SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
Commission File No. 1-8283
Great American Communications Company
Incorporated under the
IRS Employer
laws of Florida
Identification No. 59-2054850
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 562-8000
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Quoted On
Class A Common Stock, $.01 par value
NASDAQ/NMS
Other securities for which reports are submitted pursuant to
Section 15(d) 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 and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and need not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No
As of March 1, 1994, there were 10,153,672 shares of Class A Common
Stock outstanding. The aggregate market value of Class A Common Stock
<PAGE>
held by non-affiliates of the Registrant at March 1, 1994, was
approximately $105.1 million (based on non-affiliated holdings of
6,470,671 shares and a market price of $16.25 per share).
Documents Incorporated by Reference:
Proxy Statement for the 1994 Annual Meeting of Shareholders
(portions of which are incorporated by reference in Part III hereof).
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY
INDEX TO ANNUAL REPORT
ON FORM 10-K
<CAPTION>
Page
<S> <C>
Part I
Item 1 - Business 1
Item 2 - Properties 6
Item 3 - Legal Proceedings 6
Item 4 - Submission of Matters to a Vote of Security Holders 7
Part II
Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters 8
Item 6 - Selected Financial Data 9
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8 - Financial Statements and Supplementary Data 16
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure *
Part III
Item 10 - Directors and Executive Officers of the Registrant 17
Item 11 - Executive Compensation 17
Item 12 - Security Ownership of Certain Beneficial Owners and
Management 17
Item 13 - Certain Relationships and Related Transactions 17
Part IV
Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K S-1
</TABLE>
* The response to this Item is "none".
<PAGE>
PART I
ITEM 1
Business
Introduction
Great American Communications Company ("GACC") is a holding company
engaged primarily in the ownership and operation of television and radio
stations. Its address is One East Fourth Street, Cincinnati, Ohio 45202
and its telephone number is (513) 562-8000. American Financial
Corporation and its chairman, Carl H. Lindner, (collectively, "AFC") owned
approximately 32.5% of GACC's outstanding Common Stock at March 1, 1994.
GACC's principal operations are conducted through its wholly-owned
subsidiary, Great American Television and Radio Company, Inc. ("GATR").
On December 28, 1993, GACC completed its comprehensive financial
restructuring through a prepackaged plan of reorganization under chapter
11 of the U.S. Bankruptcy Code. As part of the reorganization, GACC
effected a one-for-300 reverse stock split and issued approximately
10.1 million shares of Class A Common Stock, 1.2 million shares of Class B
Common Stock and $72.5 million principal amount of 14% Senior Extendable
Notes initially due June 30, 2001 (the "14% Notes") in exchange for $288
million principal amount of debt, $275 million liquidation value of
preferred stock of a subsidiary and $7.5 million in cash. As a result of
the reorganization, indebtedness and preferred stock obligations have been
reduced from $910 million to $433 million, and annual fixed charges
(interest and preferred stock dividends) have been reduced from more than
$94 million to approximately $41 million. The prepackaged plan of
reorganization is discussed in further detail in Note B to GACC's
Financial Statements. The term "Common Stock" as used herein refers to
both the Class A and Class B Common Stock. The differences in these two
securities are discussed in Item 5 and Note H to GACC's Financial
Statements.
On February 18, 1994, GACC refinanced its 14% Notes and the 13%
Senior Subordinated Notes due 2001 issued by Great American Broadcasting
Company ("GABC"), one of GACC's subsidiaries, through the issuance of
9-3/4% Senior Subordinated Notes due 2004.
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General
At December 31, 1993, GATR owned and/or operated six network-
affiliated television stations, twelve FM radio stations and five AM radio
stations. The following tables give the location, network affiliation and
market information for these stations:
<TABLE>
<CAPTION>
Television Stations
Station Rank(A) Commercial Cable
Market and TV Station and Network Adults Stations In Sub-
National Market Households First Year Affili- Market Aged Market scriber-
Rank (A) In DMA Owned ation Share 25-54 VHF UHF ship
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tampa, FL 15 1,384,000 WTSP 1985 ABC 3 3 3 6 67%
Phoenix, AZ 20 1,097,000 KSAZ*1985 CBS 1T 2T 4 4 53%
Cincinnati, OH 30 770,000 WKRC 1949 ABC 3 1T 3 2 58%
Kansas City, MO 31 768,000 WDAF 1964 NBC 3 2T 3 3 60%
Greensboro/
High Point, NC 48 538,000 WGHP 1991 ABC 2T 2T 3 4 58%
Birmingham, AL 51 522,000 WBRC 1957 ABC 1 1 2 3 62%
<FN>
*Formerly KTSP.
(A) Rankings based on TV Households in Designated Market Area ("DMA"), 6:00 a.m. to
2:00 a.m., Sunday-Saturday. "T" = tied.
The source of all television stations' market information is the Nielsen Station Index,
November 1993.
</TABLE>
<TABLE>
<CAPTION>
Radio Stations
Station Rank In
Market and Population Station and Targeted Stations
National Market in Metro First Year Power Format Market Audience In
Rank (A) Area (A) Owned (Watts) (B) (C) (D) Market
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FM
Detroit, MI(a) 6 3,643,100 WRIF 1987 27,200 AOR 13T 2 30
Atlanta, GA 12 2,681,900 WKLS 1985 100,000 AOR 8 3 19
Phoenix, AZ 21 1,880,000 KSLX 1992 100,000 CR 16 7 26
Tampa, FL 22 1,869,400 WXTB 1989 100,000 AOR 2 1 24
Denver, CO(b) 24 1,636,500 KBPI 1990 100,000 AOR 9T 3 33
Cincinnati, OH(b) 25 1,528,500 WKRQ 1947 50,000 CHR 3 3 24
Portland, OR 26 1,511,600 KKRZ 1984 100,000 CHR 3 2 25
Milwaukee, WI(a) 28 1,342,000 WLZR 1987 50,000 AOR 4 2 26
Sacramento, CA 29 1,340,100 KSEG 1988 50,000 CR 6 5 25
Sacramento, CA(c) 29 1,340,100 KRXQ 25,000 AOR 8T 2 25
Kansas City, MO 30 1,338,000 KYYS 1964 100,000 AOR 11 6 25
Columbus, OH 34 1,197,200 WLVQ 1954 40,000 AOR 5 1 23
2
<PAGE>
AM
Phoenix, AZ 21 1,880,000 KOPA 1992 5,000 CR n/m n/m 26
Portland, OR 26 1,511,600 KEX 1984 50,000 AC 2 5 25
Milwaukee, WI(a) 28 1,342,000 WLZR 1987 1,000 AOR n/m n/m 26
Kansas City, MO 30 1,338,000 WDAF 1964 5,000 C 1 9 25
Columbus, OH 34 1,197,200 WTVN 1954 5,000 AC 2 3 23
Notes to this table appear on the following page.
3
<PAGE>
<FN>
(a) Under Agreement for sale as of March 1, 1994.
(b) An agreement in principal has been reached for the sale of KBPI in Denver and the
acquisition of WWNK-FM in Cincinnati. The transaction is pending execution of a
definitive agreement and is subject to the approval of the FCC.
(c) Operated under a local marketing arrangement as of December 31, 1993; under agreement
for purchase as of March 1, 1994.
(A)Rankings for Metro Area, all persons aged 12 and over. Source: "Market Survey
Schedule and Population Rankings" - Arbitron, Fall 1993.
(B) AOR - Album Oriented Rock; AC - Adult Contemporary; C - Country; CHR - Contemporary
Hit Radio; CR - Classic Rock.
(C) Rankings for Metro Area, 6am-midnight, Monday-Sunday. All persons aged 12 and over.
Source: Arbitron Radio Market Report, Fall 1993. "T" - tied.
(D) Rankings for Metro Area, 6am-midnight, Monday-Sunday. Targeted Audience: FM -
Adults aged 18-34, AM - Adults aged 25-54. Source: Arbitron Radio Market Report,
Fall 1993.
n/m Separate rating not meaningful. These stations are operated in conjunction with the
related FM station.
</TABLE>
Substantially all of GATR's broadcast revenues come from the sale of
advertising time to local and national advertisers. Local advertisements
are sold by each station's sales personnel and national spots are sold by
independent national sales representatives. GATR's television and radio
stations compete for revenues with other stations in their respective
signal coverage areas as well as with all other advertising media.
Advertising revenues are significantly affected by economic conditions on
both the national and local level.
GATR's television stations receive a significant portion of their
programming from their respective networks; the networks sell commercial
advertising time within such programming. The competitive position of the
stations is directly affected by viewer acceptance of network programs.
In recent years, the national audience shares obtained by the networks
have declined as a result of increased competition from cable television
networks and other competing program sources. As of 1991, these declines
began to diminish and it is expected that significant declines will not
occur during the next several years. The non-network programs broadcast
by the stations are either produced by the stations or acquired from other
sources. Locally originated programs include a wide range of show types
such as entertainment, news, sports, public affairs and religious
programs.
Broadcast stations also compete for audience with other forms of
home entertainment, such as cable television, pay television systems of
various types and home video and audio recordings. These competing
services, which have the potential of providing improved signal reception
or increased home entertainment selection, have experienced rapid growth
in recent years. The major competing television services today are
provided by a large number of advertiser-supported and pay cable
television networks. Cable subscribership is presently slightly under 60%
of television households in the United States, and is not expected to grow
beyond 65% within the next several years. There are other related forms
of home entertainment which, with continued technological advances or
regulatory changes, can be expected to become increasingly competitive
4
<PAGE>
with GATR's broadcast properties. In addition, statutory or regulatory
changes may affect the competition faced by GATR. For example, the
Federal Communications Commission ("FCC") now permits telephone companies
to deliver video services to homes in the companies' telephone service
areas, but only on a common carrier basis. Telephone companies continue
to seek authority from the FCC and from Congress to become cable operators
and thereby to compete directly with presently existing cable systems.
Because most radio programming originates locally, network
affiliation has little effect upon the station's competitive position
within the market. GATR's AM radio stations offer their listeners a wide
range of programs including news, music, discussion, commentary and
sports. GATR's FM radio stations offer primarily album oriented rock,
classic rock and contemporary hit music programming, designed to appeal to
a more youthful audience. Companies that operate radio stations must
always be alert to the possibility of another station changing its
programming format to compete directly for listeners and advertisers. If
another station converts to a format similar to that of one of GATR's
radio stations in the same geographic area, the result could be lower
ratings and advertising revenue, increased promotion and other expenses
and consequently lower operating results.
FCC rules permitting ownership of two FM and/or two AM radio
stations in certain markets (a "duopoly") have created opportunities for
GATR to increase its share of advertising revenues in its existing markets
and may allow certain synergies such as reduced operating expenses
resulting from combined administrative staffs, combined promotional
efforts, and the ability to offer advertisers a larger combined audience.
GATR expects in the near future to purchase, sell or exchange radio
stations in order to avail itself of the considerable operating
opportunities presented by the duopoly rules. Pursuant to this effort,
GATR expects to close during the second quarter of 1994 the purchase of a
second FM radio station in Sacramento, and has recently announced the
agreement in principle to acquire a second FM radio station in Cincinnati.
Regulation
GATR's business is subject to various federal and state laws and
regulations which can affect the profitability of operations. GATR's
television and radio broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended.
Among other things, FCC regulations govern issuance, term renewal and
transfer of licenses which are necessary for operation of television and
radio stations. Upon application, and in the absence of conflicting
applications (which would require the FCC to hold a hearing) or adverse
findings as to the licensee's qualifications, such licenses are renewed
without hearing for regular terms of five years for television stations
and seven years for radio stations. Representatives of special interest
and minority groups have, in the past, filed petitions to deny renewal
applications of various broadcast stations. All of GATR's broadcast
stations presently operate under regular renewal authorizations. A
license renewal application is currently pending with respect to GATR's
television station in Birmingham.
Two organizations have filed petitions with the FCC to deny the
license renewal application of GATR's Birmingham television station,
5
<PAGE>
alleging the station has failed to meet the FCC's equal employment
opportunity requirements. GATR has opposed the petitions and expects that
the license will be renewed. Grant of the renewal will continue to be
delayed until the FCC has considered these petitions.
The FCC's present rules permit maximum national ownership of
eighteen AM and eighteen FM radio stations. A single owner may own a
maximum of two AM and two FM stations in larger radio markets such as
those in which GATR operates stations, so long as the combined audience
share served by those stations in a single market does not exceed 25%.
The FCC's rules currently permit ownership of twelve television stations
nationally, and one television station in each market.
Current FCC regulations also prohibit the ownership of both radio
and television stations in the same geographic market area. Pursuant to
waivers of those rules granted by the FCC, GATR currently owns both radio
and television stations in four markets: Cincinnati, Ohio; Kansas City,
Missouri; Tampa, Florida; and Phoenix, Arizona. None of the FCC waivers
are limited as to time, but it is possible that the FCC might, in the
future, prohibit the sale of all of the stations in any of these markets
to a single purchaser. GATR's planned acquisition of a second FM radio
station in Cincinnati will require a further waiver of the FCC's rules.
A pending rulemaking proceeding before the FCC proposes to relax or
eliminate several multiple ownership rules with respect to television and
with respect to radio/television stations in the same market. The timing
and substantive outcome of that rulemaking are uncertain.
Legislation adopted in 1992 affords most television licensees the
right either to have their station's signals carried on local cable
systems or, alternatively, to require that operators of local cable
systems obtain "retransmission consent" to carry each television station's
signal on cable. All of GATR's television stations are presently carried
by cable systems in their local service areas in most cases pursuant to
retransmission consent agreements.
Current technology offers several different methods of transmitting
television with greatly improved definition, color rendition, sound and a
wider screen picture. The most advanced type of transmission system is
referred to as High Definition Television ("HDTV"). HDTV transmissions
from communications satellites to homes equipped with special HDTV
receivers have begun on a limited basis in Japan, but such transmissions
are incompatible with reception by current television sets in use in the
United States. The FCC is expected in 1995 to promulgate a technical
standard or standards for a system of HDTV broadcasting to be used in the
U.S. The type of HDTV standard that will be adopted by the FCC will
involve the broadcast of HDTV on a separate television channel than that
used for conventional broadcasting, and would thus require participating
broadcasters to make significant new capital investments in order to
operate a second station in each market. If broadcast stations fail to
make this additional investment, they would in the long term be likely to
suffer adverse competitive effects, since cable television, VCRs and
direct broadcast satellites are likely to deliver HDTV signals or programs
to consumers. Although these regulatory proceedings with respect to HDTV
and HDTV standards are in process, GATR does not believe HDTV will be a
significant factor over the next few years. After the final standards are
set, manufacturers must gear up to produce both transmission equipment and
receivers under the standard. Finally, penetration of the new HDTV
6
<PAGE>
receivers in the consumer marketplace will need to reach certain levels
before stations commit to the capital investment necessary to broadcast
HDTV.
The FCC is also investigating new methods of "digital" radio
broadcasting. "Digital radio" would permit radio transmission and
reception at a level of quality comparable to that afforded by compact
discs, and would be far less subject to interference than present radio
broadcasts. Present day radio receivers would not be able to receive
digital radio broadcasts because digital radio, in addition to utilizing
different technology, may use totally different transmission frequencies
than used by present radio stations. As the result of frequency
allocations made by the World Administrative Radio Conference in 1992,
digital radio is expected to be developed initially in the U.S. as a
satellite-delivered system, and in Europe, Canada and Mexico as a
terrestrial system. If terrestrial digital radio is implemented in the
U.S., it will likely be through the use of "in-band" systems that send
digitalized signals over the frequencies currently used for AM and FM
broadcasting. Several U.S. industry groups are already experimenting with
the development of such "in-band" technology. The outcome of various
proceedings currently pending before the FCC concerning digital radio
broadcasting may affect the long-term value of GATR's radio franchises
either positively or negatively, although it is not presently anticipated
that any commercial digital radio broadcasting will begin in the United
States before 1996.
While the FCC relies largely on the interplay of marketplace forces
in lieu of direct government regulation, the FCC continues to regulate
closely some aspects of broadcast station operations. Examples of such
regulation include equal employment practices, political broadcast
practices and rates, television stations' performance in providing
educational and informational programs for children, television stations'
compliance with maximum commercial limits in children's programs, and
compliance with various technical regulations. It is also FCC policy to
encourage increasing competition among different electronic communications
media. As a result of rapidly developing technology, GATR's television
stations can be expected to confront increased competition from many other
systems by which information and entertainment are delivered to the home
on both a free and paid basis. Such competing delivery systems include
cable television, direct broadcasting to homes by communications
satellites, new low power television stations authorized by the FCC, pay
television delivered to homes via microwave by "wireless cable" systems,
common carriers and videocassettes. The FCC now permits telephone
companies to deliver video services to homes in the companies' telephone
service areas, but only on a common carrier basis. Telephone companies
continue to seek authority from the FCC and from Congress to become cable
operators and thereby to compete directly with presently existing cable
systems.
Employees
At December 31, 1993, GATR and its subsidiaries employed
approximately 1,300 full-time employees and 250 part-time employees.
ITEM 2
Properties
7
<PAGE>
GATR owns all of its television station studios, buildings and
transmission sites, except the Phoenix transmission site for which the
lease expires in 2012. It owns its radio studios and buildings in
Cincinnati, Kansas City and Milwaukee. All other radio station studios
are operated from leased facilities. GATR owns all of its AM station
transmission sites (other than Phoenix for which the lease expires in
1997) and owns its FM station transmission sites in Cincinnati, Kansas
City, Milwaukee and Sacramento. GATR leases its FM station transmission
sites in Atlanta, Columbus, Denver, Detroit, Portland, Phoenix and Tampa
pursuant to term leases expiring in 1998, 2003, 1994, 1996, 2001, 2000 and
2027, respectively.
<PAGE>
ITEM 3
Legal Proceedings
An action styled W. Kenneth Tregenza, et al. v. Great American
Communications Company, et al., (92-C-6384), was filed in September 1992
in the United States District Court for the Northern District of Illinois,
Eastern Division. The defendants are GACC and Shearson, Lehman Brothers
("Shearson"). The action purports to be a class action on behalf of
persons who purchased or otherwise acquired the Common Stock of GACC from
October 11, 1989 to December 17, 1991. Plaintiffs in the action allege
that certain transactions, pursuant to which GACC issued Common Stock in
exchange for debt securities in October 1989, should have been effected
pursuant to a registration statement. Plaintiffs also allege that
material misrepresentations and omissions occurred in connection with the
sales by Shearson of the stock subsequent to the exchange. The complaint
asserts claims against GACC under Section 12(2) of the Securities Act of
1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934,
and under the Illinois Securities Act. The complaint sought rescission
regarding the purchase of approximately 3.65 million shares involving a
monetary value of approximately $44 million. Motions by GACC and Shearson
to dismiss the action were granted in May 1993. On December 23, 1993, the
United States Court of Appeals for the 7th Circuit affirmed the District
Court's dismissal of the Plaintiff's action. The Plaintiff's have filed a
petition for certiorari with the United States Supreme Court.
On December 21, 1993, Coronet Insurance Company and its affiliate,
Casualty Insurance Company of Florida, filed an appeal from the decision
of the U.S. Bankruptcy Court for the Southern District of Ohio confirming
GACC's prepackaged plan of reorganization. The appeal, Coronet Insurance
Company, et al. v. Great American Communications Company, (C-1-94-018), is
now pending before the U.S. District Court for the Southern District of
Ohio. Coronet contends that the Bankruptcy court erred in approving the
settlement and release of certain claims by GACC as part of the
reorganization. Coronet's appeal seeks reversal of only that portion of
the confirmation order approving the settlement and release. Coronet
contends that there was not a "sufficient factual foundation" for
approving the settlements under Federal Rule of Bankruptcy Procedure 9019,
because specific dollar values were not assigned to the released claims.
The Bankruptcy Court found that valuation of the released claims was not
possible, and that a sufficient factual foundation existed without such a
valuation. Briefs on the merits of the appeal have been filed. GACC has
also moved to dismiss the appeal on grounds that it is moot, due to
consummation of the plan of reorganization. That motion is also pending.
8
<PAGE>
ITEM 4
Submission of Matters
to a Vote of Security Holders
The Registrant solicited acceptances of its joint prepackaged plan
of reorganization during October and early November 1993; the voting
deadline was November 3, 1993. Votes were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934. Shareholders
approved the joint prepackaged plan of reorganization with 40,441,023
shares cast in favor of the plan, 1,199,274 shares voted against the
proposal and 15,089,137 shares not voted.
The plan was also approved by the requisite percentage of each class
of security holders and other claimants as required by the Bankruptcy
Code. The results of the vote by those security holders are listed below:
<TABLE>
<CAPTION>
Percentage Of Those
Participation of Voting,
Each Class Percentage
(Principal Amount) in Favor
<S> <C> <C>
GACC:
14-3/8% Senior Subordinated Debentures 89.2% 99.8%
9% Senior Subordinated Notes 85.6% 96.5%
11% Senior Debentures 36.4% 95.2%
GACC Holding Company:
20-1/2% Senior Notes
and 14-1/8% Senior Notes (combined) 98.6% 93.2%
</TABLE>
The plan was also unanimously approved by the holders of two other
debt issues not registered under the Securities Exchange Act of 1934; the
9-1/2% Senior Secured Notes of New GACC Holdings, Inc. and GACC's Variable
Rate Convertible Subordinated Debentures.
9
<PAGE>
PART II
ITEM 5
Market for Registrant's Common Equity
and Related Stockholder Matters
GACC's Class A Common Stock, issued in the reorganization on
December 28, 1993, began trading on the National Market System of the
National Association of Securities Dealers Automated Quotations Systems,
Inc. ("NASDAQ") on December 31, 1993 under the symbol "GACC". As a result
of the effects of the reorganization (primarily the reverse stock split,
the issuance of substantial amounts of equity securities in exchange for
debt securities, and the division of the common stock into two classes),
per share prices quoted prior to the reorganization have been rendered
meaningless and are not comparable to sales prices for GACC's Class A
Common Stock subsequent to the reorganization.
The following table sets forth, for the periods indicated, the high
and low per share sales prices of the Class A Common Stock on the NASDAQ
National Market System:
High Low
1993:
Fourth Quarter (December 31, 1993 only) $16.75 $16.63
1994:
First Quarter (through March 1, 1994) 18.38 16.00
The Class B Common Stock is not traded.
The Class A Common Stock and the Class B Common Stock have the same
rights and characteristics except that the holders of Class A Common Stock
are entitled to one vote for each share of Class A Common Stock held of
record, while holders of Class B Common Stock are entitled to one vote for
each five shares of Class B Common Stock held of record. Shares of Class
B Common Stock are convertible (on a one-for-one basis) into shares of
Class A Common Stock either at the option of the holders thereof or
automatically upon the sale of such shares.
The number of holders of record of GACC's Class A Common Stock at
March 1, 1994 was approximately 2,100. At March 1, 1994, there was one
holder of record of GACC's Class B Common Stock.
GACC did not pay any dividends on its Common Stock in 1993 or 1992.
Pursuant to GACC's debt covenants, GACC is prohibited from making any
dividend payments on its Common Stock.
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<PAGE>
ITEM 6
Selected Financial Data
The following table (in millions) sets forth certain data for the
periods indicated and should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations":
<TABLE>
<CAPTION>
Predecessor (a) : Reorganized
: GACC
1989 1990 1991 1992 1993 : 1993
<S> <C> <C> <C> <C> <C> : <C>
Statement Of Operations Data: :
Consolidated net revenues $ 200 $ 210 $ 202 $211 $205 : N/A
Operating income (loss)(b) 26 25 12 (642) 40 : N/A
Loss from continuing operations (77) (58) (33) (613) (67) : N/A
Net earnings (loss) (c) (103) (46) 84 (597) 341 : N/A
Per share data (d) - - - - - : -
:
Balance Sheet Data (e): :
Consolidated assets $1,921 $1,803 $1,475 $714 N/A : $720
Consolidated long-term debt 1,191 1,135 693 635 N/A : 433
Minority interest, preferred :
stock of subsidiary 251 251 251 275 N/A : -
Shareholders' equity (deficit) 178 133 258 (339) N/A : 139
<FN>
(a) For purposes of this table, the term "Predecessor" refers to Great
American Communications Company prior to its emergence from chapter
11 bankruptcy in December 1993.
(b) GACC reduced the recorded amount of its intangible assets as of
December 31, 1992 by $658.3 million to reflect the carrying value
of its broadcasting assets at estimated fair value at that time.
(c) Net earnings for the year ended December 31, 1993 includes, as an
extraordinary item, a one-time gain of $414.5 million relating to
debt discharged in the reorganization.
(d) Per share data are not presented for the Predecessor due to the
general lack of comparability as a result of the reorganization.
(e) Balance sheet data at December 31, 1993 reflects the adoption of
fresh-start reporting. The application and effects of fresh-start
reporting is discussed in more detail in Note B to GACC's Financial
Statements.
N/A - not applicable.
</TABLE>
As a result of GACC's emergence from bankruptcy and its adoption of
fresh-start reporting as of December 31, 1993, GACC's Balance Sheet at and
11
<PAGE>
after December 31, 1993 and its Statements of Operations for periods after
December 31, 1993 will not be comparable to the Financial Statements for
periods included elsewhere herein. See Notes to Financial Statements.
12
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ITEM 7
Management's Discussion and Analysis
of Financial Condition and Results of Operations
GENERAL The following discussion should be read in conjunction with the
Financial Statements beginning on page F-1. For purposes of the following
discussion, the term "Predecessor" refers to GACC prior to its emergence
from chapter 11 bankruptcy.
LIQUIDITY AND CAPITAL RESOURCES
On December 28, 1993, GACC and its principal subsidiaries
successfully completed a comprehensive financial restructuring. The
restructuring had been designed to address GACC's severe liquidity
difficulties by: (i) reducing total indebtedness; (ii) extending scheduled
principal payments and maturities; and (iii) reducing interest rates, cash
interest payments and cash dividends on preferred stock. The
restructuring, accomplished largely through a prepackaged plan of
reorganization under chapter 11 of the U.S. Bankruptcy Code, had the
following principal components:
* GACC effected a one-for-300 reverse stock split, reducing the
number of common shares outstanding immediately prior to the
reorganization from 56.7 million to approximately 189,000
shares. The Class A Common Stock issued in the reverse stock
split resulted in the pre-reorganization stockholders owning
approximately 1.7% of the common stock of reorganized GACC.
* Debt of GACC and two of its former subsidiaries (carrying
value of approximately $288 million) and preferred stock of
one of its former subsidiaries ($274.9 million liquidation
value), were then exchanged for $66.2 million principal amount
of 14% Notes, 9.8 million shares of Class A Common Stock and
1.2 million shares of Class B Common Stock. The 14% Notes
allowed for the payment of interest in-kind through June 30,
1996, thereafter, interest was to be payable entirely in cash.
The Class A and Class B Common Stock issued in these exchanges
resulted in the holders of these securities owning
approximately 98.3% of the voting common stock of reorganized
GACC.
* Two of GACC's subsidiaries reached consensual agreements with
their creditors to extend the maturities of their debt
obligations. GABC exchanged its 13% Senior Subordinated Notes
due 2000 for 13% Senior Subordinated Notes due 2001 and GATR's
bank debt due March 1995 was restructured through a new bank
credit facility due December 1998 and through a new issue of
9-1/2% Notes due December 1999.
As a result of the foregoing, AFC's holdings of common stock, debt
securities ($44.6 million), preferred stock ($274.9 million liquidation
value) and a line of credit ($42.5 million) were exchanged for Class A
Common Stock equal to 33.2% of the common stock of reorganized GACC. In
addition, AFC purchased approximately $6.3 million principal amount of 14%
Notes and 94,837 shares of Class A Common Stock for a required capital
contribution of $7.5 million in cash.
13
<PAGE>
On February 18, 1994, GACC refinanced the 14% PIK Notes due 2001 and
GABC's 13% Senior Subordinated Notes due 2001 through the issuance of $200
million of 9-3/4% Senior Subordinated Notes due 2004.
14
<PAGE>
The following table (in millions) presents the effects of the
reorganization and refinancing on projected minimum debt service and
preferred stock dividend requirements for the next five years:
<TABLE>
<CAPTION>
Debt Service and Preferred Stock
Dividend Requirements based on
Capital Structure Increase (Decrease)
After Attributable to
Of Reorgan- After Reorgan-
Predecessor ization Refinancing ization Refinancing
<S> <C> <C> <C> <C> <C>
1994
Cash $185.0 $ 51.7 $ 57.8 ($133.3) $ 6.1
Non-Cash 20.1 13.4 2.3 (6.7) (11.1)
Total $205.1 $ 65.1 $ 60.1 ($140.0) ($ 5.0)
1995
Cash $162.4 $ 55.7 $ 61.5 ($106.7) $ 5.8
Non-Cash 23.1 14.0 0.3 (9.1) (13.7)
Total $185.5 $ 69.7 $ 61.8 ($115.8) ($ 7.9)
1996
Cash $147.4 $ 55.5 $ 52.5 ($ 91.9) ($ 3.0)
Non-Cash 22.7 7.1 0.3 ( 15.6) (6.8)
Total $170.1 $ 62.6 $ 52.8 ($107.5) ($ 9.8)
1997
Cash $ 91.7 $ 67.5 $ 56.9 ($ 24.2) ($10.6)
Non-Cash 19.8 - 0.4 ( 19.8) 0.4
Total $111.5 $ 67.5 $ 57.3 ($ 44.0) ($10.2)
1998
Cash $ 90.8 $175.5 $158.4 $ 84.7 ($17.1)
Non-Cash 22.7 - 0.4 ( 22.7) 0.4
Total $113.5 $175.5 $158.8 $ 62.0 ($16.7)
Total for
Five Years $785.7 $440.4 $390.8 ($345.3) ($49.6)
<FN>
The following assumptions were used to prepare the foregoing table:
* Assumes current interest rates on the bank credit facilities.
* Assumes all pay-in-kind notes in the respective capital structures
are paid-in-kind for the maximum amount of time permitted under the
respective agreements.
* Amounts do not include any principal payments that might be due as a
15
<PAGE>
result of the cash sweep feature of the bank credit facility. Under
the terms of the cash sweep, all cash on hand in excess of $7.5
million would be used to prepay bank debt. The effect of any such
cash flow sweep would be to increase the cash debt service payments
in 1995, 1996 and 1997 and to decrease the final payment due in
1998.
</TABLE>
16
<PAGE>
GACC is a holding company and depends on advances, dividends and tax
allocation payments from its operating subsidiary to meet its expenditures
for administrative expenses and debt service obligations. Restrictions in
GATR's debt agreements limit the amount of distributions GATR may make to
GACC. All such distributions would be prohibited if GACC or its
subsidiaries were not in compliance with the agreements. At December 31,
1993 and March 1, 1994 GACC and its subsidiaries were in compliance with
such agreements and sufficient funds were available to meet GACC's
administrative and debt service expenditures.
The debt instruments of GACC and its subsidiaries also limit the
amount of additional debt that can be incurred. Under the most
restrictive of these covenants the additional debt capacity of GACC and
its subsidiaries was $10 million.
Based upon current levels of operations and anticipated growth it is
expected that operating cash flow will be sufficient to meet expenditures
for operations (including capital expenditures), administrative expenses
and debt service through September 1998. GATR's bank credit facility
requires a final maturity principal payment of $114 million in December
1998, exclusive of any excess cash sweeps prior to that date. Therefore,
prior to December 31, 1998, GACC will be required to refinance GATR's bank
credit facility or dispose of operating assets in order to make the final
maturity payment.
Unrelated to the future need to refinance the bank credit facility,
GACC expects to continue in the near future to purchase, sell or exchange
broadcast stations in order to avail itself of the considerable operating
opportunities presented by new radio duopoly rules which permit ownership
of up to two AM and two FM stations in markets in which GACC presently has
radio operations. In furtherance of this strategy, GATR expects to close
by second quarter's end the purchase of an additional FM radio station in
Sacramento, and has recently announced the agreement in principle to
acquire an additional FM radio station in Cincinnati. These purchases
will be financed, in part, by the sales of GACC's radio stations in
Denver, Detroit and Milwaukee. Management has also recently received
expressions of interest from third parties regarding the purchase or sale
of television stations and radio stations that do not present immediate
duopoly opportunities. In several cases, discussions have ensued and are
continuing between management and such interested third parties regarding
transactions of this nature, but no agreements have been reached as
management intends to continue its evaluation of potential sales and
purchases in light of prevailing market and economic conditions, business
prospects, industry trends and regulatory developments, and to recommend
to the Board those proposals which may best maximize shareholder values.
RESULTS OF OPERATIONS
On December 28, 1993, GACC completed its comprehensive financial
restructuring through a prepackaged plan of reorganization under chapter
11 of the Bankruptcy Code. Pursuant to the reporting principles of AICPA
Statement of Position No. 90-7 entitled "Financial Reporting by Entities
in Reorganization under the Bankruptcy Code" ("SOP 90-7"), GACC revalued
its assets and liabilities to estimated fair values upon consummation of
the restructuring. See Note B to the Financial Statements.
In 1992, GACC recorded a provision for the revaluation of its
17
<PAGE>
broadcast intangible assets, reducing intangibles by $658.3 million as of
December 31, 1992, to reflect the carrying value of its broadcasting
assets at estimated fair values at that time, as shown under the heading
"costs and expenses" in the Statement of Operations.
The net earnings in 1991 and 1993 and the net loss in 1992 include
significant gains from asset sales and debt refinancing transactions.
GACC realized gains from asset sales, debt refinancing transactions and
debt discharge totaling $218.5 million, $27 million and $408.1 million in
1991, 1992 and 1993, respectively. Gains from these types of transactions
are not part of normal operations and no assurance can be given that such
transactions will recur in the future or if they recur that gains will
result.
The financial results of GACC's business are seasonal. Television
revenues are generally higher in the second and fourth calendar quarters
than in the first and third quarters.
The amount of broadcast advertising time available for sale by
GATR's stations is relatively fixed, and by its nature cannot be
stockpiled for later sale. Therefore, the primary variables affecting
revenue levels are the demand for advertising time, the viewing or
listening audience of the station and the entry of new stations in the
marketplace. The major variable costs of operation are programming
(entertainment, news and sports), sales costs related to revenues and
promotional costs. The success of the programming determines the audience
levels and therefore affects revenue.
GACC's management believes that operating income before depreciation
and amortization is helpful in understanding cash flow generated from its
broadcasting operations which is available for debt service, capital
expenditures and taxes, and in comparing operating performance of GACC's
broadcast stations to other broadcast stations. Operating income before
depreciation and amortization is also a key factor in GACC's assessment of
station performance. Operating income before depreciation and
amortization should not be considered an alternative to net income as an
indicator of GACC's overall performance.
Net revenues and operating income are shown below (in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992 1993
<S> <C> <C> <C>
Net revenues
Television broadcasting:
Local $ 62,130 $ 72,370 $ 73,085
National 51,101 62,059 60,027
Other 7,103 6,357 6,464
Total 120,334 140,786 139,576
Radio broadcasting:
Local 60,174 52,716 53,704
National 13,402 10,620 10,848
Other 1,958 1,083 1,040
Total 75,534 64,419 65,592
18
<PAGE>
Television program ventures 5,688 5,616 -
Total net revenues 201,556 210,821 205,168
Operating, selling, general
and administrative expenses (136,629) (142,861) (133,655)
Corporate general and
administrative expenses (4,367) (4,091) (3,411)
Operating income before
depreciation and amortization 60,560 63,869 68,102
Depreciation and amortization (48,219) (47,617) (28,119)
Revaluation of intangible assets - (658,314) -
Operating income (loss) $ 12,341 ($642,062) $ 39,983
</TABLE>
19
<PAGE>
1991 compared to 1992
Television revenues increased $20.5 million (17%) during the year
ended December 31, 1992; $12.6 million of this increase was due to the
acquisition of the North Carolina television station in late December
1991. The 1992 revenue increase at the five stations owned during both
years was $7.8 million (6.5%). The local and national elections, the
Olympics and the beginning of the turnaround in the economy increased the
demand for television time during 1992. Political advertising revenues
for GACC's six television stations amounted to $4.2 million in 1992.
Although political advertisements are required by law to be sold at a
station's lowest rates, the effects on a television station's results are
not all negative. Television stations have a relatively fixed supply of
advertising time available for sale, therefore, political advertising
tends to cause stations to reach "sell-out" levels more quickly. This
contributes to an increase in the overall rate charged for advertising
time, which, in turn, results in increased revenues. The Winter Olympics
were aired on GACC's CBS affiliate in Phoenix; the Summer Olympics were
aired on GACC's NBC affiliate in Kansas City.
Radio revenues decreased $11.1 million (15%) during 1992 resulting
primarily from the sale of GACC's radio stations in Indianapolis and
Pittsburgh in January of 1992, partially offset by the purchase of the
radio stations in Phoenix in April 1992. Radio revenues were, on a same
station basis, slightly above 1991 revenue levels. Revenues were down in
the first and third quarters and up in the second and fourth quarters of
the year. The Olympics and the elections did not have a significant
effect on GACC's radio stations.
Excluding the $658.3 million charge for revaluation of intangible
assets and operating income attributable to stations sold or acquired in
1991-1992, operating income increased $6.4 million (89%) due primarily to
increased television station revenues.
1992 compared to 1993
Television revenues decreased $1.2 million (less than 1%) in 1993
due primarily to the fact that Kansas City Royals' baseball broadcasts
which had aired on GACC's Kansas City television station during 1992 did
not air in 1993. The loss of revenues related to political advertising
and the Olympics was totally offset in 1993 by increased sales to other
advertisers.
Radio revenues increased $1.2 million (2%) during the year ended
December 31, 1993. Excluding GACC's AM radio station in Cincinnati which
was sold, radio revenues increased $3.6 million (6%) primarily as a result
of increased demand for radio advertising time.
GACC disposed of its television program venture when it sold its 20%
interest in the assets and operations of the "Entertainment Tonight" joint
venture in December 1992.
Operating income increased $682 million in 1993 due primarily to:
(i) the $658.3 million provision for the revaluation of intangibles in
December 1992 and the related decrease in amortization expense of $18.9
million for the year ended December 31, 1993; and (ii) a $5.6 million
decline in revenues from television program ventures as a result of the
sale of GACC's interest in "Entertainment Tonight". Excluding these items
20
<PAGE>
and operating results from stations sold or acquired during 1992,
operating income increased $8.6 million (28%) during 1993 due primarily to
decreased expenses. The majority of the expense decrease is a result of
reductions in programming costs at GACC's television stations, including
the elimination of the costs associated with the Kansas City Royals'
baseball broadcasts.
21
<PAGE>
Outlook - three months ended March 31, 1993 compared to March 31, 1994
Given the January and February 1994 results and advertising orders
already received for March, GACC expects to report material increases in
net revenues and operating income before depreciation and amortization for
its broadcast stations during the first quarter of 1994 compared to the
first quarter of 1993.
Other Income (Expense) Information Interest expense decreased $20 million
(22%) during 1992 compared to 1991, reflecting primarily refinancings and
retirements of long-term debt and, to a lesser extent, lower interest
rates. Interest expense decreased $4.9 million (7%) during 1993, compared
to 1992. In accordance with the provisions of SOP 90-7, GACC did not
accrue interest totaling $4.9 million on debt subject to exchange after
the filing of the bankruptcy petition (November 5, 1993).
Included in "Miscellaneous, net" are the following
items (in thousands):
<TABLE>
<CAPTION> Predecessor
1991 1992 1993
<S> <C> <C> <C>
Gains (losses) on sales of:
Investments:
Black Entertainment Television $36,678 $ - $ -
Interest in "Entertainment Tonight" - 9,633 -
Other investments (835) - -
Broadcast stations (5,000) (5,000) -
Real estate, property and equipment 513 (230) 270
Pretax earnings from non-broadcasting
businesses 563 113 273
Other income (expenses), net 1,214 (480) (1,037)
$33,133 $4,036 ($ 494)
</TABLE>
Reorganization Items Reorganization items represent the expenses incurred
as a result of the chapter 11 filings and subsequent reorganization,
including, among other things, the adjustments to record the fair values
of assets and liabilities at December 31, 1993 (see Note B to GACC's
Financial Statements).
Discontinued Operations Discontinued operations consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992
<S> <C> <C>
Loss from operations of GACC's
entertainment businesses, net of tax ($13,524) -
Gain on sale, net of tax:
GACC's entertainment businesses
and operations $53,391 $ 8,297
22
<PAGE>
Mid-Continent Casualty Company - 2,400
$53,391 $10,697
</TABLE>
In 1992 GACC recognized a net gain from the distribution of cash
proceeds withheld from the 1991 sale of its entertainment businesses and
operations. In addition, GACC recognized a net gain in 1992 from the
receipt of additional proceeds related to the 1989 sale of Mid-Continent
Casualty Company. GACC's discontinued operations are discussed in greater
detail in Note L to the Financial Statements.
23
<PAGE>
Income Taxes As discussed in Note K to the Financial Statements, GACC has
substantial net operating loss carryforwards, a substantial portion of
which are presently unavailable to offset future taxable income. GACC's
ability to utilize such operating loss carryforwards has been severely
restricted as a result of the completion of its comprehensive financial
restructuring.
Impact Of Inflation The impact of inflation on GACC's businesses has
declined over the last few years with the significant slowing of the
inflation rate. GACC does not believe inflation adjusted financial
information is either easily understandable or particularly informative in
the context of GACC's current businesses. Overall, GACC does not believe
that inflation presently has a material impact on its results of
operations or financial position.
ITEM 8
Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
<S> <C>
Page
Report of Independent Auditors F-1
Balance Sheet:
December 31, 1992 and 1993 F-2
Statement of Operations:
Years ended December 31, 1991, 1992 and 1993 F-3
Statement of Changes in Shareholders' Equity (Deficit):
Years ended December 31, 1991, 1992 and 1993 F-4
Statement of Cash Flows:
Years ended December 31, 1991, 1992 and 1993 F-5
Notes to Financial Statements F-6
"Selected Quarterly Financial Data" has been included in Note P to GACC's Financial
Statements.
</TABLE>
24
<PAGE>
PART III
The information required by the following Items will be included in
GACC's definitive Proxy Statement which will be filed with the Securities
and Exchange Commission in connection with the 1994 Annual Meeting of
Shareholders and is incorporated herein by reference:
ITEM 10 Directors and Executive Officers of the Registrant
ITEM 11 Executive Compensation
ITEM 12 Security Ownership of Certain Beneficial Owners and
Management
ITEM 13 Certain Relationships and Related Transactions
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great American Communications Company
We have audited the accompanying balance sheets of Great American
Communications Company and subsidiaries as of December 31, 1993 and 1992,
and the related statements of operations, shareholders' equity (deficit),
and cash flows for each of the three years in the period ended December
31, 1993. Our audits also included the financial statement schedules
listed in the Index at Item 14(a). These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits 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 audits
provide a reasonable basis for our opinion.
As more fully described in Note B to the financial statements, effective
December 28, 1993, the Company emerged from bankruptcy pursuant to a plan
of reorganization confirmed by the Bankruptcy Court on December 7, 1993.
In accordance with an American Institute of Certified Public Accountants
Statement of Position, the Company has adopted "fresh-start reporting"
whereby its assets, liabilities, and new capital structure have been
adjusted to reflect estimated fair values as of December 31, 1993. As a
result, the balance sheet as of December 31, 1993 reflects the successor
Company's new basis of accounting and, accordingly, is not comparable to
the predecessor Company's pre-reorganization balance sheet.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great American
Communications Company and subsidiaries at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
ERNST & YOUNG
Cincinnati, Ohio
F-1
<PAGE>
March 4, 1994
F-2
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
BALANCE SHEET
(Dollars in Thousands)
<CAPTION>
: Reorganized
Predecessor : GACC
December 31, : December 31,
1992 : 1993
<S> <C> : <C>
ASSETS :
Current assets: :
Cash and short-term investments $ 25,076 : $ 4,789
Trade receivables, less allowance for doubtful :
accounts of $1,605 and $2,010 46,659 : 48,294
Broadcast program rights 18,852 : 15,910
Prepaid and other current assets 1,942 : 3,355
Total current assets 92,529 : 72,348
:
Broadcast program rights, less current portion 13,575 : 11,368
Property and equipment, net 66,336 : 60,660
Contracts, broadcasting licenses and other :
intangibles, net 539,634 : 574,878
Deferred charges and other assets 1,756 : 315
$713,830 : $719,569
:
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) :
Current liabilities: :
Current maturities of long-term debt $634,777 : $ 23,500
Accounts payable, accrued expenses and other :
current liabilities 51,432 : 31,924
Broadcast program rights fees payable 17,954 : 15,439
Total current liabilities 704,163 : 70,863
:
Broadcast program rights fees payable, less :
current portion 10,901 : 8,468
Long-term debt, net of current maturities - : 409,068
Deferred income taxes 41,640 : 77,152
Other liabilities 21,223 : 15,430
Total liabilities 777,927 : 580,981
:
Minority interest - preferred stock of subsidiary 274,932 : -
:
Shareholders' equity (deficit): :
Class A Common Stock, $.01 par value, :
500,000,000 shares authorized; 56,729,434 and :
10,153,672 shares outstanding 567 : 101
Class B Common Stock, $.01 par value, 0 and :
F-3
<PAGE>
125,000,000 shares authorized; 0 and :
1,163,524 shares outstanding - : 12
Capital in excess of par value 270,324 : 138,475
Accumulated deficit from January 1, 1984 (609,920) : -
Total shareholders' equity (deficit) (339,029) : 138,588
$713,830 : $719,569
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(In Thousands)
<CAPTION>
Predecessor
Year ended December 31,
1991 1992 1993
<S> <C> <C> <C>
Net revenues:
Television broadcasting $120,334 $140,786 $139,576
Radio broadcasting 75,534 64,419 65,592
Television program ventures 5,688 5,616 -
201,556 210,821 205,168
Costs and expenses:
Operating expenses 74,628 80,431 71,730
Selling, general and administrative 62,001 62,430 61,925
Corporate, general and administrative
expenses 4,367 4,091 3,411
Depreciation and amortization 48,219 47,617 28,119
Revaluation of intangible assets - 658,314 -
189,215 852,883 165,185
Operating income (loss) 12,341 (642,062) 39,983
Other income (expense):
Interest expense, (contractual interest
for 1993 was $69,806) (89,845) (69,826) (64,942)
Minority interest (28,822) (30,478) (26,776)
Investment income 1,296 553 305
Miscellaneous, net 33,133 4,036 (494)
(84,238) (95,715) ( 91,907)
Loss from continuing operations before
reorganization items and income tax benefit (71,897) (737,777) (51,924)
Reorganization items - - (14,872)
Loss from continuing operations before income
tax benefit (71,897) (737,777) (66,796)
Federal income tax benefit (39,109) (124,541) -
F-4
<PAGE>
Loss from continuing operations (32,788) (613,236) (66,796)
Discontinued operations:
Loss, net of tax (13,524) - -
Gain on sale, net of tax 53,391 10,697 -
Earnings (loss) before extraordinary items 7,079 (602,539) (66,796)
Extraordinary items, net of tax 77,406 5,675 408,140
NET EARNINGS (LOSS) $ 84,485 ($596,864) $341,344
Net earnings (loss) per share * * *
<FN>
* Per share amounts are not relevant due to the effects of the reorganization.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(in Thousands)
Stated Value Capital Total
Class A Class B In Excess Accumu- Shareholders'
Common Common of Par lated Equity
Stock Stock Value Deficit (Deficit)
<S> <C> <C> <C> <C> <C>
Predecessor:
Balances, December 31, 1990 $351 $ - $228,917 ($ 96,407) $132,861
Common Stock issued in
exchange for debt 216 - 41,402 - 41,618
Other Common Stock issued - - 5 - 5
Net earnings - - - 84,485 84,485
Cash dividends - - - (1,134) (1,134)
Balances, December 31, 1991 567 - 270,324 (13,056) 257,835
Net loss - - - (596,864) (596,864)
Balances, December 31, 1992 567 - 270,324 (609,920) (339,029)
Net earnings - - - 341,344 341,344
Common Stock issued in the
restructuring and application
of fresh-start reporting (466) 12 (132,199) 268,576 135,923
Reorganized GACC:
Stock bonus awarded - - 350 - 350
Balances, December 31, 1993 $101 $ 12 $138,475 $ - $138,588
F-5
<PAGE>
<FN>
See notes to financial statements.
</TABLE>
F-6
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Thousands)
<CAPTION>
Predecessor
Year ended December 31,
1991 1992 1993
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) $84,485 ($596,864) $341,344
Adjustments:
Depreciation and amortization 48,219 47,617 28,119
Revaluation of intangible assets - 658,314 -
Non-cash interest expense 28,730 10,120 8,780
Other non-cash adjustments (primarily non-cash
dividends on the preferred stock of a former
subsidiary) 21,341 29,075 26,941
Realized gains on investing activities (100,224) (21,053) (1,871)
Extraordinary loss (gain) on retirements and
refinancing of long-term debt (117,306) (6,025) 6,344
Decrease (increase) in trade receivables (955) 6,540 (1,635)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 281 (3,469) (10,165)
Increase (decrease) in deferred taxes 2,241 (124,541) -
Other 408 6,421 459
(32,780) 6,135 398,316
Effects of reorganization activities:
Extraordinary gain on debt discharge - - (414,484)
Net adjustment of accounts to fair value - - (15,961)
Increase in liabilities subject to exchange - - 45,646
Professional fees and other expenses related
to bankruptcy proceedings - - 4,914
(32,780) 6,135 18,431
INVESTING ACTIVITIES:
Purchases of:
Broadcast stations (28,496) (11,500) -
Real estate, property and equipment (7,014) (6,747) (5,967)
Sales of:
Broadcast stations - 52,000 1,600
Entertainment businesses and operations,
including investment in Spelling
Entertainment Inc.:
Cash proceeds received 363,500 25,000 -
Cash expenses related to sale - (18,316) (6,021)
Investments 37,711 26,000 -
Other subsidiaries 3,844 2,400 -
Other (1,201) (939) (1,131)
368,344 67,898 (11,519)
FINANCING ACTIVITIES:
F-7
<PAGE>
Retirements and refinancing of long-term debt (489,807) (68,340) (370,150)
Additional long-term borrowings 173,000 10,000 355,339
Cash dividends paid (1,134) - -
Repurchases of subsidiary's preferred stock (9,898) (32) -
Financing costs - - (13,549)
Proceeds from the sale of common stock - - 1,161
(327,839) (58,372) (27,199)
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS 7,725 15,661 (20,287)
Cash and short-term investments at beginning
of period 1,690 9,415 25,076
Cash and short-term investments at end of period $ 9,415 $ 25,076 $ 4,789
<FN>
See notes to financial statements.
</TABLE>
F-8
<PAGE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying financial statements include
the accounts of Great American Communications Company ("GACC") and
its subsidiaries. Significant intercompany balances and
transactions have been eliminated.
On December 28, 1993 GACC completed its comprehensive financial
restructuring through a prepackaged plan of reorganization under
chapter 11 of the Bankruptcy Code (see Note B for a description of
the plan of reorganization). Pursuant to the reporting principles
of AICPA Statement of Position No. 90-7 entitled "Financial
Reporting by Entities in Reorganization under the Bankruptcy Code"
("SOP 90-7"), GACC adjusted its assets and liabilities to their
estimated fair values upon consummation of the reorganization. The
adjustments to reflect the consummation of the reorganization as of
December 31, 1993, including among other things, the gain on debt
discharge and the adjustment to record assets and liabilities at
their fair values, have been reflected in the accompanying financial
statements. The Balance Sheet at December 31, 1992 and the
Statements of Operations, Changes in Shareholders' Equity (Deficit)
and Cash Flows for the three years ended December 31, 1993 are
presented on a historical cost basis without giving effect to the
reorganization. Therefore, GACC's Balance Sheet as of December 31,
1993 is generally not comparable to prior periods and is separated
by a line (see Note B). For purposes of the financial statements,
the term "Predecessor" refers to GACC prior to its emergence from
chapter 11 bankruptcy.
All acquisitions have been treated as purchases. The accounts and
results of operations of companies since their formation or
acquisition are included in the consolidated financial statements.
At March 1, 1994, American Financial Corporation and its Chairman,
Carl H. Lindner, (collectively "AFC") owned 3,683,001 shares of
GACC's outstanding Class A Common Stock, representing approximately
32.5% of GACC's outstanding Common Stock, including the Class A and
Class B Common Stock.
BROADCAST PROGRAM RIGHTS The rights to broadcast non-network
programs on GACC's television stations are stated at cost, less
accumulated amortization. These costs are charged to operations on
a straight-line basis over the contract period or on a per showing
basis, whichever results in the greater aggregate amortization.
PROPERTY AND EQUIPMENT Property and equipment are based on cost and
depreciation is calculated primarily using the straight-line method.
Depreciable lives are: land improvements, 8-20 years; buildings and
improvements, 8-40 years; operating and other equipment, 3-20 years;
and leasehold improvements, over the life of the lease.
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts,
F-9
<PAGE>
broadcasting licenses and other intangibles represent the excess of
the value of the broadcast station over the values of their net
tangible assets, and is attributable to FCC licenses, network
affiliation agreements and other contractual or market related
factors. Reorganization value in excess of amounts allocable to
identifiable assets represents the excess of the estimated fair
value of GACC at the time of the reorganization over the estimated
fair value allocated to its net identifiable assets. Intangible
assets are being amortized on a straight-line basis over an average
of 34 years.
INCOME TAXES GACC files a consolidated Federal income tax return
which includes all 80% or more owned subsidiaries. Deferred income
tax assets and liabilities are determined based on differences
between financial reporting and tax bases and are measured using
enacted tax rates. Deferred tax assets are recognized if it is more
likely than not that a benefit will be realized.
EARNINGS (LOSS) PER SHARE As a result of the effects of the
reorganization, per share data for periods ending on or prior to
December 31, 1993 have been rendered meaningless and, therefore, per
share information has been omitted from the accompanying financial
statements for those periods.
STATEMENT OF CASH FLOWS For cash flow purposes, "investing
activities" are defined as making and collecting loans and acquiring
and disposing of debt or equity instruments and property and
equipment. "Financing activities" include obtaining resources from
owners and providing them with a return on their investments,
borrowing money and repaying amounts borrowed. All other activities
are considered "operating". Short-term investments for purposes of
the financial statements are those which had a maturity of three
months or less when acquired.
B. PLAN OF REORGANIZATION On December 28, 1993, GACC completed its
comprehensive financial restructuring that was designed to enhance
its long-term viability by adjusting its capitalization to reflect
current and projected operating performance levels. GACC
accomplished the reorganization of its debt and preferred stock
obligations through "prepackaged" bankruptcy filings made under
chapter 11 of the Bankruptcy Code by GACC and two of its former non-
operating subsidiaries. GACC's other subsidiaries (including its
primary operating subsidiary, Great American Television and Radio
Company, Inc., "GATR"), were not parties to any such filings under
the Bankruptcy Code.
The restructuring process that began in 1992 ultimately resulted in
the solicitation of acceptances for a prepackaged plan of
reorganization in October and early November 1993. The plan of
reorganization described below was overwhelmingly approved by the
creditors and shareholders. GACC filed its bankruptcy petition with
the Bankruptcy Court on November 5, 1993. The plan was confirmed on
December 7, 1993 and became effective on December 28, 1993.
The plan included extending the maturities of senior bank
indebtedness and the 13% Senior Subordinated Notes due December 2000
of GACC's subsidiary, Great American Broadcasting Company ("GABC"),
F-10
<PAGE>
reducing GACC's overall debt service requirements and eliminating
the preferred dividend requirements of GACC's former subsidiary,
GACC Holding Company ("Holding"). Under the terms of the plan the
following occurred:
* GACC effected a reverse stock split; issuing one share of a
new class of capital stock, the Class A Common Stock, for each
300 shares of common stock outstanding prior to the
reorganization.
* Approximately $140 million principal amount of the 9-1/2%
Senior Secured Notes due in 2000 were exchanged for $65
million principal amount of 14% Senior Extendable Notes
initially due June 30, 2001 (the "14% Notes"), including
accrued interest from June 30, 1993, and shares of Class A and
Class B Common Stock equal to 35.1% of the adjusted common
stock of the reorganized entity. The interest on the 14%
Notes was allowed to be paid-in-kind through the issuance of
additional notes through June 30, 1996, thereafter, interest
was to be payable entirely in cash (see Note F). The terms of
the Class A and Class B Common Stock are summarized in Note H.
* Holders of approximately $59 million principal amount of
GACC's and Holding's debt (including the 20-1/2% Senior Notes,
$10.3 million of the 14-1/8% Senior Notes, the 14-3/8% Senior
Subordinated Debentures, the 9% Senior Subordinated Notes and
the 11% Senior Debentures) received either a combination of
14% Notes and Class A Common Stock or solely Class A Common
Stock in exchange for their debt securities. These holders
were issued shares of Class A Common Stock amounting to
approximately 29.3% of the common stock of the reorganized
entity and $1.2 million principal amount of 14% Notes.
* Holders of the Variable Rate Convertible Subordinated
Debentures received Class A Common Stock equal to 0.5% of the
common stock of the reorganized entity.
* Approximately $87 million principal amount of GACC's and its
subsidiaries' debt (including the $42.5 million outstanding
balance of the subordinated line of credit with AFC, $21.9
million of the 9-1/2% Senior Secured Notes held by AFC and
$22.6 million principal amount of the 14-1/8% Senior Notes
held by AFC's Chairman), approximately $275 million
liquidation value of Holding's Preferred Stock and
approximately 22.8 million shares of common stock held by AFC
before the reorganization were exchanged for Class A Common
Stock equal to 33.2% of the common stock of the reorganized
entity.
* AFC fulfilled a commitment to contribute $7.5 million in cash
for which it received approximately $6.3 million principal
amount of 14% Notes and 94,837 shares of Class A Common Stock.
The following unaudited table (in millions) illustrates the effects
of the reorganization on projected cash debt service and preferred
dividend requirements over the next five years:
F-11
<PAGE>
Reorganized
Predecessor GACC
Capital Capital Increase
Structure Structure (Decrease)
1994 $185.0 $ 51.7 ($133.3)
1995 162.4 55.7 (106.7)
1996 147.4 55.5 (91.9)
1997 91.7 67.5 (24.2)
1998 90.8 175.5 84.7
Total $677.3 $405.9 ($271.4)
The following assumptions were used to prepare the foregoing table:
* Assumes current interest rates on the bank credit facilities.
* Assumes all pay-in-kind notes in the respective capital
structures are paid-in-kind for the maximum amount of time
permitted under the respective agreements.
* Amounts do not include any principal payments that might be
due as a result of the cash sweep feature of the bank credit
facility. Under the terms of the cash sweep, all cash on hand
in excess of $7.5 million would be used to prepay bank debt.
The effect of any such cash flow sweep would be to increase
the cash debt service payments in 1995, 1996 and 1997 and to
decrease the final payment due in 1998.
The net expense incurred as a result of the chapter 11 filings and
subsequent reorganization has been segregated from ordinary
operations in the Statement of Operations. Reorganization items for
1993 include the following (in thousands):
Financing Costs $25,967
Adjustments to fair value (15,961)
Professional fees and other expenses
related to bankruptcy 4,914
Interest Income (48)
$14,872
Financing costs consist of the unamortized portion of original issue
discount and deferred financing costs relating to debt subject to
exchange as of the date the petition for bankruptcy was filed
(November 5, 1993). Adjustments to fair value reflect the net
change to state assets and liabilities at estimated fair value as of
December 31, 1993. Interest income is attributable to the
accumulation of cash and short-term investments after commencement
of the chapter 11 cases.
Pursuant to the fresh-start reporting provisions of SOP 90-7, GACC's
assets and liabilities have been revalued and a new reporting entity
F-12
<PAGE>
was created with no retained earnings or accumulated deficit as of
the effective date. The period from the effective date to December
31, 1993 was considered immaterial thus, December 31, 1993 was used
as the effective date for recording the fresh-start adjustments.
GACC's results of operations for the period from the effective date
of the restructuring to December 31, 1993 have been reflected in the
Statement of Operations for the year ended December 31, 1993.
The reorganization values of GACC's assets and liabilities were
determined based upon several factors including: prices and
multiples of broadcast cash flow (operating income before
depreciation and amortization) paid in purchase and business
combination transactions, projected operating results of the
broadcast stations, market values of publicly traded broadcast
companies, economic and industry information and GACC's reorganized
capital structure. The foregoing factors resulted in a range of
reorganization values between $75 and $200 million. Based upon an
analysis of all of this data, management determined that the
reorganization value of the company would be $138.6 million.
F-13
<PAGE>
The effects of the reorganization and fresh-start adjustments on
GACC's Balance Sheet at December 31, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
Pre- Confirmation
Confirmation of Plan Reorganized
Balance Debt Fresh- Balance
Sheet Discharge Start Sheet
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 10,974 ($ 6,185) $ - $ 4,789
Trade receivables, net 48,294 - - 48,294
Broadcast program rights 15,910 - - 15,910
Prepaid expenses and other current
assets 3,355 - - 3,355
Total current assets 78,533 (6,185) - 72,348
Broadcast program rights, less
current portion 11,368 - - 11,368
Property and equipment, net 60,660 - - 60,660
Contracts, broadcasting licenses and
other intangibles, net 524,062 - 50,816 574,878
Deferred charges and other assets 315 - - 315
Total assets $674,938 ($ 6,185) $ 50,816 $719,569
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term
debt $635,042 ($611,542) $ - $ 23,500
Accounts payable, accrued expenses
and other current liabilities 111,467 (79,543) - 31,924
Broadcast program rights fees
payable 15,439 - - 15,439
Total current liabilities 761,948 (691,085) - 70,863
Broadcast program rights fees
payable, less current portion 8,468 - - 8,468
Deferred income taxes 42,297 - 34,855 77,152
Long-term debt, less current
maturities - 409,068 - 409,068
Other long-term liabilities 15,423 7 - 15,430
Total liabilities 828,136 (282,010) 34,855 580,981
Minority interest - preferred stock
of subsidiary 274,932 (274,932) - -
Shareholders' equity (deficit):
Class A common stock 567 (466) - 101
F-14
<PAGE>
Class B common stock - 12 - 12
Capital in excess of par value 270,324 136,727 (268,576) 138,475
Accumulated deficit from
January 1, 1984 (699,021) 414,484 284,537 -
Total shareholders'
equity (deficit) (428,130) 550,757 15,961 138,588
Total liabilities and
shareholders'
equity (deficit) $674,938 ($ 6,185) $ 50,816 $719,569
</TABLE>
F-15
<PAGE>
(a) The reduction in cash is attributable to the payment of $15.6
million of accrued interest on the 13% Senior Subordinated
Notes due December 2000 and $5.8 million of fees associated
with consummation of the reorganization, partially offset by
receipt of $7.7 million of proceeds from the restructuring of
the bank credit facility and the secured bank loan due March
1995 and $7.5 million from AFC for the purchase of 14% Notes
and shares of Class A Common Stock.
(b) The increase in contracts, broadcasting licenses and other
intangibles represents a $26.4 million reduction in
identifiable intangibles and recognition of reorganization
value in excess of amounts allocable to identifiable assets
totaling $77.2 million.
(c) The net reduction in accounts payable, accrued expenses and
other current liabilities represents: (i) the elimination of
$34.7 million of accrued dividends on the preferred stock of a
subsidiary; (ii) the elimination of $29.8 million of interest
accrued through November 5, 1993 on debt securities discharged
in the reorganization, (iii) payment of $15.6 million of
accrued interest on the 13% Senior Subordinated Notes due
2000, (iv) the elimination of an $883,000 payable to AFC
related to a cash advance received by GACC during 1992; and
(v) $1.4 million of accrued professional fees related to the
consummation of the reorganization.
(d) The following table reconciles the adjustments to long-term
debt (in thousands):
<TABLE>
<CAPTION>
Current
Maturities Other
<S> <C> <C>
Pre-reorganization balances $635,042 $ -
Adjustments to reflect the issuance of 14%
Senior Extendable Notes and Common Stock
in exchange for:
14-3/8% Senior Subordinated Debentures (41,624) 1,016
9% Senior Subordinated Notes (734) 20
11% Senior Debentures (2,242) 55
Variable Rate Convertible Subordinated
Debentures (1,145) -
Subordinated Line of Credit with AFC (42,500) -
14-1/8% Senior Notes (32,955) 70
20-1/2% Senior Notes (4,551) -
9-1/2% Senior Secured Notes (161,951) 65,000
14% Senior Extendable Notes purchased by AFC - 6,339
Subtotal (287,702) 72,500
Payment in-kind of accrued interest on 14% Senior
Extendable Notes - 5,068
F-16
<PAGE>
Adjustment to reflect the restructuring of
the 13% Senior Subordinated Notes due December
2000, the secured bank loan due March 1995 and
the bank term loan (323,840) 331,500
Total adjustments (611,542) 409,068
Long-term debt $ 23,500 $409,068
</TABLE>
(e) The elimination of minority interest represents the retirement
of the preferred stock of a subsidiary in exchange for the
issuance of Class A Common Stock.
(f) The gain on debt discharge is summarized as follows
(in thousands):
Carrying value of debt securities subject to
exchange, including accrued interest $318,447
Carrying value of preferred stock of subsidiary,
including accrued dividends 309,608
Aggregate principal amount of 14% Senior
Extendable Notes issued in exchanges,
including accrued interest since June 30, 1993 (71,236)
Aggregate value of Common Stock
issued in exchanges (134,762)
Expenses attributable to consummation of the
reorganization (7,573)
Total gain on debt discharge $414,484
(g) The adjustment to deferred income taxes represents a valuation
adjustment of a deferred tax asset related to net operating
loss carryforwards that are significantly restricted after
1993 due to the reorganization (See Note K).
C. ACQUISITIONS AND DISPOSITIONS GACC has entered into agreements to
sell its radio stations in Detroit and Milwaukee for $11.5 and $7
million, respectively. The majority of the net proceeds from these
sales will be used to purchase a radio station in Sacramento for $16
million. An agreement in principle has been reached for the sale of
GACC's radio station in Denver for approximately $8 million and the
acquisition of a radio station in Cincinnati for approximately $15
million. The transaction is subject to the execution of a
definitive agreement and the approval of the FCC. These
transactions are expected to be consummated in 1994 and will not
have a material effect on GACC's financial results.
In December 1992, GACC sold its 20% interest in the assets and
operations of the "Entertainment Tonight" joint venture for $26
million in cash. GACC retained the right to air the program on its
TV stations in Cincinnati, Kansas City and Birmingham as long as it
owns these stations. GACC recognized a pretax gain of approximately
F-17
<PAGE>
$9.6 million on the transaction (see Note I for gains and losses on
sales of assets).
In November 1992, GACC entered into a local marketing arrangement by
which the programming and sales efforts of its AM radio station in
Cincinnati were performed by an unrelated third party. The
agreement provided for the option to purchase the station for $1.6
million in cash, which has been exercised by the other party, and
such sale was completed in June 1993. As a result of the pending
sale, GACC recorded a pretax loss of $5 million on the transaction
during 1992 (See Note I).
In April 1992, GACC acquired two radio stations in Phoenix for
$11.5 million. In January 1992, GACC sold one radio station in
Pittsburgh and two radio stations in Indianapolis to Broadcast
Alchemy, L.P. for $52 million. A pretax loss of $5 million on the
sale was recorded in the fourth quarter of 1991 (see Note I). In
December 1991, GACC acquired the net assets of a television station
in High Point, North Carolina from Taft Broadcasting Partners, L.P.
for $28.5 million.
During 1991, GACC sold its entertainment businesses and operations.
The results of operations and the gain or loss on sale of the
entertainment businesses and operations have been reflected in the
Statement of Operations as discontinued operations (see Note L). In
the fourth quarter of 1991, GACC's 12.85% interest in Black
Entertainment Television was sold in an initial public offering of
its common stock for approximately $37 million in cash. GACC
realized a pretax gain of $36.7 million on the sale (see Note I).
D. PROPERTY AND EQUIPMENT Property and equipment at December 31,
consisted of the following (in thousands):
<TABLE>
<CAPTION>
: Reorganized
Predecessor : GACC
1992 : 1993
<S> <C> : <C>
Land and land improvements $ 9,827 : $ 9,548
Buildings and improvements 23,318 : 17,171
Operating and other equipment 91,681 : 33,941
124,826 : 60,660
Accumulated depreciation (58,490) : -
$ 66,336 : $60,660
</TABLE>
Pursuant to the fresh-start reporting principles of SOP 90-7, the
carrying value of property and equipment was adjusted to estimated
fair value as of the effective date of the reorganization, which
included the restarting of accumulated depreciation. Depreciation
expense relating to property and equipment was $11.6 million, $12.0
million and $11.8 million in 1991, 1992 and 1993, respectively.
E. CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts,
broadcasting licenses and other intangibles at December 31,
consisted of the following (in thousands):
<TABLE>
F-18
<PAGE>
<CAPTION>
: Reorganized
Predecessor : GACC
1992 : 1993
<S> <C> : <C>
Licenses, network affiliation agreements and :
other market related intangibles $587,274 : $497,726
Reorganization value in excess of amounts :
allocable to identifiable assets - : 77,152
Other intangibles, principally goodwill 38,927 : -
626,201 : 574,878
Accumulated amortization (86,567) : -
$539,634 : $574,878
</TABLE>
GACC reduced the recorded amount of its intangibles by $658.3
million as of December 31, 1992 to reflect the carrying value of its
broadcasting assets at estimated fair values at that time. GACC's
carrying value of its broadcasting assets was also adjusted to
estimated fair value as of the effective date of the reorganization
pursuant to the reporting principles of SOP 90-7 (see Note B). This
adjustment included, among other things, the restarting of
accumulated amortization related to intangibles.
Amortization expense relating to contracts, broadcasting licenses
and other intangibles was $37.4 million, $36.0 million and $16.5
million in 1991, 1992 and 1993, respectively.
F-19
<PAGE>
F. LONG-TERM DEBT Long-term debt at December 31, consisted of the
following (in thousands):
<TABLE>
<CAPTION>
:Reorganized
Predecessor : GACC
1992 : 1993
<S> <C> : <C>
GACC: :
14% Senior Extendable Notes due June 2001 $ - : $ 77,568*
14-3/8% Senior Subordinated Debentures due :
October 1999, less unamortized discount of :
$1,080 (imputed interest rate - 15%) 40,544 : -
Subordinated line of credit with AFC 42,500 : -
Other obligations, less unamortized discount :
of $242 3,880 : -
86,924 : 77,568
Subsidiaries: :
Guaranteed by GACC: :
GATR bank term loan payable 217,400 : -
GATR bank credit facility - : 220,000
14-1/8% Senior Notes due October 1996, less :
unamortized discount of $769 :
(imputed interest rate - 15%) 32,186 : -
20-1/2% Senior Notes due October 1995 4,551 : -
:
Other: :
13% Senior Subordinated Notes of GABC :
due December 2000 121,500 : -
13% Senior Subordinated Notes of GABC :
due May 2001 - : 111,500*
9-1/2% Senior Secured Notes due December 2000 :
less unamortized discount of $25,874 :
(imputed interest rate - 12.7%) 135,016 : -
Secured bank loan due March 1995 28,000 : -
9-1/2% Notes due December 1999 (secured) - : 17,500
Other obligations, less unamortized discount :
of $50 and $0 9,200 : 6,000
547,853 : 355,000
634,777 : 432,568
Less current maturities (634,777) : (23,500)
$ - : $409,068
</TABLE>
* On February 18, 1994, GACC refinanced the 14% Notes and
GABC's 13% Senior Subordinated Notes due 2001 through the
issuance of $200 million principal amount of 9-3/4% Senior
Subordinated Notes due 2004. There was no gain or loss
recognized by GACC on the transaction.
As disclosed in the 1992 financial statements, GACC was in default
under certain of its and its subsidiaries debt securities. On
December 28, 1993, the prepackaged plan of reorganization described
F-20
<PAGE>
in Note B was completed. As part of the plan, all of the debt of
GACC and the 14-1/8% Senior Notes due 1996, the 20-1/2% Senior Notes
due 1995 and the 9-1/2% Senior Secured Notes due 2000 of its former
subsidiaries were exchanged for 14% Notes and shares of common stock
of the reorganized company. In addition, GABC's 13% Senior
Subordinated Notes due December 2000 were restructured through the
issuance of 13% Senior Subordinated Notes due May 2001 and the bank
term loan and secured bank loan due March 1995 were restructured
through the bank credit facility and through the issuance of 9-1/2%
Notes due December 1999. On December 31, 1993, GACC issued $5.1
million principal amount of 14% Notes in lieu of cash interest
payable on that date.
The bank credit facility, which matures in December 1998, bears
interest at two percent over prime or, alternatively, three percent
over Eurodollar-based interest rates. At December 31, 1993, the
prime rate was 6% and the weighted average Eurodollar-based interest
rate was 3.44%. The bank credit facility is secured by
substantially all of the assets of GACC. In addition to mandatory
scheduled principal payments beginning in 1994, the bank credit
facility contains a provision whereby GACC's cash on hand at the end
of any fiscal year in excess of $7.5 million must be used to prepay
the bank credit facility in March of the following fiscal year. Any
distributions received by GACC from the contingent payments withheld
from the 1991 sale of Hanna-Barbera are required to be used to
prepay the bank credit facility (See Note L).
The 9-1/2% Notes due December 1999 are secured by the assets of
GACC's television station in Greensboro/High Point, North Carolina.
The bank credit facility contains covenants that restrict the
operations of GACC and its subsidiaries including requirements to
maintain certain financial ratios and places restrictions on:
incurring additional indebtedness, paying dividends, making capital
expenditures, selling broadcast stations and certain other corporate
actions. Pursuant to these covenants, GACC would be prohibited from
making any dividend payments in 1994. In addition, cash proceeds
from sales of certain assets by GACC's subsidiaries must be used to
repay certain indebtedness. GACC's other loan agreement covenants
limit, among other things, the amount of dividends, loans or
advances that GACC's subsidiaries may pay to GACC.
At December 31, 1993, the sinking-fund payments on long term
debt of GACC's subsidiaries for the next five years are as
follows: 1994 - $23.5 million; 1995 - $27.5 million; 1996 -
$20 million; 1997 - $26 million; and 1998 - $129 million. The
sinking fund payments due in 1998 include a $114 million
payment in December 1998 for the maturity of the bank credit
facility.
Cash interest payments (including amounts allocable to discontinued
operations) were $90.2 million, $54.8 million and $45.1 million in
1991, 1992 and 1993, respectively.
During 1992, GACC prepaid $44.7 million of the bank term loan from
the proceeds of the sales of its Indianapolis and Pittsburgh radio
stations and its interest in the "Entertainment Tonight" joint
venture, coupled with a portion of the cash received from a
F-21
<PAGE>
distribution of proceeds withheld from the 1991 sale of its
entertainment businesses and operations. In addition, GACC issued
$13.7 million principal amount of the 9-1/2% Senior Secured Notes in
exchange for $14.9 million principal amount of its 14-3/8%
Debentures and $3.3 million principal amount of Holding's 14-1/8%
Senior Notes through privately-negotiated transactions. In a
separate privately-negotiated transaction, GACC acquired $6.5
million principal amount of Holding's 14 1/8% Senior Notes during
the fourth quarter of 1992 for $2.3 million in cash.
During 1991, GACC acquired approximately $180 million principal
amount of Holdings 14-1/8% Senior Notes, $140 million principal
amount of the 14-3/8% Debentures, $41 million principal amount of
Holding's 20-1/2% Senior Notes, $16 million principal amount of
GACC's 9% Senior Subordinated Notes and $5 million principal amount
of GABC's 13% Senior Subordinated Notes through privately-negotiated
transactions for approximately $109 million in cash, $138 million
principal amount of the 9-1/2% Senior Secured Notes and 21.6 million
shares of GACC Common Stock. The majority of the financing for the
cash portion of these transactions was provided by a $100 million
bank bridge loan executed through modifications to former bank debt
agreements. GACC realized a pretax gain of approximately $117
million on debt refinancings during 1991.
In addition, during 1991 GACC utilized approximately $350 million of
the cash proceeds from the sales of the Entertainment Group and
other investments to: (i) retire the $100 million bank revolving
credit loan and $100 million bank bridge loan (borrowed during 1991)
and (ii) to reduce the bank term loan and the AFC subordinated line
of credit by $127.9 million and $22.5 million, respectively.
The net gains from the debt retirements, refinancings and discharge
are shown as an extraordinary item in the Statement of Operations in
the year the transactions occur (see Note M).
G. MINORITY INTEREST Minority interest consisted of outstanding
preferred shares of a subsidiary. The preferred shares were non-
voting cumulative shares with a liquidation value of approximately
$275 million at the time of the reorganization. These shares were
exchanged for 673,555 shares of Class A Common Stock in the
reorganization.
H. SHAREHOLDERS' EQUITY (DEFICIT) GACC is authorized to issue 500
million shares of Class A Common Stock, $.01 par value, 125 million
shares of Class B Common Stock, $.01 par value and 9.5 million
shares of Serial Preferred Stock, $.01 par value. Class A Common
shares are entitled to one vote for each share held of record; Class
B shares are entitled to one vote for every five shares held of
record. Class A and Class B Common shares will vote together as a
single class on all motions. The Class A and Class B shares are
entitled to the same treatment per share in the event of any
dividend, distribution, split-up or recapitalization. Class B
shares are convertible (on a one-for-one basis) into Class A shares
if such conversion does not violate the Communications Act of 1934,
as amended, or the rules, regulations or policies of the FCC
promulgated thereunder. The preferred stock may have such
preferences and other rights and limitations as the Board of
Directors may designate with respect to each series.
F-22
<PAGE>
Changes in the number of shares of Common Stock are shown in the
following table:
<TABLE>
<CAPTION>
Class A Class B
<S> <C> <C>
Predecessor:
Outstanding at January 1, 1991 35,169,367 -
Issued in Exchange for Debt 21,554,299 -
Other 5,768 -
Outstanding at January 1, 1992 & 1993 56,729,434 -
Reverse stock split (1-for-300) (56,540,336) -
Issued in restructuring for
exchanges of securities 9,846,437 1,163,524
Issued for cash 94,837 -
Reorganized GACC:
Stock bonus awarded 23,300 -
Outstanding at December 31, 1993 10,153,672 1,163,524
</TABLE>
The 1991 Stock Option Plan under which 3,250,000 shares were
available for grant was canceled as part of the plan of
reorganization. In addition, warrants to purchase three million
common shares were also terminated. No consideration was paid to
any option or grant holder.
Immediately following the consummation of the reorganization, the
Board of Directors established the 1993 Stock Option Plan. The Plan
provides for granting of both non-qualified and incentive stock
options to key employees. There are 600,000 shares of Class A
Common shares reserved for issuance under the Plan. During 1993,
options for the purchase of 581,000 shares were granted at an
exercise price of $15.00 per share. Options become exercisable at
the rate of 20% per year commencing one year after grant and expire
at the earlier of 10 years from the date of grant, three months
after termination of employment, or one year after the death or
disability of the holder.
I. GAINS AND LOSSES ON SALES OF ASSETS Included in "Miscellaneous, net" are
the following pretax gains (losses) on sales of assets (in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992 1993
<S> <C> <C> <C>
Gains (losses) on sales of:
Investments $35,843 $9,633 $ -
Broadcast stations (5,000) (5,000) -
F-23
<PAGE>
Real estate, property and equipment 513 (230) 270
</TABLE>
Gains on sales of investments represent primarily gains on the sales
of interests in Black Entertainment Television in 1991 and
"Entertainment Tonight" in 1992.
<PAGE>
J. BENEFIT PLANS In March 1992, the Board of Directors authorized the
termination of GABC's non-contributory defined benefit pension plan
which covered substantially all full-time employees meeting the
eligibility requirements. Accrued benefits under the pension plan
were frozen effective June 30, 1992 and all participants became
fully vested. The termination of the pension plan and the
subsequent settlement of the vested benefit obligation by the
purchase of non-participating annuity contracts for, or the lump-sum
payments to, each covered employee, was completed in the first
quarter of 1994 with no effect on GACC's results of operations.
F-24
<PAGE>
K. INCOME TAXES Deferred income taxes reflect the impact of temporary
differences between the carrying amounts of assets and liabilities
recognized for financial reporting purposes and the amounts
recognized for income tax purposes. Significant components of
GACC's deferred tax assets and liability as of December 31, are as
follows (in thousands):
<TABLE>
<CAPTION>
: Reorganized
Predecessor : GACC
1992 : 1993
<S> <C> : <C>
Deferred tax assets: :
Net operating loss carryforwards $41,048 : $80,500
Reserves, accrued expenses and other 15,305 : 17,168
56,353 : 97,668
Valuation allowance for deferred tax :
assets (15,397) : (75,005)
40,956 : 22,663
Deferred tax liability: :
Tax over book basis of depreciable assets 82,596 : 99,815
:
Net deferred tax liability $41,640 : $77,152
</TABLE>
As a result of the fair value adjustments made upon application of
the reporting principles of SOP 90-7, GACC's net deferred tax
liability increased $35.5 million primarily due to recognition of a
valuation allowance for financial reporting purposes to offset the
gross deferred tax asset related to net operating loss
carryforwards, based on an analysis of the likelihood of
realization. GACC's ability to use its net operating loss
carryforwards existing as of December 31, 1993 against ordinary
taxable income in the future may be severely limited due to certain
provisions of the Internal Revenue Code of 1986, as amended,
generally limiting the availability of net operating loss
carryforwards following certain changes in ownership.
At December 31, 1993, GACC had net operating loss carryforwards for
Federal income tax purposes estimated at $230 million expiring as
follows: 2003 - $18 million; 2004 - $2 million; and 2008 -
$210 million.
F-25
<PAGE>
The following is a reconciliation of Federal income taxes at the
"statutory" rates of 34% in 1991 and 1992 and 35% in 1993 and as
shown in the Statement of Operations (in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992 1993
<S> <C> <C> <C>
Loss from continuing operations
before income taxes ($ 71,897) ($737,777) ($ 66,796)
Earnings from discontinued
operations 44,367 11,447 -
Extraordinary items 117,306 6,025 408,140
Adjusted earnings (loss) before
income taxes $ 89,776 ($720,305) $341,344
Income taxes at the statutory rate $ 30,524 ($244,904) $119,470
Effect of:
Tax basis over book basis of
subsidiaries sold (38,646) - -
Goodwill 3,118 107,300 (630)
Minority interest 9,799 10,363 9,372
Certain reorganization items - - (127,606)
Other 496 3,800 (606)
Total tax provision (benefit) 5,291 (123,441) -
Less taxes applied to:
Discontinued operations (4,500) (750) -
Extraordinary items (39,900) (350) -
Federal income tax benefit as
shown in the Statement of Operations ($ 39,109) ($124,541) $ -
</TABLE>
The Federal income tax benefit as applied to continuing operations
consists of (in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992 1993
<S> <C> <C> <C>
Current taxes $ 3,050 $ 1,100 $ -
Deferred taxes (credits) (30,657) (110,723) -
Benefits of operating loss
carryforwards (11,502) (14,918) -
($39,109) ($124,541) $ -
F-26
<PAGE>
</TABLE>
GACC recognized Federal income tax expense of approximately $3
million and $1.1 million in 1991 and 1992, respectively,
representing alternative minimum tax.
GACC paid Federal income taxes of $500,000 and $775,000 in cash
during 1991 and 1992, respectively.
L. DISCONTINUED OPERATIONS Discontinued operations consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Predecessor
Year Ended
December 31,
1991 1992
<S> <C> <C>
Revenues $65,063 $ -
Loss from operations, net of tax
credits of $7,000 (13,524) -
Gain on sale, net of taxes of
$11,500 and $750 53,391 10,697
</TABLE>
In May 1991, GACC sold its investment in Spelling Entertainment,
Inc. common and convertible preferred stock to The Charter Company,
an affiliate of AFC at that time, for $107.5 million in cash. A
pretax loss of $17.2 million on the sale was recorded in the first
quarter of 1991.
In December 1991, GACC sold its subsidiary, Hanna-Barbera
Productions, Inc., along with the rights to distribute Hanna-Barbera
programs, to a joint venture between Turner Broadcasting System,
Inc. and Apollo Investment Fund, L.P. for $320 million, which
includes $40 million in contingent payments expected to be received
over time as certain conditions in the sale agreement are satisfied.
As part of this transaction, GACC acquired the Hanna-Barbera
distribution rights from Worldvision Enterprises, Inc., a wholly-
owned subsidiary of Spelling, in exchange for $24 million in cash,
the GACC live action program library and a licensing and
merchandising subsidiary, Hamilton Projects, Inc. These
distribution rights were in turn sold to the purchaser of Hanna-
Barbera as part of the overall transaction. GACC recognized a
pretax gain of approximately $82 million on the sale during the
fourth quarter of 1991, which did not include any gain from the $40
million in contingent payments. In 1992, GACC received
distributions totaling $25 million of the contingent payments
withheld from the sale. GACC recognized a pretax gain of $9 million
related to these distributions in the third quarter of 1992, after
deductions for post closing sale adjustments, settlement of certain
tax liabilities and other items related thereto.
Interest expense of $21.7 million has been allocated to discontinued
F-27
<PAGE>
operations for the year ended December 31, 1991. The allocation was
based on interest expense incurred for long-term debt retired with
the proceeds of the sale of the entertainment assets and operations,
including Spelling.
M. EXTRAORDINARY ITEMS Extraordinary items consisted of the following
(in thousands):
<TABLE>
<CAPTION>
Predecessor
1991 1992 1993
<S> <C> <C> <C>
Gain (loss) from retirement and
refinancing of long-term debt $117,306 $6,025 ($ 6,344)
Gain on debt discharge - - 414,484
Provision for Federal income taxes (39,900) (350) -
$ 77,406 $5,675 $408,140
</TABLE>
N. PENDING LEGAL PROCEEDINGS Management, after review and consultation
with counsel, considers that any liability from litigation pending
against GACC and any of its subsidiaries would not materially affect
the consolidated financial position or results of operations of GACC
and its subsidiaries.
O. RELATED PARTIES Included in the gain from retirement and
refinancing of long-term debt in 1991, is a pretax gain of
approximately $23 million on the purchase from AFC and a GACC
Director of $64.8 million principal amount of GACC's and its
subsidiaries' Notes and Debentures in exchange for cash and 9-1/2%
Senior Secured Notes on the same terms as those negotiated with
unrelated parties during 1991.
In January 1991, GACC sold a subsidiary whose primary operations
consist of operating a recreation and entertainment complex to an
executive officer of AFC for $3.8 million, a price based on an
appraisal prepared by an independent third party appraiser.
Included in the Balance Sheet at December 31, 1992 is a net payable
to AFC of $883,000, representing miscellaneous accounts payable.
This amount was canceled in the reorganization and no consideration
was paid to AFC.
P. ADDITIONAL INFORMATION Quarterly Operating Results (Unaudited) - The
following are quarterly results of consolidated operations for 1992
and 1993 (in thousands). See Notes B, I, L and M for the effects of
gains or losses from asset sales, debt retirements and other items
recognized in individual quarters.
<TABLE>
<CAPTION>
Predecessor
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
F-28
<PAGE>
<S> <C> <C> <C> <C> <C>
1992
Net revenues $44,424 $56,742 $53,851 $ 55,804 $210,821
Operating income (loss) (2,975) 6,843 3,976 (649,906) (642,062)
Loss before
extraordinary items (27,213) (14,498) (10,806) (550,022) (602,539)
Net loss (27,213) (14,498) (8,967) (546,186) (596,864)
1993
Net revenues $43,575 $55,890 $50,152 $55,551 $205,168
Operating income 3,378 13,702 8,614 14,289 39,983
Loss before
extraordinary items (19,749) (10,105) (16,672) (20,270) (66,796)
Net earnings (loss) (20,586) (12,404) (19,880) 394,214 341,344
</TABLE>
GACC's financial results are seasonal. Television broadcasting
revenues are higher in the second and fourth quarters than in the
first and third quarters. In the fourth quarter of 1992, GACC
recorded an adjustment of $658.3 million to reflect its broadcasting
assets at estimated fair value as of December 31, 1992. In the
fourth quarter of 1993, GACC recorded net earnings of $399.6 million
directly attributable to its comprehensive financial restructuring
(see Note B).
Included in selling, general and administrative expenses in 1991,
1992 and 1993 are charges of $8.1 million, $6.6 million and $6.6
million, respectively, for advertising and charges of $2.1 million,
$2.3 million and $2.4 million, respectively, for repairs and
maintenance.
F-29
<PAGE>
PART IV
ITEM 14
Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this Report:
1. Financial Statements are included in Part II, Item 8.
2. Financial Statement Schedules:
A. Selected Quarterly Financial Data is included in Note P to
GACC's Financial Statements.
B. Schedules filed herewith:
Page
For 1991, 1992 and 1993:
III - Condensed Financial Information of Registrant S-2
All other schedules for which provisions are made in the
applicable regulation of Securities and Exchange Commission
have been omitted as they are not applicable, not required, or
the information required thereby is set forth in the Financial
Statements or the notes thereto.
3. Exhibits - see Exhibit Index.
(b) Reports on Form 8-K filed during the fourth quarter of 1993:
Date of Report Event Reported
December 7, 1993 Confirmation of GACC's prepackaged plan of
reorganization by the U.S. Bankruptcy Court.
S-1
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
CONDENSED BALANCE SHEET
<CAPTION>
December 31,
1992 1993
<S> <C> <C>
ASSETS:
Cash $ 64 $ 3,469
Investment in subsidiaries - 217,476
Receivables from affiliates 217,782 -
Deferred income tax assets - 3,266
Other assets 147 1
$217,993 $224,212
LIABILITIES AND CAPITAL (DEFICIENCY):
Accounts payable and accrued expenses $ 9,526 $ 8,056
Payables to affiliates 883 -
Due to subsidiaries 451,779 -
Long-term debt 94,834 77,568
Capital (deficiency) (339,029) 138,588
$217,993 $224,212
</TABLE>
S-2
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
CONDENSED STATEMENT OF OPERATIONS
<CAPTION>
Year ended December 31,
1991 1992 1993
<S> <C> <C> <C>
INCOME:
Equity in undistributed earnings (losses) of
subsidiaries ($ 96,379) ($599,384) $145,939
Interest income from subsidiaries'
long-term debt 20,240 - -
Gain from redemption of subsidiaries'
long-term debt 21,654 - -
Other income 20 171 17
(54,465) (599,213) 145,956
COSTS AND EXPENSES:
Interest expense 17,421 11,837 9,348
Loss on bad debts - advances to subsidiary - - 213,054
Other expenses 2,252 2,186 1,303
19,673 14,023 223,705
Loss from continuing operations before
reorganization items and income taxes (74,138) (613,236) (77,749)
Reorganization items - - 10,953
Loss from continuing operations before
income taxes (74,138) (613,236) (66,796)
Provision for Federal income taxes - - -
Loss from continuing operations (74,138) (613,236) (66,796)
Discontinued operations:
Loss, net of income tax of $0 (20,524) - -
Gain on sale, net of income taxes of
$750 and $0 64,891 10,697 -
Loss before extraordinary items (29,771) (602,539) (66,796)
Extraordinary items, net of tax 114,256 5,675 408,140
NET EARNINGS (LOSS) $ 84,485 ($596,864) $341,344
S-3
<PAGE>
</TABLE>
S-4
<PAGE>
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
CONDENSED STATEMENT OF CASH FLOWS
<CAPTION>
Year ended December 31,
1991 1992 1993
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) $ 84,485 ($596,864) $341,344
Adjustments:
Depreciation and amortization 87 4 -
Non-cash minority interest expense 28,822 28,846 26,776
Equity in undistributed net earnings
of subsidiaries 21,217 590,115 (158,298)
Loss on bad debts - advances to subsidiaries - - 213,055
Other non-cash adjustments (16,280) 424 168
Realized gains on investing activities (21,654) (11,447) -
Extraordinary loss (gain) on retirements
and refinancing of long-term debt (117,306) (6,025) 6,344
Increase in payables to affiliates 1,000 - -
Increase (decrease) in accounts payable and
accrued expenses 9,238 (4,578) (854)
Other (1,164) 22 63
(11,555) 497 428,598
Effects of reorganization activities:
Extraordinary gain on debt discharge - - (414,484)
Net adjustments to fair value - - (15,961)
Increase in liabilities subject to exchange - - 1,317
Professional fees and other expenses related
to bankruptcy proceedings - - (3,906)
(11,555) 497 (4,436)
INVESTING ACTIVITIES:
Cash advanced from (to) subsidiaries (111,659) 5,672 1,447
Redemption of subsidiary's long-term debt 155,570 - -
43,911 5,672 1,447
FINANCING ACTIVITIES:
Retirements and refinancings of
long-term debt (76,662) (16,105) -
Additional long-term borrowings 45,000 10,000 6,339
Cash dividends paid (1,134) - -
Proceeds from the issuance of common stock - - 1,161
Financing costs - - (1,106)
(32,796) (6,105) 6,394
S-5
<PAGE>
NET INCREASE (DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS (440) 64 3,405
Cash at beginning of period 440 - 64
Cash at end of period $ - $ 64 $ 3,469
</TABLE>
S-6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, Great American Communications Company has duly
caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GREAT AMERICAN COMMUNICATIONS COMPANY
By: /s/ JOHN P. ZANOTTI
Chief Executive Officer
Signed: March 14, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
s/ JOHN P. ZANOTTI
John P. Zanotti Director* March 24, 1994
s/RANDOLPH L. BOOTH
Randolph L. Booth Director* March 24, 1994
s/THEODORE H. EMMERICH
Theodore H. Emmerich Director* March 24, 1994
s/S. CRAIG LINDNER
S. Craig Lindner Director March 24, 1994
s/CARL H. LINDNER
Carl H. Lindner Director March 24, 1994
s/JAMES E. EVANS
James E. Evans Director March 24, 1994
<PAGE>
s/GREGORY C. THOMAS
Gregory C. Thomas Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer) March 24, 1994
</TABLE>
* Member of the Audit Committee
GREAT AMERICAN COMMUNICATIONS COMPANY
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit Description
<S> <C>
2.1 Joint Prepackaged Plan of Reorganization of GACC and certain
subsidiaries under chapter 11 of the Bankruptcy Code, filed as
Exhibit 2.1 to GACC's Form 10-Q for the quarterly period ended
September 30, 1993.*
3.1 Restated Articles of Incorporation of GACC.
3.2 Restated Bylaws of GACC.
4.1 Loan Agreement dated as of August 20, 1993, as amended
and restated from time to time, between GATR, GABC and
certain banks, filed as exhibit 4.1 to GACC's Form 8-K
dated February 18, 1994.*
4.2 Indenture dated as of February 18, 1994, between GACC
and Shawmut Bank, N.A., as Trustee relating to the 9-3/4%
Senior Subordinated Notes due 2004 (the form of which 9-3/4%
Senior Subordinated Notes due 2004 is included therein), filed
as exhibit 4.2 to GACC's 8-K dated February 18, 1994.*
4.3 Indenture dated as of December 28, 1993 between GACC and
Shawmut Bank, N.A., as trustee, relating to the 14% Senior
Extendable Notes initially due 2001 (the form of which 14%
Senior Extendable Notes due 2001 is included therein), filed
as exhibit 4.1 to Amendment No. 2 to GACC's Form S-4
Registration Statement No. 33-63036 dated as of
September 27, 1993.*
4.4 Note Exchange Agreement dated as of September 30, 1993 by and
among GABC and former holders of 13% Senior Subordinated Notes
due 2000 named therein, relating to the 13% Senior
Subordinated Notes due 2001 (the form of which 13% Senior
Subordinated Notes due 2001 is included therein), filed as
<PAGE>
exhibit 4.2 to Amendment No. 2 to GACC's Form S-4 Registration
Statement No. 33-63036 dated as of September 27, 1993.*
10.1 GACC 1993 Stock Option Plan.
10.2 Comprehensive Settlement Agreement dated as of December 1, 1993,
by and among GACC, Holding, New GACC Holdings, Inc., GABC,
GATR, Leisure Systems Inc., AFC, Carl H. Lindner and other
parties named therein, as incorporated by reference to
exhibit 10.23 to Amendment No. 2 to GACC's Form S-4
Registration Statement No. 33-63036 dated September 27, 1993.*
E-2
<PAGE>
Number Exhibit Description
10.3 Letter Agreement dated as of December 21, 1993, between AFC,
AIF, L.P., Artemis Finance SNC and certain other former holders of
9-1/2% Senior Secured Notes of New GACC Holdings, Inc. due 2000,
as incorporated by reference to Exhibit 10.23 to Amendment
No. 2 to GACC's Form S-4 Registration Statement No. 33-63036
dated September 27, 1993.*
21 Subsidiaries of the Registrant
Registrant has no outstanding debt issues exceeding 10% of the assets of Registrant
and consolidated subsidiaries other than those listed above.
* Incorporated herein by reference
</TABLE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
GREAT AMERICAN COMMUNICATIONS COMPANY
ARTICLE I
Name
The name of the corporation is Great American Communications
Company (hereinafter called the "Corporation").
ARTICLE II
Purpose
The Corporation is organized for the purpose of transacting
any or all lawful business for which corporations may be organized under
the Florida Business Corporation Act of the State of Florida (the "FBCA").
ARTICLE III
Capital Stock
Section 1. Authorized Capital Stock. The total number of shares
which the Corporation shall have the authority to issue is 634,500,000
shares and such shares shall be divided into classes as follows: (i)
9,500,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), (ii) 500,000,000 shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), and (iii) 125,000,000
shares of Class B Common Stock, par value $.01 per share (the "Class B
Common Stock"; the Class A Common Stock and the Class B Common Stock are
referred to collectively herein as the "Common Stock").
Section 2. Preferred Stock. The Preferred Stock may be issued in
one or more series. The Board of Directors of the Corporation is hereby
authorized to issue the shares of Preferred Stock in such series and to
fix from time to time before issuance the number of shares to be included
in any such series and the designation, relative powers, preferences, and
rights and qualifications, limitations, or restrictions of all shares of
such series. The authority of the Board with respect to each such series
will include, without limiting the generality of the foregoing, the
determination of any or all of the following:
(a) the number of shares of any series and the designation
to distinguish the shares of such series from the shares of all
other series;
<PAGE>
(b) the voting powers, if any, and whether such voting
powers are full or limited in such series;
(c) the redemption provisions, if any, applicable to such
series, including the redemption price or prices to be paid;
(d) whether dividends, if any, will be cumulative or
noncumulative, the dividend rate of such series, and the dates and
preferences of dividends on such series;
(e) the rights of such series upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets
of, the Corporation;
(f) the provisions, if any, pursuant to which the shares of
such series are convertible into, or exchangeable for, shares of any
other class or classes or of any other series of the same or any
other class or classes of stock, or any other security, of the
Corporation or any other corporation or other entity, and the price
or prices or the rates of exchange applicable thereto;
(g) the right, if any, to subscribe for or to purchase any
securities of the Corporation or any other corporation or other
entity;
(h) the provisions, if any, of a sinking fund applicable to
such series; and
(i) any other relative, participating, optional, or other
special powers, preferences, rights, qualifications, limitations, or
restrictions thereof;
all as may be determined from time to time by the Board of Directors and
stated in the resolution or resolutions providing for the issuance of such
Preferred Stock (collectively, a "Preferred Stock Designation"). Any
Preferred Stock Designation must be approved by all but one of the
Directors of the Corporation then in office (with abstentions being
counted as a vote against such approval).
Section 3. Terms of the Common Stock. Except as otherwise provided
in this Section 3, the shares of Class A Common Stock and the shares of
Class B Common Stock shall be identical in all respects and shall be
entitled to the same rights, privileges and powers. Without limiting the
generality of the foregoing, the Class A Common Stock and the Class B
Common Stock shall be entitled to the same treatment per share in the
event of the payment of any dividend, or the making of any distribution,
with respect to the Common Stock or in the event of any split-up or
recapitalization of the Common Stock; provided, however, that, in the
event of the making of any dividend or distribution payable in shares of
Common Stock or in the event of any split-up of the Common Stock, the
Class A Common Stock shall be entitled to receive only shares of Class A
Common Stock and the Class B Common Stock shall be entitled to receive
only shares of Class B Common Stock.
Section 3.1 Voting. Except as otherwise provided by law,
holders of the Class A Common Stock and the Class B Common Stock shall
vote together as one class on all matters. The holders of Class A Common
Stock shall be entitled to one vote on each matter submitted for a vote of
the holders of Common Stock at a meeting of shareholders for each share of
Class A Common Stock held of record by such holder as of the record date
<PAGE>
for such meeting. The holders of Class B Common Stock shall be entitled
to one vote on each matter submitted for a vote of the holders of Common
Stock at a meeting of shareholders for every five shares of Class B Common
Stock held of record by such holder as of the record date for such
meeting.
Section 3.2 Conversion of Class A Common Stock. Shares of
Class A Common Stock that are acquired by a record holder of Class B
Common Stock shall be deemed to be converted into shares of Class B Common
Stock, on a one-for-one basis, immediately upon the acquisition by such
record holder of the beneficial ownership of such shares of Class A Common
Stock if, promptly after such acquisition, the record holder of Class B
Common Stock delivers to the Corporation (i) the certificates representing
the shares of Class A Common Stock that are so deemed to be converted,
(ii) evidence of the surrender of such certificates to the Corporation for
cancellation, and (iii) a written notice of conversion, which shall state
the names and addresses in which the certificates representing the Class B
Common Stock shall be issued. As promptly as practicable after the
satisfaction of the foregoing conditions, the Corporation shall issue and
deliver, as specified in the notice of conversion, certificates for the
number of full shares of Class B Common Stock issuable upon such
conversion.
Section 3.3 Conversion of Class B Common Stock. Shares of
Class B Common Stock shall be convertible into shares of Class A Common
Stock, on a one-for-one basis, upon the occurrence of any of the following
events:
(a) The delivery to the Corporation by a record holder of
Class B Common Stock of (i) the certificates representing the shares
of Class B Common Stock sought to be converted, (ii) proper evidence
of the surrender of such certificates to the Corporation for
cancellation, and (iii) a written notice of conversion, which shall
state the names and addresses in which the certificates representing
the Class A Common Stock issuable upon such conversion shall be
issued, unless the Corporation reasonably determines that such
conversion and subsequent ownership of the Class A Common Stock
violates the Communications Act of 1934, as amended, or the rules,
regulations or policies of the Federal Communications Commission
promulgated thereunder. The conversion shall be deemed to have been
effected on such date as the certificates representing the shares to
be converted, the evidence of surrender, and notice of conversion
have been delivered to the Corporation, unless such determination
has been made by the Corporation (the "Conversion Date"). As
promptly as practicable after the Conversion Date, the Corporation
shall issue and deliver, as specified in the notice of conversion,
certificates for the number of full shares of Class A Common Stock
issuable upon such conversion.
(b) The sale, transfer or other disposition of shares of
Class B Common Stock to any person or entity that does not control,
is not controlled by, and is not under common control with a holder
of the Class B Common Stock and the delivery of written notice of
such event to the Corporation. Upon such sale, transfer or other
disposition and delivery of written notice, the certificates
representing such shares of Class B Common Stock shall automatically
represent the number of shares of Class A Common Stock shown on the
face of such certificate. Any holder may surrender the certificates
formerly representing Class B Common Stock to the Corporation, and
the Corporation shall promptly issue and deliver a certificate
<PAGE>
representing the shares of Class A Common Stock owned by such holder
after giving effect to the conversion.
Section 3.4 Non-Voting Observer. For so long as there are
any shares of Class B Common Stock issued and outstanding and the sum of
(i) the number of shares of Class B Common Stock of the Corporation that
are issued and outstanding, and (ii) the number of shares of Class A
Common Stock that are owned beneficially and of record by the holders of
record of Class B Common Stock is greater than 10% of the total number of
shares of Common Stock issued and outstanding, the holders of Class B
Common Stock, as a class, shall have the right to name one non-voting
observer of the Board of Directors of the Corporation, who shall be
reasonably acceptable to the Board of Directors (the "Observer"). The
Observer shall receive all notices of meetings of the Board of Directors
and copies of all other communications distributed by the Corporation to
the members of the Board of Directors in the same manner and at the same
time as such notice and materials are provided to the members of the Board
of Directors. The Observer shall not be counted in determining whether a
quorum is present for the transaction of business at any meeting of the
Board of Directors. The holders of Class B Common Stock, as a class,
shall have the sole and exclusive right to fill any vacancies created by
the death or resignation of any Observer; provided, however, that any
Observer named to fill any vacancy shall be reasonably acceptable to the
Board of Directors.
ARTICLE IV
Registered Office and Agent
The name and street address of the registered office of the
Corporation is:
CT Corporation System
1200 South Pine Island Road
Plantation, Florida 33324
ARTICLE V
Nonvoting Stock
The Corporation will not issue nonvoting equity securities to
the extent prohibited by Section 1123 of the United States Bankruptcy
Code, 11 U.S.C. Section 101-1330 (the "Bankruptcy Code"); provided,
however that this Article V (a) will have no further force and effect
beyond that required under Section 1123 of the Bankruptcy Code, (b) will
have such force and effect, if any, only for so long as such section is in
effect and applicable to the Corporation, and (c) in all events may be
amended or eliminated in accordance with applicable law as from time to
time in effect.
<PAGE>
ARTICLE VI
Principal Office
The address of the principal office and mailing address of the
Corporation is:
One East Fourth Street
Cincinnati, Ohio 45202
ARTICLE VII
Preemptive Rights
Section 1. Preemptive Rights. Prior to the seventh anniversary of
the effective date of the Joint Prepackaged Plan of Reorganization of the
Corporation and certain of its subsidiaries under chapter 11 of the
Bankruptcy Code as confirmed by the United States Bankruptcy Court for the
Southern District of Ohio, Western Division, in consolidated Case No. 93-
14668 (the "Prepackaged Plan"), the holders of Common Stock shall, upon a
proposal to sell, issue or otherwise dispose of any shares of Common Stock
by the Corporation (a "Proposed Sale"), have the right, prior to or in
connection with the consummation of such Proposed Sale, to purchase shares
of Common Stock on the same terms and conditions as the Proposed Sale,
such that each of the holders of Common Stock would have the opportunity
to hold the same percentage of shares of Common Stock then outstanding
after giving effect to the Proposed Sale as such holders of Common Stock
had immediately prior to the Proposed Sale; provided, however, that
holders of Class A Common Stock shall have the right to purchase only
shares of Class A Common Stock and holders of Class B Common Stock shall
have the right to purchase only shares of Class B Common Stock.
Section 2. Exceptions. Notwithstanding the foregoing, a Proposed
Sale shall not include any sale, issuance or other disposition of Common
Stock (a) made in an offering of Common Stock which is registered under
the Securities Act of 1933 and which raises at least $10,000,000 in net
proceeds, (b) made pursuant to an employee benefit or incentive plan
approved by the Board of Directors (including, without limitation, the
issuance of securities on the exercise of options, warrants or other
rights issued in whole or in part pursuant to such an employee benefit or
incentive plan), (c) made in whole or in part to acquire the stock or
assets of a business, (d) made in whole or in part to acquire real
property, (e) made between the Corporation and any wholly owned subsidiary
of the Corporation, or (f) made pursuant to the Prepackaged Plan.
Section 3. Noncash Consideration. In the event that all or a
portion of the consideration to be paid, exchanged or otherwise
transferred to the Corporation as part of the Proposed Sale consists in
whole or in part of securities or other noncash consideration, the Board
of Directors shall, reasonably and in good faith, determine the value of
such noncash consideration, net of expenses of issuance, and in connection
with such valuation may retain and rely upon the opinion of any investment
banker or other adviser as it deems necessary or desirable, and in such
event the holders of Common Stock may exercise their preemptive rights
hereunder by paying, in cash, an amount equal to the value so determined
in lieu of paying, exchanging or otherwise transferring such noncash
consideration.
<PAGE>
Section 4. Notice. Notice of any such right to purchase Common
Stock (including notice as to the Board of Director's determination of the
value of any noncash consideration proposed to be received in
consideration therewith) shall be given no less than thirty calendar days
prior to the date on which the Corporation anticipates that the closing of
the Proposed Sale will occur. Holders of Common Stock may exercise their
right to purchase shares by delivering written notice to the Corporation
at an address designated in the Corporation's notice, on or before the
tenth calendar day after the date of notice given by the Corporation, of
such holder's irrevocable, binding commitment to purchase all or a portion
of its pro rata number of shares on the same terms and conditions as the
Proposed Sale. Any holder who does not give such notice or whose notice
is not timely received by the Corporation shall be deemed to have forever
waived any preemptive rights with respect to the Proposed Sale.
Section 5. Waiver. The preemptive rights granted to holders of
Common Stock under this Article VII may be waived by an affirmative vote
of all of the Directors of the Corporation then in office (with
abstentions by such Directors being counted as a vote against such a
waiver).
ARTICLE VIII
Certain Nonapplicable Florida Statutes
The Corporation hereby elects not to be governed by the
provisions of sections 607.0901 or 607.0902 of the FBCA.
Executed this 20th day of December, 1993.
ATTEST: Great American Communications
Company
/s/Samuel J. Simon By: /s/Gregory C. Thomas
Samuel J. Simon Gregory C. Thomas
Secretary Executive Vice President
EXHIBIT 3.2
RESTATED BY-LAWS
OF
GREAT AMERICAN COMMUNICATIONS COMPANY
ARTICLE I.
Meetings of Shareholders
SECTION 1. Annual Meeting. The annual meeting of the
shareholders of the Corporation shall be held at the time and place
designated by the Board of Directors of the Corporation. Business
transacted at the annual meeting shall include the election of directors
of the Corporation.
SECTION 2. Special Meetings. Special meetings of the
shareholders shall be called only by (i) the Chairman of the Board, (ii)
the President, (iii) the Board of Directors, (iv) the Executive Committee,
or (v) the Secretary after receipt of the written request by the holders
of not less than ten percent of all shares entitled to vote at the
meeting. Special meetings of holders of the outstanding Preferred Stock,
if any, may be called in the manner and for the purpose provided in the
applicable Preferred Stock Designation.
SECTION 3. Notice. Written notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten nor more than sixty days before the meeting, either personally or by
first class mail, by or at the direction of the Chairman of the Board, the
President, the Secretary, or the officer or persons calling the meeting.
If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, with postage
thereon prepaid.
SECTION 4. Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. When a specified item of business is
required to be voted on by a class of stock, a majority of the shares of
such class shall constitute a quorum for the transaction of such item of
business by the class; provided, however, that with respect to matters
that are to be voted upon by the Class A Common Stock and the Class B
Common Stock as a single class, that number of shares of Class A Common
Stock and Class B Common Stock representing a majority of the combined
voting power of the Class A Common Stock and the Class B Common Stock
shall constitute a quorum.
Unless otherwise provided by law or the Restated Articles of
Incorporation or these By-Laws, if a quorum is present, action on a
<PAGE>
matter, other than the election of directors, is approved if the votes
cast by the holders of the shares represented at the meeting and entitled
to vote on the subject matter in favor of the action exceed the votes cast
opposing the action.
After a quorum has been established at a shareholders'
meeting, the subsequent withdrawal of shareholders, so as to reduce the
number of shareholders entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken
at the meeting or any adjournment thereof.
SECTION 5. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Such proxy shall
be filed with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after eleven months from the date of
its execution, unless otherwise provided in the proxy.
ARTICLE II.
Directors
SECTION 1. Function. All corporate powers shall be exercised
by or under the authority of, and the business affairs of this Corporation
shall be managed under the direction of, the Board of Directors.
SECTION 2. Number. Subject to the rights, if any, of the
holders of any series of Preferred Stock to elect additional directors
under circumstances specified in a Preferred Stock Designation, as defined
in the Restated Articles of Incorporation of the Corporation, the Board of
Directors shall initially consist of nine members and the authorized
number of directors shall be fixed from time to time by the Board of
Directors; provided, however, that the authorized number of directors
shall be not less than two or more than twenty.
SECTION 3. Election and Term. The directors, other than
those who may be elected by the holders of any series of Preferred Stock,
will be classified with respect to the time for which they severally hold
office into three classes, as nearly equal in number as possible,
designated Class I, Class II, and Class III. The directors first
appointed to Class I will hold office for a term expiring at the annual
meeting of shareholders to be held in 1994, the directors first appointed
to Class II will hold office for a term expiring at the annual meeting of
shareholders to be held in 1995, and the directors first appointed to
Class III will hold office for a term expiring at the annual meeting of
shareholders to be held in 1996; with members of each class to hold office
until their successors are elected and qualified. At each succeeding
annual meeting of the shareholders of the Corporation, the successors of
the class of directors whose terms expire at that meeting will be elected
by plurality vote of all votes cast at such meeting to hold office for a
term expiring at the annual meeting of shareholders held in the third year
following the year of their election.
SECTION 4. Certain Nominations of Directors. Nominations of
persons for election as directors of the Corporation made by or at the
direction of the Board of Directors shall include such number of director
nominees who do not control, and are not controlled by or under common
control with, any Affiliate (each a "Nonaffiliate Director") as shall
result in there being at least four Nonaffiliate Directors, if such
<PAGE>
director nominees are elected.
Nominations of persons for election as directors of the
Corporation made by or at the direction of the Board of Directors shall
consist of the person or persons recommended by the class of directors
that are to be succeeded by such director nominees (which may include such
persons as successors to themselves) if such recommendations are
reasonably acceptable to the remaining directors.
SECTION 5. Vacancies. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the
number of directors, may be filled by the affirmative vote of a majority
of the remaining directors, or by the sole remaining director; provided,
however, that the person or persons chosen by the directors to fill a
vacancy in a class of directors shall be a person or persons recommended
by the remaining directors, or the remaining director, in such class if
any such recommendation is made and if such recommendation is reasonably
acceptable to the remaining directors; provided, further, however, that if
such vacancy exists by reason of the death, resignation or removal of a
Nonaffiliate Director and at least four Nonaffiliate Directors are not
included among the remaining directors, then the person chosen by the
remaining directors to fill such vacancy shall be a Nonaffiliate Director.
A director elected to fill a vacancy shall hold office for the remainder
of the term of the class of directors in which the vacancy occurred and
until such director's successor is elected and qualified. No decrease in
the number of directors constituting the Board of Directors will shorten
the term of an incumbent director.
SECTION 6. Quorum and Voting. A majority of the number of
directors constituting the whole Board of Directors fixed herein or by the
directors pursuant to these By-laws shall constitute a quorum for the
transaction of business. The act of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
SECTION 7. Time, Notice and Call of Meetings. Regular
meetings of the Board of Directors shall be held without notice at the
location of and immediately after the adjournment of the annual meeting of
the shareholders in each year, and at such other time and place as may be
determined by the Board of Directors. Notice of the time and place of
special meetings of the Board of Directors, which need not include the
purpose or purposes for which the meeting is called, shall be given to
each director either by personal delivery, telegram, cablegram, or by
telephone at least two days prior to the meeting. Notice may also be
given through the postal service if mailed at least 5 days prior to the
meeting.
Notice of a meeting of the Board of Directors need not be
given to any director who signs a waiver of notice either before or after
the meeting. Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting and waiver of any and all objections to
the place of the meeting, the time of the meeting, or the manner in which
it has been called or convened, except when a director states, at the
beginning of the meeting, any objection to the transaction of business
because the meeting is not lawfully called or convened.
Meetings of the Board of Directors may be called by the
Chairman of the Board, by the President of the Corporation, or by any two
directors.
<PAGE>
Members of the Board of Directors may participate in a meeting
of such board or of a committee thereof by means of a conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a
meeting.
SECTION 8. Action Without a Meeting. Any action required to
be taken at a meeting of the directors of the Corporation, or any action
which may be taken at a meeting of the directors or a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the
action so to be taken, signed by all of the directors or all the members
of the committee, as the case may be, is filed in the minutes of the
proceedings of the Board or of the committee. Such consent shall have the
same effect as a unanimous vote.
SECTION 9. Compensation of Directors. Directors shall be
entitled to such compensation as shall be fixed from time to time by
resolution adopted by the Board of Directors, and shall also be entitled
to reimbursement for any reasonable expenses incurred in attending any
meeting of the Board or such committee, subject to any limitations fixed
by the Board of Directors.
SECTION 10. Removal of Directors. Any or all of the
directors may be removed, with cause, by the vote of the holders of that
number of shares then entitled to vote in the election of directors that
represents a majority of the voting power of such shares, at a meeting of
shareholders called expressly for that purpose. One or more of the
directors may be removed for cause by the vote of a majority of the
remaining directors.
ARTICLE III.
Officers
SECTION 1. Officers. The officers of the Corporation shall
consist of a President, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors at the first meeting of directors
immediately following the annual meeting of shareholders of the
Corporation, and shall serve until their successors are chosen and
qualify. Such other officers, including, without limitation, a Chairman
of the Board of Directors, and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of Directors
from time to time. Any two or more offices may be held by the same
person. The failure to elect a President, a Secretary or a Treasurer
shall not affect the existence of the Corporation.
SECTION 2. Chief Executive Officer. Either the Chairman of
the Board of Directors or the President, as determined by the Board of
Directors, shall be the chief executive officer of the Corporation, shall
have general and active management of the business and affairs of the
Corporation subject to the directions of the Board of Directors, shall
preside at all meetings of the shareholders and Board of Directors, and
shall have such additional authority and perform such duties as may be
assigned to him by the Board of Directors.
SECTION 3. Secretary. The Secretary shall have custody of,
and maintain, all of the corporate records except the financial records
and shall record the minutes of all meetings of the shareholders and the
<PAGE>
Board of Directors, send all notices of meetings out and perform such
duties as may be prescribed by the Board of Directors or the chief
executive officer.
SECTION 4. Treasurer. The Treasurer shall have custody of
all corporate funds and financial records, shall keep full and accurate
accounts of receipts and disbursements and render accounts thereof at the
annual meetings of shareholders and whenever else required by the Board of
Directors or the chief executive officer, and shall perform such other
duties as may be prescribed by the Board of Directors or the chief
executive officer.
SECTION 5. Removal of Officers. Any officer or agent elected
or appointed by the Board of Directors may be removed by the board
whenever in its judgment the best interests of the Corporation will be
served thereby.
SECTION 6. Action with Respect to Securities of Other
Corporations. Unless otherwise directed by the Board of Directors, the
chief executive officer or his designee shall have power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of shareholders of or with respect to any action of shareholders
of any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation
may possess by reason of its ownership of securities in such other
corporation.
ARTICLE IV.
Indemnification
SECTION 1. Third Party Actions. Each person (including the
heirs, executors, administrators, legal representatives and estate of such
person) (i) who is or was a director or officer of the Corporation, (ii)
who is or was an agent or employee of or independent contractor to the
Corporation other than an officer and as to whom the Corporation has
agreed to grant such indemnity, or (iii) who is or was serving at the
request of the Corporation in the position of a director, officer,
trustee, partner, agent, or employee of or independent contractor to
another corporation, partnership, joint venture, trust or other enterprise
and as to whom the Corporation has agreed to grant such indemnity, shall
be indemnified by the Corporation against all liabilities and expenses
(including, without limitation, judgments, fines, penalties, amounts paid
in settlement and fees and disbursements of legal counsel) actually and
reasonably incurred in connection with any action, suit or proceeding
(other than an action, suit or proceeding by, or in the right of, the
Corporation) to which any such person (including the heirs, executors,
administrators, legal representatives and estate of such person) may be a
party or in which such person may be otherwise involved by reason of such
person's serving or having served in any of the foregoing capacities, if
such person acted in good faith and in a manner such person reasonably
believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action, suit or proceeding,
had no reasonable cause to believe his conduct was unlawful.
SECTION 2. Derivative Actions. Each person (including the
heirs, executors, administrators, legal representatives and estate of such
person) (i) who is or was a director or officer of the Corporation, (ii)
who is or was an agent or employee of or independent contractor to the
<PAGE>
Corporation other than an officer and as to whom the Corporation has
agreed to grant such indemnity, or (iii) who is or was serving at the
request of the Corporation in the position of a director, officer,
trustee, partner, agent, or employee of or independent contractor to
another corporation, partnership, joint venture, trust or other enterprise
and as to whom the Corporation has agreed to grant such indemnity, shall
be indemnified by the Corporation against all liabilities and expenses
(including, without limitation, judgments, fines, penalties, amounts paid
in settlement and fees and disbursements of counsel) actually and
reasonably incurred in connection with any action, suit or proceeding by
or in the right of the Corporation to which any such person (including the
heirs, executors, administrators, legal representatives and estate of such
person) may be a party or in which such person may be otherwise involved
by reason of such person's serving or having served in any of the
foregoing capacities, if such person acted in good faith and in a manner
such person reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made
in respect of any action, suit or proceeding as to which such person shall
have been adjudged or determined to be liable for gross negligence or
willful misconduct in the performance of his duties to the Corporation
unless, and only to the extent that, the court in which such action, suit
or proceeding was brought shall determine upon application of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such liabilities and expenses which the court shall deem
proper.
SECTION 3. Procedure. To the extent that any person who may
be entitled to indemnification under Section 1 or Section 2 of this
Article IV shall have been successful on the merits or otherwise in
defense of any action, suit or proceeding, or in defense of any claim,
issue or matter therein, such person shall be indemnified against all
liabilities and expenses (including, without limitation, judgments, fines,
penalties, amounts paid in settlement, and fees and disbursements of legal
counsel) actually and reasonably incurred by such person in connection
therewith. Any other indemnification under Section 1 or Section 2 of this
Article IV, unless pursuant to a determination by a court, shall be made
by the Corporation only as authorized in the specific case upon a
determination that the indemnification of the person is proper in the
circumstances because such person has met the applicable standard of
conduct set forth in said Section 1 or Section 2. Such determination
shall be made (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding; or (b) if such a quorum is not obtainable or even if
obtainable, such a quorum so directs, by independent legal counsel in a
written opinion; or (c) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit or
proceeding. The termination of any action, suit or proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation or, with respect to any criminal action, suit or proceeding,
had reasonable cause to believe that his conduct was unlawful.
SECTION 4. Advances. Expenses (including, without
limitation, fees and disbursements of legal counsel) incurred in
connection with any action, suit or proceeding as to which indemnification
is claimed, may be paid by the Corporation in advance of the final
disposition thereof as authorized by the Board of Directors in the
specific case and upon receipt of an undertaking by or on behalf of the
<PAGE>
person on whose behalf such expenses are advanced to repay such amount if
it is ultimately determined that such person is not entitled to be
indemnified by the Corporation.
SECTION 5. Definitions. For purposes of this Article IV,
"action, suit or proceeding" shall include every pending, threatened or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or other, and any and all appeals thereof.
The right of indemnification conferred by this Article IV shall extend to
any threatened action, suit or proceeding and the failure to institute it
shall be deemed its final determination.
SECTION 6. Insurance. The Corporation may purchase and
maintain insurance, including self-insurance plans or arrangements, at its
expense, to protect itself and any person (including the heirs, executors,
administrators, legal representatives and estate of such person) (i) who
is or was a director, officer, agent or employee of or independent
contractor to the Corporation, or (ii) who is or was serving at the
request of the Corporation in the position of a director, officer,
trustee, partner, agent or employee of or independent contractor to
another corporation, partnership, joint venture, trust or other enterprise
against liabilities and expenses (including, without limitation,
judgments, fines, penalties, amounts paid in settlement and fees and
disbursements of legal counsel) actually and reasonably incurred in
connection with any action, suit or proceeding, whether or not the
Corporation would have the legal power to directly indemnify such person
against such liability and expenses.
SECTION 7. Severability. If any part of this Article IV
shall be found in any circumstance or as to any person to be
unenforceable, the effect and validity of the remaining parts or of such
parts in other circumstances or as to other persons shall not be affected,
except as otherwise provided by applicable law.
ARTICLE V.
Stock Certificates
SECTION 1. Issuance and Form. Every holder of shares in the
Corporation shall be entitled to have a certificate, in such form as may
be prescribed by the Board of Directors and by law, representing all
shares to which he is entitled. No certificates shall be issued for any
share until such share is fully paid.
SECTION 2. Transfer of Stock. The Corporation shall register
a stock certificate presented to it for transfer if the certificate is
properly endorsed by the holder of record or by his duly authorized
attorney.
SECTION 3. Lost, Stolen, or Destroyed Certificates. The
Corporation shall issue a new stock certificate in the place of any
certificate previously issued if the holder of record of the certificate
(a) makes proof in affidavit form that it has been lost, destroyed or
wrongfully taken; (b) requests the issue of a new certificate before the
Corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of any adverse claim;
(c) gives bond in such form and amount as the Corporation may direct to
indemnify the Corporation and the transfer agent and registrar, if any,
against any claim that may be made on account of the alleged loss,
<PAGE>
destruction, or theft of a certificate; and (d) satisfies any other
reasonable requirements imposed by the Corporation.
ARTICLE VI.
Books and Records
SECTION 1. Books and Records. The Corporation shall keep
correct and complete books and records of account and shall keep minutes
of the proceedings of its shareholders, Board of Directors and committees
of directors.
The Corporation shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and addresses of
all shareholders, and the number and class, if any, of the shares held by
each.
Any books, records and minutes may be in written form or in
any other form capable of being converted into written form within a
reasonable time.
SECTION 2. Shareholders' Inspection Rights. Any person who
shall have been a holder of record of one-quarter of one percent of the
outstanding shares of any class of the Corporation, or of voting trust
certificates therefor, for at least six months immediately preceding this
demand or shall be the holder of record of, or the holder of record of
voting trust certificates for, at least five percent of the outstanding
shares of any class of the Corporation, upon written demand stating the
purpose therefor, shall have the right to examine, in person or by agent
or attorney, at any reasonable time or times, for any proper purpose its
relevant books and records of accounts, minutes and records of
shareholders and to make extracts therefrom.
SECTION 3. Financial Information. Unless modified by
resolution of the shareholders, not later than four months after the close
of each fiscal year, the Corporation shall prepare a balance sheet showing
in reasonable detail the financial condition of the Corporation as of the
close of its fiscal year, and a profit and loss statement showing the
results of the operations of the Corporation during its fiscal year.
Upon written request of any shareholder or holder of voting
trust certificates for shares of the Corporation, the Corporation shall
mail to such shareholder or holder of voting trust certificates a copy of
the most recent such balance sheet and profit and loss statement.
ARTICLE VII.
Dividends
The Board of Directors of the Corporation may, from time to
time, declare, and the Corporation may pay, dividends on its shares in
cash, property or its own shares, except when the Corporation is insolvent
or when the payment thereof would render the Corporation insolvent, or
when the declaration or payment thereof would be contrary to any
restrictions contained in the Restated Articles of Incorporation.
<PAGE>
ARTICLE VIII.
Corporate Seal
The corporate seal shall have the name of the Corporation, the
date of its organization and the words "CORPORATE SEAL, FLORIDA" inscribed
thereon. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE IX.
Prohibitions Against Alien Officers and
Directors; Restriction on Ownership and
Voting of Stock by Aliens
SECTION 1. Definition of "Alien." Throughout these By-Laws
the word "alien" shall have the meaning set forth in Section 310(b) of the
Communications Act of 1934, as amended or modified from time to time.
Throughout this Article IX, the word "citizen" means any person
partnership, government, corporation, joint-stock company, association or
other entity not an alien.
SECTION 2. Directors. Aliens (including representatives of
aliens) shall not constitute more than 25% of the total number of
Directors of the Corporation.
SECTION 3. Officers. No alien may be elected or appointed or
serve as an officer of the Corporation.
SECTION 4. Stock Ownership and Voting. Under no
circumstances shall the amount of stock owned of record or voted by aliens
exceed one-fourth of the total stock outstanding.
The ownership of record and beneficial ownership of shares of
stock by aliens, and the nationality of transferees thereof, shall be
determined in conformity with the provisions of the Communications Act of
1934 and the rules, regulations and policies of the Federal Communications
Commission promulgated thereunder. There shall be maintained a domestic
record covering citizen shareholders and foreign record covering all other
shareholders.
SECTION 5. Stock Certificates. Every certificate
representing stock issued or transferred to an alien shall be marked
"Foreign Share Certificate," but under no circumstances shall certificates
representing more than one-fourth of the total stock outstanding at any
one time be so marked, nor shall the total amount of stock represented by
Foreign Share Certificates, plus the amount of stock owned by aliens and
represented by certificates not so marked, exceed one-fourth of the total
stock outstanding.
SECTION 6. Domestic Share Certificates. Every certificate
issued not marked "Foreign Share Certificate" shall be marked "Domestic
Share Certificate" and shall contain a statement of the restrictions and
limitations set forth in Section 7 of this Article.
SECTION 7. Share Certificate Transfers. All stock
represented by Foreign Share Certificates may be transferred to anyone.
Transfers of shares of domestic record to aliens may only be made unless
and so long as the stock records of the Corporation shall disclose less
<PAGE>
than one-fourth alien stock ownership after giving effect to the proposed
transfer of shares.
SECTION 8. Types of Stock Restricted. The restrictions set
forth in this Article IX with respect to alien ownership, alien voting,
and transfers of shares of aliens shall be applicable to the (i) Class A
Common Stock and the Class B Common Stock combined, (ii) the preferred
stock alone and (iii) the Class A Common Stock, Class B Common Stock and
preferred stock combined.
If, so long as, the stock records of the Corporation shall
disclose one-fourth alien stock ownership or it shall be found by the
Corporation that stock of domestic record is in fact held by or for the
account of an alien, the holder of such stock shall not be entitled to
vote, to receive dividends or to any other rights, except those mandated
by applicable federal and state laws, and except the right to transfer
such stock to a citizen.
SECTION 9. Effectiveness. Each of the provisions of this
Article IX shall be effective only so long as and to the extent necessary
to comply with the provisions of the Communications Act of 1934 and the
rules, regulations and policies of the Federal Communications Commission
promulgated thereunder.
ARTICLE X.
Affiliate Transactions
SECTION 1. Restrictions on Affiliate Transactions. Prior to
the seventh anniversary of the effective date of the Prepackaged Plan, the
Corporation will not, and will not permit any Subsidiary to, directly or
indirectly, enter into or permit to exist any transaction or series of
related transactions with an aggregate value in excess of $1,000,000 in
any calendar year (including, without limitation, the purchase, sale,
lease or exchange of any property, the rendering of any services, the
making of any loan or advance or the guarantee of any indebtedness) with
any Affiliate of the Corporation (an "Affiliate Transaction"), unless such
transaction is or has been approved by an affirmative vote of either (i)
all but one of the directors of the Corporation then in office who are not
affiliated with the Affiliate involved in such transaction (with
abstentions by any such directors being counted as a vote against such
approval) or (ii) the holders of that number of shares of the
Corporation's outstanding stock entitled to vote generally in the election
of directors held by persons other than the Affiliate involved in such
transaction that constitutes a majority of the voting power of such stock
at a special or regular meeting of the shareholders.
SECTION 2. Exceptions. Notwithstanding the foregoing, an
Affiliate Transaction shall not include (i) any transaction between or
among the Corporation and any Subsidiary, (ii) any transaction entered
into by the Corporation or any Subsidiary in connection with the
Prepackaged Plan or in connection with the related restructuring
transactions, (iii) transactions in the ordinary course of business of the
Corporation or any Subsidiary, including, but not limited to, the sale of
advertising time to an Affiliate or the purchase of insurance from an
Affiliate that is an insurance carrier or through an Affiliate that is an
insurance agent or agency, or (iv) the exercise of preemptive rights by
such Affiliate.
<PAGE>
SECTION 3. Amendment, Repeal, Etc. Notwithstanding anything
contained in these Restated Articles of Incorporation to the contrary, the
amendment or repeal, or the adoption of any provision inconsistent with,
this Article X, shall require the affirmative vote of all but one of the
Directors then in office (with abstentions being counted as a vote against
such approval).
ARTICLE XI.
Extraordinary Transactions
SECTION 1. Vote Required for Extraordinary Transactions.
Prior to the earliest of (i) the seventh anniversary of the effective date
of the Prepackaged Plan, (ii) such time as the sum of (x) the number of
shares of Class B Common Stock that are issued and outstanding, and (y)
the number of shares of Class A Common Stock that are owned beneficially
and of record by the holders of record of Class B Common Stock is less
than 10% of the total number of shares of Common Stock issued and
outstanding, or (iii) such time as the closing sales price for the Common
Stock on any securities exchange or as quoted on the NASDAQ National
Market System exceeds $36.72 (as adjusted for any stock split, stock
dividend, recapitalization or other similar transaction) for a continuous
period of 120 calendar days, the Corporation will not, and will not permit
any Subsidiary to, enter into or engage in any Extraordinary Transaction
(as hereinafter defined) unless such Extraordinary Transaction is or has
been approved by an affirmative vote of all but one of the directors of
the Corporation then in office (with abstentions by any such directors
being counted as a vote against such approval).
SECTION 2. Extraordinary Transactions. "Extraordinary
Transactions" shall mean the following:
(i) a sale by the Corporation or any Subsidiary of all
or substantially all of the assets of the Corporation and its
Subsidiaries, taken as a whole;
(ii) the merger or consolidation of the Corporation or
any Subsidiary with or into another entity (other than any
merger or consolidation involving solely the Corporation
and/or one or more wholly owned Subsidiaries), where (w) the
Corporation or the Subsidiary is not the surviving
corporation, (x) the capital stock of the Corporation is
converted into or exchanged for other securities or cash, (y)
the holders of Common Stock immediately prior to such merger
or consolidation do not own at least a majority of the voting
power of the Corporation immediately following such merger or
consolidation, or (z) any Subsidiary involved in such merger
or consolidation is not a Subsidiary immediately following
such merger or consolidation;
(iii) any transfer, distribution, sale or other
disposition in any period of four consecutive calendar
quarters of assets of the Corporation or any Subsidiary (a)
with a fair market value in excess of 10% of the total assets
of the Corporation as reflected on the consolidated balance
sheet of the Corporation as of the beginning of such period,
or (b) which accounted for 10% or more of the consolidated
operating cash flow of the Corporation during the four
consecutive calendar quarters immediately preceding the date
of such transfer, distribution, sale or other disposition;
<PAGE>
(iv) any purchases by the Corporation or any
Subsidiary of television or radio broadcast stations, or other
businesses, in any period of four consecutive calendar
quarters for aggregate consideration paid with a fair market
value in excess of 10% of the total assets of the Corporation
as reflected on the consolidated balance sheet of the
Corporation as of the beginning of such period;
(v) the purchase by the Corporation or any Subsidiary
in any fiscal year of the Corporation of any fixed or capital
assets (including plant, machinery or equipment and including
any lease of any of the foregoing, but excluding any purchase
of the nature described in clause (iv)), that would be
required to be capitalized and shown as an asset with a value
in excess of $7,000,000 on the consolidated balance sheet of
the Corporation in accordance with generally accepted
accounting principles; provided, however, that the $7,000,000
limit will be increased by 5% with respect to each fiscal year
commencing with 1994; provided, further, however, that
Extraordinary Transactions shall not include any purchase by
the Corporation or any Subsidiary of any such fixed or capital
assets relating to high definition television;
(vi) the creation, incurrence, issuance, or assumption
by the Corporation or any Subsidiary of any Indebtedness in an
amount that would result in the total debt of the Corporation
as reflected on the consolidated balance sheet of the
Corporation exceeding the sum of (i) the total debt on the
consolidated balance sheet as of the effective date of the
Prepackaged Plan and (ii) $30,000,000;
(vii) the sale, issuance or other disposition of a
number of shares of Common Stock (other than sales, issuances
and other dispositions made (a) to any wholly owned subsidiary
or (b) pursuant to an employee benefit or incentive plan or
program approved by the Board of Directors (including, without
limitation, the issuance of securities on the exercise of
options, warrants or other rights issued in connection with
such an employee benefit plan or program) to persons other
than officers or employees of AFC) in any two-year period that
exceeds 15% of the number of issued and outstanding shares of
Common Stock at the beginning of any such period or the sale,
issuance or other disposition of any equity securities of the
Corporation other than Common Stock; provided, however, that
this clause (vii) shall not apply to one such sale, issuance
or other disposition, or one series of related sales,
issuances, or other dispositions, if the net proceeds of such
sale, issuance or other disposition are used to reduce debt of
the Corporation or any Subsidiary;
(viii) the declaration or payment of any cash dividend
on any equity securities of the Corporation or the making of
any other distribution of any kind with respect to any equity
securities of the Corporation; provided, however, that this
clause (viii) shall not apply to regular, periodic dividends
required pursuant to the terms of any equity security of the
Corporation other than the Common Stock;
(ix) the adoption of any amendment to the Restated
Articles of Incorporation or the Restated By-Laws of the
<PAGE>
Corporation or the fixing of the number of authorized
directors at any number other than nine;
(x) the appointment of any director to a committee of
the Board of Directors that does not include as a member a
Nonaffiliate Director who was recommended by a majority of the
Nonaffiliate Directors, or the sole remaining Nonaffiliate
Director, then in office;
(xi) the establishment of the compensation to be paid
to any officer or employee of the Corporation or any
Subsidiary who is also an officer or employee of AFC;
(xii) the retention of any investment banking firm for
the purpose of rendering a fairness opinion with respect to an
Affiliate Transaction (as defined in Article XI);
(xiii) the operation by the Corporation or any
Subsidiary of any business other than a business which derives
revenues substantially from the sale of advertising time or
the delivery, transmission or dissemination of entertainment
or information to public viewers or subscribers; and
(xiv) any delegation by the Board of Directors to any
committee of the Board of Directors of the authority to
approve or ratify any Extraordinary Transaction.
ARTICLE XII.
Certain Definitions
For the purposes of these By-Laws the following terms shall
have the meanings set forth below:
(i) "AFC" shall mean American Financial Corporation, an Ohio
corporation.
(ii) "Affiliate" shall mean any person or entity that is the
beneficial owner of 20% or more of the issued and outstanding Common
Stock.
(iii) "Class A Common Stock" shall mean the issued and
outstanding shares of Class A Common Stock, par value $.01 per
share, of the Corporation.
(iv) "Class B Common Stock" shall mean the issued and
outstanding shares of Class B Common Stock, par value $.01 per
share, of the Corporation.
(v) "Common Stock" shall mean the issued and outstanding
shares of Class A Common Stock of the Corporation and Class B Common
Stock of the Corporation, collectively.
(vi) "Indebtedness" shall mean with respect to any person (i)
any liability of such person (x) for borrowed money, (y) evidenced
by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any
property or assets (other than inventory or similar property
acquired in the ordinary course of business), or (z) in respect of
<PAGE>
the capitalized obligation under leases which constitute capitalized
lease obligations, and (ii) any guarantee by such person of any
liability of others of the type described in the preceding clause
(i).
(vii) "Prepackaged Plan" shall mean the Joint Prepackaged Plan
of Reorganization of Great American Communications Company and
certain of its subsidiaries under chapter 11 of the United States
Bankruptcy Code, 11 U.S.C. Section 101-1330, as confirmed by the
United States Bankruptcy Court for the Southern District of Ohio,
Western Division, in consolidated Case No. 93-14668.
(viii) "Subsidiary" shall mean a corporation of which at least a
majority of the securities that are entitled to vote generally in
the election of directors are owned directly or indirectly by the
Corporation.
ARTICLE XIII.
Amendment of By-Laws
Except as provided in Article XI of these By-Laws or as
otherwise provided by law, the Board of Directors may amend and repeal
these By-Laws and may make new By-Laws.
EXHIBIT 10.1
GREAT AMERICAN COMMUNICATIONS COMPANY
1993 Stock Option Plan
Section VII. Purpose. The purpose of the Plan is to promote the
interests of the Company and its shareholders by providing a means for
selected Key Employees of the Company and its Subsidiaries to acquire a
proprietary interest in the Company, thereby strengthening the Company's
ability to attract capable management personnel and providing an
inducement for Key Employees to remain in the employ of the Company or its
subsidiaries and to perform at their maximum levels. It is intended that
Options granted pursuant to this Plan may constitute Incentive Stock
Options or Nonqualified Stock Options, as hereinafter set forth.
Section VIII. Definitions. Unless the context clearly indicates
otherwise, the following terms, when used in this Plan, shall have the
meanings set forth below:
1. "Board" shall mean the Board of Directors of the Company.
2. "Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
3. "Committee" shall mean the Compensation Committee of the
Board, appointed by the Board to administer the Plan and perform the
functions set forth in Section 3 of this Plan.
4. "Common Stock" shall mean the Class A Common Stock, par
value $.01 per share, of the Company, and any other stock or securities
resulting from the adjustment thereof or substitution therefor as
described in Section 12 of this Plan.
5. "Company" shall mean Great American Communications Company,
a Florida corporation.
6. "Fair Market Value" with respect to the Common Stock as of
any date shall mean 1. in the event the Common Stock is listed on a
national securities exchange, the closing price as reported for
composite transactions on that date, or, if no sales occurred on that
date, then the closing price on the next preceding date on which such
sales of Common Stock occurred; 2. in the event the Common Stock is not
listed on a national securities exchange, the mean between the high bid
and low asked prices reported for shares of Common Stock traded over-
the-counter on that date, or, if no bid and asked prices were reported
on that date, then the mean between the high bid and low asked prices on
the next preceding date on which such prices were reported; or 3. in the
event there are no over-the-counter prices for the Common Stock and it
is not listed on a national securities exchange, the fair market value
as determined by the Committee in its discretion.
7. "Incentive Stock Option" shall mean an Option granted under
the Plan and designated as such by the Committee which meets the
requirements of Section 422A of the Code.
<PAGE>
8. "Key Employee" shall mean a regular employee, whether or not
a director of the Company or a Subsidiary, who is an officer or holds a
managerial or other key position as determined by the Committee, and
who, in the judgment of the Committee, has demonstrated a capacity for
making a substantial contribution to the success of the business of the
Company or a Subsidiary. A director of GACC who is not a Key Employee
described in the previous sentence shall also be eligible with respect
to the grant of Non-qualified Stock Options.
9. "Nonqualified Stock Option" shall mean an Option granted
under the Plan other than an Incentive Stock Option.
10. "Option" shall mean, unless otherwise specifically limited
under any provision of this Plan, both an Incentive Stock Option and a
Nonqualified Stock Option granted pursuant to this Plan.
11. "Option Price" shall mean the price at which Common Stock
may be purchased under an Option, as provided in Section 7.(e) of this
Plan.
12. "Optionee" shall mean a Key Employee granted an Option under
the Plan.
13. "Parent" shall mean any corporation which qualifies as a
parent corporation of the Company within the meaning of Section 425(e)
of the Code.
14. "Plan" shall mean the Great American Communications Company
1993 Stock Option Plan.
15. "Stock Option Agreement" shall mean the written agreement
between an Optionee and the Company evidencing the grant of an Option
and setting forth the terms and conditions of the grant.
16. "Subsidiary" shall mean any corporation which qualifies as a
subsidiary corporation of the Company within the meaning of Section
425(f) of the Code.
Section IX. Administration of the Plan.
1. Committee. The Plan shall be administered by the Committee
which shall include not less than two members of the Board who are
"disinterested persons" as defined in Rule 16b-3(d)(3) promulgated under
the Securities Exchange Act of 1934, as amended (the "1934 Act"). The
members of the Committee shall serve at the pleasure of the Board, which
shall have the power, at any time and from time to time, to remove
members from the Committee or to add members thereto. Vacancies on the
Committee shall be filled by action of the Board.
2. Duties and Powers of the Committee. The Committee shall
have the full power and authority, but subject to and not inconsistent
with the express provisions of the Plan, to administer the Plan and to
exercise all the powers and authorities either specifically granted to
it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority 1. to grant Options
which have received any requisite approval of the Board and to determine
which Options shall constitute Incentive Stock Options and which Options
shall constitute Nonqualified Stock Options; 2. to determine the
employees to whom, and the time or times at which, Options shall be
granted; 3. to determine the number of shares of Common Stock to be
<PAGE>
covered by each Option; 4. to determine the Option Price of Common Stock
subject to an Option; 5. to determine the duration of the exercise
period of Options and the time or times at which Options may be
exercised and the extent of exercisability of Options; 6. to determine
the terms and provisions of Stock Option Agreements (which need not be
identical) entered into in connection with Options granted under the
Plan, including such terms and provisions as shall in the judgment of
the Committee be necessary or advisable in order to conform to any
applicable laws or regulations, as the same may be amended from time to
time; and 7. to make all other determinations necessary or advisable for
the administration of the Plan. Subject to the express provisions of
the Plan, the Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Stock Option Agreement
in such manner and to the extent it shall determine in order to carry
out the purposes of the Plan.
The Committee shall have full power and authority to construe and
interpret the Plan and the respective Stock Option Agreements and to
establish, amend or rescind such rules, regulations and procedures as the
Committee deems necessary or appropriate for the proper administration of
the Plan.
The determinations of the Committee on the foregoing matters and any
other matters arising in connection with the construction, administration,
interpretation and effect of the Plan and of the Committee's rules and
regulations thereunder shall (except as otherwise specifically provided in
the Plan) be final, binding and conclusive.
3. Committee Meetings and Actions. The Committee may select
one of its members as Chairman. The Committee shall hold its meetings
at such times and places as it shall determine. All decisions and
determinations of the Committee shall be made by not less than the
affirmative vote of a majority of its members. Actions may be taken by
the Committee at a duly conveyed meeting (including a meeting by
telephone conference call) or by unanimous written consent.
Section X. Eligibility. Options under the Plan may be granted only to
Key Employees of the Company and its Subsidiaries. A director of the
Company who is not also a Key Employee shall only be eligible to receive a
Non-qualified Option under this Plan. More than one Option may be granted
to the same Optionee and be outstanding concurrently hereunder.
Section XI. Shares Subject to the Plan.
1. Aggregate Number of Shares Available. Subject to the
adjustments provided for in Section 12 of this Plan, the aggregate
number of shares of Common Stock for which Options may be granted under
the Plan shall be 600,000 shares. Shares delivered by the Company
pursuant to exercises of Options may be authorized but unissued shares
of Common Stock, issued shares of Common Stock which have been
reacquired by the Company, or a combination thereof, as the Board or the
Committee shall from time to time determine.
2. Effect of Expiration of Options. In the event that any
outstanding Option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares of Common
Stock subject to but not issued under such Option shall again be
available for the granting of Options under the Plan.
3. Effect of Exercises. If all or any portion of an Option is
<PAGE>
exercised, the shares with respect to which such Option is exercised,
shall not thereafter be available for the granting of other Options
under the Plan.
Section XII. Stock Options Agreements. Each Option shall be
evidenced by a written Stock Option Agreement, which shall be executed by
the Company and the Optionee, containing such terms and conditions, not
inconsistent with the Plan, as shall be determined by the Committee.
Stock Option Agreements evidencing Incentive Stock Options shall contain
such terms and conditions, among others, as may be necessary in the
opinion of the Committee to qualify them as an incentive stock option
under the Code.
Section XIII. Terms and Conditions of Options. Each Option granted
under the Plan shall comply with and be subject to the following terms and
conditions, as well as such other terms and conditions as may be
determined by the Committee and specified in the related Stock Option
Agreement:
1. Number of Shares. The number of shares of Common Stock to
which an Option relates shall be determined by the Committee and
specified in the related Stock Option Agreement.
2. Type of Option. Each Stock Option Agreement shall specify
the type of Option granted and evidenced thereby, i.e., whether the
Option is an Incentive Stock Option or a Nonqualified Stock Option.
3. Date of Grant; Exercise Period. The date of grant of any
Option shall be the date on which the Committee shall award the Option
(or the earlier date, if applicable, that the Board specifically
approves such grant) if an immediate grant of such Option is
contemplated, or the date contemplated as the date of grant if the
Committee imposes a condition on the granting of such Option. Options
granted under the Plan shall be for such periods as may be determined by
the Committee and set forth in the related Stock Option Agreements,
subject to the provisions of Section 9 hereof regarding early
termination upon the occurrence of certain events and subject to the
further provisions of this paragraph 7.(c). The exercise period of an
Incentive Stock Option shall not exceed ten (10) years from the date of
grant of such Option.
4. Vesting of Options. Subject to the further provisions of
this paragraph (c) regarding Incentive Stock Options and unless
otherwise recommended to the Committee by the Board, all Options shall
become exercisable upon the first anniversary of the Date of Grant to
the extent of Twenty Percent (20%) of the total shares covered by the
Option with an additional Twenty Percent (20%) of the total shares
covered by the Option becoming exercisable on each succeeding
anniversary. This right of exercise shall be cumulative and shall be
exercisable in whole or in part.
5. Option Price. The Option Price per share of the Common
Stock subject to an Option granted under the Plan shall be determined by
the Committee at the time the Option is granted, and shall be subject to
the following conditions:
1. Nonqualified Stock Options - The Option Price
per share of Common Stock subject to a Nonqualified Stock
Option may be less than the Fair Market Value per share of
the Common Stock on the date of grant, but shall not be less
<PAGE>
than the par value per share of Common Stock.
2. Incentive Stock Options - The Option Price per
share of Common Stock subject to an Incentive Stock Option
shall not be less than the greater of (a) 100% of the Fair
Market Value per share of the Common Stock on the date of
grant, or (b) the par value per share of the Common Stock.
Section XIV. Method of Exercise; Payment of Option Price
1. Method of Exercise. An Option may be exercised as to any or
all full shares of Common Stock as to which the Option has become
exercisable in accordance with the terms of the related Stock Option
Agreement and the provisions of this Plan by delivering to the Company
written notice of such exercise in the manner hereinafter specified in
Section 17, provided, however, that an Option may not be exercised at
any one time as to less than 1,000 shares (or such number of shares as
to which the Option is then exercisable if such number of shares is less
than 1,000 shares). Such written notice shall specify the number of
shares of Common Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option
Price for such shares. The date of exercise of an Option or portion
thereof shall be the date of receipt by the Company of such written
notice as determined in accordance with the provisions of Section 17 of
the Plan.
2. Payment of Option Price. Payment for shares purchased upon
exercise of an Option may be made
1. in cash (including a check, bank draft or money
order), or
2. with the approval of the Committee, by delivering to the
Company shares of Common Stock already owned by the Optionee
("Previously Held Shares") having a Fair Market Value (determined
as of the day preceding the date on which the Option is exercised)
equal to the cash Option Price of the shares of Common Stock as to
which the Option is being exercised, or
3. with the approval of the Committee, by a combination of
the methods described in (i) and (ii) above, or
4. with the approval of the Committee, by any other method
or in any other form authorized by the Committee and reflected in
the related Stock Option Agreement or in any written notice
relative thereto as may be from time to time delivered by the
Committee to the Optionee.
Section XV. Death, Disability or Other Termination of Employment
1. Death. In the event an Optionee dies (i) while in the
employ of the Company or a Subsidiary or (ii) within three (3) months of
the termination of such employment (other than termination for cause or
voluntary termination without the consent of the Company or the
Subsidiary, as the case may be), his Option may be exercised, solely to
the extent that the Optionee was entitled to exercise the Option at the
date of his death or, if earlier, the date of his termination, by the
person or persons to whom such Optionee's rights under the Option shall
pass by will or the laws of descent and distribution, at any time or
from time to time within one (1) year after the date of Optionee's death
<PAGE>
or prior to the expiration of the period for which the Option was
granted, whichever is the shorter period.
2. Disability. In the event an Optionee's employment by the
Company or a Subsidiary is terminated because of the Optionee's
permanent disability, the Optionee may exercise his Option, solely to
the extent that he was entitled to do so at the date of termination of
his employment, at any time or from time to time within one (1) year
after the date of such termination of employment or prior to the
expiration of the period for which the Option was granted, whichever is
the shorter period.
3. Other Termination of Employment. In the event the
Optionee's employment by the Company or a Subsidiary is terminated other
than by death or permanent disability as provided by paragraphs (a) and
(b), respectively, of this Section 9 and other than for cause or by the
voluntary action of the Optionee without the consent of the Company or
Subsidiary employing the Optionee, the Optionee may exercise his Option,
solely to the extent that he was entitled to do so at the date of
termination of his employment, at any time or from time to time within
ninety (90) days after the date of such termination of employment or
prior to the expiration of the period for which the Option was granted,
whichever is the shorter period. In the event the Optionee's employment
by the Company or a Subsidiary is terminated for cause or by the
voluntary action of the Optionee without the consent of the Company or
Subsidiary employing the Optionee, his Option shall terminate at the
date of termination of his employment.
4. Failure to Exercise. To the extent an Option or any portion
thereof is not exercised within the limited period provided in
paragraphs (a), (b) or (c) of this Section 9, whichever is applicable,
all rights pursuant to such Option will cease and terminate at the
expiration of such period.
5. Matters Relating to Termination of Employment. The
Committee in its absolute discretion shall determine the effect of all
matters and questions relating to the termination of employment of an
Optionee, including, but not limited to, questions as to whether a
termination of employment resulted from permanent disability or was
voluntary or involuntary on the part of the Optionee and questions of
whether particular leaves of absence constitute terminations employment.
Section XVI. Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the
Plan, the Committee in its discretion may modify, extend, or renew
outstanding Options granted under the Plan, or accept the surrender of
outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options hereunder in substitution therefor.
Notwithstanding the foregoing, however, no modification (other than
adjustments as provided by Section 12 hereof) of an Option shall, without
the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted to such Optionee.
If the terms of an Incentive Stock Option are "modified, extended or
renewed" within the meaning of Section 424(h) of the Code and
interpretations thereunder, such modification, extension or renewal shall
be considered the granting of a new Incentive Stock Option.
Section XVII. Withholding Taxes. The Company shall be entitled to
require, as a condition to its delivery of shares of Common Stock upon the
<PAGE>
exercise of an Option that the Optionee pay to the Company an amount
sufficient to satisfy all present or estimated future federal, state and
local withholding tax requirements related thereto.
Subject to the further provisions of this Section 11 and to the
disapproval of the Committee, an Optionee may elect to satisfy applicable
withholding tax liabilities by 1. having the Company withhold from the
shares of Common Stock otherwise issuable to the Optionee upon his
exercise of an Option that number of shares of Common Stock having a Fair
Market Value on the day preceding the date of such exercise sufficient to
satisfy the amount of such tax liabilities or 2. delivering to the Company
that number of Previously Held Shares having a Fair Market Value on the
day preceding the date of such exercise sufficient to satisfy the amount
of such tax liabilities. Any such election will be irrevocable and must
be made prior to the date the Option exercise becomes taxable. In
addition, if the Optionee is a director or an officer of the Company
within the meaning of Section 16(b) of the 1934 Act, such election may not
be made within six months of the grant of the Option (except that this
limitation will not apply in the event of the death or disability of the
Optionee prior to the expiration of the six-month period), and such
election shall be made either in the ten-day "window period" following the
release of the Company's quarterly or annual summary earnings statement as
provided by Rule 16b-3(e)(iii) under the 1934 Act, or at least six months
prior to the date the Option exercise becomes taxable.
The Company intends that this Section 11 shall comply with the
requirements of Rule 16b-3 under the 1934 Act, as the same may be
interpreted or amended from time to time during the term of the Plan.
Should any provision of this Section 11 not be necessary to comply with
the requirements of the Rule or should any additional provisions be
necessary for this Section 11 to so comply, the Committee may amend the
Plan to add to or modify the provisions of the Plan accordingly.
Section XVIII. Adjustments Upon Changes in Capitalization. The total
number and character of shares available for Options under the Plan, the
number and character of shares subject to outstanding Options and the
Option Price shall be appropriately adjusted by the Committee in the event
of any change in the number or character of outstanding shares of Common
Stock resulting from a stock dividend, subdivision or combination of
shares, or reclassification. In the event of a merger or consolidation of
the Company or a tender offer for shares of Common Stock, the Committee
may make such adjustments with respect to Options under the Plan and take
such other actions as it deems necessary or appropriate to reflect, or in
anticipation of, such merger, consolidation or tender offer, including,
without limitation, the substitution of new Options, the termination or
adjustment of outstanding Options, the acceleration of Options, or the
removal of limitations or restrictions on outstanding Options.
Section XIX. Nontransferability. No Option granted under the Plan
shall be transferable by an Optionee otherwise then by will or by the laws
of descent and distribution, and an Option may be exercised, during the
lifetime of the Optionee, only by the Optionee.
Section XX. No Right to Continued Employment. Nothing in this Plan or
in any Option granted hereunder shall confer upon an Optionee any right to
continue in the employ of the Company or a Subsidiary nor interfere or
affect in any way the right of the Company or a Subsidiary to terminate an
Optionee's employment at any time for any reason.
Section XXI. Rights as a Shareholder. An Optionee shall have no
<PAGE>
rights as a shareholder with respect to any shares of Common Stock subject
to his Option until the date of issuance to him of a stock certificate or
certificates for such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is prior to the
date such stock certificate is issued, except as provided in Section 12
hereof.
Section XXII. Compliance with Law and Other Conditions. The
obligation of the Company to issue or deliver shares of Common Stock upon
the exercise of Options shall be subject to all applicable laws,
regulations, rules and approvals of applicable governmental and regulatory
authorities. Notwithstanding any other provisions of this Plan or any
Stock Option Agreements, the Company shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock
purchased upon the exercise of an Option prior to the fulfillment of the
following conditions:
1. The listing, or approval for listing upon notice of
issuance, of such shares on any securities exchange on which the Common
Stock is then listed;
2. The registration or other qualification of such shares under
any state or federal securities law or regulation which the Committee
shall, in its absolute discretion upon the advice of counsel, deem
necessary or advisable; and
3. The obtaining of any other consent, approval, permit or
other clearance from any state or federal governmental or regulatory
agency which the Committee shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable.
With respect to Options granted to any Optionee who is an officer of the
Company or is otherwise subject to Section 16 of the 1934 Act, the
Committee may, in its absolute discretion at the time of the granting of
an Option or the exercise thereof, make such provisions as may be
necessary to assure compliance with Rule 16b-3 under the 1934 Act.
Section XXIII. Notices. Whenever any notice is required or permitted
to be given under the Plan or any Stock Option Agreement, such notice must
be in writing and personally delivered or sent by courier or by mail. Any
such notice shall be deemed effectively given or delivered upon personal
deliver or twenty-four hours after delivery to a courier service which
guarantees overnight delivery or five (5) days after deposit with the U.S.
Post Office, by registered or certified mail, return receipt requested,
postage prepaid, addressed to the person who is to receive such notice at
the address which such person has theretofore specified by written notice
delivered in accordance herewith. The Company or an Optionee may change,
at any time and from time to time, by written notice to the other, the
address which it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee shall
specify as its or his address for receiving notices the address set forth
in the Stock Option Agreement pertaining to the shares of Common Stock to
which such notice relates.
Section XXIV. Amendment, Suspension or Termination of the Plan. The
Plan may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Board or the
Committee; provided, however, that except as expressly authorized by the
Plan, the Board shall not, without the approval of the holders of a
<PAGE>
majority of the outstanding shares of the Company's stock entitled to vote
thereon, effect any change to the Plan if such change would cause the Plan
to cease to satisfy any applicable conditions of Rule 16b-3.
Further, no such amendment, suspension or termination, other than
adjustments for changes in capitalization as provided in Section 12
hereof, shall adversely affect or impair any outstanding Option without
the written consent of the Optionee affected thereby.
Section XXV. Effective Date; Duration.
1. Effective Date. The Plan shall become effective upon the date of
its adoption by the Board provided that, within twelve months after the
date the Plan is adopted by the Board, the Plan is approved and adopted by
the holders of a majority of the outstanding shares of stock of the
Company entitled to vote thereon. If the Plan shall not be subsequently
approved and adopted by the shareholders of the Company as specified
herein, the Plan and all Options granted hereunder shall be null and void
and any obligation pursuant to the subsequent exercise of any Option
previously granted shall not be binding upon the Company. To the extent
an Optionee has already purchased and paid for any shares received under
the Plan, the Optionee may retain the ownership of said shares; however,
the prior exercise of said Option shall not constitute the exercise of an
Incentive Stock Option.
2. Duration. Unless earlier terminated by the Board or the Committee
pursuant to the provisions of the Plan, the Plan shall terminate on the
tenth anniversary of its effective date as hereinbefore specified. No
Options shall be granted under the Plan after such termination date.
GREAT AMERICAN COMMUNICATIONS COMPANY
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The following is a list of subsidiaries of GACC at December 31, 1993.
All corporations listed are 100% owned subsidiaries of GACC and, if
indented, subsidiaries of the company under which they are listed.
State of
Name of Company Incorporation
Great American Broadcasting Company Delaware
Great American Television and Radio Holdings, Inc. Ohio
Great American Television and Radio Company, Inc. Ohio
Leisure Systems Inc. Ohio
The names of certain subsidiaries are omitted, as such subsidiaries in
the aggregate would not constitute a significant subsidiary.
