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, 2002
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 0-15392
REGENT COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 31-1492857
(State or Other Jurisdiction of (I.R.S. Employer
- -------------------------------- ----------------------
Incorporation or Organization) Identification No.)
100 EAST RIVERCENTER BOULEVARD
9TH FLOOR
COVINGTON, KENTUCKY 41011
-------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(859) 292-0030
-------------------------------
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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.
Common Stock, $.01 par value - 46,538,583 shares outstanding as of May 9, 2002
REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2002
INDEX
PART I FINANCIAL INFORMATION Page
Number
------
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the three months ended March 31, 2002
(unaudited) and March 31, 2001 (unaudited)............................ 3
Condensed Consolidated Balance Sheets
As of March 31, 2002 (unaudited) and December 31, 2001................ 4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2002 (unaudited)
and March 31, 2001 (unaudited)........................................ 5
Notes to Condensed Consolidated Financial Statements (unaudited)............... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 18
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 18
Item 2. Changes in Securities and Use of Proceeds...................................... 18
Item 6. Exhibits and Reports on Form 8-K............................................... 19
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
March 31,
---------------------------------------
2002 2001
---- ----
Gross broadcast revenues $ 14,318 $ 12,403
Less agency commissions 1,332 1,069
-------- --------
Net broadcast revenues 12,986 11,334
Station operating expenses 9,946 8,441
Depreciation and amortization 831 3,352
Corporate general and administrative expenses 1,540 1,326
Gain on sale of long-lived assets 442 -
-------- --------
Operating income (loss) 1,111 (1,785)
Interest expense (885) (986)
Other expense, net (117) (137)
-------- ---------
Income (loss) before income taxes and cumulative
effect of accounting change 109 (2,908)
Income tax (expense) benefit (41) 1,900
-------- --------
Income (loss) before cumulative effect of accounting change 68 (1,008)
Cumulative effect of accounting change, net
of applicable income taxes of $3,762 (6,138) -
--------- --------
Net loss $ (6,070) $ (1,008)
======== ========
Basic and diluted net income (loss) per common share:
Before cumulative effect of accounting change $ 0.00 $ (0.03)
======== ========
Net loss $ (0.17) $ (0.03)
======== ========
Weighted average number of common shares used
in basic and diluted calculation 35,874 33,810
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
March 31, December 31,
2002 2001
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,172 $ 1,765
Accounts receivable, less allowance of $662 and
$719 at March 31, 2002 and December 31, 2001, respectively 9,224 9,772
Other current assets 601 642
--------- ---------
Total current assets 10,997 12,179
Property and equipment, net 25,238 25,817
Goodwill, net 12,268 12,777
Intangible assets, net 244,556 253,643
Other assets, net 1,869 1,940
--------- ---------
Total assets $ 294,928 $ 306,356
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,348 $ 2,044
Accrued compensation 1,232 1,000
Accrued expenses and other current liabilities 2,540 3,010
--------- ---------
Total current liabilities 6,120 6,054
Long-term debt, less current portion 83,004 87,019
Deferred taxes and other long-term liabilities 1,213 4,945
--------- ---------
Total liabilities 90,337 98,018
Commitments and Contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000,000 shares authorized;
37,323,279 and 36,948,362 shares issued at March 31, 2002
and December 31, 2001, respectively 373 369
Treasury shares, 1,295,956 and 1,308,173 shares, at cost,
at March 31, 2002 and December 31, 2001, respectively (6,690) (6,757)
Additional paid-in capital 272,946 270,694
Retained deficit (62,038) (55,968)
--------- ---------
Total stockholders' equity 204,591 208,338
--------- ---------
Total liabilities and stockholders' equity $ 294,928 $ 306,356
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three Months Ended March 31,
-------------------------------
2002 2001
------------- -------------
Cash flows from operating activities:
Net cash provided by operating activities $ 1,205 $ 1,800
Cash flows from investing activities:
Acquisition costs (130) (69)
Capital expenditures (632) (920)
Net proceeds from disposal of long-lived assets 1,829 --
Other -- 19
------- -------
Net cash provided by (used in) investing activities 1,067 (970)
Cash flows from financing activities:
Proceeds from issuance of common stock 1,150 17
Principal payments on long-term debt (4,015) (1,515)
Long-term debt borrowings -- 1,000
------- -------
Net cash used in financing activities (2,865) (498)
------- -------
Net (decrease) increase in cash and cash equivalents (593) 332
Cash and cash equivalents at beginning of period 1,765 778
------- -------
Cash and cash equivalents at end of period $ 1,172 $ 1,110
======= =======
Supplemental schedule of non-cash financing
and investing activities:
Common stock issued in conjunction with the
acquisition of option to purchase stations
in Grand Rapids, Michigan $ 1,100 $ --
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-5-
REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Regent Communications, Inc. (including its wholly-owned subsidiaries,
the "Company" or "Regent") was formed to acquire, own and operate radio stations
in medium-sized and small markets in the United States.
The condensed consolidated financial statements of Regent have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, include all adjustments
necessary for a fair presentation of the results of operations, financial
position and cash flows for each period shown. All adjustments are of a normal
and recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations. Results for interim periods may not be indicative of results for
the full year. The December 31, 2001 condensed consolidated balance sheet was
derived from audited consolidated financial statements. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in Regent's Form 10-K for the
year ended December 31, 2001.
2. EQUITY OFFERING
On April 29, 2002, the Company completed the sale of 10.5 million
shares of its common stock at a price of $7.50 per share. Net cash proceeds to
the Company after underwriting discounts and commissions were approximately
$74.6 million. Regent has granted the underwriters a 30-day option to purchase
up to 1,575,000 additional shares of common stock to cover over-allotments.
Approximately $70.6 million of the proceeds were used to pay down outstanding
indebtedness under the Company's credit facility. The remaining $4.0 million of
proceeds will be used to fund the Company's pending transactions scheduled to
close during the second quarter of 2002.
3. COMPLETED AND PENDING ACQUISITIONS AND DISPOSITIONS
On March 12, 2002, the Company completed the disposition of
substantially all the operating assets of WGNA-AM, serving the Albany, New York
market, for $2.0 million in cash to ABC, Inc. On February 15, 2002, ABC, Inc.
began providing programming and other services to the station under a time
brokerage agreement. The Company recognized a gain of approximately $440,000 on
the sale. The Company treated the disposal of WGNA-AM as the disposal of
long-lived assets, rather than a business or a component of a business, due to
the fact that station had no independent revenue stream from its operations.
On July 27, 2001, the Company entered into an agreement, as amended, to
acquire by merger with The Frankenmuth Radio Co., Inc. WZRZ-FM serving the
Flint, Michigan market for approximately $2.0 million, consisting of
approximately $0.6 million in cash and 208,905 shares of Regent common stock,
valued at approximately $1.4 million. In 2001, the Company placed in escrow
$125,000 to secure its obligations under this agreement. The Federal
Communications Commission has approved the assignment of the station licenses,
and the closing of this acquisition is anticipated during the second quarter of
2002. On January 1, 2002, Regent began providing programming and other services
to the station under a time brokerage agreement.
-6-
Also on July 27, 2001, the Company entered into an agreement, as
amended, to purchase the outstanding stock of Haith Broadcasting Corporation,
owner of WFGR-FM serving the Grand Rapids, Michigan market for approximately
$3.9 million in cash. In 2001, the Company placed in escrow $250,000 to secure
its obligations under this agreement. In conjunction with the above stock
purchase, on February 4, 2002, the Company purchased the option to buy WFGR-FM
from Connoisseur Communications of Flint, L.L.P. for approximately $1.1 million,
paid by the issuance of 174,917 shares of Regent common stock. The Federal
Communications Commission has approved the assignment of the station licenses of
WFGR-FM, and the closing of this acquisition is anticipated during the second
quarter of 2002. On January 1, 2002, Regent began providing programming and
other services to the station under a time brokerage agreement.
On November 15, 2001, Regent entered into an agreement with Covenant
Communications Corporation to acquire substantially all of the assets of WRXF-FM
and WLSP-AM, serving the Flint, Michigan market, for $1.3 million in cash. In
2001, the Company placed in escrow $65,000 to secure its obligations under this
agreement. Applications seeking approval from the Federal Communications
Commission for the transfer of the station licenses are currently pending. On
December 3, 2001, Regent began providing programming and other services to the
stations under a time brokerage agreement.
The following unaudited pro forma data summarize the combined results
of operations of Regent, together with the operations of significant stations
acquired in 2001, but excluding the operations of the Palmdale, California
stations disposed of in the second quarter of 2001.
Three Months Ended
March 31, 2001
--------------
(unaudited)
(In thousands, except per share amounts)
Net broadcast revenues $13,110
Net income $ 68
Net income per common share:
Basic and diluted $ 0.00
These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had been
consummated at the beginning of the three-month period.
4. LONG-TERM DEBT
The Company has a credit agreement with a group of lenders which
provides for a senior reducing revolving credit facility expiring December 31,
2006 with an initial aggregate revolving commitment of up to $125.0 million
(including a commitment to issue letters of credit of up to $25.0 million in
aggregate face amount, subject to the maximum revolving commitment available).
Regent incurred approximately $2.0 million in financing costs related to the
credit facility, which are being amortized over the life of the agreement. The
credit facility is available for working capital and acquisitions, including
related acquisition expenses. In accordance with the terms of the credit
facility, at March 31, 2002, the available borrowings under the credit
-7-
facility were permanently reduced by $4,687,500, and will reduce by an equal
amount on the last day of each remaining quarter during 2002. At March 31, 2002
and 2001 there were borrowings of approximately $82.6 million and $44.0 million,
respectively, outstanding under this facility and there were approximately $37.7
million and $81.0 million of available borrowings, subject to the terms and
conditions of the credit facility (see Note 2).
Under the credit facility, the Company is required to maintain a
minimum interest rate coverage ratio, minimum fixed charge coverage ratio,
maximum corporate overhead, and maximum financial leverage ratio and to observe
negative covenants customary for facilities of this type. Borrowings under the
credit facility bear interest at a rate equal to, at the Company's option,
either (a) the higher of the rate announced or published publicly from time to
time by the agent as its corporate base of interest or the Overnight Federal
Funds Rate plus 0.5%, in either case plus the applicable margin determined under
the credit facility, or (b) the reserve-adjusted Eurodollar Rate plus the
applicable margin, which varies between 1.25% and 2.75% depending upon the
Company's financial leverage. Borrowings under the credit facility bore interest
at an average rate of 4.48% and 6.54% as of March 31, 2002 and 2001,
respectively. The Company is required to pay certain fees to the agent and the
lenders for the underwriting commitment, administration and use of the credit
facility. The Company's indebtedness under this credit facility is
collateralized by liens on substantially all of its assets and by a pledge of
its operating and license subsidiaries' stock and is guaranteed by these
subsidiaries.
5. CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000
shares of common stock and 40,000,000 shares of preferred stock. No shares of
preferred stock were issued at March 31, 2002 or 2001. The Company has in the
past designated shares of preferred stock in several different series. Of the
available shares of preferred stock, 6,768,862 remain designated in several of
those series and 33,231,138 shares are currently undesignated.
On February 4, 2002, the Company issued 174,917 shares of common stock
to Connoisseur Communications of Flint, L.L.P., valued at approximately $1.1
million, for the option to purchase WFGR-FM, serving the Grand Rapids, Michigan
market.
On February 5, 2002, 200,000 shares of the Company's common stock and
the associated cash proceeds of approximately $1.2 million were released from an
escrow account. The shares, sold to a venture capital fund related to one of
Regent's independent directors, were part of the Company's November 2001 private
placement offering of 900,000 shares issued at $5.75 per share, and were held in
escrow pending confirmation from Nasdaq that stockholder approval would not be
required for such sale.
Based on the approval by Regent's Board of Directors of a program to
buyback up to $10.0 million of its common stock, during the third quarter of
2000, Regent began buying back shares of its common stock at certain market
price levels. Regent acquired a total of 1,088,600 shares of its common stock
for an aggregate purchase price of approximately $5.6 million in 2000. No shares
were repurchased during 2001 or the first quarter of 2002. During the first
quarter of 2002, Regent reissued 12,217 shares of treasury stock previously
acquired as an employer match to employee contributions under the Company's
401(k) plan.
-8-
6. GOODWILL AND OTHER INTANGIBLE ASSETS
The Company's intangible assets consist principally of the value of FCC
licenses and the excess of the purchase price over the fair value of net assets
of acquired radio stations (goodwill). On January 1, 2002, the Company adopted
the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires that a Company no
longer amortize goodwill and intangible assets determined to have an indefinite
life and also requires an annual impairment testing of those assets. Consistent
with the application provisions of SFAS 142, the Company applied a discounted
cash flow analysis to test impairment of both indefinite-lived intangible
assets and goodwill. Based on the results of this evaluation, the Company
recorded impairment charges against indefinite-lived intangibles of
approximately $3.9 million, net of income taxes of approximately $2.4 million,
and against goodwill of approximately $2.2 million, net of income taxes of
approximately $1.4 million. In estimating future cash flows, the Company
considered the impact of the economic slow down in the radio industry at the
end of 2001. These conditions, combined with the change in methodology for
testing for impairment, which previously employed the utilization of
undiscounted cash flow projections, adversely impacted the cash flow
projections used to determine the fair value of the FCC licenses, as well as
each reporting unit.
Assuming amortization of goodwill and other indefinite-lived intangible
assets had been discontinued at January 1, 2001, the comparable net income and
net income per share (basic and diluted) for the prior-year period would have
been:
Three Months Ended March 31,
---------------------------
2002 2001
-------- -----------
(In thousands, except per
share amounts)
Reported net loss $(6,070) $(1,008)
Add back: Goodwill amortization - 59
Add back:FCC license amortization - 1,505
------- -------
Adjusted net (loss) income $(6,070) $ 556
======= =======
BASIC AND DILUTED NET (LOSS) INCOME PER SHARE:
Reported net loss per share $ (0.17) $ (0.03)
Impact of goodwill amortization - -
Impact of FCC license amortization - 0.05
------- -------
Adjusted net (loss) income per share $ (0.17) $ 0.02
======= =======
DEFINITE-LIVED INTANGIBLE ASSETS
The Company has definite-lived intangible assets that continue to be
amortized in accordance with SFAS 142, consisting primarily of non-compete
agreements. These agreements are amortized over the life of the agreement. In
accordance with the transitional requirements of SFAS 142, the Company
reassessed the useful lives of these intangibles and made no changes to their
useful lives. The following table presents the gross carrying amount and
accumulated amortization for the Company's definite-lived intangibles at March
31, 2002 and December 31, 2001 (in thousands):
MARCH 31, 2002 DECEMBER 31, 2001
------------------- ----------------------
GROSS GROSS
CARRYING ACCUMULATED CARRYING ACCUMULATED
AMOUNT AMORTIZATION AMOUNT AMORTIZATION
--------- ------------ -------- ------------
Non-compete agreements and other $ 762 $ 184 $ 862 $ 249
----- ----- ----- -----
Total $ 762 $ 184 $ 862 $ 249
===== ===== ===== =====
The aggregate amortization expense related to the Company's
definite-lived intangible assets for the three-month period ended March 31, 2002
and for the year ended December 31,
-9-
2001 was approximately $35,000 and $220,000, respectively. The estimated annual
amortization expense for the years ending December 31, 2003, 2004, 2005 and 2006
is approximately $134,000, $113,000, $100,000 and $42,000, respectively.
INDEFINITE-LIVED INTANGIBLE ASSETS
The Company's indefinite-lived intangible assets consist of FCC
licenses for radio stations. Upon adoption of SFAS 142, the Company ceased
amortizing these assets, and instead will test the assets at least annually for
impairment. The following table presents the carrying amount for the Company's
indefinite-lived intangible assets at March 31, 2002 and December 31, 2001 (in
thousands):
MARCH 31, DECEMBER 31,
2002 2001
---------- ----------
FCC licenses $ 243,978 $253,030
---------- --------
Total $ 243,978 $253,030
========== ========
Upon adoption of SFAS 142, the Company recorded an impairment charge of
approximately $3.9 million, net of an income tax benefit of approximately $2.4
million, which is reflected as a cumulative effect of an accounting change in
its statements of operations. The Company used a discounted cash flow
methodology to value FCC licenses.
GOODWILL
SFAS 142 requires the Company to test goodwill for impairment using a
two-step process. Step one identifies potential impairment, while step two
measures the amount of the impairment. Based on performing this test as of
January 1, 2002, the Company recognized an impairment charge of approximately
$2.2 million, net of income tax benefit of approximately $1.4 million. Regent
has reflected this charge as a component of cumulative effect of an accounting
change in its statement of operations. The following table presents the changes
in the carrying amount of goodwill for the three-month period ended March 31,
2002 (in thousands):
GOODWILL
--------
Balance as of December 31, 2001 $ 12,777
Adjustments 3,062
Impairment loss related to the adoption of SFAS 142 (pre-tax) (3,571)
--------
Balance as of March 31, 2002 $ 12,268
========
The adjustment to goodwill primarily relates to a reclassification to
goodwill from FCC licenses upon the adoption of SFAS 142.
7. EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128 ("SFAS 128") calls
for the dual presentation of basic and diluted earnings per shares ("EPS").
Basic EPS is calculated by dividing net income by the weighted average number of
common shares outstanding during the reporting period. The calculation of
diluted earnings per share is similar to basic except that the weighted average
number of shares outstanding includes the additional dilution that would occur
if potential common stock, such as stock options or warrants, were exercised.
The number of additional shares is calculated by assuming that outstanding stock
options and warrants with an exercise price in excess of the Company's average
stock price for the period were exercised, and that the proceeds from such
exercises were used to acquire shares of common stock at the average market
price during the reporting period. For the three months ended March 31, 2002 and
2001, the effects of the assumed exercise of the Company's options and warrants
are antidilutive, therefore, basic EPS and diluted EPS are the same for those
periods.
-10-
THREE MONTHS ENDED MARCH 31,
2002 2001
----- ----
(In thousands, except per share amounts)
Net income (loss) before cumulative effect
of accounting change $ 68 $ (1,008)
Cumulative effect of accounting change,
net of applicable income taxes of $3,762 (6,138) -
-------- --------
Net loss $ (6,070) $ (1,008)
Weighted average basic common shares 35,874 33,810
Basic and diluted net loss per common share:
Income (loss) before cumulative effect of
accounting change $ 0.00 $ (0.03)
Cumulative effect of accounting change $ (0.17) $ -
-------- --------
Net loss $ (0.17) $ (0.03)
8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 145, "Rescission of SFAS Nos. 4,
44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections" ("SFAS
145"). SFAS 145 rescinds FASB Statement No. 4, "Reporting Gains and Losses from
Extinguishment of Debt," and an amendment of that Statement, FASB Statement No.
64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." As a
result, gains and losses from extinguishments of debt should be classified as
extraordinary items only if they meet the criteria in APB Opinion No. 30,
"Reporting the Results of Operations, Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions ("APB 30"). Applying the provisions of APB 30 will
distinguish transactions that are part of an entity's recurring operations from
those that are unusual or infrequent or that meet the criteria for
classification as an extraordinary item. SFAS 145 also amends FASB Statement No.
13, "Accounting for Leases," to eliminate inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also rescinds FASB Statement No. 44,
"Accounting for Intangible Assets of Motor Carriers" and amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. The Company
will adopt this standard for lease transactions entered into after May 15, 2002
and has determined the impact of adoption to be immaterial. The provisions of
SFAS 145 related to debt extinguishments will be adopted on January 1, 2003, and
could have an impact on the Company, to the extent that the Company would make
any changes to its credit facility. There were no extinguishments of debt during
the three months ended March 31, 2002 or 2001.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 addresses the financial accounting and reporting
for the impairment or disposal of long-lived assets, including the disposal of a
segment of a business. SFAS 144 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash
-11-
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. SFAS 144 requires
companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
Furthermore, future operating losses relating to discontinued operations can no
longer be recorded before they occur. Assets to be disposed of are reported at
the lower of the carrying amount or fair value, less costs to sell. The Company
has adopted SFAS 144, as required, in the first quarter of 2002 and have deemed
that the impact of adoption is not material.
In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143")
that addresses the recognition of asset retirement obligations. The objective of
SFAS 143 is to provide guidance for legal obligations associated with the
retirement of tangible long-lived assets. The statement is effective for fiscal
years beginning after June 15, 2002. The Company has not yet determined the
impact, if any, of adopting SFAS 143.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The performance of a radio station group, such as ours, is customarily
measured by its ability to generate broadcast cash flow. The term "broadcast
cash flow" means operating income (loss) before depreciation and amortization
and corporate general and administrative expenses. Although broadcast cash flow
is not a measure of performance calculated in accordance with generally accepted
accounting principles, we believe that broadcast cash flow is accepted by the
broadcasting industry as a generally recognized measure of performance and is
used by analysts who report publicly on the performance of broadcasting
companies. Nevertheless, this measure should not be considered in isolation or
as a substitute for operating income (loss), net income (loss), net cash
provided by (used in) operating activities or any other measure for determining
our operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles.
This Form 10-Q includes certain forward-looking statements with respect
to our company that involve risks and uncertainties. These statements are
influenced by our financial position, business strategy, budgets, projected
costs, and plans and objectives of management for future operations. They may
use words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "project" and other similar expressions. Although we believe our
expectations reflected in these forward-looking statements are based on
reasonable assumptions, we cannot assure you that our expectations will prove
correct. Actual results and developments may differ materially from those
conveyed in the forward-looking statements. For these statements, we claim the
protections of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
Important factors that could cause actual results to differ materially
from the expectations reflected in the forward-looking statements include
changes in general economic, business and market conditions, as well as changes
in such conditions that may affect the radio broadcast industry or the markets
in which we operate, including, in particular, the ongoing impact of the war on
terrorism, increased competition for attractive radio properties and advertising
dollars, fluctuations in the cost of operating radio properties, possible
impairments of our goodwill and indefinite-lived intangible assets, our ability
to manage our growth, our ability
-12-
to integrate our acquisitions, and changes in the regulatory climate affecting
radio broadcast companies. These forward-looking statements speak only as of the
date on which they are made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this Form 10-Q. If we do update one or more forward-looking statements, you
should not conclude that we will make additional updates with respect to those
or any other forward-looking statements.
RESULTS OF OPERATIONS
A comparison of the three months ended March 31, 2002 versus March 31, 2001
follows:
Our results from operations for the first three months of 2002 showed
significant increases over the same period of 2001, primarily due to the
acquisitions of stations in Lafayette, Louisiana and Peoria, Illinois during the
second half of the 2001 year. These increases were offset by the sale of our
three stations in Palmdale, California during the second quarter of 2001. Net
broadcast revenues in the first quarter of 2002 increased by 14.6% from $11.3
million in the first quarter of 2001 to $13.0 million, and station operating
expenses increased 17.8%, from $8.4 million in the first quarter of 2001 to $9.9
million in the first quarter of 2002. This resulted in an increase in broadcast
cash flow of 5.1%, from $2.9 million in the first quarter of 2001, to $3.0
million in the first quarter of 2002.
While the acquisitions mentioned above have affected the comparability
of our 2002 results from operations to those of 2001, we believe meaningful
quarter-to-quarter comparisons can be made for results of operations for those
markets in which we have been operating for five full quarters, exclusive of any
markets held for sale. This group of comparable markets is currently represented
by ten markets and 43 radio stations. In these comparable markets, for the three
months ended March 31, 2002, as compared to the same period in 2001, our net
broadcast revenues, excluding barter revenues, decreased 2.4% and broadcast cash
flow decreased by 9.7%. The decrease in net revenue, and consequently broadcast
cash flow, was due primarily to the sluggish economic conditions present during
the first quarter of 2002. Same station operating expenses remained consistent
with the prior year.
Corporate general and administrative expense was $1.5 million in the
first quarter of 2002, compared to $1.3 million in the first quarter of 2001.
This increase was due primarily to the salary components of resources who were
charged at the market level in 2001 and were charged to corporate expense in
2002. Additionally, due to an increase in Regent's stock price at March 31,
2002, we recorded non-cash compensation expense related to the mark to market of
units of phantom stock awarded to senior officers for the 2001 bonus, which will
be distributed in 2003. Interest expense decreased 10.2% from approximately $1.0
million during the first quarter of 2001, to $0.9 million in during the first
quarter of 2002, primarily as a result of lower interest rates on the
outstanding debt under our credit facility.
Depreciation and amortization expense decreased 75.2% from $3.3 million
in 2001 to $0.8 million in 2002. Effective January 1, 2002, we adopted the
provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"), which eliminated the amortization of
goodwill and other intangible assets determined to have an indefinite life, and
also requires an annual impairment testing of those assets. Amortization
expense related to goodwill and indefinite-lived intangible assets was
approximately $2.5 million for the three months ended March 31, 2001.
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On March 12, 2002, we completed the sale of WGNA-AM in Albany, New York
for $2.0 million in cash. We recorded a gain of approximately $440,000 on the
sale.
The effective tax rate for the first quarter of 2002 differs from that
computed at the federal statutory rate of 34% principally because of the effect
of state income taxes of 4.0%, net of federal benefit. During the first quarter
of 2001, the effective rate differed from that computed at the statutory rate,
due primarily to an adjustment of our net operating loss carryforwards.
Upon adoption of SFAS 142, we completed a transitional impairment
analysis of our indefinite-lived FCC licenses and recorded an impairment loss of
approximately $3.9 million, net of income tax benefit of approximately $2.4
million. Additionally, we completed the two-step transitional impairment
analysis of goodwill and recorded an impairment loss of approximately $2.2
million, net of income tax benefit of approximately $1.4 million. These losses
were recorded as a cumulative effect of accounting change for the quarter ended
March 31, 2002.
Net income per common share for the first quarter of 2002 was $0.00
compared to a net loss per share of $0.03 in the first quarter of 2001. The
variance was primarily the result of the decrease in amortization expense and
the gain on the sale of WGNA-AM in Albany, New York during the first quarter of
2002, offset partially by the 2001 adjustment of our net operating loss
carryforwards. Including the cumulative effect of accounting change, net loss
per common share for the first quarter of 2002 was $0.17.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents balance at March 31, 2002 was
approximately $1.2 million compared to $1.1 million at March 31, 2001. Net cash
provided by operating activities was $1.2 million in 2002 compared to $1.8
million in 2001. The decrease was due primarily to the change in accounts
receivable during the first quarter of 2001. Cash flow provided by investing
activities during the first quarter of 2002 was $1.1 million, compared to $1.0
million used in investing activities in 2001. The primary reason for the change
was proceeds received during 2002 for the sale of WGNA-AM in Albany, New York.
Additionally, capital expenditures were lower during the first quarter of 2002
compared to the comparable 2001 period. Cash flows used in financing activities
were $2.9 million in 2002 compared to $0.5 million in 2001. The change is due to
the payment of long-term debt with proceeds from the sale of WGNA-AM in Albany,
New York and proceeds received from the release of the escrow for 200,000 shares
of common stock issued during our November 2001 private placement.
Sources of funds
On April 29, 2002, we completed the sale of 10.5 million shares of our
common stock at a price of $7.50 per share. Net cash proceeds after underwriting
discounts and commissions were approximately $74.6 million. In conjunction with
the offering, the underwriters were granted a 30-day option to purchase up to
1,575,000 additional shares of common stock to cover over-allotments.
Approximately $70.6 million of the proceeds were used to pay down outstanding
borrowings under our credit facility. The remaining $4.0 million of proceeds
will be used to fund our pending acquisitions scheduled to close during the
second quarter of 2002.
We have a credit agreement with a group of lenders, which provides for
a senior reducing revolving credit facility of $125.0 million maturing December
31, 2006. The credit facility permits the borrowing of available credit for
working capital requirements and general corporate purposes, including
transaction fees and expenses, and to fund permitted acquisitions. The facility
also permits us to request from time to time that the lenders issue letters of
credit in an aggregate amount up to $25.0 million in accordance with the same
lending provisions. The commitment and our maximum borrowings, including the
permanent reduction due to excess cash flow in April 2002 and the scheduled
quarterly reductions, reduce over five years beginning in 2002, as follows (in
thousands):
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December 31, Commitment Amount
------------ -----------------
2001 $125,000
2002 102,335
2003 83,585
2004 58,585
2005 33,585
2006 0
The scheduled reduction in available commitment amounts each year
occurs ratably over each quarter. For the 2002 year, the quarterly reduction
amount is $4,687,500. The $25.0 million letter of credit sub-limit also reduces
proportionately but not below $15.0 million. Mandatory prepayments and
commitment reductions are also required from certain asset sales, subordinated
debt proceeds, excess cash flow amounts and sales of equity securities. On April
30, 2002, the available commitment amount under the credit facility was
permanently reduced by approximately $3.9 million due to the provisions of the
excess cash flow calculation. We also paid down $70.6 million of outstanding
indebtedness under our credit facility using a substantial portion of the net
proceeds from the April 29, 2002 public sale of our common stock. In connection
with such reduction of indebtedness, we provided our lender with a reinvestment
notice which will allow us to re-borrow such monies for acquisitions and other
permitted investments which we complete and/or for which we obtain binding
agreements within 270 days of our debt repayment. We are actively exploring
acquisition opportunities and anticipate fully reinvesting such monies within
the applicable time periods; however, there can be no assurances in this regard.
If we are unable to reinvest these monies in suitable acquisitions, the amount
of our available commitment would be reduced by the amount of any un-reinvested
proceeds unless we were able to obtain a waiver or modification of the credit
facility terms. At May 9, 2002 there were borrowings of approximately $12.5
million outstanding under the facility, and there were approximately $103.9
million of available borrowings, subject to the terms and conditions of the
credit facility.
Under the terms of the facility, we are required to maintain a minimum
interest rate coverage ratio, minimum fixed charge coverage ratio, maximum
corporate overhead and maximum financial leverage ratio and to observe negative
covenants customary for facilities of this type. Borrowings under the new credit
facility bear interest at a rate equal to (a) the higher of the rate announced
or published publicly from time to time by the agent as its corporate base of
interest or the Overnight Federal Funds Rate plus 0.5%, in either case plus the
applicable margin determined under the credit facility, or (b) the
reserve-adjusted Eurodollar Rate plus the applicable margin, which varies
between 1.25% and 2.75% depending upon our financial leverage. Borrowings
outstanding at March 31, 2002 bore interest at an average rate of 4.48%.
We are required to pay certain fees to the agent and the lenders for
the underwriting commitment, administration and use of the credit facility. Our
indebtedness under this credit facility is collateralized by liens on
substantially all of our assets and by a pledge of our operating and license
subsidiaries' stock and is guaranteed by these subsidiaries.
On February 5, 2002, we received approximately $1.2 million from the
release of an escrow account holding 200,000 shares of our common stock. The
shares, sold to a venture capital fund related to one of our independent
directors, were part of our November 2001 private placement offering of 900,000
shares issued at $5.75 per share, and were held in escrow pending confirmation
from Nasdaq that stockholder approval would not be required for such sale.
-15-
On March 12, 2002, we completed the sale of WGNA-AM in Albany, New York
to ABC, Inc. for $2.0 million. We recognized a pre-tax gain of approximately
$440,000 on the sale of the station assets, which was treated as the sale of
long-lived assets.
Uses of funds
During the first quarter of 2002, we used the net proceeds from the
sale of WGNA-AM in Albany, New York, the cash received from the release of our
private placement shares held in escrow, and cash from continuing operations to
pay down approximately $4.0 million of indebtedness under our credit facility.
Additionally during the first quarter of 2002, we funded capital
expenditures of approximately $630,000, related primarily to expansion and
relocation activities in our Flint and Grand Rapids, Michigan markets to
accommodate and/or consolidate our pending acquisitions and to create cost
savings over the long term. We expect capital expenditures to be approximately
$4.0 million for the 2002 year.
Pending acquisitions
On July 27, 2001, we entered into an agreement, as amended, to acquire
by merger with The Frankenmuth Radio Co., Inc., WZRZ-FM serving the Flint,
Michigan market for approximately $2.0 million, consisting of approximately $0.6
million in cash and 208,905 shares of our common stock, valued at approximately
$1.4 million. In 2001, we placed in escrow $125,000 to secure our obligations
under this agreement. The Federal Communications Commission has approved the
assignment of the station licenses, and the closing of this acquisition is
anticipated during the second quarter of 2002. On January 1, 2002, we began
providing programming and other services to the station under a time brokerage
agreement.
Also on July 27, 2001, we entered into an agreement, as amended, to
purchase the outstanding stock of Haith Broadcasting Corporation, owner of
WFGR-FM serving the Grand Rapids, Michigan market for approximately $3.9 million
in cash. In 2001, we placed in escrow $250,000 to secure our obligations under
this agreement. In conjunction with the above stock purchase, on February 4,
2002, we purchased the option to buy WFGR-FM from Connoisseur Communications of
Flint, L.L.P. for approximately $1.1 million, paid by the issuance of 174,917
shares of Regent common stock. The Federal Communications Commission has
approved the assignment of the station licenses of WFGR-FM, and the closing of
this acquisition is anticipated during the second quarter of 2002. On January 1,
2002, we began providing programming and other services to the station under a
time brokerage agreement.
On November 15, 2001, we entered into an agreement with Covenant
Communications Corporation to acquire substantially all of the assets of WRXF-FM
and WLSP-AM, serving the Flint, Michigan market, for $1.3 million in cash. In
2001, we placed in escrow $65,000 to secure our obligations under this
agreement. Applications seeking approval from the Federal Communications
Commission for the transfer of the station licenses are currently pending. On
December 3, 2001, we began providing programming and other services to the
stations under a time brokerage agreement.
We believe the cash generated from operations and available borrowings
under our credit facility, along with the remaining proceeds from our April
offering of common stock, will be sufficient to complete our pending
acquisitions and to meet our requirements for corporate expenses and capital
expenditures for the foreseeable future, based on our projected operations
-16-
and indebtedness. After giving effect to all pending transactions, the
outstanding borrowings under our credit facility would be approximately $13.8
million with available borrowings of approximately $102.6 million, subject to
the terms and conditions of the credit facility.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 145, "Rescission of SFAS
Nos. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections"
("SFAS 145"). SFAS 145 rescinds FASB Statement No. 4, "Reporting Gains and
Losses from Extinguishment of Debt," and an amendment of that Statement, FASB
Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements." As a result, gains and losses from extinguishments of debt should
be classified as extraordinary items only if they meet the criteria in APB
Opinion No. 30, "Reporting the Results of Operations, Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions ("APB 30"). Applying the provisions of APB 30
will distinguish transactions that are part of an entity's recurring operations
from those that are unusual or infrequent or that meet the criteria for
classification as an extraordinary item. SFAS 145 also amends FASB Statement No.
13, "Accounting for Leases," to eliminate inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement also rescinds FASB Statement No. 44,
"Accounting for Intangible Assets of Motor Carriers" and amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. We will adopt
this standard for lease transactions entered into after May 15, 2002 and have
determined the impact of adoption to be immaterial. The provisions of the SFAS
145 related to debt extinguishments will be adopted on January 1, 2003, and
could have an impact on us, to the extent that we would make any changes to our
credit facility. We had no debt extinguishments during the three months ended
March 31, 2002 or 2001.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 addresses the financial accounting and reporting
for the impairment or disposal of long-lived assets, including the disposal of a
segment of a business. SFAS 144 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the asset. SFAS 144 requires companies to separately report
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. Furthermore, future operating losses
relating to discontinued operations can no longer be recorded before they occur.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value, less costs to sell. We have adopted SFAS 144, as required, in the
first quarter of 2002 and have deemed that the impact of adoption is not
material.
-17-
In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143")
that addresses the recognition of asset retirement obligations. The objective of
SFAS 143 is to provide guidance for legal obligations associated with the
retirement of tangible long-lived assets. The statement is effective for fiscal
years beginning after June 15, 2002. We have not yet determined the impact, if
any, of adopting SFAS 143.
UPDATE TO CRITICAL ACCOUNTING POLICIES
Due to the implementation of SFAS 142, our accounting policies related
to the carrying values of goodwill and indefinite-lived intangible assets have
changed. In accordance with the provisions of SFAS 142, goodwill is now tested
for impairment using a two-step process, which identifies any potential
goodwill impairment, and measures the amount of goodwill impairment loss to be
recognized, if any. In addition, the impairment test for indefinite-lived
intangibles consists of a comparison of the fair value of the intangible asset
with its carrying value. To test for any potential impairment of both goodwill
and indefinite-lived intangible assets, we employ a discounted cash flow
methodology. Goodwill and indefinite-lived intangible assets will be tested for
impairment at least annually. We have made no changes to any other critical
accounting policies referenced in our Form 10-K for the year ended December 31,
2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes as borrowings
under our credit facility bear interest at variable interest rates. It is our
policy to enter into interest rate transactions only to the extent considered
necessary to meet our objectives. As of March 31, 2002 we have not employed any
financial instruments to manage our interest rate exposure. Based on our
exposure to variable rate borrowings at March 31, 2002, a one percent (1%)
change in the weighted average interest rate would change our annual interest
expense by approximately $826,000. On April 30, we paid approximately $70.6
million of the outstanding indebtedness under our credit facility, which would
significantly reduce our exposure to fluctuations in interest rates.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Regent Communications, Inc. and certain of our officers have been named
as defendants in a class action lawsuit relating to our initial public offering
in January 2000. This proceeding, filed in the United States district court for
the Southern District of New York, is a related proceeding to the In re Initial
Public Offering Securities Litigation brought by various plaintiffs claiming to
have been damaged by certain sales practices allegedly undertaken in connection
with initial public offerings underwritten by certain investment banking firms
during the applicable statute of limitations time periods. The lawsuit against
us is in its preliminary stages, its outcome is uncertain and we have not
reserved against it.
We currently and from time to time are involved in litigation
incidental to the conduct of our business. In the opinion of our management, we
are not a party to any lawsuit or legal proceeding which is likely to have a
material adverse effect on our business or financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 4, 2002, we issued 174,917 shares of common stock to
Connoisseur Communications of Flint, L.L.P., for the option to purchase WFGR-FM,
serving the Grand Rapids, Michigan market. These securities were issued pursuant
to the exemptions contained in section 4(2) of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
On February 5, 2002, 200,000 shares of our common stock and the
associated proceeds were released from an escrow account. The shares, sold to a
venture capital fund related to one of Regent's independent directors, were part
of our November 2001 private placement offering of 900,000 shares issued at
$5.75 per share, and were held in escrow pending confirmation from Nasdaq that
stockholder approval would not be required for such sale. These securities were
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issued pursuant to the exemptions contained in section 4(2) of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits identified as Part II Exhibits on the following
Exhibit Index, which is incorporated herein by this reference, are filed or
incorporated by reference as exhibits to Part II of this Form 10-Q.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the first quarter of 2002;
however, in April 2002, we filed the following Reports on Form 8-K.
On April 11, 2002, we filed a Report on Form 8-K to announce our
intention to offer for sale shares of our common stock. Additionally, this Form
8-K announced our preliminary results for the quarter ended March 31, 2002.
On April 25, 2002, we filed a Report on Form 8-K to announce the
pricing of our offering of 10,500,000 shares of common stock.
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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, hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: May 15, 2002 By: /s/ Terry S. Jacobs
-------------------------------------
Terry S. Jacobs, Chairman of the Board
and Chief Executive Officer
Date: May 15, 2002 By: /s/ Anthony A. Vasconcellos
------------------------------------
Anthony A. Vasconcellos, Chief
Financial Officer and Senior Vice
President
(Chief Accounting Officer)
S-1
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of Part II of this report on Form 10-Q:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
3(a)* Amended and Restated Certificate of Incorporation of Regent
Communications, Inc., as amended by a Certificate of
Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Special Rights and the
Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series G Preferred Stock of
Regent Communications, Inc., filed January 21, 1999
(previously filed as Exhibit 3(a) to the Registrant's Form
10-K for the year ended December 31, 1998 and incorporated
herein by this reference)
3(b)* Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Regent Communications, Inc. filed with the
Delaware Secretary of State on November 19, 1999 (previously
filed as Exhibit 3(b) to the Registrant's Form 10-Q for the
quarter ended June 30, 2001 and incorporated herein by this
reference)
3(c)* Certificate of Decrease of Shares Designated as Series G
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on June 21, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(c) to the Registrant's Form 10-Q for the quarter
ended June 30, 1999 and incorporated herein by this reference)
3(d)* Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and
the Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series H Preferred Stock of
Regent Communications, Inc., filed with the Delaware Secretary
of State on June 21, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc.,
as amended (previously filed as Exhibit 3(d) to the
Registrant's Form 10-Q for the quarter ended June 30, 1999 and
incorporated herein by this reference)
3(e)* Certificate of Decrease of Shares Designated as Series G
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on August 23, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(e) to the Registrant's Form 10-Q for the quarter
ended September 30, 1999 and incorporated herein by this
reference)
3(f)* Certificate of Increase of Shares Designated as Series H
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on August 23, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended (previously filed
as Exhibit 3(f) to the Registrant's Form 10-Q for the quarter
ended September 30, 1999 and incorporated herein by this
reference)
E-1
3(g)* Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional, and Other Special Rights
and the Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series K Preferred Stock of
Regent Communications, Inc., filed with the Delaware Secretary
of State on December 13, 1999 amending the Amended and
Restated Certificate of Incorporation of Regent
Communications, Inc., as amended (previously filed as Exhibit
3(g) to Amendment No. 1 to the Registrants Form S-1
Registration Statement No. 333-91703 filed December 29, 1999
and incorporated herein by this reference)
3(h)* Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Regent Communications, Inc. filed with the
Delaware Secretary of State on March 13, 2002 (previously
filed as Exhibit 3(h) to the Registrant's Form 10-K for the
year ended December 31, 2001 and incorporated herein by this
reference)
3(i)* Amended and Restated By-Laws of Regent Communications, Inc.
(previously filed as Exhibit 3(b) to Amendment No. 1 to the
Registrant's Form S-4 Registration Statement No. 333-46435
filed April 8, 1999 and incorporated herein by this
reference).
3(i)* Amendments to By-Laws of Regent Communications, Inc. adopted
December 13, 1999 (previously filed as Exhibit 3(h) to
Amendment No. 1 to the Registrant's Form S-1 Registration
Statement No. 333-91703 filed December 29, 1999 and
incorporated herein by this reference)
4(a)* Credit Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 4(a)
to the Registrant's Form 8-K filed February 10, 2000 and
incorporated herein by this reference)
4(b)* Omnibus Amendment No. 1 and Amendment No. 1 to Credit
Agreement dated as of February 4, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (previously filed as Exhibit 4(e) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
E-2
4(c)* Amendment No. 2 and Consent, dated as of August 23, 2000, to
the Credit Agreement dated as of January 27, 2000, as amended,
among Regent Broadcasting, Inc., Regent Communications, Inc.,
Fleet National Bank, as administrative agent, Fleet National
Bank, as issuing lender, General Electric Capital Corporation,
as syndication agent, Dresdner Bank AG, New York and Grand
Cayman Branches, as document agent, and the several lenders
party thereto (previously filed as Exhibit 4(c) to the
Registrant's Form 10-K for the year ended December 31, 2000
and incorporated herein by this reference)
4(d)* Amendment No. 3 dated as of December 1, 2000, to the Credit
Agreement dated as of January 27, 2000, as amended, among
Regent Broadcasting, Inc., Regent Communications, Inc., Fleet
National Bank, as administrative agent, Fleet National Bank,
as issuing lender, General Electric Capital Corporation, as
syndication agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as document agent, and the several lenders party
thereto (previously filed as Exhibit 4(d) to the Registrant's
Form 10-K for the year ended December 31, 2000 and
incorporated herein by this reference)
4(e)* Revolving Credit Note dated as of February 7, 2000 made by
Regent Broadcasting, Inc. in favor of Fleet National Bank in
the original principal amount of $25 million (previously filed
as Exhibit 4(f) to the Registrant's Form 8-K filed February
10, 2000 and incorporated herein by this reference) (See Note
1 below)
4(f)* Subsidiary Guaranty Agreement dated as of January 27, 2000
among Regent Broadcasting, Inc., Regent Communications, Inc.
and each of their subsidiaries and Fleet National Bank, as
collateral agent (previously filed as Exhibit 4(c) to the
Registrant's Form 8-K filed February 10, 2000 and incorporated
herein by this reference)
4(g)* Pledge Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc. and each of
their subsidiaries and Fleet National Bank, as collateral
agent (previously filed as Exhibit 4(d) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
4(h)* Security Agreement dated as of January 27, 2000 among Regent
Broadcasting, Inc., Regent Communications, Inc. and each of
their subsidiaries and Fleet National Bank, as collateral
agent (previously filed as Exhibit 4(b) to the Registrant's
Form 8-K filed February 10, 2000 and incorporated herein by
this reference)
- ----------------
* Incorporated by reference.
E-3
NOTES:
1. Seven substantially identical notes were made by Regent Broadcasting,
Inc. as follows:
ORIGINAL HOLDER PRINCIPAL AMOUNT
--------------- ----------------
General Electric Capital Corporation $22,000,000
Dresdner Bank AG, New York and Cayman Island Branches $22,000,000
Mercantile Bank National Association $16,000,000
U.S. Bank National Association $10,000,000
Summit Bank $10,000,000
Michigan National Bank $10,000,000
The CIT Group Equipment Financing, Inc. $10,000,000
E-4