<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
COMMISSION FILE NUMBER 1-14599
----------------
INFINITY BROADCASTING CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4030071
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
40 WEST 57TH STREET, NEW YORK, NY 10019
--------------------------------------------------
(Address of principal executive offices, zip code)
(212) 314-9200
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by checkmark 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
----- -----
AT JULY 31, 2000, 389,103,478 SHARES OF CLASS A COMMON STOCK AND 700,000,000
SHARES OF CLASS B COMMON STOCK WERE OUTSTANDING.
================================================================================
<PAGE> 2
INFINITY BROADCASTING CORPORATION
INDEX
---------------------------------
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings and Comprehensive Income 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Cash Flows 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 17
Market Risks
Item 4. Submission of Matters to a Vote of Security Holders 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURE 22
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
----------------------------------------------------------------------
(unaudited, in thousands except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ---------------------------
2000 1999 2000 1999
==============================================================================================================================
<S> <C> <C> <C> <C>
Total revenues $1,112,922 $681,957 $2,005,171 $1,220,584
Less agency commissions (138,009) (84,684) (241,674) (149,576)
-----------------------------------------------------------------------------------------------------------------------------
Net revenues 974,913 597,273 1,763,497 1,071,008
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses excluding depreciation and amortization 516,686 332,190 977,613 635,769
Depreciation and amortization 170,243 73,928 331,064 146,538
-----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 686,929 406,118 1,308,677 782,307
-----------------------------------------------------------------------------------------------------------------------------
Operating earnings 287,984 191,155 454,820 288,701
Interest income (expense), net (30,673) 79 (64,305) (2,123)
Other income (expense), net (536) (41) (1,901) (133)
-----------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and minority interest 256,775 191,193 388,614 286,445
Income taxes (142,228) (91,586) (216,321) (139,213)
Minority interest in (income) loss of consolidated subsidiaries (22) 21 28 56
-----------------------------------------------------------------------------------------------------------------------------
Net earnings $ 114,525 $ 99,628 $ 172,321 $ 147,288
==============================================================================================================================
Basic earnings per common share $ 0.11 $ 0.12 $ 0.16 $ 0.17
Diluted earnings per common share $ 0.11 $ 0.12 $ 0.16 $ 0.17
==============================================================================================================================
Weighed average common shares outstanding --
Basic 1,087,863 854,794 1,087,068 854,990
Diluted 1,090,636 854,938 1,091,764 855,062
==============================================================================================================================
Comprehensive income:
Foreign currency translation adjustment (33,464) 3,813 (23,023) --
Comprehensive income $ 81,061 $103,441 $ 149,298 $ 147,288
==============================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-3-
<PAGE> 4
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands except per-share amounts)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
2000 1999
================================================================================================================
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 122,360 $ 71,636
Receivables (net of allowance for doubtful accounts of $61,159
and $48,868, respectively) 874,131 748,622
Prepaid and other current assets 150,645 108,846
Deferred income taxes 107,957 44,017
================================================================================================================
Total current assets 1,255,093 973,121
Property and equipment, net 2,265,663 2,091,735
Intangible assets, net 16,032,290 15,927,693
Other assets 360,180 334,906
----------------------------------------------------------------------------------------------------------------
Total assets $19,913,226 $19,327,455
================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 446,458 $ 314,014
Accrued compensation 90,740 69,170
Accrued interest 19,211 17,112
Accrued income taxes -- 12,192
Short-term debt 99,000 38,000
Other current liabilities 5,146 943
----------------------------------------------------------------------------------------------------------------
Total current liabilities 660,555 451,431
Long-term debt 2,372,425 1,906,348
Deferred income taxes 1,299,137 1,313,398
Other noncurrent liabilities 107,642 65,236
----------------------------------------------------------------------------------------------------------------
Total liabilities 4,439,759 3,736,413
----------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, par value $0.01 (50,000 shares
authorized, no shares issued) -- --
Class A common stock, par value $0.01 (2,000,000 shares
authorized, 414,460 and 390,709 shares issued at June 30, 2000 and 4,145 3,907
December 31, 1999, respectively)
Class B common stock, par value $0.01 (2,000,000 shares authorized, 700,000
shares issued at June 30, 2000 and December 31, 1999, respectively) 7,000 7,000
Capital in excess of par value 15,726,518 15,657,734
Accumulated earnings 593,309 420,990
Accumulated other comprehensive loss (36,323) (13,300)
================================================================================================================
16,294,649 16,076,331
Less: Common stock held in treasury, at cost (28,044 shares and 17,636
shares held in treasury at June 30, 2000 and December 31, 1999,
respectively) (821,182) (485,289)
================================================================================================================
Total stockholders' equity 15,473,467 15,591,042
----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $19,913,226 $19,327,455
================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-4-
<PAGE> 5
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 2000 1999
===============================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 172,321 $ 147,288
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 331,064 146,538
Deferred taxes 213,481 2,607
Other noncash items (6,443) (3,296)
Changes in assets and liabilities, net of acquisitions and dispositions:
Decrease in accounts receivable (2,008) (8,264)
Increase in other assets (53,515) (19,714)
(Decrease) increase in accounts payable and accrued expenses (48,638) 29,246
Increase (decrease) in accrued interest 2,099 (4,680)
(Decrease) increase in accrued income taxes payable (12,192) 33,583
Decrease in other liabilities (9,348) (4,468)
---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 586,821 318,840
---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from dispositions -- 58,750
Business acquisitions and investments (643,463) (101,422)
Capital expenditures (42,815) (19,561)
---------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (686,278) (62,233)
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in short-term debt 61,000 --
Bank revolver borrowings 1,850,000 --
Bank revolver payments (1,390,000) --
Purchase of notes and convertible debentures (97,798) (184,731)
Treasury stock repurchases (335,893) (34,366)
Proceeds from exercise of stock options 62,872 --
---------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 150,181 (219,097)
---------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 50,724 37,510
Cash and cash equivalents at beginning of period 71,636 497,701
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 122,360 $ 535,211
===============================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 70,248 $ 20,744
Income taxes 18,203 103,114
===============================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-5-
<PAGE> 6
INFINITY BROADCASTING CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------
1. GENERAL
The condensed consolidated financial statements include the accounts of Infinity
Broadcasting Corporation and its subsidiary companies (together, Infinity or the
Company) after elimination of intercompany accounts and transactions. When
reading the financial information contained in this Quarterly Report, reference
should be made to the consolidated financial statements, schedules, and notes
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000. Certain previously reported amounts have been
reclassified to conform to the current year presentation. In the opinion of
management, the condensed consolidated financial statements include all material
adjustments necessary to present fairly the Company's financial position,
results of operations and cash flows. Such adjustments are of a normal recurring
nature. The results for this interim period are not necessarily indicative of
results for the entire year or any other interim period.
Infinity was incorporated in September 1998. The Company was formed to own and
operate CBS Corporation's (CBS) out-of-home media business. In December 1998,
CBS contributed to the Company, at book value, its radio and outdoor advertising
properties and related assets. The Company completed an initial public offering
of approximately 155 million shares of its Class A common stock in December 1998
(the IPO).
On May 4, 2000, CBS merged with Viacom Inc. (Viacom), and as a result of the
merger, Infinity became a majority-owned subsidiary of Viacom. As of June 30,
2000, Viacom beneficially owned 64.3% of the equity and 90.0% of the voting
power of the Company, on a fully diluted basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. On an ongoing basis,
management reviews its estimates, including those related to intangible assets,
program rights, contracts, allowance for doubtful accounts, income taxes and
litigation, based on currently available information. Changes in facts and
circumstances may result in revised estimates.
2. ACQUISITIONS
On December 7, 1999, the Company completed the acquisition of Outdoor Systems,
Inc., now known as Infinity Outdoor, Inc. (Infinity Outdoor), for approximately
$8.7 billion. The acquisition has been accounted for under the purchase method
of accounting. The excess of the purchase price over the fair value of the net
assets acquired is being amortized over a 30-year period. On December 6, 1999,
CBS, Infinity and Infinity Outdoor (the Parties) entered into a final judgment
with the United States in connection with Infinity's acquisition of Infinity
Outdoor. Under the terms of the final judgment, the Parties must divest certain
outdoor advertising properties, principally in the New York City area, in
accordance with the terms and conditions of the final judgment. The Company does
not view these divestitures as material to its business.
The following unaudited pro forma information combines the consolidated results
of operations of the Company with those of its acquisitions, including Infinity
Outdoor, as if these acquisitions occurred on January 1, 1999. The aggregate
impact of other acquisitions was not included in the unaudited pro forma
information as it is not meaningful. The pro forma results give effect to
certain purchase accounting adjustments, including additional amortization
expense from goodwill and other identifiable intangible assets, increased
interest expense from acquisition debt, the related income tax effects and
issuance of additional shares of Class A common stock.
-6-
<PAGE> 7
PRO FORMA RESULTS
(unaudited, in thousands except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------------------------
2000 1999 2000 1999
====================================================================================================================
<S> <C> <C> <C> <C>
Net revenues $974,913 $809,605 $1,763,497 $1,454,427
Net earnings 114,525 71,482 172,321 95,184
Net earnings per common share - basic $ 0.11 $ 0.07 $ 0.16 $ 0.09
Net earnings per common share - diluted $ 0.11 $ 0.06 $ 0.16 $ 0.09
====================================================================================================================
</TABLE>
This pro forma financial information is presented for comparative purposes only
and is not necessarily indicative of the operating results that actually would
have occurred had the Company's acquisitions, including Infinity Outdoor, been
consummated on January 1, 1999. In addition, these results are not intended to
be a projection of future results and do not reflect any synergies that might be
achieved from combined operations.
On March 3, 2000, the Company entered into an Asset Purchase Agreement to
acquire 18 radio stations from Clear Channel Communications, Inc. for
approximately $1.4 billion. These stations are located in San Diego, Phoenix,
Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The
transaction is subject to regulatory reviews and approvals, and is expected to
close by the end of the third quarter 2000.
On June 8, 2000, the Company completed the acquisition of Giraudy, one of
France's largest outdoor advertising companies, for approximately $400 million.
On June 22, 2000, Infinity Broadcasting acquired Societa Manifesti & Affissioni
S.p.A., one of the leading Italian outdoor advertising companies, for
approximately $90 million.
Effective July 1, 2000, the Company completed the acquisition of Waterman
Broadcasting Corporation of Texas (Waterman Broadcasting) in exchange for
approximately 2.7 million shares of the Company's Class A common stock valued at
approximately $88 million. Waterman Broadcasting owns radio stations KTSA-AM and
KTFM-FM in San Antonio.
On July 11, 2000, the Company entered into an agreement to purchase Memphis
radio stations WMC-AM and WMC-FM from Raycom Media for approximately $76
million in an asset transaction.
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
(in thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 31, DECEMBER 31,
2000 1999
===============================================================================================================
<S> <C> <C>
Accounts payable $171,130 $ 75,898
Accrued transit franchise payments 57,869 40,841
Other 217,459 197,275
---------------------------------------------------------------------------------------------------------------
Total accounts payable and accrued expenses $446,458 $314,014
===============================================================================================================
</TABLE>
4. DEBT
On May 3, 2000, the Company entered into a new credit facility, which provides
for approximately $2.0 billion of additional borrowing capacity. The credit
facility provides for short-term money market loans and revolver borrowings.
Borrowing rates under the facility are determined at the time of each borrowing
and are based generally on a floating rate index, the London Interbank Offer
Rate (LIBOR), plus a margin based on Infinity's senior unsecured debt rating.
Borrowing availability under the credit facility may be subject to compliance
with certain covenants, including a maximum leverage ratio and a minimum
interest coverage ratio, based on Infinity's senior unsecured debt rating.
-7-
<PAGE> 8
The Company's revolving credit agreements provide for approximately $3.5 billion
of total available borrowings. Viacom guarantees Infinity's borrowing under the
original $1.5 billion credit facility. At June 30, 2000, the Company had
borrowings under the credit facilities of approximately $1.5 billion, of which
$99 million were short-term. The credit facilities also serve as backup for
commercial paper issued by the Company.
5. RELATED PARTY TRANSACTIONS
In December 1998, the Company completed its IPO. In connection with the IPO, the
Company entered into an intercompany agreement with CBS, pursuant to which CBS,
now Viacom, provides the Company with a number of services, including among
others, certain legal, financial, administrative and executive services. The
costs of these services are allocated according to established methodologies
determined by Viacom on an annual basis. For the three and six months ended June
30, 2000, allocated expenses of $2.1 million and $4.1 million, respectively,
were included in the Company's Consolidated Statements of Earnings and
Comprehensive Income as compared to $1.8 million and $3.5 million for the three
and six months ended June 30, 1999, respectively. As of June 30, 2000, Viacom
beneficially owned 64.3% of the equity and 90.0% of the voting power of the
Company, on a fully diluted basis.
6. INCOME TAXES
For the three and six months ended June 30, 2000, the Company's effective tax
rate was 56%. The effective tax rate exceeds the federal statutory rate
primarily because of the non-deductible goodwill amortization resulting from
acquisitions, including the acquisition of Infinity Outdoor. During the six
months ended June 30, 2000, the Company recognized a tax benefit of $270 million
related to the exercise of approximately 24 million stock options assumed in the
Infinity Outdoor acquisition, which substantially offset all of the taxes
payable for the six months ended June 30, 2000.
7. EARNINGS PER COMMON SHARE
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", which requires the disclosure of basic and diluted
earnings per share and related computations as follows:
COMPUTATION OF EARNINGS PER COMMON SHARE
(unaudited, in thousands except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2000 1999 2000 1999
=================================================================================================================================
<S> <C> <C> <C> <C>
Net earnings applicable to common stock $ 114,525 $ 99,628 $ 172,321 $147,288
---------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - basic 1,087,863 854,794 1,087,068 854,990
Dilutive effect of stock option plans 2,773 144 4,696 72
---------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - diluted 1,090,636 854,938 1,091,764 855,062
---------------------------------------------------------------------------------------------------------------------------------
Basic and diluted earnings per common share $ 0.11 $ 0.12 $ 0.16 $ 0.17
=================================================================================================================================
</TABLE>
Options to purchase approximately 6 million shares of the Company's Class A
common stock were excluded in the computation of diluted earnings per share
because their inclusion would be anti-dilutive.
8. SEGMENT INFORMATION
The Company's operations are principally focused on the out-of-home media
business and are aligned in two business segments, Radio and Outdoor. The
Company's Radio segment has been restated for the prior year to reflect the
costs of the Company's corporate headquarters separately. These costs are
primarily comprised of compensation and general operating expenses for the
corporate headquarters. Previously, these costs were reflected as a component of
the Radio segment.
-8-
<PAGE> 9
SEGMENT RESULTS OF OPERATIONS
(unaudited, in thousands)
<TABLE>
<CAPTION>
NET REVENUES OPERATING EARNINGS EBITDA
---------------------------- ------------------------ -------------------------
THREE MONTHS ENDED JUNE 30, 2000 1999 2000 1999 2000 1999
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Radio $ 555,317 $ 463,154 $225,893 $168,752 $292,311 $235,642
Outdoor 419,596 134,119 66,022 23,671 169,304 30,660
-----------------------------------------------------------------------------------------------------------------------------
Total segments 974,913 597,273 291,915 192,423 461,615 266,302
Corporate -- -- (3,931) (1,268) (3,924) (1,260)
-----------------------------------------------------------------------------------------------------------------------------
Total $ 974,913 $ 597,273 $287,984 $191,155 $457,691 $265,042
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NET REVENUES OPERATING EARNINGS EBITDA
---------------------------- ------------------------ -------------------------
SIX MONTHS ENDED JUNE 30, 2000 1999 2000 1999 2000 1999
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Radio $1,011,715 $ 827,583 $371,593 $255,582 $503,869 $388,433
Outdoor 751,782 243,425 93,202 36,168 290,074 49,706
-----------------------------------------------------------------------------------------------------------------------------
Total segments 1,763,497 1,071,008 464,795 291,750 793,943 438,139
Corporate -- -- (9,975) (3,049) (9,960) (3,033)
-----------------------------------------------------------------------------------------------------------------------------
Total $1,763,497 $1,071,008 $454,820 $288,701 $783,983 $435,106
=============================================================================================================================
</TABLE>
Management believes that earnings before interest, taxes, minority interest,
depreciation and amortization (EBITDA) is an appropriate measure for evaluating
the operating performance of the Company's business. EBITDA eliminates the
effect of depreciation and amortization of tangible and intangible assets, most
of which were acquired in acquisitions accounted for under the purchase method
of accounting. The exclusion of amortization expense eliminates variations in
results among stations or other entities caused by the timing of acquisitions.
More recent acquisitions reflect higher amortization expense due to increasing
prices associated with out-of-home properties. However, EBITDA should be
considered in addition to, not as a substitute for, operating earnings, net
earnings, cash flows and other measures of financial performance reported in
accordance with generally accepted accounting principles. As EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, this measure may not be comparable to similarly titled
measures employed by other companies. EBITDA differs from cash flows from
operating activities primarily because it does not consider changes in assets
and liabilities from period to period, and it does not include cash flows for
interest and taxes.
Net revenues derived from the Company's foreign operations were $132 million and
$216 million for the three and six months ended June 30, 2000, respectively,
compared to $52 million and $91 million for the corresponding periods of 1999.
9. SUBSEQUENT EVENTS
On July 20, 2000, the Company initiated a $3.25 billion commercial paper program
(the "Program"). Borrowings under the Program will be short-term in nature and
will be used primarily to finance pending and future acquisitions or refinance
existing debt. The Program is backed up by the Company's credit facilities.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Infinity Broadcasting Corporation (Infinity or the Company) is one of the
largest radio broadcasters in the United States, where it owns and operates 166
radio stations. The Company is the largest outdoor advertising company in North
America, with operations in the United States, Canada and Mexico. Infinity also
owns outdoor advertising properties in Europe, with operations in the United
Kingdom, the Netherlands, France, Italy and Ireland. The Company also manages
and holds an equity position in Westwood One, Inc., the largest radio network in
the United States. The Company's operations are focused on the out-of-home media
business and are aligned in two business segments, Radio and Outdoor. The
Company characterizes its radio and outdoor advertising businesses as
out-of-home because a majority of radio listening, and virtually all viewing of
outdoor advertising, takes place in automobiles, in transit systems, on the
street and other locations outside the consumer's home, including listening to
the radio at work. The Company's strategy is to generally acquire out-of-home
media properties in the largest markets.
Infinity was incorporated in September 1998. The Company was formed to own and
operate CBS Corporation's (CBS) out-of-home media business. In December 1998,
CBS contributed to the Company, at book value, its radio and outdoor advertising
properties and related assets. Also in December 1998, the Company completed an
initial public offering of approximately 155 million shares of its Class A
common stock, generating net proceeds of $3.0 billion. Following the stock
offering, CBS owned 81.8% of the Company's equity and 95.8% of the voting power.
On May 4, 2000, CBS merged with Viacom Inc. (Viacom), and as a result of the
merger, Infinity became a majority-owned subsidiary of Viacom. As of June 30,
2000, Viacom beneficially owned 64.3% of the equity and 90.0% of the voting
power of the Company, on a fully diluted basis.
On December 7, 1999, the Company completed the acquisition of Outdoor Systems,
Inc., now known as Infinity Outdoor, Inc. (Infinity Outdoor), for approximately
$8.7 billion. On December 6, 1999, CBS, Infinity and Infinity Outdoor (the
Parties) entered into a final judgment with the United States in connection with
Infinity's acquisition of Infinity Outdoor. Under the terms of the final
judgment, the Parties must divest certain outdoor advertising properties,
principally in the New York City area, in accordance with the terms and
conditions of the final judgment. The Company does not view these divestitures
as material to its business.
On March 3, 2000, the Company entered into an Asset Purchase Agreement to
acquire 18 radio stations from Clear Channel Communications, Inc. for
approximately $1.4 billion. These stations are located in San Diego, Phoenix,
Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The
purchase allows Infinity to expand into five new Top 50 markets, and increases
the Company's presence in two markets it already serves. The transaction is
subject to regulatory reviews and approvals, and is expected to close by the end
of the third quarter 2000.
On June 8, 2000, the Company completed the acquisition of Giraudy, one of
France's largest outdoor advertising companies, for approximately $400 million.
On June 22, 2000, Infinity Broadcasting acquired Societa Manifesti & Affissioni
S.p.A., one of the leading Italian outdoor advertising companies, for
approximately $90 million, expanding the Company's position in Europe.
Effective July 1, 2000, the Company completed the acquisition of Waterman
Broadcasting Corporation of Texas (Waterman Broadcasting) in exchange for
approximately 2.7 million shares of the Company's Class A common stock valued at
approximately $88 million. Waterman Broadcasting owns radio stations KTSA-AM and
KTFM-FM in San Antonio.
On July 11, 2000, the Company announced that it has agreed to purchase Memphis
radio stations WMC-AM and WMC-FM from Raycom Media for approximately $76 million
in an asset transaction. The acquisition of these two stations gives the Company
entrance into the nation's 46th largest radio market.
-10-
<PAGE> 11
The condensed consolidated financial statements include the accounts of Infinity
and its subsidiary companies after elimination of intercompany accounts and
transactions. When reading the financial information contained in this Quarterly
Report, reference should be made to the consolidated financial statements,
schedules, and notes contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, and the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000. Certain previously reported amounts
have been reclassified to conform to the current year presentation. In the
opinion of management, the condensed consolidated financial statements include
all material adjustments necessary to present fairly the Corporation's financial
position, results of operations and cash flows. Such adjustments are of a normal
recurring nature. The results for this interim period are not necessarily
indicative of results for the entire year or any other interim period.
RESULTS OF OPERATIONS
Where appropriate, the discussion below provides a comparison of actual results
with pro forma results. For the 2000 and 1999 comparisons, pro forma results
assume the completion of the Infinity Outdoor acquisition on January 1, 1999 and
other outdoor properties as though these acquisitions had been consummated as of
the corresponding date in the prior period.
USE OF EBITDA
Management believes that earnings before interest, taxes, minority interest,
depreciation and amortization (EBITDA) is an appropriate measure for evaluating
the operating performance of the Company's business. EBITDA eliminates the
effect of depreciation and amortization of tangible and intangible assets, most
of which were acquired in acquisitions accounted for under the purchase method
of accounting. The exclusion of amortization expense eliminates variations in
results among stations or other entities caused by the timing of acquisitions.
More recent acquisitions reflect higher amortization expense due to increasing
prices associated with out-of-home properties. However, EBITDA should be
considered in addition to, not as a substitute for, operating earnings, net
earnings, cash flows and other measures of financial performance reported in
accordance with generally accepted accounting principles. As EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, this measure may not be comparable to similarly titled
measures employed by other companies. EBITDA differs from cash flows from
operating activities primarily because it does not consider changes in assets
and liabilities from period to period, and it does not include cash flows for
interest and taxes.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1999
The Company's net revenues for the three months ended June 30, 2000 were $975
million compared to $597 million for the three months ended June 30, 1999, an
increase of approximately 63%. Radio net revenues for the three months ended
June 30, 2000 were $555 million compared to $463 million for the three months
ended June 30, 1999, an increase of approximately 20% as a result of strong
performance at the Company's radio stations. Outdoor net revenues for the three
months ended June 30, 2000 were $420 million compared to $134 million for the
three months ended June 30, 1999, an increase of approximately 213%. Driving
this increase was the strong performance of the Company's outdoor properties, as
well as the December 1999 acquisition of Infinity Outdoor. On a pro forma basis,
the Outdoor segment's net revenues for the second quarter of 2000 increased by
approximately 17%. During the second quarter of 2000, the Company's consolidated
net revenues on a pro forma basis increased approximately 18%.
The Company's operating expenses excluding depreciation and amortization expense
for the three months ended June 30, 2000 were $517 million compared to $332
million for the three months ended June 30, 1999, an increase of approximately
56%. Radio operating expenses excluding depreciation and amortization for the
three months ended June 30, 2000 were $262 million compared to $227 million for
the three months ended June 30, 1999, an increase of approximately 15%. Outdoor
operating expenses excluding depreciation and amortization for the three months
ended June 30, 2000 were $251 million compared to $104 million for the three
months ended June 30, 1999, an increase of approximately 143%. These increases
were primarily attributable to expenses associated with higher revenues, as well
as the acquisition of Infinity Outdoor. On a pro forma basis, the Company's
operating expenses excluding depreciation and amortization for the three months
ended June 30, 2000 compared to the three months ended June 30, 1999 increased
approximately 14%, reflecting higher outdoor lease expenses as well as expenses
associated with higher revenues. The Company's corporate expenses for the three
months ended June 30, 2000 were $4 million compared to $1 million for the three
months ended June 30, 1999, an increase of $3 million, principally due to higher
compensation expense.
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The Company's depreciation and amortization expense for the three months ended
June 30, 2000 was $170 million compared to $74 million for the three months
ended June 30, 1999, an increase of approximately 130%. Radio depreciation and
amortization expense remained flat at approximately $67 million for the three
months ended June 30, 2000 and 1999. Outdoor depreciation and amortization
expense for the three months ended June 30, 2000 was $103 million compared to $7
million for the three months ended June 30, 1999, an increase of approximately
$96 million, resulting primarily from the acquisition of Infinity Outdoor.
The Company's operating earnings for the three months ended June 30, 2000 were
$288 million compared to $191 million for the three months ended June 30, 1999,
an increase of approximately 51%. Radio operating earnings for the three months
ended June 30, 2000 were $226 million compared to $168 million for the three
months ended June 30, 1999, an increase of approximately 34%. Outdoor operating
earnings for the three months ended June 30, 2000 were $66 million compared to
$24 million for the three months ended June 30, 1999, an increase of
approximately 177%. These increases were primarily attributable to higher
revenues at the existing operations of both Radio and Outdoor, as well as the
acquisition of Infinity Outdoor. The Company's consolidated operating earnings
on a pro forma basis increased approximately 36% during the second quarter of
2000 as compared to the second quarter of 1999.
The Company's EBITDA for the three months ended June 30, 2000 was $458 million
compared to $265 million for the three months ended June 30, 1999, an increase
of approximately 73%. Radio EBITDA for the three months ended June 30, 2000 was
$292 million compared to $235 million for the three months ended June 30, 1999,
an increase of approximately 24%. Outdoor EBITDA for the three months ended June
30, 2000 was $169 million compared to $31 million for the three months ended
June 30, 1999, an increase of approximately 452%. These increases were primarily
attributable to the higher revenues generated by the Company's operating
segments and the acquisition of Infinity Outdoor. On a pro forma basis, Outdoor
EBITDA for the second quarter of 2000 increased by approximately 22%. The
Company's consolidated EBITDA on a pro forma basis increased approximately 23%
during the second quarter of 2000 as compared to the second quarter of 1999.
Net interest expense for the three months ended June 30, 2000 was $31 million.
The Company had no net interest expense for the three months ended June 30,
1999. The increase in net interest expense resulted primarily from the
assumption of debt in connection with the acquisition of Infinity Outdoor.
Income taxes for the three months ended June 30, 2000 were $142 million compared
to $91 million for the three months ended June 30, 1999. The effective tax rate
was 56% for the three months ended June 30, 2000 compared to 48% for the three
months ended June 30, 1999. The Company's effective tax rate exceeds the federal
statutory rate primarily because of the non-deductible goodwill amortization
resulting from acquisitions, including the acquisition of Infinity Outdoor. The
increase in tax expense was due to the Company's higher operating earnings.
Substantially all of the taxes payable for the second quarter were offset by tax
benefits realized in connection with the exercise of stock options assumed in
the Infinity Outdoor acquisition.
Net earnings for the three months ended June 30, 2000 totaled $115 million
compared to $100 million for the three months ended June 30, 1999, an increase
of approximately 15%.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999
The Company's net revenues for the six months ended June 30, 2000 were $1,764
million compared to $1,071 million for the six months ended June 30, 1999, an
increase of approximately 65%. Radio net revenues for the six months ended June
30, 2000 were $1,012 million compared to $828 million for the six months ended
June 30, 1999, an increase of approximately 22% as a result of strong
performance at the Company's radio stations. Outdoor net revenues for the six
months ended June 30, 2000 were $752 million compared to $243 million for the
six months ended June 30, 1999, an increase of approximately 209%. Driving this
increase was the strong performance of the Company's outdoor properties, as well
as the acquisition of Infinity Outdoor. On a pro forma basis, Outdoor net
revenues for the first half of 2000 increased by approximately 18%. The
Company's consolidated net revenues on a pro forma basis increased approximately
20% during the first half of 2000 as compared to the first half of 1999.
The Company's operating expenses excluding depreciation and amortization expense
for the six months ended June 30, 2000 were $978 million compared to $636
million for the six months ended June 30, 1999, an increase of approximately
54%. Radio operating expenses excluding depreciation and amortization for the
six months ended
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June 30, 2000 were $506 million compared to $439 million for the six months
ended June 30, 1999, an increase of approximately 15%. Outdoor operating
expenses excluding depreciation and amortization for the six months ended June
30, 2000 were $461 million compared to $194 million for the six months ended
June 30, 1999, an increase of approximately 138%. These increases were primarily
attributable to expenses associated with higher revenues, as well as the
acquisition of Infinity Outdoor. On a pro forma basis, the Company's operating
expenses excluding depreciation and amortization for the six months ended June
30, 2000 compared to the six months ended June 30, 1999 increased approximately
15%, reflecting higher outdoor lease expenses as well as expenses associated
with higher revenues. The Company's corporate expenses for the six months ended
June 30, 2000 were $10 million compared to $3 million for the six months ended
June 30, 1999, an increase of $7 million, principally due to higher compensation
expense.
The Company's depreciation and amortization expense for the six months ended
June 30, 2000 was $331 million compared to $147 million for the six months ended
June 30, 1999, an increase of approximately 126%. Radio depreciation and
amortization expense remained flat at approximately $134 million for the six
months ended June 30, 2000 and 1999. Outdoor depreciation and amortization
expense for the six months ended June 30, 2000 was $197 million compared to $13
million for the six months ended June 30, 1999, an increase of approximately
$184 million, resulting primarily from the acquisition of Infinity Outdoor.
The Company's operating earnings for the six months ended June 30, 2000 were
$455 million compared to $288 million for the six months ended June 30, 1999, an
increase of approximately 58%. Radio operating earnings for the six months ended
June 30, 2000 were $372 million compared to $255 million for the six months
ended June 30, 1999, an increase of approximately 45%. Outdoor operating
earnings for the six months ended June 30, 2000 were $93 million compared to $36
million for the six months ended June 30, 1999, an increase of approximately
157%. These increases were primarily attributable to higher revenues at the
existing operations of both Radio and Outdoor, as well as the acquisition of
Infinity Outdoor. The Company's consolidated operating earnings on a pro forma
basis increased approximately 50% during the first half of 2000 as compared to
the first half of 1999.
The Company's EBITDA for the six months ended June 30, 2000 was $784 million
compared to $435 million for the six months ended June 30, 1999, an increase of
approximately 80%. Radio EBITDA for the six months ended June 30, 2000 was $504
million compared to $388 million for the six months ended June 30, 1999, an
increase of approximately 30%. Outdoor EBITDA for the six months ended June 30,
2000 was $290 million compared to $50 million for the six months ended June 30,
1999, an increase of approximately 484%. These increases were primarily
attributable to the higher revenues generated by the Company's operating
segments and the acquisition of Infinity Outdoor. On a pro forma basis, Outdoor
EBITDA for the first half of 2000 increased by approximately 22%. The Company's
consolidated EBITDA on a pro forma basis increased approximately 26% during the
first half of 2000 as compared to the first half of 1999.
Net interest expense for the first six months of 2000 was $64 million compared
to $2 million for the first six months of 1999. The increase in net interest
expense resulted primarily from the assumption of debt in connection with the
acquisition of Infinity Outdoor.
Income taxes for the six months ended June 30, 2000 were $216 million compared
to $139 million for the six months ended June 30, 1999. The effective tax rate
was 56% for the six months ended June 30, 2000 compared to 49% for the six
months ended June 30, 1999. The Company's effective tax rate exceeds the federal
statutory rate primarily because of the non-deductible goodwill amortization
resulting from acquisitions, including the acquisition of Infinity Outdoor. The
increase in tax expense was due to the Company's higher operating earnings.
Substantially all of the taxes payable for the first six months of 2000 were
offset by tax benefits realized in connection with the exercise of stock options
assumed in the Infinity Outdoor acquisition.
Net earnings for the six months ended June 30, 2000 totaled $173 million
compared to $147 million for the six months ended June 30, 1999, an increase of
approximately 17%.
SEASONALITY
Seasonal revenue fluctuations are common in the out-of-home media industry and
are primarily the result of fluctuations in advertising expenditures by
retailers. The Company's revenues are typically lowest in the first quarter and
highest in the fourth quarter.
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LIQUIDITY AND CAPITAL RESOURCES
In general, the Company's operations generate cash substantially in excess of
that required for recurring operations and capital expenditures. At June 30,
2000, the Company had approximately $2.4 billion of long-term debt outstanding,
substantially all of which was assumed or financed in connection with the
acquisition of Infinity Outdoor and the June 1998 acquisition of American Radio
Systems Corporation. The Company's equity at June 30, 2000 totaled approximately
$15.5 billion. At June 30, 2000, the Company's cash and cash equivalents totaled
$122 million. Management expects that the Company will have sufficient liquidity
to meet its future business needs. Sources of liquidity generally available to
the Company include cash from operations, cash and cash equivalents, borrowings,
and issuance of equity securities.
Operating Activities
The Company's operating activities provided $587 million of cash during the
first six months of 2000 compared to $319 million during the first six months of
1999. The increase relates primarily to the improved operating results during
the first six months of 2000 and cash provided from the operations of Infinity
Outdoor.
The Company paid taxes of $18 million during the first half of 2000 versus $103
million in the comparable period last year. The substantial reduction in tax
payments is the result of a tax benefit recognized from the exercise of stock
options principally assumed in connection with the Infinity Outdoor acquisition.
Investing Activities
The Company's investing activities used cash of $686 million during the first
six months of 2000 compared to $62 million during the first six months of 1999.
Cash used during the first six months of 2000 related primarily to the
acquisitions of outdoor properties and capital expenditures.
The Company's capital expenditures totaled $43 million for the six months ended
June 30, 2000, compared to $20 million for the six months ended June 30, 1999.
The Company's business does not require substantial investment of capital. The
increase in capital expenditures during the first six months of 2000 was due to
the acquisition of Infinity Outdoor.
Financing Activities
Cash provided by financing activities totaled $150 million during the first six
months of 2000 compared to cash used of $219 million during the first six months
of 1999.
During the three and six months ended June 30, 2000, pursuant to $1 billion of
stock buyback authorizations, the Company acquired approximately 5 million and
10 million shares of its Class A common stock at a cost of $169 million and $336
million, respectively. Since the inception of the stock buyback program in June
1999 through July 31, 2000, the Company has acquired approximately 28 million
shares of its Class A common stock at an average price of $29.25 per share for a
total cost of $821 million. The stock buybacks were funded principally from the
Company's internal cash resources.
The exercise of stock options, primarily assumed in connection with the
acquisition of Infinity Outdoor, provided the Company with approximately $63
million of cash during the six months ended June 30, 2000.
On May 3, 2000, the Company executed a new credit facility, which provides for
approximately $2.0 billion of additional borrowing capacity. The Company's
revolving credit agreements provide for approximately $3.5 billion of total
available borrowings. Viacom guarantees Infinity's borrowing under the original
$1.5 billion credit facility. Borrowing availability under the credit agreements
is subject to compliance with certain covenants, including a maximum leverage
ratio and a minimum interest coverage ratio, as defined in the credit
agreements. At June 30, 2000, the Company had borrowings under the credit
facilities of approximately $1.5 billion, of which $99 million were short-term.
These borrowings resulted principally from the refinancing of debt assumed in
the Infinity Outdoor acquisition and funding for current year acquisitions.
On July 20, 2000, the Company initiated a $3.25 billion commercial paper
program. Reflecting on the strength of the Company's balance sheet and its
operations, Moody's, Investors Service, Inc., Standard & Poors Ratings Services
and Fitch rated the offering at A-2, P-2, and F-2, respectively.
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<PAGE> 15
During the first half of 2000, the Company repurchased at market rates certain
outstanding debt at a cost of $98 million.
Cash used for financing activities during the first six months of 1999 related
to the Company's repayment of outstanding debt and the repurchase of shares of
the Company's Class A common stock.
Market Risk
The Company uses derivative financial instruments to reduce its exposure to
market risks from changes in foreign exchange rates and interest rates. The
Company does not hold or issue financial instruments for speculative trading
purposes. The derivative instruments used are foreign exchange forward
contracts. These derivatives, which are over-the-counter instruments, are
non-leveraged. Realized gains and losses on contracts that hedge anticipated
future cash flows are recognized in "other income (expense), net" and were not
material in the periods presented. The Company is also vulnerable to changes in
LIBOR, which is the rate primarily used in substantially all of the Company's
existing agreements; however, the Company does not believe this exposure to be
material.
REGULATORY MATTERS
The Communications Act prohibits the assignment of a broadcast license or the
transfer of control of a broadcast licensee without the prior approval of the
Federal Communications Commission (FCC). In determining whether to grant such
approval, the FCC considers a number of factors pertaining to the proposed
assignee or transferee, including compliance with the various rules limiting
common ownership of media properties in a given market, the "character" of the
proposed assignee or transferee and those persons holding "attributable"
interests therein, and compliance with the Communications Act's limitations on
alien ownership and other FCC rules and policies.
The Telecommunications Act of 1996 (Telecom Act) eliminated national limits on
the ownership of AM and FM stations. Additionally, it established new local
ownership rules that use a sliding scale of permissible ownership, depending on
the number of radio stations in a certain FCC-defined market. The FCC also has
an unpublished policy that involves special review and notice of proposed
transactions if such transactions would enable a single owner or two owners to
attain a high degree of revenue concentration in a market.
CBS (now Viacom) had previously received numerous permanent and temporary
conditional waivers to permit ownership of a television station and numerous
radio stations in the same market. The temporary waivers were subject to the
outcome of pending rulemaking proceedings focusing upon the possible relaxation
of the FCC rule restricting common ownership in the same market of radio and
television stations (formerly known as the "one-to-a-market" rule).
In August 1999, the FCC adopted a radio/television cross-ownership rule, which
allows a single party to own in a market: (a) up to two television stations (if
permitted by the FCC's newly promulgated television duopoly rule) and up to six
radio stations; or (b) one television station and seven radio stations (assuming
the television duopoly rule would allow common ownership of two television
stations in a market), in both instances if sufficient market "voices" (which
include independently owned television and radio stations as well as daily
newspapers and cable television) exist.
Viacom has demonstrated compliance with the new rule in all markets other than
Los Angeles, Chicago, Baltimore and Dallas-Fort Worth, in each of which the
Company has attributable interests in eight radio stations and Viacom has
interests in one television station. As to those four markets, the new rule
provides that the FCC would continue the temporary waivers until 2004, at which
time the FCC will review its radio/television cross-ownership rule, and Viacom
and the Company would have an opportunity to demonstrate that the continued
ownership of radio stations in these markets in excess of the limits set by the
rules would serve the public interest.
In connection with the merger of Viacom and CBS, FCC approval has been granted,
allowing the transfer of control to Viacom of the television licenses held by
CBS and the radio licenses currently held by the Company. The combined company
will be required to divest some of its broadcasting assets in connection with
such FCC
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<PAGE> 16
approval. In particular, the combined company will not be permitted to continue
the temporary conditional waivers of the radio/television cross-ownership rule
until 2004, and the addition of certain Viacom television stations will obligate
the combined company to divest additional radio stations. In total, based on the
FCC's interpretation of the radio/television cross-ownership rule, the combined
company will be required to divest seven radio stations in Los Angeles (1),
Chicago (1), Baltimore (2), Dallas (2) and Sacramento (1) in order to comply
with the radio/television cross-ownership rule.
In order to consummate the Viacom/CBS merger on an orderly and timely basis,
Viacom and CBS requested, and the FCC has granted, a period of six months from
consummation of the merger within which to file applications for divestiture
which would achieve compliance with the radio/television cross-ownership rule.
The FCC generally applies its ownership limits to "attributable" interests held
by an individual, corporation, partnership or other association. In the case of
corporations holding, or through subsidiaries controlling, broadcast licenses,
the interests of officers, directors and those who, directly or indirectly, have
the right to vote 5% or more of the corporation's voting stock (or 20% or more
of such stock in the case of insurance companies, investment companies and bank
trust departments that are passive investors) are generally attributable. If a
single individual or entity controls more than 50% of a corporation's
outstanding voting stock, that individual or entity is viewed as a single
majority stockholder; thus, the FCC views the combined company as a single
majority stockholder of the Company. In the case of a single majority
stockholder, the interests of other stockholders are not attributable unless the
stockholders are also officers or directors of the corporation or the so-called
"equity/debt plus" rule applies, under which an otherwise nonattributable debt
or equity interest in a media outlet will be deemed attributable where: (a) the
interest holder is also a program supplier to the licensee in question or is a
same market broadcaster or other media outlet subject to the broadcast
cross-ownership rules, including newspaper and cable operators; and (b) the
equity and/or debt holding exceeds 33% of the media outlet's total asset value.
The Communications Act prohibits the issuance of broadcast licenses to, or the
holding of broadcast licenses by, any corporation of which more than 20% of the
capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country. The
Communications Act also authorizes the FCC, if the FCC determines that it would
be in the public interest, to prohibit the issuance of a broadcast license to,
or the holding of a broadcast license by, any corporation directly or indirectly
controlled by any other corporation (such as Viacom in the case of the Company)
of which more than 25% of the capital stock is owned of record or voted by
aliens. As a result of these provisions, the licenses granted to the Company by
the FCC could be revoked if more than 20% of the Company's stock were directly
or indirectly owned or voted by aliens or if more than 25% of Viacom's stock
were directly or indirectly held or voted by aliens. The Company's restated
certificate restricts the ownership, voting and transfer of the Company's
capital stock in accordance with the Communications Act and the rules of the
FCC, and prohibits the issuance of more than 20% of the Company's outstanding
capital stock (or more than 20% of the voting rights it represents) to or for
the account of aliens. The restated certificate authorizes the Company's Board
of Directors to enforce these prohibitions. In addition, the restated
certificate provides that shares of capital stock of the Company determined by
the Company's Board of Directors to be owned beneficially by an alien or an
entity directly or indirectly owned by aliens in whole or in part shall be
subject to redemption by the Company by action of the Board of Directors to the
extent necessary, in the judgment of the Board of Directors, to comply with
these alien ownership restrictions.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains both
historical and forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are not based on historical facts but rather reflect
the Company's current expectations concerning future results and events. The
words "believes," "expects," "intends," "plans," "anticipates," "likely,"
"will," and similar expressions identify such forward-looking statements. These
forward-looking statements are subject to risks, uncertainties, and other
factors, some of which are beyond the Company's control, that could cause actual
results to differ materially from those forecast or anticipated in such
forward-looking statements.
Such risks, uncertainties, and factors include, but are not limited to, the
impact of changes in national, regional and local economics; successful
integration of any acquired properties; the Company's ability to develop and/or
acquire radio on-air talent and programming and to attract and retain
advertisers; the impact of significant competition from
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<PAGE> 17
other radio stations and programming alternatives such as broadcast television,
newspapers, magazines, cable television, the Internet, direct mail, and the
impact of new technologies; changes in FCC regulations; increased governmental
regulation of the location, size or content of outdoor advertising; and such
other competitive and business risks as from time to time may be detailed in the
Company's Securities and Exchange Commission reports.
Readers are cautioned not to place undue reliance on these forward-looking
statements which reflect management's view only as of the date of this Report on
Form 10-Q. The forward-looking statements included in this document are made
only as of the date of this document and the Company does not have any
obligation under Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, to publicly
update any forward-looking statements to reflect subsequent events or
circumstances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Response to this is included in "Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations - Market Risk."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of the Company was held on May 3,
2000.
(b) The following matters were submitted to a vote of the shareholders at
the annual meeting with the following results:
(i) In connection with the election of two directors, the
following votes were cast for or withheld from the following
candidates:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
David T. McLaughlin 3,823,778,949 1,724,316
Jeffrey Sherman 3,823,770,181 1,733,084
</TABLE>
The terms of office of the following directors continued after
the annual meeting:
George H. Conrades
Bruce S. Gordon
Mel Karmazin
William Levine
Arturo Moreno
Farid Suleman
Robert D. Walter
Subsequent to the annual meeting, after completion of
the Viacom/CBS merger, Mr. Sumner Redstone was
elected as a member of the Board of Directors.
(ii) A management proposal regarding the approval of the Company's
Executive Annual Incentive Plan: 3,764,285,083 votes were cast
for; 60,749,187 votes against; and 469,045 abstentions were
recorded in connection with the adoption of this proposal.
(iii) A management proposal regarding the approval of the Company's
1998 Long-Term Incentive Plan: 3,717,643,299 votes were cast
for; 107,397,984 against; and 462,032 abstentions were
recorded in connection with the adoption of this proposal.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of business. In the opinion of management of the Company, however, there
are no legal proceedings pending against the Company likely to have a material
adverse effect on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
2. PLAN OF ACQUISITION.
2.1 Asset Purchase Agreement, dated March 3, 2000, among Clear
Channel Communications, Inc., AMFM Inc., CCU Merger Sub, Inc.
and CBS Radio Inc, is incorporated by reference to
Exhibit 10.30 to the Company's report on Form 10-K for the
year ended December 31, 1999.
2.2 Agreement and Plan of Merger, dated May 27, 1999, among the
Company, Burma Acquisition Corp. and Outdoor Systems, Inc., is
incorporated herein by reference to Exhibit 99.1 to the report
on Form 8-K of Outdoor Systems, Inc., filed with the
Securities and Exchange Commission on June 3, 1999.
2.3 Amendment No. 1, dated June 16, 1999, to the Agreement and
Plan of Merger, dated May 27, 1999, among the Company, Burma
Acquisitions Corp. and Outdoor Systems, Inc., is incorporated
herein by reference to Exhibit 99.2 to the Company's report on
Form 8-K, filed with the Securities and Exchange Commission on
June 25, 1999.
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
3.1 Restated Certificate of Incorporation of the Company as of
December 14, 1998 is incorporated by reference to Exhibit 3.1
to the Company's report on Form 10-Q for the quarter ended
June 30, 1999.
3.2 Restated By-Laws of the Company as of December 14, 1998 are
incorporated by reference to Exhibit 3.2 to the Company's
report on Form 10-Q for the quarter ended June 30, 1999.
4. RIGHTS OF SECURITY HOLDERS.
4.1 There are no instruments with respect to long-term debt of the
Company that involve securities authorized thereunder
exceeding 10 percent of the total assets of the Company and
its subsidiaries on a consolidated basis. The Company agrees
to provide to the Securities and Exchange Commission, upon
request, a copy of instruments defining the rights of holders
of long-term debt of the Company and its subsidiaries.
10. MATERIAL CONTRACTS.
10.1 Intercompany Agreement between CBS Corporation (now Viacom
Inc.) and the Company is incorporated by reference to Exhibit
10(x) to the report on Form 10-K of CBS Corporation for the
year ended December 31, 1998.
10.2 Tax Sharing Agreement between CBS Corporation and the Company
is incorporated by reference to Exhibit 10(y) to the report on
Form 10-K of CBS Corporation for the year ended December 31,
1998.
10.3 Amended and Restated Credit Agreement, dated as of December
10, 1999, among the Company, the Subsidiary Borrowers parties
thereto, CBS Corporation, as Guarantor, the Lenders named
therein, The Chase Manhattan Bank, as Documentation Agent,
Morgan Guaranty Trust Company of New York, as Administrative
Agent, and Bank of America, N.A. and The Toronto-Dominion
Bank, as Syndication Agents, is incorporated herein by
reference to Exhibit 10.8 to the Company's report on Form 10-K
for the year ended December 31, 1999.
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<PAGE> 19
10.4 Amendment No. 1, dated as of April 17, 2000, to the Amended
and Restated Credit Agreement, dated as of December 10, 1999,
among the Company, the Subsidiary Borrowers (as defined in the
Agreement), CBS Corporation, as Guarantor, the Lenders (as
defined in the Agreement), Bank of America, N.A. and The
Toronto-Dominion Bank, as Syndication Agents for the Lenders,
The Chase Manhattan Bank, as Documentation Agent for the
Lenders, and Morgan Guaranty Trust Company of New York, as
Administrative Agent for the Lenders, is incorporated by
reference to Exhibit 10.4 to the Company's report on Form 10-Q
for the quarter ended March 31, 2000.
10.5 Five-year Credit Agreement, dated as of May 3, 2000, among the
Company, the Subsidiary Borrowers parties thereto, the Lenders
named therein, The Chase Manhattan Bank, as Administrative
Agent, Fleet National Bank and Bank of America, N.A., as
Co-Syndication Agents, and Bank of New York, as Documentation
Agent, is incorporated by reference to Exhibit 10.5 to the
Company's report on Form 10-Q for the quarter ended March 31,
2000.
10.6 364-Day Credit Agreement, dated as of May 3, 2000, among the
Company, the Subsidiary Borrowers parties thereto, the Lenders
named therein, The Chase Manhattan Bank, as Administrative
Agent, Fleet National Bank and Bank of America, N.A., as
Co-Syndication Agents, and Bank of New York, as Documentation
Agent, is incorporated by reference to Exhibit 10.6 to the
Company's report on Form 10-Q for the quarter ended March 31,
2000.
10.7 Management Agreement, dated March 30, 1999, between the
Company and Westwood One, Inc., is incorporated herein by
reference to Exhibit 10.17 to the report on Form 8-K of
Westwood One, Inc., filed with the Securities and Exchange
Commission on June 4, 1999.
10.8 Amended and Restated Representation Agreement, dated March 30,
1999, between the Company and Westwood One, Inc., is
incorporated herein by reference to Exhibit 10.18 to the
report on Form 8-K of Westwood One, Inc., filed with the
Securities and Exchange Commission on June 4, 1999.
10.9* Services Agreement, dated as of May 1, 1993, by and between
Outdoor Systems, Inc., Williams Manufacturing, Inc. and J&L
Industries, and Amendment No. 1, dated April 15, 1996,
thereto, are incorporated by reference to Exhibit 10.9 to the
Company's report on Form 10-Q for the quarter ended March 31,
2000.
10.10* Letter Agreement, dated as of September 6, 1999, between
Viacom Inc. and Mel Karmazin, is incorporated by reference to
Exhibit 99.4 to the report on Form 8-K of CBS Corporation,
filed with the Securities and Exchange Commission on September
8, 1999.
10.11* First Amendment to Employment Agreement, dated December 31,
1999, between Viacom Inc. and Mel Karmazin, is incorporated by
reference to Exhibit 10(ss) to the report on Form 10-K of CBS
Corporation for the year ended December 31, 1999.
10.12* The CBS Corporation 1991 Long-Term Incentive Plan, as amended
to July 28, 1999, is incorporated by reference to Exhibit
10.15 to the Company's report on Form 10-Q for the quarter
ended September 30, 1999.
10.13* The CBS Corporation 1993 Long-Term Incentive Plan, as amended
to July 28, 1999, is incorporated by reference to Exhibit
10.16 to the Company's report on Form 10-Q for the quarter
ended September 30, 1999.
10.14* 1998 Long-Term Incentive Plan of the Company, is incorporated
by reference to Exhibit 10.16 to the Company's report on Form
10-K for the year ended December 31, 1999.
10.15* Executive Annual Incentive Plan of the Company, is
incorporated by reference to Exhibit 10.17 to the Company's
report on Form 10-K for the year ended December 31, 1999.
10.16* The Westinghouse Executive Pension Plan, as amended to July
28, 1999, is incorporated by reference to Exhibit 10.20 to the
Company's report on Form 10-Q for the quarter ended September
30, 1999.
10.17* The CBS Corporation 1998 Executive Annual Incentive Plan, is
incorporated by reference to Exhibit A to the Proxy Statement
of CBS Corporation filed with the Securities and Exchange
Commission on March 25, 1998.
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10.18 Form of Trademark License Agreement between CBS Worldwide Inc.
and the Company is incorporated by reference to Exhibit 10.24
to the Company's Registration Statement No. 333-63727 on Form
S-1, Amendment No. 4, filed with the Securities and Exchange
Commission on December 4, 1998.
10.19 Form of Trademark License Agreement between CBS Broadcasting
Inc. and the Company is incorporated by reference to Exhibit
10.25 to the Company's Registration Statement No. 333-63727 on
Form S-1, Amendment No. 4, filed with the Securities and
Exchange Commission on December 4, 1998.
10.20 Form of Trademark License Agreement between CBS Corporation
and the Company is incorporated by reference to Exhibit 10.26
to the Company's Registration Statement No. 333-63727 on Form
S-1, Amendment No. 4, filed with the Securities and Exchange
Commission on December 4, 1998.
10.21* The Infinity Broadcasting Corporation Stock Plan for Directors
is incorporated by reference to Exhibit 10.25 to the Company's
report on Form 10-K for the year ended December 31, 1998.
10.22 Stockholders Agreement, dated May 27, 1999, among the Company,
William S. Levine, Arturo R. Moreno, Carole D. Moreno, Levine
Investments Limited Partnership and BRN Properties Limited
Partnership, is incorporated herein by reference to Exhibit
99.2 to the report on Form 8-K of Outdoor Systems, Inc., filed
with the Securities and Exchange Commission on June 3, 1999.
10.23 Amendment No. 1, dated July 15, 1999, to the Stockholders
Agreement, dated May 27, 1999, among the Company and the
stockholders named in the agreement, is incorporated herein by
reference to Exhibit 2.4 to the Company's Registration
Statement No. 333-88363 on Form S-4, filed with the Securities
and Exchange Commission on October 4, 1999.
27. FINANCIAL DATA SCHEDULE.
* Identifies management contract or compensatory plan or arrangement.
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<PAGE> 21
B) REPORTS ON FORM 8-K
A Current Report on Form 8-K (Items 4 and 7), filed with the Securities and
Exchange Commission on May 30, 2000, reporting a change in independent
accountants in connection with the Viacom/CBS merger.
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<PAGE> 22
SIGNATURE
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, on the 14th day of August, 2000.
INFINITY BROADCASTING CORPORATION
By: /s/ FARID SULEMAN
-------------------------------
Farid Suleman
Executive Vice President, Chief
Financial Officer and Treasurer
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