<PAGE> 1
FORM 10-Q/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission File Number 1-13452
-------
PAXSON COMMUNICATIONS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 659-4122
--------------
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 Act of 1934
during the proceeding 12 months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common and preferred stock, as of August 11, 1995:
CLASS OF STOCK NUMBER OF SHARES
- ---------------------------- ----------------
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE --------------------- 26,148,026
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE --------------------- 8,311,639
REDEEMABLE CUMULATIVE SENIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 2,000
REDEEMABLE CUMULATIVE SERIES B
PREFERRED STOCK, $0.001 PAR VALUE --------- 714.286
REDEEMABLE CUMULATIVE JUNIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 33,000
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994 3-4
Consolidated Statements of Operations
Six Months Ended June 30, 1995
and June 30, 1994 5
Consolidated Statements of Operations
Three Months Ended June 30, 1995
and June 30, 1994 6
Consolidated Statements of Changes in
Common Stockholders' Equity 7
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995
and June 30, 1994 8-9
Notes to Consolidated Financial Statements 10-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-17
Part II - Other Information
Item 1. Legal Proceedings 18-20
Item 2. Changes in Securities 18-20
Item 3. Defaults upon Senior Securities 18-20
Item 4. Submission of Matters to a Vote of
Security Holders 18-20
Item 5. Other Information 18-20
Item 6. Exhibits and Reports on Form 8-K 18-20
Signatures 21
</TABLE>
2
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
June 30, December 31,
1995 1994
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,409,187 $ 21,571,658
Accounts receivable, less allowance
for doubtful accounts of $687,516 and
$556,950 respectively 13,011,251 13,569,198
Prepaid expenses and other current assets 1,392,830 1,579,954
Current deferred income taxes 194,940 194,940
Current program rights 1,243,746 1,980,000
------------ ------------
Total current assets 24,251,954 38,895,750
Property and equipment, net 66,647,658 45,350,430
Intangible assets, net 81,572,496 53,350,967
Other assets, net 20,037,439 13,078,346
Related party notes receivable 2,250,000 1,750,000
Program rights, net 204,084 244,888
------------ ------------
Total assets $194,963,631 $152,670,381
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 3,458,161 $ 5,123,691
Current portion of program rights payable 970,316 986,562
Current portion of long-term debt 11,976,975 6,393,415
------------ ------------
Total current liabilities 16,405,452 12,503,668
Program rights payable 348,989 562,770
Long-term debt 120,300,853 76,013,542
Deferred income taxes 834,941 1,474,940
Minority interest -- 1,217,314
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
<PAGE> 4
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Redeemable Cumulative Compounding Senior
preferred stock, $0.001 par value; 15%
dividend rate per annum, 2,000 shares
authorized, issued and outstanding 15,276,065 14,060,054
Redeemable Class A & B common stock warrants 3,498,274 1,735,979
Redeemable Cumulative Compounding Series B
preferred stock, $0.001 par value;
15% dividend rate per annum, 714.286 shares
authorized, issued and outstanding 1,802,919 1,274,671
Redeemable Cumulative Compounding Junior
preferred stock, $0.001 par value; 12%
dividend rate per annum, 33,000 shares
authorized, issued and outstanding 29,165,660 26,808,053
Class A common stock, $0.001 par value; one
vote per share; 150,000,000 shares authorized,
26,137,026 shares issued and outstanding 26,137 26,042
Class B common stock, $0.001 par value; ten
votes per share, 30,000,000 shares authorized,
8,311,639 shares issued and outstanding 8,312 8,312
Class C common stock, $0.001 par value; non-
voting; 12,500,000 shares authorized, 0 shares
issued and outstanding -- --
Class C common stock warrants 5,338,952 5,338,952
Stock subscription notes receivable (76,833) (77,666)
Additional paid-in capital 33,835,759 20,647,647
Deferred option plan compensation (2,584,078) --
Accumulated deficit (29,217,771) (8,923,897)
------------ ------------
Commitments and contingencies
Total liabilities and stockholders' equity $194,963,631 $152,670,381
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
For the Six Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 40,454,900 $19,715,590
Retail and other 2,497,723 996,325
Trade 1,403,725 801,846
------------ -----------
Total revenue 44,356,348 21,513,761
Operating expenses:
Direct 11,554,850 6,277,662
Programming 5,940,066 2,995,697
Sales and promotion 4,473,186 2,417,421
Technical 2,147,289 863,373
General and administrative 9,989,674 4,801,749
Trade 1,193,843 1,012,316
Time brokerage agreement fees 549,947 225,000
Sports rights fees 1,019,355 --
Option plan compensation 9,404,129 --
Program rights amortization 777,057 --
Depreciation and amortization 8,054,256 5,265,913
------------ -----------
Total operating expenses 55,103,652 23,859,131
------------ -----------
Income (loss)from operations (10,747,304) (2,345,370)
Other income (expense):
Interest expense, net (4,308,646) (1,390,715)
Other income, net (13,763) 223,084
------------ -----------
Loss before income tax benefit (15,069,713) (3,513,001)
Income tax benefit 640,000 1,396,000
------------ -----------
Net loss (14,429,713) (2,117,001)
Dividends and accretion on preferred stock
and common stock warrants (5,864,161) (1,587,058)
------------ -----------
Net loss attributable to common stock and
common stock equivalents $(20,293,874) $(3,704,059)
============ ===========
Net loss per share $ (.42) $ (.06)
Dividends and accretion on preferred stock
and common stock warrants per share (.17) (.05)
------------ -----------
Net loss attributable to common
stock and common stock equivalents per share $ (.59) $ (.11)
============ ===========
Weighted average shares outstanding
primary & fully diluted 34,401,282 32,506,032
============ ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
For the Three Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 21,971,676 $ 11,174,281
Retail and other 1,006,757 559,037
Trade 758,212 415,285
------------- -------------
Total revenue 23,736,645 12,148,603
Operating expenses:
Direct 5,920,695 3,397,770
Programming 2,813,262 1,596,419
Sales and promotion 2,293,673 1,234,622
Technical 1,168,083 479,840
General and administrative 5,331,824 2,818,396
Trade 722,302 516,837
Time brokerage agreement fees 310,899 225,000
Sports rights fees (22,227) --
Option plan compensation 9,404,129 --
Program rights amortization 425,222 --
Depreciation and amortization 4,269,627 2,855,767
------------- -------------
Total operating expenses 32,637,489 13,124,651
------------- -------------
Income (loss)from operations (8,900,844) (976,048)
Other income (expense):
Interest expense, net (2,514,487) (782,351)
Other income, net (81,398) 44,023
------------- -------------
Loss before income tax benefit (11,496,729) (1,714,376)
Income tax benefit 320,000 1,396,000
------------- -------------
Net loss (11,176,729) (318,376)
Dividends and accretion on preferred stock
and common stock warrants (3,673,209) (803,254)
------------- -------------
Net loss attributable to common stock and
common stock equivalents $ (14,849,938) $ (1,121,630)
============= =============
Net loss per share $ (.32) $ (.01)
Dividends and accretion on preferred stock
and common stock warrants per share (.11) (.02)
------------- -------------
Net loss attributable to common
stock and common stock equivalents per share $ (.43) $ (.03)
============= =============
Weighted average shares outstanding
primary & fully diluted 34,448,665 32,506,032
============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Stock
Common Stock Common Subscription
--------------------------------------- Common Stock Notes
Class A Class B Class C Stock Warrants Receivable
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $ 1
RECAPITALIZATION OF
COMMON STOCK $ 15,791 $ 5,264 (1)
STOCK ISSUED FOR
ANG ACQUISITION 1,570 277 $(77,666)
NET PROCEEDS FROM ISSUANCE OF
COMMON STOCK WARRANTS $5,338,952
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK
ACCRETION ON REDEEMABLE
SECURITIES
NET LOSS
STOCK DIVIDEND 8,681 2,771
----------- ----------- --------- ----------- ---------- --------
BALANCE AT DECEMBER 31, 1994 26,042 8,312 0 0 5,338,952 (77,666)
STOCK ISSUED FOR COOKEVILLE
ACQUISITION (UNAUDITED) 95
DEFERRED OPTION PLAN COMPENSATION
(UNAUDITED)
OPTION PLAN COMPENSATION (UNAUDITED)
NOTE REPAYMENT (UNAUDITED) 833
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK (UNAUDITED)
ACCRETION ON REDEEMABLE
SECURITIES (UNAUDITED)
NET LOSS
(UNAUDITED)
----------- ----------- --------- ----------- ---------- --------
BALANCE AT JUNE 30, 1995
(UNAUDITED) $ 26,137 $ 8,312 $ 0 $ 0 $5,338,952 $(76,833)
=========== =========== ========= =========== ========== ========
<CAPTION>
Additional Deferred
Paid-in Option Plan Accumulated
Capital Compensation Deficit
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $16,895,623 $ $ (776,367)
RECAPITALIZATION OF
COMMON STOCK (21,054)
STOCK ISSUED FOR
ANG ACQUISITION 3,784,530
NET PROCEEDS FROM ISSUANCE OF
COMMON STOCK WARRANTS
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK (2,216,137)
ACCRETION ON REDEEMABLE
SECURITIES (1,169,319)
NET LOSS (4,762,074)
STOCK DIVIDEND (11,452)
----------- ----------- ------------
BALANCE AT DECEMBER 31, 1994 20,647,647 (8,923,897)
STOCK ISSUED FOR COOKEVILLE
ACQUISITION (UNAUDITED) 1,199,905
DEFERRED OPTION PLAN COMPENSATION
(UNAUDITED) 11,988,207 (11,988,207)
OPTION PLAN COMPENSATION (UNAUDITED) 9,404,129
NOTE REPAYMENT (UNAUDITED)
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK(UNAUDITED) (3,465,829)
ACCRETION ON REDEEMABLE
SECURITIES (UNAUDITED) (2,398,332)
NET LOSS (UNAUDITED) (14,429,713)
----------- ----------- ------------
BALANCE AT JUNE 30, 1995
(UNAUDITED) $33,835,759 $(2,584,078) $(29,217,771)
=========== =========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(14,429,713) $ (2,117,001)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 8,054,256 5,265,913
Program rights amortization 777,057 --
Option plan compensation 9,404,129 --
Provision for doubtful accounts 325,294 119,938
Income tax benefit (640,000) (1,396,000)
Minority interest in net loss -- (86,667)
Decrease (increase) in accounts receivable 232,653 178,857
Decrease (increase) in prepaid expenses and
other current assets 187,121 (250,182)
Increase in intangible assets -- --
Decrease (increase) in other assets (2,454,459) 77,094
Increase (decrease) in accounts payable and
accrued liabilities (1,665,530) 920,994
------------ ------------
Net cash provided by (used in) operating
activities (209,192) 2,712,946
------------ ------------
Cash flows for investing activities:
Acquisitions of broadcasting properties (45,110,012) (12,646,293)
Deposits on broadcasting properties (2,392,000) (3,500,000)
Increase in related party note receivable (500,000) --
Purchases of property and equipment (9,589,477) (1,485,143)
------------ ------------
Net cash used for investing activities (57,591,489) (17,631,436)
------------ ------------
Cash flows from financing activities:
Increase in related party note payable -- 7,700,000
Proceeds from long-term debt 49,980,000 3,000,000
Payments of loan origination costs (5,002,634) --
Payments of long-term debt (109,129) (400,731)
Payments for program rights (230,027) --
------------ ------------
Net cash provided by financing activities 44,638,210 10,299,269
------------ ------------
Decrease in cash and cash equivalents (13,162,471) (4,619,221)
------------ ------------
Cash and cash equivalents at beginning of period 21,571,658 7,019,747
------------ ------------
Cash and cash equivalents at end of period $ 8,409,187 $ 2,400,526
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
<PAGE> 9
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest $ 4,249,482 $1,244,212
=========== ==========
Cash paid for income taxes $ -- $ --
=========== ==========
Non-cash operating and financing activities:
Issuance of common stock for Cookeville
partner buyout $ 1,200,000 $ --
=========== ==========
Dividends on redeemable preferred stock $ 3,465,829 $1,046,425
=========== ==========
Accretion on redeemable securities $ 2,398,332 $ 540,633
=========== ==========
Trade revenue $ 1,403,725 $ 801,846
=========== ==========
Trade expense $ 1,193,843 $1,012,316
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
9
<PAGE> 10
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amendments to Form 10-Q
The Company amends by this filing its quarterly report on Form 10-Q for the
quarter ended June 30, 1995 for the following matters:
Stock Incentive Plan Compensation -- During the fiscal quarter ended June 30,
1995, the Company granted to employees 1,821,916 non-qualified stock options
("Stock Options") under the Paxson Communications Corporation Stock Incentive
Plan (the "Plan"). The Stock Options are exercisable at $3.42 per share for
Class A Common Stock of the Company (the "Common Stock") and vest ratably over
a five year period, except with respect to Stock Options granted to certain
individuals which provide for shorter vesting schedules. The Company conferred
with its independent certified public accountants, Price Waterhouse LLP, as to
the use of the Company's prior independent valuation of the Common Stock in
determining the value of the Stock Options and the appropriate expense to be
recognized by the Company in connection with the granting thereof to employees.
The Company did not recognize any option plan compensation expense for the
quarter ended June 30, 1995. After the filing of the Company's second quarter
report on Form 10-Q on August 14, 1995, the Company's independent certified
public accountants advised the Company that a different valuation, based upon
the quoted market price of the Company's Common Stock was required to be used
in determining the value of the Stock Options. The Company's application of
this market price valuation to the Stock Options resulted in a higher valuation
of such Stock Options and in a non-cash charge of $9.4 million to the earnings
reported in the Form 10-Q filed August 14, 1995.
- Redeemable Class A and B Common Stock Warrant Accretion - The Company's
130.3777 redeemable common stock warrants entitle the holders to purchase
2,709,129 shares of Class A Common Stock and 903,044 shares of Class B Common
Stock, or approximately 9% of all Common Stock. Due to an increase in the
value of the underlying Common Stock, the Company has recognized additional
accretion of $1,458,000 on these warrants for the six months ended June 30,
1995. The Common Stock warrants contain a put provision requiring the Company
to repurchase any warrants, at the option of the holder, at the fair market
value per share of the Common Stock on or after the seventh anniversary of the
original issue date (December 15, 2000). The difference between the fair
market value of the redeemable Common Stock warrants at their date of issue and
their redemption values will be accreted on a straight line method over the
life of the warrants.
Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of June 30, 1995 and
for the six month and three month periods ended June 30, 1995 and 1994, are
unaudited. In the opinion of management with the amended items noted above,
all adjustments necessary for the fair presentation of such financial
information have been included. These adjustments are of a normal recurring
nature. There have been no significant changes in accounting policies since the
period ended December 31, 1994. The composition of accounts has changed to
reflect the incorporation of the: stock incentive plan option grants, the
operations of acquisitions discussed below and the reclassification of related
party notes receivable amounts to long term assets. This note reclassification
to long-term is in anticipation of pending revisions of certain station
ownership regulation restrictions that could allow the Company's subsequent
acquisition of the underlying stations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 1994 financial
statements and related footnotes and discussions contained in the Company's
form 10-K, filed with the Securities and Exchange Commission on March 31, 1995,
form 10-Q filed on May 12, 1995, the definitive proxy statement filed by the
Company on May 4, 1995 for the annual meeting of stock holders held June 1,
1995 and the forms 8-K and 8-K/A filed on June 1, 1995 and July 31, 1995,
respectively.
Pro Forma Financial Information
The following represents the unaudited pro forma results of operations as if
the acquisitions and time brokerage agreements described in Item 2 of Part I
had been completed at the beginning of 1995 and 1994, after going effect to
certain adjustments, including increased depreciation and amortization of
property and equipment and intangible assets and interest expense for
acquisition debt. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which would have been achieved had these acquisitions been completed as of
these dates, nor are the results indicative of the Company's future results of
operations.
10
<PAGE> 11
Pro Forma Financial Information - continued
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenues $ 47,940,297 $ 36,274,055
============ ============
Broadcast cash flow $ 12,039,367 $ 6,031,268
============ ============
Income (loss) from operations $(12,538,058) $ (9,035,647)
============ ============
Net loss $(22,200,940) $(16,110,543)
============ ============
Net loss per share $ (.65) $ (.50)
============ ============
Pro forma weighted average shares
outstanding primary and fully diluted 34,401,282 32,506,032
============ ============
</TABLE>
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenues $ 24,600,296 $ 18,117,067
============ ============
Broadcast cash flow $ 7,379,542 $ 3,893,901
============ ============
Income (loss) from operations $ (9,946,689) $ (4,269,002)
============ ============
Net loss $(15,143,529) $ (7,526,177)
============ ============
Net loss per share $ (.44) $ (.23)
============ ============
Pro forma weighted average shares
outstanding primary and fully diluted 34,448,665 32,506,032
============ ============
</TABLE>
"Broadcast cash flow" is defined as Income (loss) from operations plus non-cash
expenses and non-broadcasting operating results, less scheduled broadcast rights
payments and non-cash revenues. The Company has included broadcast cash flow
data because such data is commonly used as a measure of performance for
broadcast companies and is also used by investors to measure the Company's
ability to service debt. Broadcast cash flow is not, and should not be used as
an indicator or alternative to operating income, net income or cash flow as
reflected in the Consolidated Financial Statements as it is not a measure of
financial performance under generally accepted accounting principles.
11
<PAGE> 12
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's growth since its inception in 1991 has primarily been due to the
acquisitions of or management of radio stations, television stations, and radio
networks, as well as the subsequent improvement of these operations. Certain of
the Company's radio and television stations were and continue to be operated
under time brokerage agreements for various periods. Under time brokerage
agreements, the stations' operating revenues and expenses are controlled by the
Company and are consolidated in the financial statements. The following table
discloses the date of acquisition and, where applicable, the date of
commencement of management under time brokerage agreements for each of the
Company's radio and television properties:
<TABLE>
<CAPTION>
DATE OF COMMENCEMENT DATE
STATION MARKET ACQUISITION OF BROKERAGE AGREEMENT
- ------- ------ ----------- ----------------------
<S> <C> <C> <C>
WROO(FM) Jacksonville September 1991
WNZS(AM) Jacksonville May 1993
WHPT(FM) Tampa/St. Petersburg November 1991
WHNZ(AM) Tampa/St. Petersburg November 1991
WZTA(AM) Miami/Ft. Lauderdale April 1992
WINZ(AM) Miami/Ft. Lauderdale April 1992
WWNZ(AM) Orlando April 1992
WMGF(FM) Orlando May 1993
WJRR(FM) Orlando May 1993
WPLA(FM) Jacksonville May 1993
WZNZ(AM) Jacksonville May 1993
WLVE(FM) Miami/Ft. Lauderdale April 1993
WGSQ(FM) Cookeville, TN April 1994
WPTN(AM) Cookeville, TN April 1994
WTLK(TV-14) Atlanta July 1994 April 1994
WCTD(TV-35) Miami Option April 1994
WPBF(TV-25) Palm Beach July 1994
WNZE(AM) Tampa/St. Petersburg February 1995 August 1994
WFCT(TV-66) Tampa/St. Petersburg Option August 1994
WWZN(AM) Orlando December 1994
WIRB(TV-56) Orlando December 1994
WTGI(TV-61) Philadelphia February 1995
KTFH(TV-49) Houston July 1995 March 1995
WTWS(TV-26) Hartford/New Haven March 1995
WSJT(FM) Tampa/St. Petersburg March 1995
WGOT(TV-60) Boston May 1995
KZKI(TV-30) Los Angeles May 1995
KLXV(TV-65) San Francisco June 1995
WFTL(AM) Miami/Ft. Lauderdale June 1995
</TABLE>
12
<PAGE> 13
In May 1995 the Company acquired WGOT(TV-60), serving the Boston, Massachusetts
market, for approximately $3 million and KZKI(TV-30), serving the Los Angeles,
California market, for approximately $18 million. In June 1995 the Company
aquired KLXV(TV-65) for approximately $5 million, serving the San Francisco,
California market and WFTL(AM), serving the Miami/Ft. Lauderdale, Florida
market, for approximately $2 million. The Company also acquired KTFH(TV-49),
serving the Houston, Texas market, in July 1995 for approximately $7.9 million.
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, selected financial
information as a percentage of revenues and the period-to-period changes in
such information.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
1995 1994 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 26.1% 29.2% -10.6%
Programming 13.4 13.9 -3.6
Sales and promotion 10.1 11.2 -9.8
Technical 4.8 4.0 20.0
General and administrative 22.5 22.3 0.9
Trade 2.7 4.7 -42.6
Time brokerage agreement fees 1.2 1.0 20.0
Option plan compensation 21.2 0.0 100.0
Sport rights fees 2.3 0.0 100.0
Program rights amortization 1.7 0.0 100.0
Depreciation and amortization 18.2 24.5 -25.7
----- ----- ------
Total operating expenses 124.2 110.8 12.1
----- ----- ------
Income (loss) from operations -24.2 -10.8 124.1
Other income (expense);
Interest expense, net -9.7 -6.5 49.2
Other income (expense) net 0.0 1.0 -100.0
Loss before income tax benefit -33.9 -16.3 108.0
Income tax benefit 1.4 6.5 -78.5
----- ----- ------
Net loss -32.5% -9.8% 231.6
===== ===== ======
</TABLE>
13
<PAGE> 14
RESULTS OF OPERATIONS - CONTINUED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
1995 1994 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 24.9% 28.0% -11.1%
Programming 11.9 13.1 -9.2
Sales and promotion 9.7 10.2 -4.9
Technical 4.9 3.9 25.6
General and administrative 22.5 23.2 -3.0
Trade 3.0 4.3 -30.2
Time brokerage agreement fees 1.3 1.9 -31.6
Option plan compensation 39.6 0.0 100.0
Sport rights fees -0.1 0.0 -100.0
Program rights amortization 1.8 0.0 100.0
Depreciation and amortization 18.0 23.5 -23.4
----- ----- --------
Total operating expenses 137.5 108.1 27.2
----- ----- --------
Income (loss) from operations -37.5 -8.1 363.0
----- ----- --------
Other income (expense);
Interest expense, net -10.6 -6.4 65.6
Other income (expense) net -0.3 0.4 175.0
----- ----- --------
Loss before income tax benefit -48.4 -14.1 243.3
----- ----- --------
Income tax benefit 1.3 11.5 -88.7
----- ----- --------
Net loss -47.1 -2.6% 1,711.5%
===== ===== ========
</TABLE>
14
<PAGE> 15
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Consolidated revenues for the six months ended June 30, 1995 increased 107% (or
$22.9 million) to $44.4 million from $21.5 million for the six months ended
June 30, 1994. This increase was primarily due to the acquisition of WPBF
(TV-25) on July 1, 1994 and the additional television acquisitions and time
brokerage operations discussed above.
Operating expenses for the six months ended June 30, 1995 increased 131.0% (or
$31.2 million) to $55.1 million from $23.9 million for the six months ended
June 30, 1994. The increase was primarily due to the costs of operating these
newly acquired television stations, direct expenses such as commissions which
rise in proportion to revenues, higher corporate overhead, specifically
option plan compensation, and higher depreciation and amortization
related to assets acquired. Further, based on the vesting formula associated
with the options granted under the Stock Incentive Plan, the Company expects to
recognize additional compensation expense (related to the Company's Stock
Incentive Plan) over the next five years in the aggregate amount of
approximately $2.6 million.
Broadcast cash flow for the six months ended June 30, 1995 increased 150% (or
$6.6 million) to $11 million, from $4.4 million for the six months ended June
30, 1994. The increase in broadcasting cash flow was a direct result of
acquisitions and improved performance of existing properties.
Net interest expense for the six months ended June 30, 1995 increased to $4.3
million from $1.4 million for the six months ended June 30, 1994, an increase
of 207% primarily due to a greater level of long-term debt throughout the period
and higher borrowing rates. As a result of acquisitions, at June 30, 1995,
long-term debt was $132.3 million, or 61% higher than the $82.4 million
outstanding a year prior.
The Company recognized $640,000 of income tax benefit which resulted primarily
from the 1995 net loss and reversal of deferred taxes associated with the
1993 tax provision resulting from the change in tax status.
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
Consolidated revenues for the three months ended June 30, 1995 increased 96%
(or $11.6 million) to $23.7 million from $12.1 million for the three months
ended June 30, 1994. This increase was primarily due to the acquisition of WPBF
(TV-25) on July 1, 1994 and the additional television acquisitions and time
brokerage operations discussed above.
Operating expenses for the three months ended June 30, 1995 increased 148.7%
(or $19.5 million) to $32.6 million from $13.1 million for the three months
ended June 30, 1994. The increase was primarily due to the costs of operating
these newly acquired television stations, direct expenses such as commissions
which rise in proportion to revenues, higher corporate overhead, including
option plan compensation, and higher depreciation and amortization related to
assets acquired.
Broadcast cash flow for the three months ended June 30, 1995 increased 154% (or
$4.3 million) to $7.1 million, from $2.8 million for the three months ended
June 30, 1994. The increase in broadcast cash flow was a direct result of
acquisitions and improved performance of existing properties.
Net interest expense for the three months ended June 30, 1995 increased to $2.5
million from $.7 million for the three months ended June 30, 1994, an increase
of 257% primarily due to a greater level of long-term debt throughout the
period and higher borrowing rates. As a result of acquisitions, at June
15
<PAGE> 16
30, 1995, long-term debt was $132 million, or 277% higher than the $35 million
outstanding a year prior.
The Company recognized $320,000 of income tax benefit which resulted primarily
from the 1995 net loss and reversal of deferred taxes associated with the 1993
tax provision resulting from the change in tax status.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1995 and December 31, 1994 was $7.8
million and $26.4 million, respectively, and the ratio of current assets to
current liabilities was 1.48:1 and 3.11:1, on such dates respectively. Working
capital decreased primarily due to acquisitions previously discussed, and an
increase in the current portion of long-term debt.
Cash provided by (used in) operations of $(.2) million and $2.7 million for the
six months ended June 30, 1995 and 1994, respectively, reflect the improvement
in operating results of existing properties, acquisitions and time brokerage
properties net of increased interest expense and increases in other assets.
Cash used for investing activities primarily reflects the acquisitions of
WTGI(TV-61), WTWS(TV-26), WGOT(TV-60), KZKI(TV-30), KLXV(TV-65), WSJT(FM),
WFTL(AM) and purchases of equipment for these and existing properties. Cash
provided by financing activities primarily reflects the proceeds from
borrowings of long-term debt. In addition the Company advanced $500,000 to The
Christian Network, Inc. during the second quarter under a demand note bearing
interest at prime rate.
Non-cash activity relates to option plan compensation, reciprocal trade
advertising revenue and expense, as well as dividends and accretion on the
preferred stock and common stock warrants.
The Company has two senior debt facilities of $150 million and $75
million. The $150 million facility is secured by the assets of WPBF(TV-25) and
the Company's radio networks and stations. The credit terms require
amortization of principal over a seven-year period with the first payment due
September 30, 1995, and interest payable quarterly at a floating rate
(presently LIBOR plus 2.5%). As of June 30, 1995, approximately $90 million has
been drawn under this facility. On August 4, 1995 $17 million was borrowed
under this facility in conjunction with the Whitehead Media, Inc. ("Whitehead")
loan discussed below.
On May 17, 1995 the Company closed on a $75 million senior debt
facility. This facility is secured by substantially all the assets of the
Company's television subsidiaries, with the exception of WPBF(TV-25) and
WFCT(TV-66). The facility matures on May 17, 1997 and may be extended for an
additional year under certain conditions. As of June 30, 1995 approximately $39
million was outstanding under this facility. On July 3, 1995 an additional $8.5
million was drawn down under this facility in conjunction with the acquisition
of KTFH(TV-49) discussed below.
The Company believes that cash flow from operations will be sufficient
to make scheduled interest payments under the existing credit facilities and
meet working capital requirements for its mature properties. The Company
periodically evalutes its credit facilities. Currently, the Company is
negotiating new financings that could result in the retirement of one or more
if its two existing senior credit facilities and increase the Company's
borrowing capabilities for additional acquisitions and other purposes. Such
financings could result in the Company writing off prior to December 31, 1995
up to approximately $11 million in loan origination costs relating to its two
existing senior credit facilities.
16
<PAGE> 17
ACQUISITION COMMITMENTS
The Company has agreements to purchase significant assets of the following
television stations all of which are subject to various conditions, including
the receipt of regulatory approvals:
<TABLE>
<CAPTION>
PURCHASE
STATION MARKET SERVED PRICE
- ------- ------------- -----
<S> <C> <C>
KTFH(TV-49) Houston, TX (1) $ 7,900,000
Channel 68 Dallas, TX (2) $ 2,000,000
WHKE(TV-55) Milwaukee, WI (4) $ 2,500,000
WIRB(TV-56) Orlando, FL (3)(4) $ 3,800,000
KUBD(TV-59) Denver, CO (4) $ 6,500,000
WOAC(TV-67) Cleveland, OH (5) $ 6,600,000
WTJC(TV-26) Dayton, OH (4) $ 3,500,000
WYVN(TV-60) Washington, DC(2) $ 1,900,000
</TABLE>
(1) Station acquired on July 3, 1995.
(2) Stations not currently on the air. The Company estimates spending
$2,000,000 in build-out costs for each station before broadcasting can
begin in Dallas and Washington, respectively.
(3) Operated under a time brokerage agreement since December 27, 1994.
(4) Station licenses will be owned by The Christian Network, Inc. with the
Company guaranteeing payment of the purchase price. The Company plans
to enter into time brokerage agreements and acquire certain real and
personal tangible assets of the stations.
(5) Station license will be owned by Whitehead with the Company
guaranteeing payment of the purchase price. The Company plans to enter
into a time brokerage agreement and acquire certain real and personal
tangible assets of the station.
In September 1994, the Company entered into an agreement with Whitehead
in which the Company agreed to lend $18.0 million to purchase WTVX(TV-34), West
Palm Beach, Florida. On August 4, 1995 the Company funded the loan, Whitehead
completed the acquisition of WTVX(TV-34) and the Company began operating the
station under a time brokerage agreement.
17
<PAGE> 18
PAXSON COMMUNICATIONS CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company, or any of its
property, is subject. To the knowledge of the Company, no such legal
proceedings are contemplated by any governmental authority.
Items 2-3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Shareholders was held on June 1, 1995. At the
meeting, all seven of the Company's existing directors were re-elected for one
year terms. Proposals to amend the Certificates of Designation with respect to
the Company's 15% Cumulative Compounding Redeemable Preferred Stock (the "15%
Preferred Proposal") and Series B 15% Cumulative Compounding Redeemable
Preferred Stock (the "Series B Preferred Proposal") to conform the provisions
of such Certificates of Designation with the Company's contractual obligations
with the holders of the preferred stock governed by such Certificates of
Designation were approved. In addition, the Company's proposal to change its
name from "Paxson Communications Corp." to "Paxson Communications Corporation"
was approved. The appointment of Price Waterhouse LLP as the Company's
independent certified public accountants was also ratified.
The number of votes cast for, cast against and withheld, as well as the number
of broker nonvotes with respect to the election of five of the directors is set
forth below:
<TABLE>
<CAPTION>
Director For Withheld Broker Nonvotes
- -------- --- -------- ---------------
<S> <C> <C> <C>
Lowell W. Paxson 108,478,692 271 422,464
James B. Bocock 108,478,613 350 422,464
Arthur D. Tek 108,478,613 350 422,464
J. Patrick Michaels, Jr. 108,478,613 350 422,464
S. William Scott 108,478,613 350 422,464
</TABLE>
There were no votes cast against the election of the above 5 directors.
Pursuant to the Company's certificate of incorporation, the election of two
directors, Micheal J. Marocco and John A. Kornreich, was only voted on by the
holders of the Company's 2000 outstanding shares of 15% Cumulative Compounding
Redeemable Preferred Stock. All such 2000 shares were cast in favor of such
two directors.
18
<PAGE> 19
The number of votes cast for, cast against and abstaining as well as the number
of broker nonvotes with respect to the remaining four matters voted upon at the
meeting is set forth below:
<TABLE>
<CAPTION>
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
<S> <C> <C> <C> <C>
15% Preferred Proposal 108,338,993 190 540 561,704
Series B Preferred
Proposal 108,338,993 151 579 561,704
Name Change 108,478,606 52 305 422,464
Accountant Appointment 108,338,769 36 158 422,464
</TABLE>
Item 5. Other Matters. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
EXHIBIT NO. DESCRIPTION
10.1 Asset Purchase Agreement, dated January 31, 1995, between Gary A.
Rosen in his capacity as Bankruptcy Trustee for Flying A
Communications, Inc. and Paxson Communications Corp.*
10.2 Real Estate Sale and Purchase Agreement, dated as of May 18, 1995, by
and between F&M Bank - Martinsburg and Paxson Communications of
Washington-60, Inc.*
10.3 Asset Purchase Agreement, dated as of June 1, 1995, by and between
Channel 26 of Dayton, Inc. and Video Mall Communications, Inc. for
Television Station WTJC-TV, Springfield, Ohio*
10.4 Asset Purchase Agreement, dated as of May 23, 1995, by and among
Whitehead Media, Inc., Morton J. Kent and Canton, Inc. for Television
Station WOAC(TV) Canton, Ohio*
10.5 Credit Agreement, dated as of May 17, 1995, among Paxson
Communications Television, Inc. and Merrill Lynch Capital Corporation,
As Arranger and Syndication Agent, and Canadian Imperial Bank of
Commerce, New York Agency, Administrative Agent and Collateral
Agent*
10.6 Loan Agreement, dated as of September 22, 1994, among Paxson
Communications Corp. and Whitehead Media Inc.*
10.7 Amendment to Loan Agreement, dated October 3, 1994, among Paxson
Communications Corp. and Whitehead Media Inc.*
10.8 Second Amendment to Loan Agreement, dated August 4, 1995, among Paxson
Communications Corporation and Whitehead Media Inc.*
-------------------
* Previously filed
27 Financial Data Schedule (for SEC use only)
19
<PAGE> 20
(b) Reports on Form 8-K.
Form 8-K Current Report filed June 1, 1995 in conjunction with the May
17, 1995 acquisitions of KZKI(TV-30) and WGOT(TV-60).
Form 8-K/A Amendment to Current Report filed July 31, 1995 to file
acquisition financial statements and pro forma financial information
for the acquisitions of KZKI(TV-30) and WGOT(TV-60).
20
<PAGE> 21
PAXSON COMMUNICATIONS CORPORATION
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 thereunto duly authorized.
Date: August 30, 1995 By: /s/ Lowell W. Paxson
----------------------
Lowell W. Paxson
Chairman of the Board of Directors
and Chief Executive Officer
Date: August 30, 1995 By: /s/ Arthur D. Tek
-------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
21
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 8,409,187
<SECURITIES> 0
<RECEIVABLES> 13,698,767
<ALLOWANCES> 687,516
<INVENTORY> 0
<CURRENT-ASSETS> 24,251,954
<PP&E> 81,707,815
<DEPRECIATION> (15,060,157)
<TOTAL-ASSETS> 194,963,631
<CURRENT-LIABILITIES> (16,405,452)
<BONDS> 0
<COMMON> 34,449
49,742,918
0
<OTHER-SE> 7,296,029
<TOTAL-LIABILITY-AND-EQUITY> (194,963,631)
<SALES> 0
<TOTAL-REVENUES> 23,736,645
<CGS> 0
<TOTAL-COSTS> 32,637,489
<OTHER-EXPENSES> (81,398)
<LOSS-PROVISION> (325,294)
<INTEREST-EXPENSE> 2,514,487
<INCOME-PRETAX> (11,496,729)
<INCOME-TAX> 320,000
<INCOME-CONTINUING> (11,176,729)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,176,729)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> 0
</TABLE>
