UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [x] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2003
| [ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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 30328
(Address of principal executive offices and zip code)
(678) 645-0000
(Registrant’s telephone number, including area code)
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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). 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.
Class A common stock, par value
of $0.33 - 41,603,164 shares outstanding as of April 30, 2003.
Class B common stock, par value of $0.33 - 58,733,016 shares outstanding as of April 30, 2003.
COX RADIO, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2003
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 | 15 | ||||||
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 20 | ||||||
Item 4. |
Controls and Procedures | 20 | ||||||
| Part II - Other Information | ||||||||
Item 1. |
Legal Proceedings | 21 | ||||||
Item 6. |
Exhibits and Reports on Form 8-K | 21 | ||||||
Signatures |
23 | |||||||
| Certification of Chief Executive Officer Pursuant To Rule 13a-14 of the Securities Exchange Act of 1934 | 24 | |||||||
| Certification of Chief Financial Officer Pursuant To Rule 13a-14 of the Securities Exchange Act of 1934 | 25 | |||||||
Preliminary Note
This Quarterly Report on Form10-Q is for the three months ended March 31, 2003. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The SEC allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. In this Quarterly Report, “Cox Radio,” “we,” “us” and “our” refer to Cox Radio, Inc. and its subsidiaries.
2
Part I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
COX RADIO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2003 | December 31, 2002 | ||||||||||
| (Amounts in thousands, | |||||||||||
| except share data) | |||||||||||
ASSETS |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ | 5,644 | $ | 4,681 | |||||||
Accounts and notes receivable, less allowance for doubtful
accounts of $4,839 and $4,791, respectively |
72,277 | 86,876 | |||||||||
Prepaid expenses and other current assets |
11,708 | 7,567 | |||||||||
Amounts due from Cox Enterprises |
— | 3,059 | |||||||||
Total current assets |
89,629 | 102,183 | |||||||||
Property and equipment, net |
79,096 | 79,304 | |||||||||
FCC licenses and other intangible assets, net |
2,028,886 | 2,023,525 | |||||||||
Goodwill |
46,514 | 46,514 | |||||||||
Other assets |
16,991 | 20,186 | |||||||||
Total assets |
$ | 2,261,116 | $ | 2,271,712 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||
Current liabilities: |
|||||||||||
Accounts payable and accrued expenses |
$ | 25,358 | $ | 27,821 | |||||||
Accrued salaries and wages |
4,746 | 6,449 | |||||||||
Accrued interest |
6,948 | 7,966 | |||||||||
Income taxes payable |
9,154 | 12,109 | |||||||||
Amounts due to Cox Enterprises |
8,549 | — | |||||||||
Other current liabilities |
3,107 | 2,083 | |||||||||
Total current liabilities |
57,862 | 56,428 | |||||||||
Notes payable |
589,640 | 614,602 | |||||||||
Deferred income taxes |
485,311 | 482,286 | |||||||||
Other long term liabilities |
6,682 | 6,907 | |||||||||
Total liabilities |
1,139,495 | 1,160,223 | |||||||||
Commitments and contingencies (Note 5) |
|||||||||||
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; 41,603,164 and 41,571,789 shares issued
and 41,474,893 and 41,450,595 shares outstanding at
March 31, 2003 and December 31, 2002, respectively |
13,729 | 13,719 | |||||||||
Class B common stock, $0.33 par value; 135,000,000 shares
authorized; 58,733,016 shares issued and outstanding at
March 31, 2003 and December 31, 2002 |
19,382 | 19,382 | |||||||||
Additional paid-in capital |
624,792 | 624,049 | |||||||||
Accumulated other comprehensive loss, net of tax |
(2,917 | ) | (3,082 | ) | |||||||
Retained earnings |
468,481 | 459,104 | |||||||||
| 1,123,467 | 1,113,172 | ||||||||||
Less: Class A common stock held in treasury (128,271 and
121,194 shares at cost, at March 31, 2003 and December
31, 2002, respectively) |
(1,846 | ) | (1,683 | ) | |||||||
Total shareholders’ equity |
1,121,621 | 1,111,489 | |||||||||
Total liabilities and shareholders’ equity |
$ | 2,261,116 | $ | 2,271,712 | |||||||
See notes to unaudited consolidated financial statements.
3
COX RADIO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2003 | 2002 | |||||||||
| (Amounts in thousands, | ||||||||||
| except per share data) | ||||||||||
Net revenues: |
||||||||||
Local |
$ | 66,939 | $ | 62,899 | ||||||
National |
19,258 | 18,009 | ||||||||
Other |
5,372 | 5,122 | ||||||||
Total net revenues |
91,569 | 86,030 | ||||||||
Operating expenses: |
||||||||||
Cost of services (exclusive of depreciation shown separately below) |
21,220 | 19,866 | ||||||||
Selling, general and administrative |
38,210 | 36,115 | ||||||||
Corporate general and administrative |
4,235 | 4,101 | ||||||||
Depreciation |
2,944 | 3,002 | ||||||||
Amortization |
30 | 30 | ||||||||
(Gain) loss on sales of assets |
(1 | ) | 357 | |||||||
Loss on sales of radio stations |
— | 151 | ||||||||
Operating income |
24,931 | 22,408 | ||||||||
Other income (expense): |
||||||||||
Interest income |
1 | 8 | ||||||||
Interest expense |
(9,176 | ) | (10,189 | ) | ||||||
Other - net |
(124 | ) | (118 | ) | ||||||
Income before income taxes and cumulative effect of accounting change |
15,632 | 12,109 | ||||||||
Current income tax expense |
3,344 | 2,053 | ||||||||
Deferred income tax expense |
2,911 | 2,736 | ||||||||
Total income tax expense |
6,255 | 4,789 | ||||||||
Income before cumulative effect of accounting change |
9,377 | 7,320 | ||||||||
Cumulative effect of accounting change, net of tax |
— | (13,934 | ) | |||||||
Net income (loss) |
$ | 9,377 | $ | (6,614 | ) | |||||
Net income (loss) per share – basic |
||||||||||
Income before cumulative effect of accounting change |
$ | 0.09 | $ | 0.07 | ||||||
Cumulative effect of accounting change |
— | (0.14 | ) | |||||||
Net income (loss) per common share |
$ | 0.09 | $ | (0.07 | ) | |||||
Net income (loss) per share – diluted |
||||||||||
Income before cumulative effect of accounting change |
$ | 0.09 | $ | 0.07 | ||||||
Cumulative effect of accounting change |
— | (0.14 | ) | |||||||
Net income (loss) per common share |
$ | 0.09 | $ | (0.07 | ) | |||||
Weighted average common shares outstanding – basic |
100,200 | 100,037 | ||||||||
Weighted average common shares outstanding – diluted |
100,580 | 100,537 | ||||||||
See notes to unaudited consolidated financial statements.
4
COX RADIO, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)
| Class A | Class B | ||||||||||||||||||||
| Common Stock | Common Stock | Additional | |||||||||||||||||||
| Paid-in | |||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | |||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
Balance at
December 31, 2002 |
41,572 | $ | 13,719 | 58,733 | $ | 19,382 | $ | 624,049 | |||||||||||||
Comprehensive income: |
|||||||||||||||||||||
Net income |
— | — | — | — | — | ||||||||||||||||
Unrealized gain on interest
rate swaps |
— | — | — | — | — | ||||||||||||||||
Reclassification to earnings
of transition adjustments |
— | — | — | — | — | ||||||||||||||||
Comprehensive income |
|||||||||||||||||||||
Repurchase of Class A
common stock |
— | — | — | — | — | ||||||||||||||||
Issuance of Class A common
stock related to incentive
plans including tax
benefit of $299 |
31 | 10 | — | — | 743 | ||||||||||||||||
Balance at
March 31, 2003 |
41,603 | $ | 13,729 | 58,733 | $ | 19,382 | $ | 624,792 | |||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| Accumulated | |||||||||||||||||||||
| Other | Treasury Stock | ||||||||||||||||||||
| Comprehensive | Retained | ||||||||||||||||||||
| Loss | Earnings | Shares | Amount | Total | |||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
Balance at
December 31, 2002 |
$ | (3,082 | ) | $ | 459,104 | 121 | $ | (1,683 | ) | $ | 1,111,489 | ||||||||||
Comprehensive income: |
|||||||||||||||||||||
Net income |
— | 9,377 | — | — | 9,377 | ||||||||||||||||
Unrealized gain on interest
rate swaps |
136 | — | — | — | 136 | ||||||||||||||||
Reclassification to earnings
of transition adjustments |
29 | — | — | — | 29 | ||||||||||||||||
Comprehensive income |
9,542 | ||||||||||||||||||||
Repurchase of Class A
common stock |
— | — | 7 | (163 | ) | (163 | ) | ||||||||||||||
Issuance of Class A common
stock related to incentive
plans including tax
benefit of $299 |
— | — | — | — | 753 | ||||||||||||||||
Balance at
March 31, 2003 |
$ | (2,917 | ) | $ | 468,481 | 128 | $ | (1,846 | ) | $ | 1,121,621 | ||||||||||
See notes to unaudited consolidated financial statements.
5
COX RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2003 | 2002 | |||||||||||
| (Amounts in thousands) | ||||||||||||
Cash flows from operating activities: |
||||||||||||
Net income (loss) |
$ | 9,377 | $ | (6,614 | ) | |||||||
Items not requiring cash: |
||||||||||||
Depreciation |
2,944 | 3,002 | ||||||||||
Amortization |
30 | 30 | ||||||||||
Deferred income taxes |
2,911 | 2,736 | ||||||||||
Tax benefit from exercise of stock options |
299 | 966 | ||||||||||
(Gain) loss on sales of assets |
(1 | ) | 357 | |||||||||
Loss on sales of radio stations |
— | 151 | ||||||||||
Cumulative effect of accounting change, net of tax |
— | 13,934 | ||||||||||
Changes in assets and liabilities (net of effects of acquisitions and dispositions): |
||||||||||||
Decrease in accounts receivable |
14,599 | 10,408 | ||||||||||
Decrease in accounts payable and accrued expenses |
(2,857 | ) | (92 | ) | ||||||||
Decrease in accrued salaries and wages |
(1,703 | ) | (268 | ) | ||||||||
Decrease in accrued interest |
(1,018 | ) | (872 | ) | ||||||||
Decrease in income taxes payable |
(2,955 | ) | (414 | ) | ||||||||
Other, net |
(2,848 | ) | (2,217 | ) | ||||||||
Net cash provided by operating activities |
18,778 | 21,107 | ||||||||||
Cash flows from investing activities: |
||||||||||||
Capital expenditures |
(2,726 | ) | (3,256 | ) | ||||||||
Acquisitions and related expenses, net of cash acquired |
(63 | ) | (312 | ) | ||||||||
Decrease in other long-term assets |
133 | 3,934 | ||||||||||
Proceeds from sales of assets |
1 | 1 | ||||||||||
Investment in signal upgrades |
(2,530 | ) | (3,305 | ) | ||||||||
Proceeds from sales of radio stations |
— | 530 | ||||||||||
Net cash used in investing activities |
(5,185 | ) | ||||||||||