<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
APRIL 23,1999
(Date of earliest event reported)
COMMISSION FILE NUMBERS:
ACME Intermediate Holdings, LLC 333-40277
ACME Television, LLC 333-40281
ACME INTERMEDIATE HOLDINGS, LLC
And
ACME TELEVISION, LLC
(Exact name of registrants as specified in their charter)
----------
Delaware ACME Television, LLC 52-2050588
Delaware ACME Intermediate Holdings, LLC 52-2050589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
----------
2101 E. Fourth Street, Suite 202
Santa Ana, California 92705
(Address and zip code of principal executive offices)
Registrants' telephone number, including area code: 714-245-9499
----------
===============================================================================
<PAGE> 2
ACME INTERMEDIATE HOLDINGS, LLC
and
ACME TELEVISION, LLC
FORM 8-K TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
------ ----
<S> <C> <C>
Item 2 Acquisition or Disposition of Assets................................. 1
Item 7. Financial Statements of Tri-Station Assets and
Licenses Acquisitions
Independent Auditor's Report.................................. 2
Combined Balance Sheets as of
December 31, 1998 and March 31, 1999........................ 3
Combined Statements of Operations and Changes in
Stockholder's Deficit for the year ended
December 31, 1998 and the three months ended
March 31, 1999 and 1998..................................... 4
Combined Statement of Cash Flows for the year ended
December 31, 1998 and the three months ended
March 31, 1999 and 1998..................................... 5
Notes to Consolidated Financial Statements.................... 6
Pro forma Financial Information...................................... 12
ACME Intermediate Holdings, LLC Unaudited Pro Forma
Consolidated Balance Sheet as of March 31,1999.............. 13
ACME Television, LLC Unaudited Pro Forma Consolidated Balance
Sheet as of March 31,1999................................... 14
Notes to the Unaudited Pro Forma Consolidated
Balance Sheets.............................................. 15
ACME Intermediate Holdings, LLC Unaudited Pro Forma
Consolidated Statement Of Operations for
the three months ended March 31, 1999....................... 16
ACME Television, LLC Unaudited Pro Forma Consolidated
Statement Of Operations for the three
months ended March 31, 1999................................. 17
ACME Intermediate Holdings, LLC Unaudited Pro Forma
Consolidated Statement Of Operations for
the year ended December 31, 1998............................ 18
ACME Television, LLC Unaudited Pro Forma Consolidated
Statement Of Operations for the year ended
December 31, 1998 .......................................... 19
Notes to the Unaudited Pro Forma Consolidated Statements
of Operations for the three months ended March 31,
1999 and the year ended December 31, 1998................... 20
Exhibits
</TABLE>
<PAGE> 3
ITEM 2. Acquisition or Disposition of Assets.
On April 23, 1999, wholly-owned subsidiaries of ACME Television, LLC ("ACME
Television" or the "Company"), acquired all of the assets, other than the
Federal Communications Commission ("FCC") licenses, of Station WDPX, Channel 26,
Springfield, Ohio, Station WPXG, Channel 14, Suring, Wisconsin, and Station
WPXU, Channel 23, Decatur, Illinois, respectively, (the "Asset Acquisitions").
The Asset Acquisitions were consummated pursuant to an Asset Purchase Agreement,
dated April 23, 1999 (the "Asset Purchase Agreement"), by and among Paxson
Communications Corporation ("Paxson"), Paxson Communications License Company,
LLC, Paxson Communications of Green Bay-14, Inc., Paxson Communications of
Dayton-26, Inc., Paxson Dayton License, Inc., Paxson Communications of
Decatur-23, Inc., Paxson Decatur License, Inc., (collectively, the
aforementioned entities, including Paxson, are referred to herein as the
"Sellers"), ACME Television of Ohio, LLC ("ACME Ohio"), ACME Television of
Wisconsin, LLC ("ACME Wisconsin"),ACME Television of Illinois, LLC ("ACME
Illinois"), ACME Television Licenses of Ohio, LLC ("ACME Licenses Ohio"), ACME
Television Licenses of Wisconsin, LLC ("ACME Licenses Wisconsin"), and ACME
Television Licenses of Illinois, LLC ("ACME Licenses Illinois").
$32.0 million of the $40.0 million aggregate acquisition cost for Station WDPX,
Station WPXG and Station WPXU (collectively, the "Acquired Stations") was paid
in cash at the closing of the Asset Acquisitions (April 23, 1999).
Pursuant to the same Asset Purchase Agreement, ACME Licenses Ohio, ACME Licenses
Wisconsin and ACME Licenses Illinois also purchased, with FCC approval, the FCC
licenses of Station WDPX, Station WPXG, and Station WPXU, respectively,
(collectively, the "Licenses Acquisitions"). The remaining $8.0 million of the
aggregate acquisition cost of the Acquired Stations was paid in cash at the
closing of the Licenses Acquisitions on June 23, 1999.
The aggregate acquisition cost of the Acquired Stations was determined through
arms-length negotiations among the parties involved. Management of the Company
believes that the acquisition cost approximates the fair value of the assets
acquired based on market conditions. The $40.0 million aggregate cost of the
Acquired Stations was funded using (i) borrowings by ACME Television pursuant to
its First Amended and Restated Credit Agreement, dated December 2, 1997, as
amended, by and among the Company, the lenders party thereto and Canadian
Imperial Bank of Commerce and (ii) capital contributions by ACME Intermediate
Holdings, LLC ("ACME Intermediate") the direct parent of ACME Television. The
ACME Intermediate financing was obtained through the issuance and sale of
preferred membership units to ACME Television Holdings, LLC. The Asset
Acquisitions were accounted for using the purchase method.
Effective June 2, 1999, while FCC approval of the Licenses Acquisition was
pending, ACME Ohio, ACME Wisconsin and ACME Illinois entered into long-term time
brokerage agreements with certain of the Sellers to operate Station WDPX,
Station WPXG and Station WPXU, respectively. These time brokerage agreements
were terminated with the closing of the Licenses Acquisition on June 23, 1999.
During the 22 day term of these time brokerage agreements, the Company retained
all revenues generated from the Stations' sale of all advertising time within
programs supplied by the Company to each station, reimbursed the Sellers for
certain operating expenses of each station and provided programming for each
station subject to the Sellers' ultimate authority for each station and each
station's existing programming commitments.
Upon consummation of the Licenses Acquisitions, the Company entered into a
secondary affiliation agreement with an affiliate of the Sellers to provide Pax
Net prime-time programming during certain specified non prime-time periods to
each of the Acquired Stations for a term of five years. The Company also entered
into non-competition agreements with Paxson prohibiting Paxson and its
affiliates from engaging in the business of television broadcasting in each of
the markets served by the Acquired Stations for a term of two years.
<PAGE> 4
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Paxson Communications Corporation:
We have audited the accompanying combined balance sheet of the Tri-Station
Assets and Licenses Acquisitions ("Paxson Communications of Green Bay-14, Inc.,"
"Paxson Communications License Co., LLC," "Paxson Communications of Dayton-26,
Inc.," "Paxson Dayton License, Inc.," "Paxson Communications of Decatur-23,
Inc.," and "Paxson Decatur License, Inc.," all wholly-owned subsidiaries of
Paxson Communications Corporation, collectively the "Company") as of December
31, 1998, and the related combined statements of operations and changes in
stockholder's deficit, 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the Tri-Station
Assets and Licenses Acquisitions at 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/ KPMG LLP
-----------------------------------
KPMG LLP
West Palm Beach, Florida
May 14, 1999, except as to Note 8,
which is as of June 23, 1999
<PAGE> 5
TRI-STATION ASSETS AND LICENSES ACQUISITIONS
(Wholly-Owned Subsidiaries of Paxson Communications Corporation)
Combined Balance Sheets
December 31, 1998 and March 31, 1999
<TABLE>
<CAPTION>
MARCH 31,
ASSETS (TOTAL ASSETS HAVE BEEN DECEMBER 31, 1999
PLEDGED AS COLLATERAL ON PARENT COMPANY DEBT) 1998 (UNAUDITED)
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,000 4,000
Accounts receivable, net 316,190 175,149
Prepaid expenses and other current assets 375 375
------------ ------------
Total current assets 320,565 179,524
Property and equipment, net 8,690,223 7,935,751
Deposits 29,821 29,821
Other assets -- 1,437
Intangible assets, net 13,148,590 12,983,858
Deferred tax asset 474,513 993,465
------------ ------------
Total assets $ 22,663,712 22,123,856
============ ============
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable 377,587 2,532
Accrued liabilities 329,290 461,014
Non-interest-bearing advances from Parent 10,736,695 11,242,812
Interest-bearing advances from Parent 16,614,066 16,616,126
------------ ------------
Total current liabilities 28,057,638 28,322,484
------------ ------------
Stockholder's deficit:
Paid-in capital 3,000 3,000
Accumulated deficit (5,396,926) (6,201,628)
------------ ------------
Total stockholder's deficit (5,393,926) (6,198,628)
------------ ------------
Total liabilities and stockholder's deficit $ 22,663,712 22,123,856
============ ============
</TABLE>
See accompanying notes to combined financial statements.
<PAGE> 6
TRI-STATION ASSETS AND LICENSES ACQUISITIONS
(Wholly-Owned Subsidiaries of Paxson Communications Corporation)
Combined Statements of Operations and Changes in Stockholder's Deficit
Year ended December 31, 1998 and
three months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
YEAR ENDED MARCH 31, MARCH 31,
DECEMBER 31, 1999 1998
1998 (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C>
Broadcast revenues, net $ 1,601,444 508,693 266,110
Other revenue 49,906 -- --
----------- ----------- -----------
1,651,350 508,693 266,110
----------- ----------- -----------
Operating expenses:
Programming and promotion 619,802 96,248 724
Production and engineering 671,259 185,253 60,855
Selling, general and administrative 1,809,980 610,247 247,732
Depreciation and amortization 1,251,748 437,003 163,341
----------- ----------- -----------
Total operating expenses 4,352,789 1,328,751 472,652
----------- ----------- -----------
Operating loss (2,701,439) (820,058) (206,542)
----------- ----------- -----------
Other (income) expenses:
Interest income (5,502) -- --
Interest expense 1,725,307 497,025 295,456
Loss on disposal of assets 2,358 6,496 --
Other expense 75 75 58
----------- ----------- -----------
Net other expenses 1,722,238 503,596 295,514
----------- ----------- -----------
Net loss before income taxes (4,423,677) (1,323,654) (502,056)
Income tax benefit 1,748,769 518,952 195,802
----------- ----------- -----------
Net loss (2,674,908) (804,702) (306,254)
Paid-in capital 3,000 3,000 2,000
Stockholder's deficit at beginning of period (2,722,018) (5,396,926) (2,722,018)
----------- ----------- -----------
Stockholder's deficit at end of period $(5,393,926) (6,198,628) (3,026,272)
=========== =========== ===========
</TABLE>
See accompanying notes to combined financial statements.
<PAGE> 7
TRI-STATION ASSETS AND LICENSES ACQUISITIONS
(Wholly-Owned Subsidiaries of Paxson Communications Corporation)
Combined Statements of Cash Flows
Year ended December 31, 1998 and
three months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
YEAR ENDED MARCH 31, MARCH 31,
DECEMBER 31, 1999 1998
1998 (UNAUDITED) (UNAUDITED)
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,674,908) (804,702) (306,254)
Adjustments to reconcile net loss to net cash
used in operating activities: 221,103 5,716 8,931
Depreciation and amortization 1,251,748 437,003 163,341
Bad debt expense
Broadcast rights 360,000 90,000 --
Loss on disposal of assets 2,358 6,496 --
Deferred income tax benefit (1,748,769) (518,952) (195,802)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (478,070) 135,325 3,609
Decrease in prepaid expenses 35,126 -- (8,583)
Decrease in deposits 4,264 -- 6,125
Decrease (increase) in other assets 30,040 (1,437) (434,610)
Decrease in accounts payable and
accrued expenses (433,300) (243,331) (62,948)
------------ ------------ ------------
Net cash used in operating activities (3,430,408) (893,882) (826,191)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of property and equipment -- 11,500 --
Purchase of property and equipment (3,682,254) -- (1,615,178)
Acquisition of broadcast properties (9,250,000) -- --
------------ ------------ ------------
Net cash used in investing activities (12,932,254) 11,500 (1,615,178)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from interest-bearing advances 6,865,661 2,060 148,561
Proceeds from non-interest-bearing advances 9,499,001 880,322 2,292,808
Capital contribution from Parent 1,000 -- --
------------ ------------ ------------
Net cash provided by financing activities 16,365,662 882,382 2,441,369
Net increase in cash and cash
equivalents 3,000 -- --
Cash and cash equivalents at beginning of period 1,000 4,000 1,000
------------ ------------ ------------
Cash and cash equivalents at end of period $ 4,000 4,000 1,000
============ ============ ============
Supplemental disclosure of noncash investing activities:
Transfer of equipment to affiliated stations $ -- 464,205 --
============ ============ ============
</TABLE>
See accompanying notes to combined financial statements.
<PAGE> 8
(1) DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) PRESENTATION
Combined financial statements are presented for Paxson
Communications of Dayton-26, Inc. and Paxson Dayton License, Inc.;
Paxson Communications of Decatur-23, Inc. and Paxson Decatur
License, Inc.; Paxson Communications of Green Bay-14, Inc. and
Paxson Communications License Company, LLC (the "Tri-Station Asset
and Licenses Acquisitions"). Paxson Dayton License, Inc., Paxson
Decatur License, Inc. and Paxson Communications License Company,
LLC are holding companies with no assets or independent operations
other than their ownership of the Federal Communications
Commission's ("FCC") licenses. All of the Companies are
wholly-owned subsidiaries of, and are operated by, Paxson
Communications Corporation (the "Parent" or "PCC"). Unless the
context requires otherwise, references to the "Company",
"Companies" and "Station" refer to the combined assets,
liabilities, stockholders' equity and results of operations of
these Companies. Segment information is not presented as all of
the Companies' revenue is attributed to a single reportable
segment.
(b) NATURE OF BUSINESS
The Stations broadcast long form paid programming primarily in the
form of infomercials, and as of August 1998, also carry PAX TV.
PAX TV is the brand name for the national programming service that
PCC broadcasts through its owned, operated, and affiliated
television stations. The above entities comprise the business
operations of the following stations: WDPX (TV) Springfield, Ohio,
WPXG (TV) Suring, Wisconsin, and WPXU (TV) Decatur, Illinois. WPXG
commenced broadcast operations in October, 1998. As described in
note 4, the Company is fully dependent upon the Parent to fund
current operations.
(c) ACQUISITION OF BROADCAST PROPERTY
In May, 1998, Paxson Communications Corporation acquired certain
broadcasting assets of WPXU (Decatur, Illinois). The results of
operations related to this station are included in the combined
financial statements since the date of acquisition.
Total consideration paid for this acquisition, including costs of
acquisition, was approximately $9.25 million in 1998. This
acquisition has been accounted for under the purchase method of
accounting and, accordingly, the assets acquired and liabilities
assumed have been recorded at their estimated fair value as of the
acquisition date, as determined by an independent appraiser.
The allocation of the purchase price is summarized as follows:
<TABLE>
<S> <C>
Land and land improvements $ 50,384
Property and equipment 2,539,506
Intangible assets 6,660,110
----------
Total consideration paid $9,250,000
==========
</TABLE>
The following is pro forma information for 1998 as if the
acquisition was consummated on January 1, 1998. The pro forma
information is not necessarily indicative of the combined
financial position or results of operations which would have been
realized had the acquisition been consummated as of January 1,
1998.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL (UNAUDITED)
----------- ----------
<S> <C> <C>
Revenue $1,651,350 1,818,665
========== ==========
Net loss $2,674,908 3,042,330
========== ==========
</TABLE>
<PAGE> 9
(d) CASH AND CASH EQUIVALENTS
Cash and cash equivalents are highly liquid investments with
original maturities of three months or less.
(e) PROPERTY AND EQUIPMENT
Purchases of property and equipment, including additions and
improvements and expenditures for repairs and maintenance that
significantly add to productivity or extend the economic lives of
the assets, are capitalized at cost and depreciated using the
straight-line method over their estimated useful lives as follows
(see note 2):
<TABLE>
<S> <C>
Broadcasting towers and equipment 6 - 13 years
Office furniture and equipment 5 - 10 years
Buildings and building improvements 15 - 40 years
Leasehold improvements Term of lease
Vehicles and other 5 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are
charged to expense as incurred.
(f) INTANGIBLE ASSETS
Intangible assets are capitalized at cost and amortized using the
straight-line method over their estimated useful lives as follows
(see note 3):
<TABLE>
<S> <C>
FCC licenses and goodwill 25 years
Covenants not to compete Generally 3 years
</TABLE>
(g) IMPAIRMENT
The Company reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that, based on
estimated undiscounted future cash flows, the carrying amounts of
the assets may not be fully recoverable. In cases where the
carrying amounts of the assets may not be fully recoverable, an
impairment loss is recognized when the sum of the future
undiscounted cash flows is less than the carrying amount of the
asset. The measurement of the impairment losses to be recognized
is based upon the difference between the fair value and the
carrying amount of the assets. Intangible assets, including FCC
licenses and goodwill, are assessed for recoverability based on
whether the amortization of the intangible asset balance over its
remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation.
(h) REVENUE RECOGNITION
Broadcasting revenues are derived principally from the sale of
infomercials and spot advertisements to local, regional and
national advertisers. Broadcast revenue is recognized in the
period during which the infomercials and spot advertisements are
broadcast.
(i) INCOME TAXES
The Company's operations are included in the consolidated tax
returns of the Parent. Income tax expense is calculated as if the
Company was filing on a separate return basis with specific
book/tax differences being allocated by the Parent to the
subsidiaries from which they arise. Current Federal taxes are
payable to or receivable from the Parent. The Company utilizes the
asset and liability method for accounting for income taxes wherein
deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between
the financial statement and income tax bases of assets and
liabilities. An allowance is recorded when it is more likely than
not that any or all of a deferred tax asset will not be realized
as if the Company were filing on a separate return basis.
<PAGE> 10
(j) 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.
(k) CONCENTRATION OF CREDIT RISK
A significant portion of the Company's accounts receivable are due
from advertising agencies.
(l) UNAUDITED INTERIM FINANCIAL INFORMATION
The unaudited combined balance sheet as of March 31, 1999 and the
statements of operations and changes in stockholders' deficit, and
cash flows for the three months ended March 31, 1999 and 1998 have
been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the interim periods are not
necessarily indicative of the results that may be expected for any
future period including the year ending December 31, 1999.
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1999
1998 (UNAUDITED)
----------- -----------
<S> <C> <C>
Broadcast towers and equipment $ 7,561,929 7,069,697
Office furniture and equipment 376,115 390,238
Buildings and leasehold improvements 1,653,130 1,668,812
Land and land improvements 166,256 166,256
Vehicles and other 49,648 49,648
----------- -----------
9,807,078 9,344,651
Accumulated depreciation (1,116,855) (1,408,900)
----------- -----------
Property and equipment, net $ 8,690,223 7,935,751
=========== ===========
</TABLE>
Depreciation expense aggregated approximately $702,000 for the year ended
December 31, 1998 and $272,000 (unaudited) and $81,000 (unaudited) for
the three months ended March 31, 1999 and 1998, respectively.
<PAGE> 11
(3) INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1999
1998 (UNAUDITED)
------------ ------------
<S> <C> <C>
FCC licenses $ 12,273,587 12,273,587
Goodwill 1,287,622 1,287,622
Covenants not to compete 350,000 350,000
------------ ------------
13,911,209 13,911,209
Accumulated amortization (762,619) (927,351)
------------ ------------
Intangible assets, net $ 13,148,590 12,983,858
============ ============
</TABLE>
Amortization expense related to intangible assets aggregated
approximately $550,000 for the year ended December 31, 1998 and
approximately $165,000 (unaudited) and $82,000 (unaudited) for the three
months ended March 31, 1999 and 1998, respectively.
(4) RELATED PARTY TRANSACTIONS
During the period January 1 through August 30, 1998 the Parent's primary
source of revenue was derived from the selling of long form infomercials.
Under this operating method, infomercial sales were made through the
Parent's network sales office and revenue associated with these sales was
allocated to the Stations based on market size of the station and
proportionate share of households reached. Such allocations aggregated
$329,000 for 1998 (January 1 to August 30, 1998) and $129,000 (unaudited)
for the three months ended March 31, 1998, and are included in broadcast
revenues, net.
As of August 31, 1998, PAX TV Network programming commenced and the
Parent allocated related broadcast expense to the Stations. Such
allocations aggregated $360,000 for 1998 (September 1 to December 31,
1998) and $90,000 (unaudited) for the three months ended March 31, 1999,
and are included in programming and promotion expense. All network sales
revenue (i.e., sales made to advertisers to cover the entire PAX TV) were
recorded by the Parent without allocation to the Stations. However,
during the period September through December, 1998, local and national
advertising revenue was generated on sales made by local and national
sales personnel and Paxson national sales representatives, and such
revenues were recorded in the accompanying statement of operations.
The Stations are wholly owned by the Parent and are solely dependent upon
the Parent for providing operating funds. The Parent maintains all
banking relationships and incurs debt on the behalf of its wholly owned
subsidiaries. All assets of the Stations have been pledged as collateral
on Parent company debt. With the exception of petty cash, the Parent
provides the treasury function whereby bank accounts are not maintained
at the station level and all receipts are made to a Parent lock box and
disbursements are made by the Parent on behalf of the Station.
Management/royalty fee expense charged to the Company from the Parent
aggregated $158,000 for December 31, 1998, and $69,000 (unaudited) and
$56,000 (unaudited) for the three months ended March 31, 1999 and 1998,
respectively, which was based on 17% of gross revenues for the period
from January 1, 1998 to August 31, 1998, and 12% of gross revenues
thereafter. Such charges related to certain general and administrative
functions performed by the Parent on behalf of the Stations.
The Stations receive both interest and non-interest-bearing advances from
the Parent. Interest-bearing advances aggregating $9,614,066 at December
31, 1998 and $9,616,126 (unaudited) at March 31, 1999 bear interest at
12% and are due December 31, 1999, pursuant to promissory notes with the
Parent which stipulate maximum advances of $15,000,000. Advances
aggregating $7,000,000 at December 31, 1998 and March 31, 1999
(unaudited) bear interest at 12% and are not currently supported by an
underlying note agreement. Interest due to the Parent aggregated
$1,725,307, $497,025 (unaudited), and $295,456 (unaudited) for the year
ended December 31, 1998 and three months ended March 31, 1999 and 1998,
respectively.
<PAGE> 12
The Stations also have non-interest-bearing advances from the Parent
aggregating $10,736,695 at December 31, 1998 and $11,242,812 (unaudited)
at March 31, 1999. The average balance of such non-interest-bearing
advances aggregated $6,509,482 for 1998.
(5) INCOME TAXES
Income tax expense (benefit) attributable to the year ended December 31,
1998 consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Period ended March 31, 1999:
U.S. Federal $ -- (1,375,116) (1,375,116)
State and local -- (373,653) (373,653)
----------- ----------- -----------
$ -- (1,748,769) (1,748,769)
=========== =========== ===========
</TABLE>
The actual income tax expense for the year ended December 31, 1998
differs from the "expected" expense (benefit) computed by applying the
U.S. Federal corporate income tax rate of 34% to loss before income tax
as follows:
<TABLE>
<S> <C>
Computed "expected" tax expense (benefit) $(1,504,051)
Increase (reduction) in income taxes resulting from:
Meals and entertainment 1,860
State and local income taxes, net of Federal income tax
benefit (246,578)
-----------
$(1,748,769)
===========
</TABLE>
At December 31, 1998, the Company has net operating loss carryforwards
for Federal income tax purposes of $6,612,518 available to offset future
taxable income, if any, which expire as follows:
<TABLE>
<S> <C>
2011 $ 424,444
2012 1,332,620
2018 4,855,454
----------
$6,612,518
==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 1998 are as follows:
<PAGE> 13
<TABLE>
<S> <C>
Deferred tax assets
Net operating loss carryforwards $ 2,601,921
-----------
Total gross deferred tax assets 2,601,921
Less valuation allowance --
-----------
Deferred tax assets 2,601,921
-----------
Deferred tax liabilities:
Buildings and equipment, principally due to differences
in depreciation and amortization (320,503)
Intangible assets, primarily FCC licenses (1,806,905)
-----------
Deferred tax liabilities (2,127,408)
-----------
Net deferred tax assets $ 474,513
===========
</TABLE>
Management believes the deferred tax asset at December 31, 1998 is
realizable on a separate return basis due to the sale of the Stations as
described in note 8.
(6) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of accounts receivable, accounts payable, accrued expenses
and interest-bearing advances approximate their carrying values due to
their short-term nature.
(7) COMMITMENTS AND CONTINGENCIES
The Companies incurred total rental expense of approximately $62,000 for
the year ended December 31, 1998, and $6,898 and $13,720 for the three
months ended March 31, 1999 and 1998, respectively, the majority of which
was incurred for the tower and station leases for Paxson Communications
of Green Bay-14, Inc. Future minimum lease payments under these
non-cancelable operating leases as of December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999 $ 36,500
2000 33,500
2001 33,500
2002 30,750
2003 22,500
Thereafter 90,000
--------
$246,750
========
</TABLE>
(8) SUBSEQUENT EVENTS
On April 23, 1999, an Asset Purchase Agreement was entered into by and
among Paxson Communications Corporation, Paxson Communications License
Company, LLC, Paxson Communications of Green Bay-14, Inc., Paxson
Communication of Dayton-26, Inc., Paxson Dayton License, Inc., Paxson
Communications of Decatur-23, Inc. and Paxson Decatur License, Inc
(collectively, the "Sellers") and ACME Television of Ohio, LLC, ACME
Television Licenses of Ohio, LLC, ACME Television of Wisconsin, LLC, ACME
Television Licenses of Wisconsin, LLC, ACME Television of Illinois, LLC
and ACME Television Licenses of Illinois, LLC (collectively, the
"Buyers"), for Station WDPX(TV), Springfield, OH, WPXG(TV), Suring, WI
and WPXU(TV), Decatur, IL. Pursuant to this transaction, the Buyers have
purchased substantially all property and equipment and intangibles,
including the FCC licenses, (and did not acquire accounts receivable or
assume any liabilities) of the Stations for an aggregate purchase price
of $40,000,000, of which $32,000,000 was paid to the Sellers by the
Buyers on April 23, 1999, and $8,000,000 was paid to the Sellers by the
Buyers on June 23, 1999.
<PAGE> 14
(b) Pro forma Financial Information
The following pro forma consolidated financial statements of ACME Intermediate
Holdings, LLC and ACME Television, LLC are presented to reflect the acquisition
of Stations WDPX, WPXG and WPXU. The accompanying pro forma financial
information includes:
1. Pro forma Balance Sheets as of March 31, 1999, for ACME
Intermediate Holdings, LLC and ACME Television, LLC,
prepared as if the transactions were effective as of that
date.
2. Pro forma Statements of Operations for the year ended
December 31, 1998 and the three months ended March 31, 1999,
for ACME Intermediate Holdings, LLC and ACME Television,
LLC, prepared as if the transaction occurred at the
beginning of the period presented.
The pro forma balance sheets were derived from the unaudited combined balance
sheet of Stations WDPX, WPXG and WPXU and the unaudited consolidated balance
sheets of ACME Intermediate Holdings, LLC and ACME Television, LLC as of March
31, 1999.
The pro forma statements of operations for the year ended December 31, 1998 were
derived from the audited combined statement of the Acquired Stations for the
year then ended and the audited consolidated statements of ACME Intermediate
Holdings, LLC and ACME Television, LLC for the year then ended.
The pro forma statements of operations for the three months ended March 31, 1999
were derived from the unaudited combined statement of the Acquired Stations and
the unaudited consolidated statements of ACME Intermediate Holdings, LLC and
ACME Television, LLC.
The pro forma data are based upon available information and certain assumptions
that management believes are reasonable. The pro forma adjustments are described
in the footnotes to the pro forma financial statements. The allocation of the
purchase price is based upon preliminary estimates, which may be revised at a
later date. It is at least reasonably possible that the purchase price
allocations might require further revision and that such revision could be
material. The Pro Forma Consolidated Financial Statements do not purport to
represent what the Company's results of operations or financial condition would
actually have been had the transactions occurred on such dates or to project the
Company's results of operations or financial condition for any future period or
date.
The pro forma financial information should be read in conjunction with the
historical financial statements of ACME Intermediate Holdings, LLC and ACME
Television, LLC and the historical financial information of the Acquired
Stations, which were used to prepare the pro forma financial information. The
historical financial statements of the Acquired Stations are included herein.
The historical consolidated financial statements of ACME Intermediate Holdings,
LLC and ACME Television, LLC are contained in ACME Intermediate Holdings, LLC's
and ACME Television, LLC's integrated Form 10-K and integrated Forms 10-Q.
<PAGE> 15
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL ACME
---------------------------- INTERMEDIATE
ACME HOLDINGS, LLC
INTERMEDIATE ACQUIRED CONSOLIDATED
HOLDINGS, LLC STATIONS PRO FORMA
MARCH 31, MARCH 31, PRO FORMA MARCH 31,
ASSETS 1999 1999 ADJUSTMENTS 1999
------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents 938 $ 4 (4)(1) 938
Accounts receivable, net 9,009 175 (175)(1) 9,009
Due from affiliates 9 -- -- 9
Current portion of programming rights 6,591 -- -- 6,591
Prepaid expenses and other current assets 663 1 (1)(1) 663
-------- -------- ------- --------
Total current assets 17,210 180 (180) 17,210
Property and equipment, net 18,420 7,936 (3,580)(2) 22,776
Programming rights, net of current portion 6,858 -- -- 6,858
Deposits 616 30 (30)(1) 616
Deferred tax asset 3,811 993 (993)(1) 3,811
Intangible assets, net 229,528 12,984 22,863 (2) 265,375
Other assets 10,819 1 (1)(1) 10,819
-------- -------- ------- --------
Total assets 287,262 22,124 18,079 327,465
======== ======== ======= ========
LIABILITIES AND MEMBERS' AND STOCKHOLDERS'
DEFICIT
Current liabilities:
Bank borrowings 12,900 -- 25,000 (2) 37,900
Accounts payable 3,187 3 (3)(1) 3,187
Accrued liabilities 4,892 461 (461)(1) 4,892
Accrued acquisition costs -- -- 203 (2) 203
Current portion of programming rights payable 6,913 -- -- 6,913
Current portion of obligations under lease 1,304 -- -- 1,304
Noninterest-bearing advances from Parent -- 11,243 (11,243)(1) --
Interest-bearing advances from Parent -- 16,616 (16,616)(1) --
Other current liabilities 35 -- -- 35
-------- -------- ------- --------
Total current liabilities 29,231 28,323 (3,120) 54,434
Programming rights payable, net of current portion 5,804 -- -- 5,804
Obligations under lease, net of current portion 4,348 -- -- 4,348
Other liabilities 833 -- -- 833
Deferred income taxes 30,471 -- -- 30,471
Senior discount notes 10 7/8% 149,298 -- -- 149,298
Senior secured notes 12% 43,436 -- -- 43,436
-------- -------- ------- --------
Total liabilities 263,421 28,323 (3,120) 288,624
-------- -------- ------- --------
Redeemable members' capital -- -- 15,000 (2) 15,000
Members' and Stockholder's deficit:
Members' capital 60,902 -- -- 60,902
Paid-in capital -- 3 (3)(1) --
Accumulated deficit (37,061) (6,202) 6,202 (1) (37,061)
-------- -------- ------- --------
Total members' capital and
stockholder's deficit 23,841 (6,199) 6,199 23,841
-------- -------- ------- --------
Total liabilities and members' capital
and stockholder's deficit 287,262 22,124 18,079 327,465
======== ======== ======= ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 16
ACME TELEVISION, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL ACME
--------------------------- TELEVISION,
ACME LLC
TELEVISION, ACQUIRED CONSOLIDATED
LLC STATIONS PRO FORMA
MARCH 31, MARCH 31, PROFORMA MARCH 31,
ASSETS 1999 1999 ADJUSTMENTS 1999
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents 938 $ 4 (4)(1) 938
Accounts receivable, net 9,009 175 (175)(1) 9,009
Due from affiliates 100 -- -- 100
Current portion of programming rights 6,591 -- -- 6,591
Prepaid expenses and other current assets 663 1 (1)(1) 663
-------- -------- ------- --------
Total current assets 17,301 180 (180) 17,301
Property and equipment, net 18,420 7,936 (3,580)(2) 22,776
Programming rights, net of current portion 6,858 -- -- 6,858
Deposits 616 30 (30)(1) 616
Deferred tax asset 3,811 993 (993)(1) 3,811
Intangible assets, net 229,528 12,984 22,863 (2) 265,375
Other assets 9,233 1 (1)(1) 9,233
-------- -------- ------- --------
Total assets 285,767 22,124 18,079 325,970
======== ======== ======= ========
LIABILITIES AND MEMBERS' AND STOCKHOLDERS'
DEFICIT
Current liabilities:
Bank borrowings 12,900 -- 25,000 (2) 37,900
Accounts payable 3,187 3 (3)(1) 3,187
Accrued liabilities 4,892 461 (461)(1) 4,892
Accrued acquisition costs -- -- 203 (2) 203
Current portion of programming rights payable 6,913 -- -- 6,913
Current portion of obligations under lease 1,304 -- -- 1,304
Noninterest-bearing advances from Parent -- 11,243 (11,243)(1) --
Interest-bearing advances from Parent -- 16,616 (16,616)(1) --
-------- -------- ------- --------
Total current liabilities 29,196 28,323 (3,120) 54,399
Programming rights payable, net of current portion 5,804 -- -- 5,804
Obligations under lease, net of current portion 4,348 -- -- 4,348
Other liabilities 833 -- -- 833
Deferred income taxes 30,471 -- -- 30,471
Senior discount notes 10 7/8% 149,298 -- -- 149,298
-------- -------- ------- --------
Total liabilities 219,950 28,323 (3,120) 254,153
-------- -------- ------- --------
Members' and Stockholder's deficit:
Members' capital 95,063 -- 15,000 (2) 110,063
Paid-in capital -- 3 (3)(1) --
Accumulated deficit (29,246) (6,202) 6,202 (1) (29,246)
-------- -------- ------- --------
Total members' capital and
stockholder's deficit 65,817 (6,199) 21,199 80,817
-------- -------- ------- --------
Total liabilities and members' capital
and stockholder's deficit 285,767 22,124 18,079 325,970
======== ======== ======= ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 17
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
AND
ACME TELEVISION, LLC AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999
(1) Elimination of the Acquired Stations' historical assets not acquired,
liabilities not assumed and stockholder's deficit.
(2) Reflect the consideration for the Acquired Stations and the preliminary
allocation of the purchase price (which may be revised at a later date),
as follows:
<TABLE>
<CAPTION>
ACME ACME
INTERMEDIATE TELEVISION,
HOLDINGS, LLC LLC
------------- ----------
($ 000's) ($ 000's)
<S> <C> <C>
Consideration:
Cash paid from borrowings $ 25,000 $ 25,000
Capital contribution from ACME Television Holdings, LLC 15,000 --
Capital contribution from ACME Intermediate Holdings, LLC -- 15,000
Acquisition costs 203 203
--------- ---------
Total consideration 40,203 40,203
Less:
Fair value of property and equipment acquired 4,356 4,356
--------- ---------
Intangible assets acquired $ 35,847 $ 35,847
========= =========
The $15.0 million cash capital contribution from ACME Television Holdings, LLC was in exchange
for preferred membership units in ACME Intermediate Holdings, LLC, which have a mandatory
redemption date of October 1, 2005. ACME Intermediate, in turn, contributed $15.0 million cash
to ACME Television, LLC in exchange for additional membership units.
Intangible assets:
Fair value of intangible assets 35,847 35,847
Less: historical costs of intangible assets (12,984) (12,984)
--------- ---------
Net pro forma adjustment 22,863 22,863
========= =========
Property and equipment:
Fair value of property and equipment 4,356 4,356
Less: historical cost of property and equipment (7,936) (7,936)
--------- ---------
Net pro forma adjustment (3,580) (3,580)
========= =========
</TABLE>
<PAGE> 18
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL
------------------------
ACME ACME
INTERMEDIATE ACQUIRED INTERMEDIATE
HOLDINGS, LLC STATIONS HOLDINGS, LLC
MARCH 31, MARCH 31, PRO FORMA CONSOLIDATED
1999 1999 ADJUSTMENTS PRO FORMA
-------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Net Revenues $ 11,123 $ 509 $ -- $ 11,632
Other revenue -- -- -- --
-------- ------- -------- --------
11,123 509 -- 11,632
-------- ------- -------- --------
Operating expenses:
Programming and promotion 4,197 96 -- 4,293
Production and engineering 1,182 186 -- 1,368
Selling, general and administrative 6,272 610 -- 6,882
Depreciation and amortization 3,766 437 164 (1) 4,367
-------- ------- -------- --------
Total operating expenses 15,417 1,329 164 16,910
-------- ------- -------- --------
Operating loss (4,294) (820) (164) (5,278)
-------- ------- -------- --------
Other (income) expenses:
Interest income 8 -- -- 8
Interest expense (5,830) (497) (18)(2) (6,345)
Gain (Loss) on disposal of assets -- (7) -- (7)
Other expense -- -- -- --
-------- ------- -------- --------
Net other expenses (5,822) (504) (18) (6,344)
-------- ------- -------- --------
Net loss before income taxes (10,116) (1,324) (182) (11,622)
Income tax benefit 745 519 (519)(3) 745
-------- ------- -------- --------
Net loss (9,371) (805) (701) (10,877)
======== ======= ======== ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 19
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
ACME ACME
INTERMEDIATE ACQUIRED INTERMEDIATE
HOLDINGS, LLC STATIONS HOLDINGS, LLC
DECEMBER 31, DECEMBER 31, PRO FORMA CONSOLIDATED
1998 1998 ADJUSTMENTS PRO FORMA
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Revenues $ 43,928 $ 1,601 $ -- $ 45,529
Other revenue -- 50 -- 50
-------- ------- -------- --------
43,928 1,651 -- 45,579
-------- ------- -------- --------
Operating expenses:
Programming and promotion 17,480 620 -- 18,100
Production and engineering 4,265 671 -- 4,936
Selling, general and administrative 13,627 1,810 -- 15,437
Depreciation and amortization 11,355 1,252 1,153 (1) 13,760
-------- ------- -------- --------
Total operating expenses 46,727 4,353 1,153 52,233
-------- ------- -------- --------
Operating loss (2,799) (2,702) (1,153) (6,654)
-------- ------- -------- --------
Other (income) expenses:
Interest income 224 5 -- 229
Interest expense (21,378) (1,725) (425)(2) (23,528)
Gain (Loss) on disposal of assets 1,112 (2) -- 1,110
Other expense (608) -- -- (608)
-------- ------- -------- --------
Net other expenses (20,650) (1,722) (425) (22,797)
-------- ------- -------- --------
Net loss before income taxes (23,449) (4,424) (1,578) (29,451)
Income tax benefit 2,393 1,749 (1,749)(3) 2,393
-------- ------- -------- --------
Net loss (21,056) (2,675) (3,327) (27,058)
======== ======= ======== ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 20
ACME TELEVISION, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
ACME ACME
TELEVISION, ACQUIRED TELEVISION,
LLC STATIONS LLC
DECEMBER 31, DECEMBER 31, PRO FORMA CONSOLIDATED
1998 1998 ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net Revenues $ 43,928 $ 1,601 $ -- $ 45,529
Other revenue -- 50 -- 50
-------- ------- -------- --------
43,928 1,651 -- 45,579
-------- ------- -------- --------
Operating expenses:
Programming and promotion 17,480 620 -- 18,100
Production and engineering 4,265 671 -- 4,936
Selling, general and administrative 13,627 1,810 -- 15,437
Depreciation and amortization 11,355 1,252 1,153(1) 13,760
-------- ------- -------- --------
Total operating expenses 46,727 4,353 1,153 52,233
-------- ------- -------- --------
Operating loss (2,799) (2,702) (1,153) (6,654)
-------- ------- -------- --------
Other (income) expenses:
Interest income 224 5 -- 229
Interest expense (16,172) (1,725) (425)(2) (18,332)
Gain (Loss) on disposal of assets 1,112 (2) -- 1,110
Other expense (608) -- -- (608)
-------- ------- -------- --------
Net other expenses (15,444) (1,722) (425) (17,591)
-------- ------- -------- --------
Net loss before income taxes (18,243) (4,424) (1,578) (24,245)
Income tax benefit 2,393 1,749 (1,749)(3) 2,393
-------- ------- -------- --------
Net loss (15,850) (2,675) (3,327) (21,852)
======== ======= ======== ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 21
ACME TELEVISION, LLC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED) (000's)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------
ACME ACME
TELEVISION, ACQUIRED TELEVISION,
LLC STATIONS LLC
MARCH 31, MARCH 31, PRO FORMA CONSOLIDATED
1999 1999 ADJUSTMENTS PRO FORMA
-------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Net Revenues $ 11,123 $ 509 $ -- $ 11,632
Other revenue -- -- -- --
-------- ------- -------- --------
11,123 509 -- 11,632
-------- ------- -------- --------
Operating expenses:
Programming and promotion 4,197 96 -- 4,293
Production and engineering 1,182 186 -- 1,368
Selling, general and administrative 6,272 610 -- 6,882
Depreciation and amortization 3,766 437 164 (1) 4,367
-------- ------- -------- --------
Total operating expenses 15,417 1,329 164 16,910
-------- ------- -------- --------
Operating loss (4,294) (820) (164) (5,278)
-------- ------- -------- --------
Other (income) expenses:
Interest income 8 -- -- 8
Interest expense (4,437) (497) (18)(2) (4,952)
Gain (Loss) on disposal of assets -- (7) -- (7)
Other expense -- -- -- --
-------- ------- -------- --------
Net other expenses (4,429) (504) (18) (4,951)
-------- ------- -------- --------
Net loss before income taxes (8,723) (1,324) (182) (10,229)
Income tax benefit 745 519 (519)(3) 745
-------- ------- -------- --------
Net loss (7,978) (805) (701) (9,484)
======== ======= ======== ========
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE> 22
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
AND
ACME TELEVISION, LLC AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
(1) Adjustments to eliminate the Acquired Stations' historical depreciation and
amortization expense and to record depreciation and amortization expense as
follows:
<TABLE>
<CAPTION>
(000's) (000's)
THREE MONTHS YEAR
ENDED ENDED
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Depreciation of property and equipment 153 613
Amortization of broadcast licenses, relating to the
acquisition, over a 20 year period 448 1,792
Less: historical depreciation and amortization expense
of the Acquired Stations (437) (1,252)
---- ------
164 1,153
==== ======
</TABLE>
(2) Adjustments to eliminate the Acquired Stations' historical interest expense
and to record interest expense related to the acquisition as follows:
<TABLE>
<CAPTION>
(000's) (000's)
THREE MONTHS YEAR
ENDED ENDED
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Interest expense for borrowings against Credit
agreement (estimated at 8.25% per annum for the
three months ended March 31, 1999 and 8.6% for
the year ended December 31, 1998) 515 2,150
Less: historical interest expense of the Acquired
Stations (497) (1,725)
---- ------
18 425
==== ======
</TABLE>
(3) Adjustments to eliminate historical income tax benefit. ACME Intermediate
Holdings, LLC and ACME Television, LLC acquired the Acquired Stations as
limited liability companies. Accordingly, all tax liabilities or tax
benefits pass directly to the members.
<PAGE> 23
Exhibits
<TABLE>
<S> <C>
2.1 Asset Purchase Agreement, dated April 23, 1999, by and among
Paxson Communications Corporation, Paxson Communications License
Company, LLC, Paxson Communications of Green Bay-14, Inc., Paxson
Communications of Dayton-26, Inc., Paxson Dayton License, Inc.,
Paxson Communications of Decatur-23, Inc., Paxson Decatur
License, Inc., ACME Television of Ohio, LLC, ACME Television
Licenses of Ohio, LLC, ACME Television of Wisconsin, LLC, ACME
Television Licenses of Wisconsin, LLC, ACME Television of
Illinois, LLC and ACME Television Licenses of Illinois, LLC for
WDPX(TV), Springfield, Ohio, WPXG(TV), Suring, WI and WPXU(TV),
Decatur, IL. Incorporated by reference to the Registrant's report
on Form 8-K filed May 7, 1999.
4.1 Indenture, dated September 30, 1997, by and among ACME
Intermediate Holdings, LLC and ACME Intermediate Finance, Inc.,
as Issuers, and Wilmington Trust Company, incorporated by
reference to Exhibit 4.2 of the Intermediate Registration
Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 4.3 of the Intermediate
Registration Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME
Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Exhibit 4.1 of the Television
Registration Statement.
4.4 First Supplemental Indenture, dated February 11, 1998, by and
among ACME Television, LLC and ACME Finance Corporation, the
Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the period ending March 31, 1998.
4.5 Second Supplemental Indenture, dated March 13, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending March 31, 1998.
4.5 Third Supplemental Indenture, dated August 21, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, as issuers,
the Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the period ending September 30, 1998.
23.0 Consent of Accountants to the inclusion of the Tri-Station Assets
and Licenses Acquisitions report dated May 14, 1999, in this Form
8-K/A dated April 23, 1999.
99.1 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Communications Licenses Company, LLC, Paxson
Communications of Green bay-14, Inc., and ACME Television of
Wisconsin, LLC for Station WPXG-TV, Suring, Wisconsin.
Incorporated by reference to the Registrant's report on Form 8-K
filed May 7, 1999.
99.2 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Dayton Licenses Inc., Paxson Communications of Decatur-23,
Inc., and ACME Television of Illinois, LLC for Station WPXU-TV,
Decatur, Illinois. Incorporated by reference to the Registrant's
report on Form 8-K filed May 7, 1999.
99.3 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Decatur Licenses Inc., Paxson Communications of Dayton-26,
Inc., and ACME Television of Ohio, LLC for Station WDPX-TV,
Springfield, Ohio. Incorporated by reference to the Registrant's
report on Form 8-K filed May 7, 1999.
99.4 Press Release, dated March 23, 1999, issued by ACME Television,
LLC. Incorporated by reference to the Registrant's report on Form
8-K filed May 7, 1999.
</TABLE>
<PAGE> 24
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 hereunto duly authorized.
ACME Television, LLC
Date: July 7, 1999 By: /s/ Thomas Allen
--------------------------
Thomas Allen
Executive Vice President and
Chief Financial Officer
<PAGE> 25
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 hereunto duly authorized.
ACME Intermediate Holdings, LLC
Date: July 7, 1999 By: /s/ Thomas Allen
------------------------
Thomas Allen
Executive Vice President and
Chief Financial Officer
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
2.1 Asset Purchase Agreement, dated April 23, 1999, by and among
Paxson Communications Corporation, Paxson Communications License
Company, LLC, Paxson Communications of Green Bay-14, Inc., Paxson
Communications of Dayton-26, Inc., Paxson Dayton License, Inc.,
Paxson Communications of Decatur-23, Inc., Paxson Decatur
License, Inc., ACME Television of Ohio, LLC, ACME Television
Licenses of Ohio, LLC, ACME Television of Wisconsin, LLC, ACME
Television Licenses of Wisconsin, LLC, ACME Television of
Illinois, LLC and ACME Television Licenses of Illinois, LLC for
WDPX(TV), Springfield, Ohio, WPXG(TV), Suring, WI and WPXU(TV),
Decatur, IL. Incorporated by reference to the Registrant's report
on Form 8-K filed May 7, 1999.
4.1 Indenture, dated September 30, 1997, by and among ACME
Intermediate Holdings, LLC and ACME Intermediate Finance, Inc.,
as Issuers, and Wilmington Trust Company, incorporated by
reference to Exhibit 4.2 of the Intermediate Registration
Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 4.3 of the Intermediate
Registration Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME
Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Exhibit 4.1 of the Television
Registration Statement.
4.4 First Supplemental Indenture, dated February 11, 1998, by and
among ACME Television, LLC and ACME Finance Corporation, the
Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the period ending March 31, 1998.
4.5 Second Supplemental Indenture, dated March 13, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending March 31, 1998.
4.5 Third Supplemental Indenture, dated August 21, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, as issuers,
the Guarantors named therein, and Wilmington Trust Company,
incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the period ending September 30, 1998.
23.0 Consent of Accountants to the inclusion of the Tri-Station Assets
and Licenses Acquisitions report dated May 14, 1999, in this Form
8-K/A dated April 23, 1999.
99.1 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Communications Licenses Company, LLC, Paxson
Communications of Green bay-14, Inc., and ACME Television of
Wisconsin, LLC for Station WPXG-TV, Suring, Wisconsin.
Incorporated by reference to the Registrant's report on Form 8-K
filed May 7, 1999.
99.2 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Dayton Licenses Inc., Paxson Communications of Decatur-23,
Inc., and ACME Television of Illinois, LLC for Station WPXU-TV,
Decatur, Illinois. Incorporated by reference to the Registrant's
report on Form 8-K filed May 7, 1999.
99.3 Time Brokerage Agreement, Dated April 23, 1999, by and among
Paxson Decatur Licenses Inc., Paxson Communications of Dayton-26,
Inc., and ACME Television of Ohio, LLC for Station WDPX-TV,
Springfield, Ohio. Incorporated by reference to the Registrant's
report on Form 8-K filed May 7, 1999.
99.4 Press Release, dated March 23, 1999, issued by ACME Television,
LLC. Incorporated by reference to the Registrant's report on Form
8-K filed May 7, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 23
ACCOUNTANTS' CONSENT
The Board of Directors
Paxson Communications Corporation:
We consent to the inclusion of our report dated May 14, 1999, except as to note
8, which is as of June 23, 1999, with respect to the combined balance sheet of
the Tri-Station Assets and Licenses Acquisitions ("Paxson Communications of
Green Bay-14, Inc.," "Paxson Communications License Co., LLC," "Paxson
Communications of Dayton-26, Inc.," "Paxson Dayton License, Inc.," "Paxson
Communications of Decatur-23, Inc.," and "Paxson Decatur License, Inc.," all
wholly-owned subsidiaries of Paxson Communications Corporation") as of December
31, 1998, and the related combined statements of operations and changes in
stockholder's deficit, and cash flows for the year then ended, which report
appears in the Form 8-K/A of Acme Intermediate Holdings, LLC and ACME
Television, LLC dated April 23, 1999.
/s/ KPMG LLP
----------------------------------------
KPMG LLP
West Palm Beach, Florida
July 6, 1999
