UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number: 333-44177
BRILL MEDIA COMPANY, LLC
(Exact name of registrant as specified in its charter)
Virginia 52-2071822
(State of Formation) (I.R.S. Employer Identification No.)
420 N.W. Fifth Street
Evansville, Indiana 47708
(address of principal executive offices)
(812) 423-6200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] YES [ ] NO
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TABLE OF CONTENTS
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PART NO. ITEM NO. Page No.
- ------------------------------------------------------------------------------------------------
I 1 FINANCIAL STATEMENTS
Consolidated Statements of Financial Position
August 31, 1998 and February 28, 1998 3
Consolidated Statements of Operations and
Members'Deficiency for the Three Months
Ended August 31, 1998 and 1997 and
Six Months Ended August 31, 1998 and 1997 4
Consolidated Statements of Cash Flows for the
Six Months Ended August 31, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
2 MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 7
II 6 EXHIBITS AND REPORTS ON FORM 8-K 13
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PART I
ITEM 1. FINANCIAL STATEMENTS
Brill Media Company, LLC
(A Limited Liability Company)
<TABLE>
<CAPTION>
Consolidated Statements of Financial Position
August 31 February 28
1998 1998
-----------------------------------
(Unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 5,363,578 $ 10,917,613
Accounts receivable, net 5,781,498 3,544,246
Interest receivable on notes from managed affiliates 444,437 324,357
Inventories 711,842 628,711
Other current assets 588,335 567,632
------------------------------------
Total current assets 12,889,690 15,982,559
Notes receivable from managed affiliates 17,315,747 16,315,747
Property and equipment 21,748,989 20,713,615
Less: Accumulated depreciation 9,569,878 8,874,995
------------------------------------
Net property and equipment 12,179,111 11,838,620
Goodwill and FCC licenses, net 11,958,184 12,056,591
Covenants not to compete, net 3,410,300 3,884,427
Other assets, net 6,203,195 6,071,047
------------------------------------
21,571,679 22,012,065
Amount due from affiliate 3,014,167 --
------------------------------------
$ 66,970,394 $ 66,148,991
====================================
Liabilities and members' deficiency
Current liabilities:
Amounts payable to affiliates $ 585,065 $ 724,587
Accounts payable 1,877,398 745,210
Accrued payroll and related expenses 776,629 595,762
Accrued interest 1,656,474 1,341,390
Other accrued expenses 481,016 195,378
Current maturities of long-term obligations 1,026,538 1,005,875
------------------------------------
Total current liabilities 6,403,120 4,608,202
Long-term notes and other obligations 111,057,553 109,050,787
Members' deficiency (50,490,279) (47,509,998)
------------------------------------
$ 66,970,394 $ 66,148,991
====================================
</TABLE>
See accompanying notes to the consolidated financial statements.
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Brill Media Company, LLC
(A Limited Liability Company)
<TABLE>
<CAPTION>
Consolidated Statements of Operations and Members' Deficiency
(Unaudited)
Three Months Ended August 31 Six Months Ended August 31
1998 1997 1998 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 10,088,578 $ 7,571,827 $ 20,693,099 $ 15,100,057
Operating expenses:
Operating departments 7,392,968 5,036,366 14,793,133 10,104,343
Incentive plan -- 242,500 -- 485,000
Management fees 642,345 530,378 1,326,789 1,071,714
Time brokerage agreement fees 12,000 12,000 24,000 24,000
Consulting 61,997 58,998 123,996 117,996
Depreciation 362,159 254,763 705,473 508,312
Amortization 335,829 124,668 672,187 240,715
-------------------------------------------------------------------------
8,807,298 6,259,673 17,645,578 12,552,080
-------------------------------------------------------------------------
Operating income 1,281,280 1,312,154 3,047,521 2,547,977
Other income (expense):
Interest - managed affiliates 526,016 491,694 1,026,366 563,582
Interest - affiliates, net (2,410) 59,427 (9,256) 128,078
Interest - other, net (3,333,012) (2,407,776) (6,583,784) (4,390,195)
Amortization of deferred financing costs (153,059) (152,129) (299,632) (282,876)
Loss on sale of assets, net -- (6,908) -- (8,948)
Other, net (54,874) (16,178) (95,936) (21,963)
-------------------------------------------------------------------------
(3,017,339) (2,031,870) (5,962,242) (4,012,322)
-------------------------------------------------------------------------
Loss before income taxes (1,736,059) (719,716) (2,914,721) (1,464,345)
Income tax provision 41,100 27,000 81,600 77,866
-------------------------------------------------------------------------
Net loss (1,777,159) (746,716) (2,996,321) (1,542,211)
Members' deficiency, beginning of period (48,713,120) (27,405,448) (47,509,998) (26,609,973)
Capital contributions -- 1,970 16,040 1,990
Dividends -- (3,000,000) -- (3,000,000)
-------------------------------------------------------------------------
Members' deficiency, end of period $(50,490,279) $(31,150,194) $(50,490,279) $(31,150,194)
=========================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
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Brill Media Company, LLC
(A Limited Liability Company)
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended August 31
1998 1997
-------------------------------------
<S> <C> <C>
Operating activities
Net loss $ (2,996,321) $ (1,542,211)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,377,660 749,027
Amortization of deferred financing costs and original issue 2,636,109 282,876
discount
Management fees accrual 341,305 471,197
Affiliate interest accrual (110,578) (128,079)
Additional interest accrual -- 1,122,611
Incentive plan accrual -- 485,000
Loss on sale of assets, net -- 8,948
Changes in operating assets and liabilities:
Accounts receivable (2,237,252) (872,019)
Other current assets (103,834) (178,155)
Accounts payable 1,132,188 196,159
Other accrued expenses 781,588 (338,795)
-------------------------------------
Net cash provided by operating activities 820,865 256,559
Investing activities
Purchase of property and equipment (904,614) (408,373)
Proceeds from sale of assets 17,410 30,915
Payment for noncompetition agreement -- (3,000,000)
Loans to managed affiliates (1,000,000) (13,903,955)
Loan to affiliate (3,000,000) --
Increase in other assets (38,085) (37,676)
-------------------------------------
Net cash used in investing activities (4,925,289) (17,319,089)
Financing activities
Increase (decrease) in amounts due to affiliates (506,854) 867,862
Payment of deferred financing costs (490,991) (85,266)
Principal payments on long-term obligations (502,324) (349,437)
Proceeds from long-term borrowings 34,518 16,203,075
Capital contributions 16,040 1,990
-------------------------------------
Net cash provided by (used in) financing activities (1,449,611) 16,638,224
-------------------------------------
Net decrease in cash and cash equivalents (5,554,035) (424,306)
Cash and cash equivalents at beginning of period 10,917,613 775,363
-------------------------------------
Cash and cash equivalents at end of period $ 5,363,578 $ 351,057
=====================================
</TABLE>
See accompanying notes to the consolidated financial statements.
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Brill Media Company, LLC
Notes to the Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Brill Media Company, LLC (BMC) and its subsidiaries, all of which
are wholly owned (collectively the Company). BMC's members are directly owned by
Alan R. Brill (Mr. Brill). These statements 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 recurring
accruals, considered necessary for a fair presentation have been included along
with the elimination of all intercompany balances and transactions. Operating
results for both the three month and the six month periods ended August 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending February 28, 1999. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended February 28, 1998.
2. Pending Dispositions and Completed Acquisitions
On October 24, 1997, the Company entered into contracts to sell the
operating assets of its Missouri stations (collectively, the Missouri
Properties). The Company also executed Time Brokerage Agreements (TBAs) under
which the proposed buyers would operate the Missouri Properties beginning
November 1, 1997, for $50,000 per month, until transfer of the Federal
Communications Commission (FCC) licenses is complete. Accordingly, other than
pursuant to the TBAs, no broadcast revenue or operating expenses were recorded
for the Missouri Properties subsequent to October 31, 1997. Applications for
transfer of the broadcast licenses of the Missouri Properties have been filed
with the FCC by the buyers. A local market competitor has objected to the
transfer of the licenses and on December 12, 1997, filed with the FCC a Petition
to Deny the license transfers and to terminate the TBAs. The Attorney General of
the State of Missouri on January 9, 1998 filed a civil investigative demand on
the Company to provide documents in order to consider whether the proposed
transactions would violate federal or Missouri antitrust laws. The Company
complied with the demand. The Attorney General of the State of Missouri has
since filed comments with the FCC objecting to the proposed transfers. The FCC
has taken no further action on the Petition to Deny. The Company believes that,
even if the Petition to Deny were granted, the consequences to the Company would
not be material.
During the year ended February 28, 1998, the Company acquired eleven weekly
shopping guide publications, a printing business and two print distribution
operations reaching approximately 164,000 households in the north-central
portion of the lower
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peninsula of Michigan (the 1998 News acquisitions). Of such acquisitions, two
weekly shopping guide publications and one print distribution operation were
acquired on October 1, 1997 and nine weekly shopping guide publications, the
printing business and one distribution operation were acquired on February 23,
1998.
3. Long Term Debt
As of August 31, 1998, the Company had approximately $112 million of
long-term obligations, including the Company's 12% senior notes due 2007 (the
Notes) and appreciation notes due 2007 (the Appreciation Notes). The Notes are
senior unsecured obligations of BMC and a subsidiary of BMC, Brill Media
Management, Inc. (Media). The Appreciation Notes are unsecured subordinated
obligations of BMC and Media. The Notes and Appreciation Notes are
unconditionally guaranteed, fully, jointly, and severally, by each of the
Company's subsidiaries other than Media (the Guarantors) all of which are wholly
owned. BMC is a holding company and has no operations, assets, or cash flows
separate from its investments in its subsidiaries. Accordingly, separate
financial statements and other disclosures concerning Media and the Guarantors
have not been presented because management has determined that they would not be
material to investors.
4. Affiliate Transaction
During August 1998 the Company advanced $3,000,000 to an affiliate. In
return, the Company received a note bearing interest at the prime lending rate,
first payable on December 31, 1999 and annually thereafter until maturity of the
note on December 31, 2003. Said note is attached as Exhibit 10.
ITEM 2. MANAGEMENT'S DISSCUSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General Information and Basis of Presentation
The Company is a diversified media enterprise that acquires, develops,
manages, and operates radio stations, newspapers and related businesses in
middle markets. The Company presently owns, operates, or manages fifteen radio
stations (the Stations) serving five markets located in Pennsylvania,
Kentucky/Indiana, Colorado, Minnesota/Wisconsin, and Missouri. The Company's
newspaper businesses (the Newspapers) operate integrated newspaper publishing,
printing and print advertising distribution operations, providing total-market
print advertising coverage throughout a thirty-one-county area in the central
and north-central portions of the lower peninsula of Michigan. This operation
offers a three-edition daily newspaper, twenty-two weekly publications, web
offset printing operations for Newspapers' publications and outside customers,
and private distribution systems. Mr. Brill founded the business and began its
operations in 1981. The Company's overall operations, including its sales and
marketing strategy, long-range planning, and management support services are
managed by Brill Media Company, L.P., a limited partnership indirectly owned by
Mr. Brill.
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Results of Operations
The Company's unaudited consolidated financial statements tend not to be
directly comparable from period to period due to both completed acquisitions and
pending dispositions. These activities are identified in the notes to the
audited and unaudited consolidated financial statements of the Company.
Three Months Ended August 31, 1998 Compared to Three Months Ended
August 31, 1997
Revenues for the three months ended August 31, 1998 were $10.1 million, a
$2.5 million or 33.2% increase from the prior comparative period. For the
current quarter, Stations' revenues represented $3.6 million and Newspapers'
revenues represented $6.5 million.
Stations' revenues, excluding the Missouri Properties, kept pace with the
prior comparative period. As a result of the pending disposition of the
Missouri Properties, Station broadcast revenue in total decreased $.5
million.
The Newspapers' revenues increased $3.0 million or 86.7% from the prior
comparative period. The 1998 News acquisitions accounted for $2.7 million
of the increase.
Operating expenses for the three months ended August 31, 1998 were $8.8
million, a $2.5 million or 40.7% increase from the prior comparative period.
The Stations' operating expenses, excluding the Missouri Properties,
increased primarily as a result of salary and promotional related
expenditures necessary for continued market expansion and increased
amortization expense. This increase was offset by the elimination of the
Missouri Properties' operating expenses.
The 1998 News acquisitions represented $2.5 million of increased operating
expenses.
As a result of the above, operating income for the three months ended
August 31, 1998 was $1.3 million, remaining at the same level as the prior
comparative period.
Other income (expense) for the three months ended August 31, 1998 was $3.0
million of net expense, an increase of $1.0 million or 48.5% over the prior
comparative period. This is primarily due to an increase in interest expense
associated with the additional borrowing and financing activities for the
acquisitions referenced above.
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Six Months Ended August 31, 1998 Compared to Six Months Ended August 31, 1997
Revenues for the six months ended August 31, 1998 were $20.7 million, a
$5.6 million or 37.0% increase from the prior comparative period. For the
current fiscal year, Stations' revenues represented $7.5 million and Newspapers'
revenues represented $13.2 million.
Stations' revenues, excluding the Missouri Properties, grew $.4 million or
5.6% from the prior comparative period due to continued operations growth.
As a result of the pending disposition of the Missouri Properties, Station
broadcast revenue in total decreased $.5 million.
The Newspapers' revenues increased $6.1 million or 86.1% from the prior
comparative period. The 1998 News acquisitions accounted for $5.6 million
of the increase.
Operating expenses for the six months ended August 31, 1998 were $17.6
million, a $5.1 million or 40.6% increase from the prior comparative period.
The Stations' operating expenses, excluding the Missouri Properties,
increased primarily as a result of salary and promotional related
expenditures necessary for continued market expansion and increased
amortization expense. This increase was offset by the elimination of the
Missouri Properties' operating expenses.
The 1998 News acquisitions represented $5.0 million of increased operating
expenses.
As a result of the above, operating income for the six months ended August
31, 1998 was $3.0 million, an increase of $.5 million or 19.6% from the prior
comparative period.
Other income (expense) for the six months ended August 31, 1998 was $6.0
million of net expense, an increase of $2.0 million or 48.6% over the prior
comparative period. Of this increase, $2.2 million is due to an increase in
interest expense associated with the additional borrowings under the Notes and
financing activities for the acquisitions referenced above, offset by $.5
million of increased managed affiliate interest income.
Liquidity and Capital Resources
Generally, the Company's operating expenses are paid before its advertising
revenues are collected. As a result, working capital requirements have increased
as the Company has grown and will likely increase in the future. During the six
months ended August 31, 1998, accounts receivable net of accounts payable
increased by $1.1 million, as a result of seasonal fluctuations and the 1998
News acquisitions.
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Net cash provided by operating activities was $.82 million for the six
months ended August 31, 1998. The increase of $.56 million from the comparative
fiscal 1997 period is primiarly attributable to cash flow generated by the
operating activities of the 1998 News acquisitions, reduced by increased
payments of management fees and interest, along with the timing related to the
collection of receivables and the payment of operating expenses.
Net cash used in investing activities was $4.93 million for the six months
ended August 31, 1998. The cash used in investing activities for the current
reporting period is primarily attributable to the additional loans to managed
affiliates, the loan to an affiliate and purchase of property and equipment. The
decrease of $12.39 million in cash used in investing activities from the prior
comparative reporting period is related primarily to the loan to affiliate in
August 1998, increased capital expenditures, loans to managed affiliates
completed in May 1997 and the payment of a non-compete agreement in July 1997.
Net cash used in financing activities was $1.45 million for the six months
ended August 31, 1998. The use of cash for the current reporting period is
attributable primarily to the payments of the amounts due to affiliates,
deferred financing costs and existing long-term obligations. The decrease of
$18.09 million in cash provided by financing activities from the prior
comparative reporting period is related primarily to the proceeds from long-term
borrowings in 1997 and a decrease in amounts due to affiliates offset by an
increase in payments of deferred financing costs.
Media cashflow was $6.93 million and $5.56 million for the six-month
periods ended August 31, 1998 and 1997, respectively. Media cashflow represents
EBITDA plus incentive plan expense, management fees, time brokerage fee expense,
consulting expense and interest income from loans made by the Company to managed
affiliates (which are described in the Company's Annual Report on Form 10-K for
the year ended February 28, 1998). EBITDA is generally defined as net income
plus the income tax provision, consolidated interest expense, depreciation
expense and amortization expense. The media cashflow amounts presented above do
not include the Company's income from certain investment grade instruments as
would be permitted by the indenture under which the Notes were issued (the
Indenture). This income was $236,000 for the six month period ended August 31,
1998 and will be included in media cashflow in subsequent reporting.
Although media cashflow is not a measure of performance calculated in
accordance with GAAP, management believes it is useful in evaluating the Company
and is widely used in the media industry to evaluate a media company's
performance. However, media cashflow should not be considered in isolation or as
a substitute for net income, cash flows from operating activities and other
income or cash flow statements prepared in accordance with GAAP as a measure of
liquidity or profitability. In addition, media cashflow as determined by the
Company may not be comparable to related or similar measures as reported by
other companies and does not represent funds available for discretionary use.
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The Notes require semi-annual cash interest payments on each June 15 and
December 15 of $3.9 million through December 15, 1999 and $6.3 million from June
15, 2000 until maturity. The holders of the Appreciation Notes have the right to
require redemption of the Appreciation Notes at various prices and upon various
events (including an initial public offering) and dates, including a right to
require redemption of the Appreciation Notes at an aggregate price of $24
million on June 30, 2003 if an initial public offering has not occurred on or
before that date. The Company intends to redeem the Appreciation Notes on June
15, 1999 at a redemption price of $3 million, but there can be no assurances
that it will have sufficient resources to do so.
The Company's ability to pay interest on the Notes when due, redeem the
Appreciation Notes and to satisfy its other obligations depends upon its future
operating performance, and will be affected by financial, business, market,
technological, competitive and other conditions, developments, pressures, and
factors, many of which are beyond the control of the Company. The Company is
highly leveraged, and many of its competitors are believed to operate with much
less leverage and to have significantly greater operating and financial
flexibility and resources.
Historically, the Company has achieved significant growth through
acquisitions. In order for the Company to achieve needed future growth in
revenues and earnings and to replace the revenues and earnings of properties
that may be sold by one or more of the Subsidiaries from time to time,
additional acquisitions may be necessary. Meeting this need for acquisitions
will depend upon several factors, including the continued availability of
suitable financing. There can be no assurance that the Company can or will
successfully acquire and integrate future operations. In connection with future
acquisition opportunities, the Company, or one or more of its subsidiaries, may
need to incur additional indebtedness or issue additional equity or debt
instruments. There can be no assurance that debt or equity financing for such
acquisitions will be available on acceptable terms, or that the Company will be
able to identify or consummate any new acquisitions.
The Indenture limits the Company's ability to incur additional
indebtedness. In addition to certain other permitted indebtedness, the Indenture
permits the Company to incur indebtedness under revolving credit facilities.
Limitations in the Indenture on the Company's ability to incur additional
indebtedness, together with the highly leveraged nature of the Company, could
limit operating activities, including the Company's ability to respond to market
conditions, to provide for unanticipated capital investments or to take
advantage of business opportunities.
The Company's primary liquidity needs are to fund capital expenditures,
provide working capital, meet debt service requirements and make acquisitions.
The Company's principal sources of liquidity are expected to be cashflow from
operations, cash on hand, consummation of the sale of the Missouri Properties
and indebtedness permitted under the Indenture. The Company believes that
liquidity from such sources should be sufficient to permit the Company to meet
its debt service obligations, capital expenditures
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and working capital needs for the next 12 months, although additional capital
resources may be required in connection with the further implementation of the
Company's acquisition strategy.
Seasonality
Seasonal revenue fluctuations are common in the newspaper and radio
broadcasting industries, caused by localized fluctuations in advertising
expenditures. Accordingly, the Stations' and Newspapers' quarterly operating
results have fluctuated in the past and will fluctuate in the future as a result
of various factors, including seasonal demands of retailers and the timing and
size of advertising purchases. Generally, in each calendar year the lowest level
of advertising revenues occurs in the first quarter and the highest levels occur
in the second and fourth quarters.
Impact of Year 2000
The Company has developed a plan to modify its information technology to
recognize the year 2000 and has identified critical data processing systems that
will be upgraded or replaced with new systems. However, it is not possible to
estimate the extent of year 2000 deficiencies in all of the Company's systems,
the costs to the Company of correcting such deficiencies and the time frame in
which any required corrections will be made. In addition, numerous uncertainties
relating to such matters exist, including the ability to locate, test and
correct or replace relevant computer codes in software and embedded
microprocessors, the availability and cost of personnel trained in this area, if
required, and the extent to which third parties will be able to timely correct
year 2000 problems which originate with such third parties, but which impact the
Company's operations. Given such uncertainties, there can be no assurances that
year 2000- related deficiencies and required corrective measures will not have a
material adverse effect on the Company's business, financial conditions or
results of operations.
Forward-Looking Statements
Certain items in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Federal Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate," and similar
expressions. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and that matters referred to in such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, risks and uncertainties relating to
leverage, the need for additional funds, consummation of the pending
acquisitions, integration of the recently completed acquisitions, the ability of
the Company to achieve certain cost savings, the management of growth, the
introduction of new technology, changes in the regulatory environment, the
popularity of radio and newsprint as a
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communication/advertising medium and changing consumer tastes. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are furnished with this report: Exhibit 10 - Promissory
Note issued by Lancaster-York Broadcasting, LLC to Reading Radio, Inc. and
Exhibit 27 -- Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRILL MEDIA COMPANY, LLC
By: BRILL MEDIA MANAGEMENT, INC.,
Manager
October 15, 1998 By /s/ Alan R. Brill
---------------------------------
Alan R. Brill
DIRECTOR, PRESIDENT, CHIEF
EXECUTIVE OFFICER AND TREASURER
October 15, 1998 By /s/ Donald C. TenBarge
---------------------------------
Donald C. TenBarge
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND ASSISTANT
TREASURER (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
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EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
10 Promissory Note
27 Financial Data Schedule
14
PROMISSORY NOTE
Lancaster-York Broadcasting, LLC
$3,000,000.00 August 11, 1998
FOR VALUE RECEIVED, LANCASTER-YORK BROADCASTING, LLC, a Virginia limited
liability company (the "Maker") promises to pay to READING RADIO, INC. a
Virginia Corporation, or order (the "Holder"), in lawful money of the United
States of America, the principal sum of Three Million and No/100 Dollars
($3,000,000.00), with interest on the unpaid principal balance hereof at the
prime rate per annum from the date hereof until paid, such rate for each one
calendar month period to be the prime rate as last reported in the Wall Street
Journal on the first day of such month, payable as follows: interest only, first
payable on December 31, 1999 and annually thereafter on December 31 of each year
until December 31, 2003 when all unpaid principal and accrued but unpaid
interest hereunder shall become due and payable in full.
Any of the following shall constitute an "Event of Default" under this
Note:
(a) any failure of the Maker to make any scheduled payment of principal or
interest on this Note to the Holder when due and payable, which failure
continues for a period of at least thirty (30) consecutive calendar days after
written notice of such failure has been given to the Maker by the Holder,
(b) Maker's commencement of a voluntary case under and within the meaning
of the United States Bankruptcy Code as may then be in effect (the "Code"), or
(c) entry by a court of competent jurisdiction of an order for relief
against the Maker in an involuntary case commenced against the Maker under and
within the meaning of the Code, or appointing an interim trustee to take
possession of the Maker's assets, or ordering the liquidation of the Maker, and,
in each case, ninety (90) consecutive calendar days shall have elapsed since
entry of any such order, such order shall then be unstayed and effective, and
such involuntary case shall then still be pending and not dismissed.
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Upon the occurrence and during the continuation of an Event of Default, the
Holder, at its election made by a written notice to the Maker, may declare all
of the then unpaid principal balance of this Note, together with any interest
accrued thereon, to be, and they shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind. The
foregoing election and notice shall be deemed to have been automatically given
without further action by the Holder upon the occurrence of an Event of Default
described in subparagraph (b) or (c) above.
The Maker may prepay the amount due hereunder in whole or in part at any
time and from time to time without penalty or premium, provided that any sums
paid as partial payment shall not disturb the continuity of payments.
The Maker hereby waives presentment, demand, protest and notice of protest
and dishonor, as well as any Homestead or other exemption as to this debt, and
the Maker agrees to be bound for the payment hereof notwithstanding any
agreement for the extension of the due date of any installment of principal and
interest made by the Holder after the maturity hereof or thereof. The Maker also
waives any right to require the Holder to proceed against any person or
property.
References to the Maker shall include the undersigned and all endorsers,
sureties, guarantors and other obligors hereunder.
The Maker agrees to pay all reasonable attorneys' fees that may be incurred
in collecting this Note after an Event of Default has occurred, but not to
exceed five percent (5%) of any then due and payable principal balance.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized officer as of the day, month, and year first set forth above.
Lancaster-York Broadcasting, LLC
by: Lancaster-York Management, Inc.
its Manager
by:
---------------------------------
a duly authorized officer
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements in the Form 10-Q of Brill Media Company, LLC for the six months ended
August 31, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 5,364,000
<SECURITIES> 0
<RECEIVABLES> 5,781,000
<ALLOWANCES> 0
<INVENTORY> 712,000
<CURRENT-ASSETS> 12,890,000
<PP&E> 21,749,000
<DEPRECIATION> 9,570,000
<TOTAL-ASSETS> 66,970,000
<CURRENT-LIABILITIES> 6,403,000
<BONDS> 111,058,000
0
0
<COMMON> 0
<OTHER-SE> (50,490,000)
<TOTAL-LIABILITY-AND-EQUITY> 66,970,000
<SALES> 20,693,000
<TOTAL-REVENUES> 20,693,000
<CGS> 17,646,000
<TOTAL-COSTS> 17,646,000
<OTHER-EXPENSES> 96,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,866,000
<INCOME-PRETAX> (2,915,000)
<INCOME-TAX> 82,000
<INCOME-CONTINUING> (2,996,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,996,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
