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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 Securities Exchange Act of 1934
|X| 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. 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 November 8, 2000, 21,290,402 shares of Common Stock, $.01 par
value were outstanding.
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RADIO UNICA COMMUNICATIONS CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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 2. Changes in Securities............................................................................ 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>
SEPTEMBER 30, DECEMBER 31,
ASSETS 2000 1999
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(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 48,999,511 $ 76,806,025
Restricted cash 450,000 305,000
Accounts receivable, net of allowance for doubtful accounts of --
$630,509 and $255,242, respectively 8,545,548 5,145,345
Prepaid expenses and other current assets 4,163,522 2,504,909
------------- -------------
Total current assets 62,158,581 84,761,279
Property and equipment, net of accumulated depreciation of $4,329,429
and $2,772,963, respectively 22,047,616 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 5,611,278 5,130,968
------------- -------------
$ 195,516,236 $ 201,086,566
============= =============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
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<S> <C> <C>
Current liabilities:
Accounts payable $ 1,355,093 $ 1,877,162
Accrued expenses 3,511,884 2,112,909
Current portion of notes payable 48,583 216,067
Deferred income 494,965 --
------------- -------------
Total current liabilities 5,410,525 4,206,138
Other liabilities 165,000 165,000
Notes payable 54,819 76,911
Deferred taxes 1,953,979 1,953,979
Senior discount notes 128,276,747 117,732,564
Commitments and contingencies
Preferred stock; $.01 par value; 5,000,000 shares authorized;
no shares issued or outstanding -- --
Stockholders' equity:
Common stock; $.01 par value; 40,000,000 shares authorized; 21,290,402 and
20,942,837 shares issued and outstanding at September 30, 2000 and
December 31, 1999, respectively 212,904 209,428
Additional paid-in-capital 161,421,489 158,795,542
Deferred compensation expense (2,005,402) (4,265,522)
Accumulated deficit (99,973,825) (77,787,474)
------------- -------------
Total stockholders' equity 59,655,166 76,951,974
------------- -------------
$ 195,516,236 $ 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 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 975,930 721,429 2,949,011 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
------------ ------------ ------------ ------------
12,212,597 28,903,698 36,481,936 48,359,283
------------ ------------ ------------ ------------
Loss from operations (3,535,161) (24,169,731) (13,840,864) (37,278,034)
Other income (expense)
Interest expense (3,866,666) (3,716,300) (11,223,514) (10,407,684)
Interest income 907,176 47,540 2,860,963 635,983
Other 7,841 -- 17,064 --
------------ ------------ ------------ ------------
(2,951,649) (3,668,760) (8,345,487) (9,771,701)
------------ ------------ ------------ ------------
Net loss (6,486,810) (27,838,491) (22,186,351) (47,049,735)
Accrued dividends on Series A redeemable
cumulative preferred stock -- 1,007,159 -- 2,942,921
------------ ------------ ------------ ------------
Net loss applicable to common shareholders $ (6,486,810) $(28,845,650) $(22,186,351) $(49,992,656)
============ ============ ============ ============
Net loss per common share applicable to
common shareholders - basic and diluted $ (0.31) $ (2.60) $ (1.05) $ (4.51)
============ ============ ============ ============
Weighted average common shares
outstanding - basic and diluted 21,219,386 11,110,927 21,138,115 11,090,824
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(22,186,351) $(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 (872,435) 1,626,192
Radio broadcasting rights -- (115,797)
Other assets (31,678) (424,456)
Accounts payable and accrued expenses 451,906 (1,573,108)
Deposit payable (761,175) 165,000
------------ ------------
Net cash used in operating activities (9,725,007) (17,466,549)
------------ ------------
INVESTING ACTIVITIES
Acquisition of property and equipment (2,746,197) (2,352,060)
Restricted cash-escrow account (650,000) 12,464,326
Acquisition 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)
Proceeds from issuance of Series A redeemable cumulative
preferred stock and common stock -- 45,000
Repayment of notes payable (155,000) --
Proceeds from issuance of common stock 129,423 --
------------ ------------
Net cash (used in) provided by financing activities (25,577) 13,259,419
------------ ------------
Net decrease in cash and cash equivalents (27,806,514) (38,818,446)
Cash and cash equivalents at beginning of period 76,806,025 38,894,144
------------ ------------
Cash and cash equivalents at end of period $ 48,999,511 $ 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
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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 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 broadcasting license, and
completed the acquisition.
5
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RADIO UNICA COMMUNICATIONS 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. 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 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 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 $16.7
million or 58% to approximately $12.2 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
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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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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 $0.3 million or 35% to
approximately $1.0 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 to purchase 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
$0.7 million or 20% to approximately $(3.0) 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
and interest income of $0.9 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 and $48,000 in interest
income during the three months ended September 30, 1999.
NET LOSS. Net loss decreased by approximately $21.3 million or 77% to
approximately $6.5 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
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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 and $19.6 million in 2000 and
1999, respectively, increased by approximately $2.0 million or 62% to
approximately $(1.2) 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 $20.8 million or 91% to approximately $(2.0) 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 $11.9
million or 25% to approximately $36.5 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 $0.9 million or 43% to
approximately $2.9 million for the nine months ended September 30, 2000 from
approximately $2.0 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
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RADIO UNICA COMMUNICATIONS 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 to purchase shares of the Company's common stock. These stock
options were granted before October 19, 1999 the date of the Company's IPO.
OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately
$1.4 million or 15% to approximately $(8.3) million for the nine months ended
September 30, 2000 from approximately $(9.7) 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 and interest income of approximately $2.9 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 and $0.6 million in interest income during the nine months ended
September 30, 1999.
NET LOSS. Net loss decreased by approximately $24.8 million or 53% to
approximately $22.2 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 $6.8 million or 49% to
approximately $(7.1) 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 $24.1 million or 72% to approximately $(9.4)
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 the Company's IPO, 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
IPO 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 September 30, 2000 there were no amounts outstanding under the
Senior Secured Revolving Credit Facility.
10
<PAGE>
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 $7.7
million or 44% to approximately $9.7 million for the nine months ended September
30, 2000 from approximately $17.4 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 (used in) provided by financing activities was approximately $(26,000)
and $13.3 million for the nine months ended September 30, 2000 and 1999,
respectively. The decrease of approximately $13.3 million from 1999 to 2000 is
mainly due to 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 the IPO 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 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.
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<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 0.7
Acquisition of radio stations 15.8
Other purposes, including deposits on time brokerage agreements
and acquisition of radio broadcasting rights 4.0
Capital expenditures 4.2
Working capital and other 5.8
Investment in unconsolidated companies 3.5
Temporary investments in cash and cash equivalents 48.9
--------
$ 99.4
</TABLE>
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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.
/s/ Steven E. Dawson
By: --------------------------------
Steven E. Dawson
Chief Financial Officer
Date: November 8, 2000
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