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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 JUNE 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 August 9, 2000, 100 shares of Common Stock, $.01 par value were
outstanding.
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RADIO UNICA CORP.
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
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
</TABLE>
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RADIO UNICA CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 2000 1999
------ -------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,358,240 $ 2,396,044
Restricted cash 750,000 305,000
Accounts receivable, net of allowance for
doubtful accounts of $521,255 and $255,242,
respectively 8,003,564 5,145,345
Prepaid expenses and other current assets 3,359,068 2,094,735
------------ -----------
Total current assets 13,470,872 9,941,124
Property and equipment, net of accumulated
depreciation of $3,764,526 and $2,772,963
respectively 19,848,104 17,434,918
Broadcast licenses, net of accumulated
amortization of $4,963,550 and $3,463,192,
respectively 94,413,828 84,665,873
Other intangible assets, net of accumulated
amortization of $2,813,013 and $2,121,951,
respectively 8,402,466 9,093,528
Other assets 3,812,061 5,123,967
------------ ------------
$139,947,331 $126,259,410
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 981,220 $ 1,877,162
Accrued expenses 3,219,421 2,112,909
Current portion of notes payable 45,730 216,067
Deferred income 921,560 --
------------ -------------
Total current liabilities 5,167,931 4,206,138
Other liabilities 165,000 165,000
Notes payable 76,911 76,911
Deferred taxes 1,953,979 1,953,979
Due to parent, net 47,194,891 25,584,756
Senior discount notes 124,649,352 117,732,564
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 (2,758,776) (4,265,522)
Accumulated deficit (96,058,236) (78,750,695)
------------ ------------
Total stockholders' deficit (39,260,733) (23,459,938)
------------ ------------
$139,947,331 $126,259,410
============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
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RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenue $ 7,745,933 $ 4,581,368 $ 13,963,636 $ 6,347,282
Operating expenses:
Direct operating 1,603,605 976,557 3,234,059 1,708,467
Selling, general and administrative 4,017,614 3,384,742 7,880,712 6,362,150
Network 3,133,847 2,392,803 6,805,723 5,632,040
Corporate 809,152 668,643 1,686,644 1,339,856
Depreciation and amortization 1,445,778 1,329,151 2,869,018 2,413,072
LMA termination fee -- 2,000,000 -- 2,000,000
Stock option compensation 753,373 -- 1,506,746 --
=========== =========== ============ ============
11,763,369 10,751,896 23,982,902 19,455,585
----------- ----------- ------------ ------------
Loss from operations (4,017,436) (6,170,528) (10,019,266) (13,108,303)
Other income (expense):
Interest expense (3,711,074) (3,416,524) (7,356,848) (6,691,384)
Interest income 46,223 139,587 59,350 588,443
Other 5,535 -- 9,223 --
----------- ----------- ------------ ------------
(3,659,316) (3,276,937) (7,288,275) (6,102,941)
----------- ----------- ------------ ------------
Net loss (7,676,752) (9,447,465) (17,307,541) (19,211,244)
Accrual dividends on Sales A redeemable
cumulative preferred stock -- 977,209 -- 1,935,762
----------- ----------- ------------ ------------
Net loss applicable to common
shareholders $(7,676,752) $(10,424,674) $(17,307,541) $(21,147,006)
=========== ============ ============ ============
Net loss per common share applicable
to common shareholders - basic and
diluted $ (76,768) $ (104,247) $ (173,075) $ (211,470)
=========== ============ ============ ============
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
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RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------
ASSETS 2000 1999
------ ---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(17,307,541) $(19,211,244)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,869,018 2,413,072
Provision for bad debts 266,013 99,929
Accretion of interest on senior discount notes 6,916,788 6,170,461
Amortization of deferred financing costs 385,416 385,416
Stock option compensation expense 1,506,746 --
Other (332,940) (487,400)
Change in assets and liabilities:
Accounts receivable (3,124,236) (2,497,298)
Prepaid expenses (881,152) 1,102,011
Other current assets (128,682) (67,318)
Accounts payable (895,942) 18,179
Accrued expenses 906,512 672,993
Other assets (437,856) 36,738
Deposit payable -- 165,000
============ ============
Net cash used in operating activities (10,257,856) (11,199,461)
------------ -------------
INVESTING ACTIVITIES
Acquisition of property and equipment (1,440,041) (1,717,121)
Restricted cash-escrow account (650,000) 9,964,447
Radio broadcasting rights -- (42,500)
Acquisition of radio stations (6,145,041) (44,723,582)
Investment in unconsolidated company (2,000,000) --
============ ============
Net cash used in investing activities (10,235,082) (36,518,756)
------------ -------------
FINANCING ACTIVITIES
Proceeds from borrowings under the revolving credit
facility -- 10,200,000
Debt financing costs -- (1,135,581)
Proceeds from issuance of Series A redeemable
cumulative preferred stock of Radio Unica
Communications Corp. -- 44,550
Intercompany payable, net 19,610,134 --
Repayment of note payable (155,000) --
------------- -------------
Net cash provided by financing activities 19,455,134 9,108,969
------------- -------------
Net decrease in cash and cash equivalents (1,037,804) (38,609,248)
Cash and cash equivalents at beginning of period 2,396,044 38,894,144
------------- -------------
Cash and cash equivalents at end of period $ 1,358,240 $ 284,896
============ =============
Investment in unconsolidated company in exchange
for advertising $ 1,000,000 $ --
============ =============
Reclassification of prepaid expenses to broadcast
license upon consummation of the acquisition of
radio stations $ -- $ 2,500,000
============ =============
Reclassification of other assets to broadcast
license upon consummation of the acquisition of
radio stations $ (4,544,301) $ --
============ =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
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RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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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 six months ended June 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 revenues 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. The purchase price has been allocated to the assets acquired based
on preliminary estimates subject to final appraisals.
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 parent, Radio Unica Communications Corp.
("RUCC") 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. The purchase price has been allocated to the assets acquired
based on preliminary estimates subject to final appraisals.
On April 12, 2000, the Company contracted to acquire substantially all the
assets used in the operations of radio station KZDC-AM in San Antonio, Texas
from Texas Lotus, Ltd., for a cash purchase price of $1.85 million. The Company
has been operating the station under a local marketing agreement since January
1998. On July 27, 2000 after receiving the consent of the FCC to assign the
broadcasting license, the Company completed the acquisition.
5
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RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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2. ACQUISITIONS, CONTINUED
On April 27, 2000, the Company contracted to acquire substantially all the
assets used in the operations of radio station KQTL-AM in Tucson, Arizona from
Cima Broadcasting, L.L.C., 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.
On June 8, 2000, the Company contracted to acquire substantially all the
assets used in the operations of radio station KATD-AM in Pittsburgh, California
from Peoples Radio, Inc. for a purchase price of approximately $5.0 million. The
purchase price is comprised of approximately $4.5 million cash and 87,500 shares
of RUCC common stock valued at approximately $0.5 million. The Company funded a
$450,000 escrow in conjunction with this transaction. The transaction is
expected to be finalized upon the receipt of the FCC's approval to assign the
broadcasting license.
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 SIX MONTHS ENDED
JUNE 30,
----------------------------------
2000 1999
---- ----
<S> <C> <C>
Current assets $ 12,112,642 $ 7,742,632
Total Assets 135,589,101 120,774,554
Current liabilities 5,167,931 35,264,176
Total liabilities (including due to parent of
$52,792,652 and $30,287,176) 104,351,184 37,150,686
Net revenue 13,963,636 6,347,282
Operating expenses 20,883,278 14,820,634
Net loss (14,207,917) (14,576,293)
</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.
5. SUBSEQUENT EVENTS
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
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RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
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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 JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1999
NET REVENUE. Net revenue increased by approximately $3.2 million or 69% to
approximately $7.8 million for the three months ended June 30, 2000 from
approximately $4.6 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, increases in
advertising rates at the Company's network and O&Os, and the maturing of the
newer O&Os.
OPERATING EXPENSES. Operating expenses increased by approximately $1.0
million or 9% to approximately $11.8 million for the three months ended June 30,
2000 from approximately $10.8 million for the comparable period in the prior
year. The increase in operating expenses is due to a non-cash stock option
compensation expense charge of approximately $0.8 million, increased
depreciation and amortization relating to the increase in the number of O&Os of
approximately $0.1 million and increased costs associated with the increase in
the number of O&Os.
Direct operating expenses increased by approximately $0.6 million or 64% to
approximately $1.6 million for the three months ended June 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 increased spending relating to the promotion of those
O&Os.
7
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RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
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Selling, general and administrative expenses increased by approximately $0.6
million or 19% to approximately $4.0 million for the three months ended June 30,
2000 from approximately $3.4 million for the comparable period in the prior
year. The increase in selling, general and administrative expenses primarily
relates to the increase in net revenue as well as the increase in the number of
O&Os.
Network expenses increased by $0.7 million or 31% to approximately $3.1
million for the three months ended June 30, 2000 from approximately $2.4 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 network advertising.
Corporate expenses increased by approximately $0.1 million or 21% to
approximately $0.8 million for the three months ended June 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 of legal and
professional fees and other costs associated with the growth of the Company.
Depreciation and amortization increased by approximately $0.1 million or 9%
to approximately $1.4 million for the three months ended June 30, 2000 from
approximately $1.3 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 represents a non-cash charge of
approximately $0.8 million relating to the vesting of stock options granted
to employees of the Company to purchase approximately 267,000 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
$0.4 million or 12% to approximately $(3.7) million for the three months ended
June 30, 2000 from approximately $(3.3) million for the comparable period in the
prior year. Other income (expense) for the three months ended June 30, 2000 is
mainly comprised of interest expense of approximately $(3.7) million. Interest
expense primarily relates to the interest on the outstanding balance of the
Senior Discount Notes. The Company had approximately $0.1 million in interest
income and $(3.4) million in interest expense during the three months ended June
30, 1999.
NET LOSS. Net loss decreased by approximately $1.8 million or 19% to
approximately $7.7 million for the three months ended June 30, 2000 from
approximately $9.5 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 partially offset by increased costs associated with the operation of the
Company's O&Os, increased sales cost associated with the increase in revenue,
increased depreciation and amortization resulting from the increase in the
number of O&Os, as well as the non-cash stock option compensation expense
relating to the vesting of stock options.
8
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RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
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EBITDA. EBITDA less the non-cash charge relating to the stock option
compensation expense of approximately $0.8 million increased by approximately
$3.0 million or 62% to approximately $(1.8) million for the three months ended
June 30, 2000 from approximately $(4.8) million for the comparable period in the
prior year. EBITDA increased by approximately $2.2 million or 47% to
approximately $(2.6) million for the three months ended June 30, 2000 from
approximately $(4.8) 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.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999
NET REVENUE. Net revenue increased by approximately $7.6 million or 120% to
approximately $14.0 million for the six months ended June 30, 2000 from
approximately $6.4 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, increases in
advertising rates at the Company's network and O&Os, and the maturing of the
newer O&Os.
OPERATING EXPENSES. Operating expenses increased by approximately $4.5
million or 23% to approximately $24.0 million for the six months ended June 30,
2000 from approximately $19.5 million for the comparable period in the prior
year. The increase in operating expenses is due to a non-cash stock option
compensation expense charge of approximately $1.5 million, increased
depreciation and amortization relating to the increase in the number of O&Os of
approximately $0.5 million, increased costs in network programming as well as
increased costs associated with the increase in the number of O&Os.
Direct operating expenses increased by approximately $1.5 million or 89% to
approximately $3.2 million for the six months ended June 30, 2000 from
approximately $1.7 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 increased spending relating to the promotion of those
O&Os.
Selling, general and administrative expenses increased by approximately $1.5
million or 24% to approximately $7.9 million for the six months ended June 30,
2000 from approximately $6.4 million for the comparable period in the prior
year. The increase in selling, general and administrative expenses primarily
relates to the increase in net revenue as well as the increase in the number of
O&Os.
Network expenses increased by $1.2 million or 21% to approximately $6.8
million for the six months ended June 30, 2000 from approximately $5.6 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 network advertising.
Corporate expenses increased by approximately $0.4 million or 26% to
approximately $1.7 million for the six months ended June 30, 2000 from
approximately $1.3 million for the comparable period in the prior year. The
increase in corporate expenses is mainly due to increased costs of legal and
professional fees and other costs associated with the growth of the Company.
Depreciation and amortization increased by approximately $0.5 million or
19% to approximately $2.9 million for the six months ended June 30, 2000 from
approximately $2.4 million for the comparable period in the prior year. The
increase in depreciation and amortization is due to the addition of fixed and
intangible assets arising from the acquisition of O&Os.
9
<PAGE>
RADIO UNICA CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
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Stock option compensation expense represents a non-cash charge of
approximately $1.5 million relating to the vesting of stock options granted to
employees of the Company to purchase approximately 267,000 shares of RUCC common
stock. These stock options were granted before October 19, 1999 the date of
RUCC's IPO. The Company is a wholly owned subsidiary of RUCC.
OTHER INCOME (EXPENSE). Other income (expense) increased by approximately
$1.2 million or 19% to approximately $(7.3) million for the six months ended
June 30, 2000 from approximately $(6.1) million for the comparable period in the
prior year. Other income (expense) for the six months ended June 30, 2000 is
mainly comprised of interest expense of approximately $(7.4) million. Interest
expense primarily relates to the interest on the outstanding balance of the
Senior Discount Notes. The Company had approximately $0.6 million in interest
income and $(6.7) million in interest expense during the six months ended June
30, 1999.
NET LOSS. Net loss decreased by approximately $1.9 million or 10% to
approximately $17.3 million for the six months ended June 30, 2000 from
approximately $19.2 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 partially offset by increased costs associated with the operation of the
Company's O&Os, increased sales cost associated with the increase in revenue,
increased depreciation and amortization resulting from the increase in the
number of O&Os, as well as the non-cash stock option compensation expense
relating to the vesting of stock options.
EBITDA. EBITDA less the non-cash charge relating to the stock option
compensation expense of approximately $1.5 million increased by approximately
$5.1 million or 47% to approximately $(5.6) million for the six months ended
June 30, 2000 from approximately $(10.7) million for the comparable period in
the prior year. EBITDA increased by approximately $3.5 million or 33% to
approximately $(7.2) million for the six months ended June 30, 2000 from
approximately $(10.7) 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company has had negative cash flows since inception. Working capital and
financing for 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 June 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 $0.9
million or 8% to approximately $10.3 million for the six months ended June 30,
2000 from approximately $11.2 million for the comparable period in the prior
year. Net cash used in investing activities was approximately $10.2 million and
$36.5 million for the six months ended June 30, 2000 and 1999, respectively. The
decrease of approximately $26.3 million from 2000 to 1999 is primarily due to
fewer radio station acquisitions that took place during 2000. Net cash provided
by financing activities was approximately $19.5 million and $9.1 million for the
six months ended June 30, 2000 and 1999, respectively. The increase of
approximately $10.4 million from 2000 to 1999 is due to borrowings from RUCC
partially offset by borrowings under the revolving credit facility which took
place during 1999.
Capital expenditures primarily relate to the purchase of broadcast
equipment for the network and O&Os, leasehold improvements, computer equipment
and telecommunications equipment. Capital expenditures were approximately $1.4
million and $1.7 million for the six months ended June 30, 2000 and 1999,
respectively. The decrease in capital expenditures is primarily due to fewer
station build-outs taking 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 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 June 30, 2000, there were no amounts outstanding under our credit
facility.
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RADIO UNICA CORP.
PART II - OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27.1 - Financial Data Schedule.
(b) SIGNATURES
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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.
By: /s/ Steven E. Dawson
---------------------------
Steven E. Dawson
Chief Financial Officer
Date: August 9, 2000
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