<PAGE>
FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.1 TO APPLICATION OF REPORT
FILED PURSUANT TO SECTION 12, 13, OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report: April 1, 1996 Date of Event: January 16, 1996
INFINITY BROADCASTING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-14702 13-2766282
- -------------- --------------------- -------------------
State of jurisdiction (Commission File No.) (I.R.S. Employer
Corporation or organization Identification No.)
600 Madison Avenue, New York, New York 10022
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(212)750-6400
----------------------------------------------------
(Registrant's telephone number, including area code)
This Amendment No. 1 amends the registrant's Current Report on Form 8-K filed on
September 27, 1995 and supplies the financial statements for an acquired
business and pro forma financial information within 60 days of the original due
date of such Report as permitted by Item 7(a)(4) and Item 7(b)(2) of Form 8-K.
<PAGE>
Item 2. Acquisition of Disposal or Assets
On January 16, 1996, Infinity Broadcasting Corporation (the "Company") and
several of its wholly-owned subsidiaries completed the acquisition of seven
radio stations located in Dallas, San Francisco, Detroit and Seattle from
various entities affiliated with Alliance Broadcasting, L.P. for a total
purchase price of $275 million, including working capital (the "Alliance
Acquisition"). The radio stations are KYNG-FM and KSNN-FM in Dallas, KFRC-FM,
KFRC-AM and KYCY-FM in San Francisco, WYCD-FM in Detroit and KYCW-FM in
Seattle (collectively, the "Stations").
The purchase price of the Alliance Acquisition was funded by bank
borrowings under the Company's Second Amended and Restated Credit Agreement,
dated as of December 22, 1994 (the "Credit Agreement"), with a syndicated group
of bank lenders. The Credit Agreement provides for aggregate borrowings of up to
$700 million. The Company used a portion of such availability to complete the
purchase of TDI Worldwide, Inc. on March 26, 1996.
On February 7, 1996, the Company entered into an agreement to sell its
Seattle radio station KYCW-FM for approximately $26 million (the "KYCW-FM
Disposition").
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The information called for by this Item is included on Pages F-1 through
F-19 of this filing and is incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma combined balance sheet data at December 31, 1995 is
presented as if, at such date, the Company had acquired the Stations and
completed the KYCW-FM Disposition. The
unaudited pro forma combined statements of operations data for the year ended
December 31, 1995 are presented as if, at the beginning of such period, the
Company had acquired the Stations and radio station KLUV-FM, the acquisition of
which was completed on April 21, 1995 and completed the KYCW-FM Disposition.
In the opinion of management, all adjustments necessary to present fairly
this pro forma information have been made.
The pro forma combined financial statements that follow should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto, which appear in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and with the Financial Statements and Notes thereto
of Alliance Broadcasting, L.P. appearing elsewhere in this filing. The pro forma
information is not necessarily indicative of the results that would have been
reported had the Alliance Acquisition and, radio station KLUV-FM acquisition or
the KYCW-FM Disposition actually occurred on the dates specified, nor is it
indicative of the Company's future results.
<PAGE>
(c) Exhibits
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
2(a) Asset Purchase Agreement, dated as of September 12, 1994, by and
between TK Communications, Inc. and Infinity Broadcasting Corporation
of Dallas. (This exhibit can be found as Exhibit 2(f) to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1994
(File No. 0-14702) and is incorporated herein by reference.)
2(b) Purchase Agreement, dated as of September 22, 1995, among each of the
entities identified in Schedule 1.0 (a) thereto, Alliance
Broadcasting, L.P., each of the entities identified in Schedule 1.0
(b) thereto, Infinity Broadcasting Corporation of Los Angeles and the
Company. (This exhibit can be found as Exhibit 2(a) to the Company's
Report on Form 8-K filed on September 27, 1995 (File No. 0-14702),
such Report on Form 8-K being the subject of this Form 8-K/A No. 1 and
is incorporated herein by reference.)
23(a) Consent of Price Waterhouse LLP
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, thereunto duly authorized.
INFINITY BROADCASTING CORPORATION
By: /S/ FARID SULEMAN
__________________________________
Farid Suleman
Vice President - Finance
and Chief Financial Officer
Date: April 1, 1996
<PAGE>
ALLIANCE BROADCASTING, L.P.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
ALLIANCE BROADCASTING, L.P.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS F-1
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1994 AND 1995 F-2
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE YEARS
ENDED DECEMBER 31, 1995 F-3
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL FOR THE THREE YEARS
ENDED DECEMBER 31, 1995 F-4
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE YEARS ENDED
DECEMBER 31, 1995 F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8
<PAGE>
Report of Independent Accountants
To the Partners of Alliance Broadcasting, L.P.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of partners' capital and of cash flows
present fairly, in all material respects, the financial position of Alliance
Broadcasting, L.P. (Alliance) and its subsidiaries at December 31, 1994 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of Alliance's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
San Francisco, California
February 26, 1996
F-1
<PAGE>
<TABLE>
ALLIANCE BROADCASTING, L.P.
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31,
1994 1995
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,511,000 $ 1,439,000
Accounts receivable, less
allowance for doubtful accounts
of $266,000 and $222,000 8,410,000 9,089,000
Prepaid expenses and other 574,000 444,000
----------------- ----------------
Total current assets 10,495,000 10,972,000
Property and equipment, net 6,884,000 6,025,000
Intangible and other assets, net 71,002,000 66,219,000
----------------- -----------------
Total assets $88,381,000 $ 83,216,000
----------------- -----------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 2,170,000 $ 1,264,000
Accrued expenses 1,677,000 1,336,000
Current portion of capital
lease obligations 93,000 109,000
Current portion of note payable 2,000,000 9,000,000
----------------- -----------------
Total current liabilities 5,940,000 11,709,000
Capital lease obligations,
less current portion 230,000 433,000
Note payable, less current portion 58,000,000 50,000,000
----------------- -----------------
Total liabilities 64,170,000 62,142,000
----------------- -----------------
Commitments and contingencies
(Notes 5, 6 and 7)
Partners' capital:
General partner - -
Class A limited partners 19,001,000 16,312,000
Class B limited partner, net of
deferred contribution receivable
of $2,539,000 and $3,957,000 - -
Class D limited partners 5,210,000 4,762,000
----------------- -----------------
Total partners' capital 24,211,000 21,074,000
----------------- -----------------
Total liabilities and
partners' capital $ 88,381,000 $ 83,216,000
----------------- -----------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
F-2
<PAGE>
<TABLE>
ALLIANCE BROADCASTING, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
REVENUE
Gross revenue $ 13,356,000 $ 33,288,000 $ 46,332,000
Less - agency commissions (2,143,000) (5,641,000) (7,597,000)
------------ ------------ ------------
Net revenue 11,213,000 27,647,000 38,735,000
------------ ------------ ------------
STATION OPERATING COSTS AND EXPENSES (12,684,700) (24,113,000) (26,540,000)
TIME BROKERAGE FEES (807,300) (495,000) -
DEPRECIATION AND AMORTIZATION (2,744,000) (5,426,000) (6,422,000)
CORPORATE GENERAL AND ADMINISTRATIVE
EXPENSES (1,366,000) (1,789,000) (2,230,000)
OTHER INCOME (EXPENSE)
Interest and other expense (981,000) (4,395,000) (7,837,000)
Class C Return (454,000) - -
Interest and other income 381,000 973,000 1,293,000
------------ ------------ ------------
Total other income (expense) (1,054,000) (3,422,000) (6,544,000)
------------ ------------ ------------
Loss before state income taxes
and extraordinary item (7,443,000) (7,598,000) (3,001,000)
PROVISION FOR STATE INCOME TAXES - - (146,000)
------------ ------------ ------------
Loss before extraordinary item (7,443,000) (7,598,000) (3,147,000)
EXTRAORDINARY ITEM-REFINANCING (NOTE 4) - (1,491,000) -
------------ ------------ ------------
NET LOSS $ (7,443,000) $(9,089,000) $(3,147,000)
------------ ------------ ------------
NET LOSS PER PARTNERSHIP UNIT
Loss before extraordinary item $ (0.27) $ (0.16) $ (0.06)
Extraordinary item-refinancing - (0.03) -
------------ ------------ ------------
Net loss $ (0.27) $ (0.19) $ (0.06)
------------ ------------ ------------
NET LOSS ALLOCATION
General partner $ (247,000) $ (66,000) $ (10,000)
Limited partners (7,196,000) (9,023,000) (3,137,000)
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
F-3
<PAGE>
<TABLE>
Alliance Broadcasting, L.P.
Consolidated Statement of Partners' Capital
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
General Partner Class A Limited Partners Class B Limited Partner Class D Limited Partners
Units Amount Units Amount Units Amount(1) Units Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 177,000 $ - 16,678,000 $11,212,000 702,000 $ - - $ -
Additional capital contributions
related to Alliance Broadcasting
Motown, L.P. 10,000 10,000 1,000,000 1,000,000 42,000
Capital contributions in
connection with formation of
Alliance Broadcasting
Holdings, Inc./ Alliance
Broadcasting California, L.P. 175,000 175,000 16,668,000 16,668,000 702,000
Additional capital contributions
related to Armadillo
Broadcasting, L.P. 53,000 53,000 5,000,000 5,000,000 211,000
Capital contributions by Class B
limited partner and general
partner 9,000 9,000 882,000
Net loss - initial allocation (74,000) (7,067,000) (302,000)
Reallocate Class B limited
partner deficit to general
partner and Class A limited
partners (173,000) (129,000) 302,000
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
Balance at December 31, 1993 424,000 $ - 39,346,000 $26,684,000 2,539,000 $ - - $ -
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
<FN>
(1)Payment of the capital contributions related to the issuance of the Class B
limited partnership units is deferred under the terms of the partnership
agreement and is payable through recontribution of available cash flows, as
defined, otherwise distributable to the Class B limited partner (Note 7).
- continued on next page -
</FN>
</TABLE>
F-4
<PAGE>
<TABLE>
Alliance Broadcasting, L.P.
Consolidated Statement of Partners' Capital
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
General Partner Class A Limited Partners Class B Limited Partner Class D Limited Partners
Units Amount Units Amount Units Amount(1) Units Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 424,000 $ - 39,346,000 $26,684,000 2,539,000 $ - - $ -
Capital contributions in connection
with the formation of Alliance
Broadcasting Cranwell, L.P. 28,000 28,000 2,800,000 2,800,000
Capital contributions in conncetion
with the formation of Alliance
Broadcasting Rainier, L.P. 8,000 8,000 750,000 750,000
Additional capital contributions to
fund working capital requirements 30,000 30,000 3,000,000 3,000,000
Net loss - initial allocation (91,000) (7,271,000) (454,000) (1,273,000)
Reallocate Class B limited partner
and general partner deficits to
Class A and Class D limited
partners 25,000 (412,000) 454,000 (67,000)
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
Balance at December 31, 1994 490,000 $ - 39,346,000 $19,001,000 2,539,000 $ - 6,550,000 $ 5,210,000
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
<FN>
(1)Payment of the capital contributions related to the issuance of the Class B
limited partnership units is deferred under the terms of the partnership
agreement and is payable through recontribution of available cash flows, as
defined, otherwise distributable to the Class B limited partner (Note 7).
- continued on next page -
</FN>
</TABLE>
F-5
<PAGE>
<TABLE>
Alliance Broadcasting, L.P.
Consolidated Statement of Partners' Capital
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
General Partner Class A Limited Partners Class B Limited Partner Class D Limited Partners
Units Amount Units Amount Units Amount(1) Units Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 490,000 $ - 39,346,000 $19,001,000 2,539,000 $ - 6,550,000 $ 5,210,000
Issuance of Class B units under
the Class B Unit Award Program 10,000 10,000 945,000
Net loss - initial allocation (32,000) (2,482,000) (220,000) (413,000)
Reallocate Class B limited partner
and general partner deficits to
Class A and Class D limited
partners 22,000 (207,000) 220,000 (35,000)
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
Balance at December 31, 1995 500,000 $ - 39,346,000 $16,312,000 3,484,000 $ - 6,550,000 $ 4,762,000
--------- -------- ------------ ----------- ---------- ----------- ------------- ------------
<FN>
(1)Payment of the capital contributions related to the issuance of the Class B
limited partnership units is deferred under the terms of the partnership
agreement and is payable through recontribution of available cash flows, as
defined, otherwise distributable to the Class B limited partner (Note 7).
</FN>
</TABLE>
F-6
<PAGE>
<TABLE>
ALLIANCE BROADCASTING, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (7,443,000) $ (9,089,000) $ (3,147,000)
Adjustments to reconcile net loss
to net cash flows from
operating activities:
Depreciation and amortization 2,744,000 5,426,000 6,422,000
Accrued interest - note payable (65,000) - -
Accrued Class C Return (657,000) - -
Extraordinary item - refinancing - 1,491,000 -
Loss on sale of fixed asset - - 201,000
Change in other assets and
liabilities:
Accounts receivable, net (2,202,000) (4,603,000) (679,000)
Prepaid expenses and other
current assets 943,000 (353,000) 130,000
Accounts payable and accrued
expenses 730,000 2,119,000 (1,247,000)
------------ ------------ ------------
Net cash flows from
operating activities (5,950,000) (5,009,000) 1,680,000
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, equipment
and other assets (867,000) (1,645,000) (624,000)
Acquisition of radio station assets
and related costs (31,642,000) (31,466,000) -
Other - - (38,000)
------------ ------------ ------------
Net cash flows from investing
activities (32,509,000) (33,111,000) (662,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 22,915,000 6,616,000 10,000
Proceeds from note payable, net of
deferred financing costs 23,210,000 56,217,000 1,000,000
Principal payments of note payable (700,000) (25,000,000) (2,000,000)
Retirement of Class C partnership
unit (7,300,000) - -
Reduction of capital lease
obligations (34,000) (50,000) (100,000)
------------ ------------ ------------
Net cash flows from financing
activities 38,091,000 37,783,000 (1,090,000)
------------ ------------ ------------
Net change in cash (368,000) (337,000) (72,000)
Cash at beginning of year 2,216,000 1,848,000 1,511,000
------------ ------------ ------------
Cash at end of year $ 1,848,000 $ 1,511,000 $ 1,439,000
------------ ------------ ------------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid during year $ 452,000 $ 3,381,000 $ 6,165,000
------------ ------------ ------------
Payment of Class C Return during
year $ 1,111,000 $ - $ -
------------ ------------ ------------
Noncash transactions:
Acquisition of property and
equipment through capital
lease obligations $ 85,000 $ 183,000 $ 319,000
------------ ------------ ------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
F-7
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. THE PARTNERSHIP AND BUSINESS OF ALLIANCE BROADCASTING, L.P.
ORGANIZATION
Alliance Broadcasting, L.P. (Alliance) was formed as a limited partnership
in January 1990 for the purpose of acquiring, developing and operating
broadcast radio stations either directly or through its subsidiaries. Its
general partner is Alliance Broadcasting, Inc., a corporation owned by John
Hayes. Its Class A and Class D limited partners are GS Alliance Partners,
L.P. and Odyssey Partners, L.P. and the Class B limited partners are John
Hayes and certain Alliance employees. Alliance's initial term expires in
November 2003. However, the partnership agreement, as amended, provides for
the term to be extended to 2005 under certain circumstances.
In January 1996, Alliance sold (referred to as Infinity transaction) the
radio station assets, excluding cash balances, of the broadcast
subsidiaries described below to Infinity Broadcasting Corporation pursuant
to the terms of a Purchase Agreement dated September 22, 1995 (Note 9). in
connection with this sale transaction, the broadcast subsidiaries described
below were merged into Alliance.
MEMBERS OF CONSOLIDATED GROUP
The consolidated financial statements include the accounts of Alliance and
its subsidiaries. The broadcast subsidiaries described below each had a
subsidiary which owned the related FCC broadcast license. All material
intercompany and interpartnership transactions have been eliminated in
consolidation.
Alliance's subsidiaries at December 31, 1995 included the following
corporations and limited partnerships (Alliance and such subsidiaries are
collectively referred to as the Group or Company):
ALLIANCE BROADCASTING MANAGEMENT, INC. (ABMI) - ABMI is a corporation which
was wholly owned by Alliance. ABMI had a 1% general partnership interest in
each of the limited partnerships described below.
ALLIANCE BROADCASTING DALLAS, L.P. (DALLAS) - Dallas was formed as a
limited partnership for the purpose of acquiring from Group W Radio, Inc.
(Group W) and GWR Equity Holding, Inc. (GWR) the broadcast license and
certain fixed assets of a Dallas, Texas radio station. Alliance had a 99%
Class A limited partnership interest in Dallas and GWR had a Class C
limited partnership interest which was retired in August 1993 prior to its
scheduled maturity. The gain realized on the prepayment was not material.
Dallas' term was until December 2009. In December 1991, Dallas acquired the
radio station assets and a covenant not to compete for $3,000,000 in cash
and the issuance of a note payable of $700,000 and Class C partnership unit
of $7,300,000. During 1993, the note payable was repaid and the Class C
partnership unit was retired. The purchase price was allocated to the
assets acquired based upon their relative fair values as follows: property
and equipment - $786,000; noncompete agreement - $1,513,000; broadcast
license - $8,000,000. The excess of the purchase price over the fair value
of the assets acquired of $701,000 was recorded as goodwill. This radio
station operated under the call letters "KYNG-FM."
F-8
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ALLIANCE BROADCASTING MOTOWN, L.P. (MOTOWN) - Motown was formed as a
limited partnership for the purpose of acquiring the broadcast license and
certain fixed assets of a Detroit, Michigan radio station. Alliance had a
99% Class A limited partnership interest in Motown. Motown's term was the
earlier of the expiration of the term of Alliance or December 2009. In
September 1992, Motown acquired the radio station assets for $4,550,000 in
cash. The purchase price was allocated to the assets acquired based upon
their relative fair values as follows: property and equipment - $993,000;
broadcast license - $3,557,000. This radio station operated under the call
letters "WYCD-FM."
ARMADILLO BROADCASTING, L.P. (ARMADILLO) - Armadillo was formed as a
limited partnership for the purpose of operating a radio station located in
Arlington, Texas pursuant to the terms of a time brokerage agreement.
Alliance had a 99% Class A limited partnership interest in Armadillo.
Armadillo's term was the earlier of the expiration of the term of Alliance
or December 2009.
Under the terms of the time brokerage agreement, Armadillo purchased
broadcast airtime of the station during the term of the agreement and the
agreement included an option whereby Armadillo could purchase the operating
assets of the station. In October 1993, Armadillo purchased the broadcast
license and certain fixed assets of this radio station for $11,000,000 in
cash and the time brokerage agreement was terminated. The purchase price
was initially allocated to the assets acquired based upon their estimated
relative fair values as follows: property and equipment - $938,000;
broadcast license - $10,000,000; goodwill - $62,000. During 1994, the
allocation was revised whereby property and equipment was reduced by
$676,000, broadcast license increased by $738,000 and goodwill decreased by
$62,000. This radio station operated under the call letters "KSNN-FM."
ALLIANCE BROADCASTING CALIFORNIA, L.P. (ABC) - ABC was formed as a limited
partnership for the purpose of acquiring the broadcast license and certain
fixed assets of a radio station located in San Francisco, California. ABC's
term was the earlier of the expiration of Alliance or December 2013.
Alliance had a 99% Class A limited partnership interest in ABC. In August
1993, ABC acquired the radio station assets and a covenant not to compete
for $8,950,000 in cash. The purchase price was allocated to the assets
acquired based upon their relative fair values as follows: property and
equipment - $1,033,000; noncompete agreement - $950,000; broadcast license
- $6,800,000. The excess of the purchase price over the fair value of the
assets acquired of $167,000 was recorded as goodwill. This radio station
operated under the call letters "KFRC-AM."
ALLIANCE BROADCASTING HOLDINGS, INC. (ABH) - ABH, a wholly owned subsidiary
of Alliance and a corporation, acquired the capital stock of an unrelated
corporation which owned and operated a San Francisco, California radio
station in August 1993 for $11,200,000 in cash. The purchase price was
allocated to the assets acquired based upon their relative fair values as
follows: property and equipment - $1,190,000; noncompete agreement -
$1,200,000; broadcast license - $8,200,000. The excess of the purchase
price over the fair value of the assets acquired of $610,000 was recorded
as goodwill. This radio station operated under the call letters "KFRC-FM."
F-9
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ALLIANCE BROADCASTING RAINIER, L.P. (RAINIER) - Rainier was formed as a
limited partnership for the purpose of acquiring the broadcast license and
certain fixed assets of a radio station located in Seattle, Washington.
Alliance had a 99% Class A limited partnership interest in Rainier.
Rainier's term was the earlier of the expiration of the term of Alliance or
December 2013. In June 1994, Rainier acquired the radio station assets for
$11,950,000 in cash. The purchase price was allocated to the assets
acquired based upon their relative fair values as follows: property and
equipment - $789,000; broadcast license - $11,161,000. This radio station
operated under the call letters "KYCW-FM."
ALLIANCE BROADCASTING CRANWELL, L.P. (CRANWELL) - Cranwell was formed as a
limited partnership for the purpose of operating a radio station located in
San Francisco, California pursuant to the terms of a time brokerage
agreement. Alliance had a 99% Class A limited partnership interest in
Cranwell. Cranwell's term was the earlier of the expiration of the term of
Alliance or December 2013.
Under the terms of the time brokerage agreement, Cranwell purchased
broadcast airtime during the term of the agreement and the agreement
included an option whereby Cranwell could purchase the operating assets of
the station. In June 1994, Cranwell acquired the radio station assets for
$18,000,000 in cash. Alliance acquired only the broadcast license and
certain other assets and did not acquire an on-going business. Therefore,
the pro forma information below excludes this station. The purchase price
was allocated to the assets acquired based upon their relative fair values
as follows: property and equipment - $234,000; broadcast license -
$17,766,000. This radio station operated under the call letters "KYCY-FM."
UNAUDITED PRO FORMA DATA
Unaudited pro forma data for the on-going businesses acquired in 1993 and
1994 assuming the above acquisitions had occurred in the year immediately
preceding the acquisition date and the beginning of the year of the
acquisition date for the two years ended December 31, 1994 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994
<S> <C> <C>
Net revenue $ 18,337,000 $ 28,544,000
Net loss before income taxes and
extraordinary item (14,036,000) (9,604,000)
Pro forma net loss per partnership unit
before income taxes and extraordinary item (.33) (.20)
Pro forma partnership units outstanding 42,205,000 47,987,000
</TABLE>
F-10
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Broadcast operations derive revenue from the sale of program time and
commercial announcements to local, regional and national advertisers.
Revenue is recognized when the related programs and commercial
announcements are broadcast.
BARTER TRANSACTIONS
Barter transactions are arrangements under which the stations provide
commercial air time in exchange for merchandise and services. These
transactions are recorded at the estimated fair value of the merchandise
or services received. Revenue from barter transactions is recognized as
income when advertisements are broadcast and merchandise or services
received are charged to expense when used. Barter transactions, revenue
and expense, were not material in any of the years in the three years
ended December 31, 1995.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for repairs and
maintenance are charged to expense as incurred and improvements that
significantly extend the lives of assets are capitalized. Depreciation is
provided using the straight-line method and the estimated useful lives of
the related assets as follows:
Studio equipment 5 years
Transmitter equipment 7 years
Furniture and equipment 7 years
Computer equipment and other 5 years
Automobiles 5 years
Leasehold improvements Term of lease or 5 years
INTANGIBLE AND OTHER ASSETS
Intangible and other assets are stated at cost and amortized using the
straight-line method and the following estimated useful lives:
Broadcast licenses 25 years
Noncompete agreements Term of agreement
Organization costs 5 years
Goodwill 25 years
Deferred financing costs Term of loan
F-11
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
IMPAIRMENT OF LONG-LIVED ASSETS
Alliance evaluates intangible and other long-lived assets for potential
impairment by analyzing the operating results, including related cash
flows, trends and prospects of its subsidiaries, as well as comparing
them to their competitors. Alliance also takes into consideration recent
acquisition patterns within the broadcast industry, the impact of
recently enacted or potential Federal Communications Commission (FCC)
rules and regulations and any other events or circumstances which might
indicate potential impairment. Based upon these evaluations, Alliance has
determined that no impairment of recorded intangible and other long-lived
assets has occurred.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Group to
concentration of credit risk consist principally of accounts receivable
and short-term investments. The Group's advertising time is purchased
through advertising agencies by advertisers, in diversified industries,
that are principally located in the metropolitan areas served by the
radio stations. The Group performs ongoing credit evaluations of its
customers. The Group maintains reserves for credit losses and such losses
have generally been within management's expectations. No single
advertising agency or advertiser accounted for a significant portion of
the accounts receivable balance reflected in the consolidated balance
sheet at December 31, 1994 and 1995. The Group invests excess cash in
short-term liquid investments. The Group has not incurred losses related
to these investments.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the Group considers all
financial instruments with an initial maturity of three months or less to
be cash equivalents.
INCOME TAXES
The individual partners are responsible for reporting of their share of
the earnings and losses of each partnership in their respective income
tax returns. Accordingly, no provision for federal and state income taxes
has been made in these consolidated financial statements related to the
earnings and losses of partnerships included in the Group except for a
state income tax provision related to income earned in those states that
require a partnership to pay such taxes.
ABMI and ABH record income taxes under the liability method.
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
CASH - The carrying amount in the financial statements approximates its
fair value.
NOTE PAYABLE AND CAPITAL LEASE OBLIGATIONS - The fair value is estimated
based on current market rates available to the Group for debt of the same
remaining maturities. Since the note payable was repaid at its carrying
amount, exclusive of remaining deferred financing costs, and the lease
obligations were assumed, both in connection with the Infinity
transaction, management believes that disclosure of estimated fair value
would not be meaningful.
NET LOSS PER PARTNERSHIP UNIT
Net loss per partnership unit is computed using the weighted average
number of units outstanding. The number of units used in the computation
of net loss per partnership unit for
F-12
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
the three years ended December 31, 1995 was 27,409,000 in 1993,
47,900,000 in 1994 and 49,705,000 in 1995.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
DECEMBER 31,
1994 1995
Land $ 101,000 $ 101,000
Studio equipment 3,095,000 3,022,000
Transmitter equipment 2,583,000 2,582,000
Furniture and equipment 1,192,000 1,346,000
Computer equipment and other 701,000 756,000
Automobiles 139,000 571,000
Leasehold improvements 974,000 1,020,000
----------------- ----------------
8,785,000 9,398,000
Less - accumulated
depreciation (1,901,000) (3,373,000)
----------------- ----------------
$ 6,884,000 $ 6,025,000
----------------- ----------------
Depreciation expense was $566,000, $1,080,000 and $1,601,000 for the
years ended December 31, 1993, 1994 and 1995, respectively. At December
31, 1994 and 1995, property and equipment included assets under capital
leases of $419,000 and $738,000, respectively, with related accumulated
amortization of $116,000 and $235,000, respectively.
4. INTANGIBLE AND OTHER ASSETS
Intangible and other assets consist of the following:
DECEMBER 31,
1994 1995
Broadcast licenses $ 66,161,000 $ 66,161,000
Noncompete agreements 3,663,000 3,663,000
Organization costs 3,151,000 3,151,000
Goodwill and other
non-current assets 1,596,000 1,634,000
Deferred financing costs 3,783,000 3,783,000
----------------- -----------------
78,354,000 78,392,000
Less - accumulated
amortization (7,352,000) (12,173,000)
----------------- -----------------
$ 71,002,000 $ 66,219,000
----------------- -----------------
F-13
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Amortization expense was $2,178,000, $4,346,000 and $4,821,000 for the
years ended December 31, 1993, 1994 and 1995, respectively.
The broadcast licenses represent rights granted by the FCC which expire
at seven year intervals from October 1996 through February 1998. The FCC
licenses are renewable for subsequent seven year intervals. Management
anticipated continued renewals of the FCC licenses and Alliance was
amortizing the licenses over a period of 25 years consistent with
industry practice. The noncompete agreements were obtained in connection
with the acquisitions of radio stations and generally have terms not
exceeding three years.
Goodwill, organization costs, and other non-current assets are primarily
composed of legal and other professional fees incurred in connection with
the formation of Alliance and the acquisition of the radio station
assets, including broadcast licenses.
Deferred financing costs are primarily composed of loan origination fees
and other professional fees incurred in connection with The Chase
Manhattan Bank, N.A. (Chase) Credit Agreement described below (Note 5).
In connection with the refinancing of the Company's debt in 1994 an
extraordinary loss of $1,491,000 resulted. The extraordinary loss
represented the unamortized portion of deferred financing costs
associated with a previous note payable to Chase (deferred financing
costs of $1,790,000 and related accumulated amortization of $299,000).
5. FINANCING ARRANGEMENTS
CHASE CREDIT AGREEMENT (INITIAL)
Alliance was party with Chase to a credit agreement dated August 12, 1993
(Credit Agreement) which provided for a revolving credit facility of up
to $25,000,000.
Borrowings under the Credit Agreement ($25,000,000 at December 31, 1993)
bore interest, at the election of Alliance, at prime or LIBOR plus a
stated percentage rate based on the type of loan selected by Alliance.
The Credit Agreement required Alliance to maintain interest rate
protection agreements on a notional amount of $15,000,000 in order to
establish a fixed or maximum interest rate through August 1996. The
maximum interest rate was 8% through August 1994, 9% through August 1995
and 11% through August 1996. Beginning with the quarter ending December
31, 1994, principal and interest was payable quarterly until maturity
(August 1998). Borrowings under the Credit Agreement were secured by
substantially all assets of the Group, including Alliance's ownership
interest in its subsidiaries, including the license subsidiaries (see
below), and guaranteed by its subsidiaries, including the license
subsidiaries (see below).
Under the Credit Agreement, each of Alliance's broadcast subsidiaries was
required to establish a license subsidiary and to contribute its
respective FCC broadcast license to the license subsidiary.
F-14
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amounts outstanding under the Credit Agreement were repaid prior to
maturity in connection with the refinancing described below. A loss was
recorded in connection with the refinancing (Note 4).
CHASE CREDIT AGREEMENT (AMENDED)
On June 16, 1994, Alliance executed an amended and restated credit
agreement with Chase and other syndicate banks (Amended Credit Agreement)
which provided for a term loan of $50,000,000 and a revolving credit
facility of $20,000,000 as described below. The Amended Credit Agreement
was amended effective December 31, 1994, to modify certain financial
covenant requirements. Amounts outstanding under this credit facility
were repaid in January 1996 in connection with the Infinity transaction
(Note 9).
Borrowings under the Amended Credit Agreement ($59,000,000 at December
31, 1995) bore interest, at the election of Alliance, at prime or LIBOR
plus a stated percentage rate based on the type of loan selected by
Alliance and was secured by substantially all assets of the Group,
including Alliance's ownership interest in its subsidiaries, including
the license subsidiaries, and guaranteed by its subsidiaries, including
the license subsidiaries. The Amended Credit Agreement provided for an
interest rate ceiling on up to $45,000,000 through August 1996. The
maximum interest rate was 9% through August 1995 and 11% through August
1996 on the first $15,000,000. The maximum interest rate was 10% through
June 1995 and 11% through June 1996 on the remaining $30,000,000.
Interest on the term loan and the revolving credit facility was payable
quarterly. Beginning with the quarter ending December 31, 1995, principal
of the term loan was payable quarterly until maturity (December 1999).
The Amended Credit Agreement permitted prepayment without penalty. The
Amended Credit Agreement required additional annual payments of principal
of the term loan in April of each year equal to 75% of excess cash flow
(as defined).
Beginning with the quarter ending March 31, 1997, the amount available
under the revolving credit facility was reduced to the date of maturity
(December 1999) by $1,250,000 per quarter, increasing to $1,875,000 per
quarter on March 31, 1998. Alliance was required to repay amounts
outstanding under the revolving credit facility in excess of the
calculated maximum commitment amount.
The Amended Credit Agreement contained covenants which included, among
others, limitations related to debt, distributions to partners and
capital expenditures. In addition, the covenants stipulated certain
financial ratios including, among others, cash flow, debt to cash flow,
debt service, fixed charges, overhead and liquidity.
6. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Group leases office space and its transmitter towers under operating
leases which expire from 1996 through 2004. Substantially all leases
related to the broadcast subsidiaries were assumed in connection with the
Infinity transaction (Note 9). The future minimum rental commitments
required under these leases subsequent to December 31, 1995 were as
follows:
F-15
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EQUIPMENT TOWERS OFFICES TOTAL
YEAR ENDING
DECEMBER 31,
1996 $ 29,000 $ 305,000 $ 864,000 $ 1,198,000
1997 18,000 316,000 881,000 1,215,000
1998 7,000 268,000 803,000 1,078,000
1999 5,000 266,000 617,000 888,000
2000 5,000 241,000 463,000 709,000
Thereafter 14,000 1,019,000 827,000 1,860,000
---------- ----------- ----------- -------------
$ 78,000 $ 2,415,000 $ 4,455,000 $ 6,948,000
========== =========== =========== =============
Aggregate rent expense for the equipment, offices and towers was
$976,000, $1,210,000, and $1,165,000 for the years ended December 31,
1993, 1994 and 1995, respectively.
In addition to the above operating leases, the Group leases certain
property and equipment under capital leases through 2000. Substantially
all capital lease obligations of the broadcast subsidiaries were assumed
in connection with the Infinity transaction (Note 9). The following were
the future minimum lease payments under the capital lease obligations at
December 31, 1995:
YEAR ENDING
DECEMBER 31,
1996 $ 283,000
1997 246,000
1998 92,000
1999 33,000
2000 13,000
-----------------
667,000
Less - amounts representing interest (125,000)
-----------------
Present value of minimum lease payments 542,000
Less - current portion (109,000)
-----------------
Noncurrent portion $ 433,000
-----------------
CONTINGENCIES
A small number of claims and contingent liabilities are pending against
Alliance and members of the Group, arising in the ordinary course of
business. In the opinion of the Company's legal counsel and management,
the ultimate disposition of all claims, both asserted and unasserted,
will not have a material adverse effect on the Company's financial
position or results of operations.
F-16
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. PARTNERS' CAPITAL
The partnership agreement, as amended, provided for the issuance of Class
B limited partnership units to John Hayes and employees, directors or
consultants. Payment of the capital contributions related to the issuance
of the Class B limited partnership units was deferred (deferred
contribution account) and were payable through the recontribution of
available cash flow (as defined) otherwise distributable to the Class B
limited partner. Upon the payment of the deferred contribution account,
the Class B limited partnership units were automatically converted into
an equal number of Class A limited partnership units. Through December
31, 1995, no distributions of available cash flow (as defined) had been
made and no reductions had been made to the Class B limited partner
deferred contribution account. In connection with the Infinity
transaction, available cash flow (as defined) was generated and a cash
distribution was made to all partners, including the Class B limited
partners (Note 9). Accordingly, in January 1996, the deferred
contribution account was fully repaid and the Class B units were
converted into Class A limited partnership units.
The partnership agreement, as amended, required the periodic issuance to
John Hayes of Class B limited partnership units such that the aggregate
number of Class B limited partnership units issued to him at a price of
$1 per unit equaled the lesser of 6% of the aggregate partnership units
outstanding or 2,761,183 (provided that such percentage and amount was
subject to adjustment as provided in the partnership agreement). At
December 31, 1995, John Hayes had been issued 2,538,507 Class B limited
partnership units with a deferred contribution account of $1 per unit.
In January 1995, Alliance established the Class B Unit Award Program
(Plan) under which a maximum aggregate number of Class B limited
partnership units of 1,380,000 could have been purchased by certain key
employees of Alliance. During fiscal 1995, 945,000 Class B limited
partnership units were issued to key employees of Alliance with a
deferred contribution account of $1.50 per unit. The Class B limited
partnership units held by employees were subject to repurchase at the
option of Alliance under certain conditions. The repurchase price was the
fair market value of the Class B limited partnership units for vested
units and $0.001 for non-vested units and for units repurchased upon
termination of the holders' employment for cause. For purposes of the
repurchase option, vesting generally occurred over a three-year period
from the date of issuance of the units. As a result of the Infinity
transaction, all Class B limited partnership units vested in January
1996.
In connection with the Credit Agreement, Alliance issued Series A and
Series B warrants to Chase which provided for the purchase of 3,451,479
(Series A) and 4,067,814 (Series B) Class C partnership units at an
exercise price of $1 per unit for Series A warrants and $.000001 per unit
for Series B warrants. The Series B warrants were exercisable only if an
event of default, as defined, occurred prior to March 1995. In connection
with the Amended Credit Agreement, the Series B warrants were cancelled
and Series C warrants were issued to Chase and other syndicate banks. The
Series C warrants provided for the purchase of 2,771,782 Class C
partnership units at an exercise price of $1 per unit. The Series A and
Series C warrants were exercisable at the option of the warrant holder
until June 30, 2003. Management believed the warrants had a nominal value
at issuance and no amounts were
F-17
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
recorded in these consolidated financial statements for these warrants.
Voting rights of Class C limited partnership units were restricted to
specific events as provided in the partnership agreement, as amended.
With the Infinity transaction, Chase exercised the Series A and Series C
warrants in January 1996 (Note 9).
As of December 31, 1995 the aggregate capital contributions and the
percentage interests of each of the partners were as follows (before the
dilutive effect of the Chase warrants):
CUMULATIVE PERCENTAGE
UNITS CONTRIBUTIONS INTEREST
GENERAL PARTNER 500,000 $ 484,000 1.0%
CLASS A LIMITED PARTNERS 39,346,000 39,346,000 78.8
CLASS B LIMITED PARTNERS 3,484,000 - 7.0
CLASS D LIMITED PARTNERS 6,550,000 6,550,000 13.2
For purposes of allocating net income (loss) to the partners' capital
accounts, profits and losses are generally allocated to the partners in
proportion to their respective ownership interests. However, any
allocation of losses that results in a deficit in the capital account of
the Class B limited partner is reallocated to the general partner in an
amount not to exceed the capital account of the general partner. Loss
amounts of the Class B limited partner not allocated to the general
partner as a result of this limitation are allocated pro rata based on
partnership units to each Class A and Class D limited partner. The
partnership agreement sets forth the priorities related to the
distribution of available cash flow to the partners.
8. INCOME TAXES
No income tax benefit was recorded in the consolidated financial
statements in 1993 and 1994 related to ABMI's and ABH's net losses since
future utilization of such net operating losses (NOL) was not considered
more likely than not. At December 31, 1994, federal NOL amounts in which
a full valuation reserve was recorded were approximately $115,000 for
ABMI and $1,500,000 for ABH (exclusive of amounts acquired in 1993 as
discussed below). State NOL amounts were not material. These federal NOLs
expire from 2008 through 2009.
During 1995, ABH and ABMI generated taxable income which was offset by
acquired NOLs (see below). Management determined that based on the weight
of available evidence, it was more likely than not that the full amount
of the federal NOL amounts at December 31, 1994, would be realized in the
future. Accordingly, the full valuation allowance of approximately
$500,000 at December 31, 1994 was reversed in 1995.
In connection with the 1993 stock acquisition by ABH, federal and state
NOLs were acquired. At December 31, 1994, the unused NOLs were
approximately $5,800,000 for federal and $300,000 for state income tax
reporting purposes. The federal NOLs expire at various dates
F-18
<PAGE>
ALLIANCE BROADCASTING, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
from 2004 through 2007 and the state NOL expires in 1997. No valuation
allowance was recorded at December 31, 1994 and 1995 related to these
NOLs since they substantially offset the deferred tax liability recorded
in connection with the acquisition. During 1995 approximately $1,100,000
of the federal NOLs and the entire amount of the state NOL were utilized
resulting in a 1995 deferred tax provision of approximately $500,000.
ABH has temporary differences that result from differences in asset cost
basis for FCC licenses and amortization expenses due to differences in
amortization periods for certain other intangible assets. These
differences arose primarily from the 1993 acquisition transaction and
resulted in a gross deferred tax liability of approximately $2,100,000 at
December 31, 1994 and $1,900,000 at December 31, 1995. Deferred income
taxes, both asset and liability, related to other temporary differences
have not been provided since such taxes would not be material to the
consolidated financial statements.
The 1995 tax provision also includes approximately $146,000 for state
income taxes applicable to the Group's operations in Michigan.
9. SUBSEQUENT EVENTS
Alliance received cash of approximately $6,200,000 in connection with the
January 1996 exercise of the Series A and Series C warrants by Chase.
On September 22, 1995, a Purchase Agreement was executed between Infinity
Broadcasting Corporation (Infinity) and Alliance, whereby Infinity would
acquire the radio station assets, exclusive of cash balances, of KYNG-FM
and KSNN-FM in Dallas, KFRC-FM, KFRC-AM and KYCY-FM in San Francisco,
WYCD-FM in Detroit and KYCW-FM in Seattle for $275,000,000 adjusted for
an amount equal to the amount of working capital, as defined, over
(under) $10,000,000.
On January 16, 1996, the sale of these radio station assets with a net
book value of approximately $78,700,000 at December 31, 1995, was closed
and Alliance received cash of approximately $272,600,000, of which
$6,000,000 was placed in escrow to be released over a three year period
as stipulated in the Purchase Agreement, and in connection therewith,
certain radio station liabilities of approximately $2,400,000 at December
31, 1995, were assumed. A gain will be recorded in 1996 from this
transaction representing the net gain from the sale of assets reduced by
the loss on debt extinguishment and employee bonuses, other compensation
and costs/expenses to wind-down Alliance's corporate offices.
The proceeds from the sale, together with the proceeds from the Chase
warrant exercise, were used to: i) repay outstanding notes payable and
accrued interest under the Amended Credit Agreement, ii) pay to selected
employees discretionary bonuses resulting from the sale, and iii) pay
professional fees and other expenses incurred as a result of the sale.
After retaining an amount of the aggregate cash proceeds that will be
used to pay the ongoing expenses of Alliance, as well as the costs and
expenses (such as severance, rent and lease cancellation payments) to
wind-down Alliance's corporate offices, a distribution of the remaining
amount was made in January 1996 to the partners.
F-19
<PAGE>
<TABLE>
Infinity Broadcasting Corporation
Pro Forma Combined Balance Sheet
.December 31, 1995
(In thousands)
(unaudited)
<CAPTION>
Company
Company as Acquisition of Pro Forma
reported Alliance Combined
------------ -------------- ---------
<S> <C> <C> <C>
Assets:
Current assets 108,365 10,000 (1) 118,365
Property and equipment, net 20,561 3,834 (1) 24,395
Intangible assets, net 451,220 194,861 (1) 646,081
Radio properties held for sale 66,680 (1) 66,680
Other assets 14,310 14,310
----------------------------------------------
Total assets 594,456 275,375 869,831
==============================================
Liabilities:
Current liabilities 53,080 375 53,455
Long-term debt 267,384 275,000 (1) 542,384
Stockholders' equity 273,992 273,992
Total liabilities and
----------------------------------------------
stockholders' equity 594,456 275,375 869,831
==============================================
</TABLE>
(1) To reflect the acquisition of Alliance, financed from borrowings under the
Credit Agreement, and the preliminary allocation of the purchase price of $275.0
million:
<TABLE>
<CAPTION>
Carrying Value
Reported by Allocation of
Alliance Adjustments Purchase Price
----------------------------------------------
<S> <C> <C> <C>
Assets:
Current assets 10,972 (972)(a) 10,000
Property and equipment, net 6,025 (2,191) 3,834
Intangible assets, net 66,219 128,642 194,861
Radio properties held for sale 66,680 66,680
----------------------------------------------
Total assets 83,216 192,159 275,375
==============================================
Liabilities:
Current liabilities 11,709 (11,709)(a) 0
Long term debt 50,000 (50,000)(a) 0
Other liabilities 433 (433)(a) 0
----------------------------------------------
Total liabilities 62,142 (62,142) 0
----------------------------------------------
----------------------------------------------
Partners' capital 21,074 (21,074)(a) 0
----------------------------------------------
Total liabilities and
----------------------------------------------
partners' capital 83,216 (83,216) 0
==============================================
<FN>
(a) Adjustments to eliminate assets not being acquired and liabilities not
being assumed in the Alliance acquisition.
The preliminary allocation of the purchase price may change upon final
appraisal of the fair values of the net assets acquired.
</FN>
</TABLE>
<PAGE>
<TABLE>
Infinity Broadcasting Corporation
Pro Forma Combined Statement of Operations
Year ended December 31, 1995
(In thousands, except per share data)
(unaudited)
<CAPTION>
Company
Company as Acquisition of Pro Forma
reported (1) KLUV-FM and Alliance Combined
-------------- -------------------- ----------------
<S> <C> <C> <C>
Total revenues 372,429 41,897 (2) 414,326
Less agency commissions 46,723 6,857 (2) 53,580
-------------- ------------- ---------------
Net revenues 325,706 35,040 360,746
Station operating expenses
excluding depreciation and amortization 167,285 19,674 (2) 186,959
-------------- ------------- ---------------
Station operating income
excluding depreciation and amortization 158,421 15,366 173,787
Depreciation and amortization 50,482 15,154 (3) 65,636
Corporate general and administrative expenses 6,135 0 6,135
-------------- ------------- ---------------
Operating income(loss) 101,804 212 102,016
Interest expense (44,385) (15,030) (4) (59,415)
Interest income 387 0 387
Other expense (1,715) 0 (1,715)
Income taxes (1,588) 0 (1,588)
-------------- ------------- ---------------
Net earnings(loss) 54,503 (14,818) 39,685
============== ============= ===============
Net earnings per share $0.53 $0.39
Weighted average shares 102,903 102,903
</TABLE>
(1) The Company's historical consolidated results of operations for the year
ended December 31, 1995 have been audited and include the operating results
of radio station KLUV-FM from April 21, 1995, the date the Company acquired
such station.
(2) To reflect the historical operating results of KLUV-FM for the period from
January 1, 1995 to April 20, 1995 (based upon the unaudited financial
statements of KLUV-FM), and to reflect the historical operating results of
Alliance as follows:
<TABLE>
<CAPTION>
Adjusted
Historical
Reported by Results of
Alliance Adjustments Alliance
------------- ---------------------------------
<S> <C> <C> <C>
Total revenues 46,332 (7,527)(a) 39,435
630 (b)
Less agency commissions 7,597 (1,260)(a) 6,337
------------- ------------- -------------
Net revenues 38,735 (5,637) 33,098
Station operating expenses (8,485)(a)
excluding depreciation and amortization 26,540 811 (b) 18,866
------------- ------------- -------------
Station operating income
excluding depreciation and amortization 12,195 2,037 14,232
Depreciation and amortization 6,422 (1,747)(a) 4,675
Corporate general and administrative expenses 2,230 (2,230)(a)(c) 0
------------- ------------- -------------
Operating income 3,543 6,014 9,557
Interest and other expense (7,837) 7,837 (a)(b)(c) 0
Interest and other income 1,293 (1,293)(a)(b)(c) 0
Provision for income taxes (146) 146 (a)(c) 0
------------- ------------- -------------
Net income (loss) before extraordinary item (3,147) 12,704 9,557
============= ============= =============
<FN>
(a) To exclude the operating results of radio stations held for sale.
(b) To reclassify miscellaneous broadcasting revenues and expenses
to conform with the Company's presentation.
(c) Assumes these items would not have been incurred by the Company
during this period. Such items consist primarily of corporate
and interest expenses and the provision for income taxes.
</FN>
</TABLE>
<PAGE>
(3) To reflect the pro forma depreciation and amortization expense from the
allocation of the purchase price of KLUV-FM based on the following:
franchise and other intangible assets of approximately $52.8 million over a
period of 15 years and property and equipment of $200,000 over a period of
5 years. To reflect the pro forma depreciation and amortization expense
from the preliminary allocation of the purchase price of Alliance based
on the following: franchise and other intangible assets of approximately
$194.5 million (excludes estimated allocation of purchase price to stations
held for sale) over a period of 15 years, property and equipment of $3.8
million over a period of 5 years and a non compete agreement of $375,000
over a period of 18 months.
(4) To reflect additional interest expense on bank borrowings, at an interest
rate of approximately 7% to finance the acquisitions of KLUV-FM and
Alliance.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-61081) and
the Registration Statements on Form S-8 (Nos. 33-45977, 33-55477, 33-55577 and
33-56938) of Infinity Broadcasting Corporation of our report dated February 26,
1996 relating to the consolidated financial statements of Alliance
Broadcasting, L.P., which appears on page F-1 of the Current Report on Form 8-K
of Infinity Broadcasting Corporation dated April 1, 1996.
PRICE WATERHOUSE LLP
San Francisco, California
April 1, 1996
