SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____ to _____
Commission file number 0-16265
EZ COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0829355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10800 MAIN STREET
FAIRFAX, VIRGINIA 22030
(Address of principal executive offices) (Zip code)
(703) 591-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES * NO
------ ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
CLASS OF COMMON STOCK OCTOBER 31, 1996
Class A Common Stock, $.01 par value per share 6,464,744 shares
Class B Common Stock, $.01 par value per share 2,677,897 shares
EZ COMMUNICATIONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
September 30, 1996 and December 31, 1995 3-4
Condensed Consolidated Statements of Operations for
the Three Months and Nine Months Ended September
30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 12-13
Item 6. Exhibits and Reports on Form 8-K 13-18
SIGNATURES 19
Exhibit Index
2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EZ COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
- - --------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash $5,176 $33,275
Accounts receivable, less allowance of $1,009 at September 30,
1996 and $772 at December 31, 1995 20,098 16,678
Trade receivables - barter 1,576 933
Prepaid expenses and other current assets 4,705 4,327
------------------------------
TOTAL CURRENT ASSETS 31,555 55,213
PROPERTY, PLANT AND EQUIPMENT
Land 1,635 1,451
Buildings and improvements 9,131 8,710
Broadcast equipment 23,157 21,032
Furniture and other equipment 7,120 9,936
Construction in progress 2,658 249
---------------------------
43,701 41,378
Less accumulated depreciation 15,723 21,456
---------------------------
27,978 19,922
INTANGIBLE ASSETS
Goodwill and broadcast licenses 228,985 132,730
Purchased contracts and other 6,090 6,280
---------------------------
235,075 139,010
Less accumulated amortization 18,573 15,896
---------------------------
216,502 123,114
OTHER ASSETS 6,762 7,007
---------------------------
$282,797 $205,256
---------------------------
---------------------------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
EZ COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(UNAUDITED)
SEPTEMBER 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
- - -----------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $1,885 $1,537
Accrued expenses 2,243 2,144
Accrued interest 5,236 1,643
Deferred income 1,560 1,203
Other current liabilities 653 653
---------------------------
TOTAL CURRENT LIABILITIES 11,577 7,180
LONG-TERM DEBT, LESS CURRENT PORTION 220,416 148,833
DEFERRED INCOME TAXES 6,935 7,944
OTHER LIABILITIES 16 16
SHAREHOLDERS' EQUITY
Preferred stock, no par value, authorized 1,000,000 shares, no
shares issued and outstanding
Class A Common stock, par value $.01 per share, authorized
25,000,000 shares, issued and outstanding 6,422,824 shares
at September 30, 1996 and 6,378,824 shares at December 31,
1995 64 64
Class B Common stock, par value $.01 per share, authorized
5,000,000 shares, issued and outstanding 2,677,897 shares
at September 30, 1996 and December 31, 1995 27 27
Additional paid-in capital 38,765 38,194
Retained earnings 4,997 2,998
---------------------------
43,853 41,283
---------------------------
$282,797 $205,256
---------------------------
---------------------------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
EZ COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(UNAUDITED)
Three months Nine months
ended September 30, ended September 30,
-------------------- -------------------
1996 1995 1996 1995
- - --------------------------------------------------------------------------------------------------------
REVENUE
Gross broadcasting revenue $31,910 $25,034 $86,198 $68,895
Less: agency commissions 3,988 3,208 10,925 8,705
-------------------- ------------------
Net broadcasting revenue 27,922 21,826 75,273 60,190
BROADCASTING EXPENSES 17,304 14,576 49,505 40,734
-------------------- ------------------
STATION OPERATING INCOME BEFORE
CORPORATE EXPENSES, DEPRECIATION
AND AMORTIZATION 10,618 7,250 25,768 19,456
Corporate expenses 915 900 2,741 2,720
Depreciation and amortization 2,465 1,701 6,757 4,978
-------------------- ------------------
OPERATING INCOME 7,238 4,649 16,270 11,758
OTHER INCOME (EXPENSES)
Interest expense (5,424) (2,551) (15,058) (7,894)
Other income and expenses, net (181) (106) (222) (384)
-------------------- ------------------
(5,605) (2,657) (15,280) (8,278)
INCOME BEFORE TAXES 1,633 1,992 990 3,480
Federal and state income tax (benefit) expense (205) 877 (1,009) 1,531
-------------------- ------------------
NET INCOME $1,838 $1,115 $1,999 $1,949
-------------------- ------------------
-------------------- ------------------
NET INCOME PER COMMON SHARE $0.20 $0.12 $0.22 $0.22
-------------------- ------------------
-------------------- ------------------
Weighted average common shares outstanding 9,101 9,052 9,083 9,020
-------------------- ------------------
-------------------- ------------------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
EZ COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
Nine months ended September 30,
1996 1995
- - ---------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $1,999 $1,949
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 6,757 4,978
Other charges not affecting cash (360) 1,472
Net changes in operating assets and liabilities (723) (4,441)
---------------------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES 7,673 3,958
INVESTING ACTIVITIES
Proceeds from sale of radio station 21,250
Purchases of radio stations (102,000) (16,250)
Purchases of property, plant and equipment, net (4,322) (1,811)
Proceeds from notes receivable 3,006
Other, net (1,522) (707)
---------------------------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (107,844) 5,488
FINANCING ACTIVITIES
Issuance of notes payable 16,800
Repayments of notes payable (3,800)
Proceeds from long-term debt 62,500 21,000
Principal payments on long-term debt (4,000) (31,287)
Proceeds from the exercise of employee stock options 572 1,120
---------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 72,072 (9,167)
---------------------------
(DECREASE) INCREASE IN CASH (28,099) 279
CASH AT BEGINNING OF PERIOD 33,275 2,723
---------------------------
CASH AT END OF PERIOD $5,176 $3,002
--------------------------
--------------------------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
EZ COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. 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 accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report to Shareholders and Annual Report on Form 10-K for the
year ended December 31, 1995.
NOTE B -- ACQUISITIONS OF RADIO STATIONS
CONSUMMATED ACQUISITIONS
In March 1995, the Company acquired the assets of stations KBEQ AM/FM
Kansas City, Missouri for approximately $7,650,000. The purchase price of the
acquisition was funded from borrowings under the Company's former Credit
Facility. Concurrently with the execution of the agreement to acquire KBEQ
AM/FM, the Company also entered into an option and asset purchase agreement with
an unrelated party to acquire station KFKF-FM Kansas City (the "Kansas City
Acquisition"). Upon the consummation of the acquisition of KBEQ AM/FM, the
Company entered into a Time Brokerage Agreement ("TBA") with the owner of KFKF
for them to program and market KBEQ AM/FM. In August 1995, the Company elected
to exercise its option to acquire KFKF-FM. The KFKF-FM option and asset
purchase agreement provided for an aggregate purchase price of $28,000,000, of
which $15,000,000 was paid in connection with the closing of the Kansas City
Acquisition, which occurred in January 1996, and $13,000,000 was financed
through the Company's issuance of two promissory notes to the seller of the
station due in December 1996 and January 1997 (the "Kansas City Notes"). The
Kansas City Notes bear interest at 8.49%. The $15,000,000 paid at closing was
provided from proceeds from the Company's November 1995 issuance of $150,000,000
of 9.75% Senior Subordinated Notes due 2005 (the "Notes").
In March 1996, the Company entered into an agreement to acquire the assets
of station KYCW-FM Seattle for $26,000,000. At the same time, the Company began
programming and marketing the station pursuant to a TBA. The purchase price of
7
the acquisition, which was consummated in May 1996, was funded from borrowings
under the Company's Credit Facility.
In April 1996, the Company entered into an agreement to acquire the assets
of stations KEZK-FM and KFNS-AM St. Louis for $48,000,000. At the same time,
the Company began programming and marketing the stations pursuant to a TBA. The
purchase price of the acquisition, which was consummated in July 1996, was
funded from borrowings under the Company's Credit Facility.
The above acquisitions have been accounted for by the purchase method of
accounting. The purchase price has been allocated to the assets acquired based
on their fair values at the date of the acquisition. The excess of the purchase
price over the estimated fair values of the net assets acquired has been
recorded as goodwill and broadcast licenses.
PENDING ACQUISITIONS AND DISPOSITIONS
In March 1996, the Company entered into an asset exchange agreement with an
unrelated party, whereby the Company agreed to exchange stations WEZB-FM,
WRNO-FM and WBYU-AM New Orleans for stations KBKS-FM (formerly KCIN-FM) and
KRPM-AM Seattle. At the same time, both parties began programming and marketing
the stations pursuant to separate TBA's. The consummation of the exchange,
which is expected to occur in late 1996, is subject to the consent of the
Federal Communications Commission ("FCC") and the expiration or earlier
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act") and will be accounted for as a
non-monetary exchange of similar productive assets; therefore no gain or loss
will be recorded for financial reporting purposes.
In November 1996, the Company expects to enter into an asset exchange
agreement with an unrelated party, whereby the Company will exchange stations
WIOQ-FM and WUSL-FM Philadelphia for stations WRFX-FM, WPEG-FM, WBAV-FM,
WBAV-AM, and WFNZ-AM Charlotte, and an asset purchase agreement to purchase
station WNKS-FM Charlotte for approximately $10 million. Consummation of the
asset exchange agreement is not conditioned on consummation of the asset
purchase agreement, although consummation of the asset purchase agreement is
conditioned on consummation of the asset exchange agreement. Simultaneously,
the parties and, as applicable, another unrelated party expect to enter into
separate local marketing agreements ("LMAs"), pursuant to which they will, after
expiration of the applicable waiting period under the HSR Act, begin programming
and marketing the stations to be acquired by each. On September 16, 1996, the
Company and American Radio Systems Corporation ("American") each received a
Civil Investigative Demand from the Antitrust Division of the Department of
Justice requesting certain documentary materials regarding the purchase, sale,
trade or other transfer of radio stations in Charlotte, North Carolina.
Consummation of the exchange and the acquisition, which is expected in the first
quarter of 1997, is subject to the consent of the FCC and the expiration or
earlier termination of the HSR waiting period.
8
In November 1996, in order, among other things, to meet applicable FCC
requirements, the Company expects to enter into an asset exchange agreement with
an unrelated party pursuant to which the Company will agree to exchange the
assets of station WSSS-FM Charlotte for the assets of station WTDR-FM Charlotte,
and an asset purchase agreement to which the Company will agree to sell WRFX-FM
and WNKS-FM Charlotte for approximately $64.8 million. Consummation of the
asset exchange agreement is not conditioned on consummation of the asset
purchase agreement, although consummation of the asset purchase agreement is
conditioned on consummation of the asset exchange agreement and the other party
has the right to terminate both agreements if the Company is unable to close
under either agreement. Simultaneously, the parties expect to enter into
separate LMAs, pursuant to which they will, upon expiration of the applicable
waiting period under the HSR Act, begin programming and marketing the stations
to be acquired by each. Consummation of the transactions, which is expected in
the first quarter of 1997, is subject to consummation of the stations asset
exchange above, the consent of the FCC and the expiration or earlier termination
of the HSR waiting period.
In November 1996, the Company expects to enter into an agreement to sell
the assets of KMPS-AM Seattle for approximately $2 million. Consummation of the
transaction, which is expected to close in late 1996, is subject to the consent
of the FCC.
In November 1996, the Company expects to enter into an agreement to sell
the assets of KSD-AM St. Louis for approximately $13 million. Consummation of
the transaction, which is expected to close in late 1996, is subject to the
consent of the FCC.
The operating results of the acquisitions of WBYU-AM, KBEQ AM/FM/KFKF-FM,
KYCW-FM, KBKS-FM and KEZK-FM/KFNS-AM are included in the Company's consolidated
results of operations since February 1995, January 1996, March 1996, March 1996,
and April 1996, respectively. The following unaudited pro forma summary
presents the consolidated results of operations as if the acquisitions had
occurred at the beginning of the periods presented, and, after giving effect to
certain adjustments, including the elimination of certain expenses, and the
inclusion of depreciation and amortization of assets acquired and interest
expense on the acquisition debt. These pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of what would have
occurred had the acquisition been made as of those dates or results which may
occur in the future (in thousands, except per share data).
Nine Months Ended September 30,
--------------------------------
1996 1995
---- ----
(Unaudited)
Net broadcasting revenue $77,233 $74,307
Net loss (36) (442)
Loss per common share:
Net loss per common share $ (0.00) $ (0.05)
9
NOTE C -- INCOME TAXES
In March 1996, the IRS approved the Company's request to change (for tax
purposes) its method of accounting for broadcast licenses. This change will
allow the Company to recognize certain tax benefits through 2001.
NOTE D -- RECLASSIFICATIONS
Certain 1995 amounts have been reclassified for comparative purposes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's net broadcasting revenue was $27,922,000 for the three months
ended September 30, 1996, an increase of 28% from $21,826,000 for the same
period in 1995. Net broadcasting revenue was $75,273,000 for the nine months
ended September 30, 1996, an increase of 25% from $60,190,000 for the same
period in 1995. The increase was attributed to the acquisition of stations KBEQ
AM/FM and KFKF-FM Kansas City (which were acquired in January 1996), stations
KYCW-FM and KBKS AM/FM Seattle (which the Company began programming and
marketing pursuant to LMAs in March 1996) and to stations KEZK-FM and KFNS-AM
St. Louis (which the Company began programming and marketing pursuant to and LMA
in April 1996), as well as growth from existing stations in all of the Company's
markets.
Broadcast cash flow (defined as station operating income before corporate
expenses and depreciation and amortization) was $10,618,000 for the three months
ended September 30, 1996, an increase of 46% from $7,250,000 for the three
months ended September 30, 1995. Broadcast cash flow was $25,768,000 for the
nine months ended September 30, 1996, an increase of 32% from $19,456,000 for
the nine months ended September 30, 1995. The increases were attributed to the
factors affecting net revenue previously noted.
On a same station basis (pro forma assuming that all acquisitions had
occurred at the beginning of 1995), the Company's net revenue increased 5% and
4% for the three months and the nine months ended September 30, 1996,
respectively. On a same station basis, broadcast cash flow increased 20% and
10%, respectively, for those same periods.
Corporate expenses were $915,000 for the three months ended September 30,
1996, an increase of 2% for the same period in 1995. Corporate expenses were
2,741,000 for the nine months ended September 30, 1996, consistent with the same
period in 1995.
Depreciation and amortization were $2,465,000 for the three months ended
September 30, 1996, an increase of 45% from $1,701,000 for the same period in
1995. Depreciation and amortization expense was $6,757,000 for the nine months
ended September 30, 1996, an increase of 36% from $4,978,000 for the same period
in 1995. This increase was primarily attributed to the increase in depreciable
and amortizable assets resulting from recent acquisitions of radio stations in
New Orleans, Kansas City, Seattle and St. Louis, as well as the amortization of
costs associated with the Company's November 1995 issuance of $150,000,000 of
9.75% Senior Subordinated Notes due 2005 (the "Notes").
10
Interest expense was $5,424,000 and $2,551,000 for the three months ended
September 30, 1996 and 1995, respectively. Interest expense was $15,058,000 for
the nine months ended September 30, 1996, an increase of 91% from $7,894,000 for
the nine months ended September 30, 1995. This increase was due to an increase
in the aggregate amount of debt outstanding during the respective periods
resulting from the acquisitions previously noted and issuance of the Notes. The
increase is also attributed to a higher weighted average interest rate in 1996.
The Company reported net income of $1,838,000 ($0.20 per share) and
$1,115,000 ($0.12 per share) for the three months ended September 30, 1996 and
1995, respectively. The Company reported net income of $1,999,000 ($0.22 per
share) and $1,949,000 ($0.22 per share) for the nine months ended September 30,
1996 and 1995, respectively. The increase in net income for the third quarter
and the nine months ended September 30, 1996, were the result of higher
broadcast cash flow and a tax benefit resulting from a favorable IRS ruling,
which were mitigated by higher depreciation, amortization and interest expense
resulting from the Company's recent station acquisitions in Kansas City and
Seattle and the issuance of the Notes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise from its debt service, working capital
and capital expenditure requirements. Historically, the Company has met its
liquidity needs with internally generated funds and has financed the acquisition
of radio broadcasting properties with bank borrowings and proceeds from the sale
of the Company's securities. Cash flow provided by operating activities was
$7,673,000 for the nine months ended September 30, 1996. Cash flow provided by
operating activities was $3,958,000 for the same period in 1995. The increase
for the nine months ended September 30, 1996 was principally the result of
significantly higher levels of receivables, caused by higher net revenue,
partially offset by increased accrued interest due to the timing of interest
payments on the Company's Notes.
During the nine months ended September 30, 1996, the Company made net
capital expenditures totaling $4,322,000 compared to $1,811,000 for the same
period in 1995. During 1996, the Company incurred costs of approximately
$2,500,000 to construct a new office and studio facility for its Sacramento
properties. The total cost of this project will be approximately $3,400,000 and
will be completed in the fourth quarter of 1996. Total costs incurred to date
with respect to this project totaled $3,250,000 at September 30, 1996. The
Company expects maintenance capital expenditures for its radio station group to
be less than $1,000,000 for the year ended December 31, 1996 and expects to
incur additional acquisition-related capital expenditures totaling approximately
$3,500,000 through 1997 to upgrade and/or consolidate its operations in
Sacramento, Pittsburgh and Philadelphia.
Between January 1995 and September 1996, the Company borrowed an aggregate
of $77,500,000 under various credit facilities to finance in part the
acquisitions of KBEQ AM/FM, WRNO, KYCW and KEZK-FM/KFNS-AM. Net proceeds from
the sale of the Notes were used to repay in full all amounts outstanding under
the Company's $135,000,000 Credit Facility. Concurrent with the sale of the
Notes, the Company entered into a new $125,000,000 Credit Facility (the "Credit
Facility"), of which $58,500,000 was outstanding as of September 30, 1996. At
September 30, 1996, total long-term debt outstanding was $220,416,000, which
consisted of indebtedness related to the Notes, amounts outstanding under the
Credit Facility, as well as the Kansas City Notes. The current maximum
borrowing amount available under the Credit Facility is $66,500,000. The
Company expects that cash flow from operating activities in fiscal 1996 will be
sufficient to fund all debt service costs and capital expenditure requirements.
In addition, the Company's Credit Facility permits the Company to incur an
additional $50,000,000 of debt as long as the Company remains in compliance with
certain covenants after incurring such debt.
11
Both the Indenture governing the Notes and the Credit Facility contain
certain financial and operational covenants and other restrictions with which
the Company must comply, including among others, restrictions on the payment of
dividends, limitations on making capital expenditures, incurring additional
indebtedness, redeeming or repurchasing capital stock of the Company,
restrictions on the use of borrowings, requirements to maintain certain
financial ratios and limitations on acquisitions and dispositions of stations in
certain circumstances. The Company is in compliance with such covenants and
restrictions.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On January 31, 1996, EZ New Orleans, Inc. filed an application for the
renewal of the license of WEZB-FM in New Orleans, Louisiana with the Federal
Communications Commission. A petition to deny the application dated April 25,
1996, has been filed. The petition alleges, among other things, that the
licensee has presented indecent and obscene programming and improperly
maintained the station's public inspection file; it also contends that the
licensee is not qualified to do business in Louisiana. The licensee filed its
opposition to the petition to deny on June 17, 1996. The petitioners filed a
reply dated July 11, 1996. Informal objections have also been filed against the
WEZB-FM renewal application, raising allegations similar to those in the
petition. The licensee is preparing its response to the informal objections as
well as to an inquiry from the Federal Communications Commission staff
concerning public inspection file compliance. While the Company cannot predict
the outcome of these matters involving WEZB-FM at this time, the Company
believes that the challenges will not have a material adverse effect on the
Company. There can be no assurance, however, that the renewal application will
be granted.
On August 6, 1996, each of EZ and American received an informal inquiry
from the Division of Enforcement of the Securities and Exchange Commission
regarding trading activity in the stock of EZ prior to the announcement of the
proposed merger with American discussed below. On September 11, 1996, the
Division of Enforcement informally requested that each of EZ and American
voluntarily provide certain documents in connection with the Division's inquiry.
Such documents were provided to the Division by EZ on September 26, 1996 and by
American on September 27, 1996.
On September 16, 1996, EZ and American each received a Civil Investigative
Demand from the Antitrust Division of the Department of Justice requesting
certain documentary materials regarding the purchase, sale, trade or other
transfer of radio stations in Charlotte, North Carolina. Consummation of the
exchange and the acquisition, which is expected in the first quarter of 1997, is
subject to the consent of the FCC and the expiration or earlier termination of
the HSR waiting period. Upon such consummation, EZ will own six FM stations in
Charlotte and will, therefore, be required to dispose of one of these stations.
ITEM 5. OTHER INFORMATION
The Company entered into an Agreement and Plan of Merger, dated as of
August 5, 1996 and as amended and restated as of September 27, 1996, with
American, pursuant to which the Company proposes to merge with and into
American, with American, or a subsidiary of American, as the surviving
corporation. Pursuant to the merger, each outstanding share of EZ Common Stock
will be exchanged for 0.9 shares of American Class A Common Stock and $11.75
cash consideration. Consummation of the merger is conditioned upon, among other
things, receipt of the approval of the shareholders of the Company and American
and the approval of governmental authorities. The Company anticipates that the
closing of the merger will take place during the first or second quarter of
fiscal 1997.
In connection with the proposed merger, two of the Company's principal
shareholders, Arthur Kellar, Chairman of the Board of the Company, and Alan Box,
President and Chief Executive Officer of
12
the Company, entered into a voting agreement, dated as of August 5, 1996, with
American, pursuant to which Messrs. Kellar and Box have each agreed to vote the
outstanding shares of EZ Common Stock held by him in favor of the merger at the
meeting of EZ shareholders to be held for such purpose. In addition, the
Company entered into a voting agreement, dated as of August 5, 1996, with two of
American's principal shareholders, Steven B. Dodge and Thomas H. Stoner,
pursuant to which Messrs. Dodge and Stoner have each agreed to vote the
outstanding shares of American Common Stock held by him in favor of the merger
at the meeting of American shareholders to be held for such purpose. On
November 8, 1996, EZ and American each mailed to their shareholders a joint
proxy seeking shareholder approval of the merger, along with notices calling
special meetings of the shareholders of each of EZ and American on
December 17, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Number Exhibit Title
- - -------- -------------
2.01 -- Asset Purchase Agreement dated February 21, 1992 by and between
Professional Broadcasting, Incorporated, a wholly-owned
subsidiary of the Company ("PBI"), and Sundance Broadcasting of
Wisconsin, Inc. (Phoenix sale)(2)
2.02 -- Asset Purchase Agreement dated April 29, 1992 by and among PBI
and Phalen & Associates, Inc. (Jacksonville sale)(2)
2.03 -- Asset Exchange Agreement dated October 15, 1992 between the
Company and WSOC Radio, Inc. (Miami/Charlotte Exchange)(2)
2.04 -- Asset Sale Agreement dated June 30, 1989 by and between PBI and
Americom Las Vegas (Las Vegas sale)(2)
2.05 -- Asset Purchase and Sale Agreement dated October 27, 1993, by and
between KYLO Radio, Inc., the Company and Syndicated
Communications Venture Partners II, L.P. relating to KQBR-FM,
Davis, California (Sacramento Sale)(8)
3.01 -- The Company's Amended and Restated Articles(2)
3.02 -- The Company's Amended and Restated Bylaws(2)
4.01 -- Revised specimen certificate for Class A Common Stock(2)
4.02 -- Revised specimen certificate for Class B Common Stock(2)
4.03 -- Indenture, dated as of November 1, 1986, between the Company and
Crestar Bank, as successor Trustee(2)
4.04 -- Indenture, dated as of November 21, 1995, between the Company and
State Street Bank and Trust Company, as Trustee(15)
10.01 -- 1993 Equity Incentive Plan of the Company(2)
10.02 -- Form of Stock Option Agreement of the Company(3)
13
Exhibit
Number Exhibit Title
- - ------- -------------
10.03 -- Form of Stock Option Exercise Agreement of the Company(3)
10.04 -- The Company's Savings and Security Plan(2)
10.05 -- Credit Agreement, dated as of July 29, 1992, between the Company,
PBI, The Chase Manhattan Bank (National Association), The Bank of
California, N.A. and Society National Bank, as amended (the "1992
Credit Facility")(2)
10.06 -- Stock Purchase Agreement dated October 9, 1992 by and among PBI,
Miklos Benedek and KYLO Radio, Inc. (Sacramento purchase)(9)
10.07 -- Time Brokerage Agreement dated as of January 1, 1993 by and
between the Company, as Time Broker, Pittsburgh Partners, L.P., as
Licensee, and Signature Broadcasting Partners, L.P., as Guarantor,
relating to the broadcast time of WMXP-FM, Pittsburgh, Pennsylvania
(Pittsburgh LMA)(2)
10.08 -- Asset Purchase Agreement dated as of January 1, 1993 by and among
the Company, Pittsburgh Partners, L.P. and Signature Broadcasting
Partners, Ltd (Pittsburgh purchase)(10)
10.10 -- Employment Agreement between the Company and Arthur C. Kellar
dated as of June 8, 1993 (the "Kellar Employment Agreement")(2)
10.11 -- Employment Agreement between the Company and Alan L. Box dated as
of June 8, 1993 (the "Box Employment Agreement)(2)
10.12 -- Form of Indemnity Agreement entered into by the Company with each
of its directors and executive officers(2)
10.13 -- Amendment No. 3, dated as of July 12, 1993, to the 1992 Credit
Facility(2)
10.14 -- Amendment No. 4, dated as of August 10, 1993, to the 1992 Credit
Facility(2)
10.15 -- Asset Purchase Agreement dated September 29, 1993, by and between
PBI and Pacific and Southern Company, Inc. relating to KUSA-AM and
KSD-FM, St. Louis, Missouri (St. Louis purchase)(4)
10.16 -- Local Marketing Agreement dated September 29, 1993, by and
between PBI and Pacific and Southern Company, Inc. relating to KUSA-AM
and KSD-FM, St. Louis, Missouri (St. Louis LMA)(4)
10.17 -- Agreement of Sale dated October 4, 1993, by and between PBI and
Nationwide Communications Inc. relating to KNCI-FM, Sacramento,
California (Sacramento purchase)(4)
10.18 -- Sales and Services Agreement dated October 4, 1993, by and
between PBI and Nationwide Communications Inc. relating to KNCI-FM,
Sacramento, California (Sacramento services agreement)(4)
14
Exhibit
Number Exhibit Title
- - ------- -------------
10.20 -- Time Brokerage Agreement dated November 10, 1993, by and between
KYLO Radio, Inc. and Syndicated Communications Venture
Partners II, L.P. relating to KQBR-FM, Davis, California
(Sacramento LMA)(4)
10.21 -- Amendment No. 5, dated as of December 17, 1993, to the 1992
Credit Facility(5)
10.22 -- Asset Purchase Agreement dated April 7, 1994 by and between PBI
and CLG Media, Inc. of Seattle, and CLG Media, Inc., relating to
KZOK-FM, Seattle, Washington (Seattle purchase)(6)
10.23 -- Amendment No. 6, dated as of April 12, 1994, to the 1992 Credit
Facility(6)
10.24 -- Amendment No. 7, dated as of April 20, 1994, to the 1992 Credit
Facility(6)
10.25 -- Asset purchase agreement dated as of May 6, 1994, by and between
PBI and Tak Communications, Inc. relating to WUSL-FM, Philadelphia,
Pennsylvania, and WTPX-FM, Ft. Lauderdale, Florida(6)
10.26 -- Time Brokerage Agreement dated as of May 6, 1994, by and between
PBI, as Broker, and Tak Communications, Inc., as Debtor-in-Possession
("Licensee") relating to the broadcast time of WUSL-FM, Philadelphia,
Pennsylvania (Philadelphia LMA)(6)
10.27 -- Time Brokerage Agreement dated as of May 6, 1994, by and between
PBI, as Broker, and Tak Communications, Inc., as Debtor-in-Possession
("Licensee") relating to the broadcast time of WTPX-FM, Miami, Florida
(Miami LMA)(6)
10.28 -- Asset Purchase Agreement dated as of August 2, 1994, by and
between PBI and the Seventies Broadcasting Corporation relating to
WTPX-FM, Miami/Ft. Lauderdale (Miami/Ft. Lauderdale sale)(1)
10.29 -- Amendment No.8, dated as of August 9, 1994, to the 1992 Credit
Facility(11)
10.30 -- Credit Agreement, dated as of October 11, 1994, between the
Company, the Subsidiary Guarantors and The Chase Manhattan Bank
(National Association), individually and as agent for other banks (the
"1994 Credit Facility")(12)
10.31 -- Asset Purchase Agreement dated as of November 28, 1994, by and
between PBI and Radio Vanderbilt, Inc. relating to WBYU-AM, New
Orleans, Louisiana (WBYU purchase)(13)
10.32 -- Amendment No. 1, dated as of December 15, 1994, to the 1994
Credit Facility(13)
10.33 -- Asset Purchase Agreement dated as of December 19, 1994, by and
between PBI and Radio WRNO-FM, Inc. relating to WRNO-FM, New Orleans,
Louisiana (WRNO purchase)(13)
15
Exhibit
Number Exhibit Title
- - ------- -------------
10.34 -- Local Marketing Agreement dated as of December 19, 1994, by and
between PBI and Radio WRNO-FM, Inc. relating to WRNO-FM, New
Orleans, Louisiana (WRNO LMA)(13)
10.35 -- Asset Purchase Agreement dated as of January 6, 1995, by and
among PBI and Noble Broadcast of Kansas City, Inc. relating to
KBEQ AM/FM, Kansas City, Missouri (KBEQ Purchase)(13)
10.36 -- Option and Asset Purchase Agreement dated as of January 6, 1995,
by and among PBI and the Company, and KFKF Broadcasting, Inc. and
Intracoastal Broadcasting, Inc. relating to KFKF-FM, Kansas City,
Missouri (KFKF purchase)(13)
10.37 -- Time Brokerage Agreement dated as of March 10, 1995, by and
between PBI and KFKF Broadcasting, Inc. relating to KBEQ AM/FM
(Kansas City LMA)(13)
10.38 -- KFKF Option Agreement dated as of January 6, 1995, by and among
PBI, the Company, KFKF Broadcasting, Inc. and Intracoastal
Broadcasting, Inc. as amended (KFKF Option)(14)
10.39 -- Amendment No.1, dated as of June 1, 1995, to the Kellar
Employment Agreement(14)
10.40 -- Amendment No.1, dated as of June 1, 1995, to the Box Employment
Agreement(14)
10.41 -- Credit Agreement, dated as of November 20, 1995, between the
Company, the Subsidiary Guarantors and the Chase Manhattan Bank
(National Association), individually and as agent for other banks
(the "1995 Credit Facility")(15)
10.42 -- Asset Purchase Agreement, dated as of February 7, 1996 by and
between PBI and Infinity Broadcasting Corporation of Washington
relating to KYCW-FM (KYCW purchase)(15)
10.43 -- Amended and Restated Asset Purchase Agreement, dated as of March
15, 1996, by and between PBI and Infinity Broadcasting Corporation
of Washington related to KYCW-FM(15)
10.44 -- Asset Exchange Agreement, dates as of March 31, 1996, by and
between PBI and EZ New Orleans, Inc. and Heritage Media, Inc.
("HMI") relating to WEZB-FM, WRNO-FM, WBYU-AM, KCIN-FM and KRPM-AM
(the New Orleans/Seattle Exchange)(16)
10.45 -- Time Brokerage Agreement, dated as of March 18, 1996, by and
between EZ New Orleans, Inc. and HMI relating to WEZB-FM, WRNO-FM
and WBYU-AM (the New Orleans TBA)(16)
10.46 -- Time Brokerage Agreement, dated as of March 18, 1996, by and
between HMI and PBI relating to KCIN-FM and KRPM-AM (the KCIN/KRPM
TBA)(16)
16
Exhibit
Number Exhibit Title
- - ------- -------------
10.47 -- Asset Purchase Agreement, dated as of April 5, 1996, by and among
Par Broadcasting Company, Inc. and PBI, relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK purchase)(16)
10.48 -- Time Brokerage Agreement, dated as April 5, 1996, by and between
PBI and Par Broadcasting Company, Inc., relating to KEZK-FM and
KFNS-AM, St. Louis (KEZK TBA)(16)
10.49 -- Agreement and Plan of Merger dated as of August 5, 1996, and as
amended and restated as of September 27, 1996, by and between the
Company and American Radio Systems Corporation (the "Merger
Agreement")(17)
10.50 -- The EZ Voting Agreement (17)
10.51 -- The American Voting Agreement (17)
19.02 -- The Company's 1993 Annual Report to Shareholders(7)
19.03 -- The Company's Proxy Statement dated March 31, 1995 and filed with
the Securities and Exchange Commission on March 31, 1995(13)
19.04 -- The Company's 1994 Annual Report to Shareholders(13)
19.05 -- The Company's Proxy Statement dated March 29, 1996 and filed with
the Securities and Exchange Commission on March 29, 1996(15)
19.06 -- The Company's 1995 Annual Report to Shareholders(15)
23.01 -- Consent of Ernst & Young LLP, Independent Auditors(15)
24.01 -- Powers of Attorney
_____________
* Filed herewith.
(1) Incorporated by reference to similarly numbered exhibit in the
Company's Registration Statement on Form S-1 (File No. 33-82392) originally
filed with the Securities and Exchange Commission on August 3, 1994.
(2) Incorporated by reference to similarly numbered exhibit in the
Company's Registration Statement on Form S-1 (File No. 33-64226) originally
filed with the Securities and Exchange Commission on June 10, 1993, as
amended ("1993 S-1").
(3) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-Q for the quarterly period ended June 30, 1993 (File No.
0-16265) originally filed with the Securities and Exchange Commission on
September 17, 1993, as amended.
(4) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-Q for the quarterly period ended September 30, 1993 (File
No. 0-16265) originally filed with the Securities and Exchange Commission
on November 15, 1993, as amended.
17
(5) Incorporated by reference to similarly numbered exhibit in the
Company's Form 8-K as of February 10, 1994 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on February 25, 1994.
(6) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-Q for the quarterly period ended March 31, 1994 (File No.
0-16265) originally filed with the Securities and Exchange Commission on
May 13, 1994.
(7) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-K as of December 31, 1993 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on March 31, 1994.
(8) Incorporated by reference to Exhibit 10.19 in the September 30, 1993
Form 10-Q.
(9) Incorporated by reference to Exhibit 2.05 in the 1993 S-1.
(10) Incorporated by reference to Exhibit 2.06 in the 1993 S-1.
(11) Incorporated by reference to similarly numbered exhibit in the
Company's Form 8-K as of August 23, 1994 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on September 2, 1994.
(12) Incorporated by reference to similarly numbered exhibit in the
Company's Form 8-K as of October 12, 1994 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on October 27, 1994.
(13) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-K as of December 31, 1994 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on March 31, 1995.
(14) Incorporated by reference to Exhibit 2.01 in the Company's
Registration Statement on Form S-3 (File No. 33-98450) originally filed
with the Securities and Exchange Commission on October 20, 1995, as amended
("1995 S-3").
(15) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-K as of December 31, 1995 (File No. 0-16265) originally
filed with the Securities and Exchange Commission on March 29, 1996.
(16) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-Q for the quarterly period ended March 31, 1996 (File No.
0-16265) originally filed with the Securities and Exchange Commission on
May 15, 1996.
(17) Incorporated by reference to similarly numbered exhibit in the
Company's Form 10-Q for the quarterly period ended June 30, 1996 (File No.
0-16265) originally filed with the Securities and Exchange Commission on
August 14, 1996.
(b) Reports on Form 8-K filed in the third quarter of 1996
Form 8-K dated July 30, 1996.
Item 2. Acquisition or Disposition of Assets. Acquisition of
KEZK-FM and KFNS-AM.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits. Acquisition of KEZK-FM and KFNS-AM.
18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 14, 1996 EZ COMMUNICATIONS, INC.
By: Ronald H. Peele, Jr.
--------------------------------
Ronald H. Peele, Jr.
Chief Financial Officer and
Chief Accounting Officer
19