<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
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 24, 2000
REGENT COMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-15392 31-1492857
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 EAST RIVERCENTER BOULEVARD
9TH FLOOR
COVINGTON, KENTUCKY 41011
(Address of principal executive offices)
(859) 292-0030
(Registrant's telephone number, including area code)
<PAGE> 2
This Amendment No. 1 to the Current Report on Form 8-K dated August 24, 2000 and
filed on August 29, 2000, is submitted to include the required financial
statements of radio stations WGRD-FM, WTRV-FM, WLHT-FM, and WNWZ-AM in Grand
Rapids, Michigan, radio stations WQBJ-FM, WQBK-FM and WTMM-AM in Albany,
New York and radio stations WGNA-FM, WGNA-AM and WABT-FM in Albany, New York,
and the required pro forma financial information which were impracticable to
provide at the time the Form 8-K was initially filed.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 24, 2000, pursuant to the terms of an Asset Exchange
Agreement dated as of March 12, 2000, as amended, we acquired from Clear Channel
Broadcasting, Inc., Capstar Radio Operating Company and their related entities
substantially all of the assets of four FM and two AM radio stations in Albany,
New York and three FM and one AM radio stations in Grand Rapids, Michigan in
exchange for substantially all of the assets of our five FM and three AM radio
stations in the Mansfield, Ohio and Victorville, California markets and the
payment by us of $80,465,000 in cash.
<TABLE>
<CAPTION>
Stations Acquired Stations Disposed of
----------------- --------------------
<S> <C> <C> <C>
Albany, NY............... WQBJ(FM) Victorville, CA............... KZXY(FM)
WQBK(FM) KATJ(FM)
WABT(FM) KIXA(FM)
WGNA(FM) KIXW(AM)
WGNA(AM) KROY(AM)
WTMM(AM)
Grand Rapids, MI......... WLHT(FM) Mansfield, OH................. WYHT(FM)
WGRD(FM) WSWR(FM)
WTRV(FM) WMAN(AM)
WNWZ(AM)
</TABLE>
The sources for the cash portion of the purchase price paid by us were
as follows:
(a) borrowings in the amount of $44,000,000 under our Credit
Agreement with Fleet National Bank, as Administrative Agent
and Issuing Lender, GE Capital Commercial Finance, Inc., as
Syndication Agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as Documentation Agent, and the several lenders
party thereto; and
(b) $36,465,000 of proceeds from our initial public offering of
common stock completed on January 28, 2000 and cash from
operations.
The terms of this transaction were arrived at and agreed upon through
arms' length negotiations between the parties. We intend to continue to use the
assets acquired in a manner consistent with their use prior to their acquisition
by us.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The following information is included in this report beginning at page F-1:
RADIO STATIONS - WQBJ-FM, WQBK-FM and WTMM-AM
Report of Independent Accountants
Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31,
1999 and 1998
Combined Statements of Operations for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the years ended
December 31, 1999 and 1998
Combined Statements of Cash Flows for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the years ended
December 31, 1999 and 1998
Combined Statements of Stations' Equity for the years ended
December 31, 1999 and 1998
Notes to the Combined Financial Statements
RADIO STATIONS - WGNA-FM, WGNA-AM and WABT-FM
Report of Independent Accountants
Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31,
1999 and 1998
Combined Statements of Operations for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999, the period from May 28, 1998 to December 31, 1998 and the period
from January 1, 1998 to May 27, 1998
Combined Statements of Cash Flows for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999, the period from May 28, 1998 to December 31, 1998 and the period
from January 1, 1998 to May 27, 1998
Combined Statements of Stations' Equity for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999, the period from May 28, 1998 to December 31, 1998 and the period
from January 1, 1998 to May 27, 1998.
Notes to the Combined Financial Statements
RADIO STATIONS - WGRD-FM, WTRV-FM, WLHT-FM and WNWZ-AM
Report of Independent Accountants
Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31,
1999 and 1998
Combined Statements of Operations for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999, and the period from February 1, 1998 to December 31, 1998
Combined Statements of Cash Flows for the six months ended June 30,
2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999, and the period from February 1, 1998 to December 31, 1998
Combined Statements of Stations' Equity for the period from July 13,
1999 to December 31, 1999, the period from January 1, 1999 to July 12,
1999 and the period from February 1, 1998 to December 31, 1998.
Notes to the Combined Financial Statements
Page 2
<PAGE> 3
(b) PRO FORMA FINANCIAL INFORMATION.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
contain our results of operations for the year ended December 31, 1999 and the
six months ended June 30, 2000 and our balance sheet as of June 30, 2000, after
giving effect to the transactions described below. The unaudited pro forma
statements of operations give effect to the following transactions as if they
had occurred on January 1, 1999, and the unaudited pro forma balance sheet as
of June 30, 2000 gives effect to the following transactions as if they had
occurred as of June 30, 2000. The unaudited pro forma financial statements give
effect to:
o all significant radio station acquisitions that we have
completed since January 1, 1999, including WJON (AM), WWJO
(FM) and KMXK (FM) in St. Cloud, Minnesota; WRIE (AM), WXKC
(FM), and WXTA (FM) in Erie, Pennsylvania; KROD (AM), KLAQ
(FM), and KSII (FM) in El Paso, Texas; WIBX (AM), WRUN (AM),
WFRG (FM), WLZW (FM) and WODZ (FM) in Utica, New York; WTNY
(AM), WUZZ (AM), WFRY (FM) and WCIZ (FM) in Watertown, New
York; WTMM (AM), WGNA (AM), WGNA (FM), WQBK (FM), WABT (FM)
and WQBJ (FM) in Albany, New York; and WNWZ (AM), WLHT (FM),
WGRD (FM) and WTRV (FM) in Grand Rapids, Michigan;
o all significant radio station dispositions that we have
completed since January 1, 1999, including WSSP (FM) in
Charleston, South Carolina; KCBQ (AM) in San Diego,
California; KFLG (AM), KAAA (AM), KFLG (FM), and KZZZ (FM) in
Kingman, Arizona; KOWL (AM) and KRLT (FM) in Lake Tahoe,
California; WMAN (AM), WYHT (FM) and WSWR (FM) in Mansfield,
Ohio; and KIXW (AM), KROY (AM), KATJ (FM), KZXY (FM) and KIXA
(FM) in Victorville, California;
o the payment of accumulated, unpaid dividends on all series of
preferred stock;
o the private placement of our Series K convertible preferred
stock;
o the redemption of our Series B convertible preferred stock and
the conversion of all other series of convertible preferred
stock into common stock;
o the repayment of all borrowings under our former bank
credit facility and payment of new bank credit facility fees;
o the repurchase of 275,152 shares of our common stock; and
o the public offering of our common stock and use of the net
proceeds.
The unaudited pro forma financial statements are based on our historical
consolidated financial statements and the historical financial statements of
those entities acquired in our consummated transactions. They reflect the use
of the purchase method of accounting for all acquisitions but do not reflect
any estimated cost savings that we believe will be realized. The final
allocation of the relative purchase prices of the stations acquired is
determined a reasonable time after consummation of such transactions and is
based on independent appraisals of the assets acquired and liabilities assumed.
Accordingly, the information presented may differ from the final purchase price
allocations; however, in our opinion, the final purchase price allocations will
not differ significantly from the information presented. In our opinion, all
adjustments have been made that are necessary to present fairly the pro forma
data.
The unaudited pro forma financial statements are presented for
illustrative purposes only and are not indicative of the operating results or
financial position that would have occurred if the transactions described above
had been completed on the dates indicated.
Page 3
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You should read the unaudited pro forma financial statements presented below
together with our consolidated financial statements and notes contained in this
report starting on page F-1 and those previously filed. See our Form 10-K/A
filed April 4, 2000, Form 10-Q filed August 10, 2000 and Form S-1 (Amendment
No. 1) filed December 29, 1999.
REGENT COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
1999 FOR 1999 FOR
HISTORICAL COMPLETED COMPLETED COMPLETED
REGENT TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS
---------- --------------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net broadcast revenues $ 23,854 $ 779 $ 24,633
Station operating expenses 18,325 (207) 18,118
Depreciation and amortization 3,368 424 $ (104)(4) 3,688
Corporate general and administrative
expenses 2,774 593 3,367
-------- ----- ------- --------
Operating income (loss) (613) (31) 104 (540)
Interest expense (5,248) (420) (638)(5) (6,306)
Other income (expense), net (438) 13 (425)
-------- ----- ------- --------
Loss from continuing operations,
before income taxes (6,299) (438) (534) (7,271)
Income tax expense -- -- --
-------- ----- ------- --------
Loss from continuing operations (6,299) (438) (534) (7,271)
Preferred stock dividends and accretion (22,427) -- (505)(5) (22,932)
-------- ----- ------- --------
Loss from continuing operations
attributable to common stockholders $(28,726) $(438) $(1,039) $(30,203)
======== ===== ======= ========
Basic and diluted loss per common share $(119.69)
Weighted average common shares used in basic
and diluted computations 240
</TABLE>
<TABLE>
<CAPTION>
ADJUSTMENTS HISTORICAL ADJUSTMENTS
FOR 2000 FOR 2000
FINANCING COMPLETED COMPLETED PRO FORMA
TRANSACTIONS(2) TRANSACTIONS(3) TRANSACTIONS AS ADJUSTED
--------------- --------------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net broadcast revenues $26,678 $ 51,311
Station operating expenses 16,676 34,794
Depreciation and amortization 7,045 $ 3,549(4) 14,282
Corporate general and administrative
expenses 714 4,081
------- ------- -------- --------
Operating income (loss) 2,243 (3,549) (1,846)
Interest expense $ 6,306 (1,665) (4,400)(6) (6,065)
Other income (expense), net 76 (349)
------- ------- -------- --------
Income (loss) from continuing operations,
before income taxes 6,306 654 (7,949) (8,260)
Income tax expense (494) 494 --
------- ------- -------- --------
Income (loss) from continuing operations 6,306 160 (7,455) (8,260)
Preferred stock dividends and accretion 22,932 -- --
------- ------- -------- --------
Income (loss) from continuing operations
attributable to common stockholders $29,238 $ 160 $ (7,455) $ (8,260)
======= ======= ======== ========
Basic and diluted loss per common share $ (.24)
Weighted average common shares used in basic
and diluted computations 34,516(7)
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Statements of Operations.
Page 4
<PAGE> 5
REGENT COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
ADJUSTMENTS HISTORICAL ADJUSTMENTS
FOR 2000 FOR 2000
HISTORICAL FINANCING COMPLETED COMPLETED PRO FORMA
REGENT TRANSACTIONS(2) TRANSACTIONS(3) TRANSACTIONS AS ADJUSTED
---------- --------------- --------------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 18,138 $ 7,425 $25,563
Station operating expenses 12,697 4,309 17,006
Depreciation and amortization 3,269 4,830 $ (792)(4) 7,307
Corporate general and administrative
expenses 2,131 232 2,363
-------- ------- ------- ------- -------
Operating income (loss) 41 (1,946) 792 (1,113)
Interest expense (2,478) $ 2,478 -- (2,200)(6) (2,200)
Other income, net 728 1 729
-------- ------- ------- ------- -------
Income (loss) from continuing operations,
before income taxes (1,709) 2,478 (1,945) (1,408) (2,584)
Income tax (expense) benefit -- 200 (200) --
-------- ------- ------- ------- -------
Income (loss) from continuing operations (1,709) 2,478 (1,745) (1,608) (2,584)
Preferred stock dividends and accretion (27,240) 27,240 -- --
-------- ------- ------- ------- -------
Income (loss) from continuing operations
attributable to common stockholders $(28,949) $29,718 $(1,745) $(1,608) $(2,584)
======== ======= ======= ======= =======
Basic and diluted income (loss) per common share $ (.98) $ (.07)
Weighted average common shares used in basic
and diluted computations 29,365 34,582(7)
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
Statements of Operations.
Page 5
<PAGE> 6
REGENT COMMUNICATIONS, INC.
NOTES TO THE UNDAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(1) Adjusts for historical revenues and expenses for the year ended December
31, 1999 for stations acquired or disposed of by us during 1999. The
adjustment reflects our acquisitions of three radio stations in the St.
Cloud, Minnesota market and three radio stations in the Erie, Pennsylvania
market and our dispositions of one radio station in Charleston, South
Carolina, one radio station in San Diego, California, three radio stations
in Kingman, Arizona and two radio stations in Lake Tahoe, California.
The following table summarizes the historical revenues and expenses of the
stations acquired by us during 1999 for the period from January 1,1999
through the date they were acquired by us and eliminates the historical
revenues and expenses of the stations we divested during 1999 for the
period from January 1, 1999 through the date we divested the stations:
HISTORICAL 1999 COMPLETED TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
1999
HISTORICAL HISTORICAL HISTORICAL COMPLETED
ERIE ST. CLOUD DISPOSITIONS TRANSACTIONS
---------- ---------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net broadcast revenues $2,077 $1,007 $(2,305) $ 779
Station operating expenses 1,081 657 (1,945) (207)
Depreciation and amortization 609 72 (257) 424
Corporate general and administrative
expenses 376 217 -- 593
------ ------ ------- ------
Operating income (loss) 11 61 (103) (31)
Interest expense (380) (39) (1) (420)
Other income, net 13 -- -- 13
------ ------ ------- ------
Income (loss) from continuing operations,
before income taxes (356) 22 (104) (438)
Income tax expense -- -- -- --
------ ------ ------- ------
Income (loss) from continuing operations $ (356) $ 22 $ (104) $ (438)
====== ====== ======= ======
</TABLE>
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(2) Adjustments for Financing Transactions reflects the decrease in interest
expense related to the use of proceeds from the private and public
offerings to redeem our Series B convertible preferred stock, to pay all
accumulated, unpaid dividends on all series of preferred stock and to
repay all of our borrowings under our former bank credit facility, as well
as, to eliminate preferred stock dividends and accretion. A non-recurring
charge of $1,114,000 to write off deferred financing costs related to our
former bank credit facility has not been reflected in the accompanying
Unaudited Pro Forma Condensed Consolidated Statements of Operations.
(3) Adjusted for historical revenues and expenses of stations acquired or
disposed by us in 2000. The adjustment reflects our acquisition of three
radio stations in El Paso, Texas, five radio stations in Utica, New York,
and four radio stations in Watertown, New York completed January 2000, and
six radio stations in Albany, New York and four radio stations in Grand
Rapids, Michigan completed August 24, 2000. The adjustment also reflects
our disposition of three radio stations in Mansfield, Ohio and five radio
stations in Victorville, California completed August 24, 2000.
The following table summarizes the historical revenues and expenses for the
year ended December 31, 1999 of the stations acquired by us in 2000 and
eliminates the historical revenues and expenses for the year ended December
31, 1999 of the stations we divested in 2000.
HISTORICAL 2000 COMPLETED TRANSACTIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL HISTORICAL 2000
HISTORICAL HISTORICAL WQBJ,WQBK WGNA-FM,WABT WGRD,WTRV HISTORICAL COMPLETED
EL PASO FOREVER WTMM WGNA-AM WLHT,WNNZ DISPOSITIONS TRANSACTIONS
---------- ---------- ---------- ------------ ---------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net broadcast revenues $5,288 $8,112 $3,116 $6,534 $9,211 $(5,583) $26,678
Station operating expenses 3,821 4,196 2,691 3,508 6,038 (3,578) 16,676
Depreciation and amortization 620 997 503 3,250 2,867 (1,192) 7,045
Corporate general and administrative
expenses 180 -- 81 187 266 -- 714
------ ------ ------ ------ ------ ------- -------
Operating income (loss) 667 2,919 (159) (411) 40 (813) 2,243
Interest expense (801) (864) -- -- -- -- (1,665)
Other income, net -- 44 -- (4) 37 (1) 76
------ ------ ------ ------ ------ ------- -------
Income (loss) from continuing
operations, before income taxes (134) 2,099 (159) (415) 77 (814) 654
Income tax expense -- -- -- (128) (366) -- (494)
------ ------ ------ ------ ------ ------- -------
Income (loss) from continuing
operations $ (134) $2,099 $ (159) $ (543) $ (289) $ (814) $ 160
====== ====== ====== ====== ====== ======= =======
</TABLE>
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The following table summarizes the historical revenues and expenses of the
stations acquired by us during 2000 for the period January 1, 2000 through
the date they were acquired by us and eliminates the historical revenues
and expenses of the stations we divested during 2000 for the period January
1, 2000 through the date we divested the stations:
HISTORICAL 2000 COMPLETED TRANSACTIONS
For the Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL HISTORICAL 2000
HISTORICAL HISTORICAL WQBJ,WQBK WGNA-FM,WABT WGRD,WTRV HISTORICAL COMPLETED
EL PASO FOREVER WTMM WGNA-AM WLHT,WNNZ DISPOSITIONS TRANSACTIONS
---------- ---------- ---------- ------------ --------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net broadcast revenues $389 $590 $1,271 $3,256 $4,698 $(2,779) $ 7,425
Station operating expenses 332 312 883 1,768 2,910 (1,896) 4,309
Depreciation and amortization 52 83 243 2,576 2,364 (488) 4,830
Corporate general and administrative
expenses -- -- 37 76 119 -- 232
---- ---- ------ ------ ------ ------- -------
Operating income (loss) 5 195 108 (1,164) (695) (395) (1,946)
Interest expense -- -- -- -- -- -- --
Other income, net 1 -- -- -- -- -- 1
---- ---- ------ ------ ------ ------- -------
Income (loss) from continuing
operations, before income taxes 6 195 108 (1,164) (695) (395) (1,945)
Income tax (expense) benefit -- -- -- 224 (24) -- 200
---- ---- ------ ------ ------ ------- -------
Income (loss) from continuing
operations $ 6 $195 $ 108 $ (940) $ (719) $ (395) $(1,745)
==== ==== ====== ====== ====== ======= =======
</TABLE>
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(4) Adjustment gives effect to the depreciation and amortization of assets
acquired in our transactions in 1999 and 2000. Assigned lives for the
acquired assets are as follows: FCC licenses and goodwill, 20 years;
buildings, 40 years; broadcasting equipment, 6 to 13 years; furniture and
fixtures, 5 years; and other intangibles, 5 to 15 years. Depreciation
expense has been calculated on a straight-line basis.
(5) Adjustment to reflect increased interest expense resulting from the debt
incurred for the St. Cloud, Minnesota and Erie, Pennsylvania stations
acquired in 1999.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Interest on the $14,818,000 indebtedness under our
former bank credit facility as if borrowed from
January 1, 1999 at 8.50% (variable) $1,260 $ 107
Less: historical interest expense recorded by us in
connection with the St. Cloud and Erie stations
acquired (622) (107)
------ -----
Net adjustment $ 638 $ --
====== =====
</TABLE>
The variable rate used to calculate pro forma interest expense on our
former bank credit facility is 8.50%. The rate is based on the rate in
effect at December 31, 1999.
In addition an adjustment to reflect additional dividend requirements and
accretion related to convertible preferred stock that was issued in
conjunction with the acquisition of the St. Cloud, Minnesota and Erie,
Pennsylvania stations acquired in 1999.
(6) Adjustment to reflect increased interest expense resulting from
indebtedness of $44,000,000 under our existing bank credit facility as if
borrowed from January 1, 1999 at 10.00%. The variable interest rate used
to calculate pro forma interest on our existing bank credit facility is
based on the rate in effect on August 24, 2000. A 0.125% change in the
interest rate on our existing bank credit facility results in a $61,000
and $46,000 change in the pro forma interest expense for the year ended
December 31, 1999 and for the six months ended June 30, 2000,
respectively.
(7) Historical weighted average common shares have been adjusted to reflect
the issuance of 18,400,000 common shares in the January 2000 public
offering of common stock (including the underwriters' overallotment of
2,400,000 shares exercised in February 2000), together with the conversion
of 15,775,839 shares of convertible preferred stock to the same number of
common shares, the redemption of 1,000,000 shares of convertible preferred
stock, the repurchase of 275,152 shares of common stock and the issuance
of 100,000 shares of common stock in connection with the acquisition of
stations in New York, all of which was completed in January 2000. Basic
and diluted earnings per share are the same for all periods presented due
to the effect of potential common stock being antidilutive on a historical
basis and proforma basis.
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REGENT COMMUNICATIONS, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
at June 30, 2000
<TABLE>
<CAPTION>
AUGUST PRO FORMA
HISTORICAL 2000 AS
REGENT TRANSACTIONS(1) ADJUSTED
---------- --------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,792 $(33,792) $ --
Accounts receivable, net 7,689 -- 7,689
Other current assets 495 -- 495
Assets held for sale 2,000 -- 2,000
-------- -------- --------
Total current assets 43,976 (33,792) 10,184
Property and equipment, net 17,723 3,164 20,887
Intangible assets, net 119,738 102,718 222,456
Other assets, net 7,190 -- 7,190
-------- -------- --------
Total assets $188,627 $ 72,090 $260,717
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 60 -- $ 60
Other current liabilities 3,434 $ 2,673 6,107
-------- -------- --------
Total current liabilities 3,494 2,673 6,167
Long-term debt, less current portion 540 44,000 44,540
Other long-term liabilities 92 7,607 7,699
-------- -------- --------
Total liabilities 4,126 54,280 58,406
Stockholders' equity (deficit):
Preferred stock -- -- --
Common stock 349 -- 349
Treasury stock (1,513) -- (1,513)
Additional paid-in capital 256,559 -- 256,559
Retained deficit (70,894) 17,810 (53,084)
-------- -------- --------
Total stockholders' equity 184,501 17,810 202,311
-------- -------- --------
Total liabilities and stockholders' equity $188,627 $ 72,090 $260,717
======== ======== ========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Balance
Sheet.
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REGENT COMMUNICATIONS, INC.
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
(1) Records the purchase of substantially all of the assets, excluding
accounts receivable, of four FM and two AM stations in Albany, New York
and three FM and one AM stations in Grand Rapids, Michigan in exchange
for substantially all the assets of our five FM and three AM stations in
the Mansfield, Ohio and Victorville, California markets with a fair
value of $34,812,000 and the payment by us of $80,465,000 in cash.
<TABLE>
<CAPTION>
STATIONS ACQUIRED STATIONS DIVESTED
---------------------------------------------- -----------------------
WQBJ,WQBK WGNA-FM,WABT WGRD,WTRV MANSFIELD VICTORVILLE
WTMM WGNA-AM WLHT,WNNZ STATIONS STATIONS TOTAL
--------- ------------ --------- --------- ----------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FCC licenses 11,260 49,873 47,405 (5,562) (8,138) 94,838
Property and equipment, net 1,475 1,509 2,225 (1,081) (964) 3,164
Goodwill 438 6,143 2,556 (352) (905) 7,880
Deferred tax liability -- (5,705) (1,902) -- -- (7,607)
------ ------- ------- ------ ------- -------
13,173 51,820 50,284 (6,995) (10,007) 98,275
====== ======= ======= ====== ======= =======
</TABLE>
The cash portion of the transaction of $80,465,000 was funded through the
use of borrowings in the amount of $44,000,000 under our bank credit
facility, from the cash proceeds of the January 2000 public offering and
with cash from operations.
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(c) EXHIBITS.
The Exhibit Index following the signature page hereof constitutes a
list of all Exhibits filed with or incorporated by reference in this Form 8-K/A.
Page 12
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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 hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: November 7, 2000 By: /s/ Terry S. Jacobs
-------------------------
Terry S. Jacobs,
Chairman of the Board and
Chief Executive Officer
Page 13
<PAGE> 14
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of this Current Report on Form 8-K/A:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
2(a) Asset Exchange Agreement dated as of March 12, 2000 by and among
Clear Channel Broadcasting, Inc., Clear Channel Broadcasting
Licenses, Inc., Capstar Radio Operating Company, Capstar TX Limited
Partnership, Regent Broadcasting of Victorville, Inc., Regent
Licensee of Victorville, Inc., Regent Broadcasting of Palmdale,
Inc., Regent Licensee of Palmdale, Inc., Regent Broadcasting of
Mansfield, Inc. and Regent Licensee of Mansfield, Inc. (previously
filed as Exhibit 2(g) to the Registrant's Form 10-K for the year
ended December 31, 1999 and incorporated herein by this
reference)
2(b) First Amendment to Asset Exchange Agreement made on May 31, 2000 by
and among Clear Channel Broadcasting, Inc., Clear Channel
Broadcasting Licenses, Inc., Capstar Radio Operating Company,
Capstar TX Limited Partnership, Regent Broadcasting of Victorville,
Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of
Palmdale, Inc., Regent Licensee of Palmdale, Inc., Regent
Broadcasting of Mansfield, Inc. and Regent Licensee of Mansfield,
Inc. (previously filed as Exhibit 2(b) to the Registrant's Form 10-Q
for the quarter ended June 30, 2000 and incorporated herein by
this reference)
2(c) Second Amendment to Asset Exchange Agreement made on June 2, 2000 by
and among Clear Channel Broadcasting, Inc., Clear Channel
Broadcasting Licenses, Inc., Capstar Radio Operating Company,
Capstar TX Limited Partnership, Regent Broadcasting of Victorville,
Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of
Mansfield, Inc. and Regent Licensee of Mansfield, Inc. (previously
filed as Exhibit 2(c) to the Registrant's Form 10-Q for the quarter
ended June 30, 2000 and incorporated herein by this reference)
10(a) Letter agreement dated March 12, 2000 from Clear Channel
Communications, Inc. addressed to Regent Broadcasting of
Victorville, Inc., Regent Licensee of Victorville, Inc., Regent
Broadcasting of Palmdale, Inc., Regent Licensee of Palmdale, Inc.,
Regent Broadcasting of Mansfield, Inc. and Regent Licensee of
Mansfield, Inc. (previously filed as Exhibit 10(b) to the
Registrant's Form 10-K for the year ended December 31, 1999 and
incorporated herein by this reference)
Page 14
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Regent Communications, Inc.
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows, and stations' equity present
fairly, in all material respects, the financial position of Clear Channel
Communications, Inc. radio stations WQBJ-FM, WQBK-FM and WTMM-AM (the
"Stations") at December 31, 1999 and 1998, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Stations' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
November 3, 2000
Cincinnati, Ohio
F-1
<PAGE> 16
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
COMBINED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999 1998
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 73,052 $ 3,917 $ 18,544
Accounts receivable, less allowance for doubtful
accounts of $35,622, $19,617 and $21,188 in 2000,
1999 and 1998 709,775 615,639 554,728
Barter receivable 130,902 31,350 --
Other current assets 14,497 12,718 19,611
---------- ---------- ----------
Total current assets 928,226 663,624 592,883
Property and equipment, net 1,001,146 978,890 1,082,208
Intangible assets, net 4,814,196 4,960,148 5,263,974
---------- ---------- ----------
Total assets 6,743,568 6,602,662 6,939,065
---------- ---------- ----------
LIABILITIES AND STATIONS' EQUITY
Current liabilities:
Accounts payable -- 5,000 --
Accrued expenses 26,047 17,573 9,835
Barter payable 60,190 56,800 --
---------- ---------- ----------
Total current liabilities 86,237 79,373 9,835
Commitments and contingencies -- -- --
Stations' equity 6,657,331 6,523,289 6,929,230
---------- ---------- ----------
Total stations' equity 6,657,331 6,523,289 6,929,230
---------- ---------- ----------
Total liabilities and stations' equity $6,743,568 $6,602,662 $6,939,065
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 17
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
COMBINED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2000 1999 1999 1998
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gross broadcast revenues $1,435,024 $1,663,789 $3,440,635 $2,682,619
Less: Agency commissions 164,227 159,590 324,984 286,221
---------- ---------- ---------- ----------
Net broadcast revenues 1,270,797 1,504,199 3,115,651 2,396,398
Station operating expenses 883,087 1,357,478 2,691,061 2,227,822
Depreciation and amortization 242,926 248,094 503,321 531,336
Allocated corporate general and
administrative expenses 36,712 42,242 80,985 66,183
---------- ---------- ---------- ----------
Operating income (loss) 108,072 (143,615) (159,716) (428,943)
Other income (expense), net (311) -- -- --
---------- ---------- ---------- ----------
Income (loss) before income taxes 107,761 (143,615) (159,716) (428,943)
Income tax expense -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) $ 107,761 $ (143,615) $ (159,716) $ (428,943)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 18
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
COMBINED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2000 1999 1999 1998
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 107,761 $(143,615) $(159,716) $(428,943)
Adjustments to reconcile net loss to cash flows
from operating activities:
Depreciation and amortization 242,926 248,094 503,321 531,336
Allocation of corporate expenses 36,712 42,242 80,985 66,189
Changes in operating assets and liabilities:
Accounts receivable (193,688) 68,778 (92,261) (167,626)
Other current assets (1,777) 10,550 6,893 (34)
Accounts payable (1,614) -- 61,800 (55,777)
Accrued expenses 8,474 5,630 7,738 (5,691)
--------- --------- --------- ---------
Net cash flows provided/(used) by operating
activities 198,794 231,679 408,760 (60,546)
--------- --------- --------- ---------
Cash flows used in investing activities:
Purchase of property and equipment (113,268) (87,055) (96,177) (38,817)
--------- --------- --------- ---------
Net cash flows used in investing activities (113,268) (87,055) (96,177) (38,817)
--------- --------- --------- ---------
Cash flows from financing activities:
Net transfers (to)/from Parent Company (16,391) (149,781) (327,210) 114,193
--------- --------- --------- ---------
Net cash flows (used)/provided in financing
activities (16,391) (149,781) (327,210) 114,193
--------- --------- --------- ---------
Net (decrease) increase in cash 69,135 (5,157) (14,627) 14,830
Cash at the beginning of the period 3,917 18,544 18,544 3,714
--------- --------- --------- ---------
Cash at the end of the period $ 73,052 $ 13,387 $ 3,917 $ 18,544
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 19
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
COMBINED STATEMENTS OF STATIONS' EQUITY
--------------------------------------------------------------------------------
Balance at December 31, 1997 $7,177,791
Net transfers to/from parent company 114,193
Corporate expense allocation 66,189
Net loss (428,943)
----------
Balance at December 31, 1998 6,929,230
Net transfers to/from parent company (327,210)
Corporate expense allocation 80,985
Net loss (159,716)
----------
Balance at December 31, 1999 $6,523,289
==========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 20
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION:
These financial statements of WQBJ-FM, WQBK-FM and WTMM-AM (collectively
referred to as the "Stations"), located in Albany, NY owned by Clear
Channel Communications, Inc. ("Clear Channel" or the "Parent Company"),
have been prepared in conjunction with the sale of the Stations to Regent
Communications Inc. (see Note 7).
These combined financial statements present the operations of the Stations
on a "carved-out" basis. The combined financial statements have been
prepared as if the Stations had operated as a stand-alone entity for all
periods presented and include only those assets, liabilities, revenues and
expenses directly attributable to the Stations' operations. The Stations
are allocated certain corporate expenses for services provided by the
Parent Company based upon the percentage of revenue generated by each
station to total revenue of all stations operated by the Parent Company.
Though management is of the opinion that all allocations used are
reasonable and appropriate, other allocations might be used that could
produce results substantially different from those reflected herein, and
these cost allocations might not be indicative of amounts which might be
paid to unrelated parties for similar services or if the Stations had been
operated on a stand-alone basis. The Parent Company's corporate
departmental expenses of $80,985 and $66,189 have been allocated to the
Stations during 1999 and 1998, respectively, for management salaries and
benefits, legal services, corporate office and other miscellaneous
expenses. The financial information included herein does not necessarily
reflect the financial position and results of operations that the Stations
would have experienced had they operated as a stand-alone entity during the
periods covered and may not be indicative of future operations or financial
position.
The Stations were acquired by Clear Channel on March 15, 1997 for
$7,500,000 in cash and was accounted for as a purchase transaction.
The financial statements for the six months ended June 30, 2000 and 1999
are unaudited, but, in the opinion of management, such financial statements
have been presented on the same basis as the audited financial statements
for the year ended December 31, 1999 and include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations and cash
flows for these periods.
During the periods presented, the Stations did not maintain a significant
cash balance, but were funded as needed by the Parent Company. In turn, if
the Stations generated positive cash flow, the amounts were transferred
back to the Parent Company. The net of these activities for each period has
been presented in Stations' Equity as net transfers to and from the Parent
Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The significant accounting principles followed by the Stations and the
methods of applying those principles that materially affect the
determination of financial position, results of operation, and cash flow
are summarized below.
a. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially
subject the Stations to concentrations of credit risk consist
principally of accounts receivable. The credit risk is limited due to
the large number of customers comprising the Stations' customer base.
F-6
<PAGE> 21
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
b. FAIR VALUE OF FINANCIAL INSTRUMENTS: Financial instruments as of
December 31, 1999 and 1998 consist of cash, accounts receivable and
accounts payable, all of which approximate fair value.
c. PROPERTY AND EQUIPMENT: Purchases of property and equipment, including
additions and improvements and expenditures for repairs and
maintenance that significantly add to productivity or extend the
economic lives of the assets, are capitalized at cost and depreciated
on a straight-line basis over their estimated useful lives, as
follows:
Buildings and improvements 20 - 30 years
Broadcasting towers and equipment 7 - 10 years
Computers 3 - 5 years
Furniture and fixtures 7 - 10 years
d. INTANGIBLE ASSETS: Intangible assets are comprised of FCC licenses,
goodwill and five-year non-compete agreements.
FCC licenses are stated at cost and are being amortized using the
straight-line method over 25 years. Goodwill is stated at cost and is
being amortized over 25 years. The five-year non-compete agreements
were obtained by the Parent Company in connection with the initial
purchase of the Stations. The five-year non-compete agreements are
being amortized over the period of the agreement and expire March
2002.
The carrying value of intangible assets is reviewed by the Stations
when events or circumstances suggest that their recoverability may be
impaired. If this review indicates that the intangibles will not be
recoverable, as determined based on the undiscounted cash flows of the
entity over the remaining amortization period, the carrying value of
the intangibles will be reduced to their respective fair values.
e. BUSINESS SEGMENT AND REVENUE RECOGNITION: The Stations operate in one
business segment, and revenue is derived primarily from the sale of
commercial airtime to local and national advertisers in the Albany,
New York market area. Revenue is recognized as commercials are
broadcast. The stations also derive revenues from promotional events
which resulted in revenues of approximately $338,000 and $23,000 for
the years ended December 31, 1999 and 1998.
f. BARTER AGREEMENTS: The Stations enter into trade agreements which give
rise to sales of advertising air time in exchange for products and
services. Revenues from trade agreements are recognized at the fair
market value of the products or services received as advertising
airtime is broadcast. Products and services received are expensed when
used in the broadcast operations. The revenues from trade agreements
were $120,843, $122,301, $234,567 and $158,952 for the six months
ended June 30, 2000 and 1999 and the years ended December 31, 1999 and
1998, respectively. The products and services expensed were $22,793,
$114,946, $260,017 and $126,257 for the six months ended June 30, 2000
and 1999 and the years ended December 31, 1999 and 1998, respectively.
g. INCOME TAXES: The Stations were part of the combined return of the
Parent Company. For purposes of separate financial statement
presentation, the Stations' current and deferred income taxes have
been determined as if the Stations' were a separate taxpayer. Deferred
tax assets and liabilities have not been allocated to the Stations.
F-7
<PAGE> 22
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
h. USE OF ESTIMATES: 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 disclosures 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.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1999 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
---------- ----------
<S> <C> <C>
Land $ 143,700 $ 143,700
Building and improvements 10,000 10,000
Broadcasting towers and equipment 1,344,170 1,189,366
Furniture and fixtures 50,669 91,103
Construction in progress 5,223 23,416
---------- ----------
Total property and equipment 1,553,762 1,457,585
Less: accumulated depreciation 574,872 375,377
---------- ----------
Property and equipment, net $ 978,890 $1,082,208
========== ==========
</TABLE>
Depreciation expense for the years ended December 31, 1999 and 1998 was
$199,495 and $227,510, respectively.
4. INTANGIBLE ASSETS:
Intangible assets at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
------------ ----------
<S> <C> <C>
Goodwill $2,672,835 $2,672,835
FCC licenses 2,672,835 2,672,835
Five year non-compete agreements 450,000 450,000
---------- ----------
Total intangibles 5,795,670 5,795,670
Less: accumulated amortization 835,522 531,696
---------- ----------
Intangible assets, net $4,960,148 $5,263,974
========== ==========
</TABLE>
F-8
<PAGE> 23
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
Amortization expense for the years ended December 31, 1999 and 1998 was
$303,826 and $303,826, respectively.
5. COMMITMENTS AND CONTINGENCIES:
The Stations lease office equipment, studio facilities and tower space
under certain non-cancelable operating leases. Future minimum lease
payments are as follows:
2000 $ 73,223
2001 57,178
2002 56,400
2003 54,000
2004 27,000
Thereafter --
--------
$267,801
--------
Rent expense for the years ended December 31, 1999 and 1998 was $104,231
and $113,200, respectively.
F-9
<PAGE> 24
RADIO STATIONS WQBJ-FM, WQBK-FM AND WTMM-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In December 1999, Securities Exchange Commission (SEC) staff issued SAB 101
"Revenue Recognition in Financial Statement," which was effective for
fiscal years beginning after December 15, 1999, but was delayed until no
later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999 by the issuance of SAB 101B. SAB 101 provides guidance on
applying generally accepted accounting principles for recognizing revenue.
The Stations believe that applying the provisions of SAB 101 will not
significantly affect the Stations.
7. SUBSEQUENT EVENT:
On August 24, 2000, pursuant to the terms of an Asset Exchange Agreement
dated as of March 12, 2000, as amended, Regent Communications, Inc.
("Regent") acquired from Clear Channel Broadcasting, Inc., Capstar Radio
Operating Company and their related entities substantially all of the
assets of four FM and two AM radio stations in Albany, New York and three
FM and one AM radio stations in Grand Rapids, Michigan in exchange for
substantially all of the assets of Regent's five FM and three AM radio
stations in the Mansfield, Ohio and Victorville, California markets and the
payment by Regent of $80,465,000 in cash.
F-10
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Regent Communications, Inc.
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows, and stations' equity present
fairly, in all material respects, the financial position of AMFM Inc.'s radio
stations WGNA-FM, WGNA-AM and WABT-FM (the "Stations"), at December 31, 1999
and 1998, and the results of their operations and their cash flows for the
period from July 13, 1999 to December 31, 1999, the period from January 1, 1999
to July 12, 1999, the period from May 28, 1998 to December 31, 1998 and the
period from January 1, 1998 to May 27, 1998, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Stations' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
November 3, 2000
Cincinnati, Ohio
F-11
<PAGE> 26
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
COMBINED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMFM CAPSTAR
--------------------------- -----------
JUNE 30, DECEMBER 31,
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS (unaudited)
Current assets
Cash $ 131,065 $ 29,505 | $ 262,206
Accounts receivable, less allowance for doubtful |
accounts of $40,109, $85,726 and $69,952, respectively |
in 2000, 1999 and 1998 1,587,279 1,479,605 | 1,397,893
Barter receivable 136,272 62,346 | 18,438
Other current assets 27,168 13,669 | 5,265
----------- ----------- | -----------
|
Total current assets 1,881,785 1,585,125 | 1,683,802
|
Property and equipment, net 1,530,980 1,610,711 | 1,642,159
Intangible assets, net 69,920,496 72,410,246 | 58,729,718
----------- ----------- | -----------
|
Total assets 73,333,260 75,606,082 | 62,055,679
----------- ----------- | -----------
|
LIABILITIES AND STATIONS' EQUITY |
Current liabilities |
Accounts payable 35,211 67,757 | 136,833
Barter payable 215,546 107,463 | 81,657
Accrued bonus 46,219 17,401 | 2,500
Accrued commissions 74,906 56,677 | 61,949
Other accrued expenses 4,900 18,826 | 4,120
----------- ----------- | -----------
|
Total current liabilities 376,782 268,124 | 287,059
----------- ----------- | -----------
|
Commitments and contingencies -- -- | --
Stations' equity 72,956,478 75,337,958 | 61,768,620
----------- ----------- | -----------
|
Total stations' equity 72,956,478 75,337,958 | 61,768,620
----------- ----------- | -----------
|
Total liabilities and stations' equity $73,333,260 $75,606,082 | $62,055,679
=========== =========== | ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE> 27
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
COMBINED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMFM CAPSTAR AMFM CAPSTAR SFX
---------- | ---------- ------------ | ----------------------------- | -------------
SIX MONTHS | SIX MONTHS PERIOD FROM | PERIOD FROM PERIOD FROM | PERIOD FROM
ENDED | ENDED JULY 13 TO | JANUARY 1 TO MAY 28 TO | JANUARY 1 TO
JUNE 30, | JUNE 30, DECEMBER 31, | JULY 12, DECEMBER 31, | MAY 27
2000 | 1999 1999 | 1999 1998 | 1998
---------- | ---------- ------------ | ------------ ------------ | -------------
(unaudited) | (unaudited) | |
<S> <C> | <C> <C> | <C> <C> | <C>
Gross broadcast revenues $3,676,669 | $3,487,168 $3,618,358 | $3,721,722 $4,468,316 | $2,316,300
Less: Agency commissions 420,727 | 373,598 396,599 | 409,682 530,573 | 266,719
---------- | ---------- ---------- | ---------- ---------- | ----------
| | |
Net broadcast revenues 3,255,942 | 3,113,570 3,221,759 | 3,312,040 3,937,743 | 2,049,581
| | |
Station operating expenses 1,767,684 | 1,753,971 1,637,562 | 1,870,204 1,617,819 | 998,860
Depreciation and amortization 2,575,718 | 821,626 2,360,144 | 889,728 924,278 | 709,555
Allocated corporate general and
administrative expenses 76,367 | 80,550 99,870 | 87,168 97,618 | 50,542
---------- | ---------- ---------- | ---------- ---------- | ----------
| | |
Operating income (loss) (1,163,827) | 457,423 (875,817) | 464,940 1,298,028 | 290,624
| | |
Other income (expense), net -- | -- (22,679) | 18,347 47,154 | (27,048)
---------- | ---------- ---------- | ---------- ---------- | ----------
| | |
Income (loss) before income taxes (1,163,287) | 457,423 (898,496) | 483,287 1,345,182 | 263,576
| | |
Income tax expense (benefit) (223,591) | 250,121 (137,621) | 266,062 616,416 | 144,763
---------- | ---------- ---------- | ---------- ---------- | ----------
| | |
Net income (loss) $ (940,236) | $ 207,302 $ (760,875) | $ 217,225 $ 728,766 | $ 118,813
========== | ========== ========== | ========== ========== | ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE> 28
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
COMBINED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMFM CAPSTAR AMFM CAPSTAR SFX
---------- --------- ------------ -------------------------- ------------
SIX |SIX MONTHS PERIOD FROM |PERIOD FROM PERIOD FROM | PERIOD FROM
MONTHS ENDED| ENDED JULY 13 TO |JANUARY 1 TO MAY 29 TO | JANUARY 1 TO
JUNE 30, | JUNE 30 DECEMBER 31,| JULY 12, DECEMBER 31,| MAY 28,
2000 | 1999 1999 | 1999 1998 | 1998
---------- | --------- ------------|------------ ------------| ------------
(unaudited)|(unaudited) | |
<S> <C> | <C> <C> |<C> <C> | <C>
Cash flows from operating activities: | | |
Net income (loss) $ (940,236)| $ 207,302 $ (760,875)|$ 217,225 $ 728,766 | $ 118,813
Adjustments to reconcile net income (loss) | | |
to cash flows from operating activities: | | |
Depreciation and amortization 2,575,718 | 821,626 2,360,144 | 889,728 924,278 | 709,555
Corporate allocated expenses 76,367 | 80,550 99,870 | 87,168 97,618 | 50,542
Changes in operating assets | | |
and liabilities: | | |
Accounts receivable (181,599)| (118,638) (3,937)| (121,681) (239,607)| 107,651
Other current assets (19,737)| (6,611) (1,793)| (5,924) (5,264)| --
Accounts payable 75,538 | 35,680 (63,396)| 20,125 40,485 | 55,354
Accrued expenses 33,121 | 64,543 (40,208)| 64,543 15,356 | (11,739)
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Net cash flows provided by operating activities 1,619,172 | 1,084,452 1,589,805 | 1,151,184 1,561,632 | 1,030,176
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Cash flows from investing activities: | | |
Purchase of property and equipment -- | (90,852) (25,356)| (90,852) (105,882)| --
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Net cash flows used in investing activities -- | (90,852) (25,356)| (90,852) (105,882)| --
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Cash flows from financing activities: | | |
Owner distributions (1,517,612)|(1,017,051) (1,830,646)| (1,026,836) (1,337,585) | (949,468)
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Net cash flows used in financing activities (1,517,612)|(1,017,051) (1,830,646)| (1,026,836) (1,337,585) | (949,468)
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Net increase (decrease) in cash 101,560 | (23,451) (266,197)| 33,496 118,165 | 80,708
| | |
Cash at the beginning of the period 29,505 | 262,206 295,702 | 262,206 144,041 | 63,333
---------- | --------- ---------- |----------- ----------- | -----------
| | |
Cash at the end of the period $ 131,065 | $ 238,755 $ 29,505 |$ 295,702 $ 262,206 | $ 144,041
========== | ========= ========== |=========== =========== | ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE> 29
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
COMBINED STATEMENTS OF STATIONS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Balance at December 31, 1997 (SFX) $46,073,899
Corporate allocated expenses 50,542
Net transfers to/from parent (949,468)
Net income 118,813
-----------
Balance at May 27, 1998 (SFX) $45,293,786
================================================================================
Balance at May 28, 1998 (Capstar) $59,525,577
Corporate allocated expenses 97,618
Net transfers to/from parent (1,337,585)
Purchase of WABT assets 2,754,244
Net income 728,766
-----------
Balance at December 31, 1998 (Capstar) $61,768,620
Corporate allocated expenses 87,168
Net transfers to/from parent (1,026,836)
Net income 217,225
-----------
Balance at July 12, 1999 (Capstar) $61,046,177
================================================================================
Balance at July 13, 1999 (AMFM) $77,829,609
Corporate allocated expenses 99,870
Net transfers to/from parent (1,830,646)
Net loss (760,875)
Balance at December 31, 1999 (AMFM) $75,337,958
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE> 30
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
1. BASIS OF PRESENTATION:
These financial statements of WGNA-FM, WGNA-AM and WABT-FM, (collectively
referred to as the "Stations") located in Albany, New York owned by AMFM
Inc. ("AMFM") from July 13, 1999 through August 24, 2000 have been prepared
in conjunction with the sale of the Stations to Regent Communications, Inc.
(see Note 9).
The period presented from January 1, 1998 to May 27, 1998 includes the
results of operations of WGNA-FM and WGNA-AM. WGNA-FM/AM were owned by SFX
Communications, Inc. ("SFX") prior to the acquisition of the stations by
Capstar Communications, Inc. ("Capstar") on May 28, 1998.
The period from May 28, 1998 through December 31, 1998 includes the results
of operations of WGNA-FM and WGNA-AM from May 28 to December 31, 1998 and
the results of operations of WABT-FM from October 5, 1998 to December 31,
1998. Capstar acquired WABT-FM on October 5, 1998 from Foley Broadcasting
Inc. The period from January 1, 1999 to July 12, 1999 includes the results
of operations of all three of the Stations while owned and operated by
Capstar.
On July 13, 1999 Chancellor Media Corporation acquired the stock of Capstar
Communications and changed the mane of the combined entity to AMFM Inc.
The period presented as AMFM contains the results of operations from July
13, 1999 forward for the period that the Stations were owned by AMFM.
These combined financial statements present the operations of the Stations
on a "carved-out" basis. The combined financial statements have been
prepared as if the Stations had operated as a stand-alone entity for all
periods presented, as described above, and include only those assets,
liabilities, revenues and expenses directly attributable to the Stations'
operations. The Stations are allocated certain corporate expenses for
services provided by AMFM, Capstar and SFX during their respective periods
of ownership of the stations, based upon the percentage of revenue of each
station to total revenue of all stations operated by AMFM, Capstar and SFX.
Though management is of the opinion that all allocations used are
reasonable and appropriate, other allocations might be used that could
produce results substantially different from those reflected herein and
these cost allocations might not be indicative of amounts which might be
paid to unrelated parties for similar services or if the Stations had been
operated on a stand-alone basis. Corporate departmental expenses of
$99,870, $87,168, $97,618, and $50,542 have been allocated to the Stations
for the period from July 13 to December 31, 1999, January 1, to July 12,
1999, May 28 to December 31, 1998 and January 1 to May 27, 1998,
respectively, for management salaries and benefits, legal services,
corporate office expenses, and other miscellaneous expenses. The financial
information included herein does not necessarily reflect the financial
position and results of operations that the Stations would have experienced
had they been operated as a stand-alone entity during the periods covered
and may not be indicative of future operations or financial position.
The financial statements for the six months ended June 30, 2000 and 1999
are unaudited, but, in the opinion of management, such financial
statements have been presented on the same basis as the audited financial
statements for the period from July 13 to December 31, 1999 and the period
from January 1 to July 12, 1999, respectively, and include all
adjustments, consisting only of normal recurring adjustments necessary for
a fair presentation of the financial position and results of operations
and cash flows for these periods.
F-16
<PAGE> 31
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
The Stations did not maintain a significant cash balance, but were funded
as needed by their parent companies. In turn, if the Stations generated
positive cash flow, the amounts were transferred back to the parent
company. The net of these activities for each period has been presented in
Stations' Equity as net transfers to/from parent.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The significant accounting principles followed by the Stations and the
methods of applying those principles that materially affect the
determination of financial position, results of operation, and cash flows
are summarized below.
a. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially
subject the Stations to concentrations of credit risk consist
principally of accounts receivable. The credit risk is limited due to
the large number of customers comprising the Stations' customer base.
b. FAIR VALUE OF FINANCIAL INSTRUMENTS: Financial instruments as of
December 31, 1999 and 1998 consist of cash, accounts receivable, and
accounts payable, all of which approximate fair value.
c. PROPERTY AND EQUIPMENT: Purchases of property and equipment, including
additions and improvements and expenditures for repairs and
maintenance that significantly add to productivity or extend the
economic lives of the assets, are capitalized at cost and depreciated
on a straight-line basis over their estimated useful lives, as
follows:
Buildings and improvements 20 years
Broadcasting towers and equipment 10 - 20 years
Computers 3 years
Furniture and fixtures 5 years
d. INTANGIBLE ASSETS: Intangible assets are comprised of FCC licenses and
goodwill. FCC licenses and goodwill are stated at cost and were
amortized using the straight-line method over 15 years during the
period from July 13, 1999 to June 30, 2000 and 40 years for all other
periods presented. The carrying value of intangible assets is reviewed
by the Stations when events or circumstances suggest that their
recoverability may be impaired. If this review indicates that the
intangibles will not be recoverable, as determined based on the
undiscounted cash flows of the entity over the remaining amortization
period, the carrying value of the intangibles will be reduced to
their respective fair values.
e. REVENUE RECOGNITION: Revenue is derived primarily from the sale of
commercial airtime to local and national advertisers in the Albany,
New York market area. Revenue is recognized as commercials are
broadcast.
F-17
<PAGE> 32
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
f. BARTER AGREEMENTS: The Stations enter into trade agreements which give
rise to sales of advertising air time in exchange for products and
services. Revenues from trade agreements are recognized at the fair
market value of products or services received as advertising airtime
is broadcast. Products and services received are expensed when used
in the broadcast operations. Revenues from trade agreements were
$180,219, $275,445, $207,533, $304,757, $239,678, and $159,671 for
the six months ended June 30, 2000 and 1999 and the period from July
13, 1999 to December 31, 1999, period from January 1, 1999 to July
12, 1999, period from May 28, 1998 to December 31, 1999 and period
from January 1, 1998 to May 27, 1998, respectively. Products and
services expensed for the same periods were $180,219, $310,445,
$242,535, $339,757, $239,678 and $159,670, respectively.
g. INCOME TAXES: The Stations were part of the combined return of their
parent companies. For the purposes of separate financial statement
presentation, the Station's current and deferred income taxes have
been determined as if the Station's were a separate taxpayer. Deferred
tax assets and liabilities have not been allocated to the Stations.
h. USE OF ESTIMATES: 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 disclosures 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.
3. ACQUISITION
AMFM Inc.- On July 13, 1999, Chancellor Media Corporation acquired the stock
of Capstar Communications and changed the name of the combined entity to AMFM
Inc. Under the terms of the merger, Capstar stockholders received AMFM Inc.
shares for their Capstar shares. This merger was accounted for as a purchase
transaction. The results of the allocation of the purchase price of the
merger to the Stations are as follows:
Accounts receivable $ 1,573,012
Broadcasting equipment and furniture and equipment 1,656,196
FCC license 56,547,065
Goodwill 18,145,453
Other net liabilities (92,117)
------------
$ 77,829,609
Capstar Communications, Inc.- On May 29, 1998 Capstar Communications
acquired SFX Broadcasting, Inc. This acquisition was accounted for as a
purchase transaction. The results of the allocation of the purchase price
to the Stations are as follows:
Accounts receivable $ 1,176,724
Broadcasting equipment and furniture and equipment 1,374,580
FCC license 43,631,137
Goodwill 13,430,311
Other net liabilities (87,175)
------------
$ 59,525,577
4. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1999 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
AMFM CAPSTAR
---------- ----------
1999 1998
---------- ----------
<S> <C> <C>
Land $ 147,022 $ 147,022
Building and improvements 226,718 240,762
Broadcasting towers and equipment 1,132,240 1,107,649
Computers 25,276 24,480
Furniture and fixtures 150,295 172,653
Construction in progress -- 26,343
---------- ----------
Total property and equipment 1,681,551 1,718,909
Less: accumulated depreciation 70,840 76,750
---------- ----------
Property and equipment, net $1,610,711 $1,642,159
---------- ----------
</TABLE>
Depreciation expense for the periods from July 13, 1999 to December 31,
1999, January 1, 1999 to July 12, 1999, May 28, 1998 to December 31, 1998
and January 1, 1998 to May 27, 1998 was $77,872, $83,694, $76,750 and
$270,780, respectively.
F-18
<PAGE> 33
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
5. INTANGIBLE ASSETS:
Intangible assets at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
AMFM CAPSTAR
---------- -----------
1999 1998
---------- -----------
<S> <C> <C>
Goodwill $18,145,453 $13,430,311
FCC licenses 56,547,065 46,146,935
----------- -----------
Total intangibles 74,692,518 59,577,246
Less: accumulated amortization 2,282,272 847,528
----------- -----------
Intangible assets, net $72,410,246 $58,729,718
----------- -----------
</TABLE>
Amortization expense for the periods from July 13, 1999 to December 31,
1999, January 1, 1999 to July 12, 1999, May 28, 1998 to December 31, 1998
and January 1, 1998 to May 29, 1998 was $2,282,272, $806,034, $847,528
and $438,775, respectively.
6. INCOME TAXES:
The components of the provisions for income taxes are as follows:
<TABLE>
<CAPTION>
AMFM CAPSTAR SFX
-------------- ------------------------------- ---------------
Period from Period from Period from Period from
July 13 to January 1 to May 28 to January 1 to
December 31, July 12, December 31, May 27,
1999 1999 1998 1998
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Current:
Federal $ 284,395 $215,865 $547,586 $170,759
State 50,187 38,094 96,633 30,134
Deferred:
Federal (401,373) 10,288 (23,633) (47,710)
State (70,830) 1,815 (4,170) (8,420)
-------------- --------------- -------------- ---------------
$(137,621) $266,062 $616,416 $144,763
-------------- --------------- -------------- ---------------
</TABLE>
The following is a reconciliation of the statutory Federal income tax rate
with the effective tax rate for each year:
<TABLE>
<CAPTION>
AMFM CAPSTAR SFX
----------------- ------------------------------------- ---------------
Period from Period from Period from Period from
July 13 to January 1 to May 28 to January 1 to
December 31, 1999 July 12, 1999 December 31, 1998 May 27, 1998
----------------- ------------- ----------------- ------------
<S> <C> <C> <C> <C>
U.S. Federal Statutory rate 34.0% 34.0% 34.0% 34.0%
State and local income taxes,
net of federal benefit 2.3% 8.2% 6.8% 8.3%
Amortization of non-deductible
intangible assets (21.0)% 12.8% 5.0% 12.6%
----- ---- ---- ----
Effective rate 15.3% 55.0% 45.8% 54.9%
</TABLE>
F-19
<PAGE> 34
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
7. COMMITMENTS AND CONTINGENCIES:
The Stations lease office equipment, studio facilities and tower space
under certain non-cancelable operating leases. Future minimum lease
payments are as follows:
2000 $157,824
2001 157,824
2002 153,204
2003 88,094
2004 16,344
Thereafter 130,752
--------
$704,042
--------
Rent expense was $72,336, $85,488, $92,064, and $65,760 for the period from
July 13 to December 31, 1999, January 1 to July 12, 1999, May 28 to
December 31, 1998, and January 1 to May 27, 1998, respectively.
8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In December 1999, Securities Exchange Commission (SEC) staff issued SAB 101
"Revenue Recognition in Financial Statement", which was effective for
fiscal years beginning after December 15, 1999, but was delayed until no
later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999 by the issuance of SAB 101B. SAB 101 provides guidance
on applying generally accepted accounting principles for recognizing
revenue. The Stations believe that applying the provisions of SAB 101 will
not significantly affect the Stations.
F-20
<PAGE> 35
RADIO STATIONS WGNA-FM, WGNA-AM AND WABT-FM
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
9. SUBSEQUENT EVENT:
On August 24, 2000, pursuant to the terms of an Asset Exchange Agreement
dated as of March 12, 2000, as amended, Regent Communications, Inc.
("Regent"), acquired from Clear Channel Broadcasting, Inc., Capstar Radio
Operating Company and their related entities substantially all of the
assets of four FM and two AM radio stations in Albany, New York and three
FM and one AM radio stations in Grand Rapids, Michigan in exchange for
substantially all of the assets of Regent's five FM and three AM radio
stations in the Mansfield, Ohio and Victorville, California markets and
the payment by Regent of $80,465,000 in cash.
F-21
<PAGE> 36
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Regent Communications, Inc.
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, cash flows, and stations' equity present
fairly, in all material respects, the financial position of radio stations
WGRD-FM, WTRV-FM, WLHT-FM and WNWZ-AM (the "Stations"), owned by AMFM Inc. at
December 31, 1999 and by Capstar Communications, Inc. at December 31, 1998, and
the results of their operations and their cash flows for the period from July
13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999,
and the period from February 1, 1998 to December 31, 1998, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Stations' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
November 3, 2000
Cincinnati, Ohio
F-22
<PAGE> 37
RADIO STATIONS WGRD-FM, WTRV-FM, WHLT-FM AND WNWZ-AM
COMBINED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPSTAR
AMFM INC. COMMUNICATIONS, INC.
------------------------------ --------------------
JUNE 30, DECEMBER 31, DECEMBER 31,
2000 1999 1998
----------- ------------ ------------
<S> <C> <C> | <C>
Assets (unaudited) |
Current assets |
Cash $ 1,449,333 $ 308,672 | $ 152,635
Accounts receivable, less allowance for doubtful |
accounts of $46,084, $70,303 and $64,116 in 2000, |
1999 and 1998, respectively 1,921,499 1,670,178 | 1,561,892
Barter receivable 183,580 46,586 | 47,892
Other current assets 95,007 68,422 | 60,340
----------- ----------- | -----------
|
Total current assets 3,649,419 2,093,858 | 1,822,759
|
Property and equipment, net 1,530,590 1,593,032 | 1,667,185
Intangible assets, net 63,658,074 65,919,653 | 49,517,370
Other non-current assets 1,300 1,800 | 1,950
----------- ----------- | -----------
|
Total assets $68,839,383 $69,608,343 | $53,009,264
=========== =========== | ===========
|
LIABILITIES AND STATIONS' EQUITY
Current liabilities |
Accounts payable $ 26,412 $ 31,258 | $ 19,477
Barter payable 137,527 46,587 | 43,013
Accrued bonus 38,050 41,515 | 35,000
Accrued commissions 108,965 111,138 | 122,231
Other current liabilities 26,349 43,093 | 43,205
----------- ----------- | -----------
|
Total current liabilities 337,303 273,591 | 262,926
|
Commitments and contingencies -- -- | --
----------- ----------- | -----------
Stations' equity 68,502,080 69,334,752 | 52,746,338
----------- ----------- | -----------
|
Total stations' equity 68,502,080 69,334,752 | 52,746,338
----------- ----------- | -----------
|
Total liabilities and stations' equity $68,839,383 $69,608,343 | $53,009,264
=========== =========== | ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 38
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
COMBINED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMFM INC. CAPSTAR AMFM INC. CAPSTAR
----------- | -------------- ------------- | -----------------------------
SIX MONTHS | SIX MONTHS PERIOD FROM | PERIOD FROM PERIOD FROM
ENDED | ENDED JULY 13, 1999 | JAN. 1, 1999 FEBRUARY 1 TO
JUNE 30, | JUNE 30, THROUGH | THROUGH DECEMBER 31,
2000 | 1999 DEC. 31, 1999 | JULY 12, 1999 1998
----------- | ----------- ------------- | ------------- -------------
(unaudited) | (unaudited) |
<S> <C> | <C> <C> | <C> <C>
Gross broadcast revenues $ 5,257,571 | $4,970,643 $ 4,979,372 | $5,357,281 $9,480,420
Less: Agency commissions 559,312 | 531,747 551,661 | 573,737 1,015,843
----------- | ---------- ----------- | ---------- ----------
| |
Net broadcast revenues 4,698,259 | 4,438,896 4,427,711 | 4,783,544 8,464,577
| |
Station operating expenses 2,910,060 | 2,968,165 2,816,123 | 3,221,980 5,515,528
Depreciation and amortization 2,364,472 | 745,513 2,067,408 | 799,509 1,332,602
Allocated corporate general and
administrative expenses 118,804 | 177,829 88,517 | 177,829 386,700
----------- | ---------- ----------- | ---------- ----------
| |
Operating income (loss) (695,077) | 547,389 (544,337) | 584,226 1,229,747
| |
Other income (expense), net -- | 18,759 8,048 | 29,375 91,012
----------- | ---------- ----------- | ---------- ----------
| |
Income (loss) before income taxes (695,077) | 566,148 (536,289) | 613,601 1,320,759
| |
Income tax expense 24,215 | 287,489 55,297 | 310,617 627,151
----------- | ---------- ----------- | ---------- ----------
| |
Net income (loss) $ (719,292) | $ 278,659 $ (591,586) | $ 302,984 $ 693,608
=========== | ========== =========== | ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 39
RADIO STATIONS WGRD-FM, WTRV-FM. WLHT-FM AND WNWZ-AM
COMBINED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMFM INC. | CAPSTAR AMFM INC. | CAPSTAR COMMUNICATIONS, INC.
------------- | ------------- ------------- | --------------------------------
SIX MONTHS | SIX MONTHS PERIOD FROM | PERIOD FROM PERIOD FROM
ENDED | ENDED JULY 13 TO | JANUARY 1 TO FEBRUARY 1, 1998
JUNE 30, | JUNE 30, DECEMBER 31, | JULY 12, TO DECEMBER 31,
2000 | 1999 1999 | 1999 1998
------------- | ------------- ------------- | ------------- ------------------
(unaudited) | (unaudited) |
<S> <C> | <C> <C> | <C> <C>
Cash flows from operating activities: | |
Net income (loss) $ (719,292) | $ 278,659 $ (591,586) | $ 302,984 $ 693,608
Adjustments to reconcile net income to | |
cash flows from operating activities: | |
Depreciation and amortization 2,364,472 | 745,513 2,067,408 | 799,509 1,332,602
Allocation of corporate expenses 118,805 | 177,829 88,517 | 177,829 386,700
Changes in operating | |
assets and liabilities: | |
Accounts receivable (388,315) | (247,820) 185,392 | (292,372) (234,830)
Other current assets (26,085) | (9,369) | (14,684)
Accounts payable 86,094 | 136,059 (115,010) | 136,059 (47,752)
Accrued expenses (22,382) | 14,454 (24,689) | 14,454 71,654
Other -- | (37,267) | -- --
---------- | ---------- ----------- | ----------- -----------
| |
Net cash flows provided by operating | |
activities 1,413,297 | 1,095,325 1,572,765 | 1,123,779 2,201,982
---------- | ---------- ----------- | ----------- -----------
| |
Cash flows from investing activities: | |
Purchase of property and equipment (40,451) | (75,152) (144,154) | (71,552) (345,600)
---------- | ---------- ----------- | ----------- -----------
| |
Net cash flows used in | |
investing activities (40,451) | (75,152) (144,154) | (71,552) (345,600)
---------- | ---------- ----------- | ----------- -----------
| |
Cash flows from financing activities: | |
Net transfers (to) from parent company (232,185) | (935,174) (1,238,191) | (1,086,610) (1,817,371)
---------- | ---------- ----------- | ----------- -----------
| |
Net transfers (to) from parent company (232,185) | (935,174) (1,238,191) | (1,086,610) (1,817,371)
---------- | ---------- ----------- | ----------- -----------
| |
Net increase (decrease) in cash 1,140,661 | 84,999 190,420 | (34,383) 39,011
| |
Cash at the beginning of the period 308,672 | 152,635 118,252 | 152,635 113,624
---------- | ---------- ----------- | ----------- -----------
| |
Cash at the end of the period $1,449,333 | $ 237,634 $ 308,672 | $ 118,252 $ 152,635
========== | ========== =========== | =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 40
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
COMBINED STATEMENTS OF STATIONS' EQUITY
--------------------------------------------------------------------------------
Balance at February 1, 1998 (Capstar Communications, Inc.) $53,483,401
Net income 693,608
Corporate expense allocation 386,700
Net transfer to/from parent, Capstar Communications, Inc. (1,817,371)
-----------
Balance at December 31, 1998 (Capstar Communications, Inc.) 52,746,338
Net income 302,984
Corporate expense allocation 177,829
Net transfer to/from parent, Capstar Communications, Inc. (1,086,610)
-----------
Balance At July 12, 1999 (Capstar Communications, Inc.) 52,140,541
------------------------------------------------------------------------------
Balance at July 13, 1999 (AMFM Inc.) 71,076,012
Net income (loss) (591,586)
Corporate expense allocation 88,517
Net transfer, to/from parent, AMFM Inc. (1,238,191)
-----------
Balance at December 31, 1999 (AMFM Inc.) $69,334,752
-----------
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE> 41
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION:
These financial statements of WGRD-FM, WTRV-FM, WLHT-FM and WNWZ-AM,
located in Grand Rapids, Michigan owned by AMFM Inc. (collectively
referred to as the "Stations") from July 13, 1999 through August 24, 2000
have been prepared in conjunction with the sale of the Stations to Regent
Communications Inc. (see Note 9).
AMFM Inc. ("AMFM") owned and operated radio stations WGRD-FM, WTRV-FM,
WLHT-FM and WNWZ-AM from July 13, 1999 through December 31, 1999. At the
close of business on July 13, 1999, AMFM purchased the stock of Capstar
Communications, Inc. (Capstar). Capstar owned and operated the Stations
from February 1, 1998 through July 12, 1999. Capstar purchased the
stations from Patterson Broadcasting on February 1, 1998 and as a result
the results of operations and cash flows reflect only the eleven month's
ended December 31, 1998. As a result of the changes in ownership the
financial position, results of operations and cash flows of the stations
subsequent to the date of the AMFM acquisition are labeled AMFM in the
accompanying combined financial statements, and results of operations and
cash flows of the Stations for the period prior to the AMFM acquisition
are labeled Capstar.
These combined financial statements present the operations of the Stations
on a "carved-out" basis. The combined financial statements have been
prepared as if the Stations had operated as a stand-alone entity for all
periods presented, and include only those assets, liabilities, revenues and
expenses directly attributable to the Stations' operations. The Stations
are allocated certain corporate expenses for services provided by AMFM and
Capstar based upon the percentage of revenue of each station to total
revenue of all stations operated by AMFM and Capstar. Though management is
of the opinion that all allocations used are reasonable and appropriate,
other allocations might be used that could produce results substantially
different from those reflected herein and these cost allocations might not
be indicative of amounts which might be paid to unrelated parties for
similar services or if the Stations had been operated on a stand-alone
basis. Corporate departmental expenses of $88,517, $177,829 and $386,700
have been allocated to the Stations during July 13 to December 31, 1999,
January 1 to July 12, 1999 and the eleven months ended December 31, 1998,
respectively, for management salaries and benefits, legal services,
corporate office expenses, and other miscellaneous expenses. The financial
information included herein does not necessarily reflect the financial
position and results of operations of what the Stations would have
experienced had they been operated as a stand-alone entity during the
periods covered, and may not be indicative of future operations or
financial position.
The financial statements for the six months ended June 30, 2000 and 1999
are unaudited, but, in the opinion of management, such financial statements
have been presented on the same basis as the audited financial statements
for the year ended December 31, 1999, and include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations and cash
flows for these periods.
The Stations did not maintain a significant cash balance, but were funded
as needed by their parent company. In turn, if the Stations generated
positive cash flow, the amounts were transferred back to the Parent
Company. The net of these activities for each period has been presented in
Stations' Equity as net transfers to and from the parent company.
F-27
<PAGE> 42
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The significant accounting principles followed by the Stations and the
methods of applying those principles that materially affect the
determination of financial position, results of operation, and cash flows
are summarized below.
a. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially
subject the Stations to concentrations of credit risk consist
principally of accounts receivable. The credit risk is limited due to
the large number of customers comprising the Stations' customer base.
b. FAIR VALUE OF FINANCIAL INSTRUMENTS: Financial instruments as of
December 31, 1999 and 1998 consist of cash, accounts receivable, and
accounts payable, all of which approximate fair value.
c. PROPERTY AND EQUIPMENT: Purchases of property and equipment, including
additions and improvements and expenditures for repairs and
maintenance that significantly add to productivity or extend the
economic lives of the assets, are capitalized at cost and depreciated
on a straight-line basis over their estimated useful lives, as
follows:
Buildings and improvements 20 years
Broadcasting towers, antennas and equipment 10 - 20 years
Computers 3 years
Furniture and fixtures, office equipment and autos 5 years
d. INTANGIBLE ASSETS: Intangible assets are comprised of FCC licenses and
goodwill.
FCC licenses and goodwill are stated at cost and are being amortized
using the straight-line method over 15 years during the period from
July 13, 1999 to June 30, 2000 and 40 years for all other periods
presented. Goodwill was stated at cost and was amortized over 40 years
in 1998. The carrying value of intangible assets is reviewed by the
Stations when events or circumstances suggest that their
recoverability may be impaired. If this review indicates that the
intangibles will not be recoverable, as determined based on the
undiscounted cash flows of the entity over the remaining amortization
period, the carrying value of the intangibles will be reduced to their
respective fair values.
e. REVENUE RECOGNITION: Revenue is derived primarily from the sale of
commercial airtime to local and national advertisers in the Grand
Rapids, Michigan market area. Revenue is recognized as commercials
are broadcast.
F-28
<PAGE> 43
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
f. BARTER AGREEMENTS: The Stations enter into trade agreements which give
rise to sales of advertising air time in exchange for products and
services. Revenues from trade agreements are recognized at the fair
market value of products or services received as advertising airtime
is broadcast. Products and services received are expensed when used in
the broadcast operations. Revenues from trade agreements were
$121,319, $111,440, $94,750, $122,560 and $157,500 for the six months
ended June 30, 2000 and 1999 and the period from July 13, 1999 to
December 31, 1999, from January 1, 1999 to July 12, 1999 and the
eleven months ended December 31, 1998, respectively. Products and
services expensed for the same periods were $121,319, $111,440,
$88,780, $128,530 and $166,670, respectively.
g. INCOME TAXES: The Stations were part of the combined return of their
parent company. For purposes of separate financial statement
presentation, the Stations' current and deferred-income taxes have
been determined as if the Stations' were a separate taxpayer. Deferred
tax assets and liabilities have not been allocated to the Stations.
h. USE OF ESTIMATES: 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 disclosures 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.
3. ACQUISITION
AMFM Inc.- On July 13, 1999, Chancellor Media Corporation acquired the
stock of Capstar Communications and changed the name of the combined entity
to AMFM Inc. Under the terms of the merger, Capstar stockholders received
AMFM Inc. shares for their Capstar shares. This merger was accounted for as
a purchase transaction. The results of the allocation of the purchase price
to the Stations are as follows:
Accounts receivable $ 1,902,166
Broadcasting equipment and furniture and equipment 1,544,696
FCC license 52,344,933
Goodwill 15,502,431
Other net liabilities (218,214)
------------
$ 71,076,012
Capstar Communications, Inc.- On January 29, 1998 Capstar Communications
Inc. acquired all of the outstanding preferred stock, common stock and
common stock equivalents of Patterson Broadcasting, Inc. This acquisition
was accounted for as a purchase transaction. The results of the allocation
of the purchase price to the Stations are as follows:
Accounts receivable $ 1,355,824
Broadcasting equipment and furniture and equipment 1,529,662
FCC license 40,016,862
Goodwill 10,662,689
Other net liabilities (81,636)
------------
$ 53,483,401
4. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1999 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
AMFM CAPSTAR
------------ ----------
DECEMBER 31,
1999 1998
------------ ----------
<S> <C> <C>
Land $ 142,695 $ 142,695
Building and improvements 46,233 52,301
Broadcasting towers, antennas and equipment 1,161,532 1,260,966
Computers 171,582 225,507
Furniture and fixtures, office equipment and autos 166,808 156,138
---------- ----------
Total property and equipment 1,688,850 1,837,607
Less: accumulated depreciation 95,818 170,422
---------- ----------
Property and equipment, net $1,593,032 $1,667,185
========== ==========
</TABLE>
Depreciation expense for the periods from July 13, 1999 to December 31,
1999, January 1, 1999 to July 12, 1999 and the eleven months ended
December 31, 1998 was $95,818, $120,056 and $170,422 respectively.
F-29
<PAGE> 44
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
5. INTANGIBLE ASSETS:
Intangible assets at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
AMFM CAPSTAR
----------- -----------
DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Goodwill $15,502,431 $10,662,688
FCC licenses 52,388,812 40,016,862
----------- -----------
Total intangibles 67,891,243 50,679,550
Less: accumulated amortization 1,971,590 1,162,180
----------- -----------
Intangible assets, net $65,919,653 $49,517,370
=========== ===========
</TABLE>
Amortization expense for the period from July 13, 1999 to December 31,
1999, from January 1, 1999 to July 12, 1999 and the eleven months ended
December 31, 1998 were $1,971,590, $679,453 and $1,162,180, respectively.
6. INCOME TAXES:
The components of the provisions for income taxes are as follows:
<TABLE>
<CAPTION>
AMFM CAPSTAR
--------------- ------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
JULY 13, 1999 JANUARY 1, 1999 FEBRUARY 1, 1998
TO DECEMBER 31, TO JULY 12, TO DECEMBER 31,
1999 1999 1998
--------------- ---------------- ----------------
<S> <C> <C> <C>
Current:
Federal $ 335,017 $ 261,154 531,014
State 52,077 51,354 92,301
Deferred:
Federal (356,302) (3,806) 500
State 24,505 1,915 3,336
----------- ----------- ----------
$ 55,297 $ 310,617 $ 627,151
=========== =========== ==========
</TABLE>
The following is a reconciliation of the Statutory Federal income tax rate
with the effective tax rate for each year:
<TABLE>
<CAPTION>
AMFM CAPSTAR
----------------- ------------------------------------------
Period from Period from Period from
July 13, 1997 to January 1, 1999 February 1, 1998
December 31, 1999 to July 12, 1999 to December 31, 1998
----------------- ---------------- --------------------
<S> <C> <C> <C>
U.S. Federal Statutory rate 34.0% 34.0% 34.0%
State and local income taxes,
net of federal benefit (14.3%) 8.7% 7.3%
Amortization of non-deductible
intangible assets (30.0%) 7.9% 6.2%
----- ---- ----
Effective rate (10.3%) 50.6% 47.5%
</TABLE>
F-30
<PAGE> 45
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
7. COMMITMENTS AND CONTINGENCIES:
The Stations lease office equipment, studio facilities and tower space
under certain non-cancelable operating leases. In addition, the station's
carry various non-cancelable employment agreements. Future minimum payments
are as follows:
2000 $169,614
2001 11,088
2002 11,088
2003 10,164
2004 --
Thereafter --
--------
$201,954
========
Rent expense was $76,204, $90,060 and $160,239 for the period from July 13
to December 31, 1999, January 1 to July 12, 1999 and February 1 to December
31, 1998, respectively.
8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In December 1999, Securities Exchange Commission (SEC) staff issued SAB 101
"Revenue Recognition in Financial Statement", which was effective for
fiscal years beginning after December 15, 1999, but was delayed until no
later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999, by the issuance of SAB 101B. SAB 101 provides guidance
on applying generally accepted accounting principles for recognizing
revenue. The Stations believe that applying the provisions of SAB 101 will
not significantly affect the Stations.
F-31
<PAGE> 46
RADIO STATIONS WGRD-FM, WTRV-FM, WLHT-FM AND WNWZ-AM
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
9. SUBSEQUENT EVENT:
On August 24, 2000, pursuant to the terms of an Asset Exchange Agreement
dated as of March 12, 2000, as amended, Regent Communications Inc.
("Regent") acquired from Clear Channel Broadcasting, Inc., Capstar Radio
Operating Company and their related entities substantially all of the
assets of four FM and two AM radio stations in Albany, New York and three
FM and one AM radio stations in Grand Rapids, Michigan in exchange for
substantially all of the assets of Regent's five FM and three AM radio
stations in the Mansfield, Ohio and Victorville, California markets and the
payment by Regent of $80,465,000 in cash.
F-32
