EXHIBIT 99.1
Published on June 14, 2001
EXHIBIT 99.1
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA OF SALEM HOLDING
The following table presents summary historical, pro forma and other
financial data of Salem Holding, the issuer in the proposed financing, and its
consolidated subsidiaries. The following summary historical financial data as of
and for the three years ended December 31, 2000 have been derived from Parent's
and Salem Holding's audited consolidated financial statements. The summary
historical financial data as of and for the three months ended March 31, 2000
and 2001 have been derived from Parent's and Salem Holding's unaudited condensed
consolidated financial statements, which financial statements include all
adjustments, consisting only of normal recurring adjustments, which are, in our
opinion, necessary for a fair presentation of the results of operations for such
periods. The results of operations for the three months ended March 31, 2001 are
not necessarily indicative of the results for the full year. Pro forma data for
the year ended December 31, 2000 and for the three months ended and as of March
31, 2001 are derived from the unaudited pro forma condensed consolidated
financial statements of Salem Holding and give effect to the Dividend, accrued
interest income and expense related to the loan made by Salem Holding to Parent,
proceeds of approximately $2.8 million to be received from the Settlement and
the use of such proceeds to repay borrowings under Salem Holding's credit
facility, and the proposed financing and the application of the net proceeds
therefrom, as if such transactions had occurred at the beginning of the relevant
periods, in the case of the Statement of Operations and Other Data, and as of
March 31, 2001, in the case of the Balance Sheet Data. While the pro forma data
for the year ended December 31, 2000 and the three months ended March 31, 2001
are based on adjustments we deem appropriate and which are factually supported
based on currently available data, the pro forma data may not be indicative of
what actual results would have been, nor does this information purport to
present Salem Holding's financial results for future periods.
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(1) Summary consolidated financial and other data of Salem Holding as of and for
the two years ended December 31, 1999 and as of and for the three months
ended March 31, 2000 is identical to Parent's consolidated financial results
for those periods because Parent formed Salem Holding as a wholly-owned
subsidiary in May 2000 and assigned substantially all of its assets and
liabilities to Salem Holding in August 2000. This transaction was accounted
for as an exchange of assets among entities under common control and,
accordingly, the assets exchanged were recorded at their historical cost in
a manner similar to the pooling of interest method of accounting.
(2) Represents accrued interest income on a promissory note from Parent. Salem
Holding borrowed under its credit facility to make the related loan to
Parent.
(3) We define broadcast cash flow as net operating income, excluding other media
revenue and other media operating expenses, before depreciation and
amortization and corporate expenses. We define EBITDA as net operating
income before depreciation and amortization. We define broadcast EBITDA as
EBITDA excluding other media businesses. EBITDA for the year ended December
31, 1999 excludes a $2.6 million charge ($1.9 million, net of income tax)
for a one-time stock grant concurrent with our initial public offering.
Although broadcast cash flow, EBITDA and broadcast EBITDA are not measures
of performance calculated in accordance with generally accepted accounting
principles, we believe that they are useful because they are measures widely
used in the radio broadcast industry to evaluate a radio company's operating
performance. However, you should not consider broadcast cash flow, EBITDA
and broadcast EBITDA in isolation or as substitutes for net income, cash
flows from operating activities and other statement of operations or cash
flows data prepared in accordance with generally accepted accounting
principles as a measure of liquidity or profitability. These measures are
not necessarily comparable to similarly titled measures employed by other
companies.
(4) We define operating cash flow as consolidated net income (adjusted to
exclude, among other things, net gains on dispositions of assets outside
the ordinary course of business) plus specified net losses, taxes, interest
expense, and depreciation, amortization and other non-cash charges, in
accordance with the indenture governing the 9 1/2% notes and the proposed
indenture governing the proposed financing. This includes accrued interest
income. The table below sets forth certain statement of operations and
other data on a pro forma basis and on a pro forma as adjusted basis. The
pro forma data as of and for the year ended December 31, 2000 give effect
to the Dividend, the Settlement and the use of proceeds therefrom to repay
borrowings under the credit facility, accrued interest income and expense
related to Salem Holding's loan to Parent, and the proposed financing and
the application of the net proceeds therefrom, as if such transactions had
occurred at the beginning of the period.
The pro forma as adjusted data for the year ended December 31, 2000 give
further effect to certain in-format radio station acquisitions and
dispositions as if such transactions had occurred at the beginning of the
period. The acquisition adjustments represent management's estimate of the
historical operating results of certain in-format acquisitions (stations
acquired where the format was not changed immediately upon the acquisition)
for the period from January 1, 2000 through the date of acquisition, based
on analysis of the historical results for various periods and based on
estimates of allocations received from the selling entities, all of which
management believes are reasonable. The acquisition adjustments also give
effect to management fees that would be payable to Salem Holding from Salem
Communications Acquisition Corporation had the in-format acquisition of
WROL-AM, Boston, MA, in April 2001 occurred on January 1, 2000.
The acquisition adjustments exclude all stations where the format was
changed immediately upon acquisition because such pre-acquisition operating
results are not meaningful.
The disposition adjustments represent historical operating results through
the date of sale of certain stations sold during the relevant period and
are derived from our historical financial information. The disposition
adjustments exclude the effect of the sale of KPRZ-FM, Colorado Springs,
CO, and KKHT-FM, Houston, TX, which were exchanged for other radio
stations, because these stations had been integrated with existing stations
prior to the sale. The pro forma and pro forma as adjusted information may
not be indicative of what actual results would have been, nor does this
information purport to present Salem Holding's financial results for future
periods.
We do not provide pro forma as adjusted data for the three months ended
March 31, 2001 because there were no radio station acquisitions or
dispositions by Salem Holding during such period.
(5) Pro forma debt to pro forma as adjusted EBITDA and pro forma debt to pro
forma as adjusted operating cash flow represent total pro forma debt,
including current portion and the effects of this offering, outstanding at
the end of the relevant period, divided by pro forma as adjusted EBITDA and
pro forma as adjusted operating cash flow, respectively.
(6) For purposes of computing the pro forma ratio of earnings to fixed charges,
"earnings" consist of income (loss) before income taxes and extraordinary
item plus fixed charges, and "fixed charges" consist of interest expense
plus an allocation of a portion of rent expense representing interest. The
pro forma earnings to fixed charges ratio assumes the issuance of the notes
offered hereby and the repayment of borrowings under Salem Holding's credit
facility as if each occurred at the beginning of the period presented.