| EMMIS COMMUNICATIONS CORPORATION | EMMIS OPERATING COMPANY | ||
| (Exact name of registrant as specified in its charter)
|
(Exact name of registrant as specified in its charter) | ||
| INDIANA | INDIANA | ||
| (State of incorporation or organization) | (State of incorporation or organization) | ||
| 0-23264 | 333-62172-13 | ||
| (Commission file number) | (Commission file number) | ||
| 35-1542018 | 35-2141064 | ||
| (I.R.S. Employer Identification No.) | (I.R.S. Employer Identification No.) | ||
| ONE EMMIS PLAZA | ONE EMMIS PLAZA | ||
| 40 MONUMENT CIRCLE | 40 MONUMENT CIRCLE | ||
| SUITE 700 | SUITE 700 | ||
| INDIANAPOLIS, INDIANA 46204 | INDIANAPOLIS, INDIANA 46204 | ||
| (Address of principal executive offices) | (Address of principal executive offices) |
||
| (317) 266-0100 | (317) 266-0100 | ||
| (Registrant's Telephone Number, Including Area Code) | (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 | ý | No | o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Act).
| Yes | ý | No | o |
The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of July 7, 2003, was:
| 49,336,383 | Shares of Class A Common Stock, $.01 Par Value | |
| 5,030,002 | Shares of Class B Common Stock, $.01 Par Value | |
| 0 | Shares of Class C Common Stock, $.01 Par Value |
Emmis Operating Company had 1,000 shares of common stock outstanding as of July 7, 2003 and all of these shares are owned by Emmis Communications Corporation.
The Board of Directors
and ShareholdersEmmis
Communications Corporation and Subsidiaries
We have reviewed the accompanying condensed consolidated balance sheet of Emmis Communications Corporation (an Indiana Corporation) and Subsidiaries as of May 31, 2003, and the related condensed consolidated statements of operations and cash flows for the three-month periods ended May 31, 2003 and 2002. We have also reviewed the accompanying condensed consolidated balance sheet of Emmis Operating Company (an Indiana Corporation and wholly owned subsidiary of Emmis Communications Corporation) and Subsidiaries as of May 31, 2003, and the related condensed consolidated statements of operations and cash flows for the three-month periods ended May 31, 2003 and 2002. These financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Emmis Communications Corporation and Subsidiaries as of February 28, 2003, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the year then ended. We have also audited, in accordance with auditing standards generally accepted in the United States, the accompanying consolidated balance sheet of Emmis Operating Company and Subsidiaries as of February 28, 2003, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the year then ended. In our report dated April 11, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets of Emmis Communications Corporation and Subsidiaries and Emmis Operating Company and Subsidiaries as of February 28, 2003, are fairly stated, in all material respects, in relation to the consolidated balance sheets from which they were derived.
/s/ ERNST & YOUNG LLP |
| Indianapolis, Indiana June 30, 2003 |
EMMIS COMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In
thousands, except per share data)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| May 31, | ||||||||
| 2002 |
2003 | |||||||
| GROSS REVENUES | $ | 159,498 | $ | 164,385 | ||||
| LESS: AGENCY COMMISSIONS | 22,692 | 22,024 | ||||||
| NET REVENUES | 136,806 | 142,361 | ||||||
| OPERATING EXPENSES: | ||||||||
| Station operating expenses, excluding noncash compensation | 86,330 | 89,658 | ||||||
| Corporate expenses, excluding noncash compensation | 5,133 | 5,763 | ||||||
| Noncash compensation | 5,355 | 7,063 | ||||||
| Depreciation and amortization | 10,759 | 11,352 | ||||||
| Total operating expenses | 107,577 | 113,836 | ||||||
| OPERATING INCOME | 29,229 | 28,525 | ||||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest expense | (29,947 | ) | (22,788 | ) | ||||
| Loss from unconsolidated affiliates | (1,066 | ) | (164 | ) | ||||
| Loss on debt extinguishment | (3,600 | ) | -- | |||||
| Gain on sale of assets | 8,933 | -- | ||||||
| Other income (expense), net | 647 | (12 | ) | |||||
| Total other income (expense) | (25,033 | ) | (22,964 | ) | ||||
| INCOME BEFORE INCOME TAXES AND | ||||||||
| ACCOUNTING CHANGE | 4,196 | 5,561 | ||||||
| PROVISION FOR INCOME TAXES | 2,370 | 2,959 | ||||||
| INCOME BEFORE ACCOUNTING CHANGE | 1,826 | 2,602 | ||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE, | ||||||||
| NET OF TAXES OF $102,600 | (167,400 | ) | -- | |||||
| NET INCOME (LOSS) | (165,574 | ) | 2,602 | |||||
| PREFERRED STOCK DIVIDENDS | 2,246 | 2,246 | ||||||
| NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (167,820 | ) | $ | 356 | |||
See independent accountants’ review report and accompanying notes.
In the three months ended May 31, 2002 and 2003, $4.8 million and $5.7 million respectively, of our noncash compensation was attributable to our stations, while $0.6 million and $1.4 million was attributable to corporate.
EMMIS COMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)
(Unaudited)
(In
thousands, except per share data)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| May 31, | ||||||||
| 2002 |
2003 | |||||||
| Basic net income (loss) available to common shareholders: | ||||||||
| Before accounting change | $ | (0 | .01) | $ | 0 | .01 | ||
| Cumulative effect of accounting change, net of tax | (3 | .27) | -- | |||||
| Net income (loss) available to common shareholders | $ | (3 | .28) | $ | 0 | .01 | ||
| Basic weighted average common shares outstanding | 51,211 | 54,078 | ||||||
| Diluted net income (loss) available to common shareholders: | ||||||||
| Before accounting change | $ | (0 | .01) | $ | 0 | .01 | ||
| Cumulative effect of accounting change, net of tax | (3 | .27) | -- | |||||
| Net income (loss) available to common shareholders | $ | (3 | .28) | $ | 0 | .01 | ||
| Diluted weighted average common shares outstanding | 51,211 | 54,282 | ||||||
See independent accountants’ review report and accompanying notes.
EMMIS COMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| February 28, | May 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2003 | 2003 | |||||||
| (Note 1) |
(Unaudited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 16,079 | $ | 9,407 | ||||
| Accounts receivable, net | 102,345 | 109,091 | ||||||
| Prepaid expenses | 15,596 | 21,057 | ||||||
| Other | 25,661 | 22,408 | ||||||
| Total current assets | 159,681 | 161,963 | ||||||
| PROPERTY AND EQUIPMENT, NET | 223,430 | 219,025 | ||||||
| INTANGIBLE ASSETS (Note 2): | ||||||||
| Indefinite-lived intangibles | 1,508,886 | 1,516,863 | ||||||
| Goodwill | 138,986 | 139,131 | ||||||
| Other intangibles, net | 28,861 | 28,238 | ||||||
| Total intangible assets | 1,676,733 | 1,684,232 | ||||||
| OTHER ASSETS, NET | 56,569 | 55,761 | ||||||
| Total assets | $ | 2,116,413 | $ | 2,120,981 | ||||
See independent accountants’ review report and accompanying notes.
EMMIS COMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except per share data)
| February 28, | May 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2003 | 2003 | |||||||
| (Note 1) |
(Unaudited) | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts Payable | $ | 39,526 | $ | 37,264 | ||||
| Current maturities of long-term debt | 14,912 | 23,948 | ||||||
| Current portion of TV program rights payable | 27,424 | 24,579 | ||||||
| Accrued salaries and commissions | 14,247 | 6,768 | ||||||
| Accrued interest | 11,641 | 5,191 | ||||||
| Deferred revenue | 15,805 | 18,351 | ||||||
| Other | 8,102 | 8,537 | ||||||
| Total current liabilities | 131,657 | 124,638 | ||||||
| LONG-TERM DEBT, NET OF CURRENT MATURITIES | 1,194,789 | 1,202,763 | ||||||
| OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES | 13,087 | 8,700 | ||||||
| TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION | 32,044 | 28,512 | ||||||
| OTHER NONCURRENT LIABILITIES | 17,786 | 15,274 | ||||||
| DEFERRED INCOME TAXES | 22,345 | 25,661 | ||||||
| Total liabilities | 1,411,708 | 1,405,548 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Series A cumulative convertible preferred stock, $0.01 par value; | ||||||||
| $50.00 liquidation value; authorized 10,000,000 shares; issued and | ||||||||
| outstanding 2,875,000 shares at February 28, 2003 and May 31, 2003 | 29 | 29 | ||||||
| Class A common stock, $.01 par value; authorized 170,000,000 shares; | ||||||||
| issued and outstanding 48,874,017 shares at February 28, 2003 | ||||||||
| and 49,227,117 shares at May 31, 2003 | 489 | 492 | ||||||
| Class B common stock, $.01 par value; authorized 30,000,000 shares; | ||||||||
| issued and outstanding 5,011,348 shares at February 28, 2003 | ||||||||
| and 5,030,002 shares at May 31, 2003 | 50 | 50 | ||||||
| Additional paid-in capital | 990,770 | 999,667 | ||||||
| Accumulated deficit | (269,274 | ) | (268,918 | ) | ||||
| Accumulated other comprehensive loss | (17,359 | ) | (15,887 | ) | ||||
| Total shareholders' equity | 704,705 | 715,433 | ||||||
| Total liabilities and shareholders' equity | $ | 2,116,413 | $ | 2,120,981 | ||||
See independent accountants’ review report and accompanying notes.
EMMIS COMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
| Three Months Ended May 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2002 |
2003 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net income (loss) | $ | (165,574 | ) | $ | 2,602 | ||||
| Adjustments to reconcile net income (loss) to net cash | |||||||||
| provided by operating activities - | |||||||||
| Cumulative effect of accounting change | 167,400 | -- | |||||||
| Depreciation and amortization | 17,158 | 18,103 | |||||||
| Accretion of interest on senior discount notes, | |||||||||
| including amortization of related debt costs | 7,507 | 6,536 | |||||||
| Provision for bad debts | 990 | 920 | |||||||
| Provision for deferred income taxes | 2,370 | 2,959 | |||||||
| Noncash compensation | 5,355 | 7,063 | |||||||
| Loss on debt extinguishment | 3,600 | -- | |||||||
| Gain on sale of assets | (8,933 | ) | -- | ||||||
| Deposits and other | 939 | 54 | |||||||
| Changes in assets and liabilities - | |||||||||
| Accounts receivable | (7,183 | ) | (7,512 | ) | |||||
| Prepaid expenses and other current assets | 873 | (2,032 | ) | ||||||
| Other assets | (731 | ) | (3,157 | ) | |||||
| Accounts payable and accrued liabilities | |||||||||