<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 33-91412
---------------------
BENEDEK BROADCASTING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------
DELAWARE 13-2982954
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
---------------------------
SUBSIDIARY GUARANTOR REGISTRANT
I.R.S.
EXACT NAME OF SUBSIDIARY GUARANTOR EMPLOYER
AS SPECIFIED IN ITS STATE OF IDENTIFICATION
CERTIFICATE OF INCORPORATION FORMATION NUMBER
---------------------------- --------- ------
BENEDEK LICENSE CORPORATION DELAWARE 36-4081877
---------------------------
100 PARK AVENUE 61101
ROCKFORD, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 815-987-5350
---------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED:
------------------- --------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
100% of the voting common stock of the registrant is owned by Benedek
Communications Corporation and none of the voting common stock of the registrant
is held by non-affiliates.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: At May 14, 1997,
there were outstanding 148.85 shares of common stock, without par value.
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION
FORM 10-Q TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
------ -----
PART I - FINANCIAL STATEMENTS
<S> <C> <C>
Item 1. FINANCIAL STATEMENTS
Introductory Comments........................................................................ 1
Benedek Broadcasting Corporation and Subsidiary
Consolidated Balance Sheets as of December 31, 1996 and March 31, 1997.................... 2
Consolidated Statements of Operations for the Three Months Ended
March 31, 1996 and 1997................................................................. 3
Consolidated Statements of Stockholder's Equity for the Three Months
Ended March 31, 1997.................................................................... 4
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1996 and 1997................................................................. 5
Notes to Financial Statements.............................................................. 7
Benedek License Corporation
Balance Sheets as of December 31, 1996 and March 31, 1997.................................. 11
Statements of Operations for the Three Months Ended March 31, 1996
and 1997................................................................................ 12
Statement of Stockholder's Equity for the Three Months Ended
March 31, 1997.......................................................................... 13
Statement of Cash Flows for the Three Months Ended March 31, 1996
and 1997................................................................................ 14
Notes to Financial Statements.............................................................. 15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................................... 17
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K............................................................. 24
SIGNATURES................................................................................................. 25
</TABLE>
<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 on
Form 10-K for the fiscal year ended December 31, 1996.
-1-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1996 1997
---- ----
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................................ $ 8,090,583 $ 4,863,410
Receivables
Trade, net............................................................ 23,744,311 19,889,573
Due from Seller....................................................... 474,011 525,678
Other................................................................. 386,163 682,778
Current portion of program broadcast rights.............................. 4,427,832 3,380,923
Prepaid expenses......................................................... 1,453,007 2,072,570
Deferred income taxes.................................................... 1,333,000 1,280,000
------------ ------------
TOTAL CURRENT ASSETS............................................... 39,908,907 32,694,932
------------ ------------
Property and Equipment...................................................... 84,021,301 80,082,608
------------ -------------
Intangible Assets........................................................... 354,622,296 352,165,510
------------ -------------
Other Assets
Program broadcast rights, less current portion........................... 2,298,365 2,005,019
Deferred loan costs...................................................... 9,667,095 9,500,289
Land held for sale....................................................... 109,000 109,000
Other.................................................................... 670,605 669,383
------------ ------------
12,745,965 12,283,691
------------ ------------
$491,297,569 $477,226,741
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current maturities of notes and leases payable........................... $ 14,015,273 $ 17,441,474
Current maturities of program broadcast rights payable................... 6,119,953 5,145,016
Accounts payable and accrued expenses.................................... 15,368,581 9,774,854
Deferred revenue......................................................... 707,347 668,510
------------ ------------
TOTAL CURRENT LIABILITIES.......................................... 36,211,154 33,029,854
------------ ------------
Long-Term Obligations
Notes and leases payable (Note C)........................................ 247,171,289 244,395,628
Program broadcast rights payable......................................... 1,592,400 1,364,162
Deferred revenue......................................................... 4,435,166 4,284,823
Deferred income taxes.................................................... 57,415,000 54,675,000
------------ ------------
310,613,855 304,719,613
------------ ------------
Stockholder's Equity
Common stock, no par, authorized 200 shares; issued 179.09 shares........ 1,046,500 1,046,500
Additional paid-in capital............................................... 149,592,627 149,323,427
Accumulated deficit...................................................... (4,685,418) (9,411,504)
------------ ------------
145,953,709 140,958,423
Less 30.24 shares held in treasury....................................... (1,481,149) (1,481,149)
------------ ------------
144,472,560 139,477,274
------------ ------------
$491,297,569 $477,226,741
============ ============
</TABLE>
-2-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Net revenues................................................................ $11,682,871 $28,078,473
----------- -----------
Operating expenses:
Selling, technical and program expenses.................................. 5,537,572 14,690,278
General and administrative............................................... 2,010,695 4,715,779
Depreciation and amortization............................................ 1,360,430 7,746,663
Corporate................................................................ 495,892 696,318
----------- -----------
9,404,589 27,849,038
----------- -----------
OPERATING INCOME................................................... 2,278,282 229,435
----------- -----------
Financial income (expense):
Interest expense:
Cash interest......................................................... (4,026,253) (7,076,007)
Other interest........................................................ (100,457) (376,770)
----------- -----------
(4,126,710) (7,452,777)
Interest income.......................................................... 105,855 39,599
----------- -----------
(4,020,855) (7,413,178)
----------- -----------
(LOSS) BEFORE INCOME TAX BENEFIT................................... (1,742,573) (7,183,743)
Income tax benefit.......................................................... - 2,457,657
----------- -----------
NET (LOSS)......................................................... $(1,742,573) $(4,726,086)
=========== ===========
</TABLE>
-3-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Paid-In Accumulated Treasury
Stock Capital Deficit Stock Total
-------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996.... $ 1,046,500 $ 149,592,627 $ (4,685,418) $ (1,481,149) $ 144,472,560
Financial costs related to the
sale of exchangeable
redeemable senior preferred
stock of the Company.......... - (269,200) - - (269,200)
Net (loss).................... - - (4,726,086) - (4,726,086)
-------------- ---------------- --------------- ---------------- --------------
Balance at March 31, 1997....... $ 1,046,500 $ 149,323,427 $ (9,411,504) $ (1,481,149) $ 139,477,274
============== ================ =============== ================ ===============
</TABLE>
-4-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Cash Flows From Operating Activities
Net (loss)................................................................ $(1,742,573) $(4,726,086)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Amortization of program broadcast rights.............................. 597,308 1,559,041
Depreciation and amortization......................................... 892,420 5,287,763
Amortization of intangibles and deferred loan costs................... 568,467 2,833,558
Loss on sale of property and equipment................................ - 2,111
Deferred income taxes................................................. - (2,687,000)
Other................................................................. - (18,105)
Changes in operating assets and liabilities, net of effects
of acquisitions:
Receivables........................................................... 4,638,951 3,558,123
Due to sellers........................................................ - (51,667)
Prepaid expenses and other............................................ (294,940) (619,563)
Payments on program broadcast rights payable.......................... (522,121) (1,421,961)
Accounts payable and accrued expenses................................. (4,222,411) (5,596,751)
Deferred revenue...................................................... (69,877) (189,180)
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES............................. (154,776) (2,069,717)
----------- -----------
Cash Flows From Investing Activities
Purchase of property and equipment....................................... (612,766) (572,009)
Proceeds from sale of equipment.......................................... - 3,655
Deposit on acquisition................................................... (1,000,000) -
Payment of acquisition costs............................................. (334,569) -
Other.................................................................... (15) (1,849)
------------ -----------
NET CASH (USED IN) INVESTING ACTIVITIES............................. (1,947,350) (570,203)
------------ -----------
Cash Flows From Financing Activities
Principal payments on notes and leases payable........................... (85,276) (108,092)
Net financing fees incurred by parent.................................... - (89,732)
Payment of debt acquisition costs........................................ (99,374) (389,429)
----------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES............................. (184,650) (587,253)
----------- -----------
(DECREASE) IN CASH AND CASH EQUIVALENTS............................. (2,286,776) (3,227,173)
Cash and cash equivalents:
Beginning................................................................ 9,668,331 8,090,583
----------- -----------
Ending................................................................... $ 7,381,555 $ 4,863,410
=========== ===========
</TABLE>
(Continued)
-5-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information
Cash payments for interest............................................... $8,034,064 $11,372,655
Cash payments for income taxes........................................... - 253,566
========== ===========
Supplemental Schedule of Noncash
Investing and Financing Activities
Acquisition of program broadcast rights.................................. $ 80,312 $ 218,787
Notes and capital leases payable incurred for purchase of equipment...... - 758,631
Equipment acquired by barter transactions................................ 41,888 24,198
========== ===========
</TABLE>
-6-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE A) - NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS:
Benedek Broadcasting Corporation ("Benedek Broadcasting") is a wholly owned
subsidiary of Benedek Communications Corporation (the "Company") and operates 22
television stations (the "Stations") located throughout the United States. These
Stations operate under network affiliation contracts, which 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 interim unaudited consolidated financial statements include the
accounts of Benedek Broadcasting and Benedek License Corporation ("BLC"), a
wholly-owned subsidiary of Benedek Broadcasting. All significant intercompany
items and transactions have been eliminated in the interim unaudited
consolidated financial statements. The interim unaudited consolidated 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, 1997 and the results
of operations and cash flows for the three months ended March 31, 1996 and 1997.
These financial statements do not include all the information and footnotes
required by generally accepted accounting principles.
Operating results for the three month periods ended March 31, 1996 and 1997
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1997.
(NOTE B) - ACQUISITIONS, RELATED PARTY AND BUSINESS COMBINATIONS
On April 10, 1996, the sole stockholder of Benedek Broadcasting formed the
Company as a holding company. At the closing of the acquisitions described
below, the stockholder contributed all of the outstanding shares of common stock
of Benedek Broadcasting to the Company in exchange for the issuance to him of
all of the outstanding shares of common stock of the Company.
On June 6, 1996, two acquisitions were completed. These acquisitions
included (i) the assets of the television broadcasting division of Stauffer
Communications, Inc., consisting of five television stations for a total
purchase price of $54,500,000 and (ii) all the issued and outstanding capital
stock of Brissette Broadcasting Corporation which owned and operated eight
television stations for a purchase price of $270,000,000.
These acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the results of the operations for the acquired stations
are included in the consolidated financial statements since the date of
acquisition. The purchase price has been allocated to acquired assets and
liabilities based on their relative fair values as of the closing date. The
excess of the purchase price over the net assets received from the acquisitions
is being amortized on a straight-line method over a period of 40 years.
-7-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma results of operations for the three months ended March 31,
1996, assuming the acquisitions of the broadcast television assets of Stauffer
and the capital stock of Brissette had taken place on January 1, 1996, as
compared to the actual results for the three months ended March 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------
1996 1997
---- ----
(Pro forma) (Actual)
<S> <C> <C>
Net revenue.................................. $ 27,619,092 $ 28,078,473
Operating expenses........................... (26,339,145) (27,849,038)
Financial expenses........................... (10,285,832) (7,413,178)
----------------- ------------------
(Loss) before income tax benefit.......... (9,005,885) (7,183,743)
Income tax benefit........................... 3,172,354 2,457,657
----------------- ------------------
Net income (loss)......................... $ (5,833,531) $ (4,726,086)
================= ==================
</TABLE>
The financing transactions for the acquisitions consisted of (i) the Company
making a capital contribution to Benedek Broadcasting consisting of the proceeds
from issuing (a) senior subordinated discount notes, (b) units, consisting of
exchangeable redeemable senior preferred stock, which is exchangeable for
exchange debentures, and warrants to acquire common stock of the Company, and
(c) seller junior discount preferred stock and (ii) Benedek Broadcasting
entering into a Credit Agreement, which consisted of $128,000,000 term loan
facilities and a Revolving Credit Facility with an original amount of
$15,000,000. These financing transactions were consummated concurrently with the
acquisitions.
Since the Company derives all of its operating income and cash flow from
Benedek Broadcasting, the Company's ability to pay its obligations including (i)
interest on and principal of the senior subordinated discount notes, (ii)
redemption of and cash dividends on the exchangeable redeemable senior preferred
stock and (iii) redemption of and cash dividends on the seller junior discount
preferred stock will be dependent primarily upon receiving dividends and other
payments on advances from Benedek Broadcasting. Benedek Broadcasting has no
obligation, contingent or otherwise, to pay any amounts to the Company or to
make funds available to the Company for debt service or any other obligation.
(NOTE C) - NOTES PAYABLE AND AMENDMENT TO THE CREDIT AGREEMENT
(a) Term Loans and Revolver. As part of the financing transactions described
in (Note B), on June 6, 1996, Benedek Broadcasting entered into a Credit
Agreement which, as amended, included two Term Loan Facilities consisting of (i)
a Series A Facility of $70,000,000 at the bank's base rate plus 2.75% or the
Eurodollar rate plus 3.75% per annum (currently 9.31%) and (ii) a Series B
Facility of $58,000,000 at the bank's base rate plus 3.25% or the Eurodollar
rate plus 4.25% per annum (currently 9.81%). The current rates reflect the
February 1997 amendment, as discussed below. The Term Loan Facilities provide
for quarterly principal payments until final maturity (except in the first year
during which amortization will be on a semiannual basis). The Series A Facility
and the Series B Facility mature on May 1, 2001 and November 1, 2002,
respectively. Benedek Broadcasting is required to make scheduled aggregate
-8-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
amortization payments on the Series A and Series B Facilities, as follows:
during the first year after closing, $6.0 million; during the second year after
closing, $11.0 million; during the third year after closing, $14.5 million;
during the fourth year after closing, $16.0 million; during the fifth year after
closing, $27.5 million; during the sixth year after closing, $15.0 million; and
during the first half of the seventh year after closing, $38.0 million.
The Credit Agreement, as amended, also includes a Revolving Credit Facility
of $10,000,000, which bears interest at the bank's base rate plus 2.75% or the
Eurodollar rate plus 3.75% per annum. There were no borrowings on the Revolving
Credit Facility as of March 31, 1997. The unused portion of the Revolving Credit
Facility bears interest at 0.5% a month.
The Credit Agreement, as amended, also contains several mandatory principal
prepayment clauses, one of which Benedek Broadcasting was subject to at March
31, 1997. This clause stipulates that Benedek Broadcasting prepay the principal
balance of the Term Loan Facilities by an amount equal to 50% of the
Consolidated Excess Cash Flow, as defined by the agreement, no later than 100
days after the end of the year. Benedek Broadcasting has reflected the
additional $5,683,000 as a current maturity of debt at March 31, 1997.
The Term Loan Facilities and the Revolving Credit Facility are guaranteed by
the Company and secured by certain of the Company's and Benedek Broadcasting's
present and future property and assets. The Term Loan Facilities are also
guaranteed by BLC and are collateralized by all of the stock of BLC which is
also collateral on the Senior Secured Notes which have an equal position in the
stock of BLC to the Term Loan Facilities.
The Term Loan Facilities contain various restrictive covenants and require
compliance with certain financial ratios and covenants. On February 28, 1997,
Benedek Broadcasting amended the Credit Agreement as it relates to certain
restrictive covenants and financial ratios through June 30, 1998. As part of the
amendment, effective February 28, 1997, Benedek Broadcasting agreed to increase
the interest rate on the Term Loan Facilities and Revolving Credit Facility by
an additional 50 basis points. Benedek Broadcasting also agreed to reduce the
available Revolving Credit Facility from $15,000,000 to $10,000,000. Benedek
Broadcasting is in compliance with the covenants as of March 31, 1997.
(b) Senior Secured Notes. During 1995, Benedek Broadcasting issued
$135,000,000 of 11 7/8% Senior Secured Notes due 2005 (the "Senior Secured
Notes"). 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 prepayment
premiums. The Senior Secured Notes contain various restrictive covenants
relating to limitations on dividends, transactions with affiliates, further
issuance of debt, and the sales of assets, among others. Benedek Broadcasting
was in compliance with these covenants at March 31, 1997.
-9-
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Senior Secured Notes are collateralized by all of the stock of BLC which
is also collateral on the Term Loan Facilities which have an equal position in
the stock of BLC to the Senior Secured Notes. The Senior Secured Notes are also
collateralized by certain agreements and contract rights related to the Stations
which include network affiliation agreements and certain general intangibles.
Notes payable consist of the following:
March 31, 1997
-----------------
Senior secured notes................. $ 135,000,000
Term loan series A................... 67,500,000
Term loan series B................... 57,500,000
Other................................ 1,837,102
------------------
261,837,102
Less current maturities.............. 17,441,474
------------------
$ 244,395,628
==================
(NOTE D) - INCOME TAX MATTERS AND CHANGE IN TAX STATUS
Prior to the consummation of the acquisitions and the related financing,
Benedek Broadcasting, with the consent of its stockholder, elected to be taxed
under sections of federal and state income tax law, which provided that, in lieu
of corporation income taxes, the stockholder separately accounted for Benedek
Broadcasting's income, deductions, losses and credits. Benedek Broadcasting's
election to be taxed as an "S" Corporation automatically terminated concurrently
with the consummation of the acquisitions described in (Note B). Benedek
Broadcasting is now subject to federal and state income taxes. As a result, on
June 6, 1996, Benedek Broadcasting recognized a net deferred tax asset of
approximately $3,550,000. Concurrent with the change in tax status the
accumulated deficit of $41,072,877, which existed on that date, was reclassified
to additional paid-in capital.
-10-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Federal Communication Commission (FCC)
Licenses, at cost, less accumulated amortization of $2,322,404
and $3,120,116 for 1996 and 1997, respectively...................... $123,538,650 $122,740,938
Goodwill, less accumulated amortization of $432,060 and $660,690 for 1996
and 1997, respectively................................................ 34,804,740 34,576,110
------------ ------------
$158,343,390 $157,317,048
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred tax liability.................................................... $ 34,506,000 $ 33,974,000
------------ ------------
Stockholder's Equity:
Common stock, $0.01 par authorized 3,000 shares,
issued and outstanding 99 shares.................................... 1 1
Additional paid-in capital............................................. 125,861,055 125,861,055
Accumulated deficit.................................................... (2,023,666) (2,518,008)
------------ ------------
123,837,390 123,343,048
------------ ------------
$158,343,390 $157,317,048
============ ============
</TABLE>
-11-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------
1996 1997
---- ----
<S> <C> <C>
Operating expense, amortization....................................... $(108,771) $(1,026,342)
--------- -----------
(Loss) before income tax benefit................................... (108,771) (1,026,342)
Income tax benefit ................................................... - 532,000
--------- -----------
NET (LOSS)....................................................... $(108,771) $ (494,342)
========= ===========
</TABLE>
-12-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
STATEMENTS OF STOCKHOLDER'S EQUITY
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Paid-In Accumulated
Stock Capital Deficit Total
------------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 1 $ 125,861,055 $ (2,023,666) $ 123,837,390
Net (loss)............................ - - (494,342) (494,342)
------------------- ------------------ ----------------- -----------------
Balance at March 31, 1997............... $ 1 $ 125,861,055 $ (2,518,008) $ 123,343,048
=================== ================== ================= =================
</TABLE>
-13-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------
1996 1997
---- ----
<S> <C> <C>
Cash Flows From Operating Activities
Net (loss).............................................................. $(108,771) $ (494,342)
Adjustments to reconcile net (loss) to net cash provided by
operating activities:
Amortization ........................................................... 108,771 1,026,342
Deferred income tax..................................................... - (532,000)
--------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................ $ - $ -
Cash:
Beginning............................................................... - -
--------- ----------
Ending.................................................................. $ - $ -
========= ==========
</TABLE>
-14-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE A) - NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS:
Benedek License Corporation ("BLC") is a wholly owned subsidiary of Benedek
Broadcasting Corporation ("Benedek Broadcasting"). BLC was formed on April 18,
1996 to own and hold the Federal Communications Commission ("FCC") licenses for
the 22 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 in the opinion of management for the
fair presentation of the financial position as of March 31, 1997 and the results
of operations and cash flows for the three months ended March 31, 1996 and 1997.
These financial statements do not include all the information and footnotes
required by generally accepted accounting principles.
Operating results for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1997.
(NOTE B) - BUSINESS COMBINATION
On June 6, 1996, Benedek Broadcasting Company, L.L.C. (the "LLC"), a 99%
owned subsidiary of Benedek Broadcasting, was merged into BLC. Since these
entities had identical stockholder ownership, this was accounted for in a manner
similar to a pooling-of-interests and the results of operations are included for
the above-mentioned periods since the formation of the LLC on February 28, 1995.
(NOTE C) - ACQUISITIONS
On June 6, 1996, Benedek Broadcasting acquired thirteen television stations
including their respective FCC licenses. These licenses and the related goodwill
and deferred tax liability were transferred on that day to BLC as contributed
capital based on the pro rata share of the allocated purchase price paid by
Benedek Broadcasting.
(NOTE D) - INCOME TAX MATTERS AND CHANGE IN TAX STATUS
Prior to the consummation of the business combination discussed in (Note
B), the LLC filed a partnership income tax return and the members reported their
respective shares of the income, deductions, losses and credits of the LLC on
their income tax returns. Since BLC is a "C" corporation, BLC became subject to
federal and state income taxes upon consummation of the business combination. As
a result, on June 6, 1996, BLC recognized a net deferred tax asset of
approximately $650,000.
-15-
<PAGE>
<PAGE>
BENEDEK LICENSE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE E) - STOCKHOLDER'S EQUITY
Benedek Broadcasting has pledged 100% of the outstanding common stock of
BLC as collateral for the Senior Secured Notes issued by Benedek Broadcasting
and the Term Loan Facilities.
BLC has guaranteed the obligations of Benedek Broadcasting with respect to
the Senior Secured Notes and the Term Loan Facilities.
-16-
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including changes in national and regional economies, competition in
the television business, successful integration of acquired television stations,
pricing fluctuations in local and national advertising, program ratings and
changes in programming costs, among other factors.
Except as otherwise provided, the financial data set forth below is derived
from the historical financial statements of Benedek Broadcasting prepared in
accordance with generally accepted accounting principles. Such historical
financial data includes the results of operations of five television stations
acquired from Stauffer Communications, Inc. (the "Stauffer Stations") and eight
television stations acquired from Brissette Broadcasting Corporation (the
"Brissette Stations," and together with the Stauffer Stations, the "Acquired
Stations") from the date of the acquisition thereof on June 6, 1996. As used
herein, "Same Station" data refers to the historical results of operations of
all 22 television stations currently owned by Benedek Broadcasting as if such
stations were owned by Benedek Broadcasting throughout the periods indicated
with pro forma adjustments only for corporate expenses, depreciation and
amortization and interest.
As used herein, "Adjusted EBITDA" is defined as operating income before
financial income as derived from the consolidated statements of operations plus
depreciation and amortization, amortization of program broadcast rights and
noncash compensation less payments for program broadcast rights. "Adjusted
EBITDA" as defined in Benedek Broadcasting's Credit Agreement excludes from the
foregoing definition certain noncash revenues used in determining operating
income. As used herein, "broadcast cash flow" is defined as Adjusted EBITDA plus
corporate expenses. Adjusted EBITDA and broadcast cash flow are measures used by
certain investors to measure a company's ability to service debt. Adjusted
EBITDA and broadcast cash flow should not be considered as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.
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 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.
For the three months ended March 31, 1997, Benedek Broadcasting reported
net revenues of $28.1 million compared to net revenues of $11.7 million for the
three months ended March 31, 1996. The increase in 1997 net revenues was due to
the acquisitions of the Acquired Stations which represented $16.5 million.
Benedek Broadcasting had a net loss of $4.7 million for the three months ended
March 31, 1997 compared to a net loss of $1.7 million for the three months ended
March 31, 1996. Adjusted EBITDA for the three months ended March 31, 1997 was
$8.1 million as compared to $3.7 million for the three months ended March 31,
1996. Local/regional and national advertising constitute the largest categories
of Benedek Broadcasting's operating revenues and represent approximately 85.9%
of gross revenues for the three months ended March 31, 1997 as compared to 86.1%
for the three months ended March 31, 1996.
-17-
<PAGE>
<PAGE>
Approximately 54.8% of the gross revenues of Benedek Broadcasting in the
three months ended March 31, 1997 was generated from local and regional
advertising, which is sold primarily by the Stations' 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.
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
ongoing 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. For the three months ended March 31, 1997, depreciation and
amortization increased $6.4 million from $1.3 million to $7.7 million due to the
acquisition of the Acquired Stations. Depreciation and amortization expense has
increased as assets purchased at fair market value in connection with the
acquisitions of the Acquired Stations began to depreciate. 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) represent approximately 71.6% of net revenues for
the three months ended March 31, 1997 as compared to approximately 68.9% of net
revenues for the three months ended March 31, 1996.
On June 6, 1996, Benedek Broadcasting acquired substantially all of the
broadcast television assets (including working capital of approximately $1.6
million) of the Stauffer Stations consisting of five principal broadcast
television stations and four satellite broadcast television stations for a
purchase price of $54.5 million. The principal stations acquired by Benedek
Broadcasting were 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.
On June 6, 1996, Benedek Broadcasting acquired all of the capital stock of
Brissette for $270.0 million in cash and preferred stock. All of the outstanding
indebtedness of Brissette was paid in full by the sellers at the closing.
Pursuant to the Brissette purchase agreement, at the closing Brissette was
required to have working capital of at least $8.8 million and any amount in
excess thereof was to be paid to the sellers. By acquiring all of the capital
stock of Brissette, Benedek Broadcasting acquired 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. Of the $270.0 million paid for the capital
stock of Brissette, $225.0 million was paid in cash and $45.0 million was paid
by the issuance of the junior preferred stock of the Company to General Electric
Capital Corporation ("GECC") and Paul Brissette.
-18-
<PAGE>
<PAGE>
During the first quarter of 1997, Benedek Broadcasting implemented several
aspects of the strategy involving the acquisitions of the Acquired Stations,
including adding approximately 60 hours per week in additional locally-produced
news programming. This news expansion is expected to provide future revenue
growth, the results of which Benedek Broadcasting is just beginning to realize.
Benedek Broadcasting has included Adjusted EBITDA and broadcast cash flow
data because such data is used by certain investors to measure a company's
ability to service debt. Adjusted EBITDA is used to pay principal and interest
on long-term debt and to fund capital expenditures. Adjusted EBITDA and
broadcast cash flow do 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.
The following table sets forth the computation of broadcast cash flow and
Adjusted EBITDA for the periods indicated. The table includes the results of
operations of the Acquired Stations only from the closing date of June 6, 1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1996 1997
---- ----
(Dollars in Thousands)
<S> <C> <C>
Operating income..................................... $ 2,278 $ 229
Add:
Amortization of program
broadcast rights.............................. 597 1,559
Depreciation and amortization................... 1,360 7,747
Corporate Expenses.............................. 496 696
Less:
Payment for program
broadcast liabilities......................... (522) (1,422)
------------- -------------
Broadcast cash flow.................................. 4,209 8,809
Corporate......................................... 496 696
------------- -------------
Adjusted EBITDA...................................... $ 3,713 $ 8,113
============= =============
</TABLE>
-19-
<PAGE>
<PAGE>
The following table provides both historical and Same Station information.
The Same Station information gives effect to the acquisition of the Acquired
Stations as if such transactions were consummated on January 1, 1996. The Same
Station information for the three months ended March 31, 1996 does not purport
to represent what Benedek Broadcasting's results of operations would have been
if such transactions had been effected at such date and do not purport to
project results of operations of Benedek Broadcasting in any future period.
<TABLE>
<CAPTION>
Historical Same Station
Three Months Ended March 31, Three Months Ended March 31,
------------------------------------------ --------------------------------------------
% %
1996 1997 Change 1996 1997 Change
---- ---- ------ ---- ---- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net revenues........................ $ 11,683 $ 28,078 140.3% $ 27,619 $ 28,078 1.7%
------------ ----------- ---------- ------------ ------------ ---------
Operating expenses:
Selling, technical and
program expenses................ 5,538 14,690 165.2 13,300 14,690 10.4
General and administrative........ 2,011 4,716 134.5 4,903 4,716 (3.8)
Depreciation and amortization..... 1,360 7,747 469.6 7,243 7,747 6.9
Corporate......................... 496 696 40.3 893 696 (22.0)
------------ ----------- ---------- ------------ ------------ ---------
9,405 27,849 196.1 26,339 27,849 5.7
------------ ----------- ---------- ------------ ------------ ---------
OPERATING INCOME.......... $ 2,278 $ 229 (89.9) $ 1,280 $ 229 (82.1)
============ =========== ========== ============ ============ =========
Broadcast cash flow................. $ 4,209 $ 8,809 109.3% $ 9,625 $ 8,809 (8.5)%
Broadcast cash flow margin.......... 36.0% 31.4% 34.8% 31.4%
Adjusted EBITDA..................... $ 3,713 $ 8,113 118.5% $ 8,732 $ 8,113 (7.0)%
Adjusted EBITDA margin.............. 31.8% 28.9% 31.6% 28.9%
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net revenues for the three months ended March 31, 1997 increased $16.4
million or 140.3% to $28.1 million from $11.7 million for the three months ended
March 31, 1996 primarily as a result of the acquisition on June 6, 1996 of the
Acquired Stations which increased net revenue by $16.5 million. On a Same
Station basis, net revenues for the three months ended March 31, 1997 increased
$0.5 million or 1.7% to $28.1 million from $27.6 million for the three months
ended March 31, 1996, despite a challenging national advertising environment and
a decline in political advertising revenue. Gross revenues on a Same Station
basis excluding political advertising revenue increased $1.0 million or 3.2%
from the three months ended March 31, 1996.
On a Same Station basis, Benedek Broadcasting's 12 CBS affiliated stations
and six ABC affiliated stations were affected by weakness in advertising
revenues for the three months ended March 31, 1997. Benedek Broadcasting's CBS
affiliated stations' net revenues increased by 2.1% for the first quarter 1997
as compared to 1996. Benedek Broadcasting's four NBC affiliated stations showed
an increase in net revenues of 6.5% on a Same Station basis while the six ABC
affiliated stations showed a decrease in net revenues of 3.4% on a Same Station
basis caused by a $0.3 million decrease in political revenues for those
stations. Benedek Broadcasting expects that its CBS stations may benefit in the
balance of the year from the improved ratings performance of CBS network
programming.
Operating expenses for the three months ended March 31, 1997 increased $18.4
million or 196.1% to $27.8 million from $9.4 million for the three months ended
March 31, 1996. Of the increase in operating expenses, $17.5 million was
attributable to the acquisition of the Acquired Stations. On a Same Station
-20-
<PAGE>
<PAGE>
basis, operating expenses for the three months ended March 31, 1997 increased
$1.5 million or 5.7% to $27.8 million from $26.3 million for the three months
ended March 31, 1996. The increase was primarily caused by the planned expansion
of locally-produced news programs and increased depreciation and amortization.
Operating income for the three months ended March 31, 1997 decreased $2.1
million or 89.9% to $0.2 million from $2.3 million for the three months ended
March 31, 1996.
Financial (expenses), net for the three months ended March 31, 1997 increased
$3.4 million or 84.4% to $7.4 million from $4.0 million in the three months
ended March 31, 1996, due to Benedek Broadcasting's higher debt level following
the completion of the financing of the purchase price for the Acquired Stations
in June 1996.
Income tax benefit for the three months ended March 31, 1997 was $2.5 million
compared to none for the three months ended March 31, 1996. Reductions in the
deferred tax liabilities related to the acquisitions and the creation of
deferred tax assets generated the income tax benefit for the three months ended
March 31, 1997. For the three months ended March 31, 1996, Benedek Broadcasting
recognized no income tax benefit due to its Subchapter S Corporation status.
Net loss for the three months ended March 31, 1997 was $4.7 million as
compared to a net loss of $1.7 million for the three months ended March 31,
1996.
Broadcast cash flow for the three months ended March 31, 1997 increased $4.6
million or 109.3% to $8.8 million from $4.2 million for the three months ended
March 31, 1996 primarily as a result of the acquisition of the Acquired
Stations. As a percentage of net revenues, broadcast cash flow margin decreased
to 31.4% for the three months ended March 31, 1997 from 36.0% for the three
months ended March 31, 1996. On a Same Station basis, broadcast cash flow for
the three months ended March 31, 1997 decreased $0.8 million or 8.5% to $8.8
million from $9.6 million for the three months ended March 31, 1996. As a
percentage of net revenues, broadcast cash flow margin on a Same Station basis
decreased to 31.4% for the three months ended March 31, 1997 from 34.8% for the
three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities is the primary source of liquidity for
Benedek Broadcasting. For the first quarter 1997 and 1996, however, Benedek
Broadcasting used its cash reserves to fund operating activities by $(2.1)
million for the three months ended March 31, 1997 as compared to $(0.2) million
for the three months ended March 31, 1996 due to the relatively fixed nature of
expenses and the seasonality of revenues. Cash flows from operating activities
included cash payments of interest expense which totaled $11.4 million for the
three months ended March 31, 1997 as compared to $8.0 million for the three
months ended March 31, 1996. The increase of $3.4 million was due to Benedek
Broadcasting's higher debt level following the acquisition of the Acquired
Stations. Cash flows from operating activities for the three months ended March
31, 1996 included a $2.5 million signing bonus from CBS in consideration of the
1995 contract with Benedek Broadcasting.
Cash Flows from Investing Activities were $(0.6) million for the three months
ended March 31, 1997 compared to $(1.9) million for the three months ended March
31, 1996. For the three months ended March 31, 1996, cash flows from investing
activities included a total of $1.3 million associated with the acquisitions of
the Acquired Stations.
-21-
<PAGE>
<PAGE>
Cash Flows from Financing Activities were $(0.6) million for the three months
ended March 31, 1997 compared to $(0.2) million for the three months ended March
31, 1996. For the three months ended March 31, 1997, cash flows from financing
activities included $0.5 million associated with the amendment of the Credit
Agreement.
On June 6, 1996, Benedek Broadcasting, together with the Company, implemented
a financing plan in order to finance the acquisitions of the Acquired Stations
and to pay fees and expenses related thereto. The financing plan consisted of
(i) the offer and sale by the Company of the Senior Subordinated Discount Notes
to generate gross proceeds of $90.2 million, (ii) the sale by the Company of
units consisting of Exchangeable Redeemable Senior Preferred Stock and warrants
to generate gross proceeds of $60.0 million, (iii) Benedek Broadcasting
borrowing $128.0 million pursuant to the Term Loan Facilities of the Credit
Agreement and (iv) the Company issuing an aggregate of $45.0 million initial
liquidation preference of Seller Junior Discount Preferred Stock to GECC and Mr.
Paul Brissette. Benedek Broadcasting currently also has available to it $10.0
million under a revolving credit facility under the Credit Agreement ("the
Revolving Credit Facility"). From time to time throughout 1997, Benedek
Broadcasting's cash needs will require the use of the Revolving Credit Facility
for general working capital purposes and to fund capital expenditures. During
the three months ended March 31, 1997, Benedek Broadcasting used $1.5 million of
the Revolving Credit Facility. At March 31, 1997, there were no outstanding
borrowings under the Revolving Credit Facility.
Benedek Broadcasting did not meet certain financial ratios contained in the
Credit Agreement at September 30 and December 31, 1996 due to lower than
expected Adjusted EBITDA ( as defined in the Credit Agreement). The lenders
under the Credit Agreement agreed to waive such noncompliance and during
February 1997, have amended certain covenants applicable to 1997 and the first
half of 1988. The amendment provides that for so long as the ratio of debt to
Adjusted EBITDA (as defined in the Credit Agreement) exceeds certain levels, the
Term Loan Facilities will bear interest at varying additional spreads from that
originally provided for in the Credit Agreement. The amendment further reduced
the Revolving Credit Facility from $15.0 million to $10.0 million and increased
the percentage of excess cash flow to be applied as prepayments of the Term Loan
Facilities from 50% to 75% until Benedek Broadcasting's ratio of debt to
Adjusted EBITDA is at 6.75 or lower. Benedek Broadcasting was in compliance with
the revised financial covenants as of March 31, 1997.
RECENT DEVELOPMENTS
In September 1996, Benedek Broadcasting announced that it had reached an
agreement in principle with The Warner Bros. Television Network to develop a
local cable affiliate called the "WeB" in each of the Company's 20 markets which
rank above 100. The WeB is intended to be a 24 hour, seven day a week television
channel which will broadcast Warner Bros. Network prime time programming, WB
Kids programming and syndicated programming of Warner Bros. and others. The WeB
is scheduled to begin service by the fall of 1998 in most 100-plus markets.
Benedek Broadcasting will be responsible for all local sales efforts for the new
channels in its markets. Benedek Broadcasting does not anticipate a significant
effect on operations during 1997 nor does it anticipate that significant capital
expenditures will be required in connection with the development of its WeB
affiliates.
During 1996, Benedek Broadcasting made arrangements to acquire low power
television licenses in Columbia and Jefferson City, Missouri which is expected
to be completed in the second quarter of 1997. Benedek Broadcasting does not
expect material expenditures for the acquisition of these licenses or immediate
capital needs.
-22-
<PAGE>
<PAGE>
SEASONALITY
Net revenues 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. Net revenues for the first quarter are generally the lowest of the year.
INCOME TAXES
Historically, Benedek Broadcasting had elected to be taxed as a Subchapter S
Corporation. Therefore, for the period January 1, 1996 through June 6, 1996,
income taxes were not reflected in the consolidated financial statements, but
the income, deductions, losses and credits were passed to Benedek Broadcasting's
sole stockholder. Concurrent with the completion of the financing for the
acquisitions of the Acquired Stations, Benedek Broadcasting's election to be
taxed as a Subchapter S Corporation was terminated and Benedek Broadcasting
became subject to federal and state income taxes. In conjunction with the
acquisition of Brissette, a deferred tax liability of $53.3 million was
recognized primarily associated with the variance between future tax deductions
allowed for depreciation and amortization of intangibles and the amount of such
depreciation and amortization that will be reflected for book purposes.
For the three months ended March 31, 1997, a tax benefit of $2.5 million was
recognized consisting of a $2.7 million benefit related to the net reduction of
deferred income tax liabilities and $0.2 million of taxes currently due.
Under the provisions of the Internal Revenue Code, the Company has
approximately $9.2 million of actual net operating loss carryforwards available
to offset future tax liabilities of the Company, that begin to expire in 2007
through 2011.
-23-
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a)(3) Exhibits.
3.1 --Certificate of Incorporation of the Registrant, as amended,
incorporated by reference to Exhibit 3.1 to the Registrant'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 the Registrant, as amended, incorporated by reference to
Exhibit 3.2 to the S-1 Registration Statement, incorporated by
reference to Exhibit 3.3 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996 (the "Second Quarter 1996
10-Q").
3.3 --Certificate of Incorporation of Benedek License Corporation,
incorporated by reference to Exhibit 3.3 to the Second Quarter 1996
10-Q.
3.4 --By-Laws of Benedek License Corporation, incorporated by reference to
Exhibit 3.4 to the Second Quarter 1996 10-Q.
4.1 --Indenture dated as of March 1, 1995 between the Registrant 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 11-7/8% Senior Secured Note due 2005 (included in Exhibit 4.1
hereof), incorporated by reference to Exhibit 4.2 to the S-1
Registration Statement.
4.3 --First Supplemental Indenture dated as of June 6, 1996 among the
Registrant, Benedek License Corporation and The Bank of New York,
incorporated by reference to Exhibit 4.3 to the Second Quarter 1996
10-Q.
*27 --Financial Data Scheduled pursuant to Article 5 of Regulation S-X.
- --------------
*Filed herewith
(b) Reports on Form 8-K.
None.
-24-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, 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: April 14, 1997
-25-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BENEDEK LICENSE CORPORATION
(SUBSIDIARY GUARANTOR REGISTRANT)
By: /s/ RONALD L. LINDWALL
..............................................................
Ronald L. Lindwall
Senior Vice President and Chief Financial Officer
(Authorized Officer and Principal Accounting Officer)
DATE: April 14, 1997
-26-
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF
EXHIBIT
IN SEQUENTIAL
EXHIBIT NUMBERING
NO. DESCRIPTION SYSTEM
-- ----------- ------
<S> <C> <C>
3.1 --Certificate of Incorporation of the Registrant, as amended,
incorporated by reference to Exhibit 3.1 to the Registrant'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 the Registrant, as amended, incorporated by reference
to Exhibit 3.2 to the S-1 Registration Statement, incorporated by
reference to Exhibit 3.3 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996 (the "Second Quarter
1996 10-Q").
3.3 --Certificate of Incorporation of Benedek License Corporation,
incorporated by reference to Exhibit 3.3 to the Second Quarter
1996 10-Q.
3.4 --By-Laws of Benedek License Corporation, incorporated by reference
to Exhibit 3.4 to the Second Quarter 1996 10-Q.
4.1 -- Indenture dated as of March 1, 1995 between the Registrant 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 11-7/8% Senior Secured Note due 2005 (included in Exhibit
4.1 hereof), incorporated by reference to Exhibit 4.2 to the S-1
Registration Statement.
4.3 --First Supplemental Indenture dated as of June 6, 1996 among the
Registrant, Benedek License Corporation and The Bank of New York,
incorporated by reference to Exhibit 4.3 to the Second Quarter
1996 10-Q.
*27 -- Financial Data Scheduled pursuant to Article 5 of Regulation S-X.
</TABLE>
- --------------
*Filed herewith
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 923027
<NAME> BENEDEK BROADCASTING CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,863,410
<SECURITIES> 0
<RECEIVABLES> 20,399,372
<ALLOWANCES> 509,799
<INVENTORY> 0
<CURRENT-ASSETS> 32,694,932
<PP&E> 125,197,144
<DEPRECIATION> 45,114,536
<TOTAL-ASSETS> 477,226,741
<CURRENT-LIABILITIES> 33,029,854
<BONDS> 244,395,628
<COMMON> 1,046,500
0
0
<OTHER-SE> 139,911,923
<TOTAL-LIABILITY-AND-EQUITY> 477,226,741
<SALES> 31,479,232
<TOTAL-REVENUES> 32,218,965
<CGS> 4,140,492
<TOTAL-COSTS> 4,140,492
<OTHER-EXPENSES> 27,762,950
<LOSS-PROVISION> 86,088
<INTEREST-EXPENSE> 7,413,178
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