10-Q/A 1 b40224a1e10-qa.txt LIN HOLDINGS CORP AND LIN TELEVISION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2001. [ ] 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: 333-54003-06 Commission File Number: 000-25206 ------------ --------- LIN HOLDINGS CORP. LIN TELEVISION CORPORATION ------------------ -------------------------- (Exact name of registrant (Exact name of registrant specified in its charter) as specified in its charter) DELAWARE DELAWARE -------- -------- (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) 75-2733097 13-3581627 ---------- ---------- (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 1 RICHMOND SQUARE, SUITE 230E, PROVIDENCE, RHODE ISLAND 02906 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (401) 454-2880 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrants (1) have filed all reports 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 the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. [X] Yes [ ] No NOTE: ----- 10-Q presents results for the two registrants rather than just the parent company on a fully consolidated basis. 1,000 Shares of LIN Holdings Corp.'s Common Stock, par value $.01 per share, and 1,000 shares of LIN Television Corporation's Common Stock, par value $.01 per share, were outstanding as of March 31, 2001. 2 LIN HOLDINGS CORP. AND LIN TELEVISION CORPORATION This Amendment on Form 10-Q/A is being filed to adjust the Consolidated Financial Statements of LIN Holdings Corp. and LIN Television Corporation (together, the "Company") for the quarter ended March 31, 2001. Adjustments to the Consolidated Financial Statements for the quarter ended March 31, 2001 have no impact on previously reported net revenues or net cash flows for the period. The amendment to the financial statements herein is being filed to record and disclose the marking-to-market of certain interest rate collar and cap arrangements, held by the Company to manage exposure to interest rate risks, under the guidance of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The impact on the Consolidated Statements of Operations and Consolidated Balance Sheets as a result of the above adjustment is to increase the reported Net Loss by $1.2 million and to increase Other Liabilities by $1.9 million and decrease Deferred Income taxes by $671,000. TABLE OF CONTENTS

3 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS LIN HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)

The accompanying notes are an integral part of the condensed consolidated financial statements. 2 4 LIN HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (Unaudited)

The accompanying notes are an integral part of the condensed consolidated financial statements. 3 5 LIN HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)

4 6 LIN HOLDINGS CORP. Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 1 - BASIS OF PRESENTATION: REVISION - The Company has revised its Consolidated Financial Statements for the quarter ended March 31, 2001 to record and disclose the marking-to-market of certain interest rate collar and cap arrangements, held by the Company to manage exposure to interest rate risks, under the guidance of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The impact on the Consolidated Statement of Operations and Consolidated Balance Sheet as a result of the above adjustment is to increase the reported Net Loss by $1.2 million and to increase Other Liabilities by $1.9 million and decrease Deferred Income taxes by $671,000. LIN Holdings Corp. ("LIN Holdings"), together with its subsidiaries, including LIN Television Corporation ("LIN Television") (together, the "Company"), is a television station group operator in the United States and Puerto Rico that owns ten television stations, nine of which are network-affiliated television stations. Additionally, the Company has local marketing agreements ("LMAs") under which it programs five other stations in the markets in which it operates. LIN Holdings and its subsidiaries are affiliates of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"). All of the Company's direct and indirect consolidated subsidiaries fully and unconditionally guarantee the Company's Senior Subordinated Notes on a joint and several basis. These condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These statements should be read in conjunction with the Company's annual report on Form 10-K for the fiscal year ended December 31, 2000. In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results of operations are not necessarily indicative of the results to be expected for the full year. The Company's preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Estimates are used when accounting for the collectability of accounts receivable and valuing intangible assets, deferred tax assets and net assets of businesses acquired. Actual results could differ from these estimates. NOTE 2 - BUSINESS COMBINATIONS: WAND-TV EXCHANGE: On April 1, 2000, the Company exchanged, with Block Communications Inc. (formerly Blade Communications Inc.), a 66.67% interest in certain assets of its television station WAND-TV, including its FCC license and network affiliation agreement, for substantially all of the assets and certain liabilities of WLFI-TV, Inc. Immediately after the WAND-TV exchange the Company and Blade Communications Inc. contributed their respective interests in the WAND-TV assets to a partnership, with the Company receiving a 33.33% interest in the partnership. WWLP-TV: On November 10, 2000, the Company acquired the broadcast license and operating assets of WWLP-TV, an NBC affiliate in Springfield, MA. The total purchase price for the acquisition was approximately $128.0 million, including direct costs of the acquisition. The acquisition was funded by borrowings under the Company's incremental term loan facility. Although the Company did not own or control the assets or FCC license of WWLP-TV prior to November 10, 2000, pursuant to Emerging Issues Task Force Topic D-14, "Transactions Involving Special Purpose Entities," WWLP Holdings, Inc., the parent of WWLP-TV, satisfied the definition of a special purpose entity, as a result of a $75 million guarantee of WWLP Holdings debt by the 5 7 LIN HOLDINGS CORP. Notes to Condensed Consolidated Financial Statements (unaudited) Company and other factors, and the Company was deemed to be the sponsor of WWLP Holdings. Accordingly, the financial results of operations of WWLP Holdings have been consolidated with those of the Company since March 31, 2000, when WWLP Holdings, Inc. acquired WWLP-TV from Benedek Broadcasting Corporation. UNAUDITED PRO FORMA RESULTS OF ACQUISITIONS. The following summarizes unaudited pro forma consolidated results of operations as if acquisitions and disposals in 2000 had taken place as of the beginning of the periods presented (in thousands): Three months Three months ended March 31, ended March 31, 2001 2000 (unaudited) (unaudited) --------------- --------------- Net revenues $ 58,028 $ 62,089 Operating income (loss) (1,378) 4,807 Net loss (21,775) (24,136) The pro forma data give effect to actual operating results prior to the acquisitions and disposals and adjustments to interest expense, amortization and income taxes. No effect has been given to cost reductions and operating synergies in this presentation. The pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place as of the beginning of the periods presented, nor are they necessarily indicative of the results of future operations. NOTE 3 - INVESTMENTS: JOINT VENTURE WITH NBC. The Company owns a 20.38% interest in a joint venture with NBC and accounts for its interest using the equity method, as the Company does not have a controlling interest. The following presents the summarized financial information of the joint venture (in thousands): Three months Three months ended March 31, ended March 31, 2001 2000 (unaudited) (unaudited) --------------- -------------- Net revenues $ 35,016 $ 37,250 Operating income 18,786 12,556 Net loss (5,576) (4,132) March 31, March 31, 2001 2000 (unaudited) (unaudited) --------------- -------------- Current assets $ 36,462 $ 14,158 Non-current assets 230,915 237,759 Current liabilities 17,579 1,087 Non-current liabilities 815,500 815,500 6 8 LIN HOLDINGS CORP. Notes to Condensed Consolidated Financial Statements (unaudited) INVESTMENT IN BANKS BROADCASTING, INC. The Company owns a 50.00% non-voting interest in Banks Broadcasting, Inc., a company formed in August 2000, and accounts for its interest using the equity method, as the Company does not have a controlling interest. The following presents the summarized financial information of Banks Broadcasting, Inc. (in thousands): Three months ended March 31, 2001 (unaudited) --------------- Net revenues $ 1,071 Operating loss (169) Net loss (346) March 31, 2001 (unaudited) -------------- Current assets $ 5,728 Non-current assets 21,332 Current liabilities 1,082 Non-current liabilities 189 INVESTMENT IN WAND (TV) PARTNERSHIP. The Company owns a 33.33% interest in WAND (TV) Partnership, a partnership formed in April 2000, and accounts for its interest using the equity method, as the Company does not have a controlling interest. The following presents the summarized financial information of WAND (TV) Partnership (in thousands): Three months ended March 31, 2001 (unaudited) --------------- Net revenues $ 1,582 Operating income 290 Net loss (163) March 31, 2001 (unaudited) -------------- Current assets $ 2,937 Non-current assets 34,756 Current liabilities 744 7 9 LIN HOLDINGS CORP. Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 4 - INTANGIBLE ASSETS: Intangible assets consisted of the following at (in thousands):

NOTE 5 - LONG-TERM DEBT: Long-term debt consisted of the following at (in thousands):

As of April 12, 2001, the lenders to the Senior Credit Facilities approved an amendment to allow the Company to borrow an additional $200.0 million for acquisitions or to make the $125.0 million redemption payment due in March 2003 on the LIN Holdings Corp. Senior Discount Notes, to increase the limit on Capital Expenditures from $30.0 million to $35.0 million and to change certain financial ratio requirements as follows:

NOTE 6 - RELATED PARTY TRANSACTIONS: MONITORING AND OVERSIGHT AGREEMENT. The Company is party to an agreement with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), an affiliate of the Company's ultimate parent, pursuant to which the Company agreed to pay Hicks Muse Partners an annual fee (payable 8 10 LIN HOLDINGS CORP. Notes to Condensed Consolidated Financial Statements (unaudited) quarterly) for oversight and monitoring services. The aggregate annual fee is adjustable, on a prospective basis, on January 1 of each calendar year to an amount equal to 1% of the budgeted consolidated annual earnings before interest, tax, depreciation and amortization ("EBITDA") of the Company for the then current fiscal year. Upon the acquisition by the Company of another entity or business, the fee is adjusted prospectively in the same manner using the pro forma consolidated annual EBITDA of the Company. In no event shall the annual fee be less than $1.0 million. Hicks Muse Partners is also entitled to reimbursement for any expenses incurred by it in connection with rendering services allocable to the Company. The fee for the three months ended March 31, 2001 and 2000 was $312,000 and $338,000, respectively. NOTE 7 - COMMITMENTS AND CONTINGENCIES: The Company currently and from time to time is involved in litigation incidental to the conduct of its business. In the opinion of the Company's management, none of such litigation as of March 31, 2001, is likely to have a material adverse effect on the financial position, results of operations, or cash flows of the Company. On November 7, 2000, the Company agreed to acquire from the Western New York Public Broadcasting Association certain assets of WNEQ-TV, previously a non-commercial independent broadcast television station located in Buffalo, New York. On January 29, 2001, the Company began operating WNEQ-TV under a LMA agreement and subsequently changed the station's call letters to WNLO-TV. The Company expects to close on the acquisition of WNLO-TV during 2001. The total purchase price is approximately $26.2 million, and will be funded by a combination of operating funds and additional term loans. The Company intends to account for the business combination under the purchase method of accounting. On January 3, 2001, the Company and STC Broadcasting, Inc., an entity in which Hicks Muse has a substantial economic interest, and its affiliates, Smith Acquisition Company, Smith Acquisition License Company and STC License Company, executed an Asset Purchase Agreement whereby the Company will acquire the FCC license and certain related assets of WNAC-TV, the Fox affiliate serving the Providence-New Bedford market. The total purchase price is approximately $2.5 million. After the Company acquires WNAC-TV, the station will be operated by STC Broadcasting, Inc. under an existing LMA agreement dated June 10, 1996. The transaction will be entirely financed through a Loan Agreement with STC Broadcasting, Inc. and the Company. The Company expects to close on the acquisition of WNAC-TV during 2001. The Company intends to account for the acquisition under the purchase method of accounting. On March 30, 2001, the Company exercised its option to acquire the FCC licenses of two of the Company's LMA stations, WCTX-TV and WOTV-TV. The Company expects to close on the acquisitions of WCTX-TV and WOTV-TV upon the regulatory approval of the Federal Communications Commission. The combined purchase price is approximately $7.3 million, of which $4.0 million has been pre-paid. The balance of $3.3 million will be funded by a combination of operating funds and additional term loans. NOTE 8 - DERIVATIVE INSTRUMENTS: Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"), as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and that changes in a derivative's fair value be recognized currently in earnings unless specific hedge criteria are met. The Company uses derivative instruments to manage exposures to interest rate risks. The Company's objective for holding derivatives is to minimize these risks using the most effective methods to eliminate or reduce the impact of these exposures. The Company uses interest rate collar and cap arrangements, not designated as hedging instruments under SFAS No. 133, in the notional amount of $160 million at March 31, 2001, to mitigate the impact of the variability in interest rates in connection with its variable rate senior credit facility. The aggregate fair value of the interest rate collar and cap arrangements at March 31, 2001 was a liability of $1.9 million. Interest expense for the three months ended March 31, 2001 includes a loss of $1.9 million from the marking-to-market of these derivative instruments. 9 11 LIN TELEVISION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except number of shares)

The accompanying notes are an integral part of the condensed consolidated financial statements. 10 12 LIN TELEVISION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements. 11 13 LIN TELEVISION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

12 14 LIN TELEVISION CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 1 - BASIS OF PRESENTATION: REVISION - The Company has revised its Consolidated Financial Statements for the quarter ended March 31, 2001 to record and disclose the marking-to-market of certain interest rate collar and cap arrangements, held by the Company to manage exposure to interest rate risks, under the guidance of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The impact on the Consolidated Statement of Operations and Consolidated Balance Sheet as a result of the above adjustment is to increase the reported Net Loss by $1.2 million and to increase Other Liabilities by $1.9 million and decrease Deferred Income taxes by $671,000. LIN Television Corporation, together with its subsidiaries (together, the "Company" or "LIN Television"), is a television station group operator in the United States and Puerto Rico that owns ten television stations, nine of which are network-affiliated television stations. Additionally, the Company has local marketing agreements ("LMAs") under which it programs five other stations in the markets in which it operates. LIN Television is an affiliate of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"). All of the Company's direct and indirect consolidated subsidiaries fully and unconditionally guarantee the Company's Senior Subordinated Notes on a joint and several basis. These condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These statements should be read in conjunction with the Company's annual report on Form 10-K for the fiscal year ended December 31, 2000. In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results of operations are not necessarily indicative of the results to be expected for the full year. The Company's preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Estimates are used when accounting for the collectability of accounts receivable and valuing intangible assets, deferred tax assets and net assets of businesses acquired. Actual results could differ from these estimates. NOTE 2 - BUSINESS COMBINATIONS: WAND-TV EXCHANGE: On April 1, 2000, the Company exchanged, with Block Communications Inc. (formerly Blade Communications Inc.), a 66.67% interest in certain assets of its television station WAND-TV, including its FCC license and network affiliation agreement, for substantially all of the assets and certain liabilities of WLFI-TV, Inc. Immediately after the WAND-TV exchange the Company and Blade Communications Inc. contributed their respective interests in the WAND-TV assets to a partnership, with the Company receiving a 33.33% interest in the partnership. WWLP-TV: On November 10, 2000, the Company acquired the broadcast license and operating assets of WWLP-TV, an NBC affiliate in Springfield, MA. The total purchase price for the acquisition was approximately $128.0 million, including direct costs of the acquisition. The acquisition was funded by borrowings under the Company's incremental term loan facility. Although the Company did not own or control the assets or FCC license of WWLP-TV prior to November 10, 2000, pursuant to Emerging Issues Task Force Topic D-14, "Transactions Involving Special Purpose Entities," WWLP Holdings, Inc., the parent of WWLP-TV, satisfied the definition of a special purpose entity, as a result of a $75 million guarantee of WWLP Holdings debt by the Company and other factors, and the Company was deemed to be the sponsor of WWLP Holdings. 13 15 LIN TELEVISION CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) Accordingly, the financial results of operations of WWLP Holdings have been consolidated with those of the Company since March 31, 2000, when WWLP Holdings, Inc. acquired WWLP-TV from Benedek Broadcasting Corporation. UNAUDITED PRO FORMA RESULTS OF ACQUISITIONS. The following summarizes unaudited pro forma consolidated results of operations as if acquisitions and disposals in 2000 had taken place as of the beginning of the periods presented (in thousands): Three months Three months ended March 31, ended March 31, 2001 2000 (unaudited) (unaudited) --------------- --------------- Net revenues $ 58,028 $ 62,089 Operating income (loss) (1,378) 4,807 Net loss (21,411) (24,136) The pro forma data give effect to actual operating results prior to the acquisitions and disposals and adjustments to interest expense, amortization and income taxes. No effect has been given to cost reductions and operating synergies in this presentation. The pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place as of the beginning of the periods presented, nor are they necessarily indicative of the results of future operations. NOTE 3 - INVESTMENTS: JOINT VENTURE WITH NBC. The Company owns a 20.38% interest in a joint venture with NBC and accounts for its interest using the equity method, as the Company does not have a controlling interest. The following presents the summarized financial information of the joint venture (in thousands): Three months Three months ended March 31, ended March 31, 2001 2000 (unaudited) (unaudited) --------------- -------------- Net revenues $ 35,016 $ 37,250 Operating income 18,786 12,556 Net loss (5,576) (4,132) March 31, March 31, 2001 2000 (unaudited) (unaudited) --------------- -------------- Current assets $ 36,462 $ 14,158 Non-current assets 230,915 237,759 Current liabilities 17,579 1,087 Non-current liabilities 815,500 815,500 INVESTMENT IN BANKS BROADCASTING, INC. The Company owns a 50.00% non-voting interest in Banks Broadcasting, Inc., a company formed in August 2000, and accounts for its interest using the equity method, as the Company does not have a controlling interest. The 14 16 LIN TELEVISION CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) following presents the summarized financial information of Banks Broadcasting, Inc. (in thousands): Three months ended March 31, 2001 (unaudited) --------------- Net revenues $ 1,071 Operating loss (169) Net loss (346) March 31, 2001 (unaudited) -------------- Current assets $ 5,728 Non-current assets 21,332 Current liabilities 1,082 Non-current liabilities 189 INVESTMENT IN WAND (TV) PARTNERSHIP. The Company owns a 33.33% interest in WAND (TV) Partnership, a partnership formed in April 2000, and accounts for its interest using the equity method, as the Company does not have a controlling interest. The following presents the summarized financial information of WAND (TV) Partnership (in thousands): Three months ended March 31, 2001 (unaudited) --------------- Net revenues $ 1,582 Operating income 290 Net loss (163) March 31, 2001 (unaudited) -------------- Current assets $ 2,937 Non-current assets 34,756 Current liabilities 744 NOTE 4 - INTANGIBLE ASSETS: Intangible assets consisted of the following at (in thousands):

15 17 LIN TELEVISION CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 5 - LONG-TERM DEBT: Long-term debt consisted of the following at (in thousands):

16 18 LIN TELEVISION CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 6 - RELATED PARTY TRANSACTIONS: MONITORING AND OVERSIGHT AGREEMENT. The Company is party to an agreement with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), an affiliate of the Company's ultimate parent, pursuant to which the Company agreed to pay Hicks Muse Partners an annual fee (payable quarterly) for oversight and monitoring services. The aggregate annual fee is adjustable, on a prospective basis, on January 1 of each calendar year to an amount equal to 1% of the budgeted consolidated annual earnings before interest, tax, depreciation and amortization ("EBITDA") of the Company for the then current fiscal year. Upon the acquisition by the Company of another entity or business, the fee is adjusted prospectively in the same manner using the pro forma consolidated annual EBITDA of the Company. In no event shall the annual fee be less than $1.0 million. Hicks Muse Partners is also entitled to reimbursement for any expenses incurred by it in connection with rendering services allocable to the Company. The fee for the three months ended March 31, 2001 and 2000 was $312,000 and $338,000, respectively. NOTE 7 - COMMITMENTS AND CONTINGENCIES: The Company currently and from time to time is involved in litigation incidental to the conduct of its business. In the opinion of the Company's management, none of such litigation as of March 31, 2001, is likely to have a material adverse effect on the financial position, results of operations, or cash flows of the Company. On November 7, 2000, the Company agreed to acquire from the Western New York Public Broadcasting Association certain assets of WNEQ-TV, previously a non-commercial independent broadcast television station located in Buffalo, New York. On January 29, 2001, the Company began operating WNEQ-TV under a LMA agreement and subsequently changed the station's call letters to WNLO-TV. The Company expects to close on the acquisition of WNLO-TV during 2001. The total purchase price is approximately $26.2 million, and will be funded by a combination of operating funds and additional term loans. The Company intends to account for the business combination under the purchase method of accounting. On January 3, 2001, the Company and STC Broadcasting, Inc., an entity in which Hicks Muse has a substantial economic interest, and its affiliates, Smith Acquisition Company, Smith Acquisition License Company and STC License Company, executed an Asset Purchase Agreement whereby the Company will acquire the FCC license and certain related assets of WNAC-TV, the Fox affiliate serving the Providence-New Bedford market. The total purchase price is approximately $2.5 million. After the Company acquires WNAC-TV, the station will be operated by STC Broadcasting, Inc. under an existing LMA agreement dated June 10, 1996. The transaction will be entirely financed through a Loan Agreement with STC Broadcasting, Inc. and the Company. The Company expects to close on the acquisition of WNAC-TV during 2001. The Company intends to account for the acquisition under the purchase method of accounting. On March 30, 2001, the Company exercised its option to acquire the FCC licenses of two of the Company's LMA stations, WCTX-TV and WOTV-TV. The Company expects to close on the acquisitions of WCTX-TV and WOTV-TV upon the regulatory approval of the Federal Communications Commission. The combined purchase price is approximately $7.3 million, of which $4.0 million has been pre-paid. The balance of $3.3 million will be funded by a combination of operating funds and additional term loans. NOTE 8 - DERIVATIVE INSTRUMENTS: Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"), as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and that changes in a derivative's fair value be recognized currently in earnings unless specific hedge criteria are met. The Company uses derivative instruments to manage exposures to interest rate risks. The Company's objective for holding derivatives is to minimize these risks using the most effective methods to eliminate or reduce the impact of these exposures. The Company uses interest rate collar and cap arrangements, not designated as hedging instruments under SFAS No. 133, in the notional amount of $160 million at March 31, 2001, to mitigate the impact of the variability in interest rates in connection with its variable rate senior credit facility. The aggregate fair value of the interest rate collar and cap arrangements at March 31, 2001 was a liability of $1.9 million. Interest expense for the three months ended March 31, 2001 includes a loss of $1.9 million from the marking-to-market of these derivative instruments. 17 19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FORWARD-LOOKING STATEMENTS DO NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. The words "anticipate," "believe," "expect," "plan," "intend," "estimate," "project," "foresee," "will," "could," "may" and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including those regarding the Company's financial position, business strategy, projected costs and objectives of management for future operations are forward-looking statements. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which this Quarterly Report on Form 10-Q is filed. These factors include, without limitation, the promulgation of the new FCC's broadcast ownership regulations and other regulatory changes, changes in advertising, demand, technological changes, acquisitions and dispositions, as well as other risks detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, including those set forth under the heading "Risks Associated with Business Activity" in Item I. The matters discussed in the "Risks Associated with Business Activities" below and other factors noted throughout this Quarterly Report on Form 10-Q are cautionary statements identifying factors with respect to any such forward-looking statements that could cause actual results to differ materially from those in such forward-looking statements. All forward-looking statements contained herein are expressly qualified in their entirety by such cautionary statements. The Company undertakes no obligation to update publicly forward-looking statements, whether as a result of new information, future events or otherwise. BUSINESS The Company is a television station group operator in the United States and Puerto Rico that owns ten television stations, nine of which are network-affiliated television stations. Additionally, the Company has local marketing agreements ("LMAs") under which it programs five other stations in the markets in which it operates. LIN Holdings and its subsidiaries are affiliates of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"). On January 3, 2001, the Company and STC Broadcasting, Inc., an entity in which Hicks Muse has a substantial economic interest, and its affiliates, Smith Acquisition Company, Smith Acquisition License Company and STC License Company, executed an Asset Purchase Agreement whereby the Company will acquire the FCC license and certain related assets of WNAC-TV, the Fox affiliate serving the Providence-New Bedford market. The total purchase price is approximately $2.5 million. After the Company acquires WNAC-TV, the station will be operated by STC Broadcasting, Inc. under an existing LMA agreement dated June 10, 1996. The transaction will be entirely financed through a Loan Agreement with STC Broadcasting, Inc. and the Company. The Company expects to close on the acquisition of WNAC-TV during 2001. The Company intends to account for the acquisition under the purchase method of accounting. 18 20 RESULTS OF OPERATIONS Set forth below are the significant factors that contributed to the operating results of the Company for the three months ended March 31, 2001 and 2000. The Company's results from operations from period to period are not directly comparable because of the impact of acquisitions and disposals, including the acquisitions of WWLP-TV and WLFI-TV in 2000, and the disposition of WAND-TV in 2000. Net revenues consist primarily of national and local airtime sales, net of sales adjustments and agency commissions, network compensation, Internet revenues, barter revenues, production revenues and rent income. Total net revenues for the three-month period ended March 31, 2001, decreased 2.1% to $58.0 million compared to net revenue of $59.3 million for the same period last year. The decrease was primarily due to the decrease in national and political advertising due to the campaign election cycle and a general decrease in demand for national advertising that began in the third quarter of 2000 and has continued into the second quarter of 2001, as well as the impact of the acquisitions of WLFI-TV and WWLP-TV partially offset by the dispositions of WAND-TV.

Direct operating expenses, consisting primarily of news, engineering, programming and music licensing costs, increased 9.2% to $19.7 million for the three-month period ended March 31, 2001 compared to direct operating expenses of $18.1 million for the same period last year. The increase is primarily due to the startup costs of the low power television stations in Grand Rapids, Michigan and the LMA in Buffalo, New York, and to the impact of the acquisitions of WLFI-TV and WWLP-TV partially offset by the disposition of WAND-TV. Selling, general and administrative expenses, consisting primarily of employee salaries, sales commissions and other employee benefit costs, advertising and promotional expenses, increased approximately 11.4% to $15.6 million for the three-month period ended March 31, 2001 compared to selling, general and administrative expenses of $14.0 million for the same period last year. The increase is primarily due to advertising costs associated with the network affiliation switch of WCTX-TV in New Haven, Connecticut, an increase in rating service contract costs for WIVB-TV in Buffalo, New York, the startup costs of the low power television stations in Grand Rapids, Michigan and the LMA in Buffalo, New York and to the impact of the acquisitions of WLFI-TV and WWLP-TV partially offset by the disposition of WAND-TV. 19 21 Corporate expenses, representing costs associated with the centralized management of the Company's stations, decreased 5.0% to $2.4 million for the three-month period ended March 31, 2001, compared to corporate expenses of $2.5 million for the same period last year. Amortization of program rights, representing costs associated with the acquisition of syndicated programming, features and specials increased 7.4% to $5.4 million for the three-month period ended March 31, 2001 compared to amortization of program rights of $5.0 million for the same period last year. The increase is primarily due to the impact of increased syndicated costs for WAPA-TV in Puerto Rico, and the acquisitions of WLFI-TV and WWLP-TV partially offset by the disposition of WAND-TV. Depreciation and amortization of intangible assets increased 5.9% to $16.3 million for the three-month period ended March 31, 2001, compared to depreciation and amortization of intangible assets of $15.4 million for the same period last year. The increase is primarily due to the increase in equipment and intangible assets associated with the acquisitions of WLFI-TV and WWLP-TV partially offset by the disposition of WAND-TV. OTHER EXPENSES Interest expense increased $4.5 million to $24.3 million for the three-month period ended March 31, 2001 compared to interest expense of $19.8 million for the same period last year. The increase is primarily the result of losses of $1.9 million on derivative instruments and increased borrowings associated with the acquisition of WWLP-TV on March 31, 2000. Interest expense for LIN Television Corporation increased $3.9 million to $17.5 million for the three-month period ended March 31, 2001, compared to interest expense of $13.6 million for the same period last year. The increase is primarily the result of losses of $1.9 million on derivative instruments and increased borrowings associated with the acquisition of WWLP-TV on March 31, 2000. The Company's provision from income taxes changed to a benefit of approximately $4.1 million for the three-month period ended March 31, 2001 compared to a provision of $7.1 million for the same period last year. These changes were primarily due to the disproportionate impact of non-deductible goodwill relative to the projected annual pretax net loss from period to period. LIN Television Corporation's benefit from income taxes changed to a provision of approximately $2.3 million for the three-month period ended March 31, 2001 compared to a benefit of approximately $8.2 million for the same period last year. These changes were primarily due to the disproportionate impact of non-deductible goodwill relative to the projected annual pretax net loss from period to period. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2001, the Company had cash and cash equivalents of $6.9 million and total debt of $994.5 million. Net cash used in operating activities for the three months ended March 31, 2001 was $834,000 compared to net cash provided by operating activities of $5.4 million for the same period last year. The decrease is primarily the result of decrease in national and political revenues and the increase in operating and interest expenses. Net cash provided by investing activities was $150,000 for the three months ended March 31, 2001, compared to net cash used in investing activities of $133.8 million for the same period last year. The change is primarily due to amounts paid related to the WWLP-TV transaction in the first quarter of 2000. 20 22 Net cash used in financing activities for the three months ended March 31, 2001 was $213,000 compared to net cash provided by financing activities of $121.8 million for the same period last year. The change in cash provided is primarily due to proceeds from a draw down of a credit facility in connection with the WWLP-TV transaction in the first quarter of 2000. In March 2001, the Company announced that, based on prevailing weakness in the national advertising category, it expects that pro forma net revenue for the first half of 2001 will decline compared to the same period last year. As of April 12, 2001, the lenders to the Senior Credit Facilities approved an amendment to allow the Company to borrow an additional $200.0 million for acquisitions or to make the $125.0 million redemption payment due in March 2003 on the LIN Holdings Corp. Senior Discount Notes, to increase the limit on Capital Expenditures from $30.0 million to $35.0 million and to change certain financial ratio requirements as follows:

Based on the current level of operations and anticipated future growth (both internally generated as well as through acquisitions), the Company believes that its cash flows from operations, together with available borrowings under its credit facilities, will be sufficient to meet its anticipated requirements for working capital, capital expenditures, interest payments and scheduled principal payments for at least the next twelve months. RISKS ASSOCIATED WITH BUSINESS ACTIVITIES POTENTIAL NEGATIVE CONSEQUENCES OF SUBSTANTIAL INDEBTEDNESS. As of March 31, 2001, LIN Holdings had approximately $995 million of consolidated indebtedness and approximately $444 million of consolidated stockholders' equity. LIN Television had approximately $725 million of consolidated indebtedness and approximately $675 million of consolidated stockholders' equity. The level of indebtedness of LIN Holdings and LIN Television could have several negative consequences to holders of the Senior Subordinated Notes and the Senior Discount Notes (collectively the "Notes"), including, but not limited to, the following: - a substantial portion of the Company's cash flow from operations will be dedicated to the payment of principal, premium (if any) and interest on their respective indebtedness, thereby reducing the funds available for operations, distributions to LIN Holdings for payments with respect to the Senior Discount Notes, future business opportunities and other purposes and increasing the vulnerability of LIN Holdings and LIN Television to adverse general economic and industry conditions; - the ability of the Company to obtain additional financing in the future may be limited; - all of the indebtedness in connection with the Credit Agreement as amended, a credit facility with Chase Manhattan Bank, as administrative agent, and the lenders named therein, that 21 23 establishes a $295 million term loan facility, a $50 million revolving facility, and a $387.5 million incremental term loan facility (collectively, "Senior Credit Facilities"), will be secured and is scheduled to become due prior to the time the principal payments on the Notes are scheduled to become due; - certain of the Company's borrowings (including, without limitation, amounts borrowed under the Senior Credit Facilities) will be at variable rates of interest, which will expose the Company to increases in interest rates; and - the mandatory principal redemption amount (expected to be $125 million as defined in the indenture governing the Senior Discount Notes) of the Senior Discount Notes will become due and payable in a lump sum on March 1, 2003. LIN Holdings' and LIN Television's respective abilities to make scheduled payments of the principal of, or to pay interest on, or to refinance their respective indebtedness will depend on the future performance of the Company and its subsidiaries, which to a certain extent will be subject to economic, financial, regulatory, competitive and other factors beyond the Company's control. Based upon the Company's current operations and anticipated growth, management believes that future cash flow from operations, together with the Company's available borrowings under the Senior Credit Facilities, will be adequate to meet LIN Holdings' and LIN Television's respective anticipated requirements for capital expenditures, interest payments and scheduled principal payments. There can be no assurance that the Company's business will continue to generate sufficient cash flow from operations in the future to service the Company's respective indebtedness and make necessary capital expenditures. If unable to do so, the Company may be required to refinance all or a portion of its respective indebtedness, including the Notes, or sell assets or to obtain additional financing. There can be no assurance that any such refinancing would be possible, that any assets could be sold (or, if sold, of the timing of such sales and the amount of proceeds realized therefrom) or that additional financing could be obtained. General Electric Capital Corporation ("GECC") provided debt financing for the NBC joint venture in the form of an $815.5 million 25-year non-amortizing senior secured note bearing an initial interest rate of 8.0% per annum. The Company expects that the interest payments on the GECC Note will be serviced solely by the cash flow of the NBC joint venture. The GECC Note is not an obligation of the Company and is recourse only to the NBC joint venture, LIN Television's equity interests therein and Ranger Equity Holdings B Corp. ("Ranger B"), pursuant to a guarantee. Ranger B is a wholly owned subsidiary of Ranger and is one of LIN Holdings' two corporate parents and the guarantor of the GECC Note. Ranger B owns 63% of LIN Holdings. If an event of default occurs under the GECC Note, and GECC is unable to collect all obligations owed to it after exhausting all commercially reasonable remedies against the NBC joint venture (including during the pendency of any bankruptcy involving the NBC joint venture), GECC may proceed against Ranger B, to collect any deficiency. If Ranger B does not otherwise satisfy its obligations under the guaranty, GECC could attempt to claim all or a portion of the common stock of LIN Holdings owned by Ranger B through an insolvency proceeding or otherwise. If such an event were to occur, GECC could obtain control of LIN Holdings and, as a result, LIN Television. RESTRICTIONS IMPOSED ON THE COMPANY BY TERMS OF INDEBTEDNESS. The credit agreement governing the Senior Credit Facilities and the indentures governing the Notes contain covenants that restrict LIN Holdings' and LIN Television's respective abilities to: - incur indebtedness; 22 24 - pay dividends; - create liens; - sell assets; - engage in certain mergers and acquisitions; and - refinance indebtedness. The credit agreement governing the Senior Credit Facilities requires LIN Television to maintain certain financial ratios. If LIN Holdings or LIN Television fails to comply with the various covenants contained in the credit agreement governing the Senior Credit Facilities or the indentures governing the Notes, as applicable, each of them would be in default and the maturity of substantially all of their respective long-term indebtedness could be accelerated. A default under either of the indentures would also constitute an event of default under the Senior Credit Facilities. If LIN Television were unable to repay amounts outstanding under the credit agreement, the lenders thereunder could proceed against the collateral granted to them to secure the indebtedness. If the amounts outstanding under the credit agreement were accelerated, there can be no assurance that the assets of LIN Television and its subsidiaries would be sufficient to repay the amount in full. The Notes and the Senior Credit Facilities impose certain restrictions on the Company's ability to make capital expenditures and limit the Company's ability to incur additional indebtedness. Such restrictions could limit the Company's ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business or acquisition opportunities. STRUCTURAL SUBORDINATION OF LIN HOLDINGS. LIN Holdings is a holding company, which conducts all of its operations through its subsidiaries and whose only material asset is the capital stock of LIN Television. Consequently, LIN Holdings depends on distributions from LIN Television to meet its debt service obligations. Because of the substantial leverage of LIN Television, and the dependence of LIN Holdings upon the operating performance of LIN Television to generate distributions to LIN Holdings, there can be no assurance that LIN Holdings will have adequate funds to fulfill its obligations in respect of the Senior Discount Notes when due. In addition, the credit agreement governing the Senior Credit Facilities, the indenture governing the Senior Subordinated Notes and applicable federal and state law impose restrictions on the payment of dividends and the making of loans by LIN Television to LIN Holdings. As a result of the foregoing restrictions, LIN Holdings may be unable to gain access to the cash flow or assets of LIN Television in amounts sufficient to pay the mandatory principal redemption amount when due on March 1, 2003, and cash interest on the Senior Discount Notes on and after March 1, 2003, the date on which cash interest thereon first becomes payable, and principal of the Senior Discount Notes when due. In such event, LIN Holdings may be required to: - refinance the Senior Discount Notes; - seek additional debt or equity financing; - cause LIN Television to refinance all or a portion of LIN Television's indebtedness with indebtedness containing covenants allowing LIN Holdings to gain access to LIN Television's cash flow or assets; - cause LIN Television to obtain modifications of the covenants restricting LIN Holdings' access to cash flow or assets of LIN Television contained in LIN 23 25 Television's financing documents (including, without limitation, the credit agreement and the indenture governing the Senior Subordinated Notes); or - pursue a combination of the foregoing actions. No assurance can be given that any of the foregoing measures could be accomplished. GROWTH THROUGH ACQUISITIONS; FUTURE CAPITAL REQUIREMENTS. The Company intends to pursue selective acquisitions of television stations with the goal of improving their operating performance by applying management's business strategy. Inherent in any future acquisitions are certain risks such as increasing leverage and debt service requirements and combining company cultures and facilities which could have a material adverse effect on the Company's operating results, particularly during the period immediately following such acquisitions. Additional debt or equity capital may be required to complete future acquisitions, and there can be no assurance the Company will be able to raise the required capital. Moreover, there can be no assurances that with respect to any acquired station, the Company will be able to successfully implement effective cost controls, increase advertising revenues or increase its audience share. DEPENDENCE ON CERTAIN EXTERNAL FACTORS. The Company's operating results are primarily dependent on advertising revenues which, in turn, depend on national and local economic conditions, coverage of political events and high profile sporting events (e.g., the Olympics, Super Bowl and NCAA Men's Basketball Tournament), the relative popularity of the Company's programming (which in many cases, is dependent on the relative popularity of the relevant network's programming), the demographic characteristics of the Company's markets, the activities of competitors and other factors which are outside the Company's control. The television industry is cyclical in nature, and the Company's revenues could be adversely affected by a future local, regional or national recession. RELIANCE ON SYNDICATED PROGRAMMING. One of the Company's most significant operating costs is syndicated programming. There can be no assurance that the Company will not be exposed in the future to increased syndicated programming costs which may adversely affect the Company's operating results. Acquisitions of program rights are often made two or three years in advance, making it difficult to accurately predict how a program will perform. In some instances, programs must be replaced before their costs have been fully amortized, resulting in write-offs that increase station operating costs. NON-RENEWAL OR TERMINATION OF AFFILIATION AGREEMENTS. The non-renewal or termination of a network affiliation agreement could have a material adverse effect on the Company's operations. Four of the Company's owned and operated stations are affiliated with CBS, four with NBC, and one with ABC. Each of these networks generally provides these stations with up to 22 hours of prime time programming per week. In return, the stations broadcast network-inserted commercials during such programming and receive cash network compensation. Although network affiliates generally have achieved higher ratings than unaffiliated independent stations in the same market, there can be no assurance as to the future success of each network's programming or the continuation of such programming. The Company's network affiliation agreements are subject to termination by such networks under certain circumstances. The Company believes that it enjoys a good relationship with each of CBS, NBC and ABC, as well as the other networks with which it has affiliation agreements. Certain of the networks with which the Company's stations are affiliated have required other broadcast groups, upon renewal of affiliation agreements, to reduce or eliminate network affiliation compensation and to accept other material modifications of existing affiliation agreements. However, there can be no assurance that such affiliation agreements will remain in 24 26 place or that each network will continue to provide programming or compensation to affiliates on the same basis as it currently provides programming or compensation. WCTX-TV, a station operated under a local marketing agreement ("LMA") in New Haven-Hartford, changed its network affiliation from the WB Network to the UPN Network effective January 2001. This change is not expected to have a material effect on the Company's revenues. COMPETITION FOR ADVERTISING REVENUES AND AUDIENCE RATINGS. The television broadcasting industry is a highly competitive business and is undergoing a period of consolidation and significant change. Many of the Company's current and potential competitors have greater financial, marketing, programming and broadcasting resources than the Company. Technological innovation and the resulting proliferation of programming alternatives, such as cable television, wireless cable, satellite-to-home distribution services, internet, pay-per-view and home video and entertainment systems, have fractionalized television viewing audiences and have subjected free over-the-air television broadcast stations to new types of competition. In addition, as a result of the Telecom Act, the legislative ban on telephone cable ownership has been repealed and telephone companies are now permitted to seek FCC approval to provide video services to homes under specified circumstances. Consequently, the Company may not be able to maintain or increase its current audience ratings or advertising revenues. POTENTIAL EFFECTS OF TELEVISION BROADCASTING REGULATION ON LICENSE RENEWALS AND OWNERSHIP. The broadcasting industry is subject to regulation by various governmental agencies. In particular, under the Communications Act, the FCC licenses television stations and extensively regulates their ownership and operation. The Company depends on its ability to hold television broadcast licenses from the FCC, which are ordinarily issued for maximum terms of eight years and are renewable. Although it is rare for the FCC to deny a license renewal application, there can be no assurance that the Company's television broadcasting licenses or the licenses owned by the owner-operators of the stations currently programmed by the Company under LMAs will be renewed or that if renewed the renewals will not include restrictive conditions or qualifications. DEPENDENCE ON KEY PERSONNEL. The Company believes that its success is dependent upon its ability to attract and retain skilled managers and other personnel, including its present officers and general managers. The loss of the services of Gary R. Chapman, the Chairman, President and Chief Executive Officer of LIN Holdings and LIN Television, could have a material adverse effect on the operations of the Company. Mr. Chapman's current employment agreement with LIN Television will automatically renew for an additional year on December 31, 2001 unless otherwise terminated by either party by notice 90 days prior to this date. 25 27 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates principally with respect with to its senior credit facility, which is priced based on certain variable interest rate alternatives. The Company uses derivative instruments to manage exposures to interest rate risks. The Company's objective for holding derivatives is to minimize these risks using the most effective methods to eliminate or reduce the impact of these exposures. The Company uses interest rate collar and cap arrangements, not designated as hedging instruments under SFAS No. 133, in the notional amount of $160 million at March 31, 2001, to mitigate the impact of the variability in interest rates in connection with its variable rate senior credit facility. The aggregate fair value of the interest rate collar and cap arrangements at March 31, 2001 was a liability of $1.9 million. Interest expense for the three months ended March 31, 2001 includes a loss of $1.9 million from the marking-to-market of these derivative instruments. 26 28 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company currently and from time to time is involved in litigation incidental to the conduct of its business. In the opinion of the Company's management, none of such litigation at March 31, 2001 is likely to have a material adverse effect on the Company's financial condition, results of operations or cash flows. 27 29 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrants have duly caused this report to be signed on each of their respective behalf by the undersigned thereunto duly authorized. LIN HOLDINGS CORP. LIN TELEVISION CORPORATION (Registrant) (Registrant) DATED: August 8, 2001 /s/ Peter E. Maloney ------------------------------------ Peter E. Maloney Vice President of Finance (Principal Financial and Accounting Officer.) 28

LIN HOLDINGS CORP 10-Q/A