FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended Commission File September 30, 1994 Number 0-14702 INFINITY BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-2766282 _______________________________ ____________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 MADISON AVENUE, NEW YORK, NY 10022 ________________________________________ (Address of principal executive offices) (212)750-6400 _____________ (Registrant's telephone number, including area code) 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 12 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 90 days. Yes X No ________ _________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 27,825,433 shares of Class A Common Stock, 3,845,154 shares of Class B Common Stock and 496,114 shares of Class C Common Stock as of November 4, 1994. INFINITY BROADCASTING CORPORATION INDEX Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets............ 1 Consolidated Statements of Operations.. 3 Consolidated Statements of Stockholders' Equity................................. 4 Consolidated Statements of Cash Flows............................. 5 Notes to Consolidated Financial Statements............................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 9 Part II. Item 6. Exhibits and Reports on Form 8-K....... 12 i INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES ITEM 1. FINANCIAL STATEMENTS _______ ____________________ CONSOLIDATED BALANCE SHEETS (Dollars in thousands) Sept. 30, Dec. 31, 1994 1993 ___________ ________ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 9,615 $ 9,913 Receivables, net 67,909 57,249 Prepaid expenses and other current assets 2,483 2,978 --------- --------- Total Current Assets 80,007 70,140 Property and equipment, net 22,966 18,749 Intangible assets, net 452,398 277,047 Other assets 11,003 12,104 --------- --------- $ 566,374 $ 378,040 ========= ========= See accompanying Notes to Consolidated Financial Statements. 1 INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, CONTINUED (Dollars in thousands) Sept. 30, Dec. 31, 1994 1993 ___________ ________ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current Liabilities: Accounts payable and other accrued expenses $ 14,307 $ 12,841 Accrued compensation 4,158 3,236 Accrued interest 5,599 7,776 Income taxes 7,844 7,477 Other current liabilities 17,171 5,888 Current portion of long-term debt 22,312 22,312 ---------- --------- Total Current Liabilities 71,391 59,530 ---------- --------- Long-term debt, less current portion 521,438 342,750 ---------- --------- Stockholders' equity (deficiency): Preferred stock, $0.01 par value: 1,000,000 shares authorized, none issued - - Class A Common Stock, $.002 par value: 75,000,000 shares authorized; 28,377,585 shares issued and outstanding in 1993 and 28,550,816 shares in 1994. 57 57 Class B Common Stock, $.002 par value: 17,500,000 shares authorized; issued and outstanding 3,990,621 shares in 1993 and 1994. 8 8 Class C Common Stock, $.002 par value: 30,000,000 shares authorized; issued and outstanding 496,114 shares in 1993 and 1994. 1 1 Additional paid-in capital 260,068 259,748 Retained earnings (deficit) (264,978) (284,054) __________ __________ (4,844) (24,240) Less treasury stock at cost, 845,000 shares (21,611) - __________ __________ Total stockholders' equity (deficiency) (26,455) (24,240) __________ __________ $ 566,374 $ 378,040 ========== ========== See accompanying Notes to Consolidated Financial Statements. 2 INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in thousands except per share amounts) Three Months Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1994 1993 1994 1993 __________ __________ __________ ___________ Total Revenues $ 85,470 $ 63,155 $ 219,506 $ 164,476 Less agency commissions 10,829 7,999 27,988 21,119 __________ __________ ___________ ___________ Net revenues 74,641 55,156 191,518 143,357 Station operating expenses excluding depreciation and amortization 37,469 28,645 101,332 77,471 Depreciation and amortization 12,272 10,084 34,322 28,902 Corporate general and administrative expenses 1,367 1,349 3,786 3,635 __________ __________ ___________ ___________ Total operating expenses 51,108 40,078 139,440 110,008 __________ __________ ___________ ___________ Operating income 23,533 15,078 52,078 33,349 __________ __________ ___________ ___________ Other income (expense) Interest expense (11,809) (8,914) (32,715) (28,138) Interest income 28 32 117 442 __________ __________ ___________ ___________ Earnings before income taxes 11,752 6,196 19,480 5,653 Income taxes 202 202 404 405 __________ __________ ___________ ___________ Net income 11,550 5,994 19,076 5,248 ========== ========== =========== =========== Net income per share $ .26 $ .13 $ .43 $ .13 ========== ========== =========== =========== Average shares and equivalents 44,923,919 45,433,647 44,834,242 39,937,193 ========== ========== =========== =========== See accompanying Notes to Consolidated Financial Statements. 3 INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (In thousands) Class A Class B Class C Add'l Retained Common Stock Common Stock Common Stock Paid-in Earnings Treasury Stock ____________ ____________ ____________ _______ ________ ______________ Shares Amt Shares Amt Shares Amt Capital (Deficit) Shares Amt Total ______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____ Balance at Dec. 31, 1993 28,378 $ 57 3,991 $ 8 496 $ 1 $259,748 $(284,054) 0 0 $(24,240) Net loss for the three months ended March 31, 1994 (3,864) (3,864) Issuance of Class A Common Stock 108 53 53 ______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____ Balance at March 31, 1994 (Unaudited) 28,486 $ 57 3,991 $ 8 496 $ 1 $259,801 $(287,918) 0 0 $(28,051) Net income for the three months ended June 30, 1994 11,390 11,390 Issuance of Class A Common Stock 8 1 1 Treasury Stock Acquired 525 (12,198) (12,198) ______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____ Balance at June 30, 1994 (Unaudited) 28,494 $ 57 3,991 $ 8 496 $ 1 $259,802 $(276,528) 525 $(12,198) $(28,858) Net income for three months ended Sept. 30, 1994 11,550 11,550 Issuance of Class A Common Stock 57 266 266 Treasury Stock Acquired 320 (9,413) (9,413) ______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____ Balance at Sept. 30, 1994 (Unaudited) 28,551 $ 57 3,991 $ 8 496 $ 1 $260,068 $(264,978) 845 (21,611) $(26,455) ====== ==== ===== ==== ===== ==== ======== ========== === ======== ========= See accompanying Notes to Consolidated Financial Statements. 4 INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993 (In thousands) Sept. 30, Sept. 30, 1994 1993 ________ __________ Net cash flow from (used in) operating activities: Net income $ 19,076 $ 5,248 Depreciation and amortization 34,322 28,902 Amortization of deferred financing costs 1,332 1,157 _________ _________ 54,730 35,307 Increase in receivables (10,660) (12,597) Decrease (increase) in other current assets 495 (2,363) Increase in accounts payable and accrued expenses 2,755 2,232 Decrease in accrued interest (2,177) (5,108) Increase in other current liabilities 11,283 4,947 Other, net 244 (678) _________ __________ Net cash flow from operating activities 56,670 21,740 _________ __________ Investing Activities: Capital expenditures 1,213 1,585 Acquisitions: Intangibles 206,725 121,372 Property and Equipment 5,920 - _________ __________ Net cash used for investing activities 213,858 122,957 _________ __________ Cash provided (required) before financing activities (157,188) (101,217) ========= ========== Financing Activities: Borrowings under debt agreements 227,000 125,000 Reduction of debt (48,312) (123,125) Proceeds from issuance of stocks 320 100,149 Financing costs (1,707) - Repurchase of Class A Common Stock (21,611) - Other, Net 1,200 - _________ __________ Net financing activities 156,890 102,024 Decrease (increase) in cash and cash equivalents 298 (807) _________ __________ Total financing activities $ 157,188 $ 101,217 ========= ========== See accompanying Notes to Consolidated Financial Statements. 5 INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation In the opinion of management the unaudited interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Interim periods are not necessarily indicative of results to be expected for the year. It is suggested that these financial statements be read in conjunction with the Consolidated Financial Statements and the notes thereto of the Company for the year ended December 31, 1993. The consolidated financial statements include the accounts of the Company and its subsidiaries, which are all wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation. Earnings per common share are based on the weighted average number of common shares and common equivalent shares outstanding during the period. Effective August 9, 1993, the Company declared a three- for-two stock split in the form of a stock dividend payable on August 16, 1993 to shareholders of record at the close of business on August 9, 1993. Effective November 12, 1993, the Company declared another three-for-two stock split in the form of a stock dividend payable on November 19, 1993 to shareholders of record at the close of business on November 12, 1993. The accompanying financial statements reflect the effect of the stock dividends. 2. Public Stock Offering On May 13, 1993, the Company and certain holders of warrants exercisable for shares of the Company's Class A Common Stock sold through a public offering 8,148,814 shares of Class A Common Stock, resulting in net proceeds to the Company of approximately $100 million. The net proceeds from this offering were used to pay down bank borrowings under the Company's bank credit agreement (the "Credit Agreement"). 6 3. Acquisitions On February 1, 1993, the Company completed the acquisition of the assets of WZGC-FM (Atlanta), WZLX-FM (Boston) and WUSN-FM (Chicago) from Cook Inlet Radio Partners, L.P. and Cook Inlet Radio License Partnership, L.P. for a total purchase price of approximately $100 million. On September 1, 1993, the Company completed the acquisition of WIP-AM, an all-sports radio station serving Philadelphia, from Spectacor Broadcasting, L.P. for approximately $17.4 million. In February 1994, the Company completed the acquisition of Los Angeles radio station KRTH-FM from Beasley FM Acquisition Corp. for approximately $116 million. In June 1994, the Company completed the acquisition of Washington, D.C. radio stations WPGC-AM/FM from Cook Inlet Radio Partners, L.P. and Cook Inlet Radio License Partnership, L.P. for approximately $60 million. In June 1994, the Company completed the acquisition of Detroit radio station WXYT-AM from Fritz Broadcasting, Inc. for approximately $23 million. The purchase price of the above acquisitions was funded by borrowings under the Credit Agreement. The operating results of these acquisitions are included in the Company's consolidated results of operations from the date of acquisition. The following unaudited pro forma summary presents the consolidated results of operations as if the acquisitions had occurred as of the beginning of 1994 and 1993, after giving effect to certain adjustments, including amortization of intangibles and interest expense on the acquisition debt. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of those dates or of results which may occur in the future. 7 Nine Months Ended Sept. 30, 1994 1993 _________ __________ (Unaudited) Net revenues.................. $ 204,404 $ 180,043 Net income (loss)............. 18,643 784 Net income (loss) per common share......................... .42 .02 On September 12, 1994, the Company entered into an agreement to acquire Dallas/Ft. Worth radio station KLUV-FM from TK Communications, Inc. for approximately $51 million. The purchase price will be funded by borrowings under the Credit Agreement. On February 3, 1994, the Company, Unistar Communications Group, Inc. ("Unistar") and Westwood One, Inc. ("Westwood One") completed the purchase by Westwood One of the radio network business of Unistar for approximately $101.3 million. Westwood One is the nation's largest producer and distributor of nationally sponsored radio programs. In connection with transaction, an affiliate of the Company received 5 million newly issued shares of common stock of Westwood One for $3 per share (which represents approximately 16.45% of the issued and outstanding capital stock of Westwood One) and an option to purchase an additional 3 million shares of Westwood One's common stock at a purchase price of $3 per share, subject to certain vesting requirements. In connection with the transactions, the Company's Chief Executive Officer and Chief Financial Officer became the Chief Executive Officer and Chief Financial Officer, respectively, of Westwood One pursuant to a management agreement between the Company and Westwood One. Under the management agreement, the Company is entitled to receive a base management fee and additional warrants to acquire up to 1.5 million shares of Westwood One's Common Stock at a purchase price from $3 to $5 per share in the event that Westwood One's Common Stock trades above certain target price levels. In September 1994, pursuant to such provision, the Company received a warrant to purchase 500,00 shares of Westwood One's Common Stock at an exercise price of $3 per share. 8 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THIRD QUARTER OF 1994 COMPARED TO THIRD QUARTER OF 1993 Net revenues for the third quarter of 1994 were $74,641,000 as compared to $55,156,000 for the third quarter of 1993, an increase of approximately $19,485,000 or 35%. The increase was due principally to higher advertising revenues at the Company's stations, and the acquired stations. On a pro forma basis, assuming the above acquisitions had occurred as of the beginning of 1993, net revenues for the third quarter of 1994 would have increased by approximately 11%. Station operating expenses excluding depreciation and amortization for the third quarter of 1994 were $37,469,000 as compared to $28,645,000 for the third quarter of 1993, an increase of $8,824,000 or approximately 31%. The increase was principally due to the acquired stations, expenses associated with higher revenues and higher programming expenses. On a pro forma basis, assuming the above acquisitions had occurred as of the beginning of 1993, station operating expenses for the third quarter of 1994 would have increased by approximately 8%. Depreciation and amortization expense for the third quarter of 1994 was approximately $12,272,000 as compared to $10,084,000 for the third quarter of 1993, an increase of approximately $2,188,000 or 22%. The increase was principally due to the depreciation and amortization expense associated with the acquired stations. Operating income for the third quarter of 1994 was $23,533,000 as compared to $15,078,000 for the third quarter of 1993, an increase of approximately $8,455,000 or 56%. The increase was due principally to improved results at the Company's radio stations. Net financing expense (defined as interest expense less interest income) for the third quarter of 1994 was $11,781,000 as compared to $8,882,000 for the third quarter of 1993, an increase of approximately $2,899,000 or 33%. The increase was due principally to additional borrowings in connection with the acquired stations. Net income for the third quarter of 1994 was $11,550,000 as compared to $5,994,000 for the third quarter of 1993, an increase of approximately $5,556,000 or 93%. 9 NINE MONTHS ENDED SEPTEMBER 30, 1994 AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1993 Net revenues for the nine months ended September 30, 1994 were $191,518,000 as compared to $143,357,000 for the nine months ended September 30, 1993, an increase of approximately 34%. The increase was due principally to higher advertising revenues at the Company's stations, and the acquired stations. On a pro forma basis, assuming the above acquisitions had occurred as of the beginning of 1993, net revenues for the first nine months of 1994 would have increased by approximately 14%. Station operating expenses excluding depreciation and amortization for the nine months ended September 30, 1994 were $101,332,000 as compared to $77,471,000 for the nine months ended September 30, 1993, an increase of 31%. The increase was principally due to the acquired stations, expenses associated with higher revenues and higher programming expenses. On a pro forma basis, assuming the above acquisitions had occurred as of the beginning of 1993, station operating expenses for the nine months ended 1994 would have increased by approximately 11%. Depreciation and amortization expense for the first nine months of 1994 was $34,322,000 as compared to $28,902,000 for the first nine months of 1993, an increase of approximately $5,420,000 or 19%. The increase was due to the depreciation and amortization expense associated with the acquired stations. Operating income for the first nine months of 1994 was $52,078,000 as compared to $33,349,000 for the first nine months of 1993, an increase of approximately 56%. The increase was due principally to improved results at the Company's radio stations. Net financing expense (defined as interest expense less interest income) for the first nine months of 1994 was $32,598,000 as compared to $27,696,000 for the first nine months of 1993, an increase of approximately 18%. The increase was due principally to additional interest expense associated with the additional borrowings incurred to finance the acquired stations. Income taxes for the first nine months of 1994 were $404,000, representing principally state and local income taxes, as compared to $405,000 for the first nine months of 1993. No federal income taxes have been provided as a result of available tax loss carryforwards. 10 Net income for the first nine months of 1994 was $19,076,000 ($0.43 per share) as compared to $5,248,000 (0.13 per share) for the first nine months of 1993, an increase of approximately $13,828,000. LIQUIDITY AND CAPITAL RESOURCES _______________________________ For the first nine months of 1994, net cash flow from operating activities was approximately $56,670,000, as compared to $21,740,000 for the first nine months of 1993, an increase of approximately $34,930,000. The increase was principally due to improved earnings in 1994 offset in part by higher working capital requirements for the acquired stations. The operating cash flow was used principally to pay down debt and purchase treasury stock. During the nine months ended September 30, 1994, the Company purchased 845,000 shares of its Class A Common Stock at a total cost of approximately $21.6 million. During the first nine months of 1994, the Company borrowed approximately $227 million under the Credit Agreement to finance the acquisition and working capital of the acquired radio stations. As of September 30, 1994, the Company had undrawn borrowing capacity of approximately $79 million under the Credit Agreement. 11 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Exhibit Number Description of Exhibit 2(a) __ Asset Purchase Agreement, dated as of August 15, 1992, between Cook Inlet Radio Partners, L.P. and Cook Inlet Radio License Partnership, L.P. and Infinity Broadcasting Corporation of Chicago, Infinity Broadcasting Corporation of Atlanta, Infinity Broadcasting Corporation of Boston and the Company. (This exhibit can be found as Exhibit 2(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992 (File No. 0-14702) and is incorporated herein by reference.) 2(b) __ Asset Purchase Agreement, dated as of September 25, 1992, between Spectacor Broadcasting, L.P. and Infinity Broadcasting Corporation of Philadelphia. (This exhibit can be found as Exhibit 2(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992 (File No. 0-14702) and is incorporated herein by reference.) 2(c) __ Purchase Agreement, dated as of June 16, 1993, among Beasley FM Acquisition Corp., Infinity Broadcasting Corporation of California and the Company. (This exhibit can be found as Exhibit 2(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (File No. 0- 14702) and is incorporated herein by reference.) 2(d) __ Asset Purchase Agreement, dated as of October 4, 1993, between Cook Inlet Radio Partners, L.P. and Cook Inlet Radio License Partnership, L.P. and Infinity Broadcasting Corporation of Maryland and the Company. (This exhibit can be found as Exhibit 2(f) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-14702) and is incorporated herein by reference.) 2(e) __ Asset Purchase Agreement, dated as of March 8, 1994, by and between Fritz Broadcasting, Inc., Infinity Broadcasting Corporation of Detroit and the Company. (This exhibit can be found as Exhibit 2(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 0- 14702) and is incorporated herein by reference. 12 2(f) __ Asset Purchase Agreement, dated as of September 12, 1994, by and between TK Communications, Inc. and Infinity Broadcasting Corporation of Dallas, including a list of omitted schedules and an undertaking by the Company to furnish supplementally a copy of any such omitted schedule to the Securities and Exchange Commission upon request. 4(a) __ Amended and Restated Credit Agreement, dated as of June 7, 1994, between the Company and the banks that are signatories thereto. (This exhibit can be found as Exhibit 4(a) to the Company's Report on Form 8-K filed on July 5, 1994 (File No. 0-14702) and is incorporated herein by reference.) 4(b) __ Security Agreement, dated as of June 7, 1994, by and among the Company, its subsidiaries and the banks that are signatories thereto. (This exhibit can be found as Exhibit 4(b) to the Company's Report on Form 8-K filed on July 5, 1994 (File No. 0-14702) and is incorporated herein by reference.) 10(a) __ Sixth Amendment to the Employment Agreement, dated as of September 10, 1990, between the Company and Mel Karmazin, effective as of March 30, 1994 (This exhibit can be found as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (File No. 0-14702) and is incorporated herein by reference.) (b) Reports on Form 8-K The Company filed a Report on Form 8-K, dated July 5, 1994, with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. reporting in response to Items 2 and 7 of the Form 8-K. The Company filed a Report on Form 8-K/A, dated September 6, 1994, with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. reporting in response to Item 7 of the Form 8-K filed on July 5, 1994. The Report on Form 8-K/A contained the financial statements of WPGC FM & AM at March 31, 1994, and December 31, 1993 and 1992. 13 </page> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INFINITY BROADCASTING CORPORATION (Registrant) /s/ Farid Suleman _________________________________ Farid Suleman, Vice President-Finance/ Chief Financial Officer Dated: November 11, 1994 14 </page>