SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following
items, financial statements, exhibits or other portions of its
current report on Form 8-K as set forth in the pages attached
hereto:
Item 7.(a) Financial Statements
Item 7.(b) Pro forma Financial Statements
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to
be signed on its behalf by the undersigned, there unto duly
authorized.
Clear Channel Communications, Inc.
Date_______________ By__________________________
Herbert W. Hill, Jr.
Vice President/Controller and
Principal Financial Officer
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES AND WXXA-TV
The following pro forma condensed consolidated statements of earnings for
the years ended December 31, 1993 and December 31, 1992, and the nine
months ended September 30, 1994 give effect to the acquisition of
substantially all the operating assets of television station WXXA in
Albany, New York. The pro forma information is based on the historical
results of operations of WXXA-TV and Clear Channel Communications, Inc. and
subsidiaries giving effect to the transaction under the purchase method of
accounting and the assumptions and adjustments in the accompanying notes to
the pro forma condensed consolidated statements of earnings.
The pro forma statements have been prepared by Clear Channel
Communications, Inc. based upon the historical summary of selected revenue
and expenses of WXXA-TV included elsewhere herein. These pro forma
statements may not be indicative of the results that actually would have
occurred if the acquisition had been in effect on the dates indicated or
which may be obtained in the future. The pro forma statements should be
read in conjunction with the unaudited summary of selected revenue and
expenses for the nine months ended September 30, 1994 of WXXA-TV contained
elsewhere
herein and the audited financial statements for fiscal year ending March
31, 1994 and March 31, 1993 of Heritage Broadcasting Company of New York,
Inc.
<TABLE>
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES AND WXXA-TV
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE
YEAR ENDED DECEMBER 31, 1992 (IN THOUSANDS EXCEPT PER SHARE DATA)
Clear Channel Communications, Inc. ("CCC")
Clear Channel Television of Little Rock, Inc. ("CCTLR")
Metroplex Communications, Inc. ("MCI")
<CAPTION>
Year Ended December 31, 1992
Increase
(Decrease)
CCC CCTLR MCI WXXA-TV Income Pro
Hist. Hist. Hist. Hist. forma Adj.
__(1)__ __(2)__ __(3)__ __(4)__ __(5)__ Pro forma
<S> <C> <C> <C> <C> <C> <C>
Gross broadcasting revenue $94,472 $6,304 $23,572 $8,500 $ $132,848
Net broadcasting revenue 82,205 5,203 20,270 7,052 114,730
Operating expenses (56,422) (4,204) (14,704) (4,424) (79,754)
Depreciation and amort. (12,253) (1,702) (2,402) (823) (803) (17,983)
------ ----- ----- ---- ----- ------
Operating income (loss) 13,530 (703) 3,164 1,805 (803) 16,993
Interest expense (4,739) (1,363) (6,137) (1,336) 3,680 (9,895)
Other income (expense) (1,216) (271) 1,093 (177) (571)
----- ------ ----- ---- ------ -----
Income (loss) before income
taxes 7,575 (2,337) (1,880) 292 2,877 6,527
Income tax benefit
(expense) (3,282) 462 (2,820)
----- ----- ----- --- ----- -----
Net income (loss) $4,293 $(2,337) $(1,880) $ 292 $3,339 $ 3,707
===== ===== ===== === ===== =====
Per common share:
Net income $ 0.29 $ 0.25
====== ======
Weighted average common
shares outstanding 14,830 14,830
====== ======<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSI
</TABLE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE
YEAR ENDED DECEMBER 31, 1993 (IN THOUSANDS EXCEPT PER SHARE DATA)
Clear Channel Communications, Inc. ("CCC")
Clear Channel Television of Little Rock, Inc. ("CCTLR")
Metroplex Communications, Inc. ("MCI")
<CAPTION>
Year Ended December 31, 1993
Increase
(Decrease)
CCC CCTLR MCI WXXA-TV Income Pro
Hist. Hist. Hist. Hist. forma Adj.
__(6)__ __(7)__ __(8)__ __(9)__ __(10)__ Pro forma
<S> <C> <C> <C> <C> <C> <C>
Gross broadcasting revenue $135,680 $ 7,944 $ 30,694 $8,337 $ $182,655
Net broadcasting revenue 118,183 6,588 27,400 6,891 159,062
Operating expenses (79,454) (5,176) (13,922) (4,223) (102,775)
Depreciation and amort. (17,448) (1,717) (2,056) (632) (1,346) (23,199)
------ ----- ------ ----- ----- -------
Operating income (loss) 21,281 (305) 11,422 2,036 (1,346) 33,088
Interest expense (5,390) (1,373) (4,538) (1,722) 3,066 (9,957)
Other expense (196) (10) (373) (579)
------ ----- ------ ---- ----- ------
Income (loss) before income
taxes 15,695 (1,688) 6,884 (59) 1,720 22,552
Income tax expense (6,572) (2,400) (8,972)
------ ----- ----- ---- ------ ------
Net income (loss) $ 9,123 $(1,688) $ 6,884 $ (59) $ (680) $ 13,580
===== ===== ===== ==== ==== ======
Per common share:
Net income $ 0.58 $ 0.87
==== ====
Weighted average common
shares outstanding 15,668 15,668
====== ======<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSI
</TABLE>
<TABLE>
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 (IN THOUSANDS EXCEPT PER SHARE)
Clear Channel Communications, Inc. ("CCC")
Clear Channel Television of Little Rock, Inc. ("CCTLR")
Metroplex Communications, Inc. ("MCI")
<CAPTION>
UNAUDITED Increase
(Decrease)
CCC CCTLR MCI WXXA-TV Income Pro
Hist. Hist. Hist. Hist. forma Adj.
__(11)__ __(12)__ __(13)__ __(14)__ __(15)__ Pro forma
<S> <C> <C> <C> <C> <C> <C>
Gross broadcasting revenue $134,555 $1,119 $ 19,320 $ 6,237 $ $161,231
Net broadcasting revenue 116,372 918 16,232 5,118 138,640
Operating expenses (72,863) (867) (12,031) (3,026) (88,787)
Depreciation and amort. (17,454) (287) (961) (518) (1,480) (20,700)
------ ---- ----- ----- ----- ------
Operating income (loss) 26,055 (236) 3,240 1,574 (1,480) 29,153
Interest expense (4,761) (215) (3,028) (941) 1,337 (7,608)
Other income (expense) 891 1,613 (3,504) (1,613) (2,613)
------ ----- ----- ----- ----- ------
Income (loss) before
income taxes 22,185 1,162 (3,292) 633 (1,756) 18,932
Income tax benefit (expense) (8,643) 1,138 (7,505)
------ ----- ----- --- ----- ------
Net income (loss) $ 13,542 $1,162 $ (3,292) 633 $ (618) $11,427
====== ===== ===== === === ======
Per common share:
Net Income $ 0.78 $ 0.66
==== ====
Weighted average common
shares outstanding 17,402 17,402
====== ======<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSI
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS
Year ended December 31, 1992
(1) Historical Condensed Consolidated Statement of Earnings for Clear
Channel Communications, Inc. and Subsidiaries.
(2) Historical results of operations of Clear Channel Television of
Little Rock, Inc. acquired on March 1, 1994.
(3) Historical results of operations of Metroplex Communications, Inc.
acquired on October 12, 1994.
(4) Historical results of operations of WXXA-TV acquired on December 1,
1994.
(5) Represents the pro forma effect of the acquisitions Increase
assuming they were acquired at January 1, 1992 (Decrease)
Income
In Thousands
(A) Decrease in depreciation (77) and increase in
amortization (880) resulting from a write down of fixed
assets and a write up of intangible assets acquired. (803)
(B) Decrease in interest expense due to a lower amount of
average debt outstanding and a lower average interest
rate. 3,680
(C) Tax effect of the above adjustments, along with Clear
Channel Television of Little Rock, Inc., Metroplex
Communications, Inc. and WXXA-TV historical financial
information at the federal statutory tax rate effective
for 1992 (35%). 462
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS
Year ended December 31, 1993
(6) Historical Condensed Consolidated Statement of Earnings for Clear
Channel Communications, Inc. and Subsidiaries.
(7) Historical results of operations of Clear Channel Television of
Little Rock, Inc. acquired on March 1, 1994.
(8) Historical results of operations of Metroplex Communications, Inc.
acquired on October 12, 1994.
(9) Historical results of operations of WXXA-TV acquired on December 1,
1994.
(10) Represents the pro forma effect of the acquisitions Increase
assuming they were acquired at January 1, 1993. (Decrease)
Income
In Thousands
(A) Increase in depreciation (89) and increase in
amortization (1,257) resulting from a write up of fixed
and intangible assets acquired. (1,346)
(B) Decrease in interest expense due to a lower amount of
average debt outstanding and a lower average interest
rate. 3,066
(C) Tax effect of the above adjustments, along with Clear
Channel Television of Little Rock, Inc., Metroplex
Communications, Inc. and WXXA-TV historical financial
information at the federal statutory tax rate effective
for 1993 (35%). (2,400)
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS
Nine months ended September 30, 1994
(11) Historical Condensed Consolidated Statement of Earnings for Clear
Channel Communications, Inc. and Subsidiaries.
(12) Historical results of operations of Clear Channel Television of
Little Rock, Inc. from January 1, 1994 to February 28, 1994,
acquired on March 1, 1994.
(13) Historical results of operations of Metroplex Communications, Inc.
from January 1, 1994 to September 30, 1994, acquired on October 12,
1994.
(14) Historical results of operations of WXXA-TV from January 1, 1994 to
September 30, 1994, acquired on December 1, 1994.
(15) Represents the pro forma effect of the acquisitions Increase
assuming they were acquired at January 1, 1994. (Decrease)
Income
In Thousands
(A) Increase in depreciation (107) and amortization (1,373)
resulting from a write up of assets acquired. (1,480)
(B) Decrease in interest expense due to a lower amount of
average debt outstanding and a lower average interest
rate. 1,337
(C) Decrease in other income realized upon forgiveness of
a portion of outstanding debt. (1,613)
(D) Tax effect of the above adjustments, along with Clear
Channel Television of Little Rock, Inc., Metroplex
Communications, Inc. and WXXA-TV historical financial
information at the federal statutory tax rate effective
for 1994 (35%). 1,138
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET (UNAUDITED)
(IN THOUSANDS)
September 30, 1994
------------------------------------------------
<CAPTION>
Increase
(Decrease)
CCC MCI WXXA-TV Income Pro
Hist. Hist. Hist. forma Adj.
(16) (17) (18) (19) Pro forma
<S> <C> <C> <C> <C> <C>
Current Assets
Cash $ 6,264 $ 3,028 $ 192 $(3,220)* $ 6,264
Accounts receivable
(net) 26,082 3,468 1,815 (1,531) 29,834
Film rights - current 8,953 1,256 10,209
Other current assets 444 163 (607)
------ ----- ----- ------
Total Current Assets 41,299 6,940 3,426 46,307
Property, plant and equipment 114,603 7,326 6,123 (2,000) 126,052
Less accumulated depreciation 40,232 4,177 3,796 (7,866) 40,339
------- ----- ----- -------
74,371 3,149 2,327 85,713
Film rights - non current 13,518 144 457 14,119
Intangible assets (net) 144,431 3,488 776 55,138 203,833
Other assets 16,644 780 212 (915) 16,721
$290,263 $14,357 $6,885 $366,693
======= ====== ====== =======
* Asset not acquired by Clear Channel Communications, Inc.<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
Increase
(Decrease)
CCC MCI WXXA-TV Income Pro
Hist. Hist. Hist. forma Adj.
(16) (17) (18) (19) Pro Forma
Current Liabilities
Accounts payable $ 3,677 $ 1,057 $ 67 $(1,124) $ 3,677
Accrued expenses 4,556 1,780 443 (2,623) 4,156
Accrued income and other taxes 3,311 (1,002) 2,309
Current portion of film right
liabilities 9,152 96 9,248
Current portion of long-term
debt 1,906 151 1,239 (1,390) 1,906
Other current liabilities 206 (477) 271
------ ----- ----- ------
Total Current Liabilities 22,602 3,194 1,368 21,296
Long term debt 135,589 40,635 13,257 15,041 204,522
Film right liabilities 12,618 943 817 14,378
Deferred income taxes 3,566 3,566
Other liabilities 2,719 (2,473) 246
Shareholders' equity
Partners' deficit (6,896) 6,896
Common Stock 1,716 1 5 1 1,723
Stock Warrant 47 (47)
Additional paid-in capital 87,056 620 4,682 92,358
Retained earnings 27,878 (25,963) (8,688) 35,448 28,675
Less cost of shares held in
treasury (762) 691 (71)
------- ------ ----- -------
115,888 (32,191) (8,683) 122,685
$290,263 $14,357 $6,885 $366,693
======= ====== ===== =======<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC.
</TABLE>
NOTES TO CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Note 1: Business Acquisition
On December 1, 1994, the Company purchased substantially all of the
operating assets of WXXA-TV in Albany, New York from Heritage Broadcasting
Company of New York, Inc., a New York corporation for approximately $25.5
million. The transaction has been accounted for as a purchase, and the
accounts of WXXA-TV have been included in the accompanying financial
statements as of September 30, 1994. The fair value assigned to assets
acquired is as follows:
In Thousands
Property, Plant & Equipment $ 4,718
Licenses and other intangible assets 20,782
--------
$25,500
======
The unaudited pro forma consolidated statements of earnings for the years
ended December 31, 1992 and December 31, 1993 assumes the purchase occurred
on January 1, 1992 and January 1, 1993, respectively. The unaudited
proforma consolidated statement of earnings for the nine months ended
September 30, 1994 assumes the purchase occurred on January 1, 1994. The
results are as follows:
Nine Months Year Ended
(In thousands except per share) Ended September 30, 1994 December 31, 1993
Revenues $161,231 $182,655
Net income 11,427 13,580
Earnings per share .66 .87
Year Ended
December 31,
1992
Revenues $132,848
Net income 3,707
Earnings per share .25
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(16) Historical Condensed Consolidated Balance Sheet for Clear Channel
Communications, Inc. and Subsidiaries as of September 30, 1994.
(17) Historical Condensed Balance Sheet of Metroplex Communications,
Inc. as of September 30, 1994, acquired on October 12, 1994.
(18) Historical Condensed Balance Sheet of WXXA-TV as of September 30,
1994, acquired on December 1, 1994.
(19) Under purchase accounting, certain Metroplex Communications, Inc.
and WXXA-TV assets and liabilities are required to be adjusted to
their estimated fair value. The estimated fair value adjustments
have been determined by Clear Channel Communications, Inc. based
upon independent appraisals performed at the dates of acquisition.
The following are the pro forma adjustments made to reflect
Metroplex Communications, Inc. and WXXA-TV fair values as of
September 30, 1994.
Increase
(Decrease)
Description In Thousands
Cash $(3,220)*
Accounts receivable, net (1,531)
Other current assets (607)
Property, plant and equipment (2,000)
Accumulated depreciation (7,866)
Long-term fil rights 457
Intangible assets 55,138
Other assets (915)
Accounts payable (1,124)
Accrued expenses (2,623)
Accrued income and other taxes (1,002)
Current portion of long-term debt (1,390)
Other current liabilities 271
Long-term debt 15,041
Long-term film rights liability 817
Other liabilities (2,473)
Partners' deficit 6,896
Common stock 1
Stock warrant (47)
Additional paid-in capital 4,682
Retained earnings 35,448
* Asset not acquired by Clear Channel Communications, Inc.
HERITAGE BROADCASTING COMPANY OF NEW YORK
FINANCIAL STATEMENTS WITH
ADDITIONAL INFORMATION AND
INDEPENDENT AUDITORS' REPORT
MARCH 31, 1994
PERRIN
FORDREE &
COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
FINANCIAL STATEMENTS
WITH
ADDITIONAL INFORMATION
AND
INDEPENDENT AUDITORS' REPORT
MARCH 31, 1994
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
CONTENTS
PAGE NUMBER
Independent Auditors' Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations and Accumulated Deficit 3
Statement of Cash Flows 4-5
Notes to Financial Statements 6-13
Additional Information:
Schedule of Broadcast Cash Flow from Operations 14-15
March 31, 1994
December 31, 1993<PAGE>
Indepentent Auditors' Report
To the Board of Directors
Heritage Broadcasting Company of New York
Cadillac, Michigan
We have audited the accompanying balance sheet of Heritage Broadcasting
Company of New York as of March 31, 1994 and 1993, and the related
statements of operations and accumulated deficit and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion of these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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 our audit provides 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 Heritage Broadcasting
Company of New York as of March 31, 1994 and 1993, 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
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred substantial losses since its
acquisition in November 1986. At March 31, 1994, current liabilities exceed
current assets by $10,647,085, and total liabilities exceed total assets by
$10,583,434. These factors and others discussed in Note 2 indicate that the
Company may be unable to continue in existence. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Our audit was made for the purpose of forming an opinion of the basic
financial statements taken as a whole. The additional information listed on the
foregoing table of contents is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the
basic financial statements and in our opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PERRIN, FORDREE & COMPANY, P.C.
April 22, 1994
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
BALANCE SHEET
ASSETS
MARCH 31,
1994 1993
Current Assets:
Cash $ 356,169 $ 445,008
Accounts receivable - broadcasting, less
allowance for doubtful accounts of $104,914
and $70,722, respectively 1,501,760 1,411,203
Inventory 193,731 177,468
Prepaid expenses 93,264 165,165
Current portion of film contracts 839,083 929,778
--------- ---------
Total current assets 2,984,007 3,128,622
Property, Plant and Equipment - at cost (Note 1):
Land 54,356 54,356
Land improvements 222,624 213,399
Building and improvements 75,353 65,528
Broadcast towers and antenna systems 771, 289 766,577
Broadcast equipment 1,434,598 1,419,592
Studio technical equipment 2,630,309 2,057,639
Office furniture and equipment 774,443 671,831
Vehicles 26,209 26,209
--------- ---------
5,989,181 5,275,131
Less accumulated depreciation and amortization 3,518,415 2,964,041
--------- ---------
2,470,766 2,311,090
Other Assets:
Film contracts, net of accumulated amortization
of $5,258,229 and $4,878,344, respectively
(Note 1) 976,167 2,052,214
Intangible assets, net of accumulated
amortization of $3,271,197 and $3,242,883,
respectively (Note 1) 789,653 817,967
Financing costs, net of accumulated amortization
of $212,737 and $163,882, respectively
(Note 1) 15,057 63,912
Accounts receivable - related party (Note 5) 285,759 285,759
Deposits 7,000 1,825
--------- ---------
2,073,636 3,221,677
--------- ---------
$7,528,409 $8,661,389
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' DEFICIT
MARCH 31,
1994 1993
CURRENT LIABILITIES:
Note payable - bank (Note 3) $10,297,014 $10,877,014
Current portion of obligations under capital
leases (Note 4) 98,568 -
Current portion of file contracts payable
(Note 3) 2,820,488 2,861,068
Current portion of long-term debt (Note 3) 67,500 67,500
Accounts payable - trade 85,560 79,290
Accrued expenses:
Vacation 23,282 35,856
Wages and commissions 71,225 58,498
Taxes and other 167,455 131,535
---------- ----------
261,962 225,889
---------- ----------
Total current liabilities 13,631,092 14,110,761
OBLIGATIONS UNDER CAPITAL LEASES (Note 4) 138,598
FILM CONTRACTS PAYABLE (Note 3) 991,119 1,657,321
LOAN PAYABLE - PARENT COMPANY (Note 5) 3,227,284 3,227,284
LONG-TERM DEBT (Note 3) 123,750 190,748
STOCKHOLDERS' DEFICIT:
Common stock - authorized,
issued and outstanding,
52,576 shares at $.10 per value 5,258
Accumulated deficit (10,588,692) (10,529,983)
------------ ------------
(10,583,434) (10,524,725)
____________ ____________
$7,528,409 $8,661,389
============ ============
HERITAGE BROADCASTING COMPANY OF NEW YORK
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
YEAR ENDED MARCH 31,
1994 1993
REVENUE $8,337,339 $8,500,497
Less agency and representative commissions 1,446,987 1,448,877
--------- ---------
6,890,352 7,051,620
OPERATING EXPENSES:
Operations 155,738 162,073
Engineering 448,320 471,521
Programming 340,165 298,475
Promotion 320,773 351,725
Sales 906,647 967,762
General and administrative 912,327 897,819
--------- ---------
3,083,970 3,149,375
========= =========
GROSS PROFIT BEFORE DEPRECIATION, AMORTIZATION,
CORPORATE AND INTEREST EXPENSE 3,806,382 3,902,245
DEPRECIATION AND AMORTIZATION:
Film 1,079,228 1,150,672
Property, equipment and other 631,543 823,369
--------- ---------
1,710,771 1,974,041
========= =========
INCOME FROM OPERATIONS 2,095,611 1,928,204
OTHER INCOME (EXPENSE)
Loss on sale of assets (11,159)
Interest expense (1,721,558) (1,335,806)
Interest income 1,015 196
Bad debt expense (Note 8) (60,000) (122,884)
Non-recurring expense - (82,288)
Litigation expense (Note 9) (373,777) (84,305)
----------- -----------
(2,154,320) (1,636,246)
=========== ===========
NET INCOME (LOSS) (58,709) 291,958
ACCUMULATED DEFICIT:
Beginning of year (10,529,983) (10,821,941)
============ ============
End of year $(10,588,692) $(10,529,983)
============ ============
The accompanying notes are an integral part of the financial statements.
HERITAGE BROADCASTING COMPANY OF NEW YORK
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $8,186,782 $8,424,417
Cash paid to suppliers and employees (4,455,456) (4,938,707)
----------- -----------
Cash flow before film payments 3,731,326 3,485,710
Interest received 1,015 196
Interest paid (1,450,856) (1,335,806)
Litigation - MCA (64,021) (84,305)
----------- -----------
Net cash from operating activities 2,217,464 2,065,795
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (308,698) (261,543)
(Increase) in other receivables - (1,515)
Payment of deposit (5,175) -
Proceeds from sale of assets - 4,000
--------- ---------
Net cash to investing activities (313,873) (259,058)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of film contracts payable (1,146,307) (1,458,312)
Payments of capital lease obligations (168,188) (104,979)
Repayment of debt (cash flow payments) (580,000) (122,986)
MCA lawsuit principal payments (97,845) -
----------- -----------
Net cash to financing activities (1,992,430) (1,686,277)
=========== ===========
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (88,839) 120,460
CASH AND EQUIVALENTS:
Balance - Beginning of year 445,008 324,548
======== ========
Balance - End of year $356,169 $445,008
======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
STATEMENT OF CASH FLOWS - CONTINUED
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH FROM OPERATING ACTIVITIES
YEAR ENDED MARCH 31,
1994 1993
NET INCOME (LOSS) $(58,709) $291,958
Adjustments to reconcile net income (loss)
to cash from operating activities:
Depreciation and amortization 631,543 823,369
Film amortization 1,079,228 1,150,671
MCA judgment 446,121 -
Loss on sale of asset - 11,159
Miscellaneous (22,480) 18,426
Expired MCA film rights 134,337 -
Changes in assets and liabilities:
Increase in accounts receivable (90,557) (76,080)
Increase in inventories (16,263) (13,347)
(Increase) decrease in prepaid expenses 71,901 (79,839)
Increase (decrease) in accounts payable 6,270 (12,803)
Increase (decrease) in accrued expenses 36,073 (47,719)
--------- ----------
Total adjustments 2,276,173 1,773,837
--------- ----------
NET CASH FROM OPERATING ACTIVITIES $2,217,464 $2,065,795
========= ==========
SCHEDULE OF NON-CASH TRANSACTIONS
ACQUISITION OF FILM CONTRACTS $ 231,805 $2,079,776
========= =========
INCREASE IN FILM CONTRACTS PAYABLE:
Interest on MCA judgment $270,702 -
Plaintiff attorney fees 175,419 -
--------- ---------
446,121 -
========= =========
PROPERTY ACQUIRED UNDER CAPITAL LEASE $ 405,352 -
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies of Heritage Broadcasting
Company of New York (the Company) is presented to assist in understanding
the Company's financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Heritage Broadcasting Company of New York (HBCNY) is a ninety-five percent
owned subsidiary of Heritage Broadcasting Group, Inc. (HBG).
COMPANY OPERATIONS
The Company operates a television station located in Albany, New York,
which is a Fox Broadcasting affiliate.
REVENUE RECOGNITION
The Company recognizes revenue from broadcasting when the advertisement
is telecast.
INVENTORIES
Inventories are stated at the lower of cost or market. The cost is determined
using the first-in, first-out method.
DEPRECIATION AND AMORTIZATION
Depreciation on property and equipment is provided using the straight-line
method over 3 to 10 years. Amortization expense is provided using the
straight-line method over 40 years.
FILM CONTRACTS
Film contracts consist of syndicated programming and are carried at the
gross amount net of accumulated amortization. Amortization is provided using
the straight-line method over the programming term of the contract.
FINANCING COSTS
Financing costs are amortized over the term of the bank loan using the
straight-line method.<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED:
MARCH 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES
The Company files its income tax returns as part of a consolidated group,
M.I.C.I. Corporation, the parent company of Heritage Broadcasting Group, Inc.
Income taxes are provided in the accounts of M.I.C.I. Corporation.
Accordingly, no provision or benefit for income taxes is reflected in the
accompanying financial statements, due to a large net operating loss
carryforward. The amount of the new operating loss related to HBCNY is
$10,424,000.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash equivalents, include
checking accounts and all highly liquid cash investments with maturities of
three months or less. The statement of cash flows is prepared on the cash
basis.
INTANGIBLES
Intangible assets consist of the following at March 31:
1994 1993
Fox affiliation agreement $ 132,910 $ 132,910
Underdeveloped market 2,397,100 2,397,000
FCC Licenses 771,748 771,748
Favorable site lease 334,825 334,825
Other intangible assets 424,267 424,267
--------- ---------
4,060,850 4,060,850
Less accumulated amortization (3,271,197) (3,242,883)
----------- ----------
$ 789,653 $ 817,967
=========== ==========
The Fox affiliation agreement is being amortized over twenty years using the
straight-line method.
Underdeveloped market is being amortized over six years using the straight-
line method.
FCC licenses are being amortized over forty years using the straight-line
method.
Favorable site lease is being amortized over five years using the straight-
line method.
Other intangible assets are being amortized over one to forty years using
the straight-line method.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31,1994
NOTE 2 - GOING CONCERN:
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
sustained substantial operating losses since its acquisition in November 1986.
In addition the Company has used substantial amounts of working capital in
its operations. Further, at March 31, 1994, current liabilities exceeded
current assets by $10,647,085, and total liabilities exceeded total assets by
$10,583,434. (The Company has incurred $13,774,120 of depreciation and
amortization expense in the accumulated deficit since November 1986.) During
the year ended March 31, 1994, the bank has not demanded immediate
payment of the outstanding principle balance of $25,000,000 plus accrued
interest on a note payable. However, the Company has not complied with
certain provisions in the loan agreement. Management proposed alternatives
in an attempt to restructure the agreement. A restructuring agreement was
entered into on October 31,1992.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements and the success of its future operations. Management
believes that actions presently being taken to revise the Company's
operating and financial requirements provide the opportunity for the
Company to continue as a going concern.
NOTE 3 - NOTE PAYABLE - BANK, FILM CONTRACTS PAYABLE AND LONG-TERM
DEBT:
The note payable - bank consists of a $25,000,000 revolving credit agreement
with a bank, with the Company and Heritage Broadcasting Company of
Michigan (HBCM), also a subsidiary of Heritage Broadcasting Group, Inc.,
jointly liable. The credit agreement is secured by all assets and common
stock of the Company and HBCM. The Company has been allocated $11,000,000
of the agreement proceeds ($10,297,014 of which is outstanding at March 31,
1994). The remaining $14,000,000 was allocated to HBCM.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1994
NOTE 3 - NOTE PAYABLE - BANK, FILM CONTRACTS PAYABLE AND LONG-TERM
DEBT - CONTINUED:
Covenants of the agreements, on a combined basis with HBCM, place
restrictions on capital expenditures, lease payments, management fees and
film payments, and also require certain minimum levels of cash flow and
ratios of operating debt to cash flow be maintained. The Company has not
complied with certain covenants.
RESTRUCTURING AGREEMENT WITH C.I.B.C. (BANK)
The Company (Heritage Broadcasting Group) entered into a restructuring
agreement with its Bank on October 31, 1992, for its revolving credit
agreements in the amount of $25,000,000.
The Company (HBG) incurred an additional note payable for the following
expenses at October 31, 1992:
Unpaid past-due interest $627,022
Unpaid past-due agent fees 87,500
Swap agreement - breakage costs 514,231
Accounting fees 100,000
Legal fees 342,618
---------
$ 1,671,371
=========
The amount of the note (expense obligation) is $1,671,371.
The Borrowers (HBCNY and HBCM) further jointly and severally promise to
pay interest on the unpaid principal amounts of the original debts from the
date thereof until the same shall have been paid in full at the rates and at
the times determined in accordance with the provisions of the restructuring
agreement.
The Bank may release of settle with either HBCNY or HBCM at any time
without affecting the continuing liability of the other. The Bank may proceed
under this promissory note against either HBCNY or HBCM without
proceeding against the other.
The payment obligations of the new agreement are as follows:
1.Monthly interest payments for original debt and expenses shall be due
on the first business day of each month.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1994
NOTE 3 - NOTE PAYABLE - BANK, FILM CONTRACTS PAYABLE AND LONG-TERM
DEBT - CONTINUED:
2.Mandatory payments of principal and original debt - the net sale proceeds
from the sale of the HBCNY assets and the HBCM assets shall be applied by
the Borrowers as principal payments on the original debt and expense
obligation. If HBCNY assets have not been sold prior to September 30,
1994, the Borrowers shall make a principal payment on September 30, 1994,
in the amount of $18,000,000.
After the Borrowers have made the payment described above, so long as
no restructuring default shall occur or exist, the remaining outstanding
principal balance of the original debt shall be repaid in consecutive
quarterly installments of $50,000 each, commencing on the next March 31,
June 30, September 30 and December 31, as applicable, and continuing
on each March 31, June 30, September 30 and December 31 and
thereafter, provided, however, that to the extent not previously paid,
the remaining principal amount of the original debt shall be payable in
full on the restructuring termination date, which is the earlier of
December 31, 1995, or the date on which the obligations have been
accelerated as a result of restructuring default.
3.The principal amount of the expense obligation note and restructuring
revolver facility shall be payable in full on the earliest of (a) the
date of the $18,000,000 principal amount described above, (b) September
30, 1994, or (c) the restructuring termination date.
4.Excess cash flow payments shall be paid on the twentieth day of each month
through and including January 20, 1994; each Borrower shall make a payment
to the Bank in an aggregate amount equal to the excess cash flow for the
immediately preceding month.
Excess cash flow payment shall be applied first to the expense
obligation, then to the original debt, such proceeds to be applied first
to the outstanding principal amount and then to any accrued and unpaid
interest thereon, applying any such payment to the installments due
under the term loan note in the inverse of maturity. The requirements
of the excess flow prepayments under the original credit agreement shall
be superseded by the excess cash flow payments provided for in this
agreement.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1994
NOTE 3 - NOTE PAYABLE - BANK, FILM CONTRACTS PAYABLE AND LONG-TERM
DEBT - CONTINUED:
Interest expense is not allocated between HBCM and HBCNY according to
debt allocation. Rather, it is paid and recorded by each company
according to the availability of cash.
RESTRUCTURING REVOLVER FACILITY
So long as no restructuring default shall occur or exist, the Bank makes
available to the Borrower a restructuring revolver facility. The total
amount outstanding under this agreement at any time shall not exceed the
lesser of (a) $2,000,000 and (b) the aggregate amount of excess cash flow
payments received by the Bank. The outstanding balance at March 31,
1994, is $1,606,384.
The Borrowers may request restructuring revolver advances no more
frequently than once a quarter. Any restructuring revolver advances
hereunder shall be used by Borrowers solely for the purpose of making
any outstanding note payment.
Film contracts payable are due in monthly installments at various amounts.
Maturities of film contracts payable are as follows:
Year ending March 31:
1995 (includes $1,967,748 MCA liability) $2,820,488
1996 530,087
1997 344,633
1998 116,399
---------
$3,811,607
=========
Other long-term debt at March 31, 1994, is as follows:
Note payable - Twentieth Century Fox
Film Corporation, payable in monthly
installments of $7,441, including
interest at 10%, expiring in 1997. $191,250
Less current portion of long-term debt 67,500
-------
Long-term debt $123,750
=======
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1994
NOTE 4 - OBLIGATIONS UNDER CAPITAL LEASES:
The Company is the lessee of equipment under capital leases, expiring in
1997. The assets and liabilities under capital leases are recorded at the
lower of the present value of the minimum lease payments or the fair value
of the assets. The assets are amortized (or depreciated) over the lower of
their related lease terms or their estimated productive lives. Amortization
of assets under capital lease is included in depreciation expense.
The assets are recorded at a cost of $405,352. The related depreciation
expense amounted to approximately $82,000 for the year ended March 31,
1994.
Minimum future lease payments under capital leases as of March 31, 1994,
for each year and in aggregate are as follows:
Year ending March 31:
1995 $124,232
1996 66,372
1997 66,372
1998 27,655
-------
Total minimum lease payments 284,631
Less: amount representing interest 47,465
-------
Present value of net minimum lease payment $237,166
=======
Interest rates on capitalized leases range from 8% to 12%.
NOTE 5 - RELATED PARTY TRANSACTIONS:
The Company has a non-interest-bearing loan from its parent company.
There are no terms of repayment.
The Company has a non-interest-bearing account receivable due from its
parent company. There are no terms of repayment.
NOTE 6 - OPERATING LEASE:
Rent expense for leased property for the year ended March 31, 1994, was
$133,478. Future commitments under noncancelable operating leases are as
follows:
Year ending March 31:
1995 $133,478
1996 133,478
1997 100,108
-------
$367,064
=======
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1994
NOTE 7 - NON-MONETARY TRANSACTIONS:
The Company provides advertising for certain vendors in exchange for
goods and services.
Included in gross revenue at March 31, 1994, is $288,325 of trade revenue.
Included in operating expenses at March 31, 1994, is $288,325 of trade
expenses and property and equipment. These transactions are accounted
for at fair market value of the services received.
Included in gross revenues at March 31, 1993, is $341,830 of trade
revenue. Included in operating expenses at March 31, 1993, is $341,830 of
trade expenses and property and equipment. These transactions are
accounted for at fair market value of the services received.
NOTE 8 - BAD DEBT EXPENSE:
The Company incurred bad debt expenses for accounts receivable from
bankrupt companies for the year ended March 31, 1993. These accounts
receivable were from airtime prior to November 1991.
NOTE 9 - LITIGATION EXPENSES:
The Company incurred litigation expenses totalling $373,777 and $84,305 for
the years ending March 31, 1994 and 1993, respectively, for a lawsuit with
MCA regarding film contract liabilities. A judgment was entered against
Heritage Broadcasting Company of New York on February 23, 1993, for
$1,454,500. The Company initially intended to appeal the judgment, but
allowed its time to appeal to expire on November 10, 1993. MCA has
initiated no action to collect, nor have payment terms been set. The
Company has been making good-faith payments of $25,000 per month since
February 1992. Interest on the judgment amount accrues at the rate of 10%
and has been retroactively calculated from the initial judgment dates.
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
SCHEDULE OF BROADCAST CASH FLOW FROM OPERATIONS
YEAR ENDED MARCH 31, 1994
REVENUE:
Local sales $3,594,275
National sales 4,270,248
Trade and barter income 288,325
Production 89,561
Network compensation 45,961
Sundry income 48,970
Interest income 1,015
---------
8,338,355
Less direct expenses (agency and
representative commissions) (1,446,987)
---------
NET REVENUE 6,891,368
OPERATING EXPENSES:
Operations 155,026
Engineering 442,261
Programming 163,010
Promotion 258,313
Sales 886,357
General and administrative 893,793
Trade and barter expenses 285,210
---------
TOTAL OPERATING EXPENSES 3,083,970
---------
CASH FLOW BEFORE FILM PAYMENTS 3,807,398
FILM CONTRACT PAYMENTS FOR THE YEAR 1,079,402
---------
BROADCAST CASH FLOW FROM OPERATIONS $2,727,996
=========
RECONCILIATION OF OPERATING EXPENSES TO
INTERNAL FINANCIAL STATEMENTS
OPERATING EXPENSES $3,083,970
Less:
Trade and barter transactions (285,210)
Various departments - auditor adjustments
3-31-94 (34,678)
Bad debt 60,000
---------
(259,888)
---------
OPERATING EXPENSE PER INTERNAL STATEMENTS $2,824,082
=========
<PAGE>
HERITAGE BROADCASTING COMPANY OF NEW YORK
SCHEDULE OF BROADCAST CASH FLOW FROM OPERATIONS
YEAR ENDED DECEMBER 31, 1993
REVENUE:
Local sales $3,592,985
National sales 4,132,388
Trade and barter income 303,304
Production 92,485
Network compensation 43,861
Sundry income 70,766
Interest income 1,023
---------
8,236,812
Less direct expenses (agency and
representative commissions) 1,409,023
---------
NET REVENUE 6,827,789
OPERATING EXPENSES:
Operations 157,239
Engineering 455,218
Programming 162,286
Promotion 262,909
Sales 904,300
General and administrative 927,080
Trade and barter expenses 303,304
---------
TOTAL OPERATING EXPENSES 3,172,336
---------
CASH FLOW BEFORE FILM PAYMENTS 3,655,453
FILM CONTRACT PAYMENTS FOR THE YEAR 975,266
---------
BROADCAST CASH FLOW FROM OPERATIONS $2,680,187
=========
RECONCILIATION OF OPERATING EXPENSES TO
INTERNAL FINANCIAL STATEMENTS
OPERATING EXPENSES $3,172,336
Less:
Trade and barter expenses (303,304)
Engineering - transmitter repair
3-31-93 audit adjustment (16,610)
---------
(319,914)
OPERATING EXPENSES TO INTERNAL FINANCIAL STATEMENTS $2,852,422
=========
FINANCIAL STATEMENTS
Heritage Broadcasting Co. of New York
As of 9/30/94
UNAUDITED
ASSETS As of 9/30/94
Cash $192,469
Accounts Receivable - net 1,814,947
Other current assets 162,514
Film Rights - current 1,255,844
-----------
Total Current Assets 3,425,774
Property, Plant and equipment 6,123,402
Accumulated Depreciation (3,795,602)
Film rights - long term 144,278
Intangible assets - net 775,495
Other assets 212,140
-----------
Total Assets 6,885,487
==========
LIABILITIES AND EQUITY
Accouts payable 67,308
Other accrued expenses 720,700
Film rights payable - current 96,319
Notes payable - current 484,000
-----------
Total Current Liabilities 1,368,327
Notes payable - noncurrent 9,254,095
Loan Heritage Broadcast Group 3,227,284
Film rights payable - noncurrent 943,009
Other long term debt 775,636
-----------
Total Long Term Liabilities 14,200,024
Capital Stock 5,258
Retained earnings (8,688,122)
-----------
Total Equity (deficit) (8,682,864)
Total Liabilities and (deficit) $6,885,487
==========
PROFIT AND LOSS STATEMENT Jan - Sep 94
---------
REVENUE
Local sales $2,867,236
National sales 3,208,361
Other income 161,228
-----------
Total Gross Revenue 6,236,825
Agency commission 1,118,922
Net Revenue 5,117,903
EXPENSES
Programming 121,483
Production 120,859
Technical 378,184
Sales 711,642
Promotion and Advertising 188,905
General and Administrative 696,412
Non-recurring expenses 6,464
Film amortization 801,191
Interest 941,479
Depreciation and amortization 517,959
-----------
Total operating expenses 4,484,578
Net income (loss) $633,325
==========
