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 June 30, 2002 | ||
| o | 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 1-12187
| Delaware (State or other jurisdiction of incorporation or organization) |
58-1620022 (I.R.S. Employer Identification No.) |
|
| 6205 Peachtree Dunwoody Road, Atlanta, Georgia (Address of principal executive offices) |
30328 (Zip Code) |
Registrant’s telephone number, including area code: (678) 645-0000
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 o
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
There were 41,565,063 shares of Class A Common Stock outstanding as of July 31, 2002.
There were 58,733,016 shares of Class B Common Stock outstanding as of July 31, 2002.
COX RADIO, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2002
TABLE OF CONTENTS
| Page | ||||||||
Part I – Financial Information |
||||||||
Item 1 |
Financial Statements | 3 | ||||||
Item 2 |
Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 | ||||||
Item 3 |
Quantitative and Qualitative Disclosures about Market Risk | 19 | ||||||
Part II –
Other Information |
||||||||
Item 1 |
Legal Proceedings | 20 | ||||||
Item 4 |
Submission of Matters to a Vote of Security Holders | 20 | ||||||
Item 6 |
Exhibits and Reports on Form 8-K | 21 | ||||||
Signatures |
22 | |||||||
2
PART 1 — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Cox Radio, Inc.
Consolidated Balance Sheets
(Unaudited)
| June 30, | December 31, | ||||||||||
| 2002 | 2001 | ||||||||||
| (Dollars in thousands) | |||||||||||
Assets |
|||||||||||
Current Assets: |
|||||||||||
Cash and cash equivalents |
$ | 8,633 | $ | 7,961 | |||||||
Accounts and notes receivable, less allowance for doubtful accounts
of $3,819 and $4,536, respectively |
90,240 | 81,185 | |||||||||
Prepaid expenses and other current assets |
11,586 | 9,245 | |||||||||
Total current assets |
110,459 | 98,391 | |||||||||
Plant and equipment, net |
79,553 | 80,106 | |||||||||
Intangible assets, net |
2,071,527 | 2,095,671 | |||||||||
Amounts due from Cox Enterprises, Inc. |
— | 1,084 | |||||||||
Other assets |
11,664 | 11,435 | |||||||||
Total assets |
$ | 2,273,203 | $ | 2,286,687 | |||||||
Liabilities and Shareholders’ Equity |
|||||||||||
Current Liabilities: |
|||||||||||
Accounts payable and accrued expenses |
$ | 26,245 | $ | 23,124 | |||||||
Accrued salaries and wages |
5,686 | 5,921 | |||||||||
Accrued interest |
8,070 | 8,092 | |||||||||
Income taxes payable |
10,982 | 8,012 | |||||||||
Other current liabilities |
3,676 | 3,876 | |||||||||
Total current liabilities |
54,659 | 49,025 | |||||||||
Notes payable |
659,526 | 704,450 | |||||||||
Deferred income taxes |
467,476 | 468,022 | |||||||||
Other long term liabilities |
4,093 | 3,937 | |||||||||
Amounts due to Cox Enterprises, Inc. |
10,191 | — | |||||||||
Total liabilities |
1,195,945 | 1,225,434 | |||||||||
Commitments and contingencies (Note 3) |
|||||||||||
Shareholders’ Equity: |
|||||||||||
Preferred stock, $0.33 par value: 15,000,000 shares authorized;
None outstanding |
— | — | |||||||||
Class A common stock, $0.33 par value: 210,000,000 shares
authorized; 41,564,409 and 41,270,189 shares outstanding at
June 30, 2002 and December 31, 2001, respectively |
13,717 | 13,619 | |||||||||
Class B common stock, $0.33 par value: 135,000,000 shares
authorized; 58,733,016 shares outstanding at June 30, 2002
and December 31, 2001 |
19,382 | 19,382 | |||||||||
Additional paid-in capital |
623,980 | 618,803 | |||||||||
Accumulated other comprehensive loss, net of tax |
(2,165 | ) | (2,059 | ) | |||||||
Retained earnings |
424,027 | 413,163 | |||||||||
| 1,078,941 | 1,062,908 | ||||||||||
Less: Class A common stock held in treasury (121,194 and 120,041
shares at cost at June 30, 2002 and December 31, 2001,
respectively) |
(1,683 | ) | (1,655 | ) | |||||||
Total shareholders’ equity |
1,077,258 | 1,061,253 | |||||||||
Total liabilities and shareholders’ equity |
$ | 2,273,203 | $ | 2,286,687 | |||||||
See notes to unaudited consolidated financial statements.
3
Cox Radio, Inc.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||||
Net revenues: |
||||||||||||||||||
Local |
$ | 84,396 | $ | 80,522 | $ | 147,295 | $ | 143,599 | ||||||||||
National |
24,109 | 21,844 | 42,118 | 40,137 | ||||||||||||||
Other |
5,405 | 5,505 | 10,527 | 10,660 | ||||||||||||||
Total revenues |
113,910 | 107,871 | 199,940 | 194,396 | ||||||||||||||
Costs and expenses: |
||||||||||||||||||
Operating |
25,092 | 24,127 | 44,958 | 44,361 | ||||||||||||||
Selling, general and administrative |
42,630 | 40,206 | 78,745 | 76,668 | ||||||||||||||
Corporate general and administrative |
4,365 | 3,555 | 8,466 | 7,199 | ||||||||||||||
Depreciation |
3,028 | 2,657 | 6,030 | 5,733 | ||||||||||||||
Amortization |
29 | 14,517 | 59 | 29,328 | ||||||||||||||
Loss on sales of assets |
18 | 170 | 375 | 296 | ||||||||||||||
(Gain) loss on sales of radio stations |
(49 | ) | 72 | 102 | (2,346 | ) | ||||||||||||
Operating income |
38,797 | 22,567 | 61,205 | 33,157 | ||||||||||||||
Other income (expense): |
||||||||||||||||||
Interest income |
1 | 147 | 9 | 1,217 | ||||||||||||||
Interest expense |
(10,049 | ) | (12,471 | ) | (20,238 | ) | (26,560 | ) | ||||||||||
Other — net |
(119 | ) | (122 | ) | (237 | ) | (243 | ) | ||||||||||
Income before income taxes and cumulative effect of
accounting change |
28,630 | 10,121 | 40,739 | 7,571 | ||||||||||||||
Current income tax expense |
5,000 | 4,421 | 7,053 | 4,203 | ||||||||||||||
Deferred income tax expense (benefit) |
6,152 | 29 | 8,888 | (946 | ) | |||||||||||||
Total income tax expense |
11,152 | 4,450 | 15,941 | 3,257 | ||||||||||||||
Income before cumulative effect of accounting change |
17,478 | 5,671 | 24,798 | 4,314 | ||||||||||||||
Cumulative effect of accounting change, net of tax |
— | — | (13,934 | ) | (787 | ) | ||||||||||||
Net income |
$ | 17,478 | $ | 5,671 | $ | 10,864 | $ | 3,527 | ||||||||||
Basic net income per share |
||||||||||||||||||
Income before cumulative effect of accounting change |
$ | 0.17 | $ | 0.06 | $ | 0.25 | $ | 0.04 | ||||||||||
Cumulative effect of accounting change |
— | — | (0.14 | ) | (0.01 | ) | ||||||||||||
Net income per common share |
$ | 0.17 | $ | 0.06 | $ | 0.11 | $ | 0.03 | ||||||||||
Diluted net income per share |
||||||||||||||||||
Income before cumulative effect of accounting change |
$ | 0.17 | $ | 0.06 | $ | 0.25 | $ | 0.04 | ||||||||||
Cumulative effect of accounting change |
— | — | (0.14 | ) | (0.01 | ) | ||||||||||||
Net income per common share |
$ | 0.17 | $ | 0.06 | $ | 0.11 | $ | 0.03 | ||||||||||
Weighted average basic common shares outstanding |
100,235 | 99,651 | 100,137 | 99,570 | ||||||||||||||
Weighted average diluted common shares outstanding |
100,862 | 100,206 | 100,680 | 100,113 | ||||||||||||||
See notes to unaudited consolidated financial statements.
4
Cox Radio, Inc.
Consolidated Statement of Shareholders’ Equity
(Unaudited)
| Class A | Class B | Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Common Stock | Common Stock | Additional | Other | Treasury Stock | ||||||||||||||||||||||||||||||||||||||
| Paid-in | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Earnings | Shares | Amount | Total | |||||||||||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||
Balance at
December 31, 2001 |
41,270 | $ | 13,619 | 58,733 | $ | 19,382 | $ | 618,803 | $ | (2,059 | ) | $ | 413,163 | 120 | $ | (1,655 | ) | $ | 1,061,253 | |||||||||||||||||||||||
Comprehensive
income: |
||||||||||||||||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | 10,864 | — | — | 10,864 | ||||||||||||||||||||||||||||||||
Unrealized loss
on interest rate
swaps |
— | — | — | — | — | (192 | ) | — | — | — | (192 | ) | ||||||||||||||||||||||||||||||
Reclassification
to earnings of
transition
adjustments |
— | — | — | — | — | 86 | — | — | — | 86 | ||||||||||||||||||||||||||||||||
Comprehensive
income |
— | — | — | — | — | — | — | — | — | 10,758 | ||||||||||||||||||||||||||||||||
Repurchase of
Class A common
stock |
— | — | — | — | — | — | — | 1 | (28 | ) | (28 | ) | ||||||||||||||||||||||||||||||
Issuance of Class
A common stock
related to
incentive plans
including tax
benefit |
294 | 98 | — | — | 5,177 | — | — | — | — | 5,275 | ||||||||||||||||||||||||||||||||