Quarterly Report (10-q)

Date : 08/09/2019 @ 9:12PM
Source : Edgar (US Regulatory)
Stock : Entercom Communications Corp (ETM)
Quote : 4.98  -0.03 (-0.60%) @ 1:00AM
Entercom Communications share price Chart
After Hours
Last Trade
Last $ 4.98 ◊ 0.00 (0.00%)

Quarterly Report (10-q)

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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, 2019

 

or

 

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________to ___________

 

Commission File Number: 001-14461

 

Entercom Communications Corp.

(Exact name of registrant as specified in its charter)

 

Pennsylvania

23-1701044

(State or other jurisdiction of incorporation or organization)

(I.R.S. employer identification no.)

 

2400 Market Street, 4th Floor

Philadelphia, Pennsylvania 19103

(Address of principal executive offices and zip code)

 

(610) 660-5610

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ Ö ] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [ Ö ] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [ Ö ] Accelerated filer [ ] Emerging growth company [ ]

Non-accelerated filer [ ] Smaller reporting company [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act and Section 13(a) of the Exchange Act. [ ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ Ö ]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

i


 

Class A Common Stock, par value $.01 per share

 

ETM

 

New York Stock Exchange

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class A common stock, $0.01 par value – 138,455,684 Shares Outstanding as of July 31, 2019

(Class A Shares Outstanding include 3,664,588 unvested and vested but deferred restricted stock units)

Class B common stock, $0.01 par value – 4,045,199 Shares Outstanding as of July 31, 2019.

ii


 

ENTERCOM COMMUNICATIONS CORP.

 

INDEX

 

Table of Contents

Page

 

Part I – Financial Information

 

Item 1

Financial Statements

2

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

46

Item 3

Quantitative and Qualitative Disclosures About Market Risk

60

Item 4

Controls and Procedures

61

 

 

 

 

Part II – Other Information

 

Item 1

Legal Proceedings

63

Item 1A

Risk Factors

63

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

63

Item 3

Defaults Upon Senior Securities

63

Item 4

Mine Safety Disclosures

63

Item 5

Other Information

63

Item 6

Exhibits

64

 

 

 

 

Signatures

66

 

Private Securities Litigation Reform Act Safe Harbor Statement

 

In addition to historical information, this report contains statements by us with regard to our expectations as to financial results and other aspects of our business that involve risks and uncertainties and may constitute 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.

 

Forward-looking statements are presented for illustrative purposes only and reflect our current expectations concerning future results and events. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, without limitation, 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.

 

You can identify forward-looking statements by our use of words such as “anticipates,” “believes,” “continues,” “expects,” “intends,” “likely,” “may,” “opportunity,” “plans,” “potential,” “project,” “will,” “could,” “would,” “should,” “seeks,” “estimates,” “predicts” and similar expressions which identify forward-looking statements, whether in the negative or the affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. These forward-looking statements are subject to risks, uncertainties and other factors, some of which are beyond our control, which could cause actual results to differ materially from those forecasted or anticipated in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this report. We undertake no obligation to update these statements or publicly release the result of any revision(s) to these statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

 

Key risks to our company are described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2019, and as may be supplemented by the risks described under Part II, Item 1A, of our quarterly reports on Form 10-Q and in our Current Reports on Form 8-K.

iii


 

PART I

FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

JUNE 30,

 

DECEMBER 31,

 

 

2019

 

2018

 

ASSETS:

 

 

 

 

 

 

Cash

$

30,331

 

$

122,893

 

Restricted cash

 

 

 

69,365

 

Accounts receivable, net of allowance for doubtful accounts

 

325,495

 

 

342,766

 

Prepaid expenses, deposits and other

 

32,771

 

 

25,205

 

Total current assets

 

388,597

 

 

560,229

 

Investments

 

12,705

 

 

11,205

 

Net property and equipment

 

344,951

 

 

317,030

 

Operating lease right-of-use assets

 

284,400

 

 

-

 

Radio broadcasting licenses

 

2,518,261

 

 

2,516,625

 

Goodwill

 

536,687

 

 

539,469

 

Assets held for sale

 

3,307

 

 

19,603

 

Other assets, net of accumulated amortization

 

35,716

 

 

56,197

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

4,124,624

 

$

4,020,358

 

 

LIABILITIES:

 

 

 

 

 

 

Accounts payable

$

8,891

 

$

1,858

 

Accrued expenses

 

62,439

 

 

58,449

 

Other current liabilities

 

98,714

 

 

118,438

 

Operating lease liabilities

 

37,979

 

 

-

 

Total current liabilities

 

208,023

 

 

178,745

 

Long-term debt, net of current portion

 

1,698,894

 

 

1,872,203

 

Operating lease liabilities, net of current portion

 

271,263

 

 

-

 

Deferred tax liabilities

 

545,808

 

 

545,982

 

Other long-term liabilities

 

52,994

 

 

89,168

 

Total long-term liabilities

 

2,568,959

 

 

2,507,353

 

Total liabilities

 

2,776,982

 

 

2,686,098

 

 

 

 

 

 

 

 

CONTINGENCIES AND COMMITMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Class A, B and C common stock

 

1,426

 

 

1,412

 

Additional paid-in capital

 

1,673,268

 

 

1,693,512

 

Accumulated deficit

 

( 326,828)

 

 

( 360,664)

 

Accumulated other comprehensive income (loss)

 

( 224)

 

 

-

 

Total shareholders' equity

 

1,347,642

 

 

1,334,260

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,124,624

 

$

4,020,358

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

2

 


 

ENTERCOM COMMUNICATIONS CORP.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(amounts in thousands, except share and per share data)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED

 

 

SIX MONTHS ENDED

 

 

JUNE 30,

 

 

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

$

380,665

 

$

372,124

 

 

$

689,670

 

$

672,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

Station operating expenses

 

279,170

 

 

275,839

 

 

 

528,155

 

 

531,563

 

Depreciation and amortization expense

 

10,964

 

 

10,666

 

 

 

22,069

 

 

19,137

 

Corporate general and administrative expenses

 

17,315

 

 

19,032

 

 

 

38,250

 

 

37,701

 

Integration costs

 

1,456

 

 

9,494

 

 

 

2,591

 

 

19,223

 

Restructuring charges

 

3,362

 

 

686

 

 

 

4,376

 

 

2,167

 

Impairment loss

 

-

 

 

28,988

 

 

 

-

 

 

28,988

 

Merger and acquisition costs

 

33

 

 

687

 

 

 

42

 

 

2,071

 

Other expenses related to financing

 

1,864

 

 

-

 

 

 

1,864

 

 

-

 

Net time brokerage agreement (income) fees

 

53

 

 

( 666)

 

 

 

93

 

 

( 1,092)

 

Net (gain) loss on sale or disposal of assets

 

1,686

 

 

( 154)

 

 

 

( 2,914)

 

 

( 315)

 

Total operating expense

 

315,903

 

 

344,572

 

 

 

594,526

 

 

639,443

 

OPERATING INCOME (LOSS)

 

64,762

 

 

27,552

 

 

 

95,144

 

 

33,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

24,944

 

 

25,706

 

 

 

50,164

 

 

49,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

1,781

 

 

-

 

 

 

1,781

 

 

-

 

OTHER (INCOME) EXPENSE

 

1,781

 

 

-

 

 

 

1,781

 

 

-

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT)

 

38,037

 

 

1,846

 

 

 

43,199

 

 

( 15,869)

 

INCOME TAXES (BENEFIT)

 

12,045

 

 

249

 

 

 

14,083

 

 

( 3,260)

 

NET INCOME (LOSS) AVAILABLE TO THE COMPANY - CONTINUING OPERATIONS

 

25,992

 

 

1,597

 

 

 

29,116

 

 

( 12,609)

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS - CONTINUING OPERATIONS

 

25,992

 

 

1,597

 

 

 

29,116

 

 

( 12,609)

 

Income from discontinued operations, net of income taxes (benefit)

 

-

 

 

844

 

 

 

-

 

 

1,172

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$

25,992

 

$

2,441

 

 

$

29,116

 

$

( 11,437)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS PER SHARE - BASIC

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations per share available to common shareholders - Basic

$

0.19

 

$

0.01

 

 

$

0.21

 

$

( 0.09)

 

Net income (loss) from discontinued operations per share available to common shareholders - Basic

$

-

 

$

0.01

 

 

$

-

 

$

0.01

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS PER SHARE - BASIC

$

0.19

 

$

0.02

 

 

$

0.21

 

$

( 0.08)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS PER SHARE - DILUTED

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 


 

Net income (loss) from continuing operations per share available to common shareholders - Diluted

$

0.19

 

$

0.01

 

 

$

0.21

 

$

( 0.09)

 

Net income (loss) from discontinued operations per share available to common shareholders - Diluted

$

-

 

$

0.01

 

 

$

-

 

$

0.01

 

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS PER SHARE - DILUTED

$

0.19

 

$

0.02

 

 

$

0.21

 

$

( 0.08)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

138,760,483

 

138,638,554

 

 

138,684,845

 

138,961,728

 

Diluted

139,074,229

 

139,263,363

 

 

139,221,904

 

138,961,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

4

 


 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

25,992

 

$

2,441

 

$

29,116

 

$

( 11,437)

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS),

 

 

 

 

 

 

 

 

 

 

 

NET OF TAXES (BENEFIT):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on derivatives,

 

 

 

 

 

 

 

 

 

 

 

net of taxes (benefit)

 

( 224)

 

 

-

 

 

( 224)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

$

25,768

 

$

2,441

 

$

28,892

 

$

( 11,437)

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

5

 


 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(amounts in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

Accumulated

 

 

 

 

Common Stock

 

Additional

 

Earnings

 

 

Other

 

 

 

 

Class A

 

Class B

 

Paid-in

 

(Accumulated

 

Comprehensive

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit)

 

 

Income (Loss)

 

Total

Balance, December 31, 2017

139,675,781

 

$

1,397

 

4,045,199

 

$

40

 

$

1,737,132

 

$

25,791

 

 

$

-

 

$

1,764,360

Net income (loss) available to the Company

-

 

 

-

 

-

 

 

-

 

 

-

 

 

( 13,878)

 

 

 

-

 

 

( 13,878)

Compensation expense related to granting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of stock awards

( 157,680)

 

 

( 2)

 

-

 

 

-

 

 

3,915

 

 

-

 

 

 

-

 

 

3,913

Issuance of common stock related to the Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan ("ESPP")

39,196

 

 

-

 

-

 

 

-

 

 

321

 

 

-

 

 

 

-

 

 

321

Exercise of stock options

10,000

 

 

-

 

-

 

 

-

 

 

13

 

 

-

 

 

 

-

 

 

13

Common stock repurchase

( 1,833,200)

 

 

( 18)

 

-

 

 

-

 

 

( 19,361)

 

 

-

 

 

 

-

 

 

( 19,379)

Purchase of vested employee restricted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock units

( 328,196)

 

 

( 3)

 

-

 

 

-

 

 

( 3,460)

 

 

-

 

 

 

-

 

 

( 3,463)

Payment of dividends on common stock

-

 

 

-

 

-

 

 

-

 

 

( 13,036)

 

 

-

 

 

 

-

 

 

( 13,036)

Dividend equivalents, net of forfeitures

-

 

 

-

 

-

 

 

-

 

 

342

 

 

-

 

 

 

-

 

 

342

Balance, March 31, 2018

137,405,901

 

$

1,374

 

4,045,199

 

$

40

 

 

1,705,866

 

$

11,913

 

 

$

-

 

$

1,719,193

Net income (loss) available to the Company

-

 

 

-

 

-

 

 

-

 

 

-

 

 

2,441

 

 

 

-

 

 

2,441

Compensation expense related to granting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of stock awards

1,198,734

 

 

12

 

-

 

 

-

 

 

3,728

 

 

-

 

 

 

-

 

 

3,740

Issuance of common stock related to the Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan ("ESPP")

60,386

 

 

1

 

-

 

 

-

 

 

387

 

 

-

 

 

 

-

 

 

388

Exercise of stock options

38,500

 

 

-

 

-

 

 

-

 

 

52

 

 

-

 

 

 

-

 

 

52

Purchase of vested employee restricted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock units

( 176,275)

 

 

( 2)

 

-

 

 

-

 

 

( 1,707)

 

 

-

 

 

 

-

 

 

( 1,709)

Payment of dividends on common stock

-

 

 

-

 

-

 

 

-

 

 

( 12,746)

 

 

-

 

 

 

-

 

 

( 12,746)

Dividend equivalents, net of forfeitures

-

 

 

-

 

-

 

 

-

 

 

127

 

 

-

 

 

 

-

 

 

127

Balance, June 30, 2018

138,527,246

 

$

1,385

 

4,045,199

 

$

40

 

$

1,695,707

 

$

14,354

 

 

$

-

 

$

1,711,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(amounts in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

Accumulated

 

 

 

Balance, December 31, 2018

137,180,213

 

 

1,372

 

4,045,199

 

 

40

 

 

1,693,512

 

 

( 360,664)

 

 

 

-

 

 

1,334,260

Net income (loss) available to the Company

-

 

 

-

 

-

 

 

-

 

 

-

 

 

3,125

 

 

 

-

 

 

3,125

Compensation expense related to granting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of stock awards

1,406,722

 

 

14

 

-

 

 

-

 

 

3,559

 

 

-

 

 

 

-

 

 

3,573

Issuance of common stock related to the Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan ("ESPP")

84,958

 

 

1

 

-

 

 

-

 

 

378

 

 

-

 

 

 

-

 

 

379

Exercise of stock options

180,300

 

 

2

 

-

 

 

-

 

 

242

 

 

-

 

 

 

-

 

 

244

Purchase of vested employee restricted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock units

( 204,499)

 

 

( 2)

 

-

 

 

-

 

 

( 1,424)

 

 

-

 

 

 

-

 

 

( 1,426)

Payment of dividends on common stock

-

 

 

-

 

-

 

 

-

 

 

( 12,913)

 

 

-

 

 

 

-

 

 

( 12,913)

Dividend equivalents, net of forfeitures

-

 

 

-

 

-

 

 

-

 

 

( 463)

 

 

-

 

 

 

-

 

 

( 463)

Application of amended leasing guidance

-

 

 

-

 

-

 

 

-

 

 

-

 

 

4,719

 

 

 

-

 

 

4,719

Balance, March 31, 2019

138,647,694

 

$

1,387

 

4,045,199

 

$

40

 

$

1,682,891

 

$

( 352,820)

 

 

$

-

 

$

1,331,498

Net income (loss) available to the Company

-

 

 

-

 

-

 

 

-

 

 

-

 

 

25,992

 

 

 

-

 

 

25,992

Compensation expense related to granting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of stock awards

( 38,774)

 

 

-

 

-

 

 

-

 

 

3,393

 

 

-

 

 

 

-

 

 

3,393

Issuance of common stock related to the Employee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan ("ESPP")

73,791

 

 

1

 

-

 

 

-

 

 

363

 

 

-

 

 

 

-

 

 

364

Purchase of vested employee restricted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock units

( 216,828)

 

 

( 2)

 

-

 

 

-

 

 

( 1,298)

 

 

-

 

 

 

-

 

 

( 1,300)

Payment of dividends on common stock

-

 

 

-

 

-

 

 

-

 

 

( 13,140)

 

 

-

 

 

 

-

 

 

( 13,140)

Dividend equivalents, net of forfeitures

-

 

 

-

 

-

 

 

-

 

 

1,059

 

 

-

 

 

 

-

 

 

1,059

Net unrealized gain (loss) on derivatives

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

 

( 224)

 

 

( 224)

Balance, June 30, 2019

138,465,883

 

$

1,386

 

4,045,199

 

$

40

 

$

1,673,268

 

$

( 326,828)

 

 

$

( 224)

 

$

1,347,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 


 

 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

 

SIX MONTHS ENDED

 

JUNE 30,

 

2019

 

2018

OPERATING ACTIVITIES:

 

 

 

 

 

Net income (loss) available to common shareholders

$

29,116

 

$

( 11,437)

 

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash provided by

 

 

 

 

 

(used in) operating activities:

 

 

 

 

 

Depreciation and amortization

 

22,069

 

 

19,137

Net amortization of deferred financing costs

 

 

 

 

 

(net of original issue discount and debt premium)

 

( 97)

 

 

159

Net deferred taxes (benefit) and other

 

( 3,752)

 

 

( 2,055)

Provision for bad debts

 

1,819

 

 

5,713

Net (gain) loss on sale or disposal of assets

 

( 2,914)

 

 

( 315)

Non-cash stock-based compensation expense

 

6,966

 

 

7,653

Net loss on extinguishment of debt

 

1,781

 

 

-

Deferred compensation

 

3,767

 

 

972

Impairment loss

 

-

 

 

28,988

Accretion expense (income), net of asset retirement obligation adjustments

 

34

 

 

31

 

 

 

 

 

 

Changes in assets and liabilities (net of effects of acquisitions, dispositions,

 

 

 

 

 

consolidation, and deconsolidation of Variable Interest Entities (VIEs)):

 

 

 

 

 

Accounts receivable

 

20,232

 

 

42,115

Prepaid expenses and deposits

 

( 7,739)

 

 

( 15,930)

Accounts payable and accrued liabilities

 

( 8,528)

 

 

( 20,981)

Accrued interest expense

 

3,104

 

 

( 5,090)

Accrued liabilities - long-term

 

( 7,561)

 

 

( 13,666)

Prepaid expenses - long-term

 

-

 

 

89

Net cash provided by (used in) operating activities

 

58,297

 

 

35,383

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Additions to property and equipment

 

( 38,710)

 

 

( 17,023)

Proceeds from sale of radio stations

 

 

 

 

 

and other assets

 

24,692

 

 

476

Purchases of radio stations

 

-

 

 

( 15,000)

Additions to amortizable intangible assets

 

( 2,003)

 

 

( 1,963)

Purchases of investments

 

( 1,500)

 

 

( 1,250)

Net cash provided by (used in) investing activities

 

( 17,521)

 

 

( 34,760)

 

8

 


 

ENTERCOM COMMUNICATIONS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

 

SIX MONTHS ENDED

 

JUNE 30,

 

2019

 

2018

FINANCING ACTIVITIES:

 

 

 

 

 

Borrowing under the revolving senior debt

 

119,000

 

 

83,325

Net proceeds from the notes

 

325,000

 

 

-

Payments of long-term debt

 

( 615,000)

 

 

( 27,997)

Payment for debt issuance costs

 

( 3,910)

 

 

-

Proceeds from issuance of employee stock plan

 

743

 

 

709

Proceeds from the exercise of stock options

 

242

 

 

65

Purchase of vested employee restricted stock units

 

( 2,726)

 

 

( 5,172)

Payment of dividends on common stock

 

( 24,917)

 

 

( 24,916)

Payment of dividend equivalents on vested restricted stock units

 

( 1,137)

 

 

( 866)

Repurchase of common stock

 

-

 

 

( 20,012)

Net cash provided by (used in) financing activities

 

( 202,703)

 

 

5,136

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

( 161,927)

 

 

5,759

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR

 

192,258

 

 

34,167

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

$

30,331

 

$

39,926

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

$

47,794

 

$

37,726

Income taxes

$

14,546

 

$

18,836

Dividends on common stock

$

24,917

 

$

24,916

Supplemental cash flow information

 

 

 

 

 

Tenant improvement allowance receivables

$

3,304

 

$

1,045

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

9

 


 

ENTERCOM COMMUNICATIONS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2019 AND 2018

 

1. BASIS OF PRESENTATION AND SIGNIFICANT POLICIES

 

The condensed consolidated interim unaudited financial statements included herein have been prepared by Entercom Communications Corp. and its subsidiaries (collectively, the “Company”) in accordance with: (i) generally accepted accounting principles (“U.S. GAAP”) for interim financial information; and (ii) the instructions of the Securities and Exchange Commission (the “SEC”) for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations and, therefore, the results shown on an interim basis are not necessarily indicative of results for a full year.

 

This Form 10-Q should be read in conjunction with the financial statements and related notes included in the Company’s audited financial statements as of and for the year ended December 31, 2018, and filed with the SEC on February 27, 2019, as part of the Company’s Annual Report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

 

The Company considers the applicability of any variable interest entities (“VIEs”) that are required to be consolidated by the primary beneficiary. As of June 30, 2019, there were no VIEs requiring consolidation in these financial statements. As of December 31, 2018, there was one VIE that required consolidation in these financial statements. During 2018, the Company entered into an agreement with a third party qualified intermediary (“QI”), under which the Company was primarily responsible for the oversight and completion of certain construction projects. This agreement related to the creation of leasehold improvement assets on property that had already been made available for tenant use. The Company believed it was the primary beneficiary of the VIE as the Company had the power to direct the activities that were most significant to the VIE and the Company had the obligation to absorb losses or the right to receive returns that would be significant to the VIE during the period of the agreement.

 

The use of a QI in a like-kind exchange enabled the Company to reduce its current tax liability in connection with certain asset dispositions. Under Section 1031 of the Internal Revenue Code (the “Code”), the property to be exchanged in the like-kind exchange was required to be received by the Company within 180 days. This period of time lapsed during the first quarter of 2019, at which point, the Company acquired the interests of the QI. This arrangement effectively transformed the QI from a consolidated VIE to a consolidated subsidiary of the Company.

 

Total results of operations of the VIE for the three and six months ended June 30, 2019 and the year ended December 31, 2018 were not significant. The VIE had no impact on the Company’s results of operations for the three and six months ended June 30, 2018. The consolidated VIE had a material amount of cash as of December 31, 2018, which was reflected as restricted cash on the consolidated balance sheet. Restrictions on these deposits lapsed during the first quarter of 2019. As a result, the Company does not present restricted cash at June 30, 2019. The VIE had no other assets or liabilities as of December 31, 2018. The assets of the Company’s consolidated VIE could only be used to settle the obligations of the VIE. There was a lack of recourse by the creditors of the VIE against the Company’s general creditors. Refer to Note 15, Contingencies And Commitments, for additional information.

 

There have been no material changes from Note 2, Significant Accounting Policies, as described in the notes to the Company’s financial statements contained in its Form 10-K for the year ended December 31, 2018, that was filed with the SEC on February 27, 2019, other than as described below.

 

Changes in Accounting Policies

 

In February 2016, the accounting guidance was modified to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The new guidance was effective for the Company as of January 1, 2019. The Company implemented the new leasing

10

 


 

guidance using a modified retrospective approach at the beginning of the period of adoption with a cumulative-effect adjustment to its accumulated deficit. Refer to Note 4, Leases, for additional information.

 

During the quarter ended June 30, 2019, the Company voluntarily changed the date of its annual broadcasting license and goodwill impairment test dates from April 1 to December 1. This change represents a change in method of applying an accounting principle. Refer to Note 5, Intangible Assets And Goodwill, for additional information.

 

Recent Accounting Pronouncements

 

All new accounting pronouncements that are in effect that may impact the Company’s financial statements have been implemented. The Company does not believe that there are any other new accounting pronouncements that have been issued (other than as noted below or those included in the notes to the Company’s financial statements contained in its Form 10-K for the year ended December 31, 2018, that was filed with the SEC on February 27, 2019) that might have a material impact on the Company’s financial position, results of operations or cash flows.

 

Leasing Transactions

 

As discussed above, the Company implemented the amended accounting guidance for leasing transactions on January 1, 2019. There was no impact to previously reported results of operations for any interim period. The most significant impact of the adoption of the new leasing guidance was the recognition of ROU assets and lease liabilities for operating leases on the balance sheet of $ 288.7 million and $ 306.2 million, respectively, on January 1, 2019. The difference between the ROU assets and lease liabilities recorded upon implementation is primarily attributable to deferred rent balances and unfavorable lease liabilities which were combined and presented net within the ROU assets. Refer to Note 4, Leases, for additional information.

 

 

Reclassifications

 

Certain reclassifications have been made to the prior year’s notes to the consolidated financial statements to conform to the presentation in the current year, which did not have a material impact on the Company’s previously reported financial statements.

 

2. BUSINESS COMBINATIONS

 

The Company records acquisitions under the acquisition method of accounting, and allocates the purchase price to the assets and liabilities based upon their respective fair values as determined as of the acquisition date. Merger and acquisition costs are excluded from the purchase price as these costs are expensed for book purposes and amortized for tax purposes.

 

2019 Cumulus Exchange

On February 13, 2019, the Company entered into an agreement with Cumulus Media Inc. (“Cumulus”) under which the Company exchanged three of its stations in Indianapolis, Indiana for two Cumulus stations in Springfield, Massachusetts, and one Cumulus station in New York City, New York (the “Cumulus Exchange”). The Company and Cumulus began programming the respective stations under local marketing agreements (“LMAs”) on March 1, 2019. Upon completion of the Cumulus Exchange on May 9, 2019, the Company: (i) removed from its records the assets of the divested stations, which were previously classified as assets held for sale; (ii) recorded the assets of the acquired stations at fair value; and (iii) recognized a loss on the exchange transaction of approximately $ 1.8 million.

Based on this timing, the Company’s consolidated financial statements for the six and three months ended June 30, 2019: (i) reflect the results of the acquired stations for a portion of the period in which the LMAs were in effect and after the completion of the Cumulus Exchange; and (ii) reflect the results of the divested stations for a portion of the period until the commencement date of the LMAs. The Company’s consolidated financial statements for the six and three months ended June 30, 2018: (i) do not reflect the results of the acquired stations; and (ii) reflect the results of the divested stations.

The allocations presented in the table below are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired FCC

11

 


 

broadcasting licenses, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assume an expected future growth rate of 1.0% and an estimated discount rate of 9.0%. The gross profit margins utilized were considered appropriate based on management’s expectations and experience in equivalent sized markets. The Company determines the fair value of the broadcasting licenses by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based on past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. Using a residual method, any excess between the fair values of the net assets acquired and the total fair value of stations acquired was recorded as goodwill. The Company recorded goodwill on its books, which is fully deductible for income tax purposes. Management believes that this exchange provides the Company with an opportunity to benefit from operational efficiencies from combining operations of the acquired stations with the Company’s existing stations within the Springfield, Massachusetts, and New York City, New York markets.

The following preliminary purchase price allocations are based upon the valuation of assets and these estimates and assumptions are subject to change as the Company obtains additional information during the measurement period, which may be up to one year from the acquisition date. These assets pending finalization include intangible assets. Differences between the preliminary and final valuation could be substantially different from the initial estimate.

 

 

 

 

 

 

 

Useful Lives in Years

 

 

Preliminary Value

 

From

 

To

 

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Equipment

 

$

844

 

3

 

7

Total tangible property

 

 

844

 

 

 

 

Radio broadcasting licenses

 

 

19,576

 

non-amortizing

Goodwill

 

 

2,080

 

non-amortizing

Total intangible and other assets

 

 

21,656

 

 

 

 

Total assets

 

$

22,500

 

 

 

 

Preliminary fair value of net assets acquired

 

$

22,500

 

 

 

 

 

2018 WXTU Transaction

 

On July 18, 2018, the Company entered into an agreement with Beasley Broadcast Group, Inc. (“Beasley”) to sell certain assets of WXTU-FM, serving the Philadelphia, Pennsylvania radio market for $ 38.0 million in cash (the “WXTU Transaction”). The Company also simultaneously entered into a time brokerage agreement (“TBA”) with Beasley where Beasley commenced operations of WXTU-FM on July 23, 2018. During the period of the TBA, the Company excluded net revenues and station operating expenses associated with operating WXTU-FM in the Company’s consolidated financial statements. The Company completed this disposition, which was subject to customary regulatory approvals, during the third quarter of 2018 and recognized a gain of approximately $ 4.4 million.

 

Based on this timing, the Company’s consolidated financial statements for the six and three months ended June 30, 2019 do not reflect the results of this divested station, whereas the Company’s consolidated financial statements for the six and three months ended June 30, 2018 do reflect the results of this divested station.

 

2018 Jerry Lee Transaction

 

On September 27, 2018, the Company completed a transaction to acquire the assets of WBEB-FM, serving the Philadelphia, Pennsylvania radio market from Jerry Lee Radio, LLC (“Jerry Lee”) for a purchase price of $ 57.5 million in cash, less certain working capital and other credits (the “Jerry Lee Transaction”). The Company used proceeds from the WXTU Transaction and cash on hand to fund this acquisition. Upon the completion of the WXTU

12

 


 

Transaction and the Jerry Lee Transaction, the Company will continue to operate six radio stations in the Philadelphia, Pennsylvania market.

 

On August 7, 2018, the Company entered into a TBA with Jerry Lee. During the period of the TBA, the Company included net revenues, station operating expenses and monthly TBA fees associated with operating WBEB-FM in the Company’s consolidated financial statements.

 

Based on this timing, the Company’s consolidated financial statements for the six and three months ended June 30, 2019 reflect the results of this acquired station, whereas the Company’s consolidated financial statements for the six and three months ended June 30, 2018 do not reflect the results of this acquired station.

 

The allocations presented in the table below are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired FCC broadcasting licenses, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assume an expected future growth rate of 1.0% and an estimated discount rate of 9.0%. The gross profit margins utilized were considered appropriate based on management’s expectations and experience in equivalent sized markets. The Company determines the fair value of the broadcasting licenses by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. Any excess of the purchase price over the assets acquired was reported as goodwill. The Company recorded goodwill on its books, which is fully deductible for income tax purposes. Management believes that this acquisition provides the Company with an opportunity to benefit from operational efficiencies from combining operations of the acquired station with the Company’s existing stations within the Philadelphia market.

 

The following preliminary purchase price allocations are based upon the valuation of assets and these estimates and assumptions are subject to change as the Company obtains additional information during the measurement period, which may be up to one year from the acquisition date. These assets pending finalization include intangible assets. Differences between the preliminary and final valuation could be substantially different from the initial estimates.

 

 

 

 

 

 

 

 

Useful Lives in Years

 

 

Preliminary Value

 

From

 

To

 

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Equipment

 

$

981

 

3

 

7

Total tangible property

 

 

981

 

 

 

 

Advertising contracts

 

 

477

 

1

 

1

Radio broadcasting licenses

 

 

27,346

 

non-amortizing

Goodwill

 

 

24,396

 

non-amortizing

Net working capital

 

 

3,234

 

not applicable

Total intangible and other assets

 

 

55,453

 

 

 

 

Total assets

 

$

56,434

 

 

 

 

 

 

 

 

 

 

 

 

Preliminary fair value of net assets acquired

 

$

56,434

 

 

 

 

 

2018 Emmis Acquisition

On April 30, 2018, the Company completed a transaction to acquire two radio stations in St. Louis, Missouri from Emmis Communications Corporation (“Emmis”) for a purchase price of $ 15.0 million in cash (the “Emmis Acquisition”). The Company borrowed under its revolving credit facility (the “Revolver”) to fund the acquisition. With this acquisition, the Company increased its presence in St. Louis, Missouri, to five radio stations.

13

 


 

On March 1, 2018, the Company entered into an asset purchase agreement and a TBA with Emmis to operate two radio stations. During the period of the TBA, the Company included in net revenues, station operating expenses and monthly TBA fees associated with operating these stations in the Company’s consolidated financial statements.

Based on this timing, the Company’s consolidated financial statements for the six and three months ended June 30, 2019 reflect the results of these acquired stations, whereas the Company’s consolidated financial statements for the six and three months ended June 30, 2018 reflect the results of these acquired stations for the portion of the period in which the TBA was in effect and after the completion of the transaction.

The allocations presented in the table below are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired FCC broadcasting licenses, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assume an expected future growth rate of 1.0% and an estimated discount rate of 9.0%. The gross profit margins utilized were considered appropriate based on management’s expectations and experience in equivalent sized markets. The Company determines the fair value of the broadcasting licenses by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. Any excess of the purchase price over the assets acquired was reported as goodwill.

The following table reflects the final allocation of the purchase price to the assets acquired and liabilities assumed.

 

 

 

 

 

 

 

 

Final Value

 

 

(amounts in thousands)

 

 

 

 

Assets

 

 

 

Equipment

 

$

1,558

Total tangible property

 

 

1,558

Advertiser relationships

 

 

207

Advertising contracts

 

 

114

Radio broadcasting licenses

 

 

12,785

Goodwill

 

 

332

Other noncurrent assets

 

 

4

Total intangible and other assets

 

 

13,442

Total assets

 

$

15,000

Fair value of assets acquired

 

$

15,000

 

2017 CBS Radio Business Acquisition

On February 2, 2017, the Company and its wholly-owned subsidiary (“Merger Sub”), entered into an Agreement and Plan of Merger (the “CBS Radio Merger Agreement”) with CBS Corporation (“CBS”) and its wholly-owned subsidiary CBS Radio Inc. (“CBS Radio”). Pursuant to the CBS Radio Merger Agreement, Merger Sub merged with and into CBS Radio with CBS Radio surviving as the Company’s wholly-owned subsidiary (the “Merger”). On November 13, 2018, the Company changed the name of CBS Radio Inc. to Entercom Media Corp. The parties to the Merger believe that the Merger was tax-free to CBS and its shareholders. The Merger was effected through a stock for stock Reverse Morris Trust transaction.

On November 17, 2017, the Company acquired the CBS Radio business from CBS to further strengthen its scale and capabilities to compete more effectively with other media for a larger share of advertising dollars. The purchase price was $ 2.56 billion and consisted of $ 1.17 billion of total equity consideration and $ 1.39 billion of assumed debt.

14

 


 

The CBS Radio business acquisition was completed pursuant to the CBS Radio Merger Agreement, dated February 2, 2017, by and among the Company, CBS, CBS Radio, and Merger Sub. On November 17, 2017, (i) Merger Sub was merged with and into CBS Radio, with CBS Radio continuing as the surviving corporation and a direct, wholly-owned subsidiary of the Company and (ii) each share of CBS Radio common stock was converted into one share of the Company’s common stock.

The Company issued 101,407,494 shares of its Class A common Stock to the former holders of CBS Radio common stock. At the time of the Merger, each outstanding restricted stock unit (“RSU”) and stock option with respect to CBS Class B common stock held by employees of CBS Radio was canceled and converted into equity awards for the Company’s Class A common stock. The conversion was based on the ratio of the volume-weighted average per share closing prices of CBS stock on the five trading days prior to the date of acquisition and the Company’s stock on the five trading days following the date of acquisition. Entercom Communications Corp. is considered to be the acquiring company for accounting purposes.

To complete the Merger, certain divestitures were required by the FCC in order to comply with the FCC’s ownership rules and policies. These divestitures consisted of: (i) the exchange transaction with iHeartMedia, Inc. (“iHeart”); (ii) a station exchange with Beasley; (iii) a cash sale to Bonneville International Corporation (“Bonneville”); and (iv) a cash sale to Educational Media Foundation (“EMF”).

Due to the structure of the transaction, there was no step-up in tax basis for the assets acquired as the Company assumed the existing tax basis in the assets of CBS Radio. The absence of a step-up in tax basis will limit the Company’s tax deductions in future years and impacts the amount of deferred tax liabilities recorded as part of purchase price accounting. If any of the Internal Distributions or the Final Distribution, each as defined in the CBS Radio Merger Agreement, does not qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 of the Code or the Merger does not qualify as a tax-free “reorganization” under Section 368(a) of the Code, including as a result of actions taken in connection with the distributions made by CBS to facilitate the Merger or as a result of subsequent acquisitions of shares of CBS, Entercom, or CBS Radio, then CBS and/or holders of CBS Common Stock that received Radio Common Stock in the Final Distribution may be required to pay substantial U.S. federal income taxes, and, in certain circumstances, CBS Radio and Entercom may be required to indemnify CBS for any such tax liability.

 

 

2017 Local Marketing Agreement: The Bonneville Transaction On November 1, 2017, the Company assigned assets to a trust and the trust subsequently entered into two LMAs with Bonneville. The LMAs, which were effective upon the closing of the Merger, allowed Bonneville to operate eight radio stations in the San Francisco, California and Sacramento, California markets. Of the eight radio stations operated by Bonneville, three were originally owned by the Company and the remaining five were originally owned by CBS Radio. The Company conducted an analysis and determined the assets of the eight stations satisfied the criteria to be presented as assets held for sale. The stations which were acquired from CBS Radio and were never operated by the Company are included within discontinued operations. On August 2, 2018, the Company entered into an asset purchase agreement with Bonneville to dispose of the eight radio stations in the San Francisco, California and Sacramento, California markets for $ 141.0 million in cash. During the year ended December 31, 2018, the Company closed on this sale, which resulted in a loss of approximately $ 0.4 million to the Company. Refer to Note 13, Assets Held for Sale and Discontinued Operations, for additional information.

 

Restructuring Charges

 

Restructuring charges were expensed as a separate line item in the consolidated statements of operations.

 

The components of restructuring charges are as follows:

 

15

 


 

 

Six Months Ended

 

June 30,

 

2019

 

2018

 

(amounts in thousands)

 

 

 

 

 

 

Costs to exit duplicative contracts

$

-

 

$

510

Workforce reduction

 

3,793

 

 

928

Lease abandonment costs

 

-

 

 

257

Other restructuring costs

 

583

 

 

472

Total restructuring charges

$

4,376

 

$

2,167

 

 

Three Months Ended

 

June 30,

 

2019

 

2018

 

(amounts in thousands)

 

 

 

 

 

 

Costs to exit duplicative contracts

$

-

 

$

349

Workforce reduction

 

3,100

 

 

337

Other restructuring costs

 

262

 

 

-

Total restructuring charges

$

3,362

 

$

686

 

Restructuring Plan

 

During the fourth quarter of 2017, the Company initiated a restructuring plan as a result of the integration of the CBS Radio stations acquired in November 2017. The restructuring plan included: (i) a workforce reduction and realignment charges that included one-time termination benefits and related costs; (ii) lease abandonment costs; and (iii) costs associated with realigning radio stations within the overlap markets between CBS Radio and the Company. A portion of unpaid restructuring charges as of June 30, 2019 were including in accrued expenses as these expenses are expected to be paid in less than one year.

 

The estimated amount of unpaid restructuring charges as of June 30, 2019 includes amounts in accrued expenses that are expected to be paid in less than one year and long-term restructuring costs for lease abandonment costs covering the remaining non-cancellable lease term.

 

 

Six Months

 

Twelve Months

 

Ended

 

Ended

 

June 30,

 

December 31,

 

2019

 

2018

 

(amounts in thousands)

 

 

 

 

 

 

Restructuring charges and lease abandonment costs, beginning balance

$

7,077

 

$

16,086

Additions resulting from the integration of CBS Radio

 

4,376

 

 

5,830

Payments

 

( 3,896)

 

 

( 14,839)

Restructuring charges and lease abandonment costs unpaid and outstanding

 

7,557

 

 

7,077

Restructuring charges and lease abandonment costs - noncurrent portion

 

( 419)