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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File No. 1-8283
CITICASTERS INC.
Incorporated under the laws of Florida
IRS Employer Identification No. 59-2054850
One East Fourth Street, Cincinnati, Ohio 45202
Phone: (513) 562-8000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
As of April 15, 1996, there were 20,007,552 shares of Common Stock
outstanding.
EXHIBIT INDEX Page 12
Page 1 of 9
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CITICASTERS INC. - 10-Q
PART I
FINANCIAL INFORMATION
ITEM I
Financial Statements
CITICASTERS INC. AND SUBSIDIARIES
BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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<S> <C> <C>
ASSETS
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Current assets:
Cash and short-term investments $ 6,238 $ 3,572
Trade receivables, less allowance for
doubtful accounts of $1,603 and $1,643 27,835 32,495
Broadcast program rights 4,596 5,162
Prepaid and other current assets 2,687 3,059
-------- --------
Total current assets 41,356 44,288
Broadcast program rights, less current portion 2,406 3,296
Property and equipment, net 37,159 33,878
Contracts, broadcasting licenses and other
intangibles, less accumulated amortization
of $20,489 and $17,956 331,258 312,791
Deferred charges and other assets 14,549 22,093
-------- --------
$426,728 $416,346
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities $ 12,983 $ 17,061
Broadcast program rights fees payable 4,645 5,298
-------- --------
Total current liabilities 17,628 22,359
Broadcast program rights fees payable,
less current portion 2,212 2,829
Long-term debt 148,532 132,481
Deferred income taxes 44,822 44,822
Other liabilities 54,200 54,163
-------- --------
Total liabilities 267,394 256,654
Shareholders' equity:
Common Stock, $.01 par value, including additional
paid-in capital; 500,000,000 shares authorized;
20,007,552 and 19,976,927 shares outstanding 83,148 82,936
Retained earnings from January 1, 1994 76,186 76,756
-------- --------
Total shareholders' equity 159,334 159,692
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$426,728 $416,346
======== ========
</TABLE>
See notes to financial statements.
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CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------------
1996 1995
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<S> <C> <C>
Net Revenues:
Television broadcasting $13,677 $14,086
Radio broadcasting 17,500 14,959
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31,177 29,045
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Costs and expenses:
Operating expenses 10,034 9,144
Selling, general and administrative 11,694 10,735
Corporate general and administrative 1,053 1,123
Depreciation and amortization 4,065 3,319
------- -------
26,846 24,321
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Operating income 4,331 4,724
Other income (expense):
Interest expense (3,734) (3,513)
Investment income 55 680
Miscellaneous, net (1,522) 187
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(5,201) (2,646)
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Earnings (loss) before income taxes (870) 2,078
Income tax (benefit) (300) 800
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NET EARNINGS (LOSS) $ (570) $ 1,278
======== =======
SHARE DATA:
Primary and Fully Diluted:
Net earnings (loss) ($.03) $.06
Average common shares 21,119 20,819
</TABLE>
See notes to financial statements.
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CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------------
1996 1995
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<S> <C> <C>
Common Stock, including additional
paid-in capital:
Beginning balance $ 82,936 $ 87,831
Common Stock issued:
Exercise of stock options 212 162
Common Stock repurchased
and retired - (329)
-------- --------
Balance at end of period $ 83,148 $ 87,664
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Retained earnings:
Beginning balance 76,756 63,106
Net earnings (loss) (570) 1,278
-------- --------
$ 76,186 $ 64,384
======== ========
TOTAL SHAREHOLDERS' EQUITY $159,334 $152,048
======== ========
</TABLE>
See notes to financial statements.
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CITICASTERS INC. - 10-Q
CITICASTERS INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) $ (570) $ 1,278
Adjustments:
Depreciation and amortization 4,065 3,319
Non-cash interest expense 51 46
Decrease in trade receivables 4,660 6,308
Decrease (increase) in broadcast program
rights, net of fees payable 186 (7)
Decrease in accounts payable, accrued
expenses and other liabilities (4,000) (9,459)
Other 150 487
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4,542 1,972
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INVESTING ACTIVITIES:
Deposits on broadcast stations to be acquired - (4,900)
Purchases of:
Broadcast stations (16,500) -
Real estate, property and equipment (1,820) (2,591)
Other 232 60
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(18,088) (7,431)
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FINANCING ACTIVITIES:
Additional long-term borrowings 16,000 -
Common shares repurchased - (328)
Other 212 161
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16,212 (167)
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NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 2,666 (5,626)
Cash and short-term investments at beginning of period 3,572 46,258
------- --------
Cash and short-term investments at end of period $ 6,238 $ 40,632
======= ========
</TABLE>
See notes to financial statements.
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CITICASTERS INC. - 10-Q
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
-------------------
ORGANIZATION Citicasters is engaged in the ownership and operation of radio
and television stations and derives substantially all of its revenue from
the sale of advertising time. 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.
BASIS OF PRESENTATION The accompanying financial statements for
Citicasters Inc. are unaudited, but Citicasters believes that all
adjustments (consisting only of normal recurring accruals, unless otherwise
disclosed herein) necessary for fair presentation have been made. The
results of operations for interim periods are not necessarily indicative of
results to be expected for the year. The financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary to be in conformity
with generally accepted accounting principles. Significant intercompany
balances and transactions have been eliminated. Certain reclassifications
have been made to conform to the current year's presentation.
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.
American Financial Group, Inc. and its Subsidiaries ("American Financial")
owned 7,566,889 shares or 37.8% of Citicasters' outstanding Common Stock at
April 15, 1996. At that date, American Financial's Chairman, Carl H.
Lindner, owned an additional 3,341,936 shares or 16.7% of Citicasters'
outstanding Common Stock.
USE OF ESTIMATES The preparation of the financial statements requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Changes in
circumstances could cause actual results to differ materially from those
estimates.
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, 8-20 years; operating and other equipment, 3-20 years; and
leasehold improvements, over the life of the lease.
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts,
broadcasting licenses and other intangibles represent the excess of the
value of the broadcast stations over the values of their net tangible
assets, and is attributable to FCC licenses, network affiliation agreements
and other contractual or market related factors. Reorganization value in
excess of amounts allocable to identifiable assets represents the excess of
the estimated fair value of the Company at the time of the reorganization
over the estimated fair value allocated to its net identifiable assets.
Intangible assets are being amortized on a straight-line basis over an
average of 35 years. On an ongoing basis, Citicasters reviews the carrying
value of its intangible assets. If this review indicates that intangible
assets will not be recoverable, as determined based on undiscounted cash
flows of the Company's broadcast stations over
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CITICASTERS INC. 10-Q
NOTES TO FINANCIAL STATEMENTS - CONTINUED
the remaining amortization period, Citicasters' carrying values of
intangible assets are reduced by the amount of the estimated shortfall of
cash flows.
DEBT DISCOUNT Debt discount is being amortized over the life of the
related debt obligations by the interest method.
INCOME TAXES Citicasters files a consolidated Federal income tax return
which includes all 80% or more owned subsidiaries. Deferred income tax
assets and liabilities are determined based on differences between
financial reporting and tax bases and are measured using enacted tax rates.
Deferred tax assets are recognized if it is more likely than not that a
benefit will be realized.
EARNINGS PER SHARE Primary and fully diluted earnings per share are based
upon the weighted average number of common shares and gives effect to
common equivalent shares (dilutive options) outstanding during the
respective periods. The effect of the options was to increase average
shares outstanding by 1,116,000 shares for the three months ended March 31,
1996.
STOCK BASED COMPENSATION The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair
value of the shares at the date of grant. The Company accounts for stock
option grants in accordance with APB Opinion No. 25, Accounting for Stock
Issued to Employees, and, accordingly, recognizes no compensation expense
for the stock option grants.
STATEMENT OF CASH FLOWS For cash flow purposes, "investing activities" are
defined as making and collecting loans and acquiring and disposing of debt
or equity instruments and property and equipment. "Financing activities"
include obtaining resources from owners and providing them with a return on
their investments, borrowing money and repaying amounts borrowed. All
other activities are considered "operating." Short-term investments for
purposes of the Financial Statements are those which had a maturity of
three months or less when acquired.
B. ACQUISITIONS AND DISPOSITIONS On February 12, 1996, Citicasters and Jacor
-----------------------------
Communications, Inc. entered into a merger agreement, by which Jacor will
acquire Citicasters. Under the agreement, for each share of Citicasters'
stock Jacor will pay cash of $29.50 plus a five-year warrant to purchase
approximately .2 shares of Jacor common stock at $28 per full share. If
the closing occurs after September 1996, the exercise price of the warrant
would be reduced to $26 per share and the per share cash price would
increase at the rate of $.2215 per month. American Financial and certain
of its affiliates executed irrevocable consents in favor of the Jacor
transaction on March 13, 1996. The closing of the transaction is
conditioned on, among other things, receipt of FCC and other regulatory
approvals. Upon consummation of the merger, holders of the 9-3/4% Notes
have the right to put their notes to the Company at 101% of principal.
During January 1996, Citicasters acquired two additional FM radio stations
(WHOK and WLLD) and an additional AM radio station (WLOH) in Columbus for
$24 million. Citicasters borrowed from its acquisition facility to fund
the purchases.
During June 1995, Citicasters acquired its second FM station in Portland
(KKCW) for $30 million. During August 1995, Citicasters acquired a second
FM radio station in Tampa (WTBT) for $5.5 million. The purchase price for
WTBT-FM could increase to $8 million depending on the satisfaction of
certain conditions. Citicasters began operating WTBT-FM during March 1995.
[The acquisition of radio stations in Portland, Tampa and Columbus will
result in increased revenues, operating expenses and operating income
before depreciation and amortization. Increases in depreciation and
amortization and interest expense is expected to offset a significant
portion of the aforementioned increases and, therefore, these acquisitions
are not expected to have a material effect on the Company's operating
income, earnings before income taxes, net earning and net earnings per
share for 1996.]
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CITICASTERS INC. 10-Q
NOTES TO FINANCIAL STATEMENTS - CONTINUED
C. LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
--------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ -----------
<S> <C> <C>
Citicasters:
9-3/4% Senior Subordinated Notes
due February 2004, less unamortized
discount of $2,468 and $2,519
(imputed interest rate 10.13%) $122,532 $122,481
Subsidiaries:
Bank credit facility 26,000 10,000
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$148,532 $132,481
======== ========
</TABLE>
As of March 31, 1996, Citicasters had $99 million of bank credit available
under a $125 million acquisition facility and all $25 million of bank
credit available under a working capital facility.
D. SHAREHOLDERS' EQUITY Citicasters is authorized to issue 500 million shares
--------------------
of Class A Common Stock, $.01 par value, 125 million shares of Class B
Common Stock, $.01 par value and 9.5 million shares of Serial Preferred
Stock, $.01 par value. The preferred stock may have such preferences and
other rights and limitations as the Board of Directors may designate with
respect to each series.
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CITICASTERS INC. 10-Q
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITICASTERS INC.
June 21, 1996 BY: GREGORY C. THOMAS
----------------------------
Gregory C. Thomas
Executive Vice President and
Chief Financial Officer
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