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SIXTH PROSPECTUS SUPPLEMENT AUGUST 20, 1999
(TO PROSPECTUS DATED FEBRUARY 2, 1999) FILED PURSUANT TO RULE 424(B)(3) AND (C)
FILE NO. 33-82114
RECENT DEVELOPMENTS
This Sixth Prospectus Supplement supplements and amends the Prospectus
dated February 2, 1999 and the Prospectus Supplements dated February 19, 1999,
March 5, 1999, May 24, 1999, July 8, 1999 and August 11, 1999 (the "Prospectus
Supplement", and together with the Prospectus, the "Supplemented Prospectus")
relating to our Senior Preferred Stock, Exchange Debentures and Common Stock.
This Prospectus Supplement and the Prospectus have been prepared by us for use
by holders of our Senior Preferred Stock, Exchange Debentures or Common Stock in
connection with sales of our securities that may require delivery of a
prospectus. We will receive no part of the proceeds of this offering.
This Sixth Prospectus Supplement should be read in conjunction with the
Supplemented Prospectus, and is qualified by reference to the Supplemented
Prospectus except to the extent that the information in this Sixth Prospectus
Supplement supersedes the information contained in the Supplement Prospectus.
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PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined statement of operations data for the
fiscal year ended September 28, 1997 is presented to give effect to the
Transactions as if they had occurred at the beginning of the year. The results
of WLEY-FM have not been included in the pro forma statement of operations
because such acquisition does not meet the significance test for presentation of
pro forma information and the Company does not believe that such information
would be meaningful to an understanding of the Company's pro forma results of
operations because the Company reformatted WLEY-FM from an English-language to a
Spanish-language station in July 1997. The results of KLEY-FM have not been
included in the pro-forma statement of operations because such acquisition does
not meet the significance test for presentation of pro-forma information. As a
result, the pro forma statement of operations data excludes the actual and pro
forma operating results of WLEY-FM and KLEY-FM.
The purchase prices of WLEY-FM, WXDJ-FM and WRMA-FM were determined based
upon arms-length negotiations between the Company and the sellers. The purchase
price for the Acquisitions have been allocated primarily to franchise costs and
other intangibles. This preliminary allocation of purchase price may change upon
final appraisal of the fair market value of the net assets acquired.
In the opinion of management, all adjustments necessary to present fairly
this pro forma information have been made.
These pro forma combined financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes thereto as of
and for the fiscal years ended September 27, 1998, September 28, 1997 and
September 29, 1996 and with the combined financial statements and the notes
thereto of New Age Broadcasting, Inc. and The Seventies Broadcasting Corporation
for the three months ended December 31, 1996 included elsewhere in the
Prospectus. The pro forma information is not necessarily 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.
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PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
FISCAL YEAR ENDED SEPTEMBER 28, 1997
----------------------------------------------
THE WXDJ/ PRO
COMPANY WRMA(A) ADJUSTMENTS FORMA
-------- ------- ----------- --------
Gross broadcasting revenues............................ $67,981 $7,798 $ $ 75,779
Less: agency commissions............................... (7,971) (1,046) (9,017)
-------- ------- --------
Net revenues......................................... 60,010 6,752 66,762
Station operating expenses............................. 31,041 2,104 33,145
Corporate expenses..................................... 5,595 238 (238)(b) 5,595
Depreciation and amortization.......................... 7,619 551 841(c) 9,011
-------- ------- --------
Operating income..................................... 15,755 3,859 19,011
Interest expense, net.................................. 22,201 1,003 547(d) 23,751
Other expense, net..................................... 791 -- 791
-------- ------- --------
Income (loss) before income taxes and extraordinary
item............................................... (7,237) 2,856 (5,531)
Income tax expense (benefit)........................... (2,715) -- 682(e) (2,033)
-------- ------- --------
Income (loss) before extraordinary item.............. (4,522) $2,856 (3,498)
=======
Dividends on preferred stock......................... (15,384) (11,330)(f) (26,714)
-------- --------
Loss applicable to common stock before extraordinary
items................................................ $(19,906) $(30,212)
======== ========
Ratio of Earnings to Fixed Charges(g).................. -- --
EBITDA reconciliation:
Operating income..................................... $15,755 $ 19,011
Depreciation and amortization........................ 7,619 9,011
-------- --------
EBITDA............................................... $23,374 $ 28,022
======== ========
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NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
(a) To reflect the historical operating results for WXDJ-FM and WRMA-FM from
October 1, 1996 through March 27, 1997 based upon unaudited financial
statements. The fiscal year end for WXDJ-FM and WRMA-FM was September 30,
under the ownership of the sellers, New Age Broadcasting, Inc. and The
Seventies Broadcasting Corporation, respectively.
(b) To reflect adjustment to corporate expense for the elimination of corporate
expenses which would not be incurred following the WXDJ-FM/WRMA-FM
acquisition.
(c) To reflect additional pro forma depreciation and amortization related to
the acquisition of WXDJ-FM and WRMA-FM, for the period prior to
acquisition, based upon a preliminary allocation of the purchase price and
related amortization reflected as follows:
WXDJ/WRMA
----------
Franchise costs and other intangible assets, net............ $112,500
--------
Pro forma amortization.................................... $ 1,406
Less: depreciation and amortization-historical............ (565)
--------
Pro forma adjustment...................................... $ 841
========
(d) To reflect adjustments to interest expense as a result of the Transactions:
Pro forma interest on the Notes at 11% per annum............ $ 4,126
Pro forma interest on the seller note to Infinity (assumed
interest rate of 10% per annum)........................... 150
Pro forma amortization of debt issuance costs of the
Notes..................................................... 262
Interest expense, including amortization of debt issuance
costs, on the Senior Secured Notes retired in the
Transactions.............................................. (2,988)
Interest expense -- WXDJ-FM/WRMA-FM-historical.............. (1,003)
-------
Pro forma adjustment........................................ $ 547
=======
(e) To reflect income tax effect of the above items.
(f) To reflect adjustments to preferred stock dividends as a result of the
Transactions for the period prior to the Transactions:
Elimination of dividends on Preferred Stock................. $ 15,384
Assumed dividends on Senior Preferred Stock at 14 1/4%
per annum................................................. (26,714)
--------
Pro forma adjustment........................................ $(11,330)
========
(g) For the purpose of calculating the Ratio of Earnings to Fixed Charges,
earnings are defined as earnings or loss before income taxes and
extraordinary items and fixed charges. Fixed charges are the sum of (i)
interest costs, (ii) amortization of deferred financing costs, (iii)
one-third of operating lease rental expense (deemed to be interest) and
(iv) dividends on preferred stock. Earnings were inadequate to cover fixed
charges by $9,361,000 and $34,514,000 for fiscal years 1996 and 1997,
respectively.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
The selected consolidated financial data presented below under the captions
"Statement of Operations Data" and "Balance Sheet Data" as of and for each of
the fiscal years in the five-year period ended September 27, 1998, are derived
from the consolidated financial statements of the Company, which consolidated
financial statements have been audited by KPMG LLP, independent certified public
accountants. The consolidated financial statements as of September 27, 1998 and
for each of the years in the three-year period ended September 27, 1998 and the
report thereon, are included elsewhere in this prospectus. The selected
consolidated financial data of the Company should be read in conjunction with
the consolidated financial statements of the Company as of September 27, 1998
and for each of the fiscal years in the three-year period ended September 27,
1998, the related notes and independent auditor's report, included elsewhere in
this prospectus. For additional information see "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
FISCAL YEAR ENDED
-----------------------------------------------------
9/25/94 9/24/95 9/29/96 9/28/97 9/27/98
--------- ------- -------- --------- --------
STATEMENT OF OPERATIONS DATA:
Gross broadcasting revenues................................. $ 45,825 $54,152 $ 55,338 $ 67,982 $ 86,766
Less: agency commissions.................................... 5,688 6,828 6,703 7,972 10,623
--------- ------- -------- --------- --------
Net revenues.............................................. 40,137 47,324 48,635 60,010 76,143
Station operating expenses(1)............................... 22,145 22,998 27,876 31,041 39,520
Corporate expenses(1)....................................... 2,884 4,281 3,748 5,595 6,893
Depreciation and amortization............................... 3,256 3,389 4,556 7,619 8,877
--------- ------- -------- --------- --------
Operating income (loss)................................... 11,852 16,656 12,455 15,755 20,853
Gain on sale of AM stations................................. -- -- -- -- 36,242
Interest expense, net(2).................................... 14,203 12,874 16,533 22,201 20,860
Financing costs............................................. 3,458 -- 876 299 213
Other expense (income)(3)................................... (35) 381 698 492 --
--------- ------- -------- --------- --------
Income (loss) before income taxes and extraordinary
items................................................... (5,774) 3,401 (5,652) (7,237) 36,022
Income tax expense (benefit)................................ (2,231) 1,411 (1,166) (2,715) 15,624
--------- ------- -------- --------- --------
Income (loss) before extraordinary items.................. (3,543) 1,990 (4,486) (4,522) 20,398
Extraordinary gain (loss) net of income taxes(4)............ 70,255 -- -- (1,647) (1,613)
--------- ------- -------- --------- --------
Net income (loss)......................................... $ 66,712 $ 1,990 (4,486) (6,169) 18,785
========= =======
Dividends on preferred stock................................ (2,994) (17,044) (30,270)
-------- --------- --------
Net income (loss) applicable to common stock.............. $ (7,480) $ (23,213) $(11,485)
======== ========= ========
Dividends per share on common stock......................... -0- -0- -0- -0- $ 5.60
========= ======= ======== ========= ========
OTHER DATA:
Broadcast cash flow(5)...................................... $ 17,992 $24,326 $ 20,759 $ 28,969 $ 36,623
EBITDA(6)................................................... 15,108 20,045 17,011 23,374 29,730
Capital expenditures........................................ 897 4,888 3,811 2,022 1,645
Net cash interest........................................... 12,916 7,459 7,759 13,175 18,658
Non-cash interest........................................... 1,287 5,415 8,774 9,026 2,202
--------- ------- -------- --------- --------
Interest expense, net..................................... 14,203 12,874 16,533 22,201 20,860
Net cash provided by operating activities................... 4,121 14,438 8,813 6,386 10,923
Net cash provided by (used in) investing activities......... (897) (4,988) (90,195) (144,358) 32,190
Net cash provided by (used in) financing activities......... 4,514 3,769 69,036 144,791 (17,758)
Ratio of Earnings to Fixed Charges(7)....................... -- 1.2 -- -- --
AT
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9/25/94 9/24/95 9/29/96 9/28/97 9/27/98
BALANCE SHEET DATA: --------- ------- -------- --------- ---------
Cash and cash equivalents................................... $ 12,137 $17,817 $ 5,468 $ 12,288 $ 37,642
Net working capital (deficiency)............................ 11,981 21,994 9,172 1,626 40,349
Total assets................................................ 98,733 103,629 176,860 334,367 351,034
Total debt (including current maturities)................... 93,573 95,523 135,914 183,013 171,126
Series A Preferred Stock.................................... -- -- 35,939 171,262 201,368
Shareholders' deficiency.................................... (2,960) (1,150) (3,569) (32,047) (46,193)
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NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(1) Station operating expenses include engineering, programming, selling and
general and administrative expenses.
(2) Interest expense includes non-cash interest, such as the accretion of
principal, the amortization of discounts on debt and the amortization of
deferred financing costs.
(3) During the 1996 and 1997 fiscal years, we wrote down the value of our land
and building located on Sunset Boulevard in Los Angeles by $697,741 and
$487,973, respectively. The write-downs were based on current market values
of real estate in the Los Angeles area. Financing costs are also included in
other income (expenses).
(4) On June 29, 1994, we sold 107,059 units, each consisting of $1,000 principal
amount of our Old Notes and Old Warrants. The Old Notes were issued at a
substantial discount from their principal amount. The sale of the Old Notes
and Old Warrants generated gross proceeds of $94,000,000 and proceeds to us
of $87,774,002, net of financing costs of $6,225,998. Of the $94,000,000 of
gross proceeds from the sale of the Old Notes and Old Warrants, $88,603,000
was allocated to the Old Notes and $5,397,000 was determined to be the value
of the Old Warrants. Of the net proceeds from the sale of the Old Notes and
the Old Warrants, $83,000,000 was used to satisfy in full our obligations to
our two former principal lenders and the balance was used to settle
litigation with a former stockholder and for general corporate purposes. We
realized a gain of $70,254,772 in connection with our repayment of all
obligations to our two former principal lenders because we were able to
satisfy in full these obligations at substantial discounts to their face
amounts in accordance with restructuring agreements between us and the
lenders.
For the fiscal year ended September 28, 1997, we recorded an extraordinary
loss resulting from the redemption of our Series A Senior Notes at par which
was approximately $1.5 million in excess of their carrying value and from
the write-off of the related unamortized deferred financing costs of
approximately $1.3 million, net of the related tax benefit of approximately
$1.1 million.
For the fiscal year ended September 27, 1998, we recorded an extraordinary
loss resulting from the repurchase of $13.2 million par value of Old Notes,
at a premium of approximately $2.2 million in excess of their carrying value
and from the write-off of the related unamortized deferred financing costs
of approximately $0.5 million, net of the related tax benefit of
approximately $1.1 million.
(5) The term "broadcast cash flow" means operating income before depreciation,
amortization and corporate expenses. Broadcast cash flow should not be
considered in isolation from, or as a substitute for, net income or cash
flow and other consolidated income or cash flow statement data or as a
measure of our profitability or liquidity. Although broadcast cash flow is
not a measure of performance calculated in accordance with generally
accepted accounting principles, broadcast cash flow is widely used in the
broadcasting industry as a measure of a broadcasting company's operating
performance.
(6) The term "EBITDA" means earnings before extraordinary items, gain on sale of
AM stations, net interest expense, income taxes, depreciation, amortization
and other income or expense. We have included information concerning EBITDA
in this Prospectus because it is used by some investors as a measure of a
company's ability to service its debt obligations. Although EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, EBITDA is widely used in the broadcasting industry as
a measure of a broadcasting company's operating performance.
(7) For the purpose of calculating the Ratio of Earnings to Fixed Charges,
earnings are defined as earnings or loss before income taxes and
extraordinary items and fixed charges. Fixed charges are the sum of (1)
interest costs, (2) amortization of deferred financing costs, (3) one-third
of operating lease rental expense (deemed to be interest) and (4) dividends
on preferred stock. Earnings were inadequate to cover fixed charges by
$5,774,000, $9,361,000, $34,514,000 and $17,434,000 for fiscal years 1994,
1996, 1997 and 1998, respectively.
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