-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A4EifZMf2PIbaPdgj0tnsiDKYvnGLjDfs6aflD1JGgMlWoJvKe9iNQGOfUSC1crp P181lNNeeNcuUGYpzxZMtw== 0000950144-98-005761.txt : 19980512 0000950144-98-005761.hdr.sgml : 19980512 ACCESSION NUMBER: 0000950144-98-005761 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COX RADIO INC CENTRAL INDEX KEY: 0001018522 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 581620022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12187 FILM NUMBER: 98614920 BUSINESS ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048435000 MAIL ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 10-Q 1 COX RADIO, INC. 1 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, 1998 [ ] 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 COX RADIO, INC. (Exact name of registrant as specified in its charter) DELAWARE 58-1620022 (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 1400 LAKE HEARN DRIVE, ATLANTA, GEORGIA 30319 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (404) 843-5000 --------------- 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 ----- ----- ---------- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. There were 8,869,620 shares of Class A Common Stock outstanding as of May 1, 1998. There were 19,577,672 shares of Class B Common Stock outstanding as of May 1, 1998. 2 COX RADIO, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998 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............................................ 10 ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........... 13 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................. 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................... 14 SIGNATURES...................................................................... 15
2 3 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS COX RADIO, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ (THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) ASSETS Current Assets: Cash and cash equivalents .......................................... $ 7,938 $ 6,218 Accounts receivable, less allowance for doubtful accounts of $1,897 and $1,875, respectively .............................. 43,424 50,680 Prepaid expenses and other current assets .......................... 5,032 3,795 -------- -------- Total current assets ............................................ 56,394 60,693 Plant and equipment, net ............................................. 46,646 46,071 Intangible assets, net ............................................... 537,946 518,926 Amounts due from Cox Enterprises, Inc. ............................... - 3,113 Station investment notes receivable .................................. 18,168 18,220 Other assets ......................................................... 16,558 7,617 -------- -------- Total assets .................................................... $675,712 $654,640 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses .............................. $ 21,730 $ 21,767 Income taxes payable ............................................... 2,941 3,487 Other current liabilities .......................................... 1,997 1,964 -------- -------- Total current liabilities ....................................... 26,668 27,218 Amounts due to Cox Enterprises, Inc. ................................. 17,466 - Notes payable ........................................................ 235,756 235,740 Deferred income taxes ................................................ 105,027 104,401 -------- -------- Total liabilities ............................................... 384,917 367,359 -------- -------- Commitments and contingencies (Note 3) Shareholders' equity: Class A common stock, $1.00 par value; 70,000,000 shares authorized and 8,868,885 shares outstanding ..................... 8,869 8,831 Class B common stock, $1.00 par value; 45,000,000 shares authorized and 19,577,672 shares outstanding .................... 19,578 19,578 Additional paid-in capital ......................................... 251,338 250,637 Retained earnings .................................................. 11,010 8,235 -------- -------- Total shareholders' equity ...................................... 290,795 287,281 -------- -------- Total liabilities and shareholders' equity ...................... $675,712 $654,640 ======== ========
See notes to consolidated financial statements. 3 4 COX RADIO, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------- 1998 1997 -------- -------- (THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) NET REVENUES: Local ............................................................. $ 38,545 $ 21,292 National .......................................................... 12,783 7,114 Other ............................................................. 732 749 -------- -------- Total net revenues .............................................. 52,060 29,155 COSTS AND EXPENSES: Operating ......................................................... 13,094 8,192 Selling, general and administrative ............................... 22,399 11,407 Corporate general and administrative .............................. 1,875 1,422 Depreciation and amortization ..................................... 5,361 2,052 -------- -------- OPERATING INCOME ..................................................... 9,331 6,082 OTHER INCOME (EXPENSE): Interest income ...................................................... 27 947 Interest expense ..................................................... (3,844) (4) Gain on sale of radio stations ....................................... - 49,227 Other - net .......................................................... (58) (72) -------- -------- INCOME BEFORE INCOME TAXES ........................................... 5,456 56,180 Income taxes ......................................................... 2,681 21,977 -------- -------- NET INCOME ........................................................... $ 2,775 $ 34,203 ======== ======== Basic and diluted income per common share ............................ $ .10 $ 1.21 ======== ======== Weighted average basic common shares outstanding ..................... 28,427 28,313 ======== ======== Weighted average diluted common shares outstanding ................... 28,708 28,329 ======== ========
See notes to consolidated financial statements. 4 5 COX RADIO, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
CLASS A CLASS B COMMON STOCK COMMON STOCK ADDITIONAL --------------------- --------------------- PAID-IN RETAINED SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL -------- --------- -------- --------- ---------- ----------- -------- (AMOUNTS IN THOUSANDS) BALANCE AT DECEMBER 31, 1997 ........ 8,831 $ 8,831 19,578 $ 19,578 $ 250,637 $ 8,235 $ 287,281 Net income......................... -- -- -- -- -- 2,775 2,775 Issuance of Class A common stock related to incentive plans...... 38 38 -- -- 701 -- 739 -------- --------- --------- --------- ----------- ----------- --------- BALANCE AT MARCH 31, 1998 ........... 8,869 $8,869 19,578 $ 19,578 $ 251,338 $ 11,010 $ 290,795 ======== ========= ========= ========= =========== =========== =========
See notes to consolidated financial statements. 5 6 COX RADIO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------- 1998 1997 -------- -------- (Thousands of Dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ........................................................... $ 2,775 $ 34,203 Items not requiring cash: Depreciation ....................................................... 1,273 717 Amortization ....................................................... 4,088 1,335 Deferred income taxes .............................................. 708 19,347 Gain on sale of radio stations ..................................... - (49,227) Decrease in accounts receivable ...................................... 7,256 5,370 Increase (decrease) in accounts payable and accrued expenses ......... (169) 2,201 Decrease in taxes payable ............................................ (546) (810) Payment of UAP liability ............................................. - (646) Other, net ........................................................... (1,270) (1,236) -------- -------- Net cash provided by operating activities ..................... 14,115 11,254 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................. (1,847) (1,865) Acquisitions, net of cash acquired ................................... (23,086) (1,500) Increase in other long-term assets ................................... (8,912) (357) Net proceeds from sale of radio stations ............................. - 19,741 Other, net ........................................................... 8 217 -------- -------- Net cash provided by (used in) investing activities ........... (33,837) 16,236 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Change in amounts due to/(from) CEI .................................. 20,579 (18,153) Proceeds from stock options exercised ................................ 731 - Increase (decrease) in book overdrafts ............................... 132 (531) -------- -------- Net cash provided by (used in) financing activities ........... 21,442 (18,684) -------- -------- Net increase in cash and cash equivalents ............................ 1,720 8,806 Cash and cash equivalents at beginning of period ..................... 6,218 10,595 -------- -------- Cash and cash equivalents at end of period ........................... $ 7,938 $ 19,401 ======== ========
See notes to consolidated financial statements. 6 7 COX RADIO, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1998 1. BASIS OF PRESENTATION AND OTHER INFORMATION Cox Radio, Inc. ("Cox Radio or the "Company") is a leading national radio broadcast company whose business is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises, Inc. ("CEI") indirectly owns approximately 69% of the Common Stock of Cox Radio. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal, recurring nature. These unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 1997 and notes thereto contained in Cox Radio's Annual Report on Form 10-K filed with the Securities and Exchange Commission (Commission File No. 1-12187). The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the year ending December 31, 1998 or any interim period. 2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES In January 1998, the Company entered into an agreement to assign its option to purchase KRIO-FM serving the San Antonio market for an aggregate consideration of $.3 million (the "San Antonio Disposition"). In February 1998, the Company entered into an agreement to acquire WCLR-FM, WZLR-FM and WPTW-AM serving the Dayton, Ohio market for approximately $6 million (the "Dayton Acquisition"). The Company has been operating these stations pursuant to an LMA since December 1997. In addition, the Company has entered into a Station Investment Note Receivable with the seller for $6 million. See further discussion at Note 4. Pending certain regulatory approvals, the Company anticipates closing the Dayton Acquisition in the second half of 1998. In February 1998, the Company entered into an agreement to acquire the assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5 million. In a related transaction, the Company entered into an agreement to dispose of the assets of WZKD-AM, also serving the Orlando, Florida market for $.5 million (the "Orlando Exchange"). Pending certain regulatory approvals, the Company expects to complete the Orlando Exchange in the second quarter of 1998. In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio for $23 million (the "San Antonio Acquisition II"). In April 1998, the Company entered into an agreement to acquire the assets of WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New York, market for consideration of $48 million. Pending legal and regulatory approvals, the Company expects to close this transaction in the second quarter of 1998. 7 8 The following unaudited pro forma summary of operations presents the consolidated results of operations as if all consummated and pending transactions had occurred at the beginning of the periods presented and does not purport to be indicative of what would have occurred had these transactions been made as of those dates or of results which may occur in the future.
THREE MONTHS ENDED MARCH 31, 1997 1998 ----------- ------------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues............................ $ 49,875 $ 54,565 Corporate general and administrative expenses................................ 1,898 1,875 Depreciation and amortization........... 5,350 5,745 Operating income........................ 6,549 9,262 Net income.............................. $ 1,201 $ 2,471 ========= ========= Basic and diluted pro forma earnings per common share............................ $ .04 $ .09 ========= ========= Basic pro forma shares outstanding...... 28,313 28,427 ========= ========= Diluted pro forma shares outstanding.... 28,329 28,708 ========= =========
3. COMMITMENTS AND CONTINGENCIES On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility (the "Credit Agreement"). The interest rate is based on the London Interbank Offered Rate plus a spread determined by certain leverage ratios. This facility also includes a commitment fee on the unused portion of the total amount available of .1% to .25% based on certain leverage ratios. At March 31, 1998, the Company had approximately $235.8 million of outstanding indebtedness and had approximately $64.2 million available under the Credit Agreement. The Company has entered into interest rate swap agreements with certain lenders providing bank financing. Pursuant to the interest rate swap agreements, the Company has exchanged its floating rate interest obligations on an aggregate of $100 million in principal at an average fixed rate of 6.23% per annum for an average maturity of 6.25 years. The fixing of interest rates for this period reduces in part the Company's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements are recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. However, the Company does not anticipate nonperformance by the other parties, and no material loss would be expected from their nonperformance. The fair value of the interest rate swap agreements was not recognized in the consolidated financial statements since they are accounted for as hedges. 4. STATION INVESTMENT NOTE RECEIVABLE In connection with the Dayton Acquisition, the Company has loaned $6 million to an entity which owns radio stations that the Company is operating under local marketing agreements. This Station Investment Note Receivable has an interest rate of 10% and is collateralized by substantially all of the assets of radio stations WCLR-FM, WZLR-FM and WPTW-AM. 8 9 5. EARNINGS PER COMMON SHARE AND CAPITAL STRUCTURE
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1998 ---- ---- (AMOUNTS IN THOUSANDS) NET INCOME $ 34,203 $ 2,775 ======== ======= BASIC EPS Weighted-average common shares outstanding 28,313 28,427 ======== ======= Basic income per common share 1.21 .10 ======== ======= DILUTED EPS Weighted-average common shares outstanding 28,313 28,427 Shares issuable on exercise of dilutive options 572 698 Shares assumed to be purchased with proceeds of options (556) (417) -------- ------ Shares applicable to diluted EPS 28,329 28,708 ======== ======= Diluted income per common share 1.21 .10 ======== =======
9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF COX RADIO The following discussion should be read in conjunction with the accompanying historical Consolidated Statements of Income for the three month periods ended March 31, 1998 and 1997. This report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include the information regarding future cash requirements of the Company. For such statements, the Company claims the protection of the safe harbor for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended. The Company's results could differ materially from those discussed in each forward-looking statement due to various factors which are outside the Company's control, including competition for audience share and advertising revenue from other radio stations, electronic and print media and new media technologies and governmental regulation of the radio broadcasting industry. For a more detailed discussion of these factors and others, see the Risk Factors section of the Company's prospectus filed as part of its Registration Statement on Form S-1 (File No. 333-08737). GENERAL Cox Radio is a leading national radio broadcast company whose business is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises, Inc. ("CEI") indirectly owns approximately 69% of the Common Stock of Cox Radio. The performance of a radio station group, such as the Company, is customarily measured by its ability to generate Broadcast Cash Flow and EBITDA. Broadcast Cash Flow is defined as operating income plus depreciation and amortization and corporate general and administrative expenses. EBITDA is defined as operating income plus depreciation and amortization. "After-tax" cash flow is defined as income (loss) before extraordinary items plus depreciation, amortization and deferred tax expense. Although Broadcast Cash Flow, EBITDA and after-tax cash flow are not recognized under generally accepted accounting principles ("GAAP"), they are accepted by the broadcasting industry as generally recognized measures of performance and are used by analysts who report publicly on the condition and performance of broadcasting companies. For the foregoing reasons, the Company believes that these measures will be useful to investors. However, Broadcast Cash Flow, EBITDA or after-tax cash flow should not be considered to be an alternative to operating income as determined in accordance with GAAP, an alternative to cash flows from operating activities (as a measure of liquidity) or an indicator of the Company's performance under GAAP. The primary source of the Company's revenues is the sale of local and national advertising. Historically, approximately 73% and 25% of the Company's gross revenues have been generated from local and national advertising, respectively. The Company's most significant station operating expenses are employees' salaries and benefits, commissions, programming expenses and advertising and promotional expenditures. The Company's revenues vary throughout the year. As is typical in the radio broadcasting industry, the Company's revenues and broadcast cash flows are typically lowest in the first quarter and higher in the second and fourth quarters. The Company's operating results in any period may be affected by the incurrence of advertising and promotional expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods. ACQUISITIONS AND DISPOSITIONS During the past several years, the Company has actively managed its portfolio of radio stations through selected acquisitions, dispositions and swaps, as well as the use of local marketing agreements 10 11 ("LMA's") and joint sales agreements ("JSA's"). Specific transactions entered into or consummated by the Company during the three months ended March 31, 1998 are discussed below. In January 1998, the Company entered into an agreement to assign its option to purchase KRIO-FM serving the San Antonio market for an aggregate consideration of $.3 million (the "San Antonio Disposition"). In February 1998, the Company entered into an agreement to acquire WCLR-FM, WZLR-FM and WPTW-AM serving the Dayton, Ohio market for approximately $6 million (the "Dayton Acquisition"). The Company has been operating these stations pursuant to an LMA since December 1997. In addition, the Company has entered into a Station Investment Note Receivable with the seller for $6 million. See further discussion at Note 4 to the Company's Consolidated Financial Statements included elsewhere herein. Pending certain regulatory approvals, the Company anticipates closing the Dayton Acquisition in the second half of 1998. In February 1998, the Company entered into an agreement to acquire the assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5 million. In a related transaction, the Company entered into an agreement to dispose of the assets of WZKD-AM, also serving the Orlando, Florida market for $.5 million (the "Orlando Exchange"). Pending certain regulatory approvals, the Company expects to complete the Orlando Exchange in the second quarter of 1998. In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio for $23 million (the "San Antonio Acquisition II"). In April 1998, the Company entered into an agreement to acquire the assets of WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New York, market for consideration of $48 million. Pending legal and regulatory approvals, the Company expects to close this transaction in the second quarter of 1998. RESULTS OF OPERATIONS Three months ended March 31, 1998 compared to three months ended March 31, 1997 Net Revenues. Net revenues for the first quarter of 1998 increased $22.9 million to $52.1 million, a 78.6% increase over the first quarter of 1997. This increase was primarily attributable to the acquisition of NewCity Communications, Inc. (the "NewCity Acquisition") in April 1997. Additionally, substantial increases in net revenues at the stations in Atlanta, Miami and Dayton were realized as a result of continued strong ratings performance. Station Operating Expenses. Station operating expenses increased $15.9 million to $35.5 million, an increase of 81.1% over the first quarter of 1997. The increase was primarily attributable to the NewCity Acquisition and also due to higher programming and sales related costs which are driven by ratings and revenues, respectively. Broadcast Cash Flow. Broadcast cash flow increased $7.0 million to $16.6 million, a 73.4% increase over the first quarter of 1997 for the reasons discussed above. Corporate general and administrative expenses. Corporate general and administrative expenses increased $.5 million to $1.9 million primarily due to higher overhead costs incurred as a result of the significant increase in number of stations owned and/or operated in 1998. Operating Income. Operating income for the first quarter of 1998 increased $3.2 million to $9.3 million, an increase of 53.4% over the first quarter of 1997 for the reasons discussed above. 11 12 Interest expense. Interest expense during the first quarter of 1998 totaled $3.8 million as compared to first quarter 1997 interest income of $.9 million as a result of borrowings incurred to complete the Company's recent acquisitions the most significant of which was the NewCity Acquisition. Net Income. Net income decreased $31.4 million from the first quarter of 1997 to $2.8 million primarily as a result of the first quarter 1997 after-tax gain on the sale of WCKG-FM and WYSY-FM (Chicago) of approximately $29.3 million in addition to the reasons discussed above. LIQUIDITY AND CAPITAL RESOURCES The Company's primary source of liquidity is cash provided by operations. Historically, cash requirements have been funded by Cox Radio's operating activities and through borrowings under the Credit Agreement (as defined below). For the three months ended March 31, 1998, cash from operations increased $2.9 million to $14.1 million, primarily attributable to an increase in net income excluding the gain on WCKG-FM and WYSY-FM (Chicago), a decrease in accounts receivable and an increase in depreciation and amortization expenses offset by a decrease in accounts payable and accrued expenses. In addition, cash requirements have been funded on a temporary basis through intercompany advances from CEI under a revolving credit facility with CEI (the "CEI Credit Facility"). Borrowings by the Company under the CEI Credit Facility are typically repaid by the Company within 30 days. Borrowings under the CEI Credit Facility accrue interest at CEI's commercial paper rate plus .40%. CEI continues to perform day-to-day cash management services for Cox Radio. On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility (the "Credit Agreement"). The interest rate is based on the London Interbank Offered Rate plus a spread determined by certain leverage ratios. This facility also includes a commitment fee on the unused portion of the total amount available of .1% to .25% based on certain leverage ratios. At March 31, 1998, the Company had approximately $235.8 million of outstanding indebtedness and had approximately $64.2 million available under the Credit Agreement. The Company has entered into interest rate swap agreements with certain lenders providing bank financing. Pursuant to the interest rate swap agreements, the Company has exchanged its floating rate interest obligations on an aggregate of $100 million in principal at an average fixed rate of 6.23% per annum for an average maturity of 6.25 years. The fixing of interest rates for this period reduces in part the Company's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements are recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. However, the Company does not anticipate nonperformance by the other parties, and no material loss would be expected from their nonperformance. The fair value of the interest rate swap agreements was not recognized in the consolidated financial statements since they are accounted for as hedges Future cash requirements are expected to include capital expenditures, principal and interest payments on indebtedness and funds for acquisitions. The Company expects its operations to generate sufficient cash to meet its capital expenditures and debt service requirements. Additional cash requirements, including funds for pending or other acquisitions, will be funded by various sources, including the proceeds from bank financing and, if or when appropriate, other issuances of Company securities. 12 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company has entered into interest rate swap agreements with certain lenders providing bank financing. Pursuant to the interest rate swap agreements, the Company has exchanged its floating rate interest obligations on an aggregate of $100 million in principal at an average fixed rate of 6.23% per annum for an average maturity of 6.25 years. The fixing of interest rates for this period reduces in part the Company's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. 13 14 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Listed below are the exhibits which are filed as part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):
EXHIBIT NUMBER DESCRIPTION ------- ------------------------------------------------------------------ 2.1 -- Agreement and Plan of Merger, dated as of July 1, 1996, by and among Cox Radio, Inc., New Cox Radio II, Inc., NewCity Communications, Inc. and certain stockholders of NewCity Communications, Inc. (1)** 2.2 -- Guaranty by Cox Broadcasting, Inc., dated as of July 1, 1996, in favor of NewCity Communications, Inc. (1) 3.1 -- Amended and Restated Certificate of Incorporation of Cox Radio, Inc. (1) 3.2 -- Amended and Restated Bylaws of Cox Radio, Inc. (1) 4.1 -- Indenture between NewCity Communications, Inc. and Shawmut Bank Connecticut, National Association, as Trustee, dated as of November 2, 1993, related to the 11 3/8% Notes due 2003 of NewCity Communications, Inc. (1)** 4.2 -- First Supplemental Indenture between NewCity Communications, Inc. and Shawmut Bank Connecticut, National Association, as Trustee, dated as of September 16, 1994, relating to the 11 3/8% Notes due 2003 of NewCity Communications, Inc. (1) 4.3 -- Specimen of Class A Common Stock Certificate. (1) 10.1 -- Credit Agreement, dated as of March 7, 1997, by and among Cox Radio, Inc., Texas Commerce Bank National Association, Nationsbank of Texas, N.A. and Citibank, N.A., individually and as agents, and the other banks signatory thereto.(2)** 10.2 -- CEI Credit Facility. (1) 10.3 -- Cox Radio, Inc. Long-Term Incentive Plan. (1) 10.4 -- Cox Radio, Inc. Employee Stock Purchase Plan. (1) 10.5 -- Cox Radio, Inc. Restricted Stock Plan for Non-Employee Directors (1) 10.6 -- Tax Allocation and Indemnification Agreement, dated as of September 30, 1996, by and between Cox Enterprises, Inc. and Cox Radio, Inc. (2) 11 -- Statement Re: Computation of Per Share Earnings 27 -- Financial Data Schedule (for SEC use only)
- ---------- (1) Incorporated by reference to Cox Radio's Registration Statement on Form S-1 (Commission File No. 333-08737). (2) Incorporated by reference to Cox Radio's Annual Report on Form 10-K for the period ended December 31, 1996 (Commission File No. 1-12187). ** Schedules and Exhibits intentionally omitted. 14 15 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 thereunto duly authorized. COX RADIO, INC. May 11, 1998 /s/ Maritza C. Pichon ----------------------------- Maritza C. Pichon Chief Financial Officer (Principal Financial Officer and duly authorized officer) 15 EX-11 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1998 ---- ---- (AMOUNTS IN THOUSANDS) NET INCOME $ 34,203 $ 2,775 ======== ======== BASIC EPS Weighted-average common shares outstanding 28,313 28,427 ======== ======== Basic income per common share 1.21 .10 ======== ======== DILUTED EPS Weighted-average common shares outstanding 28,313 28,427 Shares issuable on exercise of dilutive options 572 698 Shares assumed to be purchased with proceeds of options (556) (417) -------- -------- Shares applicable to diluted EPS 28,329 28,708 ======== ======== Diluted income per common share 1.21 .10 ======== ========
16 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 7,938 0 45,321 (1,897) 0 56,394 85,517 (38,871) 675,712 26,668 0 0 0 28,447 262,348 675,712 0 52,060 0 35,493 7,236 0 (3,844) 5,456 2,681 0 0 0 0 2,775 .10 .10
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