SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
Commission File No. 1-8283
Citicasters Inc.
Incorporated under the laws of Florida
IRS Employer Identification No. 59-2054850
One East Fourth Street, Cincinnati, Ohio 45202
Phone: (513) 562-8000
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 and (2)
has been subject to such filing requirements for the past 90 days. Yes
X No
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13, or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No
As of May 1, 1995, there were 8,976,661 shares of Common Stock
outstanding.
EXHIBIT INDEX Page 12
<PAGE>
CITICASTERS INC. - 10-Q
PART I
FINANCIAL INFORMATION
CITICASTERS INC. AND SUBSIDIARIES
BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31
1995 1995
--------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and short-term investments $ 40,632 $ 46,258
Trade receivables, less allowance for
doubtful accounts of $1,494 and $1,244 25,543 31,851
Broadcast program rights 5,523 5,488
Prepaid and other current assets 1,536 2,635
Total current assets 73,234 86,232
Broadcast program rights, less current portion 3,465 4,466
Property and equipment, net 26,342 25,083
Contracts, broadcasting licenses and other
intangibles, less accumulated amortization
of $10,940 and $8,932 272,687 274,695
Deferred charges and other assets 18,489 13,016
$394,217 $403,492
<PAGE>
March 31 December 31
1995 1995
LIABILITIES AND SHAREHOLDERS' EQUITY ---------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities $ 25,207 $ 33,673
Broadcast program rights fees payable 4,999 5,041
Total current liabilities 30,206 38,714
Broadcast program rights fees payable,
less current portion 2,735 3,666
Long-term debt 122,337 122,291
Deferred income taxes 44,486 44,486
Other liabilities 42,405 43,398
Total liabilities 242,169 252,555
Shareholders' equity:
Common Stock, $.01 par value, including additional
paid-in capital; 500,000,000 shares authorized;
8,976,661 and 8,979,221 shares outstanding 87,664 87,831
Retained earnings from January 1, 1994 64,384 63,106
Total shareholders' equity 152,048 150,937
$394,217 $403,492
See notes to financial statements.
</TABLE>
Page 4
<PAGE>
CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1995 1994
Net Revenues: --------- ----------
<S> <C> <C>
Television broadcasting $14,086 $34,542
Radio broadcasting 14,959 13,907
29,045 48,449
Costs and expenses:
Operating expenses 9,144 17,242
Selling, general and administrative 10,735 15,765
Corporate general and administrative 1,123 1,158
Depreciation and amortization 3,319 7,091
24,321 41,256
Operating income 4,724 7,193
Other income (expense):
Interest expense (3,513) (9,762)
Investment income 680 56
Miscellaneous, net 187 (439)
(2,646) (10,145)
Earnings (loss) before income taxes 2,078 (2,952)
Income taxes 800 (1,200)
NET EARNINGS (LOSS) $ 1,278 ($1,752)
Net earnings per share $0.14 ($0.15)
Average common shares 9,253 11,397
See notes to financial statements.
</TABLE>
Page 5
<PAGE>
CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
<S> <C> <C>
Common Stock, including additional
paid-in capital:
Beginning balance $ 87,831 $138,588
Common Stock repurchased
and retired (329) -
Common Stock issued upon
exercise of stock options 162 -
Balance at end of period $ 87,664 $138,588
Retained earnings (Deficit):
Beginning balance $ 63,106 $ -
Net earnings (loss) 1,278 (1,752)
$ 64,384 $ (1,752)
TOTAL SHAREHOLDERS EQUITY $152,048 $136,836
</TABLE>
Page 6
<PAGE>
CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) $ 1,278 ($ 1,752)
Adjustments:
Depreciation and amortization 3,319 7,091
Non-cash interest expense 46 -
Decrease in trade receivables 6,308 5,342
Decrease (increase) in broadcast program (7) 451
rights, net of fees payable
Decrease in accounts payable, accrued
expenses and other liabilities (9,459) (370)
Decrease in deferred income taxes - (819)
Other 487 337
1,972 10,280
INVESTING ACTIVITIES:
Deposits on broadcast stations to be acquired (4,900) -
Purchases of real estate, property and equipment (2,591) (1,330)
Other 60 (4)
(7,431) (1,334)
FINANCING ACTIVITIES:
Retirements and refinancing of long-term debt - (196,318)
Additional long-term borrowings - 195,350
Repurchases of the Company's Common Stock (328) -
Other 161 -
(167) (968)
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS (5,626) 7,978
Cash and short-term investments at beginning of period 46,258 4,789
Cash and short-term investments at end of period $40,632 $ 12,767
See notes to financial statements.
</TABLE>
Page 7
<PAGE>
CITICASTERS INC. - 10-Q
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying financial statements
for Citicasters Inc. are unaudited, but Citicasters believes
that all adjustments (consisting only of normal recurring
accruals, unless otherwise disclosed herein) necessary for fair
presentation have been made. The results of operations for
interim periods are not necessarily indicative of results to be
expected for the year. The financial statements have been
prepared in accordance with the instructions to Form 10-Q and
therefore do not include all information and footnotes
necessary to be in conformity with generally accepted
accounting principles. Significant intercompany balances and
transactions have been eliminated. Certain reclassifications
have been made to conform to the current year's presentation.
On December 28, 1993, the Company completed its comprehensive
financial restructuring through a prepackaged plan of
reorganization under chapter 11 of the Bankruptcy Code. As of
December 31, 1993, the Company adopted fresh-start reporting as
required by AICPA Statement of Position No. 90-7 entitled
"Financial Reporting by Entities in Reorganization under the
Bankruptcy Code." Pursuant to the adoption of fresh-start
reporting the Company adjusted its assets and liabilities to
their estimated fair values and restated retained earnings to
zero.
All acquisitions have been treated as purchases. The accounts
and results of operations of companies since their formation or
acquisition are included in the consolidated financial
statements.
At May 1, 1995, American Premier Group and its Subsidiaries
(American Premier) owned 3,366,057 shares (37.5%) of
Citicasters' outstanding Common Stock. American Premier's
Chairman, Carl H. Lindner, owned an additional 1,557,468 shares
(17.3%) of Citicasters' outstanding Common Stock.
BROADCAST PROGRAM RIGHTS The rights to broadcast non-network
programs on Citicasters' television stations are stated at
cost, less accumulated amortization. These costs are charged
to operations on a straight-line basis over the contract period
or on a per showing basis, whichever results in the greater
aggregate amortization.
Page 8
<PAGE>
PROPERTY AND EQUIPMENT Property and equipment are based on
cost and depreciation is calculated primarily using the
straight-line method. Depreciable lives are: land
improvements, 8-20 years; buildings and improvements, 8-20
years; operating and other equipment, 3-20 years; and leasehold
improvements, over the life of the lease.
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES
Contracts, broadcasting licenses and other intangibles
represent the excess of the value of the broadcast stations
over the values of their net tangible assets, and is
attributable to FCC licenses, network affiliation agreements
and other contractual or market related factors.
Reorganization value in excess of amounts allocable to
identifiable assets represents the excess of the estimated fair
value of the Company at the time of the reorganization over the
estimated fair value allocated to its net identifiable assets.
Intangible assets are being amortized on a straight-line basis
over an average of 34 years. On an ongoing basis, Citicasters
reviews the carrying value of its intangible assets. If this
review indicates that intangible assets will not be
recoverable, as determined based on undiscounted cash flows of
the Company's broadcast stations over the remaining
amortization period, Citicasters' carrying values of intangible
assets are reduced by the amount of the estimated shortfall of
cash flows.
DEBT DISCOUNT Debt discount is being amortized over the life
of the related debt obligations by the interest method.
INCOME TAXES Citicasters files a consolidated Federal income
tax return which includes all 80% or more owned subsidiaries.
Deferred income tax assets and liabilities are determined based
on differences between financial reporting and tax bases and
are measured using enacted tax rates. Deferred tax assets are
recognized if it is more likely than not that a benefit will be
realized.
EARNINGS (LOSS) PER SHARE Earnings (loss) per share is based
upon the weighted average number of common shares and gives
effect to common equivalent shares (dilutive options)
outstanding during the respective periods.
Page 9
<PAGE>
STATEMENT OF CASH FLOWS For cash flow purposes, "investing
activities" are defined as making and collecting loans and
acquiring and disposing of debt or equity instruments and
property and equipment. "Financing activities" include
obtaining resources from owners and providing them with a
return on their investments, borrowing money and repaying
amounts borrowed. All other activities are considered
"operating". Short-term investments for purposes of the
Financial Statements are those which had a maturity of three
months or less when acquired.
B. ACQUISITIONS AND DISPOSITIONS During the first quarter of
1995, Citicasters entered into agreements to acquire second FM
stations in Tampa (WTBT) and Portland (KKCW). The purchase
price for the Portland station is $30 million and the purchase
price for the Tampa station will be between $5.5 million and $8
million depending on the satisfaction of certain conditions.
Pursuant to the terms of these agreements Citicasters made
escrow deposits aggregating $4.9 million. The escrow deposits
are included in the balance sheet caption "Deferred charges and
other assets." Citicasters began operating WTBT-FM under a
local marketing agreement during March 1995. It is anticipated
that the purchase of KKCW-FM will be completed during the
second quarter of 1995.
During 1994, Citicasters sold one AM and three FM radio
stations and acquired or commenced the operation of two FM
radio stations. The following table sets forth certain
information regarding these radio station transactions:
<TABLE>
<CAPTION>
Date Operations Date of Acquisition Price/
Commenced/Ceased Closing Sales Price
<S> <C> <C> <C>
Acquisitions:
Sacramento (KRXQ-FM) January 1, 1994 May 27, 1994 $16 million
Cincinnati (WWNK-FM) April 25, 1994 April 21, 1995 $15 million
Dispositions:
Detroit (WRIF-FM) January 23, 1994 September 23, 1994 $11.5 million
Milwaukee (WLZR-FM&AM) April 14, 1994 April 14, 1994 $7 million
Denver (KBPI-FM) April 19, 1994 August 5, 1994 $8 million
In the aggregate, these purchases and sales of radio stations
will not have a material effect on Citicasters' results.
</TABLE>
Page 10
<PAGE>
During September and October 1994, Citicasters sold four of its
network affiliated television stations to entities affiliated
with New World communications Group Incorporated ("New World").
The stations sold included KSAZ in Phoenix, WDAF in Kansas
City, WBRC in Birmingham and WGHP in Greensboro/Highpoint.
Citicasters received $355.5 million in cash and a warrant to
purchase, for five years, 5,000,000 shares of New World Common
Stock at $15 per share. The warrant was valued at $10 million
and is included in the balance sheet caption "Deferred charges
and other assets." Citicasters recorded a pretax gain of $95.3
million ($50.1 million after tax) on these sales. Proceeds
from the sales were used to retire long-term debt and to
repurchase shares of the Company's Common Stock.
The following proforma financial information is based on the
historical financial statements of Citicasters, adjusted to
reflect the television station sales, retirement of long-term
debt and the February 1994 refinancing of subordinated debt (in
thousands except per share data).
Three months ended
March 31, 1994
Net revenues $26,872
Operating income $ 2,539
Net earnings $ 829
Net earnings per share $ .07
<TABLE>
<CAPTION>
C. LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
March 31, December 31,
1995 1994
<S> <C> <C>
Citicasters:
9-3/4% Senior Subordinated Notes
due February 2004, less unamortized
discount of $2,663 and $2,709
(imputed interest rate 10.13%) $122,337 $122,291
</TABLE>
As of March 31, 1995, Citicasters had $125 million of bank credit
available under an acquisition facility and $25 million of bank
credit available under a working capital facility. As of May 1,
1995, Citicasters had no amounts outstanding under either facility.
Page 11
<PAGE>
D. SHAREHOLDERS' EQUITY Citicasters is authorized to issue 500 million
shares of Class A Common Stock, $.01 par value, 125 million shares
of Class B Common Stock, $.01 par value and 9.5 million shares of
Serial Preferred Stock, $.01 par value. The preferred stock may
have such preferences and other rights and limitations as the Board
of Directors may designate with respect to each series.
Citicasters' bank credit agreement permits it to acquire up to
$65 million of its common stock. During the last four months
of 1994, Citicasters acquired 2,354,475 shares of its common
stock for $51.1 million from several unaffiliated institutions.
During the first quarter of 1995, Citicasters completed an odd
lot tender pursuant to which it acquired an additional 10,950
shares at a cost of $30 per share from holders of fewer than
100 shares.
E. SUBSEQUENT EVENT On April 19, 1995, Citicasters' Board of Directors
declared a three for two stock split of its outstanding Common
Stock. The stock split was effective for holders of record at the
close of business on May 4, 1995 with a distribution expected to be
made on May 18, 1995. Prior to the split, Citicasters had 8,976,661
shares of its Common Stock outstanding. The split will increase
this number to approximately 13.5 million shares.
Page 12
<PAGE>
CITICASTERS INC. 10-Q
ITEM 2
Management's Discussion and Analysis
of Financial Condition and Results of Operations
GENERAL
The following is a discussion of certain factors affecting Citicasters'
results of operations for the three month period ended March 31, 1995
and its liquidity and capital resources. This discussion should be read
in conjunction with Citicasters' Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Citicasters is a holding company and depends on advances, dividends and
tax allocation payments from its operating subsidiary, Citicasters Co.,
to meet its expenditures for administrative expenses and debt service
obligations. Based upon current levels of Citicasters Co.'s operations
and anticipated growth, it is expected that operating cash flow will be
sufficient to meet expenditures for operations (including capital
expenditures), administrative expenses and debt service. Citicasters'
credit agreement provides two credit facilities: an acquisition facility
of $125 million and a working capital facility of $25 million.
Citicasters Co. is permitted to advance funds or pay dividends to
Citicasters Inc. for administrative expenses, borrowing costs and
payment of dividends. No funds have been drawn under these facilities
as of May 1, 1995.
Anticipated capital expenditures for 1995 include two major projects; a
building renovation for the three Cincinnati stations ($4.5 million) and
the construction of an FM tower in Tampa ($3 million).
Citicasters expects to use its excess operating cash flow and the $125
million acquisition facility to fund future acquisitions of radio
stations. Citicasters expects to pursue the acquisition of additional
stations in its present markets and stations in markets where it does
not currently own stations. Citicasters completed the $15 million
purchase of WWNK-FM in Cincinnati during April 1995. During the first
quarter of 1995, Citicasters entered into agreements to acquire second
FM radio stations in Tampa (WTBT) and in Portland (KKCW). The purchase
price for KKCW-FM is $30 million and the purchase price for WTBT-FM will
be between $5.5 million and $8 million depending on the satisfaction of
certain conditions. Citicasters anticipates that the purchase of KKCW-
FM will be completed during the second quarter of 1995.
Page 13
<PAGE>
Citicasters expects to continue in the near future to purchase, sell or
exchange broadcast stations in order to avail itself of the considerable
operating opportunities presented by radio duopoly rules which permit
ownership of up to two AM and two FM stations in certain markets,
including those in which Citicasters presently has radio operations.
The Company will also continue to consider acquisition opportunities in
new markets.
RESULTS OF OPERATIONS
The financial results of Citicasters' business are seasonal. Broadcast
revenues are generally higher in the second and fourth calendar quarters
than in the first and third quarters.
The amount of broadcast advertising time available for sale by
Citicasters' stations is relatively fixed, and by its nature cannot be
stockpiled for later sale. Therefore, the primary variables affecting
revenue levels are the demand for advertising time, the viewing or
listening audience of the station and the entry of new stations in the
marketplace. The major variable costs of operation are programming
(news, sports and entertainment), sales costs related to revenues and
promotional costs. The success of the programming determines the
audience levels and therefore affects revenue.
Citicasters' management believes that operating income before
depreciation and amortization is helpful in understanding cash flow
generated from its broadcasting operations that is available for debt
service, capital expenditures and taxes, and in comparing operating
performance of Citicasters' broadcast stations to other broadcast
stations. Operating income before depreciation and amortization should
not be considered an alternative to net income as an indicator of
Citicasters' overall performance.
Page 14
CITICASTERS INC. 10-Q
Management's Discussion and Analysis
of Financial Condition and Results of Operations - continued
<PAGE>
<TABLE>
<CAPTION>
Net revenues and operating income are shown below (in thousands):
Three months ended
March 31,
1995 1994
<S> <C> <C>
Net revenues:
Television broadcasting:
Local $ 7,643 $19,164
National 5,775 13,618
Other 667 1,760
Total 14,085 34,542
Radio broadcasting:
Local 11,970 11,610
National 2,804 2,158
Other 186 139
Total 14,960 13,907
Total net revenues 29,045 48,449
Operating, selling, general
and administrative expenses (19,879) (33,007)
Corporate general and
administrative expenses (1,123) (1,158)
Operating income before
depreciation and
amortization 8,043 14,284
Depreciation and amortization (3,319) (7,091)
Operating income $ 4,724 $ 7,193
</TABLE>
Page 15
CITICASTERS INC. 10-Q
Management's Discussion and Analysis
of Financial Condition and Results of Operations - continued
<PAGE>
<TABLE>
<CAPTION>
Net revenues and operating income adjusted to remove the operating
results of the four television stations sold, are shown below (in
thousands):
Three months ended
March 31,
1995 1994
<S> <C> <C>
Net revenues:
Television broadcasting $14,085 $12,965
Radio broadcasting 14,960 13,907
Total net revenues 29,045 26,872
Operating, selling, general
and administrative expenses (19,879) (19,692)
Corporate general and
administrative expenses (1,123) (1,158)
Operating income before
depreciation and
amortization 8,043 6,022
Depreciation and amortization (3,319) (3,483)
Operating income $ 4,724 $ 2,539
</TABLE>
Three months ended March 31, 1995 compared to March 31, 1994
The decrease in television net revenues is attributable to the sale of
four television stations in September and October 1994. Excluding the
results of the stations sold, television net revenues increased 9% over
the first quarter of 1994. This increase reflects the expanding
economy's effect on advertising expenditures and sales efforts. Radio
net revenues increased 8% over the first quarter of 1994. The first
quarter of 1994 included the results of one additional FM station; the
net revenue increase for the current radio group was approximately 15%.
The increase is attributable to the expanding economy, sales efforts and
improved ratings at several of the stations.
Page 16
<PAGE>
CITICASTERS INC. 10-Q
Management's Discussion and Analysis
of Financial Condition and Results of Operations - continued
Costs and expenses including depreciation and amortization decreased as
a result of the sale of the television stations and a decrease in the
number of FM radio stations.
Operating income declined as a result of the sale of the four television
stations in September and October 1994. Excluding the results of the
stations sold, operating income increased 86% over the first quarter of
1994 due to the increases in net revenue.
Operating Outlook - three months ended June 30, 1995 compared to June
30, 1994
The economy and advertising expenditures continue to grow and
Citicasters anticipates increases in both net revenues and operating
income before depreciation and amortization for its two television
stations and the radio group.
Other Income (Expense) Information
Interest expense decreased $6.2 million (64%) from the first quarter of
1994 due primarily to reduced debt levels resulting from the sale of
four television stations in September and October 1994.
Page 17
<PAGE>
CITICASTERS INC. 10-Q
PART II
OTHER INFORMATION
ITEM 6
Exhibits and Reports on Form 8-K
a) Exhibits: 11 Computation of Earnings Per Common Share
27 Financial Data Schedule
b) Reports on Form 8-K: None
Page 18
<PAGE>
CITICASTERS INC. 10-Q
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.
CITICASTERS INC.
May 5, 1995 BY: GREGORY C. THOMAS
Gregory C. Thomas
Executive Vice President and
Chief Financial Officer
Page 19
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION> Three months
ended
March 31,
1995
<S> <C>
Net earnings used to calculate primary and fully-
diluted earnings per share $ 1,278
Shares used in calculation of primary earnings
per share:
Weighted average common shares 8,982
Dilutive effect of assumed exercise of certain options
for the purchase of common shares 270
Weighted average common shares used to calculate
primary earnings per share 9,252
Primary earnings per common share $ 0.14
Shares used in calculation of fully-diluted
earnings per share:
Weighted average common shares 8,982
Dilutive effect of assumed exercise of
certain stock options for the purchase
of common stock 310
Weighted average common shares used to calculate
fully-diluted earnings per share 9,292
Fully-diluted earnings per common share $ 0.14
</TABLE>
Page 20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 40,632
<SECURITIES> 0
<RECEIVABLES> 27,037
<ALLOWANCES> 1,494
<INVENTORY> 0
<CURRENT-ASSETS> 73,234
<PP&E> 32,311
<DEPRECIATION> 5,969
<TOTAL-ASSETS> 394,217
<CURRENT-LIABILITIES> 30,206
<BONDS> 122,337
<COMMON> 87,664
0
0
<OTHER-SE> 63,384
<TOTAL-LIABILITY-AND-EQUITY> 394,217
<SALES> 0
<TOTAL-REVENUES> 29,045
<CGS> 0
<TOTAL-COSTS> 21,002
<OTHER-EXPENSES> 3,319
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,513
<INCOME-PRETAX> 2,078
<INCOME-TAX> 800
<INCOME-CONTINUING> 1,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,278
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
