<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 333-60575
INTEREP NATIONAL RADIO SALES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-1865151
- ------------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Park Avenue, New York, New York 10017
- ------------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
(212) 916-0700
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(Registrant's telephone number, including area code)
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 [ ]
As of August 10, 1999, there were 297,976 outstanding shares of the
registrant's Common Stock, $0.04 par value per share.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share information)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................ $16,347 $32,962
Receivables, less allowance for doubtful accounts of $1,477 and $1,626
respectively..................................................................... 33,586 35,104
Representation contract buyouts receivable....................................... 8,873 11,447
Current portion of deferred representation contract costs........................ 31,864 33,742
Prepaid expenses and other current assets........................................ 1,803 1,207
------------ ------------
Total current assets............................................................. 92,473 114,462
------------ ------------
Fixed assets, net................................................................ 5,774 4,311
Deferred costs on representation contract purchases.............................. 45,629 45,702
Station contract rights, net..................................................... 1,219 1,681
Representation contract buyouts receivable....................................... 4,092 6,920
Other assets..................................................................... 14,115 11,432
------------ ------------
Total assets..................................................................... $163,302 $184,508
============ ============
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
LIABILITIES AND SHAREHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses ........................................... $ 12,981 $16,640
Accrued interest................................................................. 5,000 4,972
Representation contract buyouts payable.......................................... 18,313 20,219
Accrued employee-related liabilities............................................. 2,563 6,520
------------ ------------
Total current liabilities........................................................ 38,857 48,351
------------ ------------
Long-term debt................................................................... 100,000 100,000
------------ ------------
</TABLE>
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<TABLE>
<S> <C> <C>
Representation contract buyouts payable.......................................... 26,627 26,706
------------ ------------
Other noncurrent liabilities..................................................... 5,710 10,673
------------ ------------
Commitments and contingencies
Shareholders' deficit:
Common stock, $.04 par value-1,000,000 shares authorized, 334,549 shares issued.. 14 14
Additional paid-in-capital....................................................... 1,163 1,163
Accumulated deficit.............................................................. (7,060) (320)
Receivable from Employee Stock Ownership Plan.................................... -- (82)
Treasury stock, at cost-36,724 and 36,573 shares, respectively................... (2,009) (1,997)
------------ ------------
Total shareholders' deficit...................................................... (7,892) (1,222)
------------ ------------
Total liabilities and shareholders' deficit...................................... $163,302 $184,508
============ ============
</TABLE>
The accompanying Notes to Unaudited Interim Consolidated Financial Statements
are an integral part of these balance sheets.
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INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1999 1998 1999 1998
---- ---- ---- -----
<S> <C> <C> <C> <C>
Commission revenue ........................................ $ 24,225 $ 22,104 $ 41,736 $ 38,002
Contract termination revenue .............................. 1,237 1,850 3,742 25,966
-------- -------- -------- --------
Total revenues ............................................ 25,462 23,954 45,478 63,968
-------- -------- -------- --------
Operating expenses:
Selling expenses .......................................... 16,012 14,110 30,658 27,946
General and administrative expenses ....................... 2,587 2,749 5,186 5,346
Depreciation and amortization expense ..................... 6,744 8,745 16,246 17,841
-------- -------- -------- --------
Total operating expenses .................................. 25,343 25,604 52,090 51,133
-------- -------- -------- --------
Operating income (loss) ................................... 119 (1,650) (6,612) 12,835
Interest expense, net ..................................... 2,430 1,236 4,812 2,241
-------- -------- -------- --------
(Loss) Income before (benefit) provision for
income taxes .............................................. (2,311) (2,886) (11,424) 10,594
(Benefit) provision for income taxes ...................... (948) (1,183) (4,684) 4,343
-------- -------- -------- --------
Net (loss) income ......................................... (1,363) (1,703) (6,740) 6,251
-------- -------- -------- --------
Preferred stock dividend requirements and
redemption premium ........................................ -- 465 -- 930
-------- -------- -------- --------
Net (loss) income applicable to common shareholders ....... $ (1,363) $ (2,168) $ (6,740) $ 5,321
======== ======== ======== ========
</TABLE>
The accompanying Notes to Unaudited Interim Consolidated Financial Statements
are an integral part of these statements.
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<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the
Six Months
Ended June 30,
--------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income ............................................................... $ (6,740) $ 6,251
Adjustments to reconcile (loss) income to net cash provided by
operating activities:
Depreciation and amortization ................................................... 16,246 17,841
Changes in assets and liabilities-
Receivables...................................................................... 1,518 (9,166)
Representation contracts buyout receivable ...................................... 5,402 (2,231)
Prepaid expenses and other current assets ....................................... (596) (556)
Other noncurrent assets ......................................................... (3,200) (379)
Accounts payable and accrued expenses ........................................... (3,659) (3,018)
Accrued interest ................................................................ 28 (30)
Accrued employee-related liabilities ............................................ (3,957) (2,087)
Other noncurrent liabilities .................................................... (4,963) 4,505
-------- --------
Net cash provided by operating activities ....................................... 79 11,130
-------- --------
Cash flows from investing activities:
Additions to fixed assets ....................................................... (2,078) (392)
-------- --------
Net cash used in investing activities: .......................................... (2,078) (392)
-------- --------
Cash flows from financing activities:
Station representation contracts payments ....................................... (14,686) (15,999)
Debt repayments ................................................................. -- (10,250)
Borrowings in accordance with credit agreement .................................. -- 17,148
Purchases of treasury stock ..................................................... (12) (302)
Other, net ...................................................................... 82 --
-------- --------
Net cash used in financing activities ........................................... (14,616) (9,403)
-------- --------
Net (decrease) increase in cash and cash equivalents ............................ (16,615) 1,335
Cash and cash equivalents, beginning of period .................................. 32,962 1,419
-------- --------
Cash and cash equivalents, end of period ........................................ $ 16,347 $ 2,754
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest paid .............................................................. $ 4,972 $ 1,953
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Income taxes paid .......................................................... 1,080 118
Non-cash investing and financing activities:
Station representation contracts acquired .................................. $ 12,704 $ 14,004
======== ========
</TABLE>
The accompanying Notes to Unaudited Interim Consolidated Financial Statements
are an integral part of these statements.
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<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share information)
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
Interep National Radio Sales, Inc. ("Interep"), together with its subsidiaries
(collectively, the "Company"), and have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. All significant intercompany transactions and
balances have been eliminated.
The consolidated financial statements of June 30, 1999 and
1998 are unaudited; however, in the opinion of management, such statements
include all adjustments necessary for a fair presentation of the results for the
periods presented. The interim financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Consolidated Financial Statements for the year ended December 31,
1998, which are available upon request of the Company. Due to the seasonal
nature of the Company's business, the results of operations for the interim
periods are not necessarily indicative of the results that might be expected for
future interim periods or for the full year ending December 31, 1999.
Revenue Recognition
The Company is a national representation ("rep") firm serving
radio broadcast clients throughout the United States. Commission revenue is
derived from sales of advertising time for radio stations under representation
contracts. Commissions and fees are recognized in the month the advertisement is
broadcast. In connection with its unwired network business, the Company collects
fees for unwired network radio advertising and, after deducting its commissions,
remits the fees to the respective radio stations. Since it is common practice in
the industry for rep companies not to pay a station until the corresponding
receivable is paid, and since the receivable and payable are equal, except for
the commissions, fees payable to stations have been offset against the related
receivables from advertising agencies in the accompanying consolidated balance
sheets.
Representation Contract Termination Revenue and Contract Acquisition Costs
The Company's station representation contracts usually renew
automatically from year to year unless either party provides written notice of
termination at least twelve months prior to the next automatic renewal date. In
accordance with industry practice, in lieu of termination, an arrangement is
normally made for the purchase of such contracts by a successor representation
firm. The purchase price paid by the successor representation firm is generally
based upon the historic commission income projected over the remaining contract
period, plus two months (the "Buyout Period").
Costs of obtaining station representation contracts are
deferred and amortized over the Buyout Period. Such amortization is included in
the accompanying consolidated statements of operations as a component of
depreciation and amortization expense. Amounts which are to be amortized during
the next year are included as current assets in the accompanying consolidated
balance sheets. Income earned from the loss of station representation contracts
(contract termination revenue) is recognized on the effective date of the buyout
agreement.
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In addition, costs incurred as a result of commission rate
reductions are deferred and amortized over the remaining life of the existing
representation agreement. Such amortization is included in the accompanying
consolidated statements of operations as a component of depreciation and
amortization expense.
2. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). The Statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet and measured at its fair value. This Statement
also requires that changes in the derivative's fair value be recognized
currently in earnings. To date, the Company has not, and has no present
intention to, invest in any derivative instruments or participate in any hedging
activities. Accordingly, the adoption of SFAS 133 will not have any effect on
the Company.
3. Segment Disclosures
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosure about Segments of an Enterprise and Related
Information". The Statement requires the Company to report segment financial
information consistent with the presentation made to the Company's management
for decision making purposes. The Company is managed as one segment and all
revenues are derived solely from radio representation operations and related
activities. The Company's management decisions are based on consolidated cash
flow (defined as operating income before depreciation, amortization and
management fees), general and administrative expenses of $5,186 and $5,346 for
the six months ended June 30, 1999 and 1998, respectively, and EBITDA (income
before interest, taxes, depreciation and amortization) of $9,634 and $30,676 for
the six months ended June 30, 1999 and 1998, respectively.
4. Summarized Consolidating Financial Statements
The following summarized consolidating financial statements for the three and
six months ended June 30, 1999 and 1998 present the financial position, the
results of operations and cash flows for the Company and the guarantor
subsidiaries of the Company, and the eliminations necessary to arrive at the
information for the Company on a consolidated basis.
The guarantor subsidiaries are the only wholly-owned subsidiaries of the
Company, direct or indirect, and have fully and unconditionally guaranteed the
Company's 10.0% Senior Subordinated Notes (the "Notes") due 2008 on a joint and
several basis. The Company has not presented separate financial statements and
other disclosures concerning the guarantor subsidiaries of the Company because
management has determined that such information is not material to investors.
<TABLE>
<CAPTION>
At June 30, 1999
Consolidated
Company Guarantors Elimination Company
------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets $27,709 $64,764 $ -- $92,473
Noncurrent assets 55,938 20,247 (5,356) 70,829
Current liabilities 17,040 21,817 -- 38,857
Noncurrent liabilities 104,363 27,974 -- 132,337
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
At December 31, 1998
Consolidated
Company Guarantors Elimination Company
------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets $46,026 $68,436 $ -- $114,462
Noncurrent assets 15,266 60,136 (5,356) 70,046
Current liabilities 19,395 28,956 -- 48,351
Noncurrent liabilities 108,259 29,120 -- 137,379
</TABLE>
<TABLE>
<CAPTION>
For the three months ended June 30, 1999
Consolidated
Company Guarantors Company
------- ---------- ------------
<S> <C> <C> <C>
Commission revenue $ 156 $24,069 $24,255
Contract termination revenue -- 1,237 1,237
Operating (loss) income (8,472) 8,591 119
Net (loss) income (9,657) 8,294 (1,363)
</TABLE>
<TABLE>
<CAPTION>
For the three months ended June 30, 1998
Consolidated
Company Guarantors Company
------- ---------- ------------
<S> <C> <C> <C>
Commission revenue $ 145 $21,959 $22,104
Contract termination revenue -- 1,850 1,850
Operating (loss) income (8,107) 6,457 (1,650)
Net (loss) income (8,698) 6,995 (1,703)
</TABLE>
<TABLE>
<CAPTION>
For the six months ended June 30, 1999
Consolidated
Company Guarantors Company
------- ---------- ------------
<S> <C> <C> <C>
Commission revenue $ 387 $41,349 $41,736
Contract termination revenue -- 3,742 3,742
Operating (loss) income (16,823) 10,211 (6,612)
Net (loss) income (16,565) 9,825 (6,740)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
For the six months ended June 30, 1998
Consolidated
Company Guarantors Company
------- ---------- ------------
<S> <C> <C> <C>
Commission revenue $ 383 $37,619 $38,002
Contract termination revenue -- 25,966 25,966
Operating (loss) income (16,289) 29,124 12,835
Net (loss) income (22,741) 28,992 6,251
</TABLE>
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is based upon and should be read in
conjunction with the Consolidated Financial Statements, including the notes
thereto, included elsewhere in this Report.
Certain statements contained herein, including without
limitation, statements containing the words "believes", "anticipates",
"intends", "expects" and words of similar import, constitute "forward-looking
statements." Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or industry results to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, both domestic and foreign;
industry capacity; demographic changes; existing government regulations and
changes in, or the failure to comply with, government regulations; liability and
other claims asserted against the Company; competition; the loss of any
significant customers; changes in operating strategy or development plans; the
ability to attract and retain qualified personnel; the significant indebtedness
of the Company; and other factors referenced in this Report. Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements contained herein to reflect future events
or developments.
General
The Company derives substantially all of its revenues from
commissions on sales of national spot radio advertising air time on behalf of
radio stations represented by the Company. Generally, national spot advertising
time is purchased by advertising agencies or media buying services retained by
advertisers to create advertising campaigns and to place advertising with radio
stations and other media. The Company receives commissions from its client radio
stations based on the national spot radio advertising billings of the station,
net of the standard advertising agency and media buying services commissions
(typically 15%). Commission rates are negotiated and set forth in a client's
representation contract. Since commissions are based on the prices paid to radio
stations for spots, the Company's revenue base is constantly adjusted for
inflation.
The Company's operating results generally are dependent on (i)
increases and decreases in the size of the total national spot radio advertising
market, (ii) changes in the Company's share of this market, (iii) acquisitions
and terminations of representation contracts and (iv) the Company's operating
expense levels. The effect of these factors on the Company's financial condition
and results of operations has varied from period to period.
Total United States national spot radio advertising annual
revenues have grown from approximately $1.1 billion to approximately $2.0
billion during the six years ended December 31, 1998. The performance of the
national spot radio advertising market is influenced by a number of factors,
including, but not limited to, general economic conditions, consumer attitudes
and spending patterns, the share of total advertising spent on radio and the
share of total radio advertising represented by national spot radio.
The Company's share of the national spot advertising market
changes as a result of increases and decreases in the amount of national spot
advertising broadcast on the Company's client stations. Moreover, the Company's
market share increases as the Company acquires representation contracts with new
client stations, and decreases if current client station representation
contracts are terminated. Thus, the Company's ability to attract new clients,
while retaining existing clients, significantly affects its market share. In
this regard, the value of representation contracts which have been acquired or
terminated during the last few years has tended to increase, due to a number of
factors, including the consolidation of ownership in the radio broadcast
industry following the enactment of the Telecommunications Act of 1996.
Accordingly,
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<PAGE>
in recent years, the Company's rep contract acquisition activity has increased
and the Company has devoted a significant amount of its resources to acquiring
representation contracts. At the same time, there has been an increase in the
amount of revenue received by the Company on the termination of representation
contracts. The decision to acquire a representation contract is based on the
market share opportunity presented and an analysis of the costs and net benefits
to be derived. The Company continuously seeks opportunities to acquire
additional representation contracts on attractive terms, while maintaining its
current clients. The Company's ability to acquire and maintain representation
contracts has had, and will continue to have, a significant impact on its
revenues and cash flows.
Following industry practice, the Company acts as the exclusive
national rep firm for each of its client radio stations pursuant to a written
contract. If a station terminates its contract prior to the scheduled
termination date, the station is obligated to pay the Company, as required by
the contract or in accordance with industry practice, an amount approximately
equal to the commissions the Company would have earned during the unexpired term
of the canceled contract, plus an additional two months of "spill over"
commissions (representing commissions earned on advertising placed or committed
to prior to the contract termination but broadcast thereafter). In practice,
these amounts are usually paid by the successor rep firm which signs a new
contract with the station and assumes the responsibility for payment to the
former rep firm. Such payments are usually made in equal monthly installments
over a period consisting of one-half the number of months remaining under the
terminated contract. For example, if the Company acquires the representation
contract of a station which is terminating its contract with a competing rep
firm with a remaining unexpired term of 12 months, the total obligation would be
14 months of commissions payable in seven equal monthly installments.
The Company recognizes revenue resulting from the termination
of a contract with a client as of the effective date of the termination. In this
regard, when a contract is terminated, the unamortized portion, if any, of the
expense originally incurred on acquisition of such contract is written-off
entirely. With respect to its entry into a representation contract with a new
client, the Company amortizes the contract acquisition cost incurred in equal
monthly installments over the life of the new contract. As a result, the
Company's operating income is affected, negatively or positively, by the
acquisition or loss of client stations.
The Company has been unable to identify a method to forecast
any trends in buyout activity, or in the amount of revenue or expense that will
likely be associated with buyouts during a particular period. Generally, the
amount of revenue resulting from the buyout of a representation contract depends
on the length of the remaining term of the contract and the revenue generated
under the contract during the 12 months preceding the date of termination (the
"trailing period"). The amount recognized by the Company as contract termination
revenue in any period is not, however, indicative of such revenue that may be
realized in any future period from contract terminations. Historically, the
level of buyout activity has varied from period to period. Additionally, the
length of the remaining terms, and the commission revenue generation, of the
contracts which are terminated in any period vary to a considerable extent.
Accordingly, while the consolidation of ownership in the radio broadcast
industry that has followed the enactment of the Telecommunications Act of 1996
has increased buyout activity and amounts, the impact of such activity on the
Company's revenues and income is expected to be uncertain, due to the variables
of contract length and commission generation.
While the commission revenue generated under a representation
contract during a trailing period is used in the calculation of the payments to
be made by the Company on its acquisition of such contract, such revenue should
not be relied on as an indication of the future commission revenue to be
generated by the Company under that contract. Such revenue will depend on a
number of factors, including the amount of national spot advertising broadcast
by the station involved. This, in turn, will be affected by factors such as
general and local economic conditions, consumer attitudes and spending patterns,
the share of total advertising spent on radio and the share of total radio
advertising represented by national spot radio.
During 1999, the Company entered the Internet advertising
business. Revenue and expenses from this business will be affected by the level
of advertising on the Internet generally, the prices
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<PAGE>
obtained for advertising on Internet web sites and the Company's ability to
obtain contracts from high-traffic Internet web sites and from Internet
advertisers.
The Company's selling and corporate expense levels are
dependent on management decisions regarding operating and staffing levels and on
inflation. Selling expenses represent all costs associated with the Company's
marketing, sales and sales support functions. Corporate expenses include items
such as corporate management, corporate communications, financial services,
advertising and promotion expenses, Internet advertising development expenses
and employee benefit plan contributions.
The Company's business normally follows the pattern of
advertising expenditures in general and is seasonal to the extent that radio
advertising spending increases during the fourth calendar quarter in connection
with the Christmas season and tends to be weaker during the first calendar
quarter. Radio advertising generally increases during the second and third
quarters due to holiday-related advertising, school vacations and back-to-school
sales. Additionally, radio tends to experience increases in the amount of
advertising revenues as a result of special events such as Presidential election
campaigns. Furthermore, the level of advertising revenues of radio stations, and
therefore the level of revenues of the Company, is susceptible to prevailing
general and local economic conditions and the corresponding increases or
decreases in the budgets of advertisers, as well as market conditions and trends
affecting advertising expenditures in specific industries.
Results of Operations
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
Commission Revenue. Commission revenue in the second quarter
of 1999 increased to $24.2 million, or 9.6%, from $22.1 million in the
comparable quarter in 1998. This increase is attributable to the fact that
commissions generated from new client representation contracts (primarily the
ABC radio stations) exceeded the loss of commission revenue from terminated
representation contracts (primarily Nationwide Communications), as well as a
general increase in national spot advertising on client stations. The Company
entered the Internet advertising business during 1999, with sales of $37,000
during the quarter ended June 30, 1999.
Contract Termination Revenue. Contract termination revenue
decreased 33.1%, to $1.2 million, during the second quarter of 1999, as compared
to $1.9 million in the comparable 1998 period, a decrease of $0.7 million. This
decrease resulted from the lower contract values of stations lost during the
current period as compared to the prior period.
Selling Expenses. Selling expenses for the second quarter of
1999 increased to $16.0 million from $14.1 million during the same period of
1998. This increase of $1.9 million, or approximately 13.5%, was primarily due
to employee compensation increases associated with the growth in commission
revenue. Costs relating to the Company's entry into the Internet advertising
business were $0.4 million during the second quarter of 1999.
General and Administrative Expenses. General and
administrative expenses declined $0.1 million to $2.6 million for the second
quarter of 1999, from $2.7 million in the comparable quarter in 1998. This
reduction was primarily the result of the relocation of the Company's back
office operations to Florida.
Depreciation and Amortization. Depreciation and amortization
declined by $2.0 million in the second quarter of 1999, to $6.7 million, from
$8.7 million in the second quarter of 1998. This decrease of approximately 22.9%
was due primarily to the completion of the amortization of certain
representation contracts.
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<PAGE>
Operating Income (Loss). Operating loss decreased by $1.8
million, or 107%, for the second quarter of 1999, compared with the second
quarter of 1998, as a result of improved performance and lower amortization.
Interest Expense, net. Interest expense, net increased
approximately $1.2 million, or approximately 97%, to $2.4 million for the
second quarter of 1999, compared to $1.2 million for the second quarter of 1998.
This increase primarily resulted from interest charges associated with the
Company's issuance of its Notes (as defined below) in July 1998.
Benefit for Income Taxes. The benefit for income taxes
declined by approximately $0.3 million, to $0.9 million, for the quarter ended
June 30, 1999, compared to $1.2 million for the second quarter of 1998. This
decrease is a direct result of the loss before taxes.
Net Income (Loss). The Company's net loss of approximately
$1.4 million for the second quarter of 1999, a $0.3 million reduction from the
$1.7 million net loss for the comparable period in 1998, is attributable to the
factors discussed above.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
Commission Revenue. Commission revenue in the first half of
1999 increased to $41.7 million, or 9.8%, from $38.0 million in the comparable
period in 1998. This increase is attributable to the fact that commissions
generated from new client representation contracts (primarily the ABC radio
stations) exceeded the loss of commission revenue from terminated representation
contracts (primarily Nationwide Communications), as well as a general increase
in national spot advertising on client stations. The Company entered the
Internet advertising business during 1999, with sales of $37,000 during the
period ended June 30, 1999.
Contract Termination Revenue. Contract termination revenue
decreased 85.6%, to $3.7 million, during the first six months of 1999, as
compared to $26.0 million in the comparable 1998 period, a decrease of $22.2
million. This decrease is attributable to the fact that a substantial amount of
contract termination revenue was generated in the first quarter of 1998 as a
result of the termination of the Company's representation contracts with
stations owned by SFX Broadcasting, Inc., when SFX was acquired by an affiliate
of a competitor of the Company. The loss of representation contracts during the
first six months of 1999 was not as significant. The value of representation
contracts acquired or terminated during the last few years has generally tended
to increase, due to a number of factors, including the consolidation of
ownership in the radio broadcast industry following the enactment of the
Telecommunications Act of 1996.
Selling Expenses. Selling expenses for the first six months of
1999 increased to $30.7 million from $27.9 million during the same period of
1998. This increase of $2.8 million, or approximately 9.7%, was primarily due to
employee compensation increases associated with the growth in commission
revenue. Costs relating to the Company's entry into the Internet advertising
business were $0.5 million during the first six months of 1999.
General and Administrative Expenses. General and
administrative expenses declined $0.1 million to $5.2 million for the first half
of 1999, from $5.3 million in the comparable period in 1998. This reduction was
primarily the result of the relocation of the Company's back office operations
to Florida.
Depreciation and Amortization. Depreciation and amortization
declined by $1.6 million in the first half of 1999, to $16.2 million, from $17.8
million in the first half of 1998. This decrease of approximately 8.9% was due
primarily to the completion of the amortization of certain representation
contracts.
-14-
<PAGE>
Operating Income (Loss). Operating income decreased by $19.4
million, or 152%, for the first half of 1999 compared with the comparable period
in 1998. This decline was essentially attributable to the reduction in contract
termination revenue discussed above.
Interest Expense, net. Interest expense, net increased
approximately $2.6 million, or approximately 115%, to $4.8 million for the six
months ended June 30, 1999, compared to $2.2 million for the same period in
1998. This increase primarily resulted from interest charges associated with the
Company's issuance of its Notes in July 1998.
Provision (Benefit) for Income Taxes. The provision for income
taxes declined by $9.0 million for the first half of 1999 compared to the first
half of 1998 as a result of the decline in contract termination revenue in 1999
discussed above.
Net Income (Loss). The Company's net loss of approximately
$6.7 million for the six months ended June 30, 1999, a $13.0 million reduction
from the $6.3 million net income for the comparable period in 1998, is primarily
attributable to the reduction in contract termination revenue discussed above.
Liquidity and Capital Resources
The Company's cash requirements have been primarily funded by
cash provided from operations and, historically, bank debt. Cash provided by
operating activities for the six months ended June 30, 1999 amounted to $0.1
million. Due to the seasonality of the Company's business, the first quarter is
the Company's weakest quarter and the fourth quarter is stronger than the second
and third quarters.
Net cash used in investing activities is attributable to
capital expenditures. Capital expenditures of $2.1 million during the six months
ended June 30, 1999 were primarily for computer equipment and upgrades.
Overall cash used for financing activities of $14.6 million
during the first six months of 1999 was primarily used for acquisitions of
station representation contracts.
In general, as the Company acquires new representation
contracts, it uses more cash and, as its contracts are terminated, it receives
additional cash. For the reasons noted in "General" above, the Company is not
able to predict the amount of cash it will require for contract acquisitions, or
the cash it will receive on contract terminations, from period to period. The
Company believes, however, that based on its historical performance, it will
generate sufficient cash from operations and borrowings to fund its foreseeable
contract acquisition payment requirements.
In July 1998, the Company issued $100.0 million aggregate
principal amount of 10% Senior Subordinated Notes due July 1, 2008 (the
"Notes"). A portion of the net proceeds of this issuance was used to repay the
then outstanding balance of the Company's bank debt. Additionally, the Company
redeemed all of the outstanding shares of the Company's Series A Preferred Stock
and Series B Preferred Stock, together with all of the outstanding shares of
Common Stock subject to redemption. The Company also entered into an agreement
with two banks to provide the Company with a $10.0 million revolving credit
facility.
The Company believes that its liquidity resulting from the
transactions described above, together with anticipated cash from continuing
operations, should be sufficient to fund its operations and anticipated needs
for required representation contract acquisition payments, and to make required
payments of principal and interest under its new credit facility and 10.0%
annual interest payments on the Notes. The Company may not, however, generate
sufficient cash flow for these purposes or to repay the Notes at maturity. The
Company's ability to fund its operations and required contract buyout payments
and to make scheduled principal and interest payments will depend on its future
performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond
-15-
<PAGE>
its control. The Company may also need to refinance all or a portion of
the Notes on or prior to maturity. There can be no assurance that the Company
will be able to effect any such refinancing on commercially reasonable terms or
at all.
Year 2000 Assessment
Many computer systems experience problems handling dates
beyond the year 1999. Therefore, some computer hardware and software will need
to be modified prior to the year 2000 in order to remain functional. During
1998, the Company completed an assessment of its internal readiness to implement
Year 2000 compliant systems on a timely basis. The Company currently utilizes
software systems for its accounting, billing and database management functions,
among others, which were developed by third parties or developed by the Company
using third party software development tools. These third parties have advised
the Company that such systems are Year 2000 compliant or, in some cases, will be
made Year 2000 compliant through the installation of software patches or
upgrades. The Company completed implementation of programming changes needed to
make its systems Year 2000 compliant during the first quarter of 1999 and does
not believe that the related cost will have a material adverse effect on the
Company. The Company estimates that its expenditures for Year 2000 compliance
implementation during 1999 could be $250,000. There can be no assurance,
however, that there will not be a delay in, or increased costs associated with,
the implementation of such changes, and any inability to implement such changes
could have a material adverse effect on the Company.
The Company has not completed its assessment of the Year 2000
compliance of its radio station clients, nor of the possible consequences to the
Company of the failure of one or more of its radio station clients to become
Year 2000 compliant on a timely basis. It is possible that if a substantial
number of the Company's radio station clients failed to implement Year 2000
compliant billing or payment systems, for example, their payments to the Company
of commissions on the sale of radio advertising time might be disrupted, which
might adversely affect the Company's cash flow. The Company will discuss these
matters with its key radio station clients during 1999 to attempt to ascertain
whether and to what extent such problems are likely to occur. It is not clear,
however, what measures (if any) the Company could take to deal with such
eventualities while still maintaining client relationships. The Company has been
advised by its principal suppliers of data base information services and payroll
services that those services will be Year 2000 compliant on a timely basis. The
Company does not believe that it has other relationships with vendors or
suppliers which, if disrupted due to the failure of such vendors and suppliers
to deal adequately with their own Year 2000 compliance issues, would have a
material adverse effect on the Company.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest
rates that may adversely affect its results of operations and financial
condition. The Company seeks to minimize the risks from these interest rate
fluctuations through its regular operating and financing activities. The
Company's policy is not to use financial instruments for trading or other
speculative purposes. The Company is not currently a party to any financial
instruments.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The Exhibits filed with this Report are listed on the
Exhibit Index immediately following the signature page.
-16-
<PAGE>
(b) Reports on Form 8-K. No Reports on Form 8-K were filed during the
three months ended June 30, 1999.
-17-
<PAGE>
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.
INTEREP NATIONAL RADIO SALES, INC.
August 13, 1999 By WILLIAM J. McENTEE, JR.
---------------------------------------
William J. McEntee, Jr.
Vice President and
Chief Financial Officer
-18-
<PAGE>
EXHIBIT INDEX
10.1 Amendment No. 2 to Revolving Line of Credit Agreement, dated
as of March 31, 1999, among the Registrant, its subsidiaries,
BankBoston, N.A., and Summit Bank
10.2 Accession Agreement, dated as of March 15, 1999, among the
Registrant, its subsidiaries, American Radio Sales, Inc.,
BankBoston, N.A., and Summit Bank
10.3 Pledge Amendment, dated as of March 15, 1999, by the
Registrant
27.1 Financial Data Schedule
<PAGE>
Exhibit 10.1
INTEREP NATIONAL RADIO SALES, INC.
100 Park Avenue
New York, New York 10017
BankBoston, N.A.
Individually and as Agent
Summit Bank
Dated as of March 31, 1999
Re: Amendment No. 2 to Revolving Line of Credit Agreement
Ladies and Gentlemen:
We refer to the Revolving Line of Credit Agreement, dated as of July 2,
1998, and amended as of December 31, 1998 (the "Credit Agreement"), by and among
Interep National Radio Sales, Inc. (the "Company"), the several Subsidiary
Borrowers party thereto (the Company and such Subsidiary Borrowers being
hereinafter called, collectively, the "Borrowers"), BankBoston, N.A., as
Administrative Agent (the "Agent"), Summit Bank, as Documentation Agent, and the
undersigned Lenders and other Lenders that may from time to time be parties to
the Credit Agreement. All of the terms in this letter of amendment (this
"Amendment") that are not defined herein, but that are defined in the Credit
Agreement, shall have the meanings specified for such terms in the Credit
Agreement.
Each of the parties signing below desires to amend the Credit Agreement in
accordance with the terms and conditions set forth herein and, in consideration
of the promises herein contained and for other valuable consideration, each such
party agrees as follows:
ARTICLE I
AMENDMENT TO CREDIT AGREEMENT
Effective as of March 31, 1999, the Credit Agreement is hereby amended as
follows:
1.1 Certain Defined Terms. Section 1.01 of the Credit Agreement is hereby
amended by deleting the defined term "Fixed Charge Coverage" in its entirety.
1.2. Total Leverage. Section 8.22 of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
Section 8.22 Total Leverage. The Borrowers shall not permit the ratio
at any time of (i) (a) Total Funded Debt, less (b) the aggregate amount of
cash and Permitted Investments of the Borrowers to (ii) EBITDA (measured
for the immediately preceding four Quarters for which the most recent
financial statements are required to be delivered pursuant to Section 8.01
hereof), in each case measured on a consolidated basis, to be greater than
5.25 to 1.
<PAGE>
1.3. Interest Coverage. Section 8.23 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
Section 8.23 Interest Coverage. The Borrowers shall not permit the
ratio at any time of (i) EBITDA to (ii) (a) Total Interest Expense, less
(b) the aggregate amount of interest income (in each case measured, on a
consolidated basis, for the immediately preceding four Quarters for which
the most recent financial statements are required to be delivered pursuant
to Section 8.01 hereof) to be less than 1.60 to 1.
1.4. Senior Leverage. Section 8.24 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
Section 8.24. Senior Leverage. The Borrowers shall not permit the
ratio at any time of (i) Senior Debt to (ii) EBITDA (in each case measured,
on a consolidated basis, for the immediately preceding four Quarters for
which the most recent financial statements are required to be delivered
pursuant to Section 8.01 hereof) to be greater than 2.00 to 1.
1.5. Fixed Charge Coverage. Section 8.25 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
Section 8.25 Fixed Charge Coverage. The Borrowers shall not permit the
ratio at any time of (i) the sum of (a) EBITDA for the immediately
preceding four Quarter period for which financial statements are required
to be delivered pursuant to Section 8.01 hereof, and (b) the aggregate
amount of cash and Permitted Investments of the Borrowers as of the last
day of such immediately preceding four Quarter period, to (ii) the sum of
(u) Total Debt Service for such immediately preceding four Quarter period,
(v) income taxes paid during such immediately preceding four Quarter
period, (w) Capital Expenditures made during such immediately preceding
four Quarter period, and (x) Net Contract Buyout Disbursements for the
immediately preceding twelve months (in each case measured on a
consolidated basis using the most recent financial statements required to
be delivered as aforesaid) to be less than 1.10 to 1.
1.6. Capital Expenditures. Section 8.27 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
Section 8.27 Capital Expenditures. The Borrowers shall not, on a
consolidated basis, make Capital Expenditures for any fiscal year
(commencing with the fiscal year ending December 31, 1998) in excess of the
sum of (i) $2,200,000 and (ii) the difference, if any, between $2,200,000
and the aggregate amount of Capital Expenditures for the immediately
preceding fiscal year.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrowers jointly and severally represent and warrant to the Agent and
the Lenders as follows:
<PAGE>
2.1. Representations and Warranties. Each of the representations and
warranties made by or on behalf of the Borrowers to the Agent and the Lenders in
the Credit Documents was true and correct when made and is true and correct on
and as of the date hereof (after giving effect to the amendment contemplated
hereby from and after the effective date therefor), except to the extent that
any such representation or warranty relates by its express terms solely to a
prior date. After giving effect to this Amendment, no Defaults or Events of
Default are continuing.
2.2. Corporate Authority. Each of the Borrowers has taken all necessary
corporate proceedings to authorize this Amendment and the matters contemplated
hereby.
2.3. Enforceability. This Amendment has been duly executed and delivered by
each of the Borrowers and is in full force and effect on and as of the date
hereof, and the agreements and obligations of the Borrowers contained in this
Amendment and in each of the Credit Documents after giving effect hereto,
constitute the legal, valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms.
ARTICLE III
PROVISIONS OF GENERAL APPLICATION
This Amendment constitutes and shall, for all purposes of the Credit
Agreement, be deemed to be a "Credit Document". Except as otherwise expressly
provided by this Amendment, all of the terms, conditions and provisions of the
Credit Agreement and each of the other Credit Documents remain unaltered. This
Amendment and the rights and obligations hereunder of each of the parties hereto
shall be governed by and interpreted and determined in accordance with the
internal laws of The Commonwealth of Massachusetts. This Amendment shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors in title and assigns. This Amendment may be executed in
any number of counterparts, but all of such counterparts shall together
constitute but one and the same agreement. In making proof of this Amendment, it
shall not be necessary to produce or account for more than one counterpart
hereof signed by each of the parties hereto.
<PAGE>
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this Amendment No. 2 to Revolving Line of Credit Agreement
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this Amendment and return such counterparts to the undersigned.
Very truly yours,
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
Title: Vice President and Chief Financial Officer
The Subsidiary Borrowers:
MCGAVREN GUILD, INC.
D&R RADIO, INC.
CBS RADIO SALES, INC.
ALLIED RADIO PARTNERS, INC.
CABALLERO SPANISH MEDIA L.L.C.
CLEAR CHANNEL RADIO, LLC
AMERICAN RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
Title: Vice President and Chief Financial Officer
of each of the corporations
identified above
The foregoing Amendment is hereby accepted by the Agent and the undersigned
Lenders on and as of the date first above written and with the effect specified
herein.
BANKBOSTON, N.A
Individually and as Agent
By: /s/ Robert F. Milordi
Title: Managing Director
SUMMIT BANK
By: /s/ Kenneth Stoddard
Title: Vice President
<PAGE>
Exhibit 10.2
ACCESSION AGREEMENT
THIS ACCESSION AGREEMENT (this "Agreement"), dated as of March 15, 1999, is
entered into by and among (a) Interep National Radio Sales, Inc., a New York
corporation (the "Borrower"), (b) each of the several Subsidiary Borrowers
listed on the signature pages hereto (collectively, the "Existing Subsidiary
Borrowers" and, together with the Borrower, the "Existing Borrowers"), (c)
American Radio Sales, Inc., a New York corporation (the "New Subsidiary
Borrower"), (d) BankBoston, N.A., a national banking association, as a Lender
(as defined below) and as Administrative Agent (the "Agent") for the Lenders and
(e) Summit Bank, a New Jersey corporation, as a Lender and as Documentation
Agent (the "Documentation Agent").
Reference is hereby made to: (a) the Revolving Line of Credit Agreement,
dated as of July 2, 1998, as amended as of December 31, 1998 (as so amended and
in effect, the "Credit Agreement"), among (i) the Borrower, (ii) the Existing
Subsidiary Borrowers, (iii) the various financial institutions that are now or
hereafter become parties thereto (the "Lenders"), (iv) the Agent and (v) the
Documentation Agent, (b) the Security Agreement, dated as of July 2, 1998 (as
amended and in effect, the "Security Agreement"), among the Securing Parties (as
defined therein) and the Agent and (c) the Stock Pledge Agreement, dated as of
July 2, 1998 (the "Stock Pledge Agreement"), by the Borrower in favor of the
Agent.
WITNESSETH
WHEREAS, the New Subsidiary Borrower is a wholly-owned New Subsidiary (as
defined in the Credit Agreement) of the Borrower;
WHEREAS, the Borrower has formed the New Subsidiary Borrower and, pursuant
to an Assignment and Assumption Agreement dated the date hereof, has transferred
certain of its assets to the New Subsidiary Borrower, for the purpose of having
such New Subsidiary Borrower own and operate the Borrower's ABC Radio Sales
Division; and
WHEREAS, the Existing Borrowers have covenanted and agreed with the Agent
and the Lenders, pursuant to Section 8.08 of the Credit Agreement, that, among
other things, each such Existing Borrower shall enter into, and shall cause the
New Subsidiary Borrower to enter into, this Agreement with the Agent upon the
creation of any New Subsidiary such as the New Subsidiary Borrower;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Certain Terms. Capitalized terms used but not defined in this
Agreement have the meanings specified for such terms in the Credit Agreement.
Any reference herein to any agreement shall be deemed to be a
<PAGE>
-2-
reference to such agreement as amended as of the date hereof and as further
amended, supplemented or otherwise modified from time to time.
Section 2. Accession to Credit Agreement. From and after the date hereof,
the New Subsidiary Borrower shall be deemed to be a "Subsidiary Borrower" and a
"Borrower" for all purposes of the Credit Agreement, and each reference to a
"Subsidiary Borrower" or a "Borrower" in the Credit Agreement shall be deemed to
include the New Subsidiary Borrower. The New Subsidiary Borrower hereby
expressly covenants and agrees with the Agent and each Lender that, from and
after the date hereof, the New Subsidiary Borrower shall, and does hereby,
assume and agree to perform and observe each and every covenant, agreement,
obligation or liability of the Subsidiary Borrowers and any Borrower under the
Credit Agreement.
Section 3. Accession to Security Agreement. From and after the date hereof,
the New Subsidiary Borrower shall be deemed to be a "Securing Party" (as such
term is defined in the Security Agreement) for all purposes of the Security
Agreement, and each reference to a "Securing Party" or the "Securing Parties" in
the Security Agreement shall be deemed to include the New Subsidiary Borrower.
The New Subsidiary Borrower hereby expressly covenants and agrees with the Agent
and each Lender that, from and after the date hereof, the New Subsidiary
Borrower shall, and does hereby, assume and agree to perform and observe each
and every covenant, agreement, obligation or liability of a Securing Party under
the Security Agreement (including, without limitation, the making of any
filings, registrations and recordings required thereunder or under the Credit
Agreement).
Section 4. Accession to Stock Pledge Agreement. From and after the date
hereof, the New Subsidiary Borrower shall be deemed to be a "Subsidiary" (as
such term is defined in the Stock Pledge Agreement) for all purposes of the
Stock Pledge Agreement, and each reference to a "Subsidiary" or the
"Subsidiaries" in the Stock Pledge Agreement shall be deemed to include the New
Subsidiary Borrower. The Borrower shall, concurrently herewith, execute and
deliver to the Agent a Pledge Amendment (as defined in the Stock Pledge
Agreement) dated the date hereof, designating as Pledged Shares (as defined in
the Stock Pledge Agreement) all shares of the New Subsidiary Borrower's capital
stock.
Section 5. Miscellaneous. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
[Remainder of this page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NEW SUBSIDIARY BORROWER:
AMERICAN RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
--------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
EXISTING BORROWERS:
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
--------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
MCGAVERN GUILD, INC.
D&R RADIO, INC.
CBS RADIO SALES, INC.
ALLIED RADIO PARTNERS, INC.
CABALLERO SPANISH MEDIA L.L.C.
CLEAR CHANNEL RADIO, LLC
By: /s/ William J. McEntee, Jr.
--------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
Agreed to and Accepted By:
BANKBOSTON, N.A., individually
and as Agent
By: /s/ Robert F. Milordi
Name: Robert F. Milordi
Title: Managing Director
<PAGE>
Exhibit 10.3
PLEDGE AMENDMENT
This Pledge Amendment, dated as of March 15, 1999, is delivered pursuant to
Section 5(b) of the Stock Pledge Agreement, dated as of July 2, 1998 (the
"Agreement"; capitalized terms defined in the Agreement being used herein as
therein defined), by the undersigned in favor of BankBoston, N.A., as Agent. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Agreement, and that the Pledged Shares listed on this Pledge Amendment shall be
deemed to be and shall become part of the Pledged Collateral and shall secure
all Secured Obligations. Nothing contained in this Pledge Amendment shall be
deemed or construed to (i) release or impair any of the Pledged Shares or other
Pledged Collateral existing in favor of the Agent as of the date hereof, or (ii)
waive or limit any right or remedy of the Agent or the Lenders under the
Agreement or with respect to any such Pledged Shares or Pledged Collateral.
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
<TABLE>
<CAPTION>
CERTIF- NUMBER OF NUMBER OF NUMBER OF
CLASS OF PAR ICATE SHARES OUTSTANDING AUTHORIZED
ISSUER STOCK VALUE NO(S) PLEDGED SHARES SHARES
------ ----- ----- ----- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
American Radio Common $.01 1 100 100 1000
Sales, Inc
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Operations and Consolidated Balance Sheets of Interep
National Radio Sales, Inc. and Subsidiaries and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 16,347
<SECURITIES> 0
<RECEIVABLES> 42,459
<ALLOWANCES> 1,477
<INVENTORY> 0
<CURRENT-ASSETS> 92,473
<PP&E> 22,727
<DEPRECIATION> 16,953
<TOTAL-ASSETS> 163,302
<CURRENT-LIABILITIES> 38,857
<BONDS> 100,000
0
0
<COMMON> 14
<OTHER-SE> (7,906)
<TOTAL-LIABILITY-AND-EQUITY> 163,302
<SALES> 41,736
<TOTAL-REVENUES> 45,478
<CGS> 0
<TOTAL-COSTS> 52,090
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,812
<INCOME-PRETAX> (11,424)
<INCOME-TAX> (4,684)
<INCOME-CONTINUING> (6,740)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,740)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
