SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995 Commission file number 0-14702
Infinity Broadcasting Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-2766282
(State of incorporation) (I.R.S. Employer
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: 41,018,407 shares of Class A
Common Stock, 5,550,031 shares of Class B Common Stock and 744,171 shares of
Class C Common Stock as of August 8, 1995.
INFINITY BROADCASTING CORPORATION
INDEX
Page No.
________
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets. . . . . . . . . . 1
Condensed Consolidated Statements of Operations. . . . . 3
Condensed Consolidated Statements of Stockholders'
Equity . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows. . . . . 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 . . . . . . . . . . . . 10
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
_______ ____________________
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, Dec. 31,
1995 1994
___________ ________
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,456 $ 7,720
Receivables, net 77,198 76,549
Prepaid expenses and other current assets 3,295 536
_________ _________
Total Current Assets 90,949 84,805
Property and equipment, net 21,433 22,288
Intangible assets, net 472,268 441,187
Other assets 13,342 13,873
_________ _________
$ 597,992 $ 562,153
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(Dollars in thousands)
June 30, Dec. 31,
1995 1994
___________ ________
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable and other accrued expenses $ 17,785 $ 16,035
Accrued compensation 5,583 6,142
Accrued interest 9,556 9,605
Income taxes 5,430 7,927
Other current liabilities 18,030 16,219
Current portion of long-term debt -- --
---------- ----------
Total Current Liabilities 56,384 55,928
---------- ----------
Long-term debt 562,000 531,750
---------- ----------
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; 43,153,400 shares
issued in 1994 and 43,549,202 shares issued
in 1995. 87 86
Class B Common Stock, $.002 par value:
17,500,000 shares authorized; issued and
outstanding 5,767,731 shares in 1994 and
5,550,031 shares in 1995. 11 12
Class C Common Stock, $.002 par value:
30,000,000 shares authorized; issued and
outstanding 744,171 shares in 1994 and 1995. 1 1
Additional paid-in capital 260,592 260,061
Retained earnings (deficit) (233,141) (250,841)
---------- ----------
27,550 9,319
Less treasury stock at cost, 1,956,600 shares
in 1994 and 2,430,045 shares in 1995 (47,942) (34,844)
---------- ----------
Total stockholders' equity (deficiency) (20,392) (25,525)
---------- ----------
$ 597,992 $ 562,153
========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
----------- ----------- ----------- ----------
Total revenues $ 97,131 $ 79,081 $ 169,162 $ 134,036
Less agency commissions 12,567 10,387 22,271 17,159
----------- ----------- ----------- ----------
Net revenues 84,564 68,694 146,891 116,877
Station operating expenses
excluding depreciation
and amortization 40,790 33,501 78,116 63,863
Depreciation and amortization 12,428 11,547 24,000 22,050
Corporate general and
administrative expenses 1,423 1,302 2,667 2,419
----------- ----------- ----------- ----------
Total operating expenses 54,641 46,350 104,783 88,332
----------- ----------- ----------- ----------
Operating income 29,923 22,344 42,108 28,545
----------- ----------- ----------- ----------
Other income (expense)
Interest expense (12,204) (10,803) (23,883) (20,906)
Interest income 60 49 161 89
----------- ----------- ----------- ----------
Earnings before income taxes 17,779 11,590 18,386 7,728
Income taxes 584 200 686 202
----------- ----------- ----------- ----------
Net income $ 17,195 $ 11,390 $ 17,700 $ 7,526
=========== =========== =========== ==========
Net income per share $ .26 $ .17 $ .26 $ .11
----------- ----------- ----------- ----------
Average shares and
equivalents outstanding 67,305,471 68,428,682 67,275,048 67,184,105
========== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(In thousands)
Class A Class B Class C
Common Stock Common Stock Common Stock
------------ ------------ ------------
Shares Amt Shares Amt Shares Amt
------ --- ------ --- ------ ---
Balance at
Dec. 31, 1994 43,153 $ 86 5,768 $ 12 744 $ 1
Net income for the
three months ended
March 31, 1995
Issuance of Class
A Common Stock 151
Conversion of Class
B Common Stock to
Class A Common
Stock 218 1 (218) (1)
Treasury Stock
acquired
------ --- ------- --- ------ ---
Balance at March 31,
1995 (Unaudited) 43,522 87 5,550 11 744 1
Net income for
the three months
ended June 30,
1995
Issuance of Class
A Common Stock 27
Treasury Stock
acquired
------ --- ------- --- ------ ---
Balance at June 30,
1995 (Unaudited) 43,549 $ 87 5,550 $ 11 744 $ 1
====== === ======= === ====== ===
Add'l Retained Treasury Stock
Paid-in Earnings --------------
Capital (Deficit) Shares Amt Total
------- --------- ------ --- -----
Balance at
Dec. 31, 1994 $260,061 $(250,841) 1,957 $(34,844) $(25,525)
Net income for the
three months ended
March 31, 1995 505 505
Issuance of Class
A Common Stock 317 317
Conversion of Class
B Common Stock to
Class A Common
Stock
Treasury Stock
acquired 150 (3,663) (3,663)
-------- ---------- ------ --------- --------
Balance at March 31,
1995 (Unaudited) 260,378 (250,336) 2,107 (38,507) (28,366)
Net income for
the three months
ended June 30,
1995 17,195 17,195
Issuance of Class
A Common Stock 214 214
Treasury Stock
acquired 323 (9,435) (9,435)
-------- ---------- ------ --------- --------
Balance at June 30,
1995 (Unaudited) $260,592 $(233,141) 2,430 $(47,942) $(20,392)
======== ========== ====== ========= ========
See accompanying Notes to Condensed Consolidated Financial Statements
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(In thousands)
June 30, June 30,
1995 1994
Net cash flow from (used in) operating activities:
Net income $ 17,700 $ 7,526
Depreciation and amortization 24,000 22,050
Amortization of deferred financing costs 1,119 825
-------- --------
42,819 30,401
Increase in receivables (649) (5,347)
Decrease (increase) in other current assets (2,759) 709
Increase (decrease) in accounts payable
and accrued expenses (1,306) 4,358
Increase (decrease) in accrued interest (49) 2,480
Other, net 12 16
-------- --------
Net cash flow from operating activities 38,068 32,617
-------- --------
Investing Activities:
Capital expenditures 1,189 674
Acquisitions:
Intangibles 52,837 206,725
Property and Equipment 200 5,920
Less liabilities (1,811) (10,960)
-------- --------
Net cash used for investing activities 52,415 202,359
Cash required before financing activities (14,347) (169,742)
======== ========
Financing Activities:
Borrowings under debt agreements 50,000 213,000
Reduction of debt (19,750) (33,875)
Proceeds from issuance of stocks 531 54
Financing costs (600) (1,707)
Repurchase of Class A Common Stock (13,098) (12,198)
Other, Net -- 1,200
-------- --------
Net financing activities 17,083 166,474
Decrease (increase) in cash and cash
equivalents (2,736) 3,268
-------- --------
Total financing activities $ 14,347 $ 169,742
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED 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, 1994.
The condensed 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 May 12, 1995, the Company declared a three-for-two stock split in
the form of a stock dividend payable on May 19, 1995 to shareholders of record
at the close of business on May 12, 1995. The accompanying financial
statements reflect the effect of the stock dividend.
2. Acquisitions
------------
In February 1994, the Company acquired Los Angeles radio station KRTH-FM
from Beasley FM Acquisition Corp. for approximately $116 million, plus costs.
In June 1994, the Company acquired 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 $61 million, plus assumption of certain
liabilities and costs.
In June 1994, the Company acquired Detroit radio station WXYT-AM from Fritz
Broadcasting, Inc. for approximately $23 million, plus costs.
In April 1995, the Company acquired Dallas/Ft. Worth radio station KLUV-FM
from TK Communications, Inc. for approximately $51 million, plus costs.
The purchase price of the above acquisitions was funded by borrowings under
the Company's bank credit agreement (the "Credit Agreement").
6
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 1995 and 1994, after
giving effect to certain adjustments, including amortization of intangible
assets 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.
Six Months Ended June 30,
1995 1994
----------- ----------
(Unaudited)
Net revenues......................... $ 148,833 $ 131,860
Net earnings......................... 16,563 3,827
Net earnings per common share........ .25 .06
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 the 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 15.84% 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 will receive a base management fee plus a bonus based on achieving cash
flow targets 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 500,000 shares of Westwood One's Common Stock at an
exercise price of $3 per share.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
---------------------
SECOND QUARTER OF 1995 COMPARED TO SECOND QUARTER OF 1994
---------------------------------------------------------
Net revenues for the second quarter of 1995 were $84,564,000 as compared to
$68,694,000 for the second quarter of 1994, an increase of approximately
$15,870,000 or 23%. The increase was due principally to higher advertising
revenues at most of the Company's stations, and the acquisitions of radio
stations KRTH-FM (Los Angeles) effective February 15, 1994, WPGC-AM/FM
(Washington, D.C.) effective June 17, 1994, WXYT-AM (Detroit) effective June
27, 1994 and KLUV-FM (Dallas/Ft. Worth) effective April 21, 1995. On a pro
forma basis, assuming the above acquisitions had occurred as of the beginning
of 1994, net revenues for the second quarter of 1995 would have increased by
approximately 12%.
Station operating expenses excluding depreciation and amortization for the
second quarter of 1995 were $40,790,000 as compared to $33,501,000 for the
second quarter of 1994, an increase of approximately $7,289,000 or 22%. The
increase was principally due to the above acquisitions, 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 1994,
station operating expenses for the second quarter of 1995 would have increased
by approximately 10%.
Depreciation and amortization expense for the second quarter of 1995 was
$12,428,000 as compared to $11,547,000 for the second quarter of 1994, an
increase of approximately $881,000 or 8%. The increase was principally due to
the depreciation and amortization expense associated with the above
acquisitions.
7
Operating income for the second quarter of 1995 was $29,923,000 as compared
to $22,344,000 for the second quarter of 1994, an increase of approximately
$7,579,000 or 34%. 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 second quarter of 1995 was $12,144,000 as compared to $10,754,000 for the
second quarter of 1994, an increase of approximately $1,390,000 or 13%. The
increase was due principally to additional borrowings in connection with the
above acquisitions.
Net income for the second quarter of 1995 was $17,195,000 as compared to
$11,390,000 for the second quarter of 1994, an increase of approximately
$5,805,000 or 51%.
SIX MONTHS ENDED JUNE 30, 1995 AS COMPARED TO THE FIRST SIX MONTHS OF 1994
--------------------------------------------------------------------------
Net revenues for the six months ended June 30, 1995 were $146,891,000 as
compared to $116,877,000 for the first six months of 1994, an increase of
approximately 26%. The increase was due principally to higher advertising
revenues at most of the Company's stations, and the acquisitions of the radio
stations KRTH-FM (Los Angeles), WPGC-AM/FM (Washington, D.C.), WXYT-AM
(Detroit), and KLUV-FM (Dallas/Ft. Worth). On a pro forma basis, assuming the
above acquisitions had occurred as of the beginning of 1994, net revenues for
the first six months of 1995 would have increased by approximately 13%.
Station operating expenses excluding depreciation and amortization for the
six months ended June 30, 1995 were $78,116,000 as compared to $63,863,000 for
the first six months of 1994, an increase of approximately 22%. The increase
was principally due to the above acquisitions, 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 1994, station operating
expenses for the first six months of 1995 would have increased by approximately
10%.
Depreciation and amortization expense for the first six months of 1995 was
$24,000,000 as compared to $22,050,000 for the first six months of 1994, an
increase of approximately $1,950,000 or 9%. The increase was due to the
depreciation and amortization expense associated with the above acquisitions.
Operating income for the first six months of 1995 was $42,108,000 as
compared to $28,545,000 for the first six months of 1994, an increase of
approximately 48%. 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 six months of 1995 was $23,722,000 as compared to $20,817,000 for the
first six months of 1994, an increase of approximately 14%. The increase was
due principally to additional interest expense associated with the additional
borrowings incurred to finance the above acquisitions.
8
Net income for the first six months of 1995 was $17,700,000 ($0.26 per
share) as compared to $7,526,000 ($0.11 per share) for the first six months of
1994, an increase of approximately $10,174,000 or 135%.
LIQUIDITY AND CAPITAL RESOURCES
For the first six months of 1995, net cash flow from operating activities
was approximately $38,068,000, as compared to $32,617,000 for the first six
months of 1994, an increase of approximately $5,451,000. The increase was
principally due to higher net income. The operating cash flow was used
principally to pay down debt (approximately $20 million) and purchase
approximately 2.4 million shares of treasury stock (approximately $13.1
million).
During the first six months of 1995, the Company borrowed approximately $50
million under the Credit Agreement to finance the purchase of radio station
KLUV-FM in Dallas.
As of June 30, 1995, the Company had undrawn borrowing capacity of
approximately $338 million under the Credit Agreement.
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
Exhibit
Number Description of Exhibit
2(a) 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(b) 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(c) 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.)
2(d) Asset Purchase Agreement, dated as of September 12, 1994, by
and between TK Communications, Inc. and Infinity Broadcasting
Corporation of Dallas. (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, 1994 (File No. 0-14702) and is
incorporated herein by reference.)
3(a) Restated Certificate of Incorporation of the Company, as
amended October 22, 1993. (This exhibit can be found as
Exhibit 3 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.)
3(b) Certificate of Amendment of Restated Certificate of
Incorporation, filed on August 9, 1995.
4(a) Amendment No. 1, dated as of June 23, 1995, to the Second
Amended and Restated Credit Agreement, dated as of
December 22, 1994, between the Company and the banks that are
signatories thereto. (This exhibit can be found as Exhibit
10.01 to the Company's Registration Statement on Form S-3
(Registration No. 33-61081) and is incorporated herein by
reference.)
10
10(a)* Seventh Amendment, effective as of May 19, 1995, to the
Employment Agreement, dated September 10, 1990, between the
Company and Mel Karmazin. (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, 1995 (File No. 0-14702) and
is incorporated herein by reference.)
* Denotes management contract or compensatory plan or arrangement required to
be filed as an exhibit pursuant to item 6(a) of Form 10-Q.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1995.
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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: August 14, 1995
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