-----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, CfGukKT2wHuUM2nzw6bhcnIVTPtWXEG5yZd53TlvuZ2Tamb2yhBE8Nl5xo5ZLRLz OkLedfW9MqQYqVS58nMEYQ== 0001005150-96-000164.txt : 19960530 0001005150-96-000164.hdr.sgml : 19960530 ACCESSION NUMBER: 0001005150-96-000164 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960509 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960529 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINCLAIR BROADCAST GROUP INC CENTRAL INDEX KEY: 0000912752 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 521494660 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26076 FILM NUMBER: 96573894 BUSINESS ADDRESS: STREET 1: 2000 WEST 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 BUSINESS PHONE: 4104675005 MAIL ADDRESS: STREET 1: 2000 W 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 May 9, 1996 ---------------------------- (Date of earliest event reported) SINCLAIR BROADCAST GROUP, INC. (Exact name of Registrant as specified in its charter) Maryland 33-69482 52-1494660 (State of incorporation) (Commission File Number) (IRS Employer Identification Number) 2000 W. 41st Street, Baltimore, Maryland 21211-1420 --------------------------------------------------- (Address of principal executive offices)(Zip code) Registrant's telephone number, including area code: (410) 467-5005 --------------- Item 7. Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired The Financial statements required by this item are submitted in a separate section of this report. SUPERIOR COMMUNICATIONS GROUP, INC. Consolidated Balance Sheet as of March 31, 1996 Consolidated Statements of Operations for the Three Months Ended March 31, 1995 and March 31, 1996 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1995 and March 31, 1996 Notes to Consolidated Financial Statements (b) Pro Forma Financial Information The pro forma financial information required by this item is submitted in the pages to follow. (c) Exhibits Item 5. Other Matters (a) Financial Statements of Probable Business Acquisitions The Financial statements required by this item are submitted in a separate section of this report. KANSAS CITY TV 62 LIMITED PARTNERSHIP Balance Sheet as of March 31, 1996 Statements of Operations for the Three Months Ended March 31, 1995 and March 31, 1996 Statements of Cash Flows for the Three Months Ended March 31, 1995 and March 31, 1996 Notes to Financial Statements CINCINNATI TV 64 LIMITED PARTNERSHIP Balance Sheet as of March 31, 1996 Statements of Operations for the Three Months Ended March 31, 1995 and March 31, 1996 Statements of Cash Flows for the Three Months Ended March 31, 1995 and March 31, 1996 Notes to Financial Statements RIVER CITY BROADCASTING L.P. Consolidated Balance Sheet as of March 31, 1996 Consolidated Statements of Operations for the Three Months Ended March 31, 1995 and 1996 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1995 and 1996 Notes to Consolidated Financial Statements (b) Pro Forma Financial Information The pro forma information required by this item is submitted in the pages to follow. (c) PRO FORMA CONSOLIDATED FINANCIAL DATA The Pro Forma Consolidated Financial Data includes the unaudited pro forma consolidated balance sheet of the Company as of March 31, 1996 (the "Pro Forma Consolidated Balance Sheet") and the unaudited pro forma consolidated statement of operations for the three months ended March 31, 1996 (the "Pro Forma Consolidated Statement of Operations"). The unaudited Pro Forma Consolidated Balance Sheet is adjusted to give effect to (I) the consummation of the acquisition of the assets and liabilities of Superior Communications Group, Inc. ("Superior"), and the probable acquisitions of (II) Kansas City TV 62 Limited Partnership ("KSMO"), Cincinnati TV 64 Limited Partnership ("WSTR") and River City Broadcasting L.P. ("RCB") and (III) cash on hand and borrowings under the existing Bank Credit Agreement and New Credit Facilities in amounts sufficient to complete the transactions described in (I) and (II) above. The unaudited Pro Forma Consolidated Statement of Operations is adjusted to give effect to (I) the consummation of the acquisition of Superior, (II) the probable acquisitions of KSMO, WSTR and RCB and (III) cash on hand and borrowings under the existing Bank Credit Agreement and New Credit Facilities in amounts sufficient to complete the transactions described in (I) and (II) above. The WSYX-TV information in the Pro Forma Consolidated Balance Sheet and Pro Forma Consolidated Statement of Operations reflects the modification of the current acquisition documents eliminating Sinclair Broadcast Group, Inc's. ("SBG") option to acquire the assets of WSYX-TV. This resulted from the Department of Justice ("DOJ") expressing preliminary concerns about SBG's operation of two television stations in Columbus, Ohio. In order to maintain the original schedule for the rest of the transaction, SBG and RCB have entered into an agreement with the DOJ that will result in a modification of the terms of the previously mentioned probable transaction. The pro forma adjustments are based upon available information and certain assumptions the Company believes are reasonable. The Pro Forma Consolidated Financial Data should be read in conjunction with the Company's Consolidated Financial Statements and related notes thereto, the Financial Statements and related notes of Superior, KSMO, WSTR and RCB. The unaudited Pro Forma Consolidated Data do not purport to represent what the Company's results of operations or financial position would have been had any of the above events occurred on the dates specified or to project the Company's results of operations or financial position for or at any future period or date. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 (DOLLARS IN THOUSANDS) (UNAUDITED)
Superior Consolidated Commmunications Pro Forma Pro Forma Historical Group, Inc.(a) Adjustments Consummated -------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents................ $97,420 $ - $ (3,150) (b) $ 94,270 Accounts receivable, net of allowance for doubtful accounts....................... 41,148 2,202 43,350 Current portion of program contract costs....... 17,636 2,145 19,781 Deferred barter costs........................... 1,688 1,688 Prepaid expenses and other current assets....... 2,355 120 2,475 Deferred tax asset.............................. 5,279 5,279 ----------------------------------------------- -------- Total current assets............ 165,526 4,467 (3,150) 166,843 PROPERTY AND EQUIPMENT, net............................. 44,880 10,094 54,974 PROGRAM CONTRACT COSTS, less current portion............ 15,858 2,591 18,449 LOANS TO OFFICERS AND AFFILIATES, net................... 11,856 11,856 NON-COMPETE AND CONSULTING AGREEMENTS, net.............. 25,199 25,199 DEFERRED TAX ASSET...................................... 17,770 17,770 OTHER ASSETS............................................ 30,536 30,536 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net............ 298,355 53,953 352,308 ----------------------------------------------- -------- Total assets.................... $609,980 $ 71,105 $ (3,150) 677,935 =============================================== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable................................ $ 2,130 239 $ $ 2,369 Income taxes payable............................ 2,729 2,729 Accrued Liabilities............................. 30,373 235 30,608 Current portion of long-term liabilities- Notes payable and commercial bank financing.......................... 1,235 1,235 Capital leases payable.................. 441 441 Notes and capital leases payable to affiliates......................... 1,907 1,907 Program contracts payable............... 24,542 1,842 26,384 Deferred barter revenues........................ 2,080 2,080 ------------------------------------------------ -------- Total current liabilities....... 65,437 2,316 - 67,753 LONG-TERM LIABILITIES Notes payable and commercial bank financing..... 400,000 59,850 (b) 459,850 Capital leases payable.......................... - Notes and capital leases payable to affiliates.. 13,716 13,716 Program contracts payable....................... 30,213 2,368 32,581 Deferred tax liability.......................... - 3,384 3,384 Other long-term liabilites...................... 2,395 37 2,432 ------------------------------------------------ --------- Total liabilities............... 511,761 8,105 59,850 579,716 ------------------------------------------------ --------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY............ 2,303 - - 2,303 ------------------------------------------------ --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 5,000,000 shares authorized and -0- outstanding.......... - Class A Common stock, $.01 par value, 35,000,000 shares authorized and -0- and 5,960,000 shares issued and outstanding, respectively............................ 60 60 Class B Common stock, $.01 par value, 35,000,000 shares authorized and 28,790,000 shares issued and outstanding.................. 288 288 Additional paid-in-capital...................... 116,089 116,089 Accumulated deficit............................. (20,521) (20,521) ------------------------------------------------ --------- Total stockholders' equity...... 95,916 - - 95,916 ------------------------------------------------ --------- Total Liabilities and Stock- holders' Equity........... $609,980 $ 8,105 $ 59,850 $ 677,935 ================================================ =========
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (Dollars in thousands) (a) The Superior Communications Group, Inc. (Superior) column reflects the assets and liabilities acquired in connection with the purchase of the outstanding stock of Superior. Total acquired intangibles are calculated as follows: Superior -------- Purchase price........................................ $ 63,000 Add: Liabilities acquired - Accounts payable............................ 239 Accrued expenses............................ 235 Current portion of program contract costs... 1,842 Long-term portion of program contract costs. 2,368 Deferred tax liability...................... 3,384 Other long-term liabilities................. 37 Less: Assets acquired - Accounts receivable......................... (2,202) Current portion of program contracts........ (2,145) Prepaid expenses and other current assets... (120) Property and equipment...................... (10,094) Non-current portion of program contracts.... (2,591) ------ Acquired intangibles........................$(53,953) ======== (b) In March 1996, the Company entered into an agreement to acquire the outstanding stock of Superior and made a cash payment of approximately $3.2 million to be applied against cash proceeds to the stockholders of Superior upon closing. The Company funded the remaining cash proceeds to the seller of $59.8 million by utilizing available indebtedness under Facility B of the Bank Credit Agreement. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 (DOLLARS IN THOUSANDS) (UNAUDITED)
Superior Consolidated Flint Commmunications Pro Forma Pro Forma Historical TV, Inc.(a) Group, Inc.(b) Adjustments Consummated -------------------------------------------------------------- ----------- REVENUES: Station broadcast revenues, net of agency commissions................................ $ 44,176 $ 1,012 $ 3,389 $ - $ 48,577 Revenues realized from station barter arrangements............................... 3,593 3,593 ----------------------------------------------------------------------------- Total revenues.................. 47,769 1,012 3,389 - 52,170 ----------------------------------------------------------------------------- OPERATING EXPENSES: Program and production....................... 7,648 101 437 8,186 Selling, general and administrative.......... 9,292 345 1,691 11,328 Expenses realized from station barter arrangements......................... 2,931 2,931 Amortization of program contract costs and net realizable value adjustments.......................... 7,717 125 549 8,391 Depreciation and amortization of property and equipment........................ 1,465 4 279 67 (c) 1,815 Amortization of acquired intangible broad- casting assets, non-compete and consulting agreements and other assets............................... 10,677 399 440 (d) 11,516 ----------------------------------------------------------------------------- Total operating expenses........ 39,730 575 3,355 507 44,167 ----------------------------------------------------------------------------- Broadcast operating income (loss)....................... 8,039 437 34 (507) 8,003 ----------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense........................... (10,896) (10,896) Interest expense............................. - (347) (910)(e) (1,257) Interest income.............................. 1,723 (372)(f) 1,351 Other income................................. 253 19 3 275 ----------------------------------------------------------------------------- Income (loss) before (provision) benefit for income taxes...... (881) 456 (310) (1,789) (2,524) (PROVISION) BENEFIT FOR INCOME TAXES................. 423 (219) 87 859 (g) 1,150 ----------------------------------------------------------------------------- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS... $ (458) $ 237 $ (223) $ (930) $ (1,374) ============================================================================= EARNINGS PER COMMON SHARE ----------------------------------------------------------------------------- Net loss per common share............................ $ (0.01) $ (0.04) ============================================================================= WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands)... 34,750 34,750 =============================================================================
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands) (a) The Flint Inc. column reflects the results of operations for WSMH for the period from 1/1/96 to February 28, 1996, the date the transaction was consummated. (b) The Superior Communications Group, Inc. column reflects the results of operations for Superior for the three months ended 3/31/96 as the purchase transaction was consummated in May 1996. (c) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by WSMH and Superior. Tangible assets are to be depreciated over lives ranging from 5 to 29.5 years, calculated as follows: WSMH Superior Total ---- -------- ----- Depreciation expense on acquired assets..... $ 32 $ 318 $ 350 Less: Depreciation expense recorded by WSMH and Superior............................ (4) (279) (283) --- ------ ------ Pro forma adjustment........................ $ 28 $ 39 $ 67 ======= ======= ====== (d) To record amortization expense related to acquired intangible assets and eliminate amortization expense recorded by WSMH and Superior. Intangible assets are to be amortized over lives ranging from 1 to 40 years, calculated as follows: WSMH Superior Total ---- -------- ----- Amortization relating to acquired intangible assets................................... $ 167 $ 672 $ 839 Less: Intangible amortization recorded by WSMH and Superior........................ - (399) (399) --- ------ ------ Pro forma adjustment........................ $ 167 $ 273 $ 440 ====== ======= ====== (e) To record interest expense on acquisition financing relating to Superior of $59,850 (in Credit Facility with commercial bank at 8.4% for 3 months) eliminate interest expense recorded. Superior -------- Interest expense adjustment as noted above.. $ 1,257 Less: Interest expense recorded by Superior................................ (347) ------ Pro forma adjustment........................ $ 910 ======= (f) To eliminate interest income on public debt proceeds relating to WSMH and Superior of $34,400 (with a commercial bank at 5.7% for 2 months) and $3,150 (with commercial bank at 5.7% for 3 months), respectively and eliminate interest income recorded. WSMH Superior Total ---- -------- ----- Interest income adjustment as noted above... $ (327) $ (45) $ (372) Less: Interest income recorded by WSMH and Superior................................. - - - --- --- --- Pro forma adjustment........................ $ (327) (45) $ (372) ======= ====== ======= (g) To record tax benefit of pro forma adjustments. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 (DOLLARS IN THOUSANDS) (UNAUDITED)
Pro Forma Pro Forma River City Pro Forma Consummated Consummated KSMO(a) WSTR(b) Broadcasting(c) WSYX(d) Adjustments Probable ---------- --------- -------- -------------- ---- ----------- --------- ASSETS CURRENT ASSETS: Cash, including cash equivalents............. $ 94,270 $ 1,135 $ 1,377 $ - $ - $(72,882) $ 23,900 Accounts receivable, net of allowance for doubtful accounts....................... 43,350 3,365 2,300 10,000 59,015 Current portion of program contract costs.... 19,781 3,000 3,884 18,714 (1,789) 43,590 Deferred barter costs........................ 1,688 1,688 Prepaid expenses and other current asset..... 2,475 311 50 2,836 Deferred tax asset .......................... 5,279 5,279 ------------------------------------------------------------------------------ Total current assets......... 166,843 7,811 7,611 28,714 (1,789) (72,882) 136,308 PROPERTY AND EQUIPMENT, net................... 54,974 3,762 8,360 138,862 (16,710) 189,248 PROGRAM CONTRACT COSTS, less current portion.. 18,449 3,135 3,740 20,365 (2,944) 42,745 LOANS TO OFFICERS AND AFFILIATES, net......... 11,856 11,856 NON-COMPETE AND CONSULTING AGREEMENTS, net.... 25,199 25,199 DEFERRED TAX ASSET............................ 17,770 17,770 OTHER ASSETS.................................. 30,536 14,725(f) 45,261 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net.. 352,308 9,444 8,880 795,956 1,166,588 ------------------------------------------------------------------------------ Total assets................. $ 677,935 $24,152 $28,591 $983,897 $(21,443) (58,157) $1,634,975 ============================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable............................. $ 2,369 $ 1,434 $ 1,339 $ - $ - $ - $ 5,142 Income Taxes Payable......................... 2,729 2,729 Accrued Liabilities ......................... 30,608 30,608 Current portion of long-term liabilities- Notes payable and commercial bank financing 1,235 1,235 Capital leases payable..................... 441 441 Notes and capital leases payable........... 1,907 1,907 Program contracts payable.................. 26,384 3,610 4,533 27,686 (2,518) 59,695 Deferred barter revenues..................... 2,080 2,080 ------------------------------------------------------------------------------ Total current liabilities.... 67,753 5,044 5,872 27,686 (2,518) - 103,837 LONG-TERM LIABILITIES: Notes payable and commercial bank financing.. 459,850 770,187(g)1,230,037 Capital leases payable....................... - - Notes and capital leases payable to affiliates................................. 13,716 13,716 Program contracts payable.................... 32,581 2,815 3,618 23,340 (2,741) 59,613 Deferred Tax Liability....................... 3,384 3,384 Other long-term liabilites................... 2,432 8,737 11,169 ------------------------------------------------------------------------------- Total liabilities............ 579,716 16,596 9,490 51,026 (5,259) 770,187 1,421,756 ------------------------------------------------------------------------------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY.. 2,303 - - - - 2,303 ------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value, 5,000,000 shares authorized and -0- outstanding....... - - Class A Common stock, $.01 par value, 35,000,000 shares authorized and -0- and 10,141,818 shares issued and outstanding, respectively............................... 60 42(h) 102 Class B Common stock, $.01 par value, 35,000,000 shares authorized and 28,790,000 shares issued and outstanding.............. 288 288 Additional paid-in-capital.................. 116,089 114,958(h) 231,047 Accumulated deficit......................... (20,521) (20,521) -------------------------------------------------------------------------------- Total stockholders' equity......... 95,916 115,000 210,916 -------------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity......................... $ 677,935 $16,596 $9,490 $ 51,026 $ (5,259) $885,187 $1,634,975 ================================================================================
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (Dollars in thousands) The KSMO and WSTR columns reflect the assets and liabilities acquired in connection with the purchase of KSMO and WSTR. Total acquired intangibles are calculated as follows: (a) KSMO: Purchase price ............................................ $ 7,556 Add: Liabilities acquired - Accounts Payable........................... 1,434 Current portion of program contracts....... 3,610 Long - term portion of program contracts... 2,815 Subordinated debt ......................... 8,737 Less: Assets acquired Current portion of program contracts ...... (3,000) Non-current portion of program contracts .. (3,135) Cash....................................... (1,135) Accounts Receivable........................ (3,365) Prepaid expenses........................... (311) Property and equipment .................... (3,762) ------ Acquired intangibles ...................... $ 9,444 ======== (b) WSTR: Purchase price ............................................ $19,101 Add: Liabilities acquired - Accounts Payable........................... 1,339 Current portion of program contracts....... 4,533 Long - term portion of program contracts .. 3,618 Less: Assets acquired Current portion of program contracts ...... (3,884) Non-current portion of program contracts .. (3,740) Cash....................................... (1,377) Accounts Receivable........................ (2,300) Prepaid expenses........................... (50) Property and equipment .................... (8,360) ------ Acquired intangibles ...................... $ 8,880 ======== (c) The River City Broadcasting L.P. (RCB) column reflects the assets and liabilities acquired in connection with the purchase RCB. Total acquired intangibles are calculated as follows: RCB: Purchase price ............................................ $916,687 Add: Liabilities acquired - Current portion of program contracts....... 25,168 Long - term portion of program contracts... 20,599 Less: Assets acquired- Accounts receivable........................ (10,000) Current portion of program contracts ...... (16,925) Non-current portion of program contracts .. (17,421) Property and equipment .................... (122,152) -------- Acquired intangibles ...................... $795,956 ======== (d) To reflect the modification of the current acquisition documents eliminating the Company's option to acquire WSYX-TV. (e) To reflect the pay-off by the Company of KSMO and WSTR's debt of $12,882 which was purchased by Chase Bank, and to reflect the cash payment of $60.0 million made in conjunction with the purchase agreement between the Company and River City Broadcasting L.P. which will be applied against the cash proceeds upon closing. (f) To record debt acquisition costs incurred in conjunction with the Senior Secured Credit Facilities of $28.5 million, and removal of the $9.0 million purchase option to acquire KSMO & WSTR and the $4,775 note receivable from WSTR. (g) In April 1996, the Company entered into an agreement to acquire the assets of River City Broadcasting L.P. The cash proceeds due the seller at closing of $847,456 and $28,500 (transaction costs due to the lender) will be made utilizing available indebtedness under the Senior Secured Credit Facilities less $105,769, the amount attributable to the purchase of WSYX-TV. (h) In conjunction with the River City Broadcasting L.P. agreement, the seller will receive $115 million of Series A Exchangeable Preferred Stock. Pending shareholder approval, the Series A Exchangeable Preferred Stock will be exchangeable for 4,181,818 shares of $.01 par value Class A Common Stock. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 (DOLLARS IN THOUSANDS) (UNAUDITED)
River City Broad- Pro Forma Pro Forma casting Pro Forma Consummated/ Consummated KSMO(a) WSTR(b) (c) WSYX(d) Adjustments Probable ------------------------------------------------------------------------------ REVENUES: Station broadcast revenues, net of agency commissions............................... $ 48,577 $ 4,145 $ 2,725 $ 47,716 (5,547) $ - $ 97,616 Revenues realized from station barter arrangements.............................. 3,593 3,593 ------------------------------------------------------------------------------ Total revenues................... 52,170 4,145 2,725 47,716 (5,547) - 101,209 ------------------------------------------------------------------------------ OPERATING EXPENSES: Program and production........................... 8,186 96 169 6,197 (1,175) 13,473 Selling, general and administrative.............. 11,328 1,131 1,153 23,052 (1,519) 416(e) 35,561 Expenses realized from station barter arrangements.............................. 2,931 2,931 Amortization of program contract costs and net realizable value adjustments.............. 8,391 1,116 1,365 6,570 (302) 17,140 Depreciation and amortization of property and equipment............................. 1,815 189 142 3,755 (704) 321(F) 5,518 Amortization of acquired intangible broad- casting assets, non-compete and consulting agreements and other assets.................................... 11,516 20 8,589 (2,159) 7,452(g) 25,418 ------------------------------------------------------------------------------ Total operating expenses......... 44,167 2,532 2,849 48,163 (5,859) 8,189 100,041 Broadcast operating income (loss).......................... 8,003 1,613 (124) (447) 312 (8,189) 1,168 ------------------------------------------------------------------------------ OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense........................................ (10,896) (10,896) Interest (expense)............................... (1,257) (356) (577) (9,189) (8,273)(h) (19,652) Interest income.................................. 1,351 8 (1,047)(h) 312 Other income (expense)........................... 275 10 845 (80) (8) 1,042 ------------------------------------------------------------------------------ Income (loss) before (provision) benefit for income taxes..... (2,524) 1,267 152 (9,716) 304 (17,509) (28,026) (PROVISION) BENEFIT FOR INCOME TAXES.............. 1,150 (608) (73) 4,664 (146) 8,404(l) 13,391 ----------------------------------------------------------------------------- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(1,374) $ 659 $ 79 $ (5,052) $ 158 (9,105) $ (14,635) ============================================================================== EARNINGS PER COMMON SHARE Net loss per common share.......................... $ (0.04) $ (0.38) ============================================================================== WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands). 34,750 38,932(j) ==============================================================================
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands) (a) The KSMO column reflects the results of operations for the three months ended 3/31/96. (b) The WSTR column reflects the results of operations for the three months ended 3/31/96. (c) The River City Broadcasting L.P. (RCB) column reflects the results of operations for RCB for the three months ended 3/31/96. (d) To reflect the modification of the current acquisition documents eliminating the Company's option to acquire WSYX-TV. (e) To eliminate management fees paid for the three months ended 3/31/96 by RCB and record additional corporate expenses as follows: Corporate expenses on a pro forma basis........................... $3,703 Less: Corporate expenses and management fees recorded by Company.......................................... (1,893) ------- Pro forma adjustment.............................................. $ 416 (f) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by KSMO, WSTR, and RCB. Tangible assets are to be depreciated over lives ranging from 5 to 29.5 years, calculated as follows: Depreciation expense on acquired assets.......................... $ 3,703 Less: Depreciation expenses recorded by KSMO, WSTR and RCB ........................................ (3,382) ------- Pro forma adjustment............................................. $ 321 ======= (g) To record amortization expense related to acquired intangible assets and deferred financing costs, and eliminate amortization expense recorded by KSMO, WSTR, and RCB. Intangible assets are to amortized over lives ranging from 1 to 40 years, calculated as follows: FCC License..................................................... $ 2,094 Affiliation Agreements........................................... 4,188 Goodwill......................................................... 1,177 Goodwill (LMA).................................................. 5,548 ------- 13,007 Deferred financing costs......................................... 930 Less: Intangible amortization recorded by Paramount and KRRT, KSMO WSTR, and RCB............................................... (6,485) ------- Pro forma adjustment............................................. $ 7,452 ======== (h) To record interest expense on acquisition financing of $875,956 @ 8.4% for 3 months on the Senior Secured Credit Facilities for RCB and to eliminate interest income on public debt proceeds of $60,000 and $12,882 (with commercial bank at 5.7% for 3 months), for KSMO, WSTR, and RCB, respectively, and to eliminate interest expense and interest income recorded by KSMO, WSTR, and RCB.
Interest Interest Expense Income ------- ------ Interest expense and interest income adjustment as noted above.. $(18,395) $ (1,039) Less: Interest expense and interest income recorded by KSMO, WSTR and RCB............................................... 10,122 (8) ------ ------- Pro forma adjustment............................................ $ (8,273) $(1,047) ======== =======
(i) To record tax benefit of pro forma adjustments (j) Weighted average shares outstanding on a Pro Forma Consummated/Probable basis assumes that the $115 million of Series A Exchangeable Preferred Stock was exchanged for 4,181,818 shares of $.01 par value Class A Common Stock as of the IPO date (June 13, 1995). Consolidated Financial Statements Superior Communications Group, Inc. As March 31, 1996 Superior Communications Group, Inc. Balance Sheet As of March 31, 1996 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 251,379 Accounts receivable, net of allowance for doubtful accounts of 2,201,506 Program contract rights, current portion 2,144,852 Prepaid expenses and other current assets 120,104 -------------- Total current assets 4,717,841 -------------- Property and equipment, net of accumulated depreciation 7,209,857 Program contract rights, long-term portion 2,591,164 Intangible assets, net of accumulated amortization 8,381,632 -------------- Total assets $ 22,900,494 ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Program contract rights payable, current portion $ 1,841,988 Accounts payable 239,075 Accrued liabilities 234,565 Debt-current portion 2,300,000 Other current liabilities 21,000 -------------- Total current liabilities 4,636,628 PROGRAM CONTRACTS PAYABLE, net of current portion 2,367,888 DEBT, net of current portion 11,110,945 OTHER LIABILITIES, net of current portion 3,421,188 -------------- Total liabilities 21,536,649 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock 12 Preferred stock 9,365,801 Additional Paid-in Capital 36,210 Retained Deficit (5,163,678) Treasury stock (2,874,500) -------------- Total stockholders' equity 1,363,845 -------------- Total liabilities and stockholders' equity $ 22,900,494 ============== The accompanying notes are an integral part of this unaudited balance sheet. -2-
Superior Communications Group, Inc. Statement of Operations For the Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited) 1995 1996 -------------- -------------- REVENUES: Advertising revenue, net of agency commissions of $465,520 and $595,294, respectively $ 2,691,717 $ 3,388,945 OPERATING EXPENSES: Programming and production 350,842 437,116 Selling, general and administrative 1,205,203 1,690,357 Amortization of program contract rights 695,697 548,891 Depreciation and amortization of property and equipment 271,810 279,096 Amortization of intangible assets 403,218 399,114 -------------- -------------- Total operating expenses 2,926,770 3,354,574 -------------- -------------- Broadcast operating income (loss) (235,053) 34,371 -------------- -------------- OTHER INCOME: Interest expense, net (396,478) (346,928) Other income (expense) - 2,739 -------------- -------------- Total other income (396,478) (344,189) -------------- -------------- Income (loss) before (provision) benefit for income taxes (631,531) (309,818) BENEFIT FOR INCOME TAXES 176,829 86,749 -------------- -------------- Net loss $ (454,702) $ (223,069) ============== ==============
The accompanying notes are an integral part of these unaudited statements. -3- Superior Communications Group, Inc. Statement of Cash Flows For the Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited)
1995 1996 --------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (454,702) $ (223,069) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 271,810 279,096 Amortization of intangible assets 403,218 399,114 Amortization of program contracts rights 695,697 548,891 Changes in assets and liabilities: Decrease in accounts receivable 571,602 465,370 Increase in other current assets (174,829) (84,749) (Increase) decrease in prepaid expenses (162,044) 13,810 (Decrease) increase in accounts payable (15,098) 56,893 (Decrease) increase in accrued liabilities (41,677) 27,065 Decrease in other current liabilities (67,086) (196,631) Film Rights Payments (433,617) (523,324) --------------- ------------ Net cash flows provided by operating activities 593,274 762,466 --------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of treasury stock (2,885,000) - Additions to property and equipment (38,058) (101,659) --------------- ------------ Net cash flows used in investing activities (2,923,058) (101,659) --------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt (737,500) (681,646) Proceeds from issuance of long term debt 2,900,000 - --------------- ------------ Net cash flows provided by (used in) financing activities 2,162,500 (681,646) --------------- ------------ Net decrease in cash (167,284) (20,839) --------------- ------------ CASH, beginning of period 1,088,527 272,218 =============== ============ CASH, end of period $ 921,243 $ 251,379 =============== ============
The accompanying notes are an integral part of these unaudited statements. -4- Superior Communications Group, Inc. Notes to Consolidated Financial Statements March 31, 1996 1. Significant Accounting Policies Description of Business The consolidated financial statements of Superior Communications Group, Inc. (SCGI) include the accounts of SCGI and its wholly owned subsidiaries, Superior Communications of Kentucky, Inc. (SCKI) and Superior Communications of Oklahoma, Inc. (SCOI), which are collectively referred to as the Company. All intercompany balances have been eliminated. The Company owns and operates television broadcasting stations in Lexington, Kentucky and Oklahoma City, Oklahoma. These statements are unaudited, and certain information and footnote disclosures normally included in the Company's annual financial statements have been omitted, as permitted under the applicable rules and regulations. Readers of these statements should refer to the financial statements and notes thereto as of December 31, 1995 and for the year ended included elsewhere in this filing. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. Organization The Company, previously known as Superior Communications of Kentucky, L.P. (the Partnership), was incorporated in its current form on January 28, 1994 concurrent with the acquisition of SCOI (Note 2). Effective on January 28, 1994, the former partners of the Partnership exchanged all of their partnership interests for shares of preferred and common stock of the newly formed parent company, SCGI, under a Security Purchase and Exchange Agreement (Exchange Agreement) and the Partnership was then dissolved. Additionally, the former corporate general partner of the Partnership was also dissolved and the shareholders of the general partner exchanged certain operating assets with the Company for preferred and common stock. Furthermore, under the Exchange Agreement, SCGI then contributed the operating assets of the former partnership to the newly formed SCKI in exchange for all of the outstanding common stock of SCKI. 2. Acquisition of Station On January 28, 1994, SBI, a newly formed corporation and wholly owned subsidiary of the Company, purchased all of the outstanding stock of Oklahoma City Broadcasting Company (OCBC) for $10,973,241. The acquisition was accounted for as a purchase transaction with the purchase price being allocated to the assets and liabilities acquired based upon their fair market values at the date of acquisition. In connection with the transaction, SBI also entered into a noncompete agreement with the seller of OCBC valued at $1,500,000, for which a note payable was issued to the seller. The cost of the noncompete agreement is being amortized over the five-year term of the agreement. The acquisition was financed from the issuance of stock for $3,100,000 and from bank debt in the amount of $7,873,241. Concurrent with the acquisition, SBI and OCBC merged, forming SCOI. 3. Due to Related Parties Amounts due to related parties consist of fees charged by shareholders of the Company in connection with the acquisition of the Partnership (Note 1) in November 1992 and includes accrued interest at 7.75%. 4. Sale of Station On March 4, 1996, the shareholders of the Company entered into an agreement with an unrelated entity to sell all of the Company's outstanding shares of preferred and common stock. Pursuant to the terms of the stock purchase agreement, the buyer will cause the Company to pay in full all of the outstanding debt of the Company plus accrued interest and prepayment penalties. The balance of the proceeds will be distributed to the selling shareholders. Kansas City TV 62 Limited Partnership Financial Statements As of March 31, 1996 Kansas City TV 62 Limited Partnership Balance Sheet As of March 31, 1996 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,134,922 Accounts receivable, net of allowance for doubtful accounts of 3,364,947 Program contract rights, current portion 3,000,296 Prepaid expenses and other current assets 310,542 ----------- Total current assets 7,810,707 Property and equipment, net of accumulated depreciation 601,414 Due from related party 11,228 Program contract rights, long-term portion 3,134,620 Intangible assets, net of accumulated amortization 3,772,238 ----------- Total assets $15,330,207 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Program contract rights payable, current portion $ 3,610,305 Accounts payable 42,122 Deferred revenue 115,592 Accrued liabilities 1,391,839 Note payable, current portion 1,125,000 ----------- Total current liabilities 6,284,858 PROGRAM CONTRACTS PAYABLE, net of current portion 2,815,307 NOTE PAYABLE, net of current portion 14,355,040 ----------- Total liabilities 23,455,205 ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock - Additional paid-in capital - Retained earnings (8,124,998) ----------- Total stockholders' equity (8,124,998) ----------- Total liabilities and stockholders' equity $15,330,207 =========== The accompanying notes are an integral part of this unaudited balance sheet. Kansas City TV 62 Limited Partnership Statement of Operations For the Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited)
1995 1996 ---------- ---------- REVENUES: Advertising revenue, net of agency commissions of $581,860 and $704,751 $ 2,864,403 $3,292,377 Revenues realized from barter arrangements 677,728 852,925 ----------- ---------- Total Revenues 3,542,131 4,145,302 OPERATING EXPENSES: Programming and production 74,576 96,444 Selling, general and administrative 1,214,856 1,130,566 Amortization of program contract rights 932,292 1,116,516 Depreciation and amortization of property and equipment 207,504 188,655 Amortization of intangible assets ----------- ---------- Total operating expenses 2,429,228 2,532,181 ----------- ---------- Broadcast operating income 1,112,903 1,613,121 ----------- ---------- OTHER INCOME: Interest expense, net (544,488) (356,500) Other income (expense) (19,420) 9,907 ----------- ---------- Total other income $ 563,908 $ (346,593) ----------- ---------- Net income $ 548,995 $1,266,528 =========== ========== Pro Forma Net Income After Imputing An Income Tax Provision: Net income as reported $ 548,995 $1,266,528 Imputed income tax provision (263,518) (607,933) ----------- ---------- Pro Forma net income $ 285,477 $ 658,595 =========== ==========
The accompanying notes are an integral part of these unaudited statements.
Kansas City TV 62 Limited Partnership Statement of Cash Flows For The Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited) 1995 1996 -------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 548,995 $ 1,266,528 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 154,941 140,806 Amortization of goodwill and other intangible assets 52,563 47,849 Amortization of program contracts rights 300,665 293,347 Changes in assets and liabilities: Decrease in accounts receivable 420,322 587,850 Increase in prepaid expenses (48,633) (292,998) Increase (Decrease) in accounts payable 176,562 (80,213) Decrease in accrued liabilities (155,643) (153,857) Decrease in other current liabilities (8,244) (26,847) Film Rights Payments (549,884) (463,773) -------------- ------------ Net cash flows from operating activites 891,644 1,318,692 -------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (41,536) (7,586) -------------- ------------ Net cash flows from investing activities (41,536) (7,586) -------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt - (766,070) Proceeds from issuance of long-term debt 745,838 - -------------- ------------ Net cash flows from financing activities 745,838 (766,070) -------------- ------------ Net increase in cash 1,595,946 545,036 -------------- ------------ CASH, beginning of year 978,488 589,885 -------------- ------------ CASH, end of year $ 2,574,434 $ 1,134,922 ============== ============ Supplemental Schedule of Noncash Investing and Financing Activities: Film contracts acquired $ 41,000 $ 308,400 -------------- ------------ Film contract liability additions $ 41,000 $ 308,400 ============== ============
The accompanying notes are an integral part of these unaudited statements. KANSAS CITY TV 62 LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 1. ORGANIZATION: Kansas City TV 62 Limited Partnership (the "Partnership") is a joint venture of ABRY Communications III, L.P., the general partner, and Copley Place Capital Group, the limited partner. The Partnership was organized under the laws of the State of Delaware on April 18, 1990. On September 21, 1990, the Partnership acquired the business and certain assets of Kansas City Television, Inc. (the "Seller"). The Partnership is a television broadcaster serving the Kansas City area through Station KSMO on UHF Channel 62. These statements are unaudited, and certain information and footnote disclosures normally included in the Partnership's annual financial statements have been omitted, as permitted under the applicable rules and regulations. Readers of these statements should refer to the financial statements and the notes thereto as of December 31, 1995 and for the year ended included elsewhere in this filing. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. 2. RELATED PARTY TRANSACTIONS: Prior to 1995, ABRY Communications III, L.P., provided certain administrative and support services to the Partnership for which it was paid a management fee. Management fees charged to operations aggregated $276,000 in 1994. No management fees were charged during 1995. 3. OPTION AGREEMENT: On May 24, 1994, the Partnership entered into an agreement whereby the Partnership granted a third-party an option to acquire the assets of the station for an amount equal to the lesser of outstanding debt as of the exercise date, including accrued interest thereon, or $9,000,000. The acquiring entity will assume all other liabilities of the station. In conjunction with option agreement, the Partnership entered into an agreement with the third-party whereby the Partnership would pay the third-party a consulting fee of $250,000 per year as long as the option is outstanding. Cincinnati TV 64 Limited Partnership Financial Statements As of March 31, 1996 CINCINNATI TV 64, Limited Partnership Balance Sheet As of March 31, 1996 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,377,254 Accounts receivable, net of allowance for doubtful accounts of $101,814 2,299,958 Program contract rights, current portion 3,884,101 Deferred barter costs - Prepaid expenses-related party - Prepaid expenses and other current assets 50,082 Intercompany receivables - --------------- Total current assets 7,611,395 Property and equipment, net of accumulated depreciation 5,098,809 Program contract rights, long-term portion 3,739,834 Intangible assets, net of accumulated amortization 1,726,596 Other assets --------------- Total assets $ 18,176,634 =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Program contract rights payable, current portion $ 4,532,849 Accounts payable 553,590 Deferred barter revenue 133,424 Accrued liabilities 785,554 Intercompany payable - Debt-Current 950,004 Other current liabilities --------------- Total current liabilities 6,955,421 CAPITAL LEASE OBLIGATION, noncurrent portion PROGRAM CONTRACTS PAYABLE, noncurrent portion 3,617,753 DEBT- LONG-TERM 18,576,603 OTHER LIABILITIES- LONG-TERM - --------------- Total liabilities 29,149,777 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock (10,973,143) Additional Paid-in Capital - Retained Earnings - --------------- Total stockholders' equity (10,973,143) --------------- Total liabilities and stockholders' equity $ 18,176,634 ================ The accompanying notes are an integral part of this unaudited balance sheet. Cincinnati TV 64, Limited Partnership Statement of Operations For The Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited) REVENUES: 1995 1996 ---------------------- Advertising revenue, net of agency commissions of $461,779 and $534,872 $2,423,565 $2,725,271 OPERATING EXPENSES: Programming and production 156,546 168,749 Selling, general and administrative 867,744 1,153,301 Expenses realized from station barter agreements - - Amortization of program contract rights 1,231,675 1,365,464 Depreciation and amortization of property and equipment 156,177 142,019 Amortization of intangible assets 19,350 19,350 ---------- ---------- Total operating expenses 2,431,492 2,848,883 ---------- ---------- Broadcast operating income (7,927) (123,612) ---------- ---------- OTHER INCOME: Interest Expense (647,838) (576,601) Interest income, net 3,853 7,885 Other income 838,360 844,789 ---------- ---------- Total other income 194,375 276,073 ---------- ---------- Net income $ 186,448 $ 152,461 ========== ========== Pro Forma Net Income After Imputing An Income Tax Provision: Net income, as reported $ 186,448 $ 152,461 Imputed income tax provision (89,495) (73,181) ----------- ---------- Pro Forma net income $ 96,953 $ 79,280 ========== ========== The accompanying notes are an integral part of these unaudited statements. Cincinnati TV 64, Limited Partnership Statement of Cash Flows For the Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited)
1995 1996 ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 186,448 $ 152,461 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 156,177 142,019 Accretion of Subdebt 82,276 98,685 Amortization of goodwill and other intangible assets 19,350 19,350 Amortization of program contracts rights 359,035 509,368 Changes in assets and liabilities: (Increase) decrease in accounts receivable 833,229 924,876 (Increase) decrease in prepaid expenses and other current assets (21,061) (35,255) Increase (decrease) in accounts payable (604,357) (308,257) Increase (decrease)in accrued liabilities 171,121 137,603 Increase (decrease) in program rights payable (115,521) (665,479) Increase (decrease) in notes payable - (186,719) ---------- ------------ Net cash provided by operating activities 1,066,697 788,652 ---------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (69,634) (2,897) ---------- ----------- Net cash flows from investing activities (69,634) (2,897) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt (550,001) (50,001) ---------- ----------- Net cash flows used in financing activities (550,001) (50,001) ---------- ----------- Net increase in cash 447,062 735,754 CASH, beginning of period 482,000 641,500 Cash, end of period $ 929,062 $ 1,377,254 ========== =========== Supplemental Schedule of Noncash investing and financing: Film contracts acquired $ 206,000 $ (8,000) ---------- ---------- Film liability additions $ 206,000 $ (8,000) ========== =========== The accompanying notes are an integral part of these unaudited statements.
CINCINNATI TV 64 LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 1. ORGANIZATION: Cincinnati TV 64 Limited Partnership (the "Partnership") is a joint venture of ABRY Communications II, L.P., the general partner, and Copley Place Capital Group, the limited partner. The Partnership was organized under the laws of the State of Delaware on August 1, 1989. The Partnership is a television broadcaster serving the Cincinnati, Ohio area through Station WSTR on UHF Channel 64. These statements are unaudited, and certain information and footnote disclosures normally included in the Partnership's annual financial statements have been omitted, as permitted under the applicable rules and regulations. Readers of these statements should refer to the financial statements and the notes thereto as of December 31, 1995 and for the year ended included elsewhere in this filing. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. 2. RELATED PARTY TRANSACTIONS: Prior to 1995, ABRY Communications II, L.P., provided certain administrative and support services to the Partnership for which it was paid a management fee. 3. OPTION AGREEMENT: On May 24, 1994, the Partnership entered into an agreement whereby the Partnership granted a third-party an option to acquire the assets of the station for an amount equal to the lesser of outstanding debt as of the exercise date, including accrued interest thereon, or $11,000,000. The acquiring entity will assume all other liabilities of the station. In conjunction with option agreement, the Partnership entered into an agreement with the third-party whereby the Partnership would pay the third-party a consulting fee of $250,000 per year as long as the option is outstanding. The third-party exercised this option in January 1996. The transaction is subject to regulatory approval. RIVER CITY BROADCASTING (RIVER CITY BROADCASTING, L.P. AND ITS MAJORITY-OWNED BUSINESSES) Consolidated Financial Statements As of March 31, 1996 River City Broadcasting L.P. Balance Sheet As of March 31, 1996 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,969,498 Accounts receivable, net of allowance for doubtful accounts of 45,488,514 Program contract rights, current portion 18,713,753 Prepaid expenses and other current assets 7,809,096 ------------------ Total current assets 73,980,861 Property and equipment, net of accumulated depreciation 95,799,916 Program contract rights, long-term portion 20,364,645 Intangible assets, net of accumulated amortization 344,954,112 Other Non-current assets 23,823,652 ------------------ Total assets $ 558,923,186 ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 11,794,728 Program contract rights payable, current portion 27,686,463 Accrued expenses 1,579,437 Note payable, current portion 27,615,897 ------------------ Total current liabilities 68,676,525 PROGRAM CONTRACTS PAYABLE, net of current portion 23,339,961 Long_Term Debt, net of current portion 411,413,000 Accrued interest 7,181,294 Other long-term liabilities 5,529,333 ------------------ Total liabilities 516,140,113 ------------------ COMMITMENTS AND CONTINGENCIES PARTNERS' CAPITAL 42,783,073 ------------------ Total liabilities and partners' capital $ 558,923,186 ================== The accompanying notes are an integral part of this unaudited balance sheet. River City Broadcasting L.P. Statement of Operations For the Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited)
1995 1996 --------------- --------------- Net operating revenues: Local time sales $ 19,663,478 $ 27,584,261 National time sales 14,369,561 17,475,124 Other revenues 1,117,268 2,656,661 --------------- --------------- Total Net Revenue 35,150,307 47,716,046 Operating costs: Programming and production 3,379,240 6,196,755 Selling, general and administrative 13,564,372 23,052,357 Amortization of program contract rights 6,666,141 6,570,472 Depreciation 2,962,204 3,754,598 Amortization of intangible assets 5,967,595 8,589,180 --------------- --------------- Total operating expenses 32,539,552 48,163,362 --------------- --------------- Broadcast operating income 2,610,755 (447,316) --------------- --------------- Other income: Interest expense, net (10,088,258) (9,189,378) Other income (expense) (566,675) (80,007) --------------- --------------- Total other income (10,654,933) (9,269,385) --------------- --------------- Net loss $ (8,044,178) $ (9,716,701) =============== =============== Pro Forma Net Loss After Imputing An Income Tax Benefit: Net loss as reported $ (8,044,178) $ (9,716,701) Imputed income tax benefit 3,861,205 4,664,016 --------------- --------------- Pro Forma net loss $ (4,182,973) $ (5,052,685) =============== ===============
The accompanying notes are an integral part of these unaudited statements. River City Broadcasting L.P. Statement of Cash Flows For The Three Months Ended March 31, 1995 and March 31, 1996 (Unaudited)
1995 1996 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (8,044,178) $ (9,716,701) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 2,962,204 3,754,598 Amortization of goodwill and other intangible assets 6,383,653 8,623,575 Amortization of program contracts rights 6,666,141 6,570,472 Changes in assets and liabilities: Decrease in accounts receivable 7,374,201 10,353,647 (Increase)decrease in prepaid expenses 327,811 (163,934) (Increase)decrease in noncurrent assets 19,368 (3,563,341) Increase in accounts payable and accrued expenses 831,595 1,540,224 Deferred compensation 335,823 - Retirement of film contract payable (6,863,414) (8,408,085) ------------ ----------- Net cash flows from operating activites 9,993,204 8,990,455 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (4,349,795) (1,350,389) Additions to licenses and other intangibles - (1,480,517) Costs to acquire other stations (13,000,000) (3,200,000) ------------ ----------- Net cash flows from investing activities (17,349,795) (6,030,906) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt (11,050,000) (4,000,000) Net borrowings under senior credit facility 17,000,000 - ------------ ----------- Net cash flows from financing activities 5,950,000 (4,000,000) ------------ ----------- Net decrease in cash (1,406,591) (1,040,451) CASH, beginning of period 2,444,738 3,009,949 ------------ ------------ CASH, end of period $ 1,038,147 $ 1,969,498 ============ ============
The accompanying notes are an integral part of these unaudited statements. RIVER CITY BROADCASTING L.P. Notes to Consolidated Financial Statements March 31, 1996 1. Business Description River City Broadcasting, L.P. (River City Broadcasting or the Partnership) is a limited partnership formed to purchase and operate broadcast properties and related activities. River City Broadcasting has acquired nine broadcast television stations and 24 radio stations. The Partnership also operates one television station and three radio stations under local marketing agreements (LMAs). River City Broadcasting is managed by its general partner subject to terms and conditions specified in the Second Amended and Restated Agreement and conditions specified in the Second Amended and Restated Agreement of Limited Partnership (Limited Partnership Agreement). On September 3, 1993, River City Broadcasting entered into a Reorganization Agreement, whereby additional equity funding was injected into the Partnership, and certain partners' interests were redeemed (the Recapitalization). These statements are unaudited, and certain information and footnote disclosures normally included in the Company's annual financial statements have been omitted, as permitted under the applicable rules and regulations. Readers of these statements should refer to the financial statements and notes thereto as of December 31, 1995 and for the year ended included elsewhere in this filing. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. Related Party Transactions Prior to the Recapitalization, the general partner received a management fee from each station primarily based on the individual station's revenues. Subsequent to the Recapitalization, the general partner no longer received management fees. Pursuant to the Recapitalization, corporate expenses are allocated to each station to cover the salaries and expenses of senior management. Such allocation is based upon certain financial information and management's estimate of actual time spent. Management believes the allocation is reasonable and approximates what the expense would have been on a stand-alone basis. Subsequent Event In January 1996, the Partnership acquired the remaining 40% partnership interest in Twin Peaks Radio which owned and operated three radio stations in the Albuquerque, New Mexico area. -----END PRIVACY-ENHANCED MESSAGE-----