<PAGE> 1
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):
May 30, 1996
------------
COMMODORE MEDIA, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
33-92732 13-3034720
- --------------------- -------------------
(Commission File No.) (I.R.S. Employer
Identification No.)
500 Fifth Avenue, Suite 3000, New York, New York 10110
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 302-2727
--------------
(Registrant's telephone number, including area code)
not applicable
- --------------------------------------------------------------------------------
(Former Name of Former Address, if Changed Since Last Report)
Page 1 of 34 Pages
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
NAME STATE OR OTHER Primary IRS Employer
JURISDICTION OF Standard Identification
INCORPORATION Industrial Number
Classification
Number
<S> <C> <C> <C>
Commodore Media of Delaware 4832 51-0286804
Delaware, Inc.
Commodore Media of Delaware 4832 61-0997863
Kentucky, Inc.
Commodore Media of Delaware 4832 23-2207457
Pennsylvania, Inc.
Commodore Media of Delaware 4832 06-1277523
Norwalk, Inc.
Commodore Media of Delaware 4832 59-2813110
Florida, Inc.
Commodore Media of Delaware 4832 13-3356485
Westchester, Inc.
Commodore Holdings, Inc. Delaware 4832 13-3858506
Danbury Broadcasting, Inc. Connecticut 4832 13-3653113
</TABLE>
Page 2 of 34 Pages
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
MEDIA VI:
- Report of Independent Auditors
- Balance Sheets at December 31, 1995 and March 31, 1996
(unaudited)
- Statements of Operations for the year ended December 31, 1995 and
for the three months ended March 31, 1995 (unaudited) and 1996
(unaudited)
- Statements of Partners' Equity for the year ended December 31,
1995 and for the three months ended March 31, 1995 (unaudited)
and 1996 (unaudited)
- Statements of Cash Flows for the year ended December 31, 1995 and
for the three months ended March 31, 1995 (unaudited) and 1996
(unaudited)
- Notes to Financial Statements
Q BROADCASTING:
- Independent Auditors' Report
- Balance Sheets at September 30, 1994 and 1995 and March 31, 1996
(unaudited)
- Statements of Operations and Deficit for the years ended
September 30, 1993, 1994 and 1995, and for the six months ended
March 31, 1995 (unaudited) and 1996 (unaudited)
- Statements of Cash Flows for the years ended September 30, 1993,
1994 and 1995, and for the six months ended March 31, 1995
(unaudited) and 1996 (unaudited)
- Notes to Financial Statements
Page 3 of 34 Pages
<PAGE> 4
(b) Pro Forma Financial Information.
COMMODORE MEDIA:
- Unaudited Pro Forma Consolidated Statement of Operations for the
Twelve Months Ended December 31, 1995.
- Unaudited Pro Forma Consolidated Statement of Operations for the
three months ended March 31, 1996.
- Notes to Unaudited Pro Forma Consolidated Statements of
Operations.
- Unaudited Pro Forma Consolidated Balance Sheet at March 31, 1996.
- Notes to Unaudited Pro Forma Consolidated Balance Sheet.
Page 4 of 34 Pages
<PAGE> 5
REPORT OF INDEPENDENT AUDITORS
The Partners
Media VI
We have audited the accompanying balance sheet of Media VI as of December
31, 1995, and the related statement of operations, partners' equity and cash
flows for the year ended December 31, 1995. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Media VI at December 31,
1995, and the results of its operations and its cash flows for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 26, 1996
Page 5 of 34 Pages
<PAGE> 6
MEDIA VI
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................. $ 57,762 $ 36,635
Accounts receivable, net of allowance for doubtful accounts of
$12,200 in 1995 and $10,600 in 1996........................... 284,941 183,821
Due from Commodore Media, Inc. (Note 1).......................... -- 28,169
Prepaid expenses and other current assets........................ 9,666 8,941
---------- ----------
Total current assets..................................... 352,369 257,566
Property and equipment, at cost less accumulated depreciation...... 782,690 769,065
Intangible assets at cost, less accumulated amortization........... 2,147,258 2,134,434
Other assets....................................................... 1,340 1,340
---------- ----------
Total assets............................................. $3,283,657 $ 3,162,405
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 9,613 $ 21,319
Accrued expenses and other current liabilities................... 54,949 17,477
Current portion of long-term debt................................ 119,185 119,185
---------- ----------
Total current liabilities................................ 183,747 157,981
Long term debt..................................................... 2,152,371 2,122,575
Partners' equity................................................... 947,539 881,849
---------- ----------
Total liabilities and partners' equity................... $3,283,657 $ 3,162,405
========== ==========
</TABLE>
See notes to financial statements.
Page 6 of 34 Pages
<PAGE> 7
MEDIA VI
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Broadcast revenue...................................... $2,131,480 $ 519,981 $ 230,507
Less agency commissions................................ 138,807 34,241 15,117
---------- -------- --------
Net broadcast revenue.................................. 1,992,673 485,740 215,390
Net JSA revenue (Note 1)............................... -- -- 79,893
---------- -------- --------
Net revenue............................................ 1,992,673 485,740 295,283
Operating expenses:
Programming, technical and news...................... 108,591 24,585 23,983
Sales and promotion.................................. 973,219 217,484 125,572
General and administrative........................... 410,528 71,356 94,951
Depreciation and amortization........................ 149,160 38,242 26,450
---------- -------- --------
Income (loss) from operations.......................... 351,175 134,073 24,327
Interest expense, net.................................. (215,966) (57,069) (46,232)
---------- -------- --------
Net income (loss)...................................... $ 135,209 $ 77,004 $ (21,905)
========== ======== ========
</TABLE>
See notes to financial statements.
Page 7 of 34 Pages
<PAGE> 8
MEDIA VI
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
Partners' equity, beginning of period.................. $911,332 $ 911,332 $ 947,539
Net income (loss)...................................... 135,209 77,004 (21,905)
Distributions to partners.............................. (99,002) -- (43,785)
-------- -------- --------
Partners' equity, end of period........................ $947,539 $ 988,336 $ 881,849
======== ======== ========
</TABLE>
See notes to financial statements.
Page 8 of 34 Pages
<PAGE> 9
MEDIA VI
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1995 ---------------------------
------------ 1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...................................... $ 135,209 $ 77,004 $ (21,905)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................ 149,160 38,242 26,450
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable........... (27,328) 20,599 101,120
(Increase) in Due from Commodore Media, Inc.......... (28,169)
(Increase) decrease in prepaid expenses and other
current assets.................................... (572) -- 725
(Decrease) increase in accounts payable.............. (15,044) (23,373) 11,706
Increase (decrease) in accrued expenses and other
current liabilities............................... 16,333 (27,869) (37,472)
--------- -------- --------
Net cash provided by operating activities.............. 257,758 84,603 52,455
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment.................... (8,048) (1,617) --
Proceeds from sale of property and equipment........... 21,936 -- --
--------- -------- --------
Net cash provided by (used in) investing activities.... 13,888 (1,617) --
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners.............................. (99,002) -- (43,786)
Proceeds from debt..................................... 650,000 -- --
Repayment of debt...................................... (854,419) (53,992) (29,796)
--------- -------- --------
Net cash used in financing activities.................. (303,421) (53,992) (73,582)
--------- -------- --------
Net (decrease) increase in cash........................ (31,775) 28,994 (21,127)
Cash, beginning of period.............................. 89,537 89,537 57,762
--------- -------- --------
Cash, end of period.................................... $ 57,762 $ 118,531 $ 36,635
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest................................. $ 206,884 $ 46,538 $ 48,304
========= ======== ========
</TABLE>
See notes to financial statements.
Page 9 of 34 Pages
<PAGE> 10
MEDIA VI
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. NATURE OF BUSINESS AND ORGANIZATION
Media VI (the "Company") was formed under the laws of the State of Florida
as a general partnership, comprised of six general partners for the primary
purpose of owning and operating radio stations WAXE-AM and WAVW-FM located in
Vero Beach/Ft. Pierce, Florida.
In August 1995, the Company acquired substantially all of the assets of
Media 5, Inc. ("Media 5"), consisting primarily of radio station WKQS-FM, in a
business combination between companies under common control, similar to a
pooling of interest, for a 6% interest in the Company. Accordingly, the results
of operations of Media 5 have been included in the Company's statement of
operations for the year ended December 31, 1995.
On February 16, 1996, the Company entered into an Asset Purchase Agreement
(the "Agreement") to sell substantially all of the assets relating to the
operation of WAXE-AM, WAVW-FM and WKQS-FM (collectively, the "Stations") to
Commodore Media, Inc. ("Commodore") for $8,000,000 in cash. Commodore paid an
initial cash deposit of $400,000, which is being held by an escrow agent until
the closing date, which is expected to occur during 1996.
In conjunction with the Agreement, the Company entered into a Joint Sales
Agreement ("JSA") with Commodore. Under the terms of the JSA, Commodore
purchases all available broadcast air time from the Company for a fee of $60,000
per month. Additionally, Commodore assumed responsibility for a majority of the
operating expenses of the Stations. The JSA will terminate upon closing of the
Agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition/Credit Risk
The Company's primary source of revenue is the sale of airtime to
advertisers. Revenue is recorded when the advertisements are broadcast. The
Company provides advertising time to national, regional, and local advertisers
within the geographic areas in which the Company operates. Credit is extended
based on an evaluation of the customer's financial condition; generally, advance
payment is not required. Credit losses are provided for in the financial
statements in the form of an allowance for doubtful accounts.
During the three months ended March 31, 1996, the Company recognized
approximately $80,000 additional revenue related to the JSA with Commodore Media
(Note 1).
Cash is deposited in a major money center financial institution, to which
the Company is exposed to credit risk. At times, deposited amounts may exceed
federally insured limits.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Barter Transactions
Barter transactions represent the exchange of commercial air time for
programming, merchandise or services. These transactions are included in
broadcast revenue and both sales and promotion and general and administrative
expenses at the fair value of the merchandise or services received. Barter
revenue is recorded when advertisements are broadcast and barter expense is
recognized when the merchandise or services are received.
Page 10 of 34 Pages
<PAGE> 11
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
For the year ended December 31, 1995, barter revenue and expense amounted
to $96,651 and $85,103, respectively.
Income Taxes
The Company is not subject to federal or state income taxes. Income or loss
from the Company's operations is included in the determination of taxable income
of the respective partners, pursuant to the terms of the partnership agreement.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided for
using the straight-line method based on the following schedule of estimated
useful lives:
<TABLE>
<CAPTION>
ESTIMATED LIFE
CLASSIFICATION (YEARS)
<S> <C>
Land improvements.............................................. 15
Building and building improvements............................. 31
Furniture, fixtures and equipment.............................. 5
Broadcasting and technical equipment........................... 5-20
Vehicles....................................................... 3-5
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred. Expenditures for betterments and major renewals are capitalized and,
therefore, are included in property and equipment.
Intangible Assets
Intangible assets are being amortized using the straight-line method based
on the following schedule of estimated useful lives:
<TABLE>
<CAPTION>
ESTIMATED LIFE
CLASSIFICATION (YEARS)
<S> <C>
FCC licenses................................................... 40
Goodwill....................................................... 40
Deferred financing costs....................................... 4-7
</TABLE>
It is the Company's policy to account for intangible assets at the lower of
amortized cost or fair value. As part of an ongoing review of the valuation and
amortization of intangible assets, management assesses the carrying value of the
Company's intangible assets if facts and circumstances suggest that it may have
been impaired, If this review indicates that the intangible assets will not be
recoverable as determined by an undiscounted cash flow analysis of the Company
over the remaining amortization period, the carrying value of the Company's
intangible assets would be reduced to its estimated fair value.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed of ("FAS 121"), effective for fiscal years
beginning after December 15, 1995. The new rules establish standards for the
recognition and measurement of impairment losses on long-lived assets and
certain intangible assets. The Company expects the adoption of FAS 121 will not
have a material effect on its financial statements.
Interim Financial Information
Financial information as of and for the three months ended March 31, 1996
and for the three months ended March 31, 1995 is unaudited. In the opinion of
management, all adjustments of a normal and recurring
Page 11 of 34 Pages
<PAGE> 12
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
nature, and those that are necessary for a fair presentation of the results as
of and for such periods, have been included. Interim results are not necessarily
indicative of the results for a full year.
3. ACQUISITION OF MEDIA 5
The separate results of the combining entities prior to the combination for
the seven months ended July 31, 1995 are as follows:
<TABLE>
<CAPTION>
MEDIA VI MEDIA 5
<S> <C> <C>
Net revenue............................................ $960,142 $241,803
Less intercompany transactions......................... 49,360 --
-------- --------
910,782 241,803
======== ========
Net income (loss)...................................... $181,043 $(30,133)
======== ========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Land and land improvements....................................... $ 216,671
Building and building improvements............................... 283,909
Furniture, fixtures and equipment................................ 76,776
Broadcasting and technical equipment............................. 611,101
Vehicles......................................................... 13,300
----------
1,201,757
Less accumulated depreciation.................................... (419,067)
----------
Property, plant and equipment, net............................... $ 782,690
==========
</TABLE>
5. INTANGIBLE ASSETS
Intangible assets consists of the following at December 31, 1995:
<TABLE>
<S> <C>
FCC License...................................................... $2,295,349
Goodwill......................................................... 132,510
Deferred financing costs......................................... 48,617
----------
2,476,476
Less accumulated amortization.................................... (329,218)
----------
Other intangible assets, net..................................... $2,147,258
==========
</TABLE>
Page 12 of 34 Pages
<PAGE> 13
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. LONG-TERM DEBT
At December 31, 1995, the Company's long-term debt consisted of the
following:
<TABLE>
<S> <C>
First Mortgage payable to Barnett Bank of the Treasure Coast (the
"First Mortgage").............................................. $1,675,723
Second Mortgage payable to Barnett Bank of the Treasure Coast
(the "Second Mortgage")........................................ 595,833
----------
2,271,556
Less current maturities.......................................... (119,185)
----------
Total long-term debt............................................. $2,152,371
==========
</TABLE>
The First Mortgage
Principal is being repaid in equal monthly installments of approximately
$2,200, with a lump sum payment of the balance due on May 31, 2002. Interest is
payable monthly at a variable rate equal to the Barnett Bank prime, which
fluctuated from a low of 8.5% to a high of 9% during 1995. The First Mortgage is
secured by an interest in all of the Company's assets and a first mortgage on
all real property owned or subsequently acquired prior to maturity.
The Second Mortgage
Principal is being repaid in equal monthly installments of approximately
$7,700, with the final payment due on May 17, 2002. Interest is payable monthly
at a variable rate equal to Barnett Bank prime, which fluctuated from a low of
8.5% to a high of 9% during 1995. The Second Mortgage is secured by an interest
in all the Company's assets and a second mortgage on all real property.
Aggregate maturities of long-term debt due within the next five years
ending December 31, are as follows:
<TABLE>
<S> <C>
1996............................................................. $ 119,185
1997............................................................. 119,185
1998............................................................. 119,185
1999............................................................. 119,185
2000............................................................. 119,185
Thereafter....................................................... 1,675,631
----------
$2,271,556
==========
</TABLE>
7. LEASE COMMITMENTS
The principle types of property leased by the Company consist of land used
for its broadcast tower, vehicles, computer software and other office equipment.
The Company's minimum lease commitments under all non-cancelable operating
leases are as follows:
<TABLE>
<S> <C>
1996............................................................... $39,408
1997............................................................... 19,171
1998............................................................... 9,828
1999............................................................... 3,259
2000............................................................... 1,200
Thereafter......................................................... 10,800
-------
$83,666
=======
</TABLE>
Page 13 of 34 Pages
<PAGE> 14
MEDIA VI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. LEASE COMMITMENTS--(CONTINUED)
The Company's rental expense, covering the use of a modular office unit,
amounted to approximately $7,800 for the year ended December 31, 1995, and has
been included in general and administrative expenses.
8. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation with
which the Company is currently involved, individually and in the aggregate, is
not material to the Company's financial condition or the results of its
operations.
9. RELATED PARTY TRANSACTIONS
The sole shareholder of one of the Company's general partners is an
attorney employed by a law firm which provides professional services to the
Company on a continuing and regular basis. During 1995, fees of approximately
$14,000 were paid to this firm.
Additionally, the sole shareholder of one of the Company's general partners
is the owner of a local business with which the Company's radio stations conduct
business. During 1995, the Company recorded sales of approximately $7,000
related to advertisements aired for this partner's business.
10. DEFINED CONTRIBUTION RETIREMENT PLAN
The Company has a 401(k) Plan (the "Plan") for the benefit of all
employees. Participants may elect to contribute a percentage of their annual
compensation to the Plan, subject to applicable Internal Revenue Service
limitations. The Company makes a matching contribution to the Plan, not to
exceed 1% of the employees' contributions. The employer's share of the
contributions vest according to a predetermined schedule. Total contributions
made by the Company for the year ended December 31, 1995 amounted to $9,181.
Page 14 of 34 Pages
<PAGE> 15
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Q Broadcasting, Inc.
Stamford, Connecticut
We have audited the accompanying balance sheets of Q Broadcasting, Inc. as
of September 30, 1995 and 1994 and the related statements of operations and
deficit and cash flows for each of the three years in the period ended September
30, 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present
fairly, in all material respects, the financial position of Q Broadcasting, Inc.
as of September 30, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995,
in conformity with generally accepted accounting principles.
HOLTZ RUBENSTEIN & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
Melville, New York
February 12, 1996
Page 15 of 34 Pages
<PAGE> 16
Q BROADCASTING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 56,327 $ 831 $ 1,300
Accounts receivable, less allowance for doubtful
accounts of $55,000 in 1994, $58,000 in 1995
and $58,000 as of March 31, 1996............... 652,416 510,971 640,322
Prepaid expenses and other current assets......... 54,288 53,951 94,744
Due from related parties (Note 4)................. 35,433 72,880 46,925
----------- ----------- -----------
Total current assets...................... 798,464 638,633 783,291
PROPERTY AND EQUIPMENT, net (Notes 5 and 7)......... 523,025 407,292 328,517
INTANGIBLES, net (Notes 6 and 8).................... 2,633,683 2,375,195 2,308,451
OTHER ASSETS........................................ 57,131 39,168 37,262
----------- ----------- -----------
$ 4,012,303 $ 3,460,288 $ 3,457,521
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.................................. $ 70,116 $ 124,646 $ 210,443
Accrued expenses.................................. 113,151 159,316 148,503
Current portion of capital lease obligations
(Notes 5 and 7)................................ 8,695 6,183 5,098
----------- ----------- -----------
Total current liabilities................. 191,962 290,145 364,044
----------- ----------- -----------
CAPITAL LEASE OBLIGATIONS (Notes 5 and 7)........... 10,161 3,981 1,519
----------- ----------- -----------
NOTE PAYABLE--STOCKHOLDERS (Note 9)................. 6,027,893 6,995,290 7,688,074
----------- ----------- -----------
COMMITMENTS (Note 8)
STOCKHOLDERS' DEFICIT:
Common stock, no par value, 1,000 shares
authorized, issued and outstanding............. 1,000 1,000 1,000
Additional paid-in capital........................ 999,000 999,000 999,000
Deficit........................................... (3,217,713) (4,829,128) (5,596,116)
----------- ----------- -----------
(2,217,713) (3,829,128) (4,596,116)
----------- ----------- -----------
$ 4,012,303 $ 3,460,288 $ 3,457,521
=========== =========== ===========
</TABLE>
See notes to financial statements.
Page 16 of 34 Pages
<PAGE> 17
Q BROADCASTING, INC.
STATEMENTS OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
REVENUE......................... $ 1,511,181 $ 2,267,625 $ 2,508,867 $ 1,181,990 $ 1,690,948
Less: Commissions and fees.... 127,866 193,342 222,411 105,714 144,633
------------ ------------ ------------ ------------ ------------
1,383,315 2,074,283 2,286,456 1,076,276 1,546,315
------------ ------------ ------------ ------------ ------------
EXPENSES:
Broadcast and production (Note
8)......................... 715,511 742,018 786,377 361,014 607,182
Selling and promotion......... 844,004 880,429 1,500,873 647,172 967,285
General and administrative
(Note 8)................... 764,768 703,908 823,312 361,744 352,108
Depreciation and
amortization............... 637,397 538,600 447,602 158,568 152,600
------------ ------------ ------------ ------------ ------------
2,961,680 2,864,955 3,558,164 1,528,498 2,079,175
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS............ (1,578,365) (790,672) (1,271,708) (452,222) (532,860)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (Note 9)..... (257,732) (438,647) (493,578) (240,384) (295,784)
Other, net.................... 13,705 51,805 153,871 76,963 61,656
------------ ------------ ------------ ------------ ------------
(244,027) (386,842) (339,707) (163,421) (234,128)
------------ ------------ ------------ ------------ ------------
NET LOSS........................ (1,822,392) (1,177,514) (1,611,415) (615,643) (766,988)
DEFICIT, beginning of period.... (217,807) (2,040,199) (3,217,713) (3,217,713) (4,829,128)
------------ ------------ ------------ ------------ ------------
DEFICIT, end of period.......... $(2,040,199) $(3,217,713) $(4,829,128) $(3,833,356) $(5,596,116)
============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
Page 17 of 34 Pages
<PAGE> 18
Q BROADCASTING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, MARCH 31,
--------------------------------------- ---------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss......................... $(1,822,392) $(1,177,514) $(1,611,415) $(615,643) $(766,988)
----------- ----------- ----------- --------- ---------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and
amortization................ 637,397 538,600 447,602 158,568 152,600
Provision for doubtful
accounts.................... 25,150 75,655 29,702 -- --
Changes in operating assets
and liabilities:
(Increase) decrease in
assets:
Accounts receivable...... (9,557) (444,619) 111,743 131,467 (129,351)
Prepaid expenses and
other current assets... (690) (196) 337 (70,952) (40,793)
Other assets............. (3,853) (25,309) 17,963 (201) 1,906
(Decrease) increase in
liabilities:
Accounts payable......... (22,712) 14,456 54,530 (39,679) 85,797
Accrued expenses......... (31,444) 12,009 46,165 38,259 (10,813)
----------- ----------- ----------- --------- ---------
Total adjustments............. 594,291 170,596 708,042 217,462 59,346
----------- ----------- ----------- --------- ---------
Net cash used in operating
activities.................. (1,228,101) (1,006,918) (903,373) (398,181) (707,642)
----------- ----------- ----------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment..................... (91,532) (23,118) (73,381) (995) (7,081)
----------- ----------- ----------- --------- ---------
Net cash used in investing
activities.................. (91,532) (23,118) (73,381) (995) (7,081)
----------- ----------- ----------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal repayment of note
payable....................... (327,719) -- -- -- --
Repayment of capital lease
obligations................... (8,585) (9,823) (8,692) (5,841) (3,547)
Loans from stockholders.......... 1,632,185 1,111,592 967,397 317,374 692,784
Loans to related parties......... -- (35,433) (37,447) 35,433 25,955
----------- ----------- ----------- --------- ---------
Net cash provided by financing
activities.................. 1,295,881 1,066,336 921,258 346,966 715,192
----------- ----------- ----------- --------- ---------
Net (decrease) increase in cash and
cash equivalents................. (23,752) 36,300 (55,496) (52,210) 469
Cash and cash equivalents at
beginning of period.............. 43,779 20,027 56,327 56,327 831
----------- ----------- ----------- --------- ---------
Cash and cash equivalents at end of
period........................... $ 20,027 $ 56,327 $ 831 $ 4,117 $ 1,300
=========== =========== =========== ========= =========
</TABLE>
See notes to financial statements.
Page 18 of 34 Pages
<PAGE> 19
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995
AND THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996
(INFORMATION WITH RESPECT TO THE SIX MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)
1. DESCRIPTION OF ORGANIZATION AND BUSINESS:
Q Broadcasting, Inc. (the "Company") owns and operates two radio broadcast
stations in Stamford, Connecticut. These stations, WSTC-AM and WKHL-FM,
principally serve the Stamford metropolitan area.
2. BASIS OF PRESENTATION:
The financial statements have been prepared on a going concern basis which
contemplates continuity of operations and realization of assets and liquidation
of liabilities in the ordinary course of business. The Company's ability to
continue as a going concern is dependent upon the continued financial support of
its shareholders.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Revenue recognition
Broadcasting revenue is recognized when commercials are aired. Barter
transactions are recorded at the estimated fair value of the merchandise or
services received.
b. Depreciation
The Company provides for depreciation using the declining balance method
over the estimated useful lives of the fixed assets as follows:
<TABLE>
<S> <C>
Broadcast and other equipment....................................... 5 years
Tower and antenna systems........................................... 7 years
Transmitter equipment............................................... 7 years
Furniture and fixtures.............................................. 7 years
</TABLE>
c. Amortization
The Company provides for amortization using the straight-line method over
the estimated useful lives of the intangible assets as follows:
<TABLE>
<S> <C>
Broadcast license.................................................. 25 years
Transmitter lease.................................................. 23 years
Covenant not to compete............................................ 3 years
Organizational costs............................................... 5 years
</TABLE>
d. Income taxes
The shareholders of the Company elected to be taxed as a "Small Business
Corporation," for federal and state income tax purposes pursuant to the Internal
Revenue Code. As a result of this election, the income of the Company will be
taxed directly to the individual shareholders. Accordingly, no provision for
taxes is included in the financial statements of the Company.
e. Statement of cash flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
Page 19 of 34 Pages
<PAGE> 20
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)
f. Advertising
The Company charges to expense, advertising costs as incurred. Advertising
costs amounted to $227,094, $41,405 and $112,226 for the years ended September
30, 1993, 1994 and 1995, respectively and $17,168 and $23,972 for the six months
ended March 31, 1995 and 1996, respectively.
g. Interim financial statements
The unaudited financial statements as of March 31, 1996 and for the six
months ended March 31, 1995 and 1996 reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the period. The results of operations
are not necessarily indicative of the results expected for the fiscal year.
4. DUE FROM RELATED PARTIES:
The Company advanced funds on behalf of three related entities.
Approximately $16,800 and $54,200 for two entities 100% owned by the Company's
owners as of September 30, 1994 and 1995, respectively and approximately $18,700
to an entity which the Company's owners have a minority interest as of September
30, 1994 and 1995. As of March 31, 1996 these receivables amounted to
approximately $18,700 and $28,200, respectively.
5. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
------------------------- 1996
1994 1995 -----------
(unaudited)
<S> <C> <C> <C>
Broadcast and office equipment................. $ 583,853 $ 586,269 $ 586,269
Tower and antenna systems...................... 268,000 268,000 268,000
Transmitter equipment.......................... 75,000 75,000 75,000
Furniture and fixtures......................... 229,519 300,484 307,565
---------- ---------- ----------
1,156,372 1,229,753 1,236,834
Less accumulated depreciation.................. 633,347 822,461 908,317
---------- ---------- ----------
$ 523,025 $ 407,292 $ 328,517
========== ========== ==========
</TABLE>
Included in furniture and fixtures was $41,975 related to assets recorded
under capital leases; the related amount included in accumulated depreciation is
$19,095 and $28,707 as of September 30, 1994 and 1995 and $33,513 as of March
31, 1996.
Page 20 of 34 Pages
<PAGE> 21
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. INTANGIBLES:
Intangibles, at cost, is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
------------------------- 1996
1994 1995 ----------
(unaudited)
<S> <C> <C> <C>
Organizational costs........................... $ 97,917 $ 97,917 $ 97,917
Covenant not to compete........................ 450,000 450,000 450,000
Broadcast license.............................. 1,000,000 1,000,000 1,000,000
Transmitter lease.............................. 1,700,000 1,700,000 1,700,000
---------- ---------- ----------
3,247,917 3,247,917 3,247,917
Less accumulated amortization.................. 614,234 872,722 939,466
---------- ---------- ----------
$2,633,683 $2,375,195 $2,308,451
========== ========== ==========
</TABLE>
7. CAPITAL LEASE OBLIGATIONS:
Included in property and equipment are assets recorded under capital
leases. The future minimum lease payments for these capital leases and the
present value of the net minimum lease payments as of September 30, 1995 are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
<S> <C>
1996............................................................. $ 6,826
1997............................................................. 4,168
-------
Minimum lease payments............................................. 10,994
Less amount representing interest.................................. 830
-------
Present value of net minimum lease payments........................ $10,164
=======
</TABLE>
8. COMMITMENTS:
The Company leases studio and office space and a transmitter tower site
under operating leases expiring in September 1999 and December 2017,
respectively. Rent expense for these leases was approximately $179,000, $186,000
and $211,000 for the years ended September 30, 1993, 1994 and 1995,
respectively. Rent expense for these leases was approximately $110,000 for the
six months ended March 31, 1995 and 1996.
Minimum rental commitments for the remaining terms of the operating leases
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
<S> <C>
1996......................................................... $212,685
1997......................................................... 213,180
1998......................................................... 213,180
1999......................................................... 213,180
2000......................................................... 21,780
Thereafter........................................................ 430,939
</TABLE>
9. NOTE PAYABLE--STOCKHOLDERS:
In connection with advances made by its stockholders for the acquisition of
assets and working capital, the Company has issued an 8% demand note payable to
its stockholders. The stockholders have agreed not to demand payment until a
date subsequent to October 1, 1996. Interest expense for the years ended
Page 21 of 34 Pages
<PAGE> 22
Q BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9. NOTE PAYABLE--STOCKHOLDERS--(CONTINUED)
September 30, 1993, 1994 and 1995 was $238,187, $435,895 and $492,397,
respectively. Interest expense for the six months ended March 31, 1995 and 1996
was $240,384 and $295,784, respectively.
10. SUBSEQUENT EVENT:
The Company has entered into a letter of intent for the sale of
substantially all of its operating assets.
11. SUPPLEMENTARY INFORMATION--STATEMENT OF CASH FLOWS:
Barter transactions resulted in sales and related expenses of $306,600,
$314,500 and $315,900 for the years ending September 30, 1993, 1994 and 1995,
respectively. Barter transactions resulted in sales and related expenses of
$105,455 and $121,930 for the six months ended March 31, 1995 and 1996,
respectively.
Cash paid during the years ended September 30, 1993, 1994 and 1995 for
interest was $261,018, $438,648 and $493,578, respectively. Cash paid during the
six months ended March 31, 1995 and 1996 for interest was $137,526 and $-0-,
respectively.
Page 22 of 34 Pages
<PAGE> 23
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Pro Forma Consolidated Statement of Operations for the twelve
months ended December 31, 1995 presents the statement of operations of Commodore
Media, Inc. (the "Company") as if (i) the issuance of 13 1/4 % Senior
Subordinated Notes, due 2003, and Warrants to purchase 75,500 shares of Class A
Common Stock (the "Recapitalization Transactions"), (ii) the issuance of Senior
Exchangeable Redeemable Preferred Stock, Series A, $.01 par value per share (the
"Preferred Stock Offering"), (iii) borrowings from the AT&T Commercial Finance
Corporation (the "Senior Credit Facility") and (iv) the acquisition of Danbury
Broadcasting, Inc. (the "Danbury Acquisition"), Hudson Valley Growth, L.P. (the
"Westchester Acquisition"), Media VI (the "Treasure Coast Acquisition") and Q
Broadcasting, Inc. (the "Stamford Acquisition") (collectively, the
"Acquisitions") had occurred on January 1, 1995. The Unaudited Consolidated Pro
Forma Statement of Operations for the three months ended March 31, 1996 presents
the statement of operations of the Company as if the Recapitalization
Transactions, the Preferred Stock Offering, the Senior Credit Facility and the
Acquisitions had occurred on January 1, 1995. The Unaudited Pro Forma
Consolidated Balance Sheet at March 31, 1996 presents the balance sheet of the
Company as if the Preferred Stock Offering, the Senior Credit Facility, the
Treasure Coast Acquisition and the Stamford Acquisition had occurred on March
31, 1996.
The Acquisitions have been accounted for using the purchase method of
accounting. The total cost of such Acquisitions has been allocated to the
tangible and intangible assets acquired and liabilities assumed based on their
respective fair values. The allocation of the respective purchase prices assumed
in the pro forma financial statements is preliminary. The Company does not
expect that the final allocation of the purchase price will materially differ
from the preliminary allocation.
The pro forma adjustments are based on available information and on certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma consolidated financial information should be read in conjunction
with the Company's Consolidated Financial Statements and Notes thereto, as well
as the Financial Statements and Notes thereto of Danbury Broadcasting, Inc.,
(included in the Form 8-KA filed June 10, 1996), Q Broadcasting, Inc. and Media
VI, (included elsewhere in this filing). The pro forma statement of operations
data are not necessarily indicative of the results that would have occurred if
the Recapitalization Transactions, the Preferred Stock Offering, the Senior
Credit Facility and the Acquisitions had occurred on the date indicated, nor are
they indicative of the Company's future results of operations.
Page 23 of 34 Pages
<PAGE> 24
COMMODORE MEDIA, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, 1995
------------------------------------------------------
Treasure
Commodore Westchester Danbury Coast
Media, Inc. Acquisition Acquisition (a) Acquisition
------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenue $ 33,653 $ 714 $ 2,734 $2,131
Less: agency commissions (2,858) (37) (247) (139)
-------- ----- ------- ------
Net revenue 30,795 677 2,487 1,992
Station operating expenses 19,033 601 1,896 1,492
Corporate expenses 2,051 0 369 0
Depreciation and amortization 1,926 172 432 149
Long-term incentive compensation 2,007 0 0 0
-------- ----- ------- ------
Operating income (loss) 5,778 (96) (210) 351
Interest expense, net 7,000 128 296 216
Other expenses (income) 434 (43) (26) 0
-------- ----- ------- ------
Net (loss) income before income taxes
and extraordinary item (1,656) (181) (480) 135
Income taxes 140 0 0 0
-------- ----- ------- ------
Net (loss) income before extraordinary item $ (1,796) $(181) $ (480) $ 135
======== ===== ======= ======
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, 1995
-------------------------------------
Stamford Pro Forma
Acquisition (b) adjustments Combined
-------------------------------------
<S> <C> <C> <C>
Total revenue $ 3,044 $ $42,276
Less: agency commissions (224) (3,505)
-------- -------
Net revenue 2,820 38,771
Station operating expenses 3,496 (1,799)(c) 24,719
Corporate expenses 0 95 (d) 2,146
(369)(d)
Depreciation and amortization 444 (161)(e) 2,962
Long-term incentive compensation 0 2,007
-------- -------
Operating income (loss) (1,120) 6,937
Interest expense, net 518 1,168 (f) 10,632
2,464 (g)
(1,158)(h)
Other expenses (income) 0 35 (i) 620
220 (j)
-------- -------
Net (loss) income before income taxes
and extraordinary item (1,638) (4,315)
Income taxes 0 140
-------- -------
Net (loss) income before extraordinary item $ (1,638) $(4,455)
======== =======
</TABLE>
Page 24 of 34 Pages
<PAGE> 25
COMMODORE MEDIA, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
---------------------------------------------------------------------
Treasure
Commodore Coast Stamford Pro Forma Pro Forma
Media, Inc.(k) Acquisition(l) Acquisition Adjustments Combined
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenue $ 8,048 $310 $ 707 $ $ 9,065
Less: agency commissions (632) (15) (58) (705)
-------- ----- ------ --------
Net revenue 7,416 295 649 8,360
Station operating expenses 5,375 245 852 (624)(c) 5,848
Corporate expenses 466 0 0 24 (d) 490
Depreciation and amortization 480 26 76 157 (m) 739
-------- ----- ------ --------
Operating income (loss) 1,095 24 (279) 1,283
Interest expense, net 2,336 46 148 292 (n) 2,799
171 (o)
(194)(h)
Other expenses (income) 168 0 0 32 (p) 200
-------- ----- ------ --------
Net loss before income taxes
and extraordinary item (1,409) (22) (427) (1,716)
Income taxes 27 0 0 27
-------- ----- ------ --------
Net loss before extraordinary item $(1,436) $(22) $(427) $(1,743)
======== ===== ====== ========
</TABLE>
Page 25 of 34 Pages
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(a) Reflects the historical statement of operations of the Danbury
Acquisition. The Danbury Acquisition operated on a June 30 fiscal year
end. The historical statement of operations included in the unaudited
pro forma consolidated statement of operations, however, has been
prepared on a calendar year basis based on the unaudited quarterly
financial statements of the Danbury Acquisition.
(b) Reflects the historical statement of operations of the Stamford
Acquisition. The Stamford Acquisition operated on a September 30 fiscal
year end. The historical statement of operations included in the
unaudited pro forma consolidated statement of operations, however, has
been prepared on a calendar year basis based on the unaudited quarterly
financial statements of the Stamford Acquisition.
(c) Cost savings expected to be realized by combining duplicative
programming, general and administrative functions and sales
responsibilities in markets with multiple stations, commission
reduction, facilities consolidation and reductions in professional fees
due to consolidation.
(d) Corporate and general administrative expenses have been incrementally
adjusted due to the Acquisitions.
(e) To reflect reduced depreciation and amortization (net) related to the
Acquisitions due to differences arising from the purchase price
allocation and changes in accounting policy, according to the
following (dollars in thousands):
<TABLE>
<S> <C>
Reduced pro forma depreciation and amortization
expense due to differences in accounting policy $(486)
Incremental pro forma depreciation and
amortization expense due to purchase price
allocation 325
-----
$(161)
=====
</TABLE>
(f) To reflect adjustment to interest expense associated with the financing
of the Danbury and Westchester Acquisitions. The Company used $6.7
million of available cash and financed the remaining $8.2 million of
the purchase price with funds obtained from the Senior Credit Facility.
Pro forma interest expense, net, associated with the transaction is as
follows (dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense related to financed
portion of purchase price ($8.2 million, 9.74%, 12 months) $ 799
Interest income forfeited due to available cash used to fund
purchase price ($6.7 million, 5.5%, 12 months) 369
------
$1,168
======
</TABLE>
Page 26 of 34 Pages
<PAGE> 27
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(g) To reflect the adjustment to interest expense associated with the
Recapitalization Transactions as well as the financing of the Treasure
Coast and Stamford Acquisitions. The Company used $1.05 million of
available cash, $9.9 million of proceeds received from the issuance of
the Preferred Stock Offering and $6.45 million of advances received
from the Senior Credit Facility to fund these purchases. Pro forma
interest expense, net, associated with the above is as follows (dollars
in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense related to the
Recapitalization Transactions $2,773
Elimination of interest expense related to the
Company's debt retired in 1995 as part of the
Recapitalization Transaction (995)
Incremental pro forma interest expense due to financed
portion of purchase price ($6.45 million, 9.74%,
12 months) 628
Interest income forfeited due to available cash used to
fund purchase price ($1.05 million, 5.5%, 12 months) 58
------
$2,464
======
</TABLE>
(h) To eliminate interest on debt not assumed by the Company.
(i) Elimination of non-operating income that is not expected to be realized
by the Company.
(j) To reflect incremental amortization expense of deferred financing fees
as follows (dollars in thousands):
<TABLE>
<S> <C>
Amortization of deferred financing fees related to
debt retired during 1995 $(69)
Incremental pro forma amortization of deferred
financing fees associated with the Senior Credit
Facility 129
Incremental pro forma amortization of deferred
financing fees associated with Recapitalization
Transactions 160
----
$220
====
</TABLE>
Page 27 of 34 Pages
<PAGE> 28
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(k) The Company had been operating the Danbury and Westchester Acquisitions
under a Local Marketing Agreement ("LMA") since October 30, 1995 and,
therefore, has included actual results of operations in its
consolidated statement of operations for the three months ended March
31, 1996.
(l) The Company had been operating the Treasure Coast Acquisition under an
LMA since February 19, 1996 and, therefore, has included actual results
of operations in its consolidated statement of operations since that
date.
(m) To reflect incremental depreciation and amortization (net) related to
the Acquisitions due to differences arising from the purchase price
allocation and changes in accounting policy, according to the
following (dollars in thousands):
<TABLE>
<S> <C>
Reduced pro forma depreciation and amortization expense due to
differences in accounting policy $(80)
Incremental pro forma depreciation and amortization expense
due to purchase price allocation 237
----
$157
====
</TABLE>
(n) To reflect adjustment to interest expense associated with the purchase
of the Danbury and Westchester Acquisitions, as stated in adjustment
(f). Pro forma net interest expense associated with the transaction is
as follows (dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense related to financed
portion of purchase price ($8.2 million, 9.74%, 3 months) $200
Interest income forfeited due to available cash used to fund
purchase price ($6.7 million, 5.5%, 3 months) 92
----
$292
====
</TABLE>
Page 28 of 34 Pages
f
<PAGE> 29
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(o) To reflect adjustment to interest expense associated with the purchase
of the Treasure Coast and Stamford Acquisitions, as stated in
adjustment (g). Pro forma net interest expense associated with the
transaction is as follows (dollars in thousands):
<TABLE>
<S> <C>
Incremental pro forma interest expense due to financed portion
of purchase price ($6.45 million, 9.74%, 3 months) $157
Interest income forfeited due to available cash used to fund
purchase price ($1.05 million, 5.5%, 3 months) 14
----
$171
====
</TABLE>
(p) To reflect incremental pro forma amortization expense of deferred
financing fees associated with the Senior Credit Facility.
Page 29 of 34 Pages
<PAGE> 30
COMMODORE MEDIA, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
---------------------------------------------------------------------
Treasure
Commodore Coast Stamford Pro Forma Pro Forma
Media, Inc.(a) Acquisition Acquisition Adjustments Combined
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 5,087 $ 36 $ 1 $(18,250)(b) $ 4,037
900 (b)
(37)(b)
9,850 (c)
6,450 (d)
Accounts receivable, net 4,908 212 640 (852)(b) 4,908
Prepaid expenses and other current assets 453 9 142 (151)(b) 453
---------- ------- ---------- --------- ---------
Total current assets 10,448 257 783 (2,090) 9,398
Property, plant and equipment, net 10,016 769 329 11,114
FCC licenses and goodwill, net 35,213 2,135 2,308 12,709 (b) 52,365
Other intangible and other assets, net 7,534 1 37 (38)(b) 6,634
(900)(b)
---------- ------- ---------- --------- ---------
Total assets $ 63,211 $3,162 $ 3,457 $ 9,681 $ 79,511
========== ======= ========== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Accounts payable and accrued liabilities $ 4,386 $ 39 $ 359 $ (398)(b) $ 4,386
Current portion of long-term debt 12 119 5 (124)(b) 12
---------- ------- ---------- --------- ---------
Total current liabilities 4,398 158 364 (522) 4,398
Long-term debt 74,466 2,122 7,689 (9,811)(b) 80,916
6,450 (d)
Noncurrent compensation 1,463 0 0 1,463
Note payable, officer 1,175 0 0 1,175
Deferred income taxes 1,700 0 0 1,700
Preferred stock 9,850 (c) 9,850
Stockholders' equity (deficit) (19,991) 882 (4,596) 3,714 (b) (19,991)
---------- ------- ---------- --------- ---------
Total liabilities and
stockholders' equity (deficit) $ 63,211 $3,162 $ 3,457 $ 9,681 $ 79,511
========== ======= ========== ========= =========
</TABLE>
Page 30 of 34 Pages
<PAGE> 31
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) The Danbury and Westchester Acquisitions both closed on March 27, 1996
and are, therefore, reflected in the Company's financial position as of
March 31, 1996.
(b) To reflect the purchase of the Treasure Coast Acquisition and the
Stamford Acquisition, as well as the preliminary allocation of the
purchase price, including fees and expenses of $750,000:
<TABLE>
<S> <C>
Treasure Coast Acquisition................ $ 8,000,000
Stamford Acquisition...................... 9,500,000
------------
Total................................ 17,500,000
Fees and expenses......................... 750,000
-----------
Total................................ $18,250,000
===========
</TABLE>
Deposits totaling $900,000 had been paid for the Stamford Acquisition
and the Treasure Coast Acquisition, and will be applied towards the
purchase price or returned to the Company at the respective closings.
The allocation of purchase price and elimination of the assets not
acquired and the liabilities not assumed in connection with the
Treasure Coast Acquisition and the Stamford Acquisition is as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Allocation of
Purchase Carrying
Price Value Adjustment
------------- -------- ----------
<S> <C> <C> <C>
ASSETS:
Cash $ 0 $ 37 $ (37)
Accounts receivable, net 0 852 (852)
Prepaid expense and other
current assets 0 151 (151)
Property, plant and equipment, net 1,098 1,098 0
Intangible assets, net 17,152 4,443 12,709
Other assets 0 38 (38)
-------- -------- --------
Total assets $ 18,250 $ 6,619 $ 11,631
======== ======== ========
LIABILITIES:
Accounts payable and accrued
expenses 0 398 (398)
Current portion of long-term debt 0 124 (124)
Long-term debt 0 9,811 (9,811)
-------- -------- --------
Net assets $ 18,250 $ (3,714) $ 21,964
======== ======== ========
Stockholders' equity $ (3,714) $ 3,714
======== ========
</TABLE>
Page 31 of 34 Pages
<PAGE> 32
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (CONTINUED)
The preliminary allocation of purchase price may change upon final
determination of the fair value of net assets acquired.
(c) To reflect proceeds totaling $9,850,000 (net of estimated fees and
expenses) received from the Preferred Stock Offering.
(d) To reflect funds totaling $6,450,000 received from the Senior Credit
Facility.
Page 32 of 34 Pages
<PAGE> 33
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.
Dated: August 9, 1996
COMMODORE MEDIA, INC.
(Registrant)
By: /s/ Bruce A. Friedman
--------------------------
Bruce A. Friedman
President and
Chief Executive Officer
(principal executive
officer)
By: /s/ James J. Sullivan
--------------------------
James J. Sullivan
Chief Financial Officer
(principal financial
and accounting officer)
Page 33 of 34 Pages
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Additional Registrants have duly caused this report to be signed on their
behalf by the undersigned hereunto duly authorized.
Dated: August 9, 1996
Commodore Media of Delaware, Inc.,
a Delaware corporation
Commodore Media of Kentucky, Inc.,
a Delaware corporation
Commodore Media of Pennsylvania, Inc.,
a Delaware corporation
Commodore Media of Norwalk, Inc.,
a Delaware corporation
Commodore Media of Florida, Inc.,
a Delaware corporation
Commodore Media of Westchester, Inc.,
a Delaware corporation
Commodore Holdings, Inc.,
a Delaware corporation
Danbury Broadcasting, Inc.,
a Connecticut corporation
By: /s/ Bruce A. Friedman
-------------------------------
Bruce A. Friedman
President and
Chief Executive Officer
(principal executive officer)
By: /s/ James J. Sullivan
-------------------------------
James J. Sullivan
Chief Financial Officer
(principal financial and
accounting officer)
Page 34 of 34 Pages
