FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
An Ohio Corporation Employer Identification
No. 31-0978313
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Telephone (513) 621-1300
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 twelve
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days.
Yes X No
At May 10, 1994, 19,587,560 shares of common stock were
outstanding.
JACOR COMMUNICATIONS, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of March 31, 1994 and December 31,
1993 3
Condensed Consolidated Statements of
Operations for the three months ended
March 31, 1994 and 1993 4
Condensed Consolidated Statements of
Shareholders' Equity (Deficit) for the
three months ended March 31, 1994 and
1993 5
Condensed Consolidated Statements of
Cash Flows for the three months ended
March 31, 1994 and 1993 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 19
PART II. Other Information
Item 6. - Exhibits and Reports on Form 8-K 23
Signatures 24
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1994 1993
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 26,979,332 $ 28,617,599
Accounts receivable, less allowance for
doubtful accounts of $1,209,000 in 1994
and $1,082,000 in 1993 16,493,990 19,449,289
Other current assets 3,389,965 1,997,149
Total current assets 46,863,287 50,064,037
Property and equipment, net 23,087,994 23,072,887
Intangible assets, net 85,550,908 84,991,361
Other assets 5,730,481 1,780,244
Total assets $161,232,670 $159,908,529
LIABILITIES
Current liabilities:
Accounts payable $ 2,861,485 $ 2,011,460
Accrued payroll 1,211,346 3,218,239
Accrued interest 4,375
Accrued federal, state and
local income tax 1,805,486 2,025,485
Other current liabilities 4,366,427 4,145,722
Total current liabilities 10,244,744 11,405,281
Other liabilities 2,586,664 190,057
Deferred tax liability 7,918,000 7,900,000
Total liabilities 20,749,408 19,495,338
SHAREHOLDERS' EQUITY
Common stock, no par value, $.10 per share
stated value 1,954,993 1,949,982
Additional paid-in capital 136,919,939 136,634,368
Common stock warrants 390,329 390,397
Retained earnings 1,218,001 1,438,444
Total shareholders' equity 140,483,262 140,413,191
Total liabilities and
shareholders' equity $161,232,670 $159,908,529
The accompanying notes are an integral part
of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 1994 and 1993
(UNAUDITED)
1994 1993
Broadcast revenue $ 22,042,717 $ 16,898,228
Less agency commissions 2,260,688 1,815,394
Net revenue 19,782,029 15,082,834
Broadcast operating expenses 17,191,271 13,775,577
Depreciation and amortization 2,227,982 2,244,396
Corporate general and
administrative expenses 881,939 786,193
Operating loss (519,163) (1,723,332)
Interest expense (153,546) (1,128,265)
Other income, net 253,266 43,496
Loss before income taxes (419,443) (2,808,101)
Income tax benefit 199,000 1,741,000
Net loss $ (220,443) $(1,067,101)
Net loss per common share $ (0.01) $ (0.10)
Number of common shares used in per
share computations 19,528,320 10,221,111
The accompanying notes are an integral part
of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
for the three months ended March 31, 1994 and 1993
Common Stock Preferred Stock
Shares Stated Value Shares Par Value
- - -----------------------------------------------------------------------------
Balances,
December 31,
1992 428,015 $ 42,802 683,181 $ 68,318
To give effect
to the
Restructuring
and to the
application of
push-down
accounting 8,710,655 871,065 (683,181) (68,318)
- - ------------------------------------------------------------------------------
Balances,
January 1,
1993 9,138,670 913,867 -0- -0-
Issuance of
Common Stock 3,484,321 348,432
Retirement of
Treasury Stock (46,586) (4,659)
Net loss
- - ------------------------------------------------------------------------------
Balances,
March 31,
1993 12,576,405 $1,257,640 -0- $ -0-
==============================================================================
Balances,
December 31,
1993 19,499,812 $1,949,982 -0- $ -0-
Exercise of
Stock Options 49,670 4,967
Other 441 44
Net loss
- - ------------------------------------------------------------------------------
Balances,
March 31,
1994 19,549,923 $1,954,993 -0- $ -0-
==============================================================================
The accompanying notes are an integral part
of the condensed consolidated financial statements.
Additional Common
Paid-In Capital Stock
Common Preferred Warrants
- - ------------------------------------------------------------------------------
Balances,
December 31,
1992 $19,497,537 $ 5,263,929 $ 895,800
To give effect
to the
Restructuring
and to the
application of
push-down
accounting 36,994,455 (5,263,929) (492,995)
- - ------------------------------------------------------------------------------
Balances,
January 1,
1993 56,491,992 -0- 402,805
Issuance of
Common Stock 19,651,571
Retirement of
Treasury Stock (6,923,254)
Net loss
- - ------------------------------------------------------------------------------
Balances,
March 31,
1993 $69,220,309 $ -0- $ 402,805
==============================================================================
Balances,
December 31,
1993 $136,634,368 $ -0- $ 390,397
Exercise of
Stock Options 282,143
Other 3,428 (68)
Net loss
- - ------------------------------------------------------------------------------
Balances,
March 31,
1994 $136,919,939 $ -0- $ 390,329
==============================================================================
Retained
Earnings Treasury Stock
(Deficit) Shares Amount Total
- - ------------------------------------------------------------------------------
Balances,
December 31,
1992 $(69,680,819) 46,586 $(6,927,913) $(50,840,346)
To give effect
to the
Restructuring
and to the
application of
push-down
accounting 69,680,819 101,721,097
- - ------------------------------------------------------------------------------
Balances,
January 1,
1993 -0- 46,586 (6,927,913) 50,880,751
Issuance of
Common Stock 20,000,003
Retirement of
Treasury Stock (46,586) 6,927,913
Net loss (1,067,101) (1,067,101)
- - ------------------------------------------------------------------------------
Balances,
March 31,
1993 $ (1,067,101) -0- $ -0- $ 69,813,653
==============================================================================
Balances,
December 31,
1993 $ 1,438,444 -0- $ -0- $140,413,191
Exercise of
Stock Options 287,110
Other 3,404
Net loss (220,443) (220,443)
- - ------------------------------------------------------------------------------
Balances,
March 31,
1994 $ 1,218,001 -0- $ -0- $140,483,262
==============================================================================
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1994 and 1993
(UNAUDITED)
1994 1993
Cash flows from operating activities:
Net loss $ (220,443) $ (1,067,101)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation 628,264 523,169
Amortization of intangibles 1,599,718 1,688,416
Provision for losses on accounts
and notes receivable 255,869 212,030
Refinancing fees (1,993,999)
Increase in deferred tax liability 18,000
Other (212,103) (193,316)
Change in current assets and current
liabilities net of effects of
acquisitions:
Decrease in accounts receivable 3,415,682 2,485,832
Increase in other current assets (1,565,323) (1,787,801)
Increase (decrease) in accounts
payable 501,592 (521,923)
Decrease in accrued payroll,
accrued interest and other
current liabilities (2,039,399) (1,447,273)
Net cash provided (used) by operating
activities 2,381,857 (2,101,966)
Cash flows from investing activities:
Payment received on notes receivable 300,000
Capital expenditures (370,119) (313,204)
Cash paid for acquisitions (1,458,647) (2,000,000)
Loans originated and other (2,762,143) (94,601)
Net cash used by investing activities (4,290,909) (2,407,805)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 48,000,000
Proceeds from issuance of common stock 290,514 20,000,002
Collection of stock subscriptions receivable 5,740,000
Reduction in long-term debt (72,817,370)
Payment of restructuring expenses (19,729) (4,380,181)
Net cash provided (used) by financing
activities 270,785 (3,457,549)
Net decrease in cash and cash equivalents (1,638,267) (7,967,320)
Cash and cash equivalents at
beginning of period 28,617,599 12,429,574
Cash and cash equivalents at end of period $ 26,979,332 $ 4,462,254
The accompanying notes are an integral part
of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIE
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENTS
The financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Although 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,
the Company believes that the disclosures are adequate to make
the information presented not misleading and reflect all
adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair presentation of results of
operations for such periods. Results for interim periods
may not be indicative of results for the full year. It is
suggested that these financial statements be read in
conjunction with the consolidated financial statements for the
year ended December 31, 1993 and the notes thereto.
2. RESTRUCTURING AND CHANGE IN CONTROL
On January 11, 1993, the Company completed a recapitalization
plan that substantially modified its debt and capital
structure (the "Restructuring"). Such Restructuring was
accounted for as if it had been completed January 1, 1993.
The Restructuring consisted of the following five basic parts:
(1) An infusion of equity by Zell/Chilmark Fund L.P.
(hereinafter, "Zell/Chilmark") by way of a merger (the
"Merger") of a corporation wholly owned by Zell/Chilmark
with and into the Company, which resulted in an equity
restructuring of the Company, including:
(i) the conversion of every share of the Company's
common stock outstanding prior to the Merger into
0.0423618 shares of a new class of capital stock,
the Class A Common Stock (the "New Class A Common
Stock"), and warrants ("Warrants") to purchase
0.1611234 additional shares of a new class of non-
voting common stock, the Class B Common Stock (the
"New Class B Common Stock");
(ii) the conversion of every share of the Company's
preferred stock outstanding prior to the Merger,
together with any accumulated and unpaid dividends
thereon, into 0.2026505 shares of New Class B
Common Stock, and Warrants to purchase 0.7707796
shares of New Class B Common Stock;
(iii) the distribution of cash, at the rate of $5.74
per share and $0.20 per Warrant, in lieu of New
Common Stock and Warrants to those shareholders of
record who so elected, and to all holders in lieu
of any fractional shares of New Common Stock or
fractional Warrants; and
(iv) the issuance to Zell/Chilmark of 1,032,060
shares of New Class B Common Stock and 593,255
Warrants to purchase that number of shares of New
Class B Common Stock.
(2) A concurrent issuance of equity securities by the
Company in exchange for the cancellation of
approximately $81,500,000 of debt held by the Company's
senior lenders and various subordinated creditors;
(3) The sale to Zell/Chilmark of most of the equity
securities issued in exchange for such cancellation of
debt and Zell/Chilmark's reoffer of Warrants acquired by
Zell/Chilmark under the Restructuring to those senior
lenders who retained equity securities;
(4) The offering of rights (the "Rights") to (i)
Zell/Chilmark, (ii) the Company's creditors who retained
New Common Stock acquired in the Restructuring and (iii)
other holders of New Common Stock who were also
shareholders on November 27, 1992, to acquire in the
aggregate 1,000,000 shares of New Common Stock at a
price of $5.74 per share; and
(5) An increase in the authorized capital stock to
44,000,000 shares and the reservation of 1,519,218
shares of New Common Stock for issuance after the
Restructuring pursuant to a proposed new management
stock option plan ("Management Options").
As a result of the Company's restructuring and merger, the
Company's Amended and Restated Articles of Incorporation were
amended to (i) increase the authorized capital shares of the
Company to 44,000,000, (ii) authorize two classes of no par
value common stock, designated the "New Class A Common
Stock" and the "New Class B Common Stock", each with
20,000,000 shares authorized for the class, (collectively, the
"New Common Stock"), and (iii) create two classes of no par
value preferred stock, designated the "New Class A Preferred
Stock" and the "New Class B Preferred Stock", each with
2,000,000 shares authorized (collectively, the "New Preferred
Stock"). No New Preferred Stock has been issued.
Upon the grant by the Federal Communications Commission
("FCC") on April 23, 1993 of approval of a transfer of control
of the Company to Zell/Chilmark, the New Class B Common Stock
automatically converted into Class A Common Stock, the Class A
Common Stock was designated "Common Stock" and shares
formerly authorized as Class B Common Stock were added to
increase the authorized shares of such Common Stock to
40,000,000 shares.
The dilution to those who were shareholders prior to the
Restructuring and the resultant impact of the Restructuring on
the Company's common stock ownership are as follows:
Equity Distribution After Restructuring (1)
Common Stock
Received
Common Stock Pursuant to
Common Purchase the 1992
Shares Warrants Rights Percent
Received Received Offering Primary(2) Diluted(3)
Zell/Chilmark 7,288,931 657,668 983,344 91.44% 80.74%
Senior Creditors 402,431 -0- -0- 4.45% 3.64%
Other Creditors 10,000 30,710 -0- 0.11% 0.37%
Preferred Shareholders
prior to the
Restructuring 6,416 38,355 -0- 0.07% 0.40%
Common Shareholders
prior to the
Restructuring 338,505 1,287,501 16,656 3.93% 14.85%
8,046,283 2,014,234 1,000,000 100.00% 100.00%
[FN]
(1) Does not give effect to (a) the 3,484,321 shares of
Common Stock issued to Zell/Chilmark in March 1993 as
part of a refinancing; (b) the 964,006 shares of
Common Stock issued to Zell/Chilmark in July 1993 for
the purchase of radio station KAZY(FM); or (c) the
sale of 5,462,500 shares of Common Stock by the
Company in November 1993 through a public offering.
(2) Before exercise of Warrants and Management Options.
(3) After giving effect to the exercise of Warrants but
not Management Options.
3. BASIS OF PRESENTATION
The Company implemented the Restructuring described in Note
2 using the push-down method of accounting as if the
Restructuring was consummated on January 1, 1993. Push-down
accounting is a procedure whereby subsidiaries use their
parent companies' purchase accounting principles in preparing
their financial statements. In accordance with the push-down
method of accounting, the Company's net assets were restated
generally at current replacement value, the restructured debts
were stated at amounts supported by the underlying documents
and the accumulated deficit was adjusted to a zero balance.
Coincident with the implementation of the aforementioned push-
down accounting, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
Such change resulted in the establishment of a deferred income
tax liability of approximately $6,500,000.
A reconciliation of the Company's historical shareholders'
deficit as of December 31, 1992 with shareholders' equity at
January 1, 1993 as reflected in the accompanying Condensed
Consolidated Statement of Shareholders' Equity for the three
months ended March 31, 1993 is set forth below. Such
reconciliation gives effect to the Restructuring and to the
application of push-down accounting.
($000) (UNAUDITED)
Additional
Redeemable Paid-In
Common Convertible Capital, Additional Common
Dividends Stock Preferred Preferred Common Paid-In Stock
Transaction Payable Warrants Stock Stock Stock Capital Warrants
Balances,
December 31,
1992 $ 1,030 $ 487 $ 68 $ 5,264 $ 43 $ 19,497 $ 896
Adjustments:
Exchange of
redeemable
common stock
warrants for New
Common Stock (487) 2 485
Exchange of old
common stock
for New Common (43)
Stock 43
Issuance of New
Common Stock to
Zell/Chilmark 87 4,913
Issuance of New
Common Stock in
Rights Offering 100 5,640
Issuance of New
Common Stock
to creditors 665 37,499
Cancellation of
common stock
warrants 896 (896)
Additional
Redeemable Paid-In
Common Convertible Capital Additional Common
Dividends Stock Preferred Preferred Common Paid-In Stock
Transaction Payable Warrants Stock Stock Stock Capital Warrants
Issuance of New
Common Stock
to preferred
shareholders and
others and
other preferred
stock purchases (1,030) (68) (5,264) 17 6,202
Issuance of New
Common Stock
Warrants (387) 403*
Costs of issuance
of New Common
Stock and
Rights
Offering (1,125)
Forgiveness of
indebtedness
Equity effects of
push-down
accounting:
Adjustment of net
asset carrying
values 10,064
Restructuring
costs
Elimination of
accumulated
deficit (27,193)
Net adjustments (1,030) (487) (68) (5,264) 871 36,994 (493)
Balances,
January 1,
1993 $ 0 $ 0 $ 0 $ 0 $ 914 $ 56,491 $ 403
* Includes 79,275 Warrants at $0.20 each issued in connection with cancellation of
indebtedness.
Accumulated Treasury
Transaction Deficit Stock
Balances,
December 31,
1992 $ (69,681) $(6,928)
Pro Forma Adjustments:
Exchange of
redeemable
common stock
warrants for New
Common Stock
Exchange of current
old common stock
for New Common
Stock
Issuance of New
Common Stock
to Zell/Chilmark
Issuance of New
Common Stock in
Rights Offering
Issuance of New
Common Stock
to creditors
Cancellation of
common stock
warrants
ACCUMULATED TREASURY
TRANSACTION DEFICIT STOCK
Issuance of New
Common Stock
to preferred
shareholders and
others and
other preferred
stock purchases
Issuance of New
Common Stock
Warrants
Costs of issuance
of New Common
Stock and
Rights
Offering
Forgiveness of
indebtedness 47,031
Equity effects of
push-down
accounting:
Adjustment of net
asset carrying
values
Restructuring
costs (4,543)
Elimination of
accumulated
deficit 27,193
Net adjustments 69,681 0
Balances,
January 1,
1993 $ 0 $(6,928)
All common share and per share data included in the financial
statements and footnotes have been restated to reflect the
conversion of every share of the Company's common stock
outstanding prior to the Merger into 0.0423618 shares of new
common stock as discussed above. The conversion was
accounted for as a reverse stock split. The New Common Stock
was recorded at its stated value of $0.10 per share. The
difference between the stated value of common stock and the
New Common Stock was credited to additional paid-in capital,
common.
The basis for the application of push-down accounting is set
forth below. The financial statements only include the
resulting revaluations pursuant to Zell/Chilmark's 91.44%
ownership of the Company. There were no revaluations
recorded for the minority interest ownership of the Company.
The allocation of consideration given for the purchase of
91.44% of the Company by Zell/Chilmark is as follows:
8,272,276 Common Shares at
$5.74 per share $ 47,483,000
629,117 new common stock Warrants
at $0.20 per Warrant 126,000
New debt obligations 62,345,000
Assumption of certain current
liabilities 14,918,000
Assumption of other liabilities 6,130,000
$131,002,000
Current assets $ 33,146,000
Property and equipment 19,845,000
Intangible assets (primarily
FCC licenses) 76,577,000
Notes receivable and other assets 1,434,000
$131,002,000
4. PER SHARE DATA
Loss per common share is based on the weighted average
number of shares of common stock outstanding. The Company's
common stock equivalents were anti-dilutive and, therefore,
were not included in the computation.
5. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the condensed consolidated statements of
cash flows, the Company considers all highly liquid
investments with a maturity of three months or less, when
purchased, to be cash equivalents. There were no income
taxes paid during the three months ended March 31, 1994 and
1993. Interest paid was $125,000 (attributable to the
annual commitment fee payable quarterly on the credit
facility) and $1,324,829 for the three months ended March
31, 1994 and 1993, respectively. The effect of barter
transactions has been eliminated.
The condensed consolidated statement of cash flows for the
three months ended March 31, 1993 reflects the changes in
balance sheet accounts as of January 1, 1993, the date the
restructuring was recorded.
6. ACQUISITIONS
In March 1994, a subsidiary of the Company entered into an
agreement to acquire the assets of radio station WIMJ(FM) in
Cincinnati, Ohio for $9,500,000. The asset purchase is
subject to FCC approval and the satisfaction of certain
other conditions. Pending consummation of the transaction,
the Company's subsidiary has entered into a Local Marketing
Agreement which began April 7, 1994, and will expire on the
purchase date.
The acquisition of WIMJ(FM) is not expected to have a
material effect on the Company's operations.
7. DEBT AGREEMENTS
There was no debt outstanding at March 31, 1994 and December
31, 1993.
Following completion of the Restructuring in January 1993
(see Note 2), the Company refinanced its senior debt in
March 1993 (the "Refinancing") with a new group of lenders
under a new credit facility described below. With the
completion of the Refinancing, the Company's senior debt was
reduced from $69,000,000 to $45,000,000.
As part of this Refinancing, the Company raised $20,000,000
of additional equity from the issuance of 3,484,321 shares
of Common Stock at $5.74 per share through a private
placement to Zell/Chilmark. This $20,000,000, together with
available cash, funded the reduction of the Company's senior
debt.
With the Refinancing, the Company entered into a new Credit
Agreement (the "New Credit Agreement") in March 1993 with a
group of lenders agented by Banque Paribas, with The First
National Bank of Boston and Continental Bank N.A. acting as
co-agents. In November 1993 the Company entered into the
First Amendment to the New Credit Agreement (the "Amended
Credit Agreement"). The Amended Credit Agreement provides
for a senior secured reducing revolving credit facility with
a commitment of $45,000,000 that expires on December 31,
2000 (the "Revolver") and a senior secured acquisition
facility with a commitment of $55,000,000 that expires on
September 30, 1996 (the "Acquisition Facility"). Both
facilities are available for acquisitions permitted under
conditions set forth in the Amended Credit Agreement. The
indebtedness of the Company under the two facilities is
collateralized by liens on substantially all of the assets
of the Company and its operating subsidiaries and by a
pledge of the operating subsidiaries' stock, and is
guaranteed by those subsidiaries. The Amended Credit
Agreement requires quarterly reductions of the Revolver
commitments under the Amended Credit Agreement, and, under
certain circumstances, requires mandatory prepayments of any
outstanding loans and further commitment reductions under
the Amended Credit Agreement. The Amended Credit Agreement
contains restrictions pertaining to maintenance of financial
ratios, capital expenditures, payment of dividends on
distributions of capital stock and incurrence of additional
indebtedness.
Interest under the Amended Credit Agreement is payable, at
the option of the Company, at alternative rates equal to the
Eurodollar rate plus 1.25% to 2.25% or the base rate
announced by Banque Paribas plus 0.25% to 1.25%. The
spreads over the Eurodollar rate and such base rate vary
from time to time, depending upon the Company's financial
leverage. The Company will pay quarterly commitment fees
equal to 1/2% per annum on the aggregate unused portion of
the aggregate commitment on both facilities. The Company
also is required to pay certain other fees to the agent and
the lenders for the administration of the facilities and the
use of the Acquisition Facility.
In accordance with the terms of the New Credit Agreement,
the Company entered into an interest rate protection
agreement in March 1993 on the notional amount of
$22,500,000 for a three year term. This agreement provides
protection against the rise in the three-month LIBOR
interest rate beyond a level of 7.25%. The current three-
month LIBOR interest rate is 4.56%.
Unaudited pro forma results of operations, assuming the
Refinancing together with the Zell/Chilmark private
placement occurred on the first day of the period shown
below, are as follows (dollars in thousands, except per
share amounts):
For the Three Months Ended March 31, 1993
Historical Refinancing Total Pro
As Reported Adjustment Forma
Broadcast revenue $ 16,898 $ 16,898
Less agency commissions 1,815 1,815
Net revenue 15,083 15,083
Broadcast operating expenses 13,776 13,776
Depreciation and amortization 2,244 2,244
Corporate general and
administrative expenses 786 786
Operating loss (1,723) (1,723)
Interest expense (1,128) $ 565 (a) (563)
Other income, net 43 43
Loss before income tax (2,808) 565 (2,243)
Income tax benefit 1,741 226 (b) 1,515
Net loss $ (1,067) $ 339 $ (728)
Amount applicable to
loss per common
shares $ (1,067) $ (728)
Net loss per common
share $ (.10) $ (.06)
Number of common shares used
in per share calculation 10,221 2,356 (c) 12,577
Adjustments to the unaudited pro forma results of operations are
explained as follows:
(a) To reflect the elimination of the interest associated with
the restructuring debt facility and record the interest
associated with the new refinancing debt facility as
follows:
($000)
Three Months Ended
March 31, 1993
Restructuring debt
interest included
in historical
statements $ (1,128)
Interest on new
refinancing
debt facility
($45,000,000 x 5%) 563
Pro forma adjustment $ (565)
(b) To provide for the tax effect of pro forma adjustments using
an estimated statutory rate of 40%.
(c) To provide for the change in the weighted average
outstanding common shares.
8. RELATED PARTY TRANSACTIONS
In 1991, the Company sold the stock of its research
subsidiary, Critical Mass Media, Inc. ("CMM"), to Randy
Michaels, a then officer who has since become the current
president of the Company.
Effective January 1, 1994, a subsidiary of the Company and a
corporation wholly owned by Mr. Michaels formed a limited
partnership (the "Partnership") in a transaction whereby the
Partnership now owns all of the CMM stock and Mr. Michaels'
corporation owns a 95% limited partnership interest in the
Partnership. The Company's subsidiary obtained a 5% general
partnership interest in exchange for its contribution of
approximately $126,000 cash to the Partnership and is now
the sole manager of the Partnership's business.
In connection with the formation of the Partnership, the
Company agreed that Mr. Michaels' corporation has the right
between January 1, 1999 and January 1, 2000 to put its
limited partnership interest to the Partnership's general
partner in exchange for 300,000 shares of Common Stock. If
the put is not exercised by January 1, 2000, the general
partner has the right to call the limited partnership
interest prior to 2001 in exchange for 300,000 shares of
Common Stock. In addition, if certain events occur prior to
January 1, 1999 including without limitation, Mr. Michaels'
termination as President of the general partner, a reduction
of Mr. Michaels' annual base salary by more than 10%, or
generally any transaction by which any person or group other
than Zell/Chilmark shall become the owner of more than 30%
of the outstanding voting securities of the Company or
Zell/Chilmark fails to have its designees constitute at
least a majority of the members of the general partner's
Board of Directors, then Mr. Michaels' corporation will have
the right to either (a) purchase the Company's general
partnership interest at a price generally equal to the
balance of the partnership capital account, or (b) sell its
limited partnership interest to the general partner in
exchange for 300,000 shares of Common Stock.
The transaction has been accounted for as a purchase, and
the Partnership has been included in the condensed
consolidated financial statements.
9. INCOME TAXES
Income tax benefit for the three months ended March 31, 1994
and 1993 recognizes the tax benefit of the interim operating
loss based on the estimated annual effective tax rate
inclusive of federal, state and local taxes. The effective
income tax rate differs from the expected statutory rate
primarily due to the effect of certain state and local taxes
and non-deductible goodwill amortization.
10. CAPITAL STOCK
Warrants
During the three months ended March 31, 1994, 341 Warrants
were exercised.
Stock Options
During the three months ended March 31, 1994, 49,670 options
were exercised. In addition, options to purchase 10,000
shares were granted during the quarter ended March 31, 1994.
The options vest 30% per year for the first two years after
issuance and 20% per year for each of the next two years
thereafter. The exercise price of the options that vested
upon grant is $13.50 per share, and the options that
subsequently vest on each anniversary of the grant date have
an exercise price 4% greater than the options that vested in
the previous year. Once an option vests, the exercise price
for that option is fixed for the remaining term of the
option.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company began 1994 with no outstanding debt and $28.6 million
in cash and cash equivalents. The Company used the net proceeds
(approximately $60 million) from the public offering during the
fourth quarter of 1993 to repay all of its indebtedness and the
remaining net proceeds (in the form of cash and cash equivalents)
are available to finance acquisitions of radio groups and/or
radio stations and for general corporate purposes. In
conjunction with the public offering, the Company also entered
into the First Amendment to the Credit Agreement (the "Amended
Credit Agreement").
The Amended Credit Agreement provides for a senior secured
reducing revolving credit facility with a commitment of $45
million ($44.4 million at March 31, 1994 - see following
paragraph) that expires on December 31, 2000 (the "Revolver") and
a senior secured acquisition facility with a commitment of $55
million (the "Acquisition Facility") that expires on September
30, 1996. The Amended Credit Agreement contains restrictive
covenants, and the indebtedness thereunder is collateralized by
liens on substantially all of the assets of the Company and its
operating subsidiaries and by a pledge of the operating
subsidiaries' stock. The indebtedness under the Amended Credit
Agreement is guaranteed by those subsidiaries. Both facilities
may be used for acquisitions permitted under conditions set forth
in the Amended Credit Agreement. Interest under the Amended
Credit Agreement is payable, at the option of the Company, at
alternative rates equal to the Eurodollar rate plus 1.25% to
2.25% or the base rate announced by Banque Paribas plus 0.25% to
1.25%.
The Amended Credit Agreement requires that the commitment under
the Revolver be reduced in the quarter commencing January 1, 1994
(reduced by $0.6 million March 31, 1994), and continuing
quarterly thereafter. After the Acquisition Facility commitment
terminates on September 30, 1996, the Amended Credit Agreement
requires 17 equal quarterly amortization payments. The Amended
Credit Agreement further requires that, with certain exceptions,
the Company prepay the loans and reduce the commitments under the
Amended Credit Agreement with excess cash flow and the net
proceeds from certain sales of assets and capital stock.
The Company entered into an interest rate protection agreement in
March 1993 on a notional amount of $22.5 million for a three-year
term for a cost of $0.1 million. This agreement provided
protection against the rise in the three-month LIBOR interest
rate beyond a level of 7.25%. The current three-month LIBOR
interest rate is 4.56%.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
LIQUIDITY AND CAPITAL RESOURCES, Continued
During the quarter ended March 31, 1994, the Company, through its
subsidiaries, made acquisitions, loans and capital expenditures
of approximately $4.5 million. The Company expects to make
acquisitions, loans and capital expenditures in the range of
$31.0 million to $36.0 million for the year ended December 31,
1994.
In response to recent market conditions, the Company has been
authorized by its Board of Directors to purchase up to one
million shares of its common stock from time-to-time in open-
market or negotiated transactions.
Management believes that its existing cash balances, cash
generated from operations and the availability of borrowings
under the Amended Credit Agreement will be sufficient to meet its
liquidity and capital needs for the foreseeable future, under
existing market conditions.
CASH FLOW
Cash flows provided (used) by operating activities, inclusive of
working capital were $2.4 million and ($2.1) million for the
first three months of 1994 and 1993, respectively. The net cash
provided of $2.4 million for the first quarter of 1994 results
primarily from the add back of depreciation and amortization
expense to the net loss of $0.2 million. The use of cash in the
first quarter of 1993 was primarily due to $2.0 million paid in
refinancing fees. Cash flows used by investing activities were
($4.2) million and ($2.4) million for the first quarter of 1994
and 1993, respectively, as a result of payments made for
acquisitions, loans and capital expenditures. Cash flows used by
financing activities were ($3.5) million during the first quarter
of 1993 principally due to the refinancing of the Company's
senior debt plus the issuance of additional common stock and the
payment of restructuring expenses.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 1994 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1993
Broadcast revenue for the first quarter of 1994 was $22.0
million, an increase of $5.1 million or 30.4% from $16.9 million
during the first quarter of 1993. This increase resulted from an
increase in advertising rates in both local and national
advertising, an increase in revenue generated from sports
broadcasting and from the revenue generated at those properties
owned or operated during the 1994 first quarter but not during
the comparable 1993 period.
Agency commissions for the first quarter of 1994 were $2.3
million, an increase of $0.5 million or 24.5% from $1.8 million
during the first quarter of 1993 due to the increase in broadcast
revenue. Agency commissions increased at a lesser rate than
broadcast revenue due to a greater proportion of direct sales.
Broadcast operating expenses for the first quarter of 1994 were
$17.2 million, an increase of $3.4 million or 24.8% from $13.8
million during the first quarter of 1993. These expenses
increased as a result of an increase in broadcast rights' fees
for Major League Baseball games, expenses incurred at those
properties owned or operated during the 1994 first quarter but
not during the comparable 1993 period and, to a lesser extent,
increased selling and other payroll costs and programming costs.
Station operating income excluding depreciation and amortization
for the three months ended March 31, 1994 was $2.6 million, an
increase of $1.3 million or 98.2% from the $1.3 million for the
three months ended March 31, 1993.
Depreciation and amortization for the first quarter of 1994 and
1993 was $2.2 million.
Operating loss for the first quarter of 1994 was $0.5 million, a
decrease of $1.2 million from an operating loss of $1.7 million
during the first quarter of 1993.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 1994 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1993, Continued
Interest expense for the first quarter of 1994 was $0.2 million,
a decrease of $0.9 million or 86.4% from $1.1 million during the
first quarter of 1993. Interest expense declined due to the
reduction in outstanding debt.
Net loss for the first quarter of 1994 was $0.2 million, compared
to a net loss of $1.1 million reported by the Company for the
first quarter of 1993. The 1993 period includes a $1.7 million
tax benefit recognized on the interim operating loss based on the
estimated annual effective tax rate while the 1994 period only
includes a $0.2 million tax benefit. Excluding the effect of
this tax benefit in both periods, net loss for the first quarter
of 1994 improved $2.4 million over 1993.
OTHER
Although the Company has significant net operating loss
carryforwards for federal and other tax purposes, the Company's
ability to use such losses to reduce its taxable income is
severely limited because of the Restructuring. Further, as a
result of the Restructuring, the net operating loss carryforwards
and other tax attributes (including the tax basis in assets) will
be reduced or eliminated, except to the extent the Company is
permitted to apply the stock for debt exception provided under
section 108 of the Internal Revenue Code (the "Code"). As a
result of changes to the Code in 1993, the Company will be able
to amortize certain of its costs in the purchase of broadcasting
assets, particularly goodwill, on a more favorable basis than was
previously the case.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Number Description Page
11 Statement re computation of consolidated
income (loss) per common share 25
99 Press Release dated April 22, 1994 26
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(Registrant)
DATED: May 10, 1994 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income (Loss) Per Common Share
for the three months ended March 31, 1994 and 1993
1994 1993
Loss for primary diluted
computation:
Loss $ (220,443) $ (1,067,101)
Primary (1):
Weighted average common
shares and dilutive common
stock equivalents:
Common stock 19,528,320 10,221,111
Stock purchase warrants (2) (2)
Stock options (2) (2)
$19,528,320 10,221,111
Primary net loss per
common share $ (0.01) $ (0.10)
[FN]
NOTES:
1. Fully diluted loss per share is not presented since it
approximates primary loss per share.
2. The effect on primary and fully diluted loss per share of
outstanding common stock equivalents was antidilutive.
EXHIBIT 99
Contact: Chris Weber
513/621-1300
or
Kirk Brewer
312/466-4096
JACOR REPORTS SIGNIFICANT IMPROVEMENTS IN OPERATIONS;
BOARD AUTHORIZES SHARE REPURCHASE
CINCINNATI, April 22 - Jacor Communications, Inc. (NASDAQ-JCOR),
owner and operator of radio stations in six U.S. markets, today
reported a 98-percent increase in broadcast cash flow during the
quarter ended March 31, 1994.
Jacor's first-quarter broadcast cash flow rose to $2.6 million in
1994 from $1.3 million in the same quarter of 1993. First-
quarter net revenues rose 31 percent to $19.8 million from $15.1
million in the 1993 period.
On a "same station" basis - reflecting results from stations
operated in the first quarter of both 1994 and 1993 - Jacor's
broadcast cash flow rose 94 percent to $2.5 million for the first
quarter of 1994 from $1.3 million in the same period last year.
The company reported a net loss of ($0.2 million), or (1 cent)
per share, during the first three months of 1994. Results for
the same period last year reflected a net loss of ($1.1 million),
or (10 cents) per share.
Randy Michaels, Jacor president and co-chief operating officer,
said the improvements in Jacor's performance were the result of:
. Increases in local and national advertising at growth rates
greater than the radio industry as a whole
. An increase in revenue generated from generally good or
excellent ratings and advertising related to sports
broadcasting, and
. A reduction of interest expense due to having no outstanding
debt.
Michaels said, "We were able to carry the momentum of 1993 into
the first quarter of 1994. It's gratifying to see that Jacor was
able to turn in such strong results during the period. Since the
beginning of 1994, Jacor has continued its growth strategy
through a series of strategic acquisitions and affiliations."
Michaels identified the following developments as examples of
Jacor's success in expanding its market presence:
. Jacor has agreed to acquire WIMJ(FM) in Cincinnati and
currently operates that station in a new rock and roll
oldies format pursuant to a local marketing agreement.
. The company acquired the call letters WCKY and related
intellectual property which are now being broadcast by one
of Jacor's Cincinnati stations formerly known as WLWA(AM).
. Entered into joint sales agreements with stations WSAI(AM)
and WAQZ(FM) in Cincinnati.
. Entered into an asset purchase agreement for WWZZ(FM) in the
Knoxville market and began operating WWZZ under a local
marketing agreement.
. Acquired the intellectual property of KBPI(FM) in Denver and
has a pending application before the Federal Communications
Commission for the use of the call letters KBPI.
Michaels said these developments further concentrate Jacor's
strength as the rock and roll leader in Cincinnati and Denver and
as the AM radio leader in Cincinnati. The joint sales agreements
enhance Jacor's ability to further increase its share of the
available Cincinnati radio advertising dollars and provide
diverse format and advertising options for listeners and clients.
Michaels also said Jacor was disappointed that the Atlanta Braves
have announced Jacor's WGST(AM) and WGST(FM) will not be granted
the radio rights to broadcast Braves baseball following the
expiration of Jacor's current contract at the end of the 1994
baseball season.
Michaels said, "We believe the new contract awarded by the Braves
requires payment of the highest radio rights fees in the history
of baseball. We could not justify paying an amount that would be
unprofitable at these levels. We are aggressively developing
replacement programming, and we continue to develop WGST(FM)."
Jacor had the number one share of market revenues in Atlanta,
Denver and Cincinnati during the first quarter of 1994, and held
the number two spot in Tampa, Jacksonville and Knoxville.
Michaels also said Jacor's board of directors, in response to
recent market conditions, has authorized the company to purchase
up to 1 million shares of its own stock from time to time in
open-market or negotiated transactions.
Jacor Communications, Inc., headquartered in Cincinnati, is the
nation's ninth largest radio group. The company plans to pursue
growth through continued acquisitions of complementary stations
in its existing markets, and radio groups or individual stations
with significant presence in the top 25 markets.
Table follows.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 1994 and 1993
(UNAUDITED)
1994 1993
Broadcast revenue $ 22,042,717 $ 16,898,228
Less agency commissions 2,260,688 1,815,394
Net revenue 19,782,029 15,082,834
Broadcast operating expenses 17,191,271 13,775,577
Broadcast cash flow (1) 2,590,758 1,307,257
Depreciation and amortization 2,227,982 2,244,396
Corporate general and
administrative expenses 881,939 786,193
Operating loss (519,163) (1,723,332)
Interest expense (153,546) (1,128,265)
Other income, net 253,266 43,496
Loss before income taxes (419,443) (2,808,101)
Income tax benefit 199,000 1,741,000
Net loss $ (220,443) $(1,067,101)
Net loss per common share $ (0.01) $ (0.10)
Number of common shares used in per
share computations 19,528,320 10,221,111
[FN]
(1) Operating income before depreciation and amortization and corporate
general and administrative expenses.