<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - September 3, 1999
REGENT COMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-15392 31-1492857
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
50 EAST RIVERCENTER BOULEVARD
SUITE 180
COVINGTON, KENTUCKY 41011
(Address of principal executive offices)
(606) 292-0030
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 3, 1999, pursuant to the terms of an Asset Purchase
Agreement dated as of May 18, 1999, Regent Communications, Inc.(through a
wholly-owned subsidiary, Regent Broadcasting of Erie, Inc., and its wholly-owned
subsidiary, Regent Licensee of Erie, Inc.) acquired from Media One Group-Erie,
Ltd. and Cuzco LLC the FCC licenses and related assets used in the operation of
radio stations WXKC-FM and WRIE-AM licensed to Erie, Pennsylvania, and WXTA-FM,
licensed to Edinboro, Pennsylvania. The purchase price for these assets was
approximately $13.5 million paid in cash.
The terms of this acquisition were arrived at and agreed upon through
arms' length negotiations between the parties. Regent intends to continue
to use the assets acquired in this acquisition in a manner consistent with their
use prior to their acquisition by Regent.
The sources for the purchase price paid by Regent were as follows:
(a) borrowings in the amount of $7.2 million under Regent's
Credit Agreement with Bank of Montreal, Chicago Branch,
General Electric Capital Corporation and Bank One,
Indianapolis, NA ("Credit Agreement"); and
(b) $6.3 million in additional equity from the sale of Regent's
convertible preferred stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The following financial statements and notes thereto are
included in this report:
Media One Group - Erie, Ltd.
Report of Independent Accountants
Statements of Financial Position at June 30,
1999 (unaudited) and December 31,
1998
Statements of Operations for the six months
ended June 30, 1999 (unaudited) and
1998 (unaudited) and for the year
ended December 31, 1998
Statements of Cash Flows for the six months
ended June 30, 1999 (unaudited) and
1998 (unaudited) and for the year
ended December 31, 1998
Statement of Members' Deficit for the year
ended December 31, 1998
Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma condensed consolidated
financial statements for Regent Communications, Inc., giving
effect to the acquisition of the FCC licenses and related
assets of radio stations WXKC-FM, WRIE-AM and WXTA-FM, are
included in this report:
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the six months ended June
30, 1999
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the year ended December
31, 1998
Unaudited Pro Forma Condensed Consolidated Balance
Sheet at June 30, 1999
Notes to the Unaudited Pro Forma Condensed
Consolidated Financial Statements
(c) EXHIBITS.
The Exhibit Index following the signature page hereof constitutes a
list of all Exhibits filed with or incorporated by reference in this Form 8-K.
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Regent Communications, Inc.
In our opinion, the accompanying statement of financial position and the related
statements of operations, cash flows, and members' deficit present fairly, in
all material respects, the financial position of Media One Group -Erie, Ltd. (a
limited liability company) at December 31, 1998 and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
August 10, 1999
Cincinnati, Ohio
<PAGE> 4
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash $ 137,158 $ 192,764
Accounts receivable, less allowance for doubtful accounts
of $12,495 at June 30, 1999 and $8,000 at December 31, 1998 543,445 475,242
Prepaid expenses 19,294 20,456
Other assets 12,021 21,021
----------- -----------
Total current assets 711,918 709,483
Note receivable from affiliate 117,264 117,264
Property and equipment, net 881,475 949,058
Intangible assets, net 4,047,680 4,456,380
----------- -----------
Total assets $ 5,758,337 $ 6,232,185
=========== ===========
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities
Accounts payable $ 53,964 $ 37,103
Accrued expenses 45,667 40,156
Accrued interest 176 89,683
Barter payable, net 244,114 159,540
Current portion of long-term debt and capital lease 303,029 202,898
----------- -----------
Total current liabilities 646,950 529,380
Long-term debt and capital lease 6,165,288 6,417,192
Subordinated notes payable to members 1,180,387 1,180,387
Other liabilities 254,782 173,781
----------- -----------
Total liabilities 8,247,407 8,300,740
Commitments and contingencies
Members' deficit $(2,489,070) $(2,068,555)
=========== ===========
Total liabilities and members' deficit $ 5,758,337 $ 6,232,185
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
----------- ----------- -----------
1999 1998 1998
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Gross broadcast revenues $ 1,680,847 $ 1,601,952 $ 3,262,643
Less agency commissions (161,146) (154,985) (286,252)
----------- ----------- -----------
Net broadcast revenues 1,519,701 1,446,967 2,976,391
Station operating expenses 829,930 867,667 1,660,465
Depreciation and amortization 457,200 454,800 918,583
General and administration expenses 314,112 288,851 930,784
----------- ----------- -----------
Operating loss (81,541) (164,351) (533,441)
Interest expense, net (313,489) (312,189) (630,049)
Other income, net 13,015 10,525 16,537
----------- ----------- -----------
Loss before cumulative effect of change in accounting principle (382,015) (466,015) (1,146,953)
Cumulative effect of change in accounting principle (38,500) -- --
----------- ----------- -----------
Net loss $ (420,515) $ (466,015) $(1,146,953)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR
SIX MONTHS ENDED ENDED
JUNE 30, DECEMBER 31,
-------------------------- -----------
1999 1998 1998
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (420,515) $ (466,015) $(1,146,953)
Adjustments to reconcile net loss to cash flows from
operating activities:
Depreciation and amortization 457,200 454,800 918,583
Barter expense, net 84,584 92,098 69,395
Loss on disposition of fixed asset -- 683 683
Write-off of failed acquisition costs -- 93,211
Cumulative effect of change in accounting principle 38,500 -- --
Changes in operating assets and liabilities:
Accounts receivable (68,203) (102,032) (22,126)
Prepaid expenses 1,162 (5,212) (12,412)
Accounts payable 18,355 (36,062) (121,401)
Accrued expenses (63,272) (4,272) 17,347
Accrued interest 57,001 52,500 109,169
----------- ----------- -----------
Total adjustments 525,327 452,503 1,052,449
----------- ----------- -----------
Cash flows provided by (used in) operating activities 104,812 (13,512) (94,504)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (10,418) (27,265) (55,422)
Loan to related party -- -- (117,264)
Acquisition costs and earnest deposit -- (301,055) (301,055)
Return of earnest deposit 250,075
----------- ----------- -----------
Cash flows used in investing activities (10,418) (328,320) (223,666)
----------- ----------- -----------
Cash flows from financing activities:
Net borrowing on revolving credit line -- 180,082 180,082
Borrowing on subordinated notes payable to members -- 150,000 150,000
Principal repayments long-term debt and capital lease (150,000) -- --
----------- ----------- -----------
Cash flows provided by (used in) financing activities (150,000) 330,082 330,082
----------- ----------- -----------
Net increase (decrease) in cash (55,606) (11,750) 11,912
Cash at beginning of period 192,764 180,852 180,852
----------- ----------- -----------
Cash at end of period $ 137,158 $ 169,102 $ 192,764
=========== =========== ===========
Supplemental disclosure:
Interest paid $ 258,751 $ 286,668 $ 552,831
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
STATEMENT OF MEMBERS' DEFICIT
<TABLE>
<CAPTION>
MEMBERS'
DEFICIT
-----------
<S> <C>
Balance, December 31, 1997 $ (921,602)
Net loss (1,146,953)
-----------
Balance, December 31, 1998 $(2,068,555)
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. BASIS OF PRESENTATION:
The financial statements for the six months ended June 30, 1998
and 1999, are unaudited, but, in the opinion of management, such
financial statements have been presented on the same basis as the
audited financial statements for the year ended December 31, 1998,
and include all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the financial
position and results of operations and cash flows for these
periods (except for the adoption of SOP 98-5, "Reporting on the
Costs of Start-up Activities" as noted in footnote 10).
b. ORGANIZATION:
Media One Group - Erie, Ltd., a limited liability company ("Media
One"), was organized in May 1996 to acquire and operate radio
stations. The radio stations owned by Media One are WXKC-FM,
WRIE-AM and WXTA-FM; all of the radio stations operate in the
Erie, Pennsylvania, radio market.
c. BROADCAST REVENUE:
Broadcast revenue for commercial broadcasting advertisements is
recognized when the commercial is broadcast.
d. BARTER TRANSACTIONS:
The radio stations engage in the bartering of commercial airtime
for various goods and services. The goods and services are
capitalized or expensed as appropriate when received or utilized.
Revenues are recognized at such time as the commercial spots are
aired, and merchandise or services received are charged to expense
when received or used.
e. PROPERTY AND EQUIPMENT:
Property and equipment is stated at cost. Routine repairs and
maintenance are charged to expense as incurred. When property and
equipment is sold or disposed of, the asset and related
accumulated depreciation are removed from the accounts, and any
gain or loss is included in the statements of operation.
Depreciation of property and equipment is computed on the
straight-line basis over the estimated useful lives of the related
assets, as follows:
Building improvements 29 years
Broadcasting equipment 7-15 years
Office furniture and equipment 7-10 years
<PAGE> 9
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
f. INTANGIBLE ASSETS:
Intangible assets are stated at cost and amortized on the
straight-line basis over the following lives:
FCC licenses and goodwill 15 years
Consulting agreement 1 year
Non-compete agreement 3 years
Organization costs and deferred financing costs 5-6 years
Goodwill and other intangibles are evaluated periodically if
events or circumstances indicate a possible inability to recover
their carrying amount. Such evaluation is based on various
analyses, including cash flow and profitability projections. If
future expected undiscounted cash flows are insufficient to
recover the carrying amount of the asset, then an impairment loss
is recognized based upon the excess of the carrying value of the
asset over the anticipated cash flows on a discounted basis.
g. FINANCIAL INSTRUMENTS:
Financial instruments as of December 31, 1998, consist of cash,
accounts receivable, note receivable, accounts payable, debt and
capital leases, all of which the carrying amounts approximate fair
value.
h. ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
i. ALLOCATION OF MEMBERS DISTRIBUTIONS AND INCOME OR LOSS:
The members' agreement provides that the income, loss or
distributions to members will be allocated as follows:
James T. Embrescia 51.00%
Thomas J. Embrescia 29.71%
Keybank/Amanda EmbresciaTrust 6.43%
Keybank/Matthew EmbresciaTrust 6.43%
Keybank/Mary Megan EmbresciaTrust 6.43%
-------
100.00%
-------
<PAGE> 10
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
2. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1998 consisted of the following:
1998
----------------
Building improvements $ 23,982
Broadcast equipment 1,037,414
Office furniture and equipment 201,459
----------------
1,262,855
Less: Accumulated depreciation (313,797)
----------------
Property and equipment, net $ 949,058
----------------
3. INTANGIBLE ASSETS:
Intangible Assets at December 31, 1998 consisted of the following:
FCC licenses and goodwill $ 4,706,121
Consulting agreement 350,000
Non-compete agreement 350,000
Organization costs and deferred financing costs 115,000
----------------
5,521,121
Less: Accumulated amortization (1,064,741)
----------------
Intangible assets, net $ 4,456,380
----------------
4. LONG-TERM DEBT:
Media One has a loan agreement with a bank whereby available borrowings
under its credit facility are $6.6 million. The facility is
collateralized by substantially all of the assets owned by Media One
and the assets leased from Cuzco, LLC (See Note 7). Borrowings under
this facility bear annual interest at a fixed rate of 7.89% for two
years, which is payable on a quarterly basis. The remaining principal
amount outstanding will bear an interest rate of the two-year treasury
yield plus 225 basis points or an adjustable rate which is contingent
on the ratio of bank debt to broadcast cash flow as set forth in the
agreement. The agreement converted to a term loan in March 1999, with
annual principal payments commencing on March 31, 1999 as follows:
1999 $ 200,000
2000 300,000
2001 400,000
2002 5,700,000
----------
$6,600,000
----------
<PAGE> 11
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
Additional prepayments of principal are due if certain cash flow
requirements as defined in the agreement are achieved ( See Note 11).
The loan agreement contains certain restrictive covenants that include,
among other things, the maintenance of minimum interest and debt
coverage ratios, as defined. Media One is in compliance or has
obtained waivers of these covenants as of December 31, 1998.
5. CAPITAL LEASE OBLIGATIONS:
Media One leases a vehicle from Bank One under a noncancelable capital
lease which expires in August 2004. The future minimum annual payments
under the capital lease at December 31, 1998 are:
1999 $ 4,601
2000 4,601
2001 4,601
2002 4,601
2003 and thereafter 7,668
--------
26,072
Less: Interest (5,982)
--------
Present value of lease 20,090
Less: Current portion (2,898)
--------
$ 17,192
--------
6. RELATED PARTY TRANSACTIONS:
Media One has subordinated notes payable to members of $1,180,387 as of
December 31, 1998. The notes bear interest of 9% compounded annually.
Repayment of the notes and interest are subordinated to the debt
outstanding under the credit agreement and accrued interest
approximated $142,000 as of December 31, 1998 (See Note 11).
Media One has entered into a management agreement with a member who
provides general management of the stations including supervision and
consultation with respect to broadcast policies and practices. The fees
and reimbursable expenses paid to an entity owned by the member for
these services amounted to $170,645 in 1998.
Media One loaned an affiliate, Cuzco, LLC, approximately $117,000 and
received a note which bears an interest rate of 9% per annum (See Note
11).
<PAGE> 12
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
7. LEASE AGREEMENT WITH RELATED PARTY:
Media One leases its studio, offices and WXKC/WRIE transmitter sites
from Cuzco LLC, an affiliated company which is owned by Jim and Tom
Embrescia and Trusts, members of Media One. Cuzco LLC owns the land and
the building of the stations and was formed when ownership of these
assets was transferred from Media One to Cuzco LLC. The initial term of
the lease is for 29 years beginning on September 1, 1997, with an
option to extend the lease for two additional 29-year periods. Annual
rent in the amount of $48,000 is due for the first five years, with
increases thereafter based on a formula in the lease agreement.
8. INCOME TAXES:
Income taxes on the income of a limited liability company are the
responsibility of its members. Therefore, no provision for federal or
state corporate income taxes was recorded for Media One.
9. COMMITMENTS:
Media One leases the site where the WXTA (FM) tower is located under an
operating lease which expires in 2003. Media One also has the option to
renew for two additional succeeding terms of 15 years. Future minimum
annual payments under the noncancelable operating lease are $225 per
month through 2003. Rent expense for the year ended December 31, 1998
was $2,700.
10. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (UNAUDITED):
In June 1997, the Financial Accounting Standard Board issued SFAS 130,
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 established
standards of disclosure and financial statement display for reporting
total comprehensive income and its individual components. SFAS 130
became effective in 1998. Media One management has determined that
comprehensive income equals Media One's net income for all periods
presented.
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"),
which is effective for fiscal years beginning after December 15, 1998.
SOP 98-1 requires the capitalization of certain expenditures for
software that is purchased or internally developed for use in the
business. Media One elected to adopt SOP 98-1 in 1998. The impact of
its adoption was immaterial to Media One's results of operations and
statement of financial position.
<PAGE> 13
MEDIA ONE GROUP - ERIE, LTD. (A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
In April 1998, the AICPA issued SOP 98-5 "Reporting on the costs of
Start-Up Activities" ("SOP 98-5") SOP 98-5 specifies that costs of
start-up activities and organizational costs be expensed when incurred.
SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998. The initial application of SOP 98-5
is reported as a cumulative effect of a change in accounting principle
in the unaudited statement of operations for the six months ended June
30, 1999.
11. SUBSEQUENT EVENT (UNAUDITED):
On May 18, 1999 the owners of Media One entered into an agreement by
which Regent Broadcasting of Erie, Inc. and Regent Licensee of Erie,
Inc. would purchase all of the assets, properties, interest and rights
of the Company for $13,500,000, except for cash and cash equivalents,
accounts receivable, investment securities, and notes receivable. The
transaction subsequently closed on September 3, 1999. The note
receivable - affiliate, long-term debt, and subordinated notes payable
were all repaid from the proceeds at closing.
<PAGE> 14
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the unaudited pro forma condensed consolidated
financial statements for Regent Communications, Inc. ("Regent"), giving effect
to the acquisition of the FCC licenses and related assets of radio stations
WXKC-FM, WRIE-AM and WXTA-FM (collectively, the "Erie Stations") from Media One
Group-Erie, Ltd. and Cuzco LLC in a transaction accounted for as a purchase.
These unaudited pro forma condensed consolidated financial statements are based
upon the audited historical consolidated financial statements of Regent and the
Erie Stations for the year ended December 31, 1998 and the unaudited historical
consolidated financial statements of Regent and the Erie Stations as of and for
the six months ended June 30, 1999.
The unaudited pro forma condensed consolidated balance sheet has been presented
as if the Erie Stations were acquired on June 30, 1999. The unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1998 and the six months ended June 30, 1999 have been presented as if the Erie
Stations were acquired on January 1, 1998.
In the opinion of management, all adjustments necessary to fairly present this
pro forma information have been made. Depreciation and amortization for the
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets. Actual depreciation and
amortization may differ depending on the final allocation of the purchase price,
which will be based on an independent valuation that is currently being
performed. However, management does not believe these differences will be
material. The unaudited pro forma condensed consolidated financial statements
exclude the effects of estimated cost savings which management believes will
result from the integration of the Erie Stations.
The unaudited pro forma information is presented for illustrative purposes only
and does not indicate the operating results or financial position that would
have occurred if the Erie Stations had been acquired on the dates indicated, nor
is it indicative of future operating results or financial position of Regent.
The unaudited pro forma condensed consolidated financial statements presented
below should be read in conjunction with the Erie Stations' audited and
unaudited financial statements and notes thereto, which are included elsewhere
in this document and Regent's Annual Report on Form 10-K for the year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1999.
<PAGE> 15
REGENT COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
REGENT ERIE ADJUSTMENTS AS ADJUSTED
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net broadcast revenues $ 10,835,293 $ 1,519,701 $ - $ 12,354,994
Broadcast operating expenses (8,146,685) (829,930) - (8,976,615)
Depreciation and amortization (1,818,856) (457,200) 228,658 (1) (2,047,398)
Corporate general and administrative expenses (1,159,130) (314,112) - (1,473,242)
---------------- ------------- --------------- ---------------
Operating income (loss) (289,378) (81,541) 228,658 (142,261)
Interest expense (1,486,807) (313,489) (1,101) (2) (1,801,397)
Other income, net 85,040 13,015 - 98,055
---------------- ------------ --------------- ---------------
Income (loss) before income taxes,
cumulative effect of change in
accounting principle
and extraordinary items (1,691,145) (382,015) 227,557 (1,845,603)
Income tax expense - - - -
---------------- ------------ --------------- ---------------
-
Net income (loss) before cumulative
effect of change in accounting principle
and extraordinary items (1,691,145) (382,015) 227,557 (1,845,603)
Preferred stock dividends and accretion (2,561,000) - (360,848) (3) (2,921,848)
---------------- ------------ --------------- ---------------
Loss before cumulative effect of change
in accounting principle and extraordinary
items attributable to common stockholders $ (4,252,145) $ (382,015) $ (133,291) $ (4,767,451)
================ ============ =============== ===============
Basic and diluted loss per common share $ (17.72) (4) $ (19.86)(4)
Weighted average common shares used in basic
and diluted computations 240,000 240,000
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
<PAGE> 16
REGENT COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
REGENT ERIE ADJUSTMENTS AS ADJUSTED
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net broadcast revenues $ 14,771,523 $ 2,976,391 $ - $ 17,747,914
Broadcast operating expenses (11,051,165) (1,660,465) - (12,711,630)
Depreciation and amortization (2,281,497) (918,583) 461,500 (1) (2,738,580)
Corporate general and administrative expenses (1,872,182) (930,784) - (2,802,966)
---------------- ---------------- ---------------- ----------------
Operating income (loss) (433,321) (533,441) 461,500 (505,262)
Interest expense (2,883,251) (630,049) (18,438) (2) (3,531,738)
Other income, net 26,648 16,537 - 43,185
---------------- ---------------- ---------------- ----------------
Income (loss) before income taxes,
cumulative effect of change in
accounting principle
and extraordinary items (3,289,924) (1,146,953) 443,062 (3,993,815)
Income tax expense - - - -
---------------- ---------------- ---------------- ----------------
Net income (loss) before cumulative
effect of change in accounting
principle and extraordinary items (3,289,924) (1,146,953) 443,062 (3,993,815)
Preferred stock dividends and accretion (6,952,782) - (670,372)(3) (7,623,154)
---------------- ---------------- ---------------- ----------------
-
Loss before cumulative effect of change
in accounting principle and extraordinary
items attributable to common stockholders $(10,242,706) $ (1,146,953) $ (227,310) $(11,616,969)
================ ================ ================ ================
Basic and diluted loss per common share $ (42.68)(4) $ (48.40)(4)
Weighted average common shares used in basic
and diluted computations 240,000 240,000
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
<PAGE> 17
REGENT COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
REGENT ADJUSTMENTS AS ADJUSTED
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,760,004 $ - $ 1,760,004
Accounts receivable, net 4,282,758 - 4,282,758
Assets held for sale 14,713,163 - 14,713,163
Other current assets 297,708 - 297,708
---------------- ---------------- ----------------
Total current assets 21,053,633 - 21,053,633
Property and equipment, net 9,268,558 1,000,000 (1) 10,268,558
Intangible assets, net 48,910,286 12,500,000 (1) 61,410,286
Other assets 1,715,185 - 1,715,185
---------------- ---------------- ----------------
Total assets $80,947,662 $13,500,000 $94,447,662
================ ================ ================
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 8,990,000 $ - $ 8,990,000
Notes payable 6,000,000 - 6,000,000
Other current liabilities 2,290,879 - 2,290,879
---------------- ---------------- ----------------
Total current liabilities 17,280,879 - 17,280,879
Long-term debt, net of current portion 32,410,000 7,200,000 (2) 39,610,000
Other liabilities 2,391,452 - 2,391,452
---------------- ---------------- ----------------
Total liabilities 52,082,331 7,200,000 59,282,331
Redeemable preferred stock 42,530,503 6,300,000 (3) 48,830,503
Shareholders' deficit:
Preferred stock 3,370,856 - 3,370,856
Common stock 2,400 - 2,400
Additional paid-in capital 1,974,106 - 1,974,106
Retained deficit (19,012,534) - (19,012,534)
---------------- ---------------- ----------------
Total shareholders' deficit (13,665,172) - (13,665,172)
---------------- ---------------- ----------------
Total liabilities and shareholders' deficit $80,947,662 $13,500,000 $94,447,662
================ ================ ================
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
<PAGE> 18
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Records the $13.5 million purchase price for the Erie Stations and the
resulting change in depreciation and amortization expense. Regent's
allocation of the Erie Stations' purchase price of $13.5 million is as
follows:
FCC Licenses $12,350,000
Property, Plant and Equipment, net 1,000,000
Non-compete Agreement 100,000
Other Intangibles 50,000
Assigned lives for the acquired assets are as follows: FCC licenses --
forty years; building improvements - twenty-nine years; broadcasting
equipment -- six-to-thirteen years; furniture and fixtures -- five years;
non-compete agreement -- five years; other intangibles -- fifteen years.
Depreciation expense has been calculated on a straight-line basis.
(2) Records Regent's additional $7.2 million indebtedness under its Credit
Agreement, as well as the resultant increase in interest expense,
necessary to partially finance the acquisition of the Erie Stations.
Interest under this Credit Agreement is payable, at the option of Regent,
at alternative rates equal to the LIBOR rate plus 1.25% to 2.75% or the
base rate announced by the Bank of Montreal plus 0% to 1.5%. The floating
interest rate used to calculate pro forma interest expense on the Credit
Agreement is 8.625%, which is based upon the rate in effect at June 30,
1999. A one-eighth of one percent (.125%) change in the interest rate on
the Credit Agreement from that used in the pro forma adjustment would not
change the related interest expense by a material amount.
(3) Adjustment reflects the net proceeds and related dividends from the
issuance of Regent's Series H Convertible Preferred Stock at $5.50 per
share that was issued to partially finance the acquisition of the Erie
Stations. These shares accrue dividends at an annual rate of $.55 per
share and, to the extent not declared and paid in cash, are compounded
quarterly at a rate of 10% per annum. For purposes of these unaudited pro
forma condensed consolidated financial statements, we have assumed that
the Series H Convertible Preferred Stock was issued on January 1, 1998,
and no dividends have been paid.
(4) Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
calls for dual presentation of basic and dilutive earnings per share
("EPS"). Basic EPS is based upon the weighted average common shares
outstanding during the period. Diluted EPS reflects the potential dilution
that would occur if common stock equivalents were exercised. The effects
of the assumed conversion of Regent's convertible preferred stock and the
assumed exercise of outstanding options and warrants would not be dilutive
for all periods presented. Therefore, basic EPS and diluted EPS are the
same for all periods presented.
<PAGE> 19
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 hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: November 16, 1999 By: /s/ Terry S. Jacobs
-------------------------
Terry S. Jacobs,
Chairman of the Board and
Chief Executive Officer
<PAGE> 20
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of this Current Report on Form 8-K:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(a)* Asset Purchase Agreement dated as of May 18, 1999 among Regent
Broadcasting of Erie, Inc., Regent Licensee of Erie, Inc.,
Media One Group-Erie, Ltd., Cuzco LLC, Thomas J. Embrescia and
James T. Embrescia.
The following schedules and exhibits to the foregoing Asset
Purchase Agreement are omitted as not material; the Company
will furnish supplementally to the Commission upon request a
copy of any omitted schedule or exhibit:
Schedule Description
-------- -----------
1.2.8 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification of
Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
Exhibit Description
------- -----------
A Form of Indemnification Escrow Agreement
B Form Letter of Credit
C Form of Deposit Escrow Agreement
D Form of Assignment and Assumption Agreement
E Form of Non-Competition Agreement
F Form of Lease Agreement
- ---------------
* Previously filed as Exhibit 2(a) to the Registrant's initial Form 8-K dated
September 3, 1999 and incorporated herein by this reference.
