-----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, JLFZ2X2yV9JiIqemCn09i08G47MDRln6JaE7dGk3T0ozMPjoWoqBehKrcwKBha5/ diyPGaS2tf0ykXmivMbnPQ== 0000950152-99-009215.txt : 19991117 0000950152-99-009215.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950152-99-009215 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990903 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGENT COMMUNICATIONS INC CENTRAL INDEX KEY: 0000913015 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 311492857 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-46435 FILM NUMBER: 99758941 BUSINESS ADDRESS: STREET 1: 50 EAST RIVERCENTER BOULEVARD STREET 2: SUITE 180 CITY: COVINGTON STATE: KY ZIP: 41011 BUSINESS PHONE: 6062920030 MAIL ADDRESS: STREET 1: 50 EAST RIVERCENTER BLVD STREET 2: SUITE 180 CITY: COVINGTON STATE: KY ZIP: 41011 8-K/A 1 REGENT COMMUNICATIONS, INC. FORM 8-K/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - September 3, 1999 REGENT COMMUNICATIONS, INC. (Exact name of registrant as specified in charter) DELAWARE 0-15392 31-1492857 (State of other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 50 EAST RIVERCENTER BOULEVARD SUITE 180 COVINGTON, KENTUCKY 41011 (Address of principal executive offices) (606) 292-0030 (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On September 3, 1999, pursuant to the terms of an Asset Purchase Agreement dated as of May 18, 1999, Regent Communications, Inc.(through a wholly-owned subsidiary, Regent Broadcasting of Erie, Inc., and its wholly-owned subsidiary, Regent Licensee of Erie, Inc.) acquired from Media One Group-Erie, Ltd. and Cuzco LLC the FCC licenses and related assets used in the operation of radio stations WXKC-FM and WRIE-AM licensed to Erie, Pennsylvania, and WXTA-FM, licensed to Edinboro, Pennsylvania. The purchase price for these assets was approximately $13.5 million paid in cash. The terms of this acquisition were arrived at and agreed upon through arms' length negotiations between the parties. Regent intends to continue to use the assets acquired in this acquisition in a manner consistent with their use prior to their acquisition by Regent. The sources for the purchase price paid by Regent were as follows: (a) borrowings in the amount of $7.2 million under Regent's Credit Agreement with Bank of Montreal, Chicago Branch, General Electric Capital Corporation and Bank One, Indianapolis, NA ("Credit Agreement"); and (b) $6.3 million in additional equity from the sale of Regent's convertible preferred stock. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following financial statements and notes thereto are included in this report: Media One Group - Erie, Ltd. Report of Independent Accountants Statements of Financial Position at June 30, 1999 (unaudited) and December 31, 1998 Statements of Operations for the six months ended June 30, 1999 (unaudited) and 1998 (unaudited) and for the year ended December 31, 1998 Statements of Cash Flows for the six months ended June 30, 1999 (unaudited) and 1998 (unaudited) and for the year ended December 31, 1998 Statement of Members' Deficit for the year ended December 31, 1998 Notes to Financial Statements (b) PRO FORMA FINANCIAL INFORMATION. The following unaudited pro forma condensed consolidated financial statements for Regent Communications, Inc., giving effect to the acquisition of the FCC licenses and related assets of radio stations WXKC-FM, WRIE-AM and WXTA-FM, are included in this report: Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 1999 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998 Unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30, 1999 Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements (c) EXHIBITS. The Exhibit Index following the signature page hereof constitutes a list of all Exhibits filed with or incorporated by reference in this Form 8-K. 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of Regent Communications, Inc. In our opinion, the accompanying statement of financial position and the related statements of operations, cash flows, and members' deficit present fairly, in all material respects, the financial position of Media One Group -Erie, Ltd. (a limited liability company) at December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP August 10, 1999 Cincinnati, Ohio 4 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) STATEMENTS OF FINANCIAL POSITION
JUNE 30, DECEMBER 31, 1999 1998 ----------- ----------- (Unaudited) ASSETS Current assets Cash $ 137,158 $ 192,764 Accounts receivable, less allowance for doubtful accounts of $12,495 at June 30, 1999 and $8,000 at December 31, 1998 543,445 475,242 Prepaid expenses 19,294 20,456 Other assets 12,021 21,021 ----------- ----------- Total current assets 711,918 709,483 Note receivable from affiliate 117,264 117,264 Property and equipment, net 881,475 949,058 Intangible assets, net 4,047,680 4,456,380 ----------- ----------- Total assets $ 5,758,337 $ 6,232,185 =========== =========== LIABILITIES AND MEMBERS' DEFICIT Current liabilities Accounts payable $ 53,964 $ 37,103 Accrued expenses 45,667 40,156 Accrued interest 176 89,683 Barter payable, net 244,114 159,540 Current portion of long-term debt and capital lease 303,029 202,898 ----------- ----------- Total current liabilities 646,950 529,380 Long-term debt and capital lease 6,165,288 6,417,192 Subordinated notes payable to members 1,180,387 1,180,387 Other liabilities 254,782 173,781 ----------- ----------- Total liabilities 8,247,407 8,300,740 Commitments and contingencies Members' deficit $(2,489,070) $(2,068,555) =========== =========== Total liabilities and members' deficit $ 5,758,337 $ 6,232,185 =========== ===========
The accompanying notes are an integral part of these financial statements. 5 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) STATEMENTS OF OPERATIONS
SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, ----------- ----------- ----------- 1999 1998 1998 ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) Gross broadcast revenues $ 1,680,847 $ 1,601,952 $ 3,262,643 Less agency commissions (161,146) (154,985) (286,252) ----------- ----------- ----------- Net broadcast revenues 1,519,701 1,446,967 2,976,391 Station operating expenses 829,930 867,667 1,660,465 Depreciation and amortization 457,200 454,800 918,583 General and administration expenses 314,112 288,851 930,784 ----------- ----------- ----------- Operating loss (81,541) (164,351) (533,441) Interest expense, net (313,489) (312,189) (630,049) Other income, net 13,015 10,525 16,537 ----------- ----------- ----------- Loss before cumulative effect of change in accounting principle (382,015) (466,015) (1,146,953) Cumulative effect of change in accounting principle (38,500) -- -- ----------- ----------- ----------- Net loss $ (420,515) $ (466,015) $(1,146,953) ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 6 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) STATEMENTS OF CASH FLOWS
FOR THE YEAR SIX MONTHS ENDED ENDED JUNE 30, DECEMBER 31, -------------------------- ----------- 1999 1998 1998 ----------- ----------- ----------- (Unaudited) (Unaudited) Cash flows from operating activities: Net loss $ (420,515) $ (466,015) $(1,146,953) Adjustments to reconcile net loss to cash flows from operating activities: Depreciation and amortization 457,200 454,800 918,583 Barter expense, net 84,584 92,098 69,395 Loss on disposition of fixed asset -- 683 683 Write-off of failed acquisition costs -- 93,211 Cumulative effect of change in accounting principle 38,500 -- -- Changes in operating assets and liabilities: Accounts receivable (68,203) (102,032) (22,126) Prepaid expenses 1,162 (5,212) (12,412) Accounts payable 18,355 (36,062) (121,401) Accrued expenses (63,272) (4,272) 17,347 Accrued interest 57,001 52,500 109,169 ----------- ----------- ----------- Total adjustments 525,327 452,503 1,052,449 ----------- ----------- ----------- Cash flows provided by (used in) operating activities 104,812 (13,512) (94,504) ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (10,418) (27,265) (55,422) Loan to related party -- -- (117,264) Acquisition costs and earnest deposit -- (301,055) (301,055) Return of earnest deposit 250,075 ----------- ----------- ----------- Cash flows used in investing activities (10,418) (328,320) (223,666) ----------- ----------- ----------- Cash flows from financing activities: Net borrowing on revolving credit line -- 180,082 180,082 Borrowing on subordinated notes payable to members -- 150,000 150,000 Principal repayments long-term debt and capital lease (150,000) -- -- ----------- ----------- ----------- Cash flows provided by (used in) financing activities (150,000) 330,082 330,082 ----------- ----------- ----------- Net increase (decrease) in cash (55,606) (11,750) 11,912 Cash at beginning of period 192,764 180,852 180,852 ----------- ----------- ----------- Cash at end of period $ 137,158 $ 169,102 $ 192,764 =========== =========== =========== Supplemental disclosure: Interest paid $ 258,751 $ 286,668 $ 552,831
The accompanying notes are an integral part of these financial statements. 7 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) STATEMENT OF MEMBERS' DEFICIT
MEMBERS' DEFICIT ----------- Balance, December 31, 1997 $ (921,602) Net loss (1,146,953) ----------- Balance, December 31, 1998 $(2,068,555) -----------
The accompanying notes are an integral part of these financial statements. 8 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS: a. BASIS OF PRESENTATION: The financial statements for the six months ended June 30, 1998 and 1999, are unaudited, but, in the opinion of management, such financial statements have been presented on the same basis as the audited financial statements for the year ended December 31, 1998, and include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial position and results of operations and cash flows for these periods (except for the adoption of SOP 98-5, "Reporting on the Costs of Start-up Activities" as noted in footnote 10). b. ORGANIZATION: Media One Group - Erie, Ltd., a limited liability company ("Media One"), was organized in May 1996 to acquire and operate radio stations. The radio stations owned by Media One are WXKC-FM, WRIE-AM and WXTA-FM; all of the radio stations operate in the Erie, Pennsylvania, radio market. c. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast. d. BARTER TRANSACTIONS: The radio stations engage in the bartering of commercial airtime for various goods and services. The goods and services are capitalized or expensed as appropriate when received or utilized. Revenues are recognized at such time as the commercial spots are aired, and merchandise or services received are charged to expense when received or used. e. PROPERTY AND EQUIPMENT: Property and equipment is stated at cost. Routine repairs and maintenance are charged to expense as incurred. When property and equipment is sold or disposed of, the asset and related accumulated depreciation are removed from the accounts, and any gain or loss is included in the statements of operation. Depreciation of property and equipment is computed on the straight-line basis over the estimated useful lives of the related assets, as follows: Building improvements 29 years Broadcasting equipment 7-15 years Office furniture and equipment 7-10 years 9 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS f. INTANGIBLE ASSETS: Intangible assets are stated at cost and amortized on the straight-line basis over the following lives: FCC licenses and goodwill 15 years Consulting agreement 1 year Non-compete agreement 3 years Organization costs and deferred financing costs 5-6 years Goodwill and other intangibles are evaluated periodically if events or circumstances indicate a possible inability to recover their carrying amount. Such evaluation is based on various analyses, including cash flow and profitability projections. If future expected undiscounted cash flows are insufficient to recover the carrying amount of the asset, then an impairment loss is recognized based upon the excess of the carrying value of the asset over the anticipated cash flows on a discounted basis. g. FINANCIAL INSTRUMENTS: Financial instruments as of December 31, 1998, consist of cash, accounts receivable, note receivable, accounts payable, debt and capital leases, all of which the carrying amounts approximate fair value. h. ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. i. ALLOCATION OF MEMBERS DISTRIBUTIONS AND INCOME OR LOSS: The members' agreement provides that the income, loss or distributions to members will be allocated as follows: James T. Embrescia 51.00% Thomas J. Embrescia 29.71% Keybank/Amanda EmbresciaTrust 6.43% Keybank/Matthew EmbresciaTrust 6.43% Keybank/Mary Megan EmbresciaTrust 6.43% ------- 100.00% ------- 10 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS 2. PROPERTY AND EQUIPMENT: Property and equipment at December 31, 1998 consisted of the following: 1998 ---------------- Building improvements $ 23,982 Broadcast equipment 1,037,414 Office furniture and equipment 201,459 ---------------- 1,262,855 Less: Accumulated depreciation (313,797) ---------------- Property and equipment, net $ 949,058 ---------------- 3. INTANGIBLE ASSETS: Intangible Assets at December 31, 1998 consisted of the following: FCC licenses and goodwill $ 4,706,121 Consulting agreement 350,000 Non-compete agreement 350,000 Organization costs and deferred financing costs 115,000 ---------------- 5,521,121 Less: Accumulated amortization (1,064,741) ---------------- Intangible assets, net $ 4,456,380 ---------------- 4. LONG-TERM DEBT: Media One has a loan agreement with a bank whereby available borrowings under its credit facility are $6.6 million. The facility is collateralized by substantially all of the assets owned by Media One and the assets leased from Cuzco, LLC (See Note 7). Borrowings under this facility bear annual interest at a fixed rate of 7.89% for two years, which is payable on a quarterly basis. The remaining principal amount outstanding will bear an interest rate of the two-year treasury yield plus 225 basis points or an adjustable rate which is contingent on the ratio of bank debt to broadcast cash flow as set forth in the agreement. The agreement converted to a term loan in March 1999, with annual principal payments commencing on March 31, 1999 as follows: 1999 $ 200,000 2000 300,000 2001 400,000 2002 5,700,000 ---------- $6,600,000 ---------- 11 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS Additional prepayments of principal are due if certain cash flow requirements as defined in the agreement are achieved ( See Note 11). The loan agreement contains certain restrictive covenants that include, among other things, the maintenance of minimum interest and debt coverage ratios, as defined. Media One is in compliance or has obtained waivers of these covenants as of December 31, 1998. 5. CAPITAL LEASE OBLIGATIONS: Media One leases a vehicle from Bank One under a noncancelable capital lease which expires in August 2004. The future minimum annual payments under the capital lease at December 31, 1998 are: 1999 $ 4,601 2000 4,601 2001 4,601 2002 4,601 2003 and thereafter 7,668 -------- 26,072 Less: Interest (5,982) -------- Present value of lease 20,090 Less: Current portion (2,898) -------- $ 17,192 -------- 6. RELATED PARTY TRANSACTIONS: Media One has subordinated notes payable to members of $1,180,387 as of December 31, 1998. The notes bear interest of 9% compounded annually. Repayment of the notes and interest are subordinated to the debt outstanding under the credit agreement and accrued interest approximated $142,000 as of December 31, 1998 (See Note 11). Media One has entered into a management agreement with a member who provides general management of the stations including supervision and consultation with respect to broadcast policies and practices. The fees and reimbursable expenses paid to an entity owned by the member for these services amounted to $170,645 in 1998. Media One loaned an affiliate, Cuzco, LLC, approximately $117,000 and received a note which bears an interest rate of 9% per annum (See Note 11). 12 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS 7. LEASE AGREEMENT WITH RELATED PARTY: Media One leases its studio, offices and WXKC/WRIE transmitter sites from Cuzco LLC, an affiliated company which is owned by Jim and Tom Embrescia and Trusts, members of Media One. Cuzco LLC owns the land and the building of the stations and was formed when ownership of these assets was transferred from Media One to Cuzco LLC. The initial term of the lease is for 29 years beginning on September 1, 1997, with an option to extend the lease for two additional 29-year periods. Annual rent in the amount of $48,000 is due for the first five years, with increases thereafter based on a formula in the lease agreement. 8. INCOME TAXES: Income taxes on the income of a limited liability company are the responsibility of its members. Therefore, no provision for federal or state corporate income taxes was recorded for Media One. 9. COMMITMENTS: Media One leases the site where the WXTA (FM) tower is located under an operating lease which expires in 2003. Media One also has the option to renew for two additional succeeding terms of 15 years. Future minimum annual payments under the noncancelable operating lease are $225 per month through 2003. Rent expense for the year ended December 31, 1998 was $2,700. 10. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (UNAUDITED): In June 1997, the Financial Accounting Standard Board issued SFAS 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 established standards of disclosure and financial statement display for reporting total comprehensive income and its individual components. SFAS 130 became effective in 1998. Media One management has determined that comprehensive income equals Media One's net income for all periods presented. In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), which is effective for fiscal years beginning after December 15, 1998. SOP 98-1 requires the capitalization of certain expenditures for software that is purchased or internally developed for use in the business. Media One elected to adopt SOP 98-1 in 1998. The impact of its adoption was immaterial to Media One's results of operations and statement of financial position. 13 MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS In April 1998, the AICPA issued SOP 98-5 "Reporting on the costs of Start-Up Activities" ("SOP 98-5") SOP 98-5 specifies that costs of start-up activities and organizational costs be expensed when incurred. SOP 98-5 is effective for financial statements for fiscal years beginning after December 15, 1998. The initial application of SOP 98-5 is reported as a cumulative effect of a change in accounting principle in the unaudited statement of operations for the six months ended June 30, 1999. 11. SUBSEQUENT EVENT (UNAUDITED): On May 18, 1999 the owners of Media One entered into an agreement by which Regent Broadcasting of Erie, Inc. and Regent Licensee of Erie, Inc. would purchase all of the assets, properties, interest and rights of the Company for $13,500,000, except for cash and cash equivalents, accounts receivable, investment securities, and notes receivable. The transaction subsequently closed on September 3, 1999. The note receivable - affiliate, long-term debt, and subordinated notes payable were all repaid from the proceeds at closing. 14 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following tables present the unaudited pro forma condensed consolidated financial statements for Regent Communications, Inc. ("Regent"), giving effect to the acquisition of the FCC licenses and related assets of radio stations WXKC-FM, WRIE-AM and WXTA-FM (collectively, the "Erie Stations") from Media One Group-Erie, Ltd. and Cuzco LLC in a transaction accounted for as a purchase. These unaudited pro forma condensed consolidated financial statements are based upon the audited historical consolidated financial statements of Regent and the Erie Stations for the year ended December 31, 1998 and the unaudited historical consolidated financial statements of Regent and the Erie Stations as of and for the six months ended June 30, 1999. The unaudited pro forma condensed consolidated balance sheet has been presented as if the Erie Stations were acquired on June 30, 1999. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1998 and the six months ended June 30, 1999 have been presented as if the Erie Stations were acquired on January 1, 1998. In the opinion of management, all adjustments necessary to fairly present this pro forma information have been made. Depreciation and amortization for the acquisitions are based upon preliminary allocations of the purchase price to property and equipment and intangible assets. Actual depreciation and amortization may differ depending on the final allocation of the purchase price, which will be based on an independent valuation that is currently being performed. However, management does not believe these differences will be material. The unaudited pro forma condensed consolidated financial statements exclude the effects of estimated cost savings which management believes will result from the integration of the Erie Stations. The unaudited pro forma information is presented for illustrative purposes only and does not indicate the operating results or financial position that would have occurred if the Erie Stations had been acquired on the dates indicated, nor is it indicative of future operating results or financial position of Regent. The unaudited pro forma condensed consolidated financial statements presented below should be read in conjunction with the Erie Stations' audited and unaudited financial statements and notes thereto, which are included elsewhere in this document and Regent's Annual Report on Form 10-K for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999. 15 REGENT COMMUNICATIONS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999
HISTORICAL HISTORICAL PRO FORMA PRO FORMA REGENT ERIE ADJUSTMENTS AS ADJUSTED ---------------- ---------------- --------------- --------------- Net broadcast revenues $ 10,835,293 $ 1,519,701 $ - $ 12,354,994 Broadcast operating expenses (8,146,685) (829,930) - (8,976,615) Depreciation and amortization (1,818,856) (457,200) 228,658 (1) (2,047,398) Corporate general and administrative expenses (1,159,130) (314,112) - (1,473,242) ---------------- ------------- --------------- --------------- Operating income (loss) (289,378) (81,541) 228,658 (142,261) Interest expense (1,486,807) (313,489) (1,101) (2) (1,801,397) Other income, net 85,040 13,015 - 98,055 ---------------- ------------ --------------- --------------- Income (loss) before income taxes, cumulative effect of change in accounting principle and extraordinary items (1,691,145) (382,015) 227,557 (1,845,603) Income tax expense - - - - ---------------- ------------ --------------- --------------- - Net income (loss) before cumulative effect of change in accounting principle and extraordinary items (1,691,145) (382,015) 227,557 (1,845,603) Preferred stock dividends and accretion (2,561,000) - (360,848) (3) (2,921,848) ---------------- ------------ --------------- --------------- Loss before cumulative effect of change in accounting principle and extraordinary items attributable to common stockholders $ (4,252,145) $ (382,015) $ (133,291) $ (4,767,451) ================ ============ =============== =============== Basic and diluted loss per common share $ (17.72) (4) $ (19.86)(4) Weighted average common shares used in basic and diluted computations 240,000 240,000
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. 16 REGENT COMMUNICATIONS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
HISTORICAL HISTORICAL PRO FORMA PRO FORMA REGENT ERIE ADJUSTMENTS AS ADJUSTED ---------------- ---------------- ---------------- ---------------- Net broadcast revenues $ 14,771,523 $ 2,976,391 $ - $ 17,747,914 Broadcast operating expenses (11,051,165) (1,660,465) - (12,711,630) Depreciation and amortization (2,281,497) (918,583) 461,500 (1) (2,738,580) Corporate general and administrative expenses (1,872,182) (930,784) - (2,802,966) ---------------- ---------------- ---------------- ---------------- Operating income (loss) (433,321) (533,441) 461,500 (505,262) Interest expense (2,883,251) (630,049) (18,438) (2) (3,531,738) Other income, net 26,648 16,537 - 43,185 ---------------- ---------------- ---------------- ---------------- Income (loss) before income taxes, cumulative effect of change in accounting principle and extraordinary items (3,289,924) (1,146,953) 443,062 (3,993,815) Income tax expense - - - - ---------------- ---------------- ---------------- ---------------- Net income (loss) before cumulative effect of change in accounting principle and extraordinary items (3,289,924) (1,146,953) 443,062 (3,993,815) Preferred stock dividends and accretion (6,952,782) - (670,372)(3) (7,623,154) ---------------- ---------------- ---------------- ---------------- - Loss before cumulative effect of change in accounting principle and extraordinary items attributable to common stockholders $(10,242,706) $ (1,146,953) $ (227,310) $(11,616,969) ================ ================ ================ ================ Basic and diluted loss per common share $ (42.68)(4) $ (48.40)(4) Weighted average common shares used in basic and diluted computations 240,000 240,000
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. 17 REGENT COMMUNICATIONS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999
HISTORICAL PRO FORMA PRO FORMA REGENT ADJUSTMENTS AS ADJUSTED ---------------- ---------------- ---------------- ASSETS Current assets: Cash and cash equivalents $ 1,760,004 $ - $ 1,760,004 Accounts receivable, net 4,282,758 - 4,282,758 Assets held for sale 14,713,163 - 14,713,163 Other current assets 297,708 - 297,708 ---------------- ---------------- ---------------- Total current assets 21,053,633 - 21,053,633 Property and equipment, net 9,268,558 1,000,000 (1) 10,268,558 Intangible assets, net 48,910,286 12,500,000 (1) 61,410,286 Other assets 1,715,185 - 1,715,185 ---------------- ---------------- ---------------- Total assets $80,947,662 $13,500,000 $94,447,662 ================ ================ ================ LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Current portion of long-term debt $ 8,990,000 $ - $ 8,990,000 Notes payable 6,000,000 - 6,000,000 Other current liabilities 2,290,879 - 2,290,879 ---------------- ---------------- ---------------- Total current liabilities 17,280,879 - 17,280,879 Long-term debt, net of current portion 32,410,000 7,200,000 (2) 39,610,000 Other liabilities 2,391,452 - 2,391,452 ---------------- ---------------- ---------------- Total liabilities 52,082,331 7,200,000 59,282,331 Redeemable preferred stock 42,530,503 6,300,000 (3) 48,830,503 Shareholders' deficit: Preferred stock 3,370,856 - 3,370,856 Common stock 2,400 - 2,400 Additional paid-in capital 1,974,106 - 1,974,106 Retained deficit (19,012,534) - (19,012,534) ---------------- ---------------- ---------------- Total shareholders' deficit (13,665,172) - (13,665,172) ---------------- ---------------- ---------------- Total liabilities and shareholders' deficit $80,947,662 $13,500,000 $94,447,662 ================ ================ ================
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. 18 NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Records the $13.5 million purchase price for the Erie Stations and the resulting change in depreciation and amortization expense. Regent's allocation of the Erie Stations' purchase price of $13.5 million is as follows: FCC Licenses $12,350,000 Property, Plant and Equipment, net 1,000,000 Non-compete Agreement 100,000 Other Intangibles 50,000 Assigned lives for the acquired assets are as follows: FCC licenses -- forty years; building improvements - twenty-nine years; broadcasting equipment -- six-to-thirteen years; furniture and fixtures -- five years; non-compete agreement -- five years; other intangibles -- fifteen years. Depreciation expense has been calculated on a straight-line basis. (2) Records Regent's additional $7.2 million indebtedness under its Credit Agreement, as well as the resultant increase in interest expense, necessary to partially finance the acquisition of the Erie Stations. Interest under this Credit Agreement is payable, at the option of Regent, at alternative rates equal to the LIBOR rate plus 1.25% to 2.75% or the base rate announced by the Bank of Montreal plus 0% to 1.5%. The floating interest rate used to calculate pro forma interest expense on the Credit Agreement is 8.625%, which is based upon the rate in effect at June 30, 1999. A one-eighth of one percent (.125%) change in the interest rate on the Credit Agreement from that used in the pro forma adjustment would not change the related interest expense by a material amount. (3) Adjustment reflects the net proceeds and related dividends from the issuance of Regent's Series H Convertible Preferred Stock at $5.50 per share that was issued to partially finance the acquisition of the Erie Stations. These shares accrue dividends at an annual rate of $.55 per share and, to the extent not declared and paid in cash, are compounded quarterly at a rate of 10% per annum. For purposes of these unaudited pro forma condensed consolidated financial statements, we have assumed that the Series H Convertible Preferred Stock was issued on January 1, 1998, and no dividends have been paid. (4) Statement of Financial Accounting Standards No. 128, "Earnings per Share," calls for dual presentation of basic and dilutive earnings per share ("EPS"). Basic EPS is based upon the weighted average common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if common stock equivalents were exercised. The effects of the assumed conversion of Regent's convertible preferred stock and the assumed exercise of outstanding options and warrants would not be dilutive for all periods presented. Therefore, basic EPS and diluted EPS are the same for all periods presented. 19 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 hereunto duly authorized. REGENT COMMUNICATIONS, INC. Date: November 16, 1999 By: /s/ Terry S. Jacobs ------------------------- Terry S. Jacobs, Chairman of the Board and Chief Executive Officer 20 EXHIBIT INDEX The following exhibits are filed, or incorporated by reference where indicated, as part of this Current Report on Form 8-K: EXHIBIT NUMBER EXHIBIT DESCRIPTION 2(a)* Asset Purchase Agreement dated as of May 18, 1999 among Regent Broadcasting of Erie, Inc., Regent Licensee of Erie, Inc., Media One Group-Erie, Ltd., Cuzco LLC, Thomas J. Embrescia and James T. Embrescia. The following schedules and exhibits to the foregoing Asset Purchase Agreement are omitted as not material; the Company will furnish supplementally to the Commission upon request a copy of any omitted schedule or exhibit: Schedule Description -------- ----------- 1.2.8 Miscellaneous Excluded Assets 7.4 Stations Licenses, Etc. 7.7 Tangible Personal Property 7.8 Real Property 7.9 Contracts (including identification of Material Contracts) 7.11 Environmental Matters 7.12 Intellectual Property 7.13 Financial Statements 7.14 Personnel Information 7.15 Litigation 7.16 Compliance With Laws 7.17 Employee Benefit Plans Exhibit Description ------- ----------- A Form of Indemnification Escrow Agreement B Form Letter of Credit C Form of Deposit Escrow Agreement D Form of Assignment and Assumption Agreement E Form of Non-Competition Agreement F Form of Lease Agreement - --------------- * Previously filed as Exhibit 2(a) to the Registrant's initial Form 8-K dated September 3, 1999 and incorporated herein by this reference. -----END PRIVACY-ENHANCED MESSAGE-----