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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. 001-15151
RADIO UNICA COMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 65-00856900
(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, 21,202,902 shares of Common Stock, $.01 par
value were outstanding.
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RADIO UNICA COMMUNICATIONS CORP.
TABLE OF CONTENTS
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PAGE
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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 2. Changes in Securities............................................................................12
Item 4. Submission of Matters to a Vote of Security Holders..............................................12
Item 6. Exhibits and Reports on Form 8-K.................................................................13
</TABLE>
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RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 2000 1999
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(Unaudited)
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Current assets:
Cash and cash equivalents....................................... $ 58,147,539 $ 76,806,025
Restricted cash................................................. 750,000 305,000
Accounts receiveable, 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....................... 3,502,830 2,504,909
-------------- -------------
Total current assets 70,403,933 84,761,279
Property and equipment, net of accumulated depreciation of
$3,764,526 and $2,772,963 respectively........................ 19,848,103 17,434,918
Broadcast licenses, net of accumulated amortization of
$4,963,550 and $3,463,192, recpectively....................... 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.................................................... 3,855,213 5,130,968
-------------- --------------
$ 196,923,543 $ 201,086,566
============== ==============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities:
Accounts payable................................................ $ 981,220 $ 1,877,162
Accrued expenses................................................ 3,243,138 2,112,909
Current portion of notes payable................................ 45,730 216,067
Deferred income................................................. 921,560 --
-------------- -------------
Total current liabilities......................................... 5,191,648 4,206,138
Other liabilities................................................. 165,000 165,000
Notes payable..................................................... 76,911 76,911
Deferred taxes.................................................... 1,953,979 1,953,979
Senior discount notes............................................. 124,649,352 117,732,564
Commitments and contingencies
Preferred stock $.01 par value, 5,000,000 shares authorized;
no shares issued and outstanding
Stockholders' equity:
Common stock $.01 par value, 40,000,000 shares authorized;
21,201,402 and 20,942,837 shares issued and outstanding....... 212,014 209,428
Additional paid-in-capital...................................... 160,920,430 158,795,542
Deferred compensation expense................................... (2,758,776) (4,265,522)
Accumulated deficit............................................. (93,487,015) (77,787,474)
-------------- -------------
Total stockholders' equity........................................ 64,886,653 76,951,974
-------------- -------------
$ 196,923,543 $ 201,086,566
============== =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
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RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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2000 1999 2000 1999
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<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.................................... 887,373 668,643 1,973,081 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 --
----------- ------------ ------------ -----------
11,841,590 10,751,896 24,269,339 19,455,585
----------- ------------- ------------ -----------
Loss from operations........................... (4,095,657) (6,170,528) (10,305,703) (13,108,303)
Other income (expense):
Interest expense............................. (3,711,074) (3,416,524) (7,356,848) (6,691,384)
Interest income.............................. 1,045,876 139,587 1,953,787 588,443
Other........................................ 5,535 -- 9,223 --
----------- ------------ ------------ -----------
(2,659,663) (3,276,937) (5,393,838) (6,102,941)
----------- ----------- ------------ -----------
Net loss (6,755,320) (9,447,465) (15,699,541) (19,211,244)
----------- ------------ ------------ -----------
Accrued dividends on Series A redeemable
accumulative preferred stock................. -- 977,209 -- 1,935,762
----------- ------------ ------------ -----------
Net loss applicable to common shareholders..... $ (6,755,320) $ (10,424,674) $(15,699,541) $(21,147,006)
============ ============== ============= ============
Net loss per common share applicable common
shareholders -basic and diluted.............. $ (0.32) $ (0.94) $ (0.74) $ (1.91)
============ ============== ============= =============
Weighted average common shares outstanding -
basic and diluted............................ 21,181,193 11,081,924 21,097,033 11,080,606
============ ============== ============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
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OPERATING ACTIVITIES
Net loss...................................................... $ (15,699,541) $ (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.......................................... (901,166) 1,102,011
Other current assets...................................... 157,745 (67,318)
Accounts payable.......................................... (895,942) 18,179
Accrued expenses.......................................... 930,226 672,993
Other assets.............................................. (474,005) 36,288
Deposit payable........................................... -- 165,000
-------------- --------------
Net cash used in operating activities......................... (8,395,878) (11,199,911)
-------------- --------------
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)
Repayment of notes payable.................................... (155,000) --
Proceeds from issuance of Series A redeemable
cumulative preferred stock and common stock................. -- 45,000
Proceeds from issuance of common stock........................ 127,474 --
-------------- ---------------
Net cash (used in) provided by financing activities........... (27,526) 9,109,419
-------------- --------------
Net decrease in cash and cash equivalents..................... (18,658,486) (38,609,248)
Cash and cash equivalents at beginning of period.............. $ 76,806,025 $ 38,894,144
-------------- ---------------
Cash and cash equivalents at end of period.................... $ 58,147,539 $ 284,896
============== ===============
Investment in unconsolidated company in exchange
for advertising............................................. $ 1,000,000 $ --
============== ===============
Reclassification of other assets to broadcast
license upon consummation of the acquisition of
radio stations.............................................. $ (4,544,301) $ --
============== ================
Issuance of common stock for acquisition of radio
station..................................................... $ 2,000,000 --
============== ================
Reclassification of prepaid expenses to broadcast
license upon consummation of the acquisition of
radio stations.............................................. $ -- $ 2,500,000
============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
</TABLE>
4
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RADIO UNICA COMMUNICATIONS 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 Communications 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 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 COMMUNICATIONS 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 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. The transaction is expected to be
finalized upon the receipt of the FCC's approval to assign the broadcasting
license.
3. 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.
4. 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 COMMUNICATIONS 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 $1.1
million or 10% to approximately $11.8 million for the three months ended June
30, 2000 from approximately $10.7 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 COMMUNICATIONS 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 $0.2 million or 33% to
approximately $0.9 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 the
Company's common stock. These stock options were granted before October 19, 1999
the date of the Company's Initial Public Offering ("IPO").
OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately
$0.6 million or 19% to approximately $(2.7) 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 and
interest income of $1.0 million. Interest expense primarily relates to the
interest on the outstanding balance of the Senior Discount Notes. The Company
had approximately $(3.4) million in interest expense and $0.1 million in
interest income during the three months ended June 30, 1999.
NET LOSS. Net loss decreased by approximately $2.7 million or 28% to
approximately $6.7 million for the three months ended June 30, 2000 from
approximately $9.4 million for the comparable period in the prior year. The
decrease in net loss is mainly the result of the significant increase in the
Company's revenue partially offset by increased costs associated with the
operation of the Company's network and 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 COMMUNICATIONS 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
$2.9 million or 61% to approximately $(1.9) 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 45% 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 $4.8
million or 25% to approximately $24.3 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 $0.6 million or 47% to
approximately $2.0 million for the six months ended June 30, 2000 from
approximately $1.4 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 additions of fixed
and intangible assets arising from the acquisitions of O&Os.
9
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RADIO UNICA COMMUNICATIONS 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 the
Company's common stock. These stock options were granted prior to October 19,
1999 the date of the IPO.
OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately
$0.7 million or 12% to approximately $(5.4) 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 and
interest income of approximately $2.0 million. Interest expense primarily
relates to the interest on the outstanding balance of the Senior Discount Notes.
The Company had approximately $(6.7) million in interest expense and $0.6
million in interest income during the six months ended June 30, 1999.
NET LOSS. Net loss decreased by approximately $3.5 million or 18% to
approximately $15.7 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 significant 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
$4.8 million or 45% to approximately $(5.9) 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 $3.3 million or 30% to
approximately $(7.4) 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 the Company'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 the Company's shareholders.
The Company's primary source of liquidity is the remaining proceeds from the
initial public offering and the borrowing availability under the 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
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RADIO UNICA COMMUNICATIONS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
-------------------------------------------------------------------------------
Net cash used in operating activities decreased by approximately $2.8
million or 25% to approximately $8.4 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 (used in)
provided by financing activities was approximately $(28,000) and $9.1 million
for the six months ended June 30, 2000 and 1999, respectively. The decrease of
approximately $9.1 million from 1999 to 2000 is mainly due to 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 the 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 common stock
and 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.
11
<PAGE>
RADIO UNICA COMMUNICATIONS CORP.
PART II - OTHER INFORMATION
-------------------------------------------------------------------------------
ITEM 2. CHANGES IN SECURITIES
On October 19, 1999, the Company's first registration statement under the
Securities Act of 1933 was declared effective by the Securities and Exchange
Commission (File No. 333-82561). The offering commenced October 19, 1999 and was
consummated on October 22, 1999.
The net proceeds received by the Company from the offering were
approximately $99,450,000. In connection with the offering, the Company incurred
an estimated $9,990,000 of expenses, including underwriting discounts of
$7,660,800, and other expenses of the offering of approximately $2,329,200. The
payments were all made to persons who were not directors, officers, 10%
stockholders or affiliates.
From the effective date of the registration statement, the net proceeds
from the offering have been used for the following purposes, none of which was
paid to persons who were officers, directors, 10% stockholders or affiliates:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Repayments of amounts outstanding under the senior credit facility $ 16.5
Deposits established in connection with future acquisitions 0.8
Acquisition of radio stations 10.6
Other purposes, including deposits on time brokerage agreements
and acquisition of radio broadcasting rights 3.0
Working capital and other 8.3
Investment in SportsYa! Inc. 2.0
Temporary investments in cash and cash equivalents 58.2
--------
$ 99.4
=======
</TABLE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held an annual meeting of stockholders on June 20, 2000, at
which the following matters were voted upon:
1. Election of eight directors.
2. Approval of appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 2000.
The results of the meeting were as follows:
<TABLE>
<CAPTION>
BROKER
PROPOSAL 1 FOR AGAINST NON-VOTES
--- ------- ---------
<S> <C> <C> <C>
Joaquin F. Blaya 19,481,700 15,848 -
Jose C. Cancela 19,481,700 15,848 -
Leonard S. Coleman Jr. 19,481,700 15,848 -
Steven E. Dawson 19,481,700 15,848 -
Richard Dillon 19,481,700 15,848 -
Andrew C. Goldman 19,481,700 15,848 -
Sidney Lapidus 19,481,700 15,848 -
John D. Santoleri 19,481,700 15,848 -
PROPOSAL 2 19,484,200 8,800 4,508
</TABLE>
12
<PAGE>
RADIO UNICA COMMUNICATION 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 Communications Corp.
By: /s/ Steven E. Dawson
-------------------------------
Steven E. Dawson
Chief Financial Officer
Date: August 9, 2000
13
