SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO __________________
COMMISSION FILE NUMBER 333-76649
SALEM COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0121400
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CALIFORNIA 93012
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-0400
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
As of May 1, 2000 there were 17,902,392 shares of Class A common stock and
5,553,696 shares of Class B common stock of Salem Communications Corporation
outstanding.
SALEM COMMUNICATIONS CORPORATION
INDEX
PAGE NO.
COVER PAGE................................................................................ 1
INDEX..................................................................................... 2
PART I - FINANCIAL INFORMATION............................................................ 4
Item 1. Financial Statements (Unaudited)........................................ 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.............. 12
PART II - OTHER INFORMATION............................................................... 12
Item 1. Legal Proceedings....................................................... 12
Item 2. Changes in Securities and Use of Proceeds............................... 12
Item 3. Defaults upon Senior Securities......................................... 12
Item 4. Submission of Matters to a Vote of Security Holders..................... 13
Item 5. Other Information....................................................... 13
Item 6. Exhibits and Reports on Form 8-K........................................ 13
SIGNATURES................................................................................ 17
EXHIBIT INDEX............................................................................. 18
2
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 which involve risks and
uncertainties. All statements, other than statements of historical facts,
included in this report that address activities, events or developments that
Salem Communications Corporation, a Delaware corporation (the "Company"),
expects or anticipates will or may occur in the future, including such things as
business strategy and measures to implement strategy, competitive strengths,
goals, expansion and growth of the Company's business and operations, plans,
references to future success and other such matters are forward-looking
statements. When used in this report, the words "anticipates," "believes,"
"expects," or words of similar import are intended to identify forward-looking
statements. The forward-looking statements are based on certain assumptions and
analyses made by the Company in light of its experience and its perception of
historical trends, current conditions and expected future developments as well
as other factors it believes are appropriate in the circumstances. However,
whether actual results and developments will conform to the Company's
expectations and predictions is subject to a number of risks: general economic,
market or business conditions; the opportunities (or lack thereof) that may be
presented to and pursued by the Company; competitive actions by other companies;
changes in laws or regulations; and other factors, many of which are beyond the
control of the Company. Consequently, all of the forward-looking statements made
in this report are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on the Company or its business operations.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are urged to carefully review and consider the
various disclosures made by the Company to advise interested parties of certain
risks and other factors that may affect the Company's business and operating
results, including the disclosures made under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
this report.
3
PART I - FINANCIAL INFORMATION
SALEM COMMUNICATIONS CORPORATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SALEM COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31 MARCH 31
1999 2000
------------------------ -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 34,124 $ 4,109
Accounts receivable (less allowance for doubtful accounts
of $1,753 in 1999 and $2,089 in 2000)..................... 17,481 16,534
Other receivables.......................................... 645 578
Prepaid expenses........................................... 1,628 2,348
Due from stockholders...................................... 905 --
Deferred income taxes...................................... 732 1,257
--------- ---------
Total current assets........................................... 55,515 24,826
Property, plant and equipment, net............................. 50,665 55,434
Intangible assets, net......................................... 150,520 171,967
Bond issue costs............................................... 2,750 2,662
Other assets................................................... 4,914 3,842
--------- ---------
Total assets................................................... $ 264,364 $ 258,731
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses...................... $ 3,856 $ 3,502
Accrued compensation and related........................... 2,047 2,178
Accrued interest........................................... 2,546 2
Deferred subscription revenue.............................. 1,670 1,798
Income taxes............................................... 148 305
Current portion of long-term debt and capital lease
obligations................................................ 3,248 373
--------- ---------
Total current liabilities...................................... 13,515 8,158
Long-term debt, less current portion........................... 100,087 101,090
Deferred income taxes.......................................... 7,232 7,599
Other liabilities.............................................. 691 702
Stockholders' equity:
Class A common stock, $.01 par value; authorized 80,000,000
shares; issued and outstanding 17,902,392 shares........... 179 179
Class B common stock, $.01 par value; authorized 20,000,000
shares; issued and outstanding 5,553,696 shares............ 56 56
Additional paid-in capital................................. 147,380 147,380
Accumulated deficit........................................ (4,776) (6,433)
---------- ---------
Total stockholders' equity..................................... 142,839 141,182
--------- ---------
Total liabilities and stockholders' equity..................... $ 264,364 $ 258,731
========= =========
See accompanying notes
4
SALEM COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
1999 2000
----------- -----------
Gross broadcasting revenue........................ $ 22,326 $ 24,662
Less agency commissions........................... 1,901 2,053
----------- -----------
Net broadcasting revenue.......................... 20,425 22,609
Other media revenue............................... 1,095 1,791
----------- -----------
Total revenue..................................... 21,520 24,400
Operating expenses:
Broadcasting operating expenses............... 11,379 12,705
Other media operating expenses................ 1,298 4,144
Corporate expenses............................ 1,796 2,454
Depreciation and amortization (including
$195 in 1999 and $494 in 2000 for
other media businesses).................... 4,111 4,939
----------- -----------
Total operating expenses.......................... 18,584 24,242
----------- -----------
Net operating income.............................. 2,936 158
Other income (expense):
Interest income............................... 25 288
Interest expense.............................. (4,375) (2,520)
Other expense................................. (120) (287)
----------- -----------
Loss before income taxes.......................... (1,534) (2,361)
Benefit for income taxes.......................... (226) (704)
------------ ------------
Net loss.......................................... $ (1,308) $ (1,657)
============ ===========
Basic and diluted loss per share.................. $ (.08) $ (.07)
============ ===========
Basic and diluted weighted average shares
outstanding................................... 16,661,088 23,456,088
=========== ============
See accompanying notes
5
SALEM COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
1999 2000
----------- ----------
OPERATING ACTIVITIES
Net loss........................................................... $ (1,308) $ (1,657)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization.................................. 4,111 4,939
Amortization of bond issue costs and bank loan fees............ 144 121
Deferred income taxes.......................................... (382) (158)
Changes in operating assets and liabilities:
Accounts receivable......................................... 1,285 1,198
Prepaid expenses and other current assets................... (330) 45
Accounts payable and accrued expenses....................... (4,736) (2,748)
Deferred subscription revenue............................... 56 128
Other liabilities........................................... (231) 5
Income taxes................................................ 136 157
--------- ---------
Net cash provided by (used in) operating activities................ (1,255) 2,030
INVESTING ACTIVITIES
Capital expenditures............................................... (1,579) (3,527)
Deposits on radio station acquisitions............................. -- (445)
Purchases of radio stations........................................ -- (26,465)
Purchases of other media businesses................................ (8,372) --
Other assets....................................................... (72) 264
---------- ---------
Net cash used in investing activities.............................. (10,023) (30,173)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and notes payable to
stockholders.................................................... 13,750 1,000
Payments of long-term debt and notes payable to stockholders....... (2,310) (2,811)
Payments on capital lease obligations.............................. (42) (61)
---------- ----------
Net cash provided by (used in) financing activities................ 11,398 (1,872)
--------- ----------
Net increase (decrease) in cash and cash equivalents............... 120 (30,015)
Cash and cash equivalents at beginning of period................... 1,917 34,124
--------- ---------
Cash and cash equivalents at end of period......................... $ 2,037 $ 4,109
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................... $ 7,715 $ 4,970
Income taxes................................................ 20 37
See accompanying notes
6
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
Information with respect to the three months ended March 31, 2000 and 1999
is unaudited. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the unaudited
interim financial statements contain all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the financial position,
results of operations and cash flows of Salem Communications Corporation and
Subsidiaries, for the periods presented. The results of operations for the
interim periods are not necessarily indicative of the results of operations for
the full year. For further information, refer to the consolidated financial
statements and footnotes thereto included in our annual report on Form 10-K for
the year ended December 31, 1999.
NOTE 2. ACQUISITIONS AND OTHER SIGNIFICANT EVENTS
We purchased the assets (principally intangibles) of the following radio
stations:
PURCHASE
ACQUISITION DATE STATION MARKET SERVED PRICE
---------------- ------- ------------- ------------
(IN THOUSANDS)
January 4, 2000................ WNIV-AM
and WLTA-AM Atlanta, GA $ 8,000
January 10, 2000............... WABS-AM Washington, D.C. 4,100
January 25, 2000............... KJQI-FM San Francisco, CA 8,000
February 15, 2000.............. KAIM-AM/FM Honolulu, HI 1,800
February 16, 2000.............. KHNR-AM
and KGU-AM Honolulu, HI 1,700
--------
$ 23,600
========
On January 18, 2000, we purchased real property in Dallas, Texas, for
$885,000.
On January 19, 2000, we agreed to exchange radio station KPRZ-FM, Colorado
Springs, Colorado, plus $7.5 million, for radio station KSKY-AM, Dallas, Texas.
We anticipate this exchange will occur in May 2000.
On February 25, 2000, we purchased the KIEV-AM transmitter site in Los
Angeles, California, for $2.8 million.
On March 31, 2000, we purchased all of the outstanding shares of stock of
Reach Satellite Network, Inc. (RSN), for $3.1 million. RSN owns and operates
Solid Gospel, a radio broadcasting network that produces and distributes music
programming to its own radio stations WBOZ-FM and WVRY-FM, Nashville, Tennessee,
and to independent radio station affiliates. RSN also owns and operates
SolidGospel.com, a web site on the Internet.
On March 6, 2000, we agreed to purchase the following radio stations for
$185.6 million: KDGE-FM, Dallas, Texas, KALC-FM, Denver, Colorado, KXMX-FM and
KEZY-AM, Los Angeles, California, WYGY-FM and WBOB-AM, Cincinnati, Ohio, and
WRMR-AM and WKNR-AM, Cleveland, Ohio. We anticipate this purchase will close in
the third quarter of 2000. In connection with this agreement we deposited a $25
million irrevocable letter of credit with an escrow agent. Under the agreement
we are subject to a liquidated damages provision. If we fail to consummate the
purchase or otherwise terminate the agreement we are required to pay $21.4
million in addition to the $25 million letter of credit, which would be
disbursed to the seller.
NOTE 3. SUBSEQUENT EVENTS
On April 4, 2000, we purchased WGKA-AM, Atlanta, Georgia, for $8.0 million.
We financed this acquisition primarily by borrowing under our credit facility.
On April 14, 2000, we agreed to sell the rights to certain software
currently owned by OnePlace in exchange for a promissory note in the amount of
$1.1 million.
7
NOTE 4. BASIC AND DILUTED NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by the weighted
average number of common stock shares outstanding. Diluted net loss per share is
computed by dividing net loss by the weighted average number of common stock
shares and when dilutive, common stock share equivalents outstanding. Options to
purchase 342,500 shares of common stock with exercise prices greater than
average market prices of common stock were outstanding as of March 31, 2000.
These options were excluded from the respective computations of diluted net loss
per share because their effect would be anti-dilutive and, as such, basic and
diluted net loss per share are the same.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with the condensed consolidated
financial statements and related notes included elsewhere in this report. Our
condensed consolidated financial statements are not directly comparable from
period to period because of our acquisition and disposition of radio stations
and our acquisition of other media businesses. See Note 2 to our condensed
consolidated financial statements.
We are the largest U.S. radio broadcasting company, measured by number of
stations and audience coverage, providing programming targeted at audiences
interested in religious and family issues. Our core business, developed over the
last 25 years, is the ownership and operation of radio stations in large
metropolitan markets. After completing our pending transactions, we will own or
operate 70 radio stations, including 52 stations which broadcast to 21 of the
top 25 U.S. markets. We also operate Salem Radio Network, a national radio
network offering syndicated talk, news and music programming to over 1,300
affiliated radio stations.
Historically, the principal sources of our revenue are:
- the sale of block program time, both to national and local program
producers,
- the sale of advertising time on our radio stations, both to national
and local advertisers, and
- the sale of advertising time on our national radio network.
In 1999, we expanded our sources of revenue and product offerings with the
acquisition of other media businesses.
Our broadcasting revenue is affected primarily by the program rates our
radio stations charge and by the advertising rates our radio stations and
network charge. The rates for block program time are based upon our stations'
ability to attract audiences that will support the program producers through
contributions and purchases of their products. Advertising rates are based upon
the demand for advertising time, which in turn is based on our stations' and
network's ability to produce results for its advertisers. Historically we have
not subscribed to traditional audience measuring services. Instead, we market
ourselves to advertisers based upon the responsiveness of our audience. Each of
our radio stations and our network have a general pre-determined level of time
that they make available for block programs and/or advertising, which may vary
at different times of the day.
In recent years, we have begun to place greater emphasis on the development
of local advertising in all of our markets. We encourage general managers and
sales managers to increase advertising revenue. We can create additional
advertising revenue in a variety of ways, such as removing block programming
that generates marginal audience response, adjusting the start time of programs
to add advertising in more desirable time slots and increasing advertising
rates.
As is typical in the radio broadcasting industry, our second and fourth
quarter advertising revenue generally exceeds our first and third quarter
advertising revenue. Quarterly revenue from the sale of block program time does
not tend to vary, however, since program rates are generally set annually.
Our cash flow is affected by a transition period experienced by radio
stations we have acquired when, due to the nature of the radio station, our
plans for the market and other circumstances, we find it beneficial or advisable
to change its format. This transition period
8
is when we develop the radio station's program customer and listener base.
During this period, these stations typically generate negative or insignificant
cash flow.
In the broadcasting industry, radio stations often utilize trade or barter
agreements to exchange advertising time for goods or services (such as other
media advertising, travel or lodging), in lieu of cash. In order to preserve the
sale of our advertising time for cash, we generally enter into trade agreements
only if the goods or services bartered to us will be used in our business. We
have minimized our use of trade agreements and have generally sold most of our
advertising time for cash. In 1999, we sold 92% of our advertising time for
cash. In addition, it is our general policy not to preempt advertising paid for
in cash with advertising paid for in trade.
The primary operating expenses incurred in the ownership and operation of
our radio stations include employee salaries and commissions, and facility
expenses (for example, rent and utilities). In addition to these expenses, our
network incurs programming costs and lease expenses for satellite communication
facilities. We also incur and will continue to incur significant depreciation,
amortization and interest expense as a result of completed and future
acquisitions of radio stations and existing and future borrowings.
OnePlace has earned its revenue from the (1) sales of and advertising in
print and online catalogs, (2) sales of software and software support contracts,
(3) sales of products, services and banner advertising on the Internet, and (4)
sales of web site development services. CCM Communications, Inc. earns its
revenue by selling advertising in and subscriptions to its publications. The
revenue and related operating expenses of these businesses are reported as
"other media" on our condensed consolidated statements of operations.
The performance of a radio broadcasting company, such as Salem, is
customarily measured by the ability of its stations to generate broadcast cash
flow, EBITDA and after-tax cash flow. We define broadcast cash flow as net
operating income, excluding other media revenue and other media operating
expenses, and before depreciation and amortization and corporate expenses. We
define EBITDA as net operating income before depreciation and amortization. We
define after-tax cash flow as income (loss) before extraordinary items minus
gain (loss) on disposal of assets (net of income tax) plus depreciation and
amortization.
Although broadcast cash flow, EBITDA and after-tax cash flow are not
measures of performance calculated in accordance with generally accepted
accounting principles, and should be viewed as a supplement to and not a
substitute for our results of operations presented on the basis of generally
accepted accounting principles, we believe that broadcast cash flow, EBITDA and
after-tax cash flow are useful because they are generally recognized by the
radio broadcasting industry as measures of performance and are used by analysts
who report on the performance of broadcast companies. These measures are not
necessarily comparable to similarly titled measures employed by other companies.
In the following discussion of our results of operations, we compare our
results between periods on an as reported basis (that is, the results of
operations of all radio stations and network formats owned or operated at any
time during either period) and on a "same station" basis. We include in our same
station comparisons the results of operations of radio stations and network
formats that:
- we own or operate for all of both periods;
- we acquire or begin to operate at any time after the beginning of the
first relevant comparison period if the station or network format (i)
is in a market in which we already own or operate a radio station or
network format and (ii) is integrated with the existing station or
network format for our internal financial reporting purposes; or
- we sell or cease to operate at any time after the beginning of the
first relevant comparison period if the station or network format (i)
was integrated with another station or network format in a market for
our internal financial reporting purposes prior to the sale or
cessation of operations and (ii) we continue to own or operate the
other station or network format following the sale or cessation of
operations.
We include in our same station comparisons the results of operations of our
integrated stations and network formats from the date that we acquire or begin
to operate them or through the date that we sell or cease to operate them, as
the case may be.
RESULTS OF OPERATIONS
Net Broadcasting Revenue. Net broadcasting revenue increased $2.2 million or
10.8% to $22.6 million for the quarter ended March 31, 2000 from $20.4 million
for the same quarter of the prior year. The inclusion of revenue from the
acquisitions of radio
9
stations and revenue generated from local marketing agreements entered into
during 1999 provided $500,000 of the increase. On a same station basis, net
broadcasting revenue improved $1.7 million or 8.3% to $22.1 million in 2000 from
$20.4 million in 1999. Included in the same station comparison are the results
of three stations that we began to own or operate in 1999 for a total purchase
price of $13.0 million and one station that we began to own in 2000 for a total
purchase price of $4.1 million. The improvement was primarily due to an increase
in revenue at the radio stations we acquired in 1998 and 1999 that previously
operated with formats other than their current format, an increase in program
rates and an increases in advertising time and improved selling efforts at both
the national and local level. Revenue from advertising as a percentage of our
gross broadcasting revenue decreased to 35.2% for the quarter ended March 31,
2000 from 35.7% for the same quarter of the prior year. Revenue from block
program time as a percentage of our gross broadcasting revenue increased to
51.8% for the quarter ended March 31, 2000 from 51.3% for the same quarter of
the prior year.
Other Media Revenue. Other media revenue increased $700,000 to $1.8 million
for the quarter ended March 31, 2000 from $1.1 million for the same quarter in
the prior year. The increase is due primarily to the inclusion of three months
of revenue during the quarter ended March 31, 2000 as compared to two months in
the same quarter of the prior year. We acquired most of our other media
businesses in January 1999.
Broadcasting Operating Expenses. Broadcasting operating expenses increased
$1.3 million or 11.4% to $12.7 million for the quarter ended March 31, 2000 from
$11.4 million for the same quarter of the prior year. The inclusion of expenses
from the acquisitions of radio stations and revenue generated from local
marketing agreements entered into during 1999 provided $600,000 of the
increase. On a same station basis, broadcasting operating expenses increased
$700,000 or 6.1% to $12.1 million in 2000 from $11.4 million in 1999, primarily
due to incremental selling and production expenses incurred to produce the
increased revenue in the same period.
Other Media Operating Expenses. Other media operating expenses increased
$2.8 million to $4.1 million for the quarter ended March 31, 2000 from $1.3
million for the same quarter in the prior year. The increase is due primarily to
the inclusion of three months of operating expenses during the quarter ended
March 31, 2000 as compared to two months in the same quarter of the prior year
and operating expenses due to the acquisitions of AudioCentral.com, Gospel Media
Network, Inc. and the Involved Christian Radio Network, which we acquired after
March 31, 1999.
Broadcast Cash Flow. Broadcast cash flow increased $900,000 or 10.0% to $9.9
million for the quarter ended March 31, 2000 from $9.0 million for the same
quarter of the prior year. As a percentage of net broadcasting revenue,
broadcast cash flow decreased to 43.8% in 2000 from 44.3% in 1999. The decrease
is primarily attributable to the effect of stations acquired during 1999 that
previously operated with formats other than their current format. Acquired and
reformatted radio stations typically produce low margins during the first few
years following conversion. Broadcast cash flow margins improve as we implement
scheduled program rate increases and increase advertising revenue on our
stations. On a same station basis, broadcast cash flow improved $1.0 million or
11.1% to $10.0 million in 2000 from $9.0 million in 1999.
Corporate Expenses. Corporate expenses increased $700,000 or 38.9% to $2.5
million in the quarter ended March 31, 2000 from $1.8 million for the same
quarter of the prior year, primarily due to additional overhead costs associated
with radio station and other media acquisitions in 1999 and public reporting and
related costs.
EBITDA. EBITDA decreased $1.9 million or 27.1% to $5.1 million for the
quarter ended March 31, 2000 from $7.0 million for the same quarter of the prior
year. As a percentage of total revenue, EBITDA decreased to 20.9% in 2000 from
32.6% for the same quarter of the prior year. EBITDA was negatively impacted by
the results of operations of our other media businesses acquired in 1999, which
generated a net loss before depreciation and amortization of $2.4 million for
the quarter ended March 31, 2000 as compared to $200,000 for the same quarter of
the prior year. EBITDA excluding the other media businesses increased $300,000
or 4.2% to $7.5 million for the quarter ended March 31, 2000 from $7.2 million
for the same quarter of the prior year. As a percentage of net broadcasting
revenue, EBITDA excluding the other media business decreased to 33.2% in 2000
from 35.3% in 1999. The decrease is primarily attributable to the effect of
stations acquired during 1999 that previously operated with formats other than
their current format and an increase in corporate expenses.
Depreciation and Amortization. Depreciation and amortization expense
increased $800,000 or 19.5% to $4.9 million for the quarter ended March 31, 2000
from $4.1 million for the same quarter of the prior year. The increase is
primarily due to radio station and other media acquisitions consummated during
1999.
Other Income (Expense). Interest income increased $263,000 to $288,000 for
the quarter ended March 31, 2000, from $25,000 for the same quarter of the prior
year, primarily due to the interest earned on the investment of the net proceeds
of our initial public offering.
10
Interest expense decreased $1.9 million or 43.2% to $2.5 million for the quarter
ended March 31, 2000 from $4.4 million in the same quarter of the prior year.
The decrease is primarily due to interest expense associated with $50 million in
principal amount of the senior subordinated notes repurchased in July 1999.
Other expense increased $167,000 to $287,000 for the quarter ended March 31,
2000 from $120,000 for the same quarter of the prior year primarily due to
increased bank commitment fees.
Benefit for Income Taxes. Benefit for income taxes as a percentage of loss
before income taxes (that is, the effective tax rate) was (29.8%) for the
quarter ended March 31, 2000 and (14.7%) for the same quarter of the prior year.
For the quarter ended March 31, 2000 and 1999 the effective tax rate differs
from the federal statutory income rate of 34.0% primarily due to the effect of
state income taxes and certain expenses that are not deductible for tax
purposes.
Net Loss. We recognized a net loss of $1.7 million for the quarter ended
March 31, 2000 as compared to a net loss of $1.3 million for the same quarter of
the prior year.
After-Tax Cash Flow. After-tax cash flow increased $500,000 or 17.9% to $3.3
million for the quarter ended March 31, 2000 from $2.8 million for the same
quarter of the prior year. This increase was partially offset by negative
after-tax cash flow of our other media businesses. After-tax cash flow excluding
our other media losses (net of income tax) increased $1.8 million or 62.1% to
$4.7 million for the quarter ended March 31, 2000 from $2.9 million for the same
quarter of the prior year. The increase is primarily due to an increase in
broadcast cash flow and a decrease in interest expense.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed acquisitions of radio stations through
borrowings, including borrowings under bank credit facilities and, to a lesser
extent, from operating cash flow and selected asset dispositions. We received
net proceeds of $140.1 million from our initial public offering in July 1999,
which was used to pay a portion of our senior subordinated notes and amounts
outstanding under our credit facility. We have historically funded, and will
continue to fund, expenditures for operations, administrative expenses, capital
expenditures and debt service required by our credit facility and senior
subordinated notes from operating cash flow. At March 31, 2000 we had cash
and cash equivalents of $4.1 million and positive working capital of $16.7
million.
We will fund future acquisitions from cash on hand, borrowings under our
credit facility and operating cash flow; the aggregate purchase price for all
pending acquisitions exceeds the maximum amount that we may currently borrow
under our credit facility. We are evaluating alternatives to fund these
acquisitions including amending our credit facility to allow a greater debt to
cash flow ratio, selling some of our existing radio stations, and obtaining
bridge financing. We believe that cash on hand, cash flow from operations,
borrowings under our credit facility, proceeds from the sale of some of our
existing radio stations and anticipated bridge financing will be sufficient to
permit us to meet our financial obligations, fund our pending acquisitions and
fund operations for at least the next twelve months.
At March 31, 2000, we had $1.0 million outstanding under our credit
facility. In July 1999, we paid amounts outstanding of $39.8 million with a
portion of the net proceeds of our initial public offering. We amended our
credit facility principally to increase our borrowing capacity from $75 million
to $150 million, to lower the borrowing rates and to modify current financial
ratio tests to provide us with additional borrowing flexibility. The amended
credit facility matures on June 30, 2006. Aggregate commitments under the
amended credit facility begin to decrease commencing March 31, 2001.
Amounts outstanding under our credit facility bear interest at a base rate,
at our option, of the bank's prime rate or LIBOR, plus a spread. For purposes of
determining the interest rate under our credit facility, the prime rate spread
ranges from 0% to 1%, and the LIBOR spread ranges from 0.875% to 2.25%.
The maximum amount that we may borrow under our credit facility is limited
by our debt to cash flow ratio, adjusted for recent radio station acquisitions
(the "Adjusted Debt to Cash Flow Ratio"). The maximum Adjusted Debt to Cash Flow
Ratio allowed under our credit facility is 6.00 to 1 through December 31, 2000.
Thereafter, the maximum ratio will decline periodically until January 1, 2004,
at which point it will remain at 4.00 to 1 through June 2006. The Adjusted Debt
to Cash Flow Ratio at March 31, 2000 was 4.30 to 1, resulting in a borrowing
availability of approximately $77.2 million.
Our credit facility contains additional restrictive covenants customary for
credit facilities of the size, type and purpose contemplated which, with
specified exceptions, limits our ability to enter into affiliate transactions,
pay dividends, consolidate, merge or effect certain asset sales, make specified
investments, acquisitions and loans and change the nature of our business. The
credit facility also requires us to satisfy specified financial covenants, which
covenants require the maintenance of specified financial ratios
11
and compliance with certain financial tests, including ratios for maximum
leverage as described, minimum interest coverage (not less than 1.75 to 1),
minimum debt service coverage (a static ratio of not less than 1.1 to 1) and
minimum fixed charge coverage (a static ratio of not less than 1.1 to 1). The
credit facility is guaranteed by all of our subsidiaries and is secured by
pledges of all of our and our subsidiaries' assets and all of the capital stock
of our subsidiaries.
For the quarter ended March 31, 2000 net cash provided by operating
activities was $2.0 million as compared to net cash used in operating activities
of $1.3 million for the same quarter of the prior year. This was due primarily
to a smaller decrease in accrued interest during the quarter ended March 31,
2000 as compared to the same quarter of the prior year.
Net cash used in investing activities increased to $30.2 million for the
quarter ended March 31, 2000, compared to $10.0 million for the same quarter of
the prior year, primarily due to acquisitions (cash used of $26.5 million to
purchase ten radio stations and a network during the quarter ended March 31,
2000 as compared to cash used of $8.4 million to purchase other media businesses
for the same quarter of the prior year).
For the quarter ended March 31, 2000 net cash used in financing activities
was $1.9 million as compared to net cash provided by financing activities of
$11.4 million for the same quarter of the prior year. This was due primarily to
smaller borrowings during the quarter ended March 31, 2000 as compared to the
same quarter of the prior year.
On March 6, 2000, we agreed to purchase the following radio stations for
$186.6 million: KDGE-FM, Dallas, Texas, KALC-FM, Denver, Colorado, KXMX-FM and
KEZY-AM, Los Angeles, California, WYGY-FM and WBOB-AM, Cincinnati, Ohio, and
WRMR-AM and WKNR-AM, Cleveland, Ohio. We anticipate this purchase will close in
the third quarter of 2000. In connection with this agreement we deposited a $25
million irrevocable letter of credit with an escrow agent. Under the agreement
we are subject to a liquidated damages provision. If we fail to consummate the
purchase or otherwise terminate the agreement we are required to pay $21.4
million in addition to the $25 million letter of credit, which would be
disbursed to the seller.
On April 4, 2000, we purchased WGKA-AM, Atlanta, Georgia, for $8.0 million.
We financed this acquisition primarily by a borrowing under our credit facility.
IMPACT OF YEAR 2000
In prior years, we discussed the nature and progress of our plans to become
Year 2000 ready. In late 1999, we completed our remediation and testing of
systems. As a result of those planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. We are not aware of any
material problems resulting from Year 2000 issues, either with our products, our
internal systems, or the products and services of third parties. We
will continue to monitor our mission critical computer applications and those of
our suppliers and vendors throughout the Year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivative Instruments. We do not invest, and during the quarter ended March
31, 2000 did not invest, in market risk sensitive instruments.
Market Risk. Our market risk exposure with respect to financial instruments
is to changes in LIBOR and in the "prime rate" in the United States. As of March
31, 2000, we may borrow $77.2 million under our credit facility. At March 31,
2000, we had borrowed $1.0 million under our credit facility. Amounts
outstanding under the credit facility bear interest at a base rate, at our
option, of the bank's prime rate or LIBOR, plus a spread. For purposes of
determining the interest rate under our credit facility, the prime rate spread
ranges from 0% to 1%, and the LIBOR spread ranges from 0.875% to 2.25%. At March
31, 2000, the blended interest rate on amounts outstanding under the credit
facility was 9.0%. At March 31, 2000, a hypothetical 100 basis point increase in
the prime rate would result in additional interest expense of $10,000 on an
annualized basis.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various routine legal proceedings, incident to the
ordinary course of our business. Our management believes that the outcome of all
pending legal proceedings in the aggregate will not have a material adverse
effect on our consolidated financial condition or our results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The use of proceeds from the offering is described in Note 2 in the Notes to
Financial Statements in Part I above and is hereby incorporated by this
reference.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the period covered by this report.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Set forth below is a list of exhibits included as part of this Quarterly
Report:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------------------------------------
3.01* Amended and Restated Certificate of Incorporation of Salem
Communications Corporation, a Delaware corporation.
3.02* Bylaws of Salem Communications Corporation, a Delaware corporation.
4.01+ Indenture between Salem Communications Corporation, a California
corporation, certain named guarantors and The Bank of New York, as
Trustee, dated as of September 25, 1997, relating to the 9 1/2% Series
A and Series B Senior Subordinated Notes due 2007.
4.02+ Form of 9 1/2% Senior Subordinated Note (filed as part of Exhibit
4.01).
4.03+ Form of Note Guarantee (filed as part of Exhibit 4.01).
4.04*** Credit Agreement, dated as of September 25, 1997, among Salem, the
several Lenders from time to time parties thereto, and The Bank of New
York, as administrative agent for the Lenders (incorporated by
reference to Exhibit 4.07 of the previously filed Registration
Statement on Form S-4).
4.05+ Borrower Security Agreement, dated as of September 25, 1997, by and
between Salem and The Bank of New York, as Administrative Agent of the
Lenders (incorporated by reference to Exhibit 4.07 of the previously
filed Registration Statement on Form S-4).
4.06+ Subsidiary Guaranty and Security Agreement dated as of September 25,
1997, by and between Salem, certain named guarantors, and The Bank of
New York, as Administrative Agent (incorporated by reference to
Exhibit 4.09 of the previously filed Registration Statement on Form
S-4).
4.07*** Amendment No. 1 and Consent No. 1, dated as of August 5, 1998, to the
Credit Agreement, dated as of September 25, 1997, by and among Salem,
The Bank of New York, as Administrative Agent for the Lenders, Bank of
America NT&SA, as documentation agent, and the several Lenders
(incorporated by reference to Exhibit 10.02 of previously filed
Current Report on Form 8-K).
4.08* Amendment No. 2 and Consent No. 2, dated as of January 22, 1999, to
the Credit Agreement, dated as of September 25, 1997, by and among
Salem, The Bank of New York, as Administrative Agent for the Lenders,
Bank of America NT&SA, as documentation agent, and the Lenders.
4.09* Specimen of Class A common stock certificate.
4.10* Supplemental Indenture No. 1, dated as of March 31, 1999, to the
Indenture, dated as of September 25, 1997, by and among Salem
Communications Corporation, a California corporation, Salem
Communications Corporation, a Delaware corporation, The Bank of New
York, as Trustee, and the Guarantors named therein.
4.11* Consent No. 3, dated as of March 31, 1999, to the Credit Agreement,
dated as of September 25, 1997, by and among Salem, The Bank of New
York, as Administrative Agent for the Lenders, Bank of America NT&SA,
as Documentation Agent, and the Lenders named therein.
13
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------------------------------------
4.12* Assumption Agreement, dated as of March 31, 1999, by and between
Salem Communications Corporation, a Delaware corporation, and The
Bank of New York, as Administrative Agent.
4.13* Amendment No. 1 to the Grant of Security Interest (Servicemarks)
by Salem to The Bank of New York, as Administrative Agent, under
the Borrower Security Agreement, dated as of September 25, 1997,
with the Administrative Agent.
4.14* Amendment No. 3 and Consent No. 4, dated as of April 23, 1999,
under the Credit Agreement, dated as of September 25, 1997, by and
among Salem, The Bank of New York, as Administrative Agent for the
Lenders, Bank of America NT&SA, as Documentation Agent, and the
Lenders party thereto.
4.15* First Amended and Restated Credit Agreement by and among Salem,
The Bank of New York, as Administrative Agent for the Lenders,
Bank of America NT&SA, as Documentation Agent, and the Lenders
named therein.
4.16+++ Amendment No. 1 to First Amended and Restated Credit Agreement, by
and among Salem, The Bank of New York, as Administrative Agent for
the Lenders, Bank of America, N.A., as Documentation Agent and the
Lenders party thereto.
4.17+++ Amendment No. 2 to First Amended and Restated Credit Agreement, by
and among Salem, The Bank of New York, as Administrative Agent for
the Lenders, Bank of America, N.A., as Documentation Agent and the
Lenders party thereto.
10.01* Amended and Restated Employment Agreement, dated as of May 19,
1999, between Salem and Edward G. Atsinger III.
10.02* Amended and Restated Employment Agreement, dated as of May 19,
1999, between Salem and Stuart W. Epperson.
10.03.01+ Employment Contract, dated November 7, 1991, between Salem and
Eric H. Halvorson.
10.03.02+ First Amendment to Employment Contract, dated April 22, 1996,
between Salem and Eric H. Halvorson.
10.03.03+ Second Amendment to Employment Contract, dated July 8, 1997,
between Salem and Eric H. Halvorson.
10.03.04+ Deferred Compensation Agreement, dated November 7, 1991, between
Salem and Eric H. Halvorson.
10.03.05* Third Amendment to Employment Agreement, entered into May 26,
1999, between Salem and Eric Halvorson.
10.05.01+ Antenna/tower lease between Caron Broadcasting, Inc.
(WHLO-AM/Akron, Ohio) and Messrs. Atsinger and Epperson expiring
2007.
10.05.02+ Antenna/tower/studio lease between Caron Broadcasting, Inc.
(WTSJ-AM/ Cincinnati, Ohio) and Messrs. Atsinger and Epperson
expiring 2007.
10.05.03+ Antenna/tower lease between Caron Broadcasting, Inc.
(WHK-FM/Canton, Ohio) and Messrs. Atsinger and Epperson expiring
2007.
10.05.04+ Antenna/tower/studio lease between Common Ground Broadcasting,
Inc. (KKMS-AM/Eagan, Minnesota) and Messrs. Atsinger and Epperson
expiring in 2006.
10.05.05+ Antenna/tower lease between Common Ground Broadcasting, Inc.
(WHK-AM/ Cleveland, Ohio) and Messrs. Atsinger and Epperson
expiring 2008.
10.05.06+ Antenna/tower lease (KFAX-FM/Hayward, California) and Salem
Broadcasting Company, a partnership consisting of Messrs. Atsinger
and Epperson, expiring in 2003.
10.05.07+ Antenna/tower/studio lease between Inland Radio, Inc. (KKLA-AM/San
Bernardino, California) and Messrs. Atsinger and Epperson expiring
2002.
10.05.08+ Antenna/tower lease between Inspiration Media, Inc.
(KGNW-AM/Seattle, Washington) and Messrs. Atsinger and Epperson
expiring in 2002.
10.05.09+ Antenna/tower lease between Inspiration Media, Inc.
(KLFE-AM/Seattle, Washington) and The Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring in 2004.
10.05.11.01+ Antenna/tower/studio lease between Pennsylvania Media Associates,
Inc. (WZZD-AM/WFIL-AM/Philadelphia, Pennsylvania) and Messrs.
Atsinger and Epperson, as assigned from WEAZ-FM Radio, Inc.,
expiring 2004.
14
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ ------------------------------------------------------------------
10.05.11.02+ Antenna/tower/studio lease between Pennsylvania Media Associates,
Inc. (WZZD-AM/WFIL-AM/Philadelphia, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable Living Trust
expiring 2004.
10.05.12+ Antenna/tower lease between Radio 1210, Inc. (KPRZ-AM/Olivenhain,
California) and The Atsinger Family Trust expiring in 2002.
10.05.13+++ Antenna/tower lease between Salem Media of Texas, Inc. and Atsinger
Family Trust/Epperson Family Limited Partnership (KSLR-AM/San
Antonio, Texas).
10.05.14+ Antenna/turner/studio leases between Salem Media Corporation
(KLTX-AM/Long Beach and Paramount, California) and Messrs.
Atsinger and Epperson expiring in 2002.
10.05.15+ Antenna/tower lease between Salem Media of Colorado, Inc.
(KNUS-AM/Denver-Boulder, Colorado) and Messrs. Atsinger and
Epperson expiring 2006.
10.05.16+++ Atenna/tower lease between Salem Media of Colorado, Inc. and
Atsinger Family Trust/Epperson Family Limited Partnership
(KRKS-AM/KBJD-AM/Denver, Colorado).
10.05.17.01+ Studio Lease between Salem Media of Oregon, Inc.
(KPDQ-AM/FM/Portland, Oregon) and Edward G. Atsinger III, Mona J.
Atsinger, Stuart W. Epperson, and Nancy K. Epperson expiring 2002.
10.05.17.02+ Antenna/tower lease between Salem Media of Oregon, Inc.
(KPDQ-AM/FM/Raleigh Hills, Oregon and Messrs. Atsinger and
Epperson expiring 2002.
10.05.18+ Antenna/tower lease between Salem Media of Pennsylvania, Inc.
(WORD-FM/WPIT-AM/Pittsburgh, Pennsylvania) and The Atsinger Family
Trust and Stuart W. Epperson Revocable Living Trust expiring 2003.
10.05.19+ Antenna/tower lease between Salem Media of Texas, Inc. (KSLR-AM/San
Antonio, Texas) and Epperson-Atsinger 1983 Family Trust expiring
2007.
10.05.20+ Antenna/tower lease between South Texas Broadcasting, Inc.
(KENR-AM/Houston-Galveston, Texas) and Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring 2005.
10.05.21+ Antenna/tower lease between Vista Broadcasting, Inc.
(KFIA-AM/Sacramento, California) and The Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring 2006.
10.05.22++ Antenna/tower lease between South Texas Broadcasting, Inc.
(KKHT-FM/Houston-Galveston, Texas) and Sonsinger Broadcasting
Company of Houston, LP expiring 2008.
10.05.23++ Antenna/tower lease between Inspiration Media of Texas, Inc.
(KTEK-AM/Alvin, Texas) and the Atsinger Family Trust and The
Stuart W. Epperson Revocable Living Trust expiring 2009.
10.06.05+ Asset Purchase Agreement dated as of September 30, 1996 by and
between Infinity Broadcasting Corporation of Dallas and
Inspiration Media of Texas, Inc. (KEWS, Arlington, Texas; KDFX,
Dallas, Texas).
10.06.07+ Asset Purchase Agreement dated June 2, 1997 by and between New
England Continental Media, Inc. and Hibernia Communications, Inc.
(WPZE-AM, Boston, Massachusetts).
10.06.08+ Option to Purchase dated as of August 18, 1997 by and between
Sonsinger, Inc. and Inspiration Media, Inc. (KKOL-AM, Seattle,
Washington).
10.06.09++ Asset Purchase Agreement dated as of April 13, 1998 by and between
New Inspiration Broadcasting Company and First Scientific Equity
Devices Trust (KIEV-AM, Glendale, California) (incorporated by
reference to Exhibit 2.01 of the previously filed Current Report
on Form 8-K).
10.06.10* Asset Purchase Agreement dated as of April 1, 1999 by and between
Inspiration Media, Inc. and Sonsinger, Inc. (KKOL-AM, Seattle,
Washington).
10.07.01+ Tower Purchase Agreement dated August 22, 1997 by and between Salem
and Sonsinger Broadcasting Company of Houston, L.P.
10.07.02+ Amendment to the Tower Purchase Agreement dated November 10, 1997 by
and between Salem and Sonsinger Broadcasting Company of Houston,
L.P.
15
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------------------------------------
10.07.03+ Promissory Note dated November 11, 1997 made by Sonsinger
Broadcasting Company of Houston, L.P. payable to Salem.
10.07.04+ Promissory Note dated December 24, 1997 made by Salem payable to
Edward G. Atsinger III.
10.07.05+ Promissory Note dated December 24, 1997 made by Salem payable to
Stuart W. Epperson.
10.08.01+++ Local Marketing Agreement dated August 13, 1999 between Concord
Media Group, Inc. and Radio 1210, Inc.
10.08.02+++ Asset Purchase Agreement dated as of August 18, 1999, by and
between Salem Media of Georgia, Inc. and Genesis Communications,
Inc. (WNIV-FM, Atlanta, Georgia and WLTA-FM, Alpharetta, Georgia).
10.08.03+++ Asset Purchase Agreement dated as of November 29, 1999, by and
among JW Broadcasting, Inc., Salem Media of Georgia, Inc. and Salem
Communications Corporation (WGKA-AM, Atlanta, Georgia).
10.08.04 Asset Exchange Agreement dated as of January 19, 2000 by and among
Bison Media, Inc.; AMFM Texas Broadcasting, LP and AMFM Texas
Licenses, LP (KSKY-AM, Balch Springs, TX; KPRZ-FM, Colorado
Springs, CO).
10.08.05 Asset Purchase Agreement dated as of March 6, 2000 by and among
Salem, Citicasters Co., AMFM Texas Broadcasting, LP; AMFM Texas
Licenses LP; AMFM Ohio, Inc.; AMFM Radio Licenses LLC; Capstar
Radio Operating Company and Capstar TX Limited Partnership
(WBOB-AM, KEZY-AM, KXMX-FM, KDGE-FM, WKNR-AM, WRMR-AM, KALC-FM,
WYGY-FM)
10.09.01+ Evidence of Key man life insurance policy no. 2256440M insuring
Edward G. Atsinger III in the face amount of $5,000,000.
10.09.02+ Evidence of Key man life insurance policy no. 2257474H insuring
Edward G. Atsinger III in the face amount of $5,000,000.
10.09.03+ Evidence of Key man life insurance policy no. 2257476B insuring
Stuart W. Epperson in the face amount of $5,000,000.
10.10* 1999 Stock Incentive Plan.
21.01+++ Subsidiaries of Salem.
27.01 Financial Data Schedule.
+ Incorporated by reference to the exhibit of the same number, unless
otherwise noted, of Salem's Registration Statement on Form S-4 (No.
333-41733), as amended, as declared effective by the Securities and
Exchange Commission on February 9, 1998.
*** Incorporated by reference to the exhibit of the same number, unless
otherwise noted, of Salem's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on September 4, 1998.
++ Incorporated by reference to the exhibit of the same number, unless
otherwise noted, of Salem's Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on March 31, 1999.
** Incorporated by reference to the exhibit of the same number, unless
otherwise noted, of Salem's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on April 14, 1999.
* Incorporated by reference to the exhibit of the same number to Salem's
Registration Statement on Form S-1 (No. 333-76649) as amended, as declared,
effective by the Securities and Exchange Commission on June 30, 1999.
+++ Incorporated by reference to the exhibit of the same number to Salem's
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on March 30, 2000.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 2000.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Salem
Communications Corporation has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: May 15, 20000 SALEM COMMUNICATIONS CORPORATION
By: /s/ EDWARD G. ATSINGER III
------------------------------------------------
Edward G. Atsinger III
President and Chief Executive Officer
Date: May 15, 2000
By: /s/ DIRK GASTALDO
------------------------------------------------
Dirk Gastaldo
Vice President and Chief Financial Officer
(Principal Financial Officer)
17
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
10.08.04 Asset Exchange Agreement dated as of January 19, 2000 by and among
Bison Media, Inc.; AMFM Texas Broadcasting, LP and AMFM Texas
Licenses, LP (KSKY-AM, Balch Springs, TX; KPRZ-FM, Colorado
Springs, CO).
10.08.05 Asset Purchase Agreement dated as of March 6, 2000 by and among
Salem, Citicasters Co., AMFM Texas Broadcasting, LP; AMFM Texas
Licenses LP; AMFM Ohio, Inc.; AMFM Radio Licenses LLC; Capstar
Radio Operating Company and Capstar TX Limited Partnership
(WBOB-AM, KEZY-AM, KXMX-FM, KDGE-FM, WKNR-AM, WRMR-AM, KALC-FM,
WYGY-FM)
27.01 Financial Data Schedule.
18