<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K(A)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: October 9, 1996
JACOR COMMUNICATIONS, INC.
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-12404 31-0978313
(Commission File No.) (IRS Employer Identification No.)
50 East RiverCenter Boulevard
12th Floor
Covington, Kentucky 41011
(606) 655-2267
<PAGE>
Item 2. Acquisition or Disposition of Assets
As previously reported, Jacor Communications, Inc. (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Regent Communications, Inc. ("Regent"). Pursuant to the terms of the Merger
Agreement, Regent will merge with and into the Company (the "Merger"). After
consummation of the Merger, the radio stations operated by Regent subsidiaries
will be operated by indirect subsidiaries of the Company. Regent owns, operates
or represents 20 radio stations in five U.S. markets: Kansas City, Salt Lake
City, Las Vegas, Louisville and Charleston, S.C.
On November 22, 1996, the waiting period with respect to the Merger under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired.
On December 1, 1996, a subsidiary of the Company commenced serving as time
broker for the Regent stations pursuant to time brokerage agreements. On
December 13, the Federal Communications Commission granted its initial approval
with respect to the Merger. However, the completion of the Merger remains
subject to various other conditions and a definitive closing date has not yet
been scheduled.
Item 5. Other Events
On December 17, 1996, the Company's wholly owned subsidiary, Jacor
Communications Company ("JCC") publicly issued $170.0 million in aggregate
principal amount of its 9 3/4% Senior Subordinated Notes due 2006. In addition,
in December 1996 the Company relocated its principal executive offices to 50
East RiverCenter Boulevard, 12th Floor, Covington, Kentucky 41011, (606)
655-2267.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and September 30,
1996.
Consolidated Statements of Operations for the years ended December 31,
1994 and 1995 and for the nine month periods ended September 30,
1995 (unaudited) and 1996.
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1994 and 1995 and for the nine month period ended
September 30, 1996.
Consolidated Statements of Cash Flows for the years ended December 31,
1994 and 1995 and the nine month periods ended September 30, 1995
(unaudited) and 1996.
Notes to Consolidated Financial Statements.
2
<PAGE>
(b) Unaudited Pro Forma Financial Information.
Unaudired Pro Forma Condensed Consolidated Statements of Operations for
the year ended December 31, 1995 and the nine month period
ended September 30, 1996.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996.
Notes to Unaudited Pro Forma Financial Information.
Pro Forma Adjustments
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of October 8, 1996 ("Merger
Agreement") between Jacor Communications, Inc. and Regent Communications,
Inc. (omitting schedules and exhibits not deemed material).*
2.2 Form of Warrant Agreement between Jacor Communications, Inc. and KeyCorp
Shareholder Services, Inc., as warrant agent (included as Exhibit B to
Merger Agreement).*
2.3 Escrow Agreement dated as of October 8, 1996 among Jacor Communications,
Inc., Regent Communications, Inc. and PNC Bank, as escrow agent (included
as Exhibit H to Merger Agreement).*
2.4 Registration Rights Agreement dated as of October 8, 1996 among Jacor
Communications and the parties listed in Schedule I thereto (included as
Exhibit I to Merger Agreement).*
23.1 Consent of Coopers & Lybrand L.L.P.
99.1 Press Release dated October 9, 1996.*
*Previously filed upon the initial filing of the Form 8-K relating to the Merger
dated October 23, 1996.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JACOR COMMUNICATIONS, INC.
December 20, 1996 By: /s/ R. Christopher Weber
-------------------------------------
R. Christopher Weber, Senior Vice
President and Chief Financial Officer
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Regent Communications, Inc.
We have audited the accompanying consolidated balance sheets of Regent
Communications, Inc. and Subsidiaries as of December 31, 1995 and September 30,
1996 and the related consolidated statements of operations, shareholders'
equity, and cash flows for the years ended December 31, 1994 and 1995 and for
the nine month period ended September 30, 1996. 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 Regent
Communications, Inc. and Subsidiaries as of December 31, 1995 and September 30,
1996, and the consolidated results of their operations and their cash flows for
the years ended December 31, 1994 and 1995 and for the nine month period ended
September 30, 1996, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P
Cincinnati, Ohio
November 8, 1996
1
<PAGE>
REGENT COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,787,337 $ 1,236,952
Accounts receivable, less allowance for doubtful accounts
of $290,800 in 1995 and $474,400 in 1996 5,420,081 6,353,396
Other current assets 252,120 319,213
----------- -----------
Total current assets 8,459,538 7,909,561
Property and equipment, net 10,156,229 9,709,828
Intangible assets, net 59,565,917 61,597,501
Note receivable 200,000 200,000
----------- -----------
Total assets $ 78,381,684 $ 79,416,890
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 513,929 $ 2,038,216
Accounts payable 2,122,129 1,440,351
Accrued expenses 2,194,637 3,799,542
----------- -----------
Total current liabilities 4,830,695 7,278,109
Long-term debt 32,136,071 29,514,284
----------- -----------
Total liabilities 36,966,766 36,792,393
----------- -----------
Commitments and contingencies
Shareholders' equity:
1993 Series convertible preferred stock,
$.01 par value; 1,000,000 shares authorized; 1,000,000
shares issued and outstanding 10,000 10,000
1994 Series convertible preferred stock, $.01 par value:
2,000,000 shares authorized: 1,337,907
shares issued and outstanding 13,379 13,379
1995 Series convertible preferred stock,
$.01 par value; 1,500,000 shares authorized;
1,399,554 and 1,436,287 shares issued and
outstanding at December 31, 1995 and
September 30, 1996, respectively 13,996 14,363
Class A common stock, $.01 par value; 5,000,000
shares authorized; 50,000 shares issued and
outstanding 500 500
Class B common stock, $.01 par value;
150,000 shares authorized
Additional paid-in capital 47,752,128 48,298,756
Deficit (5,975,085) (5,462,501)
Shareholder notes receivable (400,000) (250,000)
----------- -----------
Total shareholders' equity 41,414,918 42,624,497
----------- -----------
Total liabilities and shareholders' equity $ 78,381,684 $ 79,416,890
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS.
2
<PAGE>
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTH PERIOD ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1995
1994 1995 (UNAUDITED) 1996
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Broadcast revenue $ 8,354,070 $ 19,604,948 $ 12,107,992 $ 26,237,925
Less agency commissions 1,029,153 2,348,183 1,467,379 3,039,514
---------- ----------- ----------- ----------
Net revenue 7,324,917 17,256,765 10,640,613 23,198,411
Broadcast operating expenses 7,736,618 14,660,414 9,457,652 19,069,612
Depreciation and amortization 1,124,669 3,315,899 1,689,404 4,226,001
Time brokerage agreement termination expense 125,000
Corporate general and administrative expenses 669,849 740,337 481,854 1,176,861
---------- ----------- ----------- ----------
Operating loss (2,331,219) (1,459,885) (988,297) (1,274,063)
Interest expense, net 355,417 1,398,914 856,494 2,273,581
Gain on sale of radio station and format 4,436,915
Other expense (376,687)
---------- ----------- ----------- ----------
(Loss) income before extraordinary item (2,686,636) (2,858,799) (1,844,791) 512,584
Extraordinary loss on early retirement
of debt 125,844 227,752
---------- ----------- ----------- ----------
Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Loss applicable to common shares:
Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584
Preferred stock dividend requirements (826,936) (2,080,997) (1,620,725) (2,507,964)
---------- ----------- ----------- ----------
Loss applicable to common shares $ (3,639,416) $ (5,167,548) $ (3,465,516) $ (1,995,380)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Loss per common share:
Before extraordinary item $ (70.27) $ (98.79) $ (69.31) $ (39.91)
Extraordinary item (2.52) (4.56) - -
---------- ----------- ----------- ----------
Loss per common share $ (72.79) $ (103.35) $ (69.31) $ (39.91)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Number of common shares used in per
share calculation 50,000 50,000 50,000 50,000
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
1993 SERIES 1994 SERIES 1995 SERIES
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
------------------- ------------------ -------------------
CLASS A
COMMON
STOCK SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 $ 500 200,000 $ 2,000
Issuance of preferred stock at $10
per share in March and April 1994 800,000 8,000
Issuance of preferred stock at $12.50
per share in August 1994, net of
issuance costs of $53,746 606,000 $ 6,060
Issuance of preferred stock at $12.50
per share for a station acquisition 245,907 2,459
Shareholder note receivable
Preferred stock subscription at
$12.50 per share
Net loss
------ --------- ------- -------- -------- ----------- --------
Balances, December 31, 1994 500 1,000,000 10,000 851,907 8,519
Issuance of preferred stock at $12.50
per share for a station acquisition 40,000 400
Issuance of preferred stock at $12.50
per share in May 1995 446,000 4,460
Issuance of preferred stock at $15.00
per share in October 1995, net of
issuance costs of $123,408 1,399,554 $ 13,996
Net loss
------ --------- ------- --------- -------- ----------- --------
Balances, December 31, 1995 500 1,000,000 10,000 1,337,907 13,379 1,399,554 13,996
Issuance of preferred stock at $15.00
per share in July 1996, net of
stock issuance costs of $4,000 36,733 367
Shareholder note receivable
Payments of shareholder notes receivable
Net income
------ --------- ------- --------- -------- ----------- --------
Balances, September 30, 1996 $ 500 1,000,000 $10,000 1,337,907 $ 13,379 1,436,287 $ 14,363
------ --------- ------- --------- -------- ----------- --------
------ --------- ------- --------- -------- ----------- --------
<CAPTION>
PREFERRED STOCK
SUBSCRIPTION
-------------------
SHARE-
ADDITIONAL HOLDER
PAID-IN NOTES
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL
---------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 800,000 $ 8,000,000 $ 2,247,500 $ (76,054) $10,173,946
Issuance of preferred stock at $10
per share in March and April 1994 (800,000) (8,000,000) 7,992,000
Issuance of preferred stock at $12.50
per share in August 1994, net of
issuance costs of $53,746 7,515,194 7,521,254
Issuance of preferred stock at $12.50
per share for a station acquisition 3,071,388 3,073,847
Shareholder note receivable $(400,000) (400,000)
Preferred stock subscription at
$12.50 per share 446,000 5,575,000 5,575,000
Net loss (2,812,480) (2,812,480)
-------- ----------- ----------- ----------- --------- -----------
Balances, December 31, 1994 446,000 5,575,000 20,826,082 (2,888,534) (400,000) 23,131,567
Issuance of preferred stock at $12.50
per share for a station acquisition 499,600 500,000
Issuance of preferred stock at $12.50
per share in May 1995 (446,000) (5,575,000) 5,570,540
Issuance of preferred stock at $15.00
per share in October 1995, net of
issuance costs of $123,408 20,855,906 20,869,902
Net loss (3,086,551) (3,086,551)
-------- ----------- ----------- ----------- --------- -----------
Balances, December 31, 1995 - - 47,752,128 (5,975,085) (400,000) 41,414,918
Issuance of preferred stock at $15.00
per share in July 1996, net of
stock issuance costs of $4,000 546,628 546,995
Shareholder note receivable (550,000) (550,000)
Payments of shareholder notes receivable 700,000 700,000
Net income 512,584 512,584
-------- ----------- ----------- ----------- --------- -----------
Balances, September 30, 1996 - $ - $48,298,756 $(5,462,501) $(250,000) $42,624,497
-------- ----------- ----------- ----------- --------- -----------
-------- ----------- ----------- ----------- --------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTH PERIOD ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1995
1994 1995 (UNAUDITED) 1996
------------ ------------- ----------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584
Adjustments to reconcile net (loss)
income to net cash used in
operating activities:
Extraordinary loss on early retirement
of debt 125,844 227,752
Depreciation 292,945 855,601 461,140 805,809
Amortization of intangibles 831,724 2,460,298 1,228,264 3,420,192
Net barter expense (revenue) 30,469 (19,960) (22,869) 7,592
Debt prepayment costs (128,890)
Gain on sale of station (4,236,915)
Gain on sale of format (200,000)
Loss on disposal of assets 4,675
Changes in operating assets and liabilities,
net of acquisitions and disposition:
Accounts receivable (2,067,146) (2,627,327) (533,395) (870,209)
Prepaid expenses and other current assets (106,572) (137,799) (126,745) (67,092)
Accounts payable 269,069 1,203,919 (191,235) (791,027)
Accrued expenses 785,646 1,037,936 290,476 1,160,587
------------ ------------- ---------- ----------
Net cash used in operating activities (2,650,501) (215,021) (739,155) (253,804)
------------ ------------- ---------- ----------
Cash flows from investing activities:
Cash paid for station acquisitions (26,908,750) (34,537,858) (11,859,555) (11,432,241)
Capital expenditures (634,595) (1,016,599) (758,511) (1,364,762)
Proceeds from disposal of assets 88,956 11,1442,786
Proceeds from sale of station format 1,000,000
Payments related to change in
station format (327,878)
------------ ------------- ---------- ----------
Net cash used in investing activities (27,543,345) (35,465,501) (12,618,066) (682,095)
------------ ------------- ---------- ----------
Cash flows from financing activities:
Proceeds from the issuance of
preferred stock 15,121,253 26,444,902 16,825,000 296,995
Note receivable (200,000) (200,000) 400,000
Payments on long-term debt (16,451,335) (8,420,121) (2,097,500)
Proceeds from the issuance of
long-term debt 13,349,749 30,751,586 5,519,206 1,000,000
Other financing costs (269,374) (2,133,116) (278,954) (213,981)
------------ ------------- ---------- ----------
Net cash provided by (used in)
financing activities 28,201,628 38,412,037 13,445,131 (614,486)
------------ ------------- ---------- ----------
Net (decrease) increase in cash and
cash equivalents (1,992,218) 2,731,515 87,910 (1,550,385)
Cash and cash equivalents, beginning
of period 2,048,040 55,822 55,822 2,787,337
------------ ------------- ---------- ----------
Cash and cash equivalents, end of period $ 55,822 $ 2,787,337 $ 143,732 $1,236,952
------------ ------------- ---------- ----------
------------ ------------- ---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUBSEQUENT EVENTS:
On October 9, 1996 Regent Communications, Inc. (the "Company") and
Jacor Communications, Inc., ("Jacor"), entered into a merger agreement
by which Jacor will acquire the Company. In exchange for all of the
outstanding stock of the Company, Jacor will issue 3.55 million shares
of Jacor common stock, warrants to purchase 500,000 shares of Jacor's
common stock at an exercise price of $40 per share and assume up to
$64 million of the Company's debt, subject to adjustment pursuant to
terms of the merger agreement. In the event that the value of Jacor's
common stock to be received by the Company's shareholders is less than
$116.0 million at Jacor's option: (a) Jacor may make up the difference
by the delivery of additional shares of common stock equal to that
difference; (b) pay the difference in cash; or (c) pay all of the
merger consideration in cash. The Company has also entered into a
time brokerage agreement with Jacor such that Jacor will commence
operating the Company's stations upon the expiration or termination of
the applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. In addition, Jacor has committed to provide
the Company with a $2,000,000 line of credit, accruing interest at 12%
per annum, the proceeds of which shall be used to ensure compliance
with the Credit Agreement (see Note 8) while the time brokerage
agreement is in effect. The holders of more than a majority of the
outstanding shares of the Company's capital stock delivered to the
Company irrevocable written consents approving the merger agreement.
The closing of the transaction is conditioned on, among other things,
receipt of Federal Communications Commission and other regulatory
approvals.
In connection with the merger agreement, the Company entered into a
Limited Consent and Agreement to the Credit Agreement, (the "Consent")
whereby the Company's senior lenders approved the merger. Pursuant to
the Consent, all of the Company's debt obligations outstanding under
the Credit Agreement must be paid in full prior to or concurrent with
the consummation of the merger agreement. If the merger agreement
terminates for any reason, or if the time brokerage agreement is in
effect after October 9, 1997, the Company will be required to prepay
the debt outstanding under the Credit Agreement in an amount not less
than the greatest of (a) $10,000,000; (b) an amount sufficient when
applied to prepay the debt to reduce the Consolidated Total Debt Ratio
to not more than 4:0 to 1:0; or (c) the aggregate amount of all
payments received by the Company from any person due to the
termination of the merger agreement.
In October 1996, the Company acquired substantially all of the assets
of WVEZ(FM) in Louisville, Kentucky for $12,163,000 in cash. In
November 1996, the Company acquired substantially all of the assets of
radio station KZHT(FM) in Salt Lake City, Utah for $5,000,000 in cash.
The Company also purchased all of the stock of Bountiful Broadcasting,
Inc., owner of KURR(FM) in Salt Lake City, Utah, for $6,000,000 in
cash. In addition, the Company sold radio stations WHKW(AM) in
Louisville, Kentucky and KKDD(AM) in Las Vegas, Nevada for $1,000,000
and $600,000, respectively, in cash.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
2. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. ORGANIZATION: The Company, a Delaware corporation, owns and/or
operates radio stations located in Louisville, Kentucky; Las Vegas,
Nevada; Kansas City, Missouri; Salt Lake City, Utah; and Charleston,
South Carolina.
b. BASIS OF PRESENTATION: The accompanying consolidated financial
statements include the accounts of Regent Communications, Inc. and its
subsidiaries. All significant intercompany accounts and transactions
have been eliminated.
The consolidated statements of operations and cash flows for the nine
month period ended September 30, 1995, included herein, have been
prepared by the Company, without audit. The Company believes that the
disclosures presented herein with respect to the unaudited period are
adequate to make the information presented not misleading and reflect
all adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair presentation of results of operations
for such periods.
c. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting
advertisements is recognized when the commercial is broadcast.
d. 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 advertising is
broadcast before the receipt of the goods or services, a receivable is
recorded.
e. CONSOLIDATED STATEMENTS OF CASH FLOWS: For purposes of the
consolidated statement of cash flows, the Company considers all highly
liquid investments with an original maturity of three months or less,
when purchased, to be cash equivalents. Interest paid for the years
ended December 31, 1994 and 1995 and for the nine month periods ended
September 30, 1995 and 1996 was $315,814, $1,071,551, $915,960 and
$1,899,461, respectively.
f. CONCENTRATIONS OF CREDIT RISK: Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of accounts receivable. The credit risk is
limited due to the large number of customers comprising the Company's
customer base and their dispersion across several different geographic
areas of the country.
g. PROPERTY AND EQUIPMENT: Property and equipment are stated at cost and
depreciated on the straight-line basis over the estimated useful lives
of the assets as follows:
Land improvements 20 years
Buildings 40 years
Equipment 4-13 years
Furniture and fixtures 10 years
Leasehold Improvements Life of Lease
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
2. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, CONTINUED:
h. INTANGIBLE ASSETS: Intangible assets are stated at cost and amortized
on the straight-line basis over the following lives:
Broadcast intangibles and goodwill 15 years
Other intangibles 5 to 7 years
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.
i. 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 date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
j. INCOME TAXES: Income taxes are provided based on the asset and
liability method of accounting pursuant to Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes".
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes.
k. PER SHARE DATA: Loss per common share for the years ended December
31, 1994 and 1995 and for the nine month periods ended September 30,
1995 and 1996 is based on the weighted average number of common shares
outstanding and gives consideration to the dividend requirements of
the convertible preferred stock. The Company's common stock options
and convertible preferred stock were anti-dilutive and, therefore,
were not included in the computation.
3. STATION TRANSACTIONS:
In April 1994, the Company acquired substantially all of the assets of
radio station WLQT(FM) in Dayton, Ohio for $5,500,000 in cash.
In May 1994, the Company acquired substantially all of the assets of radio
stations WDJX(FM) and WHKW(AM), each of which is located in Louisville,
Kentucky for $5,500,000 in cash. Pursuant to the WDJX(FM) purchase
agreement, the Company was assigned a time brokerage agreement with respect
to radio station WSJW(FM) in Louisville, Kentucky.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
3. STATION TRANSACTIONS, CONTINUED:
In July 1994, the Company entered into an advertising sales agreement with
KBGO(FM) located in Las Vegas, Nevada. The advertising sales agreement was
changed to a time brokerage agreement during 1996.
In August 1994, the Company acquired substantially all of the assets of
radio station WDOL(FM) in Dayton, Ohio for $1,500,000 in cash and a
$650,000 subordinated promissory note. A time brokerage agreement
effective May 1, 1994 with WDOL(FM) was terminated upon completion of the
purchase.
In August 1994, the Company acquired all of the stock of Wescom Holdings,
Inc., owner of radio station KSNE(FM) in Las Vegas, Nevada in exchange for
the issuance of 245,907 shares of the 1994 series of convertible preferred
stock (see Note 6) valued at approximately $3,073,000 and $2,677,000 in
cash.
In September 1994, the Company acquired substantially all of the assets of
radio station WSFR(FM) in Corydon, Indiana for $2,600,000 in cash. A time
brokerage agreement effective May 1, 1994 with WSFR(FM) was terminated upon
completion of the purchase.
In October 1994, the Company acquired substantially all of the assets of
radio stations KFMS(FM) and KKDD(AM) located in Las Vegas, Nevada for
$5,750,000 in cash and a $2,000,000 subordinated promissory note. A time
brokerage agreement with KFMS(FM) and KKDD(AM) effective July 1, 1994 was
terminated upon completion of the purchase.
In January 1995, the Company purchased substantially all of the assets of
radio station WFIA(AM) in Louisville, Kentucky for $500,000. The
consideration for this purchase was 40,000 shares of the 1994 series
convertible preferred stock.
In October 1995, the Company acquired radio stations KUDL(FM) and KMXV(FM)
in Kansas City, Missouri and KALL(AM), KODJ(FM) and KKAT(FM) in Salt Lake
City, Utah for $33,950,000 in cash and a $5,000,000 subordinated seller
note. The Company also entered into an advertising sales agreement with
KBKK(FM) in Salt Lake City, Utah.
In April 1996, the Company sold substantially all of the assets (excluding
cash and accounts receivable) of WLQT(FM) and WDOL(FM) in Dayton, Ohio for
$12,000,000 in cash.
In April 1996, the Company acquired radio stations WEZL(FM) and WXLY(FM) in
Charleston, South Carolina for $11,050,000 in cash.
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 15 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 1995 and 1996 acquisitions and 1996
disposition had taken place at the beginning of 1995, unaudited pro forma
consolidated results of operations would have been as follows:
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
3. STATION TRANSACTIONS, CONTINUED:
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------- ---------------
Net broadcasting revenue $ 27,720,848 $ 23,309,275
Net loss (4,976,017) (3,669,547)
Net loss per share (166.32) (123.55)
During May 1996, the Company sold the intellectual assets of WHKW(FM) in
Louisville, Kentucky for $1,000,000 in cash.
In July 1996, the Company entered into an agreement to purchase all of the
outstanding stock of Southwest Radio Las Vegas, Inc., owner of KWNR(FM) in
Las Vegas, Nevada, for $9,000,000 in cash and 480,000 shares of a new
series of convertible preferred stock. Pursuant to the merger agreement
with Jacor, the Company assigned all of its rights under this agreement to
Jacor.
4. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------- ---------------
Land and land improvements $ 380,993 $ 783,342
Buildings 112,215 423,285
Equipment 9,981,902 7,997,251
Furniture and fixtures 388,460 848,562
Leasehold improvements 436,441 1,224,826
------------- ------------
11,300,011 11,277,266
Less accumulated depreciation (1,143,782) (1,567,438)
------------- ------------
$ 10,156,229 $ 9,709,828
------------- ------------
------------- ------------
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
5. INTANGIBLE ASSETS:
Intangible assets consist of the following:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------- ---------------
Broadcast intangibles and goodwill $ 60,423,164 $ 64,821,432
Other 2,409,266 2,602,405
------------- ------------
62,832,430 67,423,837
Less accumulated amortization (3,266,513) (5,826,336)
------------- ------------
$ 59,565,917 $ 61,597,501
------------- ------------
------------- ------------
6. CAPITAL STOCK:
The Company's Amended Certificate of Incorporation authorizes
5,000,000 shares of the Company's Class A common stock, 150,000 shares
of Class B common stock, 4,500,000 shares of preferred stock and
designates 1,500,000 shares as the 1995 Series Convertible Preferred
Stock ("1995 Series"), 2,000,000 shares as the 1994 Series Convertible
Preferred Stock ("1994 Series") and 1,000,000 shares as the 1993
Series Convertible Preferred Stock ("1993 Series").
The preferred shares have the same voting rights as common stock and
may be converted into one share of Class A common stock. The 1993
Series, 1994 Series, and 1995 Series have equal rights for the payment
of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Company. The stated
value of the 1993 Series, 1994 Series, and 1995 Series is $10 per
share, $12.50 per share and $15 per share, respectively.
Upon any liquidation of the Company, no distribution shall be made (a)
to the holders of stock ranking junior to the convertible preferred
stock unless the holders of the convertible preferred stock have
received the stated value per share, plus an amount equal to all
unpaid dividends or (b) to the holders of stock ranking on a parity
with the convertible preferred stock, except distributions made
ratably on the convertible preferred and all other such parity stock.
Dividends accrue on the 1993 Series, 1994 Series, and 1995 Series at a
cumulative annual rate of $.70, $.875, and $1.05 per share,
respectively. Undeclared dividends in arrears amounted to $2,933,750
at December 31, 1995 and $5,450,000 at September 30, 1996. The
Company may redeem the convertible preferred stock at the stated
value, plus an amount equal to all unpaid dividends to the date of
redemption, whether or not declared.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
6. CAPITAL STOCK, CONTINUED:
During 1995, the Company adopted the Regent Communications, Inc. 1995
Employee Stock Option Plan ("Plan"). Under the Plan, options to acquire up
to 200,000 shares of Class A common stock can be granted to officers and
key employees at no less than the fair market value of the stock on the
date of grant. The Plan permits the granting of non-qualified stock
options as well as incentive stock options. Options are exercisable in
five equal annual installments commencing on the second anniversary of the
date of grant. The Plan will terminate no later than September 19, 2004.
Information pertaining to the Plan for the year ended December 31, 1995 and
the nine month period ended September 30, 1996 is as follows:
NUMBER OF
SHARES OPTION PRICE
--------- ------------
1995:
Outstanding at beginning of year -
Granted 59,500 $ 10
Exercised -
Surrendered (8,000)
Outstanding at end of year 51,500 $ 10
Exercisable at end of year -
Available for grant at end of year 148,500
1996:
Outstanding at beginning of year 51,500 $ 10
Granted 61,000 $ 15
Exercised -
Surrendered 20,000 $ 10 -15
Outstanding at end of year 92,500 $ 10 -15
Exercisable at end of year -
Available for grant at September 30, 1996 107,500
In 1995, a key employee of the Company was granted options to purchase
100,000 shares of Class A stock at a price of $15 per share. Options vest
in five equal annual installments and the full grant may be exercised five
years after the date of grant.
Options to purchase 50,000 shares of Class A common stock at $10 per share
any time after September 1, 1996 and before September 1, 1999 and options
to purchase 50,000 shares of Class B stock at $.011 per share on October 1,
2003 have been granted to the Company's president. If certain performance
criteria are met, the options to purchase Class B shares may be exercised
in 1997.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
7. INCOME TAXES:
The Company recorded no income tax expense or benefit for the years ended
December 31, 1994 and 1995 and for the nine month periods ended September
30, 1995 and September 30, 1996.
The provisions for income tax differs from the amount computed by applying
the statutory federal income tax rate due to the following:
NINE MONTH
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
------------ ------------ -------------
Federal income taxes benefit
(expense) at the statutory rate $ 984,368 $ 1,080,293 $ (179,404)
Amortization not deductible (33,776) (108,484) (80,213)
Other (12,243) (18,256) (13,951)
Change in valuation allowance (938,349) (953,553) 273,568
------------ ------------ -------------
$ 0 $ 0 $ 0
------------ ------------ -------------
------------ ------------ -------------
Components of the Company's deferred tax assets and liabilities are as
follows:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
Deferred tax assets:
Net operating loss carryforward $ 2,065,000 $ 3,045,000
Intangible assets 77,237 111,670
Allowance for doubtful accounts 101,782 166,038
Other 76,333
------------ -------------
2,244,019 3,399,041
Deferred tax liabilities:
Property and equipment 235,672 1,744,747
Other 89,857 9,372
------------ -------------
325,529 1,754,119
Valuation allowance (1,918,490) (1,644,922)
------------ -------------
Net $ 0 $ O
------------ -------------
------------ -------------
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
7. INCOME TAXES, CONTINUED:
The Company has cumulative tax loss carryforwards of approximately
$5,900,000 and $8,700,000 at December 31, 1995 and September 30, 1996,
respectively. The loss carryforwards will expire in the years 2008 through
2011.
8. LONG-TERM DEBT:
Long-term debt consists of the following:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
Variable rate Term Loan (7.875% and 8.117%
at December 31, 1995 and September 30,
1996, respectively) $ 25,000,000 $ 24,000,000
7.5% Seller Note 650,000 552,500
Variable rate Subordinated Seller Note 2,000,000 2,000,000
11.0% Subordinated Seller Note 5,000,000 5,000,000
------------ -------------
32,650,000 31,552,500
Less current maturities (513,929) (2,038,216)
------------ -------------
Total long-term debt $ 32,136,071 $ 29,514,284
------------ -------------
------------ -------------
Future maturities of long-term debt at September 30, 1996 are as follows:
1996 (three months) $ 403,929
1997 2,455,716
1998 3,585,716
1999 4,635,716
2000 10,871,423
Thereafter 9,600,000
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
8. LONG-TERM DEBT, CONTINUED:
On October 25, 1995, the Company entered into a $65,000,000 credit
agreement, subsequently amended (the "Credit Agreement"), comprised of a
$25,000,000 Term Loan and a $40,000,000 Revolving Loan Commitment. The
Company made a $1,000,000 prepayment of the Term Loan in May 1996 and is
required to make quarterly payments of $300,000 on the Term Loan beginning
December 31, 1996 that increase quarterly beginning December 31, 1997
through September 30, 2002. The Revolving Loan Commitment will be reduced
on December 31, 1996 by $62,500 and will be reduced by increasing quarterly
amounts thereafter through September 30, 2002. Loans under the Credit
Agreement bear interest at the option of the Company at a rate equal to
either (i) a base rate, defined as the higher of US prime rate and the
overnight Federal Funds rate plus 1/2 of 1% per annum, plus the applicable
margin (as defined below) or (ii) the adjusted London interbank offered
rate ("LIBOR") plus the applicable margin. Applicable margin means a
percentage per annum determined by reference to the consolidated total debt
ratio, ranging from 3/4% to 2.00% for base rate advances and from 1.75% to
3.00% for LIBOR rate advances.
The applicable margin for the Credit Agreement is adjusted each quarter to
the extent required. At December 31, 1995 and September 30, 1996, the
applicable margin was 2.00% and 2.25%, respectively, for the Company's
LIBOR rate advance. The Company is required to pay commitment fees equal
to 1/2% per annum on the aggregate unused portion of the aggregate
commitment on the Term Loan and the Revolving Loan Commitment. The Company
may prepay the Credit Agreement at any time without premium or penalty.
Indebtedness under the 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 Credit Agreement contains
restrictions pertaining to, among other things, the maintenance of certain
financial ratios, capital expenditures, payment of dividends and incurrence
of additional indebtedness. Restrictions pertaining to financial ratios
include maintenance of total debt (as defined) to adjusted operating cash
flow (as defined) less than 6.00 to 1 for the quarter ended September 30,
1996. Such ratio will be reduced to 4.5 to 1 at December 31, 1997 and 3.5
to 1 beginning September 30, 1998 and thereafter.
In connection with the Credit Agreement, the Company recorded an
extraordinary loss on the early retirement of debt in the amount of
$227,752 for the year ended December 31, 1995.
The Company entered into an interest rate protection agreement as required
by the Credit Agreement on the notional amount of $25,000,000 for a three
year period ending October 30, 1998. This agreement provides protection
against the rise in the LIBOR rate beyond a level of 7%. The agreement
requires the Company to make quarterly payments of $18,631 which are
recognized as a component of interest expense.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
8. LONG-TERM DEBT, CONTINUED:
In 1995, in connection with the acquisition of stations, the Company issued
to the seller a subordinated promissory note for $5,000,000. The note
bears interest at a fixed rate of 11% and requires annual payments of
principal and interest beginning no earlier than March 31, 1997, subject to
borrowing availability under the Credit Agreement. A key employee of the
Company holds a 5% interest in the note.
In 1994, in connection with a station acquisition, the company issued to
the seller a subordinated promissory note, as amended, for $650,000. The
note bears interest at a fixed rate of 7.5% and requires quarterly interest
payments until February 28, 1997. Quarterly principal payments of $32,500
began on February 1, 1996, with the final principal payment due February
28, 1997.
In 1994, in connection with a station acquisition, the Company issued to
the seller a subordinated promissory note for $2,000,000. The note bears
interest at the prime rate plus 2%, however, the rate will not be less than
8% nor more than 10.5%. Principal payments are due in quarterly
installments of $71,428 beginning November 1996 until December 31, 2000, at
which time all outstanding principal is due and payable.
Based on the borrowing rates currently available to the Company for bank
loans with similar terms and average maturities, the fair values of the
Company's long-term debt and interest rate protection agreement approximate
current carrying value.
9. EMPLOYMENT AGREEMENTS:
The Company has employment agreements with its president and its chief
operating officer, which provide, among other things, base salary and an
incentive cash bonus determined at the discretion of the board of
directors. In the event employment of the president is terminated prior to
expiration of this agreement, all shares of the Company common stock held
by the president shall be repurchased by the Company at fair market value.
10. EMPLOYEE BENEFIT PLAN:
During 1994, the Company adopted a 401 (k) plan which covers all eligible
employees. The Company may make a matching contribution in any year at the
discretion of the board of directors. Company contributions to the plan
were $6,205 and $34,655 for the years ended December 31, 1994 and 1995 and
$26,590 and $58,300 for the nine month periods ended September 30, 1995 and
September 30, 1996, respectively.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
11. RELATED PARTY TRANSACTIONS:
A director of the Company is associated with a private investment firm that
rendered financial advisory services in connection with the Credit Facility
and the 1995 Series offering. For such services, the company paid $266,665
in cash and issued 8,889 shares of the 1995 Series of preferred stock.
In August 1994, the Company received a promissory note for $400,000 from
the Company's president for the purchase of 32,000 shares of the 1994
Series of preferred stock. The note bears interest at the prime rate and
was paid in full during 1996.
The Company incurred fees in connection with the organization of the
Company and subsequent stock offerings for services provided by a private
investment firm owned by two of the Company's directors. Total fees for
these services were $20,000 in 1994. The firm also provided financial
advisory services to the Company for $40,000 per year in 1994 and 1995 and
$30,000 for the nine month periods ended September 30, 1995 and 1996.
12. COMMITMENTS AND CONTINGENCIES:
The Company and its subsidiaries lease certain land and facilities used in
their operations. Future minimum rentals under all noncancelable operating
leases as of September 30, 1996 are payable as follows:
1996 (three months) $ 224,261
1997 953,594
1998 776,427
1999 628,209
2000 583,566
Thereafter 2,370,636
Rental expense was approximately $837,000 and $1,039,000 for the years
ended December 31, 1994 and 1995 and $692,000 and $1,341,000 for the nine
month periods ended September 30, 1995 and 1996, respectively, including
payments under time brokerage agreements and joint sales agreements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED:
13. BARTER TRANSACTIONS:
For the years ended December 31, 1994 and 1995 and for the nine month
periods ended September 30, 1995 and 1996, barter revenue was approximately
$537,000, $1,150,000, $761,000 and $897,000, respectively and barter
expense was approximately $567,000 $1,131,000, $738,000 and $905,000,
respectively.
Included in accounts receivable and accounts payable in the consolidated
balance sheet at December 31, 1995 and September 30, 1996 are barter
accounts receivable (merchandise or services due the Company) of
approximately $413,000 and $476,000 and barter accounts payable (air time
due supplier of merchandise or service) of approximately $419,000 and
$529,000, respectively.
18
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
as of September 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Jacor/Noble/ (1) (1)
Citicasters/Gannett Regent Acquisition Total
Combined Regent Proforma Proforma Combined
Pro Forma Historical Adjustments Adjustments Pro Forma
--------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $52,821 $1,237 - - $54,058
Accounts receivable 70,782 6,353 350 - 77,485
Other current assets 12,897 319 (10) - 13,206
----------- -------- -------- --------- -----------
Total current assets 136,500 7,909 340 - 144,749
Property and equipment, net 130,758 9,710 1,275 - 141,743
Intangible assets, net 1,351,931 61,597 34,145 108,262 1,555,935
Other assets 98,032 200 - - 98,232
----------- -------- -------- --------- -----------
$1,717,221 $79,416 $35,760 $108,262 $1,940,659
----------- -------- -------- --------- -----------
----------- -------- -------- --------- -----------
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities $51,898 $7,278 $530 - $59,706
----------- -------- -------- --------- -----------
Total Current Liabilities 51,898 7,278 530 - 59,706
Long-term debt debt 626,250 29,514 34,486 19,484 709,734
5.5% Liquid Yield Option Notes 117,090 117,090
Deferred taxes and other liabilities 393,728 - - 30,630 424,358
----------- -------- -------- --------- -----------
TOTAL LIABILITIES 1,188,966 36,792 35,016 50,114 1,310,888
Shareholders' equity:
Common stock, $.01 par value including
Additional paid-in capital 430,619 48,087 - 48,429 527,135
Common stock warrants 72,644 - - 5,000(2) 77,644
Retained earnings 24,992 (5,463) 744 4,719 24,992
----------- -------- -------- --------- -----------
TOTAL SHAREHOLDER'S EQUITY 528,255 42,624 744 58,148 629,771
----------- -------- -------- --------- -----------
$1,717,221 $79,416 $35,760 $108,262 $1,940,659
----------- -------- -------- --------- -----------
----------- -------- -------- --------- -----------
</TABLE>
See accompanying notes to unaudited proforma condensed consolidated financial
statements.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1995
(in thousands , except per share data)
<TABLE>
<CAPTION>
Jacor/Noble/ (3)
Citicasters/Gannett Regent Acquisition Total
Combined Regent Proforma Proforma Combined
Pro Forma Historical Adjustments Adjustments Pro Forma
--------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue $306,769 $17,257 $19,171 - $343,197
Broadcast operating expenses 203,247 14,660 13,020 - 230,927
Depreciation and amortization 46,053 3,316 4,278 (1,675)(4) 51,972
Corporate general and
administrative expenses 6,655 740 563 (1,303)(5) 6,655
--------- -------- -------- ------- ---------
Operating income 50,814 (1,459) 1,310 2,978 53,643
Interest expense (60,438) (1,399) (3,743) (1,328)(6) (66,908)
Interest and investment income 870 - - - 870
Other income (expense), net (762) - - - (762)
--------- -------- -------- ------- ---------
Income (loss) before
Income taxes and
extraordinary items (9,516) (2,858) (2,433) 1,650 (13,157)
Income tax (expense) credit (1,796) - - 1,150(7) (646)
--------- -------- -------- ------- ---------
Income (loss) before
extraordinary items ($11,312) ($2,858) ($2,433) $2,800 ($13,803)
--------- -------- -------- ------- ---------
--------- -------- -------- ------- ---------
Income per common share ($0.38) ($0.41)
Number of common shares
used in per share
computations 30,158 33,708(8)
</TABLE>
See accompanying notes to unaudited proforma condensed consolidated financial
statements.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine months ended September 30, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
Jacor/Noble/ (3)
Citicasters/Gannett Regent Acquisition Total
Combined Regent Proforma Proforma Combined
Pro Forma Historical Adjustments Adjustments Pro Forma
--------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue $242,599 $23,198 $6,315 - $272,112
Broadcast operating expenses 167,432 19,069 4,054 - 190,555
Depreciation and amortization 34,648 4,226 1,483 (1,256)(4) 39,101
Corporate general and
administrative expenses 5,559 1,177 - (1,177)(5) 5,559
-------- ------- -------- ------- --------
Operating income 34,960 (1,274) 778 2,433 36,897
Interest expense (44,845) (2,274) (1,582) (996)(6) (49,697)
Interest and investment income 2,539 - - - 2,539
Other income (expense), net 348 4,060 (4,237) - 171
-------- ------- -------- ------- --------
Income (loss) before
Income taxes and
extraordinary items (6,998) 512 (5,041) 1,437 (10,090)
Income tax (expense) credit 1,320 - - 1,000(7) 2,320
-------- ------- -------- ------- --------
Income (loss) before
extraordinary items ($5,678) $512 ($5,041) $2,437 ($7,770)
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
Income per common share ($0.23) ($0.27)
Number of common shares
used in per share
computations 24,880 28,430(8)
</TABLE>
See accompanying notes to unaudited proforma condensed consolidated financial
statements.
<PAGE>
NOTES TO UNAUDITED PROFORMA FINANCIAL INFORMATION
The unaudited pro forma financial information (the Pro Forma Financial
information) is based on the historical financial statements of Jacor, Noble,
Citicasters, selected Gannett Radio stations and Tampa television divestiture
("Gannett Swap Transaction") and Regent and has been prepared to illustrate the
effects of the Regent Communications acquisition. Jacor completed the Noble,
Citicasters and the Gannett Swap Transaction in 1996 and previously filed pro
forma financial information related to those transactions.
(1) The adjustments to record the allocation of the purchase price of Regent to
the estimated fair value of the assets acquired and the liabilities assumed and
the recording of goodwill associated with the acquisition as if it occurred on
September 30, 1996 are as follows:
Property and equipment $10,985
Contracts broadcasting licenses
and other intangibles 204,004
Cash 1,237
Deferred charges and other assets 7,212
Long term debt issuance ($19,484)
Long term debt assumed (64,000)
3.55 million shares of common stock issued (96,516)
Common stock warrants (5,000)
Deferred taxes (30,630)
Other liabilities (7,808)
2) Adjustment represents the value assigned to the warrants to be issued to
Regent shareholders in connection with the acquisition. The warrants will be
exercisable for 500,000 shares of common stock at an exercise price of $40
per full share.
3) Reflects the 1995 and 1996 purchases and dispositions of radio properties
by Regent as if they had occurred on January 1, 1995.
4) Represents the adjustment to amortization to reflect the amortization of
intangibles related to the Regent acquisition over 40 years.
5) Represents the elimination of Regent corporate overhead for redundant
costs.
6) Represents the adjustment to interest expense associated with the borrowings
under a bank credit facility nessecary to complete the acquisition of Regent
using an assumed rate of 8%.
(7) To provide for the tax effect of pro forma adjustments using an estimated
statutory rate of 40%. The acquisition pro forma adjustments include non-
deductible amortization of goodwill.
(8) Reflects the additional shares of Jacor common stock issued in the
acquisition.
<PAGE>
PROFORMA ADJUSTMENTS
12/31/95
PURCHASE PRICE
Purchase price 185,000
Debt assumed (64,000)
3.55 million shares @ 27 3/16 (96,516)
Options (5,000)
Shortfall in stock price (19,484)
---------
0
AMORTIZATION AND DEPRECIATION EXPENSE:
PURCHASE PRICE ALLOCATION:
Purchase price 185,000
PP&E purchased (10,985)
Working capital purchased (641)
---------
173,374
Book value of intangibles (85,860)
---------
87,514
@35% 30,630
Total Intangibles 204,004
12/95
@40 years 5,100
Depreciation per Regent 819
---------
5,919
09/95
@40 years 3,825
Depreciation per Regent 270
---------
4,095
INTEREST EXPENSE
12/95
64 million @ 8% 5,120
19.5 million @ 8% 1,559
less committment fee
84.5 million @ 1/4% (209)
---------
6,470
09/96
64 million @ 8% 3,840
19.5 million @ 8% 1,169
less committment fee 0
84.5 million @ 1/4% (157)
---------
4,852
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
PROFORMA TAX EFFECT - 12/31/95:
Pretax earnings - acquisition adjustments 1,650
(2,433)
(2,858)
30,630 / 40 yrs 766
---------
(2,875)
@40% (1,150)
09/96
Pretax earnings - acquisition adjustments 1,437
(5,041)
512
30,630 / 40 yrs 574
---------
(2,517)
@40% (1,007)
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Jacor Communications, Inc. on Form S-8 (File No. 33-65126, File No. 33-10329 and
File No. 33-56385) and on Forms S-3 (File No. 33-53612 and File No. 333-06639)
of our report dated November 8, 1996, on our audits of the consolidated
financial statements of Regent Communications, Inc. as of December 31, 1995 and
September 30, 1996 and for the years ended December 31, 1994 and 1995 and for
the nine month period ended September 30, 1996, which report is included in this
Current Report on Form 8-K.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
December 19, 1996
