8-K 1 c60787e8-k.txt EMMIS COMMUNIDATIONS CORP 1 As filed with the Securities and Exchange Commission on March 12, 2001 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): March 12, 2001 EMMIS COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) INDIANA 0-23264 35-1542018 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) ONE EMMIS PLAZA, 40 MONUMENT CIRCLE SUITE 700, INDIANAPOLIS, IN 46204 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 266-0100 NOT APPLICABLE (Former name or former address, if changed since last report) 2 Item 9: Regulation FD Disclosure Emmis Communications Corporation ("Emmis") has included in this filing unaudited pro forma financial data as of and for the nine months ended November 30, 2000, for the year ended February 29, 2000 and for the twelve months ended November 30, 2000. With the recent adoption by the Securities and Exchange Commission of Regulation FD, Emmis is making the pro forma information listed below available for broad dissemination. The pro forma summary information presented below is not necessarily indicative of the results that actually would have occurred if the transactions described therein had been consummated at the beginning of the periods presented, and is not intended to be a projection of future results. Certain statements included in this 8-K which are not statements of historical fact, including but not limited to those identified with the words "expect," "will" or "look" are intended to be, and are, identified as "forward-looking statements," as defined in the Securities and Exchange Act of 1934, as amended, and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Emmis to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions; fluctuations in the demand for advertising; increased competition in the broadcasting industry; inability to obtain necessary approvals for purchases or sale transactions or to complete the transactions; changes in the costs of programming; inability to grow through suitable acquisitions and other factors mentioned in other documents filed by Emmis with the Securities and Exchange Commission. 3 EMMIS COMMUNICATIONS CORPORATION PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION The accompanying financial statements present our unaudited pro forma combined condensed balance sheet as of November 30, 2000 and our unaudited pro forma combined condensed statement of operations for the nine months ended November 30, 2000, for the year ended February 29, 2000 and our unaudited pro forma combined condensed statement of broadcast cash flow and EBITDA for the twelve months ended November 30, 2000. The unaudited pro forma combined condensed balance sheet as of November 30, 2000 is presented as if (i) we entered into our credit facility on November 30, 2000 and borrowed $1.08 billion thereunder, (ii) we used $912.0 million of the proceeds from the credit facility to refinance the existing credit facility, (iii) we used $98.8 million of the proceeds from the credit facility to fund the acquisition of KALC-FM from Salem Communications Corporation, which we refer to as the "Salem Acquisition," (iv) we used the remaining net cash proceeds from the credit facility to fund a portion of the Hearst Acquisition (described below), (v) an incurrence of new debt (the "New Debt Incurrence") took place on November 30, 2000 and approximately $87 million of the net proceeds were used to fund a portion of the $160 million purchase price of the probable acquisition of three radio stations in Phoenix from Hearst-Argyle Television, Inc., which we refer to as the "Hearst Acquisition," and (vi) we used approximately $105.0 million of the remaining net proceeds of the New Debt Incurrence to repay borrowings under the credit facility. The pro forma combined condensed statement of operations for the nine months ended November 30, 2000 and for the year ended February 29, 2000 and our unaudited pro forma combined condensed statement of broadcast cash flow and EBITDA for the twelve months ended November 30, 2000 are presented as if (i) the Salem Acquisition, (ii) the acquisition, which we refer to as the "Sinclair Acquisition," of six radio stations in St. Louis from Sinclair Broadcast Group, Inc. for $220 million in cash, (iii) the acquisition, which we refer to as the "Bonneville Acquisition," of a radio station in Los Angeles from Bonneville International Corporation in exchange for one of our radio stations in St. Louis and three of the radio stations we acquired in the Sinclair Acquisition, (iv) the acquisition, which we refer to as the "Lee Acquisition," of eight network-affiliated television stations from Lee Enterprises, Incorporated for $559.5 million in cash and the payment of $21.3 million in cash for working capital, (v) the acquisition, which we refer to as the "Clear Channel Acquisition," of one radio station in Phoenix and one radio station in Denver from a subsidiary of AMFM, Inc. for $108.0 million in cash, (vi) the Hearst Acquisition, (vii) the acquisition, which we refer to as the "Los Angeles Magazine Acquisition," of a magazine in Los Angeles from a subsidiary of the Walt Disney Company for $36.0 million in cash, (viii) the acquisition, which we refer to as the "Country Marketplace Acquisition," of a magazine from H&S Media, Inc. for $1.8 million in cash, (ix) the acquisition, which we refer to as the "Votionis Acquisition," of a 75% interest in Votionis, S.A. which operates two radio stations in Buenos Aires, Argentina for $13.3 million in cash, (x) the acquisition, which we refer to as the "WKCF Acquisition," of a television station in Orlando from Press Communications LLC for $197.1 million in cash, (xi) the acquisition, which we refer to as the "Country Sampler Acquisition," of a magazine from Archdale Holding Company, Inc. for $21.0 million in cash, (xii) our public offerings of common stock and convertible preferred stock and our private placement of common stock to a subsidiary of Liberty Media Corporation, the combined total of which was $522.0 million and which we refer to as our "1999 Equity Transactions" and the subsequent application of $210.4 million of the net proceeds of our 1999 Equity Transactions to the Votionis Acquisition and the WKCF Acquisition, (xiii) the application of the remaining $311.6 million of the net proceeds from our 1999 Equity Transactions to the repayment of our senior debt, (xiv) the debt financing of the Sinclair Acquisition, the Bonneville Acquisition, the Lee Acquisition and the Salem Acquisition, (xv) the application of approximately $87 million of net proceeds from the New Debt Incurrence to the Hearst Acquisition, and (xvi) the application of approximately $105.0 million of the remaining net proceeds of the New Debt Incurrence to repay borrowings under the credit facility each had occurred at March 1, 1999 and carried forward. Preparation of the pro forma financial information was based on assumptions deemed appropriate by our management. The pro forma information is unaudited and is not necessarily indicative of the results which actually would have occurred if the transactions had been consummated at the beginning of the periods presented, nor does it purport to represent the future financial position and results of operation for future F-1 4 periods. The pro forma information does not reflect any increased revenues, synergies or cost savings that we expect to realize from our recent acquisitions. The pro forma information should be read in conjunction with our audited historical financial statements filed as part of our amended annual report on Form 10-K/A for our fiscal year ended February 29, 2000 and our unaudited financial statements filed as part of our quarterly report on Form 10-Q for our fiscal quarter ended November 30, 2000. F-2 5 EMMIS COMMUNICATIONS CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AS OF NOVEMBER 30, 2000 (IN THOUSANDS)
EMMIS FINANCING EMMIS HISTORICAL ACTIVITIES & OTHER PRO FORMA ---------- ------------------ ---------- CURRENT ASSETS: Cash and cash equivalents........................ $ 4,639 $ -- $ 4,639 Accounts receivable, net......................... 112,972 -- 112,972 Prepaid expenses................................. 16,663 -- 16,663 Other............................................ 20,154 -- 20,154 ---------- -------- ---------- Total current assets..................... 154,428 -- 154,428 Property and equipment, net........................ 241,803 13,000(2A) 254,803 Intangible assets, net............................. 1,891,069 247,200(2A) 2,138,269 Other assets, net.................................. 82,371 2,968(2B) 85,339 ---------- -------- ---------- Total assets............................. $2,369,671 $263,168 $2,632,839 ========== ======== ========== CURRENT LIABILITIES: Accounts payable................................. $ 31,674 $ -- $ 31,674 Current portion of allocated other long-term debt.......................................... 5,278 -- 5,278 Current portion of TV program rights payable..... 19,085 -- 19,085 Accrued salaries and commissions................. 14,302 -- 14,302 Accrued interest................................. 10,748 -- 10,748 Deferred revenue................................. 15,144 -- 15,144 Other............................................ 8,993 -- 8,993 ---------- -------- ---------- Total current liabilities................ 105,224 -- 105,224 Credit facility and senior subordinated notes...... 1,212,000 66,000(2C) 1,278,000 Senior discount notes.............................. -- 200,000(2D) 200,000 TV program rights payable, net of current portion.......................................... 76,570 -- 76,570 Other long-term debt, net of current portion....... 12,919 -- 12,919 Other noncurrent liabilities....................... 5,364 -- 5,364 Deferred Income taxes.............................. 129,999 -- 129,999 ---------- -------- ---------- Total liabilities........................ 1,542,076 266,000 1,808,076 SHAREHOLDERS' EQUITY: Series A cumulative convertible preferred stock......................................... 29 -- 29 Class A Common Stock............................. 417 -- 417 Class B Common Stock............................. 52 -- 52 Additional paid-in capital....................... 827,416 -- 827,416 Accumulated deficit.............................. (105) (2,832)(2E) (2,937) Accumulated other comprehensive loss............. (214) -- (214) ---------- -------- ---------- Total shareholders' equity (deficit)..... 827,595 (2,832) 824,763 ---------- -------- ---------- Total liabilities and shareholders' equity................................. $2,369,671 $263,168 $2,632,839 ========== ======== ==========
F-3 6 EMMIS COMMUNICATIONS CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2000 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS SIGNIFICANT -------------------------------------- EMMIS ACQUISITIONS ACQUISITION OTHER ACQUISITIONS EMMIS PRO HISTORICAL AND OTHER(3A) ADJUSTMENTS AND RELATED FINANCING FORMA ---------- ------------- ----------- --------------------- --------- Net revenues.................... $353,194 $89,280 $ (1,684)(3B) $ 14,886(3G) $ 455,676 Operating expenses............ 207,736 58,172 (2,300)(3C) 9,091(3G) 272,699 International business development expenses....... 1,300 -- -- -- 1,300 Corporate expenses............ 11,635 1,035 -- -- 12,670 Depreciation and amortization............... 49,595 7,866 8,833(3D) 6,029(3H) 72,323 Noncash compensation.......... 4,097 -- -- -- 4,097 Corporate Restructuring fee and other.................. 4,057 -- -- -- 4,057 Time Brokerage Agreement Fee........................ 4,784 -- (1,684)(3B) (3,100)(3B) -- -------- ------- -------- -------- --------- Operating Income................ 69,990 22,207 (6,533) 2,866 88,533 -------- ------- -------- -------- --------- Other Income (Expense) Interest Expense.............. (41,303) (5,979) (33,643)(3E) (25,800)(3I) (106,725) Other Income (expense), net... 33,686 (30) -- -- 33,656 -------- ------- -------- -------- --------- Total other income (expense)........... (7,617) (6,009) (33,643) (25,800) (73,069) -------- ------- -------- -------- --------- Income before income taxes...... 62,373 16,198 (40,176) (22,934) 15,461 Tax Provision (Benefit)......... 28,258 6,030 (15,141)(3F) (8,715)(3F) 10,432 -------- ------- -------- -------- --------- Net Income (loss)............... 34,115 10,168 (25,035) (14,219) 5,029 Less: Preferred Stock Dividends..................... 6,738 -- -- -- 6,738 -------- ------- -------- -------- --------- Net Income (loss) Available to Common........................ $ 27,377 $10,168 $(25,035) $(14,219) $ (1,709) ======== ======= ======== ======== ========= EPS (basic)..................... $ 0.59 $ (0.04) ======== ========= EPS (diluted)................... $ 0.57 $ (0.04) ======== ========= Basic (weighted average shares outstanding).................. 46,746 46,746 ======== ========= Diluted (weighted average shares outstanding).................. 47,894 46,746 ======== ========= Broadcast Cash Flow(3J)......... $145,458 $ 182,977 ======== ========= EBITDA(3K)...................... $132,523 $ 169,007 ======== =========
F-4 7 EMMIS COMMUNICATIONS CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED FEBRUARY 29, 2000 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS SIGNIFICANT --------------------------------------- EMMIS ACQUISITIONS ACQUISITION OTHER ACQUISITIONS AND EMMIS HISTORICAL AND OTHER(3A) ADJUSTMENTS RELATED FINANCING PRO FORMA ---------- ------------- ----------- ---------------------- --------- Net revenues.................... $325,265 $192,793 $ -- $ 27,791(3G) $ 545,849 Operating expenses............ 199,818 138,556 $ (6,400)(3C) 17,763(3G) 349,737 International business development expenses....... 1,558 -- -- -- 1,558 Corporate expenses............ 13,872 2,035 -- -- 15,907 Depreciation and amortization............... 44,161 33,687 15,021(3D) 8,039(3H) 100,908 Noncash compensation.......... 7,357 -- -- -- 7,357 Programming restructuring cost....................... 896 -- -- -- 896 Time brokerage agreement fee........................ -- -- -- -- -- -------- -------- -------- -------- --------- Operating income (loss)......... 57,603 18,515 (8,621) 1,989 69,486 -------- -------- -------- -------- --------- Other income (expense) Interest expense.............. (51,986) 6,289 (62,200)(3E) (33,071)(3I) (140,968) Other income (expense), net... 3,247 (2,857) -- -- 390 -------- -------- -------- -------- --------- Total other income (expense)........... (48,739) 3,432 (62,200) (33,071) (140,578) -------- -------- -------- -------- --------- Income before income taxes...... 8,864 21,947 (70,821) (31,082) (71,092) Tax provision (benefit)......... 6,875 8,470 (27,042)(3F) (11,811)(3F) (23,508) -------- -------- -------- -------- --------- Income before extraordinary item.......................... 1,989 13,477 (43,779) (19,271) (47,584) Less: Preferred stock dividends..................... 3,144 -- -- -- 3,144 -------- -------- -------- -------- --------- Net income to common shareholder before extraordinary item..... $ (1,155) $ 13,477 $(43,779) $(19,271) $ (50,728) ======== ======== ======== ======== ========= EPS before extraordinary item (basic)....................... $ (0.03) $ (1.40) ======== ========= EPS before extraordinary item (diluted)..................... $ (0.03) $ (1.40) Basic (weighted average shares outstanding).................. 36,156 36,156 ======== ========= Diluted (weighted average shares outstanding).................. 36,156 36,156 ======== ========= Broadcast cash flow(3J)......... $125,447 $ 196,112 ======== ========= EBITDA(3K)...................... $110,017 $ 178,647 ======== =========
F-5 8 EMMIS COMMUNICATIONS CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF BROADCAST CASH FLOW AND EBITDA FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS SIGNIFICANT -------------------------------------- EMMIS ACQUISITIONS ACQUISITION OTHER ACQUISITIONS EMMIS HISTORICAL AND OTHER ADJUSTMENTS AND RELATED FINANCING PRO FORMA ---------- ------------ ----------- --------------------- --------- Net revenues....................... $433,321 $126,094 $(1,684) $21,474 $579,205 Operating expenses............... 262,261 87,549 (3,100) 13,416 360,126 Broadcast cash flow(3J)............ $171,060 $ 38,545 $ 1,416 $ 8,058 $219,079 ======== ======== ======= ======= ======== International business development expenses.......... 1,810 -- -- -- 1,810 Corporate expenses............... 15,290 1,544 -- -- 16,834 -------- -------- -------- EBITDA(3K)......................... $153,960 $ 37,001 $ 1,416 $ 8,058 $200,435 ======== ======== ======= ======= ========
F-6 9 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (IN THOUSANDS) 1. BASIS OF PRESENTATION We are a diversified media company with radio broadcasting, television broadcasting and magazine publishing operations. The accompanying combined condensed pro forma financial statements give effect to the following: - The New Debt Incurrence and the related application of net proceeds. - On January 17, 2001, we acquired radio station KALC-FM in Denver, Colorado from Salem Communications Corporation for $98.8 million in cash. We financed this acquisition with borrowings under our credit facility. - On December 29, 2000 (effective January 5, 2001) we entered into a $1.4 billion Fourth Amended and Restated Senior Credit Facility, which includes a provision allowing us to increase the commitment by $500.0 million under circumstances described in the credit facility. The Fourth Amended and Restated Revolving Credit and Term Loan Agreement replaced the October 2000 Third Amended and Restated Revolving Credit and Term Loan Agreement (the "Bridge Loan"). The proceeds of the Bridge Loan were used to fund the Sinclair and Lee acquisitions. The accompanying pro forma statement of operations for the nine months ended November 30, 2000 assume we entered the Fourth Amended and Restated Revolving Credit and Term Loan Agreement on March 1, 1999 and therefore excludes the amortization of deferred financing costs related to the Bridge Loan ($2,300). - On October 6, 2000, (effective October 1, 2000) we acquired from Sinclair Broadcast Group, Inc. certain assets of radio stations WIL-FM, WRTH-AM, WVRV-FM, KPNT-FM, KXOK-FM, and KIHT-FM in St. Louis, Missouri for a cash purchase price of $220.0 million. This acquisition was financed with borrowings under our credit facility. - On October 6, 2000, (effective October 1st) we acquired certain assets of radio station KZLA-FM from Bonneville International Corporation in exchange for three radio stations acquired from Sinclair (WIL-FM, WVRV-FM and WRTH-AM) and our existing radio station WKKX-FM. The acquired assets of KZLA-FM were recorded at $185 million based on the total fair value of the Sinclair radio stations ($143.0 million) and our station WKKX-FM ($42.0 million) exchanged for KZLA. The net book value of WKKX-FM was approximately $20.0 million. - On October 2, 2000, (effective October 1, 2000) we purchased eight network-affiliated and seven satellite television stations from Lee Enterprises, Incorporation for $559.5 million and the payment of $21.3 million for working capital. This transaction was financed through borrowings under our credit facility. - On August 24, 2000 we acquired the assets of radio stations KKFR-FM in Phoenix, Arizona and KXPK-FM in Denver, Colorado from a subsidiary of AMFM, Inc. for $108.0 million in cash. We financed the acquisition through borrowings under our credit facility. - On June 5, 2000, Emmis entered into an option agreement to acquire the assets of radio stations KTAR-AM, KMVP-AM and KKLT-FM in Phoenix, Arizona from Hearst-Argyle Television, Inc. for $160.0 million in cash. When Emmis signed the option agreement, Emmis made an escrow payment of $20.0 million, paid for with borrowings under its credit facility. This escrow payment will be used to offset the option price. Emmis began operating the radio stations on August 1, 2000 under a time brokerage agreement. Management expects to complete the transaction by the end of March 2001. F-7 10 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) A portion of the net proceeds from the New Debt Incurrence and borrowings under our credit facility will be used to fund the remaining $140 million purchase price of Hearst. - On March 3, 2000 we acquired all of the outstanding capital stock of Los Angeles Magazines Holding Company, Inc. for $36.0 million in cash from a subsidiary of the Walt Disney Company. We financed the acquisition through borrowings under our credit facility. - On December 14, 1999 we completed our acquisition of substantially all of the assets of Country Marketplace and related publications from H&S Media, Inc. for approximately $1.8 million in cash. We financed the acquisition through borrowings under our credit facility. - On November 9, 1999, we completed our acquisition of 75% of the outstanding common stock of Votionis, S.A. ("Votionis"), which operates two radio stations in Buenos Aires, Argentina, for $13.3 million in cash plus liabilities recorded of $5.6 million. The purchase of Votionis was financed with proceeds from our 1999 Equity Transaction. Therefore, no pro forma adjustment related to debt or interest expense has been recorded for this transaction. - On October 29, 1999, we completed an acquisition of substantially all of the assets of television station WKCF in Orlando, Florida ("WKCF") from Press Communications, L.L.C. for approximately $197.1 million in cash. The purchase of WKCF was financed with proceeds from the 1999 Equity Transactions. Therefore, no pro forma adjustment related to debt or interest expense has been recorded for this transaction. - On October 29, 1999 we completed the sale of 7.984 million shares of our Class A common stock and 2.875 million shares of our 6.25% Series A cumulative convertible preferred stock and entered into a stock purchase agreement with Liberty Media Corporation pursuant to which we sold 5.4 million shares of our Class A common stock (the "1999 Equity Transactions"). The combined net proceeds from the 1999 Equity Transactions was $522 million. - On April 1, 1999 we completed our acquisition of substantially all of the assets of Country Sampler, Inc. for approximately $21.0 million in cash. We financed the acquisition through borrowings under our credit facility. All of the above acquisitions have been accounted for using the purchase method of accounting. 2. PRO FORMA ADJUSTMENTS TO COMBINED CONDENSED BALANCE SHEET (A) To reflect the estimated purchase price allocation of Hearst and Salem.
HEARST SALEM ------- ------- Broadcast equipment....................................... 8,000 5,000 Intangible assets......................................... 152,000 95,200 ------- ------- 160,000 100,200 ======= =======
(B) To reflect the reclassification to intangibles of $21,400 in deposits related to the Salem and Hearst acquisitions, offset by $16,368 in debt fees associated with the Fourth Amended and Restated Revolving Credit and Term Loan Agreement and $8,000 in debt fees associated with the New Debt Incurrence. (C) To reflect borrowings under the Fourth Amended and Restated Revolving Credit and Term Loan Agreement to purchase Salem, pay for a portion of Hearst, and pay deferred financing costs, less repayment of borrowings under the credit facility with $105 million of proceeds from the New Debt Incurrence. (D) To reflect the New Debt Incurrence. F-8 11 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) (E) To reflect interest expense associated with holding the proceeds of the New Debt Incurrence, that will be used to repay a portion of our credit facility, in escrow for 120 days. This adjustment has been excluded from the accompanying pro forma statement of operations. 3. PRO FORMA ADJUSTMENTS TO COMBINED CONDENSED STATEMENTS OF OPERATIONS Certain reclassifications have been made to the historical results of the acquired businesses to conform to Emmis' pro forma financial presentation. These reclassifications had no effect on results of operations. (A) Emmis' February 28 fiscal year end differs from the September 30 or December 31 fiscal year ends of Lee, Sinclair and Bonneville. The historical results of the Lee television stations KOIN, KRQE, WSAZ, KSNW, KGMB, KGUN, KMTV and KSNT, the Sinclair radio stations, KPNT, KXOK, KIHT, WIL, WRTH and WVRV, and the Bonneville radio station KZLA for the twelve months ended December 31, 1999, are included in our pro forma statement of operations for the fiscal year ended February 29, 2000. The historical results of Lee and Sinclair for the period March 1 through September 30 are included in our pro forma statement of operations for the nine months ended November 30, 2000. These acquisitions were effective October 1, and are included in our historical results thereafter. The historical results of Bonneville for the period March 1 through August 1, 2000 are included in our pro forma statement of operations for the nine months ended November 30, 2000. Beginning August 1, 2000 we operated KZLA under a Time Brokerage Agreement and recorded the stations operating results in our historical financial statements. PRO FORMA ADJUSTMENTS (IN THOUSANDS)
ELIMINATE SIGNIFICANT NINE MONTHS ENDED LEE SINCLAIR BONNEVILLE STATIONS ACQUISITIONS ACQUISITIONS NOVEMBER 30, 2000 (HISTORICAL) (HISTORICAL) (HISTORICAL) EXCHANGED(AA) OTHER(AB) AND OTHER ----------------- ------------ ------------ ------------ ------------- ------------ ------------ Net revenues................ $71,117 $17,351 $ 8,100 $(13,259) $ 5,971 $89,280 Operating expenses.......... 48,346 8,628 4,513 (7,312) 3,997 58,172 International business development expenses...... -- -- -- -- -- -- Corporate expenses.......... 759 357 108 (189) -- 1,035 Depreciation and amortization.............. 6,899 2,720 2,530 (2,011) (2,272) 7,866 Noncash compensation........ -- -- -- -- -- -- Programming restructuring cost...................... -- -- -- -- -- -- Time brokerage agreement fee....................... -- -- -- -- -- -- ------- ------- ------- -------- ------- ------- Operating income (loss)..... 15,113 5,646 949 (3,747) 4,246 22,207 ------- ------- ------- -------- ------- ------- Interest expense............ -- (3,922) -- 2,072 (4,129) (5,979) Other income (expense), net....................... -- (70) -- 40 -- (30) ------- ------- ------- -------- ------- ------- Total other income (expense)................. -- (3,992) -- 2,112 (4,129) (6,009) ------- ------- ------- -------- ------- ------- Income (loss) before income taxes..................... 15,113 1,654 949 (1,635) 117 16,198 Tax provision/(benefit)..... 6,252 505 1,296 (642) (1,381) 6,030 ------- ------- ------- -------- ------- ------- Income (loss) before extraordinary item........ $ 8,861 $ 1,149 $ (347) $ (993) $ 1,498 $10,168 ======= ======= ======= ======== ======= =======
F-9 12 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) PRO FORMA ADJUSTMENTS (IN THOUSANDS)
ELIMINATE SIGNIFICANT TWELVE MONTHS ENDED LEE SINCLAIR BONNEVILLE STATIONS ACQUISITIONS ACQUISITIONS FEBRUARY, 2000 (HISTORICAL) (HISTORICAL) (HISTORICAL) EXCHANGED(AA) OTHER(AB) AND OTHER(A) ------------------- ------------ ------------ ------------ ------------- ------------ --------------- Net revenues............. $116,139 $26,040 $14,779 $(22,141) $57,976 $192,793 Operating expenses....... 86,277 14,551 8,341 (13,801) 43,188 138,556 International business development expenses... -- -- -- -- -- -- Corporate expenses....... 1,557 755 189 (466) -- 2,035 Depreciation and amortization........... 12,169 4,226 4,354 (3,231) 16,169 33,687 Noncash compensation..... -- -- -- -- -- -- Programming restructuring cost................... -- -- -- -- -- -- Time brokerage agreement fee.................... -- -- -- -- -- -- -------- ------- ------- -------- ------- -------- Operating income(loss)... 16,136 6,508 1,895 (4,643) (1,381) 18,515 -------- ------- ------- -------- ------- -------- Interest expense......... -- (6,173) -- 3,586 8,876 6,289 Other income (expense), net.................... -- 1 -- 6 (2,864) (2,857) -------- ------- ------- -------- ------- -------- Total other income (expense).............. -- (6,172) -- 3,592 6,012 3,432 -------- ------- ------- -------- ------- -------- Income before income taxes.................. 16,136 336 1,895 (1,051) 4,631 21,947 Tax provision/(benefit).... 6,952 186 2,303 (454) (517) 8,470 -------- ------- ------- -------- ------- -------- Income before extraordinary item..... $ 9,184 $ 150 $ (408) $ (597) $ 5,148 $ 13,477 ======== ======= ======= ======== ======= ========
(Aa) Pro forma adjustment to reflect the elimination of the historical results of the Sinclair radio stations WIL, WRTH, and WVRV and our radio station WKKX, which were exchanged for Bonneville radio station KZLA. (Ab) Pro forma adjustment to reflect the operating results of Clear Channel, LA Magazine, Country Marketplace, Votionis, WKCF and Country Sampler for the periods prior to their respective acquisitions by us. The pro forma adjustments also reflect the reduction in interest expense related to the repayment of $311.6 million of the credit facility with proceeds from the 1999 Equity Transactions. (B) To eliminate Time Brokerage Agreement Fees related to Bonneville, Hearst and Salem, and Time Brokerage Agreement revenue related to Bonneville. F-10 13 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) (C) Pro forma adjustment to reflect the decrease in amortization expense related to television program rights as a result of recording television program rights at acquisition value.
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Lee......................................................... $2,300 $3,100 WKCF........................................................ -- 3,300 ------ ------ $2,300 $6,400 ====== ======
(D) Pro forma adjustment to reflect the increase in depreciation and amortization expense as a result of recording property, plant and equipment and intangible assets at acquisition value.
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Lee......................................................... $8,133 $13,601 Bonneville.................................................. 409 684 Sinclair.................................................... 291 736 ------ ------- $8,833 $15,021 ====== =======
(E) Pro forma adjustment to reflect the interest expense associated with $800.8 million borrowed under our credit facility to finance the Lee Acquisition and the Sinclair Acquisition.
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ $800,800 borrowed, interest at approximately 8.09% per annum based on the terms of our credit facility................. $37,793 $64,787 Historical interest expense................................. (4,150) (2,587) ------- ------- Pro Forma Adjustment........................................ $33,643 $62,200 ======= =======
The elimination of historical interest expense for the nine months ended November 30, 2000 includes the $2,300 of amortization of deferred financing costs related to a temporary amendment of our credit facility. If the interest rate on our variable debt were to increase by 0.125%, our pro forma interest expense would have been higher by approximately $1.2 million and $0.9 million for the year ended February 29, 2000 and the nine months ended November 30, 2000, respectively. (F) To adjust income taxes based on combined federal and state statutory rate of 38%. (G) To reflect the historical operating results of Hearst and Salem. F-11 14 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) NET BROADCASTING REVENUE
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Hearst...................................................... 7,804 17,737 Salem....................................................... 7,082 10,054 ------ ------ 14,886 27,791 ====== ======
BROADCASTING OPERATING EXPENSE
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Hearst...................................................... 5,444 12,331 Salem....................................................... 3,647 5,432 ----- ------ 9,091 17,763 ===== ======
(H) To reflect pro forma depreciation of property and equipment and amortization of intangibles resulting from the estimated purchase price allocations of Hearst and Salem.
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Hearst...................................................... $3,707 $4,943 Salem....................................................... 2,322 3,096 ------ ------ $6,029 $8,039 ====== ======
(I) To reflect pro forma interest expense on our credit facility and the New Debt Incurrence related to Hearst and Salem.
FOR THE NINE MONTHS FOR THE YEAR ENDED ENDED NOVEMBER 30, FEBRUARY 29, 2000 2000 ------------------- ------------ Credit Facility............................................. $ 3,823 $ 5,097 The New Debt Incurrence..................................... 19,934 25,250 Amortization of Deferred Financing Costs related to our credit facility and the New Debt Incurrence............... 2,043 2,724 ------- ------- $25,800 $33,071 ======= =======
(J) Defined as net revenues less operating expenses. (K) Defined as broadcast cash flow less international business development expenses and corporate expenses. F-12 15 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 COMMUNICATIONS CORPORATION BY: /S/ WALTER Z. BERGER ------------------------------- Name: Walter Z. Berger Title: Executive Vice President, Chief Financial Officer and Treasurer (Authorized Corporate Officer) Dated: March 12, 2001