<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 12, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
<TABLE>
<S> <C>
JACOR COMMUNICATIONS, INC. JCAC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
</TABLE>
<TABLE>
<S> <C> <C> <C>
--------------------------
--------------------------
OHIO 31-0978313 FLORIDA (PENDING)
(STATE OR OTHER (I.R.S. (STATE OR OTHER (I.R.S.
JURISDICTION OF EMPLOYER JURISDICTION OF EMPLOYER
INCORPORATION OR IDENTIFICATION INCORPORATION OR IDENTIFICATION
ORGANIZATION) NO.) ORGANIZATION) NO.)
</TABLE>
1300 PNC CENTER
201 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 621-1300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
R. CHRISTOPHER WEBER
JACOR COMMUNICATIONS, INC.
1300 PNC CENTER
201 EAST FIFTH STREET
CINCINNATI, OHIO 45202
(513) 621-1300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
RICHARD G. SCHMALZL, ESQ. GREGG A. NOEL,
GRAYDON, HEAD & RITCHEY ESQ.
1900 FIFTH THIRD CENTER SKADDEN, ARPS,
CINCINNATI, OHIO 45202 SLATE, MEAGHER &
(513) 621-6464 FLOM
300 SOUTH GRAND
AVENUE, SUITE
3400
LOS ANGELES,
CALIFORNIA 90071
(213) 687-5000
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE(1)(2)
<S> <C> <C> <C> <C>
% Senior Subordinated Notes due 2006... $50,000,000 100.0% $50,000,000 $17,241.37
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Amount calculated pursuant to Section 6(b) under the Securities Act.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
JACOR COMMUNICATIONS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-3--ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
<S> <C> <C>
Item 1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus..................... Facing Page of the Registration Statement;
Cross-Reference Sheet; Outside Front Cover Page of
Prospectus
Item 2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front Cover Page; Incorporation of Certain
Documents by Reference; Available Information;
Outside Back Cover Page
Item 3. Summary Information, Risk Factors, and Ratio of
Earnings to Fixed Charges.......................... Prospectus Summary; Risk Factors; Ratio of Earnings
to Fixed Charges; Business
Item 4. Use of Proceeds.................................... Use of Proceeds
Item 5. Determination of Offering Price.................... Not Applicable
Item 6. Dilution........................................... Risk Factors
Item 7. Selling Security Holders........................... Not Applicable
Item 8. Plan of Distribution............................... Outside Front Cover Page; Underwriting
Item 9. Description of Securities to be Registered......... Description of Notes
Item 10. Interests of Named Experts and Counsel............. Legal Matters; Experts
Item 11. Material Changes................................... Prospectus Summary; The Acquisitions
Item 12. Incorporation of Certain Information by
Reference.......................................... Incorporation of Certain Documents by Reference
Item 13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................................ Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 12, 1996
PROSPECTUS
, 1996
$50,000,000
[LOGO]
JACOR COMMUNICATIONS, INC.
AND
JCAC, INC.
% SENIOR SUBORDINATED NOTES DUE 2006
The Senior Subordinated Notes (the "Notes") are being offered (the
"Offering") by Jacor Communications, Inc. ("Jacor") and JCAC, Inc., a wholly
owned subsidiary of Jacor ("JCAC" and, together with Jacor, the "Obligors"). The
Notes are being offered in connection with the acquisitions of Citicasters Inc.
and Noble Broadcast Group, Inc. and to repay a portion of the outstanding
indebtedness under the Existing Credit Facility (as defined herein).
The Notes will mature on , 2006. Interest on the Notes is
payable semi-annually on and of each year,
commencing , 1996. The Obligors will not be required to make any
mandatory redemption or sinking fund payment with respect to the Notes prior to
maturity. The Notes will be redeemable at the option of the Obligors, in whole
or in part, at any time on or after , 2001 at the redemption
prices set forth herein plus accrued and unpaid interest, if any, to the date of
redemption. In the event of a Change of Control (as defined herein), the
Obligors will be required to make an offer to repurchase the Notes, at a price
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. See "Description of Notes--Certain
Covenants-- Repurchase of Notes at the Option of the Holder Upon a Change of
Control."
The Notes will be general unsecured obligations of the Obligors,
subordinated in right of payment to all Senior Debt (as defined herein) of the
Obligors, including the LYONs (as defined herein), with respect to Jacor, and
the New Credit Facility (as defined herein), with respect to JCAC. On a pro
forma basis as of December 31, 1995 after giving effect to the Offering and the
application of the net proceeds therefrom, the consummation of the Acquisitions
(as defined herein) and the Financing (as defined herein), the aggregate
principal amount of Senior Debt (as defined herein) of Jacor would have been
approximately $100.0 million, and the aggregate principal amount of Senior Debt
of JCAC would have been approximately $620.4 million.
The Notes will be fully and unconditionally guaranteed (limited only to the
extent necessary to avoid each such guarantee being considered a fraudulent
conveyance under applicable law) on a joint and several basis (the "Guarantees")
by the Obligors' existing, wholly owned subsidiaries, (the "Initial Guarantors")
and the Obligors' future subsidiaries (the "Future Subsidiary Guarantors" and,
together with the Initial Guarantors, the "Guarantors"), which Guarantees will
be general unsecured obligations of the Guarantors.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF THE RISKS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO THE DISCOUNTS AND PROCEEDS
PUBLIC(1) COMMISSIONS(2) TO OBLIGORS(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note...................................... $ $ $
Total......................................... $ $ $
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE.
(2) THE OBLIGORS AND THE INITIAL GUARANTORS HAVE AGREED TO INDEMNIFY THE
UNDERWRITER AGAINST, AND TO PROVIDE CONTRIBUTION WITH RESPECT TO, CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY THE OBLIGORS ESTIMATED AT $ MILLION.
The Notes are offered by the Underwriter when, as and if delivered to and
accepted by the Underwriter and subject to various prior conditions. The
Underwriter has reserved the right to withdraw, cancel or modify any such offer
and to reject orders in whole or in part. It is expected that delivery of the
Notes will be made in New York, New York on or about , 1996, against
payment therefor in immediately available funds.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
[ARTWORK TO COME]
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS DOES NOT GIVE
EFFECT TO THE OVER-ALLOTMENT OPTION DESCRIBED IN "UNDERWRITING." UNLESS THE
CONTEXT OTHERWISE REQUIRES, THE TERM (I) "JACOR" REFERS TO JACOR COMMUNICATIONS,
INC. AND ITS SUBSIDIARIES, INCLUDING JCAC, AND THEIR COMBINED OPERATIONS ON A
HISTORICAL BASIS; (II) "CITICASTERS" REFERS TO CITICASTERS INC. AND ITS
SUBSIDIARIES AND THEIR COMBINED OPERATIONS ON A HISTORICAL BASIS; (III) "NOBLE"
REFERS TO NOBLE BROADCAST GROUP, INC. AND ITS SUBSIDIARIES AND THEIR COMBINED
OPERATIONS ON A HISTORICAL BASIS; AND (IV) "COMPANY" REFERS TO JACOR,
CITICASTERS, AND NOBLE ON A COMBINED PRO FORMA BASIS ASSUMING THE ACQUISITIONS
ARE CONSUMMATED AS CURRENTLY SET FORTH IN THE RESPECTIVE ACQUISITION AGREEMENTS.
THE TERM "ACQUISITIONS" REFERS TO THE PENDING MERGER OF JCAC AND CITICASTERS AND
THE PENDING ACQUISITION OF NOBLE BY JACOR. THE ACQUISITIONS WILL NOT BE
CONSUMMATED PRIOR TO THE CLOSING OF THE OFFERING.
THE COMPANY
Jacor, upon consummation of the Acquisitions, will be the second largest
radio group in the nation owning and/or operating 50 radio stations and two
television stations in 13 markets across the United States. Jacor's strategic
objective is to be the leading radio broadcaster in each of its markets.
Consistent with this objective, Jacor entered into agreements to acquire 29
radio stations and two television stations for approximately $950.0 million
within two weeks of the enactment of the Telecommunications Act of 1996 (the
"Telecom Act"). The Company will have multiple radio station platforms in
Atlanta, San Diego, St. Louis, Phoenix, Tampa, Denver, Portland, Kansas City,
Cincinnati, Sacramento, Columbus, Jacksonville and Toledo. These markets are
among the most attractive radio markets in the country, demonstrating, as a
group, radio revenue growth in excess of the radio industry average over the
last five years. In 1995, the Company would have been the top billing radio
group in 9 of its 13 markets and would have had net revenue and broadcast cash
flow of $303.5 million and $107.7 million, respectively.
The following sets forth certain information regarding the Company and its
markets:
<TABLE>
<CAPTION>
COMPANY DATA
---------------------------------------------- MARKET DATA
RADIO RADIO ----------------------------------
RADIO REVENUE AUDIENCE 1995 1995 1990-1995
REVENUE MARKET MARKET NO. OF STATIONS METROPOLITAN RADIO REVENUE
MARKET SHARE SHARE ---------------- STATISTICAL REVENUE CAGR
MARKET RANK % % AM FM TV AREA RANK RANK %
- -------------------- ------- ------- ------- ---- ---- ---- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta............. 1 23.2 15.8 1 3 -- 9 10 9.2
San Diego(1)........ 1 13.9 6.7 1 2 -- 13 13 5.5
Tampa............... 1 24.3 26.4 2 4 1 23 20 6.2
Denver(2)........... 1 45.9 30.6 4 4 -- 26 18 8.6
Portland............ 1 25.3 17.4 1 2 -- 27 26 8.4
Cincinnati(3)....... 1 56.8 38.8 2 4 1 30 23 7.4
Columbus............ 1 37.9 20.9 2 3 -- 38 31 6.7
Jacksonville........ 1 26.2 22.6 2 3 -- 57 50 7.9
Toledo.............. 1 27.9 27.5 1 2 -- 85 77 5.6
Sacramento.......... 2 14.3 7.0 -- 2 -- 34 21 4.6
Kansas City......... 3 15.3 12.9 1 1 -- 29 29 4.3
St. Louis........... 6 8.6 10.0 1 2 -- 16 17 4.5
Phoenix............. 7 6.6 3.8 1 1 -- 17 16 6.1
</TABLE>
- ------------------------
(1) Includes XTRA-FM and XTRA-AM, stations Jacor provides programming to and
sells air time for under an exclusive sales agency agreement.
(2) Excludes one station for which Jacor sells advertising time pursuant to a
joint sales agreement.
(3) Excludes three stations for which Jacor sells advertising time pursuant to
joint sales agreements.
3
<PAGE>
BUSINESS STRATEGY
Jacor's strategic objective is to be the leading radio broadcaster in each
of its markets. Jacor intends to acquire individual radio stations or radio
groups that strengthen its market position and that maximize the operating
performance of its broadcast properties. Specifically, Jacor's business strategy
centers upon:
INDIVIDUAL MARKET LEADERSHIP. Jacor strives to maximize the audience
ratings in each of its markets in order to capture the largest share of the
radio advertising revenue in the market. Jacor focuses on those markets where it
believes it has the potential to be the leading radio group in the market. By
operating multiple radio stations in its markets, Jacor is able to operate its
stations at lower costs, reduce the risk of direct format competition and
provide advertisers with the greatest access to targeted demographic groups. For
1995, the Company would have had the number one radio revenue market share in
Atlanta (23%), San Diego (14%), Tampa (24%), Denver (46%), Portland (25%),
Cincinnati (57%), Columbus (38%), Jacksonville (26%) and Toledo (28%). The
Company's aggregate radio revenue market share for 1995 would have been
approximately 25%.
ACQUISITION AND MARKET DEVELOPMENT. Jacor's acquisition strategy focuses on
acquiring both developed, cash flow producing stations and underdeveloped
"stick" properties that complement its existing portfolio and strengthen its
overall market position. Jacor has been able to improve the ratings of "stick"
properties with increased marketing and focused programming that complements its
existing radio station formats. Additionally, Jacor utilizes its strong market
presence to boost the revenues and cash flow of "stick" properties by
encouraging advertisers to buy advertising in a package with its more
established stations. The Company may enter new markets through acquisitions of
radio groups that have multiple station ownership in such groups' markets.
Additionally, the Company will seek to acquire individual stations in new
markets that it believes are fragmented and where a market-leading position can
be created through additional in-market acquisitions. The Company may exit
markets it views as having limited strategic appeal by selling or swapping
existing stations for stations in other markets where the Company operates, or
for stations in new markets.
DIVERSE FORMAT EXPERTISE. Jacor management has developed programming
expertise over a broad range of radio formats. This management expertise enables
Jacor to specifically tailor the programming of each station in a market in
order to maximize Jacor's overall market position. Jacor utilizes sophisticated
research techniques to identify opportunities within each market and programs
its stations to provide complete coverage of a demographic or format type. This
strategy allows Jacor to deliver highly effective access to a target demographic
and capture a higher percentage of the radio advertising market.
DISTINCT STATION PERSONALITIES. Jacor engages in a number of creative
programming and promotional efforts designed to create listener loyalty and
station brand awareness. Through these efforts, management seeks to cultivate a
distinct personality for each station based upon the unique characteristics of
each market. Jacor 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 successfully generated significant
audience share.
One of the methods Jacor utilizes to develop the personality of its AM radio
stations is by broadcasting professional sporting events and related
programming. Currently, Jacor has the broadcast rights for the Cincinnati Reds,
Cincinnati Bengals, Colorado Rockies, Denver Broncos, Los Angeles Kings and San
Diego Chargers and Citicasters has the broadcast rights for the Portland
Trailblazers. In addition, WGST-AM in Atlanta has the broadcast rights to serve
as the official information station for the 1996 Olympic Games. Sports
broadcasting serves as a key "magnet" for attracting audiences to a station and
then introducing them to other programming features, such as local and national
news, entertaining talk, and weather and traffic reports.
4
<PAGE>
STRONG AM STATIONS. Jacor is an industry leader in successfully operating
AM stations. While many radio groups primarily utilize network or simulcast
programming on their AM stations, Jacor also develops unique programming for its
AM stations to build strong listener loyalty and awareness. Utilizing this
operating focus and expertise, Jacor has developed its AM stations in Denver and
Cincinnati into the revenue and ratings leaders among both AM and FM stations in
their respective markets. Jacor's targeted AM programming adds to Jacor's
ability to lead its markets and results in more complete coverage of the
listener base.
Although the cost structure of a large-scale AM station generally results in
lower operating margins than typical music-based FM stations, the majority of
Jacor's AM stations generate substantial levels of broadcast cash flow.
Historically, Citicasters and Noble have not focused on their AM operations to
the same extent as Jacor. Accordingly, most of the AM stations to be acquired
meaningfully underperform Jacor's AM stations, and management believes such
stations have the potential to generate significant incremental cash flow.
POWERFUL BROADCAST SIGNALS. A station's ability to maintain market
leadership depends in part upon the strength of its broadcasting delivery
system. A powerful broadcast signal enhances delivery range and clarity, thereby
influencing listener preference and loyalty. Many of Jacor's stations'
broadcasting signals are among the strongest in their respective markets
reinforcing its market leadership. Jacor opportunistically upgrades the power
and quality of the signals at stations it acquires. Following the consummation
of the Acquisitions, Jacor expects that relatively inexpensive technical
upgrades in certain markets will provide for significantly greater signal
presence.
THE ACQUISITIONS
In February 1996, Jacor entered into a merger agreement (the "Merger") to
acquire Citicasters. Citicasters owns and/or operates 19 radio stations and two
television stations. The Citicasters' station portfolio will significantly
strengthen Jacor's position in several markets. Citicasters' strong radio
stations in Atlanta, Tampa and Cincinnati, as well as network affiliate
television stations in Tampa and Cincinnati, complement Jacor's existing radio
stations in those markets. In addition, Citicasters has the number one share of
the radio advertising revenues in the Portland (25%) and Columbus (38%) markets.
Further, Citicasters has attractive radio stations in desirable radio markets,
including Phoenix, Kansas City and Sacramento.
Also in February 1996, Jacor entered into an agreement to acquire Noble,
which owns 10 radio stations. The Noble acquisition significantly strengthens
Jacor's existing position in the San Diego and Denver markets. In addition,
Noble's number one radio market position in Toledo and Noble's stations in St.
Louis provide Jacor with strong platforms and attractive markets to pursue
Jacor's market leadership strategy.
Both Noble and Citicasters have underdeveloped stations which Jacor believes
can benefit from management's proven operating and programming expertise. These
underdeveloped stations provide considerable opportunity for both ratings and
cash flow improvement.
Due to the need to obtain various regulatory approvals, the Acquisitions
will not be consummated prior to the closing of the Offering. See "Risk
Factors--Pending Acquisitions."
The cash to be paid in connection with the Merger, the refinancing of
Citicasters' bank debt, a portion of the cash to be paid in connection with the
Noble acquisition and the repayment of certain existing indebtedness incurred in
connection with such acquisition, together with the fees and expenses incurred
in connection therewith, will be financed through (i) the anticipated net
proceeds from this Offering; (ii) the anticipated net proceeds of a concurrent
offering by Jacor of 13,750,000 shares of Common Stock (the "1996 Stock
Offering"); (iii) the anticipated net proceeds of a concurrent offering by Jacor
of $202.0 million aggregate principal amount at maturity of its Liquid Yield
Option Notes due 2011 (the "LYONs-TM- Offering"); (iv) the anticipated
borrowings under a new credit facility with an available principal amount of
$600.0 million (the "New Credit Facility") (together the Offering, the LYONs
Offering, the 1996 Stock Offering and the New Credit Facility are referred to as
the "Financing"); and (v) excess cash. See "Use of Proceeds" and "Description of
Indebtedness."
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........... $50.0 million in aggregate principal amount of % Senior
Subordinated Notes.
Maturity Date................ , 2006.
Interest Payment Dates....... and , commencing , 1996.
Mandatory Redemption......... None.
Optional Redemption.......... The Notes will be redeemable, in whole or in part, at the
option of the Obligors on or after , 2001, at
the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. See
"Description of the Notes -- Optional Redemption."
Ranking...................... The Notes will be general unsecured obligations of the
Obligors and will be subordinated in right of payment to all
existing and future Senior Debt of the Guarantors including
the LYONs with respect to Jacor, and the New Credit Facility
with respect to JCAC. On a pro forma basis as of December
31, 1995, after giving effect to the Acquisitions and the
Financing and the application of the net proceeds therefrom,
the aggregate principal amount of Senior Debt of Jacor would
have been approximately $100.0 million and the aggregate
principal amount of Senior Debt of JCAC would have been
approximately $620.4 million. See "The Acquisitions,"
"Description of Other Indebtedness -- The New Credit
Facility" and "Description of Notes -- Subordination."
Guarantees................... The Notes will be fully and unconditionally guaranteed (the
"Guarantee") on a senior subordinated basis by the Initial
Guarantors, limited only to the extent necessary for such
Guarantee to not constitute a fraudulent conveyance under
applicable law. The obligation of the Initial Guarantors
with respect to the Guarantee will be subordinated in right
of payment, to the same extent the obligations of the
Obligors, with respect of the Notes, are subordinated to all
existing and future Senior Debt. The Notes also will be
fully and unconditionally guaranteed on a joint and several
basis by the Future Subsidiary Guarantors, limited only to
the extent necessary for each such Guarantee to not
constitute a fraudulent conveyance under applicable law. See
"Description of Notes -- Guarantees."
Change of Control............ If a Change of Control occurs, the Obligors will be required
to offer to repurchase all outstanding Notes at a price
equal to 101% of their principal amount, plus accrued and
unpaid interest, if any, to the date of repurchase. There
can be no assurance that the Obligors will have sufficient
funds to purchase all of the Notes in the event of a Change
of Control or that the Obligors would be able to obtain
financing for such purpose on favorable terms, if at all. In
addition, it is expected that the New Credit Facility will
restrict the Obligors' ability to repurchase the Notes,
including pursuant to a Change of Control Offer.
Furthermore, a Change of Control under the Indenture will
result in a default under the New Credit Facility. The New
Credit Facility will also contain certain other provisions
relating to a change of control of the Obligors, which
provisions are generally broader than the Change of Control
provisions of the Indenture. Consequently, certain events
that may give rise to change of control under the New Credit
Facility may not give rise to a Change of Control under the
Indenture. See "Description of the Notes -- Change of
Control."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Certain Covenants............ The Indenture will impose certain limitations on the ability
of the Obligors and its subsidiaries to, among other things
(i) incur additional indebtedness; (ii) incur liens; (iii)
pay dividends or make certain other restricted payments;
(iv) consummate certain asset sales; (v) enter into certain
transactions with affiliates; (vi) incur indebtedness that
is subordinate in right of payment to any Senior Debt and
senior in right of payment to the Notes; (vii) impose
restrictions on the ability of a subsidiary to pay dividends
or make certain payments to the Obligors; (viii) conduct
business other than the ownership and operation of radio and
television broadcast stations and related businesses; (ix)
merge or consolidate with any other person or (x) sell,
assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the assets of the Obligors. See
"Description of Notes -- Certain Covenants."
Use of Proceeds.............. The net proceeds from this Offering will be used as part of
the Financing in connection with the Acquisitions; to repay
a portion of the outstanding indebtedness under the Existing
Credit Facility; and for general corporate purposes. See
"Use of Proceeds."
</TABLE>
MARKET DATA AND CERTAIN DEFINITIONS
All market revenue rankings and rankings of radio stations by revenue or
billings that are contained in this Prospectus are based on 1995 information
contained in Duncan's Radio Market Guide (1996 ed.), Duncan's Radio Group
Directory (1996-1997 ed.) or the Miller, Kaplan, Arase & Co. Market Revenue
Report (the "Miller Kaplan Report"). All information concerning ratings and
audience listening information is derived from the Fall 1995 Arbitron Metro Area
Ratings Survey (the "Fall 1995 Arbitron"). All Designated Market Area ("DMA")
information is derived from the Nielsen Station Index, November 1995
("Nielsen"). The term "LMAS" means local marketing agreements which would be
considered time brokerage agreements for Federal Communications Commission (the
"FCC") purposes. The term "JSAS" means joint sales agreements pursuant to which
a company sells advertising time for stations owned by third parties.
7
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The following sets forth summary unaudited pro forma combined financial
information derived from the Unaudited Pro Forma Financial Information included
elsewhere in this Prospectus. The unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1995 give effect to (i)
Jacor's 1995 completed radio station acquisitions and the February 1996 radio
station dispositions, (ii) Noble's completed 1995 radio station acquisitions and
dispositions, (iii) Citicasters' completed 1995 and January 1996 radio station
acquisitions, and (iv) the Acquisitions and the Financing. The pro forma
condensed consolidated balance sheet as of December 31, 1995 has been prepared
as if the Acquisitions and the Financing had occurred on December 31, 1995.
The Summary Unaudited Pro Forma Financial Information does not purport to
present the actual financial position or results of operations of the Company
had the transactions and events assumed therein in fact occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future. The Summary Unaudited Pro Forma Financial
Information is based on certain assumptions and adjustments described in the
notes to the Unaudited Pro Forma Financial Information and should be read in
conjunction therewith. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the Consolidated Financial Statements
and the Notes thereto for each of Jacor, Citicasters and Noble, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31,
1995
-----------
<S> <C>
OPERATING STATEMENT DATA:
Net revenue......................... $ 303,469
Broadcast operating expenses........ 195,744
Depreciation and amortization....... 46,039
Corporate general and administrative
expenses.......................... 6,655
Operating income.................... 55,031
Interest expense.................... 57,445
Loss before extraordinary items..... (2,138)
OTHER FINANCIAL DATA:
Broadcast cash flow(1).............. $ 107,725
Broadcast cash flow margin(2)....... 35.5%
EBITDA(1)........................... $ 101,070
Cash interest expense(3)............ 52,695
Capital Expenditures................ 19,677
Ratio of EBITDA to cash interest
expense........................... 1.9x
Ratio of EBITDA less capital
expenditures to cash interest
expense........................... 1.5x
<CAPTION>
AS OF
DECEMBER
31,
1995
-----------
<S> <C>
BALANCE SHEET DATA:
Working capital..................... $ 41,134
Intangible assets................... 1,278,985
Total assets........................ 1,490,658
Long-term debt...................... 620,400
LYONs concurrently being offered.... 100,000
Total shareholders' equity.......... 424,050
</TABLE>
8
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following sets forth summary historical financial data for Jacor,
Citicasters and Noble for the three years ended December 31, 1995. The
comparability of the historical consolidated financial data reflected in this
financial data has been significantly impacted by acquisitions, dispositions and
restructurings. The information presented below is qualified in its entirety by,
and should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Selected Historical Financial
Data," and the Consolidated Financial Statements and the Notes thereto for each
of Jacor, Citicasters and Noble.
JACOR
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1994 1995
------------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue........................... $ 89,932 $107,010 $118,891
Broadcast operating expenses.......... 69,520 80,468 87,290
Depreciation and amortization......... 10,223 9,698 9,483
Corporate general and administrative
expenses............................ 3,564 3,361 3,501
Operating income...................... 6,625 13,483 18,617
Net income............................ 1,438 7,852 10,965
OTHER DATA:
Broadcast cash flow(1)................ $ 20,412 $26,542 $31,601
Broadcast cash flow margin(2)......... 22.7% 24.8% 26.6%
EBITDA(1)............................. $ 16,848 $23,181 $28,100
Capital expenditures.................. 1,495 2,221 4,969
</TABLE>
CITICASTERS
<TABLE>
<CAPTION>
PREDECESSOR(3) CITICASTERS
------------- -------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1994(4) 1995
------------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue........................... $ 205,168 $197,043 $136,414
Broadcast operating expenses.......... 133,070 117,718 80,929
Depreciation and amortization......... 28,119 22,946 14,635
Corporate general and administrative
expenses............................ 3,996 4,796 4,303
Operating income...................... 39,983 51,583 36,547
Net income............................ 341,344 63,106 14,317
OTHER DATA:
Broadcast cash flow(1)................ $ 72,098 $79,325 $55,485
Broadcast cash flow margin(2)......... 35.1% 40.3% 40.7%
EBITDA(1)............................. $ 68,102 $74,529 $51,182
Capital expenditures.................. 5,967 7,569 11,857
</TABLE>
NOBLE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER(5)
-----------------------------------
1993 1994(6) 1995
------------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(7)
Net revenue........................... $ 47,509 $49,602 $41,902
Broadcast operating expenses.......... 36,944 37,892 31,445
Depreciation and amortization......... 6,916 6,311 4,107
Corporate general and administrative
expenses............................ 2,702 2,621 2,285
Operating income (loss)............... 947 (5,026) 4,065
Net income (loss)..................... 13,452 (16,038) 56,853
OTHER DATA:(7)
Broadcast cash flow(1)................ $ 10,565 $11,710 $10,457
Broadcast cash flow margin(2)......... 22.2% 23.6% 25.0%
EBITDA(1)............................. $ 7,863 $ 9,089 $ 8,172
Capital expenditures.................. 3,009 1,124 2,851
</TABLE>
9
<PAGE>
- ------------------------
(1) "Broadcast cash flow" means operating income before reduction in carrying
value of assets, depreciation and amortization, and corporate general and
administrative expenses. "EBITDA" means operating income before reduction
in carrying value of assets, depreciation and amortization. Broadcast cash
flow and EBITDA should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity. Although these measures of performance are not
calculated in accordance with generally accepted accounting principles,
they are widely used in the broadcasting industry as a measure of a
company's operating performance because they assist in comparing station
performance on a consistent basis across companies without regard to
depreciation and amortization, which can vary significantly depending on
accounting methods (particularly where acquisitions are involved) or
non-operating factors such as historical cost bases. Broadcast cash flow
also excludes the effect of corporate general and administrative expenses,
which generally do not relate directly to station performance. Pro forma
EBITDA includes approximately $5.1 million of annual estimated pretax
broadcast operating expense savings and approximately $4.9 million of
annual estimated pretax corporate overhead savings resulting from the
Acquisitions.
(2) Broadcast cash flow margin equals broadcast cash flow as a percentage of
net revenue.
(3) Cash interest expense is calculated as Generally Accepted Accounting
Principles interest expense less interest expense attributable to the
LYONs.
(4) Prior to its emergence from Chapter 11 bankruptcy in December 1993,
Citicasters was known as Great American Communications Company (the
"Predecessor"). As a result of the application of "fresh-start reporting,"
the selected financial data for periods prior to December 31, 1993 are not
comparable to periods subsequent to such date.
(5) In 1994, the sale of four television stations significantly affects
comparison of net revenues, operating expenses and broadcast cash flow for
1994 as compared to 1993 and 1995.
(6) Noble's fiscal year ends on the last Sunday of December to coincide with
the standard broadcast year.
(7) In 1994, Noble reduced intangible assets by $7.8 million to reflect the
carrying value of the broadcasting assets at their estimated fair market
values.
(8) The comparability of the information in the Summary Historical Financial
Data is affected by various acquisitions and dispositions of radio
stations, as well as the August 1995 restructuring.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE
PURCHASING THE NOTES OFFERED HEREBY.
PENDING ACQUISITIONS. The consummation of the Acquisitions requires FCC
approval with respect to the transfer of the broadcast licenses of Citicasters
and Noble to Jacor. Jacor has filed applications seeking FCC approval for the
Acquisitions. The FCC has granted its consent to Jacor's acquisition of Noble;
such consent remains subject to possible further administrative or judicial
review upon the request of third parties until May 1, 1996, or by the FCC's own
action until May 13, 1996. In addition, FCC rules generally prohibit the
ownership of a television station and of one or more radio stations serving the
same market (termed the "one-to-a-market rule"). In connection with its
application seeking FCC approval for the Merger, Jacor has requested a waiver of
the one-to-a-market rule with respect to the Cincinnati and Tampa markets. The
consummation of the Acquisitions also is subject to the expiration or
termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). Jacor has
received a second request for information from the Antitrust Division of the
Department of Justice relating to each of the Merger and the Noble acquisition.
Accordingly, the applicable waiting period under the HSR Act for each of the
Merger and the Noble acquisition is now scheduled to expire 20 days after Jacor
responds to the second request relating to such Acquisition unless an extension
is requested or an additional request for information is issued. There can be no
assurance that (i) the FCC will approve (a) the transfer of the broadcast
licenses from Citicasters to Jacor, or (b) the one-to-a-market rule waivers;
(ii) the FCC or a court would affirm the FCC consent to the Noble acquisition if
such review is undertaken; or (iii) Jacor will be successful in consummating the
Acquisitions in a timely manner or on the terms described herein. See
"Business--Federal Regulation of Broadcasting."
RISKS OF ACQUISITION STRATEGY. Jacor intends to pursue growth through the
opportunistic acquisition of broadcasting companies, radio station groups and
individual radio stations. In this regard, Jacor routinely reviews such
acquisition opportunities. Jacor believes that currently there are available a
number of acquisition opportunities that would be complementary to its business.
Other than with respect to the Acquisitions and as described in "Business --
Recent Developments," Jacor currently has no binding commitments to acquire any
specific business or other material assets. Jacor cannot predict whether it will
be successful in pursuing such acquisition opportunities or what the
consequences of any such acquisition would be.
The Acquisitions will increase Jacor's broadcast station portfolio by 29
radio and two television stations. Jacor's acquisition strategy involves
numerous risks, including difficulties in the integration of operations and
systems, the diversion of management's attention from other business concerns
and the potential loss of key employees of acquired stations. There can be no
assurance that Jacor's management will be able to manage effectively the
resulting business or that such acquisitions will benefit Jacor.
In addition to the expenditure of capital relating to the Acquisitions (see
"Uses of Proceeds"), future acquisitions also may involve the expenditure of
significant funds. Depending upon the nature, size and timing of future
acquisitions, Jacor may be required to raise additional financing. There is no
assurance that such additional financing will be available to Jacor on
acceptable terms.
GOVERNMENTAL REGULATION OF BROADCASTING INDUSTRY. The broadcasting industry
is subject to extensive federal regulation which, among other things, requires
approval by the FCC for the issuance, renewal, transfer and assignment of
broadcasting station operating licenses and limits the number of broadcasting
properties Jacor may acquire. Additionally, in certain circumstances, the
Communications Act of 1934, as amended (the "Communications Act") and FCC rules
will operate to impose limitations on alien ownership and voting of the capital
stock of Jacor. The Telecom Act, which became law on February 8, 1996, creates
significant new opportunities for broadcasting companies but also creates
uncertainties as to how the FCC and the courts will enforce and interpret the
Telecom Act.
The Company's business will be dependent upon maintaining its broadcasting
licenses issued by the FCC, which are issued for a maximum term of eight years.
The majority of the Company's radio operating licenses expire at various times
in 1996 and 1997. Although it is rare for the FCC to deny a renewal application,
there can be no assurance that the future renewal applications will be approved,
or that such
11
<PAGE>
renewals will not include conditions or qualifications that could adversely
affect the Company's operations. Moreover, governmental regulations and policies
may change over time and there can be no assurance that such changes would not
have a material adverse impact upon the Company's business, financial condition
and results of operations. See "Business--Federal Regulation of Broadcasting."
COMPETITION; BUSINESS RISKS. Broadcasting is a highly competitive business.
Jacor's, Noble's and Citicasters' radio stations and Citicasters' television
stations compete for audiences and advertising revenues with other radio and
television stations, as well as with other media, such as newspapers, magazines,
cable television, outdoor advertising and direct mail, within their respective
markets. Audience ratings and market shares are subject to change and any
adverse change in a particular market could have a material and adverse effect
on the revenue of stations located in that market. Future operations are further
subject to many variables which could have an adverse effect upon Jacor's
financial performance. These variables include economic conditions, both
generally and relative to the broadcasting industry; shifts in population and
other demographics; the level of competition for advertising dollars with other
radio stations, television stations and other entertainment and communications
media; fluctuations in operating costs; technological changes and innovations;
changes in labor conditions; and changes in governmental regulations and
policies and actions of federal regulatory bodies, including the FCC. Although
Jacor believes that each of its stations, and each station operated by Noble and
Citicasters, is able to compete effectively in its respective market, there can
be no assurance that any such station will be able to maintain or increase its
current audience ratings and advertising revenues.
SUBSTANTIAL LEVERAGE. The Acquisitions and the Financing will result in a
higher level of indebtedness for the Company. At December 31, 1995, on a
combined pro forma basis, the Company would have had total indebtedness of
approximately $720.4 million representing approximately 63.0% of total
capitalization. See "Unaudited Pro Forma Financial Information." The Company's
level of indebtedness following the Acquisitions may have the following
important consequences: (i) significant interest expense and principal repayment
obligations resulting in substantial annual fixed charges; (ii) significant
limitations on the Company's ability to obtain additional debt financing; and
(iii) increased vulnerability to adverse general economic and industry
conditions. In addition, Jacor's existing and anticipated credit facilities have
or will have a number of financial covenants, including interest coverage, debt
service coverage and a maximum debt to EBITDA ratio. See "Description of Other
Indebtedness."
SHARE OWNERSHIP BY ZELL/CHILMARK. Upon the consummation of the 1996 Stock
Offering, Zell/ Chilmark Fund L.P. ("Zell/Chilmark") will hold approximately
40.9% of the outstanding Common Stock. Share ownership by Zell/Chilmark may have
the effect of discouraging certain types of transactions involving an actual or
potential change of control of Jacor, including transactions in which the
holders of Common Stock might otherwise receive a premium for their shares over
then-current market prices.
Subject to certain restrictions under the Securities Act of 1933 and under
an agreement with the Underwriters for the 1996 Stock Offering restricting the
sale of shares of Common Stock by Zell/Chilmark for a period of 180 days after
the commencement date of the 1996 Stock Offering, Zell/Chilmark will be free to
sell shares of Common Stock after the completion of the 1996 Stock Offering.
Zell/Chilmark may thereafter sell shares of Common Stock from time to time for
any reason. By virtue of its current control of Jacor, Zell/Chilmark could sell
large amounts of Common Stock by causing Jacor to file a registration statement
with respect to such stock. In addition, Zell/Chilmark could sell its shares of
Common Stock without registration pursuant to Rule 144 under the Securities Act
of 1933. Jacor can make no prediction as to the effect, if any, such sales of
shares of Common Stock would have on the prevailing market price. Sales of
substantial amounts of Common Stock, or the availability of such shares for
sale, could adversely affect prevailing market prices. Sales or transfers of
Common Stock by Zell/Chilmark could result in another person or entity becoming
the controlling shareholder of Jacor.
LACK OF DIVIDENDS; RESTRICTIONS ON PAYMENTS OF DIVIDENDS. Jacor has not
paid any dividends to its shareholders. Jacor intends to retain all available
earnings, if any, generated by its operations for the development and growth of
its business and does not anticipate paying any dividends on Common Stock in the
foreseeable future. In addition, the payment of dividends on the Common Stock is
restricted under its credit facilities.
12
<PAGE>
KEY PERSONNEL. Jacor's business is dependent upon the performance of
certain key employees, including its President and Co-Chief Operating Officers.
Jacor employs several on-air personalities with significant loyal audiences in
their respective markets. Jacor generally enters into long-term employment
agreements with its key on-air talent to protect its interests in those
relationships, but there can be no assurances that all such on-air personalities
will remain with Jacor. See "Management."
13
<PAGE>
THE ACQUISITIONS
THE CITICASTERS MERGER
On February 12, 1996, Jacor, JCAC and Citicasters entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which JCAC will merge
with and into Citicasters, with Citicasters as the surviving corporation. As a
result of the Merger, Citicasters will become a wholly owned subsidiary of
Jacor. The consummation of the Merger is subject to various conditions,
including the approval of the FCC, and the expiration or termination of the
applicable waiting period under the HSR Act. See "Risk Factors-- Pending
Acquisitions."
Citicasters owns 19 radio stations serving eight of the nation's top 31
radio revenue markets. Citicasters' radio stations serve Atlanta, Phoenix,
Tampa, Portland, Kansas City, Cincinnati, Sacramento and Columbus. Citicasters
also owns two television stations, a CBS affiliate in Tampa and an ABC affiliate
in Cincinnati, which affiliation will change to CBS in June 1996.
At the effective time of the Merger (the "Effective Time"), each share of
Class A Common Stock, par value $0.01 per share, of Citicasters (the
"Citicasters Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Citicasters Common Stock owned by Citicasters, Jacor,
Acquisition Corp. or any direct or indirect subsidiary of Citicasters, Jacor or
Acquisition Corp., or any Citicasters Common Stock held in the treasury of
Citicasters) will, by virtue of the Merger and without any action on the part of
holders thereof, be converted into and represent the right to receive: (i)
$29.50 in cash, plus, if the closing of the transactions contemplated by the
Merger (the "Closing") does not occur prior to October 1, 1996, for each full
calendar month ending prior to the Closing, commencing with October 1996, an
additional amount of $.22125 in cash (the "Cash Consideration"); plus (ii) a
warrant to acquire a fractional share of Common Stock on the terms described in
the Citicasters Warrant Agreement to be executed at the Closing (the "Warrant
Consideration," and together with the Cash Consideration, the "Merger
Consideration").
In accordance with the terms of the Merger Agreement, all necessary
corporate actions by Citicasters and the shareholders of Citicasters to approve
the Merger Agreement have occurred. Zell/Chilmark has granted Citicasters an
irrevocable proxy to vote in favor of the issuance of the warrants necessary to
pay the Warrant Consideration (the "Merger Warrants") approximately 69% of the
outstanding Common Stock entitled to vote at Jacor's May , 1996 Annual
Meeting of Shareholders. Accordingly, Jacor believes the issuance of the Merger
Warrants will be approved at the Jacor Annual Meeting and no additional
corporate action by either Jacor or the Jacor shareholders will be necessary to
effect the Merger.
The Merger Agreement may be terminated prior to the consummation of the
Merger by either Jacor or Citicasters under various circumstances, including the
failure to consummate the Merger on or before May 31, 1997. If the Merger
Agreement is terminated upon the occurrence of certain triggering events,
including the failure to consummate the Merger by May 31, 1997, Citicasters may
draw upon an irrevocable direct pay letter of credit (the "Letter of Credit") in
the amount of $75.0 million obtained by Jacor and issued to an escrow agent on
behalf of Citicasters. Except in certain circumstances, the right to terminate
the Merger Agreement and receive a maximum of $75.0 million pursuant to a draw
on the Letter of Credit is Citicasters' exclusive remedy upon the occurrence of
a triggering event.
Citicasters' outstanding 9 3/4% Senior Subordinated Notes (the "Citicasters
Notes") will become obligations of the surviving corporation in the Merger. As a
result of a change in control covenant in the Citicasters Notes, the holders of
the Citicasters Notes will have the option to cause the Company to purchase the
Citicasters Notes at 101% of the principal amount thereof (the "Change of
Control Offer"). See "Description of Other Indebtedness."
The aggregate value of the Merger, when consummated, is estimated to be
approximately $799.4 million.
14
<PAGE>
THE NOBLE ACQUISITION
On February 21, 1996, Jacor entered into an agreement with the stockholders
of Noble to acquire all of the capital stock of Noble for approximately $12.5
million. At the same time, Jacor also purchased a warrant for approximately
$52.8 million, entitling Jacor to acquire a 79.1% equity interest in Noble. Upon
consummation of the purchase of the outstanding Noble capital stock from the
Noble stockholders and the exercise of Jacor's warrant, Jacor will own 100% of
the equity interests in Noble. The consummation of Jacor's acquisition of Noble
is subject to various conditions including the termination of the applicable
waiting period under the HSR Act. See "Risk Factors--Pending Acquisitions."
Noble owns 10 radio stations serving Denver, St. Louis and Toledo. Pending
the closing of the Noble acquisition, Jacor and Noble have entered into time
brokerage agreements with respect to Noble's radio stations in St. Louis and
Toledo.
On February 21, 1996, Jacor purchased for approximately $47.0 million
certain assets relating to Noble's San Diego operations. Noble's San Diego
operations assets included an exclusive sales agency agreement under which Noble
provided programming to and sold the air time for two radio stations serving San
Diego (XTRA-AM and XTRA-FM). These two radio stations are licensed by, and
subject to the regulatory control of, the Mexican government. As part of its
purchase of Noble's San Diego operations, Jacor was assigned all of Noble's
rights under the exclusive sales agency agreement, and Jacor is now providing
the programming to and selling air time for such stations. In addition, another
wholly owned subsidiary of Jacor provided a credit facility to Noble in the
amount of $41.0 million. Noble applied the proceeds of this credit facility to
repay in full its outstanding indebtedness as of February 21, 1996.
The aggregate value of the Noble acquisition, when fully consummated, is
estimated to be approximately $152.0 million, of which approximately $139.5
million has already been paid. In order to fund this acquisition, refinance
Jacor's outstanding debt of $45.5 million (as of February 21, 1996), and pay
related costs and expenses of approximately $5.0 million, Jacor entered into a
$300.0 million credit facility (the "Existing Credit Facility").
15
<PAGE>
USE OF PROCEEDS
The net proceeds to Jacor from the sale of the Notes offered hereby are
estimated to be $ . Jacor intends to use the net proceeds primarily to
repay a portion of the principal amount and accrued interest outstanding under
the Existing Credit Facility. The outstanding balance under the Existing Credit
Facility currently bears interest at the rate of 7.2% per annum and matures on
December 31, 2003, which monies were borrowed to (a) fund a portion of the Noble
acquisition, and (b) refinance indebtedness that was initially borrowed to fund
a portion of (i) the acquisition of three radio stations in Jacksonville, (ii)
the acquisition of two radio stations in Tampa, (iii) the purchase of the
licensee of a radio station in San Diego, and (iv) open market repurchases of
Common Stock. Jacor intends to use the remaining proceeds in connection with the
consummation of the Acquisitions and for general corporate purposes. See "The
Acquisitions."
Jacor intends to use the net proceeds from the Offering, together with (i)
anticipated net proceeds of the concurrent LYONs Offering; (ii) anticipated net
proceeds of the concurrent 1996 Stock Offering; (iii) anticipated borrowings
under the New Credit Facility; and (iv) excess cash to finance the Merger and
the remaining purchase price of the Noble acquisition; to repay all outstanding
indebtedness under the Existing Credit Facility ($183.5 million at April 10,
1996) including certain borrowings in connection with the Noble acquisition; and
for general corporate purposes.
The following sets forth the anticipated sources and uses of funds for the
Financing and the Acquisitions on a pro forma basis as if they had occurred on
December 31, 1995 (in 000s).
<TABLE>
<CAPTION>
SOURCES OF FUNDS:
<S> <C>
Gross proceeds from the Offering........................................ $ 50,000
Gross proceeds from the LYONs Offering.................................. 100,000
Gross proceeds from the 1996 Stock Offering............................. 275,000
New Credit Facility..................................................... 445,400
Citicasters Notes....................................................... 125,000
Excess cash............................................................. 7,000
---------
Total sources....................................................... $1,002,400
---------
---------
USES OF FUNDS (1):
Repayment of the Existing Credit Facility (2)........................... $ 183,500
Cash consideration for the Merger (3)................................... 624,200
Remainder of purchase price for acquisition of Noble (4)................ 15,700
Refinance existing Citicasters bank debt................................ 26,000
Citicasters Notes....................................................... 125,000
Estimated fees and expenses (5)......................................... 28,000
---------
Total uses.......................................................... $1,002,400
---------
---------
</TABLE>
- ------------------------------
(1) In connection with the 1996 Stock Offering, Jacor has determined that it
will convert all of the common stock purchase warrants outstanding on the
date hereof (the "1993 Warrants") into the right to receive the Fair Market
Value (as defined in the 1993 Warrant). Zell/Chilmark has informed Jacor
that it intends to exercise its 1993 Warrants to acquire 629,117 shares of
Common Stock in lieu of accepting the Fair Market Value of its 1993
Warrants for proceeds to Jacor totaling approximately $5.2 million. In the
event that the holders of the remaining 1,354,583 1993 Warrants elect to
receive the Fair Market Value, Jacor will be required to fund approximately
$15.8 million assuming that Fair Market Value is $11.70 per 1993 Warrant
(based upon the difference between an assumed average market price of $20
per share of Common Stock and the $8.30 exercise price per 1993 Warrant).
(2) Includes borrowings of $144.5 million to fund a portion of the Noble
acquisition and related fees and expenses. See "The Acquisitions."
(3) Pursuant to the Merger Agreement, Jacor delivered a $75.0 million Letter of
Credit to an escrow agent pending the Effective Time of the Merger. If the
Merger is not consummated by May 31, 1997, or in certain other specified
circumstances, the Letter of Credit will be drawn upon by Citicasters. See
"The Acquisitions."
(4) Purchase price due upon final closing of the Noble acquisition, including
fees and expenses. See "The Acquisitions."
(5) Estimated fees and expenses include the fees and expenses of Jacor in
connection with the Financing and financial advisory fees in connection with
the Citicasters acquisition.
16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Jacor on an actual
basis as of December 31, 1995 and pro forma as adjusted to give effect to (i)
the Offering, (ii) the 1996 Stock Offering (at an assumed public offering price
of $20.00 per share), (iii) the LYONs Offering, (iv) the funding of the New
Credit Facility as set forth in "Use of Proceeds", (v) the consummation of the
Acquisitions and (vi) certain radio station acquisitions and dispositions as
described in the Notes to Unaudited Pro Forma Financial Information.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
------------------------
PRO FORMA AS
ACTUAL ADJUSTED
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion:(1)
Borrowings under the New Credit Facility............................................ $ 45,500 $ 445,400
Proceeds of the Offering............................................................ -- 50,000
Citicasters Notes................................................................... -- 125,000
Issuance of the LYONs............................................................... -- 100,000
---------- ------------
Total long-term debt............................................................ 45,500 720,400
---------- ------------
Shareholders' equity:
Common Stock, no par value, $0.10 per share stated value(2)......................... 1,816 3,191
Additional paid-in capital.......................................................... 116,614 379,239
Common stock warrants(3)............................................................ 388 24,588
Retained earnings................................................................... 20,255 17,032
---------- ------------
Total shareholders' equity...................................................... 139,073 424,050
---------- ------------
Total capitalization.................................................................... $ 184,573 $ 1,144,450
---------- ------------
---------- ------------
</TABLE>
- ------------------------------
(1) See Notes 7 and 14 of Notes to Jacor's Consolidated Financial Statements
for additional information regarding the components and terms of Jacor's
long-term debt.
(2) Excludes (i) options outstanding on the date hereof to purchase
approximately 1,565,500 shares of Common Stock at a weighted average
exercise price of $8.04, which options have been granted to (a) employees
under Jacor's 1993 Stock Option Plan and 1995 Employee Stock Purchase Plan,
and (b) Jacor's non-employee directors, (ii) the 1993 Warrants and (iii)
the Merger Warrants.
(3) In connection with the 1996 Stock Offering, Jacor has determined that it
will convert each 1993 Warrant into the right to receive the Fair Market
Value. Zell/Chilmark has informed Jacor that it intends to exercise its 1993
Warrants to acquire 629,117 shares of Common Stock in lieu of accepting the
Fair Market Value of its 1993 Warrants for proceeds to Jacor totaling
approximately $5.2 million. In the event that the holders of the remaining
1,354,583 1993 Warrants elect to receive the Fair Market Value, Jacor will
be required to fund approximately $15.8 million assuming that Fair Market
Value is $11.70 per 1993 Warrant (based upon the difference between an
assumed average market price of $20 per share of Common Stock and the $8.30
exercise price per 1993 Warrant).
17
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") is based on the historical financial statements of
Jacor, Noble and Citicasters and has been prepared to illustrate the effects of
the acquisitions described below and the related financing transactions.
The unaudited pro forma condensed consolidated statements of operations for
the year ended December 31, 1995 give effect to each of the following
transactions as if such transactions had been completed as of January 1, 1995:
(i) Jacor's 1995 completed radio station acquisitions and the February 1996
radio station dispositions, (ii) Noble's completed 1995 radio station
acquisitions and dispositions, (iii) Citicasters' completed 1995 and January
1996 radio station acquisitions, (iv) the Acquisitions, and (v) the related
financing transactions. The pro forma condensed consolidated balance sheet as of
December 31, 1995 has been prepared as if such acquisitions and the related
financing transactions had occurred on that date.
The Acquisitions will be accounted for using the purchase method of
accounting. The total purchase costs of the Acquisitions will be allocated to
the tangible and intangible assets and liabilities acquired based upon their
respective fair values. The allocation of the aggregate purchase price reflected
in the Unaudited Pro Forma Financial Information is preliminary. The final
allocation of the purchase price will be contingent upon the receipt of final
appraisals of the acquired assets and liabilities.
The Unaudited Pro Forma Financial Information does not purport to present
the actual financial position or results of operations of the Company had the
transactions and events assumed therein in fact occurred on the dates specified,
nor are they necessarily indicative of the results of operations that may be
achieved in the future. The Unaudited Pro Forma Financial Information is based
on certain assumptions and adjustments described in the notes hereto and should
be read in conjunction therewith. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Consolidated Financial
Statements and the Notes thereto for each of Jacor, Citicasters and Noble,
included elsewhere in this Prospectus.
18
<PAGE>
JACOR COMMUNICATIONS, INC.
JACOR/NOBLE COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JACOR NOBLE PRO JACOR/NOBLE
HISTORICAL PRO FORMA JACOR PRO HISTORICAL FORMA COMBINED
JACOR ADJUSTMENTS FORMA NOBLE ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue......................... $ 118,891 $ (678)(a) $ 118,213 $ 41,902 $ 87(b) $ 160,202
Broadcast operating expenses........ 87,290 (1,425)(a) 85,865 31,445 (429)(b) 116,881
Depreciation and amortization....... 9,483 400(a) 9,883 4,107 2,360(c) 16,350
Corporate general and administrative
expenses.......................... 3,501 3,501 2,285 (1,388)(d) 4,398
---------- ------ ----------- ----------- ------------- -----------
Operating income................ 18,617 347 18,964 4,065 (456) 22,573
Interest expense.................... (1,444) (1,444) (9,913) (1,621)(e) (12,978)
Interest and investment income...... 1,260 (854)(a) 406 406
Other income (expense), net......... (168) 6(a) (162) 2,619 (2,619)(f) (162)
---------- ------ ----------- ----------- ------------- -----------
Income (loss) before income
taxes and extraordinary
items......................... 18,265 (501) 17,764 (3,229) (4,696) 9,839
Income tax expense.................. (7,300) 200(g) (7,100) (63) 1,360(g) (5,803)
---------- ------ ----------- ----------- ------------- -----------
Income (loss) before
extraordinary items........... $ 10,965 $ (301) $ 10,664 $ (3,292) $ (3,336) $ 4,036
---------- ------ ----------- ----------- ------------- -----------
---------- ------ ----------- ----------- ------------- -----------
Income per common share......... $ 0.52 $ 0.51 $ 0.19
---------- ----------- -----------
---------- ----------- -----------
Number of common shares used in per
share computations................ 20,913 20,913 20,913
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Financial Information
19
<PAGE>
JACOR COMMUNICATIONS, INC.
JACOR/NOBLE/CITICASTERS COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JACOR/NOBLE CITICASTERS
COMBINED HISTORICAL PRO FORMA JACOR/NOBLE/CITICASTERS
PRO FORMA CITICASTERS ADJUSTMENTS COMBINED PRO FORMA
----------- ---------- -------------- ---------------------
<S> <C> <C> <C> <C>
Net revenue...................................... $ 160,202 $ 136,414 $ 6,853(h) $ 303,469
Broadcast operating expenses..................... 116,881 80,929 4,366(h) 195,744
(1,322)(i)
(5,110)(j)
Depreciation and amortization.................... 16,350 14,635 15,054(k) 46,039
Corporate general and administrative expenses.... 4,398 4,303 1,322(i) 6,655
(3,368)(l)
----------- ---------- -------------- --------
Operating income............................. 22,573 36,547 (4,089) 55,031
Interest expense................................. (12,978) (13,854) (30,613)(m) (57,445)
Interest and investment income................... 406 1,231 (767)(h) 870
Other income (expense), net...................... (162) (607) 175(h) (594)
----------- ---------- -------------- --------
Income (loss) before income taxes and
extraordinary items........................ 9,839 23,317 (35,294) (2,138)
Income tax expense............................... (5,803) (9,000) 10,600(n) (4,203)
----------- ---------- -------------- --------
Income (loss) before extraordinary items..... $ 4,036 $ 14,317 $ (24,694) $ (6,341)
----------- ---------- -------------- --------
----------- ---------- -------------- --------
Income (loss) per common share............... $ 0.19 $ (0.19 )
----------- --------
----------- --------
Number of common shares used in per share
computations................................... 20,913 32,658 (o)
----------- --------
----------- --------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Financial Information
20
<PAGE>
JACOR COMMUNICATIONS, INC.
JACOR/NOBLE COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JACOR PRO NOBLE PRO JACOR/NOBLE
HISTORICAL FORMA JACOR HISTORICAL FORMA COMBINED
JACOR ADJUSTMENTS PRO FORMA NOBLE ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash............................... $ 7,437 $ 7,437 $ 447 $ 7,884
Accounts receivable................ 25,262 25,262 9,094 34,356
Broadcast program rights...........
Prepaid expenses and other current
assets........................... 3,916 3,916 2,290 6,206
---------- ----------- ---------- -----------
Total current assets........... 36,615 36,615 11,831 48,446
Property and equipment............. 30,801 $ (1,414)(p) 29,387 9,333 $ 7,667(q) 46,387
Intangible assets.................. 127,158 (2,501)(p) 124,657 50,730 125,480(q) 300,867
Deferred charges and other
assets........................... 14,265 (46)(p) 14,219 5,333 (4,267)(q) 15,285
---------- ----------- ----------- ---------- ----------- -----------
Total assets................... $ 208,839 $ (3,961) $ 204,878 $ 77,227 $ 128,880 $ 410,985
---------- ----------- ----------- ---------- ----------- -----------
---------- ----------- ----------- ---------- ----------- -----------
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities...................... $ 12,180 $ 862(p) $ 13,042 $ 12,310 $ (3,611)(r) $ 21,741
---------- ----------- ----------- ---------- ----------- -----------
Total current liabilities...... 12,180 862 13,042 12,310 (3,611) 21,741
Long-term debt, net of current
maturities........................... 45,500 (6,500)(p) 39,000 78,000 82,200(r) 199,200
Other liabilities...................... 12,086 12,086 9,208 28,000(s) 49,294
Shareholders' equity:
Common stock....................... 1,816 1,816 1,816
Additional paid-in capita1......... 116,614 116,614 44,231 (44,231)(t) 116,614
Common stock warrants.............. 388 388 388
Retained earnings.................. 20,255 1,677(p) 21,932 (66,522) 66,522(t) 21,932
---------- ----------- ----------- ---------- ----------- -----------
Total shareholders' equity..... 139,073 1,677 140,750 (22,291) 22,291 140,750
---------- ----------- ----------- ---------- ----------- -----------
Total liabilities and
shareholders' equity......... $ 208,839 $ (3,961) $ 204,878 $ 77,227 $ 128,880 $ 410,985
---------- ----------- ----------- ---------- ----------- -----------
---------- ----------- ----------- ---------- ----------- -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Financial Information
21
<PAGE>
JACOR COMMUNICATIONS, INC.
JACOR/NOBLE/CITICASTERS COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JACOR/NOBLE HISTORICAL CITICASTERS PRO JACOR/NOBLE/CITICASTERS
COMBINED PRO FORMA CITICASTERS FORMA ADJUSTMENTS COMBINED PRO FORMA
-------------------- ---------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Current Assets:
Cash............................. $ 7,884 $ 3,572 $ (500)(u) $ 3,956
(7,000)(v)
Accounts receivable.............. 34,356 32,495 66,851
Broadcast program rights......... 5,162 5,162
Prepaid expenses and other
current assets................. 6,206 3,059 9,265
-------- ---------- -------- -----------
Total current assets......... 48,446 44,288 (7,500) 85,234
Broadcast program rights, less
current portion.................... 3,296 3,296
Property and equipment............... 46,387 33,878 13,000(w) 93,265
Intangible assets.................... 300,867 312,791 670,227(w) 1,278,985
(4,900)(x)
Deferred charges and other assets.... 15,285 22,093 (7,500)(y) 29,878
-------- ---------- -------- -----------
Total assets................. $ 410,985 $ 416,346 $ 663,327 $ 1,490,658
-------- ---------- -------- -----------
-------- ---------- -------- -----------
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities.................... $ 21,741 $ 17,061 $ 38,802
Broadcast program right fees
payable........................ 5,298 5,298
-------- ---------- -----------
Total current liabilities.... 21,741 22,359 44,100
Broadcast program right fees payable,
less current portion............... 2,829 2,829
Long-term debt, net of current
maturities......................... 199,200 132,481 $ 288,719(v) 620,400
LYONs Subordinated Notes............. 100,000(v) 100,000
Other liabilities.................... 49,294 98,985 151,000(s) 299,279
Shareholders' equity:
Common stock..................... 1,816 200 (200)(t) 3,191
1,375(z)
Additional paid-in capital....... 116,614 82,736 (82,736)(t) 379,239
262,625(z)
Common stock warrants............ 388 24,200 (aa 24,588
Retained earnings................ 21,932 76,756 (76,756)(t) 17,032
(4,900)(x)
-------- ---------- -------- -----------
Total shareholders' equity... 140,750 159,692 123,108 424,050
-------- ---------- -------- -----------
Total liabilities and
shareholders' equity....... $ 410,985 $ 416,346 $ 663,327 $ 1,490,658
-------- ---------- -------- -----------
-------- ---------- -------- -----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Financial Information
22
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(a) These adjustments reflect additional revenues and expenses for Jacor's
acquisitions of radio stations WDUV-FM and WBRD-AM in Tampa Bay and WJBT-FM,
WSOL-FM, and WZAZ-AM in Jacksonville, which were completed at various dates
in 1995, net of the elimination of 1995 revenues and expenses for radio
stations WMYU-FM and WWST-FM in Knoxville, which were sold in February 1996.
(b) These adjustments reflect additional revenues and expenses for Noble's
acquisition of radio stations WRVF-FM (formerly WLQR-FM) and WSPD-AM in
Toledo, and the elimination of revenues and expenses for the sale of radio
stations KBEQ-FM and KBEQ-AM in Kansas City, and other miscellaneous
non-recurring expenses related to dispositions of properties in 1995. The
acquisitions were completed in August 1995 and the dispositions were
completed in March 1995.
(c) The adjustment reflects the additional depreciation and amortization expense
resulting from the allocation of Jacor's purchase price to the assets
acquired including an increase in property and equipment and identifiable
intangible assets, to their estimated fair market values and the recording
of goodwill associated with the acquisition of Noble. See Note (q). Goodwill
is amortized over 40 years.
(d) The adjustment represents $1,513 of corporate overhead savings for the
elimination of redundant management costs and other expenses resulting from
the combination of the Jacor and Noble entities, net of $125 additional
corporate expenses associated with the purchase of the Toledo stations.
(e) The adjustment represents additional interest expense associated with
Jacor's borrowings under the Existing Credit Facility to finance the Noble
acquisition and refinance existing outstanding borrowings. The assumed
interest rate is 7.2%, which represents the current rate as of April 1996 on
outstanding borrowings.
(f) The adjustment reflects the elimination of the gain on the sale of radio
stations KBEQ-FM and AM in Kansas City, and WSSH-AM in Boston, which were
sold in March 1995 and January 1995, respectively.
(g) To provide for the tax effect of pro forma adjustments using an estimated
statutory rate of 40%. The Noble pro forma adjustments include
non-deductible amortization of goodwill estimated to be approximately
$1,300.
(h) The adjustments represent additional revenue and expenses associated with
Citicasters June 1995 acquisition of KKCW-FM in Portland and the January
1996 acquisition of WHOK-FM, WLLD-FM, and WLOH-AM in Columbus, including
adjustments to investment income related to cash expended in the
acquisitions and miscellaneous non-recurring costs.
(i) Adjustment to reclassify miscellaneous broadcast operating expenses to
conform with Jacor's presentation.
(j) The adjustment reflects $5,110 of cost savings resulting from the
elimination of redundant broadcast operating expenses arising from the
operation of multiple stations in certain markets. Such pro forma cost
savings are expected to be $2,220 for programming and promotion, $970 for
news, $360 for technical and engineering and $1,560 for general and
administrative expenses.
(k) The adjustment reflects the additional depreciation and amortization expense
resulting from the allocation of Jacor's purchase price to the assets
acquired including an increase in property and equipment and identifiable
intangible assets to their estimated fair market values and the recording of
goodwill associated with the acquisition of Citicasters. See Note (w).
Goodwill is amortized over 40 years.
(l) The adjustment represents $3,368 of corporate overhead savings for the
elimination of redundant management costs and other expenses resulting from
the combination with Citicasters.
23
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)--(CONTINUED)
(m) Represents the adjustment to interest expense associated with the Notes, the
Citicasters Notes, the LYONs and borrowings under the New Credit Facility
with an assumed blended rate of 7.875%. The adjustment reflects additional
interest expense on borrowings necessary to complete the Merger, and
refinance outstanding borrowings under the Existing Credit Facility in
connection with the Noble acquisition. A change of .125% in interest rates
would result in a change in interest expense and income (loss) before
extraordinary items of approximately $900 and $540, respectively. See Note
(v) for composition of borrowings.
(n) To provide for the tax effect of pro forma adjustments using an estimated
statutory rate of 40%. The Citicasters pro forma adjustments include
non-deductible amortization of goodwill estimated to be approximately
$8,800.
(o) The pro forma weighted average shares outstanding includes all shares of
Common Stock outstanding prior to the 1996 Stock Offering. The weighted
average shares of Jacor do not reflect any options and warrants outstanding
prior to the 1996 Stock Offering or warrants to be issued to the Citicasters
shareholders to consummate the acquisition, as they are antidilutive. The
LYONs are not common stock equivalents and are therefore, excluded from the
computation.
(p) These adjustments reflect the February 1996 sale of radio stations WMYU-FM
and WWST-FM in Knoxville and the tax liability related to the gain on the
sale. Proceeds from the sale of $6,500 are assumed to reduce outstanding
debt.
(q) The adjustment represents the allocation of the purchase price of Noble to
the estimated fair value of the assets acquired and liabilities assumed, and
the recording of goodwill associated with the acquisition.
<TABLE>
<CAPTION>
ESTIMATED FAIR
MARKET VALUE
--------------
<S> <C>
Property and equipment........................................................ $ 17,000
Intangible assets............................................................. 176,210
Cash.......................................................................... 447
Accounts receivable........................................................... 9,094
Prepaid expenses and other current assets..................................... 2,290
Deferred charges and other assets............................................. 1,066
Accounts payable, accrued liabilities and other current liabilities........... (8,699)
Other liabilities............................................................. (37,208)
--------------
$ 160,200
--------------
--------------
</TABLE>
(r) The adjustment assumes that the $3,611 current portion of Noble debt is
financed on a long-term basis and net additional borrowings to complete the
Noble acquisitions as follows:
<TABLE>
<S> <C>
Historical Jacor debt.......................................... $ 45,500
Historical Noble debt.......................................... 78,000
Proceeds from sale of Knoxville stations....................... (6,500)
Pro forma adjustment........................................... 82,200
-----------
Assumed borrowings after acquisitions.......................... $ 199,200
-----------
-----------
</TABLE>
(s) The adjustment represents the additional deferred tax liability associated
with the difference between the book and tax basis of assets and
liabilities, excluding goodwill, after the allocation of the purchase price.
(t) The adjustment reflects the elimination of historical stockholders' equity,
as the acquisition will be accounted for as a purchase.
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)--(CONTINUED)
(u) The adjustment reflects $500 cash expended in the acquisition of the
Columbus stations in January 1996.
(v) The pro forma adjustment represents the net additional borrowings required
to complete the Citicasters acquisition (including $16,000 for the
acquisition of the Columbus stations in January 1996), assuming the use of
$7,000 of excess cash, as follows:
<TABLE>
<S> <C>
Historical Citicasters debt....................................... $ 132,481
Jacor/Noble pro forma debt........................................ 199,200
Pro forma adjustments, including a $2,519 fair market value
adjustment for Citicasters debt................................. 388,719
---------
Assumed borrowings after acquisitions............................. $ 720,400
---------
---------
</TABLE>
The assumed borrowings after the acquisitions are as follows:
<TABLE>
<S> <C>
Proceeds of this Offering......................................... $ 50,000
Borrowings under the New Credit Facility.......................... 445,400
Citicasters Notes................................................. 125,000
Issuance of the LYONs............................................. 100,000
---------
$ 720,400
---------
---------
</TABLE>
(w) The adjustments represent the allocation of the purchase price of
Citicasters (including the 1996 Columbus acquisitions) to the estimated fair
value of the assets acquired and liabilities assumed, and the recording of
goodwill associated with the acquisition as follows:
<TABLE>
<CAPTION>
ESTIMATED FAIR
MARKET VALUE
--------------
<S> <C>
Property and equipment........................................................ $ 46,878
Intangible assets............................................................. 983,018
Cash.......................................................................... 3,072
Accounts receivable........................................................... 32,495
Broadcast program rights...................................................... 8,458
Prepaid expenses and other current assets..................................... 3,059
Deferred charges and other assets............................................. 14,593
Accounts payable, accrued liabilities and other current liabilities........... (17,061)
Broadcast program rights fees payable......................................... (8,127)
Other liabilities............................................................. (249,985)
Long-term debt................................................................ (151,000)
--------------
$ 665,400
--------------
--------------
</TABLE>
The purchase price is summarized as follows:
<TABLE>
<S> <C>
Excess cash.................................................... $ 7,000
Pro forma borrowings:
Citicasters.................................................. (16,000)
Jacor........................................................ 386,200
Merger Warrants issued......................................... 24,200
Common Stock issued............................................ 264,000
-----------
$ 665,400
-----------
-----------
</TABLE>
(x) Adjustment to write off deferred financing costs for the Existing Credit
Facility anticipated to be refinanced in connection with the acquisition of
Citicasters.
25
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)--(CONTINUED)
(y) The adjustment represents a $7,500 cash deposit made in 1995 for the
acquisition of the Columbus stations, which was allocated to the fair market
value of the assets acquired when the acquisition was completed in January
1996.
(z) Adjustment represents assumed proceeds of $264,000 from the 1996 Stock
Offering, net of offering costs estimated to be $11,000.
(aa) Adjustment represents the value assigned to the Merger Warrants to be
issued to Citicasters shareholders in connection with the consummation of
the Merger, which Merger Warrants will be exercisable for 4,400,000 shares
of Common Stock in the aggregate. The value was determined assuming that the
exercise price for each full share of Common Stock issued upon exercise of
Merger Warrants is $28 per share.
26
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JACOR
The selected consolidated financial data for Jacor presented below for, and
as of the end of each of the years in the five-year period ended December 31,
1995, is derived from Jacor's Consolidated Financial Statements which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The consolidated
financial statements at December 31, 1994 and 1995 and for each of the three
years in the period ended December 31, 1995 and the auditors' report thereon are
included elsewhere in this Prospectus. This selected consolidated financial data
should be read in conjunction with the "Unaudited Pro Forma Financial
Information." Comparability of Jacor's historical consolidated financial data
has been significantly impacted by acquisitions, dispositions and the
recapitalization and refinancing completed in the first quarter of 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1991 1992 1993 1994 1995
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:(1)
Net revenue...................................... $ 64,238 $ 70,506 $ 89,932 $ 107,010 $ 118,891
Broadcast operating expenses..................... 48,206 55,782 69,520 80,468 87,290
---------- ---------- --------- --------- ---------
Station operating income excluding depreciation
and amortization............................... 16,032 14,724 20,412 26,542 31,601
Depreciation and amortization.................... 7,288 6,399 10,223 9,698 9,483
Reduction in carrying value of assets to net
realizable value............................... 8,600
Corporate general and administrative expenses.... 2,682 2,926 3,564 3,361 3,501
---------- ---------- --------- --------- ---------
Operating income (loss).......................... 6,062 (3,201) 6,625 13,483 18,617
Net interest income (expense).................... (16,226) (13,443) (2,476) 684 (184)
Gain on sale of radio stations................... 13,014
Other non-operating expenses, net................ (302) (7,057) (11) (2) (168)
---------- ---------- --------- --------- ---------
Income (loss) from continuing operations before
income tax and extraordinary item.............. $ 2,548 $ (23,701) $ 4,138 $ 14,165 $ 18,265
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Net income (loss)................................ $ (1,468) $ (23,701) $ 1,438 $ 7,852 $ 10,965
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Net income (loss) per common share:(2)
primary and fully diluted.................... $ 2.32 $ (61.50) $ 0.10 $ 0.37 $ 0.52
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Weighted average shares outstanding:(2)
Primary and fully diluted.................... 406 381 14,505 21,409 20,913
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
OTHER FINANCIAL DATA:(1)
Broadcast cash flow(3)........................... $ 16,032 $ 14,724 $ 20,412 $ 26,542 $ 31,601
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Broadcast cash flow margin(4).................... 25.0% 20.9% 22.7% 24.8% 26.6%
EBITDA(3)........................................ $ 13,350 $ 11,798 $ 16,848 $ 23,181 $ 28,100
Capital expenditures............................. 1,181 915 1,495 2,221 4,969
Ratio of earnings to fixed charges(5)............ 1.1x -- 1.9x 6.0x 5.7x
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------
1991 1992 1993 1994 1995
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Working capital (deficit)........................ $ (128,455) $ (140,547 (6) $ 38,659 $ 44,637 $ 24,436
Intangible assets (net of accumulated
amortization).................................. 81,738 70,038(6) 84,991 89,543 127,158
Total assets..................................... 125,487 122,000(6) 159,909 173,579 208,839
Total long-term debt (including current
portion)....................................... 137,667 140,542(6) 45,500
Common stock purchase warrants................... 1,257 487(6) 390 390 388
Shareholders' equity (deficit)................... (27,383) (50,840 (6) 140,413 149,044 139,073
</TABLE>
27
<PAGE>
- ------------------------------
(1) The comparability of the information reflected in this selected financial
data is affected by Jacor's purchase of radio station KBPI-FM (formerly
KAZY-FM), in Denver (July 1993); the purchase and interim operation of
radio station WOFX-FM (formerly WPPT-FM) under a local marketing agreement
in Cincinnati (April 1994); the purchase of radio stations WJBT-FM, WZAZ-
AM, and WSOL-FM (formerly WHJX-FM) in Jacksonville (August 1995); the
purchase of radio stations WDUV-FM and WBRD-AM in Tampa (August 1995); the
sale of radio stations WMJI-FM, in Cleveland and WYHY(FM), in Nashville
(January 1991), the sale of Telesat Cable TV (May 1994), the January 11,
1993 recapitalization plan, that substantially modified Jacor's debt and
capital structure (such recapitalization was accounted for as if it had
been completed January 1, 1993) and the March 1993 refinancing. For
information related to acquisitions in 1993, 1994 and 1995 see Notes 2 and
3 of Notes to Consolidated Financial Statements. For information related to
the disposition during 1994, see Note 4 of Notes to Consolidated Financial
Statements.
(2) Income (loss) per common share for the two 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. Jacor's stock options and convertible preferred
stock were antidilutive and, therefore, were not included in the
computations. The redeemable common stock warrants were antidilutive for
1992 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 three years
ended December 31, 1995 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 periods. Income (loss) per
common share and weighted average shares outstanding for the two years
ended December 31, 1992 are adjusted to reflect the 0.0423618 reverse stock
split in Common Stock effected by the January 1993 recapitalization.
(3) "Broadcast cash flow" means operating income before reduction in carrying
value of assets, depreciation and amortization and corporate general and
administrative expenses. "EBITDA" means operating income before reduction
in carrying value of assets, depreciation and amortization. Broadcast cash
flow and EBITDA should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity. Although this measure of performance is not
calculated in accordance with generally accepted accounting principles, it
is widely used in the broadcasting industry as a measure of a company's
operating performance because it assists in comparing station performance
on a consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors
such as historical cost bases. Broadcast cash flow also excludes the effect
of corporate general and administrative expenses, which generally do not
relate directly to station performance.
(4) Broadcast cash flow margin equals broadcast cash flow as a percentage of
net revenue.
(5) For the purpose of computing the ratio of earnings to fixed charges as
prescribed by the rules and regulations of the Securities and Exchange
Commission, earnings represent pretax income from continuing operations
plus fixed charges, less interest capitalized. Fixed charges represent
interest (including amounts capitalized), the portion of rent expenses
deemed to be interest and amortization of deferred financing costs. In
1992, fixed charges exceeded earnings by approximately $23.7 million.
(6) Pro forma amounts as of December 31, 1992, to give effect to the January
11, 1993 recapitalization plan that substantially modified Jacor's debt and
capital structure (in 000s):
<TABLE>
<S> <C>
Working capital............................................................. $15,933
Intangible assets (net of accumulated amortization)......................... 82,857
Total assets................................................................ 142,085
Long-term debt.............................................................. 64,178
Common stock purchase warrants.............................................. 403
Shareholders' equity........................................................ 50,890
</TABLE>
28
<PAGE>
CITICASTERS
The selected consolidated financial data for Citicasters presented below
for, and as of the end of each of the years in the five-year period ended
December 31, 1995, is derived from Citicasters' Consolidated Financial
Statements which have been audited by Ernst & Young LLP, independent
accountants. The consolidated financial statements at December 31, 1994 and 1995
and for each of the three years in the period ended December 31, 1995 and the
auditors' report thereon are included elsewhere in this Prospectus. This
selected consolidated financial data should be read in conjunction with the
"Unaudited Pro Forma Financial Information." Comparability of historical
consolidated financial data has been significantly impacted by the dispositions
of four television stations in 1994, the adoption of "fresh-start reporting" by
Citicasters in December 1993, the writedown of intangible assets to estimated
fair values in 1992 and the sale of its entertainment business in 1991.
<TABLE>
<CAPTION>
PREDECESSOR(1) CITICASTERS
----------------------------------------- ----------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1991 1992 1993 1994 1995
---------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:(2)
Net revenue.............................. $ 201,556 $ 210,821 $ 205,168 $ 197,043 $ 136,414
Broadcast operating expense.............. 136,629 142,861 133,070 117,718 80,929
---------- -------------- ------------- ---------- ----------
Station operating income excluding
depreciation and amortization.......... 64,927 67,960 72,098 79,325 55,485
Depreciation and amortization............ 48,219 47,617 28,119 22,946 14,635
Reduction in carrying value of assets to
net realizable value................... 658,314(3)
Corporate general and administrative
expenses............................... 4,367 4,091 3,996 4,796 4,303
---------- -------------- ------------- ---------- ----------
Operating income (loss).................. 12,341 (642,062) 39,983 51,583 36,547
Net interest income (expense)............ (89,845) (69,826) (64,942) (31,979) (13,854)
Minority interest........................ (28,822) (30,478) (26,776)
Gain on sale of television stations...... 95,339
Investment income........................ 1,296 553 305 1,216 1,231
Miscellaneous income (expense), net...... 33,133 4,036 (494) 447 (607)
Reorganization items..................... (14,872)
---------- -------------- ------------- ---------- ----------
Income (loss) from continuing operations
before income tax and extraordinary
item................................... $ (71,897) $ (737,777) $ (66,796) $ 116,606 $ 23,317
---------- -------------- ------------- ---------- ----------
---------- -------------- ------------- ---------- ----------
Net income (loss)........................ $ 84,485 $ (596,864) $ 341,344(4) $ 63,106 $ 14,317
---------- -------------- ------------- ---------- ----------
---------- -------------- ------------- ---------- ----------
Net earnings per share(5)................ $ 2.55 $ 0.68
---------- ----------
---------- ----------
Average common shares(5)................. 24,777 21,017
---------- ----------
---------- ----------
OTHER FINANCIAL DATA:(2)
Broadcast cash flow(6)................... $ 64,927 $ 67,960 $ 72,098 $ 79,325 $ 55,485
---------- -------------- ------------- ---------- ----------
---------- -------------- ------------- ---------- ----------
Broadcast cash flow margin(7)............ 32.2% 32.2% 35.1% 40.3% 40.7%
EBITDA(6)................................ $ 60,560 $ 63,869 $ 68,102 $ 74,529 $ 51,182
Capital expenditures..................... 7,014 6,747 5,967 7,569 11,857
<CAPTION>
PREDECESSOR CITICASTERS
-------------------------- -------------------------------------
DECEMBER 31,
-----------------------------------------------------------------
1991 1992 1993(8) 1994 1995
---------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................. $ (52,520) $ (611,634) $ 1,485 $ 47,518 $ 21,929
Intangible assets (net of accumulated
amortization)........................... 1,290,294 539,634 574,878 274,695 312,791
Total assets.............................. 1,475,929 713,830 719,569 403,492 416,346
Long-term debt (including current
portion)................................ 692,636 634,777 432,568 122,291 132,481
Shareholders' equity (deficit)............ 257,835 (339,029) 138,588 150,937 159,692
</TABLE>
29
<PAGE>
- ------------------------------
(1) Prior to its emergence from Chapter 11 bankruptcy in December 1993,
Citicasters was known as Great American Communications Company (the
"Predecessor"). As a result of the application of "fresh-start reporting,"
the selected financial data for periods prior to December 31, 1993 are not
comparable to periods subsequent to such date.
(2) The 1995 acquisition of four FM stations (KKCW, WTBT, WHOK and WLLD) and
WLOH-AM increased broadcast cash flow by approximately 2%. The 1994 sale of
four television stations (KTSP, KSAZ, WGHP and WDAF) significantly affects
comparison of net revenues, operating expenses and broadcast cash flow for
1994 as compared to 1993 and 1995. The purchase and sale of radio stations
in 1994 did not effect the comparison of broadcast cash flow, because the
cash flow of the stations sold was approximately equal to the cash flow of
the stations purchased.
(3) The recorded amount of intangible assets as of December 31, 1992 was
reduced by $658.3 million to reflect the carrying value of the broadcasting
assets at estimated fair market value at that time.
(4) Net income for the year ended December 31, 1993 includes, as an
extraordinary item, a one-time net gain of $408.0 million relating to debt
discharged in the reorganization. Net loss for 1992 includes a $10.7
million gain from discontinued operations and a $5.7 million extraordinary
gain from early extinguishment of debt. Net income from 1991 includes $39.9
million from discontinued operations and $77.4 million extraordinary gain
from early extinguishment of debt.
(5) Per share data are not presented for the Predecessor due to the general
lack of comparability as a result of the reorganization.
(6) "Broadcast cash flow" means operating income before reduction in carrying
value of assets, depreciation and amortization and corporate general and
administrative expenses. "EBITDA" means operating income before reduction
in carrying value of assets, depreciation and amortization. Broadcast cash
flow and EBITDA should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity. Although this measure of performance is not
calculated in accordance with generally accepted accounting principles, it
is widely used in the broadcasting industry as a measure of a company's
operating performance because it assists in comparing station performance
on a consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors
such as historical cost bases. Broadcast cash flow also excludes the effect
of corporate general and administrative expenses, which generally do not
relate directly to station performance.
(7) Broadcast cash flow margin equals broadcast cash flow as a percentage of
net revenue.
(8) Balance sheet data at December 31, 1993 reflects the adoption of
"fresh-start reporting" as discussed in more detail in Note B to
Citicasters' Consolidated Financial Statements.
30
<PAGE>
NOBLE
The following data has been derived from Noble's Consolidated Financial
Statements audited by Price Waterhouse LLP, independent accountants.
Consolidated balance sheets at December 25, 1994 and December 31, 1995 and the
related consolidated statements of operations and of cash flows for each of the
three years in the period ended December 31, 1995 and notes thereto appear
elsewhere in this Prospectus. The report of Price Waterhouse LLP which also
appears herein contains an explanatory paragraph describing Jacor's agreement to
purchase Noble as described in Note 2 to Noble's Consolidated Financial
Statements. The comparability of the consolidated financial data has been
significantly impacted by acquisitions, dispositions, Noble's August 1995
restructuring and its December 1991 restructuring.
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------------------
DECEMBER 28, DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 31,
1991 1992 1993 1994 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:(1)
Net revenue............................. $ 58,283 $ 55,368 $ 47,509 $ 49,602 $ 41,902
Broadcast operating expense............. 44,191 43,565 36,944 37,892 31,445
------------ ------------ ------------ ------------ ------------
Station operating income excluding
depreciation and amortization......... 14,092 11,803 10,565 11,710 10,457
Depreciation and amortization........... 10,005 8,305 6,916 6,311 4,107
Reduction in carrying value of assets to
net realizable value.................. 10,367(2) 7,804(2)
Corporate general administrative
expenses.............................. 3,013 2,483 2,702 2,621 2,285
------------ ------------ ------------ ------------ ------------
Operating income (loss)................. 1,074 (9,352) 947 (5,026) 4,065
Net interest income (expense)........... (25,063) (10,126) (7,602) (10,976) (9,913)
Net gain (loss) on sale of radio
stations.............................. (8,403) 7,909
Other income (expense).................. (7,588) (1,905) 2,619
------------ ------------ ------------ ------------ ------------
Income (loss) before income tax,
extraordinary item and cumulative
effect of change in accounting
principle............................. $ (31,577) $ (29,786) $ 1,254 $ (16,002) $ (3,229)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net income (loss)....................... $ (31,665) $ (5,949)(3) $ 13,452(4) $ (16,038) $ 56,853(5)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
OTHER FINANCIAL DATA:(1)
Broadcast cash flow(6).................. $ 14,092 $ 11,803 $ 10,565 $ 11,710 $ 10,457
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Broadcast cash flow margin(7)........... 24.18% 21.32% 22.24% 23.61% 24.96%
EBITDA(6)............................... $ 11,079 $ 9,320 $ 7,863 $ 9,089 $ 8,172
Capital expenditures.................... 601 532 3,009 1,124 2,851
<CAPTION>
AS OF
--------------------------------------------------------------------
DECEMBER 28, DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 31,
1991 1992 1993 1994 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Working capital (deficit)............... $ 8,565 $ 2,265 $ 1,002 $ (186,133) $ (479)
Intangible assets (net of accumulated
amortization)(2)...................... 165,052 125,770 101,555 89,849 50,730
Total assets............................ 207,272 156,740 128,055 116,023 77,227
Long-term debt (including current
portion).............................. 272,572 231,980 186,975 186,886 81,611
Stockholders' equity (deficit).......... (114,306) (120,124) (106,672) (122,710) (22,291)
</TABLE>
- ------------------------------
(1) The comparability of the information reflected in this selected financial
data is affected by Noble's purchase of radio stations WSPD-AM and WRVF-FM
in Toledo (August 1995); the sale of radio stations KBEQ-FM/AM in Kansas
City (March 1995); the
31
<PAGE>
sale of radio stations KMJQ-FM and KYOK-AM in Houston (December 1994); the
sale of radio stations WBAB-FM and WGBB-AM in New York (March 1993); the
sale of WSSH-FM in Boston (April 1993); the purchase of radio stations
KATZ-AM and KNJZ-FM in St. Louis (May 1993); the August 1995 restructuring;
and the December 1991 restructuring.
(2) The recorded amount of intangible assets was reduced by $10.4 million as of
December 27, 1992 and $7.8 million as of December 25, 1994 to reflect the
carrying value of the broadcasting assets at their estimated fair market
values.
(3) Net loss for the year ended December 27, 1992 includes, as an extraordinary
item, a gain of $23.9 million relating to debt discharged in the December
1991 restructuring.
(4) Net income for the year ended December 26, 1993 includes, as an
extraordinary item, a $12.2 million gain on forgiveness of debt, and a $354
thousand cumulative effect of a change in accounting principle.
(5) Net income for the year ended December 31, 1995 includes, as an
extraordinary item, a $60.1 million gain resulting from the extinguishment
of debt in association with the August 1995 restructuring.
(6) "Broadcast cash flow" means operating income before reduction in carrying
value of assets, depreciation and amortization and corporate general and
administrative expenses. "EBITDA" means operating income before reduction in
carrying value of assets, depreciation and amortization. Broadcast cash flow
and EBITDA should not be considered in isolation from, or as a substitute
for, operating income, net income or cash flow and other consolidated income
or cash flow statement data computed in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity. Although this measure of performance is not calculated in
accordance with generally accepted accounting principles, it is widely used
in the broadcasting industry as a measure of a company's operating
performance because it assists in comparing station performance on a
consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors such
as historical cost bases. Broadcast cash flow also excludes the effect of
corporate general and administrative expenses, which generally do not relate
directly to station performance.
(7) Broadcast cash flow margin equals broadcast cash flow as a percentage of net
revenue.
32
<PAGE>
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
Jacor's revenue is the sale of broadcasting time on its radio stations for
advertising. Jacor'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. Jacor works closely with local station management to
implement cost control measures.
Jacor's revenue is affected primarily by the advertising rates Jacor'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 principally measured by Arbitron Metro Area Ratings Surveys.
Most advertising contracts are short-term and run only for a few weeks. Most
of Jacor's revenue is generated from local advertising, which is sold by the
station's sales staff. In 1995, approximately 85% of Jacor's gross revenue was
from local advertising and approximately 15% was from national advertising. A
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 most of Jacor's stations are made by Jacor'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.
Sports broadcasting and full-service programming features play an integral
part in Jacor's operating strategy. As a result, because of the rights fees and
related costs of broadcasting professional baseball, football and hockey, as
well as the costs related to the full-service programming features of its AM
radio stations, Jacor's broadcast cash flow margins are typically lower than its
competitors'.
Jacor's first calendar quarter historically produces the lowest revenue for
the year, and the second and third quarters historically produce the highest
revenue for the year, due in part to revenue received during the summer months
related to the broadcast of Major League Baseball games. During 1995, however,
Jacor recorded higher broadcast revenue and broadcast operating expenses during
the third and fourth quarters than those recorded during the second quarter due
to the Major League Baseball strike. As a result of the strike, second quarter
revenue and operating expenses were lower. For the entire twelve months of 1995,
the strike did not have a material impact on Jacor's station operating income
(broadcast revenue less broadcast operating expenses).
Jacor's operating results in any period may be affected by the incurrence of
advertising and promotion expenses that do not produce commensurate revenue in
the period in which the expenses are incurred. As a result of Arbitron's
quarterly reporting of ratings, Jacor's ability to realize revenue 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, 1994 and 1995 is affected by the July 1993 purchase of radio station
KBPI-FM (formerly KAZY-FM) in Denver; the May 1994 sale of Telesat Cable TV; the
June 1995 purchase of radio station WOFX-FM (formerly WPPT-FM) in Cincinnati,
and interim operation of such station from April 1994 to June 1995 under a LMA;
the August 1995 purchases of radio stations WJBT-FM, WZAZ-AM, and WSOL-FM
(formerly WHJX-FM), each located in Jacksonville, and WDUV-FM and WBRD-AM, each
located in Tampa. With these acquisitions, Jacor expects to realize certain cost
savings and increased ratings through format modifications and thereby improve
operating results in these markets.
The acquisitions discussed above and the Acquisitions will increase Jacor's
net revenue, broadcast operating expenses, depreciation and amortization,
corporate general and administrative expenses, and interest expense.
Accordingly, past financial performance should not be considered a reliable
indicator of future performance, and investors should not use historical trends
to anticipate results or trends in future periods.
33
<PAGE>
General economic conditions have an impact on Jacor's business and financial
results. From time to time the markets in which Jacor operates experience weak
economic conditions that may negatively affect revenue of Jacor. However,
management believes that this impact will be somewhat softened by Jacor's
diverse geographical presence.
In the following analysis, management discusses the broadcast cash flow of
Jacor. "Broadcast cash flow" means operating income before reduction in carrying
value of assets, depreciation and amortization and corporate general and
administrative expenses. Broadcast cash flow should not be considered in
isolation from, or as a substitute for, operating income, net income or cash
flow and other consolidated income or cash flow statement data computed in
accordance with generally accepted accounting principles or as a measure of a
company's profitability or liquidity. Although this measure of performance is
not calculated in accordance with generally accepted accounting principles, it
is widely used in the broadcasting industry as a measure of a company's
operating performance because it assists in comparing station performance on a
consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors such as
historical cost bases. Broadcast cash flow also excludes the effect of corporate
general and administrative expenses, which generally do not relate directly to
station performance.
THE YEAR ENDED 1995 COMPARED TO THE YEAR ENDED 1994
BROADCAST REVENUE for 1995 was $133.1 million, an increase of $13.5 million
or 11.3% from $119.6 million during 1994. This increase resulted from an
increase in advertising rates in both local and national advertising and from
the revenue generated at those properties owned or operated during 1995 but not
during the comparable 1994 period. On a "same station" basis--reflecting results
from stations operated for the entire twelve months of both 1995 and
1994--broadcast revenue for 1995 was $125.3 million, an increase of $8.4 million
or 7.2% from $116.9 million for 1994.
AGENCY COMMISSIONS for 1995 were $14.2 million, an increase of $1.6 million
or 12.6% from $12.6 million during 1994 due to the increase in broadcast
revenue. Agency commissions increased at a greater rate than broadcast revenue
due to a greater proportion of agency sales.
BROADCAST OPERATING EXPENSES for 1995 were $87.3 million, an increase of
$6.8 million or 8.5% from $80.5 million during 1994. These expenses increased as
a result of increased selling and other payroll costs, programming costs and
expenses incurred at those properties owned or operated during 1995 but not
during the comparable 1994 period. On a "same station" basis, broadcast
operating expenses for 1995 were $81.3 million, an increase of $4.2 million or
5.5% from $77.1 million for 1994.
DEPRECIATION AND AMORTIZATION for 1995 and 1994 was $9.5 million and $9.7
million, respectively.
OPERATING INCOME for 1995 was $18.6 million, an increase of $5.1 million or
38.1% from an operating income of $13.5 million for 1994.
INTEREST EXPENSE for 1995 was $1.4 million, an increase of $0.9 million or
170.1% from $0.5 million for 1994. Interest expense increased due to an increase
in outstanding debt that was incurred in connection with acquisitions and stock
repurchases.
NET INCOME for 1995 was $11.0 million, compared to net income of $7.9
million reported by Jacor for 1994. The 1994 period includes income tax expense
of $6.3 million, while the 1995 period includes $7.3 million of income tax
expense.
BROADCAST CASH FLOW for 1995 was $31.6 million, an increase of $5.1 million
or 19.2%, from $26.5 million during 1994. On a "same station" basis, broadcast
cash flow for 1995 was $30.5 million, an increase of $3.1 million or 11.0%, from
$27.4 million for 1994.
THE YEAR ENDED 1994 COMPARED TO THE YEAR ENDED 1993
BROADCAST REVENUE for 1994 was $119.6 million, an increase of $18.9 million
or 18.8% from $100.7 million during 1993. This increase resulted from an
increase in advertising rates in both local and national advertising and from
the revenue generated at those properties owned or operated during 1994 but not
34
<PAGE>
during the comparable 1993 period. On a "same station" basis--reflecting results
from stations operated for the entire twelve months of both 1994 and
1993--broadcast revenue for 1994 was $110.7 million, an increase of $11.6
million or 11.6% from $99.1 million for 1993.
AGENCY COMMISSIONS for 1994 were $12.6 million, an increase of $1.8 million
or 16.8% from $10.8 million during 1993 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 1994 were $80.5 million, an increase of
$11.0 million or 15.7% from $69.5 million during 1993. These expenses increased
as a result of expenses incurred at those properties owned or operated during
1994 but not during the comparable 1993 period and, to a lesser extent,
increased selling and other payroll costs and programming costs. On a "same
station" basis, broadcast operating expenses for 1994 were $72.0 million, an
increase of $4.1 million or 6.1% from $67.9 million for 1993.
DEPRECIATION AND AMORTIZATION for 1994 and 1993 was $9.7 million and $10.2
million, respectively.
OPERATING INCOME for 1994 was $13.5 million, an increase of $6.9 million or
103.5% from an operating income of $6.6 million for 1993.
INTEREST EXPENSE for 1994 was $0.5 million, a decrease of $2.2 million or
80.5% from $2.7 million for 1993. Interest expense declined due to the reduction
in outstanding debt, such debt having been retired from the proceeds of Jacor's
November 1993 equity offering.
NET INCOME for 1994 was $7.9 million, compared to net income of $1.4 million
reported by Jacor for 1993. The 1993 period includes income tax expense of $2.7
million, while the 1994 period includes $6.3 million of income tax expense.
BROADCAST CASH FLOW for 1994 was $26.5 million, an increase of $6.1 million
or 29.9%, from $20.4 million during 1993. On a "same station" basis, broadcast
cash flow for 1994 was $26.4 million, an increase of $6.0 million or 29.0%, from
$20.4 million for 1993.
LIQUIDITY AND CAPITAL RESOURCES
Jacor began 1995 with no outstanding debt and $27.0 million in cash and cash
equivalents. During 1995, Jacor used $59.8 million in cash for acquisitions of
radio stations and licenses and for loans made in connection with Jacor's JSAs
and $21.7 million in cash to purchase shares of its Common Stock. These funds
came from cash on hand together with cash provided from operating activities and
draws under Jacor's 1993 credit agreement aggregating $45.5 million.
During 1995, Jacor made capital expenditures of approximately $5.0 million.
Jacor estimates that capital expenditures for 1996 will be approximately $6.0
million which includes approximately $2.5 million to purchase the building
currently housing the offices and studios of its Tampa radio stations and to
complete the relocation of the offices and studios of its Atlanta radio
stations. Jacor estimates that capital expenditures for the properties to be
acquired from Citicasters and Noble would be approximately $4.0 million in the
12-month period following the consummation of the Acquisitions. The actual level
of spending will depend on a variety of factors, including general economic
conditions and the Company's business. In February 1996, Jacor entered into the
Existing Credit Facility which provided for a $300.0 million reducing revolving
facility that reduces on a quarterly basis commencing March 31, 1997. The credit
facility bears interest at floating rates based on a Eurodollar rate or a bank
base rate. See "Description of Other Indebtedness."
In connection with the Merger, Jacor anticipates entering into the New
Credit Facility which would provide for availability of $600.0 million pursuant
to a reducing revolving facility that would reduce on a quarterly basis
commencing one year from the date of the facility. It is anticipated that the
New Credit Facility would bear interest at floating rates based on a Eurodollar
rate or a bank base rate. Jacor also anticipates that the New Credit Facility
will provide Jacor with additional credit for future acquisitions as well as
working capital and other general corporate purposes. In addition, concurrently
with this Offering,
35
<PAGE>
Jacor anticipates commencing the 1996 Stock Offering and the LYONs Offering
which would provide Jacor with gross proceeds of approximately $275.0 million
and $100.0 million, respectively. See "Description of Other Indebtedness."
Jacor currently expects to fund its acquisition of Noble and expenditures
for capital requirements from available cash balances, internally generated
funds and the availability of borrowings under its Existing Credit Facility.
Jacor currently expects to fund the Merger with a combination of funds provided
by this Offering, the 1996 Stock Offering, the LYONs Offering, the New Credit
Facility and excess cash on hand. These funds together with cash generated from
operations will be sufficient to meet Jacor's liquidity and capital needs for
the foreseeable future.
As a result of entering into the Existing Credit Facility in the first
quarter of 1996, Jacor will write off approximately $1.6 million of unamortized
cost associated with its 1993 credit agreement. In connection with entering into
the New Credit Facility, Jacor anticipates that it will write off approximately
$5.0 million of unamortized cost associated with its Existing Credit Facility.
The issuance of additional debt will negatively impact Jacor's
debt-to-equity ratio and its results of operations and cash flows due to higher
amounts of interest expense, although the issuance of additional equity will
soften this impact to some extent. Also, if Jacor were not able to complete the
Merger due to certain circumstances, Jacor would incur a one-time charge of
$75.0 million relating to the non-refundable deposit. If debt were used to
finance such payment, it would negatively impact Jacor's future results of
operations and impede Jacor's future growth by limiting the amount available
under the Existing Credit Facility.
CASH FLOWS
Cash flows provided by operating activities, inclusive of working capital,
were $20.6 million, $11.3 million and $9.0 million for 1995, 1994 and 1993,
respectively. Cash flows provided by operating activities in 1995 resulted
primarily from the add-back of $9.5 million of depreciation and amortization
expense to net income of $11.0 million for the period. Cash flows provided by
operating activities in 1994 resulted primarily from net income of $7.9 million
generated during the year. The additional $3.4 million resulted principally from
the excess of the sum of the depreciation and amortization add-back of $9.7
million, together with the add-back of $1.4 million for provision for losses on
accounts and notes receivable over the net change in working capital of ($7.6)
million. Cash flows provided by operating activities in 1993 resulted primarily
from the excess of the sum of the depreciation and amortization add-back of
$10.1 million, together with the $1.4 million of net income generated during the
year over the net change in working capital of ($2.3) million.
Cash flows used by investing activities were ($64.3) million, ($13.7)
million and ($5.5) million for 1995, 1994 and 1993, respectively. Investing
activities include capital expenditures of $5.0 million, $2.2 million and $1.5
million in 1995, 1994 and 1993, respectively. Investing activities in 1995 and
1994 include expenditures of $59.8 million and $14.6 million, respectively, for
acquisitions, the purchase of intangible assets and loans made in connection
with Jacor's JSAs. In addition, 1994 investing activities were net of $3.2
million of payments received on notes and from the sale of assets. Investing
activities in 1993 included expenditures of $3.9 million relating to the
purchase of radio station assets.
Cash flows provided by financing activities were $24.2 million, $0.7 million
and $12.8 million for 1995, 1994 and 1993. Cash flows provided by financing
activities in 1995 resulted primarily from the $45.5 million in borrowings under
the 1993 credit agreement, together with $0.8 million in proceeds received from
the issuance of Common Stock to Jacor's employee stock purchase plan and upon
the exercise of outstanding stock options net of the $21.7 million used to
repurchase Common Stock. Cash flows from financing activities in 1994 resulted
primarily from the proceeds received from the issuance of Common Stock upon the
exercise of outstanding stock options. The cash provided by financing activities
in 1993 principally was due to the refinancing of Jacor's senior debt in March
1993 plus the issuance of additional Common Stock, and the payment of
restructuring expenses in 1993.
NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 123 "Accounting for
Stock-Based Compensation." Jacor will continue to
36
<PAGE>
apply APB Opinion No. 25 in accounting for its plans as permitted by this
statement. This statement, however, requires that a company's financial
statements include certain disclosures about stock-based employee compensation
arrangements regardless of the method used to account for them. Pro forma
disclosures required by a company that elects to continue to measure
compensation cost using APB Opinion No. 25 will be made by Jacor for the year
ended December 31, 1996.
In March 1995, the FASB issued FAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement
requires Jacor to review for possible impairment of long-lived assets and
certain identifiable intangibles when circumstances indicate that the carrying
value of these assets may not be recoverable. Jacor will adopt the statement in
the first quarter of 1996, the effect of which will be immaterial to Jacor's
Consolidated Financial Statements.
37
<PAGE>
BUSINESS
GENERAL
Jacor, upon consummation of the Acquisitions, will be the second largest
radio group in the nation owning and/or operating 50 radio stations and two
television stations in 13 markets across the United States. Jacor's strategic
objective is to be the leading radio broadcaster in each of its markets.
Consistent with this objective, Jacor entered into agreements to acquire 29
radio stations and two television stations for approximately $950.0 million
within two weeks of the enactment of the Telecom Act. The Company will have
multiple station platforms in Atlanta, San Diego, St. Louis, Phoenix, Tampa,
Denver, Portland, Kansas City, Cincinnati, Sacramento, Columbus, Jacksonville
and Toledo. These markets are among the most attractive radio markets in the
country, demonstrating, as a group, radio revenue growth in excess of the radio
industry average over the last five years. In 1995, the Company would have been
the top billing radio group in 9 of its 13 markets and would have had net
revenue and broadcast cash flow of $303.5 million and $107.7 million,
respectively.
The following table sets forth certain information regarding the Company and
its markets:
<TABLE>
<CAPTION>
COMPANY DATA
--------------------------------------------------------------------------------------------
NO. OF STATIONS
RADIO REVENUE RADIO AUDIENCE -------------
RADIO REVENUE MARKET SHARE MARKET SHARE TV
MARKET MARKET RANK % % AM FM --
- -------------------------------- ------------------- --------------- --------------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Atlanta......................... 1 23.2 15.8 1 3 --
San Diego(1).................... 1 13.9 6.7 1 2 --
Tampa........................... 1 24.3 26.4 2 4 1
Denver(2)....................... 1 45.9 30.6 4 4 --
Portland........................ 1 25.3 17.4 1 2 --
Cincinnati(3)................... 1 56.8 38.8 2 4 1
Columbus........................ 1 37.9 20.9 2 3 --
Jacksonville.................... 1 26.2 22.6 2 3 --
Toledo.......................... 1 27.9 27.5 1 2 --
Sacramento...................... 2 14.3 7.0 -- 2 --
Kansas City..................... 3 15.3 12.9 1 1 --
St. Louis....................... 6 8.6 10.0 1 2 --
Phoenix......................... 7 6.6 3.8 1 1 --
<CAPTION>
MARKET DATA
-----------------------------------------------
1995 METROPOLITAN 1990-1995
STATISTICAL AREA 1995 RADIO REVENUE CAGR
MARKET RANK REVENUE RANK %
- -------------------------------- ----------------- ------------- -------------
<S> <C> <C> <C>
Atlanta......................... 9 10 9.2
San Diego(1).................... 13 13 5.5
Tampa........................... 23 20 6.2
Denver(2)....................... 26 18 8.6
Portland........................ 27 26 8.4
Cincinnati(3)................... 30 23 7.4
Columbus........................ 38 31 6.7
Jacksonville.................... 57 50 7.9
Toledo.......................... 85 77 5.6
Sacramento...................... 34 21 4.6
Kansas City..................... 29 29 4.3
St. Louis....................... 16 17 4.5
Phoenix......................... 17 16 6.1
</TABLE>
- ------------------------------
(1) Includes XTRA-FM and XTRA-AM, stations Jacor provides programming to and
sells air time for under an exclusive sales agency agreement.
(2) Includes stations for which Jacor sells advertising time pursuant to a
joint sales agreement.
(3) Excludes three stations for which Jacor sells advertising time pursuant to
joint sales agreements.
BUSINESS STRATEGY
Jacor's strategic objective is to be the leading radio broadcaster in each
of its markets. Jacor intends to acquire individual radio stations or radio
groups that strengthen its market position and that maximize the operating
performance of its broadcast properties. Specifically, Jacor's business strategy
centers upon:
INDIVIDUAL MARKET LEADERSHIP. Jacor strives to maximize the audience
ratings in each of its markets in order to capture the largest share of the
radio advertising revenue in the market. Jacor focuses on those markets where it
believes it has the potential to be the leading radio group in the market. By
operating multiple radio stations in its markets, Jacor is able to operate its
stations at lower costs, reduce the risk of direct format competition and
provide advertisers with the greatest access to targeted demographic groups. For
1995, the Company would have had the number one radio revenue market share in
Atlanta (23%), San Diego (14%), Tampa (24%), Denver (46%), Portland (25%),
Cincinnati (57%), Columbus (38%), Jacksonville (26%) and Toledo (28%). The
Company's aggregate radio revenue market share for 1995 would have been
approximately 25%.
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ACQUISITION AND MARKET DEVELOPMENT. Jacor's acquisition strategy focuses on
acquiring both developed, cash flow producing stations and underdeveloped
"stick" properties that complement its existing portfolio and strengthen its
overall market position. Jacor has been able to improve the ratings of "stick"
properties with increased marketing and focused programming that complements its
existing radio station formats. Additionally, Jacor utilizes its strong market
presence to boost the revenues and cash flow of "stick" properties by
encouraging advertisers to buy advertising in a package with its more
established stations. The Company may enter new markets through acquisitions of
radio groups that have multiple station ownership in such groups' markets.
Additionally, the Company will seek to acquire individual stations in new
markets that it believes are fragmented and where a market-leading position can
be created through additional in-market acquisitions. The Company may exit
markets it views as having limited strategic appeal by selling or swapping
existing stations for stations in other markets where the Company operates, or
for stations in new markets.
DIVERSE FORMAT EXPERTISE. Jacor management has developed programming
expertise over a broad range of radio formats. This management expertise enables
Jacor to specifically tailor the programming of each station in a market in
order to maximize Jacor's overall market position. Jacor utilizes sophisticated
research techniques to identify opportunities within each market and programs
its stations to provide complete coverage of a demographic or format type. This
strategy allows Jacor to deliver highly effective access to a target demographic
and capture a higher percentage of the radio advertising market.
DISTINCT STATION PERSONALITIES. Jacor engages in a number of creative
programming and promotional efforts designed to create listener loyalty and
station brand awareness. Through these efforts, management seeks to cultivate a
distinct personality for each station based upon the unique characteristics of
each market. Jacor 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 successfully generated significant
audience share.
One of the methods Jacor utilizes to develop the personality of its AM radio
stations is by broadcasting professional sporting events and related
programming. Currently, Jacor has the broadcast rights for the Cincinnati Reds,
Cincinnati Bengals, Colorado Rockies, Denver Broncos, Los Angeles Kings and San
Diego Chargers and Citicasters has the broadcast rights for the Portland
Trailblazers. In addition, WGST-AM in Atlanta has the broadcast rights to serve
as the official information station for the 1996 Olympic Games. Sports
broadcasting serves as a key "magnet" for attracting audiences to a station and
then introducing them to other programming features, such as local and national
news, entertaining talk, and weather and traffic reports.
STRONG AM STATIONS. Jacor is an industry leader in successfully operating
AM stations. While many radio groups primarily utilize network or simulcast
programming on their AM stations, Jacor also develops unique programming for its
AM stations to build strong listener loyalty and awareness. Utilizing this
operating focus and expertise, Jacor has developed its AM stations in Denver and
Cincinnati into the revenue and ratings leaders among both AM and FM stations in
their respective markets. Jacor's targeted AM programming adds to Jacor's
ability to lead its markets and results in more complete coverage of the
listener base.
Although the cost structure of a large-scale AM station generally results in
lower operating margins than typical music-based FM stations, the majority of
Jacor's AM stations generate substantial levels of broadcast cash flow.
Historically, Citicasters and Noble have not focused on their AM operations to
the same extent as Jacor. Accordingly, most of the AM stations to be acquired
meaningfully underperform Jacor's AM stations, and management believes such
stations have the potential to generate significant incremental cash flow.
POWERFUL BROADCAST SIGNALS. A station's ability to maintain market
leadership depends in part upon the strength of its broadcasting delivery
system. A powerful broadcast signal enhances delivery range and clarity, thereby
influencing listener preference and loyalty. Many of Jacor's stations'
broadcasting signals are among the strongest in their respective markets
reinforcing its market leadership. Jacor opportunistically upgrades
39
<PAGE>
the power and quality of the signals at stations it acquires. Following the
consummation of the Acquisitions, Jacor expects that relatively inexpensive
technical upgrades in certain markets will provide for significantly greater
signal presence.
RADIO STATION OVERVIEW
The following sets forth certain information regarding the 50 radio stations
that will be owned and/or operated by the Company upon completion of the
Acquisitions, and the two San Diego stations for which Jacor provides
programming and for which it sells air time.
<TABLE>
<CAPTION>
JACOR(J) COMBINED RADIO
MARKET/ CITICASTERS(C) COMBINED RADIO REVENUE MARKET TARGET
STATION NOBLE(N) REVENUE MARKET RANK SHARE % FORMAT DEMOGRAPHIC
- -------------------- ------------------- --------------------- ------------------- ------------------------- -------------
<S> <C> <C> <C> <C> <C>
ATLANTA 1 23.2
WPCH-FM J Adult Contemporary Women 25-54
WGST-AM/FM(1) J News Talk Men 25-54
WKLS-FM C Album Oriented Rock Men 18-34
SAN DIEGO 1 13.9
KHTS-FM J TBD
XTRA-FM(2) N Rock Alternative Men 18-34
XTRA-AM(2) N Sports Men 25-54
DENVER (3) 1 45.9
KOA-AM J News Talk Men 25-54
KRFX-FM J Classic Rock Men 25-54
KBPI-FM J Album Oriented Rock Men 18-34
KTLK-AM J Talk Adults 35-64
KHIH-FM N Jazz Adults 25-54
KHOW-AM N Talk Adults 25-54
KBCO-AM N Talk Adults 25-54
KBCO-FM N Album Oriented Rock Men 18-34
PHOENIX 7 6.6
KSLX-AM/FM C Classic Rock Men 25-54
ST. LOUIS 6 8.6
KMJM-FM N Urban Adult Contemporary Adults 25-54
KATZ-FM N Black Oldies Adults 25-54
KATZ-AM N Urban Talk Adults 35-64
TAMPA 1 24.3
WFLA-AM J News Talk Adults 25-54
WFLZ-FM J Contemporary Hit Radio Adults 18-34
WDUV-FM J Beautiful/EZ Adults 35-64
WBRD-AM(4) J Talk Adults 35-64
WXTB-FM C Album Oriented Rock Men 18-34
WTBT-FM C Classic Rock Men 25-54
CINCINNATI (3) 1 56.8
WLW-AM J News Talk Men 25-54
WEBN-FM J Album Oriented Rock Men 18-34
WOFX-FM J Classic Rock Men 25-54
WCKY-AM J Talk Adults 35-64
WWNK-FM C Adult Contemporary Women 25-54
WKRQ-FM C Contemporary Hit Radio Women 18-34
COLUMBUS 1 37.9
WTVN-AM C Adult Contemporary/Talk Adults 25-54
WLVQ-FM C Album Oriented Rock Men 18-34
WHOK-FM C Country Adults 25-54
WLLD-FM C Country Adults 25-54
WLOH-AM C News Adults 35-64
KANSAS CITY 3 15.3
WDAF-AM C Country Adults 35-64
KYYS-FM C Album Oriented Rock Men 18-34
<CAPTION>
TARGET
DEMOGRAPHIC
MARKET/ SHARE
STATION %/RANK
- -------------------- ------------
<S> <C>
ATLANTA
WPCH-FM 9.8/2
WGST-AM/FM(1) 5.5/7
WKLS-FM 11.3/3
SAN DIEGO
KHTS-FM
XTRA-FM(2) 10.5/1
XTRA-AM(2) 4.5/6
DENVER (3)
KOA-AM 10.4/1
KRFX-FM 9.6/2
KBPI-FM 10.0/2
KTLK-AM 3.2/10
KHIH-FM 4.9/10
KHOW-AM 1.8/18
KBCO-AM --
KBCO-FM 6.8/4
PHOENIX
KSLX-AM/FM 6.9/3
ST. LOUIS
KMJM-FM 6.3/6
KATZ-FM 1.2/18
KATZ-AM 1.6/15
TAMPA
WFLA-AM 3.7/13
WFLZ-FM 16.1/1
WDUV-FM 4.5/10
WBRD-AM(4) --
WXTB-FM 21.8/1
WTBT-FM 6.0/5
CINCINNATI (3)
WLW-AM 16.8/1
WEBN-FM 21.0/1
WOFX-FM 5.9/6
WCKY-AM 5.9/6
WWNK-FM 7.8/4
WKRQ-FM 13.5/2
COLUMBUS
WTVN-AM 4.9/7
WLVQ-FM 11.3/2
WHOK-FM 4.0/9
WLLD-FM 3.3/12
WLOH-AM --
KANSAS CITY
WDAF-AM 8.3/2
KYYS-FM 11.7/4
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
JACOR(J) COMBINED RADIO
MARKET/ CITICASTERS(C) COMBINED RADIO REVENUE MARKET TARGET
STATION NOBLE(N) REVENUE MARKET RANK SHARE % FORMAT DEMOGRAPHIC
- -------------------- ------------------- --------------------- ------------------- ------------------------- -------------
SACRAMENTO 2 14.3
<S> <C> <C> <C> <C> <C>
KRXQ-FM C Album Oriented Rock Men 18-34
KSEG-FM C Classic Rock Men 25-54
PORTLAND 1 25.3
KEX-AM C News Talk Adults 35-64
KKCW-FM C Adult Contemporary Women 25-54
KKRZ-FM C Contemporary Hit Radio Women 18-34
TOLEDO 1 27.9
WSPD-AM N News Talk Adults 35-64
WVKS-FM N Contemporary Hit Radio Adults 18-34
WRVF-FM N Adult Contemporary Women 25-54
JACKSONVILLE 1 26.2
WJBT-FM J Urban Adults 18-34
WQIK-FM J Country Adults 25-54
WSOL-FM J Adult Urban Adults 25-54
WZAZ-AM J Urban Talk Adults 35-64
WJGR-AM J Talk Adults 25-54
<CAPTION>
TARGET
DEMOGRAPHIC
MARKET/ SHARE
STATION %/RANK
- -------------------- ------------
SACRAMENTO
<S> <C>
KRXQ-FM 8.8/2
KSEG-FM 6.2/4
PORTLAND
KEX-AM 7.0/3
KKCW-FM 10.4/1
KKRZ-FM 12.8/1
TOLEDO
WSPD-AM 4.7/7
WVKS-FM 19.4/1
WRVF-FM 14.8/2
JACKSONVILLE
WJBT-FM 6.7/6
WQIK-FM 9.8/2
WSOL-FM 7.3/5
WZAZ-AM 0.9/17
WJGR-AM 0.8/17
</TABLE>
- ------------------------------
(1) Jacor provides programming and sells air time for the FM station pursuant
to a LMA.
(2) Jacor provides programming and sells air time for these stations under an
exclusive sales agency agreement.
(3) Excludes stations WAQZ-FM, WAOZ-AM and WSAI-AM in Cincinnati and KTCL-FM in
Denver which Jacor sells advertising time for pursuant to JSAs.
(4) In March 1996, Jacor entered into a contract for the sale of the assets of
WBRD-AM.
TELEVISION
Upon the acquisition of Citicasters, Jacor will own a television station in
each of the Cincinnati and Tampa markets where it currently owns and operates
multiple radio stations. Owning and operating television and radio stations in
the same market requires an FCC waiver. See "Risk Factors--Pending
Acquisitions." By operating television stations in markets where Jacor has a
significant radio presence, Jacor expects to realize significant operating
advantages, including shared news departments and administrative overhead, as
well as cross-selling of advertising time and cross promotions.
The following table sets forth certain information regarding these stations
and the markets in which they operate:
<TABLE>
<CAPTION>
COMMERCIAL STATIONS IN
STATION RANK (1)
NATIONAL TV HOUSEHOLDS ------------------------------ MARKET
MARKET IN DMA (1) ADULTS AGED -------------
MARKET/STATION RANK (1) (000S) TV HOUSEHOLDS 25-54 VHF UHF
- -------------------------- ------------- ------------- ----------------- ----------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
TAMPA/WTSP 15 1,395 2 4 2 8
CINCINNATI/WKRC 29 793 3 1T 3 2
<CAPTION>
CABLE SUBSCRIBER NETWORK
MARKET/STATION % AFFILIATION
- -------------------------- ----------------- -----------
<S> <C> <C>
TAMPA/WTSP 70 CBS
CINCINNATI/WKRC 61 ABC(2)
</TABLE>
- ------------------------------
(1) Rankings for Designated Market Area ("DMA"), 6:00 a.m. to 2:00 a.m.,
Sunday-Saturday for "TV Households" and "Adults aged 25-54." "T" designates
tied. This market information is from Nielsen.
(2) This station is scheduled to switch its network affiliation to CBS in June
1996.
RECENT DEVELOPMENTS
In February 1996, Jacor entered into an agreement to acquire Citicasters.
Citicasters owns and/or operates 19 radio stations, located across the United
States in Atlanta, Phoenix, Tampa, Portland, Kansas City, Cincinnati,
Sacramento, Columbus and two television stations, one located in Tampa and one
in Cincinnati. The Citicasters acquisition enhances Jacor's existing station
portfolios in Atlanta, Tampa and Cincinnati and creates new multiple radio
station platforms in Phoenix, Portland, Kansas City, Sacramento and Columbus.
Also, in February 1996, Jacor entered into an agreement to acquire Noble,
which owns ten radio stations serving Denver, St. Louis and Toledo. Pending the
closing of this transaction, Jacor and Noble have entered into time brokerage
agreements with respect to Noble's radio stations in St. Louis and Toledo. Jacor
41
<PAGE>
also acquired from Noble the right to provide programming to and sells the air
time for one AM and one FM station serving the San Diego market. The Noble
acquisition enhances Jacor's existing portfolio in Denver where it will own
eight stations, in addition to creating new multiple station platforms in St.
Louis and Toledo, where Jacor will own two of the four Class B FM stations.
In February 1996, Jacor sold the business and certain operating assets of
radio stations WMYU-FM and WWST-FM in Knoxville. Jacor received approximately
$6.5 million in cash for this sale. In March 1996, Jacor entered into an
agreement for the sale of the assets of WBRD-AM in Tampa. The sale is pending
subject to receipt of the required FCC approvals.
In March 1996, Jacor entered into an agreement to acquire the FCC license of
WCTQ-FM and WAMR-AM in Venice, Florida. Jacor will also purchase certain real
estate and transmission facilities necessary to operate the stations. The
purchase price for the assets is approximately $4.4 million. Jacor anticipates
that it will consummate this acquisition in the second quarter of 1996.
During 1995, Jacor actively pursued the acquisition of selected stations in
its existing markets and targeted new markets and acquired six radio stations.
In August 1995, Jacor acquired the business and certain operating assets of
radio stations WDUV-FM and WBRD-AM in Tampa. In September 1995, Jacor exercised
its purchase option to acquire ownership of the licensee of radio station
KHTS-FM (formerly KECR) in San Diego. In 1995, Jacor acquired the call letters,
programming and certain contracts of radio station WOFX-FM in Cincinnati and
then changed the call letters of its FM broadcast station WPPT to WOFX. Jacor
also acquired radio stations WSOL-FM (formerly WHJX), WJBT-FM and WZAZ-AM in
Jacksonville. The aggregate cash purchase price for these acquisitions was
approximately $37.7 million.
ADVERTISING
Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. The
growth in total radio advertising revenue tends to be fairly stable and has
generally grown at a rate faster than the Gross National Product ("GNP"). With
the exception of 1991, when total radio advertising revenue fell by
approximately 3.1% compared to the prior year, advertising revenue has risen in
each of the past 15 years more rapidly than either inflation or the GNP. Total
advertising revenue in 1994 of $10.2 billion, as reported by RAB, was its
highest level in the industry's history.
During the year ended December 31, 1995, approximately 82% of the Company's
broadcast revenue would have been generated from the sale of local advertising
and approximately 18% from the sale of national advertising. Jacor believes that
radio is one of the most efficient, cost-effective means for advertisers to
reach specific demographic groups. The advertising rates charged by Jacor's
radio stations are based primarily on (i) the station's ability to attract an
audience in the demographic groups targeted by its advertisers (as measured
principally by quarterly Arbitron rating 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, (iii) the supply of and
demand for radio advertising time and (iv) the supply and pricing of alternative
advertising media.
Jacor emphasizes an aggressive local sales effort because local advertising
represents a large majority of Jacor's revenues. Jacor's local advertisers
include automotive, retail, financial institutions and services and healthcare.
Each station's local sales staff solicits advertising, either directly from the
local advertiser or through an advertising agency for the local advertisers.
Jacor pays a higher commission rate to the sales staff for generating direct
sales because Jacor 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. Jacor employs personnel in each market to produce commercials for the
advertisers. National advertising sales for most of Jacor's stations are made by
Jacor'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.
Jacor believes that sports broadcasting, absent unusual circumstances, is a
stable source of advertising revenues. There is less competition for the sports
listener, since only one radio station can offer a particular
42
<PAGE>
game. In addition, due to the higher degree of audience predictability, sports
advertisers tend to sign contracts which are generally longer term and more
stable than Jacor's other advertisers. Jacor's sales staffs are particularly
skilled in sales of sports advertising.
According to the Radio Advertising Bureau Radio Marketing Guide and Fact
Book for Advertisers, 1994-1995, each week, radio reaches approximately 76.7% of
all Americans over the age of 12. More than one-half of all radio listening is
done outside the home, in contrast to other advertising mediums, and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and 20 minutes per day listening to radio. The highest
portion of radio listenership occurs during the morning, particularly between
the time a listener wakes up and the time the listener reaches work. This
"morning drive time" period reaches more than 85% of people over 12 years of age
and, as a result, radio advertising sold during this period achieves premium
advertising rates.
Jacor believes operating multiple stations in a market gives it significant
opportunities in competing for advertising dollars. Each multiple station
platform better positions Jacor to access a significant share of a given
demographic segment making Jacor stations more attractive to advertisers seeking
to reach that segment of the population.
COMPETITION; CHANGES IN THE BROADCASTING INDUSTRY
The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations will depend significantly upon its
audience ratings and its share of the overall advertising revenue within its
market. The Company's stations will compete for listeners and advertising
revenue directly with other radio stations as well as many other advertising
media 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 will
be 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 among radio stations in its
market, transmitter power, assigned frequency, audience characteristics, local
program acceptance and the number and characteristics of other stations in the
market area, and other advertising media in that market. Jacor 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 competitive position will be 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
Jacor believes that each of the Company's stations will be able to 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.
Although the radio broadcasting industry is highly competitive, some legal
restrictions on 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.
Jacor's stations also compete directly 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
43
<PAGE>
development or introduction in the future of any new media technology will not
have an adverse effect on the radio broadcasting industry. Jacor also competes
with other radio station groups to purchase additional stations.
The FCC has allocated spectrum for a new technology, satellite digital audio
radio services ("DARS"), to deliver audio programming. The FCC has proposed, but
not yet adopted licensing and operating rules for DARS, so that the allocated
spectrum is not yet available for service. Jacor cannot predict when and in what
form such rules will be adopted. The FCC granted a waiver in September 1995 to
permit one potential DARS operator to commence construction of a DARS satellite
system, with the express notice that the FCC might not license such operator to
provide DARS, nor would such waiver prejudge the ongoing rule making proceeding.
DARS may provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and/or national audiences.
Digital technology also may be used in the future by terrestrial radio broadcast
stations either on existing or alternate broadcasting frequencies, and the FCC
has stated that it will consider making changes to its rules to permit AM and FM
radio stations to offer digital sound following industry analysis of technical
standards. 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 that applied for migration prior to the
FCC's cut-off date. At the end of a transition period, 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. None of the stations to
be affiliated with the Company have sought authorizations for operations on the
expanded AM band.
Television stations compete for audiences and advertising revenues with
radio and other television stations and multichannel video delivery systems in
their market areas and with other advertising media such as newspapers,
magazines, outdoor advertising and direct mail. Competition for sales of
television advertising time is based primarily on the anticipated and actually
delivered size and demographic characteristics of audiences as determined by
various services, price, the time of day when the advertising is to be
broadcast, competition from other television stations, including affiliates of
other television broadcast networks, cable television systems and other media
and general economic conditions. Competition for audiences is based primarily on
the selection of programming, the acceptance of which is dependent on the
reaction of the viewing public, which is often difficult to predict. Additional
elements that are material to the competitive position of television stations
include management experience, authorized power and assigned frequency. The
broadcasting industry is continuously faced with technical changes and
innovations, the popularity of competing entertainment and communications media,
changes in labor conditions, and governmental restrictions or actions of Federal
regulatory bodies, including the FCC, any of which could possibly have a
material effect on a television station's operations and profits. There are
sources of video service other than conventional television stations, the most
common being cable television, which can increase competition for a broadcasting
television station by bringing into its market distant broadcasting signals not
otherwise available to the station's audience, serving as a distribution system
for national satellite-delivered programming and other non-broadcast programming
originated on a cable system and selling advertising time to local advertisers.
Other principal sources of competition include home video exhibition,
direct-to-home broadcast satellite television ("DBS") entertainment services and
multichannel multipoint distribution services ("MMDS"). Moreover, technology
advances and regulatory changes affecting programming delivery through fiber
optic telephone lines and video compression could lower entry barriers for new
video channels and encourage the development of increasingly specialized "niche"
programming. The Telecom Act permits telephone companies to provide video
distribution services via radio communication, on a common carrier basis, as
"cable systems" or as "open video systems," each pursuant to different
regulatory schemes. Jacor is unable to predict the effect that technological and
regulatory changes will have on the broadcast television industry and on the
future profitability and value of a particular broadcast television station.
The FCC authorizes DBS services throughout the United States. Currently, two
FCC permittees, DirecTv and United States Satellite Broadcasting, provide
subscription DBS services via high power communications satellites and small
dish receivers, and other companies provide direct-to-home video service
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using lower powered satellites and larger receivers. Additional companies are
expected to commence direct-to-home operations in the near future. DBS and MMDS,
as well as other new technologies, will further increase competition in the
delivery of video programming.
Jacor 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 BROADCASTING
The ownership, operation and sale of stations are subject to the
jurisdiction of the FCC, which acts under authority granted by 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. On February 8, 1996, the
President signed the Telecom Act. The Telecom Act, among other measures, directs
the FCC to (a) eliminate the national radio ownership limits; (b) increase the
local radio ownership limits as specified in the Telecom Act; (c) issue
broadcast licenses for periods of eight years; and (d) eliminate the opportunity
for the filing of competing applications against broadcast renewal applications.
Certain of these measures have been adopted by the FCC. Other provisions of the
Telecom Act will be acted upon by the FCC through rule-making proceedings,
presently scheduled for completion by the end of 1996.
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.
Television stations in the United States operate as either Very High
Frequency (VHF) stations (channels 2 through 13) or Ultra High Frequency (UHF)
stations (channels 14 through 69). UHF stations in many cases have a weaker
signal and therefore do not achieve the same coverage as VHF stations.
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. The Telecom Act amends the Communications
Act to provide that broadcast station licenses be granted, and thereafter
renewed, for a term not to exceed eight years, if the FCC finds that the public
interest, convenience, and necessity would be served.
Generally, the FCC renews licenses without a hearing. The Telecom Act amends
the Communications Act to require the FCC to grant an application for renewal of
a broadcast station license if: (1) the station has served the public interest,
convenience and necessity; (2) there have been no serious violations by the
licensee of the Communications Act or the rules and regulations of the FCC; and
(3) there have been no other violations by the licensee of the Communications
Act or the rules and regulations of the FCC which, taken together, would
constitute a pattern of abuse. Pursuant to the Telecom Act, competing
applications against broadcast renewal applications will no longer be
entertained. The Telecom Act provides that if the FCC, after notice and an
opportunity for a hearing, decides that the requirements for renewal have not
been met and that no mitigating factors warrant lesser sanctions, it may deny a
renewal application. Only thereafter may the FCC accept applications by third
parties to operate on the frequency of the former licensee. The Communications
Act continues to authorize the filing of petitions to deny against license
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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.
Except for the Company's Florida stations and Georgia stations (other than
WGST-FM), whose licenses have been renewed for seven years expiring in 2003, the
current seven-year terms of the broadcasting licenses of all of the Company's
stations expire in 1996, 1997 and 1998. Jacor does not anticipate any material
difficulty in obtaining license renewals for full terms in the future.
The following sets forth the market, FCC license classification, antenna
height above average terrain ("HAAT"), power, frequency and FCC license
expiration date for the 50 radio stations that will be owned and/or operated by
the Company upon completion of the Acquisitions and the two San Diego stations
to which Jacor provides programming and for which it sells air time.
<TABLE>
<CAPTION>
EXPIRATION
HAAT IN POWER IN DATE OF
MARKET/STATION FCC CLASS FEET KILOWATTS FREQUENCY FCC LICENSE
- --------------------- --------- --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ATLANTA, GA
WPCH-FM C 984 100 94.9 MHz 4/1/03
WGST-AM 2 -- 50/1 640 kHz 4/1/03
WGST-FM(1) C2 492 50 105.7 MHz 4/1/96
WKLS-FM C 984 100 96.1 MHz 4/1/03
SAN DIEGO, CA
KHTS-FM B 1887 2 93.3 MHz 12/1/97
XTRA-FM(2) C 804 100 91.1 MHz (3)
XTRA-AM(2) 1 -- 77/50 690 kHz (3)
DENVER, CO(4)
KOA-AM 1B 50/50 850 kHz 4/1/97
KRFX-FM C 1045 100 103.5 MHz 4/1/97
KBPI-FM C 988 100 106.7 MHz 4/1/97
KTLK-AM 2 -- 50/1 760 kHz 4/1/97
KHIH-FM C 1608 100 95.7 MHz 4/1/97
KHOW-AM 3 -- 5/5 630 kHz 4/1/97
KBCO-AM 2 -- 5/.1 1190 kHz 4/1/97
KBCO-FM C 1542 100 97.3 MHz 4/1/97
PHOENIX, AZ
KSLX-AM 3 -- 5/.5 1440 kHz 10/1/97
KSLX-FM C 1841 100 100.7 MHz 10/1/97
ST. LOUIS, MO
KMJM-FM C 1027 100 107.7 MHz 2/1/97
KATZ-FM B 489 50 100.3 MHz 12/1/96
KATZ-AM 3 -- 5/5 1600 kHz 2/1/97
TAMPA, FL
WFLA-AM 3 -- 5/5 970 kHz 2/1/03
WFLZ-FM C 1358 100 93.3 MHz 2/1/03
WDUV-FM C 1358 100 103.5 MHz 2/1/03
WBRD-AM 3 -- 2.5/1 1420 kHz 2/1/03
WXTB-FM C 1345 100 97.9 MHz 2/1/03
WTBT-FM A 285 6 105.5 MHz 2/1/03
CINCINNATI, OH(4)
WLW-AM 1A -- 50/50 700 kHz 10/1/96
WEBN-FM B 876 16.5 102.7 MHz 10/1/96
WOFX-FM B 909 16 92.5 MHz 10/1/96
WCKY-AM 3 -- 5/1 550 kHz 10/1/96
WWNK-FM B 600 32 94.1 MHz 10/1/96
WKRQ-FM B 876 16 101.9 MHz 10/1/96
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
EXPIRATION
HAAT IN POWER IN DATE OF
MARKET/STATION FCC CLASS FEET KILOWATTS FREQUENCY FCC LICENSE
- --------------------- --------- --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COLUMBUS, OH
WTVN-AM 3 5/5 610 kHz 10/1/96
WLVQ-FM B 751 18 96.3 MHz 10/1/96
WHOK-FM B 761 21 95.5 MHz 10/1/96
WLLD-FM A 755 .6 98.9 MHz 10/1/96
WLOH-AM 3 -- 1/0 1320 kHz 10/1/96
KANSAS CITY, MO
WDAF-AM 3 -- 5/5 610 kHz 12/1/96
KYYS-FM C 1001 100 102.1 MHz 12/1/96
SACRAMENTO, CA
KRXQ-FM B 325 25 93.7 MHz 12/1/97
KSEG-FM B 499 50 96.9 MHz 12/1/97
PORTLAND, OR
KEX-AM 1B -- 50/50 1190 kHz 2/1/98
KKCW-FM C 1654 100 103.3 MHz 2/1/98
KKRZ-FM C 1434 100 100.3 MHz 2/1/98
TOLEDO, OH
WSPD-AM 3 -- 5/5 1370 kHz 10/1/96
WVKS-FM B 479 50 92.5 MHz 10/1/96
WRVF-FM B 807 19 101.5 MHz 10/1/96
JACKSONVILLE, FL
WJBT-FM A 299 6 92.7 MHz 2/1/03
WQIK-FM C 1014 100 99.1 MHz 2/1/03
WSOL-FM C 1463 100 101.5 MHz 4/1/03
WZAZ-AM 4 -- 1/1 1400 kHz 2/1/03
WJGR-AM 3 -- 5/5 1320 kHz 2/1/03
</TABLE>
- ------------------------------
(1) Jacor provides programming to and sells air time for this station under an
LMA.
(2) Jacor provides programming to and sells air time for these stations under an
exclusive sales agency agreement.
(3) These stations are not licensed by the FCC, but rather are licensed by the
Mexican government.
(4) Excludes stations WAQZ-FM, WAOZ-AM and WSAI-AM in Cincinnati and KTCL-FM in
Denver which Jacor sells advertising time for pursuant to JSAs.
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.
OWNERSHIP RULES. Rules of the FCC limit the number and location of
broadcast stations in which one licensee (or any party with a control position
or attributable ownership interest therein) may have an attributable interest.
The "national radio ownership rule" had generally prohibited any one
non-minority individual or entity from having a control position or attributable
ownership interest in more than 20 AM or more than 20 FM radio stations
nationwide. The Telecom Act directs the FCC to modify its rules to eliminate any
provisions limiting the number of radio stations which may be owned or
controlled by one entity nationally. The FCC adopted this rule change by an
order which became effective on March 15, 1996.
The "local radio ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a control position or
attributable ownership interest. The local radio ownership rule had provided for
markets with 15 or more radio stations, a limit of two AMs and two FMs, provided
generally that the combined audience shares of the co-owned stations did not
exceed 25% of the radio ratings market at the time of acquisition. The Telecom
Act directs the FCC to revise its rules to increase the local radio ownership
limits as follows: (a) in markets with 45 or more commercial radio stations, a
party may own up to eight commercial radio stations, no more than five of which
are in the same service (AM or FM); (b) in markets with 30-44 commercial radio
stations, the limit is seven commercial radio stations, no more than four of
which are in the same service; (c) in markets with 15-29 commercial radio
stations, the limit is six commercial radio stations, no more than four of which
are in the same service; and (d) in markets with 14 or
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fewer commercial radio stations, a party may own up to five commercial radio
stations, no more than three of which are in the same service, provided that no
party may own more than 50% of the commercial stations in the market. The FCC
adopted these changes to the local radio ownership rule by an order which became
effective March 15, 1996. In addition, the FCC has a "cross interest" policy
that may prohibit a party with an attributable 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, or which may prohibit
local stations from combining to build or acquire another local station. The FCC
is presently evaluating its cross-interest policy as well as policies governing
attributable ownership interests. Jacor cannot predict whether the FCC will
adopt any changes in these policies or, if so, what the new policies will be.
Under the current 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 an attributable 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 an attributable
interest unless they own or have voting control over 10% or more of such stock.
The FCC is currently evaluating whether to raise the foregoing benchmarks to 10%
and 20%, respectively. An officer or director of a corporation or any general
partner of a partnership also is deemed to hold an attributable interest in the
media license. Under the current rules, prior to the Offering Zell/Chilmark is
considered a single majority shareholder of Jacor, and minority shareholders are
not considered to have attributable interests in Jacor's stations. At present,
Zell/Chilmark, the current sole attributable shareholder of Jacor, has no other
attributable media interests. The FCC has asked for comments as to whether it
should continue the single majority shareholder exemption. Jacor cannot predict
whether the FCC will adopt these or any other proposals.
Following the Offering, Zell/Chilmark will no longer be the single majority
shareholder of Jacor. Consequently, under current rules, shareholders of Jacor
with 5% or more of the outstanding votes (except for qualified institutional
investors, for which the 10% benchmark is applicable), if any, will be
considered to hold attributable interests in Jacor. Such holders of attributable
interests must comply with or obtain waivers of the FCC's multiple ownership
limits. Zell/Chilmark's change from the single majority shareholder in Jacor to
one holding less than 50% requires prior FCC approval. It is Jacor's
understanding that such approval is obtained by the filing of a "short-form"
transfer of control application with the FCC. Such short-form applications do
not require public notice or a waiting period before grant by the FCC. Third
parties do not have a right to petition for the denial of such applications. The
FCC typically grants uncontested short-form applications within two weeks to one
month from filing.
The rules also generally prohibit the acquisition of an ownership or control
position in a television station and one or more radio stations serving the same
market (termed the "one-to-a-market" rule). Current FCC policy looks favorably
upon waiver requests relating to television and AM/FM radio combinations in the
top 25 television markets where at least 30 separately owned broadcast stations
will remain after the combination. One-to-a-market waiver requests in other
markets, as well as those in the top 25 television markets that involve the
combination of a television station and more than one same service (AM or FM)
radio station, presently are evaluated by the FCC pursuant to a fact-based,
five-part, case-by-case review. The FCC also has an established policy for
granting waivers that involve "failed" stations. The FCC currently is
considering changes to its one-to-a-market waiver standards in a pending
rule-making proceeding. The Telecom Act instructs the FCC to extend its top 25
market/30 voices waiver policy to the top 50 markets, consistent with the public
interest, convenience, and necessity. The Telecom Act conferees stated that they
expect the FCC in its future implementation of its current one-to-a-market
waiver policy, as well as in any future changes the FCC may adopt in the pending
rule-making, to take into account increased competition and the need for
diversity in today's radio marketplace. The FCC also plans to review and
possibly modify its current prohibitions relating to ownership or control
positions in a daily newspaper and a broadcast station in the same market.
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. The FCC is currently considering
whether it should attribute non-voting stock, or
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<PAGE>
perhaps non-voting stock interests when combined with other rights, such as
voting shares or contractual relationships, along with its review of its other
attribution policies. Jacor cannot predict whether the FCC will adopt these or
other changes in its attribution policies.
Under the Communications Act, broadcast licenses may not be granted,
transferred or assigned to any corporation 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 of which more than one-fourth of the capital stock is owned of
record or voted by Aliens, without an FCC public interest finding. 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 Jacor are known by Jacor to be Aliens.
REGULATION OF BROADCAST OPERATIONS. In order to retain licenses,
broadcasters are obligated, under the Communications Act, to serve the "public
interest." Since the late 1970s, 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 broadcast 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 have been
considered by the FCC when evaluating licensee renewal applications and at other
times. The FCC has proposed implementing the changes in its broadcast renewal
procedures required by the Telecom Act by a rule making proceeding scheduled to
be completed by the end of 1996. That proceeding may further illuminate the
standards for renewal of broadcast licenses under the Telecom Act.
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 full term) license term or license revocation.
The Telecom Act states that the FCC may deny, after a hearing, the renewal of a
broadcast license for serious violations of the Communications Act or the FCC's
rules or where there have been other violations which together constitute a
pattern of abuse.
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. Jacor cannot predict whether the FCC will adopt this or any other
proposal.
AGREEMENTS WITH OTHER BROADCASTERS. Over the past several years a
significant number of broadcast licensees, including certain of Jacor'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 the FCC's rules and policies and other laws. 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
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 a licensee sells advertising
time on both its own station or stations and on another separately owned
station.
49
<PAGE>
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 has 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. At present, the FCC
is considering whether it should treat as attributable multiple business
arrangements among local stations, such as joint sales accompanied by debt
financing. Jacor cannot predict whether the FCC would require the termination or
restructuring of Jacor's JSAs or other arrangements with broadcasters in the
Cincinnati and Denver markets in connection with the FCC's pending rule making
on attribution or other FCC proceedings.
Under certain circumstances, the FCC will consider a radio station brokering
time on another radio 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 radio 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 radio station which it could not own
under the FCC's local radio ownership rules.
The FCC's rules also prohibit a radio licensee from simulcasting more than
25% of its programming on another radio 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 both stations serve substantially the same geographic area.
FCC CONSIDERATION OF ACQUISITIONS. On February 8, 1996, Jacor filed an
application with the FCC for its consent to the transfer of control of Noble
Broadcast Licenses, Inc. ("Noble Licenses"), the licensee of ten full-powered
radio stations in the Toledo, St. Louis and Denver markets, from John T. Lynch
ET AL., to Jacor (the "Noble Transfer Application"). Jacor presently owns two AM
and two FM stations in the Denver market, and Noble presently owns two AM and
two FM stations serving the Denver market. The Noble Transfer Application was
granted on March 27, 1996 by the Mass Media Bureau of the FCC acting pursuant to
delegated authority. No party filed an opposition to the Noble Transfer
Application. The FCC issued on April 1, 1996, a public notice of the grant by
the Mass Media Bureau. Pursuant to the Communications Act and the FCC's rules,
interested third parties may file petitions for reconsideration of the Noble
Transfer Application until May 1, 1996. Third parties that did not object to an
application prior to its grant must establish good cause for filing a petition
for reconsideration. The Mass Media Bureau of the FCC may also reconsider the
grant of the Noble Transfer Application on its own motion until May 1, 1996. In
addition, the full FCC may on its own motion review the Mass Media Bureau grant
until May 13, 1996. If no such actions are taken, the grant of the Noble
Transfer Application will become "final," that is, the grant will no longer be
subject to further administrative or judicial review. Under FCC rules, in
instances such as this, a grant by the Mass Media Bureau is effective
immediately. Consequently, under FCC rules, the parties may consummate the
transaction prior to the grant having become final, and the agreement between
the parties provides that a final grant is not a condition to closing. Pursuant
to that agreement, however, Jacor at its option may defer the closing until all
Noble station licenses have been renewed and such renewal grants are final.
On February 22, 1996, Jacor filed an application with the FCC for its
consent to the transfer of control of Citicasters Co., the licensee of 19
full-powered radio stations in the Atlanta, Phoenix, Tampa, Cincinnati,
Portland, Sacramento, Columbus and Kansas City markets, and two television
stations in the Tampa and Cincinnati markets, from the shareholders of
Citicasters to Jacor (the "Citicasters Transfer Application"). The Citicasters
Transfer Application has been accepted by the FCC and, pursuant to the
Communications Act and the FCC's rules, interested third parties may file
petitions to deny the Citicasters Transfer Application until April 4, 1996, and
thereafter may file informal objections until the Citicasters Transfer
Application is granted. To Jacor's knowledge, no party has filed a timely
petition to deny or other objection to the Citicasters Transfer Application.
Jacor presently owns and/or has LMAs with one AM and two FM stations in the
Atlanta market, two AM and two FM stations in the Tampa market and two AM and
two FM stations in the Cincinnati market. The Citicasters Transfer Application
provides a technical statement demonstrating that, pursuant to the FCC's
methodology for calculating market size, the relevant radio market in each of
Atlanta, Tampa and Cincinnati contains more than 45 commercial radio stations,
and the Company would own less than eight commercial radio stations, and less
than five in the same service in each such radio
50
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market. The television stations licensed to Citicasters are in markets in which
Jacor and Citicasters own radio stations. Consequently, the Citicasters Transfer
Application requests waivers pursuant to a five-part, case-by-case review of the
one-to-a-market rule to permit the permanent co-ownership of these television
and radio stations. The Citicasters Transfer Application notes that the FCC may
choose to grant initially temporary waivers of the one-to-a-market rule in
connection with the transfer of Citicasters to Jacor and thereafter rule on the
permanent waiver requests.
LEGISLATION AND REGULATION OF TELEVISION OPERATIONS. Television stations
are regulated by the FCC pursuant to provisions of the Communications Act and
the FCC rules that are in many instances the same or similar to those applicable
to radio stations. Besides technical differences between television and radio,
principal variances in regulation relate to limits on national and local
ownership, LMAs and simulcasts, children's programming requirements, advanced
television service, signal carriage rights on cable systems, license terms,
"V-chip" technology and network/affiliate relations.
The current FCC rules prohibit combined local ownership or control of
television stations with overlapping "Grade B" service contours (unless
established waiver standards are met). The Telecom Act directs the FCC to
conduct a rule-making proceeding to determine whether to retain, modify or
eliminate these local television ownership rules. This rule making is presently
scheduled for completion by the end of 1996. The current FCC rules also prohibit
(with certain qualifications) any person or entity from having an attributable
interest in more than 12 full-power television stations, subject to a 25%
national audience reach limitation. Pursuant to the Telecom Act, the FCC by an
order released in March 1996 has modified this national television ownership
rule by eliminating the 12-station limit and permitting an entity to have an
attributable interest in an unlimited number of U.S. television stations so long
as such stations do not reach in the aggregate more than 35% of the national
television audience. Additionally, the rules prohibit (with certain
qualifications) the holder of an attributable interest in a television station
from also having an attributable interest in a radio station, daily newspaper or
cable television system serving a community located within the relevant coverage
area of that television station. As noted above, the radio/television
one-to-a-market rule is under review and the FCC also plans to review and
possibly modify its current broadcast/daily newspaper restriction. The Telecom
Act mandates the elimination of the restriction of network ownership of cable
systems, which the FCC has adopted by an order released in March 1996. The FCC
will monitor the response to this change to determine if additional rule changes
are necessary to ensure nondiscriminatory carriage and channel positioning of
nonaffiliated broadcast stations by network-owned cable systems.
Presently, LMAs between television stations are not treated as attributable
interests and there is no restriction on same-market television simulcasts. The
FCC is considering in a pending rule-making proceeding whether to treat
television LMAs similar to radio LMAs for multiple ownership rule purposes. The
Citicasters television stations are not participants in LMAs.
The FCC is conducting a rule-making proceeding to consider proposals to
increase and quantify television stations' programming obligations under the FCC
rules implementing the Children's Television Act of 1990, which requires
television stations to present programming specifically directed to the
"educational and informational" needs of children under the age of 16.
The FCC is conducting a rule-making proceeding to devise a table of channel
allotments in connection with the introduction of advanced (or "high
definition") television service ("ATV"). The FCC has preliminarily decided to
allot a second broadcast channel to each full-power commercial television
station for ATV operation. According to this preliminary decision, stations
would be permitted to phase in their ATV operations over a period of several
years following adoption of a final table of allotments, after which they would
be required to surrender their non-ATV channel. During the past year, Congress
has considered proposals that would require incumbent broadcasters to bid at
auctions for the additional spectrum required to effect a transition to ATV, or
alternatively, would assign additional ATV spectrum to incumbent broadcasters
and require the early surrender of their non-ATV channel for sale by public
auction. It is not possible to predict if, or when, any of these proposals will
be adopted or the effect, if any, adoption of such proposals would have on the
Citicasters television stations.
FCC regulations implementing the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act") require each television
broadcaster to elect, at three-year intervals beginning
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June 17, 1993, either to (a) require carriage of its signal by cable systems in
the station's market ("must-carry") or (b) negotiate the terms on which such
broadcast station would permit transmission of its signal by the cable systems
within its market ("retransmission consent"). In a 2-1 decision issued on
December 13, 1995, a special three-judge panel of the U.S. District Court for
the District of Columbia upheld the constitutionality of the must-carry
provisions. The District Court's decision has been appealed to the U.S. Supreme
Court, which will hear the appeal during its 1996-1997 term, with a decision
expected in the second calendar quarter of 1997. In the meantime, the FCC's
must-carry regulations implementing the Cable Act remain in effect. Jacor cannot
predict the outcome of the Supreme Court review of the case.
Until the passage of the Telecom Act, television licenses were granted and
renewed for a maximum of five years. The Telecom Act amends the Communications
Act to provide that broadcast station licenses be granted, and thereafter
renewed, for a term not to exceed eight years, if the FCC finds that the public
interest, convenience, and necessity would be served. The Telecom Act also
requires the broadcast and cable industries to develop and transmit an encrypted
rating that would permit the blocking of violent or indecent video programming
and allow telephone companies to operate cable television systems in their own
service areas.
At present, the Citicasters Cincinnati television station is an ABC-network
affiliate (committed to change to a CBS-network affiliate in June 1996) and the
Citicasters Tampa television station is a CBS-network affiliate. Both are VHF
stations. The FCC currently is reviewing certain of its rules governing the
relationship between broadcast television networks and their affiliated
stations. The FCC is conducting a rule-making proceeding to examine its rules
prohibiting broadcast television networks from representing their affiliated
stations for the sale of non-network advertising time and from influencing or
controlling the rates set by their affiliates for the sale of such time.
Separately, the FCC is conducting a rule-making proceeding to consider the
relaxation or elimination of its rules prohibiting broadcast networks from (a)
restricting their affiliates' right to reject network programming; (b) reserving
an option to use specified amounts of their affiliates' broadcast time; and (c)
forbidding their affiliates from broadcasting the programming of another
network; and to consider the relaxation of its rule prohibiting
network-affiliated stations from preventing other stations from broadcasting the
programming of their network.
PROPOSED CHANGES. The FCC has not yet implemented formally certain of the
changes to its rules necessitated by the Telecom Act. Moreover, 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 broadcast stations, (ii) result in the loss of audience
share and advertising revenues of the Company's radio broadcast stations, (iii)
affect the ability of the Company to acquire additional broadcast stations or
finance such acquisitions, (iv) affect current cooperative agreements and/or
financing arrangements with other radio broadcast licensees, or (v) affect the
Company's competitive position in relationship to other advertising media in its
markets. Such matters include, for example, changes to the license authorization
and renewal process; proposals to revise the FCC's equal employment opportunity
rules and other matters relating to minority and female involvement in
broadcasting; proposals to alter 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
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; proposals
to limit the tax deductibility of advertising expenses by advertisers; potential
auctions for ATV or non-ATV television spectrum; the implementation of "V-chip"
technology; and changes to children's television programming requirements,
signal carriage rights on cable systems and network affiliate relations.
Although Jacor believes the foregoing discussion is sufficient to provide
the reader with a general understanding of all material aspects of FCC
regulations that affect Jacor, 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.
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ENERGY AND ENVIRONMENTAL MATTERS
Jacor'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
Jacor is currently in material compliance with all statutory and administrative
requirements as related to environmental quality and pollution control.
EMPLOYEES
Jacor has no direct employees. As of March 29, 1996, Jacor's subsidiaries
employed approximately 1,170 persons, 836 on a full-time and 334 on a part-time
basis. Each Jacor 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 Jacor
employee is represented by a union.
PROPERTIES/FACILITIES
Jacor owns the office and studio facilities for WQIK(FM) and WJGR(AM) in
Jacksonville, Florida (6,875 square feet) and the office and studio facilities
for WFLZ(FM), WFLA(AM) and WDUV(FM) in Tampa, Florida (43,000 square feet).
Jacor leases space for the office and studio facilities at its other station
locations in Jacksonville, Florida (two sites of 4,567 and 5,000 square feet,
respectively); Atlanta (19,500 square feet); Denver (25,964 square feet);
Cincinnati (27,601 square feet) and Tampa (6,000 square feet). The two leases in
Jacksonville expire in 1997 and 1998, respectively. The Denver and Atlanta
leases expire in 1999 and 2007, respectively. The Cincinnati lease expires in
1998 and has two five-year renewal options. The small Tampa lease is a
month-to-month lease for WBRD-AM. Jacor leases approximately 10,000 square feet
for its corporate offices in Cincinnati under a lease expiring in 1996 with a
five-year renewal option. The office (500 square feet) for KHTS in San Diego,
California is a month-to-month lease. In conjunction with Jacor's acquisition of
radio station WOFX(FM) (formerly WPPT) in Cincinnati, Jacor purchased the
building from which such station previously operated. Jacor plans to sell this
building.
Expansion of Jacor'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 Jacor'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 the Company-owned facilities and,
in the case of leased facilities, the lease of additional space or the
relocation of the office and studio. Jacor's office and studio facilities are
all located in downtown or suburban office buildings and are capable of being
relocated to any suitable office facility in the station market area.
Jacor owns the antenna tower and tower site for radio station WJBT(FM) in
Jacksonville, Florida. Jacor also owns the towers and tower site locations for
its AM stations in Atlanta, Denver, Jacksonville, Tampa and WLW(AM) in
Cincinnati. For the tower site at WCKY(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. Jacor, through a wholly owned subsidiary, owns the
real estate on which the tower sites are located for XTRA-AM and XTRA-FM,
stations to which Jacor provides programming and for which it sells air time.
Jacor 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 Jacor's
stations are in generally good condition. In management's opinion, the quality
of the signals range from good to excellent, and Jacor is committed to
maintaining and updating its equipment and transmission facilities in order to
achieve the best possible signal in the market area.
Although Jacor believes its properties are generally adequate for its
operations, opportunities to upgrade facilities are continuously reviewed.
See Notes 7 and 11 of Notes to Consolidated Financial Statements included
elsewhere herein for a description of encumbrances against Jacor's properties
and Jacor's rental obligations.
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LITIGATION
From time to time, Jacor becomes involved in various claims and lawsuits
that are incidental to its business. In the opinion of Jacor's management, there
are no material legal proceedings pending against Jacor.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The directors and executive officers of Jacor are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Sheli Z. Rosenberg........................... 54 Board Chair and Director
Randy Michaels............................... 43 President, Co-Chief Operating Officer and Director
Robert L. Lawrence........................... 43 Co-Chief Operating Officer and Director
R. Christopher Weber......................... 40 Senior Vice President, Chief Financial Officer and Secretary
Jon M. Berry................................. 49 Senior Vice President and Treasurer
John W. Alexander............................ 49 Director
Rod F. Dammeyer.............................. 55 Director
F. Philip Handy.............................. 51 Director
Marc Lasry................................... 36 Director
</TABLE>
All directors hold office until the annual meeting of shareholders next
following their election, or until their successors are elected and qualified.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.
The Board of Directors currently has two standing committees, the
Compensation Committee and the Audit Committee. The Compensation Committee
consists of three directors, Messrs. Dammeyer and Handy and Mrs. Rosenberg. The
basic function of the Compensation Committee is to determine stock option grants
to executive officers and other key employees, as well as to review salaries,
bonuses, and other elements of compensation of executive officers and other key
employees and make recommendations on such matters to the full Board of
Directors. The Audit Committee consists of three directors, Messrs. Alexander
and Dammeyer and Mrs. Rosenberg. The basic function of the Audit Committee is to
review the financial statements of the Company, to consult with Jacor's
independent auditors and to consider such other matters with respect to the
internal and external audit of the financial affairs of Jacor as may be
necessary or appropriate in order to facilitate accurate financial reporting.
Information with respect to the business experience and affiliations of the
directors and executive officers of Jacor is set forth below.
Sheli Z. Rosenberg was elected as Jacor's Board Chair in February 1996. She
is also the President and a member of the law firm of Rosenberg & Liebentritt,
P.C. since 1980. Mrs. Rosenberg is also Chief Executive Officer, President and a
director of Equity Financial and Management Company and its parent successor
Equity Group Investments, Inc., a privately owned and affiliated investment and
management company. Mrs. Rosenberg is also a director of Great American
Management and Investment, Inc. ("GAMI"), a diversified manufacturing company,
and of Capsure Holdings Corp., an affiliate of GAMI, and a trustee of Equity
Residential Properties Trust, a real estate investment trust. Mrs. Rosenberg is
also a director of American Classic Voyages Co.; CFI Industries, Inc.; Eagle
Industries, Inc.; Anixter International Inc.; Sealy Corporation; and Revco D.S.,
Inc. Mrs. Rosenberg was a Vice President of Madison Management Group, Inc.,
which filed a petition under the federal bankruptcy laws on November 8, 1991.
Mrs. Rosenberg was also a Vice President of First Capital Benefits
Administrators, Inc., a wholly owned indirect subsidiary of GAMI, which filed a
federal bankruptcy petition on January 3, 1995.
Randy Michaels, whose legal name is Benjamin L. Homel, has served as an
officer of Jacor since 1986. From July 1983 until he joined Jacor, Mr. Michaels
was executive vice president--programming and
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operations at Republic Broadcasting Corporation (acquired by the Company in
December 1986). Prior to that time, Mr. Michaels served as national program
director of Taft Broadcasting Corporation's Radio Group (a predecessor of
Citicasters).
Robert L. Lawrence has served as an officer of Jacor since 1986. From July
1983 until he joined Jacor, Mr. Lawrence was executive vice president--sales and
marketing at Republic Broadcasting Corporation. Prior to that time, Mr. Lawrence
was vice president and general manager of WYNF, Tampa, Florida, a station owned
by Taft Broadcasting Corporation's Radio Group (a predecessor of Citicasters).
R. Christopher Weber has served as an officer of Jacor since 1986. From
December 1985 until he joined Jacor, Mr. Weber was chief financial officer of
Republic Broadcasting Corporation. Prior to that time, Mr. Weber was employed by
the accounting firm of Peat Marwick & Mitchell.
Jon M. Berry has served as an officer of Jacor since 1982. From September
1979 until October 1982, Mr. Berry was controller of United Western Corporation,
a real estate holding company.
John W. Alexander has been a Partner of Meringoff Equities, and a Managing
Partner of Mallard Creek Capital Partners, since 1987. Both are private real
estate and investment partnerships. Mr. Alexander is also a Trustee of Equity
Residential Properties Trust, a real estate investment trust.
Rod F. Dammeyer is President and Chief Executive Officer of Anixter
International Inc. (formerly known as Itel Corporation), a Chicago-based
value-added provider of integrated networking and cabling solutions. Mr.
Dammeyer has been President of Anixter International since 1985 and Chief
Executive Officer since 1993; and he has been President and Chief Executive
Officer since February 1994 and Director since 1992 of Great American Management
and Investment, Inc., a diversified manufacturing company. He is a member of the
boards of directors of ANTEC Corporation, Capsure Holding Corp. (an affiliate of
GAMI); Falcon Building Products, Inc.; IMC Global, Inc., Revco D.S., Inc.; and
Sealy Corporation. Mr. Dammeyer is also a trustee of several Van Kampen American
Capital, Inc. trusts.
F. Philip Handy has been President of Winter Park Capital Company, a private
investment firm, since 1980. Mr. Handy is a director of Anixter International,
Inc.; GAMI; Q-Tel, S.A. de C.V.; and Banca Quadrum, S.A. (formerly Servicios
Financieros Quadrum, S.A.).
Marc Lasry has been the Executive Vice President of Amroc Investments, Inc.,
a private investment firm, since 1990. Mr. Lasry was the Director and Senior
Vice President of the corporation reorganization department of Cowen & Co., a
privately owned brokerage firm, from 1987 to 1989. From January 1989 to
September 1990, he was a portfolio manager for Amroc Investments, L.P., a
private investment firm.
There are no family relationships among any of the above-named directors nor
among any of the directors and any executive officers of Jacor.
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<PAGE>
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture") to be dated as of
, 1996, by and among Jacor and JCAC, Inc., a Florida corporation and
a wholly owned subsidiary of Jacor ("JCAC" and collectively with Jacor, the
"Obligors"), the Guarantors and , as trustee (the "Trustee").
The terms of the Indenture are also governed by certain provisions contained in
the Trust Indenture Act of 1939, as amended. The following summaries of certain
provisions of the Indenture are summaries only, do not purport to be complete
and are qualified in their entirety by reference to all of the provisions of the
Indenture. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Indenture. Wherever particular provisions
of the Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference. The form of the Indenture has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. A copy of the form of Indenture is available upon request.
GENERAL
The Notes will be senior subordinated, unsecured, general obligations of the
Obligors, limited in aggregate principal amount to $50.0 million. The Notes will
be subordinate in right of payment to certain other debt obligations of the
Obligors. The Notes will be jointly and severally irrevocably and
unconditionally guaranteed on a senior subordinated basis by each of the
Obligor's present and future Subsidiaries (the "Guarantors"). The obligations of
each Guarantor under its guarantee, however, will be limited in a manner
intended to avoid it being deemed a fraudulent conveyance under applicable law.
See "Certain Bankruptcy Limitations" below. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on , 2006. The Notes will bear interest at
the rate per annum stated on the cover page hereof from the date of issuance or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on and of each year,
commencing , 1996, to the persons in whose names such Notes are
registered at the close of business on the or immediately
preceding such Interest Payment Date. Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the
office or agency of the Obligors maintained for such purpose, which office or
agency shall be maintained in the Borough of Manhattan, The City of New York. At
the option of the Obligors, payment of interest may be made by check mailed to
the Holders of the Notes at the addresses set forth upon the registry books of
the Registrar. No service charge will be made for any registration of transfer
or exchange of Notes, but the Obligors may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Until otherwise designated by the Obligors, the Obligors' office or agency will
be the corporate trust office of the Trustee presently located at the office of
the Trustee in the Borough of Manhattan, The City of New York.
SUBORDINATION
The Notes and the Guarantees will be general, unsecured obligations of the
Obligors and the Guarantors, respectively, subordinated in right of payment to
all Senior Debt of the Obligors and the Guarantors, as applicable. On a pro
forma basis, as of December 31, 1995, after giving effect to the Acquisitions
and the Financings and the application of the proceeds from the Financings, the
Obligors would have had outstanding an aggregate of approximately $ million of
secured Senior Debt, $ million of other Indebtedness that is secured and $
million of Indebtedness subordinate to the Notes in right of payment.
The Indenture provides that no payment (by set-off or otherwise) may be made
by or on behalf of the Obligors or a Guarantor, as applicable, on account of the
principal of, premium, if any, or interest on the Notes (including any
repurchases of Notes), or on account of the redemption provisions of the Notes,
for cash or property (other than Junior Securities), (i) upon the maturity of
any Senior Debt of the Obligors or such Guarantor by lapse of time, acceleration
(unless waived) or otherwise, unless and until all principal of, premium, if
any, and the interest on such Senior Debt are first paid in full in cash or Cash
Equivalents (or
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<PAGE>
such payment is duly provided for) or otherwise to the extent holders accept
satisfaction of amounts due by settlement in other than cash or Cash
Equivalents, or (ii) in the event of default in the payment of any principal of,
premium, if any, or interest on Senior Debt of the Obligors or such Guarantor
when it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (a "Payment Default"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Debt to declare such Senior Debt to be due
and payable and (ii) written notice of such event of default given to the
Obligors and the Trustee by the Representative under the New Credit Facility or
the holders of an aggregate of at least $million principal amount outstanding of
any other Senior Debt or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived or otherwise has ceased
to exist, no payment (by set-off or otherwise) may be made by or on behalf of
the Obligors or any Guarantor which is an obligor under such Senior Debt on
account of the principal of, premium, if any, or interest on the Notes,
(including any repurchases of any of the Notes), or on account of the redemption
provisions of the Notes, in any such case, other than payments made with Junior
Securities. Notwithstanding the foregoing, unless the Senior Debt in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Obligors
and the Guarantors shall be required to pay all sums not paid to the Holders of
the Notes during the Payment Blockage Period due to the foregoing prohibitions
and to resume all other payments as and when due on the Notes. Any number of
Payment Notices may be given; PROVIDED, HOWEVER, that (i) not more than one
Payment Notice shall be given within a period of any 360 consecutive days, and
(ii) no default that existed upon the date of such Payment Notice or the
commencement of such Payment Blockage Period (whether or not such event of
default is on the same issue of Senior Debt) shall be made the basis for the
commencement of any other Payment Blockage Period.
Upon any distribution of assets of any Obligor or any Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of any
Obligor or a Guarantor, whether voluntary or involuntary, in bankruptcy,
insolvency, receivership or a similar proceeding or upon assignment for the
benefit of creditors or any marshalling of assets or liabilities, (i) the
holders of all Senior Debt of the Obligors or such Guarantor, as applicable,
will first be entitled to receive payment in full in cash or Cash Equivalents
(or have such payment duly provided for) or otherwise to the extent holders
accept satisfaction of amounts due by settlement in other than cash or Cash
Equivalents before the Holders are entitled to receive any payment on account of
principal of, premium, if any, and interest on the Notes (other than Junior
Securities) and (ii) any payment or distribution of assets of any Obligor or
such Guarantor of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities) to which the Holders or
the Trustee on behalf of the Holders would be entitled (by set-off or
otherwise), except for the subordination provisions contained in the Indenture,
will be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of such Senior Debt or their
representative to the extent necessary to make payment in full (or have such
payment duly provided for) on all such Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Obligor or any Guarantor (other than Junior
Securities) shall be received by the Trustee or the Holders at a time when such
payment or distribution is prohibited by the foregoing provisions, such payment
or distribution shall be held in trust for the benefit of the holders of such
Senior Debt, and shall be paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of such Senior Debt remaining unpaid or
unprovided for or to their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing any
of such Senior Debt may have been issued, ratably according to the aggregate
principal amounts remaining unpaid on account of such Senior Debt held or
represented by each, for application to the payment of all such Senior Debt
remaining unpaid, to the extent necessary to pay or to
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<PAGE>
provide for the payment of all such Senior Debt in full in cash or Cash
Equivalents or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than cash or Cash Equivalents after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt.
No provision contained in the Indenture or the Notes will affect the
obligation of the Obligors and the Guarantors, which is absolute and
unconditional, to pay, when due, principal of, premium, if any, and interest on
the Notes. The subordination provisions of the Indenture and the Notes will not
prevent the occurrence of any Default or Event of Default under the Indenture or
limit the rights of the Trustee or any Holder to pursue any other rights or
remedies with respect to the Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Obligors or
a marshalling of assets or liabilities of the Obligors, holders of the Notes may
receive ratably less than other creditors.
The Obligors conducts their operations through their Subsidiaries.
Accordingly, the Obligors' ability to meet their cash obligations is dependent
upon the ability of their subsidiaries to make cash distributions to the
Obligors. Furthermore, any right of the Obligors to receive the assets of any
such subsidiary upon such subsidiary's liquidation or reorganization effectively
will be subordinated by operation of law to the claims of such subsidiary's
creditors (including trade creditors) and holders of its preferred stock, except
to the extent that the Obligors are themselves recognized as a creditor or
preferred stockholder of such subsidiary, in which case the claims of the
Obligors would still be subordinate to any indebtedness or preferred stock of
such subsidiary senior in right of payment to that held by the Obligors.
CERTAIN BANKRUPTCY LIMITATIONS
Each of the Obligors is a holding company, conducting all of their business
through Subsidiaries, which have guaranteed or will guarantee the Obligors'
Obligations with respect to the Notes. See "Risk Factors." Holders of the Notes
will be direct creditors of each Guarantor by virtue of its guarantee.
Nonetheless, in the event of the bankruptcy or financial difficulty of a
Guarantor, such Guarantor's obligations under its guarantee may be subject to
review and avoidance under state and federal fraudulent transfer laws. Among
other things, such obligations may be avoided if a court concludes that such
obligations were incurred for less than reasonably equivalent value or fair
consideration at a time when the Guarantor was insolvent, was rendered
insolvent, or was left with inadequate capital to conduct its business. A court
would likely conclude that a Guarantor did not receive reasonably equivalent
value or fair consideration to the extent that the aggregate amount of its
liability on its guarantee exceeds the economic benefits it receives in the
Offering. The obligations of each Guarantor under its guarantee will be limited
in a manner intended to cause it not to be a fraudulent conveyance under
applicable law, although no assurance can be given that a court would give the
holder the benefit of such provision.
If the obligations of a Guarantor under its guarantee were avoided, Holders
of Notes would have to look to the assets of any remaining Guarantors for
payment. There can be no assurance in that event that such assets would suffice
to pay the outstanding principal and interest on the Notes.
OPTIONAL REDEMPTION
The Obligors will not have the right to redeem any Notes prior to ,
2001. The Notes will be redeemable at the option of the Obligors, in whole or in
part, at any time on or after , upon not less than 30 days nor more
than 60 days notice to each holder of Notes, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
12-month period commencing of the years indicated below, in each
case (subject to the right of Holders of record on a Record Date to receive
interest due on an Interest Payment Date that is on or prior to such Redemption
Date) together with accrued and unpaid interest thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ----------------------------------------------------------------------- -----------
<S> <C>
200 ................................................................... %
200 ................................................................... %
200 ................................................................... %
200 and thereafter..................................................... 100.000%
</TABLE>
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In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. Any notice which relates to a Note to be
redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the Notes or portions
thereof called for redemption, unless the Obligors defaults in the payment
thereof.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Obligors (the "Change
of Control Offer"), to require the Obligors to repurchase all or any part of
such Holder's Notes (PROVIDED, that the principal amount of such Notes must be
$1,000 or an integral multiple thereof) on a date (the "Change of Control
Purchase Date") that is no later than 35 Business Days after the occurrence of
such Change of Control, at a cash price (the "Change of Control Purchase Price")
equal to 101% of the principal amount thereof, together with accrued interest to
the Change of Control Purchase Date. The Change of Control Offer shall be made
within 10 Business Days following a Change of Control and shall remain open for
20 Business Days following its commencement (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Obligors
promptly shall purchase all Notes properly tendered in response to the Change of
Control Offer.
As used herein, a "Change of Control" means (i) any merger or consolidation
of any of the Obligors with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of any of
the assets of the Obligors, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee(s) or surviving entity or entities, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of Capital
Stock of the applicable Obligor then outstanding normally entitled to vote in
elections of directors, or (iii) during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the applicable Obligor (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of the applicable Obligor was approved by a vote of
a majority of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the applicable Obligor then in office.
On or before the Change of Control Purchase Date, the Obligors will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Obligors. The Paying Agent promptly will pay the
Holders of Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest), and the Trustee promptly will
authenticate and deliver to
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such Holders a new Note equal in principal amount to any unpurchased portion of
the Note surrendered. Any Notes not so accepted will be delivered promptly by
the Obligors to the Holder thereof. The Obligors publicly will announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Obligors, and, thus, the removal of incumbent
management.
The phrase "all or substantially all" of the assets of the Obligors will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or substantially
all" of the assets of any of the Obligors has occurred. In addition, no
assurances can be given that the Obligors will be able to acquire Notes tendered
upon the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
The Indenture will provide that, except as set forth below in this covenant,
the Obligors and the Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Disqualified Capital Stock (including Acquired
Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO FORMA
basis to, such incurrence of Indebtedness or Disqualified Capital Stock and
(ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Coverage Ratio of Jacor for the Reference Period immediately
preceding the Incurrence Date, after giving effect on a PRO FORMA basis to
such incurrence of such Indebtedness or Disqualified Capital Stock and, to
the extent set forth in the definition of Consolidated Coverage Ratio, the
use of proceeds thereof, would be at least to 1 (the "Debt Incurrence
Ratio"), then the Obligors may incur such Indebtedness or Disqualified
Capital Stock; PROVIDED, that except in the case of Acquired Indebtedness,
such Indebtedness or Disqualified Capital Stock incurred pursuant to this
clause (a) has an Average Life to Stated Maturity that exceeds the remaining
Average Life to Stated Maturity of the Notes and has a Stated Maturity for
its final scheduled principal or (in the case of Disqualified Capital Stock)
redemption payment, as applicable, later than the Stated Maturity for the
final scheduled principal payment of the Notes];
(b) the Obligors and the Guarantors may incur Indebtedness evidenced by
the Notes and the Guarantees and represented by the Indenture up to the
amounts specified therein as of the date thereof;
(c) the Obligors and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a) and (b) of this
covenant or which is outstanding on the Issue Date so long as, in the case
of Indebtedness used to refinance, refund, or replace Indebtedness described
in clause (c), such Refinancing Indebtedness is secured only by the assets
that secured the Indebtedness so refinanced;
(d) the Obligors and the Guarantors may incur Permitted Indebtedness;
(e) the Obligors and the Guarantors may incur Indebtedness in an
aggregate amount outstanding at any time (including any Indebtedness issued
to refinance, replace, or refund such Indebtedness) of up to $ million,
minus the amount of any such Indebtedness retired with Net Cash Proceeds
from any Asset Sale or assumed by a transferee in an Asset Sale; and
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(f) Indebtedness incurred pursuant to the New Credit Facility up to an
aggregate amount outstanding (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) at any time of $ million,
plus accrued interest and such additional amounts as may be deemed to be
outstanding in the form of Interest Swap and Hedging Obligations with
lenders party to the New Credit Facility, minus the amount of any such
Indebtedness retired with Net Cash Proceeds from any Asset Sale or assumed
by a transferee in an Asset Sale.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of either of the
Obligors (including upon designation of any subsidiary or other Person as a
Subsidiary) or is merged with or into or consolidated with either of the
Obligors or a Subsidiary of either of the Obligors shall be deemed to have been
Incurred at the time such Person becomes such a Subsidiary of either of the
Obligors or is merged with or into or consolidated with either of the Obligors
or a Subsidiary of either of the Obligors, as applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that the Obligors and the Subsidiaries will not,
and will not permit any of their Subsidiaries to, directly or indirectly, make
any Restricted Payment if, after giving effect to such Restricted Payment on a
PRO FORMA basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) the Obligors are not permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio in paragraph (a)
of the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock," or (3) the aggregate amount of all Restricted
Payments made by the Obligors and its Subsidiaries, including after giving
effect to such proposed Restricted Payment, from and after the Issue Date, would
exceed the sum of (a) $ million, plus (b) 50% of the aggregate Adjusted
Consolidated EBITDA of Jacor and its Consolidated Subsidiaries for the period
(taken as one accounting period), commencing on the first day of the first full
fiscal quarter commencing after the Issue Date, to and including the last day of
the fiscal quarter ended immediately prior to the date of each such calculation
(or, in the event Adjusted Consolidated EBITDA for such period is a deficit,
then minus 100% of such deficit), plus (c) the aggregate Net Cash Proceeds
received by Jacor from the sale of its Qualified Capital Stock (other than (i)
to a Subsidiary of Jacor and (ii) to the extent applied in connection with a
Qualified Exchange), after the Issue Date.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (v) Restricted Investments, PROVIDED,that, after
giving PRO FORMA effect to such Investment, the aggregate amount of all such
Investments made on or after the Issue Date that are outstanding (after giving
effect to any such Investments that are returned to the Obligors or the
Subsidiary Guarantor that made such prior Investment, without restriction, in
cash on or prior to the date of any such calculation) at any time does not
exceed $ million, (w) repurchases of Capital Stock from employees of the
Obligors or its Subsidiaries upon the death, disability or termination of
employment in an aggregate amount to all employees not to exceed $ per year or
$ million in the aggregate on and after the Issue Date, (x) a Qualified
Exchange, (y) the payment of any dividend on Qualified Capital Stock within 60
days after the date of its declaration if such dividend could have been made on
the date of such declaration in compliance with the foregoing provisions, or (z)
the repurchase of the LYONs in accordance with the terms thereof as of the issue
date. The full amount of any Restricted Payment made pursuant to the foregoing
clauses (v), (w), (y) and (z) (but not pursuant to clause (y)) (but without
giving effect to any Restricted Payment made pursuant to such clause (w), so
long as the proposed Restricted Payment is a Restricted Investment) of the
immediately preceding sentence, however, will be deducted in the calculation of
the aggregate amount of Restricted Payments available to be made referred to in
clause (3) of the immediately preceding paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture will provide that the Obligors and the Subsidiaries will not,
and will not permit any of their Subsidiaries to, directly or indirectly,
create, assume or suffer to exist any consensual restriction on the ability of
any Subsidiary of the Obligors to pay dividends or make other distributions to
or on behalf of, or to pay any obligation to or on behalf of, or otherwise to
transfer assets or property to or on behalf of, or make or pay loans or advances
to or on behalf of, the Obligors or any Subsidiary of the Obligors, except (a)
restrictions imposed by the Notes or the Indenture, (b) restrictions imposed by
applicable law,
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(c) existing restrictions under specified Indebtedness outstanding on the Issue
Date, (d) restrictions under any Acquired Indebtedness not incurred in violation
of the Indenture or any agreement relating to any property, asset, or business
acquired by the Obligors or any of their Subsidiaries, which restrictions in
each case existed at the time of acquisition, were not put in place in
connection with or in anticipation of such acquisition and are not applicable to
any person, other than the person acquired, or to any property, asset or
business, other than the property, assets and business so acquired, (e) any such
restriction or requirement imposed by Indebtedness incurred under paragraph (e)
or (f) of the covenant "Limitation of Incurrence of Additional Indebtedness and
Disqualified Capital Stock," provided such restriction or requirement is no more
restrictive than that imposed by the New Credit Facility as of the Issue Date,
(f) restrictions with respect solely to a Subsidiary of the Obligors imposed
pursuant to a binding agreement which has been entered into for the sale or
disposition of all or substantially all of the Equity Interests or assets of
such Subsidiary, provided such restrictions apply solely to the Equity Interests
or assets of such Subsidiary which are being sold, and (g) in connection with
and pursuant to permitted Refinancings, replacements of restrictions imposed
pursuant to clauses (a), (c) or (d) of this paragraph that are not more
restrictive than those being replaced and do not apply to any other person or
assets than those that would have been covered by the restrictions in the
Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease entered into in the
ordinary course of business, consistent with industry practice, nor (b) Liens
permitted under the terms of the Indenture on assets securing Senior Debt
incurred in accordance with the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" shall in and of themselves be
considered a restriction on the ability of the applicable Subsidiary to transfer
such agreement or assets, as the case may be.
LIMITATIONS ON LAYERING INDEBTEDNESS; LIENS
The Indenture will provide that the Obligors and the Subsidiaries will not,
and will not permit any of their Subsidiaries to, directly or indirectly, incur,
or suffer to exist (a) any Indebtedness that is subordinate in right of payment
to any other Indebtedness of the Obligor or a Guarantor unless, by its terms,
such Indebtedness (i) has a maturity date subsequent to the Stated Maturity of
the Notes and an Average Life longer than that of the Notes and (ii) is
subordinate in right of payment to, or ranks PARI PASSU with, the Notes or the
Guarantees, as applicable, or (b) other than Permitted Liens, any Lien upon any
of its property or assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom securing Indebtedness other than Senior Debt or
Purchase Money Indebtedness or Capitalized Lease Obligations incurred in
accordance with the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock."
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture will provide that the Obligors and the Subsidiaries will not,
and will not permit any of their Subsidiaries to, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, business or assets, including by merger or
consolidation (in the case of a Guarantor or a Subsidiary of any of the
Obligors), and including any sale or other transfer or issuance of any Equity
Interests of any Subsidiary of the Obligors, whether by the Obligors or a
Subsidiary of either or through the issuance, sale or transfer of Equity
Interests by a Subsidiary of the Obligors (an "Asset Sale"), unless (l)(a)
within days after the date of such Asset Sale, the Net Cash Proceeds therefrom
(the "Asset Sale Offer Amount") are applied to the optional redemption of the
Notes in accordance with the terms of the Indenture or to the repurchase of the
Notes pursuant to an irrevocable, unconditional cash offer (the "Asset Sale
Offer") to repurchase Notes at a purchase price (the "Asset Sale Offer Price")
of % of principal amount, plus accrued interest to the date of payment, made
within days of such Asset Sale or (b) within days following such Asset Sale,
the Asset Sale Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional days) in assets and
property (other than notes, bonds, obligation and securities) which in the good
faith reasonable judgment of the Board will immediately constitute or be a part
of a Related Business of the Obligors or such Subsidiary (if it continues to be
a Subsidiary) immediately following such transaction or (ii) used to retire
specified Indebtedness existing on the Issue Date or Senior Debt to permanently
reduce the amount of such Indebtedness outstanding on the Issue Date or
permitted pursuant to paragraph (c), (e) or (f) of the covenant "Limitation on
Incurrence of
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Additional Indebtedness and Disqualified Capital Stock" (including that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is so permanently reduced by such amount), (2) with respect to any
Asset Sale or related series of Asset Sales involving securities, property or
assets with an aggregate fair market value in excess of $ , at least % of
the consideration for such Asset Sale or series of related Asset Sales consists
of cash or Cash Equivalents, (3) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect,
on a PRO FORMA basis, to, such Asset Sale, and (4) the Board of Directors of the
applicable Obligor determines in good faith that such Obligor or such
Subsidiary, as applicable, receives fair market value for such Asset Sale.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (l)(b) above (the "Excess Proceeds") exceeds $ million and that each
Asset Sale Offer shall remain open for 20 Business Days following its
commencement and no longer (the "Asset Sale Offer Period"). Upon expiration of
the Asset Sale Offer Period, the Obligors shall apply the Asset Sale Offer
Amount plus an amount equal to accrued interest to the purchase of all Notes
properly tendered (on a PRO RATA basis if the Asset Sale Offer Amount is
insufficient to purchase all Notes so tendered) at the Asset Sale Offer Price
(together with accrued interest). To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, the Obligors may use any remaining Net Cash Proceeds for general
corporate purposes as otherwise permitted by the Indenture and following each
Asset Sale Offer the Excess Proceeds amount shall be reset to zero. If required
by applicable law, the Asset Sale Offer Period may be extended as so required,
however, if so extended it shall nevertheless constitute an Event of Default if
within 60 Business Days of its commencement the Asset Sale Offer is not
consummated or the properly tendered Notes are not purchased pursuant thereto.
For purposes of (2) above, total consideration received means the total
consideration received for such Asset Sales minus the amount (a) Senior Debt
assumed by a transferee which assumption permanently reduces the amount of
Indebtedness outstanding on the Issue Date or permitted pursuant to paragraph
(c), (e) or (f) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" (including that in the case of a
revolver or similar arrangement that makes credit available, such commitment is
so reduced by such amount) and (b) property that within 30 days of such Asset
Sale is converted into cash or Cash Equivalents).
Notwithstanding the foregoing provisions of the first paragraph of this
covenant:
(i) the Obligors and their Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
(ii) the Obligors and their Subsidiaries may sell or dispose of damaged,
worn out or other obsolete property in the ordinary course of business so
long as such property is no longer necessary for the proper conduct of the
business of either of the Obligors or such Subsidiary, as applicable; and
(iii) the Guarantors may convey, sell, transfer, assign or otherwise
dispose of assets to the Obligors or any of their wholly owned Guarantors.
All Net Cash Proceeds from an Event of Loss shall be invested, used for
prepayment of Senior Debt, or used to repurchase Notes, all within the period
and as otherwise provided above in clauses 1(a) or 1(b)(i) of the first
paragraph of this covenant.
In addition to the foregoing, the Obligors will not, and will not permit any
Subsidiary to, directly or indirectly make any Asset Sale of any of the Equity
Interests of any Subsidiary except pursuant to an Asset Sale of all the Equity
Interests of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture will provide that neither the Obligors nor any of their
Subsidiaries will be permitted after the Issue Date to enter into any contract,
agreement, arrangement or transaction with any Affiliate (an
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"Affiliate Transaction"), or any series of related Affiliate Transactions,
(other than Exempted Affiliate Transactions) (i) unless it is determined that
the terms of such Affiliate Transaction are fair and reasonable to the Obligors,
and no less favorable to the Obligors, than could have been obtained in an arm's
length transaction with a non-Affiliate and, (ii) if involving consideration to
either party in excess of $ , unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Transactions) has been approved
by a majority of the members of the Board of Directors that are disinterested in
such transaction and (iii) if involving consideration to either party in excess
of $ million, unless in addition the Obligors, prior to the consummation
thereof, obtains a written favorable opinion as to the fairness of such
transaction to the applicable Obligor from a financial point of view from an
independent investment banking firm of national reputation.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that neither of the Obligors will not, directly
or indirectly, consolidate with or merge with or into another person or sell,
lease, convey or transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons or adopt a Plan
of Liquidation, unless (i) either (a) the applicable Obligor is the continuing
entity or (b) the resulting, surviving or transferee entity or, in the case of a
Plan of Liquidation, the entity which receives the greatest value from such Plan
of Liquidation is a corporation organized under the laws of the United States,
any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Obligors in connection with
the Notes and the Indenture; (ii) no Default or Event of Default shall exist or
shall occur immediately after giving effect on a PRO FORMA basis to such
transaction; (iii) immediately after giving effect to such transaction on a PRO
FORMA basis, the Consolidated Net Worth of the consolidated surviving or
transferee entity or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation is at least equal to
the Consolidated Net Worth of the Obligors immediately prior to such
transaction; and (iv) immediately after giving effect to such transaction on a
PRO FORMA basis, the consolidated resulting, surviving or transferee entity or,
in the case of a Plan of Liquidation, the entity which receives the greatest
value from such Plan of Liquidation would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence
Ratio set forth in paragraph (a) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of any Obligor or consummation of a Plan of Liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which such Obligor is merged or to which such transfer is
made or, in the case of a Plan of Liquidation, the entity which receives the
greatest value from such Plan of Liquidation shall succeed to, and be
substituted for, and may exercise every right and power of, the applicable
Obligor under the Indenture with the same effect as if such successor
corporation had been named therein as an Obligor, and the applicable Obligor
shall be released from the obligations under the Notes and the Indenture except
with respect to any obligations that arise from, or are related to, such
transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Obligors' interest in which constitutes all or
substantially all of the properties and assets of the Obligors shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Obligors.
LIMITATION ON LINES OF BUSINESS
The Indenture will provide that neither the Obligors nor any of their
Subsidiaries shall directly or indirectly engage to any substantial extent in
any line or lines of business activity other than that which, in the reasonable
good faith judgment of the Board of Directors of the Obligors is a Related
Business.
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RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
The Indenture will provide that the Obligors and the Guarantors will not
sell, and will not permit any of their Subsidiaries to issue or sell, any Equity
Interests of any Subsidiary of the Obligors to any Person other than the
Obligors or a wholly owned Subsidiary of the Obligors, except for Equity
Interests with no preferences or special rights or privileges and with no
redemption or prepayment provisions.
FUTURE SUBSIDIARY GUARANTORS
The Indenture will provide that all present and future Subsidiaries of the
Obligors jointly and severally will guaranty irrevocably and unconditionally all
principal, premium, if any, and interest on the Notes on a senior subordinated
basis.
RELEASE OF GUARANTORS
The Indenture will provide that no Guarantor shall consolidate or merge with
or into (whether or not such Guarantor is the surviving Person) another Person
unless (i) subject to the provisions of the following paragraph and certain
other provisions of the Indenture, the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, pursuant to which such Person shall
unconditionally guarantee, on a Senior Subordinated basis, all of such
Guarantor's obligations under such Guarantor's guarantee, the Indenture on the
terms set forth in the Indenture; (ii) immediately before and immediately after
giving effect to such transaction on a PRO FORMA basis, no Default or Event of
Default shall have occurred or be continuing; and (iii) immediately after such
transaction, the surviving person holds all Permits required for operation of
the business of, and such entity is controlled by a person or entity (or has
retained a person or entity which is) experienced in, operating broadcast
properties otherwise holds all Permits to operate its business.
Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor or all of its assets to an entity which
is not a Subsidiary Guarantor, which transaction is otherwise in compliance with
the Indenture (including, without limitation, the provisions of the covenant
Limitations on Sale of Asset, and Subsidiary Stock), such Subsidiary Guarantor
will be deemed released from its obligations under its Guarantee of the Notes;
PROVIDED, HOWEVER, that any such termination shall occur only to the extent that
all obligations of such Subsidiary Guarantor under all of its guarantees of, and
under all of its pledges of assets or other security interests which secure, any
Indebtedness of the Obligors or any other Subsidiary shall also terminate upon
such release, sale or transfer.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture will prohibit the Obligors and their Subsidiaries from being
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.
REPORTS
The Indenture will provide that whether or not the Obligors are subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Obligors shall deliver to the Trustee and, to each Holder, within 15 days after
it is or would have been (if it were subject to such reporting obligations)
required to file such with the Commission, annual and quarterly financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the Commission, if the Obligors were subject to
the requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Obligors' certified
independent public accountants as such would be required in such reports to the
Commission, and, in each case, together with a management's discussion and
analysis of financial condition and results of operations which would be so
required and, to the extent permitted by the Exchange Act or the Commission (if
it were subject to such reporting obligations), file with the Commission the
annual, quarterly and other reports which it is or would have been required to
file with the Commission.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Obligors to pay any installment of interest on the Notes as and when the same
becomes due and payable and the continuance of any such
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failure for 30 days, (ii) the failure by the Obligors to pay all or any part of
the principal, or premium, if any, on the Notes when and as the same becomes due
and payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price, or otherwise, (iii) the failure by the Obligors or any
Subsidiary to observe or perform any other covenant or agreement contained in
the Notes or the Indenture and, subject to certain exceptions, the continuance
of such failure for a period of 30 days after written notice is given to the
Obligors by the Trustee or to the Obligors and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Notes outstanding, (iv) certain
events of bankruptcy, insolvency or reorganization in respect of the Obligors or
any of their Significant Subsidiaries, (v) a default in any issue of
Indebtedness of the Obligors or any of their Subsidiaries with an aggregate
principal amount in excess of $ million (a) resulting from the failure to pay
principal at maturity or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity, and (vi) final
unsatisfied judgments not covered by insurance aggregating in excess of $
million, at any one time rendered against the Obligors or any of their
Subsidiaries and not stayed, bonded or discharged within 60 days. The Indenture
provides that if a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such Default, give to the Holders notice of such
Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Obligor or any
Significant Subsidiary,) then in every such case, unless the principal of all of
the Notes shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Notes at the time
outstanding, by notice in writing to the Obligor (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare all principal, determined as
set forth below, and accrued interest thereon to be due and payable immediately;
provided, however, that if any Senior Debt is outstanding pursuant to the New
Credit Facility upon a declaration of such acceleration, such principal and
interest shall be due and payable upon the earlier of (x) the third Business Day
after the sending to the Obligors and the Representative of such written notice,
unless such Event of Default is cured or waived prior to such date and (y) the
date of acceleration of any Senior Debt under the New Credit Facility. In the
event a declaration of acceleration resulting from an Event of Default described
in clause (v) above has occurred and is continuing, such declaration of
acceleration shall be automatically annulled if such default is cured or waived
or the holders of the Indebtedness which is the subject of such default have
rescinded their declaration of acceleration in respect of such Indebtedness
within five days thereof and the Trustee has received written notice or such
cure, waiver or rescission and no other Event of Default described in clause (v)
above has occurred that has not been cured or waived within five days of the
declaration of such acceleration in respect of such Indebtedness. If an Event of
Default specified in clause (iv), above, relating to the Obligor or any
Significant Subsidiary occurs, all principal and accrued interest thereon will
be immediately due and payable on all outstanding Notes without any declaration
or other act on the part of Trustee or the Holders. The Holders of a majority in
aggregate principal amount of Notes at the time outstanding, generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest on the
Notes which have become due solely by such acceleration and except on default
with respect to any provision requiring a supermajority approval to amend, which
default may only be waived by such a supermajority, and have been cured or
waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except on
default with respect to any provision requiring a supermajority approved to
amend, which default may only be waived by such a supermajority, and except a
default in the payment of principal of or interest on any Note not yet cured or
a default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Obligors may, at their option and at any
time within one year of the Stated Maturity of the Notes, elect to have their
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Obligors shall be deemed to have paid and discharged the entire indebtedness
represented, and the Indenture shall cease to be of further effect as to all
outstanding Notes and Guarantees, except as to (i) rights of Holders to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due from the trust funds; (ii) the Obligors'
obligations with respect to such Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payment and money for security payments
held in trust; (iii) the rights, powers, trust, duties, and immunities of the
Trustee, and the Obligors' obligations in connection therewith; and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Obligors may, at
their option and at any time, elect to have the obligations of the Obligors and
the Guarantors released with respect to certain covenants that are described in
the Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Obligors must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, U.S. legal tender, U.S. Government Obligors or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest on such Notes, and the Holders of
Notes must have a valid, perfected, exclusive security interest in such trust;
(ii) in the case of the Legal Defeasance, the Obligors shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
Trustee confirming that (A) the Obligors has received from, or there has been
published by the Internal Revenue Service, a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of such Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Obligors shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of such Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit; (v) such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under the Indenture or any other material
agreement or instrument to which the Obligors or any of their Subsidiaries is a
party or by which the Obligors or any of their Subsidiaries is bound; (vi) the
Obligors shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Obligors with the intent of preferring the
holders of such Notes over any other creditors of the Obligors or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Obligors or others; and (vii) the Obligors shall have delivered to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
the conditions precedent provided for in, in the case of the officers'
certificate, (i) through (vi) and, in the case of the opinion of counsel,
clauses (i), (with respect to the validity and perfection of the security
interest) (ii), (iii) and (v) of this paragraph have been complied with.
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AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Obligors, the
Guarantors and the Trustee to enter into a supplemental indenture for certain
limited purposes without the consent of the Holders. With the consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
at the time outstanding, the Obligors, the Guarantors and the Trustee are
permitted to amend or supplement the Indenture or any supplemental indenture or
modify the rights of the Holders; provided that no such modification may without
the consent of holders of at least 66 2/3% in aggregate principal amount of
Notes at the time outstanding, e.g., modify the provisions (including the
defined terms used therein) of the covenant "Repurchase of Notes at the Option
of the Holder upon a Change of Control" in a manner adverse to the Holders and
provided, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity on any Note, or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price or
alter the provisions (including the defined terms used therein) regarding the
right of the Obligors to redeem the Notes or the provisions (including the
defined terms used therein) of the "Repurchase of Notes at the Option of the
Holder Upon a Change of Control" covenant in a manner adverse to the Holders, or
(ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture, or (iii) modify any of the
waiver provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Note affected thereby.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Obligor, the
Guarantors or any successor entity shall have any personal liability in respect
of the obligations of the Obligor or the Guarantors under the Indenture or the
Notes by reason of his or its status as such stockholder, employee, officer or
director, except to the extent such person is an Issuer or Guarantor, except to
the extent such is an Obligor or a Guarantor.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the
Obligors, including by designation, or is merged or consolidated into or with
either of the Obligors or one of their Subsidiaries.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"ADJUSTED CONSOLIDATED EBITDA" means Consolidated EBITDA minus 100% of the
amount of any writedowns, writeoffs, or negative extraordinary charges not
otherwise reflected in Consolidated EBITDA during such period.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with either of the
Obligors. For purposes of this definition, the term "control" means the power to
direct the management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, PROVIDED, THAT, a Beneficial Owner of 25% or more of the total
voting power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
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"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CASH EQUIVALENT" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500 million and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition.
"CONSOLIDATED COVERAGE RATIO" of any person on any date of determination
(the "Transaction Date") means the ratio, on a PRO FORMA basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; PROVIDED, that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of such Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a PRO FORMA basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless such
person or any of its Subsidiaries is a party to an Interest Swap or Hedging
Obligation (which shall remain in effect for the 12-month period immediately
following the Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether higher or lower)
shall be used.
"CONSOLIDATED EBITDA" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) Consolidated income tax expense,
(ii) Consolidated depreciation and amortization expense, provided that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the equity interest
of the Obligors in such Subsidiary, (iii) Consolidated Fixed Charges, and less
the amount of all cash payments made by such person or any of its Subsidiaries
during such period to the extent such payments relate to non-cash charges that
were added back in determining Consolidated EBITDA for such period or any prior
period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized,
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paid, accrued, or scheduled to be paid or accrued (including, in accordance with
the following sentence, interest attributable to Capitalized Lease Obligations)
of such person and its Consolidated Subsidiaries during such period, including
(i) original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations, and
(iii) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period, (b) one-third of Consolidated Rental Expense for such period
attributable to operating leases of such person and its Consolidated
Subsidiaries, and (c) the amount of dividends accrued or payable (or guaranteed)
by such person or any of its Consolidated Subsidiaries in respect of Preferred
Stock (other than by Subsidiaries of such person to such person or such person's
wholly owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Obligors to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
person or a Subsidiary of such person of an obligation of another person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), (b) the net income, if positive, of any person, other
than a wholly owned Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's PRO RATA share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary.
"CONSOLIDATED NET WORTH" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"CONSOLIDATED RENTAL EXPENSE" of any person means the aggregate rental
obligations of such person and its Consolidated Subsidiaries (not including
taxes, insurance, maintenance and similar expenses that the lessee is obligated
to pay under the terms of the relevant leases), determined on a Consolidated
basis in conformity with GAAP, payable in respect of such period under leases of
real or personal property (net of income from subleases thereof, not including
taxes, insurance, maintenance and similar expenses that the sublessee is
obligated to pay under the terms of such sublease), whether or not such
obligations are reflected as liabilities or commitments on a Consolidated
balance sheet of such Person and its Subsidiaries or in the notes thereto,
excluding, however, in any event, that portion of Consolidated Fixed Charges of
such person representing payments by such person or any of its Consolidated
Subsidiaries in respect of Capitalized Lease Obligations.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
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"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any person, Equity Interests of such person that, by its terms or by
the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes and (b) with respect to any
Subsidiary of such person (including with respect to any Subsidiary of the
Obligors), any Equity Interests other than any common equity with no preference,
privileges, or redemption or repayment provisions.
"EQUITY INTEREST" of any person means any shares, interests, participations
or other equivalents (however designated) in such person's equity, and shall in
any event include any Capital Stock issued by, or partnership interests in, such
person.
"EVENT OF LOSS" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCLUDED PERSON" means Zell/Chilmark Fund L.P. and all Related Persons of
such person.
"EXEMPTED AFFILIATE TRANSACTION" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of the applicable Obligor, (b) dividends
permitted under the terms of the covenant discussed above under "Limitation on
Restricted Payments" above and payable, in form and amount, on a pro rata basis
to all holders of Common Stock of Jacor, and (c) transactions solely between the
Obligors and any of their wholly owned Subsidiaries or solely among wholly owned
Subsidiaries of the Obligors.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"INDEBTEDNESS" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such any person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the kind described
in the preceding clause (a) or (b) that such person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person and all obligations to purchase, redeem or acquire any Equity
Interests and (d) any and all deferrals, renewals, extensions, refinancing and
refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties, and (i) all Disqualified Capital Stock of such Person (valued at
the greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Disqualified Capital Stock, such Fair Market Value to be
determined in good faith by the board of directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
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"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits arising in the
ordinary course of business); (c) other than guarantees of Indebtedness of
either of the Obligors or any Guarantor to the extent permitted by the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock," the entering into by such person of any guarantee of, or other credit
support or contingent obligation with respect to, Indebtedness or other
liability of such other person; and (d) the making of any capital contribution
by such person to such other person.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
either of the Obligors or a Guarantor. as applicable, that is subordinated in
right of payment to Senior Debt at least to the same extent as the Notes or the
Guarantees, as applicable, and has no scheduled installment of principal due, by
redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Notes; PROVIDED, that in the case of subordination in respect of
Senior Debt under the New Credit Facility, "Junior Security" shall mean any
Qualified Capital Stock and any Indebtedness of the Obligors or the Guarantor,
as applicable, that (i) has a final maturity date occurring after the final
maturity date of, all Senior Debt outstanding under the New Credit Facility on
the date of issuance of such Qualified Capital Stock or Indebtedness, (ii) is
unsecured, (iii) has an Average Life longer than the security for which such
Qualified Capital Stock or Indebtedness is being exchanged, and (iv) by their
terms or by law are subordinated to Senior Debt outstanding under the New Credit
Facility on the date of issuance of such Qualified Capital Stock or Indebtedness
at least to the same extent as the Notes.
"NET CASH PROCEEDS" means the aggregate amount of cash or Cash Equivalents
received by the Obligors in the case of a sale of Qualified Capital Stock and by
the Obligors and their Subsidiaries in respect of an Asset Sale plus, in the
case of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the applicable Obligor that were issued for cash on or
after the Issue Date, the amount of cash originally received by the applicable
Obligor upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and (in the case of Asset Sales, reasonable and
customary), expenses (including, without limitation, the fees and expenses of
legal counsel and investment banking fees and expenses) incurred in connection
with such Asset Sale or sale of Qualified Capital Stock, and, in the case of an
Asset Sale only, less the amount (estimated reasonably and in good faith by the
applicable Obligor) of income, franchise, sales and other applicable taxes
required to be paid by the applicable Obligor or any of its respective
Subsidiaries in connection with such Asset Sale.
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"NEW CREDIT FACILITY" means the credit agreement dated by and
among the , certain of its subsidiaries, certain financial
institutions and , as agent, providing for (A) an aggregate $
million term loan facility, and (B) an aggregate $ million revolving credit
facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time whether or not with
the same agent, trustee, representative lenders or holders, and, subject to the
proviso to the next succeeding sentence, irrespective of any changes in the
terms and conditions thereof. Without limiting the generality of the foregoing,
the term "New Credit Facility" shall include agreements in respect of Interest
Swap and Hedging Obligations with lenders party to the New Credit Facility and
shall also include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any New Credit Facility and all
refundings, refinancings and replacements of any New Credit Facility, including
any agreement (i) extending the maturity of any Indebtedness incurred thereunder
or contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Obligors
and their Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder, PROVIDED that on the date such Indebtedness is incurred it
would not be prohibited by clause (g) of the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock," or (iv) otherwise
altering the terms and conditions thereof in a manner not prohibited by the
terms hereof.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by the Obligors or any Guarantor under the terms of the
Notes or the Indenture.
"PERMITTED INDEBTEDNESS" means any of the following:
(a) The Obligors and their Subsidiaries may incur Indebtedness solely in
respect of bankers acceptances, letters of credit and performance bonds (to
the extent that such incurrence does not result in the incurrence of any
obligation to repay any obligation relating to borrowed money of others),
all in the ordinary course of business in accordance with customary industry
practices, in amounts and for the purposes customary in the Obligors'
industry; PROVIDED,that the aggregate principal amount outstanding of such
Indebtedness (including any Indebtedness issued to refinance, refund or
replace such Indebtedness) shall at no time exceed $ ; and
(b) The Obligors may incur Indebtedness to any wholly owned Subsidiary
Guarantor, and any wholly owned Subsidiary Guarantor may incur Indebtedness
to any other wholly owned Subsidiary Guarantor or to the Obligors; PROVIDED,
that, in the case of Indebtedness of the Obligor, such obligations shall be
unsecured and subordinated in all respects to the Obligors' obligations
pursuant to the Notes and the date of any event that causes such Subsidiary
Guarantor to no longer be a wholly owned Subsidiary shall be an Incurrence
Date.
"PERMITTED INVESTMENT" means (a) Investments in any of the Notes; (b) Cash
Equivalents; (c) intercompany notes to the extent permitted under clause (b) of
the definition of "Permitted Indebtedness"; and (d) loans, advances or
investments in existence on the Issue Date.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Obligors in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Obligors in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Obligors or any of their Subsidiaries) or interfere with
the
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ordinary conduct of the business of the Obligors or any of their Subsidiaries;
(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security legislation; (h) Liens securing Indebtedness of a Person
existing at the time such person becomes a Subsidiary or is merged with or into
the Obligors or a Subsidiary or Liens securing Indebtedness incurred in
connection with an Acquisition, PROVIDED that such Liens were in existence prior
to the date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any other assets; (i) leases or
subleases granted to other persons in the ordinary course of business not
materially interfering with the conduct of the business of the Obligors or any
of their Subsidiaries or materially detracting from the value of the relative
assets of the Obligors or any of their Subsidiaries; (j) Liens arising from
precautionary Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Obligors or any of their Subsidiaries in
the ordinary course of business; and (k) Liens securing Refinancing Indebtedness
incurred to refinance any Indebtedness that was previously so secured in a
manner no more adverse to the Holders of the Notes than the terms of the Liens
securing such refinanced Indebtedness provided that the Indebtedness secured is
not increased and the lien is not extended to any additional assets of property.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Obligors that is
not Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Obligors
issued on or after the Issue Date with the Net Cash Proceeds received by the
Obligors from the substantially concurrent sale of Qualified Capital Stock or
any exchange of Qualified Capital Stock for any Capital Stock or Indebtedness
issued on or after the Issue Date.
"REFERENCE PERIOD" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
PROVIDED, that (A) such Refinancing Indebtedness of any Subsidiary of the
Obligors shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness
shall (x) not have an Average Life shorter than the Indebtedness or Disqualified
Capital Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Notes than was the Indebtedness or Disqualified Capital Stock to
be refinanced and (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption payment) scheduled to come due earlier than the
scheduled maturity of any installment of principal of the Indebtedness or
Disqualified Capital Stock to be so refinanced which was scheduled to come due
prior to the Stated Maturity.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by the Obligors and their Subsidiaries as of the Issue Date and any
and all businesses that in the good faith judgment of the Board of Directors of
the Obligors are materially related businesses.
"RELATED PERSON" means any person who controls, is controlled by or is under
common control with an Excluded Person; PROVIDED that for purposes of this
definition "control" means the beneficial ownership of more than 50% of the
total voting power of a person normally entitled to vote in the election of
directors, managers or trustees, as applicable of a person.
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"RESTRICTED INVESTMENT" means, in one or a series of related transactions,
any Investment, other than investments in Cash Equivalents and other Permitted
Investments; PROVIDED, HOWEVER, that a merger of another person with or into an
Obligor or a Subsidiary Guarantor shall not be deemed to be a Restricted
Investment so long as the surviving entity is an Obligor or a direct wholly
owned Subsidiary Guarantor.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or any Subsidiary or parent of such person,
(c) other than with the proceeds from the substantially concurrent sale of, or
in exchange for, Refinancing Indebtedness any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such person; PROVIDED, HOWEVER, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Capital Stock of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer; (ii) any dividend, distribution or other
payment to an Obligor, or to any of their wholly owned Subsidiary Guarantors, by
any of the Subsidiaries of the Obligors; or (iii) loans or advances to any
Subsidiary Guarantor the proceeds of which are used by such Subsidiary Guarantor
in a Related Business activity of such Subsidiary Guarantor.
"SENIOR DEBT" of the Obligor or any Guarantor means Indebtedness (including
any monetary obligation in respect of the New Credit Facility, and interest,
whether or not allowable, accruing on Indebtedness incurred pursuant to the New
Credit Facility after the filing of a petition initiating any proceeding under
any bankruptcy, insolvency or similar law) of the Obligors or such Guarantor
arising under the New Credit Facility or that, by the terms of the instrument
creating or evidencing such Indebtedness, is expressly designated Senior Debt
and made senior in right of payment to the Notes or the applicable Guarantee;
provided, that in no event shall Senior Debt include (a) Indebtedness to any
Subsidiary of the Obligors or any officer, director or employee of the Obligors
or any Subsidiary of the Obligors, (b) Indebtedness incurred in violation of the
terms of the Indenture, (c) Indebtedness to trade creditors, (d) Disqualified
Capital Stock, (e) Capitalized Lease Obligations, and (f) any liability for
taxes owed or owing by the Obligors or such Guarantor.
"SIGNIFICANT SUBSIDIARY" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.
"STATED MATURITY," when used with respect to any Note, means ,
2006.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Obligors or a
Guarantor that is subordinated in right of payment to the Notes or such
Guarantee, as applicable, in any respect or has a stated maturity on or after
the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest, or (iii) a
partnership in which such person or a Subsidiary of such person is, at the time,
a general partner and in which such person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests of
which are owned by an Obligor or one or more Wholly-owned Subsidiaries of an
Obligor.
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DESCRIPTION OF OTHER INDEBTEDNESS
The summaries contained herein of certain of the indebtedness of the Company
do not purport to be complete and are qualified in their entirety by reference
to the provisions of the various agreements and indentures related thereto,
which are filed as exhibits to the Registration Statement of which this
Prospectus is a part and to which reference is hereby made.
EXISTING CREDIT FACILITY
The Existing Credit Facility is provided by a syndicate of banks pursuant to
a credit agreement. The Existing Credit Facility provides up to $300.0 million
of loans to Jacor in two components: (i) a $190.0 million revolving credit
facility with mandatory quarterly commitment reductions beginning on March 31,
1997 and a final maturity date of December 31, 2003; and (ii) a $110.0 million
revolving portion with scheduled quarterly reductions beginning on March 31,
1998 and ending on December 31, 2003.
Borrowings under the Existing Credit Facility bear interest at rates that
fluctuate with the bank base rate and the Eurodollar rate.
The loans under the Existing Credit Facility are guaranteed by each of
Jacor's direct and indirect subsidiaries other than certain immaterial
subsidiaries. Jacor's obligations with respect to the Existing Credit Facility
and each guarantor's obligations with respect to the related guaranty are
secured by substantially all of their respective assets, including, without
limitation, inventory, equipment, accounts receivable, intercompany debt and, in
the case of Jacor's subsidiaries, capital stock.
The Existing Credit Facility contains covenants and provisions that
restrict, among other things, Jacor's ability to: (i) incur additional
indebtedness; (ii) incur liens on its property; (iii) make investments and
advances; (iv) enter into guarantees and other contingent obligations; (v) merge
or consolidate with or acquire another person or engage in other fundamental
changes; (vi) engage in certain sales of assets; (vii) make capital
expenditures; (viii) enter into leases; (ix) engage in certain transactions with
affiliates; and (x) make restricted junior payments. The Existing Credit
Facility also requires the satisfaction of certain financial performance
criteria (including a consolidated interest coverage ratio, a leverage-to-EBITDA
ratio and consolidated cash flow available for fixed charges ratio) and the
repayment of loans under the Existing Credit Facility with proceeds of certain
sales of assets and debt or equity issuances, and with 50% of Jacor's Excess
Cash Flow (as defined in the Existing Credit Facility).
The Existing Credit Facility provides for certain customary events of
default, including a Change of Control (as defined in the Existing Credit
Facility).
NEW CREDIT FACILITY
Jacor is currently negotiating with a syndicate of banks and other financial
institutions to secure the New Credit Facility. Jacor anticipates that the New
Credit Facility will provide availability of up to $600.0 million of loans to
Jacor in three components: (i) a revolving credit facility of up to $200.0
million with mandatory quarterly commitment reductions beginning on September
30, 1998 and a final maturity date of June 30, 2003; (ii) a term loan of up to
$300.0 million with scheduled quarterly reductions beginning on September 30,
1997 and a final maturity date of June 30, 2003; and (iii) a tranche B term loan
of up to $100.0 million with scheduled quarterly reductions beginning on
September 30, 1999 and a final maturity date of September 30, 2003. Jacor may
elect to use the New Credit Facility to purchase Notes tendered pursuant to a
Change of Control Offer.
Jacor anticipates that borrowings under the New Credit Facility will bear
interest at rates that fluctuate with a bank base rate and/or the Eurodollar
rate.
Jacor anticipates that the loans under the New Credit Facility will be
guaranteed by each of the Company's direct and indirect subsidiaries other than
certain immaterial subsidiaries. It is anticipated that the Company's
obligations with respect to the New Credit Facility and each guarantor's
obligations with respect to the related guaranty will be secured by
substantially all of their respective assets, including, without limitation,
inventory, equipment, accounts receivable, intercompany debt and, in the case of
the Company's subsidiaries, capital stock.
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Jacor expects that the New Credit Facility will contain covenants and
provisions that restrict, among other things, the Company's ability to: (i)
incur additional indebtedness; (ii) incur liens on its property; (iii) make
investments and advances; (iv) enter into guarantees and other contingent
obligations; (v) merge or consolidate with or acquire another person or engage
in other fundamental changes; (vi) engage in certain sales of assets; (vii) make
capital expenditures; (viii) enter into leases; (ix) engage in certain
transactions with affiliates; and (x) make restricted junior payments. The New
Credit Facility also will require the satisfaction of certain financial
performance criteria (including a consolidated interest coverage ratio, a
leverage-to-EBITDA ratio and fixed charge coverage ratio) and the repayment of
loans under the New Credit Facility with proceeds of certain sales of assets and
debt or equity issuances, and with 50% of the Company's Consolidated Excess Cash
Flow (as defined in the New Credit Facility).
The New Credit Facility will provide for certain customary events of
default, including a Change of Control (as defined in the New Credit Facility).
THE CITICASTERS NOTES DUE 2004
The Notes due 2004 are general unsecured obligations of Citicasters and are
subordinated in rights of payment to all Senior Indebtedness (as defined in the
Citicasters Note Indenture). The Citicasters Notes were issued pursuant to an
indenture between Citicasters and Shawmut Bank Connecticut, National
Association, as Trustee (the "Citicasters Note Indenture").
The current aggregate outstanding principal amount of the Citicasters Notes
is $122.4 million and the Citicasters Notes mature on February 15, 2004.
Interest on the Citicasters Notes accrues at the rate of 9 3/4% per annum.
The Citicasters Notes are not redeemable at Citicasters' option before
February 15, 1999 (other than in connection with certain public offerings of
common stock by Citicasters, as described below). Thereafter, the Citicasters
Notes are subject to redemption at the option of Citicasters, at redemption
prices declining from 104.875% of the principal amount for the twelve months
commencing February 15, 1999 to 100.00% on and after February 15, 2002, plus, in
each case, accrued and unpaid interest thereon to the applicable redemption
date.
In addition, at any time on or before February 15, 1999, (i) up to 25% of
the aggregate principal amount of the Citicasters Notes may be redeemed at a
redemption price of 108.75% of the principal amount thereof, plus accrued and
unpaid interest, out of the net proceeds of public offerings of primary shares
of common stock of Citicasters, and after giving effect to such redemption at
least $100.0 million in Citicasters Notes remains outstanding and (ii) upon a
Change of Control (as defined in the Citicasters Note Indenture), the
Citicasters Notes can be redeemed provided at least $100.0 million of
Citicasters Notes remain outstanding and such redemption occurs within 180 days
of the date of a Change of Control. In addition, prior to December 31, 1996,
Citicasters can redeem the Citicasters Notes from the proceeds of Asset Sales
(as defined in the Citicasters Note Indenture) subject to certain restrictions.
The Citicasters Note Indenture contains certain covenants which impose
certain limitations and restrictions on the ability of Citicasters to incur
additional indebtedness, pay dividends or make other distributions, make certain
loans and investments, apply the proceeds of Asset Sales (and use the proceeds
thereof), create liens, enter into certain transactions with affiliates, merge,
consolidate or transfer substantially all its assets and make investments in
unrestricted subsidiaries.
THE LYONS DUE 2011
Concurrently with this Offering, Jacor is conducting the LYONs Offering
whereby Jacor intends to issue and sell LYONs in the aggregate principal amount
at maturity of $202.0 million (excluding $ aggregate principal amount
at maturity subject to the over-allotment option) of LYONs due April , 2011.
Each LYON will have an Issue Price of $ and a principal amount at maturity
of $1,000.
Each LYON will be convertible, at the option of the Holder, at any time on
or prior to maturity, unless previously redeemed or otherwise purchased, into
Common Stock at a conversion rate of shares per LYON. The conversion rate
will not be adjusted for accrued original issue discount, but will be subject to
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adjustment upon the occurrence of certain events affecting the Common Stock.
Upon conversion, the Holder will not receive any cash payment representing
accrued original issue discount; such accrued original issue discount will be
deemed paid by the Common Stock received by the Holder on conversion.
The LYONs will not be redeemable by Jacor prior to April , 2001.
Thereafter, the LYONs are redeemable for cash at any time at the option of
Jacor, in whole or in part, at redemption prices equal to the issue price plus
accrued original issue discount to the date of redemption.
The LYONs will be purchased by Jacor, at the option of the Holder, on April
, 2001 and April , 2006, for a Purchase Price of $ and $
(representing issue price plus accrued original issue discount to each date),
respectively, representing a % yield per annum to the Holder on such date,
computed on a semiannual bond equivalent basis. Subject to certain exceptions,
Jacor, at its option, may elect to pay the purchase price on any such purchase
date in cash or Common Stock, or any combination thereof. In addition, as of 35
business days after the occurrence of a change in control of Jacor occurring on
or prior to April , 2001, each LYON will be purchased for cash, by Jacor, at
the option of the Holder, for a change in control purchase price equal to the
issue price plus accrued original issue discount to the change in control
purchase date set for such purchase. The change in control purchase feature of
the LYONs may in certain circumstances have an antitakeover effect.
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UNDERWRITING
Subject to certain conditions contained in the Underwriting Agreement,
Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter"), has
agreed to purchase from the Obligors an aggregate of $50.0 million principal
amount of Notes.
The Underwriting Agreement provides that the obligations of the Underwriter
to purchase and accept delivery of the Notes offered hereby are subject to the
approval of certain legal matters by counsel and to certain other conditions.
The nature of the Underwriter's obligations is such that the Underwriter is
committed to purchase all of the Notes if any are purchased by them.
The Obligors have agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the Underwriter may be required to make in respect
thereof.
The Underwriter proposes to offer the Notes to the public initially at the
price to the public set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not to exceed $ per share.
The Underwriter may allow, and such dealers may reallow, discounts not in excess
of $ per share to the Underwriter and certain other dealers. After the
initial public offering of the Notes, the offering price and other selling terms
may be changed by the Underwriter.
The Underwriter has provided and is currently retained to provide investment
banking services to Jacor for which it has received and is entitled to receive
usual and customary fees. The Underwriter is also acting as a representative in
connection with the 1996 Stock Offering and will receive usual and customary
fees for such services.
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1995 and 1994 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1995, included in this registration statement,
have been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The consolidated balance sheets of Citicasters Inc. as of December 31, 1995
and 1994 and the consolidated statements of operations, changes in shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1995 appearing in this registration statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon (which
contains an explanatory paragraph with respect to Citicasters Inc.'s emergence
from bankruptcy and subsequent adoption of "fresh-start reporting" as of
December 31, 1993, as more fully described in Note B to the consolidated
financial statements), appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of Noble Broadcast Group, Inc. as of
December 31, 1995 and December 25, 1994 and for each of the three years in the
period ended December 31, 1995, included in this Prospectus, have been so
included in reliance on the report (which includes an explanatory paragraph
relating to Jacor's agreement to purchase Noble Broadcast Group, Inc. as
described in Note 2 to the consolidated financial statements) of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
LEGAL MATTERS
The authorization and issuance of the Notes offered hereby will be passed
upon for Jacor by Graydon, Head & Ritchey, Cincinnati, Ohio. Certain legal
matters in connection with this Offering will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Jacor with the Securities and
Exchange Commission (the "Commission") are incorporated herein by reference and
are made a part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995;
(b) Current Reports on Form 8-K dated February 12, 1996, February 27, 1996,
March 6, 1996, as amended, and March 27, 1996 as amended; and
(c) Jacor's Form 8-A Registration Statement dated January 12, 1993.
All documents filed by Jacor with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this Prospectus and prior to the termination
of the offering of the securities made hereby shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in any other subsequently filed document that is or is
deemed to be incorporated by reference herein) modifies or supersedes such
previous statement. Any statement so modified or superseded shall not be deemed
to constitute a part of this Prospectus except as so modified or superseded.
This Prospectus incorporates by reference certain documents relating to
Jacor which are not delivered herewith. These documents (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
herein) are available, without charge, upon oral or written request by any
person to whom this Prospectus is delivered. Such requests should be directed to
Jacor Communications, Inc., 1300 PNC Center, 201 East Fifth Street, Cincinnati,
Ohio 45202, Attention: Jon M. Berry, Senior Vice President and Treasurer,
Telephone Number (513) 621-1300.
AVAILABLE INFORMATION
Jacor is subject to the informational requirements of the Exchange Act, and
accordingly files reports, proxy statements and other information with the
Commission. Jacor has filed a Registration Statement on Form S-3 together with
all amendments and exhibits thereto with the Commission under the Securities Act
of 1993 (the "Securities Act") with respect to the Offering. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. The Registration Statement, including any amendments,
schedules and exhibits thereto, is available for inspection and copying as set
forth above. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein include all material terms of such
contracts or other documents but are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. Such reports, proxy statements and other
information filed with the Commission are available for inspection and copying
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such documents may also be
obtained from the Public Reference Room of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, reports and other information concerning Jacor are available for
inspection and copying at the offices of The Nasdaq Stock Market at 1735 K
Street, N.W., Washington, D.C. 20006-1506.
80
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Jacor Communications, Inc. and Subsidiaries
Report of Independent Accountants................................................ F-2
Consolidated Balance Sheets at December 31, 1994 and 1995........................ F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994
and 1995........................................................................ F-4
Consolidated Statements of Shareholders' Equity for the years ended December 31,
1993, 1994 and 1995............................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994
and 1995........................................................................ F-6
Notes to Consolidated Financial Statements....................................... F-7
Citicasters Inc. and Subsidiaries
Report of Independent Auditors................................................... F-16
Balance Sheets at December 31, 1994 and 1995..................................... F-17
Statements of Operations for the years ended December 31, 1993, 1994 and 1995.... F-18
Statements of Changes in Shareholders' Equity for the years ended December 31,
1993, 1994 and 1995............................................................. F-19
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995.... F-20
Notes to Financial Statements.................................................... F-22
Noble Broadcast Group, Inc. and Subsidiaries
Report of Independent Accountants................................................ F-31
Consolidated Balance Sheet at December 25, 1994 and December 31, 1995............ F-32
Consolidated Statement of Operations for the years ended December 26, 1993,
December 25, 1994 and December 31, 1995......................................... F-33
Consolidated Statement of Changes in Stockholders' Deficit for the years ended
December 26, 1993, December 25, 1994 and December 31, 1995...................... F-34
Consolidated Statement of Cash Flows for the years ended December 26, 1993,
December 25, 1994 and December 31, 1995......................................... F-35
Notes to Consolidated Financial Statements....................................... F-36
</TABLE>
F-1
<PAGE>
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, 1994 and 1995, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. 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, 1994 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
February 12, 1996 except for Note 14,
as to which the date
is March 13, 1996
F-2
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
ASSETS 1994 1995
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 26,974,838 $ 7,436,779
Accounts receivable, less allowance for doubtful accounts of $1,348,000 in
1994 and $1,606,000 in 1995................................................ 24,500,652 25,262,410
Prepaid expenses............................................................. 3,419,719 2,491,140
Other current assets......................................................... 1,230,582 1,425,000
-------------- --------------
Total current assets..................................................... 56,125,791 36,615,329
Property and equipment....................................................... 22,628,841 30,801,225
Intangible assets............................................................ 89,543,301 127,157,762
Other assets................................................................. 5,281,422 14,264,775
-------------- --------------
Total assets............................................................. $ 173,579,355 $ 208,839,091
-------------- --------------
-------------- --------------
LIABILITIES
Current liabilities:
Accounts payable............................................................. $ 2,723,717 $ 2,312,691
Accrued payroll.............................................................. 3,274,902 3,177,945
Accrued federal, state and local income tax.................................. 2,092,616 3,225,585
Other current liabilities.................................................... 3,397,117 3,463,344
-------------- --------------
Total current liabilities................................................ 11,488,352 12,179,565
Long-term debt................................................................... -- 45,500,000
Other liabilities................................................................ 3,869,567 3,468,995
Deferred tax liability........................................................... 9,177,456 8,617,456
-------------- --------------
Total liabilities........................................................ 24,535,375 69,766,016
-------------- --------------
Commitments and contingencies....................................................
SHAREHOLDERS' EQUITY
Preferred stock, authorized and unissued 4,000,000 shares........................ -- --
Common stock, no par value, $0.10 per share stated value; authorized 100,000,000
shares, issued and outstanding shares: 19,590,373 in 1994 and 18,157,209 in
1995............................................................................ 1,959,038 1,815,721
Additional paid-in capital....................................................... 137,404,815 116,614,230
Common stock warrants............................................................ 390,167 388,055
Retained earnings................................................................ 9,289,960 20,255,069
-------------- --------------
Total shareholders' equity............................................... 149,043,980 139,073,075
-------------- --------------
Total liabilities and shareholders' equity............................... $ 173,579,355 $ 208,839,091
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Broadcast revenue............................................... $ 100,745,089 $ 119,635,308 $ 133,103,137
Less agency commissions..................................... 10,812,889 12,624,860 14,212,306
-------------- -------------- --------------
Net revenue............................................... 89,932,200 107,010,448 118,890,831
Broadcast operating expenses.................................... 69,520,397 80,468,077 87,290,409
Depreciation and amortization................................... 10,222,844 9,698,030 9,482,883
Corporate general and administrative expenses................... 3,563,800 3,361,263 3,500,518
-------------- -------------- --------------
Operating income.......................................... 6,625,159 13,483,078 18,617,021
Interest expense................................................ (2,734,677) (533,862) (1,443,836)
Interest income................................................. 258,857 1,218,179 1,259,696
Other expense, net.............................................. (10,895) (2,079) (167,772)
-------------- -------------- --------------
Income before income taxes................................ 4,138,444 14,165,316 18,265,109
Income tax expense.............................................. (2,700,000) (6,313,800) (7,300,000)
-------------- -------------- --------------
Net income................................................ $ 1,438,444 $ 7,851,516 $ 10,965,109
-------------- -------------- --------------
-------------- -------------- --------------
Net income per common share............................... $ 0.10 $ 0.37 $ 0.52
-------------- -------------- --------------
-------------- -------------- --------------
Number of common shares used in per share calculation........... 14,504,527 21,409,177 20,912,705
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL COMMON
STATED PAID-IN STOCK RETAINED
SHARES VALUE CAPITAL WARRANTS EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1993............. 9,092,084 $ 909,208 $49,568,738 $ 402,805 $ 0 $50,880,751
Issuance of common stock:
Public offering................. 5,462,500 546,250 59,390,937 59,937,187
Sale to Majority Shareholder.... 3,484,321 348,432 19,651,571 20,000,003
1993 rights offering............ 345,476 34,548 1,703,287 1,737,835
Directors' subscription......... 80,000 8,000 451,200 459,200
Purchase of KAZY(FM)............ 964,006 96,401 5,436,993 5,533,394
Exercise of stock options....... 52,886 5,289 275,914 281,203
Other........................... 18,539 1,854 155,728 (12,408) 145,174
Net income............................ 1,438,444 1,438,444
--------- --------- ----------- ----------- ---------- -----------
Balances, December 31, 1993........... 19,499,812 1,949,982 136,634,368 390,397 1,438,444 140,413,191
Exercise of stock options............. 89,310 8,931 760,215 769,146
Other................................. 1,251 125 10,232 (230) 10,127
Net income............................ 7,851,516 7,851,516
--------- --------- ----------- ----------- ---------- -----------
Balances, December 31, 1994........... 19,590,373 1,959,038 137,404,815 390,167 9,289,960 149,043,980
Purchase and retirement of stock...... (1,515,300) (151,530) (21,542,302) (21,693,832)
Purchase of stock by employee stock
purchase plan....................... 43,785 4,378 470,251 474,629
Exercise of stock options............. 27,790 2,779 192,754 195,533
Other................................. 10,561 1,056 88,712 (2,112) 87,656
Net income............................ 10,965,109 10,965,109
--------- --------- ----------- ----------- ---------- -----------
Balances, December 31, 1995........... 18,157,209 $1,815,721 $116,614,230 $ 388,055 $20,255,069 $139,073,075
--------- --------- ----------- ----------- ---------- -----------
--------- --------- ----------- ----------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 1,438,444 $ 7,851,516 $ 10,965,109
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation............................................ 2,258,818 2,506,661 3,251,360
Amortization of intangible assets....................... 7,840,064 7,191,369 6,231,523
Provision for losses on accounts and notes receivable... 957,749 1,441,925 1,136,887
Refinancing fees........................................ (2,455,770)
Deferred income tax provision (benefit)................. 1,400,000 (355,000) (560,000)
Other................................................... (138,920) (477,825) 237,418
Changes in operating assets and liabilities, net of
effects of acquisitions and disposals:
Accounts receivable................................. (5,677,825) (5,765,899) (2,343,943)
Other current assets................................ 1,487,404 (2,008,159) 1,029,161
Accounts payable.................................... (268,903) 371,913 (424,306)
Accrued payroll and other current liabilities....... 2,119,153 591,389 1,102,239
--------------- -------------- --------------
Net cash provided by operating activities....................... 8,960,214 11,347,890 20,625,448
--------------- -------------- --------------
Cash flows from investing activities:
Payment received on notes receivable........................ 1,300,000 392,500
Capital expenditures........................................ (1,495,317) (2,221,140) (4,969,027)
Cash paid for acquisitions.................................. (3,871,910) (4,904,345) (34,007,857)
Purchase of intangible assets............................... (6,261,520) (15,535,809)
Proceeds from sale of assets................................ 1,919,189
Loans originated and other.................................. (160,158) (3,482,379) (10,220,300)
--------------- -------------- --------------
Net cash used by investing activities........................... (5,527,385) (13,650,195) (64,340,493)
--------------- -------------- --------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................... 48,000,000 45,500,000
Purchase of common stock.................................... (21,693,832)
Proceeds from issuance of common stock...................... 88,301,704 779,273 757,818
Reduction in long-term debt................................. (118,484,583)
Payment of restructuring expenses........................... (5,061,925) (119,729) (387,000)
--------------- -------------- --------------
Net cash provided by financing activities....................... 12,755,196 659,544 24,176,986
--------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents............ 16,188,025 (1,642,761) (19,538,059)
Cash and cash equivalents at beginning of year.................. 12,429,574 28,617,599 26,974,838
--------------- -------------- --------------
Cash and cash equivalents at end of year........................ $ 28,617,599 $ 26,974,838 $ 7,436,779
--------------- -------------- --------------
--------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS
The Company owns and operates 23 radio stations in seven metropolitan
markets throughout the United States. On January 11, 1993, the Company completed
a recapitalization plan that substantially modified its debt and capital
structure. Such recapitalization was accounted for as if it had been completed
January 1, 1993.
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,
$5,545,000, and $6,662,000 were paid during 1993, 1994 and 1995, respectively.
Interest paid was $3,107,000, $381,000, and $1,378,000 during 1993, 1994, and
1995, respectively. The effect of barter transactions has been eliminated (see
Note 12).
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. 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:
<TABLE>
<S> <C>
Land improvements..................................... 20 Years
Buildings............................................. 25 Years
3 to 20
Equipment............................................. Years
5 to 12
Furniture and fixtures................................ Years
Life of
Leasehold improvements................................ lease
</TABLE>
F-7
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INTANGIBLE ASSETS
Intangible assets are stated at cost less accumulated amortization;
amortization is provided principally on the straight-line basis over the
following lives:
<TABLE>
<S> <C>
Goodwill.............................................. 40 Years
5 to 25
Other intangibles..................................... Years
</TABLE>
Other intangible assets consist primarily of various contracts and purchased
intellectual property.
The carrying value of intangible assets is reviewed by the Company when
events or circumstances suggest that the recoverability of an asset may be
impaired. If this review indicates that goodwill and licenses will not be
recoverable, as determined based on the undiscounted cash flows of the entity
over the remaining amortization period, the carrying value of the goodwill and
licenses will be reduced accordingly.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
PER SHARE DATA
Income per share for the three years ended December 31, 1995 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.
2. ACQUISITION OF LICENSES
In June 1993, the Company acquired the FCC license and certain contracts of
radio station WLWA(AM) (formerly WKRC) in Cincinnati, Ohio for $1,600,000 in
cash.
In September 1995, the Company exercised its purchase option to acquire
ownership of the FCC license of radio station KHTS-FM (formerly KECR-FM) in San
Diego, California for approximately $13,875,000 in cash.
3. ACQUISITIONS
In July 1993, the Company completed the acquisition of radio station
KAZY(FM) in Denver, Colorado from its majority shareholder. The majority
shareholder had purchased that station for $5,500,000 and then 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 the majority
shareholder's cost for the station plus related acquisition costs. In connection
with the acquisition, 964,006 shares of the Company's common stock were issued
to the majority shareholder.
Effective January 1, 1994, the Company acquired an interest in Critical Mass
Media, Inc. ("CMM") from the Company's President. In connection with the
transaction, the President has the right to put the remaining interest to the
Company between January 1, 1999 and January 1, 2000 for 300,000 shares of the
Company's common stock. If the put is not exercised by January 1, 2000, the
Company has the right to acquire the remaining interest prior to 2001 in
exchange for 300,000 shares of the Company's common stock. In connection with
the acquisition, the Company recorded $3,017,000 in goodwill and a $2,400,000
obligation included in other liabilities.
F-8
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In March 1994, the Company entered into an agreement to acquire the assets
of radio station WPPT(FM) (formerly WIMJ) in Cincinnati, Ohio for $9,500,000 in
cash. Pending consummation of the transaction (which occurred in June 1995), the
Company operated the station under a Local Marketing Agreement which commenced
April 7, 1994, and expired upon completion of the purchase.
In 1994, the Company acquired the call letters, programming and certain
contracts of radio station KBPI(FM) in Denver, Colorado and then changed the
call letters of its FM broadcast station KAZY to KBPI; the Company acquired the
call letters, programming and certain contracts of radio station WCKY(AM) in
Cincinnati, Ohio and then changed the call letters of its AM broadcast station
WLWA to WCKY; the Company acquired radio station KTLK(AM) (formerly KRZN) in
Denver, Colorado; and the Company acquired radio station WWST(FM) (formerly
WWZZ) in Knoxville, Tennessee. The aggregate cash purchase price for these
acquisitions was approximately $9.5 million.
In August 1995, the Company acquired certain operating assets of radio
stations WDUV(FM) and WBRD(AM) in Tampa, Florida for approximately $14,000,000
in cash.
In 1995, the Company acquired the call letters, programming and certain
contracts of radio station WOFX(FM) in Cincinnati, Ohio and then changed the
call letters of its FM broadcast station WPPT to WOFX. The Company also acquired
radio stations WSOL(FM) (formerly WHJX), WJBT(FM) and WZAZ(AM) in Jacksonville,
Florida. The aggregate cash purchase price for these acquisitions was
approximately $9,750,000.
All of the above acquisitions have been accounted for as purchases. The
excess cost over the fair value of net assets acquired is being amortized over
40 years. The results of operations of the acquired businesses are included in
the Company's financial statements since the respective dates of acquisition.
Assuming each of the 1994 and 1995 acquisitions had taken place at the beginning
of 1994, unaudited pro forma consolidated results of operations would have been
as follows:
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED)
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995
<S> <C> <C>
Net broadcasting revenue..................................... $ 111,232,000 $ 121,214,000
Net income................................................... 7,115,000 10,423,000
Net income per share......................................... 0.33 0.50
</TABLE>
4. DISPOSITION
In May 1994, the Company completed the sale of the business and
substantially all the assets of its wholly owned subsidiary, Telesat Cable TV,
Inc., under a contract dated December 1993. The Company received approximately
$2,000,000 in cash for this sale.
5. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1994 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Land and land improvements..................................... $ 1,999,002 $ 2,575,224
Buildings...................................................... 1,912,432 2,584,556
Equipment...................................................... 18,725,970 26,673,912
Furniture and fixtures......................................... 2,346,041 3,505,363
Leasehold improvements......................................... 2,116,548 3,184,683
------------- -------------
27,099,993 38,523,738
Less accumulated depreciation.................................. (4,471,152) (7,722,513)
------------- -------------
$ 22,628,841 $ 30,801,225
------------- -------------
------------- -------------
</TABLE>
F-9
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. INTANGIBLE ASSETS
Intangible assets at December 31, 1994 and 1995 consist of the following:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Goodwill..................................................... $ 78,621,918 $ 120,947,774
Other........................................................ 25,952,816 27,488,624
-------------- --------------
104,574,734 148,436,398
Less accumulated amortization................................ (15,031,433) (21,278,636)
-------------- --------------
$ 89,543,301 $ 127,157,762
-------------- --------------
-------------- --------------
</TABLE>
7. DEBT AGREEMENT
The Company's debt obligations at December 31, 1995 consist of the
following:
<TABLE>
<CAPTION>
Indebtedness under the Bank Credit Agreement (described
below)--
<S> <C>
Senior reducing revolving facility......................... $38,500,000
Senior acquisition facility................................ 7,000,000
----------
$45,500,000
----------
----------
</TABLE>
The Company has an agreement with a group of lenders, as amended (the "1993
Credit Agreement"), which provides for a senior reducing revolving credit
facility with a commitment of $39,550,000 at December 31, 1995 that expires on
December 31, 2000 (the "Revolver") and a senior 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 1993 Credit Agreement.
The 1993 Credit Agreement requires that the commitment under the Revolver be
reduced by $900,000 quarterly during 1996 and by increasing quarterly amounts
thereafter, and, under certain circumstances, requires mandatory prepayments of
any outstanding loans and further commitment reductions under the 1993 Credit
Agreement. Amounts outstanding under the Acquisition Facility at September 30,
1996 are payable in 17 equal quarterly installments.
The indebtedness of the Company under the 1993 Credit Agreement 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 1993 Credit Agreement contains
restrictions pertaining to maintenance of financial ratios, capital
expenditures, payment of dividends or distributions of capital stock and
incurrence of additional indebtedness.
Interest under the 1993 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 3/8% 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.
In accordance with the terms of the 1993 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 5.3125%.
F-10
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. CAPITAL STOCK
During 1995, the Company purchased and retired 1,515,300 shares of its own
common stock at a cost of $21,693,832. The Company's Board of Directors has
authorized the Company to purchase up to an additional 1,000,000 shares of its
own common stock from time to time in open-market or negotiated transactions.
The Company issued 2,014,233 warrants on January 1, 1993 to purchase
2,014,233 shares of common stock at $8.30 which were recorded at their estimated
fair value of $0.20 per warrant. The warrants may be exercised at any time prior
to January 14, 2000, at which time the warrants expire. During the year ended
December 31, 1995, 10,561 warrants were exercised.
9. INCOME TAXES
Income tax expense for the years ended December 31, 1993, 1994 and 1995 is
summarized as follows:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
<S> <C> <C> <C>
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
------------ ------------ ------------
------------ ------------ ------------
1994:
Current............................................................. $ 5,593,800 $ 1,075,000 $ 6,668,800
Deferred............................................................ (300,000) (55,000) (355,000)
------------ ------------ ------------
$ 5,293,800 $ 1,020,000 $ 6,313,800
------------ ------------ ------------
------------ ------------ ------------
1995:
Current............................................................. $ 6,600,000 $ 1,260,000 $ 7,860,000
Deferred............................................................ (500,000) (60,000) (560,000)
------------ ------------ ------------
$ 6,100,000 $ 1,200,000 $ 7,300,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The provisions for income tax differ from the amount computed by applying
the statutory federal income tax rate due to the following:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Federal income taxes at the statutory rate.............................. $ 1,407,071 $ 4,957,861 $ 6,392,788
Amortization not deductible............................................. 404,660 606,137 606,137
State income taxes, net of any current federal income tax benefit....... 330,000 663,000 780,000
Other................................................................... 558,269 86,802 (478,925)
------------ ------------ ------------
$ 2,700,000 $ 6,313,800 $ 7,300,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The tax effects of the significant temporary differences which comprise the
deferred tax liability at December 31, 1993, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Property and equipment.............................................. $ 11,172,498 $ 11,062,121 $ 12,208,187
Intangibles......................................................... (1,445,854) (860,566) (1,456,567)
Accrued expenses.................................................... (740,790) (2,183,592) (1,992,093)
Reserve for pending sale of assets.................................. (1,458,396)
Other............................................................... 372,542 1,159,493 (142,071)
------------- ------------- -------------
Net liability................................................. $ 7,900,000 $ 9,177,456 $ 8,617,456
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
F-11
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. STOCK-BASED COMPENSATION PLANS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation". The Company will continue to apply APB Opinion No. 25 in
accounting for its plans as permitted by this statement. This statement however,
requires that a company's financial statements include certain disclosures about
stock-based employee compensation arrangements regardless of the method used to
account for them. Pro forma disclosures required by a company that elects to
continue to measure compensation cost using Opinion No. 25 will be made by the
Company for the year ended December 31, 1996.
At December 31, 1995, the Company has three stock-based compensation plans,
which are described below. The Company applies APB Opinion 25 in accounting for
its plans. Accordingly, no compensation cost has been recognized for its fixed
stock option plans and its stock purchase plan.
1993 STOCK OPTION PLAN
Under the Company's 1993 stock option plan, options to acquire up to
2,769,218 shares of common stock can be granted to officers and key employees at
no less than 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 options vest 30% upon grant, 30% upon the first
anniversary of the grant date and 20% per year for each of the next two years
thereafter and expire 10 years after grant. The plan will terminate no later
than February 7, 2003. Information pertaining to the plan for the years ended
December 31, 1993, 1994 and 1995 is as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
<S> <C> <C>
1993:
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
1994:
Outstanding at beginning of year.................................... 1,365,620 $ 5.74-$ 6.46
Granted............................................................. 10,000 $13.50-$15.18
Exercised........................................................... (89,310) $ 5.74-$ 5.97
Outstanding at end of year.......................................... 1,286,310 $ 5.74-$15.18
Exercisable at end of year.......................................... 734,670 $ 5.74-$13.50
Available for grant at end of year.................................. 87,618
1995:
Outstanding at beginning of year.................................... 1,286,310 $ 5.74-$15.18
Granted............................................................. 245,000 $13.88-$15.60
Exercised........................................................... (27,790) $ 5.74-$ 6.46
Outstanding at end of year.......................................... 1,503,520 $ 5.74-$15.60
Exercisable at end of year.......................................... 1,046,340 $ 5.74-$14.04
Available for grant at end of year.................................. 1,092,618
</TABLE>
F-12
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DIRECTORS' STOCK OPTIONS
The Company has granted nonqualified stock options to purchase up to 65,000
shares of the Company's common stock to certain members of the Company's Board
of Directors. These options vest 30% upon grant, 30% upon the first anniversary
of the grant date and 20% per year for each of the next two years thereafter.
Options to purchase up to 40,000 shares must be exercised in full prior to May
28, 1998 while the remaining options must be exercised in full prior to December
15, 2004. The exercise price of these options ranges from $5.74 per share to
$14.34 per share.
EMPLOYEE STOCK PURCHASE PLAN
Under the 1995 Employee Stock Purchase Plan, the Company is authorized to
issue up to 200,000 shares of common stock to its full-time and part-time
employees, all of whom are eligible to participate. Under the terms of the Plan,
employees can choose each year to have up to 10 percent of their annual base
earnings withheld to purchase the Company's common stock. The purchase price of
the stock is 85 percent of the lower of its beginning-of-year or end-of-year
market price. Under the Plan, the Company sold 43,785 shares to employees in
1995 at a purchase price of $10.84 per share.
11. 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, 1995 are payable as follows:
<TABLE>
<S> <C>
1996................................... $2,958,000
1997................................... 2,681,000
1998................................... 2,340,000
1999................................... 1,208,000
2000................................... 1,106,000
Thereafter............................. 4,273,000
----------
$14,566,000
----------
----------
</TABLE>
Rental expense was approximately $2,991,000, $3,336,000, and $3,471,000 for
the years ended December 31, 1993, 1994 and 1995, respectively.
The Company has a real estate lease for office space for its Atlanta
operations with an affiliate of its majority shareholder. The annual rental rate
is approximately $330,000.
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, as
would not have a significant effect on the financial position or results of
operations of the Company.
12. BARTER TRANSACTIONS
Barter revenue was approximately $5,061,000, $4,647,000, and $4,976,000 in
1993, 1994 and 1995, respectively. Barter expense was approximately $4,941,000,
$4,164,000, and $5,166,000 in 1993, 1994 and 1995, respectively.
F-13
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Included in accounts receivable and accounts payable in the accompanying
consolidated balance sheets for 1994 and 1995 are barter accounts receivable
(merchandise or services due the Company) of approximately $1,372,000 and
$927,000, respectively, and barter accounts payable (air time due supplier of
merchandise or service) of approximately $1,000,000 and $1,012,000,
respectively.
13. 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 1 1/2% of such employee's annual compensation up
to $150,000 of such compensation. Total expense related to this plan was
$237,875, $289,487, and $334,253 in 1993, 1994 and 1995, respectively.
14. SUBSEQUENT EVENTS
ACQUISITIONS
In February 1996, the Company entered into an agreement to acquire Noble
Broadcast Group, Inc. ("Noble"), for $152,000,000 in cash. Noble owns 10 radio
stations, 4 of which serve Denver, Colorado, with 3 each serving St. Louis,
Missouri and Toledo, Ohio; and provides programming to and sells air time for
two stations serving the San Diego market. The broadcast signals for the
stations serving the San Diego market originate from Mexico. The agreement is
subject to the approval of the Federal Communications Commission and the
satisfaction of certain other conditions. Pending consummation of the
transaction, the Company entered into Time Brokerage Agreements for the stations
in St. Louis and Toledo which began February 21, 1996, and will expire on the
purchase date. The Company will finance this acquisition from the proceeds of a
new credit facility discussed below.
In February 1996, the Company signed an agreement and plan of merger to
acquire Citicasters Inc. ("Citicasters"), owner of 19 radio stations in eight
U.S. markets as well as two network-affiliated television stations. Citicasters'
radio stations serve Atlanta, Georgia; Cincinnati and Columbus, Ohio; Kansas
City, Kansas and Missouri; Phoenix, Arizona; Portland, Oregon; Sacramento,
California; and Tampa, Florida. The television stations serve Cincinnati, Ohio
and Tampa, Florida. The agreement is subject to the approval of the Federal
Communications Commission and the satisfaction of certain other conditions. In
conjunction with this agreement, the Company has delivered to the seller a
$75,000,000 nonrefundable deposit in the form of a letter of credit. The letter
of credit requires annual fees of 1.25% and can be drawn upon by Citicasters if
the merger agreement is terminated.
Jacor will pay $29.50 in cash, plus, in the event that the closing does not
occur prior to October 1, 1996, for each full calendar month ending prior to the
merger commencing with October 1996, an additional amount of $.22125 in cash. In
addition, for each share of Citicasters common stock held, Citicasters
shareholders will receive one Jacor warrant to purchase a fractional share of
Jacor common stock (which fraction is anticipated to be .2035247) at a price of
$28.00 per full share of Jacor common stock. If the merger is not consummated by
October 1, 1996, the exercise price for the warrants to purchase 4,400,000
shares of Jacor stock will be reduced to $26.00 per share. The cash purchase
price, which is approximately $630,000,000, will increase by approximately
$5,000,000 for each full month subsequent to October 1996 but prior to the
merger.
NEW CREDIT AGREEMENT
On February 20, 1996 the Company entered into a new credit facility. The
Company's new senior debt consists of two facilities (the "Facilities") provided
under an agreement (the "Existing Credit Facility") with ten banks: a
$190,000,000 reducing revolving credit facility ("Revolving A Loans") and a
$110,000,000 reducing revolving credit facility ("Revolving B Loans"). Both
Facilities mature on December 31, 2003. The
F-14
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
indebtedness of the Company under the 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 Revolving A Loans will be used primarily to refinance existing debt and
to complete the Noble acquisition. The Revolving B Loans will be used to finance
acquisitions, stock repurchases and for working capital and other general
corporate purposes.
The commitment under the Revolving A Loans will be reduced by $2,500,000
each quarter commencing January 1, 1997 and by increasing quarterly amounts in
each succeeding year. The commitment under the Revolving B Loans will be reduced
by $5,000,000 for each quarter commencing January 1, 1998.
The Company is required to make mandatory prepayments of the Facilities
equal to (i) net proceeds from any debt offerings, (ii) 50% of net proceeds from
any equity offerings to bring the Company's leverage ratio down to 5 to 1, (iii)
50% of excess cash flow, as defined, beginning in 1997, and (iv) net after tax
proceeds received from asset sales or other dispositions.
Interest under the Facilities is payable, at the option of the Company, at
alternative rates equal to the Eurodollar rate plus 1% to 2 3/4% or the base
rate announced by Banque Paribas plus up to 1 1/2%. 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 of
3/8% to 1/2% per annum on the unused portion of the commitment on both
Facilities depending on the Company's financial leverage. The Company also is
required to pay certain other fees to the agent and the lenders for the
administration of the Facilities.
The Existing Credit Facility contains a number of covenants which, among
other things, require the Company to maintain specified financial ratios and
impose certain limitations on the Company with respect to (i) the incurrence of
additional indebtedness; (ii) investments and acquisitions, except under
specified conditions; (iii) the incurrence of additional liens; (iv) the
disposition of assets; (v) the payment of cash dividends; (vi) capital
expenditures; and (vii) mergers, changes in business, and transactions with
affiliates.
SUPPLEMENTARY DATA
Quarterly Financial Data for the years ended December 31, 1994 and 1995
(Unaudited)
<TABLE>
<CAPTION>
FIRST SECOND FOURTH
QUARTER QUARTER THIRD QUARTER QUARTER
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1994
Net revenue....................................... $ 19,782,029 $ 30,010,219 $ 28,498,476 $ 28,719,724
Operating income (loss)........................... (519,163) 4,364,512 4,784,215 4,853,514
Net income (loss)................................. (220,443) 2,374,259 2,629,384 3,068,316
Net income (loss) per common share(1)............. (0.01) 0.11 0.12 0.14
1995
Net revenue....................................... $ 24,016,183 $ 30,866,300 $ 32,293,562 $ 31,714,786
Operating income.................................. 1,060,526 5,628,006 5,899,472 6,029,017
Net income........................................ 751,314 3,528,561 3,488,305 3,196,929
Net income per common share(1).................... 0.04 0.17 0.17 0.16
</TABLE>
- ------------------------------
(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.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Citicasters Inc.
We have audited the accompanying balance sheets of Citicasters Inc. and
subsidiaries (formerly Great American Communications Company) as of December 31,
1994 and 1995, and the related statements of operations, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1995. 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.
As more fully described in Note B to the financial statements, effective
December 28, 1993, the Company emerged from bankruptcy pursuant to a plan of
reorganization confirmed by the Bankruptcy Court on December 7, 1993. In
accordance with an American Institute of Certified Public Accountants Statement
of Position, the Company has adopted "fresh-start reporting" whereby its assets,
liabilities, and new capital structure have been adjusted to reflect estimated
fair values as of December 31, 1993. As a result, the statements of operations,
shareholders' equity and cash flows for the years ended December 31, 1994 and
December 31, 1995 reflect the Company's new basis of accounting and,
accordingly, are not comparable to the Company's pre-reorganization statements
of operations, shareholders' equity and cash flows for the year ended December
31, 1993.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Citicasters Inc. and
subsidiaries at December 31, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Cincinnati, Ohio
February 23, 1996
F-16
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments......................................................... $ 46,258 $ 3,572
Trade receivables, less allowance for doubtful accounts of $1,244 and $1,643............ 31,851 32,495
Broadcast program rights................................................................ 5,488 5,162
Prepaid and other current assets........................................................ 2,635 3,059
---------- ----------
Total current assets.................................................................. 86,232 44,288
Broadcast program rights, less current portion.......................................... 4,466 3,296
Property and equipment, net............................................................. 25,083 33,878
Contracts, broadcasting licenses and other intangibles, net............................. 274,695 312,791
Deferred charges and other assets....................................................... 13,016 22,093
---------- ----------
$ 403,492 $ 416,346
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities........................ $ 33,673 $ 17,061
Broadcast program rights fees payable................................................... 5,041 5,298
---------- ----------
Total current liabilities............................................................. 38,714 22,359
Broadcast program rights fees payable, less current portion............................... 3,666 2,829
Long-term debt............................................................................ 122,291 132,481
Deferred income taxes..................................................................... 44,486 44,822
Other liabilities......................................................................... 43,398 54,163
---------- ----------
Total liabilities..................................................................... 252,555 256,654
Shareholders' equity:
Common Stock, $.01 par value, including additional paid-in capital, 500,000,000 shares
authorized; 20,203,247 and 19,976,927 shares outstanding.............................. 87,831 82,936
Retained earnings from January 1, 1994.................................................. 63,106 76,756
---------- ----------
Total shareholders' equity............................................................ 150,937 159,692
---------- ----------
$ 403,492 $ 416,346
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
F-17
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
PREDECESSOR
1993 1994 1995
<S> <C> <C> <C>
Net revenues:
Television broadcasting................................................... $ 139,576 $ 130,418 $ 61,592
Radio broadcasting........................................................ 65,592 66,625 74,822
----------- ---------- ----------
205,168 197,043 136,414
----------- ---------- ----------
Costs and expenses:
Operating expenses........................................................ 71,730 60,682 37,416
Selling, general and administrative....................................... 61,340 57,036 43,513
Corporate, general and administrative expenses............................ 3,996 4,796 4,303
Depreciation and amortization............................................. 28,119 22,946 14,635
----------- ---------- ----------
165,185 145,460 99,867
----------- ---------- ----------
Operating income............................................................ 39,983 51,583 36,547
Other income (expense):
Interest expense, (contractual interest for 1993 was $69,806)............. (64,942) (31,979) (13,854)
Minority interest......................................................... (26,776) -- --
Investment income......................................................... 305 1,216 1,231
Gain on sale of television stations....................................... -- 95,339 --
Miscellaneous, net........................................................ (494) 447 (607)
----------- ---------- ----------
(91,907) 65,023 (13,230)
----------- ---------- ----------
Earnings (loss) before reorganization items and income taxes................ (51,924) 116,606 23,317
Reorganization items........................................................ (14,872) -- --
----------- ---------- ----------
Earnings (loss) before income taxes and extraordinary items................. (66,796) 116,606 23,317
Income taxes................................................................ -- 53,500 9,000
----------- ---------- ----------
Earnings (loss) before extraordinary items.................................. (66,796) 63,106 14,317
Extraordinary items, net of tax............................................. 408,140 -- --
----------- ---------- ----------
Net earnings................................................................ $ 341,344 $ 63,106 $ 14,317
----------- ---------- ----------
----------- ---------- ----------
Share data:
Primary and Fully Diluted:
Net earnings............................................................ * $ 2.55 $ .68
Average common shares................................................... * 24,777 21,017
</TABLE>
- ------------------------
*Share amounts are not relevant due to the effects of the reorganization.
See notes to financial statements.
F-18
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
PREDECESSOR
1993 1994 1995
<S> <C> <C> <C>
Common stock, including additional paid-in capital:
Beginning balance......................................................... $ 270,891 $ 138,588 $ 87,831
Common stock issued:
Exercise of stock options............................................... -- -- 273
Stock bonus awarded..................................................... 350 297 --
Common stock repurchased and retired...................................... -- (51,054) (5,168)
Effect of restructuring................................................... (132,653) -- --
----------- ---------- ----------
Balance at end of period $ 138,588 $ 87,831 $ 82,936
----------- ---------- ----------
----------- ---------- ----------
Retained earnings:
Beginning balance......................................................... $(609,920) $ -- $ 63,106
Net earnings.............................................................. 341,344 63,106 14,317
Application of fresh-start accounting..................................... 268,576 -- --
Cash dividends............................................................ -- -- (667)
----------- ---------- ----------
Balance at end of period.................................................. $ -- $ 63,106 $ 76,756
----------- ---------- ----------
----------- ---------- ----------
Total Shareholders' Equity.................................................. $ 138,588 $ 150,937 $ 159,692
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
See notes to financial statements.
F-19
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
PREDECESSOR
1993 1994 1995
<S> <C> <C> <C>
Operating Activities:
Net earnings................................................................ $ 341,344 $ 63,106 $ 14,317
Adjustments:
Depreciation and amortization............................................. 28,119 22,946 14,635
Non-cash interest expense................................................. 8,780 198 190
Other non-cash adjustments (primarily non-cash dividends on the preferred
stock of a former subsidiary)........................................... 26,941 -- --
Reorganization items...................................................... 14,872 -- --
Realized gains on sales of assets......................................... (1,871) (51,218) --
Extraordinary gains on retirements and refinancing of long-term debt...... (408,140) -- --
Decrease (increase) in trade receivables.................................. (1,635) 16,443 (644)
Decrease (increase) in broadcast program rights, net of fees payable...... 201 (146) 916
Increase (decrease) in accounts payable, accrued expenses and other
liabilities............................................................. 9,514 (2,891) (5,885)
Increase (decrease) in deferred taxes..................................... -- (6,559) 336
Other..................................................................... 306 (4,389) (634)
----------- --------- ---------
18,431 37,490 23,231
----------- --------- ---------
Investing Activities:
Deposits on broadcast stations to be acquired............................... -- -- (7,500)
Purchases of:
Broadcast stations........................................................ -- (16,000) (50,598)
Real estate, property and equipment....................................... (5,967) (7,569) (11,857)
Sales of:
Broadcast stations........................................................ 1,600 381,547 --
Entertainment businesses:
Cash proceeds received.................................................. -- 5,000 --
Cash expenses related to sale........................................... (6,021) (813) (22)
Investments and other subsidiaries........................................ -- 2,841 --
Other....................................................................... (1,131) 204 (378)
----------- --------- ---------
(11,519) 365,210 (70,355)
----------- --------- ---------
Financing Activities:
Retirements and refinancing of long-term debt............................... (370,150) (505,824) (3,500)
Additional long-term borrowings............................................. 355,339 195,350 13,500
Financing costs............................................................. (13,549) -- --
Common shares repurchased................................................... -- (51,054) (5,168)
Cash dividends paid on common stock......................................... -- -- (667)
Proceeds from the sale of common stock...................................... 1,161 -- --
Other....................................................................... -- 297 273
----------- --------- ---------
(27,199) (361,231) 4,438
----------- --------- ---------
Net Increase (Decrease) in Cash and Short-Term Investments.................... (20,287) 41,469 (42,686)
Cash and short-term investments at beginning of period........................ 25,076 4,789 46,258
----------- --------- ---------
Cash and short-term investments at end of period.............................. $ 4,789 $ 46,258 $ 3,572
----------- --------- ---------
----------- --------- ---------
</TABLE>
See notes to financial statements.
F-20
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULE TO THE STATEMENT OF CASH FLOWS--REORGANIZATION ITEMS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31, 1993
PREDECESSOR
<S> <C>
Effects of Reorganization Activities:
Cash Items:
Operating activities:
Professional fees and other expenses related to bankruptcy proceedings and consummation of the
reorganization............................................................................... $ (10,633)
-----------
-----------
Financing activities:
Long-term debt issued for cash................................................................. $ 6,339
Common stock issued for cash................................................................... 1,161
-----------
$ 7,500
-----------
-----------
Non Cash Items:
Increase in long-term debt (primarily reduction in original issue discount)...................... $ 25,967
Net adjustment of accounts to fair value......................................................... (15,961)
Decrease in liabilities subject to exchange...................................................... (40,423)
Increase in accrued liabilities (professional fees and other expenses related to consummation of
the reorganization)............................................................................ 1,438
Decrease in long-term debt through the issuance of common stock.................................. (221,541)
Elimination of minority interest (preferred stock of subsidiary) through the issuance of common
stock.......................................................................................... (274,932)
Common stock issued in reorganization............................................................ 134,762
-----------
$(390,690)
-----------
-----------
</TABLE>
See notes to financial statements.
F-21
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
ORGANIZATION. Citicasters is engaged in the ownership and operation of
radio and television stations and derives substantially all of its revenue from
the sale of advertising time. The amount of broadcast advertising time available
for sale by Citicasters' stations is relatively fixed, and by its nature cannot
be stockpiled for later sale. Therefore, the primary variables affecting revenue
levels are the demand for advertising time, the viewing or listening audience of
the station and the entry of new stations in the marketplace. The major variable
costs of operation are programming (news, sports and entertainment), sales costs
related to revenues and promotional costs. The success of the programming
determines the audience levels and therefore affects revenue.
BASIS OF PRESENTATION. The accompanying financial statements include the
accounts of Citicasters Inc. and its subsidiaries. For purposes of the financial
statements and notes hereto the term "Predecessor" refers to Great American
Communications Company and its subsidiaries prior to emergence from chapter 11
bankruptcy. Significant intercompany balances and transactions have been
eliminated.
On December 28, 1993, the Predecessor completed its comprehensive financial
restructuring through a prepackaged plan of reorganization under chapter 11 of
the Bankruptcy Code (see Note B for a description of the reorganization).
Pursuant to the reporting principles of AICPA Statement of Position No. 90-7
entitled "Financial Reporting by Entities in Reorganization under the Bankruptcy
Code" ("SOP 90-7"), Predecessor adjusted its assets and liabilities to their
estimated fair values upon consummation of the reorganization. The adjustments
to reflect the consummation of the reorganization as of December 31, 1993,
including, among other things, the gain on debt discharge and the adjustment to
record assets and liabilities at their fair values, have been reflected in the
accompanying financial statements. The Statements of Operations, Changes in
Shareholders' Equity and Cash Flows for the year ended December 31, 1993 are
presented on a historical cost basis without giving effect to the
reorganization. Therefore, the Statements of Operations, Changes in
Shareholders' Equity and Cash Flows for periods after December 31, 1993 are
generally not comparable to prior periods and are separated by a line (see Note
B).
All acquisitions have been treated as purchases. The accounts and results of
operations of companies since their formation or acquisition are included in the
consolidated financial statements.
American Financial Group, Inc. and its Subsidiaries ("American Financial")
owned 7,566,889 shares (37.8%) of Citicasters' outstanding Common Stock at March
1, 1996. At that date, American Financial's Chairman, Carl H. Lindner, owned an
additional 3,428,166 shares (17.1%) of Citicasters' outstanding Common Stock.
USE OF ESTIMATES. The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Changes in circumstances could cause actual
results to differ materially from those estimates.
BROADCAST PROGRAM RIGHTS. The rights to broadcast non-network programs on
Citicasters' television stations are stated at cost, less accumulated
amortization. These costs are charged to operations on a straight-line basis
over the contract period or on a per-showing basis, whichever results in the
greater aggregate amortization.
PROPERTY AND EQUIPMENT. Property and equipment are based on cost and
depreciation is calculated primarily using the straight-line method. Depreciable
lives are: land improvements, 8-20 years; buildings and improvements, 8-40
years; operating and other equipment, 3-20 years; and leasehold improvements,
over the life of the lease.
F-22
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES. Contracts,
broadcasting licenses and other intangibles represent the excess of the value of
the broadcast station over the values of their net tangible assets, and is
attributable to FCC licenses, network affiliation agreements and other
contractual or market related factors. Reorganization value in excess of amounts
allocable to identifiable assets represents the excess of the estimated fair
value of Citicasters at the time of the reorganization over the estimated fair
value allocated to its net identifiable assets. Intangible assets are being
amortized on a straight-line basis over an average of 34 years. On an ongoing
basis, Citicasters reviews the carrying value of its intangible assets. If this
review indicates that intangible assets will not be recoverable, as determined
based on undiscounted cash flows of broadcast stations over the remaining
amortization period, Citicasters' carrying value of intangible assets are
reduced by the amount of the estimated shortfall of cash flows.
INCOME TAXES. Citicasters files a consolidated Federal income tax return
which includes all 80% or more owned subsidiaries. Deferred income tax assets
and liabilities are determined based on differences between financial reporting
and tax bases and are measured using enacted tax rates. Deferred tax assets are
recognized if it is more likely than not that a benefit will be realized.
EARNINGS PER SHARE. Primary and fully diluted earnings per share in 1994
and 1995 are based upon the weighted average number of common shares and gives
effect to common equivalent shares (dilutive options) outstanding during the
respective periods. As a result of the effects of the reorganization, per share
data for the year ended December 31, 1993 has been rendered meaningless and,
therefore, per share information for this period has been omitted from the
accompanying financial statements.
STOCK BASED COMPENSATION. The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair value of
the shares at the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and, accordingly, recognizes no compensation expense for the stock option
grants.
STATEMENT OF CASH FLOWS. For cash flow purposes, "investing activities" are
defined as making and collecting loans and acquiring and disposing of debt or
equity instruments and property and equipment. "Financing activities" include
obtaining resources from owners and providing them with a return on their
investments, borrowing money and repaying amounts borrowed. All other activities
are considered "operating." Short-term investments for purposes of the financial
statements are those which had a maturity of three months or less when acquired.
B. REORGANIZATION
On December 28, 1993, Citicasters completed its comprehensive financial
restructuring that was designed to enhance its long-term viability by adjusting
its capitalization to reflect current and projected operating performance
levels. The Predecessor accomplished the reorganization of its debt and
preferred stock obligations through "prepackaged" bankruptcy filings made under
chapter 11 of the Bankruptcy Code by the Predecessor and two of its former
non-operating subsidiaries. The Predecessor's primary operating subsidiary,
Great American Television and Radio Company, Inc., was not a party to any such
filings under the Bankruptcy Code.
Acceptances for a prepackaged plan of reorganization were solicited in
October and early November 1993. The plan of reorganization described below was
overwhelmingly approved by the creditors and shareholders. The Predecessor filed
its bankruptcy petition with the Bankruptcy Court on November 5, 1993. The plan
was confirmed on December 7, 1993 and became effective on December 28, 1993.
Under the terms of the plan the following occurred:
- Predecessor effected a reverse stock split; issuing 2.25 shares of a new
class of common stock for each 300 shares of common stock outstanding
prior to the reorganization.
F-23
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- Debt with a carrying value of $634.8 million was exchanged for 23,256,913
shares of common stock and $426.6 million in debt.
- Preferred stock of a subsidiary was exchanged for 1,515,499 shares of
common stock.
- American Financial fulfilled a commitment to contribute $7.5 million in
cash for which it received approximately $6.3 million principal amount of
14% Notes and 213,383 shares of common stock.
- The net expense incurred as a result of the chapter 11 filings and
subsequent reorganization has been segregated from ordinary operations in
the Statement of Operations. Reorganization items for 1993 include the
following (in thousands):
<TABLE>
<S> <C>
Financing costs............................................................ $ 25,967
Adjustments to fair value.................................................. (15,961)
Professional fees and other expenses related to bankruptcy................. 4,914
Interest income............................................................ (48)
---------
$ 14,872
---------
---------
</TABLE>
Financing costs consist of the unamortized portion of original issue
discount and deferred financing costs relating to debt subject to exchange as of
the date the petition for bankruptcy was filed (November 5, 1993). Adjustments
to fair value reflect the net change to state assets and liabilities at
estimated fair value as of December 31, 1993. Interest income is attributable to
the accumulation of cash and short-term investments after commencement of the
chapter 11 cases.
Pursuant to the fresh-start reporting provisions of SOP 90-7, the
Predecessor's assets and liabilities were revalued and a new reporting entity
was created with no retained earnings or accumulated deficit as of the effective
date. The period from the effective date to December 31, 1993 was considered
immaterial thus, December 31, 1993 was used as the effective date for recording
the fresh-start adjustments. Predecessor's results of operations for the period
from the effective date of the restructuring to December 31, 1993 have been
reflected in the Statement of Operations for the year ended December 31, 1993.
The reorganization values of the assets and liabilities were determined
based upon several factors including: prices and multiples of broadcast cash
flow (operating income before depreciation and amortization) paid in purchase
and business combination transactions, projected operating results of the
broadcast stations, market values of publicly traded broadcast companies,
economic and industry information and the reorganized capital structure. The
foregoing factors resulted in a range of reorganization values between $75 and
$200 million. Based upon an analysis of all of this data, management determined
that the reorganization value of the company would be $138.6 million.
The gain on debt discharge is summarized as follows (in thousands):
<TABLE>
<S> <C>
Carrying value of debt securities subject to exchange, including accrued
interest................................................................ $ 318,447
Carrying value of preferred stock of subsidiary, including accrued
dividends............................................................... 309,608
Aggregate principal amount of 14% Senior Extendable Notes issued in
exchanges, including accrued interest since June 30, 1993............... (71,236)
Aggregate value of common stock issued in exchanges....................... (134,762)
Expenses attributable to consummation of the reorganization............... (7,573)
---------
Total gain on debt discharge (See Note J)................................. $ 414,484
---------
---------
</TABLE>
F-24
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
C. ACQUISITIONS AND DISPOSITIONS
During June 1995, Citicasters acquired its second FM station in Portland
(KKCW) for $30 million. During August 1995, Citicasters acquired a second FM
radio station in Tampa (WTBT) for $5.5 million. The purchase price for WTBT-FM
could increase to $8 million depending on the satisfaction of certain
conditions. Citicasters began operating WTBT-FM during March 1995. In December
1995, the Company began operating WHOK-FM, WLLD-FM and WLOH-AM in Columbus under
a local marketing agreement and acquired the stations in January 1996 for $24
million.
During 1994, Citicasters sold one AM and three FM radio stations and
acquired or commenced the operation of two FM radio stations. The following
table sets forth certain information regarding these radio station transactions:
<TABLE>
<CAPTION>
ACQUISITION
DATE OPERATIONS DATE OF PRICE/ SALES
COMMENCED/CEASED CLOSING PRICE
<S> <C> <C> <C>
Acquisitions:
Sacramento (KRXQ-FM).................. January 1, 1994 May 27, 1994 $ 16 million
Cincinnati (WWNK-FM).................. April 25, 1994 April 21, 1995 $ 15 million
Dispositions:
Detroit (WRIF-FM)..................... January 23, 1994 September 23, 1994 $ 11.5 million
Milwaukee (WLZR-FM&AM)................ April 14, 1994 April 14, 1994 $ 7 million
Denver (KBPI-FM)...................... April 19, 1994 August 5, 1994 $ 8 million
</TABLE>
In the aggregate, the purchases and sales of radio stations completed in
1994 and 1995 did not have a material effect on Citicasters' results. No gain or
loss was recognized on the radio stations sold during 1994, because those
stations were valued at their respective sales price under the fresh-start
reporting provision of SOP 90-7.
During September and October 1994, Citicasters sold four of its network
affiliated television stations to entities affiliated with New World
Communications Group Incorporated ("New World"). The stations sold included KSAZ
in Phoenix, WDAF in Kansas City, WBRC in Birmingham and WGHP in Greensboro/
Highpoint. Citicasters received $355.5 million in cash and a warrant to
purchase, for five years, 5,000,000 shares of New World Common Stock at $15 per
share. The warrant was valued at $10 million and is included in the balance
sheet caption "Deferred charges and other assets." Citicasters recorded a pretax
gain of $95.3 million ($50.1 million after tax) on these sales. Proceeds from
the sales were used to retire long-term debt and to repurchase shares of the
Company's Common Stock. During 1995, the terms of the warrant were amended to
modify the registration rights relating to the underlying shares. In
consideration for such modification, the exercise price was increased from $15
to $16 per share.
The following unaudited proforma financial information is based on the
historical financial statements of Citicasters, adjusted to reflect the
television station sales, retirement of long-term debt, the effects of the
December 1993 reorganization and the February 1994 refinancing of subordinated
debt (in thousands except per share data).
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993 1994
<S> <C> <C>
Net revenues.................................................................... $ 119,597 $ 128,375
---------- ----------
---------- ----------
Operating income................................................................ $ 20,142 $ 30,624
---------- ----------
---------- ----------
Net earnings.................................................................... $ 4,244 $ 11,582
---------- ----------
---------- ----------
Net earnings per share.......................................................... $ .16 $ .47
---------- ----------
---------- ----------
</TABLE>
F-25
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
D. PROPERTY AND EQUIPMENT
Property and equipment at December 31, consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Land and land improvements....................................................... $ 5,305 $ 5,883
Buildings and improvements....................................................... 10,710 15,458
Operating and other equipment.................................................... 13,873 22,771
---------- ---------
29,888 44,112
Accumulated depreciation......................................................... (4,805) (10,234)
---------- ---------
$ 25,083 $ 33,878
---------- ---------
---------- ---------
</TABLE>
Pursuant to the fresh-start reporting principles of SOP 90-7, the carrying
value of property and equipment was adjusted to estimated fair value as of the
effective date of the reorganization, which included the restarting of
accumulated depreciation. Depreciation expense relating to property and
equipment was $11.6 million in 1993; $8.7 million in 1994; and $5.4 million in
1995.
E. CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES
Contracts, broadcasting licenses and other intangibles at December 31,
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Licenses, network affiliation agreements and other market related intangibles... $ 275,629 $ 322,749
Reorganization value in excess of amounts allocable to identifiable assets...... 7,998 7,998
---------- ----------
283,627 330,747
Accumulated amortization........................................................ (8,932) (17,956)
---------- ----------
$ 274,695 $ 312,791
---------- ----------
---------- ----------
</TABLE>
Citicasters' carrying value of its broadcasting assets was adjusted to
estimated fair value as of the effective date of the reorganization pursuant to
the reporting principles of SOP 90-7. This adjustment included, among other
things, the restarting of accumulated amortization related to intangibles.
Amortization expense relating to contracts, broadcasting licenses and other
intangibles was $16.5 million in 1993; $14.2 million in 1994; and $9.3 million
in 1995.
F. LONG-TERM DEBT
Long-term debt at December 31, consisted of the following (in thousands):
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Citicasters:
9 3/4% Senior Subordinated Notes due February 2004, less unamortized discount
of $2,709 and $2,519 (imputed interest rate 10.13%)......................... $ 122,291 $ 122,481
Subsidiaries:
Bank credit facility.......................................................... -- 10,000
---------- ----------
Total long-term debt........................................................ $ 122,291 $ 132,481
---------- ----------
---------- ----------
</TABLE>
F-26
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1995, the only sinking fund or other scheduled principal
payments due during the next five years is $10 million, due in 1998.
Cash interest payments were $45.1 million in 1993; $27.1 million in 1994;
and $12.9 million in 1995.
In February 1994, Citicasters refinanced its 14% Notes and the 13% Senior
Subordinated Notes due 2001 through the issuance of $200 million principal
amount of 9 3/4% Senior Subordinated Notes due 2004 ("9 3/4% Notes"). The 9 3/4%
Notes were issued at a discount; the net proceeds were $195.4 million. No gain
or loss was recognized on these transactions. A portion of the proceeds from the
sale of the four television stations ($305 million) was used to retire long-term
debt including $75 million principal amount of the 9 3/4% Notes.
In October 1994, Citicasters entered into a bank credit agreement with a
group of banks providing two revolving credit facilities: a $125 million
facility to fund future acquisitions and a $25 million working capital facility.
The acquisition facility is available through December 31, 2001. The maximum
amount available under this facility will be reduced by $7.5 million per quarter
beginning in the first quarter of 1998. The working capital facility is
available through December 31, 1997. Citicasters is required to use excess cash
flow to reduce amounts outstanding under the facilities if leverage ratios
exceed certain levels.
The interest rate under the facilities varies depending on Citicasters'
leverage ratio. In the case of the base rate option, the rate ranges from the
base rate to the base rate plus .75%. In the case of the eurodollar rate option,
the rate ranges from 1% to 2% over the eurodollar rate. The bank credit
facilities are secured by substantially all the assets of Citicasters. As of
March 1, 1996, Citicasters had $26 million outstanding under the acquisition
facility.
Citicasters' 9 3/4% Notes require a prepayment of the 9 3/4% Notes in the
event of certain changes in the control of Citicasters and further require the
proceeds from certain asset sales to be used to partially redeem 9 3/4% Notes.
At December 31, 1995 the market of the 9 3/4% Notes exceeded carrying value
by approximately $1.5 million.
G. SHAREHOLDERS' EQUITY
Citicasters is authorized to issue 500 million shares of Class A Common
Stock, $.01 par value, 125 million shares of Class B Common Stock, $.01 par
value and 9.5 million shares of Serial Preferred Stock, $.01 par value. The
preferred stock may have such preferences and other rights and limitations as
the Board of Directors may designate with respect to each series.
During 1994 and 1995, Citicasters acquired 2,354,475 and 254,760 shares of
its common stock from several unaffiliated institutions for $51.1 million and
$5.2 million, respectively. Under the most restrictive provision of Citicasters'
debt covenants, Citicasters may acquire an additional $8.7 million of its common
stock.
During 1995, Citicasters' Board of Directors twice declared three-for-two
stock splits of its outstanding common stock. All share and per share data have
been restated to reflect both stock splits.
The Company's debt instruments contain certain covenants which limit the
amount of dividends which Citicasters is able to pay on its common stock. Under
the most restrictive provision of Citicasters' debt covenants, dividends are
limited to a maximum of $2.5 million annually. Citicasters paid a dividend of
$.03 per common share in 1995. Under the merger agreement with Jacor (see Note
M), Citicasters will not be permitted to pay dividends without the prior consent
of Jacor.
F-27
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Changes in the number of shares of common stock are shown in the following
table:
<TABLE>
<S> <C>
Predecessor:
Outstanding at January 1, 1993........................................ 56,729,434
Effect of reverse stock split in restructuring........................ (56,303,963)
Issued in restructuring for exchanges of securities................... 24,772,412
Issued for cash....................................................... 213,383
Citicasters:
Stock bonuses awarded to employees.................................... 52,425
----------
Outstanding at December 31, 1993...................................... 25,463,691
Stock bonuses awarded to employees.................................... 37,125
Stock repurchased and retired......................................... (5,297,569)
----------
Outstanding at December 31, 1994...................................... 20,203,247
Exercise of stock option.............................................. 29,812
Stock repurchased and retired......................................... (256,132)
----------
Outstanding at December 31, 1995...................................... 19,976,927
----------
----------
</TABLE>
Following the consummation of the reorganization, the Board of Directors
established the 1993 Stock Option Plan. The Plan provides for granting both
non-qualified and incentive stock options to key employees. There are 1,800,000
common shares reserved for issuance under the 1993 Plan. During 1994, the Board
of Directors established the 1994 Directors Stock Option Plan. The Plan provides
for the granting of options to non-employee directors of Citicasters. There are
450,000 common shares reserved for issuance under the 1994 Plan. Options under
both plans become exercisable at the rate of 20% per year commencing one year
after grant and expire at the earlier of 10 years from the date of grant, three
months after termination of employment or retirement as a director, or one year
after the death or disability of the holder.
Stock option data for Citicasters' stock option plans are as follows:
<TABLE>
<CAPTION>
1994 1995
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
OPTION PRICE OPTION PRICE
SHARES PER SHARE SHARES PER SHARE
Outstanding, beginning of period............. 1,307,250 $ 6.67 1,614,375 $ 6.67-$10.33
Granted...................................... 498,375 $ 9.77-$10.33 57,500 $ 18.00-$25.50
Exercised.................................... -- -- (29,812) $ 6.67
Terminated................................... (191,250) $ 6.67 -- --
---------- -------------- ---------- ---------------
Outstanding, December 31..................... 1,614,375 $ 6.67-$10.33 1,642,063 $ 6.67-$25.50
---------- -------------- ---------- ---------------
---------- -------------- ---------- ---------------
Exercisable, December 31..................... 223,200 $ 6.67 516,263 $ 6.67-$10.33
---------- -------------- ---------- ---------------
---------- -------------- ---------- ---------------
Available for grant December 31.............. 635,625 607,937
---------- ----------
---------- ----------
</TABLE>
F-28
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
H. INCOME TAXES
Deferred income taxes reflect the impact of temporary differences between
the carrying amounts of assets and liabilities recognized for financial
reporting purposes and the amounts recognized for income tax purposes.
Significant components of Citicasters' deferred tax assets and liability as of
December 31 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Deferred tax assets:
Accrued expenses and other...................................................... $ 8,190 $ 8,409
Deferred tax liability:
Book over tax basis of depreciable assets......................................... 52,676 53,231
--------- ---------
Net deferred tax liability........................................................ $ 44,486 $ 44,822
--------- ---------
--------- ---------
</TABLE>
The following is a reconciliation of Federal income taxes at the "statutory"
rate of 35% in 1993, 1994 and 1995 and as shown in the Statement of Operations
(in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
1993 1994 1995
<S> <C> <C> <C>
Earnings (loss) from continuing operations before income taxes.... $ (66,796) $ 116,606 $ 23,317
Extraordinary items............................................... 408,140 -- --
----------- ---------- ----------
Adjusted earnings before income taxes............................. $ 341,344 $ 116,606 $ 23,317
----------- ---------- ----------
----------- ---------- ----------
Income taxes at the statutory rate................................ $ 119,470 $ 40,812 $ 8,161
Effect of:
Book basis over tax basis of stations sold...................... -- 8,472 --
Goodwill........................................................ (630) 599 74
Minority interest............................................... 9,372 -- --
Certain reorganization items.................................... (127,606) -- --
State taxes net of Federal income tax benefit................... -- 3,575 650
Other........................................................... (606) 42 115
----------- ---------- ----------
Income taxes as shown in the Statement of Operations............ $ -- $ 53,500 $ 9,000
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
Income tax provision as applied to continuing operations consists of (in
thousands):
<TABLE>
<CAPTION>
PREDECESSOR
1993 1994 1995
<S> <C> <C> <C>
Current taxes..................................... $ -- $ 42,800 $ 7,300
Deferred taxes.................................... -- 5,200 700
State taxes....................................... -- 5,500 1,000
----- --------- ---------
$ -- $ 53,500 $ 9,000
----- --------- ---------
----- --------- ---------
</TABLE>
Federal income taxes of $7 million and $8.4 million were paid in cash during
1994 and 1995, respectively.
I. DISCONTINUED OPERATIONS
During 1994, Citicasters received an additional $5 million related to the
1991 sale of its entertainment businesses. The after-tax proceeds were credited
to reorganization intangibles. A final distribution is scheduled to occur in
December 1996. It is not possible to quantify the amount of the distribution
Citicasters will receive at that time.
J. EXTRAORDINARY ITEMS
Predecessor's extraordinary items in 1993 consisted of a loss of $6.3
million from the retirement of debt prior to the reorganization and a gain of
$414.5 million on debt discharge in the reorganization.
F-29
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
K. PENDING LEGAL PROCEEDINGS
Management, after review and consultation with counsel, considers that any
liability from litigation pending against Citicasters and any of its
subsidiaries would not materially affect the consolidated financial position or
results of operations of Citicasters and its subsidiaries.
L. ADDITIONAL INFORMATION
Quarterly Operating Results (Unaudited)--The following are quarterly results
of consolidated operations for 1994 and 1995 (in thousands except per share
data).
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTA1
<S> <C> <C> <C> <C> <C>
1994
Net revenues.................................. $ 48,449 $ 60,423 $ 50,908 $ 37,263 $ 197,043
Operating income.............................. 7,193 18,321 13,386 12,683 51,583
Net earnings (loss)........................... (1,752) 5,161 44,851 14,846 63,106
Net earnings (loss) per share................. $ (.07) $ .20 $ 1.75 $ .67 $ 2.55
1995
Net revenues.................................. $ 29,045 $ 36,886 $ 34,126 $ 36,357 $ 136,414
Operating income.............................. 4,724 11,588 8,910 11,325 36,547
Net earnings.................................. 1,278 5,242 3,282 4,515 14,317
*Net earnings per share........................ $ .06 $ .25 $ .15 $ .21 $ .68
</TABLE>
- ------------------------
* The sum of the quarterly earnings per share does not equal the earnings per
share computed on a year-to-date basis due to rounding.
Citicasters' financial results are seasonal. Revenues are higher in the
second and fourth quarter and lower in the first and third quarter; the first
quarter is the lowest of the year.
During the third and fourth quarters of 1994, Citicasters recorded net
earnings of $41.7 million and $8.4 million, respectively, attributable to the
sale of the four television stations.
Included in selling, general and administrative expenses in 1993, 1994 and
1995 are charges of $6.6 million, $7.2 million and $5.8 million, respectively,
for advertising and charges of $2.4 million, $2.2 million and $1.3 million,
respectively, for repairs and maintenance.
M. SUBSEQUENT EVENT
On February 12, 1996, Citicasters and Jacor Communications, Inc. entered
into a merger agreement by which Jacor will acquire Citicasters. Under the
agreement, for each share of Citicasters' stock, Jacor will pay cash of $29.50
plus a five-year warrant to purchase approximately .2 shares of Jacor common
stock at $28 per share. If the closing occurs after September 1996 the exercise
price of the warrant would be reduced to $26 per share and the per share cash
price would increase at the rate of $.2215 per month. American Financial and
certain of its affiliates have agreed to execute irrevocable consents in favor
of the Jacor transaction on March 13, 1996. The closing of the transaction is
conditioned on, among other things, receipt of FCC and other regulatory
approvals. Upon consummation of the merger, holders of the 9 3/4% Notes have the
right to put their notes to the Company at 101% of principal.
F-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Noble Broadcast Group, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in stockholders' deficit and
of cash flows present fairly, in all material respects, the financial position
of Noble Broadcast Group, Inc. and its subsidiaries at December 25, 1994 and
December 31, 1995, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, in February
1996 the Company entered into an agreement to be purchased by Jacor
Communications, Inc.
PRICE WATERHOUSE LLP
San Diego, California
March 21, 1996
F-31
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER DECEMBER
25, 31,
ASSETS 1994 1995
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents..................................................... $ 2,134,000 $ 447,000
Accounts receivable, less allowance for doubtful accounts of $515,000 and
$455,000.................................................................... 12,401,000 9,094,000
Prepaid expenses and other.................................................... 2,084,000 2,290,000
-------------- -------------
Total current assets...................................................... 16,619,000 11,831,000
Property, plant and equipment, net................................................ 7,623,000 9,333,000
Intangible assets, less accumulated amortization of $33,718,000 and $25,734,000... 89,849,000 50,730,000
Other assets...................................................................... 1,932,000 5,333,000
-------------- -------------
$ 116,023,000 $ 77,227,000
-------------- -------------
-------------- -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.............................................................. $ 3,537,000 $ 2,867,000
Accrued interest.............................................................. 6,477,000 1,674,000
Accrued payroll and related expenses.......................................... 1,720,000 1,077,000
Other accrued liabilities..................................................... 4,364,000 3,081,000
Current portion of long-term debt............................................. 167,209,000 3,611,000
Unamortized carrying value of subordinated debt............................... 19,445,000
-------------- -------------
Total current liabilities................................................. 202,752,000 12,310,000
Long-term debt, less current portion.............................................. 232,000 78,000,000
Deferred income taxes............................................................. 8,568,000
Other long-term liabilities....................................................... 683,000 640,000
-------------- -------------
Total liabilities................................................................. 203,667,000 99,518,000
-------------- -------------
Mandatorily redeemable Class A-1 common stock, $.01 par value; 1,580,285 shares
authorized; 249,931 shares issued and outstanding in 1994........................ 35,066,000
-------------- -------------
Stockholders' deficit:
Class A common stock, $.000001 par value; 1,569,514 shares authorized, 49,904
shares issued and outstanding in 1995....................................... -- --
Class B common stock, $.01 par value and $.000001 par value in 1994 and 1995,
respectively; 2,293,235 and 254,018 shares authorized in 1994 and 1995,
respectively; 254,018 shares issued and outstanding......................... 3,000 --
Paid-in capital............................................................... 662,000 44,231,000
Accumulated deficit........................................................... (123,375,000) (66,522,000)
-------------- -------------
Total stockholders' deficit............................................... (122,710,000) (22,291,000)
Commitments (Note 11)
-------------- -------------
$ 116,023,000 $ 77,227,000
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-32
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-------------------------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
Broadcast revenue............................................ $ 53,860,000 $ 56,154,000 $ 47,061,000
Less agency commissions...................................... (6,351,000) (6,552,000) (5,159,000)
----------------- ----------------- -----------------
Net revenue.............................................. 47,509,000 49,602,000 41,902,000
----------------- ----------------- -----------------
Expenses:
Broadcast operating expenses............................. 36,944,000 37,892,000 31,445,000
Corporate general and administrative..................... 2,702,000 2,621,000 2,285,000
Depreciation and amortization............................ 6,916,000 6,311,000 4,107,000
Write-down of intangibles and other assets............... 7,804,000
----------------- ----------------- -----------------
46,562,000 54,628,000 37,837,000
----------------- ----------------- -----------------
Income (loss) from operations................................ 947,000 (5,026,000) 4,065,000
Interest expense............................................. (7,602,000) (10,976,000) (9,913,000)
Net gain on sale of radio stations........................... 7,909,000 2,619,000
----------------- ----------------- -----------------
Income (loss) before provision for income taxes,
extraordinary gain and cumulative effect of change in
accounting principle....................................... 1,254,000 (16,002,000) (3,229,000)
Provision for income taxes................................... (378,000) (36,000) (63,000)
----------------- ----------------- -----------------
Income (loss) before extraordinary gain and cumulative effect
of change in accounting principle.......................... 876,000 (16,038,000) (3,292,000)
Extraordinary gain on forgiveness of debt, net of income
taxes...................................................... 12,222,000 60,145,000
----------------- ----------------- -----------------
Income (loss) before cumulative effect of change in
accounting principle....................................... 13,098,000 (16,038,000) 56,853,000
Cumulative effect of change in accounting principle.......... 354,000
----------------- ----------------- -----------------
Net income (loss)............................................ $ 13,452,000 $ (16,038,000) $ 56,853,000
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Primary earnings (loss) per share:
Before extraordinary item and cumulative effect of change
in accounting principle................................ $ 2.21 $ (31.82 ) $ (1.59 )
Extraordinary item....................................... 9.35 48.66
Cumulative effect of change in accounting principle...... .27
----------------- ----------------- -----------------
Total................................................ $ 11.83 $ (31.82 ) $ 47.07
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Fully diluted earnings (loss) per share:
Before extraordinary item and cumulative effect of change
in accounting principle................................ $ 2.21 $ (31.82 ) $ (1.61 )
Extraordinary item....................................... 9.35 48.66
Cumulative effect of change in accounting principle...... .27
----------------- ----------------- -----------------
Total................................................ $ 11.83 $ (31.82 ) $ 47.05
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Common equivalent shares:
Primary.................................................. 1,307,541 503,949 1,236,098
Fully diluted............................................ 1,307,541 503,949 1,236,098
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-33
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
------------------------ ---------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 27, 1992...... 254,018 $ 3,000 $ 662,000 $(120,789,000) $(120,124,000)
Net income.................... 13,452,000 13,452,000
----------- ----- --------- ----------- ---------- ------------ ------------
Balance at December 26, 1993...... 254,018 3,000 662,000 (107,337,000) (106,672,000)
Net loss...................... (16,038,000) (16,038,000)
----------- ----- --------- ----------- ---------- ------------ ------------
Balance at December 25, 1994...... 254,018 3,000 662,000 (123,375,000) (122,710,000)
Cancellation of Class A-1
Mandatorily Redeemable
Common Stock................ 26,562,000 26,562,000
Exchange of Class A-1
Mandatorily Redeemable
Common Stock................ 49,904 -- 8,504,000 8,504,000
Change in par value of Class B
Common Stock from $.01 per
share to $.000001 per
share....................... (3,000) 3,000
Issuance of warrant to
purchase common stock....... 8,500,000 8,500,000
Net income.................... 56,853,000 56,853,000
----------- ----- --------- ----------- ---------- ------------ ------------
Balance at December 31, 1995...... 49,904 $ -- 254,018 $ -- $44,231,000 $(66,522,000) $(22,291,000)
----------- ----- --------- ----------- ---------- ------------ ------------
----------- ----- --------- ----------- ---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-34
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................... $ 13,452,000 $ (16,038,000) $ 56,853,000
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Cumulative effect of change in accounting principle..... (354,000)
Interest expense added to long-term debt................ 2,309,000 2,465,000 3,631,000
Depreciation and amortization........................... 5,848,000 4,999,000 4,499,000
Net (revenue) expense on barter transactions............ 81,000 (288,000) (210,000)
(Gain) loss on disposition of assets.................... (7,930,000) 138,000 (2,287,000)
Extraordinary gain on forgiveness of debt............... (12,222,000) (60,145,000)
Write-down of intangibles and other assets.............. 9,297,000
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable................................. (1,318,000) (2,367,000) 3,698,000
Prepaid expenses and other.......................... 233,000 (14,000) 4,000
Other assets........................................ (610,000) 732,000 (224,000)
Accounts payable.................................... 679,000 1,360,000 (670,000)
Accrued interest.................................... (223,000) 2,070,000 (1,674,000)
Other accrued liabilities........................... (888,000) 924,000 (1,926,000)
Other long-term liabilities......................... 2,643,000 (107,000) (43,000)
-------------- -------------- ---------------
Net cash provided by (used in) operating
activities........................................ 1,700,000 3,171,000 1,506,000
-------------- -------------- ---------------
Cash flows from investing activities:
Proceeds from disposition of assets......................... 35,002,000 6,000 47,650,000
Acquisition of property, plant and equipment................ (3,009,000) (1,124,000) (2,851,000)
Acquisition of radio stations............................... (6,834,000)
-------------- -------------- ---------------
Net cash flows provided by (used in) investing
activities........................................ 31,993,000 (1,118,000) 37,965,000
-------------- -------------- ---------------
Cash flows from financing activities:
Payments on long-term debt.................................. (34,036,000) (2,534,000) (126,450,000)
Borrowings.................................................. 90,500,000
Payments related to financing costs......................... (5,208,000)
-------------- -------------- ---------------
Net cash used in financing activities............... (34,036,000) (2,534,000) (41,158,000)
-------------- -------------- ---------------
Net decrease in cash and cash equivalents....................... (343,000) (481,000) (1,687,000)
Cash and cash equivalents at beginning of period................ 2,958,000 2,615,000 2,134,000
-------------- -------------- ---------------
Cash and cash equivalents at end of period...................... $ 2,615,000 $ 2,134,000 $ 447,000
-------------- -------------- ---------------
-------------- -------------- ---------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-35
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--THE COMPANY
Noble Broadcast Group, Inc. (the Company), a privately held Delaware
corporation, owned and operated the following radio stations during 1995:
WSSH-AM serving Boston, Massachusetts; KBEQ-FM and AM, serving Kansas City,
Missouri; KMJQ-FM and KYOK-AM serving Houston, Texas; KBCO-FM and AM and KHIH-FM
and KHOW-AM, serving Denver, Colorado; KMJM-FM, KNJZ-FM and KATZ-AM, serving St.
Louis, Missouri; WVKS-FM, WRVF-FM and WSPD-AM, serving Toledo, Ohio. Four of
these stations were sold and two stations were purchased during 1995 (Note 8).
In addition, the Company also provided programming for and had exclusive rights
to sell advertising time on two radio stations located in Baja California,
Mexico, XETRA-FM and XETRA-AM, which primarily serve the metropolitan San Diego
area broadcasting as XTRA-FM and AM.
NOTE 2--SUBSEQUENT EVENT-SALE OF THE COMPANY
In February 1996, the Company entered into a Stock Purchase and Stock and
Warrant Redemption Agreement (the Agreement) whereby Jacor Communications, Inc.
(Jacor) agreed to purchase both the Company's outstanding Class B common stock
and a newly-issued warrant allowing Jacor to purchase the Company's Class A
common stock. This transaction is subject to Federal Communications Commission
approval and certain other conditions. Simultaneously, the Company entered into
an Asset Purchase Agreement and sold the assets of certain subsidiaries of the
Company to a wholly-owned subsidiary of Jacor and assigned to this subsidiary
its rights and obligations under certain contracts including the Exclusive Sales
Agency Agreement (Note 10). The aggregate value of the above transactions, when
fully consummated, is $152,000,000 plus certain closing costs. At that time,
Jacor will own 100% of the equity interests in the Company. The Company also
entered into time brokerage agreements with Jacor for the stations in St. Louis
and Toledo. The Company received approximately $99,000,000 in February 1996 in
conjunction with the transactions.
In connection with this transaction, the Company entered into a Credit
Agreement with another wholly-owned subsidiary of Jacor providing for a
$40,000,000 Term Loan Facility, which was borrowed in full in February 1996, and
a $1,000,000 Revolving Loan Facility. The loans bear interest at the Prime rate,
payable quarterly. Both facilities are to be repaid on February 1, 2002 or upon
occurrence of certain ownership changes, whichever occurs earlier.
The Company used the total proceeds received in February 1996 to repay the
outstanding indebtedness under the Senior Secured Term Loan, the Senior
Revolving Credit Facility and the Subordinated Notes, to redeem and retire the
warrant held by the subordinated debtholder, and to redeem and retire all of the
Company's Class A shares outstanding (Notes 5 and 6). In the event that the
transaction cannot be consummated, none of the proceeds previously paid to the
Class A stockholders or the warrant holders shall be returned. If the
transaction is terminated by the buyer, the Class B stockholders shall be
entitled to the balance of the amounts due under the Agreement; if terminated by
the Company, the buyer shall be entitled only to the amounts previously paid to
the Class B stockholders as well as certain other amounts.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Significant intercompany balances and
transactions have been eliminated.
FINANCIAL STATEMENT PREPARATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
F-36
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FISCAL YEAR
The Company's fiscal year ends on the last Sunday of December to coincide
with the standard broadcast year.
REVENUES
Revenues for commercial broadcasting advertisements are recognized when the
commercial is broadcast.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid investments (money market funds) with
original maturities of three months or less. Included in cash and cash
equivalents at December 25, 1994 is $1,600,000 of restricted cash. Restricted
cash of $1,500,000 was released to the Company on December 31, 1994 in
conjunction with its sale of KMJQ-FM and KYOK-AM (Note 8). The remaining
$100,000 of restricted cash was released to the Company in January 1995 in
conjunction with the sale of WSSH-AM (Note 8).
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.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company places its cash and temporary cash investments
in money market funds with high quality 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 United States.
EARNINGS (LOSS) PER COMMON SHARE
Primary earnings (loss) per common share are calculated on the basis of the
weighted average number of common shares outstanding plus (in periods in which
they have a dilutive effect) the effect of common equivalent shares arising from
Senior Subordinated Convertible Notes, using the if-converted method, and the
effect of warrants to purchase common stock using the treasury stock method. The
calculation of fully diluted earnings per common share also includes the effect
of the assumed conversion of Senior Subordinated Convertible Notes and exercise
of warrants to purchase common stock in periods in which such conversion would
cause dilution.
PROPERTY, PLANT AND EQUIPMENT
Purchases of property, plant and equipment, including additions and
improvements and expenditures for repairs and maintenance that significantly add
to productivity or extend the economic lives of the assets, are capitalized at
cost and depreciated on the straight-line basis over their estimated useful
lives as follows:
<TABLE>
<S> <C>
Technical and office equipment.................................. 5-8 years
10-30
Buildings and building improvements............................. years
Furniture and fixtures.......................................... 10 years
Leasehold improvements.......................................... 10 years
Land improvements............................................... 8 years
Automobiles..................................................... 3 years
</TABLE>
F-37
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Maintenance and repairs are expensed as incurred.
INTANGIBLE ASSETS
Intangible assets represents the aggregate excess purchase cost over the
fair market value of radio station net assets acquired. Intangible assets are
stated at the lower of cost or net realizable value and are being amortized
using the straight-line method over periods not exceeding 40 years. The Company
evaluates the realizability of intangible assets by comparing the asset carrying
amount to future anticipated undiscounted cash flows.
In 1994, the Company determined that intangibles related to its Houston
stations were impaired and, accordingly, it recorded a $7,450,000 loss (Note 8).
Additionally, in 1994, the Company determined that $354,000 in other assets
would not be realized, and recorded a loss.
DEBT ISSUANCE COSTS
Debt issuance costs incurred in connection with executing long-term debt
agreements are amortized over the term of associated debt to interest expense.
FINANCIAL INSTRUMENTS
Interest rate swaps are entered into as a hedge against interest exposure of
variable rate debt. The differences to be paid or received on the swaps are
included in interest expense. Gains and losses are recognized when the swaps are
settled. The interest rate swaps are subject to market risk as interest rates
fluctuate.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board Statement No. 107, "Disclosures about
Fair Value of Financial Instruments," (FAS 107) requires disclosure of fair
value information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. Fair values
are based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used. The carrying
amount of all financial instruments on the consolidated balance sheet are
considered reasonable estimates of fair value, with the exception of long-term
debt as of December 25, 1994, of which $50,301,000 was forgiven in August 1995
(Note 5) and the interest rate swap agreement (Note 5).
NOTE 4--COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
<S> <C> <C>
Property, plant and equipment
Technical and office equipment................................................. $ 12,295,000 $ 10,196,000
Land and land improvements..................................................... 978,000 1,067,000
Buildings and building improvements............................................ 2,880,000 2,517,000
Furniture and fixtures......................................................... 1,531,000 1,244,000
Leasehold improvements......................................................... 1,640,000 1,057,000
Automobiles.................................................................... 327,000 314,000
------------- --------------
19,651,000 16,395,000
Less accumulated depreciation and amortization................................. (12,028,000) (7,062,000)
------------- --------------
$ 7,623,000 $ 9,333,000
------------- --------------
------------- --------------
Other non-current assets
Debt issuance costs............................................................ $ 646,000 $ 4,267,000
Other.......................................................................... 1,286,000 1,066,000
------------- --------------
$ 1,932,000 $ 5,333,000
------------- --------------
------------- --------------
</TABLE>
F-38
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Statement of Cash Flows Information
Schedule of certain non-cash financing activities:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
----------------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ --------------- ---------------
<S> <C> <C> <C>
Acquisition of assets in exchange for debt.................... $ 463,000 $ -- $ --
------------ ----- -----
------------ ----- -----
</TABLE>
NOTE 5--LONG-TERM DEBT
Long-term debt is comprised of:
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
<S> <C> <C>
Senior Secured Term Loan..................................... $ 45,000,000
Senior Revolving Credit Facility............................. 7,050,000
Subordinated Notes........................................... 29,325,000
Tranche A Notes.............................................. $ 87,364,000
Tranche B Notes.............................................. 11,587,000
Series A Senior Subordinated Notes........................... 29,617,000
Series B Senior Subordinated Convertible Notes............... 37,000,000
Other........................................................ 1,873,000 236,000
--------------- -------------
167,441,000 81,611,000
Less current portion......................................... (167,209,000) (3,611,000)
--------------- -------------
$ 232,000 $ 78,000,000
--------------- -------------
--------------- -------------
</TABLE>
Interest paid during 1993, 1994 and 1995 aggregated $4,354,000, $6,152,000
and $3,673,000, respectively.
TRANCHE A NOTES AND TRANCHE B NOTES--The Tranche A and Tranche B Notes,
which were outstanding as of December 25, 1994, were extinguished in conjunction
with the Company's August 1995 debt restructuring (see Debt Restructuring
below). The Tranche A Notes bore interest at the 30-day LIBOR rate plus an
applicable margin. The Tranche B Notes bore interest at 4 percent. The senior
debt agreement provided for principal prepayments at the option of the Company
and called for mandatory principal prepayments from the net proceeds of sales of
certain radio station properties or from 50 percent of the net proceeds of sales
by the Company of any stock or warrants issued by the Company or from the
exercise of any such warrants or from excess operating cash, as defined.
During 1993, the Company sold certain radio station properties and other
assets (Note 8) and utilized resultant net proceeds of $32,960,000 to repay
Tranche A Notes of $18,498,000 and Tranche B Notes of $14,462,000. Pursuant to
agreements with the senior debtholders, $12,222,000 of the Tranche A Notes was
forgiven, resulting in an extraordinary gain during the year ended December 26,
1993.
The Company's agreement with the Senior debtholders contained, among other
things, certain covenants as to the maintenance of certain financial ratios and
cash flows, as well as restrictions on additional indebtedness, property sales
and liens, mergers and acquisitions, contingent liabilities, certain lease
transactions, investments, transactions with affiliates, corporate overhead,
capital expenditures, prepaid expenditures, and employment and certain other
contracts.
Based on agreements between the Company and the holders of the Tranche A
Notes and Tranche B Notes, the outstanding debt was to be repaid as of August
18, 1995 and the Company classified the debt as current as of December 25, 1994.
F-39
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SENIOR SUBORDINATED NOTES AND SENIOR SUBORDINATED CONVERTIBLE NOTES--The
Series A Senior Subordinated Notes (Subordinated Notes) and Series B Senior
Subordinated Convertible Notes (Convertible Notes), which were outstanding as of
December 25, 1994, were extinguished in conjunction with the Company's 1995 debt
restructuring (see Debt Restructuring below).
In fiscal year 1991 the Company restructured its debt with the subordinated
debtholders by modifying certain terms. The $24,423,000 excess of the carrying
amount of the old subordinated debt instruments over the principal amount of the
Subordinated and Convertible Notes was recorded as unamortized carrying value of
subordinated debt in 1991 and was being amortized against future interest
expense over the term of the restructured Subordinated and Convertible Notes.
The Subordinated Notes bore interest at an annual rate of 9%; interest was added
to principal semiannually. During 1993, 1994 and 1995, approximately $2,309,000,
$2,465,000 and $3,631,000 of interest was added to the principal, respectively.
The Convertible Notes bore interest at the non-compounding annual rate of 5
percent and such interest was due and payable at such time as the principal
became payable. The Convertible Notes were convertible as to both principal and
accrued interest into 803,592 shares of Mandatorily Redeemable Class A-1 common
stock at the option of the holders after April 30, 1994.
The Subordinated Notes and Convertible Notes were subordinated to the
Tranche A and B Notes and contained, among other things, covenants as to the
maintenance of certain financial ratios and cash flows, and certain restrictions
as to additional indebtedness, amounts and types of payments and investments,
dividends, liens and encumbrances, sale and leaseback transactions, equity
interests of subsidiaries, sales of assets, mergers, corporate overhead, capital
expenditures, prepayment of expenses, and employment contracts.
Based on agreements between the Company and the holders of Subordinated
Notes and Convertible Notes, the outstanding debt was to be repaid as of August
18, 1995 and the Company classified the debt and associated unamortized carrying
value of subordinated debt as current as of December 25, 1994.
DEBT RESTRUCTURING--In August 1995, the Company completed a restructuring of
its debt, resulting in the extinguishment of $175,301,000 of Tranche A Notes,
Tranche B Notes, Subordinated Notes and Convertible Notes plus accrued interest
for an aggregate amount of $125,000,000 in cash. Additionally, the Company
repurchased or exchanged the shares of Class A-1 common stock held by the
holders of these debt instruments. The Company sold its Houston, Boston and
Kansas City stations in 1995 and utilized the resultant net proceeds of
$47,650,000, along with $1,500,000 restricted cash released to the Company (Note
3), to repay outstanding debt prior to the completion of the restructuring (Note
8), entered into a new senior $60,000,000 Credit Agreement and obtained new
subordinated debt for $37,000,000. The former debtholders forgave $50,301,000 of
principal and accrued interest which has been recognized as an extraordinary
gain in 1995. Also included in the extraordinary gain for 1995 is $18,412,000,
representing the remaining unamortized carrying value of subordinated debt as of
the date of the related debt extinguishment.
SENIOR SECURED TERM LOAN AND SENIOR REVOLVING CREDIT FACILITY--In August
1995, the Company and its wholly-owned subsidiaries entered into a $60,000,000
Credit Agreement with a consortium of banks, consisting of a $45,000,000 Senior
Secured Term Loan (the Term Loan) and a $15,000,000 Senior Revolving Credit
Facility (the Revolver). The Company borrowed all of the $45,000,000 Term Loan
and $7,500,000 of the Revolver and paid transaction costs of approximately
$4,700,000. Under the Term Loan and the Revolver, principal payments were due in
varying amounts through 2001. As discussed in Note 2, the outstanding debt under
the Credit Agreement was paid in full and cancelled in February 1996.
F-40
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Borrowings under the Credit Agreement bore interest, at the option of the
Company, at either the London Interbank Offered Rate (LIBOR) plus an applicable
margin of up to 2.625%, or at a base rate (defined as the higher of the Federal
Funds Rate plus .5% or the bank's Prime rate) plus an applicable margin of up to
1.375% per annum. The Term Loan and the Revolver were secured by substantially
all of the Company's assets, including the common stock and tangible and
intangible assets and major lease rights of the Company's operating
subsidiaries.
In conjunction with entering into the Credit Agreement, the Company issued a
warrant to purchase 10% of the common stock of the Company's primary operating
subsidiary, exercisable only in the event of certain specified occurrences
through June 30, 1996, for an exercise price of $1.00. The Company determined
that the value of the warrant was de minimus because of the nature of the
specified events required for warrant exercise. As discussed in Note 2, the
warrant was cancelled in February 1996.
INTEREST RATE SWAP AGREEMENT--In accordance with the terms of the Credit
Agreement, the Company entered into a three year interest rate swap agreement in
September 1995 on a notional principal amount of $30,000,000. Under the interest
rate swap agreement, on a quarterly basis the Company pays the counterparty
interest at a fixed rate of 5.87%, and the counterparty pays the Company
interest at a variable rate based on the LIBOR.
As of December 31, 1995, the interest rate swap agreement had a nominal
carrying value and a ($425,000) fair value. The fair value was estimated by
obtaining a quotation from the counterparty. In February 1996, the Company
terminated the interest rate swap agreement in conjunction with its debt
extinguishment, and realized a loss of $686,000 upon termination.
SUBORDINATED NOTES--In August 1995, the Company entered into an Investment
Agreement with a new subordinated debtholder, consisting of $37,000,000 in
subordinated notes. The subordinated notes bore interest at a rate of 8.108% per
annum compounded quarterly, of which 50% was to be paid annually with the
remainder being added to principal. The notes were due in August 2002. As
discussed in Note 2, the debt was paid in full and cancelled in February 1996.
Under the Investment Agreement, the Company issued a warrant for 75% of the
Company's Class A common stock, exercisable through August 2005, with an
exercise price of $1.00. Management has determined that the fair value of the
warrant on the date of issuance was approximately $8,500,000, which has been
recorded as a discount on the related debt and was being amortized to interest
expense over the term of the debt. As discussed in Note 2, the Company
repurchased the warrant in February 1996.
COVENANTS--The Credit Agreement and the Investment Agreement required the
Company to comply with certain financial and operating covenants, including,
among others, limitations on: capital expenditures, acquisitions and additional
indebtedness, engaging in a business other than radio broadcasting, paying cash
dividends, corporate overhead levels, the use of borrowings, and requirements to
maintain certain financial ratios.
NOTE 6--COMMON STOCK
In conjunction with the August 1995 refinancing, the Company entered into an
agreement with its former debtholders providing for the repurchase or exchange
of all of their Class A-1 shares of common stock. Under the agreement, 189,321
Class A-1 shares were repurchased by the Company for a de minimus amount and the
remaining 60,610 shares were exchanged for 49,904 shares of Class A common
stock. There were 249,931 shares of Mandatorily Redeemable Class A-1 common
stock outstanding in 1993 and 1994.
The Company's authorized capital stock subsequent to the August 1995
restructuring consists of 1,569,514 shares of Class A common stock, $.000001 par
value, of which 49,904 shares are issued and outstanding, and
F-41
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
254,018 shares of Class B voting common stock, $.000001 par value, all of which
are issued and outstanding. Prior to August 1995, the Class B common stock had a
par value of $.01. Class B common stock is voting common stock, while Class A
common stock has no right to vote with respect to the election of directors, or
other corporate actions other than certain major events set forth in the
Company's Restated Certificate of Incorporation. The holders of Class B common
stock, voting as a class, are entitled to elect six members of the Board of
Directors. Class B common stock may convert their shares into stock that is
registered pursuant to certain firm commitment underwritten public offerings, as
defined.
Shares of Class A common stock are convertible into an equal number of
shares of Class B common stock subsequent to a public offering, as described in
the Restated Certificate of Incorporation, upon certain events as defined in the
Company's agreements with the subordinated debtholders, or as of August 18,
2000. In addition, holders of both Class A and Class B common stock may convert
their shares into stock that is registered pursuant to a public offering.
Holders of Class A common stock are entitled to participate on a pro rata basis
with the holders of Class B common stock with respect to dividends, when and as
declared by the Board of Directors, provided there are funds legally available
for such purpose, and with respect to any redemption or repurchase by the
Company of any Class B common stock.
The Mandatorily Redeemable Class A-1 common stock contained a liquidation
preference over Class B common stock in an amount equal to a prescribed formula
value solely in the event of a liquidation resulting from bankruptcy, insolvency
or other similar proceeding. Such liquidation preference was zero at December
25, 1994. The Mandatorily Redeemable Class A-1 common stock was not entitled to
vote except for the right, voting as a separate class, to elect one member of
the Company's Board of Directors and except that certain transactions specified
in the Company's Restated Certificate of Incorporation required the consent of
the majority of the then-outstanding shares of Mandatorily Redeemable Class A-1
common stock. Holders of Mandatorily Redeemable Class A-1 common stock were
entitled to participate on a pro rata basis with the holders of Class B common
stock upon any redemption or repurchase by the Company of any Class B common
stock or other equity securities of the Company.
Shares of Class A-1 common stock were convertible into an equal number of
shares of Class B common stock subsequent to a public offering, or under certain
specified circumstances. In addition, holders of Class A-1 common stock were
entitled to convert their shares into stock registered pursuant to certain firm
commitment underwritten public offerings, as defined. Prior to an initial public
offering (IPO), holders of Class A-1 common stock were entitled to, in the event
of a defined change of voting control of the Company, require the Company to
repurchase their shares of Class A-1 common stock in accordance with specified
formula prices. In addition, if the Company had not effected an IPO by December
2002, then holders of a majority of the then-outstanding Class A-1 common stock,
on or after December 31, 2003, could require the Company to repurchase the Class
A-1 common stock owned by them at a specified formula repurchase price.
The Mandatorily Redeemable Class A-1 common stock was recorded at an "issue
price" equivalent to the carrying value of the equity instruments exchanged
therefor. No subsequent adjustment to the valuation of the Mandatorily
Redeemable Class A-1 common stock was required prior to its repurchase and
exchange in August 1995.
NOTE 7--STOCK OPTIONS
The Company had two stock option plans, the Executive Stock Option Plan
(Executive Plan) and the 1991 Stock Option Plan (1991 Plan). No options were
granted under the Executive Plan or the 1991 Plan. In conjunction with the
August 1995 debt restructuring, the Company cancelled the 1991 Plan and the
Executive Plan.
F-42
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--STATION TRANSACTIONS
In August 1995, concurrent with the debt restructuring, the Company
purchased substantially all of the assets and certain liabilities of WSPD-AM and
WRVF-FM, Toledo, Ohio, for $6,660,000 using cash proceeds obtained through the
August 1995 debt restructuring. The acquisition has been accounted for using the
purchase method. The assets acquired were comprised of accounts receivable of
$391,000 and property, plant and equipment of $1,525,000. The excess of the
purchase price over the fair value of the assets and liabilities acquired was
$4,744,000, which is attributable to intangible assets and is being amortized
over 40 years using the straight-line method. The results of operations are
included in the results of operations of the Company since their acquisition.
The following unaudited pro forma summary information presents the results
of operations of the Company as if the acquisition of WSPD-AM and WRVF-FM had
occurred on December 27, 1993, after giving effect to certain adjustments,
principally intangible amortization and interest. These pro forma results have
been prepared for comparative purposes only and do not purport to be indicative
of what would have occurred had the acquisition been effected as of December 27,
1993 or of the results which may occur in the future.
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED
-----------------------------
DECEMBER 25, DECEMBER 31,
1994 1995
<S> <C> <C>
Net revenue.................................................... $ 59,455,000 $ 47,945,000
Loss before extraordinary item................................. $ (16,230,000) $ (4,015,000)
Net income (loss).............................................. $ (16,230,000) $ 57,576,000
Earnings (loss) per share before extraordinary item............ $ (32.21) $ (3.25)
Earnings (loss) per share...................................... $ (32.21) $ 46.58
</TABLE>
In March 1995, the Company sold substantially all of the assets (excluding
cash and accounts receivable) and certain liabilities of Noble Broadcast of
Kansas City, Inc. (KBEQ-FM and KBEQ-AM) for $7,650,000. The sale of these assets
resulted in a gain of approximately $1,982,000 and has been reflected in the
Company's 1995 results of operations.
In January 1995, the Company sold substantially all of the assets (excluding
cash and accounts receivable) and certain liabilities of Noble Broadcast of
Ballybunion, Inc. (WSSH-AM) for $1,500,000. The sale of these assets resulted in
a gain of approximately $637,000 and has been reflected in the Company's 1995
results of operations.
On December 31, 1994, the Company sold substantially all of the non-cash
assets and certain liabilities of Noble Broadcast of Houston, Inc. (KMJQ-FM and
KYOK-AM) for $38,500,000 and released restricted cash of $1,500,000 (Note 3).
The sale of these assets resulted in a loss on the sale of $7,450,000. This loss
was considered to result from permanent impairment of intangible assets as of
December 25, 1994 and has been reflected in the Company's results of operations
in 1994.
In March 1993, the Company sold substantially all of the assets of Noble
Broadcast of New York, Inc. (WBAB-FM and WGBB-AM) for $16,000,000. Net proceeds
from this sale of $15,000,000 were used to reduce the Tranche A and Tranche B
Notes (Note 5) resulting in the forgiveness of $5,562,000 of Tranche A Notes.
The sale of these assets resulted in a gain on the sale of $6,555,000.
In April 1993, the Company sold substantially all of the assets of WSSH-FM
Boston, Massachusetts, for $18,500,000. Net proceeds from this sale of
$15,250,000 were used to reduce the Tranche A and Tranche B Notes (Note 5)
resulting in the forgiveness of $5,655,000 of the Notes. The sale of these
assets resulted in a gain of $1,354,000.
F-43
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In May 1993, the Company purchased substantially all of the assets of
KATZ-AM and KNJZ-FM in St. Louis for $2,750,000. The Company paid $2,250,000 in
cash and issued a non-interest bearing promissory note for $500,000. The note is
payable in equal installments of $250,000 in May 1994 and May 1996. The
acquisition has been accounted for using the purchase method. The assets and
liabilities acquired were comprised entirely of intangible assets which are
being amortized over 40 years using the straight-line method. The results of
operations are included in the results of operations of the Company since their
acquisition.
NOTE 9--INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
109 on a prospective basis, effective January 1, 1993. SFAS 109 requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under the SFAS 109 asset and liability method, deferred tax assets
and liabilities are determined based upon the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. Upon
implementation of SFAS 109, the Company recorded a cumulative effect (benefit)
of a change in accounting principle of $354,000, which represented the future
tax benefits expected to be realized upon utilization of the Company's state tax
loss carryforwards. The benefit of these loss carryforwards was realized during
1993.
The following is a summary of the provision for income taxes, for the years
ended December 26, 1993, December 25, 1994 and December 31, 1995:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Current:
Federal................................................. $ -- $ -- $ --
State................................................... 24,000 36,000 63,000
Deferred:
Federal................................................. -- --
State................................................... 354,000 -- --
---------- --------- ---------
Provision................................................... $ 378,000 $ 36,000 $ 63,000
---------- --------- ---------
---------- --------- ---------
</TABLE>
A reconciliation of the provision for income taxes to the amount computed by
applying the statutory Federal income tax rate to income before income taxes
follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
Federal statutory rate......................................... $ 439,000 $ (5,601,000) $ (1,176,000)
State income taxes, net of federal benefit..................... 57,000 (728,000) (153,000)
Amortization and write down of intangibles..................... (496,000) 3,348,000 1,329,000
Losses for which no current benefit is available............... -- 2,847,000 --
State net operating loss utilization........................... 354,000 -- --
Other.......................................................... 24,000 170,000 63,000
------------ ------------- -------------
$ 378,000 $ 36,000 $ 63,000
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
F-44
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of deferred income taxes at December 25, 1994 and December
31, 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Deferred tax assets:
Available net operating loss carryforwards for financial reporting
purposes........................................................... $ 30,060,000 $ --
Charitable contribution carryovers................................... 250,000 250,000
Book and tax amortization differences................................ 12,530,000 --
Accrued liabilities and reserves..................................... 200,000 180,000
-------------- -------------
43,040,000 430,000
Deferred tax liabilities:
Book and tax basis differences....................................... (14,272,000) (7,256,000)
Book and tax depreciation and amortization differences............... (4,458,000) (1,312,000)
-------------- -------------
Net deferred tax assets (liabilities)................................ 24,310,000 (8,138,000)
Valuation allowance.................................................. (24,310,000) (430,000)
-------------- -------------
$ -- $ (8,568,000)
-------------- -------------
-------------- -------------
</TABLE>
The Company recorded a provision for income taxes in 1993, 1994 and 1995 due
to taxable income for state tax reporting purposes related to entities in the
consolidated group which were subject to state income tax. The Company recorded
a valuation allowance for those deferred tax assets for which the Company's
management determined that the realization of such future tax benefits is not
more likely than not. Taxes paid during 1993, 1994 and 1995 aggregated $24,000,
$36,000 and $63,000, respectively.
At December 31, 1995, the Company had available Federal net operating losses
of approximately $46,000,000 for tax reporting purposes. Additionally, the
Company had available net operating losses of approximately $41,000,000 for
state income tax purposes. The net operating losses for tax purposes expire
between 2001 and 2009. In certain circumstances, as specified in the Internal
Revenue Code, a 50 percent or more ownership change by certain combinations of
the Company's stockholders during any three year period would result in
limitations on the Company's ability to utilize its net operating loss
carryforwards. The value of the Company's stock at the time of the ownership
change is the primary factor in determining the limit on the Company's ability
to utilize its net operating loss carryforwards. As a result of the August 1995
debt and equity restructuring, an ownership change occurred, and consequently
the Company's net operating loss carryforwards generated prior to the ownership
change are limited. The purchase of the Company by Jacor (Note 2) will also
result in an ownership change as specified in the Internal Revenue Code. As a
result of the August 1995 debt and equity restructuring, certain deferred tax
assets were reduced for financial reporting purposes. The increase in deferred
tax liabilities of $8,568,000 that occurred in conjunction with the August 1995
debt and equity restructuring was recorded as a component of the extraordinary
gain resulting from the August 1995 restructuring.
NOTE 10--BROADCAST LICENSE AGREEMENT
The Company's consolidated net sales for 1993, 1994 and 1995, include
XTRA-FM and XTRA-AM sales of approximately $13,346,000, $14,087,000 and
$15,613,000, respectively, pursuant to an Exclusive Sales Agency Agreement (the
Agreement) with the broadcast licensee expiring in 2015. Under the Agreement,
the Company acts as the agent for the sale of advertising time on XTRA-FM and
XTRA-AM for all areas outside Mexico. The Company operated a broadcasting tower
under a month-to-month lease until February 1996 when it moved to a new location
in Mexico owned by the Company. The broadcast licenses for these stations from
the Ministry of Communications of the Republic of Mexico are scheduled to expire
on July 3, 2004.
F-45
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company is not aware of any information which would lead it to believe that
any specific risks exist which threaten the continuance of the Company's
relationship with the broadcast licensee.
Pursuant to the terms of the Agreement, as amended, the Company provides
programming for and purchases advertising time directly from the broadcast
licensee and resells such time to United States advertisers and agencies. The
Company incurred $555,000, $584,000 and $415,000 in expenses under the Agreement
during 1993, 1994 and 1995.
NOTE 11--BARTER TRANSACTIONS
Barter revenue was approximately $2,956,000, $2,551,000 and $2,461,000, in
1993, 1994 and 1995, respectively. Barter expense was approximately $3,037,000,
$2,263,000 and $2,251,000, in 1993, 1994 and 1995, respectively.
Included in prepaid expenses and other current assets and accrued
liabilities in the accompanying consolidated balance sheets for 1995 and 1994
are barter receivables (merchandise or services due to the Company) of
approximately $1,640,000 and $1,540,000, respectively and barter accounts
payable (air time due to suppliers of merchandise or services) of approximately
$1,384,000 and $1,385,000, respectively.
NOTE 12--COMMITMENTS
BROADCAST COMMITMENTS
The Company has agreements to broadcast a series of professional sports
games and related events through 1998. The Company incurred total expenses of
$2,142,000, $2,744,000 and $3,757,000 during 1993, 1994 and 1995, respectively,
in accordance with the agreements. Future minimum annual payments under the
agreements become due and payable as follows:
<TABLE>
<S> <C>
1996............................................ $2,765,000
1997............................................ 1,172,000
1998............................................ 385,000
---------
$4,322,000
---------
---------
</TABLE>
LEASE COMMITMENTS
The Company incurred total rental expenses of $1,389,000, $1,378,000 and
$538,000 in 1993, 1994 and 1995, respectively, under operating leases for
facilities and equipment. Future annual rental commitments expected under such
leases at December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996............................................ $ 489,000
1997............................................ 406,000
1998............................................ 415,000
1999............................................ 404,000
2000............................................ 368,000
Thereafter...................................... 1,038,000
---------
$3,120,000
---------
---------
</TABLE>
TIME BROKERAGE AGREEMENTS
The Company, through various subsidiaries, previously provided programming
through time brokerage agreements. These agreements, which were terminated in
August 1995, allowed the Company to purchase a
F-46
<PAGE>
NOBLE BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
specified amount of broadcast time per week in exchange for the rights to all
advertising revenues. The Company incurred related total expenses of $1,294,000,
$1,517,000 and $479,000 during 1993, 1994 and 1995, respectively.
NOTE 13--LITIGATION
The Company is involved in litigation on certain matters arising in the
ordinary course of business. Management has consulted with legal counsel and
does not believe that the resolution of such matters will have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.
F-47
<PAGE>
- ----------------------------------------------
----------------------------------------------
- ----------------------------------------------
----------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................................. 3
Risk Factors........................................ 11
The Acquisitions.................................... 14
Use of Proceeds..................................... 16
Capitalization...................................... 17
Unaudited Pro Forma Financial Information........... 18
Selected Historical Financial Data.................. 27
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 33
Business............................................ 38
Management.......................................... 54
Description of Notes................................ 56
Description of Other Indebtedness................... 76
Underwriting........................................ 79
Experts............................................. 79
Legal Matters....................................... 79
Incorporation of Certain Documents by Reference..... 80
Available Information............................... 80
Index to Financial Statements....................... F-1
</TABLE>
$50,000,000
JACOR COMMUNICATIONS, INC.
AND
JCAC, INC.
% SENIOR
SUBORDINATED NOTES
DUE 2006
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1996
- ----------------------------------------------
----------------------------------------------
- ----------------------------------------------
----------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the fees and expenses (all but the
SEC and NASD fees are estimates) in connection with the issuance and
distribution of the Notes being registered hereunder. All such fees and expenses
shall be borne by the Company.
<TABLE>
<S> <C>
SEC Registration fees............................................. $ 17,242
NASD fee.......................................................... 5,500
Blue Sky fees and expenses........................................ 25,000
Printing and engraving expenses................................... 150,000
Transfer agent and registrar fee and expenses..................... 12,000
Attorneys' fees and expenses...................................... 200,000
Accounting fees and expenses...................................... 125,000
Miscellaneous..................................................... 65,258
---------
Total..................................................... $ 600,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1 of Article VI of the Registrant's Amended and Restated Code of
Regulations (the "Code of Regulations") generally provides that each of the
Registrant's directors, officers and employees is entitled to be indemnified
from personal liability to the fullest extent permitted by Ohio law. Section
1701.13 of the Ohio Revised Code permits a corporation to indemnify its
officers, directors and employees (other than in certain cases involving bad
faith, negligence or misconduct) from and against any and all claims and
liabilities to which he or she may become subject by reason of his or her
position, or acts or commissions in such position, including reasonable costs of
defense and settlements (except in connection with shareholder derivative suits,
where indemnification is limited to the costs of defense). Ohio law also permits
corporations to provide broader indemnification than that provided by statute.
Pursuant to authority contained in its Code of Regulations, the Registrant
maintains in force a standard directors' and officers' liability insurance
policy providing coverage of $10,000,000 against liability incurred by any
director or officer in his or her capacity as such.
ITEM 16. EXHIBITS.
See Index to Exhibits.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-1
<PAGE>
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective;
(2) That, for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) That, for the purpose of determining the eligibility of the trustee
under the Indenture for the Notes, to file an application under subsection (a)
of section 310 of the Trust Indenture Act ("Act") in accordance with the rules
and regulations prescribed by the Commission under section 305(b)(2) of the Act.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO
BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF CINCINNATI, STATE OF OHIO
ON THIS 12TH DAY OF APRIL 1996.
JACOR COMMUNICATIONS, INC.
BY: /S/ R. CHRISTOPHER WEBER
-----------------------------------
R. Christopher Weber
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND
SECRETARY
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW HEREBY CONSTITUTES AND APPOINTS R. CHRISTOPHER WEBER AND JON M. BERRY, OR
EITHER OF THEM, AS SUCH SIGNATORY'S TRUE AND LAWFUL ATTORNEYS-IN-FACT AND
AGENTS, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR SUCH SIGNATORY
AND IN SUCH SIGNATORY'S NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO
SIGN ANY OR ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS
REGISTRATION STATEMENT (AND TO ANY REGISTRATION STATEMENT FILED PURSUANT TO RULE
462 UNDER THE SECURITIES ACT), AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO,
AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY
TO BE DONE IN AND ABOUT THE FOREGOING, AS FULLY AS TO ALL INTENTS AND PURPOSES
AS SUCH SIGNATORY MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING
ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS, OR ANY OF THEM, OR THEIR OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON APRIL 12, 1996 BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED.
Principal Executive Officer: Principal Financial and Accounting
Officer:
/s/ RANDY MICHAELS /s/ R. CHRISTOPHER WEBER
- ----------------------------------- -----------------------------------
Randy Michaels R. Christopher Weber
PRESIDENT, CO-CHIEF OPERATING SENIOR VICE PRESIDENT, CHIEF
OFFICER AND DIRECTOR FINANCIAL OFFICER AND SECRETARY
/S/ ROBERT L. LAWRENCE /s/ ROD F. DAMMEYER
- ----------------------------------- -----------------------------------
Robert L. Lawrence Rod F. Dammeyer
CO-CHIEF OPERATING OFFICER AND DIRECTOR
DIRECTOR
/s/ SHELI Z. ROSENBERG /s/ F. PHILIP HANDY
- ----------------------------------- -----------------------------------
Sheli Z. Rosenberg F. Philip Handy
BOARD CHAIR AND DIRECTOR DIRECTOR
/s/ JOHN W. ALEXANDER /s/ MARC LASRY
- ----------------------------------- -----------------------------------
John W. Alexander Marc Lasry
DIRECTOR DIRECTOR
II-3
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INDEX TO EXHIBITS
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
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1.1 Form of Underwriting Agreement (to be filed by amendment). **
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2.1 Agreement and Plan of Merger dated February 12, 1996 (the "Merger *
Agreement") among Citicasters Inc., the Registrant and JCAC, Inc.
Incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated February 27, 1991.
2.2 Stockholders Agreement dated February 12, 1996 among the Registrant, JCAC, *
Inc., Great American Insurance Company, American Financial Corporation,
American Financial Enterprises, Inc., Carl H. Lindner, The Carl H.
Lindner Foundation and S. Craig Lindner. Incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated February
27, 1996.
2.3 Jacor Shareholders Agreement dated February 12, 1996 among Citicasters Inc. *
and Zell/ Chilmark Fund L.P. Incorporated by reference to Exhibit 2.3 to
the Registrant's Current Report on Form 8-K dated February 27, 1996.
2.4 Escrow Agreement among the Registrant, Citicasters Inc. and PNC Bank dated **
March 13, 1996.
2.5 Irrevocable Letter of Credit, Banque Paribas, Chicago Branch dated March **
13, 1996.
2.6 Letter of Credit and Reimbursement Agreement by and between the Registrant **
and Banque Paribas dated March 13, 1996.
2.7 Form of Employment Continuation Agreement (executive officer form) between *
Citicasters Inc. and [executive officer] (referred to as exhibit
6.6(c)(i) in Merger Agreement). Incorporated by reference to Exhibit 2.5
to the Registrant's Current Report on Form 8-K dated February 27, 1996.
2.8 Form of Employment Continuation Agreement (management form) between *
Citicasters Inc. and [manager] (referred to as exhibit 6.6(c)(ii) in
Merger Agreement). Incorporated by reference to Exhibit 2.6 to the
Registrant's Current Report on Form 8-K dated February 27, 1996.
2.9 Form of Warrant Agreement between the Registrant, and KeyCorp Shareholder *
Services, Inc., as warrant agent (referred to as exhibit 3.1 in Merger
Agreement). Incorporated by reference to Exhibit 2.7 to the Registrant's
Current Report on Form 8-K dated February 27, 1996.
2.10 Stock Purchase and Stock Warrant Redemption Agreement dated as of February *
20, 1996 among the Registrant, Prudential Venture Partners II, L.P.,
Northeast Ventures, II, John T. Lynch, Frank A. DeFrancesco, Thomas R.
Jiminez, William R. Arbenz, CIHC, Incorporated, Bankers Life Holding
Corporation and Noble Broadcast Group, Inc. ("Noble") (omitting exhibits
not deemed material or filed separately in executed form). [Prudential
and Northeast are sometimes referred to hereafter as the "Class A
Shareholders"; Lynch, DeFrancesco, Jiminez and Arbenz as the "Class B
Shareholders"; and CIHC and Bankers Life as the Warrant Sellers.]
Incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
2.11 Investment Agreement dated as of February 20, 1996 among the Registrant, *
Noble and the Class B Shareholders (omitting exhibits not deemed
material). Incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated March 6, 1996.
2.12 Warrant to Purchase Class A Common Stock of Noble issued to the Registrant. *
Incorporated by reference to Exhibit 2.3 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
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EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
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2.13 Indemnification and Escrow Agreement dated as of February 20, 1996 among *
the Registrant, Noble, the Class A Shareholders, the Class B
Shareholders, the Warrant Sellers, The Fifth Third Bank and Conseco, Inc.
Incorporated by reference to Exhibit 2.4 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
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2.14 Stock Escrow and Security Agreement dated as of February 20, 1996 among the *
Registrant, Noble, the Class B Shareholders, Philip H. Banks, as trustee,
and The Fifth Third Bank, as escrow agent (omitting exhibits not deemed
material or filed separately in executed form). Incorporated by reference
to Exhibit 2.5 to the Registrant's Current Report on Form 8-K dated March
6, 1996.
2.15 Trust Agreement dated as of February 20, 1996 among the Class B *
Shareholders and their spouses, and Philip H. Banks, as trustee.
Incorporated by reference to Exhibit 2.6 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
2.16 Registration Rights Agreement dated as of February 20, 1996 between the *
Registrant and Noble. Incorporated by reference to Exhibit 2.7 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
2.17 Asset Purchase Agreement dated as of February 20, 1996 among Chesapeake *
Securities, Inc. (a Registrant subsidiary), Noble Broadcast of San Diego,
Inc., Sports Radio, Inc. and Noble Broadcast Center, Inc. Incorporated by
reference to Exhibit 2.7 to the Registrant's Current Report on Form 8-K
dated March 6, 1996.
2.18 Jacor--CMM Limited Partnership Agreement of Limited Partnership dated *
January 1, 1994, by and between Jacor Cable, Inc., Up Your Ratings, Inc.
and the Registrant. Incorporated by reference to Exhibit 2.2 of the
Registrant's Annual Report on Form 10-K dated March 30, 1995.
2.19 Amendment No. 1 to Jacor--CMM Limited Partnership Agreement of Limited *
Partnership dated July 22, 1994, by and between Jacor Cable, Inc., Up
Your Ratings, Inc. and the Registrant to amend the Jacor--CMM Limited
Partnership Agreement of Limited Partnership dated January 1, 1994.
Incorporated by reference to Exhibit 2.3 of the Registrant's Annual
Report on Form 10-K dated March 30, 1995.
2.20 Amendment No. 2 to Jacor--CMM Limited Partnership Agreement of Limited *
Partnership with an effective date as of January 1, 1994, by and between
Jacor Cable, Inc., Up Your Ratings, Inc. and the Registrant to amend the
Jacor--CMM Limited Partnership Agreement of Limited Partnership dated
January 1, 1994. Incorporated by reference to Exhibit 2.4 of the
Registrant's Annual Report on Form 10-K dated March 30, 1995.
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 February 20, 1996, among the Registrant, the *
Banks named therein, Banque Paribas, as Agent, and The First National
Bank of Boston and Bank of America Illinois, as Co-Agents (omitting
exhibits not deemed material or filed separately in executed form).
Incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
4.3 Revolving A Note in favor of Banque Paribas by the Registrant dated as of *
February 20, 1996. (1) Incorporated by reference to Exhibit 4.2 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
4.4 Revolving B Note in favor of Banque Paribas by the Registrant dated as of *
February 20, 1996. (1) Incorporated by reference to Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
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EXHIBIT NUMBERED
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4.5 Security Agreement dated as of February 20, 1996 among the Registrant, *
Banque Paribas, as Agent, for itself, the Co-Agents and the Banks.
Incorporated by reference to Exhibit 4.4 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
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4.6 Pledge Agreement dated as of February 20, 1996 among the Registrant, Banque *
Paribas, as Agent, for itself, the Co-Agents and the Banks. Incorporated
by reference to Exhibit 4.5 to the Registrant's Current Report on Form
8-K dated March 6, 1996.
4.7 Trademark Security Agreement dated as of February 20, 1996 among the *
Registrant, Banque Paribas, as Agent, for itself, the Co-Agents and the
Banks. Incorporated by reference to Exhibit 4.6 to the Registrant's
Current Report on Form 8-K dated March 6, 1996.
4.8 Subsidiary Guaranty dated as of February 20, 1996, by various subsidiaries *
of the Registrant in favor of Banque Paribas, as Agent, for itself, the
Co-Agents and the Banks. (2) Incorporated by reference to Exhibit 4.7 to
the Registrant's Current Report on Form 8-K dated March 6, 1996.
4.9 Subsidiary Security Agreement dated as of February 20, 1996, by various *
Company subsidiaries in favor of Banque Paribas, as Agent, for itself,
the Co-Agents and the Banks (omitting exhibits not deemed material). (2)
Incorporated by reference to Exhibit 4.8 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
4.10 Primary Pledge Agreement dated as of February 20, 1996 among Chesapeake *
Securities, Inc. (a subsidiary of the Registrant), Banque Paribas as
Agent, for itself, the Co-Agents and the Banks. (3) Incorporated by
reference to Exhibit 4.9 to the Registrant's Current Report on Form 8-K
dated March 6, 1996.
4.11 Secondary Pledge Agreement dated as of February 20, 1996 between the *
Registrant and Chesapeake Securities, Inc. (a subsidiary of the
Registrant). (4) Incorporated by reference to Exhibit 4.10 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
4.12 Subsidiary Trademark Agreement dated as of February 20, 1996 among Jacor *
Broadcasting of Tampa Bay, Inc., Jacor Broadcasting of Atlanta, Inc.,
Jacor Broadcasting Corporation and Jacor Broadcasting of Florida, Inc. in
favor of Banque Paribas as Agent, for itself, the Co-Agents and the
Banks. Incorporated by reference to Exhibit 4.11 to the Registrant's
Current Report on Form 8-K dated March 6, 1996.
4.13 Deed to Secure Debt and Security Agreement, dated as of February 20, 1996, *
by and between Jacor Broadcasting of Atlanta, Inc. and Banque Paribas, as
Agent. Incorporated by reference to Exhibit 4.12 to the Registrant's
Current Report on Form 8-K dated March 6, 1996.
4.14 Deed of Trust and Security Agreement, dated as of February 20, 1996, *
between Jacor Broadcasting of Colorado, Inc. and the Public Trustee in
the County of Weld and the State of Colorado. (6) Incorporated by
reference to Exhibit 4.13 to the Registrant's Current Report on Form 8-K
dated March 6, 1996.
4.15 Open-End Mortgage, Assignment of Rents and Leases and Security Agreement, *
dated February 20, 1996, by and between Jacor Broadcasting Corporation
and Banque Paribas, as Agent. (7) Incorporated by reference to Exhibit
4.14 to the Registrant's Current Report on Form 8-K dated March 6, 1996.
4.16 Open-End Mortgage, Assignment of Rents and Leases and Security Agreement *
dated as of February 20, 1996, by Jacor Broadcasting of Tampa Bay, Inc.
in favor of Banque Paribas, as Agent. (8) Incorporated by reference to
Exhibit 4.15 to the Registrant's Current Report on Form 8-K dated March
6, 1996.
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EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
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4.17 Deed of Trust and Security Agreement, Assignment of Leases, Rents and *
Profits, Financing Statement and Fixture Filing made by Chesapeake
Securities, Inc. for the Benefit of Banque Paribas as Agent dated as of
February 20, 1996. Incorporated by reference to Exhibit 4.16 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
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4.18 Second Consolidated Amended and Restated Intercompany Demand Note issued to *
the Company by various subsidiaries of the Registrant dated as of
February 20, 1996. (5) Incorporated by reference to Exhibit 4.17 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
4.19 Second Amended and Restated Intercompany Security Agreement and Financing *
Statement dated as of February 20, 1996 by various subsidiaries of the
Registrant in favor of the Company (omitting exhibits not deemed
material). (2) Incorporated by reference to Exhibit 4.18 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
4.20(+) Restricted Stock Agreement dated as of June 23, 1993 by and between the *
Registrant and Rod F. Dammeyer. (9) Incorporated by reference to Exhibit
4.2 to the Registrant's Quarterly Report on Form 10-Q dated August 13,
1993.
4.21(+) 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.
(10) Incorporated by reference to Exhibit 4.3 to the Registrant's
Quarterly Report on Form 10-Q dated August 13, 1993.
4.22(+) Stock Option Agreement dated as of December 15, 1994 between the Registrant *
and Rod F. Dammeyer covering 5,000 shares of the Registrant's common
stock. (11) Incorporated by reference to Exhibit 4.23 to the Registrant's
Quarterly Report on Form 10-Q dated August 13, 1993.
4.23 Form of Indenture for Notes (to be filed by amendment) **
5.1 Form of Opinion of Graydon, Head & Ritchey (to be filed by amendment). **
10.1 Credit Agreement dated as of February 20, 1996 among Broadcast Finance,
Inc. (a Regis-trant subsidiary), Noble Broadcast Group, Inc. and Noble
Broadcast Holdings, Inc. (omitting exhibits not deemed material or filed
separately in executed form). Incorporated by reference to Exhibit 10.1
to the Registrant's Current Report on Form 8-K dated March 6, 1996.
10.2 Subsidiary Guaranty dated as of February 20, 1996 in favor of Broadcast *
Finance, Inc. by Noble Broadcast Center, Inc., Noble Broadcast of
Colorado, Inc., Noble Broadcast of St. Louis, Inc., Noble Broadcast of
Toledo, Inc., Nova Marketing Group, Inc., Noble Broadcast Licenses, Inc.,
Noble Broadcast of San Diego, Inc., Sports Radio, Inc. and Sports Radio
Broadcasting, Inc. Incorporated by reference to Exhibit 10.2 to the
Registrant's Current Report on Form 8-K dated March 6, 1996.
10.3 Term Note in the amount of $40,000,000 by Noble Broadcast Holdings, Inc. in *
favor of Broadcast Finance, Inc. dated as of February 20, 1996.
Incorporated by reference to Exhibit 10.3 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
10.4 Revolving Note in the amount of $1,000,000 by Noble Broadcast Holdings, *
Inc. in favor of Broadcast Finance, Inc. dated as of February 20, 1996.
Incorporated by reference to Exhibit 10.4 to the Registrant's Current
Report on Form 8-K dated March 6, 1996.
10.5(+) 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.
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EXHIBIT NUMBERED
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10.6(+) Jacor Communications, Inc. 1995 Employee Stock Purchase Plan. Incorporated *
by reference to Exhibit 4.01 to the Registration Statement on Form S-8,
filed on November 9, 1994.
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(12) Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Graydon, Head & Ritchey (included in opinion of counsel filed as
Exhibit 5.1).
24 Powers of Attorney of directors and officers signing this Registration
Statement.
27.1 Financial Data Schedule of the Registrant. Incorporated by reference to the *
Registrants Annual Report on Form 10-K for the year ended December 31,
1995.
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(*) Incorporated by reference.
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(**) To be filed by Amendment.
(+) Management Contracts and Compensatory Arrangements.
(1) Identical Notes were issued by the Company in favor of the following Banks:
The First National Bank of Boston
Bank of America Illinois
Bank of Montreal
The Bank of New York
The Bank of Nova Scotia
CIBC, Inc.
First Bank
Society National Bank
Union Bank
The aggregate principal amount of Revolving A Notes is $190 million. The aggregate
principal amount of the Revolving B Notes is $110 million.
(2) Executed by the following subsidiaries of the Registrant:
Jacor Broadcasting of Florida, Inc.
Jacor Broadcasting of Atlanta, Inc.
Jacor Broadcasting of Knoxville, Inc.
Jacor Broadcasting of Colorado, Inc.
Jacor Broadcasting of Tampa Bay, Inc.
Jacor Broadcasting of St. Louis, Inc.
Jacor Cable, Inc.
Georgia Network Equipment, Inc.
Jacor Broadcasting Corporation
Broadcast Finance, Inc.
Chesapeake Securities, Inc.
OIA Broadcasting L.L.C.
(3) An identical Primary Pledge Agreement was executed by Jacor Broadcasting of Atlanta,
Inc.
(4) An identical Secondary Pledge Agreement was executed by Jacor Broadcasting of Atlanta,
Inc.
(5) Such notes were issued by the subsidiaries of the Registrant identified in (2) above.
(6) A substantially similar document was entered into by Jacor Broadcasting of Colorado,
Inc. relating to real property located in Douglas County, Colorado.
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(7) A substantially similar document was entered into by Jacor Broadcasting Corporation
relating to real property located in Hamilton County, Ohio.
(8) Substantially similar documents were entered into by Jacor of Tampa Bay, Inc. relating
to real property located in Manatee County, Florida and by Jacor Broadcasting of
Florida relating to real property located in Duval County, Florida and St. Johns
County, Florida.
(9) 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.
(10) Identical documents were entered into with John W. Alexander, F. Philip Handy and Marc
Lasry.
(11) Identical documents were entered into with John W. Alexander, F. Philip Handy, Marc
Lasry and Sheli Z. Rosenberg.
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EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
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1991 1992 1993 1994 1995
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EARNINGS:
Income (loss) before income taxes........................ $ 2,548 $ (23,701) $ 4,138 $ 14,165 $ 18,265
Fixed charges............................................ 18,830 15,578 4,768 2,860 3,853
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Total.............................................. $ 21,378 $ (8,123) $ 8,906 $ 17,025 $ 22,118
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FIXED CHARGES:
Interest expense......................................... $ 16,775 $ 13,701 $ 2,735 $ 534 $ 1,444
Amortization of debt expense............................. 718 449 238 324 326
Portion of rent expense deemed to be interest............ 1,337 1,428 1,795 2,002 2,083
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Total.............................................. $ 18,830 $ 15,578 $ 4,768 $ 2,860 $ 3,853
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Ratio of earnings to fixed charges......................... 1.1 N/A 1.9 6.0 5.7
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Coverage deficiency........................................ N/A $ 23,701 N/A N/A N/A
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion and incorporation by reference in this
registration statement of Jacor Communications, Inc. on Form S-3 of our report
dated February 12, 1996, except for Note 14, as to which the date is March 13,
1996, on our audits of the consolidated financial statements of Jacor
Communications, Inc. as of December 31, 1995 and 1994 and for each of the three
years in the period ended December 31, 1995. We also consent to the reference to
our firm under the captions "Selected Historical Financial Data" and "Experts."
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
April 11, 1996
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 23, 1996 with respect to the financial
statements of Citicasters Inc. included in the Registration Statement (Form S-3)
and related Prospectus of Jacor Communications, Inc. for the registration of an
aggregate principal amount of $50,000,000 of senior subordinated notes due 2006.
ERNST & YOUNG LLP
Cincinnati, Ohio
April 11, 1996
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EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of Jacor Communications, Inc. of our report
dated March 21, 1996 relating to the consolidated financial statements of Noble
Broadcast Group, Inc. (which report includes an explanatory paragraph regarding
Jacor Communications, Inc.'s agreement to purchase Noble Broadcast Group, Inc.),
which appears in such Prospectus. We also consent to the references to us under
the headings "Experts" and "Selected Historical Financial Data" in such
Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Historical Financial Data."
PRICE WATERHOUSE LLP
San Diego, California
April 12, 1996
