**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 

| **ý**                                             | **Quarterly  Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|--------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                   |                                                                                          |
| **For  the Quarterly Period Ended September 30, 2002** |
|                                                   |                                                                                          |
| **OR**                                                 |
|                                                   |                                                                                          |
| **o**                                                  | **Transition  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                                                   |                                                                                          |
| **Commission File No. 001-15151**                      |

 

| **Radio  Unica Communications Corp.**                                               |
|-------------------------------------------------------------------------------------|
| (Exact name of  registrant as specified in its charter)                             |
|                                                                                |   |   |
| **Delaware**                                                                        |   | **65-0856900** |
| (State of  Incorporation)                                                           |   | (I.R.S. Employer  Identification Number) |
|                                                                                |   |   |
| **8400 N.W. 52nd Street,  Suite 101  Miami, FL**                                    |   | **33166** |
| (Address of principal  executive offices)                                           |   | (Zip Code) |
|                                                                                |   |   |
| **305-463-5000**                                                                    |
| (Registrant’s telephone  number, including area code)                          |
|                                                                                |   |   |
| **N/A**                                                                             |
| (Former name, former  address and former fiscal year, if changed since last report) |

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.   YES ý              NO o

 

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

 

As of November 14, 2002,20,941,656 shares of Common Stock, $.01 par value were outstanding.

 

 

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**RADIO UNICA COMMUNICATIONS CORP.**

 

**TABLE OF CONTENTS**

 
| **PART I.**  | **FINANCIAL INFORMATION**                                   |
|--------------|-------------------------------------------------------------|
|         |                                                        |   |
| Item 1.      | Financial Statements                                        |
| Item  2.     | Management’s  Discussion and Analysis                  |
| Item  3.     | Quantitative  and Qualitative Disclosures about Market Risk |
| Item 4.      | Controls and Procedures                                     |
|         |                                                        |   |
| **PART II.** | **OTHER INFORMATION**                                       |
|         |                                                        |   |
| Item 2.      | Changes in Securities                                       |
| Item 6.      | Exhibits and  Reports on Form 8-K                           |

 

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**RADIO UNICACOMMUNICATIONS CORP.**

 

**CONSOLIDATEDBALANCE SHEETS**

 
|                                                                                                                     |   | **September 30,  2002** |        | **December 31,  2001** |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|------------------------|--------|
|                                                                                                                     |   | **(Unaudited)**         |        |                   |   |
| **ASSETS**                                                                                                               |   |                    |        |                   |   |
| Current assets:                                                                                                          |   |                    |        |                   |   |
| Cash and cash equivalents                                                                                                |   | $                       | 10,383,187  |                   | $      | 19,909,952 |   |
| Accounts receivable, net of  allowance for doubtful accounts of $1,267,836 and $1,253,425, respectively                  |   | 9,992,116               |        | 10,251,340             |   |
| Prepaid expenses and other  current assets                                                                               |   | 1,570,656               |        | 1,600,898              |   |
| Total current assets                                                                                                     |   | 21,945,959              |        | 31,762,190             |   |
|                                                                                                                     |   |                    |        |                   |   |
| Property and equipment, net                                                                                              |   | 24,778,664              |        | 23,971,415             |   |
| Broadcast licenses, net of  accumulated amortization of $10,336,623                                                      |   | 98,200,730              |        | 98,200,730             |   |
| Other intangible assets,  net                                                                                            |   | 9,256,912               |        | 9,055,938              |   |
| Other assets                                                                                                             |   | 994,168                 |        | 344,543                |   |
|                                                                                                                     |   | $                       | 155,176,433 |                   | $      | 163,334,816 |   |
|                                                                                                                     |   |                    |        |                   |   |
| **LIABILITIES  AND STOCKHOLDERS’ (DEFICIT) EQUITY**                                                                 |   |                    |        |                   |   |
| Current liabilities:                                                                                                     |   |                    |        |                   |   |
| Accounts payable                                                                                                         |   | $                       | 737,850     |                   | $      | 2,216,655 |   |
| Accrued expenses                                                                                                         |   | 2,197,684               |        | 2,942,467              |   |
| Interest payable                                                                                                         |   | 3,095,890               |        | —                 |   |
| Current portion of notes  payable                                                                                        |   | 645,657                 |        | 984,991                |   |
| Deferred revenue                                                                                                         |   | 743,161                 |        | 658,943                |   |
| Total current liabilities                                                                                                |   | 7,420,242               |        | 6,803,056              |   |
|                                                                                                                     |   |                    |        |                   |   |
| Other liabilities                                                                                                        |   | 75,000                  |        | 55,000                 |   |
| Notes payable                                                                                                            |   | 502,013                 |        | 1,139,276              |   |
| Deferred taxes                                                                                                           |   | 871,406                 |        | 988,460                |   |
| Senior discount notes                                                                                                    |   | 158,088,000             |        | 147,934,782            |   |
|                                                                                                                     |   |                    |        |                   |   |
| Commitments and  contingencies                                                                                           |   |                    |        |                   |   |
|                                                                                                                     |   |                    |        |                   |   |
| Stockholders’ (deficit)  equity:                                                                                    |   |                    |        |                   |   |
| Preferred stock; $.01 par  value; 5,000,000 shares authorized; no shares issued or outstanding                           |   | —                  |        | —                 |   |
| Common stock; $.01 par  value; 40,000,000 shares authorized; 21,420,456 shares issued and 20,941,656  shares outstanding |   | 214,205                 |        | 214,205                |   |
| Additional paid-in capital                                                                                               |   | 161,522,206             |        | 161,522,206            |   |
| Treasury stock at cost;  478,800 shares                                                                                  |   | (1,315,644              | )           | (1,315,644             | )      |
| Stockholders notes  receivable                                                                                           |   | (749,657                | )           | (749,657               | )      |
| Deferred compensation  expense                                                                                           |   | (173,159                | )           | (570,817               | )      |
| Accumulated deficit                                                                                                      |   | (171,278,179            | )           | (152,686,051           | )      |
| Total stockholders’  (deficit) equity                                                                               |   | (11,780,228             | )           | 6,414,242              |   |
|                                                                                                                     |   | $                       | 155,176,433 |                   | $      | 163,334,816 |   |

 

*Theaccompanying notes are an integral part of these financial statements.*

 

2

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**RADIO UNICACOMMUNICATIONS CORP.**

 

**CONSOLIDATEDSTATEMENTS OF OPERATIONS (Unaudited)**

 
|                                                            |   | **Three  months ended  September 30,** |       | **Nine months  ended  September 30,** |   |
|-----------------------------------------------------------------|--------|----------------------------------------|------------|---------------------------------------|--------|
|                                                            |   | **2002**                               |       | **2001**                              |   | **2002** |   | **2001** |   |
|                                                            |   |                                   |       |                                  |   |   |   |   |   |
| Net revenue                                                     |   | $                                      | 12,015,508 |                                  | $      | 11,408,829 |   | $ | 32,355,776 |   | $ | 26,953,385 |   |
|                                                            |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                             |   |                                   |       |                                  |   |   |   |   |   |
| Direct operating                                                |   | 1,390,475                              |       | 1,817,328                             |   | 3,888,901 |   | 5,909,611 |   |
| Selling, general and  administrative                            |   | 4,595,505                              |       | 4,656,440                             |   | 13,403,676 |   | 13,015,428 |   |
| Network                                                         |   | 3,054,998                              |       | 4,730,205                             |   | 10,528,746 |   | 12,432,243 |   |
| Corporate                                                       |   | 919,216                                |       | 996,316                               |   | 2,858,827 |   | 2,974,410 |   |
| Cost of promotion services                                      |   | 1,926,348                              |       | 1,509,953                             |   | 3,977,541 |   | 2,210,460 |   |
| Depreciation and  amortization                                  |   | 768,192                                |       | 1,746,601                             |   | 2,260,142 |   | 5,076,312 |   |
| Stock option compensation                                       |   | 86,191                                 |       | 177,811                               |   | 397,657 |   | 533,425 |   |
|                                                            |   | 12,740,925                             |       | 15,634,654                            |   | 37,315,490 |   | 42,151,889 |   |
| Loss from operations                                            |   | (725,417                               | )          | (4,225,825                            | )      | (4,959,714 | ) | (15,198,504 | ) |
|                                                            |   |                                   |       |                                  |   |   |   |   |   |
| Other income (expense):                                         |   |                                   |       |                                  |   |   |   |   |   |
| Interest expense                                                |   | (4,847,932                             | )          | (4,390,201                            | )      | (13,963,800 | ) | (12,615,654 | ) |
| Interest income                                                 |   | 75,342                                 |       | 262,956                               |   | 268,986 |   | 1,240,540 |   |
| Loss on investment in  unconsolidated company                   |   | —                                 |       | (5,209,817                            | )      | — |   | (5,008,160 | ) |
| Other                                                           |   | (1,734                                 | )          | (11,809                               | )      | (54,654 | ) | 2,581 |   |
|                                                            |   | (4,774,324                             | )          | (9,348,871                            | )      | (13,749,468 | ) | (16,380,693 | ) |
| Loss before income taxes                                        |   | (5,499,741                             | )          | (13,574,696                           | )      | (18,709,182 | ) | (31,579,197 | ) |
| Income tax benefit                                              |   | 39,018                                 |       | 39,018                                |   | 117,054 |   | 117,053 |   |
| Net loss                                                        |   | $                                      | (5,460,723 | )                                     | $      | (13,535,678 | ) | $ | (18,592,128 | ) | $ | (31,462,144 | ) |
|                                                            |   |                                   |       |                                  |   |   |   |   |   |
| Net loss per common share -  basic and diluted                  |   | $                                      | (0.26      | )                                     | $      | (0.65 | ) | $ | (0.89 | ) | $ | (1.51 | ) |
|                                                            |   |                                   |       |                                  |   |   |   |   |   |
| Weighted average common  shares outstanding - basic and diluted |   | 20,941,656                             |       | 20,836,982                            |   | 20,941,656 |   | 20,820,294 |   |

 

*Theaccompanying notes are an integral part of these financial statements.*

 

3

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**RADIO UNICACOMMUNICATIONS CORP.**

 

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS (Unaudited)**

 
|                                                                                |   | **Nine months  ended September 30,** |        |
|-------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|
|                                                                                |   | **2002**                             |        | **2001** |   |
|                                                                                |   |                                 |        |   |   |
| **Operating  activities**                                                           |   |                                 |        |   |   |
| Net loss                                                                            |   | $                                    | (18,592,128 | ) | $ | (31,462,144 | ) |
| Adjustments to reconcile  net loss to net cash used in operating activities:        |   |                                 |        |   |   |
| Depreciation and  amortization                                                      |   | 2,260,142                            |        | 5,076,312 |   |
| Provision for bad debts                                                             |   | 14,411                               |        | 299,907 |   |
| Accretion of interest on  senior discount notes                                     |   | 10,153,218                           |        | 11,819,518 |   |
| Amortization of deferred  financing costs                                           |   | 550,815                              |        | 579,134 |   |
| Stock option compensation  expense                                                  |   | 397,657                              |        | 533,425 |   |
| Loss on investment in  unconsolidated company                                       |   | —                               |        | 5,008,160 |   |
| Deferred income taxes                                                               |   | (117,054                             | )           | (117,053 | ) |
| Other                                                                               |   | (118,835                             | )           | (579,540 | ) |
| Changes in assets and  liabilities, net of effects of acquisitions:                 |   |                                 |        |   |   |
| Accounts receivable                                                                 |   | 244,813                              |        | (955,448 | ) |
| Prepaid expenses and other  current assets                                          |   | 81,364                               |        | 1,428,593 |   |
| Other assets                                                                        |   | (712,700                             | )           | 79,906 |   |
| Accounts payable                                                                    |   | (1,478,805                           | )           | 202,938 |   |
| Accrued expenses                                                                    |   | (744,783                             | )           | (97,307 | ) |
| Interest payable                                                                    |   | 3,095,890                            |        | — |   |
| Deferred revenue                                                                    |   | 203,054                              |        | 530,093 |   |
| Other liabilities                                                                   |   | 20,000                               |        | 43,000 |   |
| Net cash used in operating  activities                                              |   | (4,742,941                           | )           | (7,610,506 | ) |
|                                                                                |   |                                 |        |   |   |
| **Investing  activities**                                                           |   |                                 |        |   |   |
| Acquisition of property and  equipment                                              |   | (2,858,524                           | )           | (2,292,940 | ) |
| Acquisition of wholly owned  subsidiary, net of cash received                       |   | —                               |        | (1,342,687 | ) |
| Net cash used in investing  activities                                              |   | (2,858,524                           | )           | (3,635,627 | ) |
|                                                                                |   |                                 |        |   |   |
| **Financing  activities**                                                           |   |                                 |        |   |   |
| Stockholders notes  receivable                                                      |   | —                               |        | (420,588 | ) |
| Repayment of notes payable                                                          |   | (976,597                             | )           | (39,583 | ) |
| Proceeds from employee  stock option exercises                                      |   | —                               |        | 46,221 |   |
| Deferred financing costs                                                            |   | (948,703                             | )           | — |   |
| Net cash used in financing  activities                                              |   | (1,925,300                           | )           | (413,950 | ) |
|                                                                                |   |                                 |        |   |   |
| Net decrease in cash and  cash equivalents                                          |   | (9,526,765                           | )           | (11,660,083 | ) |
| Cash and cash equivalents  at beginning of period                                   |   | 19,909,952                           |        | 39,274,817 |   |
| Cash and cash equivalents  at end of period                                         |   | $                                    | 10,383,187  |   | $ | 27,614,734 |   |
|                                                                                |   |                                 |        |   |   |
| Issuance of note payable in  connection with acquisition of wholly owned subsidiary |   | $                                    | —      |   | $ | 2,078,561 |   |

 

*The accompanying notes are an integral part of thesefinancial statements.*

 

4

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**RADIO UNICA COMMUNICATIONS CORP.**

 

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

 

**1.**              **Basis ofPresentation**

 

The accompanying unaudited consolidated condensed financial statementsof Radio Unica Communications Corp. and subsidiaries (the “Company”) for theperiods indicated herein have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission and in accordance withgenerally accepted accounting principles (“GAAP”) for interim financialinformation.  Accordingly, the financialstatements do not include all of the information and notes required bygenerally accepted accounting principles for complete financialstatements.  In the opinion ofmanagement, all adjustments (consisting of normal recurring adjustments)considered necessary for a fair presentation have been included.  Operating results for the three and ninemonths ended September 30, 2002 are not necessarily indicative of the resultsthat may be expected for the year ending December 31, 2002.  The consolidated condensed financialstatements include the accounts of the Company and all majority ownedsubsidiaries over which the Company has control.  All significant intercompany accounts and transactions have beeneliminated in consolidation.  Forfurther information, refer to the Company’s 2001 consolidated financialstatements and notes thereto.

 

The Company’s revenue and cash flows are typically lowest in the firstcalendar quarter. Seasonal fluctuations are common in the radio broadcastingindustry and are due primarily to fluctuations in consumer spending.

 

**2.**              **Segment Operating Results**

 

Pursuant to the provisions of FinancialAccounting Standards Board (“FASB”) Statement of Financial Accounting Standards(“SFAS”) No. 131, “Disclosure About Segments of a Business Enterprise andRelated Information”, the Company is required to report segment information.The Company classified its businesses into two reporting segments: radiobroadcasting and promotion services. The radio broadcasting segment includes the operations of the Company’sradio network, the operations of all owned and/or operated radio stations andcorporate expenses.  The promotionservices segment includes the operations of the Company’s marketing andpromotions business.  The Companyevaluates performance based on several factors, of which the primary financialmeasures are business segment net revenue, operating income (loss) and earnings(loss) from operations plus depreciation and amortization and stock optioncompensation expense (“EBITDA before Stock Option Compensation Expense”).

 

EBITDA before Stock Option Compensation Expense is presented not as analternative measure of operating results or cash flow from operations (asdetermined in accordance with GAAP), but because it is a widely acceptedsupplemental financial measure of a company’s ability to service debt. TheCompany’s calculation of EBITDA Before Stock Option Compensation Expense maynot be comparable to similarly titled measures reported by other companiessince all companies do not calculate this non-GAAP measure in the same manner.The Company’s EBITDA Before Stock Option Compensation Expense calculation isnot intended to represent cash used in operating activities, since it does notinclude interest and taxes and changes in operating assets and liabilities, noris it intended to represent the net increase or decrease in cash, since it doesnot include cash provided by (used in) investing and financing activities.

 

5

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Resultsby segment are as follows:

 
|                                             |   | **Three months ended  September 30,** |       | **Nine months ended  September 30,** |   |
|--------------------------------------------------|--------|---------------------------------------|------------|--------------------------------------|--------|
|                                             |   | **2002**                              |       | **2001**                             |   | **2002** |   | **2001** |   |
|                                             |   | **(Unaudited)**                       |       | **(Unaudited)**                      |   |
| Net revenue                                      |   |                                  |       |                                 |   |   |   |   |   |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Radio broadcasting                               |   | $                                     | 9,255,185  |                                 | $      | 9,079,248 |   | $ | 25,882,159 |   | $ | 23,430,182 |   |
| Promotion services                               |   | 2,760,323                             |       | 2,329,581                            |   | 6,473,617 |   | 3,523,203 |   |
| Consolidated                                     |   | $                                     | 12,015,508 |                                 | $      | 11,408,829 |   | $ | 32,355,776 |   | $ | 26,953,385 |   |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Operating income (loss)                          |   |                                  |       |                                 |   |   |   |   |   |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Radio broadcasting                               |   | $                                     | (942,837   | )                                    | $      | (4,513,425 | ) | $ | (5,647,049 | ) | $ | (15,681,856 | ) |
| Promotion services                               |   | 217,420                               |       | 287,600                              |   | 687,335 |   | 483,352 |   |
| Consolidated                                     |   | $                                     | (725,417   | )                                    | $      | (4,225,825 | ) | $ | (4,959,714 | ) | $ | (15,198,504 | ) |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| EBITDA before Stock Option  Compensation Expense |   |                                  |       |                                 |   |   |   |   |   |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Radio broadcasting                               |   | $                                     | (145,657   | )                                    | $      | (2,679,422 | ) | $ | (3,156,581 | ) | $ | (10,184,524 | ) |
| Promotion services                               |   | 274,623                               |       | 378,009                              |   | 854,666 |   | 595,757 |   |
| Consolidated                                     |   | $                                     | 128,966    |                                 | $      | (2,301,413 | ) | $ | (2,301,915 | ) | $ | (9,588,767 | ) |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Total Assets                                     |   |                                  |       |                                 |   |   |   |   |   |
|                                             |   |                                  |       |                                 |   |   |   |   |   |
| Radio broadcasting                               |   |                                  |       |                                 |   | $ | 148,675,979 |   | $ | 169,580,209 |   |
| Promotion services                               |   |                                  |       |                                 |   | 6,500,454 |   | 3,451,997 |   |
| Consolidated                                     |   |                                  |       |                                 |   | $ | 155,176,433 |   | $ | 173,032,206 |   |
|                                                  |        |                                       |            |                                      |        |  |  |  |  |  |  |  |  |  |

 

6

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**3.**              **Recent Accounting Standards**

 

Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwilland Other Intangible Assets”. Under SFAS No. 142, goodwill and intangibleassets with indefinite lives are no longer amortized but are reviewed annually,or more frequently if indicators of impairment arise. Separable intangibleassets that are not deemed to have indefinite lives will continue to beamortized over their useful lives. As prescribed by SFAS No. 142, the Companyhas completed the transitional impairment test on its goodwill and broadcastlicenses and has determined that no impairment exists. The Company has determined that its broadcastlicenses have indefinite lives. As required by SFAS No. 142, the results forthe periods prior to its adoption have not been restated. A reconciliation ofpreviously reported net loss and net loss per share to the amounts adjusted forthe exclusion of the amortization of goodwill and broadcast licenses is asfollows:

 
|                                           |   | **Three  months ended  September 30,** |       | **Nine months  ended  September 30,** |   |
|------------------------------------------------|--------|----------------------------------------|------------|---------------------------------------|--------|
|                                           |   | **2002**                               |       | **2001**                              |   | **2002** |   | **2001** |   |
|                                           |   |                                   |       |                                  |   |   |   |   |   |
| Net loss as reported                           |   | $                                      | (5,460,723 | )                                     | $      | (13,535,678 | ) | $ | (18,592,128 | ) | $ | (31,462,144 | ) |
| Goodwill and broadcast  license amortization   |   | —                                 |       | 970,655                               |   | — |   | 2,905,665 |   |
|                                           |   |                                   |       |                                  |   |   |   |   |   |
| Net loss as adjusted                           |   | $                                      | (5,460,723 | )                                     | $      | (12,565,023 | ) | $ | (18,592,128 | ) | $ | (28,556,479 | ) |
|                                           |   |                                   |       |                                  |   |   |   |   |   |
| Net loss per common share -  basic and diluted |   |                                   |       |                                  |   |   |   |   |   |
|                                           |   |                                   |       |                                  |   |   |   |   |   |
| As reported                                    |   | $                                      | (0.26      | )                                     | $      | (0.65 | ) | $ | (0.89 | ) | $ | (1.51 | ) |
|                                           |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| As adjusted                                    |   | $                                      | (0.26      | )                                     | $      | (0.60 | ) | $ | (0.89 | ) | $ | (1.37 | ) |
|                                                |        |                                        |            |                                       |        |  |  |  |  |  |  |  |  |  |

 

Effective January 1, 2002, the Company adopted SFAS No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144superseded SFAS No. 121, “Accounting for the Impairment of Long-Lived Assetsand for Long-Lived Assets to be Disposed of” and the accounting and reportingprovisions of Accounting Principles Board Opinion No. 30, “Reporting theResults of Operations -Reporting the Effects of Disposal of a Segment of aBusiness, and Extraordinary, Unusual and Infrequently Occurring Events andTransactions”, for the disposal of a segment of a business. SFAS No. 144 alsoamended Accounting Research Bulletin No. 51, “Consolidated FinancialStatements”, to eliminate the exception to consolidation for a subsidiary forwhich control is likely to be temporary. Consistent with SFAS No. 121, SFAS No.144 requires impairment losses to be recorded on long-lived assets used inoperations when indicators of impairment are present and the undiscounted cashflows estimated to be generated by those assets are less than the assets’carrying amount. Our adoption of SFAS No. 144 did not have an effect on ourconsolidated financial statements.

 

7

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**4.**              **Revolving Credit Facility**

 

On June 25, 2002, Radio Unica Corp., a wholly owned subsidiary of theCompany, and all the subsidiaries of Radio Unica Corp. (collectively “RUC”)entered into a credit agreement for a senior secured revolving credit facility(the “Revolving Credit Facility”) providing for up to $20 million ofavailability with General Electric Capital Corporation (“GECC”). The RevolvingCredit Facility will mature on February 1, 2006. Amounts outstanding under theRevolving Credit Facility bear interest at a rate of either (i) the Index Rate(as defined) plus 2.5% or (ii) LIBOR plus 3.5%. The obligations under theRevolving Credit Facility are guaranteed by the Company and secured bysubstantially all the assets of the Company and by all the assets and stock ofRUC.  RUC will pay certain fees inconnection with the Revolving Credit Facility, including an Unused Line Fee (asdefined) ranging between 0.50% and 0.75% annually on the aggregate unusedportion of the Revolving Credit Facility.  RUC may use the borrowings available under the Revolving Credit Facilityfor working capital, general corporate needs, to provide funds for futurePermitted Acquisitions (as defined), for capital expenditures, to pay interest,and to the extent permitted by the agreement, for Permitted Senior NoteRepurchases (as defined).

 

The Revolving Credit Facility contains certain financial andoperational covenants and customary events of default, including, among others,payment defaults and default in the performance of other covenants, breach ofrepresentations or warranties, cross-default to other indebtedness, certainbankruptcy or ERISA defaults, the entry of certain judgments against theCompany or any subsidiary, and any security interest or guarantee that ceasesto be in effect. The Revolving Credit Facility also provides that an event ofdefault will occur upon the occurrence of a Change of Control (as defined).

** **

**5.**              **Common Stock**

 

On July 15, 2002, the Company received a Nasdaq Staff Determinationindicating that the Company failed to comply with the minimum net tangibleassets and shareholder equity standards for continued listing set forth inMarketplace Rule 4450(a)(3) and that its securities were, therefore, subject todelisting from The Nasdaq National Market. Effective September 12, 2002, the Company’s stock was delisted from theNasdaq National Market.  The Company’sstock now trades on the Over the Counter Bulletin Board.

 

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**RADIO UNICA COMMUNICATIONS CORP.**

 

**MANAGEMENT’S DISCUSSION AND ANALYSISOF RESULTS OF OPERATIONS AND FINANCIAL CONDITION**

 

This report contains forward-looking statements within the meaning ofSection 21E of the Securities Exchange Act of 1934, as amended. Theseforward-looking statements include, among others, statements concerning theCompany’s outlook for 2002 and beyond, the Company’s expectations, beliefs,future plans and strategies, anticipated events or trends, and similarexpressions concerning matters that are not historical facts.  The forward-looking statements in this reportare subject to risks and uncertainties that could cause actual results todiffer materially from those expressed in or implied by the statements.

 

**Overview**

 

We generate radio broadcasting revenue from sales of networkadvertising time, and sales of local and national advertising time on radiostations that we own and those that we operate under local marketing agreements(collectively “O&Os”). Advertising rates are, in large part, based upon thenetwork’s and each station’s ability to attract audiences in demographic groupstargeted by advertisers. All radio broadcasting revenue is stated net of anyagency commissions. We recognize radio broadcasting revenue when thecommercials are broadcast.   We alsogenerate revenue from our promotion services company, MASS Promotions, Inc.(“MASS”).  We recognize revenuegenerated by MASS when the promotion services are performed.

 

Our operating expenses consist of programming expenses, marketing andselling costs, including commissions paid to our sales staff, technical andengineering costs, cost of promotion services and general and administrativeexpenses.

 

The Company presents earnings before net interest, taxes, depreciationand amortization (“EBITDA”) not as an alternative measure of operating resultsor cash flow from operations (as determined in accordance with generallyaccepted accounting principles (“GAAP”)), but because it is a widely acceptedsupplemental financial measure of a company’s ability to service debt. EBITDAis defined as operating income (loss) plus depreciation and amortization. TheCompany’s calculation of EBITDA may not be comparable to similarly titledmeasures reported by other companies since all companies do not calculate thisnon-GAAP measure in the same fashion. The Company’s EBITDA calculation is notintended to represent cash used in operating activities, since it does notinclude interest and taxes and changes in operating assets and liabilities, noris it intended to represent the net increase or decrease in cash, since it doesnot include cash provided by (used in) investing and financing activities.

 

**Results of Operations**

 

**Three Months Ended September 30, 2002 Compared To The ThreeMonths Ended September 30, 2001**

 

NET REVENUE.  Net revenueincreased by approximately $0.6 million or 5% to approximately $12.0 millionfor the three months ended September 30, 2002 from approximately $11.4 millionfor the comparable period in the prior year. The increase in net revenue relates to increased revenue generated bypromotional and merchandising services associated with MASS of approximately$0.4 million, and increased rates and revenue market share at the network andO&Os.

 

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OPERATING EXPENSES.  Operatingexpenses decreased by approximately $2.9 million or 19% to approximately $12.7million for the three months ended September 30, 2002 from approximately $15.6million for the comparable period in the prior year.  The decrease in operating expenses is due to decreased directoperating expenses of approximately $0.4 million, decreased selling, generaland administrative expenses of $0.1 million, decreased network expenses ofapproximately $1.7 million, decreased corporate expenses of approximately $0.1million, decreased depreciation and amortization of approximately $0.9 millionand decreased stock option compensation expense of approximately $0.1 million,offset in part by the increased cost associated with the operations of MASS ofapproximately $0.4 million of cost of promotion services.

 

Direct operating expenses decreased by approximately $0.4 million or23% to approximately $1.4 million for the three months ended September 30, 2002from approximately $1.8 million for the comparable period in the prioryear.  The decrease in direct operatingexpenses is primarily due to decreased advertising spending in 2002, decreasesin headcount at certain stations and termination of a time brokerage agreementand station operations in San Diego.

 

Selling, general and administrative expensesdecreased by approximately $0.1 million or 1% to approximately $4.6million for the three months ended September 30, 2002 from approximately $4.7million for the comparable period in the prior year.  The decrease in selling,general and administrative expenses primarily relates to the terminationof a time brokerage agreement and station operations in San Diego offset by the increase in general andadministrative expenses associated with the growth of MASS.

 

Network expenses decreased approximately $1.7million or 35% to approximately $3.0 million for the three months endedSeptember 30, 2002 from approximately $4.7 million for the comparable period inthe prior year.  The decrease in network expenses is mainly due to a decrease in thecost of network programming, including sporting events, decreased personnel costs,and decreased spending associated with the promotion and marketing of thenetwork.

 

Corporate expenses decreased approximately$0.1 million or 8% to approximately $0.9 million for the three months endedSeptember 30, 2002 from approximately $1.0 million for the comparable period inthe prior year.  The decrease incorporate expenses is mainly due to a decrease in legal and professional feesand other miscellaneous expenses.

 

Cost of promotion services increased by approximately $0.4 million or28% to $1.9 million for the three months ended September 30, 2002 fromapproximately $1.5 million for the comparable period in the prior year.  The increase in the cost of promotionservices is directly related to the increase in MASS’ revenue.

 

Depreciation and amortization decreased byapproximately  $0.9 million or56% to approximately $0.8 million for the three months ended September 30, 2002from approximately $1.7 million for the comparable period in the prioryear.  The decrease in depreciation and amortization is due to the fact thateffective January 1, 2002 the Company ceased the amortization ofgoodwill and broadcast licenses with indefinite useful lives in accordance with the provisions of FinancialAccounting Standards Board (“FASB”) Statement of Financial Accounting Standards(“SFAS”) No. 142, “Goodwill and Other Intangible Assets”.

 

Stock option compensation expense decreased by approximately $0.1million or 52% to approximately $0.1 million for the three months endedSeptember 30, 2002 from approximately $0.2 million for the comparable period inthe prior year.  Stock optioncompensation expense represents a non-cash charge relating to the vesting ofstock options granted to employees to purchase shares of the Company’s commonstock.

 

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OTHER INCOME (EXPENSE). Other income(expense) decreased by approximately $4.5 million or 49% toapproximately $(4.8) million for the three months ended September 30, 2002 fromapproximately $(9.3) million for the comparable period in the prior year. Other income (expense) for the threemonths ended September 30, 2002 includedinterest income of approximately $0.1 million, and interest expense ofapproximately $(4.8) million.  Interestexpense primarily relates to the interest on the Senior Discount Notes.  The Company had approximately $0.3 millionin interest and other income and $(4.4) million in interest expense as well asa loss on investment in an unconsolidated company of approximately $(5.2)million during the three months ended September 30, 2001.

 

INCOME TAX BENEFIT. The Company recorded an income tax benefit ofapproximately $39,000 for the three months ended September 30, 2002 and2001.  The benefit results from theCompany’s ability to utilize a portion of its net operating tax losscarryforwards to offset existing deferred tax liabilities.

 

NET LOSS.  Net loss decreased byapproximately $8.1 million or 60% to approximately $(5.4) million for the threemonths ended September 30, 2002 from approximately $(13.5) million for thecomparable period in the prior year. The decrease in net loss is mainly the result of the increase in theCompany’s revenue of approximately $0.6 million, decreased operating expensesof approximately $2.9 million, the decrease in loss on investment in anunconsolidated company of approximately $5.2 million offset in part by theincrease in interest expense related to the Senior Discount Notes ofapproximately $0.5 million and decreased interest and other income ofapproximately $0.2 million.

 

EBITDA.  EBITDA less thenon-cash charge relating to the stock option compensation expense ofapproximately $0.1 million increased by approximately $2.4 million or 106% toapproximately $0.1 million for the three months ended September 30, 2002 from approximately$(2.3) million for the comparable period in the prior year.  The increase is mainly a result of theincrease in revenue generated by MASS, increased rates and revenue market shareat the network and O&Os, and decreased operating expenses relating to theradio broadcasting business.

 

**Nine Months Ended September 30, 2002 Compared To The NineMonths Ended September 30, 2001**

 

The results of operations for the nine months ended September 30, 2002are not comparable to the same period in 2001 primarily due to the acquisitionof MASS, which took place on April 30, 2001. Consequently, only five months of MASS’ operations are included in theresults for the nine months ended September 30, 2001.

 

NET REVENUE.  Net revenueincreased by approximately $5.4 million or 20% to approximately $32.4 millionfor the nine months ended September 30, 2002 from approximately $27.0 millionfor the comparable period in the prior year. The increase in net revenue relates to increased revenue generated bypromotional and merchandising services associated with MASS of approximately$3.0 million, and increased rates and revenue market share at the network andO&Os of approximately $2.4 million.

 

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OPERATING EXPENSES.  Operatingexpenses decreased by approximately $4.8 million or 11% to approximately $37.3 million for the nine monthsended September 30, 2002 from approximately $42.1 million for the comparableperiod in the prior year.  The decreasein operating expenses is due to decreased direct operating expenses ofapproximately $2.0 million, decreased network expenses of approximately $1.9million, decreased corporate expenses of approximately $0.1 million, decreaseddepreciation and amortization of approximately $2.8 million and decreased stockoption compensation expense of approximately $0.1 million offset in part byincreased selling, general and administrative expenses of approximately $0.4million and increased cost of promotion services of approximately $1.8 million.

 

Direct operating expenses decreased by approximately $2.0 million or34% to approximately $3.9 million for the nine months ended September 30, 2002from approximately $5.9 million for the comparable period in the prior year.  The decrease in direct operating expenses isprimarily due to decreased advertising spending in 2002, decreases in headcountat certain stations and the termination of a time brokerage agreement andstation operations in San Diego.

 

Selling, general and administrative expenses increased by approximately$0.4 million or 3% to approximately $13.4 million for the nine months endedSeptember 30, 2002 from approximately $13.0 million for the comparable periodin the prior year.  The increase in selling,general and administrative expenses primarily relates to the increase ingeneral and administrative costs associated with MASS of approximately $1.0million offset in part by a decrease of approximately $0.6 million related tothe radio broadcasting business. The increase in general and administrativeexpenses associated with MASS is primarily due to the additional four months ofMASS’ operations in 2002 as well as the growth of MASS as a business segment.

 

Network expenses decreased by approximately $1.9 million or 15% toapproximately $10.5 million for the nine months ended September 30, 2002 fromapproximately $12.4 million for the comparable period in the prior year.  Thedecrease in network expenses is mainly due to a decrease in the cost of networkprogramming, including sporting events, decreased personnel costs, anddecreased spending associated with the promotion and marketing of the network.

 

Corporate expenses decreased byapproximately $0.1 million or 4% to approximately $2.9 million for the ninemonths ended September 30, 2002 from approximately $3.0 million from thecomparable period in the prior year. The decrease in corporate expenses is mainly due to decreased outsideservices and professional fees.

 

Cost of promotion services increased byapproximately $1.8 million or 80% to $4.0 million for the nine months endedSeptember 30, 2002 from approximately $2.2 million for the comparable period inthe prior year.  The increase in thecost of promotion services is directly related to the increase in MASS’ revenueand the additional four months of MASS’ operations in 2002.

 

Depreciation and amortization decreased byapproximately $2.8 million or 55% to approximately $2.3 million for thenine months ended September 30, 2002 from approximately $5.1 million for thecomparable period in the prior year. Thedecrease in depreciation and amortization is due to the fact that effectiveJanuary 1, 2002 the Company ceased the amortization of goodwill andbroadcast licenses with indefinite useful lives in accordance with the provisions of SFAS No. 142, “Goodwilland Other Intangible Assets”.

 

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Stock option compensation expense decreased by approximately $0.1million or 25% to approximately $0.4 million for the nine months endedSeptember 30, 2002 from approximately $0.5 million for the comparable period inthe prior year.  Stock optioncompensation expense represents a non-cash charge relating to the vesting ofstock options granted to employees to purchase shares of the Company’s commonstock.

 

OTHER INCOME (EXPENSE). Other income(expense) decreased by approximately $2.6 million or 16% to approximately $(13.8) million for the nine monthsended September 30, 2002 from approximately $(16.4) million for the comparableperiod in the prior year. Other income (expense) for the nine months endedSeptember 30, 2002 is mainly comprised of interest expense of approximately$(14.0) million and interest income of approximately $0.3 million.  Interest expense primarily relates to theinterest on the  Senior Discount Notes.The Company had approximately $(12.6) million in interest expense,approximately $1.2 million in interest income as well as a loss on investmentin an unconsolidated company of approximately $(5.0) million during the ninemonths ended September 30, 2001.

 

INCOME TAX BENEFIT. The Company recorded an income tax benefit ofapproximately $0.1 million for the nine months ended September 30, 2002 and2001.  The benefit results from theCompany’s ability to utilize a portion of its net operating tax losscarryforwards to offset existing deferred tax liabilities.

 

NET LOSS.  Net loss decreased byapproximately $12.9 million or 41% to approximately $18.6 million for the ninemonths ended September 30, 2002 from approximately $31.5 million for thecomparable period in the prior year. The decrease in net loss is mainly the result of the increase in theCompany’s revenue of approximately $5.4 million and decreased operatingexpenses of approximately $4.8 million, decrease in loss on investment in anunconsolidated company of approximately $5.0, offset in part by the increase ininterest expense related to the Senior Discount Notes of approximately $1.4million and decreased interest and other income of approximately $0.9 million.

 

EBITDA.  EBITDA less the non-cashcharge relating to the stock option compensation expense of approximately $0.4million increased by approximately $7.3 million or 76% to approximately $(2.3)million for the nine months ended September 30, 2002 from approximately $(9.6)million for the comparable period in the prior year.  The increase is mainly a result of the increase in revenuegenerated by MASS, increased rates and revenue market share at the network andO&Os, and decreased operating expenses relating to the radio broadcastingbusiness.

 

**Liquidity and Capital Resources**

 

The Company has had negative cash flows since inception. Working capital and financing for theCompany’s acquisitions to date have been provided primarily by the proceedsfrom the Company’s initial public offering, the issuance of the 113⁄4 % SeniorDiscount Notes due August 1, 2006 and the issuance of promissory notes, commonstock and preferred stock to the Company’s shareholders.

 

On June 25, 2002, Radio Unica Corp. (“RUC”), a whollyowned subsidiary of the Company, entered into an agreement for a senior securedrevolving credit facility (the “Revolving Credit Facility”) providing for up to$20 million of availability.  TheRevolving Credit Facility will mature on February 1, 2006. RUC may use theborrowings available under the Revolving Credit Facility for working capital,general corporate needs, to provide funds for future Permitted Acquisitions (asdefined), for capital expenditures, to pay interest, and to the extentpermitted by the agreement, for Permitted Senior Note Repurchases (as defined).

 

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Net cash used in operating activities decreased by approximately $2.9million or 38% to approximately $4.7 million for the nine months endedSeptember 30, 2002 from approximately $7.6 million for the comparable period inthe prior year.   Net cash used ininvesting activities was approximately $2.9 million and $3.6 million for thenine months ended September 30, 2002 and 2001, respectively.  The decrease of approximately $0.7 millionfrom 2002 to 2001 is primarily due to the acquisition of MASS, which took placeduring April 2001, offset in part by the increase in capital expendituresassociated with signal upgrades currently in process or recently completed forour New York and Dallas stations.  Netcash used in financing activities was approximately $1.9 million and $0.4million for the nine months ended September 30, 2002 and 2001,respectively.  The increase ofapproximately $1.5 million is due to deferred financing costs incurred inconnection with the Revolving Credit Facility of approximately $0.9 million andthe repayment of notes issued in connection with the acquisition of MASS ofapproximately $1.0 million, offset in part by the funding of the stockholdersnotes receivable of approximately $0.4 million during 2001.

 

Capital expenditures primarily relate to the purchase of broadcastequipment for the network and O&Os, leasehold improvements, computerequipment and telecommunications equipment. Capital expenditures wereapproximately  $2.9 million and $2.3million for the nine months ended September 30, 2002 and 2001,respectively.  The increase in capitalexpenditures is primarily due to the signal upgrades that are currently inprocess or have been recently completed for our New York and Dallas stations.

 

The Company believes that the remaining proceeds from its initialpublic offering and the borrowing availability under the Revolving CreditFacility will provide adequate resources to fund the Company’s operating expenses,working capital requirements and capital expenditures.  The Company’s first interest payment underthe Senior Discount Notes in the amount of approximately $9.3 million is due onFebruary 1, 2003 and semiannually through August 1, 2006.  The Company will utilize its current cashposition, cash generated from operations and the borrowing availability underthe Revolving Credit Facility to fund such payments. There can be no assurancethat the Company will have sufficient funds or will generate future cash flowsto meet all of the of the Company’s obligations and commitments. The failure togenerate such sufficient cash flow could significantly adversely affect themarket value of the Company’s common stock and Senior Discount Notes, and theCompany’s ability to pay the principal of and interest on the Senior DiscountNotes.

 

**Item3.**           **Quantitative and Qualitative Disclosuresabout Market Risk**

 

Our market risk exposure with respect to financial instruments is tochanges in the “Federal Funds Rate” in the United States. We may borrow up to$20 million under our credit facility. Amounts outstanding under the creditfacility bear interest, at the Company’s option, at the Federal Funds Rate plus50 basis points plus 2.5% or LIBOR plus 3.50%. At September 30, 2002, there were no amounts outstanding under ourcredit facility.

 

**Item4.**           **Controls and Procedures**

 

The Company’s Chief Executive Officer and Chief Financial Officer,based on their evaluation of the Company’s disclosure controls and procedureswithin the past 90 days, have concluded that such disclosure controls andprocedures were effective to ensure that material information relating to theCompany and required to be disclosed by the Company has been made known to themand has been

 

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recorded, processed, summarized and reported timely.  There have not been any significant changesin the Company’s internal controls or in other factors that could significantlyaffect these controls subsequent to the date of evaluation.

 

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**RADIO UNICA COMMUNICATIONS CORP.**

 

**PARTII - OTHER INFORMATION**

 

**Item2.**           **Changes in Securities**

 

On October 19, 1999, the Company’s first registrationstatement under the Securities Act of 1933 was declared effective by theSecurities and Exchange Commission (File No. 333-82561).  The offering commenced October 19, 1999 andwas consummated on October 22, 1999.

 

The net proceeds received by the Company from theoffering were approximately $99,450,000. In connection with the offering, the Company incurred an estimated$9,990,000 of expenses, including underwriting discounts of $7,660,800, andother expenses of the offering of approximately $2,329,200.  The payments were all made to persons whowere not directors, officers, 10% stockholders or affiliates.

 

From the effective date of the registration statement,the net proceeds from the offering have been used for the following purposes,none of which were paid to persons who were officers, directors, 10%stockholders or affiliates:

 
|                                                                                                          |   | **(in  millions)** |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
| Repayments of amounts outstanding under a revolving  credit facility                                          |   | $                  | 16.5   |   |
| Acquisition of radio stations                                                                                 |   | 20.3               |   |
| Other purposes, including deposits on time brokerage  agreements and acquisition of radio broadcasting rights |   | 5.5                |   |
| Capital expenditures                                                                                          |   | 10.7               |   |
| Working capital and other                                                                                     |   | 24.1               |   |
| Acquisition of Company stock held in treasury                                                                 |   | 1.3                |   |
| Investment in unconsolidated companies                                                                        |   | 7.0                |   |
| Acquisition of MASS Promotions, Inc.                                                                          |   | 2.7                |   |
| Deferred financing costs                                                                                      |   | 0.9                |   |
| Temporary investments in cash and cash equivalents                                                            |   | 10.4               |   |
|                                                                                                          |   | $                  | 99.4   |   |

 

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**Item 6.**           **Exhibits and Reports on Form 8-K.**

 

(a)          Exhibitsrequired by Item 601 of Regulation S-K.

 

99                                    Certification

 

(b)         SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 

 
|                                                                                                                                      | Radio Unica Communications Corp. |
|-------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|
|                                                                                                                                      |                             |   |
|                                                                                                                                      |                             |   |   |
|                                                                                                                                      | By:                              | /s/ Steven E. Dawson |   |
|                                                                                                                                      |                             |   | Steven E. Dawson |   |
|                                                                                                                                      |                             |   | Chief Financial Officer |   |
|                                                                                                                                      |                             |   |   |
|                                                                                                                                      |                             |   |   |
| Date:                    November 14, 2002 |

 

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**CERTIFICATION**

 

I, Joaquin F. Blaya, Chief Executive Officer of RadioUnica Communications Corp. (the “Company”), certify that:

 

1.               Ihave reviewed this quarterly report on Form 10-Q of the Company;

 

2.               Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Company as of, and for,the periods presented in this quarterly report;

 

4.               The Company’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) for the Company and we have:

 

(a)          designed such disclosurecontrols and procedures to ensure that material information relating to theCompany, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this quarterlyreport is being prepared;

 

(b)         evaluated theeffectiveness of the Company’s disclosure controls and procedures as of a datewithin 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

(c)          presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The Company’s othercertifying officers and I have disclosed, based on our most recent evaluation,to the Company’s auditors and the audit committee of the Company’s board ofdirectors (or persons performing the equivalent function):

 

(a)          all significantdeficiencies in the design or operation of internal controls which couldadversely affect the Company’s ability to record, process, summarize and reportfinancial data and have identified for the Company’s auditors any materialweaknesses in internal controls; and

 

(b)         any fraud, whether or notmaterial, that involves management or other employees who have a significantrole in the Company’s internal controls; and

 

6.               The Company’s othercertifying officers and I have indicated in this quarterly report whether ornot there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

Date: November 14, 2002

 
|   | /s/ Joaquin F. Blaya |                    |
|--------|----------------------|-------------------------|
|   |                 | Joaquin F. Blaya        |   |
|   |                 | Chief Executive Officer |   |

 

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**CERTIFICATION**

 

I, Steven E. Dawson, Chief Financial Officer of RadioUnica Communications Corp. (the “Company”), certify that:

 

1.               I have reviewedthis quarterly report on Form 10-Q of the Company;

 

2.               Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Company as of, and for,the periods presented in this quarterly report;

 

4.               The Company’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) for the Company and we have:

 

(a)          designed such disclosurecontrols and procedures to ensure that material information relating to theCompany, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this quarterlyreport is being prepared;

 

(b)         evaluated theeffectiveness of the Company’s disclosure controls and procedures as of a datewithin 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

(c)          presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The Company’s othercertifying officers and I have disclosed, based on our most recent evaluation,to the Company’s auditors and the audit committee of the Company’s board ofdirectors (or persons performing the equivalent function):

 

(a)          all significantdeficiencies in the design or operation of internal controls which couldadversely affect the Company’s ability to record, process, summarize and reportfinancial data and have identified for the Company’s auditors any materialweaknesses in internal controls; and

 

(b)         any fraud, whether or notmaterial, that involves management or other employees who have a significantrole in the Company’s internal controls; and

 

6.               The Company’s othercertifying officers and I have indicated in this quarterly report whether ornot there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

Date: November 14, 2002

 
|   | /s/ Steven E. Dawson |                    |
|--------|----------------------|-------------------------|
|   |                 | Steven E. Dawson        |   |
|   |                 | Chief Financial Officer |   |

 

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