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, 1995 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 April 27, 1995, 19,616,279 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, 1995 and December 31, 1994 3 Condensed Consolidated Statements of Operations for the three months ended March 31, 1995 and 1994 4 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. Other Information Item 6. - Exhibits and Reports on Form 8-K 11 Signatures 12 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 1995 1994 (UNAUDITED) (AUDITED) ASSETS Current assets: Cash and cash equivalents $ 32,664,911 $ 26,974,838 Accounts receivable, less allowance for doubtful accounts of $1,488,000 in 1995 and $1,348,000 in 1994 19,432,951 24,500,652 Other current assets 5,413,944 4,650,301 Total current assets 57,511,806 56,125,791 Property and equipment, net 22,749,049 22,628,841 Intangible assets, net 88,114,972 89,543,301 Other assets 5,385,569 5,281,422 Total assets $173,761,396 $173,579,355 LIABILITIES Current liabilities: Accounts payable $ 2,473,872 $ 2,723,717 Accrued payroll 1,438,909 3,274,902 Accrued federal, state and local income tax 2,634,783 2,092,616 Other current liabilities 4,319,393 3,397,117 Total current liabilities 10,866,957 11,488,352 Other liabilities 3,816,174 3,869,567 Deferred tax liability 9,127,456 9,177,456 Total liabilities 23,810,587 24,535,375 SHAREHOLDERS' EQUITY Common stock, no par value, $.10 per share stated value 1,961,629 1,959,038 Additional paid-in capital 137,557,763 137,404,815 Common stock warrants 390,144 390,167 Retained earnings 10,041,273 9,289,960 Total shareholders' equity 149,950,809 149,043,980 Total liabilities and shareholders' equity $173,761,396 $173,579,355 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, 1995 and 1994 (UNAUDITED) 1995 1994 Broadcast revenue $ 26,840,493 $22,042,717 Less agency commissions 2,824,310 2,260,688 Net revenue 24,016,183 19,782,029 Broadcast operating expenses 19,959,660 17,191,271 Depreciation and amortization 2,111,971 2,227,982 Corporate general and administrative expenses 884,026 881,939 Operating income (loss) 1,060,526 (519,163) Interest expense (104,822) (153,546) Other income, net 309,610 253,266 Income (loss) before income taxes 1,265,314 (419,443) Income tax (expense) benefit (514,000) 199,000 Net income (loss) $ 751,314 $ (220,443) Net income (loss) per common share $ 0.04 $ (0.01) Number of common shares used in per share computations 21,347,440 19,528,320 The accompanying notes are an integral part of the condensed consolidated financial statements. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the three months ended March 31, 1995 and 1994 (UNAUDITED) 1995 1994 Cash flows from operating activities: Net income (loss) $ 751,314 $ (220,443) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 686,522 628,264 Amortization of intangibles 1,425,449 1,599,718 Provision for losses on accounts and notes receivable 277,892 255,869 Deferred income tax provision (benefit) (50,000) 18,000 Other (198,570) (212,103) Change in current assets and current liabilities net of effects of acquisitions: Decrease in accounts receivable 4,844,835 3,415,682 Increase in other current assets (767,393) (1,565,323) Increase (decrease) in accounts payable (273,728) 501,592 Decrease in accrued payroll, accrued interest and other current liabilities (371,551) (2,039,399) Net cash provided by operating activities 6,324,770 2,381,857 Cash flows from investing activities: Payment received on notes receivable 300,000 Capital expenditures (707,183) (370,119) Cash paid for acquisitions (1,458,647) Loans originated and other (33,029) (2,762,143) Net cash used by investing activities (740,212) (4,290,909) Cash flows from financing activities: Proceeds from issuance of common stock 155,515 290,514 Payment of restructuring expenses (50,000) (19,729) Net cash provided by financing activities 105,515 270,785 Net increase (decrease) in cash and cash equivalents 5,690,073 (1,638,267) Cash and cash equivalents at beginning of period 26,974,838 28,617,599 Cash and cash equivalents at end of period $ 32,664,911 $26,979,332 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, 1994 and the notes thereto. 2. PER SHARE DATA Income per share for the three months ended March 31, 1995 is based on the weighted average number of common shares outstanding and gives effect to both dilutive stock options and dilutive stock purchse warrants during the period. Fully diluted earnings per share is not presented since it approximates primarily earnings per share. Loss per share for the three months ended March 31, 1994 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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company began 1995 with no outstanding debt and $27.0 million in cash and cash equivalents. The $27.0 million of cash and cash equivalents together with the funds available under the Company's Credit Agreement, as amended, are available to finance acquisitions of radio groups and/or radio stations and for general corporate purposes. The Company's Credit Agreement provides for a senior secured reducing revolving credit facility with a commitment of $45 million ($42.0 million at March 31, 1995 - 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 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 Credit Agreement is guaranteed by those subsidiaries. Both facilities may be used for acquisitions permitted under conditions set forth in the Credit Agreement. Interest under the 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 Credit Agreement requires that the commitment under the Revolver be reduced in the quarter commencing January 1, 1994 and continuing quarterly thereafter (reduced by $3.0 million as of March 31, 1995). After the Acquisition Facility commitment terminates on September 30, 1996, the Credit Agreement requires 17 equal quarterly amortization payments. The Credit Agreement further requires that, with certain exceptions, the Company prepay the loans and reduce the commitments under the 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 6.19%. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued LIQUIDITY AND CAPITAL RESOURCES, Continued During the quarter ended March 31, 1995, the Company, through its subsidiaries, made capital expenditures of approximately $0.7 million. The Company expects to make acquisitions, loans and capital expenditures in the range of $24 million to $27 million for the remainder of the year ended December 31, 1995. Management believes that its existing cash balances, cash generated from operations and the availability of borrowings under the 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 by operating activities, inclusive of working capital were $6.3 million and $2.4 million for the first three months of 1995 and 1994, respectively. The net cash provided of $6.3 million for the first quarter of 1995 results primarily from the add back of depreciation and amortization expense to net income together with the cash generated from the change in working capital for the period. 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. Cash flows used by investing activities were ($0.7) million and ($4.3) million for the first quarter of 1995 and 1994, respectively. The net cash used of $($0.7) million by investing activities for the first quarter of 1995 results primarily from payments made for capital expenditures. The net cash used of ($4.3) million by investing activities for the first quarter of 1994 results from payments made for acquisitions, loans and capital expenditures. Cash flows provided by financing activities were $0.1 million and $0.3 million for the first three months of 1995 and 1994, respectively, principally due to the proceeds from the issuance of additional common stock. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS THE THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1994 Broadcast revenue for the first quarter of 1995 was $26.8 million, an increase of $4.8 million or 21.8% from $22.0 million during the first quarter of 1994. This increase resulted from an increase in advertising rates in both local and national advertising and from the revenue generated at those properties owned or operated during the 1995 first quarter but not during the comparable 1994 period. Agency commissions for the first quarter of 1995 were $2.8 million, an increase of $0.5 million or 24.9% from $2.3 million during the first quarter of 1993 due to the increase in broadcast revenue. Broadcast operating expenses for the first quarter of 1995 were $20.0 million, an increase of $2.8 million or 16.1% from $17.2 million during the first quarter of 1994. These expenses increased as a result of expenses incurred at those properties owned or operated during the 1995 first quarter but not during the comparable 1994 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, 1995 was $4.1 million, an increase of $1.5 million or 56.6% from the $2.6 million for the three months ended March 31, 1994. The strike-shortened Major League Baseball season in 1995 and the loss of the Atlanta Braves broadcast rights after the 1994 season will impact the comparability of broadcast revenue and operating expenses for the second and third quarters. However, the Company does not anticipate a material impact on station operating income for 1995 due to the impact of baseball broadcasting. Depreciation and amortization for the first quarter of 1995 and 1994 was $2.1 million and $2.2 million, respectively. Operating income for the first quarter of 1995 was $1.1 million, a $1.6 million improvement from an operating loss of $0.5 million during the first quarter of 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS THE THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1994, Continued Interest expense for the first quarter of 1995 and 1994 was $0.1 million and $0.2 million, respectively. Net income for the first quarter of 1995 was $0.8 million, compared to a net loss of $0.2 million reported by the Company for the first quarter of 1994. The 1994 period includes a $0.2 million tax benefit while the 1995 period includes $0.5 million of income tax expense. 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 13 27 Financial Data Schedule 14 99 Press Release dated April 19, 1995 15 (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: April 27, 1995 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, 1995 and 1994 1995 1994 Income (loss) for primary diluted computation: Income (loss) $ 751,314 $ (220,443) Primary (1): Weighted average common shares and dilutive common stock equivalents: Common stock 19,597,789 19,528,320 Stock purchase warrants 749,223 (2) Stock options 700,428 (2) Contingently issuable common shares 300,000 21,347,440 19,528,320 Primary net income (loss) per common share $ 0.04 $ (0.01) [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 JACOR REPORTS SIGNIFICANT IMPROVEMENTS IN OPERATIONS CINCINNATI, April 19 - Jacor Communications, Inc. (NASDAQ-JCOR), owner and operator of radio stations in six U.S. markets, today reported a 57-percent increase in broadcast cash flow during the quarter ended March 31, 1995. Jacor's first-quarter broadcast cash flow rose to $4.1 million in 1995 from $2.6 million in the same quarter of 1994. First- quarter net revenues rose 21 percent to $24.0 million from $19.8 million in the 1994 period. On a "same station" basis - reflecting results from stations operated in the first quarter of both 1995 and 1994 - Jacor's broadcast cash flow rose 54 percent to $4.1 million for the first quarter of 1995 from $2.7 million in the same period last year. The company reported net income of $0.8 million, or 4 cents per share, during the first three months of 1995. Results for the same period last year reflected a net loss of ($0.2 million), or (1 cent) per share. Jacor Communications, Inc., headquartered in Cincinnati, is the nations eighth 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. CONTACT: Chris Weber 513/621-1300 OR Kirk Brewer 312/466-4096 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, 1995 and 1994 (UNAUDITED) 1995 1994 Broadcast revenue $ 26,840,493 $ 22,042,717 Less agency commission 2,824,310 2,260,688 Net revenue 24,016,183 19,782,029 Broadcast operating expenses 19,959,660 17,191,271 Broadcast cash flow (1) 4,056,523 2,590,758 Depreciation and amortization 2,111,971 2,227,982 Corporate general and administrative expenses 884,026 881,939 Operating income (loss) 1,060,526 (519,163) Interest expense (104,822) (153,546) Other income, net 309,610 253,266 Income (loss) before income taxes 1,265,314 (419,443) Income tax (expense) benefit (514,000) 199,000 Net income (loss) $ 751,314 $ (220,443) Net income (loss) per common share $ 0.04 $(0.01) Number of common shares used in per share computations 21,347,440 19,528,320 [FN] (1) Operating income before depreciation and amortization and corporate general and administrative expenses.