<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) January 23, 2000
Citadel Broadcasting Company
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada
----------------------------------------------
(State or Other Jurisdiction of Incorporation)
000-24515 86-0703641
- -------------------------------- ---------------------------------
(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
------------------------------------------------------------------
(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 "intends", "will," "may" 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.
-1-
<PAGE> 3
ITEM 5. OTHER EVENTS
On January 23, 2000, Citadel Broadcasting entered into a stock purchase
agreement with Bloomington Broadcasting Holdings, Inc. and its stockholders to
purchase all of the issued and outstanding capital stock of Bloomington
Broadcasting Holdings. Through its subsidiaries, Bloomington Broadcasting
Holdings owns and operates 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 two 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. Bloomington Broadcasting Holdings has also entered
into an agreement to purchase an additional AM radio station serving the Johnson
City/Kingsport/ Bristol, Tennessee market. If this transaction has not been
completed prior to completion of Citadel Broadcasting's acquisition of
Bloomington Broadcasting Holdings, Citadel Broadcasting will be assigned the
rights under the purchase agreement. The aggregate purchase price for the
transactions described is approximately $176.0 million in cash. This amount
includes repayment of indebtedness of Bloomington Broadcasting Holdings that may
be outstanding at the time of closing and a deferred obligation relating to a
recent radio station purchase by Bloomington Broadcasting Holdings. Certain
purchase price adjustments may also be made at closing. Citadel Broadcasting has
delivered an irrevocable letter of credit in favor of Bloomington Broadcasting
Holdings, issued by Credit Suisse First Boston, in the amount of $15.0 million
to secure Citadel Broadcasting's obligations under the stock purchase agreement.
Citadel Communications intends to operate these stations through Citadel
Broadcasting.
The stock purchase agreement contains customary representations and
warranties of the parties, and completion of the acquisition of the stations is
subject to conditions including (1) the receipt of FCC consent to the transfer
of control of the station licenses to Citadel Broadcasting, (2) the expiration
or termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and (3) the receipt of consents
to the change of control under certain contracts to which Bloomington
Broadcasting Holdings or its subsidiaries are a party. An application seeking
FCC approval has not yet been filed with the FCC.
Certain financial information of Bloomington Broadcasting Holdings, Inc.
and certain pro forma financial information of Citadel Broadcasting Company is
included in Item 7 of this report.
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, 1998
Consolidated Statement of Income for the year ended December 31, 1998
Consolidated Statement of Stockholders' Equity for the year ended
December 31, 1998
Consolidated Statement of Cash Flows for the year ended December 31, 1998
Notes to Consolidated Financial Statements
Consolidated Balance Sheet as of September 30, 1999 (unaudited)
Consolidated Statements of Operations for the nine months ended
September 30, 1999 and 1998 (unaudited)
Consolidated Statements of Stockholders' Equity for the nine months ended
September 30, 1999 (unaudited)
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 and 1998 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
-2-
<PAGE> 4
(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
September 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
nine months ended September 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
twelve months ended December 31, 1998
(c) Exhibits. The following exhibits are filed as part of this report:
23.1 Consent of Dunbar, Breitweiser & Company, LLP.
99.1 Press Release of Citadel Communications Corporation, dated January 24,
2000.
-3-
<PAGE> 5
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, 1998, and the
related consolidated statement of income, stockholders' equity and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 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, 1998, 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 4, 1999
(except for Note 14 as to
which the date is
February 15, 1999)
-4-
<PAGE> 6
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 605,685
Accounts receivable, less allowance for doubtful accounts, $140,133 4,760,456
Other receivables 58,388
Prepaid expenses 78,875
Refundable income taxes 359,600
Deferred income taxes 179,000
-----------
Total current assets $ 6,042,004
-----------
INVESTMENTS AND OTHER ASSETS
Prepaid expenses $ 20,833
Cash value of life insurance 44,374
Deferred compensation trust accounts 423,650
Deferred loan costs 2,602
Deferred income taxes 163,000
-----------
$ 654,459
-----------
PROPERTY AND EQUIPMENT
Land $ 729,518
Land improvements 31,104
Buildings and improvements 2,862,429
Technical and other equipment, including equipment acquired
under capital lease $19,345 9,290,241
Furniture and fixtures 1,350,011
Vehicles 549,390
-----------
$14,812,693
Less accumulated depreciation, including amortization applicable to
equipment acquired under capital lease, $11,929 9,793,392
-----------
$ 5,019,301
-----------
INTANGIBLES, at amortized cost $59,403,557
-----------
$71,119,321
===========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE> 7
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,200,000
Current maturities of capital lease obligation 5,453
Accounts payable 366,287
Accrued expenses 1,868,712
Income received in advance 2,805
-----------
Total current liabilities $ 3,443,257
-----------
LONG-TERM DEBT, less current maturities
Notes payable, bank $41,950,000
Notes payable, stockholders 16,831,564
-----------
$58,781,564
-----------
DEFERRED COMPENSATION $ 468,276
-----------
DEFERRED INCOME TAXES $ 566,000
-----------
COMMITMENTS
STOCKHOLDERS' EQUITY Capital stock:
Preferred, 5% cumulative, Series A Convertible Participating; par value
$.01 share; authorized 1,700,000 shares; 109,890 shares issued
and outstanding ($12,087,900 aggregate liquidation preference) $ 1,099
Common, $.01 par value; authorized 300,000 shares; 11,477.40 shares
issued and outstanding 115
Retained earnings (deficit) (715,460)
Accumulated other comprehensive income 21,276
Paid in capital 8,553,194
-----------
$ 7,860,224
-----------
$71,119,321
===========
</TABLE>
-6-
<PAGE> 8
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1998
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Gross revenue $29,827,868
Deductions from revenue 3,367,355
-----------
Net revenue $26,460,513
-----------
Operating expenses:
Selling expenses $ 5,974,717
Technical expenses 500,355
Program and production expenses 7,020,605
General and administrative expenses 9,893,008
-----------
$23,388,685
-----------
Operating income $ 3,071,828
-----------
Nonoperating income (expense):
Interest income $ 22,600
Interest expense-lenders (3,212,969)
Loss on dispositions of property and equipment and intangible assets (25,159)
Other income 112,606
-----------
$(3,102,922)
-----------
Income (loss) before income taxes $ (31,094)
Federal and state income taxes 1,506
-----------
Net income (loss) $ (32,600)
===========
</TABLE>
See Notes to Consolidated Financial Statements.
-7-
<PAGE> 9
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Class A
Preferred Common
Stock Common Stock
----------- -------- -------
<S> <C> <C> <C>
Balance, January 1, 1998 $ 2,060,100 $ -- $3,126
Net income (loss), 1998 -- -- --
Stock and retained earnings acquired by parent,
eliminated in consolidation (2,060,100) -- (3,126)
New shares issued 1,099 115 --
Required reduction in basis for partial change in basis -- -- --
Unrealized loss on investments -- -- --
----------- ------- ------
Balance, December 31, 1998 $ 1,099 $ 115 $ --
=========== ======= ======
</TABLE>
See Notes to Consolidated Financial Statements.
-8-
<PAGE> 10
<TABLE>
<CAPTION>
Accumulated
Class B Discount on Retained Other
Common Preferred Earnings Comprehensive Paid-In
Stock Stock (Deficit) Income Capital Total
-------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ 97,038 $(417,209) $ 6,077,820 $26,125 $ -- $ 7,847,000
-- -- (32,600) -- -- (32,600)
(97,038) 417,209 (6,760,680) -- -- (8,503,735)
-- -- -- -- 10,999,264 11,000,478
-- -- -- -- (2,446,070) (2,446,070)
-- -- -- (4,849) -- (4,849)
-------- --------- ----------- ------- ----------- -----------
$ -- $ -- $ (715,460) $21,276 $ 8,553,194 $ 7,860,224
======== ========= =========== ======= =========== ===========
</TABLE>
-9-
<PAGE> 11
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
1998
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (32,600)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 1,106,075
Amortization 1,933,057
Provision for doubtful accounts 211,042
Deferred compensation 175,981
Loss on dispositions of property and equipment and intangible assets 25,159
Income earned in deferred compensation trust accounts (112,608)
Increase in cash value of life insurance (3,590)
Deferred income taxes (93,000)
Interest expense added to notes payable 820,564
Change in assets and liabilities:
(Increase) in accounts receivable (596,268)
Decrease in other receivables 11,442
Decrease in inventories 21,043
Decrease in prepaid expenses 11,628
(Increase) in refundable income taxes (359,600)
(Decrease) in accounts payable (139,241)
Increase in accrued expenses 167,231
(Decrease) in income received in advance (10,060)
(Decrease) in income taxes payable (60,100)
------------
Net cash provided by operating activities $ 3,076,155
------------
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 (61,287)
Proceeds from disposal of property and equipment 25,149
Purchase of property and equipment (429,024)
Purchase of Bloomington Broadcasting Corporation by
Bloomington Broadcasting Holdings, Inc. (61,977,867)
------------
Net cash (used in) investing activities $(62,449,529)
------------
</TABLE>
See Notes to Consolidated Financial Statements.
-10-
<PAGE> 12
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $ 450,000
Principal payments on short-term borrowings (1,050,000)
Proceeds from long-term borrowings 58,928,500
Principal payments on long-term borrowings (8,621,897)
Payments on capital lease obligations (5,143)
Proceeds from stock issued 9,982,978
-----------
Net cash provided by financing activities $59,684,438
-----------
Increase in cash and cash equivalents $ 311,064
Cash and cash equivalents:
Beginning 294,621
-----------
Ending $ 605,685
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 2,426.395
===========
Income taxes $ 464,812
===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Income reinvested in deferred compensation trust accounts $ (112,608)
===========
Increase in cash value of life insurance $ (3,590)
===========
Stock and note payable value transferred to Bloomington
Broadcasting Holdings, Inc. from Bloomington Broadcasting
Company $ 2,500,000
===========
</TABLE>
-11-
<PAGE> 13
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, South Carolina. A subsidiary
company also operated a business known as Sign Pro in
Bloomington, Illinois. Sign Pro sold customized banners and signs
and represented less than one percent of consolidated gross
revenue. Sign Pro was sold in April, 1998. 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
1998:
Twin-Cities Broadcasting Corp. WJBC (AM), WBNQ (FM),
WBWN (FM) and Sign Pro
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) and
WLAV (FM)
Radio South Carolina, Inc. WISW (AM), WTCB (FM) and
WOMG (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.
-12-
<PAGE> 14
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:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
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
</TABLE>
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 expense for the year ended
December 31, 1998 was $1,321,167.
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 continue
to apply the provisions of APB Opinion No. 25 "Accounting for
Stock Issued to Employees", 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, 1998.
There was no stock-based compensation cost reflected in 1998
net income and there would likewise be none on a pro forma
basis.
-13-
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 the
calendar year 1998. Bloomington Broadcasting Holdings, Inc. was
formed in 1998 for the purpose of this acquisition and had no
operations in 1998 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.
Following is pro forma financial information for 1998 assuming the
leveraged buyout described above had occurred on January 1, 1998:
(Unaudited)
-----------
Gross revenue $ 29,827,868
Deductions from revenue (3,367,355)
------------
Net revenue 26,460,513
Operating expenses (24,618,685)
------------
Operating income 1,841,828
Nonoperating income (expense) (5,690,681)
------------
Income (loss) before income tax (3,848,853)
Income tax provision (refund) (911,704)
------------
Net income (loss) $ (2,937,149)
============
Note 3. Amortization of Intangibles
Amortization of intangible assets is on the straight-line method
over the following periods:
<TABLE>
<CAPTION>
Years
-----------
<S> <C>
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
Sign Pro license 5.0
Consulting agreement 1.0 - 5.0
Favorable antenna site agreements 0.7 - 23.9
Favorable studio and office space lease 1.4 - 1.5
</TABLE>
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.
-14-
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Costs and accumulated amortization of intangibles at December 31,
1998 are as follows:
<TABLE>
<CAPTION>
1998
---------------------------------------------------
Accumulated Net Book
Cost Amortization Value
----------- ------------ -----------
<S> <C> <C> <C>
Premium audience growth
pattern asset $ 8,921,320 $ 651,266 $ 8,270,054
Favorable transmitter site
lease 2,554,630 99,900 2,454,730
Going concern value 5,088,914 196,426 4,892,488
FCC licenses 34,391,764 3,369,193 31,022,571
Goodwill 12,454,084 156,000 12,298,084
Organization and start-up
costs 72,061 72,061 --
Agreement not to compete 1,000 1,000 --
Other advertising contracts 21,852 12,491 9,361
Fixed asset delivery premium 152,900 152,900 --
Other intangible assets 579,432 146,817 432,615
Sign Pro license 2,000 2,000 --
Consulting agreement 25,000 13,333 11,667
Favorable antenna site
agreements 16,953 4,966 11,987
Favorable studio and office
space lease 34,723 34,723 --
----------- ---------- -----------
$64,316,633 $4,913,076 $59,403,557
=========== ========== ===========
</TABLE>
-15-
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1998
------------------------------
Payments
Due Within
Total One Year
------------- ------------
<S> <C> <C>
Note 4. Pledged Assets and Notes Payable
The Company and its subsidiaries had the following notes payable at
December 31, 1998:
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 9.625 % and LIBOR Rate note, presently 8.6875%,
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 $ 1,150,000 $ --
LIBOR Rate Notes 2,000,000 --
TERM A AND TERM B NOTES- LIBOR Rate notes presently 8.6875%,
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 20,000,000 1,000,000
Term B Notes 20,000,000 200,000
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. 16,011,000 --
Stockholders, "PIK Notes," interest at 10.25%, fixed rate,
interest payable semiannually at June 30, and December 31.
Maturity date is June 30, 2008. 820,564 --
------------- ------------
$59,981,564 $1,200,000
============= ============
</TABLE>
-16-
<PAGE> 18
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.
Aggregate future maturities on the above notes are:
<TABLE>
<S> <C>
1999 $ 1,200,000
2000 2,200,000
2001 2,200,000
2002 3,200,000
2003 4,200,000
</TABLE>
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.
If employment is terminated by the subsidiary or the employee
becomes permanently disabled, he is entitled to receive $10,000 for
each full year of employment from January 1, 1992 through the date
of termination. In the event of the death of the employee prior to
December 31, 2001, a lump sum of $100,000 is to be paid to the
employee's heirs. The present value of the estimated liability under
this agreement is being accrued over the ten year period ending
December 31, 2001. The amount accrued under this agreement and
reflected as expense was $7,937 for the year ended December 31,
1998.
The subsidiary is the owner and beneficiary of a life insurance
policy providing face coverage of $100,000 on the life of the above
employee. This policy had a cash value of $44,374 at December 31,
1998, and is available to fund the subsidiary's obligation under the
deferred compensation agreement.
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.
-17-
<PAGE> 19
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 amount recorded as expense under these non-qualified
deferred compensation plan was $175,982 for the year ended December
31, 1998. The investments held in the rabbi trust accounts are
carried at fair value as of December 31, 1998 as follows:
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Cost of investments $389,374
Unrealized gains 60,593
Unrealized losses (26,317)
--------
$423,650
========
</TABLE>
The net unrealized gain included as accumulated other comprehensive
income in stockholders' equity at December 31, 1998 was $21,276, net
of deferred income taxes of $13,000.
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.
-18-
<PAGE> 20
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. As of
December 31, 1998 there were no issued or outstanding shares of
Series B Redeemable Preferred Stock.
The authorized number of shares of common stock is 300,000, at par
value of $.01 per share. Holders of common stock are entitled to one
vote for each share held, and vote together with the holders of the
convertible preferred stock as a single class. Holders of common
stock are entitled to dividends only after all preferential
preferred stock dividends have been paid. If additional dividends
are declared, the holders of common stock will share in such
dividends with the convertible preferred stockholders as a single
class of equal shareholders.
As described in Note 2 to these financial statements, effective July
1, 1998 all preferred stock, Class A common stock and Class B common
stock of Bloomington Broadcasting Corporation was acquired by
Bloomington Broadcasting Holdings, Inc. All previous shares acquired
were cancelled, and a new common stock certificate was issued by
Bloomington Broadcasting Corporation for 100 shares ($.01 par value
per share), representing 100% ownership by Bloomington Broadcasting
Holdings, Inc.
As of December 31, 1998, the aggregate preferred stock dividends
accumulated, not declared or paid was $274,725, representing a $5
per share dividend for one-half year.
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.
-19-
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net deferred tax liability consists of the following components
as of December 31, 1998:
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Deferred tax assets $ 794,000
Deferred tax asset valuation allowances (9,000)
Deferred tax liabilities (1,009,000)
-----------
Net deferred tax liabilities $ (224,000)
===========
</TABLE>
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 liability
described above have been included in the accompanying balance sheet
as of December 31, 1998 as follows:
<TABLE>
<CAPTION>
1998
---------
<S> <C>
Current assets $ 179,000
Noncurrent assets 163,000
Noncurrent liabilities (566,000)
---------
$(224,000)
=========
</TABLE>
The current and noncurrent deferred tax assets are net of
allocations of the valuation allowances of $0 and $9,000 for 1998.
The valuation allowances have been recorded to reduce the total
deferred tax assets to an amount that management believes will
ultimately be realized.
Approximate
Deferred tax assets-current Tax Effect
--------------------------- -----------
Allowance for doubtful accounts $ 48,000
Accrued vacation 91,000
State income tax refunds 49,000
Valuation allowance (9,000)
--------
$179,000
========
Deferred tax assets-noncurrent
------------------------------
Deferred compensation payable $163,000
========
Deferred tax liabilities-noncurrent
-----------------------------------
Property and equipment $323,000
Intangible assets 243,000
--------
$566,000
========
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:
1998
--------
Provision (refund) computed at
statutory rate (34%) $(10,572)
Nondeductible meals and entertainment 14,032
Tax-exempt interest (768)
State income taxes (refund), net of federal
income tax (1,186)
--------
Federal and state income tax expense $ 1,506
========
-20-
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
$9,375,454 in net operating loss carryforwards at December 31, 1998,
which may be used to offset future taxable income of the Company and
its subsidiaries. These carryforwards expire as follows:
<TABLE>
<CAPTION>
Year
Carry- Radio Radio South
forwards Chattanooga Michigan Carolina
Expire Inc. Media, Inc. Inc.
-------- ----------- ----------- ----------
<S> <C> <C> <C>
1999 $ -- $ -- $ --
2000 -- 824,683 --
2001 -- 932,225 --
2002 -- 408,647 --
2003 -- 804,183 --
2004 -- 524,299 --
2005 -- 675,933 664,191
2006 253,532 113,970 1,258,238
2007 31,646 -- 1,223,988
2008 24,642 -- 319,730
2009 390,068 -- 41,433
2010 127,116 -- 138,686
2011 -- 393,397 --
2012 83,227 11,091 --
2013 130,529 -- --
---------- ---------- ----------
$1,040,760 $4,688,428 $3,646,266
========== ========== ==========
</TABLE>
The provision for income taxes charged to operations for the year
ended December 31, 1998 consists of the following:
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Current tax expense $ 94,506
Deferred tax (benefit) (93,000)
--------
$ 1,506
========
</TABLE>
-21-
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1999 $245,303
2000 189,530
2001 69,746
2002 41,155
2003 33,888
Due thereafter 246,200
--------
$825,822
========
</TABLE>
Total rent expense under operating leases was $233,767 for the year
ended December 31, 1998.
A subsidiary company has also entered into an agreement to acquire a
telephone system through a capitalized lease agreement. The terms of
the lease require monthly payments of $534 through November 1999.
Following is a schedule of future minimum lease payments under this
capital lease together with the present value of the net minimum
lease payments as of December 31, 1998:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1999 $5,878
Less the amount representing interest 425
------
$5,453
Less current portion 5,453
------
$ --
======
</TABLE>
-22-
<PAGE> 24
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
contribution for 1998 was 3.0% 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 contribution to the plan for the year ended
December 31, 1998 was $220,462. The total matching contribution was
$71,476 for the year ended December 31, 1998.
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, 1998, the
Company's uninsured cash balances totalled $937,791, including
$359,256 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.
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.
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.
Effective November 15, 1996, Bloomington Broadcasting Corporation
acquired certain assets of Pye Broadcasting , Inc. from Chattanooga
Regional Interconnect, Inc. A consulting agreement executed as a
part of this purchase required monthly payments of $10,000 through
November 1997.
-23-
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
TERM A TERM B
---------------- ------------- -------------
<S> <C> <C>
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
</TABLE>
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.
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. There
are no unexercised options outstanding as of December 31, 1998.
Note 14. Commitment
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 intends to finance this acquisition through the Revolving
Credit Commitment with First Union National Bank. The closing is
scheduled for July 1, 1999. The Company has been operating the
station since March 1, 1999 under a Lease Management Agreement.
-24-
<PAGE> 26
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL REPORT
(Reviewed)
SEPTEMBER 30, 1999
-25-
<PAGE> 27
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 798,156
Accounts receivable, less allowance for doubtful accounts of $153,112 4,950,651
Other receivables 57,583
Prepaid expenses 149,725
Deferred income taxes 179,000
-----------
Total current assets $ 6,135,115
-----------
INVESTMENTS AND OTHER ASSETS
Cash value of life insurance $ 44,374
Deferred compensation trust accounts 466,263
Deferred income taxes 163,000
-----------
$ 673,637
-----------
PROPERTY AND EQUIPMENT
Land and land improvements $ 774,686
Buildings and improvements 2,855,865
Technical and other equipment, including equipment acquired
under capital lease $19,345 9,697,305
Furniture and fixtures 1,360,333
Vehicles 620,539
-----------
$15,308,728
Less accumulated depreciation, including amortization applicable to
equipment acquired under capital lease $14,831 10,509,520
-----------
$ 4,799,208
INTANGIBLES, at amortized cost $59,970,300
-----------
$71,578,260
===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-26-
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,850,000
Current maturities of capital lease obligation 1,049
Accounts payable 264,546
Accrued expenses 1,575,566
Income taxes payable 11,173
------------
Total current liabilities $ 4,702,334
------------
LONG-TERM DEBT, less current maturities $ 59,690,002
------------
DEFERRED COMPENSATION $ 517,318
------------
DEFERRED INCOME TAXES $ 486,000
------------
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) (2,393,078)
Accumulated other comprehensive income 21,276
Paid in capital 8,553,194
------------
$ 6,182,606
------------
$ 71,578,260
============
</TABLE>
-27-
<PAGE> 29
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine-month Periods Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Gross revenue $ 23,254,275 $ 21,801,923
Deductions from revenue 2,765,072 2,605,194
------------ ------------
Net revenue $ 20,489,203 $ 19,196,729
------------ ------------
Operating expenses:
Selling expenses $ 4,246,215 $ 4,527,621
Technical expenses 368,396 401,708
Program and production expenses 5,633,253 5,158,736
General and administrative expenses 7,494,048 7,107,599
------------ ------------
$ 17,741,912 $ 17,195,664
------------ ------------
Operating income $ 2,747,291 $ 2,001,065
------------ ------------
Nonoperating income (expense):
Interest income $ 23,884 $ 17,369
Interest expense-lenders (4,324,036) (1,735,440)
Gain (loss) on dispositions of property and equipment 5,800 (7,062)
Other expense (29,589) (8,787)
------------ ------------
$ (4,323,941) $ (1,733,920)
------------ ------------
Income (loss) before income taxes $ (1,576,650) $ 267,145
Federal and state income taxes 100,968 1,000
------------ ------------
Net income (loss) $ (1,677,618) $ 266,145
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-28-
<PAGE> 30
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine-month Period Ended September 30, 1999
(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, 1999 $1,099 $115 $ (715,460) $21,276 $8,553,194 $ 7,860,224
Net Loss, 1999 -- -- (1,677,618) -- -- (1,677,618)
------ ---- ----------- ------- ---------- -----------
Balance, September 30, 1999 $1,099 $115 $(2,393,078) $21,276 $8,553,194 $ 6,182,606
====== ==== =========== ======= ========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-29-
<PAGE> 31
BLOOMINGTON BROADCASTING HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine-month Periods Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(1,677,618) $ 266,145
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 3,111,257 1,971,898
Provision for doubtful accounts 134,660 134,092
Deferred compensation 49,042 (75,892)
(Gain) loss on dispositions of property and equipment (5,800) 7,062
Deferred income taxes (80,000) (70,000)
Interest expense added to notes payable 1,308,438 410,282
Change in assets and liabilities:
(Increase) in accounts receivable (324,855) (364,640)
Decrease in other receivables 805 64,012
(Increase) in prepaid expenses (47,415) (229,807)
(Increase) decrease in refundable income taxes 359,600 (49,468)
(Increase) decrease in deferred compensation trust accounts (42,613) 122,005
(Decrease) in accounts payable (101,741) (291,577)
(Decrease) in accrued expenses (295,951) (88,020)
Increase (decrease) in income taxes payable 11,173 (60,100)
----------- ------------
Net cash provided by operating activities $ 2,398,982 $ 1,745,992
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property and equipment $ 13,229 $ --
Purchase of property and equipment (497,164) (354,847)
Purchase of intangibles (2,968,172) --
Purchase of Bloomington Broadcasting Corporation by
Bloomington Broadcasting Holdings, Inc. -- (61,661,396)
----------- ------------
Net cash (used in) investing activities $(3,452,107) $(62,016,243)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $ -- $ 450,000
Principal payments on short-term borrowings --
(1,050,000)
Proceeds from long-term borrowings 1,250,000 58,928,500
Principal payments on long-term borrowings -- (7,871,897)
Payments on capital lease obligations (4,404) (3,314)
Proceeds from stock issued -- 9,982,978
----------- ------------
Net cash provided by financing activities $ 1,245,596 $ 60,436,267
----------- ------------
Increase in cash and cash equivalents $ 192,471 $ 166,016
Cash and cash equivalents:
Beginning 605,685 294,621
----------- ------------
Ending $ 798,156 $ 460,637
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 3,035,484 $ 1,325,158
=========== ============
Income taxes, net of refunds received 1999: $298,500 $ (111,397) $ 407,812
=========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
-30-
<PAGE> 32
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. A
subsidiary company also operated a business known as Sign Pro in
Illinois. Sign Pro sold customized banners and signs and represented
less than one percent of consolidated gross revenue. Sign Pro was sold
in April, 1998. 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
and 1998:
<TABLE>
<CAPTION>
<S> <C>
Twin-Cities Broadcasting Corp. WJBC (AM), WBNQ (FM), WBWN (FM) and Sign Pro
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) and WLAV (FM)
Radio South Carolina, Inc. WISW (AM), WTCB (FM), WOMG (FM) and WLXC (FM)
</TABLE>
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, as of September 30, 1999.
Bloomington Broadcasting Holdings, Inc. was formed in 1998 for the
purpose of this acquisition and had no operations in 1999 or 1998 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> 33
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 nine months ended September 30,
1999 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1999. For further information, refer
to the consolidated financial statements and notes thereto for the year
ended December 31, 1998. All inter-company balances and transactions
are eliminated in consolidation.
Note 4. Acquisition of a Radio Station
In July 1999, Radio South Carolina, Inc. acquired substantially all of
the assets of WLXC-FM at a cost of approximately $3,200,000. The
acquisition was accounted for under the purchase method of accounting.
Note 5. Commitments
In July 1999, Michigan Media, Inc. agreed to acquire certain radio
station and broadcast assets for $7.5 million. The transaction closed
on January 6, 2000. The acquisition was accounted for under the
purchase method of accounting.
Note 6. Subsequent Event
Subsequent to September 30,1999, the Company incurred approximately
$400,000 of costs pertaining to a failed initial public offering. These
costs were charged to expense in December 1999.
On January 23, 2000, the stockholders of the Company entered into a
definitive agreement to sell 100% of their stock to Citadel
Broadcasting Company, a subsidiary of Citadel Communication
Corporation, for $176 million. The transaction will be recorded under
the purchase method of accounting.
-32-
<PAGE> 34
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 12, 1998 acquisition of Pacific Northwest Broadcasting
Corporation which owned KQFC-FM, KKGL-FM and KBOI-AM in Boise, Idaho
for the purchase price of approximately $14.4 million and the April 21,
1998 acquisition of KIZN-FM and KZMG-FM in Boise for the purchase price
of approximately $14.5 million (collectively, the "Boise
Acquisitions"),
o the March 26, 1998 acquisition of WCTP-FM, WCTD-FM and WKJN-AM serving
the Wilkes-Barre/Scranton market for the purchase price of
approximately $6.0 million (the "Wilkes-Barre/Scranton Acquisition"),
o the November 17, 1998 acquisition of KAAY-AM in Little Rock, Arkansas
for the purchase price of approximately $5.1 million,
o the February 9, 1999 acquisition of WKQZ-FM, WYLZ-FM, WILZ-FM, WIOG-FM,
WGER-FM and WSGW-AM in Saginaw/Bay City, 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/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"),
o the November 1, 1999 acquisition of KOOJ-FM in Baton Rouge, Louisiana
for the purchase price of approximately $9.5 million,
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 $61.5 million, which
amount includes the repayment of certain indebtedness of Caribou
Communications (the "Oklahoma City Acquisition"),
o the July 27, 1998 sale of WEST-AM in Allentown/Bethlehem, Pennsylvania
as a portion of the consideration for the 1997 acquisition of WLEV-FM
in Allentown/Bethlehem,
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<PAGE> 35
o the October 7, 1998 sale of WQCY-FM, WTAD-AM, WMOS-FM and WBJR-FM in
Quincy, Illinois for the sale price of approximately $2.3 million (the
"Quincy Sale"),
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 July 1998 initial public offering by Citadel Communications of
shares of its common stock and the use of net proceeds from that
offering,
o the November 1998 sale by Citadel Communications' subsidiary, Citadel
Broadcasting Company, of $115.0 million principal amount of its 9-1/4%
Senior Subordinated Notes due 2008 and the use of net proceeds from
that offering,
o the June 1999 public offering by Citadel Communications of shares of
its common stock and the use of net proceeds from that offering (the
"1999 Offering"), and
o the August 1999 redemption of a portion of Citadel Broadcasting's
outstanding 13-1/4% Exchangeable Preferred Stock (the "Preferred
Redemption"); and
(2) the following pending acquisitions (collectively, the "Pending
Acquisitions'):
o the pending acquisition of WGRF-FM, WEDG-FM, WHIT-FM, WMNY-AM and
WHLD-AM in Buffalo, 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-FM, WEBB-FM and WTVL-AM in Augusta-Waterville, Maine, WBPW-FM,
WOZI-FM and WQHR-FM in Presque Isle-Caribou, Maine, WCRQ-FM in
Dennysville-Calais, Maine, KMYY-FM, KYEA-FM, KZRZ-FM and KTJC-FM in
Monroe, Louisiana, KDOK-FM, KTBB-FM, KEES-AM, KYZS-AM and KGLD-AM in
Tyler-Longview, Texas, WFPG-AM, WFPG-FM and WPUR-FM in Atlantic City,
New Jersey, WFHN-FM and WBSM-AM in New Bedford, Massachusetts, WQGN-FM,
WSUB-AM and WVVE-FM in New London, Connecticut and the right to operate
WKOE-FM in Atlantic City under a program service and time brokerage
agreement for the aggregate purchase price of approximately $190.0
million (the "BPH Acquisition"),
o the pending 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 pending acquisition of WMMQ-FM, WJIM-FM, WFMK-FM, WITL-FM, WVFN-AM
and WJIM-AM in Lansing, Michigan, WHNN-FM and WTCF-FM in Saginaw,
Michigan and WFBE-FM in Flint, Michigan for the aggregate purchase
price of approximately $120.5 million, of which, subject to certain
conditions, approximately $10.1 million would be paid in shares of
Citadel Communications' common stock valued at $50.375 per share (the
"Michigan" Acquisition"),
o the pending acquisitions of WXLO-FM, WORC-FM and WWFX-FM in Worcester,
Massachusetts for the aggregate purchase price of approximately $38.75
million (the "Worcester Acquisitions"), and
o the pending acquisition of Bloomington Broadcasting Holdings, Inc.,
which is expected to own at closing 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 and WJBC-AM,
WBNQ-FM and WBWN-FM in Bloomington, Illinois, for the aggregate
purchase price of approximately $176.0 million, which amount includes
repayment of indebtedness of Bloomington Broadcasting Holdings that may
be outstanding at the time of closing and a deferred obligation
relating to a recent radio station purchase by Bloomington Broadcasting
Holdings (the "Bloomington Acquisition"); and
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 to be acquired, or from which assets will be
acquired, in connection with the Pending Acquisitions.
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 8.4375%, which
represents the interest rate in effect under the then existing credit facility
as of January 1, 1998. 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, 1998. 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, 1998.
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 to be acquired, or from which assets will be
acquired, in connection with the Pending Acquisitions, which would not have
been incurred if the acquisition had occurred on January 1, 1998. The
eliminated items were deemed redundant and therefore are not reflected as
of January 1, 1998.
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
September 30, 1999 has been adjusted to give effect to the following
transactions as if each had occurred on September 30, 1999:
(1) the Marathon Disposition,
(2) the acquisition of KOOJ-FM,
(3) the Oklahoma City Acquisition, and
-34-
<PAGE> 36
(3) the Pending Acquisitions.
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
Acquisitions 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 Acquisitions 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.
-35-
<PAGE> 37
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING
AS ADJUSTED
ADJUSTMENTS FOR
FOR OKLAHOMA OKLAHOMA CITY
CITY ACQUISITION, ACQUISITION,
MARATHON MARATHON ADJUSTMENTS
ACTUAL DISPOSITION DISPOSITION FOR PRO FORMA
CITADEL AND ACQUISITION AND ACQUISITION THE PENDING CITADEL
BROADCASTING OF KOOJ-FM(1) OF KOOJ-FM ACQUISITIONS(2) BROADCASTING
-------------- ----------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 8,798 321 $ 9,119 $ 798 $ 9,917
Restricted cash -- 26,000 26,000 (26,000) --
Accounts and notes receivable,
net 48,208 1,906 50,114 2,008 52,122
Prepaid expenses 3,808 21 3,829 150 3,979
Assets held for sale 25,991 (25,991) -- -- --
-------- -------- -------- -------- ----------
Total current assets 86,805 2,257 89,062 (23,044) 66,018
Property and equipment, net 68,088 2,505 70,593 20,670 91,263
Intangible assets, net 480,431 68,034 548,465 546,106 1,094,571
Other assets 4,205 -- 4,205 -- 4,205
-------- -------- -------- -------- ----------
TOTAL ASSETS $639,529 $ 72,796 $712,325 $543,732 $1,256,057
======== ======== ======== ======== ==========
LIABILITIES AND SHAREHOLDER'S
EQUITY
Accounts payable and accrued
liabilities $ 15,021 $ 980 $ 16,001 $ 1,841 $ 17,842
Current maturities of other
long-term Obligations 994 250 1,244 1,049 2,293
-------- -------- -------- -------- ----------
Total current liabilities 16,015 1,230 17,245 2,890 20,135
Notes payable, less current
maturities 57,500 70,916 128,416 497,675 626,091
10-1/4% Notes 210,401 -- 210,401 -- 210,401
9-1/4% Notes
Other long-term obligations,
less current Maturities 2,685 1,000 3,685 3,465 7,150
Deferred tax liability 46,964 -- 46,964 29,627 76,591
Exchangeable preferred stock 82,526 -- 82,526 -- 82,526
Common stock and additional
paid-in capital 260,927 -- 260,927 10,075 271,002
Deferred compensation (3,329) -- (3,329) -- (3,329)
Accumulated other comprehensive
loss (12) -- (12) -- (12)
Accumulated deficit/retained
earnings (34,148) (350) (34,498) -- (34,498)
-------- -------- -------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $639,529 $ 72,796 $712,325 $543,732 $1,256,057
======== ======== ======== ======== ==========
</TABLE>
(1) Represents the net effect of the Oklahoma City Acquisition, the Marathon
Disposition and the acquisition of KOOJ-FM, as if each transaction had taken
place on September 30, 1999.
(2) Represents the net effect of the Pending Acquisitions as if each transaction
had taken place on September 30, 1999.
-36-
<PAGE> 38
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING
AS ADJUSTED ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR FOR FOR PRO FORMA
CITADEL COMPLETED COMPLETED THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS ACQUISITIONS(2) BROADCASTING
-------------- ---------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue...................... $126,521 $19,382 $145,903 $ 71,179 $217,082
Station operating expenses....... 85,124 10,241 95,365 49,223 144,588
Depreciation and amortization.... 25,589 11,206 36,795 28,194 64,989
Corporate general and
administrative................ 4,921 (131) 4,790 -- 4,790
-------- ------- -------- -------- --------
Operating expenses............ 115,634 21,316 136,950 77,417 214,367
-------- ------- -------- -------- --------
Operating income (loss).......... 10,887 (1,934) 8,953 (6,238) 2,715
Interest expense................. 17,502 4,918 22,420 31,494 53,914
Other (income) expense, net...... (1,187) 350 (837) -- (837)
-------- ------- -------- -------- --------
Income (loss) before income
taxes......................... (5,428) (7,202) (12,630) (37,732) (50,362)
Income taxes (benefit)........... (1,376) (850) (2,226) (1,481) (3,707)
Dividend requirement for
Exchangeable Preferred Stock.. (11,322) 2,812 (8,510) -- (8,510)
-------- ------- -------- -------- --------
Income (loss) from
continuing operations
applicable to common shares... $(15,374) $(3,540) $(18,914) $(36,251) $(55,165)
======== ======= ======== ======== ========
</TABLE>
(1) Represents the net effect of the Completed Transactions that were
consummated after January 1, 1999 as if each transaction had taken place on
January 1, 1998. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON
OKLAHOMA ROCHESTER/ MUNCIE/ BATON ROUGE/
CITY PORTLAND KOKOMO LAFAYETTE
ACQUISITION ACQUISITION ACQUISITION ACQUISITION
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 7,155 $10,642 $ 9,543 $1,371
Station operating expenses 4,831 6,021 6,711 1,275
Depreciation and
amortization 3,292 3,628 2,685 628
Corporate general and
administrative -- -- -- --
------- ------- ------- ------
Operating expenses 8,123 9,649 9,396 1,903
------- ------- ------- ------
Operating income (loss) (968) 993 147 (532)
Interest expense 3,897 3,234 2,531 --
Other (income) expenses,
net -- -- -- --
------- ------- ------- ------
Income (loss) before
income taxes (4,865) (2,241) (2,384) (532)
Income taxes (benefit) (724) -- (126)
Dividend requirement for
Exchangeable Preferred
Stock -- -- -- --
------- ------- ------- ------
Income (loss) from
continuing operations $(4,865) $(1,517) $(2,384) $ (406)
======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
CARLISLE
ACQUISITION, ADJUSTMENTS
CAPSTAR FOR THE
TRANSACTIONS, 1999 OFFERING
SAGINAW/ KOOJ ACQUISITION AND THE
BAY CITY AND MARATHON PREFERRED THE COMPLETED
ACQUISITION DISPOSITION REDEMPTION TRANSACTIONS
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 526 $(9,855) $ -- $19,382
Station operating expenses 486 (9,083) -- 10,241
Depreciation and
amortization 202 771 -- 11,206
Corporate general and
administrative -- (131) -- (131)
----- ------- ------- -------
Operating expenses 688 (8,443) -- 21,316
----- ------- ------- -------
Operating income (loss) (162) (1,412) -- (1,934)
Interest expense -- (1,044) (3,700) 4,918
Other (income) expenses,
net -- 350 -- 350
----- ------- ------- -------
Income (loss) before
income taxes (162) (718) 3,700 (7,202)
Income taxes (benefit) -- -- -- (850)
Dividend requirement for
Exchangeable Preferred
Stock -- -- 2,812 2,812
----- ------- ------- -------
Income (loss) from
continuing operations $(162) $ (718) $ 6,512 $(3,540)
===== ======= ======= =======
</TABLE>
(2) Represents the net effect of the Pending Acquisitions as if each
transaction had taken place on January 1, 1998. Dollars in the table below
are shown in thousands.
<TABLE>
<CAPTION>
BPH LAFAYETTE MICHIGAN WORCESTER BLOOMINGTON PENDING
ACQUISITION ACQUISITION ACQUISITION ACQUISITIONS ACQUISITION ACQUISITIONS
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue $ 31,231 $1,749 $14,092 $ 3,618 $ 20,489 $ 71,179
Station operating expenses 23,328 1,331 7,851 2,837 13,876 49,223
Depreciation and amortization 9,649 474 6,039 1,964 10,068 28,194
-------- ------ ------- ------- -------- --------
Operating expenses 32,977 1,805 13,890 4,801 23,944 77,417
-------- ------ ------- ------- -------- --------
Operating income (loss) (1,746) (56) 202 (1,183) (3,455) (6,238)
Interest expense 10,378 538 6,988 2,452 11,138 31,494
-------- ------ ------- ------- -------- --------
Income (loss) before income
taxes (12,124) (594) (6,786) (3,635) (14,593) (37,732)
Income taxes (benefit) -- -- -- -- (1,481) (1,481)
-------- ------ ------- ------- -------- --------
Income (loss) from continuing
operations $(12,124) $ (594) $(6,786) $(3,635) $(13,112) $(36,251)
======== ====== ======= ======= ======== ========
</TABLE>
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<PAGE> 39
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR AS ADJUSTED FOR THE PRO FORMA
CITADEL COMPLETED FOR COMPLETED PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS ACQUISITIONS(2) BROADCASTING
-------------- ---------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue....................... $135,426 $41,137 $176,563 $ 87,708 $264,271
Station operating expenses........ 93,485 25,056 118,541 61,866 180,407
Depreciation and amortization..... 26,414 21,591 48,005 36,635 84,640
Corporate general and
administrative.................. 4,369 (349) 4,020 -- 4,020
-------- ------- -------- -------- --------
Operating expenses.............. 124,268 46,298 170,566 98,501 269,067
-------- ------- -------- -------- --------
Operating income (loss)........... 11,158 (5,161) 5,997 (10,793) (4,796)
Interest expense.................. 18,126 3,651 21,777 40,789 62,566
Other (income) expense, net....... (1,651) 350 (1,301) -- (1,301)
-------- ------- -------- -------- --------
Income (loss) before income
taxes........................... (5,317) (9,162) (14,479) (51,582) (66,061)
Income taxes (benefit)............ (1,386) (1,591) (2,977) (1,975) (4,952)
Dividend requirement for --
Exchangeable Preferred Stock.... (14,586) 138 (14,448) -- (14,448)
-------- ------- -------- -------- --------
Income (loss) from continuing
operations applicable to common
shares.......................... $(18,517) $(7,433) $(25,950) $(49,607) $(75,557)
======== ======= ======== ======== ========
</TABLE>
(1) Represents the net effect of the Completed Transactions as if each
transaction had taken place on January 1, 1998. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON/ BATON
OKLAHOMA ROCHESTER/ MUNCIE/ ROUGE/ SAGINAW/
CITY PORTLAND KOKOMO LAFAYETTE BAY CITY
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue $ 8,250 $13,642 $17,421 $7,331 $6,981
Station operating
expenses 6,240 8,676 12,100 5,170 4,447
Depreciation and
amortization 4,390 5,441 5,369 2,914 2,421
Corporate general and
administrative -- -- -- -- --
------- ------- ------- ------ ------
Operating expenses 10,630 14,117 17,469 8,084 6,868
Operating income (loss) (2,380) (475) (48) (753) 113
Interest expense 5,196 4,852 5,063 -- --
Other (income) expense,
net -- -- -- -- --
------- ------- ------- ------ ------
Income (loss) before
income taxes (7,576) (5,327) (5,111) (753) 113
Income taxes (benefit) -- (1,086) -- (505) --
Dividend requirement for
Exchangeable Preferred
Stock -- -- -- -- --
------- ------- ------- ------ ------
Income (loss) from
continuing
Operations $(7,576) $(4,241) $(5,111) $ (248) $ 113
======= ======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
ADJUSTMENTS
OTHER REPAYMENT FOR THE
ACQUISITIONS OF THE OFFERING 1999 OFFERING THE
AND CREDIT OF THE AND THE COMPLETED
DISPOSITIONS FACILITY 9-1/4% PREFERRED TRANS-
(a) (b) NOTES(c) REDEMPTION(d) ACTIONS
------------ ------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
Net revenue $(12,488) $ -- $ -- $ -- $41,137
Station operating
expenses (11,577) -- -- -- 25,056
Depreciation and
amortization 1,056 -- -- -- 21,591
Corporate general and
administrative (349) -- -- -- (349)
-------- ------- ------- ------- -------
Operating expenses (10,870) -- -- -- 46,298
Operating income (loss) (1,618) -- -- -- (5,161)
Interest expense (947) (4,487) 1,374 (7,400) 3,651
Other (income) expense,
net 350 -- -- 350
-------- ------- ------- ------- -------
Income (loss) before
income taxes (1,021) 4,487 (1,374) 7,400 (9,162)
Income taxes (benefit) -- -- -- -- (1,591)
Divided requirement for
Exchangeable
Preferred Stock -- -- -- 138 138
-------- ------- ------- ------- -------
Income (loss) from
continuing
Operations $ (1,021) $ 4,487 $(1,374) $ 7,538 $(7,433)
======== ======= ======= ======= =======
</TABLE>
(a) Represents the net effect of the Marathon Disposition, the Carlisle
Acquisition, the Capstar Transactions, the Boise Acquisitions, the
Wilkes-Barre/Scranton Acquisition, the acquisition of KOOJ-FM in Baton
Rouge, the disposition of WEST-AM in Allentown/Bethlehem, the acquisition
of KAAY-AM in Little Rock and the Quincy Sale.
(b) Represents the repayment of outstanding borrowings under Citadel
Broadcasting's credit facility with the proceeds from the Citadel
Communications' initial public offering.
(c) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $3.5 million related to Citadel
Broadcasting's 9-1/4% Senior Subordinated Notes due 2008.
(d) Represents the use of proceeds from the 1999 Offering, including the
redemption of approximately 35% of Citadel Broadcasting's issued and
outstanding Exchangeable Preferred Stock.
-38-
<PAGE> 40
(2) Represents the net effect of the Pending Acquisitions as if each transaction
had taken place on January 1, 1998. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
BPH LAFAYETTE MICHIGAN WORCESTER BLOOMINGTON PENDING
ACQUISITION ACQUISITION ACQUISITION(a) ACQUISITIONS(b) ACQUISITION ACQUISITIONS
----------- ------------ ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue $ 38,628 $ 2,383 $ 16,900 $ 3,336 $ 26,461 $ 87,708
Station operating expenses 28,842 1,984 9,322 2,541 19,177 61,866
Depreciation and amortization 12,865 631 8,052 1,663 13,424 36,635
-------- -------- -------- -------- -------- --------
Operating expenses 41,707 2,615 17,374 4,204 32,601 98,501
Operating income (loss) (3,079) (232) (474) (868) (6,140) (10,793)
Interest expense 13,838 717 9,317 2,067 14,850 40,789
-------- -------- -------- -------- -------- --------
Income (loss) before
income taxes (16,917) (949) (9,791) (2,935) (20,990) (51,582)
Income taxes (benefit) -- -- -- -- (1,975) (1,975)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations $(16,917) $ (949) $ (9,791) $ (2,935) $(19,015) $(49,607)
======== ======== ======== ======== ======== ========
</TABLE>
(a) Citadel Broadcasting may sell one or more of its stations serving
Saginaw/Bay City in connection with this acquisition. However, Citadel
Broadcasting is unable to include the effect of the divestiture in this
pro forma financial information until it determines the station or stations
it may sell.
(b) The current owner of WWFX-FM purchased the station in January 1999. Citadel
Broadcasting is unable to provide operating results for the year ended
December 31, 1998 as the information is not currently available. In the
opinion of management, the 1998 operations are not significant to the pro
forma condensed consolidated statement of operations.
-39-
<PAGE> 41
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: January 25, 2000 By: /s/ Lawrence R. Wilson
------------------ --------------------------------------
Lawrence R. Wilson
Chairman and Chief Executive Officer
-40-
<PAGE> 42
EXHIBIT INDEX
23.1 Consent of Dunbar, Breitweiser & Company, LLP.
99.1 Press Release of Citadel Communications Corporation, dated January 24,
2000.
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors
Citadel Broadcasting Company
We consent to the incorporation by reference in the registration statement (No.
333-92593) on Form S-3 of Citadel Communications Corporation, Citadel
Broadcasting Company, CCC Capital Trust I and CCC Capital Trust II of our report
dated February 4, 1999 (except for Note 14 as to which the date is February 15,
1999), relating to the consolidated balance sheet of Bloomington Broadcasting
Holdings, Inc. and subsidiaries as of December 31, 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended, which report appears in the Form 8-K of Citadel Broadcasting
Company filed January 26, 2000.
/s/ Dunbar, Breitweiser & Company, LLP
Bloomington, Illinois
January 26, 2000
<PAGE> 1
Exhibit 99.1
[CITADEL LOGO] Citadel Communications Corporation
----------------------------------------------------------
News Announcement For Immediate Release
CONTACT:
Donna Heffner Joseph N. Jaffoni
Chief Financial Officer Stewart A. Lewack
Citadel Communications Corporation Jaffoni & Collins Incorporated
702/804-5200 212/835-8500 or [email protected]
CITADEL COMMUNICATIONS AGREES TO
ACQUIRE BLOOMINGTON BROADCASTING
- Adds 20 Stations in Five New Mid-Sized Markets -
BLOOMINGTON, IL and LAS VEGAS, NV, January 24, 2000 - Mid-sized market radio
broadcaster Citadel Communications Corporation (Nasdaq: CITC) announced today
that its principal operating subsidiary, Citadel Broadcasting Company, has
entered into a definitive agreement to acquire Bloomington Broadcasting, the
owner of 20 radio stations in five mid-sized markets, for approximately $176
million cash.
Upon completion of the transaction, Citadel will add WKLQ-FM, WLAV-FM, WODJ-FM
and WBBL-AM in Grand Rapids, Michigan, the nation's 66th largest market;
WOMG-FM, WTCB-FM, WLXC-FM and WISW-AM in Columbia, South Carolina, the nation's
88th largest market; WKOS-FM, WQUT-FM, WGOC-AM, WJCW-AM and WKIN-AM in Johnson
City-Kingsport-Bristol, Tennessee, the nations's 95th largest market; WOGT-FM,
WSKZ-FM, and WGOW-AM/FM in Chattanooga, Tennessee, the nation's 102nd largest
market; and, WBNQ-FM, WBWN-FM and WJBC-AM in Bloomington, Illinois, the
nation's 230th largest market.
Commenting on the transaction, Citadel Chairman and Chief Executive Officer,
Larry Wilson, stated, "Bloomington Broadcasting is one of the most well
respected private station groups in the industry today, and we're very excited
to welcome its management team to the Citadel family. Upon completion of the
transaction, Ken Maness, the President of Bloomington, will assume a senior
management position at Citadel. Bloomington brings to Citadel some dynamic
regional clusters, two of which add to our growing presence in Michigan and
South Carolina. We look forward to a long-term partnership with Ken and to
extending his company's already impressive track record of success."
<PAGE> 2
CITADEL COMMUNICATIONS, 1/24/00 Page 2
Kenneth H. Maness, President and Chief Executive Officer of Bloomington
Broadcasting, added, "We're proud of the great people and radio clusters that we
have developed and it is especially exciting to pass them forward to one of the
most dynamic radio broadcasters in the country. When we decided to sell the
company, our goal was to maximize value for our shareholders and to create the
best possible opportunities for our employees. In Citadel, we found the perfect
match. We are thrilled to be able to advance our vision with a great radio
company."
Completion of the transaction, expected to close in the second quarter of 2000,
is subject to regulatory approval and other customary closing conditions. First
Union Securities, Inc. represented the sellers in the transaction.
Citadel is a radio broadcasting company that, upon completion of pending
transactions, will own or operate 136 FM and 60 AM radio stations concentrated
in 42 mid-sized markets. The Company owns all of the issued and outstanding
common stock of Citadel.
This news announcement contains certain forward-looking statements that are
based upon current expectations and involve certain risks and uncertainties
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Words such as "will" or variations of such words and similar expressions are
intended to signify such forward-looking statements. Key risks are described in
the Company's and Citadel's reports filed with the U.S. Securities and Exchange
Commission. Readers should note that these statements may be impacted by several
factors, including economic changes and changes in the radio broadcast industry
generally and, accordingly, the Company's and Citadel's actual performance and
results may vary form those stated herein and the Company and Citadel undertake
no obligation to update the information contained herein.
# # #
