<PAGE>
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): August 23, 1996
---------------
Evergreen Media Corporation
-----------------------------------
(Exact Name of Registrant as
Specified in Charter)
Delaware 75-2247099
--------------- -------------------
(State or Other (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
433 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
----------------------------------
(Address of Principal
Executive Offices)
(214) 869-9020
--------------------------
(Registrant's telephone
number, including area code)
<PAGE>
ITEM 5. Other Events.
-------------
Financial Information for WEDR, Inc.
------------------------------------
On June 27, 1996, Evergreen Media Corporation (the "Company") entered
into an agreement to purchase from WEDR, Inc. the assets used in the operation
of WEDR-FM, 99.1 MHz, Miami, Florida, for a purchase price of $65 million. The
Company hereby provides the following financial information, not otherwise
called for by this form but of importance to securityholders, in regard to WEDR,
Inc.: (a) Independent Auditors' Report, included on page A-1 of this report and
incorporated by reference herein; (b) Balance Sheet of WEDR, Inc. at December
31, 1995 and at June 30, 1996 (unaudited), included on page A-2 of this report
and incorporated by reference herein; (c) Statements of Earnings and Retained
Earnings of WEDR, Inc. for (i) the year ended December 31, 1995 and (ii) the six
months ended June 30, 1995 and 1996 (unaudited), included on page A-3 of this
report and incorporated by reference herein; (d) Statements of Cash Flows for
(i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995
and 1996 (unaudited), included on pages A-4 of this report and incorporated by
reference herein; and (e) Notes to Financial Statements included on pages A-5 to
A-13 of this report and incorporated by reference herein.
ITEM 7. Financial Statements Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
7(a) Financial Statements of Business to Be Acquired
-----------------------------------------------
The following information called for by Item 7(a) is included on pages
A-1 through [A-13] of this report and is incorporated herein by
reference:
(1) Independent Auditors' Report;
(2) Balance Sheet of WEDR, Inc. at December 31, 1995 and at June 30,
1996 (unaudited);
(3) Statements of Earnings and Retained Earnings of WEDR, Inc. for
(i) the year ended December 31, 1995 and (ii) the six months
ended June 30, 1995 and 1996 (unaudited); and
(4) Statements of Cash Flows for (i) the year ended December 31, 1995
and (ii) the six months ended June 30, 1995 and 1996 (unaudited);
(5) Notes to Financial Statements.
7(c) Exhibits
--------
*(2.1) Purchase Agreement by and between WEDR, Inc. and Evergreen
Media Corporation of Los Angeles dated as of June 27, 1995.
**(23.1) Consent of KPMG Peat Marwick LLP, independent accountants.
________________________________
* Previously filed as Exhibit 2.19 to the Company's Form 10-K dated as of
August 14, 1996 and incorporated herein by reference.
** Filed herewith.
2
<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.
Evergreen Media Corporation
By: /s/ Matthew E. Devine
-----------------------------
Matthew E. Devine
Chief Financial Officer
Date: August 23, 1996
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
WEDR, Inc.:
We have audited the accompanying balance sheet of WEDR, Inc. as of December 31,
1995, and the related statements of earnings and retained earnings and cash
flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of WEDR, Inc. as of December 31,
1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
June 28, 1996
A-1
<PAGE>
WEDR, INC.
Balance Sheets
(dollars in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, June 30,
Assets 1995 1996
------ ------------ -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 311 $ 523
Accounts receivable, less 2,048 2,386
allowance for doubtful accounts
of $250
Prepaid expenses and other 58 58
------ ------
Total current assets 2,417 2,967
Property and equipment, net (note 2) 834 781
Other assets (note 3) 177 228
------ ------
$3,428 $3,976
====== ======
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued $ 158 $ 138
expenses
Current portion of obligation 52 52
under capital lease (note 4) ------ ------
Total current liabilities 210 190
Obligation under capital lease, 184 159
excluding current portion (note 4) ------ ------
Total liabilities 394 349
------ ------
Stockholders' equity:
Common stock, $10 par value.
Authorized, issued and
outstanding 100 shares 1 1
Retained earnings 3,033 3,626
------ ------
Total stockholders' equity 3,034 3,627
Commitments and contingencies (notes 4
and 5) ------ ------
$3,428 $3,976
====== ======
</TABLE>
See accompanying notes to financial statements.
A-2
<PAGE>
WEDR, INC.
Statements of Earnings and Retained Earnings
(in thousands)
<TABLE>
<CAPTION>
Six months ended
Year ended June 30,
December 31, -------------------
1995 1995 1996
------------ -------- --------
(unaudited)
<S> <C> <C> <C>
Gross revenues $ 9,841 $ 4,580 $ 5,005
Less agency commissions 1,298 605 661
------- ------- -------
Net revenues 8,543 3,975 4,344
------- ------- -------
Operating expenses:
Station operating expenses
excluding depreciation and
amortization:
Related party 297 149 149
Other 4,198 1,980 1,951
Corporate general and
administrative:
Related party 1,227 572 802
Other 227 56 83
Depreciation and amortization 204 84 72
------- ------- -------
Total operating expenses 6,153 2,841 3,057
------- ------- -------
Operating income 2,390 1,134 1,287
------- ------- -------
Nonoperating income (expenses):
Interest expense (24) (14) (9)
Other, net 22 -- 15
------- ------- -------
Nonoperating expenses, net (2) (14) 6
------- ------- -------
Net earnings 2,388 1,120 1,293
Stockholder distributions (2,048) (1,134) (700)
Retained earnings, beginning of period 2,693 2,693 3,033
------- ------- -------
Retained earnings, end of period $ 3,033 $ 2,679 $ 3,626
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
A-3
<PAGE>
WEDR, INC.
Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six months ended
Year ended June 30,
December 31, -------------------
1995 1995 1996
------------ -------- --------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,388 $ 1,120 $ 1,293
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and amortization 204 84 72
Changes in certain assets and
liabilities:
Accounts receivable (420) (80) (338)
Accounts payable and 42 121 (20)
accrued expenses
Other assets 35 (9) (51)
------- ------- ------
Net cash provided by 2,249 1,236 956
operating activities ------- ------- ------
Cash flows used in investing activities
- capital expenditures (32) (22) (19)
------- ------- ------
Cash flows from financing activities:
Principal payments on capital
lease (48) (71) (25)
Stockholder distributions (2,048) (1,134) (700)
------- ------- ------
Net cash used by financing
activities (2,096) (1,205) (725)
------- ------- ------
Increase in cash 121 9 212
Cash at beginning of period 190 190 311
------- ------- ------
Cash at end of period $ 311 $ 199 $ 523
======= ======= ======
</TABLE>
See accompanying notes to financial statements.
A-4
<PAGE>
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Description of Business
-----------------------
WEDR, Inc. (the "Company"), an "S corporation," owns and operates
radio station WEDR-FM which serves the Fort Lauderdale - Miami,
Florida market. The Company also operates affiliated radio station
WRBD-AM servicing the same market under a marketing agreement with
WRBD, Inc.
(b) Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation of property
and equipment, including equipment operated under capital leases, is
computed using an accelerated method over the estimated useful lives
of the assets. Repair and maintenance costs are charged to expense
when incurred.
(c) Barter Transactions
-------------------
The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An
asset and liability is recorded at the fair market value of the goods
or services received. Barter revenue is recorded and the liability
relieved when commercials are broadcast and barter expense is
recorded and the asset relieved when goods or services are received
or used. Barter revenues and expenses were approximately $535,000
during the year ended December 31, 1995.
(d) Income Taxes
------------
As the Company is an "S corporation," income taxes are the
responsibility of its individual stockholders. Accordingly, no income
tax expense is recorded in the accompanying financial statements.
(e) Revenue Recognition
-------------------
Revenue is derived primarily from the sale of commercial
announcements to local and national advertisers. Revenue is
recognized as commercials are broadcast.
(Continued)
A-5
<PAGE>
2
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
(f) Statement of Cash Flows
-----------------------
The Company paid approximately $24,000 for interest during the year
ended December 31, 1995.
(g) Disclosure of Certain Significant Risks and Uncertainties
---------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts 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.
In the opinion of management, credit risk with respect to trade
receivables is limited due to the large number of diversified
customers and the geographic diversification of the Company's
national revenue customer base. The Company performs ongoing credit
evaluations of its customers and believes that adequate allowances
for any uncollectible trade receivables are maintained. At December
31, 1995, no receivable from any customer exceeded 5% of
stockholders' equity and no customer accounted for more than 10% of
net revenues in 1995.
(h) Fair Value of Financial Instruments
-----------------------------------
The carrying amount of cash and cash equivalents, accounts receivable
and accounts payable approximates fair value because of the short
maturity of these instruments. It is not practicable to estimate the
fair value of loans to stockholders as such loans have no maturity
dates and their terms can be readily modified by the stockholders.
(i) Interim Financial Information
-----------------------------
In the opinion of management, the accompanying unaudited interim
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial
position, results of operations and cash flows of the Company as of
June 30, 1996 and for the six-month periods ended June 30, 1995 and
1996.
(Continued)
A-6
<PAGE>
3
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
(2) Property and Equipment
----------------------
Property and equipment consists of the following at December 31, 1995:
<TABLE>
<CAPTION>
Estimated
useful life
-------------
<S> <C> <C>
Broadcast and other equipment 5 - 15 years $ 870
Buildings and improvements 5-31 years 659
Furniture and fixtures 5 - 7 years 56
Land -- 100
------
1,685
Less accumulated depreciation
and amortization 851
------
$ 834
======
</TABLE>
(3) Other Assets
------------
Other assets consists of the following at December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Loans to stockholders $ 122
Loans to employees 13
Note receivable 42
------
$ 177
======
</TABLE>
The Company has unsecured outstanding loans to three stockholders which
effectively serve as individual lines of credit. Amounts outstanding on
the loans have no specified maturity date and bear interest at 7%.
Interest on the loans is paid monthly through payroll deductions.
(4) Commitment and Contingencies
----------------------------
The Company has leased certain broadcast equipment under a capital lease
that expires in September 1999. The amounts of property and equipment and
related accumulated amortization recorded under this capital lease are
$287,000 and $148,000, respectively, at December 31, 1995. Amortization of
assets held under the lease is included in depreciation and amortization
expense in the accompanying financial statements.
(Continued)
A-7
<PAGE>
4
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
The Company has noncancelable operating leases, primarily for tower space.
Rental expense for operating leases and other contractual obligations
(excluding those with lease terms of one month or less that were not
renewed) was approximately $365,000 during 1995.
A-8
<PAGE>
5
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
Future minimum lease payments under the capital lease and noncancelable
operating leases and other obligations (with initial or remaining lease
terms in excess of one year) as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Operating
leases and
Year ending December 31: Capital lease Other
------------------------ ------------- -----
<S> <C> <C>
1996 $ 73 224
1997 73 192
1998 73 95
1999 55 86
2000 - 86
----
274
Less interest component at 10% 38
----
$236
====
</TABLE>
The Company sells a portion of its national sales receivables under a
factoring arrangement. Upon sale and collection of the receivable, the
Company receives 80% and 12%, respectively, of the receivable balance. The
remaining 8% represents fees paid to the factor. The Company is required
to repurchase receivables deemed uncollectible by the factor. At December
31, 1995, approximately $250,000 of receivables are subject to repurchase
by the Company. During the year ended December 31, 1995, total receivables
sold under this arrangement and related factoring fees were approximately
$600,000 and $50,000, respectively.
In June 1996, the Company agreed to sell certain property and equipment
and the FCC license of WEDR-FM to Evergreen Media Corporation for $65
million. Prior to consummation of the sale, certain operating leases and
the factoring arrangement disclosed above are to be terminated by the
Company. Consummation of the sale is subject to receipt of regulatory
approvals.
(5) Related Party Transactions
--------------------------
The Company operates WRBD-AM under a marketing agreement with WRBD, Inc.,
an affiliated entity, whereby the Company pays WRBD, Inc. a monthly
marketing fee of $20,000 for the use of WRBD-AM's frequency. Such
marketing fees totaled $240,000 for
(Continued)
A-9
<PAGE>
6
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
the year ended December 31, 1995.
During the year ended December 31, 1995, the Company paid $57,000 to WRBD,
Inc. for the lease of certain space on WRBD, Inc.'s broadcast tower.
During the year ended December 31, 1995, the Company paid management fees,
salaries and certain nonoperating costs totaling approximately $1,227,000
to its stockholders.
(Continued)
A-10
<PAGE>
7
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
(6) Supplemental Financial Data
---------------------------
The following presents supplemental financial data of WEDR, Inc. for the
year ended December 31, 1995 and the six months ended June 30, 1995 and
1996 (unaudited):
<TABLE>
<CAPTION>
FM and
Corporate
Year ended December 31, 1995 operations AM operations Total
- ---------------------------- ---------- ------------- -------
<S> <C> <C> <C>
Gross revenues $9,555 $ 286 $9,841
Less agency commissions 1,281 17 1,298
------ ------ ------
Net revenues 8,274 269 8,543
------ ------ ------
Operating expenses:
Station operating expenses
excluding depreciation
and amortization:
Related party 57 240 297
Other 3,507 691 4,198
Corporate general and
administrative:
Related party 1,227 -- 1,227
Other 227 -- 227
Depreciation and amortization 49 155 204
------ ------ ------
Operating expenses 5,067 1,086 6,153
------ ------ ------
Operating income (loss) 3,207 (817) 2,390
------ ------ ------
Nonoperating income (expenses):
Interest expense -- (24) (24)
Other, net 22 -- 22
------ ------ ------
Nonoperating expenses 22 (24) (2)
------ ------ ------
Net income (loss) $3,229 $ (841) $2,388
====== ====== ======
</TABLE>
(Continued)
A-11
<PAGE>
8
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
<TABLE>
<CAPTION>
Six months ended June 30, 1995 FM and
- ------------------------------ Corporate
(unaudited) operations AM operations Total
- ----------- ---------- -------------- --------
<S> <C> <C> <C>
Gross revenues $4,432 $ 148 $4,580
Less agency commissions 596 9 605
------ ----- ------
Net revenues 3,836 139 3,975
------ ----- ------
Operating expenses:
Station operating expenses
excluding depreciation
and amortization:
Related party 28 121 149
Other 1,718 262 1,980
Corporate general and
administrative:
Related party 572 -- 572
Other 56 -- 56
Depreciation and amortization 21 63 84
------ ----- ------
Operating expenses 2,395 446 2,841
------ ----- ------
Operating income (loss) 1,441 (307) 1,134
------ ----- ------
Nonoperating income (expenses):
Interest expense -- (14) (14)
Other, net -- -- --
------ ----- ------
Nonoperating expenses -- (14) (14)
------ ----- ------
Net income (loss) $1,441 $(321) $1,120
====== ===== ======
</TABLE>
(Continued)
A-12
<PAGE>
9
WEDR, INC.
Notes to Financial Statements
(tables in thousands of dollars)
<TABLE>
<CAPTION>
Six months ended June 30, 1996 FM and
- ------------------------------ Corporate
(unaudited) operations AM operations Total
- ----------- ---------- ------------- -----
<S> <C> <C> <C>
Gross revenues $4,852 $ 153 $5,005
Less agency commissions 652 9 661
------ ----- ------
Net revenues 4,200 144 4,344
------ ----- ------
Operating expenses:
Station operating expenses
excluding depreciation
and amortization:
Related party 28 121 149
Other 1,683 268 1,951
Corporate general and
administrative:
Related party 802 -- 802
Other 83 -- 83
Depreciation and amortization 18 54 72
------ ----- ------
Operating expenses 2,614 443 3,057
------ ----- ------
Operating income (loss) 1,586 (299) 1,287
------ ----- ------
Nonoperating income (expenses):
Interest expense -- (9) (9)
Other, net 15 -- 15
------ ----- ------
Nonoperating expenses 15 (9) 6
------ ----- ------
Net income (loss) $1,601 $(308) $1,293
====== ===== ======
</TABLE>
A-13
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Evergreen Media Corporation:
We consent to incorporation by reference in the Registration Statements on Form
S-3 (No. 33-93874) and Form S-8 (Nos. 33-83124 and 333-04379) of Evergreen Media
Corporation, Inc. of our report dated June 28, 1996, relating to the balance
sheet of WEDR, Inc. as of December 31, 1995 and the related statements of
operations and retained earnings and cash flows for the year then ended, which
report appears in the Form 8-K dated August 23, 1996 filed by Evergreen Media
Corporation.
KPMG Peat Marwick LLP
Dallas, Texas
August 19, 1996
