<PAGE>
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, 1997
OR
[ ] 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: 0-21575
--------
METRO NETWORKS, INC.
---------------------------------------------------
(Exact Name of Registrant as specified in its charter)
DELAWARE 76-0505148
-------- ----------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation)
2800 POST OAK BLVD.
SUITE 4000
HOUSTON, TEXAS 77056
-----------------------------------
(Address of Registrant)
713-407-6000
--------------------------
(Registrant's phone number)
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 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___
---
NUMBER OF SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING AS OF MARCH 31, 1997:
16,550,357
1
<PAGE>
METRO NETWORKS, INC.
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1996
AND MARCH 31, 1997 3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND MARCH 31, 1997 5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND MARCH 31, 1997 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 13
II. OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
2
<PAGE>
METRO NETWORKS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
ASSETS DECEMBER 31, 1997
1996 (UNAUDITED)
------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 43,441,293 $ 36,217,339
Accounts receivable, net 23,318,182 23,317,645
Prepaid expenses and other current assets 841,849 1,166,550
Reciprocal receivables 11,397,959 10,750,442
Merchandise and scrip inventory 567,144 788,749
Income tax receivable - 436,410
Reciprocal prepaid expenses and other current
assets 440,246 641,961
------------ ------------
Total current assets 80,006,673 73,319,096
------------ ------------
Property and equipment:
Operating equipment 14,686,692 18,324,975
Transportation equipment 706,554 567,162
Leasehold improvements 1,170,189 1,590,456
------------ ------------
16,563,435 20,482,593
Less: accumulated depreciation 5,992,630 6,650,246
------------ ------------
10,570,805 13,832,347
Purchased broadcast contracts and other intangibles,
net of accumulated amortization of $9,022,969 in
1997 and $6,783,978 in 1996 14,074,242 17,499,333
Other assets 1,160,611 1,730,523
------------ ------------
Total assets $105,812,331 $106,381,299
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
METRO NETWORKS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION>
MARCH 31,
LIABILITIES DECEMBER 31, 1997
1996 (UNAUDITED)
------------ -------------
<S> <C> <C>
Current liabilities:
Disbursement float $ 2,055,467 $ 2,458,539
Accounts payable 3,076,333 3,599,871
Accrued payroll liabilities 1,578,677 3,706,200
Other accrued liabilities 6,606,972 3,738,110
Notes payable 518,244 108,252
Note payable to shareholder 3,100,000 3,100,000
Current portion of long-term debt 318,789 865,069
Deferred revenues 430,299 638,057
Income tax payable 897,788 -
Current deferred income taxes 61,000 61,000
Reciprocal payables 7,837,337 7,030,827
Accrued reciprocal liabilities 1,520,897 1,748,187
Reciprocal and airtime obligations 2,711,301 2,667,501
------------ ------------
Total current liabilities 30,713,104 29,721,613
------------ ------------
Long-term debt 473,356 593,347
Other liabilities 2,696,228 2,681,972
------------ ------------
Total liabilities 33,882,688 32,996,931
------------ ------------
STOCKHOLDERS' EQUITY
Common stock 16,550 16,550
Preferred stock 2,550 2,550
Additional paid-in capital 72,888,027 72,888,027
Retained (deficit) earnings (977,484) 477,241
------------ ------------
Total stockholders' equity 71,929,643 73,384,368
------------ ------------
$105,812,331 $106,381,299
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
METRO NETWORKS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
---------------------------
1996 1997
----------- ------------
Advertising revenues $23,030,197 $29,367,827
Broadcasting costs 12,468,213 15,998,600
Marketing expense 5,484,607 6,209,079
General and administrative expense 1,683,220 3,043,332
Depreciation and amortization 1,489,671 2,129,638
----------- -----------
Total operating costs 21,125,711 27,380,649
----------- -----------
Income from operations 1,904,486 1,987,178
----------- -----------
Other (income) expense:
Interest income (22,608) (366,412)
Interest expense 322,109 22,168
Other (6,691) (16,417)
----------- -----------
Income before income tax 1,611,676 2,347,839
----------- -----------
Income tax expense 502,948 893,114
----------- -----------
Net income $ 1,108,728 $ 1,454,725
=========== ===========
Net income per share $ - $0.09
=========== ===========
Pro forma income data (unaudited):
Income as reported before tax $ 1,611,676
Proforma federal and state income
tax 572,145
-----------
Proforma net income $ 1,039,534
===========
Pro forma net income per share 0.09
Weighted average shares outstanding 11,900,357 16,730,957
See accompanying notes to consolidated financial statements.
5
<PAGE>
METRO NETWORKS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
------------------------------------
1996 1997
------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,108,728 $ 1,454,725
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 1,489,671 2,129,638
Loss on dispositions of property
and equipment - 170,299
Amortization of discount on note payable 23,526 -
Provision for doubtful receivables 48,977 255,237
Deferred federal income tax (180,108) -
Decrease (increase) in, net of acquisition of businesses
Accounts receivable, net 258,562 147,851
Prepaid expenses and other current assets (56,720) 101,448
Other assets (147,464) (892,463)
(Decrease) increase in, net of acquisition of businesses
Accounts payable 466,721 523,538
Accrued payroll liabilities 116,563 2,127,523
Other accrued liabilities 425,504 (3,018,862)
Deferred revenues 76,338 207,757
Income tax payable 442,948 (1,334,198)
Other liabilities (19,261) (198,119)
Net reciprocal arrangements (838,083) (1,398,641)
----------- -----------
Net cash provided by operating activities 3,215,902 275,733
----------- -----------
Cash flows from investing activities:
Acquisitions of companies (4,266,886) (4,050,000)
Advances on receivables to related parties (149,367) -
Proceeds from sale of property and equipment - 40,000
Acquisitions of property and equipment (486,907) (3,149,038)
----------- -----------
Net cash used in investing activities $(4,903,160) $(7,159,038)
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
METRO NETWORKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
---------------------------
1996 1997
---------------------------
<S> <C> <C>
Cash flows from financing activities:
Increase (decrease) in disbursements float $( 230,443) 403,072
Proceeds from long-term debt 3,532,060 -
Principal payments on long term debt (281,901) (743,721)
Distributions (932,373) -
---------- -----------
Net cash provided by financing activities 2,087,343 (340,649)
---------- -----------
Net (decrease) increase in cash and cash
equivalents 400,085 (7,223,954)
Cash and cash equivalents at beginning of period 3,049,946 43,441,293
---------- -----------
Cash and cash equivalents at end of period $3,450,031 $36,217,339
========== ===========
Supplemental disclosures of cash
flow information:
Cash paid during the period for interest $ 106,970 $ 299,941
========== ===========
Cash paid during the period for income taxes $ 60,000 $ 851,544
========== ===========
Supplemental noncash investing and financing activities:
Property and equipment acquired through reciprocal
activities $ 74,626 $ 969,349
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
METRO NETWORKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosure normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The information furnished
in this report reflects all adjustments which, in the opinion of
management, are necessary for a fair statement of the financial position,
results of operations and cash flows as of and for the interim periods.
Such adjustments consist of items of a normal recurring nature. The results
of operations for the interim periods are not necessarily indicative of the
results of operations expected for the full fiscal year or for any other
future period.
2. INITIAL PUBLIC OFFERING
In October 1996, the Company completed its initial public offering of its
common stock (the "Public Offering"). Of the 7,200,000 shares of common
stock offered, 3,600,000 shares were sold by the selling shareholder. In
addition, the Company's underwriters exercised the underwriters' over-
allotment option which resulted in the Company selling an additional
1,050,000 shares. The Company received approximately $67.8 million in
cash, net of underwriting discounts and commissions, and other expenses.
3. PRO FORMA EARNINGS PER SHARE
Proforma income taxes are set forth herein because certain of the
Predecessor companies (as defined below) operated as S corporations or
partnerships for federal income tax purposes. Proforma net income reflects
income taxes calculated using a C corporation tax status. Weighted average
shares outstanding and pro forma net income per share are calculated
assuming the shares issued in conjunction with the Reorganization (see note
6) were outstanding for the periods presented.
Assuming that the Public Offering shares were outstanding for the periods
presented the pro forma net income per share for the three months ended
March 31, 1996 would have been $0.06.
8
<PAGE>
4. NOTES PAYABLE AND LONG-TERM DEBT
Short-term notes payable consist of various notes with an original maturity
of less than one year. Long-term debt consists of:
December 31, March 31,
1996 1997
------------ -----------
Various acquisitions notes payable, discounted
at 8% due 1997 through 1999 $686,395 $1,360,065
Unsecured note payable to bank at prime
(8.25% at December 31, 1996), due 1997
through 2000 105,750 98,351
-------- ----------
792,145 1,458,416
Less: Current portion 318,789 865,069
-------- ----------
$473,356 $ 593,437
========= ==========
On October 22, 1996, the Company paid off the notes payable related to the
$30.0 million revolving agreement and replaced this facility with a
reducing revolving credit facility (the "Credit Agreement") which provides
for maximum aggregate permitted borrowings of $30.0 million. The new line
of credit expires December 31, 2003, and will begin reducing in March 1999.
The new line of credit bears interest at a variable rate indexed to the
lender's prime rate or LIBOR. The new line of credit has a commitment fee
based on the daily average unborrowed balance and is secured by the grant
of a lien by the Company and its subsidiary on all of their respective
assets and a pledge of the Company's equity interest in its subsidiary in
favor of the lender. The new line of credit provides for various
restrictions on the Company which would restrict the Company, without first
obtaining the lender's consent, from taking certain actions, including but
not limited to incurring additional indebtedness, making certain
acquisitions or consolidating with any other entity, altering its existing
capital structure and paying certain dividends.
5. ACQUISITIONS
On January 2, 1997, the Company acquired substantially all of the tangible
and intangible assets of Airborne Traffic Network, Inc. ("Airborne"), a
Kansas corporation. Airborne operates a network of broadcast affiliates
serving the Kansas City, Kansas and Omaha, Nebraska metropolitan areas. As
consideration for the asset purchase, the Company paid
9
<PAGE>
$1,350,000 at closing and agreed to pay an additional contingent
consideration in a final payment based upon net revenue or operating cash
flow of Airborne for the 12 month period following the closing date. The
final payment, based upon net revenue or operating cash flow as defined in
the Asset Purchase Agreement, ranges from zero for net revenue less than
$1,200,000 or operating cash flow less than $400,000 up to $150,000 for net
revenue greater than or equal to $1,800,000 or operating cash flow greater
than or equal to $600,000.
On January 3, 1997, the Company acquired substantially all of the tangible
and intangible assets and assumed certain liabilities of TWI Networks,
Inc., an Ohio corporation ("TWI"). TWI operates a network of broadcast
affiliates serving the Cincinnati, Columbus and Dayton, Ohio areas, the
Memphis and Nashville, Tennessee areas and the Miami, Florida area. The
purchase price of approximately $3.7 million consisted of cash
consideration of $2,700,000 and installment notes payable of $1,000,000.
The purchase price was allocated to the net assets based upon their
estimated fair market values. The excess purchase price of approximately
$3.25 million was allocated to the value of purchased broadcast contracts,
non-compete agreements and goodwill and is being amortized over a five-year
period.
6. REORGANIZATION
From 1978 until the closing of the Public Offering, the business of the
Company was operated through Metro Traffic Control, Inc., a Maryland
corporation ("MTC"); Metro Networks, Ltd., a Texas limited partnership
("MNL"); Metro Video News, Inc., a Texas corporation ("MVN"); Metro
Reciprocal, Inc., a Texas corporation ("MRI") and their subsidiaries
(collectively, the "Predecessor Companies"). Until the closing of the
Public Offering, all of the equity interests in the Predecessor Companies
were owned by David I. Saperstein, the Chairman and Chief Executive Officer
of the Company, and certain trusts (the "Trusts") created for the benefit
of Mr. Saperstein's children (collectively, the "Saperstein Family").
In May 1996, Metro Networks, Inc. was incorporated in Delaware.
Immediately prior to the closing of the Public Offering in October 1996,
the Saperstein Family established Metro Networks, Inc. as a holding company
and consolidated the issued and outstanding equity interests in the
Predecessor Companies, by exchanging such interests for 9,350,607 shares of
Metro Networks, Inc.'s common stock and 2,549,750 shares of Metro Networks,
Inc.'s Series A Convertible Preferred Stock (the "Reorganization").
7. CERTAIN TRANSACTIONS
Prior to the Public Offering, the Company entered into certain reciprocal
arrangements with unrelated third parties as a result of which the Company
received goods and services for the benefit of Mr. Saperstein. The
reciprocal arrangements obligate the Company to provide commercial airtime,
provide other goods and services, and make cash
10
<PAGE>
disbursements to such third parties in exchange for the goods and services
received by the Company. The dollar values of such arrangements have
typically been calculated based upon the Company's estimate of the fair
market value of the commercial airtime inventory involved on a basis
similar to the others in the broadcast industry. As of March 31, 1997, the
Company was obligated to provide approximately $1.5 million of commercial
airtime, goods and services and cash under these reciprocal arrangements.
Immediately prior to the Public Offering, the Company entered into an
agreement with Mr. Saperstein pursuant to which Mr. Saperstein was
distributed the goods and services the Company held for Mr. Saperstein's
benefit. The Company also distributed to Mr. Saperstein all of its rights
to the goods and services that are the subject of existing reciprocal
arrangements but which had not yet been delivered to the Company. The
value of such goods and services was approximately $4.1 million.
Immediately prior to the closing of the Public Offering, the Company
entered into a Stock Loan and Pledge Agreement with Mr. Saperstein pursuant
to which the Company loaned Mr. Saperstein 2,549,750 shares of common stock
(the "Loaned Stock"). The loan is for a term of ten years, although the
Company has the right to require the return of the Loaned Stock from Mr.
Saperstein prior to that time upon three days notice. As security for the
loan, Mr. Saperstein pledged 2,549,750 shares of Series A Convertible
Preferred Stock of the Company which, when converted into common stock,
will equal the number of shares of Loaned Stock. Mr. Saperstein is
obligated to pay the Company an annual fee over the term of the loan of
0.1% of the average fair market value of the Loaned Stock during the five
day period immediately following the date of the Stock Loan and Pledge
Agreement. One-half of this fee is payable annually, and the remaining one-
half of this fee is payable upon the termination of the loan if such
termination occurs pursuant to an Event of Default (as defined in the Stock
Loan and Pledge Agreement) or at the end of the ten year term of the Stock
Loan and Pledge Agreement. The Company will forfeit this portion of the
fee if it calls the loan prior to the end of the ten year term. In
addition, Mr. Saperstein paid an initial transaction fee of $2,550 to the
Company and is obligated to repay to the Company any dividends that are
paid by the Company on the Loaned Stock. The Series A Convertible
Preferred Stock does not pay any dividends.
8. INCOME TAXES
Prior to the Reorganization, MNL owned corporations which were taxed under
the C corporation provisions of the Internal Revenue Code. Taxes related
to income from the entities taxed under the C corporation provisions are
reported under the asset and liability method. Accordingly, deferred tax
assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Subsequent to the Reorganization all of the
operations will be included in the consolidated tax return of the Company.
Accordingly at the time of Reorganization the Company recorded an increase
in the deferred tax liability of $66,000, which represented the tax basis
differential between
11
<PAGE>
financial and tax assets and liabities associated with the S corporations
and partnerships included in the reorganization.
As of October 1996, the Company and the controlling shareholder entered
into an agreement pursuant to which the controlling shareholder may seek
reimbursement from the Company for any income tax obligation attributable
to any period prior to the Reorganization. Alternatively, in the event
that the status of any of MVN, MRI or MTC as a subchapter S corporation is
not respected, the Company may seek reimbursement from the controlling
shareholder, but only to the extent that the controlling shareholder
receives a tax refund attributable to amounts he previously included in
income in his capacity as a shareholder of such corporations. In October
1996, the Company distributed to the controlling shareholder a note for
$3,100,000. This note relates to estimated tax amounts owed by the
controlling shareholder as a result of his ownership interest in S
corporations and partnerships for the period January 1, 1996 to the date of
the Reorganization. The note does not bear interest and is due on demand,
but in all events no later than December 31, 1997.
9. STOCK OPTIONS
The Company's Board of Directors has adopted the 1996 Incentive Stock
Option Plan (the "1996 Plan") for the Company's officers and employees.
The Board of Directors has discretionary authority, subject to certain
restrictions, to administer the 1996 Plan, including but not limited to
determining the individuals to whom, the times at which, and the exercise
price for which options will be granted. The total number of shares
reserved for issuance under the 1996 Plan is 1,000,000, of which
approximately 584,000 have been issued. The exercise price of options
granted under the 1996 Plan may not be less than 100% of the fair market
value (or not less than 110% of the fair market value as to any individual
who, at the time the option is granted, owned more than 10% of the total
combined voting power of all classes of stock of the Company) of the common
stock on the date such option was granted. Options granted under the 1996
Plan typically become vested and exercisable for up to 33 1/3% of the total
optioned shares upon the first anniversary of the grant of the option and
for an additional 33 1/3% of the total optioned shares upon each succeeding
anniversary until the option is fully exercisable at the end of the third
year. Generally, the unexercised portion of any option automatically
terminates upon the earlier of (i) termination of the optionee's employment
with the Company, (ii) the expiration of 90 days from the date the
optionee's employment with the Company terminates for any reason other than
cause, death, or disability (iii) the expiration of one year after the
optionee's death or (iv) the expiration of the option. Upon the sale,
merger or liquidation of the Company, outstanding options may be exercised
immediately prior to the consummation of such a transaction, whether or not
vested as of such date of consummation. In addition, 40,000 options were
granted to non-employee members of the Board of Directors.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table provides a summary of the Company's statement of
operations for the periods indicated:
THREE MONTHS ENDED MARCH 31,
----------------------------
(IN MILLIONS,
EXCEPT PER SHARE DATA)
1996 1997 % CHANGE
------ ----- --------
Advertising Revenues $23.0 $29.4 27.5%
Broadcast Costs 12.5 16.0 28.3%
Marketing Expense 5.5 6.2 13.2%
General &
Administrative Expense 1.7 3.0 80.7%
Depreciation & Amortization 1.5 2.1 43.0%
EBITDA 3.4 4.1 21.1%
Net Income* 1.0 1.5 39.9%
EPS* 0.06 0.09 39.9%
*1996 Net Income and EPS have been adjusted on a pro forma basis to reflect
C corporation tax status. Weighted average shares oustanding are calculated
assuming the shares issued in conjunction with the October 1996 IPO were
outstanding for the periods presented.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Revenues increased by $6.4 million, or approximately 27.5% to $29.4 million
for the three months ended March 31, 1997 (the "March 1997 Period") from $23.0
million for the three months ended March 31, 1996 (the "March 1996 Period")
primarily due to increased sales of commercial airtime inventory. Revenues from
reciprocal arrangements were $1.8 million in the March 1997 Period, a decrease
of $1.5 million from $3.3 million in the March 1996 Period. As a percentage of
total revenues, revenues from reciprocal arrangements decreased to 6.1% in the
March 1997 Period from 14.3% in the March 1996 Period.
Broadcasting costs increased by $3.5 million, or approximately 28.3%, to
$16.0 million in the March 1997 Period from $12.5 million in the March 1996
Period. As a percentage of revenues, broadcasting costs increased modestly to
54.5% for the March 1997 Period from 54.1% for the March 1996 Period. The
Company's continued development of its Expanded Radio Services, Metro TV
Services, and acquisitions of Airborne, TWI and several new market start-up
operations significantly contributed to the increase. Excluding these costs,
broadcasting costs would have increased by 8.0% to $13.5 million in the March
1997 Period from $12.5 million in the March 1996 Period. Broadcasting costs
attributable to reciprocal arrangements decreased from approximately $2.0
million in the March 1996 Period to $0.9 million in the March 1997 Period.
13
<PAGE>
Marketing expense increased by $0.7 million, to $6.2 million in the March
1997 Period from $5.5 million in the March 1996 Period. This increase resulted
from increased sales commissions associated with the increased revenues
generated in the March 1997 Period. Marketing expense as a percentage of
revenues decreased to 21.1% in the March 1997 Period as compared to 23.8% in the
March 1996 Period due to the relatively fixed nature of certain of the Company's
marketing costs. Marketing expense related to reciprocal arrangements decreased
by approximately $0.5 million from $0.8 million in the March 1996 Period to $0.3
million in the March 1997 Period.
General and administrative expense increased by $1.3 million, to $3.0
million in the March 1997 Period from $1.7 million in the March 1996 Period.
This increase was primarily due to increased salaries and related overhead
associated with the Company's continued growth. General and administrative
expenses associated with reciprocal arrangements increased by approximately $0.1
million from $0.2 million in the March 1996 Period to $0.3 million in the March
1997 Period.
EBITDA increased by approximately $0.7 million to $4.1 million in the March
1997 Period from $3.4 million in the March 1996 Period. The improvement
represented an increase of 21.1%. The increase in EBITDA was primarily
attributable to the Company's continued revenue growth. EBITDA as a percentage
of revenue was 14.0% in the March 1997 Period.
As a result of the factors discussed above, net income increased to $1.5
million in the March 1997 Period from $1.0 million (adjusted on a pro forma
basis to reflect C corporation tax status) in the March 1996 Period, or
approximately 39.9%. Earnings per share increased to $0.09 in the March 1997
Period.
During the March 1997 Period cash and cash equivalents decreased $7.2
million from $43.4 million to $36.2 million. Cash provided by operating
activities decreased from $3.2 million in the March 1996 Period to $0.3 million
due primarily to the decrease in other accrued liabilities. Cash used in
investing activities increased to $7.2 million from $4.9 million in the March
1996 Period due to increased acquisitions of property and equipment. Cash
provided by financing activities decreased to $(0.3) million in the March 1997
Period from $2.1 million due to the absence of long term debt borrowing.
The maximum aggregate permitted borrowings under the Credit Agreement is
$30.0 million. As of March 31, 1997, the Company had no debt outstanding under
the Credit Agreement.
The Company intends to retain all of its earnings to finance the
development and expansion of its business and therefore does not intend to pay
any cash dividends on the common stock for the forseeable future. The Credit
Agreement restricts the payment of cash dividends.
14
<PAGE>
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
27.1 Financial Data Schedule
15
<PAGE>
SIGNATURE
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.
METRO NETWORKS, INC.
DATED: 5-14-97 BY: /S/ CURTIS H. COLEMAN
---------------- ---------------------------------
CURTIS H. COLEMAN
SENIOR VICE PRESIDENT-
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER AND DULY AUTHORIZED OFFICER)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 36,217
<SECURITIES> 0
<RECEIVABLES> 34,068
<ALLOWANCES> 0
<INVENTORY> 789
<CURRENT-ASSETS> 73,319
<PP&E> 20,483
<DEPRECIATION> 6,650
<TOTAL-ASSETS> 106,381
<CURRENT-LIABILITIES> 29,722
<BONDS> 0
0
3
<COMMON> 17
<OTHER-SE> 73,365
<TOTAL-LIABILITY-AND-EQUITY> 106,381
<SALES> 29,368
<TOTAL-REVENUES> 29,368
<CGS> 22,208
<TOTAL-COSTS> 27,381
<OTHER-EXPENSES> (383)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 2,348
<INCOME-TAX> 893
<INCOME-CONTINUING> 1,455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,455
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
