-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JTnsJI59g+mDrOj7C7HkqfkZbABn75wi0fqkXT0yxtOIzNFySZTM56UkDqJC5TBd 6nB/BadJpwbwuBwNdbi87w== 0000783005-98-000006.txt : 19980702 0000783005-98-000006.hdr.sgml : 19980702 ACCESSION NUMBER: 0000783005-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980701 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMMIS BROADCASTING CORPORATION CENTRAL INDEX KEY: 0000783005 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 351542018 STATE OF INCORPORATION: IN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23264 FILM NUMBER: 98659264 BUSINESS ADDRESS: STREET 1: 950 NORTH MERIDIAN STREET STE 1200 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3172660100 MAIL ADDRESS: STREET 1: EMMIS BROADCASTING CORP STREET 2: 950 N MERIDAN STREET CITY: INDIAPOLIS STATE: IN ZIP: 46204 10-Q 1 As filed with the Securities and Exchange Commission on July 1, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended May 31, 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: 0-23264 EMMIS BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) INDIANA 35-1542018 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 950 NORTH MERIDIAN STREET SUITE 1200 INDIANAPOLIS, INDIANA 46204 (Address of principal executive offices) (Zip Code) (317) 266-0100 (Registrant's Telephone Number, Including Area Code) NOT APPLICABLE (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required 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 The number of shares outstanding of each of the Registrant's classes of common stock, as of June 29, 1998, was: 13,086,001 Shares of Class A Common Stock, $.01 Par Value 2,560,894 Shares of Class B Common Stock, $.01 Par Value INDEX Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements. . . . . . . . . . . . . . . . .4 Condensed Consolidated Balance Sheets at May 31, 1998 and February 28, 1998. . . . . . . . . .4 Condensed Consolidated Statements of Operations for the three months ended May 31, 1998 and 1997. . . . . . . . . . . . . . .6 Condensed Consolidated Statements of Cash Flows for the three months ended May 31, 1998 and 1997 . . . . . . . . . . . . . . . . .8 Notes to Condensed Consolidated Financial Statements. . . . . . . . . . . . . . . . . 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . 14 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Emmis Broadcasting Corporation and Subsidiaries: We have reviewed the accompanying condensed consolidated balance sheet of Emmis Broadcasting Corporation (an Indiana corporation) and Subsidiaries as of May 31, 1998, and the related condensed consolidated statements of operations and cash flows for the three-month periods ended May 31, 1998 and 1997. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Emmis Broadcasting Corporation as of February 28, 1998, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the year then ended (not presented separately herein), and in our report dated March 31, 1998, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 28, 1998 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ARTHUR ANDERSEN LLP Indianapolis, Indiana, June 19, 1998. ITEM 1. FINANCIAL STATEMENTS EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- (Dollars in thousands, except per share data)
February 28, May 31, 1998 1998 ------- ------- (Note 1) (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,785 $ 8,555 Accounts receivable, net 32,120 37,928 Income tax refunds receivable 4,968 3,722 Prepaid expenses and other 8,279 9,848 -------- -------- Total current assets 51,152 60,053 Property and equipment, net 33,446 39,373 Intangible assets, net 234,558 232,324 Other assets, net 14,232 47,883 -------- -------- Total assets $ 333,388 $ 379,633 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Current maturities of long-term debt $ 51 $ 41 Accounts payable 13,140 14,191 Accrued salaries and commissions 2,893 2,876 Accrued interest 2,421 1,276 Deferred revenue 7,985 7,928 Other 1,579 1,514 ------- ------- Total current liabilities 28,069 27,826 LONG-TERM DEBT, NET OF CURRENT MATURITIES 231,371 274,466 OTHER NONCURRENT LIABILITIES 604 553 MINORITY INTEREST 1,875 868 DEFERRED INCOME TAXES 26,259 26,559 ------- ------ Total liabilities 288,178 330,272 ------- ------ SHAREHOLDERS' EQUITY: Class A common stock, $.01 par value; authorized 34,000,000 shares; issued and outstanding 8,430,660 shares at February 28, 1998 and 8,494,158 shares at May 31, 1998 84 85 Class B common stock, $.01 par value; authorized 6,000,000 shares; issued and outstanding 2,560,894 shares at February 28, 1998 and 2,560,894 at May 31, 1998 26 26 Additional paid-in capital 72,753 74,959 Accumulated deficit (27,653) (25,538) Cumulative translation adjustments - (171) ------- ------- Total shareholders' equity 45,210 49,361 ------- ------- Total liabilities and shareholders' equity $ 333,388 $ 379,633 ======= =======
The accompanying notes to condensed consolidated financial statements are an integral part of these balance sheets. EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ----------------------------------------------- (Dollars in thousands, except per share data)
Three Months Ended May 31, (Unaudited) -------------------------- 1997 1998 ------ ------ GROSS BROADCASTING REVENUES $ 33,820 $ 42,362 LESS: AGENCY COMMISSIONS 5,258 6,933 ------- ------- NET BROADCASTING REVENUES 28,562 35,429 Broadcasting operating expenses 16,225 20,068 Publication and other revenue, net of operating expenses 245 1,463 International business development expenses 338 207 Corporate expenses 1,644 1,957 Time brokerage fees - 2,125 Depreciation and amortization 1,682 3,407 Noncash compensation 827 424 ------- ------ OPERATING INCOME 8,091 8,704 ------- ------ OTHER INCOME (EXPENSE): Interest expense (2,649) (5,508) Minority interest - 1,007 Other income (expense), net 172 312 ------- ------ Total Other Income (Expense) (2,477) (4,189) ------- ------ INCOME BEFORE INCOME TAXES 5,614 4,515 PROVISION FOR INCOME TAXES 2,246 2,400 -------- ------- NET INCOME $ 3,368 $ 2,115 ======== ======= Basic net income per share $ .31 $ .19 ======== ======= Diluted net income per share $ .30 $ .18 ======== ======= Weighted average common shares outstanding: Basic 11,004,147 11,018,141 Diluted 11,372,963 11,490,116
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Dollars in thousands)
Three Months Ended May 31, (Unaudited) ------------------- 1997 1998 ----- ----- OPERATING ACTIVITIES: Net income $ 3,368 $ 2,115 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization of property and equipment 582 1,305 Amortization of debt issuance costs and cost of interest rate cap agreements 191 281 Amortization of intangible assets 1,100 2,102 Provision for bad debts - 413 Provision (benefit) from deferred income taxes (215) 300 Gain on sale of property and equipment - (533) Compensation related to stock options granted 661 237 Contribution to profit sharing plan paid with common stock 166 187 Minority Interest - (1,007) (Increase) decrease in certain current assets - Accounts receivable (5,409) (6,221) Prepaid expenses and other 1,496 (323) Increase (decrease) in certain current liabilities - Accounts payable (1,245) 1,051 Accrued salaries and commissions 968 (17) Accrued interest 184 (1,145) Deferred revenue (48) (57) Other 2 (65) Increase (decrease) in other assets, net (143) 326 Decrease in other liabilities - (51) ------- ------- Net cash provided by (used in) operating activities 1,658 (1,102) ------- ------- INVESTING ACTIVITIES: Purchases of property and equipment (941) (7,375) Proceeds from sale of property and equipment - 607 Acquisition of WALC-FM, WKBQ-AM, and WKKX-FM (36,964) - Deposit on acquisition of SF Broadcasting - (25,000) Deposit on acquisition of Wabash Valley Broadcasting - (9,000) -------- ------- Net cash used by investment activities (37,905) (40,768) ------- ------- FINANCING ACTIVITIES: Payments on long-term debt (2,022) (1,000) Proceeds from long-term debt 38,000 44,085 Purchase of interest rate cap agreements and other debt related costs (181) (68) Proceeds from exercise of stock options and related income taxes benefits 613 1,783 ------ ------ Net cash provided by financing activities 36,410 44,800 ------ ------ EFFECT OF EXCHANGE RATES ON CASH - (160) INCREASE IN CASH AND CASH EQUIVALENTS 163 2,770 CASH AND CASH EQUIVALENTS: Beginning of period 1,191 5,785 ------ ------ End of period $1,354 $8,555 ====== ====== SUPPLEMENTAL DISCLOSURES: Cash paid for- Interest $ 2,274 $ 5,753 Income taxes 589 265 ACQUISITION OF WALC-FM, WKBQ-AM AND WKKX-FM: Fair value of assets acquired $ 44,564 Cash paid 43,564 ------ Liabilities assumed $1,000 ======
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------------- (Unaudited) MAY 31, 1998 ------------- NOTE 1. GENERAL -------- Pursuant to the rules and regulations of the Securities and Exchange Commission, the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Broadcasting Corporation, and Subsidiaries ("Emmis" or the "Company"). In June 1998, the Company changed its name to Emmis Communications Corporation. 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 such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 28, 1998. In the opinion of the registrant, the accompanying interim financial statements contain all material adjustments (consisting only of normal recurring adjustments), necessary to present fairly the consolidated financial position of Emmis at May 31, 1998 and the results of its operations for the three months ended May 31, 1998 and 1997 and its cash flows for the three months ended May 31, 1998 and 1997. NOTE 2. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS ------------- On March 31, 1997, Emmis completed its acquisition of substantially all of the assets of radio stations WALC-FM and WKKX-FM in St. Louis from Zimco, Inc., for approximately $43.6 million in cash, plus an agreement to broadcast approximately $1 million in trade spots, for Zimco, Inc. over a period of several years. Emmis financed the acquisition through additional borrowings under its bank credit facility (Credit Facility). The acquisition was accounted for as a purchase. Concurrent with the signing of the asset purchase agreement, Emmis entered into a time brokerage agreement that permitted Emmis to operate the acquired stations effective December 1, 1996 through the date of closing. Operating results of these stations are reflected in the consolidated statements of operations beginning December 1, 1996. On November 1, 1997, the Company completed its acquisition of substantially all of the assets of WTLC-FM and AM in Indianapolis from Panache Broadcasting, L.P. for approximately $15.3 million in cash. Emmis financed the acquisition through additional bank borrowings. The acquisition was accounted for as a purchase. On February 1, 1998, the Company acquired all of the outstanding capital stock of Mediatex Communications Corporation for approximately $37 million in cash. Mediatex Communications Corporation owns and operates Texas Monthly, a regional magazine. The acquisition was accounted for as a purchase and was financed through additional bank borrowings. On June 5, 1998, the Company completed its acquisition of radio station WQCD-FM in New York City for approximately $141 million in cash. The acquisition was financed through additional bank borrowings under its Credit Facility and was accounted for as a purchase. In connection with the above agreement, the Company entered into a time brokerage agreement which permitted Emmis to operate the station effective July 1, 1997 through the date of closing. In consideration for the time brokerage agreement, the Company paid a monthly fee of approximately $700,000. Operating results of WQCD-FM are reflected in the consolidated statements of operations beginning July 1, 1997. A pro forma condensed consolidated statement of operations is presented below for the three months ended May 31, 1997, assuming the acquisitions of WALC-FM, WKKX-FM, WTLC-FM and AM, and Texas Monthly and the operation of WQCD-FM, under the time brokerage agreement, all had occurred on the first day of the year ended February 28, 1998. Pro forma results for the three months ended May 31, 1997, include actual revenue and operating expenses, operating under the time brokerage agreement, and certain pro forma expense adjustments for the acquisition of WALC-FM and WKKX-FM. In addition, pro forma adjustments for March through May for the operation of WQCD-FM under the time brokerage agreement, and the acquisition of WTLC-FM and AM and Texas Monthly are included in pro forma results for the three months ended May 31, 1997. Pro forma interest expense, depreciation of property and equipment and amortization expense related to the intangibles resulting from the allocation of the purchase price for the above acquisitions and pro forma time brokerage fees for the operation of WQCD-FM have been included in the pro forma statements presented below (in thousands, except per share data). PRO FORMA CONDENSED CONSOLIDATED -------------------------------- STATEMENT OF OPERATIONS ---------------------- (Dollars in thousands, except per share data)
Three Months Ended May 31, 1997 ------------------ Pro forma ---------- Net broadcasting revenues $ 34,053 Broadcasting operating expenses 19,195 Publication and other revenue, net of operating expenses 744 International business development expenses 338 Corporate expenses 1,644 Time brokerage agreement fees 2,125 Depreciation and amortization 2,834 Noncash compensation 827 ------ Operating income 7,834 Interest expense (3,874) Other income (expense), net 244 ------ Income before income taxes 4,204 Provision for income taxes 1,681 ------ Net income $ 2,523 ====== Basic net income per share $ .23 ====== Diluted net income per share $ .22 ====== Weighted average shares outstanding Basic 11,004,147 Diluted 11,372,963
The pro forma condensed consolidated statements of operations presented above do not purport to be indicative of the results that actually would have been obtained if the indicated transaction had been effective at the beginning of the three month period ended May 31, 1997 and is not intended to be projection of future results or trends. NOTE 3. BASIC AND DILUTED NET INCOME PER SHARE --------------------------------------- Basic net income per share excludes dilution and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. NOTE 4. ACCOUNTING PRONOUNCEMENTS ------------------------- Effective March 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", which established standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is defined as net income and all nonowner changes in shareholders' equity. Comprehensive income was comprised of the following for the three month periods ended May 31, 1998 and 1997 (dollars in thousands):
Three Months Ended May 31, ------------------- 1997 1998 ---- ---- Net income $3,368 $2,115 Translation adjustment - (171) ----- ----- Total comprehensive income $3,368 $1,944 ====== =====
NOTE 5. INCOME TAXES ------------ Under Statement of Financial Accounting Standards No. 109, the Company recognizes income taxes under the liability method of accounting for income taxes. The liability method measures the expected tax impact of future taxable income or deductions resulting from differences in the tax and financial reporting bases of assets and liabilities reflected in the consolidated balance sheet and the expected tax impact of carryforwards for tax purposes. Income tax expense is generally reported during interim periods on the basis of the estimated annual effective tax rate for the taxable jurisdictions in which the Company operates. NOTE 6. CONTINGENCIES ------------- It is anticipated that options to acquire 100,000 shares of stock will be granted to the CEO for the year ended February 28, 1998. Accordingly, the Company has previously reflected in the financial statements non-cash compensation expense totaling $2.9 million and a corresponding increase to additional paid in capital. The granting of these options requires board of director approval, and thus, there can be no assurance that such options will ultimately be granted. NOTE 7. OTHER SIGNIFICANT EVENTS ------------------------ Effective March 20, 1998, the Company entered into an agreement to purchase the majority of the assets of Wabash Valley Broadcasting Corporation for approximately $90 million in cash. The acquisition consists of WTHI-TV, a CBS network affiliated television station, WTHI-FM and AM and WWVR-FM, radio stations located in the Terre Haute, Indiana area, and WFTX-TV, a Fox network affiliated television station in Ft. Myers, Florida. This acquisition is awaiting approval by the FCC. Effective March 30, 1998, the Company entered into an agreement to purchase substantially all of the assets of SF Broadcasting of Wisconsin, Inc. and SF Multistations, Inc. and Subsidiaries (collectively the "SF Acquisition") for approximately $307 million. A portion of the purchase price ($25 million) was paid in escrow upon execution of the purchase agreement, another portion ($257 million) will be paid in cash at the closing, and the balance ($25 million) of the purchase price will be payable pursuant to a promissory note bearing interest at 8% with principle and interest due on the first anniversary of the closing date. At Emmis' option, the promissory note may be paid in cash or with Emmis' Class A Common Stock. The Company currently anticipates that it will pay all of the purchase price in cash. The SF Acquisition consists of four Fox network affiliated television stations: WLUK-TV in Green Bay, Wisconsin, WVUE-TV in New Orleans, Louisiana, WALA-TV in Mobile, Alabama, and KHON-TV in Honolulu, Hawaii (including McHale Videofilm and satellite stations KAII-TV, Wailuku, Hawaii, and KHAW-TV, Hilo, Hawaii). This acquisition has been approved by the FCC and is awaiting closing. The Company will account for these acquisitions under the purchase method of accounting. In June 1998, Emmis completed the sale of 4.6 million of its Class A Common Stock at $42.00 per share resulting in total proceeds of $193 million. Net proceeds from the offering were used to repay outstanding obligations under the Credit Facility. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The performance of a radio group, such as the Company, is customarily measured by the ability of its stations to generate Broadcast Cash Flow and Operating Cash Flow. Emmis defines Broadcast Cash Flow as advertising revenues net of agency commissions, less broadcast operating expenses. Operating Cash Flow is defined by the Company as operating income before depreciation, amortization, time brokerage fees and noncash compensation expenses. Broadcast Cash Flow and Operating Cash Flow are not measures of liquidity or of performance calculated in accordance with generally accepted accounting principles, and should be viewed as a supplement to and not a substitute for the Company's results of operations presented on the basis of generally accepted accounting principles. The Company believes that Broadcast Cash Flow and Operating Cash Flow are useful because they are generally recognized by the radio broadcasting industry as measures of performance and are used by analysts who report on the performance of broadcast companies. RESULTS OF OPERATIONS THREE MONTHS ENDED MAY 31, 1998 COMPARED TO MAY 31, 1997 Net broadcasting revenues for the quarter ended May 31, 1998 were $35.4 million compared to $28.6 million for the same quarter of the prior year, an increase of $6.8 million or 24.0%. This increase is principally due to the operation of WQCD under a time brokerage agreement and the acquisition of WTLC FM and AM, as well as the ability to realize higher advertising rates at the Company's broadcasting properties, resulting from higher ratings at certain broadcasting properties, as well as increases in general radio spending in the markets in which the Company operates. Broadcasting operating expenses for the quarter ended May 31, 1998 were $20.1 million compared to $16.2 million for the same quarter of the prior year, an increase of $3.9 million or 23.7%. Included in broadcast operating expense for the three months ended May 31, 1998 is $.5 million of expense from the operations of Slager Radio for which revenue was nominal due to the commencement of broadcasting during the first quarter. The remaining increase is primarily attributable to the operation of WQCD under a time brokerage agreement and the acquisition of WTLC FM and AM. Broadcast Cash Flow for the fiscal quarter ended May 31, 1998 was $15.4 million compared to $12.3 million for the same quarter of the prior year, an increase of $3.1 million or 25.2%. This increase is principally due to increased net broadcasting revenues offset by increased broadcasting operating expenses as discussed above. Corporate expenses for the quarter ended May 31, 1998 were $2.0 million compared to $1.6 million for the same quarter of the prior year, an increase of $0.4 million or 19%. This increase was primarily due to the establishment of a corporate division for publishing. International business development expenses for the quarter ended May 31, 1998 were $.2 million compared to $.3 million for the same quarter of the prior year. These expenses reflect costs associated with Emmis International Corporation. The purpose of this wholly owned subsidiary is to identify, investigate and develop international broadcast investments or other international business opportunities. Expenses consist primarily of salaries, travel and various administrative costs. Operating Cash Flow for the quarter ended May 31, 1998 was $14.7 million compared to $10.6 million for the same quarter of the prior year, an increase of $4.1 million or 38.3%. This increase is principally due to increased net broadcasting revenues offset by increased broadcasting operating expenses, as discussed above, and an increase in publication and other revenue, net of operating expenses resulting from the acquisition of Texas Monthly. Interest expense was $5.5 million for the quarter ended May 31, 1998 compared to $2.6 million for the same quarter of the prior year, an increase of $2.9 million or 108%. This increase reflects higher outstanding debt due to the St. Louis, WTLC FM and AM and Texas Monthly acquisitions and deposits related to the SF and Wabash Valley acquisitions. RESULTS OF OPERATIONS MAY 31, 1997 COMPARED TO MAY 31, 1996 Net broadcasting revenues for the quarter ended May 31, 1997 were $28.6 million compared to $25.4 million for the same quarter of the prior year, an increase of $3.2 million or 12.7%. This increase is principally due to the St. Louis acquisition and the ability to realize higher advertising rates at the Company's broadcasting properties, resulting from higher ratings at certain broadcasting properties, as well as increases in general radio spending in the markets in which the Company operates. Broadcasting operating expenses for the quarter ended May 31, 1997 were $16.2 million compared to $13.1 million for the same quarter of the prior year, an increase of $3.1 million or 23.6%. This increase is principally attributable to the St. Louis acquisition and increased promotional spending at the Company's broadcasting properties. Broadcast Cash Flow for the fiscal quarter ended May 31, 1997 was $12.3 million compared to $12.2 million for the same quarter of the prior year, an increase of $.1 million or 1.0%. This increase is principally due to increased net broadcasting revenues offset by increased broadcasting operating expenses as discussed above. Corporate expenses for the quarter ended May 31, 1997 were $1.6 million compared to $1.5 million for the same quarter of the prior year, an increase of $0.1 million or 12%. This increase was primarily due to increased travel expenses and other expenses related to potential acquisitions. International business development expenses for the quarters ended May 31, 1997 and 1996 were $.3 million. These expenses reflect costs associated with Emmis International Corporation. The purpose of this wholly owned subsidiary is to identify, investigate and develop international broadcast investments or other international business opportunities. Expenses consist primarily of salaries, travel and various administrative costs. Operating Cash Flow for the quarter ended May 31, 1997 was $10.6 million compared to $10.8 million for the same quarter of the prior year, a decrease of $.2 million or 1.5%. This decrease is principally due to increased corporate and international expenses. Interest expense was $2.6 million for the quarter ended May 31, 1997 compared to $2.5 million for the same quarter of the prior year, an increase of $.1 million or 5.9%. This increase reflects higher outstanding debt due to the St. Louis acquisition offset by voluntary repayments made under the Company's Credit Facility. LIQUIDITY AND CAPITAL RESOURCES The increase in accounts receivable from February 28, 1998 to May 31, 1998 is due to the increase of net broadcasting revenues in the quarter ended May 31, 1998 compared to the quarter ended February 28, 1998. In the fiscal quarter ended May 31, 1998, the Company made voluntary payments of $1.0 million under its Credit Facility. In August 1996, Emmis announced its plan to build an office building in downtown Indianapolis for its corporate office and its Indianapolis operations. The project is expected to be completed in 1999 for an estimated cost of $30 million, net of reimbursable construction costs of $2 million. This amount reflects an increase over the original amount due to the acquisition of WTLC FM and AM and network acquisitions, as well as an increase in overall staffing. Certain factors such as additional studio costs related to digital technology and historical landmark requirements may cause the cost of this project to increase. The Company is funding this project through cash flow from operating activities and bank borrowings. In the fiscal quarter ended May 31, 1998, the Company had capital expenditures of $7.4 million. These capital expenditures consist primarily of progress payments in connection with the Indianapolis building project. In June 1998, Emmis completed the sale of 4.6 million shares of its Class A Common Stock at $42.00 per share resulting in total proceeds of $193 million. Net proceeds from the offering were used to repay outstanding obligations under the Credit Facility. The Company expects that cash flow from operating activities will be sufficient to fund all debt service for debt existing at May 31, 1998, working capital and capital expenditure requirements, and the acquisition of WQCD-FM. To complete the acquisition of assets from Wabash Valley Broadcasting and SF Broadcasting, the Company will increase its bank borrowings under a new Credit Facility. As part of its business strategy, the Company frequently evaluates potential acquisitions of radio stations. In connection with future acquisition opportunities, the Company may incur additional debt or issue additional equity or debt securities depending on market conditions and other factors. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits. The following exhibits are filed or incorporated by reference as a part of this report: 11 Statements re: Calculations of per share net income (loss) 15 Letter re: unaudited interim financial information 27 Financial data schedule (Edgar version only) Reports on Form 8-K The Company filed Form 8-K on May 7, 1998, to file audited financial statements for Tribune New York Radio, Inc. and SF Broadcasting of Wisconsin, Inc. and SF Multistations, Inc. and Subsidiaries. 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. EMMIS BROADCASTING CORPORATION Date: July 1, 1998 By: /s/ Howard L. Schrott ------------------------- Howard L. Schrott Vice President(Authorized Corporate Officer), Chief Financial Officer and Treasurer EX-11 2 EXHIBIT 11 EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- SCHEDULE OF CALCULATION OF PER SHARE NET INCOME -----------------------------------------------
For the Three Months Ended May 31, 1998 ------------ Weighted Calculated Net Average Per Income Shares Share -------- -------- --------- Shares outstanding and net income used in the determination of basic net income per share $ 2,115,000 11,018,141 $ .19 Options 471,975 ----------- ---------- ----- Used in the determination of diluted net income per share $ 2,115,000 11,490,116 $ .18 =========== ========== =====
EXHIBIT 11 EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- SCHEDULE OF CALCULATION OF PER SHARE NET INCOME -----------------------------------------------
For the Three Months Ended May 31, 1997 ------------ Weighted Calculated Net Average Per Income Shares Share -------- -------- --------- Shares outstanding and net income used in the determination of basic net income per share $ 3,368,000 11,004,147 $ .31 Options 368,816 ----------- ---------- ----- Used in the determination of diluted net income per share $ 3,368,000 11,372,963 $ .30 =========== ========== =====
EXHIBIT 11 EMMIS BROADCASTING CORPORATION AND SUBSIDIARIES ----------------------------------------------- SCHEDULE OF CALCULATION OF PRO FORMA PER SHARE NET INCOME ---------------------------------------------------------
For the Three Months Ended May 31, 1997 ------------ Weighted Calculated Net Average Per Income Shares Share -------- -------- --------- Shares outstanding and net income used in the determination of basic net income per share $ 2,523,000 11,004,147 $ .23 Options 368,816 ----------- ---------- ----- Used in the determination of diluted net income per share $ 2,523,000 11,372,963 $ .22 =========== ========== =====
EX-15 3 June 29, 1998 Mr. Howard Schrott Chief Financial Officer Emmis Broadcasting Corporation 950 N. Meridian Street, Suite 1200 Indianapolis, Indiana 46204 Dear Mr. Schrott: We are aware that Emmis Broadcasting Corporation has incorporated by reference in its Registration Statement Nos.333-83890 and 333-14657 its Form 10-Q for the quarter ended May 31, 1998, which includes our report dated June 19, 1998, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ ARTHUR ANDERSEN LLP - ----------------------- ARTHUR ANDERSEN LLP EX-27 4
5 0000783005 EMMIS BROADCASTING CORPORATION 3-MOS FEB-28-1999 MAR-01-1998 MAY-31-1998 8,555 0 39,508 1,580 0 60,053 60,973 21,600 379,633 27,826 274,466 0 0 111 49,250 379,633 42,362 42,362 6,933 6,933 24,992 414 5,508 4,515 2,400 2,115 0 0 0 2,115 .19 .18
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