SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________ to ________________
Commission File No. 0-2481
LIN BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 62-0673800
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5295 Carillon Point
Kirkland, Washington 98033
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(206) 828-1902
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. 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 will
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. [ X ]
The number of shares outstanding of the registrant's Common Stock
was 51,512,770 as of February 28, 1994, excluding 3,817,402 treasury
shares. The aggregate market value of the voting stock held by non-
affiliates of the registrant was $2,739,315,011 as of February 28, 1994.
(The term "affiliates" is deemed, for this purpose only, to refer only to
the directors of the registrant and to McCaw Cellular Communications, Inc.)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement relating to its 1994
annual meeting of stockholders are incorporated by reference into Part III
hereof. Such Proxy Statement will be filed with the Securities and
Exchange Commission no later than 120 days after the registrant's fiscal
year ended December 31, 1993.
<PAGE>
<PAGE> TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . .
Business of the Company . . . . . . . . . . . .
The Cellular Telephone Industry . . . . . . . .
The Company's Cellular Operations . . . . . . .
The Company's Media Operations. . . . . . . . .
Mobile Satellite Service. . . . . . . . . . . .
Private Market Value Guarantee. . . . . . . . .
Governmental Regulation . . . . . . . . . . . .
Employees . . . . . . . . . . . . . . . . . . .
Item 2. Properties . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . .
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . .
Item 6. Selected Consolidated Financial Data . . . . . . .
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . .
Item 8. Financial Statements and Supplementary Data. . . .
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . .
PART III
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 . .
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . .
<PAGE>
<PAGE> 1 PART I
Item 1. BUSINESS
Business of the Company
LIN Broadcasting Corporation (the "Company" or "LIN"),
through its subsidiaries, is principally engaged in the cellular
telephone and media (commercial television broadcasting and
specialty publishing) businesses.
The Company owns cellular interests (i.e., direct or
indirect interests in licensees) representing approximately 27.2
million 1993 pops primarily in the New York, Los Angeles,
Philadelphia, Dallas-Fort Worth and Houston markets and owns
seven network-affiliated television stations. "Pops" means the
population of a market multiplied by a percentage ownership
interest in an entity licensed or designated to receive a license
(a "licensee") by the Federal Communications Commission (the
"FCC") to construct or operate a cellular telephone system in
such market. Pops do not represent actual subscribers in a
cellular system. All of these pops (except Philadelphia, where
the Company's equity/voting interest is 49.99%) are located in
markets where the Company owns a 50% or more equity or voting
interest and these markets represent five of the top 10
Metropolitan Statistical Areas ("MSAs") nationwide. As of
December 31, 1993, the cellular systems in which the Company
owned interests had an aggregate of approximately 1,434,000
subscribers and average penetration was 3.34%. The Company's
proportionate share of such subscribers (based on its actual
ownership interest) was 865,000. During 1993, the cellular
operations in which LIN has ownership interests produced
aggregate net revenues of $1.22 billion and LIN's broadcasting
and publishing operations generated net revenues of $168 million.
The Company, a Delaware corporation, was incorporated in
October 1961. The Company's principal executive office is
located at 5295 Carillon Point, Kirkland, Washington 98033. Its
telephone number is (206) 828-1902. References to "the Company"
in this Form 10-K include LIN Broadcasting Corporation and/or its
subsidiaries and its predecessors, unless the context otherwise
requires. For information about the Company's industry segments,
see Note 11 to the consolidated financial statements of the
Company contained elsewhere in this Annual Report on Form 10-K.
McCaw Cellular Communications, Inc. ("McCaw") owns an
approximate 52% interest in the Company. In August 1993, McCaw
and American Telephone and Telegraph Company ("AT&T") signed a
definitive merger agreement. The agreement, which is contingent
on regulatory and other approvals, would include an all-stock
transaction with each McCaw share exchanged for one AT&T share,
subject to certain adjustments depending on the trading price of
AT&T stock prior to the close of the transaction. For more
information regarding McCaw's proposed transaction with AT&T, see
McCaw's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
The Cellular Telephone Industry
Cellular telephone technology provides high quality, high
capacity service to and from vehicle-mounted, hand-held portable<PAGE>
<PAGE> 2
and stationary wireless telephones. Cellular telephone systems
("cellular systems") divide a region into many "cells," each
covered by its own low-power transmitter, receiver and signaling
equipment (the "cell site"). Each cell site is connected by
landline, microwave or other technology to the system's computers
in a mobile telephone switching office (the "switch"). The
switches control the operation of the cellular system for the
entire service area. Each conversation in a cellular system
involves a radio transmission between a cellular telephone and a
cell site and the transmission of the call between the cell site
and a switch. The switch and cell sites periodically monitor the
signal quality of calls in progress. The signal quality of the
transmission between the cellular telephone and a cell site in
any cell declines as the signal strength decreases. When the
signal quality of a call declines to a predetermined level, the
switch determines if the signal quality is greater at the cell
site of another cell or different sector within the same cell and
if so, "hands off" the call to that other cell site or sector.
This hand off takes a fraction of a second and is not generally
noticeable to either party to the call. If the cellular telephone
leaves the service area of the cellular system, the call is
disconnected unless an appropriate technical interface is
established with an adjacent cellular system.
Currently, the radio transmission between the cellular
telephone and the cell site is primarily an "analog" transmission
and both the cellular telephone and the transmitting equipment
are designed to send and receive voice signals exclusively in
this mode. With the current analog technology and the amount of
licensed radio frequencies available to the Company, there are
capacity limitations in certain areas, especially in large
markets like New York and Los Angeles. To relieve potential
capacity constraints as well as to provide a platform for future
service enhancements, the Company has participated in the
development of and is planning to introduce digital service in
addition to traditional analog service in all of its cellular
operations. In October of 1993, the Company launched digital
service in Los Angeles. The Company has also installed digital
transmitting equipment in New York and Dallas and expects to
introduce commercial service to those markets during the first
half of 1994. The Company is using a digital format referred to
as Time Division Multiple Access ("TDMA") which has been adopted
and re-endorsed as an industry standard by the Cellular
Telecommunications Industry Association. Digital technology
offers many advantages over analog technology, including an
initial three-fold increase in capacity, lower costs and the
opportunity to provide enhanced services, such as improved data
transmissions, short messaging, caller ID and longer phone
battery life. Because existing analog cellular telephones will
not be able to receive digital transmissions from the cell site,
the Company expects that the conversion from analog to digital
will be phased in over a number of years, during which a system
will maintain both analog and digital transmitting equipment and
will thus be able to serve customers with either analog, dual-
mode (analog and digital) or digital only cellular telephones.
All of the Company's systems are already compatible with both
analog and digital transmitting equipment. Thus, implementation
of digital service only involves the change-out of cell site
radios and certain other equipment. The Company expects that
after a meaningful percentage of call volume is handled by the<PAGE>
<PAGE> 3
digital network, the capital costs of adding system capacity to
support subscriber growth will drop significantly.
Cellular systems can offer a variety of features including
call forwarding, call waiting, conference calling, voice message
storage and retrieval and voice recognition where subscribers can
make calls by speaking the number to be dialed. Because cellular
systems are fully interconnected with the landline telephone
network, subscribers can receive and originate both local and
long distance calls from their cellular telephones. The cellular
system operator pays an interconnection charge to the local
landline telephone company to carry calls placed from a mobile
unit to a wired telephone. The amounts paid are subject to
negotiation or tariff and vary from system to system.
All cellular phones are designed for compatibility with
cellular systems in all market areas within the United States,
Canada and Mexico and with all channels allocated for cellular
use, so that a mobile unit may be used wherever a subscriber is
located. Changes of cellular telephone numbers or other technical
adjustments to mobile units by the manufacturer or the cellular
service operator may be required, however, to enable the
subscriber to change from one cellular system to another.
Cellular system operators may provide service to subscribers from
another cellular system temporarily located in or traveling
through the operator's service area. Such subscribers are called
"roamers."
The FCC granted only two licenses for cellular service in
each market. During its initial licensing of cellular MSAs and
rural service areas ("RSAs"), the FCC reserved one license for
applicants (such as the Company) that were not affiliated with
any landline telephone carrier (the "A Block license"), and the
other license for wireline applicants (the ("B Block license") .
Now, subject to FCC rules, an A Block or B Block license may be
granted to either a wireline or nonwireline entity, but no entity
may control more than one cellular system in any service area.
<PAGE>
<PAGE> 4
<TABLE>
The Company's Cellular Operations
Set forth below is information with respect to the seven cellular systems in which
the Company owns an interest:
Market Information
Total
LIN's Interests Population Market B Block
Name and Location Equity Voting (000,000s)(1) Rank(1) Competition
<S> <C> <C> <C> <C> <S> <C>
Cellular One 93.1% 100.0% 14.9 1 NYNEX/Bell
New York Atlantic
Los Angeles Cellular 40.0% 50.0% 14.6 2 AirTouch
Telephone Company Communications
Los Angeles (formerly
PacTel)
Comcast Metrophone 49.9% 49.9% 4.9 4 Bell Atlantic
Philadelphia
Metrocel 60.4% 60.4% 4.2 6 Southwestern
Dallas-Ft. Worth Bell
Houston Cellular 56.3% 50.0% 3.8 8 GTE
Telephone Company
Houston
Galveston Cellular 34.6% 50.0% 0.2 169 GTE
Telephone Company
Galveston
Cellular One 100.0% 100.0% 0.2 N/A GTE
(Texas RSA-17)
Newton, TX (2)
1/ Source: Donnelley Marketing Information Services estimate for 1993.
2/ The Company acquired its interest in the Newton, Texas RSA in 1993.
</TABLE>
<PAGE>
<PAGE> 5
The agreements governing the New York, Los Angeles, Dallas-
Fort Worth, Houston and Galveston partnerships are generally
similar and the Company has or shares effective operating control
of each partnership. The Company's wholly owned subsidiaries are
general partners in these partnerships, and each of the
partnerships is governed by a Partners' or Executive Committee
consisting of designated representatives from the partners in the
particular partnership. In each case, the applicable partnership
agreement generally provides that all rights and obligations
(other than voting), such as obligations for capital investment,
sharing of profits and losses, and distributions, are based upon
percentage ownership. The cellular system serving the
Philadelphia market is conducted in the form of a corporation and
Comcast Corporation ("Comcast") has operating control of the
corporation. The participants in each of these partnership or
corporate entities are generally responsible for their pro rata
share of all capital contributions called for by the governing
bodies of such entities, and failure to make such contributions
could result in the ownership interest being either forfeited or
diluted. Such ownership interests are also subject to
restrictions upon the owners' ability to sell, transfer, pledge
or otherwise encumber or dispose of such interests under certain
circumstances.
Marketing. In marketing its services, the Company stresses
that cellular telephones are affordable and easy to use and
produce immediate and direct benefits to subscribers, including
increased productivity for the business user and convenience for
all subscribers. The Company also emphasizes that it is a
locally managed, customer-oriented cellular system operator which
is responsive and accommodating to the needs of subscribers.
The Company follows a strategy of controlled
decentralization which allows each regional manager to adapt the
Company's general marketing and incentive plans to the particular
needs of the market, to develop innovative uses for cellular
telephones and products which are responsive to local needs, and
to set goals for its sales force and dealers. The key elements of
all such marketing plans are appealing to potential subscribers,
creating public awareness and understanding of the cellular
telephone services offered by the Company, developing a sales
force and dealer network, reducing the initial investment
required by subscribers to obtain cellular service and certifying
installation centers.
Subscribers. While subscribers represent a wide range of
occupations, they have traditionally been individuals who work in
the construction, contracting, real estate, wholesale and retail
industries, service industries and professionals. Because these
individuals often work out of their cars during the day, the
Company's systems are used primarily between the hours of 7:00
a.m. and 6:00 p.m. Increasingly, the Company's subscribers
represent major accounts, such as federal and local governmental
agencies, national and regional shipping, delivery and
transportation companies and other businesses. Although a
majority of the Company's subscribers are business users, a
growing share of new customers use the phone principally for
safety and convenience. The Company expects this trend to <PAGE>
<PAGE> 6
continue as market penetration increases. Over half of the
Company's new subscribers purchase a portable unit that is not
restricted to car use. The Company believes that hand-held
portable cellular telephones will become an increasingly large
portion of its subscriber base as the price for such telephones
continues to decline.
Sales Force, Dealers and Retailers. The Company enlists
subscribers through an internal sales force and through a network
of independent dealers and retailers. Dealers and retailers are
independent contractors who solicit customers on a commission
basis for the Company's cellular systems.
The Company's dealers either are in the business of selling
or servicing cellular telephones exclusively or are engaged in
businesses with customers that are likely to become cellular
subscribers. The Company has established and is continuing to
pursue multi-state dealer arrangements. The Company has several
dealer compensation contracts. Most involve a commission which
is paid immediately to the dealer, but with the dealer's
retention of all or part of the commission contingent upon the
customer keeping the service for a specified period of time
(generally between three and six months). Such contracts may
also involve the payment of a portion of the commission over
time, as service is provided to the subscriber.
The Company has also been successful in attracting premier
national mass market retailers to distribute its products.
National Marketing. Increasingly, large customers with
nationwide needs for cellular services are purchasing these
services centrally. Larger corporations generally require a
national sales force, special volume purchase discounts, trial
programs, central billing, simple rate plans, and national 24-
hour customer service. McCaw's National Account Services Group
coordinates these activities with local markets, and certain of
the Company's markets contract with this group in order to meet
the needs of their large customers. To improve these programs,
McCaw is now operating a central clearing house for all new
national account orders and shipping of the cellular telephones
to national accounts. The National Account Services Group also
accredits local installers, and establishes McCaw's national
corporate price plans.
Telephones and Installation. The Company purchases
telephones under national sales contracts and, as a means of
stimulating demand for cellular service, generally sells phones
to its dealers and the major accounts it services directly at
prices reflecting its costs. The Company cooperates with several
cellular equipment manufacturers in local advertising and
promotion of cellular equipment.
There are a number of different types of cellular telephones
available, all of which are compatible with cellular systems
nationwide. Models vary by type: car-mounted, transportable, and
fully portable; by type of transmission: analog and digital; by
feature, such as: speed dialing, speakerphone, voice recognition
and horn alert; and by price. Prices at which telephones are
sold to subscribers may also vary by market, resulting in part<PAGE>
<PAGE> 7
from local competitive forces. To ensure quality installation
and customer satisfaction, the Company certifies installation
centers which meet certain quality control standards.
Products and Services. The Company generally offers its
customers several pricing options. Some options consist of a
fixed monthly charge plus additional variable charges per minute
of telephone use. A high volume caller might find an option with
a high monthly access charge and low per-minute charges to be
most economical. Low volume users might choose a different
package featuring a low access fee and high per-minute charge.
The Company also offers plans with access fees which include a
specified number of minutes, with established per-minute charges
for usage in excess of the included minutes.
The Company makes available to subscribers custom calling
services such as call-forwarding, call-waiting, three-way
calling, no-answer and busy transfer. The Company has also
instituted a voice retrieval message system and has or will be
installing voice recognition technology in all its cellular
systems. The Company also provides news, weather, sports and
financial news recordings.
The Company has also implemented automatic roaming in its
cellular systems. With automatic roaming, the Company's
subscribers are pre-registered in cellular systems outside the
Company's regions. Such subscribers receive service automatically
while they are roaming, without having to communicate with the
local office in any fashion.
Customer Service. The Company recognizes that being
responsive to the problems and concerns of its subscribers is
critical in a service business. The Company trains and certifies
various agents to provide repair services for the Company's
subscribers. The Company continually monitors and provides
ongoing training for service centers. In addition, the Company
operates its markets through an on-site staff, including a branch
manager or managers, technicians and customer service
representatives.
McCaw National Network. McCaw is continuing the process of
linking various regional cellular systems, including the
Company's, into the North American Cellular Network ("NACN"), a
"national seamless network" permitting cellular subscribers,
without making special arrangements, to both place and receive
calls anywhere they travel in areas served by the NACN, even if
the local cellular service is not provided by McCaw or the
Company. All of McCaw's and the Company's markets within the
continental United States as well as the A Block systems in most
other major metropolitan areas and Cantel, which holds Canada's A
Block cellular license, are served by the NACN. GTE Corporation
and most of the other major B Block licensees have formed a
national network similar to the NACN, which competes with the
NACN. As of February 28, 1994, the NACN served approximately 5
million subscribers and covered a population base of over 100
million.
<PAGE>
<PAGE> 8
Cellular Competition. The FCC awarded only two cellular
licenses in each market - an A Block and a B Block license.
During its initial licensing of MSAs and RSAs the FCC reserved
the A Block license for a nonwireline company (which in each of
the Company's markets is the partnership or other entity in which
the Company owns an interest) and the B Block license for an
affiliate of a local wireline telephone company. Now, subject to
FCC rules, an A Block or a B Block license may be granted to
either a wireline or a nonwireline entity, but no entity may
control more than one license per market. Only a small number of
RSA cellular licenses have not been granted. Each licensee in a
market has the exclusive grant of a defined frequency band within
that market. The Company also faces competition for wireless
communications services in each market from other wireless
technologies which provide many of the characteristics of
cellular service. See "Competition From Other Technologies."
Competition is principally on the basis of services and
enhancements offered, the technical quality of the system,
quality and responsiveness of customer service and price.
Competition may be intense. Under applicable law, the Company is
required to permit the "reselling" of its services. In certain
larger markets and in certain market segments such as national
customers, competition from resellers may be significant. There
is also competition for dealers.
The Company believes that in most of its markets the B Block
competitor must be viewed as formidable because of its greater
assets and resources and more extensive experience in
telecommunications. Large amounts of capital are required to
build and operate a cellular system, especially for equipment and
marketing. Because of their historical affiliation with the local
telephone company, the financial and other resources available to
the B Block licensees will generally be greater than those
available to the Company. In addition, the B Block licensee
generally has completed construction and commenced operation of
its system earlier than the Company's system, giving the B Block
licensee a significant head start.
FCC rules require Regional Bell Operating Companies that
become cellular operators to create a separate subsidiary to own
and operate cellular systems. This requirement is intended to
make it more difficult for these companies to engage in
anticompetitive activities, such as subsidizing their cellular
operations from monopoly landline revenues in order to force
cellular competitors out of the market.
There are currently pending several legislative initiatives
which may affect the Company, including proposals regarding the
obligation of common carriers such as the Company to provide
interconnection or equal access to interexchange carriers and the
right of the Regional Bell Operating Companies (which are the
Company's primary B Block competitors) to offer or resell
interexchange services. In light of the uncertainty as to
whether such legislation will be enacted or the final form
thereof, and as to the nature of the additional competitive
services covered thereby, it is impossible to quantify the impact
of these legislative initiatives or such competition on the
Company at this time. <PAGE>
<PAGE> 9
Competition From Other Technologies. Potential users of
cellular systems may find their communication needs satisfied by
other current and developing technologies. For example,
specialized mobile radio ("SMR") systems, generally used by
taxicabs and tow truck services, and other communication services
which have the technical capability to handle mobile telephone
calls may provide competition in certain markets. One-way
messaging or beeper services that feature voice message and data
display as well as tones may be adequate for potential
subscribers who do not need to transmit back to the caller.
Other two-way mobile services may also be competitive with the
Company's services. For example, the second generation of
cordless telephone technology will permit the application of this
technology to a public environment. If sufficient demand
develops for these types of services, however, current regulation
would permit the Company to offer them under its existing
licenses.
In addition to B Block cellular competition, the Company and
its unconsolidated affiliates expect to face competition from
enhanced specialized mobile radio services ("ESMR") operations,
such as Nextel, which are providing cellular-like services in the
Company's California markets. A number of other ESMR networks
are scheduled to begin either operation or construction in 1994
in other cities as well.
In September 1993, the FCC adopted rules for the licensing
of personal communications services ("PCS"). While the Company
and other cellular carriers will be eligible to compete for these
licenses, the amount of PCS spectrum that cellular carriers may
acquire in their own cellular market areas is limited.
Furthermore, the FCC's rules provide for as many as seven PCS
licenses in any market area, so the likelihood of additional
competition in wireless services has increased. The FCC has also
established Rand-McNally Major Trading Areas ("MTAs") and Basic
Trading Areas ("BTAs") as the licensing areas for PCS services.
Both MTAs and BTAs are larger than a cellular MSA or RSA. In
some instances, an MTA may exceed in size the Company's cluster
of cellular licenses in a particular geographic region. It is
expected that PCS licenses will begin to be awarded in 1994.
Several parties to the FCC proceeding including the Company have
petitioned for reconsideration of certain aspects of the PCS
rules and it is possible that the FCC could amend its rules based
on these petitions.
Some of the PCS spectrum is already used by cellular
carriers for microwave transmissions, and the FCC has determined
that the existing microwave users must be phased out or relocated
to new frequencies once PCS is deployed. However, the FCC's
rules enable displaced microwave users to obtain compensation
from PCS licensees for vacating PCS spectrum and provide for a
transition period before incumbent microwave users are forced to
relocate.
Pursuant to the Omnibus Budget Reconciliation Act of 1993,
signed into law in August 1993, the FCC will auction the spectrum
that it has allocated for PCS licenses. Auctions are scheduled to
<PAGE>
<PAGE> 10
begin in May 1994. The FCC has recently proposed rules for
conducting auctions; these include a provision for the submission
of bids to acquire all licenses available within a common
spectrum block, thus offering a new PCS entrant the possibility
of obtaining national coverage. Because the auction rules are
only in preliminary form, it is uncertain how they will affect
the Company's competitive position.
The Company's Media Operations
The Company's media business consists of its television
broadcasting and publishing operations. The percentage of the
Company's media revenues contributed by television broadcasting
and publishing in each of the three years ended December 31,
1993, 1992 and 1991, respectively, are shown in the following
table:
1993 1992 1991
Broadcasting 86.4% 86.7% 86.1%
Publishing 13.6% 13.3% 13.9%
Television Broadcasting. The Company owns, through wholly
owned subsidiaries and under authorizations granted by the FCC,
four VHF and three UHF network-affiliated television stations.
In addition to network programming, each of the Company's
stations devotes segments of its broadcasting day to news, local
live programming, talk shows, and syndicated and off-network
programs. News and community-oriented programs are emphasized
and play an important role in the stations' services to their
viewers. Set forth in the following table is information with
respect to the Company's television stations. <PAGE>
<PAGE> 11
<TABLE>
Number of
Commercial
Stations
Network NSI Operating
Station and Market Channel Affiliation Market Rank(1) in Market
<S> <C> <C> <S> <C> <C>
KXAS-TV
Ft. Worth-Dallas, 5 (VHF) NBC 8 4 VHF
Texas 8 UHF
WISH-TV
Indianapolis, 8 (VHF) CBS 26 4 VHF
Indiana 4 UHF
WOOD-TV (formerly
WOTV-TV) Grand 8 (VHF) NBC 36 3 VHF
Rapids-Kalamazoo- 2 UHF
Battle Creek, Michigan
WAVY-TV
Hampton Roads, 10 (VHF) NBC 39 3 VHF
Virginia 2 UHF
KXAN-TV (2)
Austin, Texas 36 (UHF) NBC 68 1 VHF
3 UHF
WAND-TV
Decatur-Champaign- 17 (UHF) ABC 77 1 VHF
Springfield-Danville, 6 UHF
Illinois
WANE-TV
Fort Wayne, Indiana 15 (UHF) CBS 103 4 UHF
_______________________
(1) Source: Nielsen Station Index ("NSI") - DMA Market Ranking 1993/1994, A.C. Nielsen
Company.
(2) Station KXAM-TV, Channel 14 (UHF) at Llano, Texas is operated as a satellite station
of KXAN-TV in order to increase its coverage area.
</TABLE>
<PAGE>
<PAGE> 12
Commercial television broadcasting in the United States is
conducted on 68 channels numbered "2" through "69". Channels "2"
through "13" are in the very high frequency (VHF) band and "14"
through "69" are in the ultra high frequency (UHF) band. In
general, UHF stations are at a disadvantage relative to VHF
stations because of relatively weaker reception of UHF
transmission by many viewers and because of the inconvenience of
fine tuning for UHF reception. In markets where no VHF station,
or only one, can be received, these disadvantages are relatively
less significant. Three of the Company's stations, KXAN-TV,
WAND-TV, and WANE-TV, are UHF stations, but the disadvantages of
operating on the UHF band in certain of these markets is
mitigated since only one VHF station transmits in the areas
served by KXAN-TV and WAND-TV and only UHF stations operate in
the area served by WANE-TV. In addition, as cable television
penetration increases in television markets, the reception
disadvantage is further lessened.
The following is certain information (in addition to that
set forth in the foregoing table) with respect to each of the
Company's television stations, including the respective
expiration dates of their FCC licenses and network affiliation
contracts. Applications for renewal of FCC licenses must be
filed with the FCC four months before the expiration date of the
license. See "Governmental Regulation-Broadcasting." On March
16, 1989, the FCC eliminated its long standing rule limiting
network affiliation contracts to two years' duration. Network
affiliation contracts are generally renewable by their terms for
successive periods (unless notice of termination is provided in
advance of its expiration date) and the Company knows of no
reason why its network affiliation contracts should not be
renewed in due course on satisfactory terms. (All population
estimates contained herein are as of January 1, 1994 and were
obtained from Nielsen Market Rankings - October 1993.)
Station KXAS-TV was acquired by the Company in November 1974
and is affiliated with the NBC network pursuant to a network
affiliation contract which expires on January 31, 1996. The Fort
Worth-Dallas market, with a population of approximately
4,700,000, is served by three other commercial VHF television
stations (of which two are affiliated, respectively, with CBS and
ABC, and one is an independent), by two noncommercial VHF
stations (stations which do not accept advertising), and by eight
commercial UHF stations (one of which is affiliated with the FOX
network). Approximately 46% of KXAS-TV's 24 hours of daily
broadcasting time consists of programming that is either locally
produced or purchased from non-network sources.
Station WISH-TV was acquired by the Company in February 1984
and is affiliated with the CBS network pursuant to a network
affiliation agreement which expires on February 14, 1998. The
Indianapolis market, with a population of approximately
2,288,000, is served by three other commercial VHF television
stations, of which one is affiliated with NBC, one is affiliated
with ABC, and one is an independent. In addition, there are two
low power television stations operating in the Indianapolis
market, one of which simulcasts WISH-TV's programming and one
which simulcasts for the NBC affiliate. There are four <PAGE>
<PAGE> 13
commercial independent UHF stations and three non-commercial UHF
stations serving this market. Approximately 42% of WISH-TV's 24
hours of daily broadcasting time consists of programming that is
either locally produced or purchased from non-network sources.
Station WOOD-TV (formerly WOTV-TV) was acquired by the
Company in April 1983 and is affiliated with the NBC network
pursuant to a network affiliation agreement which expires on
April 30, 1994. The Grand Rapids-Kalamazoo-Battle Creek market,
with a population of approximately 1,683,000, is served by two
other commercial VHF television stations which are affiliated
with CBS and ABC and by two commercial UHF television stations
(one of which is affiliated with ABC and one of which is
affiliated with the FOX network) and three non-commercial UHF
television stations. Approximately 45% of WOOD-TV's 24 hours of
daily broadcasting time consists of programming that is either
locally produced or purchased from non-network sources.
Station WAVY-TV was acquired by the Company in April 1968
and is affiliated with the NBC network pursuant to a network
affiliation agreement which expires on December 31, 1996. The
Portsmouth-Norfolk-Newport News-Hampton Roads market, with a
population of approximately 1,614,000, is served by two other
commercial VHF television stations (which are affiliated,
respectively, with CBS and ABC) and by three UHF television
stations (one of which is a noncommercial station).
Approximately 52% of WAVY-TV's 24 hours of daily broadcasting
time consists of programming that is either locally produced or
purchased from non-network sources.
Station KXAN-TV was acquired by the Company in May 1979 and
is affiliated with the NBC network pursuant to a network
affiliation agreement which expires on December 31, 1995. The
Austin market, with a population of approximately 980,000, is
served by three other commercial stations, one of which is a VHF
station affiliated with CBS, one of which is a UHF station
affiliated with ABC, and one of which is a UHF station affiliated
with the FOX network. There is also one noncommercial UHF
television station in this market. Approximately 31% of
KXAN-TV's 24 hours of daily broadcasting time consists of
programming that is either locally produced or purchased from
non-network sources. Its parent company, KXAN Inc., also
operates KXAM-TV, Channel 14, at Llano, Texas. This full power
station operates as a satellite of KXAN-TV with the majority of
its programming duplicating that of KXAN-TV. However, a separate
news bureau has been established to produce local news reports
specific to the KXAM audience.
Station WAND-TV was acquired by the Company in January 1966
and is affiliated with the ABC network pursuant to a network
affiliation agreement which expires on July 1, 1994. The
Decatur-Champaign-Springfield-Danville market, with a population
of approximately 837,000, is served by six other commercial
television stations, one of which is a VHF television station
affiliated with CBS, whose coverage is supplemented by a UHF
satellite located in Springfield. The remaining five stations
are UHF television stations, two of which are affiliated with
NBC, two of which are FOX affiliates located in Springfield and
<PAGE>
<PAGE> 14
Champaign, and one of which is an independent located in Decatur.
This market is also served by a noncommercial VHF television
station. Approximately 50% of WAND-TV's 24 hours of daily
broadcasting time consists of programming that is either locally
produced or purchased from non-network sources.
Station WANE-TV was acquired by the Company in February 1984
and is affiliated with the CBS network pursuant to a network
affiliation agreement which expires on December 31, 1994. The
Fort Wayne market, with a population of approximately 619,000, is
served by three other commercial UHF stations, one of which is
affiliated with NBC, one of which is affiliated with ABC, and one
of which is affiliated with the FOX network. This market is also
served by two noncommercial UHF stations. Approximately 44.6% of
WANE-TV's 24 hours of daily broadcasting time consists of
programming that is either locally produced or purchased from
non-network sources.
The Company also provides programming and advertising services
pursuant to a local marketing agreement to WOTV-41, Battle Creek,
Michigan, an ABC affiliate operating on UHF Channel 41. The
Grand Rapids-Kalamazoo-Battle Creek market, with a population of
approximately 1,683,000, is served by three commercial VHF
stations, including station WOOD-TV, which is owned by the
Company, one other commercial UHF television station and three
non-commercial UHF stations. Approximately 39% of WOTV-41's
hours of broadcasting time consists of programming that is either
locally produced or purchased from non-network sources. WOTV-
41's current FCC license expires in October 1997.
Broadcasting Revenues. Revenues of a local television
station depend to some extent upon whether or not it is
affiliated with a television network. In general, the
affiliation contracts of WAND-TV with ABC, WISH-TV and WANE-TV
with CBS, and KXAS-TV, WOOD-TV, WAVY-TV and KXAN-TV with NBC,
provide that the respective network will offer to the affiliated
station all of the programs it generates, and the affiliated
station normally transmits a number of hours of network
programming each month. The network programs transmitted by the
affiliated station will usually contain advertising originated by
the network for which the network is compensated by its
advertisers.
The affiliation contracts provide that the network will pay
to the affiliated station an amount that is determined by
negotiation based upon the market size and rating level of the
affiliated station in question. Network programs usually contain
"slots" of time in which the local station is permitted to sell
spot advertising for its own account. The affiliate is permitted
to sell advertising spots preceding, following and sometimes
during network programs.
A network affiliation may be important to a local station
because network programs, in general, have higher viewer ratings
than non-network programs and help to establish a solid audience
base and acceptance within the market for the local station.
Because network programming often enhances a station's rating
level, a network-affiliated station is often able to charge
higher prices for its own advertising time.<PAGE>
<PAGE> 15
In addition to revenues derived from broadcasting network
programs, local television stations derive revenues from the sale
of advertising time for spot advertisements, which usually vary
from 10 seconds to 60 seconds in length, and from the sale of
program sponsorship to national and local advertisers.
Advertising contracts are generally short in duration and may
usually be canceled upon two weeks' notice. Each of the
Company's television stations is represented by a national firm
for the sale of spot advertising to national customers, but each
station has local sales personnel covering the service area in
which it is located. National representatives are compensated by
a commission based on net advertising revenues from national
customers.
The following table shows the approximate percentage of the
Company's television broadcasting revenues by source for each of
the past three years:
1993 1992 1991
Local 51% 50% 50%
National spot 46% 47% 46%
Network 3% 3% 4%
As a result of the Consumer Protection and Cable Act of 1992
(the "Cable Act"), the FCC implemented rules that require each
broadcast television station to select either mandatory cable
carriage or negotiated cable retransmission of its signal with
repsect to each cable system in its local market. In the
majority of instances, the Company's television stations elected
for retransmission consent, and during 1993 completed agreements
with local cable operators.
In 1994, the Company will launch the "Local Weather
Station." The "Local Weather Station" will provide Dopplar
radar, local travel and aviation forecasts, weather trends and
features. This station will be offered in certain of the
Company's television markets over local cable systems.
Management expects that the "Local Weather Station" will provide
additional initial revenues of approximately $500,000 per year
and enable introduction into the cable programming business.
Various cable companies have filed legal challenges to the
Cable Act on the grounds that it infringes their constitutional
rights. These challenges are currently pending before the United
States Supreme Court, with a decision expected this summer.
However, management does not expect the outcome of the Supreme
Court case to affect the Company's cable contracts relating to
the "Local Weather Station."
Competition. The television stations of the Company compete
for revenues with other television stations and advertising
media, such as radio, newspapers, magazines, billboards and
direct mail, serving their geographical areas. Generally, a
television station does not compete with stations in other market
areas.
<PAGE>
<PAGE> 16
Other sources of competition to the Company's television
stations include cable television systems, which carry local and
distant television broadcast signals by wire, cable or fiber to
subscribers who pay a fee for this service. However, most cable
systems also supply programming to subscribers that is not
originated on, or transmitted from, conventional broadcasting
stations. Some of these cable programs are sold to subscribers
for additional fees while others are supported by advertising
sales by both the cable network and increasingly by cable
operators. Multipoint distribution services, home dish
subscription services, satellite master antenna systems, VCRs,
movie rentals and low-power stations also compete with broadcast
stations.
The FCC recently expanded the number of frequencies
available for multipoint distribution services, including
services such as direct broadcast satellite television. A large
number of applications in virtually all television markets
(including all the markets served by the Company's stations) have
been filed with the FCC. A number of those applications have now
been granted.
The Company's Specialty Publishing Business. The Company
acquired GuestInformant in October 1981 and, in July 1983
acquired Leisureguides, Inc., which was merged into
GuestInformant in 1985. In August 1990, Metromedia Company, Inc.
("Metromedia") commenced managing GuestInformant pursuant to a
management contract with the Company. GuestInformant publishes
annual, hardcover, high-quality publications that are placed in
the rooms of distinguished hotels in 33 market areas including
most major cities. For each of these locations, GuestInformant
produces a distinctive magazine, which contains editorial
features relating to places of interest in the area and
advertisements supporting each magazine published. In select
markets, GuestInformant also publishes a Quick City Guide, which
is a softcover magazine distributed in hotel lobbies. Editorial
and production offices are located in Woodland Hills, California,
and sales offices are maintained in New York and most other major
cities. Printing is done by independent contractors.
Mobile Satellite Service
Subsidiaries of the Company and McCaw are stockholders
(holding on a combined basis an approximately 12% interest) in
American Mobile Satellite Corporation, which has been licensed by
the FCC to provide national mobile satellite service. This
service is expected to be available by the end of 1994 and will
provide full-duplex, digital mobile telephony to vehicle mounted
and fixed terminals throughout North America. The Company does
not expect mobile satellite service to be competitive with
cellular service in urban areas, but should be a complementary
service in rural areas.
Private Market Value Guarantee
The Company has entered into the Private Market Value
Guarantee ("PMVG") with McCaw for the benefit of the Company's
stockholders (other than McCaw and its affiliates). The PMVG
<PAGE>
<PAGE> 17
provides among other things that, for as long as McCaw and its
affiliates beneficially own in the aggregate at least 25% of the
outstanding shares of the Company's Common Stock ("Shares") on a
fully diluted basis or McCaw's designees constitute a majority of
the Board of Directors of the Company, and any Shares are held by
other persons, the following provisions shall apply.
Independent Directors. Three members of the Company's board
of directors (the "Independent Directors") will be independent
directors as determined under the New York Stock Exchange Rules
(i.e., independent of management of the Company and its
affiliates and free of any relationship that, in the opinion of
the Company's board of directors, would interfere with the
exercise of independent judgment). The initial Independent
Directors are persons who served on the Company's Board prior to
the completion by McCaw of its tender offer for the Company. At
each annual meeting of the Company's stockholders, Independent
Directors will be nominated by the then current Independent
Directors and elected by a Majority Vote of the Public
Stockholders, as defined below. Independent Directors will be
subject to removal only (a) for cause, (b) if a majority of the
Independent Directors approve such removal or (c) if such removal
is approved by a Majority Vote of the Public Stockholders.
"Majority Vote of the Public Stockholders" means (a) the
affirmative vote of the holders of at least a majority of the
Public Shares present and entitled to vote at any meeting at
which the holders of a majority of the Public Shares are present
or (b) the action by written consent (in accordance with
applicable provisions of Delaware law and the Company's
certificate of incorporation and by-laws) of the holders of a
majority of the Public Shares. "Public Shares" means Shares not
owned by McCaw or any of its affiliates.
Sale of the Company after Five Years. On or about January
1, 1995 (the "Initiation Date"), the Independent Directors will
designate an investment banking firm of recognized national
standing (the "Independent Directors' Appraiser") and McCaw will
designate an investment banking firm of recognized national
standing, in each case to determine the private market value per
Share. Private market value per Share is the private market
price ("Private Market Price") per Share (including control
premium) that an unrelated third party would pay if it were to
acquire all outstanding Shares (including the Shares held by
McCaw and its affiliates) in an arm's length transaction,
assuming that the Company was being sold in a manner designed to
attract all possible participants (including the Regional Bell
Operating Companies) and to maximize stockholder value, including
if necessary through the sale or other disposition (including
tax-free spin-offs, if possible) of businesses prohibited by
legal restrictions to be owned by any particular buyer or class
of buyers (e.g., the Regional Bell Operating Companies).
Once the Private Market Price is determined pursuant to the
procedures provided for in the PMVG, McCaw will have 45 days to
decide whether it desires to proceed with an acquisition of all
of the Public Shares (an "Acquisition") at that price. If McCaw
decides to proceed with an Acquisition, it may pay the Private<PAGE>
<PAGE> 18
Market Price in cash or any combination of cash, common equity
securities and/or nonconvertible senior or subordinated "current
cash pay" debt securities that the Independent Directors, after
consultation with their investment banking firm, believe in good
faith will have an aggregate market value, on a fully distributed
basis, of not less than the Private Market Price. If McCaw
determines to proceed with an Acquisition as set forth above, it
will enter into an agreement with the Company (containing
customary terms and conditions) and will cause a meeting of
stockholders of the Company to be held as soon as practicable to
consider and vote thereon. The Acquisition may only be completed
if it is approved by a Majority Vote of the Public Stockholders.
If McCaw determines not to proceed with an Acquisition, or
if despite McCaw's good faith efforts an Acquisition has not been
completed within 12 months following the Initiation Date (or, if
an Acquisition has been approved by a Majority Vote of the Public
Stockholders and is being pursued in good faith by McCaw but has
not been completed due to regulatory delays or litigation, 20
months following the Initiation Date), McCaw will put the Company
in its entirety up for sale under direction of the Independent
Directors in a manner intended by the Independent Directors to
maximize value for all Shares. The sale procedures will be set
by the Independent Directors and may include, if necessary in
order to maximize stockholder value, provision for the sale or
other disposition of businesses prohibited by legal restrictions
to be owned by any particular buyer or class of buyers (e.g., the
Regional Bell Operating Companies). The Independent Directors
will select from among the proposed transactions the one or more
transactions determined by them (including tax-free spin-offs, if
possible) as being most likely to maximize value for all Shares
and will cause a meeting of the Company's stockholders to be held
as soon as practicable to consider and vote thereon. McCaw will
not bid unless requested to do so by the Independent Directors.
McCaw will fully cooperate in this process and, if one or more of
the transactions so selected by the Independent Directors are
approved by a Majority Vote of the Public Stockholders, will
cause all Shares owned by it or its affiliates to be voted in
favor thereof. Any sale of the Company would be subject to
receipt of FCC and other necessary regulatory approvals.
If a transaction is presented for approval at a meeting of
stockholders as contemplated above and fails to receive the
requisite Majority Vote of the Public Stockholders, McCaw will
have no further rights or obligations to purchase the remaining
interest in the Company, but the remainder of the Private Market
Value Guarantee shall continue to apply to the extent described
therein.
Continuing Stockholder Protections. Except as described
above, neither McCaw nor any of its non-Company affiliates may
engage in any material transaction (including, without
limitation, agreements, such as roaming agreements, which are
standard in the industry) with the Company or any of its
subsidiaries (other than proportionate as a stockholder of the
Company) unless such transaction has been approved by a majority
of the Independent Directors.
<PAGE>
<PAGE> 19
Except as described above, neither McCaw nor any of its non-
Company affiliates may engage in a merger or consolidation with
the Company, or purchase all or substantially all of the
Company's assets, unless the transaction is approved not only by
a majority of the Independent Directors but also by a Majority
Vote of the Public Stockholders. In deciding whether to approve
such a transaction, the Independent Directors will be instructed
to consider as a fair price per Share the Private Market Price
per Share (including control premium) that an unrelated third
party would pay if it were to acquire all outstanding Shares
(including the Shares held by McCaw and its affiliates) in an
arm's length transaction, assuming that the Company was being
sold in the manner contemplated above. The Independent Directors
will retain independent financial advisors and counsel to advise
them with respect to any such transaction.
No transaction will be undertaken, and the Company will not
take any action, whether or not approved by a majority of the
board of directors of the Company, if the Independent Directors
determine in their good faith judgment by unanimous vote that
such transaction or action would likely depress the value of the
Company on the Initiation Date. In addition, the Company will
not acquire or dispose of any business (other than acquisitions
of additional cellular interests in markets in which the Company
has an interest), whether or not approved by a majority of the
board of directors of the Company, if the Independent Directors
determine in their good faith judgment by unanimous vote that
such acquisition or disposition is not in the best interests of
the Company.
Additional Share Purchases. Except as permitted above,
neither McCaw nor any of its non-Company affiliates may purchase
additional Shares if, after giving effect thereto, they would
beneficially own in the aggregate more than 75% of the
outstanding Shares on a fully diluted basis.
Corporate Opportunities. McCaw will direct to the Company,
and the Company will have a priority right to pursue, all
corporate opportunities to acquire interests in U.S. cellular
telephone systems other than those in markets in which McCaw has
an interest or contiguous to markets in which McCaw has such an
interest (in the latter instance, however, only if such market is
not a market in which the Company has such an interest or
contiguous to such a market). For purposes of the foregoing, a
party will not be deemed to have an interest in a cellular
telephone system solely by reason of such party's ownership of
less than a majority equity interest in a public company having
such an interest. The Independent Directors will be afforded an
amount of time reasonably necessary to consider any such
transaction, consistent with any time constraints imposed by the
other party to such transaction, and if and for as long as a
majority of the Independent Directors desire to pursue such
transaction, McCaw will not separately pursue that transaction.
Certain Transferees Bound. Except pursuant to a sale of the
Company as described above, neither McCaw nor any of its non-
Company affiliates may sell more than 25% of the outstanding
Shares on a fully diluted basis to a third party or group unless <PAGE>
<PAGE> 20
that third party or group agrees in writing to be bound by the
provisions set forth in the PMVG to the same extent as McCaw is
so bound.
Amendments. The provisions of the PMVG may be amended in
any respect not materially adverse to the holders of Public
Shares, but only if the amendment is approved by a majority of
the Independent Directors. Any such amendment will promptly be
disclosed in a filing with the Securities and Exchange
Commission. The determination of the Independent Directors as to
whether an amendment is materially adverse to the holders of
Public Shares shall be final and shall bind all holders of Public
Shares. The provisions of the PMVG may also be amended in any
other respect if the amendment is approved by a Majority Vote of
the Public Stockholders.
The foregoing description is only a summary of the PMVG,
which has been filed with the Securities and Exchange Commission
as an exhibit to this Report.
Governmental Regulation
Cellular. The construction, operation and transfer of
cellular systems in the United States are regulated to varying
degrees by the FCC pursuant to the Communications Act of 1934, as
amended (the "Communications Act"). The FCC has promulgated
regulations governing the construction and operation of cellular
systems, licensing and technical standards for the provision of
cellular telephone service.
For licensing purposes the FCC divided the United States
into separate geographic markets (MSAs and RSAs). In each market,
the allocated cellular frequencies are divided into two equal
blocks. During the initial application process for MSAs and RSAs,
the FCC reserved the A Block frequencies for nonwireline
applicants (such as the Company) and the B Block for wireline
applicants. Now, subject to FCC rules, an A Block or B Block
license may be granted to either a wireline or nonwireline
entity, but no entity may control more than one cellular system
in any MSA or RSA.
The completion of acquisitions involving the transfer of
control of a cellular system requires prior FCC approval and, in
certain cases, compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and state regulatory approval.
Acquisitions of minority interests generally do not require FCC
approval. Whenever FCC approval is required, any interested party
may file a petition to dismiss or deny the Company's application
for approval of the proposed transfer. The Company expects to
receive in the ordinary course FCC approval for the completion of
all of its pending acquisitions for which such approval is
required and which has not already been obtained.
When a cellular system has been constructed, the licensee is
required to notify the FCC that construction has been completed.
Immediately upon this notification, but not before, FCC rules
authorize the licensee to offer commercial service to the public.
The licensee is then said to have "operating authority." The <PAGE>
<PAGE> 21
Company has obtained operating authority for each of its cellular
systems that is currently in operation. Initial operating
licenses are granted for 10 year periods. The FCC has recently
established the procedures and standards for filing renewal
applications, filing petitions to deny applications for renewal
and conducting comparative renewal proceedings between cellular
licensees and challengers filing competing applications. The FCC
will award a "renewal expectancy" to cellular operators meeting
specific criteria that establish that the licensee has adequately
provided service to the public and has complied with applicable
rules and regulations. The ruling establishing the process of
obtaining a "renewal expectancy" and other procedures for renewal
is subject to further FCC review. Licenses may be revoked and
license renewal applications denied for cause. In addition, if a
renewal expectancy is not granted, a license could be awarded to
a competing applicant if it prevails in a comparative hearing.
Under FCC rules, the authorized service area for the Company
in each of its markets is referred to as the "cellular geographic
service area" or CGSA. The CGSA is comprised of the composite
service area of the system's cell sites as measured according to
a formula established by the FCC in 1992 and contained in its
rules. The CGSA may be coincident with or smaller than the
related MSA or RSA. The right to serve areas which fall within
the licensee's MSA or RSA but outside of its CGSA is exclusive to
such licensee for a period of 5 years from the date the licensee
receives authority to construct its system. This ruling and the
manner in which the FCC defines the CGSA is currently subject to
further FCC and court review. At the conclusion of such 5-year
period other entities may apply to serve areas within the MSA or
RSA that are unserved by the licensee. If more than one mutually
exclusive application is filed for an unserved area, the FCC is
considering whether to use its auction authority to choose a
winner or whether to award the area by lottery. In March 1993
the FCC began accepting such unserved areas applications and the
Company expects that there will be applications filed for
unserved areas within MSAs where it holds the initial A Block
licenses. The Company expects that any unserved areas within its
MSAs will be immaterial to the Company. In addition, the Company
intends to file several unserved areas applications to attempt to
obtain rights to serve additional territory. Because of the
possibility of other competing applications, the Company has no
assurance that these applications will be granted.
The FCC requires landline telephone carriers in each market
to offer reasonable interconnection facilities to both cellular
systems in the market and to disclose how the B Block licensee
will interconnect with the landline network. The A Block
cellular licensee has the right to interconnect with the landline
network in a manner no less favorable than that of the B Block
licensee; it may, however, negotiate interconnection arrangements
that are not identical to those provided to the B Block licensee
in that market. In addition, the FCC is now considering the
issue of whether commercial mobile radio services such as
cellular should be required to provide interconnection to their
networks to other carriers.
<PAGE>
<PAGE> 22
The FCC's rules also generally require persons or entities
holding cellular construction permits or licenses to coordinate
their proposed frequency usage and system design with other
cellular users and licensees in order to avoid electrical
interference between adjacent systems or the capture of another
market's subscribers. The height and power of base stations in
the cellular system are regulated by FCC rules, as are the type
of signals emitted by these stations. In addition to regulation
by the FCC, cellular systems are subject to certain Federal
Aviation Administration regulations respecting the marking,
lighting, siting and construction of cellular transmitter towers
and antennas.
The FCC has initiated a rulemaking to update its rules which
ensure that FCC-regulated transmitters do not expose the public
or workers to potentially harmful levels of radio frequency
radiation. The Company does not believe that the standards that
have been proposed will have any significant impact on the
Company or its services.
Applicable law administered by the FCC requires that the
total percentage of shares of the Company owned of record or
voted by non-United States persons or entities shall not exceed
25%.
The Company is also subject to state and local regulation in
some instances. In 1981, the FCC preempted the states from
exercising jurisdiction in the areas of licensing, technical
standards and market structure. However, certain states require
cellular system operators to go through a state certification
process to serve communities within their borders. All such
certificates can be revoked for cause. In addition, certain
state authorities regulate several aspects of a cellular
operator's business, including the rates it charges its
subscribers and cellular resellers, the resale of long-distance
service to its subscribers, the technical arrangements and
charges for interconnection with the landline network and the
transfer of interests in cellular systems. The siting and
construction of the cellular facilities, including transmitter
towers, antennas and equipment shelters may also be subject to
state or local zoning, land use and other local regulations.
Public utility or public service commissions (or certain of
the commissioners) and legislators in several states have
expressed an interest in examining whether the cellular industry
should be more closely regulated by such states. Such regulation
could include one or all of the following: regulating the manner
in which cellular service is provided to "wholesale" or "bulk"
purchasers who resell such service to the public; regulating the
provision of cellular service across landline telephone
"exchange" or "LATA" boundaries; or mandating that cellular
providers allow "equal access" to long-distance providers,
thereby allowing cellular subscribers to choose their long-
distance provider. There can be no assurance that this does not
evidence a future trend in state regulation of the cellular
industry.
<PAGE>
<PAGE> 23
The Omnibus Budget Reconciliation Act specifies that
cellular and other commercial mobile providers should be subject
to similar regulatory treatments, including possible federal pre-
emption of state rate and entry regulation. These provisions may
reduce some of the Company's regulatory compliance costs and may
ensure that competing wireless services do not acquire
competitive advantages as a result of disparate regulatory
treatment. Nevertheless, in light of the uncertainty as to how
the legislation will be implemented, and as to the nature of the
additional competitive services covered thereby, it is impossible
to quantify the impact of these legislative and regulatory
initiatives on the Company at this time.
The states of Pennsylvania and Texas do not currently
regulate cellular operations. The New York Public Service
Commission has certain regulations governing cellular operators
in that state. In July 1993, the New York State legislature
passed a law that exempted cellular telephone companies from a 45
day notice requirement for certain tariff filings. In October
1992, the California Public Utilities Commission (the "CPUC")
issued a decision specifying new reporting rules for cellular
carriers, authorizing resellers to connect switching equipment
that they may purchase to the switching equipment operated by
cellular carriers, and ordering cellular carriers to "unbundle"
their wholesale service offerings to switch-based resellers. The
CPUC's ruling also stated that cellular carriers would be
required to market their retail services at fully compensatory
prices and that unbundled wholesale service could not be priced
for more than cost plus a prescribed rate of return (tentatively
established at 14.75%). The decision ordered carriers to prepare
applications for unbundled wholesale service within 120 days.
However, numerous cellular carriers have filed applications for
reconsideration of the decision and the CPUC has stayed its
effective date until the agency acts upon those applications. A
ruling on the reconsideration requests is expected in the first
half of 1994.
Broadcasting. Broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act. The
Communications Act empowers the FCC, among other things, to
issue, revoke or modify broadcasting licenses, to assign
frequency bands and determine the location of stations, to
regulate the apparatus used by stations, to establish areas to be
served by particular stations, to adopt such regulations as may
be necessary to carry out the provisions of the Communications
Act, and to impose penalties for violation of such regulations.
Broadcasting licenses for television stations are granted
for a maximum period of five years and are renewable upon
application therefor. During certain periods when a renewal
application is pending, competing applicants may file for the
frequency in use by the renewal applicant. Competing applicants
may be entitled to a comparative hearing in competition with the
renewal applicant. As of December 31, 1993, no competing
applications had been filed against any of the Company's
stations. In addition, petitions to deny applications for
renewal of licenses may be filed during certain periods following
the filing of renewal applications. In recent years, <PAGE>
<PAGE> 24
representatives of various community groups and others have filed
numerous petitions to deny renewal applications of broadcasting
stations (including applications filed by the Company's
stations). The expiration dates of the Company's television
station licenses are stated in the section entitled "The
Company's Media Operations--Television Broadcasting". In each
case, renewal applications must be filed with the FCC four months
before the expiration date of the license, and competing
applications and petitions to deny must be filed one month prior
to the expiration date.
The Communications Act prohibits the assignment of a license
or the transfer of control of a licensee without prior approval
of the FCC and, in effect, prohibits the Company, without the
approval of the FCC, from having any officer who is an alien,
more than 25% of its directors who are aliens, or more than 25%
of its stock owned by aliens or foreign governments, or
representatives of aliens or foreign governments.
The FCC's "multiple ownership" rules restrict the number of
radio and television licenses which a single entity may control
or in which it would have a substantial ownership interest.
These rules limit individual market station combinations (radio-
radio, television-television and radio-television) and national
reach (both numbers of stations and households covered). The
rules are more liberal with respect to minority-owned
enterprises, AM radio stations, UHF television stations and large
markets. In addition, television licensees may not acquire daily
newspapers published in the same markets served by their
broadcast stations nor acquire cable systems in the areas reached
by their signals. The Company does not currently own any radio-
television, broadcast-newspaper or television-cable combinations.
The FCC's rules provide that, with certain exceptions, the
power to vote or control the vote of 5% or more of the stock of a
publicly-held broadcast licensee (i.e., a licensee with 50 or
more stockholders) is the test for determining whether an entity
should have the licensee's stations attributed to it for purposes
of the multiple ownership rules. However, the FCC's rules permit
a qualifying mutual fund, insurance company or bank trust
department to vote or control the vote of up to 10% of the stock
of a publicly-held broadcast company before that company's
stations would be attributed to it under those rules. The FCC's
rules also permit exceptions to this principle where a single
person or entity holds a greater than 50% voting interest in the
licensee or parent company.
Congress frequently proposes legislation and the FCC
frequently proposes new or changed regulations or policies that
would, directly or indirectly, affect the broadcast industry.
The 1992 Cable Act and related FCC rules are examples. See "The
Company's Media Operations--Broadcasting Revenues." They also
conduct various proceedings, investigations, hearings and studies
that could lead to proposed legislation, regulations or policies.
The Company cannot predict whether new legislation or regulations
will be proposed or adopted or the adverse impact, if any, upon
the Company's operations which might result therefrom.
<PAGE>
<PAGE> 25
Employees
As of December 31, 1993, the Company employed 2,370 full-
time and part-time employees in its consolidated cellular
operations (New York and Dallas), broadcasting, publishing and
corporate offices. Fifty four of such employees were represented
by unions. The Company's unconsolidated cellular affiliates also
employed 1,690 full-time and part-time employees as of year end
1993. The Company believes that its employee relations are
generally good.
Item 2. PROPERTIES
To provide cellular service, the Company maintains sales and
administrative offices, transmitter or antenna sites and
switching offices. The Company generally leases all of these
facilities, although it does own such premises where it is in the
best interests of the Company to do so. The Company's broadcast
operations maintain administrative offices, television studios
and transmitter or antenna sites, most of which are owned by the
Company. The Company's specialty publishing operations maintain
office space for sales and administrative activities, most of
which is leased. See Note 10 to the Company's consolidated
financial statements included elsewhere in this Form 10-K.
Item 3. LEGAL PROCEEDINGS
The Company is from time to time a defendant in and is
threatened with various legal proceedings arising from its
regular business activities. The Company is also party to
routine filings with the FCC and state regulatory authorities and
customary regulatory proceedings pending in connection with
interconnection, rates, and practices and proceedings concerning
the telecommunications industry in general and other proceedings
which management does not expect to have a material adverse
effect on the financial position or results of operations of the
Company.
In August 1993 and in December 1993, two dealers for the Los
Angeles cellular partnership filed lawsuits against the
partnership and certain other parties in the California state
court, seeking injunctive relief and monetary damages. The
lawsuits allege various torts and statutory violations, including
price-fixing regarding cellular equipment and service, below-cost
sales of equipment, fraud, interference with economic
relationship, unfair competition, discrimination among agents,
and conspiracy. The lawsuits are in their early stages and
plaintiffs have made a motion to consolidate them. The
partnership intends to defend each lawsuit vigorously, believes
that it has meritorious defenses to the allegations contained in
the complaints, and does not expect that the ultimate results of
these legal proceedings will have a material adverse effect on
its financial position or results of operations.
In September 1993, a proposed class action lawsuit was filed
by a cellular subscriber in a District Court in Texas. The
lawsuit alleges that the renewal provisions and liquidated
damages provisions of the annual subscriber agreements of various
<PAGE>
<PAGE> 26
cellular carriers, including the Houston cellular partnership,
are void and unenforceable, and are contrary to public policy.
The plaintiffs also seek monetary damages. No class has yet been
certified. The partnership intends to defend the lawsuit
vigorously, believes that it has meritorious defenses to the
allegations contained in the complaint, and does not expect that
the ultimate results of this legal proceeding will have a
material adverse effect on its financial position or results of
operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the quarter ended December 31, 1993.<PAGE>
<PAGE> 27
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is listed for quotation on the
Nasdaq National Market under the symbol LINB. The following
table sets forth, for the calendar quarters indicated, the high
and low sale prices of the Common Stock on the Nasdaq National
Market as reported in published financial sources. These prices
reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Year High Low
1992
First Quarter. . . . . . . . . $ 84 1/2 $ 70
Second Quarter . . . . . . . . $ 78 1/2 $ 60
Third Quarter. . . . . . . . . $ 75 1/2 $ 61 1/2
Fourth Quarter . . . . . . . . $ 79 1/2 $ 63 3/4
1993
First Quarter. . . . . . . . . $ 90 $ 75 1/2
Second Quarter . . . . . . . . $101 $ 80 1/4
Third Quarter. . . . . . . . . $121 3/4 $ 98 1/2
Fourth Quarter . . . . . . . . $116 1/2 $108 1/4
1994
First Quarter
(through February 28, 1994) $117 1/4 $106 1/2
As of February 28, 1994 there were approximately 1,404
holders of record of the Common Stock (which number does not
include the number of stockholders whose shares are held of
record by a broker or clearing agency but does include such a
brokerage house or clearing agency as one recordholder).
The Company has never paid cash dividends on the Common
Stock. The Board of Directors will determine future dividend
policy based on the Company's results of operations, financial
condition, capital requirements and other circumstances. The
Company's Bank Credit Facilities (described below) restrict the
Company's ability to pay dividends to its stockholders. There
are also restrictions on the ability of the Company's operating
subsidiaries to pay dividends to the Company. It is not
anticipated that any cash dividends will be paid on the Common
Stock in the foreseeable future.
<PAGE>
<PAGE> 28
<TABLE>
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is selected consolidated financial data of the Company for the past five years. This data should
be read in conjunction with the consolidated financial statements of the Company and the notes thereto for the
corresponding periods which are contained elsewhere in this Form 10-K. Selected historical financial data for the
years ended December 31, 1990 and 1989 are not comparable to recent years due to the effect of the Metromedia
Transaction and the adoption of Statement of Financial Accounting Standards (SFAS) No. 109 (as discussed below). During
1993, the Company retroactively adopted SFAS No. 109, "Accounting for Income Taxes" effective January 1, 1991 and has
restated its 1992 and 1991 financial statements.
Year Ended December 31,
1993 1992 1991 1990 1989
(Restated)(1) (Restated)(1)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues . . . . . . . . . . $688,557 $ 572,521 $ 468,137 $ 378,089 $250,748
Operating income . . . . . . . . 128,305 130,015 81,430 134,912 97,143
Equity in income of
unconsolidated cellular affiliates 103,125 96,977 82,338 70,607 68,144
Cumulative effect of the change in
accounting for income taxes. . -- -- (693,835) -- --
Net income (loss). . . . . . . . $(60,727) $(68,952) $(838,131) $(222,844) (2) $ 57,366 (3)
Per share amounts:
Income (loss) before cumulative
effect of the change in accounting
for income taxes . . . . . . $(1.18) $(1.34) $(2.81) $(4.33) $1.07
Cumulative effect of the change in
accounting for income taxes. -- -- $(13.50) -- --
Net income (loss). . . . . . . $(1.18) $(1.34) $(16.31) $(4.33) $1.07
Average common and common
equivalent shares outstanding. 51,445 51,417 51,395 51,455 53,414
Balance Sheet Data:
Cash, cash equivalents and
marketable securities. . . . . $102,831 $ 122,495 $ 108,924 $ 63,809 $238,173
Working capital. . . . . . . . . (69,269) (6,580) 27,698 63,234 233,042
Total assets . . . . . . . . . . 2,909,523 2,862,910 2,798,944 2,693,117 674,880
Long-term debt . . . . . . . . . 1,551,447 1,694,338 1,769,682 1,716,250 --
Redeemable preferred stock
of a subsidiary. . . . . . . . 1,305,248 1,170,948 1,036,648 902,348 --
Stockholders' equity (deficit) . $(1,102,365) $(1,046,736) $ (978,573) $ (142,334) $496,808<PAGE>
<PAGE> 29
(1) The retroactive adoption of SFAS No. 109 effective January 1, 1991 increased previously reported net loss by $667.9
million or $13.00 per share in 1991 and decreased net taxes and net loss by $26.1 million or $0.51 per share in 1992.
The effect of the adoption on the December 31, 1992 and 1991 balance sheets was to increase deferred income taxes and
stockholders deficit by $641.8 and $667.9 million respectively.
(2) Includes nonrecurring charges associated with the completion of the tender offer by McCaw of $292,884 on a pre-tax
basis and $245,651 ($4.77 per share) on an after-tax basis.
(3) Includes nonrecurring charges associated with the tender offer by McCaw and the proposed merger (which was
terminated) with BellSouth Corporation of $76,629 on a pre-tax basis and $50,575 ($0.95 per share) on an after-tax
basis.<PAGE>
<PAGE> 30
Selected Proportionate Cellular Operating Data
The following table sets forth unaudited, supplemental financial data for the Company's
cellular segment reflecting proportionate consolidation of entities in which the Company has
an interest. This presentation differs from the consolidation methodology used to prepare
the Company's principal financial statements in accordance with generally accepted
accounting principles (see Note 2 to the consolidated financial statements).
Year Ended December 31,
1993 1992 1991
(Dollars in thousands)
<S> <C> <C> <C>
Net Revenues $755,336 $609,426 $484,600
Direct Costs and Expenses
Excluding Marketing 222,308 172,523 139,010
Marketing 176,298 144,238 115,570
Depreciation and
Amortization 139,224 126,841 113,382
Loss on Disposal of Fixed Assets 23,589 -- --
Total Operating
Costs 561,419 443,602 367,962
Operating Income
Proportionate Basis $193,917 $165,824 $116,638
Cellular Systems
Proportionate subscribers(1) 865,000 649,000 484,000
Proportionate pops(2) 27,200,000 26,900,000 26,400,000
Operating Income Reconciliation
From Consolidation/Equity Accounting to Proportionate Accounting
Operating Income
Consolidation/Equity Method(3) $77,993 $ 77,273 $ 41,912
Equity in Income of
Unconsolidated Affiliates 103,125 96,977 82,338
Minority Interests in Net Income of
Consolidated Subsidiaries (3,896) (18,856) (14,130)
Net Income Tax Expenses Included in
Equity in Income of Unconsolidated
Affiliates and Minority Interests(4) 2,656 5,222 5,472
Other Adjustments(5) 14,039 5,208 1,046
Operating Income
Proportionate Basis $193,917 $165,824 $116,638
(see above)
<PAGE>
<PAGE> 31
(1) Calculated by multiplying (i) the total subscribers of a licensee in which, as of the
date specified, the Company owned an interest, by (ii) the percentage ownership
interest in that licensee which the Company owned on such date.
(2) Calculated by multiplying (i) the Donnelley Marketing Service estimate of current year
population in a market by (ii) the percentage ownership interest that the Company owned
in a licensee.
(3) See Note 11 to the consolidated financial statements - "Segment Data."
(4) Includes a ($2,766) cumulative effect of accounting change during 1993 due to the
adoption of SFAS No. 109, "Accounting for Income Taxes", at the Company's Philadelphia
cellular affiliate.
(5) Elimination of interest income, interest expense and other non-operating income and
expenses included in equity in income of unconsolidated affiliates and minority
interests. Such amounts include $5,715 for 1993 and $1,582 for 1992 due to equity in
losses and interest expenses at the Philadelphia affiliate due to that entity's
ownership of an interest in a cable system operator.<PAGE>
</TABLE>
<PAGE> 32
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
There are several legislative and regulatory initiatives at
the federal and state levels that are expected to result in the
allocation of additional spectrum for use for mobile
communications services, and may result in the modification of
rights held by providers of mobile communications services and
the modification of relationships between facilities-based
cellular carriers and resellers of cellular services. See "The
Company's Cellular Operations-Cellular Competition" and
"Governmental Regulation." The Company believes these
initiatives will continue and will result, in some cases, in
additional competition for the Company. One entity has already
been authorized to provide a cellular-like mobile service in
certain markets of the Company (in addition to the B Block
cellular competition) commencing in 1993 and 1994. The Company
also intends to pursue rights to offer additional mobile
communications services. In light of the uncertainty as to the
eventual outcome of any of these specific initiatives, including
as to the nature and timing of the additional competitive
services covered thereby, it is impossible to quantify the impact
of these legislative and regulatory initiatives or such
competition on the Company at this time.
1993 COMPARED TO 1992
LIN reported net revenues of $688.6 million for 1993, an
increase of 20% over 1992 net revenues of $572.5 million.
Consolidated cellular revenues increased 28% as strong cellular
subscriber growth continued. As of December 31, 1993, the number
of cellular subscribers in all of the Company's cellular systems
was 1,434,000, a 34% increase from the 1,073,000 subscribers as
of December 31, 1992. Media revenues were up 2% from 1992.
During the first quarter of 1993, the Company retroactively
adopted Statement of Financial Accounting Standard (SFAS) No.
109, "Accounting for Income Taxes," effective January 1, 1991.
The adoption of SFAS No. 109 as of January 1, 1991 required the
Company to record a cumulative effect of the change in accounting
for income taxes of $693.8 million with a corresponding increase
in deferred tax liability. The years ended December 31, 1992 and
1991 have been restated to reflect the retroactive adoption.
This change in accounting for income taxes has no effect on cash
flow and will reduce/increase the income tax expense/benefit the
Company will recognize in future periods as the difference in the
book and tax basis of the intangible assets is reduced. See
notes 2 and 8 to the Company's consolidated financial statements
included herein for additional information regarding the
restatement of prior periods' financial statements.
The Company recorded a consolidated net loss for 1993 of
$60.7 million or $1.18 per share, compared to a consolidated net
loss of $69.0 million or $1.34 per share for 1992.
<PAGE>
<PAGE> 33
Revenues
Net revenues for LIN's consolidated cellular operations
(principally New York and Dallas) increased 28% from 1992. This
increase was primarily the result of a 29% increase in
subscribers, offset, in part, by a decline in average revenue per
subscriber. Total monthly average revenue per subscriber for all
of LIN's cellular markets, weighted by LIN's ownership interest
in such markets, was approximately $83 for 1993, compared to
approximately $90 for 1992, a decrease of 8%. The decrease in
average revenue per subscriber is primarily the result of a lower
average rate per minute plus a slight decline in average minutes
of use per subscriber. The average rate has decreased due
principally to pricing actions such as actual rate decreases
and/or including more minutes for a fixed price. The Company
expects that the trend of decreasing revenue per subscriber will
continue as the number of casual users as a percentage of the
total users increases. However, the Company is continuing to
pursue opportunities to mitigate the revenue impact of this trend
through introducing new and expanded services.
To meet the changing and growing needs of its cellular
customers, the Company has an ongoing program to develop new
products and services. During 1993, the Company began offering
several new services in various of its markets including enhanced
directory assistance, voice recognition, and data transmission
services. The Company also introduced digital cellular service in
Los Angeles in October 1993 and is planning to begin offering
digital cellular services in New York and Dallas during the first
half of 1994. Continued growth in demand for basic cellular
service, as well as demand for new services such as those
discussed above should contribute to continued cellular revenue
growth for the Company.
Net revenues from the media segment increased 2% from 1992.
However, excluding cyclical political and Olympics revenues from
both years, the increase was 6%. The Company is planning to
introduce a local weather channel to be carried by the local
cable licensee in certain of its markets during 1994. In
addition, the Company completed agreements for the retransmission
of the Company's programming by substantially all cable systems
in the Company's television markets.
Operating Costs and Expenses
Direct operating expenses increased 11% from 1992 and
represented 18% of net revenues versus 19% in 1992. The increase
in this line item reflects increased cellular network operating
expenses due to the subscriber growth and increased network size,
as well as increased television news and programming expenses.
Selling, general and administrative expenses increased 27% from
1992 and increased to 38% of net revenues in 1993 versus 36% in
1992. Among the factors contributing to the increase are
additional marketing expenses associated with the increase in new
cellular subscribers. The Company added 20% more new subscribers
in 1993 than in 1992. The Company also had a large increase in
costs related to cellular customer service and support. This
increase reflects the Company's continuous effort to improve <PAGE>
<PAGE> 34
customer retention as well as investments made to provide
efficient support for future customer growth. Depreciation
increased principally due to the addition of property and
equipment to expand and improve the Company's cellular systems.
Depreciation will continue to grow in the future as additional
capital expenditures will be required to support growth in the
cellular subscriber base and to provide new cellular services
including digital cellular. The Company expects amortization of
intangible assets will decline somewhat beginning in 1994 as
certain intangibles will become fully amortized. Any new
acquisitions or dispositions of cellular interests or other
changes in ownership interests will change the future level of
amortization expense. During the second quarter of 1993, the
Company's Dallas cellular venture adopted a plan to replace its
existing analog cellular system with a new dual-mode (analog and
digital) system. The provision for loss on cellular equipment
represents the estimated loss to be realized upon sale of the
analog cellular equipment at an amount less than its carrying
value. The $4.4 million downward adjustment of this provision in
the fourth quarter reflected the signing of a contract to sell
the equipment to a third party.
Other Income and Expenses
Equity in income of unconsolidated affiliates rose 6%.
Revenues of these ventures increased 16% due primarily to an
increase in subscribers offset, in part, by a decrease in average
revenue per subscriber. This trend is consistent with that of
LIN's consolidated cellular operations. Direct operating
expenses of these ventures increased 24% and represented 11% of
revenues versus 10% in the prior year. This increase is due
primarily to increased network operations, toll and roamer
expenses at those cellular operations. Selling, general and
administrative expenses of the ventures increased 17% and
represented 39% of revenues in 1993 and in 1992. The majority of
the increase in this line item was due to increased marketing and
sales expenditures associated with a 28% increase in the number
of new customers. Depreciation expenses of these ventures
increased 33%, reflecting additional capital expenditures for
capacity expansion and increased coverage in all the ventures,
and digital service equipment in Los Angeles. Other expenses
also grew significantly due to settlement of certain lawsuits and
equity in losses of a cable affiliate absorbed by Philadelphia.
Interest expense (which includes the amortization of the
financing and commitment fees) decreased $29.8 million from the
1992 amount due to lower interest rates and debt levels. The
Company's weighted average interest rate on its borrowings was
4.94% during 1993 and 6.43% during 1992. This decrease was due
both to reductions in the base borrowing rates as well as the
applicable margin the Company pays. The reduction in borrowings
was the result of scheduled principal repayments on the Bank
Credit Facilities (as defined below).
Minority interests in net income of consolidated
subsidiaries decreased $14.9 million primarily due to the
equipment write-down incurred at the Dallas cellular operations
as discussed above. <PAGE>
<PAGE> 35
The provision for preferred stock dividends is a result of
the issuance, by LIN's subsidiary, LCH Communications, Inc.
("LCH"), of $850 million of LCH Preferred Stock. The LCH
Preferred Stock accrues dividends at the rate of 15.8% annually.
The dividends are not required to be paid in cash at the present
time. The terms of the LCH Preferred Stock, including redemption
provisions and covenants, are described further in Note 6 to the
consolidated financial statements.
The Omnibus Reconciliation Act of 1993 increased the
corporate tax rate to 35 percent from 34 percent, effective as of
January 1, 1993. Pursuant to SFAS No. 109, the Company recorded
an additional tax expense of $15.3 million, with a corresponding
increase in deferred tax liability. This change had no effect on
cash flow and will reduce the income tax expense the Company will
recognize in future periods as the difference in the book and tax
basis of intangible assets is reduced. However, the Company's
current and future taxable income will be subject to the higher
tax rate.
1992 COMPARED TO 1991
Revenues
Net revenues of LIN's consolidated cellular operations (New
York and Dallas) increased 28% from 1991. The increase was
primarily the result of a 33% increase in subscribers offset, in
part, by a decrease in average revenue per subscriber. Total
monthly average revenue per subscriber in LIN's five cellular
markets, weighted by LIN's ownership interest in such markets,
was approximately $90 for 1992, compared to approximately $98 for
1991, a decrease of 8.1%. The decrease in average revenue per
subscriber is largely the result of a decline in minutes of use
per subscriber, due to an increase in the number of casual users
as a percentage of customer base.
Net revenues from the media segment, which includes the
Company's television broadcasting operations and its specialty
publishing business, increased 10% from 1991. Improved economic
conditions in many of the Company's market areas stimulated
growth in advertising spending. Political advertising revenues
also contributed 26% of the total increase in revenues.
Operating Costs and Expenses
Direct operating expenses increased 3% from 1991 and
represented 19% of net revenues in 1992. The decrease in direct
operating expenses as a percent of net revenues is the result of
economies and efficiencies of scale in the cellular operations
and control of programming and news production costs in the
broadcast operations. Selling, general and administrative
expenses increased 31% from 1991. As a percentage of net
revenues, selling, general and administrative expenses increased
to 36% for 1992 from 34% for 1991. The increase in selling,
general and administrative expenses is due in part to an increase
in cellular marketing expenses associated with subscriber growth
as well as investments in development of direct sales operations.
The Company also increased customer service and support costs as <PAGE>
<PAGE> 36
a number of measures to improve systems to support future
customer growth were undertaken. Depreciation increased
principally due to capital expenditures to expand and improve the
Company's cellular systems.
Other Income and Expenses
Equity in income of unconsolidated affiliates rose 18%,
reflecting revenue and income gains in the Los Angeles, Houston
and Philadelphia cellular ventures. Revenues of these ventures
increased 22% due primarily to an increase in subscribers offset
in part by a decrease in average minutes of use per subscriber.
Selling, general and administrative expenses of these ventures
were up 28%, largely from higher marketing and customer service
costs associated with the increased subscriber levels.
Interest expense (which includes the amortization of the
financing and commitment fees) decreased $42.9 million from 1991
levels due to lower interest rates and debt levels. This
interest rate decrease was due primarily to reductions in the
base borrowing rates the Company pays. The reduction in
borrowing was the result of scheduled principal payments on the
Bank Credit Facilities.
Minority interests in net income of consolidated
subsidiaries increased $4.7 million primarily due to the increase
in income generated at the New York and Dallas ventures.
LIQUIDITY AND CAPITAL RESOURCES
The Company utilizes capital primarily to expand and improve
its cellular systems, to make acquisitions of cellular interests,
to improve broadcasting operations and to make interest and
principal payments on its indebtedness. The Company's cellular
operations continue to require substantial capital to increase
system capacity and coverage areas, to enable provision of new
services, and to expand and improve administrative support
systems. In 1993, the Company began the replacement of the
existing cellular system in Dallas with a new system provided by
L.M. Ericsson, the system vendor in all of the Company's other
markets. This project is expected to cost approximately $100
million, of which approximately $55 million was expended during
1993. Additionally, the Company continues to invest in digital
cellular equipment and in October 1993 announced the introduction
of digital cellular service in the Los Angeles market. Customer
trials of digital service are continuing in New York with the
introduction of digital service for both New York and Dallas
planned for the first half of 1994. Although the conversion to
digital services requires significant initial expenditures, there
are several advantages such as initially, a three-fold capacity
expansion and the establishment of a platform for future service
enhancement such as short message, caller ID, improved data
transmission and longer phone battery life. During October of
1993, the Company completed the acquisition of the Texas-17 RSA
for approximately $36 million. This market is adjacent to the
Houston market, which will increase the Company's coverage area
in that region. The Company also has entered into an agreement <PAGE>
<PAGE> 37
to purchase the Connecticut-1 RSA adjacent to the New York
market. That transaction is expected to be completed during
1994.
The Company's principal sources of funds are provided by
operations and two bank credit facilities, a Cellular Facility
and a Broadcast Facility (together, the "Bank Credit
Facilities"). Under the Company's Cellular Facility, LIN
Cellular Network ("LCNI"), a wholly-owned subsidiary of the
Company, had $1.48 billion outstanding and $240 million available
as of December 31, 1993. Under the Company's Broadcast Facility,
LIN Television Corporation ("LTC"), a wholly-owned subsidiary of
the Company, had $222 million outstanding and no additional funds
available as of December 31, 1993.
Under its Bank Credit Facilities, the Company must remain in
compliance with a series of financial covenants which compare the
levels of the Company's cellular and broadcast indebtedness to
its cellular and broadcast cash flows as of the end of each
quarter. During the second quarter of 1993, the Company
renegotiated certain terms of its Cellular Facility (see Note 5
to the consolidated financial statements contained elsewhere in
this Form 10-K). Although the Company is currently in compliance
with all covenants under the Bank Credit Facilities, the ratios
of indebtedness to cash flow required to be maintained by the
Bank Credit Facilities decrease through 1994. It is necessary
over that time period for the Company either to reduce debt or to
increase cash flow to remain in compliance.
Any failure to comply with these or other covenants and
restrictions contained in the Company's indebtedness could result
in a default thereunder. The ability of the Company to comply
with these provisions may be affected by events beyond its
control. If the Company fails to service its indebtedness or
satisfy the covenants contained in the Bank Credit Facilities or
the agreements relating to its other indebtedness, the Company
will be in default. In such an event, holders of the Company's
indebtedness will be able to exercise their rights including the
right to declare all the borrowed funds and interest thereon
immediately due and payable. If the Company were unable to repay
such indebtedness, the holders of such indebtedness could proceed
against their collateral, if any. Substantially all of the
Company's assets, including its stock in subsidiaries and its
ownership interests in entities holding cellular licenses, are
pledged or encumbered as security for indebtedness. Further
details with respect to the Company's Bank Credit Facilities are
contained in Note 5 to the consolidated financial statements
contained elsewhere in this Form 10-K.
The Company's assets are essentially divided into four
pools, three of which are subject to the restrictions of the Bank
Credit Facilities and the Preferred Stock. All of the Company's
cellular operations other than Philadelphia are owned by LCNI and
are subject to the restrictions of the Cellular Facility. All of
the Company's broadcast operations other than WOOD-TV are owned
by LTC and are subject to the restrictions of the Broadcast
Facility. The Company's Philadelphia cellular interest,
television station WOOD-TV and its GuestInformant business, all <PAGE>
<PAGE> 38
held by subsidiaries, are subject to the restrictions of the
Preferred Stock (see Note 6 to the consolidated financial
statements). With limited exceptions, none of the cash flows,
proceeds of borrowings or proceeds from sales of assets from any
of these pools are available to meet the cash needs of the other
pools or of the Company in general. The Company's other assets
not described above (principally its interest in a mobile
satellite corporation and some of its cash) are held free of any
restriction.
While the Company has generated sufficient cash to meet its
expenditure requirements, the Company continues to have
substantial debt service, and other operating and capital
requirements. If cash generated from operations is not
sufficient to fund those requirements, the Company will have to
borrow additional amounts under its Cellular Facility. There are
conditions which must be satisfied before the banks will be
required to lend those additional amounts. If these conditions
are not satisfied, the banks may conclude it is not in their best
interest to lend additional amounts to the Company. If the
Company were unable to borrow the required amounts from the
banks, it may seek to issue additional debt through a private or
public offering, sell equity or sell certain cellular interests,
broadcast properties or other assets. There can be no assurance
that the Company will be able to obtain such additional financing
or sell assets when needed, or if it is able to obtain such
financing or sell assets, that the terms will be favorable to the
Company. Finally, the Company will be required by the terms of
its Bank Credit Facilities to apply the proceeds of asset sales
under certain circumstances not reinvested in similar assets to
the repayment of loans thereunder. While the Company expects to
have sufficient internally generated funds to repay its
indebtedness at maturity, there can be no assurance that this
will occur.
The Company's indebtedness is due and payable over several
years, with the amortization of the Broadcast Facility and
Cellular Facility having commenced in 1991 and 1993,
respectively. See Note 5 to the consolidated financial
statements contained elsewhere in this Form 10-K. While the
Company expects to have sufficient internally generated funds to
repay its indebtedness when due, there can be no assurance that
this will occur. If the Company does not have sufficient
internally generated funds, it may issue additional indebtedness,
sell equity or sell assets to refinance such maturing
indebtedness. There can be no assurance that such issuances or
sales will be possible or, if carried out, that the terms thereof
will be favorable to the Company or its stockholders. To date
the Company has obtained funds to meet its obligations primarily
through the issuance of indebtedness.
Cash provided by operating activities totalled $219.6
million in 1993, compared to $143.3 million in 1992. The
increase was primarily due to improved operating margins and
decreases in amounts paid for interest, partially offset by an
increase in tax payments for the year. The Company's Los Angeles
cellular affiliate continues to provide a substantial
contribution to the Company's operating cash flow. In the event <PAGE>
<PAGE> 39
the California economy remains weak or the business of the Los
Angeles affiliate is otherwise adversely affected, the Company's
cash flow could similarly be adversely affected.
The Company used $168.5 million of cash and cash equivalents
for investing activities during 1993, primarily as a result of
capital expenditures and cellular acquisitions offset by net
advances from certain affiliates. As mentioned earlier, the
Dallas cellular system change-out is expected to cost
approximately $100 million, with approximately $55 million having
been expended during 1993. During 1992, the Company expended a
net of $85.7 million for investing activities. This amount
included $71.5 million of capital expenditures and $26.7 million
of additional advances to unconsolidated cellular affiliates.
During 1993, the Company made scheduled principal repayments
of $37.6 million and $33.8 million on its Broadcast Facility and
Cellular Facility, respectively. During 1992, the Company made
scheduled principal repayments of $31.8 million on its Broadcast
Facility. Scheduled principal payments on the Bank Credit
Facilities increase to $146.9 million during 1994.
It is the Company's policy to carefully monitor the state of
its business, cash requirements and capital structure. From time
to time, the Company may enter into transactions pursuant to
which debt is extinguished, including sales of assets or equity,
joint ventures, reorganizations or recapitalizations. There can
be no assurance that any further such transactions will be
undertaken or, if undertaken, will be favorable to stockholders.
Inflation
The Company believes that its businesses are affected by
inflation to an extent no greater than other businesses are
generally affected.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and
supplementary data, together with the report of Ernst & Young,
independent auditors, are included elsewhere herein. Reference
is made to the "Index to Financial Statements" immediately
preceding page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.<PAGE>
<PAGE> 40
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information
under the captions "Election of Directors," "Executive Officers,"
and "Certain Transactions" in the Company's Proxy Statement
relating to its 1994 annual meeting of stockholders (the "Proxy
Statement").
Item 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information
under the captions "Election of Directors" and "Executive
Compensation" in the Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There is hereby incorporated by reference the information
under the captions "Principal Stockholders," "Election of
Directors," "Security Ownership of Management" and "Beneficial
Ownership of Common Stock of McCaw" in the Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information
under the captions "Election of Directors", "Compensation
Committee Interlocks" and "Certain Transactions" in the Proxy
Statement.
<PAGE>
<PAGE> 41 PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(a)(1) Financial Statements Filed
Report of Ernst & Young, Independent Auditors
Consolidated Financial Statements of the Company
- Consolidated Balance Sheets at December 31, 1993 and 1992
- Consolidated Statements of Operations for the Years Ended
December 31, 1993, 1992 and 1991
- Consolidated Statements of Stockholders' Deficit for the
Years Ended December 31, 1993, 1992 and 1991
- Consolidated Statements of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991
- Notes to Consolidated Financial Statements
Report of Ernst & Young, Independent Auditors
Independent Auditors' Report
Report of Independent Public Accountants
Combined Financial Statements of the Company's
Unconsolidated Affiliates
- Combined Balance Sheets at December 31, 1993 and 1992
- Combined Statements of Income for the Years Ended
December 31, 1993, 1992 and 1991
- Combined Statements of Ventures' Equity for the Years
Ended December 31, 1993, 1992 and 1991
- Combined Statements of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991
- Notes to the Combined Financial Statements
(a)(2) Financial Statement Schedules Filed
Financial Statement Schedules of the Company
VIII- Valuation and Qualifying Accounts and
Reserves for the Years Ended December 31,
1993, 1992 and 1991
Financial Statement Schedules of the Company's
Unconsolidated Affiliates
II - Amounts Receivable from Related Parties for the
Years Ended December 31, 1993, 1992 and 1991
IV - Indebtedness to Related Parties for the Years
Ended December 31, 1993, 1992 and 1991
V - Property and Equipment for the Years Ended
December 31, 1993, 1992 and 1991
VI- Accumulated Depreciation and Amortization of
Property and Equipment for the Years Ended
December 31, 1993, 1992 and 1991
VIII- Valuation and Qualifying Accounts and Reserves
for the Years Ended December 31, 1993, 1992 and
1991
X - Supplementary Income Statement Information for
the Years Ended December 31, 1993, 1992 and
1991<PAGE>
<PAGE> 42
All other schedules have been omitted because the
information is not required or is not applicable, or because the
information required is included in the financial statements or
the notes thereto.
(a)(3) Exhibits
3.1 Restated Certificate of Incorporation of LIN
Broadcasting Corporation (incorporated by reference
to Exhibit 3.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992)
3.2 By Laws, as amended (incorporated by reference to
Exhibit 3(b) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989)
10.1* 1969 Stock Option Plan, as amended
10.2* Profit Sharing Plan, as amended and restated
effective January 1, 1989 (incorporated by reference
to Exhibit 10.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992)
10.3* Deferred Compensation Plan, as amended (incorporated
by reference to Exhibit 10(d) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1989)
10.4 Television affiliation contract for WAND-TV with
American Companies, Inc., dated February 8, 1990
(incorporated by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992)
10.5 Television affiliation contract for WAVY-TV with
National Broadcasting Company, Inc., dated December
17, 1988 (incorporated by reference to Exhibit 10(f)
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989)
10.6 Television affiliation contract for KXAS-TV with
National Broadcasting Company, Inc., dated October
5, 1989, as amended (incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992)
10.7 Television affiliation contract for KXAN-TV with
National Broadcasting Company, Inc., dated July 1,
1989, as amended (incorporated by reference to
Exhibit 10(h) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989)
10.8 Television affiliation contract for WOTV-TV with
National Broadcasting Company, Inc., dated January
1, 1981, as amended (incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992)
10.9 Television affiliation contract for WISH-TV with
CBS, Inc., dated November 1, 1992 (incorporated by
reference to Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992)<PAGE>
<PAGE> 43
10.10 Television affiliation contract for WANE-TV with
CBS, Inc., dated November 1, 1992 (incorporated by
reference to Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992)
10.11 Partnership Agreement, dated as of March 18, 1983,
among LIN Cellular Communications Corporation,
Metromedia, Inc., and Cellular Systems, Inc.
(incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992)
10.12 Partnership Agreement, dated as of June 22, 1983,
between Los Angeles Cellular Corporation and LIN
Cellular Communications Corporation (incorporated by
reference to Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992)
10.13 Stock Agreement, dated June 5, 1982, by and among
Radio Broadcasting Company, LIN Broadcasting
Corporation, LIN Cellular Communications
Corporation, Metromedia, Inc., and AWACS, Inc.
(incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992)
10.14 Amended and Restated Partnership Agreement, dated as
of November 9, 1984, among LIN Cellular
Communications Corporation, D/FW Signal, Inc., MCI
Cellular Telephone Company, Cellular Mobile Systems,
Inc., and Mid-America Cellular Systems, Inc.
(incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992)
10.15 Amended and Restated Partnership Agreement, dated as
of December 12, 1984, among Metro Mobile CTS,
Cellular Systems, Inc., and Houston Mobile Cellular
Communications Company (incorporated by reference to
Exhibit 10.15 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992)
10.16 Partnership Agreement, dated as of December 12,
1984, among American Mobile Communications of
Houston and the Gulf, Houston Cellular Corporation,
LIN Cellular Communications Corporation, MCI
Cellular Telephone Company, Charisma Communications
Corp. of the Southwest, and Cellular Mobile Systems
of Texas, Inc. (incorporated by reference to Exhibit
10.16 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992)
10.17 Partnership Agreement, dated as of September 1991,
by and between Galveston Mobile Corporation and LIN
Cellular Communications Corporation (incorporated by
reference to Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992)<PAGE>
<PAGE> 44
10.18 Agreement, dated December 11, 1989, between the
Company, MMM Holdings, Inc. and McCaw Cellular
Communications, Inc. (incorporated by reference to
Exhibit (c)(6) to Amendment No. 24 to Schedule 14D-1
and Amendment No. 30 to Schedule 13D relating to the
Offer filed by MMM Holdings, Inc. and McCaw with the
Securities and Exchange Commission on December 12,
1989)
10.19 Private Market Value Guarantee, dated December 11,
1989, between the Company and McCaw Cellular
Communications, Inc. (incorporated by reference to
Exhibit (c)(7) to Amendment No. 24 to Schedule 14D-1
and Amendment No. 30 to Schedule 13D relating to the
Offer filed by MMM Holdings, Inc. and McCaw with the
Securities and Exchange Commission on December 12,
1989)
10.20 Exercise, dated October 27, 1989, of the Company's
Rights of First Refusal to Acquire the Interests of
Metromedia Company in Metro One Cellular Telephone
Company, and Agreement of Purchase and Sale, dated
October 3, 1989, by and between McCaw Cellular
Communications, Inc. and Metromedia Company
(incorporated by reference to Exhibit 10(u) to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989)
10.21* Form of Severance Agreement between the Company and
Certain Officers of the Company (incorporated by
reference to Exhibit 10(u) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989)
10.22 Credit Agreement, dated as of August 1, 1990, among
LIN Cellular Network, Inc., Morgan Guaranty Trust
Company of New York and the Lenders Named therein
(incorporated by reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990)
10.23 Credit Agreement, dated as of August 1, 1990, among
LIN Television Corporation, The Toronto-Dominion
Bank Trust Company, and the Lenders Named therein
(incorporated by reference to Exhibit 10.22 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990)
10.24 Agreement for Change-Out System, dated as of October
2, 1990, among Ericsson Radio Systems Inc., Ericsson
GE Mobile Communications Holding Inc. and Cellular
Telephone Company (incorporated by reference to
Exhibit 10.23 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990)
10.25 Stock Acquisition Agreement, dated as of May 7,
1990, between LCH Cellular, Inc. and Metromedia
Company (incorporated by reference to Exhibit (b)(i)
to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990)
10.26 Restated Certificate of Incorporation of LCH
Communications, Inc. (formerly LCH Cellular, Inc.)
(incorporated by reference to Exhibit (b)(ii) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1990)<PAGE>
<PAGE> 45
10.27 Stockholders Agreement, dated as of August 10, 1990,
among Metromedia Company, LCH Holdings, Inc. and LCH
Communications, Inc. (incorporated by reference to
Exhibit (b)(iii) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1990)
10.28* Employee Stock Purchase Plan (incorporated by
reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8 dated March 13,
1991 (Registration No. 33-39282))
10.29* Employment Agreement, dated as of October 17, 1990
of Gary Chapman (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991)
10.30* Employment Agreement, dated as of April 16, 1991, of
Donald Guthrie (incorporated by reference to Exhibit
10.30 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991)
10.31* LIN Broadcasting Corporation Retirement Plan, as
amended and restated as of January 1, 1989
(incorporated by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1991). Amendment thereto dated
January 1, 1993 (incorporated by reference to
Exhibit 10.32 to the Company's Annual Report on Form
10-K for the year ended December 31, 1992)
10.32* LIN Broadcasting Corporation Supplemental Benefit
Retirement Plan dated January 1, 1990 (incorporated
by reference to Exhibit 10.33 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992)
10.33* LIN Broadcasting Corporation 401(K) Plan & Trust,
dated as of July 1, 1991 (incorporated by reference
to Exhibit 10.32 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991)
10.34* LIN Employee Plans, established in connection with
the McCaw-AT&T Merger Agreement
10.35* LIN Broadcasting Deferred Compensation Plan, dated
December 15, 1993.
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young
23.2 Consent of Deloitte & Touche
23.3 Consent of Arthur Andersen & Co.
24 Powers of Attorney with respect to Certain
Signatures
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
December 31, 1993.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LIN BROADCASTING CORPORATION
By: ROBERTA R. KATZ
Roberta R. Katz
Senior Vice President-
General Counsel
March 30, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
Chairman of the Board,
Chief Executive Officer and
Director (Principal
Craig O. McCaw* Executive Officer) March 30, 1994
- ------------------------
Craig O. McCaw
President and
Tom A. Alberg* Director March 30, 1994
- ------------------------
Tom A. Alberg
Senior Vice President-Finance
(Principal Financial and
DONALD GUTHRIE Accounting Officer) March 30, 1994
- ------------------------
Donald Guthrie
Vice Chairman
Harold S. Eastman* of the Board March 30, 1994
- ------------------------
Harold S. Eastman
Vice Chairman
Wayne M. Perry* of the Board March 30, 1994
- ------------------------
Wayne M. Perry
John E. McCaw, Jr.* Director March 30, 1994
- ------------------------
John E. McCaw, Jr.<PAGE>
<PAGE>
Signature Title Date
John W. Stanton* Director March 30, 1994
- ------------------------
John W. Stanton
President and
James L. Barksdale* Director March 30, 1994
- ------------------------
James L. Barksdale
William G. Herbster* Director March 30, 1994
- ------------------------
William G. Herbster
Wilma H. Jordan* Director March 30, 1994
- ------------------------
Wilma H. Jordan
Richard W. Kislik* Director March 30, 1994
- ------------------------
Richard W. Kislik
*By: ROBERTA R. KATZ
- ------------------------
Roberta R. Katz
Attorney-in-fact
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
Report of Ernst & Young, Independent Auditors.............F-1
Consolidated Financial Statements of the Company
Consolidated Balance Sheets at December 31,
1993 and 1992.........................................F-2
Consolidated Statements of Operations for the Years
Ended December 31, 1993, 1992 and 1991................F-4
Consolidated Statements of Stockholders' Deficit
for the Years Ended December 31, 1993,
1992 and 1991.........................................F-6
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991................F-7
Notes to Consolidated Financial Statements..............F-10
Report of Ernst & Young, Independent Auditors.............F-31
Independent Auditors' Report..............................F-32
Report of Independent Public Accountants..................F-33
Combined Financial Statements of the Company's
Unconsolidated Affiliates
Combined Balance Sheets at December 31,
1993 and 1992 .......................................F-34
Combined Statements of Income for the Years Ended
December 31, 1993, 1992 and 1991.....................F-36
Combined Statements of Ventures' Equity for the Years
Ended December 31, 1993, 1992 and 1991...............F-37
Combined Statements of Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991...............F-38
Notes to Combined Financial Statements.................F-41
Financial Statement Schedules of the Company
VIII - Valuation and Qualifying Accounts and
Reserves for the Years Ended
December 31, 1993, 1992 and 1991................F-49
Financial Statement Schedules of the Company's Unconsolidated
Affiliates
II - Amounts Receivable from Related Parties
for the Years Ended December 31,
1993, 1992 and 1991.............................F-50
IV - Indebtedness to Related Parties for the Years
Ended December 31, 1993, 1992 and 1991..........F-51
V - Property and Equipment for the Years Ended
December 31, 1993, 1992 and 1991................F-52
VI- Accumulated Depreciation and Amortization
of Property and Equipment for the Years
Ended December 31, 1993, 1992 and 1992..........F-53
VIII- Valuation and Qualifying Accounts and
Reserves for the Years Ended December 31,
1993, 1992 and 1991.............................F-54
X - Supplementary Income Statement Information
for the Years Ended December 31,
1993, 1992 and 1991............................F-55<PAGE>
<PAGE> F-1
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors and Stockholders of
LIN Broadcasting Corporation
We have audited the accompanying consolidated balance sheets of
LIN Broadcasting Corporation and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of
operations, stockholders' 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 our audits 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.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of LIN Broadcasting Corporation and
subsidiaries at December 31, 1993 and 1992, and the consolidated
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.
Seattle, Washington
February 4, 1994
<PAGE>
<PAGE> F-2
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(Dollars in thousands)
ASSETS 1993 1992
- ----------------------------------------------------------------
Current Assets:
Cash and cash equivalents $86,366 $102,909
Marketable securities 16,465 19,586
Accounts receivable, less allowance
for doubtful accounts
(1993-$18,138; 1992-$13,398) 156,784 122,749
Film contract rights, prepaid
expenses and other
current assets 21,960 18,334
- ----------------------------------------------------------------
Total current assets 281,575 263,578
- ----------------------------------------------------------------
Property and equipment, at cost,
less accumulated depreciation 405,762 348,179
Other noncurrent assets 61,807 68,911
Investments in and advances to
unconsolidated affiliates 264,172 244,317
Cellular FCC licenses, less
accumulated amortization
(1993-$148,672; 1992-$104,962) 1,627,371 1,634,202
Other intangible assets,
less accumulated amortization
(1993-$145,853; 1992-$109,355) 268,836 303,723
- ----------------------------------------------------------------
Total Assets $2,909,523 $2,862,910
================================================================
(continued)<PAGE>
<PAGE> F-3
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
DECEMBER 31, 1993 AND 1992
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' DEFICIT 1993 1992
- ----------------------------------------------------------------
Current Liabilities:
Current portion of long-term debt $146,891 $75,344
Accrued income taxes 34,241 42,828
Accounts payable 37,975 39,169
Unearned revenues 25,880 20,000
Accrued interest payable 2,685 5,444
Payable to McCaw 16,064 12,261
Other accruals 87,108 75,112
- ----------------------------------------------------------------
Total current liabilities 350,844 270,158
- ----------------------------------------------------------------
Long-term debt 1,551,447 1,694,338
Deferred income taxes 735,049 708,402
Film contract obligations and
other noncurrent liabilities 13,091 11,919
Minority interests in equity of
consolidated subsidiaries 56,209 53,881
Redeemable preferred stock of
a subsidiary 1,305,248 1,170,948
Stockholders' Deficit:
Common stock, $.01 par value,
150,000,000 shares
authorized, 55,329,000
shares issued 553 553
Paid-in capital 224,689 222,081
Deficit (1,150,205) (1,089,478)
- ----------------------------------------------------------------
(924,963) (866,844)
- ----------------------------------------------------------------
Less common stock in treasury,
at cost (1993-3,826,000 shares;
1992-3,904,000 shares) 177,402 179,892
- ----------------------------------------------------------------
Total stockholders' deficit (1,102,365) (1,046,736)
- ----------------------------------------------------------------
Total Liabilities and
Stockholders' Deficit $2,909,523 $2,862,910
================================================================
See accompanying notes.
<PAGE>
<PAGE> F-4
<TABLE>
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands, except per share amounts)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Revenues $688,557 $572,521 $468,137
Operating Costs and Expenses:
Direct operating 123,081 110,966 107,750
Selling, general and administrative 261,549 205,365 157,267
Corporate expenses 8,340 7,571 12,714
Depreciation 45,940 39,676 29,869
Amortization of intangible assets 79,190 78,928 79,107
Provision for loss on
cellular equipment 42,152 -- --
- --------------------------------------------------------------------------------------
560,252 442,506 386,707
- --------------------------------------------------------------------------------------
Operating Income 128,305 130,015 81,430
- --------------------------------------------------------------------------------------
Other Income (Expenses):
Equity in income of unconsolidated
affiliates 103,125 96,977 82,338
Investment and other income 7,015 9,295 12,367
Litigation settlement -- 7,032 --
Interest expense (95,407) (125,218) (168,113)
- --------------------------------------------------------------------------------------
14,733 (11,914) (73,408)
- --------------------------------------------------------------------------------------
Income Before Income Tax Expense,
Minority Interests and Cumulative
Effect of the Change in Accounting
for Income Taxes 143,038 118,101 8,022
Income Tax Expense 65,569 33,897 3,888
- --------------------------------------------------------------------------------------
(continued)<PAGE>
<PAGE> F-5 LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands, except per share amounts)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Minority Interests
and Cumulative Effect of
the Change in Accounting
for Income Taxes 77,469 84,204 4,134
Minority Interests:
In net income of consolidated
subsidiaries (3,896) (18,856) (14,130)
Provision for preferred stock
dividends of a subsidiary (134,300) (134,300) (134,300)
- --------------------------------------------------------------------------------------
Loss Before Cumulative Effect of
the Change in Accounting for
Income Taxes (60,727) (68,952) (144,296)
- --------------------------------------------------------------------------------------
Cumulative Effect of the
Change in Accounting
for Income Taxes -- -- (693,835)
- --------------------------------------------------------------------------------------
Net Loss ($60,727) ($68,952) ($838,131)
======================================================================================
Per share amounts:
Loss before cumulative effect of
the change in accounting for
income taxes ($1.18) ($1.34) ($2.81)
Cumulative effect of the change
in accounting for income taxes -- -- (13.50)
- --------------------------------------------------------------------------------------
Net loss ($1.18) ($1.34) ($16.31)
======================================================================================
See accompanying notes. <PAGE>
<PAGE> F-6 LIN BROADCASTING CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Total
Common Paid-in Treasury Stockholders'
Stock Capital Deficit Stock Deficit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 $553 $220,754 ($182,395) ($181,246) ($142,334)
Net loss -- -- (838,131) -- (838,131)
3,630 shares purchased for
treasury -- -- -- (193) (193)
30,263 shares issued from
treasury for stock option exercises
and related tax benefits -- 1,012 -- 1,073 2,085
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1991 553 221,766 (1,020,526) (180,366) (978,573)
Net loss -- -- (68,952) -- (68,952)
17,911 shares purchased for
treasury -- -- -- (1,429) (1,429)
39,192 shares issued from treasury
for employee stock purchase plan,
stock option exercises and
related tax benefits -- 315 -- 1,903 2,218
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 553 222,081 (1,089,478) (179,892) (1,046,736)
Net loss -- -- (60,727) -- (60,727)
19,218 shares purchased for
treasury -- -- -- (1,798) (1,798)
97,040 shares issued from treasury
for employee stock purchase plan,
stock option exercises and
related tax benefits -- 2,608 -- 4,288 6,896
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 $553 $224,689 ($1,150,205) ($177,402) ($1,102,365)
- ----------------------------------------------------------------------------------------------------------------------
See accompanying notes. <PAGE>
<PAGE> F-7 LIN BROADCASTING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss ($60,727) ($68,952) ($838,131)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 125,130 118,604 108,976
Amortization of cost associated
with long-term debt 9,793 10,477 10,002
Litigation settlement -- (5,900) --
Provision for loss on cellular equipment 42,152 -- --
Minority interests in net income of
consolidated subsidiaries 3,896 18,856 14,130
Provision for preferred stock dividends 134,300 134,300 134,300
Provision for losses on accounts
receivable 14,359 14,930 13,130
Cumulative effect of accounting change -- -- 693,835
Equity in income of unconsolidated
affiliates (103,125) (96,977) (82,338)
Changes in operating assets
and liabilities:
Increase in accounts receivable (48,394) (34,554) (34,858)
Decrease in federal tax receivable -- -- 47,825
Increase in other current assets (3,626) (2,580) (3,545)
Cash received from equity investees 67,447 70,927 45,295
Increase (decrease) in accrued
income taxes (8,587) 8,359 12,543
Increase (decrease) in other
current liabilities 24,041 (2,346) 37,488
Increase (decrease) in deferred
income taxes 26,647 (6,563) (9,971)
Decrease in minority interests (1,568) (9,268) (646)
Other, net (2,184) (6,017) 14,564
- --------------------------------------------------------------------------------------
Total adjustments 280,281 212,248 1,000,730
- --------------------------------------------------------------------------------------
Net cash provided by
operating activities 219,554 143,296 162,599
(continued)<PAGE>
<PAGE> F-8 LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTING ACTIVITIES:
Proceeds from sales of
marketable securities 46,677 34,780 63,657
Purchases of marketable securities (43,705) (22,260) (85,938)
Capital expenditures (150,475) (71,505) (166,521)
Cellular acquisitions (36,879) -- --
Investments in and advances
to/from unconsolidated
affiliates, net 15,854 (26,709) (13,476)
- --------------------------------------------------------------------------------------
Net cash used for investing
activities ($168,528) ($85,694) ($202,278)
- --------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from long-term bank loans $ -- $ -- $120,000
Repayment of long-term bank loans (71,344) (31,818) (58,500)
Proceeds from common stock issued
for stock purchase plan, stock options
and related tax benefits 5,573 1,923 1,206
Purchase of common stock for treasury (1,798) (1,429) (193)
- --------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities (67,569) (31,324) 62,513
- --------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (16,543) 26,278 22,834
- --------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning
of Year 102,909 76,631 53,797
- --------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $86,366 $102,909 $76,631
- --------------------------------------------------------------------------------------
(Continued)
<PAGE>
<PAGE> F-9
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) for:
<S> <C> <C> <C>
Interest $88,373 $119,823 $162,251
Income taxes $47,612 $34,384 ($47,216)
See accompanying notes.
</TABLE>
<PAGE>
<PAGE> F-10
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- Organization and Operations
The Company is engaged in the ownership and operation of cellular
telephone systems, television stations and a publishing company.
McCaw Cellular Communications, Inc. ("McCaw") currently owns
approximately 52% of the outstanding shares of the Company.
NOTE 2 -- Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of the Company, its majority-
owned subsidiaries and cellular ventures in which the Company has
voting control. The Company's investments in cellular ventures
in which it has voting interests of at least 20% but not more
than 50% (Los Angeles, Philadelphia, Houston and Galveston) are
accounted for on the equity method. All significant intercompany
accounts and transactions have been eliminated.
CELLULAR FCC LICENSES AND OTHER INTANGIBLE ASSETS: Cellular FCC
licenses represent costs to acquire cellular licenses authorized
by the Federal Communications Commission. Other intangible
assets primarily represent costs allocated in acquisitions to
network affiliations, goodwill and other intangibles. Intangible
assets acquired subsequent to October 31, 1970 are being
amortized over the lesser of their useful lives or forty years,
in accordance with Accounting Principles Board Opinion No. 17.
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES: Certain highly
liquid, short-term investments which have a maturity of three
months or less when purchased are considered cash equivalents.
The Company's excess cash is invested in U.S. Government
obligations and money market instruments. Investments which do
not meet the definition of a cash equivalent are classified as
marketable securities. Marketable securities are carried at
aggregate cost which approximates market value. Net realized
gains and losses on security transactions are determined on a
specific cost basis.
PROPERTY AND EQUIPMENT: Property and equipment, including
renewals and betterments to existing facilities, are recorded at
cost. Depreciation is computed on a straight-line basis over the
estimated useful lives of the assets.
INCOME TAXES: Accelerated depreciation methods are used for tax
purposes. The Company provides deferred taxes relating to these
and other timing differences.
During the first quarter of 1993, the Company retroactively
adopted SFAS No. 109, "Accounting for Income Taxes," effective
January 1, 1991 and has restated its 1992 and 1991 financial
statements. See Note 8 for further discussion.<PAGE>
<PAGE> F-11
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -- Significant Accounting Policies (continued)
NET LOSS PER SHARE: Net loss per share is based upon the
weighted average common shares outstanding during the year.
Common stock equivalents are excluded from the calculation when
their effect is antidilutive. Average common shares outstanding
for the years ended December 31, 1993, 1992 and 1991 totalled
51,445,000, 51,417,000 and 51,395,000, respectively.
FILM CONTRACT RIGHTS: Film contract rights are recorded as
assets when the films are available for broadcasting, are
amortized over the estimated usage of the films, and are
classified as current or noncurrent on that basis.
REVENUE RECOGNITION: Cellular airtime is recorded as revenue
when earned. Access fees that are billed in advance to cellular
customers are recognized as revenue in the period when the
cellular services are provided. Broadcast revenue is billed when
contracted and recognized during the period the advertising is
aired. Publishing revenue and the related costs and commissions
are recognized as income during the year that the edition in
which the advertising appears is published.
NOTE 3 -- Property and Equipment
The major classifications of property and equipment are as
follows:
December 31,
1993 1992
(in thousands)
Land $5,860 $5,855
Buildings and improvements 48,307 43,621
Broadcasting and publishing
equipment 70,001 67,475
Cellular equipment 412,824 358,235
Construction in progress
and other 154,061 74,121
------- -------
691,053 549,307
Less accumulated depreciation 285,291 201,128
------- -------
$405,762 $348,179
======== =======
<PAGE>
<PAGE> F-12
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 -- Investments in and Advances to Unconsolidated
Affiliates
As indicated in Note 2, the Company's investments in cellular
partnerships or corporations in which it has voting interests of
at least 20% but not more than 50% (Los Angeles, Philadelphia,
Houston and Galveston) are accounted for on the equity method.
At December 31, 1993 and 1992, the investments accounted for
under the equity method exceeded the Company's share of the
underlying net assets by approximately $30.1 million and $35.3
million, respectively.
The Company has direct and indirect equity interests in American
Mobile Satellite Corporation ("AMSC") totalling 7.6% and 19.6% as
of December 31, 1993 and 1992, respectively. These interests are
accounted for at cost and amounted to $27.3 million as of
December 31, 1993 and 1992. The fair value of the Company's
investment in AMSC is estimated at $38.1 million based on the
closing price of AMSC's publicly traded equity on December 31,
1993.
The Company also has loans and advances totalling $10.2 and $26
million as of December 31, 1993 and 1992, respectively, to
Houston Cellular Telephone Company, AMSC and Galveston Cellular
Telephone Company. The interest rates on these loans range from
prime plus 1% (7% as of December 31, 1993) to 12%. The
maturities range from 1994 to 2002.
The following is a summary of combined results of operations,
assets, liabilities and equity of significant investments
accounted for under the equity method:<PAGE>
<PAGE> F-13
<TABLE>
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 -- Investments in and Advances to Unconsolidated Affiliates (Continued)
At 100% 1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Net revenues $ 704,550 $ 606,277 $ 494,549
Net income $ 255,685 $ 238,084 $ 207,779
LIN's equity in income $ 103,125 $ 96,977 $ 82,338
Current assets $ 183,577 $ 137,553 $ 119,500
Noncurrent assets 488,052 423,676 366,278
--------- --------- ---------
Total assets $ 671,629 $ 561,229 $ 485,778
========= ========= ==========
Current liabilities $ 127,976 $ 83,152 $ 75,622
Noncurrent liabilities 100,950 130,932 42,516
--------- --------- ---------
Total liabilities 228,926 214,084 118,138
Equity 442,703 347,145 367,640
--------- --------- ---------
Total liabilities and equity $ 671,629 $ 561,229 $ 485,778
========= ========= ==========
</TABLE>
<PAGE>
<PAGE> F-14
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 -- Long-Term Debt
Long-term debt consists of the following:
December 31,
1993 1992
(in thousands)
Bank Credit Facilities
LIN Television Corporation:
Term credit facility $ 159,088 $ 189,682
Revolving credit facility 63,000 70,000
---------- ----------
222,088 259,682
LIN Cellular Network Inc.:
Term credit facility 1,316,250 1,350,000
Revolving credit facility 160,000 160,000
---------- ----------
1,476,250 1,510,000
---------- ----------
1,698,338 1,769,682
Less current portion of long-
term debt 146,891 75,344
---------- ----------
$1,551,447 $1,694,338
========== ==========
The Company has two bank facilities: a Cellular Facility and a
Broadcast Facility. LIN Cellular Network, Inc. ("LCNI"), a
wholly owned subsidiary of the Company (owning all of the
Company's cellular operations other than Philadelphia), has an
aggregate of $1.48 billion outstanding and $240 million available
as of December 31, 1993. LIN Television Corporation ("LTC"), a
wholly owned subsidiary of the Company (owning all the Company's
television operations other than WOOD-TV), has $222 million
outstanding and no additional funds available as of December 31,
1993.
During the second quarter of 1993, the Company renegotiated its
Cellular Facility. This resulted in an extension in the
commencement of amortization of the $400 million revolving
portion of the Cellular Facility from September 1993 to March
1996 and a change in certain financial covenants and other terms.
<PAGE>
<PAGE> F-15
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 -- Long-Term Debt (continued)
Fees incurred in connection with the Bank Credit Facilities are
classified as noncurrent assets and are being amortized over the
contracted terms of the facilities. The aggregate amounts of
principal maturities on the utilized portions of the Bank Credit
Facilities subsequent to December 31, 1993 are as follows:
(in thousands)
1994 $146,891
1995 186,503
1996 239,924
1997 289,628
1998 342,392
Thereafter 493,000
--------
$1,698,338
==========
Under the Bank Credit Facilities, interest is payable, at the
Company's discretion, at the prevailing prime rate, LIBOR or CD
rates, plus an applicable margin. Interest is fixed for a period
ranging from one month to twelve months, depending on
availability of the interest basis selected, although if the
Company selects a prime-based loan, the interest rate will
fluctuate during the period as the prime rate fluctuates. The
applicable margin for each loan will be determined each quarter
based on the borrowing subsidiaries' ratio of adjusted senior
debt (as determined under the appropriate Bank Credit Facility)
to cash flow, as defined. Due to the frequent repricing of the
borrowings under the Bank Credit Facilities, the book values at
December 31, 1993 approximate fair values.
On March 31, 1991 and September 30, 1993, LTC and LCNI,
respectively, began making payments amortizing the amounts
outstanding under the Bank Credit Facilities. Quarterly payments
will continue until December 31, 1998 for LTC and June 30, 2000
for LCNI. In addition, both LTC and LCNI will be required to
apply cash proceeds from certain sales of assets, not reinvested
in similar assets, and excess cash flow, as defined, to the
prepayment of loans. The Company has not guaranteed the
repayment of amounts under the Bank Credit Facilities.
<PAGE>
<PAGE> F-16
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 -- Long-Term Debt (continued)
The Bank Credit Facilities contain covenants restricting certain
activities by LCNI and LTC and their respective subsidiaries,
including, without limitation, restrictions on (i) acquisitions
and investments, (ii) the incurrence of debt, (iii) distributions
and dividends to stockholders, (iv) mergers and sales of assets,
(v) prepayments of subordinated indebtedness, (vi) the creation
of liens and (vii) the issuance of preferred stock.
In addition, LCNI and LTC are required to maintain compliance
with certain financial covenants set forth in the Bank Credit
Facilities, including ratios of senior debt and combined debt to
cash flow and cash flow to debt service or fixed charges. Under
the Cellular Facility, LCNI pledged as security the capital stock
of certain of its subsidiaries, including those owning the
Company's interests in the New York, Dallas-Fort Worth and
Houston cellular partnerships. Under the Broadcast Facility, LTC
pledged as security the capital stock of each of its
subsidiaries, which owns all the Company's television properties
(other than WOOD-TV). The Company also pledged as security the
capital stock of LCNI and LTC under the Bank Credit Facilities.
The Bank Credit Facilities contain provisions concerning
customary events of default, including (i) failure to make
principal or interest payments when due, (ii) failure to comply
with covenants, (iii) misrepresentations, (iv) defaults on other
indebtedness, (v) material adverse change in the business,
condition, operations, performance or properties of the borrower,
(vi) unpaid judgments and (vii) standard ERISA and bankruptcy
defaults. In addition, it shall be an event of default if the
Designated Party (as defined in the McCaw Shareholders'
Agreement) fails to be entitled to appoint a majority of the
Board of Directors of the Company or if the McCaw Family (as
defined) fails to hold at least 20 million McCaw shares subject
to such Shareholders' Agreement.
The weighted average interest rates were 4.46% and 4.69% for the
Cellular Facility and the Broadcast Facility, respectively, at
December 31, 1993. The Bank Credit Facilities provide for annual
fees of .5% of the unused commitments. In order to manage
interest rate exposure, the Company has entered into interest
rate swap and cap agreements covering $50 million and $840
million of its outstanding debt, respectively, as of December 31,
1993. The costs of the interest caps are capitalized and charged
to interest expense over the lives of the caps.
<PAGE>
<PAGE> F-17
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 -- Redeemable Preferred Stock of a Subsidiary
LCH Communications, Inc. ("LCH"), a wholly-owned subsidiary of
the Company, has issued 1,500 shares of Class A Redeemable
Preferred Stock with a stated value of $850 million (par value
$10 per share). The Preferred Stock accrues dividends at the
rate of 15.8% per year. LCH is not required to declare or pay
dividends in cash, but they do accrue on a cumulative basis and
must be paid in the event of certain redemptions of the Preferred
Stock (see below). The holder of the Preferred Stock , Comcast
Corporation, is entitled to appoint two members of the LCH Board
of Directors.
LCH may redeem the Preferred Stock at any time at a price equal,
at its option, to either:
(1) all of the issued and outstanding capital stock of LIN-Penn
(which holds the Company's Philadelphia cellular interest
and its GuestInformant specialty publishing business), plus
cash equal to 15% of the fair market value of all businesses
(currently, only WOOD-TV) then operated by LCH (the
"Operating Business Portion"); or
(2) a cash amount equal to the greater of (a) the fair market
value of the issued and outstanding capital stock of LIN-
Penn plus the Operating Business Portion and (b) $850
million, plus, in each case, dividends which would have
accrued on the Preferred Stock from the issuance date (to
the extent not previously paid) at the rate of 15.8% per
year.
LCH is required to redeem the Preferred Stock in the year 2000
(if not redeemed prior to such time) at a price comparable to
that described above. In certain circumstances, the holder of
the Preferred Stock may require the corporate parent of LCH to
purchase the Preferred Stock. The terms of the Stock Acquisition
Agreement executed pursuant to the issuance of the Preferred
Stock contain numerous covenants pertaining to LCH which, among
other things, include restrictions on (i) the incurrence of debt,
(ii) liens, (iii) forgiveness of debt, (iv) mergers, etc., (v)
disposition of assets and (vi) dispositions of certain stock.
Management estimates the fair value of the Preferred Stock at
December 31, 1993 to be $555 million. This represents the
estimated fair value of the capital stock of LIN-Penn plus 15% of
the Operating Business Portion at December 31, 1993 based on
various valuation approaches.
<PAGE>
<PAGE> F-18
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 -- Stockholders' Deficit
McCaw Cellular Communications, Inc. currently owns approximately
52% of the outstanding Common Stock of the Company. McCaw has
agreed, pursuant to a Private Market Value Guarantee ("PMVG"), to
either offer to purchase the remaining shares of the Company in
1995 for private market value (as defined) or put the Company up
for sale.
The Company is authorized to issue 2,000,000 shares of preferred
stock, without par value, none of which is outstanding. The
Company's board of directors is empowered to set the dividend,
redemption and liquidation rights pertaining to any series of
preferred stock that may be issued from time to time, to
designate whether preferred shares of any series shall be
convertible and the terms of such convertibility, and to
establish the voting rights and any special rights or
restrictions that are to apply to preferred shares of any series.
The Company has never paid or declared a cash dividend on its
common stock. Its dividend policy is subject to future earnings,
financial conditions and other relevant factors (including,
without limitation, dividend restrictions in credit and loan
agreements between the Company and banks).
Pursuant to the Company's 1969 stock option plan, as amended,
incentive and nonqualified options have been granted or are
available for grant to officers and key employees at prices not
less than fair market value at date of grant.
Options are generally not exercisable until one year after grant,
have vesting terms ranging from two to five years, and expire ten
years from date of grant. Changes in incentive and nonqualified
stock options granted and outstanding are as follows:<PAGE>
<PAGE> F-19
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 -- Stockholders' Deficit (continued)
Shares Prices Per Share
Options outstanding at
December 31, 1990 376,947 $ 6.90 - $90.94
Granted 480,500 $71.50
Exercised (30,263) $22.35 - $49.82
Cancelled or expired (8,828) $30.17 - $89.40
--------
Options outstanding at
December 31, 1991 818,356 $ 6.90 - $90.94
Granted 521,350 $76.50 - $77.50
Exercised (25,101) $6.90 - $49.81
Cancelled or expired (51,410) $43.50 - $90.94
--------
Options outstanding at
December 31, 1992 1,263,195 $8.03 - $90.94
Granted 473,300 $88.50 - $110.50
Exercised (84,911) $9.31 - $77.50
Cancelled or expired (52,335) $22.35 - $76.50
--------
Options outstanding at
December 31, 1993 1,599,249 $8.03 - $110.50
=========
As of December 31, 1993, there were 611,905 exercisable options
to purchase shares and there were 954,840 options available for
future grants.
Pursuant to the Company's stock option plan, in the event of a
"change in control" (as defined in the plan) of the Company,
vested options at the time of the change in control may be
surrendered by officers of the Company, subject to Section 16 of
the Securities Exchange Act of 1934, as amended, in exchange for
a cash payment per share by the Company equal to the difference
between the exercise price for the option and the greater of the
highest amount paid to any holder of common stock by the acquiror
in connection with the resulting change in control or the highest
selling price of the common stock during the 90-day period prior
to the date of surrender of the option. Notwithstanding the
foregoing, if a change in control results in the consolidation or
merger of the Company with McCaw or a successor to McCaw under
the PMVG and McCaw or any such successor is the surviving company
or if McCaw becomes the beneficial owner of 80% or more of the
Company's stock (other than pursuant to a private market sale, as
defined in the Company's Private Market Value Guarantee with
McCaw), each outstanding option shall be converted into an option<PAGE>
<PAGE> F-20
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 -- Stockholders' Deficit (continued)
to purchase McCaw's Class A Common Stock or the common stock of
any such successor (or in the event that McCaw or any such
successor is not publicly traded, the ultimate parent thereof).
If a change in control results from a private market sale, upon a
vote by a majority of the Company's independent directors, each
outstanding option will be converted into an option to purchase
the common stock of the acquiror. If the independent directors
do not approve the conversion, the Company may (but is not
required to) cancel each such option in exchange for a payment
per share in cash equal to the excess of the purchase price per
share in the private market sale over the exercise price of such
option.
The Company's Employee Stock Purchase Plan (ESPP) allows eligible
employees to purchase shares of the Company's common stock,
through regular payroll deductions, at 85% of the closing market
price of the stock as of the last trading day of each month. The
ESPP restricts a participant to purchase no more than $25,000 of
stock in any calendar year. A total of 300,000 shares have been
authorized under the ESPP. There are no charges or credits to
income in connection with the ESPP. During 1993, common stock
was purchased and distributed to employees at prices ranging from
$66.09 to $100.51 per share.
The Company has a Stockholder Rights Plan designed to strengthen
its bargaining position on behalf of its stockholders in the
event of coercive stock accumulation programs, inadequate offers
or other tactics that may be used to gain control of the Company
without offering a fair and adequate price to all stockholders.
Under the Rights Plan, each stockholder has one right for each
share of the Company's outstanding common stock that entitles the
holder to purchase one one-thousandth (1/1000th) of a share of a
participating preferred stock. At the present time, the rights
are attached to the common stock and are not exercisable, and
they do not represent any significant value to stockholders. The
rights become valuable, as a result of becoming exercisable into
capital stock at a substantial discount price, if any person
acquires 15% or more of the Company's outstanding common stock or
upon the occurrence of certain other events, including a merger
or other business combination involving the Company. The
Stockholder Rights Plan was amended to provide that the McCaw
acquisition and the Private Market Value Guarantee as well as the
acquisition of McCaw by American Telephone and Telegraph Company
would not constitute a Triggering Event or cause McCaw or any of
its affiliates to become an Acquiring Person (each as defined)
under the Stockholder Rights Plan.
<PAGE>
<PAGE> F-21
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 -- Income Taxes
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," established new standards for
determining and reporting income tax liabilities. The Company
adopted SFAS No. 109 during the first quarter of 1993 effective
January 1, 1991. The principal impact of SFAS No. 109 on the
Company relates to the requirement that a deferred tax liability
be provided to recognize the differences in book and tax basis
for certain intangible assets recorded as a result of purchase
business combinations, such as the Company's 1990 acquisition of
an additional 46% interest in the New York City cellular
licensee. The transition provisions of SFAS No. 109 permit
companies to adopt either by recording the cumulative effect of
the change in the statement of operations for the period of
initial application or by retroactively restating any number of
consecutive prior years to conform to the new rules. The Company
has restated the years ended December 31, 1992 and 1991. As a
result, the Company recorded a cumulative effect adjustment and a
deferred tax liability of $693.8 million or $13.50 per share as
of January 1, 1991. For the year ended December 31, 1992 and
1991, income tax expense and net loss before cumulative effect of
the change in accounting were reduced by $26.1 million or $0.51
per share and $25.9 million or $0.50 per share, respectively.
Deferred taxes are determined based on the estimated future tax
effects of differences between the financial statement and the
tax basis of assets and liabilities given the provisions of the
enacted tax laws. The components of the net deferred tax
liability, as restated for the adoption of SFAS No. 109 as of
January 1, 1991, are as follows:
Deferred Income Taxes
Assets Liabilities
------ -----------
December 31, 1993
Intangible Assets $ -- $628,822
Property and equipment -- 82,813
Other 2,365 25,779
------- --------
Total $2,365 $737,414
======= ========
December 31, 1992
Intangible Assets $ -- $641,817
Property and equipment -- 63,345
Net operating loss and
alternative minimum
tax credit carryforwards 22,494 --
Other 1,766 27,500
------- --------
Total $24,260 $732,662
======= ========<PAGE>
<PAGE> F-22
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 -- Income Taxes (continued)
The components of income tax expense are as follows:
(in thousands)
1993 1992 1991
---- ---- ----
Current:
Federal $33,984 $29,753 $4,501
State 4,938 14,216 11,306
-------- ------- -------
38,922 43,969 15,807
Deferred:
Federal 26,800 (5,828) (6,901)
State (153) (4,244) (5,018)
-------- ------- -------
26,647 (10,072) (11,919)
-------- ------- -------
$65,569 $33,897 $3,888
======= ======= =======
The deferred tax benefit in prior years results largely from the
amortization of intangible assets, offset in part by the excess
of tax over financial statement depreciation.
The Omnibus Budget Reconciliation Act of 1993 increased the
corporate tax rate to 35 percent from 34 percent effective as of
January 1, 1993. Pursuant to Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," the Company
recorded an additional tax expense of $15.3 million in the third
quarter of 1993, with a corresponding increase in deferred tax
liability.
<PAGE>
<PAGE> F-23
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 -- Income Taxes (continued)
The following table reconciles the amount which would be provided
by applying the 35% federal statutory rate to income before
income tax expense to the federal income taxes actually provided.
(in thousands)
1993 1992 1991
---- ---- ----
Expense
assuming federal
statutory rate $50,064 $40,154 $2,726
Equity investments (5,672) (4,169) (3,770)
State and local taxes (1,675) (3,390) (2,138)
Tax expense not
provided on minority
partners' share of
income 1,027 (4,734) (3,343)
Change in statutory tax
rate from 34% to 35% 15,335 -- --
Other 1,705 (3,936) 4,125
-------- -------- -------
Federal income tax
expense (benefit) $60,784 $23,925 $(2,400)
======= ======= =======
NOTE 9 -- Retirement Plans
The Company has a contributory retirement plan covering certain
employees of the Company and its wholly owned television
subsidiaries who meet certain requirements, including length of
service and age. Pension benefits vest upon completion of five
years of service and are computed, subject to certain
adjustments, by multiplying 1.25% of the employee's last three
years average annual compensation times the number of years of
credited service. Funding is based upon legal requirements and
tax considerations. No funding was required during the three-
year period ended December 31, 1993.
<PAGE>
<PAGE> F-24
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -- Retirement Plans (continued)
The components of the net pension expense were as follows:
1993 1992 1991
---- ---- ----
(in thousands)
Service cost of current period $791 $583 $454
Interest cost on projected
benefit obligation 2,632 2,458 2,241
Actual return on plan assets (962) (2,053) (7,812)
Net amortization of unrecognized
net transition assets and
deferral of variance from
actual return on assets (906) 466 6,494
------- ------- -------
Net pension expense $1,555 $1,454 $1,377
======= ======= =======
The following table sets forth the pension plans' funded status
and amounts recognized in the balance sheet at December 31, 1993
and 1992:
1993 1992
------------------ ----------------
Funded Unfunded Funded Unfunded
(in thousands)
Actuarial present value
of accumulated plan
benefits (including
vested benefits
of $35,385 in 1993
and $31,247 in 1992) $36,668 $370 $32,165 $216
Plan assets at fair
value, primarily
publicly traded
stocks and bonds $37,593 $ -- $37,783 $ --
Less projected benefit
obligation for
service rendered
to date 38,896 641 33,394 360
------- ------ ------- -------
(continued)<PAGE>
<PAGE> F-25
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -- Retirement Plans (continued)
1993 1992
------------------ ----------------
Funded Unfunded Funded Unfunded
(in thousands)
Plan assets in excess
of (less than)
projected benefit
obligation (1,303) (641) 4,389 (360)
Unrecognized prior
service cost 6,603 76 7,831 90
Unrecognized net
(gain) loss (2,005) 262 (7,182) 109
Unrecognized net
transition (asset)
obligation being
recognized
over 15 years (2,507) (130) (2,820) (146)
------- ------- ------- -------
Prepaid (accrued)
pension cost
included in balance
sheet $ 788 $(433) $2,218 ($307)
======= ======= ======= =======
The assumed weighted average discount rate was 7.0% for 1993 and
7.75% for 1992 and 1991. The rate of increase in future
compensation levels is assumed to be 5.5% for 1993 and 7.0% for
1992 and 1991. The expected long-term rate of return on assets
is assumed to be 8.0% for 1993 and 8.5% for 1992 and 1991.
Due to a change in the Internal Revenue Code Section 415 limits
in April 1992, plan benefit changes resulting from the McCaw
acquisition that were expected to be paid from the unfunded plan
have been shifted to the funded plan for the year ended 1992. As
a result of this change, $1.1 million of the accrued liability of
the unfunded plan was shifted to the funded plan during 1992.
Employees of the Company's consolidated cellular operations are
covered by 401(k) plans that provide matching contributions from
the Company.
<PAGE>
<PAGE> F-26
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -- Retirement Plans (continued)
In December 1990, the Financial Accounting Standards Board issued
Statement No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions." This statement is effective for
fiscal years beginning after December 15, 1992 and requires
employers to accrue the cost of benefits provided to retirees,
other than pensions, over the employees' active service lives.
The Company has not offered such benefits to retirees.
NOTE 10 -- Commitments and Contingencies
Total rent expense amounted to $15.9 million, $13.2 million and
$10.2 million in 1993, 1992 and 1991, respectively.
Annual commitments for rental payments, principally on real
property operating leases, after December 31, 1993 are as
follows: 1994-$16.6 million; 1995-$16.0 million; 1996-$14.5
million; 1997-$13.6 million; 1998-$13.0 million and thereafter-
$130.8 million.
Film broadcasting rights under contract but not yet available for
telecasting amounted to $4.6 million at December 31, 1993.
The Company and its subsidiaries are from time to time defendants
in and are threatened with various legal proceedings arising from
their regular business activities. Management, after consulting
with legal counsel, does not expect that the ultimate results of
these legal proceedings will have a material adverse effect on
the financial position of the Company.
NOTE 11 -- Segment Data
The Company is engaged in both cellular telephone operations and
the media business. Cellular revenues primarily represent fees
charged for providing cellular telephone service to subscribers.
Media revenues are principally from the sale of television time
to advertisers and also include revenues from the Company's
specialty publishing operation. The cellular business segment
data reflects the consolidation of the Company's controlling
interests (principally New York and Dallas). Cellular interests
in Philadelphia, Los Angeles, Galveston and Houston are accounted
for by the equity method of accounting, and thus are not included
in the cellular business segment data which follows: <PAGE>
<PAGE> F-27
<TABLE>
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 -- Segment Data (Continued)
Cellular Media Corporate Total
(in thousands)
<S> <C> <C> <C> <C>
1993
Net revenues $520,131 $168,426 $ -- $688,557
Depreciation and amortization 114,894 10,061 175 125,130
Income (loss) from operations 77,993 58,828 (8,516) 128,305
Capital expenditures 136,662 8,599 92 145,353
Identifiable assets 2,589,995 257,839 61,689 2,909,523
1992
Net revenues $407,721 $164,800 $ -- $572,521
Depreciation and amortization 109,263 9,149 192 118,604
Income (loss) from operations 77,273 60,516 (7,774) 130,015
Capital expenditures 89,254 4,489 95 93,838
Identifiable assets 2,554,972 250,259 57,679 2,862,910
1991
Net revenues $317,806 $150,331 $ -- $468,137
Depreciation and amortization 99,483 9,209 284 108,976
Income (loss) from operations 41,912 52,610 (13,092) 81,430
Capital expenditures 160,298 5,693 530 166,521
Identifiable assets 2,500,888 241,162 56,894 2,798,944
</TABLE>
<PAGE>
<PAGE> F-28
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - Related Party Transactions
Under an inter-company services agreement negotiated between the
Company and McCaw, McCaw provided management and other services
to the Company during 1993, 1992 and 1991. LIN also provided
certain services to McCaw during the same time periods. The
Company incurred $7.3 million, $5.3 million and $5.4 million for
the net value of management and other services rendered under the
inter-company services agreement during 1993, 1992 and 1991,
respectively. The related payables for such services were $16.1
million and $12.3 million as of December 31, 1993 and 1992,
respectively.
In addition to the transactions described above, the Company or
its affiliates routinely enters into transactions with McCaw or
its affiliates in the ordinary course of business. The Company
pays McCaw for providing cellular service to the Company's
subscribers under roaming agreements, and McCaw pays the Company
for similar services provided by the Company to McCaw's
subscribers. The Company's cellular operations also participate
in certain programs managed by McCaw, such as national
advertising campaigns, national accounts marketing, and the North
American Cellular Network, among other things. Such transactions
are not separately disclosed in the financial statements as they
are carried out in the normal course of business.
All of such agreements and arrangements between the Company and
McCaw are on terms that the Company believes are as favorable to
it as would have been obtained with an unrelated third party.
Under the Company's Private Market Value Guarantee with McCaw,
approval of the majority of LIN's independent directors is
required before the Company enters into any material transactions
with McCaw or its affiliates.
NOTE 13 - Provision for Loss on Cellular Equipment
In June 1993, the Company began the replacement of the cellular
system assets currently used in its Dallas cellular operations
with a new system. As a result, the Company recorded a non-cash
pre-tax charge of $42.2 million to reflect the estimated loss on
the disposal of the current system. After taxes and minority
interests, this charge was approximately $14.8 million, or $0.29
per share.
<PAGE>
<PAGE> F-29
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 -- Other Income and Expenses
In June 1992, the Company settled a lawsuit relating to the McCaw
acquisition. Under the terms of the settlement, the Company
received from the defendants a payment of $3 million and certain
other considerations in July 1992 and a payment of $2 million in
July 1993. In addition, the Company will receive payments of $2
million from McCaw on June 30, 1994 and 1995, respectively.
After payment of legal fees and other related costs, this
settlement resulted in a net gain to the Company of approximately
$7.0 million.
NOTE 15 -- Acquisitions
On October 6, 1993, the Company acquired a 100% interest in the
Newton, Texas (Texas RSA-17) A Block cellular system for
approximately $36 million cash. The acquisition was accounted
for using the purchase method and the excess of the cost over
fair market value of the tangible assets acquired has been
assigned to Cellular FCC licenses.
The Company has also entered into an agreement to acquire the
Litchfield, Connecticut (Connecticut RSA-1) A Block cellular
system for aggregate consideration of approximately $30 million.
This transaction is expected to be completed during 1994.
NOTE 16 -- Quarterly Results of Operations (Unaudited)
The financial information presented below reflects all
adjustments (consisting of normal recurring adjustments) which
are, in the opinion of management, necessary to a fair
presentation of the results for the interim periods.
Summarized quarterly financial data for 1993 and 1992 is as
follows:<PAGE>
<PAGE> F-30
<TABLE>
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 -- Quarterly Results of Operations (Unaudited) (continued)
First Second Third Fourth
Quarter Quarter Quarter Quarter
(in thousands)
<S> <C> <C> <C> <C>
1993
Net revenues $151,233 $171,198 $175,145 $190,981
Operating income 32,707 553 44,593 50,452
Equity in income of unconsolidated
affiliates 24,729 24,580 26,906 26,910
Net loss (14,592) (16,614) (26,483) (3,038)
Net loss per share $(0.29) $(0.32) $(0.51) $(0.06)
1992
Net revenues $123,925 $142,887 $145,699 $160,010
Operating income 18,036 33,708 36,069 42,202
Equity in income of unconsolidated
affiliates 23,805 25,953 26,443 20,776
Net loss (30,692) (12,675) (16,674) (8,911)
Net loss per share $(0.60) $(0.25) $(0.32) $(0.17)
</TABLE>
<PAGE>
<PAGE> F-31
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
The Board of Directors and Stockholders of
LIN Broadcasting Corporation
We have audited the accompanying combined balance sheets of LIN
Broadcasting Corporation's Unconsolidated Affiliates listed in
Note 1 (the Ventures) as of December 31, 1993 and 1992, and the
related combined statements of income, Ventures' equity, 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 did
not audit the 1993 and 1992 consolidated financial statements of
AWACS, Inc. and subsidiaries, which statements reflect total
assets constituting 24% and 20% as of December 31, 1993 and 1992,
respectively and net revenues constituting 19% and 17% for the
years then ended of the related combined totals. Those
statements were audited by other auditors whose report, which
also places reliance on other auditors, has been furnished to us,
and our opinion, insofar as it relates to data included for
AWACS, Inc. and subsidiaries, is based solely on the reports of
the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform our audits 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 and the reports of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the combined financial statements referred to above
present fairly, in all material respects, the combined financial
position of the Ventures at December 31, 1993 and 1992, and the
combined 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, based on our audits and the reports of other
auditors, 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
Seattle, Washington
February 4, 1994<PAGE>
<PAGE> F-32
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
AWACS, Inc.
Wayne, Pennsylvania
We have audited the consolidated balance sheet of AWACS, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of operations and retained earnings and
of cash flows for the years then ended (not presented separately
herein). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We
did not audit the financial statements of Garden State
Cablevision L.P. ("Garden State"), the Company's investment in
which is accounted for by the use of the equity method. The
Company's equity of $32,302,000 and $22,369,000 in Garden State's
deficit at December 31, 1993 and 1992, respectively, and of
$9,933,000 and $2,985,000 in that entity's net losses for the
years then ended are included in the accompanying consolidated
financial statements. The financial statements of Garden State
were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts
included for Garden State, is based solely on the report of such
other auditors.
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.
In our opinion, based on our audits and the report of other
auditors, such consolidated financial statements present fairly,
in all material respects, the financial position of AWACS, Inc.
and subsidiaries as of December 31, 1993 and 1992 and the results
of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.
As discussed in the notes to the consolidated financial
statements, the Company changed its method of accounting for
income taxes effective January 1,1993 to conform with Statement
of Financial Accounting Standards No. 109 "Accounting for Income
Taxes."
DELOITTE & TOUCHE
Philadelphia, Pennsylvania
February 18, 1994<PAGE>
<PAGE> F-33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Garden State Cablevision L.P.:
We have audited the accompanying balance sheets of Garden State
Cablevision L.P. (a Delaware Limited Partnership) as of December
31,1993 and 1992, and the related statements of operations,
partners' (deficit) capital and cash flows for the years then
ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements 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.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Garden State Cablevision L.P. as of December 31,1993 and 1992,
and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
that the Partnership will continue as a going concern. As
discussed in Note 2, the Partnership has obtained financing
proposals for the repayment of the Senior Debt and Subordinated
Debt which become due in 1994. As of the date of this report, the
Partnership has not received a written commitment for the
required financing and this raises substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to this matter are described in Note 2. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
ARTHUR ANDERSEN & CO.
Philadelphia, Pa.,
February 23, 1994 <PAGE>
<PAGE> F-34
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(Dollars in thousands)
ASSETS 1993 1992
- ----------------------------------------------------------------
Current assets:
Cash and cash equivalents $54,357 $40,815
Accounts receivable, less
allowance for doubtful
accounts (1993-$9,829;
1992-$14,440) 111,723 84,926
Prepaid expenses and other 17,497 11,812
- ----------------------------------------------------------------
Total current assets 183,577 137,553
- ----------------------------------------------------------------
Property and equipment, at
cost, less accumulated
depreciation 452,447 417,297
Other assets 2,108 1,143
Cellular FCC licenses, less
accumulated amortization
(1993-$506) 13,564 --
Organization costs, less
accumulated amortization
(1993-$6,785; 1992-$5,780) 3,265 4,270
Due from majority stockholder
of AWACS 16,387 --
Notes receivable, less allowance
for doubtful accounts
(1993-$150; 1992-$198) 281 966
- ----------------------------------------------------------------
Total assets $671,629 $561,229
================================================================
(continued)<PAGE>
<PAGE> F-35
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED BALANCE SHEETS (continued)
DECEMBER 31, 1993 AND 1992
(Dollars in thousands)
LIABILITIES AND EQUITY 1993 1992
- ----------------------------------------------------------------
Current liabilities:
Accounts payable $37,801 $22,378
Accrued expenses 39,180 27,889
Unearned revenues 27,610 16,818
Commissions payable 14,439 10,868
Notes payable 2,946 --
Other current liabilities 6,000 5,199
- ----------------------------------------------------------------
Total current liabilities 127,976 83,152
- ----------------------------------------------------------------
Notes payable to affiliates 63,126 93,827
Investment in affiliate 32,302 22,369
Deferred income taxes 4,236 13,434
Other long-term liabilities 1,286 1,302
Equity:
Contributed capital 78,690 63,817
Excess cost of limited
partnership interest (70,384) (70,384)
Retained earnings 434,397 353,712
- ----------------------------------------------------------------
Total equity 442,703 347,145
- ----------------------------------------------------------------
Total liabilities and equity $671,629 $561,229
================================================================
See accompanying notes.
<PAGE>
<PAGE> F-36
<TABLE>
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Revenues $704,550 $606,277 $494,549
Operating Costs and Expenses:
Direct operating 75,140 60,732 51,698
Selling, general and administrative 277,040 236,597 185,098
Depreciation and amortization 69,833 52,595 41,684
- --------------------------------------------------------------------------------------
422,013 349,924 278,480
- --------------------------------------------------------------------------------------
Operating Income 282,537 256,353 216,069
- --------------------------------------------------------------------------------------
Other Income (Expense):
Interest expense (8,138) (3,901) (2,558)
Investment income 2,578 1,685 2,245
Provision for loss on cellular
equipment -- (4,604) --
Litigation settlements (12,254) -- --
Equity in loss of affiliate (9,933) (2,985) --
- --------------------------------------------------------------------------------------
(27,747) (9,805) (313)
Income Before Provision for Income
Taxes and Cumulative Effect
of Accounting Changes 254,790 246,548 215,756
Provision for Income Taxes 11,247 8,464 7,977
- --------------------------------------------------------------------------------------
Income before Cumulative Effect
of Accounting Changes 243,543 238,084 207,779
Cumulative Effect of Accounting Changes 12,142 -- --
- --------------------------------------------------------------------------------------
Net Income $255,685 $238,084 $207,779
======================================================================================
See accompanying notes.<PAGE>
<PAGE> F-37
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED STATEMENTS OF VENTURES' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Excess Cost
of Limited
Contributed Partnership Retained Total
Capital Interest Earnings Equity
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 $61,137 $ -- $221,074 $282,211
Net income -- -- 207,779 207,779
Distributions to partners -- -- (122,350) (122,350)
Balance at December 31, 1991 61,137 -- 306,503 367,640
Net income -- -- 238,084 238,084
Distributions to partners -- -- (185,945) (185,945)
Acquisition of interest in
Garden State Cable -- (70,384) -- (70,384)
Acquisition of interest in
Galveston Cellular
Telephone Company 2,680 -- (4,930) (2,250)
- ------------------------------------------------------------------------------------------
Balance at December 31, 1992 63,817 (70,384) 353,712 347,145
Net income -- -- 255,685 255,685
Distributions to partners -- -- (175,000) (175,000)
Contributions 809 -- -- 809
In kind contribution of Cellular
FCC license 14,064 -- -- 14,064
- ------------------------------------------------------------------------------------------
Balance at December 31, 1993 $78,690 ($70,384) $434,397 $442,703
==========================================================================================
See accompanying notes.
<PAGE>
<PAGE> F-38
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $255,685 $238,084 $207,779
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 69,833 52,595 41,684
Equity in loss of affiliate 9,933 2,985 --
Non-cash interest expense 6,006 1,403 --
Provision for losses on accounts
receivable 20,945 21,127 13,506
Provision for loss of cellular equipment -- 4,604 --
Cumulative effect of accounting changes (12,142) -- --
Changes in operating assets and
liabilities
Increase in accounts receivable (47,742) (29,300) (31,058)
Increase (decrease) in accounts payable 15,423 (6,129) 8,943
Increase in accrued expenses 11,295 5,467 1,536
Increase in unearned revenues 10,792 3,445 2,896
Increase in commissions payable 3,571 2,553 1,808
Increase in deferred income taxes 3,319 3,244 2,763
Other, net (5,093) (1,069) (3,684)
- --------------------------------------------------------------------------------------
Total adjustments 86,140 60,925 38,394
- --------------------------------------------------------------------------------------
Net cash provided by
operating activities 341,825 299,009 246,173
(continued)<PAGE>
<PAGE> F-39
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTING ACTIVITIES:
Advances to/from majority
stockholder of AWACS (16,387) 9,259 (710)
Capital expenditures (103,944) (112,573) (126,250)
- --------------------------------------------------------------------------------------
Net cash used for
investing activities (120,331) (103,314) (126,960)
FINANCING ACTIVITIES:
Proceeds from (repayment of)
revolving credit notes -- (3,800) 3,800
Proceeds from (repayment of)
notes payable to partners (33,761) 10,478 10,000
Contributions from partners 809 -- --
Distributions paid to partners (175,000) (185,945) (122,350)
- --------------------------------------------------------------------------------------
Net cash used for
financing activities (207,952) (179,267) (108,550)
- --------------------------------------------------------------------------------------
Net Increase in Cash and
Cash Equivalents 13,542 16,428 10,663
- --------------------------------------------------------------------------------------
Cash and Cash Equivalents at
Beginning of Year 40,815 24,387 13,724
- --------------------------------------------------------------------------------------
Cash and Cash Equivalents at
End of Year $54,357 $40,815 $24,387
=======================================================================================
(continued)<PAGE>
<PAGE> F-40
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
1993 1992 1991
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid for:
Income taxes $4,900 $6,600 $5,300
Interest
Partners 1,478 3,422 2,411
Others 242 540 414
Noncash investing and financing activities:
On September 30, 1992, an indirect subsidiary of AWACS issued a note for $51 million to
purchase from the majority stockholder of AWACS a 40% limited partnership interest in
Garden State Cablevision L.P. (see Note 5 to the combined financial statements).
In October 1992, a subsidiary of LIN, together with a third party, acquired an approximate
56% interest in the parent company of Galveston Cellular Telephone Company. In 1993, the
cost basis of of this acquisition was pushed-down to the books of Galveston Cellular
Telephone Company.
See accompanying notes.
</TABLE>
<PAGE>
<PAGE> F-41
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 -- Basis of Presentation
These combined financial statements have been prepared to comply
with the Securities and Exchange Commission's Regulation S-X
requirement, in connection with LIN Broadcasting Corporation's
("LIN") consolidated financial statements, which requires
separate or combined financial statements of significant
subsidiaries 50% or less controlled.
These combined financial statements include 100% of the accounts
of the operating ventures listed in the table below in which LIN
has voting interests of 50% or less (the "Ventures"). These
Ventures are included in LIN's consolidated financial statements
on the equity accounting method. During 1992, LIN acquired an
indirect interest in Galveston Cellular Telephone Company. As a
result of this acquisition, the results of the Galveston venture
are included in the combined financial statements from the date
of acquisition.
Voting/
Name and Location Equity Management
- -----------------------------------------------------------------
AWACS Inc., d/b/a
Comcast Metrophone Corporation 49.99% 49.99%
Philadelphia
Los Angeles Cellular
Telephone Co., Partnership 39.97% 50.00%
Los Angeles
Houston Cellular
Telephone Co., Partnership 56.25% 50.00%
Houston
Galveston Cellular
Telephone Co., Corporation 34.60% 50.00%
Galveston
NOTE 2 -- Significant Accounting Policies
The following are the Ventures' significant accounting policies:
CASH EQUIVALENTS: Certain highly liquid, short-term investments
which have a maturity of three months or less are considered cash
equivalents. Excess cash is primarily invested in U.S.
Government obligations.
PROPERTY AND EQUIPMENT: Cellular system equipment is recorded at
cost and is depreciated on a straight-line basis over an 8 or 10
year period. All other property and equipment, including
betterments to existing facilities, are recorded at cost and<PAGE>
<PAGE> F-42
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 2 -- Significant Accounting Policies (continued)
depreciated on a straight-line basis over their estimated useful
lives of three to twenty years. Beginning in 1993, AWACS revised
the useful lives used to compute depreciation for its cell site
equipment from 10 to 8 years and for its computer equipment from
5 to 3 years. The change had the effect of increasing
depreciation expense by approximately $4.4 million.
CELLULAR FCC LICENSES AND ORGANIZATION COSTS: Cellular FCC
Licenses represent costs to acquire cellular licenses authorized
by the Federal Communications Commission and are amortized using
the straight line method over 40 years. Organization costs,
consisting principally of legal fees, feasibility studies and
other costs related to obtaining required licenses and regulatory
approvals, are amortized using the straight-line method over a 10
year period.
INCOME TAXES: Accelerated depreciation methods are used for tax
purposes. AWACS, which is a corporation, provides deferred taxes
related to this and other timing differences. Effective January
1, 1993, AWACS adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes" (see Note 7). No provision is made for income taxes for
either the Los Angeles or Houston ventures as the income or loss
is includable in the tax returns of the respective partners of
these partnerships.
REVENUE RECOGNITION: Cellular airtime is recorded as revenue
when earned. Unearned revenues consist principally of amounts
billed to customers for access fees which are payable one month
in advance.
RECLASSIFICATIONS: Certain reclassifications have been made to
the prior years' combined financial statements in order to
conform to the 1993 presentation.
NOTE 3 -- Property and Equipment
The major classifications of property and equipment were as
follows:
December 31,
1993 1992
------------------
Land $1,379 $1,271
Buildings and improvements 6,583 5,084
Cellular equipment 576,655 511,993
Other 70,997 40,093
------- -------
655,614 558,441
Less accumulated depreciation 203,167 141,144
------- -------
$452,447 $417,297
======== ========<PAGE>
<PAGE> F-43
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 4 -- Notes Payable to Affiliates
The Houston venture has entered into agreements with the partners
under which it has borrowed $2,946 and $35,946 as of December 31,
1993 and 1992, respectively. The borrowings were made to fund
capital expenditures and to retire existing equipment vendor
financings. The notes to partners mature in June 1994, are
nonamortizing and bear interest at a rate of prime (6% as of
December 31, 1993) plus 1%. The Galveston venture also entered
into an agreement with an affiliate under which it has borrowed
$4,717 and $5,478 as of December 31, 1993 and December 31, 1992,
respectively. This note matures beginning in 1995 and bears
interest at prime plus 2%.
NOTE 5 -- Investment in Affiliate
On September 30, 1992, an indirect subsidiary of AWACS acquired
from the majority stockholder of AWACS a 40% limited partnership
interest in Garden State Cablevision L.P. ("Garden State").
Consideration consisted of a note with an initial principal
amount of $51,000 which is included in Notes payable to
affiliates. The note bears interest at a rate of 11% per annum.
Interest is payable on a quarterly basis to the extent of
available cash, with any unpaid interest added to principal. The
note is due September 30, 1997. AWACS anticipates there will be
no significant amount of cash available for payment of interest
on the note, and accordingly, interest accrued on the note during
1993 and 1992 of $6,006 and $1,403, respectively, was added to
principal.
AWACS' acquisition of the 40% interest in Garden State was
recorded as a negative investment in an affiliate of $19,384,
which represented the carryover basis from the majority
stockholder. AWACS' excess of purchase price over the carrying
value was recorded as a reduction of stockholders' equity in the
amount of $70,384. The investment is accounted for on the equity
method and under the terms of the partnership agreement, 49.5% of
the net losses of Garden State are allocated to AWACS. Such
losses, which amounted to $9,933 and $2,985 during 1993 and 1992,
respectively, were added to the investment in affiliate.
Summarized financial information for Garden State for the year
ended December 31, 1993 and the three months ended December 31,
1992 is as follows:<PAGE>
<PAGE> F-44
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 5 -- Investment in Affiliate (Continued)
Three Months
Year Ended Ended
December 31, December 31,
1993 1992
------------ -----------
(Unaudited)
Results of Operations
Revenues $90,824 $21,779
Costs and expenses 41,647 9,915
Depreciation and amortization 47,682 12,139
------- -------
Operating loss 1,495 (275)
Interest expense, net 20,904 5,755
------- -------
Loss before cumulative effect
of accounting change $(19,409) $(6,030)
Cumulative effect of
accounting change (657) --
------- -------
Net loss $(20,066) $(6,030)
======= ========
Equity in net loss $(9,933) $(2,985)
======= ========
Financial position at December 31, 1993 and 1992
Current assets $7,328 $15,861
Noncurrent assets 246,512 285,828
Current liabilities 294,325 23,198
Noncurrent liabilities 779 299,689
Garden State's Senior Loan Credit Agreement matures on March 30,
1994, but may be extended through December 31, 1999, upon the
satisfaction of certain conditions as specified by the agreement.
These conditions include, among other things, the refinancing of
the subordinated debt, which matures on June 30,1994, at terms
approved by the senior lenders. In connection therewith, Garden
State has obtained financing proposals for the repayment of the
senior debt ($196,475,000 at December 31, 1993) and subordinated
debt ($75,926,919 at December 31, 1993, including deferred
interest of $7,523,428). Management believes that Garden State
will be successful in obtaining the required financing. As of
February 18, 1994, Garden State had not received a written
commitment for the required financing. Garden State's ability to
continue as a going concern is dependent upon obtaining the
required financing.<PAGE>
<PAGE> F-45
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 5 -- Investment in Affiliate (Continued)
In November 1993, Garden State signed a letter of intent to
purchase the general partner's interest in Garden State. The
general partner has also retained its rights under the
Partnership Agreement that beginning August 15, 1994, for a
period of 90 days, it shall have the right to cause Garden State
to purchase all of its partnership interest. The purchase price
shall be equal to the greater of 150% of the general partner's
aggregate capital contributions or 120% of the general partner's
percentage of the system's fair market value as determined by an
independent appraisal.
During 1993 and 1994, the FCC adopted and modified various
regulations governing the rates charged to cable subscribers.
Because of these regulations, future revenue growth from cable
services will rely to a much greater extent that has been true in
the past on increased revenues from unregulated services and new
subscribers than from increases in previously unregulated rates.
NOTE 6 -- Equity
In accordance with the various partnership agreements, income of
the partnerships is allocated to each owner's respective capital
account in accordance with its respective equity interest.
Additional capital contributions may be called based on annual
construction and operating budgets submitted by the partnerships
and agreed upon by the operating committees of each partnership.
NOTE 7 -- Postretirement Benefits Other Than Pensions
Effective January 1, 1993, AWACS adopted SFAS No. 106. This
statement requires AWACS to accrue the estimated cost of retiree
benefits earned during the years the employee provides services.
AWACS previously expensed the cost of these benefits as claims
were incurred. AWACS recorded the cumulative effect of the
obligation for its allocated cost of such benefits in 1993.
AWACS' retiree benefit obligation is unfunded and all benefits
are paid by Comcast. The cumulative effect as of January 1, 1993
of the adoption of SFAS No. 106 was to reduce the AWACS net
income by approximately $375 (net of tax). The effect of SFAS
No. 106 on AWACS' income before cumulative effect of the
accounting changes was not significant to AWACS' results of
operations.
NOTE 8 -- Income Taxes
Effective January 1, 1993, AWACS adopted SFAS No. 109,
"Accounting for Income Taxes." As a result, AWACS recorded a
cumulative effect of accounting change of $12,517. The adoption
of SFAS No. 109 did not have a significant impact on the amount
of income tax expense recorded by AWACS during 1993.<PAGE>
<PAGE> F-46
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 8 -- Income Taxes (continued)
Income tax expense consists of the following:
Year Ended December 31,
1993 1992 1991
---- ---- ----
Current:
Federal $3,543 $3,179 $3,840
State 4,653 2,041 1,374
------ ------ ------
8,196 5,220 5,214
------ ------ ------
Deferred:
Federal 4,381 2,509 1,841
State (1,330) 735 922
------ ------ ------
3,051 3,244 2,763
------ ------ ------
$11,247 $8,464 $7,977
======= ======= ======
Total tax expense differs from the amount computed by multiplying
income before tax by the statutory federal tax rate primarily due
to non-deductible depreciation and amortization expense and state
income taxes.
Deferred taxes are attributable primarily to excess tax over book
depreciation and certain expenses not deductible for tax purposes
until paid.
NOTE 9 -- Related-Party Transactions
During the years ended December 31, 1993, 1992 and 1991, the two
partnerships recorded management fees payable to affiliates of
their partners of $4,200, $4,200 and $4,200, respectively, for
management consultation, legal services and various other
professional services.
AWACS is required to advance to its majority stockholder certain
amounts based on AWACS' cash flow (as defined) on a semiannual
basis. During 1993, AWACS advanced $15,970 to the majority
stockholder in the form of a note bearing interest at the prime
rate plus 1%. Pursuant to the terms of the note, unpaid interest
of $417 was capitalized and added to the principal outstanding.
For the year ended December 31, 1993, AWACS is required to
advance to the majority stockholder an additional $4,460 by April
30, 1994.
In addition to the transactions described above, the Ventures
routinely enter into transactions with the Company or other
affiliates of the Company (including McCaw), or other affiliates<PAGE>
<PAGE> F-47
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 9 -- Related-Party Transactions (continued)
of the partners. Such transactions include roaming agreements
and participation in the North American Cellular Network, among
other things. Such transactions are not separately disclosed in
the financial statements as they are carried out in the normal
course of business.
NOTE 10 -- Commitments
The Ventures lease office space, land and buildings for cell
sites and vehicles under operating leases which expire through
the year 2010. Total rent expense for the years ended December
31, 1993, 1992 and 1991 was $13,945, $11,909 and $8,788,
respectively. Some of the leases include escalation clauses
based on increases in the Consumer Price Index. Several of the
leases include options to extend the lease term.
Future minimum payments under noncancellable operating leases
with initial or remaining terms of one year or more at December
31, 1993 are:
1994 $14,286
1995 13,037
1996 10,841
1997 8,918
1998 6,811
1999 and beyond 10,809
--------
$64,702
========
NOTE 11 -- Contingencies
The Ventures are from time to time defendants in and are
threatened with various legal proceedings arising from their
regular business activities. The Ventures are also party to
routine filings with the FCC and state regulatory authorities and
customary regulatory proceedings pending in connection with
interconnection, rates, and practices and proceedings concerning
the telecommunications industry in general and other proceedings
which management does not expect to have a material adverse
effect on the financial position or results of operations of the
Ventures.
In August 1993 and in December 1993, two dealers for the Los
Angeles cellular partnership filed lawsuits against the
partnership and certain other parties in the California state
court, seeking injunctive relief and monetary damages. The
lawsuits allege various torts and statutory violations, including
price-fixing regarding cellular equipment and service, below-cost
sales of equipment, fraud, interference with economic
relationship, unfair competition, discrimination among agents,<PAGE>
<PAGE> F-48
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 11 -- Contingencies (continued)
and conspiracy. The lawsuits are in their early stages and
plaintiffs have made a motion to consolidate them. The
partnership intends to defend each lawsuit vigorously, believes
that it has meritorious defenses to the allegations contained in
the complaints, and does not expect that the ultimate results of
these legal proceedings will have a material adverse effect on
its financial position or results of operations.
In September 1993, a proposed class action lawsuit was filed by a
cellular subscriber in a District Court in Texas. The lawsuit
alleges that the renewal provisions and liquidated damages
provisions of the annual subscriber agreements of various
cellular carriers, including the Houston cellular partnership,
are void and unenforceable, and are contrary to public policy.
The plaintiffs also seek monetary damages. No class has yet been
certified. The partnership intends to defend the lawsuit
vigorously, believes that it has meritorious defenses to the
allegations contained in the complaint, and does not expect that
the ultimate results of this legal proceeding will have a
material adverse effect on its financial position or results of
operations.<PAGE>
<PAGE> F-49
<TABLE>
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $13,398 $11,869 $12,518
Additions:
Charged to income 14,359 14,930 13,130
Recoveries 7,939 4,911 3,836
Deductions:
Accounts written off 17,558 18,312 17,615
- ------------------------------------------------------------------------------------------
Balance at End of Year $18,138 $13,398 $11,869
==========================================================================================
<PAGE>
<PAGE> F-50
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Deductions
Balance at ------------------------
Beginning of Amounts Amounts Balance at End of Year
Year Additions Collected Written Off Current Not current
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Comcast Cellular
Communications, Inc. $ -- $16,387 $ -- $ -- $16,387 $ --
Promissory note,
bearing interest at prime plus 1%.
The note matures six months after a
Credit Agreement of CCCI is paid
in full, which is expected to be
in the year 2000.
Year Ended December 31, 1992
Metromedia Company $9,259 $ -- $9,259 $ -- $ -- $ --
Promissory note, bearing
interest at prime, due 9/30/94
if not previously called
Year Ended December 31, 1991
Metromedia Company $8,549 $710 $ -- $ -- $9,259 $ --
Promissory note, bearing
interest at prime, due
9/30/94 if not previously called
<PAGE>
<PAGE> F-51
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE IV - INDEBTEDNESS TO RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Balance at
Beginning of Balance at
Year Additions Deductions End of Year
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
LIN Cellular Communications $20,220 -- $18,563 $1,657 (1)
American Cellular
Communications 15,726 -- 14,437 1,289 (1)
Galveston Mobile Partnership 5,478 -- 761 4,717
Comcast Cellular 52,403 6,006 -- 58,409
- ------------------------------------------------------------------------------------------
Totals $93,827 $6,006 $33,761 $66,072
==========================================================================================
Year Ended December 31, 1992:
LIN Cellular Communications $17,407 $2,813 $ -- $20,220
American Cellular
Communications 13,539 2,187 -- 15,726
Galveston Mobile Partnership -- 5,478 -- 5,478
Comcast Cellular -- 52,403 -- 52,403
- ------------------------------------------------------------------------------------------
Totals $30,946 $62,881 $ -- $93,827
==========================================================================================
Year Ended December 31, 1991:
LIN Cellular Communications $11,782 $5,625 $ -- $17,407
American Cellular
Communications 9,164 4,375 -- 13,539
- ------------------------------------------------------------------------------------------
Totals $20,946 $10,000 $ -- $30,946
==========================================================================================
(1) Classified as short term.
See Notes 4 and 5 regarding terms of indebtedness.<PAGE>
<PAGE> F-52
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE V - PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Balance at Balance at
Beginning of Retirements End of
Year Additions or Sales Reclassifications Year
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Land $1,271 $168 $60 -- $1,379
Buildings and improvements 5,084 1,499 -- -- $6,583
Cellular equipment 511,993 71,081 6,419 -- $576,655
Other 40,093 32,770 1,866 -- $70,997
- ----------------------------------------------------------------------------------------------------------------------
Totals $558,441 $105,518 $8,345 -- $655,614
======================================================================================================================
Year Ended December 31, 1992:
Land $518 $753 $ -- $ -- $1,271
Buildings and improvements 3,321 1,763 -- -- 5,084
Cellular equipment 409,385 106,982 20,054 15,680 511,993
Other 46,970 13,932 5,129 (15,680) 40,093
- ----------------------------------------------------------------------------------------------------------------------
Totals $460,194 $123,430 $25,183 $0 $558,441
======================================================================================================================
Year Ended December 31, 1991:
Land $395 $123 $ -- $ -- $518
Buildings and improvements 1,487 2,161 327 -- 3,321
Cellular equipment 321,188 88,197 -- -- 409,385
Other 33,688 13,379 97 -- 46,970
- ----------------------------------------------------------------------------------------------------------------------
Totals $356,758 $103,860 $424 $ -- $460,194
======================================================================================================================
<PAGE>
<PAGE> F-53
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
Balance at Balance at
Beginning of Retirements End of
Year Additions or Sales Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1993:
Buildings and improvements $1,200 $969 $6 $2,163
Cellular equipment 129,640 58,040 1,994 185,686
Other 10,304 6,301 1,287 15,318
- ---------------------------------------------------------------------------------------------------------
Totals $141,144 $65,310 $3,287 $203,167
=========================================================================================================
Year Ended December 31, 1992:
Buildings and improvements $633 $567 $ -- $1,200
Cellular equipment 93,219 47,272 10,851 129,640
Other 6,628 4,185 509 10,304
- ---------------------------------------------------------------------------------------------------------
Totals $100,480 $52,024 $11,360 $141,144
=========================================================================================================
Year Ended December 31, 1991:
Buildings and improvements $307 $377 $51 $633
Cellular equipment 56,192 37,027 -- 93,219
Other 3,711 2,970 53 6,628
- ---------------------------------------------------------------------------------------------------------
Totals $60,210 $40,374 $104 $100,480
=========================================================================================================
<PAGE>
<PAGE> F-54
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $14,638 $11,309 $10,387
Additions:
Charged to income 20,945 21,127 13,506
Recoveries 5,551 7,400 3,255
Deductions:
Accounts written off 31,155 25,198 15,839
- ------------------------------------------------------------------------------------------
Balance at End of Year $9,979 (1) $14,638 (2) $11,309
=========================================================================================
(1) Includes $150 classified as long-term.
(2) Includes $198 classified as long-term.
<PAGE>
<PAGE> F-55
LIN BROADCASTING CORPORATION'S UNCONSOLIDATED AFFILIATES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in thousands)
1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes - other than payroll and income taxes:
Property $8,960 $13,322 $6,054
Other 1,866 1,578 1,150
Advertising 29,719 19,459 15,017
Other items are not presented as such amounts are less than 1% of net revenues.
</TABLE>
LIN BROADCASTING CORPORATION
AMENDED AND RESTATED
1969 STOCK OPTION PLAN
1. Purpose of the Plan
The general purpose of this 1969 Stock Option Plan
(hereinafter called the Plan) is to aid in maintaining and
developing a management and staff capable of assuring the future
success of LIN Broadcasting Corporation (hereinafter called the
Company) by providing to employees of the Company and its
subsidiaries additional incentives to enlarge their proprietary
interest in the Company, to continue and increase their efforts on
the Company's behalf, and to remain in the employ of the Company or
its subsidiaries. Options granted under the Plan may be "incentive
stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (hereinafter called the Internal Revenue Code), or
"nonqualified stock options".
2. Stock Reserved for Options
An aggregate of 3,778,941 shares of Common Stock, $.01 par
value, of the Company (hereinafter called the Common Stock) will be
reserved for issuance or transfer upon the exercise of options
granted under the Plan. Such shares may be in whole or in part, as
the Board of Directors of the Company shall from time to time
determine, authorized but unissued shares of Common Stock or issued
shares of Common Stock which shall have been reacquired by the
Company. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall (unless the Plan shall
have been terminated) again be available for other options to be
granted under the Plan.
3. Administration of the Plan
The Plan shall be administered by a Committee (hereinafter
called the Committee) consisting solely of two or more persons
appointed from time to time by the Board of Directors; provided,
however, that with respect to officers and directors of the Company
who are subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), such Committee shall consist
solely of three or more persons appointed from time to time by the
Board of Directors out of those members of the Board of Directors
of the Company who have not at any time within one year prior to
service as a Committee member or during such service been eligible
to be granted or awarded equity securities pursuant to the Plan or
any other plan of the Company or any of its affiliates except
pursuant to certain formula, broad-based or fee election plans
specified in Rule 16b-3(c) under the Exchange Act.
The Committee shall have plenary authority in its discretion,
but subject to the express provisions of the Plan, to determine the
purchase price of the Common Stock covered by each option, whether
each option shall be an incentive stock option or a nonqualified
stock option, the employees to whom, and the time or times at
which, options shall be granted, and the number of shares to be
subject to each option; to interpret the Plan; to prescribe, amend,
and rescind rules and regulations relating to it; to determine the
terms and provisions (and amendments thereof) of the respective
option agreements (which need not be identical), including such
terms and provisions (and amendments) as shall be required in the
judgment of the Committee to provide that options under the Plan
will be incentive stock options under the Internal Revenue Code or
nonqualified stock options, or to conform to any change in any law
or regulation applicable thereto; and to make all other
determinations deemed necessary or advisable for the administration
of the Plan. The Committee's determination on the foregoing
matters shall be conclusive.
The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum.
All determinations of the Committee shall be made by not less than
a majority of its members. Any decision or determination reduced
to writing and signed by all the members shall be fully as
effective as if it had been made by a majority vote at a meeting
duly called and held. The Committee may appoint a secretary, shall
keep minutes of its meetings, and shall make such rules and
regulations for the conduct of its business as it shall deem
advisable.
4. Eligibility: Factors to be Considered in Granting Options
Options may be granted only to key employees (which term as
used herein includes officers) of the Company, its subsidiary
corporations as defined in Section 425 of the Internal Revenue Code
and any other organization (including, but not limited to,
partnerships and joint ventures) of which the Company owns more
than a 50% equity interest (herein called subsidiaries). A
director of the Company or of a subsidiary who is not also an
employee of the Company or one of its subsidiaries will not be
eligible to receive an option. The maximum number of shares of
Common Stock with respect to which an option or options may be
granted to any eligible employee in any one fiscal year of the
Company shall not exceed 300,000 shares (the "Maximum Annual
Employee Grant"). In determining the employees to whom options
shall be granted and the number of shares to be covered by each
option, the Committee may take into account the nature of the
services rendered by the respective employees, the present and
potential contributions to the success of the Company, and such
other factors as the Committee in its discretion shall deem
relevant. An employee who has been granted an option under the
Plan may be granted an additional option or options under the Plan
if the Committee shall so determine. The aggregate fair market
value (determined as of the time the option is granted) of the
stock for which any employee may be granted incentive stock options
in any calendar year after 1980 and before 1987 (under all plans of
the Company or any subsidiary) shall not exceed $100,000 plus any
unused limit carryover to such year. If $100,000 exceeds the
aggregate fair market value (determined at the time the option is
granted) of the stock for which an employee was granted incentive
stock options in any calendar year (under all plans of the Company
or any subsidiary) one-half of such excess shall be unused limit
carryover to each of the three succeeding calendar years, under the
rules of former Section 422A(c)(4) of the Internal Revenue Code of
1954. Notwithstanding the foregoing, to the extent that the
aggregate fair market value (determined as of the time the option
is granted) of the stock for which incentive stock options granted
after December 31, 1986 are exercisable for the first time by the
holder of the option during any calendar year (under all plans of
the Company, a parent or subsidiary or predecessor corporation)
exceeds $100,000, such options shall be treated as nonqualified
stock options. No incentive stock option shall be granted to any
person who, at the time the option is granted, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any subsidiary, unless at the
time the option is granted the option price is at least 110% of the
fair market value of the stock subject to the option and the option
by its terms is not exercisable for more than 5 years from the date
it is granted.
5. Option Prices
The purchase price of the Common Stock under each option shall
be determined by the Committee, but shall not be less than 100% of
the fair market value of the Common Stock at the time of granting
the option. Such fair market value shall be determined by the
Committee. The purchase price shall be paid in full at the time of
exercise as provided in the option agreement (i) in cash or the
equivalent in the amount of such purchase price, (ii) by surrender
or delivery to the Company of whole shares of Common Stock owned by
the persons exercising the option for a period of at least six
months with a fair market value (as determined by the Committee) at
the close of business on the date the option is exercised equal to
such purchase price, (iii) partly in cash or the equivalent and
partly by delivery to the Company of whole shares of Common Stock
owned by the person exercising the option, such that the sum of the
amount of such cash and the fair market value of such shares (as
determined by the Committee) at the close of business on the date
the option is exercised equals such purchase price or (iv) delivery
of a properly executed exercise notice, together with irrevocable
instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price and any
federal, state or local withholding tax obligations that may arise
in connection with the exercise. Any provision specifying form of
payment in any option agreement related to a nonqualified option
outstanding prior to February 11, 1981, shall be waived to the
extent necessary to permit the holder of the option covered thereby
to pay the purchase price specified therein as provided in clauses
(ii), (iii) and (iv) of the preceding sentence. The purchase price
specified under each option, as from time to time amended, will
remain constant during the term of such option (subject to
adjustment pursuant to paragraph 11 hereof). The cash proceeds are
to be added to the general funds of the Company and used for its
general corporate purposes.
6. Exercise of Options
Unless otherwise provided in the option agreement or by
resolution of the Committee adopted at any time, an option granted
under the Plan shall become exercisable in installments as follows:
To the extent of 30% of the number of shares originally covered
thereby, at any time after the grant of the option; to the extent
of an additional 20% of such number of shares, at any time after
the commencement of each of the second, third and fourth years of
the term of the option; and to the extent of an additional 10% of
such number of shares subject to the option, at any time after the
commencement of the fifth year of the term of the option; and such
installments shall be cumulative. The Committee shall have
authority in its discretion to prescribe in any option agreement or
by resolution adopted at any time that the option may be exercised
in different installments during the term of the option, including
installments that will make all shares subject to the option become
purchasable prior to the employee's compulsory retirement date as
prescribed from time to time by the Company. Anything to the
contrary notwithstanding, shares of Common Stock obtained upon
exercise of the option may not be sold by persons subject to
Section 16 of the Exchange Act until six months after the date the
option was granted. An option may be exercised, at any time or
from time to time during the term of the option, as to any or all
full shares which have become purchasable under the provisions of
the option, but not at any time as to less than 25 shares unless
the remaining shares which have become so purchasable are less than
25 shares. The term of each option shall not be more than 10 years
from the date of granting thereof, or such shorter period as is
prescribed in paragraph 9 or 10 hereof. Except as provided in said
paragraphs 9 and 10, no option may be exercised at any time unless
the holder thereof is then an employee of the Company or one of its
subsidiaries. Anything herein to the contrary notwithstanding, an
incentive stock option granted prior to 1987 shall not be
exercisable while there is outstanding any incentive stock option
which was granted before the granting of such option to such
individual to purchase stock of the Company or a subsidiary
(determined at the time of granting of such option) or a
predecessor of any such corporations. An option shall be treated
as outstanding for this purpose until it is exercised in full or
expires by reason of lapse of time. The holder of an option shall
not have any of the rights of a stockholder with respect to the
shares subject to option until such shares shall be issued to him
upon the due exercise of his option.
If the holder of an option at the occurrence of a Change in
Control (as defined below) is (or has been at any time within the
six months prior to the Change in Control) an officer of the
Company within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and if the option has
been held by the officer for at least six months, the officer
shall, during the 60-day period following such occurrence, be
entitled to surrender the option to the extent it is exercisable on
the date of surrender to the Company for cancellation as to all
shares covered by the portion so surrendered and to accept in
exchange therefor a cash payment equal to the product of (x) the
difference between the purchase price of such shares under the
portion of the option so surrendered and the fair market value of
such shares, which will be the greater of (i) the highest selling
price of the Common Stock on the National System of NASDAQ (or any
other principal market on which the Common Stock is then traded)
during the 90-day period prior to the date of surrender of such
option, and (ii) the highest price paid to any holder of Common
Stock in the transaction or group of transactions resulting in such
Change in Control, times (y) the number of such shares. The
Company shall make payment to the optionholder within five (5)
business days after the date on which the optionholder delivers
notice to the Company of his election to utilize the cash payment
procedure provided herein. For purposes of this Section, "Change
in Control" shall mean any of the following events: (i) approval
by the holders of the Common Stock of any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Common
Stock are converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Common
Stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, (ii) approval by the
holders of the Common Stock of any sale, lease, exchange or other
transfer in one transaction or a series of related transactions of
all or substantially all the assets of the Company other than a
transfer of the Company's assets to a majority-owned subsidiary of
the Company, (iii) approval by the holders of the Common Stock of
any plan or proposal for the liquidation or dissolution of the
Company, (iv) any person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company or a
majority-owned subsidiary of the Company or any employee benefit
plan sponsored by the Company or a majority-owned subsidiary of the
Company, becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company
representing 80% or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart from
rights accruing in special circumstances) having the right to vote
in the election of directors, or (v) at any time during a period of
two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company cease for
any reason to constitute at least a majority thereof, unless the
election (or the nomination for election by the Company's
stockholders) of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such
two-year period; provided, however, that no such event or
occurrence shall constitute a "Change in Control" if, prior to or
concurrently with such event or occurrence, a resolution is adopted
by the affirmative vote of 80% or more of the Disinterested
Directors then in office declaring that such event or occurrence
shall not constitute a Change in Control for purposes of the Plan.
For purposes hereof, the term "Disinterested Directors" shall mean
any member of the Board of Directors of the Company who is not an
officer or employee of the Company or any of its subsidiaries or a
participant in the Plan and who, if elected by stockholders, was
elected at a regularly scheduled meeting of stockholders prior to
the Change in Control and/or, if not elected by stockholders, was
recommended for election by a majority of the Disinterested
Directors then on the Board of Directors of the Company.
7. Employee's Agreement to Serve
Each employee receiving an option shall, as one of the terms
of the option agreement or of an employment agreement in connection
with which such option is granted, agree that he will remain in the
service of the Company or one of its subsidiaries for a period of
at least one year from the date the option is granted to him or for
a period expiring one year after the expiration of the longest
period of service called for by any other contract theretofore
entered into by him with the Company, whichever is longer (or until
his earlier compulsory retirement date as prescribed from time to
time by the Company) and that he will, during such employment,
devote his entire time, energy, and skill to the service of the
Company or such subsidiary and the promotion of its interests,
subject to vacations, sick leave, and other absences in accordance
with the policies of the Company and its subsidiaries. Such
employment shall (subject to the terms of any contract between the
Company or any such subsidiary and such employee) be at the
pleasure of the Company or of such subsidiary, and at such
compensation as the Company or such subsidiary shall reasonably
determine from time to time.
8. Nontransferability of Options
No option granted under the Plan shall be transferable
otherwise than by will or the laws of descent and distribution, and
an option may be exercised, during the lifetime of the holder
thereof, only by him.
9. Termination of Employment
Unless otherwise provided in an option holder's option
agreement or by resolution of the Committee adopted at any time,
(A) in the event of termination of the employment of the holder of
an option, other than (a) a termination that is either (i) for
cause or (ii) voluntary on the part of the employee and without the
written consent of the Company, or (b) a termination by reason of
death, the employee may exercise his option at any time within
three months after such termination of employment (or within one
year if the termination is by reason of disability within the
meaning of Section 22(e)(3) of the Internal Revenue Code), but not
after ten years from the date of granting thereof, to the extent of
the number of shares covered by his option which were purchasable
by him at the date of the termination of his employment and (B) in
the event of the termination of the employment of the holder of an
option that is either (x) for cause or (y) voluntary on the part of
the employee without the written consent of the Company, any option
held by him under the Plan, to the extent not theretofore
exercised, shall forthwith terminate. For purposes of this Plan,
an employment relationship shall be deemed to exist between an
optionee and the Company or one of its subsidiaries so long as the
optionee continues to be an employee of the Company or of a parent
corporation as defined in the Internal Revenue Code or a subsidiary
or of McCaw Cellular Communications, Inc., a Delaware corporation,
or any subsidiary ("McCaw"), or any successor or parent corporation
or any subsidiary of any such successor or parent corporation. The
option agreements may contain such provisions as the Committee
shall approve with reference to the effect of approved leaves of
absence. Nothing in the Plan or in any option granted pursuant
thereto shall confer on any employee any right to continue in the
employ of the Company or any of its subsidiaries or affect in any
way the right of the Company or any of its subsidiaries to
terminate his employment at any time.
10. Death of an Employee
If an employee to whom an option has been granted under the
Plan shall die while he is employed by the Company or a parent
corporation as defined in the Internal Revenue Code or a subsidiary
or by McCaw or any successor corporation or within three months
after the termination of his employment, such option (unless it
shall have previously terminated pursuant to the provisions of
paragraph 9 hereof or unless otherwise provided in his option
agreement) may be exercised by a legatee or legatees of the option
holder under his last will, or by his personal representatives or
distributees, at any time within a period of two years after his
death, but not after ten years from the date of granting thereof,
(i) if death occurs while he is employed by the Company or a parent
corporation as defined in the Internal Revenue Code or a subsidiary
or by McCaw or any successor corporation, to the extent of the
remaining shares covered by his option, whether or not such shares
had become purchasable by such employee at the date of his death,
but subject to the ordering rule in paragraph 6, or (ii) if death
occurs during such three-month period, to the extent of the number
of shares purchasable by such employee pursuant to the provisions
of paragraph 9 hereof at the date of his death.
11. Adjustment Upon Changes in Capitalization
Notwithstanding any other provision of the Plan, each option
agreement may contain such provision as the Committee shall
determine to be appropriate for the adjustment of the number, class
and purchase price of shares subject to and purchasable upon any
exercise of such option in the event of changes in the outstanding
Common Stock of the Company by reason of any stock dividend, split-
up, recapitalization, merger, consolidation, combination or
exchange of shares, and the like or in the event of a Change in
Control of the Company, and in the event of any such change in the
outstanding Common Stock of the Company or Change in Control of the
Company, the aggregate number and class of shares of the Company or
of the parent of the Company available under the Plan, the Maximum
Annual Employee Grant and the purchase price of such shares shall
be appropriately adjusted by the Committee, whose determination
shall be conclusive.
12. McCaw Transactions
Notwithstanding anything contained in this Plan to the
contrary, if (i) a Change in Control, as defined in paragraph 6
hereof, results in the consolidation or merger of the Company with
McCaw or a successor to McCaw's rights and obligations under the
Private Market Value Guarantee dated December 11, 1989 (a "PMVG
Successor") and McCaw or a PMVG Successor is the continuing or
surviving corporation as described in paragraph 6 hereof or
(ii) McCaw or a PMVG Successor becomes the beneficial owner of
securities of the Company representing 80% or more of the combined
voting power of the Company's then outstanding securities as
described in paragraph 6 hereof (other than by reason of the sale
of the Company in accordance with Section 2(f) of the Private
Market Value Guarantee dated December 11, 1989 (the "Private Market
Sale")), in lieu of any other benefit payable under this Plan, each
option outstanding under this Plan shall be converted into an
option to purchase a number of shares of Class A Common Stock of
McCaw or common stock of any such PMVG Successor (or, in the event
that McCaw or any such PMVG Successor is not publicly traded, the
common stock of the ultimate publicly traded parent thereof)
("McCaw Stock") determined by multiplying the number of shares
subject to that portion of the option which remains outstanding but
unexercised by a fraction, the numerator of which is the fair
market value on the date of the Change in Control of a share of the
Common Stock and the denominator of which is the fair market value
of a share of McCaw Stock on the date of the Change in Control.
The option price per share of McCaw Stock shall be equal to the
product of the per share exercise price of the option multiplied by
a fraction, the numerator of which is the fair market value of a
share of McCaw Stock and the denominator of which is the fair
market value of a share of the Common Stock on the date of the
Change in Control. For purposes of this paragraph 12, the fair
market value of Common Stock and McCaw Stock shall be equal to the
closing price thereof on the relevant date or, if no such shares
have been traded on the relevant date, the average of the last
reported bid and asked price thereof on the relevant date.
Similarly, if a Change in Control results from a Private Market
Sale, upon a vote by a majority of the Independent Directors (as
defined in the Private Market Value Guarantee) each option
outstanding under this Plan shall be changed into an option to
purchase the common stock of the ultimate parent of the acquiring
entity, the common stock of which is publicly traded on the same
basis as set forth above in this paragraph; provided that if no
such conversion is approved by the Independent Directors, the
Company shall have the right (but not the duty) to cancel each such
option in exchange for a payment in cash equal to the excess of the
purchase price in the Private Market Sale over the exercise price
of such option. For purposes of this paragraph 12, a Change in
Control shall be deemed to have occurred regardless of whether the
Disinterested Directors adopt a resolution declaring that such
event or occurrence shall not constitute a Change in Control.
13. Adoption of Plan
The Plan shall be adopted as of the date of its approval by
the Board of Directors.
14. Termination and Amendment
Unless the Plan shall theretofore have been terminated as
hereinafter provided, it shall terminate on, and no option shall be
granted thereunder after, February 28, 1999. The Plan may be
terminated, modified, or amended by the stockholders of the
Company. The Board of Directors of the Company may terminate the
Plan or make such modifications or amendments thereof as it shall
deem advisable, including such modifications or amendments as it
shall deem advisable in order to conform to any change in any law
or regulation applicable thereto; provided, however, that the Board
of Directors may not, without further approval by the holders of a
majority of the voting stock of the Company voting in person or by
proxy at a duly held meeting of stockholders, adopt any amendment
which would require stockholder approval under any applicable law
or regulation including but not limited to Rule 16-3 under
Section 16(b) of the Exchange Act. No termination, modification or
amendment of the Plan may, without the consent of the employee to
whom any option shall theretofore have been granted, adversely
affect the rights of such employee under such option. Any
amendment made to the Plan which would constitute a "modification"
to incentive stock options outstanding on the date of such
amendment, shall not be applicable to such outstanding incentive
stock options, but shall have prospective effect only, unless the
holder of the option agrees otherwise.
LIN Employee Plans
1. There is hereby established a bonus pool consisting in
the aggregate of $7.75 million which shall be payable to
employees of the Company and its subsidiaries as of the date
hereof, conditioned on closing under the Agreement (the "AT&T
Closing") and the closing of any acquisition of all or
substantially all of the remaining shares of the Company by McCaw
Cellular Communications, Inc. or of a sale of the Company
(pursuant to the Private Market Value Guarantee or otherwise)
(the "LIN Closing"), in such amounts as shall be determined by
the Committee described below, provided that such bonuses shall
be payable in three installments, 50% to be paid at the AT&T
Closing, 25% to be paid on the first anniversary of the AT&T
Closing, and 25% to be paid on the second anniversary of the AT&T
Closing (except in the case of any such person entitled to
receive $5,000 or less in the aggregate, in which case such bonus
shall be payable in two equal installments, one such installment
to be paid at the AT&T Closing and the second to be paid on the
first anniversary of the AT&T Closing), in each case to such
persons who remain employed by, or serve as an officer of, the
Company, its ultimate parent or any of their subsidiaries at such
times, provided, that if the LIN Closing has not occurred by any
of the foregoing dates, such payment shall not be made until the
date of the LIN Closing. The amount of such payment to any such
person shall be based upon such person's compensation, overall
contributions to the Company, longevity with the Company and such
other factors as may be determined appropriate by the Committee
in its discretion.
2. (a) There is hereby established an Executive
Separation Plan for certain highly-compensated executives of the
Company and its Subsidiaries under which payments will be paid to
certain of such executives in the event such executive is
terminated (other than for cause) on or after the AT&T Closing or
such executive voluntarily or involuntarily terminates his
employment within six months following an adverse change in such
executive's working conditions on or after the AT&T Closing.
With respect to any executive, the amount of such benefit payment
would be equal to any unpaid installment of the bonus pool
provided for above unless such executive was terminated by the
Company for consistently poor performance (and the executive has
received substantially contemporaneous written notices of the
alleged instances of such poor performance). For purposes of the
foregoing, an executive shall not be deemed to be terminated if
such executive remains employed by, or serves as an officer of,
the Company, its ultimate parent or any of their subsidiaries.
(b) There is also hereby established a severance process
under which payments will be paid to certain employees who earned
less than $115,000 in 1993 in the event such employee is
terminated (other than for cause) on or after the AT&T Closing or
such employee voluntarily or involuntarily terminates his
employment within six months following an adverse change in such
employee's working conditions on or after the AT&T Closing. The
amount payable to any such employee in the event of termination
on or prior to February 28, 1995 (the "Initial Amount") shall be
200% of such employee's total 1993 compensation; the amount
payable to any employee in the event of termination after
February 28, 1995 shall be 60% of the Initial Amount and after
February 28, 1996 shall be 25% of the Initial Amount. No
severance payment shall be made after February 28, 1997. For
purposes of the foregoing, an employee shall not be deemed to be
terminated if such employee remains employed by, or serves as an
officer of, the Company, its ultimate parent or any of their
subsidiaries.
(c) In the event it shall be determined that all or
any portion of any severance or benefit payment or any
accelerated installment of the bonus pool (individually and
collectively a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision thereto,
including any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and
penalties, being hereafter collectively referred to as the
"Excise Tax") then such person shall be entitled to receive an
additional payment or payments (individually and collectively, a
"Gross-Up Payment"). The Gross-Up Payment shall be in an amount
such that, after payment by such person of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any Excise Tax and federal, state
and local income taxes imposed upon the Gross-Up Payment, such
person retains an amount of the Gross-Up Payment equal to the
"Resulting Excise Tax." The Resulting Excise Tax shall be
computed by first determining the Excise Tax that would be
payable by such person if all compensation and benefits from the
Company and any affiliate, excluding the severance payments and
any accelerated installment of the bonus pool, were taken into
account, and subtracting the result from the Excise Tax that
would be payable by such person if all compensation and benefits
from the Company and any affiliate were taken into account. For
purposes of computing the Gross-Up Payment, all taxes shall be
assumed to be imposed at the highest relevant tax rate. The
Company shall remit the Gross-Up Payment to such person within 30
business days following notice from such person requesting such
payment, together with reasonable documentation of such person's
determination of the amount thereof (including, if so requested
by the Company and at the Company's expense, a certification from
a reputable accountant, chosen by the Company, as to the
liability of such person for such Excise Tax).
(d) Any purported adverse change in any employee's or
executive's working conditions shall be communicated in writing
to the Company, and shall indicate in reasonable detail the facts
and circumstances claimed to constitute such adverse change. The
Company shall have up to 30 days to remedy the purported adverse
change prior to such event being considered an adverse change for
purposes of this Agreement.
(e) For purposes of the foregoing:
(i) "For cause" means:
(x) commission of act(s) or omission(s)
which have, have had, or are likely to have a
material adverse effect on the business,
operations, financial conditions or reputation of
the Company;
(y) conviction (including a plea of guilty
or nolo contendere) of a felony or any crime of
theft, dishonesty or moral turpitude;
(z) gross omission or gross dereliction of
any statutory or common-law duty of loyalty to the
Company.
(ii) "Adverse change in such employee's or
executive's working conditions" means the occurrence,
without such person's express consent, of any of the
following:
(w) a reduction in such person's annual base
salary or annual salary increases or bonus
opportunities in the absence of overall poor
performance as documented in the annual
performance review (if such person has received
substantially contemporaneous written notices of
the alleged instances of such poor performance);
(x) a material reduction in such person's
scope of responsibility, authority or other
conditions of employment;
(y) a notice of change of such person's job
location to one more than 40 miles from his
present location; and
(z) a decrease in executive perquisites (if
applicable) or other employee benefits in the
aggregate, except changes in the general welfare
and benefit plans of the Company in a manner
consistent with similar plans applicable to AT&T
employees in general, which changes on the whole
(after consideration of any additional benefits
provided after closing) are not material
decreases.
3. Any dispute under the foregoing resolutions or the
letter referred to in paragraph 4 below as concerns any person
shall be referred for a decision to a Review Board, consisting of
representatives of both the Company and AT&T, which shall fully
examine, consider and report upon all issues raised therein
within 30 days after request by such person. If such person
remains unsatisfied, such dispute thereafter shall be settled
exclusively by arbitration by a neutral arbitrator selected by
the parties, held in accordance with the rules of the American
Arbitration Association and conducted in the city nearest to such
person's place of employment in which there is an office of the
American Arbitration Association. The decision of the neutral
arbitrator shall be final, conclusive and binding on all
interested parties and no action at law or in equity shall be
instituted or further prosecuted. The Company shall pay on a
current basis all legal expenses incurred by such person in
connection with such arbitration unless the arbitrator finds the
Company to be without liability, in which case such person and
Company shall each bear all its own costs.
4. The amount of each such payment under paragraphs 1 and
2 above for each person shall be determined by a Committee
composed of Craig McCaw and Wayne Perry by September 30, 1993,
provided the amount determined for Craig McCaw and Wayne Perry
shall be set by the Compensation Committee. Promptly upon the
determination of such amounts, the appropriate officers of the
Company shall confirm to each person his entitlement to the bonus
and severance payments established pursuant to and in accordance
with the terms and conditions of this resolution by an
appropriate letter, which letter shall be binding upon the
Company.
LIN BROADCASTING CORPORATION
DEFERRED COMPENSATION PLAN
(Dated: December 15, 1993)
<PAGE>
<PAGE> TABLE OF CONTENTS
Page
1. Introduction..............................................1
2. Effective Date............................................1
3. Eligible Employees........................................1
4. Procedure.................................................1
A. Salary Deferral......................................1
B. Bonus Deferrals......................................2
C. Form of Payment......................................2
D. Timing of Payment....................................2
E. Limit on Payments....................................3
5. Investment of Deferred Compensation.......................3
6. Deferred Compensation Accounting..........................3
7. Death Benefit; Designation of Beneficiary.................3
8. Amendment or Termination..................................4
9. Assignment................................................4
10. Financial Hardship........................................5
11. Taxes.....................................................5
12. No Employment Agreement...................................5
13. Unfunded..................................................5
14. Vesting...................................................5
15. Duties Upon Insolvency....................................5
16. Claim Procedures..........................................6
<PAGE>
<PAGE>
LIN BROADCASTING CORPORATION
DEFERRED COMPENSATION PLAN
1. Introduction.
This Deferred Compensation Plan (the "Plan") provides
competitive fringe benefit planning to key employees of LIN
Broadcasting Corporation (the "Employer") by permitting such
employees to defer the receipt of compensation. The election to
defer must be irrevocable and must be made in accordance with the
terms of this Plan.
2. Effective Date.
The effective date of the Plan is December 1, 1993.
3. Eligible Employees.
As of the Effective Date, all officers of the Employer are
eligible to participate Plan ("Eligible Employee(s)" or
"Participant"). Other officers or key employees may become
eligible to participate if so notified by the Administrative
Committee of the Employer's 401(k) Plan, hereinafter "Committee."
4. Procedure.
A. Salary Deferral.
On or prior to December 31 of each year that this Plan is
in effect, any Eligible Employee may elect to defer receipt of all
or any portion (subject to any minimum deferral limitation
established by the Committee) of his or her compensation coming due
in the calendar year following the year of election. The election
shall be in writing, on a form provided by the Committee, and shall
be irrevocable as to any compensation payable in the next year. Any
new election with respect to future years' compensation must be
filed with the Committee prior to the end of the year preceding the
year in which the change is to take effect. For purposes of this
Plan, compensation shall refer to any officer's salary, excluding
bonuses.
Notwithstanding the previous paragraph, an Eligible Employee
may elect to defer receipt of all or any portion of his or her
remaining compensation coming due in the current calendar year if
such election is made in writing within thirty (30) days after he
or she is notified of his or her eligibility to participate in this
Plan by the Committee.
<PAGE>
<PAGE> 2
B. Bonus Deferrals.
On or prior to July 31 of each year this Plan is in
effect or such other times as designated by the Committee, any
Eligible Employee may elect to defer receipt of all or any portion
(subject to any minimum deferral limitation established by the
Committee) of his or her bonus for services performed during the
current Plan Year that will be payable later in such year or in
following Plan Year. The election shall be in writing, on a form
provided by the Committee and shall be irrevocable as to any bonus
payable with respect to services performed for such year. Any new
election with respect to future years' bonuses must be filed with
the Committee prior to the July 31 of the year for which the bonus
relates, or prior to such other time as designated by the
Committee.
Notwithstanding the previous paragraph, an Eligible Employee
may elect to defer receipt of all or any portion of any bonus if
such election is made in writing within thirty (30) days after he
or she is notified, by the Committee, of his or her eligibility to
participate in this Plan.
C. Form of Payment.
Subject to the limitations contained in Paragraph E
below, a Participant's account determined in accordance with
Paragraph 6 hereof shall be paid in installments or as a lump sum
in accordance with the Participant's deferral election, unless the
Committee, in its sole discretion, elects to accelerate installment
payments upon the occurrence of a financial hardship in accordance
with Paragraph 10.
D. Timing of Payment.
A distribution of a Participant's account shall begin on
the first day of the month following sixty (60) days (or as soon
thereafter as administratively possible) after the occurrence of
the earliest of: (i) termination of employment (voluntary or
involuntary); (ii) disability; (iii) passage of the stated period
of time stated on the Participant's deferral election; or (iv)
subject to the provisions of Paragraph 8 hereof, termination of the
Plan.
For purposes of determining commencement of payments due to
disability, disability shall mean the inability of a Participant to
perform the normal functions of his position, which inability is
expected to be of a permanent nature or long lasting duration. The
existence of a participant's disability shall be determined by the
Committee in its discretion.
<PAGE>
<PAGE> 3
E. Limit on Payments.
No amount will be paid hereunder if such payment will
cause the Employer to pay excessive remuneration to such Employee
as that term is defined by Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code"). Payments hereunder will be
reduced to the extent necessary to avoid the limitations of Section
162(m). Amounts not paid due to such limitations, shall be deferred
and paid in the following year(s).
5. Investment of Deferred Compensation.
The Committee shall select investment funds for amounts
deferred hereunder. The Committee shall initially select three
funds: (1) a bond fund; (2) an equity fund; and (3) a short-term
fixed income fund. Funds can be added or subtracted by the
Committee, in its sole discretion. All taxes (including interest
and penalties) levied or assessed with respect to the funds or the
income thereon, shall be paid by the Company, unless under other
applicable tax law, such taxes are deemed an obligation of the
Participant, in which case the Participant will pay.
A Participant shall direct the Committee to invest his or her
account among the various funds selected. A Participant shall have
the right to direct the Committee at least quarterly. Such
direction shall be made in writing on a form and in the time and
manner established by the Committee. In the event no direction is
received, the Committee shall invest a Participant's account in the
short-term income fund.
The Committee shall have no responsibility or liability for
investments made at the direction of the Participant.
6. Deferred Compensation Accounting.
All compensation deferred hereunder shall be credited to a
special account on the books of the Employer in the name of the
Participants, and/or deposited in a grantor trust on behalf of such
Participants. The Committee shall invest the amounts credited to
the account, in accordance with the instructions from Participants,
in the investment funds that have been established from time to
time by the Committee. A Participant's account will be increased by
his or her proportionate share of all income and investment gains
realized by the funds and decreased by all administrative expenses
and investment losses realized by the funds. A Participant is
entitled to a statement of his or her account, at least annually,
within ninety (90) days after the close of the calendar year.
7. Death Benefit; Designation of Beneficiary.
Any amount due to a Participant which is unpaid upon his or
her death shall be paid to the beneficiary designated on a form
provided by the Committee. The designated beneficiary may be
changed from time to time by filing a new beneficiary designation<PAGE>
<PAGE> 4
with the Committee. A spouse must consent to a designation if more
than fifty percent (50%) of the account will be paid to a
beneficiary other than the spouse. The designation last filed shall
control. If a Participant fails to designate a beneficiary, or if
the person or persons designated on the beneficiary designation
predecease the Participant, and the beneficiary designation form
does not indicate who receives the amount due, the amount owing
shall be paid in the following order:
a. surviving spouse;
b. estate of deceased Participant.
Payments to the beneficiary of a deceased Participant shall be made
in the manner described in Paragraphs 4(c) and 4(d), as if the
beneficiary were the Participant.
8. Amendment or Termination.
The Plan may be terminated by the Committee within three years
of: (i) a "change in control" as defined by Section 13(d) of the
Deferred Compensation Trust Agreement, dated November 30, 1993; or
(ii) a significant change in the tax laws governing either the
Employer and the Participant. Notwithstanding the foregoing, this
Plan may be amended or terminated at any time by the Committee,
provided that no amendment or termination shall effect the rights
of Participants to receive amounts deferred but unpaid as of such
termination or amendment. The Plan shall be administered by the
Committee. Any member of the Committee who is a Participant shall
not vote or act on any matter relating solely to himself. If the
Plan is terminated, unless the Committee determines that accounts
shall be frozen and payable in accordance with the original
election, amounts deferred hereunder shall be distributed pursuant
to Paragraph 4(c) and 4(d) of this Plan.
9. Assignment.
No amounts deferred hereunder shall be assignable in whole or
in part, either by voluntary or involuntary act or operation of
law. Rights hereunder are not subject to anticipation, alienation,
sale, transfer, assignment, pledge or encumbrance, and such rights
may not be subject to the debts, contracts, liabilities,
engagements or torts of the Participant or his beneficiary. All
amounts deferred hereunder remain the unrestricted assets of the
Employer. Any assets purchased shall remain the sole property of
the Employer subject to the claims of its general creditors and
shall be available for the Employer's use for whatever purpose
desired. No Participant hereunder shall have any right other than
the unsecured promise of the Employer to pay deferred compensation
in the future. No Participant hereunder shall have any voice in the
use, disposition, or investment of the assets of the Plan.
<PAGE>
<PAGE> 5
10. Financial Hardship.
If financial hardship in the nature of an emergency is
established to the satisfaction of the Committee (or such
individual as the Committee may authorize), the Committee may make
emergency payments to the Participant on a date earlier than his
deferred compensation would otherwise be payable. Such emergency
payments may not exceed the amount determined by the Committee (or
its authorized delegate) to be reasonably necessary to meet the
financial hardship and in no event may exceed the amount of the
Participant's deferred compensation plus interest credited thereon.
At the time his deferred compensation is subsequently payable, the
Participant will be entitled to his deferred compensation plus
interest, less prior emergency payments. Financial hardship in the
nature of an emergency includes, but is not limited to, medical and
hospital needs not covered by any insurance program, purchase of a
principal residence, payment of tuition for the next twelve (12)
months of schooling for the Participant, spouse or dependent, and
payments required by any Court order. A Participant shall not make
another deferral election hereunder for at least twelve (12) months
following a hardship distribution.
11. Taxes.
When payments are made pursuant to Paragraph 4 above, such
payments are subject to income tax withholding.
12. No Employment Agreement.
Nothing in this Agreement shall be construed as creating a
right in the Participant to continued employment with the Employer.
13. Unfunded.
The amounts credited hereunder shall at all times be subject
to the general creditors of the Employer. Amounts may, however, be
deposited in a grantor trust.
14. Vesting.
Amounts deferred hereunder will always be one hundred percent
(100%) vested and nonforfeitable.
15. Duties Upon Insolvency.
The Employer shall be considered "insolvent" if: (i) Employer
is unable to pay its debts as they become due, or (ii) the Employer
is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code. Upon the occurrence of insolvency, the
Board of Directors and the Chief Executive Officer of the Employer
shall have the duty to inform the Committee and any Trustee holding
Plan assets of the Employer's insolvency. Upon insolvency, the
Committee and the Trustee shall hold the assets of the Trust for
the benefit of the Employer's general creditors. Nothing hereunder<PAGE>
<PAGE> 6
shall diminish the rights of Plan Participants or their
beneficiaries to pursue their rights as a general creditors with
respect to benefits due under the Plan.
Benefit payments will resume to participants and Beneficiaries
when the Board of Directors and the Chief Executive Officer inform
the Committee and any Trustee that the Employer is no longer
insolvent. Provided there are sufficient Employer assets when
payments subsequently resume, the first payment following a
discontinuance hereunder shall include the aggregate amount of all
payments due to the Plan Participants or the beneficiaries under
the terms of the Plan for the period of such discontinuance.
16. Claim Procedures.
Disputes arising hereunder shall be resolved utilizing the
claims procedures adopted by the Employer's 401(k) Plan. Such
procedures are hereby incorporated by reference.
This Plan is adopted to be effective as of the first day of
December, 1993, by LIN Broadcasting Corporation.
LIN BROADCASTING CORPORATION
By:
Its:
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Cellular Long Distance Company (California Corporation)
Cellular Long Distance Company (Texas Corporation)
Cellular Systems, Inc. (New York Corporation)
Cellular Telephone Company (New York General Partnership)
Cellular Telephone Company
Equipment Sales, Inc. (New Jersey Corporation)
Indiana Broadcasting Corporation (Delaware Corporation)
Kingstip Communications, Inc. (Texas Corporation)
KXAN, Inc. (Delaware Corporation)
LC Acquisition Corporation (Delaware Corporation)
LCH Holdings, Inc. (Delaware Corporation)
LCH Communications, Inc. (Delaware Corporation)
LCN Holdings, Inc. (Delaware Corporation)
LIN Cellular Communications
Corporation (California Corporation)
LIN Cellular Communications
Corporation (Delaware Corporation)
LIN Cellular Communications
Corporation (New York Corporation)
LIN Cellular Communications
Corporation (Pennsylvania Corporation)
LIN Cellular Communications
Corporation (Texas Corporation)
LIN Cellular Holdings, Inc. (New York Corporation)
LIN Cellular of Houston, Inc. (Texas Corporation)
LIN Cellular Network, Inc. (Delaware Corporation)
LIN Central Broadcasting
Corporation (Michigan Corporation)
LIN Holdings, Inc. (Delaware Corporation)
LIN Long Distance (Texas), Inc. (Texas Corporation)
LIN Michigan Broadcasting
Corporation (Michigan Corporation)
LIN Satellite Communications
Corporation (Delaware Corporation)
LIN Television Corporation (Delaware Corporation)
LIN Television Corporation (Indiana Corporation)
Litchfield Acquisition Corporation (Delaware Corporation)
LTC Holdings, Inc. (Delaware Corporation)
LWWI Broadcasting, Inc. (Delaware Corporation)
Metrocel Long Distance Company (Texas General Partnership)
Metroplex Telephone Company (Texas General Partnership)
Mid-Texas Broadcasting, Inc. (Texas Corporation)
North Texas Broadcasting
Corporation (Texas Corporation)
Satellite Mobile Telephone Company (Limited Partnership)
Southern California Cellular
Consulting, Inc. (California Corporation)
Transit Communications, Inc. (California Corporation)
WAND Television, Inc. (Illinois Corporation)
WAVY Television, Inc. (Virginia Corporation)
EXHIBIT 23.1
Consent of Ernst & Young, Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8, Nos. 33-39282 and 2-82944) of LIN
Broadcasting Corporation and in the related Prospectuses of our
report dated February 4, 1994, with respect to the consolidated
financial statements and schedules of LIN Broadcasting
Corporation, and our report dated February 4, 1994, with respect
to the combined financial statements and schedules of LIN
Broadcasting Corporation's Unconsolidated Affiliates, included in
the Annual Report (Form 10-K) for the year ended December 31,
1993.
ERNST & YOUNG
Seattle, Washington
March 28, 1994
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-39282 of LIN Broadcasting Corporation on Form S-
8 of our report dated February 18, 1994 (relating to the
consolidated financial statements of AWACS, Inc. and subsidiaries
as of December 31, 1993 and 1992 and for the years then ended,
not presented separately herein) appearing as an Exhibit to this
Annual Report on Form 10-K of LIN Broadcasting Corporation for
the year ended December 31, 1993.
DELOITTE & TOUCHE
Philadelphia, Pennsylvania
March 29, 1994
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To LIN Broadcasting Corporation:
As independent public accountants, we hereby consent to the
incorporation of our report dated February 23,1994 on Garden
State Cablevision L.P. and included in LIN Broadcasting
Corporation's Form lO-K into LIN Broadcasting Corporation's
previously filed Registration Statement File No. 33-39282. It
should be noted that we have not audited any financial statements
of Garden State Cablevision L.P. subsequent to December 31,1993
or performed any audit procedures subsequent to the date of our
report.
ARTHUR ANDERSEN & CO.
Philadelphia, Pa.
March 30, 1994
POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
CRAIG O. McCAW
Name: Craig O. McCaw
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
TOM A. ALBERG
Name: Tom A. Alberg
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
HAROLD S. EASTMAN
Name: Harold S. Eastman
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
WAYNE M. PERRY
Name: Wayne M. Perry
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
JOHN E. McCAW, JR.
Name: John E. McCaw, Jr.
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
JOHN W. STANTON
Name: John W. Stanton
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
JAMES L. BARKSDALE
Name: James L. Barksdale
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
WILLIAM G. HERBSTER
Name: William G. Herbster
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
WILMA H. JORDAN
Name: Wilma H. Jordan
Dated: March 25, 1994
<PAGE>
<PAGE> POWER OF ATTORNEY FOR FORM 10-K
The person whose signature appears below hereby constitutes
and appoints Andrew A. Quartner, Roberta R. Katz and Donald
Guthrie, or any of them, his/her true and lawful attorneys-in-
fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead,
in any and all capacities, to sign the Annual Report on Form 10-K
for the year ending December 31, 1993 for LIN Broadcasting
Corporation, and to sign any and all amendments to such Form 10-
K, and other documents in connection therewith, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitutes, may lawfully do
or cause to be done by virtue thereof.
RICHARD W. KISLIK
Name: Richard W. Kislik
Dated: March 25, 1994
