-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hi+Yi7m/DM8An1IRxyLp4jHHmTVLeWVeifuuBZP4JfxsH+9+skztk/Nq4+Jh+bS4 VoSIITV5Seb5mb9NIq4WDQ== 0000930661-96-001123.txt : 19960826 0000930661-96-001123.hdr.sgml : 19960826 ACCESSION NUMBER: 0000930661-96-001123 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960823 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960823 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MEDIA CORP CENTRAL INDEX KEY: 0000894972 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 752247099 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21570 FILM NUMBER: 96620180 BUSINESS ADDRESS: STREET 1: 433 EAST LAS COLINAS BLVD STREET 2: STE 2230 CITY: IRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 2148699020 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): August 23, 1996 --------------- Evergreen Media Corporation ----------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 75-2247099 --------------- ------------------- (State or Other (IRS Employer Jurisdiction of Identification No.) Incorporation) 433 East Las Colinas Boulevard Suite 1130 Irving, Texas 75039 ---------------------------------- (Address of Principal Executive Offices) (214) 869-9020 -------------------------- (Registrant's telephone number, including area code) ITEM 5. Other Events. ------------- Financial Information for WEDR, Inc. ------------------------------------ On June 27, 1996, Evergreen Media Corporation (the "Company") entered into an agreement to purchase from WEDR, Inc. the assets used in the operation of WEDR-FM, 99.1 MHz, Miami, Florida, for a purchase price of $65 million. The Company hereby provides the following financial information, not otherwise called for by this form but of importance to securityholders, in regard to WEDR, Inc.: (a) Independent Auditors' Report, included on page A-1 of this report and incorporated by reference herein; (b) Balance Sheet of WEDR, Inc. at December 31, 1995 and at June 30, 1996 (unaudited), included on page A-2 of this report and incorporated by reference herein; (c) Statements of Earnings and Retained Earnings of WEDR, Inc. for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on page A-3 of this report and incorporated by reference herein; (d) Statements of Cash Flows for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on pages A-4 of this report and incorporated by reference herein; and (e) Notes to Financial Statements included on pages A-5 to A-13 of this report and incorporated by reference herein. ITEM 7. Financial Statements Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- 7(a) Financial Statements of Business to Be Acquired ----------------------------------------------- The following information called for by Item 7(a) is included on pages A-1 through [A-13] of this report and is incorporated herein by reference: (1) Independent Auditors' Report; (2) Balance Sheet of WEDR, Inc. at December 31, 1995 and at June 30, 1996 (unaudited); (3) Statements of Earnings and Retained Earnings of WEDR, Inc. for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); and (4) Statements of Cash Flows for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); (5) Notes to Financial Statements. 7(c) Exhibits -------- *(2.1) Purchase Agreement by and between WEDR, Inc. and Evergreen Media Corporation of Los Angeles dated as of June 27, 1995. **(23.1) Consent of KPMG Peat Marwick LLP, independent accountants. ________________________________ * Previously filed as Exhibit 2.19 to the Company's Form 10-K dated as of August 14, 1996 and incorporated herein by reference. ** Filed herewith. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Evergreen Media Corporation By: /s/ Matthew E. Devine ----------------------------- Matthew E. Devine Chief Financial Officer Date: August 23, 1996 3 INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors WEDR, Inc.: We have audited the accompanying balance sheet of WEDR, Inc. as of December 31, 1995, and the related statements of earnings and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WEDR, Inc. as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Dallas, Texas June 28, 1996 A-1 WEDR, INC. Balance Sheets (dollars in thousands, except for share data)
December 31, June 30, Assets 1995 1996 ------ ------------ ----------- (unaudited) Current assets: Cash $ 311 $ 523 Accounts receivable, less 2,048 2,386 allowance for doubtful accounts of $250 Prepaid expenses and other 58 58 ------ ------ Total current assets 2,417 2,967 Property and equipment, net (note 2) 834 781 Other assets (note 3) 177 228 ------ ------ $3,428 $3,976 ====== ====== Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accounts payable and accrued $ 158 $ 138 expenses Current portion of obligation 52 52 under capital lease (note 4) ------ ------ Total current liabilities 210 190 Obligation under capital lease, 184 159 excluding current portion (note 4) ------ ------ Total liabilities 394 349 ------ ------ Stockholders' equity: Common stock, $10 par value. Authorized, issued and outstanding 100 shares 1 1 Retained earnings 3,033 3,626 ------ ------ Total stockholders' equity 3,034 3,627 Commitments and contingencies (notes 4 and 5) ------ ------ $3,428 $3,976 ====== ======
See accompanying notes to financial statements. A-2 WEDR, INC. Statements of Earnings and Retained Earnings (in thousands)
Six months ended Year ended June 30, December 31, ------------------- 1995 1995 1996 ------------ -------- -------- (unaudited) Gross revenues $ 9,841 $ 4,580 $ 5,005 Less agency commissions 1,298 605 661 ------- ------- ------- Net revenues 8,543 3,975 4,344 ------- ------- ------- Operating expenses: Station operating expenses excluding depreciation and amortization: Related party 297 149 149 Other 4,198 1,980 1,951 Corporate general and administrative: Related party 1,227 572 802 Other 227 56 83 Depreciation and amortization 204 84 72 ------- ------- ------- Total operating expenses 6,153 2,841 3,057 ------- ------- ------- Operating income 2,390 1,134 1,287 ------- ------- ------- Nonoperating income (expenses): Interest expense (24) (14) (9) Other, net 22 -- 15 ------- ------- ------- Nonoperating expenses, net (2) (14) 6 ------- ------- ------- Net earnings 2,388 1,120 1,293 Stockholder distributions (2,048) (1,134) (700) Retained earnings, beginning of period 2,693 2,693 3,033 ------- ------- ------- Retained earnings, end of period $ 3,033 $ 2,679 $ 3,626 ======= ======= =======
See accompanying notes to financial statements. A-3 WEDR, INC. Statements of Cash Flows (in thousands)
Six months ended Year ended June 30, December 31, ------------------- 1995 1995 1996 ------------ -------- -------- (unaudited) Cash flows from operating activities: Net earnings $ 2,388 $ 1,120 $ 1,293 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 204 84 72 Changes in certain assets and liabilities: Accounts receivable (420) (80) (338) Accounts payable and 42 121 (20) accrued expenses Other assets 35 (9) (51) ------- ------- ------ Net cash provided by 2,249 1,236 956 operating activities ------- ------- ------ Cash flows used in investing activities - capital expenditures (32) (22) (19) ------- ------- ------ Cash flows from financing activities: Principal payments on capital lease (48) (71) (25) Stockholder distributions (2,048) (1,134) (700) ------- ------- ------ Net cash used by financing activities (2,096) (1,205) (725) ------- ------- ------ Increase in cash 121 9 212 Cash at beginning of period 190 190 311 ------- ------- ------ Cash at end of period $ 311 $ 199 $ 523 ======= ======= ======
See accompanying notes to financial statements. A-4 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) (1) Summary of Significant Accounting Policies ------------------------------------------ (a) Description of Business ----------------------- WEDR, Inc. (the "Company"), an "S corporation," owns and operates radio station WEDR-FM which serves the Fort Lauderdale - Miami, Florida market. The Company also operates affiliated radio station WRBD-AM servicing the same market under a marketing agreement with WRBD, Inc. (b) Property and Equipment ---------------------- Property and equipment are stated at cost. Depreciation of property and equipment, including equipment operated under capital leases, is computed using an accelerated method over the estimated useful lives of the assets. Repair and maintenance costs are charged to expense when incurred. (c) Barter Transactions ------------------- The Company trades commercial air time for goods and services used principally for promotional, sales and other business activities. An asset and liability is recorded at the fair market value of the goods or services received. Barter revenue is recorded and the liability relieved when commercials are broadcast and barter expense is recorded and the asset relieved when goods or services are received or used. Barter revenues and expenses were approximately $535,000 during the year ended December 31, 1995. (d) Income Taxes ------------ As the Company is an "S corporation," income taxes are the responsibility of its individual stockholders. Accordingly, no income tax expense is recorded in the accompanying financial statements. (e) Revenue Recognition ------------------- Revenue is derived primarily from the sale of commercial announcements to local and national advertisers. Revenue is recognized as commercials are broadcast. (Continued) A-5 2 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) (f) Statement of Cash Flows ----------------------- The Company paid approximately $24,000 for interest during the year ended December 31, 1995. (g) Disclosure of Certain Significant Risks and Uncertainties --------------------------------------------------------- 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. In the opinion of management, credit risk with respect to trade receivables is limited due to the large number of diversified customers and the geographic diversification of the Company's national revenue customer base. The Company performs ongoing credit evaluations of its customers and believes that adequate allowances for any uncollectible trade receivables are maintained. At December 31, 1995, no receivable from any customer exceeded 5% of stockholders' equity and no customer accounted for more than 10% of net revenues in 1995. (h) Fair Value of Financial Instruments ----------------------------------- The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short maturity of these instruments. It is not practicable to estimate the fair value of loans to stockholders as such loans have no maturity dates and their terms can be readily modified by the stockholders. (i) Interim Financial Information ----------------------------- In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows of the Company as of June 30, 1996 and for the six-month periods ended June 30, 1995 and 1996. (Continued) A-6 3 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) (2) Property and Equipment ---------------------- Property and equipment consists of the following at December 31, 1995:
Estimated useful life ------------- Broadcast and other equipment 5 - 15 years $ 870 Buildings and improvements 5-31 years 659 Furniture and fixtures 5 - 7 years 56 Land -- 100 ------ 1,685 Less accumulated depreciation and amortization 851 ------ $ 834 ======
(3) Other Assets ------------ Other assets consists of the following at December 31, 1995:
Loans to stockholders $ 122 Loans to employees 13 Note receivable 42 ------ $ 177 ======
The Company has unsecured outstanding loans to three stockholders which effectively serve as individual lines of credit. Amounts outstanding on the loans have no specified maturity date and bear interest at 7%. Interest on the loans is paid monthly through payroll deductions. (4) Commitment and Contingencies ---------------------------- The Company has leased certain broadcast equipment under a capital lease that expires in September 1999. The amounts of property and equipment and related accumulated amortization recorded under this capital lease are $287,000 and $148,000, respectively, at December 31, 1995. Amortization of assets held under the lease is included in depreciation and amortization expense in the accompanying financial statements. (Continued) A-7 4 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) The Company has noncancelable operating leases, primarily for tower space. Rental expense for operating leases and other contractual obligations (excluding those with lease terms of one month or less that were not renewed) was approximately $365,000 during 1995. A-8 5 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) Future minimum lease payments under the capital lease and noncancelable operating leases and other obligations (with initial or remaining lease terms in excess of one year) as of December 31, 1995 are as follows:
Operating leases and Year ending December 31: Capital lease Other ------------------------ ------------- ----- 1996 $ 73 224 1997 73 192 1998 73 95 1999 55 86 2000 - 86 ---- 274 Less interest component at 10% 38 ---- $236 ====
The Company sells a portion of its national sales receivables under a factoring arrangement. Upon sale and collection of the receivable, the Company receives 80% and 12%, respectively, of the receivable balance. The remaining 8% represents fees paid to the factor. The Company is required to repurchase receivables deemed uncollectible by the factor. At December 31, 1995, approximately $250,000 of receivables are subject to repurchase by the Company. During the year ended December 31, 1995, total receivables sold under this arrangement and related factoring fees were approximately $600,000 and $50,000, respectively. In June 1996, the Company agreed to sell certain property and equipment and the FCC license of WEDR-FM to Evergreen Media Corporation for $65 million. Prior to consummation of the sale, certain operating leases and the factoring arrangement disclosed above are to be terminated by the Company. Consummation of the sale is subject to receipt of regulatory approvals. (5) Related Party Transactions -------------------------- The Company operates WRBD-AM under a marketing agreement with WRBD, Inc., an affiliated entity, whereby the Company pays WRBD, Inc. a monthly marketing fee of $20,000 for the use of WRBD-AM's frequency. Such marketing fees totaled $240,000 for (Continued) A-9 6 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) the year ended December 31, 1995. During the year ended December 31, 1995, the Company paid $57,000 to WRBD, Inc. for the lease of certain space on WRBD, Inc.'s broadcast tower. During the year ended December 31, 1995, the Company paid management fees, salaries and certain nonoperating costs totaling approximately $1,227,000 to its stockholders. (Continued) A-10 7 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars) (6) Supplemental Financial Data --------------------------- The following presents supplemental financial data of WEDR, Inc. for the year ended December 31, 1995 and the six months ended June 30, 1995 and 1996 (unaudited):
FM and Corporate Year ended December 31, 1995 operations AM operations Total - ---------------------------- ---------- ------------- ------- Gross revenues $9,555 $ 286 $9,841 Less agency commissions 1,281 17 1,298 ------ ------ ------ Net revenues 8,274 269 8,543 ------ ------ ------ Operating expenses: Station operating expenses excluding depreciation and amortization: Related party 57 240 297 Other 3,507 691 4,198 Corporate general and administrative: Related party 1,227 -- 1,227 Other 227 -- 227 Depreciation and amortization 49 155 204 ------ ------ ------ Operating expenses 5,067 1,086 6,153 ------ ------ ------ Operating income (loss) 3,207 (817) 2,390 ------ ------ ------ Nonoperating income (expenses): Interest expense -- (24) (24) Other, net 22 -- 22 ------ ------ ------ Nonoperating expenses 22 (24) (2) ------ ------ ------ Net income (loss) $3,229 $ (841) $2,388 ====== ====== ======
(Continued) A-11 8 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars)
Six months ended June 30, 1995 FM and - ------------------------------ Corporate (unaudited) operations AM operations Total - ----------- ---------- -------------- -------- Gross revenues $4,432 $ 148 $4,580 Less agency commissions 596 9 605 ------ ----- ------ Net revenues 3,836 139 3,975 ------ ----- ------ Operating expenses: Station operating expenses excluding depreciation and amortization: Related party 28 121 149 Other 1,718 262 1,980 Corporate general and administrative: Related party 572 -- 572 Other 56 -- 56 Depreciation and amortization 21 63 84 ------ ----- ------ Operating expenses 2,395 446 2,841 ------ ----- ------ Operating income (loss) 1,441 (307) 1,134 ------ ----- ------ Nonoperating income (expenses): Interest expense -- (14) (14) Other, net -- -- -- ------ ----- ------ Nonoperating expenses -- (14) (14) ------ ----- ------ Net income (loss) $1,441 $(321) $1,120 ====== ===== ======
(Continued) A-12 9 WEDR, INC. Notes to Financial Statements (tables in thousands of dollars)
Six months ended June 30, 1996 FM and - ------------------------------ Corporate (unaudited) operations AM operations Total - ----------- ---------- ------------- ----- Gross revenues $4,852 $ 153 $5,005 Less agency commissions 652 9 661 ------ ----- ------ Net revenues 4,200 144 4,344 ------ ----- ------ Operating expenses: Station operating expenses excluding depreciation and amortization: Related party 28 121 149 Other 1,683 268 1,951 Corporate general and administrative: Related party 802 -- 802 Other 83 -- 83 Depreciation and amortization 18 54 72 ------ ----- ------ Operating expenses 2,614 443 3,057 ------ ----- ------ Operating income (loss) 1,586 (299) 1,287 ------ ----- ------ Nonoperating income (expenses): Interest expense -- (9) (9) Other, net 15 -- 15 ------ ----- ------ Nonoperating expenses 15 (9) 6 ------ ----- ------ Net income (loss) $1,601 $(308) $1,293 ====== ===== ======
A-13 EX-23.1 2 CONSENT OF KPMG PEAT MARWICK EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors Evergreen Media Corporation: We consent to incorporation by reference in the Registration Statements on Form S-3 (No. 33-93874) and Form S-8 (Nos. 33-83124 and 333-04379) of Evergreen Media Corporation, Inc. of our report dated June 28, 1996, relating to the balance sheet of WEDR, Inc. as of December 31, 1995 and the related statements of operations and retained earnings and cash flows for the year then ended, which report appears in the Form 8-K dated August 23, 1996 filed by Evergreen Media Corporation. KPMG Peat Marwick LLP Dallas, Texas August 19, 1996 -----END PRIVACY-ENHANCED MESSAGE-----