- ----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 28, 1998
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 33-99622
BUSSE BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2750516
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
141 East Michigan Avenue, Suite 300
Kalamazoo, Michigan 49007
(Address of principal executive offices)
(616) 388-8019
(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
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 X No ---- ----
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No ---- ------
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of August 10, 1998, 107,700 shares of the Common Stock of Busse
Broadcasting Corporation were outstanding. None of the outstanding shares were
held by non-affiliates.
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2
BUSSE BROADCASTING CORPORATION
Form 10-Q Table of Contents
Page
Reference
----------
Part I - Financial Information
Item 1. Financial Statements.
Busse Broadcasting Corporation
Condensed Consolidated Balance Sheets as of June 28, 1998
and December 28, 1997 (Unaudited) 3
Unaudited Condensed Consolidated Statements of Operations for the
Three Months Ended June 28, 1998 and June 29, 1997 4
Unaudited Condensed Consolidated Statements of Operations for the
Six Months Ended June 28, 1998 and June 29, 1997 5
Unaudited Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 28, 1998 and June 29, 1997 6
Notes to Unaudited Condensed Consolidated Financial Statements for the
Six Months Ended June 28, 1998 7
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Condensed Consolidated Balance Sheets as of June 28, 1998
and December 28, 1997 (Unaudited) 13
Unaudited Condensed Consolidated Statements of Operations and Stockholder's
Equity for the Three Months Ended June 28, 1998 and June 29, 1997 14
Unaudited Condensed Consolidated Statements of Operations and Stockholder's
Equity for the Six Months Ended June 28, 1998 and June 29, 1997 15
Unaudited Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 28, 1998 and June 29, 1997 16
Notes to Unaudited Condensed Consolidated Financial Statements for the
Six Months Ended June 28, 1998 17
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 19
Part II - Other Information
Item 1. Legal Proceedings. 26
Item 5. Other Information. 26
Item 6. Exhibits and Reports on Form 8-K. 26
SIGNATURES 28
2
Part I - Financial Information
Item 1. Financial Statements.
Busse Broadcasting Corporation
Condensed Consolidated Balance Sheets
Unaudited
JUNE 28, DECEMBER 28,
1998 1997
----------------------------------------
ASSETS (Note 1)
Current assets:
Cash and cash equivalents (Note 2) $ 9,045,736 $ 8,974,699
Receivables, net 3,650,675 3,804,410
Other current assets 776,646 1,343,483
----------------------------------------
Total current assets 13,473,057 14,122,592
Property, plant and equipment, net 12,555,079 13,226,067
Deferred charges and other assets 1,503,221 1,811,809
Intangible assets and excess reorganization value 46,826,755 48,775,820
========================================
Total assets $ 74,358,112 $ 77,936,288
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY (Note 1)
Current liabilities:
Accounts payable and accrued expenses $ 2,360,295 $ 4,161,712
Long-term debt (Note 2) 61,168,080 60,918,857
Stockholders' equity:
Series A cumulative convertible preferred stock (non-voting)
- $.01 par value, $1,000 per share liquidation preference;
65,524.41 shares authorized, issued and outstanding including
dividends in arrears of $11,897,150 and $9,485,924 at June 28, 1998
and December 28, 1997, respectively 29,227,810 26,816,584
Common stock (voting) - $.01 par value; 2,154,000 shares authorized,
and 107,700 shares issued and outstanding 1,077 1,077
Additional paid-in capital - common stock 9,185,772 9,185,772
Accumulated deficit (27,584,922) (23,147,714)
----------------------------------------
Total stockholders' equity 10,829,737 12,855,719
========================================
Total liabilities and stockholders' equity $ 74,358,112 $ 77,936,288
========================================
See accompanying notes to condensed consolidated financial statements.
3
Busse Broadcasting Corporation
Condensed Consolidated Statements of Operations
Unaudited
THREE MONTHS ENDED
---------------------------------------------
JUNE 28, 1998 JUNE 29, 1997
---------------------------------------------
Net revenue $ 5,488,694 $ 5,284,833
Operating costs and expenses, excluding depreciation and
amortization 2,177,559 2,180,756
Depreciation 427,494 530,269
Amortization of intangibles and excess reorganization value 960,440 977,126
---------------------------------------------
Total operating costs and expenses 3,565,493 3,688,151
Corporate expenses 407,255 387,601
---------------------------------------------
Income from operations 1,515,946 1,209,081
Other income (expense):
Interest expense (2,099,150) (2,084,508)
Interest income 126,254 90,062
Gain on disposition of assets 1,150 370
Other income (expense) 5,872 (3,916)
---------------------------------------------
Other expense (1,965,874) (1,997,992)
---------------------------------------------
Loss from operations before income taxes (449,928) (788,911)
Provision for current income taxes (Note 3) -- --
---------------------------------------------
Net loss (449,928) (788,911)
Charges to stockholders' equity for Series A preferred stock
dividends in arrears (1,205,613) (1,205,613)
=============================================
Net loss attributable to common stockholders $ (1,655,541) $ (1,994,524)
=============================================
Per common share - basic and diluted (Note 1):
Loss from operations $ (4.18) $ (7.33)
Series A preferred stock dividends in arrears (11.19) (11.19)
--------------------------------------------
Net loss attributable to common stockholders $ (15.37) $ (18.52)
=============================================
Weighted average common shares outstanding - basic and diluted 107,700 107,700
=============================================
See accompanying notes to condensed consolidated financial statements.
4
Busse Broadcasting Corporation
Condensed Consolidated Statements of Operations
Unaudited
SIX MONTHS ENDED
---------------------------------------------
JUNE 28, 1998 JUNE 29, 1997
---------------------------------------------
Net revenue $ 10,215,822 $ 9,549,775
Operating costs and expenses, excluding depreciation and
amortization 4,448,310 4,345,637
Depreciation 919,906 1,060,538
Amortization of intangibles and excess reorganization value 1,949,065 1,989,904
----------------------------------------------
Total operating costs and expenses 7,317,281 7,396,079
Corporate expenses 960,135 740,554
----------------------------------------------
Income from operations 1,938,406 1,413,142
Other income (expense):
Interest expense (4,192,307) (4,163,284)
Interest income 227,078 186,576
Gain on disposition of assets 1,161 390
Other income (expense) (320) 65,199
----------------------------------------------
Other expense (3,964,388) (3,911,119)
----------------------------------------------
Loss from operations before income taxes (2,025,982) (2,497,977)
Provision for current income taxes (Note 3) -- --
----------------------------------------------
Net loss (2,025,982) (2,497,977)
Charges to stockholders' equity for Series A preferred stock
dividends in arrears (2,411,226) (2,411,226)
==============================================
Net loss attributable to common stockholders $ (4,437,208) $ (4,909,203)
==============================================
Per common share - basic and diluted (Note 1):
Loss from operations $ (18.81) $ (23.19)
Series A preferred stock dividends in arrears (22.39) (22.39)
----------------------------------------------
Net loss attributable to common stockholders $ (41.20) $ (45.58)
==============================================
Weighted average common shares outstanding - basic and diluted 107,700 107,700
==============================================
See accompanying notes to condensed consolidated financial statements.
5
Busse Broadcasting Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
SIX MONTHS ENDED
------------------------------------
JUNE 28, 1998 JUNE 29, 1997
------------------------------------
Operating activities:
Net loss $(2,025,982) $(2,497,977)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 2,868,971 3,050,442
Non cash interest expense 249,222 220,199
Amortization of deferred financing costs 308,703 308,703
Program payments over program amortization (4,247) (2,085)
Gain on disposition of property, plant and equipment (1,161) (390)
Deferred compensation expense 122,548 174,520
Pension expense -- 60,000
Change in current assets and liabilities:
Receivables 153,735 21,350
Other current assets 65,262 15,782
Deferred compensation payment (1,065,000) --
Accounts payable and accrued expenses (353,142) (369,718)
------------------------------------
Net cash provided by operating activities 318,909 980,826
INVESTING ACTIVITIES:
Capital expenditures (248,919) (479,099)
Proceeds from disposition of assets 1,162 390
(Increase) decrease in other assets (115) (3,367)
------------------------------------
Net cash used in investing activities (247,872) (482,076)
------------------------------------
Net cash used in financing activities -- --
------------------------------------
Net increase (decrease) in cash and cash equivalents 71,037 498,750
Cash and cash equivalents at beginning of period 8,974,699 7,989,805
====================================
Cash and cash equivalents at end of period $ 9,045,736 $ 8,488,555
====================================
Supplemental disclosure of cash flow information:
Interest paid during the period $ 3,634,382 $ 3,634,382
====================================
Income taxes paid during the period $ -- $ --
====================================
See accompanying notes to condensed consolidated financial statements.
6
Busse Broadcasting Corporation
Notes to Condensed Consolidated Financial Statements
Unaudited
June 28, 1998
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include Busse Broadcasting
Corporation and its wholly owned subsidiaries (collectively Busse or the
Company) engaged in the following businesses:
Television:
KOLN/KGIN-TV CBS Affiliate Lincoln/Grand Island, Nebraska WEAU-TV NBC
Affiliate Eau Claire/La Crosse, Wisconsin (Sold July 31, 1998 as discussed
in Note 5 "Sale of the Company's Capital Stock and Like-kind Exchange of
Assets", herein.)
All intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying unaudited condensed consolidated financial statements in
conjunction with the related notes to the financial statements reflect, in the
opinion of the Company, all adjustments, consisting of only normal recurring
adjustments necessary to present fairly the Company's financial position and
results of operations for the unaudited interim periods. Results for such
interim periods are not necessarily indicative of the results for the respective
entire years.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these condensed
consolidated financial statements be read in conjunction with the audited
financial statements and notes thereto of Busse Broadcasting Corporation
included in the Company's 1997 Annual Report on Form 10-K.
The Company and its wholly-owned subsidiary filed voluntary petitions for a
joint plan of reorganization under Chapter 11 of the United States Bankruptcy
Code (the "Plan") on March 10, 1995. On April 20, 1995 the United States
Bankruptcy Court for the district of Delaware (the "Court") confirmed the Plan,
such Plan became effective May 3, 1995 (the "Effective Date") and the respective
Chapter 11 cases were closed by the Court on September 21, 1995.
7
Busse Broadcasting Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
2. DEBT
Debt is summarized as follows:
JUNE 28, DECEMBER 28,
1998 1997
================================
Senior Secured Notes, net of unamortized
original issue discount of $1,358,920 and
$1,608,143 at June 28, 1998 and December
28, 1997, respectively $ 61,168,080 $ 60,918,857
================================
On October 26, 1995 the Company issued $62,527,000 principal amount of 11 5/8%
Senior Secured Notes due October 15, 2000 ("Senior Notes") at a price of 95.96%
of the aggregate principal amount thereof. As discussed more fully in Note 5,
herein, on July 31, 1998 the Company effected a satisfaction and discharge (the
"Discharge") of the Senior Notes in accordance with the indenture pursuant to
which the Senior Notes were issued (the "Indenture"). The Senior Notes were
Discharged by the Company depositing $69,913,002, in cash, with the Indenture's
trustee and collateral agent (the "Trustee") and providing the Trustee an
irrevocable direction to redeem all of the outstanding Senior Notes on October
15, 1998 at a redemption price of 106% of the aggregate principal amount of the
Senior Notes plus accrued and unpaid interest as of the date of the redemption.
The cash deposited with the Trustee is equal to 100% of the aggregate cash
required to effect the Senior Note redemption on October 15, 1998. Such cash
deposit and irrevocable direction effected a satisfaction and discharge of the
Senior Notes pursuant to the Indenture.
8
Busse Broadcasting Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
3. INCOME TAXES
As of December 28, 1997 the Company had approximately $61.4 million of federal
net operating loss carryforwards ("NOL's") which begin to expire in 2005. As a
result of the Plan (see Note 1) the Company elected treatment under Section 382
(1) (5) of the Internal Revenue Code, as amended (the "Code"). This treatment
will allow the Company to utilize, under certain restrictions, its NOL's to
offset taxable income incurred after the Effective Date. Utilization of a
portion of these NOL's are assumed in the Company's calculation of
Post-Effective Date deferred taxes.
As discussed more fully in Note 5 herein, on July 31, 1998 the Company sold the
WEAU Assets, as defined in Note 5 herein, and recognized a gain, on a tax basis,
of approximately $60 million. Such gain will be offset by and reduce the
Company's NOL's.
Also, as discussed more fully in Note 5, herein, on July 31, 1998 after
completion of the sale of the WEAU Assets, as defined in Note 5, 100% of the
Company's capital stock was acquired by Gray Communications Systems, Inc.
("Gray"), as described in Note 5; such acquisition will subject the Company's
remaining NOL's to certain limitations under section 382 of the Code.
9
Busse Broadcasting Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
4. CORPORATE REORGANIZATION/SUBSIDIARY GUARANTORS
Prior to their Discharge, as discussed in Notes 2 and 5, the Senior Notes were
fully and unconditionally guaranteed, on a joint and several and senior secured
basis, by all of the Company's direct and indirect subsidiaries, each of which
is wholly-owned.
The following tables present summarized combined balance sheet and operating
statement information for (i) KOLN/KGIN, Inc. (ii) KOLN/KGIN License, Inc. and
(iii) WEAU License, Inc. Separate financial statements of KOLN/KGIN, Inc.
immediately follow these notes to condensed consolidated financial statements of
Busse Broadcasting Corporation. Separate financial statements and other
disclosures concerning KOLN/KGIN License, Inc. and WEAU License, Inc. have not
been presented because management has determined that such financial statements
would not be material to investors. On June 29, 1998 WEAU License, Inc. was
merged into WEAU License, LLC, a Delaware limited liability company solely
controlled by Busse (WEAU, LLC") with WEAU LLC being the surviving entity.
JUNE 28, DECEMBER 28,
1998 1997
---------------------------------
ASSETS
Current assets $ 2,851,333 $ 3,377,708
Non-current assets 43,954,877 45,525,932
=================================
$46,806,210 $48,903,640
=================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities $ 619,465 $ 1,112,618
Non-current liabilities 6,198,320 6,373,635
Stockholder's equity 39,988,425 41,417,387
=================================
Total liabilities and stockholder's equity $46,806,210 $ 48,903,640
=================================
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ ------------------------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1998 1997 1998 1997
------------------------------------ ------------------------------------
Net revenue $ 3,606,773 $ 3,342,150 $ 6,835,017 $ 6,161,283
Total operating costs and expenses 2,598,299 2,600,245 5,420,756 5,215,201
Income from operations 1,008,474 741,905 1,414,261 946,082
Net loss $ (518,646) $ (605,977) $ (1,428,962) $ (1,552,868)
10
Busse Broadcasting Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
5. SALE OF THE WEAU ASSETS, LIKE-KIND EXCHANGE OF ASSETS AND SALE OF 100% OF THE
CAPITAL STOCK OF THE COMPANY
On July 31, 1998 Busse and WEAU LLC sold all of the assets of WEAU-TV, Eau
Claire Wisconsin, including the FCC licenses controlled by WEAU LLC,
(collectively the "WEAU Assets") to Cosmos Broadcasting Corp. ("Cosmos") for an
aggregate cash purchase price of $66 million. In accordance with the Indenture,
the Company directed the $66 million of proceeds be deposited with the Indenture
Trustee.
Also on July 31, 1998, Busse; Gray; two subsidiaries of Gray (WALB-TV, Inc. and
WALB Licensee Corp. collectively referred to herein as the "Gray Subsidiaries");
and Cosmos effected a like-kind exchange transaction (the "Like-kind Exchange")
as follows: (i) the Gray Subsidiaries sold to Cosmos substantially all of the
assets from the Gray Subsidiaries in exchange for the WEAU Assets plus an
aggregate cash payment of $12 million and (ii) Cosmos directed Busse to deliver
the respective WEAU Assets directly to the Gray Subsidiaries to complete the
Like-kind Exchange.
After consummation of the sale of the WEAU Assets and the Like-kind Exchange,
Gray acquired all of the capital stock of Busse for an aggregate net purchase
price of $57.4 million, which was paid in cash to the Company's stockholders.
The aggregate net purchase price was derived by the sum of (i) $112 million,
plus (ii) the Company's cash and cash equivalents, less (iii) the aggregate
amount of the Company's indebtedness and accrued and unpaid interest thereon,
including the accreted amount of the Company's Senior Notes, less (iv) certain
other purchase price adjustments. The value of the Company's cash, cash
equivalents, aggregate indebtedness and other purchase price adjustments were
determined as of the close of business on July 30, 1998.
Effective with the closing of the sale of the Company's capital stock, as
discussed above, Messrs. Busse and Ryan resigned as executive officers of, and
terminated their respective employment with, the Company and its affiliates.
Messrs. Busse, Beck and Cornwell resigned as directors of the Company and Mr.
Busse resigned as a director of each of the Company's affiliates.
Gray, upon acquisition of Busse's stock elected the following directors for
Busse: Messrs. Richard L. Boger, Hilton H. Howell, William E. Mayher, III,
Howell Newton, Hugh Norton, Robert S. Prather, Jr., Mrs. Harriett J. Robinson
and Mr. J. Mack Robinson. Such new directors appointed the following executive
officers of the Company: Mr. J. Mack Robinson as President and Chairman, Mr.
Frederick J. Erickson as Chief Financial Officer, Mr. Robert Beizer as
Secretary, Mr. Vance Luke as Assistant Secretary and Mr. Jackson S. Cowart, IV
as Assistant Secretary.
11
After the change in control of the Busse capital stock and appointment of new
directors and officers for the Company, Busse irrecoverably directed the Trustee
to utilize certain collateral proceeds funds held by the Trustee along with
certain other cash deposited by the Company with the Trustee as an irrevocable
cash deposit aggregating $69,913,002, to redeem all of the outstanding Senior
Notes on October 15, 1998 at 106% of the aggregate principal amount thereof and
accrued and unpaid interest to the date of redemption. Such cash deposit and
irrevocable direction effected a satisfaction and discharge of the Senior Notes
pursuant to the Indenture.
12
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Condensed Consolidated Balance Sheets
Unuaudited
JUNE 28, DECEMBER 28,
1998 1997
-----------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 353,066 $ 373,716
Receivables, net 2,216,846 2,375,565
Program contract rights 126,280 441,825
Other current assets 9,138 40,600
------------ ------------
Total current assets 2,705,330 3,231,706
Property, plant and equipment, net 6,929,054 7,444,901
Due from Parent 905,707 464,096
Deferred charges and other assets 4,776 4,776
Intangible assets and excess reorganization value 31,110,555 32,404,597
------------ ------------
Total assets $ 41,655,422 $ 43,550,076
============ ============
LIABILITIES AND COMMON STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 456,408 $ 631,201
Program contracts payable 53,449 369,733
------------ ------------
Total current liabilities 509,857 1,000,934
Deferred income tax liabilities 1,693,000 1,783,000
Stockholder's equity:
Common stock (voting) - $.01 par value, 1,000 shares authorized, issued
and outstanding 10 10
Additional paid-in capital 46,568,577 46,568,577
Accumulated deficit (7,116,022) (5,802,445)
------------ ------------
Total stockholder's equity 39,452,565 40,766,142
------------ ------------
Total liabilities and stockholder's equity $ 41,655,422 $ 43,550,076
============ ============
See accompanying notes to condensed consolidated financial statements.
13
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Condensed Consolidated Statements of Operations and Stockholder's Equity
Unaudited
THREE MONTHS ENDED
------------------------------------
JUNE 28, JUNE 29,
1998 1997
------------------------------------
Net revenue $ 3,428,773 $ 3,164,150
Operating costs and expenses, excluding depreciation and amortization 1,341,801 1,350,136
Depreciation 269,750 274,525
Amortization of intangibles and excess reorganization value 632,928 649,614
Corporate expenses 252,431 224,582
------------------------------------
Total operating costs and expenses 2,496,910 2,498,857
------------------------------------
Income from operations 931,863 665,293
Other income (expense):
Interest income 3,146 4,981
Other expense -- (7,756)
------------------------------------
Other income (expense) 3,146 (2,775)
------------------------------------
Income before income taxes 935,009 662,518
(Provision) benefit for income taxes:
Current (1,445,000) (1,250,000)
Deferred 50,000 45,000
------------------------------------
(1,395,000) (1,205,000)
------------------------------------
Net loss (459,991) (542,482)
Stockholder's equity at beginning of period 39,912,556 42,776,726
====================================
Stockholder's equity at end of the period $ 39,452,565 $ 42,234,244
====================================
See accompanying notes to condensed consolidated financial statements.
14
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Condensed Consolidated Statements of Operations and Stockholder's Equity
Unaudited
SIX MONTHS ENDED
------------------------------------
JUNE 28, JUNE 29,
1998 1997
------------------------------------
Net revenue $ 6,475,017 $ 5,801,283
Operating costs and expenses, excluding depreciation and amortization 2,767,183 2,685,051
Depreciation 539,500 549,050
Amortization of intangibles and excess reorganization value 1,294,042 1,299,228
Corporate expenses 617,254 443,443
------------------------------------
Total operating costs and expenses 5,217,979 4,976,772
------------------------------------
Income from operations 1,257,038 824,511
Other income (expense):
Interest income 6,341 9,943
Other expense (6,956) (7,756)
------------------------------------
Other income (expense) (615) 2,187
------------------------------------
Income before income taxes 1,256,423 826,698
(Provision) benefit for income taxes:
Current (2,660,000) (2,310,000)
Deferred 90,000 91,000
------------------------------------
(2,570,000) (2,219,000)
------------------------------------
Net loss (1,313,577) (1,392,302)
Stockholder's equity at beginning of period 40,766,142 43,626,546
------------------------------------
Stockholder's equity at end of the period $39,452,565 $42,234,244
====================================
See accompanying notes to condensed consolidated financial statements.
15
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Condensed Consolidated Statements of Cash Flows
Unaudited
SIX MONTHS ENDED
------------------------------------
JUNE 28, JUNE 29,
1998 1997
------------------------------------
OPERATING ACTIVITIES:
Net loss $(1,313,577) $(1,392,302)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 1,833,542 1,848,278
Program payments over program amortization (739) (1,042)
Deferred income taxes (90,000) (91,000)
Change in current assets and liabilities:
Receivables 158,719 (136,948)
Other current assets 31,462 (1,867)
Accounts payable and accrued expenses (174,793) (111,008)
------------------------------------
Net cash provided by operating activities 444,614 114,111
INVESTING ACTIVITIES:
Capital expenditures (23,653) (206,804)
------------------------------------
Net cash used in investing activities (23,653) (206,804)
FINANCING ACTIVITIES:
Increase in due from Parent (441,611) (71,069)
------------------------------------
Net cash used in financing activities (441,611) (71,069)
------------------------------------
Net increase (decrease) in cash and cash equivalents (20,650) (163,762)
Cash and cash equivalents at beginning of period 373,716 299,008
------------------------------------
Cash and cash equivalents at end of period $ 353,066 $ 135,246
====================================
Supplemental information
Income taxes paid $ 2,660,000 $ 2,310,000
====================================
See accompanying notes to condensed consolidated financial statements.
16
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Notes to Condensed Consolidated Financial Statements
Unaudited
June 28, 1998
1. BASIS OF PRESENTATION
The financial statements present the financial position, results of operations
and stockholder's equity, and cash flows of KOLN/KGIN, Inc., a wholly-owned
subsidiary of Busse Broadcasting Corporation (the Company or Parent). KOLN/KGIN,
Inc. owns and operates KOLN/KGIN-TV a CBS affiliate operating channels 10 and 11
in the Lincoln - Hastings - Kearney, Nebraska television market.
The accompanying financial statements include the accounts of KOLN/KGIN License,
Inc., a wholly owned subsidiary of KOLN/KGIN, Inc. All intercompany accounts and
transactions have been eliminated in consolidation.
Net intercompany balances reflected in the due from Parent account are primarily
the result of KOLN/KGIN, Inc.'s participation in the Company's central cash
management program, wherein the month-end cash balances in excess of certain
levels are remitted to the Company. Other transactions include the allocation of
corporate expenses to KOLN/KGIN, Inc. and the current income taxes that would
have been due to the Company. There are no terms of settlement or interest
related to these balances which averaged $684,901 and $272,999 due from the
Parent during the six months ended June 28, 1998 and June 29, 1997,
respectively.
The accompanying unaudited condensed consolidated financial statements in
conjunction with the related notes to the financial statements reflect, in the
opinion of KOLN/KGIN, Inc., all adjustments, consisting of only normal recurring
adjustments necessary to present fairly KOLN/KGIN, Inc.'s financial position and
results of operations for the unaudited interim periods. Results for such
interim periods are not necessarily indicative of the results for the respective
entire years.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these condensed
consolidated financial statements be read in conjunction with the audited
financial statements and notes thereto of KOLN/KGIN, Inc.
17
KOLN/KGIN, Inc.
(A Wholly-Owned Subsidiary of Busse Broadcasting Corporation)
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
1. BASIS OF PRESENTATION (CONTINUED)
The Company and KOLN/KGIN, Inc. (then named WWMT, Inc.) filed voluntary
petitions for a joint plan of reorganization under Chapter 11 of the United
States Bankruptcy Code (the "Plan") on March 10, 1995. On April 20, 1995 the
United States Bankruptcy Court (the "Court") for the district of Delaware
confirmed the Plan, such Plan became effective May 3, 1995 (the "Effective
Date") and the respective Chapter 11 cases were closed by the Court on September
21, 1995.
2. GUARANTEE OF PARENT'S SENIOR NOTES
On October 26, 1995 the Parent issued $62,527,000 principal amount of 11 5/8%
Senior Secured Notes due October 15, 2000 ("Senior Notes") at a price of 95.96%
of the aggregate principal amount thereof.
On July 31, 1998 the parent effected a satisfaction and discharge of the Senior
Notes. See Notes 2 and 5 of Busse Broadcasting Corporation's Notes to Condensed
Consolidated Financial Statements (unaudited) for the six months ended June 28,
1998 included herein.
3. SALE OF THE CAPITAL STOCK OF THE PARENT
On July 31, 1998 all of the capital stock of the Parent was sold to Gray
Communications Systems, Inc. ("Gray"). As a result of the acquisition of the
Parent's stock, Gray also indirectly controls KOLN/KGIN, Inc. and KOLN/KGIN
License, Inc. See Notes 2 and 5 of Busse Broadcasting Corporation's Notes to
Condensed Consolidated Financial Statements (unaudited) for the six months ended
June 28, 1998 included herein.
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
The following discussion and analysis of financial condition and
results of operations should be read in conjunction with the unaudited Condensed
Consolidated Financial Statements of the Company and notes thereto included at
Item 1, "Financial Statements," which provide additional information regarding
the Company's financial activities and condition. The accompanying unaudited
Condensed Consolidated Financial Statements, together with the related notes to
such financial statements, reflect, in the opinion of the Company, all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position and results of operations for
the unaudited interim periods. Results of such interim periods are not
necessarily indicative of the results for the respective entire fiscal years.
The Company's fiscal year is the 52/53 week period ending on the Sunday
nearest to December 31 of each year. The Company's first three fiscal quarters
are each comprised of 13 consecutive weeks. Unless otherwise indicated,
references herein to 1998 and/or 1997 refer to the three or six month period
ended June 28, 1998 or June 29, 1997, respectively.
RESULTS OF OPERATIONS
The net revenues of KOLN/KGIN-TV and WEAU-TV (collectively, the
"Stations") are derived primarily from advertising revenues and, to a much
lesser extent, from compensation paid by the networks to the Stations for
broadcasting network programming. The Stations' primary operating expenses are
employee compensation and related benefits, programming, news gathering and
production and promotions. Substantially all of the assets of WEAU-TV were sold
on July 31, 1998; See "Sale of the WEAU Assets, Like-kind Exchange of Assets and
Sale of 100% of the Capital Stock of the Company", included herein, and Note 5
of Notes to Condensed Consolidated Financial Statements (Unaudited) included in
"Financial Statements" at Item 1.
In general, television stations receive revenues for advertising sold
for placement within and adjoining its locally originated programming and
adjoining national network programming. Advertising is sold in time increments
and is priced primarily on the basis of a program's popularity within the
demographic group an advertiser desires to reach, as measured principally by
quarterly audience surveys. In addition, advertising rates are affected by the
number of advertisers competing for the available time, the size of the
demographic make-up of the markets served by the television station and the
availability of alternate advertising media in the market areas. Rates are
highest during the most desirable viewing hours with corresponding reductions
during other hours. The ratings of local
19
television stations affiliated with a national television network can be
affected by the ratings of the network programming.
Most advertising contracts are short-term and generally run for only a
few weeks. A large portion of the revenues of the Stations is generated from
local and regional advertising, which is sold primarily by the Stations' sales
staff, and the remainder of the advertising revenues represents national
advertising, which is sold by an independent national advertising sales
representative. The Stations generally pay commissions to advertising agencies
on local, regional, and national advertising, and on national advertising the
Stations also generally pay commissions to the national sales representative.
The advertising revenues of the Stations are generally highest in the
second and fourth quarters of each year, due in part to increases in consumer
advertising in the spring and retail advertising in the period leading up to and
including the holiday season. In addition, advertising revenues are generally
higher during election years due to spending by political candidates, which
spending typically is heaviest during the fourth quarter. Operating expenses of
the Company's television stations are generally consistent throughout the fiscal
year.
COMPARISON OF THE THREE MONTHS ENDED JUNE 28, 1998 AND JUNE 29, 1997
Net revenue increased $203,861, or 3.9%, to $5,488,694 from $5,284,833
for the three months ended June 28, 1998 compared to the three months ended June
29, 1997, reflecting increased net political advertising offset in part by a
decrease in demand for commercial time from national advertising clients. Net
political revenue for the Stations during the three months ended June 28, 1998
increased by approximately $444,000 to $467,000 from $23,000 between the fiscal
periods reflecting primary election campaigning in Nebraska as part of the
biannual election cycle. Net local time sales, excluding political revenues, and
network compensation for the Stations was consistent between the respective
fiscal periods.
Operating expenses, excluding depreciation and amortization expenses,
decreased $3,197, or 0.1%, to $2,177,559 for the three months ended June 28,
1998 from $2,180,756 for the comparable 1997 period.
Depreciation expenses decreased $102,775, or 19.4%, to $427,494 for the
three months ended June 28, 1998 from $530,269 for the comparable 1997 period,
reflecting the timing of estimated depreciation charges within the 1997 fiscal
year.
Amortization expenses decreased $16,686, or 1.7%, to $960,440 for the
three months ended June 28, 1998 from $977,126 for the comparable 1997 period.
Corporate expenses increased $19,654, or 5.1%, to $407,255 during the
three months ended June 28, 1998 from $387,601 for the three months ended June
29, 1997 reflecting, in part, differences in the incurrence of professional
services between the respective fiscal
20
periods including professional service expenses relating to the sale of the
Company's capital stock as discussed herein.
Income from operations increased $306,865, or 25.4%, to $1,515,946 for
the three months ended June 28, 1998 from $1,209,081 for the comparable period
of 1997 primarily reflecting the increased net revenues and the decreased
expenses, both as discussed above.
Interest expense increased $14,642, or 0.7%, to $2,099,150 for the three
months ended June 28, 1998 from $2,084,508 for the comparable 1997 fiscal period
reflecting continuing accretion of original issue discount. Interest income
increased $36,192, or 40.1%, to $126,254 for the three months ended June 28,
1998 from $90,062 for the comparable 1997 fiscal period reflecting the Company's
earnings on its cash balances during the respective fiscal periods.
The Company has analyzed its current and deferred tax assets and
liabilities and has concluded that no provision for current or deferred federal
or state taxes is required for the three months ended June 28, 1998.
COMPARISON OF THE SIX MONTHS ENDED JUNE 28, 1998 AND JUNE 29, 1997
Net revenue increased $666,047, or 7.0%, to $10,215,822 from $9,549,775
for the six months ended June 28, 1998 compared to the six months ended June 29,
1997, reflecting increased net political advertising and an increase in demand
for commercial time from local clients offset in part by a decrease in demand
for commercial time from national advertising clients. Net political revenue for
the Stations during the six months ended June 28, 1998 increased by
approximately $570,000 to $626,000 from $56,000 between the fiscal periods
reflecting primary election campaigning in Nebraska as part of the biannual
election cycle. Network compensation for the Stations was consistent between the
respective fiscal periods.
Operating expenses, excluding depreciation and amortization expenses,
increased $102,673, or 2.4%, to $4,448,310 for the six months ended June 28,
1998 from $4,345,637 for the comparable 1997 period. Approximately $47,000 of
such increase relates to the cost of certain litigation only during the 1998
period; such litigation has been settled favorably by the Company.
Depreciation expenses decreased $140,632, or 13.3%, to $919,906 for the
six months ended June 28, 1998 from $1,060,538 for the comparable 1997 period,
reflecting the timing of estimated depreciation charges within the 1997 fiscal
year.
Amortization expenses decreased $40,839, or 2.0%, to $1,949,065 for the
six months ended June 28, 1998 from $1,989,904 for the comparable 1997 period.
Corporate expenses increased $219,581, or 29.7%, to $960,135 during the
six months ended June 28, 1998 from $740,554 for the six months ended June 29,
1997 reflecting, in
21
part, differences in the incurrence of professional services between the
respective fiscal periods including professional service expenses relating to
the sale of the Company's capital stock as discussed herein.
Income from operations increased $525,264, or 37.2%, to $1,938,406 for
the six months ended June 28, 1998 from $1,413,142 for the comparable period of
1997 primarily reflecting the increased net revenues offset in part by the
increased expenses, both as discussed above.
Interest expense increased $29,023, or 0.7%, to $4,192,307 for the six
months ended June 28, 1998 from $4,163,284 for the comparable 1997 fiscal period
reflecting continuing accretion of original issue discount. Interest income
increased $40,502, or 21.7%, to $227,078 for the six months ended June 28, 1998
from $186,576 for the comparable 1997 fiscal period reflecting the Company's
earnings on its cash balances during the respective fiscal periods.
The Company has analyzed its current and deferred tax assets and
liabilities and has concluded that no provision for current or deferred federal
or state taxes is required for the six months ended June 28, 1998.
LIQUIDITY AND CAPITAL RESOURCES
General
The Company's cash and cash equivalents at June 28, 1998 totaled
$9,045,736 compared to $8,974,699 at December 28, 1997. The Company's cash
balances at June 28, 1998 and December 28, 1998 includes $3,444,651 and
$3,360,024, respectively, representing the net proceeds, and the interest
earnings thereon, from the sale of Winnebago during 1996. The primary changes in
the Company's cash position results from changes in certain working capital
accounts.
Satisfaction, Discharge and Redemption of the Senior Notes
On July 31, 1998 the Company utilized the net proceeds from the sale of
the WEAU Assets, as defined herein, the net proceeds, and the interest earnings
thereon, from the sale of Winnebago and cash on hand to irrevocably deposit
$69,913,002 with the Trustee, and irrevocably instructed, the Trustee to redeem
all of the outstanding Senior Notes on October 15, 1998 at a redemption price of
106% of the aggregate principal amount thereof and accrued and unpaid interest
thereon through the date of redemption. Such actions by the Company constitute a
satisfaction and discharge of the Senior Notes under the Indenture. See Notes 2
and 5 to Notes to Condensed Consolidated Financial Statements (Unaudited)
included in "Financial Statements" at Item 1.
22
Capital Expenditures
The Company will require liquidity for capital expenditures and working
capital needs. For the six months ended June 28, 1998 capital expenditures
totaled $248,919.
It is anticipated that significant capital expenditures may be required
in the future to implement advanced television, "ATV" at the Stations. The FCC
has determined the technical standards, the channel assignments and a time table
for implementation of ATV. The FCC has assigned the following ATV channels to
the Company's current channels:
Station Location Current Channel ATV Channel
KOLN Lincoln, Nebraska 10 25
KGIN Grand Island, Nebraska 11 32
WEAU Eau Claire, Wisconsin 13 39
Generally, under the FCC's implementation schedule, the Company must
apply for ATV construction permits for each of its present television stations
by November 1, 1999 and then commence ATV operations by May 1, 2002. Under the
current FCC implementation schedule the Company would generally be required to
surrender to the government either the current channel or the ATV channel by
December 31, 2006 and continue its digital operations thereafter on the retained
channel. Recent legislation requires the FCC to extend the December 31, 2006
surrender date with respect to certain stations within a given television market
if (i) at least one network affiliate is not broadcasting a digital service in
the given market and has exercised "due diligence" in meeting the ATV buildout
requirements for that market or (ii) digital to analog converter technology is
not generally available in the given market or (iii) 15 percent or more of the
television households in a given market do not subscribe to a multichannel video
programming distributor that carries the digital service of each local station
and those television households do not have at least one advanced television set
or at least one digital to analog converter. The foregoing implementation
schedule is subject to review by the FCC every two years and may also be subject
to future legislation or judicial review, the effect of which cannot be
predicted by the Company.
The Company is currently studying the ATV channel assignments for the
Stations as well as the technical and capital expenditure requirements to
implement ATV at the Stations. The Company currently intends to implement ATV at
the Stations within the FCC mandated implementation period. The Company cannot
presently predict the cost of such implementation but, based upon general
industry estimates, currently believes that such costs will be material and will
require several million dollars to commence initial ATV operations.
23
INCOME TAXES
As of December 28, 1997 the Company had approximately $61.4 million of
federal net operating loss carryforwards ("NOL's") which begin to expire in
2005. As a result of the Plan the Company elected treatment under Section 382
(1) (5) of the Internal Revenue Code, as amended (the "Code"). This treatment
will allow the Company to utilize, under certain restrictions, its NOL's to
offset taxable income incurred after the Effective Date. Utilization of a
portion of these NOL's are assumed in the Company's calculation of
Post-Effective Date deferred taxes.
With the Company's sale of the WEAU Assets On July 31, 1998 a gain, on
a tax basis, of approximately $60 million was recognized. Such gain will be
offset by and reduce the Company's NOL's.
After completion of the sale of the WEAU Assets, 100% of the Company's
capital stock was acquired by Gray; such acquisition will subject the Company's
remaining NOL's to certain limitations under section 382 of the Code. See Note 5
of Notes to Condensed Consolidated Financial Statements (Unaudited) included in
"Financial Statements" at Item 1.
SALE OF THE WEAU ASSETS, LIKE-KIND EXCHANGE OF ASSETS AND SALE OF 100% OF THE
CAPITAL STOCK OF THE COMPANY
On July 31, 1998 Busse and WEAU LLC sold substantially all of WEAU Assets to
Cosmos for an aggregate cash purchase price of $66 million. In accordance with
the Indenture, the Company directed the $66 million of proceeds be deposited
with the Indenture Trustee.
Also on July 31, 1998, Busse, Gray, the Gray Subsidiaries and Cosmos effected
the Like-kind Exchange as follows: (i) the Gray Subsidiaries sold to Cosmos
substantially all of the assets from the Gray Subsidiaries in exchange for the
WEAU Assets plus an aggregate cash payment of $12 million and (ii) Cosmos
directed Busse to deliver the WEAU Assets directly to the Gray Subsidiaries to
complete the Like-kind Exchange.
After consummation of the sale of the WEAU Assets and the Like-kind Exchange,
Gray acquired all of the capital stock of Busse for an aggregate net purchase
price of $57.4 million, which was paid in cash to the Company's stockholders.
The aggregate net purchase price was derived by the sum of (i) $112 million,
plus (ii) the Company's cash and cash equivalents, less (iii) the aggregate
amount of the Company's indebtedness and accrued and unpaid interest thereon,
including the accreted amount of the Company's Senior Notes, less (iv) certain
other purchase price adjustments. The value of the Company's cash, cash
equivalents, aggregate indebtedness and other purchase price adjustments were
determined as of the close of business on July 30, 1998.
Effective with the closing of the sale of the Company's capital stock, as
discussed above, Messrs. Busse and Ryan resigned as executive officers of, and
terminated their respective
24
employment with, the Company and its affiliates. Messrs. Busse, Beck and
Cornwell resigned as directors of the Company and Mr. Busse resigned as a
director of each of the Company's affiliates.
Gray, upon acquisition of Busse's stock elected the following directors for
Busse: Messrs. Richard L. Boger, Hilton H. Howell, William E. Mayher, III,
Howell Newton, Hugh Norton, Robert S. Prather, Jr., Mrs. Harriett J. Robinson
and Mr. J. Mack Robinson. Such new directors appointed the following executive
officers of the Company: Mr. J. Mack Robinson as President and Chairman, Mr.
Frederick J. Erickson as Chief Financial Officer, Mr. Robert Beizer as
Secretary, Mr. Vance Luke as Assistant Secretary and Mr. Jackson S. Cowart, IV
as Assistant Secretary.
After the change in control of the Busse capital stock and appointment of new
directors and officers for the Company, Busse irrecoverably directed the Trustee
to utilize $69,913,002 of certain collateral proceeds funds held by the Trustee,
for credit to the Company, along with certain other cash deposited by the
Company with the Trustee as an irrevocable cash deposit aggregating $69,913,002,
to redeem all of the outstanding Senior Notes on October 15, 1998 at 106% of
aggregate principal amount thereof and accrued and unpaid interest to the date
of redemption. Such cash deposit and irrevocable direction effected a
satisfaction and discharge of the Senior Notes pursuant to the Indenture.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT
This quarterly report on Form 10-Q contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. When used in this report, the words "believes," "expects,"
"anticipates," "estimates" and similar words and expressions are generally
intended to identify forward-looking statements. Statements that describe the
Company's future strategic plans, goals or objectives are also forward-looking
statements. Readers of this report are cautioned that any forward-looking
statements, including those regarding the intent, belief, or current
expectations of the Company or management, are not guarantees of future
performance, results or events and involve risks and uncertainties, and that
actual results and events may differ materially from those in the
forward-looking statements as a result of various factors including, but not
limited to (i) general economic conditions in the markets in which the Company
operates, (ii) competitive pressures within the industry and/or the markets in
which the Company operates, (iii) the effect of future legislation or regulatory
changes on the Company's operations and (iv) other factors described from time
to time in the Company's filings with the Securities and Exchange Commission.
The forward-looking statements included in this report are made only as of the
date hereof. The Company undertakes no obligation to update such forward-looking
statements to reflect subsequent events or circumstances.
25
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company from time to time is involved in litigation incidental to
the conduct of its business. The Company is not currently a party to any lawsuit
or proceeding which, in the opinion of the Company, could have a material
adverse effect on the Company.
Item 5. OTHER INFORMATION
On July 31, 1998, Gray Communications Systems, Inc. completed the
purchase of all of the outstanding capital stock of Busse Broadcasting
Corporation. The net purchase price was $112 million plus associated transaction
costs. The purchase price includes the assumption of Busse's indebtedness,
including its 11 5/8% Senior Secured Notes due 2000. Immediately prior to Gray's
acquisition of Busse, Cosmos Broadcasting Corporation (a subsidiary of Liberty
Corporation) acquired WEAU-TV from Busse and exchanged it for WALB-TV, Gray's
NBC affiliate in Albany, Georgia. WALB-TV was valued at $78 million in the
exchange transaction. As a result of these transactions, Gray adds the following
television stations to its existing broadcast group: KOLN-TV, the CBS affiliate
serving the Lincoln-Hastings-Kearney, Nebraska market; its satellite station
KGIN-TV, the CBS affiliate serving Grand Island, Nebraska; and WEAU-TV, an NBC
affiliate serving the Eau Claire-La Crosse, Wisconsin market.
Immediately following the acquisition of Busse, Gray exercised its right
to satisfy and discharge the Busse 11 5/8% Senior Secured Notes, effectively
prefunding the Notes at the October 15, 1998 call price of 106 plus accrued
interest.
See Note 5. Sale of the WEAU Assets, Like-kind Exchange of Assets and
Sale of 100% of the Capital Stock of the Company which is included in the Notes
to Condensed Consolidated Financial Statements (continued) Unaudited of Busse
Broadcasting Corporation included herein.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBITS
10.1 - Amended and Restated Stock Purchase
Agreement by and among Busse Broadcasting
Corporation, South Street Corporate Recovery
Fund I, L.P., Greycliff Leveraged Fund 1993,
L.P., South Street Leveraged Corporate
Recovery Fund, L.P., South Street Corporate
Recovery Fund I (International), L.P. and
Gray Communications Systems, Inc. dated as
of June 22, 1998
26
10.2 - Asset Purchase Agreement by and among Busse
Broadcasting Corporation, WEAU License,
Inc. and Cosmos Broadcasting Corporation,
dated as of June 22, 1998
10.3 - Exchange Agreement by and among Gray
Communications Systems, Inc., WALB-TV, Inc.,
WALB Licensee Corporation., Cosmos
Broadcasting Corporation, Busse Broadcasting
Corporation, and WEAU License, Inc. dated as
of June 22, 1998
27 Financial Data Schedule for the Six months
ended June 28, 1998
(b) REPORTS ON FORM 8-K
None
27
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 thereunto duly authorized.
BUSSE BROADCASTING CORPORATION
(Registrant)
Dated: August 10, 1998 BY: /s/ Frederick J. Erickson
-------------------------------------
Frederick J. Erickson
Chief Financial Officer
28