SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report September 1, 2000 Commission File No. 333-76649
(Date of earliest event reported)
SALEM COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0121400
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CALIFORNIA 93012
(Address of principal executive offices)
(805) 987-0400
Registrant's telephone number, including area code
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 2000, Salem Communications Corporation, ("Salem"),
completed its asset exchange with Cox Radio, Inc. to exchange certain assets of
radio station KKHT-FM (Houston, Texas) for certain assets of radio stations
WALR-FM (Atlanta, Georgia), KLUP-AM (San Antonio, Texas) and WSUN-AM (Tampa,
Florida). The acquired assets consist principally of FCC licenses and tangible
assets used in the radio broadcasting business. Salem did not acquire the format
or intellectual property of WALR-FM or WSUN-AM. The parties have estimated the
value of assets exchanged by each party to be approximately $80 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Since the substantial portion of the assets acquired relate to WALR-FM and
Salem did not acquire the related format or intellectual property, and
accordingly, the source and nature of revenue and operating expenses will be
significantly different than they were prior to the acquisition, historical
financial statements would not be meaningful to readers of this report.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed consolidated financial
statements give effect to disposition of KKHT-FM as part of the asset exchange
with Cox Radio, Inc. The assets acquired by Salem consist principally of
property, plant and equipment, FCC licenses and other intangible assets used in
the radio broadcasting business and, in some cases, will continue to be utilized
by Salem's subsidiaries for such purposes. However, since the substantial
portion of the assets acquired relate to WALR-FM and Salem did not acquire the
related format or intellectual property, a pro forma statement of operations
reflecting the acquisition would not be meaningful to readers of this report.
For accounting purposes, Salem will account for the asset exchange as a
non-monetary exchange of similar productive assets, and accordingly, the net
assets of the acquired radio stations are assumed to be recorded in the
accompanying unaudited pro forma combined condensed consolidated balance sheet
at the historical cost basis of KKHT-FM. As a result, there are no pro forma
adjustments reflected in the unaudited pro forma combined condensed consolidated
balance sheet.
The unaudited pro forma combined condensed consolidated balance sheet at
June 30, 2000 gives effect to the disposition of KKHT-FM as if it occurred on
June 30, 2000. The unaudited pro forma combined condensed consolidated
statements of operations for the year ended December 31, 1999 and for the nine
months ended September 30, 2000 give effect to the disposition of KKHT-FM as if
it had occurred on January 1, 1999.
The unaudited pro forma combined condensed consolidated balance sheet was
prepared based upon the historical balance sheets of Salem, including the
balance sheet of KKHT-FM.
The unaudited pro forma combined condensed consolidated statements of
operations for the year ended December 31, 1999 and for the nine months ended
September 30, 2000 was prepared based upon the historical statement of
operations of Salem, including financial information of KKHT-FM.
The unaudited pro forma combined condensed consolidated financial
statements should be read in conjunction with the historical financial
statements of Salem and the acquired radio stations.
The unaudited pro forma combined condensed consolidated financial
statements are not necessarily indicative of the actual results of operations or
financial position that would have occurred had the asset exchange occurred on
the dates indicated nor are they necessarily indicative of future operating
results or financial position.
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Pro Forma
Adjustment For
The Disposition Pro Forma
(in thousands) Salem of KKHT-FM (A) Salem
---------------- --------------- ---------
AS OF SEPTEMBER 30, 2000
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . $ 8,098 $ - $ 8,098
Accounts receivable, net. . . . . . . . . . . . 20,719 - 20,719
Other current assets. . . . . . . . . . . . . . 11,083 - 11,083
---------------- -------------- --------
Total current assets. . . . . . . . . . . . . . . 39,900 - 39,900
Property, plant, equipment and software, net. . . 67,138 - 67,138
Intangible assets, net. . . . . . . . . . . . . . 357,040 - 357,040
Other assets. . . . . . . . . . . . . . . . . . . 10,098 - 10,098
---------------- -------------- --------
Total assets. . . . . . . . . . . . . . . . . . . $ 474,176 $ - $474,176
================ ============== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current liabilities. $ 9,982 $ - $ 9,982
Current portion of long-term debt . . . . . . . 123 - 123
---------------- -------------- --------
Total current liabilities . . . . . . . . . . . . 10,105 - 10,105
Long-term debt, less current portion. . . . . . . 288,750 - 288,750
Other long-term liabilities . . . . . . . . . . . 18,752 - 18,752
Stockholders' equity. . . . . . . . . . . . . . . 156,569 - 156,569
---------------- -------------- --------
Total liabilities and stockholders' equity. . . . $ 474,176 $ - $474,176
================ ============== ========
Pro Forma
Adjustment For
The Disposition Pro Forma
(in thousands) Salem of KKHT-FM (B) Salem
---------------- --------------- ---------
NINE MONTHS ENDED SEPTEMBER 30, 2000
Net revenues. . . . . . . . . . . . . . . . . . . $ 81,035 $ (1,916) (1) $ 79,119
Operating expenses. . . . . . . . . . . . . . . . 53,395 (765) (2) 52,630
Depreciation and amortization expense . . . . . . 16,993 - (3) 16,993
Corporate expenses. . . . . . . . . . . . . . . . 7,790 - 7,790
---------------- -------------- --------------
Operating income. . . . . . . . . . . . . . . . . 2,857 (1,151) 1,706
Other income (expense)
Interest expense, net . . . . . . . . . . . . . (9,590) - (9,590)
Gain on disposal of assets. . . . . . . . . . . 29,985 - 29,985
Other expense, net. . . . . . . . . . . . . . . (775) - (775)
---------------- -------------- --------------
Income (loss) before income taxes . . . . . . . . 22,477 (1,151) 21,326
Provision (benefit) for income taxes. . . . . . . 8,747 (449) (4) 8,298
---------------- -------------- --------------
Net income (loss) . . . . . . . . . . . . . . . . $ 13,730 $ (702) $ 13,028
================ ============== ==============
Basic and diluted income per share. . . . . . . . $ 0.59 $ 0.56
================ ==============
Basic and diluted average shares outstanding. . . 23,456,088 23,456,088
================ ==============
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Pro Forma
Adjustment For
The Disposition Pro Forma
(in thousands) Salem of KKHT-FM (B) Salem
---------------- -------------- ---------
YEAR ENDED DECEMBER 31, 1999
Net revenues. . . . . . . . . . . . . . . . . . . $ 93,546 $ (2,668) (1) $ 90,878
Operating expenses. . . . . . . . . . . . . . . . 56,276 (1,020) (2) 55,256
Depreciation and amortization expense . . . . . . 18,233 - (3) 18,233
Corporate expenses. . . . . . . . . . . . . . . . 8,507 - 8,507
Stock and related cash grant. . . . . . . . . . . 2,550 - 2,550
---------------- -------------- ---------------
Operating income. . . . . . . . . . . . . . . . . 7,980 (1,648) 6,332
Other income (expense)
Interest expense, net . . . . . . . . . . . . . (13,214) - (13,214)
Loss on disposal of assets. . . . . . . . . . . (219) - (219)
Other expense, net. . . . . . . . . . . . . . . (633) - (633)
---------------- -------------- ---------------
Loss before income taxes. . . . . . . . . . . . . (6,086) (1,648) (7,734)
Benefit for income taxes. . . . . . . . . . . . . (1,611) (643) (4) (2,254)
---------------- -------------- ---------------
Loss from continuing operations . . . . . . . . . $ (4,475) $ (1,005) $ (5,480)
================ ============== ===============
Basic and diluted loss per share. . . . . . . . . $ (0.22) $ (0.27)
================ ===============
Basic and diluted average shares outstanding. . . 20,066,006 20,066,006
================ ===============
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(A) There are no pro forma adjustments for the disposition of KKHT-FM at September 30, 2000 as the
disposition is a part of a non-monetary exchange of similar productive assets that will not result
in the recognition of a gain or loss or in any change of the recorded amounts of property, plant,
equipment and software and intangible assets being exchanged.
(B) The pro forma adjustments for the disposition of KKHT-FM for the year ended December 31, 1999 and
for the nine months ended September 30, 2000 are as follows:
INCREASE (DECREASE)
TO INCOME
12/31/99 9/30/00
-------- --------
(1) Decrease in net revenues resulting from the exchange of KKHT-FM . . . . . . . . $ (2,668) $ (1,916)
(2) Decrease in operating expenses resulting from the exchange of KKHT-FM . . . . . 1,020 765
(3) The pro forma adjustments for the disposition of KKHT-FM do not include
any adjustment for depreciation and amortization expense as the
disposition is part of a non-monetary exchange of similar productive
assets and will not change the recorded amounts of property, plant,
equipment and software and intangible assets. . . . . . . . . . . . . . . . . . -- --
(4) Increase in benefit for income taxes resulting from a decrease in
operating income related to the exchange of KKHT-FM . . . . . . . . . . . . . . 643 449
(c) Exhibits.
EXHIBITS
10.08.06 Asset Exchange Agreement dated as of May 31, 2000 by and among
Salem; South Texas Broadcasting, Inc.; Cox Radio, Inc.; and CXR Holdings, Inc.
(WALR-FM, Athens, GA; WSUN-AM, Plant City, FL, KLUP-AM, Terrell Hills, TX,
KKHT-FM, Conroe, TX). (1)
(1) Incorporated by reference to the exhibit of the same number of Salem's
Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission
on August 14, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SALEM COMMUNICATIONS CORPORATION
Date: November 15, 2000
By: /s/ EDWARD G. ATSINGER III
--------------------------------------
Edward G. Atsinger III
President and Chief Executive Officer
Date: November 15, 2000
By: /s/ David A.R. Evans
--------------------------------------
David A.R.Evans
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)