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
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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
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