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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A (Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 27, 1997 (January 31, 1997)
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GRANITE BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-19728 13-3458782
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements of Businesses Acquired.
[No changes being made to this Section 7.A.]
B. Pro Forma Financial Information.
(See following pages)
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PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
The pro forma condensed consolidated financial statements presented below
are based on the historical financial statements of the Company, WXON-TV and
WLAJ-TV. The pro forma condensed consolidated statement of operations for the
year ended December 31, 1996 gives effect to: (i) the WXON Acquisition; (ii) the
operation of WLAJ-TV pursuant to a time brokerage agreement dated as of October
17, 1996; and (iii) the application of the net proceeds of the Offering and the
application of additional borrowings under the Credit Agreement as if such
transactions occurred on January 1, 1996. The pro forma condensed consolidated
balance sheet as of December 31, 1996 gives effect to: (i) the WXON Acquisition;
and (ii) the application of the net proceeds of the Offering and the application
of additional borrowings under the Credit Agreement to finance the WXON
Acquisition as if such transactions occurred on January 1, 1997.
The pro forma condensed consolidated financial statements give effect to the
acquisition described above under the purchase method of accounting and are
based upon the assumptions and adjustments described in the accompanying notes.
The pro forma information is not necessarily indicative of the results that
would have been reported had such events actually occurred on the dates
specified, nor is it indicative of the Company's future results.
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
GRANITE
BROADCASTING WXON-TV WLAJ-TV
CORPORATION TWELVE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, PRO FORMA
1996 1996 1996 ADJUSTMENTS PRO FORMA
-------------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue................................ $ 129,164 $ 17,804 $ 3,057 $ 511 (a) $ 150,536
Station operating expenses................. 72,089 7,177 2,624 (1,208)(b) 80,682
Time brokerage agreement fees.............. 150 450 (c) 600
Depreciation expense....................... 6,144 81 557 (357)(d) 6,425
Amortization expense....................... 9,737 7 27 4,300 (e) 14,071
Corporate expense.......................... 4,800 151 (151)(f) 4,800
Non-cash compensation...................... 496 496
-------------- ------------- ----------- ------------ ----------
Operating income (loss).................... 35,748 10,539 (302) 43,462
Equity in net loss of investee............. 995 995
Interest expense (income), net............. 36,765 (417) 665 2,218 (g) 39,231
Non-cash interest expense.................. 2,087 2,087
Other expense (income)..................... 1,034 (69) 47 1,012
-------------- ------------- ----------- ------------ ----------
Income (loss) before income taxes and
extraordinary item....................... (5,133) 11,025 (1,014) 137
Provision for income taxes................. (761) (217) (978)
-------------- ------------- ----------- ------------ ----------
Income (loss) before extraordinary item.... $ (5,894) $ 10,808 $ (1,014) $ (841)
-------------- ------------- ----------- ------------ ----------
-------------- ------------- ----------- ------------ ----------
Dividend on preferred stock................ 3,525 19,125 (h) 22,650
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Loss before extraordinary item attributable
to common shareholders................... $ (9,419) $ (23,491)
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Loss before extraordinary item per common
share.................................... $ (1.09) $ (2.73)
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Weighted average common shares
outstanding(i)........................... 8,612 8,612
</TABLE>
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PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Year Ended December 31, 1996
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
GRANITE
BROADCASTING WXON-TV
CORPORATION DECEMBER 31, PRO FORMA
DECEMBER 31, 1996 1996 ADJUSTMENTS PRO FORMA
------------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash......................................................... $ 556 $ 556
Accounts receivable, net..................................... 27,057 27,057
Film contract rights and other assets........................ 16,062 $ 2,905 $ (5,000)(j) 13,967
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TOTAL CURRENT ASSETS................................ 43,675 2,905 41,580
PROPERTY AND EQUIPMENT, NET.................................... 33,562 203 1,797 (j) 35,562
OTHER NONCURRENT ASSETS........................................ 18,466 18,466
INTANGIBLE ASSETS.............................................. 356,860 173,356 (j) 531,966
1,750 (k)
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TOTAL ASSETS........................................ $ 452,563 $ 3,108 $627,574
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LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable............................................. $ 4,017 $ 4,017
Accrued liabilities.......................................... 10,025 10,025
Film contract rights payable................................. 9,578 3,261 12,839
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TOTAL CURRENT LIABILITIES........................... 23,620 3,261 26,881
LONG-TERM DEBT................................................. 351,561 27,400 (l) 378,961
FILM CONTRACT RIGHTS PAYABLE................................... 3,383 3,383
DEFERRED INCOME TAXES AND NONCURRENT LIABILITIES............... 31,646 31,646
REDEEMABLE PREFERRED STOCK..................................... 45,488 144,350 (l) 189,838
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock................................................. 87 87
Additional paid in capital................................... 45,547 45,547
Accumulated deficit.......................................... (45,376) (45,376)
Less: Unearned compensation.................................. (2,506) (2,506)
Note receivable from officer......................... (887) (887)
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Total stockholders' deficit......................... (3,135) (3,135)
Net assets to be acquired.................................... (153) 153 (m) 0
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Total liabilities and stockholders' equity.......... $ 452,563 $ 3,108 $627,574
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</TABLE>
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NOTE TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
Adjustments reflected in the pro forma condensed consolidated financial
statements are explained as follows:
(a) To adjust net revenue to reflect negotiated increases in network
compensation revenue at WLAJ-TV and reduced national representative
commissions at WXON-TV.
(b) To adjust station operating expenses as follows:
<TABLE>
<S> <C>
To eliminate the cost of a news programming contract that was terminated
shortly before entering into the WLAJ-TV time brokerage agreement and
production expenses for a program cancelled simultaneously with entering
into the WLAJ-TV time brokerage agreement...................................... $ 85,000
To reduce amortization of film contract rights at WXON-TV to reflect the net
assets to be acquired based on the preliminary allocation of the purchase
price.......................................................................... 416,000
To reduce salary and wages and related benefit costs associated with
permanent staff reductions at WLAJ-TV made after execution of the WLAJ-TV time
brokerage agreement............................................................ 381,000
To eliminate the cost of a studio lease at WLAJ-TV which was terminated upon
execution of the time brokerage agreement...................................... 53,000
To eliminate a management fee paid to a related party of WXON-TV................ 273,000
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$1,208,000
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----------
</TABLE>
(c) To record the monthly fee paid to the current owner of WLAJ-TV pursuant
to the time brokerage agreement.
(d) To eliminate depreciation expense of WLAJ-TV and to record additional
depreciation expense at WXON-TV based on the preliminary allocation of the
purchase price.
(e) To reflect increased amortization expense as follows:
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<S> <C>
(i) Amortization of excess costs of the purchase price over net assets
acquired................................................................... $4,334,000
(ii) Elimination of historical amortization expense in the financial
statements of WXON-TV and WLAJ-TV......................................... (34,000)
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$4,300,000
----------
----------
</TABLE>
(f) To eliminate historical corporate expense charged to WLAJ-TV.
(g) To record interest expense on additional borrowings under the Credit
Agreement and to eliminate historical interest expense (income) in the
financial statements of WXON-TV and WLAJ-TV.
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(h) To reflect a dividend rate on the New Preferred Stock of 12 3/4%.
(i) Pro forma weighted average common shares outstanding does not include
the conversion of the Convertible Preferred Stock (which trades under the
symbol "GBTVP") and the exercise of any outstanding stock options as the
effect would be anti-dilutive.
(j) To record the preliminary allocation of the purchase price of WXON-TV as
follows:
<TABLE>
<CAPTION>
HISTORICAL
CARRYING ESTIMATED
VALUE AS REPORTED MARKET VALUE
WXON-TV OF ASSETS PRO FORMA
DECEMBER 31, 1996 PURCHASED ADJUSTMENT
------------------ -------------- --------------
<S> <C> <C> <C>
Film contract rights and other assets........................ $ 2,905,000 $ 2,905,000 $ --
Property and equipment....................................... 203,000 2,000,000 1,797,000
Intangible assets............................................ -- 173,356,000 173,356,000
Film contract rights payable and other liabilities........... (3,261,000) (3,261,000) --
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Net assets (liabilities)..................................... $ (153,000) $ 175,000,000 $ 175,153,000
------------------ -------------- --------------
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</TABLE>
The Company made a $5,000,000 deposit in connection with the WXON
Acquisition.
(k) To reflect the incurrence of other costs associated with the WXON
Acquisition.
(l) To reflect the issuance of the New Preferred Stock offered hereby, net
of Offering related expenses, and the application of additional borrowings
under the Credit Agreement.
(m) To eliminate the seller's historical carrying value of the net assets of
WXON-TV.
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C. Exhibits.
[No changes being made to this Section 7.C.]
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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.
GRANITE BROADCASTING CORPORATION
Dated: June 27, 1997 By: /s/LAWRENCE I. WILLS
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Name: Lawrence I. Wills
Its: Vice President--Finance and Controller
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