SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 30, 1996
EZ COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Virginia 0-16265 54-0829355
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
10800 Main Street
Fairfax, Virginia 22030
(Address of principal executive offices) (Zip code)
(703) 591-1000
(Registrant's telephone number, including area code)
<PAGE>
Item 2.(a)
On July 30, 1996, Professional Broadcasting, Inc. ("PBI"), a wholly-owned
subsidiary of the Registrant, acquired by purchase substantially all of the
assets of radio stations KEZK-FM and KFNS-AM serving St. Louis, Missouri, from
Par Broadcasting Company, Inc. ("Par"). Par, a California corporation, is not
an affiliate of the Registrant.
The assets acquired consist of items of broadcasting and technical
equipment utilized in the transmission of radio broadcast signals, Federal
Communications Commission licenses and other items of real and personal property
associated with the continuing operations of the broadcast facilities.
PBI paid cash consideration in the amount of $48,000,000 to Par at closing
for the acquired broadcasting assets. The purchase price was based upon an arms
length negotiation considering the potential cash flow generated by the
acquisition and consideration of the market in which the stations were located,
the registrant's existing stations in that market, management, personnel, and
the overall operation of the facilities as a going concern.
The funds utilized in completing this acquisition were provided by proceeds
from the Registrant's senior lending facility with The Chase Manhattan Bank, NA,
individually and as an agent for other banks (the "Credit Facility").
Item 2.(b)
The assets acquired by PBI were utilized by KEZK-FM and KFNS-AM for the
purposes of radio broadcasting. The Registrant intends to continue such use.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of KEZK-FM and KFNS-AM.
Unaudited
---------
- Condensed Balance Sheet as of June 30, 1996
- Condensed Statement of Operations for the six months ended June
30, 1996
- Condensed Statement of Cash Flows for the six months ended June
30, 1996
- Notes to Condensed Financial Statements
Audited
-------
- Report of Independent Auditors
- Statement of Assets, Liabilities and Partners' Capital as of
December 31, 1995 and 1994
- Statement of Income and Expenses for the year ended December
31, 1995 and 1994
- Statement of Cash Flows for the year ended December 31, 1995
and 1994
- Notes to Financial Statements
<PAGE>
(b) Pro Forma Financial Information (Unaudited)
- Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1996
- Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1995
- Pro Forma Condensed Consolidated Statement of Operations for
the six months ended June 30, 1996
- Notes to Pro Forma Financial Statements
(c) Exhibits
Exhibit
Number Exhibit Title
- - ------ -------------
10.47 -- Asset Purchase Agreement, dated as of April 5, 1996, by and among
Par Broadcasting Company, Inc. and PBI, relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK purchase)(16)
10.48 -- Time Brokerage Agreement, dated as April 5, 1996, by and between
PBI and Par Broadcasting Company, Inc., relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK TBA)(16)
__________
(16) Incorporated by reference to similarly numbered exhibit in the Company's
Form 10-Q for the quarterly period ended March 31, 1996 (File No. 0-16265)
originally filed with the Securities and Exchange Commission on May 15,
1996.
<PAGE>
Par Broadcasting Company, Inc.
CONDENSED BALANCE SHEET
June 30,
1996
----
ASSETS (unaudited)
Current assets
Cash $201,737
Accounts receivable, less allowance of $8,612 1,712,468
Trade receivables - barter 149,147
Prepaids and other current assets 343,715
-------------
Total current assets 2,407,067
Property and equipment, at cost 1,426,480
Less accumulated depreciation 627,843
-------------
798,637
Intangible assets, at cost 14,359,405
Less accumulated amortization 2,804,697
-------------
11,554,708
Total assets $14,760,412
=============
- - ---------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $53,092
Other accrued expenses 474,718
-------------
Total current liabilities 527,810
Intercompany payable to affiliate 13,669,142
Stockholders' equity
Common stock 38,000
Retained earnings 525,460
-------------
563,460
-------------
$14,760,412
=============
See notes to condensed financial statements
<PAGE>
Par Broadcasting Company, Inc.
CONDENSED STATEMENT OF OPERATIONS
(in thousands)
Six months ended
June 30, 1996
-------------
(unaudited)
Revenue
Gross broadcasting revenue $2,079,297
Less: agency commissions 284,284
-------------
Net broadcasting revenue 1,795,013
Broadcasting expenses 1,099,696
-------------
Station operating income before
depreciation and amortization 695,317
Depreciation and amortization 306,608
-------------
Operating income 388,709
Other income (expenses)
Interest expense (408,643)
Other income (expenses), net 21,586
-------------
Net income $1,652
=============
See notes to condensed financial statements
<PAGE>
Par Broadcasting Company, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
Six months ended
June 30, 1996
-------------
(unaudited)
Operating activities
Net income $1,652
Adjustments to reconcile net income to net cash provided
by
operating activities:
Depreciation and amortization 306,608
Other charges not affecting cash 20,971
Net changes in operating assets and liabilities 268,452
------------
Net cash provided by operating activities 597,683
Investing activities
Purchases of property and equipment (10,853)
------------
Net cash used in investing activities (10,853)
Financing activities
Decrease in intercompany payable to affiliate (915,276)
------------
Net cash used in financing activities (915,276)
------------
Decrease in cash (328,446)
Cash at beginning of period 530,183
------------
Cash at end of period $201,737
============
See notes to condensed financial statements
<PAGE>
Par Broadcasting Company, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. For further information, refer to the audited financial statements and
footnotes thereto.
2. Description of Business
In October 1995, Par Broadcasting Company, Inc. ("Par") entered into an
agreement to acquire all of the radio station assets, excluding cash balances,
of the broadcast subsidiaries (including stations KEZK-FM and KFNS-AM) of
Compass Radio Group, Inc. The transfer of the broadcast licenses to Par was
effective April 1996.
3. Subsequent Events
In April 1996, Par entered into an agreement to sell substantially all of
the fixed and intangible assets of stations KEZK-FM and KFNS-AM to Professional
Broadcasting, Incorporated ("PBI"), a wholly-owned subsidiary of EZ
Communications, Inc. ("EZ"), for $48,000,000, subject to certain regulatory
approval and certain other conditions. At the same time, PBI began programming
and marketing KEZK-FM and KFNS-AM pursuant to a time brokerage agreement. The
sale was consummated in July 1996. The station's accounts receivable and
certain other assets did not convey as part of the purchase.
<PAGE>
AUDITED FINANCIAL STATEMENTS
COMPASS RADIO OF ST. LOUIS, INC.
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
<PAGE>
Compass Radio of St. Louis, Inc.
Audited Financial Statements
Years ended December 31, 1995 and 1994
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Statements of Assets, Liabilities and Stockholders' Equity . . . . . . . . 2-3
Statements of Income and Expenses . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 6-9
<PAGE>
Report of Independent Auditors
Board of Directors
EZ Communications, Inc.
We have audited the accompanying statements of assets, liabilities and
stockholders' equity of Compass Radio of St. Louis, Inc. as of December 31,
1995 and 1994, and the related statements of income and expenses 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 on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Compass Radio of
St. Louis, Inc. at December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
June 12, 1996
1
<PAGE>
COMPASS RADIO OF ST. LOUIS, INC.
Statements of Assets, Liabilities and Stockholders, Equity
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 530,183 $ 203,395
Accounts receivable, less allowance
of $21,869 and $53,377 at December 31,1994
and 1995, respectively 2,321,489 2,238,635
Trade receivables - barter 65,023 68,060
Prepaid and other current assets 165,256 72,901
----------- -----------
Total current assets 3,081,951 2,582,991
Property and equipment
Land 181,000 181,000
Broadcast and computer equipment 972,292 942,555
Furniture, fixtures and vehicles 226,325 210,000
Leasehold improvements 36,010 4,000
----------- -----------
1,415,627 1,328,555
Less accumulated depreciation 567,600 334,155
----------- ----------
848,027 994,400
Intangible assets:
FCC license 14,133,170 14,133,170
Other 226,235 226,235
------------ ------------
14,359,405 14,359,405
Less accumulated amortization 2,558,333 1,572,873
------------ ------------
11,801,072 12,786,532
Total assets $15,731,050 $16,363,923
============ ============
</TABLE>
See accompanying notes.
2
<PAGE>
Compass Radio of St. Louis, Inc.
Statements of Assets, Liabilities and Stockholders' Equity (continued)
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable $ 198,770 $ 289,849
Other accrued expenses 262,877 389,786
Deferred income 123,177 86,549
----------- -----------
Total current liabilities 584,824 766,184
----------- -----------
Intercompany payable to affiliate 14,584,418 15,694,587
----------- -----------
Total liabilities 15,169,242 16,460,771
Stockholders' equity
Common Stock, $38 par value,
1,000 shares issued,
authorized and outstanding 38,000 38,000
Accumulated earnings (deficit) 523,808 (134,848)
----------- ------------
Total stockholders' equity (deficit) 561,808 (96,848)
----------- ------------
Total liabilities and stockholders' equity $15,731,050 $16,363,923
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
Compass Radio of St. Louis, Inc.
Statements of Income and Expenses
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1995 1995
------------ ------------
<S> <C> <C>
Revenue:
Gross broadcasting revenue $ 10,461,416 $ 8,776,249
Less agency commissions 2,464,381 2,097,592
------------ ------------
Net broadcasting revenue 7,997,035 6,678,657
Broadcasting expenses:
Program expenses 1,686,393 1,401,434
Selling expenses 636,811 620,073
Technical expenses 256,200 226,622
Promotional expenses 605,360 528,401
General and administrative expenses 943,030 855,853
------------ ------------
Total broadcasting expenses 4,127,794 3,632,383
------------ ------------
Station operating income before corporate
expenses, depreciation and amortization 3,869,241 3,046,274
Depreciation and amortization 1,218,903 1,198,800
------------ ------------
Operating income 2,650,338 1,847,474
Other (expenses) income:
Interest expense (1,603,825) (1,496,273)
Other income 18,408 5,042
------------- -------------
Income before income taxes $1,064,921 $356,243
Provision for income taxes (406,266) (136,043)
------------- -------------
Net income $658,655 $220,200
============= =============
</TABLE>
See accompanying notes.
4
<PAGE>
Compass Radio of St. Louis, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 658,655 $ 220,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,218,903 1,198,800
Bad debt expense 138,732 116,105
Changes in operating assets and
liabilities:
Increase in accounts and trade receivables (111,325) (950,296)
Increase in prepaid and other current (92,355) (33,562)
assets
(Decrease) increase in accounts payable (181,360) 137,722
----------- -----------
and other accrued expenses
Net cash provided by operating activities 1,631,250 688,969
INVESTING ACTIVITIES
Purchases of property and equipment (87,072) (98,563)
----------- -----------
Net cash used in investing activities (87,072) (98,563)
FINANCING ACTIVITIES
Payments made on intercompany payable to (1,217,390) (476,828)
----------- -----------
affiliate
Net cash used in financing activities (1,217,390) (476,828)
----------- -----------
Increase in cash 326,788 113,578
Cash at beginning of year 203,395 89,817
----------- -----------
Cash at end of year $ 530,183 $ 203,395
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
Compass Radio of St. Louis, Inc.
Notes to Financial Statements
1. ORGANIZATION
Compass Radio of St. Louis Inc. (the Company or "Compass"), owns and operates
radio station KEZK-FM and KFNS-AM located in St. Louis, Missouri. The Company
is a wholly-owned subsidiary of Compass Radio Group, Inc. ("CRGI").
The Company maintains its accounting records and prepares its financial
statements in conformity with generally accepted accounting principles.
Financial statements prepared on this basis require the use of management's
estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue from the sale of air time is recognized at the time the program or
advertisement is broadcast. Agency commissions are deducted from gross revenue,
reflecting the net amount due to the station.
ADVERTISING EXPENSES
The Company expenses advertising costs as they are incurred.
PROPERTY AND EQUIPMENT
Property and equipment are stated on the basis of cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
related assets, ranging from five to fifteen years for broadcast and computer
equipment, furniture, fixtures and improvements, and four years for vehicles.
Expenditures for maintenance and repairs are charged to operations as incurred.
CASH AND CASH EQUIVALENTS
For financial reporting purposes, the Company considers all highly liquid
investments with a maturity of three months or less, when purchased, to be cash
equivalents.
6
<PAGE>
Compass Radio of St. Louis, Inc.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS
Intangible assets are stated on the basis of cost and are amortized using the
straight-line method. Broadcast licenses are amortized over ten years, and
other assets are amortized over five years. The periods of amortization and the
carrying value of intangible assets are evaluated annually to determine whether
circumstances warrant their revision.
TRADE RECEIVABLES AND DEFERRED INCOME
In the course of business, the Company trades air time for goods and services
used principally for promotional sales and other business activities. 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 are charged to
expenses when used.
3. RELATED PARTY TRANSACTIONS
At December 31, 1995 and 1994, the Company had the following intercompany
balances due to/(from) its affiliates:
1995 1994
---- ----
Intercompany receivable - affiliates $( 4,708,043) $( 2,427,987)
Intercompany payable - line-of-credit 306,524 334,224
Intercompany payable - long term debt 18,443,629 17,652,307
Intercompany payable - income tax (Note 4) 542,308 136,043
------------ ------------
TOTAL $ 14,584,418 $ 15,694,587
============ ============
The intercompany receivable represents amounts owed to Compass from affiliated
radio stations. There are no terms of settlement associated with this
intercompany account.
The intercompany payable - long term debt represents principal and accrued
interest related to the Company's pro-rata share of a larger note which is held
by its parent, CRGI. Pursuant to the terms of the note, the lenders maintain a
first security interest on all the assets and stock of CRGI and its affiliates
(including Compass). CRGI and its affiliated stations began making interest
payments on the note in 1994. Principal and unpaid interest are due in full in
June, 1998.
Compass, on behalf of its parent, paid approximately $813,000 and $207,000 of
interest related to the long-term note for the years ended December 31, 1995
and 1994, respectively.
7
<PAGE>
Compass Radio of St. Louis, Inc.
Notes to Financial Statements (continued)
4. INCOME TAXES
The Company accounts for income taxes pursuant to the provision of Statement of
Financial Standards No. 109.
The Company's income tax returns are filed as part of its parent corporation's
consolidated group. Accordingly, the Company's current payable and deferred tax
liability are reflected as part of the intercompany payable to affiliates.
The Company's significant temporary differences relate to accelerated tax
depreciation and non-recognition of certain book accruals. The primary
difference between the Company's tax at statutory rates and the tax expenses
recorded for financial statement purposes relates to the reduced tax
deductibility of certain meals and entertainment expenses.
5. COMMITMENTS
Compass leases certain office, storage and parking space which includes
escalation clauses based on the cost of living index and reimbursement clauses
for the tenant's pro-rata share of real estate taxes and operating expenses.
The operating leases include renewal provisions which may be exercised at the
option of the station.
Future minimum payments under the operating lease at December 31, 1995 are
approximately as follows:
1996 $ 182,090
1997 188,366
1998 191,745
1999 190,744
2000 149,106
Thereafter 157,338
----------
$1,059,389
==========
Rent expense for 1995 and 1994 totaled approximately $173,000 and $129,000
respectively.
8
<PAGE>
Compass Radio of St. Louis, Inc.
Notes to Financial Statements (continued)
6. SUBSEQUENT EVENTS
In October 1995, CRGI entered into an asset purchase agreement to sell the radio
station assets, excluding cash balances, of its broadcast subsidiaries
(including Compass) to Par Broadcasting, Inc. ("Par") for $68 million.
In April 1996, Professional Broadcasting Inc., a wholly-owned subsidiary of EZ
Communications, Inc. ("EZ"), entered into an agreement with Par to acquire
substantially all of the assets of Compass for $48 million, subject to certain
regulatory approvals and other conditions. The sale is expected to be
consummated in August, 1996. Simultaneously, EZ began programming and marketing
KEZK-FM and KFNS-AM pursuant to a local marketing agreement.
9
<PAGE>
EZ COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited condensed consolidated pro forma financial statements
set forth the pro forma results of operations and financial condition for the
purchase of substantially all of the fixed and intangible assets of radio
stations KEZK-FM and KFNS-AM serving St. Louis, Missouri from Par Broadcasting
Company, Inc. on July 30, 1996 (the "St. Louis Acquisition"), under the purchase
method of accounting. The following unaudited pro forma condensed consolidated
balance sheet gives effect to the acquisition as if the foregoing had occurred
on June 30, 1996. The unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1995 and the six months ended June
30, 1996 give effect to (i) the St. Louis Acquisition and (ii) the Company's
issuance of $150,000,000 of its 9 3/4% Senior Subordinated Notes due 2005 (the
"Notes") which closed in November, 1995, as if the foregoing had occurred at the
beginning of the periods presented.
These unaudited pro forma condensed consolidated financial statements may not be
indicative of the results that actually would have occurred if the transactions
described above had been completed as of the dates indicated above or that may
be attained in the future. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the historical
consolidated financial statements of Compass Radio of St. Louis, Inc. and
related notes thereto included elsewhere herein or delivered with this Form 8-K,
the Company's audited consolidated financial statements and notes thereto and
the Annual Report on Form 10-K for the year ended December 31, 1995 and the
Company's Form 10-Q for the six months ended June 30, 1996.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Adjustments Company
-----------------------------
For the Pro Forma
As St. Louis Condensed
Reported Acquisition Consolidated
-------- ----------- ------------
ASSETS
<S> <C> <C> <C>
Cash $2,676 ($250) (1) $2,426
Accounts receivable, net 21,103 $21,103
Other current assets 9,401 (2,750) (1) 6,651
--------------------------------------------------------------
Total current assets 33,180 (3,000) 30,180
Property, plant & equipment 45,465 2,169 (1) 47,634
Less accumulated depreciation (20,570) (20,570)
--------------------------------------------------------------
24,895 2,169 27,064
Intangible assets 189,071 45,831 (1) 234,902
Less accumulated amortization (17,003) (17,003)
--------------------------------------------------------------
172,068 45,831 217,899
Other assets 6,695 6,695
--------------------------------------------------------------
Total assets $236,838 $45,000 $281,838
==============================================================
Liabilities & Shareholders' Equity
Current liabilities $9,540 $9,540
Long-term debt:
Credit Facility 15,500 $45,000 (1) 60,500
Kansas City Note Payable 13,000 13,000
Senior Subordinated Notes 148,887 148,887
--------------------------------------------------------------
Total long-term debt 177,387 45,000 222,387
Other liabilities 7,896 7,896
--------------------------------------------------------------
Total liabilities 194,823 45,000 239,823
Shareholders' equity 42,015 42,015
--------------------------------------------------------------
Total liabilities and
shareholders' equity $236,838 $45,000 $281,838
==============================================================
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statements of Operations
(dollars in thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------
For the
Acquisition Company
of Stations Pro Forma
For The KEZK-FM/KFNS-AM Condensed
As Reported Notes St. Louis Consolidated
----------- ----- --------- ------------
<S> <C> <C> <C> <C>
Gross revenue $95,642 $10,115 (2) $105,757
Less: agency commissions 11,974 1,365 (2) 13,339
---------------------------------------------------------------------------------
Net revenue 83,668 8,750 92,418
Broadcasting expenses 55,652 4,841 (2) 60,493
---------------------------------------------------------------------------------
Station operating income 28,016 3,909 31,925
Corporate expenses 3,556 3,556
Depreciation and amortization 6,757 $458 (4) 1,363 (2) 8,578
---------------------------------------------------------------------------------
Operating income 17,703 (458) 2,546 19,791
Other income (expense)
Interest expense, net (10,799) (3,826)(5) (1,623)(5) (16,248)
Other income and expenses, net (685) (685)
---------------------------------------------------------------------------------
Income (loss) before taxes and extraordinary item 6,219 (4,284) 923 2,858
Federal and state income tax (expense)/ benefit (2,975) 1,499 (6) (323)(6) (1,799)
---------------------------------------------------------------------------------
Income (loss) before extraordinary item 3,244 (2,785) 600 1,059
Extraordinary loss, net (1,001) (1,001)
---------------------------------------------------------------------------------
Net income (loss) $2,243 ($2,785) $600 $58
=================================================================================
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
Pro Forma Adjustments
-----------------------------------------------
For the
Acquisition Company
of Stations Pro Forma
KEZK-FM/KFNS-AM Condensed
As Reported St. Louis Consolidated
----------- --------- ------------
<S> <C> <C> <C>
Gross revenue $54,288 $2,079 (2) $56,367
Less: agency commissions 6,937 284 (2) 7,221
---------------------------------------------------------------------------------
Net revenue 47,351 1,795 49,146
Broadcasting expenses 32,201 1,100 (2) 33,301
---------------------------------------------------------------------------------
Station operating income 15,150 695 15,845
Corporate expenses 1,826 1,826
Depreciation and amortization 4,292 682 (2) 4,974
---------------------------------------------------------------------------------
Operating income 9,032 13 9,045
Other income (expense)
Interest expense, net (9,634) (1,193)(3) (10,827)
Other income and expenses, net (41) (41)
---------------------------------------------------------------------------------
Loss before taxes and extraordinary item (643) (1,180) (1,823)
Federal and state income tax (expense)/ benefit 804 413 (6) 1,217
---------------------------------------------------------------------------------
Net income (loss) $161 ($767) ($606)
=================================================================================
</TABLE>
<PAGE>
EZ COMMUNICATIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(1) Adjusted to reflect the acquisition of stations KEZK-FM and KFNS-AM
St. Louis as if it had occurred on June 30, 1996. The acquisition will be
accounted for using the purchase method of accounting. The Company estimates
that the purchase price of approximately $48,000,000 will be allocated as
follows (in thousands):
Broadcast equipment $ 2,169
Goodwill and broadcast license 45,831
------
$48,000
======
The adjustments reflect the funding of the purchase price with approximately
$45,000,000 from borrowings under the Company's Senior Credit Facility,
$2,750,000 being funded from a previously established escrow deposit and the
remainder being provided from cash from operations.
(2) Adjusted for the May 1996 acquisition of stations KEZK-FM and KFNS-AM
St. Louis (the Company began programming and marketing the station effective
April 1996 pursuant to the terms of a time brokerage agreement ("TBA")). This
adjustment reflects revenue and broadcasting expenses of the acquired station
from the beginning of the period presented to the date of the commencement of
the TBA and pro forma depreciation and amortization (assuming useful lives of
ten years for broadcast equipment and 40 years for goodwill and broadcast
licenses), based on the allocated purchase prices of these stations, from the
beginning of the period presented to the date of the acquisition.
(3) Represents additional interest expense of $1,913,000 on increased
outstanding debt of $45,000,000 relating to the St. Louis Acquisition assuming
an average interest rate of 8.5%.
(4) Adjusted to reflect the amortization of offering costs of $5,000,000
over the term of the Notes.
(5) Represents adjustment to increase interest expense associated with the
Notes and the St. Louis Acquisition as if both had occurred at the beginning of
the period presented. The following table presents a detail of the pro forma
interest expense (in thousands):
Year
Ended
December 31,
1995
----
Pro forma interest expense
--------------------------
For the Notes $14,625
For the St. Louis Acquisition 1,623
Less: aggregate historical
interest expense (10,799)
--------
Pro forma adjustment $ 5,449
========
The pro forma adjustment for the St. Louis Acquisition assumes that excess
proceeds of $28,904,125 from the issuance of the Notes were used to finance in
part the St. Louis Aquisition. The remaining $19,095,875 of the $48,000,000
purchase price was assumed to be funded from borrowings under the Company's
Senior Credit Facility at 8.5%.
(6) Assumes an effective tax rate of 35%.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 14, 1996 EZ COMMUNICATIONS, INC.
By: /s/ Ronald H. Peele, Jr.
------------------------------
Ronald H. Peele, Jr.
Chief Financial Officer and
Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- - ------ -----------
10.47 -- Asset Purchase Agreement, dated as of April 5, 1996, by and among
Par Broadcasting Company, Inc. and PBI, relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK purchase)(16)
10.48 -- Time Brokerage Agreement, dated as April 5, 1996, by and between
PBI and Par Broadcasting Company, Inc., relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK TBA)(16)
__________
(16) Incorporated by reference to similarly numbered exhibit in the Company's
Form 10-Q for the quarterly period ended March 31, 1996 (File No. 0-16265)
originally filed with the Securities and Exchange Commission on May 15,
1996.
