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 June 30, 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 July 29, 1994, 19,588,789 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 June 30, 1994 and December 31,
1993 3
Condensed Consolidated Statements of
Operations for the three months and
six months ended June 30, 1994
and 1993 4
Condensed Consolidated Statements of
Shareholders' Equity (Deficit) for the
six months ended June 30, 1994 and
1993 5
Condensed Consolidated Statements of
Cash Flows for the six months ended
June 30, 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 4. - Submission of Matters to Vote of
Security Holders 25
Item 6. - Exhibits and Reports on Form 8-K 26
Signatures 27
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 22,402,017 $ 28,617,599
Accounts receivable, less allowance for
doubtful accounts of $1,338,000 in 1994
and $1,082,000 in 1993 24,275,463 19,449,289
Other current assets 3,453,701 1,997,149
Total current assets 50,131,181 50,064,037
Property and equipment, net 21,356,803 23,072,887
Intangible assets, net 90,757,773 84,991,361
Other assets 5,941,342 1,780,244
Total assets $168,187,099 $159,908,529
LIABILITIES
Current liabilities:
Accounts payable $ 3,362,857 $ 2,011,460
Accrued payroll 2,421,359 3,218,239
Accrued interest 4,375
Accrued federal, state and
local income tax 3,561,436 2,025,485
Other current liabilities 3,265,923 4,145,722
Total current liabilities 12,611,575 11,405,281
Other liabilities 3,976,353 190,057
Deferred tax liability 8,513,744 7,900,000
Total liabilities 25,101,672 19,495,338
SHAREHOLDERS' EQUITY
Common stock, no par value, $.10 per share
stated value 1,958,876 1,949,982
Additional paid-in capital 137,144,001 136,634,368
Common stock warrants 390,290 390,397
Retained earnings 3,592,260 1,438,444
Total shareholders' equity 143,085,427 140,413,191
Total liabilities and
shareholders' equity $168,187,099 $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 and six months ended June 30, 1994 and 1993
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
Broadcast revenue $33,588,971 $27,703,851 $55,631,688 $44,602,079
Less agency commissions 3,578,752 3,007,585 5,839,440 4,822,979
Net revenue 30,010,219 24,696,266 49,792,248 39,779,100
Broadcast operating expenses 22,231,623 18,772,175 39,422,894 32,547,752
Depreciation and amortization 2,487,786 2,442,032 4,715,768 4,686,428
Corporate general and
administrative expenses 926,298 920,858 1,808,237 1,707,051
Operating income 4,364,512 2,561,201 3,845,349 837,869
Interest expense (136,928) (617,795) (290,474) (1,746,060)
Other income, net 257,675 48,126 510,941 91,622
Income (loss) before
income taxes 4,485,259 1,991,532 4,065,816 (816,569)
Income tax (expense) benefit (2,111,000) (1,255,800) (1,912,000) 485,200
Net income (loss) $ 2,374,259 $ 735,732 $ 2,153,816 $ (331,369)
Net income (loss) per
common share $ .11 $ .05 $ .10 $ (.03)
Number of common shares used
in per share computations 21,371,111 13,748,758 21,475,091 11,253,673
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 six months ended June 30, 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)
Issuance of
Common Stock-
1993 Rights
Offering 345,476 34,548
Issuance of
Common Stock-
Directors
subscription 80,000 8,000
Exercise of
Warrants 614 61
Net loss
- - ------------------------------------------------------------------------------
Balances,
June 30,
1993 13,002,495 $1,300,249 -0- -0-
==============================================================================
Balances,
December 31,
1993 19,499,812 $1,949,982 -0- $ -0-
Exercise of
Stock Options 88,310 8,831
Other 635 63
Net income
- - ------------------------------------------------------------------------------
Balances,
June 30,
1994 19,588,757 $1,958,876 -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)
Issuance of
Common Stock-
1993 Rights
Offering 1,703,542
Issuance of
Common Stock-
Directors
subscription 451,200
Exercise of
Warrants 5,158 (123)
Net loss
- - ------------------------------------------------------------------------------
Balances,
June 30,
1993 $71,380,209 $ -0- $ 402,682
==============================================================================
Balances,
December 31,
1993 $136,634,368 $ -0- $ 390,397
Exercise of
Stock Options 498,068
Other 11,565 (107)
Net income
- - ------------------------------------------------------------------------------
Balances,
June 30,
1994 $137,144,001 $ -0- $ 390,290
==============================================================================
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
Issuance of
Common Stock-
1993 Rights
Offering 1,738,090
Issuance of
Common Stock-
Directors
subscription 459,200
Exercise of
Warrants 5,096
Net loss (331,369) (331,369) --
- - ----------------------------------------------------------------------------
Balances,
June 30,
1993 $ (331,369) -0- $ -0- $ 72,751,771
==============================================================================
Balances,
December 31,
1993 $ 1,438,444 -0- $ -0- $140,413,191
Exercise of
Stock Options 506,899
Other 11,521
Net income 2,153,816 2,153,816
- - ------------------------------------------------------------------------------
Balances,
June 30,
1994 $ 3,592,260 -0- $ -0- $143,085,427
==============================================================================
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1994 and 1993
(UNAUDITED)
1994 1993
Cash flows from operating activities:
Net income (loss) $ 2,153,816 $ (331,369)
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation 1,238,623 1,057,265
Amortization of intangibles 3,477,145 3,563,541
Provision for losses on accounts
and notes receivable 512,388 418,498
Decrease in deferred tax liability (251,300)
Refinancing fees (1,994,801)
Other (339,840) (192,240)
Change in current assets and current
liabilities net of effects of
acquisitions and disposals:
Increase in accounts receivable (4,516,464) (4,909,959)
Increase (decrease) in other
current assets (736,559) 887,392
Increase (decrease) in accounts
payable 995,141 (106,241)
Increase (decrease) in accrued
payroll, accrued interest
and other current liabilities 308,060 (637,391)
Net cash provided (used) by operating
activities 2,841,010 (2,245,305)
Cash flows from investing activities:
Payments received on notes receivable 950,000 12,500
Capital expenditures (866,429) (846,331)
Cash paid for acquisitions (7,688,038) (3,691,020)
Net proceeds from the sale of assets 1,919,189
Loans originated and other (3,870,005) (21,969)
Net cash used by investing activities (9,555,283) (4,546,820)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 48,000,000
Proceeds from issuance of common stock 518,420 20,119,856
Collection of stock subscriptions receivable 5,740,000
Reduction in long-term debt (73,386,692)
Payment of restructuring expenses (19,729) (4,890,930)
Net cash provided (used) by financing
activities 498,691 (4,417,766)
Net decrease in cash and cash equivalents (6,215,582) (11,209,891)
Cash and cash equivalents at
beginning of period 28,617,599 12,429,574
Cash and cash equivalents at end of period $ 22,402,017 $ 1,219,683
The accompanying notes are an integral part
of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
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 six
months ended June 30, 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
[FN]
* 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
Income per share for the six months ended June 30, 1994 and
for the three months ended June 30, 1994 and 1993 is based
on the weighted average number of common shares outstanding
and gives effect to both dilutive stock options and dilutive
stock purchase warrants during the period. Fully diluted
earnings per share is not presented since it approximates
primary earnings per share. The loss per common share for
the six-month period ended June 30, 1993 is based on the
weighted average number of shares of common stock
outstanding. The Company's common stock equivalents were
anti-dilutive for this period 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. Income taxes aggregating
$773,300 were paid during the six months ended June 30,
1994. There were no income taxes paid during the six months
ended June 30, 1993. Interest paid was $255,000
(attributable to the annual commitment fee payable quarterly
on the credit facility) and $2,027,000 for the six months
ended June 30, 1994 and 1993, respectively. The effect of
barter transactions has been eliminated.
The condensed consolidated statement of cash flows for the
six months ended June 30, 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 June 30, 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 4.81%.
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 Six Months Ended June 30, 1993
Historical Refinancing Total Pro
As Reported Adjustment Forma
Broadcast revenue $ 44,602 $ 44,602
Less agency commissions 4,823 4,823
Net revenue 39,779 39,779
Broadcast operating expenses 32,548 32,548
Depreciation and amortization 4,686 4,686
Corporate general and
administrative expenses 1,707 1,707
Operating income 838 838
Interest expense (1,746) $ 621 (a) (1,125)
Other income, net 92 92
Loss before income tax (816) 621 (195)
Income tax (expense)
benefit 485 (248)(b) 237
Net income (loss) $ (331) $ 373 $ 42
Net income (loss)
per common share $ (.03) $ .00
Number of common shares used
in per share calculation 11,254 1,323 (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:
Restructuring debt
interest included
in historical
statements $ (1,746)
Interest on new
refinancing
debt facility
($45,000,000 x 5%) 1,125
Pro forma adjustment $ (621)
(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 expense for the six months ended June 30, 1994
and for the three months ended June 30, 1994 and 1993 is
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.
Income tax benefit for the six months ended June 30, 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 six months ended June 30, 1994, 538 warrants were
exercised.
Stock Options
During the six months ended June 30, 1994, 88,310 options
were exercised. In addition, options to purchase 10,000
shares were granted during this same period. 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 ($43.9 million at June 30, 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 $1.1 million as of June 30, 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 4.81%.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
LIQUIDITY AND CAPITAL RESOURCES, Continued
During the six months ended June 30, 1994, the Company, through
its subsidiaries, made acquisitions, loans and capital
expenditures of approximately $12.1 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.
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. As of June
30, 1994 the Company had not acquired any shares under this
authorization.
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 $2.8 million and ($2.2) million for the
first six months of 1994 and 1993, respectively. The net cash
provided of $2.8 million for the first six months of 1994 results
primarily from the net income of $2.2 million generated during
that period. The use of cash in the first six months of 1993 was
primarily due to $2.0 million paid in refinancing fees. Cash
flows used by investing activities were ($9.6) million and ($4.5)
million for the first six months of 1994 and 1993, respectively,
as a result of payments made for acquisitions, loans and capital
expenditures. The 1994 amount is net of $2.8 million of payments
received on notes and from the sale of assets. Cash flows used
by financing activities were ($4.4) million during the first six
months of 1993 principally due to the refinancing of the
Company's senior debt net of 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 SIX MONTHS ENDED JUNE 30, 1994 COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1993
Broadcast revenue for the first six months of 1994 was $55.6
million, an increase of $11.0 million or 24.7% from $44.6 million
during the first six months 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 first six months of 1994 but not
during the comparable 1993 period. On a "same station" basis -
reflecting results from stations operated in the first six months
of both 1994 and 1993 - broadcast revenue for the 1994 period was
$52.0 million, an increase of $8.1 million or 18.5% from $43.9
million for the 1993 period.
Agency commissions for the first six months of 1994 were $5.8
million, an increase of $1.0 million or 21.1% from $4.8 million
during the first six months 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 six months of 1994
were $39.4 million, an increase of $6.9 million or 21.1% from
$32.5 million during the first six months 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 first six months
of 1994 but not during the comparable 1993 period and, to a
lesser extent, increased selling and other payroll costs and
programming costs. On a "same station" basis, broadcast
operating expenses for the 1994 period were $35.7 million, an
increase of $3.8 million or 11.9% from $32.0 million for the 1993
period.
Station operating income excluding depreciation and amortization
for the six months ended June 30, 1994 was $10.4 million, an
increase of $3.2 million or 43.4% from $7.2 million for the six
months ended June 30, 1993. On a "same station" basis, station
operating income excluding depreciation and amortization for the
1994 period was $10.5 million, an increase of $3.4 million or
48.2% from $7.1 million for the 1993 period.
Depreciation and amortization for the first six months of 1994
and 1993 was $4.7 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
RESULTS OF OPERATIONS
THE SIX MONTHS ENDED JUNE 30, 1994 COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 1993, Continued
Operating income for the first six months of 1994 was $3.8
million, an increase of $3.0 million or 458.9% from an operating
income of $0.8 million during the first six months of 1993.
Interest expense for the first six months of 1994 was $0.3
million, a decrease of $1.4 million or 83.4% from $1.7 million
during the first six months of 1993. Interest expense declined
due to the reduction in outstanding debt.
Net income for the first six months of 1994 was $2.4 million,
compared to a net loss of $0.3 million reported by the Company
for the first six months of 1993. The 1993 period includes a
$0.5 million tax benefit recognized on the interim operating loss
based on the estimated annual effective tax rate while the 1994
period includes a $1.9 million tax expense.
THE THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1993
Broadcast revenue for the second quarter of 1994 was $33.6
million, an increase of $5.9 million or 21.2% from $27.7 million
during the second 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 second quarter but not during
the comparable 1993 period. On a "same station" basis -
reflecting results from stations operated in the second quarter
of both 1994 and 1993 - broadcast revenue for the 1994 period was
$31.6 million, an increase of $4.2 million or 15.5% from $27.3
million for the 1993 period.
Agency commissions for the second quarter of 1994 were $3.6
million, an increase of $0.6 million or 19.0% from $3.0 million
during the second 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1993, Continued
Broadcast operating expenses for the second quarter of 1994 were
$22.4 million, an increase of $3.6 million or 18.4% from $18.8
million during the second 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 second quarter but
not during the comparable 1993 period and, to a lesser extent,
increased selling and other payroll costs and programming costs.
On a "same station" basis, broadcast operating expenses for the
1994 period were $20.0 million, an increase of $1.5 million or
8.1% from $18.5 million for the 1993 period.
Station operating income excluding depreciation and amortization
for the three months ended June 30, 1994 was $7.8 million, an
increase of $1.9 million or 31.3% from the $5.9 million for the
three months ended June 30, 1993. On a "same station" basis,
station operating income excluding depreciation and amortization
for the 1994 period was $8.1 million, an increase of $2.2 million
or 38.4% from $5.9 million for the 1993 period.
Depreciation and amortization for the second quarter of 1994 and
1993 was $2.5 million and $2.4 million, respectively.
Operating income for the second quarter of 1994 was $4.4 million,
an increase of $1.8 million or 70.4% from operating income of
$2.6 million during the second quarter of 1993.
Interest expense for the second quarter of 1994 was $0.1 million,
a decrease of $0.5 million or 77.8% from $0.6 million during the
second quarter of 1993. Interest expense declined due to the
reduction in outstanding debt.
Net income for the second quarter of 1994 was $2.4 million,
compared to net income of $0.7 million reported by the Company
for the second quarter of 1993. The 1993 period includes income
tax expense of $1.3 million while the 1994 period includes $2.1
million of income tax expense. The income tax expense for each
period is based on the estimated annual effective tax rate.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
RESULTS OF OPERATIONS
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 4. Submission of Matters to Vote of Security Holders
The Annual Meeting of Shareholders was held on May 18, 1994. At
such meeting the shareholders were asked to vote upon (1) a
proposed amendment to the Company's Amended and Restated Articles
of Incorporation and (2) a proposed amendment to the Company's
Amended and Restated Code of Regulations.
The specific matters voted upon and the results of the voting
were as follows:
(1) The proposal to amend the Company's Amended and Restated
Articles of Incorporation to increase the number of
authorized shares of common stock of the Company from
40,000,000 to 100,000,000:
Shares Voted "FOR" 16,746,936 (85.5%)
Shares Voted "AGAINST" 430,536
Shares "ABSTAINING" 2,334
(2) The proposal to amend the Company's Amended and Restated
Code of Regulations to increase the maximum allowable number
of Directors of the Company from nine (9) to fifteen (15).
Shares Voted "FOR" 16,396,041 (85.5%)
Shares Voted "AGAINST" 782,159
Shares "ABSTAINING" 1,606
Each proposal received more than the requisite two-thirds
approval of the Company's outstanding shares of common stock and
was thereby adopted. The amendment to the Company's Amended and
Restated Code of Regulations was effective immediately upon
shareholder approval. The amendment to the Company's Amended and
Restated Articles of Incorporation will be effective upon filing
a certificate of amendment with the Ohio Secretary of State.
That filing will be made when the Company identifies a specific
use for the additional authorized shares.
The Company's shareholders also re-elected the eight incumbent
Directors of the Company to serve for an additional one year term
expiring at the 1995 Annual Meeting of Shareholders.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION, Continued
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Number Description Page
3 Amended and Restated Code of Regulations
of the Company (as last amended
May 18, 1994) 28
11 Statement re computation of consolidated
income (loss) per common share 39
99 Press Release dated July 28, 1994 40
(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: July 29, 1994 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
EXHIBIT 3
AMENDED AND RESTATED
CODE OF REGULATIONS
OF
JACOR COMMUNICATIONS, INC.
(As last amended May 18, 1994)
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the
Shareholders of this corporation shall be held at any time within
five months after the close of the fiscal year of the
corporation.
Section 2. Special Meetings. Special meetings of the
Shareholders may be called at any time by the Chairman of the
Board, the President, a majority of the Board of Directors acting
with or without a meeting, or the holder or holders of ten
percent of all shares outstanding and entitled to vote thereat.
Calls for special meetings shall specify the time, place and
object or objects thereof, and, unless all Shareholders entitled
to vote thereat agree otherwise, no business other than that
specified in the call therefor shall be considered at any such
meeting.
Section 3. Place of Meetings. Annual and special meetings
of Shareholders shall be held at the principal office of the
corporation in the City of Cincinnati, Ohio, or at any other
reasonably convenient location, either within or without the
State of Ohio, to be designated by the Board of Directors.
Section 4. Notice of Meetings. Unless waived, a written
notice of each annual or special meeting of the Shareholders,
stating the date, the hour, the place, and the purpose or
purposes thereof, shall be served upon or mailed to each
Shareholder of record entitled to vote at such meetings not more
than sixty days nor less than ten days before any such meeting.
If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address
as the same appears on the books of the corporation.
All notices with respect to any shares of record in the name
of two or more persons may be given to that person who is named
first on the books of the corporation, with such notice being
effective as to all the holders of record of such shares.
Every person who by operation of law, transfer, or otherwise
shall become entitled to any share or right or interest therein,
shall be bound by every notice with respect to such share which,
prior to his name and address being entered upon the books of the
corporation as the registered holder of such share, may have been
given to the person in whose name such share appeared of record.
Section 5. Waiver of Notice. Any Shareholder entitled to
notice, either before or after any meeting, may waive any notice
required to be given by law or under these Regulations, and
whenever all of the Shareholders entitled to vote shall meet in
person or by proxy and consent in writing to the holding of a
meeting, such meeting shall be valid for all purposes without
call or notice, and at such meeting any action may be taken.
Section 6. Quorum. The presence, at any Shareholders'
meeting, in person or by proxy, of holders of record of a
majority of the amount of the authorized, issued, and outstanding
stock entitled to vote thereat shall be necessary to constitute a
quorum.
Section 7. Proxies. Any Shareholder entitled to vote at a
meeting of the Shareholders may be represented and voted thereat
by proxy, appointed by an instrument in writing, subscribed by
the Shareholder, or by his duly authorized attorney, and
submitted to the Secretary at or before such meeting.
Section 8. Voting. At all meetings of the Shareholders,
only such persons shall be entitled to vote as are:
(a) Authorized to vote and who appear as Shareholders
upon the books of the corporation for ten days
prior to such meeting; or
(b) Authorized to vote in accordance with the proxy
provisions of Article I, Section 7.
Section 9. Order of Business. At all Shareholders'
meetings, the order of business shall be as follows:
(a) Call to order by the President.
(b) Presentation of proof of due calling of the
meeting, the certificate of the Secretary or the
affidavit of the person who mailed the notice
being conclusive proof of service in that mode.
(c) Execution of any and all waivers of notice.
(d) Presentation and examination of proxies.
(e) Reading and settlement of the minutes of the
previous meeting.
(f) Reports of Officers and Committees.
(g) If the annual meeting, or a meeting called for
that purpose, the election of Directors.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
This order may be changed by the affirmative vote of the majority
of the Shareholders present.
Section 10. Action Without Meeting. Any action which may
be taken at any meeting of Shareholders may be taken without a
meeting if authorized by a writing signed by all of the holders
of shares who would be entitled to notice of a meeting held for
such purpose.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number of Directors. The number of Directors
shall be five (5) unless changed as provided in this paragraph.
The number of Directors may be increased from time to time by the
Board of Directors to a maximum of fifteen (15) and decreased
from time to time to a minimum of five (5) without further
amendment of these regulations upon the adoption of a resolution
offered for that purpose at any regular or special meeting of the
Board of Directors pursuant to the vote of a majority of
Directors in office at the time of the meeting. In addition, the
Board of Directors may, pursuant to the vote of a majority of the
Directors in office at the time of the meeting, fill any
Director's position that is created by an increase in the number
of Directors. No reduction in the number of Directors shall have
the effect of removing from office any Director prior to the
expiration of his term in office.
Section 2. Election of Directors. Except as provided in
Article II, Section 1, the election of the Directors shall be
held at the annual meeting of the Shareholders, or at a special
meeting called for that purpose. At each and every election of
Directors, each holder of common shares entitled to vote shall
have the right to vote either in person or by proxy the number of
common shares owned by him for as many persons as there are
Directors to be elected, or, may cumulate his common shares and
give one candidate as many votes as are equal to the product of
the number of Directors to be elected multiplied by the number of
shares of his common stock, or distribute them on the same
principle among as many candidates as he thinks fit.
Section 3. Term of Office. Except as provided in Article
II, Section 1, Directors shall hold office until the next annual
Shareholders' meeting succeeding their election and until their
successors are elected and qualified.
Section 4. Compensation. The Board of Directors, by the
affirmative vote of a majority of the Directors then in office,
and irrespective of any personal interest of any of its members,
shall have authority to establish reasonable compensation of all
Directors for services to the corporation as Directors, officers,
or otherwise, and to establish a fixed sum for expenses of
attendance at each meeting, regular or special.
Section 5. Vacancies. Any vacancy in the Board of
Directors resulting from death, resignation, removal or
disqualification, may be filled by a majority vote of the
remaining Directors, and each person so elected shall be Director
until his successor is elected by the Shareholders. A
resignation from the Board of Directors shall be deemed to take
effect upon its receipt by the Secretary unless some other time
is specified therein.
Section 6. Removal. All the Directors, or all the
Directors of a particular class, or any individual Director may
be removed from office, without assigning any cause, by the vote
of the holders of record of two-thirds of the amount of
authorized, issued, and outstanding stock which is entitled to
elect the Director of that class, provided that no individual
Director shall be removed by an amount which would be unable to
prevent his election to the Board, pursuant to the cumulative
voting rights in Article II, Section 2.
Section 7. Meetings.
(a) Annual Meetings. An annual meeting of the
Directors of this corporation shall be held immediately following
the adjournment of each annual Shareholders' meeting if all of
the Directors can be duly notified for such meeting. If the
annual meeting is not so held, it shall be held at a time within
the next thirty days. If held thereafter, however, the validity
of such meeting shall not be questioned by reason of the late
holding thereof.
(b) Special Meetings. Special meetings of the Board
of Directors may be called by the President. Upon written
request to the President by at least two Directors, the President
shall call a meeting at the time requested by said Directors. In
all cases, however, not less than seven nor more than thirty days
notice of the special meeting must be given to all Directors.
(c) Place of Meetings. All meetings of the Board of
Directors shall be held at the principal office of the
corporation in the City of Cincinnati, Ohio, or at such other
reasonably convenient location, either within or without the
State of Ohio, as the Board may designate from time to time and
as may be specified in the notice thereof.
(d) Notice of Meetings. Written notice of an annual
or special meeting of the Board of Directors shall be served upon
or mailed by registered or certified mail, return receipt
requested, to each Director by the Secretary at least seven days
prior to such meeting. If mailed, notice is given when deposited
in the United States mail, and it shall be addressed to each
Director at his respective residence or usual place of business.
Every such notice shall state the time and place of the meeting,
but need not state the purposes thereof. Notice of any meeting
of the Board need not be given to any Director, however, if
waived by him in writing, whether before or after such meeting be
held, or if he shall be present at such meeting, and any meeting
of the Board shall be a valid meeting for all purposes without
notice thereof having been given if all Directors shall be
present thereat.
(e) Quorum. The presence of a majority of all
Directors in office at the time of the meeting shall be necessary
to constitute a quorum at that meeting.
Section 8. Duties and Authority.
(a) General Powers. It shall be the duty of the
Directors, acting as a Board, to exercise general supervision
over the affairs of the corporation, to fix, define, and limit
the powers and duties of all officers, to direct and advise all
officers, to cause financial reports to be prepared, and to
declare dividends and order the same paid at such times as they
may determine, and as the net earnings and conditions of the
business warrant. All such actions shall require approval of a
majority of the Directors then in office.
Any business dealing of any nature for which said
majority approval is not obtained shall be the individual
responsibility of the particular officer or Director, and the
corporation, its Shareholders, other officers and/or Directors
shall be in no way responsible to the violating officer and/or
Director, or to third parties for any liability arising out of
that business dealing.
When approval of the Board of Directors has been
given to a particular transaction or undertaking, the Board of
Directors may then delegate to officers, employees, or agents the
authority to complete such transaction or undertaking.
(b) Inspection of Books. The Board of Directors
shall, subject to the laws of the state of incorporation,
determine the conditions and regulations under which books and
accounts of this corporation, or any of them, shall be open to
the inspection of the Shareholders of this corporation.
(c) Election of Officers. At the annual meeting of
the Board of Directors in each year, and at any special meetings
held for that purpose, the Board of Directors shall elect
officers of the corporation by a majority vote of the Directors
then in office and designate and appoint such subordinate
officers and employees as it shall determine.
(d) Executive Committee. The Board of Directors, by
resolution adopted by a majority of the Directors then in office,
may designate three or more Directors to constitute an executive
committee, which committee, to the extent provided in such
resolution, shall have and may exercise all of the authority of
the Board of Directors in the management of the corporation,
provided such committee shall not have the authority of the Board
of Directors in reference to amending the articles of
incorporation, adopting a plan of merger or adopting a plan of
consolidation with another corporation or corporations,
recommending to the Shareholders the sale, lease, exchange,
mortgage, pledge, or other disposition of all or substantially
all of the property and assets of the corporation if not made in
the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the
regulations of the corporation, electing or removing officers of
the corporation or members of the executive committee, fixing the
compensation of any member of the executive committee, declaring
dividends or amending, altering, or repealing any resolution of
the Board of Directors which by its terms provides that is shall
not be amended, altered, or repealed by the executive committee.
The designation of such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed upon it or him
by law.
(e) Other Committees. The Board of Directors, by
resolution adopted by a majority of the Directors then in office,
may designate other committees consisting of not less than two
Directors, except as otherwise required by law. Committees
consisting of two Directors will not have the authority of the
Board of Directors, but may make recommendations to the Board of
Directors and may exercise such powers as shall be conferred or
authorized by resolution of the Board. A majority of any such
committee may determine its action and fix the time and place of
its meetings unless the Board of Directors shall otherwise
provide. The Board of Directors, by such affirmative vote, shall
have power at any time to change the powers and members of any
such committees, to fill vacancies, and to dispose of any such
committee.
ARTICLE III
OFFICERS
Section 1. Composition. The officers of this corporation
shall be a President, a Secretary, and a Treasurer. The
corporation may also have a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers and such other officers and assistant
officers as the Board of Directors may determine. The President
and Chairman of the Board shall be chosen from among the members
of the Board of Directors.
Section 2. Term of Office. The officers shall hold office
for the term of one year and until their successors are elected
and qualified; provided, however, that the officers elected at
the first meeting of the first Board of Directors shall hold
office until the next annual election of officers, as provided by
these Regulations.
Any officer may be removed with or without cause upon
the two-thirds vote of the Directors then in office, unless
contrary to the terms of an employment contract.
A vacancy in any office, however created, shall be
filled by the Board of Directors.
Any two or more offices may be held by the same person.
Section 3. Duties.
(a) Chairman of the Board. The Chairman of the Board,
if one be elected, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may be
prescribed by the Board of Directors.
(b) President. The President shall be an active
executive officer of the corporation and shall perform such
duties as shall be designated from time to time by the Board of
Directors. In any event he shall preside at all meetings of the
Shareholders and, in the absence of, or if a Chairman of the
Board shall not have been elected, shall also preside at meetings
of the Board of Directors. He shall have authority to sign all
certificates for shares. He shall have authority to sign all
deeds, mortgages, bonds, contracts, notes and other instruments
requiring his signature if:
(i) at the express direction of the Board of
Directors and
(ii) with the countersignature of the Secretary,
or of any other officer expressly authorized
to do so.
He shall further have all the powers and duties prescribed by the
General Corporation Law and such others as the Board of Directors
may, from time to time, assign to him.
(c) Vice President. The Vice President, if one be
elected, shall perform such duties as are conferred upon him by
these Regulations, or as may from time to time be assigned to him
by the Board of Directors. At the request of the President, or
in his absence or disability, the Vice President, designated by
the President (or in the absence of such designation, the Vice
President designated by the Board), shall perform all the duties
of the President, and when so acting, shall have all the powers
of the President. The authority of the Vice President to sign in
the name of the corporation all certificates for shares and
authorized deeds, mortgages, bonds, contracts, notes and other
instruments shall be coordinated with like authority of the
President.
(d) Secretary. The Secretary shall keep the minutes
of all proceedings of the Board of Directors and of the
Shareholders and make a proper record of the same, which shall be
attested by him. He shall give notice of meetings of
Shareholders and Directors. He shall keep such books as may be
required by the Board of Directors, shall take charge of the seal
and stock book of the corporation, and shall issue and attest all
certificates of stock. He shall have authority to sign all
deeds, mortgages, bonds, contracts, notes and other instruments
requiring his signature if:
(i) at the express direction of the Board of
Directors and
(ii) with the countersignature of the President,
or of any other officer expressly authorized
to do so.
He shall further have all the powers and duties prescribed by the
General Corporation Law and such others as the Board of Directors
may, from time to time, assign to him.
(e) Treasurer. The Treasurer shall have the custody
of the funds and securities of the corporation which may come
into his hands and shall do with the same as may be ordered by
the Board of Directors. When necessary or proper, he may endorse
for collection on behalf of the corporation checks, notes, and
other similar obligations. All corporate funds disbursed shall
be by check and must be signed by the President or Treasurer of
the corporation. The Treasurer shall deposit the funds of the
corporation to its credit in such banks and depositories as the
Board of Directors may from time to time designate. He shall
submit to the annual meeting of the Shareholders a statement of
the financial conditions of the corporation and whenever thereto
required by the Board of Directors, shall make and render a
statement of his accounts and such other statements as may be
required by the Board of Directors. He shall keep in books of
the corporation full and accurate accounts of all monies received
and paid by him for account of the corporation. He shall perform
such other duties as may from time to time be assigned by the
Board of Directors to him.
(f) Assistant and Subordinate Officers. The Board of
Directors may appoint such assistant and subordinate officers as
it may deem desirable. Each such officer shall hold office
during the pleasure of the Board of Directors and perform such
duties as the Board of Directors may prescribe.
The Board of Directors may from time to time
authorize any officer to appoint and remove subordinate officers,
to prescribe their authority and duties, and to fix their
compensation.
(g) Delegation of Duties. In the absence of any
officer of the corporation, or for any other reason the Board of
Directors may deem sufficient, the Board may delegate the powers
or duties of such officer to any other officer, Director, or
other qualified person the Board may select.
ARTICLE IV
STOCK
Section 1. Form. Each certificate for the shares of stock
of the corporation shall bear a distinguishing number, the
signature of the President and Secretary, and such recitals as
may be required by law. The certificates for shares shall be of
such tenor and design as the Directors may adopt, and the tenor
and design thereof may be changed from time to time by the Board.
Section 2. Issuance and Transfer. Certificates evidencing
ownership of the shares of stock of the corporation shall be
issued to those entitled to them by transfer or otherwise. They
shall be issued respectively in numerical order and a full record
of books shall be kept for that purpose.
No issue or transfer of stock shall be made except on
the books of the corporation, under signature of the President,
of the Secretary, and of the holder of record of stock, or his
agent or attorney, thereunto duly constituted, and no transfer of
stock shall be made except upon the production and delivery to
the corporation of the certificate of the holder. Upon the
return of said certificate of the holder, the Secretary shall
cancel it and paste or attach the same to the proper stub in the
stock book from which it was originally detached.
No certificate of stock shall be transferred so long as
the holder thereof, whether legally or equitably, shall be
indebted to the corporation, and the corporation shall have a
first and paramount lien upon all stock of any holder who may be
indebted to the corporation.
ARTICLE V
SEAL
The Board of Directors may, but need not, adopt, use, and
thereafter alter, a corporate seal.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section 1. Right to Indemnification. The corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, including all appeals by reason of the fact that
he is or was a director, officer or employee of the corporation,
or is or was serving at the request of the corporation as a
director, trustee, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, including
any employee benefit plan, to the fullest extent permissible
under applicable law.
Section 2. Nonexclusiveness; Heirs. The indemnification
provided by this Article shall not be exclusive of, and shall be
in addition to, any other rights granted to those seeking
indemnification as a matter of law or under the Articles of
Incorporation, these regulations, any agreement, vote of
shareholders or disinterested directors, any insurance purchased
by the corporation, or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office and shall continue as to a person who has
ceased to be a director, trustee, officer or employee and shall
inure to the benefit of the heirs, executors and administrators
of such a person.
Section 3. Purchase of Insurance. The corporation may
purchase and maintain insurance or furnish similar protection,
including but not limited to trust funds, letters of credit or
self-insurance, on behalf of or for any person who is or was a
director, officer or employee of the corporation, or is or was
serving at the request of the corporation as a director, trustee,
officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the
provisions of this Article.
Section 4. Effectiveness. Neither the amendment nor repeal
of this Article nor the adoption of any provision of the Articles
of Incorporation or these Regulations or of any statute
inconsistent with this Article shall eliminate or reduce the
effect of this Article in respect of any acts or omissions
occurring prior to such amendment, repeal or adoption of an
inconsistent provision.
ARTICLE VII
AMENDMENT
This Code of Regulations may be amended or new regulations
adopted only upon the written assent of the holders of record of
two-thirds of the issued capital stock of the corporation
entitled to vote.
ARTICLE VIII
CONTROL SHARE ACQUISITIONS
Section 1701.831 of the Ohio Revised Code does not apply to
"control share acquisitions" (as defined therein) of shares of
the Company.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income (Loss) Per Common Share
for the three months and six months ended June 30, 1994 and 1993
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
Income (loss) for primary and
fully diluted computation:
Income (loss) $2,374,259 $ 735,732 $2,153,816 $ (331,369)
Primary (1):
Weighted average common shares
and all other dilutive
securities:
Common stock 19,581,945 12,587,436 19,555,281 11,253,673
Stock purchase warrants 755,470 474,665 844,297 (2)
Stock options 733,696 686,657 775,513 (2)
Contingently issuable
common shares 300,000 300,000
21,371,111 13,748,758 21,475,091 11,253,673
Primary income (loss)
per common share $ .11 $ .05 $ .10 $ (.03)
[FN]
NOTES:
1. Fully diluted earnings per share is not presented since it
approximates primary income 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
BROADCAST CASH FLOW
CINCINNATI, JULY 28 - Jacor Communications, Inc. (NASDAQ: JCOR),
owner and operator of radio stations in six U.S. markets, today
reported a 43-percent increase in broadcast cash flow during the
six months ended June 30, 1994, and a 31-percent increase in
broadcast cash flow for the second quarter of 1994.
Jacor's broadcast cash flow for the 1994 six-month period
rose 43 percent to $10.4 million from $7.2 million in the same
six-month period of 1993. Second quarter broadcast cash flow
rose 31 percent to $7.8 million in 1994 from $5.9 million in the
same quarter of 1993. Net revenues for the six-month period rose
25 percent to $49.8 million from $39.8 million in the 1993
period. Second quarter 1994 net revenues rose 22 percent to
$30.0 million from $24.7 million in the 1993 period.
On a "same station" basis - reflecting results from stations
operated in the first six months of both 1994 and 1993 - Jacor's
broadcast cash flow rose 48 percent to $10.5 million for the
first six months of 1994 from $7.1 million in the same period
last year. Broadcast cash flow on a "same station" basis for the
second quarter of 1994 rose 38 percent to $8.1 million from $5.8
million for the second quarter of 1993.
The company reported net income of $2.2 million or 10 cents
per share, during the first six months of 1994. Results for the
same period last year reflected a net loss of $0.3 million, or 3
cents per share. Net income for the second quarter of 1994 was
$2.4 million or 11 cents per share, an increase of 222 percent
from the net income of $0.7 million or 5 cents per share reported
by the Company for the second quarter of 1993.
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.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months and six months ended June 30, 1994 and 1993
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
Broadcast revenue $33,588,971 $27,703,851 $ 55,631,688 $44,602,079
Less agency commissions 3,578,752 3,007,585 5,839,440 4,822,979
Net revenue 30,010,219 24,696,266 49,792,248 39,779,100
Broadcast operating expenses 22,231,623 18,772,175 39,422,894 32,547,752
Broadcast cash flow (1) 7,778,596 5,924,091 10,369,354 7,231,348
Depreciation and amortization 2,487,786 2,442,032 4,715,768 4,686,428
Corporate general and
administrative expenses 926,298 920,858 1,808,237 1,707,051
Operating income 4,364,512 2,561,201 3,845,349 837,869
Interest expense (136,928) (617,795) (290,474) (1,746,060)
Other income, net 257,675 48,126 510,941 91,622
Income (loss) before
income taxes 4,485,259 1,991,532 4,065,816 (816,569)
Income tax (expense) benefit (2,111,000) (1,255,800) (1,912,000) 485,200
Net income (loss) $ 2,374,259 $ 735,732 $ 2,153,816 $ (331,369)
Net income (loss) per
common share $ .11 $ .05 $ .10 $ (.03)
Number of common shares used
in per share computations 21,371,111 13,748,758 21,475,091 11,253,673
[FN]
(1) Operating income before depreciation and amortization and corporate
general and administrative expenses.