<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 9, 1996
----------------------------
(Date of earliest event reported)
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
Maryland 33-69482 52-1494660
(State of incorporation) (Commission File Number) (IRS Employer
Identification Number)
2000 W. 41st Street, Baltimore, Maryland 21211-1420
---------------------------------------------------
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (410) 467-5005
---------------
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
The Financial statements required by this item are submitted in a
separate section of this report.
SUPERIOR COMMUNICATIONS GROUP, INC.
Consolidated Balance Sheet as of March 31, 1996
Consolidated Statements of Operations for the Three Months Ended
March 31, 1995 and March 31, 1996
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1995 and March 31, 1996
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
The pro forma financial information required by this item is submitted
in the pages to follow.
(c) Exhibits
<PAGE>
Item 5. Other Matters
(a) Financial Statements of Probable Business Acquisitions
The Financial statements required by this item are submitted in a
separate section of this report.
KANSAS CITY TV 62 LIMITED PARTNERSHIP
Balance Sheet as of March 31, 1996
Statements of Operations for the Three Months Ended March 31,
1995 and March 31, 1996
Statements of Cash Flows for the Three Months Ended March 31, 1995
and March 31, 1996
Notes to Financial Statements
CINCINNATI TV 64 LIMITED PARTNERSHIP
Balance Sheet as of March 31, 1996
Statements of Operations for the Three Months Ended March 31,
1995 and March 31, 1996
Statements of Cash Flows for the Three Months Ended March 31, 1995
and March 31, 1996
Notes to Financial Statements
RIVER CITY BROADCASTING L.P.
Consolidated Balance Sheet as of
March 31, 1996
Consolidated Statements of Operations for the Three Months Ended
March 31, 1995 and 1996
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1995 and 1996
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
The pro forma information required by this item is submitted in the
pages to follow.
(c) PRO FORMA CONSOLIDATED FINANCIAL DATA
The Pro Forma Consolidated Financial Data includes the unaudited pro forma
consolidated balance sheet of the Company as of March 31, 1996 (the "Pro Forma
Consolidated Balance Sheet") and the unaudited pro forma consolidated statement
of operations for the three months ended March 31, 1996 (the "Pro Forma
Consolidated Statement of Operations").
The unaudited Pro Forma Consolidated Balance Sheet is adjusted to give
effect to (I) the consummation of the acquisition of the assets and liabilities
of Superior Communications Group, Inc. ("Superior"), and the probable
acquisitions of (II) Kansas City TV 62 Limited Partnership ("KSMO"), Cincinnati
TV 64 Limited Partnership ("WSTR") and River City Broadcasting L.P. ("RCB") and
(III) cash on hand and borrowings under the existing Bank Credit Agreement and
New Credit Facilities in amounts sufficient to complete the transactions
described in (I) and (II) above.
The unaudited Pro Forma Consolidated Statement of Operations is adjusted to
give effect to (I) the consummation of the acquisition of Superior, (II) the
probable acquisitions of KSMO, WSTR and RCB and (III) cash on hand and
borrowings under the existing Bank Credit Agreement and New Credit Facilities in
amounts sufficient to complete the transactions described in (I) and (II) above.
The WSYX-TV information in the Pro Forma Consolidated Balance Sheet and Pro
Forma Consolidated Statement of Operations reflects the modification of the
current acquisition documents eliminating Sinclair Broadcast Group, Inc's.
("SBG") option to acquire the assets of WSYX-TV. This resulted from the
Department of Justice ("DOJ") expressing preliminary concerns about SBG's
operation of two television stations in Columbus, Ohio. In order to maintain the
original schedule for the rest of the transaction, SBG and RCB have entered into
an agreement with the DOJ that will result in a modification of the terms of the
previously mentioned probable transaction.
<PAGE>
The pro forma adjustments are based upon available information and certain
assumptions the Company believes are reasonable. The Pro Forma Consolidated
Financial Data should be read in conjunction with the Company's Consolidated
Financial Statements and related notes thereto, the Financial Statements and
related notes of Superior, KSMO, WSTR and RCB. The unaudited Pro Forma
Consolidated Data do not purport to represent what the Company's results of
operations or financial position would have been had any of the above events
occurred on the dates specified or to project the Company's results of
operations or financial position for or at any future period or date.
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Superior
Consolidated Commmunications Pro Forma Pro Forma
Historical Group, Inc.(a) Adjustments Consummated
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents................ $97,420 $ - $ (3,150) (b) $ 94,270
Accounts receivable, net of allowance for
doubtful accounts....................... 41,148 2,202 43,350
Current portion of program contract costs....... 17,636 2,145 19,781
Deferred barter costs........................... 1,688 1,688
Prepaid expenses and other current assets....... 2,355 120 2,475
Deferred tax asset.............................. 5,279 5,279
----------------------------------------------- --------
Total current assets............ 165,526 4,467 (3,150) 166,843
PROPERTY AND EQUIPMENT, net............................. 44,880 10,094 54,974
PROGRAM CONTRACT COSTS, less current portion............ 15,858 2,591 18,449
LOANS TO OFFICERS AND AFFILIATES, net................... 11,856 11,856
NON-COMPETE AND CONSULTING AGREEMENTS, net.............. 25,199 25,199
DEFERRED TAX ASSET...................................... 17,770 17,770
OTHER ASSETS............................................ 30,536 30,536
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net............ 298,355 53,953 352,308
----------------------------------------------- --------
Total assets.................... $609,980 $ 71,105 $ (3,150) 677,935
=============================================== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................ $ 2,130 239 $ $ 2,369
Income taxes payable............................ 2,729 2,729
Accrued Liabilities............................. 30,373 235 30,608
Current portion of long-term liabilities-
Notes payable and commercial bank
financing.......................... 1,235 1,235
Capital leases payable.................. 441 441
Notes and capital leases payable to
affiliates......................... 1,907 1,907
Program contracts payable............... 24,542 1,842 26,384
Deferred barter revenues........................ 2,080 2,080
------------------------------------------------ --------
Total current liabilities....... 65,437 2,316 - 67,753
LONG-TERM LIABILITIES
Notes payable and commercial bank financing..... 400,000 59,850 (b) 459,850
Capital leases payable.......................... -
Notes and capital leases payable to affiliates.. 13,716 13,716
Program contracts payable....................... 30,213 2,368 32,581
Deferred tax liability.......................... - 3,384 3,384
Other long-term liabilites...................... 2,395 37 2,432
------------------------------------------------ ---------
Total liabilities............... 511,761 8,105 59,850 579,716
------------------------------------------------ ---------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY............ 2,303 - - 2,303
------------------------------------------------ ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares
authorized and -0- outstanding.......... -
Class A Common stock, $.01 par value, 35,000,000
shares authorized and -0- and 5,960,000
shares issued and outstanding,
respectively............................ 60 60
Class B Common stock, $.01 par value, 35,000,000
shares authorized and 28,790,000 shares
issued and outstanding.................. 288 288
Additional paid-in-capital...................... 116,089 116,089
Accumulated deficit............................. (20,521) (20,521)
------------------------------------------------ ---------
Total stockholders' equity...... 95,916 - - 95,916
------------------------------------------------ ---------
Total Liabilities and Stock-
holders' Equity........... $609,980 $ 8,105 $ 59,850 $ 677,935
================================================ =========
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(a) The Superior Communications Group, Inc. (Superior) column reflects the
assets and liabilities acquired in connection with the purchase of the
outstanding stock of Superior. Total acquired intangibles are calculated
as follows:
Superior
--------
Purchase price........................................ $ 63,000
Add: Liabilities acquired -
Accounts payable............................ 239
Accrued expenses............................ 235
Current portion of program contract costs... 1,842
Long-term portion of program contract costs. 2,368
Deferred tax liability...................... 3,384
Other long-term liabilities................. 37
Less: Assets acquired -
Accounts receivable......................... (2,202)
Current portion of program contracts........ (2,145)
Prepaid expenses and other current assets... (120)
Property and equipment...................... (10,094)
Non-current portion of program contracts.... (2,591)
------
Acquired intangibles........................$(53,953)
========
(b) In March 1996, the Company entered into an agreement to acquire the
outstanding stock of Superior and made a cash payment of approximately
$3.2 million to be applied against cash proceeds to the stockholders of
Superior upon closing. The Company funded the remaining cash proceeds to
the seller of $59.8 million by utilizing available indebtedness under
Facility B of the Bank Credit Agreement.
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Superior
Consolidated Flint Commmunications Pro Forma Pro Forma
Historical TV, Inc.(a) Group, Inc.(b) Adjustments Consummated
-------------------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions................................ $ 44,176 $ 1,012 $ 3,389 $ - $ 48,577
Revenues realized from station barter
arrangements............................... 3,593 3,593
-----------------------------------------------------------------------------
Total revenues.................. 47,769 1,012 3,389 - 52,170
-----------------------------------------------------------------------------
OPERATING EXPENSES:
Program and production....................... 7,648 101 437 8,186
Selling, general and administrative.......... 9,292 345 1,691 11,328
Expenses realized from station barter
arrangements......................... 2,931 2,931
Amortization of program contract costs
and net realizable value
adjustments.......................... 7,717 125 549 8,391
Depreciation and amortization of property
and equipment........................ 1,465 4 279 67 (c) 1,815
Amortization of acquired intangible broad-
casting assets, non-compete and
consulting agreements and other
assets............................... 10,677 399 440 (d) 11,516
-----------------------------------------------------------------------------
Total operating expenses........ 39,730 575 3,355 507 44,167
-----------------------------------------------------------------------------
Broadcast operating income
(loss)....................... 8,039 437 34 (507) 8,003
-----------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest and amortization of debt
discount expense........................... (10,896) (10,896)
Interest expense............................. - (347) (910)(e) (1,257)
Interest income.............................. 1,723 (372)(f) 1,351
Other income................................. 253 19 3 275
-----------------------------------------------------------------------------
Income (loss) before (provision)
benefit for income taxes...... (881) 456 (310) (1,789) (2,524)
(PROVISION) BENEFIT FOR INCOME TAXES................. 423 (219) 87 859 (g) 1,150
-----------------------------------------------------------------------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS... $ (458) $ 237 $ (223) $ (930) $ (1,374)
=============================================================================
EARNINGS PER COMMON SHARE
-----------------------------------------------------------------------------
Net loss per common share............................ $ (0.01) $ (0.04)
=============================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands)... 34,750 34,750
=============================================================================
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)
(a) The Flint Inc. column reflects the results of operations for WSMH for the
period from 1/1/96 to February 28, 1996, the date the transaction was
consummated.
(b) The Superior Communications Group, Inc. column reflects the results of
operations for Superior for the three months ended 3/31/96 as the purchase
transaction was consummated in May 1996.
(c) To record depreciation expense related to acquired tangible assets and
eliminate depreciation expense recorded by WSMH and Superior. Tangible
assets are to be depreciated over lives ranging from 5 to 29.5 years,
calculated as follows:
WSMH Superior Total
---- -------- -----
Depreciation expense on acquired assets..... $ 32 $ 318 $ 350
Less: Depreciation expense recorded by WSMH
and Superior............................ (4) (279) (283)
--- ------ ------
Pro forma adjustment........................ $ 28 $ 39 $ 67
======= ======= ======
(d) To record amortization expense related to acquired intangible assets and
eliminate amortization expense recorded by WSMH and Superior. Intangible
assets are to be amortized over lives ranging from 1 to 40 years,
calculated as follows:
WSMH Superior Total
---- -------- -----
Amortization relating to acquired intangible
assets................................... $ 167 $ 672 $ 839
Less: Intangible amortization recorded by
WSMH and Superior........................ - (399) (399)
--- ------ ------
Pro forma adjustment........................ $ 167 $ 273 $ 440
====== ======= ======
(e) To record interest expense on acquisition financing relating to Superior
of $59,850 (in Credit Facility with commercial bank at 8.4% for 3 months)
eliminate interest expense recorded.
Superior
--------
Interest expense adjustment as noted above.. $ 1,257
Less: Interest expense recorded by
Superior................................ (347)
------
Pro forma adjustment........................ $ 910
=======
(f) To eliminate interest income on public debt proceeds relating to WSMH and
Superior of $34,400 (with a commercial bank at 5.7% for 2 months) and
$3,150 (with commercial bank at 5.7% for 3 months), respectively and
eliminate interest income recorded.
WSMH Superior Total
---- -------- -----
Interest income adjustment as noted above... $ (327) $ (45) $ (372)
Less: Interest income recorded by WSMH and
Superior................................. - - -
--- --- ---
Pro forma adjustment........................ $ (327) (45) $ (372)
======= ====== =======
(g) To record tax benefit of pro forma adjustments.
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma River City Pro Forma Consummated
Consummated KSMO(a) WSTR(b) Broadcasting(c) WSYX(d) Adjustments Probable
---------- --------- -------- -------------- ---- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents............. $ 94,270 $ 1,135 $ 1,377 $ - $ - $(72,882) $ 23,900
Accounts receivable, net of allowance for
doubtful accounts....................... 43,350 3,365 2,300 10,000 59,015
Current portion of program contract costs.... 19,781 3,000 3,884 18,714 (1,789) 43,590
Deferred barter costs........................ 1,688 1,688
Prepaid expenses and other current asset..... 2,475 311 50 2,836
Deferred tax asset .......................... 5,279 5,279
------------------------------------------------------------------------------
Total current assets......... 166,843 7,811 7,611 28,714 (1,789) (72,882) 136,308
PROPERTY AND EQUIPMENT, net................... 54,974 3,762 8,360 138,862 (16,710) 189,248
PROGRAM CONTRACT COSTS, less current portion.. 18,449 3,135 3,740 20,365 (2,944) 42,745
LOANS TO OFFICERS AND AFFILIATES, net......... 11,856 11,856
NON-COMPETE AND CONSULTING AGREEMENTS, net.... 25,199 25,199
DEFERRED TAX ASSET............................ 17,770 17,770
OTHER ASSETS.................................. 30,536 14,725(f) 45,261
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net.. 352,308 9,444 8,880 795,956 1,166,588
------------------------------------------------------------------------------
Total assets................. $ 677,935 $24,152 $28,591 $983,897 $(21,443) (58,157) $1,634,975
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable............................. $ 2,369 $ 1,434 $ 1,339 $ - $ - $ - $ 5,142
Income Taxes Payable......................... 2,729 2,729
Accrued Liabilities ......................... 30,608 30,608
Current portion of long-term liabilities-
Notes payable and commercial bank financing 1,235 1,235
Capital leases payable..................... 441 441
Notes and capital leases payable........... 1,907 1,907
Program contracts payable.................. 26,384 3,610 4,533 27,686 (2,518) 59,695
Deferred barter revenues..................... 2,080 2,080
------------------------------------------------------------------------------
Total current liabilities.... 67,753 5,044 5,872 27,686 (2,518) - 103,837
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing.. 459,850 770,187(g)1,230,037
Capital leases payable....................... - -
Notes and capital leases payable to
affiliates................................. 13,716 13,716
Program contracts payable.................... 32,581 2,815 3,618 23,340 (2,741) 59,613
Deferred Tax Liability....................... 3,384 3,384
Other long-term liabilites................... 2,432 8,737 11,169
-------------------------------------------------------------------------------
Total liabilities............ 579,716 16,596 9,490 51,026 (5,259) 770,187 1,421,756
-------------------------------------------------------------------------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY.. 2,303 - - - - 2,303
-------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000
shares authorized and -0- outstanding....... - -
Class A Common stock, $.01 par value,
35,000,000 shares authorized and -0- and
10,141,818 shares issued and outstanding,
respectively............................... 60 42(h) 102
Class B Common stock, $.01 par value,
35,000,000 shares authorized and 28,790,000
shares issued and outstanding.............. 288 288
Additional paid-in-capital.................. 116,089 114,958(h) 231,047
Accumulated deficit......................... (20,521) (20,521)
--------------------------------------------------------------------------------
Total stockholders' equity......... 95,916 115,000 210,916
--------------------------------------------------------------------------------
Total Liabilities and Stockholder's
Equity......................... $ 677,935 $16,596 $9,490 $ 51,026 $ (5,259) $885,187 $1,634,975
================================================================================
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
The KSMO and WSTR columns reflect the assets and liabilities acquired in
connection with the purchase of KSMO and WSTR. Total acquired intangibles are
calculated as follows:
(a) KSMO:
Purchase price ............................................ $ 7,556
Add: Liabilities acquired -
Accounts Payable........................... 1,434
Current portion of program contracts....... 3,610
Long - term portion of program contracts... 2,815
Subordinated debt ......................... 8,737
Less: Assets acquired
Current portion of program contracts ...... (3,000)
Non-current portion of program contracts .. (3,135)
Cash....................................... (1,135)
Accounts Receivable........................ (3,365)
Prepaid expenses........................... (311)
Property and equipment .................... (3,762)
------
Acquired intangibles ...................... $ 9,444
========
(b) WSTR:
Purchase price ............................................ $19,101
Add: Liabilities acquired -
Accounts Payable........................... 1,339
Current portion of program contracts....... 4,533
Long - term portion of program contracts .. 3,618
Less: Assets acquired
Current portion of program contracts ...... (3,884)
Non-current portion of program contracts .. (3,740)
Cash....................................... (1,377)
Accounts Receivable........................ (2,300)
Prepaid expenses........................... (50)
Property and equipment .................... (8,360)
------
Acquired intangibles ...................... $ 8,880
========
<PAGE>
(c) The River City Broadcasting L.P. (RCB) column reflects the assets and
liabilities acquired in connection with the purchase RCB. Total acquired
intangibles are calculated as follows:
RCB:
Purchase price ............................................ $916,687
Add: Liabilities acquired -
Current portion of program contracts....... 25,168
Long - term portion of program contracts... 20,599
Less: Assets acquired-
Accounts receivable........................ (10,000)
Current portion of program contracts ...... (16,925)
Non-current portion of program contracts .. (17,421)
Property and equipment .................... (122,152)
--------
Acquired intangibles ...................... $795,956
========
(d) To reflect the modification of the current acquisition documents
eliminating the Company's option to acquire WSYX-TV.
(e) To reflect the pay-off by the Company of KSMO and WSTR's debt of $12,882
which was purchased by Chase Bank, and to reflect the cash payment of
$60.0 million made in conjunction with the purchase agreement between the
Company and River City Broadcasting L.P. which will be applied against the
cash proceeds upon closing.
(f) To record debt acquisition costs incurred in conjunction with the Senior
Secured Credit Facilities of $28.5 million, and removal of the $9.0
million purchase option to acquire KSMO & WSTR and the $4,775 note
receivable from WSTR.
(g) In April 1996, the Company entered into an agreement to acquire the assets
of River City Broadcasting L.P. The cash proceeds due the seller at
closing of $847,456 and $28,500 (transaction costs due to the lender) will
be made utilizing available indebtedness under the Senior Secured Credit
Facilities less $105,769, the amount attributable to the purchase of
WSYX-TV.
(h) In conjunction with the River City Broadcasting L.P. agreement, the seller
will receive $115 million of Series A Exchangeable Preferred Stock.
Pending shareholder approval, the Series A Exchangeable Preferred Stock
will be exchangeable for 4,181,818 shares of $.01 par value Class A Common
Stock.
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
River City
Broad- Pro Forma
Pro Forma casting Pro Forma Consummated/
Consummated KSMO(a) WSTR(b) (c) WSYX(d) Adjustments Probable
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions............................... $ 48,577 $ 4,145 $ 2,725 $ 47,716 (5,547) $ - $ 97,616
Revenues realized from station barter
arrangements.............................. 3,593 3,593
------------------------------------------------------------------------------
Total revenues................... 52,170 4,145 2,725 47,716 (5,547) - 101,209
------------------------------------------------------------------------------
OPERATING EXPENSES:
Program and production........................... 8,186 96 169 6,197 (1,175) 13,473
Selling, general and administrative.............. 11,328 1,131 1,153 23,052 (1,519) 416(e) 35,561
Expenses realized from station barter
arrangements.............................. 2,931 2,931
Amortization of program contract costs and net
realizable value adjustments.............. 8,391 1,116 1,365 6,570 (302) 17,140
Depreciation and amortization of property
and equipment............................. 1,815 189 142 3,755 (704) 321(F) 5,518
Amortization of acquired intangible broad-
casting assets, non-compete and
consulting agreements and other
assets.................................... 11,516 20 8,589 (2,159) 7,452(g) 25,418
------------------------------------------------------------------------------
Total operating expenses......... 44,167 2,532 2,849 48,163 (5,859) 8,189 100,041
Broadcast operating income
(loss).......................... 8,003 1,613 (124) (447) 312 (8,189) 1,168
------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount
expense........................................ (10,896) (10,896)
Interest (expense)............................... (1,257) (356) (577) (9,189) (8,273)(h) (19,652)
Interest income.................................. 1,351 8 (1,047)(h) 312
Other income (expense)........................... 275 10 845 (80) (8) 1,042
------------------------------------------------------------------------------
Income (loss) before (provision)
benefit for income taxes..... (2,524) 1,267 152 (9,716) 304 (17,509) (28,026)
(PROVISION) BENEFIT FOR INCOME TAXES.............. 1,150 (608) (73) 4,664 (146) 8,404(l) 13,391
-----------------------------------------------------------------------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(1,374) $ 659 $ 79 $ (5,052) $ 158 (9,105) $ (14,635)
==============================================================================
EARNINGS PER COMMON SHARE
Net loss per common share.......................... $ (0.04) $ (0.38)
==============================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands). 34,750 38,932(j)
==============================================================================
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)
(a) The KSMO column reflects the results of operations for the three months
ended 3/31/96.
(b) The WSTR column reflects the results of operations for the three months
ended 3/31/96.
(c) The River City Broadcasting L.P. (RCB) column reflects the results of
operations for RCB for the three months ended 3/31/96.
(d) To reflect the modification of the current acquisition documents
eliminating the Company's option to acquire WSYX-TV.
(e) To eliminate management fees paid for the three months ended 3/31/96 by
RCB and record additional corporate expenses as follows:
Corporate expenses on a pro forma basis........................... $3,703
Less: Corporate expenses and management fees
recorded by Company.......................................... (1,893)
-------
Pro forma adjustment.............................................. $ 416
(f) To record depreciation expense related to acquired tangible assets and
eliminate depreciation expense recorded by KSMO, WSTR, and RCB. Tangible
assets are to be depreciated over lives ranging from 5 to 29.5 years,
calculated as follows:
Depreciation expense on acquired assets.......................... $ 3,703
Less: Depreciation expenses recorded by
KSMO, WSTR and RCB ........................................ (3,382)
-------
Pro forma adjustment............................................. $ 321
=======
<PAGE>
(g) To record amortization expense related to acquired intangible assets and
deferred financing costs, and eliminate amortization expense recorded by
KSMO, WSTR, and RCB. Intangible assets are to amortized over lives ranging
from 1 to 40 years, calculated as follows:
FCC License..................................................... $ 2,094
Affiliation Agreements........................................... 4,188
Goodwill......................................................... 1,177
Goodwill (LMA).................................................. 5,548
-------
13,007
Deferred financing costs......................................... 930
Less: Intangible amortization recorded by Paramount and KRRT, KSMO
WSTR, and RCB............................................... (6,485)
-------
Pro forma adjustment............................................. $ 7,452
========
(h) To record interest expense on acquisition financing of $875,956 @ 8.4% for
3 months on the Senior Secured Credit Facilities for RCB and to eliminate
interest income on public debt proceeds of $60,000 and $12,882 (with
commercial bank at 5.7% for 3 months), for KSMO, WSTR, and RCB,
respectively, and to eliminate interest expense and interest income
recorded by KSMO, WSTR, and RCB.
<TABLE>
<CAPTION>
Interest Interest
Expense Income
------- ------
<S> <C> <C>
Interest expense and interest income adjustment as noted above.. $(18,395) $ (1,039)
Less: Interest expense and interest income recorded by KSMO,
WSTR and RCB............................................... 10,122 (8)
------ -------
Pro forma adjustment............................................ $ (8,273) $(1,047)
======== =======
</TABLE>
(i) To record tax benefit of pro forma adjustments
(j) Weighted average shares outstanding on a Pro Forma Consummated/Probable
basis assumes that the $115 million of Series A Exchangeable Preferred
Stock was exchanged for 4,181,818 shares of $.01 par value Class A Common
Stock as of the IPO date (June 13, 1995).
<PAGE>
Consolidated Financial Statements
Superior Communications Group, Inc.
As March 31, 1996
<PAGE>
Superior Communications Group, Inc.
Balance Sheet
As of March 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 251,379
Accounts receivable, net of allowance for
doubtful accounts of 2,201,506
Program contract rights, current portion 2,144,852
Prepaid expenses and other current assets 120,104
--------------
Total current assets 4,717,841
--------------
Property and equipment, net of accumulated
depreciation 7,209,857
Program contract rights, long-term portion 2,591,164
Intangible assets, net of accumulated amortization 8,381,632
--------------
Total assets $ 22,900,494
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Program contract rights payable, current portion $ 1,841,988
Accounts payable 239,075
Accrued liabilities 234,565
Debt-current portion 2,300,000
Other current liabilities 21,000
--------------
Total current liabilities 4,636,628
PROGRAM CONTRACTS PAYABLE, net of current portion 2,367,888
DEBT, net of current portion 11,110,945
OTHER LIABILITIES, net of current portion 3,421,188
--------------
Total liabilities 21,536,649
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 12
Preferred stock 9,365,801
Additional Paid-in Capital 36,210
Retained Deficit (5,163,678)
Treasury stock (2,874,500)
--------------
Total stockholders' equity 1,363,845
--------------
Total liabilities and stockholders' equity $ 22,900,494
==============
The accompanying notes are an integral part of this unaudited balance sheet.
-2-
<PAGE>
<TABLE>
<CAPTION>
Superior Communications Group, Inc.
Statement of Operations
For the Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
1995 1996
-------------- --------------
<S> <C> <C>
REVENUES:
Advertising revenue, net of agency commissions of $465,520
and $595,294, respectively $ 2,691,717 $ 3,388,945
OPERATING EXPENSES:
Programming and production 350,842 437,116
Selling, general and administrative 1,205,203 1,690,357
Amortization of program contract rights 695,697 548,891
Depreciation and amortization of property and equipment 271,810 279,096
Amortization of intangible assets 403,218 399,114
-------------- --------------
Total operating expenses 2,926,770 3,354,574
-------------- --------------
Broadcast operating income (loss) (235,053) 34,371
-------------- --------------
OTHER INCOME:
Interest expense, net (396,478) (346,928)
Other income (expense) - 2,739
-------------- --------------
Total other income (396,478) (344,189)
-------------- --------------
Income (loss) before (provision) benefit for income taxes (631,531) (309,818)
BENEFIT FOR INCOME TAXES 176,829 86,749
-------------- --------------
Net loss $ (454,702) $ (223,069)
============== ==============
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
-3-
<PAGE>
Superior Communications Group, Inc.
Statement of Cash Flows
For the Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
--------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (454,702) $ (223,069)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 271,810 279,096
Amortization of intangible assets 403,218 399,114
Amortization of program contracts rights 695,697 548,891
Changes in assets and liabilities:
Decrease in accounts receivable 571,602 465,370
Increase in other current assets (174,829) (84,749)
(Increase) decrease in prepaid expenses (162,044) 13,810
(Decrease) increase in accounts payable (15,098) 56,893
(Decrease) increase in accrued liabilities (41,677) 27,065
Decrease in other current liabilities (67,086) (196,631)
Film Rights Payments (433,617) (523,324)
--------------- ------------
Net cash flows provided by operating activities 593,274 762,466
--------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of treasury stock (2,885,000) -
Additions to property and equipment (38,058) (101,659)
--------------- ------------
Net cash flows used in investing activities (2,923,058) (101,659)
--------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (737,500) (681,646)
Proceeds from issuance of long term debt 2,900,000 -
--------------- ------------
Net cash flows provided by (used in) financing activities 2,162,500 (681,646)
--------------- ------------
Net decrease in cash (167,284) (20,839)
--------------- ------------
CASH, beginning of period 1,088,527 272,218
=============== ============
CASH, end of period $ 921,243 $ 251,379
=============== ============
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
-4-
<PAGE>
Superior Communications Group, Inc.
Notes to Consolidated Financial Statements
March 31, 1996
1. Significant Accounting Policies
Description of Business
The consolidated financial statements of Superior Communications Group, Inc.
(SCGI) include the accounts of SCGI and its wholly owned subsidiaries, Superior
Communications of Kentucky, Inc. (SCKI) and Superior Communications of Oklahoma,
Inc. (SCOI), which are collectively referred to as the Company. All intercompany
balances have been eliminated. The Company owns and operates television
broadcasting stations in Lexington, Kentucky and Oklahoma City, Oklahoma.
These statements are unaudited, and certain information and footnote disclosures
normally included in the Company's annual financial statements have been
omitted, as permitted under the applicable rules and regulations. Readers of
these statements should refer to the financial statements and notes thereto as
of December 31, 1995 and for the year ended included elsewhere in this filing.
The results of operations presented in the accompanying financial statements are
not necessarily representative of operations for an entire year.
Organization
The Company, previously known as Superior Communications of Kentucky, L.P. (the
Partnership), was incorporated in its current form on January 28, 1994
concurrent with the acquisition of SCOI (Note 2). Effective on January 28, 1994,
the former partners of the Partnership exchanged all of their partnership
interests for shares of preferred and common stock of the newly formed parent
company, SCGI, under a Security Purchase and Exchange Agreement (Exchange
Agreement) and the Partnership was then dissolved. Additionally, the former
corporate general partner of the Partnership was also dissolved and the
shareholders of the general partner exchanged certain operating assets with the
Company for preferred and common stock. Furthermore, under the Exchange
Agreement, SCGI then contributed the operating assets of the former partnership
to the newly formed SCKI in exchange for all of the outstanding common stock of
SCKI.
2. Acquisition of Station
On January 28, 1994, SBI, a newly formed corporation and wholly owned subsidiary
of the Company, purchased all of the outstanding stock of Oklahoma City
Broadcasting Company (OCBC) for $10,973,241. The acquisition was accounted for
as a purchase transaction with the purchase price being allocated to the assets
and liabilities acquired based upon their fair market values at the date of
acquisition. In connection with the transaction, SBI also entered into a
noncompete agreement with the seller of OCBC valued at $1,500,000, for which a
note payable was issued to the seller. The cost of the noncompete agreement is
being amortized over the five-year term of the agreement. The acquisition was
financed from the issuance of stock for $3,100,000 and from bank debt in the
amount of $7,873,241. Concurrent with the acquisition, SBI and OCBC merged,
forming SCOI.
3. Due to Related Parties
Amounts due to related parties consist of fees charged by shareholders of the
Company in connection with the acquisition of the Partnership (Note 1) in
November 1992 and includes accrued interest at 7.75%.
4. Sale of Station
On March 4, 1996, the shareholders of the Company entered into an agreement with
an unrelated entity to sell all of the Company's outstanding shares of preferred
and common stock. Pursuant to the terms of the stock purchase agreement, the
buyer will cause the Company to pay in full all of the outstanding debt of the
Company plus accrued interest and prepayment penalties. The balance of the
proceeds will be distributed to the selling shareholders.
<PAGE>
Kansas City TV 62
Limited Partnership
Financial Statements
As of March 31, 1996
<PAGE>
Kansas City TV 62 Limited Partnership
Balance Sheet
As of March 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,134,922
Accounts receivable, net of allowance for
doubtful accounts of 3,364,947
Program contract rights, current portion 3,000,296
Prepaid expenses and other current assets 310,542
-----------
Total current assets 7,810,707
Property and equipment, net of accumulated
depreciation 601,414
Due from related party 11,228
Program contract rights, long-term portion 3,134,620
Intangible assets, net of accumulated amortization 3,772,238
-----------
Total assets $15,330,207
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Program contract rights payable, current portion $ 3,610,305
Accounts payable 42,122
Deferred revenue 115,592
Accrued liabilities 1,391,839
Note payable, current portion 1,125,000
-----------
Total current liabilities 6,284,858
PROGRAM CONTRACTS PAYABLE, net of current portion 2,815,307
NOTE PAYABLE, net of current portion 14,355,040
-----------
Total liabilities 23,455,205
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock -
Additional paid-in capital -
Retained earnings (8,124,998)
-----------
Total stockholders' equity (8,124,998)
-----------
Total liabilities and stockholders' equity $15,330,207
===========
The accompanying notes are an integral part of this unaudited balance sheet.
<PAGE>
Kansas City TV 62 Limited Partnership
Statement of Operations
For the Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1996
---------- ----------
REVENUES:
Advertising revenue, net of agency commissions
of $581,860 and $704,751 $ 2,864,403 $3,292,377
Revenues realized from barter arrangements 677,728 852,925
----------- ----------
Total Revenues 3,542,131 4,145,302
OPERATING EXPENSES:
Programming and production 74,576 96,444
Selling, general and administrative 1,214,856 1,130,566
Amortization of program contract rights 932,292 1,116,516
Depreciation and amortization of property and equipment 207,504 188,655
Amortization of intangible assets
----------- ----------
Total operating expenses 2,429,228 2,532,181
----------- ----------
Broadcast operating income 1,112,903 1,613,121
----------- ----------
OTHER INCOME:
Interest expense, net (544,488) (356,500)
Other income (expense) (19,420) 9,907
----------- ----------
Total other income $ 563,908 $ (346,593)
----------- ----------
Net income $ 548,995 $1,266,528
=========== ==========
Pro Forma Net Income After Imputing An Income Tax Provision:
Net income as reported $ 548,995 $1,266,528
Imputed income tax provision (263,518) (607,933)
----------- ----------
Pro Forma net income $ 285,477 $ 658,595
=========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE>
<TABLE>
<CAPTION>
Kansas City TV 62 Limited Partnership
Statement of Cash Flows
For The Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
1995 1996
-------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 548,995 $ 1,266,528
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 154,941 140,806
Amortization of goodwill and other intangible assets 52,563 47,849
Amortization of program contracts rights 300,665 293,347
Changes in assets and liabilities:
Decrease in accounts receivable 420,322 587,850
Increase in prepaid expenses (48,633) (292,998)
Increase (Decrease) in accounts payable 176,562 (80,213)
Decrease in accrued liabilities (155,643) (153,857)
Decrease in other current liabilities (8,244) (26,847)
Film Rights Payments (549,884) (463,773)
-------------- ------------
Net cash flows from operating activites 891,644 1,318,692
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (41,536) (7,586)
-------------- ------------
Net cash flows from investing activities (41,536) (7,586)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt - (766,070)
Proceeds from issuance of long-term debt 745,838 -
-------------- ------------
Net cash flows from financing activities 745,838 (766,070)
-------------- ------------
Net increase in cash 1,595,946 545,036
-------------- ------------
CASH, beginning of year 978,488 589,885
-------------- ------------
CASH, end of year $ 2,574,434 $ 1,134,922
============== ============
Supplemental Schedule of Noncash Investing and Financing
Activities:
Film contracts acquired $ 41,000 $ 308,400
-------------- ------------
Film contract liability additions $ 41,000 $ 308,400
============== ============
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE>
KANSAS CITY TV 62 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
1. ORGANIZATION:
Kansas City TV 62 Limited Partnership (the "Partnership") is a joint venture of
ABRY Communications III, L.P., the general partner, and Copley Place Capital
Group, the limited partner. The Partnership was organized under the laws of the
State of Delaware on April 18, 1990. On September 21, 1990, the Partnership
acquired the business and certain assets of Kansas City Television, Inc. (the
"Seller"). The Partnership is a television broadcaster serving the Kansas City
area through Station KSMO on UHF Channel 62.
These statements are unaudited, and certain information and footnote disclosures
normally included in the Partnership's annual financial statements have been
omitted, as permitted under the applicable rules and regulations. Readers of
these statements should refer to the financial statements and the notes thereto
as of December 31, 1995 and for the year ended included elsewhere in this
filing. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
2. RELATED PARTY TRANSACTIONS:
Prior to 1995, ABRY Communications III, L.P., provided certain administrative
and support services to the Partnership for which it was paid a management fee.
Management fees charged to operations aggregated $276,000 in 1994. No management
fees were charged during 1995.
3. OPTION AGREEMENT:
On May 24, 1994, the Partnership entered into an agreement whereby the
Partnership granted a third-party an option to acquire the assets of the station
for an amount equal to the lesser of outstanding debt as of the exercise date,
including accrued interest thereon, or $9,000,000. The acquiring entity will
assume all other liabilities of the station. In conjunction with option
agreement, the Partnership entered into an agreement with the third-party
whereby the Partnership would pay the third-party a consulting fee of $250,000
per year as long as the option is outstanding.
<PAGE>
Cincinnati TV 64
Limited Partnership
Financial Statements
As of March 31, 1996
<PAGE>
CINCINNATI TV 64, Limited Partnership
Balance Sheet
As of March 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,377,254
Accounts receivable, net of allowance for
doubtful accounts of $101,814 2,299,958
Program contract rights, current portion 3,884,101
Deferred barter costs -
Prepaid expenses-related party -
Prepaid expenses and other current assets 50,082
Intercompany receivables -
---------------
Total current assets 7,611,395
Property and equipment, net of accumulated
depreciation 5,098,809
Program contract rights, long-term portion 3,739,834
Intangible assets, net of accumulated amortization 1,726,596
Other assets
---------------
Total assets $ 18,176,634
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Program contract rights payable, current portion $ 4,532,849
Accounts payable 553,590
Deferred barter revenue 133,424
Accrued liabilities 785,554
Intercompany payable -
Debt-Current 950,004
Other current liabilities
---------------
Total current liabilities 6,955,421
CAPITAL LEASE OBLIGATION, noncurrent portion
PROGRAM CONTRACTS PAYABLE, noncurrent portion 3,617,753
DEBT- LONG-TERM 18,576,603
OTHER LIABILITIES- LONG-TERM -
---------------
Total liabilities 29,149,777
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock (10,973,143)
Additional Paid-in Capital -
Retained Earnings -
---------------
Total stockholders' equity (10,973,143)
---------------
Total liabilities and stockholders' equity $ 18,176,634
================
The accompanying notes are an integral part of this unaudited balance sheet.
<PAGE>
Cincinnati TV 64, Limited Partnership
Statement of Operations
For The Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
REVENUES: 1995 1996
----------------------
Advertising revenue, net of agency commissions
of $461,779 and $534,872 $2,423,565 $2,725,271
OPERATING EXPENSES:
Programming and production 156,546 168,749
Selling, general and administrative 867,744 1,153,301
Expenses realized from station barter agreements - -
Amortization of program contract rights 1,231,675 1,365,464
Depreciation and amortization of property and equipment 156,177 142,019
Amortization of intangible assets 19,350 19,350
---------- ----------
Total operating expenses 2,431,492 2,848,883
---------- ----------
Broadcast operating income (7,927) (123,612)
---------- ----------
OTHER INCOME:
Interest Expense (647,838) (576,601)
Interest income, net 3,853 7,885
Other income 838,360 844,789
---------- ----------
Total other income 194,375 276,073
---------- ----------
Net income $ 186,448 $ 152,461
========== ==========
Pro Forma Net Income After Imputing An Income Tax
Provision:
Net income, as reported $ 186,448 $ 152,461
Imputed income tax provision (89,495) (73,181)
----------- ----------
Pro Forma net income $ 96,953 $ 79,280
========== ==========
The accompanying notes are an integral part of these unaudited statements.
<PAGE>
Cincinnati TV 64, Limited Partnership
Statement of Cash Flows
For the Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1996
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 186,448 $ 152,461
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 156,177 142,019
Accretion of Subdebt 82,276 98,685
Amortization of goodwill and other intangible assets 19,350 19,350
Amortization of program contracts rights 359,035 509,368
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 833,229 924,876
(Increase) decrease in prepaid expenses and other current assets (21,061) (35,255)
Increase (decrease) in accounts payable (604,357) (308,257)
Increase (decrease)in accrued liabilities 171,121 137,603
Increase (decrease) in program rights payable (115,521) (665,479)
Increase (decrease) in notes payable - (186,719)
---------- ------------
Net cash provided by operating activities 1,066,697 788,652
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (69,634) (2,897)
---------- -----------
Net cash flows from investing activities (69,634) (2,897)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (550,001) (50,001)
---------- -----------
Net cash flows used in financing activities (550,001) (50,001)
---------- -----------
Net increase in cash 447,062 735,754
CASH, beginning of period 482,000 641,500
Cash, end of period $ 929,062 $ 1,377,254
========== ===========
Supplemental Schedule of Noncash investing and financing:
Film contracts acquired $ 206,000 $ (8,000)
---------- ----------
Film liability additions $ 206,000 $ (8,000)
========== ===========
The accompanying notes are an integral part of these unaudited statements.
</TABLE>
<PAGE>
CINCINNATI TV 64 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
1. ORGANIZATION:
Cincinnati TV 64 Limited Partnership (the "Partnership") is a joint venture of
ABRY Communications II, L.P., the general partner, and Copley Place Capital
Group, the limited partner. The Partnership was organized under the laws of the
State of Delaware on August 1, 1989. The Partnership is a television broadcaster
serving the Cincinnati, Ohio area through Station WSTR on UHF Channel 64.
These statements are unaudited, and certain information and footnote disclosures
normally included in the Partnership's annual financial statements have been
omitted, as permitted under the applicable rules and regulations. Readers of
these statements should refer to the financial statements and the notes thereto
as of December 31, 1995 and for the year ended included elsewhere in this
filing. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
2. RELATED PARTY TRANSACTIONS:
Prior to 1995, ABRY Communications II, L.P., provided certain administrative and
support services to the Partnership for which it was paid a management fee.
3. OPTION AGREEMENT:
On May 24, 1994, the Partnership entered into an agreement whereby the
Partnership granted a third-party an option to acquire the assets of the station
for an amount equal to the lesser of outstanding debt as of the exercise date,
including accrued interest thereon, or $11,000,000. The acquiring entity will
assume all other liabilities of the station. In conjunction with option
agreement, the Partnership entered into an agreement with the third-party
whereby the Partnership would pay the third-party a consulting fee of $250,000
per year as long as the option is outstanding. The third-party exercised this
option in January 1996. The transaction is subject to regulatory approval.
<PAGE>
RIVER CITY BROADCASTING
(RIVER CITY BROADCASTING, L.P.
AND ITS MAJORITY-OWNED BUSINESSES)
Consolidated Financial Statements
As of March 31, 1996
<PAGE>
River City Broadcasting L.P.
Balance Sheet
As of March 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,969,498
Accounts receivable, net of allowance for
doubtful accounts of 45,488,514
Program contract rights, current portion 18,713,753
Prepaid expenses and other current assets 7,809,096
------------------
Total current assets 73,980,861
Property and equipment, net of accumulated
depreciation 95,799,916
Program contract rights, long-term portion 20,364,645
Intangible assets, net of accumulated amortization 344,954,112
Other Non-current assets 23,823,652
------------------
Total assets $ 558,923,186
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 11,794,728
Program contract rights payable, current portion 27,686,463
Accrued expenses 1,579,437
Note payable, current portion 27,615,897
------------------
Total current liabilities 68,676,525
PROGRAM CONTRACTS PAYABLE, net of current portion 23,339,961
Long_Term Debt, net of current portion 411,413,000
Accrued interest 7,181,294
Other long-term liabilities 5,529,333
------------------
Total liabilities 516,140,113
------------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL 42,783,073
------------------
Total liabilities and partners' capital $ 558,923,186
==================
The accompanying notes are an integral part of this unaudited balance sheet.
<PAGE>
River City Broadcasting L.P.
Statement of Operations
For the Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
--------------- ---------------
<S> <C> <C>
Net operating revenues:
Local time sales $ 19,663,478 $ 27,584,261
National time sales 14,369,561 17,475,124
Other revenues 1,117,268 2,656,661
--------------- ---------------
Total Net Revenue 35,150,307 47,716,046
Operating costs:
Programming and production 3,379,240 6,196,755
Selling, general and administrative 13,564,372 23,052,357
Amortization of program contract rights 6,666,141 6,570,472
Depreciation 2,962,204 3,754,598
Amortization of intangible assets 5,967,595 8,589,180
--------------- ---------------
Total operating expenses 32,539,552 48,163,362
--------------- ---------------
Broadcast operating income 2,610,755 (447,316)
--------------- ---------------
Other income:
Interest expense, net (10,088,258) (9,189,378)
Other income (expense) (566,675) (80,007)
--------------- ---------------
Total other income (10,654,933) (9,269,385)
--------------- ---------------
Net loss $ (8,044,178) $ (9,716,701)
=============== ===============
Pro Forma Net Loss After Imputing An Income Tax Benefit:
Net loss as reported $ (8,044,178) $ (9,716,701)
Imputed income tax benefit 3,861,205 4,664,016
--------------- ---------------
Pro Forma net loss $ (4,182,973) $ (5,052,685)
=============== ===============
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE>
River City Broadcasting L.P.
Statement of Cash Flows
For The Three Months Ended March 31, 1995 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,044,178) $ (9,716,701)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,962,204 3,754,598
Amortization of goodwill and other intangible assets 6,383,653 8,623,575
Amortization of program contracts rights 6,666,141 6,570,472
Changes in assets and liabilities:
Decrease in accounts receivable 7,374,201 10,353,647
(Increase)decrease in prepaid expenses 327,811 (163,934)
(Increase)decrease in noncurrent assets 19,368 (3,563,341)
Increase in accounts payable and accrued expenses 831,595 1,540,224
Deferred compensation 335,823 -
Retirement of film contract payable (6,863,414) (8,408,085)
------------ -----------
Net cash flows from operating activites 9,993,204 8,990,455
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (4,349,795) (1,350,389)
Additions to licenses and other intangibles - (1,480,517)
Costs to acquire other stations (13,000,000) (3,200,000)
------------ -----------
Net cash flows from investing activities (17,349,795) (6,030,906)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (11,050,000) (4,000,000)
Net borrowings under senior credit facility 17,000,000 -
------------ -----------
Net cash flows from financing activities 5,950,000 (4,000,000)
------------ -----------
Net decrease in cash (1,406,591) (1,040,451)
CASH, beginning of period 2,444,738 3,009,949
------------ ------------
CASH, end of period $ 1,038,147 $ 1,969,498
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE>
RIVER CITY BROADCASTING L.P.
Notes to Consolidated Financial Statements
March 31, 1996
1. Business Description
River City Broadcasting, L.P. (River City Broadcasting or the Partnership) is a
limited partnership formed to purchase and operate broadcast properties and
related activities. River City Broadcasting has acquired nine broadcast
television stations and 24 radio stations. The Partnership also operates one
television station and three radio stations under local marketing agreements
(LMAs). River City Broadcasting is managed by its general partner subject to
terms and conditions specified in the Second Amended and Restated Agreement and
conditions specified in the Second Amended and Restated Agreement of Limited
Partnership (Limited Partnership Agreement).
On September 3, 1993, River City Broadcasting entered into a Reorganization
Agreement, whereby additional equity funding was injected into the Partnership,
and certain partners' interests were redeemed (the Recapitalization).
These statements are unaudited, and certain information and footnote disclosures
normally included in the Company's annual financial statements have been
omitted, as permitted under the applicable rules and regulations. Readers of
these statements should refer to the financial statements and notes thereto as
of December 31, 1995 and for the year ended included elsewhere in this filing.
The results of operations presented in the accompanying financial statements are
not necessarily representative of operations for an entire year.
Related Party Transactions
Prior to the Recapitalization, the general partner received a management fee
from each station primarily based on the individual station's revenues.
Subsequent to the Recapitalization, the general partner no longer received
management fees. Pursuant to the Recapitalization, corporate expenses are
allocated to each station to cover the salaries and expenses of senior
management. Such allocation is based upon certain financial information and
management's estimate of actual time spent. Management believes the allocation
is reasonable and approximates what the expense would have been on a stand-alone
basis.
Subsequent Event
In January 1996, the Partnership acquired the remaining 40% partnership interest
in Twin Peaks Radio which owned and operated three radio stations in the
Albuquerque, New Mexico area.
