FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
An Ohio Corporation Employer Identification
No. 31-0978313
1300 PNC Center Telephone (513) 621-1300
201 East Fifth Street
Cincinnati, Ohio 45202
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Common Stock Purchase Warrants
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 twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will 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.
The aggregate market value of the voting stock held by nonaffiliates of
Registrant as of March 15, 1994 was $103,653,000.
The number of common shares outstanding as of March 15, 1994 was
19,566,860.
Documents Incorporated By Reference
Portions of Registrant's definitive Proxy Statement to be filed during April,
1994 in connection with the Annual Meeting of Shareholders presently scheduled
to be held on May 18, 1994 are incorporated by reference into Part III of this
Form 10-K.
There are 120 pages in this document.
The index of exhibits appears on page 84.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART I
Item 1. Business
(a) General Development of Business
Jacor Communications, Inc. ("Jacor" or the "Company"),
headquartered in Cincinnati, Ohio, was incorporated under Ohio
law in December 1979 and began operations in January 1981. The
Company is a holding company engaged primarily in the radio
broadcasting business. During 1993, Jacor entities owned and
operated thirteen radio stations located across the United States
in six markets: Atlanta, Cincinnati, Denver, Tampa, Jacksonville
and Knoxville. The Company has local marketing agreements
("LMAs") to operate three radio stations, one in Atlanta, one in
Denver and one in Cincinnati. The Company agreements to acquire
the Denver and Cincinnati stations upon FCC approval. In
addition, the Company sells the advertising time for two radio
stations in Cincinnati through joint sales agreements ("JSAs").
LMAs and JSAs represent emerging alternatives to outright station
ownership. In addition, Jacor also owns and operates Telesat
Cable TV, through the Company's wholly-owned subsidiary, Jacor
Cable, Inc., a company engaged in the development and operation
of a cable television system, and the Georgia Radio News Service,
a radio news service which provides news, sports, and public
affairs programming to more than 140 stations.
In January 1993, the Company completed a Restructuring which
resulted in the reduction of the Company's debt from $156 million
to $72 million and the issuance of stock to Zell/Chilmark Fund
L.P. ("Zell/Chilmark") which lead to a transfer of control of the
Company to Zell/Chilmark.
In order to reduce its debt obligations further, the Company
refinanced its senior bank debt in March 1993 with a new group of
lenders. With the completion of the Refinancing, the Company's
senior debt was reduced from $69 million to $45 million under a
credit facility. As part of this Refinancing, the Company raised
$20 million of additional equity from the issuance of 3,484,321
shares of Common Stock through a private placement to
Zell/Chilmark. This $20 million, together with available cash,
funded the reduction of the Company's senior debt.
In June 1993, the Company acquired the FCC license and certain
contracts of radio station WLWA-AM (formerly WKRC-AM) in
Cincinnati, Ohio for a purchase price of $1.6 million in cash.
In July 1993, the Company completed the acquisition of radio
station KAZY(FM) in Denver, Colorado from Zell/Chilmark under a
contract dated December 1992. Zell/Chilmark had purchased that
station for $5.5 million. Zell/Chilmark sold the station to the
Company in consideration of the issuance of shares of the
Company's Common Stock having a value, at $5.74 per share, equal
to Zell/Chilmark's cost for the station plus related acquisition
costs. As a result, 964,006 shares were issued to complete this
acquisition.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
In October 1993, the Company entered into a LMA pursuant to which
radio station WGST(FM) (formerly WCHK) in Atlanta, Georgia will
make air time and transmission services available to the Company
for a certain term for the broadcast of the Company's programs in
return for a monthly fee, and entered into an agreement to
acquire the FCC license and certain transmitter facilities of
radio station KTLK(AM) (formerly KRZN) in Denver, Colorado for
$1.6 million cash. The asset purchase is subject to certain
conditions, including the receipt of FCC approval. Pending the
purchase of the assets, the Company entered into a LMA with
respect to radio station KTLK(AM).
In November 1993, the Company issued pursuant to a public
offering, 5,462,500 shares of its Common Stock at a price of
$12.00 per share. Net proceeds to the Company from this offering
were approximately $60 million. Initially the Company used the
net proceeds to repay all of its indebtedness and the remaining
net proceeds are being used to finance acquisitions of radio
groups and/or radio stations for general corporate purposes. The
Company also entered into the First Amendment to the Credit
Agreement which provides for a senior secured reducing revolving
credit facility with a commitment of $45 million that expires on
December 31, 2000 and a senior secured acquisition facility with
a commitment of $55 million that expires on September 30, 1996.
Both facilities are available for acquisitions permitted under
conditions set forth in the Credit Agreement, as amended.
In December 1993, the Company entered into an agreement to sell
the business and substantially all the cable TV assets of its
wholly-owned subsidiary, Jacor Cable, Inc. The Company will
receive approximately $2 million in cash for the sale of the
assets. The sale is subject to consents from regulatory
authorities and certain other conditions.
In March 1994, the Company entered into an agreement to acquire
the assets of radio station WIMJ(FM) in Cincinnati, Ohio for $9.5
million. The acquisition will be funded with cash on hand. The
asset purchase is subject to FCC approval and the satisfaction of
certain other conditions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(b) Financial Information About Industry Segments
The Company considers its operations to be comprised entirely of
one business segment.
(c) Narrative Description of Business
The following table sets forth certain information about the
radio stations owned by the Company and those stations for which
the Company has LMAs and JSAs:
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
<TABLE>
<CAPTION>
1993 Market Date of
Market and Station Rank By Acquisition
Call Letters Radio Revenue LMA / JSA Format
<S> <C> <C> <C>
OWNED:
Atlanta, GA
WPCH(FM) 11 August 1985 Soft Adult Contemporary
Atlanta, GA
WGST(AM)(2) 11 August 1985 News, Sports, Talk
Denver, CO
KRFX(FM) 16 August 1987 Classic Rock
Denver, CO
KAZY(FM) 16 July 1993 Album Oriented Rock
Denver, CO
KOA(AM) 16 August 1987 News, Sports, Talk
Cincinnati, OH
WEBN(FM) 19 May 1986 Album Oriented Rock
Cincinnati, OH
WLW(AM) 19 December 1986 News, Sports, Talk
Cincinnati, OH
WLWA(AM) 19 June 1993 News, Sports, Talk
Tampa, FL
WFLZ(FM) 20 April 1988 Contemporary Hit Radio
Tampa, FL
WFLA(AM) 20 April 1988 News, Talk
Jacksonville, FL
WQIK(FM/AM)(3) 51 May 1984 Country
Knoxville, TN
WMYU(FM) 71 December 1986 Adult Contemporary
LMAs:
Atlanta, GA
WGST(FM)(2) 11 October 1993 News, Sports, Talk
Denver, CO
KTLK(AM)(4) 16 November 1993 News, Sports, Talk
Cincinnati, OH
WIMJ(FM)(5) 19 March 1994 NM (6)
JSAs:
Cincinnati, OH
WAQZ(FM) 19 December 1991 Album Oriented Rock
Cincinnati, OH
WSAI(AM) 19 January 1994 Adult Standards
</TABLE>
[FN]
(1) Total number of stations in the market is derived from the Fall 1993
Arbitron.
(2) Radio stations WGST(AM) and WGST(FM) are currently simulcast.
(3) The FM and AM stations in this market are primarily simulcast.
(4) The Company has agreed to acquire KTLK's (formerly KRZN) FCC license
and certain of its transmitter facilities upon FCC approval.
Pending FCC approval of the acquisition, the Company is operating
KTLK(AM) pursuant to a LMA.
(5) The Company has agreed to acquire WIMJ(FM). Pending FCC approval of the
acquisition, the Company will operate WIMJ(FM) pursuant to a LMA effective
April 7, 1994.
(6) Not meaningful. The information is not presented because the station's
format will be changed effective with the LMA beginning April 7, 1994.
<PAGE>
<TABLE>
<CAPTION>
Overall
Station's Audience Rank Total
Primary In Primary Number of
Market and Station Demographic Demographic In Stations
Call Letters Target Target Market in Market(1)
<S> <C> <C> <C> <C>
OWNED:
Atlanta, GA
WPCH(FM) Adults 25-54 4 4 20
Atlanta, GA
WGST(AM)(2) Men 25-54 13 11 (TIE) 20
Denver, CO
KRFX(FM) Men 18-34 1 3 33
Denver, CO
KAZY(FM) Men 18-34 7 18 (TIE) 33
Denver, CO
KOA(AM) Men 25-54 2 2 33
Cincinnati, OH
WEBN(FM) Men 18-34 1 5 29
Cincinnati, OH
WLW(AM) Men 25-54 1 2 29
Cincinnati, OH
WLWA(AM) Men 25-54 17 13 29
Tampa, FL
WFLZ(FM) Women 18-34 1 5 25
Tampa, FL
WFLA(AM) Men 25-54 8 4 25
Jacksonville, FL
WQIK(FM/AM)(5) Adults 25-54 1 1 20
Knoxville, TN
WMYU(FM) Women 25-54 3 5 22
LMAs:
Atlanta, GA
WGST(FM)(2) Men 25-54 15 17 (TIE) 20
Denver, CO
KTLK(AM)(6) Men 25-54 27 (TIE) 20 (TIE) 33
Cincinnati, OH
WIMJ(FM)(3) NM (6) NM(6) NM(6) 29
JSAs:
Cincinnati, OH
WAQZ(FM) Men 18-34 10 (TIE) 18 (TIE) 29
Cincinnati, OH
WSAI(AM) Adults 35-64 14 15 29
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Company Strategy
The Company's business strategy focuses upon developing the
operations of its existing stations to their potential and
acquiring new radio groups and/or radio stations primarily
in the nation's top 25 radio markets.
Operations
The Company uses a variety of techniques to maximize the
performance of its radio stations. Jacor's operating
strategy is to aggressively manage its portfolio of stations
to maximize operating performance and to dominate each
market by being the market leader in revenues and ratings.
The Company's general operational objective is to heighten a
station's recognition in its market and to capitalize on
this recognition by generating significant shares of each
market's radio advertising dollars. Specifically, the
Company's operating strategies center upon:
Dominating Individual Markets. The Company strives to
dominate the ratings and revenues in each market in which it
competes. The Company seeks to maximize its share of
advertising revenue in each of the six markets in which it
competes through the operation of multiple radio stations in
each of these local markets.
A station's ability to maintain market leadership status
depends in part upon the strength of its broadcasting
delivery system. The Company believes its stations'
broadcasting signals are among the strongest in their
respective markets, which reinforces the Company's
leadership positions in each of the Company's existing
markets.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Developing Strong Station Personality. The Company engages
in a number of creative programming and promotional efforts
designed to create listener loyalty and generate station
brand awareness. Through these efforts, management seeks to
cultivate a distinct personality for each station based upon
the unique characteristics of each local market. The
Company hires dynamic on-air personalities for key morning
and afternoon "drive-times," and provides comprehensive
news, traffic and weather reports to create active listening
by the audience. This commitment to "foreground" or "high
impact" programming has generated significant audience
share.
One of the key ways the Company develops the personality of
its AM radio stations is through the broadcast of
professional sports. Presently, the Company has the
broadcast rights for the Atlanta Braves, Atlanta Hawks,
Cincinnati Reds, Cincinnati Bengals, Colorado Rockies,
Denver Nuggets and Denver Broncos. Sports broadcasts serve
as a "magnet" for attracting audiences and then introducing
them to other programming features, such as local and
national news, entertaining talk, and weather and traffic
reports.
Another method the Company uses to create personality for
its stations is to sponsor highly visible promotions for the
local communities in which they serve. Through high profile
station promotions and community events, management believes
it can maximize recognition by, and appeal to, the listening
audience.
Operating Multiple Formats. The Company utilizes
sophisticated research techniques to identify opportunities
within each market and to tailor each station's programming
to maximize its market position. The Company's radio
stations employ a variety of programming formats, each of
which is designed to appeal to a specific demographic target
audience.
Management believes that a significant portion of the
Company's operating success stems from its ability to
successfully program both FM and AM stations. The Company
programs its FM stations, whose high fidelity signals are
preferred for music transmission, with music of various
formats supplemented by unique on-air personalities. The
Company believes that its AM stations generate greater
audience share as vehicles for news, sports and information.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Emphasizing Local Sales Effort.
Each station owned by the Company has its own advertising
sales staff. To achieve greater control over advertising
revenues, the Company's sales staff focuses on establishing
strong direct relationships with local advertisers. The
Company is able to generate significant direct local sales
by understanding advertisers' needs and by more effectively
delivering the desired demographic audience. The Company's
radio stations also offer a complete range of creative
production services to its advertising clientele. Given the
Company's ratings and sales position in its markets, Jacor
is able to attract and retain a highly talented, experienced
sales force.
Acquisitions
The new FCC rules permitting ownership of more than one FM
and more than one AM radio station in the same market have
created opportunities for the Company to expand its presence
in its existing markets and may allow certain synergies to
be achieved. For example, jointly-owned stations may be
able to increase their revenues by delivering larger,
combined audiences to advertisers and by engaging in joint
promotional efforts. In addition, jointly-owned stations
may be able to reduce operating expenses by combining
studios and offices.
The Company's acquisition strategy is to acquire
complementary stations in existing markets, radio groups
with a significant presence in the top 25 radio markets
and/or individual radio stations in such markets. The
Company believes that its unique combination of financial
resources, committed controlling shareholder and skilled
management will enable the Company to successfully pursue
such a strategy. The Company has considerable financial
resources. In contrast to many radio groups with whom Jacor
competes for acquisitions, the Company has no outstanding
debt. In addition, the Company has $100 million of
committed bank borrowing availability to pursue
acquisitions. Jacor also believes that the expertise and
resources of Zell/Chilmark will enhance the Company's
ability to successfully complete attractive acquisitions.
The Company believes that Zell/Chilmark's expertise in
identifying attractive opportunities, negotiating favorable
acquisitions and obtaining capital will be valuable in
implementing Jacor's acquisition strategy.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Advertising
The primary source of the Company's revenues is the sale of
broadcasting time for local and national advertising.
During the year ended December 31, 1993, approximately 85%
of the Company's broadcast revenue was generated from the
sale of local advertising and approximately 15% from the
sale of national advertising. The Company believes that
radio is one of the most efficient, cost-effective means for
advertisers to reach specific demographic groups. The
advertising rates charged by the Company's radio stations
are based primarily on (i) the station's ability to attract
audiences in the demographic groups targeted by its
advertisers (as measured principally by quarterly Arbitron
ratings surveys that quantify the number of listeners tuned
to the station at various times), (ii) the number of
stations in the market that compete for the same demographic
group and (iii) the supply of and demand for radio
advertising time. Advertising rates generally are the
highest during morning and afternoon "drive-time" hours.
Depending on the format of a particular station, there are
predetermined numbers of advertisements that are broadcast
each hour. The Company determines the number of
advertisements broadcast hourly that can maximize available
revenue dollars without jeopardizing listening levels.
Although the number of advertisements broadcast during a
given time period may vary, the total number of
advertisements broadcast on a particular station generally
does not vary significantly from year to year. Most
advertising contracts are short-term and run only for a few
weeks.
The Company emphasizes an aggressive local sales effort
because local advertising represents the large majority of
the Company's revenues and the Company has greater control
over the local advertising market. The major categories of
the Company's local advertisers include automotive, retail,
financial institutions and services, and health care. Each
station's local sales staff solicits advertising, either
directly from the local advertiser or through an advertising
agency for the local advertiser. The Company pays a higher
commission rate to the sales staff for generating direct
sales because the Company believes that through a strong
relationship directly with the advertiser, it can better
understand the advertiser's business needs and more
effectively design an advertising campaign to help the
advertiser sell its product. The Company employs personnel
at each radio station to produce commercials for the
advertisers. National advertising sales for each of the
Company's stations are made by the Company's national sales
managers in conjunction with the efforts of an independent
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
advertising representative who specializes in national sales
and is compensated on a commission-only basis.
The Company also participates in barter transactions,
contracts under which the Company provides commercial air
time in exchange for goods and services. This is a business
practice typical to the broadcast industry. The Company
minimizes its use of trade agreements and in each of the
last three years has sold approximately 95% of its
advertising time for cash. The Company's involvement
relative to barter transactions is discussed in Note 16 of
Notes to Consolidated Financial Statements.
Competition; Changes in the Broadcasting Industry
The radio broadcasting industry is a highly competitive
business. The success of each of the Company's stations
depends significantly upon its audience ratings and its
share of the overall advertising revenue within its market.
The Company's stations compete for listeners and advertising
revenue directly with other radio stations within their
respective markets. Radio stations compete for listeners
primarily on the basis of program content and by hiring
high-profile talent that appeals to a particular demographic
group. By building in each of its markets a strong listener
base comprised of a specific demographic group, the Company
is able to attract advertisers seeking to reach those
listeners.
In addition to management experience, factors which are
material to competitive position include the station's rank
in its market, transmitter power, assigned frequency,
audience characteristics, local program acceptance and the
number and characteristics of other stations in the market
area. The Company attempts to improve its competitive
position with promotional campaigns aimed at the demographic
groups targeted by its stations and by sales efforts
designed to attract advertisers. Recent changes in the
FCC's policies and rules permit increased joint ownership
and joint operation of local radio stations. Those stations
taking advantage of these joint arrangements may in certain
circumstances have lower operational costs and may be able
to offer advertisers more attractive rates and services.
The Company's audience ratings and market share are subject
to change, and any adverse change in a particular market
could have a material adverse effect on the revenue of the
Company's stations in that market. Although the Company
believes that each of its stations can compete effectively
in the market, there can be no assurance that any one of the
Company's stations will be able to maintain or increase its
current audience ratings and advertising revenue market
share.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Although the radio broadcasting industry is highly
competitive, some barriers to entry exist. The operation of
a radio broadcast station requires a license from the FCC
and the number of radio stations that can operate in a given
market is limited by the availability of the FM and AM radio
frequencies that the FCC will license in that market.
The Company's stations also compete for advertising revenues
with other media, including broadcast television, cable
television, newspapers, magazines, direct mail, coupons and
billboard advertising. In addition, the radio broadcasting
industry is subject to competition from new media
technologies that are being developed or introduced, such as
the delivery of audio programming by cable television
systems and by digital audio broadcasting. The radio
broadcasting industry historically has grown despite the
introduction of new technologies for the delivery of
entertainment and information, such as television
broadcasting, cable television, audio tapes and compact
disks. Greater population and greater availability of
radios, particularly car and portable radios, have
contributed to this growth. There can be no assurance,
however, that the development or introduction in the future
of any new media technology will not have an adverse effect
on the radio broadcasting industry. The Company also
competes with other radio station groups to purchase
additional stations.
The FCC is currently considering whether to authorize the
use of a new technology, digital audio broadcasting ("DAB"),
to deliver audio programming. DAB may provide a medium for
the delivery by satellite or terrestrial means of multiple
new audio programming formats to local and national
audiences. This technology also may be used in the future
by radio broadcast stations either on existing or alternate
broadcasting frequencies. In addition, the FCC has
authorized an additional 100 Khz of band width for the AM
band and will soon allocate frequencies in this new band to
certain existing AM station licensees. At the end of a
transition period to be determined by the FCC, those
licensees will be required to return to the FCC either the
license for their existing AM band station or the license
for the expanded AM band station.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
The Company cannot predict what other matters might be
considered in the future, nor can it judge in advance what
impact, if any, the implementation of any of these proposals
or changes might have on its business.
Federal Regulation of Radio Broadcasting
The ownership, operation and sale of radio stations are
subject to the jurisdiction of the FCC, which acts under
authority granted by the Communications Act of 1934, as
amended (the "Communications Act"). Among other things, the
FCC assigns frequency bands for broadcasting; determines the
particular frequencies, locations and power of stations;
issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or
control of station licenses; regulates equipment used by
stations; adopts and implements regulations and policies
that directly or indirectly affect the ownership, operation
and employment practices of stations; and has the power to
impose penalties for violations of its rules or the
Communications Act.
Radio stations in the United States operate either by
Amplitude Modulation (AM), conducted on 107 different
frequencies located between 540 and 1600 kilohertz (KHz)
(plus 10 frequencies between 1610-1710 KHz on the newly
expanded AM band) in the low frequency band of the
electromagnetic spectrum, or by Frequency Modulation (FM),
conducted on approximately 100 different frequencies located
between 88 and 108 megahertz (MHz) at the very high
frequency band of the electromagnetic spectrum.
License Grants and Renewals. The Communications Act
provides that a broadcast station license may be granted to
an applicant if the grant would serve the public interest,
convenience and necessity, subject to certain limitations
referred to below. In making licensing determinations, the
FCC considers the legal, technical, financial and other
qualifications of the applicant, including compliance with
the Communications Act's limitations on alien ownership,
compliance with various rules limiting common ownership of
broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding
"attributable" interests in the licensee. Broadcast station
licenses are granted for specific periods of time and, upon
application, are renewable for additional terms. Under the
Communications Act, radio station licenses may be granted
for a maximum term of seven years and, upon application, may
be renewed for additional terms of up to seven years.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Generally, the FCC renews licenses without a hearing. The
Communications Act authorizes the filing of petitions to
deny and competing applications against license renewal
applications during particular periods of time following the
filing of renewal applications. Petitions to deny can be
used by interested parties, including members of the public,
to raise issues concerning the qualifications of the renewal
applicant, whereas competing applications seek to gain a new
license from the FCC for the frequency being used by the
renewal applicant. If a competing application is granted by
the FCC, the renewal application will be denied and the
incumbent licensee will lose its right to operate on the
contested broadcast frequency.
If a competing application is filed against a renewal
application, or if a substantial and material question of
fact concerning an application is raised by the FCC or other
interested parties, or if for any reason the FCC is unable
to determine that the grant of a renewal or other
application would serve the public interest, convenience and
necessity, the FCC is required to hold an evidentiary
hearing on the application. The filing of a competing
application may require a comparative evidentiary hearing
between the incumbent licensee and the competing applicant;
however, the FCC may recognize a "renewal expectancy" for an
incumbent licensee if it has provided substantial service to
its listeners during the preceding license term. The
broadcasting licenses of all of the Company's stations
expire in 1996 and 1997. The Company does not anticipate
any material difficulty in obtaining license renewals in the
future.
The following table sets forth the date of acquisition by
the Company (or one of its predecessor entities) of its
radio stations, or the date of commencement of a LMA/JSA in
the case of stations not owned by the Company, the frequency
of each such station, and the date of expiration of such
station's main FCC broadcast license:
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
<TABLE>
<CAPTION>
Date of Expiration Date
Acquisition of
Station Market LMA/JSA Frequency FCC License
<S> <C> <C> <C> <C>
OWNED:
WPCH(FM) Atlanta, GA August 1985 94.9 MHz 04/01/96
WGST(AM) Atlanta, GA August 1985 640 KHz 04/01/96
KRFX(FM) Denver, CO August 1987 103.5 MHz 04/01/97
KOA(AM) Denver, CO August 1987 850 KHz 04/01/97
KAZY(FM) Denver, CO July 1993 106.7 MHz 04/01/97
WEBN(FM) Cincinnati, OH May 1986 102.7 MHz 10/01/96
WLW(AM) Cincinnati, OH December 1986 700 KHz 10/01/96
WLWA(AM) Cincinnati, OH June 1993 550 KHz 10/01/96
WFLZ(FM) Tampa, FL April 1988 93.3 MHz 02/01/96
WFLA(AM) Tampa, FL April 1988 970 KHz 02/01/96
WQIK(FM) Jacksonville, FL May 1984 99.1 MHz 02/01/96
WQIK(AM) Jacksonville, FL May 1984 1320 KHz 02/01/96
WMYU(FM) Knoxville, TN December 1986 102.1 MHz 08/01/96
LMAs:
WGST(FM) Atlanta, GA October 1993 105.7 MHz 04/01/96
KTLK(AM) Denver, CO November 1993 760 KHz 04/01/97
WIMJ(FM) Cincinnati, OH March 1994 * 92.5 MHz 10/01/96
JSAs:
WAQZ(FM) Cincinnati, OH December 1991 107.1 MHz 10/01/96
WSAI(AM) Cincinnati, OH January 1994 1360 KHz 10/01/96
</TABLE>
[FN]
* Effective April 7, 1994.
License Assignments and Transfers of Control. The
Communications Act also prohibits the assignment of a
license or the transfer of control of a corporation holding
such a license without the prior approval of the FCC.
Applications to the FCC for such assignments or transfers
are subject to petitions to deny by interested parties and
must satisfy requirements similar to those for renewal and
new station applicants.
Under the Communications Act, broadcast licenses may not be
granted, transferred or assigned to any corporation of which
any officer or director is a non-U.S. citizen (including
non-U.S. corporations) or of which more than one-fifth of
the capital stock is owned of record or voted by non-U.S.
citizens or foreign governments or their representatives
(collectively, "Aliens"). In addition, the Communications
Act provides that no broadcast license may be held by any
corporation directly or indirectly controlled by any other
corporation any officer of which is an Alien, or more than
one-fourth of the directors of which are Aliens, or more
than one-fourth of the capital stock of which is owned of
record or voted by Aliens, without an FCC public interest<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
finding (which has never been granted in the case of
broadcast licenses). The FCC has issued interpretations of
existing law under which these restrictions in modified form
apply to other forms of business organizations, including
general and limited partnerships. The FCC also prohibits a
licensee from continuing to control broadcast licenses if
the licensee otherwise falls under Alien influence or
control in a manner determined by the FCC to be in violation
of the Communications Act or contrary to the public
interest. No officers, directors or significant
shareholders of the Company are known by the Company to be
Aliens.
Ownership Rules. Rules of the FCC limit the number and
location of radio stations in which one licensee (or any
party with a control position or cognizable ownership
interest therein) may have a cognizable interest. The
"national ownership rule" prohibits any one individual or
entity from having a control position or cognizable
ownership interest in more than 18 AM or more than 18 FM
radio stations nationwide (with the limit to increase to 20
AM and 20 FM stations as of September 16, 1994). A licensee
may own an additional three non-controlling interests in
each service (AM and FM) in stations controlled by
minorities or qualifying as small businesses, where
"control" is defined as more than 50% ownership and "small
business" defined as one which had, including all affiliated
entities under common control, annual revenues of less than
$0.5 million and assets of less than $1 million. The "local
ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a
control position or cognizable ownership interest. In radio
markets with fewer than 15 commercial stations, the limit is
three radio stations, no more than two of which may be in
the same service (AM or FM), provided that the number of co-
owned stations represents less than 50% of the commercial
stations in the market. For markets with 15 or more radio
stations, the limit is two AMs and two FMs provided
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
generally that the combined audience shares of the co-owned
stations do not exceed 25% of the radio ratings market at
the time of acquisition. In addition, the FCC has a "cross
interest" policy that may prohibit a party with a cognizable
interest in one station in a market from also holding either
a "meaningful" non-attributable equity interest (e.g., non-
voting stock, voting stock, limited partnership interests)
or key management position in another station in the same
market.
The rules also generally prohibit the acquisition of an
ownership or control position in a television station and
either an AM or an FM radio station serving the same market.
There are also prohibitions relating to ownership or control
position in a daily newspaper and a broadcast station in the
same market and limitations on the extent to which Aliens
may own interests or hold control positions in broadcast
stations.
For the purpose of the above rules, a control position is
considered to be held by an officer or director of a
corporation or any general partner of a partnership or any
person serving in a management capacity. Also, under these
rules, an individual or other entity owning or having voting
control of 5% or more of a corporation's voting stock is
considered to have a cognizable interest in the corporation
and its stations, except that banks holding such stock in
their trust accounts, investment companies, and certain
other passive interests are not considered to have a
cognizable interest unless they own or have voting control
over 10% or more of such stock. The FCC is currently
considering raising the benchmarks to 10% and 20%,
respectively. The Company cannot predict whether the FCC
will adopt this or any other proposal. Zell/Chilmark is
considered a single majority shareholder of the Company, and
minority shareholders are not considered to have cognizable
interests in the Company's stations.
Holders of non-voting stock generally will not be attributed
an interest in the issuing entity, and holders of debt and
instruments such as warrants, convertible debentures,
options, or other non-voting interests with rights of
conversion to voting interests generally will not be
attributed such an interest unless and until such conversion
is effected.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Regulation of Radio Operations. In order to retain
licenses, broadcasters are obligated, under the
Communications Act, to serve the "public interest." Since
the late 1970's, the FCC gradually has relaxed or eliminated
many of the more formalized regulatory procedures and
requirements developed to promote the broadcast of certain
types of programming responsive to the problems, needs, and
interests of a station's community of license.
The regulatory changes have provided stations with increased
flexibility to design their program formats and have
provided relief from some recordkeeping and FCC filing
requirements. However, licensees continue to be required to
present programming that is responsive to significant
community issues and to maintain certain records
demonstrating such responsiveness. Complaints from
listeners concerning a station's programming will be
considered by the FCC when evaluating licensee renewal
applications and at other times.
Stations still are required to follow various rules
promulgated under the Communications Act that regulate
political broadcasts, political advertisements, sponsorship
identifications, technical operations and other matters.
"Equal Opportunity" and affirmative action requirements also
exist. Failure to observe these or other rules can result
in the imposition of monetary forfeitures or in the grant of
a "short" (less than seven-year) renewal term or license
revocation. In some instances, licenses have been denied
because of serious rule violations.
In 1985, the FCC adopted rules regarding human exposure to
levels of radio frequency ("RF") radiation. These rules
require applicants for new broadcast stations, renewals of
broadcast licenses or modification of existing licenses to
inform the FCC at the time of filing such applications
whether a new or existing broadcast facility would expose
people to RF radiation in excess of certain guidelines. In
March 1993, the FCC proposed adopting more restrictive
radiation limits. The Company cannot predict whether the
FCC will adopt this or any other proposal.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Agreements With Other Broadcasters. Over the past several
years a significant number of radio broadcast licensees,
including certain of the Company's subsidiaries, have
entered into cooperative agreements with other stations in
their market. These agreements may take varying forms,
subject to compliance with the requirements of antitrust
laws and with the FCC's rules and policies. Typically,
separately-owned stations may agree to function
cooperatively in terms of programming, advertising sales,
etc., subject to the licensee of each station maintaining
independent control over the programming and station
operations of its own station. One typical example is a LMA
between two separately owned radio stations serving a common
service area, whereby the licensee of one station programs
substantial portions of the broadcast day on the other
licensee's station, subject to ultimate editorial and other
controls being exercised by the latter licensee, and sells
advertising time during such program segments for its own
account. Another is a JSA pursuant to which one station
sells advertising time in combination, both on itself and on
a station under separate ownership.
In the past, the FCC has determined that issues of joint
advertising sales should be left to antitrust enforcement
and has specifically exempted LMAs from its "cross-interest"
policy. Furthermore, the FCC and the staff of the FCC's
Mass Media Bureau have held that LMAs do not per se
constitute a transfer of control and are not contrary to the
Communications Act provided that the licensee of the station
maintains complete responsibility for and control over
operations of its broadcast station (including,
specifically, control over station finances, personnel and
programming) and complies with applicable FCC rules and with
antitrust laws.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Under certain circumstances, the FCC will consider a station
brokering time on another station serving the same market to
have an attributable ownership interest in the brokered
station for purposes of the FCC's radio multiple ownership
rules. In particular, a broadcast station is not permitted
to enter into a LMA giving it the right to program more than
15% of the broadcast time, on a weekly basis, of another
local station which it could not own under the FCC's revised
local radio "duopoly" multiple ownership rules. However,
LMAs entered into prior to September 16, 1992, are generally
grandfathered.
The FCC's rules also prohibit a broadcast licensee from
simulcasting more than 25% of its programming on another
station in the same broadcast service (i.e., AM-AM or FM-FM)
whether it owns both stations or operates both through a LMA
where the brokered and brokering stations serve
substantially the same geographic area.
Proposed Changes. The Congress and the FCC have under
consideration, and may in the future consider and adopt, new
laws, regulations and policies regarding a wide variety of
matters that could, directly or indirectly, (i) affect the
operation, ownership and profitability of the Company and
its radio broadcast stations, (ii) result in the loss of
audience share and advertising revenues of the Company's
radio broadcast stations and (iii) affect the ability of the
Company to acquire additional radio broadcast stations or
finance such acquisitions. Such matters include, for
example, changes to the license authorization and renewal
process; proposals to expand the FCC's equal employment
opportunity rules and other matters relating to minority and
female involvement in broadcasting; proposals to increase
the benchmarks or thresholds for attributing ownership
interest in broadcast media; proposals to change rules or
policies relating to political broadcasting; changes to
technical and frequency allocation matters, including those
relative to the implementation of digital audio broadcasting
on both a satellite and terrestrial basis; proposals to
permit expanded use of FM translator stations; proposals to
restrict or prohibit the advertising of beer, wine and other
alcoholic beverages on radio; changes in the FCC's cross-
interest, multiple ownership, alien ownership and cross-
ownership policies; proposals to allow greater telephone
company participation in the delivery of audio and video
programming; and proposals to limit the tax deductibility of
advertising expenses by advertisers.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 1. Business, Continued
(c) Narrative Description of Business, Continued
Although the Company believes the foregoing discussion is
sufficient to provide the reader with a general
understanding of all material aspects of FCC regulations
that affect the Company, it does not purport to be a
complete summary of all provisions of the Communications Act
or FCC rules and policies. Reference is made to the
Communications Act, FCC rules and the public notices and
rulings of the FCC for further information.
Energy and Environmental Matters
The Company's source of energy used in its broadcasting
operations is electricity. No limitations have been placed
on the availability of electrical power, and management
believes its energy sources are adequate.
Management believes that the Company is in compliance with
all statutory and administrative requirements as related to
environmental quality and pollution control. The Company's
business is not a source of pollution.
Employees
The Company has no direct employees. The Company's
subsidiaries employ 601 persons, 498 on a full-time and 103
on a part-time basis. Each station has its own complement
of employees which generally include a general manager,
sales manager, operations manager, business manager,
advertising sales staff, on-air personalities and clerical
personnel. No employee is represented by a union.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 2. Property Holdings
The Company owns the office and studio facilities for its
AM/FM combination stations in Jacksonville, Florida (6,875 square
feet) and its FM station in Knoxville, Tennessee (6,500 square
feet). The Company leases space for the office and studio
facilities at its other station locations in Atlanta (15,500
square feet); Denver (22,000 square feet); Cincinnati (20,200
square feet) and Tampa (14,800 square feet). The Atlanta and
Denver leases expire in 1996 and 1999, respectively, and the
Atlanta lease has two five-year renewal options. Both the
Cincinnati and Tampa leases expire in 1998 and each lease has two
five-year renewal options. The Company leases approximately
7,435 square feet for the office and studio facilities of
Telesat, its cable television operations located in Northern
Kentucky, under a lease expiring in 1994. The Company also
leases approximately 10,000 square feet for its corporate offices
in Cincinnati under a lease expiring in 2001. In conjunction
with the Company's proposed acquisition of radio station WIMJ(FM)
in Cincinnati, the Company has also agreed to purchase for
approximately $1.6 million the building from which such station
currently operates.
Expansion of the Company's operations generally comes from
the acquisition of stations and their facilities and ordinarily
does not create a need for additional space at existing
locations, although the emergence of LMAs and JSAs with other
stations in the Company's existing markets could create such a
need. Any future need for additional office and studio space at
existing locations will be satisfied by the construction of
additions to Company-owned facilities and, in the case of leased
facilities, the lease of additional space or the relocation of
the office and studio. The Company's office and studio
facilities are all located in downtown or suburban office
buildings and are capable of being relocated in any suitable
office facility in the station market area.
The Company owns the towers and tower site locations for its
AM stations in Atlanta, Denver, Jacksonville, Tampa and WLW(AM)
in Cincinnati. The Company owns the tower which serves its FM
station in Knoxville which is located on property leased by the
Company under a lease expiring in 2005. For the tower site at
WLWA(AM), Cincinnati, and for all its other FM stations, the
Company leases tower space for its FM antennae under leases
expiring from 1996 to 2013.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 2. Property Holdings, Continued
The Company owns substantially all of its equipment,
consisting principally of transmitting antennae, transmitters,
studio equipment and general office equipment. The towers,
antennae and other transmission equipment used by the Company's
stations are in generally good condition. In management's
opinion, the quality of the signals range from good to excellent,
and the Company is committed to maintaining and updating its
equipment and transmission facilities in order to achieve the
best possible signal in the market area.
Although the Company believes its properties are generally
adequate for its operations, opportunities to upgrade facilities
are continuously reviewed.
See Notes 8 and 15 of Notes to Consolidated Financial
Statements included elsewhere herein for a description of
encumbrances against the Company's properties and the Company's
rental obligations.
Item 3. Legal Proceedings
From time to time, the Company becomes involved in various
claims and lawsuite that are incidental to its business. In the
opinion of the Company's management, there are no material legal
proceedings pending against the Company.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the fourth quarter of the calendar year covered by this
report.
Executive Officers of the Registrant
Pursuant to General Instruction G(3) of Form 10-K, the following
list is included as an unnumbered Item in Part I of this Report
in lieu of being included in the Proxy Statement to be filed
during April, 1994 for the Annual Meeting of Shareholders
presently scheduled to be held on May 18, 1994.
The following is a list of names and ages of all of the executive
officers of Registrant indicating all positions and offices with
Registrant held by each person as of March 15, 1994. All such
persons have been elected to serve until the next annual election
of officers and their successors are elected, or until their
earlier resignation or removal.
Age as of First
March 15, Offices and Elected
Name 1994 Positions Held an Officer
David M. Schulte 47 Chairman of the Board 6/07/93
Randy Michaels 41 President and Co-Chief
Operating Officer 12/29/86
Robert L. Lawrence 41 Co-Chief Operating
Officer 12/29/86
R. Christopher Weber 38 Senior Vice President and
Chief Financial Officer 12/29/86
Jon M. Berry 47 Senior Vice President and
Treasurer 11/01/82
Each of the executive officers listed above has served Registrant
in various executive capacities throughout the past five years.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The following table reflects the high and low sale prices in
dollars per share for the Common Stock as reported on The Nasdaq
Stock Market since July 13, 1993 (on The Nasdaq National Market
from November 19, 1993); and the high and low bid prices for the
Common Stock as quoted on the OTC Bulletin Board (with such
quotes reported in the pink sheets of the National Quotation
Bureau, Inc.) from February 17, 1993 (the first date quotes were
available for the Common Stock after the Restructuring) through
July 12, 1993. The Company is not aware of any quotes for the
Common Stock from January 1, 1993 through February 17, 1993.
Such prices represent inter-dealer quotations without adjustment
for retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions. Trading in the
Company's Common Stock, both on the OTC Bulletin Board and in The
Nasdaq Stock Market, has been limited and sporadic. Accordingly,
the market price information below may not accurately reflect the
value of the Common Stock had a more active public trading market
existed.
Price Range of
Common Stock
1993 High Low
1st Quarter (from February 17)........ $ 8.00 $ 7.00
2nd Quarter........................... 9.13 7.75
3rd Quarter (through July 12, 1993)... 8.13 7.50
3rd Quarter (from July 13, 1993)...... 12.00 8.00
4th Quarter........................... 19.50 11.75
As part of the Restructuring, all of the Company's formerly
outstanding capital stock was exchanged for new securities of the
Company, including the common stock which is now outstanding and
warrants to acquire common stock. The following table reflects
the high and low sale prices of the former common stock traded on
The Nasdaq National Market from January 1, 1992 through February
10, 1992; and the high and low bid prices for the common stock as
quoted in The Nasdaq Stock Market for the period from February
11, 1992 through August 4, 1992 and as quoted on the OTC Bulletin
Board (with such quotes reported in the pink sheets of the
National Quotation Bureau, Inc.) since August 5, 1992, adjusted
to reflect a 0.0423618 reverse stock split in the Company's
former common stock effected by the Restructuring.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters, Continued
Price Range of
Common Stock
1992 High Low
1st Quarter (through February 10)..... $41.31 $17.70
1st Quarter (from February 11)........ 29.51 17.70
2nd Quarter........................... 32.46 14.75
3rd Quarter (through August 4)........ 23.61 20.66
3rd Quarter (from August 5)........... 17.70 2.95
4th Quarter........................... 11.80 2.95
At March 15, 1994, there were 1,676 record holders of Common
Stock including shares held in nominee name and the last reported
sale price on the Nasdaq National Market was $15.50 per share.
The Company has neither declared nor paid any dividends on its
common stock to date. The Company's existing agreements with its
lenders restrict the payment of dividends. It is the Company's
present policy to retain substantially all earnings, if any, for
the requirements of the business.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1993(1) 1992(1) 1991(1) 1990(1) 1989(1)
<S> <C> <C> <C> <C> <C>
For the year:
Net revenue $89,932,200 $70,505,959 $64,237,752 $80,036,270 $76,917,477
Broadcast operating
expense 69,520,397 55,782,048 48,206,072 60,436,931 60,306,142
Station operating
income excluding
depreciation and
amortization 20,411,803 14,723,911 16,031,680 19,599,339 16,611,335
Depreciation and
amortization 10,222,844 6,399,093 7,287,879 10,294,334 9,369,716
Reduction in carrying
value of assets to
net realizable value 8,600,000
Corporate general and
administrative
expenses 3,563,800 2,926,075 2,681,672 2,811,625 3,437,751
Operating income (loss) 6,625,159 (3,201,257) 6,062,129 6,493,380 3,803,868
Net interest expense (2,475,820) (13,443,318) (16,226,234) (17,727,828) (14,833,692)
Gain on sale of radio
stations 13,013,527
Other non-operating
income (expense) net (10,895) (7,056,771) (301,897) (8,431,714) 45,065
Income (loss) before
income tax and
extraordinary item 4,138,444 (23,701,346) 2,547,525 (19,666,162) (10,984,759)
Net income (loss) $ 1,438,444 $(23,701,346) $ 1,467,525 $20,746,162) $(15,371,337)
Net income (loss) per
common share: (2)
Primary and fully
diluted $ 0.10 $(61.50) $ 2.32 $(47.10) $(41.78)
Weighted average shares
outstanding: (2)
Primary and fully
diluted 14,504,527 381,430 405,927 422,672 420,977
Other Financial Data:
Broadcast cash flow (3) $20,411,803 $14,723,911 $16,031,680 $19,599,339 $16,611,335
At year end:
Working capital
(deficit) $38,658,756 $(140,547,337)(4) $(128,455,248) $6,230,189 $5,359,061
Intangible assets
(net of accumulated
amortization) 84,991,361 70,037,759 (4) 81,738,386 92,026,575 105,605,581
Total assets 159,908,529 122,000,391 (4) 125,487,201 152,717,141 158,624,339
Long-term debt
(including current
portion) 140,541,948 (4) 137,666,850 151,436,233 147,303,341
Redeemable common
stock 6,278,800 5,493,942
Common stock purchase
warrants 390,397 487,000 (4) 1,257,084 1,708,144 4,278,973
Shareholders' equity
(deficit) 140,413,191 (50,840,346)(4) (27,383,036) (28,774,289) (8,867,905)
</TABLE>
<PAGE>
[FN]
NOTES:
(1) The comparability of the information reflected in this
selected financial data is affected by the purchase of
Telesat Cable TV (July 1989); the sale of Eastman Radio,
Inc. (August 1990); the sale of radio stations WMJI(FM), in
Cleveland, Ohio and WYHY(FM), in Nashville, Tennessee
(January 1991), and the Restructuring and the Refinancing.
For information related to the dispositions during 1991, see
Note 5 of Notes to Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations". For information related to
the Restructuring and the Refinancing see Notes 1, 2 and 8
of Notes to Consolidated Financial Statements.
(2) Income (loss) per common share for the four years ended
December 31, 1992 is based on the weighted average number of
shares of Common Stock outstanding and gives consideration
to the dividend requirements of the convertible preferred
stock and accretion of the change in redemption value of
certain common stock warrants. The Company's common stock
options and convertible preferred stock were anti-dilutive
and, therefore, were not included in the computations. The
redeemable common stock warrants were anti-dilutive for
1992, 1990 and 1989 and were not included in the
computations. Such warrants were dilutive in 1991 using the
"equity method" under Emerging Issues Task Force Issue No.
88-9 and, therefore, the common shares issuable upon
conversion were included in the 1991 computation. Income
per share for the year ended December 31, 1993 is based on
the weighted average number of common shares outstanding and
gives effect to both dilutive stock options and dilutive
stock purchase warrants during the period. Income (loss)
per common share and weighted average shares outstanding for
the four years ended December 31, 1992 are adjusted to
reflect the 0.0423618 reverse stock split in the Company's
Common Stock effected by the Restructuring.
(3) The term broadcast cash flow means operating income before
reduction in carrying value of assets, depreciation,
amortization and corporate general and administrative
expenses. Broadcast cash flow is not intended to represent
cash flow or any other measure of performance in accordance
with generally accepted accounting principles. Broadcast
cash flow is included herein because management believes
that it is widely used in the broadcasting industry as a
measure of a radio broadcasting company's operating
performance and that certain investors find it to be a
useful tool in evaluating such an investment. See the
Consolidated Statements of Cash Flows included on pages 41
and 42 in this annual report for a description of the
Company's cash flows presented in accordance with generally
accepted accounting principles and page 36 in this annual
report for a further discussion of the Company's cash flows.
<PAGE>
(4) Pro forma amounts as of December 31, 1992, to give effect to
the 1993 Restructuring and change in control (see Note 1 of
Notes to Consolidated Financial Statements):
Working capital $ 15,933,304
Intangible assets (net of
accumulated amortization) 82,856,512
Total assets 142,085,313
Long-term debt 64,177,962
Common stock purchase warrants 402,805
Shareholders' equity 50,889,751
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
GENERAL
The performance of a radio station group, such as Jacor, is
customarily measured by its ability to generate broadcast
cash flow. The primary source of the Company's revenues is
the sale of broadcasting time on its radio stations for
advertising. The Company's significant operating expenses
are employee salaries, sports broadcasting rights fees,
programming expenses, advertising and promotion expenses,
rental of premises for studios and transmitting equipment and
music license royalty fees. The Company strives to control
these expenses by working closely with local station
management.
The Company's revenues are affected primarily by the
advertising rates the Company's radio stations are able to
charge. These rates are in large part based on a station's
ability to attract audiences in the demographic groups
targeted by its advertisers, as measured principally by
quarterly Arbitron Metro Area Ratings Surveys. In the
broadcasting industry, radio stations often use trade (or
barter) agreements to generate advertising time sales in
exchange for goods or services (such as travel and lodging),
instead of for cash. The Company minimizes its use of trade
agreements and in each of the last three years has sold
approximately 95% of its advertising time for cash.
Sports broadcasting and the full-service programming features
play an integral part in the Company's operating strategy.
As a result, the Company's broadcast cash flow margins are
typically lower than its competitor's because of the rights
fees and related costs of broadcasting professional baseball,
football and basketball, as well as the costs related to the
full-service programming features of its AM radio stations.
Most advertising contracts are short-term and run only for a
few weeks. Most of the Company's revenue is generated from
local advertising, which is sold by the station's sales
staff. in 1993, approximately 85% of the Company's gross
revenues was from local advertising and approximately 15% was
from national advertising. The station's local sales staff
solicits advertising, either directly from the local
advertiser or through an advertising agency for the local
advertiser. National advertising sales for each of the
Company's stations are made by the Company's national sales
managers in conjunction with the efforts of an independent
advertising representative who specializes in national sales
and is compensated on a commission-only basis.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
GENERAL, Continued
The Company's first calendar quarter historically produces
the lowest revenues for the year, and the second and third
quarters historically produce the highest revenues for the
year, due in part to revenues received during the summer
months related to the broadcast of Major League Baseball
games. The Company's operating results in any period may be
affected by the incurrence of advertising and promotion
expenses that do not produce commensurate revenues in the
period in which the expenses are incurred. As a result of
Arbitron's quarterly reporting of ratings, the Company's
ability to realize revenues as a result of increased
advertising and promotional expenses may be delayed for
several months.
The comparability of financial information for the years
ended December 31, 1993, 1992 and 1991 is affected by the
January 1991 sale of radio stations WMJI(FM), Cleveland, and
WYHY(FM), Nashville, the January 1993 Restructuring and the
March 1993 Refinancing.
LIQUIDITY AND CAPITAL RESOURCES
Prior to 1993, the Company financed its operations through a
combination of cash generated from its operations and debt.
As a result of the substantial debt the Company incurred in
connection with its acquisitions and the downturn in the
economy, the Company was unable to meet its debt obligations
in January 1993.
In January 1993, the Company completed the restructuring of
$140 million of indebtedness. In connection with the
Restructuring, the Company issued common stock and warrants
in exchange for debt and other claims against the Company and
exchanged common stock and warrants for all of the Company's
previously outstanding capital stock. As a result of the
Restructuring, the Company's indebtedness was reduced from
$140 million to approximately $72 million (of which $69
million was owed to the Company's senior bank lenders). The
Refinancing in March 1993 allowed the Company to reduce its
total debt from $72 million to $45 million. As a result of
the Restructuring and Refinancing, the Company dramatically
improved its capital structure.
In addition to the substantial reduction of its senior and
subordinated debt which resulted from the Restructuring and
the Refinancing, the Company paid $0.4 million for the
cancellation of approximately $0.7 million of other debt.
Also, during the first quarter of 1993, the Company acquired
for $0.8 million notes in the amount of approximately $2.3
million owing to a bank by Terry S. Jacobs, the Company's
former Chairman, President and Chief Executive Officer.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
The new Credit Agreement was amended in connection with the
November 1993 public offering by the Company (see below).
The First Amendment to the Credit Agreement (the "Amended
Credit Agreement") provides for a senior secured reducing
revolving credit facility with a commitment of $45 million
that expires on December 31, 2000 (the "Revolver") and a
senior secured acquisition facility with a commitment of $55
million (the "Acquisition Facility") that expires on
September 30, 1996. The Amended Credit Agreement contains
restrictive covenants, and the indebtedness thereunder is
collateralized by liens on substantially all of the assets of
the Company and its operating subsidiaries and by a pledge of
the operating subsidiaries' stock. The indebtedness under
the Amended Credit Agreement is guaranteed by those
subsidiaries. Both facilities may be used for acquisitions
permitted under conditions set forth in the Amended Credit
Agreement. Interest under the Amended Credit Agreement is
payable, at the option of the Company, at alternative rates
equal to the Eurodollar rate plus 1.25% to 2.25% or the base
rate announced by Banque Paribas plus 0.25% to 1.25%.
The Amended Credit Agreement requires that the commitment
under the Revolver be reduced in the quarter commencing
January 1, 1994, and continuing quarterly thereafter. After
the Acquisition Facility commitment terminates on September
30, 1996, the Amended Credit Agreement requires 17 equal
quarterly amortization payments. The Amended Credit
Agreement further requires that, with certain exceptions, the
Company prepay the loans and reduce the commitments under the
Amended Credit Agreement with excess cash flow and the net
proceeds from certain sales of assets and capital stock.
As a result of the Restructuring and the Refinancing, the
Company's interest expense has been substantially reduced.
The Company's interest expense in 1993 was $11.0 million less
than the interest expense incurred in 1992.
The Company entered into an interest rate protection
agreement in March 1993 on a notional amount of $22.5 million
for a three-year term for a cost of $0.1 million. This
agreement provided protection against the rise in the three-
month LIBOR interest rate beyond a level of 7.25%. The
three-month LIBOR interest rate at December 31, 1993 was
3.38%.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
The Company made capital expenditures during 1993 of
approximately $1.5 million. The Company contemplates making
capital expenditures for existing properties during 1994 of
approximately $1.1 million out of the Company's working
capital.
In June 1993, the Company entered into restricted stock
agreements with certain members of the Company's Board of
Directors for the purchase of 80,000 shares of Common Stock.
The shares were purchased at a price of $5.74 per share with
total proceeds of $0.46 million added to the Company's
working capital. The shares are restricted until the first
anniversary of the Directors' appointment as a member of the
Board of Directors of the Company.
In June 1993, the Company acquired the FCC license and
certain contracts of radio station WLWA(AM) in Cincinnati,
Ohio for a purchase price of $1.6 million and funded the
acquisition from working capital. In July 1993, the Company
acquired radio station KAZY(FM) in Denver, Colorado from
Zell/Chilmark at Zell/Chilmark's acquisition cost. The
KAZY(FM) acquisition was funded through the issuance of
964,006 shares of Common Stock to Zell/Chilmark. In October
1993, the Company entered into an agreement to acquire the
FCC license and certain transmitter facilities of KTLK(AM)
(formerly KRZN) in Denver, Colorado (subject to FCC approval)
for $1.6 million and will fund the acquisition with cash on
hand.
During the fourth quarter of 1993, the Company issued
pursuant to a public offering, 5,462,500 shares of its Common
Stock at a price of $12.00 per share. Net proceeds to the
Company from this offering were approximately $60 million.
Initially, the Company used the net proceeds to repay all of
its indebtedness and the remaining net proceeds are being
used to finance acquisitions of radio groups and/or radio
stations and for general corporate purposes. The Company
also entered into the First Amendment to the Credit Agreement
discussed above.
In March 1994, the Company entered into an agreement to
acquire the assets of radio station WIMJ(FM) in Cincinnati,
Ohio for $9.5 million. The acquisition will be funded with
cash on hand. The asset purchase is subject to FCC approval
and the satisfaction of certain other conditions.
Management believes that its existing cash balances, cash
generated from operations and the availability of borrowings
under the Amended Credit Agreement will be sufficient to meet
its liquidity and capital needs for the foreseeable future,
under existing market conditions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
1993 Compared to 1992
Broadcast revenue for 1993 was $100.7 million, an increase of
$21.4 million or 27.1% from $79.3 million during 1992. This
increase resulted from an increased customer base and an
increase in advertising rates in both local and national
advertising, an increase in revenue generated from the
broadcast of Major League Baseball games (primarily due to
the broadcast of the Colorado Rockies' baseball games in 1993
for the first time) and from the revenue generated at those
stations operated under a LMA during 1993 but not during the
1992 period.
Agency commissions for 1993 were $10.8 million, an increase
of $2.0 million or 23.6% from $8.8 million during 1992 due to
the increase in broadcast revenue. Agency commissions
increased at a lesser rate than broadcast revenue due to a
greater proportion of direct sales.
Broadcast operating expenses for 1993 were $69.5 million, an
increase of $13.7 million or 24.6% from $55.8 million during
1992. These expenses increased as a result of an increase in
broadcast rights' fees for Major League Baseball games
(primarily due to the broadcast of the Colorado Rockies'
baseball games in 1993 for the first time), expenses incurred
at the stations which were operated under a LMA during 1993
but not during the 1992 period and, to a lesser extent,
increased selling and other payroll costs and programming
costs.
Depreciation and amortization for 1993 was $10.2 million, an
increase of $3.8 million or 59.8% from $6.4 million during
1992, primarily as a result of the implementation of the
Restructuring effective January 1, 1993 using the push-down
method of accounting. In accordance with the push-down
method of accounting, the Company's net assets were restated
to reflect current replacement value. Because the aggregate
current replacement values were in excess of book value, this
restatement resulted in a higher depreciable and amortizable
basis for the Company's property and equipment and intangible
assets.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Operating income for 1993 was $6.6 million, an increase of
$9.8 million from an operating loss of $3.2 million during
1992. The 1992 period, however, includes a charge of $8.6
million primarily relating to a reduction in carrying value
of assets to net realizable value for the Tampa stations.
Absent this expense, operating income increased $1.2 million
or 22.7% during the 1993 period compared to 1992.
Interest expense for 1993 was $2.7 million, a decrease of
$11.0 million or 80.0% from $13.7 million during 1992.
Interest expense declined due to the reduced debt outstanding
and a decrease in interest rates as a result of the
Restructuring effective January 1, 1993 and the Refinancing
in March 1993.
Net income for 1993 was $1.4 million, compared to a net loss
of $23.7 million reported by the Company for 1992. The 1992
period includes an interest rate protection agreement
termination expense of $7.1 million in addition to the $8.6
million charge for reduction in carrying value of assets to
net realizable value. Excluding the effect of these expenses
in 1992, net income for 1993 improved $9.4 million over 1992.
1992 Compared to 1991
Broadcast revenue for 1992 was $79.3 million, an increase of
$6.8 million or 9.4% from $72.4 million during 1991. The
increase in advertising revenue from the broadcast of Major
League Baseball games (primarily due to the broadcast of the
Atlanta Braves' baseball games in 1992 for the first time),
together with the advertising revenue generated from the
broadcast of the Denver Broncos' post-season football games
in January, more than offset the period-to-period decline of
nearly $1.4 million in national spot advertising. The
decrease in national spot advertising reflects the decline in
national radio revenue nationwide in 1992, as reported by the
broadcast accounting firm Miller, Kaplan, Arase & Co.
Agency commissions for 1992 were $8.8 million, an increase of
$0.6 million or 6.6% from $8.2 million during 1991. Agency
commissions increased at a lesser rate than broadcast revenue
due to a greater proportion of direct sales.
Broadcast operating expenses for 1992 were $55.8 million, an
increase of $7.6 million or 15.7% from $48.2 million for
1991. These expenses increased primarily as a result of
rights' fees and other costs to broadcast professional
football and baseball and increased spending for advertising
and promotion of the stations during 1992.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Depreciation and amortization for 1992 was $6.4 million, a
decrease of $0.9 million or 12.2% from $7.3 million for 1991
due primarily to a decrease in amortization relating to a
non-compete agreement.
Operating loss for 1992 was $3.2 million, a decrease of $9.3
million from operating income of $6.1 million for 1991. The
1992 period, however, includes a charge of $8.6 million
primarily relating to a reduction in carrying value of assets
to net realizable value for the Tampa stations. In the third
quarter of 1992, the Company determined that there had been a
permanent impairment in the carrying value of its investment
in certain of its radio properties. Accordingly, based on
the results of a third-party appraisal, acquisition cost
allocated to FCC licenses was reduced by $8.6 million.
Interest expense for 1992 was $13.7 million, a decrease of
$3.1 million or 18.3% from $16.8 million for 1991. Interest
expense decreased as a result of the termination of an
interest rate protection agreement (the "Swap Agreement") in
February 1992. The Company did not benefit from the
generally lower interest rates because the Swap Agreement not
only limited the Company's risk to increases in interest
rates but also the benefit from decreases in interest rates
on $100 million of its debt. The termination of the Swap
Agreement allowed the Company in 1992 to realize the full
benefit of reduced interest rates on all of its senior
indebtedness, not just that in excess of $100 million. In
connection with the termination of the Swap Agreement, the
Company was assessed a termination settlement amount of $7.1
million, which is reflected as an expense.
Net loss for 1992 was $23.7 million, compared to a net income
of $1.5 million for 1991. However, both the Swap Agreement
termination expense and the charge for reduction in carrying
value are included in the 1992 results. On the other hand,
1991 includes a gain from the sale of two radio stations in
January 1991 and an extraordinary item, which represents the
income tax benefit of utilizing existing loss carryforwards
to offset the 1991 provision for federal and state income
taxes.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CASH FLOW
Cash flows provided (used) by operating activities, inclusive
of working capital, were $9.0 million, $6.8 million and
($4.4) million for 1993, 1992 and 1991, respectively. The
use of cash in 1993 was primarily due to $2.5 million paid in
refinancing fees and a net use of cash of $5.7 million from
an increased working capital investment to support an
increase in sales. Cash flows provided (used) by investing
activities were ($6.0) million, ($1.7) million and $26.2
million for 1993, 1992 and 1991, respectively. In addition
to capital expenditures of $2.0 million, $0.9 million and
$1.2 million in 1993, 1992 and 1991, respectively, investing
activities in 1993 include a $1.8 million expenditure
relating to the purchase of radio station assets and a $2.0
million expenditure for the purchase of intangible assets.
Investing activities in 1992 include a $1.0 million
expenditure relating to the investment in the Colorado
Rockies baseball franchise and 1991 includes the receipt of
both the return of an escrow deposit and the net proceeds
from the sale of properties in the amounts of $1.8 million
and $25.4 million, respectively. Cash flows provided (used)
by financing activities were $13.2 million and ($22.3)
million for 1993 and 1991, principally due to the refinancing
of the Company's senior debt in March 1993 plus the issuance
of additional common stock, and the payment of Restructuring
expenses in 1993 and the net repayment of long-term debt
together with the purchase of treasury stock for 1991.
INCOME TAXES
Although the Company has significant net operating loss
carryforwards for federal and other tax purposes, the
Company's ability to use such losses to reduce its taxable
income is severely limited because of the Restructuring.
Further, as a result of the Restructuring, the net operating
loss carryforwards and other tax attributes (including the
tax bases in assets) will be reduced or eliminated, except to
the extent the Company is permitted to apply the stock for
debt exception provided under Section 108 of the Internal
Revenue Code (the "Code") (see Note 12 of Notes to
Consolidated Financial Statements). As a result of changes
to the Code in 1993, the Company will be permitted to
amortize certain intangible assets, particularly goodwill,
associated with the purchase of broadcasting operation
assets.
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." The new accounting standard
was adopted on January 1, 1993, as required. Such change is
included in the new basis of accounting established as of
January 1, 1993 through the application of push-down
accounting principles and resulted in the establishment of a
deferred income tax liability of approximately $6.5 million.
At December 31, 1993, the Company reported a net deferred tax
liability of $7.9 million and a deferred tax provision of
$1.4 million. (See Note 12 of Notes to Consolidated
Financial Statements for further details).
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying consolidated balance sheets
of Jacor Communications, Inc. and Subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of
operations, shareholders' equity (deficit), and cash flows
for each of the three years in the period ended December 31,
1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express
an opinion on these financial statements 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.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting
principles.
As discussed in Note 2 to the financial statements, in 1993
the Company implemented the push-down method of accounting in
connection with the financial restructuring and change in
control described in Note 1.
COOPERS & LYBRAND
Cincinnati, Ohio
March 7, 1994, except for
Note 18, as to which the
date is March 16, 1994
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
<CAPTION>
1993 1992
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 28,617,599 $ 9,157,383
Restricted cash (substantially all
restricted by senior lenders) 1,178,058
Accounts receivable, less allowance for
doubtful accounts of $1,082,000 in
1993 and $959,000 in 1992 19,449,289 14,801,686
Other current assets 1,997,149 4,394,974
Total current assets 50,064,037 29,532,101
Property and equipment 23,072,887 20,862,290
Intangible assets 84,991,361 70,037,759
Notes receivable 182,000 364,344
Other assets 1,598,244 1,203,897
Total assets $159,908,529 $122,000,391
LIABILITIES
Current liabilities:
Debt callable by senior lenders $115,685,767
Current portion of long-term debt 22,785,511
Interest rate protection agreement
termination fee payable 7,082,263
Accounts payable $ 2,011,460 2,190,505
Dividends payable 1,029,675
Accrued payroll 3,218,239 1,010,105
Accrued interest 4,375 9,624,900
Accrued federal, state and
local income tax 2,025,485 886,021
Accrued restructuring expense 5,557,391
Other current liabilities 4,145,722 4,227,300
Total current liabilities 11,405,281 170,079,438
Long-term debt 2,070,670
Other liabilities 190,057 203,629
Deferred tax liability 7,900,000
Total liabilities 19,495,338 172,353,737
Commitments and contingencies
Redeemable common stock warrants 487,000
SHAREHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock, $0.10 par value,
cumulative, redeemable, $0.77 per share
annual dividend; 727,273 shares issued;
683,181 shares outstanding in 1992 68,318
Additional paid-in capital, preferred stock 5,263,929
Common stock, no par value, $0.10 per share
stated value; issued shares: 19,499,812 in
1993 and 428,015 in 1992 1,949,982 42,802
Additional paid-in capital, common stock 136,634,368 19,497,537
Common stock warrants 390,397 895,800
Retained earnings (deficit) 1,438,444 (69,680,819)
140,413,191 (43,912,433)
Less treasury stock, 46,586 common
shares in 1992, at cost (6,927,913)
Total shareholders' equity (deficit) 140,413,191 (50,840,346)
Total liabilities and
shareholders' equity (deficit) $159,908,529 $122,000,391
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Broadcast revenue $100,745,089 $ 79,256,543 $ 72,444,278
Less agency commissions 10,812,889 8,750,584 8,206,526
Net revenue 89,932,200 70,505,959 64,237,752
Broadcast operating expenses 69,520,397 55,782,048 48,206,072
Depreciation and amortization 10,222,844 6,399,093 7,287,879
Corporate general and
administrative expenses 3,563,800 2,926,075 2,681,672
Reduction in carrying value
of assets to net realizable
value 8,600,000
Operating income (loss) 6,625,159 (3,201,257) 6,062,129
Interest expense (2,734,677) (13,701,483) (16,774,570)
Interest income 258,857 258,165 548,336
Gain on sale of radio stations 13,013,527
Interest rate protection
agreement termination
expense (7,082,263)
Other income (expense), net (10,895) 25,492 (301,897)
Income (loss) before
income taxes and
extraordinary item 4,138,444 (23,701,346) 2,547,525
Income tax expense (2,700,000) (2,912,000)
Income (loss) before
extraordinary item 1,438,444 (23,701,346) (364,475)
Extraordinary item 1,832,000
Net income (loss) 1,438,444 (23,701,346) 1,467,525
Preferred stock dividends (526,048) (525,932)
Decrease in redemption value
of redeemable common stock
warrants 770,084
Amount applicable to
income (loss) per
common share $ 1,438,444 $(23,457,310) $ 941,593
Income (loss) per common share:
Before extraordinary item $ 0.10 $(61.50) $(2.19)
Extraordinary item 4.51
Net income (loss) per
common share $ 0.10 $(61.50) $ 2.32
Number of common shares used
in per share calculation 14,504,527 381,430 405,927
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Common Stock Preferred Stock
Shares Stated Value Shares Par Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances,
December 31,
1990 386,370 $ 38,637 685,191 $ 68,519
Decrease in
redemption value
of redeemable
common stock
warrants
Purchase of
treasury stock,
previously
classified as
redeemable
common stock 41,560 4,156
Other treasury
stock
transactions
Conversion of
preferred stock 85 9 (2,010) (201)
Preferred stock
dividend
Net income
- ------------------------------------------------------------------------------
Balances,
December 31,
1991 428,015 42,802 683,181 68,318
Decrease in
redemption value
of redeemable
common stock
warrants
Expiration of
warrants
Preferred stock
dividend
Net loss
- ------------------------------------------------------------------------------
Balances,
December 31,
1992 428,015 42,802 683,181 68,318
<PAGE>
To give effect
to the restruct-
uring and to the
application of
push down
accounting 8,710,655 871,065 (683,181) (68,318)
- ------------------------------------------------------------------------------
Balances,
January 1, 1993 9,138,670 913,867 0 0
Retirement of
treasury stock (46,586) (4,659)
Issuance of
common stock:
Public Offering 5,462,500 546,250
Sale to Parent 3,484,321 348,432
1993 Rights
Offering 345,476 34,548
Directors'
Subscription 80,000 8,000
Purchase of
KAZY(FM) 964,006 96,401
Exercise of
Stock Options 52,886 5,289
Other 18,539 1,854
Net income
- ------------------------------------------------------------------------------
Balances,
December 31,
1993 19,499,812 $1,949,982 0 0
==============================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additional Common
Paid-In Capital Stock
Common Preferred Warrants
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Balances,
December 31,
1990 $11,788,956 $ 6,339,111 $1,085,199
Decrease in
redemption value
of redeemable
common stock
warrants 451,060
Purchase of
treasury stock,
previously
classified as
redeemable
common stock 6,274,644
Other treasury
stock
transactions
Conversion of
preferred stock 23,394 (23,202)
Preferred stock
dividend (525,932)
Net income
- ------------------------------------------------------------------------------
Balances,
December 31,
1991 18,538,054 5,789,977 1,085,199
Decrease in
redemption value
of redeemable
common stock
warrants 770,084
Expiration of
warrants 189,399 (189,399)
Preferred stock
dividend (526,048)
Net loss
- ------------------------------------------------------------------------------
Balances,
December 31,
1992 19,497,537 5,263,929 895,800
<PAGE>
To give effect
to the restruct-
uring and to the
application of
push down
accounting 36,994,455 (5,263,929) (492,995)
- ------------------------------------------------------------------------------
Balances,
January 1, 1993 56,491,992 0 402,805
Retirement of
treasury stock (6,923,254)
Issuance of
common stock:
Public Offering 59,390,937
Sale to Parent 19,651,571
1993 Rights
Offering 1,703,287
Directors'
Subscription 451,200
Purchase of
KAZY(FM) 5,436,993
Exercise of
Stock Options 275,914
Other 155,728 (12,408)
Net income
- ------------------------------------------------------------------------------
Balances,
December 31,
1993 $136,634,368 0 $ 390,397
==============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Retained
Earnings Treasury Stock
(Deficit) Shares Amount Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances,
December 31,
1990 $(47,446,998) 4,997 $ (647,713) $(28,774,289)
Decrease in
redemption value
of redeemable
common stock
warrants 451,060
Purchase of
treasury stock,
previously
classified as
redeemable
common stock 41,560 (6,278,800)
Other treasury
stock
transactions 29 (1,400) (1,400)
Conversion of
preferred stock
Preferred stock
dividend (525,932)
Net income 1,467,525 1,467,525
- -----------------------------------------------------------------------------
Balances,
December 31,
1991 (45,979,473) 46,586 (6,927,913) (27,383,036)
Decrease in
redemption value
of redeemable
common stock
warrants 770,084
Expiration of
warrants
Preferred stock
dividend (526,048)
Net loss (23,701,346) (23,701,346)
- ------------------------------------------------------------------------------
Balances,
December 31,
1992 (69,680,819) 46,586 (6,927,913) (50,840,346)
<PAGE>
To give effect
to the restruct-
uring and to the
application of
push down
accounting 69,680,819 101,721,097
- ------------------------------------------------------------------------------
Balances,
January 1, 1993 0 46,586 (6,927,913) 50,880,751
Retirement of
Treasury Stock (46,586) 6,927,913
Issuance of
Common Stock:
Public Offering 59,937,187
Refinancing 20,000,003
1993 Rights
Offering 1,737,835
Directors'
Subscription 459,200
Purchase of
KAZY(FM) 5,533,394
Exercise of
Stock Options 281,203
Other 145,174
Net income 1,438,444 1,438,444
- ------------------------------------------------------------------------------
Balances,
December 31,
1993 $ 1,438,444 0 0 $140,413,191
==============================================================================
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,438,444 $(23,701,346) $ 1,467,525
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation 2,258,818 3,091,854 3,153,548
Amortization of intangible assets 7,840,064 3,175,995 4,003,087
Non-cash interest expense 2,600,223 1,880,228
Termination of interest rate
protection agreement 7,082,263
Reduction in carrying value of
assets to net realizable value 8,600,000
Provision for losses on accounts
and notes receivable 957,749 741,926 1,153,034
Refinancing fees (2,455,770)
Increase in deferred tax liability 1,400,000
Gain on sale of properties (7,502) (13,013,527)
Other (131,418) (169,492) (244,342)
Change in current assets and
current liabilities net of
effects of acquisitions
and disposals:
(Increase) decrease in
accounts receivable (5,677,825) (2,692,159) 621,009
(Increase) decrease in
other current assets 1,487,404 (3,277,830) 1,526,927
Increase (decrease) in
accounts payable (268,903) 966,739 (1,196,189)
Increase (decrease) in accrued
payroll, accrued interest
and other current
liabilities 2,119,153 10,341,295 (3,771,658)
Net cash provided (used) by
operating activities 8,960,214 6,759,468 (4,420,358)
(Continued)
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
(Continued)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash flows from investing activities:
Return of escrow deposit $ 1,800,000
Net proceeds from sale of properties 25,372,659
Capital expenditures $(1,495,317) $ (915,270) (1,181,047)
Investment in baseball franchise (1,000,000)
Cash paid for acquisitions (3,871,910)
Other (160,158) 192,870 204,225
Net cash provided (used) by
investing activities (5,527,385) (1,722,400) 26,195,837
Cash flows from financing activities:
Proceeds from issuance of long-term
debt 48,000,000 9,391,847
Proceeds from issuance of common stock 88,301,704
Reduction in long-term debt (118,484,583) (25,126) (25,041,458)
Purchase of treasury stock (6,280,200)
Payment of restructuring expenses (5,061,925) (396,626)
Net cash provided (used) by
financing activities 12,755,196 (25,126) (22,326,437)
Net increase (decrease) in cash
and cash equivalents 16,188,025 5,011,942 (550,958)
Cash and cash equivalents at
beginning of year 12,429,574 4,145,441 4,696,399
Cash and cash equivalents at
end of year $ 28,617,599 $ 9,157,383 $ 4,145,441
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. RESTRUCTURING AND CHANGE IN CONTROL
On January 11, 1993, the Company completed a recapitalization plan that
substantially modified its debt and capital structure (the
"Restructuring"). Such Restructuring was accounted for as if it had been
completed January 1, 1993. The Restructuring consisted of the following
five basic parts:
(1) An infusion of equity by Zell/Chilmark Fund L.P. (hereinafter,
"Zell/Chilmark") by way of a merger (the "Merger") of a corporation
wholly owned by Zell/Chilmark with and into the Company, which
resulted in an equity restructuring of the Company, including:
(i) the conversion of every share of the Company's common stock
outstanding prior to the Merger into 0.0423618 shares of a new
class of capital stock, the Class A Common Stock (the "New
Class A Common Stock"), and warrants ("Warrants") to purchase
0.1611234 additional shares of a new class of non-voting
common stock, the Class B Common Stock (the "New Class B
Common Stock");
(ii) the conversion of every share of the Company's preferred stock
outstanding prior to the Merger, together with any accumulated
and unpaid dividends thereon, into 0.2026505 shares of New
Class B Common Stock, and Warrants to purchase 0.7707796
shares of New Class B Common Stock;
(iii) the distribution of cash, at the rate of $5.74 per share and
$0.20 per Warrant, in lieu of New Common Stock and Warrants to
those shareholders of record who so elected, and to all
holders in lieu of any fractional shares of New Common Stock
or fractional Warrants; and
(iv) the issuance to Zell/Chilmark of 1,032,060 shares of New Class
B Common Stock and 593,255 Warrants to purchase that number of
shares of New Class B Common Stock.
(2) A concurrent issuance of equity securities by the Company in
exchange for the cancellation of approximately $81,500,000 of debt
held by the Company's senior lenders and various subordinated
creditors;
(3) The sale to Zell/Chilmark of most of the equity securities issued in
exchange for such cancellation of debt and Zell/Chilmark's reoffer
of Warrants acquired by Zell/Chilmark under the Restructuring to
those senior lenders who retain equity securities;<PAGE>
(4) The offering of rights (the "Rights") to (i) Zell/Chilmark, (ii) the
Company's creditors who retained New Common Stock acquired in the
Restructuring and (iii) other holders of New Common Stock who were
also shareholders on November 27, 1992, to acquire in the aggregate
1,000,000 shares of New Common Stock at a price of $5.74 per share;
and
(5) An increase in the authorized capital stock to 44,000,000 shares and
the reservation of 1,519,218 shares of New Common Stock for issuance
after the Restructuring pursuant to a proposed new management stock
option plan ("Management Options").
As a result of the Company's restructuring and merger, the Company's Amended and
Restated Articles of Incorporation were amended to (i) increase the authorized
capital shares of the Company to 44,000,000, (ii) authorize two classes of no
par value common stock, designated the "New Class A Common Stock" and the "New
Class B Common Stock", each with 20,000,000 shares authorized for the class,
(collectively, the "New Common Stock"), and (iii) create two classes of no par
value preferred stock, designated the "New Class A Preferred Stock" and the "New
Class B Preferred Stock", each with 2,000,000 shares authorized (collectively,
the "New Preferred Stock"). No New Preferred Stock has been issued.
Upon the grant by the Federal Communications Commission ("FCC") on April 23,
1993 of approval of a transfer of control of the Company to Zell/Chilmark, the
New Class B Common Stock automatically converted into Class A Common Stock, the
Class A Common Stock was designated "Common Stock" and shares formerly
authorized as Class B Common Stock were added to increase the authorized shares
of such Common Stock to 40,000,000 shares.
See Note 10 for a summary of the terms of the New Common Stock and the New
Preferred Stock.
<PAGE>
The dilution to those who were shareholders prior to the Restructuring and the
resultant impact of the Restructuring on the Company's common stock ownership
are as follows:
<TABLE>
Equity Distribution After Restructuring(1)
<CAPTION>
Common Stock
Received
Common Stock Pursuant to
Common Purchase the 1992
Shares Warrants Rights Percent
Received Received Offering Primary(2) Diluted(3)
<S> <C> <C> <C> <C> <C>
Zell/Chilmark 7,288,931 657,668 983,344 91.44% 80.74%
Senior Creditors 402,431 -0- -0- 4.45% 3.64%
Other Creditors 10,000 30,710 -0- 0.11% 0.37%
Preferred Shareholders
prior to the
Restructuring 6,416 38,355 -0- 0.07% 0.40%
Common Shareholders
prior to the
Restructuring 338,505 1,287,501 16,656 3.93% 14.85%
8,046,283 2,014,234 1,000,000 100.00% 100.00%
</TABLE>
[FN]
(1) Does not give effect to (a) the 3,484,321 shares of Common
Stock issued to Zell/Chilmark in March 1993 as part of a
refinancing (see Note 8); (b) the 964,006 shares of Common
Stock issued to Zell/Chilmark in July 1993 for the purchase
of radio station KAZY(FM) (see Note 4); or (c) the sale of
5,462,500 shares of Common Stock by the Company in November
1993 through a public offering.
(2) Before exercise of Warrants and Management Options.
(3) After giving effect to the exercise of Warrants but not
Management Options.
<PAGE>
2. BASIS OF PRESENTATION
The Company implementated the Restructuring described in Note
1 using the push-down method of accounting as if the
Restructuring was consummated on January 1, 1993. Push-down
accounting is a procedure whereby subsidiaries use their
parent companies' purchase accounting principles in preparing
their financial statements. In accordance with the push-down
method of accounting, the Company's net assets were restated
generally at current replacement value, the restructured
debts were stated at amounts supported by the underlying
documents and the accumulated deficit was adjusted to a zero
balance.
Coincident with the implementation of the aforementioned
push-down accounting, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes". Such change resulted in the establishment of
a deferred income tax liability of $6,500,000.
A reconciliation of the Company's historical shareholders'
deficit as of December 31, 1992 with shareholders' equity at
January 1, 1993 as reflected in the accompanying Consolidated
Statement of Shareholders' Equity for the year ended December
31, 1993 is set forth below. Such reconciliation gives
effect to the Restructuring and to the application of push-
down accounting.
<PAGE>
<TABLE>
<CAPTION)
($000)
Additional
Redeemable Paid-In
Common Convertible Capital, Additional Common
Dividends Stock Preferred Preferred Common Paid-In Stock
Transaction Payable Warrants Stock Stock Stock Capital Warrants
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31, 1992 $ 1,030 $ 487 $ 68 $ 5,264 $ 43 $ 19,497 $ 896
Adjustments:
Exchange of
redeemable
common stock
warrants for
New Common
Stock (487) 2 485
Exchange of old
common stock for
New Common (43)
Stock 43
Issuance of New
Common Stock
to Zell/Chilmark 87 4,913
Issuance of New
Common Stock
in Rights
Offering 100 5,640
Issuance of New
Common Stock
to creditors 665 37,499
Cancellation of
common stock
warrants 896 (896)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additional
Redeemable Paid-In
Common Convertible Capital Additional Common
Dividends Stock Preferred Preferred Common Paid-In Stock
Transaction Payable Warrants Stock Stock Stock Capital Warrants
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of New
Common Stock
to preferred
shareholders and
others and
other preferred
stock purchases (1,030) (68) (5,264) 17 6,202
Issuance of New
Common Stock
Warrants (387) 403*
Costs of issuance
of New Common
Stock and Rights
Offering (1,125)
Forgiveness of
indebtedness
Equity effects of
push-down
accounting:
Adjustment of net
asset carrying
values 10,064
Restructuring
costs
Elimination of
accumulated
deficit (27,193)
Net adjustments (1,030) (487) (68) (5,264) 871 36,994 (493)
Balances,
January 1, 1993 $ 0 $ 0 $ 0 $ 0 $ 914 $ 56,491 $ 403
</TABLE>
[FN]
* Includes 79,275 Warrants at $0.20 each issued in connection with
cancellation of indebtedness.
<PAGE>
<TABLE>
<CAPTION>
Accumulated Treasury
Transaction Deficit Stock
<S> <C> <C>
Balances,
December 31, 1992 $ (69,681) $(6,928)
Adjustments:
Exchange of
redeemable
common stock
warrants for
New Common
Stock
Exchange of old
common stock for
New Common
Stock
Issuance of New
Common Stock
to Zell/Chilmark
Issuance of New
Common Stock
in Rights
Offering
Issuance of New
Common Stock
to creditors
Cancellation of
common stock
warrants
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Accumulated Treasury
TRANSACTION Deficit Stock
<S> <C> <C>
Issuance of New
Common Stock
to preferred
shareholders and
others and
other preferred
stock purchases
Issuance of New
Common Stock
Warrants
Costs of issuance
of New Common
Stock and Rights
Offering
Forgiveness of
indebtedness 47,031
Equity effects of
push-down
accounting:
Adjustment of net
asset carrying
values
Restructuring
costs (4,543)
Elimination of
accumulated
deficit 27,193
Net adjustments 69,681 0
Balances,
January 1, 1993 $ 0 $(6,928)
</TABLE>
<PAGE>
The effect of the Restructuring discussed above and the March
11, 1993 Refinancing together with the Zell/Chilmark private
placement (see Note 8) has been reflected in the accompanying
December 31, 1993 Consolidated Balance Sheet.
Pro forma results of operations, assuming the Restructuring,
and the Refinancing together with the Zell/Chilmark private
placement occurred on the first day of the periods shown
below, are as follows (amounts in thousands, except per share
amounts):
<TABLE>
<CAPTION>
For the Year Ended December 31, 1993
Historical Refinancing Total Pro
As Reported Adjustment Forma
<S> <C> <C> <C>
Broadcast revenue............................. $ 100,745 $ 100,745
Less agency commissions..................... 10,813 10,813
Net revenue............................... 89,932 89,932
Broadcast operating expenses.................. 69,520 69,520
Depreciation and amortization................. 10,223 10,223
Corporate general and administrative expenses. 3,564 3,564
Operating income.......................... 6,625 6,625
Interest expense.............................. (2,735) $ 485 (a) (2,250)
Other income, net............................. 248 248
Income before income tax.................. 4,138 485 4,623
Income tax expense........................ (2,700) (194)(b) (2,894)
Net income................................ $ 1,438 $ 291 $ 1,729
Net income per common share................... $ 0.10 $ 0.11
Number of common shares used in per share
calculation................................... 14,505 659 (c) 15,164
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1992
Historical Restructuring Pro Forma to Total
As Pro Forma give effect to Refinancing Pro
Reported Adjustments Restructuring Adjustment Forma
<S> <C> <C> <C> <C> <C>
Broadcast revenue............ $ 79,257 $ 79,257 $ 79,257
Less agency commissions..... 8,751 8,751 8,751
Net revenue................. 70,506 70,506 70,506
Broadcast operating expenses. 55,782 55,782 55,782
Depreciation and amortization 6,399 $ 2,635 (d) 9,034 9,034
Corporate general and
administrative expenses..... 2,926 2,926 2,926
Reduction in carrying value of
assets to net realizable
value........................ 8,600 (8,600)(e)
Operating income (loss)..... (3,201) 5,965 2,764 2,764
Interest expense.............. (13,701) 8,871 (f) (4,830) $ 2,580 (a) (2,250)
Interest rate protection
agreement termination
expense...................... (7,082) 7,082 (g)
Other income, net............. 283 283 283
Income (loss) before
income taxes................. (23,701) 21,918 (1,783) 2,580 797
Income tax expense............ (319)(b) (319)
Net income (loss)...........$ (23,701) $21,918 $ (1,783) $ 2,261 $ 478
Amount applicable to income
(loss) per common share...$ (23,457) $ (244)(h) $ (1,783) $ 478
Net income (loss) per
common share..............$ (61.50) $ (0.20) $ 0.04
Number of common shares used
in per share calculation..... 381 8,712(c) 9,093 3,484 (c) 12,577
</TABLE>
Adjustments to the pro forma results of operations are
explained as follows:
(a) To reflect the elimination of the interest associated
with the restructuring debt facility and record the interest
associated with the new refinancing debt facility as follows:
($000)
Year Ended
December 31,
1993 1992
Restructuring debt interest
included in historical financial
statements......................... $ (2,735) $ (4,830)
Interest on new refinancing
debt facility ($45,000 x 5%)....... 2,250 2,250
Pro forma adjustment................ $ (485) $ (2,580)<PAGE>
(b) To provide for the tax effect of pro forma adjustments
using an estimated statutory rate of 40%.
(c) To provide for the change in the weighted average
outstanding common shares.
(d) To adjust depreciation and amortization expense to
reflect the revised expense related to the new asset bases
for property and equipment and intangible assets.
Property and Equipment
Property and equipment are depreciated on the straight-
line basis over the estimated useful lives of the assets as
follows:
Land improvements..................... 20 years
Buildings............................. 25 years
Equipment............................. 3 to 20 years
Furniture and fixtures................ 5 to 12 years
Leasehold improvements................ Life of lease
Intangible Assets
Intangible assets are amortized on the straight-line
basis over the following lives:
Goodwill.............................. 40 years
Other intangibles..................... 1 to 25 years
(e) To eliminate the write down of intangible assets due to
the revaluation of assets.
(f) To reflect the elimination of the interest associated
with the restructured debt and record the interest associated
with the restructuring debt facility as follows:
($000)
Year Ended
December 31,
1992
Restructured debt interest included
in historical statements............... $ (13,701)
Interest on restructuring debt facility
($69,000 x 7%)......................... 4,830
Pro forma adjustment..................... $ (8,871)
<PAGE>
(g) To eliminate the expense associated with the termination
of the interest rate protection agreement in 1992, which
termination fee was eliminated as part of the Restructuring.
(h) To eliminate the dividend and redemption premium
requirement on preferred stock and redeemable common stock
warrants exchanged in the Restructuring Plan.
All common share and per share data included in the financial
statements and footnotes have been restated to reflect the
conversion of every share of the Company's common stock
outstanding prior to the Merger into 0.0423618 shares of new
common stock as discussed above. The conversion was
accounted for as a reverse stock split. The New Common Stock
was recorded at its stated value of $0.10 per share. The
difference between the stated values of common stock and the
New Common Stock was credited to additional paid-in capital,
common.
The basis for the application of push-down accounting is set
forth below. The financial statements only include the
resulting revaluations pursuant to Zell/Chilmark's 91.44%
ownership of the Company. There were no revaluations
recorded for the minority interest ownership of the Company.
The allocation of consideration given for the purchase of
91.44% of the Company by Zell/Chilmark is as follows:
8,272,276 Common Shares
at $5.74 per share $ 47,483,000
629,117 new common stock Warrants
at $0.20 per Warrant 126,000
New debt obligations 62,345,000
Assumption of certain current
liabilities 14,918,000
Assumption of other liabilities 6,130,000
$131,002,000
Current assets $ 33,146,000
Property and equipment 19,845,000
Intangible assets (primarily
goodwill) 76,577,000
Notes receivable and other assets 1,434,000
$131,002,000
<PAGE>
3. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
Description of Business
The Company owns and operates radio stations throughout the
United States. The Company also owns a company engaged in the
development and operation of a cable television system. The
Company implemented a plan in 1990 to divest its non-radio
station assets. See Note 5 regarding the pending sale of the
Company's cable television business.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Jacor Communications, Inc. and its subsidiaries.
All significant intercompany accounts and transactions have
been eliminated.
Revenues
Revenues for commercial broadcasting advertisements are
recognized when the commercial is broadcast.
Barter Transactions
Revenue from barter transactions (advertising provided in
exchange for goods and services) is recognized as income when
advertisements are broadcast, and merchandise or services
received are charged to expense when received or used. If
merchandise or services are received prior to the broadcast of
the advertising, a liability (deferred barter revenue) is
recorded. If the advertising is broadcast before the receipt
of the goods or services, a receivable is recorded.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid investments with a
maturity of three months or less, when purchased, to be cash
equivalents. Income taxes aggregating $100,000, $384,000
and $1,198,000 were paid during 1993, 1992 and 1991,
respectively. Interest paid was $3,107,000, $2,136,000 and
$15,350,000 during 1993, 1992, and 1991, respectively. The
effect of barter transactions has been eliminated (see Note
16).
<PAGE>
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary
cash investments and accounts receivable. The Company places
its temporary cash investments ($20,000,000 at December 31,
1993) with two financial institutions. Concentrations of
credit risk with respect to accounts receivable are limited
due to the large number of customers comprising the Company's
customer base and their dispersion across many different
geographic areas of the country.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation; depreciation is provided on the straight-line
basis over the estimated useful lives of the assets as
follows:
Land improvements 20 Years
Buildings 25 Years
Equipment 3 to 20 Years
Furniture and fixtures 5 to 12 Years
Leasehold improvements Life of lease
Intangible Assets
Intangible assets are stated at cost less accumulated
amortization; amortization is provided principally on the
straight-line basis over the following lives:
Goodwill 40 Years
Other intangibles 1 to 25 Years
<PAGE>
Per Share Data
Income per share for the year ended December 31, 1993 is based
on the weighted average number of common shares outstanding
and gives effect to both dilutive stock options and dilutive
stock purchase warrants during the year. Fully diluted income
per share is not presented since it approximates income per
share.
Loss per share for the years ended December 31, 1992 and 1991
is based on the weighted average number of shares of common
stock outstanding (adjusted to reflect the conversion of
each share of the average number of shares outstanding into
0.0423618 shares of New Common Stock as a result of the 1993
Restructuring) and gives consideration to the dividend
requirements of the convertible preferred stock and accretion
of the change in redemption value of certain common stock
warrants. The Company's common stock options and convertible
preferred stock were anti-dilutive and, therefore, were not
included in the computations. The redeemable common stock
warrants were anti-dilutive for 1992 and were not included in
the computations. Such warrants were dilutive in 1991 and
therefore the common shares issuable upon conversion were
included in the 1991 computation.
Interest Rate Swap Agreement
From July 1990 through its termination in February 1992, the
Company used an interest rate swap to hedge a portion of its
variable rate borrowings against increases in interest rates.
The interest differential to be paid or received was accrued
and recognized currently as a component of interest
expense. See Note 8 regarding termination of the interest
rate swap agreement.
Interest Rate Protection Agreement
In March 1993, the Company entered into an interest rate
protection agreement which provides protection against an
increase in the three-month LIBOR interest rate beyond a level
of 7.25%. The cost of this agreement is being amortized
over the term of the agreement as a component of interest
expense.
<PAGE>
4. ACQUISITIONS
In June 1993, the Company acquired the FCC license and certain
contracts of radio station WLWA-AM (formerly WKRC-AM) in
Cincinnati, Ohio for $1,600,000 cash.
In July 1993, the Company completed the acquisition of radio
station KAZY(FM) in Denver, Colorado from Zell/Chilmark under
a contract dated December 1992. Zell/Chilmark had purchased
that station for $5,500,000. Zell/Chilmark sold the station
to the Company in consideration of the issuance of shares of
the Company's Common Stock having a value, at $5.74 per share,
equal to Zell/Chilmark's cost for the station plus related
acquisition costs. As discussed in Note 10, 964,006 shares
were issued to complete this acquisition.
In October 1993, the Company entered into an agreement to
acquire the FCC license and certain transmitter facilities of
radio station KTLK(AM) (formerly KRZN in Denver, Colorado) for
$1,600,000 cash. The asset purchase is subject to certain
conditions, including the receipt of FCC approval. Pending
the purchase of the assets, the Company entered into a Local
Marketing Agreement with respect to radio station KTLK(AM).
<PAGE>
5. DISPOSITIONS
In January 1991, the Company sold substantially all of the
assets of radio stations WMJI, located in Cleveland, Ohio, and
WYHY, located in Nashville, Tennessee, for a total cash
consideration of $29,750,000. Certain assets of these radio
stations (principally cash and accounts receivable) were
retained by the Company. The Company used the net proceeds
from this sale (a) to retire $18,023,294 of its outstanding
senior debt, (b) to repurchase 981,061 shares of its common
stock held by its former president for $6,278,800 and (c) to
reserve $1,080,000 (subject to the release by its senior
lenders) for the future payment of income taxes resulting from
the sale of these two radio stations. This sale resulted in a
pre-tax gain of approximately $13,000,000.
In December 1993, the Company entered into an agreement to
sell the business and substantially all the assets of its
wholly-owned subsidiary, Telesat Cable TV, Inc. The Company
will receive approximately $2,000,000 in cash for this sale.
The sale is subject to the receipt of consents from regulatory
authorities and certain other conditions.
6. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1993 and 1992 consist
of the following:
1993 1992
Land and land
improvements $ 1,920,388 $ 3,017,834
Buildings 1,838,571 2,000,150
Equipment 17,357,880 25,093,176
Furniture and fixtures 2,278,263 2,826,473
Leasehold improvements 1,932,925 2,420,176
25,328,027 35,357,809
Less accumulated
depreciation ( 2,255,140) (14,495,519)
$23,072,887 $20,862,290
The 1993 decrease in the cost and accumulated depreciation for
property and equipment results from the implementation of the
Restructuring described in Note 1 using the push-down method
of accounting. In accordance with the push-down method of
accounting, the Company's property and equipment were restated
generally at current replacement value (see Note 2).
<PAGE>
7. INTANGIBLE ASSETS
Intangible assets at December 31, 1993 and 1992 consist of the
following:
1993 1992
Goodwill $ 73,140,129 $ 75,624,470
Other 19,691,296 19,552,759
92,831,425 95,177,229
Less accumulated amortization (7,840,064) (25,139,470)
$ 84,991,361 $ 70,037,759
The 1993 decrease in accumulated amortization for intangible
assets results from the implementation of the Restructuring
described in Note 1 using the push-down method of accounting.
In accordance with the push-down method of accounting, the
Company's intangible assets were restated generally at current
replacement value (see Note 2).
<PAGE>
8. DEBT AGREEMENTS
There is no debt outstanding at December 31, 1993. The
Company's debt obligations at December 31, 1992
consisted of the following:
1992
Indebtedness under the Amended
and Restated Bank Credit
Agreement described below $115,685,767
16% Subordinated Capital Notes,
including deferred interest of
$2,302,518 7,303,543
14.5% Subordinated Notes, including
deferred interest of $1,708,359 6,967,846
13% Subordinated Capital Notes,
net of unamortized discount
of $75,585 (effective
interest rate of 16.3%) 2,924,415
16.5% Deferred Interest Notes
described below 507,500
Non-compete agreement 1,875,000
8.5% Subordinated Note due in
January 1993 (effective interest
rate of 11.5%) 4,000,000
Other 1,277,877
140,541,948
Less debt callable by senior lenders (115,685,767)
Less current maturities (22,785,511)
Long-term debt $ 2,070,670
<PAGE>
Following completion of the Restructuring in January 1993 (see
Note 1), the Company refinanced its senior debt in March 1993
(the "Refinancing") with a new group of lenders under a new
credit facility described below. With the completion of the
Refinancing, the Company's senior debt was reduced from
$69,000,000 to $45,000,000.
As part of this Refinancing, the Company raised $20,000,000 of
additional equity from the issuance of 3,484,321 shares of Common
Stock at $5.74 per share through a private placement to
Zell/Chilmark. This $20,000,000, together with available cash,
funded the reduction of the Company's senior debt.
With the Refinancing, the Company entered into a new Credit
Agreement (the "New Credit Agreement") in March 1993 with a group
of lenders agented by Banque Paribas, with The First National
Bank of Boston and Continental Bank N.A. acting as co-agents. In
November 1993 the Company entered into the First Amendment to the
New Credit Agreement (the "Amended Credit Agreement"). The
Amended Credit Agreement provides for a senior secured reducing
revolving credit facility with a commitment of $45,000,000 that
expires on December 31, 2000 (the "Revolver") and a senior
secured acquisition facility with a commitment of $55,000,000
that expires on September 30, 1996 (the "Acquisition Facility").
Both facilities are available for acquisitions permitted under
conditions set forth in the Amended Credit Agreement. The
indebtedness of the Company under the two facilities is
collateralized by liens on substantially all of the assets of the
Company and its operating subsidiaries and by a pledge of the
operating subsidiaries' stock, and is guaranteed by those
subsidiaries. The Amended Credit Agreement requires quarterly
reductions of the Revolver commitments under the Amended Credit
Agreement, and, under certain circumstances, requires mandatory
prepayments of any outstanding loans and further commitment
reductions under the Amended Credit Agreement. The Amended
Credit Agreement contains restrictions pertaining to maintenance
of financial ratios, capital expenditures, payment of dividends
on distributions of capital stock and incurrence of additional
indebtedness.
Interest under the Amended Credit Agreement is payable, at the
option of the Company, at alternative rates equal to the
Eurodollar rate plus 1.25% to 2.25% or the base rate announced by
Banque Paribas plus 0.25% to 1.25%. The spreads over the
Eurodollar rate and such base rate vary from time to time,
depending upon the Company's financial leverage. The Company
will pay quarterly commitment fees equal to 1/2% per annum on the
aggregate unused portion of the aggregate commitment on both
facilities. The Company also is required to pay certain other
fees to the agent and the lenders for the administration of the
facilities and the use of the Acquisition Facility.
<PAGE>
In accordance with the terms of the New Credit Agreement, the
Company entered into an interest rate protection agreement in
March 1993 on the notional amount of $22,500,000 for a three year
term. This agreement provides protection against the rise in the
three-month LIBOR interest rate beyond a level of 7.25%. The
current three-month LIBOR interest rate is 3.38%.
At December 31, 1992, the Company was in default under its
Amended and Restated Bank Credit Agreement (the "Old Credit
Agreement") because of non-compliance with certain covenants,
non-payment of interest, and non-payment of obligations on
certain subordinated debt. At December 31, 1992, the amount
outstanding under the Old Credit Agreement was $115,685,767.
During 1991, the Company began negotiations with all of the banks
to which it was indebted under its Old Credit Agreement to
restructure all of the Company's senior and subordinated debt and
certain other obligations. These discussions led to the
Restructuring discussed above and described in Note 1.
All of the aforementioned debt that was outstanding at December
31, 1992 was restructured in connection with the Restructuring
discussed in Note 1 and subsequently refinanced.
The December 31, 1992 balance of $1,875,000 shown as due the
Company's former president under his non-compete agreement with
the Company was paid in full in January 1993.
In June 1989, the Company entered into an interest rate
protection agreement (the "Swap Agreement") with The First
National Bank of Chicago (the "Bank"). On February 3, 1992, the
Bank notified the Company of its election to terminate the Swap
Agreement. In connection therewith, the Bank assessed the
Company a termination settlement amount, which the Bank
determined to be $7,082,263. This amount is reflected as an
expense in the 1992 consolidated financial statements and was
included as part of the settlement reached with the Company's
senior creditors in the Restructuring (see Note 1).
<PAGE>
9. OLD COMMON STOCK WARRANTS
The Company's 13% Subordinated Capital Notes contained
detachable warrants to purchase common stock of the Company.
The warrants were initially recorded at their appraised
value of $1.40 each. The difference between the carrying
value of the warrants and the Company's estimate of the
redemption value after December 31, 1990 and before the
earliest put date (August 1992), including changes in
interim periods, was recorded as a decrease or increase in
paid-in capital over the period from date of determination
to the earliest put date. Paid-in capital was increased
$770,084 and $451,060 in 1992 and 1991, respectively, as a
result of the decline in the Company's estimate of the
redemption value during such periods. The $487,000 carrying
value of the warrants equaled the Company's estimated
redemption value at December 31, 1992. Any change in
estimated redemption value adjusted the earnings or loss
applicable to common shares, if dilutive, for purposes of
computing income or loss per common share. These warrants
were canceled as part of the settlement reached with the
Company's subordinated creditors in the Company's
Restructuring (see Note 1).
<PAGE>
10. CAPITAL STOCK
Authorized and Issued Shares
New Common Stock and New Preferred Stock
As a result of the Company's Restructuring, the Company's
Amended and Restated Articles of Incorporation were amended
to increase the authorized capital shares of the Company to
44,000,000 shares, divided into three classes. The first
class consists of 40,000,000 shares of New Common Stock,
without par value. The second class consists of 2,000,000
shares of New Class A Preferred Stock, without par value.
The third class consists of 2,000,000 shares of New Class B
Preferred Stock, without par value.
The following is a summary of the terms of the New Common
Stock and the New Preferred Stock.
New Common Stock
The holders of Common Stock have no preemptive rights, and
the Common Stock has no redemption, sinking fund, or
conversion privileges. The holders of Common Stock are
entitled to one vote for each share held on any matter
submitted to the shareholders and, upon timely written
request, may cumulate their votes in the election of
directors. Approximately 3,500,000 shares of Common Stock
at December 31, 1993 were reserved for the exercise of
common stock purchase warrants and the exercise of stock
options.
New Preferred Stock
The New Class A Preferred Stock and the New Class B
Preferred Stock were created as new classes of the Company's
capital stock, with 2,000,000 shares authorized for each
such class. The New Class A Preferred Stock has full voting
rights. The New Class B Preferred Stock has no voting
rights except as otherwise provided by law or as lawfully
fixed by the Board of Directors with respect to a particular
series. No shares of New Preferred Stock have been issued.
Shareholder Rights Plan
On December 31, 1990, the Company's Board of Directors
established a Shareholder Rights Plan and declared a
dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock, which was
distributed January 14, 1991 to shareholders of record on
such date. Once exercisable, each Right entitled the holder
to buy 1/100 of a share of the Class B Junior Preferred
Stock for $8.00. The Rights had no voting power. As a
condition to the Company's Restructuring (see Note 1),
Jacor's Board of Directors redeemed these rights on January
8, 1993. The redemption price of these rights was $0.001
per right.
<PAGE>
Preferred Stock
In February 1988, the Company issued 727,273 shares of Class
A 7% cumulative convertible preferred stock ("Eastman
Preferred") to consummate the acquisition of Eastman Radio,
Inc. At December 31, 1992, the Company had not paid the
quarterly dividend payments due in April, July and
October, 1991 and January, April, July and October, 1992.
The Eastman Preferred shares were exchanged for either cash
or New Common Stock and Warrants as part of the settlement
reached with the Company's Eastman Preferred shareholders in
the Company's Restructuring (see Note 1). Additionally, the
liability accrued by the Company for the quarterly dividend
payments discussed above was eliminated.
Republic Broadcasting Corporation Warrants
In connection with the 1986 acquisition of Republic
Broadcasting Corporation ("RBC"), the Company issued to the
three RBC operating principals, now employed by the Company
in senior management capacities, warrants to purchase 34,481
shares of the Company's common stock. The appraised value
of the warrants, $895,800, was credited to common stock
warrants within shareholders' deficit. The warrants had
an expiration date of May 14, 1997. These warrants were
canceled as part of the Company's Restructuring.
New Warrants
Under the Restructuring, 2,014,233 Warrants to purchase
2,014,233 shares of Common Stock were issued and recorded at
their estimated fair value of $0.20 per Warrant. During the
year ended December 31, 1993, 18,539 Warrants were
exercised.
The Warrants are registered Warrants issued under the
Warrant Agreement between the Company and Society National
Bank, as Warrant Agent. Each Warrant entitles the holder to
purchase one share of Common Stock at the price of $8.30 per
share by surrendering to the Warrant Agent the Warrant
together with the purchase price for the shares of Common
Stock being purchased. Except as provided below, the
Warrants may be exercised, in whole or in part (but unless
the Warrants are being exercised in full, only for whole
shares of Common Stock), at any time prior to January 14,
2000, at which time the Warrants expire. The Warrants do
not confer upon the holder any voting or preemptive rights,
or any other rights of a shareholder of the Company.
The Warrant exercise price and the number of shares of
Common Stock issuable upon exercise are subject to
adjustment in the event of a dividend or other distribution
of Common Stock or securities convertible into or
exchangeable for Common Stock (which shall not include
options, warrants or other rights to purchase securities)
on, or a subdivision or combination of, the Common Stock.
<PAGE>
Generally, in the event of any reclassification, capital
reorganization or other similar change of outstanding shares
of Common Stock or substitution of other securities of the
Company for the Common Stock or in case of any consolidation
or merger of the Company with or into another corporation
the Company shall provide a holder of Warrants the right,
by exercising the Warrants, to purchase the kind and amount
of shares of stock and other securities and property which
are receivable upon such event.
Notwithstanding the foregoing, upon the happening of any
sale event (as defined in the warrant), the Warrants may,
at the sole discretion of the Company, automatically be
converted into the right to receive the fair market value
of the Warrants, whereupon the Warrants will cease to be
exercisable for shares of Common Stock.
A sale event occurred as a result of the issuance of
additional Common Stock pursuant to a public offering during
the fourth quarter of 1993. The Company chose not to
convert the Warrants into the right to receive the fair
market value and all Warrants remained outstanding in
accordance with their terms. Notwithstanding this
determination, upon the occurrence of any other sale event
the Company may elect to convert the Warrants.
Restricted Stock Agreements
In June 1993, the Company entered into restricted stock
agreements with certain members of the Company's Board of
Directors for the purchase of 80,000 shares of the Company's
Common Stock. The shares were purchased at a price of $5.74
per share and remain restricted until the first anniversary
of the Directors' appointment as a member of the Board of
Directors of the Company.
Rights Offering
In June 1993, the Company sold pursuant to a rights offering
(the "1993 Rights Offering") 345,476 shares of its Common
Stock at a price of $5.74 per share. Net proceeds to the
Company from this offering were approximately $1,738,000.
<PAGE>
Issuance of Additional Common Stock
In July 1993, the Company issued 964,006 shares of Common
Stock to Zell/Chilmark for the purchase of radio station
KAZY(FM) in Denver, Colorado (see Note 4).
During the fourth quarter of 1993, the Company issued
pursuant to a public offering, 5,462,500 shares of its
Common Stock at a price of $12.00 per share. Net proceeds
to the Company from this offering were approximately
$60,000,000. Such net proceeds will be used to finance
acquisitions of radio groups and/or radio stations and for
general corporate purposes. Pending this application of the
net proceeds, the Company used the net proceeds to repay all
of its indebtedness (approximately $39,147,000) with the
remaining net proceeds available for general corporate
purposes.
Old Common Stock and Old Preferred Stock
Prior to the January, 1993 Restructuring, authorized Class A
non-voting preferred stock was 1,000,000 shares of $0.10
par value each. Of this amount, 272,727 shares were
undesignated and 727,273 shares were designated as a series
of Class A 7% Cumulative Convertible Preferred Stock.
Prior to the January, 1993 Restructuring, authorized Class B
voting preferred stock was 1,000,000 shares of $0.10 par
value each. Of this amount, 800,000 shares were
undesignated and 200,000 shares were designated as a series
of Class B Junior Preferred Stock. There were no shares of
Class B preferred stock outstanding at December 31, 1992 and
1991.
Prior to the January, 1993 Restructuring, the Company's
Directors had the authority to increase the authorized Class
A and Class B preferred stock up to an aggregate of
5,000,000 shares for each class.
Prior to the January, 1993 Restructuring, authorized common
stock was 20,000,000 shares. The Company's Directors had
the authority to increase the authorized shares of common
stock up to 25,000,000 shares.
11. REDUCTION IN CARRYING VALUE
In the third quarter of 1992, the Company determined that
there had been a permanent impairment in the carrying value
of its investment in certain of its radio properties due to
a continuing decline in operating income and operating cash
flows at those stations and deteriorating market conditions
during the nine months ended September 30, 1992.
Accordingly, based on the results of a third-party
appraisal, goodwill was reduced by $8,600,000 and charged as
an expense in the accompanying 1992 Consolidated Statement
of Operations.
<PAGE>
12. INCOME TAXES
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." The new accounting standard
was adopted on January 1, 1993, as required. Such change
was included in the new basis of accounting established as
of January 1, 1993 through the application of push-down
accounting principles and resulted in the establishment of a
deferred income tax liability of approximately $6.5 million.
Income tax expense for the years ended December 31, 1993 and
1991 is summarized as follows. (There was no income tax
expense for the year ended December 31, 1992):
Federal State Total
1993:
Current $ 900,000 $ 400,000 $1,300,000
Deferred 1,300,000 100,000 1,400,000
$2,200,000 $ 500,000 $2,700,000
1991:
Current $ 280,000 $ 800,000 $1,080,000
Charge equivalent to
amount of utilized
loss carryforwards 1,460,000 372,000 1,832,000
$1,740,000 $1,172,000 $2,912,000
The income tax benefit resulting from the utilization of the
net operating loss carryforwards is included as an
extraordinary item in the accompanying 1991 Consolidated
Statement of Operations.
The provisions for income tax differ from the amount
computed by applying the statutory federal income tax rate
due to the following:
1993 1992 1991
Federal income taxes
at a tax rate of 34% $ 1,407,071 $(8,058,458) $ 866,159
Difference between book and
tax gain on assets sold 89,594
Amortization not deductible 404,660 3,635,143 742,861
State income taxes, net of any
current federal income tax
benefit 330,000 900,000
Net operating loss carried
forward to future years 4,028,554
Other 558,269 394,761 313,386
$ 2,700,000 $ 0 $2,912,000
<PAGE>
As of December 31, 1993, the Company reported a net deferred
tax liability of $7,900,000 and for the year then ended a
deferred tax provision of $1,400,000. The tax effects of
the significant temporary differences which comprise the
deferred tax liability at December 31, 1993 are as follows:
Property and equipment $ 11,172,498
Intangibles (1,445,854)
Accrued expenses (740,790)
Reserve for pending sale
of assets (1,458,396)
Other 372,542
Net Liability $ 7,900,000
Tax net operating loss carryforwards expiring after 2000
approximate $23,654,000 at December 31, 1993 (including
approximately $23,000,000 of tax loss carryforwards as of
the effective date of the Restructuring for tax purposes).
Additionally, for income tax purposes the Company has
alternative minimum tax loss carryforwards of approximately
$14,500,000 and alternative minimum tax credit carryforwards
of $62,000 at December 31, 1993. The Company has additional
net operating loss carryforwards for tax purposes of
approximately $6,307,000 expiring after 1999 related to
certain acquisitions. To the extent that the Company
realizes the tax benefits in future years from those net
operating loss carryforwards which existed at the time of
the Restructuring, intangible assets will be reduced. See
restrictions on the utilization of pre-Restructuring tax
loss carryforwards set forth in the last paragraph on this
page.
As a result of the Company's financial difficulties prior to
the Restructuring, it is anticipated that no tax liability
will result from the approximately $40,000,000 of
cancellation of indebtedness income that will be realized
for tax purposes under the Restructuring (see Note 1).
However, except to the extent the Company is permitted to
avoid recognition of any such income by application of the
stock-for-debt exception provided under Section 108 of the
Internal Revenue Code of 1986, as amended, net operating
losses, net operating loss carryforwards, and other tax
attributes (including the tax bases in assets) will be
reduced or eliminated.
Further, the Company's future use of any net operating loss
carryforwards which survive the Restructuring will be
limited as a consequence of the ownership change under the
Restructuring. As a result, it is anticipated that the
Company will be permitted to utilize only a small fraction
of the pre-restructuring net operating loss carryforwards
(discussed above) to offset future taxable income.
Accordingly, at December 31, 1993, the Company has not
recognized any tax loss carryforwards for financial
reporting purposes.<PAGE>
13. RELATED PARTY TRANSACTIONS
In February 1991, the Company sold the stock of its research
subsidiary, Critical Mass Media, Inc. ("CMM"), to Randy
Michaels, a then officer who has since become the current
president of the Company, resulting in a loss of $66,000.
During 1993, 1992 and 1991, the Company incurred charges of
approximately $591,000, $632,000 and $664,000, respectively,
for research performed by such company. The rates paid for
such services are comparable to those rates charged the
Company before the sale.
Subsequent to December 31, 1993, the Company and Mr.
Michaels formed a limited partnership for the purpose of
owning all of the outstanding stock of CMM (see Note 18).
In March 1993, a subsidiary of the Company purchased, for
$800,000, two notes from a bank that had extended loans to
Terry S. Jacobs, (former Chairman of the Board, President
and Chief Executive Officer of the Company - see following
paragraph), and to Mr. Jacobs' family partnership. The
loans had unpaid balances of approximately $2,350,000. Mr.
Jacobs, on behalf of his family partnership, executed a new
note in the amount of $800,000 payable to the Company's
subsidiary. The balance of the prior indebtedness was
canceled. The note, which is personally guaranteed by Mr.
Jacobs, is due in five years with interim installments of
principal payable quarterly. The note was amended in July,
1993 to bear interest at 7% and is collateralized by a
pledge of substantially all of the stock and warrants in the
Company owned by Mr. Jacobs and his family partnership.
Based upon the fact that the note is collateralized by a
pledge of the Company's securities and because these
securities constituted a substantial portion of Mr. Jacobs'
assets, the Company recorded an allowance for loss on the
full amount of the note. Such transaction was accounted for
as part of the Restructuring. Such allowance for loss will
be reduced as payments on the note, if any, are made.
In June 1993, Mr. Jacobs resigned as Chairman, President and
Chief Executive Officer of the Company. In November 1993,
Mr. Jacobs resigned as a director due to potential conflicts
of interest resulting from Mr. Jacobs' new business venture.
Mr. Jacobs continues to serve the Company under a four-year
consulting agreement. The consulting agreement provides
that (i) Mr. Jacobs will receive for his services $64,000 in
1993; $247,250 in 1994; $233,250 in 1995; $219,250 in 1996
and $155,250 in 1997 and will apply any payments he receives
to any balance due under the aforementioned note and (ii)
Mr. Jacobs will receive in lieu of his former employment
agreement $207,292 in 1993 and $93,750 in 1994.
<PAGE>
14. STOCK OPTIONS
1993 Stock Option Plan
Under the Company's 1993 stock option plan, options to
acquire up to 1,519,218 shares of common stock can be
granted to officers and key employees at no less than 100%
of the fair market value of the underlying stock on the date
of grant. The plan permits the granting of non-qualified
stock options as well as incentive stock options. The
outstanding options will be adjusted to reflect stock
splits, stock dividends, etc. (anti-dilutive provisions).
The plan will terminate no later than February 7, 2003.
Information pertaining to the plan for the year ended
December 31, 1993 is as follows:
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
<S> <C> <C>
Outstanding at beginning of year 0
Granted 1,535,910 $5.74 - $6.46
Exercised (55,980) $5.74
Surrendered (114,310) $5.97 - $6.46
Outstanding at end of year 1,365,620 $5.74 - $6.46
Exercisable at end of year 370,500 $5.74
Available for grant at end of year 97,618
</TABLE>
The options vest 30% per year for the first two years after
issuance and 20% per year for each of the next two years
thereafter. The exercise price of the options that vested
upon grant is $5.74 per share, and the options that
subsequently vest on each anniversary of the grant date have
an exercise price 4% greater than the options that vested in
the previous year. Once an option vests, the exercise price
for that option is fixed for the remaining term of the
option.
<PAGE>
1989 Stock Option Plan
Under the Company's 1989 stock option plan, options to
acquire up to 33,890 shares of common stock could be granted
to officers and key employees at no less than 100% of the
fair market value of the underlying stock on the date of the
grant. The outstanding options will be adjusted to reflect
stock splits, stock dividends, etc. (anti-dilutive
provisions). The plan will terminate in March 1999.
Information pertaining to the plan for the years ended
December 31, 1993, 1992 and 1991 is as follows:
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
<S> <C> <C>
1993:
Outstanding at beginning of year 10,590 $32.58 - $132.90
Granted 0
Exercised 0
Canceled (10,590) $32.58 - $132.90
Outstanding at end of year 0
Exercisable at end of year 0
Available for grant at end of year 33,890
1992:
Outstanding at beginning of year 10,590 $32.58 - $132.90
Granted 0
Exercised 0
Expired 0
Outstanding at end of year 10,590 $32.58 - $132.90
Exercisable at end of year 10,590 $32.58 - $132.90
Available for grant at end of year 23,300
1991:
Outstanding at beginning of year 2,965 $132.90
Granted 7,625 $ 32.58
Exercised 0
Expired 0
Outstanding at end of year 10,590 $32.58 - $132.90
Exercisable at end of year 10,590 $32.58 - $132.90
Available for grant at end of year 23,300
</TABLE>
<PAGE>
1982 Incentive Stock Option Plan
Under the Company's 1982 incentive stock option plan,
options to acquire up to 21,180 shares of common stock could
be granted to officers and key employees at no less than
100% of the fair market value of the underlying stock on the
date of the grant. Options granted under the plan generally
have a maximum term of five years and are generally
exercisable immediately. The outstanding options will be
adjusted to reflect stock splits, stock dividends, etc.
(anti-dilutive provisions). As part of the Restructuring,
the options outstanding at December 31, 1992 were canceled.
Since the plan expired in March 1992 no new grants can be
made under this plan.
Information pertaining to the plan for the years ended
December 31, 1992 and 1991 is as follows:
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
<S> <C> <C>
1992:
Outstanding at beginning of year 18,194 $ 32.58 - $ 35.65
Granted or reissued 0
Exercised 0
Surrendered 0
Expired 0
Outstanding at end of year 18,194 $ 32.58 - $ 35.65
Exercisable at end of year 18,194 $ 32.58 - $ 35.65
Available for grant at end of year 0
1991:
Outstanding at beginning of year 12,666 $ 47.21 - $168.78
Granted or reissued 18,194 $ 32.58 - $ 35.65
Exercised 0
Surrendered (10,548) $ 47.21 - $160.76
Expired (2,118) $153.44 - $168.78
Outstanding at end of year 18,194 $ 32.58 - $ 35.65
Exercisable at end of year 18,194 $ 32.58 - $ 35.65
Available for grant at end of year 0
</TABLE>
<PAGE>
Directors' Stock Options
In May 1993, the Company granted nonqualified stock options
to purchase up to 40,000 shares of the Company's common
stock to certain members of the Company's Board of Directors
at a minimum exercise price of $5.74 per share, which price
was the per share purchase price of common stock in the June
1993 rights offering. These options have the same exercise
prices and vesting schedules as the options issued pursuant
to the 1993 Stock Option Plan.
<PAGE>
15. COMMITMENTS AND CONTINGENCIES
Lease Obligations
The Company and its subsidiaries lease certain land and
facilities used in their operations, including local
marketing agreements for certain radio stations. Future
minimum rental payments under all noncancellable
operating leases as of December 31, 1993 are payable as
follows:
1994 $ 2,611,000
1995 2,232,000
1996 2,181,000
1997 2,080,000
1998 1,760,000
Thereafter 2,876,000
$13,740,000
Rental expense was approximately $2,991,000, $2,379,000 and
$2,229,000 for the years ended December 31, 1993, 1992 and
1991, respectively.
Legal Proceedings
The Company is a party to various legal proceedings. In the
opinion of management, all such matters are adequately
covered by insurance or if not so covered, are without merit
or are of such kind, or involve such amounts, which would
not have a significant effect on the financial position or
results of operations of the Company.
16. BARTER TRANSACTIONS
Barter revenue was approximately $5,061,000, $3,905,000 and
$3,608,000 in 1993, 1992 and 1991, respectively. Barter
expense was approximately $4,941,000, $3,572,000 and
$3,232,000 in 1993, 1992 and 1991, respectively.
Included in accounts receivable and accounts payable in the
accompanying consolidated balance sheets for 1993 and 1992
are barter accounts receivable (merchandise or services due
the Company) of approximately $1,040,000 and $1,112,000,
respectively, and barter accounts payable (air time due
supplier of merchandise or service) of approximately
$874,000 and $784,000, respectively.
<PAGE>
17. RETIREMENT PLAN
The Company maintains a defined contribution retirement plan
covering substantially all employees who have met
eligibility requirements. The Company matches 50% of
participating employee contributions, subject to a maximum
contribution by the Company of up to 1 1/2% of such
employee's annual compensation. Total expense related to
this plan was $237,875, $228,851 and $173,308 in 1993, 1992
and 1991, respectively.
18. SUBSEQUENT EVENTS
Formation of Partnership
Effective January 1, 1994, a subsidiary of the Company and a
corporation wholly owned by Mr. Michaels, the Company's
president, formed a limited partnership (the "Partnership")
in a transaction whereby the Partnership now owns all of the
CMM stock and Mr. Michaels' corporation owns a 95% limited
partnership interest in the Partnership. The Company's
subsidiary obtained a 5% general partnership interest in
exchange for its contribution of approximately $126,000 cash
to the Partnership. The Company initiated this transaction
primarily to allow Mr. Michaels to focus his full time and
energy to the Company and its business and the Company's
subsidiary is now the sole manager of the Partnership's
business.
In connection with the formation of the Partnership, the
Company agreed that Mr. Michaels' corporation has the right
between January 1, 1999 and January 1, 2000 to put its
limited partnership interest to the Partnership's general
partner in exchange for 300,000 shares of Common Stock. If
the put is not exercised by January 1, 2000, the general
partner has the right to call the limited partnership
interest prior to 2001 in exchange for 300,000 shares of
Common Stock. In addition, if certain events occur prior to
January 1, 1999 including without limitation, Mr. Michaels'
termination as President of the general partner, a reduction
of Mr. Michaels' annual base salary by more than 10%, or
generally any transaction by which any person or group other
than Zell/Chilmark shall become the owner of more than 30%
of the outstanding voting securities of the Company or
Zell/Chilmark fails to have its designees constitute at
least a majority of the members of the general partner's
Board of Directors, then Mr. Michaels' corporation will have
the right to either (a) purchase the Company's general
partnership interest at a price generally equal to the
balance of the partnership capital account, or (b) sell its
limited partnership interest to the general partner in
exchange for 300,000 shares of Common Stock.<PAGE>
Acquisition of Radio Station
In March 1994, the Company entered into an agreement to
acquire the assets of radio station WIMJ(FM) in Cincinnati,
Ohio for $9,500,000. The asset purchase is subject to FCC
approval and the satisfaction of certain other conditions.
Pending consummation of the transaction, the Company has
entered into a Local Marketing Agreement which commences
April 7, 1994, and will expire on the purchase date.
The acquisition of WIMJ(FM) is not expected to have a
material effect on the Company's operations.
<PAGE>
Supplementary Data
Quarterly Financial Data
for the years ended December 31, 1993 and 1992 (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1993
Net revenue $15,082,834 $24,696,266 $26,306,483 $23,846,617
Operating income (loss) (1,723,332) 2,561,201 3,353,970 2,433,320
Net income (loss) (1,067,101) 735,732 893,318 876,495
Net income (loss) per
common share (1) (0.10) 0.05 0.06 0.05
1992
Net revenue $13,127,783 $18,866,015 $20,054,483 $18,457,678
Operating income (loss) (1,560,187) 2,594,846 (5,847,962) 1,612,046
Net loss (11,728,279)(2) (936,463) (9,177,495)(3) (1,859,109)
Net loss per common
share (4) (30.11) (2.11) (24.06) (5.22)
</TABLE>
[FN]
NOTES:
(1) The sum of the quarterly net income (loss) per share amounts
does not equal the annual amount reported as per share
amounts are computed independently for each quarter.
(2) Includes a charge of $7,082,263 related to the termination
of an interest rate protection agreement (see Note 8 of
Notes to Consolidated Financial Statements).
(3) Includes a charge of $8,600,000 related to a reduction in
the carrying value of certain of the Company's radio
properties (see Note 11 of Notes to Consolidated Financial
Statements).
(4) Adjusted to reflect the conversion of the average number of
shares outstanding into 0.0423618 shares of New Common Stock
as a result of the 1993 Restructuring. See Note 1 of Notes
to Consolidated Financial Statements.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART III
Item 10. Directors and Executive Officers of Registrant
The information set forth under the captions "Election of Directors,"
"Board of Directors, Its Committees, Meetings and Functions," and
"Security Ownership of Certain Beneficial Owners and Management-
Reports of Changes in Beneficial Ownership" contained in the Company's
definitive Proxy Statement to be filed during April, 1994 for the
Annual Meeting of Shareholders presently scheduled to be held on May
18, 1994, is incorporated herein by reference. Certain information
with respect to the executive officers of Registrant is set forth
under the caption "Executive Officers of Registrant" appearing at the
end of Part I of this Report.
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation"
contained in the Company's definitive Proxy Statement to be filed
during April, 1994 for the Annual Meeting of Shareholders presently
scheduled to be held on May 18, 1994, is incorporated herein by
reference, except that the information required by Items 402(k) and
(l) of Regulation S-K which appear within such caption under the sub-
headings "Compensation Committee Report" and "Stock Performance" are
specifically not incorporated by reference into this Form 10-K or into
any other filing by the Company under the Securities Act of 1993 or
the Securities Exchange Act of 1934.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management," contained in the Company's
definitive Proxy Statement to be filed during April, 1994 for the
Annual Meeting of Shareholders presently scheduled to be held on May
18, 1994, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Certain Relationships and
Related Transactions" contained in the Company's definitive Proxy
Statement to be filed during April, 1994 for the Annual Meeting of
Shareholders presently scheduled to be held on May 18, 1994, is
incorporated herein by reference.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a) List of Documents filed as part of this Report:
(1) Financial Statements
The financial statements of Registrant as set
forth under Item 8 of this Report on Form 10-K
Page Number
(2) Financial Statement Schedules
Report of Coopers & Lybrand,
Independent Accountants 83
Schedule V - Property and Equipment 117
Schedule VI - Accumulated Depreciation
of Property and Equipment 118
Schedule VIII - Valuation and Qualifying
Accounts and Reserves 119
Schedule X - Supplementary Income
Statement Information 120
Schedules other than those listed
above are omitted for the reason
that they are not applicable or are
not required or the information is
included in the financial statements
or notes thereto.
(3) Exhibits
Reference is made to the exhibit index
commencing on page 84 hereof, listing
the exhibits included as part of this
Report
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, Continued
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
<PAGE>
JACOR COMMUNICATIONS, INC, AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
JACOR COMMUNICATIONS, INC.
(The Company)
Date March 29, 1994 By /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
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 Company and in the capacities and on the dates
indicated.
Date March 29, 1994 /s/ Randy Michaels
Randy Michaels,
President, Co-Chief
Operating Officer and Director
(Principal Executive Officer)
Date March 29, 1994 /s/ Robert L. Lawrence
Robert L. Lawrence,
Co-Chief Operating Officer
and Director
Date March 29, 1994 /s/ David M. Schulte
David M. Schulte,
Chairman and Director
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SIGNATURES, Continued
Date March 29, 1994 /s/ John W. Alexander
John W. Alexander,
Director
Date March 29, 1994 /s/ Rod F. Dammeyer
Rod F. Dammeyer,
Director
Date March 29, 1994 /s/ F. Philip Handy
F. Philip Handy,
Director
Date March 29, 1994 /s/ Marc Lasry
Marc Lasry,
Director
Date March 29, 1994 /s/ Samuel Zell
Samuel Zell,
Director
Date March 29, 1994 /s/ R. Christopher Weber
R. Christopher Weber
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Jacor Communications, Inc.
Our report on the consolidated financial statements of Jacor
Communications, Inc. and Subsidiaries is included on page 37 of
this Form 10-K. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedules listed in the index on page 79 of this Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND
Cincinnati, Ohio
March 7, 1994
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
2.1 Restructuring Agreement dated as of September 30, 1992
between the Registrant and Zell/Chilmark Fund L.P.,
effective September 22, 1992. Incorporated by
reference to Exhibit 2.1 to the Current Report on Form
8-K dated September 22, 1992. *
2.2 Amended Agreement of Merger by and among the
Registrant, Zell/Chilmark Fund L.P. and JCI Merger
Corporation. Incorporated by reference to Exhibit 2.1
to the Registration Statement on Form S-4, effective
December 18, 1992. *
2.3 Plan of Merger among Z/C Radio Acquisition, Inc. and
Jacor Broadcasting of Colorado, Inc. and the
Registrant. Incorporated by reference to Exhibit 10.1
to the Current Report on Form 8-K dated July 21, 1993.*
2.4 Asset Purchase Agreement (excluding exhibits and
schedules not deemed material) between Summit-Denver
Broadcasting Corporation and Z/C Radio Acquisition,
Inc. dated December 3, 1992. Incorporated by reference
to Exhibit 10.2 to the Current Report on Form 8-K dated
July 21, 1993. *
2.5 Letter of Intent dated October 14, 1993 relating to the
sale of Telesat. Incorporated by reference to Exhibit
2.5 to the Registration Statement on Form S-1, filed on
October 18, 1993. *
2.6 Sale and Purchase Agreement dated October 15, 1993
between Jacor Broadcasting of Colorado, Inc. and
Genesis Broadcasting, Inc. (excluding schedules and
exhibits not deemed material). Incorporated by
reference to Exhibit 2.6 to the Registration Statement
on Form S-1, filed on October 18, 1993. *
2.7 Asset Purchase Agreement dated December 17, 1993
between Jacor Cable, Inc. and Crisler Capital Company,
Limited Partnership (excluding exhibits and schedules
not deemed material). See pages 92 through 112.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
3.1 Amended and Restated Articles of Incorporation of the
Registrant. Incorporated by reference to Exhibit 4 to
the Registration Statement on Form 8-A, effective
January 22, 1993. *
3.2 Amended and Restated Code of Regulations of the
Registrant. Incorporated by reference to Exhibit 4.2
to the Registration Statement on Form S-8, filed on
June 28, 1993. *
4.1 Specimen Common Stock Certificate. Incorporated by
reference to Exhibit 2.1 to the Registrant's Form 8-A,
dated January 12, 1993. *
4.2 Credit Agreement dated as of March 5, 1993, among the
Registrant; the Banks named therein; Banque Paribas, as
Agent; and The First National Bank of Boston and
Continental Bank N.A., as Co-Agents (omitting exhibits
not deemed material or filed separately in executed
form). Incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K dated March 11, 1993. *
4.3 Commitment letters dated October 14, 1993 from Banque
Paribas, as Agent, The First National Bank of Boston
and Continental Bank N.A., as co-agents, and Society
National Bank to amend the Credit Agreement dated as of
March 5, 1993. Incorporated by reference to Exhibit
4.3 to the Registration Statement on Form S-1, filed on
October 18, 1993. *
4.4 Pledge Agreement dated as of March 5, 1993, by and
between the Registrant and Banque Paribas, as Agent.
Incorporated by reference to Exhibit 4.2 to the Current
Report on Form 8-K dated March 11, 1993. *
4.5 Security Agreement dated as of March 5, 1993, by and
between the Registrant and Banque Paribas, as Agent
(omitting exhibits not deemed material). Incorporated
by reference to Exhibit 4.3 to the Current Report on
Form 8-K dated March 11, 1993. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
4.6 Consolidated Amended and Restated Intercompany Demand
Note issued to the order of the Registrant by Jacor
Broadcasting of Atlanta, Inc. dated March 11, 1993. (1)
Incorporated by reference to Exhibit 4.4 to the Current
Report on Form 8-K dated March 11, 1993. *
4.7 Amended and Restated Intercompany Security Agreement
and Financing Statement, dated as of March 5, 1993,
among the Registrant and various of its subsidiaries
(omitting exhibits not deemed material). Incorporated
by reference to Exhibit 4.5 to the Current Report on
Form 8-K dated March 11, 1993. *
4.8 Subsidiary Guaranty, dated as of March 5, 1993, by
various subsidiaries, and their affiliates, of the
Registrant, in favor of Banque Paribas, as Agent.
Incorporated by reference to Exhibit 4.6 to the Current
Report on Form 8-K dated March 11, 1993. *
4.9 Subsidiary Security Agreement, dated as of March 5,
1993, by and among various subsidiaries, and their
affiliates, of the Registrant and Banque Paribas, as
Agent (omitting exhibits not deemed material).
Incorporated by reference to Exhibit 4.7 to the Current
Report on Form 8-K dated March 11, 1993. *
4.10 Pledge Agreement, dated as of March 5, 1993, by and
between Jacor Broadcasting of Atlanta, Inc. and Banque
Paribas, as Agent. Incorporated by reference to
Exhibit 4.8 to the Current Report on Form 8-K dated
March 11, 1993. *
4.11 Deed to Secure Debt and Security Agreement, dated as of
March 5, 1993, by and between Jacor Broadcasting of
Atlanta, Inc. and Banque Paribas, as Agent.
Incorporated by reference to Exhibit 4.9 to the Current
Report on Form 8-K dated March 11, 1993. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
4.12 Deed of Trust and Security Agreement, dated as of March
5, 1993, between Jacor Broadcasting of Colorado, Inc.
and the Public Trustee in the County of Douglas and the
State of Colorado. Incorporated by reference to
Exhibit 4.10 to the Current Report on Form 8-K dated
March 11, 1993. *
4.13 Open-End Mortgage, Assignment of Rents and Leases and
Security Agreement, dated March 5, 1993, by and between
Jacor Broadcasting Corporation and Banque Paribas, as
Agent. (2) Incorporated by reference to Exhibit 4.11 to
the Current Report on Form 8-K dated March 11, 1993. *
4.14 Revolving Note issued by the Registrant to Banque
Paribas, dated March 11, 1993 in the principal amount
of $9,000,000.00. (3) Incorporated by reference to
Exhibit 4.12 to the Current Report on Form 8-K dated
March 11, 1993. *
4.15 Acquisition Note issued by the Registrant to Banque
Paribas, dated March 11, 1993 in the principal amount
of $11,000,000.00. (4) Incorporated by reference to
Exhibit 4.13 to the Current Report on Form 8-K dated
March 11, 1993. *
4.16 Trademark Security Agreement, dated as of March 5,
1993, by Registrant in favor of Banque Paribas, as
Agent. Incorporated by reference to Exhibit 4.14 to
the Current Report on Form 8-K dated March 11, 1993. *
4.17 Subsidiary Trademark Security Agreement, dated as of
March 5, 1993, by Jacor Broadcasting of Tampa Bay, Inc.
in favor of Banque Paribas, as Agent. Incorporated by
reference to Exhibit 4.15 to the Current Report on Form
8-K dated March 11, 1993. *
4.18 (+) Restricted Stock Agreement dated as of June 23, 1993 by
and between the Registrant and Rod F. Dammeyer. (5)
Incorporated by reference to Exhibit 4.2 to the
Quarterly Report on Form 10-Q dated August 13, 1993. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
4.19 (+) Stock Option Agreement dated as of June 23, 1993
between the Registrant and Rod F. Dammeyer covering
10,000 shares of the Registrant's common stock. (6)
Incorporated by reference to Exhibit 4.3 to the
Quarterly Report on Form 10-Q dated August 13, 1993.*
4.20 First Amendment to Credit Agreement dated as of
November 15, 1993 among the Registrant; the Banks named
therein; Banque Paribas, as Agent, The First National
Bank of Boston and Continental Bank N.A. as co-agents
(omitting exhibit filed separately in executed form),
to amend the Credit Agreement dated as of March 5,
1993. Incorporated by reference to Exhibit 4.3 to
Amendment No. 2 to Form S-1 Registration Statement
filed on November 16, 1993. *
4.21 First Amendment to Subsidiary Guaranty, dated as of
November 15, 1993, by various subsidiaries, and their
affiliates, of the Registrant, in favor of Banque
Paribas, as Agent, to amend the Subsidiary Guaranty
dated as of March 5, 1993. Incorporated by reference
to Exhibit 4.20 to Amendment No. 2 to Form S-1
Registration Statement filed on November 16, 1993. *
10.1 Shareholder Agreement dated as of September 20, 1992
among Zell/Chilmark Fund L.P. and Terry S. Jacobs,
William W. Cowgill, Michael J. Rozen and Philip A.
Mason. Incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K dated September 22, 1992. *
10.2 Preferred Shareholder Agreement dated as of October 21,
1992 by and between William K. Burton and the
Registrant. Incorporated by reference to Exhibit 10.1
to the Registration Statement on Form S-4, effective
December 18, 1992. *
10.3 Preferred Shareholder Agreement dated as of October 19,
1992 by and between Gerald J. Schubert and the
Registrant. Incorporated by reference to Exhibit 10.2
to the Registration Statement on Form S-4, effective
December 18, 1992. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
10.4 Letter agreement dated December 14, 1992 of Terry S.
Jacobs, Robert L. Lawrence and Randy Michaels in favor
of David M. Schulte and Samuel Zell. Incorporated by
reference to Exhibit 10.3 to the Registration Statement
on Form S-4, effective December 18, 1992. *
10.5 Promissory Note, dated as of March 2, 1993, issued to
the Registrant by JFP Holdings Limited Partnership.
Incorporated by reference to Exhibit 10.1 to the
Registration Statement on Form S-3, filed on April 19,
1993. *
10.6 Guarantee, effective as of March 2, 1993, issued to the
Registrant by Terry S. Jacobs. Incorporated by
reference to Exhibit 10.2 to the Registration Statement
on Form S-3, filed on April 19, 1993. *
10.7 Pledge Agreement, effective as of March 2, 1993,
executed by Terry S. Jacobs in favor of the Registrant.
Incorporated by reference to Exhibit 10.3 to the
Registration Statement on Form S-3, filed on April 19,
1993. *
10.8 Pledge Agreement, effective as of March 2, 1993,
executed by JFP Holdings Limited Partnership in favor
of the Registrant. Incorporated by reference to
Exhibit 10.4 to the Registration Statement on Form S-3,
filed on April 19, 1993. *
10.9 (+) Consulting Agreement between Terry S. Jacobs and the
Registrant dated July 28, 1993. Incorporated by
reference to Exhibit 10.9 to the Registration Statement
on Form S-1, filed on October 18, 1993. *
10.10 Amended and Restated Promissory Note, dated as of March
2, 1993 and amended on July 28, 1993, issued to the
Registrant by JFP Holdings Limited Partnership.
Incorporated by reference to Exhibit 10.10 to the
Registration Statement on Form S-1, filed on October
18, 1993. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
10.11 Modification and Restatement of Guarantee, effective as
of July 28, 1993, issued to the Registrant by Terry S.
Jacobs. Incorporated by reference to Exhibit 10.11 to
the Registration Statement on Form S-1, filed on
October 18, 1993. *
10.12 Amendment to Loan Documents, dated as of July 28, 1993,
among the Registrant, JFP Holdings Limited Partnership,
and Terry S. Jacobs. Incorporated by reference to
Exhibit 10.12 to the Registration Statement on Form S-
1, filed on October 18, 1993. *
10.13 (+) Jacor Communications, Inc. 1993 Stock Option Plan.
Incorporated by reference to Exhibit 99 to the
Quarterly Report on Form 10-Q dated August 13, 1993. *
11 Statement re computation of per share earnings. See
page 113.
21 Subsidiaries of Registrant. See page 114.
23.1 Consent of Independent Accountants. See page 115.
99.1 Press Release dated March 16, 1994. See page 116.
* Incorporated by reference as indicated.
+ Management Contracts and Compensatory Arrangements.
(1) Identical notes were issued by the following subsidiaries:
Jacor Broadcasting of Colorado, Inc.
Jacor Broadcasting of Florida, Inc.
Jacor Broadcasting of Knoxville, Inc.
Jacor Broadcasting of Tampa Bay, Inc.
Jacor Cable, Inc.
Jacor Broadcasting Corporation
Georgia Network Equipment, Inc.
Broadcast Finance, Inc.
(2) A substantially similar document was entered into by Jacor
Broadcasting of Florida, Inc. relating to real property
located in the State of Florida.<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Name and Description/Location
(3) Substantially identical notes were issued to the following
payees in the following principal amounts:
Payee Amount
The First National Bank of Boston..... $ 9,000,000.00
Continental Bank N.A.................. $ 9,000,000.00
Society National Bank................. $ 9,000,000.00
Union Bank............................ $ 9,000,000.00
(4) Substantially identical notes were issued to the following
payees in the following principal amounts:
Payee Amount
The First National Bank of Boston..... $11,000,000.00
Continental Bank N.A.................. $11,000,000.00
Society National Bank................. $11,000,000.00
Union Bank............................ $11,000,000.00
(5) Substantially identical documents were entered into with
John W. Alexander, F. Philip Handy and Marc Lasry covering
20,000, 30,000 and 10,000 shares of common stock,
respectively.
(6) Identical documents were entered into with John W. Alexander,
F. Philip Handy and Marc Lasry.
<PAGE>
EXHIBIT 2.7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made as
of the 17th day of December, 1993, by and between CRISLER CAPITAL
COMPANY, LIMITED PARTNERSHIP, a Delaware limited partnership
("Buyer") and JACOR CABLE, INC., a Kentucky corporation
("Seller").
RECITALS:
WHEREAS, Seller (under the d/b/a "Telesat Cable TV") is
currently engaged in the business of providing cable television
services in the counties of Boone and Grant, Kentucky; and
WHEREAS, Buyer desires to purchase, and Seller desires to
sell, substantially all the operating assets of Seller used in
connection with said business.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
SECTION 1
CERTAIN DEFINITIONS
As used in this Agreement, each of the following terms shall
have the following meanings:
1.1 "Acquired Assets" shall mean the following assets owned
and/or held by Seller and used in the CATV Business:
1.1.1 The tangible personal property, electronic
devices, trunk and distribution cable, towers, amplifiers, power
supplies, conduit, vaults and pedestals, grounding and pole
hardware, subscriber's devices and "headend" (origination, earth
stations, transmission and distribution system) hardware
described on Schedule 1.1.1 hereto (collectively, the
"Equipment").
1.1.2 The office furniture, computer hardware and
software, fixtures and leasehold improvements described on
Schedule 1.1.2 hereto (collectively, the "Furniture and
Fixtures");
1.1.3 The vehicles described on Schedule 1.1.3 hereto
(collectively, the "Vehicles");
1.1.4 The following general intangibles: subscriber
lists, the trade names "Telesat Cable T.V." and "Telesat" and any
derivation thereof and the goodwill associated with the CATV
Business (collectively, the "Intangibles");
1.1.5 The franchises and licenses described on Exhibit
1.1.5 (the "Licenses");
<PAGE>
1.1.6 The pole attachment rights, buried cable
agreements and easements described on Schedule 1.1.6 hereto
(collectively, the "CATV Instruments");
1.1.7 The contracts and agreements described on
Schedule 1.1.7 hereto (collectively, the "Assigned Contracts");
1.1.8 The real property leases described on Schedule
1.1.8 hereto (collectively, the "Real Property Leases"); and
1.1.9 All of Seller's records, files, books, logs and
other materials relating exclusively to the operation of the CATV
Business, but specifically excluding those books and records
identified at Section 1.9.3 below.
1.2 "Assumed Liabilities" shall consist of the following:
1.2.1 Liabilities arising after the Closing Date under
any of the Licenses, CATV Instruments, Assigned Contracts or Real
Property Leases, but only with respect to the performance
thereunder subsequent to the Closing Date; and
1.2.2 All other liabilities which are incurred and
arise out of or relate to the ownership or use of the Acquired
Assets after the Closing Date or the operation of the CATV
Business after the Closing Date.
1.3 "CATV" shall mean cable television.
1.4 "CATV Business" shall mean all of the Acquired Assets
and CATV System as presently operated by Seller in the Counties
of Boone and Grant, Kentucky.
1.5 "CATV System" shall mean Seller's complete CATV
reception and distribution system consisting of one or more
headends, trunk cable, subscriber drops and associated electronic
equipment.
1.6 "Closing" and "Closing Date" shall refer to the meeting
for the purposes of concluding the transactions contemplated by
this Agreement, to be held at the place and on the date specified
in Section 6 of this Agreement.
1.7 "Communications Act" means the Communications Act of
1934, as amended.
1.8 "Copyright Act" means the Copyright Act of 1976, as
amended.
1.9 "Excluded Assets" shall mean those assets which are not
specifically identified as Acquired Assets, and which shall not
be transferred to the Buyer hereunder; these Excluded Assets
include, without limitation:
<PAGE>
1.9.1 Cash and cash equivalents (or similar
investments), including without limitation, bank accounts;
1.9.2 The names "Jacor" and "Jacor Cable, Inc." and
any derivation, form of combination thereof;
1.9.3 All of Seller's minute books, stock transfer
records, accounting information and books of account, tax
information and tax returns, and all similar corporate records;
1.9.4 All insurance policies benefitting Seller and
pertaining to the CATV Business, and all rights of Seller of
every nature and description under or arising out of such
insurance policies;
1.9.5 Claims for refund of taxes paid by Seller and
its respective affiliates imposed with respect to the CATV
Business; and
1.9.6 All rights of Seller under this Agreement and
the agreements and instruments delivered to Seller by Buyer
pursuant to this Agreement.
1.10 "FAA" means the Federal Aviation Administration.
1.11 "FCC" means the Federal Communications Commission.
1.12 "Knowledge" shall mean to the best of the actual
knowledge of Seller or Buyer, as the case may be, after such
party has made due inquiry of its officers, employees or agents
who would be expected to have knowledge of the matter.
1.13 "Security Interest" shall mean any mortgage, lien,
security agreement, pledge, option, charge, restrictive
agreement, encumbrance, restraint on transfer, or claim against
title with respect to any of the Acquired Assets.
1.14 "Tax" and "Taxes" shall mean all taxes, charges, fees,
levies, or other assessments, including without limitation,
income, excise, property, real estate, sales, payroll, and
franchise taxes imposed by the United States or any state, county
or local government, subdivision or agency thereof. Such terms
shall also include any interest or penalties payable in
connection with such taxes, charges, fees, levies or other
assessments.
SECTION 2
SALE AND PURCHASE
2.1 Sale and Purchase of the Acquired Assets. Subject to
the terms and conditions of this Agreement, and in reliance on
the accuracy of the representations and warranties made by each
party to the other, at the Closing and on the Closing Date,
Seller agrees to sell, assign and deliver to Buyer, and Buyer
agrees to purchase and accept assignment and delivery from <PAGE>
Seller, all of Seller's right, title and interest in and to the
Acquired Assets (expressly excluding all Excluded Assets) for the
Purchase Price (as defined in Section 2.2).
2.2 Purchase Price. The aggregate amount to be paid by
Buyer to Seller for the Acquired Assets shall be Two Million
Dollars ($2,000,000) (the "Purchase Price"). The Purchase Price
shall be paid by Buyer to Seller at the Closing by wire transfer
of funds in accordance with the following wiring instructions:
Account Name: Jacor Cable, Inc. Depository
Bank: Fifth Third Bank of Northern Kentucky
Account No.: 767-92155
ABA No.: 042100230
2.3 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Acquired Assets as follows:
2.3.1 Equipment $1,830,000
2.3.2 Furniture and Fixtures 30,000
2.3.3 Vehicles 40,000
2.3.4 Gov't/Reg. Franchises 100,000
Total $2,000,000
Seller and Buyer agree, if applicable, that they will each
file Internal Revenue Service Code Form 8594 for the taxable year
in which the Closing Date occurs to reflect the allocation of the
Purchase Price as set forth in this Section.
2.4 Assumption of Liabilities. At the Closing, Seller
shall assign and Buyer shall assume all of Seller's obligations
under the Assumed Liabilities. Such Assignment and Assumption
shall be in the form of Exhibit A hereto. No other debts,
liabilities or obligations of, or claims against, Seller, whether
absolute, contingent or otherwise, and whether now due or to
become due, known or unknown, and whether reflected on Seller's
financial statements, shall be assumed by Buyer.
2.5 Prorations. The parties acknowledge that it is
appropriate to allocate between Buyer and Seller, as of the
Closing Date and on a pro rata basis, certain prepaid expenses,
accrued expenses, unearned income and accrued income, incurred,
received and/or earned (as the case may be) by Seller in
connection with the CATV Business.
Accordingly, the parties agree that, as of the Closing Date,
they shall jointly prepare and agree upon an estimate of the
prorations to be made pursuant to the terms of this Section 2.5
for all prepaid expenses, accrued expenses, unearned income and
accrued income, all as determined in accordance with generally
accepted accounting principles (the "Closing Date Proration"), to
reflect the principle that all expenses and income attributable
to the CATV Business for the period prior to the Closing Date are
for the account of Seller, and all expenses and income
attributable to the CATV Business for the period on and after the
Closing Date are for the account of Buyer. The parties agree
that some of the items to be prorated are the following:
<PAGE>
royalties, taxes, rents, utilities, assessments, accounts
payable, prepayments and other charges. Accounts receivable are
specifically excluded from the proration provided for in this
Section 2.5 and are addressed in Section 2.6 below. The parties
agree that, at the Closing, Buyer shall pay to Seller (if the
prorations result in an overall credit to Seller) or Seller shall
pay to Buyer (if the prorations result in an overall credit to
Buyer), the amount determined to be owing pursuant to the Closing
Date Proration.
Within sixty (60) days following the Closing Date, Buyer and
Seller shall jointly prepare a final determination of all
prorations which were not calculated as of the Closing Date and
containing any corrections to the Closing Date Proration (the
"Post-Closing Proration"). Within three (3) business days
following such determination, the parties agree that Buyer shall
pay to Seller (if the prorations result in an overall credit to
Seller) or Seller shall pay to Buyer (if the prorations result in
an overall credit to Buyer) the amount determined to be owing
pursuant to the Post-Closing Proration.
2.6 Accounts Receivable. At the Closing, Buyer shall
purchase from Seller, and Seller shall sell to Buyer, all of
Seller's accounts receivable relating to the CATV Business, and
Buyer shall pay Seller the following amounts for such accounts
receivable:
2.6.1 For accounts receivable which are less than
sixty-one (61) days past due, 100% of the face amount of such
accounts receivable;
2.6.2 For accounts receivable which are more than
sixty (60) but less than ninety-one (91) days past due, 75% of
the face amount of such accounts receivable; and
2.6.3 For all accounts receivable which are more than
ninety (90) days past due, $1.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following, which
shall be true and correct on the date of this Agreement and as of
the Closing Date:
3.1 Organization and Authority. Seller is a corporation
duly formed, validly existing, and in good standing under the
laws of the Commonwealth of Kentucky, and has full corporate
power to own its properties and conduct the CATV Business as
currently conducted by it. The execution, delivery and
performance of this Agreement and the transactions contemplated
hereby by Seller have been duly and validly authorized by all
necessary corporate action on the part of the Seller. Subject to
obtaining the Required Consents (as defined in Section 5.4
hereof), and subject also to the representations and warranties
<PAGE>
made in Sections 3.4 and 3.5 hereof, Seller has full power and
authority to sell the Acquired Assets to be sold pursuant to this
Agreement. This Agreement constitutes the legal, valid and
binding obligation of Seller, enforceable in accordance with its
terms.
3.2 No Breach or Violation. The execution, delivery and
performance of this Agreement by Seller will not, subject to
obtaining the Required Consents, and subject also to the
representations and warranties made in Sections 3.4 and 3.5
hereof: (i) conflict with or result in a breach or violation by
Seller of; (ii) constitute default by Seller under; or (iii)
create or impose any Security Interest or right of termination,
cancellation or acceleration with respect to, any of the Acquired
Assets or any contracts or agreements relating thereto.
3.3 Title to/Rights in Acquired Assets. Except as
disclosed at the Note under "Computer Software" on Schedule 1.1.2
and at item 1 of Schedule 3.12, Seller has good and marketable
title to all of the Equipment, Furniture and Fixtures, Vehicles
and Intangibles. Seller has all of the rights expressly granted
to and/or reserved by it, as the case may be, in each of the
Licenses. All of the Acquired Assets are free and clear of all
Security Interests of any kind or nature, except for Security
Interests disclosed in Schedule 3.3, which shall be removed and
released at or prior to Closing.
3.4 CATV Instruments. Seller makes no representation or
warranty with respect to its right, title or interest in or to
the CATV Instruments; provided, however, that with respect to the
agreements identified on Schedule 1.1.6 as items B and C under
the heading "Easements," Seller has all of the rights expressly
granted to it therein. Buyer acknowledges that all of the CATV
Instruments (other than the agreements identified on Schedule
1.1.6 as items B and C under the heading "Easements") were
entered into by a prior operator of the CATV Business, and that
it appears that no formal assignment to Seller of the rights or
obligations under such CATV Instruments was ever executed.
Seller has been operating the CATV Business in reliance on the
benefits granted to the prior operator of the CATV Business under
the CATV Instruments. The CATV Instruments generally require the
prior written consent of the other party thereto prior to any
assignment thereof. To Seller's knowledge, Seller is not in
violation or default under any material covenant or provision of
any CATV Instrument. Seller shall deliver to Buyer upon request
complete copies of the CATV Instruments and any amendments to the
CATV Instruments in its possession.
3.5 Assigned Contracts and Real Property Leases.
3.5.1 Programming Contracts. The "Programming
Contracts" identified on Schedule 1.1.7 reflect those programming
vendors (other than local television stations) whose programming
is currently retransmitted by the CATV Business. To Seller's
knowledge, Seller is not in violation or default under any
material covenant or provision of any such programming
arrangements. Seller makes no representation regarding the
validity or assignability of written agreements relating to such
<PAGE>
relationships. To the extent they exist, the Programming
Contracts generally require the prior written consent of the
other party thereto prior to any assignment thereof. Seller
shall deliver to Buyer upon request complete copies of all such
agreements in its possession.
3.5.2 Retransmission Consents, Etc.. The local
television stations identified under "Retransmission Consents" on
Schedule 1.1.7 have provided retransmission consents and/or "must
carry" notices to Seller. To Seller's knowledge, Seller is not
in violation or default under any material covenant or provision
of any such consent or notice. Seller shall deliver to Buyer
upon request complete copies of such consents and notices in its
possession. Seller makes no representation as to the
assignability of such consents or notices.
3.5.3 Service Contracts. The "service contracts"
identified on Schedule 1.1.7 are essentially vendor-vendee
relationships that Seller has with various service providers.
These service providers are paid on a monthly basis for the
services provided during the prior month. Most of the "service
contracts" are not represented by any formal, continuing written
agreement, and Seller makes no representation regarding the
assignability thereof.
3.5.4 Real Property Leases. All of the Real Property
Leases are in full force and effect. Seller is in substantial
compliance with its obligations under each of the Real Property
Leases, and no event has occurred or condition or state of fact
exists which constitutes, or after notice or lapse of time or
both would constitute, a material breach or default by Seller
thereunder. Buyer acknowledges that Seller has orally subleased
a portion of the Florence office space covered by the TLI/Cahill
lease identified on Schedule 1.1.8, pursuant to which the
sublessee is paying to Seller the monthly sublease amount of
$2,121.39. Seller agrees to guarantee, from the Closing Date
through September 1994, a monthly payment of $2,121.39 (prorated
as appropriate) to the lessor constituting the current sublease
payments; provided, however, that that this guarantee shall
terminate if Buyer takes (or causes to be taken) any action to
encourage or cause the current sublessee to cease making such
sublease payments.
3.6 Licenses. The Licenses constitute all of the material
governmental or regulatory licenses, franchises, approvals,
authorizations and permits (other than general business and tax
permits) necessary to operate the CATV Business in substantial
compliance with all applicable laws and regulations. Seller is
in substantial compliance with and has fulfilled and performed in
all material respects its obligations under each of the Licenses,
except for possible required extensions based upon the eighteen
(18) homes per mile density requirement of Boone County Ordinance
450.4, and to Seller's knowledge no event has occurred or
condition or state of fact exists which constitutes, or after
notice or lapse of time or both would constitute, a material
breach or default under any of the Licenses.
<PAGE>
3.7 Acquired Assets. The Acquired Assets constitute all of
the equipment, furniture, fixtures, vehicles, intangibles,
leases, contracts and licenses used by Seller to operate the CATV
Business as it is presently being conducted.
3.8 Condition of Assets. Except as set forth in any of the
Schedules to this Agreement, the tangible Acquired Assets
identified in Sections 1.1.1, 1.1.2 and 1.1.3 are in operating
condition and repair, ordinary wear and tear excepted. Such
tangible Acquired Assets are currently adequate for the purposes
for which they are presently used by Seller in the CATV Business.
3.9 FCC Compliance.
3.9.1 General Compliance. Seller is authorized under
applicable FCC rules, regulations, and orders to distribute the
FM signals and off-air television broadcast signals presently
being carried to the subscribers of its CATV Business and to
utilize all carrier frequencies generated by its CATV Business,
and is licensed to operate all of the facilities used by Seller
in the CATV Business. The operation of Seller's CATV Business
and of any FCC-licensed facility used in conjunction with the
operation of its CATV Business is in material compliance with the
FCC's rules and regulations, and Seller has received no notice of
any claimed default or violation with respect to the foregoing.
Seller shall deliver to Buyer upon request copies of all current
and past reports and filings made with the FCC in its possession.
3.9.2 CLI Compliance. With respect to the CATV
Business, Seller has substantially complied with its obligations
in connection with the Cumulative Leakage Index (CLI) under
applicable FCC rules and regulations including, without
limitation: (i) purchasing CLI monitoring equipment as required;
(ii) maintaining appropriate log books and other recordkeeping;
and (iii) making any required correction of any radiation leakage
discovered by Seller in connection with its monitoring
obligations under such FCC rules and regulations. The CATV
System is in material compliance with CLI standards under
applicable FCC rules and regulations.
3.9.3 Three-Year Anti-Trafficking Provision. The
transaction contemplated by the terms of this Agreement is exempt
from 47 C.F.R. 76.502 of the FCC's anti-trafficking regulations
pursuant to 47 C.F.R. 76.502(f)(1).
3.10 Copyright Compliance.
3.10.1 Copyright Filings. Seller has made all
required material filings and payments with the Register of
Copyrights and is otherwise in substantial compliance with all
applicable rules and regulations of the Copyright Office
applicable to the CATV Business. Seller shall deliver to Buyer
upon request copies of all current and past reports and filings
made with the Register of Copyrights in its possession.
3.10.2 Copyright Infringement. Except as disclosed at
item 2 of Schedule 3.12, the Acquired Assets conveyed hereunder
<PAGE>
are free of any rightful claim of any other third person by way
of copyright infringement. Seller further warrants that the
manner in which the program services are offered over the CATV
System will not result in additional reportable gross receipts
under applicable rules and regulations of the Copyright Office
because of the manner in which Seller offered or offers such
programming services.
3.11 FAA Compliance. All required FAA no hazard
determinations have been obtained with respect to the
construction and/or alteration of towers used in connection with
the operation of the CATV System. The towers have been marked
and lit, where required, in compliance in all material respects
with applicable FCC and FAA rules.
3.12 Litigation and Violations. Except as set forth on
Schedule 3.12 hereto, there is no litigation at law, in equity,
or in any other proceeding or investigation pending or, to
Seller's knowledge, threatened against Seller, which: (i) may
materially and adversely affect Seller; (ii) involves the
possibility of any judgment, order, award or other decision which
might materially impair the ability of the Seller to perform its
obligations under this Agreement; or (iii) could have a
materially adverse effect on the CATV Business.
3.13 Tax Returns; Other Reports. Seller has duly and timely
filed in proper form all federal, state, local and foreign
income, franchise, sales, use, property, excise, payroll, and
other tax returns and all other reports (whether or not relating
to Taxes) required to be filed by law with the appropriate
governmental authority. All uncontested taxes, fees and
assessments of whatever nature due or payable by Seller pursuant
to said returns, reports, or otherwise have been paid.
3.14 Employment Matters. Schedule 3.14 contains a true and
complete list of names and positions of all employees of Seller's
CATV Business.
3.15 Employees. With respect to the CATV Business: (i) to
the best of Seller's knowledge, Seller is in substantial
compliance with all laws, rules and regulations relating to the
employment of labor (including but not limited to prices, wages,
hours, discrimination in employment and collective bargaining)
and is not liable for any arrearage of wages or payroll taxes or
penalties for failure to comply with any of the foregoing; (ii)
Seller is not a party to any contracts, agreements or commitments
with any labor unions; (iii) there are no suits, actions,
proceedings, grievances, arbitrations or other controversies
pending or, to the best of Seller's knowledge, threatened, by or
with any labor union, employee, former employee or job applicant;
and (iv) there is no strike, dispute, request for representation,
slowdown or stoppage pending or, to the best of Seller's
knowledge, threatened against Seller.
3.16 Environmental. To the best of Seller's knowledge,
Seller and the CATV Business are in substantial compliance with
all federal, state, local and regional statutes, laws,
ordinances, regulations and orders relating to environmental
<PAGE>
matters, including but not limited to, air pollution, water
pollution, noise control, on-site or off-site infectious waste
discharge, disposal or recovery, on-site or off-site hazardous
waste discharge, disposal or recovery, toxic or hazardous
substances, and employee safety, and there is no unresolved
notice of violation of any such statutes, laws, ordinances,
regulations and orders with respect thereto, nor is any such
notice pending or, to the best of Seller's knowledge, threatened.
To the best of Seller's knowledge, there are no underground fuel
storage tanks or any Hazardous Substance present in violation of
applicable federal, state or local statutes, laws, ordinances,
regulations and orders on, in or under any of the facilities used
in connection with the CATV Business. Hazardous Substance as
used in the preceding sentence means any substance (i) the
presence of which requires investigation or remediation under any
federal, state or local statute, regulation, ordinance, order,
action, policy or common law, including, without limitation,
CERCLA (42 U.S.C. 9601 et seq.) and RCRA (42 U.S.C. 6901 et
seq.), (ii) which contains PCBs or asbestos or (iii) which
contains gasoline, diesel fuel or other petroleum hydrocarbons in
any unconfined manner.
3.17 Minimum Subscribers. As of November 1, 1993, the CATV
Business had at least 4,900 subscribers.
3.18 Finders and Brokers. Seller has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of Buyer to pay any finder's
fees, brokerage or agent's commission or other like payments.
3.19 Disclosure. No representation or warranty by Seller in
this Agreement or any Schedule to this Agreement, or any
statement, list or certificate furnished or to be furnished by
Seller pursuant to this Agreement, contains or will contain any
untrue statement of material fact, or omits or will omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following, which
shall be true and correct on the date of this Agreement and as of
the Closing Date:
4.1 Organization and Authority. Buyer is a limited
partnership duly formed, validly existing, and in good standing
under the laws of the State of Delaware. The execution, delivery
and performance of this Agreement and the transactions
contemplated hereby by Buyer have been duly and validly
authorized by all necessary partnership action on the part of the
Buyer. Buyer has full power and authority to purchase the
Acquired Assets pursuant to this Agreement. This Agreement
constitutes the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms.
<PAGE>
4.2 Finders and Brokers. Buyer has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of Seller to pay any finder's
fees, brokerage or agent's commission or other like payments.
4.3 Disclosure. No representation or warranty by Buyer in
this Agreement or any Schedule to this Agreement, or any
statement, list or certificate furnished or to be furnished by
Buyer pursuant to this Agreement, contains or will contain any
untrue statement of material fact, or omits or will omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
SECTION 5
CONDUCT PENDING CLOSING
5.1 Access to CATV Business. Between the date of execution
and delivery of this Agreement and the Closing Date, and subject
to the Confidentiality Agreement, dated October 5, 1993, entered
into between the parties, Seller shall give to Buyer and its
representatives full access at reasonable times to all the
premises and books and records of the CATV Business and shall
furnish or make available to Buyer and its representatives all
information regarding the CATV Business and the Acquired Assets
as Buyer shall from time to time reasonably request.
5.2 Continuity and Maintenance of Operations. Between the
date of execution and delivery of this Agreement and the Closing
Date, Seller shall continue to operate the CATV Business, shall
maintain in accordance with its past practices the CATV System
and Acquired Assets, and shall keep all of its CATV Business
books, records, billing practices and files all in the ordinary
course of business and all in accordance with past practices;
provided, however, that Seller will not be required to construct
any extensions to the CATV System.
5.3 Employees of CATV Business. Between the date of
execution and delivery of this Agreement and the Closing Date,
Seller shall use its best efforts (in the ordinary course of
business and in accordance with past practices) to preserve
Seller's relationship with its employees employed in the CATV
Business and shall pay to those employees all salaries,
commissions, and other compensation to which they are entitled
for services rendered prior to the Closing. Seller shall not,
without the prior written consent of Buyer, which consent shall
not be unreasonably withheld or delayed, change the compensation
of any employees of the CATV Business.
5.4 Approvals of Third Parties. Seller and Buyer shall use
their joint best efforts to obtain before Closing: (i) all
governmental and third-party approvals, consents and other
authorizations necessary and required for Seller to perform its
obligations under this Agreement with respect to the transfer
and/or assignment from Seller to Buyer of the Licenses, the CATV
Instruments, the Assigned Contracts and the Real Property Leases,
<PAGE>
and (ii) those additional approvals, consents and authorizations
identified on Schedule 5.4 hereto ((i) and (ii) collectively
being referred to as the "Required Consents"). In the event the
parties are unable to obtain one or more of such approvals or
consents for any reason, Buyer agrees to negotiate in good faith,
with assistance from Seller, with the applicable governmental
authorities and/or third parties to enter into new agreements or
other similar arrangements effective as of the Closing Date which
are reasonably acceptable to Buyer and which are reasonably
acceptable to Seller with respect to the release of Seller from
any and all obligations and liabilities arising on or after the
Closing Date under the respective Licenses, CATV Instruments,
Assigned Contracts and Real Property Leases, as the case may be
(collectively being referred to herein as the "Alternative
Agreements").
Notwithstanding anything to the contrary contained in this
Agreement, Seller makes no representation, warranty or covenant
to Buyer that any or all Required Consent(s) or Alternative
Agreement(s) will be obtained and no such representation,
warranty or covenant shall be implied and failure to obtain any
Required Consent(s) of Seller shall not be or be deemed a breach
or default by Seller of this Agreement. However, Buyer's
obligation to close is subject to Section 10.1 herein.
5.5 Contract Renewals/Extensions. To the extent that any
of the Licenses, CATV Instruments (excluding the "Pole Attachment
and Buried Cable Agreements" identified on Schedule 1.1.6) or
Real Property Leases for which Required Consents are to be
obtained pursuant to Section 5.4 have expired or will expire
prior to the Closing Date, Seller shall use its best efforts to
enter into extensions or renewals of such Licenses, applicable
CATV Instruments and/or Real Property Leases, which extensions or
renewals shall be in a form and upon terms reasonably acceptable
to Buyer. With respect to the Assigned Contracts, Buyer agrees
to use its best efforts to obtain an extension through March 31,
1994 of the retransmission consents/must carry notices for WCPO-
TV and WKRC-TV.
5.6 Cooperation and Best Efforts. From the date hereof
until the Closing, the parties agree to cooperate with one
another and to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transaction
contemplated by this Agreement, including without limitation,
using all reasonable efforts to obtain all necessary waivers,
consents and approvals to be provided by each of them hereunder,
and to effect all necessary registrations and filings, including,
but not limited to, submissions of information requested by
governmental authorities.
SECTION 6
CLOSING; CLOSING DATE; TERMINATION
The Closing shall be held on such date mutually agreed by
<PAGE>
the parties within fifteen (15) days after all conditions to
Closing contained in this Agreement have been met. The Closing
will be held at 10:00 a.m. at the offices of Graydon, Head &
Ritchey, 1900 Fifth Third Center, Cincinnati, Ohio. Either Buyer
or Seller may terminate this Agreement without liability upon
written notice to the other if the Closing hereunder has not been
consummated by June 30, 1994, and the parties shall thereupon be
relieved of any further obligation hereunder; provided, however,
if that party's breach of this Agreement has prevented the
consummation of the transactions contemplated hereby, that party
shall not be entitled to terminate this Agreement pursuant to
this Section 6.
SECTION 7
SELLER'S OBLIGATIONS AT CLOSING
At the Closing, Seller shall deliver to Buyer, the
following:
7.1 Secretary's Certificate. A copy of resolutions by
Seller's sole shareholder and its board of directors authorizing
the execution and performance of this Agreement, certified by the
Secretary of Seller.
7.2 Closing Certificate. A certificate of the President or
appropriate Vice President of Seller that the warranties and
representations of Seller set forth in this Agreement are true
and correct as of the Closing Date.
7.3 Legal Opinions. The legal opinion of Graydon, Head &
Ritchey, counsel for Seller, in the form of Exhibit B hereto, and
the legal opinion of Hogan & Hartson, FCC counsel for Seller, in
the form of Exhibit C attached hereto.
7.4 Instruments of Conveyance and Transfer. Such
assignments, bills of sale, certificates/documents of title and
other instruments of conveyance and transfer, in form
satisfactory to Buyer, as shall be effective to transfer to Buyer
title in and to the Acquired Assets, free and clear of all
Security Interests.
7.5 Security Interests. Documentation reasonably
satisfactory to Buyer of the release and discharge of any and all
Security Interests on the Acquired Assets.
7.6 Proration Amount. An amount equal to any required
payment by Seller to Buyer pursuant to the proration performed
pursuant to Section 2.5 hereof by corporate check.
7.7 Assignment and Assumption Agreement. The Assignment
and Assumption Agreement with respect to the Assumed Liabilities.
SECTION 8
BUYER'S OBLIGATIONS AT CLOSING
<PAGE>
At the Closing, Buyer shall deliver to Seller the following:
8.1 General Partner's Certificate. A certificate of a
general partner of Buyer certifying that all actions required to
be taken by the partners of Buyer to authorize the execution,
delivery and performance of this Agreement by Buyer have been
taken, along with a copy of any resolutions adopted by Buyer
and/or its partners in connection therewith.
8.2 Closing Certificate. A certificate of a general
partner of Buyer that the warranties and representations of Buyer
set forth in this Agreement are true and correct as of the
Closing Date.
8.3 Legal Opinion. The legal opinion of Dinsmore & Shohl,
counsel for Buyer, in the form of Exhibit D hereto.
8.4 Purchase Price. The $2,000,000 Purchase Price by wire
transfer of funds in accordance with Section 2.2 hereof.
8.5 Accounts Receivable Price. An amount equal to the
purchase price of the accounts receivable as determined in
accordance with Section 2.6 hereof by wire transfer of funds in
accordance with Section 2.2 hereof.
8.6 Proration Amount. An amount equal to any required
payment by Buyer to Seller pursuant to the proration performed
pursuant to Section 2.5 hereof by wire transfer of funds in
accordance with Section 2.2 hereof
8.7 Assignment and Assumption Agreement. The Assignment
and Assumption Agreement with respect to the Assumed Liabilities.
SECTION 9
CONDITIONS TO SELLER'S OBLIGATIONS
Seller's obligation to Close hereunder is subject to the
satisfaction, or waiver by Seller, of all of the following
conditions:
9.1 Approvals and Consents. All of the Required Consents
(or applicable Alternative Agreements) shall have been obtained
and remain in full force and effect as of the Closing Date.
9.2 Performance by Buyer. Buyer shall have performed all
of its agreements and covenants under this Agreement to the
extent such are required to be performed at or prior to Closing,
and all of Buyer's representations and warranties set forth in
Section 4 hereof shall be true and correct in all material
respects as of the Closing Date.
9.3 No Actions. No action, proceeding or investigation
<PAGE>
shall have been instituted and not have been dismissed as of the
Closing Date to set aside or modify the transaction provided for
in this Agreement or to enjoin or prevent its consummation.
SECTION 10
CONDITIONS TO BUYER'S OBLIGATIONS
Buyer's obligation to Close hereunder is subject to the
satisfaction, or waiver by Buyer, of all of the following
conditions:
10.1 Approvals and Consents. All of the Required Consents
(or applicable Alternative Agreements) shall have been obtained
and remain in full force and effect as of the Closing Date.
10.2 Performance by Seller. Seller shall have performed all
of its agreements and covenants under this Agreement to the
extent such are required to be performed at or prior to Closing,
and all of Seller's representations and warranties set forth in
Section 3 of this Agreement shall be true and correct in all
material respects as of the Closing Date.
10.3 No Actions. No action, proceeding or investigation
shall have been instituted and not have been dismissed as of the
Closing Date to set aside or modify the transaction provided for
in this Agreement or to enjoin or prevent its consummation.
10.4 Operability. Seller shall not have suffered, on or
prior to Closing, any uninsured and unrepaired loss, claim,
casualty, or calamity which materially adversely affects the
operability of the CATV Business. Seller shall bear the risk of
loss on or prior to Closing with respect to the tangible Acquired
Assets identified in Sections 1.1.1, 1.1.2 and 1.1.3 as a result
of any loss, claim, casualty or calamity.
10.5 Financing. Buyer shall have obtained financing
reasonably acceptable to Buyer from a bank or other financial
institution to allow Buyer to consummate the transactions
contemplated hereby.
SECTION 11
INDEMNIFICATION
11.1 Indemnification.
11.1.1 From and after the Closing, Seller shall
indemnify and hold harmless Buyer from and against any and all
losses, costs, damages, liabilities and expenses, including
reasonable attorneys' fees and expenses ("Damages"), incurred by
Buyer arising out of any breach of any of the representations,
warranties or agreements ("Warranty" or "Warranties") given or
made by Seller in this Agreement and for the failure by Seller to
<PAGE>
comply with any applicable bulk sales or bulk transfer law.
Notwithstanding the preceding sentence, the aggregate obligation
of Seller to defend, indemnify and hold harmless Buyer for
Damages pursuant to this paragraph shall be limited to Seven
Hundred Fifty Thousand Dollars ($750,000); provided, however,
that Seller shall have no obligation to defend, indemnify and
hold harmless Buyer pursuant to this Section until and only to
the extent that the aggregate Damages incurred by Buyer with
respect to all such Warranties exceeds Forty Thousand Dollars
($40,000).
11.1.2 From and after the Closing, Buyer shall
indemnify and hold harmless Seller from and against any and all
Damages incurred by Seller arising out of any breach of any of
the Warranties given or made by Buyer in this Agreement or
arising out of any of the Assumed Liabilities.
11.2 Procedures: Third Party Claims. If a claim to which
the indemnification provisions of Section 11.1 apply arises out
of any suit, claim or other assertion of liability by a third
party (hereinafter a "Claim"), the indemnified party agrees to
give written notice within a reasonable time to the indemnifying
party of the existence of such Claim, it being understood that
the failure to give such notice shall not affect the indemnified
party's right to indemnification and the indemnifying party's
obligation to indemnify as set forth in Section 11.1, unless the
indemnifying party's ability to contest, defend or settle with
respect to such Claim is thereby demonstrably and materially
prejudiced. The obligations and liabilities of the parties
hereto with respect to their respective indemnities pursuant to
Section 11.1 resulting from any Claim, shall be subject to the
following additional terms and conditions:
11.2.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own
choosing, the defense or opposition to such Claim.
11.2.2 In the event that the indemnifying party shall
elect not to undertake such defense or opposition, or within
thirty (30) days after notice of any such Claim from the
indemnified party shall fail to defend or oppose, the indemnified
party (upon further written notice to the indemnifying party)
shall have the right to undertake the defense, opposition,
compromise or settlement of such Claim, by counsel or other
representatives of its own choosing, on behalf of and for the
account and risk of the indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to
such Claim at any time prior to settlement, compromise or final
determination thereof).
11.2.3 Anything in this Section 11.2 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
Claim may materially and adversely affect the indemnified party,
the indemnified party shall have the right, at its own cost and
expense, to participate in the defense, opposition, compromise or
settlement of the Claim, (ii) the indemnifying party shall not,
without the indemnified party's written consent, settle or
compromise any Claim or consent to entry of any judgment which
<PAGE>
does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the indemnified party a release
from all liability in respect of such Claim, and (iii) in the
event that the indemnifying party undertakes defense of or
opposition to any Claim, the indemnified party, by counsel or
other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying
party and its counsel or other representatives concerning such
Claim and the indemnifying party and the indemnified party and
their respective counsel or other representatives shall cooperate
in good faith with respect to such Claim.
11.2.4 No undertaking of defense or opposition to a
Claim shall be construed as an acknowledgement by such party that
it is liable to the party claiming indemnification with respect
to the Claim at issue or other similar Claims.
SECTION 12
CABLE RATES
12.1 Cable Rates. Buyer and Seller acknowledge that the FCC
recently instituted new basic cable rate regulations which became
effective September 1, 1993, and that an operator of a cable
system could be liable for refunds to customers for certain cable
service rates, as of September 1, 1993, which did not conform to
the new FCC rate regulations.
12.2 Cooperation. Seller agrees that if Buyer is required
to defend such cable service rates which have been established by
Seller for the CATV Business as of September 1, 1993, Seller
shall provide Buyer with its full cooperation in assisting Buyer
in its defense thereof, including but not limited to providing
Buyer with all of Seller's information, documents, data and other
materials relating to the establishment of such rates; Buyer
shall pay all reasonable out-of-pocket expenses incurred by
Seller in providing such assistance, provided that Seller shall
obtain Buyer's approval (which shall not be unreasonably withheld
or delayed) prior to incurring such expenses.
12.3 Seller's Refund Obligations. Seller shall be liable
for, and shall pay to Buyer, the amounts, if any, which Buyer is
required to refund to customers of the CATV Business arising out
of such cable service rates which, between September 1, 1993 and
the Closing Date, were not in conformity with the FCC's new rate
regulations. Seller shall pay such amounts to Buyer within five
(5) business days after demand therefor has been given to Seller.
SECTION 13
MISCELLANEOUS PROVISIONS
13.1 Public Announcements. Any announcements or similar
publicity with respect to this Agreement or the transactions
<PAGE>
contemplated herein shall be approved by both Seller (by Michael
Oakes) and Buyer (by Robert Dean Meiszer) in advance, provided
that such approval shall not be unreasonably withheld or delayed.
13.2 Amendment and Modification. This Agreement may be
amended, modified, or supplemented only by the written agreement
of the parties hereto.
13.3 Waiver of Compliance. Except as otherwise provided in
this Agreement, any failure of either of the parties to comply
with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure. The failure of any party hereto to enforce at any time
any provisions of this Agreement shall in no way be construed to
be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of
any party thereafter to enforce each and every such provision.
No waiver of any breach of this Agreement shall be held to be
waiver of any other or subsequent breach.
13.4 Survival of Representations and Warranties. Each and
every representation and warranty of Seller or Buyer contained
herein or in any other document delivered prior to or at the
Closing shall survive for a period of eighteen (18) months from
the Closing Date, provided, however, that the right of either
party to indemnification pursuant to section 11 shall not be
affected by the expiration of said eighteen (18) month period if
notice of a good faith claim for indemnification (but not
necessarily the fixed amount of the claim) has been given by the
indemnified party to the indemnifying party prior to the
expiration of said eighteen (18) month period and the indemnified
party files a formal claim no later than thirty (30) days
following the end of such eighteen (18) month period.
13.5 Costs and Expenses.
13.5.1 Buyer agrees to pay: (i) all of its attorneys'
fees, accountants' charges, costs and expenses in connection with
the negotiation, preparation and performance of and compliance
with the terms of this Agreement; and (ii) any and all excise
and/or transfer taxes on any of the Acquired Assets to which such
taxes may apply as a result of the transfers contemplated hereby.
13.5.2 Seller agrees to pay all of its attorneys'
fees, accountants' charges, costs and expenses in connection with
the negotiation, preparation and performance of and compliance
with the terms of this Agreement.
13.6 Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed to be properly given: (i)
<PAGE>
when personally delivered to the party entitled to receive the
notice; (ii) upon receipt of a facsimile message confirmed by
first-class mail, postage prepaid; (iii) upon receipt of package
delivered by overnight courier; or (iv) when sent by certified or
registered mail, postage prepaid properly addressed to the party
entitled to receive such notice at the address stated below or
such other address as one party may so notify the other:
Seller:
Jacor Cable, Inc.
1300 PNC Center
Cincinnati, Ohio 45202
Attention: Randy Michaels, President
Fax No. 513-621-0090
with a copy (which shall not constitute notice) to:
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: Paul F. Solomon, Esq.
Fax No. 513-651-3836
Buyer:
Crisler Capital Company, Limited Partnership
600 Vine Street, Suite 2710
Cincinnati, Ohio 45202
Attention: Robert Dean Meiszer
Fax No. 513-381-8808
with a copy (which shall not constitute notice) to:
Dinsmore & Shohl
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Attention: Mark C. Bissinger, Esq.
Fax No. 513-977-8141
13.7 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Neither Seller nor
Buyer may assign this Agreement or any of its rights or
liabilities hereunder without the prior written consent of the
other party hereto. Notwithstanding the preceding sentence, Buyer
may assign its rights, title and interest in and under this
Agreement to an affiliate of Buyer which controls, is controlled
by, or is under common control with, Buyer; provided, however,
that no such assignment shall release or relieve Buyer from its
obligations and primary liability to Seller hereunder.
13.8 Access to Records. For a period of four (4) years
from the Closing Date, Buyer shall maintain and preserve all
books, records, documents, agreements and other information
<PAGE>
contained in tangible form being sold by Seller to Buyer
hereunder and, upon receipt of a request therefor from Buyer and
during normal business hours, permit Seller and its
representatives to have access to and to make copies thereof at
Seller's expense.
13.9 Entire Agreement. This Agreement, including the
Schedules and Exhibits attached hereto and any documents referred
to herein, shall constitute the entire Agreement between the
parties hereto with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments, and
writings with respect to such subject matter.
13.10 Severability. The illegality or partial illegality
of this Agreement or any provisions hereof shall not affect the
validity of the remainder of this Agreement or any provision
hereof.
13.11 Captions. The captions appearing in this Agreement
are inserted only as a matter of convenience and as a reference
and in no way define, limit or describe the scope or intent of
this Agreement or any of the provisions hereof.
13.12 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
13.13 Third Party Beneficiaries. The are no intended third
party beneficiaries to this Agreement.
13.14 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
CRISLER CAPITAL COMPANY,
LIMITED PARTNERSHIP
By: MAK Ventures, Inc.
General Partner
By:R. DEAN MEISZER, PRESIDENT
R. Dean Meiszer, President
JACOR CABLE, INC.
By:R. CHRISTOPHER WEBER
R. Christopher Weber,
Senior V.Pres. and Secretary
<PAGE>
GUARANTY
Jacor Communications, Inc. hereby guarantees the payment by
Jacor Cable, Inc. of its obligations set forth in Sections 2.5
(prorations), 3.5.4 (guarantee of sublease payment), 11.1.1
(indemnification) and 12.3 (cable rate refunds), and Item B of
Schedule 1.1.6 under the heading "Easements" (Aseere settlement),
all of the Asset Purchase Agreement by and between Jacor Cable,
Inc., and Crisler Capital Company, Limited Partnership, dated as
of December ___, 1993. The execution, delivery and performance
of this Guaranty by Jacor Communications, Inc. have been duly and
validly authorized by all necessary corporate action on the part
of Jacor Communications, Inc.
JACOR COMMUNICATIONS, INC.
By:______________________________
<PAGE>
SCHEDULES/EXHIBITS
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Legal Opinion of Graydon, Head & Ritchey
Exhibit C - Legal Opinion of Hogan & Hartson
Exhibit D - Legal Opinion of Dinsmore & Shohl
Schedule 1.1.1 - Equipment
Schedule 1.1.2 - Furniture and Fixtures
Schedule 1.1.3 - Vehicles
Schedule 1.1.5 - Licenses
Schedule 1.1.6 - CATV Instruments
Schedule 1.1.7 - Assigned Contracts
Schedule 1.1.8 - Real Property Leases
Schedule 3.3 - Security Interests
Schedule 3.12 - Litigation, Etc.
Schedule 3.14 - Employment Matters
Schedule 5.4 - Additional Required Consents
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income (Loss) Per Common Share
for the Years ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Income (loss) for primary
computation:
Income (loss) before
extraordinary items $ 1,438,443 $(23,701,346) $ (364,475)
Add:
Dividends on preferred stock (526,048) (525,932)
Decrease in redemption value
of redeemable common stock
warrants 770,084
Income (loss) applicable
to common shares before
extraordinary item 1,438,443 (23,457,310) (890,407)
Extraordinary item 1,832,000
Income (loss) applicable
to common shares $ 1,438,443 $(23,457,310) $ 941,593
Primary (1):
Weighted average common shares
and dilutive common stock
equivalents:
Common stock outstanding 13,163,264 381,430 (2) 387,754(2)
Stock purchase warrants 611,879 (3) 18,173(4)
Stock options 729,384 (3) (3)
7% cumulative convertible
preferred stock - (5) (5)
14,504,527 381,430 405,927
Income (loss) per common share:
Before extraordinary
item $ 0.10 $(61.50) $ (2,19)
Net income (loss) $ 0.10 $(61.50) $ 2.32
</TABLE>
[FN]
NOTES:
1. Fully diluted earnings per share is not presented since it
approximates primary income per share.
2. Adjusted to reflect the conversion of the average number of
shares outstanding into 0.0423618 shares of New Class A
Common Stock as a result of the 1993 Restructuring. See
Note 1 to Consolidated Financial Statements.
3. The effect on primary and fully diluted earnings (loss) per
share of outstanding common stock equivalents was
antidilutive.
4. The redeemable common stock warrants were dilutive in 1991
using the "equity method" under Emerging Issues Task Force
Issue No. 88-9 and therefore the common shares issuable upon
conversion were included in the 1991 computation.
5. The convertible preferred stock was not assumed to be
converted because it would be antidilutive due to the impact
of adding back preferred stock dividends.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 21
The following is a list of the subsidiaries of the Company as of
December 31, 1993. All of these subsidiaries are included in the
Consolidated Financial Statements which are a part of this
report.
Percentage
State of of Equity
Name of Company Relationship Incorporation Ownership
Jacor Broadcasting Subsidiary Florida 100%
of Florida, Inc.
Jacor Broadcasting Subsidiary Georgia 100%
of Atlanta, Inc.
Jacor Broadcasting Subsidiary Delaware 100%
of Knoxville,Inc.
Jacor Broadcasting
of Colorado, Inc. Subsidiary Colorado 100%
Jacor National Corp. Subsidiary Delaware 100%
Jacor Broadcasting
of Tampa Bay, Inc. Subsidiary Florida 100%
Jacor Cable, Inc. Subsidiary Kentucky 100%
Jacor Broadcasting
Corporation Subsidiary Ohio 100%
Broadcast Finance, Inc. Subsidiary Ohio 100%
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Jacor Communications, Inc. on Forms S-8 (File No.
33-65126 and File No. 33-10329) and on Form S-3 (File No. 33-
53612) of our report dated March 7, 1994 on our audits of the
consolidated financial statements and financial statement
schedules of Jacor Communications, Inc. and Subsidiaries as of
December 31, 1993 and 1992 and for the years ended December 31,
1993, 1992 and 1991, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND
Cincinnati, Ohio
March 25, 1994
<PAGE>
EXHIBIT 99.1
JACOR TO PURCHASE CINCINNATI FM STATION
CINCINNATI, MARCH 16 - Jacor Communications, Inc. (NASDAQ-
JCOR), owner and operator of 15 radio stations in six U.S.
markets, has entered into an agreement to purchase Cincinnati's
WIMJ-FM, "Majic 92.5." This agreement is subject to the approval
of the Federal Communications Commission and the satisfaction of
certain other conditions. Jacor has agreed to pay approximately
$9.5 million in cash for the station.
Jacor President Randy Michaels announced the transaction
with Pathfinder Communications President John Dille, owner of
WIMJ since 1977. The station will first enter into a Local
Marketing Agreement with Jacor effective April 7, 1994, at which
time Jacor will become responsible for WIMJ's programming and
sales.
Cincinnati-based Jacor, in addition to owning and operating
radio stations around the country, locally owns WEBN-FM, WLW-AM
and WLWA-AM; the purchase of WIMJ will be the Company's second
local FM.
Jacor Communications, Inc., headquartered in Cincinnati, is
the nation's ninth largest radio group. The Company plans to
pursue growth through continued acquisitions of complementary
stations in its existing markets, and radio groups or individual
stations with significant presence in the top 25 markets.
FOR FURTHER INFORMATION CONTACT:
Chris Weber
Jacor Communications, Inc.
1300 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
(513) 621-1300
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY AND EQUIPMENT
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Balance at
Beginning Additions
Classification of Period at Cost Retirements
<S> <C> <C> <C>
Year ended December 31, 1993:
Land and land improvements $ 3,017,834 $ 50,000
Buildings 2,000,150 297,951
Broadcast equipment 25,093,176 2,862,200
Furniture and fixtures 2,826,473 319,690
Leasehold improvements 2,420,176 175,525
$35,357,809 $3,705,366
Year ended December 31, 1992:
Land and land improvements $ 3,017,834
Buildings 1,943,273 $ 56,877
Broadcast equipment 24,168,087 952,855
Furniture and fixtures 2,786,219 40,254
Leasehold improvements 2,411,617 18,919
$34,327,030 $1,068,905
Year ended December 31, 1991:
Land and land improvements $ 3,395,014 $ 260,692
Buildings 2,205,720 334,585
Broadcast equipment 26,121,861 692,765
Furniture and fixtures 2,923,303 99,019
Leasehold improvements 2,416,159 20,870
$37,062,057 $1,407,931
</TABLE>
[FN]
(1) Represents property and equipment sold.
(2) Represents the adjustment resulting from the implementation of the
Company's January 11, 1993 restructuring using the push-down method
of accounting. In accordance with the push-down method of accounting,
the Company's property and equipment were restated at current replacement
value.
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Other Changes Balance
Add (Deduct) at End
Classification (1) (2) of Period
<S> <C> <C> <C>
Year ended December 31, 1993:
Land and land improvements $ (50,000) $ (1,097,446) $ 1,920,388
Buildings (250,000) (209,530) 1,838,571
Broadcast equipment (10,597,496) 17,357,880
Furniture and fixtures (867,900) 2,278,263
Leasehold improvements (662,777) 1,932,924
$(300,000) $(13,435,149) $25,328,026
Year ended December 31, 1992:
Land and land improvements $ 3,017,834
Buildings 2,000,150
Broadcast equipment $ (27,766) 25,093,176
Furniture and fixtures 2,826,473
Leasehold improvements (10,360) 2,420,176
$ (38,126) $35,357,809
Year ended December 31, 1991:
Land and land improvements $ (637,872) $ 3,017,834
Buildings (597,032) 1,943,273
Broadcast equipment (2,646,539) 24,168,087
Furniture and fixtures (236,103) 2,786,219
Leasehold improvements (25,412) 2,411,617
$(4,142,958) $34,327,030
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Additions
Charged Other
Balance at To Changes Balance
Beginning Costs and Add(Deduct) at End
Classification of Period Expenses Retirements (1) (2) of Period
<S> <C> <C> <C> <C> <C> <C>
For the year ended
December 31, 1993:
Land and land
improvements $ 120,698 $ 16,592 $ (120,698) $ 16,592
Buildings 341,386 76,443 $(3,679) (341,386) 72,764
Broadcast equipment 11,756,200 1,673,686 (11,756,200) 1,673,686
Furniture and
fixtures 1,168,191 176,503 (1,168,191) 176,503
Leasehold
improvements 1,109,044 315,595 (1,109,044) 315,595
$14,495,519 $2,258,819 $(3,679) $(14,495,519) $2,255,140
For the year ended
December 31, 1992:
Land and land
improvements $ 94,998 $ 25,700 $ 120,698
Buildings 264,172 77,214 341,386
Broadcast equipment 9,242,840 2,522,597 $ (9,237) 11,756,200
Furniture and
fixtures 920,744 247,447 1,168,191
Leasehold
improvements 896,294 218,894 (6,144) 1,109,044
$11,419,048 $3,091,852 $(15,381) $14,495,519
For the year ended
December 31, 1991:
Land and land
improvements $ 72,431 $ 24,629 $ (2,062) $ 94,998
Buildings 293,019 63,649 (92,496) 264,172
Broadcast equipment 7,654,631 2,579,704 (991,495) 9,242,840
Furniture and
fixtures 783,261 228,454 (90,971) 920,744
Leasehold
improvements 660,460 257,112 (21,278) 896,294
$9,463,802 $3,153,548 $(1,198,302) $11,419,048
</TABLE>
[FN]
(1) Represents accumulated depreciation of assets sold.
(2) Represents the adjustment resulting from the implementation
of the Company's January 11, 1993 restructuring using the
push-down method of accounting. In accordance with the
push-down method of accounting, the Company's property and
equipment were restated at current replacement value.
<PAGE>
<TABLE>
JACOR COMMUNICATIONS,INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Additions
Balance at Charged to Operating
Beginning Costs and Companies
Description of Period Expenses Acquired
<S> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful trade
accounts receivable $ 959,117 $ 957,749
Allowance for uncollectible
notes receivable -0- $ 700,000
Accumulated amortization of
intangible assets:
Acquisition cost allocated
to FCC licenses $12,328,461 $ 1,780,441
Other 12,811,009 6,059,623
Total $25,139,470 $ 7,840,064
Year ended December 31, 1992:
Allowance for doubtful trade
accounts receivable $ 1,380,365 $ 741,926
Allowance for uncollectible
notes receivable $ 1,462,504
Accumulated amortization of
intangible assets:
Acquisition cost allocated
to FCC licenses $10,265,726 $ 2,062,735
Other 11,697,749 1,113,260
Total $21,963,475 $ 3,175,995
Year ended December 31, 1991:
Allowance for doubtful trade
accounts receivable $ 1,124,050 $ 1,053,034
Allowance for uncollectible
notes receivable $ 1,362,504 $ 100,000
Accumulated amortization of
intangible assets:
Acquisition cost allocated
to FCC licenses $10,164,179 $ 2,123,720
Other 10,219,061 1,879,367
Total $20,383,240 $ 4,003,087
</TABLE>
[FN]
(1) Represents the adjustment resulting from the implementation of the
Company's January 11, 1993 restructuring using the push-down method
of accounting. In accordance with the push-down method of accounting,
the Company's intangible assets were restated generally at current
replacement value.
<PAGE>
<TABLE>
JACOR COMMUNICATIONS,INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
Deductions
Accounts Operating Balance
Written off, Companies at End
Description Net (1) Disposed of Period
<S> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful trade
accounts receivable $ (834,564) $ 1,082,302
Allowance for uncollectible
notes receivable -0- $ 700,000
Accumulated amortization of
intangible assets:
Acquisition cost allocated
to FCC licenses $(12,328,461) $ 1,780,441
Other (12,811,009) 6,059,623
Total $(25,139,470) $ 7,840,064
Year ended December 31, 1989:
Allowance for doubtful trade
accounts receivable $(1,163,174) $ 959,117
Allowance for uncollectible
notes receivable $(1,462,504) $ -0-
Accumulated amortization of
intangible assets:
Acquisition cost allocated
to FCC licenses $ 12,328,461 Other
12,811,009
Total $ 25,139,470
Year ended December 31, 1991:
Allowance for doubtful trade
accounts receivable $ (636,042) $ (160,677) $ 1,380,365
Allowance for uncollectible
note receivable $ 1,462,504
Accumulated amortization of
intangible assets:
Acquisiton cost allocated
to FCC licenses $ (400,679) $ 11,887,220
Other (2,022,173) 10,076,255
Total $(2,422,852) $ 21,963,475
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the years ended December 31, 1993, 1992 and 1991
Charged to Costs and Expenses
1993 1992 1991
1. Maintenance and
repairs (1) (1) (1)
2. Amortization of
intangible assets:
Acquisition cost
allocated to FCC
licenses $1,780,441 $2,062,735 $2,123,720
Other intangibles $6,059,623 $1,113,260 $1,879,367
3. Taxes, other than
payroll and income
taxes:
Property and general (1) (1) (1)
4. Royalties None None None
5. Advertising costs $5,342,045 $4,729,336 $4,121,737
[FN]
(1) Does not exceed one percent of total revenues.
