Document/Exhibit Description Pages Size
1: 10-Q Paxson Communication 22 137K
2: EX-10.127 Asset Purchase Agreement - Kmnz-Tv 32 139K
3: EX-10.128 Purchase Agreement - Channel 51 37 176K
4: EX-10.129 Loan, Option, Related Transactions 173 493K
5: EX-10.130 Stock Purchase and Related Transactions 202 638K
6: EX-10.131 Asset Purchase and Sale Agreement 18 65K
7: EX-10.132 Purchase Agreement - Boardworks 41 98K
8: EX-10.133 Asset Purchase Agreement - Koog-Tv 68 204K
9: EX-10.134 Loan Agreement 29 108K
10: EX-10.135 Option Agreement 51 188K
11: EX-10.136 Asset Purchase Agreement - Wkes-Fm 51 171K
12: EX-10.137 Asset Purchase Agreement - Whrc(Tv) 77 236K
13: EX-10.138 Easement Agreement 12 48K
14: EX-10.139 Contract for Sale and Purchase 32 81K
15: EX-10.139.1 Promissory Note 7 28K
16: EX-10.139.2 Real Estate Mortgage 14 52K
17: EX-10.139.3 Assignment of Rights 5 22K
18: EX-27 Financial Data Schedule 1 8K
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
-----------------------------
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 1-13452
PAXSON COMMUNICATIONS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
---------------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 659-4122
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 Act of 1934
during the proceeding 12 months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common and preferred stock, as of October 31, 1996:
[Download Table]
CLASS OF STOCK NUMBER OF SHARES
------------------------ --------------------------------
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE --------------------- 38,673,309
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE ---------------------- 8,311,639
REDEEMABLE EXCHANGEABLE PREFERRED
STOCK, $0.001 PAR VALUE ------------------- 150,000
REDEEMABLE CUMULATIVE JUNIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 33,000
PAXSON COMMUNICATIONS CORPORATION
INDEX
--------------------------------------------------
[Download Table]
Page
----
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statements of Operations
Three Months Ended September 30, 1996 and 1995 5
Consolidated Statements of Changes in
Common Stockholders' Equity 6
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-19
Part II - Other Information
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20-21
Signatures 22
2
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
-------------------------------------------------------------------------------
[Download Table]
September 30, December 31,
1996 1995
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 34,372,721 $ 68,070,990
Accounts receivable, less allowance for doubtful
accounts of $1,337,992 and $909,713
respectively 22,549,586 17,726,415
Prepaid expenses and other current assets 2,831,186 971,363
Current program rights 1,312,498 1,412,544
------------ ------------
Total current assets 61,065,991 88,181,312
Property and equipment, net 128,645,751 79,859,080
Intangible assets, net 178,732,208 84,318,147
Other assets, net 32,220,339 19,896,694
Investments in broadcast properties 43,966,022 21,192,030
Program rights, net 1,109,542 384,814
------------ ------------
Total assets $445,739,853 $293,832,077
============ ============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 12,393,114 $ 5,030,692
Accrued interest 13,368,748 6,932,342
Current portion of program rights payable 1,264,160 1,449,602
Current portion of long-term debt 599,132 430,590
------------ ------------
Total current liabilities 27,625,154 13,843,226
Program rights payable 1,172,645 432,750
Long-term debt 3,594,001 12,484,024
Senior subordinated notes, net 227,584,120 227,374,911
Redeemable Cumulative Compounding Senior
preferred stock, $0.001 par value; 15%
dividend rate per annum, 2,000 shares
authorized, issued and outstanding 19,192,339 16,824,082
Redeemable Class A & B common stock warrants - 6,465,317
Redeemable Cumulative Compounding Series B
preferred stock, $0.001 par value; 15%
dividend rate per annum, 714.286 shares
authorized, issued and outstanding 3,308,973 2,352,654
Redeemable Cumulative Compounding Junior
preferred stock, $0.001 par value; 12%
dividend rate per annum, 33,000 shares
authorized, issued and outstanding 35,435,378 31,533,910
Class A common stock, $0.001 par value; one vote
per share; 150,000,000 shares authorized,
38,672,309 shares issued and outstanding 38,672 26,227
Class B common stock, $0.001 par value; ten votes
per share, 35,000,000 shares authorized,
8,311,639 shares issued and outstanding 8,312 8,312
Class C common stock, $0.001 par value;
non-voting; 12,500,000 shares authorized, 0
shares issued and outstanding - -
Class A & B common stock warrants 6,862,647 -
Class C common stock warrants 4,281,852 5,338,952
Stock subscription notes receivable (17,500) (115,714)
Additional paid-in capital 197,448,091 34,342,086
Deferred option plan compensation (1,514,366) (1,384,267)
Accumulated deficit (79,280,465) (55,694,393)
Commitments and contingencies
------------ ------------
Total liabilities, redeemable securities
and common stockholders' equity $445,739,853 $293,832,077
============ ============
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
------------------------------------------------------------------------------
[Download Table]
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
Revenue:
Local and national advertising $102,281,411 $ 65,333,616
Other 4,491,557 3,837,003
Trade and barter 2,728,554 2,353,098
------------ ------------
Total revenue 109,501,522 71,523,717
Operating expenses:
Direct 24,697,573 17,624,276
Programming 12,281,370 9,358,796
Sales and promotion 9,116,041 6,767,364
Technical 5,548,642 3,674,362
General and administrative 22,525,238 15,912,555
Trade and barter 2,048,538 2,081,962
Time brokerage agreement fees 5,984,938 757,369
Sports rights fees 1,213,701 1,509,565
Option plan compensation 2,727,223 9,809,105
Program rights amortization 1,080,430 1,291,754
Depreciation and amortization 18,378,035 13,079,041
------------ ------------
Total operating expenses 105,601,729 81,866,149
------------ ------------
Income (loss) from operations 3,899,793 (10,342,432)
Other income (expense):
Interest expense (22,352,540) (8,715,113)
Interest income 5,388,855 861,924
Other income, net (645,054) (45,773)
------------ ------------
Loss before income tax benefit (13,708,946) (18,241,394)
Income tax benefit - 960,000
------------ ------------
Loss before extraordinary item (13,708,946) (17,281,394)
Extraordinary item - (10,625,727)
------------ ------------
Net loss (13,708,946) (27,907,121)
Dividends and accretion on preferred stock
and common stock warrants (9,877,126) (9,121,480)
------------ ------------
Net loss attributable to common stock and
common stock equivalents $(23,586,072) $(37,028,601)
============ ============
Loss per share before extraordinary item $ (.32) $ (.50)
Extraordinary item - (.31)
------------ ------------
Net loss per share (.32) (.81)
Dividends and accretion on preferred stock
and common stock warrants (.23) (.27)
------------ ------------
Net loss per share attributable to common
stock and common stock equivalents $ (.55) $ (1.08)
============ ============
Weighted average shares outstanding primary
and fully diluted 42,721,280 34,404,800
============ ============
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
------------------------------------------------------------------------------
[Download Table]
For the Three Months
Ended September 30,
1996 1995
(Unaudited)
Revenue:
Local and national advertising $37,277,378 $ 24,878,716
Other 1,893,317 1,339,280
Trade and barter 960,561 949,373
----------- ------------
Total revenue 40,131,256 27,167,369
Operating expenses:
Direct 9,259,056 6,069,426
Programming 4,782,996 3,418,730
Sales and promotion 3,618,971 2,294,178
Technical 2,226,855 1,527,073
General and administrative 8,442,118 5,922,881
Trade and barter 691,520 888,119
Time brokerage agreement fees 2,944,555 207,422
Sports rights fees 447,541 490,210
Option plan compensation 435,306 404,976
Program rights amortization 358,628 514,697
Depreciation and amortization 6,641,106 5,024,785
----------- ------------
Total operating expenses 39,848,652 26,762,497
----------- ------------
Income from operations 282,604 404,872
Other income (expense):
Interest expense (7,254,399) (3,827,887)
Interest income 1,354,179 283,344
Other income, net (86,001) (32,010)
----------- ------------
Loss before income tax benefit (5,703,617) (3,171,681)
Income tax benefit - 320,000
----------- ------------
Loss before extraordinary item (5,703,617) (2,851,681)
Extraordinary item - (10,625,727)
----------- ------------
Net loss (5,703,617) (13,477,408)
Dividends and accretion on preferred stock
and common stock warrants (2,463,092) (3,257,319)
----------- ------------
Net loss attributable to common stock and
common stock equivalents $(8,166,709) $(16,734,727)
============ ============
Loss per share before extraordinary item $ (.12) $ (.08)
Extraordinary item - (.31)
----------- ------------
Net loss per share (.12) (.39)
Dividends and accretion on preferred stock
and common stock warrants (.05) (.10)
----------- ------------
Net loss per share attributable to common
stock and common stock equivalents $ (.17) $ (.49)
=========== ============
Weighted average shares outstanding primary
and fully diluted 46,983,274 34,458,766
=========== ============
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
------------------------------------------------------------------------------
[Enlarge/Download Table]
Common Stock
----------------------
Class Class Class ClassA&B Class Stock
A B C Common C Subscription
Stock Common Stock Notes
Warrants Warrants Receivable
Balance at December 31, 1994 $26,042 $8,312 $0 $0 $5,338,952 $(77,666)
Stock issued for Cookeville
acquisition 95
Deferred option plan compensation
Option plan compensation
Stock options exercised 90
Increase in stock subscription
receivable (48,029)
Note repayments 9,981
Dividends on redeemable
preferred stock
Accretion on Senior redeemable
preferred stock
Accretion on Series B preferred stock
Accretion on Junior preferred stock
Accretion on Class A & B common
stock warrants
Net loss
------- ------ ----- ---------- ---------- -------
Balance at December 31, 1995 26,227 8,312 - - 5,338,952 (115,714)
Release of Put on Class A&B common
stock warrants (unaudited) 9,116,399
Issuance of common stock, net of
issuance costs of $10 million
(unaudited) 10,300
Exercise of Class A,B&C common stock
warrants (unaudited) 1,854 (2,253,752) (1,057,100)
Stock issued for Todd Communications
acquisition (unaudited) 139
Deferred option plan compensation
(unaudited)
Option plan compensation(unaudited)
Stock options exercised (unaudited) 152
Note repayments (unaudited) 98,214
Dividends on redeemable
preferred stock (unaudited)
Accretion on Senior redeemable
preferred stock (unaudited)
Accretion on Series B preferred
stock (unaudited)
Accretion on Junior preferred
stock (unaudited)
Accretion on Class A & B common
stock warrants (unaudited)
Net loss (unaudited)
------- ------ ----- ---------- ----------- ---------
Balance at September 30, 1996
(unaudited) $38,672 $8,312 $0 $6,862,647 $ 4,281,852 $(17,500)
======= ====== ===== ========== =========== =========
Additional Deferred
Paid-in Option Plan Accumulated
Capital Compensation Deficit
Balance at December 31, 1994 $ 20,647,647 $ 0 $(8,923,897)
Stock issued for Cookeville
acquisition 1,199,905
Deferred option plan compensation 12,187,508 (12,187,508)
Option plan compensation 10,803,241
Stock options exercised 307,026
Increase in stock subscription
receivable
Note repayments
Dividends on redeemable
preferred stock (7,275,516)
Accretion on Senior redeemable
preferred stock (332,156)
Accretion on Series B preferred stock (325,208)
Accretion on Junior preferred stock (634,988)
Accretion on Class A & B common
stock warrants (4,729,338)
Net loss (33,473,290)
------------ ----------- -----------
Balance at December 31, 1995 34,342,086 (1,384,267) (55,694,393)
Release of Put on Class A&B common
stock warrants (unaudited)
Issuance of common stock, net of
issuance costs of $10 million
(unaudited) 154,789,700
Exercise of Class A,B&C common stock
warrants (unaudited) 3,308,999
Stock issued for Todd Communications
acquisition (unaudited) 1,534,967
Deferred option plan compensation
(unaudited) 2,857,322 (2,857,322)
Option plan compensation(unaudited) 2,727,223
Stock options exercised (unaudited) 615,017
Note repayments (unaudited)
Dividends on redeemable
preferred stock (unaudited) (6,175,339)
Accretion on Senior redeemable
preferred stock (unaudited) (256,092)
Accretion on Series B preferred
stock (unaudited) (307,050)
Accretion on Junior preferred
stock (unaudited) (487,563)
Accretion on Class A & B common
stock warrants (unaudited) (2,651,082)
Net loss (unaudited) (13,708,946)
------------ ----------- ------------
Balance at September 30, 1996
(unaudited) $197,448,091 $(1,514,366) $(79,280,465)
============ =========== ============
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
-------------------------------------------------------------------------------
[Download Table]
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
Cash flows from operating activities:
Net loss $(13,708,946) $(27,907,121)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 18,378,035 13,079,041
Option plan compensation 2,727,223 9,809,105
Program rights amortization 1,080,430 1,291,754
Provision for doubtful accounts 799,753 653,602
Deferred income taxes - (960,000)
Loss on sale of assets 61,392 98,556
Extraordinary loss on write-off of loan costs - 10,625,727
Increase in accounts receivable (5,622,924) (1,257,071)
Decrease (increase) in prepaid expenses and
other current assets (1,859,823) 21,432
Increase in intangible assets - (1,200,000)
Decrease (increase) in other assets 6,727,610 (1,056,165)
Increase in accounts payable and accrued
liabilities 7,362,422 907,249
Increase in accrued interest 6,436,406 16,797
------------ ------------
Net cash provided by operating activities 22,381,578 4,122,906
------------ ------------
Cash flows from investing activities:
Acquisitions of broadcast properties (146,040,428) (53,847,917)
Increase in deposits on broadcast properties (8,427,000) (2,660,000)
Proceeds from sale of fixed assets 228,279 716,820
Increase in investments in broadcast properties (22,773,992) (28,763,671)
Purchase of property and equipment (22,931,929) (18,864,364)
------------ ------------
Net cash used in investing activities (199,945,070) (103,419,132)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 164,800,000 -
Issuance expenses of common stock sale (10,000,000) -
Proceeds from note payable to related party - 1,200,000
Proceeds from long-term debt 17,700,000 317,539,000
Payments of long-term debt (28,071,481) (169,639,157)
Payments of loan origination costs - (13,032,399)
Proceeds from exercise of common stock options 489,149 69,084
Repayments of stock subscription notes receivable 98,214 5,833
Payments for program rights (1,150,659) (472,335)
------------ ------------
Net cash provided by financing activities 143,865,223 135,670,026
------------ ------------
Increase (decrease) in cash and cash equivalents (33,698,269) 36,373,800
------------ ------------
Cash and cash equivalents at beginning of period 68,070,990 21,571,658
------------ ------------
Cash and cash equivalents at end of period $ 34,372,721 $ 57,945,458
============ ============
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
-------------------------------------------------------------------------------
[Download Table]
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
Supplemental disclosures of cash flow
information:
Cash paid for interest $14,694,387 $8,188,957
=========== ==========
Cash paid for income taxes $ - $ -
=========== ==========
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes $ 209,209 $ -
=========== ==========
Issuance of common stock for Cookeville partner buyout $ - $1,200,000
=========== ==========
Issuance of common stock for Todd Communications
acquisition $ 1,535,106 $ -
=========== ==========
Note payable incurred for WOCD acquisition $ 1,650,000 $ -
=========== ==========
Dividends accreted on redeemable preferred stock $ 6,175,339 $5,507,650
=========== ==========
Accretion on redeemable securities $ 3,701,787 $3,613,830
=========== ==========
Trade and barter revenue $ 2,728,554 $2,353,098
=========== ==========
Trade and barter expense $ 2,048,538 $2,081,962
=========== ==========
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of September 30,
1996 and for the nine and three month periods ended September 30, 1996 and
1995, are unaudited. In the opinion of management, all adjustments necessary
for the fair presentation of such financial information have been included.
These adjustments are of a normal recurring nature. There have been no
changes in accounting policies since the period ended December 31, 1995. The
composition of accounts has changed to reflect the sale of Class A common
stock and the operations of acquisitions discussed below.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 1995 financial
statements and related footnotes and discussions contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996, and the definitive proxy statement for the annual meeting of
stockholders held May 16, 1996, all of which were filed with the United States
Securities and Exchange Commission. Also, in connection with the April 3, 1996
sale of 13.5 million shares of Class A common stock by the Company and others,
the Company filed a Registration Statement on Form S-1 with the Securities and
Exchange Commission on January 26, 1996 which, as amended, was declared
effective March 28, 1996. In connection with the sale of 150,000 shares of 12
1/2% Cumulative Exchangeable Preferred Stock, the Company filed a Registration
Statement on Form S-3 with the Securities and Exchange Commission on August 15,
1996 which, as amended, was declared effective September 30, 1996. The sale of
the related shares of exchangeable preferred stock was consummated on October 4,
1996. The Company used a portion of the proceeds of the exchangeable preferred
stock sale to redeem the Senior preferred stock and the Series B preferred
stock. The pro forma effect of the exchangeable preferred stock sale and
redemption of the Senior preferred stock and Series B preferred stock has been
presented in Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The Company has engaged the services of an investment banking firm to advise it
on strategic alternatives with regard to its network-affiliated television
operations in the West Palm Beach, Florida market. Such alternatives may
include the possible sale or exchange of these assets. The Company has received
a verbal expression of interest in making an offer to acquire these operations
for approximately $120 million. There can be no assurance that this expression
of interest will result in an offer being made, or an acceptable contract or
eventual sale closing.
This Form 10-Q and the documents incorporated by reference herein contain
forward-looking statements which involve risks and uncertainties and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, fluctuations in the
Company's quarterly activities and results of operations, the risks inherent
in the Company's business as well as other factors discussed in this Form 10-Q
or in the documents incorporated by reference herein.
9
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1991, the Company has grown primarily through the
acquisition or management of radio and television broadcast stations and
radio networks, as well as the subsequent improvement of these properties'
operations. Certain of the Company's radio and television stations were and
continue to be operated under time brokerage agreements for various periods.
Under time brokerage agreements, the stations' operating revenues and
expenses are controlled by the Company and are included in the consolidated
statement of operations in the financial statements. The Company operates
three business segments: (1) the Infomall TV Network ("inTV"), a nationwide
network of owned, operated or affiliated television stations dedicated to the
airing of long form paid programming, consisting primarily of infomercials;
(2) Paxson Radio, consisting of radio broadcasting stations, radio news and
sports networks and billboard operations; and (3) Paxson Network-Affiliated
Television, consisting of network-affiliated television broadcasting stations
in West Palm Beach, Florida. The broadcast properties currently owned,
operated or affiliated with the Company are listed below:
[Download Table]
INFOMALL TV NETWORK COMMENCEMENT
TV MARKET SERVED (1) STATION OF OPERATIONS OWNERSHIP
------------------------------------------------------------------------------
New York, NY WHAI-TV 1996 Owned
Los Angeles, CA KZKI-TV 1995 Owned
Philadelphia, PA WTGI-TV 1995 Owned
San Francisco, CA KLXV-TV 1995 Owned
Boston, MA WGOT-TV 1995 Owned
Washington, D.C. WSHE-TV 1996 Owned
Dallas,TX (2)(3) Channel 68 1996 Owned
Atlanta, GA WTLK-TV 1994 Owned
Atlanta, GA WNGM-TV 1996 Time Brokerage
Houston, TX KTFH-TV 1995 Owned
Cleveland, OH WOAC-TV 1995 Time Brokerage
Cleveland, OH WAKC-TV 1996 Owned
Minneapolis, MN KXLI-TV 1996 Owned
Tampa, FL WFCT-TV 1994 Time Brokerage
Miami, FL WCTD-TV 1994 Time Brokerage
Phoenix,AZ KWBF-TV 1996 Owned
Denver, CO KUBD-TV 1995 Owned
Sacramento, CA KCMY-TV 1995 Time Brokerage
St. Louis, MO WCEE-TV 1996 Owned
Orlando, FL WIRB-TV 1994 Time Brokerage
Hartford, CT (4) WTWS-TV 1995 Owned
Raleigh, NC (5) WRMY-TV 1996 Time Brokerage
Milwaukee, WI WHKE-TV 1996 Time Brokerage
Salt Lake City, UT (2)(7) KZAR-TV 1996 Time Brokerage
Grand Rapids, MI (2)(3) WJUE-TV 1996 Time Brokerage
Oklahoma City, OK KMNZ-TV 1996 Owned
Greensboro, NC WAAP-TV 1996 Owned
Birmingham, AL WNAL-TV 1996 Time Brokerage
Albany, NY WOCD-TV 1996 Owned
Dayton, OH WTJC-TV 1995 Owned
Tulsa, OK (2)(3) KGLB-TV 1996 Owned
San Juan, Puerto Rico WSJN-TV 1996 Owned
Ponce, Puerto Rico WKPV-TV 1996 Owned
San Sebastian, Puerto Rico WJWN-TV 1996 Owned
Philadelphia, PA WTVE-TV 1996 Affiliate
Indianapolis, IN WIIB-TV 1996 Affiliate
Norfolk, VA WJCB-TV 1995 Affiliate
Fresno, CA KGMC-TV 1996 Affiliate
10
PAXSON RADIO COMMENCEMENT
RADIO MARKET SERVED (1) STATION FORMAT OF OPERATIONS OWNERSHIP
-------------------------------------------------------------------------------
[Download Table]
Miami, FL WLVE-FM Smooth Jazz 1993 Owned
WZTA-FM Active Rock 1992 Owned
WINZ-AM News 1992 Owned
WPLL-FM Modern AC 1996 Time Brokerage
WFTL-AM Hot Talk 1995 Owned
WSRF-AM Block/Long-Form 1996 Time Brokerage
WIOD-AM Talk/Sports/Ent 1996 Owned
Tampa, FL WHPT-FM Rock AC 1991 Owned
WSJT-FM Smooth Jazz 1995 Owned
WHNZ-AM News 1991 Owned
WZTM-AM Sports 1994 Owned
Orlando, FL WMGF-FM Soft AC 1992 Owned
WJRR-FM Active Rock 1992 Owned
WSHE-FM Modern AC 1996 Owned
WTKS-FM Hot Talk 1996 Time Brokerage(6)
WWNZ-AM News 1992 Owned
WQTM-AM Sports 1994 Owned
Jacksonville, FL WROO-FM Country 1991 Owned
WPLA-FM Rock Alternative 1992 Owned
WFSJ-FM Smooth Jazz 1996 Owned
WNZS-AM Sports 1993 Owned
WZNZ-AM News 1992 Owned
WTLK-FM Hot Talk 1996 Time Brokerage
Pensacola, FL WYCL-TV Rock Alternative 1996 Owned
WTKX-FM Album Oriented Rock 1996 Owned
Tallahassee, FL WSNI-FM Oldies 1996 Owned
WXSR-FM Active Rock 1996 Owned
WJZT-FM Hot AC 1996 Owned
WTNT-FM Country 1996 Owned
WNLS-AM Sports 1996 Owned
Panama City, FL WPBH-FM Soft AC 1996 Owned
WPAP-FM Country 1996 Owned
WFSY-FM Hot AC 1996 Owned
WSHF-FM Big Band 1996 Owned
WDIZ-AM Smooth Jazz 1996 Owned
Cookeville, TN WGSQ-FM Country 1994 Owned
WPTN-AM Talk 1994 Owned
WHUB-FM Adult Contemporary 1996 Owned
WHUB-AM Country 1996 Owned
RADIO NETWORK
-------------
Alabama Radio Network News 1995 Owned
Florida Radio Network News 1993 Owned
Tennessee Radio Network News 1994 Owned
University of Florida Sports Network Sports 1994 Owned
University of Miami Sports Network Sports 1995 Owned
Penn State Sports Network Sports 1994 Owned
BILLBOARD PROPERTIES
The Company currently owns 457 billboard faces in Florida, including 172
faces in the Tampa, Florida market and 285 faces in the Orlando, Florida
market.
11
[Enlarge/Download Table]
PAXSON NETWORK-AFFILIATED TELEVISION COMMENCEMENT
TV MARKET SERVED (1) STATION AFFILIATION OF OPERATIONS OWNERSHIP
----------------------------------------------------------------------------------------------
West Palm Beach, FL WPBF-TV ABC 1994 Owned
WTVX-TV Warner/UPN 1995 Time Brokerage
(1) Each station is licensed by the Federal Communications Commission
("FCC") to serve a specific community, which is included in the
listed market.
(2) Station is currently under construction or presently not
operational.
(3) The Company owns 49% and has an option to acquire the
remaining 51% upon completion of construction.
(4) To be operated pursuant to a time brokerage agreement upon
completion of an FCC-required restructuring of the Company's
investment in such station in connection with the Company's
acquisition of WHAI-TV.
(5) The Company has an option to acquire a 40% ownership interest in
WRMY-TV.
(6) Operated pursuant to a time brokerage agreement. The Company
has a contract to acquire the station for $25 million upon
completion of Federal Trade Commission and FCC review and approval.
(7) The Company has an option to acquire a 50% ownership interest in
KZAR-TV.
In August 1996, the Company purchased the assets of Boardworks Outdoor
Advertising Company, Inc. for approximately $1.3 million.
In August 1996, the Company purchased the assets of WHUB-FM and WHUB-AM for
approximately $3.8 million.
In August 1996, the Company purchased a 50% ownership interest in WSJN-TV,
WKPV-TV and WJWN-TV for approximately $4 million. These stations are
currently operated under a time brokerage agreement. The Company is
currently negotiating the purchase of the remaining 50% ownership of these
stations for approximately $7 million.
In September 1996, the Company purchased the assets of WSIT-LP for
approximately $1.5 million. This "low power" station will be utilized to
simulcast the signal of the Company's WSHE-TV station.
In September 1996, the Company purchased the assets of WSNI-FM, WTNT-FM,
WJZT-FM (formerly WTPS-FM), WXSR-FM, WNLS-AM, WYCL-FM (formerly WOWW-FM),
WTKX-FM, WPAP-FM and WPBH-FM for approximately $21.3 million.
In September 1996, the Company purchased the assets of WDIZ-AM (formerly
WGNE-AM), WFSY-FM and WSHF-FM (formerly WEBZ-FM) for approximately $2.8
million.
In September 1996, the Company loaned $8 million to WNAL-TV and began
operating the station pursuant to a time brokerage agreement pending
completion of the acquisition of the station for $10 million currently
scheduled for January 1997.
In September 1996, the Company purchased KXLI-TV for approximately $12
million.
In September 1996, the Company financed the purchase of WMTO-FM in Panama
City, Florida by DP Media, Inc., which is beneficially owned by a member of
Mr. Paxson's family, for aggregate consideration of $500,000. The Company
has recorded a note receivable from DP Media, Inc. which bears interest at
10% and is payable on demand.
In September 1996, the Company began operating WTLK-FM (formerly WPVJ-FM)
pursuant to a time brokerage agreement pending completion of the acquisition
for $4 million.
The Company has loaned an aggregate of $5 million to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October 1,
1996 pending completion of the acquisition of the station for $17 million.
In October 1996, the Company purchased WIOD-AM and WSHE-FM (formerly WDIZ-FM)
and KMNZ-TV for approximately $14 million, $22 million and $6.5 million,
respectively.
In October 1996, the Company purchased WRAP-LP for approximately $1.3
million. This "low power" station will be utilized to simulcast the signal
of the Company's WGOT-TV station.
12
In October 1996, the Company financed the acquisition of 48 acres of land
located in Orange County, Florida, through a $4.5 million secured loan which
matures March 1998. In connection with such financing, the Company was granted
an option to acquire easements on such property, for a price of $1.5 million
payable through the forgiveness of an equivalent principal amount of the loan,
to construct 18 billboard faces.
The Company's operating results throughout the periods discussed have been
impacted significantly by the timing and mix of radio, television and inTV
acquisitions. Operating revenues are derived from the sale of advertising to
local and national advertisers. The Company's primary operating expenses
involved in owning and operating Paxson Radio and Paxson Network-Affiliated
Television are syndicated program rights fees, commissions on revenues,
employee salaries, news gathering, promotion and administrative expenses.
Comparatively, operation of an inTV station involves low operating expenses
relative to traditional television station operation. As a result, the
Company's inTV stations usually contribute to operating profit within a short
time frame. The costs of operating an inTV station do not vary significantly
with revenue, with the exception of costs associated with sales commissions
and agency fees. As such, upon obtaining a certain level of revenue
sufficient to cover fixed costs, additional revenue levels have a significant
impact on the operating results of an individual inTV station.
The Company currently expects to continue acquiring additional stations which
may have similar effects on the comparability of revenues, operating
expenses, interest expense and operating cash flow as those described above.
The Company's past results are not necessarily indicative of future
performance due to various risks and uncertainties which may significantly
reduce revenues and increase operating expenses. For example, a reduction in
expenditures by radio and television advertisers in the Company's markets may
result in lower revenues. The Company may be unable to reduce expenses,
including certain variable expenses, in an amount sufficient in the short
term to offset lost revenues caused by poor market conditions. The Company's
television stations are dependent upon "must carry" regulations for carriage
on cable systems in each market. The constitutionality of "must carry"
regulations is currently being litigated in the U.S. Supreme Court and if
such regulations were invalidated, the Company could suffer decreased
revenues or increased carriage expenses if the Company's stations lose cable
carriage or find it necessary to pay cable systems for carriage. The
broadcasting industry continues to undergo rapid technological change which
may increase competition within the Company's markets as new delivery
systems, such as direct broadcast satellite and computer networks, attract
customers. The changing nature of audience tastes and viewing and listening
habits may affect the continued attractiveness of the Company's broadcasting
stations to advertisers, upon whom the Company is dependent for its revenue.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount (contingent or otherwise) of assets and
liabilities at the date of the financial statements and the reported amount
of revenues and expenses during the reporting period. The fair value of the
Company's investments in broadcast properties and programming rights payable
were based upon the net present value of applicable estimated future cash
flows using a discounted rate approximating market rates. The fair values of
the Company's long-term debt and the senior subordinated notes were estimated
based on market rates and instruments with similar risks and maturities. The
fair value estimates presented are based on pertinent information available
to management as of September 30, 1996. As a result of the foregoing, the
estimates presented in the Company's financial statements are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have not
been comprehensively revalued for purposes of the Company's financial
statements.
13
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected financial
information as a percentage of revenues.
[Download Table]
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
Revenues 100.0% 100.0% 100.0% 100.0%
Operating Expenses:
Direct 22.6% 24.6% 23.1% 22.3%
Programming 11.2 13.1 11.9 12.6
Sales and promotion 8.3 9.5 9.0 8.4
Technical 5.1 5.1 5.5 5.6
General and administrative 20.5 22.2 21.1 21.8
Trade and barter 1.9 2.9 1.7 3.3
Time brokerage agreement fees 5.5 1.1 7.3 0.8
Sport rights fees 1.1 2.1 1.1 1.8
Option plan compensation 2.5 13.7 1.1 1.5
Program rights amortization 1.0 1.8 0.9 1.9
Depreciation and amortization 16.7 18.4 16.6 18.5
----- ----- ----- -----
Total operating expenses 96.4 114.5 99.3 98.5
----- ----- ----- -----
Income (loss) from operations 3.6 -14.5 0.7 1.5
----- ----- ----- -----
Other income (expense):
Interest expense -20.4 -12.2 -18.1 -14.1
Interest income 4.9 1.2 3.4 1.0
Other income, net -0.6 - -0.2 -0.1
----- ----- ----- -----
Loss before income tax benefit -12.5 -25.5 -14.2 -11.7
----- ----- ----- -----
Income tax benefit - 1.3 - 1.2
----- ----- ----- -----
Loss before extraordinary item -12.5% -24.2% -14.2% -10.5%
----- ----- ----- -----
14
The following sets forth, for the periods indicated, selected information for
the Company's business segments:
[Enlarge/Download Table]
As of and for the nine As of and for the three
months ended September 30, months ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
INFOMALL TV NETWORK
Total revenue $ 41,918,555 $ 19,055,392 $ 14,591,515 $ 8,329,700
Operating expenses, less
depreciation, amortization
and option plan compensation 23,216,124 10,643,262 8,733,515 4,426,943
Depreciation and amortization 7,592,973 3,214,841 3,154,920 1,140,613
Option plan compensation 10,854 - 3,616 -
------------ ------------ ------------ ------------
Income (loss) from operations $ 11,098,604 $ 5,197,289 $ 2,699,464 $ 2,762,144
============ ============ ============ ============
Operating cash flow $ 20,621,000 $ 9,120,000 $ 6,633,000 $ 4,102,000
============ ============ ============ ============
Total identifiable assets $214,739,495 $ 89,455,069 $214,739,495 $ 89,455,069
============ ============ ============ ============
Capital expenditures $ 12,237,344 $ 4,466,582 $ 5,699,792 $ 3,581,213
============ ============ ============ ============
PAXSON RADIO
Total revenue $ 52,481,390 $ 39,526,546 $ 20,854,445 $ 14,404,734
Operating expenses, less
depreciation, amortization
and option plan compensation 41,953,024 32,858,027 16,868,997 11,432,097
Depreciation and amortization 7,681,352 6,714,087 2,381,541 2,578,883
Option plan compensation 381,357 1,628,000 127,106 67,000
------------ ------------ ------------ ------------
Income (loss) from operations $ 2,465,657 $ (1,673,568) $ 1,476,801 $ 326,754
============ ============ ============ ============
Operating cash flow $ 12,411,000 $ 7,295,000 $ 5,399,000 $ 3,087,000
============ ============ ============ ============
Total identifiable assets $123,716,563 $ 70,254,836 $123,716,563 $ 70,254,836
============ ============ ============ ============
Capital expenditures $ 2,911,853 $ 8,474,741 $ 1,466,819 $ 4,383,561
============ ============ ============ ============
PAXSON NETWORK-AFFILIATED TELEVISION
Total revenue $ 14,022,574 $ 11,236,018 $ 4,326,304 $ 3,929,050
Operating expenses, less
depreciation, amortization
and option plan compensation 12,255,042 8,299,345 4,163,037 3,040,864
Depreciation and amortization 2,148,175 2,664,011 683,055 1,091,898
Option plan compensation - - - -
------------ ------------ ------------ ------------
Income (loss) from operations $ (380,643) $ 272,662 $ (519,788) $ (203,712)
============ ============ ============ ============
Operating cash flow $ 3,366,000 $ 3,467,000 $ 644,000 $ 1,127,000
============ ============ ============ ============
Total identifiable assets $ 39,068,243 $ 54,139,779 $ 39,068,243 $ 54,139,779
============ ============ ============ ============
Capital expenditures $ 826,739 $ 2,287,669 $ (55,020) $ 764,261
============ ============ ============ ============
CORPORATE AND OTHER
Total revenue $ 1,079,003 $ 1,705,761 $ 358,992 $ 503,885
Operating expenses, less
depreciation,amortization
and option plan compensation 7,072,281 7,177,370 3,006,691 2,432,833
Depreciation and amortization 955,535 486,101 421,590 213,390
Option plan compensation 2,335,012 8,181,105 304,584 337,976
------------ ------------ ------------ ------------
Income (loss) from operations $ (9,283,825) $(14,138,815) $ (3,373,873) $ (2,480,314)
============ ============ ============ ============
Operating cash flow $ (5,994,000) $ (4,323,000) $ (2,648,000) $ (1,721,000)
============ ============ ============ ============
Total identifiable assets $ 68,215,552 $ 70,079,790 $ 68,215,552 $ 70,079,790
============ ============ ============ ============
Capital expenditures $ 6,955,993 $ 3,635,372 $ 1,884,234 $ 545,852
============ ============ ============ ============
CONSOLIDATED
Total revenue $109,501,522 $ 71,523,717 $ 40,131,256 $ 27,167,369
Operating expenses, less
depreciation,amortization
and option plan compensation 84,496,471 58,978,004 32,772,240 21,332,737
Depreciation and amortization 18,378,035 13,079,040 6,641,106 5,024,784
Option plan compensation 2,727,223 9,809,105 435,306 404,976
------------ ------------ ------------ ------------
Income (loss) from operations $ 3,899,793 $(10,342,432) $ 282,604 $ 404,872
============ ============ ============ ============
Operating cash flow $ 30,404,000 $ 15,559,000 $ 10,028,000 $ 6,595,000
============ ============ ============ ============
Total identifiable assets $445,739,853 $283,929,474 $445,739,853 $283,929,474
============ ============ ============ ============
Capital expenditures $ 22,931,929 $ 18,864,364 $ 8,995,825 $ 9,274,887
============ ============ ============ ============
"Operating cash flow" is defined as net income excluding non-cash items,
non-recurring items including terminated operations, interest, other income,
income taxes and time brokerage fees, less scheduled program rights payments.
The Company has included operating cash flow data because the financial
performance of broadcast companies is frequently evaluated based on some
measure of cash flow from operations and such data may assist investors in
measuring
15
the Company's ability to service debt. Operating cash flow is not, and should
not be used as an indicator or alternative to operating income, net income or
cash flow as reflected in the Consolidated Financial Statements as it is not a
measure of financial performance under generally accepted accounting principles.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated revenues for the nine months ended September 30, 1996 increased
53% (or $38 million) to $109.5 million from $71.5 million for the nine months
ended September 30, 1995. This increase was primarily due to new television
station acquisitions and time brokerage operations ($20.9 million), new radio
stations ($8.4 million) and increased revenues from existing television
stations ($4.8 million) and radio stations ($5.8 million).
Operating expenses for the nine months ended September 30, 1996 increased 29%
(or $23.7 million) to $105.6 million from $81.9 million for the nine months
ended September 30, 1995. The increase was due to higher direct expenses such as
commissions which rise in proportion to revenues ($7.1 million), other
non-direct costs of operating new television stations ($5.4 million) and radio
stations ($4.2 million), increased non-direct costs of network-affiliated
television operations ($2.0 million) which is primarily due to the addition of
WTVX, higher depreciation and amortization related to assets acquired ($5.3
million), and increased time brokerage agreement fees ($5.2 million), all of
which were partially offset by lower option plan compensation costs ($7.1
million).
Operating cash flow for the nine months ended September 30, 1996 increased
95% (or $14.8 million) to $30.4 million, from $15.6 million for the nine
months ended September 30, 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and time brokerage
operations ($8.4 million), new radio stations ($1.8 million) and improved
performance of existing television ($2.2 million) and radio stations ($3.4
million).
Interest expense for the nine months ended September 30, 1996 increased to
$22.4 million from $8.7 million for the nine months ended September 30, 1995,
an increase of 156% primarily due to a greater level of debt throughout the
period and higher borrowing rates. As a result of acquisitions, at September
30, 1996, total long-term debt and senior subordinated notes were $231.8
million, compared with the balance of $230.3 million outstanding a year
prior. The September 30, 1995 balance reflects the private sale of $230
million of 11 5/8% Senior Subordinated Notes at a discount netting $227.3
million before transaction costs on September 28, 1995.
Interest income for the nine months ended September 30, 1996 increased to
$5.4 million from $.9 million, primarily due to greater levels of cash and
cash equivalents invested throughout the period primarily as a result of the
receipt of the proceeds of the April 1996 common stock sale.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated revenues for the three months ended September 30, 1996 increased
48% (or $12.9 million) to $40.1 million from $27.2 million for the three
months ended September 30, 1995. This increase was primarily due to new
television station acquisitions and time brokerage operations ($4.7 million),
new radio stations ($4.3 million) and increased revenues from existing
television stations ($2.1 million) and radio stations ($2.9 million).
Operating expenses for the three months ended September 30, 1996 increased
49% (or $13.0 million) to $39.8 million from $26.8 million for the three
months ended September 30, 1995. The increase was due to higher direct
expenses such as commissions which rise in proportion to revenues ($3.2
million), other non-direct costs of operating new television stations ($2.0
million) and radio stations ($2.5 million), increased non-direct costs of
network-affiliated television operations ($.7 million) which is primarily due
to the addition of WTVX, higher depreciation and amortization related to
assets acquired ($1.6 million), and increased time brokerage agreement fees
($2.7 million).
Operating cash flow for the three months ended September 30, 1996 increased
52% (or $3.4 million) to $10.0 million, from $6.6 million for the three
months ended September 30, 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and time brokerage
operations ($.3 million), new radio stations ($.7 million) and improved
performance of existing television ($1.6 million) and radio stations ($1.7
million).
Interest expense for the three months ended September 30, 1996 increased to
$7.3 million from $3.8 million for the three months ended September 30, 1995,
an increase of 90% primarily due to a greater level of debt throughout the
period and higher borrowing rates. As a result of acquisitions, at September
30, 1996, total long-term debt and senior
16
subordinated notes were $231.8 million, compared with the balance of $230.3
million outstanding a year prior. The September 30, 1995 balance reflects the
private sale of $230 million of 11 5/8% Senior Subordinated Notes at a discount
netting $227.3 million before transaction costs on September 28, 1995.
Interest income for the three months ended September 30, 1996 increased to
$1.4 million from $.3 million, primarily due to greater levels of cash and
cash equivalents invested throughout the period primarily as a result of the
receipt of the proceeds of the April 1996 common stock sale.
LIQUIDITY AND CAPITAL RESOURCES
On October 4, 1996, the Company completed an offering ("the Offering") of
150,000 shares of Exchangeable preferred stock, resulting in gross proceeds of
$150 million before transaction costs. Total issuance costs (including those
prepaid) are approximately $6.2 million, resulting in net proceeds of
approximately $143.8 million. A portion of the Offering proceeds was used by
the Company to redeem the outstanding Senior preferred stock and Series B
preferred stock aggregating approximately $28.5 million. The remaining proceeds
from the Offering will be utilized to fund the acquisitions discussed below
along with related capital requirements. The Company may also borrow under its
senior credit facility should additional funds for acquisitions or capital
expenditures be required. The completion of each of the acquisitions discussed
below is subject to a variety of factors and to the satisfaction of various
conditions, and there can be no assurance that any of such acquisitions will be
completed.
The following table sets forth the actual and pro forma cash and capitalization
of the Company as of September 30, 1996. Pro forma capitalization gives effect
to (i) the consummation of the Offering; and (ii) the redemption of the Senior
preferred stock and Series B preferred stock.
[Download Table]
As of September 30,
1996
------------------------
Actual Proforma
------ --------
(in thousands)
Cash and cash equivalents $ 34,373 $149,667
======== ========
Long-term debt (including current maturities) $ 4,193 $ 4,193
Senior subordinated notes, net (1) 227,584 227,584
-------- --------
231,777 231,777
-------- --------
Redeemable Senior Preferred Stock (2) 19,192 -
Redeemable Series B Preferred Stock (2) 3,309 -
Redeemable Junior Preferred Stock 35,435 35,435
Redeemable Exchangeable Preferred Stock - 143,750
Class A Common Stock 39 39
Class B Common Stock 8 8
Class C Common Stock - -
Class A and B Common Stock Warrants 6,863 6,863
Class C Common Stock Warrants 4,282 4,282
Stock subscription notes receivable (18) (18)
Additional paid-in capital 197,448 197,448
Deferred option plan compensation (1,514) (1,514)
Accumulated deficit (3) (79,280) (85,235)
-------- --------
Total capitalization $417,541 $532,835
======== ========
(1) Net of issue discount.
(2) Reflects redemption concurrent with the completion of the offering.
(3) Reflects additional accretion and dividends in connection with
redemption of Senior preferred stock and Series B preferred stock.
The Company's working capital at September 30, 1996 and December 31, 1995 was
$33.4 million and $74.3 million, respectively, and the ratio of current
assets to current liabilities was 2.21:1 and 6.37:1 on such dates,
respectively. Working capital decreased primarily due to the acquisitions
previously discussed.
Cash provided by (used in) operations of $22.4 million and $4.1 million for
the nine months ended September 30, 1996 and 1995, respectively, reflects the
improvement in operating results of existing properties, acquisitions and
time brokerage properties net of increased interest expense and increases in
other assets. Cash used for investing activities primarily reflects the
acquisitions and investments discussed above, and purchases of equipment for
these and existing properties. Cash provided by financing activities
primarily reflects the proceeds from the Offering and long term debt
borrowings net of debt repayments. In addition, the Company has advanced
$1,350,000 to The Christian Network, Inc.
17
("CNI") during the nine months ended September 30, 1996 under a demand note
bearing interest at the prime rate (currently 8.25%). At September 30, 1996 the
Company had total advances to CNI outstanding of approximately $2.5 million,
which has been included in investments in broadcast properties. Non-cash
activity relates to option plan compensation, stock issued for the WFSJ-FM
acquisition, a note payable incurred with the WOCD-TV acquisition, reciprocal
trade and barter advertising revenue and expense and accretion of discount on
senior subordinated notes, as well as dividends and accretion on the redeemable
preferred stock and common stock warrants.
The Company has engaged the services of an investment banking firm to advise it
on strategic alternatives with regard to its network-affiliated television
operations in the West Palm Beach, Florida market. Such alternatives may
include the possible sale or exchange of these assets. The Company has received
a verbal expression of interest in making an offer to acquire these operations
for approximately $120 million. There can be no assurance that this expression
of interest will result in an offer being made, or an acceptable contract or
eventual sale closing.
The Company's primary capital requirements are for the acquisition of
broadcasting properties and related capital expenditures and interest and
principal payments on indebtedness. The Company's outstanding senior
subordinated notes require semi-annual interest payments at a fixed rate. The
Company presently has no outstanding borrowings under its $100 million senior
secured revolving credit facility ("Senior Facility"). Borrowings under the
Senior Facility bear interest at floating rates and require interest payments on
varying dates depending on the interest rate option selected by the Company.
The Company believes that it will require additional financing to consummate the
acquisitions discussed below (including the expected capital expenditures
associated therewith), and to meet its anticipated short term and long term
working capital requirements for its existing properties. The Company presently
has available to it the full $100 million in borrowing capacity under the Senior
Facility. The Company has received underwriting commitments to increase its
borrowing capacity under the Senior Facility to $200 million. The Company has
completed the negotiation and expects to enter into an amended and restated
credit facility, to reflect such change, but there can be no assurance that the
Company will be able to borrow under the amended facility. The failure to raise
funds necessary to finance the Company's future cash requirements could
adversely affect the Company's ability to pursue its business strategy. The
Company's television stations are dependent upon "must carry" regulations for
carriage on cable systems in each market. The constitutionality of "must carry"
regulations is currently being litigated in the U.S. Supreme Court and if such
regulations were invalidated, the Company could suffer decreased revenues or
increased carriage expenses if the Company's stations lose cable carriage or
find it necessary to pay cable systems for carriage. In addition, should the
Company suffer a significant impairment to its cash flow from operations due to
the occurrence of one or more adverse events, its liquidity could become
insufficient on a short term basis due to diminished borrowing capacity under
the Senior Facility and, on a long term basis, the Company could have
insufficient resources to repay indebtedness under the Senior Facility or the
senior subordinated notes when due.
18
ACQUISITION COMMITMENTS
The Company has agreements to purchase significant assets of, or to enter
into time brokerage arrangements with respect to, the following properties,
which are subject to various conditions, including the receipt of regulatory
approvals:
[Download Table]
Property Market Served (1) Purchase Price
----------------------- ---------------------- --------------
Infomall TV Network:
KCMY-TV Sacramento, CA (2) $17,000,000
WHRC-TV Boston, MA $15,000,000
KAJW-TV Phoenix, AZ $12,000,000
WNAL-TV Birmingham, AL (3) $10,000,000
KBCB-TV Seattle, WA $ 8,000,000
KOOG-TV Salt Lake City, UT $ 7,700,000
WSJN-TV,WKPV-TV,WJWN-TV Puerto Rico (4) $ 7,000,000
WHBI-TV West Palm Beach,FL (5)(6) $ 3,000,000
KVUT-TV Little Rock (5) $ 2,500,000
WOST-TV Providence, RI (5)(7) $ 1,000,000
KGLB-TV Tulsa, OK (8) $ 421,000
Paxson Radio:
WSHE-FM,WSRF-AM Ft. Lauderdale, FL (9) $57,500,000
WKES-FM Tampa, FL $35,323,000
WTKS-FM Orlando, FL (10) $25,000,000
WTLK-FM Jacksonville, FL (10) $ 4,000,000
(1) Each station is licensed by the FCC to serve a specific community,
which is included in the listed market.
(2) The Company has loaned an aggregate of $5 million to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October 1,
1996 pending completion of the acquisition of the station for $17 million.
(3) In September 1996, the Company loaned $8,000,000 to WNAL-TV and began
operating the station pursuant to a time brokerage agreement pending
completion of the acquisition of the station for $10 million currently
scheduled for January 1997.
(4) The Company has purchased a 50% ownership interest in these stations
which are currently operated under a time brokerage agreement and is
negotiating the purchase of the remaining 50%.
(5) Station is currently under construction or not operating.
(6) Pending inTV affiliate. The Company has advanced approximately $2.3
million through September 30, 1996 on this property.
(7) The Company will acquire 50% ownership interest and has committed to
loan up to $3 million for capital improvements and relocation of the
station's tower.
(8) The Company has acquired a 49% interest in this property, amount
represents purchase price for the remaining 51%.
(9) Purchase price includes a cash payment of $47.5 million and $10
million of Company common stock. The Company began operating the
stations pursuant to a time brokerage agreement on May 1, 1996 and
anticipates completing the purchase in January 1997.
(10) The Company began operating WTKS-FM pursuant to a time brokerage
agreement on June 17, 1996 and will acquire the station upon completion
of Federal Trade Commission and FCC review and approval. The Company
began operating WTLK-FM (formerly WPVJ-FM) pursuant to a time brokerage
agreement on September 25, 1996 pending completion of the acquisition of
the station.
19
PAXSON COMMUNICATIONS CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company or any of its
property is subject. To the knowledge of the Company, no such legal
proceedings are contemplated by any governmental authority.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
[Download Table]
Exhibit No. Description
----------- -----------
3.1.1 Certificate of Incorporation of the Company**
3.1.2 The Company's Certificate of Designations of the
Company's 15% Cumulative Compounding Redeemable Preferred
Stock*
3.1.3 The Company's Certificate of Designations of the
Company's Series B 15% Cumulative Compounding Redeemable
Preferred Stock**
3.1.4 The Company's Certificate of Designations of the
Company's Junior Cumulative Compounding Redeemable Preferred
Stock**
3.1.5 The Company's Certificate of Designations of the
Company's 12 1/2% Cumulative Exchangeable Preferred Stock ****
3.1.6 Bylaws of the Company***
4.1 Form of Stock Certificate of Class A Common Stock*
10.127 Asset purchase agreement, dated July 31, 1996, by and
between Paxson Communications of Oklahoma City-62, Inc. and
Aracelis Ortiz for Television Station KMNZ-TV, Oklahoma City,
Oklahoma
10.128 Purchase agreement, dated July 31, 1996, by and among
America 51, L.P., Paxson Communications of Phoenix-51, Inc.,
and Hector Garcia Salvatierra for Television Station Channel
51, Tolleson, Arizona
10.129 Loan, Option and Related Transactions, dated August 19,
1996, between Paxson Communications of Seattle-24, Inc. and
World Television of Washington, L.L.C. for Television Station
KBCB(TV), Bellingham, Washington
10.130 Stock Purchase and Related Transactions, dated August
21, 1996, between Paxson Communications of Little Rock-42 Inc.,
Leininger-Geddes Partnership and Channel 42 of Little Rock,
Inc. for Television Station KVUT(TV), Little Rock, Arkansas
10.131 Asset purchase and sale agreement, dated August 27,
1996, between Intermart Broadcasting First Coast, Inc., and
Paxson Broadcasting of Jacksonville, Limited Partnership for
Radio Station WPVJ-FM of Ponte Vedra Beach, Florida
10.132 Purchase agreement, dated August 29, 1996, by and
between Boardworks Outdoor Advertising Company, Inc., and
Paxson Outdoor, Inc.
20
[Download Table]
10.133 Asset purchase agreement, dated August 30, 1996, by and
between Paxson Communications Television, Inc. and Alpha &
Omega Communications,L.L.C. for Television Station KOOG-TV,
Ogden, Utah
10.134 Loan agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento-29, Inc. for Television Station
KCMY-TV, Sacramento, California
10.135 Option agreement, dated September 6, 1996, by and
between Ponce-Nicasio Broadcasting, A Limited Partnership and
Paxson Communications of Sacramento for Television Station
KCMY-TV, Sacramento, California
10.136 Asset purchase agreement, dated September 12, 1996, by
and between The Moody Bible Institute of Chicago and Paxson
Broadcasting of Tampa, Limited Partnership for Radio Station
WKES-FM, St, Petersburg, Florida
10.137 Asset purchase agreement, dated September 27, 1996, by
and between Channel 46 of Boston, Inc. and Massachusett
Redevelopment Limited Liability Company for Television Station
WHRC(TV), Norwell, Massachusetts
10.138 Easement agreement, dated October 9, 1996, by and
between Kartworlds of Central Florida L.C. and Paxson Outdoor,
Inc.
10.139 Contract for sale and purchase, dated October 22, 1996,
between Southern Land Investors, LTD., and Paxson Outdoor, Inc.
10.139.1 Promissory note, dated October 22, 1996, between
Southern Land Investors, LTD. and Paxson Outdoor, Inc.
10.139.2 Real estate mortgage, dated October 22, 1996, Southern
Land Investors, Ltd. and Paxson Outdoor, Inc.
10.139.3 Assignment of rights under pre-annexation agreement,
dated October 22, 1996, by and between Michael J. Grindstaff
and Southern Land Investors, Ltd.
27 Financial Data Schedule (for SEC use only)
-------------------------
* Filed with the Company's Registration Statement on Form
S-4, filed September 26, 1994, Registration No. 33-84416 and
incorporated herein by reference.
** Filed with the Company's Annual Report on Form 10-K,
dated March 31, 1995 and incorporated herein by reference.
*** Filed with the Company's Registration Statement on Form
S-1, as amended, filed January 26, 1996, Registration No.
333-473 and incorporated herein by reference.
**** Filed with the Company's Registration Statement on Form
S-3, as amended, filed August 15, 1996, Registration No.
333-10267 and incorporated herein by reference.
(b) Reports on Form 8-K. None.
21
PAXSON COMMUNICATIONS CORPORATION
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.
PAXSON COMMUNICATIONS CORPORATION
Date: November 13, 1996 By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson
Chairman of the Board of Directors
and Chief Executive Officer
Date: November 13, 1996 By: /s/ Arthur D. Tek
------------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
22
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0000950144-96-008111 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Fri., Apr. 26, 7:34:03.2am ET 
