<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 1995
PAXSON COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13452 59-3212788
- --------------------------------------------------------------------------------
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
601 Clearwater Park Road, West Palm Beach, Florida 33401-6233
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (407) 659-4122
---------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Amendment to File Acquisition Financial Statements.
On August 21, 1995, the Registrant filed a report on Form 8-K with respect: (i)
its loan to Whitehead Media, Inc. ("Whitehead") to permit Whitehead to acquire
the assets comprising WTVX-TV serving the West Palm Beach, Florida market and
(ii) entering into a time brokerage agreement with Whitehead to provide certain
programming and sales services for the station. At that time, it was
impracticable to provide the financial statements and pro forma financial
information required to be filed therewith relative to the acquired assets, and
the Registrant stated in such Form 8-K that it intended to file the required
financial statements and pro forma financial information as soon as practicable
thereafter, but no later than October 18, 1995. By this amendment to such Form
8-K, the Registrant is amending and restating Item 7 thereof to include such
required financial statements and pro forma financial information herewith.
Item 7. Financial Statements and Exhibits.
(a) Pro Forma Financial Information.
Paxson Communications Corporation Unaudited Pro Forma Combined
Balance Sheet at June 30, 1995
Paxson Communications Corporation Unaudited Pro Forma Combined
Statement of Operations:
For the six months ended 6/30/95
For the year ended 12/31/94
(b) Financial Statements of Business Acquired.
WTVX-TV, Krypton Broadcasting of
Ft. Pierce, Inc. Financial Statements
December 31, 1994, and June 30, 1995
<PAGE> 3
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Loan Agreement, dated as of September 22, 1994, among
Paxson Communications Corp. and Whitehead Media, Inc.*
2.2 Amendment to Loan Agreement, dated as of October 3,
1994, among Paxson Communications Corp. and
Whitehead Media, Inc. *
2.3 Second Amendment to Loan Agreement, dated as of
August 4, 1995, among Paxson Communications
Corporation and Whitehead Media, Inc.*
2.4 Time Brokerage Agreement, dated September 22, 1994,
effective as of August 4, 1995, between Whitehead Media,
Inc. and Paxson Communications Corporation for Television
Station WTVX-TV Fort Pierce, Florida **
2.5 Amendment to Time Brokerage Agreement, dated as of
April 19, 1995, between Whitehead Media, Inc. and Paxson
Communications Corporation for Television Station
WTVX-TV Fort Pierce, Florida **
</TABLE>
* Previously filed with the Registrant's Quarterly Report on
From 10-Q, dated June 30, 1995, and incorporated herein by reference.
** Previously filed with the Registrant's prior Form 8-k filed
on August 25, 1995, and incorporated herein by reference.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAXSON COMMUNICATIONS
CORPORATION
(Registrant)
By: /s/ Arthur D. Tek
-----------------
Arthur D. Tek,
its Treasurer
Date: October 17, 1995
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet and statements of
operation present the pro forma combined financial position at June 30, 1995
and pro forma combined results of operations for the six months ended June 30,
1995 and for the year ended December 31, 1994 while giving effect to Paxson
Communications Corporation's (PCC's) loan to Whitehead Media, Inc.
("Whitehead") and time brokerage agreement for WTVX-TV. The unaudited pro forma
combined statements of operations for the six months ended June 30, 1995 and
for the year ended December 31, 1994 assume that these transactions had been
completed on January 1, 1994. The unaudited pro forma combined balance sheet
at June 30,1995 assumes that these transactions had been completed on June 30,
1995. The Unaudited Pro Forma Combined Financial Statements give effect only
to the adjustments set forth in the accompanying notes to unaudited Pro Forma
Combined Financial Statements. These financial statements are not necessarily
indicative of the results of operations or financial position which would have
been achieved had the transactions been completed as of the beginning of the
earliest period presented, nor are the statements necessarily indicative of
PCC's future results of operations or financial position.
<PAGE> 6
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------------------------------
As of June 30, 1995
PCC WTVX Adjustments Combined
--- ---- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents 8,409,187 925,908 (925,908)(b) 8,409,187
Accounts receivable 13,011,251 747,829 (747,829)(b) 13,011,251
Prepaid expenses and other current assets 1,392,830 65,929 (65,929)(b) 1,392,830
Current deferred income taxes 194,940 0 0 194,940
Current program rights 1,243,746 37,046 (37,046)(b) 1,243,746
------------ ---------- ---------- ------------
Total current assets 24,251,954 1,776,712 (1,776,712) 24,251,954
Property and equipment, net 66,647,658 4,414,234 (4,414,234)(b) 66,647,658
Intangible assets, net 81,572,496 1,964,755 (1,964,755)(b) 81,572,496
Other assets, net 20,037,439 0 (700,000)(a) 19,337,439
Investment in broadcast properties, net 0 0 18,000,000 (a) 18,000,000
Related party notes receivable 2,250,000 0 0 2,250,000
Program rights, net 204,084 36,450 (36,450)(b) 204,084
------------ ---------- ---------- ------------
Total assets $194,963,631 $8,192,151 $9,107,849 $212,263,631
============ ========== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 3,458,161 1,765,978 (1,465,978)(b)(a) 3,758,161
Current portion of program rights payable 970,316 75,683 (75,683)(b) 970,316
Current portion of long-term debt 11,976,975 3,647,033 (3,647,033)(b) 11,976,975
------------ ---------- ---------- ------------
Total current liabilities 16,405,452 5,488,694 (5,188,694) 16,705,452
Program rights payable 348,989 7,975 (7,975)(b) 348,989
Long-term debt 120,300,853 8,535,260 8,464,740 (b)(a) 137,300,853
Deferred income taxes 834,941 0 0 834,941
Redeemable cumulative compounding senior preferred stock 15,276,065 0 0 15,276,065
Redeemable class A & B common stock warrants 3,498,274 0 0 3,498,274
Redeemable cumulative compounding series B preferred stock 1,802,919 0 0 1,802,919
Redeemable cumulative compounding junior preferred stock 29,165,660 0 0 29,165,660
Class A common stock 26,137 0 0 26,137
Class B common stock 8,312 0 0 8,312
Class C common stock 5,338,952 0 0 5,338,952
Stock subscription notes receivable (76,833) 0 0 (76,833)
Additional paid-in capital 33,835,759 0 0 33,835,759
Deferred option plan compensation (2,584,078) 0 0 (2,584,078)
Accumulated deficit (29,217,771) (5,839,778) 5,839,778 (b) (29,217,771)
------------ ---------- ---------- ------------
Total liabilities and stockholders' equity $194,963,631 $8,192,151 $9,107,849 $212,263,631
============ ========== ========== ============
</TABLE>
<PAGE> 7
<TABLE>
PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
For the Six Months Ending 6/30/95
Pro Forma Pro Forma
PCC WTVX Adjustments Combined
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Local & National $40,454,900 $2,218,768 $0 $42,673,668
Retail & Other 2,497,723 96,861 0 2,594,584
Trade & Barter 1,403,725 326,017 0 1,729,742
----------- ---------- ------------ -----------
Total Revenue $44,356,348 $2,641,646 $0 $46,997,994
----------- ---------- ------------ -----------
Operating Expenses
Direct $11,554,850 $447,485 $0 $12,002,335
Programming 5,940,066 163,921 0 6,103,987
Sales & Promotion 4,473,186 607,029 0 5,080,215
Technical 2,147,289 308,215 0 2,455,504
General & Administrative 9,989,674 259,453 0 10,249,127
Trade & Barter 1,193,843 344,919 0 1,538,762
Time Brokerage Fees 549,947 0 100,000 (d) 649,947
Broadcast Rights Fees 1,019,355 0 0 1,019,355
Option plan compensation 9,404,129 0 0 9,404,129
Program Rights Amortization 777,057 60,258 0 837,315
Depreciation & Amortization 8,054,256 252,205 247,795 (c)(g) 8,554,256
----------- ---------- ------------ -----------
OPERATING INCOME (LOSS) ($10,747,304) $198,161 ($347,795) ($10,896,938)
Other Income (Expense)
Interest Expense, Net (4,308,646) (446,779) (573,221)(e) (5,328,646)
Gain (Loss) on Sale of Assets 0 0 0 0
Other Income (Expense), Net (13,763) (65,450) 76,857 (f) (2,356)
----------- ---------- ------------ -----------
EARNINGS BEFORE TAXES & EXTRAORDINARY ITEMS ($15,069,713) ($314,068) ($844,159) ($16,227,940)
Benefit (Provision ) for Income Taxes 640,000 0 0 640,000
----------- ---------- ------------ -----------
EARNINGS BEFORE EXTRAORDINARY ITEMS ($14,429,713) ($314,068) ($844,159) ($15,587,940)
Minority Interest & Extraordinary Items 0 0 0 0
----------- ---------- ------------ -----------
NET INCOME (LOSS) ($14,429,713) ($314,068) ($844,159) ($15,587,940)
Dividends & Accretion on Pfd & Com Stock Warrants (5,864,161) 0 0 (5,864,161)
----------- ---------- ------------ -----------
NET INCOME ATTRIBUTABLE TO COMMON STOCK & EQUIVALENTS ($20,293,874) ($314,068) ($844,159) ($21,452,101)
=========== ========== ============ ===========
Pro Forma Weighted Average Shares Outstanding 34,401,282 34,401,282
NET INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCK & EQ. ($0.59) ($0.62)
=========== ===========
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
For The Twelve Months Ending 12/31/94
AUDITED Pro Forma Pro Forma
PCC WTVX Adjustments Combined
--- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Local & National $56,668,983 $4,167,639 $0 $60,836,622
Retail & Other 2,779,215 230,690 0 3,009,905
Trade & Barter 2,619,245 792,036 0 3,411,281
----------- ---------- ------------ -----------
Total Revenue $62,067,443 $5,190,365 $0 $67,257,808
----------- ---------- ------------ -----------
Operating Expenses
Direct $16,221,385 $845,679 $0 $17,067,064
Programming 8,750,624 487,165 0 9,237,789
Sales & Promotion 5,753,025 844,417 0 6,597,442
Technical 2,113,117 513,743 0 2,626,860
General & Administrative 11,689,343 445,116 0 12,134,459
Trade & Barter 2,426,118 787,155 0 3,213,273
Retail 568,372 0 0 568,372
Time Brokerage Fees 503,698 0 200,000 (d) 703,698
Sprots rights Fees 2,379,516 0 0 2,379,516
Program rights Amortization 820,754 149,607 0 970,361
Depreciation & Amortization 12,403,528 521,147 478,853 (c)(g) (13,403,528)
----------- ---------- ------------ -----------
OPERATING INCOME (LOSS) ($1,562,037) $596,336 ($678,853) ($1,644,554)
Other Income (Expense)
Interest Expense, Net (4,874,710) (747,547) (1,292,453)(e) (6,914,710)
Gain (Loss) on Sale of Assets 28,105 0 0 28,105
Other Income (Expense), Net (33,432) (124,288) 131,431 (f) (26,289)
----------- ---------- ------------ -----------
EARNINGS BEFORE TAXES & EXTRAORDINARY ITEMS ($6,442,074) ($275,499) ($1,839,875) ($8,557,448)
Benefit (Provision) for Income Taxes 1,680,000 0 0 1,680,000
----------- ---------- ------------ -----------
EARNINGS BEFORE EXTRAORDINARY ITEMS ($4,762,074) ($275,499) ($1,839,875) ($6,877,448)
Minority Interest & Extraordinary Items 0 0 0 0
----------- ---------- ------------ -----------
NET INCOME (LOSS) ($4,762,074) ($275,499) ($1,839,875) ($6,877,448)
Dividends & Accretion on Pfd & Com Stock Warrants (3,385,456) 0 0 (3,385,456)
NET INCOME ATTRIBUTABLE TO COMMON STOCK & EQUIVALENTS ($8,147,530) ($275,499) ($1,839,875) ($10,262,904)
=========== ========== ============ ===========
Pro Forma Weighted Average Shares Outstanding 33,430,116 33,430,116
NET INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCK & EQ. ($0.24) ($0.31)
=========== ===========
</TABLE>
<PAGE> 9
PAXSON COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. Unaudited Pro Forma Adjustments
The Unaudited Pro Forma Combined Financial Statements reflect the following
unaudited pro forma adjustments:
(a) Gives effect to the execution of a loan agreement related to the time
brokerage agreement for WTVX-TV in which PCC loaned $18 million for the
acquisition of the station by Whitehead Media Inc. through PCC's then
existing credit facility, use of previously deposited escrow funds and
accrued liabilities for payment of transaction costs.
(b) To eliminate assets and liabilities not purchased by PCC.
(c) To reflect the elimination of historical depreciation and amortization
expense.
(d) To include the pro forma time brokerage fee pursuant to the agreement.
(e) To eliminate historical interest expense and reflect pro forma interest
on $17 million of new debt.
(f) To reflect the elimination of non-recurring expenses relating to
reorganization.
(g) To reflect depreciation and amortization of the WTVX-TV assets related
to the PCC investment with Whitehead Media, Inc. in broadcast
properties.
<PAGE> 10
INDEX OF FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Page
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
Financial Statements -- December 31, 1994 and June 30,1995
Report of Independent Certified Public Accountants F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in Shareholder's Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6
</TABLE>
<PAGE> 11
PRICE WATERHOUSE LLP[LOGO]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Trustee of
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in accumulated deficit and of cash flows present fairly,
in all material respects, the financial position of WTVX-TV, Krypton
Broadcasting of Ft. Pierce, Inc. (the "Company") at December 31, 1994 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the ordinary course of business.
On June 1, 1993, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. Management's plans in
regard to the bankruptcy matters are described in Note 1 to the accompanying
financial statements.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
October 11, 1995
F-1
<PAGE> 12
<TABLE>
<CAPTION>
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
BALANCE SHEET
- -----------------------------------------------------------------------------------------------------------------
June 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 925,908 $ 592,898
Accounts receivable, net of allowance
for doubtful accounts of $56,794 and $68,491 747,829 824,324
Current program rights 37,046 82,318
Other current assets 65,929 44,129
----------- -----------
Total current assets 1,776,712 1,543,669
Property and equipment, net 4,414,234 4,485,318
Intangible assets, net 1,964,755 1,994,077
Program rights, net 36,450 51,436
----------- -----------
Total assets $ 8,192,151 $ 8,074,500
============ ===========
LIABILITIES AND ACCUMULATED DEFICIT
Liabilities:
Accounts payable and accrued liabilities $ 191,222 $ 127,640
Current program rights payable 75,683 128,217
Accrued interest 1,574,756 1,128,077
Liabilities subject to Chapter 11 proceedings 3,647,033 3,647,033
----------- -----------
Total current liabilities 5,488,694 5,030,967
Program rights payable 7,975 33,983
Debt 8,535,260 8,535,260
----------- -----------
Total liabilities 14,031,929 13,600,210
Commitments and contingencies (Note 8)
Shareholder's equity (5,839,778) (5,525,710)
------------ -----------
Total liabilities and shareholder's equity $ 8,192,151 $ 8,074,500
============ ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-2
<PAGE> 13
<TABLE>
<CAPTION>
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------
For the For the
Period Ended Year Ended
June 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 2,218,768 $ 4,167,639
Production and other 16,732 58,398
Trade and barter 326,017 792,036
Tower rent 80,129 172,292
----------- -----------
Total revenue 2,641,646 5,190,365
----------- -----------
Operating expenses:
Direct 447,485 845,679
Technical 308,215 513,743
Sales and promotions 607,029 844,417
Programming 163,921 487,165
General and administrative 259,453 445,116
Trade and barter 344,919 787,155
Program rights amortization 60,258 149,607
Depreciation and amortization 252,205 521,147
----------- ----------
Total operating expenses 2,443,485 4,594,029
Income from operations 198,161 596,336
Interest expense (446,779) (747,547)
Reorganization expenses (Note 1) (76,857) (131,431)
Other income 11,407 7,143
----------- -----------
Loss before income taxes (314,068) (275,499)
Provision for intercompany income taxes - -
----------- -----------
Net loss $ (314,068) $ (275,499)
============ ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-3
<PAGE> 14
<TABLE>
<CAPTION>
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
- -----------------------------------------------------------------------------------------------
<S> <C>
Balance at January 1, 1994 $ (5,250,211)
Net loss (275,499)
-----------
Balance at December 31, 1994 (5,525,710)
Net loss through June 30, 1995
(unaudited) (314,068)
-----------
Balance at June 30, 1995 $ (5,839,778)
(unaudited) ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-4
<PAGE> 15
<TABLE>
<CAPTION>
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------
For the For the
Period Ended Year Ended
June 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (314,068) $ (275,499)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 252,205 521,147
Program rights amortization 60,258 149,607
Allowance for doubtful accounts (11,697) 39,267
(Increase)/decrease in accounts receivable 88,192 (169,954)
(Increase) in other current assets (21,800) (16,765)
Increase/(decrease) in accounts payable and accrued liabilities 63,582 (28,022)
Increase in accrued interest 446,679 747,547
Increase/(decrease) in liabilities subject to Chapter 11 - -
----------- -----------
Net cash provided by operating activities 563,351 967,328
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (151,799) (346,703)
----------- -----------
Net cash used for investing activities (151,799) (346,703)
----------- -----------
Cash flows from financing activities:
Payment of program rights payable (78,542) (199,195)
----------- -----------
Net cash used for financing activities (78,542) (199,195)
----------- -----------
Increase in cash and cash equivalents 333,010 421,430
Cash and cash equivalents at beginning
of period 592,898 171,468
----------- -----------
Cash and cash equivalents at end of period $ 925,908 $ 592,898
============ ===========
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 0 $ 0
------------ -----------
Non-cash operating activities:
Trade and barter revenue $ 326,017 $ 792,036
============ ===========
Trade and barter expense $ 344,919 $ 787,155
============ ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-5
<PAGE> 16
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc. (the "Company"),
operating as a subsidiary of Krypton International Corporation, is engaged
in the operation of a television broadcasting station in Ft. Pierce,
Florida, serving the West Palm Beach, Florida market.
On June 1, 1993, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code in Miami, Florida.
The financial statements of the Company have been prepared on a
"going-concern" basis which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business. However,
as a result of the Chapter 11 filing such realization of assets and
liquidation of liabilities are management's plan via the Court mandated
sale. On August 4, 1995, the company sold all the assets, as specified in
the related asset purchase agreement, to Whitehead Media Corporation for
approximately $17,175,000.
Reorganization expenses included in the Statement of Operations for the
year ended December 31, 1994 is comprised of professional and attorney
fees of $131,431.
Cash and cash equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less. Cash and cash equivalents are
recorded at fair value.
Property and equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized
at cost and depreciated on a straight-line basis over their estimated
useful lives as follows:
<TABLE>
<S> <C>
Broadcasting tower and equipment 7-40 years
Building and improvements 40 years
Office furniture, equipment and other 7 years
Vehicles 5 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
Intangible assets
Intangible assets consist of the FCC license, which is stated at cost and
is being amortized using the straight-line method over 25 years.
F-6
<PAGE> 17
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
Program rights
The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements.
Pursuant to a licensing agreement, an asset is recorded for the program
rights acquired and a liability is recorded for the obligation incurred,
at the gross amount of the liability. Program rights are amortized on a
method that approximates the straight-line basis over the related term.
Program rights which will not be aired are charged to expense. Current
program rights represent programs which will be amortized during the next
year; current liabilities represent program rights which will be paid
within the year under contractual agreements. Program rights payable
represent the obligation incurred to secure the right to broadcast program
material in accordance with a contractual agreement.
Income taxes
The Company's operating results have been included in the consolidated tax
returns of Krypton International Corporation, and a provision for
intercompany income taxes, which approximates the income tax provision
calculated for Company income on a standalone basis, has been included in
the financial statements.
Revenue recognition
Revenue is recognized as advertising air time is broadcast.
Trade agreements
The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from
trade agreements are recognized at the fair market value of products or
services received as advertising air time is broadcast. Products and
services received are expensed when used in the broadcast operations. If
the Company uses exchanged products or services before advertising air
time is provided, a trade liability is recognized.
Interim financial data
The interim financial data of the Company is unaudited; however, in the
opinion of the Company, the interim data includes all adjustments,
consisting of only normal recurring adjustments necessary for a fair
statement of results of the interim periods. The results of operations
for the period ended June 30, 1995 are not necessarily indicative of the
results that can be expected for the entire fiscal year ending December
31, 1995.
F-7
<PAGE> 18
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
2. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
Broadcasting tower and equipment $ 5,097,621
Building, land and improvements 704,823
Office furniture, equipment and other 219,986
Vehicles 26,145
------------
6,048,575
Less accumulated depreciation (1,563,257)
------------
Property and equipment, net $ 4,485,318
============
Depreciation expense for the year $ 427,309
============
</TABLE>
3. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
FCC license $ 2,356,473
Less accumulated amortization (362,396)
------------
Intangible assets, net $ 1,994,077
============
Amortization expense for the year $ 93,838
============
</TABLE>
F-8
<PAGE> 19
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
4. PROGRAM RIGHTS:
Program rights consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
Program rights $ 231,925
Less accumulated amortization (98,171)
------------
133,754
Less current program rights 82,318
------------
$ 51,436
============
Amortization expense for the year $ 149,607
============
</TABLE>
5. LIABILITIES SUBJECT TO CHAPTER 11 PROCEEDINGS:
The principal categories of claims classified in the Balance Sheet as
liabilities subject to Chapter 11 proceedings at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
Accounts payable $ 392,102
Accrued interest 650,932
Program license contracts 2,603,999
------------
$ 3,647,033
============
</TABLE>
Reorganization expenses included in the statement of operations consist
primarily of professional and attorney fees related directly to the
bankruptcy proceedings (Note 1).
F-9
<PAGE> 20
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
6. INCOME TAXES:
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
<S> <C>
Assets:
Intangible assets $ 24,231
Allowance for doubtful accounts 25,773
Net operating loss carryforwards 780,419
Valuation allowance $ (830,423)
------------
$ 0
============
</TABLE>
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax asset will not be realized. A
valuation allowance has been provided for the deferred tax assets.
7. DEBT:
A portion of the Krypton International Corporation's debt and interest
costs which are directly related to WTVX-TV were allocated to the Company
based on the original purchase price of the station. Debt allocated at
December 31, 1994 was approximately $8,535,000. Interest expense
allocated for the year ended December 31, 1994 was approximately $748,000.
There are no other costs pushed down by Krypton International Corporation
as there are no others which are directly related to the Company.
F-10
<PAGE> 21
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
8. COMMITMENTS AND CONTINGENCIES:
The Company incurred expenses of approximately $64,908 for the year ended
December 31, 1994 under non-cancelable operating leases for office
equipment and office space. Future minimum annual payments under these
non-cancelable operating leases as of December 31, 1994, are as
follows:
<TABLE>
PAYMENT
<S> <C>
1995 $ 44,668
1996 4,538
1997 3,492
1998 873
1999 --
------------
$ 53,571
============
</TABLE>
F-11
