<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 MARCH 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission File Number 1-12187
COX RADIO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 58-1620022
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1400 LAKE HEARN DRIVE, ATLANTA, GEORGIA 30319
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Registrant's telephone number, including area code: (404) 843-5000
---------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
----------
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
There were 8,869,620 shares of Class A Common Stock outstanding as of
May 1, 1998.
There were 19,577,672 shares of Class B Common Stock outstanding as of
May 1, 1998.
<PAGE> 2
COX RADIO, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS................................................. 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................ 10
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........... 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................... 14
SIGNATURES...................................................................... 15
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COX RADIO, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- ------------
(THOUSANDS OF DOLLARS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents .......................................... $ 7,938 $ 6,218
Accounts receivable, less allowance for doubtful accounts
of $1,897 and $1,875, respectively .............................. 43,424 50,680
Prepaid expenses and other current assets .......................... 5,032 3,795
-------- --------
Total current assets ............................................ 56,394 60,693
Plant and equipment, net ............................................. 46,646 46,071
Intangible assets, net ............................................... 537,946 518,926
Amounts due from Cox Enterprises, Inc. ............................... - 3,113
Station investment notes receivable .................................. 18,168 18,220
Other assets ......................................................... 16,558 7,617
-------- --------
Total assets .................................................... $675,712 $654,640
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .............................. $ 21,730 $ 21,767
Income taxes payable ............................................... 2,941 3,487
Other current liabilities .......................................... 1,997 1,964
-------- --------
Total current liabilities ....................................... 26,668 27,218
Amounts due to Cox Enterprises, Inc. ................................. 17,466 -
Notes payable ........................................................ 235,756 235,740
Deferred income taxes ................................................ 105,027 104,401
-------- --------
Total liabilities ............................................... 384,917 367,359
-------- --------
Commitments and contingencies (Note 3)
Shareholders' equity:
Class A common stock, $1.00 par value; 70,000,000 shares
authorized and 8,868,885 shares outstanding ..................... 8,869 8,831
Class B common stock, $1.00 par value; 45,000,000 shares
authorized and 19,577,672 shares outstanding .................... 19,578 19,578
Additional paid-in capital ......................................... 251,338 250,637
Retained earnings .................................................. 11,010 8,235
-------- --------
Total shareholders' equity ...................................... 290,795 287,281
-------- --------
Total liabilities and shareholders' equity ...................... $675,712 $654,640
======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
COX RADIO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
-------- --------
(THOUSANDS OF DOLLARS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
NET REVENUES:
Local ............................................................. $ 38,545 $ 21,292
National .......................................................... 12,783 7,114
Other ............................................................. 732 749
-------- --------
Total net revenues .............................................. 52,060 29,155
COSTS AND EXPENSES:
Operating ......................................................... 13,094 8,192
Selling, general and administrative ............................... 22,399 11,407
Corporate general and administrative .............................. 1,875 1,422
Depreciation and amortization ..................................... 5,361 2,052
-------- --------
OPERATING INCOME ..................................................... 9,331 6,082
OTHER INCOME (EXPENSE):
Interest income ...................................................... 27 947
Interest expense ..................................................... (3,844) (4)
Gain on sale of radio stations ....................................... - 49,227
Other - net .......................................................... (58) (72)
-------- --------
INCOME BEFORE INCOME TAXES ........................................... 5,456 56,180
Income taxes ......................................................... 2,681 21,977
-------- --------
NET INCOME ........................................................... $ 2,775 $ 34,203
======== ========
Basic and diluted income per common share ............................ $ .10 $ 1.21
======== ========
Weighted average basic common shares outstanding ..................... 28,427 28,313
======== ========
Weighted average diluted common shares outstanding ................... 28,708 28,329
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
COX RADIO, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL
--------------------- --------------------- 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, 1997 ........ 8,831 $ 8,831 19,578 $ 19,578 $ 250,637 $ 8,235 $ 287,281
Net income......................... -- -- -- -- -- 2,775 2,775
Issuance of Class A common stock
related to incentive plans...... 38 38 -- -- 701 -- 739
-------- --------- --------- --------- ----------- ----------- ---------
BALANCE AT MARCH 31, 1998 ........... 8,869 $8,869 19,578 $ 19,578 $ 251,338 $ 11,010 $ 290,795
======== ========= ========= ========= =========== =========== =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
COX RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
-------- --------
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................... $ 2,775 $ 34,203
Items not requiring cash:
Depreciation ....................................................... 1,273 717
Amortization ....................................................... 4,088 1,335
Deferred income taxes .............................................. 708 19,347
Gain on sale of radio stations ..................................... - (49,227)
Decrease in accounts receivable ...................................... 7,256 5,370
Increase (decrease) in accounts payable and accrued expenses ......... (169) 2,201
Decrease in taxes payable ............................................ (546) (810)
Payment of UAP liability ............................................. - (646)
Other, net ........................................................... (1,270) (1,236)
-------- --------
Net cash provided by operating activities ..................... 14,115 11,254
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................. (1,847) (1,865)
Acquisitions, net of cash acquired ................................... (23,086) (1,500)
Increase in other long-term assets ................................... (8,912) (357)
Net proceeds from sale of radio stations ............................. - 19,741
Other, net ........................................................... 8 217
-------- --------
Net cash provided by (used in) investing activities ........... (33,837) 16,236
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in amounts due to/(from) CEI .................................. 20,579 (18,153)
Proceeds from stock options exercised ................................ 731 -
Increase (decrease) in book overdrafts ............................... 132 (531)
-------- --------
Net cash provided by (used in) financing activities ........... 21,442 (18,684)
-------- --------
Net increase in cash and cash equivalents ............................ 1,720 8,806
Cash and cash equivalents at beginning of period ..................... 6,218 10,595
-------- --------
Cash and cash equivalents at end of period ........................... $ 7,938 $ 19,401
======== ========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
COX RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
1. BASIS OF PRESENTATION AND OTHER INFORMATION
Cox Radio, Inc. ("Cox Radio or the "Company") is a leading national
radio broadcast company whose business is devoted to acquiring, developing and
operating radio stations located throughout the United States. Cox Enterprises,
Inc. ("CEI") indirectly owns approximately 69% of the Common Stock of Cox Radio.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnote disclosures required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the financial
statements reflect all adjustments considered necessary for a fair statement of
the results of operations and financial position for the interim periods
presented. All such adjustments are of a normal, recurring nature. These
unaudited interim financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 1997
and notes thereto contained in Cox Radio's Annual Report on Form 10-K filed with
the Securities and Exchange Commission (Commission File No. 1-12187).
The results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998 or any interim period.
2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
In January 1998, the Company entered into an agreement to assign its
option to purchase KRIO-FM serving the San Antonio market for an aggregate
consideration of $.3 million (the "San Antonio Disposition").
In February 1998, the Company entered into an agreement to acquire
WCLR-FM, WZLR-FM and WPTW-AM serving the Dayton, Ohio market for approximately
$6 million (the "Dayton Acquisition"). The Company has been operating these
stations pursuant to an LMA since December 1997. In addition, the Company has
entered into a Station Investment Note Receivable with the seller for $6
million. See further discussion at Note 4. Pending certain regulatory approvals,
the Company anticipates closing the Dayton Acquisition in the second half of
1998.
In February 1998, the Company entered into an agreement to acquire the
assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5
million. In a related transaction, the Company entered into an agreement to
dispose of the assets of WZKD-AM, also serving the Orlando, Florida market for
$.5 million (the "Orlando Exchange"). Pending certain regulatory approvals, the
Company expects to complete the Orlando Exchange in the second quarter of 1998.
In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio
for $23 million (the "San Antonio Acquisition II").
In April 1998, the Company entered into an agreement to acquire the
assets of WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New
York, market for consideration of $48 million. Pending legal and regulatory
approvals, the Company expects to close this transaction in the second quarter
of 1998.
7
<PAGE> 8
The following unaudited pro forma summary of operations presents the
consolidated results of operations as if all consummated and pending
transactions had occurred at the beginning of the periods presented and does not
purport to be indicative of what would have occurred had these transactions been
made as of those dates or of results which may occur in the future.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1998
----------- -------------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Net revenues............................ $ 49,875 $ 54,565
Corporate general and administrative
expenses................................ 1,898 1,875
Depreciation and amortization........... 5,350 5,745
Operating income........................ 6,549 9,262
Net income.............................. $ 1,201 $ 2,471
========= =========
Basic and diluted pro forma earnings per
common share............................ $ .04 $ .09
========= =========
Basic pro forma shares outstanding...... 28,313 28,427
========= =========
Diluted pro forma shares outstanding.... 28,329 28,708
========= =========
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior,
unsecured revolving credit facility (the "Credit Agreement"). The interest rate
is based on the London Interbank Offered Rate plus a spread determined by
certain leverage ratios. This facility also includes a commitment fee on the
unused portion of the total amount available of .1% to .25% based on certain
leverage ratios.
At March 31, 1998, the Company had approximately $235.8 million of
outstanding indebtedness and had approximately $64.2 million available under the
Credit Agreement.
The Company has entered into interest rate swap agreements with certain
lenders providing bank financing. Pursuant to the interest rate swap agreements,
the Company has exchanged its floating rate interest obligations on an aggregate
of $100 million in principal at an average fixed rate of 6.23% per annum for an
average maturity of 6.25 years. The fixing of interest rates for this period
reduces in part the Company's exposure to the uncertainty of floating interest
rates. The differential paid or received on the interest rate swap agreements
are recognized as an adjustment to interest expense. The counterparties to these
interest rate swap agreements are a diverse group of major financial
institutions. The Company is exposed to credit loss in the event of
nonperformance by these counterparties. However, the Company does not anticipate
nonperformance by the other parties, and no material loss would be expected from
their nonperformance. The fair value of the interest rate swap agreements was
not recognized in the consolidated financial statements since they are accounted
for as hedges.
4. STATION INVESTMENT NOTE RECEIVABLE
In connection with the Dayton Acquisition, the Company has loaned $6
million to an entity which owns radio stations that the Company is operating
under local marketing agreements. This Station Investment Note Receivable has an
interest rate of 10% and is collateralized by substantially all of the assets of
radio stations WCLR-FM, WZLR-FM and WPTW-AM.
8
<PAGE> 9
5. EARNINGS PER COMMON SHARE AND CAPITAL STRUCTURE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1998
---- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
NET INCOME $ 34,203 $ 2,775
======== =======
BASIC EPS
Weighted-average common shares outstanding 28,313 28,427
======== =======
Basic income per common share 1.21 .10
======== =======
DILUTED EPS
Weighted-average common shares outstanding 28,313 28,427
Shares issuable on exercise of dilutive options 572 698
Shares assumed to be purchased with proceeds of options (556) (417)
-------- ------
Shares applicable to diluted EPS 28,329 28,708
======== =======
Diluted income per common share 1.21 .10
======== =======
</TABLE>
9
<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 month
periods ended March 31, 1998 and 1997.
This report contains forward-looking statements that are subject to
risks and uncertainties. Forward-looking statements include the information
regarding future cash requirements of the Company. For such statements, the
Company claims the protection of the safe harbor for forward-looking statements
contained in Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's results could differ materially from those discussed in each
forward-looking statement due to various factors which are outside the Company's
control, including competition for audience share and advertising revenue from
other radio stations, electronic and print media and new media technologies and
governmental regulation of the radio broadcasting industry. For a more detailed
discussion of these factors and others, see the Risk Factors section of the
Company's prospectus filed as part of its Registration Statement on Form S-1
(File No. 333-08737).
GENERAL
Cox Radio is a leading national radio broadcast company whose business is
devoted to acquiring, developing and operating radio stations located throughout
the United States. Cox Enterprises, Inc. ("CEI") indirectly owns approximately
69% of the Common Stock of Cox Radio.
The performance of a radio station group, such as the Company, is
customarily measured by its ability to generate Broadcast Cash Flow and EBITDA.
Broadcast Cash Flow is defined as operating income plus depreciation and
amortization and corporate general and administrative expenses. EBITDA is
defined as operating income plus depreciation and amortization. "After-tax" cash
flow is defined as income (loss) before extraordinary items plus depreciation,
amortization and deferred tax expense. Although Broadcast Cash Flow, EBITDA and
after-tax cash flow are not recognized under generally accepted accounting
principles ("GAAP"), they are accepted by the broadcasting industry as generally
recognized measures of performance and are used by analysts who report publicly
on the condition and performance of broadcasting companies. For the foregoing
reasons, the Company believes that these measures will be useful to investors.
However, Broadcast Cash Flow, EBITDA or after-tax cash flow should not be
considered to be an alternative to operating income as determined in accordance
with GAAP, an alternative to cash flows from operating activities (as a measure
of liquidity) or an indicator of the Company's performance under GAAP.
The primary source of the Company's revenues is the sale of local and
national advertising. Historically, approximately 73% and 25% of the Company's
gross revenues have been generated from local and national advertising,
respectively. The Company's most significant station operating expenses are
employees' salaries and benefits, commissions, programming expenses and
advertising and promotional expenditures.
The Company's revenues vary throughout the year. As is typical in the radio
broadcasting industry, the Company's revenues and broadcast cash flows are
typically lowest in the first quarter and higher in the second and fourth
quarters. The Company's operating results in any period may be affected by the
incurrence of advertising and promotional expenses that do not necessarily
produce commensurate revenues until the impact of the advertising and promotion
is realized in future periods.
ACQUISITIONS AND DISPOSITIONS
During the past several years, the Company has actively managed its
portfolio of radio stations through selected acquisitions, dispositions and
swaps, as well as the use of local marketing agreements
10
<PAGE> 11
("LMA's") and joint sales agreements ("JSA's"). Specific transactions entered
into or consummated by the Company during the three months ended March 31, 1998
are discussed below.
In January 1998, the Company entered into an agreement to assign its option
to purchase KRIO-FM serving the San Antonio market for an aggregate
consideration of $.3 million (the "San Antonio Disposition").
In February 1998, the Company entered into an agreement to acquire WCLR-FM,
WZLR-FM and WPTW-AM serving the Dayton, Ohio market for approximately $6 million
(the "Dayton Acquisition"). The Company has been operating these stations
pursuant to an LMA since December 1997. In addition, the Company has entered
into a Station Investment Note Receivable with the seller for $6 million. See
further discussion at Note 4 to the Company's Consolidated Financial Statements
included elsewhere herein. Pending certain regulatory approvals, the Company
anticipates closing the Dayton Acquisition in the second half of 1998.
In February 1998, the Company entered into an agreement to acquire the
assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5
million. In a related transaction, the Company entered into an agreement to
dispose of the assets of WZKD-AM, also serving the Orlando, Florida market for
$.5 million (the "Orlando Exchange"). Pending certain regulatory approvals, the
Company expects to complete the Orlando Exchange in the second quarter of 1998.
In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio
for $23 million (the "San Antonio Acquisition II").
In April 1998, the Company entered into an agreement to acquire the
assets of WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New
York, market for consideration of $48 million. Pending legal and regulatory
approvals, the Company expects to close this transaction in the second quarter
of 1998.
RESULTS OF OPERATIONS
Three months ended March 31, 1998 compared to three months ended March 31, 1997
Net Revenues. Net revenues for the first quarter of 1998 increased
$22.9 million to $52.1 million, a 78.6% increase over the first quarter of 1997.
This increase was primarily attributable to the acquisition of NewCity
Communications, Inc. (the "NewCity Acquisition") in April 1997. Additionally,
substantial increases in net revenues at the stations in Atlanta, Miami and
Dayton were realized as a result of continued strong ratings performance.
Station Operating Expenses. Station operating expenses increased $15.9
million to $35.5 million, an increase of 81.1% over the first quarter of 1997.
The increase was primarily attributable to the NewCity Acquisition and also due
to higher programming and sales related costs which are driven by ratings and
revenues, respectively.
Broadcast Cash Flow. Broadcast cash flow increased $7.0 million to
$16.6 million, a 73.4% increase over the first quarter of 1997 for the reasons
discussed above.
Corporate general and administrative expenses. Corporate general and
administrative expenses increased $.5 million to $1.9 million primarily due to
higher overhead costs incurred as a result of the significant increase in number
of stations owned and/or operated in 1998.
Operating Income. Operating income for the first quarter of 1998
increased $3.2 million to $9.3 million, an increase of 53.4% over the first
quarter of 1997 for the reasons discussed above.
11
<PAGE> 12
Interest expense. Interest expense during the first quarter of 1998
totaled $3.8 million as compared to first quarter 1997 interest income of $.9
million as a result of borrowings incurred to complete the Company's recent
acquisitions the most significant of which was the NewCity Acquisition.
Net Income. Net income decreased $31.4 million from the first quarter
of 1997 to $2.8 million primarily as a result of the first quarter 1997
after-tax gain on the sale of WCKG-FM and WYSY-FM (Chicago) of approximately
$29.3 million in addition to the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash provided by operations.
Historically, cash requirements have been funded by Cox Radio's operating
activities and through borrowings under the Credit Agreement (as defined below).
For the three months ended March 31, 1998, cash from operations increased $2.9
million to $14.1 million, primarily attributable to an increase in net income
excluding the gain on WCKG-FM and WYSY-FM (Chicago), a decrease in accounts
receivable and an increase in depreciation and amortization expenses offset by a
decrease in accounts payable and accrued expenses. In addition, cash
requirements have been funded on a temporary basis through intercompany advances
from CEI under a revolving credit facility with CEI (the "CEI Credit Facility").
Borrowings by the Company under the CEI Credit Facility are typically repaid by
the Company within 30 days. Borrowings under the CEI Credit Facility accrue
interest at CEI's commercial paper rate plus .40%.
CEI continues to perform day-to-day cash management services for Cox Radio.
On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior,
unsecured revolving credit facility (the "Credit Agreement"). The interest rate
is based on the London Interbank Offered Rate plus a spread determined by
certain leverage ratios. This facility also includes a commitment fee on the
unused portion of the total amount available of .1% to .25% based on certain
leverage ratios.
At March 31, 1998, the Company had approximately $235.8 million of
outstanding indebtedness and had approximately $64.2 million available under the
Credit Agreement.
The Company has entered into interest rate swap agreements with certain
lenders providing bank financing. Pursuant to the interest rate swap agreements,
the Company has exchanged its floating rate interest obligations on an aggregate
of $100 million in principal at an average fixed rate of 6.23% per annum for an
average maturity of 6.25 years. The fixing of interest rates for this period
reduces in part the Company's exposure to the uncertainty of floating interest
rates. The differential paid or received on the interest rate swap agreements
are recognized as an adjustment to interest expense. The counterparties to these
interest rate swap agreements are a diverse group of major financial
institutions. The Company is exposed to credit loss in the event of
nonperformance by these counterparties. However, the Company does not anticipate
nonperformance by the other parties, and no material loss would be expected from
their nonperformance. The fair value of the interest rate swap agreements was
not recognized in the consolidated financial statements since they are accounted
for as hedges
Future cash requirements are expected to include capital expenditures,
principal and interest payments on indebtedness and funds for acquisitions. The
Company expects its operations to generate sufficient cash to meet its capital
expenditures and debt service requirements. Additional cash requirements,
including funds for pending or other acquisitions, will be funded by various
sources, including the proceeds from bank financing and, if or when appropriate,
other issuances of Company securities.
12
<PAGE> 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has entered into interest rate swap agreements with certain
lenders providing bank financing. Pursuant to the interest rate swap agreements,
the Company has exchanged its floating rate interest obligations on an aggregate
of $100 million in principal at an average fixed rate of 6.23% per annum for an
average maturity of 6.25 years. The fixing of interest rates for this period
reduces in part the Company's exposure to the uncertainty of floating interest
rates. The differential paid or received on the interest rate swap agreements is
recognized as an adjustment to interest expense.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Listed below are the exhibits which are filed as part of this
Report (according to the number assigned to them in Item 601
of Regulation S-K):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------------------
<S> <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 Communications, Inc. (1)**
2.2 -- Guaranty by Cox Broadcasting, Inc., dated as of July 1,
1996, in favor of NewCity Communications, Inc. (1)
3.1 -- Amended and Restated Certificate of Incorporation of
Cox Radio, Inc. (1)
3.2 -- Amended and Restated Bylaws of Cox Radio, Inc. (1)
4.1 -- Indenture between NewCity Communications, Inc. and
Shawmut Bank Connecticut, National Association, as Trustee,
dated as of November 2, 1993, related to the 11 3/8% Notes
due 2003 of NewCity Communications, Inc. (1)**
4.2 -- First Supplemental Indenture between NewCity Communications,
Inc. and Shawmut Bank Connecticut, National Association, as
Trustee, dated as of September 16, 1994, relating to
the 11 3/8% Notes due 2003 of NewCity Communications, Inc. (1)
4.3 -- Specimen of Class A Common Stock Certificate. (1)
10.1 -- Credit Agreement, dated as of March 7, 1997, by and among Cox
Radio, Inc., Texas Commerce Bank National Association,
Nationsbank of Texas, N.A. and Citibank, N.A., individually
and as agents, and the other banks signatory thereto.(2)**
10.2 -- CEI Credit Facility. (1)
10.3 -- Cox Radio, Inc. Long-Term Incentive Plan. (1)
10.4 -- Cox Radio, Inc. Employee Stock Purchase Plan. (1)
10.5 -- Cox Radio, Inc. Restricted Stock Plan for Non-Employee
Directors (1)
10.6 -- Tax Allocation and Indemnification Agreement, dated as of
September 30, 1996, by and between Cox Enterprises, Inc. and
Cox Radio, Inc. (2)
11 -- Statement Re: Computation of Per Share Earnings
27 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ----------
(1) Incorporated by reference to Cox Radio's Registration Statement on
Form S-1 (Commission File No. 333-08737).
(2) Incorporated by reference to Cox Radio's Annual Report on Form 10-K
for the period ended December 31, 1996 (Commission File No.
1-12187).
** Schedules and Exhibits intentionally omitted.
14
<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.
May 11, 1998 /s/ Maritza C. Pichon
-----------------------------
Maritza C. Pichon
Chief Financial Officer
(Principal Financial Officer and
duly authorized officer)
15
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1998
---- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
NET INCOME $ 34,203 $ 2,775
======== ========
BASIC EPS
Weighted-average common shares outstanding 28,313 28,427
======== ========
Basic income per common share 1.21 .10
======== ========
DILUTED EPS
Weighted-average common shares outstanding 28,313 28,427
Shares issuable on exercise of dilutive options 572 698
Shares assumed to be purchased with proceeds of options (556) (417)
-------- --------
Shares applicable to diluted EPS 28,329 28,708
======== ========
Diluted income per common share 1.21 .10
======== ========
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 7,938
<SECURITIES> 0
<RECEIVABLES> 45,321
<ALLOWANCES> (1,897)
<INVENTORY> 0
<CURRENT-ASSETS> 56,394
<PP&E> 85,517
<DEPRECIATION> (38,871)
<TOTAL-ASSETS> 675,712
<CURRENT-LIABILITIES> 26,668
<BONDS> 0
0
0
<COMMON> 28,447
<OTHER-SE> 262,348
<TOTAL-LIABILITY-AND-EQUITY> 675,712
<SALES> 0
<TOTAL-REVENUES> 52,060
<CGS> 0
<TOTAL-COSTS> 35,493
<OTHER-EXPENSES> 7,236
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,844)
<INCOME-PRETAX> 5,456
<INCOME-TAX> 2,681
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,775
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
