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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 19, 1998
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Citadel Communications Corporation
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(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State of Other Jurisdiction of Incorporation)
000-24515 86-0748219
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(Commission File Number) (IRS Employer Identification No.)
140 South Ash Avenue
Tempe, Arizona 85281
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(Address of Principal Executive Offices) (Zip Code)
(602) 731-5222
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS.
As previously reported, on November 19, 1998, Citadel Broadcasting
Company ("CBC"), a subsidiary of Citadel Communications Corporation (the
"Company"), sold an aggregate of $115.0 million in principal amount of its 9-
1/4% Senior Subordinated Notes due 2008 (the "Notes") in a private placement
transaction. The aggregate sale price was $115.0 million, and the aggregate net
proceeds to CBC were approximately $111.0 million. CBC repaid all amounts
outstanding under its revolving credit facility, and it intends to use the
remaining net proceeds to finance acquisitions and for general corporate
purposes.
As previously announced, on November 23, 1998, CBC entered into an
Asset Purchase Agreement with Wicks Broadcast Group Limited Partnership and
certain related entities (collectively, "Wicks") to acquire a total of ten FM
and six AM radio stations in Charleston, South Carolina, Binghamton, New York
and Muncie and Kokomo, Indiana, each a market where CBC does not presently own
any other radio stations, for an aggregate purchase price of $77.0 million in
cash. CBC has delivered an irrevocable letter of credit in favor of Wicks in the
amount of $5.0 million to secure certain of CBC's obligations under the asset
purchase agreement. The asset purchase agreement contains customary
representations and warranties of the parties, and consummation of the
transaction is subject to certain conditions including (i) the receipt of the
Federal Communications Commission's consent to the transfer of the station
licenses to CBC or its subsidiary, Citadel License, Inc., (ii) the expiration or
termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and (iii) the receipt of
consents to the assignment to CBC of certain material contracts relating to the
stations.
This Current Report on Form 8-K/A (Amendment No. 1) has been filed in
order to file the asset purchase agreement as an exhibit and in order to
incorporate certain financial information of Wicks Radio Group (a division of
the Wicks Broadcast Group Limited Partnership) (collectively, the Financial
Statements) in the Company's Registration Statement No. 333-65279. The Financial
Statements are set forth below in Item 7 and are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. The following Financial Statements are included
herein pursuant to Item 7(a):
Independent Auditors' Report
Balance sheets as of December 31, 1997 and September 30, 1998
(unaudited)
Statements of Operations and Changes in Division Equity for the year
ended December 31, 1997 and the nine months ended September 30, 1998
(unaudited)
Statements of Cash Flows for the year ended December 31, 1997 and for
the nine months ended September 30, 1998 (unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information. The following pro forma financial
information of Citadel Communications and Subsidiaries is included
herein pursuant to Item 7(b):
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended September 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended September 30, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Balance Sheet at September
30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(c) The following exhibits are filed as part of this report pursuant to
Item 7(c):
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2.1 Asset Purchase Agreement dated November 23, 1998 by and among Wicks
Broadcast Group Limited Partnership, WBG License Co., L.L.C., Butternut
Broadcasting Company, Inc., WBG Binghamton License Co., Inc. and
Citadel Broadcasting Company.
4.1 Indenture dated as of November 19, 1998 among Citadel Broadcasting
Company, Citadel License, Inc. and The Bank of New York, as Trustee,
with the form of 9 1/4% Senior Subordinated Notes due 2008 included
therein (previously filed).
10.1 Tenth Amendment to Loan Instruments dated November 3, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.2 Eleventh Amendment to Loan Instruments dated November 17, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.3 Twelfth Amendment to Loan Instruments dated November 19, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
23.1 Consent of KPMG Peat Marwick LLP
99.1 Press Release dated November 19, 1998 (previously filed).
99.2 Press Release dated November 23, 1998 (previously filed).
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INDEPENDENT AUDITORS' REPORT
The Partners
Wicks Radio Group
(a division of Wicks Broadcast Group Limited Partnership)
We have audited the accompanying balance sheet of Wicks Radio Group (a
division of Wicks Broadcast Group Limited Partnership) as of December 31, 1997,
and the related statements of operations and changes in division equity, and
cash flows for the year then ended. These financial statements are the
responsibility of Wicks Radio Group's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wicks Radio Group (a
division of Wicks Broadcast Group Limited Partnership) as of December 31, 1997
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
McLean, Virginia
December 15, 1998
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
ASSETS
Cash and cash equivalents................................... $ 104,940 $ 326,168
Accounts receivable, net of allowance for doubtful accounts
of $286,811 at December 31, 1997 and $311,650 at
September 30, 1998........................................ 2,123,972 3,126,098
Prepaid expenses and other assets........................... 58,099 203,819
----------- -----------
Total current assets................................... 2,287,011 3,656,085
Property and equipment, net................................. 4,617,141 6,277,822
Intangible assets, net...................................... 25,047,120 38,242,931
----------- -----------
Total assets........................................... $31,951,272 $48,176,838
=========== ===========
LIABILITIES AND DIVISION EQUITY
Current liabilities -- accounts payable and accrued
expenses.................................................. $ 489,238 $ 513,650
Deferred income taxes....................................... 560,000 530,000
----------- -----------
Total liabilities...................................... 1,049,238 1,043,650
Division equity............................................. 30,902,034 47,133,188
----------- -----------
Total liabilities and division equity.................. $31,951,272 $48,176,838
=========== ===========
See accompanying notes to financial statements.
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND CHANGES IN DIVISION EQUITY
(UNAUDITED)
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -----------------
Revenues:
Broadcast revenues........................................ $12,751,347 $13,837,308
Other revenue............................................. 346,790 500,346
----------- -----------
Gross revenues.............................................. 13,098,137 14,337,654
Less -- agency commissions................................ (1,320,388) (1,387,370)
----------- -----------
Net revenue................................................. 11,777,749 12,950,284
Operating costs:
Station operating expenses................................ 8,269,884 8,668,765
Depreciation and amortization............................. 2,301,180 3,052,064
Corporate overhead........................................ 1,008,602 587,049
----------- -----------
11,579,666 12,307,878
Net income before income taxes.............................. 198,083 642,406
Income taxes (benefit)...................................... (40,000) (30,000)
----------- -----------
Net income.................................................. 238,083 672,406
Division equity, beginning of period........................ 23,281,430 30,902,034
Net corporate transfers..................................... 7,382,521 15,558,748
----------- -----------
Division equity, end of period.............................. $30,902,034 $47,133,188
=========== ===========
See accompanying notes to financial statements.
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
----------- -----------------
Cash flows from operating activities:
Net income................................................ $ 238,083 $ 672,406
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,301,180 3,052,064
Deferred tax benefit................................... (40,000) (30,000)
(Increase) decrease in receivables..................... 65,154 (1,002,126)
Increase in prepaid expenses and other current
assets............................................... (50,794) (145,720)
Increase (decrease) in accounts payable and accrued
expenses............................................. (1,515,667) 24,412
----------- ------------
Net cash provided by operating activities............ 997,956 2,571,036
----------- ------------
Cash flows used in investing activities:
Purchase of property and equipment........................ (369,460) (145,157)
Acquisition of broadcast properties....................... (8,672,770) (17,763,399)
----------- ------------
Cash flows used in investing activities..................... (9,042,230) (17,908,556)
----------- ------------
Cash flows provided by financing activities -- net corporate
transfers................................................. 7,382,521 15,558,748
----------- ------------
Net increase (decrease) in cash and cash equivalents........ (661,753) 221,228
Cash and cash equivalents, beginning of period.............. 766,693 104,940
----------- ------------
Cash and cash equivalents, end of period.................... $ 104,940 $ 326,168
=========== ============
See accompanying notes to financial statements.
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS DESCRIPTION
The Wicks Radio Group (the "Broadcast Group") is a division of Wicks
Broadcast Group Limited Partnership (the "Partnership"). The Broadcast Group
consists of the thirteen radio stations (8 FMs and 5 AMs) serving the
Charleston, SC and Binghamton, NY markets as of December 31, 1997. In January
1998, the Broadcast Group acquired an additional three stations (2 FMs and
1 AM). See note 3.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents consist
of highly liquid investments with original maturities of three months or less.
The fair market value of such investments approximates cost.
Property and Equipment
Property and equipment are stated at cost. Depreciation expense is computed
using the straight-line method over the estimated useful lives of the assets,
which range from three to twenty years.
Intangible Assets and Recovery of Long-Lived Assets
Intangible assets consist principally of network affiliation agreements,
broadcasting licenses, covenants not to compete and the excess of costs over the
fair value of net assets acquired. Amortization expense is computed on a
straight-line basis over the estimated lives of the assets which range from 2-15
years.
The Partnership's policy is to review its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The Partnership recognizes an impairment loss when the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset. The measurement of the impairment losses to be recognized
is based upon the difference between the fair value and the carrying amount of
the assets.
Income Taxes
The Broadcast Group is generally not an entity subject to income taxes. The
Broadcast Group's income or loss is passed through to the Partnership and the
related tax attributes are deemed to be distributed to, and to be reportable by,
the partners of the Partnership on their respective income tax returns.
However, the Broadcast Group contains the Partnership's subsidiary,
Regional Group, Inc. Regional Group, Inc. and its subsidiaries are Subchapter C
corporations, and are, therefore, responsible for the income taxes attributable
to their profit and losses.
Income taxes for Regional Group, Inc. and its subsidiaries are accounted
for under the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating losses and tax credit
carryforwards. Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized
into income in the period that includes the enactment date. The income tax
benefit is a result of the amortization of the deferred tax liability.
Revenues
Broadcasting revenues are derived principally from the sale of program time
and spot announcements to local, regional, and national advertisers. Advertising
revenue is recognized in the period during which the program time and spot
announcements are broadcast.
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Barter Transactions
Barter transactions are recorded at the estimated fair values of the
products and services received. Barter revenues are recognized when commercials
are broadcast. The assets or services received in exchange for broadcast time
are recorded when received or used.
Corporate Overhead
A number of overhead services are maintained centrally by the Partnership
and are allocated to its business units based on the benefits provided. These
services include most of the costs associated with the human resources function
and certain general and administrative costs of the corporate function such as
accounting and finance, treasury and legal.
In addition, the Partnership provides for the working capital needs of the
Broadcast Group. There is no borrowing arrangement between the Partnership and
the Broadcast Group. Accordingly, no interest expense is recorded in the
accompanying financial statements. However, all of the assets of the Broadcast
Group have been pledged as collateral on the Partnership's credit facility.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
A significant portion of the Broadcast's Group accounts receivable are due
from advertising agencies.
Unaudited Interim Financial Information
The unaudited balance sheet, statements of operations and changes in
division equity, and cash flows as of September 30, 1998 and for the nine months
then ended have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions of
Regulation S-X. 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 interim period are not necessarily
indicative of the results that may be expected for any future period including
the year ending December 31, 1998.
(3) ACQUISITION OF BROADCAST RADIO STATIONS
In December 1997, the Partnership acquired certain broadcasting assets of
WBUB-FM (St. George, South Carolina) and WXTC-AM (Charleston, South Carolina)
and upgraded the frequency of one of its existing FM stations in the Charleston,
South Carolina, market through a swap of broadcast license rights.
In January 1998, the Partnership acquired certain broadcasting assets of
WMDH-FM and WMDH-AM (Muncie, Indiana) and WWKI-FM (Kokomo, Indiana).
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Total consideration paid for these acquisitions including costs of
acquisitions was approximately $8,673,000 in 1997 and $17,764,000 (unaudited) in
1998. These acquisitions have been accounted for under the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed have
been recorded at their estimated fair value as of the acquisition date, as
determined by an independent appraiser. The allocation of the purchase price is
summarized as follows:
(UNAUDITED)
1997 1998
---------- -----------
Land........................................................ $ 68,000 $ 107,000
Property and equipment...................................... 2,260,000 2,194,000
Intangible assets........................................... 6,345,000 15,463,000
---------- -----------
Total consideration paid.................................... $8,673,000 $17,764,000
========== ===========
(4) PROPERTY AND EQUIPMENT
A summary of property and equipment is as follows:
(UNAUDITED)
DECEMBER 31, September 30,
1997 1998
------------ -------------
Land........................................................ $ 168,615 $ 275,318
Building and improvements................................... 267,370 989,413
Office equipment, furniture, and fixtures................... 430,259 581,724
Broadcast and production equipment.......................... 4,980,885 6,432,008
Vehicles.................................................... 81,137 94,660
----------- -----------
5,928,266 8,373,123
Less accumulated depreciation............................... (1,311,125) (2,095,301)
----------- -----------
$ 4,617,141 $ 6,277,822
=========== ===========
(5) INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are comprised of the following:
(UNAUDITED)
USEFUL LIFE DECEMBER 31, September 30,
IN YEARS 1997 1998
----------- ------------ -------------
FCC licenses................................................ 15 $14,548,860 $23,996,860
Network affiliations........................................ 15 1,372,056 2,869,114
Goodwill.................................................... 15 9,721,115 14,239,756
Non-compete agreements...................................... 2-5 725,000 725,000
Other intangibles........................................... 2-15 2,113,348 2,113,348
----------- -----------
28,480,379 43,944,078
Less accumulated amortization............................... (3,433,259) (5,701,147)
----------- -----------
$25,047,120 $38,242,931
=========== ===========
(6) DEFERRED INCOME TAXES
The Partnership had established a deferred tax liability arising from the
acquisition of Regional Group, Inc. of $600,000. This liability was attributable
to the difference between the book basis of Regional Group, Inc. and the
carryover basis of the former shareholders at the acquisition date. As the
liability was principally attributable to the book/tax difference in long-term
tangible and intangible assets, the deferred tax liability was classified as a
long-term liability. The Broadcast Group recognized an income tax benefit of
$40,000 in 1997 and $30,000 for the nine months ended September 30, 1998 as a
result of amortization of the deferred tax liability.
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WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(7) LEASES
The Broadcast Group leases certain property and equipment under
noncancelable operating lease agreements. Rental expense was approximately
$261,000 for the year ended December 31, 1997.
Future minimum lease payments under noncancelable operating leases are
approximately:
YEAR ENDING DECEMBER 31:
- ------------------------
1998.................................................... $ 308,000
1999.................................................... 239,000
2000.................................................... 188,000
2001.................................................... 153,000
2002.................................................... 153,000
Thereafter.............................................. 675,000
----------
$1,716,000
==========
(8) SUBSEQUENT EVENT
In November 1998, the Partnership entered into an agreement with Citadel
Broadcasting Company ("Citadel") to sell the Wicks Radio Group to Citadel for
approximately $77 million, subject to approval from the Federal Communications
Commission.
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PRO FORMA FINANCIAL INFORMATION
The following unaudited condensed consolidated financial statements
reflect the results of operations and balance sheet of Citadel Communications
Corporation and its subsidiaries (the "Company") after giving effect to (1) all
radio station acquisitions and dispositions completed after January 1, 1997, (2)
the July 1997 offering of $101.0 million principal amount of the Company's
10-1/4% Senior Subordinated Notes due 2007, the July 1997 offering of 1.0
million shares of the Company's 13-1/4% Exchangeable Preferred Stock and the use
of the net proceeds from such offerings (the "1997 Offerings"), (3) the
repayment of outstanding borrowings under the Company's credit facility with the
proceeds from Citadel Communications Corporation's July 1998 initial public
offering, (4) the November 1998 offering of $115.0 million principal amount of
the Company's 9-1/4% Senior Subordinated Notes due 2008 and the use of the net
proceeds from such offering (the "Original Offering") and (5) the pending
acquisitions by the Company of radio stations and related assets in Baton Rouge
and Lafayette, Louisiana, Saginaw/Bay City, Michigan, Harrisburg/Carlisle,
Pennsylvania, Charleston, South Carolina, Binghamton, New York and Muncie and
Kokomo, Indiana (the "Pending Acquisitions"). The transactions in clauses (1)
through (4) in the preceding sentence are collectively referred to as the
"Completed Transactions". The unaudited pro forma condensed consolidated
financial statements are based on the historical consolidated financial
statements of the Company and the financial statements of those entities
acquired, or from which assets were acquired, in connection with the Completed
Transactions, and should be read in conjunction with the financial statements
and notes thereto of (A)(i) the Company, (ii) Tele-Media Broadcasting Company
and its Partnership Interests, (iii) Deschutes River Broadcasting, Inc., (iv)
Snider Corporation, (v) Snider Broadcasting Corporation and Subsidiary and CDB
Broadcasting Corporation, (vi) Maranatha Broadcasting Company, Inc.'s, Radio
Broadcasting Division and (vii) Pacific Northwest Broadcasting Corporation and
Affiliates which are included in the Company's Registration Statement on Form
S-1 (file no. 333-51011); (B) the Company which are included in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998;
and (C) the Wicks Radio Group (a division of the Wicks Broadcast Group Limited
Partnership) which are included elsewhere in this report.
In the opinion of management, all adjustments necessary to fairly
present this pro forma financial information have been made. For pro forma
purposes, the Company's consolidated statements of operations for the year ended
December 31, 1997 and the nine months ended September 30, 1997 and 1998 have
been adjusted to give effect to the Completed Transactions and the Pending
Acquisitions as if each occurred on January 1, 1997. The interest rate applied
to borrowings under, and repayments of, the Company's credit facility in the pro
forma consolidated statements of operations was 8.4375%, which represents the
interest rate in effect under the credit facility as of January 1, 1997. For pro
forma purposes, the Company's consolidated balance sheet as of September 30,
1998 has been adjusted to give effect to the October 1998 sale of four FM radio
stations and one AM radio station in Quincy, Illinois (the "Quincy Sale"), the
November 1998 purchase of one AM radio station and sale of one AM radio station
in Little Rock, Arkansas, the Original Offering and the Pending Acquisitions as
if each had occurred on September 30, 1998.
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The unaudited pro forma information is presented for illustrative
purposes only and is not indicative of the operating results or financial
position that would have occurred if the Completed Transactions and the Pending
Acquisitions had been consummated on the dates indicated, not is it indicative
of future operating results or financial position if the aforementioned
transactions are completed. The Company cannot predict whether consummation of
the Pending Acquisitions will conform to the assumptions used in the preparation
of the unaudited pro forma condensed consolidated financial statements.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
Net revenue............................... $ 98,821 $ (310) $ 98,511 $23,725 $122,236
Station operating expenses................ 69,412 (1,401) 68,011 15,574 83,585
Depreciation and amortization............. 20,005 519 20,524 8,526 29,050
Corporate general and administrative...... 3,351 -- 3,351 600 3,951
-------- ------- -------- ------- --------
Operating expenses...................... 92,768 (882) 91,886 24,700 116,586
-------- ------- -------- ------- --------
Operating income (loss)................... 6,053 572 6,625 (975) 5,650
Interest expense.......................... 13,590 (1,410) 12,180 8,385 20,565
Other (income) expense, net............... (94) -- (94) -- (94)
-------- ------- -------- ------- --------
Income (loss) before income taxes......... (7,443) 1,982 (5,461) (9,360) (14,821)
Income taxes (benefit).................... (1,163) -- (1,163) (347) (1,510)
Dividend requirement for
exchangeable preferred stock............ (10,822) -- (10,822) -- (10,822)
-------- ------- -------- ------- --------
Income (loss) from continuing operations
applicable to common shares............. $(17,102) $ 1,982 $(15,120) $(9,013) $(24,133)
======== ======= ======== ======= ========
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NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the disposition of WEST-AM in
Allentown/Bethlehem, (b) the acquisitions of WEMR-AM, WEMR-FM, WSGD-FM,
WDLS-FM and WCDL-FM in Wilkes-Barre/Scranton (the "Wilkes-Barre/Scranton
Acquisitions"), (c) the acquisitions of KQFC-FM, KKGL-FM, KBOI-FM, KIZN-FM
and KZMG-FM in Boise (the "Boise Acquisition"), (d) the Quincy Sale, (e) the
acquisition of KAAY-AM and the disposition of KRNN-AM in Little Rock, (f)
the repayment of outstanding borrowings under the Credit Facility with the
proceeds from Citadel Communications' initial public offering and (g) the
consummation of the Original Offering as if each transaction had taken place
on January 1, 1997 (does not reflect radio station acquisitions completed in
1997 or the 1997 Offerings). Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Prior to the
acquisition dates, the Company operated many of the acquired stations under
a JSA or LMA. The Company receives fees for such services. Includes net
revenue and station operating expenses for stations operated under JSAs to
reflect ownership of the stations as of January 1, 1997. Net revenue and
station expenses for stations operated under LMAs are included in the
Company's historical consolidated financial statements. For those stations
operated under JSAs or LMAs and subsequently acquired, associated fees and
redundant expenses were eliminated and estimated occupancy costs were
included to adjust the results of operations to reflect ownership of the
stations as of January 1, 1997. Dollars in the table below are shown in
thousands.
OTHER REPAYMENT OF THE ORIGINAL THE COMPLETED
ACQUISITIONS(a) CREDIT FACILITY(b) OFFERING(c) TRANSACTIONS
----------------- ------------------- ------------ -------------
Net revenue.......................................... $ (310) $ -- $ -- $ (310)
Station operating expenses........................... (1,401) -- -- (1,401)
Depreciation and amortization........................ 519 -- -- 519
------- ------- ------- -------
Operating expenses................................. (882) -- -- (882)
------- ------- ------- -------
Operating income..................................... 572 -- -- 572
Interest expense..................................... 445 (4,487) 2,632 (1,410)
------- ------- ------- -------
Income before income taxes........................... 127 4,487 (2,632) 1,982
Income taxes (benefit)............................... -- -- -- --
------- ------- ------- -------
Income from continuing operations.................... $ 127 $ 4,487 $(2,632) $ 1,982
======= ======= ======= =======
- ---------------
(a) Represents the net effect of the Boise Acquisition, the
Wilkes-Barre/Scranton Acquisitions, the disposition of WEST-AM in
Allentown/Bethlehem, the Quincy Sale and the acquisition of KAAY-AM and
the disposition of KRNN-AM in Little Rock.
(b) Represents the repayment of outstanding borrowings under the Credit
Facility with the proceeds from Citadel Communications' initial public
offering.
(c) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the acquisition of KQXL-FM, WXOK-AM,
WEMX-FM, WKJN-FM, WIBR-AM in Baton Rouge and KFXZ-FM, KRRQ-FM, KNEK-AM and
KNEK-FM in Lafayette (the "Baton Rouge/Lafayette Acquisition"), (b) the
acquisition of WKQZ-FM, WMJK-FM, WIOG-FM, WMJA-FM, WGER-FM and WSGW-AM in
Saginaw/Bay City (the "Saginaw/Bay City Acquisition"), (c) the acquisition
of WHYL-AM and WHYL-FM in Harrisburg/Carlisle (the "Carlisle Acquisition")
and (d) the acquisition of WSSX-FM, WWWZ-FM, WMGL-FM, WSUY-FM, WNKT-FM,
WTMA-AM, WTMZ-AM and WXTC-AM in Charleston, WHWK-FM, WYOS-FM, WAAL-FM,
WNBF-AM and WKOP-AM in Binghamton, WMDH-FM and WMDH-AM in Muncie and WWKI-FM
in Kokomo (the "Charleston/ Binghamton/Muncie/Kokomo Acquisition") as if
each transaction had taken place on January 1, 1997. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ
-14-
16
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
CHARLESTON/
BINGHAMTON/
MUNCIE/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS(a)
--------------------- ---------------- ----------- ----------- ---------------
Net revenue................... $ 4,947 $ 5,192 $ 636 $12,950 $ --
Station operating expenses.... 3,447 3,384 414 8,669 (340)
Depreciation and
amortization................ 2,380 1,898 223 4,025 --
Corporate general and
administrative.............. -- -- -- -- 600
------- ------- ------ ------- -----
Operating expenses.......... 5,827 5,282 637 12,694 260
Operating income (loss)....... (880) (90) (1) 256 (260)
Interest expense.............. 2,088 2,215 285 3,797 --
------- ------- ------ ------- -----
Income (loss) before income
taxes....................... (2,968) (2,305) (286) (3,541) (260)
Income taxes (benefit)........ (347) -- -- -- --
------- ------- ------ ------- -----
Income (loss) from continuing
operations.................. $(2,621) $(2,305) $ (286) $(3,541) $(260)
======= ======= ====== ======= =====
PENDING
ACQUISITIONS
------------
Net revenue................... $23,725
Station operating expenses.... 15,574
Depreciation and
amortization................ 8,526
Corporate general and
administrative.............. 600
-------
Operating expenses.......... 24,700
Operating income (loss)....... (975)
Interest expense.............. 8,385
-------
Income (loss) before income
taxes....................... (9,360)
Income taxes (benefit)........ (347)
-------
Income (loss) from continuing
operations.................. $(9,013)
=======
- ---------------
(a) Includes the elimination of $208,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$132,000 of station management expenses, and additional corporate
overhead of $600,000 to reflect increase in costs to administer the
additional stations.
-15-
17
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
Net revenue..................................... $60,025 $29,122 $ 89,147 $ 21,024 $110,171
Station operating expenses...................... 43,306 19,598 62,904 14,859 77,763
Depreciation and amortization................... 9,589 10,446 20,035 8,526 28,561
Corporate general and administrative............ 2,562 (334) 2,228 1,200 3,428
------- ------- -------- -------- --------
Operating expenses............................ 55,457 29,710 85,167 24,585 109,752
------- ------- -------- -------- --------
Operating income (loss)......................... 4,568 (588) 3,980 (3,561) 419
Interest expense................................ 8,470 2,516 10,986 8,385 19,371
Other (income) expense, net..................... (401) -- (401) -- (401)
------- ------- -------- -------- --------
Income (loss) before
income taxes.................................. (3,501) (3,104) (6,605) (11,946) (18,551)
Income taxes (benefit).......................... (105) (519) (624) (347) (971)
Dividend requirement for exchangeable preferred
stock......................................... (3,276) (7,225) (10,501) -- (10,501)
------- ------- -------- -------- --------
Income (loss) from continuing operations
applicable to common shares................... $(6,672) $(9,810) $(16,482) $(11,599) $(28,081)
======= ======= ======== ======== ========
-16-
18
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the Company's acquisition of Tele-Media
Broadcasting Company (the "Tele-Media Acquisition"), (b) the acquisitions of
KENZ-FM, KBER-FM, KBEE-FM and KFNZ-AM in Salt Lake City, (c) the acquisition
of KNHK-FM in Reno, (d) the acquisition of KTHK-FM in Tri-Cities, (e) the
acquisitions of WXEX-FM and WHKK-FM in Providence, (f) the Company's 1997
acquisition of various stations in Little Rock (the "Little Rock
Acquisitions"), (g) the acquisition of WLEV-FM in Allentown/Bethlehem, (h)
the disposition of WEST-AM in Allentown/Bethlehem, (i) the
Wilkes-Barre/Scranton Acquisitions, (j) the Boise Acquisition, (k) the
Quincy Sale, (l) the acquisition of KAAY-AM and the disposition of KRNN-AM
in Little Rock, (m) the consummation of the 1997 Offerings, (n) the
repayment of outstanding borrowings under the Credit Facility with the
proceeds from Citadel Communications' initial public offering and (o) the
consummation of the Original Offering as if each transaction had taken place
on January 1, 1997. Depreciation and amortization for such acquisitions are
based upon preliminary allocations of the purchase price to property and
equipment and intangible assets which will be amortized over periods of 1-25
years. Actual depreciation and amortization may differ depending on the
final allocation of the purchase price; however, management does not believe
these differences will be material. Prior to the acquisition dates, the
Company operated many of the acquired stations under a JSA or LMA. The
Company receives fees for such services. Includes net revenue and station
operating expenses for stations operated under JSAs to reflect ownership of
the stations as of January 1, 1997. Net revenue and station expenses for
stations operated under LMAs are included in the Company's historical
consolidated financial statements. For those stations operated under JSAs or
LMAs and subsequently acquired, associated fees and redundant expenses were
eliminated and estimated occupancy costs were included to adjust the results
of operations to reflect ownership of the stations as of January 1, 1997.
Dollars in the table below are shown in thousands.
PRO FORMA
ADJUSTMENTS FOR REPAYMENT OF
ACTUAL TELE-MEDIA LITTLE ROCK OTHER THE 1997 THE CREDIT
TELE-MEDIA(a) ACQUISITION ACQUISITIONS TRANSACTIONS(f) OFFERINGS FACILITY(i)
------------- --------------- --------------- --------------- ------------ ------------
Net revenue.......... $16,241 $ -- $5,293 $ 7,588 $ -- $ --
Station operating
expenses........... 12,679 (573)(b) 2,710 4,782 -- --
Depreciation and
amortization....... 2,208 2,278 (c) 2,037 3,923 -- --
Corporate general and
administrative..... 454 (788)(d) -- -- -- --
------- ------- ------ ------- ------- -------
Operating
expenses......... 15,341 917 4,747 8,705 -- --
------- ------- ------ ------- ------- -------
Operating income
(loss)............. 900 (917) 546 (1,117) -- --
Interest expense..... 10,375 (708)(e) 591 3,654 (7,298)(g) (6,730)
------- ------- ------ ------- ------- -------
Income (loss) before
income taxes....... (9,475) (209) (45) (4,771) 7,298 6,730
Income taxes
(benefit).......... -- (519) -- -- -- --
Dividend requirement
for exchangeable
preferred stock.... -- -- -- -- (7,225)(h) --
------- ------- ------ ------- ------- -------
Income (loss) from
continuing
operations......... $(9,475) $ 310 $ (45) $(4,771) $ 73 $ 6,730
======= ======= ====== ======= ======= =======
THE ORIGINAL THE COMPLETED
OFFERING(j) TRANSACTIONS
------------ -------------
Net revenue.......... $ -- $ 29,122
Station operating
expenses........... -- 19,598
Depreciation and
amortization....... -- 10,446
Corporate general and
administrative..... -- (334)
------- --------
Operating
expenses......... -- 29,710
------- --------
Operating income
(loss)............. -- (588)
Interest expense..... 2,632 2,516
------- --------
Income (loss) before
income taxes....... (2,632) (3,104)
Income taxes
(benefit).......... -- (519)
Dividend requirement
for exchangeable
preferred stock.... -- (7,225)
------- --------
Income (loss) from
continuing
operations......... $(2,632) $ (9,810)
======= ========
- ---------------
(a) Represents the unaudited historical results of Tele-Media for the period
January 1, 1997 through July 3, 1997, including the historical operating
results of Wilkes-Barre/Scranton stations acquired by Tele-Media in
February and April 1997 which had been operated under LMA/JSA agreements
since August and December 1996. The operating results of Tele-Media are
included in the Company's results of operations beginning July 4, 1997,
the date of acquisition.
(b) Includes the elimination of $115,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$211,000 of LMA/JSA fees related to the Wilkes-Barre/Scranton stations
and $247,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the Tele-Media Acquisition occurred on
January 1, 1997, these expenses would not have been incurred.
(c) Reflects increased depreciation and amortization resulting from the
purchase price allocation.
-17-
19
(d) Reflects the elimination of the management fees paid to affiliates by
Tele-Media of $454,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the incremental
expense necessary to oversee the Tele-Media stations and the elimination
of $534,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the 1997 Offerings and the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
(e) Reflects the elimination of Tele-Media interest expense of $5.5 million
and the recording of interest expense of $4.8 million that would have
been incurred if the acquisition of Tele-Media had occurred on January
1, 1997.
(f) Gives effect to the acquisitions of KENZ-FM, KBER-FM, KBEE-FM and
KFNZ-AM in Salt Lake City, KNHK-FM in Reno, KTHK-FM in Tri-Cities,
WXEX-FM and WHKK-FM in Providence, WLEV-FM in Allentown/Bethlehem, the
Boise Acquisition, the Wilkes-Barre/Scranton Acquisitions, the
disposition of WEST-AM in Allentown/Bethlehem, the Quincy Sale and the
acquisition of KAAY-AM and the disposition of KRNN-AM in Little Rock as
if each transaction had taken place on January 1, 1997.
(g) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the 10 1/4% Senior Subordinated
Notes (the "1997 Notes") and recording of the amortization of deferred
financing costs of $3.3 million related to the 1997 Notes.
(h) Reflects the recording of the dividends related to the Exchangeable
Preferred Stock as if the 1997 Offerings had taken place on January 1,
1997.
(i) Reflects the repayment of outstanding borrowings under the Credit
Facility with the proceeds from Citadel Communications' initial public
offering.
(j) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the Baton Rouge/Lafayette Acquisition, (b)
the Saginaw/Bay City Acquisition, (c) the Carlisle acquisition and (d) the
Charleston/Binghamton/Muncie/Kokomo Acquisition as if each such transaction
had taken place on January 1, 1997. Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
CHARLESTON/BINGHAMTON/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE MUNCIE/KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS
--------------------- ---------------- ----------- ---------------------- -----------
Net revenue................. $ 4,368 $ 4,934 $ 670 $11,052 $ --
Station operating
expenses.................. 3,323 3,322 392 8,156 (334)(a)
Depreciation and
amortization.............. 2,380 1,898 223 4,025 --
Corporate general and
administrative............ -- -- -- -- 1,200 (b)
------- ------- ------ ------- -----
Operating expenses........ 5,703 5,220 615 12,181 866
Operating income (loss)..... (1,335) (286) 55 (1,129) (866)
Interest expense............ 2,088 2,215 285 3,797 --
------- ------- ------ ------- -----
Income (loss) before income
taxes..................... (3,423) (2,501) (230) (4,926) (866)
Income taxes (benefit)...... (347) -- -- -- --
------- ------- ------ ------- -----
Income (loss) from
continuing operations..... $(3,076) $(2,501) $ (230) $(4,926) $(866)
======= ======= ====== ======= =====
PENDING
ACQUISITIONS
------------
Net revenue................. $ 21,024
Station operating
expenses.................. 14,859
Depreciation and
amortization.............. 8,526
Corporate general and
administrative............ 1,200
--------
Operating expenses........ 24,585
Operating income (loss)..... (3,561)
Interest expense............ 8,385
--------
Income (loss) before income
taxes..................... (11,946)
Income taxes (benefit)...... (347)
--------
Income (loss) from
continuing operations..... $(11,599)
========
- ---------------
(a) Includes the elimination of $202,000 of expenses to reflect lower fees,
as a percentage of national advertising sales paid by the Company to a
national representative for national advertising and the elimination of
$132,000 of station management expenses.
(b) Reflects increased corporate overhead to administer additional stations.
-18-
20
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
Net revenue..................................... $ 89,803 $ 29,950 $119,753 $ 29,581 $149,334
Station operating expenses...................... 65,245 18,783 84,028 20,092 104,120
Depreciation and amortization................... 14,661 11,626 26,287 11,367 37,654
Corporate general and administrative............ 3,530 (334) 3,196 1,600 4,796
-------- -------- -------- -------- --------
Operating expenses.......................... 83,436 30,075 113,511 33,059 146,570
-------- -------- -------- -------- --------
Operating income (loss)......................... 6,367 (125) 6,242 (3,478) 2,764
Interest expense................................ 12,872 2,274 15,146 11,180 26,326
Other (income) expense, net..................... (451) -- (451) -- (451)
-------- -------- -------- -------- --------
Income (loss) before income taxes............... (6,054) (2,399) (8,453) (14,658) (23,111)
Income taxes (benefit).......................... (770) (1,048) (1,818) (463) (2,281)
Dividend requirement for Exchangeable Preferred
Stock......................................... (6,633) (7,225) (13,858) -- (13,858)
-------- -------- -------- -------- --------
Income (loss) from continuing operations
applicable to common shares................... $(11,917) $ (8,576) $(20,493) $(14,195) $(34,688)
======== ======== ======== ======== ========
-19-
21
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the Tele-Media Acquisition, (b) the
acquisitions of KENZ-FM, KBER-FM, KBEE-FM and KFNZ-AM in Salt Lake City, (c)
the acquisition of KNHK-FM in Reno, (d) the acquisition of KTHK-FM in
Tri-Cities, (e) the acquisitions of WXEX-FM and WHKK-FM in Providence, (f)
Wilkes-Barre/Scranton Acquisitions, (g) the Little Rock Acquisitions, (h)
the Boise Acquisition, (i) the acquisition of WLEV-FM in
Allentown/Bethlehem, (j) the sale of WEST-AM in Allentown/Bethlehem, (k) the
Quincy Sale, (l) the acquisition of KAAY-AM and the disposition of KRNN-AM
in Little Rock, (m) the consummation of the 1997 Offerings, (n) repayment of
outstanding borrowings under the Credit Facility with the proceeds from
Citadel Communications' initial public offering and (o) the consummation of
the Original Offering as if each transaction had taken place on January 1,
1997. Net revenue and station expenses for stations operated under LMAs are
included in the Company's historical consolidated financial statements. For
those stations operated under JSAs or LMAs and subsequently acquired,
associated fees and redundant expenses were eliminated and estimated
occupancy costs were included to adjust the results of operations to reflect
ownership of the stations as of January 1, 1997. Dollars in the table below
are shown in thousands.
ADJUSTMENTS REPAYMENT
FOR OF THE
ACTUAL TELE-MEDIA LITTLE ROCK OTHER THE 1997 CREDIT
TELE-MEDIA(a) ACQUISITION ACQUISITIONS ACQUISITIONS(f) OFFERINGS FACILITY
-------------- ----------- ------------ ---------------- ---------------- ---------
Net revenue.......... $16,241 $ -- $5,596 $ 8,113 $ -- $ --
Station operating
expenses............ 12,679 (573)(b) 2,835 3,842 -- --
Depreciation and
amortization........ 2,208 2,278 (c) 2,358 4,782 -- --
Corporate general and
administrative...... 454 (788)(d) -- -- -- --
------- ------ ------ ------- ------- -------
Operating
expenses.......... 15,341 917 5,193 8,624 -- --
------- ------ ------ ------- ------- -------
Operating income
(loss).............. 900 (917) 403 (511) -- --
Interest expense..... 10,375 (708)(e) 591 4,779 (7,298)(g) (8,974)(i)
------- ------ ------ ------- ------- -------
Income (loss) before
income taxes........ (9,475) (209) (188) (5,290) 7,298 8,974
Income taxes
(benefit)........... -- (519) (225) (304) -- --
Dividend requirement
for exchangeable
preferred stock..... -- -- -- -- (7,225)(h) --
------- ------ ------ ------- ------- -------
Income (loss) from
continuing
operations.......... $(9,475) $ 310 $ 37 $(4,986) $ 73 $ 8,974
======= ====== ====== ======= ======= =======
THE
THE ORIGINAL COMPLETED
OFFERING(J) TRANSACTIONS
------------ ------------
Net revenue.......... $ -- $29,950
Station operating
expenses............ -- 18,783
Depreciation and
amortization........ -- 11,626
Corporate general and
administrative...... -- (334)
------- -------
Operating
expenses.......... -- 30,075
------- -------
Operating income
(loss).............. -- (125)
Interest expense..... 3,509 2,274
------- -------
Income (loss) before
income taxes........ (3,509) (2,399)
Income taxes
(benefit)........... -- (1,048)
Dividend requirement
for exchangeable
preferred stock..... -- (7,225)
------- -------
Income (loss) from
continuing
operations.......... $(3,509) $(8,576)
======= =======
- ---------------
(a) Represents the unaudited historical results of Tele-Media for the period
January 1, 1997 through July 3, 1997, including the historical operating
results of Wilkes-Barre/Scranton stations acquired by Tele-Media in
February and April 1997 which had been operated under LMA/JSA agreements
since August and December 1996. The operating results of Tele-Media are
included in the Company's results of operations beginning July 3, 1997,
the date of acquisition.
(b) Includes the elimination of $115,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising, the elimination of
$211,000 of LMA/JSA fees related to the Wilkes-Barre/Scranton stations
and the elimination of $247,000 of expenses associated with the
litigation between the Company and Tele-Media. Had the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
(c) Reflects increased depreciation and amortization resulting from the
purchase price allocation.
(d) Reflects the elimination of the management fees paid to affiliates by
Tele-Media of $454,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the incremental
expense necessary to oversee the Tele-Media stations and the elimination
of $534,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the 1997 Offerings and the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
-20-
22
(e) Reflects the elimination of Tele-Media interest expense of $5.5 million
and the recording of interest expense of $4.8 million that would have
been incurred if the acquisition of Tele-Media had occurred on January
1, 1997.
(f) Gives effect to (i) the acquisitions of WLEV-FM in Allentown/Bethlehem;
KBOI-AM, KQFC-FM and KKGL-FM in Boise; KENZ-FM, KBER-FM, KBEE-FM and
KFNZ-AM in Salt Lake City, KNHK-FM in Reno, KTHK-FM in Tri-Cities;
WXEX-FM and WHKK-FM in Providence; WEMR-AM/FM, WCTP-FM, WCTD-FM and
WCDL-AM in Wilkes-Barre/Scranton, KIZN-FM and KZMG-FM in Boise and
KAAY-AM in Little Rock, (ii) the sale of WEST-AM in Allentown/Bethlehem
and KRNN-AM in Little Rock and (iii) the Quincy Sale as if such
transactions had taken place on January 1, 1997.
(g) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the 1997 Notes and the
amortization of deferred financings costs of $3.3 million related to the
1997 Notes.
(h) Reflects the recording of the dividends on the Exchangeable Preferred
Stock as if the 1997 Offerings had taken place on January 1, 1997.
(i) Reflects the reduction of interest expense due to the pay down of the
Credit Facility with the proceeds received from Citadel Communications'
initial public offering.
(j) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the Baton Rouge/Lafayette Acquisition, (b)
the Saginaw/Bay City Acquisition, (c) the Carlisle Acquisition, and (d) the
Charleston/Binghamton/Muncie/Kokomo Acquisition, as if each transaction had
taken place on January 1, 1997. Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
CHARLESTON/
BINGHAMTON/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE MUNCIE/KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS
--------------------- ---------------- ----------- ------------- -----------
Net revenue.................... $ 6,064 $ 6,616 $ 899 $16,002 $ --
Station operating expenses..... 4,649 4,445 528 10,917 (447)(a)
Depreciation and
amortization................. 3,173 2,530 297 5,367 --
Corporate general and
administrative............... -- -- -- -- 1,600 (b)
------- ------- ------ ------- -------
Operating expenses........... 7,822 6,975 825 16,284 1,153
Operating income (loss)........ (1,758) (359) 74 (282) (1,153)
Interest expense............... 2,784 2,953 380 5,063 --
------- ------- ------ ------- -------
Income (loss) before income
taxes........................ (4,542) (3,312) (306) (5,345) (1,153)
Income taxes (benefit)......... (463) -- -- -- --
------- ------- ------ ------- -------
Income (loss) from continuing
operations................... $(4,079) $(3,312) $ (306) $(5,345) $(1,153)
======= ======= ====== ======= =======
PENDING
ACQUISITIONS
------------
Net revenue.................... $ 29,581
Station operating expenses..... 20,092
Depreciation and
amortization................. 11,367
Corporate general and
administrative............... 1,600
--------
Operating expenses........... 33,059
Operating income (loss)........ (3,478)
Interest expense............... 11,180
--------
Income (loss) before income
taxes........................ (14,658)
Income taxes (benefit)......... (463)
--------
Income (loss) from continuing
operations................... $(14,195)
========
- ---------------
(a) Includes the elimination of $271,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$176,000 of station management expenses.
(b) Reflects increased corporate overhead to administer additional stations.
-21-
23
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
ACQUISITION OF
KAAY-AM AND ADJUSTMENTS ADJUSTMENTS FOR
ACTUAL ADJUSTMENTS FOR DISPOSITION OF FOR THE PENDING THE ORIGINAL PRO FORMA THE
THE COMPANY THE QUINCY SALE KRNN-AM ACQUISITIONS(1) OFFERING(2) COMPANY
----------- ---------------- --------------- --------------- --------------- -------------
ASSETS
Cash and cash
equivalents.............. $ 7,407 $ -- $ (4,909) $(17,000) $ 21,774 $ 7,272
Accounts and notes
receivable, net.......... 32,044 250 80 1,000 -- 33,374
Prepaid expenses........... 3,287 -- -- -- -- 3,287
-------- ------- -------- -------- -------- --------
Total current assets....... 42,738 250 (4,829) (16,000) 21,774 43,933
Property and equipment,
net...................... 36,834 (375) 220 14,500 -- 51,179
Intangible assets, net..... 290,405 (1,087) 4,620 142,449 -- 436,387
Other assets............... 3,376 -- -- -- 4,000(3) 7,376
-------- ------- -------- -------- -------- --------
$373,353 $(1,212) $ 11 $140,949 $ 25,774 $538,875
======== ======= ======== ======== ======== ========
LIABILITIES AND
SHAREHOLDER'S EQUITY
Accounts payable and
accrued liabilities...... $ 11,399 $ -- $ 11 $ -- $ -- $ 11,410
Current maturities of other
long-term obligations.... 282 -- -- -- -- 282
-------- ------- -------- -------- -------- --------
Total current
liabilities.............. 11,681 -- 11 -- -- 11,692
-------- ------- -------- -------- -------- --------
Notes payable, less current
maturities............... 18,726 (2,000) -- 132,500 (89,226)(4) 60,000
10 1/4% Notes.............. 98,461 -- -- -- -- 98,461
9 1/4% Notes............... -- -- -- -- 115,000 115,000
Other long-term
obligations, less current
maturities............... 1,011 -- -- 1,500 -- 2,511
Deferred tax liability..... 25,306 -- -- 6,949 -- 32,255
Exchangeable preferred
stock.................... 112,965 -- -- -- -- 112,965
Shareholder's equity:
Common stock and
additional paid-in
capital.................. 140,235 -- -- -- -- 140,235
Accumulated deficit...... (35,032) 788 -- -- -- (34,244)
-------- ------- -------- -------- -------- --------
$373,353 $(1,212) $ 11 $140,949 $ 25,774 $538,875
======== ======= ======== ======== ======== ========
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NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(1) Represents the net effect of (i) the Baton Rouge/Lafayette Acquisition, (ii)
the Saginaw/Bay City Acquisition, (iii) the Carlisle Acquisition, and (iv)
the Charleston/Binghamton/Muncie/Kokomo Acquisition.
(2) Represents the issuance of the outstanding notes and the application of the
net proceeds from the Original Offering.
(3) Reflects the initial purchasers' discount and the expenses of the Original
Offering.
(4) Reflects the repayment of borrowings under the Credit Facility.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CITADEL COMMUNICATIONS
CORPORATION
December 15, 1998 /s/ Lawrence R. Wilson
- ------------------------------ --------------------------------------
Lawrence R. Wilson, Chairman and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Asset Purchase Agreement dated November 23, 1998 by and among Wicks
Broadcast Group Limited Partnership, WBG License Co., L.L.C., Butternut
Broadcasting Company, Inc., WBG Binghamton License Co., Inc. and
Citadel Broadcasting Company.
4.1 Indenture dated as of November 19, 1998 among Citadel Broadcasting
Company, Citadel License, Inc. and The Bank of New York, as Trustee,
with the form of 9-1/4% Senior Subordinated Notes due 2008 included
therein (previously filed).
10.1 Tenth Amendment to Loan Instruments dated November 3, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.2 Eleventh Amendment to Loan Instruments dated November 17, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.3 Twelfth Amendment to Loan Instruments dated November 19, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
23.1 Consent of KPMG Peat Marwick LLP
99.1 Press Release dated November 19, 1998 (previously filed).
99.2 Press Release dated November 23, 1998 (previously filed).
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