EX-99 3 ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

Hoak Media, LLC and Subsidiaries

CONSOLIDATED BALANCE SHEETS

|  | March 31, 2014 |  |  | December 31, 2013 |
|  | (Unaudited) |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |
Cash |  | $ | 3,032,660 |  |  | $ | 3,778,402 |
Accounts receivable, net of allowance for doubtful accounts of $293,011 and $288,516 as of March 31, 2014 and December 31, 2013, respectively |  |  | 13,412,805 |  |  |  | 14,938,806 |
Prepaid expenses and other current assets |  |  | 367,989 |  |  |  | 440,173 |
Income tax receivable |  |  | 136,750 |  |  |  | 8,112 |
Deferred income taxes, net |  |  | 21,301 |  |  |  | 19,417 |
Assets of discontinued operations |  |  | 1,259,525 |  |  |  | 1,331,478 |
Total current assets |  |  | 18,231,030 |  |  |  | 20,516,388 |
PROPERTY AND EQUIPMENT, at cost |  |  |  |  |  |  |  |
Land |  |  | 3,259,972 |  |  |  | 3,259,972 |
Buildings and improvements |  |  | 11,026,273 |  |  |  | 10,966,461 |
Towers |  |  | 12,306,589 |  |  |  | 12,287,084 |
Transmitters and antennas |  |  | 18,865,556 |  |  |  | 18,776,438 |
Broadcast equipment |  |  | 31,382,110 |  |  |  | 30,672,148 |
Other |  |  | 5,185,986 |  |  |  | 5,168,169 |
|  |  | 82,026,486 |  |  |  | 81,130,272 |
Accumulated depreciation |  |  | (54,500,711 | ) |  |  | (53,202,042 | )
PROPERTY AND EQUIPMENT, net |  |  | 27,525,775 |  |  |  | 27,928,230 |
INTANGIBLE ASSETS, net |  |  | 116,355,341 |  |  |  | 116,412,583 |
GOODWILL |  |  | 37,826,986 |  |  |  | 37,826,986 |
ASSETS OF DISCONTINUED OPERATIONS |  |  | 3,835,380 |  |  |  | 3,835,380 |
OTHER NONCURRENT ASSETS, net |  |  | 2,275,488 |  |  |  | 2,386,638 |
Total assets |  | $ | 206,050,000 |  |  | $ | 208,906,205 |

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Hoak Media, LLC and Subsidiaries

CONSOLIDATED BALANCE SHEETS - CONTINUED

|  | March 31, 2014 |  |  | December 31, 2013 |
|  | (Unaudited) |  |  |  |  |
LIABILITIES AND MEMBERS’ EQUITY |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |
Accounts payable |  | $ | 499,188 |  |  | $ | 839,420 |
Accrued liabilities |  |  | 4,585,794 |  |  |  | 5,104,692 |
Deferred revenue |  |  | 132,782 |  |  |  | 811,752 |
Current portion of notes payable |  |  | 13,000,000 |  |  |  | 13,000,000 |
Accrued interest |  |  | 103,069 |  |  |  | 121,674 |
Accrued income taxes |  |  | 43,691 |  |  |  | - |
Liabilities of discontinued operations |  |  | 1,846,202 |  |  |  | 2,064,620 |
Total current liabilities |  |  | 20,210,726 |  |  |  | 21,942,158 |
NOTES PAYABLE, net of current portion |  |  | 131,169,441 |  |  |  | 136,946,294 |
DEFERRED INCOME TAXES, net |  |  | 14,951,097 |  |  |  | 15,011,373 |
LIABILITIES OF DISCONTINUED OPERATIONS |  |  | 6,379,321 |  |  |  | 6,379,321 |
Total liabilities |  |  | 172,710,585 |  |  |  | 180,279,146 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |  |  |
MEMBERS’ EQUITY |  |  |  |  |  |  |  |
Members’ interests |  |  | 40,247,186 |  |  |  | 35,539,054 |
Noncontrolling interest |  |  | (6,907,771 | ) |  |  | (6,911,995 | )
Total members’ equity |  |  | 33,339,415 |  |  |  | 28,627,059 |
Total liabilities and members’ equity |  | $ | 206,050,000 |  |  | $ | 208,906,205 |

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Hoak Media, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

|  | 2014 |  |  | 2013 |
|  | (Unaudited) |
Gross revenue |  |  |  |  |  |  |  |
Local and regional advertising |  | $ | 12,540,664 |  |  | $ | 12,348,730 |
National advertising |  |  | 3,383,951 |  |  |  | 3,415,643 |
Political advertising |  |  | 642,992 |  |  |  | 87,267 |
Barter and other revenue |  |  | 7,280,675 |  |  |  | 6,162,656 |
Gross revenue |  |  | 23,848,282 |  |  |  | 22,014,296 |
Commissions |  |  |  |  |  |  |  |
Agency commissions |  |  | 1,792,056 |  |  |  | 1,762,652 |
National representative commissions |  |  | 211,635 |  |  |  | 182,396 |
Total commissions |  |  | 2,003,691 |  |  |  | 1,945,048 |
Net revenue |  |  | 21,844,591 |  |  |  | 20,069,248 |
Operating expenses |  |  |  |  |  |  |  |
Program and production |  |  | 3,080,654 |  |  |  | 2,808,780 |
News |  |  | 2,353,443 |  |  |  | 2,137,578 |
Technical |  |  | 896,834 |  |  |  | 810,677 |
Sales and promotion |  |  | 2,048,169 |  |  |  | 1,999,315 |
General and administrative |  |  | 3,294,927 |  |  |  | 3,223,088 |
Depreciation and amortization |  |  | 1,355,930 |  |  |  | 1,531,576 |
Barter and other operating expenses |  |  | 705,760 |  |  |  | 713,344 |
Total operating expenses |  |  | 13,735,717 |  |  |  | 13,224,358 |
Operating income |  |  | 8,108,874 |  |  |  | 6,844,890 |
Interest expense, net |  |  | (1,697,175 | ) |  |  | (1,074,396 | )
Other income (expense), net |  |  | 2,590 |  |  |  | (21,271 | )
Income from continuing operations before income taxes |  |  | 6,414,289 |  |  |  | 5,749,223 |
Income tax expense |  |  | (152,893 | ) |  |  | (431,230 | )
Income from continuing operations |  |  | 6,261,396 |  |  |  | 5,317,993 |
Income from discontinued operations |  |  | 145,485 |  |  |  | 67,628 |
Net income |  |  | 6,406,881 |  |  |  | 5,385,621 |
Less: Net income (loss) attributable to noncontrolling interest |  |  | 42 |  |  |  | (23,042 | )
Net income attributable to Hoak Media, LLC |  | $ | 6,406,839 |  |  | $ | 5,408,663 |

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Hoak Media, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

|  | 2014 |  |  | 2013 |
|  | (Unaudited) |
Cash flows from operating activities |  |  |  |  |  |  |  |
Net income |  | $ | 6,406,881 |  |  | $ | 5,385,621 |
Net income from discontinued operations |  |  | (145,485 | ) |  |  | (67,628 | )
Net income from continuing operations |  |  | 6,261,396 |  |  |  | 5,317,993 |
Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,355,930 |  |  |  | 1,531,576 |
Bad debt expense |  |  | 28,895 |  |  |  | 12,215 |
(Excess) deficit of barter revenue over barter expense |  |  | (22,372 | ) |  |  | 6,851 |
Noncash compensation |  |  | 108,579 |  |  |  | 178,917 |
Loss (gain) on sale of assets |  |  | (2,621 | ) |  |  | 21,269 |
Amortization of deferred financing costs |  |  | 135,156 |  |  |  | 116,691 |
Deferred income taxes |  |  | (62,160 | ) |  |  | 79,880 |
Net changes in current assets and liabilities |  |  |  |  |  |  |  |
Accounts receivable, net |  |  | 1,519,478 |  |  |  | 239,488 |
Prepaid expenses and other current assets |  |  | 72,184 |  |  |  | (54,668 | )
Income tax receivable |  |  | (84,947 | ) |  |  | 1,350 |
Accounts payable |  |  | (341,222 | ) |  |  | (660,883 | )
Accrued liabilities |  |  | (537,493 | ) |  |  | (129,763 | )
Deferred revenue |  |  | (678,970 | ) |  |  | (680,039 | )
Net cash provided by operating activities, continuing operations |  |  | 7,751,833 |  |  |  | 5,980,877 |
Net cash (used in) operating activities, discontinued operations |  |  | (108,671 | ) |  |  | (81,756 | )
Net cash provided by operating activities |  |  | 7,643,162 |  |  |  | 5,899,121 |
Cash flows from investing activities |  |  |  |  |  |  |  |
Additions to property and equipment |  |  | (897,817 | ) |  |  | (1,142,849 | )
Proceeds from sale of assets |  |  | 4,205 |  |  |  | 7,208 |
Net cash used in investing activities, continuing operations |  |  | (893,612 | ) |  |  | (1,135,641 | )
Net cash provided by investing activities, discontinued operations |  |  | - |  |  |  | - |
Net cash used in investing activities |  |  | (893,612 | ) |  |  | (1,135,641 | )

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Hoak Media, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Three Months Ended March 31,

|  | 2014 |  |  | 2013 |
|  | (Unaudited) |
Cash flows from financing activities |  |  |  |  |  |  |  |
Distributions |  | $ | (1,803,104 | ) |  | $ | (2,973,391 | )
Deferred financing costs |  |  | (24,006 | ) |  |  | - |
Repayment of note payable |  |  | (5,776,853 | ) |  |  | (3,500,000 | )
Net cash used in financing activities, continuing operations |  |  | (7,603,963 | ) |  |  | (6,473,391 | )
Net cash provided by financing activities, discontinued operations |  |  | - |  |  |  | - |
Net cash used in financing activities |  |  | (7,603,963 | ) |  |  | (6,473,391 | )
Net decrease in cash |  |  | (854,413 | ) |  |  | (1,709,911 | )
Cash at beginning of year, continuing and discontinued operations |  |  | 3,985,861 |  |  |  | 4,107,980 |
Cash at end of year, continuing operations |  | $ | 3,032,660 |  |  | $ | 2,330,591 |
Cash at end of year, discontinued operations |  | $ | 98,788 |  |  | $ | 67,478 |
Supplemental cash flow information |  |  |  |  |  |  |  |
Interest paid |  | $ | 1,630,638 |  |  | $ | 976,114 |
Taxes paid |  | $ | 300,000 |  |  | $ | 350,000 |

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