<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):November 22, 1996
TRIATHLON BROADCASTING COMPANY
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-26530 33-0668235
--------------------------- -------------------- -------------------
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
Symphony Towers, 750 B Street, Suite 1920, San Diego, CA 92101
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 239-4242
---------------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired or to be acquired.
The audited financial statements for the radio stations acquired from Pourtales
for the years ended December 31, 1995 and 1994 are set forth in the Prospectus
dated March 4, 1996 contained in the Registration Statement filed by the
Company with the Securities and Exchange Commission (File No. 333-1186), which
is incorporated herein by reference. The unaudited financial information of
Pourtales as of September 30, 1996 and for the nine months ended September 30,
1996 and 1995 follows.
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIPS)
CONDENSED COMBINED BALANCE SHEETS
SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash ........................................................... $ 26,125
Accounts receivable - net of allowance for doubtful accounts of
$158,654 ................................................ 12,704
Prepaid expenses and other current assets ...................... 261,515
----------
Total Current Assets ........................................ 300,344
PROPERTY AND EQUIPMENT - net of accumulated
depreciation of $1,786,144 1,427,763
OTHER ASSETS:
License costs - net of accumulated amortization of
$1,169,732 ................................................ 5,250,479
Non-compete agreements - net of accumulated amortization of
$1,579,511 ................................................ 60,000
Other .......................................................... 13,678
----------
$7,052,264
==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities ....................... $ 593,923
----------
Total Current Liabilities ................................... 593,923
SHARE OF LOSSES OF PARTNERSHIP IN EXCESS OF
INVESTMENT ................................................. 3,058,442
PAYABLE TO RELATED PARTIES ........................................ 5,264,458
LONG-TERM DEBT .................................................... 100,000
COMMITMENTS AND CONTINGENCIES (NOTES 2, 5 & 6) .................... --
STOCKHOLDERS' DEFICIENCY:
Preferred Stock ................................................ 4,753,920
Common Stock ................................................... 4,988
Additional Paid-in Capital ..................................... 2,025,030
Accumulated Deficit ............................................ (8,748,497)
----------
Stockholders' Deficiency . ................................. (1,964,559)
----------
$7,052,264
==========
</TABLE>
SEE NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIPS)
CONDENSED COMBINED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
REVENUE:
Broadcasting .................... $1,668,837 $7,182,601
Less commissions and fees ....... 90,867 1,106,806
---------- ----------
Net revenue ................ 1,577,970 6,075,795
---------- ----------
COSTS AND EXPENSES:
Broadcasting .................... 833,921 2,286,449
Sales and advertising ........... 153,225 1,296,737
General and administrative ...... 524,817 1,341,041
Depreciation and amortization ... 554,109 875,314
Management fees to affiliate .... 609,229 665,547
Other ........................... 99,640 59,182
---------- ----------
Total ...................... 2,774,941 6,524,270
---------- ----------
LOSS FROM OPERATIONS ............... (1,196,971) (448,475)
INTEREST EXPENSE ................... 103,311 113,982
SHARE OF LOSSES IN PARTNERSHIP ..... 606,752 1,200,871
---------- ----------
NET LOSS ........................... (1,907,034) (1,763,328)
ACCUMULATED DEFICIENCY, BEGINNING OF
PERIOD .......................... (6,841,463) (4,755,053)
---------- ----------
ACCUMULATED DEFICIENCY, END OF PERIOD $(8,748,497) $(6,518,381)
========== ==========
</TABLE>
SEE NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIPS)
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1996 1995
---- ----
(UNAUDITED)
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ...................................................... $(1,907,034) $(1,763,328)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Share of losses in partnership ............................. 606,752 1,200,871
Depreciation and amortization .............................. 554,109 875,314
Changes in operating assets and liabilities:
Accounts receivable ..................................... 1,460,999 118,630
Prepaid expenses and other current assets ............... (49,202) 39,032
Accounts payable and accrued liabilities ................ (744,241) 24,690
----------- -----------
Net cash (used in) provided by operating activities . (78,617) 495,209
----------- -----------
INVESTING ACTIVITIES:
Purchases of property and equipment ............................ (25,033) (140,195)
---------- ----------
Net cash used in investing activities ..................... (25,033) (140,195)
----------- -----------
FINANCING ACTIVITIES:
Payments on borrowings ......................................... (1,202,424) (180,000)
Advances to (from) related parties ............................. 1,240,124 (282,914)
----------- -----------
Net cash provided by (used in) financing activities ....... 37,700 (462,914)
----------- -----------
NET DECREASE IN CASH ............................................. (65,950) (107,900)
CASH:
Beginning of period ........................................... 92,075 228,223
----------- -----------
End of period ................................................. $ 26,125 $ 120,323
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Advance to related party for transfer of property and
equipment ................................................ $ 436,061
Note issued for property and equipment ....................... $ 50,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest ....................................... $ 68,299 $ 112,056
</TABLE>
SEE NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIP)
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS - UNAUDITED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Springs Radio, Inc. (Springs Radio), KVUU/KSSS, Inc.
(KVUU/KSSS), KOTY-FM, Inc. (KOTY), KEYF Corporation (KEYF) and Fourth Street
Broadcasting, Inc. (Fourth Street) (together, the "Companies") were
incorporated from 1990 through 1992 for the purpose of owning and
operating radio stations in Colorado Springs, Colorado and in Kennewick and
Spokane, Washington and are affiliated directly or indirectly through common
ownership. Springs Radio is a wholly owned subsidiary of Pourtales Holdings,
Inc. (PHI). The Companies acquired radio stations KVOR-AM, KSPZ-FM, KVUU-FM,
KTWK-AM (formerly KSSS-AM), KTCR-AM, KEGX-FM (formerly KOTY-FM), KEYF-AM,
KEYF-FM, KUDY-AM and KKZX-FM. KOTY (effective February 1, 1994), KEYF
(effective May 1, 1994) and Fourth Street (effective May 1, 1994) contributed
their radio stations' operating assets, along with their liabilities, to
Pourtales Radio Partnership (the "Partnership") (see Note 2). The Partnership
acquired radio station KEYN-FM, which operates in Wichita, Kansas, effective
May 1, 1994. The Partnership accounts for the operations of radio stations
KTCR/KEGX; KEYF-AM and KEYF-FM; KUDY/KKZX; and KEYN-FM (together, the
"Divisions") as four separate divisions of the Partnership. The accompanying
combined financial statements reflect the operating activities of Springs Radio
and KVUU/KSSS and radio stations KTCR, KEGX, KEYF-AM, KEYF-FM, KUDY, KKZX, and
KEYN; and the equity of KOTY, KEYF and Fourth Street in the operations of the
Partnership. Intercompany and interdivision transactions and balances have been
eliminated.
BASIS OF PRESENTATION - The accompanying unaudited condensed combined
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for an interim period are not necessarily indicative of the results
that may be expected for a full year.
2. INVESTMENT IN PARTNERSHIP
Effective February 1, 1994 (KOTY) and May 1, 1994, (KEYF and
Fourth Street), along with three other entities affiliated by common ownership
(collectively, the "Partners"), became general partners in the Partnership.
Each partner contributed substantially all of its assets to the Partnership
and the Partnership assumed all existing liabilities of each partner. The
Partners received an initial capital account credit equal to the amount of
the excess of the book value of contributed assets over the liabilities
assumed. The profits and losses of the Partnership are allocated to the
Partners in amounts equal to the profits or losses of their respective
radio stations; accordingly, the profit or loss directly or indirectly
attributable to the operations of radio stations KTCR/KEGX, KEYF-AM/FM and
KUDY/KKZX are allocated to KOTY, KEYF and Fourth Street, respectively. The
profit or loss directly or indirectly attributable to the operations of radio
station KEYN-FM, which is also owned by the Partnership, is
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIP)
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS - UNAUDITED
allocated 100% to Fourth Street. This allocation has been eliminated in the
combination of the Companies' and Divisions' financial statements. Any other
profits or losses of the Partnership are allocated among the Partners in
accordance with their proportionate interests.
3. LONG-TERM DEBT
In June 1996, Springs Radio refinanced a note payable to a financial
institution with an outstanding principal balance of $1,085,253, through a loan
from the Partnership, and is included in the payable to related parties.
Fourth Street received an additional $100,000 from its preferred
stockholder, which amount is reflected as a loan in the accompanying condensed
combined financial statements. The loan is non-interest bearing, has no
maturity date, and must be repaid by Fourth Street prior to the payment of
any dividends or other distributions to Fourth Street's stockholders. In the
event that the preferred stockholder elects to convert all or any portion of
Fourth Street's preferred stock into common stock, repayment of the loan is
not required. Fourth Street's management believes that the loan was made with
an expectation that Fourth Street's preferred stockholder would eventually
convert preferred stock into common stock and, therefore, upon such conversion,
the loan would be reflected as a capital contribution.
4. PROGRAM AFFILIATION AND JOINT SALES AGREEMENTS
In April 1993, KOTY entered into a program affiliation agreement with
the owner of two radio stations, under the terms of which KOTY provided
programming for the stations and managed their operations. The agreement
provided for KOTY to receive all broadcasting revenue generated by the stations
and to be responsible for certain of the operating costs and expenses. Upon
formation of the Partnership and the contribution of assets to the Partnership
by KOTY in February 1994, the Partnership assumed KOTY's rights and obligations
under the agreement. In June, 1996, the Partnership agreed to allow the owner
to withdraw one of the two stations from the agreement. The withdrawal of the
one station has had an immaterial effect on the operating results of the
Partnership.
In January 1994, KOTY entered into a joint sales agreement with the owner
of another radio station. Under the terms of the agreement, KOTY sold
advertising on behalf of such station and KOTY paid a monthly fee to the owner.
The Partnership assumed KOTY's rights and obligations under the agreement in
February 1994. The agreement expired in March 1995.
In June 1995, the Partnership entered into a joint sales agreement with
the company which also agreed subsequently to purchase the radio stations
(Buyer), including KEYN (see Note 6). Under the terms of the agreement, the
Buyer sells advertising on behalf of KEYN and the Buyer pays a monthly fee to
KEYN. The agreement was effective on September 13, 1995 and provides for a fee
of $49,000 per month for the first six months and $74,000 per month thereafter
with periodic adjustments by mutual consent.
Effective January 16, 1996, the Partnership, PHI, Springs Radio and
KVUU/KSSS entered into a joint sales agreement with another radio station owner
(Broker) for the sale of advertising on behalf of radio stations KVOR-AM,
KSPZ-FM, KVUU-FM, KTWK-AM, KEYF-AM, KEYF-FM, KUDY-AM and
<PAGE>
SPRINGS RADIO, INC.
KVUU/KSSS, INC.
KOTY-FM, INC.
KEYF CORPORATION
FOURTH STREET BROADCASTING, INC.
KTCR/KEGX, KEYF, KUDY/KKZX AND KEYN
(DIVISIONS OF POURTALES RADIO PARTNERSHIP)
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS - UNAUDITED
KKZX-FM. Under the terms of the agreement, the Broker was granted the exclusive
right to sell all of the advertising related to the stations in return for a
monthly fee of between 55% and 60% of the combined "broadcast cash flow", as
defined in the agreement, of the radio stations that are covered by the
agreement, including certain radio stations operated by the Broker. The
agreement has an initial term of five years, with options to renew on the part
of either of the parties, and may be terminated by the parties under certain
circumstances.
Effective January 16, 1996, the Partnership, PHI, Springs Radio and
KVUU/KSSS entered into a program affiliation agreement with the Buyer referred
to above under the terms of which the Buyer provides programming for the
stations and managed the operations of radio stations KVOR-AM, KSPZ-FM,
KVUU-FM, KTWK-AM, KEYF-AM, KEYF-FM, KUDY-AM and KKZX-FM. In addition effective
July 1, 1996, the Partnership, entered into a program affiliation agreement
with the Buyer under the terms of which the Buyer provides programming for the
stations and managed the operations of radio stations KEGX-FM, and KTCR-AM. The
buyer reimburses the Partnership for certain operating expenses of each of the
radio stations.
5. INCOME TAXES
As of December 31, 1995, the Companies have net operating loss
carryforwards of approximately $5,595,000 which expire beginning in 2007
through 2009.
6. SALE OF RADIO STATIONS
On August 4, 1995, the Partnership entered into a contract to sell radio
stations KTCR, KEGX, KEYF-AM, KEYF-FM, KUDY and KKZX along with the radio
stations owned by Springs Radio and KVUU/KSSS for approximately $22,800,000.
This agreement, as amended in January 1996 also provided for the sale of
radio station KEYN, subject to obtaining FCC approval for transfer of the
operating licences.
<PAGE>
(b) Pro Forma Financial Information
The unaudited pro forma financial information of the Company, which includes
Pourtales, for the year ended March 31, 1996 and as at and for the six months
ended September 30, 1996 is contained among other proforma financial
information which follows.
<PAGE>
TRIATHLON BROADCASTING COMPANY
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
The Pro Forma Condensed Combined Balance Sheet at September 30, 1996 is
presented as if, at such date, the Company had completed the acquisitions of:
(i) KVOR-AM, KSPZ(FM), KTWK-AM, KVUU(FM), KEYF(FM), KEYF-AM, KEYN(FM), KUDY-AM,
KKZX(FM), KEGX(FM) and KTCR-AM (the "Pourtales Acquisition"); (ii) KZSN(FM),
KZSN-AM, KSSN(FM) and KMVK(FM) (the "Southern Skies Acquisition"); (iii)
KGOR(FM) KFAB-AM and the Business Music Service (the "KGOR/KFAB Acquisition");
and (iv) KOLL-FM (the "KOLL Acquisition") and received proceeds from borrowings
under the credit facility obtained from AT&T Commercial Finance Corporation
("AT&T") (the "Credit Facility"), including amounts which will exceed the
Credit Facility.
The Pro Forma Condensed Combined Statement of Operations for the year
ended March 31, 1996 and for the six months ended September 30, 1996 gives
effect to the following transactions as if they had occurred as of
April 1, 1995: (i) the acquisitions of KRBB(FM), KFH-AM, KWSJ(FM)(formerly
KXLK(FM) and KQAM-AM (the "Wichita Acquisitions"), KTGL(FM) and KZKX(FM) (the
"Lincoln Acquisition), KIBZ(FM), KKNB(FM) and KHAT-AM (the "Rock Steady
Acquisition"), KTNP(FM)(formerly KRRK(FM) (the "93.3, Inc. Acquisition"),
KXKT-FM (the "Valley Acquisition"), KALE-AM and KIOK(FM) (the "Sterling
Acquisition"), KISC(FM), KNFR(FM) and KAQQ-AM (the "Silverado Acquisition"),
the Pourtales Acquisition, the Southern Skies Acquisition, the KGOR/KFAB
Acquisition, and the KOLL Acquisition; (ii) the initial public offering of the
Company's Class A Common Stock; (iii) the issuance of the 9% Mandatory
Convertible Preferred Stock ("Preferred Stock Offering"); and (iv) the
application of net proceeds from the Credit Facility, including amounts which
will exceed the Credit Facility.
The above acquisitions have been accounted for using the purchase method
of accounting. The total cost of each acquisition has been allocated to the
tangible and intangible assets of the stations acquired and liabilities assumed
based on their respective fair values. The allocations of the purchase price
assumed in the pro forma financial statements are preliminary. The Company does
not expect that the final allocations will materially differ from the
preliminary allocations.
<PAGE>
In the opinion of management, all adjustments necessary to fairly present
this pro forma information have been made. These Pro Forma Condensed Combined
Financial Statements have been prepared utilizing, and should be read in
conjunction with: (i) the Company's Consolidated Financial Statements as of and
for the year ended March 31, 1996 (included in the Company's Form 10KSB);
(ii) the Company's Condensed Consolidated Financial Statements as of and for
the six months ended September 30, 1996 (included in the Company's Form 10QSB);
and (iii) the historical financial statements of the sellers of the Wichita
Acquisitions (consisting of Marathon Broadcasting Corporation, KFH/KXLK, a
division of Pourtales Radio Partnership, and Midcontinent Broadcasting, Co. of
Kansas), the Lincoln Acquisition (consisting of KZKX-(FM), Inc., KTGL
Corporation, KZKX and KTGL, divisions of Pourtales Radio Partnership), the
Rocky Steady Acquisition (consisting of Rock Steady, Inc.), the 93.3, Inc.
Acquisition (consisting of 93.3, Inc.), the Valley Acquisition (consisting of
Valley Broadcasting, Inc.), the Sterling Acquisition (consisting of KALE/KIOK
Radio Station, a unit of Sterling Realty Organization), the Silverado
Acquisition (consisting of KAQQ-AM, KISC-(FM) and KNFR-(FM), divisions of
Silverado Broadcasting Company, Inc.), the Pourtales Acquisition (consisting
of Springs Radio, Inc., KVUU/KSSS, Inc., KOTY-(FM), Inc., KEYF Corporation,
Fourth Street Broadcasting, Inc., and KTCR/KEGX, KEYF, KUDY/KKZX and KEYN,
divisions of Pourtales Radio Partnership), the KOLL Acquisition (consisting of
KOLL-(FM), a division of Southern Starr Broadcasting Group, Inc. and KOLL-(FM),
a division of Southern Starr of Arkansas, Inc.); the Southern Skies Acquisition
(consisting of Southern Skies Corporation and Arkansas Skies Corporation) and
the KGOR/KFAB Acquisition (consisting of KGOR-(FM), KFAB-AM and the Business
Music Service to be acquired from American Radio Systems Inc.), all included, as
applicable, in the Prospectus, dated March 4, 1996 and the Company's Current
Report on Form 8-K, dated January 9, 1997, which are incorporated herein by
reference, and Item 7(a) included elsewhere herein. The Company's fiscal year
ended on March 31, 1996. The fiscal year for all of the acquired stations
ended on December 31, 1995, except for Rock Steady, Inc., which ended on
September 30, 1995. The pro forma information does not purport to be
indicative of the results that would have been reported had such events
actually occurred on the dates specified, nor is it indicative of the
Company's future results if the aforementioned transactions are completed.
Each of the sellers of the acquired and to be acquired radio stations has
its own historical financial and operating structures and may include or exclude
items which may affect the comparability of certain items. Management believes
that pro forma results are a better indicator of the Company's performance
in that the pro forma numbers reflect the proposed capital structure and
acquisition prices.
The Pro Forma Condensed Combined Statement of Operations data include
adjustments to station operating expenses to reflect anticipated savings that
management believes it will be able to achieve through the implementation of
its strategy. There can be no assurance that the Company will be able to
achieve such savings.
No pro forma adjustments have been made to the Pro Forma Condensed
Combined Statement of Operations for the year ended March 31, 1996 to reflect
the acquisition of KQAM-AM (one of the three stations in the Wichita
Acquisitions) because the Company has determined that the impact of such
adjustments would not have a material effect on the Company's results of
operations and financial condition.
<PAGE>
No pro forma adjustments have been made to the Pro Forma Condensed
Combined Statement of Operations for the six months ended September 30, 1996
to reflect the Rock Steady Acquisition, the Sterling Acquisition, the
93.3, Inc. Acquisition, the Valley Acquisition and the Silverado Acquisition
for the period prior to their respective acquisitions as the impact of such
adjustments would not have a material effect on the Company's results of
operations.
No pro forma adjustments have been made to the Pro Forma Condensed
Combined Statement of Operations for the six months ended September 30, 1996
to reflect the KOLL Acquisition as the Company has been operating the KOLL
Acquisition under a local marketing agreement since March 15, 1996 and the
impact of such adjustments would not have a material effect on the Company's
results of operations.
In order to consummate the pending acquisitions, the Company must also
seek additional financing. The amounts available under the Credit Facility
and cash on hand and from operations is not sufficient to fund the purchase
price of all of the pending acquisitions. The ability of the Company to issue
certain securities or borrow under the Credit Agreement are subject to meeting
certain financial tests. In addition, consummation of the acquisitions is
subject to the prior approval of AT&T, the lender under the Credit Agreement.
There can be no assurance that the Company's existing stations, and the stations
which the Company will acquire, will achieve the cash flow levels required to
issue certain securities or borrow under the Credit Agreement. Without
additional financing it is unlikely that the Company will be able to implement
its acquisition strategy and will lose all or part of the deposits made in
connection with the pending acquisitions.
<PAGE>
TRIATHLON BROADCASTING COMPANY
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
TRIATHLON
BROADCASTING POURTALES SOUTHERN SKIES
COMPANY ACQUISITION ACQUISITION
-------------- ------------- --------------
(HISTORICAL)
<S> <C> <C> <C>
ASSETS
Current assets ............. $17,711,187 $ 300,344 $ 1,267,220
Property and equipment, net 5,333,959 1,427,763 361,138
Intangible assets, net .... 41,408,131 5,310,479 4,404,408
Other assets ............... 7,214,755 13,678 6,832
-------------- ------------- --------------
$71,668,032 $ 7,052,264 $ 6,039,598
============== ============= ==============
LIABILITIES & STOCKHOLDERS'
EQUITY/(DEFICIT)
Current liabilities ........ $ 3,348,294 $ 593,923 $ 11,957,890
Long term liabilities ..... -- 8,422,900 7,264,671
Deferred taxes ............. 2,501,550 -- --
Deferred compensation ..... 128,745 -- --
Stockholder's equity/
(deficit) ................. 65,689,443 (1,964,559) (13,182,963)
-------------- ------------- --------------
$71,668,032 $ 7,052,264 $ 6,039,598
============== ============= ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
KGOR/KFAB KOLL PRO FORMA PRO FORMA
ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets ............. $ 1,176,987 $ 215,428 $ 73,600,000 (1) $ 11,954,166
(82,317,000)(2)
Property and equipment, net 2,668,637 303,249 -- 10,150,588
Intangible assets, net .... 26,924,593 1,991,745 1,400,000 (1) 130,799,936
44,288,422 (2)
5,128,000 (2)
Other assets ............... -- -- (7,000,000)(2) 235,265
------------- ------------- ---------------- --------------
$30,770,217 $2,510,422 $ 35,099,422 $153,139,955
============= ============= ================ ==============
LIABILITIES & STOCKHOLDERS'
EQUITY/(DEFICIT)
Current liabilities ........ $ 289,582 $ 24,954 $(12,772,426)(2) $ 3,442,217
Long term liabilities ..... 30,195,125 348,958 75,000,000 (1) 75,750,000
(46,231,654)(2)
750,000 (2)
Deferred taxes ............. -- -- 5,128,000 (2) 7,629,550
Deferred compensation ..... -- -- -- 128,745
Stockholder's equity/
(deficit) ................. 285,510 2,136,510 12,725,502 (2) 66,189,443
500,000 (2)
------------- ------------- ---------------- --------------
$30,770,217 $2,510,422 $ 35,099,422 $153,139,955
============= ============= ================ ==============
</TABLE>
1
<PAGE>
TRIATHLON BROADCASTING COMPANY
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ACQUISITIONS
DURING THE SIX-
ACQUISITIONS MONTHS
TRIATHLON PRIOR TO ENDED
BROADCASTING MARCH 31, SEPTEMBER
COMPANY 1996 30, 1996
------------ ------------ ------------
(HISTORICAL) (3) (4)
<S> <C> <C> <C>
Net revenue ......... $ 3,169,271 $4,017,524 $7,523,863
Station operating
expenses ........... 2,723,975 2,874,732 6,343,521
Depreciation and
amortization ....... 321,104 826,057 763,495
Corporate expenses . 547,891 288,000 161,000
Deferred
compensation ....... 273,369 -- --
------------ ------------ ------------
Operating income
(loss) ............. (697,068) 28,735 255,847
Interest expense ... (590,062) (72,390) (759,287)
Other income
(expense) .......... 239,740 (482,896) 89,810
------------ ------------ ------------
Income (loss) before
provision for taxes (1,047,390) (526,551) (413,630)
Provision for income
taxes .............. -- -- --
------------ ------------ ------------
Income (loss) before
extraordinary item (1,047,390) $ (526,551) $ (413,630)
------------ ------------
Preferred stock
dividend
requirement ........ (314,000)
------------
Net loss before
extraordinary item
applicable to
common shares ...... $(1,361,390)
------------
Net loss before
extraordinary item
per common share .. $ (.44)
------------
Weighted average
common shares
outstanding ........ 3,069,144
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SOUTHERN
POURTALES SKIES KOLL KGOR/KFAB PRO FORMA PRO FORMA
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue ......... $ 8,186,234 $ 6,970,842 $873,787 $ 7,247,040 $ (126,471)(11) $37,862,090
Station operating
expenses ........... 6,671,079 5,069,746 548,665 5,123,284 (1,904,298)(5) 27,324,233
(126,471)(11)
Depreciation and
amortization ....... 1,104,098 778,107 92,906 497,364 185,319 (6) 4,568,450
Corporate expenses . 864,335 474,005 70,677 402,140 (1,008,048)(7) 1,800,000
Deferred
compensation ....... -- -- -- -- -- 273,369
------------ ------------ ----------- ----------- --------------- ------------
Operating Income
(loss) ............. (453,278) 648,984 161,539 1,224,252 2,727,027 3,896,038
Interest expense ... (164,625) (1,675,067) (43,517) (1,934,277) (2,260,775)(8) (7,500,000)
Other Income
(expense) .......... (1,468,507) 3,695 -- -- 1,857,898 (9) 239,740
------------ ------------ ----------- ----------- --------------- ------------
Income (loss) before
provision for
income taxes ....... (2,086,410) (1,022,388) 118,022 (710,025) 2,324,150 (3,364,222)
Provision for income
tax expense ........ -- -- (55,047) -- 55,047 (10) --
------------ ------------ ----------- ----------- --------------- ------------
Income (loss) before
extraordinary item $(2,086,410) $(1,022,388) $ 62,975 $ (710,025) 2,379,197 (3,364,222)
------------ ------------ ----------- ----------- ---------------
Preferred stock
dividend
requirement ........ (12) (5,507,296)
------------
Net loss before
extraordinary item
applicable to
common shares ...... $(8,871,518)
------------
Net loss before
extraordinary item
per common share .. $ (1.82)
------------
Weighted average
common shares
outstanding ........ (13) 4,887,789
</TABLE>
2
<PAGE>
TRIATHLON BROADCASTING COMPANY
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TRIATHLON SOUTHERN
BROADCASTING POURTALES SKIES
COMPANY ACQUISITION ACQUISITION
-------------- -------------- -------------
(HISTORICAL)
<S> <C> <C> <C>
Net revenue ............................. $ 9,950,260 $ 923,691 $3,453,108
Station operating expenses .............. 7,028,180 811,933 2,586,076
Depreciation and amortization ........... 760,359 386,635 387,328
Corporate expenses ...................... 802,388 414,635 240,581
Non-cash compensation ................... 225,745 -- --
-------------- -------------- -------------
Operating income (loss) ................. 1,133,588 (689,512) 239,123
Interest expense ........................ (1,292,548) (67,293) (613,129)
Other income (expense) .................. 425,897 (436,809) 771
-------------- -------------- -------------
Income (loss) before provision for taxes 266,937 (1,193,614) (373,235)
Provision for income taxes .............. (54,000) -- --
-------------- -------------- -------------
Net income (loss) ....................... 212,937 $(1,193,614) $ (373,235)
-------------- -------------
Preferred stock dividend requirement ... (2,723,699)
--------------
Net loss applicable to common shares ... $(2,510,762)
--------------
Net loss per common share ............... $ (0.52)
--------------
Weighted average common shares
outstanding ............................ 4,841,600
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
KGOR/ KFAB PRO FORMA PRO FORMA
ACQUISITION ADJUSTMENTS COMBINED
------------- -------------- --------------
(4)
<S> <C> <C> <C>
Net revenue ............................. $ 3,314,208 $ 993,862 (11) $18,635,129
Station operating expenses .............. 2,012,514 (462,500)(5) 12,970,065
993,862 (11)
Depreciation and amortization ........... 432,609 317,294 (6) 2,284,225
Corporate expenses ...................... 743,062 (1,398,278)(7) 802,388
Non-cash compensation ................... -- -- 225,745
------------- -------------- --------------
Operating income (loss) ................. 126,023 1,543,484 2,352,706
Interest expense ........................ (1,202,681) (574,349)(8) (3,750,000)
Other income (expense) .................. (65,478) 501,516 (9) 425,897
------------- -------------- --------------
Income (loss) before provision for taxes (1,142,136) 1,470,651 (971,397)
Provision for income taxes .............. -- 54,000 (10) --
------------- -------------- --------------
Net income (loss) ....................... $(1,142,136) $1,524,651 (971,397)
------------- --------------
Preferred stock dividend requirement ... (12) (2,753,648)
--------------
Net loss applicable to common shares ... $(3,725,045)
--------------
Net loss per common share ............... $ (0.76)
--------------
Weighted average common shares
outstanding ............................ (13) 4,887,789
</TABLE>
3
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
BALANCE SHEET ADJUSTMENTS
(1) To reflect the proceeds from borrowings:
Credit Facility $40,000,000
Additional financing (a) 35,000,000
Less: fees and expenses (b) 1,400,000
------------
Net proceeds from financings $73,600,000
============
(a) Assumed to be borrowed utilizing the Credit Facility by
amendment.
(b) Includes fees and expenses pursuant to the Amended and
Restated SCMC Agreement of $525,000 related to the additional
financing and excludes $600,000 related to the Credit Facility
paid prior to September 30, 1996. Also excludes $800,000 of other
fees and expenses paid prior to September 30, 1996.
(2) To reflect the purchase of stations to be acquired subsequent to
September 30, 1996 and the preliminary allocation of the purchase
price including fees and expenses of $2,100,000:
Pourtales Acquisition $22,500,000 (a)
Southern Skies Acquisitions 23,867,000 (b)
KFAB/KGOR Acquisition 38,000,000
KOLL Acquisition 4,100,000
-----------
88,467,000
Fees and expenses 2,100,000 (c)
-----------
Total $90,567,000
===========
(a) Excludes $2,000,000 deposit recorded as financing expense by the
Company during the period that the stations were operated by the
Company under a Local Marketing Agreement ("LMA") from January
16 through November 22, 1996.
(b) Includes the issuance of 46,189 shares of Class A Common Stock
valued at $500,000 and $750,000 payable pursuant to a non-
competition agreement executed by a principal of Southern Skies.
(c) Includes fees and expenses pursuant to the Amended and Restated
SCMC Agreement of $1,327,000. Also excludes $1,300,000 of other
fees and expenses paid prior to September 30, 1996.
Deposits of $5,700,000 have been made for letters of credit which have been
posted for the acquisitions prior to September 30, 1996 and will be applied
towards the purchase price or returned to the Company at the closing.
ALLOCATION OF
PURCHASE PRICE CARRYING VALUE ADJUSTMENT
-------------- -------------- ----------
ASSETS
Current assets $2,959,979 $2,959,979
<PAGE>
ALLOCATION OF
PURCHASE PRICE CARRYING VALUE ADJUSTMENT
-------------- -------------- ----------
Property and equipment, net 4,760,787 4,760,787
Intangible assets, net 82,919,647 38,621,225 $44,288,422
Goodwill (b) 5,128,000 5,128,000
Other assets 20,510 20,510
----------- ----------- ------------
Total assets 95,788,923 46,372,501 49,416,422
LIABILITIES
Current liabilities $93,923 $12,866,349 $(12,772,426)
Long term debt (a) $46,231,654 (46,231,654)
Deferred taxes (b) 5,128,000 5,128,000
----------- ----------- ------------
Net assets $90,567,000 (12,725,502) $103,292,502
----------- ----------- ------------
The preliminary allocation of purchase price may change upon final
determination of the fair value of the net assets acquired.
(a) to reflect the repayment of long term debt by the seller.
(b) To reflect a deferred tax liability and corresponding goodwill
based on the excess of the consideration paid over the tax basis
of the underlying assets of the stations acquired in the
Pourtales Acquisition using a 35% effective tax rate. This
assumes that the tax basis of the assets approximates the book
value of these assets prior to the acquisition. To the extent
that the tax basis is different, there would be an adjustment to
goodwill and the deferred tax liability.
STATEMENT OF OPERATIONS ADJUSTMENTS
- -----------------------------------
(3) Includes the historical results of operations for stations acquired
by the Company through March 31, 1996 for the periods prior to their
acquisition, as follows:
<TABLE>
<CAPTION>
LINCOLN
WICHITA ACQUISITIONS ACQUISITION
------------------------ ------------
COMBINED
KFH/KXLK(a) KRBB(a) KZKX/KTGL(b) TOTAL
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenue .................. $ 378,580 $767,916 $2,871,028 $4,017,524
Station operating expenses .. 568,891 565,950 1,739,891 2,874,732
Depreciation and amortization 184,017 69,596 572,444 826,057
Corporate expenses ........... 72,000 -- 216,000 288,000
------------ ---------- ------------ ------------
Operating Income (loss) ..... (446,328) 132,370 342,693 28,735
Interest income .............. -- 199 -- 199
Interest expense ............. 11,227 (75,295) (8,322) (72,390)
Other income (expense) ....... -- 6,409 (489,504) (483,095)
------------ ---------- ------------ ------------
NET INCOME (LOSS) ............ $(435,101) $ 63,683 $ (155,133) $ (526,551)
============ ========== ============ ============
</TABLE>
- ------------
(a) For the period April 1, 1995 through September 12, 1995
(b) For the period April 1, 1995 through December 31, 1995
(4) Includes the historical results of operations for stations acquired
by the Company during the six months ended September 30, 1996 for the
periods prior to acquisition, as follows:
<TABLE>
<CAPTION>
ROCK STEADY STERLING
ACQUISITION(a) ACQUISITION(b)
-------------- --------------
<S> <C> <C>
Net revenue .................. $ 908,537 $ 581,234
Station operating expenses .. 1,098,992 785,603
Depreciation and amortization 66,672 33,571
Corporate expenses ........... -- --
-------------- --------------
Operating income (loss) ..... (257,127) (237,940)
Interest income .............. -- --
Interest expense ............. (126,646) (182)
Other income (expense) ....... (4,460) 11,788
-------------- --------------
NET INCOME (LOSS) ............ $ (388,233) $(226,334)
============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
93.3, INC. VALLEY SILVERADO COMBINED
ACQUISITION(B) ACQUISITION(B) ACQUISITION(B) TOTAL
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Net revenue .................. $1,058,452 $1,732,548 $3,243,092 $7,523,863
Station operating expenses .. 756,333 1,190,716 2,511,877 6,343,521
Depreciation and amortization 52,994 129,739 480,519 763,495
Corporate expenses ........... -- -- 161,000 161,000
-------------- -------------- -------------- ------------
Operating income (loss) ..... 249,125 412,093 89,696 255,847
Interest income .............. -- -- 8,495 8,495
Interest expense ............. (53,423) (579,036) -- (759,287)
Other income (expense) ....... 7,072 67,566 (651) 81,315
-------------- -------------- -------------- ------------
NET INCOME (LOSS) ............ $ 202,774 $ (99,377) $ 97,540 $ (413,630)
============== ============== ============== ============
</TABLE>
- ------------
(a) For the 12 months ended March 31, 1996
(b) For the year ended December 31, 1995
No adjustment was included in the Pro Forma Condensed Combined Statements
of Operations for the six months ended September 30, 1996 for the
historical results prior to their acquisition for the above stations as the
impact would be immaterial on the results of operation for the six month
period.
(5) To reflect certain cost savings that are being implemented and have
been implemented as a result of the combination of stations in
markets including the elimination of certain positions, combining
duplicative general, administrative and sales responsibilities,
automation of live programming, commission reductions and facilities
cost savings and the standardization of salesperson commissions.
There can be no assurance
<PAGE>
that unforeseen developments will not prevent full realization of the
anticipated cost savings associated with the implementation of such
measures.
(6) To reflect the incremental additional amortization expense relating
to the acquisitions based on the preliminary purchase price
allocations. The actual depreciation and amortization expense may
change upon final determination of the fair value of the net assets
acquired. To the extent the tax basis is adjusted a corresponding
adjustment in amortization expense would be made.
(7) To adjust corporate general and administrative expenses to
reflect the terms of the Amended and Restated Financial Consulting
Agreement and to eliminate expenses of the acquired stations not
expected to be incurred by the Company.
(8) To adjust interest expense incurred upon the formation of the Company
and by the stations that were acquired and to reflect interest
expense including the amortization of deferred financing costs
associated with the Credit Facility and the additional borrowing
required to complete all the acquisitions.
(9) To eliminate non-operating expenses that are not expected to be
incurred by the Company.
(10) Income taxes have not been provided in that for Federal income taxes
a net operating loss would have existed during the periods presented.
State taxes are considered immaterial and have been included in
corporate general and administrative expenses.
(11) To adjust for JSA/LMA fees.
(12) To reflect the full year dividend requirement for the Preferred Stock
Offering.
(13) To reflect the weighted average number of common stock outstanding
for a full year.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
TRIATHLON BROADCASTING COMPANY
February 4, 1997 By:/s/ Jan E. Chason
----------------------------
Name: Jan E. Chason
Title: Chief Financial Officer
and Treasurer
