<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 28, 2000
Citadel Broadcasting Company
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(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation)
333-36771 86-0703641
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(Commission File Number) (IRS Employer Identification No.)
City Center West, Suite 400
7201 West Lake Mead Boulevard
Las Vegas, Nevada 89128
---------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
(702) 804-5200
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(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
This report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are based largely on current expectations and projections about future events
and financial trends affecting Citadel Broadcasting Company's business.
The words "believes," "expects" and "intends" and similar words are intended to
identify forward-looking statements. In addition, any statements that refer to
expectations or other characterizations of future events or circumstances are
forward-looking statements. The forward-looking statements in this report are
subject to risks, uncertainties and assumptions including, among other things:
o the realization of Citadel Broadcasting's business strategy,
o general economic and business conditions, both nationally and in
Citadel Broadcasting's radio markets,
o Citadel Broadcasting's expectations and estimates concerning future
financial performance, financing plans and the impact of competition,
o anticipated trends in Citadel Broadcasting's industry, and
o the impact of current or pending legislation and regulation and
antitrust considerations.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this report might not transpire. Citadel
Broadcasting undertakes no obligation to publicly update or revise any
forward-looking statements because of new information, future events or
otherwise.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 28, 2000, Citadel Broadcasting Company completed its
acquisition of all of the issued and outstanding Capital Stock of Bloomington
Broadcasting Holdings, Inc. from the stockholders of Bloomington Broadcasting
Holdings. Bloomington Broadcasting Holdings owned and operated three FM radio
stations and one AM radio station serving the Grand Rapids, Michigan market,
three FM radio stations and one AM radio station serving the Columbia, South
Carolina market, three FM radio stations and one AM radio station serving the
Chattanooga, Tennessee market, two FM and three AM radio stations serving the
Johnson City/Kingsport/Bristol, Tennessee market and two FM radio stations and
one AM radio station serving the Bloomington, Illinois market. The aggregate
purchase price was approximately $175.9 million in cash, which amount includes
the repayment of indebtedness of Bloomington Broadcasting Holdings and a
deferred obligation relating to a recent radio station purchase by Bloomington
Broadcasting Holdings. The purchase price was paid with the remaining proceeds
from Citadel Broadcasting's parent's, Citadel Communications Corporation,
February 2000 public offering of shares of its common stock and amounts borrowed
under Citadel Broadcasting's credit facility with Credit Suisse First Boston, as
Lead Arranger, Administrative Agent and Collateral Agent; FINOVA Capital
Corporation, as Syndication Agent; First Union National Bank and Fleet National
Bank, as Documentation Agents; and Credit Suisse First Boston, Bank of America,
N.A., Bank of Montreal, The Bank of New York, Bank of Nova Scotia, The Chase
Manhattan Bank, Credit Industrial et Commercial, FINOVA
-2-
<PAGE> 3
Capital Corporation, First Union National Bank, Fleet National Bank, The
Industrial Bank of Japan, Limited, Webster Bank, Michigan National Bank, Natexis
Banque Populaires (formerly known as Natexis Banque BFCE), US Bank National
Association, ING (U.S.) Capital LLC, The Fuji Bank, Limited, Dai-Ichi Kangyo
Bank Ltd., First Hawaiian Bank, General Electric Capital Corporation, Suntrust
Bank, Inc., Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, Summit Bank, Royal Bank of Canada, and National
City Bank, as lenders.
Immediately following the acquisition, Bloomington Broadcasting
Holdings was merged with and into Citadel Broadcasting. Citadel Broadcasting
intends to operate the radio stations acquired.
Certain financial information of Bloomington Broadcasting Holdings,
Inc. and Subsidiaries and pro forma financial information of Citadel
Broadcasting Company is included in Item 7 of this report.
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<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. The following financial statements of Bloomington
Broadcasting Holdings, Inc. and Subsidiaries are included in this
report:
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1999
Consolidated Statement of Income for the year ended December 31, 1999
Consolidated Statement of Stockholders' Equity for the year ended
December 31, 1999
Consolidated Statement of Cash Flows for the year ended December 31,
1999
Notes to Consolidated Financial Statements
Consolidated Balance Sheet as of March 31, 2000 (unaudited)
Consolidated Statements of Operations for the three month periods ended
March 31, 2000 and 1999 (unaudited)
Consolidated Statement of Stockholders' Equity for the three month
period ended March 31, 2000 (unaudited)
Consolidated Statements of Cash Flows for the three month periods ended
March 31, 2000 and 1999 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
(b) Pro Forma Financial Information. The following pro forma financial
information of Citadel Broadcasting Company is included herein:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 2000
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the three months ended March 31, 2000
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1999
(c) Exhibits. The following exhibits are filed as part of this report:
2.1 Stock Purchase Agreement dated January 23, 2000 by and among
Bloomington Broadcasting Holdings, Inc., the stockholders of
Bloomington Broadcasting Holdings, Inc. and Citadel Broadcasting
Company (incorporated by reference to Exhibit 2.7 to Citadel
Communications Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999).
23.1 Consent of Dunbar, Breitweiser & Company, LLP.
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<PAGE> 5
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 1999
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<PAGE> 6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Bloomington Broadcasting Holdings, Inc.
Bloomington, Illinois
We have audited the accompanying consolidated balance sheet of Bloomington
Broadcasting Holdings, Inc. and subsidiaries as of December 31, 1999, and the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bloomington
Broadcasting Holdings, Inc. and subsidiaries as of December 31, 1999, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ DUNBAR, BREITWEISER & COMPANY LLP
Bloomington, Illinois
February 18, 2000
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<PAGE> 7
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
1999
-----------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 947,969
Accounts receivable, less allowance for doubtful accounts, $153,485 5,236,922
Other receivables 29,082
Prepaid expenses 161,645
Refundable income taxes 9,800
Deferred income taxes 214,000
-----------
Total current assets $ 6,599,418
-----------
INVESTMENTS AND OTHER ASSETS
Prepaid expenses $ 20,833
Cash value of life insurance 52,743
Deferred compensation trust accounts 579,904
Deferred income taxes 292,000
-----------
$ 945,480
-----------
PROPERTY AND EQUIPMENT
Land $ 756,458
Land improvements 31,104
Buildings and improvements 2,882,952
Technical and other equipment 9,667,909
Furniture and fixtures 1,376,027
Vehicles 649,651
-----------
$15,364,101
Less accumulated depreciation 10,665,102
-----------
$ 4,698,999
-----------
INTANGIBLES, at amortized cost $59,113,105
-----------
$71,357,002
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,200,000
Accounts payable 1,235,726
Accrued expenses 1,811,797
Income taxes payable 39,100
------------
Total current liabilities $ 5,286,623
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LONG-TERM DEBT, less current maturities
Notes payable, bank $ 41,000,000
Notes payable, stockholders 18,593,230
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$ 59,593,230
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DEFERRED COMPENSATION $ 579,904
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COMMITMENTS
STOCKHOLDERS' EQUITY
Capital stock:
Preferred, 5% cumulative, Series A Convertible Participating;
par value $.01 share; authorized 1,700,000 shares; issued and
outstanding, 109,890 shares; ($12,087,900
aggregate liquidation preference) $ 1,099
Common, $.01 par value; authorized 300,000 shares, issued and
outstanding, 11,477.40 shares 115
Retained earnings (deficit) (2,727,762)
Accumulated other comprehensive income 70,599
Paid in capital 8,553,194
------------
$ 5,897,245
------------
$ 71,357,002
============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 8
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1999
<TABLE>
<CAPTION>
1999
-----------
<S> <C>
Gross revenue $31,995,451
Deductions from revenue 3,691,927
-----------
Net revenue $28,303,524
-----------
Operating expenses:
Selling expenses $ 6,242,113
Technical expenses 494,815
Program and production expenses 7,324,827
General and administrative expenses 10,976,326
-----------
$25,038,081
-----------
Operating income $ 3,265,443
-----------
Nonoperating income (expense):
Interest income $ 36,931
Interest expense-lenders (5,830,009)
Loss on dispositions of property and equipment and intangible assets (10,537)
Other income 34,596
-----------
$(5,769,019)
-----------
Loss before income taxes $(2,503,576)
Federal and state income taxes (credits) (491,274)
-----------
Net loss $(2,012,302)
===========
</TABLE>
See Notes to Consolidated Financial Statements.
-8-
<PAGE> 9
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Accumulated
Retained Other
Preferred Earnings Comprehensive Paid-In
Stock Common (Deficit) Income Capital Total
------ ---- ----------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1999 $1,099 $115 $ (715,460) $21,276 $8,553,194 $ 7,860,224
Net loss, 1999 -- -- (2,012,302) -- -- (2,012,302)
New shares issued -- -- -- -- -- --
Unrealized gain on investments -- -- -- 49,323 -- 49,323
------ ---- ----------- ------- ---------- -----------
Balance, December 31, 1999 $1,099 $115 $(2,727,762) $70,599 $8,553,194 $ 5,897,245
====== ==== =========== ======= ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 10
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
1999
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,012,302)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation 955,504
Amortization 3,234,419
Provision for doubtful accounts 311,643
Deferred compensation 128,299
Loss on dispositions of property and equipment and intangible assets 10,537
Income earned in deferred compensation trust accounts (34,597)
Increase in cash value of life insurance (1,869)
Deferred income taxes (756,000)
Interest expense added to notes payable 1,761,666
Change in assets and liabilities:
(Increase) in accounts receivable (788,109)
Decrease in other receivables 29,306
(Increase) decrease in prepaid expenses (82,770)
(Increase) decrease in refundable income taxes 349,800
Increase (decrease) in accounts payable 869,439
Increase (decrease) in accrued expenses (56,915)
(Decrease) in income received in advance (2,805)
Increase (decrease) in income taxes payable 39,100
-----------
Net cash provided by operating activities $ 3,954,346
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Life insurance premiums applied to increase in cash value of
life insurance $ (6,500)
Deposits to deferred compensation trust accounts (63,004)
Proceeds from disposal of property and equipment 8,300
Purchase of property and equipment (654,040)
Purchase of intangibles (2,941,365)
-----------
Net cash (used in) investing activities $(3,656,609)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings $ 3,000,000
Principal payments on long-term borrowings (2,950,000)
Payments on capital lease obligations (5,453)
-----------
Net cash provided by financing activities $ 44,547
-----------
Increase in cash and cash equivalents $ 342,284
Cash and cash equivalents:
Beginning 605,685
-----------
Ending $ 947,969
===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for:
Interest $ 4,055,517
===========
Income taxes (refunds) $ (124,182)
===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Income reinvested in deferred compensation trust accounts $ (34,597)
===========
Increase in cash value of life insurance $ (1,869)
===========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 11
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Business, Use of Estimates and Significant Accounting Policies
Nature of business:
The Company and its subsidiaries operate AM and FM radio stations in
Bloomington-Normal, Illinois; Chattanooga, Tennessee; Johnson
City-Kingsport, Tennessee and Bristol, Virginia; Holland-Grand Rapids,
Michigan; and Columbia and Lexington, South Carolina. The stations are
subject to regulation by the Federal Communications Commission. The
Company and its subsidiaries grant credit on terms that management
establishes for individual accounts.
The Companies operated under the following business names during 1999:
Bloomington Broadcasting Corp. -
Twin-Cities Broadcasting Corp. - WJBC (AM), WBNQ (FM), WBWN
(FM)
Radio Chattanooga, Inc. - WGOW (AM), WSKZ (FM), WGOW (FM) and
WOGT (FM)
Tri-Cities Radio Corp. - WJCW (AM), WQUT (FM), WKIN (AM) and
WKOS (FM)
Michigan Media, Inc. - WBBL (AM), WKLQ (FM), WLAV (FM) and
WODJ (FM)
Radio South Carolina, Inc. - WISW (AM), WTCB (FM), WOMG (FM)
and WLXC (FM)
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.
Significant accounting policies:
Principles of consolidation:
All subsidiary companies are wholly-owned and are included in the
accompanying consolidated financial statements. All material
intercompany balances and transactions have been eliminated in
consolidation.
Cash and cash equivalents:
For purposes of reporting cash flows, the Company considers all
highly liquid instruments with an original maturity of three
months or less to be cash equivalents.
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<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment:
Property and equipment are stated at cost. Major improvements to
existing property and equipment are capitalized. Expenditures for
maintenance and repairs which do not extend the life of the
applicable assets are charged to expense in the period incurred.
Depreciation expense of property and equipment is computed
principally on the straight-line method over the following
estimated useful lives:
Years
-----
Land improvements 5-20
Buildings and improvements 4-39
Technical equipment:
Studio and control 3-35
Transmitting and radiating 3-20
General 3-20
Furniture and fixtures 3-20
Vehicles and airplane 3-10
It is the Company's policy to include amortization expense on
assets acquired under capital leases with depreciation expense on
owned assets.
When properties are retired or otherwise disposed of, the asset
and accumulated depreciation accounts are adjusted accordingly.
Any resulting gain or loss is reflected in income in the period
realized.
Advertising:
The Company expenses the costs of advertising as incurred. Total
advertising and promotion expenses for the year ended
December 31, 1999 was $1,249,113.
Income taxes:
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
Stock option plan:
The Company has adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," (SFAS No. 123) which permits entities to recognize
as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively
SFAS No. 123 also allows entities to
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<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continue to apply the provisions of APB Opinion No. 25 "Accounting
for Stock Issued to Employee", and provide pro forma net income
disclosures for employee stock option grants made in 1995 and
future years as if the fair-value based method defined in
SFAS No. 123 had been applied. The Company has elected to continue
to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS No. 123. There are no
unexercised options outstanding as of December 31, 1999.
There was no stock-based compensation cost reflected in 1999 net
income and there would likewise be none on a pro forma basis.
Note 2. Leveraged Buyout
Effective on July 1, 1998, Bloomington Broadcasting Holdings, Inc.
(formerly Bloomington Broadcasting Acquisition Corp.) purchased 100% of
the stock of Bloomington Broadcasting Corporation. The transaction has
been recorded in accordance with the "purchase method" of Accounting
Principles Board (APB) Opinion No. 16, Business Combinations, and
guidance from the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB). The stock purchase was financed
through a combination of bank debt, stockholder debentures and issuance
of preferred stock.
These financial statements include the financial position and results
of operations of Bloomington Broadcasting Holdings, Inc., Bloomington
Broadcasting Corporation, and all subsidiaries, for all of calendar
year 1999. Bloomington Broadcasting Holdings, Inc. was formed in 1998
for the purpose of this acquisition and had no operations in 1999 other
than its ownership of Bloomington Broadcasting Corporation.
The acquisition cost of Bloomington Broadcasting Corporation was
approximately $64,478,000.
Amortization of goodwill and other intangible assets acquired in this
transaction is computed on the straight-line basis over various periods
from 15 years to 50 years.
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<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Amortization of Intangibles
Intangible assets are recorded at acquisition cost and are amortized on
the straight line method over their estimated useful lives as follows:
Years
-----------
Premium audience growth pattern asset 21.2 - 45.3
Favorable transmitter site lease 37.3 - 50.0
Going concern value 15.0 - 40.0
FCC licenses 10.0 - 15.0
Goodwill 40.0
Organization and start-up costs 5.0
Agreement not to compete 5.0
Other advertising contracts 0.5 - 40.0
Fixed asset delivery premium 9.0
Other intangible assets 15.0 - 40.0
Consulting agreement 1.0 - 5.0
Favorable antenna site agreements 0.7 - 23.9
Favorable studio and office space lease 1.4 - 1.5
FCC licenses and goodwill acquired prior to October 31, 1970 in the
amount of $77,135 are not being amortized and are carried at cost.
Costs and accumulated amortization of intangibles at December 31, 1999,
are as follows:
1999
--------------------------------------
Accumulated Net Book
Cost Amortization Value
----------- ------------ ----------
Premium audience growth
pattern asset $ 8,921,320 $ 859,258 $ 8,062,062
Favorable transmitter site
lease 2,554,630 152,949 2,401,681
Going concern value 5,168,726 329,278 4,839,448
FCC licenses 37,253,317 5,858,892 31,394,425
Goodwill 12,454,084 467,352 11,986,732
Organization and start-up
costs 72,061 72,061 --
Agreement not to compete 1,000 1,000 --
Other advertising contracts 21,852 12,758 9,094
Fixed asset delivery premium 152,900 152,900 --
Other intangible assets 579,432 177,796 401,636
Consulting agreement 25,000 18,333 6,667
Favorable antenna site
agreements 16,953 5,593 11,360
Favorable studio and office
space lease 34,273 34,273 --
----------- ---------- -----------
$67,255,548 $8,142,443 $59,113,105
=========== ========== ===========
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<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Pledged Assets and Notes Payable
The Company and its subsidiaries had the following notes payable at
December 31, 1999:
First Union National Bank, Fleet National Bank, Bank One Indiana,
N.A., collectively as lender, fixed and variable interest rates as
described below, secured by substantially all assets and
communications licenses of Bloomington Broadcasting Holdings, Inc. and
Bloomington Broadcasting Corporation.
Revolving Credit Notes- combination of Base Rate note, presently
10.375 % and LIBOR Rate note, presently 9.5%, interest payable
quarterly (Base Rate notes) and monthly (LIBOR Rate notes);
commitment fee, presently .5% due quarterly on average daily
unused portion of the Revolving Credit Commitment; if total
outstanding principal exceeds the Revolving Credit Commitment such
excess shall be repayable immediately; optional principal payments
allowed in a minimum amount of $250,000 for Base Rate notes and
$2,000,000 for LIBOR Rate notes; Revolving Credit Commitment
presently $15,000,000 with permanent partial reductions scheduled
beginning in March 2002; interest on Base Rate notes at higher of
First Union National Banks' prime rate, or Federal Funds Rate plus
.5%; Revolving Credit Facility shall terminate on the earliest of
June 30, 2005 or the date of termination by either the Company or
First Union National Bank.
Base Rate Note
LIBOR Rate Notes
Term A and Term B Notes- LIBOR Rate notes presently 9.5% on Term A
and 9.75% on Term B, interest payable monthly, principal payable
quarterly beginning on December 31, 1999 in increments stipulated
in the note (see five-year maturity schedule at end of the
footnote), optional principal prepayments of at least $2,000,000
allowable; mandatory principal prepayments required in the amount
of 100% of Net Cash Proceeds from any of the following events,
a) debt proceeds not permitted, b) issuance of equity securities,
c) asset sales, d) insurance proceeds, e) excess cash flow.
Term A Notes
Term B Notes
Stockholders, interest at 10.25%, fixed rate, interest payable
semiannually at June 30 and December 31, principal due in full on
June 30, 2008. These notes are subordinate to the senior
indebtedness described above. There are eleven individual notes,
all of which are uncollateralized. The maker of the notes, at its
option, may pay interest by the issuance of additional
subordinated notes ("PIK Note") equal to such interest payment
provided that advance notice is given under the terms of the note.
Stockholders, "PIK Notes," several issue dates, interest at
10.25%, fixed rate, interest payable semiannually at June 30, and
December 31. Maturity date is June 30, 2008.
1999
-------------------------
Payments
Due Within
Total One Year
----------- ----------
Base Rate Note $ 2,400,000 $ --
LIBOR Rate Notes 2,000,000 --
Term A Notes 19,000,000 2,000,000
Term B Notes 19,800,000 200,000
Stockholders 16,011,000 --
Stockholders (PIK) 2,582,230 --
----------- ----------
$61,793,230 $2,200,000
=========== ==========
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<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Credit Agreement with First Union National Bank (and other
co-lenders), has several restrictive covenants. The Company must
maintain a certain leverage ratio, fixed charge coverage ratio, and
interest coverage ratio during the term of the loans. The Company can
not, with some exceptions, incur any debt. There are also limitations
on future mergers, liquidations or sales of assets. Also, the Company
may not declare or pay any dividends on any of its capital stock, or
purchase, redeem or retire any of its capital stock. See Note 16 for
sale of stock to Citadel Broadcasting Company.
Aggregate future maturities on the above notes are:
2000 $ 2,200,000
2001 2,200,000
2002 3,200,000
2003 4,200,000
2004 4,200,000
Note 5. Deferred Compensation and Life Insurance
In connection with an employment agreement, a provision has been made
for future compensation which is payable to an employee or his heirs in
annual payments of $10,000 per year for ten years commencing on January
1, 2002 if the employee remains employed by a subsidiary Company from
January 1, 1992 through December 31, 2001. In January, 2000, the
employee voluntarily terminated his employment with the Company.
Accordingly, the present value of the estimated liability under this
agreement was eliminated through a credit of approximately $44,000 to
deferred compensation expense for 1999.
Bloomington Broadcasting Corporation established certain non-qualified
deferred compensation plans accompanied by rabbi trusts which are
generally available to general managers, officers and other highly
compensated employees of the parent company and its subsidiaries.
Qualifying employees may elect to defer portions of their salaries
which are then deposited into segregated trust accounts. The employees
designate the trustees and direct the investment of the funds for their
individual accounts. The amounts held in the trusts will at all times
remain solely the property of the participating company and are subject
to the claims of its general creditors.
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<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Upon termination of employment, participating employees are entitled to
receive the value of the assets in the trust accounts established for
their benefit. The plans also permit early withdrawals of the deferred
compensation to the extent that a participant is subject to an
unforeseeable emergency which would otherwise result in severe
financial hardship.
The total amounts recorded as expense under these non-qualified
deferred compensation plans was $128,299 for the year ended December
31, 1999. The investments held in the rabbi trust accounts are carried
at fair value as of December 31, 1999, as follows:
1999
---------
Cost of investments $ 470,306
Unrealized gains 137,368
Unrealized losses (27,770)
---------
$ 579,904
=========
The net unrealized gain included as accumulated other comprehensive
income in stockholder's equity at December 31, 1999 was $70,599, net of
deferred income taxes of $39,000.
Note 6. Capital Stock
The outstanding preferred stock is Series A Convertible Participating
Preferred Stock. The Shareholders Agreement, dated June 30, 1998,
places certain restrictions on transfers of such shares. The Agreement
also contains a "Call" provision, whereby, shares held by "Management
Investors" are redeemable by the Company or the "Venture Investors."
Each share of preferred stock is entitled to one vote, based on the
current "common stock conversion rate." The holders of Series A
Convertible Participating Preferred Stock are entitled to receive
cumulative, compounding dividends of 5% of the difference between the
convertible base liquidation amount (presently $110 per share) and ten
dollars, per share. The Series A Convertible Participating Preferred
Stock has a liquidation preference over other shares of company stock.
The liquidation price per share is the convertible base liquidation
amount, presently, $110, plus any accumulated but unpaid dividends.
In the event of an "extraordinary transaction", if the holders of
Series A Convertible Participating Preferred Stock have not converted
their shares into Series B Redeemable Preferred Stock or common stock,
then the Company shall redeem all the shares at the convertible base
liquidation amount. Extraordinary transactions include a) mergers or
consolidations, b) sale or transfer of all assets, c) a purchase of the
company, d) redemption of a majority of shares, or e) a public
offering. See Note 16 for sale of stock to Citadel Broadcasting
Company.
-17-
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The authorized number of shares of preferred stock is 1,700,000, of
which 300,000 shares are designated as Series A Convertible
Participating Preferred Stock (par value $.01 per share), 400,000
shares are designated as Series B Redeemable Preferred Stock (par value
$.01 per share), and 1,000,000 shares are undesignated.
The authorized number of shares of common stock is 300,000, at par
value of $.01 per share. Holders of common stock are entitled to one
vote for each share held, and vote together with the holders of the
convertible preferred stock as a single class. Holders of common stock
are entitled to dividends only after all preferential preferred stock
dividends have been paid. If additional dividends are declared, the
holders of common stock will share in such dividends with the
convertible preferred stockholders as a single class of equal
shareholders.
As of December 31, 1999, the aggregate preferred stock dividends
accumulated, not declared or paid was $837,911.
Note 7. Income Tax Matters
The Company reports its income as the parent company of a consolidated
federal income tax return which includes the operations of the
following subsidiaries:
Bloomington Broadcasting Corporation
Twin-Cities Broadcasting Corp.
Radio Chattanooga, Inc.
Tri-Cities Radio Corp.
Michigan Media, Inc.
Radio South Carolina, Inc.
The members of the consolidated group have elected to allocate income
taxes among the members of the group by an agreement executed on
January 1, 1986, under which each company records a consolidated return
tax benefit or cost based upon its current taxable income or loss and
governed by any tax elections made for the consolidated return and the
tax rate effective for the consolidated group. This benefit or cost is
due from or to the parent company, respectively. These allocations are
reflected on the balance sheet as consolidated return tax benefit or
liability. A similar approach is used for the allocation of deferred
income taxes.
-18-
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net deferred tax assets (liabilities) consist of the following
components as of December 31, 1999:
1999
---------
Deferred tax assets $1,259,000
Deferred tax asset valuation allowances --
Deferred tax liabilities (753,000)
----------
Net deferred tax assets $ 506,000
==========
Deductible temporary differences giving rise to deferred tax assets
primarily relate to accounts receivable, allowances for doubtful
accounts, deferred compensation payable, accrued vacation pay, and
State and City unused net operating loss carryforwards. Taxable
temporary differences giving rise to deferred tax liabilities relate to
property and equipment and intangibles.
The components giving rise to the net deferred tax liabilities
described above have been included in the accompanying balance sheets
as of December 31, 1999:
1999
--------
Current assets $214,000
Noncurrent assets, net 292,000
--------
$506,000
========
The current and noncurrent deferred tax assets are net of allocations
of the valuation allowances of $0 for 1999. The valuation allowances
have been recorded to reduce the total deferred tax assets to an amount
that management believes will ultimately be realized.
Approximate
Tax Effect
1999
--------
Deferred tax assets-current
Allowance for doubtful accounts $ 61,000
Accrued vacation 112,000
State net operating losses 41,000
--------
$214,000
========
Deferred tax assets-noncurrent
Deferred compensation payable $177,000
Intangible assets 352,000
State net operating losses 122,000
--------
$651,000
========
Deferred tax liabilities-noncurrent
Property and equipment $359,000
--------
$359,000
========
-19-
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation between the actual provision for income taxes and that
computed by applying the U.S. statutory rate to income before income
tax is as follows:
1999
---------
Provision (refund) computed at statutory rate (34%) $(851,216)
Amortization of intangible assets 223,311
Nondeductible meals and entertainment 16,927
State income taxes (refunds), net of federal
income tax 116,681
Other, net 3,023
---------
Federal and state income tax expense (credit) $(491,274)
=========
For State and City income tax purposes, under provisions of Tennessee,
South Carolina and City of Grand Rapids, Michigan tax statutes and
regulations, the Company and its subsidiaries have $6,473,258 in net
operating loss carryforwards at December 31, 1999, which may be used to
offset future taxable income of the Company and its subsidiaries. These
carryforwards expire as follows:
Year
Carry- Radio Radio South
forwards Chattanooga Michigan Carolina
Expire Inc. Media, Inc. Inc.
---------- ---------- ---------- ------------
2000 $ -- $ -- $ --
2001 -- 119,778 --
2002 -- 408,647 --
2003 -- 804,183 --
2004 -- 524,299 --
2005 -- 675,933 158,176
2006 -- 113,970 1,258,238
2007 -- -- 1,223,988
2008 -- -- 319,730
2009 -- -- 41,433
2010 -- -- 138,686
2011 -- 393,397 --
2012 150,819 11,091 --
2013 130,890 -- --
-------- ---------- ----------
$281,709 $3,051,298 $3,140,251
======== ========== ==========
-20-
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes charged to operations for the year ended
December 31, 1999 consists of the following:
1999
---------
Current tax expense $ 264,726
Deferred tax (benefit) (756,000)
---------
$(491,274)
=========
Note 8. Leases
The Company and its subsidiaries rent vehicles, office equipment,
studio space, office space and an AM tower under various operating
leases. These leases expire between December 1999 and December 2013.
Generally, the Company and its subsidiaries are required to carry
liability and property damage insurance, to pay some common area
charges, real estate taxes, and to maintain the properties.
Two subsidiaries also lease land where transmitter towers and buildings
are located. The first lease (WTCB) expires in December 2026 and the
second lease (WBWN) expires in May 2047. The subsidiaries are required
to pay all utilities, property taxes and other expenses incidental to
the maintenance and operation of the transmitter building and
equipment. The subsidiaries are also required to carry liability and
property damage insurance. No rental payments are due on this first
lease. Instead, the subsidiary must offer space on the tower to the
lessor for the lessor's communication antennae. Rental payments of $150
per month are due on the second lease.
The total minimum rental commitments under the operating leases
described above are due as follows:
Year Ending December 31,
------------------------
2000 $293,432
2001 217,537
2002 171,874
2003 39,388
2004 31,300
Due thereafter 220,400
--------
$973,931
========
Total rent expenses under operating leases was $246,676 for the year
ended December 31, 1999.
-21-
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Employees' Profit-Sharing Plan
The Company and its subsidiaries have an employees' profit-sharing plan
covering substantially all employees to which both the employer and
eligible employees contribute. The Company's discretionary
contributions for 1999 were 2.6%, of net operating earnings, as
defined, before depreciation and amortization. Amounts in excess of
this amount may be contributed at the discretion of the Board of
Directors, but are not to exceed the maximum amount deductible for
federal income tax purposes. The Company is also required to make
matching contributions equal to 1% of the compensation of employees who
contribute to the plan through salary deferral elections. The annual
discretionary contributions to the plan for the year ended December 31,
1999 was $226,772. The total matching contributions were $70,247 for
the year ended December 31, 1999.
Note 10. Concentrations of Credit Risk Arising from Cash Deposits in Excess of
Insured Limits
The parent and subsidiary companies maintain cash balances at financial
institutions in Bloomington, Illinois; Chattanooga, Tennessee;
Knoxville, Tennessee; Grand Rapids, Michigan; and West Columbia, South
Carolina. Accounts at these institutions are insured by the Federal
Deposit Insurance Corporation up to aggregate balances of $100,000 per
Company. At December 31, 1999, the Company's uninsured cash balances
totaled $410,425, including $308,936 held in repurchase agreements
which are collateralized by U.S. Government agency securities held by
the bank. This uninsured total does not reflect deductions for
outstanding checks not yet presented to the banks for payment or
transfers to affiliated companies on the following business day. The
Company does not believe there is a significant risk of loss to these
deposits.
Note 11. Non-competition Agreements
A subsidiary acquired certain assets of Sattler Broadcasting, Inc.
(radio station WOGT) in 1993. In connection with this purchase a
non-competition agreement was obtained from Virginia Sattler, the sole
shareholder of Sattler Broadcasting, Inc. The terms of this agreement,
which expired in 1998, required the Company to pay Ms. Sattler $66,667
in 1998.
-22-
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective May 1, 1996, Bloomington Broadcasting Corporation acquired
certain assets of McLean County Broadcasters, Inc. related to radio
station WBWN-FM, licensed to Leroy, Illinois. The asset purchase
agreement also provided for a five-year non-competition agreement with
the sellers for $25,000. In addition, the Company entered into a
consulting agreement, which includes a non-compete provision, with an
employee of WBWN. The consulting agreement provides for payments by the
Company of $25,000 per year for a ten year period, ending on April 30,
2006.
Note 12. Financial Instruments
The Company has entered into Interest Rate Swap agreements with First
Union National Bank relative to the Term A and Term B portions of the
borrowing from First Union National Bank as described in Note 4 to
these financial statements.
The current notional amount is $15,000,000 of the Term A notes and
$20,000,000 of the Term B notes.
The nature and terms of the interest rate swaps are as follows:
TERM A TERM B
------------- -----------
Transaction type Interest rate Interest rate
swap swap
Effective date July 30, 1998 July 30, 1998
Termination date June 29, 2001 June 30, 2003
Term 3 years 5 years
Payment dates last day of last day of
each month each month
Fixed rate 5.86% 5.94%
Floating rate LIBOR LIBOR
The interest rate swap agreements, in effect, create fixed rate loans
for much of the total borrowed from First Union National Bank. The
instruments' market risk is that fluctuations in interest rates may
make the swaps less valuable. The agreements are held for non-trading
purposes. The Company's objective for holding the interest rate swaps
is to hedge the risk of rising interest rates on its long-term
financing.
The Company is required to pay interest monthly on the Term A and Term
B notes and the swap agreements, and the gain or loss resulting from
the interest rate swap agreements is then recorded as a corresponding
increase or decrease to interest expense on the underlying debt.
-23-
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Stock Option Plan
The Company has established the Bloomington Broadcasting Holdings, Inc.
1998 Stock Option and Grant Plan (the "Plan"). The purpose of the Plan
is to encourage and enable the officers, employees, directors,
consultants, advisors and other key persons of the Company to acquire a
proprietary interest in the Company. The maximum number of shares of
stock reserved and available for issuance under the Plan is 12,210
shares of common stock. During 1998, 11,477.40 shares of common stock
were purchased under Restricted Stock Purchase Agreements pursuant to
the Plan. The price paid for the shares issued during 1998 was $1.00
per share. No shares were issued during 1999. There are no unexercised
options outstanding as of December 31, 1999.
Note 14. Barter Transactions (Trade Revenues and Expenses)
Barter transactions are recorded at the estimated fair values of the
products and services received. Barter revenues are recognized when
commercials are broadcast. Assets received in exchange for broadcast
time are recorded when received. Services are recorded when the
corresponding revenue is recorded.
1999
----------
Trade agreement revenue $1,155,560
Trade agreement expense $1,101,194
Note 15. Radio Station Purchase
On February 15, 1999, Radio South Carolina, Inc. had reached an
agreement to acquire substantially all of the operating assets and the
license of radio station WLXC (FM) at a cost of $3,200,000. The Company
financed this acquisition through the Revolving Credit Commitment with
First Union National Bank, closing on July 1, 1999. The Company had
been operating the station since March 1, 1999 under a Lease Management
Agreement.
Note 16. Subsequent Events
On January 6, 2000, Michigan Media, Inc. (a subsidiary of the Company)
acquired the station assets and broadcast rights of WODJ (FM) in
Greenville, Michigan for $7,500,000.
On January 10, 2000, Tri-Cities Radio Corp. (a subsidiary of the
Company) entered into an asset purchase agreement to acquire the
station assets and broadcast rights of WGOC (AM) in Blountville,
Tennessee for $850,000. The Company began operating the station on
February 1, 2000. Closing will take place following FCC consent.
On January 23, 2000, the Company entered into a definitive letter of
intent to sell 100% of its stock to Citadel Broadcasting Company
("Citadel"), a subsidiary of Citadel Communications Corporation, for
$176 million. The transaction will be recorded under the purchase
method of accounting. Citadel has delivered to the Company an
irrevocable letter of credit in favor of the Company for $15 million to
secure consummation of the transaction.
-24-
<PAGE> 25
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 978,476
Accounts receivable, less allowance for doubtful accounts of $140,844 4,790,322
Other receivables 41,753
Prepaid expenses 69,730
Refundable income taxes 39,100
Deferred income taxes 214,000
-----------
Total current assets $ 6,133,381
-----------
INVESTMENTS AND OTHER ASSETS
Prepaid expenses $ 20,833
Frequency swap option 944,831
Deferred compensation trust accounts 618,232
Deferred income taxes 744,000
-----------
$ 2,327,896
-----------
PROPERTY AND EQUIPMENT
Land and land improvements $ 910,087
Buildings and improvements 2,908,727
Technical and other equipment 10,338,709
Furniture and fixtures 1,483,936
Vehicles 651,420
-----------
$16,292,879
Less accumulated depreciation 10,920,759
-----------
$ 5,372,120
-----------
INTANGIBLES, at amortized cost $63,957,473
-----------
$77,790,870
===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-25-
<PAGE> 26
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Scheduled maturities of long-term debt $ 2,200,000
Accelerated maturities of long-term bank debt 47,450,000
Accelerated maturities of long-term stockholders' debt
and related accrued interest 19,046,453
Frequency swap obligation 944,831
Accounts payable 1,373,756
Accrued expense 1,213,374
Income taxes payable 11,400
-----------
Total current liabilities $72,239,814
-----------
DEFERRED COMPENSATION $ 618,232
-----------
COMMITMENTS
STOCKHOLDERS' EQUITY
Capital stock:
Preferred, 5% cumulative, Series A Convertible Participating; par value
$.01 share; authorized 1,700,000 shares; issued and outstanding
109,890 shares; ($12,087,900 aggregate
liquidation preference) $ 1,099
Common, $.01 par value; authorized 300,000 shares, issued and
outstanding 11,477.40 shares 115
Retained Earnings (deficit) (3,713,321)
Accumulated other comprehensive income 91,737
Paid In Capital 8,553,194
-----------
$ 4,932,824
-----------
$77,790,870
===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-26-
<PAGE> 27
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three-month Periods Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Gross revenue $ 7,669,466 $ 6,380,873
Deductions from revenue 901,148 788,673
----------- -----------
Net revenue $ 6,768,318 $ 5,592,200
----------- -----------
Operating expenses:
Selling expenses $ 1,630,821 $ 1,289,331
Technical expenses 135,213 122,882
Program and production expenses 1,993,725 1,693,972
General and administrative expenses 2,910,723 2,386,808
----------- -----------
$ 6,670,482 $ 5,492,993
----------- -----------
Operating income $ 97,836 $ 99,207
----------- -----------
Nonoperating income (expense):
Interest income $ 31,516 $ 7,675
Interest expense (1,567,399) (1,383,452)
Other income 1,888 500
----------- -----------
$(1,533,995) $(1,375,277)
----------- -----------
Loss before income tax benefit $(1,436,159) $(1,276,070)
Federal and state income tax benefit (450,600) (347,900)
----------- -----------
Net loss $ (985,559) $ (928,170)
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-27-
<PAGE> 28
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Three-month Period Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Retained Other
Preferred Common Earnings Comprehensive Paid-In
Stock Stock (Deficit) Income Capital Total
--------- ------ ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 $1,099 $115 $(2,727,762) $70,599 $8,553,194 $5,897,245
Net Loss, 2000 -- -- (985,559) -- -- (985,559)
Unrealized gain on
investments -- -- -- 21,138 -- 21,138
------ ---- ----------- ------- ---------- ----------
Balance, March 31, 2000 $1,099 $115 $(3,713,321) $91,737 $8,553,194 $4,932,824
====== ==== =========== ======= ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-28-
<PAGE> 29
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three-month Periods Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (985,559) $ (928,170)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,177,422 1,012,819
Provision for doubtful accounts 6,613 (18,352)
Deferred compensation 32,026 2,143
Gain on dispositions of property and equipment -- (500)
Deferred income taxes (461,000) (386,000)
Interest expense added to notes payable 453,223 410,282
Change in assets and liabilities:
Decrease in accounts receivable 439,987 683,302
(Increase) decrease in other receivables (12,671) 50,146
(Increase) decrease in prepaid expenses 91,915 (71,547)
(Increase) decrease in refundable income taxes (29,300) 314,957
(Increase) in deferred compensation trust accounts (1,888) --
Increase in accounts payable 138,030 21,135
(Decrease) in accrued expenses (598,423) (591,757)
Increase (decrease) in income taxes payable (27,700) 38,100
----------- ----------
Net cash provided by operating activities $ 222,675 $ 536,558
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property and equipment $ -- $ 500
Purchase of property and equipment (928,778) (39,143)
Purchase of intangibles (5,766,133) (56,765)
Proceeds from cancellation of life insurance policy 52,743 --
----------- ----------
Net cash (used in) investing activities $(6,642,168) $ (95,408)
----------- ----------
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-29-
<PAGE> 30
<TABLE>
<CAPTION>
2000 1999
---------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings $7,000,000 $ --
Principal payments on borrowings (550,000) (250,000)
Payments on capital lease obligations -- (1,413)
---------- ---------
Net cash provided by (used in) financing activities $6,450,000 $(251,413)
---------- ---------
Increase in cash and cash equivalents $ 30,507 $ 189,737
Cash and cash equivalents:
Beginning 947,969 605,685
---------- ---------
Ending $ 978,476 $ 795,422
========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $1,114,175 $ 993,055
========== =========
Income taxes, net of refunds received 1999: $298,500 $ 78,915 $(201,096)
========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-30-
<PAGE> 31
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization and Nature of Operations
The Company and its subsidiaries operate AM and FM radio stations in
Illinois, Tennessee, Virginia, Michigan, and South Carolina. The
stations are subject to regulation by the Federal Communications
Commission. The Company and its subsidiaries grant credit on terms that
management establishes for individual accounts.
The Companies operated under the following business names during 2000
and 1999:
Twin-Cities Broadcasting Corp. WJBC (AM), WBNQ (FM) and
WBWN (FM)
Radio Chattanooga, Inc. WGOW (AM), WSKZ (FM), WGOW
(FM) and WOGT (FM)
Tri-Cities Radio Corp. WJCW (AM), WQUT (FM), WKIN
(AM), WGOC (AM) and WKOS (FM)
Michigan Media, Inc. WBBL (AM), WKLQ (FM), WLAV
(FM) and WODJ (FM)
Radio South Carolina, Inc. WISW (AM), WTCB (FM), WOMG
(FM) and WLXC (FM)
Note 2. Leveraged Buyout
Effective on July 1, 1998, Bloomington Broadcasting Holdings, Inc.
(formerly Bloomington Broadcasting Acquisition Corp.) purchased 100% of
the stock of Bloomington Broadcasting Corporation. The transaction has
been recorded in accordance with the "purchase method" of Accounting
Principles Board (APB) Opinion No. 16, Business Combinations, and
guidance from the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB). The stock purchase was financed
through a combination of bank debt, stockholder debentures and issuance
of preferred stock.
These financial statements include the financial position of
Bloomington Broadcasting Holdings, Inc., Bloomington Broadcasting
Corporation, and all subsidiaries. Bloomington Broadcasting Holdings,
Inc. was formed in 1998 for the purpose of this acquisition and has no
operations other than its ownership of Bloomington Broadcasting
Corporation.
The acquisition cost of Bloomington Broadcasting Corporation was
approximately $64,478,000 of which $61,661,396 was paid in cash.
Amortization of goodwill and other intangible assets acquired in this
transaction is computed on the straight-line basis over various periods
from 15 years to 50 years.
-31-
<PAGE> 32
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Basis of Presentation
The accompanying reviewed condensed consolidated financial statements
of Bloomington Broadcasting Holdings, Inc. and its subsidiaries have
been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, consisting of normal
accruals, considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2000
are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000. For further information, refer to
the consolidated financial statements and notes thereto for the year
ended December 31, 1999. All inter-company balances and transactions
are eliminated in consolidation.
Note 4. Commitments
In July 1999, Michigan Media, Inc. (a subsidiary of the Company) agreed
to acquire certain radio station and broadcast assets of WODJ (FM) for
$7.5 million. The transaction closed on January 6, 2000. The
acquisition was accounted for under the purchase method of accounting.
An outstanding frequency swap option is reflected as an asset and
liability on the accompanying consolidated balance sheet.
On January 10, 2000, Tri-Cities Radio Corp. (a subsidiary of the
Company) entered into an asset purchase agreement to acquire the
station assets and broadcast rights of WGOC (AM) in Blountville,
Tennessee for $850,000. The Company began operating the station on
February 1, 2000. Closing took place on May 26, 2000.
On January 23, 2000, the Company entered into a definitive agreement to
sell 100% of its stock to Citadel Broadcasting Company, a subsidiary of
Citadel Communication Corporation, for $175 million. The transaction
will be recorded under the purchase method of accounting. The
transaction was approved by the Federal Communications Commission (FCC)
and closed on June 28, 2000. In connection with the sale of its stock,
the Company's obligations to lenders and stockholders were repaid.
Accordingly, the obligation to lenders and stockholders is reflected in
the current liability section of the consolidated balance sheet as of
March 31, 2000.
-32-
<PAGE> 33
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements reflect the results of operations and balance sheet of Citadel
Broadcasting Company after giving effect to:
(1) the following completed transactions (collectively, the
"Completed Transactions"):
o the February 9, 1999 acquisition of WKQZ-FM, WYLZ-FM, WILZ-FM,
WIOG-FM, WGER-FM and WSGW-AM in Saginaw/Bay City/Midland,
Michigan for the purchase price of approximately $35.0 million
(the "Saginaw/Bay City Acquisition"),
o the February 17, 1999 acquisition of WHYL-FM and WHYL-AM in
Harrisburg/Lebanon/Carlisle, Pennsylvania for the purchase
price of approximately $4.5 million (the "Carlisle
Acquisition"),
o the March 17, 1999 acquisition of Citywide Communications,
Inc., which owned KQXL-FM, WEMX-FM, WCAC-FM, WXOK-AM and
WIBR-AM serving the Baton Rouge, Louisiana market and KFXZ-FM,
KNEK-FM, KRRQ-FM and KNEK-AM serving the Lafayette, Louisiana
market for the purchase price of approximately $31.5 million
(the "Baton Rouge/Lafayette Acquisition"),
o the April 30, 1999 acquisition of KSPZ-FM serving the Colorado
Springs, Colorado market in exchange for KKLI-FM in Colorado
Springs, the April 30, 1999 acquisition of KVOR-AM and KTWK-AM
serving the Colorado Springs, Colorado market and KEYF-FM and
KEYF-AM serving the Spokane, Washington market for the
purchase price of approximately $10.0 million and the April
30, 1999 termination of a joint sales agreement under which
Citadel Communications operated certain other radio stations
in Colorado Springs and Spokane (collectively, the "Capstar
Transactions"),
o the June 30, 1999 acquisition of WSSX-FM, WWWZ-FM, WMGL-FM,
WSUY-FM, WNKT-FM, WTMA-AM, WTMZ-AM and WXTC-AM in Charleston,
South Carolina, WHWK-FM, WYOS-FM, WAAL-FM, WNBF-AM and WKOP-AM
in Binghamton, New York, WMDH-FM and WMDH-AM in Muncie,
Indiana and WWKI-FM in Kokomo, Indiana for the purchase price
of approximately $77.0 million (the "Charleston/Binghamton/
Muncie/Kokomo Acquisition"),
o the August 31, 1999 acquisition of Fuller-Jeffrey Broadcasting
Companies, Inc. which owned WOKQ-FM, WPKQ-FM, WXBB-FM and
WXBP-FM serving the Portsmouth/Dover/Rochester, New Hampshire
market and WBLM-FM, WCYI-FM, WCYY-FM, WHOM-FM, WJBQ-FM and
WCLZ-FM serving the Portland, Maine market for the purchase
price of approximately $65.3 million, which amount includes
the repayment of certain indebtedness of Fuller-Jeffrey
Broadcasting and approximately $1.8 million in consulting and
noncompetition payments payable over a seven-year period (the
"Portsmouth/Dover/ Rochester/Portland Acquisition"),
-33-
<PAGE> 34
o the November 1, 1999 acquisition of KOOJ-FM in Baton Rouge,
Louisiana for the purchase price of approximately $9.5 million
(the "KOOJ Acquisition"),
o the December 23, 1999 acquisition of Caribou Communications
Co., which owned KATT-FM, KYIS-FM, KCYI-FM, KNTL-FM and
WWLS-AM in Oklahoma City, Oklahoma, for a purchase price of
approximately $60.0 million, which amount includes the
repayment of certain indebtedness of Caribou Communications
(the "Oklahoma City Acquisition"),
o the February 10, 2000 acquisition of WXLO-FM in Worcester,
Massachusetts for the purchase price of approximately $21.0
million (the "WXLO Acquisition"),
o the March 31, 2000 acquisition of KSMB-FM, KDYS-AM, KVOL-FM
and KVOL-AM in Lafayette, Louisiana for the purchase price of
approximately $8.5 million (the "Lafayette Acquisition"),
o the April 7, 2000 acquisition of WORC-FM in Worcester,
Massachusetts for the purchase price of approximately $3.5
million (the "WORC Acquisition"),
o the (A) April 15, 2000 acquisition of WGRF-FM, WEDG-FM,
WHTT-FM, WMNY-AM and WHLD-AM in Buffalo/Niagara Falls, New
York, WAQX-FM, WLTI-FM, WNSS-AM, and WNTQ-FM in Syracuse, New
York, WIII-FM and WKRT-AM in Ithaca, New York, WMME-FM,
WEZW-AM, WEBB-FM and WTVL-AM in Augusta/Waterville, Maine,
WBPW-FM, WOZI-FM and WQHR-FM in Presque Isle, Maine, WCRQ-FM
in Dennysville/Calais, Maine, KMYY-FM, KYEA-FM, KZRZ-FM and
KTJC-FM in Monroe, Louisiana, KDOK-FM, KTBB-AM, KEES-AM,
KYZS-AM and KGLD-AM in Tyler/Longview, Texas, WFPG-AM, WFPG-FM
and WPUR-FM in Atlantic City/Cape May, New Jersey, WFHN-FM and
WBSM-AM in New Bedford/Fall River, Massachusetts, WQGN-FM,
WSUB-AM and WVVE-FM in New London, Connecticut and the right
to operate WKOE-FM in Atlantic City/Cape May under a program
service and time brokerage agreement and the right to sell
advertising in the United States for one FM radio Station in
Niagara Falls, Ontario under a joint sales agreement for the
aggregate purchase price of approximately $189.0 million, and
(B) entry into a local marketing agreement dated June 1, 2000
pursuant to which a third party operates the five
Tyler/Longview, Texas stations acquired and has an obligation
to purchase such stations (the unaudited pro forma financial
information does not give effect to any future sale of the
stations pursuant to this agreement) (collectively, the "BPH
Transactions"),
o the June 19, 2000 acquisition of WWFX-FM in Worcester,
Massachusetts for the purchase price of approximately $12.8
million (the "WWFX Acquisition"),
o the June 28, 2000 acquisition of Bloomington Broadcasting
Holdings, Inc., which owned WKLQ-FM, WBBL-AM, WLAV-FM and
WODJ-FM, in Grand Rapids, Michigan, WTCB-FM, WOMG-FM, WLXC-FM
and WISW-AM in Columbia, South Carolina, WSKZ-FM, WOGT-FM,
WGOW-AM and WGOW-FM in Chattanooga, Tennessee, WQUT-FM,
WKOS-FM, WJCW-AM, WKIN-AM and WGOC-AM in Johnson
City/Kingsport/Bristol, Tennessee
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<PAGE> 35
and WJBC-AM, WBNQ-FM and WBWN-FM in Bloomington, Illinois, for
the aggregate purchase price of approximately $175.9 million,
which amount includes repayment of indebtedness of Bloomington
Broadcasting Holdings and a deferred obligation relating to a
recent radio station purchase by Bloomington Broadcasting
Holdings (the "Bloomington Acquisition"),
o the November 9, 1999 sale of KKTT-FM, KEHK-FM and KUGN-AM in
Eugene, Oregon, KAKT-FM, KBOY-FM, KCMX-FM, KTMT-FM, KCMX-AM
and KTMT-AM in Medford, Oregon, KEYW-FM, KORD-FM, KXRX-FM,
KTHT-FM and KFLD-AM in Tri-Cities, Washington, KCTR-FM,
KKBR-FM, KBBB-FM, KMHK-FM and KBUL-AM in Billings, Montana,
WQKK-AM and WGLU-FM in Johnstown, Pennsylvania and WQWK-FM,
WNCL-FM, WRSC-AM and WBLF-AM in State College, Pennsylvania
for the sale price of approximately $26.0 million (the
"Marathon Disposition"),
o the June 1999 public offering by Citadel Broadcasting's
parent, Citadel Communications Corporation, of shares of its
common stock and the use of net proceeds from that offering
(the "1999 Offering"),
o the August 1999 redemption of a portion of Citadel
Broadcasting's outstanding 13-1/4% Exchangeable Preferred
Stock (the "Preferred Redemption"),
o the February 2000 public offering by Citadel Communications of
shares of its common sock and the use of net proceeds from
that offering (the "2000 Offering"); and
(2) the following pending transactions (collectively, the
"Pending Transactions"):
o the (A) pending acquisition of WMMQ-FM, WJIM-FM, WFMK-FM,
WITL-FM, WVFN-AM and WJIM-AM in Lansing/East Lansing,
Michigan, WHNN-FM and WTCF-FM in Saginaw/Bay City/Midland,
Michigan and WFBE-FM in Flint, Michigan for the aggregate
purchase price of approximately $120.5 million, consisting of
200,000 shares of Citadel Communications' common stock valued
at $50.375 per share, based on the closing share price of the
common stock on December 2, 1999, and approximately $110.4
million in cash. However, if the value of the common stock at
the time of closing, based on the 20-day average closing sale
price per share prior to closing, is less than $45.3375 (90%
of the value on December 2, 1999), then no common stock will
be issued and the purchase price will be paid entirely in cash
(the unaudited pro forma financial information assumes payment
of the purchase price in all cash), and (B) pending sale of
WSGW-AM, WGER-FM and WTCF-FM in Saginaw/Bay City/Midland,
Michigan for the sale price of approximately $16.2 million
(collectively, the "Michigan Transactions"), and
o the pending acquisition of WKDF-FM and WGFX-FM in Nashville,
Tennessee, WIVK-FM, WNOX-AM, WNOX-FM and WSMJ-FM in Knoxville,
Tennessee, and WZRR-FM, WYSF-FM, WJOX-AM and WAPI-AM in
Birmingham, Alabama as well as the right to operate WOKI-FM in
Knoxville under a long-term local marketing agreement for the
aggregate purchase price of approximately $300.0 million in
cash,
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<PAGE> 36
subject to various adjustments specified in the
acquisition agreement (the "Dick Acquisition").
The unaudited pro forma condensed consolidated financial statements are
based on Citadel Broadcasting's historical consolidated financial statements,
the financial statements of those entities acquired, or from which assets were
acquired, in connection with the Completed Transactions, and the financial
statements of those entities from which assets will be acquired in connection
with the Pending Transactions.
In the opinion of management, all adjustments necessary to fairly
present this pro forma information have been made. The interest rate applied to
borrowings under, and repayments of, Citadel Broadcasting's credit facility in
the pro forma consolidated statements of operations was 7.8%, which represents
the interest rate in effect under the then existing credit facility as of
January 1, 1999. Pro forma financial information has been adjusted to reflect
the following, when applicable:
o Prior to the acquisition dates, Citadel Broadcasting operated
some of the acquired stations under a joint sales agreement
("JSA") or local marketing agreement ("LMA"). Citadel
Broadcasting receives or pays fees for such services
accordingly. Net revenue and station operating expenses for
stations operated under JSAs are included to reflect ownership
of the stations as of January 1, 1999. Net revenue and station
operating expenses for stations operated under LMAs are
included in Citadel Broadcasting's historical consolidated
financial statements. For those stations operated under JSAs
and LMAs and subsequently acquired, associated fees and
redundant expenses were eliminated and estimated occupancy
costs were included to adjust the results of the operations to
reflect ownership of the stations as of January 1, 1999.
o Elimination of revenue and operating expenses from the
entities acquired, or from which assets were acquired, in
connection with the Completed Transactions, and the entities
from which assets will be acquired in connection with the
Pending Transactions, which would not have been incurred if
the acquisition had occurred on January 1, 1999. The
eliminated items were deemed redundant and therefore are not
reflected as of January 1, 1999.
Depreciation and amortization for the acquisitions are based upon
preliminary allocations of the purchase price to property and equipment and
intangible assets. Actual depreciation and amortization may differ depending on
the final allocation of the purchase price. However, management does not believe
these differences will be material.
For pro forma purposes, Citadel Broadcasting's balance sheet as of
March 31, 2000 has been adjusted to give effect to the following transactions as
if each had occurred on March 31, 2000 (collectively, the "Recent 2000
Transactions"):
(1) the WORC Acquisition,
(2) the BPH Transactions,
(3) the WWFX Acquisition,
-36-
<PAGE> 37
(4) the Bloomington Acquisition, and
(5) the Pending Transactions.
The unaudited pro forma information is presented for illustrative
purposes only and does not indicate the operating results or financial position
that would have occurred if the transactions described above had been completed
on the dates indicated, nor is it indicative of future operating results or
financial position if the Pending Transactions described above are completed.
Citadel Broadcasting cannot predict whether the completion of the Pending
Transactions will conform to the assumptions used in the preparation of the
unaudited pro forma condensed consolidated financial statements. Additionally,
completion of each of the Pending Transactions is subject to certain conditions.
Although Citadel Broadcasting believes these closing conditions are generally
customary for transactions of this type, there can be no assurance that such
conditions will be satisfied.
The initial grant from the FCC for the WWFX Acquisition has not yet
become a final order. Until an order becomes final, third parties may file a
request for reconsideration or judicial review or the FCC may reconsider the
grant on its own motion. Such action could expose Citadel Broadcasting to a
modification or set aside of the initial approval. There can be no assurance
that a modification or set aside will not occur.
The total cash required to fund the acquisitions that are included in
the Pending Transactions is expected to be approximately $420.5 million. The
remaining borrowing capacity under Citadel Broadcasting's committed credit
facility, together with working capital funds and the approximately $16.2
million of funds from the anticipated sale of three radio stations will not be
sufficient to fund such pending acquisitions. Citadel Broadcasting expects
that additional funds of approximately $180.0 million will be required to
complete these transactions.
Citadel Broadcasting's credit facility allows Citadel Broadcasting to
request up to $300.0 million in additional term loans, which may be made at the
sole discretion of the lenders. In addition, Citadel Broadcasting may need to
obtain an amendment to, or a waiver under, its credit facility for certain
financial ratios due to the additional indebtedness. Citadel Broadcasting
believes that the lenders under the credit facility will provide the additional
term loans to complete the Pending Transactions and will waive or amend the
credit facility with respect to certain financial ratios. However, there can be
no assurance that this will be the case. In addition, Citadel Communications or
Citadel Broadcasting may consider other financing alternatives, such as selling
additional equity or debt securities. Again, there can be no assurance that
Citadel Communications or Citadel Broadcasting could obtain such financing on
favorable terms or at all. The unaudited pro forma financial information assumes
that the lenders under the credit facility provide the additional term loans to
complete the Pending Transactions and that they waive or amend the credit
facility with respect to certain financial ratios.
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<PAGE> 38
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING ADJUSTMENTS
ACTUAL ADJUSTMENTS AS ADJUSTED FOR PRO FORMA
CITADEL FOR RECENT 2000 FOR RECENT 2000 THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS TRANSACTIONS (2) BROADCASTING
-------------- ---------------- ------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 212,187 $ (191,126) $ 21,061 $ (4,320) $ 16,741
Accounts and notes
receivable, net 45,255 5,207 50,462 -- 50,462
Prepaid expenses 4,090 89 4,179 -- 4,179
Net assets of
discontinued operations 2,861 -- 2,861 -- 2,861
--------- ---------- ---------- ---------- ----------
Total current assets 264,393 (185,830) 78,563 (4,320) 74,243
Property and equipment,
net 68,521 21,050 89,571 17,127 106,698
Intangible assets, net 556,140 394,457 950,597 387,193 1,337,790
Restricted cash 30,055 (30,055) -- -- --
Other assets 8,201 618 8,819 -- 8,819
--------- ---------- ---------- ---------- ----------
TOTAL ASSETS $ 927,310 $ 200,240 $1,127,550 $ 400,000 $1,527,550
========= ========== ========== ========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable and
accrued liabilities $ 17,465 $ 3,390 $ 20,855 $ -- $ 20,855
Current maturities of
other long-term
obligations 834 -- 834 -- 834
--------- ---------- ---------- ---------- ----------
Total current liabilities 18,299 3,390 21,689 -- 21,689
Notes payable, less
current maturities 120,000 160,000 280,000 400,000 680,000
Senior subordinated
notes 210,620 -- 210,620 -- 210,620
Other long-term
obligations, less
current maturities 2,311 -- 2,311 -- 2,311
Deferred tax liability 44,794 36,850 81,644 -- 81,644
Exchangeable preferred
stock 88,382 -- 88,382 -- 88,382
Common stock and
additional paid-in
capital 516,695 -- 516,695 -- 516,695
Deferred compensation (23,716) -- (23,716) -- (23,716)
Accumulated deficit/
retained earnings (50,075) -- (50,075) -- (50,075)
--------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES AND $ 927,310 $ 200,240 $1,127,550 $ 400,000 $1,527,550
SHAREHOLDERS' EQUITY ========= ========== ========== ========== ==========
</TABLE>
(1) Represents the net effect of the WORC Acquisition, the BPH
Transactions, the WWFX Acquisition and the Bloomington Acquisition, as
if each transaction had taken place on March 31, 2000.
(2) Represents the net effect of the Pending Transactions as if each
transaction had taken place on March 31, 2000.
-38-
<PAGE> 39
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING ADJUSTMENTS
ACTUAL ADJUSTMENTS AS ADJUSTED FOR PRO FORMA
CITADEL FOR COMPLETED FOR COMPLETED THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS TRANSACTIONS (2) BROADCASTING
-------------- ---------------- ------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 46,137 $ 17,802 $ 63,939 $ 10,263 $ 74,202
Station operating expenses 32,831 13,150 45,981 7,874 53,855
Depreciation and
amortization 12,605 7,312 19,917 6,779 26,696
Corporate general and
administrative 5,235 -- 5,235 -- 5,235
---------- --------- --------- -------- ---------
Operating expenses 50,671 20,462 71,133 14,653 85,786
---------- --------- --------- -------- ---------
Operating income (loss) (4,534) (2,660) (7,194) (4,390) (11,584)
Interest expense 8,747 5,127 13,874 7,811 21,685
Other (income) expense, net (2,058) -- (2,058) (75) (2,133)
---------- --------- --------- -------- ---------
Income (loss) from continuing
operations before
income taxes (11,223) (7,787) (19,010) (12,126) (31,136)
Income taxes (benefit) (735) (614) (1,349) -- (1,349)
Net income (loss) from
continuing operations (10,488) (7,173) (17,661) (12,126) (29,787)
Net (loss) from discontinued
operations, net of tax (564) -- (564) -- (564)
Net income (11,052) (7,173) (18,225) (12,126) (30,351)
Dividend requirement for
exchangeable preferred
stock (2,965) -- (2,965) -- (2,965)
---------- --------- --------- -------- ---------
Income (loss) applicable
to common shares $ (14,017) $ (7,173) $ (21,190) $(12,126) $ (33,316)
========== ========= ========= ======== =========
</TABLE>
(1) Represents the net effect of the Completed Transactions that were
consummated after January 1, 2000 as if each transaction had taken
place on January 1, 1999. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
BLOOMINGTON WWFX BPH
ACQUISITION ACQUISITION TRANSACTIONS
----------- ----------- ------------
<S> <C> <C> <C>
Net revenue $ 6,768 $ 485 $ 9,375
Station operating expenses 5,091 255 6,972
Depreciation and
amortization 3,510 219 3,240
Corporate general and
administrative -- -- --
-------- ------ --------
Operating expenses 8,601 474 10,212
-------- ------ --------
Operating income (loss) (1,833) 11 (837)
Interest expense 3,434 249 3,189
Other (income) expenses, net -- -- --
-------- ------ --------
Income (loss) from continuing
operations before income
taxes (5,267) (238) (4,026)
Income taxes (benefit) (614) -- --
-------- ------ --------
Net income (loss) from
continuing operations $ (4,653) $ (238) $ (4,026)
======== ====== ========
</TABLE>
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<PAGE> 40
<TABLE>
<CAPTION>
WORC AND ADJUSTMENTS
LAFAYETTE WXLO FOR THE THE COMPLETED
ACQUISITION ACQUISITION 2000 OFFERING TRANSACTIONS
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 688 $ 486 $ -- $17,802
Station operating expenses 464 368 -- 13,150
Depreciation and amortization 158 185 -- 7,312
Corporate general and
administrative -- -- -- --
-------- -------- ---------- ---------
Operating expenses 622 553 -- 20,462
-------- -------- ---------- ---------
Operating income (loss) 66 (67) -- (2,660)
Interest expense 166 178 (2,089) 5,127
Other (income) expenses, net -- -- -- --
-------- -------- ---------- ---------
Income (loss) from continuing
operations before income
taxes (100) (245) 2,089 (7,787)
Income tax (benefit) -- -- -- (614)
-------- -------- ---------- ---------
Net income (loss) from continuing
operations (100) (245) 2,089 (7,173)
======== ======== ========== =========
</TABLE>
(2) Represents the net effect of the Pending Transactions as if each
transaction had taken place on January 1, 1999.
Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
MICHIGAN DICK PENDING
TRANSACTIONS ACQUISITION TRANSACTIONS
<S> <C> <C> <C>
Net revenue $ 3,221 $ 7,042 $ 10,263
Station operating expenses 1,840 6,034 7,874
Depreciation and amortization 1,743 5,036 6,779
-------- -------- ---------
Operating expenses 3,583 11,070 14,653
-------- -------- ---------
Operating income (loss) (362) (4,028) (4,390)
Interest expense 1,953 5,858 7,811
Other (income) expenses, net -- (75) (75)
-------- -------- ---------
Income (loss) from continuing
operations before income taxes (2,315) (9,811) (12,126)
Income tax (benefit) -- -- --
-------- -------- ---------
Net income (loss) from continuing
operations $ (2,315) $ (9,811) $ (12,126)
======== ========= =========
</TABLE>
-40-
<PAGE> 41
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING ADJUSTMENTS
ACTUAL ADJUSTMENTS AS ADJUSTED FOR PRO FORMA
CITADEL FOR COMPLETED FOR COMPLETED THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS TRANSACTIONS (2) BROADCASTING
-------------- ---------------- ------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 178,495 $ 98,716 $277,211 $ 49,553 $326,764
Station operating expenses 115,312 65,112 180,424 34,458 214,882
Depreciation and
amortization 35,749 42,433 78,182 27,032 105,214
Corporate general and
administrative 7,010 (131) 6,879 -- 6,879
Non-cash deferred
compensation 1,727 -- 1,727 -- 1,727
--------- -------- -------- -------- --------
Operating expenses 159,798 107,414 267,212 61,490 328,702
--------- -------- -------- -------- --------
Operating income (loss) 18,697 (8,698) 9,999 (11,937) (1,938)
Interest expense 25,385 16,801 42,186 31,240 73,426
Other (income) expense, net (388) (9,638) (10,026) 1,232 (8,794)
--------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes (6,300) (15,861) (22,161) (44,409) (66,570)
Income tax (benefit) (1,647) (3,307) (4,954) -- (4,954)
Net income (loss) from
continuing operations (4,653) (12,554) (17,207) (44,409) (61,616)
Net (loss) from
discontinued
operations, net of tax (4,275) -- (4,275) -- (4,275)
Net income (8,928) (12,554) (21,482) (44,409) (65,891)
Dividend requirement for
exchangeable preferred
stock (14,103) 3,324 (10,779) -- (10,779)
--------- -------- -------- -------- --------
Income (loss) applicable
to common shares $ (23,031) (9,230) (32,261) (44,409) (76,670)
========= ======== ======== ======== ========
</TABLE>
(1) Represents the net effect of the Completed Transactions as if each
transaction had taken place on January 1, 1999. Dollars in the table
below are shown in thousands.
-41-
<PAGE> 42
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON/
OKLAHOMA ROCHESTER/ MUNCIE/
BLOOMINGTON BPH CITY PORTLAND KOKOMO
ACQUISITION TRANSACTIONS ACQUISITION ACQUISITION ACQUISITION
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Revenue $ 28,304 $ 42,061 $ 9,736 $ 10,642 $ 9,543
Station operating expenses 19,354 28,997 6,402 6,021 6,711
Depreciation and amortization 14,041 12,961 4,298 3,628 2,685
Corporate general and
administrative -- -- -- -- --
-------- -------- ------- -------- -------
Operating expenses 33,395 41,958 10,700 9,649 9,396
-------- -------- ------- -------- -------
Operating income (loss) (5,091) 103 (964) 993 147
Interest expense 13,738 12,757 4,282 2,994 2,343
Other (income) expenses, net -- -- -- -- --
-------- -------- ------- -------- -------
Income (loss) from continuing
operations before income
taxes (18,829) (12,654) (5,246) (2,001) (2,196)
Income tax (benefit) (2,457) -- -- (724) --
Net income (loss) from
continuing operations (16,372) (12,654) (5,246) (1,277) (2,196)
Net (loss) from discontinued
operations, net of tax -- -- -- -- --
Net income (loss) (16,372) (12,654) (5,246) (1,277) (2,196)
Dividend requirement for
exchangeable preferred
stock -- -- -- -- --
-------- -------- ------- -------- -------
Income (loss) applicable to
common shares (16,372) (12,654) $(5,246) (1,277) $(2,196)
======== ======== ======= ======== =======
</TABLE>
-42-
<PAGE> 43
<TABLE>
<CAPTION>
CARLISLE
ACQUISITION,
CAPSTAR
TRANSACTI0NS,
KOOJ ACQUISITION
WXL0 ACQUISITION, ADJUSTMENTS
LAFAYETTE FOR THE
ACQUISITION, 1999 OFFERING,
WORC ACQUISITION, THE PREFERRED
BATON ROUGE/ SAGINAW/ WWFX ACQUISITION AND REDEMPTION
LAFAYETTE BAY CITY MARATHON AND THE THE COMPLETED
ACQUISITION ACQUISITION DISPOSITION 2000 OFFERING TRANSACTIONS
----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net Revenue $1,371 $ 526 $(3,467) $ -- $ 98,716
Station operating expenses 1,275 486 (4,134) -- 65,112
Depreciation and
amortization 628 202 3,990 -- 42,433
Corporate general and
administrative -- -- (131) -- (131)
------ ----- ------- -------- ---------
Operating expenses 1,903 688 (275) -- 107,414
------ ----- ------- -------- ---------
Operating income (loss) (532) (162) (3,192) -- (8,698)
Interest expense -- -- 2,395 (21,708) 16,801
Other (income) expenses,
net -- -- (9,638) -- (9,638)
------ ----- ------- -------- ---------
Income (loss) from
continuing operations
before income taxes (532) (162) 4,051 21,708 (15,861)
Income tax (benefit) (126) -- -- -- (3,307)
Net income (loss) from
continuing operations (406) (162) 4,051 21,708 (12,554)
Net (loss) from discontinued
operations, net of tax -- -- -- -- --
Net income (loss) (406) (162) 4,051 21,708 (12,554)
Dividend requirement for
exchangeable preferred
stock -- -- -- 3,324 3,324
------ ----- ------- -------- ---------
Income (loss) applicable
to common shares $ (406) $(162) 4,051 $ 25,032 (9,230)
====== ===== ======= ======== =========
</TABLE>
-43-
<PAGE> 44
(2) Represents the net effect of the Pending Transactions as if each
transaction had taken place on January 1, 1999. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
MICHIGAN DICK PENDING
TRANSACTIONS ACQUISITION TRANSACTIONS
------------ ----------- ------------
<S> <C> <C> <C>
Net Revenue $15,264 $ 34,289 $ 49,553
Station operating expenses 8,071 26,387 34,458
Depreciation and amortization 6,889 20,143 27,032
------- -------- --------
Operating expenses 14,960 46,530 61,490
------- -------- --------
Operating income (loss) 304 (12,241) (11,937)
Interest expense 7,810 23,430 31,240
Other (income) expense, net -- 1,232 1,232
------- -------- --------
Income (loss) from continuing
operations before income taxes (7,506) (36,903) (44,409)
Income tax (benefit) -- -- --
------- -------- --------
Net income (loss) from continuing
operations $(7,506) $(36,903) $(44,409)
======= ======== ========
</TABLE>
-44-
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CITADEL BROADCASTING COMPANY
Date: July 13, 2000 By: /s/ Lawrence R. Wilson
------------- -------------------------------
Lawrence R. Wilson
Chairman and Chief Executive Officer
<PAGE> 46
EXHIBIT INDEX
2.1 Stock Purchase Agreement dated January 23, 2000 by and among
Bloomington Broadcasting Holdings, Inc., the stockholders of
Bloomington Broadcasting Holdings, Inc. and Citadel Broadcasting
Company (incorporated by reference to Exhibit 2.7 to Citadel
Communications Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999).
23.1 Consent of Dunbar, Breitweiser & Company, LLP.
