<PAGE> 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 SEPTEMBER 30, 1996
[ ] 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 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) 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 [ ] No [X]
---------------
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
There were 8,736,973 shares of Class A Common Stock outstanding as of
October 31, 1996.
There were 19,577,672 shares of Class B Common Stock outstanding as of
October 31, 1996.
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COX RADIO, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PART I - FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS....................................................................... 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................................................ 9
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES...................................................................... 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................ 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................... 13
SIGNATURES............................................................................................ 14
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COX RADIO, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents......................................................... $ 2,813 $ 1,691
Accounts and notes receivable, less allowance for doubtful
accounts of $952 and $774, respectively.......................................... 29,224 30,667
Prepaid expenses and other current assets......................................... 3,012 3,289
------------- ------------
Total current assets............................................................ 35,049 35,647
Plant and equipment, net........................................................... 29,311 28,020
Intangible assets, net............................................................. 136,887 126,798
Other assets....................................................................... 3,866 1,302
------------- ------------
Total assets.................................................................... $ 205,113 $ 191,767
============= ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable and accrued expenses............................................. $ 8,283 $ 10,924
Unit appreciation plan ("UAP") liability ......................................... 2,552 963
Income taxes payable.............................................................. - 278
Other current liabilities......................................................... 714 873
------------- ------------
Total current liabilities....................................................... 11,549 13,038
Amounts due to Cox Enterprises, Inc................................................ 107,119 125,089
Deferred income taxes.............................................................. 7,604 6,470
------------- ------------
Total liabilities............................................................... 126,272 144,597
------------- ------------
Shareholder's equity:
Preferred stock, $1.00 par value: 5,000,000 shares authorized,
none outstanding................................................................. - -
Common stock, $1.00 par value; 6,000 shares authorized
and 600 shares outstanding at December 31, 1995.................................. - 1
Class A Common Stock, $1.00 par value; 70,000,000 shares
authorized, none outstanding..................................................... - -
Class B Common Stock, $1.00 par value; 45,000,000 shares
authorized and 19,577,672 shares outstanding at
September 30, 1996............................................................... 19,578 -
Additional paid-in capital........................................................ 108,114 90,947
Deficit in retained earnings...................................................... (48,851) (43,778)
------------- ------------
Total shareholder's equity...................................................... 78,841 47,170
------------- ------------
Total liabilities and shareholder's equity...................................... $ 205,113 $ 191,767
============= ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
COX RADIO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
NET REVENUES:
Local.................................................. $ 24,294 $ 24,124 $ 74,708 $ 67,326
National............................................... 7,984 7,045 23,463 22,069
Other.................................................. 739 233 1,154 558
-------- -------- -------- --------
Total net revenues................................... 33,017 31,402 99,325 89,953
COSTS AND EXPENSES:
Operating.............................................. 11,482 12,275 32,046 30,527
Selling, general and administrative.................... 10,944 10,770 37,677 35,527
Corporate general and administrative................... 1,986 2,979 4,327 4,852
Depreciation and amortization.......................... 2,027 1,768 6,006 5,483
-------- -------- -------- --------
OPERATING INCOME.......................................... 6,578 3,610 19,269 13,564
OTHER INCOME (EXPENSE):
Interest expense.......................................... (2,553) (1,535) (5,409) (4,477)
Other - net............................................... (51) 286 (326) 18
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 3,974 2,361 13,534 9,105
Income taxes.............................................. 1,604 1,006 5,951 3,954
-------- -------- -------- --------
NET INCOME ............................................... $ 2,370 $ 1,355 $ 7,583 $ 5,151
======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
3
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COX RADIO, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
DEFICIT
COMMON STOCK CLASS B COMMON STOCK ADDITIONAL IN
------------- -------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ------ ------ ------- -------- -----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995..................... 1 $ 1 $ 90,947 $ (43,778) $ 47,170
Net income ..................................... 7,583 7,583
Dividends to CEI ............................... (12,656) (12,656)
Capital contribution by CEI .................... 36,744 36,744
Issuance of Class B Common Stock to CEI......... (1) (1) 19,578 $ 19,578 (19,577)
------ ------ ------ -------- -------- --------- --------
BALANCE AT SEPTEMBER 30, 1996 ................... 0 $ 0 19,578 $ 19,578 $108,114 $ (48,851) $ 78,841
====== ====== ====== ======== ======== ========= ========
</TABLE>
See notes to consolidated financial statements.
4
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COX RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1996 1995
---- ----
(THOUSANDS OF DOLLARS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................................ $ 7,583 $ 5,151
Items not requiring cash:
Depreciation...................................................................... 1,931 1,832
Amortization...................................................................... 4,075 3,651
Deferred income taxes............................................................. 1,134 (504)
Decrease in accounts receivable.................................................... 1,443 824
Decrease in accounts payable and accrued expenses.................................. (226) (541)
Decrease in taxes payable.......................................................... (278) (116)
Increase (decrease) in UAP liability............................................... 1,589 (187)
Other, net......................................................................... 565 27
-------- --------
Net cash provided by operating activities...................................... 17,816 10,137
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................... (1,381) (2,070)
Acquisitions, net of cash acquired................................................. (15,811) (11,697)
Increase in other long-term assets................................................. (3,205) (2,788)
-------- --------
Net cash used in investing activities.......................................... (20,397) (16,555)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in amounts due to CEI..................................................... 18,774 8,594
Dividends paid..................................................................... (12,656) -
Decrease in book overdrafts........................................................ (2,415) (2,451)
-------- --------
Net cash provided by financing activities...................................... 3,703 6,143
-------- --------
Net increase (decrease) in cash and cash equivalents............................... 1,122 (275)
Cash and cash equivalents at beginning of period................................... 1,691 1,897
-------- --------
Cash and cash equivalents at end of period......................................... $ 2,813 $ 1,622
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest............................................................. $ 5,687 $ 4,593
Cash paid for income taxes......................................................... $ 6,546 $ 5,773
Noncash activities - Capital contribution by CEI................................... $ 36,744 -
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 7
COX RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION AND OTHER INFORMATION
Cox Radio, Inc. ("Cox Radio" or the "Company"), a subsidiary of Cox
Enterprises, Inc. ("CEI"), is a leading national radio broadcasting company
whose business is devoted exclusively to operating, acquiring and developing
radio stations located throughout the United States.
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, 1995
and notes thereto contained in Cox Radio's registration statement filed with
the Securities and Exchange Commission on Form S-1 (Commission File No.
333-08737).
The results of operations for the nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1996 or any interim period.
2. COX RADIO CONSOLIDATION AND INITIAL PUBLIC OFFERING
On September 30, 1996, pursuant to an Agreement and Plan of Merger of KFI,
Inc., WCKG, Inc., WWRM, Inc. and Cox Syracuse, Inc. with and into Cox Radio,
Inc. (the "Plan of Merger"), CEI transferred direct or indirect ownership of
its U.S. radio broadcast properties to Cox Radio (the "Cox Radio
Consolidation"). In connection with the Cox Radio Consolidation, the Company
amended its Certificate of Incorporation to change the capital structure of the
Company. As a result, the Company's capital stock consists of 70,000,000
authorized shares of Class A Common Stock, 45,000,000 authorized shares of
Class B Common Stock and 5,000,000 authorized shares of Preferred Stock, all at
$1.00 par value per share. Pursuant to the Plan of Merger, CEI, through its
indirect subsidiary, Cox Broadcasting, Inc., received 19,577,672 shares of the
Company's Class B Common Stock for its ownership interests. CEI's historical
basis in the assets and liabilities of the operations were carried over to Cox
Radio.
On October 2, 1996, the Company completed an initial public offering of
7,500,000 shares of the Company's Class A Common Stock at a price of $18.50 per
share. In connection with the public offering, the Company granted the
underwriters an option to purchase up to 1,125,000 additional shares of the
Company's Class A Common Stock at the public offering price of $18.50 per
share. This option was exercised and closed on October 2, 1996. Proceeds to
the Company from the public offering and the underwriters' option totaled
approximately $149,000,000, net of underwriting discounts and commissions. The
Company used approximately $107.1 million of such net proceeds to repay all
amounts then outstanding under notes due to CEI (see note 4). The balance of
the net proceeds will be available for general corporate purposes and
acquisitions, including to partially fund the NewCity Acquisition (see note 3).
Also in connection with the public offering, the Company registered 111,973
shares of the Company's restricted Class A Common Stock that were issued to
certain members of the Company's management pursuant to the Cox Radio, Inc.
Long-Term Incentive Plan.
Historical net income per common share is not presented due to the Cox Radio
Consolidation and subsequent initial public offering discussed above.
The following supplemental pro forma net income per share and share amounts
assume the Cox Radio Consolidation and initial public offering were completed
as of January 1, 1995.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pro forma net income 3,902 2,276 10,828 7,837
Pro forma common shares outstanding 25,694 26,697 26,289 26,781
Pro forma net income per share 0.15 0.09 0.41 0.29
</TABLE>
6
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3. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
In January 1996, Cox Radio completed the acquisition of Louisville stations
WRKA-FM and WRVI-FM for $8.7 million. The Company also acquired Louisville
station WXNU-FM, later renamed WHTE-FM, for $2.6 million in August 1996.
In June 1996, the Company acquired WHEN-AM and WWHT-FM in Syracuse for $4.5
million. These stations are being operated by NewCity Communications, Inc.
("NewCity") under a local marketing agreement ("LMA").
The acquisitions were accounted for by the purchase method, and accordingly,
the purchase price has been allocated to the assets acquired based on their
estimated fair market values at the date of the acquisition. A substantial
portion of each purchase price was allocated to intangible assets to reflect
the FCC broadcasting licenses acquired. The excess of the purchase price over
the fair market value of the net assets acquired has been recorded as goodwill
and is being amortized over 30 to 40 years using the straight-line basis. No
liabilities were assumed by the Company as a result of the acquisitions.
Operations of WRKA-FM, WRVI-FM, and WHTE-FM have been included in the
consolidated results of the Company since the acquisition date of each such
station. These stations' operations are not considered to be significant and
thus, pro forma results are not presented.
In April 1996, the Company agreed to sell WIOD-AM in Miami for $13.0 million
(the "Miami Disposition"). This transaction was consummated in October 1996 and
resulted in a pre-tax gain of approximately $2.1 million which will be
recognized in the fourth quarter of 1996.
In June 1996, the Company agreed to exchange WCKG-FM and WYSY-FM in Chicago for
WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition"). In
addition to receiving the three Orlando stations, Cox Radio will also receive
cash proceeds of approximately $20 million, subject to certain adjustments.
The Company has filed a Premerger Notification pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR") for
the Orlando Acquisition and has received a second request from the Department
of Justice ("DOJ"). The Company expects to comply substantially with the
second request in the fourth quarter of 1996. The Company expects to
consummate the Orlando Acquisition in the first half of 1997. In June
1996, the Company entered into an LMA with the seller to operate the Orlando
stations and assigned its rights under the LMA to NewCity.
For tax purposes, the Company will account for the Orlando Acquisition and
Miami Disposition as like-kind exchanges. Tax rules will allow the Company to
defer a substantial portion of the related tax gains on these transactions upon
the reinvestment of the $32.5 million in net proceeds in qualifying future
acquisitions. The Company is presently pursuing additional qualifying
reinvestment properties.
In July 1996, the Company entered into an agreement to acquire NewCity
Communications, Inc. for approximately $253 million, which includes certain
working capital adjustments, consisting of approximately $166 million in cash
and approximately $87 million in assumption of NewCity debt (the "NewCity
Acquisition"). The NewCity Acquisition is expected to be financed with proceeds
from a new bank credit facility to be negotiated prior to the consummation of
the acquisition. The consummation of the NewCity Acquisition, which is
anticipated to occur in the first half of 1997, is subject to certain closing
conditions, including receipt of approval by the Federal Communications
Commission ("FCC") and the DOJ. The Company has received an HSR second request
on the NewCity Acquisition from the DOJ relating to the Orlando market and
expects to comply substantially with the second request in the fourth quarter
of 1996.
7
<PAGE> 9
In July 1996, the Company decided to exercise its option to purchase WFNS-AM
for an aggregate consideration of $1.5 million (the "Tampa Acquisition"). The
Company expects to complete this transaction during the fourth quarter of 1996.
In October 1996, the Company agreed to acquire KRAV-FM and KGTO-AM (the "Tulsa
Acquisition"). The Company entered into an LMA with the seller to operate
these stations and assigned its rights under the LMA to NewCity. This
acquisition is expected to close during the first quarter of 1997.
The Miami Disposition, the Orlando Acquisition, the NewCity Acquisition, the
Tampa Acquisition, and the Tulsa Acquisition are collectively referred to as
the "Pending Acquisitions".
4. TRANSACTIONS WITH AFFILIATED COMPANIES
In June and September 1996, CEI contributed to the capital of the Company and
its subsidiaries $33.4 million and $3.3 million, respectively. During August
1996, the Company completed the Louisville Acquisition for $2.6 million which
was funded by CEI. At September 30, 1996, the Company and its subsidiaries owed
to CEI a total of $107.1 million which is evidenced by interest bearing notes
accruing interest at Chase Manhattan Bank's prime rate plus 1.5%. In
connection with the initial public offering (see note 2), all amounts due to
CEI were paid in full.
5. COMMITMENTS AND CONTINGENCIES
The NewCity Acquisition and the Orlando Acquisition are being reviewed by the
DOJ pursuant to the respective HSR filings. In connection with the Orlando
Acquisition, the DOJ has issued a second request seeking the production of
documents and other information on the Chicago and Orlando radio markets. In
connection with the NewCity Acquisition, the DOJ has issued a second request
seeking the production of documents and other information on the Orlando radio
market. There can be no assurance that the DOJ will not require restructuring
of the acquisitions, potentially including the divestiture of certain stations,
as part of the HSR review process. In addition, consummation of each of the
Pending Acquisitions is subject to receiving FCC approval. Further, the
Company must obtain waivers of (a) the FCC radio-television cross-ownership
rules in order to complete the NewCity Acquisition as it relates to
NewCity's stations in Atlanta and Orlando and the Orlando Acquisition, and (b)
FCC radio-newspaper cross-ownership rule as it relates to NewCity's station in
Atlanta. There can be no assurance that FCC approval and waivers will be
obtained.
8
<PAGE> 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 and nine month
periods ended September 30, 1996 and 1995.
GENERAL
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 net revenues less station operating expenses. EBITDA
is defined as operating income plus depreciation and amortization. Although
Broadcast Cash Flow and EBITDA 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, investors should not consider Broadcast Cash
Flow or EBITDA 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, national and
network advertising. Most of the Company's revenue is generated from local
advertising which is sold by each station's sales staff. Historically,
approximately 76% and 24% of the Company's gross revenues were 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 first calendar quarter generally produces
the lowest revenues for the year, and the fourth calendar quarter generally
produces the highest revenues for the year. 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 ("LMA's") and joint sales
agreements ("JSA's"). Specific transactions entered into by the Company during
the past nine months are discussed below.
In January 1996, Cox Radio completed the acquisition of Louisville stations
WRKA-FM and WRVI-FM for $8.7 million. The Company also acquired Louisville
station WXNU-FM, later renamed WHTE-FM, for $2.6 million in August 1996.
In June 1996, the Company acquired WHEN-AM and WWHT-FM in Syracuse for $4.5
million. These stations are being operated by NewCity Communications, Inc.
("NewCity") under an LMA.
In April 1996, the Company agreed to sell WIOD-AM in Miami for $13.0 million
(the "Miami Disposition"). This transaction was consummated in October 1996 and
resulted in a pre-tax gain of approximately $2.1 million which will be
recognized in the fourth quarter of 1996.
9
<PAGE> 11
In June 1996, the Company agreed to exchange WCKG-FM and WYSY-FM in Chicago for
WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition") and $20
million. The Company has received an HSR second request from the DOJ. The
Company expects to comply substantially with the second request in the fourth
quarter of 1996. The Company expects to consummate the Orlando Acquisition in
the first half of 1997. In June 1996, the Company entered into an LMA with
the seller to operate the Orlando stations and assigned its rights under the
LMA to NewCity.
For tax purposes, the Company will account for the Orlando Acquisition and
Miami Disposition as like-kind exchanges. Tax rules will allow the Company to
defer a substantial portion of the related tax gains on these transactions upon
the reinvestment of the net proceeds in qualifying future acquisitions. The
Company is presently pursuing additional qualifying reinvestment properties.
In July 1996, the Company agreed to acquire NewCity Communications, Inc. for
approximately $253 million, which includes certain working capital adjustments,
consisting of approximately $166 million in cash and approximately $87 million
in assumption of debt (the "NewCity Acquisition"). The Company has received
an HSR second request from the DOJ relating to the Orlando market. The Company
expects to comply substantially with the second request in the fourth quarter
of 1996. The consummation of the NewCity Acquisition is anticipated to occur
during the first half of 1997.
In July 1996, the Company decided to exercise its option to purchase WFNS-AM
(Tampa) for an aggregate consideration of $1.5 million. The Company expects
to complete this transaction during the fourth quarter of 1996.
In October 1996, the Company agreed to acquire KRAV-FM and KGTO-AM (Tulsa).
This acquisition is expected to close during the first quarter of 1997. The
Company entered into an LMA with the seller to operate these stations and
assigned its rights under the LMA to NewCity.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995
Net Revenues. Net revenues for the third quarter of 1996 increased $1.6
million to $33.0 million, a 5.1% increase over the third quarter of 1995. This
increase was primarily attributable to increased sports programming revenues at
the Atlanta stations and the successful repositioning of the Los Angeles
stations resulting from the Company's decision to sell advertising on the Los
Angeles stations separately. These increases were partially offset by a
decrease resulting from a July 1996 LMA with the prospective purchaser of
WCKG-FM and WYSY-FM in Chicago.
Station Operating Expenses. Station operating expenses decreased $0.6 million
to $22.4 million, a decrease of 2.7% from the third quarter of 1995. The
decrease was attributable to the July 1996 LMA of WCKG-FM and WYSY-FM and was
partially offset by an increase due to the acquisition of WRVI-FM and WRKA-FM in
January 1996.
Broadcast Cash Flow. Broadcast cash flow increased $2.2 million to $10.6
million, a 26.7% increase over the third quarter of 1995 for the reasons
discussed above.
Corporate general and administrative expenses. Corporate general and
administrative expenses decreased $1.0 million to $2.0 million primarily due
to a non-recurring corporate charge during 1995.
Operating Income. Operating income for the third quarter of 1996 increased
$3.0 million to $6.6 million, an increase of 82.2% over the third quarter of
1995 for the reasons discussed above.
Interest expense. Interest expense increased $1.0 million to $2.5 million, a
66.3% increase from the prior third quarter, primarily as a result of an
increase in interest-bearing notes payable to CEI.
10
<PAGE> 12
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
Net Revenues. Net revenues for the nine months ended September 30, 1996
increased $9.4 million to $99.3 million, a 10.4% increase over the comparable
period of 1995. This increase was primarily attributable to increased sports
programming revenues at the Atlanta stations, the successful repositioning of
the Los Angeles stations as described above and the acquisition of WRVI-FM and
WRKA-FM in Louisville in January 1996.
Station Operating Expenses. Station operating expenses for the nine months
ended September 30, 1996 increased $3.7 million to $69.7 million, a 5.6%
increase over the comparable period of 1995. Significant components of the
increase related to higher sports programming costs in Atlanta, higher selling
compensation costs at the Los Angeles stations and the acquisition of WRVI-FM
and WRKA-FM in Louisville in January 1996. These increases were offset by a
decrease related to the Chicago stations, WCKG-FM and WYSY-FM.
Broadcast Cash Flow. Broadcast cash flow for the nine months ended September
30, 1996 increased $5.7 million to $29.6 million, a 23.9% increase over the
comparable period of 1995 for the reasons discussed above.
Corporate general and administrative expenses. Corporate general and
administrative expenses for the nine months ended September 30, 1996 decreased
$.5 million to $4.3 million primarily as a result of a non-recurring corporate
charge during 1995.
Operating Income. Operating income for the nine months ended September 30,
1996 increased by $5.7 million to $19.3, a 42.1% increase over the comparable
period of 1995 for the reasons discussed above.
Interest expense. Interest expense for the nine months ended September 30,
1996 increased $0.9 million to $5.4 million, a 20.8% increase over the
comparable period of 1995, primarily resulting from an increase in
interest-bearing notes payable to CEI.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash provided by operations. For
the nine months ended September 30, 1996, cash from operations increased $7.7
million to $17.8 million, a 76% increase primarily attributable to an increase
in net income, the UAP liability, and the deferred tax liability. Cash
requirements have been funded by Cox Radio's operating activities and
historically, as needed, through intercompany advances from CEI. Prior to the
Cox Radio Consolidation, certain of the indirect subsidiaries of CEI entered
into various notes with CEI, (the "CEI Notes") which bear interest at the prime
rate (as reported by the Chase Manhattan Bank N.A.) plus 1.5%. Upon the
consummation of the initial public offering, Cox Radio used approximately $107.1
million of the net proceeds of the offering to completely discharge all amounts
owed under the CEI Notes. In addition, Cox Radio has entered into a revolving
credit facility with CEI (the "New CEI Credit Facility"). All interest accrued
and principal owed under the New CEI Credit Facility prior to the consummation
of the Company's initial public offering was contributed by CEI to Cox Radio.
Subsequent to the consummation of the initial public offering, all existing and
future borrowings under the New CEI Credit Facility will accrue interest at
CEI's commercial paper rate plus .75%. CEI continues to perform day-to-day cash
management services for Cox Radio.
During the nine months ended September 30, 1996, Cox Radio declared and paid
dividends totaling $12.7 million representing cash generated by certain of the
Company's radio stations.
11
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In connection with the transactions contemplated by the Cox Radio
Consolidation, on September 30, 1996, the Company amended its Certificate
of Incorporation to change the capital structure of the Company, with the
result that the Common Stock of the Company was exchanged for shares of
Class B Common Stock of the Company. There has been no change made by
the Company that would alter the description of the Class A Common Stock
and the Class B Common Stock of the Company found on pages 86-89 of the
Company's Registration Statement on Form S-1 (Commission File No.
333-08737).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
By Written Consent of the Sole Shareholder dated July 22, 1996, the
following directors were elected: Nicholas D. Trigony, Robert F. Neil,
James C. Kennedy, David E. Easterly.
By Written Consent of the Sole Shareholder dated September 25, 1996, the
Company's sole shareholder approved the filing of the Company's Amended
and Restated Certificate of Incorporation and the adoption of Cox Radio,
Inc. Long-Term Incentive Plan, the Cox Radio, Inc. Employee Stock
Purchase Plan, and the Cox Radio, Inc. Restricted Stock Plan for
Non-Employee Directors.
By Written Consent of the Sole Shareholder dated September 26, 1996, the
sole shareholder approved the Agreement and Plan of Merger of KFI, Inc.,
WCKG, Inc., WWRM, Inc. and Cox Syracuse, Inc. with and into the Company.
12
<PAGE> 14
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):
<TABLE>
<S> <C> <C>
* 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 Communication, Inc.
* 2.2 Guaranty by Cox Broadcasting, Inc., dated as of
July 1, 1996, in favor of NewCity Communication,
Inc.
* 3.1 Amended and Restated Certificate of Incorporation
of Cox Radio, Inc.
* 3.2 Amended and Restated Bylaws of Cox Radio, Inc.
* 4.1 Indenture between NewCity Communication, 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.
* 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.
* 4.3 Specimen of Class A Common Stock Certificate
* 10.1 Promissory Note for Cox Radio, Inc.
* 10.2 Promissory Note for WSB, Inc.
* 10.3 Promissory Note for Cox Kentucky, Inc.
* 10.4 Promissory Note for WHIO, Inc.
* 10.5 Promissory Note for Cox Syracuse, Inc.
* 10.6 Promissory Note for WWRM, Inc.
* 10.7 Promissory Note for WCKG, Inc.
* 10.8 Form of New CEI Credit Facility
* 10.9 Cox Radio, Inc. Long-Term Incentive Plan
* 10.10 Cox Radio, Inc. Employee Stock Purchase Plan
* 10.11 Cox Radio, Inc. Restricted Stock Plan for
Non-Employee Directors
27.1 Financial Data Schedule (for SEC use only)
* Incorporated by reference to the corresponding exhibit of
Cox Radio's Registration Statement on Form S-1
(Commission File No. 333-08737)
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended September 30,
1996:
none
13
<PAGE> 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.
November 13, 1996 /s/ Maritza C. Pichon
--------------------------------
Maritza C. Pichon
Chief Financial Officer
(Principal Financial Officer and
duly authorized officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-Q
PERIOD ENDING SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,813
<SECURITIES> 0
<RECEIVABLES> 29,224
<ALLOWANCES> 1
<INVENTORY> 0
<CURRENT-ASSETS> 35,049
<PP&E> 52,801
<DEPRECIATION> (23,490)
<TOTAL-ASSETS> 205,113
<CURRENT-LIABILITIES> 11,549
<BONDS> 0
0
0
<COMMON> 19,578
<OTHER-SE> 59,263
<TOTAL-LIABILITY-AND-EQUITY> 205,113
<SALES> 0
<TOTAL-REVENUES> 99,325
<CGS> 0
<TOTAL-COSTS> 69,723
<OTHER-EXPENSES> 10,333
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,409
<INCOME-PRETAX> 13,534
<INCOME-TAX> 5,951
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,583
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
