BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
June 30,
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
11,660,648
|
|
|
$
|
12,992,375
|
|
Accounts receivable, less allowance for doubtful accounts of $637,860 in 2012 and $474,347 in 2013
|
|
|
18,175,425
|
|
|
|
17,731,922
|
|
Prepaid expenses
|
|
|
963,677
|
|
|
|
3,294,607
|
|
Deferred tax assets
|
|
|
418,900
|
|
|
|
73,212
|
|
Other current assets
|
|
|
2,172,195
|
|
|
|
2,222,119
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
33,390,845
|
|
|
|
36,314,235
|
|
Notes receivable from related parties
|
|
|
2,656,067
|
|
|
|
2,500,538
|
|
Property and equipment, net
|
|
|
19,066,881
|
|
|
|
18,856,086
|
|
FCC broadcasting licenses
|
|
|
183,251,728
|
|
|
|
183,281,728
|
|
Goodwill
|
|
|
13,629,364
|
|
|
|
13,629,364
|
|
Other assets
|
|
|
7,377,779
|
|
|
|
6,385,070
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
259,372,664
|
|
|
$
|
260,967,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
3,500,000
|
|
|
$
|
5,500,000
|
|
Accounts payable
|
|
|
1,156,406
|
|
|
|
918,136
|
|
Other current liabilities
|
|
|
7,979,975
|
|
|
|
7,890,907
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
12,636,381
|
|
|
|
14,309,043
|
|
Long-term debt, net of current portion
|
|
|
113,250,000
|
|
|
|
106,750,000
|
|
Deferred tax liabilities
|
|
|
49,449,507
|
|
|
|
50,972,097
|
|
Other long-term liabilities
|
|
|
987,519
|
|
|
|
929,051
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
176,323,407
|
|
|
|
172,960,191
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued
|
|
|
|
|
|
|
|
|
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 8,897,440 issued and 6,145,195 outstanding in 2012;
9,041,290 issued and 6,253,515 outstanding in 2013
|
|
|
8,897
|
|
|
|
9,041
|
|
Class B common stock, $0.001 par value; 75,000,000 shares authorized; 16,662,743 issued and outstanding in 2012 and
2013
|
|
|
16,662
|
|
|
|
16,662
|
|
Additional paid-in capital
|
|
|
116,896,411
|
|
|
|
117,267,413
|
|
Treasury stock, Class A common stock; 2,752,245 in 2012; 2,787,775 shares in 2013
|
|
|
(14,539,533
|
)
|
|
|
(14,723,378
|
)
|
Accumulated deficit
|
|
|
(19,347,366
|
)
|
|
|
(14,568,910
|
)
|
Accumulated other comprehensive income
|
|
|
14,186
|
|
|
|
6,002
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
83,049,257
|
|
|
|
88,006,830
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
259,372,664
|
|
|
$
|
260,967,021
|
|
|
|
|
|
|
|
|
|
|
3
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2012
|
|
|
2013
|
|
Net revenue
|
|
$
|
24,790,965
|
|
|
$
|
26,855,633
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Station operating expenses (including stock-based compensation of $4,741 in 2012 and $11,553 in 2013 and excluding depreciation
and amortization shown separately below)
|
|
|
14,634,886
|
|
|
|
16,773,324
|
|
Corporate general and administrative expenses (including stock-based compensation of $103,322 in 2012 and $171,747 in
2013)
|
|
|
1,940,349
|
|
|
|
2,129,569
|
|
Depreciation and amortization
|
|
|
516,452
|
|
|
|
527,529
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
17,091,687
|
|
|
|
19,430,422
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
7,699,278
|
|
|
|
7,425,211
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,265,985
|
)
|
|
|
(2,326,250
|
)
|
Loss on extinguishment of long-term debt
|
|
|
|
|
|
|
(1,260,784
|
)
|
Other income (expense), net
|
|
|
(89,374
|
)
|
|
|
36,563
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
6,343,919
|
|
|
|
3,874,740
|
|
Income tax expense
|
|
|
2,482,849
|
|
|
|
1,516,771
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
3,861,070
|
|
|
|
2,357,969
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities (net of income tax benefit of $8,329 in 2012 and income tax expense of $3,558 in
2013)
|
|
|
(13,237
|
)
|
|
|
5,718
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
3,847,833
|
|
|
$
|
2,363,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.17
|
|
|
$
|
0.10
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,674,258
|
|
|
|
22,742,198
|
|
Diluted
|
|
|
22,733,063
|
|
|
|
22,798,418
|
|
4
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2012
|
|
|
2013
|
|
Net revenue
|
|
$
|
48,089,573
|
|
|
$
|
51,668,102
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Station operating expenses (including stock-based compensation of $7,512 in 2012 and $18,791 in 2013 and excluding depreciation
and amortization shown separately below)
|
|
|
30,140,190
|
|
|
|
33,476,328
|
|
Corporate general and administrative expenses (including stock-based compensation of $230,444 in 2012 and $301,722 in
2013)
|
|
|
3,980,694
|
|
|
|
4,223,578
|
|
Depreciation and amortization
|
|
|
1,030,501
|
|
|
|
1,092,224
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
35,151,385
|
|
|
|
38,792,130
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
12,938,188
|
|
|
|
12,875,972
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,612,156
|
)
|
|
|
(4,374,124
|
)
|
Loss on extinguishment of long-term debt
|
|
|
|
|
|
|
(1,260,784
|
)
|
Other income (expense), net
|
|
|
(15,068
|
)
|
|
|
82,592
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
10,310,964
|
|
|
|
7,323,656
|
|
Income tax expense
|
|
|
4,041,898
|
|
|
|
2,545,200
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
6,269,066
|
|
|
|
4,778,456
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Unrealized loss on securities (net of income tax benefit of $7,911 in 2012 and $5,189 in 2013)
|
|
|
(12,572
|
)
|
|
|
(8,184
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
6,256,494
|
|
|
$
|
4,770,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.28
|
|
|
$
|
0.21
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,657,742
|
|
|
|
22,726,954
|
|
Diluted
|
|
|
22,707,464
|
|
|
|
22,774,001
|
|
5
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2012
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,269,066
|
|
|
$
|
4,778,456
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
237,956
|
|
|
|
320,513
|
|
Provision for bad debts
|
|
|
529,330
|
|
|
|
408,421
|
|
BMI music license fee settlement
|
|
|
(770,654
|
)
|
|
|
|
|
Depreciation and amortization
|
|
|
1,030,501
|
|
|
|
1,092,224
|
|
Amortization of loan fees
|
|
|
186,309
|
|
|
|
254,659
|
|
Loss on extinguishment of long-term debt
|
|
|
|
|
|
|
1,260,784
|
|
Deferred income taxes
|
|
|
2,689,858
|
|
|
|
1,860,094
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
401,218
|
|
|
|
35,082
|
|
Prepaid expenses
|
|
|
(723,371
|
)
|
|
|
(2,330,930
|
)
|
Other assets
|
|
|
(479,066
|
)
|
|
|
181,107
|
|
Accounts payable
|
|
|
(125,396
|
)
|
|
|
(238,270
|
)
|
Other liabilities
|
|
|
361,866
|
|
|
|
(219,618
|
)
|
Other operating activities
|
|
|
(443,475
|
)
|
|
|
10,455
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
9,164,142
|
|
|
|
7,412,977
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(700,807
|
)
|
|
|
(852,349
|
)
|
Payments for translator licenses
|
|
|
|
|
|
|
(30,000
|
)
|
Payments for investments
|
|
|
(62,500
|
)
|
|
|
(104,167
|
)
|
Repayment of notes receivable from related parties
|
|
|
139,674
|
|
|
|
155,529
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(623,633
|
)
|
|
|
(830,987
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Principal payments on indebtedness
|
|
|
(6,565,308
|
)
|
|
|
(4,500,000
|
)
|
Payments of loan fees
|
|
|
|
|
|
|
(617,051
|
)
|
Tax benefit (shortfall) from vesting of restricted stock
|
|
|
(80,104
|
)
|
|
|
50,633
|
|
Payments for treasury stock
|
|
|
(107,938
|
)
|
|
|
(183,845
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(6,753,350
|
)
|
|
|
(5,250,263
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,787,159
|
|
|
|
1,331,727
|
|
Cash and cash equivalents at beginning of period
|
|
|
13,610,069
|
|
|
|
11,660,648
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
15,397,228
|
|
|
$
|
12,992,375
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
2,443,066
|
|
|
$
|
4,080,557
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
1,677,500
|
|
|
$
|
2,274,395
|
|
|
|
|
|
|
|
|
|
|
Supplement disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Property and equipment acquired through placement of advertising airtime
|
|
$
|
55,804
|
|
|
$
|
29,080
|
|
|
|
|
|
|
|
|
|
|
6
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the
consolidated financial statements of Beasley Broadcast Group, Inc. and its subsidiaries (the Company) included in the Companys Annual Report on Form 10-K for the year ended December 31, 2012. These financial statements have
been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations for the
interim periods presented and all such adjustments are of a normal and recurring nature. The Companys results are subject to seasonal fluctuations therefore the results shown on an interim basis are not necessarily indicative of results for
the full year.
(2) Recent Accounting Pronouncement
In February 2013, the FASB issued guidance to improve the reporting of reclassifications out of accumulated other
comprehensive income. The guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under
U.S. generally accepted accounting principles to be reclassified in its entirety to net income. For other amounts that are that are not required under U.S. generally accepted accounting principles to be reclassified in their entirety to net income
in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. generally accepted accounting principles that provide additional detail about those amounts. The new guidance is effective prospectively for
reporting periods beginning after December 15, 2012, with early adoption permitted. The Company adopted the new guidance in the first quarter of 2013 with no material impact on its financial statements.
(3) FCC Broadcasting Licenses
The change in the carrying amount of FCC broadcasting licenses for the six months ended June 30, 2013 is as
follows:
|
|
|
|
|
Balance as of December 31, 2012
|
|
$
|
183,251,728
|
|
Acquisition of translator licenses
|
|
|
30,000
|
|
|
|
|
|
|
Balance as of June 30, 2013
|
|
$
|
183,281,728
|
|
|
|
|
|
|
On January 11, 2013, the Company acquired two translator licenses from Reach Communications, Inc.
for $30,000. The translator licenses allow the Company to rebroadcast the programming of one of its radio stations in Fort Myers-Naples, FL on the FM band over an expanded area of coverage. Translator licenses are generally granted for renewable
terms of eight years and are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that they might be impaired.
(4) Derivative Financial Instruments
The Company is a party to two interest rate cap agreements which limit its cost of variable rate debt on a portion of
its term loans. The interest rate cap agreements have an aggregate notional amount of $57.5 million and cap LIBOR at 1% on an equivalent amount of the Companys term loans. The interest rate cap agreements expire in September 2014. The interest
rate caps were not designated as hedging instruments. As of June 30, 2013, the fair value of the interest rate caps, reported in other assets, was approximately $16,000. The fair values of the interest rate caps were determined using observable
inputs (Level 2). The inputs were quotes from the counterparties to the interest rate cap agreements. The change in fair value, reported in interest expense, was approximately $5,000 and $2,000 for the three and six months ended June 30, 2013,
respectively.
7
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(5) Long-Term Debt
Long-term debt is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
June 30,
2013
|
|
First lien facility:
|
|
|
|
|
|
|
|
|
Term loan
|
|
$
|
86,750,000
|
|
|
$
|
105,250,000
|
|
Revolving credit facility
|
|
|
5,000,000
|
|
|
|
7,000,000
|
|
Second lien facility:
|
|
|
|
|
|
|
|
|
Term loan
|
|
|
25,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,750,000
|
|
|
|
112,250,000
|
|
Less current installments
|
|
|
(3,500,000
|
)
|
|
|
(5,500,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
113,250,000
|
|
|
$
|
106,750,000
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012, the first lien facility consisted of a term loan with a remaining balance
of $86.7 million and a revolving credit facility with a maximum commitment of $20.0 million. The first lien facility carried interest, based on the adjusted LIBOR rate, at 5.18% as of December 31, 2012. As of December 31, 2012, the second
lien facility consisted of a term loan of $25.0 million. The second lien facility carried interest, based on the adjusted LIBOR rate, at 11.25% as of December 31, 2012.
On April 3, 2013, the Company amended its first lien credit agreement. The amendment waived certain restrictions to permit the prepayment of the $25.0 million second lien facility in full with $20.0
million of additional term loan borrowings and $2.0 million of additional revolving credit facility borrowings from the first lien facility and $3.0 million of cash on hand. The amendment also modified the interest rate margins on the term loan. In
connection with the prepayment of the second lien facility, the Company recorded a prepayment fee of $1.0 million in interest expense during the second quarter of 2013. In connection with the amended first lien credit agreement and the prepayment of
the second lien facility, the Company also recorded a loss on extinguishment of long-term debt of $1.3 million during the second quarter of 2013.
As of June 30, 2013, the first lien facility consisted of a term loan with a remaining balance of $105.2 million and a revolving credit facility with a maximum commitment of $20.0 million. As of
June 30, 2013, the Company had $13.0 million in remaining commitments available under its revolving credit facility. At the Companys election, the first lien facility may bear interest at either (i) the adjusted LIBOR rate, as
defined in the first lien credit agreement, plus a margin ranging from 3.5% to 5.0% that is determined by the Companys consolidated total debt ratio, as defined in the first lien credit agreement or (ii) the base rate, as defined in the
first lien credit agreement, plus a margin ranging from 2.5% to 4.0% that is determined by the Companys consolidated total debt ratio. Interest on adjusted LIBOR rate loans is payable at the end of each applicable interest period and, for
those interest periods with a duration in excess of three months, the three month anniversary of the beginning of such interest period. Interest on base rate loans is payable quarterly in arrears. The first lien facility carried interest, based on
the adjusted LIBOR rate, at 4.20% as of June 30, 2013 and matures on August 9, 2017.
The first lien credit
agreement requires mandatory prepayments equal to 50% of consolidated excess cash flow, as defined in the first lien credit agreement, when the Companys consolidated total debt is equal to or greater than three times its consolidated operating
cash flow, as defined in the first lien credit agreement. The mandatory prepayments decrease to 25% of excess cash flow when the Companys consolidated total debt is less than three times its consolidated operating cash flow. Mandatory
prepayments of consolidated excess cash flow are due 120 days after year end. The credit agreement also requires mandatory prepayments for defined amounts from net proceeds of asset sales, net insurance proceeds, and net proceeds of debt issuances.
The first lien facility requires the Company to comply with certain financial covenants which are defined in the first lien
credit agreement. These financial covenants include:
|
|
|
Consolidated Total Debt Ratio.
The Companys consolidated total debt on the last day of each fiscal quarter through December 31, 2013
must not exceed 5.0 times its consolidated operating cash flow for the four quarters then ended. The maximum ratio is 4.5 times for 2014, 4.0 times for 2015, 3.5 times for 2016, and 3.0 times for 2017.
|
|
|
|
Interest Coverage Ratio.
The Companys consolidated operating cash flow for the four quarters ending on the last day of each fiscal quarter
through maturity must not be less than 2.0 times its consolidated cash interest expense for the four quarters then ended.
|
The first lien facility is secured by a first-priority lien on substantially all of the Companys assets and the assets of substantially all of its subsidiaries and is guaranteed jointly and
severally by the Company and substantially all of its subsidiaries. The guarantees were issued to the Companys lenders for repayment of the outstanding balance of the first lien facility. If the Company defaults under the terms of the first
lien credit agreement, the Company and its applicable subsidiaries may be required to perform under their guarantees. As of June 30, 2013, the maximum amount of undiscounted payments the Company and its applicable subsidiaries would have had to
make in the event of default was $112.2 million. The guarantees for the first lien facility expire on August 9, 2017.
8
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The aggregate scheduled principal repayments of the credit facility for the remainder of
2013 and the next four years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
loan
|
|
|
Revolving
credit
facility
|
|
|
Total
|
|
2013
|
|
$
|
2,750,000
|
|
|
$
|
|
|
|
$
|
2,750,000
|
|
2014
|
|
|
6,875,000
|
|
|
|
|
|
|
|
6,875,000
|
|
2015
|
|
|
8,250,000
|
|
|
|
|
|
|
|
8,250,000
|
|
2016
|
|
|
9,625,000
|
|
|
|
|
|
|
|
9,625,000
|
|
2017
|
|
|
77,750,000
|
|
|
|
7,000,000
|
|
|
|
84,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
105,250,000
|
|
|
$
|
7,000,000
|
|
|
$
|
112,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Failure to comply with financial covenants, scheduled interest payments, scheduled principal repayments,
or any other terms of its credit agreement could result in the acceleration of the maturity of its outstanding debt. The Company believes that it will have sufficient liquidity and capital resources to permit it to meet its financial obligations for
at least the next twelve months. As of June 30, 2013, the Company was in compliance with all applicable financial covenants under its credit agreement.
(6) Stock-Based Compensation
The Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the 2007 Plan) permits the Company to
issue up to 4.0 million shares of Class A common stock. The 2007 Plan allows for eligible employees, directors and certain consultants of the Company to receive shares of restricted stock, stock options or other stock-based awards. The
restricted stock awards that have been granted under the 2007 Plan generally vest over one to five years of service.
A
summary of restricted stock activity under the 2007 Plan is as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|
Unvested as of April 1, 2013
|
|
|
114,551
|
|
|
$
|
5.78
|
|
Granted
|
|
|
63,500
|
|
|
|
7.21
|
|
Vested
|
|
|
(4,600
|
)
|
|
|
4.95
|
|
|
|
|
|
|
|
|
|
|
Unvested as of June 30, 2013
|
|
|
173,451
|
|
|
$
|
6.33
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2013, there was $0.8 million of total unrecognized compensation cost related to
restricted stock granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average period of 1.9 years.
The 2000 Equity Plan of Beasley Broadcast Group. Inc. (the 2000 Plan) was terminated upon adoption of the 2007 Plan, except with respect to outstanding awards. The remaining stock options
expire ten years from the date of grant. No new awards will be granted under the 2000 Plan.
A summary of stock option
activity under the 2000 Plan is as follows:
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Weighted-
Average
Exercise
Price
|
|
Outstanding as of April 1, 2013
|
|
|
171,084
|
|
|
$
|
14.07
|
|
Forfeited
|
|
|
(71,334
|
)
|
|
|
11.73
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable as of June 30, 2013
|
|
|
99,750
|
|
|
$
|
15.75
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2013, the weighted-average remaining contractual term was 0.9 years and the aggregate
intrinsic value was zero for stock options granted under the 2000 Plan.
9
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(7) Income Taxes
The Companys effective tax rate was approximately 39% for the three and six months ended June 30, 2012 and
approximately 39% and 35% for the three and six months ended June 30, 2013, respectively which differ from the federal statutory rate of 34% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes.
The effective tax rate for the six months ended June 30, 2013, also reflects a $0.3 million decrease from a change to the Companys state tax effective rate.
(8) Related Party Transactions
On June 17, 2013, the Company entered into an asset purchase agreement to acquire KVGS-FM in Las Vegas, NV from
GGB Las Vegas, LLC, which is owned by George G. Beasley, for $4.0 million. The Company expects to complete this acquisition by the end of the third quarter of 2014 however closing is subject to certain conditions. The Company expects to finance this
acquisition with cash on hand or a combination of cash on hand and a note payable to GGB Las Vegas, LLC.
On May 31,
2013, the interest rate on the notes receivable from Beasley Family Towers, LLC was discretionarily changed from 6.0% to 2.57%. The aggregate monthly payments of approximately $38,000 were unchanged, but due to the interest rate change the maturity
date of the notes is now June 30, 2019. Beasley Family Towers, LLC is controlled by George G. Beasley, Bruce G. Beasley, Caroline Beasley, Brian E. Beasley and other family members of George G. Beasley.
On April 12, 2013, the Company contributed an additional $104,167 to Digital PowerRadio, LLC which maintained its ownership interest
at approximately 20% of the outstanding units. Digital PowerRadio, LLC is managed by Fowler Radio Group, LLC which is partially-owned by Mark S. Fowler, an independent director of the Company.
(9) Financial Instruments
The carrying amount of notes receivable from related parties with a fixed rate of interest of 2.57% was $2.5 million as
of June 30, 2013, compared with a fair value of $2.3 million based on current market interest rates. The carrying amount of notes receivable from related parties was $2.7 million as of December 31, 2012, compared with a fair value of $2.9
million.
The carrying amount of long term debt, including the current installments, was $112.2 million as of June 30,
2013 and approximated fair value based on current market rates. The carrying amount of long-term debt was $116.7 million as of December 31, 2012 and approximated fair value based on current market rates.
10
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with the financial
statements and related notes included elsewhere in this report. The results discussed below are not necessarily indicative of the results to be expected in any future periods. This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking statements for purposes of federal and
state securities laws, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or
developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words may,
will, estimate, intend, continue, believe, expect or anticipate and other similar words. Such forward-looking statements may be contained in Managements
Discussion and Analysis of Financial Condition and Results of Operations, among other places. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as
unforeseen events that would cause us to broadcast commercial-free for any period of time and changes in the radio broadcasting industry generally. We do not intend, and undertake no obligation, to update any forward-looking statement. Key risks to
our company are described in our annual report on Form 10-K, filed with the Securities and Exchange Commission on February 15, 2013.
General
We are a radio
broadcasting company whose primary business is operating radio stations throughout the United States. We own and operate 43 radio stations in the following markets: Atlanta, GA, Augusta, GA, Boston, MA, Fayetteville, NC, Fort Myers-Naples, FL,
Greenville-New Bern-Jacksonville, NC, Las Vegas, NV, Miami-Fort Lauderdale, FL, Philadelphia, PA, West Palm Beach-Boca Raton, FL, and Wilmington, DE. We also operate one radio station in the expanded AM band in Augusta, GA. In addition, we provide
management services to one radio station in Las Vegas, NV. We refer to each group of radio stations in each radio market as a market cluster.
Recent Developments
On
June 17, 2013, we entered into an asset purchase agreement to acquire KVGS-FM in Las Vegas, NV from GGB Las Vegas, LLC, which is owned by George G. Beasley, for $4.0 million. We expect to complete this acquisition by the end of the third
quarter of 2014 however closing is subject to certain conditions. We expect to finance this acquisition with cash on hand or a combination of cash on hand and a note payable to GGB Las Vegas, LLC.
On May 31, 2013, the interest rate on the notes receivable from Beasley Family Towers, LLC was discretionarily changed from 6.0% to
2.57%. The aggregate monthly payments of approximately $38,000 were unchanged, but due to the interest rate change the maturity date of the notes is now June 30, 2019. Beasley Family Towers, LLC is controlled by George G. Beasley, Bruce G.
Beasley, Caroline Beasley, Brian E. Beasley and other family members of George G. Beasley.
Financial Statement Presentation
The following discussion provides a brief description of certain key items that appear in our financial statements and
general factors that impact these items.
Net Revenue.
Our net revenue is primarily derived from the sale of
advertising airtime to local and national advertisers. Net revenue is gross revenue less agency commissions, generally 15% of gross revenue. Local revenue generally consists of advertising airtime and digital sales to advertisers in a radio
stations local market either directly to the advertiser or through the advertisers agency. National revenue generally consists of advertising airtime sales to agencies purchasing advertising for multiple markets. National sales are
generally facilitated by our national representation firm, which serves as our agent in these transactions.
11
Our net revenue is generally determined by the advertising rates that we are able to charge
and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors:
|
|
|
a radio stations audience share in the demographic groups targeted by advertisers as measured principally by quarterly reports issued by the
Arbitron Ratings Company;
|
|
|
|
the number of radio stations, as well as other forms of media, in the market competing for the attention of the same demographic groups;
|
|
|
|
the supply of, and demand for, radio advertising time; and
|
|
|
|
the size of the market.
|
Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our market clusters. Seasonal revenue fluctuations are also common in the radio
broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues are typically lowest in the first calendar quarter of the year.
We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or
services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime.
We
also continue to invest in digital support services to develop and promote our radio station websites. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime
during audio streaming of our radio stations over the internet.
Operating Expenses.
Our operating expenses consist
primarily of (1) programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our radio stations, (2) general and administrative expenses, including compensation and other expenses,
incurred at our corporate offices, and (3) depreciation and amortization. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect reported amounts and related disclosures.
We consider an accounting estimate to be critical if:
|
|
|
it requires assumptions to be made that were uncertain at the time the estimate was made; and
|
|
|
|
changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial
condition.
|
Our critical accounting estimates are described in Item 7 of our annual report on Form 10-K
for the year ended December 31, 2012. There have been no material changes to our critical accounting estimates during the second quarter of 2013.
Recent Accounting Pronouncements
Recent accounting pronouncements are
described in Note 2 to the accompanying financial statements.
Three Months Ended June 30, 2013 Compared to the Three Months Ended
June 30, 2012
The following summary table presents a comparison of our results of operations for the three months
ended June 30, 2012 and 2013 with respect to certain of our key financial measures. These changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes
to financial statements included in Item 1 of this report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Change
|
|
|
|
2012
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
Net revenue
|
|
$
|
24,790,965
|
|
|
$
|
26,855,633
|
|
|
$
|
2,064,668
|
|
|
|
8.3
|
%
|
Station operating expenses
|
|
|
14,634,886
|
|
|
|
16,773,324
|
|
|
|
2,138,438
|
|
|
|
14.6
|
|
Corporate general and administrative expenses
|
|
|
1,940,349
|
|
|
|
2,129,569
|
|
|
|
189,220
|
|
|
|
9.8
|
|
Interest expense
|
|
|
1,265,985
|
|
|
|
2,326,250
|
|
|
|
1,060,265
|
|
|
|
83.8
|
|
Loss on extinguishment of long-term debt
|
|
|
|
|
|
|
1,260,784
|
|
|
|
1,260,784
|
|
|
|
|
|
Income tax expense
|
|
|
2,482,849
|
|
|
|
1,516,771
|
|
|
|
(966,078
|
)
|
|
|
(38.9
|
)
|
Net income
|
|
|
3,861,070
|
|
|
|
2,357,969
|
|
|
|
(1,503,101
|
)
|
|
|
(38.9
|
)
|
12
Net Revenue.
Net revenue increased $2.1 million during the three months ended
June 30, 2013. Significant factors affecting net revenue included a $1.1 million increase in advertising revenue at our Las Vegas market cluster, which included $1.0 million of additional net revenue from KOAS-FM in Las Vegas, NV which was
acquired in the third quarter of 2012, a $0.7 million increase in advertising revenue from our Philadelphia market cluster, and a $0.3 million increase in advertising revenue from our Fayetteville market cluster. Net revenue was comparable to the
same period in 2012 at our remaining market clusters.
Station Operating Expenses.
Station operating expenses increased
$2.1 million during the three months ended June 30, 2013. Significant factors affecting station operating expenses included a $0.7 million increase at our Las Vegas market cluster, which included $0.4 million of additional station operating
expenses from KOAS-FM in Las Vegas, NV, a $0.4 million increase at our Miami-Fort Lauderdale market cluster, a $0.4 million increase at our Philadelphia market cluster, and a $0.3 million increase at our Fort Myers-Naples market cluster. In
addition, station operating expenses increased an aggregate amount of $0.8 million across ten of our eleven market clusters as a result of a BMI fee settlement in 2012. Station operating expenses were comparable to the same period in 2012 at our
remaining market clusters.
Corporate General and Administrative Expenses.
The $0.2 million increase in corporate
general and administrative expenses during the three months ended June 30, 2013 was primarily due to an increase in incentive-based compensation expense and stock-based compensation expense.
Interest Expense.
Interest expense increased $1.1 million during the three months ended June 30, 2013.
Significant factors affecting interest expense included a $1.0 million fee in connection with the prepayment of the second lien facility, an increase in borrowing costs under the credit agreements we entered into in the third quarter of 2012, and a
decrease in long-term debt outstanding.
Loss on Extinguishment of Long-Term Debt.
In connection
with the amended first lien credit agreement and the prepayment of the second lien facility we recorded a loss on extinguishment of long-term debt of $1.3 million during the three months ended June 30, 2013.
Income Tax Expense.
Our effective tax rate was approximately 39% for the three months ended June 30, 2012 and 2013, which
differs from the federal statutory rate of 34% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes.
Net Income.
Net income during the three months ended June 30, 2013 decreased $1.5 million as a result of the factors described above.
Six Months Ended June 30, 2013 Compared to the Six Months Ended June 30, 2012
The following summary table presents a comparison of our results of operations for the six months ended June 30, 2012 and 2013 with respect to certain of our key financial measures. These changes
illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 1 of this report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
Change
|
|
|
|
2012
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
Net revenue
|
|
$
|
48,089,573
|
|
|
$
|
51,668,102
|
|
|
$
|
3,578,529
|
|
|
|
7.4
|
%
|
Station operating expenses
|
|
|
30,140,190
|
|
|
|
33,476,328
|
|
|
|
3,336,138
|
|
|
|
11.1
|
|
Corporate general and administrative expenses
|
|
|
3,980,694
|
|
|
|
4,223,578
|
|
|
|
242,884
|
|
|
|
6.1
|
|
Interest expense
|
|
|
2,612,156
|
|
|
|
4,374,124
|
|
|
|
1,761,968
|
|
|
|
67.5
|
|
Loss on extinguishment of long-term debt
|
|
|
|
|
|
|
1,260,784
|
|
|
|
1,260,784
|
|
|
|
|
|
Income tax expense
|
|
|
4,041,898
|
|
|
|
2,545,200
|
|
|
|
(1,496,698
|
)
|
|
|
(37.0
|
)
|
Net income
|
|
|
6,269,066
|
|
|
|
4,778,456
|
|
|
|
(1,490,610
|
)
|
|
|
(23.8
|
)
|
Net Revenue.
Net revenue increased $3.6 million during the six months ended June 30, 2013.
Significant factors affecting net revenue included a $1.9 million increase in advertising revenue at our Las Vegas market cluster, which included $1.8 million of
13
additional net revenue from KOAS-FM in Las Vegas, NV which was acquired in the third quarter of 2012, and a $1.7 million increase in advertising revenue from our Philadelphia market cluster. Net
revenue was comparable to the same period in 2012 at our remaining market clusters.
Station Operating Expenses.
Station operating expenses increased $3.3 million during the six months ended June 30, 2013. Significant factors affecting station operating expenses included a $1.2 million increase at our Las Vegas market cluster, which included $0.8
million of additional station operating expenses from KOAS-FM in Las Vegas, NV, a $0.8 million increase at our Philadelphia market cluster, and a $0.6 million increase at our Miami-Fort Lauderdale market cluster. In addition, station operating
expenses increased an aggregate amount of $0.8 million across ten of our eleven market clusters as a result of a BMI fee settlement in 2012. Station operating expenses were comparable to the same period in 2012 at our remaining market clusters.
Corporate General and Administrative Expenses.
The $0.2 million increase in corporate general and administrative
expenses during the six months ended June 30, 2013 was primarily due to an increase in incentive-based compensation expense and stock-based compensation expense.
Interest Expense.
Interest expense increased $1.8 million during the six months ended June 30, 2013. Significant factors affecting interest expense included a $1.0 million fee in
connection with the prepayment of the second lien facility, an increase in borrowing costs under the credit agreements we entered into in the third quarter of 2012, and a decrease in long-term debt outstanding.
Loss on Extinguishment of Long-Term Debt.
In connection with the amended first lien credit agreement and the
prepayment of the second lien facility we recorded a loss on extinguishment of long-term debt of $1.3 million during the six months ended June 30, 2013.
Income Tax Expense.
Our effective tax rate was approximately 39% and 35% for the six months ended June 30, 2012 and 2013, respectively, which differ from the federal statutory rate of 34% due
to the effect of state income taxes and certain expenses that are not deductible for tax purposes. The effective tax rate for the six months ended June 30, 2013, also reflects a $0.3 million decrease from a change to our state tax effective
rate.
Net Income.
Net income during the six months ended June 30, 2013 decreased $1.5 million as a result of the
factors described above.
Liquidity and Capital Resources
Overview.
Our primary sources of liquidity are internally generated cash flow and our revolving credit loan. Our primary liquidity needs have been, and for the next twelve months and
thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and radio station acquisitions. Historically, our capital expenditures have not been significant. In
addition to property and equipment associated with radio station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our studio and office space and the technological
improvement, including upgrades necessary to broadcast HD Radio, and maintenance of our broadcasting towers and equipment. We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our
operations.
Our credit agreement permits us to repurchase additional shares of our common stock, subject to compliance with
financial covenants, up to an aggregate amount of $0.5 million per year. We paid $0.2 million to repurchase 35,530 shares during the six months ended June 30, 2013.
Our credit agreement permits us to pay cash dividends, subject to compliance with financial covenants, up to an aggregate amount of $4.0 million for 2013, $5.0 million for each of 2014 and 2015, and $6.0
million for each year thereafter. We did not pay any cash dividends during the six months ended June 30, 2013.
We expect
to provide for future liquidity needs through one or a combination of the following sources of liquidity:
|
|
|
internally generated cash flow;
|
14
|
|
|
additional borrowings, other than under our existing credit facilities, to the extent permitted thereunder; and
|
|
|
|
additional equity offerings.
|
We believe that we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next twelve months. However, poor
financial results or unanticipated expenses could give rise to defaults under our credit facilities, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect and we may not secure financing
when needed or on acceptable terms.
Our ability to reduce our consolidated total debt ratio, as defined by our credit
agreement, by increasing operating cash flow and/or decreasing long-term debt will determine how much, if any, of the remaining commitments under our revolving credit facility will be available to us in the future. Poor financial results or
unanticipated expenses could result in our failure to maintain or lower our consolidated total debt ratio and we may not be permitted to make any additional borrowings under our revolving credit facility.
The following summary table presents a comparison of our capital resources for the six months ended June 30, 2012 and 2013 with
respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements
included in Item 1 of this report.
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2012
|
|
|
2013
|
|
Net cash provided by operating activities
|
|
$
|
9,164,142
|
|
|
$
|
7,412,977
|
|
Net cash used in investing activities
|
|
|
(623,633
|
)
|
|
|
(830,987
|
)
|
Net cash used in financing activities
|
|
|
(6,753,350
|
)
|
|
|
(5,250,263
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
$
|
1,787,159
|
|
|
$
|
1,331,727
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By Operating Activities.
Net cash provided by operating activities
decreased $1.8 million during the six months ended June 30, 2013. Significant factors affecting net cash provided by operating activities included a $1.8 million increase in cash paid for station operating expenses, a $1.6 million increase in
interest payments, a $0.6 million increase in income tax payments, and a $2.4 million increase in cash receipts from the sale of advertising airtime.
Net Cash Used In Investing Activities.
Net cash used in investing activities during the six months ended June 30, 2013 included payments of $0.9 million for capital expenditures. Net cash
used in investing activities for the same period in 2012 included payments of $0.7 million for capital expenditures.
Net
Cash Used In Financing Activities.
Net cash used in financing activities during the six months ended June 30, 2013 included repayments of $4.5 million under our credit facilities, and payments of $0.6 million for loan fees related to
the amended first lien credit agreement. Net cash used in financing activities for the same period in 2012 included repayments of $6.6 million under our credit facility.
Credit Facility.
As of July 26, 2013, the aggregate outstanding balance of our credit facility was $112.2 million. On April 3, 2013, we amended our first lien credit agreement. The
amendment waived certain restrictions to permit the prepayment of the $25.0 million second lien facility in full with $20.0 million of additional term loan borrowings and $2.0 million of additional revolving credit facility borrowings from the first
lien facility and $3.0 million of cash on hand. The amendment also modified the interest rate margins on the term loan. In connection with the prepayment of the second lien facility, we recorded a prepayment fee of $1.0 million in interest expense
during the second quarter of 2013. In connection with the amended first lien credit agreement and the prepayment of the second lien facility, we also recorded a loss on extinguishment of long-term debt of $1.3 million during the second quarter of
2013.
As of June 30, 2013, the first lien facility consisted of a term loan with a remaining balance of $105.2 million
and a revolving credit facility with a maximum commitment of $20.0 million. As of June 30, 2013, we had $13.0 million in remaining commitments available under our revolving credit facility. At our election, the first lien facility may bear
interest at either (i) the adjusted LIBOR rate, as defined in the first lien credit agreement, plus a margin ranging from 3.5% to 5.0% that is determined by our consolidated total debt ratio, as defined in the first lien credit agreement or
(ii) the base rate, as defined in the first lien credit agreement, plus a margin ranging from 2.5% to 4.0% that is determined by our consolidated total debt ratio. Interest on adjusted LIBOR rate loans is payable at the end of each applicable
interest period and, for those interest periods with a duration in excess of three months, the three month anniversary of the beginning of such interest period. Interest on base rate loans is payable quarterly in arrears. The first lien facility
carried interest, based on the adjusted LIBOR rate, at 4.20% as of June 30, 2013 and matures on August 9, 2017.
15
The first lien credit agreement requires mandatory prepayments equal to 50% of consolidated
excess cash flow, as defined in the first lien credit agreement, when our consolidated total debt is equal to or greater than three times our consolidated operating cash flow as defined in the first lien credit agreement. The mandatory prepayments
decrease to 25% of excess cash flow when our consolidated total debt is less than three times our consolidated operating cash flow. Mandatory prepayments of consolidated excess cash flow are due 120 days after year end. The credit agreement also
requires mandatory prepayments for defined amounts from net proceeds of asset sales, net insurance proceeds, and net proceeds of debt issuances.
The first lien facility requires us to comply with certain financial covenants which are defined in the first lien credit agreement. These financial covenants include:
|
|
|
Consolidated Total Debt Ratio.
Our consolidated total debt on the last day of each fiscal quarter through December 31, 2013 must not exceed
5.0 times our consolidated operating cash flow for the four quarters then ended. The maximum ratio is 4.5 times for 2014, 4.0 times for 2015, 3.5 times for 2016, and 3.0 times for 2017.
|
|
|
|
Interest Coverage Ratio.
Our consolidated operating cash flow for the four quarters ending on the last day of each fiscal quarter through
maturity must not be less than 2.0 times our consolidated cash interest expense for the four quarters then ended.
|
The first lien facility is secured by a first-priority lien on substantially all of the Companys assets and the assets of substantially all of its subsidiaries and is guaranteed jointly and
severally by the Company and substantially all of its subsidiaries. The guarantees were issued to our lenders for repayment of the outstanding balance of the first lien facility. If we default under the terms of the first lien credit agreement, the
Company and its applicable subsidiaries may be required to perform under their guarantees. As of June 30, 2013, the maximum amount of undiscounted payments the Company and its applicable subsidiaries would have had to make in the event of
default was $112.2 million. The guarantees for the first lien facility expire on August 9, 2017.
The aggregate scheduled
principal repayments of the credit facility for the remainder of 2013 and the next four years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
loan
|
|
|
Revolving
credit
facility
|
|
|
Total
|
|
2013
|
|
$
|
2,750,000
|
|
|
$
|
|
|
|
$
|
2,750,000
|
|
2014
|
|
|
6,875,000
|
|
|
|
|
|
|
|
6,875,000
|
|
2015
|
|
|
8,250,000
|
|
|
|
|
|
|
|
8,250,000
|
|
2016
|
|
|
9,625,000
|
|
|
|
|
|
|
|
9,625,000
|
|
2017
|
|
|
77,750,000
|
|
|
|
7,000,000
|
|
|
|
84,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
105,250,000
|
|
|
$
|
7,000,000
|
|
|
$
|
112,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Failure to comply with financial covenants, scheduled interest payments, scheduled principal repayments,
or any other terms of our credit agreement could result in the acceleration of the maturity of our outstanding debt, which could have a material adverse effect on our business or results of operations. As of June 30, 2013, we were in compliance
with all applicable financial covenants under our credit agreement; our consolidated total debt ratio was 3.39 times, and our interest coverage ratio was 3.94 times.