<PAGE>
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the
|X| Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
Transition Report Pursuant to Section 13 or 15(d) of
|_| the Securities Exchange Act of 1934
COMMISSION FILE NO. 333-61211
RADIO UNICA CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 65-0776004
(State of Incorporation) (I.R.S. Employer
Identification Number)
8400 N.W. 52ND STREET, SUITE 101
MIAMI, FL 33166
(Address of principal executive offices) (Zip Code)
305-463-5000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since
last report)
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.
As of November 8, 2000, 100 shares of Common Stock, $.01 par value were
outstanding.
--------------------------------------------------------------------------------
<PAGE>
RADIO UNICA CORP.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................... 2
Item 2. Management's Discussion and Analysis........................... 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................... 12
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 2000 1999
------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 125,634 $ 2,396,044
Restricted cash 450,000 305,000
Accounts receivable, net of allowance for doubtful accounts of
$630,509 and $255,242, respectively 8,545,548 5,304,089
Prepaid expenses and other current assets 3,521,725 1,935,991
------------- -------------
Total current assets 12,642,907 9,941,124
Property and equipment, net of accumulated depreciation of
$4,329,429 and $2,772,963, respectively 22,047,617 17,434,918
Broadcast licenses, net of accumulated amortization of $5,793,741
and $3,463,192, respectively 97,641,826 84,665,873
Other intangible assets, net of accumulated amortization of
$3,158,544 and $2,121,951, respectively 8,056,935 9,093,528
Other assets 6,039,880 5,123,967
------------- -------------
$ 146,429,165 $ 126,259,410
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
---------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,355,093 $ 1,877,162
Accrued expenses 3,463,973 2,112,909
Current portion of notes payable 48,583 216,067
Deferred income 494,965 --
------------- -------------
Total current liabilities 5,362,614 4,206,138
Other liabilities 165,000 165,000
Notes payable 54,819 76,911
Deferred taxes 1,953,979 1,953,979
Due to parent, net 56,386,377 25,584,756
Senior discount notes 128,276,747 117,732,564
Commitments and contingencies
Stockholders' deficit:
Common stock $.01 par value; 1,000 shares authorized;
100 shares issued and outstanding 1 1
Additional paid-in-capital 59,556,278 59,556,278
Deferred compensation expense (2,005,402) (4,265,522)
Accumulated deficit (103,321,248) (78,750,695)
------------- -------------
Total stockholders' deficit (45,770,371) (23,459,938)
------------- -------------
$ 146,429,165 $ 126,259,410
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenue $ 8,677,436 $ 4,733,967 $ 22,641,072 $ 11,081,249
Operating expenses:
Direct operating 1,937,242 995,572 5,171,301 2,704,039
Selling, general and administrative 3,741,573 2,697,129 11,622,285 9,059,279
Network 3,221,459 3,500,234 10,027,182 9,132,274
Corporate 865,438 721,429 2,552,082 2,061,285
Depreciation and amortization 1,583,019 1,398,228 4,452,037 3,811,300
LMA termination fee -- -- -- 2,000,000
Stock option compensation 753,374 19,591,106 2,260,120 19,591,106
------------ ------------ ------------ ------------
12,102,105 28,903,698 36,085,007 48,359,283
------------ ------------ ------------ ------------
Loss from operations (3,424,669) (24,169,731) (13,443,935) (37,278,034)
Other income (expense):
Interest expense (3,866,666) (3,716,300) (11,223,514) (10,407,684)
Interest income 20,482 47,540 79,832 635,983
Other 7,841 -- 17,064 --
------------ ------------ ------------ ------------
(3,838,343) (3,668,760) (11,126,618) (9,771,701)
------------ ------------ ------------ ------------
Net loss (7,263,012) (27,838,491) (24,570,553) (47,049,735)
Accrued dividends on Series A redeemable
cumulative preferred stock -- 1,007,159 -- 2,942,921
------------ ------------ ------------ ------------
Net loss applicable to common shareholders $ (7,263,012) $(28,845,650) $(24,570,553) $(49,992,656)
============ ============ ============ ============
Net loss per common share applicable to
common shareholders - basic and diluted $ (72,630) $ (288,457) $ (245,706) $ (499,927)
============ ============ ============ ============
Weighted average common shares
outstanding - basic and diluted 100 100 100 100
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(24,570,553) $(47,049,735)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 4,452,037 3,811,300
Provision for bad debt 375,267 290,780
Accretion of interest on senior discount notes 10,544,183 9,406,457
Amortization of deferred financing costs 578,124 578,124
Stock option compensation expense 2,260,120 19,591,106
Amortization of deferred revenue (505,035) --
Other (254,500) (285,063)
Change in assets and liabilities:
Accounts receivable (3,775,470) (3,487,349)
Prepaid expenses (1,172,490) 1,626,192
Radio broadcasting rights -- (115,797)
Other assets (1,196,778) (424,006)
Accounts payable and accrued expenses 403,995 (1,573,108)
Deposit payable -- 165,000
------------ ------------
Net cash used in operating activities (12,861,100) (17,466,099)
------------ ------------
INVESTING ACTIVITIES
Acquisition of property and equipment (2,746,197) (2,352,060)
Restricted cash-escrow account (650,000) 12,464,326
Acquisitions of radio stations (11,155,733) (44,723,582)
Investments in unconsolidated companies (3,504,000) --
------------ ------------
Net cash used in investing activities (18,055,930) (34,611,316)
------------ ------------
FINANCING ACTIVITIES
Proceeds from borrowings under the revolving credit facility -- 14,350,000
Debt financing costs -- (1,135,581)
Intercompany payable, net 28,801,620 --
Repayment of notes payable (155,000) --
Proceeds from issuance of Series A redeemable cumulative
preferred stock of Radio Unica Communications Corp. -- 44,550
------------ ------------
Net cash provided by financing activities 28,646,620 13,258,969
------------ ------------
Net decrease in cash and cash equivalents (2,270,410) (38,818,446)
Cash and cash equivalents at beginning of period 2,396,044 38,894,144
------------ ------------
Cash and cash equivalents at end of period $ 125,634 $ 75,698
============ ============
Supplemental disclosures of cash flow information:
Investment in unconsolidated company in exchange for
advertising $ 1,000,000 $ --
============ ============
Reclassification of other assets to broadcast license and property
and equipment upon the consummation of the acquisitions of radio
stations $ 4,678,322 $ --
============ ============
Issuance of common stock for acquisition of radio station $ 2,000,000 $ --
============ ============
Reclassification of prepaid expenses to broadcast licenses upon
consummation of the acquisitions of radio stations $ -- $ 2,500,000
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of
Radio Unica Corp. and subsidiaries (the "Company") for the periods indicated
herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission and in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000. The consolidated financial statements include the accounts of
the Company and all majority owned subsidiaries over which the Company has
control. All significant intercompany accounts and transactions have been
eliminated. For further information, refer to the Company's 1999 consolidated
financial statements and notes thereto.
The Company's revenue and cash flow are typically lowest in the first
calendar quarter and highest in the fourth calendar quarter. Seasonal
fluctuations are common in the radio broadcasting industry and are due primarily
to fluctuations in consumer spending.
Certain amounts appearing in the 1999 consolidated financial statements have
been reclassified to conform with the 2000 presentation.
2. ACQUISITIONS
On October 18, 1999, the Company entered into an asset purchase agreement
with Den-Mex LLC to acquire Denver radio station KCUV-AM for a cash purchase
price of $2.7 million. On January 3, 2000, after receiving the consent of the
Federal Communications Commission (the "FCC") to assign the broadcasting
license, the Company completed the acquisition.
On February 11, 2000, the Company entered into an asset purchase agreement
with El Pistolon Investments, L.P. to acquire McAllen radio station KVJY-AM for
a cash purchase price of $2.5 million. On June 1, 2000 after receiving the
consent of the FCC to assign the broadcasting license, the Company completed the
acquisition.
On December 23, 1999, the Company entered into an asset purchase agreement
with Harry Pappas to acquire Fresno radio station KFRE-AM for a purchase price
of $7.5 million. The purchase price was comprised of approximately $5.5 million
cash and 76,555 shares of the Company's common stock valued at $2.0 million. On
June 28, 2000 after receiving the consent of the FCC to assign the broadcasting
license, the Company completed the acquisition.
On April 12, 2000, the Company entered into an asset purchase agreement with
Texas Lotus, Ltd. to acquire San Antonio radio station KZDC-AM for a cash
purchase price of $1.83 million. The Company operated the station under a local
marketing agreement from January 1998 through July 27, 2000, at which time the
Company received the consent of the FCC to assign the side broadcasting
license, and completed the acquisition.
5
<PAGE>
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
2. ACQUISITIONS, CONTINUED
On April 27, 2000, the Company entered into an asset purchase agreement with
Cima Broadcasting, L.L.C. to acquire Tucson radio station KQTL-AM for a cash
purchase price of approximately $3.3 million. The Company funded a $300,000
escrow in conjunction with this transaction. On August 4, 2000 after receiving
the consent of the FCC to assign the broadcasting license, the Company completed
the acquisition. The purchase price has been allocated to the assets acquired
based on preliminary estimates.
On June 8, 2000, the Company entered into an asset purchase agreement with
Peoples Radio, Inc. to acquire Pittsburgh, California radio station KATD-AM for
approximately $5.0 million. The purchase price is comprised of approximately
$4.5 million cash and 87,500 shares of the Company's common stock valued at
approximately $0.5 million. The Company funded a $450,000 escrow in conjunction
with this transaction. On October 18, 2000 after receiving the consent of the
FCC to assign the broadcasting license, the Company completed the acquisition.
3. SUMMARIZED FINANCIAL INFORMATION
The Senior Discount Notes issued by the Company are guaranteed by all of the
Company's Domestic Restricted Subsidiaries on a full, unconditional, joint and
several basis. The financial statements of the subsidiary guarantors are omitted
as management has determined that separate financial statements and other
disclosures concerning the subsidiaries are not material to investors.
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------
2000 1999
-------------- ---------------
<S> <C> <C>
Current assets $ 12,517,273 $ 5,450,454
Total assets 146,303,531 117,927,920
Current liabilities 5,362,614 39,125,665
Total liabilities (including due to parent of
$65,690,051 and $36,412,945, respectively) 129,612,840 41,082,013
Net revenue 22,641,072 11,081,249
Operating expenses 34,002,852 23,985,059
Net loss (22,488,398) (22,375,511)
</TABLE>
4. INVESTMENTS
On June 26, 2000 the Company acquired approximately 3% of SportsYA! Inc,
through the purchase of preferred stock, in exchange for $2.0 million in cash
and $1.0 million in advertising on the Company's network. SportsYA! Inc. owns
SportsYA.com, the leading Spanish and Portuguese language sports portal serving
Latin America, Spain and the U.S. Hispanic market.
On July 18, 2000, the Company acquired approximately 13% of Estrellamundo,
LLC for $1.5 million in cash. Estrellamundo LLC is completing construction of a
Latin-themed club located within Disneyland in Anaheim, California.
6
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
--------------------------------------------------------------------------------
This report contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, among others, statements concerning the
Company's outlook for 2000 and beyond, the Company's expectations, beliefs,
future plans and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. The
forward-looking statements in this report are subject to risks and uncertainties
that could cause actual results to differ materially from those expressed in or
implied by the statements.
OVERVIEW
We generate revenue from sales of network advertising time, and sales of
local and national advertising time on radio stations that we own and those that
we operate under local marketing agreements (collectively "O&Os"). Advertising
rates are, in large part, based upon the network's and each station's ability to
attract audiences in demographic groups targeted by advertisers. All revenues
are stated net of any agency commissions. We recognize advertising revenue when
the commercials are broadcast.
Our operating expenses consist of programming expenses, marketing and selling
costs, including commissions paid to our sales staff, technical and engineering
costs, and general and administrative expenses.
As is true of other radio operators, the Company's performance is customarily
measured by its earnings before net interest, taxes, depreciation and
amortization ("EBITDA"). EBITDA is defined as operating income (loss) plus
depreciation and amortization. Although EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles, EBITDA
is presented because it provides useful information regarding the Company's
ability to service debt. However, EBITDA should not be considered as an
alternative measure of operating results or cash flows from operations (as
determined in accordance with generally accepted accounting principles).
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999
NET REVENUE. Net revenue increased by approximately $4.0 million or 83% to
approximately $8.7 million for the three months ended September 30, 2000 from
approximately $4.7 million for the comparable period in the prior year. The
increase in net revenue relates to an increase in the Company's customer base
due to the strengthening of the Company's network and O&Os, the addition of
new O&O's and increases in advertising rates at the Company's network and
O&Os.
OPERATING EXPENSES. Operating expenses decreased by approximately $16.8
million or 58% to approximately $12.1 million for the three months ended
September 30, 2000 from approximately $28.9 million for the comparable period in
the prior year. The decrease in operating expenses is due to a non-cash stock
option compensation expense charge of approximately $19.6 million incurred
during the three months ended September 30, 1999, offset in part by increased
depreciation and amortization relating to the increase in the number of O&Os of
approximately $0.2 million and increased costs associated with the increase in
the number of O&Os.
7
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
--------------------------------------------------------------------------------
Direct operating expenses increased by approximately $0.9 million or 95% to
approximately $1.9 million for the three months ended September 30, 2000 from
approximately $1.0 million for the comparable period in the prior year. The
increase in direct operating expenses is primarily due to the increase in the
number of O&Os as well as spending relating to the promotion of these
O&Os.
Selling, general and administrative expenses increased by approximately
$1.0 million or 39% to approximately $3.7 million for the three months ended
September 30, 2000 from approximately $2.7 million for the comparable period
in the prior year. The increase in selling, general and administrative
expenses primarily relates to the increase in variable sales costs as well as
the increase in the number of O&Os.
Network expenses decreased by $0.3 million or 8% to approximately $3.2
million for the three months ended September 30, 2000 from approximately $3.5
million for the comparable period in the prior year. The decrease in network
expenses is mainly due to a decrease in the cost of sporting event rights during
the three months ended September 30, 2000 as compared to the comparable period
in 1999.
Corporate expenses increased by approximately $0.2 million or 20% to
approximately $0.9 million for the three months ended September 30, 2000 from
approximately $0.7 million for the comparable period in the prior year. The
increase in corporate expenses is mainly due to increased costs in legal and
professional fees and other costs associated with the growth of the Company.
Depreciation and amortization increased by approximately $0.2 million or 13%
to approximately $1.6 million for the three months ended September 30, 2000 from
approximately $1.4 million for the comparable period in the prior year. The
increase in depreciation and amortization is due to additions of fixed and
intangible assets arising from the acquisitions of O&Os.
Stock option compensation decreased by approximately $18.8 million or 96% to
approximately $0.8 million from $19.6 million for the comparable period in the
prior year. Stock option compensation expense represents a non-cash charge
relating to the vesting of stock options granted to employees of the Company to
purchase shares of Radio Unica Communications Corp's ("RUCC") common stock.
These stock options were granted before October 19, 1999, the date of RUCC's
initial public offering ("IPO"). The Company is a wholly owned subsidiary of
RUCC.
OTHER INCOME (EXPENSE). Other income (expense) increased by approximately
$0.1 million or 5% to approximately $(3.8) million for the three months ended
September 30, 2000 from approximately $(3.7) million for the comparable period
in the prior year. Other income (expense) for the three months ended September
30, 2000 is mainly comprised of interest expense of approximately $(3.9)
million. Interest expense primarily relates to the interest on the outstanding
balance of the Senior Discount Notes. The Company had approximately $(3.7)
million in interest expense during the three months ended September 30, 1999.
NET LOSS. Net loss decreased by approximately $20.5 million or 74% to
approximately $7.3 million for the three months ended September 30, 2000 from
approximately $27.8 million for the comparable period in the prior year. The
decrease in net loss is mainly the result of the increase in the Company's
revenue, the decrease in the non-cash stock option compensation expense
partially offset by increased costs associated with the operation of the
Company's network and O&Os, increased variable sales costs associated with the
increase in revenue and depreciation and amortization resulting from the
increase in the number of O&Os.
8
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
----------------------------------------------------------------------------
EBITDA. EBITDA, less the non-cash charge relating to the stock option
compensation expense of approximately $0.8 million and $19.6 million in 2000 and
1999, respectively, increased by approximately $2.1 million or 66% to
approximately $(1.1) million for the three months ended September 30, 2000 from
approximately $(3.2) million for the comparable period in the prior year. EBITDA
increased by approximately $20.9 million or 92% to approximately $(1.9) million
for the three months ended September 30, 2000 from approximately $(22.8) million
for the comparable period in the prior year. The increase in EBITDA is mainly a
result of the increase in the Company's revenues offset by increase costs
associated with the operation of the Company's network and O&Os, as well as the
non-cash stock option compensation expense of $19.6 million incurred during
1999.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1999
NET REVENUE. Net revenue increased by approximately $11.5 million or 104%
to approximately $22.6 million for the nine months ended September 30, 2000
from approximately $11.1 million for the comparable period in the prior year.
The increase in net revenue relates to an increase in the Company's customer
base due to the strengthening of the Company's network and O&Os, the addition
of new O&O's and increases in advertising rates at the Company's network and
O&Os.
OPERATING EXPENSES. Operating expenses decreased by approximately $12.3
million or 25% to approximately $36.1 million for the nine months ended
September 30, 2000 from approximately $48.4 million for the comparable period
in the prior year. The decrease in operating expenses is due to a non-cash
stock option compensation expense charge of approximately $19.6 million
incurred during 1999, offset in part by increased depreciation and
amortization relating to the increase in the number of O&Os of approximately
$0.6 million, increased costs in network programming as well as costs
associated with the increase in the number of O&Os.
Direct operating expenses increased by approximately $2.5 million or 91%
to approximately $5.2 million for the nine months ended September 30, 2000
from approximately $2.7 million for the comparable period in the prior year.
The increase in direct operating expenses is primarily due to the increase in
the number of O&Os as well as spending relating to the promotion of these
O&Os.
Selling, general and administrative expenses increased by approximately
$2.5 million or 28% to approximately $11.6 million for the nine months ended
September 30, 2000 from approximately $9.1 million for the comparable period
in the prior year. The increase in selling, general and administrative
expenses primarily relates to the increase in variable sales costs as well as
the increase in the number of O&Os.
Network expenses increased by $0.9 million or 10% to approximately $10.0
million for the nine months ended September 30, 2000 from approximately $9.1
million for the comparable period in the prior year. The increase in network
expenses is mainly due to the increase in cost of network programming, including
sporting events, as well as increased marketing expenditures.
Corporate expenses increased by approximately $0.5 million or 24% to
approximately $2.6 million for the nine months ended September 30, 2000 from
approximately $2.1 million for the comparable period in the prior year. The
increase in corporate expenses is mainly due to increased costs in legal and
professional fees and other costs associated with the growth of the Company.
9
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
----------------------------------------------------------------------------
Depreciation and amortization increased by approximately $0.6 million or 17%
to approximately $4.4 million for the nine months ended September 30, 2000 from
approximately $3.8 million for the comparable period in the prior year. The
increase in depreciation and amortization is due to the additions of fixed and
intangible assets arising from the acquisitions of O&Os.
Stock option compensation expense decreased by approximately $17.3 million or
88% to approximately $2.3 million from approximately $19.6 million for the
comparable period in the prior year. Stock option compensation expense
represents a non-cash charge relating to the vesting of stock options granted to
employees of the Company to purchase shares of RUCC common stock. These stock
options were granted before October 19, 1999 the date of the Company's IPO. The
Company is a wholly owned subsidiary of RUCC.
OTHER INCOME (EXPENSE). Other income (expense) increased by approximately
$1.3 million or 14% to approximately $(11.1) million for the nine months ended
September 30, 2000 from approximately $(9.8) million for the comparable period
in the prior year. Other income (expense) for the nine months ended September
30, 2000 is mainly comprised of interest expense of approximately $(11.2)
million. Interest expense primarily relates to the interest on the outstanding
balance of the Senior Discount Notes. The Company had approximately $(10.4)
million in interest expense during the nine months ended September 30, 1999.
NET LOSS. Net loss decreased by approximately $22.4 million or 48% to
approximately $24.6 million for the nine months ended September 30, 2000 from
approximately $47.0 million for the comparable period in the prior year. The
decrease in net loss is mainly the result of the increase in the Company's
revenue, the decrease in the non-cash stock option compensation expense
partially offset by increased costs associated with the operation of the
Company's O&Os, increased variable sales costs associated with the increase in
revenue and depreciation and amortization resulting from the increase in the
number of O&Os.
EBITDA. EBITDA, less the non-cash charge relating to the stock option
compensation expense of approximately $2.3 million and $19.6 million for 2000
and 1999, respectively, increased by approximately $7.2 million or 51% to
approximately $(6.7) million for the nine months ended September 30, 2000
from approximately $(13.9) million for the comparable period in the prior
year. EBITDA increased by approximately $24.5 million or 73% to approximately
$(9.0) million for the nine months ended September 30, 2000 from
approximately $(33.5) million for the comparable period in the prior year.
The increase in EBITDA is mainly a result of the increase in the Company's
revenues offset by increase costs associated with the operation of the
Company's network and O&Os, as well as the decrease of $17.3 million relating
to the non-cash stock option compensation expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company has had negative cash flows since inception. Working capital and
financing of the Company's acquisitions to date have been provided primarily by
the proceeds from RUCC's initial public offering, the issuance of the 11 3/4%
Senior Discount Notes due August 1, 2006 and the issuance of promissory notes,
common stock and preferred stock to RUCC's and the Company's shareholders.
The Company's primary source of liquidity is the remaining proceeds from
RUCC's initial public offering and the borrowing availability under its Senior
Secured Revolving Credit Facility. The Senior Secured Revolving Credit Facility
is a senior secured revolver with $20.0 million of available borrowings subject
to certain conditions. At September 30, 2000 there were no amounts outstanding
under the Senior Secured Revolving Credit Facility.
10
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
----------------------------------------------------------------------------
Net cash used in operating activities decreased by approximately $4.6 million
or 26% to approximately $12.9 million for the nine months ended September 30,
2000 from approximately $17.5 million for the comparable period in the prior
year. Net cash used in investing activities was approximately $18.1 million and
$34.6 million for the nine months ended September 30, 2000 and 1999,
respectively. The decrease of approximately $16.5 million from 1999 to 2000 is
primarily due to fewer radio station acquisitions that took place during 2000.
Net cash provided by financing activities was approximately $28.6 million and
$13.3 million for the nine months ended September 30, 2000 and 1999,
respectively. The increase of approximately $15.3 million from 1999 to 2000 is
due to borrowings from RUCC partially offset by borrowings under the Senior
Secured Revolving Credit Facility which took place during 1999.
Capital expenditures primarily relate to the purchases of broadcast equipment
for the network and O&Os, leasehold improvements, computer equipment and
telecommunications equipment. Capital expenditures were approximately $2.7
million and $2.4 million for the nine months ended September 30, 2000 and 1999,
respectively. The increase in capital expenditures is primarily due to station
build-outs and signal upgrades that have taken place during 2000.
The Company believes that its current cash position, the remaining proceeds
from RUCC's initial public offering and the borrowing availability under the
Senior Secured Revolving Credit Facility, will provide adequate resources to
fund the Company's operating expenses, working capital requirements, capital
expenditures and acquisitions until its business strategy provides the Company
with sufficient operating cash flow. There can be no assurance that such
business strategy will be successfully implemented or that the future cash flows
of the Company will be sufficient to meet all of the Company's obligations and
commitments. The failure to generate such sufficient cash flow could
significantly adversely affect the market value of the Company's Senior Discount
Notes, and the Company's ability to pay the principal of and interest on the
Senior Discount Notes.
IMPACT OF YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $10,000 during 1999 in connection with remediating its
systems. The Company is not aware of any material problems resulting from Year
2000 issues, either with its products, its internal systems, or the products and
services of third parties. The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risk exposure with respect to financial instruments is to changes
in the "prime rate" in the United States. We may borrow up to $20 million under
our Senior Secured Revolving Credit Facility. Amounts outstanding under the
credit facility bear interest, at the Company's option, at the bank's prime
rate plus 1.25% or LIBOR plus 2.50%. At September 30, 2000, there were no
amounts outstanding under our Senior Secured Revolving Credit Facility.
11
<PAGE>
RADIO UNICA CORP.
PART II - OTHER INFORMATION
--------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27.1 - Financial Data Schedule.
(b) 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.
Radio Unica Corp.
/s/ Steven E. Dawson
By: ----------------------------
Steven E. Dawson
Chief Financial Officer
Date: November 8, 2000
12
