SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: November 21, 1997
JACOR COMMUNICATIONS, INC.
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-12404 31-0978313
(Commission File No.) (IRS Employer Identification No.)
50 East RiverCenter Boulevard
12th Floor
Covington, KY 41011
(606) 655-2267
Item 5. OTHER EVENTS
Subsequent to June 1, 1997, Jacor Communications, Inc. (the "Company")
acquired two new, indirect wholly-owned subsidiaries: Archon Communications,
Inc., whose name was subsequently changed to Jacor/Premiere Holding, Inc.
("Archon"), and W.N. Broadcasting Corp., whose name was subsequently changed
to Jacor Broadcasting of Youngstown, Inc. ("WN"). Also, the Company created
MultiVerse Acquisition Corp. ("MVAC"), an indirect wholly- owned subsidiary
of the Company, which acquired substantially all of the assets of Multiverse
Networks, L. L. C., Synergy Broadcast Investment Enterprises, L.L.C.,
Shanahan Broadcasting, Inc. and Worldstar, Inc. in November 1997. Prior to
such transaction, MVAC did not have any assets or operations. The financial
statements of these three new subsidiaries were not required to be filed
pursuant to Item 2 or Item 7 of Form 8-K because none of these acquisitions
were significant to the Company. However, as required by the terms of the
Company's various indentures relating to its outstanding senior subordinated
notes, Archon, WN and MVAC now have become guarantors of such debt. Because
audited financial statements for these subsidiary guarantors have not been
previously included in the Company's consolidated financial statements, the
Company is filing the financial statements included in Item 7 of this Form
8-K so that such financial statements may be incorporated by reference into
any registration statements filed by the Company and its subsidiaries
pursuant to the Securities Act of 1933, as amended, including without
limitation the Company's Registration Statements on Form S-4 (File No.
333-35273) and on Form S-3 (File No. 333-40127 ). Archon, WN and MVAC will
be co-registrants to such Registration Statements.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
(i) Archon Communications, Inc.
Report of Independent Accountants F-1
Balance Sheets as of December 31, 1996 and March 31, 1997 F-2
Statements of Income for the period July 6, 1995 (Date of
Inception) to December 31, 1995, the year ended December 31,
1996 and the three months ended March 31, 1997 F-3
Statements of Changes in Stockholders' Equity for the period
July 6, 1995 (Date of Inception) to December 31, 1995, the year
ended December 31, 1996 and the three months ended March 31, 1997 F-4
Statements of Cash Flows for the period July 6, 1995 (Date of
Inception) to December 31, 1995, the year ended December 31,
1996 and the three months ended March 31, 1997 F-5
2
Notes to Financial Statements F-6
(ii) W.N. Broadcasting Corp.
Report of Independent Accountants' F-9
Balance Sheets at December 31, 1996, 1995 and 1994 F-10
Statements of Operations and Retained Earnings
for each of the three years in the period ended
December 31, 1996 F-12
Statements of Cash Flows for each of the three years in the
period ended December 31, 1996 F-13
Notes to Financial Statements F-15
(iii) MultiVerse Acquisition Corp. (the combined financial
statements of MultiVerse Networks, L.L.C., Synergy Broadcast
Investment Enterprises L.L.C., Shanahan Broadcasting, Inc.
and WorldStar, Inc.)
Report of Independent Auditors F-22
Combined Balance Sheets as of September 28, 1997,
December 29, 1996 and December 31, 1995 F-23
Combined Statements of Income for the nine month period ended
September 28, 1997, the year ended December 29, 1996 and the
ten months ended December 31, 1995 F-24
Combined Statements of Shareholders' Equity for the nine month
period ended September 28, 1997, the year ended December 29, 1996
and the ten months ended December 31, 1995 F-25
Combined Statements of Cash Flows for the nine month period ended
September 28, 1997, the year ended December 29, 1996 and the
ten months ended December 31, 1995 F-26
Notes to Financial Statements F-27
(b) Exhibits
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of William T. Ogden, Inc.
3
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.
JACOR COMMUNICATIONS, INC.
November 21, 1997 By: /s/ R. Christopher Weber
-------------------------------------------
R. Christopher Weber, Senior Vice President
and Chief Financial Officer
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying balance sheets of Archon Communications Inc. as
of December 31, 1996 and March 31, 1997 and the related statements of income,
changes in stockholders' equity and cash flows for the period July 6, 1995 (Date
of Inception) to December 31, 1995, the year ended December 31, 1996 and the
three months ended March 31, 1997. These financial statements are the
responsibility of Archon's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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 amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 Archon Communications, Inc. as
of December 31, 1996 and March 31, 1997 and the results of its operations and
its cash flows for the period July 6, 1995 (Date of Inception) to December 31,
1995, the year ended December 31, 1996 and the three months ended March 31,
1997, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
November 7, 1997
F-1
ARCHON COMMUNICATIONS INC.
BALANCE SHEETS
December 31, March 31,
1996 1997
-------------- --------------
ASSETS
Cash and cash equivalents $ 12,018,743 $ 11,874,204
Investment in Premiere common stock 15,150,000 19,350,000
Investment in warrants 3,656,250 3,656,250
Property and equipment, net 47,089 44,723
-------------- --------------
Total assets $ 30,872,082 $ 34,925,177
-------------- --------------
-------------- --------------
LIABILITIES
Accrued expenses $ 15,430 $ 17,576
Deferred income taxes 4,142,500 5,762,500
-------------- --------------
Total liabilities 4,157,930 5,780,076
STOCKHOLDERS' EQUITY
Preferred stock, authorized and unissued - -
Common Stock, $.01 per share par value; authorized
20,000 shares, issued and outstanding 10,000 shares 100 100
Additional paid-in capital 20,499,900 20,499,900
Unrealized gain on investments, net 5,978,275 8,498,275
Retained earnings 235,877 146,826
-------------- --------------
Total stockholders' equity 26,714,152 29,145,101
-------------- --------------
Total liabilities and stockholders' equity $ 30,872,082 $ 34,925,177
-------------- --------------
-------------- --------------
The accompanying notes are an integral part of the financial statements
F-2
ARCHON COMMUNICATIONS INC.
STATEMENTS OF INCOME
FOR THE PERIOD JULY 6, 1995 (DATE OF INCEPTION)
TO DECEMBER 31, 1995, THE YEAR ENDED
DECEMBER 31, 1996 AND THE THREE MONTHS
ENDED MARCH 31, 1997
1995 1996 1997
------------ ------------ ------------
Investment income $ 243,485 $ 628,258 $ 174,177
Financing commitment income 689,325 1,378,650 -
Other income 226,295 232,400 -
------------ ------------ ------------
Total income 1,159,105 2,239,308 174,177
Investment management expenses 1,736,690 1,268,346 323,228
------------ ------------ ------------
(Loss) income from operations (577,585) 970,962 (149,051)
Income tax expense (benefit) (231,000) 388,500 (60,000)
------------ ------------ ------------
Net (loss) income $ (346,585) $ 582,462 $ (89,051)
------------ ------------ ------------
------------ ------------ ------------
The accompanying notes are an integral part of the financial statements
F-3
ARCHON COMMUNICATIONS INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD JULY 6, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 1995,
THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED
MARCH 31, 1997
Common Stock Unrealized Retained
--------------------- Additional Gain on Earnings
Shares Par Value Paid-In Capital Investments (deficit) Total
---------- --------- --------------- ----------- ----------- ------------
Issuance of Archon
common stock on July 6, 1995 10,000 $ 100 $ 20,499,900 - - $20,500,000
Net loss - - - - $(346,585) (346,585)
Unrealized gain on securities
available for sale, net
of deferred taxes - - - 4,928,275 - 4,928,275
---------- --------- --------------- ----------- ----------- ------------
Balance at December 31, 1995 10,000 100 20,499,900 4,928,275 (346,585) 25,081,690
Net income - - - - 582,462 582,462
Unrealized gain on securities
available for sale, net
of deferred taxes - - - 1,050,000 - 1,050,000
---------- --------- --------------- ----------- ----------- ------------
Balance at December 31, 1996 10,000 100 20,499,900 5,978,275 235,877 26,714,152
Net loss - - - - (89,051) (89,051)
Unrealized gain on securities
available for sale, net
of deferred taxes - - - 2,520,000 - 2,520,000
---------- --------- --------------- ----------- ----------- ------------
Balance at March 31, 1997 10,000 $ 100 $20,499,900 $8,498,275 $146,826 $29,145,101
---------- --------- --------------- ----------- ----------- ------------
---------- --------- --------------- ----------- ----------- ------------
The accompanying notes are an integral part of the financial statements
F-4
ARCHON COMMUNICATIONS INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD JULY 6, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 1995,
THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED
MARCH 31, 1997
1995 1996 1997
-------------- -------------- --------------
Cash flow from operating activities:
Net (loss) income $ (346,585) $ 582,462 $ (89,051)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 2,261 7,399 2,366
Financing commitment income (689,325) (1,378,650)
Deferred income taxes (231,000) 388,500 (60,000)
Changes in operating assets and liabilities
Accrued expenses 15,980 (550) 2,146
-------------- -------------- --------------
Net cash used in operating activities (1,248,669) (400,839) (144,539)
-------------- -------------- --------------
Cash flows from investing activities:
Cash paid for Premiere Common Stock (6,775,000)
Purchase of fixed assets (28,504) (28,245)
-------------- -------------- --------------
Net cash used in investing activities (6,803,504) (28,245) -
-------------- -------------- --------------
Net cash provided by financing activities:
Proceeds from issuance of Archon common stock 20,500,000 - -
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 12,447,827 (429,084) (144,539)
Cash and cash equivalents at beginning of year - 12,447,827 12,018,743
-------------- -------------- --------------
Cash and cash equivalents at end of year $ 12,447,827 $ 12,018,743 $ 11,874,204
-------------- -------------- --------------
-------------- -------------- --------------
The accompanying notes are an integral part of the financial statements
F-5
ARCHON COMMUNICATIONS INC.
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
A. DESCRIPTION OF BUSINESS
Archon Communications Inc. ("Archon"), a Delaware corporation, was formed
on July 6, 1995, primarily to make investments in and provide financial
commitments and consulting services to Premiere Radio Networks, Inc.
("Premiere"). Archon has two shareholders, each owning 50% of the
outstanding common shares. Two officers of Archon are on the board of
directors of Premiere. Investment management expenses of Archon relate
primarily to consulting services provided by a shareholder.
B. CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, Archon considers
all highly liquid investments with a maturity of three months or less, when
purchased, to be cash equivalents. Cash and cash equivalents recorded in
the balance sheets as of March 31, 1997 and December 31, 1996, consist
primarily of investment grade commercial paper issued by Ford Motor Credit
and General Electric Capital Corp., respectively.
C. CONCENTRATIONS OF CREDIT RISK
Archon's investments in common stock and warrants are solely with Premiere,
a publicly traded company.
D. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided using accelerated methods.
E. MARKETABLE EQUITY SECURITIES
Archon's investment in Premiere common stock is classified as available for
sale and recorded at fair value in the balance sheet. Unrealized gains are
recorded as a separate component of stockholders' equity, net of deferred
income taxes computed using a tax rate of 40%.
F. WARRANTS
Archon received 1,221,750 Class B warrants valued at $1,588,275 in
connection with the purchase of the Premiere common stock. In addition,
Archon received 1,060,500 Class A warrants valued at $2,067,975 in exchange
for providing financing commitments to Premiere (see Note 2). The warrants
were valued by an independent third party and are being carried on the
balance sheet at the above amounts.
F-6
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, CONTINUED:
G. DEFERRED INCOME TAXES
The Deferred income tax liability is primarily related to unrealized gains
on the investment in Premiere common stock. Deferred income taxes have
also been provided with regard to the financing income recognized by
Archon. The financing income relates to Class A warrants Archon received
in connection with providing financing commitments to Premiere (see Note
2). Net operating losses of $346,585 were utilized in 1996 for purposes of
computing 1996 income tax expense.
H. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
2. INVESTMENT IN PREMIERE COMMON STOCK AND WARRANTS:
Archon's principal asset is an investment in Premiere common stock and
related stock purchase warrants to purchase Premiere common stock. In July
1995, Archon entered into various agreements with Premiere pursuant to
which it provided Premiere with standby commitments to purchase up to
$10,800,000 of subordinated debentures ("Debentures"); and Archon purchased
from Premiere 750,000 shares of common stock along with 1,221,750 Class B
warrants for aggregate cash consideration of $4,025,000. In return for
providing the commitments, Archon was also guaranteed a minimum of
1,060,500 Class A warrants. The debentures were issuable in units
consisting of $1,000 principal amount of Debentures and 150 Class A
warrants exercisable at $4.67 per share (an aggregate of up to 1,620,000
Class A warrants were issuable). The debentures were issuable at
Premiere's option through October 28, 1996. Premiere did not exercise its
rights with respect to the Debentures, however, as required by the
agreement with Premiere, Archon received 1,060,500 of the Class A warrants.
Archon recorded the value of the Class A warrants at the time the financing
commitments were provided, along with an equal amount of deferred income.
The deferred income was amortized over the term of the commitment until
Premiere terminated its option to issue the Debentures, at which time the
remaining deferred income was recognized.
Additionally in a separate transaction, Archon purchased 450,000 shares of
Premiere common stock in July 1995 for an aggregate price of $2,750,000.
F-7
3. SUBSEQUENT EVENT:
On June 12, 1997, Jacor Communications, Inc. ("Jacor") purchased all of the
outstanding shares of Archon common stock for cash consideration of
$39,759,907 and 405,809 shares of Jacor common stock.
F-8
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
Board of Directors
W. N. Broadcasting Corp.
Niles, Ohio
We have audited the accompanying balance sheets of W.N. Broadcasting Corp.
as of December 31, 1996, 1995 and 1994 and the related statements of operations,
retained earnings, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 W. N. Broadcasting Corp. as
of December 31, 1996, 1995 and 1994, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ William T. Ogden, Inc.
William T. Ogden, Inc.
September 18, 1997
F-9
BALANCE SHEETS
W. N. BROADCASTING CORP.
ASSETS
December 31
----------------------------------------
1996 1995 1994
---------- ---------- ----------
CURRENT ASSETS
Cash $ 2,833 $ 31,946 $ 14,969
Accounts receivable 367,146 308,343 325,103
Prepaid expenses 6,071 9,135 6,675
Refundable income taxes 32,060 37,360 11,214
---------- ---------- ----------
TOTAL CURRENT ASSETS 408,110 386,784 357,961
OTHER ASSETS
Licenses 530,000 530,000 530,000
Deferred tax benefit 7,000 5,000 5,000
Deposits 943 943 943
---------- ---------- ----------
537,943 535,943 535,943
PROPERTY AND EQUIPMENT
Land 80,000 80,000 80,000
Building and improvements 127,555 127,555 124,238
Equipment 436,120 428,004 412,455
Furniture and fixtures 43,706 35,886 38,608
Vehicles 17,347 56,179 52,179
---------- ---------- ----------
704,728 727,624 707,480
Less accumulated depreciation 495,391 503,085 474,969
---------- ---------- ----------
209,337 224,539 232,511
---------- ---------- ----------
$1,155,390 $1,147,266 $1,126,415
---------- ---------- ----------
---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
F-10
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31
----------------------------------------
1996 1995 1994
---------- ---------- ----------
CURRENT LIABILITIES
Note payable $ 26,070 $ 32,701 $ 23,026
Accounts payable 109,059 83,450 79,772
Deferred trade revenue 35,402 41,406 44,847
Accrued compensation, payroll taxes and
withholding taxes 71,173 71,739 65,253
Accrued interest 1,632 2,254 --
Accrued state income taxes -- -- 2,000
Accrued taxes other than income 13,395 12,461 12,227
Current portion of long-term debt 94,000 80,000 70,200
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 350,731 324,011 297,325
LONG-TERM DEBT 327,784 420,708 494,639
LOANS PAYABLE TO SHAREHOLDERS' 257,442 259,105 262,700
SHAREHOLDERS' EQUITY
Common stock, no par value, stated value
$5 per share:
Authorized 750 shares
Issued and outstanding 391 shares 1,955 1,955 1,955
Additional paid-in capital 15,145 15,145 15,145
Retained earnings 202,333 126,342 54,651
---------- ---------- ----------
219,433 143,442 71,751
---------- ---------- ----------
$1,155,390 $1,147,266 $1,126,415
---------- ---------- ----------
---------- ---------- ----------
F-11
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
W. N. BROADCASTING CORP.
OPERATIONS
For the years ended December 31
----------------------------------------------
1996 1995 1994
---------- ---------- ----------
Sales $2,202,470 $2,137,217 $2,000,631
Other income 37,170 21,360 54,637
---------- ---------- ----------
2,239,640 2,158,577 2,055,268
Costs and expenses:
Operating expenses 2,051,894 1,970,449 1,820,515
Depreciation 31,138 35,412 43,598
Interest 51,617 57,025 64,664
---------- ---------- ----------
2,134,649 2,062,886 1,928,777
---------- ---------- ----------
INCOME BEFORE
INCOME TAXES 104,991 95,691 126,491
Income taxes 29,000 24,000 14,000
---------- ---------- ----------
NET INCOME $ 75,991 $ 71,691 $ 112,491
---------- ---------- ----------
---------- ---------- ----------
RETAINED EARNINGS
Balance at beginning of year, as previously reported $ 33,255
Prior period adjustment (91,095)
----------
Balance (deficit) at beginning of year, as restated $ 126,342 $ 54,651 (57,840)
Net income 75,991 71,691 112,491
---------- ---------- ----------
BALANCE AT END OF YEAR $ 202,333 $ 126,342 $ 54,651
---------- ---------- ----------
---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
F-12
STATEMENTS OF CASH FLOWS
W. N. BROADCASTING CORP
For the years ended December 31
---------------------------------------------
1996 1995 1994
---------- ------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 75,991 $ 71,691 $112,491
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 31,138 35,412 43,598
Bad debts 56,232 55,424 44,606
Deferred income taxes ( 2,000) -- ( 5,000)
---------- ------------- ----------
161,361 162,527 195,695
Changes in operating assets and liabilities:
Net increase in receivables
and other current assets ( 106,671) ( 67,270) ( 84,663)
Net increase in accounts payable, deferred revenue
and accrued expenses 19,351 7,211 31,544
---------- ------------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 74,041 102,468 142,576
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ( 15,936) ( 27,440) ( 3,584)
Capital lease deposit -- -- ( 943)
---------- ------------- ----------
NET CASH USED IN
INVESTING ACTIVITIES ( 15,936) ( 27,440) ( 4,527)
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments) borrowing on short-term debt ( 6,631) 9,675 ( 4,844)
Payments on long-term debt ( 78,924) ( 64,131) ( 89,778)
Payments on shareholders' loans ( 1,663) ( 3,595) ( 31,120)
---------- ------------- ----------
NET CASH USED IN
FINANCING ACTIVITIES ( 87,218) ( 58,051) ( 125,742)
---------- ------------- ----------
NET INCREASE (DECREASE) IN CASH ( 29,113) 16,977 12,307
Cash at beginning of year 31,946 14,969 2,662
---------- ------------- ----------
CASH AT END OF YEAR $ 2,833 $ 31,946 $ 14,969
---------- ------------- ----------
---------- ------------- ----------
F-13
STATEMENTS OF CASH FLOWS (CONTINUED)
W. N. BROADCASTING CORP.
SCHEDULE OF NONCASH INVESTING AND
FINANCING TRANSACTIONS
For the years ended December 31
---------------------------------------------
1996 1995 1994
---------- ------------- ----------
Capital lease incurred for the acquisition
of equipment $ -- $ -- $ 33,977
---------- ------------- ----------
---------- ------------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
F-14
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description:
The Company was incorporated in the State of Ohio in 1980, and owns and
operates a FM and AM radio station located in the Niles, Ohio area.
Accounts Receivable:
Management evaluates the accounts receivable prior to year-end and at that
time establishes an allowance for doubtful accounts and expenses
uncollectible accounts. Accounts receivable are stated net of an allowance
for doubtful accounts in the amount of $25,000 for 1996 and 1995 and $15,000
for 1994.
Licenses:
Licenses consisted of the Federal Communication Commission FM and AM
licenses. The licenses are recorded at cost.
Property and Equipment:
Property and equipment are recorded at cost and are depreciated over the
estimated useful lives of the assets using the straight-line method.
Income Taxes:
The provision for federal income taxes is calculated on the basis of pretax
accounting income. Deferred income taxes have been provided using the
liability method on the differences between tax and financial accounting.
Principal differences relate primarily to depreciation, allowance for
doubtful accounts and accrued vacations. These items are included in
financial accounting currently; recognition is deferred for tax reporting
purposes.
Advertising Costs:
Advertising is charged to expense during the period in which it is
incurred. Total advertising costs amount to $100,952 for 1996, $120,111 for
1995 and $121,431 for 1994.
F-15
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues:
Revenues for commercial broadcasting advertisements are recognized when the
commercial is broadcast.
Barter Transactions:
Revenue from barter transactions (advertising provided in exchange for
goods and services) is recognized as income when advertisements are
broadcast, and merchandise or services received are charged to expense when
received or used. If merchandise or services are received prior to the
broadcast of the advertising, a liability (deferred trade revenue) is
recorded. If the advertising is broadcast before the receipt of the goods or
services, a receivable is recorded.
Statement of Cash Flows:
For purposes of the statement of cash flows, the Company considers all
money market funds and highly liquid investments with original maturities of
three months or less to be cash equivalents.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE PAYABLE
The Company has a revolving line of credit arrangement with its primary bank.
Advances on the credit line are payable on demand and bear interest at rate of
15%. The credit line is collateralized by all corporate assets.
F-16
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
LONG-TERM DEBT
Long-term debt, including capital leases, consisted of:
December 31
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
Note payable to bank, bearing interest at prime
plus .25%, payable in monthly installments of
$6,082, maturing in February, 2003, collateralized
by all corporate assets, and a personal guarantees
of the shareholders' $357,674 $396,894 $427,833
Note payable to bank, bearing interest at prime
plus .50%, payable in monthly installments $2,678,
maturing in September, 1998, collateralized by
all corporate assets and a personal guarantees
of the shareholders' 33,109 60,786 83,655
Note payable to bank, bearing interest at prime
plus 2%, payable in monthly installments of $260,
maturing in February, 1997, collateralized by
accounts receivable and personal property 11,998 13,886 15,149
Note payable to bank, bearing interest at 13.9%,
payable in monthly installment of $294,
maturing in July, 1997, collateralized by a
vehicle 1,713 4,890 7,763
Capital lease, payable in monthly installments of
$638, maturing in May, 1999, collateralized by
equipment 14,614 19,112 23,324
Capital lease, payable in monthly installments
of $305, maturing in October, 1997, collateralized
by equipment 2,676 5,140 7,115
-------- -------- --------
421,784 500,708 564,839
Less current maturities 94,000 80,000 70,200
-------- -------- --------
TOTALS $327,784 $420,708 $494,639
-------- -------- --------
-------- -------- --------
F-17
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
LONG-TERM DEBT
The current maturities of long-term debt as of December 31, 1996 are as
follows:
December 31 Amount
----------- --------
1997 $ 94,000
1998 57,550
1999 56,850
2000 60,210
2001 65,042
Thereafter 88,132
--------
TOTAL $421,784
--------
--------
The total interest paid amounted to $52,239 for 1996, $54,771 for
1995 and $64,664 for 1994.
LOANS PAYABLE TO SHAREHOLDERS
Loans payable to shareholders consisted of non-interest bearing
loans from shareholders with no stipulated repayment terms.
LEASE INCOME
The Company leases space on their transmitting tower under
noncancellable operating leases with terms of three years. After the initial
term the leases convert to month to month unless renewed or canceled. The
leases mature through May, 2000, and generate $2,155 of lease income per
month. Future minimum lease income as of December 31, 1996 are as follows:
December 31 Amount
----------- --------
1997 $ 8,700
1998 10,200
1999 4,500
2000 1,500
--------
TOTAL $24,900
--------
--------
F-18
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
INCOME TAXES
Income taxes (benefit) consisted of:
Year Ended December 31
--------------------------------------
1996 1995 1994
-------- -------- --------
Federal:
Current $31,000 $19,000 $17,000
Deferred ( 2,000) -- ( 5,000)
29,000 19,000 12,000
State -- 5,000 2,000
-------- -------- --------
TOTALS $29,000 $24,000 $14,000
-------- -------- --------
-------- -------- --------
The amount of federal income tax expense differs from the amount of expense
that would result from applying domestic federal statutory rates to pre-tax
income from continuing operation primarily due to depreciation and bad debt
differences for book and tax and nondeductible expenses.
The Company's net deferred tax asset consisted of:
December 31
--------------------------------------
1996 1995 1994
-------- -------- --------
Deferred tax assets $14,000 $15,000 $11,000
Deferred tax liabilities ( 7,000) (10,000) ( 6,000)
------- ------- -------
TOTALS $ 7,000 $ 5,000 $ 5,000
------- ------- -------
------- ------- -------
These amounts are presented on the balance sheets as follows:
Deferred tax benefit:
Current $ -- $ -- $ --
Long-term 7,000 5,000 5,000
----- ------- --------
TOTALS$ 7,000 $ 5,000 $ 5,000
----- ------- --------
----- ------- --------
Total federal and state income taxes paid amounted to $36,851 for 1996,
$52,573 for 1995 and $33,801 for 1994.
F-19
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 195 and 1994
LEASES
The Company leases certain equipment under capital lease agreements which
are included in long-term debt. The equipment totaling $34,552 is included in
property and equipment on the balance sheet.
The Company leases real property under a noncancellable operating lease
with a term of three years ending January, 2000. The lease is renewable up to
six additional successive terms of three years each. The following is a summary
of future minimum lease payments under the leases at December 31, 1996:
Operating Capital
December 31 Leases Leases
----------- --------- ---------
1997 $10,560 $11,349
1998 10,560 7,661
1999 10,560 1,613
2000 880 --
------- -------
Total minimum
lease payments $32,560 20,623
-------
-------
Less amount
representing
interest 3,333
------
Present value of
minimum lease
payments $ 17,290
---------
---------
PRIOR PERIOD ADJUSTMENT
Certain errors resulting in an overstatement of accounts receivable and an
understatement of accrued liabilities at January 1, 1994 were discovered during
the audit of the 1994 financial statements. An adjustment in the amount of
$91,095 was required to properly adjust previously reported retained earnings.
F-20
NOTES TO FINANCIAL STATEMENTS
W. N. BROADCASTING CORP.
December 31, 1996, 1995 and 1994
SUBSEQUENT EVENTS
The Company, with the consent of its shareholders, elected as of January 1,
1997 under the Internal Revenue Code to be an S corporation.
During 1997, the shareholders of Company entered into an agreement to sell
100% of the outstanding shares of the company to a publicly traded corporation.
The transaction is subject to final FCC approval.
F-21
REPORT OF INDEPENDENT AUDITORS
----------
Shareholders and Board of Directors
of Shanahan Broadcasting, Inc.,
Synergy Broadcasting, L.L.C.,
Worldstar, Inc., and MultiVerse Networks, L.L.C.
We have audited the accompanying combined balance sheet of Synergy Broadcasting,
L.L.C., Worldstar, Inc. and MultiVerse Networks, L.L.C. as of September 28, 1997
and the combined balance sheets of Shanahan Broadcasting, Inc., Worldstar, Inc.
and MultiVerse Networks, L.L.C. as of December 29, 1996 and December 31, 1995,
and the related combined statements of income, shareholders' equity and cash
flows for the nine months ended September 28, 1997, the year ended December 29,
1996 and the ten months ended December 31, 1995. These financial statements are
the responsibility of the companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits 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 amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and a significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Synergy Broadcasting,
L.L.C., Worldstar, Inc. and MultiVerse Networks, L.L.C. as of September 28, 1997
and of Shanahan Broadcasting, Inc., Worldstar, Inc. and MultiVerse Networks,
L.L.C. as of December 29, 1996 and December 31, 1995, and the combined results
of their operations and their cash flows for the nine months ended September 28,
1997, the year ended December 29, 1996 and the ten months ended December 31,
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
November 14, 1997
F-22
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
COMBINED BALANCE SHEETS
----------
September 28, December 29, December 31,
1997 1996 1995
------------- ------------ ------------
A S S E T S:
Current assets:
Cash and cash equivalents $1,749,650 $642,660 $352,424
Accounts receivable 3,894,617 2,399,616 1,168,488
Prepaid expenses and other assets 162,877 155,998 27,076
--------- --------- ---------
Total current assets 5,807,144 3,198,274 1,547,988
Furniture and equipment, at cost, less accumulated
depreciation (Note 2) 130,587 147,430 47,537
Other assets 110,877 24,747 6,734
Intangible assets 479,920 588,235 829,503
--------- --------- ---------
Total assets $6,528,528 $3,958,686 $2,431,762
--------- --------- ---------
--------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $548,907 $598,209 $186,165
Deferred subscription revenue 229,364 416,738 321,953
Accrued compensation payable 1,934,701 810,989 198,667
Pro forma income taxes 2,729,602 1,048,921 204,778
Current portion of loan from stockholder - 380,000 353,352
--------- --------- ---------
Total current liabilities 5,442,574 3,254,857 1,264,915
--------- --------- ---------
--------- --------- ---------
Commitments and contingencies (Note 3)
Loan from stockholder (Note 6) - 102,547 451,233
Shareholders' equity:
Shanahan Broadcasting, Inc. common stock, no par
value; 2,000 shares authorized, 1,000 issued and
outstanding
Synergy Broadcasting, L.L.C., 100% interest
authorized and outstanding
Worldstar, Inc. common stock, no par value; 1,000
shares authorized, issued and outstanding
MultiVerse Networks, L.L.C., 100 capital units
authorized, issued and outstanding
Additional paid-in capital 651,000 501,000 501,000
Retained earnings 434,954 100,282 214,616
--------- --------- ---------
Total shareholders' equity 1,085,954 601,282 715,614
--------- --------- ---------
Total liabilities and shareholders' equity $6,528,528 $3,958,686 $2,431,762
--------- --------- ---------
--------- --------- ---------
The accompanying notes are an integral part of these combined financial
statements.
F-23
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
COMBINED STATEMENTS OF INCOME
----------
Nine Months Ten Months
Ended Year Ended Ended
September 28, December 29, December 31,
1997 1996 1995
------------- ------------ -------------
Revenue:
Gross revenue $16,281,480 $12,056,648 $4,317,926
Less: Agency commissions 2,228,315 1,600,019 605,781
---------- ---------- ---------
Net operating revenue 14,053,165 10,456,629 3,712,145
Operating expenses:
Production and programming 3,677,751 3,865,591 251,178
Producer fee 1,900,121 1,630,168 516,257
Clearance fee 711,225 505,675 261,127
General and administrative 3,388,830 2,229,695 2,117,136
---------- ---------- ---------
Total operating expenses 9,677,927 8,231,129 3,145,698
---------- ---------- ---------
Net operating income 4,375,238 2,225,500 566,447
Other income and expenses:
Interest income 20,808 22,301 2,701
Interest expense (22,590) (54,443) (53,207)
---------- ---------- -------
Income before provision for
pro forma income taxes 4,373,456 2,193,358 515,941
Pro forma income taxes 1,749,382 877,343 206,376
--------- --------- -------
Net income $2,624,074 $1,316,015 $309,565
--------- --------- -------
--------- --------- -------
The accompanying notes are an integral part of these combined financial
statements.
F-24
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
For The Nine Months Ended September 28, 1997,
The Year Ended December 29, 1996 And The Ten Months Ended December 31, 1995
----------
Synergy
Broadcasting
Shanahan Broadcasting, Inc. Investment Worldstar, Inc.
Common Stock Enterprises, L.L.C. Common Stock
----------------------------- -------------------- ---------------------------
Shares Issued Shares Issued
And And
Outstanding Amount Capital Outstanding Amount
------------- ------ ------- ------------- ------
Balance at March 1, 1995 - - -
Stock issuance 1,000 $100,000 1,000 $1,000
Net income
Dividend/draws
----- ------- ------- ----- -----
Balance at December 31, 1995 1,000 100,000 1,000 1,000
Net income
Dividend/draws
----- ------- ------- ----- -----
Balance at December 29, 1996 1,000 100,000 1,000 1,000
Issuance of capital $150,000
Net income
Dividend/draws
----- ------- ------- ----- -----
Balance at September 28, 1997 1,000 $100,000 $150,000 1,000 $1,000
----- ------- ------- ----- -----
----- ------- ------- ----- -----
MultiVerse
Networks, L.L.C.
Member Interests Combined
---------------- ---------------------------
Additional
Paid-In Retained
Capital Capital Earnings
------- ----------- --------
Balance at March 1, 1995 $400,000 $400,000 ($41,618)
Stock issuance 101,000
Net income 309,565
Dividend/draws (53,333)
------- ------- -------
Balance at December 31, 1995 400,000 501,000 214,614
Net income 1,316,015
Dividend/draws (1,430,349)
------- ------- ---------
Balance at December 29, 1996 400,000 501,000 100,282
Issuance of capital 150,000
Net income 2,624,074
Dividend/draws (2,289,402)
------- ------- ---------
Balance at September 28, 1997 $400,000 $651,000 $434,954
------- ------- -------
------- ------- -------
The accompanying notes are an integral part of these combined financial
statements.
F-25
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
COMBINED STATEMENTS OF CASH FLOWS
----------
Nine Months Ten Months
Ended Year Ended Ended
September 28, December 29, December 31,
1997 1996 1995
------------- ------------ ------------
Cash flows from operating activities:
Net income $2,624,074 $1,316,015 $309,565
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 125,158 269,905 181,964
Pro forma income taxes 1,680,681 844,143 204,778
Changes in operating assets and liabilities:
Accounts receivable (1,495,001) (1,231,128) (1,133,154)
Prepaid expenses and other current
assets (6,879) (128,922) (23,056)
Other assets (86,130) (18,013) (6,734)
Deferred subscription revenue (187,374) 94,785 321,953
Accounts payable and accrued liabilities 1,074,410 1,024,366 262,453
--------- --------- ---------
Net cash provided by operating
activities 3,728,939 2,171,151 117,769
Cash flows used in investing activities:
Acquisition of furniture and equipment - (128,528) (53,028)
Cash flows used in financing activities:
Note due to stockholder - - 208,000
Capital contributions 150,000 - 101,000
Distributions paid (2,289,402) (1,430,349) (53,333)
Repayment of debt (482,547) (322,038) (322,536)
--------- --------- --------
Net cash used in
financing activities (2,621,949) (1,752,387) (66,869)
--------- --------- ------
Increase (decrease) in cash
and cash equivalents 1,106,990 290,236 (2,128)
Cash and cash equivalents, beginning of period 642,660 352,424 354,552
--------- ------- -------
Cash and cash equivalents, end of period $1,749,650 $642,660 $352,424
--------- ------- -------
--------- ------- -------
Cash paid for:
Interest $22,590 $54,443 $53,207
Income taxes $18,701 $33,198 $1,539
Noncash activity:
Notes issued $1,000,000
Acquisition of a network radio program $1,000,000
The accompanying notes are an integral part of these combined financial
statements.
F-26
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS
----------
1. Summary Of Significant Accounting Policies:
BASIS OF PRESENTATION
Shanahan Broadcasting, Inc. ("SBI"), incorporated in March 1995 as an "S"
Corporation; Synergy Broadcasting, L.L.C. ("Synergy"), formed in March 1997
as a limited liability company; and Worldstar, Inc. ("Worldstar");
incorporated in October 1995 as a "C" Corporation, are independent
creators, producers and distributors of a network radio program and
distributors of related merchandising rights. SBI and Synergy derive a
substantial portion of their revenues from the sale of commercial radio
broadcast time to national advertisers. MultiVerse Networks, L.L.C.
("MultiVerse"), formed in December 1994 as a limited liability company, is
an independent sales representation company which earns commissions for the
sale of commercial radio broadcast time which it sells on behalf of
third-party network radio programmers pursuant to exclusive agreements.
MultiVerse also represents SBI and Synergy with respect to the network
radio advertising sales of their program. Each of SBI, Synergy, Worldstar
and MultiVerse are owned or controlled, either directly or indirectly, by
entities that are owned or controlled by one individual. Collectively,
SBI, Synergy, Worldstar and MultiVerse are referred to as the "Companies".
The combined financial statements have been prepared since inception of SBI
and include the accounts of SBI, Synergy, Worldstar and MultiVerse for nine
months ended September 28, 1997. For the year ended December 29, 1996 and
ten months ended December 31, 1995, combined financial statements include
the accounts of SBI, Worldstar and MultiVerse. All material intercompany
transactions and accounts have been eliminated in the combined financial
statements.
REVENUE RECOGNITION
Revenue from the sale to advertisers of commercial broadcast time obtained
in exchange for radio programs is recognized when the commercials are
broadcast. Merchandising revenues are recognized when the merchandise is
shipped. Subscription revenues are recorded as deferred revenue and
recognized on a straight-line basis over the term of the underlying
subscriptions.
Continued
F-27
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
----------
1. Summary Of Significant Accounting Policies, Continued:
REVENUE RECOGNITION, Continued
Substantially all of the Companies' accounts receivable are from
advertising agencies that purchase commercial broadcast time from the
Companies on behalf of national advertisers. The Companies generally do
not require collateral from their customers. Concentrations of credit risk
associated with accounts receivable are limited due to the large number of
customers comprising the Companies' customer base.
PRODUCTION AND PROGRAMMING COSTS
Production and programming costs are expensed in the period in which they
occur. The Companies do not capitalize costs associated with production
and distribution of internally developed programs, as the estimated future
revenues from the programs are considered immaterial. Costs related to
programs not broadcast as of the balance sheet dates are insignificant.
ADVERTISING COSTS
Advertising costs are expensed in the period in which they occur. General
and administrative expenses include advertising costs of $91,632, $53,759
and $40,277 in 1997, 1996 and 1995, respectively.
CASH AND CASH EQUIVALENTS
The Companies consider all highly liquid investments with a maturity of
three months or less, when purchased, to be cash equivalents.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost and are depreciated under the
straight-line method over a period of 5 years representing the estimated
useful lives of the related assets.
Continued
F-28
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
1. Summary Of Significant Accounting Policies, Continued:
PRO FORMA INCOME TAXES
The combined financial statements consist of two corporate entities.
Therefore, pro forma income taxes have been provided on the
"separate-return" basis as if all entities had filed corporate income tax
returns. Pro forma income taxes have been calculated at the estimated
effective rate of 40% on the pre-tax profits for the periods.
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 amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
INTANGIBLE ASSETS
Intangible assets are stated at cost and consist of a network radio program
purchased by SBI in March 1995 for $1,000,000 from Shanahan Marketing
International, which is owned by the controlling shareholder of the
Companies. Upon inception of Synergy in March 1997, SBI contributed the
acquired network radio program in consideration of a 59%-interest in
Synergy.
The network radio program is being amortized using the straight-line method
over the duration of the related program's rights, which originally was for
51 months, and in March 1997 was extended for seven additional years.
Continued
F-29
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
2. Furniture And Equipment:
Furniture and equipment at September 28, 1997 and December 29, 1996 and
December 31, 1995 consist of the following:
1997 1996 1995
------------- ---- ----
Furniture and equipment $163,828 $181,556 $53,028
Less: Accumulated depreciation (33,241) (34,126) (5,491)
-------- -------- -------
$130,587 $147,430 $47,537
-------- -------- -------
-------- -------- -------
3. Commitments And Contingencies:
The Companies lease space for their office and studio facilities under
operating leases and also have an agreement with an individual pursuant
to which the individual participates in certain net profits of the
Companies' radio program, as defined, and receives additional compensation
per annum, expiring at various dates through November 30, 2004. Renewal
options are available on certain of these leases. Future minimum lease
payments under noncancellable operating leases and the employment agreement
at September 28, 1997, are as follows:
Three months ending December 31, 1997 $ 182,368
Year ending December 31, 1998 730,772
Year ending December 31, 1999 728,663
Year ending December 31, 2000 673,553
Year ending December 31, 2001 625,566
Year ending December 31, 2002 500,000
Thereafter 1,000,000
----------
$4,440,922
----------
----------
Rental expense under operating leases was $49,016, $107,091 and $53,300
during the nine months ended September 28, 1997, the year ended
December 29, 1996 and the ten months ended December 31, 1995, respectively.
Continued
F-30
SHANAHAN BROADCASTING, INC.,
SYNERGY BROADCASTING, L.L.C.,
WORLDSTAR, INC. AND MULTIVERSE NETWORKS, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-----------
4. Retirement Plans:
SBI, Synergy and Worldstar provide for retirement through a joint qualified
401(k) savings and retirement plan. This plan covers all eligible
employees who have completed six months of service on January 1 or July 1
of any given year. All eligible employees may contribute from 1% to 15% of
their annual compensation on a pre-tax basis. SBI, Synergy and Worldstar
make matching contributions after the third year of service or earlier at
their option. No contributions were made by SBI, Synergy or Worldstar
during the reporting period.
MultiVerse does not offer a retirement plan.
5. Sale Of Assets:
Effective October 1997, the Companies sold substantially all of their
assets, excluding cash and cash equivalents and certain accounts
receivable, to a wholly owned subsidiary of Premiere Radio Networks, Inc.
for $71,500,000 in cash.
6. Related Parties:
Transactions with related parties of common ownership and control were as
follows:
a. Sales to Gateway Educational Products, Ltd. during 1995 were $24,224.
b. Purchases from Shanahan Broadcast Investment Services, Inc. for the
period ended September 28, 1997 were $144,122, of which $21,500 is
included in accounts payable.
c. A loan was payable to the controlling shareholder resulting from the
acquisition of the rights to its network radio program (Note 1). The
loan was paid in full at September 28, 1997, and bore interest at the
rate of 9% per annum. Interest expense was $22,590, $54,443, and
$53,207, for the periods ended September 28, 1997, December 29, 1996,
and December 31, 1995, respectively.
F-31