-----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, IkOhfkFuzwIVzkedYJ51YgY1NzJr3aIbz9uFi0kEyCCmBfQ220C/3TJLvHbPxr9A XPs5Pwrq3QN6Q4CpkIdORQ== 0000950123-00-002904.txt : 20000411 0000950123-00-002904.hdr.sgml : 20000411 ACCESSION NUMBER: 0000950123-00-002904 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000114 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM INC CENTRAL INDEX KEY: 0000927720 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 133827791 STATE OF INCORPORATION: DE FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27823 FILM NUMBER: 582604 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM INC /NJ/ CENTRAL INDEX KEY: 0000927721 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 133181941 STATE OF INCORPORATION: DE FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-01 FILM NUMBER: 582605 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: NY ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF CALIFORNIA INC CENTRAL INDEX KEY: 0000927722 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 923952357 STATE OF INCORPORATION: CA FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-02 FILM NUMBER: 582606 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF FLORIDA INC CENTRAL INDEX KEY: 0000927723 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 581700848 STATE OF INCORPORATION: FL FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-03 FILM NUMBER: 582607 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALARCON HOLDINGS INC CENTRAL INDEX KEY: 0000927725 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 133475833 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-05 FILM NUMBER: 582608 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM NETWORK INC CENTRAL INDEX KEY: 0000927726 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 133511101 STATE OF INCORPORATION: NY FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-06 FILM NUMBER: 582609 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBS PROMOTIONS INC CENTRAL INDEX KEY: 0000927727 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 133456128 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-82114-07 FILM NUMBER: 582610 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBS OF GREATER NEW YORK INC CENTRAL INDEX KEY: 0001017144 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133888732 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-07 FILM NUMBER: 582611 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF GREATER MIAMI INC CENTRAL INDEX KEY: 0001096126 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 650774450 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-08 FILM NUMBER: 582612 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF ILLINOIS INC CENTRAL INDEX KEY: 0001096127 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 364174296 STATE OF INCORPORATION: IL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-09 FILM NUMBER: 582613 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF SAN ANTONIO INC CENTRAL INDEX KEY: 0001096128 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 650820776 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-10 FILM NUMBER: 582614 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF PUERTO RICO INC /DE/ CENTRAL INDEX KEY: 0001096129 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 650820776 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-11 FILM NUMBER: 582615 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBS FUNDING INC CENTRAL INDEX KEY: 0001096130 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-12 FILM NUMBER: 582616 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPANISH BROADCASTING SYSTEM OF PUERTO RICO INC /PR/ CENTRAL INDEX KEY: 0001096342 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] STATE OF INCORPORATION: DE FISCAL YEAR END: 0926 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-85519-14 FILM NUMBER: 582617 BUSINESS ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 BUSINESS PHONE: 3054416901 MAIL ADDRESS: STREET 1: 3191 CORAL WAY CITY: MIAMI STATE: FL ZIP: 33145 8-K/A 1 SPANISH BROADCASTING SYSTEM INC 1 - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 8-K/A-1 AMENDMENT NO. 1 TO 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): January 14, 2000 SPANISH BROADCASTING SYSTEM, INC. (Exact name of registrant as specified in its charter)
DELAWARE 000-27823 13-3827791 -------- --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)
3191 CORAL WAY, MIAMI, FLORIDA 33145 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 441-6901
Not Applicable -------------------------------------------------------------- (Former name or former address, if changed since last report.) - ------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS
PRIMARY STANDARD STATE OR OTHER INDUSTRIAL I.R.S. EMPLOYER JURISDICTION OF CLASSIFICATION IDENTIFICATION NAME INCORPORATION NUMBER NUMBER - ----- --------------- --------------- --------------- Spanish Broadcasting System of California, Inc. ..... California 4832 92-3952357 Spanish Broadcasting System Network, Inc. ........... New York 4899 13-3511101 SBS Promotions, Inc. ................................ New York 7999 13-3456128 SBS Funding, Inc. ................................... Delaware 4832 52-6999475 Alarcon Holdings, Inc. .............................. New York 6512 13-3475833 SBS of Greater New York, Inc. ....................... New York 4832 13-3888732 Spanish Broadcasting System of Florida, Inc. ........ Florida 4832 58-1700848 Spanish Broadcasting System of Greater Miami, Inc. .. Delaware 4832 65-0774450 Spanish Broadcasting System of Puerto Rico, Inc. .... Delaware 4832 52-2139546 Spanish Broadcasting System, Inc. ................... New Jersey 4832 13-3181941 Spanish Broadcasting System of Illinois, Inc. ....... Delaware 4832 36-4174296 Spanish Broadcasting System of San Antonio, Inc. .... Delaware 4832 65-0820776 Spanish Broadcasting System of Puerto Rico, Inc. .... Puerto Rico 4832 66-0564244
2 Item 1. Changes in Control of Registrant. Not Applicable. Item 2. Acquisition or Disposition of Assets. On September 22, 1999, Spanish Broadcasting System of Puerto Rico, Inc., a Delaware corporation and a wholly-owned subsidiary of Spanish Broadcasting System, Inc., a Delaware Corporation ("SBS"), entered into a stock purchase agreement (the "Stock Purchase Agreement") to purchase all of the outstanding capital stock of the following nine subsidiaries of AMFM Operating, Inc., a Delaware corporation (formerly known as Chancellor Media Corporation of Los Angeles)("AMFM"): Primedia Broadcast Group, Inc., WIO, Inc., Cadena Estereotempo, Inc., Portorican American Broadcasting, Inc., WLDI, Inc., WRPC, Inc., WOYE, Inc., WZNT, Inc., and WOQI, Inc. (the "Subsidiaries"). The Subsidiaries own and operate eight radio stations in Puerto Rico: WIOA-FM, WIOB-FM, WIOC-FM, WCOM-FM, WZMT-FM, WZNT-FM, WOYE-FM, and WCTA-FM. There is no material relationship between AMFM and SBS or any of its affiliates, any director or officer of SBS, or any associate of any such director or officer. On January 14, 2000, SBS completed the purchase from AMFM of all of the outstanding capital stock of the Subsidiaries for total cash consideration of $91.2 million, including a $10.0 million deposit that was made on the purchase on September 22, 1999, closing costs of $0.7 million and working capital adjustments of $0.5 million. The consideration paid for the purchase was determined through arms-length negotiations between SBS and AMFM. SBS financed the purchase with cash on hand. The assets acquired by SBS include studio facilities which were used by AMFM for radio broadcasting. SBS intends to continue to use the studio facilities for radio broadcasting. Item 3. Bankruptcy or Receivership. Not Applicable. Item 4. Changes in Registrant's Certifying Accountant. Not Applicable. Item 5. Other Events. Not Applicable Item 6. Resignation of Registrant's Directors. Not Applicable. 2 3 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. a. Financial Statements 3 4 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES Combined Financial Statements and Additional Combining Information for the Year Ended December 31, 1999, and Independent Auditors' Report 4 5 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES TABLE OF CONTENTS
PAGE INDEPENDENT AUDITORS' REPORT ON COMBINED FINANCIAL STATEMENTS COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999: Combined Balance Sheet Combined Statement of Income and Deficit Combined Statement of Cash Flows Notes to Combined Financial Statements INDEPENDENT AUDITORS' REPORT ON ADDITIONAL COMBINING INFORMATION ADDITIONAL COMBINING INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999: Combining Balance Sheet Information Combining Statement of Income and Deficit Information
5 6 INDEPENDENT AUDITORS' REPORT To the Stockholder of Primedia Broadcast Group, Inc., WZNT, Inc., WOYE, Inc., WLDI, Inc., WRPC, Inc., WZMT, Inc., WIO, Inc. and Cadena Estereotempo, Inc. We have audited the accompanying combined balance sheet of Primedia Broadcast Group, Inc. and its affiliates as of December 31, 1999, and the related combined statements of income and deficit and of cash flows for the year then ended. The combined financial statements include the accounts of Primedia Broadcast Group, Inc. and seven related companies, WZNT, Inc., WOYE, Inc., WLDI, Inc., WRPC, Inc., WZMT, Inc. (formerly WOQI, Inc.), WIO, Inc. and Cadena Estereotempo, Inc. These companies are under common ownership and common management. These financial statements are the responsibility of the Companies' 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, such financial statements present fairly, in all material respects, the combined financial position of Primedia Broadcast Group, Inc. and its affiliates at December 31, 1999, and the combined results of their operations and their combined cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ DELOITTE & TOUCHE LLP San Juan, Puerto Rico March 3, 2000 6 7 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES COMBINED BALANCE SHEET DECEMBER 31, 1999
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,168,700 Accounts receivable (Note 4) 2,652,896 Prepaid expenses 162,221 Deferred income tax (Note 9) 130,204 ------------ Total current assets 4,114,021 PROPERTY AND EQUIPMENT - Net (Note 5) 3,748,140 INTANGIBLE AND OTHER ASSETS - Net (Note 6) 25,108,936 ------------ TOTAL $ 32,971,097 ============ LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $ 387,049 Accrued expenses 1,924,039 Income tax payable 1,243,811 ------------ Total current liabilities 3,554,899 DUE TO PARENT (Note 3) 20,678,326 DEFERRED INCOME TAX (Note 9) 169,696 ------------ Total liabilities 24,402,921 ============ COMMITMENTS AND CONTINGENCY (Note 10) STOCKHOLDER'S EQUITY (Note 7): Common stock 7,138 Preferred stock 13,739 Additional paid-in capital 13,368,408 Deficit (4,821,109) ------------ Total stockholder's equity 8,568,176 ------------ TOTAL $ 32,971,097 ============
See notes to combined financial statements. 7 8 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES COMBINED STATEMENT OF INCOME AND DEFICIT YEAR ENDED DECEMBER 31, 1999
REVENUES: Broadcast revenues (Note 8) $ 17,722,462 Less agency commissions and discounts 4,049,436 ------------ Net broadcast revenues 13,673,026 Other revenues 480,857 ------------ Total revenues 14,153,883 ------------ COSTS AND EXPENSES: Technical operations 422,991 Programming 2,886,771 Selling 1,541,560 General and administrative (Notes 8 and 10) 4,415,503 ------------ Total costs and expenses 9,266,825 ------------ INCOME BEFORE OTHER EXPENSES 4,887,058 ------------ OTHER EXPENSES (INCOME): Depreciation and amortization 3,115,185 Other income (11,770) ------------ Total other expenses 3,103,415 ------------ INCOME BEFORE INCOME TAX PROVISION 1,783,643 ------------ INCOME TAX PROVISION (BENEFIT) (Note 9): Current 1,371,273 Deferred (85,760) ------------ Total income tax provision 1,285,513 ------------ NET INCOME 498,130 DEFICIT, BEGINNING OF YEAR 5,319,239 ------------ DEFICIT, END OF YEAR $ 4,821,109 ============
See notes to combined financial statements. 8 9 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES COMBINED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 498,130 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,115,185 Bad debt expense 199,332 Deferred income tax benefit (85,760) Changes in operating assets and liabilities: Decrease (increase) in: Accounts receivable 862,557 Prepaid expenses (7,137) Increase (decrease) in: Accounts payable 254,291 Accrued expenses (509,248) Income tax payable 1,158,575 ----------- Net cash provided by operating activities 5,485,925 CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (175,050) CASH FLOWS FROM FINANCING ACTIVITIES - Payments to Parent (5,814,658) ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (503,783) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,672,483 ----------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,168,700 ===========
See notes to combined financial statements. 9 10 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - Primedia Broadcast Group, Inc. ("Primedia") was incorporated on December 12, 1994 under the laws of the Commonwealth of Puerto Rico. Primedia commenced its operations on January 1, 1995 as a management company for a group of radio stations acquired or under local marketing or joint sale agreements. Effective October 23, 1998, Primedia and its affiliated companies became wholly-owned subsidiaries of AMFM Operating, Inc., a Delaware corporation (formerly known as Chancellor Media Corporation) (the "Parent"). COMBINED FINANCIAL STATEMENTS - The accompanying combined financial statements include the accounts of Primedia and its affiliated companies WZNT, Inc., WOYE, Inc., WLDI, Inc., WRPC, Inc., WZMT, Inc. (formerly WOQI, Inc.), WIO, Inc. and Cadena Estereotempo, Inc. (collectively the "Group"). Primedia and its affiliates are under common ownership and management. The affiliated companies were incorporated for the purpose of acquiring existing radio stations in Puerto Rico. These companies commenced operations upon the acquisition of the radio stations. All significant intercompany balances and transactions have been eliminated in the preparation of the combined financial statements. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. REVENUE AND EXPENSE RECOGNITION - Revenues are recognized when commercials are broadcasted. Salaries and other operating costs are charged to expense when incurred. CASH AND CASH EQUIVALENTS - All highly liquid investments purchased with original maturities of three months or less are considered as cash equivalents. ALLOWANCE FOR DOUBTFUL ACCOUNTS - The allowance for doubtful accounts is an amount that management believes will be adequate to absorb possible losses on existing accounts receivable that may become uncollectible based on evaluations of collectibility of accounts receivable and prior credit experience. Because of uncertainties inherent in the estimation process, management's estimate of credit losses inherent in the existing accounts receivable and the related allowance may change in the near term. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows: building and leasehold improvements, 40 years; broadcasting equipment, 5 to 15 years; other equipment and furniture and fixtures, 3 to 7 years. 10 11 Expenditures for maintenance and repairs are charged to costs and expenses as incurred; expenditures for renewals and betterments are capitalized. Cost and accumulated depreciation for property sold, retired or abandoned are removed from the accounts and any resulting gain or loss is included in income or expense. INTANGIBLE AND OTHER ASSETS - Intangible and other assets consist principally of the excess of cost over net assets acquired from predecessor companies. Such excess cost was assigned to the Federal Communications Commission ("FCC") licenses, customer list, goodwill, leasehold rights and tower space income agreements based on independent appraisals. These assets are amortized on a straight-line basis over their estimated useful lives as follows: FCC licenses, customer list and goodwill, 15 years; leasehold rights, 4 years. IMPAIRMENT OF LONG-LIVED ASSETS - Long-lived assets, certain identifiable intangibles and goodwill, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No indications of impairment are evident as a result of such review. BARTER TRANSACTIONS - Barter and trade-out revenue is recognized when commercials are broadcasted. Goods or services are recorded at their estimated fair value when received or used. If goods or services are received prior to the broadcast of the commercial, a liability is recorded; if the commercial is broadcasted first, a receivable is recorded. DEFERRED INCOME TAXES - Deferred income taxes are provided for temporary differences in the financial statements and tax bases of assets and liabilities using current tax rates in effect in accordance with Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES. Principal temporary differences giving rise to deferred income taxes are depreciation and the allowance for bad debts. Deferred tax assets, including the benefit for net operating loss carryforward, if any, are evaluated based on the guidelines of SFAS 109 for realization and may be reduced by a valuation allowance. CONCENTRATION OF CREDIT RISK - The Group's financial instruments that are exposed to concentration of credit risk consist principally of trade accounts receivable. The Group's trade accounts receivable result principally from the sale of airtime to advertising agencies and individual customers in Puerto Rico. The Group routinely assesses the financial strength of its customers. As a consequence, concentration of credit risk is limited. 2. CHANGE IN OWNERSHIP OF THE GROUP On September 22, 1999, the Parent entered into a stock purchase agreement to sell all of the outstanding capital stock of the Group to Spanish Broadcasting System of Puerto Rico, Inc., a Delaware corporation and a wholly-owned Subsidiary of Spanish Broadcasting System, Inc., also a Delaware Corporation. This transaction was completed on January 14, 2000. 3. RELATED PARTY TRANSACTIONS The companies included in the combined financial statements share technical and operating personnel and certain facilities and other services. The individual financial statements for each company have been prepared from separate records maintained in a central accounting location. Portions of certain 11 12 revenues and expenses represent allocations made by management for items applicable to each company based on operating statistics and other pertinent criteria. In addition, during the year ended December 31, 1999, the Parent charged management fees amounting to approximately $180,000 to the Group. Transactions with the Parent are recorded at terms and conditions arranged by the parties. Due to Parent at December 31, 1999 amounting to $20,678,326, consists of payments made by the Parent on behalf of the companies, principally related to the Parent's acquisition of the Group in 1998. These advances bear no interest and have no formal repayment terms. 4. ACCOUNTS RECEIVABLE Accounts receivable at December 31, 1999 consisted of:
Customers $2,938,464 Other 48,288 ---------- Total 2,986,752 Less allowance for doubtful accounts 333,856 ---------- Accounts receivable - net $2,652,896 ==========
5. PROPERTY AND EQUIPMENT Property and equipment at December 31, 1999 consisted of:
Land, building and leasehold improvements $1,151,714 Broadcasting equipment 4,110,135 Other equipment, furniture and fixtures 1,250,098 ---------- Total 6,511,947 Less accumulated depreciation and amortization 2,763,807 ---------- Property and equipment - net $3,748,140 ==========
6. INTANGIBLE AND OTHER ASSETS Intangible and other assets at December 31, 1999 consisted of:
FCC licenses $18,162,742 Goodwill 12,061,557 Customer list 2,973,073 Leasehold rights 185,832 Other 203,641 ----------- Total 33,586,845 Less accumulated amortization 8,477,909 ----------- Intangible and other assets - net $25,108,936 ===========
12 13 7. STOCKHOLDER'S EQUITY Common stock at December 31, 1999 consisted of:
SHARES SHARES PAR ISSUED AND AUTHORIZED VALUE OUTSTANDING AMOUNT ---------- ----- ----------- ------ WZNT, Inc. 1,000,000 $1.00 1,782 $1,782 WOYE, Inc. 1,000,000 1.00 716 716 WLDI, Inc. 1,000,000 1.00 719 719 WZMT, Inc. 1,000,000 1.00 1,000 1,000 WRPC, Inc. 1,000,000 1.00 1,095 1,095 Primedia Broadcast Group, Inc. 1,000,000 1.00 4 4 WIO, Inc. 1,000,000 1.00 1,822 1,822 ------ Total $7,138 ======
Preferred stock at December 31, 1999 consisted of:
PREFERRED SHARES STOCK SHARES PAR ISSUED AND CLASS A AUTHORIZED VALUE OUTSTANDING AMOUNT ------- ---------- ----- ----------- ------ WZNT, Inc. 6,000 $1.00 3,988 $3,988 WOYE, Inc. 3,000 1.00 1,602 1,602 WLDI, Inc. 3,000 1.00 1,610 1,610 WRPC, Inc. 4,500 1.00 2,452 2,452 Primedia Broadcast Group, Inc. 50 1.00 8 8 WIO, Inc. 8,000 1.00 4,079 4,079 ------- Total $13,739 =======
Preferred shares are cumulative at an annual rate of $50.00 per share, calculated on a basis of a 360-day year; unpaid dividends accrue interest on a daily basis at a rate of 5% per annum. Total dividends in arrears amounted to approximately $800,000 as of December 31, 1999. The preferred shares entitle the holder to vote, and to receive, in the event of liquidation and prior to any distribution of assets to the holders of the common stock, an amount equal to (a) $1,000 per share, plus (b) an amount equal to all accrued and unpaid dividends, plus (c) an amount equal to all accrued and unpaid interest to the date of such payment. 8. BARTER TRANSACTIONS Broadcast revenues and expenses related to trade-out agreements amounted to approximately $1,750,000 and $1,720,000, respectively, during the year ended December 31, 1999. 9. INCOME TAXES The companies within the Group are subject to Puerto Rico income taxes at statutory rates that range from 20% to 39%. The provision for income tax is computed on an individual company basis, therefore losses of one company cannot be offset against the taxable income of another. Income tax provision for the year ended December 31, 1999 does not bear a normal relationship to income before income taxes because of certain expenses which are not deductible for income tax purposes. 13 14 At December 31, 1998, certain companies had net operating loss carryforwards of approximately $229,000, that were used to offset their corresponding taxable income for the year ended December 31, 1999. The components of deferred income tax at December 31, 1999 are as follows:
Deferred tax liability - Property and equipment $169,696 -------- Deferred tax asset - Allowance for bad debts $130,204 --------
10. COMMITMENTS AND CONTINGENCY COMMITMENTS WZNT, Inc. leases its office space in Guaynabo, Puerto Rico under an operating lease agreement expiring on August 31, 2000. The lease specifies a monthly rental payment of $2,100. Rent expense for the year ended December 31, 1999 amounted to approximately $25,000. WZNT, Inc. leases tower and building space at its transmitter site to two cellular communication companies under operating leases expiring in various dates through August 31, 2000. These agreements require the lessees to pay WZNT, Inc. monthly rental payments of $2,800 and $3,000, respectively, during the corresponding lease periods. On February 5, 2000, the Group entered into an option agreement to acquire an office building for total purchase price of approximately $5,200,000. The Group's administrative offices and radio broadcasting studios will be moved to the new building when the existing facilities lease agreement expires on August 31, 2000. CONTINGENCY The Group is a defendant in a lawsuit arising out of the normal conduct of business. Management, based on consultation with legal counsel, is of the opinion that the final outcome of this matter will not have a significant effect on the financial position or results of operations of the Group. 11. SUPPLEMENTAL CASH FLOW INFORMATION Income tax paid during the year ended December 31, 1999 amounted to approximately $213,000. There were no interest payments during 1999. ****** 14 15 INDEPENDENT AUDITORS' REPORT ON ADDITIONAL COMBINING INFORMATION To the Stockholder of Primedia Broadcast Group, Inc., WZNT, Inc., WOYE, Inc., WLDI, Inc., WRPC, Inc., WZMT, Inc., WIO, Inc. and Cadena Estereotempo, Inc. Our audit was conducted for the purpose of forming an opinion on the basic combined financial statements for the year ended December 31, 1999, taken as a whole. The additional combining information listed in the table of contents is presented for the purpose of additional analysis of the basic combined financial statements rather than to present the financial position and results of operations of the individual companies, and is not a required part of the basic combined financial statements. This additional information is the responsibility of the Companies' management. Such information has been subjected to the auditing procedures applied in our audit of the basic combined financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic combined financial statements taken as a whole. /s/ DELOITTE & TOUCHE LLP San Juan, Puerto Rico March 3, 2000 15 16 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES COMBINING BALANCE SHEET INFORMATION DECEMBER 31, 1999
ASSETS PRIMEDIA WZNT WOYE WLDI WRPC - ------ -------- ---- ---- ---- ---- CURRENT ASSETS: Cash and cash equivalents $1,168,700 $ - $ - $ - $ - Accounts receivable 720,830 67,404 591,719 Prepaid expenses 58,426 52,383 6,126 3,559 5,401 Investment in subsidiary Deferred income tax 37,989 24,599 6,013 ---------- ----------- ---------- ---------- ---------- Total current assets 1,227,126 811,202 98,129 601,291 5,401 PROPERTY AND EQUIPMENT - Net 32,321 1,385,849 589,049 585,166 427,909 INTANGIBLES AND OTHER ASSETS - Net 1,666 7,002,827 2,454,501 2,145,230 2,127,855 ---------- ----------- ---------- ---------- ---------- TOTAL $1,261,113 $ 9,199,878 $3,141,679 $3,331,687 $2,561,165 ========== =========== ========== ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $ 16,803 $ 370,246 $ - $ - $ - Accrued expenses 448,888 493,627 108,349 314,592 66,251 Income tax payable 4,439 133,258 146,092 118,686 72,140 ---------- ----------- ---------- ---------- ---------- Total current liabilities 470,130 997,131 254,441 433,278 138,391 DUE TO PARENT 794,422 6,101,367 1,730,151 1,864,725 709,340 DEFERRED INCOME TAX - - - - - Total liabilities 1,264,552 7,098,498 1,984,592 2,298,003 847,731 ---------- ----------- ---------- ---------- ---------- STOCKHOLDER'S EQUITY (DEFICIENCY): Common stock 4 1,782 716 719 1,095 Preferred stock 8 3,988 1,602 1,610 2,452 Additional paid-in capital 988 3,982,869 1,599,828 1,534,313 2,172,114 Retained earnings (deficit) (4,439) (1,887,259) (445,059) (502,958) (466,227) ---------- ----------- ---------- ---------- ---------- Total stockholder's equity (deficiency) (3,439) 2,101,380 1,157,087 1,033,684 1,713,434 ---------- ----------- ---------- ---------- ---------- Less treasury stock at cost TOTAL $1,261,113 $ 9,199,878 $3,141,679 $3,331,687 $2,561,165 ========== =========== ========== ========== ==========
ASSETS WZMT WIO ESTEREOTEMPO ELIMINATIONS COMBINED - ------ ---- --- ------------ ------------ -------- CURRENT ASSETS: Cash and cash equivalents $ - $ - $ - $ - $ 1,168,700 Accounts receivable 170,426 1,102,517 2,652,896 Prepaid expenses 829 35,497 162,221 Investment in subsidiary 3,425,002 (3,425,002) Deferred income tax 3,811 57,792 130,204 ---------- ----------- ----------- ----------- ----------- Total current assets 174,237 3,425,831 1,195,806 (3,425,002) 4,114,021 PROPERTY AND EQUIPMENT - Net 15,055 362,317 350,474 3,748,140 INTANGIBLES AND OTHER ASSETS - Net 2,692,458 6,401,366 2,283,033 25,108,936 ---------- ----------- ----------- ----------- ----------- TOTAL $2,881,750 $10,189,514 $ 3,829,313 $(3,425,002) $32,971,097 ========== =========== =========== =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $ - $ - $ - $ - $ 387,049 Accrued expenses 72,077 420,255 1,924,039 Income tax payable 63,325 10,039 695,832 1,243,811 ---------- ----------- ----------- ----------- ----------- Total current liabilities 135,402 10,039 1,116,087 3,554,899 DUE TO PARENT 2,797,280 7,392,817 (711,776) 20,678,326 DEFERRED INCOME TAX 169,696 169,696 ---------- ----------- ----------- ----------- ----------- Total liabilities 2,932,682 7,572,552 404,311 24,402,921 ---------- ----------- ----------- ----------- ----------- STOCKHOLDER'S EQUITY (DEFICIENCY): Common stock 1,000 1,822 2,001,000 (2,001,000) 7,138 Preferred stock 4,079 13,739 Additional paid-in capital 4,078,296 1,291,199 (1,291,199) 13,368,408 Retained earnings (deficit) (51,932) (1,467,235) 483,803 (483,803) (4,821,109) ---------- ----------- ----------- ----------- ----------- Total stockholder's equity (deficiency) (50,932) 2,616,962 3,776,002 (3,776,002) 8,568,176 Less treasury stock at cost (351,000) 351,000 ---------- ----------- ----------- ----------- ----------- TOTAL $2,881,750 $10,189,514 $ 3,829,313 $(3,425,002) $32,971,097 ========== =========== =========== =========== ===========
16 17 PRIMEDIA BROADCAST GROUP, INC. AND ITS AFFILIATES COMBINING STATEMENT OF INCOME AND DEFICIT INFORMATION YEAR ENDED DECEMBER 31, 1999
PRIMEDIA WZNT WOYE WLDI WRPC -------- ---- ---- ---- ---- REVENUES: Broadcast revenues $ - $ 3,609,452 $1,691,406 $3,758,116 $ 780,100 Less agency commissions and discounts 829,384 376,218 921,098 203,161 ------- ----------- ---------- ---------- --------- Net broadcast revenues 2,780,068 1,315,188 2,837,218 576,939 Other revenues 402,157 4,030 31,477 ------- ----------- ---------- ---------- --------- Total revenues 3,182,225 1,319,218 2,888,695 576,939 ------- ----------- ---------- ---------- --------- COSTS AND EXPENSES: Technical operations 97,188 41,147 88,092 16,766 Programming 663,269 280,821 601,201 114,423 Selling 354,191 149,961 321,047 61,101 General and administrative 1,191,097 255,895 1,304,841 82,570 ------- ----------- ---------- ---------- --------- Total costs and expenses 2,305,745 727,824 2,315,181 274,860 ------- ----------- ---------- ---------- --------- INCOME BEFORE OTHER EXPENSES 876,480 591,394 553,514 302,079 ------- ----------- ---------- ---------- --------- OTHER EXPENSES (INCOME): Depreciation and amortization 1,026,902 317,640 266,196 225,299 Other income (11,770) ------- ----------- ---------- ---------- --------- Total other expenses 1,015,132 317,640 266,196 225,299 ------- ----------- ---------- ---------- --------- OPERATING INCOME (LOSS) (138,652) 273,754 287,318 76,780 EQUITY IN INCOME OF SUBSIDIARY ------- ----------- ---------- ---------- --------- INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) (138,652) 273,754 287,318 76,780 ------- ----------- ---------- ---------- --------- INCOME TAX PROVISION (BENEFIT): Current 161,082 169,921 219,368 82,270 Deferred (19,686) (7,739) 2,395 7,185 ------- ----------- ---------- ---------- --------- Total income tax provision (benefit) 141,396 162,182 221,763 89,455 ------- ----------- ---------- ---------- --------- NET INCOME (LOSS) (280,048) 111,572 65,555 (12,675) DEFICIT, BEGINNING OF YEAR (4,439) (1,607,211) (556,631) (568,513) (449,552) ------- ----------- ---------- ---------- --------- RETAINED EARNINGS (DEFICIT), END OF YEAR $(4,439) $(1,887,259) $ (445,059) $ (502,958) $(462,227) ======= =========== ========== ========== =========
WZMT WIO ESTEREOTEMPO ELIMINATIONS COMBINED ---- --- ------------ ------------ -------- REVENUES: Broadcast revenues $737,014 $ - $7,146,174 $ - $17,722,462 Less agency commissions and discounts 161,634 1,557,941 4,049,436 -------- ----------- ---------- ----------- ----------- Net broadcast revenues 575,380 5,588,233 13,673,026 Other revenues 4,110 96,000 39,083 (96,000) 480,857 -------- ----------- ---------- ----------- ----------- Total revenues 579,490 96,000 5,627,316 (96,000) 14,153,883 -------- ----------- ---------- ----------- ----------- COSTS AND EXPENSES: Technical operations 17,448 162,350 422,991 Programming 119,075 1,107,982 2,886,771 Selling 63,588 591,672 1,541,560 General and administrative 69,848 1,607,252 (96,000) 4,415,503 -------- ----------- ---------- ----------- ----------- Total costs and expenses 269,959 3,469,256 (96,000) 9,266,825 -------- ----------- ---------- ----------- ----------- INCOME BEFORE OTHER EXPENSES 309,531 96,000 2,158,060 4,887,058 -------- ----------- ---------- ----------- ----------- OTHER EXPENSES (INCOME): Depreciation and amortization 204,626 589,007 485,515 3,115,185 Other income (11,770) -------- ----------- ---------- ----------- ----------- Total other expenses 204,626 589,007 485,515 3,103,415 -------- ----------- ---------- ----------- ----------- OPERATING INCOME (LOSS) 104,905 (493,007) 1,672,545 1,783,643 EQUITY IN INCOME OF SUBSIDIARY 1,034,776 (1,034,776) --------- ----------- INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) 104,905 541,769 1,672,545 (1,034,776) 1,783,643 -------- ----------- ---------- ----------- ----------- INCOME TAX PROVISION (BENEFIT): Current 65,889 (6,463) 679,206 1,371,273 Deferred (2,236) (24,242) (41,437) (85,760) -------- ----------- ---------- ----------- ----------- Total income tax provision (benefit) 63,653 (30,705) 637,769 1,285,513 -------- ----------- ---------- ----------- ----------- NET INCOME (LOSS) 41,252 572,474 1,034,776 (1,034,776) 498,130 DEFICIT, BEGINNING OF YEAR (93,184) (2,039,709) (550,973) 550,973 (5,319,239) -------- ----------- ---------- ----------- ----------- RETAINED EARNINGS (DEFICIT), END OF YEAR $(51,932) $(1,467,235) $ 483,803 $ (483,803) $(4,821,109) ======== =========== ========== =========== ===========
17 18 b. UNAUDITED PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 26, 1999 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended December 26, 1999 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the fiscal year ended September 26, 1999 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements The following unaudited pro forma condensed consolidated financial statements give effect to the acquisition of Primedia Broadcast Group, Inc. and affiliates ("Primedia") which occurred on January 14, 2000 using the purchase method of accounting. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. The estimated fair values of the assets and liabilities of Primedia have been combined with the recorded values of the assets and liabilities of Spanish Broadcasting System, Inc. and subsidiaries ("SBS") in the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet gives effect to the purchase as if it had occurred on December 26, 1999. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended September 26, 1999 and the three months ended December 26, 1999 assumes the acquisition was consummated on September 28, 1998. The unaudited condensed statements of operations for Primedia for the twelve months ended September 30, 1999 were derived by adding the nine months ended September 30, 1999 to Primedia's year ended December 31, 1998, and removing the nine months ended September 30, 1998. The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only and do not purport to represent what SBS's financial position or results of operations would have been if the acquisition had occurred on the dates indicated or to project SBS's financial position or results of operations as of any future date or for any future period. The unaudited pro forma condensed consolidated financial statements, including the notes thereto are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements of SBS included in its (a) annual report on Form 10-K, as amended for the fiscal year ended September 26, 1999 and (b) quarterly report on Form 10-Q for the fiscal quarter ended December 26, 1999, as well as the historical financial statements and the related notes hereto of Primedia included in this report. The unaudited pro forma adjustments have been applied to the financial information derived from the financial statements of SBS and Primedia to account for the acquisition as a purchase and, accordingly, the assets acquired and liabilities assumed are reflected at their estimated fair values. The unaudited pro forma financial information has been prepared based on the assumptions described in the notes thereto and includes assumptions relating to the allocation of the consideration paid for the assets of Primedia based on the estimates of their fair values. In the opinion of SBS, all adjustments necessary to present fairly such unaudited pro forma financial information have been based on the terms and structure of the acquisition. 18 19 SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES Pro Forma Condensed Consolidated Balance Sheet As of December 26, 1999 (In thousands, except per share data) (Unaudited)
HISTORICAL PRO FORMA -------------------------- ------------------------- SBS PRIMEDIA ---------- ---------- AS OF ASSETS 12/26/99 12/31/99 ADJUSTMENTS BALANCES ---------- ---------- ----------- ---------- Current assets: Cash and cash equivalents $174,579 1,169 (81,321) (1) 94,427 Net Receivables 23,295 2,653 (153) (1) 25,795 Other current assets 5,457 292 (142) (1) 5,607 ---------- ---------- --------- ---------- Total current assets 203,331 4,114 (81,616) 125,829 Property and equipment, net 14,511 3,748 (1,548) (1) 16,711 Intangible Assets, net. 299,654 25,109 75,764 (1) 400,527 Deferred Financing Costs, net 8,257 -- -- 8,257 Other assets 187 -- -- 187 ---------- ---------- --------- ---------- Total assets $525,940 32,971 (7,400) 551,511 ========== ========== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current Portion of Long-Term Debt 1,051 -- -- 1,051 Deposit on Sale of Stations 700 -- -- 700 Accounts Payable and Accrued Expenses 11,531 3,555 (184) (1) 14,902 Accrued Interest 3,387 -- -- 3,387 Deferred Commitment Fee 2,751 -- -- 2,751 ---------- ---------- --------- ---------- Total current liabilities 19,420 3,555 (184) 22,791 12.5% Senior Unsecured Notes, net of unamortized discount 100 -- -- 100 9.625% Senior Subordinated Notes 235,000 -- -- 235,000 Other Long-Term Debt, Less Current Portion 879 -- -- 879 Due to Parent -- 20,678 (20,678) (1),(2) -- Deferred Income Taxes 3,607 170 22,030 (1) 25,807 ---------- ---------- --------- ---------- Total liabilities 259,006 24,403 1,168 284,577 Stockholders' Equity: Preferred Stock, $ 1.00 Par Value -- 14 (14) (2) -- Common Stock, $ 1.00 Par Value -- 7 (7) (2) -- Class A Common Stock, $.0001 Par Value. 3 -- -- 3 Class B Common Stock, $.0001 Par Value 3 -- -- 3 Additional paid-in capital 393,252 13,368 (13,368) (2) 393,252 Accumulated deficit (126,324) (4,821) 4,821 (2) (126,324) ---------- ---------- --------- ---------- Total stockholders' equity 266,934 8,568 (8,568) 266,934 ---------- ---------- --------- ---------- Total liabilities and stockholders' equity $525,940 32,971 (7,400) 551,511 ========== ========== ========= ==========
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 19 20 SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Operations For the three months ended December 26, 1999 (In thousands, except per share data) (Unaudited)
HISTORICAL PRO FORMA -------------------------- --------------------------- SBS PRIMEDIA ---------- ---------- THREE MONTHS ENDED 12/26/99 12/31/99 ADJUSTMENTS BALANCES ---------- ---------- ----------- ---------- Gross Revenues $ 33,202 5,059 -- 38,261 Less: Agency Commissions 4,269 1,138 -- 5,407 ---------- ---------- ---------- ---------- Net Revenues 28,933 3,921 -- 32,854 Operating expenses: Engineering 586 108 -- 694 Programming 2,957 703 -- 3,660 Selling 6,283 1,061 -- 7,344 General and Administrative 2,678 537 -- 3,215 Corporate Expenses 13,063 55 (55) (4) 13,063 Depreciation & Amortization 2,624 767 (54) (3) 3,337 ---------- ---------- ---------- ---------- Total operating expenses 28,191 3,231 (109) 31,313 ========== ========== ========== ========== Operating Income 742 690 109 1,541 Other Income (Expenses): Interest Expense, net (2,966) -- (600) (6) (3,566) Other, net (405) 69 -- (336) ---------- ---------- ---------- ---------- Income (Loss) Before Income Taxes and Extraordinary Item (2,629) 759 (491) (2,361) Income Tax Expense (Benefit) (1,078) 490 (380) (7) (968) ---------- ---------- ---------- ---------- Income (Loss) Before Extraordinary Item (1,551) 269 (111) (1,393) Extraordinary Item, Loss on Extinguishment of Debt, Net of Income Taxes (16,865) -- -- (16,865) ---------- ---------- ---------- ---------- Net Income (Loss) $ (18,416) 269 (111) (18,258) ========== ========== ========== ========== Dividends on preferred stock (28,372) -- -- (28,372) ========== ========== ========== ========== Net loss applicable to common stockholders $ (46,788) 269 (111) (46,630) ========== ========== ========== ========== Net loss applicable to common stockholders per share = basic and diluted $ (0.90) (0.90) ========== ========== Weighted average shares = basic and diluted 52,001 52,001 ========== ==========
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 20 21 SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Operations For the fiscal year ended September 26, 1999 (In thousands, except per share data) (Unaudited)
HISTORICAL PRO FORMA -------------------------- --------------------------- SBS PRIMEDIA ---------- ---------- TWELVE MONTHS ENDED 12/26/99 12/31/99 ADJUSTMENTS BALANCES ---------- ---------- ----------- ---------- Gross Revenues $ 111,233 18,551 -- 129,784 Less: Agency Commissions 13,883 4,176 -- 18,059 ---------- ---------- --------- ---------- Net Revenues 97,350 14,375 -- 111,725 Operating expenses: Engineering 2,223 432 -- 2,655 Programming 10,120 2,825 -- 12,945 Selling 22,015 3,276 -- 25,291 General and Administrative 10,261 2,394 -- 12,655 Corporate Expenses 10,636 2,273 (1,663) (4) 11,246 Depreciation and Amortization 9,906 3,352 (818 (3) 12,440 ---------- ---------- --------- ---------- Total operating expenses 65,161 14,552 (2,481) 77,232 ---------- ---------- --------- ---------- Operating Income (Loss) 32,189 (177) 2,481 34,493 Other Income (Expenses): Interest Expense, net (21,178) (309) (6,322) (5),(6) (27,809) Other, net (749) 238 -- (511) ---------- ---------- --------- ---------- Income (Loss) Before Income Taxes 10,262 (248) (3,841) 6,173 Income Tax Expense (Benefit) 4,445 1,191 (2,962) (7) 2,674 ---------- ---------- --------- ---------- Net Income (Loss) $ 5,817 (1,439) (879) 3,499 ========== ========== ========= ========== Dividends on preferred stock (34,748) -- -- (34,748) ========== ========== ========= ========== Net loss applicable to common stockholders $ (28,931) (1,439) (879) (31,249) ========== ========== ========= ========== Net loss applicable to common stockholders per share = basic and diluted $ (0.86) (0.93) ========== ========== Weighted average shares = basic and diluted 33,585 33,585 ========== ==========
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements. 21 22 SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) BASIS OF PRESENTATION The purchase price for Primedia was approximately $91,200, including approximately $1,200 of acquisition costs. The total purchase price includes a $10,000 deposit made by SBS in September 1999. This purchase was accounted for under the purchase method of accounting in accordance with APB No. 16, whereby the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Estimates of the fair values of the assets and liabilities of Primedia have been consolidated with the SBS column in the unaudited pro forma condensed consolidated financial statements. The Primedia purchase price was allocated accordingly: Cash Acquired........................ $ 1,048 Accounts Receivable.................. 2,500 Prepaid Expenses..................... 150 Property, Plant & Equipment.......... 2,200 FCC Licenses......................... 88,673 Goodwill............................. 22,200 Accounts Payable..................... (293) Accrued Expenses..................... (1,798) Income Taxes Payable................. (1,280) Deferred Tax Liability............... (22,200) ------- $91,200 =======
The above purchase price allocation and the 40-year useful lives assigned to the FCC licenses and goodwill are preliminary and have been made solely for the purpose of developing the SBS unaudited pro forma condensed consolidated financial statements. The preliminary estimates are subject to the receipt of a final valuation report. PRO FORMA ADJUSTMENTS FOR PRIMEDIA (1) To record the purchase of Primedia. (2) To eliminate the historical equity of Primedia. (3) To record the depreciation and amortization of assets acquired at estimated fair value using estimated useful lives, and eliminate historical depreciation and amortization of Primedia. (4) To eliminate historical corporate overhead allocated to Primedia, in excess of SBS corporate overhead allocation. (5) To eliminate historical interest expense for Primedia related to debt repaid by the former owners. (6) To record interest expense for estimated debt required to fund Primedia acquisition. (7) To record tax effect of pro forma adjustments. PRO FORMA LOSS PER COMMON SHARE Basic and diluted pro forma loss per share is computed using the weighted average number of SBS common shares outstanding during the period. Common stock equivalents were not considered for each of the periods since their effect would be antidilutive. CONFORMING AND RECLASSIFICATION ADJUSTMENTS There were no adjustments required to conform the accounting policies of Primedia. Certain reclassifications have been made to Primedia's financial statements to conform to SBS's financial statement presentation. There have been no intercompany transactions. 22 23 c. Exhibits *1. Stock Purchase Agreement, dated as of September 22, 1999 among Chancellor Media Corporation of Los Angeles, Primedia Broadcast Group, Inc., WIO, Inc., Cadena Estereotempo, Inc., Portorican American Broadcasting, Inc., WLDI, Inc., WRPC, Inc., WOYE, Inc., WZNT, Inc., WOQI, Inc., and Spanish Broadcasting System of Puerto Rico, Inc. (the "Stock Purchase Agreement"). *2. Amendment to the Stock Purchase Agreement, dated as of January 3, 2000. *3. Amendment to the Stock Purchase Agreement, dated as of January 14, 2000. 4. Consent of Deloitte & Touche LLP. --------- * Filed with the initial filing of this Form 8-K on January 28, 2000. Item 8. Change in Fiscal Year. Not Applicable. 23 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant and each of the additional registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. SPANISH BROADCASTING SYSTEM, INC. (Registrant) and Each of the Additional Registrants Listed in the Table of Additional Registrants March 29, 2000 /s/ Joseph A. Garcia --------------------------------------- Joseph A. Garcia Chief Financial Officer Executive Vice President and Secretary 24 EX-99.4 2 CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 4 INDEPENDENT AUDITORS' CONSENT We consent to the use in the Current Report on Form 8-K under the Securities Exchange Act of 1934 of Spanish Broadcasting System, Inc. filed on January 28, 2000, of our reports dated March 3, 2000, and to the incorporation by reference of such reports in Registration Statement No. 333-3240 of Spanish Broadcasting System, Inc. on Form S-3 under the Securities Act of 1933 insofar as such reports relate to the combined financial statements and additional combining information of Primedia Broadcast Group, Inc. and Affiliates for the year ended December 31, 1999. /s/ DELOITTE & TOUCHE LLP San Juan, Puerto Rico March 28, 2000 -----END PRIVACY-ENHANCED MESSAGE-----