<PAGE>
<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<S> <C>
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
</TABLE>
COMMISSION FILE NUMBER 33-91412
------------------------
BENEDEK BROADCASTING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 13-2982954
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
SUBSIDIARY GUARANTOR REGISTRANT
<TABLE>
<CAPTION>
I.R.S.
EXACT NAME OF SUBSIDIARY GUARANTOR EMPLOYER
AS SPECIFIED IN ITS STATE OF IDENTIFICATION
CERTIFICATE OF FORMATION FORMATION NUMBER
- - ------------------------------------- --------- -----------
<S> <C> <C>
BENEDEK BROADCASTING COMPANY, L.L.C. DELAWARE 36-4009188
</TABLE>
------------------------
<TABLE>
<S> <C>
STEWART SQUARE, SUITE 210, 61101
308 WEST STATE STREET, ROCKFORD, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 815-987-5350
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 147.85 shares of
common stock, without par value, were outstanding at May 15, 1996.
________________________________________________________________________________
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION
FORM 10-Q TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
- - --------- ----
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Introductory Comments............................................................................ 3
Benedek Broadcasting Corporation and Subsidiary
Consolidated Balance Sheets as of December 31, 1995 and March 31, 1996...................... 4
Consolidated Statements of Operations for the Three Months Ended March 31, 1995 and 1996.... 5
Consolidated Statements of Stockholder's (deficit) for the Three Months Ended March 31,
1996....................................................................................... 6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1995 and 1996.... 7
Notes to Consolidated Financial Statements.................................................. 8
Benedek Broadcasting Company, L.L.C.
Balance Sheet as of December 31, 1995 and March 31, 1996.................................... 11
Statement of Operations for the Period February 28, 1995 through March 31, 1995 and the
Three Months Ended March 31, 1996.......................................................... 12
Statement of Members' Equity for the Period February 28, 1995 through March 31, 1995 and the
Three Months Ended March 31, 1996.......................................................... 13
Statement of Cash Flows for the Period February 28, 1995 through March 31, 1995 and the
Three Months Ended March 31, 1996.......................................................... 14
Notes to Financial Statements............................................................... 15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............ 16
PART II -- OTHER INFORMATION
Item 5. Other Information................................................................................ 21
Item 6. Exhibits and Reports on Form 8-K................................................................. 30
SIGNATURES.................................................................................................. 31
</TABLE>
2
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Introductory Comments:
The Financial Statements included herein have been prepared by Benedek
Broadcasting Corporation ('Benedek Broadcasting'), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. It is suggested that these
Financial Statements be read in conjunction with the financial information set
forth in Benedek Broadcasting's Annual Report for the fiscal year ended December
31, 1995.
3
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................................ $ 9,668,331 $ 7,381,555
Accounts receivable, net................................................. 12,529,696 7,890,745
Current portion of program broadcast rights.............................. 1,575,325 1,204,839
Prepaid expenses......................................................... 576,697 871,637
------------ ------------
Total current assets........................................... 24,350,049 17,348,776
------------ ------------
Property and Equipment........................................................ 20,035,715 19,797,949
------------ ------------
Intangible Assets............................................................. 60,420,617 59,952,607
------------ ------------
Other Assets.................................................................. 9,646,940 10,833,916
------------ ------------
$114,453,321 $107,933,248
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes and leases payable........................... $ 318,077 $ 304,712
Current maturities of program broadcast rights payable................... 2,042,643 1,753,982
Accounts payable and accrued expenses.................................... 7,824,296 3,643,758
Deferred revenue......................................................... 500,000 500,000
------------ ------------
Total current liabilities...................................... 10,685,016 6,202,452
------------ ------------
Long-Term Obligations
Notes and capital leases payable......................................... 135,448,948 135,377,037
Program broadcast rights payable......................................... 632,444 479,296
Deferred revenue......................................................... 4,250,000 4,180,123
------------ ------------
140,331,392 140,036,456
------------ ------------
Stockholder's Deficit
Common stock, no par, authorized 200 shares;
issued 178.09 shares................................................... 1,046,500 1,046,500
Additional paid-in capital............................................... 2,758,178 2,758,178
Accumulated deficit...................................................... (38,886,616) (40,629,189)
------------ ------------
(35,081,938) (36,824,511)
Less 30.24 shares held in treasury....................................... 1,481,149 1,481,149
------------ ------------
(36,563,087) (38,305,660)
------------ ------------
$114,453,321 $107,933,248
------------ ------------
------------ ------------
</TABLE>
4
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Net revenues..................................................................... $10,149,581 $11,682,871
----------- -----------
Operating expenses:
Selling, technical and program expenses..................................... 4,413,684 5,537,572
General and administrative.................................................. 1,893,658 2,010,695
Depreciation and amortization............................................... 856,107 1,360,430
Corporate................................................................... 343,256 495,892
----------- -----------
7,506,705 9,404,589
----------- -----------
Operating income....................................................... 2,642,876 2,278,282
Financial income (expense):
Interest expense
Cash interest.......................................................... (2,410,691) (4,026,253)
Other interest......................................................... (752,658) (100,457)
----------- -----------
(3,163,349) (4,126,710)
Interest income............................................................. 136,906 105,855
----------- -----------
(3,026,443) (4,020,855)
----------- -----------
Income (loss) before extraordinary item................................ (383,567) (1,742,573)
Extraordinary item, gain on early extinguishment of debt......................... 6,863,762 --
----------- -----------
Net income (loss)...................................................... $ 6,480,195 $(1,742,573)
----------- -----------
----------- -----------
</TABLE>
5
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED TREASURY
STOCK CAPITAL DEFICIT STOCK TOTAL
---------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995..................... $1,046,500 $2,758,178 $(38,886,616) $(1,481,149) $(36,563,087)
Net (loss) (unaudited)...................... -- -- (1,742,573) -- (1,742,573)
---------- ---------- ------------ ----------- ------------
Balance at March 31, 1996 (unaudited)............ $1,046,500 $2,758,178 $(40,629,189) $(1,481,149) $(38,305,660)
---------- ---------- ------------ ----------- ------------
---------- ---------- ------------ ----------- ------------
</TABLE>
6
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
--------------------------
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss)........................................................... $ 6,480,195 $(1,742,573)
Adjustments to reconcile net income (loss) to net cash (used in) operating
activities:
Amortization of program broadcast rights............................... 510,967 597,308
Depreciation and amortization.......................................... 529,889 892,420
(Gain) on early extinguishment of debt................................. (6,863,762) --
Amortization of intangibles and deferred loan costs.................... 482,505 568,467
(Gain) loss on sale of property and equipment.......................... (2,853) --
Payment of deferred and contingent interest............................ (4,405,746) --
Payment of prepayment premiums......................................... (2,748,896) --
Other.................................................................. 31,691 --
Change in assets and liabilities, net of effects of acquisition:
Receivables............................................................ 539,518 4,638,951
Prepaid expenses....................................................... (204,128) (294,940)
Payments on program broadcast rights payable........................... (429,021) (522,121)
Accounts payable and accrued expenses.................................. 593,679 (4,222,411)
Deferred income........................................................ -- (69,877)
Contingent and deferred interest payable............................... 567,533 --
------------ -----------
Net cash (used in) operating activities........................... (4,918,429) (154,776)
------------ -----------
Cash Flows From Investing Activities
Purchase of property and equipment.......................................... (359,996) (612,766)
Proceeds from sale of equipment............................................. 9,173 --
Payment for acquisition of station.......................................... (26,558,152) --
Deposit on acquisition...................................................... -- (1,000,000)
Payment of acquisition costs................................................ -- (334,569)
Other....................................................................... -- (15)
------------ -----------
Net cash (used in) investing activities........................... (26,908,975) (1,947,350)
------------ -----------
Cash Flows From Financing Activities
Principal payments on notes, including capital lease payables............... (96,075,529) (85,276)
Proceeds from senior secured debt issue..................................... 135,000,000 --
Payment of debt acquisition costs........................................... (5,085,944) (99,374)
------------ -----------
Net cash provided by (used in) financing activities............... 33,838,527 (184,650)
------------ -----------
Increase (decrease) in cash and cash equivalents.................. 2,011,123 (2,286,776)
Cash and cash equivalents:
Beginning................................................................... 4,617,242 9,668,331
------------ -----------
Ending...................................................................... $ 6,628,365 $ 7,381,555
------------ -----------
------------ -----------
Supplemental Disclosure of Cash Flow Information
Cash payments for interest.................................................. $ 5,894,091 $ 8,034,064
------------ -----------
------------ -----------
Supplemental Schedule of Non-Cash Investing and Financing Activities
Acquisition of program broadcast rights..................................... $ 318,442 $ 80,312
Note payable and capital lease obligation incurred for purchase of
equipment................................................................. 107,672 --
Equipment acquired by barter transactions................................... 84,676 41,888
------------ -----------
------------ -----------
Acquisition of WTVY-TV:
Cash purchase price.................................................... $ 26,558,152 $ --
------------ -----------
------------ -----------
Property and equipment acquired at fair market value................... 7,533,196 --
Intangible assets acquired............................................. 21,306,181 --
Other, net............................................................. (281,225) --
------------ -----------
28,558,152 --
Less: Application of advance to affiliate.............................. 2,000,000 --
------------ -----------
$ 26,558,152 $ --
------------ -----------
------------ -----------
</TABLE>
7
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NOTE A) -- NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS: Benedek Broadcasting Corporation ('Benedek
Broadcasting') owns and operates nine television stations located throughout the
United States which operate under network affiliation contracts. The networks
provide programs to the affiliated stations and the stations sell commercial
time during the programs to national, regional, and local advertisers. The
networks also sell commercial time during the programs to national advertisers.
Credit arrangements are determined on an individual customer basis.
BASIS OF PRESENTATION: The unaudited consolidated financial statements
include the accounts of Benedek Broadcasting and Benedek Broadcasting Company,
L.L.C. (the 'LLC'), a 99% owned subsidiary. All significant intercompany items
and transactions have been eliminated in the unaudited consolidated financial
statements. The financial statements include all adjustments, consisting of
normal and recurring adjustments, which are considered necessary in the opinion
of management for the fair presentation of the financial position as of March
31, 1996 and the results of operations and cash flows for the three months ended
March 31, 1995 and 1996. These financial statements do not include all the
information and footnotes required by generally accepted accounting principles.
Operating results for the three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996.
(NOTE B) -- BUSINESS COMBINATION AND ACQUISITION
(1) BUSINESS COMBINATION:
On March 10, 1995, two affiliates of Benedek Broadcasting, Blue Grass
Television, Inc. ('Blue Grass') and Youngstown Broadcasting Co., Inc.
('Youngstown'), were merged into Benedek Broadcasting. Since these entities had
identical stockholder ownership, this was accounted for in a manner similar to
that in pooling-of-interests accounting.
Benedek Broadcasting issued 92.85 shares of its common stock for all the
outstanding common shares of Blue Grass and Youngstown, and such shares are
treated as if they were outstanding for all periods presented.
On March 10, 1995, the FCC (as defined) licenses for all the television
stations owned by Benedek Broadcasting were transferred to the newly formed LLC.
Benedek Broadcasting owns 99% of the membership interest in the LLC and its
principal stockholder owns the remaining 1% minority membership interest. The
assets, liabilities and results of operations of the LLC are included in these
consolidated financial statements. The minority membership interest in the LLC
is not significant.
(2) ACQUISITION:
On March 31, 1995, Benedek Broadcasting acquired substantially all of the
assets of WTVY-TV which serves Dothan, Alabama and Panama City, Florida for an
aggregate purchase price of approximately $28,699,000. The acquired assets
include property and equipment with a fair market value of approximately
$7,533,000 and program broadcast rights of approximately $93,000, offset by
liabilities under program broadcast rights of approximately $79,000 and net
liabilities under trade and barter contracts of approximately $155,000. Benedek
Broadcasting also assumed commitments of approximately $214,000 related to
programming. The excess of the purchase price over the net assets acquired
totaled approximately $21,306,000 and has been allocated to intangible assets
which will be amortized over 40 years. This transaction has been accounted for
under the purchase method of accounting. Accordingly, the results of operations
for WTVY-TV have been included in the results of operations of these
consolidated financial statements since the date of acquisition.
8
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The results of operations for the three months ended March 31, 1995 and
1996, assuming the acquisition of WTVY-TV had taken place on January 1, 1995,
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1996
------------ ------------
(PRO FORMA) (ACTUAL)
<S> <C> <C>
Net revenue.................................................. $ 11,793,367 $ 11,682,871
Operating expenses........................................... 9,346,343 9,404,589
Financial expense............................................ 3,952,089 4,020,855
------------ ------------
(Loss) before extraordinary item........................ (1,505,065) (1,742,573)
Extraordinary item........................................... 6,863,762 --
------------ ------------
Net income (loss)....................................... $ 5,358,697 $ (1,742,573)
------------ ------------
------------ ------------
</TABLE>
(NOTE C) -- NOTES PAYABLE AND CAPITAL LEASES PAYABLE
During 1995, Benedek Broadcasting issued $135,000,000 of 11 7/8% Senior
Secured Notes due 2005 (the 'Senior Secured Notes'). The net proceeds of the
Senior Secured Notes were used, together with available cash, to (i) refinance
certain indebtedness, (ii) finance the acquisition of WTVY-TV and (iii) pay fees
and expenses in connection with the offering. The Senior Secured Notes have been
registered with the Securities and Exchange Commission in a registration
statement declared effective in November 1995.
The Senior Secured Notes bear interest at the rate of 11 7/8%, payable
semiannually on March 1 and September 1 of each year and mature in March 2005.
The Senior Secured Notes may be redeemed by Benedek Broadcasting in whole or in
part after March 1, 2000 subject to certain prepayment premiums. The Senior
Secured Notes contain various restrictive covenants relating to limitations on
dividends, transactions with affiliates, further issuance of debt, and sales of
assets, among others. As of March 31, 1996, Benedek Broadcasting was in
compliance with these covenants.
The Senior Secured Notes are collateralized by Benedek Broadcasting's 99%
interest in the LLC, certain agreements and contract rights related to the
stations which includes network affiliation agreements and certain general
intangibles. The minority membership interest holder has also entered into a
pledge and security agreement providing for the pledge of his 1% interest in the
LLC.
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ --------------
<S> <C> <C>
Senior Secured Notes...................................... $135,000,000 $ 135,000,000
Capital leases and other.................................. 767,025 681,749
------------ --------------
135,767,025 135,681,749
Less current maturities................................... 318,077 304,712
------------ --------------
$135,448,948 $ 135,377,037
------------ --------------
------------ --------------
</TABLE>
9
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1995, the notes provide for annual reductions as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1996.......................................... $ 318,077
1997.......................................... 256,980
1998.......................................... 144,882
1999.......................................... 45,778
2000.......................................... 1,308
Thereafter.................................... 135,000,000
------------
$135,767,025
------------
------------
</TABLE>
(NOTE D) -- ACQUISITIONS AND SUBSEQUENT EVENTS
(1) ACQUISITIONS:
On November 22, 1995, Benedek Broadcasting entered into an agreement,
subject to regulatory approvals, to acquire the assets of five television
stations (and four satellite stations) for a total purchase price of
$54,500,000.
On December 15, 1995, Benedek Broadcasting entered into a stock purchase
agreement to acquire all the issued and outstanding shares of capital stock of a
corporation which owns and operates eight television stations for a purchase
price of $270,000,000.
(2) SUBSEQUENT EVENTS:
On April 10, 1996, the sole stockholder of Benedek Broadcasting formed
Benedek Communications Corporation ('BCC') in contemplation of the above
acquisitions. At the closing of the acquisitions and related financing plans,
the sole stockholder of Benedek Broadcasting will contribute all of the
outstanding shares of common stock of Benedek Broadcasting to BCC in exchange
for the issuance to him of all of the outstanding shares of common stock of BCC.
The financing plan for the acquisitions contemplates that (i) BCC issue (a)
senior subordinated discount notes, (b) units, consisting of exchangeable
preferred stock and warrants to acquire common stock of BCC, and (c) seller
junior discount preferred stock and (ii) Benedek Broadcasting enter into a new
credit agreement. The new credit agreement is planned to include $120,000,000
term loan facilities and a $15,000,000 revolving credit facility. These
financing arrangements are currently being negotiated and have not been
finalized.
On April 18, 1996, Benedek Broadcasting formed Benedek License Corporation
('BLC') in contemplation of the aforementioned acquisitions. Upon consummation
of the acquisitions and the related financing plans, the LLC will be merged with
BLC and all of the licenses and authorizations issued by the FCC for the
operation of the Stations (as defined) will be held by BLC.
10
<PAGE>
<PAGE>
BENEDEK BROADCASTING COMPANY, L.L.C.
(A LIMITED LIABILITY COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31,
1996
DECEMBER 31, -----------
1995
------------ (UNAUDITED)
<S> <C> <C>
ASSETS
Federal Communication Commission (FCC)
Licenses, at cost, less accumulated amortization of $326,312 and $435,083
for 1995 and 1996, respectively........................................... $ 15,304,138 $15,195,367
------------ -----------
$ 15,304,138 $15,195,367
------------ -----------
------------ -----------
MEMBERS' EQUITY
Members' Equity (Note C)
Members' capital............................................................ $ 16,211,650 $16,211,650
Deduct notes receivable arising from the issuance of membership certificates
(Note B).................................................................. 581,200 15,630,450
------------ -----------
15,630,450 581,200
Accumulated deficit......................................................... (326,312) (435,083)
------------ -----------
$ 15,304,138 $15,195,367
------------ -----------
------------ -----------
</TABLE>
11
<PAGE>
<PAGE>
BENEDEK BROADCASTING COMPANY, L.L.C.
(A LIMITED LIABILITY COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 28, 1995 THROUGH MARCH 31, 1995
AND THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
1995 1996
-------- -----------
(UNAUDITED)
<S> <C> <C>
Operating expense, amortization........................................................ $ 18,971 $ 108,771
-------- -----------
Net (loss)........................................................................ $(18,971) $ (108,771)
-------- -----------
-------- -----------
</TABLE>
12
<PAGE>
<PAGE>
BENEDEK BROADCASTING COMPANY, L.L.C.
(A LIMITED LIABILITY COMPANY)
STATEMENT OF MEMBERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NOTES RECEIVABLE
ARISING FROM
THE ISSUANCE OF
MEMBERS' MEMBERSHIP ACCUMULATED
CAPITAL CERTIFICATES DEFICIT TOTAL
----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995................ $16,211,650 $(581,200) $(326,312) $15,304,138
Net (loss) (unaudited)...................... -- -- (108,771) (108,771)
----------- ----------------- ----------- -----------
Balance March 31, 1996(unaudited)........... $16,211,650 $(581,200) $(435,083) $15,195,367
----------- ----------------- ----------- -----------
----------- ----------------- ----------- -----------
</TABLE>
13
<PAGE>
<PAGE>
BENEDEK BROADCASTING COMPANY, L.L.C.
(A LIMITED LIABILITY COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FEBRUARY 28, 1995 THROUGH MARCH 31, 1995
AND THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net (loss).................................................................... $ (18,971) $ (108,771)
Adjustment to reconcile net (loss) to net cash provided by operating
activities:
Amortization............................................................. 18,971 108,771
----------- -----------
Net cash provided by operating activities........................... -- --
----------- -----------
Net change in cash.................................................. -- --
----------- -----------
Cash:
Beginning..................................................................... -- --
----------- -----------
Ending........................................................................ $ -- $ --
----------- -----------
----------- -----------
Supplemental schedule of noncash investing and financing activities
FCC licenses acquired by issuing membership certificates...................... $15,630,450
-----------
Notes received for issuance of membership certificates........................ $ 581,200
-----------
-----------
</TABLE>
14
<PAGE>
<PAGE>
BENEDEK BROADCASTING COMPANY, L.L.C.
(A LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
(NOTE A) -- NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS: Benedek Broadcasting Company, L.L.C. (the 'LLC') is a
99% owned subsidiary of Benedek Broadcasting Corporation ('Benedek
Broadcasting'). The LLC located in Rockford, Illinois, was formed February 28,
1995 under the Delaware Limited Liability Company Act with a term of 30 years.
The LLC was formed to own and hold the Federal Communication Commission ('FCC')
licenses for the nine television stations owned by Benedek Broadcasting which
are located throughout the United States.
BASIS OF PRESENTATION: The financial statements include all adjustments,
consisting of normal and recurring adjustments, which are considered necessary
in the opinion of management for the fair presentation of the financial position
as of March 31, 1996 and the results of operations and cash flows for the period
February 28, 1995 through March 31, 1995 and the three months ended March 31,
1996. These financial statements do not include all the information and
footnotes required by generally accepted accounting principles.
Operating results for the three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996.
(NOTE B) -- NOTES RECEIVABLE ARISING FROM THE ISSUANCE OF MEMBERSHIP
CERTIFICATES
The notes receivable arising from the issuance of membership certificates
are noninterest bearing and are due on demand.
(NOTE C) -- MEMBERS' EQUITY
The members have pledged their membership interests in the LLC as
collateral on the Senior Secured Notes issued by Benedek Broadcasting which had
an outstanding balance at December 31, 1995 and March 31, 1996 of $135,000,000.
15
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The operating revenues of Benedek Broadcasting are derived primarily from
the sale of advertising time and, to a lesser extent, from compensation paid by
the networks for broadcasting network programming and from barter transactions
for goods and services. Revenue depends on the ability of Benedek Broadcasting
to provide popular programming which attracts audiences in the demographic
groups targeted by advertisers, thereby allowing Benedek Broadcasting to sell
advertising time at satisfactory rates. Revenue also depends significantly on
factors such as the national and local economy and the level of local
competition.
Approximately 56.9% of the gross revenues of the Benedek Stations (as
defined) in the first quarter of 1996 was generated from local and regional
advertising, which is sold primarily by a Station's sales staff, and the
remainder of the advertising revenues is comprised primarily of national
advertising, which is sold by national sales representatives retained by
Benedek Broadcasting. Benedek Broadcasting generally pays commissions to
advertising agencies on local, regional and national advertising and to national
sales representatives on national advertising. Net revenues reflect deductions
from gross revenues for commissions payable to advertising agencies and national
sales representatives.
Local/regional advertising and national advertising constitute the largest
categories of Benedek Broadcasting's operating revenues and represent
approximately 82.8% of gross revenues for the three months ended March 31, 1996
as compared to 88.5% for the three months ended March 31, 1995. Although
relatively constant as a total percentage of gross revenues, the mix of
advertising revenue can vary depending on the level of political advertising
revenue. Excluding political advertising revenue, the percentage of gross
revenues attributable to local/regional advertising and national advertising of
Benedek Broadcasting was 85.7% for the three months ended March 31, 1996,
compared to 88.6% for the three months ended March 31, 1995. The decrease was
the result of an increase in network compensation of $0.4 million or 60.7%,
representing 7.6% of gross revenues (excluding political advertising revenues)
for the three months ended March 31, 1996 as compared to 5.2% of gross revenues
(excluding political advertising revenues) for the three months ended March 31,
1995.
In the three months ended March 31, 1996, Benedek Broadcasting reported net
revenues of $11.7 million compared to net revenues of $10.1 million for the
three months ended March 31, 1995. Benedek Broadcasting had a net loss of $1.7
million for the three months ended March 31, 1996 compared to net income of $6.5
million (after an extraordinary gain of $6.9 million) for the three months ended
March 31, 1995. Operating cash flow for the three months ended March 31, 1996
was $3.7 million compared to $3.6 million for the three months ended March 31,
1995.
In December 1995, Benedek Broadcasting entered into new long-term
affiliation agreements with CBS effective retroactive to July 1, 1995. In
connection with such arrangements, CBS paid Benedek Broadcasting bonus payments
of $2.5 million in the fourth quarter of 1995 and $2.5 million in the first
quarter of 1996. These payments will be recognized as revenue by Benedek
Broadcasting at the rate of $0.5 million per year over the ten-year term of the
affiliation agreements. In connection with these payments, Benedek Broadcasting
also agreed with CBS that, upon the consummation of the Acquisitions (as
defined), the terms of the affiliation agreements for the Acquired Stations (as
defined) which are CBS affiliates would be extended through 2005.
Benedek Broadcasting's primary operating expenses are employee
compensation, programming and depreciation and amortization. Changes in
compensation expense result primarily from adjustments to fixed salaries based
on employee performance and inflation and, to a lesser extent, from changes in
sales commissions paid based on levels of advertising revenues. Programming
expense consists primarily of amortization of program rights. Benedek
Broadcasting purchases first run and off-network syndicated programming on an
on-going basis and has a policy of closely matching payments for and
amortization of program rights in each period. A network-affiliated station
receives approximately two-thirds of its required daily programming from the
network at no cost. Depreciation and amortization expense has generally declined
from period to period as assets acquired at the time
16
<PAGE>
<PAGE>
of the acquisition of a station are fully depreciated. However, for the three
months ended March 31, 1996 depreciation and amortization increased $0.5 million
primarily due to the acquisition of WTVY-TV (the 'Dothan Station'). Barter
expense generally offsets barter revenue and reflects the fair market value of
goods and services received. Benedek Broadcasting's operating expenses
(excluding depreciation and amortization) have remained fairly constant and
represent approximately 68.8% of net revenues for the three months ended March
31, 1996 as compared to 65.6% of net revenues for the three months ended March
31, 1995.
On March 31, 1995, Benedek Broadcasting acquired for a cash purchase price
of $28.7 million substantially all of the assets (excluding cash and accounts
receivable) of the Dothan Station which is the CBS affiliate serving both
Dothan, Alabama and Panama City, Florida.
Benedek Broadcasting has included operating cash flow data because such
data is used by certain investors to measure a company's ability to service
debt. Operating cash flow is defined as operating income before financial income
as derived from statements of operations plus depreciation and amortization,
amortization of program broadcast rights and non-cash compensation less cash
payments for program broadcast rights. Operating cash flow is used to pay
principal and interest on long-term debt and to fund capital expenditures.
Operating cash flow does not purport to represent cash provided by operating
activities as reflected in Benedek Broadcasting's Consolidated Financial
Statements, is not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
17
<PAGE>
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain historical financial and operating
data for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------
1995 1996
---------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues:
Local/regional..................................................... $ 6,901 59.0% $ 7,553 56.9%
National........................................................... 3,438 29.4 3,437 25.9
Political.......................................................... 14 0.1 445 3.4
Network............................................................ 605 5.2 972 7.3
Barter............................................................. 487 4.2 589 4.4
Other.............................................................. 243 2.1 275 2.1
------- ----- ------- -----
Gross revenues.......................................................... 11,688 100.0% 13,271 100.0%
----- -----
----- -----
Agency and national sales representative commissions............... 1,538 1,588
------- -------
Net revenues............................................................ 10,150 11,683
------- -------
Operating expenses:
Compensation expense and payroll taxes(a).......................... 3,386 4,088
Amortization of program rights..................................... 511 597
Depreciation and amortization...................................... 856 1,360
Barter............................................................. 434 494
Other(b)........................................................... 1,977 2,370
------- -------
7,164 8,909
------- -------
Station operating income................................................ 2,986 2,774
Corporate expenses................................................. 343 496
------- -------
Operating income........................................................ 2,643 2,278
Financial (expenses), net............................................... (3,027) (4,021)
------- -------
Net income (loss) before extraordinary item............................. (384) (1,743)
Extraordinary item, gain on early extinguishment of debt................ 6,864 --
------- -------
Net income (loss)....................................................... $ 6,480 $(1,743)
------- -------
------- -------
Broadcast cash flow..................................................... $ 3,924 $ 4,209
Broadcast cash flow margin.............................................. 38.7% 36.0%
Operating cash flow..................................................... $ 3,581 $ 3,713
Operating cash flow margin.............................................. 35.3% 31.8%
</TABLE>
- - ------------
(a) Does not include corporate overhead.
(b) Includes utilities, insurance and other general and administrative
expenses.
18
<PAGE>
<PAGE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Net revenues for the three months ended March 31, 1996 increased $1.5
million or 15.1% to $11.7 million from $10.2 million for the three months ended
March 31, 1995. Of this increase, $1.4 million was attributable to the
acquisition in March 1995 of the Dothan Station. For the eight Benedek Stations
owned by Benedek Broadcasting during the entire first quarter of both 1995 and
1996, net revenues for the three months ended March 31, 1996 increased $0.2
million or 1.5% from the three months ended March 31, 1995. For such Benedek
Stations, political advertising revenue for the three months ended March 31,
1996 increased by $0.4 million to $0.4 million. Gross revenues for such Benedek
Stations excluding political advertising revenue decreased $0.4 million or 3.1%
from the three months ended March 31, 1995.
Operating expenses for the three months ended March 31, 1996 increased $1.9
million or 25.3% to $9.4 million from $7.5 million for the three months ended
March 31, 1995. Of the increase in operating expenses, $1.4 million was
attributable to the acquisition of the Dothan Station. As a percentage of net
revenues, operating expenses increased to 80.5% from 74.0% in the three months
ended March 31, 1995, primarily as a result of an increase of $0.5 million in
depreciation and amortization expense. For the eight Benedek Stations owned by
Benedek Broadcasting during the entire first quarter of both 1995 and 1996,
operating expenses for the three months ended March 31, 1996 increased $0.5
million or 6.1% from the three months ended March 31, 1995. Operating expenses
as a percentage of net revenues for such Benedek Stations increased from 74.0%
for the three months ended March 31, 1995 to 77.3% in the three months ended
March 31, 1996.
Operating income for the three months ended March 31, 1996 decreased $0.4
million or 13.8% to $2.3 from $2.7 million for the three months ended March 31,
1995.
Financial (expenses), net for the three months ended March 31, 1996
increased $1.0 million or 32.9% to $4.0 million from $3.0 million in the three
months ended March 31, 1995 due to Benedek Broadcasting's higher debt level
following the offering of the Senior Secured Notes in March 1995.
Net loss for the three months ended March 31, 1996 was $1.7 million as
compared to net income of $6.5 million for the three months ended March 31, 1995
primarily as a result of an extraordinary gain of $6.9 million on the early
extinguishment of debt.
Operating cash flow for the three months ended March 31, 1996 increased
$0.1 million or 3.6% to $3.7 million from $3.6 million for the three months
ended March 31, 1995 primarily as a result of the acquisition of the Dothan
Station. As a percentage of net revenues, operating cash flow decreased to 31.8%
for the three months ended March 31, 1996 from 35.3% for the three months ended
March 31, 1995. For the eight Benedek Stations owned by Benedek Broadcasting
during the entire first quarter of both 1995 and 1996, operating cash flow for
the three months ended March 31, 1996 decreased $0.3 million or 7.9% to $3.3
million from $3.6 million for the three months ended March 31, 1995. As a
percentage of net revenues, operating cash flow decreased to 31.8% for the three
months ended March 31, 1996 from 35.3% for the three months ended March 31,
1995. The first quarter of each fiscal year is typically characterized by lower
operating cash flow margins than Benedek Broadcasting would realize for the full
fiscal year due to the seasonal nature of the broadcasting business.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities is the primary source of liquidity for
Benedek Broadcasting and were $(0.2) million for the three months ended March
31, 1996 compared to $(4.9) million for the three months ended March 31, 1995.
For the three months ended March 31, 1996 cash flows from operating activities
primarily resulted from a $4.6 million decrease in receivables, which included
$2.5 million from the bonus payment from CBS, offset by a decrease in accrued
interest of $4.0 million. For the three months ended March 31, 1995 cash flows
from operating activities primarily resulted from the refinancing of
substantially all of its existing long-term debt in March 1995 and the payment
of $4.4 million of deferred and contingent interest and $2.7 million of
prepayment premiums. In addition, cash used by operations included $6.9 million
of non-cash gain on early extinguishment of debt.
Cash Flows From Investing Activities were $(1.9) million for the three
months ended March 31, 1996, compared to $(26.9) million for the three months
ended March 31, 1995. For the three months
19
<PAGE>
<PAGE>
ended March 31, 1996, cash flows from investing activities primarily resulted
from a $1.0 million deposit made to acquire the Stauffer Stations (as defined)
and $0.6 million of capital expenditures. For the three months ended March 31,
1995 cash flows used in investing activities included $26.7 million paid to
acquire the Dothan Stations.
Cash Flows from Financing Activities were $(0.2) million for the three
months ended March 31, 1996 compared to $33.8 million for the three months ended
March 31, 1995. For the three months ended March 31, 1995 cash flows from
financing activities primarily resulted from the issuance in March 1995 of
$135.0 million of Benedek Broadcasting's Senior Secured Notes to refinance
existing indebtedness and finance the acquisition of the Dothan Station, offset
by $96.0 million of principal payments on existing indebtedness. The
consummation of the refinancing resulted in an extraordinary gain on the early
extinguishment of debt comprised of a gain of $11.1 million from adjusting the
carrying value of certain warrants held by Benedek Broadcasting's lenders offset
by $2.7 million of prepayment premiums and $1.5 million of unamortized debt
discount and deferred loan costs.
SEASONALITY
Net revenues and operating cash flow of Benedek Broadcasting are generally
higher during the fourth quarter of each year, primarily due to increased
expenditures by advertisers in anticipation of holiday season consumer spending
and an increase in viewership during this period, and, to a lesser extent,
during the second quarter of each year.
INCOME TAXES
Benedek Broadcasting has elected to be taxed as an S Corporation,
therefore, net income (loss) does not include a provision for income tax
expense. Benedek Broadcasting's election to be taxed as an S Corporation will
automatically terminate concurrently with the consummation of the Transactions
(as defined).
EMERGING ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123, 'Accounting for Stock Based Compensation'
in October 1995, which establishes financial accounting and reporting standards
for stock based employee compensation plans, including stock purchase plans,
stock options, restricted stock, and stock appreciation rights. Benedek
Broadcasting has elected to continue accounting for stock based compensation
under Accounting Principles Board Opinion No. 25. The disclosure requirements of
SFAS No. 123 will be effective for Benedek Broadcasting's financial statements
beginning in 1996. Management does not believe that the implementation of SFAS
123 will have a material effect on its consolidated financial statements.
20
<PAGE>
<PAGE>
PART II -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Benedek Broadcasting has recently entered into the transactions described
below.
As used in this Report on Form 10-Q, unless the context otherwise requires:
BCC refers to Benedek Communications Corporation, a Delaware corporation
which will become the sole stockholder of Benedek Broadcasting upon the
consummation of the Transactions;
Benedek Broadcasting refers to Benedek Broadcasting Corporation, a Delaware
corporation, and its subsidiaries (prior to the consummation of the
Transactions, the LLC and, after the consummation of the Transactions, BLC);
LLC refers to Benedek Broadcasting Company, L.L.C., a Delaware limited
liability company, owned 99% by Benedek Broadcasting and 1% by A. Richard
Benedek, formed in connection with the issuance of Benedek Broadcasting's
outstanding 11 7/8% Senior Secured Notes due 2005 (the 'Senior Secured Notes')
to hold all of the licenses and authorizations issued by the Federal
Communications Commission (the 'FCC') for the operation of the Benedek Stations
and which will be merged with BLC upon the consummation of the Transactions;
BLC refers to Benedek License Corporation, a Delaware corporation which
will be merged with the LLC upon the consummation of the Transactions as a
result of which it will become a wholly-owned subsidiary of Benedek
Broadcasting, and which will hold all of the licenses and authorizations issued
by the FCC for the operation of all the Stations;
Benedek Stations refers to the nine network-affiliated television stations
currently owned by Benedek Broadcasting;
Stauffer refers to Stauffer Communications, Inc.;
Stauffer Stations refers to the five network-affiliated television stations
(and four satellite stations) currently owned by Stauffer and to be acquired by
Benedek Broadcasting;
Brissette refers to Brissette Broadcasting Corporation and its wholly-owned
subsidiaries;
Brissette Stations refers to the eight network-affiliated television
stations currently owned by Brissette and to be acquired by Benedek
Broadcasting;
Acquired Stations refers collectively to the Stauffer Stations and the
Brissette Stations; and
Stations refers collectively to the Benedek Stations and the Acquired
Stations.
As further described under 'The Acquisitions,' Benedek Broadcasting has
agreed, subject to certain conditions, to acquire substantially all of the
television broadcast assets of Stauffer and all of the capital stock of
Brissette (the 'Acquisitions'). Benedek Broadcasting, together with BCC, intends
to implement a financing plan (the 'Financing Plan,' and together with the
Acquisitions and certain other events, the 'Transactions') in order to finance
the Acquisitions and to pay fees and expenses related thereto. The Financing
Plan consists of the issuance of the Senior Subordinated Discount Notes,
borrowings by Benedek Broadcasting under the Credit Agreement, the offer and
sale by BCC of the Units and the issuance by BCC of its Seller Junior Discount
Preferred Stock.
Credit Agreement refers to the credit agreement between Benedek
Broadcasting and a group of lenders pursuant to which Benedek Broadcasting will
borrow $118.0 million in term loans (the 'Term Loan Facilities') and may borrow
up to $15.0 million in revolving credit loans (the 'Revolving Credit Facility');
Exchangeable Preferred Stock refers to the 15.0% Exchangeable Redeemable
Senior Preferred Stock to be issued by BCC;
Seller Junior Discount Preferred Stock refers to the preferred stock to be
issued by BCC to General Electric Capital Corporation ('GECC'), one of the
sellers of the Brissette Stations;
Senior Secured Notes refers to the 11 7/8% Senior Secured Notes due 2005
issued by Benedek Broadcasting in March 1995;
21
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<PAGE>
Senior Subordinated Discount Notes refers to the Senior Subordinated
Discount Notes due 2006 to be issued by BCC;
Units refers to the Units offered by BCC, each consisting of ten shares of
Exchangeable Preferred Stock, ten Initial Warrants and 14.8 Contingent Warrants;
Initial Warrants refers to 600,000 warrants, each to purchase one share of
Class A Common Stock of BCC;
Contingent Warrants refers to 888,000 warrants, each to purchase one share
of Class A Common Stock of BCC;
Warrants refers to the Initial Warrants and the Contingent Warrants;
Warrant Shares refers to the shares of BCC's Class A Common Stock issuable
upon exercise of the Warrants;
Operating cash flow refers to operating income before financial income
(expense) as derived from statements of operations plus depreciation and
amortization, amortization of program broadcast rights and non-cash compensation
less cash payments for program broadcast rights;
Operating cash flow margin refers to operating cash flow divided by net
revenues;
Broadcast cash flow refers to operating income before financial income
(expense) as derived from statements of operations plus depreciation and
amortization, amortization of program broadcast rights, corporate expenses and
non-cash compensation less cash payments for program broadcast rights; and
Broadcast cash flow margin refers to broadcast cash flow divided by net
revenues.
Operating cash flow and broadcast cash flow data have been included herein
because such data is used by certain investors to measure a company's ability to
service debt. Operating cash flow and broadcast cash flow do not purport to
represent cash provided by operating activities as reflected in the Consolidated
Financial Statements of Benedek Broadcasting, the Financial Statements of
Stauffer or the Consolidated Financial Statements of Brissette, are not measures
of financial performance under generally accepted accounting principles ('GAAP')
and should not be considered in isolation or as substitutes for measures of
performance prepared in accordance with GAAP.
THE ACQUISITIONS
THE STAUFFER ACQUISITION. In November 1995, Benedek Broadcasting entered
into an asset purchase agreement, as amended (the 'Stauffer Agreement'), with
Stauffer pursuant to which, subject to certain conditions, Benedek Broadcasting
will acquire substantially all of the broadcast television assets (including
working capital) of Stauffer consisting of five principal broadcast television
stations and four satellite broadcast television stations for a purchase price
of $54.5 million. Benedek Broadcasting will also assume certain liabilities and
obligations of Stauffer incurred in the ordinary course of business, excluding,
among other things, any indebtedness for borrowed money. Pursuant to the
Stauffer Agreement, at closing Stauffer must have working capital of at least
$1.6 million. To the extent the working capital of Stauffer exceeds $1.6 million
(including therein accounts receivable of Stauffer only to the extent actually
collected), Benedek Broadcasting is obligated to remit such excess to Stauffer
over the 90-day period immediately after the closing.
The principal stations to be acquired by Benedek Broadcasting are KCOY-TV,
Santa Maria, California; WIBW-TV, Topeka, Kansas; KMIZ(TV), Columbia, Missouri;
KGWC-TV, Casper, Wyoming; and KGWN-TV, Cheyenne, Wyoming. KGWC-TV operates two
satellite stations, KGWL-TV, Lander, Wyoming, and KGWR-TV, Rock Springs,
Wyoming, both of which rebroadcast the programming of KGWC-TV. KGWN-TV operates
two satellite stations, KSTF-TV, Scottsbluff, Nebraska and KTVS-TV, Sterling,
Colorado, both of which rebroadcast the programming of KGWN-TV. All of the
Stauffer Stations are affiliated with CBS, except for KMIZ(TV), Columbia,
Missouri, which is affiliated with ABC. Benedek Broadcasting has deposited the
sum of $5.0 million with an escrow agent as a down payment. For the year ended
December 31, 1995, the Stauffer Stations had net revenues of $17.3 million,
broadcast cash flow of $4.0 million and broadcast cash flow margin of 23.1%.
22
<PAGE>
<PAGE>
THE BRISSETTE ACQUISITION. In December 1995, Benedek Broadcasting entered
into a stock purchase agreement, as amended (the 'Brissette Agreement'), with
Mr. Paul Brissette, GECC and Brissette pursuant to which, subject to certain
conditions, Benedek Broadcasting will acquire all of the capital stock of
Brissette for $270.0 million in cash and preferred stock. All of the outstanding
indebtedness of Brissette is required to have been paid in full by the sellers
at the closing. Pursuant to the Brissette Agreement, at closing Brissette must
have working capital of at least $8.8 million and any amount in excess thereof
will be paid to the sellers after the closing. Brissette owns and operates eight
network-affiliated television stations including WMTV(TV), the NBC affiliate
serving Madison, Wisconsin; WWLP(TV), the NBC affiliate serving Springfield,
Massachusetts; WILX-TV, the NBC affiliate serving Lansing, Michigan; WHOI(TV),
the ABC affiliate serving Peoria, Illinois; WSAW-TV, the CBS affiliate serving
Wausau, Wisconsin; WTRF-TV, the CBS affiliate serving Wheeling, West Virginia
and Steubenville, Ohio; KAUZ-TV, the CBS affiliate serving Wichita Falls, Texas;
and KOSA-TV, the CBS affiliate serving Odessa, Texas. For the year ended
December 31, 1995, Brissette had net revenues of $51.3 million, broadcast cash
flow of $23.9 million and broadcast cash flow margin of 46.5%.
Of the $270.0 million to be paid for the capital stock of Brissette, $225.0
million is to be paid in cash and the balance is to be paid by the issuance to
GECC of the Seller Junior Discount Preferred Stock. See 'The Financing Plan.'
23
<PAGE>
<PAGE>
THE FINANCING PLAN
Benedek Broadcasting, together with its parent company BCC, intends to
implement the Financing Plan in order to finance the Acquisitions and to pay
fees and expenses related thereto. The Financing Plan consists of (i) the offer
and sale by BCC of the Senior Subordinated Discount Notes, (ii) the offer and
sale by BCC of the Units to generate gross proceeds of $60.0 million, (iii)
Benedek Broadcasting borrowing $118.0 million pursuant to the Term Loan
Facilities of the Credit Agreement and (iv) BCC issuing $45.0 million initial
liquidation preference of Seller Junior Discount Preferred Stock to GECC.
The sale of the Senior Subordinated Discount Notes, advances pursuant to
the Credit Agreement and the sale of the Units are conditioned upon the
consummation of each other and upon the consummation of the Acquisitions, the
issuance of the Seller Junior Discount Preferred Stock and the availability of
$15.0 million under the Revolving Credit Facility.
BCC has entered into commitment letters with several accredited investors
with respect to the Units pursuant to a Private Placement Memorandum dated May
6, 1996 as supplemented as of May 8, 1996.
Benedek Broadcasting has entered into a commitment letter with Pearl Street
L.P., an affiliate of Goldman, Sachs & Co., with respect to Term Loan Facilities
of up to $120.0 million pursuant to the Credit Agreement. Pearl Street L.P. will
act as Arranging Agent for the credit facility and Goldman, Sachs & Co. will be
the Syndication Agent. Canadian Imperial Bank of Commerce will act as
Administrative Agent and Collateral Agent for the ultimate lenders under the
Credit Agreement and will provide the Revolving Credit Facility.
The following table sets forth the sources and uses for the Financing Plan
on a pro forma basis as of March 31, 1996:
<TABLE>
<CAPTION>
(DOLLARS
IN THOUSANDS)
<S> <C>
SOURCES:
Benedek Broadcasting
Cash.................................................................... $ 7,500
Deposit(a).............................................................. 5,000
Credit Agreement
Revolving Credit Facility(b)....................................... --
Term Loan Facilities............................................... 118,000
BCC
The Notes............................................................... 100,000
The Units(c)............................................................ 60,000
Seller Junior Discount Preferred Stock.................................. 45,000
--------------
$335,500
--------------
--------------
USES:
Stauffer Acquisition.................................................... $ 54,500
Brissette Acquisition................................................... 270,000
Fees and Expenses....................................................... 11,000
--------------
$335,500
--------------
--------------
</TABLE>
- - ------------
(a) Pursuant to the Stauffer Agreement, Benedek Broadcasting has made a $5.0
million down payment which has been deposited in escrow pending
consummation of the Stauffer Acquisition.
(b) At the closing, Benedek Broadcasting will have available to it $15.0
million under the Revolving Credit Facility.
(c) Each Unit consists of ten shares of Exchangeable Preferred Stock, ten
Initial Warrants and 14.8 Contingent Warrants, each Warrant to purchase one
share of Class A Common Stock of BCC.
24
<PAGE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the 'Pro Forma
Financial Statements') are based on the Consolidated Financial Statements of
Benedek Broadcasting, the Financial Statements of Stauffer and the Consolidated
Financial Statements of Brissette adjusted to give pro forma effect to the
Acquisitions, the Financing Plan, and certain contractual arrangements which
have been entered into since January 1, 1995 (collectively, for purposes of the
Pro Forma Financial Statements, the 'Transactions').
The unaudited Pro Forma Statements of Operations for the three months ended
March 31, 1996 are derived from the unaudited consolidated statement of
operations of Benedek Broadcasting for the three months ended March 31, 1996,
the unaudited statement of operations of Stauffer for the three months ended
March 31, 1996, and the unaudited statement of operations of Brissette for the
13-week period ended March 31, 1996, and assume that the Transactions were
consummated as of January 1, 1996. The unaudited Pro Forma Balance Sheet is
derived from the unaudited balance sheets of Benedek Broadcasting, Stauffer and
Brissette as of March 31, 1996, and assumes that the Transactions were
consummated on that date.
The Pro Forma Financial Statements do not purport to represent what BCC's
results of operations or financial condition would actually have been if the
Transactions had occurred on the dates indicated or to project BCC's results or
financial condition for or at any future period or date. The Pro Forma Financial
Statements are presented for comparative purposes only. The pro forma
adjustments, as described in the accompanying data, are based on available
information and certain assumptions that management believes are reasonable.
Additionally, certain reclassification entries have been made to the unaudited
financial statements of Stauffer and Brissette for consistent presentation with
Benedek Broadcasting.
The unaudited pro forma information with respect to the Acquisitions is
based on the historical financial statements of the business or assets acquired.
The Acquisitions are and will be accounted for under the purchase method of
accounting. The purchase price for the Acquisitions will be allocated to the
tangible and identifiable intangible assets and liabilities of the acquired
businesses based upon management's preliminary estimates of their fair value
with the remainder, if any, allocated to goodwill. The allocation of purchase
price for the Acquisitions is subject to revision when additional information
concerning asset and liability valuations is obtained. In the opinion of
management, the asset and liability valuations for the Acquisitions will not be
materially different from the Pro Forma Financial Statements presented. The pro
forma expenses directly attributable to the Transactions include interest
expense and changes in depreciation and amortization expenses resulting from the
allocation of the purchase cost.
25
<PAGE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS BCC
BENEDEK FOR PRO
BROADCASTING STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................... $11,683 $3,965 $11,970 $ 34(a) $27,652
Operating expenses:
Station operating expenses........... 7,549 3,516 7,107 (520)(b) 17,652
Depreciation and amortization........ 1,360 575 1,513 3,616(c) 7,064
--------------- -------- --------- ------------ --------
Station operating income (loss).... 2,774 (126) 3,350 (3,062) 2,936
Corporate expenses................... 496 -- 762 (762)(d) 496
--------------- -------- --------- ------------ --------
Operating income (loss)................ 2,278 (126) 2,588 (2,300) 2,440
--------------- -------- --------- ------------ --------
Financial expense, net:
Interest expense, net:
Cash interest, net................. (3,920) -- (4,893) 2,132(e) (6,681 )
Other interest..................... (101) -- (137) (3,183)(e) (3,421 )
--------------- -------- --------- ------------ --------
Total interest, net.............. (4,021) -- (5,030) (1,051) (10,102 )
--------------- -------- --------- ------------ --------
Other, net........................... -- -- (109) 109(f) --
Provision for income taxes............. -- -- (103) 103(g) --
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations........................... (1,743) (126) (2,654) (3,139) (7,662 )
Exchangeable Preferred Stock
dividends............................ -- -- -- (2,250)(h) (2,250 )
Seller Junior Discount Preferred
Stock dividends...................... -- -- -- (891)(i) (891 )
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations available to common
stockholders......................... $(1,743) $ (126) $(2,654) $ (6,280) $(10,803)
--------------- -------- --------- ------------ --------
--------------- -------- --------- ------------ --------
CERTAIN FINANCIAL DATA:
Broadcast cash flow.................... $ 4,209 $ 584 $ 4,833 $ 554 $10,180
Broadcast cash flow margin............. 36.0% 14.7% 40.4% 36.8 %
Operating cash flow.................... $ 3,713 $ 584 $ 4,071 $ 1,316 $ 9,684
Operating cash flow margin............. 31.8% 14.7% 34.0% 35.0 %
Amortization of program broadcast
rights............................... $ 597 $ 314 $ 483 $ 1,394
Payments for program broadcast
rights............................... 522 179 512 1,213
Capital expenditures................... 655 43 405 1,103
Cash payments for Federal income
taxes................................ -- -- -- --
</TABLE>
26
<PAGE>
<PAGE>
(a) The adjustment reflects the annualized effect of reduced commission rates
payable to national sales representative firms under new agreements
negotiated by Benedek Broadcasting.
(b) The adjustment reflects cost savings resulting from the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1996
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
(i) Elimination of redundant operating expenses, consisting of the elimination
of certain positions at the Acquired Stations.............................. $ 309
(ii) Adjustments to certain employee benefits and compensation practices at the
Acquired Stations......................................................... 116
(iii) Implementation of the Acquired Stations of operating strategies currently
utilized at the Benedek Stations.......................................... 95
-------
$ 520
-------
-------
</TABLE>
The pro forma cost savings as allocated among departments are summarized in
the table below:
<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN WEEKS
ENDED ENDED
MARCH 31, MARCH 31,
1996 1996
------------ --------------
STAUFFER BRISSETTE TOTAL
------------ -------------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Selling expenses............................................. $ 24 $ 13 $ 37
Programming and technical.................................... 122 133 255
Advertising and promotions................................... 17 45 62
General and administrative................................... 130 36 166
----- ----- -----
Total.................................................... $293 $227 $ 520
----- ----- -----
----- ----- -----
</TABLE>
(c) The adjustment reflects primarily the additional depreciation and
amortization expense resulting from the allocation of the purchase price
for the Acquired Stations to the assets acquired, including an increase in
property and equipment and intangible assets to their estimated fair
market value and the recording of goodwill associated with each of the
Acquisitions. See Note (c) to the Pro Forma Balance Sheet for allocation
of excess of purchase price over net book value of assets acquired to
property and equipment and intangible assets.
(d) The adjustment reflects the net annualized cost savings resulting from the
acquisition of the Acquired Stations by BCC, including (i) the elimination
of substantially all of the corporate expenses of Brissette and (ii) the
addition of certain corporate management personnel by BCC and related
costs.
(e) Interest expense has been adjusted to reflect the net effect of the change
in outstanding debt and deferred financing costs described in Notes (a)
and (d) to the Pro Forma Balance Sheet as if it had occurred on January 1,
1996 for the three months ended March 31, 1996. The following table
details the calculation of the adjustment:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1996
------------------------------------
CASH OTHER INTEREST TOTAL
------- -------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Notes at an assumed rate of 12.25%................................ $ -- $ (3,063) $(3,063)
Term Loan Facilities at an assumed blended rate of 9.0%........... (2,655) -- (2,655)
Interest on existing Brissette Notes.............................. 4,893 -- 4,893
Reduction in interest income...................................... (106) -- (106)
Increase in amortization of deferred financing costs.............. -- (257) (257)
Reduction of amortization of deferred financings costs on
Brissette debt.................................................. -- 137 137
------- ------- -------
Net adjustment................................................ $ 2,132 $ (3,183) $(1,051)
------- ------- -------
------- ------- -------
</TABLE>
Actual interest rates under these agreements may be higher or lower than
these rates. A change of 0.125% in the interest rate on borrowings under
the Notes and Term Loan Facilities would change pro forma interest expense
by approximately $68,000 for the three months ended March 31, 1996.
(f) The adjustment reflects the elimination of certain legal and investment
advisory fees paid by Brissette in connection with the sale to Benedek
Broadcasting.
(g) The adjustment reflects the elimination of income tax expense. BCC is not
expected to have income tax expense on a pro forma basis.
(h) The adjustment reflects the dividends paid on the Exchangeable Preferred
Stock at a rate of 15.0% per annum paid quarterly for an effective annual
rate of 15.9%.
(i) The adjustment reflects the dividends paid on the Seller Junior Discount
Preferred Stock at an assumed rate of 7.92% per annum paid quarterly for
an effective annual rate of 8.16%.
27
<PAGE>
<PAGE>
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------- ADJUSTMENTS
BENEDEK FOR BCC
BROADCASTING STAUFFER BRISSETTE TRANSACTIONS PRO FORMA
--------------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 7,381 $ 347 $ 1,534 $ (8,500)(a) $ 762
Trade receivables................................ 7,771 2,797 9,259 -- 19,827
Other receivables................................ 120 -- -- 2,252(b) 2,372
Current portion of program broadcast rights...... 1,205 874 1,443 -- 3,522
Prepaid expenses................................. 872 128 518 -- 1,518
--------------- -------- --------- ----------- ---------
Total current assets......................... 17,349 4,146 12,754 (6,248) 28,001
--------------- -------- --------- ----------- ---------
Property and equipment............................... 19,798 10,446 12,012 49,705(c) 91,961
--------------- -------- --------- ----------- ---------
Intangible assets.................................... 59,952 7,087 76,349 159,498(c) 302,886
--------------- -------- --------- ----------- ---------
Other assets:
Program broadcast rights, less current portion... 541 851 1,482 -- 2,874
Deposit on Stauffer Acquisition.................. 4,000 -- -- (4,000)(a) --
Deferred financing costs......................... 5,624 -- -- 8,066(d) 13,690
Other............................................ 669 12 -- -- 681
--------------- -------- --------- ----------- ---------
Total other assets........................... 10,834 863 1,482 4,066 17,245
--------------- -------- --------- ----------- ---------
Total........................................ $ 107,933 $ 22,542 $ 102,597 $ 207,021 $440,093
--------------- -------- --------- ----------- ---------
--------------- -------- --------- ----------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of notes payable and leases
payable........................................ $ 304 $ -- $ 197,348 $(197,348)(e) $ 6,304
6,000(a)
Current maturities of program broadcast rights
payable........................................ 1,754 684 1,631 -- 4,069
Accounts payable and accrued expenses............ 3,644 760 4,906 -- 9,310
Deferred revenue................................. 500 -- 136 -- 636
--------------- -------- --------- ----------- ---------
Total current liabilities.................... 6,202 1,444 204,021 (191,348) 20,319
--------------- -------- --------- ----------- ---------
Long-term obligations:
Notes and capital leases payable................. 135,377 -- -- 112,000(a) 347,377
100,000(a)
Program broadcast rights payable................. 479 805 1,005 -- 2,289
Deferred revenue................................. 4,180 -- 530 -- 4,710
Other noncurrent liabilities..................... -- -- 1,637 1,637
--------------- -------- --------- ----------- ---------
Total long-term liabilities.................. 140,036 805 3,172 212,000 356,013
--------------- -------- --------- ----------- ---------
Redeemable preferred stock:
Exchangeable Preferred Stock....................... -- -- -- 51,000(a) 51,000
Seller Junior Discount Preferred Stock............. -- -- -- 45,000(a) 45,000
--------------- -------- --------- ----------- ---------
Total redeemable preferred stock............. -- -- -- 96,000 96,000
--------------- -------- --------- ----------- ---------
Stockholder's equity (deficit):
Brissette preferred stock........................ -- -- 66,500 (66,500)(e) --
Common stock..................................... 1,047 -- -- -- 1,047
Additional paid-in capital....................... 2,758 -- 35,837 (35,837)(e) (31,805 )
9,000(a)
(40,629)(a)
(2,934)(d)
Accumulated (deficit)............................ (40,629) 20,293 (206,933) 40,629(f) --
186,640(e)
--------------- -------- --------- ----------- ---------
(36,824) 20,293 (104,596) 90,369 (30,758 )
Less treasury stock.............................. 1,481 -- -- -- 1,481
--------------- -------- --------- ----------- ---------
Total stockholder's equity (deficit)......... (38,305) 20,293 (104,596) 90,369 (32,239 )
--------------- -------- --------- ----------- ---------
Total........................................ $ 107,933 $ 22,542 $ 102,597 $ 207,021 $440,093
--------------- -------- --------- ----------- ---------
--------------- -------- --------- ----------- ---------
</TABLE>
28
<PAGE>
<PAGE>
(a) Reflects the Financing Plan and costs in connection therewith as follows
(in thousands):
<TABLE>
<S> <C>
Cash............................................................... $ 7,500
Deposit(1)......................................................... 5,000
Term Loan Facilities............................................... 118,000
Notes.............................................................. 100,000
Exchangeable Preferred Stock....................................... 51,000
Initial Warrants(2)................................................ 9,000
Seller Junior Discount Preferred Stock(3).......................... 45,000
--------
Total.......................................................... $335,500
--------
--------
</TABLE>
(1) Pursuant to the Stauffer Agreement, Benedek Broadcasting has made an
aggregate down payment of $5.0 million. At March 31, 1996, the amount of
the down payment was $4.0 million. The additional $1.0 million was paid
in April 1996.
(2) The Initial Warrants are for the purchase of 7.5% of the fully-diluted
Common Stock of BCC (with an assumed initial allocated value of $9.0
million).
(3) The Seller Junior Discount Preferred Stock represents securities of BCC
issued to GECC in connection with the acquisition of the Brissette
Stations.
(b) The adjustment reflects the net pro forma increase in working capital to
be acquired from Stauffer and Brissette, as if such transactions had
occurred at March 31, 1996. The purchase agreements require certain
working capital amounts for Stauffer and Brissette at the date of closing.
See Note (c)(2) below.
(c) The Acquisitions will each be accounted for as a purchase, applying the
provisions of Accounting Principles Board Opinion 16. The purchase price
will be allocated to acquired assets and liabilities based on their
relative fair values as of the closing date, determined using valuations
and other studies which are not yet complete. The purchase price and
preliminary allocation of such cost for each Acquisition is as follows,
assuming the Acquisitions occurred on March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
STAUFFER BRISSETTE TOTAL
-------- --------- --------
<S> <C> <C> <C>
Purchase price................................................... $54,500 $ 270,000 $324,500
-------- --------- --------
Book value (deficit) per historical financial statements......... 20,293 (104,596) (84,303)
Add (deduct) --
Indebtedness not assumed(1).................................. -- 197,348 197,348
Adjustment to working capital(2)............................. (935 ) 3,187 2,252
-------- --------- --------
Adjusted book value...................................... 19,358 95,939 115,297
-------- --------- --------
Excess of purchase price over net book value of assets
acquired....................................................... $35,142 $ 174,061 $209,203
-------- --------- --------
-------- --------- --------
Allocated to:
Property and equipment(3).................................... $11,283 $ 38,422 $ 49,705
Intangible assets(4)......................................... 23,859 135,639 159,498
-------- --------- --------
Total allocated.................................................. $35,142 $ 174,061 $209,203
-------- --------- --------
-------- --------- --------
</TABLE>
(1) The Brissette Agreement specifies that long-term debt owed by Brissette
will be discharged by the sellers at closing.
(2) Working capital has been adjusted to reflect that the purchase
agreements specify the level of working capital, exclusive of program
broadcast rights and assets and payables, that will exist on the closing
date (Stauffer $1.6 million; Brissette $8.8 million plus a pro rata
portion of the signing bonus received from the national sales
representative firm which portion at March 31, 1996 would have equaled
$657,000).
(3) The recorded value of acquired property and equipment will total $21.7
million and $50.4 million for the assets of the Stauffer Stations and
Brissette Stations, respectively.
(4) The recorded value of acquired intangibles will total $30.9 million and
$220.9 million for the assets of the Stauffer Stations and Brissette
Stations, respectively.
(d) The adjustment reflects the estimated transaction costs in connection with
the Financing Plan, of which $8.066 million has been allocated to deferred
financing costs and $2.934 million has been charged to capital as the
allocable cost associated with the sale of the Senior Subordinated
Discount Notes.
(e) The adjustment reflects the elimination of (i) the long-term debt owed by
Brissette and not assumed in the acquisition and (ii) the historical
stockholder's equity of Stauffer and Brissette, as the Acquisitions will
be accounted for using the purchase method of accounting.
(f) The adjustment reflects the reclassification of the accumulated deficit to
paid-in capital, which will occur upon the consummation of the
Transactions, at which time Benedek Broadcasting's election to be treated
as an S Corporation for tax purposes will automatically terminate.
29
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- - ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
3.1 -- Certificate of Incorporation of Benedek Broadcasting, as amended, incorporated by reference to Exhibit
3.1 to Benedek Broadcasting's Registration Statement on Form S-1, File No. 33-91412, filed on April 20,
1995 (the 'S-1 Registration Statement').
3.2 -- By-Laws of Benedek Broadcasting, as amended, incorporated by reference to Exhibit 3.2 to the S-1
Registration Statement.
4.1 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting, Benedek Broadcasting Company, L.L.C.
and The Bank of New York, relating to the 11 7/8% Senior Secured Notes due 2005, incorporated by
reference to Exhibit 4.1 to the S-1 Registration Statement.
4.2 -- Form of Note (included in an Exhibit 4.1 hereof) incorporated by reference to Exhibit 4.2 to the S-1
Registration Statement.
*10.1 -- First Amendment dated April 11, 1996 among Benedek Broadcasting, General Electric Capital Corporation,
Paul Brissette and Brissette Broadcasting Corporation, amending the Stock Purchase Agreement dated
December 15, 1995.
*10.2 -- Second Amendment dated April 24, 1996 among Benedek Broadcasting, General Electric Capital
Corporation, Paul Brissette and Brissette Broadcasting Corporation, amending the Stock Purchase
Agreement dated December 15, 1995, as amended April 11, 1996.
*27 -- Financial Data Schedule pursuant to Article 5 of Regulation S-X.
</TABLE>
- - ------------
* Filed herewith
(b) Reports on Form 8-K.
Benedek Broadcasting filed a Report on Form 8-K on April 12, 1996 that
included information under Item 5 (Other Events). The Report was filed for the
purpose of disclosing certain information pertaining to the acquisition of
substantially all of the television broadcast assets of Stauffer and all of the
capital stock of Brissette. Audited financial statements for Stauffer and
Brissette at December 31, 1995 and the three years then ended were included, as
well as pro forma consolidated financial data of BCC for the fiscal year ended
December 31, 1995 giving effect to the foregoing acquisitions.
30
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BENEDEK BROADCASTING CORPORATION
(Registrant)
By: /s/ RONALD L. LINDWALL
........................
RONALD L. LINDWALL
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
(AUTHORIZED OFFICER AND PRINCIPAL
ACCOUNTING OFFICER)
Date: May 15, 1996
31
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BENEDEK BROADCASTING CORPORATION, L.L.C.
(Subsidiary Guarantor Registrant)
By:BENEDEK BROADCASTING CORPORATION,
Member
By: /s/ RONALD L. LINDWALL
........................
RONALD L. LINDWALL
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
(AUTHORIZED OFFICER AND PRINCIPAL
ACCOUNTING OFFICER)
Date: May 15, 1996
32
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS PAGE
- - ----------- ------------------------------------------------------------------------------------------------- ----
<S> <C> <C>
3.1 -- Certificate of Incorporation of Benedek Broadcasting, as amended, incorporated by reference to
Exhibit 3.1 to Benedek Broadcasting's Registration Statement on Form S-1, File No. 33-91412,
filed on April 20, 1995 (the 'S-1 Registration Statement').....................................
3.2 -- By-Laws of Benedek Broadcasting, as amended, incorporated by reference to Exhibit 3.2 to the
S-1 Registration Statement.....................................................................
4.1 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting, Benedek Broadcasting
Company, L.L.C. and The Bank of New York, relating to the 11 7/8% Senior Secured Notes due
2005, incorporated by reference to Exhibit 4.1 to the S-1 Registration Statement...............
4.2 -- Form of Note (included in an Exhibit 4.1 hereof) incorporated by reference to Exhibit 4.2 to
the S-1 Registration Statement.................................................................
*10.1 -- First Amendment dated April 11, 1996 among Benedek Broadcasting, General Electric Capital
Corporation, Paul Brissette and Brissette Broadcasting Corporation, amending the Stock Purchase
Agreement dated December 15, 1995..............................................................
*10.2 -- Second Amendment dated April 24, 1996 among Benedek Broadcasting, General Electric Capital
Corporation, Paul Brissette and Brissette Broadcasting Corporation, amending the Stock Purchase
Agreement dated December 15, 1995, as amended April 11, 1996...................................
*27 -- Financial Data Schedule pursuant to Article 5 of Regulation S-X...............................
</TABLE>
- - ------------
* Filed herewith
33
<PAGE>
<PAGE>
April 11, 1996
General Electric Capital Corporation
260 Long Ridge Road
Stamford, CT 06927-5000
Paul Brissette
299 Royal Palm Way
Boca Raton, FL 33432
Brissette Broadcasting Corporation
299 Royal Palm Way
Boca Raton, FL 33432
Gentlemen:
Reference is made to the Stock Purchase Agreement dated December 15,
1995 (the "Stock Purchase Agreement") by and among Benedek Broadcasting
Corporation, as Purchaser, General Electric Capital Corporation and Paul
Brissette, as Sellers, and Brissette Broadcasting Corporation relating to the
capital stock of Brissette Broadcasting Corporation. Any capitalized term used
herein without definition shall have the meaning provided therefor in the Stock
Purchase Agreement.
Purchaser has advised Sellers as to its current intentions with respect
to the financing for the acquisition of the Shares and, as a result of
discussions concerning such financing plans, Purchaser and GE Capital have
agreed to certain changes to the terms, preferences, rights and limitations to
be set forth in the Certificate of Designations for the Issuer Preferred Stock
(the "Certificate of Designations"). Specifically, Purchaser has advised Sellers
that the Issuer will be Benedek Communications Corporation, a newly-formed
Delaware corporation ("BCC") which will be the sole stockholder of Purchaser. As
part of the financing for the acquisition, BCC will also issue its Senior
Subordinated Discount Notes due 2006 (the "Discount Notes") and its Exchangeable
Redeemable Senior Preferred Stock due 2007 (the "Exchangeable Preferred Stock"),
which Exchangeable Preferred Stock will be mandatorily redeemable on July 1
2007. Sellers have also agreed to waive the requirement of finality with respect
to the FCC Consent, as more particularly set forth herein.
<PAGE>
<PAGE>
General Electric Capital Corporation - 2 - April 11, 1996
Accordingly, the following shall constitute the first amendment to the
Stock Purchase Agreement:
1. Section 11(h) of the Stock Purchase Agreement is hereby amended
to read in its entirety as follows:
"(h) The FCC Consent shall have been issued and the FCC shall
grant to Purchaser a waiver of not less than six months of the
Duopoly Rules in which to come into compliance with such
Duopoly Rules to the extent such waiver is required to permit
Purchaser to consummate the transactions contemplated hereby;
provided, however, that for purposes of this Section 11(h) the
FCC Consent shall mean an order of the FCC or its staff acting
pursuant to delegated authority consenting to the transfer of
control of the Stations from Brissette to Purchaser and such
FCC Consent shall not be required to have become final."
2. The Certificate of Designations for the Issuer Preferred Stock
is hereby amended as follows:
(a) The mandatory redemption date set forth in Paragraph
5(a)(i) of the Certificate of Designations shall be July 1, 2008.
(b) The reference in the first sentence of Paragraph 6(b) of
the Certificate of Designations to "four consecutive quarterly dividends or two
consecutive semi-annual dividends" shall be amended to refer to "six consecutive
quarterly dividends or three consecutive semi-annual dividends," which
corresponds to the periods applicable to the Exchangeable Preferred Stock.
(c) The Preferred Stock shall expressly rank junior to the
Exchangeable Preferred Stock with respect to the payment of dividends or the
distribution of assets on liquidation, dissolution or winding up of the Company.
The provision giving effect to such ranking shall be in form, scope and
substance reasonably satisfactory to the Purchaser and GE Capital and shall,
among other things, provide that all claims of the holders of the Preferred
Stock, including without limitation, claims with respect to dividend payments,
redemption payments, mandatory repurchase payments or rights upon liquidation,
winding-up or dissolution, shall rank junior to the claims of the holders of
indebtedness of the Company for borrowed money and, except as to claims of
holders of the Preferred Stock for declared and unpaid dividends as to which
such holders will have whatever claims exist as a matter of law, all other
creditors of the Company.
<PAGE>
<PAGE>
General Electric Capital Corporation - 3 - April 11, 1996
(d) The definition of Debt shall be amended to specifically
(i) include the Exchangeable Preferred Stock and any future issue of preferred
stock of the Company that either ranks senior or pari passu to the Preferred
Stock with respect to the payment of dividends or the distribution of assets on
liquidation, dissolution or winding up of the Company or that is mandatorily
redeemable by the Company on or prior to the first anniversary of the mandatory
redemption date of the Preferred Stock and (ii) exclude the Preferred Stock.
(e) The definition of consolidated interest expense in
Paragraph 1 of the Certificate of Designations is hereby amended to provide that
dividends on preferred stock issued by the Company which is deemed to be Debt
are an interest expense.
(f) Paragraph 3(c) is hereby amended to provide that until the
fifth anniversary of the Original Issue Date, dividend payments shall be
automatically made by adding the amount thereof to the Liquidation Preference of
the shares of Preferred Stock, and the definition of Liquidation Preference
shall be appropriately amended.
(g) Paragraph 6(g) of the Certificate of Designation shall be
amended to: (i) delete clause 1 therefrom, (ii) amend clause 3 thereof to read
in its entirety as follows: "the Company will not consolidate with or merge with
or into, any person unless (a) the resulting or surviving person (if not the
Company) is organized and existing under the laws of the United States of
America or any state thereof or the District of Columbia and the Preferred Stock
shall be converted into or exchanged for and shall become shares of such
resulting or surviving transferee person, having in respect of such resulting or
surviving person the same powers, preferences and relative, participating,
optional or other special rights or qualifications, limitations and restrictions
thereon, that the Preferred Stock had immediately prior to such transaction and
(b) immediately after and giving effect to such transaction, the resulting or
surviving person would have been able to issue an additional $1.00 of Debt
without the approval of the holders of the Preferred Stock," (iii) delete clause
4 therefrom, (iv) amend clause 5 to provide that neither the Company nor any
Subsidiary will, after the Original Issue Date, incur any Debt prohibited by
such clause 5, (v) amend the last sentence of such Paragraph 6(g) to read in its
entirety as follows: "For purposes of this Section, Debt is not deemed incurred
upon either (i) the issuance of additional preferred stock on account of then
existing payment-in-kind preferred stock as a payment of dividends provided such
payment is in accordance with the terms thereof, or (ii) the accretion of
discount with respect to any indebtedness, provided such accretion is in
accordance with the terms thereof", and (vi) add a clause 6 thereto which shall
require the Company to maintain the Purchaser as its wholly-owned subsidiary,
which ownership may be indirect but only through other wholly-owned subsidiaries
of the Company.
(h) Notwithstanding any prohibition thereon set forth in
Paragraph 3(b) of the Certificate of Designations, the Company may make
distributions on its common stock of Tax Amounts (as defined in the Indenture)
with respect to periods on or prior to the termination of
<PAGE>
<PAGE>
General Electric Capital Corporation - 4 - April 11, 1996
Purchaser's status as an S Corporation, provided that the aggregate amount of
all such distributions of Tax Amounts shall not exceed the sum of $1.0 million.
3. Except as amended hereby, the Stock Purchase Agreement shall
remain in full force and effect.
If the foregoing correctly sets forth our agreement and understanding,
please sign where indicated below. This first amendment may be signed in
counterparts, which, taken together, shall constitute one agreement.
Very truly yours,
BENEDEK BROADCASTING CORPORATION
By: /s/ Ronald L. Lindwall
--------------------------
ACCEPTED AND AGREED TO:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ John L. Flannery
--------------------------
/s/ Paul Brissette
- - ------------------------------
Paul Brissette, individually
BRISSETTE BROADCASTING CORPORATION
By: /s/ Paul Brissette
--------------------------
<PAGE>
<PAGE>
April 24, 1996
General Electric Capital Corporation
260 Long Ridge Road
Stamford, CT 06927-5000
Paul Brissette
299 Royal Palm Way
Boca Raton, FL 33432
Brissette Broadcasting Corporation
299 Royal Palm Way
Boca Raton, FL 33432
Gentlemen:
Reference is made to the Stock Purchase Agreement dated December 15,
1995 (as amended by the first amendment dated April 11, 1996, the "Stock
Purchase Agreement") by and among Benedek Broadcasting Corporation, as
Purchaser, General Electric Capital Corporation and Paul Brissette, as Sellers,
and Brissette Broadcasting Corporation relating to the capital stock of
Brissette Broadcasting Corporation. Any capitalized term used herein without
definition shall have the meaning provided therefor in the Stock Purchase
Agreement.
The following shall constitute the second amendment to the Stock
Purchase Agreement:
1. Section 2(a) of the Stock Purchase Agreement is amended to provide
that Purchaser shall pay the entire purchase price in cash and that
simultaneously therewith, GE Capital will purchase the Issuer Preferred Stock
for $45.0 million in cash. GE Capital may direct Purchaser to provide for the
issuance of a portion of the Issuer Preferred Stock to Brissette. For purposes
of Section 15(e) of the Stock Purchase Agreement, the Cash Purchase Price shall
continue to mean the sum of $225.0 million.
2. Except as amended hereby, the Stock Purchase Agreement shall remain
in full force and effect.
<PAGE>
<PAGE>
If the foregoing correctly sets forth our agreement and understanding,
please sign where indicated below. This second amendment may be signed in
counterparts, which, taken together, shall constitute one agreement.
Very truly yours,
BENEDEK BROADCASTING CORPORATION
By: /s/ K. James Yager
----------------------
ACCEPTED AND AGREED TO:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ John L. Flannery
---------------------------
/s/ Paul Brissette
---------------------------
Paul Brissette, individually
BRISSETTE BROADCASTING CORPORATION
By: /s/ Paul Brissette
---------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,381,555
<SECURITIES> 0
<RECEIVABLES> 8,132,628
<ALLOWANCES> 241,883
<INVENTORY> 0
<CURRENT-ASSETS> 17,348,776
<PP&E> 46,995,612
<DEPRECIATION> 27,197,663
<TOTAL-ASSETS> 107,933,248
<CURRENT-LIABILITIES> 6,202,452
<BONDS> 135,377,037
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