<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-21575
METRO NETWORKS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 76-0505148
(State of incorporation) (IRS Employer
Identification No.)
2800 POST OAK BLVD., SUITE 4000 77056-6199
HOUSTON, TEXAS (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (713) 407-6000
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, and (2) has been subject to such filing requirements
for the past 90 days. [X] Yes [ ] No
SHARES OF COMMON STOCK OUTSTANDING AT APRIL 30, 1998: 16,588,024
================================================================================
<PAGE>
METRO NETWORKS, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets................................. 2
Unaudited Consolidated Statements of Earnings............... 3
Unaudited Condensed Consolidated Statements of Cash Flows... 4
Unaudited Consolidated Statement of Stockholders' Equity.... 5
Notes to Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition................ 8
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.............................. 9
</TABLE>
<PAGE>
Metro Networks, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
ASSETS (unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 23,665 $ 25,087
Short-term marketable investments 1,324 777
Accounts receivable, net 32,191 34,113
Reciprocal receivables, net 11,447 11,113
Merchandise and scrip inventory 761 686
Other 587 703
-------- --------
Total current assets 69,975 72,479
-------- --------
PROPERTY AND EQUIPMENT
Operating equipment 33,350 30,638
Transportation equipment 743 842
Leasehold improvements 2,933 2,747
-------- --------
37,026 34,227
Less - accumulated depreciation and amortization 11,090 9,838
-------- --------
25,936 24,389
-------- --------
PURCHASED BROADCAST CONTRACTS AND OTHER INTANGIBLES,
NET OF ACCUMULATED AMORTIZATION OF $12,374 AND $11,354 17,496 17,545
OTHER ASSETS 890 660
-------- --------
$114,297 $115,073
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,377 $ 3,030
Notes payable 326 568
Reciprocal payables and accrued liabilities 10,389 10,281
Accrued liabilities 8,133 10,074
Current portion of long-term debt 420 420
-------- --------
Total current liabilities 22,645 24,373
LONG-TERM DEBT 235 490
OTHER 1,487 1,917
-------- --------
Total liabilities 24,367 26,780
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value (authorized 10,000,000 shares) 3 3
Common stock, $.001 par value (authorized 25,000,000 shares) 17 16
Additional paid-in capital 73,723 73,708
Unrealized appreciation in equity investments 168 -
Retained earnings 16,019 14,566
-------- --------
89,930 88,293
-------- --------
$114,297 $115,073
======== ========
</TABLE>
- -----------------------------
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
Metro Networks, Inc. and Subsidiaries
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------
1998 1997
-------- --------
<S> <C> <C>
REVENUES $34,392 $29,368
OPERATING COSTS AND EXPENSES
Broadcasting 19,591 15,999
Marketing 7,456 6,209
General and administrative 2,724 3,043
Depreciation and amortization 2,371 2,130
------- -------
32,142 27,381
------- -------
TOTAL OPERATING EARNINGS 2,250 1,987
OTHER (INCOME) EXPENSE
Interest income (223) (366)
Interest expense 63 22
Other (95) (17)
------- -------
(255) (361)
------- -------
EARNINGS BEFORE STATE AND FEDERAL INCOME TAXES 2,505 2,348
STATE AND FEDERAL INCOME TAXES 1,052 893
------- -------
NET EARNINGS $ 1,453 $ 1,455
======= =======
BASIC EARNINGS PER SHARE $ 0.09 $ 0.09
======= =======
BASIC AVERAGE COMMON SHARES OUTSTANDING 16,587 16,550
======= =======
DILUTED EARNINGS PER SHARE $ 0.09 $ 0.09
======= =======
DILUTED AVERAGE COMMON SHARES OUTSTANDING 16,891 16,731
======= =======
</TABLE>
- -------------------
The accompany notes are an integral part of these financial statements.
-3-
<PAGE>
Metro Networks, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------
1998 1997
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 1,453 $ 1,455
Adjustments to reconcile net earnings to
cash provided by operating activities
Depreciation and amortization 2,371 2,130
Deferred federal income taxes 125 -
Amoritization of discount on notes payable 8 -
Provision for doubtful accounts 197 255
Loss on dispositions of property and equipment 8 170
Changes in operating assets and liabilities (1,202) (3,735)
------- -------
Cash provided by operating activities 2,960 275
------- -------
INVESTING ACTIVITIES
Capital additions (2,578) (3,149)
Purchase of marketable securities (379) -
Proceeds from sale of property and equipment 65 40
Acquisitions of companies (1,000) (4,050)
------- -------
Cash used for investing activities (3,892) (7,159)
------- -------
FINANCING ACTIVITIES
Repayments of long-term debt (506) (743)
Issuance of common stock 16 -
------- -------
Cash used for financing activities (490) (743)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,422) (7,627)
CASH AND CASH EQUIVALENTS
Beginning of period 25,087 41,386
------- -------
End of period $23,665 $33,759
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 36 $ 300
Cash paid during the period for state and federal income taxes $ 586 $ 852
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES
Property and equipment acquired through reciprocal activities $ 99 $ 969
</TABLE>
- -----------------------------
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
Metro Networks, Inc. and Subsidiaries
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1998
(in thousands, except share data)
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL APPRECIATION
PREFERRED COMMON PAID-IN OF EQUITY RETAINED
DOLLAR AMOUNTS STOCK STOCK CAPITAL INVESTMENTS EARNINGS TOTAL
- -------------- ----- ----- ------- ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 $ 3 $ 16 $73,708 $ -- $14,566 $88,293
Net earnings -- -- -- -- 1,453 1,453
Change in unrealized appreciation of equity investments -- -- -- 168 -- 168
Issuance of stock under Stock Option Plan -- 1 15 -- -- 16
---- ---- ------- ------- ------- -------
BALANCE, MARCH 31, 1998 $ 3 $ 17 $73,723 $ 168 $16,019 $89,930
==== ==== ======= ======= ======= =======
=========================
SHARES ISSUED
---------------------------
PREFERRED COMMON
SHARE AMOUNTS STOCK STOCK
- ------------- ----------- -----------
<S> <C> <C>
BALANCE, DECEMBER 31, 1997 2,549,750 16,587,058
Issuance of stock under Stock Option Plan - 966
---------- -----------
BALANCE, MARCH 31, 1998 2,549,750 16,588,024
========== ===========
</TABLE>
-5-
<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 Metro Networks, Inc. ("the Company") pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures 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. Certain reclassifications have been made
to prior year amounts to conform to current year presentation. These
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's December 31,
1997 Annual Report on Form 10K.
2. ACQUISITIONS
On March 2, 1998, the Company acquired all the outstanding common stock of
Traffic Patrol Broadcasting, Inc. ("TPB"), a Texas corporation. TPB
provides traffic reporting services to a network of broadcast affiliates
serving the Dallas/Ft. Worth, Texas area. The consideration for the stock
included cash of approximately $1,000,000 and a contingent payment based on
future operating cash flow.
3. RELATED PARTY TRANSACTIONS
Prior to the October 1996 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 the controlling
shareholder. The reciprocal arrangements obligate the Company to provide
commercial airtime, provide other goods and services, and make cash
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 others in the broadcast industry. As of March 31, 1998, the
Company was obligated to provide approximately $585,000 of commercial
airtime, goods and services and cash under these reciprocal arrangements.
-6-
<PAGE>
4. EARNING PER COMMON SHARE
The following is a reconciliation of the numerators and denominators of the
basic and diluted computations for the periods ended March 31, 1998 and
1997 (in thousands, except per share data).
<TABLE>
<CAPTION>
FOR THE PERIODS ENDED MARCH 31,
------------------------------------------
WEIGHTED
AVERAGE SHARES PER SHARE
Income OUTSTANDING Amount
---------- ----------- ---------
<S> <C> <C> <C>
MARCH 31, 1998
- --------------
BASIC EPS
Income available to common stockholders $1,453 16,587 $0.09
EFFECT OF DILUTIVE SECURITIES
Options -- 304 --
------ ------ -----
DILUTED EPS
Income available to stockholders plus assumed conversion $1,453 16,891 $0.09
====== ====== =====
MARCH 31, 1997
- --------------
BASIC EPS
Income available to common stockholders $1,455 16,550 $0.09
EFFECT OF DILUTIVE SECURITIES
Options -- 181 --
------ ------ -----
DILUTED EPS
Income available to stockholders plus assumed conversion $1,455 16,731 $0.09
====== ====== =====
</TABLE>
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Revenues increased by $5.0 million to $34.4 million, or 17.1%, in the first
quarter of 1998. The increase in revenue is primarily due to increased sales of
commercial airtime inventory. Revenues from reciprocal agreements were $2.1
million in the first quarter of 1998, compared to $1.8 million for the same
period of last year. As a percentage of total revenues, revenues from
reciprocal agreements increased slightly to 6.2% of total revenues in the first
quarter of 1998 compared to 6.1% for the same period last year.
Total Operating Costs (broadcasting and marketing costs) increased by $4.8
million to $27.0 million, or 21.8%, in the first quarter of 1998 when compared
to the same period last year. As a percentage of revenues, total operating
costs were 78.6% in the first quarter of 1998, compared to 75.6% for the same
period last year. The increase in costs are primarily due to the Company's
introduction of its Metro Source service, continued development of its Expanded
Radio Services and Metro Television Services and various acquisitions which the
Company completed in 1997 and 1998.
General and administrative expenses decreased by $0.3 million to $2.7
million, or 10.5% in the first quarter of 1998 when compared to the same period
last year. As a percentage of revenues, general and administrative expenses
decreased to 7.9% in the first quarter of 1998, compared to 10.4% for the same
period last year.
Earnings before interest income, interest expense, taxes, depreciation and
amortization (EBITDA) increased by $0.6 million, or 14.1%, to $4.7 million in
the first quarter compared to $4.1 million in first quarter of 1997. The
increase in EBITDA was primarily attributable to continued revenue growth.
EBITDA as a percentage of revenue was 13.7% for the first quarter of 1998,
compared to 14.1% for the same period last year.
The Company recorded first quarter 1998 net income of $1.5 million, which
was unchanged from last year. Earnings per share for the three months ended
March 31, 1998 was $0.09, which was unchanged from the prior year.
FINANCIAL CONDITION
- -------------------
Cash and cash equivalents decreased $1.4 million from $25.1 million to
$23.7 million for the three months ended March 31, 1998. Cash provided by
operating activities increased $2.7 million to $3.0 million in the first quarter
of 1998 when compared to the same period last year, primarily due to changes in
operating assets and liabilities. Cash used for investing activities decreased
by $3.3 million to $3.9 million in the first quarter of 1998 when compared to
the same period last year, primarily due to a decrease in acquisitions of
companies from last year.
-8-
<PAGE>
The maximum aggregate permitted borrowings under the Credit Agreement is
$30.0 million. As of March 31, 1998, the Company had no debt outstanding under
the Credit Agreement.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit
No.
-------
10.27 Amendment dated December 31, 1997 to Credit Agreement
among Metro Networks, Inc., certain lenders and
NationsBank of Texas, N.A. as Administrative Lender.
10.28 Amendment dated October 8, 1997 to the 1996 Incentive
Stock Option Plan.
27.1 Financial Data Schedule.
No reports were filed on Form 8-K during the three-month
period ended March 31, 1998.
-9-
<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.
--------------------
(Registrant)
Dated: May 13, 1998 By: /s/ TIMOTHY D. MCMILLIN
_______________________ -----------------------------
Timothy D. McMillin
Senior Vice President
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
-10-
<PAGE>
EXHIBIT 10.27
SECOND AMENDMENT
TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment") is
dated as of the 31st day of December, 1997 and entered into among METRO
NETWORKS, INC., a Delaware corporation (the "Borrower"), the Lenders party
thereto, and NATIONSBANK OF TEXAS, N.A., a national banking association,
individually and as Administrative Lender (in such latter capacity, the
"Administrative Lender").
WITNESSETH:
WHEREAS, the Borrower, the Lenders, and the Administrative Lender entered
into a Credit Agreement, dated as of October 22, 1996, for a loan facility in
the amount of $30,000,000 (as amended, restated, waived or otherwise modified
from time to time, including without limitation, the First Amendment dated
September 30, 1997, between the Borrower, the Lenders party thereto, and the
Administrative Lender, the "Credit Agreement"); and
WHEREAS, the Lenders, the Administrative Lender, and the Borrower have
agreed to amend the Credit Agreement to make certain changes to the terms
therein upon the terms and conditions set forth below;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
Borrower, the Lenders and the Administrative Lender agree as follows:
SECTION 1. Definitions. Unless specifically defined or redefined below,
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.
SECTION 2. Amendment to Section 7.3(h) of the Credit Agreement. Section
7.3(h) of the Credit Agreement shall be deleted in its entirety and the
following Section 7.3(h) shall be substituted in its stead:
(h) Other Investments primarily related to the Borrower's Business
not to exceed $722,000 in aggregate purchase price amount, provided that no
Default exists prior to or giving effect to the purchase of any such
Investment.
<PAGE>
SECTION 3. Amendment to Section 7.6(a) of the Credit Agreement. Section
7.6(a) of the Credit Agreement shall be deleted in its entirety and the
following Section 7.6(a) shall be substituted in its stead:
(a) single Acquisitions, the Acquisition Consideration for which does
not exceed $3,500,000, and so long as in any fiscal year the aggregate
Acquisition Consideration paid by the Borrower and the Subsidiaries for all
Acquisitions during such fiscal year does not exceed $7,500,000 (or
$7,710,000 for fiscal year 1997 only), and
SECTION 4. Affirmation. The Borrower hereby acknowledges and agrees that
nothing in this Second Amendment shall affect the Borrower's obligations under
the Credit Agreement or the other Loan Documents executed in connection
therewith (except as specifically provided in this Second Amendment), which
remain valid, binding and enforceable, and except as amended hereby, unamended,
or shall constitute a waiver by the Lenders of any of their rights or remedies,
now or at any time in the future, with respect to any requirement under the
Credit Agreement or the other Loan Documents or with respect to an Event of
Default or Default, occurring now or at any time in the future.
SECTION 5. Conditions Precedent. This Second Amendment shall not be
effective until:
(a) all proceedings of the Borrower taken in connection with this
Second Amendment and the transactions contemplated hereby shall be
satisfactory in form and substance to the Administrative Lender and Lenders
signatory hereto, and
(b) the Administrative Lender and Lenders shall have each received
such documents, instruments, and certificates, etc., each in form and
substance satisfactory to the Lenders, as the Lenders shall deem necessary
or appropriate in connection with this Second Amendment and the
transactions contemplated hereby.
SECTION 6. Representations and Warranties. The Borrower represents and
warrants to the Lenders and the Administrative Lender that (a) the Borrower has
the corporate power and has taken all necessary corporate action, to authorize
it to enter into and deliver this Second Amendment and all related
documentation, (b) this Second Amendment constitutes its legal, valid, and
binding obligations, enforceable in accordance with the terms hereof (subject as
to enforcement of remedies to any applicable bankruptcy, reorganization,
moratorium, or other laws or principles of equity affecting the enforcement of
creditors' rights generally), (c) there exists no Event of Default or Default
under the Credit Agreement after giving effect to this Second Amendment, (d) its
representations and warranties set forth in the Credit Agreement and other Loan
Documents are true and correct on the date hereof after giving effect to this
Second Amendment, (e) it has complied with all agreements and conditions to be
complied with by it under the Credit Agreement and the other Loan Documents by
the date hereof, (f) the Credit Agreement, as amended hereby, and the other Loan
Documents remain in full force and effect,
2
<PAGE>
and (g) no notice to, or consent of, any Person is required under the terms of
any agreement of the Borrower in connection with the execution of this Second
Amendment.
SECTION 7. Further Assurances. The Borrower shall execute and deliver such
further agreements, documents, instruments, and certificates in form and
substance satisfactory to the Administrative Lender, as the Administrative
Lender or any Lender may deem reasonably necessary or appropriate in connection
with this Second Amendment.
SECTION 8. Counterparts. This Second Amendment and the other Loan
Documents may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument. In making proof of any
such agreement, it shall not be necessary to produce or account for any
counterpart other than one signed by the party against which enforcement is
sought.
SECTION 9. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AGREES THAT
THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS SECOND AMENDMENT AND THE
OTHER LOAN DOCUMENTS.
SECTION 10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE ADMINISTRATIVE
LENDER AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND
INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS SECOND AMENDMENT AND
MAKING ANY ADVANCES HEREUNDER.
SECTION 11. ENTIRE AGREEMENT. THIS SECOND AMENDMENT TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
<PAGE>
- --------------------------------------------------------------------------------
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
- --------------------------------------------------------------------------------
4
<PAGE>
IN WITNESS WHEREOF, this Second Amendment to Credit Agreement is executed
as of the date first set forth above.
BORROWER: METRO NETWORKS, INC.
/s/ SHANE E. COPPOLA
-------------------------------
By: Shane E. Coppola
Its: Executive Vice President
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
/s/ WHITNEY L. BUSSE
-------------------------------
By: Whitney L. Busse
Its: Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A., as a
Lender
/s/ WHITNEY L. BUSSE
-------------------------------
By: Whitney L. Busse
Its: Vice President
THE BANK OF NOVA SCOTIA, as a
Lender
/s/ VINCENT J. FITZGERALD, JR.
-------------------------------
By: Vincent J. Fitzgerald, Jr.
Its: __________________________
5
<PAGE>
EXHIBIT 10.28
AMENDMENT NO. 1
TO THE
METRO NETWORKS, INC.
1996 INCENTIVE STOCK OPTION PLAN
This Amendment No. 1 (the "Amendment") to the Metro Networks, Inc. 1996
Incentive Stock Option Plan (the "Plan"), made pursuant to action of the Board
of Directors of Metro Networks, Inc. pursuant to Section 8.1 of the Plan, is
dated as of October 8, 1997. The Plan is hereby amended as follows:
1. The following definition shall be added to Section 1 of the Plan:
"Nonstatutory Stock Option" means an Option not described in Section
422(b), 423(b) or 424(c)(3)(B) of the Code.
2. Section 6.2 of the Plan is hereby amended as follows:
A) by deleting the lead in paragraph of such Section and substituting
the following in lieu thereof:
"Each Option shall be subject to the following conditions, which
conditions shall be stated within the applicable Incentive Stock
Option Agreement. Any Option which does not comply with these
provisions shall not be considered an Incentive Stock Option but
instead shall be considered a Nonstatutory Stock Option issued under
the Plan."
B) by adding the words "but instead shall be considered Nonstatutory
Stock Options" at the end of the first sentence of subsection (a)
thereof.
The terms of the Plan shall remain in full force and effect without
modification or amendment except as expressly set forth herein.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 23,665
<SECURITIES> 1,324
<RECEIVABLES> 43,638
<ALLOWANCES> 0
<INVENTORY> 761
<CURRENT-ASSETS> 69,975
<PP&E> 37,026
<DEPRECIATION> 11,090
<TOTAL-ASSETS> 114,297
<CURRENT-LIABILITIES> 22,645
<BONDS> 0
0
3
<COMMON> 17
<OTHER-SE> 89,910
<TOTAL-LIABILITY-AND-EQUITY> 114,297
<SALES> 34,392
<TOTAL-REVENUES> 34,392
<CGS> 27,047
<TOTAL-COSTS> 32,142
<OTHER-EXPENSES> (318)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63
<INCOME-PRETAX> 2,505
<INCOME-TAX> 1,052
<INCOME-CONTINUING> 1,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,453
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
