<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission File No. 1-8283
CITICASTERS INC.
Incorporated under the IRS Employer
laws of Florida Identification No. 59-2054850
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 562-8000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS QUOTED ON
- ------------------- ----------
Common Stock, $.01 par value NASDAQ/NMS
OTHER SECURITIES FOR WHICH REPORTS ARE SUBMITTED PURSUANT TO SECTION 15(D) OF
THE ACT: 9-3/4% Series B Senior Subordinated Notes due December 15, 2004.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and need not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 March 1, 1995, there were 8,982,611 shares of Common Stock
outstanding. The aggregate market value of Common Stock held by non-
affiliates of the Registrant at March 1, 1995, was approximately $114.2 million
(based on non-affiliated holdings of 4,059,086 shares and a market price of
$28.13 per share).
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DOCUMENTS INCORPORATED BY REFERENCE:
Proxy Statement for the 1995 Annual Meeting of Shareholders (portions of
which are incorporated by reference in Part III hereof).
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<PAGE> 2
CITICASTERS INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
Page
----
<TABLE>
<S> <C>
Part I
- ------
Item 1 - Business 1
Item 2 - Properties 6
Item 3 - Legal Proceedings 6
Item 4 - Submission of Matters to a Vote of Security Holders *
Part II
- -------
Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6 - Selected Financial Data 8
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8 - Financial Statements and Supplementary Data 14
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure *
Part III
- --------
Item 10 - Directors and Executive Officers of the Registrant 14
Item 11 - Executive Compensation 14
Item 12 - Security Ownership of Certain Beneficial Owners and
Management 14
Item 13 - Certain Relationships and Related Transactions 14
Part IV
- -------
Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K S-1
<FN>
* The response to this Item is "none."
</TABLE>
<PAGE> 3
PART I
ITEM 1
BUSINESS
--------
INTRODUCTION
Citicasters Inc. is a holding company engaged in the ownership and
operation of radio and television stations and derives substantially all of its
revenue from the sale of advertising time. Its address is One East Fourth
Street, Cincinnati, Ohio 45202 and its telephone number is (513) 562-8000. In
June 1994, the name of the Company was changed from Great American
Communications Company to Citicasters Inc. American Financial Corporation
("AFC") and its Chairman, Carl H. Lindner, owned approximately 54.8% of
Citicasters' common stock at March 1, 1995. Citicasters Inc.'s operations are
conducted through its principal subsidiary, Citicasters Co. (formerly known as
Great American Television and Radio Company, Inc.)
In September and October 1994, the Company sold its network-affiliated
television stations located in Birmingham, Greensboro/High Point, Kansas City
and Phoenix to New World Communications Group Incorporated ("New World"). As
consideration, the Company received approximately $355 million in cash and a
five-year warrant to purchase 5,000,000 shares of New World Class A common
stock at $15 per share.
The sales proceeds together with the collection of working capital of
the stations provided Citicasters with approximately $370 million of cash which
was used to repay in full its former bank credit facility, redeem $75 million
principal amount of 9-3/4% Notes due 2004, retire $17.5 million of 9-1/2% Notes
due 1999 and repay $2 million in mortgage debt. The Company also repurchased
2.4 million shares of its Common Stock at a total cost of $51.1 million.
The Company has entered into two new revolving credit facilities to be
used for working capital and general corporate purposes ($25 million) and
acquisitions ($125 million). Citicasters plans to use its excess cash flow and
this acquisition facility to fund future purchases of radio stations.
1
<PAGE> 4
GENERAL
At December 31, 1994, Citicasters owned and/or operated two
network-affiliated television stations, ten FM radio stations and four AM radio
stations. The following tables give the location, network affiliation and
market information for these stations:
TELEVISION STATIONS
<TABLE>
<CAPTION>
Station Rank (a) Commercial
TV ---------------- Stations In Cable
Market and Households Station and TV Adults Market Sub- Network
National Market In DMA First Year House- Aged ------------ scriber- Affili-
Rank (a) (000's) Owned holds 25-54 VHF UHF ship ation
-------------------- ---------- ------------ ------- ------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tampa, FL 15 1,390 WTSP 1985 3 1T 3 6 69% CBS(b)
Cincinnati, OH 30 782 WKRC 1949 3 1T 3 2 59% ABC
<FN>
(a) Rankings for Designated Market Area ("DMA"), 6:00 a.m. to 2:00 a.m.,
Sunday-Saturday for "TV Households" and "Adults aged 25-54." "T" =
tied. The source of market information is the Nielsen Station Index,
November 1994.
(b) This station switched its network affiliation from ABC on December 12,
1994.
</TABLE>
<TABLE>
<CAPTION>
RADIO STATIONS
--------------
Population
Market and in Metro Station & Power Station Rank(b) Stations
National Market Area (a) First Year (Watts) --------------- in
Rank (a) (000's) Operated (000's) 12+ 18-34 25-54 Market Format
- -------------------- --------- ---------- ------- ---- ----- ----- --------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FM
- --
Atlanta, GA 12 2,770 WKLS 1985 99 11 4 11T 20 Album Oriented Rock
Phoenix, AZ 20 1,933 KSLX 1992 100 8 3 2 30 Classic Rock
Tampa, FL 21 1,864 WXTB 1989 100 2 1 3 23 Album Oriented Rock
Portland, OR 24 1,563 KKRZ 1984 95 8 4 12 28 Contemporary Hits
Cincinnati, OH 25 1,549 WKRQ 1947 16 9 5 11 25 Contemporary Hits
Cincinnati, OH(c) 25 1,549 WWNK 1994 32 10T 9 8T 25 Adult Contemporary
Kansas City, MO 27 1,351 KYYS 1964 100 8T 2 5 25 Album Oriented Rock
Sacramento, CA 29 1,341 KSEG 1988 50 8 3T 5T 25 Classic Rock
Sacramento, CA 29 1,341 KRXQ 1994 25 11 3T 8 25 Album Oriented Rock
Columbus, OH 33 1,216 WLVQ 1954 18 7 4 4T 25 Album Oriented Rock
AM
- --
Phoenix, AZ 20 1,933 KOPA 1992 5 n/m n/m n/m 30 Classic Rock
Portland, OR 24 1,563 KEX 1984 50 7 15T 10 28 Adult Contemporary
Kansas City, MO 27 1,351 WDAF 1964 5 1 14 4 25 Country
Columbus, OH 33 1,216 WTVN 1954 5 1 10 4T 25 Adult Contemporary
<FN>
(a) Rankings for Metro Area. Source: "Market Survey Schedule and
Population Rankings" - Arbitron, Fall 1994.
(b) Rankings for Metro Area, 6am-midnight, Monday-Sunday. All persons
aged 12 and over, Adults aged 18-34 and Adults aged 25-54. Source:
Arbitron Radio Market Report, Fall 1994. "T" = tied.
(c) Operated under a local marketing arrangement as of December 31, 1994;
under agreement for purchase for which a closing is anticipated in the
first quarter of 1995.
n/m Separate rating not meaningful. The station is operated in
conjunction with the related FM station.
</TABLE>
2
<PAGE> 5
Substantially all of Citicasters' broadcast revenues come from the
sale of advertising time to local and national advertisers. Local
advertisements are sold by each station's sales personnel and national spots
are sold by independent national sales representatives. Citicasters'
television and radio stations compete for revenues with other stations in their
respective signal coverage areas as well as with all other advertising media.
Advertising revenues are significantly affected by economic conditions on both
the national and local level.
Citicasters' AM radio stations offer their listeners a range of
programs including news, music, discussion, commentary and sports.
Citicasters' FM radio stations offer programming more focused on music.
Generally, album oriented rock and contemporary hit music programming, appeals
to a younger audience; classic rock and adult contemporary programming appeals
to a slightly older audience. Radio stations must always be alert to the
possibility of another station changing its programming format to compete
directly for listeners and advertisers. If another station converts to a
format similar to that of one of Citicasters' radio stations in the same
market, the result could be lower ratings and advertising revenue, increased
promotion and other expenses and consequently lower operating income.
FCC rules permitting ownership of two FM and/or AM radio stations in
certain markets (a "duopoly") have created opportunities for Citicasters to
increase their share of advertising revenues in its existing markets and may
allow certain synergies such as reduced operating expenses resulting from
combined administrative staffs, combined promotional efforts, and the ability
to offer advertisers a larger combined audience. Citicasters expects to
purchase, sell or exchange radio stations in order to avail itself of the
considerable operating opportunities presented by the duopoly rules. Pursuant
to this effort, Citicasters expects to complete the purchase of a second FM
radio station in Cincinnati during the first quarter of 1995 and has also
entered into agreements to acquire a second FM radio station in the Tampa and
Portland markets.
Citicasters' television stations receive a significant portion of
their programming from their respective networks; the networks sell commercial
advertising time within such programming. The competitive position of the
stations is directly affected by viewer acceptance of network programs. In the
late 1980's, the national audience shares obtained by the networks declined as
a result of increased competition from cable television networks and other
competing program sources. In 1991, these declines began to diminish and it is
expected that significant declines will not occur during the next several
years. The non-network programs broadcast by the stations are either produced
by the stations or acquired from other sources. Locally originated programs
include a wide range of show types such as news, sports, entertainment, public
affairs and religious programs.
Broadcast stations also compete for audience with other forms of home
entertainment, such as cable television, direct satellite-to-home video
services, pay television systems of various types and home video and audio
recordings. These competing services, which have the potential of providing
improved signal reception or increased home entertainment selection, have
experienced rapid growth in recent years. The major competing television
services today are provided by a large number of advertiser-supported and pay
cable television networks. Cable subscribership presently exceeds 60% of
television households in the United States and is not expected to grow beyond
65% within the next several years. There are other related forms of home
entertainment which, with continued technological advances or regulatory
changes, can be expected to become increasingly competitive with Citicasters'
broadcast properties. In addition, statutory or regulatory changes may affect
the competition faced by Citicasters. For example, the Federal Communications
Commission ("FCC") now permits telephone companies to deliver video services to
homes in the companies' telephone service areas, but only on a common carrier
basis. Telephone companies continue to seek authority from the FCC and from
Congress to become cable operators and thereby to compete directly with
presently existing cable systems. Recent court decisions, still subject to
U.S. Supreme Court review, have held that governmental restraints that prohibit
telephone companies from offering cable services are unconstitutional.
3
<PAGE> 6
REGULATION
Citicasters' business is subject to various federal and state laws and
regulations which can affect the profitability of operations. Citicasters'
television and radio broadcasting operations are subject to the jurisdiction of
the FCC under the Communications Act of 1934, as amended. Among other things,
FCC regulations govern issuance, renewal and transfer of licenses which are
necessary for operation of television and radio stations. Upon application,
and in the absence of conflicting applications (which would require the FCC to
hold a hearing) or adverse findings as to the licensee's qualifications, such
licenses are renewed without hearing for regular terms of five years for
television stations and seven years for radio stations. Representatives of
special interest and minority groups have, in the past, filed petitions to deny
renewal applications of various broadcast stations. All of Citicasters'
broadcast stations presently operate under regular renewal authorizations.
The FCC's present rules permit maximum national ownership of twenty AM
and twenty FM radio stations. A single owner may own a maximum of two AM and
two FM stations in larger radio markets such as those in which Citicasters
operates stations, so long as the combined audience share served by those
stations in a single market does not exceed 25%. The FCC's rules currently
permit ownership of twelve television stations nationally, with a limit of one
television station in each market.
Current FCC regulations also prohibit the ownership of both radio and
television stations in the same geographic market area. Pursuant to waivers of
those rules granted by the FCC, Citicasters currently owns both radio and
television stations in Cincinnati and Tampa. Citicasters' expected
acquisitions of additional radio stations in Cincinnati and Tampa will require
a further waiver of the FCC's rules.
A pending proceeding before the FCC proposes to relax or eliminate
several rules regarding the ownership of multiple television stations and of
both radio and television stations in the same market. The timing and
substantive outcome of the proceeding are uncertain.
The FCC is also investigating new methods of "digital" radio
broadcasting. "Digital Radio" would permit radio transmission and reception at
a level of quality comparable to that afforded by compact discs, and would be
far less subject to interference than present radio broadcasts. Present day
radio receivers would not be able to receive digital radio broadcasts because
digital radio, in addition to utilizing different technology, may use totally
different transmission frequencies than used by present radio stations. As the
result of frequency allocations made by the World Administrative Radio
Conference in 1992, digital radio is expected to be developed initially in the
U.S. as a satellite-delivered system, and in Europe, Canada and Mexico as a
terrestrial system. In January, 1995, the FCC allocated 50 mHz of spectrum in
the S-Band (2310-2360 mHz) for satellite digital radio services ("DARS").
There are currently four pending satellite DARS applications, and the FCC is
expected to commence a rulemaking shortly to establish service and operational
standards for satellite DARS. If terrestrial digital radio is implemented in
the U.S., it will likely be through the use of "in-band" systems that send
digitalized signals over the frequencies currently used for AM and FM
broadcasting. Several U.S. industry groups are already experimenting with the
development of such "in-band" technology. The outcome of any FCC action
concerning digital radio broadcasting may affect the long-term value of
Citicasters' radio franchises either positively or negatively, although it is
not presently anticipated that any commercial digital radio broadcasting will
begin in the United States before 1996.
4
<PAGE> 7
While the FCC relies largely on the interplay of marketplace forces in
lieu of direct government regulation, the FCC continues to regulate closely
some aspects of broadcast station operations. Examples of such regulation
include equal employment practices, political broadcast practices and rates,
television stations' performance in providing educational and informational
programs for children, televisions stations' compliance with maximum commercial
limits in children's programs, and compliance with various technical
regulations. It is also FCC policy to encourage increasing competition among
different electronic communications media. As a result of rapidly developing
technology, Citicasters' television stations can be expected to confront
increased competition from many other systems by which information and
entertainment are delivered to the home on both a free and paid basis.
Legislation adopted in 1992 affords most television licensees the
right either to have their station's signals carried on local cable systems or,
alternatively, to require that operators of local cable systems obtain
"retransmission consent" to carry each television station's signal on cable.
Both of Citicasters' television stations are presently carried by cable systems
in their local service areas, in most cases pursuant to retransmission consent
agreements. The constitutionality of the must-carry and retransmission consent
requirements continues to be the subject of pending court litigation. The
Company does not believe that invalidation of either requirement would have a
material adverse effect on its television stations.
Current technology offers several different methods of transmitting
television programming with greatly improved definition, color rendition, sound
and a wider screen picture. The most advanced type of transmission system is
referred to as High Definition Television ("HDTV"). The FCC is expected in
1995 or 1996 to promulgate technical standards for a system of HDTV
broadcasting to be used in the U.S. The type of HDTV standard that will be
adopted by the FCC will involve the broadcast of HDTV on a separate television
channel from that used for conventional broadcasting, and would thus require
participating broadcasters to make new capital investments estimated to be
approximately $2 million per station in order to operate a second station in
each market. If broadcast stations fail to make this additional investment,
they would in the long term be likely to suffer adverse competitive effects,
since cable television, VCR's and direct broadcast satellites are likely to
deliver HDTV signals or programs to consumers. Although these regulatory
proceedings with respect to HDTV and HDTV standards are in process, Citicasters
does not believe HDTV will be a significant factor over the next few years.
After the final standards are set, manufacturers must gear up to produce both
transmission equipment and receivers under the standard. Finally, penetration
of the new HDTV receivers in the consumer marketplace will need to reach
certain levels before stations commit to the capital investment necessary to
broadcast HDTV. The FCC has thus far indicated that it will allow a period of
six years following adoption of a new HDTV standard and allocation of new HDTV
channels for the completion of construction of new HDTV facilities.
EMPLOYEES
At December 31, 1994, Citicasters and its subsidiaries employed
approximately 700 full-time employees and 200 part-time employees.
5
<PAGE> 8
ITEM 2
PROPERTIES
----------
Citicasters owns both of its television station studios, buildings and
transmission sites. It owns its radio studios and buildings in Cincinnati.
All other radio station studios are operated from leased facilities.
Citicasters owns all of its AM station transmission sites (other than Phoenix
for which the lease expires in 1997) and owns its FM station transmission sites
in Cincinnati and Sacramento. Citicasters leases its FM station transmission
sites in Atlanta (lease expires in 1998), Columbus (2003), Portland (2001),
Phoenix (2000), Tampa (1997) and Kansas City (2004). In early 1995 Citicasters
began construction of an FM tower in Tampa which is expected to be completed
during the second half of the year.
ITEM 3
LEGAL PROCEEDINGS
-----------------
As reported in Citicasters' Form 10-Q for the quarter ended June 30,
1994, the Securities and Exchange Commission has been conducting a formal
investigation regarding the issuance by the Company in 1989 of approximately
3.6 million shares of common stock in exchange for outstanding public debt of
the Company. The Staff of the SEC notified the Company in May, 1994, that it
was considering recommending enforcement action against the Company alleging
that the issuances of the common stock in those exchange transactions were in
violation of the registration provisions of the Securities Act of 1933. The
Company is unaware of any further developments in the investigation since May
1994. The Company believes that the issuance of common stock was exempt from
those registration requirements.
6
<PAGE> 9
PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
-------------------------------
Following the Company's reorganization, the Common Stock resumed
trading on the National Market System of the National Association of Securities
Dealers Automated Quotations Systems, Inc. ("NASDAQ") on December 31, 1993
under the symbol "GACC." The trading symbol was changed to "CITI" on June 8,
1994, the day the Company changed its name. As a result of the effects of the
reorganization (primarily the reverse stock split and the issuance of
substantial amounts of equity securities in exchange for debt securities), per
share prices quoted prior to the reorganization have been rendered meaningless
and are not comparable to sale prices for Citicasters' Common Stock subsequent
to the reorganization. The reorganization is discussed in Note B to the
Financial Statements.
<TABLE>
The following table sets forth, for the periods indicated, the high
and low per share sales prices of the Common Stock on the NASDAQ National
Market System.
<CAPTION>
High Low
------ ------
<S> <C> <C>
1993:
December 31, 1993 ........................ $16.75 $16.63
1994:
First Quarter ............................ $18.38 $15.50
Second Quarter ........................... $19.88 $15.38
Third Quarter ............................ $22.50 $17.25
Fourth Quarter ........................... $24.75 $20.13
</TABLE>
At March 1, 1995 there were approximately 2,000 holders of record of
the Company's Common Stock.
The Company did not pay dividends on its Common Stock in 1994 or 1993.
The Company's debt instruments contain covenants which limit the amount of
dividends which Citicasters is able to pay on its Common Stock. Under the most
restrictive provision of Citicasters' debt covenants, dividends are limited to
a maximum of $2.5 million annually.
In January 1995, the Company offered to purchase shares of the Company's Common
Stock from persons who owned fewer than 100 shares for $30.00 per share.
7
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ITEM 6
SELECTED FINANCIAL DATA
-----------------------
<TABLE>
The following table (in millions except for per share data) sets forth
certain data for the periods indicated and should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations":
<CAPTION>
Citicasters | Predecessor(a)
------------------ | ------------------------------------------
1994 1993 | 1993 1992 1991 1990
------ ------ | ------ ------ ------ ------
<S> <C> <C> | <C> <C> <C> <C>
Statement of Operations Data: |
- ----------------------------- |
Consolidated net revenues $197 N/A | $205 $211 $202 $210
Operating income (loss)(b) 52 N/A | 40 (642) 12 25
Net earnings (loss) from |
continuing operations 63 N/A | (67) (613) (33) (58)
Net earnings (loss)(c) 63 N/A | 341 (597) 84 (46)
Per share data (d) $5.73 N/A | - - - -
|
Balance Sheet Data (e): |
- ----------------------- |
Consolidated assets $403 $720 | N/A $714 $1,475 $1,803
Consolidated long-term debt 122 433 | N/A 635 693 1,135
Minority interest, |
preferred stock of |
subsidiary - - | N/A 275 251 251
Shareholders' equity |
(deficit) 151 139 | N/A (339) 258 133
<FN>
(a) For purposes of this table, the term "Predecessor" refers to Great
American Communications Company prior to its emergence from chapter 11
bankruptcy in December 1993.
(b) The recorded amount of intangible assets as of December 31, 1992 was
reduced by $658 million to reflect the carrying value of its
broadcasting assets at estimated fair value at that time.
(c) Net earnings for the year ended December 31, 1993 includes, as an
extraordinary item, a one-time gain of $414 million relating to debt
discharged in the reorganization.
(d) Per share data are not presented for the Predecessor due to the
general lack of comparability as a result of the reorganization.
(e) Balance sheet data at December 31, 1993 reflects the adoption of
fresh-start reporting. The application and effects of fresh-start
reporting is discussed in more detail in Note B to the Financial
Statements.
N/A - not applicable.
</TABLE>
As a result of the Company's emergence from bankruptcy and its adoption of
fresh-start reporting as of December 31, 1993, the Balance Sheet at and after
December 31, 1993 and the Statements of Operations for periods after December
31, 1993 will not be comparable to the Financial Statements for prior periods
included elsewhere herein. See Notes to Financial Statements.
8
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ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
GENERAL
The following discussion should be read in conjunction with the
Financial Statements beginning on page F-1.
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 has entered into a new credit agreement
that 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 March 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).
Four of Citicasters' television stations were sold to entities
affiliated with New World Communications Group Incorporated in September and
early October 1994. The cash proceeds from the sale together with the
collection of the working capital of the stations provided Citicasters with
approximately $370 million in cash. Citicasters has retired $305 million of
long-term debt and repurchased 2.4 million shares of its common stock at an
aggregate cost of $51.1 million with the proceeds. 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 has a $15
million acquisition pending for WWNK-FM in Cincinnati and expects to complete
the purchase during the first quarter of 1995. During the first quarter of
1995, Citicasters entered into agreements to acquire WGUL-FM in Tampa and
KKCW-FM in Portland. The purchase price for KKCW-FM is $30 million and the
purchase price for WGUL-FM will be between $5.5 million and $8 million
depending on the satisfaction of certain conditions.
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.
9
<PAGE> 12
RESULTS OF OPERATIONS
The financial results of Citicasters' business are seasonal. 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 which 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 is also a key factor in Citicasters' assessment
of station performance. Operating income before depreciation and amortization
should not be considered an alternative to net income as an indicator of
Citicasters' overall performance.
On December 28, 1993, Great American Communications Company completed
its comprehensive financial restructuring through a prepackaged plan of
reorganization under chapter 11 of the Bankruptcy Code. Pursuant to generally
accepted accounting principles for entities in reorganization under the
bankruptcy code, Great American Communications Company revalued its assets and
liabilities to estimated fair values upon consummation of the restructuring.
Great American Communications Company and its subsidiaries are hereafter
referred to as "Predecessor." See Note B to the Financial Statements.
The net earnings in 1994 and 1993 and the net loss in 1992 include
significant non-recurring transactions including gains from asset sales and
debt refinancing transactions. In 1992, a provision was recorded for the
revaluation of broadcast intangible assets, reducing intangibles by $658
million as of December 31, 1992, to reflect the carrying value of broadcasting
assets at estimated fair values at that time. The gains realized from asset
sales, debt discharge and debt refinancing transactions totaled $50 million,
$408 million and $27 million in 1994, 1993 and 1992, respectively. Gains from
these types of transactions are not part of normal operations and no assurance
can be given that such transactions will recur in the future or if they recur
that gains will result.
10
<PAGE> 13
<TABLE>
Net revenues and operating income are shown below (in thousands):
<CAPTION>
| Predecessor
| ---------------------------
1994 | 1993 1992
-------- | -------- --------
<S> <C> | <C> <C>
Net revenues |
- ------------ |
Television broadcasting: |
Local $ 67,308 | $ 73,085 $ 72,370
National 56,972 | 60,027 62,059
Other 6,138 | 6,464 6,357
-------- | -------- --------
Total 130,418 | 139,576 140,786
-------- | -------- --------
Radio broadcasting: |
Local 54,305 | 53,704 52,716
National 11,666 | 10,848 10,620
Other 654 | 1,040 1,083
-------- | -------- --------
Total 66,625 | 65,592 64,419
-------- | -------- --------
|
Television program ventures - | - 5,616
-------- | -------- --------
TOTAL NET REVENUES 197,043 | 205,168 210,821
|
Operating, selling, general |
and administrative expenses (117,718) | (133,070) (142,861)
|
Corporate general and |
administrative expenses (4,796) | (3,996) (4,091)
-------- | -------- --------
|
OPERATING INCOME BEFORE |
DEPRECIATION AND AMORTIZATION 74,529 | 68,102 63,869
|
Depreciation and amortization (22,946) | (28,119) (47,617)
Revaluation of intangible assets - | - (658,314)
-------- | --------- --------
|
OPERATING INCOME (LOSS) $ 51,583 | $ 39,983 ($642,062)
======== | ========= ========
</TABLE>
<TABLE>
Net revenues and operating income adjusted to remove the operating
results of the four television stations sold are shown below (in thousands):
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Net revenues:
Television broadcasting $ 61,750 $ 54,005
Radio broadcasting 66,625 65,592
-------- --------
TOTAL NET REVENUES 128,375 119,597
Operating, selling, general
and administrative expenses (79,950) (81,199)
Corporate general and
administrative expenses (4,796) (3,996)
-------- --------
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION 43,629 34,402
Depreciation and amortization (13,005) (14,260)
-------- --------
OPERATING INCOME $ 30,624 $ 20,142
======== ========
</TABLE>
11
<PAGE> 14
1994 COMPARED TO 1993
Television revenues declined $9.2 million (7%) in 1994 due to the sale of
four television stations in September and October 1994. Excluding the results
of the four television stations sold, television revenues increased $7.7
million (14%) during 1994. Revenue increases were due to several factors
including: the expanding economy's effect on advertising expenditures;
national and local elections; and sales efforts. Radio revenues increased $1.0
million (2%) during 1994. The results for 1993 include one more FM radio
station than for 1994 and, although the purchase and sale of radio stations in
1994 did not have a material effect on the consolidated results for 1994, the
percentage increases in revenues and decreases in expenses were affected by
these transactions. The revenues of the eight FM and four AM stations owned in
both years increased 9.6%.
Costs and expenses decreased $14.6 million (11%) during 1994 due primarily
to the sale of the four television stations. Excluding the results of the four
television stations sold, expenses declined 1% as a result of cost controls and
the decrease in the number of FM radio stations.
Operating income increased $11.6 million (29%) during 1994 despite the
sale of the four television stations. Excluding the sale of the four
television stations, operating income increased $10.5 million (52%) during 1994
due to the combination of revenue increases and expense controls.
1993 COMPARED TO 1992
Television revenues decreased $1.2 million (less than 1%) in 1993 due
primarily to the fact that Kansas City Royals' baseball broadcasts which had
aired on the Kansas City television station during 1992 did not air in 1993.
The loss of revenues related to political advertising and the Olympics was
totally offset in 1993 by increased sales to other advertisers.
Radio revenues increased $1.2 million (2%) during the year ended
December 31, 1993. Excluding the AM radio station in Cincinnati which was
sold, radio revenues increased $3.6 million (6%) primarily as a result of
increased demand for radio advertising time.
Television program venture revenues ceased subsequent to the sale of a
20% interest in the assets and operations of the "Entertainment Tonight" joint
venture in December 1992.
12
<PAGE> 15
Operating income increased $682 million in 1993 due primarily to: (i)
the $658 million provision for the revaluation of intangibles in December 1992
and the related decrease in amortization expense of $18.9 million for the year
ended December 31, 1993; and (ii) a $5.6 million decline in revenues from
television program ventures as a result of the sale of the interest in
"Entertainment Tonight." Excluding these items and operating results from
stations sold or acquired during 1992, operating income increased $8.8 million
(29%) during 1993 due primarily to decreased expenses. The majority of the
expense decrease is a result of reductions in television programming costs,
including the elimination of the costs associated with the Kansas City Royals'
baseball broadcasts.
OPERATING OUTLOOK - THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO MARCH 31,
1994
The economy and advertising expenditures continue to grow and
Citicasters anticipates that the television stations and radio stations will
continue their strong performance which will be reflected in both net revenues
and operating income before depreciation and amortization.
OTHER INCOME (EXPENSE) INFORMATION Interest expense decreased $33.0 million
(51%) during 1994 compared to 1993 due primarily to reduced debt levels
resulting from the reorganization and to a lesser extent the sale of four
television stations. Interest expense decreased $4.9 million (7%) during 1993
compared to 1992.
<TABLE>
Included in "Miscellaneous, net" are the following items (in
thousands):
<CAPTION>
| Predecessor
| ----------------
1994 | 1993 1992
------- | ------- -------
<S> <C> | <C> <C>
Gains (losses) on sales of: |
Investments: |
Interest in "Entertainment Tonight" $ - | $ - $9,633
Other investments 634 | - -
Broadcast stations 95,339 | - (5,000)
Real estate, property and equipment 450 | 270 (230)
Other income (expenses), net (637) | (764) (367)
------- | ----- ------
$95,786 | ($494) $4,036
======= | ===== ======
</TABLE>
REORGANIZATION ITEMS Reorganization items represent the expenses
incurred as a result of the chapter 11 filings and subsequent
reorganization, including, among other things, the adjustments to record
the fair values of assets and liabilities at December 31, 1993 (see Note
B to the Financial Statements).
<TABLE>
DISCONTINUED OPERATIONS Discontinued operations consisted of the
following (in thousands):
<CAPTION>
Predecessor
-----------
1992
------
<S> <C>
Gain on sale, net of tax:
Entertainment businesses
and operations $ 8,297
Mid-Continent Casualty Company 2,400
-------
$10,697
=======
</TABLE>
In 1992, a net gain was recognized from the proceeds withheld
from the 1991 sale of the entertainment businesses. In addition, a net
gain was recognized in 1992 from the receipt of contingent proceeds
related to the 1989 sale of Mid-Continent Casualty Company. See Note J
to the Financial Statements.
INCOME TAXES As discussed in Note I to the Financial Statements,
Citicasters has utilized substantially all of its net operating loss
carryforwards to offset a substantial portion of the taxable gain
generated by the sale of its four television stations.
13
<PAGE> 16
<TABLE>
ITEM 8
Financial Statements and Supplementary Data
-------------------------------------------
Page
----
<S> <C>
Report of Independent Auditors F-1
Balance Sheet:
December 31, 1994 and 1993 F-2
Statement of Operations:
Years ended December 31, 1994, 1993 and 1992 F-3
Statement of Changes in Shareholders' Equity:
Years ended December 31, 1994, 1993 and 1992 F-4
Statement of Cash Flows:
Years ended December 31, 1994, 1993 and 1992 F-5
Notes to Financial Statements F-7
</TABLE>
"Selected Quarterly Financial Data" has been included in Note M to Citicasters'
Financial Statements.
_________________________
PART III
The information required by the following Items will be included in
Citicasters' definitive Proxy Statement which will be filed with the Securities
and Exchange Commission in connection with the 1995 Annual Meeting of
Shareholders and is incorporated herein by reference:
ITEM 10 Directors and Executive Officers of the Registrant
--------------------------------------------------
ITEM 11 Executive Compensation
----------------------
ITEM 12 Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management
----------
ITEM 13 Certain Relationships and Related Transactions
----------------------------------------------
14
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Citicasters Inc.
We have audited the accompanying balance sheets of Citicasters Inc. and
subsidiaries (formerly Great American Communications Company) as of December
31, 1994 and 1993, and the related statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. Our audits also included the financial statement schedules listed in
the Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As more fully described in Note B to the financial statements, effective
December 28, 1993, the Company emerged from bankruptcy pursuant to a plan of
reorganization confirmed by the Bankruptcy Court on December 7, 1993. In
accordance with an American Institute of Certified Public Accountants
Statement of Position, the Company has adopted "fresh-start reporting" whereby
its assets, liabilities, and new capital structure have been adjusted to
reflect estimated fair values as of December 31, 1993. As a result, the
statements of operations, shareholders' equity and cash flows for the year
ended December 31, 1994 reflect the Company's new basis of accounting and,
accordingly, is not comparable to the Company's pre-reorganization statements
of operations, shareholders' equity and cash flows for the two years ended
December 31, 1993.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Citicasters Inc. and
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
ERNST & YOUNG LLP
Cincinnati, Ohio
March 2, 1995
F-1
<PAGE> 18
<TABLE>
CITICASTERS INC. AND SUBSIDIARIES
BALANCE SHEET
(Dollars in Thousands)
<CAPTION>
December 31,
-----------------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and short-term investments $ 46,258 $ 4,789
Trade receivables, less allowance for doubtful
accounts of $1,244 and $2,010 31,851 48,294
Broadcast program rights 5,488 15,910
Prepaid and other current assets 2,635 3,355
-------- --------
Total current assets 86,232 72,348
Broadcast program rights, less current portion 4,466 11,368
Property and equipment, net 25,083 60,660
Contracts, broadcasting licenses and other
intangibles, net 274,695 574,878
Deferred charges and other assets 13,016 315
-------- --------
$403,492 $719,569
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt $ - $ 23,500
Accounts payable, accrued expenses and other
current liabilities 33,673 31,924
Broadcast program rights fees payable 5,041 15,439
-------- --------
Total current liabilities 38,714 70,863
Broadcast program rights fees payable, less
current portion 3,666 8,468
Long-term debt, net of current maturities 122,291 409,068
Deferred income taxes 44,486 77,152
Other liabilities 43,398 15,430
-------- --------
Total liabilities 252,555 580,981
Shareholders' equity:
Common Stock, $.01 par value, including
additional paid-in capital, 500,000,000
shares authorized; 8,979,221 and
11,317,196 shares outstanding 87,831 138,588
Retained earnings from January 1, 1994 63,106 -
-------- --------
Total shareholders' equity 150,937 138,588
-------- --------
$403,492 $719,569
======== ========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 19
<TABLE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(In Thousands except per share amounts)
<CAPTION>
Year ended December 31,
-----------------------------------------------
| Predecessor
| ------------------------
1994 | 1993 1992
-------- | -------- --------
<S> <C> | <C> <C>
Net revenues: |
Television broadcasting $130,418 | $139,576 $140,786
Radio broadcasting 66,625 | 65,592 64,419
Television program ventures - | - 5,616
-------- | -------- --------
197,043 | 205,168 210,821
-------- | -------- --------
Costs and expenses: |
Operating expenses 60,682 | 71,730 80,431
Selling, general and administrative 57,036 | 61,340 62,430
Corporate, general and administrative |
expenses 4,796 | 3,996 4,091
Depreciation and amortization 22,946 | 28,119 47,617
Revaluation of intangible assets - | - 658,314
-------- | -------- --------
145,460 | 165,185 852,883
-------- | -------- --------
|
Operating income (loss) 51,583 | 39,983 (642,062)
|
Other income (expense): |
Interest expense, (contractual interest |
for 1993 was $69,806) (31,979) | (64,942) (69,826)
Minority interest - | (26,776) (30,478)
Investment income 1,216 | 305 553
Miscellaneous, net 95,786 | (494) 4,036
-------- | -------- --------
|
65,023 | (91,907) (95,715)
-------- | -------- --------
Earnings (loss) from continuing |
operations before reorganization items and income taxes 116,606 | (51,924) (737,777)
|
|
Reorganization items - | (14,872) -
-------- | -------- --------
Earnings (loss) from continuing operations |
before income taxes 116,606 | (66,796) (737,777)
Income taxes 53,500 | - (124,541)
-------- | -------- --------
|
Earnings (loss) from continuing operations 63,106 | (66,796) (613,236)
|
Discontinued operations: |
Gain on sale, net of tax - | - 10,697
-------- | -------- --------
|
Earnings (loss) before extraordinary items 63,106 | (66,796) (602,539)
Extraordinary items, net of tax - | 408,140 5,675
-------- | -------- --------
|
NET EARNINGS (LOSS) $ 63,106 | $341,344 ($596,864)
======== | ======== ========
|
Net earnings per share $5.73 | * *
Average common shares 11,012 | * *
<FN>
* Share amounts are not relevant due to the effects of the reorganization.
</TABLE>
See notes to financial statements.
F-3
<PAGE> 20
<TABLE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands)
<CAPTION>
Common Stock
Including
Additional Retained Total
Paid-In Earnings Shareholders'
Capital (Deficit) Equity
------------ ----------- -------------
<S> <C> <C> <C>
PREDECESSOR:
- -----------
Balances, December 31, 1991 $270,891 ($ 13,056) $257,835
Net loss - (596,864) (596,864)
-------- --------- --------
Balances, December 31, 1992 270,891 (609,920) (339,029)
Net earnings - 341,344 341,344
Common Stock issued in restructuring
and application of fresh-start
accounting (132,653) 268,576 135,923
Stock bonus awarded 350 - 350
-------- --------- --------
Balances, December 31, 1993 after
reorganization $138,588 $ - $138,588
======== ========= ========
REORGANIZED COMPANY:
- -------------------
Balances, December 31, 1993 $138,588 $ - $138,588
Stock bonus awarded 297 - 297
Net earnings - 63,106 63,106
Common shares repurchased and retired (51,054) - (51,054)
-------- --------- --------
Balances, December 31, 1994 $ 87,831 $ 63,106 $150,937
======== ========= ========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 21
<TABLE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Thousands)
<CAPTION>
Year ended December 31,
------------------------------------------------
| Predecessor
| -------------------------
1994 | 1993 1992
-------- | -------- ---------
<S> <C> | <C> <C>
OPERATING ACTIVITIES: |
Net earnings (loss) $ 63,106 | $341,344 ($596,864)
Adjustments: |
Depreciation and amortization 22,946 | 28,119 47,617
Revaluation of intangible assets - | - 658,314
Non-cash interest expense 198 | 8,780 10,120
Other non-cash adjustments (primarily non- |
cash dividends on the preferred stock |
of a former subsidiary) - | 26,941 29,075
Reorganization items - | 14,872 -
Realized gains on investing activities (51,218) | (1,871) (21,053)
Extraordinary gains on retirements |
and refinancing of long-term debt - | (408,140) (6,025)
|
Decrease (increase) in trade receivables 16,443 | (1,635) 6,540
Increase (decrease) in accounts payable, |
accrued expenses and other liabilities (2,891) | 9,514 (3,469)
Decrease in deferred taxes (6,559) | - (124,541)
Other 465 | 507 6,421
-------- | -------- --------
42,490 | 18,431 6,135
-------- | -------- --------
INVESTING ACTIVITIES: |
Purchases of: |
Broadcast stations (16,000) | - (11,500)
Real estate, property and equipment (7,569) | (5,967) (6,747)
Sales of: |
Broadcast stations 381,547 | 1,600 52,000
Entertainment businesses: |
Cash proceeds received - | - 25,000
Cash expenses related to sale (813) | (6,021) (18,316)
Investments and other subsidiaries 2,841 | - 28,400
Other 204 | (1,131) (939)
-------- | ------- --------
360,210 | (11,519) 67,898
-------- | ------- --------
|
FINANCING ACTIVITIES: |
Retirements and refinancing of long-term debt (505,824) | (370,150) (68,340)
Additional long-term borrowings 195,350 | 355,339 10,000
Financing costs - | (13,549) -
Common shares repurchased (51,054) | - -
Proceeds from the sale of common stock - | 1,161 -
Other 297 | - (32)
-------- | -------- --------
(361,231) | (27,199) (58,372)
-------- | -------- --------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM |
INVESTMENTS 41,469 | (20,287) 15,661
|
Cash and short-term investments at beginning |
of period 4,789 | 25,076 9,415
-------- | -------- --------
Cash and short-term investments at end of |
period $ 46,258 | $ 4,789 $ 25,076
======== | ======== ========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 22
<TABLE>
CITICASTERS INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULE TO THE STATEMENT OF CASH FLOWS
(In Thousands)
<CAPTION>
Year Ended
December 31, 1993
-----------------
Predecessor
-----------
<S> <C>
EFFECTS OF REORGANIZATION ACTIVITIES:
Cash Items:
Operating activities:
Professional fees and other expenses
related to bankruptcy proceedings
and consummation of the reorganization ($ 10,633)
========
Financing activities:
Long-term debt issued for cash $ 6,339
Common stock issued for cash 1,161
--------
$ 7,500
========
Non Cash Items:
Increase in long-term debt (primarily
reduction in original issue discount) $ 25,967
Net adjustment of accounts to fair value (15,961)
Decrease in liabilities subject to exchange (40,423)
Increase in accrued liabilities
(professional fees and other expenses
related to consummation of the
reorganization) 1,438
Decrease in long-term debt through the
issuance of common stock (221,541)
Elimination of minority interest (preferred
stock of subsidiary) through the
issuance of common stock (274,932)
Common stock issued in reorganization 134,762
--------
($390,690)
========
See notes to financial statements.
</TABLE>
F-6
<PAGE> 23
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying financial statements include the
accounts of Citicasters Inc. and its subsidiaries. For purposes of the
financial statements and notes hereto the term "Predecessor" refers to Great
American Communications Company and its subsidiaries prior to emergence from
chapter 11 bankruptcy. Significant intercompany balances and transactions
have been eliminated.
On December 28, 1993 the Predecessor completed its comprehensive financial
restructuring through a prepackaged plan of reorganization under chapter 11 of
the Bankruptcy Code (see Note B for a description of the reorganization).
Pursuant to the reporting principles of AICPA Statement of Position No. 90-7
entitled "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7"), Predecessor adjusted its assets and liabilities
to their estimated fair values upon consummation of the reorganization. The
adjustments to reflect the consummation of the reorganization as of December
31, 1993, including among other things, the gain on debt discharge and the
adjustment to record assets and liabilities at their fair values, have been
reflected in the accompanying financial statements. The Statements of
Operations, Changes in Shareholders' Equity and Cash Flows for the two years
ended December 31, 1993 are presented on a historical cost basis without
giving effect to the reorganization. Therefore, the Statements of Operations,
Changes in Shareholders' Equity and Cash Flows for periods after December 31,
1993 are generally not comparable to prior periods and are separated by a line
(see Note B).
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 March 1, 1995, American Financial Corporation ("AFC") owned 3,366,057
shares (37.5%) of Citicasters' outstanding Common Stock. AFC'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.
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, 8-40 years; operating and other equipment, 3-20 years; and
leashold 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 station 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 Citicasters 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 broadcast
stations over the remaining amortization period, Citicasters' carrying value
of intangible assets are reduced by the amount of the estimated shortfall of
cash flows.
F-7
<PAGE> 24
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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 PER SHARE Earnings per share in 1994 is based upon the weighted
average number of common shares and common equivalent shares outstanding
during the year. As a result of the effects of the reorganization, per
share data for periods ending on or prior to December 31, 1993 have
been rendered meaningless and, therefore, per share information for these
periods has been omitted from the accompanying financial statements.
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. REORGANIZATION On December 28, 1993, Citicasters completed its
comprehensive financial restructuring that was designed to enhance its
long-term viability by adjusting its capitalization to reflect current and
projected operating performance levels. The Predecessor accomplished the
reorganization of its debt and preferred stock obligations through
"prepackaged" bankruptcy filings made under chapter 11 of the Bankruptcy
Code by the Predecessor and two of its former non-operating subsidiaries.
The Predecessor's primary operating subsidiary, Great American Television
and Radio Company, Inc., was not a party to any such filings under the
Bankruptcy Code.
The restructuring process that began in 1992 ultimately resulted in the
solicitation of acceptances for a prepackaged plan of reorganization in
October and early November 1993. The plan of reorganization described
below was overwhelmingly approved by the creditors and shareholders. The
Predecessor filed its bankruptcy petition with the Bankruptcy Court on
November 5, 1993. The plan was confirmed on December 7, 1993 and became
effective on December 28, 1993.
The plan included extending the maturities of Predecessor's senior bank
indebtedness and the 13% Senior Subordinated Notes due December 2000,
reducing overall debt service requirements and eliminating the preferred
dividend requirements. Under the terms of the plan the following occurred:
* Predecessor effected a reverse stock split; issuing one share of a
new class of common stock, for each 300 shares of common stock
outstanding prior to the reorganization.
* Approximately $140 million principal amount of the 9-1/2% Senior
Secured Notes due in 2000 were exchanged for $65 million principal
amount of 14% Senior Extendable Notes initially due June 30, 2001
(the "14% Notes"), including accrued interest from June 30, 1993,
and shares of common stock equal to 35.1% of the adjusted common
stock of the reorganized entity. The terms of the common stock
are summarized in Note G.
F-8
<PAGE> 25
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
* Holders of approximately $59 million principal amount of
Predecessor's debt (including the 20-1/2% Senior Notes, $10.3
million of the 14-1/8% Senior Notes, the 14-3/8% Senior
Subordinated Debentures, the 9% Senior Subordinated Notes and the
11% Senior Debentures) received either a combination of 14% Notes
and common stock or solely common stock in exchange for their debt
securities. These holders were issued shares of common stock
amounting to approximately 29.3% of the common stock of the
reorganized entity and $1.2 million principal amount of 14% Notes.
* Holders of the Variable Rate Convertible Subordinated Debentures
received common stock equal to 0.5% of the common stock of the
reorganized entity.
* Approximately $87 million principal amount of Predecessor's and
its subsidiaries' debt (including the $42.5 million outstanding
balance of the subordinated line of credit with AFC, $21.9 million
of the 9-1/2% Senior Secured Notes held by AFC and $22.6 million
principal amount of the 14-1/8% Senior Notes held by AFC's
Chairman), approximately $275 million liquidation value of
Predecessor's Preferred Stock and approximately 22.8 million shares
of common stock held by AFC before the reorganization were
exchanged for common stock equal to 33.2% of the common stock of
the reorganized entity.
* AFC fulfilled a commitment to contribute $7.5 million in cash for
which it received approximately $6.3 million principal amount of
14% Notes and 94,837 shares of common stock.
<TABLE>
The net expense incurred as a result of the chapter 11 filings and subsequent
reorganization has been segregated from ordinary operations in the Statement
of Operations. Reorganization items for 1993 include the following (in
thousands):
<S> <C>
Financing costs $25,967
Adjustments to fair value (15,961)
Professional fees and other expenses
related to bankruptcy 4,914
Interest income (48)
-------
$14,872
=======
</TABLE>
Financing costs consist of the unamortized portion of original issue discount
and deferred financing costs relating to debt subject to exchange as of the
date the petition for bankruptcy was filed (November 5, 1993). Adjustments to
fair value reflect the net change to state assets and liabilities at estimated
fair value as of December 31, 1993. Interest income is attributable to the
accumulation of cash and short-term investments after commencement of the
chapter 11 cases.
Pursuant to the fresh-start reporting provisions of SOP 90-7, the
Predecessor's assets and liabilities have been revalued and a new reporting
entity was created with no retained earnings or accumulated deficit as of the
effective date. The period from the effective date to December 31, 1993 was
considered immaterial thus, December 31, 1993 was used as the effective date
for recording the fresh-start adjustments. Predecessor's results of
operations for the period from the effective date of the restructuring to
December 31, 1993 have been reflected in the Statement of Operations for the
year ended December 31, 1993.
F-9
<PAGE> 26
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The reorganization values of the assets and liabilities were determined based
upon several factors including: prices and multiples of broadcast cash flow
(operating income before depreciation and amortization) paid in purchase and
business combination transactions, projected operating results of the
broadcast stations, market values of publicly traded broadcast companies,
economic and industry information and the reorganized capital structure. The
foregoing factors resulted in a range of reorganization values between $75 and
$200 million. Based upon an analysis of all of this data, management
determined that the reorganization value of the company would be $138.6
million.
<TABLE>
The effects of the reorganization and fresh-start adjustments on the Balance
Sheet at December 31, 1993 are as follows (in thousands):
<CAPTION>
Confirmation
Pre- of Plan
Confirmation ------------------------- Reorganized
Balance Debt Fresh- Balance
Sheet Discharge Start Sheet
-------------- --------- -------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 10,974 ($ 6,185) $ - $ 4,789
Other current assets 67,559 - - 67,559
-------- -------- -------- --------
Total current assets 78,533 (6,185) - 72,348
Contracts, broadcasting licenses
and other intangibles, net 524,062 - 50,816 574,878
Other assets 72,343 - - 72,343
-------- -------- -------- --------
Total assets $674,938 ($ 6,185) $ 50,816 $719,569
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-
term debt $635,042 ($611,542) $ - $ 23,500
Accounts payable, accrued expenses
and other current liabilities 126,906 (79,543) - 47,363
-------- -------- -------- --------
Total current liabilities 761,948 (691,085) - 70,863
Deferred income taxes 42,297 - 34,855 77,152
Long-term debt, less current
maturities - 409,068 - 409,068
Other long-term liabilities 23,891 7 - 23,898
-------- -------- -------- --------
Total liabilities 828,136 (282,010) 34,855 580,981
Minority interest - preferred stock
of subsidiary 274,932 (274,932) - -
Shareholders' equity (deficit):
Common Stock, including additional
paid-in capital 270,891 136,273 (268,576) 138,588
Accumulated deficit from
January 1, 1984 (699,021) 414,484 284,537 -
-------- -------- -------- --------
Total shareholders'
equity (deficit) (428,130) 550,757 15,961 138,588
------- -------- -------- --------
Total liabilities and share-
holders' equity (deficit) $674,938 ($ 6,185) $ 50,816 $719,569
======== ======== ======== ========
</TABLE>
F-10
<PAGE> 27
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(a) The reduction in cash is attributable to the payment of $15.6 million
of accrued interest on the 13% Senior Subordinated Notes due December
2000 and $5.8 million of fees associated with consummation of the
reorganization, partially offset by receipt of $7.7 million of proceeds
from the restructuring of the bank credit facility and the secured bank
loan due March 1995 and $7.5 million from AFC for the purchase of 14%
Notes and shares of common stock.
(b) The increase in contracts, broadcasting licenses and other intangibles
represents a $26.4 million reduction in identifiable intangibles and
recognition of reorganization value in excess of amounts allocable to
identifiable assets totaling $77.2 million.
(c) The net reduction in accounts payable, accrued expenses and other
current liabilities represents: (i) the elimination of $34.7 million of
accrued dividends on the preferred stock of a subsidiary; (ii) the
elimination of $29.8 million of interest accrued through November 5,
1993 on debt securities discharged in the reorganization, (iii) payment
of $15.6 million of accrued interest on the 13% Senior Subordinated
Notes due 2000, (iv) the elimination of an $883,000 payable to AFC
related to a cash advance received by Predecessor during 1992; and (v)
$1.4 million of accrued professional fees related to the consummation
of the reorganization.
<TABLE>
(d) The following table reconciles the adjustments to long-term debt
(in thousands):
<CAPTION>
Current
Maturities Other
---------- --------
<S> <C> <C>
Pre-reorganization balances $635,042 $ -
Adjustments to reflect the issuance of
14% Senior Extendable Notes and Common
Stock in exchange for:
14-3/8% Senior Subordinated Debentures (41,624) 1,016
9% Senior Subordinated Notes (734) 20
11% Senior Debentures (2,242) 55
Variable Rate Convertible Subordinated
Debentures (1,145) -
Subordinated Line of Credit with AFC (42,500) -
14-1/8% Senior Notes (32,955) 70
20-1/2% Senior Notes (4,551) -
9-1/2% Senior Secured Notes (161,951) 65,000
14% Senior Extendable Notes purchased by AFC - 6,339
-------- --------
Subtotal (287,702) 72,500
Payment in-kind of accrued interest on
14% Senior Extendable Notes - 5,068
Adjustment to reflect the restructuring of
the 13% Senior Subordinated Notes due
December 2000, the secured bank loan due
March 1995 and the bank term loan (323,840) 331,500
-------- --------
Total adjustments (611,542) 409,068
-------- --------
Long-term debt $ 23,500 $409,068
======== ========
</TABLE>
F-11
<PAGE> 28
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(e) The elimination of minority interest represents the retirement
of the preferred stock of a subsidiary in exchange for the
issuance of common stock.
<TABLE>
(f) The gain on debt discharge is summarized as follows (in
thousands):
<S> <C>
Carrying value of debt securities subject to
exchange, including accrued interest $318,447
Carrying value of preferred stock of subsidiary,
including accrued dividends 309,608
Aggregate principal amount of 14% Senior
Extendable Notes issued in exchanges,
including accrued interest since June 30, 1993 (71,236)
Aggregate value of common stock
issued in exchanges (134,762)
Expenses attributable to consummation of the
reorganization (7,573)
--------
Total gain on debt discharge $414,484
========
</TABLE>
(g) The adjustment to deferred income taxes represents a valuation
adjustment of a deferred tax asset related to net operating
loss carryforwards that are significantly restricted after
1993 due to the reorganization (See Note I).
C. ACQUISITIONS AND DISPOSITIONS 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.
<TABLE>
The following unaudited proforma financial information is based on the
historical financial statements of Citicasters, adjusted to reflect the
television station sales, retirement of long-term debt, the effects of
the December 1993 reorganization and the February 1994 refinancing of
subordinated debt (in thousands except per share data).
Year ended December 31,
--------------------------------
1994 1993
-------- --------
<S> <C> <C>
Net revenues $128,375 $119,597
======== ========
Operating income $ 30,624 $ 20,142
======== ========
Net earnings $ 11,582 $ 4,244
======== ========
Net earnings per share $ 1.05 $ .37
======== ========
</TABLE>
F-12
<PAGE> 29
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
In 1994, Citicasters sold radio stations in Detroit, Milwaukee and Denver
for $11.5, $7 and $8 million in cash, respectively. A portion of the
proceeds was used to purchase a radio station (KRXQ-FM) in Sacramento for
$16 million (completed in May 1994). The purchase of a radio station
(WWNK-FM) in Cincinnati for $15 million is expected to be completed in the
first quarter of 1995 upon approval of the license transfer by the FCC.
Citicasters currently operates WWNK under a local marketing agreement.
These purchases and sales did not have a material effect on the Statement
of Operations. No gain or loss was recognized upon the sale of the radio
stations because those stations were valued at their respective sale
prices under the fresh-start reporting provision of SOP 90-7.
In June 1993, the Predecessor sold an AM radio station in Cincinnati for
$1.6 million in cash. A pretax loss of $5.0 million was recorded in
November 1992 in anticipation of the sale.
In December 1992, Predecessor sold its 20% interest in the assets and
operations of the "Entertainment Tonight" joint venture for $26 million
and recognized a pretax gain of approximately $9.6 million.
In April 1992, Predecessor acquired two radio stations in Phoenix for
$11.5 million. In January 1992, Predecessor sold a radio station in
Pittsburgh and two radio stations in Indianapolis for $52 million.
<TABLE>
Included in "Miscellaneous, net" are the following pretax gains (losses)
on sales of assets (in thousands):
<CAPTION>
Predecessor
--------------------
1994 1993 1992
-------- | -------- --------
|
<S> <C> | <C> <C>
Gains (losses) on sales of: |
|
Investments $ 634 | $ - $9,633
|
Broadcast stations 95,339 | - (5,000)
|
Real estate, property |
and equipment 450 | 270 (230)
|
</TABLE>
F-13
<PAGE> 30
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
D. PROPERTY AND EQUIPMENT Property and equipment at December 31, consisted
of the following (in thousands):
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
Land and land improvements $ 5,305 $ 9,548
Buildings and improvements 10,710 17,171
Operating and other equipment 13,873 33,941
-------- -------
29,888 60,660
Accumulated depreciation (4,805) -
-------- -------
$ 25,083 $60,660
======== =======
</TABLE>
Pursuant to the fresh-start reporting principles of SOP 90-7, the carrying
value of property and equipment was adjusted to estimated fair value as of
the effective date of the reorganization, which included the restarting of
accumulated depreciation. Depreciation expense relating to property and
equipment was $8.7 million in 1994; $11.6 million in 1993; and $11.8
million in 1992.
E. CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts,
broadcasting licenses and other intangibles at December 31, consisted of
the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Licenses, network affiliation agreements
and other market related intangibles $275,629 $497,726
Reorganization value in excess of amounts
allocable to identifiable assets 7,998 77,152
-------- --------
283,627 574,878
Accumulated amortization (8,932) -
-------- --------
$274,695 $574,878
======== ========
</TABLE>
Citicasters' carrying value of its broadcasting assets was adjusted to
estimated fair value as of the effective date of the reorganization
pursuant to the reporting principles of SOP 90-7 (see Note B). This
adjustment included, among other things, the restarting of accumulated
amortization related to intangibles.
Amortization expense relating to contracts, broadcasting licenses and
other intangibles was $14.2 million in 1994; $16.5 million in 1993; and
$35.8 million in 1992.
F-14
<PAGE> 31
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
F. LONG-TERM DEBT Long-term debt at December 31, consisted of the following
(in thousands):
<TABLE>
<S> <C> <C>
1994 1993
-------- --------
Citicasters:
9-3/4% Senior Subordinated Notes
due February 2004, less unamortized
discount of $2,709 (imputed interest
rate 10.13%) $122,291 $ -
14% Senior Extendable Notes due
June 2001 - 77,568
Subsidiaries:
Bank credit facility - 220,000
13% Senior Subordinated Notes of
Citicasters Corp. due May 2001 - 111,500
9-1/2% Notes due December 1999 (secured) - 17,500
Other obligation - 6,000
-------- --------
Total long-term debt 122,291 432,568
Less current maturities - (23,500)
-------- --------
$122,291 $409,068
======== ========
</TABLE>
At December 31, 1994 no sinking fund payments are due for the next five
years.
Cash interest payments were $27.1 million in 1994; $45.1 million in 1993;
and $54.8 million in 1992.
On February 18, 1994 Citicasters refinanced the 14% Notes and the 13%
Senior Subordinated Notes due 2001 through the issuance of $200 million
principal amount of 9-3/4% Senior Subordinated Notes due 2004 ("9-3/4%
Notes"). The 9-3/4% Notes were issued at a discount; the net proceeds
were $195.4 million. No gain or loss was recognized on these
transactions. A portion of the proceeds from the sale of the four
television stations was used to retire the 9-1/2% Senior Secured Notes,
the secured bank loan and $75 million principal amount of the 9-3/4%
Notes.
In October 1994, Citicasters entered into a new bank credit agreement with
a group of banks providing two revolving credit facilities: a $125
million facility to fund future acquisitions and a $25 million working
capital facility. The acquisition facility is available through December
31, 2001. The maximum amount available under this facility will be
reduced by $7.5 million per quarter beginning in the first quarter of
1998. The working capital facility is available through December 31,
1997. Citicasters is required to use excess cash flow to reduce amounts
outstanding under the facilities if leverage ratios exceed certain levels.
The interest rate under the facilities varies depending on Citicasters'
leverage ratio. In the case of the base rate option, the rate ranges from
the base rate to the base rate plus .75%. In the case of the eurodollar
rate option, the rate ranges from 1% to 2% over the eurodollar rate. The
bank credit facilities are secured by substantially all the assets of
Citicasters. As of December 31, 1994 and March 1, 1995, Citicasters had
no amounts outstanding under either facility.
F-15
<PAGE> 32
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Citicasters' 9-3/4% Notes require a prepayment of the 9-3/4% Notes in the
event of certain changes in the control of Citicasters and further require
the proceeds from certain asset sales to be used to partially redeem
9-3/4% Notes.
At December 31, 1994 the carrying value of the 9-3/4% Notes exceeded fair
value by approximately $4.5 million. Fair value of the 9-3/4% Notes is
based on market prices of similar debt issues.
In December 1993, as part of the reorganization described in Note B, debt
with a carrying value of $634.8 million was exchanged for common stock and
debt instruments. The debt issued in the exchange included $77.6 million
of 14% Senior Extendable Notes due January 2001, $111.5 million of 13%
Senior Subordinated Notes due 2001, $17.5 million of 9-1/2% Senior Secured
Notes due 2000 and a $220 million bank credit facility.
During 1992, $47 million of the proceeds from asset sales were used to
repay or repurchase $51.2 million principal amount of long-term debt. In
addition, $13.7 million principal amount of secured notes were issued in
exchange for $18.2 million principal amount of unsecured notes.
G. 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.
The Company's debt instruments contain certain covenants which limit the
amount of dividends which Citicasters is able to pay on its common stock.
Under the most restrictive provision of Citicasters' debt covenants,
dividends are limited to a maximum of $2.5 million annually.
<TABLE>
Changes in the number of shares of common stock are shown in the following
table:
<CAPTION>
PREDECESSOR:
-----------
<S> <C>
Outstanding at January 1, 1992 & 1993 56,729,434
Reverse stock split (1-for-300) (56,540,336)
Issued in restructuring for
exchanges of securities 11,009,961
Issued for cash 94,837
CITICASTERS:
-----------
Stock bonus awarded 23,300
----------
Outstanding at December 31, 1993 11,317,196
Stock bonus awarded 16,500
Stock repurchased and retired (2,354,475)
----------
Outstanding at December 31, 1994 8,979,221
==========
</TABLE>
F-16
<PAGE> 33
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The 1991 Stock Option Plan under which 3,250,000 shares were available for
grant was canceled as part of the reorganization.
Immediately following the consummation of the reorganization, the Board of
Directors established the 1993 Stock Option Plan. The Plan provides for
granting both non-qualified and incentive stock options to key employees.
There are 800,000 common shares reserved for issuance under the 1993 Plan.
During 1994, the Board of Directors established the 1994 Directors Stock
Option Plan. The Plan provides for the granting of options to
non-employee directors of Citicasters. There are 200,000 common shares
reserved for issuance under the 1994 Plan. Options under both plans
become exercisable at the rate of 20% per year commencing one year after
grant and expire at the earlier of 10 years from the date of grant, three
months after termination of employment or retirement as a director, or one
year after the death or disability of the holder.
<TABLE>
Stock option data for Citicasters' stock option plans are as follows:
<CAPTION>
1994
Directors
1993 Stock Option Price Stock Option Option Price
Option Plan Per Share Plan Per Share
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Outstanding
December 31, 1993 581,000 $15.00 - -
Granted 171,500 $22.00-$23.13 50,000 $23.25
Terminated (85,000) $15.00 - -
------- -------
Outstanding
December 31, 1994 667,500 $15.00-$23.13 50,000 $23.25
======= =======
Exercisable
December 31, 1994 99,200 $15.00 - -
======= =======
Available for grant
December 31, 1994 132,500 150,000
======= =======
</TABLE>
H. BENEFIT PLANS In 1992, the Board of Directors authorized the termination
of the non-contributory defined benefit pension plan which covered
substantially all full-time employees meeting the eligibility
requirements. Accrued benefits under the pension plan were frozen and all
participants became fully vested. The termination of the pension plan and
the subsequent settlement of the vested benefit obligation by the purchase
of non-participating annuity contracts for, or the lump-sum payments to,
each covered employee, was completed in the first quarter of 1994 with no
effect on the results of operations.
F-17
<PAGE> 34
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
I. INCOME TAXES Deferred income taxes reflect the impact of temporary
differences between the carrying amounts of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for
income tax purposes. Significant components of Citicasters' deferred tax
assets and liability as of December 31, are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ - $80,500
Reserves, accrued expenses and other 8,190 17,168
------- -------
8,190 97,668
Valuation allowance for deferred
tax assets - (75,005)
------- -------
8,190 22,663
Deferred tax liability:
Book over tax basis of depreciable
assets 52,676 99,815
------- -------
Net deferred tax liability $44,486 $77,152
======= =======
</TABLE>
Citicasters utilized its remaining net operating loss carryforwards to
offset taxable gains generated by the 1994 sales of television and radio
stations. In accordance with SOP 90-7, the utilization of these net
operating loss carryforwards reduced reorganization value in excess of
amounts allocable to identifiable assets.
F-18
<PAGE> 35
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The following is a reconciliation of Federal income taxes at the
"statutory" rates of 35% in 1994 and 1993 and 34% in 1992 and as shown in
the Statement of Operations (in thousands):
<TABLE>
<CAPTION>
| Predecessor
| ------------------------
1994 | 1993 1992
-------- | -------- --------
<S> <C> | <C> <C>
Earnings (loss) from continuing |
operations before income taxes $116,606 | ($ 66,796) ($737,777)
Earnings from discontinued |
operations - | - 11,447
Extraordinary items - | 408,140 6,025
-------- | -------- --------
Adjusted earnings (loss) |
before income taxes $116,606 | $341,344 ($720,305)
======== | ======== ========
|
|
Income taxes at the statutory rate $ 40,812 | $119,470 ($244,904)
Effect of: |
Book basis over tax basis of |
stations sold 8,472 | - -
Goodwill 599 | (630) 107,300
Minority interest - | 9,372 10,363
Certain reorganization items - | (127,606) -
State taxes net of Federal |
income tax benefit 3,575 | - -
Other 42 | (606) 3,800
-------- | -------- --------
Total taxes 53,500 | - (123,441)
|
|
Less taxes applied to: |
Discontinued operations - | - (750)
Extraordinary items - | - (350)
-------- | -------- --------
|
Income taxes as shown in the |
|
Statement of Operations $ 53,500 | $ - ($124,541)
======== | ======== ========
</TABLE>
<TABLE>
Income tax provision (benefit) as applied to continuing operations consists of (in thousands):
| Predecessor
| ------------------------
1994 | 1993 1992
-------- | -------- --------
<S> <C> | <C> <C>
Current taxes $42,800 | $ - $ 1,100
Deferred taxes (credits) 5,200 | - (110,723)
Benefits of operating |
loss carryforwards - | - (14,918)
State taxes 5,500 | - -
------- | ------- --------
$53,500 | $ - ($124,541)
======= | ======= ========
</TABLE>
Federal income taxes of $7 million and $775,000 were paid in cash during
1994 and 1992, respectively.
F-19
<PAGE> 36
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
J. DISCONTINUED OPERATIONS During 1992, Predecessor recognized pretax gains
of $11.4 million on the receipt of additional proceeds from the 1991 sale
of its entertainment businesses and the 1989 sale of an insurance
subsidiary. In 1994, an additional $5 million was received and the after
tax proceeds were credited to reorganization intangibles. A final
distribution is scheduled to occur in December 1996. It is not possible
to quantify the amount of the distribution Citicasters will receive at
that time.
<TABLE>
K. EXTRAORDINARY ITEMS Extraordinary items consisted of the following
(in thousands):
<CAPTION>
Predecessor
----------------------
1993 1992
-------- --------
<S> <C> <C>
Gain (loss) from retirement and
refinancing of long-term debt ($ 6,344) $6,025
Gain on debt discharge 414,484 -
Provision for Federal income taxes - (350)
-------- ------
$408,140 $5,675
======== ======
</TABLE>
L. PENDING LEGAL PROCEEDINGS Management, after review and consultation with
counsel, considers that any liability from litigation pending against
Citicasters and any of its subsidiaries would not materially affect the
consolidated financial position or results of operations of Citicasters
and its subsidiaries.
F-20
<PAGE> 37
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - CONTINUED
M. ADDITIONAL INFORMATION Quarterly Operating Results (Unaudited) - The
following are quarterly results of consolidated operations for 1994 and
1993 (in thousands except per share data). See Notes B and C for the
effects of gains or losses from asset sales, debt retirements and other
items recognized in individual quarters. Share amounts are not
presented for 1993 due to the effects of the reorganization.
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
1994
----
Net revenues $48,449 $60,423 $50,908 $ 37,263 $197,043
Operating income 7,193 18,321 13,386 12,683 51,583
Net earnings (loss) (1,752) 5,161 44,851 14,846 63,106
* Net earnings (loss)
per share (.15) $.45 $3.93 $1.51 $5.73
1993 Predecessor
----------------
Net revenues $43,575 $55,890 $50,152 $ 55,551 $205,168
Operating income 3,378 13,702 8,614 14,289 39,983
Loss before
extraordinary items (19,749) (10,105) (16,672) (20,270) (66,796)
Net earnings (loss) (20,586) (12,404) (19,880) 394,214 341,344
<FN>
* The sum of the quarterly earnings per share does not equal the
earnings per share computed on a year-to-date basis due to the
effect of the timing of the repurchase of common stock on the
weighted average number of common shares outstanding used in the
computations of quarterly and of year-to-date earnings per share.
</TABLE>
Citicasters' financial results are seasonal. Television revenues are higher in
the second and fourth quarter and lower in the first and third quarter; the
first quarter is the lowest of the year. Radio revenues are higher in the
second and third quarter and lower in the first and fourth quarter; the first
quarter is the lowest of the year. The sale of the four television stations in
1994 will change the seasonal pattern somewhat. The first quarter will remain
the lowest quarter of the year; the second and fourth quarter will still be
higher than the third but by a lesser margin.
During the third and fourth quarters of 1994, Citicasters recorded net earnings
of $41.7 million and $8.4 million respectively, attributable to the sale of the
four television stations. In the fourth quarter of 1993, Predecessor recorded
net earnings of $399.6 million directly attributable to its comprehensive
financial restructuring (see Note B).
Included in selling, general and administrative expenses in 1994, 1993 and 1992
are charges of $7.2 million, $6.6 million, and $6.6 million, respectively, for
advertising and charges of $2.2 million, $2.4 millioin and $2.3 million,
respectively, for repairs and maintenance.
F-21
<PAGE> 38
PART IV
ITEM 14
Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) Documents files as part of this Report:
1. Financial statements are included in Part II, Item 8.
2. Financial Statement Schedules:
A. Selected Quarterly Financial Data is included in Note M to the
Financial Statements.
B. Schedules filed herewith:
Page
----
For 1994, 1993 and 1992:
------------------------
I - Condensed Financial Information of Registrant S-2
All other schedules for which provisions are made in the
applicable regulation of Securities and Exchange Commission
have been omitted as they are not applicable, not required, or
the information required thereby is set forth in the Financial
Statements or the notes thereto.
3. Exhibits - see Exhibit Index.
(b) Reports on Form 8-K filed during the fourth quarter of 1994:
Date of Report Event Reported
-------------- --------------
October 12, 1994 Sale of Citicasters' network-affiliated television
stations to New World Communications Group,
Incorporated.
S-1
<PAGE> 39
CITICASTERS INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
<TABLE>
CONDENSED BALANCE SHEET
-----------------------
<CAPTION>
December 31,
------------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS:
Cash $ 210 $ 3,469
Investment in subsidiaries 277,969 217,477
Deferred income tax assets 3,266 3,266
-------- --------
$281,445 $224,212
======== ========
LIABILITIES AND CAPITAL:
Accounts Payable and accrued
expenses $ 8,217 $ 8,056
Long-term debt 122,291 77,568
Capital 150,937 138,588
-------- --------
$281,445 $224,212
======== ========
</TABLE>
S-2
<PAGE> 40
CITICASTERS INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
<TABLE>
CONDENSED STATEMENT OF OPERATIONS
---------------------------------
<CAPTION>
Year ended December 31,
---------------------------------------
Predecessor
| -----------------------
1994 | 1993 1992
-------- | -------- ---------
<S> <C> | <C> <C>
INCOME: |
Equity in undistributed earnings (losses) |
of subsidiaries $ 81,698 | $145,939 ($599,384)
Other income - | 17 171
-------- | -------- ---------
81,698 | 145,956 (599,213)
-------- | -------- ---------
COSTS AND EXPENSES: |
Interest expense 17,351 | 9,348 11,837
Loss on bad debts - advances to subsidiary - | 213,054 -
Other expenses 1,241 | 1,303 2,186
-------- | -------- ---------
18,592 | 223,705 14,023
-------- | -------- ---------
Earnings (loss) from continuing operations |
before reorganization items 63,106 | (77,749) (613,236)
|
Reorganization items - | 10,953 -
-------- | -------- ---------
|
Earnings (loss) from continuing operations 63,106 | (66,796) (613,236)
|
Discontinued operations: |
Gain on sale, net of income taxes of $750 - | - 10,697
-------- | -------- ---------
|
|
Earnings (loss) before extraordinary items 63,106 | (66,796) (602,539)
|
Extraordinary items, net of income taxes |
of $0 and $350 - | 408,140 5,675
-------- | -------- ---------
|
NET EARNINGS (LOSS) $ 63,106 | $341,344 ($596,864)
======== | ======== =========
</TABLE>
S-3
<PAGE> 41
CITICASTERS INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
<TABLE>
CONDENSED STATEMENT OF CASH FLOWS
---------------------------------
<CAPTION>
Year ended December 31,
----------------------------------------
Predecessor
| -----------------------
1994 | 1993 1992
-------- | -------- ---------
<S> <C> | <C> <C>
OPERATING ACTIVITIES: |
Net earnings (loss) $ 63,106 | $341,344 ($596,864)
Adjustments: |
Non-cash minority interest expense - | 26,776 28,846
Equity in undistributed net earnings |
of subsidiaries (81,698) | (158,298) 590,115
Loss on bad debts - advances to subsidiaries - | 213,055 -
Other non-cash adjustments 197 | 168 424
Realized gains on investing activities - | - (11,447)
Extraordinary gain on retirements |
and refinancing of long-term debt - | (408,140) (6,025)
Increase (decrease) in accounts payable and |
accrued expenses 161 | (19,404) (4,578)
Dividend from subsidiary 134,443 | - -
Other - | 63 26
-------- | -------- ---------
116,209 | (4,436) 497
|
INVESTING ACTIVITIES: |
Investment in subsidiary (113,237) | - -
Cash advanced from subsidiaries - | 1,447 5,672
-------- | -------- ---------
(113,237) | 1,447 5,672
|
FINANCING ACTIVITIES: |
Retirements and refinancings of long-term debt (150,824) | - (16,105)
Additional long-term borrowings 195,350 | 6,339 10,000
Proceeds from the issuance of common stock - | 1,161 -
Common shares repurchased (51,054) | - -
Financing costs - | (1,106) -
Other 297 | - -
-------- | -------- ---------
(6,231) | 6,394 (6,105)
-------- | -------- ---------
|
NET INCREASE (DECREASE) IN CASH AND |
SHORT-TERM INVESTMENTS (3,259) | 3,405 64
|
Cash at beginning of period 3,469 | 64 -
-------- | -------- ---------
|
Cash at end of period $ 210 | $ 3,469 $ 64
======== | ======== =========
</TABLE>
S-4
<PAGE> 42
CITICASTERS INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In Thousands)
<TABLE>
SUPPLEMENTARY SCHEDULE TO THE CONDENSED STATEMENT OF CASH FLOWS
---------------------------------------------------------------
<CAPTION>
Year ended
December 31, 1993
-----------------
Predecessor
-----------
<S> <C>
EFFECTS OF REORGANIZATION ACTIVITIES:
Cash Items:
Operating activities:
Professional fees and other expenses
related to bankruptcy proceedings ($ 3,743)
========
Financing activities:
Common stock issued for cash $ 1,161
Long-term debt issued for cash 6,339
--------
$ 7,500
========
Non Cash Items:
Decrease in long-term debt through the
issuance of common stock ($221,541)
Increase in long-term debt (primarily
reduction in original issue discount) 370
Elimination of minority interest through
the issuance of common stock (274,932)
Common stock issued in reorganization 134,762
Decrease in accrued liabilities subject to
exchange (51,712)
Net adjustment of accounts to fair value (15,961)
Increase in accrued liabilities
(professional fees and other expenses
related to bankruptcy proceedings) 1,438
--------
($427,576)
========
</TABLE>
S-5
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, Citicasters Inc. has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Citicasters Inc.
By: JOHN P. ZANOTTI
-----------------------
Chief Executive Officer
Signed: March 17, 1995
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Capacity Date
--------- -------- ----
JOHN P. ZANOTTI
- -----------------------
John P. Zanotti Director March 17, 1995
THEODORE H. EMMERICH
- -----------------------
Theodore H. Emmerich Director March 17, 1995
S. CRAIG LINDNER
- -----------------------
S. Craig Lindner Director March 17, 1995
CARL H. LINDNER
- -----------------------
Carl H. Lindner Director March 17, 1995
JAMES E. EVANS
- -----------------------
James E. Evans Director March 17, 1995
JULIUS S. ANREDER
- -----------------------
Julius S. Anreder Director March 17, 1995
GREGORY C. THOMAS
- -----------------------
Gregory C. Thomas Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer) March 17, 1995
<PAGE> 44
CITICASTERS INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit Description
- ------ -------------------
<S> <C>
2.1 Joint Prepackaged Plan of Reorganization of Predecessor and certain
subsidiaries under chapter 11 of the Bankruptcy Code, filed as Exhibit
2.1 to Citicasters Inc.'s Form 10-Q for the quarterly period ended
September 30, 1993. *
3.1 Restated Articles of Incorporation of Citicasters, filed as Exhibit 3.1
to Citicasters Inc.'s, Form 10-K for 1993. *
3.2 Restated Bylaws of Citicasters, filed as Exhibit 3.2 to Citicasters
Inc's, Form 10-K for 1993. *
4.1 Loan Agreement dated as of October 5, 1994, as modified from time to
time, between Citicasters Co., Citicasters Inc. and certain banks,
filed as Exhibit 4.1 to Citicasters Inc.'s, Form 10-Q for the quarterly
period ended September 30, 1994. *
4.2 Indenture dated as of February 18, 1994, between Citicasters and
Shawmut Bank, N.A., as Trustee relating to the 9-3/4% Senior
Subordinated Notes due 2004 (the form of which 9-3/4% Senior
Subordinated Notes due 2004 is included therein), filed as exhibit 4.2
to Citicasters Inc.'s 8-K dated February 18, 1994. *
10.1 Citicasters 1993 Stock Option Plan, filed as Exhibit 10.1 to
Citicasters Inc.'s, Form 10-K for 1993. *
10.2 1994 Directors Stock Option Plan.
10.3 Comprehensive Settlement Agreement dated as of December 1, 1993, by
and among Predecessor, AFC, Carl H. Lindner and other parties named
therein, as incorporated by reference to Exhibit 10.23 to Amendment
No. 2 to Citicasters Inc.'s, Form S-4 Registration Statement No. 33-
63036 dated September 27, 1993. *
11 Computation of earnings per common share
21 Subsidiaries of the Registrant
27 Financial Data Schedule
<FN>
Registrant has no outstanding debt issues exceeding 10% of the assets
of Registrant and consolidated subsidiaries other than those listed above.
* Incorporated herein by reference
</TABLE>
E-1
<PAGE> 45
================================================================================
Citicasters Inc. 1994 Form 10-K
================================================================================
<PAGE> 1
EXHIBIT 10.2
------------
CITICASTERS INC.
1994 DIRECTORS STOCK OPTION PLAN
1. PURPOSE
-------
The purpose of the Citicasters Inc. 1994 Directors Stock Option Plan
(the "Plan") is to aid Citicasters Inc. (the "Company") in attracting and
retaining directors of outstanding competence, dedication and loyalty.
Consistent with this objective, the Plan provides for the grant to non-employee
directors of Stock Options ("Options") pursuant to the terms and conditions
hereinafter set forth. As used herein, the term "Subsidiary" means any
domestic or foreign corporation, at least 50% of the outstanding voting stock
or voting power of which is beneficially owned, directly or indirectly, by the
Company.
2. EFFECTIVE DATE
--------------
The Plan shall become effective upon the date of its adoption by the
Board of Directors of the Company (the "Board"), provided that, within twelve
months after the Plan is adopted by the Board, the Plan is approved by the
holders of a majority of the outstanding shares of stock of the Company
entitled to vote thereon (the "Effective Date").
3. ADMINISTRATION
--------------
The Plan shall be administered by the Compensation Committee of the
Board of Directors or such other committee appointed by the Board of Directors
(the "Committee"). The Committee will consist of two or more directors who may
also be eligible to participate in the Plan.
4. ELIGIBILITY
-----------
Options under the Plan shall be granted only to persons who are
directors of the Company and who are not employees of the Company or a
Subsidiary.
5. GRANT OF OPTIONS
----------------
Options shall automatically be granted pursuant to the terms of this
Section without further action by the Board of Directors. The date on which
Options are granted hereunder shall be referred to herein as the "Date of
Grant."
5.1 On the Effective Date, each person serving as a director of
the Company who is not an employee of the Company or a Subsidiary shall be
granted 10,000 Options.
<PAGE> 2
- 2 -
5.2 On each September 1 following the Effective Date during the
term of the Plan, each person serving as a director of the Company on such date
who is not an employee of the Company or a Subsidiary shall be granted 1,000
Options.
5.3 Each person who is elected as a director of the Company, who
(i) was not a director of the Company on the Effective Date, and (ii) is not an
employee of the Company or a Subsidiary on the date of election as a director,
shall be granted 10,000 Options on the date such person is elected a director.
5.4 All Options granted pursuant to the Plan shall have an Option
Price determined pursuant to Section 7.1 hereof.
6. SHARES SUBJECT TO THE PLAN
--------------------------
6.1 The shares to be issued upon the exercise of the options
granted under the Plan shall be shares of Common Stock, no par value, of the
Company. Either treasury or authorized and unissued shares of Common Stock, or
both, as the Board of Directors shall from time to time determine, may be so
issued. No shares of Common Stock which are the subject of any lapsed, expired
or terminated options may be made available for reoffering under the Plan.
6.2 Subject to the provisions of Section 6.3, the aggregate number
of shares of Common Stock for which options may be granted under the Plan shall
be 200,000 shares.
6.3 The aggregate number of shares pursuant to the provisions of
the Plan shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from any stock dividend,
stock split or similar event and may, in the sole discretion of the Board of
Directors of the Company, be similarly adjusted for any other capital
adjustment (including a reclassification of shares or recapitalization or
reorganization of the Company) or the distribution to holders of shares of
Common Stock of rights, warrants, assets or evidences of indebtedness.
7. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
Each Option granted pursuant to the Plan shall be evidenced by a
written agreement (the "Agreement") between the Company and the person to whom
the Option is granted (the "Grantee") in such form or forms as the Committee,
from time to time, shall prescribe, which shall comply with and be subject to
the terms and conditions of this Paragraph 7. In addition, the Committee may,
in its absolute discretion, include in any such Grant other terms, conditions
and provisions that are not inconsistent with the express provisions of the
Plan.
<PAGE> 3
- 3 -
7.1 OPTION PRICE. The purchase price of the shares of Common
Stock which may be acquired pursuant to the exercise of any option granted
pursuant to the Plan shall be the last closing sale price reported on the date
of grant ("Option Price").
7.2 DURATION OF OPTIONS. Each Option granted under the Plan shall
expire and all rights pursuant thereto shall cease on the date which shall be
the tenth anniversary of the Date of Grant (the "Expiration Date").
7.3 VESTING OF OPTIONS. Each Option granted hereunder may be
exercised to the extent that the Grantee is vested in such Option. The Options
will vest according to the following schedule:
<TABLE>
<CAPTION>
Number of Years the Grantee has remained
a director of the Company following Options in which a Grantee
the Date of Grant is Vested
---------------------------------------- ---------------------------
<S> <C>
Under one. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
At least one but less than two. . . . . . . . . . . . . . . . . . . . . . 20%
At least two but less than three . . . . . . . . . . . . . . . . . . . . 40%
At least three but less than four . . . . . . . . . . . . . . . . . . . . 60%
At least four but less than five . . . . . . . . . . . . . . . . . . . . 80%
Five or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
Anything contained in this Paragraph 7.3 to the contrary
notwithstanding, a Grantee shall become fully (100%) vested in each of his or
her Options under the following circumstances: (i) upon termination of the
Grantee's service as a director of the Company for reasons of death, Disability
or Retirement (as such terms are defined in Paragraphs 7.7.4 and 7.7.5); (ii)
if the Committee, in its sole discretion, determines that acceleration of the
Option vesting schedule would be desirable for the Company; or (iii) if such
Options vest pursuant to Paragraph 7.4.
7.4 MERGER, CONSOLIDATION, ETC. If the Company shall, pursuant to
action by its Board of Directors, at any time propose to merge into,
consolidate with, or sell or otherwise transfer all or substantially all of its
assets to another corporation and provision is not made pursuant to the terms
of such transaction for the assumption by the surviving, resulting or acquiring
corporation of outstanding Options or for substitution of new Options therefor,
the Committee shall cause written notice of the proposed transaction to be
given to each Grantee not less than twenty days prior to the anticipated
effective date of the proposed transaction, and his or her Options shall become
fully (100%) vested and, prior to a date specified in such notice, which shall
be not more than ten days prior to the anticipated effective date of the
proposed transaction, each Grantee shall have the right to exercise his or her
Options. Each Grantee, by so notifying the Company in writing, may in
exercising his or her Options, condition such exercise upon, and provide that
such exercise shall become effective at the time
<PAGE> 4
- 4 -
of, but immediately before, the consummation of the transaction. If the
transaction is consummated, each Option, to the extent not previously exercised
before the date specified in the foregoing notice, shall terminate on the
effective date of such consummation. If the transaction is abandoned, (i) any
Option not exercised shall continue to be available for exercise in accordance
with other provisions of the Plan and (ii) to the extent that any Option not
exercised before such abandonment shall have vested solely by operation of this
Paragraph 7.4, such vesting shall be deemed annulled, and the vesting schedule
set forth in or pursuant to Paragraph 7.3 shall be reinstituted, as of the date
of such abandonment.
7.5 EXERCISE OF OPTIONS. A person entitled to exercise an Option
may exercise it to the extent vested pursuant to Paragraph 7.3 in whole or in
part during any period beginning on the third business day following the date
of release of the financial data specified in Rule 16b-3(e)(1)(ii) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and ending on
the twelfth business day following such date (the "Window Period"), by
delivering to the Secretary of the Company written notice (the "Notice")
specifying the number of Options being exercised. The payment of the Option
Price shall be either in cash or by delivery of shares of Common Stock of the
Company having a fair market value equal to the purchase price on the date of
exercise of the Option, or by any combination of cash and such shares.
7.6 NONTRANSFERABILITY. Options shall not be transferable other
than by will or the laws of descent and distribution and may be exercised,
during the lifetime of the Grantee, only by the Grantee.
7.7 TERMINATION OF SERVICE AS A DIRECTOR. Unless otherwise
determined by the Committee, the following rules shall apply in the event of
Grantee's termination of service as a director of the Company.
7.7.1 Except as provided in Paragraph 7.7.4 or 7.7.5, in
the event of a Grantee's termination of service as a director of the
Company either (1) as a result of his removal as a director for cause
or (2) as a result of resignation of the director, his or her Option
shall immediately terminate.
7.7.2 In the event of the Grantee's termination of service
as a director under circumstances other than those specified in
Paragraph 7.7.1 hereof and for reasons other than death, Disability
(as defined in Paragraph 7.7.4) or Retirement (as defined in Paragraph
7.7.5), his or her Options shall terminate on the date which is 90
days from the date of such termination of service as a director or on
its Expiration Date, whichever shall first occur; PROVIDED, HOWEVER,
that if
<PAGE> 5
- 5 -
the Grantee is subject to the provisions of Section 16(a) of the
Exchange Act on the date of termination of service as a director, such
Options shall terminate (x) on the date which is the end of the first
Window Period following the later of 90 days from the date of such
termination of service as a director or six months and ten days after
the date of Grant of such Options or (y) on its Expiration Date,
whichever shall first occur.
7.7.3 In the event of the death of a Grantee while he or
she is serving as a director of the Company, such Option shall
terminate on the first anniversary of the Grantee's death or on its
Expiration Date, whichever shall first occur.
7.7.4 In the event of the Grantee's termination of service
as a director due to mental or physical infirmity of the Company
("Disability"), his or her Options shall terminate on first
anniversary of such Disability, or on its Expiration Date, whichever
shall first occur.
7.7.5 In the event that the Grantee's service as a director
terminates after five or more years of service as a director
("Retirement"), his or her Options shall terminate on the second
anniversary of the date of such Retirement or on its Expiration Date,
whichever shall first occur.
7.7.6 Anything contained in this Paragraph 7.7 to the
contrary notwithstanding, an Option may only be exercised following
the Grantee's termination of service as a director for reasons other
than death, Disability or Retirement if, and to the extent that, such
Option was exercisable immediately prior to such termination service
as a director.
7.8 NO RIGHTS AS STOCKHOLDER OR TO CONTINUE AS A DIRECTOR. No
Grantee shall have any rights as a stockholder of the Company with respect to
any shares of Common Stock prior to the date of issuance to him or her of a
certificate representing such shares issued pursuant to Paragraph 7.5, and
neither the Plan nor any Option granted under the Plan shall confer upon a
Grantee any right to continue to serve as a director.
8. ISSUANCE OF SHARES; RESTRICTIONS
--------------------------------
8.1 Unless any shares of Common Stock to be issued by the Company
under the Plan have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and, in the case of any Grantee who may be
deemed an "affiliate" of the Company as defined in Rule 405 under the
Securities Act, such shares have been registered under the Securities Act for
resale by such Grantee, or unless the Company has determined that an exemption
from registra-
<PAGE> 6
- 6 -
tion is available, the Company may require prior to and as a condition of the
issuance of any shares of Common Stock that the person receiving such shares
hereunder furnish the Company with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring such
shares solely with a view to investment for his or her own account and not with
a view to the resale or distribution of all or any part thereof, and that such
person will not dispose of any of such shares otherwise than in accordance with
the provisions of Rule 144 under the Securities Act unless and until either the
shares are registered under the Securities Act or the Company is satisfied that
an exemption from such registration is available.
8.2 Anything contained herein to the contrary notwithstanding, the
Company shall not be able to issue any shares of Common Stock under the Plan
unless and until the Company is satisfied that such sale or issuance complies
with (i) all applicable requirements of NASDAQ (or the governing body of the
principal market in which the Common Stock is traded, if the Common Stock is
not then listed on that exchange), (ii) all applicable provisions of the
Securities Act and (iii) all other laws or regulations by which the Company is
bound or to which the Company is subject.
9. TERM OF THE PLAN
----------------
Unless the Plan has been sooner terminated pursuant to Paragraph 10
hereof, the Plan shall terminate on, and no Options shall be granted after the
tenth anniversary of the Effective Date. The provisions of the Plan, however,
shall continue thereafter to govern all Options theretofore granted, until the
exercise, expiration or cancellation of the Options.
10. AMENDMENT AND TERMINATION OF PLAN
---------------------------------
The Board of Directors at any time may terminate or suspend the Plan
or amend it from time to time in such respects as it deems desirable; provided
that, without the further approval of the stockholders no amendment shall (i)
increase the maximum aggregate number of Options which may be granted under the
Plan, (ii) change the Option Grant Price provided for in Paragraph 7.1 hereof,
(iii) change the eligibility provisions of Paragraph 4 hereof or (iv) make any
other amendment which in the opinion of counsel to the Company must be approved
by the Company's stockholders in order to remain an exempted plan under Rule
16b-3, and provided further that, subject to the provisions of Paragraph 8
hereof, no termination of or amendment to the Plan shall adversely affect the
rights of any participant without the consent of such participant, as the case
may be. In addition, the provisions of the Plan shall not be amended more than
once every six months, other than to comport with
<PAGE> 7
- 7 -
changes to the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
(NS3\Dir-Opt.Pln)
<PAGE> 1
CITICASTERS INC. AND SUBSIDIARIES
<TABLE>
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands except per share amounts)
<CAPTION>
Year ended
December 31,
1994
------------
<S> <C>
Net earnings used to calculate primary and fully-
diluted earnings per share $63,106
=======
Shares used in calculation of primary earnings
per share:
Weighted average common shares 10,905
Dilutive effect of assumed exercise of certain
options for the purchase of common shares 107
-------
Weighted average common shares used to calculate
primary earnings per share 11,012
=======
Primary earnings per common share $ 5.73
Shares used in calculation of fully-diluted
earnings per share:
Weighted average common shares 10,905
Dilutive effect of assumed exercise of certain
options for the purchase of common shares 217
-------
Weighted average common shares used to calculate
fully-diluted earnings per share 11,122
=======
Fully-diluted earnings per common share $ 5.67
</TABLE>
As a result of the effects of the reorganization, earnings per share for
periods ending on or prior to December 31, 1993 have been rendered meaningless
and, therefore omitted from the financial statements.
E-2
<PAGE> 1
CITICASTERS INC.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The following is a list of subsidiaries of Citicasters Inc. at December
31, 1994. All corporations listed are 100% owned subsidiaries of Citicasters
Inc.
State of
Name of Company Incorporation
--------------- -------------
Citicasters Co. Ohio
The names of certain subsidiaries are omitted, as such subsidiaries in
the aggregate would not constitute a significant subsidiary.
E-3
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 46,258
<SECURITIES> 0
<RECEIVABLES> 31,851
<ALLOWANCES> 1,244
<INVENTORY> 0
<CURRENT-ASSETS> 86,232
<PP&E> 29,888
<DEPRECIATION> 4,805
<TOTAL-ASSETS> 403,492
<CURRENT-LIABILITIES> 38,714
<BONDS> 122,291
<COMMON> 87,831
0
0
<OTHER-SE> 63,106
<TOTAL-LIABILITY-AND-EQUITY> 403,492
<SALES> 0
<TOTAL-REVENUES> 197,043
<CGS> 0
<TOTAL-COSTS> 137,066
<OTHER-EXPENSES> 28,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,979
<INCOME-PRETAX> 116,606
<INCOME-TAX> 53,500
<INCOME-CONTINUING> 63,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,106
<EPS-PRIMARY> 5.73
<EPS-DILUTED> 0
</TABLE>
