly-owned subsidiary of
the Company, with the sole assets of the trust consisting of the $125.0 million
aggregate principal amount of the Company's 6.25% Convertible Subordinated
Debentures due September 30, 2014. The Company has entered into several
contractual arrangements for the purpose of fully, irrevocably and
unconditionally guaranteeing the trust's obligations under the TIDES. The
holders of the TIDES have a preference with respect to each distribution and
amount payable upon liquidation, redemption or otherwise over the holders of the
common securities of the trust. Each TIDES is convertible into shares of the
Company's Class A Common Stock at the rate of 1.1364 shares of Class A Common
Stock for each TIDES.
6. SHAREHOLDERS' EQUITY
During the three months ended March 31, 2000 and 2001, the Company
issued non-qualified options to purchase 467,750 shares and 788,500 shares,
respectively, of its Class A Common Stock at prices ranging from $31.88 to
$59.44 and $40.00 to $43.53, respectively, per share. All of the options become
exercisable over a four-year period. In connection with the grant of options
with exercise prices below fair market value at the time of grant, the grant of
options issued to non-employees and the grant of performance-based options, the
Company recognized non-cash stock-based compensation expense in the amount of
$173,000 and $132,000 for the three months ended March 31, 2000 and 2001,
respectively.
During the three months ended March 31, 2000, the Company issued
Restricted Stock awards, consisting of rights to 5,000 shares of Class A Common
Stock. Such shares vest ratably on each of the next four anniversary dates of
the grant. In connection with awards in 1999 and with this award, the Company
recognized non-cash stock-based compensation expense in the amounts of $31,000
and $32,000 for the three months ended March 31, 2000 and 2001, respectively.
On February 5, 2001, J.P. Morgan Partners, formerly known as Chase
Capital, converted 300,000 shares of Class C Common Stock to 300,000 shares of
Class A Common Stock.
7. SUBSEQUENT EVENTS
On May 4, 2001, the shareholders of the Company approved an amendment
to the Company's 1998 Equity Compensation Plan to increase the number of shares
issuable under such plan by 2.5 million shares.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains, in addition to historical information, statements
by us with regard to our expectations as to financial results and other aspects
of our business that involve risks and uncertainties and may constitute forward
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These statements
reflect our current views and are based on certain assumptions. Actual results
could differ materially from those currently anticipated as a result of a number
of factors, including, but not limited to, the following: (1) the highly
competitive nature of, and new technologies in, the radio broadcasting industry;
(2) our dependence upon our Seattle radio stations; (3) the risks associated
with our acquisition strategy generally; (4) the control of us by Joseph M.
Field and members of his immediate family; (5) our vulnerability to changes in
federal legislation or regulatory policies; and (6) those matters discussed
below.
GENERAL
Founded in 1968, we are the fifth largest radio broadcasting company in
the United States based upon revenues derived from the latest edition of BIA
Consulting, Inc. We have assembled a nationwide portfolio of 95 stations in 18
markets, including 11 of the country's top 50 markets. Our station groups rank
among the top three in revenue market share in 15 of the 16 measured markets in
which we operate, based on Duncan's Radio Market Guide (2000 ed.)
A radio broadcasting company derives its revenues primarily from the
sale of broadcasting time to local and national advertisers. The advertising
rates that a radio station is able to charge and the number of advertisements
that can be broadcast without jeopardizing listener levels largely determine
those revenues. Advertising rates are primarily based on three factors: (1) a
station's audience share in the demographic groups targeted by advertisers, as
measured principally by quarterly reports issued by the Arbitron Ratings
Company; (2) the number of radio stations in the market competing for the same
demographic groups; and (3) the supply of and demand for radio advertising time.
Several factors may adversely affect a radio broadcasting company's
performance in any given period. In the radio broadcasting industry, seasonal
revenue fluctuations are common and are due primarily to variations in
advertising expenditures by local and national advertisers. Typically, revenues
are lowest in the first calendar quarter of the year. We generally incur
advertising and promotional expenses to increase "listenership" and Arbitron
ratings. However, since Arbitron reports ratings quarterly, any increased
ratings and therefore increased advertising revenues tend to lag behind the
incurrence of advertising and promotional spending.
We include revenues recognized under a time brokerage agreement or a
similar sales agreement for stations operated by us prior to acquiring the
stations in net revenues, while we reflect operating expenses associated with
these stations in station operating expenses. Consequently, there is no
difference in the method of revenue and operating expense recognition between a
station operated by us under a time brokerage agreement or similar sales
agreement and a station owned and operated by us.
In the following analysis, we discuss broadcast cash flow, broadcast
cash flow margin and after tax cash flow. Broadcast cash flow consists of
operating income before depreciation and amortization, net expense (income) from
time brokerage agreement fees, corporate general and administrative expenses and
gain or loss on sale of assets. Broadcast cash flow margin represents broadcast
cash flow as a percentage of net revenues. After tax cash flow consists of loss
before accounting change, plus the following: depreciation and amortization,
non-cash compensation expense (which is otherwise included in corporate general
and administrative expenses), deferred tax provision and the elimination of any
gain or loss, net of current tax, on sale of assets, investments and derivative
instruments. Although broadcast cash flow, broadcast cash flow margin and after
tax cash flow are not measures of performance or liquidity calculated in
accordance with generally accepted accounting principles, we believe that these
measures are useful to an investor in evaluating our performance because they
are widely used in the broadcast industry to measure a radio company's operating
performance. However, you should not consider broadcast cash flow, broadcast
cash flow margin and after tax cash flow in isolation or as substitutes for net
income, operating income, cash flows from operating activities or any other
measure for determining our operating performance or liquidity that is
calculated in accordance with generally accepted accounting principles. In
addition, because broadcast cash flow, broadcast cash flow margin and after tax
cash flow are not calculated in accordance with generally accepted accounting
principles, they are not necessarily comparable to similarly titled measures
employed by other companies.
We calculate "same station" growth by comparing the performance of
stations operated by us throughout a relevant period to the comparable
performance in the prior year's corresponding period, adjusted for significant
changes to sports contracts and excluding the effect of barter revenues and
expenses. "Same station broadcast cash flow margin" is the broadcast cash flow
margin of the stations included in our same station calculations.
RESULTS OF OPERATIONS
The following presents the results of our operations for the three
months ended March 31, 2001 and March 31, 2000, and should be read in
conjunction with our condensed consolidated financial statements and the related
notes included
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elsewhere in this Form 10-Q. Our results of operations represent the operations
of the radio stations owned or operated pursuant to time brokerage agreements or
joint sales agreements during the relevant periods.
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2000
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
NET REVENUES $70,877 $69,455
Decrease of $1,422 or 2.0%
------------------------------------------------------------------------
Net revenues decreased 2.0% to $69.5 million for the three months ended
March 31, 2001 from $70.9 million for the three months ended March 31, 2000. On
a same station basis, net revenues decreased 4.0% to $68.7 million from $71.5
million. Same station net revenues declined due to a general weakness in the
advertising sector coupled with comparisons to the prior year's period in which
we experienced an exceptionally strong growth rate of approximately 19%. The
overall decline in net revenues was affected by acquisitions and divestitures.
Since January 1, 2000, we acquired stations with net revenues of $4.2 million
for the three months ended March 31, 2001 as compared to $0.4 million for the
three months ended March 31, 2000 and we divested stations that had net revenues
of $1.5 million for the three months ended March 31, 2000, (including $0.2
million in revenues from a sports contract for which we discontinued selling
advertising).
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
STATION OPERATING EXPENSES $46,193 $46,360
Increase of $167 or 0.4%
Percentage of Net Revenues -------------------------------------------------------------------------
65.2% 66.7%
Station operating expenses increased 0.4% to $46.4 million for the
three months ended March 31, 2001 from $46.2 million for the three months ended
March 31, 2000. On a same station basis, station operating expenses decreased
3.2% to $45.6 million from $47.1 million. Same station operating expenses
declined due to: (1) a decrease in sales expense as a result of a decrease in
same station net revenues for the reasons described above and (2) cost reduction
efforts. The overall increase in station operating expenses was affected by
acquisitions and divestitures. Since January 1, 2000, we acquired stations with
operating expenses of $3.7 million for the three months ended March 31, 2001 as
compared to $0.4 million for the three months ended March 31, 2000 and divested
stations that had operating expenses of $0.5 million for the three months ended
March 31, 2000 (net of $0.5 million in expense reductions from a sports contract
for which we discontinued selling advertising).
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
DEPRECIATION AND AMORTIZATION $10,477 $11,496
Increase of $1,019 or 9.7%
-------------------------------------------------------------------
Percentage of Net Revenues 14.8% 16.6%
Depreciation and amortization increased 9.7% to $11.5 million
for the three months ended March 31, 2001 from $10.5 million for the three
months ended March 31, 2000. The increase was mainly attributable to our
acquisitions, net of divestitures, since January 1, 2000.
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES $3,167 $3,330
Increase of $ 163 or 5.1%
--------------------------------------------------------------------
Percentage of Net Revenues 4.5% 4.8%
Corporate general and administrative expenses increased 5.1% to $3.3
million for the three months ended March 31, 2001 from $3.2 million for the
three months ended March 31, 2000. The increase was mainly attributable to
increased costs related to the growth in the number of stations. Also included
is non-cash stock-based compensation expense of $0.2 million for each of the
three months ended March 31, 2001 and 2000.
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
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(AMOUNTS IN THOUSANDS)
INTEREST EXPENSE (INCLUDING FINANCING
COST OF TIDES) $11,343 $9,864
Decrease of $1,479 or 13.0%
------------------------------------------------------------------
Percentage of Net Revenues 16.0% 14.2%
Interest expense, including the financing cost of our 6.25% Convertible
Preferred Securities Term Income Deferrable Equity Securities (TIDES), decreased
13.0% to $9.9 million for the three months ended March 31, 2001 from $11.3
million for the three months ended March 31, 2000. The decrease in interest
expense was mainly attributable to an overall decrease in outstanding
indebtedness coupled with a decline in interest rates.
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
LOSS BEFORE INCOME TAX BENEFIT AND ($208) ($2,851)
ACCOUNTING CHANGE
Increase of $2,643
-------------------------------------------------------------------
Percentage of Net Revenues (0.3%) (4.1%)
Loss before income tax benefit and accounting change increased to $2.9
million for the three months ended March 31, 2001 from $0.2 million for the
three months ended March 31, 2000. The increase in the loss before income tax
benefit and accounting change is mainly attributable to: (1) the decrease in net
revenues of $1.4 million; (2) the increase in depreciation and amortization of
$1.0 million; (3) the implementation this period of a new accounting standard
for derivative instruments, resulting in a loss of $0.5 million; and (4) the
equity loss from unconsolidated affiliate of $0.9 million, offset by a reduction
in interest expense of $1.5 million.
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
NET LOSS ($86) ($2,315)
Increase of $2,229
-------------------------------------------------------------------
Percentage of Net Revenues (0.1%) (3.3%)
Net loss increased to $2.3 million for the three months ended March
31, 2001 from $0.1 million for the three months ended March 31, 2000. The
increase in net loss is mainly attributable to: (1) all of the factors described
above and (2) the cumulative effect of the accounting change, net of taxes, of
$0.6 million, offset by the increase in the income tax benefit of $1.0 million.
OTHER DATA
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
BROADCAST CASH FLOW $24,684 $23,095
Decrease of $ 1,589 or 6.4%
-------------------------------------------------------------------
Broadcast cash flow decreased 6.4% to $23.1 million for the three
months ended March 31, 2001 from $24.7 million for the three months ended
March 31, 2000. On a same station basis, broadcast cash flow decreased 5.7% to
$23.1 million from $24.5 million for the same reasons that same station net
revenues declined, which are described above. The overall decline in broadcast
cash flow was affected by acquisitions and divestitures. Since January 1, 2000,
we acquired stations with broadcast cash flow of $0.5 million for the three
months ended March 31, 2001 and we divested stations that had broadcast cash
flow of $0.9 million for the three months ended March 31, 2000 (including $0.7
million in broadcast cash flow from a sports contract for which we discontinued
selling advertising).
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
BROADCAST CASH FLOW MARGIN Decrease of 34.8% 33.3%
-------------------------------------------------------------------
The broadcast cash flow margin decreased to 33.3% for the three months
ended March 31, 2001 from 34.8% for the three months ended March 31, 2000. On a
same station basis, our broadcast cash flow margin decreased to 33.6% from
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34.2%. The decrease is primarily attributable to the same reasons
that same station net revenues and same station broadcast cash flow declined,
which are described above.
THREE MONTHS ENDED
------------------
MARCH 31, 2000 MARCH 31, 2001
(AMOUNTS IN THOUSANDS)
AFTER TAX CASH FLOW $14,968 $15,082
Increase of $114 or 0.8%
--------------------------------------------------------------------------------
After tax cash flow increased 0.8% to $15.1 million for the three
months ended March 31, 2001 from $15.0 million for the three months ended March
31, 2000. Despite the decrease in broadcast cash flow for the reasons described
above, after tax cash flow was positively affected by: (1) the decrease in
interest expense, net of tax, due to the overall decrease in outstanding
indebtedness and the decline in interest rates and (2) the tax benefits from the
purchase of radio station assets since January 1, 2000. The amount of the
deferred income tax expense was $3.8 million for the three months ended March
31, 2001 and $4.4 million for the three months ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
We use a significant portion of our capital resources to consummate
acquisitions. These acquisitions are funded from one or a combination of the
following sources: (1) our bank facility (described below); (2) the sale of
securities; (3) the swapping of our radio stations in transactions which qualify
as "like-kind" exchanges under Section 1031 of the Internal Revenue Code and (4)
internally-generated cash flow.
Net cash flows provided by operating activities were $22.2 million and
$3.1 million for the three months ended March 31, 2001 and 2000, respectively.
Changes in our net cash flows provided by operating activities are primarily a
result of changes in advertising revenues and station operating expenses, which
are affected by the acquisition and disposition of radio stations during those
periods. For the three months ended March 31, 2001, cash flows provided by
operating activities were positively affected primarily by a decrease of $16.2
million in outstanding accounts receivable due to the seasonality of the
business as first quarter net revenues are typically lower than the prior year's
fourth quarter net revenues and to improved collection efforts. For the three
months ended March 31, 2000, cash flows were negatively impacted by an increase
of $4.9 million in accounts receivable and by a decrease of $7.5 million in
accounts payable, accrued liabilities and income taxes payable as a result of
the increase in cash requirements necessary to operate the 41 radio stations
purchased from Sinclair Broadcast Group, Inc. on December 16, 1999.
Net cash flows used in investing activities were $7.1 million and
$11.3 million for the three months ended March 31, 2001 and 2000, respectively.
Net cash flows used in financing activities were $15.3 million for the three
months ended March 31, 2001 and net cash flows provided by financing activities
were $7.4 million for the three months ended March 31, 2000. The cash flows for
the three months ended March 31, 2001 reflect additions to property and
equipment, investments consummated and the net decrease in borrowings. The cash
flows for the three months ended March 31, 2000 reflect acquisitions consummated
and the related borrowings.
During the three months ended March 31, 2001, we reduced our
outstanding debt by $16.0 million. We also increased the amount of investments
by $2.8 million. As of March 31, 2001, we had $445.0 million of borrowings
outstanding under our bank facility in addition to an outstanding letter of
credit in the amount of $5.8 million. We expect to use the credit available
under the revolving credit facility to fund future acquisitions.
In addition to debt service and quarterly distributions under the
TIDES, our principal liquidity requirements are for working capital and general
corporate purposes, including capital expenditures, and, if appropriate
opportunities arise, acquisitions of additional radio stations. Capital
expenditures for the three months ended March 31, 2001, were $4.0 million, which
included the balance of a $2.0 million commitment as of December 31, 2000, to
fund construction of a studio relocation project. We estimate that an additional
amount of capital expenditures for the balance of the fiscal year 2001 will be
between $5.0 and $7.0 million. We believe that cash from operating activities,
together with available revolving borrowings under our bank facility, should be
sufficient to permit us to meet our financial obligations and fund our
operations. However, we may require additional financing for future
acquisitions, if any, and we cannot assure you that we will be able to obtain
such financing on terms considered favorable by us.
We entered into our bank facility as of December 16, 1999, with a
syndicate of banks for $650.0 million in senior credit consisting of: (1) $325.0
million in a reducing revolving credit facility and (2) $325.0 million in a
multi-draw term loan that was fully drawn as of March 31, 2001. Our bank
facility was established to: (1) refinance existing indebtedness; (2) provide
working capital; and (3) fund corporate acquisitions. At our election, interest
on any outstanding principal accrues at a rate based on either LIBOR plus a
spread which ranges from 0.75% to 2.375% or on the prime rate plus a spread of
up to 1.125%, depending on our leverage ratio. Under the bank facility, the
reducing revolving credit facility and the multi-draw term loan mature on
September 30, 2007 and reduce on a quarterly basis beginning September 30, 2002
in quarterly amounts that vary from $12.2 million to $16.3 million for each
loan. Our bank facility requires us to comply with certain financial covenants
and leverage ratios that are defined terms within the agreement. We believe we
are in compliance
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with the covenants and leverage ratios. Our bank facility also provides that at
any time prior to December 31, 2001, we may solicit additional incremental loans
of up to $350.0 million, and we will be governed under the same terms as the
term loan.
RECENT PRONOUNCEMENTS
Effective January 1, 2001, we adopted the Financial Accounting
Standards Board's Statement of Accounting Standards ("SFAS") No. 133 entitled
"Accounting for Derivative and Hedging Activities" and amended by SFAS No. 137
and SFAS No. 138. SFAS No. 133 established accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, which are collectively referred to as derivatives, and for
hedging activities. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation. All
derivatives, whether designated in hedging relationships or not, are required to
be recorded on the balance sheet at fair value. If the derivative is designated
in a fair value hedge, the changes in the fair value of the derivative and the
hedged item are recognized in the statement of operations. If the derivative is
designated as a cash flow hedge, changes in the fair value of the derivative are
recorded in other comprehensive income (loss) and are recognized in the
statement of operations when the hedged item affects net income (loss). SFAS No.
133 defines new requirements for designation and documentation of hedging
relationships as well as on going effectiveness assessments in order to use
hedge accounting under this standard. A derivative that does not qualify as a
hedge is marked to fair value through the statement of operations. For those
derivatives with a notional amount of $30.0 million that did not qualify for
hedge accounting treatment, for the three months ended March 31, 2001, we
recorded to the statement of operations a $0.4 million loss under the cumulative
effect of accounting change as an accumulated transition adjustment and a $0.8
million loss under loss on derivative instruments as the adjustment for this
period. For those derivatives designated as cash flow hedges with a notional
amount of $233.0 million, we recorded: (1) the ineffective amount of the hedges
to the statement of operations as a $0.6 million loss under the cumulative
effect of accounting change as an accumulated transition adjustment and as a
$0.3 million gain under loss on derivative instruments as the adjustment for
this period and (2) the effective amount of the hedges to other comprehensive
loss, as a $1.1 million loss as an accumulated transition adjustment and as a
$2.8 million loss as the adjustment for this period. We calculated the
transition and current period adjustments in accordance with tentative
accounting guidance issued by the Derivatives Implementation Group, and
therefore, the guidance could be subject to change.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our bank facility requires us to protect ourselves from interest rate
fluctuations through the use of derivative rate hedging instruments. As a
result, we have entered into various interest rate transactions with various
banks, which we define as "Rate Hedging Transactions", designed to mitigate our
exposure to significantly higher floating interest rates. A rate cap agreement
establishes an upper limit or "cap" for the base LIBOR rate and a rate floor
agreement establishes a lower limit or "floor" for the base LIBOR rate. Several
of the agreements cover a rate cap and a rate floor and have been entered into
simultaneously with the same bank. Swap agreements require that we pay a fixed
rate of interest on the notional amount to a bank and the bank pay to us a
variable rate equal to three-month LIBOR. As of March 31, 2001, we have Rate
Hedging Transactions in place for a total notional amount of $263.0 million.
All of the Rate Hedging Transactions are tied to the three-month LIBOR
interest rate, which may fluctuate significantly on a daily basis. The valuation
of each of the Rate Hedging Transactions is affected by the change in the
three-month LIBOR rate and the remaining term of the agreement. Any increase in
the three-month LIBOR rate results in a more favorable valuation, while any
decrease in the three-month LIBOR rate results in a less favorable valuation for
each of the Rate Hedging Transactions. As of March 31, 2001, we recognized
losses in the statement of operations and the statement of other comprehensive
loss as these losses were negatively affected by a decrease in the three-month
LIBOR rate at March 31, 2001, as compared to December 31, 2000, offset by a
reduction in the average remaining period under each of the outstanding Rate
Hedging Transactions.
See also additional disclosures regarding "Liquidity and Capital
Resources" made under Item 2, above.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are from time to time involved in litigation incidental to the
conduct of our business, but we are not a party to any lawsuit or proceeding
which, in our opinion, is likely to have a material adverse effect on us.
We entered into a preliminary agreement on February 6, 1996, to
acquire the assets of radio station KWOD-FM, Sacramento, California, from Royce
International Broadcasting Corporation ("Royce"), subject to approval by the
FCC, for a purchase price of $25.0 million. Notwithstanding efforts by us to
pursue this transaction, Royce has been non-responsive. On July 28, 1999, we
commenced a legal action seeking to enforce this agreement, and subsequently
Royce filed a cross-complaint against us asking for treble damages, an
injunction, attorney's fees and costs and filed a separate action against our
President. This separate action against our President was dismissed without
leave to amend in February 2000. We are pursuing legal action against Royce and
seeking dismissal of the cross-complaint. We estimate that the impact of an
unfavorable outcome will not materially impact our financial position, results
of operations or cash flows. However, we cannot determine if and when the
transaction might occur.
In October 1999, The Radio Music License Committee, of which we are a
participant, filed a motion in the New York courts against Broadcast Music, Inc.
commencing a rate-making proceeding, on behalf of the radio industry, seeking a
determination of fair and reasonable industry-wide license fees. We are
currently operating under interim license agreements for the period commencing
January 1, 1997 at the rates and terms reflected in prior agreements. We
estimate that the impact of an unfavorable outcome of the motion will not
materially impact our financial position, results of operations or cash flows.
In December 2000, the U.S. Copyright Office, under the Digital
Millennium Copyright Act, issued a final rule that AM and FM radio broadcast
signals transmitted simultaneously over a digital communications network, are
subject to the sound recording copyright owner's exclusive right of performance.
This would result in the imposition of license fees for Internet streaming and
other digital media. As a result of this decision, we must now participate in an
arbitration proceeding at the U.S. Copyright Office to determine the amount of
the fees that are due from the use of sound recordings in Internet streaming.
We, along with other broadcasters and the National Association of Broadcasters,
previously commenced a legal action in New York challenging the imposition of
these license fees. In addition, we have commenced a legal action, together with
other radio broadcasters, seeking declaratory relief as to the impact of the
final rule of the Copyright Office. We intend to pursue this action. However, we
cannot determine the likelihood of success. We estimate that the impact of an
unfavorable determination will not materially impact our financial position,
results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None to report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None to report.
ITEM 5. OTHER INFORMATION
None to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
- ------ -----------
3.01 Amended and Restated Articles of Incorporation of the
Registrant (1)
3.02 Form of Amended and Restated Bylaws of the Registrant (1)
10.01 Employment Agreement, dated June 25, 1993, between the
Registrant and Joseph M. Field, as amended (1)
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10.02 Employment Agreement, dated December 17, 1998, between
the Registrant and David J. Field, as amended (1)
10.03 Employment Agreement, dated December 17, 1998, between
the Registrant and John C. Donlevie, as amended (1)
10.04 Employment Agreement, dated November 13, 1998, between
the Registrant and Stephen F. Fisher (1)
10.05 Asset Purchase Agreement, dated as of May 11, 2000,
among the Registrant, Entercom Kansas City, LLC,
Entercom Kansas City License, LLC, and Susquehanna
Radio Corp. (See table of contents for list of omitted
schedules and exhibits, which the Registrant hereby
agrees to furnish supplementally to the Securities and
Exchange Commission upon request) (2)
10.06 Credit Agreement, dated as of December 16, 1999, among
Entercom Radio, LLC, as the Borrower, the Registrant,
as a Guarantor, Banc of America Securities LLC, as
Sole Lead Arranger and Book Manager, Key Corporate
Capital, Inc., as Administrative Agent, and
Co-Documentation Agent, Bank of America, N.A., as
Syndication Agent, and Co-Documentation Agent and the
Financial Institutions listed therein (4)
10.07 Amended and Restated Asset Purchase Agreement, dated
as of August 20, 1999, among the Registrant, Sinclair
Communications, Inc., WCGV, Inc., Sinclair Radio of
Milwaukee Licensee, LLC, Sinclair Radio of New Orleans
Licensee, LLC, Sinclair Radio of Memphis, Inc.,
Sinclair Radio of Memphis Licensee, Inc., Sinclair
Properties, LLC, Sinclair Radio of Norfolk/Greensboro
Licensee, L.P., Sinclair Radio of Buffalo, Inc.,
Sinclair Radio of Buffalo Licensee, LLC, WLFL, Inc.,
Sinclair Radio of Greenville Licensee, Inc., Sinclair
Radio of Wilkes-Barre, Inc. and Sinclair Radio of
Wilkes-Barre Licensee, LLC. (See table of contents for
list of omitted schedules and exhibits, which the
Registrant hereby agrees to furnish supplementally to
the Securities and Exchange Commission upon request (3)
10.08 Asset Purchase Agreement, dated as of August 20, 1999,
among the Registrant, Sinclair Communications, Inc.,
Sinclair Media III, Inc. and Sinclair Radio of Kansas
City Licensee, LLC. (See table of contents for list of
omitted schedules and exhibits, which the Registrant
hereby agrees to furnish supplementally to the
Securities and Exchange Commission upon request (3)
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (File No. 333-61381)
(2) Incorporated by reference to the Registrant's Quarterly Report
on Form 10Q. (File No. 001-14461)
(3) Incorporated by reference to the Registrant's Registration
Statement on Form S-1. (File No. 333-86397)
(4) Incorporated by reference to the Registrant's Current Report
on Form 8-K. (File No. 001-14461).
(b) Reports filed on Form 8-K
On January 17, 2001, we filed a report on Form 8-K to disclose
unaudited financial information for the year ended December 31, 1999 and for the
nine-months ended September 30, 2000.
On March 28, 2001, we filed a report on Form 8-K to report the
dismissal of Deloitte & Touche LLP as our independent accountant and the
engagement of Arthur Andersen LLP as our new independent accountant as of March
23, 2001. The decision to change accountants was recommended by the audit
committee to the board of directors and was approved by the board of directors.
Deloitte & Touche LLP's opinions on our financial statements for the fiscal
years ended December 31, 2000 and 1999 did not contain an adverse opinion or a
disclaimer of opinion, nor were such opinions qualified or modified as to
uncertainty, audit scope or accounting principles.
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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.
ENTERCOM COMMUNICATIONS CORP.
(Registrant)
Date: May 11, 2001 /s/ Joseph M. Field
--------------------
Name: Joseph M. Field
Title: Chief Executive Officer
Date: May 11, 2001 /s/ David J. Field
-------------------
Name: David J. Field
Title: President and Chief Operating Officer
Date: May 11, 2001 /s/ Stephen F. Fisher
---------------------
Name: Stephen F. Fisher
Title: Executive Vice President and Chief
Financial Officer
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