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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
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 16, 1997 (April 1, 1997)
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SFX BROADCASTING, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-22486 13-3649750
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
150 East 58th Street, 19th Floor, New York, New York 10155
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 407-9191
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N/A
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(Former name or former address, if changed since last report)
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This Form 8-K/A amends the Forms 8-K of SFX Broadcasting, Inc. (the
"Company") filed on April 15, 1997 and June 16, 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The following financial information relating to the Secret Stations:
Indianapolis and Pittsburgh is incorporated herein by reference to the Form 8-K
filed by the Company with the Securities and Exchange Commission on January 21,
1997:
Report of Independent Public Accountants
Combined Balance Sheet as of June 30, 1996
Combined Statements of Operations for the year ended June 30, 1996
Combined Statements of Cash Flows for the year ended June 30, 1996
Notes to Combined Financial Statements
The following financial information relating to the Secret Stations:
Indianapolis and Pittsburgh is filed herewith as Annex A, which is incorporated
herein by reference:
Condensed Combined Balance Sheet as of March 31, 1997 (unaudited)
Condensed Combined Statement of Operations for the nine months
ended March 31, 1997 (unaudited)
Condensed Combined Statement of Cash Flows for the nine
months ended March 31, 1997 (unaudited)
Note to Unaudited Condensed Combined Financial Statements
(b) Pro Forma Financial Information
The pro forma financial statements filed herewith as Annex B, which
give effect to the acquisition by the Company of the Secret Stations:
Indianapolis and Pittsburgh from Secret Communications Limited Partnership,
are incorporated herein by reference.
(c) Exhibits
23.1 Consent of Arthur Andersen LLP.
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ANNEX A
THE SECRET STATIONS: INDIANAPOLIS AND PITTSBURGH
CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED)
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 527,990
Accounts receivable (net of allowance for
doubtful accounts of $393,004) 5,718,553
Trade receivables 251,869
Prepaid expenses and other assets 379,190
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Total current assets 6,877,602
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PROPERTY AND EQUIPMENT, net 4,323,929
INTANGIBLE ASSETS, net 40,208,003
OTHER ASSETS 192,813
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TOTAL ASSETS $ 51,602,347
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LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,478,095
Trade payables 171,501
Interest payable 34,941
Current maturities of long-term debt 2,559,803
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Total current liabilities 5,244,340
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LONG-TERM DEBT, less current maturities 29,329,840
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL AND STATION EQUITY:
Balance, beginning of period 13,329,270
Net amounts transferred to central office (10,242,895)
Contributed capital 11,713,580
Net income for the period 2,228,212
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Balance, end of quarter 17,028,167
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 51,602,347
============
The accompanying note to unaudited condensed combined financial statements is
an integral part of this balance sheet.
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<PAGE>
THE SECRET STATIONS: INDIANAPOLIS AND PITTSBURGH
CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
GROSS REVENUES $ 27,086,253
Less: agency commissions 3,271,844
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Net revenues 23,814,409
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OPERATING EXPENSES:
Station operating expenses excluding
depreciation and amortization 14,625,992
Depreciation and amortization 2,798,242
Central office general and administrative 2,339,406
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Operating expenses 19,763,640
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OPERATING INCOME 4,050,769
NONOPERATING EXPENSE:
Interest expense 1,822,557
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Non operating expense 1,822,557
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NET INCOME $ 2,228,212
============
The accompanying note to unaudited condensed combined financial statements is
an integral part of this statement.
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THE SECRET STATIONS: INDIANAPOLIS AND PITTSBURGH
CONDENSED COMBINED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31,1997
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,228,212
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on sale of equipment 2,108
Depreciation and amortization 2,798,242
Changes in assets and liabilities:
Decrease in receivables, net 1,232,556
Decrease in prepaid expenses and other assets 72,428
Increase in payables and accrued expenses 299,478
(Decrease) in interest payable (201,955)
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Net cash provided by operating activities 6,431,069
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 4,500
Cost to acquire license (36,808)
Capital expenditures (229,829)
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Net cash (used in) investing activities (262,137)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in amounts transferred to central office (10,242,895)
Net borrowings of long-term debt (7,500,000)
Capital contributions 11,713,580
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Net cash (used in) financing activities (6,029,315)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 139,617
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 388,373
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 527,990
============
The accompanying note to unaudited condensed combined financial statements is
an integral part of this statement.
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NOTE TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1: Basic of Presentation
The accompanying unaudited condensed combined financial statements for The
Secret Stations: WFBQ-FM/WRZX-FM/WNDE-AM, Indianapolis, Indiana and
WDVE-FM/WXDX-FM, Pittsburgh, Pennsylvania have been prepared in accordance with
generally accepted accounting practices for interim periods. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. It is
suggested that these condensed combined financial statements be read in
conjunction with the financial statements and notes thereto incorporated by
reference elsewhere in this document.
In the opinion of management, the unaudited condensed combined financial
statements reflect all adjustments consisting of normal recurring adjustments
necessary to present fairly the combined financial position of The Secret
Stations as of March 31, 1997, and the condensed combined results of operations
and cash flows for all periods presented.
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<PAGE>
ANNEX B
UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
SFX BROADCASTING, INC.
The following financial statements and notes thereto contain forward-looking
statements that involve risks and uncertainties. The actual results of the
Company may differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, risks
and uncertainties relating to the ability of the Company to achieve revenue of
stations owned or to be acquired, the need for additional financing,
integration of the Secret Communications stations, and management of growth.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
In the opinion of management, all adjustments necessary to fairly present this
pro forma information have been made. The Unaudited Pro Forma Condensed
Combined Financial Statements are based upon, and should be read in conjunction
with, the historical financial statements and the respective notes to such
financial statements of the Company previously filed and the historical
condensed combined financial statements and the respective notes to such
financial statements of Secret Communications Stations: Indianapolis and
Pittsburgh (the "Secret Communications Acquisition") included herein. The pro
forma information does not purport to be 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 if the aforementioned
transaction was completed. The Company cannot predict whether the combination
of the Secret Communications Acquisition will conform to the assumptions used
in the presentation of the Unaudited Pro Forma Condensed Combined Financial
Statements.
The Unaudited Pro Forma Condensed Combined Balance Sheet at March 31, 1997 is
presented as if the Company had completed the Secret Communications Acquisition
as of March 31, 1997.
The Unaudited Pro Forma Condensed Combined Statements of Operations for the
year ended December 31, 1996 and the three months ended March 31, 1997 are
presented as if the Company had completed the Secret Communications Acquisition
as of January 1, 1996.
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<PAGE>
Pro Forma Condensed Combined Statement of Operations
SFX Broadcasting, Inc.
For the Three Months Ended March 31, 1997
(in thousands except share data)
<TABLE>
<CAPTION>
SFX
Broadcasting, Secret
Inc. As Comm. Pro Forma
Reported Acquisition Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net broadcast revenues $ 44,991 $6,978 $ 51,969
Station and other operating expenses 29,916 4,729 34,645
Concert and related revenue, net 51 -- 51
Depreciation, amortization and acquisition
related costs 8,145 891 $ 810 (a) 9,846
Corporate expenses 2,049 -- 2,049
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Operating income 4,932 1,358 (810) 5,480
Interest expense, including amortization of
deferred financing costs 12,815 -- 524 (b) 13,339
Other expense (income) (1,680) 77 (77)(c) (1,680)
Income tax expense (benefit) 285 -- 285
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Net income (loss) (6,488) 1,281 (1,257) (6,464)
Preferred stock dividend requirement 7,952 -- 4,735 (d) 12,687
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Net loss applicable to common shares $ (14,440) $1,281 $(5,992) $ (19,151)
===================================================================================================
Net loss per common share $ (1.58) $ (2.09)
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Average common shares outstanding 9,161,433 9,161,433
</TABLE>
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<PAGE>
Pro Forma Condensed Combined Statement of Operations
SFX Broadcasting, Inc.
For the Year Ended December 31, 1996
(in thousands except share data)
<TABLE>
<CAPTION>
SFX
BROADCASTING, SECRET
INC. AS COMM. PRO FORMA
REPORTED ACQUISITION ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Net broadcast revenues $ 143,061 $31,835 $ 174,896
Station and other operating expenses 92,816 19,251 112,067
Concert and related revenue, net -- -- --
Depreciation, amortization and acquisition
related costs 17,311 3,970 $ 3,239 (a) 24,520
Corporate expenses 6,313 -- 6,313
Other 28,994 2 28,996
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Operating income (2,373) 8,612 (3,239) 3,000
Interest expense, including amortization of
deferred financing costs 34,897 -- 11,123 (b) 46,020
Other expense (income) (2,117) 1,175 (1,175)(c) (2,117)
Income tax expense (benefit) 480 -- 480
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Net income (loss) (35,633) 7,437 (13,187) (41,383)
Preferred stock dividend requirement 6,061 -- 28,406 (d) 34,467
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Net loss applicable to common shares $ (41,694) $ 7,437 $(41,593) $ (75,850)
===================================================================================================
Net loss per common share $ (4.57) $ (8.31)
============ ==========
Average common shares outstanding 9,127,985 9,127,985
</TABLE>
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<PAGE>
Pro Forma Condensed Combined Balance Sheet
SFX Broadcasting, Inc.
March 31, 1997
(in thousands)
<TABLE>
<CAPTION>
SFX SECRET
BROADCASTING, COMM. PRO FORMA
INC. AS REPORTED ACQUISITION ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Current assets $ 170,052 $ 6,878 $ 134,053 (e) $ 59,105
(6,878)(f)
(245,000)(f)
Property and equipment, net 89,398 4,324 93,722
Intangible assets, net 765,597 40,208 210,275 (f) 1,016,315
235 (g)
Other assets 55,075 193 (235)(g) 45,033
(10,000)(f)
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Total assets $1,080,122 $51,603 $ 82,450 $1,214,175
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LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 56,131 $ 2,685 $ (2,685)(f) $ 56,131
Other liabilities 15,653 15,653
Long-term debt (including current portion):
Credit Agreement -- 134,053 (e) 134,053
Note Offering 450,000 450,000
Acquired company debt 31,890 (31,890)(f) --
Other debt 1,080 1,080
Deferred taxes 102,254 102,254
Redeemable preferred stock
Series B Notes 943 943
Series C Preferred Stock 10 10
Series D Preferred Stock 141,402 141,402
Series E Preferred Stock 225,000 225,000
Stockholder's equity 87,649 17,028 (17,028)(f) 87,649
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Total liabilities and stockholders'
equity $1,080,122 $51,603 $ 82,450 $1,214,175
====================================================================================================
</TABLE>
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<PAGE>
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
SFX BROADCASTING, INC.
a. Reflects increase in amortization of intangible assets resulting from
purchase price allocations and the change in amortization period of
$810,000 and $3,239,000 for the three months ended March 31, 1997 and the
year ended December 31, 1996, respectively.
b. To reflect interest expense of $524,000 and $11,123,000 relating to the
borrowings from the Company's credit agreement at 8.25% for the three
months ended March 31, 1997 and the year ended December 31, 1996,
respectively.
c. Elimination of LMA fees paid by Secret Communications for WDSY and
WJJJ.
d. To record the incremental Series E Preferred Stock dividends at 12
5/8%.
e. For the purpose of the pro forma condensed combined financial statements,
the Company has assumed additional borrowings of $134,053,000 under its
existing credit agreement.
f. To reflect the Secret Communications Acquisition for $245,000,000 in cash,
the utilization of a $10,000,000 deposit paid in 1996 and the related
excess of the purchase price paid over the net book value of the assets
carried on the adjusted balance sheet of $210,275,000 based upon a
preliminary purchase price allocation and the adjustments to remove
$6,878,000 of current assets, $2,685,000 of current liabilities,
$31,890,000 of other debt and $17,028,000 of partners' capital and station
equity not acquired from Secret Communications.
g. To reflect additional acquisition costs related to the Secret
Communications Acquisition which were incurred prior to March 31, 1997.
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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 thereto duly authorized.
SFX BROADCASTING, INC.
By: /s/ Thomas P. Benson
--------------------------------
Name: Thomas P. Benson
Title: Vice President and Chief
Financial Officer
Date: June 16, 1997
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8-K/A
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 8-K/A of SFX Broadcasting, Inc. dated June 16, 1997, of
our report dated January 17, 1997, relating to the combined financial
statements of The Secret Stations: Indianapolis and Pittsburgh ("Stations"),
included in SFX Broadcasting Inc.'s previously filed Form 8-K dated
January 21, 1997. It should be noted that we have not audited any financial
statements of the Stations subsequent to June 30, 1996 or performed any audit
procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
June 13, 1997
