##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K x
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2003 or o
    
    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 0-15392 REGENT COMMUNICATIONS, INC.  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    31-1492857
(I.R.S. Employer
Identification No.)
 100 East RiverCenter Boulevard
Suite 900
Covington, Kentucky 41011
(Address of principal executive offices) (Zip Code)
(859) 292-0030
(Registrants telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value per share
(Title of class) Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x  No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes x  No o As of June 30, 2003, the last business day of the registrants most recently
completed second fiscal quarter, the aggregate market value of common stock
held by non-affiliates of the registrant was $226,060,402 based upon the
closing sale price of $6.14 on the Nasdaq Stock Markets National Market for
that date. (For purposes hereof, directors, executive officers and 10% or
greater stockholders have been deemed affiliates.) The number of common shares of registrant outstanding as of March 4, 2004 was
46,567,810. DOCUMENTS INCORPORATED BY REFERENCE Portions of registrants definitive Proxy Statement to be filed during
April 2004 in connection with the 2004 Annual Meeting of Stockholders presently
scheduled to be held on May 19, 2004 are incorporated by reference into Part
III of this Form 10-K.




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSIGNATURESEXHIBIT INDEXEX-10(E)EX-10(F)EX-10(G)EX-21EX-23EX-31(A)EX-31(B)EX-32(A)EX-32(B)    Table of Contents  REGENT COMMUNICATIONS, INC. INDEX TO ANNUAL REPORT
ON FORM 10-K PagePart IItem 1
    
    Business
    
    
    3Item 2
    
    Properties
    
    
    24Item 3
    
    Legal Proceedings
    
    
    24Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    25Part IIItem 5
    
    Market for Registrants Common Equity and RelatedStockholder Matters
    
    
    25Item 6
    
    Selected Financial Data
    
    
    26Item 7
    
    Managements Discussion and Analysis of FinancialCondition and Results of Operations
    
    
    27Item 7A
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    43Item 8
    
    Financial Statements and Supplementary Data
    
    
    45Item 9
    
    Changes in and Disagreements with Accountantson Accounting and Financial Disclosure
    
    
    86Item 9A
    
    Controls and Procedures
    
    
    86Part IIIItem 10
    
    Directors and Executive Officers of the Registrant
    
    
    86Item 11
    
    Executive Compensation
    
    
    86Item 12
    
    Security Ownership of Certain Beneficial Ownersand Management
    
    
    87Item 13
    
    Certain Relationships and Related Transactions
    
    
    87Item 14
    
    Principal Accounting Fees and Services
    
    
    87Part IVItem 15
    
    Exhibits, Financial Statement Schedules and Reports on Form 8-K
    
    
    87
 Regent Communications, Inc. is a holding company. We own and
operate our radio stations and hold our radio broadcast licenses in
separate subsidiaries. In this report, when we use the term
Regent and the pronouns we, our and us, we mean Regent
Communications, Inc. and all its subsidiaries, unless the context
otherwise requires. 2




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PART I 
 ITEM 1. BUSINESS. General Development of Business We are a radio broadcasting company focused on acquiring, developing and
operating radio stations in mid-sized and small markets. We currently own 54 FM
and 20 AM radio stations in 16 markets in California, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Michigan, Minnesota, New York, Pennsylvania and
Texas. We have entered into a written agreement to exchange our four radio
stations serving the Erie, Pennsylvania market and two stations serving the
Lancaster, Pennsylvania market for five radio stations serving the Bloomington,
Illinois market. In conjunction with the above exchange, we are currently
providing programming and certain other services to the Bloomington stations,
and the purchaser of the Erie and Lancaster stations is providing the same such
services to those stations. We have also entered into written agreements to
acquire two additional stations serving the Ft. Collins-Greeley, Colorado
market and currently provide programming and certain other services to one of
the stations pending completion of its purchase. After the completion of our
pending transactions, we will own 56 FM and 19 AM radio stations in 15 markets.
Our assembled clusters of radio stations rank first or second in terms of
revenue share in all of our markets that are ranked by BIA Publications, Inc.
in their Investing in Radio 2003 Market Report,except Albany, New York and
Grand Rapids, Michigan, where our clusters ranks third. Our primary strategy is to secure and maintain a leadership position in
the markets we serve and to expand into additional mid-sized and small markets
where we can achieve a leadership position. After we enter a market, we seek to
acquire stations that, when integrated with our existing operations, will allow
us to reach a wider range of demographic groups that appeal to advertisers,
increase revenue and achieve substantial cost savings. Additionally, we believe
that our advertising pricing on the basis of cost per thousand impressions,
combined with the added reach of our radio station clusters, allows us to
compete successfully for advertising revenue against non-radio competitors such
as print media, television and outdoor advertising. Relative to the largest radio markets in the United States, we believe
that the mid-sized and small markets represent attractive operating
environments because they are generally characterized by the following:  -
    
    a greater use of radio advertising compared to the national average;-
    
    substantial growth in advertising revenues as national and regional retailers expand into mid-sized and small markets;-
    
    less direct format competition due to a smaller number of stations in any given market; and-
    
    lower overall susceptibility to fluctuations in general economic conditions due to a lower percentage of national versus
local advertising revenues. We believe that these operating characteristics, coupled with the
opportunity to establish or expand radio station clusters within a specific
market, create the potential for revenue growth and cost efficiencies. Our portfolio of radio stations is diversified in terms of geographic
location, target demographics and format. We believe that this diversity helps
insulate us from downturns in specific markets and changes in format
preferences. 3




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Completed Acquisitions and Dispositions We completed the following acquisitions and dispositions of radio stations
during 2003 and 2004. The purchase prices set forth below were paid in cash,
except where otherwise indicated, and include, where applicable, amounts paid
under non-competition agreements, but do not include transaction-related costs. We completed the following acquisition in 2003: PurchasePrice (in
    
    DateSeller
    
    Market
    
    No. of Stations
    
    Call Letters
    
    millions)
    
    CompletedBrill Media Company
LLC and related
entities
    
    Lancaster-Reading,
PA
    
    
    2
    
    
    WIOV-AM
WIOV-FM
    
    $
    61.9
    (1)
    
    2/25/03Evansville, IN/Owensboro,
KY
    
    
    3
    
    
    WKDQ-FM
WBKR-FM
WOMI-AMFt.
Collins-Greeley, CO
    
    
    3
    
    
    KTRR-FM
KUAD-FM
KKQZ-FM(2)Duluth, MN
    
    
    4
    
    
    KKCB-FM
KLDJ-FM
KBMX-FM
WEBC-AM
 We completed the following acquisition in 2004: PurchaseNo. of
    
    
    
    Price (in
    
    DateSeller
    
    Market
    
    Stations
    
    Call Letters
    
    millions)
    
    CompletedClear Channel
Broadcasting, Inc.
and its affiliates
    
    Evansville, IN
    
    
    5
    
    
    WYNG-FM
WDKS-FM
WKRI-FM
WGBF-FM
WGBF-AM
    
    $
    8.0
    (3)
    
    01/28/04
 We completed the following disposition in 2004: Sale PriceNo. of
    
    
    
    (in
    
    DatePurchaser
    
    Market
    
    Stations
    
    Call Letters
    
    millions)
    
    CompletedClear Channel
Broadcasting, Inc.
and its affiliates
    
    Duluth, MN
    
    
    4
    
    
    KKCB-FM
KLDJ-FM
KBMX-FM
WEBC-AM
    
    $
    5.3
    (4)
    
    01/28/2004
 4




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(1) We assumed certain assets and liabilities in conjunction with the
Brill acquisition. Total cash paid, excluding transaction related costs
approximated $61.2 million. (2) KKQZ-FM, purchased as a construction permit, began broadcast operations
on November 1, 2002. (3) The purchase price consisted of $2.7 million in cash and substantially all
the assets of our four stations in Duluth, Minnesota. (4) We acquired substantially all the assets of five radio stations in
Evansville, Indiana in exchange for our four stations in Duluth, Minnesota and
the payment by us of $2.7 million in cash. Pending Transactions We currently have transactions pending which, if completed, will result in
the acquisition by us of seven radio stations and the disposal by us of six
radio stations. Closing of these transactions are subject to certain
conditions, including required governmental approvals. On January 10, 2003, we entered into an agreement to purchase
substantially all of the assets of KKPL-FM and KARS-FM, serving the Ft.
Collins-Greeley, Colorado market from AGM-Nevada, L.L.C. for $7.75 million.
The purchase price is payable in a combination of $5.0 million in cash and
$2.75 million in Regent common stock, based on a per share price equal to the
average daily closing price for the ten consecutive trading days ending on the
second trading day immediately preceding the closing date. In the event the
average share price for that period is less than $7.50 per share, we may, at
our sole discretion, reallocate the purchase price to increase the amount of
cash consideration and reduce the portion paid in Regent common stock. On
February 1, 2003, we began providing programming and other services to KKPL-FM
under a time brokerage agreement. We have placed $387,500 in escrow to secure
our obligations under this agreement. The FCC has given us approval on this
transaction and we expect to close sometime late in the second quarter or early
third quarter of 2004. Additionally, in the Ft. Collins-Greeley market, we have a pending
transaction in which we will receive $1.0 million in cash, net of our costs,
from another operator to move our antenna off the KTRR-FM tower to our KUAD-FM
tower that will enable us to have a better signal into the Ft. Collins-Greeley
market as well as relieving us of a long-term lease on the KTRR tower. We
anticipate completing this transaction sometime in the second quarter of 2004. On February 9, 2004, Regent entered into an exchange agreement with
Citadel Broadcasting Group (Citadel), whereby Regent agreed to exchange four
stations (WXKC-FM, WRIE-AM, WXTA-FM, and WQHZ-FM) serving the Erie,
Pennsylvania market and two stations (WIOV-AM and WIOV-FM) serving the
Lancaster-Reading, Pennsylvania market, plus a cash payment, for five stations
(WBNQ-FM, WBWN-FM, WTRX-FM, WJEZ-FM, and WJBC-AM) serving the Bloomington,
Illinois market. The cash payment will be calculated as a multiple of 7.5
times the excess of station operating income from the Bloomington stations over
that of the Erie and Lancaster-Reading stations for the twelve-month period
ended January 31, 2004. The term station operating income means operating
income (loss) before depreciation and amortization, corporate general and
administrative expenses, gain (loss) on sale of long-lived assets, and
impairment of goodwill and FCC licenses. Although station operating income is
not a measure of performance calculated in accordance with generally accepted
accounting principles, we believe that station operating income is accepted by
the broadcasting industry as a generally recognized measure of performance and
is used by analysts who report publicly on the performance of broadcasting
companies. Nevertheless, this measure should not be considered in isolation or
as a substitute for operating income (loss), net income (loss), net cash
provided by (used in) operating activities or any other measure for determining
our operating performance or liquidity that is calculated in accordance with
accounting principles generally accepted in the United States of America. The 5




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cash portion of the purchase price will be funded through borrowings under
the Companys credit facility. Effective February 1, 2004, Regent began
providing programming and other services to the Bloomington stations and
Citadel began providing the same such services to the Erie and Lancaster
stations. We expect to complete this transaction late in the second quarter or
early third quarter of 2004. Acquisition Strategy Our acquisition strategy is to expand within our existing markets and into
new mid-sized and small markets where we believe we can effectively use our
operating strategies. In considering new markets, we focus on those markets
that have a minimum of $8.0 million in gross radio advertising revenue where we
believe we can build a station cluster that will generate at least $1.0 million
in annual station operating income. Although significant competition exists
among potential purchasers for suitable radio station acquisitions throughout
the United States, we believe that there is currently less competition,
particularly from the larger radio operators, in the mid-sized and small
markets. After entering a market, we seek to acquire additional stations that
will allow us to reach a wider range of demographic groups to appeal to
advertisers and increase revenue. We also integrate these stations into our
existing operations in an effort to achieve substantial cost savings. We have
sold or will sell stations in different markets that did not or do not fit
within our existing acquisition strategy. We believe that the creation of strong station clusters in our local
markets is essential to our operating success. In evaluating an acquisition
opportunity in a new market, we assess our potential to build a leading radio
station cluster in that market over time. We will not consider entering a new
market unless we can acquire multiple stations in that market. We also analyze
a number of additional factors we believe are important to success, including
the number and quality of commercial radio signals broadcasting in the market,
the nature of the competition in the market, our ability to improve the
operating performance of the radio station or stations under consideration and
the general economic conditions of the market. We believe that our acquisition strategy, properly implemented, affords a
number of benefits, including:  -
    
    greater revenue and station operating income diversity;-
    
    improved station operating income through the consolidation of facilities and the elimination of redundant expenses;-
    
    enhanced revenue by offering advertisers a broader range of advertising packages;-
    
    improved negotiating leverage with various key vendors;-
    
    enhanced appeal to top industry management talent; and-
    
    increased overall scale, which should facilitate our capital raising activities. We have developed a process for integrating newly acquired properties into
our overall culture and operating philosophy, which involves the following key
elements:  -
    
    assess format quality and effectiveness so that we can refine station formats in order to increase audience and revenue
share; 6




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-
    
    upgrade transmission, audio processing and studio facilities;-
    
    expand and strengthen sales staff through active recruiting and in-depth training;-
    
    convert acquired stations to our communications network and centralized networked accounting system; and-
    
    establish revenue and expense budgets consistent with the programming and sales strategy and corresponding cost adjustments. From time to time, in compliance with applicable law, we enter into a time
brokerage agreement (under which separately owned and licensed stations agree
to function cooperatively in terms of programming, advertising, sales and other
matters), or a similar arrangement, with a target property prior to final
Federal Communication Commission (FCC) approval and the consummation of the
acquisition, in order to gain a head start on the integration process. Operating Strategy Our operating strategy focuses on maximizing our radio stations appeal to
listeners and advertisers and, consequently, increasing our revenue and station
operating income. To achieve these goals, we have implemented the following
strategies: Ownership of Strong Radio Station Clusters. We seek to secure and maintain
a leadership position in the markets we serve by owning multiple stations in
those markets. By coordinating programming, promotional and sales strategies
within each local station cluster, we attempt to capture a wider range of
demographic listeners to appeal to advertisers. We believe that the
diversification of our programming formats and inventory of available
advertising time strengthens relationships with advertisers, increasing our
ability to maximize the value of our inventory. We believe that operating
multiple stations in a market enhances our ability to market the advantages of
advertising on radio versus other media, such as newspapers and television. We believe that our ability to utilize the existing programming and sales
resources of our radio station clusters enhances the growth potential of both
new and underperforming stations while reducing the risks associated with the
implementation of station performance improvements, such as new format
launches. We believe that operating leading station clusters allows us to
attract and retain talented local personnel, who are essential to our operating
success. Furthermore, we seek to achieve cost savings within a market through
the consolidation of facilities, sales and administrative personnel, management
and operating resources, such as on-air talent, programming and music research,
and the reduction of other redundant expenses. Aggressive Sales and Marketing. We seek to maximize our share of local
advertising revenue in each of our markets through aggressive sales and
marketing initiatives. We provide extensive training through in-house sales and
time management programs and independent consultants who hold frequent seminars
and are available for consultation with our sales personnel. We emphasize
regular, informal exchanges of ideas among our management and sales personnel
across our various markets. We seek to maximize our revenue by utilizing
sophisticated inventory management techniques to provide our sales personnel
with frequent price adjustments based on regional and local market conditions.
We further strengthen our relationship with some advertisers by offering the
ability to create customer traffic through an on-site event staged at, and
broadcast from, the advertisers business location. We believe that, prior to
their acquisition, many of our newly acquired stations had underperformed in
sales, due primarily to undersized sales staffs. Accordingly, we have
significantly expanded the sales forces of many of our acquired stations. 7




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Targeted Programming and Promotion. To maintain or improve our position in
each market, we combine extensive market research with an assessment of our
competitors vulnerabilities in order to identify significant and sustainable
target audiences. We then tailor the programming, marketing and promotion of
each radio station to maximize its appeal to the targeted audience. We attempt
to build strong markets by:  -
    
    creating distinct, highly visible profiles for our on-air
personalities, particularly those broadcasting during morning drive
time, which traditionally airs between 6:00 a.m. and 10:00 a.m.;-
    
    formulating recognizable brand names for select stations; and-
    
    actively participating in community events and charities. Decentralized Operations. We believe that radio is primarily a local
business and that much of our success will be the result of the efforts of
regional and local management and staff. Accordingly, we decentralize much of
our operations at these levels. Each of our station clusters is managed by a
team of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of their particular market. Local
managers are responsible for preparing annual operating budgets and a portion
of their compensation is linked to meeting or surpassing their operating
targets. Corporate management approves each station clusters annual operating
budget and imposes strict financial reporting requirements to track station
performance. Corporate management is responsible for long range planning,
establishing corporate policies and serving as a resource to local management. Station Portfolio When our pending acquisition transactions are completed, we will own 56 FM
and 19 AM radio stations in 15 mid-sized and small markets. The following table
sets forth information about the stations that we own at December 31, 2003;
stations that we acquired subsequent to December 31, 2003; and stations that we
expect to own after giving effect to our pending transactions. As you review the information in the table below, you should note the
following:  -
    
    The abbreviation MSA in the table means the markets rank among the
largest metropolitan statistical areas in the United States.-
    
    In the Primary Demographic Target column, the letter A designates
adults, the letter W designates women and the letter M designates
men. The numbers following each letter designate the range of ages
included within the demographic group.-
    
    Station Cluster Rank by Market Revenue Share in the table is the
ranking, by radio cluster market revenue, of each of our radio
clusters in its market among all other radio clusters in that market.-
    
    We obtained all metropolitan statistical area rank information, market
revenue information and station cluster market rank information for
all of our markets from Investing in Radio 2003 Market Report,
published by BIA Publications, Inc. 8




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-
    
    We obtained all audience share information from the Fall 2003 Radio
Market Report published by The Arbitron Company. We derived station
cluster audience share based on persons ages 12 and over, listening
Monday through Sunday, 6:00 a.m. to 12:00 midnight.-
    
    N/A indicates the market has no MSA rank and is not rated by Arbitron. StationCluster
    
    StationRank by
    
    ClusterStation
    
    Primary
    
    Market
    
    12+Radio Market/
    
    
    
    
    
    Programming
    
    Demographic
    
    Revenue
    
    AudienceStation Call Letters
    
    MSA Rank
    
    Format
    
    Target
    
    Share
    
    ShareAlbany, NY
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    20.2WQBJ(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49WQBK(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49WABT(FM)
    
    
    
    
    
    
    80s
    
    
    
    A 25-54WGNA(FM)
    
    
    
    
    
    Country
    
    
    A 25-54WTMM(AM)
    
    
    
    
    
    Sports
    
    
    M 35+Bloomington, IL
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    40.4WJBC (AM)*
    
    
    
    
    
    News/talk
    
    
    A  35-54WBNQ (FM)*
    
    
    
    
    
    Hot AC
    
    
    W 25-54WBWN (FM)*
    
    
    
    
    
    Country
    
    
    A 25-54WTRX (FM)*
    
    
    
    
    
    Classic rock
    
    
    M 25-54WJEZ (FM)*
    
    
    
    
    
    Adult contemporary
    
    
    A 25-54Chico, CA
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    22.8KFMF(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49KALF(FM)
    
    
    
    
    
    Country
    
    
    A 25-54KQPT(FM)
    
    
    
    
    
    Alternative
    
    
    A 18-34KZAP(FM)
    
    
    
    
    
    Rhythmic CHR
    
    
    A 18-34Duluth, MN
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    23.1WEBC(AM)&
    
    
    
    
    
    News/Talk
    
    
    A 35+KLDJ(FM)&
    
    
    
    
    
    Oldies
    
    
    A 35+KKCB(FM)&
    
    
    
    
    
    Country
    
    
    A 25-54KBMX(FM)&
    
    
    
    
    
    Adult Contemporary
    
    
    A 25-54El Paso, TX
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    12.3KSII(FM)
    
    
    
    
    
    Hot Adult Contemporary
    
    
    W 25-54KLAQ(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49KROD(AM)
    
    
    
    
    
    News/Talk
    
    
    A 35+Erie, PA
    
    
    156
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    28.1WXKC(FM)#
    
    
    
    
    
    Adult Contemporary
    
    
    W 25-54WXTA(FM)#
    
    
    
    
    
    Country
    
    
    A 25-54WRIE(AM)#
    
    
    
    
    
    Nostalgia
    
    
    A 35+WQHZ(FM)#
    
    
    
    
    
    Classic Hits
    
    
    A 25-54
 9




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StationCluster
    
    StationRank by
    
    ClusterStation
    
    Primary
    
    Market
    
    12+Radio Market/
    
    
    
    
    
    Programming
    
    Demographic
    
    Revenue
    
    AudienceStation Call Letters
    
    MSA Rank
    
    Format
    
    Target
    
    Share
    
    ShareEvansville, IN
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    38.5WKDQ(FM)
    
    
    
    
    
    Country
    
    
    A 25-54WJLT(FM)@
    
    
    
    
    
    Country
    
    
    A  35-54WDKS(FM)@
    
    
    
    
    
    CHR
    
    
    A  18-34WYNG(FM)@
    
    
    
    
    
    Rock
    
    
    A  25-54WGBF(FM)@
    
    
    
    
    
    Rock
    
    
    A  18-34WGBF(AM)@
    
    
    
    
    
    Talk
    
    
    A 35+Flint, MI
    
    
    119
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    26.3WCRZ(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    W 25-54WWBN(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49WFNT(AM)
    
    
    
    
    
    Nostalgia
    
    
    A 35+WRCL(FM)
    
    
    
    
    
    Rhythmic CHR
    
    
    A  18-34WQUS(FM)
    
    
    
    
    
    Classic Hits
    
    
    A  25-54WLSP(AM)
    
    
    
    
    
    Variety
    
    
    A 35+Ft. Collins-Greeley, CO
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    18.6KUAD(FM)
    
    
    
    
    
    Country
    
    
    A 25-54KTRR(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    A 25-54KKQZ(FM)
    
    
    
    
    
    Classic Rock
    
    
    A 25-54KKPL(FM)*
    
    
    
    
    
    Alternative
    
    
    A  18-34KARS(FM)*
    
    
    
    
    
    Rock
    
    
    A 18-34Grand Rapids, MI
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    15.5WLHT(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    W 25-54WGRD(FM)
    
    
    
    
    
    New Rock
    
    
    M 18-49WTRV(FM)
    
    
    
    
    
    Soft Adult Contemporary
    
    
    W 35+WNWZ(AM)
    
    
    
    
    
    Talk
    
    
    A 35+WFGR(FM)
    
    
    
    
    
    Classical
    
    
    A    35+Lafayette, LA
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    26.4KPEL(FM)
    
    
    
    
    
    Talk
    
    
    A   35+KTDY(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    A   25-54KRKA(FM)
    
    
    
    
    
    Rhythmic CHR
    
    
    A  18-34KFTE(FM)
    
    
    
    
    
    Alternative
    
    
    A   18-34KMDL(FM)
    
    
    
    
    
    Country
    
    
    A   25-54KPEL(AM)
    
    
    
    
    
    Talk
    
    
    A   35+KROF(AM)
    
    
    
    
    
    Sports
    
    
    A   35+Lancaster-Reading, PA
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    9.0WIOV(AM)#
    
    
    
    
    
    Talk
    
    
    A   35+WIOV(FM)#
    
    
    
    
    
    Country
    
    
    A   25-54Owensboro, KY
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AWOMI(AM)
    
    
    
    
    
    News/Talk
    
    
    A   35+WBKR(FM)
    
    
    
    
    
    Country
    
    
    A   25-54
 10




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##### Table of Contents



StationCluster
    
    StationRank by
    
    ClusterStation
    
    Primary
    
    Market
    
    12+Radio Market/
    
    
    
    
    
    Programming
    
    Demographic
    
    Revenue
    
    AudienceStation Call Letters
    
    MSA Rank
    
    Format
    
    Target
    
    Share
    
    SharePeoria, IL
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    22.1WVEL(AM)
    
    
    
    
    
    Gospel
    
    
    A  35+WGLO(FM)
    
    
    
    
    
    Classic Rock
    
    
    M  25-54WIXO(FM)
    
    
    
    
    
    Alternative
    
    
    A  18-34WPIA(FM)
    
    
    
    
    
    CHR
    
    
    A  18-34WVEL(FM)
    
    
    
    
    
    CHR
    
    
    A  18-34WFYR(FM)
    
    
    
    
    
    Country
    
    
    A  25-54Redding, CA
    
    
    215
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    42.1KSHA(FM)
    
    
    
    
    
    Soft Adult Contemporary
    
    
    W 25-54KNNN(FM)
    
    
    
    
    
    CHR
    
    
    A 18-34KRDG(FM)
    
    
    
    
    
    Oldies
    
    
    A 35-54KRRX(FM)
    
    
    
    
    
    Rock
    
    
    M 18-49KNRO(AM)
    
    
    
    
    
    ESPN
    
    
    M 35+KQMS(AM)
    
    
    
    
    
    News/Talk/Sports
    
    
    A 35+St. Cloud, MN
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    22.6KMXK(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    W 25-54WWJO(FM)
    
    
    
    
    
    Country
    
    
    A 25-54WJON(AM)
    
    
    
    
    
    News/Talk
    
    
    A 35+KLZZ(FM)
    
    
    
    
    
    Classic Rock
    
    
    M 25-54KKSR(FM)
    
    
    
    
    
    Dance CHR
    
    
    A 18-34KXSS(AM)
    
    
    
    
    
    Adult Standards
    
    
    A 35-64Utica-Rome, NY
    
    
    151
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    38.0WODZ(FM)
    
    
    
    
    
    Oldies
    
    
    A 35-54WLZW(FM)
    
    
    
    
    
    Adult Contemporary
    
    
    W 25-54WFRG(FM)
    
    
    
    
    
    Country
    
    
    A 25-54WRUN(AM)
    
    
    
    
    
    Sports
    
    
    M 35+WIBX(AM)
    
    
    
    
    
    News/Talk
    
    
    A 35+Watertown, NY
    
    
    257
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    36.5WCIZ(FM)
    
    
    
    
    
    Classic Hits
    
    
    A 25-54WFRY(FM)
    
    
    
    
    
    Country
    
    
    A 25-54WTNY(AM)
    
    
    
    
    
    Talk
    
    
    A 35+WNER(AM)
    
    
    
    
    
    ESPN
    
    
    M 35+
   The symbol * indicates a station that is the subject of one of our pending
acquisitions; the symbol # indicates a station that we have entered into an
agreement to sell; the symbol @ indicates a station that we have acquired
subsequent to December 31, 2003; and the symbol & indicates a station that we
have disposed subsequent to December 31, 2003. The completion of each pending
acquisition or disposition is subject to certain conditions, including
governmental approvals. There can be no assurance that these conditions will be
satisfied in any particular case. 11




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##### Table of Contents



Advertising Sales Virtually all of our revenue is generated from the sale of local, regional
and national advertising for broadcast on our radio stations. In 2003,
approximately 85% of our net broadcast revenue was generated from the sale of
locally driven advertising. Additional broadcast revenue is generated from the
sale of national advertising, network compensation payments and other
miscellaneous transactions. The major categories of our advertisers include
telephone companies, retail merchants, restaurants, fast food chains,
automotive companies and grocery stores. Each stations local sales staff solicits advertising either directly from
the local advertiser or indirectly through an advertising agency. We pay a
higher commission rate to our sales staff for direct advertising sales. Through
direct advertiser relationships, we can better understand the advertisers
business needs and more effectively design advertising campaigns to sell the
advertisers products. We employ personnel in each of our markets to produce
commercials for the advertiser. In-house production combined with effectively
designed advertising establishes a stronger relationship between the advertiser
and the station cluster. National sales are made by a firm specializing in
radio advertising sales on the national level in exchange for a commission
based on net revenue. Regional sales, which we define as sales in regions
surrounding our markets to companies that advertise in our markets, are
generally made by our local sales staff. Depending on the programming format of a particular station, we estimate
the optimum number of advertising spots available. The number of advertisements
that can be broadcast without jeopardizing listening levels is limited in part
by the format of a particular station and by the volume of advertisements being
run on competing stations in the local market. Our stations strive to maximize
revenue by managing advertising inventory. Our stations adjust pricing based on
local market conditions and the ability to provide advertisers with an
effective means of reaching a targeted demographic group. Each of our stations
has a general target level of on-air inventory. This target level of inventory
may be different at different times of the day but tends to remain stable over
time. Much of our selling activity is based on demand for our radio stations
on-air inventory and, in general, we respond to this demand by varying prices
rather than our target inventory level for a particular station. Therefore,
most changes in revenue can be explained by demand-driven pricing changes. A stations listenership is reflected in ratings surveys that estimate the
number of listeners tuned to the station and the time they spend listening.
Each stations ratings are used by its advertisers and advertising
representatives to consider advertising with the station and are used by us to
chart audience levels, set advertising rates and adjust programming. The radio
broadcast industrys principal ratings service is The Arbitron Company, which
publishes periodic ratings surveys for significant domestic radio markets.
These surveys are our primary source of audience ratings data. We believe that radio is one of the most efficient and cost-effective
means for advertisers to reach specific demographic groups. Advertising rates
charged by radio stations are based primarily on the following:  -
    
    the supply of, and demand for, radio advertising time;-
    
    a stations share of audiences in the demographic groups targeted by advertisers, as measured by ratings surveys estimating
the number of listeners tuned to the station at various times; and-
    
    the number of stations in the market competing for the same demographic groups. Rates are generally highest during morning and afternoon commuting hours. 12




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##### Table of Contents



Competition The radio broadcasting industry is highly competitive. The success of each
station depends largely upon audience ratings and its share of the overall
advertising revenue within its market. Stations compete for listeners and
advertising revenue directly with other radio stations within their respective
markets. Radio stations compete for listeners primarily on the basis of program
content that appeals to a particular demographic group. Building a strong
listener base consisting of a specific demographic group in a market enables an
operator to attract advertisers seeking to reach those listeners. Companies
that operate radio stations must be alert to the possibility of another station
changing format to compete directly for listeners and advertisers. A stations
decision to convert to a format similar to that of another radio station in the
same geographic area may result in lower ratings and advertising revenue,
increased promotion and other expenses and, consequently, lower station
operating income. Factors that are material to a radio stations competitive position
include management experience, the stations local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. Management believes that radio stations that elect to take
advantage of joint arrangements such as local marketing agreements or joint
sales agreements may in certain circumstances have lower operating costs and
may be able to offer advertisers more attractive rates and services. Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. The operation of a radio broadcast station requires a
license from the FCC, and the number of radio stations that can operate in a
given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market, as well as by the FCCs
rules and policies regulating the number of stations that may be owned or
controlled by a single entity. A summary of certain of those rules and
policies can be found under the heading Federal Regulation of Radio
Broadcastingbelow. Our stations compete for advertising revenue with other stations and with
other media, including newspapers, broadcast television, cable television,
magazines, direct mail, coupons and outdoor advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies
that are being developed or introduced, such as the delivery of audio
programming by cable or direct broadcast satellite television systems, by
satellite-delivered digital audio radio service and by in-band digital audio
broadcasting. Two providers of satellite-delivered digital audio broadcasting
have commenced service and deliver by satellite to nationwide and regional
audiences, multi-channel, multi-format, digital radio services with sound
quality equivalent to compact discs. Furthermore, terrestrial in-band digital
audio broadcasting may deliver multi-channel, multi-format programming in the
same bands now used by AM and FM broadcasters. The delivery of information
through the Internet also could create a new form of competition, as could the
development of non-commercial low-power FM radio stations that serve small,
localized areas. We cannot predict what additional new services or other regulatory matters
might be considered in the future by the FCC, nor assess in advance what impact
those proposals or changes might have on our business. The radio broadcasting
industry historically has grown despite the introduction of new technologies
for the delivery of entertainment and information. A growing population and
greater availability of radios, particularly car and portable radios, have
contributed to this growth. There can be no assurances, however, that this
historical growth will continue. Employees At February 28, 2004, we employed approximately 887 persons. Eight of our
employees in 13




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##### Table of Contents



Watertown, New York are covered by a collective bargaining agreement. None of
our other employees are covered by collective bargaining agreements. We
consider our relations with our employees generally to be good. Federal Regulation of Radio Broadcasting Introduction.The radio broadcasting industry is subject to extensive and
changing regulation of, among other things, program content, advertising
content, technical operations and business and employment practices. Our
ownership, operation, purchase and sale of radio stations is regulated by the
FCC, which acts under authority derived from the Communications Act of 1934, as
amended. Among other things, the FCC:  -
    
    assigns frequency bands for broadcasting;-
    
    determines the particular frequencies, locations, operating powers and other technical parameters of stations;-
    
    issues, renews, revokes, conditions and modifies station licenses;-
    
    determines whether to approve changes in ownership or control of station licenses;-
    
    regulates equipment used by stations; and-
    
    adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment
practices of stations. The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Failure to
observe these or other rules and policies can result in the imposition of
various sanctions, including fines, the grant of abbreviated license renewal
terms or, for particularly egregious violations, the denial of a license
renewal application, the revocation of a license or the denial of FCC consent
to acquire additional radio stations. The summary is not a comprehensive
listing of all of the regulations and policies affecting radio stations. For
further information concerning the nature and extent of federal regulation of
radio stations, you should refer to the Communications Act, FCC rules and FCC
public notices and rulings. License Grant and Renewal. Radio stations operate under renewable
broadcasting licenses that are ordinarily granted by the FCC for maximum terms
of eight years. A station may continue to operate beyond the expiration date of
its license if a timely filed license renewal application is pending. During
the periods when renewal applications are pending, petitions to deny license
renewals can be filed by interested parties, including members of the public.
The FCC is required to hold hearings on a stations renewal application if a
substantial or material question of fact exists as to whether the station has
served the public interest, convenience and necessity. If, as a result of an
evidentiary hearing, the FCC determines that the licensee has failed to meet
certain requirements and that no mitigating factors justify the imposition of a
lesser sanction, then the FCC may deny a license renewal application.
Historically, FCC licenses have generally been renewed. We are not currently
aware of any facts that would prevent the timely renewal of our licenses to
operate our radio stations, although we cannot assure you that all of our
licenses will be renewed. The FCC classifies each AM and FM station. An AM station operates on
either a clear channel, regional channel or local channel. A clear channel is
one on which AM stations are assigned to serve wide areas. Clear channel AM
stations are classified as either: Class A stations, which operate on an
unlimited time 14




---



##### Table of Contents



basis and are designed to render primary and secondary service over an extended
area; Class B stations, which operate on an unlimited time basis and are
designed to render service only over a primary service area; or Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional channel
is one on which Class B and Class D AM stations may operate and serve primarily
a principal center of population and the rural areas contiguous to it. A local
channel is one on which AM stations operate on an unlimited time basis and
serve primarily a community and the suburban and rural areas immediately
contiguous thereto. Class C AM stations operate on a local channel and are
designed to render service only over a primary service area that may be reduced
as a consequence of interference. The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial
FM stations are classified as follows, in order of increasing power and antenna
height: Class A, B1, C3, B, C2, C1, C0 and C. In addition, the FCC under
certain circumstances subjects Class C FM stations that do not satisfy a
certain antenna height requirement to an involuntary downgrade in class to
Class C0. The following table sets forth the market, call letters, FCC license
classification, antenna height above average terrain (HAAT), power and
frequency of each of the stations that are owned and operated by us or that are
the subject of a pending acquisition or subsequent sale, and the date on which
each stations FCC license expires. Pursuant to FCC rules and regulations, many
AM radio stations are licensed to operate at a reduced power during the
nighttime broadcasting hours, which can result in reducing the radio stations
coverage during the nighttime hours of operation. Both daytime and nighttime
power ratings are shown, where applicable. For FM stations, the maximum
effective radiated power in the main lobe is given. ExpirationDate ofStation Call
    
    
    
    
    
    Power in
    
    
    
    FCCMarket
    
    Letters
    
    FCC Class
    
    HAAT in Meters
    
    Kilowatts
    
    Frequency
    
    LicenseAlbany, NY
    
    WQBJ(FM)
    
    B
    
    150
    
    
    50.0
    
    
    103.5 MHz
    
    06/01/06WQBK(FM)
    
    A
    
    92
    
    
    6.0
    
    
    103.9 MHz
    
    06/01/06WABT(FM)
    
    A
    
    107
    
    
    5.0
    
    
    104.5 MHz
    
    06/01/06WGNA(FM)
    
    B
    
    300
    
    
    12.5
    
    
    107.7 MHz
    
    06/01/06WTMM(AM)
    
    B
    
    N/A
    
    
    5.0
    
    
    1300 kHz
    
    06/01/06Bloomington, IL
    
    WJBC (AM)*
    
    C
    
    N/A
    
    
    1.0
    
    
    1230  kHz
    
    12/01/04WBNQ (FM)*
    
    B
    
    142
    
    
    50.0
    
    
    101.5 MHz
    
    12/01/04WBWN (FM)*
    
    B1
    
    100
    
    
    25.0
    
    
    104.1 MHz
    
    12/01/04WTRX (FM)*
    
    B1
    
    144
    
    
    12.0
    
    
    93.7 MHz
    
    12/01/04WJEZ (FM)*
    
    A
    
    149
    
    
    1.3
    
    
    98.9   MHz
    
    12/01/04Chico, CA
    
    KFMF(FM)
    
    B1
    
    344
    
    
    2.0
    
    
    93.9 MHz
    
    12/01/05KQPT(FM)
    
    B
    
    193
    
    
    28.0
    
    
    107.5 MHz
    
    12/01/05KALF(FM)
    
    B
    
    386
    
    
    7.0
    
    
    95.7 MHz
    
    12/01/05KZAP(FM)
    
    B1
    
    393
    
    
    1.5
    
    
    96.7 MHz
    
    12/01/05Duluth, MN
    
    WEBC(AM)&
    
    B
    
    N/A
    
    
    5.0
    
    
    560 kHz
    
    04/01/05KLDJ(FM)&
    
    C2
    
    251
    
    
    18.5
    
    
    101.7 MHz
    
    04/01/05KKCB(FM)&
    
    C1
    
    241
    
    
    100.0
    
    
    105.1 MHz
    
    04/01/05
 15




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##### Table of Contents



ExpirationDate ofStation Call
    
    
    
    
    
    Power in
    
    
    
    FCCMarket
    
    Letters
    
    FCC Class
    
    HAAT in Meters
    
    Kilowatts
    
    Frequency
    
    LicenseKBMX(FM)&
    
    C2
    
    278
    
    
    7.7
    
    
    107.7 MHz
    
    04/01/05El Paso, TX
    
    KSII(FM)
    
    C
    
    433
    
    
    98.0
    
    
    93.1 MHz
    
    08/01/05KLAQ(FM)
    
    C
    
    424
    
    
    88.0
    
    
    95.5 MHz
    
    08/01/05KROD(AM)
    
    B
    
    N/A
    
    
    5.0
    
    
    600 kHz
    
    08/01/05Erie, PA
    
    WXKC(FM)#
    
    B
    
    150
    
    
    50.0
    
    
    99.9 MHz
    
    08/01/06WRIE(AM)#
    
    B
    
    N/A
    
    
    5.0
    
    
    1260 kHz
    
    08/01/06WXTA(FM)#
    
    B1
    
    154
    
    
    10.0
    
    
    97.9 MHz
    
    08/01/06WQHZ(FM)#
    
    A
    
    187
    
    
    1.7
    
    
    102.3 MHz
    
    08/01/06Evansville, IN
    
    WKDQ(FM)
    
    C
    
    300
    
    
    98.0
    
    
    99.5 MHz
    
    08/01/04WYNG(FM)@
    
    B
    
    128
    
    
    50.0
    
    
    94.9 MHz
    
    12/01/04WDKS(FM)@
    
    A
    
    100
    
    
    6.0
    
    
    106.1 MHz
    
    08/01/04WJLT(FM)@
    
    B
    
    150
    
    
    50.0
    
    
    105.3 MHz
    
    08/01/04WGBF(FM)@
    
    A
    
    138
    
    
    3.2
    
    
    103.1 MHz
    
    08/01/04WGBF(AM)@
    
    B
    
    N/A
    
    5.0 daytime
    
    1280  kHz
    
    08/01/041.0 nightFlint, MI
    
    WCRZ(FM)
    
    B
    
    101
    
    
    50.0
    
    
    107.9 MHz
    
    10/01/04WWBN(FM)
    
    A
    
    149
    
    
    1.8
    
    
    101.5 MHz
    
    10/01/04WFNT(AM)
    
    B
    
    N/A
    
    5.0 daytime
    
    1470 kHz
    
    10/01/041.0 nightWRCL(FM)
    
    A
    
    133
    
    
    3.5
    
    
    93.7 MHz
    
    10/01/04WQUS(FM)
    
    A
    
    91
    
    
    3.0
    
    
    103.1 MHz
    
    10/01/04WLSP(AM)
    
    B
    
    N/A
    
    5.0 daytime
    
    1530 kHz
    
    10/01/041.0 nightFt. Collins-
Greeley, CO
    
    KUAD(FM)
    
    C1
    
    212
    
    
    100.0
    
    
    99.1 MHz
    
    04/01/05KTRR(FM)
    
    C2
    
    125
    
    
    50.0
    
    
    102.5 MHz
    
    04/01/05KKQZ(FM)
    
    C3
    
    168
    
    
    8.7
    
    
    94.3 MHz
    
    04/01/05KKPL(FM)*
    
    C2
    
    150
    
    
    50.0
    
    
    99.9 MHz
    
    10/01/05KARS(FM)*
    
    C
    
    372
    
    
    100.0
    
    
    102.9 MHz
    
    10/01/05Grand Rapids, MI
    
    WLHT(FM)
    
    B
    
    168
    
    
    40.0
    
    
    95.7 MHz
    
    10/01/04WGRD (FM)
    
    B
    
    180
    
    
    13.0
    
    
    97.9 MHz
    
    10/01/04WTRV(FM)
    
    A
    
    92
    
    
    3.50
    
    
    100.5 MHz
    
    10/01/04WNWZ (AM)
    
    D
    
    N/A
    
    1.0 daytime
    
    1410 kHz
    
    10/01/04.048 nightWFGR(FM)
    
    A
    
    150
    
    
    2.75
    
    
    98.7 MHz
    
    10/01/04
 16




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##### Table of Contents



ExpirationDate ofStation Call
    
    
    
    
    
    Power in
    
    
    
    FCCMarket
    
    Letters
    
    FCC Class
    
    HAAT in Meters
    
    Kilowatts
    
    Frequency
    
    LicenseLafayette, LA
    
    KMDL(FM)
    
    C2
    
    171
    
    
    38.0
    
    
    97.3 MHz
    
    06/01/04KRKA(FM)
    
    C1
    
    263
    
    
    97.0
    
    
    107.9 MHz
    
    06/01/04KFTE(FM)
    
    C2
    
    163
    
    
    42.0
    
    
    96.5 MHz
    
    06/01/04KTDY(FM)
    
    C
    
    300
    
    
    100.0
    
    
    99.9 MHz
    
    06/01/04KPEL(FM)
    
    C3
    
    89
    
    
    25.0
    
    
    105.1 MHz
    
    06/01/04KPEL(AM)
    
    B
    
    N/A
    
    1.0 daytime
    
    1420 kHz
    
    06/01/040.75 nightKROF(AM)
    
    D
    
    N/A
    
    1.0 daytime
    
    960 kHz
    
    06/01/04.095 nightLancaster-Reading,
PA
    
    WIOV(AM)#
    
    C
    
    N/A
    
    
    1.0
    
    
    1240 kHz
    
    08/01/06WIOV(FM)#
    
    B
    
    214
    
    
    25.0
    
    
    105.1 MHz
    
    08/01/06Owensboro, KY
    
    WOMI(AM)
    
    C
    
    N/A
    
    
    0.83
    
    
    1490 kHz
    
    08/01/04WBKR(FM)
    
    C
    
    320
    
    
    91.0
    
    
    92.5 MHz
    
    08/01/04Peoria, IL
    
    WGLO(FM)
    
    B1
    
    189
    
    
    7.0
    
    
    95.5 MHz
    
    12/01/04WVEL(FM)
    
    A
    
    137
    
    
    3.3
    
    
    101.1 MHz
    
    12/01/04WPIA(FM)
    
    A
    
    100
    
    
    6.0
    
    
    98.5 MHz
    
    12/01/04WVEL(AM)
    
    D
    
    N/A
    
    5.0 daytime
    
    1140 kHz
    
    12/01/04WFYR(FM)
    
    B1
    
    103
    
    
    23.5
    
    
    97.3 MHz
    
    12/01/04WIXO(FM)
    
    A
    
    178
    
    
    1.5
    
    
    99.9 MHz
    
    12/01/04Redding, CA
    
    KRRX(FM)
    
    C
    
    600
    
    
    100.0
    
    
    106.1 MHz
    
    12/01/05KNNN(FM)
    
    C2
    
    465
    
    
    1.6
    
    
    99.3 MHz
    
    12/01/05KQMS(AM)
    
    C
    
    N/A
    
    
    1.0
    
    
    1400 kHz
    
    12/01/05KSHA(FM)
    
    C
    
    475
    
    
    100.0
    
    
    104.3 MHz
    
    12/01/05KRDG(FM)
    
    C1
    
    379
    
    
    28.0
    
    
    105.3 MHz
    
    12/01/05KNRO(AM)
    
    B
    
    N/A
    
    10.0 daytime
    
    1670 kHz
    
    12/01/051.0 nightSt. Cloud, MN
    
    KMXK(FM)
    
    C2
    
    150
    
    
    50.0
    
    
    94.9 MHz
    
    04/01/05WJON(AM)
    
    C
    
    N/A
    
    
    1.0
    
    
    1240 kHz
    
    04/01/05WWJO(FM)
    
    C
    
    305
    
    
    97.0
    
    
    98.1 MHz
    
    04/01/05KKSR(FM)
    
    C2
    
    138
    
    
    50.0
    
    
    96.7 MHz
    
    04/01/05KLZZ(FM)
    
    C3
    
    126
    
    
    9.0
    
    
    103.7 MHz
    
    04/01/05KXSS(AM)
    
    B
    
    N/A
    
    2.5 daytime
    
    1390 kHz
    
    04/01/051.0 nightUtica-Rome, NY
    
    WODZ(FM)
    
    B1
    
    184
    
    
    7.4
    
    
    96.1 MHz
    
    06/01/06WLZW(FM)
    
    B
    
    201
    
    
    25.0
    
    
    98.7 MHz
    
    06/01/06WFRG(FM)
    
    B
    
    151
    
    
    100.0
    
    
    104.3 MHz
    
    06/01/06WIBX(AM)
    
    B
    
    N/A
    
    
    5.0
    
    
    950 kHz
    
    06/01/06WRUN(AM)
    
    B
    
    N/A
    
    5.0 daytime
    
    1150 kHz
    
    06/01/061.0 night
 17




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##### Table of Contents



ExpirationDate ofStation Call
    
    
    
    
    
    Power in
    
    
    
    FCCMarket
    
    Letters
    
    FCC Class
    
    HAAT in Meters
    
    Kilowatts
    
    Frequency
    
    LicenseWatertown, NY
    
    WCIZ(FM)
    
    A
    
    100
    
    
    6.0
    
    
    93.3 MHz
    
    06/01/06WFRY(FM)
    
    C1
    
    145
    
    
    97.0
    
    
    97.5 MHz
    
    06/01/06WTNY(AM)
    
    B
    
    N/A
    
    
    1.0
    
    
    790 kHz
    
    06/01/06WNER(AM)
    
    D
    
    N/A
    
    3.5 daytime
    
    1410 kHz
    
    06/01/060.058 night
   *
    
    Stations indicated with an asterisk (*) are subject to acquisition by us
under an existing agreement.#
    
    Stations indicated with a pound sign (#) are subject to disposal by us
under an existing agreement.@
    
    Stations indicated with an at sign (@) are stations that were acquired
subsequent to December 31, 2003.&
    
    Stations indicated with an ampersand sign (&) are stations that were disposed
subsequent to December 31, 2003. Transfers or Assignment of Licenses. The Communications Act prohibits the
assignment or transfer of a broadcast license without the prior approval of the
FCC. In determining whether to grant approval, the FCC considers a number of
factors pertaining to the licensee and proposed licensee, including:  -
    
    compliance with the various rules limiting common ownership of media
properties in a given market;-
    
    the character of the licensee and those persons holding attributable
interests in the licensee; and-
    
    compliance with the Communications Acts limitations on alien
ownership as well as compliance with other FCC regulations and
policies. To obtain FCC consent to assign or transfer control of a broadcast
license, appropriate applications must be filed with the FCC. If the
application involves a substantial change in ownership or control, the
application must be placed on public notice for not less than 30 days during
which time petitions to deny or other objections against the application may be
filed by interested parties, including members of the public. Once the FCC
grants an application, interested parties may seek reconsideration of that
grant for 30 days, after which time the FCC may for another ten days reconsider
the grant on its own motion. These types of petitions are filed from time to
time with respect to proposed acquisitions. Informal objections to assignment
and transfer of control applications may be filed at any time up until the FCC
acts on the application. If the application does not involve a substantial
change in ownership or control, it is a pro forma application. The pro forma
application is nevertheless subject to having informal objections filed against
it. When passing on an assignment or transfer application, the FCC is
prohibited from considering whether the public interest might be served by an
assignment or transfer of the broadcast license to any party other than the
assignee or transferee specified in the application. Multiple Ownership Rules. The Communications Act and FCC rules impose
specific limits on the number of commercial radio stations an entity can own in
a single market and the combination of radio stations, television stations and
newspapers that any entity can own in a single market. The radio
multiple-ownership rules may preclude us from acquiring certain stations we
might otherwise seek to acquire. The ownership rules also effectively prevent
us from selling stations in a market to a buyer that has reached its ownership
limit in the market unless that buyer divests other stations. The local radio
ownership rules are as follows: 18




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##### Table of Contents



-
    
    in markets with 45 or more commercial radio stations, ownership is
limited to eight commercial stations, no more than five of which can
be either AM or FM;-
    
    in markets with 30 to 44 commercial radio stations, ownership is
limited to seven commercial stations, no more than four of which can
be either AM or FM;-
    
    in markets with 15 to 29 commercial radio stations, ownership is
limited to six commercial stations, no more than four of which can be
either AM or FM; and-
    
    in markets with 14 or fewer commercial radio stations, ownership is
limited to five commercial stations or no more than 50.0% of the
markets total, whichever is lower, and no more than three of which
can be either AM or FM. On June 2, 2003, the FCC adopted rules which changed the methodology by
which it defines a particular radio market and counts stations to determine
compliance with the radio multiple ownership restrictions. Those new rules
would generally result in parties being able to own fewer radio stations in
Arbitron-rated markets than was the case under the previous rules. The FCCs
new rules also provide that parties who own groups of radio stations that
comply with the previous multiple ownership rules, but would not comply with
the new rules, will be allowed to retain those groups on a grandfathered
basis, but will not be allowed to transfer or assign those groups intact unless
such transfer or assignment is to certain eligible small businesses. On
September 3, 2003, the United States Court of Appeals for the Third Circuit
issued a stay of the FCCs new rules, which were to become effective on
September 4, 2003, pending the outcome of legal proceedings involving those
rules. Pending resolution of those proceedings, the FCC has continued to apply
its previous rules. If the FCCs new rules regarding radio multiple ownership
are upheld by the courts, our ability to transfer or assign our radio stations
as a group to a single buyer in certain markets will be limited and we may be
unable to acquire additional stations or clusters of stations in certain
markets. In addition to limits on the number of radio stations that a single owner
may own in a particular geographic market, the FCC also has cross-ownership
rules that limit or prohibit radio station ownership by the owner of television
stations or a newspaper in the same market. The FCCs radio/television
cross-ownership rules permit a single owner to own up to two television
stations, consistent with the FCCs rules on common ownership of television
stations, together with one radio station in all markets. In addition, an owner
will be permitted to own additional radio stations, not to exceed the local
radio ownership limits for the market, as follows:  -
    
    in markets where 20 media voices will remain after the consummation of
the proposed transaction, an owner may own an additional five radio
stations, or, if the owner only has one television station, an
additional six radio stations; and-
    
    in markets where ten media voices will remain after the consummation
of the proposed transaction, an owner may own an additional three
radio stations. A media voice includes each independently-owned, full power television and
radio station and each daily newspaper, plus one voice for all cable television
systems operating in the market. In addition to the limits on the number of radio stations and
radio/television combinations that a single owner may own, the FCCs
broadcast/newspaper cross-ownership rule prohibits the same owner from owning a
broadcast station and a daily newspaper in the same geographic market. 19




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As part of its June 2, 2003 order on broadcast ownership, the FCC adopted
new rules which would eliminate television-radio cross ownership restrictions
in markets with four or more television stations, and would relax
newspaper-broadcast cross ownership restrictions in markets with between four
and eight television stations (inclusive). Under these new rules, cross
ownership among newspapers, radio and television stations would not be
permitted in markets with fewer than four television stations and would not be
restricted in markets with nine or more television stations. These new rules
have been stayed pending the outcome of the legal proceedings before the Third
Circuit Court of Appeals described above, and in the meantime the FCC has
continued to apply its previous rules regarding cross ownership. The FCC generally applies its ownership limits to attributable interests
held by an individual, corporation, partnership or other association. In the
case of corporations directly or indirectly controlling broadcast licenses, the
interests of officers, directors, and those who, directly or indirectly, have
the right to vote 5.0% or more of the corporations voting stock are generally
attributable. In addition, certain passive investors are attributable if they
hold 20.0% or more of the corporations voting stock. The FCC temporarily
revoked the single majority shareholder exemption that provided that the
interest of minority shareholders in a corporation were not attributable if a
single entity or individual held 50% or more of that corporations voting
stock. However, the FCC grandfathered as non-attributable those minority stock
interests that were held as of the date of the revocation. On December 3, 2001,
the FCC reinstated the single majority shareholder exemption for all
transactions after the order. The FCC also has a rule, known as the equity-debt-plus rule, which causes
certain creditors or investors to be attributable owners of a station. Under
this rule, a major programming supplier or a same-market owner will be an
attributable owner of a station if the supplier or owner holds debt or equity,
or both, in the station that is greater than 33.0% of the value of the
stations total debt plus equity. A major programming supplier includes any
programming supplier that provides more than 15.0% of the stations weekly
programming hours. A same-market owner includes any attributable owner of a
media company, including broadcast stations, cable television, and newspapers,
located in the same market as the station, but only if the owner is
attributable under an FCC attribution rule other than the equity-debt-plus
rule. The attribution rules limit the number of radio stations we may acquire
or own in any market (and may also limit the ability of certain potential
buyers of stations owned by us from being able to purchase some or all of the
stations which they might otherwise wish to purchase from us). Alien Ownership Rules. The Communications Act prohibits the issuance or
holding of broadcast licenses by persons who are not U.S. citizens, whom the
FCC rules refer to as aliens, including any corporation if more than 20.0% of
its capital stock is owned or voted by aliens. In addition, the FCC may
prohibit any corporation from holding a broadcast license if the corporation is
controlled by any other corporation of which more than 25.0% of the capital
stock is owned of record or voted by aliens, if the FCC finds that the
prohibition is in the public interest. Our charter provides that our capital
stock is subject to redemption by us by action of the Board of Directors to the
extent necessary to prevent the loss of any license held by us, including any
FCC license. Time Brokerage. Over the past few years, a number of radio stations have
entered into what have commonly been referred to as time brokerage agreements
or local marketing agreements. While these agreements may take varying forms,
under a typical time brokerage agreement, separately owned and licensed radio
stations agree to enter into cooperative arrangements of varying sorts, subject
to compliance with the requirements of antitrust laws and with the FCCs rules
and policies. Under these arrangements, separately-owned stations could agree
to function cooperatively in programming, advertising sales and similar
matters, subject to the requirement that the licensee of each station maintain
independent control over the programming and operations of its own station. One
typical type of time brokerage agreement is a programming agreement 20




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between two separately-owned radio stations serving a common service area,
whereby the licensee of one station provides substantial portions of the
broadcast programming for airing on the other licensees station, subject to
ultimate editorial and other controls being exercised by the latter licensee,
and sells advertising time during those program segments. The FCCs rules provide that a radio station that brokers more than 15.0%
of its weekly broadcast time on another station serving the same market will be
considered to have an attributable ownership interest in the brokered station
for purposes of the FCCs multiple ownership rules. As a result, in a market
where we own a radio station, we would not be permitted to enter into a time
brokerage agreement with another local radio station in the same market if we
could not own the brokered station under the multiple ownership rules, unless
our programming on the brokered station constituted 15.0% or less of the
brokered stations programming time on a weekly basis. FCC rules also prohibit
a broadcast station from duplicating more than 25.0% of its programming on
another station in the same broadcast service (i.e., AM-AM or FM-FM), either
through common ownership of the two stations or through a time brokerage
agreement where the brokered and brokering stations which it owns or programs
serve substantially the same area. Radio stations may also enter into what are commonly known as joint sales
agreements. In a typical joint sales agreement, separately owned and licensed
stations agree to enter into cooperative arrangements involving the sale of
advertising time and the collection of proceeds from such sales, but involving
none or only a limited amount of programming time. Such arrangements are
subject to compliance with the requirements of the antitrust laws and the FCCs
rules and policies. In its June 2, 2003 rulemaking, the FCC determined that a
radio station that sold more than 15% of the weekly advertising time of another
station serving the same market would be considered to have an attributable
interest in that other station. These new rules have been stayed pending the
outcome of the legal proceedings before the Third Circuit Court of Appeals
described above, and in the meantime the FCC has continued to apply its
previous rule that joint sales agreements do not constitute attributable
relationships. Programming and Operation. The Communications Act requires broadcasters to
serve the public interest. Since 1981, the FCC gradually has relaxed or
eliminated many of the more formalized procedures it developed to promote the
broadcast of certain types of programming responsive to the needs of a
stations community of license. However, licensees continue to be required to
present programming that is responsive to community problems, needs and
interests and to maintain records demonstrating such responsiveness. Complaints
from listeners concerning a stations programming will be considered by the FCC
when it evaluates the licensees renewal application. However, listener
complaints, which are required to be maintained in the stations public file,
may be filed with and considered by the FCC at any time. Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, sponsorship
identifications, the advertisement of casinos and lotteries, employment
practices, obscene and indecent broadcasts and technical operations, including
limits on human exposure to radio frequency radiation. The FCC has adopted rules prohibiting employment discrimination by
broadcast stations on the basis of race, religion, color, national origin, and
gender; and requiring broadcasters to implement programs to promote equal
employment opportunities at their stations. These rules replace earlier rules
that were found by the federal Court of Appeals for the District of Columbia
Circuit to be unconstitutional. The rules generally require broadcasters to
widely disseminate information about full-time job openings to all segments of
the community to ensure that all qualified applicants have sufficient
opportunity to apply for the job, to send job vacancy announcements to
recruitment organizations and others in the community indicating an interest in
all or some vacancies at the station, and to implement a number of specific
longer-term recruitment outreach 21




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efforts, such as job fairs, internship programs, and interaction with
educational and community groups. Broadcasters must also file reports with the
FCC detailing outreach efforts, periodically certify their compliance with the
EEO rules, and file certain reports in their public files and with the FCC. The
applicability of these policies to part-time employment opportunities is the
subject of a pending further rule making proceeding. FCC decisions hold that a broadcast station may not deny a candidate for
federal political office a request for broadcast advertising time solely on the
grounds that the amount of time requested is not the standard length of time
which the station offers to its commercial advertisers. This policy has not had
a material impact on our programming and commercial advertising operations but
the policys future impact is uncertain. Proposed and Recent Changes. Congress and the FCC may in the future
consider and adopt new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, affect the operation, ownership
and profitability of our radio stations, result in the loss of audience share
and advertising revenue for our radio stations, and affect our ability to
acquire additional radio stations or finance such acquisitions. Such matters
could include:  -
    
    proposals to impose regulatory, spectrum use or other fees on FCC licensees;-
    
    proposals to impose streaming fees for radio;-
    
    changes to foreign ownership rules for broadcast licenses;-
    
    revisions to political broadcasting rules, including requirements that broadcasters provide free air time to candidates;-
    
    technical and frequency allocation matters;-
    
    proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;-
    
    changes in the FCCs attribution and multiple ownership policies;-
    
    changes to broadcast technical requirements;-
    
    proposals to allow telephone or cable television companies to deliver audio and video programming to the home through
existing phone, cable television or other communication lines; and-
    
    proposals to limit the tax deductibility of advertising expenses by advertisers. The FCC has selected In-Band On-Channel  as the exclusive technology for
terrestrial digital operations by AM and FM radio stations. The FCC has
authorized limited commencement of hybrid In-Band On-Channel  transmissions,
that is, simultaneous broadcast in both digital and analog format pending the
adoption of formal licensing and service rules. Nighttime operations by digital
AM stations have not yet been authorized and remain subject to further review.
The advantages of digital audio broadcasting over traditional analog
broadcasting technology include improved sound quality and the ability to offer
a greater variety of auxiliary services. In-Band On-Channel  technology would
permit a station to transmit radio programming in both analog and digital
formats, and eventually in digital only formats, using the bandwidth 22




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that the radio station is currently licensed to use. It is unclear what formal
licensing and service rules the FCC will adopt regarding In-Band On-Channel 
technology and what effect such regulations would have on our business or the
operations of our radio stations. It is also unclear what impact the
introduction of digital broadcasting will have on the markets in which we
compete. Finally, the FCC has adopted procedures for the auction of broadcast
spectrum in circumstances where two or more parties have filed for new or major
change applications, which are mutually exclusive. Such procedures may limit
our efforts to modify or expand the broadcast signals of our stations. We cannot predict what other matters might be considered in the future by
the FCC or Congress, nor can we judge in advance what impact, if any, the
implementation of any of these proposals or changes might have on our business. Federal Antitrust Considerations.The Federal Trade Commission and the
United States Department of Justice, which evaluate transactions to determine
whether those transactions should be challenged under the federal antitrust
laws, have been increasingly active recently in their review of radio station
acquisitions, particularly where an operator proposes to acquire additional
stations in its existing markets. For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules promulgated
thereunder, require the parties to file Notification and Report Forms with the
Federal Trade Commission and the Department of Justice and to observe specified
waiting period requirements before consummating the acquisition. During the
initial 30-day period after the filing, the agencies decide which of them will
investigate the transaction. If the investigating agency determines that the
transaction does not raise significant antitrust issues, then it will either
terminate the waiting period or allow it to expire after the initial 30 days.
On the other hand, if the agency determines that the transaction requires a
more detailed investigation, then, at the conclusion of the initial 30-day
period, it will issue a formal request for additional information. The issuance
of a formal request extends the waiting period until the 20th calendar day
after the date of substantial compliance by all parties to the acquisition.
Thereafter, the waiting period may only be extended by court order or with the
consent of the parties. In practice, complying with a formal request can take a
significant amount of time. In addition, if the investigating agency raises
substantive issues in connection with a proposed transaction, then the parties
frequently engage in lengthy discussions or negotiations with the investigating
agency concerning possible means of addressing those issues, including
persuading the agency that the proposed acquisition would not violate the
antitrust laws, restructuring the proposed acquisition, divestiture of other
assets of one or more parties, or abandonment of the transaction. These
discussions and negotiations can be time consuming, and the parties may agree
to delay completion of the acquisition during their pendency. At any time before or after the completion of a proposed acquisition, the
Federal Trade Commission or the Department of Justice could take such action
under the antitrust laws as it considers necessary or desirable in the public
interest, including seeking to enjoin the acquisition or seeking divestiture of
the business or other assets acquired. Acquisitions that are not required to be
reported under the Hart-Scott-Rodino Act may be investigated by the Federal
Trade Commission or the Department of Justice under the antitrust laws before
or after completion. In addition, private parties may under certain
circumstances bring legal action to challenge an acquisition under the
antitrust laws. As part of its increased scrutiny of radio station acquisitions, the
Department of Justice has stated publicly that it believes that commencement of
operations under time brokerage agreements, local marketing agreements, joint
sales agreements and other similar agreements customarily entered into in
connection with radio station transfers prior to the expiration of the waiting
period under the Hart-Scott-Rodino Act could 23




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violate the Hart-Scott-Rodino Act. In connection with acquisitions subject to
the waiting period under the Hart-Scott-Rodino Act, so long as the Department
of Justice policy on the issue remains unchanged, we would not expect to
commence operation of any affected station to be acquired under time brokerage
agreement, local marketing agreement or similar agreement until the waiting
period has expired or been terminated. Our Internet site (www.regentcomm.com) makes available to interested
parties our annual report on Form 10-K, quarterly reports on Form 10-Q, and
current reports on Form 8-K, and all amendments to those reports, as well as
all other reports and schedules we file electronically with the Securities and
Exchange Commission (the Commission), as soon as reasonably practicable after
such material is electronically filed with or furnished to the Commission.
Interested parties may also find reports, proxy and information statements and
other information on issuers that file electronically with the Commission at
the Commissions Internet site (http://www.sec.gov). 
 ITEM 2. PROPERTIES. The types of properties required to support each of our radio stations
include offices, studios, transmitter sites and antenna sites. A stations
studios are generally housed with its offices in business districts. The
transmitter sites and antenna sites are generally located so as to provide
maximum market coverage. We currently own studio facilities in Redding, California; Burton (Flint),
Michigan; Lafayette, Louisiana; Peoria, Illinois; St. Cloud, Minnesota; Marcy
(Utica-Rome), New York; Watertown, New York; Owensboro, Kentucky; Windsor (Ft.
Collins), Colorado; and Ephrata (Lancaster), Pennsylvania. We own transmitter
and antenna sites in Redding, California; Burton, Otisville, Millington and
Lapeer (Flint), Michigan; St. Cloud, Rice, Stearns County and Graham Township
(St. Cloud), Minnesota; Whitestown, Deerfield and Kirkland (Utica-Rome), New
York; Watertown and Rutland (Watertown), New York; Peoria County and Woodford
County (Peoria), Illinois; Lafayette and Abbeville (Lafayette), Louisiana;
Albany, New York; Grand Rapids, Michigan; Owensboro, Utica and Henderson
(Owensboro), Kentucky; Pierce, Windsor and Wellington (Ft. Collins), Colorado;
and Lancaster and Wyomissing (Lancaster), Pennsylvania. We expect to acquire
additional and dispose of certain real estate in connection with our pending
transactions. We lease our remaining studio and office facilities, including
corporate office space in Covington, Kentucky, and our remaining transmitter
and antenna sites. We do not anticipate any difficulties in renewing any
facility leases or in leasing alternative or additional space, if required. We
own substantially all of our other equipment, consisting principally of
transmitting antennae, towers, transmitters, studio equipment and general
office equipment. Substantially all of our personal property and equipment serve as
collateral for our obligations under our existing credit facility. 
 ITEM 3. LEGAL PROCEEDINGS. As previously reported, Regent Communications, Inc. and certain of its
officers were named as defendants in a class action lawsuit relating to our
initial public offering, which proceeding remains pending in the United States
district court for the Southern District of New York. The suit against Regent
is a related proceeding to the In re Initial Public Offering Securities
Litigation brought by various plaintiffs in connection with various initial
public offerings conducted during the applicable statute of limitations time
periods. Although the suit remains in its preliminary stages, the Regent
officers who were initially named as defendants have subsequently been
dismissed from the proceeding. In addition, settlement discussions are ongoing
with respect to the In re Initial Public Offering Securities Litigation, and
Regent expects to participate in a settlement that will effectively end its
participation in the litigation. The terms of the agreement have been 24




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reached and the settlement should be finalized in the near future.
Notwithstanding the foregoing, the outcome of this litigation remains uncertain
and we have not reserved for it. We currently and from time to time are involved in litigation incidental
to the conduct of our business, but we are not a party to any lawsuit or
proceeding that, in our opinion, is likely to have a material adverse effect on
us. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to our security holders during the fourth
quarter of the fiscal year ended December 31, 2003. 
 PART II 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Shares of our common stock have been quoted on The Nasdaq Stock Market
under the symbol RGCI since January 25, 2000, following effectiveness of the
registration statement for the initial public offering of our common stock. The
following table sets forth, for each of the calendar quarters indicated, the
reported high and low sales prices of our common stock as reported in the
Nasdaq National Market. High
    
    Low2003First quarter
    
    $
    6.65
    
    
    $
    4.50Second quarter
    
    $
    6.62
    
    
    $
    4.71Third quarter
    
    $
    7.05
    
    
    $
    4.97Fourth quarter
    
    $
    7.10
    
    
    $
    5.802002First quarter
    
    $
    8.88
    
    
    $
    4.90Second quarter
    
    $
    8.90
    
    
    $
    6.01Third quarter
    
    $
    7.00
    
    
    $
    4.26Fourth quarter
    
    $
    6.90
    
    
    $
    4.81
 As of March 4, 2004, there were approximately 267 holders of record of our
common stock. The number of record holders was determined from the records of
our transfer agent and does not include beneficial owners of common stock whose
shares are held in the names of securities brokers, dealers and registered
clearing agencies. We have never declared or paid cash dividends on our common stock and do
not intend to do so in the foreseeable future. In addition, our credit
agreement with our lenders prohibits the payment of cash dividends on our
common stock. 25




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ITEM 6. SELECTED FINANCIAL DATA. The selected financial data below should be read in conjunction with
our consolidated financial statements and related notes and Managements
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this report. SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data) YEAR ENDED DECEMBER 31,2003
    
    2002
    
    2001
    
    2000
    
    1999OPERATING RESULTS (1):Net broadcast revenues
    
    $
    80,578
    
    
    $
    70,390
    
    
    $
    53,745
    
    
    $
    44,107
    
    
    $
    23,854Operating income (loss)
    
    
    13,537
    
    
    
    9,460
    
    
    
    (3,078
    )
    
    
    831
    
    
    
    (612
    )Income (loss) before income taxes
and cumulative effect of
accounting change (2)
    
    
    9,668
    
    
    
    6,819
    
    
    
    (2,378
    )
    
    
    13,852
    
    
    
    (6,771
    )Cumulative effect of accounting change,
net of income taxes (3)
    
    
    
    
    
    
    (6,138
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    5,706
    
    
    
    (6,480
    )
    
    
    (1,713
    )
    
    
    13,852
    
    
    
    (6,771
    )Preferred stock dividend requirements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (629
    )
    
    
    (5,205
    )Preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,611
    )
    
    
    (17,221
    )Income (loss) applicable to common shares
    
    
    5,706
    
    
    
    (6,480
    )
    
    
    (1,713
    )
    
    
    (13,388
    )
    
    
    (29,197
    )BASIC AND DILUTED NET INCOME
(LOSS) PER COMMON SHARE:Income (loss) before cumulative effect
of accounting change
    
    $
    0.12
    
    
    $
    (0.01
    )
    
    $
    (0.05
    )
    
    $
    (0.42
    )
    
    $
    (121.65
    )Cumulative effect of accounting
change
    
    
    
    
    
    
    (0.14
    )
    
    
    
    
    
    
    
    
    
    
    Basic and diluted net income (loss)
per common share
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    (0.05
    )
    
    $
    (0.42
    )
    
    $
    (121.65
    )Weighted average number of common
shares used in calculation:Basic
    
    
    46,515
    
    
    
    43,177
    
    
    
    34,218
    
    
    
    31,715
    
    
    
    240Fully diluted (4)
    
    
    46,837
    
    
    
    43,177
    
    
    
    34,218
    
    
    
    31,715
    
    
    
    240
 DECEMBER 31,2003
    
    2002
    
    2001
    
    2000
    
    1999BALANCE SHEET DATA (1):Current assets
    
    $
    16,068
    
    
    $
    16,984
    
    
    $
    12,179
    
    
    $
    12,012
    
    
    $
    10,329Total assets
    
    
    373,301
    
    
    
    308,030
    
    
    
    306,356
    
    
    
    252,733
    
    
    
    83,727Current liabilities
    
    
    7,958
    
    
    
    7,948
    
    
    
    6,054
    
    
    
    4,902
    
    
    
    3,115Long-term debt and capital leases,
less current portion
    
    
    67,714
    
    
    
    11,449
    
    
    
    87,094
    
    
    
    45,094
    
    
    
    25,331Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,265Total stockholders equity (deficit)
    
    $
    283,798
    
    
    $
    278,490
    
    
    $
    208,338
    
    
    $
    198,420
    
    
    $
    (37,810
    )
  (1)
    
    Acquisitions in 2003, 2002, 2001, 2000, and 1999 affect comparability
among years (see Note 2 in Notes to
Consolidated Financial Statements).  (2)
    
    Under current accounting guidance, amounts formerly recorded as
extraordinary loss due to the write-off of unamortized deferred
finance costs are now included as a component of interest expense.
Those amounts previously recorded in extraordinary loss and now
included in interest expense are $1.1 million and $0.5 million for the years
2000 and 1999, respectively. In 2003, Regent wrote-off
approximately $1.0 million in unamortized deferred finance costs,
which are included as a component of interest expense.  (3)
    
    Refer to Note 8 of the Notes to Consolidated Financial
Statements. 26




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(4)
    
    Shares for fully diluted are the same as basic in years 1999
through 2002 as the effect of outstanding common stock
options and warrants was anti-dilutive in those years. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Cautionary Statement Concerning Forward-Looking Statements This Form 10-K includes certain forward-looking statements with respect to
our company and its business that involve risks and uncertainties. These
statements are influenced by our financial position, business strategy,
budgets, projected costs and the plans and objectives of management for future
operations. We use words such as anticipate, believe, plan, estimate,
expect, intend, project and other similar expressions. Although we
believe our expectations reflected in these forward-looking statements are
based on reasonable assumptions, we cannot assure you that our expectations
will prove correct. Actual results and developments may differ materially from
those conveyed in the forward-looking statements. For these statements, we
claim the protections for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Important factors that could cause actual results to differ materially
from the expectations reflected in the forward-looking statements made in this
Form 10-K include changes in general economic, business and market conditions,
as well as changes in such conditions that may affect the radio broadcast
industry or the markets in which we operate, including, in particular, the
current political unrest and ongoing war on terrorism in the Middle East,
increased competition for attractive radio properties and advertising dollars,
fluctuations in the cost of operating radio properties, our ability to manage
our growth, our ability to integrate our acquisitions, and changes in the
regulatory climate affecting radio broadcast companies. Further information on
other factors that could affect the financial results of Regent Communications,
Inc. is included in Regents other filings with the Securities and Exchange
Commission. These documents are available free of charge at the Commissions
website at http://www.sec.gov and/or from Regent Communications, Inc. The
forward-looking statements speak only as of the date on which they are made,
and we undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this Form 10-K. If we do
update one or more forward-looking statements, you should not conclude that we
will make additional updates with respect to those or any other forward-looking
statements. Executive overview We formed Regent in November 1996 to acquire, own and operate clusters of
radio stations in mid-sized and small markets. Our primary objective is to
increase Regents value to our stockholders by growing the number of radio
stations and markets in which we operate and by improving the financial
performance of the stations we own and operate in those markets. We measure
our progress by evaluating our ability to continue to increase the number of
stations we own and to improve the post-acquisition performance of the radio
stations that we acquire. Growth in radio stations and markets. Since our inception, we have
negotiated 35 separate transactions for the acquisition and disposition of
radio stations in various markets. We have grown rapidly to our current size
of 75 radio stations in fifteen markets. We achieved this growth through
completed and pending acquisitions of 108 stations in 26 markets and the sale
or exchange of 33 stations in eleven markets. We expect to continue to grow our
company by entering new markets where we see growth potential. 27




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Additionally, we seek to continue to strategically upgrade our presence in each
of our markets through additional acquisitions and to continue to enhance our
radio portfolio by selling or exchanging existing stations for stations in
markets where there is more opportunity for growth.Of our radio station
portfolio, 35 stations have been owned or operated by our Company for less than
three years. We consider this group as being in the start-up or developmental
stages and are the stations that have the most opportunity for improved results
going forward. Our strategy is illustrated by our February 2003 acquisition of 12 radio
stations in four markets from Brill Media Company LLC. That acquisition
positioned us to negotiate the following additional four complementary
transactions (See Note 2 in the Notes to Consolidated Financial statements),
which strengthened our position in certain markets and allowed us to enter a
new, more attractive market:  
    
    The exchange of four radio stations in Duluth, Minnesota that
we had acquired in the Brill transaction, for five radio stations
serving the Evansville, Indiana market, a market that we already have
a presence in through the Brill transaction. This transaction was
completed in January 2004.
    
    The pending purchase of two radio stations serving the Ft.
Collins-Greeley, Colorado market, one of which we began providing
programming and other services to in February 2003.
    
    The exchange of six radio stations we currently own in two
markets, Erie and Lancaster, Pennsylvania for five radio stations
serving the Bloomington, Illinois market. In February 2004, we began
providing programming and other services to the stations we intend to
acquire, and the purchaser of the stations we intend to sell began
providing the same such services to those stations.
    
    The pending transaction in Ft. Collins-Greeley in which we will
receive $1.0 million in cash, net of our costs, from another operator
to move our antenna off the KTRR-FM tower to our KUAD-FM tower, which
will enable us to have a better signal into the Ft. Collins-Greeley
market as well as relieve us of the long-term lease obligation on the
KTRR tower. In order to fuel our growth, we have obtained funds from a variety of
financing transactions, including our January 2000 initial public offering, our
November 2001 private placement of common stock, our April 2002 public offering
of common stock, and our credit facilities from financial institutions. After
giving effect to our pending transactions, we currently have available $69.7
million under our current credit facilities for future acquisitions and other
purposes, subject to the terms and conditions of our credit facility.
Additionally, subject to market conditions, Regents financial performance and
other factors, we have the ability to quickly access the public markets for up
to approximately $171.2 million through additional public offerings of common
or preferred stock and/or various debt securities pursuant to our currently
effective shelf registration on file with the Securities and Exchange
Commission. Performance of our stations and markets. The principal source of our
revenue is the sale of broadcasting time on our radio stations for advertising.
Our revenue is driven primarily by the amount of advertising time that we sell
and the advertising rates that our radio stations are able to charge. The
advertising rates are based upon a stations ability to attract audiences in
the demographic groups targeted by its advertisers, as measured principally by
periodic Arbitron Radio Market Reports. In evaluating the performance of our
various radio stations in our various markets, we focus on same station results
as well as overall growth in our revenues and profitability. We believe that
meaningful quarter-to-quarter comparisons can be made for results of operations
for those markets in which we have been operating for five full quarters,
exclusive of stations acquired or disposed of during those periods.
Additionally, barter is excluded in this 28




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comparison, as it customarily results in volatility between quarters, although
differences over the full year are not material. The advertising environment for radio in 2003 was comparable to 2002, as
advertiser demand for air time was sluggish. The war in Iraq slowed what
appeared to be a promising first quarter after a relatively strong start in
January and February of 2003. The war, combined with the lingering events of
September 11, 2001 and generally weak economic conditions, created a difficult
two-year period for the radio industry as a whole, including Regent. We
anticipate that the demand for advertising will improve somewhat in 2004.
While political advertising was less than 1% of our revenue stream in 2003, we
expect to see a bigger impact in 2004 as it is a presidential election year.
We also anticipate that the 2004 Olympics will generate additional radio
advertising because some advertisers will be unable to obtain television
airtime for advertising and typically look to increased radio advertising as an
alternative. Our financial results are dependent on a number of factors, including the
general strength of the local and national economies, population growth, the
ability to provide popular programming, local market and regional competition,
relative efficiency of radio broadcasting compared to other advertising media,
signal strength and government regulation and policies. From time to time, the
markets in which we operate experience weak economic conditions that may
negatively affect our revenue. We believe, however, that this impact is
somewhat mitigated by our diverse geographical presence. Our financial results are seasonal. As is typical in the radio
broadcasting industry, we expect our first calendar quarter to produce the
lowest revenues for the year, and the fourth calendar quarter to produce the
highest revenues for the year. Our operating results in any period may be
affected by the incurrence of advertising and promotion expenses that do not
necessarily produce commensurate revenues until the impact of the advertising
and promotion is realized in future periods. To enhance the operations of our stations we have organized oversight of
the radio stations into four regions with a regional vice president responsible
for the operations in each region as well as their own market. The synergies
and idea sharing that has been generated by this alignment has been strategic
as we continue to develop our stations. Additionally, we have invested in our
corporate infrastructure to accommodate our acquisition strategy. We believe
that we are well positioned to rapidly and significantly increase the size of
our company, with relatively minimal increases in corporate overhead. Prior to 2002, and excluding gains on the sale or exchange of radio
stations, we have historically generated net losses, primarily as a result of
significant non-cash charges for depreciation and amortization relating to the
acquisitions of radio stations and interest charges on outstanding debt. The
FCC licenses and goodwill attributable to substantially all of our radio
stations have historically been amortized on a straight-line method over a 15-
to 40-year period. Upon adoption of SFAS 142 in January 2002, we ceased
amortizing all goodwill and FCC licenses. Additionally, the goodwill and FCC
licenses that we recorded for acquisitions that we completed subsequent to July
1, 2001, were not amortized due to this new guidance. Based upon the large
number of acquisitions we consummated within the last three years, we
anticipate that depreciation charges will continue to be significant for
several years. To the extent that we complete additional acquisitions, our
interest expense and depreciation charges related to property and equipment and
other intangible assets are likely to increase. The Sarbanes-Oxley Act of
2002 - Section 404 The Sarbanes-Oxley Act of 2002 was enacted on July 30, 2002, largely in
response to a number of major corporate and accounting scandals involving some
of the largest and well-known companies in the 29




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United States. In the second half of 2002 and in fiscal year 2003, we have
expended significant internal resources to comply with the new corporate
governance mandates contained in this law and related regulations adopted by
the Securities and Exchange Commission, the Department of Labor and the Nasdaq
National Market. Section 404 of the Sarbanes-Oxley Act becomes effective this
year and it requires that by December 31, 2004, we must:  
    
    Document and test the internal controls over financial
reporting;
    
    Form an evaluation, based on sufficient evidence, as to the
overall effectiveness of our system of internal controls over
financial reporting and;
    
    Issue an annual assertion on the effectiveness of internal
control over financial reporting beginning with the year ended
December 31, 2004. We will incur approximately $0.6 million in increased costs in 2004 to
comply with Section 404 and we are uncertain as to the long term cost effects
at this time. Our external auditors must review the work performed by
management and perform independent tests of the internal controls and will then
issue a report on internal control over financial reporting. We are currently
in the process of documenting all of the financial processes and internal
controls in all of our radio stations as well as in the corporate office and
anticipate testing our controls in the second quarter of 2004. Any weaknesses
in our internal controls that are found during the testing will be remediated
and then retested. We believe that we will be in full compliance with Section
404 by the end of 2004. Critical Accounting Policies The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make judgments and estimates that affect the reported amounts of
assets, liabilities, revenues, and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, the most significant of which include establishing allowances for
doubtful accounts, allocating the purchase price of acquisitions, evaluating
the realizability of our deferred tax assets, determining the
recoverability of our long-lived assets and evaluating our goodwill
and indefinite-lived intangible assets for impairment. The basis for our estimates are
historical experience and various assumptions that are believed to be
reasonable under the circumstances, given the available information at the time
of the estimate, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily available
from other sources. Actual results may differ from these estimates under
different assumptions and conditions. We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements. 30




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Goodwill and Indefinite-Lived Intangible Assets- Our FCC licenses qualify
as indefinite-lived intangible assets, and represent a significant portion
of the assets on our balance sheet. We apply a fair value approach
employing a discounted cash flow methodology to test impairment of both
indefinite-lived intangible assets and goodwill on a market by market
basis. To arrive at a value for discounted cash flow of a market,
management relies upon estimates of future cash flows and the effects of
changes in business conditions. Local economic conditions in each of our
markets could impact whether an FCC license or goodwill is impaired, as a
decrease or increase in market revenue could negatively or positively impact
discounted cash flows. Additionally, other factors such as interest rates,
the performance of the S&P 500, as well as capital expenditures can affect
the discounted cash flow analysis. To the extent that the carrying value
exceeds the fair value of the assets, an impairment loss will be recorded
in operating income.Impairment of Long-Lived Assets Our long-lived assets to be held and
used (fixed assets and definite-lived intangible assets) are reviewed for
impairment whenever events or circumstances indicate that the carrying
amount may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposal of the asset. If we
were to determine that the carrying amount of an asset was not
recoverable, we would record an impairment loss for the difference between
the carrying amount and the fair value of the asset. We determine the
fair value of our long-lived assets based upon the market value of similar
assets, if available, or independent appraisals, if necessary. Long-lived
assets to be disposed of and/or held for sale are reported at the lower of
carrying amount or fair value, less cost to sell. We determine the fair
value of these assets in the same manner as described for assets held and
used.The amount of intangibles with definite lives that we have recorded
is not material.Deferred Tax Assets- At December 31, 2003, we had a deferred tax asset of
approximately $16.9 million before valuation allowance, the primary
component of which is our net operating loss carryforwards. While we have
a valuation allowance of $3.9 million set up for tax assets expiring
through 2016, we have determined that it is not necessary to record a
valuation allowance against our net operating loss carryforwards for years
2017 through 2023, based on estimated future taxable income during those
years. Our estimated future taxable income in those periods takes into
consideration the run-off of significant tax amortization related to
existing FCC licenses and deductible goodwill by 2016. However, there is
no assurance that our projections will be achieved, and if our taxable
income projections fall short, we most likely would need to record
additional valuation allowance against the deferred tax assets that would
not be utilized. The need to record an additional valuation allowance
against our deferred tax assets is reviewed quarterly, and if we were to
determine that we would be unable to realize a portion, or the remainder
of the deferred tax assets in the future, an adjustment to the deferred
tax assets would be recorded as expense in the period such determination
was made. Additionally, if it were determined that we would be able to
utilize a portion of the net operating loss carryforwards that are
reserved for in the valuation allowance, an adjustment to the valuation
allowance would be recorded as a reduction of expense. If our provisions
for current or deferred taxes are not adequate due to unfavorable law
changes or unforeseen circumstances, we could experience losses in excess
of the current or deferred income tax provisions we have established.Allowance for Doubtful Accounts We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of our
customers to make required payments. We routinely review customer account
activity in order to assess the adequacy of the allowances provided for
potential losses. Based on historical information, we believe that our
allowance is adequate. However, changes in general economic, business and
market conditions could affect the ability of our customers to make their
required payments; therefore, the allowance for doubtful accounts is
reviewed monthly and changes to the allowance are updated as new
information is received. A one percent change to our 31




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allowance as a percent of our outstanding accounts receivable at December
31, 2003 would cause a decrease in net income of approximately $0.1
million, net of tax. Effect of Recently Issued Accounting Pronouncements In May 2003, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity
(SFAS 150). SFAS 150 changes the accounting for certain financial
instruments that, under previous guidance could be classified as equity or
mezzanine equity by now requiring those instruments to be classified as
liabilities (or assets in some circumstances) in the balance sheet. SFAS 150
affects an entitys classification of mandatorily redeemable instruments,
financial instruments to repurchase an entitys own equity instruments and
financial instruments embodying obligations that the issuer must or could
choose to settle by issuing a variable number of its shares or other equity
instruments based entirely on a fixed monetary amount known at inception or
something other than changes in its own equity instruments. The Company
adopted SFAS 150 effective June 30, 2003, with no impact to the Companys
financial position, cash flows or results of operations. Under its currently
effective shelf registration statement, the Company has the ability to offer
for sale financial instruments with characteristics of both debt and equity.
If the Company were to issue such instruments, the provisions of SFAS 150 would
be applied. RESULTS OF OPERATIONS The key factors that have affected our business over the last three years
are discussed and analyzed in the following paragraphs. This commentary should
be read in conjunction with our consolidated financial statements and the
related footnotes included herein. 2003 Compared to 2002 Results from operations in 2003, as compared to 2002, were affected
considerably by full year results for our 2003 acquisitions in Evansville,
Indiana, Ft. Collins-Greeley, Colorado and Lancaster, Pennsylvania which we
began operating in September 2002, and to a lesser extent our 2002 acquisitions
of radio stations in Flint and Grand Rapids, Michigan (see Note 2 in the Notes
to the Financial Statements). Additionally, in March 2003, we began operating
five additional stations in Evansville, Indiana under a time brokerage
agreement with Clear Channel Broadcasting, Inc. and its related affiliates.
Accordingly, the results of our operations in 2003 are not comparable to those
of the prior period, nor are they necessarily indicative of future results. Net Broadcast Revenues The radio industry has experienced a difficult last few years as the
effects of September 11, 2001, the war on terrorism, the war in Iraq and other
related events, negatively impacted the advertising environment. Overall
advertising growth has remained somewhat flat in 2003 with national business
showing larger growth than local business. We have felt the impact of such
matters and we believe our financial performance is comparable to the radio
industry as a whole. However, the national growth was not as significant to us
as national advertising only represents approximately 15% of our revenue.
Additionally, eleven of our markets are over 100 in terms of market revenue
rank where national business growth was not as significant as in the larger
markets. Accordingly, our results were much more impacted by locally driven
revenues. Net broadcast revenues of approximately $80.6 million in 2003 represented
a 14.5% increase over 2002 net revenues of approximately $70.4 million.
Approximately $8.2 million of the increase was 32




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attributable to full year results for stations we acquired in 2003. Results for
the stations we began operating under time brokerage agreements in 2003
contributed approximately $2.9 million of the net revenue increase, and the
difference was due to revenue decreases at stations we owned for both years. The increase in net revenue in 2003 of $10.2 million was comprised
primarily of: $9.6 million of local revenue; $1.3 million of national revenue;
$0.6 million of non-traditional broadcast revenue; and $0.1 million of non-cash
barter revenue. These increases were partially offset by decreases in political
revenues of $0.8 million, as 2003 was an off election year, and other
miscellaneous revenue of $0.6 million. The Evansville stations that we
exchanged for the Duluth stations accounted for revenue generated during 2003
that was not in our 2002 revenue, although that effect was somewhat mitigated
by our operation of the Duluth stations from September 2002 through December
2002. Station Operating Expenses Operating expenses were approximately $56.5 million in 2003, compared to
approximately $49.0 million in 2002. The increase is primarily a result of
full year results for the stations we acquired in 2003, which represented
approximately $5.0 million of the increase, as well as expenses for the
stations we purchased or operated under time brokerage agreements in 2003,
which added approximately $3.3 million of additional operating expense. The
remaining $0.8 million of cost reduction was attributable to cost savings at
the stations we have owned for all of 2002 and 2003. Part of the savings was
attributable to compensation savings as a result of the revenue shortfalls. As 2003 was a difficult year for advertising revenue, it was important for
us to balance our investment spending with cost control. Our discretionary
dollars remained relatively flat to prior year spending. We have continued to
invest in research and promotional expenses, which we incur to properly target
our intended demographic audiences within our markets, as well as to promote
our radio stations through various advertising campaigns and contest prize
give-aways, as we believe these expenditures will promote long-term growth at
our radio stations. Expenses directly related to the generation of revenue such
as sales commissions increased approximately $1.9 million. The administrative
costs required to operate the facilities at our markets such as power and rent
increased by approximately $1.6 million and our compensation and benefits
expenses increased by approximately $3.7 million. Non-cash barter expense
increased by $0.4 million in 2003. Depreciation and Amortization Depreciation and amortization expense increased by 27.0%, from
approximately $3.4 million in 2002, to approximately $4.3 million in 2003.
This was primarily due to increased depreciation expense related to
acquisitions that were closed during 2003 and the second half of 2002. Corporate Expense Corporate general and administrative expenses in total remained relatively
flat in 2003 compared to 2002. However, variances occurred within various
accounts. Those variances include increases in: payroll expense due to annual
performance increases; travel and entertainment; technology communications
expense as a result of the addition of four markets purchased from Brill Media;
management conferences not held in the prior year; and increased rent expense
primarily as a result of the termination of the sublease of our old office
space. These increases were offset by an approximate 50% decrease in incentive
compensation due to the difficult business revenue environment in 2003. 33




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Interest Expense Interest expense increased by 66.3% from $2.2 million in 2002 to $3.7
million in 2003. The increase was due to debt that was incurred to close the
Brill transaction in February 2003, as well as the write-off of approximately
$1.0 million in unamortized deferred finance costs related to our old credit
facility. Average outstanding long-term debt balances in 2003 were $62.1
million compared to $33.8 million in 2002. The increase in interest expense was
somewhat mitigated by a lower weighted average interest rate in 2003 of 2.87%
compared to 3.59% in 2002. Income Taxes We recorded income tax expense of approximately $4.0 million in 2003
representing a 41% effective rate. The rate includes a state rate of
approximately 5.7% as well as the 34% federal rate. Additionally, 1.8% was
attributed to a small valuation allowance we recorded for state net operating
losses generated in 2003 and miscellaneous adjustments accounted for a decrease
of 0.5%. We recorded income tax expense of approximately $7.2 million in 2002,
prior to the income tax benefit from cumulative effect of accounting change.
This represented a 34% federal rate and a 4.8% state rate, and included $4.4
million of income tax expense related to the establishment of valuation
allowances on our federal and state net operating loss carryforwards scheduled
to expire in the years 2002 through 2016. In arriving at the determination as
to the amount of the valuation allowance required for the year ended December
31, 2002, we considered the impact of deferred tax liabilities resulting from
purchase transactions, statutory restrictions on the use of operating losses,
and a tax planning strategy available to us. We determined that when
considering the current state of private market values for radio station
assets, it would be more likely than not that we would not be able to implement
our tax planning strategy within the foreseeable future resulting in the
establishment of the valuation allowance. We determined that it was not necessary in 2003 to record additional
valuation allowance against our Federal net operating loss carryforwards for
years 2017 through 2023, based on estimated future taxable income during those
years. Our estimated future taxable income in those periods takes into
consideration the run-off of significant tax amortization related to existing
FCC licenses and deductible goodwill by 2016. We have cumulative federal and state tax loss carryforwards of
approximately $64.0 million at December 31, 2003, which expire in the years
2004 through 2023. The utilization of a portion of the net operating loss
carryforwards for federal income tax purposes is limited, pursuant to the
annual utilization limitations provided under the provisions of Internal
Revenue Code Section 382. Same Station Results Our revenues are produced exclusively by our radio stations and we believe
that an analysis of the revenue of stations that we owned for the full years
2002 and 2003 is important because it presents a more direct view of whether or
not our stations are operating effectively. Nevertheless, this
measure should not be considered in isolation or as a substitute for broadcast
net revenue, operating income (loss), net income (loss), net cash provided by
(used in) operating activities or any other measure for determining our
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. While acquisitions have affected the comparability of our 2003 operating
results to those of 2002, we believe meaningful quarter-to-quarter net
broadcast revenue comparisons can be made for results of operations for those
markets in which we have been operating for five full quarters, exclusive of
markets disposed of 34




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during those years. The following comparable results between 2003 and
2002 includes the results of 61 stations in twelve markets and are listed in
the table below by quarter, excluding the effect of barter transactions
(dollars in thousands). 2003
    
    2002Quarter 1
    
    Net Revenue
    
    Net Revenue
    
    % ChangeNet broadcast revenue
    
    $
    16,733
    
    
    $
    12,986Less remaining stations and
barter effect
    
    
    4,209
    
    
    
    691Same station net broadcast
revenue
    
    $
    12,524
    
    
    $
    12,295
    
    
    
    1.9
    %
 Revenue for the first quarter of 2003 was negatively impacted by the war
in Iraq, as March was particularly affected after two fairly successful months
in January and February. In addition, we had a very successful first quarter
of 2002, making comparable revenue growth in 2003 difficult, given the economic
climate. Also, we had political revenue of approximately $150,000 in the first
quarter of 2002 that we did not have in the first quarter of 2003. 2003
    
    2002Quarter 2
    
    Net Revenue
    
    Net Revenue
    
    % ChangeNet broadcast revenue
    
    $
    21,453
    
    
    $
    17,262Less remaining stations and
barter effect
    
    
    5,407
    
    
    
    1,072Same station net broadcast
revenue
    
    $
    16,046
    
    
    $
    16,190
    
    
    
    (0.9
    )%
 Revenue for the second quarter was slightly down compared to the prior
year quarter results, as advertising economic conditions showed continued
negative impact from the war. April revenue exceeded prior year and May and
June were down 2% and 3.5%, respectively. Additionally, we had a
non-traditional broadcast revenue shortfall of approximately $150,000. 2003
    
    2002Quarter 3
    
    Net Revenue
    
    Net Revenue
    
    % ChangeNet broadcast revenue
    
    $
    21,353
    
    
    $
    18,710Less remaining stations and
barter effect
    
    
    5,203
    
    
    
    2,066Same station net broadcast
revenue
    
    $
    16,150
    
    
    $
    16,644
    
    
    
    (3.0
    )%
 The weakness in the advertising economy continued into the third quarter
of 2003 as revenue was lower by $0.5 million compared to 2002. Local revenue
was flat compared to the prior year third quarter and national was favorable by
2.6%. Non-traditional broadcast revenue was down by approximately $0.5 million,
half of which was related to two events that were cancelled in 2003
but were included in 2002 results. Political revenue was down by approximately $0.2
million compared to the third quarter of 2002. 35




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2003
    
    2002Quarter 4
    
    Net Revenue
    
    Net Revenue
    
    % ChangeNet broadcast revenue
    
    $
    21,039
    
    
    $
    21,432Less remaining stations and
barter effect
    
    
    5,164
    
    
    
    5,441Same station net broadcast
revenue
    
    $
    15,875
    
    
    $
    15,991
    
    
    
    (.7
    )%
 Net revenue for the fourth quarter of 2003 showed some modest improvement
in the advertising environment as October was down 2.8% and November and
December were flat compared to the fourth quarter of 2002. Local revenue was up
3% and political revenue was down by approximately $0.5 million as 2002 forth
quarter had some hotly contested elections in some of our markets.
Additionally, non-traditional broadcast revenue was down by approximately $0.2
million compared to the fourth quarter of 2002. 2002 Compared to 2001 Results from operations in 2002, as compared to 2001, were affected
considerably by full year results for our 2001 acquisitions in Peoria,
Illinois, Lafayette, Louisiana, and to a lesser extent, Erie, Pennsylvania, and
our 2002 acquisitions of radio stations in Flint and Grand Rapids, Michigan, as
well as the 2001 disposition of our stations in Palmdale, California.
Additionally, in September 2002, we began operating the Brill Media stations
under time brokerage agreements. Accordingly, the results of our operations in
2002 are not comparable to those of the prior period, nor are they necessarily
indicative of future results. Additionally, our results for the third and
fourth quarters of 2001 were negatively impacted by the September 11, 2001
terrorist attacks. Net Broadcast Revenues Net broadcast revenues were approximately $70.4 million in 2002, a 31.0%
increase over 2001 net revenues of approximately $53.7 million. Approximately
$9.3 million of the increase was attributable to full year results for stations
we acquired in 2001. Results for the stations we acquired or began operations
under time brokerage agreements in 2002 contributed approximately $6.6 million of the net revenue increase,
and the remainder was due to revenue increases at stations we owned for both
years, offset partially by the sale of our Palmdale, California stations during
2001. Station Operating Expenses Operating expenses were approximately $49.0 million in 2002, compared to
approximately $38.5 million in 2001. The increase is primarily a result of
full year results for the stations we acquired in 2001, which represented
approximately $5.8 million of the increase, as well as expenses for the
stations we purchased or operated under time brokerage agreements in 2002,
which added approximately $5.6 million of additional operating expense. A
significant portion of the increase in our operating expense was due to
research and promotional expenses we incurred to properly target our intended
demographic audiences within our markets, as well as to promote our radio
stations through various advertising campaigns and contest prize give-aways,
which we believe will promote long-term growth at our radio stations. Depreciation and Amortization Depreciation and amortization expense decreased by 75.0% from
approximately $13.4 million in 2001 36




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to approximately $3.4 million in 2002. Effective January 1, 2002, we adopted
the provisions of SFAS 142, which eliminated the amortization of goodwill and
other intangible assets determined to have an indefinite life, and also
requires an annual impairment testing of those assets. Amortization expense
related to goodwill and indefinite-lived intangible assets was approximately
$6.3 million, net of income taxes, for the year ended December 31, 2001. Corporate Expenses Corporate general and administrative expenses increased from approximately
$4.9 million in 2001 to approximately $6.1 million in 2002. This increase was
due to a combination of the following: salary components of two employees who
were charged at the market level in 2001 and were charged to corporate expense
in 2002, due to our ability to leverage those resources at the corporate level;
increased legal expenses; implementation of and compliance with various
provisions of the Sarbanes-Oxley Act of 2002; an increase in Directors and
Officers insurance premiums; and cash compensation paid to outside Directors
for their service on the Companys Board of Directors, a policy which began in
2002. Impairment of Goodwill In conjunction with our annual impairment testing of goodwill and
indefinite-lived intangible assets, it was determined that the fair value of
goodwill for our Peoria, Illinois market was less than the carrying value of
the goodwill recorded in our financial statements. As a result, during the
fourth quarter of 2002, we recorded an impairment charge of $1.8 million, net
of income taxes, against operating income. Gain on Sale on Long-lived Assets On March 12, 2002, we completed the sale of WGNA-AM in Albany, New York
for $2.0 million in cash. We recorded a pre-tax gain of approximately $442,000
on the sale. We treated the disposal of WGNA-AM as the disposal of long-lived
assets, rather than a business or a component of a business, due to the fact
that the stations had no independent revenue stream from its operations. Interest Expense Interest expense decreased by 32.7% in 2002 compared to 2001. The
decrease was primarily the result of the paydown of outstanding debt under our
credit facility with proceeds from our April 2002 stock offering. Also
contributing to the decrease was lower interest rates throughout 2002, as
compared to 2001. The weighted average interest rate for the year 2002 was
3.59%, compared to 5.32% for the 2001 year. The weighted average interest rate
at December 31, 2002 was 2.67%, as compared to an average interest rate of
3.37% at December 31, 2001. Gain on Sale of Radio Stations On June 1, 2001, we completed the sale of our three stations in Palmdale,
California to Concord Media Group, Inc. We recognized a pre-tax gain of
approximately $4.4 million on this transaction, which is reflected in the
Consolidated Statements of Operations for the year ended December 31, 2001. Income Taxes We recorded income tax expenses of approximately $7.2 million in 2002,
prior to the income tax benefit from cumulative effect of accounting change.
This represents a 34% federal rate and a 4.8% state rate, 37




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and includes $4.4 million of income tax expense related to the establishment of
valuation allowances on our federal and state net operating
loss carryforwards scheduled to expire in the years 2002 through 2016. We
had cumulative federal and state tax loss carryforwards of approximately $49.8
million at December 31, 2002, which expire in the years 2003 through 2022. The
utilization of a portion of the net operating loss carryforwards for federal
income tax purposes is limited, pursuant to the annual utilization limitations
provided under the provisions of Internal Revenue Code Section 382. In
arriving at the determination as to the amount of the valuation allowance
required for the years ended December 31, 2002 and 2001, we considered the
impact of deferred tax liabilities resulting from purchase transactions,
statutory restrictions on the use of operating losses, and a tax planning
strategy available to us. Consequently, during the second half of 2002, we
determined that when considering the current state of private market values for
radio stations assets, it would be more likely than not that we would not be
able to implement our tax planning strategy within the foreseeable future. Cumulative Effect of Accounting Change Upon the adoption of SFAS 142, we completed a transitional impairment
analysis of our indefinite-lived FCC licenses and recorded an impairment of
approximately $3.9 million, net of income tax benefit of approximately $2.4
million. Additionally, we completed the two-step transitional impairment
analysis of goodwill and recorded impairment
loss of approximately $2.2 million, net of income tax benefit of approximately
$1.4 million. To estimate fair value, we used a discounted cash flow
methodology. These losses are reflected as a cumulative effect of accounting
change in the Consolidated Statements of Operations for the year ended December
31, 2002. LIQUIDITY AND CAPITAL RESOURCES Executive Overview Since our inception, we have demonstrated our ability to access the public
markets to raise capital for acquisitions as discussed above. We have also
negotiated three separate credit facilities with a number of banking
institutions, with the most recent credit facility being put in place in June
2003. We believe that we have sufficient access to funds so that we will be
able to continue to pursue our growth strategy during 2004. Our liquidity has been supported by a strong credit policy that has
enabled the Company to keep write-offs of accounts receivable to approximately
1% of net revenue or lower in the last three years. Additionally, our accounts
receivable days sales outstanding decreased the last three years from 68 days
in 2001 to 63 days in 2003, which was further strengthened in 2003 by the
implementation of a bonus program for the business offices in our radio
stations, which is based on certain criteria related to the collection of
accounts receivables. We expect the long-term liquidity of the Company to be strong, as radio
stations typically do not have large capital requirements. Excluding
consolidation projects, where we consolidate duplicate facilities in a market,
our capital expenditures have been approximately 2% of our net revenue.
Additionally, we have maintained a disciplined acquisition approach that has
enabled us to consistently keep our debt leverage under our bank covenant
levels. One half of our outstanding term loan is on a fixed interest rate
through June 2006 and the other half is variable rate. Our interest rates are
based on LIBOR rates and we had a weighted average interest rate in 2003 of
2.87%. Our term loan begins to reduce on December 31, 2004 with an initial
payment of approximately $0.8 million and continues quarterly thereafter to
termination. The revolving credit facility begins to reduce on June 30, 2005
and continues thereafter to termination. We believe the cash generated from operations and available borrowings
under our credit facility will be sufficient to complete our pending
acquisition and to meet our requirements for corporate expenses and 38




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capital expenditures for the remainder of 2004, based on our projected
operations and indebtedness and giving effect to scheduled credit facility
commitment reductions. After giving effect to all completed and pending asset
transactions, at December 31, 2003, outstanding borrowings under our existing
credit facility would be approximately $80.2 million, with available borrowings
of approximately $70.7 million, subject to the terms and conditions of the
credit facility. We have the capability to borrow up to a leverage ratio of
6.00 :1.00 through 2004 and at December 31, 2003 our debt leverage ratio
including all pending transactions was 4.32 :1.00. Upon the completion of our pending transactions in Bloomington, Illinois
and Ft. Collins-Greeley, Colorado, where we will likely borrow on our revolving
credit facility, we expect the long-term cash needs of the Company to be
satisfied by cash from operating activities, including the scheduled reductions
of our credit facility. We will further reassess our long-term cash
requirements as additional acquisitions may be identified. Discussion of Consolidated Statements of Cash Flows Our cash and cash equivalents balance at December 31, 2003 was
approximately $1.7 million compared to approximately $2.7 million at December
31, 2002. The decrease is due primarily to a decrease in deposits in transit
that is related to improvements in our cash management system through migration
to a lockbox collection process. Consolidated cash balances are typically
maintained between one to two million dollars as excess cash generated by
operating activities after investing activities is utilized to pay down the
revolving credit facility. Net cash provided by operating activities was approximately $14.0 million
in 2003, compared to approximately $11.0 million in 2002 representing an
increase of 27%. The increase was due primarily to the operating activities of
radio stations acquired or operated under time brokerage agreements in 2003 and
in the latter part of 2002. The increase in accounts receivable reduced net
cash from operating activities by $0.7 million in 2003 compared to $4.6 million
in 2002. The increase in the 2002 accounts receivable was due primarily to the
increase of the Brill station accounts receivables that we began operating in
September 2002. Cash flow used in investing activities was approximately $68.3 million in
2003 compared to approximately $8.3 million in 2002. The increase in 2003 was
due primarily to the acquisition of the Brill stations in 2003. Capital
expenditures were higher in 2003 by approximately $1.2 million due to
consolidation projects in Flint and Peoria and new facilities in Utica. Cash flows provided by financing activities were approximately
$53.4 million in 2003, compared to cash flows used in financing activities
of approximately $1.8 million in 2002. The increase in 2003 reflects the
borrowing of funds to close the Brill transaction in 2003. During 2002,
proceeds received from our April 2002 stock offering and the final proceeds
received from our November 2001 private placement of equity were used to repay
borrowings under our credit facility. Sources of Funds In 2003, our sources of cash totaled approximately $150.5 million,
including $72.9 million borrowed to pay off the old credit facility, and were
derived from a combination of: cash provided by operating activities;
borrowings under our new credit facility net of financing costs; and, to a much
lesser extent, net proceeds from the sale of long-lived assets. On June 30, 2003, we entered into a new senior secured reducing credit
agreement with a group of lenders that provides for a maximum aggregate
principal amount of $150.0 million, consisting of a senior 39




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secured revolving credit facility in the aggregate principal amount of
$85.0 million and a senior secured term loan facility in the amount of $65.0
million. The credit facility includes a commitment to issue letters of credit
of up to $35.0 million in aggregate face amount, subject to the maximum
revolving commitment available. Regent incurred approximately $2.0 million in
financing costs related to the new credit facility, which are being amortized
over the life of the facility using the effective interest method. The new
credit facility is available for working capital and permitted acquisitions,
including related acquisition costs. At December 31, 2003, we had borrowings
under the new credit facility of $67.5 million, comprised of a $65.0 million
term loan and $2.5 million of revolver borrowings, and available borrowings of
$82.5 million, subject to the terms and conditions of the facility. The
borrowings under the new credit facility were used to pay off the outstanding
indebtedness under the old credit facility and the financing costs related to
the new credit facility. At June 30, 2003, we incurred approximately $1.0
million of interest expense to write-off unamortized deferred finance costs
related to our old credit facility. At December 31, 2002, we had borrowings of
approximately $11.0 million under our old credit facility. The term loan commitment reduces over seven years beginning on December
31, 2004, and the revolving commitment begins reduction on June 30, 2005,
approximately as follows (in thousands): Revolving
    
    Term LoanDecember 31,
    
    Commitment
    
    Commitment2003
    
    $
    85,000
    
    
    $
    65,0002004
    
    
    85,000
    
    
    
    64,1882005
    
    
    81,175
    
    
    
    60,4502006
    
    
    72,888
    
    
    
    54,2752007
    
    
    60,350
    
    
    
    44,3632008
    
    
    42,288
    
    
    
    31,2002009
    
    
    21,463
    
    
    
    15,6002010
    
    
    -0-
    
    
    
    -0-
 The letter of credit subfacility of $35.0 million reduces over a four- and
one-half year period beginning June 30, 2006. The new credit facility also
provides for an additional $100.0 million incremental loan facility, subject to
the terms of the facility, which matures not earlier than six months after the
maturity date of the new credit facility, and is also subject to mandatory
reductions. Borrowings that are outstanding under the incremental loan
facility after the original maturity date of the new credit facility may have
different or additional financial or other covenants, and may be priced
differently than the original term and revolving loans. The Companys ability
to borrow amounts under this incremental loan facility expires June 30, 2006. Under the current credit facility, we are required to maintain a maximum
leverage ratio, minimum interest coverage ratio, and minimum fixed charge
coverage ratio, as well as to observe negative covenants customary for
facilities of this type. Borrowings under the new credit facility bear
interest at a rate equal to, at our option, either (a) the higher of the rate
announced or published publicly from time to time by the agent as its corporate
base rate of interest or the Federal Funds Rate plus 0.5% in either case plus
the applicable margin determined under the new credit facility, which varies
between 0.0% and 1.5% depending upon our consolidated leverage ratio, or (b)
the Eurodollar Rate plus the applicable margin, which varies between 1.5% and
3.0%, depending upon our consolidated leverage ratio. Borrowings under the new
credit facility bore interest at an average rate of 3.15% at December 31, 2003.
Borrowings under the old credit facility bore interest at an average rate of
2.67% at December 31, 2002. We are required to pay certain fees to the agent
and the lenders for the underwriting commitment and the administration and use
of the new credit facility. The underwriting commitment varies between 0.375%
and 0.625% depending upon the amount of the new credit facility utilized. Our
indebtedness under the new credit facility is collateralized by liens on
substantially 40




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all of our personal property assets and by a pledge of our operating and
license subsidiaries stock and is guaranteed by those subsidiaries. Under the terms of the new credit facility, we were required to enter into
by December 31, 2003, and maintain for a two-year period after becoming
effective, an interest rate protection agreement, providing interest rate
protection for a minimum of one-half of the aggregate outstanding borrowings
under the combined term loans and incremental term loans. In August 2003, we
entered into a LIBOR-based forward interest rate swap agreement, which will
effectively convert $32.5 million of our variable-rate debt under the new
credit facility to a fixed rate. The swap agreement becomes effective on June
30, 2004 and expires two years from that date. Under this agreement, payments
will be made based on a fixed rate, which we set in August 2003 based on the
market for a financial instrument of this type at that date. We have
classified the swap agreement as a cash-flow hedge, in which we are hedging the
variability of cash flows related to our variable-rate debt. Uses of Funds In 2003, we utilized our sources of cash primarily to: repay borrowings of
approximately $82.0 million of which $72.9 million was utilized to pay off our
old credit facility; pay financing costs for the new credit facility of $2.0
million; acquire radio stations and pay related acquisition costs totaling
approximately $62.9 million; and repurchase shares of our common stock for
approximately $1.0 million. Additionally in 2003, we funded capital
expenditures of approximately $5.0 million of which approximately $3.2 million
was utilized to upgrade our equipment and consolidate duplicate facilities in
order to remain competitive and to create cost savings over the long term.
Maintenance capital expenditures were $1.8 million in 2003 compared to $1.3
million in 2002. The increase in 2003 is due primarily to general increases in
expenditures due to significantly more owned and operated stations in 2003. We
expect capital expenditures to be approximately $1.0 million in the first
quarter of 2004 of which $0.8 million is projected to be maintenance capital
expenditures. On February 25, 2003, we completed the acquisition of 12 radio stations
from Brill Media Company LLC and its related entities. We began providing
programming and other services to the stations under a time brokerage agreement
on September 11, 2002. The stations we acquired and the markets they serve are
as follows:  
    
    WIOV-FM and WIOV-AM, serving the Lancaster-Reading,
Pennsylvania market;
    
    WKDQ-FM, WBKR-FM and WOMI-AM, serving the Evansville,
Indiana and Owensboro, Kentucky markets;
    
    KTRR-FM, KUAD-FM and KKQZ-FM (formerly a construction
permit prior to commencing broadcast operations on November 1,
2002) serving the Ft. Collins-Greeley, Colorado market, and;
    
    KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM, serving the
Duluth, Minnesota market. The purchase price of these assets, including acquisition costs, was
approximately $63.6 million, which we paid in cash through borrowings under our
credit facility. Pending Sources and Uses of Funds  Transactions that have Subsequently Closed On February 27, 2003, we entered into an agreement with Clear Channel to
exchange our four stations (KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM) serving the
Duluth, Minnesota market and $2.7 million in cash for Clear Channels five
stations (WYNG-FM, WDKS-FM, WKRI-FM, WGBF-FM and WGBF-AM) serving the
Evansville, Indiana market. On March 1, 2003, we began providing programming
and other 41




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services to the Evansville stations, and Clear Channel began providing the
same such services to the Duluth stations. On January 28, 2004, we completed
the exchange with Clear Channel and paid $2.7 million in cash. Pending Sources and Uses of Funds On January 10, 2003, we entered into an agreement to purchase
substantially all the assets of KKPL-FM and KARS-FM, serving the Ft.
Collins-Greeley, Colorado market from AGM-Nevada, L.L.C. for $7.75 million.
The purchase price is payable in a combination of $5.0 million in cash and
$2.75 million in Regent common stock, based on a per share price equal to the
average daily closing price for the ten consecutive trading days ending on the
second trading day immediately preceding the closing date. In the event the
average share price for that period is less than $7.50 per share we may, at our
sole discretion, reallocate the purchase price to increase the amount of cash
consideration and reduce the portion paid in Regent common stock. On February
1, 2003, we began providing programming and other services to KKPL-FM under a
time brokerage agreement. We have placed $387,500 in escrow to secure our
obligations under this agreement. The FCC has given us approval on this
transaction and we expect to close late in the second quarter or early third
quarter of 2004. Additionally in the Ft. Collins-Greeley market, we have a pending
transaction in which we will receive $1.0 million in cash, net of our costs,
from another operator to move our antenna off the KTRR-FM tower to our KUAD-FM
tower that will enable us to have a better signal into the Ft. Collins-Greeley
market as well as relieving us of a long-term lease on the KTRR tower. We
anticipate completing this transaction sometime in the second quarter of 2004. On February 9, 2004, we entered into an exchange agreement with Citadel
Broadcasting Group (Citadel), whereby we agreed to exchange four stations
(WXKC-FM, WRIE-AM, WXTA-FM, and WQHZ-FM) serving the Erie, Pennsylvania market
and two stations (WIOV-AM and WIOV-FM) serving the Lancaster-Reading,
Pennsylvania market, plus a cash payment, for five stations (WBNQ-FM, WBWN-FM,
WTRX-FM, WJEZ-FM, and WJBC-AM) serving the Bloomington, Illinois market. The
cash payment will be calculated as a multiple of 7.5 times the excess of
station operating income from the Bloomington stations over that of the Erie
and Lancaster-Reading stations for the twelve-month period ended January 31,
2004. The cash portion of the purchase price will be funded through borrowings
under our credit facility. Effective February 1, 2004, we began providing
programming and other services to the Bloomington stations and Citadel began
providing the same such services to the Erie and Lancaster-Reading stations. We
expect to complete this transaction late in the second quarter or early third
quarter of 2004. In March 2002 we filed a Registration Statement on Form S-3 covering a
combined $250.0 million of common stock, convertible preferred stock,
depository shares, debt securities, warrants, stock purchase contracts and
stock purchase units (the Shelf Registration Statement). The Shelf
Registration Statement also covers debt securities that could be issued by one
of our subsidiaries, and guarantees of such debt securities by us. We used
approximately $78.8 million of the amounts available under the Shelf
Registration Statement for our April 2002 offering of common stock, leaving us
with capacity of approximately $171.2 million if we were to seek to raise
monies in the public markets. Our Board of Directors has authorized us to repurchase shares of our
common stock on the open market when the share price reaches predetermined
levels set by the Board. During the third quarter of 2002, the amount of our
common stock we were authorized to repurchase was increased to bring the level
to $10.0 million. During the first quarter of 2003, we made purchases of our
common stock totaling approximately $1.0 million under this program. We have
not purchased any shares since the first quarter of 2003 and still have
approximately $9.0 million of remaining capacity under the plan. 42




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Off Balance Sheet Financing Arrangements We have no off-balance sheet financing arrangements with related or
unrelated parties and no unconsolidated subsidiaries. Contractual Obligations Contractual obligations related to our credit facility and other long-term
debt, capital leases and operating leases are summarized below (in thousands).
Under the terms of our credit facility, our maximum borrowings will reduce over
seven years, beginning in 2004. Based upon our outstanding borrowings at
December 31, 2003, the payments detailed below under Long-term Debt would be
required to maintain compliance with our credit facility. Payments Due by PeriodContractual
    
    
    
    
    
    One year
    
    Two to
    
    Four toObligation
    
    Total
    
    or less
    
    three years
    
    five years
    
    ThereafterLong-term
Debt (1)
    
    $
    67,890
    
    
    $
    872
    
    
    $
    10,243
    
    
    $
    23,075
    
    
    $
    33,700Purchase Obligations (2)
    
    
    13,445
    
    
    
    6,685
    
    
    
    6,760
    
    
    
    -0-
    
    
    
    -0-Capital Leases
    
    
    475
    
    
    
    339
    
    
    
    122
    
    
    
    10
    
    
    
    4Asset Retirement
Obligations
    
    
    315
    
    
    
    70
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    245Operating Leases
    
    
    11,580
    
    
    
    1,353
    
    
    
    2,348
    
    
    
    2,198
    
    
    
    5,681Total Contractual
Cash Obligations
    
    $
    93,705
    
    
    $
    9,319
    
    
    $
    19,473
    
    
    $
    25,283
    
    
    $
    39,630
 (1) Includes a long-term note payable of approximately $0.4 million. If we are
in default of our credit agreement, $67.5 million of long-term debt could be
accelerated. (2) Includes: approximately $0.1 million to complete the construction of the
KUAD tower in Ft. Collins, Colorado; approximately $0.1 million to complete the
upgrade of the studio facilities in Flint, Michigan; employment contracts of
approximately $5.4 million; and sports rights, ratings services and other
programming contracts of approximately $7.9 million. 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to the impact of interest rate changes as borrowings under
our credit facility bear interest at variable interest rates. It is our policy
to enter into interest rate transactions only to the extent considered
necessary to meet our objectives. Under the terms of the new credit facility,
the Company was required to enter into by December 31, 2003, and maintain for a
two-year period after becoming effective, an 43




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##### Table of Contents



interest rate protection agreement, providing interest rate protection for
a minimum of one-half of the aggregate outstanding borrowings under the
combined term loans and incremental term loans. In August 2003, the Company
entered into a LIBOR-based forward interest rate swap agreement, which will
effectively convert $32.5 million of its variable-rate debt under the new
credit facility to a fixed rate. The swap agreement becomes effective on June
30, 2004 and expires two years from that date. Under this agreement, payments
will be made based on a fixed rate, which we set in August 2003 based on the
market for a financial instrument of this type at that date. We have
classified the swap agreement as a cash-flow hedge, in which we are hedging the
variability of cash flows related to its variable-rate debt. Based on our
exposure to variable rate borrowings at December 31, 2003, a one percent change
in the weighted average interest rate would change our annual interest expense
by approximately $350,000. 44




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Regent Communications, Inc.
Index to Financial Statements PageFinancial Statements:Report of Independent Auditors
    
    
    46Consolidated Statements of Operations for
the years ended December 31, 2003, 2002 and 2001
    
    
    47Consolidated Balance Sheets at December 31, 2003 and 2002
    
    
    48Consolidated Statements of Cash Flows for the
years ended December 31, 2003, 2002 and 2001
    
    
    49Consolidated Statements of Changes in Stockholders Equity (Deficit) for
the years ended December 31, 2003, 2002 and 2001
    
    
    50Notes to Consolidated Financial Statements
    
    
    51Financial Statement Schedules:For each of the three years in the period ended December 31, 2003:II - Valuation and Qualifying Accounts
    
    
    85
 All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements and notes
thereto. 45




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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS To the Stockholders and Board of Directors of  Regent
Communications, Inc.: In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Regent Communications, Inc. and its subsidiaries at December 31,
2003 and December 31, 2002, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2003 in
conformity with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial
statement schedule are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion. As discussed in Note 8, effective January 1, 2002, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets. /s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
March 8, 2004 46




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REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) YEAR ENDED DECEMBER 31,2003
    
    2002
    
    2001Broadcast revenues, net of agency commissions of
$8,347, $7,296 and $5,594 for the years ended
December 31, 2003, 2002 and 2001, respectively
    
    $
    80,578
    
    
    $
    70,390
    
    
    $
    53,745Station operating expenses
    
    
    56,526
    
    
    
    48,963
    
    
    
    38,530Depreciation and amortization
    
    
    4,262
    
    
    
    3,360
    
    
    
    13,436Corporate general and administrative expenses
    
    
    6,151
    
    
    
    6,149
    
    
    
    4,857Impairment of goodwill
    
    
    
    
    
    
    2,900
    
    
    
    Loss (gain) on sale of long-lived assets
    
    
    102
    
    
    
    (442
    )
    
    
    Operating income (loss)
    
    
    13,537
    
    
    
    9,460
    
    
    
    (3,078
    )Interest expense
    
    
    (3,671
    )
    
    
    (2,208
    )
    
    
    (3,279
    )Gain on exchange/sale of radio stations, net
    
    
    
    
    
    
    
    
    
    
    4,444Other expense, net
    
    
    (198
    )
    
    
    (433
    )
    
    
    (465
    )Income (loss) before income taxes and cumulative
effect of accounting change
    
    
    9,668
    
    
    
    6,819
    
    
    
    (2,378
    )Income tax (expense) benefit
    
    
    (3,962
    )
    
    
    (7,161
    )
    
    
    665Income (loss) before cumulative effect of accounting
change
    
    
    5,706
    
    
    
    (342
    )
    
    
    (1,713
    )Cumulative effect of accounting change, net of applicable
income taxes of $3,762
    
    
    
    
    
    
    (6,138
    )
    
    
    NET INCOME (LOSS)
    
    
    5,706
    
    
    
    (6,480
    )
    
    
    (1,713
    )Other comprehensive loss, net of taxNet unrealized loss on cash flow hedge
    
    
    (199
    )
    
    
    
    
    
    
    NET COMPREHENSIVE INCOME (LOSS)
    
    $
    5,507
    
    
    $
    (6,480
    )
    
    $
    (1,713
    )BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:Income (loss) before cumulative effect of
accounting change
    
    $
    0.12
    
    
    $
    (0.01
    )
    
    $
    (0.05
    )Cumulative effect of accounting change
    
    
    
    
    
    
    (0.14
    )
    
    
    Net income (loss) per common share
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    (0.05
    )Weighted average number of common shares
used in basic calculation
    
    
    46,515
    
    
    
    43,177
    
    
    
    34,218Weighted average number of common shares
used in diluted calculation
    
    
    46,837
    
    
    
    43,177
    
    
    
    34,218
 The accompanying notes are an integral part of these consolidated financial statements. 47




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REGENT COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts) DECEMBER 31,2003
    
    2002ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,673
    
    
    $
    2,656Accounts receivable, net of allowance of $868 and
$854 at December 31, 2003 and 2002, respectively
    
    
    13,554
    
    
    
    13,517Other current assets
    
    
    841
    
    
    
    811Total current assets
    
    
    16,068
    
    
    
    16,984Property and equipment, net
    
    
    35,135
    
    
    
    26,889Intangible assets, net
    
    
    293,673
    
    
    
    238,706Goodwill, net
    
    
    25,649
    
    
    
    24,200Other assets
    
    
    2,776
    
    
    
    1,251Total assets
    
    $
    373,301
    
    
    $
    308,030LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion long-term debt
    
    $
    872
    
    
    $
    60Accounts payable
    
    
    2,366
    
    
    
    2,050Accrued compensation
    
    
    1,402
    
    
    
    2,158Other current liabilities
    
    
    3,318
    
    
    
    3,680Total current liabilities
    
    
    7,958
    
    
    
    7,948Long-term debt, less current portion
    
    
    67,018
    
    
    
    11,359Other long-term liabilities
    
    
    696
    
    
    
    90Deferred taxes
    
    
    13,831
    
    
    
    10,143Total liabilities
    
    
    89,503
    
    
    
    29,540Commitments and Contingencies (Note 13)Stockholders equity:Common stock, $.01 par value, 100,000,000 shares authorized;
48,083,492 and 48,047,382 shares issued at December 31, 2003
and 2002, respectively
    
    
    481
    
    
    
    480Treasury stock, 1,542,705 and 1,488,556 shares, at cost at
December 31, 2003 and 2002, respectively
    
    
    (7,758
    )
    
    
    (7,575
    )Additional paid-in capital
    
    
    348,016
    
    
    
    348,033Accumulated other comprehensive loss
    
    
    (199
    )
    
    
    Accumulated deficit
    
    
    (56,742
    )
    
    
    (62,448
    )Total stockholders equity
    
    
    283,798
    
    
    
    278,490Total liabilities and stockholders equity
    
    $
    373,301
    
    
    $
    308,030
 The accompanying notes are an integral part of these consolidated financial statements. 48




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REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) YEAR ENDED DECEMBER 31,2003
    
    2002
    
    2001Cash flows from operating activities:Net income (loss)
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    (1,713
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Cumulative effect of accounting change, net of applicable
income taxes
    
    
    
    
    
    
    6,138
    
    
    
    Depreciation and amortization
    
    
    4,262
    
    
    
    3,360
    
    
    
    13,436Provision for doubtful accounts
    
    
    908
    
    
    
    819
    
    
    
    822Deferred income tax expense (benefit) and
valuation allowance
    
    
    3,860
    
    
    
    7,114
    
    
    
    (847
    )Write-off of unamortized deferred finance costs
    
    
    1,032
    
    
    
    
    
    
    
    Non-cash interest expense
    
    
    321
    
    
    
    281
    
    
    
    283Non-cash charge for compensation
    
    
    497
    
    
    
    499
    
    
    
    491Gain on sale of radio stations, net
    
    
    
    
    
    
    
    
    
    
    (4,444
    )Loss (gain) on sale of long-lived assets
    
    
    102
    
    
    
    (442
    )
    
    
    Impairment of goodwill
    
    
    
    
    
    
    2,900
    
    
    
    Other, net
    
    
    (102
    )
    
    
    (422
    )
    
    
    160Changes in operating assets and liabilities, net of acquisitions:Accounts receivable
    
    
    (723
    )
    
    
    (4,576
    )
    
    
    (328
    )Other assets
    
    
    14
    
    
    
    (204
    )
    
    
    (107
    )Current and long-term liabilities
    
    
    (1,899
    )
    
    
    1,996
    
    
    
    597Net cash provided by operating activities
    
    
    13,978
    
    
    
    10,983
    
    
    
    8,350Cash flows from investing activities:Acquisitions of radio stations, net of cash acquired, acquisition
related costs, and escrow deposits on pending acquisitions
    
    
    (63,322
    )
    
    
    (6,248
    )
    
    
    (63,450
    )Capital expenditures
    
    
    (5,033
    )
    
    
    (3,856
    )
    
    
    (3,161
    )Net proceeds from sale of radio stations
    
    
    
    
    
    
    
    
    
    
    13,393Net proceeds from sale of long-lived assets and other
    
    
    29
    
    
    
    1,829
    
    
    
    27Net cash used in investing activities
    
    
    (68,326
    )
    
    
    (8,275
    )
    
    
    (53,191
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    
    
    
    
    75,785
    
    
    
    4,068Proceeds from long-term debt
    
    
    138,500
    
    
    
    5,000
    
    
    
    60,500Principal payments on long-term debt
    
    
    (82,029
    )
    
    
    (80,660
    )
    
    
    (18,491
    )Payment of financing costs
    
    
    (1,959
    )
    
    
    
    
    
    
    Payment of issuance costs
    
    
    (1
    )
    
    
    (820
    )
    
    
    (249
    )Treasury stock purchases
    
    
    (992
    )
    
    
    (1,122
    )
    
    
    Repayment of capital lease obligations
    
    
    (154
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    53,365
    
    
    
    (1,817
    )
    
    
    45,828Net (decrease) increase in cash and cash equivalents
    
    
    (983
    )
    
    
    891
    
    
    
    987Cash and cash equivalents at beginning of period
    
    
    2,656
    
    
    
    1,765
    
    
    
    778Cash and cash equivalents at end of period
    
    $
    1,673
    
    
    $
    2,656
    
    
    $
    1,765Supplemental schedule of non-cash investing and financing activities:Common stock issued in conjunction with the
acquisitions of radio stations
    
    $
    
    
    
    $
    2,445
    
    
    $
    7,459Employer match on 401(k) plan
    
    $
    402
    
    
    $
    294
    
    
    $
    307Capital lease obligations for property and equipment
    
    $
    150
    
    
    $
    
    
    
    $
    Supplemental data:Cash paid for interest
    
    $
    4,132
    
    
    $
    2,082
    
    
    $
    3,077Cash paid for income taxes
    
    $
    215
    
    
    $
    85
    
    
    $
    128
 The accompanying notes are an integral part of these consolidated financial statements. 49




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REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
(In thousands, except share amounts) AccumulatedAdditional
    
    
    
    
    
    Other
    
    TotalCommon
    
    Treasury
    
    Paid-In
    
    Accumulated
    
    Comprehensive
    
    StockholdersStock
    
    Stock
    
    Capital
    
    Deficit
    
    Loss
    
    EquityBalance, December 31, 2000
    
    $
    352
    
    
    $
    (7,063
    )
    
    $
    259,386
    
    
    $
    (54,255
    )
    
    $
    
    
    
    $
    198,420Issuance of 700,000 shares of common
stock, net of issuance costs of $373
    
    
    7
    
    
    
    
    
    
    
    3,644
    
    
    
    
    
    
    
    
    
    
    
    3,651Exercise of 28,468 stock options and 37,230
stock warrants
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    30Issuance of 1,001,969 shares of common stock
in conjunction with acquisitions
    
    
    10
    
    
    
    
    
    
    
    7,449
    
    
    
    
    
    
    
    
    
    
    
    7,459Stock bonus award (22,825 shares)
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    
    
    
    
    170Issuance of 55,579 shares of treasury stock
for 401(k) match
    
    
    
    
    
    
    306
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    321Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,713
    )
    
    
    
    
    
    
    (1,713
    )Balance, December 31, 2001
    
    
    369
    
    
    
    (6,757
    )
    
    
    270,694
    
    
    
    (55,968
    )
    
    
    
    
    
    
    208,338Issuance of 10,700,000 shares of common
stock, net of issuance costs of $4,832
    
    
    107
    
    
    
    
    
    
    
    74,961
    
    
    
    
    
    
    
    
    
    
    
    75,068Issuance of 384,453 shares of common stock
in conjunction with acquisitions
    
    
    4
    
    
    
    
    
    
    
    2,290
    
    
    
    
    
    
    
    
    
    
    
    2,294Exercise of 16,074 stock options
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Issuance of 42,706 shares of treasury stock
for 401(k) match, net of forfeitures
    
    
    
    
    
    
    235
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    273Issuance of 12,571 shares of treasury stock
for employee stock purchase plan
    
    
    
    
    
    
    69
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    77Purchase of 235,660 shares of treasury stock
    
    
    
    
    
    
    (1,122
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,122
    )Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    22Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,480
    )
    
    
    
    
    
    
    (6,480
    )Balance, December 31, 2002
    
    
    480
    
    
    
    (7,575
    )
    
    
    348,033
    
    
    
    (62,448
    )
    
    
    
    
    
    
    278,490Stock bonus award (30,960 shares)
    
    
    
    
    
    
    170
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    183Non-cash exercise of 36,110 stock options
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of 69,794 shares of treasury stock
for 401(k) match, net of forfeitures
    
    
    
    
    
    
    384
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    386Issuance of 49,647 shares of treasury stock
for employee stock purchase plan
    
    
    
    
    
    
    273
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    242Purchase of 201,500 shares of treasury stock
    
    
    
    
    
    
    (992
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (992
    )Other
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,706
    
    
    
    
    
    
    
    5,706Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    (199
    )Balance, December 31, 2003
    
    $
    481
    
    
    $
    (7,758
    )
    
    $
    348,016
    
    
    $
    (56,742
    )
    
    $
    (199
    )
    
    $
    283,798
 The accompanying notes are an integral part of these consolidated financial statements. 50




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  1.
    
    SUMMARY OF ACCOUNTING POLICIES  a.
    
    CONSOLIDATION:  The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly owned. All
significant intercompany transactions and balances have been
eliminated in consolidation. Certain prior year amounts and balances
have been reclassified to conform to the current classifications
with no effect on financial results.  b.
    
    USE OF ESTIMATES:The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.c.
    
    CASH AND CASH EQUIVALENTS:Cash and cash equivalents include all highly liquid investments with
an original maturity of three months or less.d.
    
    PROPERTY AND EQUIPMENT:Property and equipment are stated at cost and depreciated on the
straight-line basis over the estimated useful life of the assets.
Buildings are depreciated over thirty-nine years, broadcasting
equipment over a three-to-twenty year life and furniture and
fixtures generally over a ten-year life. Leasehold improvements are
amortized over the shorter of their useful lives or the terms of the
related leases. Upon sale or disposition of an asset, the cost and
related accumulated depreciation are removed from the accounts.e.
    
    GOODWILL AND OTHER INTANGIBLE ASSETS:Intangible assets consist principally of the value of FCC licenses
and the excess of the purchase price over the fair value of net
assets of acquired radio stations (goodwill). On January 1, 2002,
the Company adopted the provisions of Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS 142) (See Note 8). SFAS 142 requires that a Company no
longer amortize goodwill and intangible assets determined to have an
indefinite life and also requires an annual impairment testing of
those assets. Prior to the implementation of SFAS 142, FCC licenses
and goodwill acquired through acquisitions prior to July 1, 2001,
were amortized on a straight-line basis over lives ranging from 15
to 40 years. Non-competition agreements are amortized over the life
of the agreement. -51-




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  f.
    
    LONG-LIVED ASSETS:Long-lived assets (including property, equipment, and intangible
assets subject to amortization) to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The carrying
amount of a long-lived asset is not recoverable if it exceeds the
sum of the undiscounted cash flows expected to result from the use
and eventual disposal of the asset. If it were determined that the
carrying amount of an asset was not recoverable, an impairment loss
would be recorded for the difference between the carrying amount and
the fair value of the asset. The Company determines the fair value
of its long-lived assets based upon the market value of similar
assets, if available, or independent appraisals, if necessary.
Long-lived assets to be disposed of and/or held for sale are
reported at the lower of carrying amount or fair value, less cost to
sell. The fair value of assets held for sale is determined in the
same manner as described for assets held and used.g.
    
    DEFERRED FINANCING COSTS:Deferred financing costs are amortized using the effective interest
method over the term of the related debt.h.
    
    CONCENTRATIONS OF CREDIT RISK:Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of accounts
receivable. The credit risk is limited due to the large number of
customers comprising the Companys customer base and their
dispersion across several different geographic areas of the country.
The Company also maintains cash in bank accounts at financial
institutions where the balance, at times, exceeds federally insured
limits.i.
    
    REVENUE RECOGNITION:Broadcast RevenueBroadcast revenue for commercial broadcasting advertisements is
recognized when the commercial is broadcast. Revenue is reported net
of agency commissions. Agency commissions are calculated based on a
stated percentage applied to gross billing revenue for advertisers
that use agencies. Agency commissions were approximately $8.3
million, $7.3 million and $5.6 million for the years ended December
31, 2003, 2002 and 2001, respectively.Barter TransactionsBarter transactions (advertising provided in exchange for goods and
services) are reported at the estimated fair value of the products
or services received. Revenue from barter transactions is recognized
when advertisements are broadcast, and merchandise or services
received are charged to expense when received or used. If
merchandise or services are received prior to the broadcast of the
advertising, a 52




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  liability (deferred barter revenue) is recorded. If advertising is
broadcast before the receipt of the goods or services, a receivable
is recorded. Barter revenue was approximately $4.5 million, $4.5
million, and $3.7 million and barter expense was approximately $4.5
million, $4.1 million, and $3.7 million for the years ended December
31, 2003, 2002, and 2001, respectively.Time Brokerage AgreementsAt December 31, 2003, the Company operated six stations under the
terms of time brokerage agreements (TBAs). Revenues and expenses
related to such stations are included in operations since the
effective dates of the TBAs. Fees paid under such TBAs are included
in Other expense, net in the accompanying Consolidated Statements of
Operations.j.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS:Short-Term InstrumentsDue to their short-term maturity, the carrying amount of accounts
receivable, accounts payable and accrued expenses approximated their
fair value at December 31, 2003 and 2002.Long-Term DebtThe fair value of the Companys long-term debt is estimated based on
the current rates offered to the Company for debt of the same
remaining maturities. Based on borrowing rates currently available,
the fair value of long-term debt approximates its carrying value at
December 31, 2003 and 2002.Interest Rate SwapsThe Company enters into interest rate swap agreements to manage its
exposure to interest rate movements by effectively converting a
portion of its debt from variable to fixed rates. The Company
follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133), as amended by SFAS 137, SFAS
138 and SFAS 149, which requires that all derivative financial
instruments that qualify for hedge accounting, such as interest rate
swap agreements, be recognized in the financial statements as assets
or liabilities and be measured at fair value. If certain conditions
are met, a derivative may be designated as a cash flow hedge, a fair
value hedge or a foreign currency hedge. An entity that elects to
apply hedge accounting is required to establish at the inception of
the hedge the method it will use for assessing the effectiveness of
the hedge and the measurement method it will use to assess the fair
value of the hedge. Changes in the fair value of derivative
instruments are either recognized periodically in income or as a
component of stockholders equity, in accumulated other
comprehensive income (loss). The fair value of the hedge
instruments are determined by obtaining quotations from the
financial institutions that are counterparties to the Companys
hedge agreements. The Company formally documents all relationships
between hedging instruments 53




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  and hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The Company
also formally assesses, both at the inception of the hedge and on an
ongoing basis, whether each derivative is highly effective in
offsetting changes in cash flows of the hedged item. If it is
determined that a derivative is not highly effective as a hedge, or
if a derivative ceases to be a highly effective hedge, the Company
will discontinue hedge accounting prospectively.k.
    
    INCOME TAXES:Deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts based on enacted
tax laws and statutory tax rates. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount more likely than not to be realized.l.
    
    ADVERTISING AND PROMOTION COSTS:Costs of media advertising and associated production costs are
expensed the first time the advertising takes place.m.
    
    ALLOWANCE FOR DOUBTFUL ACCOUNTS:The Company maintains an allowance for doubtful accounts for
estimated losses resulting from the inability of our customers to
make required payments. The allowance is calculated based on a
percentage of cash revenue, and includes a provision for known
issues. Customer account activity is routinely reviewed to assess the
adequacy of the allowance provided for potential losses.n.
    
    VARIABLE INTEREST ENTITIES:The Company has adopted the provisions of Financial Accounting
Standards Board Interpretation No. 46, Consolidation of Variable
Interest Entities (FIN 46). Under the provisions of FIN 46, the
Company is required to consolidate the operations of entities for
which it is the primary beneficiary, and deconsolidate those entities
for which it is no longer the primary beneficiary. The Company may
be required to consolidate or deconsolidate the operations of
stations it operates as a lessee under time brokerage or local
marketing agreements, or those stations it leases to other
broadcasting entities under time brokerage or local marketing
agreements. The Company will adopt the provisions of FIN 46 for
variable interest entity contracts entered into prior to February 1,
2003 during the first quarter of 2004, as required by the statement,
and expects no material impact upon adoption.o.
    
    STOCK-BASED COMPENSATION PLANS:At December 31, 2003, the Company had four stock-based employee
compensation plans, which are described more fully in Note 6. The
Company accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related Interpretations, under 54




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  which compensation expense is recorded only to the extent that the
market price of the underlying common stock on the date of grant
exceeds the exercise price. The following table illustrates the
effect on net income (loss) and income (loss) per share if the
Company had applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation (SFAS
123), to stock-based employee compensation (in thousands except per
share information). Year Ended December 31,2003
    
    2002
    
    2001(Unaudited)Net income (loss), as reported
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    (1,713
    )Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all awards,
net of related tax effects
    
    
    (1,362
    )
    
    
    (1,546
    )
    
    
    (1,409
    )Pro forma net income (loss)
    
    $
    4,344
    
    
    $
    (8,026
    )
    
    $
    (3,122
    )Pro forma income (loss)
applicable to common shares
    
    $
    4,344
    
    
    $
    (8,026
    )
    
    $
    (3,122
    )Basic and diluted income
(loss) per share:As reported
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    (0.05
    )Pro forma
    
    $
    0.09
    
    
    $
    (0.19
    )
    
    $
    (0.09
    )
  2.
    
    ACQUISITIONS AND DISPOSITIONS The Company seeks to acquire radio stations that enable it to expand
within its existing markets and enter into new mid-sized and small
markets that fit into Regents operating strategy.  Pending Acquisitions and Dispositions On January 10, 2003, Regent entered into an agreement to purchase
substantially all of the assets of KKPL-FM and KARS-FM, serving the Ft.
Collins-Greeley, Colorado market from AGM-Nevada, L.L.C. for $7.75
million. The purchase price is payable in a combination of $5.0 million
in cash and $2.75 million in Regent common stock, based on a per share
price equal to the average daily closing price for the ten consecutive
trading days ending on the second trading day immediately preceding the
closing date. In the event the average share price of Regent common stock
for that period is less than $7.50 per share Regent may, at its sole
discretion, reallocate the purchase price to increase the amount of cash
consideration and reduce the portion paid in Regent common stock. On
February 1, 2003, the Company began providing programming and other
services to KKPL-FM under a time brokerage agreement. The Company has
placed $387,500 in escrow to secure its obligations under this agreement.
The Company has received FCC approval for this transaction and expects
to complete this transaction in the second or third quarter of 2004. 55




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On February 9, 2004, Regent entered into an exchange agreement with
Citadel Broadcasting Group (Citadel), whereby Regent agreed to exchange
four stations (WXKC-FM, WRIE-AM, WXTA-FM, and WQHZ-FM) serving the Erie,
Pennsylvania market and two stations (WIOV-AM and WIOV-FM) serving the
Lancaster-Reading, Pennsylvania market, plus a cash payment, for five
stations (WBNQ-FM, WBWN-FM, WTRX-FM, WJEZ-FM, and WJBC-AM) serving the
Bloomington, Illinois market. The cash payment will be calculated as a
multiple of 7.5 times the excess of station operating income from the
Bloomington stations over that of the Erie and Lancaster-Reading stations
for the twelve-month period ended January 31, 2004. The cash portion of
the purchase price will be funded through borrowings under the Companys
credit facility. Effective February 1, 2004, Regent began providing
programming and other services to the Bloomington stations and Citadel
began providing the same such services to the Erie and Lancaster-Reading
stations. The Company expects to complete this transaction in the second
or third quarter of 2004.  Subsequently Completed Acquisitions and Dispositions On January 28, 2004, Regent completed an exchange agreement with
Clear Channel Broadcasting, Inc. and its affiliates (Clear Channel)
whereby Regent exchanged four stations (KKCB-FM, KLDJ-FM, KBMX-FM and
WEBC-AM) serving the Duluth, Minnesota market, which Regent acquired on
February 25, 2003, and $2.7 million in cash, for five radio stations
(WYNG-FM, WDKS-FM, WKRI-FM, WGBF-FM, and WGBF-AM) serving the Evansville,
Indiana market. On March 1, 2003, Regent began providing programming and
other services to the Evansville stations, and Clear Channel began
providing the same such services to the Duluth stations. The cash
portion of the purchase price was funded through borrowings under the
Companys credit facility. 2003 Acquisitions On February 25, 2003, the Company completed the acquisition of 12
radio stations from Brill Media Company LLC and its related entities.
Regent had been providing programming and other services to the stations
under a time brokerage agreement, which began on September 11, 2002. The
stations acquired and the markets they serve are as follows:  
    
    WIOV-FM and WIOV-AM, serving the Lancaster-Reading,
Pennsylvania market
    
    WKDQ-FM, WBKR-FM and WOMI-AM, serving the Evansville,
Indiana and Owensboro, Kentucky markets
    
    KTRR-FM, KUAD-FM and KKQZ-FM (formerly a construction
permit prior to commencing broadcast operations on November 1,
2002) serving the Ft. Collins-Greeley, Colorado market, and
    
    KKCB-FM, KLDJ-FM, KBMX-FM and WEBC-AM, serving the
Duluth, Minnesota market  The net purchase price of these assets after all adjustments, and
excluding related acquisition costs, was approximately $61.9 million,
which Regent funded through borrowings under its credit facility.
Acquisition related costs approximated $1.7 million, 56




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS of which approximately $0.7 million were paid in 2002. The Company
received a final independent appraisal for the purchase during the third
quarter of 2003. 2002 Acquisitions and Dispositions On March 12, 2002, the Company completed the disposition of
substantially all the operating assets of WGNA-AM, serving the Albany,
New York market, for $2.0 million in cash to ABC, Inc. On February 15,
2002, ABC, Inc. began providing programming and other services to the
station under a time brokerage agreement. The Company recognized a
pre-tax gain of approximately $442,000 on the sale. The Company treated
the disposal of WGNA-AM as the disposal of long-lived assets, rather than
a business or a component of a business, due to the fact that the station
had no independent revenue stream from its operations. On June 1, 2002, the Company acquired, through a subsidiary merger
with The Frankenmuth Radio Co., Inc., WRCL-FM (formerly WZRZ-FM) serving
the Flint, Michigan market, for 209,536 shares of Regent common stock,
valued at approximately $1.4 million. The Company also purchased the
land and broadcasting assets used by WRCL-FM from MTE Corporation, a
related entity, for approximately $0.6 million in cash, net of $125,000
that the Company placed in escrow in 2001 to secure its obligations under
these agreements. Prior to the closing, the Company provided programming
and other services to the station under a time brokerage agreement, which
began January 1, 2002. The Company allocated approximately $0.6 million
of the total purchase price to fixed assets and approximately $1.4
million to FCC licenses. Additionally, the Company recorded
approximately $0.5 million of goodwill and deferred taxes due to the
difference between the fair market value and book value of the assets and
liabilities acquired through the merger. The cash portion of the purchase
price was funded primarily through proceeds received from the Companys
April 2002 common stock offering. Also on June 1, 2002, the Company purchased the outstanding stock of
Haith Broadcasting Corporation, owner of WFGR-FM serving the Grand
Rapids, Michigan market for approximately $3.9 million. The purchase
price was paid in cash, net of $250,000 that the Company placed in escrow
in 2001 to secure its obligations under this agreement. In conjunction
with the above stock purchase, on February 4, 2002, the Company purchased
the option to buy WFGR-FM from Connoisseur Communications of Flint,
L.L.P., paid by the issuance of 174,917 shares of Regent common stock,
valued at approximately $1.0 million. Prior to the closing of the
agreement, the Company provided programming and other services to the
station under a time brokerage agreement, which began January 1, 2002.
The Company allocated approximately $38,000 of the purchase price to
fixed assets and approximately $4.9 million to FCC licenses.
Additionally, the Company recorded approximately $1.4 million of goodwill
and deferred taxes due to the difference between the fair market value
and book value of the assets and liabilities acquired through the merger.
The cash portion of the purchase price was funded primarily through
proceeds received from the Companys April 2002 common stock offering. On October 1, 2002, the Company purchased substantially all of the
broadcasting assets of WQUS-FM (formerly WRXF-FM) and WLSP-AM, serving
the Flint, Michigan market, from Covenant Communications Corporation.
Regent began providing programming and other services to the stations
under a time brokerage agreement on 57




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 3, 2001. The $1.3 million purchase price, net of $65,000
that was placed in escrow in 2001 to secure the Companys obligations
under this agreement, was paid using cash from current operations. The
Company allocated approximately $0.1 million of the purchase price to
fixed assets and approximately $1.2 million to FCC licenses. 2001 Acquisitions and Dispositions On May 9, 2001, the Company completed the acquisition by merger with
StarCom, Inc. of one AM and two FM radio stations (KXSS-AM, KKSR-FM and
KLZZ-FM) serving the St. Cloud, Minnesota market for approximately $5.0
million in cash. Concurrent with the purchase, the Company entered into
a $500,000 non-compete agreement with a former shareholder of StarCom,
Inc., to be paid ratably over a five-year period. The purchase was
funded from borrowings under Regents bank credit facility. Prior to the
closing of the purchase, the Company provided programming and other
services to the stations under a time brokerage agreement, which began in
July 2000. The Company allocated approximately $4.9 million of the
purchase price to FCC licenses and approximately $0.1 million to fixed
assets. On June 1, 2001, the Company completed the sale of substantially all
the assets of its three radio stations serving the Palmdale, California
market (KTPI-FM, KAVC-AM and KOSS-FM) to Concord Media Group, Inc. for
approximately $13.5 million in cash. The Company recognized a pre-tax
gain of approximately $4.4 million on the sale. On August 29, 2001, the Company completed an acquisition from Two
Petaz, Inc.; WFYR, Inc.; Winston Communications, Inc. of Illinois; and
the Cromwell Group, Inc., of (i) substantially all the assets of radio
stations WGLO-FM, WPPY-FM, WRVP-FM and WVEL-AM, serving the Peoria,
Illinois market, for a purchase price of approximately $14.0 million in
cash and (ii) substantially all the assets of radio stations WFYR-FM and
WIXO-FM, also serving the Peoria market, in exchange for 786,141 shares
of Regent common stock, valued at approximately $5.8 million. Prior to
the closing of the purchase, the Company provided programming and other
services to the stations under time brokerage agreements, which began in
May 2001. The Company received a final appraisal for this purchase in
2002, and accordingly re-allocated the purchase price to conform to the
appraisal. Based on the final appraisal, the Company allocated
approximately $14.3 million of the purchase price to FCC licenses,
approximately $3.9 million to goodwill, $10,000 to non-compete agreements
and approximately $1.6 million to fixed assets. On October 15, 2001, the Company completed the acquisition of
substantially all of the assets of WQHZ-FM (formerly WJET-FM), serving
the Erie, Pennsylvania market, from NextMedia Group II, Inc. for $4.9
million in cash. The Company allocated substantially all of the purchase
price to FCC licenses. On December 8, 2001 the Company completed the acquisition of
substantially all of the assets of seven radio stations serving the
Lafayette, Louisiana market (KMDL-FM, KRKA-FM, KFTE-FM, KTDY-FM, KPEL-FM,
KPEL-AM and KROF-AM) from ComCorp of Lafayette, Inc. and its affiliates
for approximately $38.1 million in cash and 215,828 shares of Regent
common stock, valued at approximately $1.5 million. The Company received
a final appraisal for this purchase in 2002, and accordingly re- 58




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  allocated the purchase price to conform to the appraisal. Based on
the final appraisal, the Company allocated approximately $27.8 million of
the purchase price to FCC licenses, approximately $7.9 million to
goodwill, and approximately $3.9 million to fixed assets. The Company accounted for all of its 2003, 2002 and 2001
acquisitions using the purchase method of accounting. The Company
allocated the aggregate purchase price from all acquisitions in 2003 and
2002 as follows (in thousands): 2003
    
    2002Barter accounts receivable
    
    $
    239
    
    
    $
    Property and equipment
    
    
    6,972
    
    
    
    723FCC licenses
    
    
    55,133
    
    
    
    7,486Goodwill
    
    
    2,238
    
    
    
    1,921Barter accounts payable
    
    
    (522
    )
    
    
    Other liabilities
    
    
    (419
    )
    
    
    $
    63,641
    
    
    $
    10,130
 The Company uses independent valuations to determine the fair values
of significant assets acquired. The results of operations of the acquired
businesses are included in the Companys consolidated financial
statements since their respective dates of acquisition or operation under
time brokerage agreements. The following unaudited pro forma data summarize the combined
results of operations of Regent, together with the operations of the
significant stations acquired in 2003 and 2002, as though those
transactions had occurred on January 1, 2002. PRO FORMA (UNAUDITED)(In thousands, except
per share amounts)2003
    
    2002Net broadcast revenues
    
    $
    80,578
    
    
    $
    82,918Net income (loss)
    
    $
    5,737
    
    
    $
    (4,165
    )Net income (loss) per common share:Basic
    
    $
    0.12
    
    
    $
    (0.10
    )Diluted
    
    $
    0.12
    
    
    $
    (0.10
    )
 These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had
been consummated on the indicated dates, nor is it indicative of future
results of operations. 59




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  3.
    
    LONG-TERM DEBTLong-term debt consists of the following as of December 31 (in thousands): 2003
    
    2002Senior reducing term loan
    
    $
    65,000
    
    
    $
    10,969Senior reducing revolving credit facility
    
    
    2,500
    
    
    
    Subordinated promissory note
    
    
    390
    
    
    
    45067,890
    
    
    
    11,419Less: current portion of long-term debt
    
    
    (872
    )
    
    
    (60
    )$
    67,018
    
    
    $
    11,359
 Senior Reducing Revolving Credit Facility On June 30, 2003, the Company entered into a new senior secured
reducing credit agreement with a group of lenders that provides for a
maximum aggregate principal amount of $150.0 million, consisting of a
senior secured revolving credit facility in the aggregate principal
amount of $85.0 million and a senior secured term loan facility in the
amount of $65.0 million. The credit facility includes a commitment to
issue letters of credit of up to $35.0 million in aggregate face amount,
subject to the maximum revolving commitment available. Regent incurred
approximately $2.0 million in financing costs related to the new credit
facility, which are being amortized over the life of the facility using
the effective interest method. The new credit facility is available for
working capital and permitted acquisitions, including related acquisition
costs. At December 31, 2003 the Company had borrowings under the new
credit facility of $67.5 million, comprised of a $65.0 million term loan
and $2.5 million of revolver borrowings, and available borrowings of
$82.5 million, subject to the terms and conditions of the facility. The
borrowings under the new credit facility were used to pay off the
outstanding indebtedness under the old credit facility and the financing
costs related to the new credit facility. At December 31, 2002, the
Company had borrowings of approximately $11.0 million under its old
credit facility. The term loan and revolver commitment reduce over seven years
beginning in 2004, as follows (in thousands): Revolving
    
    Term LoanDecember 31,
    
    Commitment
    
    Commitment2003
    
    $
    85,000
    
    
    $
    65,0002004
    
    
    85,000
    
    
    
    64,1882005
    
    
    81,175
    
    
    
    60,4502006
    
    
    72,888
    
    
    
    54,2752007
    
    
    60,350
    
    
    
    44,3632008
    
    
    42,288
    
    
    
    31,2002009
    
    
    21,463
    
    
    
    15,6002010
    
    
    
    
    
    
    
 60




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The letter of credit subfacility reduces over a four- and one-half-year
period beginning in 2006. The new credit facility also provides for an
additional $100.0 million incremental loan facility, subject to the terms
of the facility, which matures not earlier than six months after the
maturity date of the new credit facility, and is also subject to
mandatory reductions. Borrowings that are outstanding under the
incremental loan facility after the original maturity date of the new
credit facility may have different or additional financial or other
covenants, and may be priced differently than the original term and
revolving loans. The Companys ability to borrow amounts under this
incremental loan facility expires June 30, 2006. Under the current credit facility, the Company is required to
maintain a maximum leverage ratio, minimum interest coverage ratio, and
minimum fixed charge coverage ratio, as well as to observe negative
covenants customary for facilities of this type. Borrowings under the
new credit facility bear interest at a rate equal to, at the Companys
option, either (a) the higher of the rate announced or published publicly
from time to time by the agent as its corporate base rate of interest or
the Federal Funds Rate plus 0.5%, in either case plus the applicable
margin determined under the new credit facility, which varies between
0.0% and 1.5% depending upon the Companys consolidated leverage ratio,
or (b) the Eurodollar Rate plus the applicable margin, which varies
between 1.5% and 3.0%, depending upon the Companys consolidated leverage
ratio. Borrowings under the new credit facility bore interest at an
average rate of 3.15% at December 31, 2003. Borrowings under the old
credit facility bore interest at an average rate of 2.67% at December 31,
2002. The Company is required to pay certain fees to the agent and the
lenders for the underwriting commitment and the administration and use of
the new credit facility. The underwriting commitment varies between
0.375% and 0.625% depending upon the amount of the new credit facility
utilized. The Companys indebtedness under the new credit facility is
collateralized by liens on substantially all of its assets and by a
pledge of its operating and license subsidiaries stock and is guaranteed
by those subsidiaries. Based upon our outstanding borrowings under the credit facility at
December 31, 2003, and the balance of our subordinated promissory note,
the payments detailed below would be required to maintain compliance
with the maximum borrowings allowed under our credit facility over the
next five years (in thousands): 2004
    
    $
    8722005
    
    
    4,0682006
    
    
    6,1752007
    
    
    9,9122008
    
    
    13,163Thereafter
    
    
    33,700$
    67,890
 Prior to the current credit facility, the Company had an agreement
with a group of lenders that provided for a senior reducing revolving
credit facility with a commitment of up to $125.0 million expiring in
December 2006. On June 30, 2003, Regent used borrowings under the new
credit facility to pay off the outstanding debt and accrued interest
totaling approximately $73.1 million under the old credit. At June 30,
2003, the 61




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company incurred approximately $1.0 million of interest expense to
write-off unamortized deferred finance costs related to its old credit
facility.  4.
    
    SUPPLEMENTAL GUARANTOR INFORMATION The Company conducts the majority of its business through its
subsidiaries (Subsidiary Guarantors). The Subsidiary Guarantors are
wholly owned by Regent Broadcasting, Inc. (RBI), which is a wholly
owned subsidiary of Regent Communications, Inc. (RCI). The Subsidiary
Guarantors are guarantors of any debt securities that could be issued by
RCI or RBI, and are therefore considered registrants of such securities.
RCI would also guarantee any debt securities that could be issued by RBI.
All such guarantees will be full and unconditional and joint and
several. No debt securities have been issued to date by RBI or RCI. Set forth below are consolidating financial statements for RCI, RBI
and the Subsidiary Guarantors as of December 31, 2003 and 2002, and the
years ended December 31, 2003, 2002 and 2001. The equity method of
accounting has been used by the Company to report its investment in
subsidiaries. Substantially all of RCIs and RBIs income and cash flow
are generated by their subsidiaries. Separate financial statements for
the Subsidiary Guarantors are not presented based on managements
determination that they do not provide additional information that is
material to investors. Condensed Consolidating Statements of Operations
(in thousands)
Year Ended December 31, 2003 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalNet broadcast revenue
    
    $
    
    
    
    $
    
    
    
    $
    80,578
    
    
    $
    
    
    
    $
    80,578Station operating expenses
    
    
    
    
    
    
    
    
    
    
    56,526
    
    
    
    
    
    
    
    56,526Depreciation and
amortization
    
    
    109
    
    
    
    
    
    
    
    4,153
    
    
    
    
    
    
    
    4,262Corporate general and
administrative expenses
    
    
    6,089
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    6,151Loss on sale of assets
    
    
    1
    
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    102Equity in earnings of
subsidiaries
    
    
    5,035
    
    
    
    11,855
    
    
    
    
    
    
    
    (16,890
    )
    
    
    Operating (loss) income
    
    
    (1,164
    )
    
    
    11,793
    
    
    
    19,798
    
    
    
    (16,890
    )
    
    
    13,537Interest expense
    
    
    (36
    )
    
    
    (3,635
    )
    
    
    
    
    
    
    
    
    
    
    (3,671
    )Other income (expense), net
    
    
    13
    
    
    
    (20
    )
    
    
    (191
    )
    
    
    
    
    
    
    (198
    )(Loss) income before
income taxes
    
    
    (1,187
    )
    
    
    8,138
    
    
    
    19,607
    
    
    
    (16,890
    )
    
    
    9,668Income tax benefit (expense)
    
    
    453
    
    
    
    (3,103
    )
    
    
    (7,752
    )
    
    
    6,440
    
    
    
    (3,962
    )Net (loss) income
    
    $
    (734
    )
    
    $
    5,035
    
    
    $
    11,855
    
    
    $
    (10,450
    )
    
    $
    5,706
 62




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statements of Operations
(in thousands)
Year Ended December 31, 2002 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalNet broadcast revenue
    
    $
    
    
    
    $
    
    
    
    $
    70,390
    
    
    $
    
    
    
    $
    70,390Station operating expenses
    
    
    
    
    
    
    
    
    
    
    48,963
    
    
    
    
    
    
    
    48,963Depreciation and
amortization
    
    
    109
    
    
    
    
    
    
    
    3,251
    
    
    
    
    
    
    
    3,360Corporate general and
administrative expenses
    
    
    6,088
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    6,149Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    2,900
    
    
    
    
    
    
    
    2,900Gain on sale of long-
lived assets
    
    
    
    
    
    
    
    
    
    
    (442
    )
    
    
    
    
    
    
    (442
    )Equity in (loss) earnings of
subsidiaries
    
    
    (286
    )
    
    
    1,840
    
    
    
    
    
    
    
    (1,554
    )
    
    
    Operating (loss) income
    
    
    (6,483
    )
    
    
    1,779
    
    
    
    15,718
    
    
    
    (1,554
    )
    
    
    9,460Interest expense
    
    
    (36
    )
    
    
    (2,172
    )
    
    
    
    
    
    
    
    
    
    
    (2,208
    )Other expense, net
    
    
    
    
    
    
    (88
    )
    
    
    (345
    )
    
    
    
    
    
    
    (433
    )(Loss) income before
income taxes and
cumulative effect of
accounting change
    
    
    (6,519
    )
    
    
    (481
    )
    
    
    15,373
    
    
    
    (1,554
    )
    
    
    6,819Income tax (expense) benefit
    
    
    (588
    )
    
    
    195
    
    
    
    (7,395
    )
    
    
    627
    
    
    
    (7,161
    )(Loss) income before
cumulative effect of
accounting change
    
    
    (7,107
    )
    
    
    (286
    )
    
    
    7,978
    
    
    
    (927
    )
    
    
    (342
    )Cumulative effect of
accounting change
    
    
    
    
    
    
    
    
    
    
    (6,138
    )
    
    
    
    
    
    
    (6,138
    )Net (loss) income
    
    $
    (7,107
    )
    
    $
    (286
    )
    
    $
    1,840
    
    
    $
    (927
    )
    
    $
    (6,480
    )
 63




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statements of Operations
(in thousands)
Year Ended December 31, 2001 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalNet broadcast revenue
    
    $
    
    
    
    $
    
    
    
    $
    53,745
    
    
    $
    
    
    
    $
    53,745Station operating expenses
    
    
    
    
    
    
    
    
    
    
    38,530
    
    
    
    
    
    
    
    38,530Depreciation and
amortization
    
    
    92
    
    
    
    
    
    
    
    13,344
    
    
    
    
    
    
    
    13,436Corporate general and
administrative expenses
    
    
    4,808
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    4,857Equity (loss) in earnings
of subsidiaries
    
    
    (1,641
    )
    
    
    1,012
    
    
    
    
    
    
    
    629
    
    
    
    Operating (loss) income
    
    
    (6,541
    )
    
    
    963
    
    
    
    1,871
    
    
    
    629
    
    
    
    (3,078
    )Interest expense
    
    
    (36
    )
    
    
    (3,243
    )
    
    
    
    
    
    
    
    
    
    
    (3,279
    )Gain on exchange/sale of
radio stations
    
    
    4,444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,444Other expense, net
    
    
    
    
    
    
    
    
    
    
    (465
    )
    
    
    
    
    
    
    (465
    )(Loss) income before income
taxes and cumulative
effect
of accounting change
    
    
    (2,133
    )
    
    
    (2,280
    )
    
    
    1,406
    
    
    
    629
    
    
    
    (2,378
    )Income tax benefit (expense)
    
    
    597
    
    
    
    639
    
    
    
    (394
    )
    
    
    (177
    )
    
    
    665Net (loss) income
    
    $
    (1,536
    )
    
    $
    (1,641
    )
    
    $
    1,012
    
    
    $
    452
    
    
    $
    (1,713
    )
 64




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Balance Sheets
(in thousands)
December 31, 2003 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    1,673
    
    
    $
    
    
    
    $
    
    
    
    $
    1,673Accounts receivable, net
    
    
    
    
    
    
    
    
    
    
    13,554
    
    
    
    
    
    
    
    13,554Other current assets
    
    
    360
    
    
    
    
    
    
    
    481
    
    
    
    
    
    
    
    841Total current assets
    
    
    360
    
    
    
    1,673
    
    
    
    14,035
    
    
    
    
    
    
    
    16,068Intercompany receivable
    
    
    
    
    
    
    
    
    
    
    44,678
    
    
    
    (44,678
    )
    
    
    Investment in subsidiaries
    
    
    273,905
    
    
    
    382,642
    
    
    
    
    
    
    
    (656,547
    )
    
    
    Property and equipment, net
    
    
    387
    
    
    
    
    
    
    
    34,748
    
    
    
    
    
    
    
    35,135Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    293,673
    
    
    
    
    
    
    
    293,673Goodwill, net
    
    
    1,599
    
    
    
    
    
    
    
    24,050
    
    
    
    
    
    
    
    25,649Other assets
    
    
    8,984
    
    
    
    2,242
    
    
    
    438
    
    
    
    (8,888
    )
    
    
    2,776Total assets
    
    $
    285,235
    
    
    $
    386,557
    
    
    $
    411,622
    
    
    $
    (710,113
    )
    
    $
    373,301LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term
Debt
    
    $
    60
    
    
    $
    812
    
    
    $
    
    
    
    $
    
    
    
    $
    872Accounts payable and
accrued expenses
    
    
    1,047
    
    
    
    172
    
    
    
    5,867
    
    
    
    
    
    
    
    7,086Intercompany payable
    
    
    
    
    
    
    44,678
    
    
    
    
    
    
    
    (44,678
    )
    
    
    Total current liabilities
    
    
    1,107
    
    
    
    45,662
    
    
    
    5,867
    
    
    
    (44,678
    )
    
    
    7,958Long-term debt, less current
portion
    
    
    330
    
    
    
    66,688
    
    
    
    
    
    
    
    
    
    
    
    67,018Deferred taxes and other
long-term liabilities
    
    
    
    
    
    
    302
    
    
    
    23,113
    
    
    
    (8,888
    )
    
    
    14,527Total liabilities
    
    
    1,437
    
    
    
    112,652
    
    
    
    28,980
    
    
    
    (53,566
    )
    
    
    89,503Stockholders equity
    
    
    283,798
    
    
    
    273,905
    
    
    
    382,642
    
    
    
    (656,547
    )
    
    
    283,798Total liabilities and
stockholders equity
    
    $
    285,235
    
    
    $
    386,557
    
    
    $
    411,622
    
    
    $
    (710,113
    )
    
    $
    373,301
 65




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Balance Sheets
(in thousands)
December 31, 2002 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    2,656
    
    
    $
    
    
    
    $
    
    
    
    $
    2,656Accounts receivable, net
    
    
    
    
    
    
    
    
    
    
    13,517
    
    
    
    
    
    
    
    13,517Other current assets
    
    
    297
    
    
    
    
    
    
    
    514
    
    
    
    
    
    
    
    811Total current assets
    
    
    297
    
    
    
    2,656
    
    
    
    14,031
    
    
    
    
    
    
    
    16,984Intercompany receivable
    
    
    
    
    
    
    
    
    
    
    28,048
    
    
    
    (28,048
    )
    
    
    Investment in subsidiaries
    
    
    269,302
    
    
    
    304,105
    
    
    
    
    
    
    
    (573,407
    )
    
    
    Property and equipment, net
    
    
    464
    
    
    
    
    
    
    
    26,425
    
    
    
    
    
    
    
    26,889Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    238,706
    
    
    
    
    
    
    
    238,706Goodwill, net
    
    
    1,754
    
    
    
    493
    
    
    
    21,953
    
    
    
    
    
    
    
    24,200Other assets
    
    
    9,021
    
    
    
    1,149
    
    
    
    43
    
    
    
    (8,962
    )
    
    
    1,251Total assets
    
    $
    280,838
    
    
    $
    308,403
    
    
    $
    329,206
    
    
    $
    (610,417
    )
    
    $
    308,030LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and
accrued expenses
    
    $
    60
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    60Accounts payable and
accrued expenses
    
    
    1,898
    
    
    
    84
    
    
    
    5,906
    
    
    
    
    
    
    
    7,888Intercompany payable
    
    
    
    
    
    
    28,048
    
    
    
    
    
    
    
    (28,048
    )
    
    
    Total current liabilities
    
    
    1,958
    
    
    
    28,132
    
    
    
    5,906
    
    
    
    (28,048
    )
    
    
    7,948Long-term debt, less current
portion
    
    
    390
    
    
    
    10,969
    
    
    
    
    
    
    
    
    
    
    
    11,359Deferred taxes and other
long-term liabilities
    
    
    
    
    
    
    
    
    
    
    19,195
    
    
    
    (8,962
    )
    
    
    10,233Total liabilities
    
    
    2,348
    
    
    
    39,101
    
    
    
    25,101
    
    
    
    (37,010
    )
    
    
    29,540Stockholders equity
    
    
    278,490
    
    
    
    269,302
    
    
    
    304,105
    
    
    
    (573,407
    )
    
    
    278,490Total liabilities and
stockholders equity
    
    $
    280,838
    
    
    $
    308,403
    
    
    $
    329,206
    
    
    $
    (610,417
    )
    
    $
    308,030
 66




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statements of Cash Flows
(in thousands)
Year Ended December 31, 2003 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalCash flows from operating activities:Cash flows (used in) provided
by operating activities
    
    $
    (6,573
    )
    
    $
    (5,077
    )
    
    $
    25,628
    
    
    $
    
    
    
    $
    13,978Cash flows from investing activities:Acquisitions of radio stations
and related acquisition costs
    
    
    
    
    
    
    (63,322
    )
    
    
    
    
    
    
    
    
    
    
    (63,322
    )Capital expenditures
    
    
    (32
    )
    
    
    (5,001
    )
    
    
    
    
    
    
    
    
    
    
    (5,033
    )Net proceeds from sale of
long-lived assets
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    29Net cash (used in) provided
by investing activities
    
    
    (32
    )
    
    
    (68,323
    )
    
    
    29
    
    
    
    
    
    
    
    (68,326
    )Cash flows from financing activities:Principal payments on long-
term debt
    
    
    (60
    )
    
    
    (81,969
    )
    
    
    
    
    
    
    
    
    
    
    (82,029
    )Repayment of capital lease
obligations
    
    
    
    
    
    
    
    
    
    
    (154
    )
    
    
    
    
    
    
    (154
    )Long-term debt borrowings
    
    
    
    
    
    
    138,500
    
    
    
    
    
    
    
    
    
    
    
    138,500Purchase of treasury shares
    
    
    (992
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (992
    )Payment of financing/issuance
costs
    
    
    
    
    
    
    (1,960
    )
    
    
    
    
    
    
    
    
    
    
    (1,960
    )Net transfers from/(to)
subsidiaries
    
    
    7,657
    
    
    
    17,846
    
    
    
    (25,503
    )
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    6,605
    
    
    
    72,417
    
    
    
    (25,657
    )
    
    
    
    
    
    
    53,365Decrease in cash and cash
equivalents
    
    
    
    
    
    
    (983
    )
    
    
    
    
    
    
    
    
    
    
    (983
    )Cash and cash equivalents at
beginning of period
    
    
    
    
    
    
    2,656
    
    
    
    
    
    
    
    
    
    
    
    2,656Cash and cash equivalents at
end of period
    
    $
    
    
    
    $
    1,673
    
    
    $
    
    
    
    $
    
    
    
    $
    1,673
 67




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statements of Cash Flows
(in thousands)
Year Ended December 31, 2002 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalCash flows from operating activities:Cash flows (used in) provided
by operating activities
    
    $
    (3,094
    )
    
    $
    (2,651
    )
    
    $
    16,728
    
    
    $
    
    
    
    $
    10,983Cash flows from investing activities:Acquisitions of radio stations
and related acquisition costs
    
    
    
    
    
    
    (6,248
    )
    
    
    
    
    
    
    
    
    
    
    (6,248
    )Capital expenditures
    
    
    
    
    
    
    (3,856
    )
    
    
    
    
    
    
    
    
    
    
    (3,856
    )Net proceeds from sale of
long-lived assets
    
    
    
    
    
    
    
    
    
    
    1,829
    
    
    
    
    
    
    
    1,829Net cash (used in) provided
by investing activities
    
    
    
    
    
    
    (10,104
    )
    
    
    1,829
    
    
    
    
    
    
    
    (8,275
    )Cash flows from financing activities:Net proceeds from issuance
of common stock
    
    
    75,785
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,785Principal payments on long-
term debt
    
    
    (60
    )
    
    
    (80,600
    )
    
    
    
    
    
    
    
    
    
    
    (80,660
    )Long-term debt borrowings
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Purchase of treasury shares
    
    
    (1,122
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,122
    )Payment of equity issuance
costs
    
    
    (820
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (820
    )Net transfers (to)/from
subsidiaries
    
    
    (70,689
    )
    
    
    89,246
    
    
    
    (18,557
    )
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    3,094
    
    
    
    13,646
    
    
    
    (18,557
    )
    
    
    
    
    
    
    (1,817
    )Increase in cash and cash
equivalents
    
    
    
    
    
    
    891
    
    
    
    
    
    
    
    
    
    
    
    891Cash and cash equivalents at
beginning of period
    
    
    
    
    
    
    1,765
    
    
    
    
    
    
    
    
    
    
    
    1,765Cash and cash equivalents at
end of period
    
    $
    
    
    
    $
    2,656
    
    
    $
    
    
    
    $
    
    
    
    $
    2,656
 68




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##### Table of Contents



REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidating Statements of Cash Flows
(in thousands)
Year Ended December 31, 2001 SubsidiaryRCI
    
    RBI
    
    Guarantors
    
    Eliminations
    
    TotalCash flows from operating activities:Cash flows (used in) provided
by operating activities
    
    $
    (2,463
    )
    
    $
    (2,121
    )
    
    $
    12,934
    
    
    $
    
    
    
    $
    8,350Cash flows from investing activities:Acquisitions of radio stations
and related acquisition costs
    
    
    
    
    
    
    (63,450
    )
    
    
    
    
    
    
    
    
    
    
    (63,450
    )Capital expenditures
    
    
    
    
    
    
    (3,161
    )
    
    
    
    
    
    
    
    
    
    
    (3,161
    )Proceeds from the sale of long-
lived assets
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Net proceeds from sale of
radio stations
    
    
    13,393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,393Net cash provided by (used in)
investing activities
    
    
    13,393
    
    
    
    (66,611
    )
    
    
    27
    
    
    
    
    
    
    
    (53,191
    )Cash flows from financing activities:Net proceeds from issuance
of common stock
    
    
    4,068
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,068Principal payments on long-
term debt
    
    
    (60
    )
    
    
    (18,431
    )
    
    
    
    
    
    
    
    
    
    
    (18,491
    )Long-term debt borrowings
    
    
    
    
    
    
    60,500
    
    
    
    
    
    
    
    
    
    
    
    60,500Payment of equity issuance
costs
    
    
    (249
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (249
    )Net transfers (to)/from
subsidiaries
    
    
    (14,689
    )
    
    
    27,650
    
    
    
    (12,961
    )
    
    
    
    
    
    
    Net cash (used in) provided
by financing activities
    
    
    (10,930
    )
    
    
    69,719
    
    
    
    (12,961
    )
    
    
    
    
    
    
    45,828Increase in cash and cash
equivalents
    
    
    
    
    
    
    987
    
    
    
    
    
    
    
    
    
    
    
    987Cash and cash equivalents at
beginning of period
    
    
    
    
    
    
    778
    
    
    
    
    
    
    
    
    
    
    
    778Cash and cash equivalents at
end of period
    
    $
    
    
    
    $
    1,765
    
    
    $
    
    
    
    $
    
    
    
    $
    1,765
  5.
    
    CAPITAL STOCK The Companys authorized capital stock consists of 100,000,000
shares of common stock and 40,000,000 shares of preferred stock. No
shares of preferred stock were issued or outstanding at December 31, 2003
or 2002. The Company has in the past designated shares of 69




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS preferred stock
in several different series. Of the available shares of preferred stock,
6,768,862 remain designated in several of those series and 33,231,138
shares are currently undesignated. On February 4, 2003, the Company issued 30,960 shares of common
stock to four executive officers at an issue price of $5.905 as payment
of a portion of 2002 bonuses awarded under the Companys Senior
Management Bonus Plan. The shares were issued from previously
repurchased treasury shares. On March 5, 2003, the Company issued 36,110 shares of Regent common
stock to a director of the Company in a net cashless exercise of a stock
option issued under the Regent Communications, Inc. Faircom Conversion
Stock Option Plan. The cashless exercise was completed by the tendering
of mature shares as payment for the option exercise. Regent has a stock buyback program, approved by its Board of
Directors, which allows the Company to repurchase shares of its common
stock at certain market price levels. During 2003, Regent acquired
201,500 shares of its common stock for an aggregate purchase price of
approximately $1.0 million. During 2002, Regent acquired 235,660 shares
of treasury stock for an aggregate purchase price of approximately $1.1
million. In October 2002, Regents Board of Directors increased the
amount of stock the Company could buy back by approximately $6.7 million,
providing for an aggregate amount available for repurchase of $10.0
million at December 31, 2002. At December 31, 2003, there was
approximately $9.0 million available under the buyback plan for
repurchases. During 2003, Regent reissued 119,441 shares of treasury stock
previously acquired, net of forfeited shares, as an employer match to
employee contributions under the Companys 401(k) Profit Sharing Plan and
to employees enrolled in the Companys Employee Stock Purchase Plan.
During 2002, Regent reissued 55,277 shares of treasury stock previously
acquired, net of forfeited shares, as an employer match to employee
contributions under the Companys 401(k) Profit Sharing Plan, and to
employees enrolled in the Companys Employee Stock Purchase Plan. On February 4, 2002, the Company issued 174,917 shares of common
stock to Connoisseur Communications of Flint, L.L.P., valued at
approximately $1.0 million, for the option to purchase WFGR-FM, serving
the Grand Rapids, Michigan market. On February 5, 2002, the Company issued 200,000 shares of common
stock at a price of $5.75 per share as part of its 2001 private placement
offering to qualified investors. The shares were sold to a venture
capital fund related to one of the Companys independent directors, and
were held in escrow, along with the associated cash proceeds of
approximately $1.2 million, pending confirmation from Nasdaq that
stockholder approval would not be required for such sale. On April 29, 2002, the Company completed the sale of 10.5 million
shares of its common stock at a price of $7.50 per share. Net cash
proceeds to the Company after underwriting discounts and commissions were
approximately $74.6 million. Approximately $70.6 million of the proceeds
were used to pay down outstanding indebtedness under the Companys credit
facility. The remaining $4.0 million of proceeds were used to partially
fund the Companys acquisitions of WRCL-FM (formerly WZRZ-FM), serving
the Flint, Michigan market, and WFGR-FM, serving the Grand Rapids,
Michigan market, during the second quarter of 2002. 70




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On June 1, 2002, the Company issued 209,536 shares of common stock,
valued at approximately $1.4 million, in conjunction with its subsidiary
merger with The Frankenmuth Radio Co., Inc. At various times during 2002, 16,074 options to purchase shares of
Regent common stock were exercised by three former directors of Faircom
Inc. at prices ranging from $0.89 to $3.73 per share. The options were
issued under the Regent Communications, Inc. Faircom Conversion Stock
Option Plan, which provided substitute options for those granted under
the Faircom Inc. Stock Option Plan prior to the Companys merger with
Faircom Inc. At December 31, 2003 there were warrants outstanding entitling the
holders to purchase a total of 790,000 shares of Regents common stock at
$5.00 per share. These warrants were previously issued in 1998 in
connection with the Series A, B, and F convertible preferred stock and
expire ten years from the date of grant.  6.
    
    STOCK-BASED COMPENSATION PLANS 1998 Management Stock Option Plan The Regent Communications, Inc. 1998 Management Stock Option Plan,
as amended (the 1998 Stock Option Plan) provides for the issuance of up
to an aggregate of 4,000,000 common shares in connection with the
issuance of incentive stock options (ISOs) and non-qualified stock
options (NQSOs). The Compensation Committee of the Companys Board of
Directors determines eligibility. The exercise price of the options is to
be not less than the fair market value of the underlying common stock at
the grant date and in the case of ISOs granted to a 10% owner (as
defined), the exercise price must be at least 110% of the fair market
value of the underlying common stock at the grant date. Under the terms
of the 1998 Stock Option Plan, the options expire no later than ten years
from the date of grant in the case of ISOs (five years in the case of
ISOs granted to a 10% owner), no later than ten years and one day in the
case of NQSOs, or earlier in either case in the event a participant
ceases to be an employee of the Company. The ISOs vest ratably over a
five-year period and the NQSOs vest ratably over periods ranging from
three to ten years. Faircom Conversion Stock Option Plan On June 15, 1998, the Company acquired, pursuant to an agreement of
merger, all of the outstanding common stock of Faircom Inc. Upon
consummation of the Faircom merger, the Board of Directors of the Company
adopted the Regent Communications, Inc. Faircom Conversion Stock Option
Plan (Conversion Stock Option Plan) which applied to those individuals
previously participating in the Faircom Inc. Stock Option Plan (Faircom
Plan). In exchange for relinquishing their options under the Faircom
Plan, five former officers and members of Faircoms Board of Directors
were given, in total, the right to acquire 274,045 shares of the
Companys common stock at exercise prices ranging from $0.89 to $3.73 per
share and expiring from May 11, 1999 to July 1, 2002 (the Converted
Options). Certain options granted to a director under the Conversion
Stock Option Plan were extended until July 1, 2003 due to certain lock-up
provisions related to the Companys public sale of common stock in April
2002. No 71




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS additional compensation expense was recorded related to the option
extension, as the Company had taken the maximum amount of expense at the
date the options were converted from the Faircom Plan. At December 31,
2003, there were no options remaining under the Conversion Stock Option
Plan. 2001 Directors Stock Option Plan The Regent Communications, Inc. 2001 Directors Stock Option Plan
(the 2001 Directors Option Plan) provides for the issuance of up to an
aggregate of 500,000 common shares in connection with the issuance of
NQSOs. Grants in the amount of 10,000 shares are awarded initially to
each new outside Director at the date of his first attendance at a
meeting of the Board of Directors, and thereafter, on each one year
anniversary date of the first attendance at a meeting of the Board of
Directors, each outside Director will be automatically granted a further
option to purchase 5,000 shares. The exercise price of the options is to
be equal to the fair market value of the underlying common stock at the
date of grant. Under the terms of the 2001 Directors Option Plan, the
options are exercisable six months from the date of grant and expire ten
years from the date of grant. Employee Stock Purchase Plan In December 2001, the Company adopted the Regent Communications,
Inc. Employee Stock Purchase Plan (the Stock Purchase Plan) and
reserved 500,000 shares of common stock for issuance thereunder. Under
the Stock Purchase Plan, participating employees may purchase shares of
the Companys common stock at a price per share that is 90% of the lesser
of the fair market value as of the beginning or the end of the quarterly
offering period. Prior to January 1, 2003, the offering period was on a
semi-annual basis. Under the terms of the Stock Purchase Plan, eligible
employees may elect each offering period to have between 1 and 10% of
their compensation withheld through payroll deductions. A total of
approximately 38,000 and 24,000 shares of common stock have been issued
under the Stock Purchase Plan for the 2003 and 2002 offering periods,
respectively. Stock-based Compensation The Company applies the provisions of APB 25 in accounting for the
1998 Stock Option Plan, the 2001 Directors Option Plan, and the Stock
Purchase Plan. Under APB 25, no compensation expense is recognized for
options granted to employees or Directors at exercise prices that are
equal to or greater than the fair market value of the underlying common
stock at the grant date, or for purchases of common stock under the Stock
Purchase Plan. SFAS 123 requires the Company to provide, beginning with
1995 grants, pro forma information regarding net income (loss) and net
income (loss) per common share as if compensation costs for the Companys
stock-based compensation plans had been determined in accordance with the
fair value based method prescribed in SFAS 123. Such pro forma
information is included in Footnote 1. The weighted average fair value per share for options granted under
the 1998 Stock Option Plan and 2001 Directors Option Plan was $3.17,
$3.60, and $4.10 for ISOs in 2003, 2002 and 2001, respectively, and
$3.17, $3.57, and $4.12 for NQSOs in 72




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2003, 2002 and 2001, respectively. The weighted average fair value for options
granted under the Conversion Stock Option Plan was approximately $230,000
and such amount was recognized at the time of conversion since the
Converted Options are fully vested. The fair value of each option grant
is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions: 2003
    
    2002
    
    2001ISOs
    
    NQSOs
    
    ISOs
    
    NQSOs
    
    ISOs
    
    NQSOsDividends
    
    None
    
    None
    
    None
    
    None
    
    None
    
    NoneVolatility
    
    
    60.3
    %
    
    
    60.4
    %
    
    
    53.5
    %
    
    
    53.5
    %
    
    
    55.1
    %
    
    
    55.1
    %Risk-free
interest rate
    
    
    3.16
    %
    
    
    3.10
    %
    
    
    4.70
    %
    
    
    4.68
    %
    
    
    5.11
    %
    
    
    5.12
    %Expected
term
    
    5 years
    
    5 years
    
    5 years
    
    5 years
    
    5 years
    
    5 years
 The weighted average fair value per share for common stock issued
during 2003 under the Stock Purchase Plan was $3.04, calculated using an
average risk-free interest rate of 2.8%, volatility of 59.4%, assuming no
dividends and an expected term of five years. For the 2002 year, the
weighted average fair value per share was $1.61, calculated using an
average risk-free interest rate of 1.66%, volatility of 53.5%, assuming
no dividends and an expected term of five years. Presented below is a summary of the status of outstanding Company stock
options issued to employees and Directors: WEIGHTED AVERAGESHARES
    
    EXERCISE PRICECompany options held by employees and Directors:At December 31, 2000
    
    
    1,978,403
    
    
    $
    5.04Granted
    
    
    672,750
    
    
    $
    7.73Exercised
    
    
    (28,468
    )
    
    $
    1.65Forfeited/expired
    
    
    (13,000
    )
    
    $
    5.25Company options held by employees and Directors:At December 31, 2001
    
    
    2,609,685
    
    
    $
    5.77Granted
    
    
    522,000
    
    
    $
    6.95Exercised
    
    
    (16,074
    )
    
    $
    1.86Forfeited/expired
    
    
    (32,750
    )
    
    $
    7.51Company options held by employees and Directors:At December 31, 2002
    
    
    3,082,861
    
    
    $
    5.97Granted
    
    
    560,750
    
    
    $
    5.88Exercised
    
    
    (135,195
    )
    
    $
    3.73Forfeited/expired
    
    
    (24,500
    )
    
    $
    6.37Company options held by employees and Directors:At December 31, 2003
    
    
    3,483,916
    
    
    $
    6.04
 73




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the status of Company options outstanding and exercisable at December 31, 2003 under the 1998
Stock Option Plan and the 2001 Directors Option Plan: OPTIONS OUTSTANDING
    
    OPTIONS EXERCISABLEWEIGHTEDAVERAGE
    
    WEIGHTED
    
    
    
    
    
    WEIGHTEDREMAINING
    
    AVERAGE
    
    
    
    
    
    AVERAGECONTRACTUAL
    
    EXERCISE
    
    
    
    
    
    EXERCISEEXERCISE PRICE
    
    SHARES
    
    LIFE (YEARS)
    
    PRICE
    
    SHARES
    
    PRICE$6.13-$7.83
    
    
    1,348,250
    
    
    
    7.6
    
    
    $
    7.35
    
    
    
    614,800
    
    
    $
    7.44$5.00-$6.00
    
    
    2,135,666
    
    
    
    5.7
    
    
    $
    5.22
    
    
    
    1,450,166
    
    
    $
    5.023,483,916
    
    
    
    
    
    
    
    
    
    
    
    2,064,966
 There were options exercisable into common stock of 2,064,966,
1,764,411, and 1,531,976 shares at weighted average exercise prices of
$5.74, $5.40, and $5.24 per share at December 31, 2003, 2002, and 2001,
respectively. As of December 31, 2003, the stock options granted under the 1998
Stock Option Plan entitle the holders to purchase 3,263,916 shares of the
Companys common stock. Stock options granted under the 2001 Directors
Option Plan entitle the holders to purchase 220,000 shares of the
Companys common stock. There were no remaining stock options
outstanding under the Conversion Stock Option Plan at December 31, 2003.  7.
    
    EARNINGS PER SHARE Statement of Financial Accounting Standards No. 128 (SFAS 128)
calls for the dual presentation of basic and diluted earnings per share
(EPS). Basic EPS is calculated by dividing net income by the weighted
average number of common shares outstanding during the reporting period.
The calculation of diluted earnings per share is similar to basic except
that the weighted average number of shares outstanding includes the
additional dilution that would occur if potential common stock, such as
stock options or warrants, were exercised. The number of additional
shares is calculated by assuming that outstanding stock options and
warrants with an exercise price less than the Companys average stock
price for the period were exercised, and that the proceeds from such
exercises were used to acquire shares of common stock at the average
market price during the reporting period. At December 31, 2003, the
effects of the assumed exercise of 2,135,666 outstanding stock options
and 790,000 warrants to purchase shares of common stock were included in
the calculation of diluted net income per share. The effects of the
assumed exercise of 1,774,361 and 2,609,685 outstanding options and
790,000 and 790,000 warrants to purchase shares of common stock are
excluded from the calculations of diluted net loss per share at December
31, 2002 and 2001, respectively, as their effect was anti-dilutive. The following table sets forth the computation of basic and diluted
net income (loss) per share for the periods indicated (in thousands
except per share data): 74




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31,2003
    
    2002
    
    2001Net income (loss) before cumulative effect
of accounting change
    
    $
    5,706
    
    
    $
    (342
    )
    
    $
    (1,713
    )Cumulative effect of accounting change, net
of applicable income taxes of $3,762
    
    
    
    
    
    
    (6,138
    )
    
    
    Net income (loss)
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    (1,713
    )Weighted average basic common shares
    
    
    46,515
    
    
    
    43,177
    
    
    
    34,218Dilutive effect of stock options and warrants
    
    
    322
    
    
    
    
    
    
    
    Weighted average diluted common shares
    
    
    46,837
    
    
    
    43,177
    
    
    
    34,218Net income (loss) per common share:Basic and diluted:Net income (loss) before cumulative
effect of accounting change
    
    $
    0.12
    
    
    $
    (0.01
    )
    
    $
    (0.05
    )Cumulative effect of accounting change
    
    
    
    
    
    
    (0.14
    )
    
    
    Net income (loss)
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    (0.05
    )
  8.
    
    GOODWILL AND OTHER INTANGIBLE ASSETS The Companys intangible assets consist principally of the value of
FCC licenses and the excess of the purchase price over the fair value of
net assets of acquired radio stations (goodwill). On January 1, 2002,
the Company adopted the provisions of SFAS 142, which requires that a
Company no longer amortize goodwill and intangible assets determined to
have an indefinite life and also requires an annual impairment testing of
those assets. Consistent with the application provisions of SFAS 142,
the Company applied a fair value approach to test impairment of both
indefinite-lived intangible assets and goodwill on a market-by-market
basis. Based on the results of this evaluation, during the first quarter
of 2002, the Company recorded impairment charges against indefinite-lived
intangibles of approximately $3.9 million, net of income taxes of
approximately $2.4 million, and against goodwill of approximately $2.2
million, net of income taxes of approximately $1.4 million. Regent
reflected this charge as a component of cumulative effect of accounting
change in its Consolidated Statements of Operations. In estimating
future cash flows, the Company considered the impact of the economic slow
down in the radio industry at the end of 2001. Those conditions, combined
with the change in methodology for testing for impairment, which
previously employed the utilization of undiscounted cash flow
projections, adversely impacted the cash flow projections used to
determine the fair value of the FCC licenses, as well as each reporting
unit. No impairment charge was appropriate under the FASBs previous
goodwill impairment standard, which was based on undiscounted cash flows. During the fourth quarter of 2003, Regent performed its annual
review of goodwill for impairment and determined that it was not
necessary to record any impairment charges for the year 2003. While
performing its annual impairment of goodwill during the fourth quarter of
2002, and based on the Companys methodology of comparing discounted cash
flow projections for a reporting unit to the units carrying 75




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS value, it was determined that the carrying amount of goodwill relating to
the Peoria market exceeded the fair value by $2.9 million. This amount
was charged to operations in the fourth quarter of 2002 and was included
in the Consolidated Statements of Operations as an impairment of
goodwill. Assuming amortization of goodwill and other indefinite-lived
intangible assets had been discontinued at January 1, 2000, the
comparable net income (loss) and net income (loss) per share (basic and
diluted) for the prior-year periods would have been (in thousands, except
per share amounts): Year Ended December 31,2003
    
    2002
    
    2001Reported net income (loss)
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    (1,713
    )Add back: Goodwill amortization
    
    
    
    
    
    
    
    
    
    
    597Add back: FCC license
amortization
    
    
    
    
    
    
    
    
    
    
    6,976Adjusted net income (loss)
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    5,860Adjusted net income (loss)
applicable to common shares
    
    $
    5,706
    
    
    $
    (6,480
    )
    
    $
    5,860Basic and diluted income (loss) per
share:Reported net income (loss) per
share
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    (0.05
    )Impact of goodwill amortization
    
    
    
    
    
    
    
    
    
    
    0.02Impact of FCC license amortization
    
    
    
    
    
    
    
    
    
    
    0.20Adjusted net income (loss) per
share
    
    $
    0.12
    
    
    $
    (0.15
    )
    
    $
    0.17
 Definite-lived Intangible Assets The Company has definite-lived intangible assets that continue to be
amortized in accordance with SFAS 142, consisting primarily of
non-compete agreements. These agreements are amortized over the life of
the agreement. In accordance with the transition requirements of SFAS
142, the Company reassessed the useful lives of these intangibles and
made no changes to their useful lives. The following table presents the
gross carrying amount and accumulated amortization for the Companys
definite-lived intangibles at December 31, 2003 and 2002 (in thousands): December 31,
    
    December 31,2003
    
    2002Gross Carrying
    
    Accumulated
    
    Gross
    
    AccumulatedAmount
    
    Amortization
    
    Carrying Amount
    
    AmortizationNon-compete agreements
and other
    
    $
    762
    
    
    $
    458
    
    
    $
    762
    
    
    $
    292Total
    
    $
    762
    
    
    $
    458
    
    
    $
    762
    
    
    $
    292
 76




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The aggregate amortization expense related to the Companys
definite-lived intangible assets for the years ended December 31, 2003,
2002 and 2001, was approximately $166,000, $140,000, and $35,000,
respectively. The estimated annual amortization expense for the years
ending December 31, 2004, 2005 and 2006, is approximately $127,000,
$108,000, and $69,000, respectively. Indefinite-lived Intangible Assets The Companys indefinite-lived intangible assets consist of FCC
licenses for radio stations. Upon adoption of SFAS 142, the Company
ceased amortizing these assets, and instead tests the assets at least
annually for impairment. The following table presents the carrying
amount for the Companys indefinite-lived intangible assets at December
31, 2003 and 2002 (in thousands): December 31,
    
    December 31,2003
    
    2002FCC licenses
    
    $
    293,369
    
    
    $
    238,236Total
    
    $
    293,369
    
    
    $
    238,236
 The change in FCC licenses is due to the acquisition of radio stations in
2003. Goodwill SFAS 142 requires the Company to test goodwill for impairment using
a two-step process. Step one identifies potential impairment, while step
two measures the amount of the impairment. The following table presents
the changes in the carrying amount of goodwill for the years ended
December 31, 2003 and 2002 (in thousands): GoodwillBalance as of December 31, 2001
    
    $
    12,777Adjustments
    
    
    14,903Acquisition related goodwill
    
    
    2,997Impairment loss related to the adoption of SFAS 142
(pre-tax)
    
    
    (3,577
    )Impairment of goodwill in Peoria
    
    
    (2,900
    )Balance as of December 31, 2002
    
    $
    24,200Adjustments
    
    
    (110
    )Acquisition related goodwill
    
    
    1,559Balance as of December 31, 2003
    
    $
    25,649
 The adjustment to goodwill in 2002 primarily relates to a
reclassification to goodwill from FCC licenses upon the adoption of SFAS
142, and reclassifications, primarily between goodwill and FCC licenses,
as a result of final appraisals for the acquisitions of radio stations in
the Peoria, Illinois and Lafayette, Louisiana markets. The adjustments in
2003 primarily relate to pre-acquisition contingencies that were never
realized and were subsequently recorded as a reduction to goodwill. 77




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REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  9.
    
    INCOME TAXES The Companys income tax expense (benefit) consists of the following
for the years ended December 31 (in thousands): 2003
    
    2002
    
    2001Current federal
    
    $
    
    
    
    $
    (46
    )
    
    $
    47Current state
    
    
    102
    
    
    
    93
    
    
    
    135Total current
    
    $
    102
    
    
    $
    47
    
    
    $
    182Deferred federal
    
    $
    3,763
    
    
    $
    2,442
    
    
    $
    (640
    )Deferred state
    
    
    551
    
    
    
    267
    
    
    
    (207
    )Total deferred
    
    $
    4,314
    
    
    $
    2,709
    
    
    $
    (847
    )Valuation allowance
    
    $
    (454
    )
    
    $
    4,405
    
    
    $
    Net income tax
expense (benefit)
    
    $
    3,962
    
    
    $
    7,161
    
    
    $
    (665
    )
 Additionally, the Company recorded an income tax benefit of approximately
$3.8 million as a component of the cumulative effect of accounting change
as of January 1, 2002. The components of the Companys deferred tax assets and liabilities
are as follows as of December 31 (in thousands): 2003
    
    2002Deferred tax assets:Net operating loss carryforwards
    
    $
    16,209
    
    
    $
    12,590Miscellaneous accruals and credits
    
    
    346
    
    
    
    453Accounts receivable reserve
    
    
    330
    
    
    
    324Total deferred tax assets
    
    
    16,885
    
    
    
    13,367Valuation allowance
    
    
    (3,951
    )
    
    
    (4,405
    )Net deferred tax assets
    
    
    12,934
    
    
    
    8,962Deferred tax liabilities:Property and equipment
    
    
    (1,241
    )
    
    
    (1,656
    )Intangible assets
    
    
    (25,524
    )
    
    
    (17,449
    )Total deferred tax liabilities
    
    
    (26,765
    )
    
    
    (19,105
    )Net deferred tax liabilities
    
    $
    (13,831
    )
    
    $
    (10,143
    )
 The Company has cumulative federal and state tax loss carryforwards
of approximately $64.0 million at December 31, 2003. These loss
carryforwards will expire in years 2004 through 2023. The utilization of
a portion of these net operating loss carryforwards for federal income
tax purposes is limited pursuant to the annual utilization 78




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  limitations provided under the provisions of Internal Revenue Code
Section 382. The Company recorded a valuation allowance in 2003 for state
net operating losses that were generated in 2003 and are scheduled to
expire prior to 2016. Additionally, the valuation allowance against net
operating losses that expired during 2003 was released.  During the second half of 2002, the Companys ability to implement
its tax planning strategy to utilize net operating loss carryforwards was
reevaluated based on the current state of private market values for radio
station assets and the Company determined that it was more likely than
not that certain deferred tax assets would not be utilized in the
foreseeable future. Consequently, the Company recorded a valuation
allowance of approximately $4.4 million in 2002.  The difference between the Companys effective tax rate on income
(loss) before income taxes and the federal statutory tax rate arise from
the following: 2003
    
    2002
    
    2001Federal tax expense at statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    (34.0
    )%Amortization of intangibles and other
non-deductible expenses
    
    
    0.5
    
    
    
    0.5
    
    
    
    5.8Increase (decrease) of valuation allowance
    
    
    (4.7
    )
    
    
    64.6
    
    
    
    0.0Expiration of net operating losses
    
    
    6.5
    
    
    
    3.4
    
    
    
    0.0State tax, net of federal tax benefit
    
    
    5.7
    
    
    
    4.8
    
    
    
    (2.7
    )Other
    
    
    (1.0
    )
    
    
    (2.3
    )
    
    
    3.0Effective tax rate
    
    
    41.0
    %
    
    
    105.0
    %
    
    
    (27.9
    )%
  10.
    
    DERIVATIVE FINANCIAL INSTRUMENTS  Under the terms of its new credit facility, the Company was required
to enter into by December 31, 2003, and maintain for a two-year period
after becoming effective, an interest rate protection agreement,
providing interest rate protection for a minimum of one-half of the
aggregate outstanding borrowings under the combined term loans and
incremental term loans. In August 2003, the Company entered into a
LIBOR-based forward interest rate swap agreement, which will effectively
convert $32.5 million of its variable-rate debt under the new credit
facility to a fixed rate. The swap agreement becomes effective on June
30, 2004 and expires two years from that date. Under this agreement,
payments will be made based on a fixed rate, which Regent set in August
2003 based on the market for a financial instrument of this type at that
date. The Company has classified the swap agreement as a cash-flow
hedge, in which the Company is hedging the variability of cash flows
related to its variable-rate debt. The unrealized loss related to the
interest rate swap agreement was $0.2 million at December 31, 2003, net
of $0.1 million of income taxes, based on information received from the
counterparty to the agreement. This loss has been recorded as a component
of accumulated other 79




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  comprehensive loss. The Company determined that there was no
ineffectiveness in the hedge agreement at either the date of inception or
at December 31, 2003.  11.
    
    SAVINGS PLANS  Regent Communications, Inc.401(k)Profit Sharing Plan  The Company sponsors a defined contribution plan covering
substantially all employees. Both the employee and the Company can make
voluntary contributions to the plan. In the third quarter of 2000, the
Company added a matching feature to its contribution plan, in which the
Company will match participant contributions in the form of employer
stock. The matching formula is 50 cents for every dollar contributed up
to the first 6% of compensation. Company matched contributions vest to
the employees over a three-year period after one year of service.
Contribution expense was approximately $402,000, $294,000 and $307,000 in
2003, 2002 and 2001, respectively.  Regent Communications, Inc. Deferred Compensation Plan  On October 1, 2002, the Company implemented the Regent
Communications, Inc. Deferred Compensation Plan as a vehicle for highly
compensated employees to defer compensation that they could not otherwise
defer due to the limitations applicable to the Regent Communications,
Inc. 401(k) Profit Sharing Plan and to provide an opportunity to share in
matching contributions on a portion of such deferrals. The Board of
Directors determines the Companys matching cash contribution, if any,
within 60 days after the end of the calendar year for which deferrals
were made. For the 2003 plan year, the matching contribution was 100% of
the first 1% of deferrals contributed by participants, and contribution
expense was approximately $25,000. For the short plan year period of
October 1 through December 31, 2002, the matching contribution was 100%
of the first 4% of deferrals contributed by participants. Contribution
expense was approximately $5,000 for the year ended December 31, 2002.
Participants are immediately vested in all of their deferral
contributions. Matching contributions vest after attainment of age 65,
termination of employment due to disability, a change in control of the
Company, or if sooner, based on a vesting schedule of 33.3% after one
year of service, 66.6% after two years of service, and 100% after three
years of service. 80




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  12.
    
    OTHER FINANCIAL INFORMATION  Property and Equipment:  Property and equipment consists of the following as of December 31
(in thousands): 2003
    
    2002Equipment
    
    $
    37,791
    
    
    $
    29,949Furniture and fixtures
    
    
    1,989
    
    
    
    1,699Building and improvements
    
    
    9,145
    
    
    
    5,822Land and improvements
    
    
    4,424
    
    
    
    3,65853,349
    
    
    
    41,128Less accumulated depreciation
    
    
    (18,214
    )
    
    
    (14,239
    )Net property and equipment
    
    $
    35,135
    
    
    $
    26,889
  Depreciation expense was approximately $4.1 million, $3.2 million,
and $2.9 million for the years ended December 31, 2003, 2002 and 2001.  Other Current Liabilities:  Other current liabilities consist of the following as of December 31
(in thousands): 2003
    
    2002Accrued interest
    
    $
    184
    
    
    $
    90Accrued professional fees
    
    
    103
    
    
    
    327Accrued non-compete payments
    
    
    200
    
    
    
    300Due to seller for collection of receivables
and other
    
    
    
    
    
    
    349Acquisition related accruals
    
    
    445
    
    
    
    Accrued other
    
    
    2,386
    
    
    
    2,614$
    3,318
    
    
    $
    3,680
  13.
    
    COMMITMENTS AND CONTINGENCIES  In the normal course of business, the Company is subject to various
regulatory proceedings, lawsuits, claims and other matters. Such matters
are subject to many uncertainties and outcomes are not predictable with
assurance. In the opinion of the Companys management, the eventual
resolution of such matters for amounts above those reflected in the
consolidated financial statements would not likely have a materially
adverse effect on the financial condition of the Company.  As previously reported, Regent Communications, Inc. and certain of
its officers were named as defendants in a class action lawsuit relating
to our initial public offering, which proceeding remains pending in the
United States district court for the Southern District of New York. The
suit against Regent is a related proceeding to the In re Initial 81




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Public Offering Securities Litigation brought by various plaintiffs in
connection with various initial public offerings conducted during the
applicable statute of limitations time periods. Although the suit
remains in its preliminary stages, the Regent officers who were initially
named as defendants have subsequently been dismissed from the proceeding.
In addition, settlement discussions are ongoing with respect to the In
re Initial Public Offering Securities Litigation, and Regent expects to
participate in a settlement that will effectively end its participation
in the litigation. The terms of the agreement have been reached and the
settlement should be finalized in the near future. Notwithstanding the
foregoing, the outcome of this litigation remains uncertain and we have
not reserved for it.  The Company leases certain facilities and equipment used in its
operations. Certain of the Companys operating leases contain renewal
options and/or escalating rent provisions. Total rental expenses were
approximately $2.2 million, $2.0 million, and $1.2 million in 2003, 2002,
and 2001, respectively.  At December 31, 2003, the total minimum annual rental commitments
under non-cancelable leases are as follows (in thousands): Operating
    
    CapitalLeases
    
    Leases2004
    
    $
    1,353
    
    
    $
    3392005
    
    
    1,181
    
    
    
    882006
    
    
    1,167
    
    
    
    342007
    
    
    1,148
    
    
    
    92008
    
    
    1,050
    
    
    
    1Thereafter
    
    
    5,681
    
    
    
    4Total minimum payments
    
    $
    11,580
    
    
    
    475Amount representing interest
    
    
    
    
    
    
    12Present value of net minimum lease payments
    
    
    
    
    
    $
    463
 The Company classifies the current portion of capital leases in other current
liabilities and the long-term portion in other long-term liabilities. The cost
and accumulated depreciation associated with assets under capital leases is
considered insignificant. 82




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED): All adjustments necessary for a fair statement of income for each
period have been included (in thousands, except per share amounts): 1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th Quarterended
    
    ended
    
    ended
    
    ended
    
    TotalMarch 31
    
    June 30
    
    Sept. 30
    
    Dec. 31
    
    Year2003Net broadcast revenues
    
    $
    16,733
    
    
    $
    21,453
    
    
    $
    21,353
    
    
    $
    21,039
    
    
    $
    80,578Operating income
    
    
    748
    
    
    
    4,635
    
    
    
    4,474
    
    
    
    3,680
    
    
    
    13,537NET INCOME:
    
    
    110
    
    
    
    1,924
    
    
    
    2,137
    
    
    
    1,535
    
    
    
    5,706BASIC AND DILUTED NET
INCOME PER COMMON SHARE(1)(2):Net income per
common share
    
    $
    0.00
    
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.03
    
    
    $
    0.122002Net broadcast revenues
    
    $
    12,986
    
    
    $
    17,262
    
    
    $
    18,710
    
    
    $
    21,432
    
    
    $
    70,390Operating income(3)
    
    
    1,111
    
    
    
    3,400
    
    
    
    3,670
    
    
    
    1,279
    
    
    
    9,460Cumulative effect of accounting
change, net of taxes(4)
    
    
    (6,138
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,138
    )NET (LOSS) INCOME:
    
    
    (6,070
    )
    
    
    1,674
    
    
    
    1,817
    
    
    
    (3,901
    )
    
    
    (6,480
    )BASIC AND DILUTED NET (LOSS)
INCOME PER COMMON SHARE(1)(2):Before cumulative effect of accounting
change
    
    $
    0.00
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    (0.08
    )
    
    $
    (0.01
    )Net (loss) income per
common share
    
    $
    (0.17
    )
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    (0.08
    )
    
    $
    (0.15
    )
   (1)
    
    The sum of the quarterly net income (loss) per share amounts may
not equal the annual amount reported, as per share amounts are computed
independently for each quarter.(2)
    
    Despite net income for all four quarters in 2003 and for the second
and third quarters of 2002, net income per common share was the same
for both the basic and diluted calculation.(3)
    
    Results for the fourth quarter of 2002 include a charge of $2.9
million to operating income for the impairment of goodwill related to
the Companys Peoria market. Refer to Note 8 for further disclosures.(4)
    
    Refer to Note 8 for information regarding the cumulative effect of
accounting change.  15.
    
    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS  In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS 150). SFAS 150
changes the accounting for certain financial instruments that, under
previous guidance could be classified as equity or mezzanine equity by
now requiring those instruments to be classified as liabilities (or
assets in some circumstances) in the balance sheet. SFAS 150 affects an
entitys classification of mandatorily redeemable instruments, financial
instruments to repurchase an entitys own equity instruments and
financial instruments embodying obligations that 83




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REGENT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  the issuer must or could choose to settle by issuing a variable
number of its shares or other equity instruments based entirely on a
fixed monetary amount known at inception or something other than changes
in its own equity instruments. The Company adopted SFAS 150 effective
June 30, 2003, with no impact to the Companys financial position, cash
flows or results of operations. Under its currently effective shelf
registration statement, the Company has the ability to offer for sale
financial instruments with characteristics of both debt and equity. If
the Company were to issue such instruments, the provisions of SFAS 150
would be applied. 84




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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands) ADDITIONSBALANCE
    
    CHARGED
    
    
    
    
    
    
    
    
    
    BALANCEAT
    
    TO
    
    CHARGED TO
    
    
    
    
    
    ATBEGINNING
    
    COSTS AND
    
    OTHER
    
    
    
    
    
    THE ENDOF PERIOD
    
    EXPENSES
    
    ACCOUNTS
    
    DEDUCTIONS(1)
    
    OF PERIODAllowance for doubtful accounts:Years ended December 31,2003
    
    $
    854
    
    
    
    908
    
    
    
    
    
    
    
    894
    
    
    $
    8682002
    
    $
    719
    
    
    
    819
    
    
    
    
    
    
    
    684
    
    
    $
    8542001
    
    $
    403
    
    
    
    822
    
    
    
    
    
    
    
    506
    
    
    $
    719Deferred tax asset valuation allowance:Years ended December 31,2003
    
    $
    4,405
    
    
    
    177
    (2)
    
    
    
    
    
    
    631
    (3)
    
    $
    3,9512002
    
    $
    
    
    
    
    4,405
    (4)
    
    
    
    
    
    
    
    
    
    $
    4,4052001
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
  (1)
    
    Represents accounts written off to the reserve.(2)
    
    Represents a valuation allowance recorded for state net operating
loss carryforwards generated in 2003 and scheduled to expire prior to
2016.(3)
    
    Represents the release of valuation allowance for federal and state
net operating loss carryforwards that expired in 2003.(4)
    
    See Note 9 in the Notes to Consolidating Financial Statements. 85




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. 
 ITEM 9A. CONTROLS AND PROCEDURES. The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Companys Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to the Companys management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the definition of
disclosure controls and procedures in Rule 13a-14c. In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. The Company has carried out an evaluation, under the supervision and with
the participation of the Companys management, including the Companys Chief
Executive Officer and the Companys Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures as of the end of the period covered by this report. Based on
the foregoing, the Companys Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls and procedures were
effective. There have been no significant changes to the Companys internal controls
over financial reporting during the quarter December 31, 2003 or in other
factors that could significantly affect the internal controls subsequent to the
date the Company completed its evaluation. Therefore, no corrective actions
were taken. 
 PART III 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information required by this Item 10 is hereby incorporated by
reference from our definitive Proxy Statement, and specifically from the
portions thereof captioned Section 16 (a) Beneficial Ownership Reporting
Compliance, Election of Directors and Executive Officers, to be filed in
April 2004 in connection with the 2004 Annual Meeting of Stockholders presently
scheduled to be held on May 19, 2004. 
 ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item 11 are hereby incorporated by
reference from our definitive Proxy Statement to be filed in April 2004 in
connection with the 2004 Annual Meeting of Stockholders, presently scheduled to
be held on May 19, 2004, and specifically from the portions thereof captioned
Executive Compensation and Stock Performance Graph, except that the
information required by Items 402(k) and (l) of Regulation S-K which appear
within such caption under the sub-heading Compensation Committee Report are
specifically not 86




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incorporated by reference into this Form 10-K or into any other filing by
Regent under the Securities Act of 1933 or the Securities Exchange Act of 1934. 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Except for the information required by Item 201(d) of Regulation S-K,
which is included below, the information required by this Item 12 is hereby
incorporated by reference from our definitive Proxy Statement, and specifically
from the portion thereof captioned Security Ownership of Certain Beneficial
Owners and Management, to be filed in April 2004, in connection with the 2004
Annual Meeting of Stockholders, presently scheduled to be held on May 19, 2004. Number of
    
    
    
    
    
    Number of securitiessecurities to be
    
    
    
    
    
    remaining availableissued upon
    
    Weighted average
    
    for issuance underexercise of
    
    exercise price of
    
    equity compensationoutstanding
    
    outstanding
    
    plans (excludingoptions, warrants
    
    options, warrants
    
    securitiesand rights
    
    and rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    3,497,496
    
    
    $
    6.05
    
    
    
    1,656,825Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    3,497,496
    
    
    $
    6.05
    
    
    
    1,656,825
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this Item 13 is hereby incorporated by
reference from our definitive Proxy Statement, and specifically from the
portion thereof captioned Certain Relationships and Related Transactions, to
be filed in April 2004 in connection with the 2004 Annual Meeting of
Stockholders, presently scheduled to be held on May 19, 2004. 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this Item 14 is hereby incorporated by
reference from our definitive Proxy Statement, and specifically from the
portion thereof captioned Independent Public Accountants, to be filed in
April 2004 in connection with the 2004 Annual Meeting of Stockholders,
presently scheduled to be held on May 19, 2004. 
 PART IV 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.  (a)
    
    1. FINANCIAL STATEMENTS. 87




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The consolidated financial statements of Regent Communications, Inc. and
subsidiaries filed as part of this Annual Report on Form 10-K are set forth
under Item 8. 2. FINANCIAL STATEMENT SCHEDULES. The financial statement schedule filed as part of this Annual Report on
Form 10-K is set forth under Item 8. 3. EXHIBITS. A list of the exhibits filed or incorporated by reference as part of this
Annual Report on Form 10-K is set forth in the Index to Exhibits which
immediately precedes such exhibits and is incorporated herein by this
reference. (b) REPORTS ON FORM 8-K. On November 2003, we filed a report on Form 8-K announcing financial
results for the third quarter of 2003. 88




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Regent Communications, Inc. has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized. REGENT COMMUNICATIONS, INC.Date: March 10, 2004
    
    By:

    /s/ TERRY S. JACOBSTerry S. Jacobs, Chairman of the Board,Chief Executive Officer and Treasurer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. Signature
    
    Title
    
    Date/s/ TERRY S. JACOBS
Terry S. Jacobs
    
    Chairman of the Board, Chief
Executive Officer, Treasurer and
Director (Principal Executive Officer)
    
    March 10, 2004/s/ WILLIAM L. STAKELIN
William L. Stakelin
    
    President, Chief Operating Officer,
Secretary and Director
    
    March 10, 2004/s/ ANTHONY A. VASCONCELLOS
Anthony A. Vasconcellos
    
    Senior Vice President and Chief
Financial Officer (Principal Financial
and Principal Accounting Officer)
    
    March 10, 2004/s/ JOEL M. FAIRMAN
Joel M. Fairman
    
    Director
    
    March 10, 2004/s/ HENDRIK J. HARTONG, JR.
Hendrik J. Hartong, Jr.
    
    Director
    
    March 10, 2004/s/ WILLIAM H. INGRAM
William H. Ingram
    
    Director
    
    March 10, 2004/s/ R. GLEN MAYFIELD
R. Glen Mayfield
    
    Director
    
    March 10, 2004/s/ TIMOTHY M. MOONEY
Timothy M. Mooney
    
    Director
    
    March 10, 2004/s/ RICHARD H. PATTERSON
Richard H. Patterson
    
    Director
    
    March 10, 2004/s/ WILLIAM P. SUTTER, JR.
William P. Sutter, Jr.
    
    Director
    
    March 10, 2004/s/ JOHN H. WYANT
John H. Wyant
    
    Director
    
    March 10, 2004
 S-1




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##### Table of Contents



EXHIBIT INDEX The following exhibits are filed, or incorporated by reference where
indicated, as part of Part IV of this Annual Report on Form 10-K: EXHIBITNUMBER
    
    EXHIBIT DESCRIPTION2(a)*
    
    Asset Purchase Agreement made by and among Regent Communications, Inc.
and Brill Media Company L.L.C. and certain of its subsidiaries dated
August 22, 2002 (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 2.1 to the
Registrants Form 8-K dated March 11, 2003 and incorporated herein by this
reference)3(a)*
    
    Amended and Restated Certificate of Incorporation of Regent
Communications, Inc., as amended by a Certificate of Designation, Number,
Powers, Preferences and Relative, Participating, Optional and Other
Special Rights and the Qualifications, Limitations, Restrictions, and
Other Distinguishing Characteristics of Series G Preferred Stock of Regent
Communications, Inc., filed January 21, 1999 (previously filed as Exhibit
3(a) to the Registrants Form 10-K for the year ended December 31, 1998
and incorporated herein by this reference)3(b)*
    
    Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Regent Communications, Inc. filed with the Delaware
Secretary of State on November 19, 1999 (previously filed as Exhibit 3(b)
to the Registrants Form 10-Q for the quarter ended June 30, 2001 and
incorporated herein by this reference)3(c)*
    
    Certificate of Decrease of Shares Designated as Series G Convertible
Preferred Stock of Regent Communications, Inc., filed with the Delaware
Secretary of State on June 21, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc., as amended
(previously filed as Exhibit 3(c) to the Registrants Form 10-Q for the
quarter ended June 30, 1999 and incorporated herein by this reference)3(d)*
    
    Certificate of Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Special Rights and the Qualifications,
Limitations, Restrictions, and Other Distinguishing Characteristics of
Series H Preferred Stock of Regent Communications, Inc., filed with the
Delaware Secretary of State on June 21, 1999 amending the Amended and
Restated Certificate of Incorporation of Regent Communications, Inc., as
amended (previously filed as Exhibit 3(d) to the Registrants Form 10-Q
for the quarter ended June 30, 1999 and incorporated herein by this
reference)3(e)*
    
    Certificate of Decrease of Shares Designated as Series G Convertible
Preferred Stock of Regent Communications, Inc., filed with the Delaware
Secretary of State on August 23, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc., as amended
(previously filed as Exhibit 3(e) to the Registrants Form 10-Q for the
quarter ended on September 30, 1999 and incorporated herein by this
reference)
 E-1




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EXHIBITNUMBER
    
    EXHIBIT DESCRIPTION3(f)*
    
    Certificate of Increase of Shares Designated as Series H Convertible
Preferred Stock of Regent Communications, Inc., filed with the Delaware
Secretary of State on August 23, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc., as amended
(previously filed as Exhibit 3(f) to the Registrants Form 10-Q for the
quarter ended on September 30, 1999 and incorporated herein by this
reference)3(g)*
    
    Certificate of Designation, Number, Powers, Preferences and Relative,
Participating, Optional, and Other Special Rights and the Qualifications,
Limitations, Restrictions, and Other Distinguishing Characteristics of
Series K Preferred Stock of Regent Communications, Inc., filed with the
Delaware Secretary of State on December 13, 1999 amending the Amended and
Restated Certificate of Incorporation of Regent Communications, Inc., as
amended (previously filed as Exhibit 3(g) to Amendment No. 1 to the
Registrants Form S-1 Registration Statement No. 333-91703 filed December
29, 1999 and incorporated herein by this reference)3(h)*
    
    Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Regent Communications, Inc. filed with the Delaware
Secretary of State on March 13, 2002 (previously filed as Exhibit 3(h) to
the Registrants Form 10-K for the year ended December 31, 2001 and
incorporated herein by this reference)3(i)*
    
    Amended and Restated By-Laws of Regent Communications, Inc. (previously
filed as Exhibit 3(b) to the Amendment No. 1 to the Registrants Form S-4
Registration Statement No. 333-46435 filed April 8, 1999 and incorporated
herein by this reference)3(j)*
    
    Amendments to By-Laws of Regent Communications, Inc. adopted December
13, 1999 (previously filed as Exhibit 3(h) to Amendment No. 1 to the
Registrants Form S-1 Registration Statement No. 333-91703 filed December
29, 1999 and incorporated herein by this reference)4(a)*
    
    Credit Agreement dated as of June 30, 2003 among Regent Broadcasting,
Inc., Regent Communications, Inc., Fleet National Bank, as Administrative
Agent, Fleet National Bank, as Issuing Lender, US Bank, National
Association, as Syndication Agent, Wachovia Bank, National Association and
Suntrust BanK, as co-Documentation Agents, and the several lenders party
thereto (previously filed as Exhibit 10.1 to the Registrants Form 8-K
filed July 1, 2003 and incorporated herein by this reference)4(b)*
    
    Rights Agreement dated as of May 19, 2003 between Regent Communications,
Inc. and Fifth Third Bank (previously filed as Exhibit 4.1 to the
Registrants Form 8-K filed May 20, 2003 and incorporate herein by this
reference)10(a)*#
    
    Regent Communications, Inc. 1998 Management Stock Option Plan, as
amended through May 17, 2001 and restated as of October 24, 2002
(previously filed as Exhibit 10(b) to the Registrants Form 10-Q for the
quarter ended September 30, 2002 and incorporated herein by this
reference)
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT DESCRIPTION10(b)*#
    
    Regent Communications, Inc. 2001 Directors Stock Option Plan dated May
17, 2001 (previously filed as Exhibit 10(b) to the Registrants Form 10-Q
for the quarter ended June 30, 2001 and incorporated herein by this
reference)10(c)*#
    
    Regent Communications, Inc. Employee Stock Purchase Plan, as amended on
October 24, 2002 and effective January 1, 2003 (previously filed as
Exhibit 10(a) to the Registrants Form 10-Q for the quarter ended
September 30, 2002 and incorporated herein by this reference)10(d)*#
    
    Regent Communications, Inc. Deferred Compensation Plan dated July 25,
2002 and effective October 1, 2002 (previously filed as Exhibit 10(e) to
the Registrants Form 10-K for the year ended December 31, 2002 and
incorporated herein by this reference)10(e)#
    
    Employment Agreement between Regent Communications, Inc. and Terry S.
Jacobs10(f)#
    
    Employment Agreement between Regent Communications, Inc. and William L.
Stakelin10(g)#
    
    Employment Agreement between Regent Communications, Inc. and Anthony A.
Vasconcellos10(h)*
    
    Stock Purchase Agreement dated June 15, 1998 among Regent
Communications, Inc., Waller-Sutton Media Partners, L.P., WPG Corporate
Development Associates V, L.C.C., WPG Corporate Development Associates
(Overseas) V, L.P., General Electric Capital Corporation, River Cities
Capital Fund Limited Partnership and William H. Ingram (excluding exhibits
not deemed material or filed separately in executed form) (previously
filed as Exhibit 4(d) to the Registrants Form 8-K filed June 30, 1998 and
incorporated herein by this reference)10(i)*
    
    Registration Rights Agreement dated June 15, 1998 among Regent
Communications, Inc., PNC Bank, N.A., Trustee, Waller-Sutton Media
Partners, L.P., WPG Corporate Development Associates V, L.C.C., WPG
Corporate Development Associates (Overseas) V, L.P., BMO Financial, Inc.,
General Electric Capital Corporation, River Cities Capital Fund Limited
Partnership, Terry S. Jacobs, William L. Stakelin, William H. Ingram, Blue
Chip Capital Fund II Limited Partnership, Miami Valley Venture Fund L.P.
and Thomas Gammon (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 4(e) to the
Registrants Form 8-K filed June 30, 1998 and incorporated herein by this
reference)10(j)*
    
    Warrant for the Purchase of 650,000 Shares of Common Stock issued by
Regent Communications, Inc. to Waller-Sutton Media Partners, L.P. dated
June 15, 1998 (See Note 1 below) (previously filed as Exhibit 4(f) to the
Registrants Form 8-K filed June 30, 1998 and incorporated herein by this
reference)10(k)*
    
    Stock Purchase Agreement dated June 21, 1999 between Regent
Communications, Inc. and Waller-Sutton Media Partners, L.P. relating to
the purchase of 90,909 shares of Regent Communications, Inc. Series H
convertible
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT DESCRIPTIONpreferred stock (See Note 2 below) (excluding exhibits not deemed
material or filed separately in executed form) (previously filed
as Exhibit 4(aa) to the Registrants Form 10-Q for the quarter
ended June 30,1999 and incorporated herein by this reference)10(l)*
    
    Stock Purchase Agreement dated June 21, 1999, among Regent
Communications, Inc., WPG Corporate Development Associates V, L.L.C. and
WPG Corporate Development Associates V (Overseas), L.P. relating to the
purchase of 1,180,909 and 182,727 shares, respectively, of Regent
Communications, Inc. Series H convertible preferred stock (excluding
exhibits not deemed material or filed separately in executed
form)(previously filed as Exhibit 4(bb) to the Registrants Form 10-Q for
the quarter ended June 30, 1999 and incorporated herein by this reference)10(m)*
    
    Stock Purchase Agreement dated as of August 31, 1999 among Regent
Communications, Inc., The Roman Arch Fund L.P. and The Roman Arch Fund II
L.P. relating to the purchase of 109,091 and 72,727 shares, respectively,
of Regent Communications, Inc. Series H convertible preferred stock
(excluding exhibits not deemed material or filed separately in executed
form) (previously filed as Exhibit 4(ee) to the Registrants Form 10-Q for
the quarter ended on September 30, 1999 and incorporated herein by this
reference)10(n)*
    
    First Amendment to Registration Rights Agreement dated as of August 31,
1999 among Regent Communications, Inc., PNC Bank, N.A., as trustee,
Waller-Sutton Media Partners, L.P., WPG Corporate Development Associates
V, L.L.C., WPG Corporate Development Associates (Overseas) V, L.P., BMO
Financial, Inc., General Electric Capital Corporation, River Cities
Capital Fund Limited Partnership, Terry S. Jacobs, William L. Stakelin,
William H. Ingram, Blue Chip Capital Fund II Limited Partnership, Miami
Valley Venture Fund L.P. and Thomas P. Gammon (excluding exhibits not
deemed material or filed separately in executed form) (previously filed as
Exhibit 4(gg) to the Registrants Form 10-Q for the quarter ended on
September 30, 1999 and incorporated herein by this reference)10(o)*
    
    Second Amendment to Registration Rights Agreement dated as of December
13, 1999, among Regent Communications, Inc., Terry S. Jacobs, William L.
Stakelin, Blue Chip Capital Fund II Limited Partnership, Blue Chip Capital
Fund III Limited Partnership, Miami Valley Venture Fund, L.P., PNC Bank,
N.A., as trustee, PNC Bank, N.A., Custodian, Waller-Sutton Media Partners,
L.P., River Cities Capital Fund Limited Partnership, Mesirow Capital
Partners VII, WPG Corporate Development Associates V, L.L.C., WPG
Corporate Development Associates V (Overseas) L.P., General Electric
Capital Corporation, William H. Ingram, The Roman Arch Fund L.P., The
Roman Arch Fund II L.P. and The Prudential Insurance Company of America
(previously filed as Exhibit 4(hh) to Amendment No. 1 to the Registrants
Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and
incorporated herein by this reference)10(p)*
    
    Third Amended and Restated Stockholders Agreement dated as of December
13, 1999, among Regent Communications, Inc., Terry S. Jacobs, William L.
Stakelin, Blue Chip Capital Fund II Limited Partnership, Blue Chip Capital
Fund III Limited Partnership, Miami Valley Venture Fund, L.P., PNC Bank,
N.A., as
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT DESCRIPTIONtrustee, PNC Bank, N.A., Custodian, Waller-Sutton Media Partners,
L.P., River Cities Capital Fund Limited Partnership, Mesirow
Capital Partners VII, WPG Corporate Development Associates V,
L.L.C., WPG Corporate Development Associates V (Overseas) L.P.,
General Electric Capital Corporation, William H. Ingram, Joel M.
Fairman, The Roman Arch Fund L.P., The Roman Arch Fund II L.P. and
the Prudential Insurance Company of America (previously filed as
Exhibit 4(ii) to Amendment No. 1 to the Registrants Form S-1
Registration Statement No. 333-91703 filed December 29, 1999 and
incorporated herein by this reference)10(q)*
    
    Stock Purchase Agreement dated as of November 24, 1999, between Regent
Communications, Inc. and Blue Chip Capital Fund III Limited Partnership
(see Note 3 below) (previously filed as Exhibit (jj) to Amendment No. 1 to
the Registrants Form S-1 Registration Statement filed December 29, 1999
and incorporated herein by this reference)10(r)*
    
    Third Amendment to Registration Rights Agreement, dated August 28, 2001,
among Regent Communications, Inc. and the Stockholders who are signatories
thereto (previously filed as Exhibit 10(b) to the Registrants Form 10-Q
for the quarter ended September 30, 2001 and incorporated herein by this
reference)10(s)*
    
    Fourth Amendment to Registration Rights Agreement, dated as of November
26, 2001, among Regent Communications, Inc. and the Stockholders who are
signatories thereto (previously filed as Exhibit 10(t) to the Registrants
Form 10-K for the year ended December 31, 2001 and incorporated herein by
this reference)10(t)*
    
    Registration Rights Agreement dated as of January 7, 2002, between
Regent Communications, Inc. and ComCorp of Lafayette, Inc. (previously
filed as Exhibit 10(u) to the Registrants Form 10-K for the year ended
December 31, 2001 and incorporated herein by this reference)10(u)*
    
    Registration Rights Agreement dated as of January 7, 2002 between Regent
Communications, Inc. and Abbeville Broadcasting Service, Inc. (previously
filed as Exhibit 10(v) to the Registrants Form 10-K for the year ended
December 31, 2001 and incorporated herein by this reference)21
    
    Subsidiaries of Registrant23
    
    Consent of Independent Accountants31(a)
    
    Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification31(b)
    
    Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification32(a)
    
    Chief Executive Officer Section 1350 Certification32(b)
    
    Chief Financial Officer Section 1350 Certification
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*
    
    Incorporated by reference.#
    
    Constitutes a management contract or compensatory plan or arrangement. NOTES:  1.
    
    Six substantially identical warrants for the purchase of shares of
Registrants common stock were issued as follows: SharesWaller-Sutton Media Partners, L.P.
    
    
    650,000WPG Corporate Development Associates V, L.L.C.
    
    
    112,580WPG Corporate Development Associates (Overseas) V, L.P.
    
    
    17,420General Electric Capital Corporation
    
    
    50,000River Cities Capital Fund Limited Partnership
    
    
    20,000William H. Ingram
    
    
    10,000
  2.
    
    Two substantially identical stock purchase agreements were entered into
for the purchase of Series H convertible preferred stock as follows: Blue Chip Capital Fund II Limited Partnership
    
    363,636 sharesPNC Bank, N.A., as trustee
    
    181,818 shares
  3.
    
    Four substantially identical stock purchase agreements were entered into
for the purchase of Series K convertible preferred stock as follows: WPG Corporate Development Associates V, L.L.C. and
WPG Corporate Development Associates V (Overseas), L.P.
    
    181,818 sharesPNC Bank, N.A., Custodian
    
    181,818 sharesMesirow Capital Partners VII
    
    818,181 sharesThe Prudential Insurance Company of America
    
    1,000,000 shares
 E-6