UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 2004
| ¨ | 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: 333-107783
CBD Media LLC
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 02-0553288 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 312 Plum Street, Suite 900 Cincinnati, OH |
45202 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(513) 397-6794
(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 ¨ No x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
| Page | ||||
| Part I | FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 3 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 | ||
| Item 4. | Controls and Procedures | 16 | ||
| Part II | OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 16 | ||
| Item 6. | Exhibits and Reports on Form 8-K | 17 | ||
| Signatures | 18 | |||
| Exhibits | ||||
2
FINANCIAL INFORMATION
CBD MEDIA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2004, DECEMBER 31, 2003 AND SEPTEMBER 30, 2003
(Dollars in Thousands)
| September 30, 2004 (Unaudited) |
December 31, 2003 |
September 30, 2003 (Unaudited) | |||||||
| ASSETS |
|||||||||
| CURRENT ASSETS: |
|||||||||
| Cash and cash equivalents |
$ | 14,062 | $ | 22,466 | $ | 16,696 | |||
| Accounts receivable (net of allowance of $4,565, $4,875 and $3,608 at September 30, 2004, December 31, 2003 and September 30, 2003, respectively) |
6,481 | 7,020 | 7,305 | ||||||
| Deferred directory costs |
14,767 | 10,922 | 14,615 | ||||||
| Prepaid expenses and other current assets |
661 | 547 | 529 | ||||||
| Related party receivable |
922 | 1,000 | 22 | ||||||
| Total current assets |
36,893 | 41,955 | 39,167 | ||||||
| PROPERTY AND EQUIPMENT (NET) |
92 | 75 | 86 | ||||||
| DEBT ISSUANCE COSTS (net of accumulated amortization of $1,908, $806 and $480 at September 30, 2004, December 31, 2003 and September 30, 2003, respectively) |
8,742 | 9,244 | 9,928 | ||||||
| GOODWILL |
28,299 | 28,299 | 28,299 | ||||||
| INTANGIBLE ASSETS (NET) |
241,595 | 260,921 | 267,548 | ||||||
| TOTAL ASSETS |
$ | 315,621 | $ | 340,494 | $ | 345,028 | |||
| LIABILITIES AND MEMBER’S CAPITAL |
|||||||||
| CURRENT LIABILITIES: |
|||||||||
| Current portion of long-term debt |
$ | 1,000 | $ | 600 | |||||
| Accounts payable |
$ | 994 | 1,045 | 913 | |||||
| Accrued liabilities |
8,654 | 6,878 | 10,783 | ||||||
| Deferred revenue |
6,712 | 5,472 | 6,049 | ||||||
| Other current liabilities |
635 | 659 | 659 | ||||||
| Related party payable |
271 | 190 | 229 | ||||||
| Total current liabilities |
17,266 | 15,244 | 19,233 | ||||||
| LONG-TERM DEBT (NET OF CURRENT PORTION) |
280,000 | 307,600 | 308,000 | ||||||
| OTHER LONG-TERM LIABILITIES (NET OF CURRENT PORTION) |
1,729 | 2,093 | 2,212 | ||||||
| MEMBER’S CAPITAL: |
|||||||||
| Contributed capital |
10,950 | 11,673 | 11,673 | ||||||
| Retained earnings |
5,676 | 3,884 | 3,910 | ||||||
| Total member’s capital |
16,626 | 15,557 | 15,583 | ||||||
| TOTAL LIABILITIES AND MEMBER’S CAPITAL |
$ | 315,621 | $ | 340,494 | $ | 345,028 | |||
See notes to condensed consolidated financial statements.
3
CBD MEDIA LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
AND THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(Dollars in Thousands)
| For the Three Months Ended Sept 30, 2004 |
For the Three Months Ended Sept 30, 2003 |
For the Nine Months Ended Sept 30, 2004 |
For the Nine Months Ended Sept 30, 2003 |
|||||||||||||
| NET REVENUE |
$ | 21,746 | $ | 21,629 | $ | 66,354 | $ | 64,646 | ||||||||
| COST OF REVENUE |
8,123 | 8,546 | 25,069 | 24,303 | ||||||||||||
| AMORTIZATION AND DEPRECIATION |
6,449 | 6,631 | 19,348 | 19,893 | ||||||||||||
| GENERAL AND ADMINISTRATIVE |
2,176 | 1,687 | 5,405 | 2,811 | ||||||||||||
| OPERATING INCOME |
4,998 | 4,765 | 16,532 | 17,639 | ||||||||||||
| OTHER EXPENSES: |
||||||||||||||||
| Interest expense |
4,736 | 5,469 | 14,789 | 20,538 | ||||||||||||
| Interest income |
(13 | ) | (30 | ) | (49 | ) | (179 | ) | ||||||||
| Total other expenses |
4,723 | 5,439 | 14,740 | 20,359 | ||||||||||||
| NET INCOME (LOSS) |
275 | (674 | ) | 1,792 | (2,720 | ) | ||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS): |
||||||||||||||||
| Loss on interest rate swap |
(20 | ) | ||||||||||||||
| Reclassification adjustment for loss on termination of interest rate swap |
1,099 | |||||||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) |
$ | 275 | $ | (674 | ) | $ | 1,792 | $ | (1,641 | ) | ||||||
See notes to condensed consolidated financial statements.
4
CBD MEDIA LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBER’S CAPITAL (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(Dollars in Thousands)
| Contributed Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total Member’s Capital |
|||||||||||||
| BALANCE AT DECEMBER 31, 2002 |
$ | 138,963 | $ | 6,630 | $ | (1,079 | ) | $ | 144,514 | |||||||
| NET LOSS |
(2,720 | ) | (2,720 | ) | ||||||||||||
| MEMBER CONTRIBUTIONS |
1,000 | 1,000 | ||||||||||||||
| DISTRIBUTION TO MEMBER |
(128,290 | ) | (128,290 | ) | ||||||||||||
| OTHER COMPREHENSIVE INCOME - INTEREST RATE SWAP |
1,079 | 1,079 | ||||||||||||||
| BALANCE AT SEPTEMBER 30, 2003 |
$ | 11,673 | $ | 3,910 | $ | — | $ | 15,583 | ||||||||
| BALANCE AT DECEMBER 31, 2003 |
$ | 11,673 | $ | 3,884 | $ | $ | 15,557 | |||||||||
| NET INCOME |
1,792 | 1,792 | ||||||||||||||
| DISTRIBUTION TO MEMBER |
(723 | ) | (723 | ) | ||||||||||||
| BALANCE AT SEPTEMBER 30, 2004 |
$ | 10,950 | $ | 5,676 | $ | — | $ | 16,626 | ||||||||
See notes to condensed consolidated financial statements.
5
CBD MEDIA LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(Dollars in Thousands)
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income (loss) |
$ | 1,792 | $ | (2,720 | ) | |||
| Adjustments to reconcile net income (loss) to cash flows provided by operating activities: |
||||||||
| Depreciation and amortization |
19,348 | 19,893 | ||||||
| Amortization of debt issuance costs (including write-off) |
1,102 | 5,817 | ||||||
| Changes in certain working capital accounts |
||||||||
| Accounts receivable |
617 | 38 | ||||||
| Prepaid expenses and other assets |
(114 | ) | 127 | |||||
| Deferred directory costs |
(3,845 | ) | (4,064 | ) | ||||
| Accounts payable and other current liabilities |
(51 | ) | 131 | |||||
| Accrued liabilities |
1,857 | 2,699 | ||||||
| Deferred revenue |
1,240 | 787 | ||||||
| Other |
(388 | ) | (79 | ) | ||||
| Net cash provided by operating activities |
21,558 | 22,629 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES- |
||||||||
| Capital expenditures |
(39 | ) | (48 | ) | ||||
| Net cash used in investing activities |
(39 | ) | (48 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Member contributions |
1,000 | |||||||
| Distribution to member |
(723 | ) | (128,290 | ) | ||||
| Debt issuance costs |
(600 | ) | (10,408 | ) | ||||
| Proceeds from borrowings |
— | 310,000 | ||||||
| Payments on borrowings |
(28,600 | ) | (211,400 | ) | ||||
| Net cash used in financing activities |
(29,923 | ) | (39,098 | ) | ||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
(8,404 | ) | (16,517 | ) | ||||
| CASH AND CASH EQUIVALENTS: |
||||||||
| Beginning of period |
22,466 | 33,213 | ||||||
| End of period |
$ | 14,062 | $ | 16,696 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
| Cash paid for interest (including interest rate swap) |
$ | 11,987 | $ | 11,407 | ||||