<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: March 13, 1996
JACOR COMMUNICATIONS, INC.
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-12404 31-0978313
(Commission File No.) (IRS Employer Identification No.)
1300 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 621-1300
<PAGE>
This Amendment to Form 8-K is being filed by the Company solely for the
purpose of including the entire text of the financial statements that were
required to be filed as part of the Company's Form 8-K that was initially filed
with the Securities and Exchange Commission ("Commission") on March 29, 1996.
In connection with the prior filing of such Form 8-K , these financial
statements were included as required by the applicable Commission rules and
regulations by incorporating same by reference from the Company's Form S-3
Registration Statement (File No. 333-01917).
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
CITICASTERS INC. AND SUBSIDIARIES
AUDITED-
Report of Independent Auditors
Balance Sheets at December 31, 1994 and 1995
Statements of Operations for the years ended December 31, 1993, 1994 and 1995
Statements of Changes in Shareholders' Equity for the years ended December 31,
1993, 1994 and 1995
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995
Notes to Financial Statements
UNAUDITED-
Condensed Balance Sheets at December 31, 1995 and March 31, 1995
Condensed Statements of Operations for the three months ended March 31, 1995
and 1996
Condensed Statements of Changes in Shareholders' Equity for the three months
ended
March 31, 1995 and 1996
Condensed Statements of Cash Flows for the three months ended March 31, 1995
and 1996
Notes to Condensed Financial Statements
(b) Pro Forma Financial Information.
UNAUDITED-
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1995 and latest twelve months ended March 31, 1996
2
<PAGE>
Pro Forma Condensed Consolidated Statement of Operations for the three months
ended March 31, 1996
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1996
Notes to Unaudited Pro Forma Financial Information
(c) Exhibits
23.1 Consent of Independent Accountants
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.
November 20, 1996 By: /s/ R. Christopher Weber
-----------------------------------------
R. Christopher Weber, Senior Vice President
and Chief Financial Officer
3
<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
4
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
ASSETS 1994 1995
<S> <C> <C>
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:
Class A 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>
5
<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.
6
<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>
7
<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>
8
<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>
9
<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.
10
<PAGE>
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.
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.
11
<PAGE>
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.
- 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):
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
---------
---------
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.
12
<PAGE>
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):
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
---------
---------
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>
DATE OPERATIONS DATE OF ACQUISITION PRICE/
COMMENCED/CEASED CLOSING SALES 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>
13
<PAGE>
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).
YEAR ENDED
DECEMBER 31,
1993 1994
Net revenues. . . . . . . . . . $119,597 $128,375
-------- --------
-------- --------
Operating income. . . . . . . . $20,142 $ 30,624
-------- --------
-------- --------
Net earnings. . . . . . . . . . $4,244 $ 11,582
-------- --------
-------- --------
Net earnings per share. . . . . $.16 $.47
-------- --------
-------- --------
D. PROPERTY AND EQUIPMENT
Property and equipment at December 31, consisted of the following (in
thousands):
1994 1995
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
-------- --------
-------- --------
14
<PAGE>
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):
1994 1995
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
-------- --------
-------- --------
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):
1994 1995
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
-------- --------
-------- --------
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.
15
<PAGE>
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 weighted average interest rate on Citicasters outstanding bank debt
as of December 31, 1995 was 6.84%. 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.
16
<PAGE>
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.
Changes in the number of shares of common stock are shown in the
following table:
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
-----------
-----------
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.
17
<PAGE>
Stock option data for Citicasters' stock option plans are as follows:
<TABLE>
<CAPTION>
1994 1995
----------------------------- -----------------------------
OPTION PRICE OPTION PRICE
SHARES PER SHARE SHARES PER SHARE
<S> <C> <C> <C> <C>
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>
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):
1994 1995
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
---------- ----------
---------- ----------
18
<PAGE>
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.
19
<PAGE>
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.
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 TOTAL
<S> <C> <C> <C> <C> <C>
1994
Net revenues . . . . . . . . . . . . $48,449 $60,423 $50,908 $37,263 $197,043
Operating income . . . . . . . . . . 7,193 18,321 13,386 12,683 51,583
Net earnings (loss). . . . . . . . . (1,752) 5,161 44,851 14,846 63,106
Net earnings (loss) per share. . . . $(.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.
20
<PAGE>
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.
21
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEET-UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, 1995 MARCH 31, 1996
----------------- --------------
<S> <C> <C>
Current assets:
Cash and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,572 $ 6,238
Trade receivables, less allowance for doubtful accounts of $1,643 and $1,603. . . 32,495 27,835
Broadcast program rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,162 4,596
Prepaid and other current assets. . . . . . . . . . . . . . . . . . . . . . . . . 3,059 2,687
-------- --------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,288 41,356
Broadcast program rights, less current portion. . . . . . . . . . . . . . . . . . 3,296 2,406
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,878 37,159
Contracts, broadcasting licenses and other intangibles, less accumulated
amortization of $17,956 and $20,489 . . . . . . . . . . . . . . . . . . . . . . 312,791 331,258
Deferred charges and other assets . . . . . . . . . . . . . . . . . . . . . . . . 22,093 14,549
-------- --------
$416,346 $426,728
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable accrued expenses and other current liabilities . . . . . . . . . $ 17,061 $ 12,983
Broadcast program rights fees payable . . . . . . . . . . . . . . . . . . . . . . 5,298 4,645
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 22,359 17,628
Broadcast program rights fees payable, less current portion . . . . . . . . . . . 2,829 2,212
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,481 148,532
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,822 44,822
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,163 54,200
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,654 267,394
Shareholders' equity:
Common Stock, $.01 par value, including additional paid-in capital;
500,000,000 shares authorized; 19,976,927 and 20,007,552 shares outstanding . . 82,936 83,148
Retained earnings from January 1, 1994. . . . . . . . . . . . . . . . . . . . . . 76,756 76,186
-------- --------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 159,692 159,334
-------- --------
$416,346 $426,728
-------- --------
-------- --------
</TABLE>
See notes to financial statements.
22
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
CONDENSED STATEMENT OF OPERATIONS-UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1995 1996
-------- --------
<S> <C> <C>
Net Revenues:
Television broadcasting. . . . . . . . . . . . . . $14,086 $13,677
Radio broadcasting . . . . . . . . . . . . . . . . 14,959 17,500
------- -------
29,045 31,177
------- -------
Costs and expenses:
Operating expenses . . . . . . . . . . . . . . . . 9,144 10,034
Selling, general and administrative. . . . . . . . 10,735 11,694
Corporate general and administrative . . . . . . . 1,123 1,053
Depreciation and amortization. . . . . . . . . . . 3,319 4,065
------- -------
24,321 26,846
------- -------
Operating income . . . . . . . . . . . . . . . . . . . 4,724 4,331
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . (3,513) (3,734)
Investment income. . . . . . . . . . . . . . . . . 680 55
Miscellaneous, net . . . . . . . . . . . . . . . . 187 (1,522)
------- -------
(2,646) (5,201)
------- -------
Earnings (loss) before income taxes. . . . . . . . . . 2,078 (870)
Income tax (benefit) . . . . . . . . . . . . . . . . . 800 (300)
------- -------
NET EARNINGS (LOSS). . . . . . . . . . . . . . . . . . $ 1,278 $ (570)
------- -------
------- -------
SHARE DATA:
Primary and Fully Diluted:
Net earnings (loss) . . . . . . . . . . . . . . $ .06 $ (.03)
Average common shares. . . . . . . . . . . . . . . 20,819 21,119
</TABLE>
See notes to financial statements.
23
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY-UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1995 1996
-------- --------
<S> <C> <C>
Common Stock, including additional paid-in capital:
Beginning balance. . . . . . . . . . . . . . . . . $ 87,831 $ 82,936
Common Stock issued:
Exercise of stock options. . . . . . . . . . . . . 162 212
Common Stock repurchased and retired . . . . . . . . . (329) -
-------- --------
Balance at end of period . . . . . . . . . . . . . . . $ 87,664 $ 83,148
-------- --------
-------- --------
Retained earnings:
Beginning balance. . . . . . . . . . . . . . . . . 63,106 76,756
Net earnings (loss). . . . . . . . . . . . . . . . 1,278 (570)
-------- --------
$ 64,384 $ 76,186
-------- --------
-------- --------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . $152,048 $159,334
-------- --------
-------- --------
</TABLE>
See notes to financial statements.
24
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
CONDENSED STATEMENT OF CASH FLOWS-UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1995 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss). . . . . . . . . . . . . . . . $ 1,278 $ (570)
Adjustments:
Depreciation and amortization . . . . . . . . . 3,319 4,065
Non-cash interest expense . . . . . . . . . . . 46 51
Decrease in trade receivables . . . . . . . . . 6,308 4,660
Decrease (increase) in broadcast program
rights, net of fees payable . . . . . . . . . (7) 186
Decrease in accounts payable, accrued expenses
and other liabilities . . . . . . . . . . . . . (9,459) (4,000)
Other. . . . . . . . . . . . . . . . . . . . . . 487 150
------- -------
1,972 4,542
------- -------
INVESTING ACTIVITIES:
Deposits on broadcast stations to be acquired. . . (4,900) -
Purchases of:
Broadcast stations. . . . . . . . . . . . . . . - (16,500)
Real estate, property and equipment . . . . . . (2,591) (1,820)
Other. . . . . . . . . . . . . . . . . . . . . . . 60 232
------- -------
(7,431) (18,088)
------- -------
FINANCING ACTIVITIES:
Additional long-term borrowings. . . . . . . . . . - 16,000
Common shares repurchased. . . . . . . . . . . . . (328) -
Other. . . . . . . . . . . . . . . . . . . . . . . 161 212
------- -------
(167) 16,212
------- -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS. . . . . . . . . . . . . . . . . . . . . (5,626) 2,666
Cash and short-term investments at beginning of period 46,258 3,572
------- -------
Cash and short-term investments at end of period . . . $40,632 $ 6,238
------- -------
------- -------
</TABLE>
See notes to financial statements.
25
<PAGE>
CITICASTERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
A. ACCOUNTING POLICIES
ORGANIZATION Citicasters is engaged in the ownership and operation of radio and
television stations and derives substantially all of its revenue from the sale
of advertising time. The amount of broadcast advertising time available for sale
by Citicasters' stations is relatively fixed, and by its nature cannot be
stockpiled for later sale. Therefore, the primary variables affecting revenue
levels are the demand for advertising time, the viewing or listening audience of
the station and the entry of new stations in the marketplace. The major variable
costs of operation are programming (news, sports and entertainment), sales costs
related to revenues and promotional costs. The success of the programming
determines the audience levels and therefore affects revenue.
BASIS OF PRESENTATION The accompanying financial statements for Citicasters
Inc. are unaudited, but Citicasters believes that all adjustments (consisting
only of normal recurring accruals, unless otherwise disclosed herein) necessary
for fair presentation have been made. The results of operations for interim
periods are not necessarily indicative of results to be expected for the year.
The financial statements have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and footnotes
necessary to be in conformity with generally accepted accounting principles.
Significant intercompany balances and transactions have been eliminated. Certain
reclassifications have been made to conform to the current year's presentation.
All acquisitions have been treated as purchases. The accounts and
results of operations of companies since their formation or acquisition are
included in the consolidated financial statements.
American Financial Group, Inc. and its Subsidiaries ("American
Financial") owned 7,566,889 shares or 37.8% of Citicasters' outstanding
Common Stock at April 15, 1996. At that date, American Financial's Chairman,
Carl H. Lindner, owned an additional 3,341,936 shares or 16.7% of
Citicasters' outstanding Common Stock.
USE OF ESTIMATES The preparation of the financial statements requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Changes in circumstances could
cause actual results to differ materially from those estimates.
BROADCAST PROGRAM RIGHTS The rights to broadcast non-network programs on
Citicasters' television stations are stated at cost, less accumulated
amortization. These costs are charged to operations on a straight-line basis
over the contract period or on a per showing basis, whichever results in the
greater aggregate amortization.
PROPERTY AND EQUIPMENT Property and equipment are based on cost and
depreciation is calculated primarily using the straight-line method. Depreciable
lives are: land improvements, 8-20 years; buildings and improvements, 8-20
years; operating and other equipment, 3-20 years; and leasehold improvements,
over the life of the lease.
26
<PAGE>
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts, broadcasting
licenses and other intangibles represent the excess of the value of the
broadcast stations over the values of their net tangible assets, and is
attributable to FCC licenses, network affiliation agreements and other
contractual or market related factors. Reorganization value in excess of amounts
allocable to identifiable assets represents the excess of the estimated fair
value of the Company at the time of the reorganization over the estimated fair
value allocated to its net identifiable assets. Intangible assets are being
amortized on a straight-line basis over an average of 35 years. On an ongoing
basis, Citicasters reviews the carrying value of its intangible assets. If this
review indicates that intangible assets will not be recoverable, as determined
based on undiscounted cash flows of the Company's broadcast stations over the
remaining amortization period, Citicasters' carrying values of intangible assets
are reduced by the amount of the estimated shortfall of cash flows.
DEBT DISCOUNT Debt discount is being amortized over the life of the related
debt obligations by the interest method.
INCOME TAXES Citicasters files a consolidated Federal income tax return which
includes all 80% or more owned subsidiaries. Deferred income tax assets and
liabilities are determined based on differences between financial reporting and
tax bases and are measured using enacted tax rates. Deferred tax assets are
recognized if it is more likely than not that a benefit will be realized
EARNINGS PER SHARE Primary and fully diluted earnings per share are based upon
the weighted average number of common shares and gives effect to common
equivalent shares (dilutive options) outstanding during the respective periods.
The effect of the options was to increase average shares outstanding by
1,116,000 shares for the three months ended March 31, 1996.
STOCK BASED COMPENSATION The Company grants stock options for a fixed number of
shares to employees with an exercise price equal to the fair value of the shares
at the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
and, accordingly, recognizes no compensation expense for the stock option
grants.
STATEMENT OF CASH FLOWS For cash flow purposes, "investing activities" are
defined as making and collecting loans and acquiring and disposing of debt or
equity instruments and property and equipment. "Financing activities" include
obtaining resources from owners and providing them with a return on their
investments, borrowing money and repaying amounts borrowed. All other activities
are considered "operating." Short-term investments for purposes of the Financial
Statements are those which had a maturity of three months or less when acquired.
B. ACQUISITIONS AND DISPOSITIONS
On February 12, 1996, Citicasters and Jacor Communications, Inc.
entered into a merger agreement, by which Jacor will acquire Citicasters.
Under the agreement, for each share of Citicasters' stock Jacor will pay cash
of $29.50 plus a five-year warrant to purchase approximately .2 shares of
Jacor common stock at $28 per full share. If the closing occurs after
September 1996, the exercise price of the warrant would be reduced to $26 per
share and the per share cash price would increase at the rate of $.2215 per
month. American Financial and certain of its
27
<PAGE>
affiliates executed irrevocable consents in favor of the Jacor transaction on
March 13, 1996. The closing of the transaction is conditioned on, among other
things, receipt of FCC and other regulatory approvals. Upon consummation of the
merger, holders of the 9 3/4% Notes have the right to put their notes to the
Company at 101% of principal.
During January 1996, Citicasters acquired two additional FM radio
stations (WHOK and WLLD) and an additional AM radio station (WLOH) in
Columbus for $24 million. Citicasters borrowed from its acquisition facility
to fund the purchases. In the aggregate, the purchases of radio stations
completed during 1995 and 1996 did not have a material effect on the
Company's results.
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.
C. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
DECEMBER 31, MARCH 31,
1995 1996
------------ ---------
Citicasters:
9 3/4% Senior Subordinated Notes due
February 2004, less unamortized
discount of $2,519 and $2,468
(imputed interest rate 10.13%) $122,481 $122,532
Subsidiaries:
Bank credit facility 10,000 26,000
-------- --------
$132,481 $148,532
-------- --------
-------- --------
As of March 31, 1996, Citicasters had $99 million of bank credit available
under a $125 million acquisition facility and all $25 million of bank credit
available under a working capital facility.
D. SHAREHOLDERS' EQUITY
Citicasters is authorized to issue 500 million shares of Class A
Common Stock, $.01 par value, 125 million shares of Class B Common Stock,
$.01 par value and 9.5 million shares of Serial Preferred Stock, $.01 par
value. The preferred stock may have such preferences and other rights and
limitations as the Board of Directors may designate with respect to each
series.
28
<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 Communications, Inc. (The "Company" or "Jacor"), Noble Broadcast
Group, Inc. ("Noble") and Citicasters Inc. ("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 and for the latest twelve
months ended March 31, 1996 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 of Noble and Citicasters by the
Company (the "Acquisitions"), and (v) the related financing transactions. The
unaudited pro forma condensed consolidated statements of operations for the
three months ended March 31, 1996 and for the latest twelve months ended
March 31, 1996 give effect to each of the following transactions as if such
transactions had been completed as of January 1, 1996: (i) Jacor's February
1996 radio station dispositions, (ii) the Acquisitions, and (iii) the related
financing transactions. The pro forma condensed consolidated balance sheet as
of March 31, 1996 has been prepared as if such acquisitions and the related
financing transactions had occurred on that date.
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.
29
<PAGE>
<TABLE>
<CAPTION>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 1995
JACOR NOBLE JACOR/NOBLE
HISTORICAL PRO FORMA JACOR HISTORICAL PRO FORMA COMBINED
JACOR ADJUSTMENTS PRO 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 2,710 (c) 16,700
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 (806) 22,223
Interest expense. . . . . . . . . (1,444) (1,444) (9,913) (3,143)(e) (14,500)
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) (6,568) 7,967
Income tax expense . . . . . . . . (7,300) 200 (g) (7,100) (63) 2,100 (g) (5,063)
--------- ---------- --------- -------- --------- ---------
Income (loss) before
extraordinary items. . . . . $10,965 $(301) $10,664 $(3,292) $(4,468) $2,904
--------- ---------- --------- -------- --------- ---------
--------- ---------- --------- -------- --------- ---------
Income per common
share . . . . . . . . . . . . . . $0.52 $0.51 $0.14
--------- --------- ---------
--------- --------- ---------
Number of common shares used in
per share computations . . . . . 20,913 20,913 20,913
--------- --------- ---------
--------- --------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
30
<PAGE>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
LATEST TWELVE
MONTHS ENDED
YEAR ENDED DECEMBER 31, 1995 MARCH 31, 1996
-------------------------------------------------------------- --------------
JACOR/NOBLE JACOR/NOBLE
JACOR/NOBLE CITICASTERS /CITICASTERS /CITICASTERS
COMBINED HISTORICAL PRO FORMA COMBINED COMBINED
PRO FORMA CITICASTERS ADJUSTMENTS PRO FORMA PRO FORMA
--------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue . . . . . . . . . . . $160,202 $136,414 $6,853 (h) $303,469 $305,883
Broadcast operating expenses. . . 116,881 80,929 4,366 (h) 195,744 197,854
(1,322)(i)
(5,110)(j)
Depreciation and amortization . . 16,700 14,635 15,505 (k) 46,840 47,118
Corporate general and
administrative expenses. . . . . 4,398 4,303 1,322 (i) 6,655 6,733
(3,368)(l)
----------- --------- ----------- ---------- ----------
Operating income . . . . . . . 22,223 36,547 (4,540) 54,230 54,178
Interest expense. . . . . . . . . (14,500) (13,854) (32,084)(m) (60,438) (60,438)
Interest and investment income. . 406 1,231 (767)(h) 870 595
Other income (expense), net . . . (162) (607) 175 (h) (594) (896)
----------- --------- ----------- ---------- ----------
Income (loss) before income
taxes and extraordinary
items. . . . . . . . . . . . 7,967 23,317 (37,216) (5,932) (6,561)
Income tax expense. . . . . . . . (5,063) (9,000) 11,100 (n) (2,963) (3,555)
----------- --------- ----------- ---------- ----------
Income (loss) before
extraordinary items. . . . . $2,904 $14,317 $(26,116) $(8,895) $(10,116)
----------- --------- ----------- ---------- ----------
----------- --------- ----------- ---------- ----------
Income (loss) per common share $0.14 $(0.29) $(0.34)
----------- ---------- ----------
----------- ---------- ----------
Number of common shares used in
per share computations . . . . 20,913 30,158 (o) 29,433
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
31
<PAGE>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
--------------------------------------------------------------------------------------
JACOR JACOR/NOBLE
HISTORICAL PRO FORMA JACOR HISTORICAL NOBLE PRO FORMA COMBINED PRO
JACOR ADJUSTMENTS PRO FORMA NOBLE ADJUSTMENTS FORMA
---------- ----------- --------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue. . . . . . . $30,074 $1,850 (p) $31,924 $6,058 $(2,154)(r) $35,828
Broadcast operating
expenses . . . . . . . . 23,871 1,693 (p) 25,564 5,626 (2,075)(r) 29,115
Depreciation and
amortization . . . . . 2,619 30 (p) 2,649 1,079 625 (c) 4,353
Corporate general
and administrative
expenses . . . . . . . 1,139 1,139 577 (378)(s) 1,338
-------- ----------- -------- --------- -------------- -----------
Operating
income . . . . . . 2,445 127 2,572 (1,224) (326) 1,022
Interest expense . . . . (2,111) (2,111) (1,875) 361 (e) (3,625)
Interest and
investment
income . . . . . . . . .
Other income
(expense), net . . . . 2,767 (2,539)(q) 228 37,669 (37,669)(r) 228
-------- ----------- -------- --------- -------------- -----------
Income (loss)
before income
taxes and
extraordinary
items. . . . . . . 3,101 (2,412) 689 34,570 (37,634) (2,375)
Income tax expense . . . (1,259) 965 (g) (294) (14,683) 14,925 (g) (52)
-------- ----------- -------- --------- -------------- -----------
Income (loss)
before
extraordinary
items. . . . . . . $1,842 $(1,447) $395 $19,887 $(22,709) $(2,427)
-------- ----------- -------- --------- -------------- -----------
-------- ----------- -------- --------- -------------- -----------
Income per
common
share. . . . . . . . . . $0.09 $0.02 $(0.13)
-------- -------- -----------
-------- -------- -----------
Number of common
shares used in per
share
computations . . . . . 20,503 20,503 18,183
-------- -------- -----------
-------- -------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
32
<PAGE>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION> THREE MONTHS
ENDED
THREE MONTHS ENDED MARCH 31, 1996 MARCH 31, 1995
-------------------------------------------------------------------- -----------------------
JACOR/NOBLE CITICASTERS
COMBINED HISTORICAL PRO FORMA JACOR/NOBLE/CITICASTERS JACOR/NOBLE/CITICASTERS
PRO FORMA CITICASTERS ADJUSTMENTS COMBINED PRO FORMA COMBINED PRO FORMA
----------- ----------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Net revenue. . . . . . . . $35,828 $31,177 $67,005 $64,591
Broadcast operating
expenses . . . . . . . . 29,115 21,728 $(330)(i) 49,235 47,125
(1,278)(j)
Depreciation and
amortization . . . . . . 4,353 4,065 3,470 (k) 11,888 11,610
Corporate general and
administrative
expenses . . . . . . . . 1,338 1,053 330 (i) 1,879 1,801
(842)(l)
----------- ----------- ----------- ----------------------- -----------------------
Operating income . . 1,022 4,331 (1,350) 4,003 4,055
Interest expense . . . . . (3,625) (3,734) (7,750)(m) (15,109) (15,109)
Interest and investment
income . . . . . . . . . 55 55 330
Other income
(expense), net . . . . . 228 (1,522) 1,489 (t) 195 497
----------- ----------- ----------- ----------------------- -----------------------
Income (loss)
before income
taxes and
extraordinary
items. . . . . . . . (2,375) (870) (7,611) (10,856) (10,227)
Income tax expense . . . . (52) 300 2,090 (n) 2,338 2,930
----------- ----------- ----------- ----------------------- -----------------------
Income (loss)
before
extraordinary
items. . . . . . . . $(2,427) $(570) $(5,521) $(8,518) $(7,297)
----------- ----------- ----------- ----------------------- -----------------------
----------- ----------- ----------- ----------------------- -----------------------
Income (loss) per
common share . . . . $(0.13) $(0.29) $(0.24)
----------- ----------------------- -----------------------
----------- ----------------------- -----------------------
Number of common
shares used in per
share computations . . . 18,183 29,433 (o) 30,848
----------- ----------------------- -----------------------
----------- ----------------------- -----------------------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
33
<PAGE>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------------------------------
JACOR/NOBLE
HISTORICAL HISTORICAL NOBLE PRO FORMA COMBINED
JACOR NOBLE ADJUSTMENTS PROFORMA
---------- ---------- --------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . $5,889 $592 $6,481
Accounts receivable . . . . . . . . . . . 25,301 3,239 28,540
Broadcast program rights. . . . . . . . .
Prepaid expenses and other current assets 8,460 3,377 11,837
---------- ---------- ----------
Total current assets . . . . . . . . 39,650 7,208 46,858
Property and equipment . . . . . . . . . . . . 39,214 4,670 $4,980 (u) 48,864
Intangible assets. . . . . . . . . . . . . . . 165,282 49,965 99,009 (u) 314,256
Deferred charges and other assets. . . . . . . 109,102 1,289 (54,275)(u) 16,116
(40,000)(v)
---------- ---------- ---------- ----------
Total assets $353,248 $63,132 $9,714 $426,094
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable, accrued liabilities
and other current liabilities. . . $14,601 $11,493 $26,094
Current portion of Long-term debt. . 40,000$ (40,000) (v)
---------- ---------- ---------- ----------
Total current liabilities. . . . . . 14,601 51,493 (40,000) 26,094
Long-term debt, net of current maturities . . 183,500 15,125 (v) 198,625
Other liabilities . . . . . . . . . . . . . . 14,772 18,228 28,000(u)(w) 61,000
Shareholders' equity:
Common stock . . . . . . . . . . . . 1,824 1,824
Additional paid-in capital . . . . . 117,102 49,791 (49,791)(x) 117,102
Common stock warrants. . . . . . . . 388 388
Retained earnings. . . . . . . . . . 21,061 (56,380) 56,380 (x) 21,061
---------- ---------- ---------- ----------
Total shareholders' equity . . . 140,375 (6,589) 6,589 140,375
---------- ---------- ---------- ----------
Total liabilities and
shareholders equity. . . . . . $353,248 $63,132 $9,714 $426,094
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
34
<PAGE>
JACOR COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------
JACOR/NOBLE HISTORICAL CITICASTERS PRO JACOR/NOBLE/CITICASTERS
COMBINED PRO FORMA CITICASTERS FORMA ADJUSTMENTS COMBINED PRO FORMA
------------------ ----------- ----------------- -----------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . $6,481 $6,238 $35,300 (z) $48,019
Accounts receivable. . . . . . . . . . . . . 28,540 27,835 56,375
Broadcast program rights . . . . . . . . . . 4,596 4,596
Prepaid expenses and other
current assets. . 11,837 2,687 14,524
---------- ---------- ---------- ----------
Total current assets . . . . . . . . . . 46,858 41,356 35,300 123,514
Broadcast program rights, less
current portion. . . . . . . . . . . . . . . . . . . 2,406 2,406
Property and equipment . . . . . . . . . . . . . . . . 48,864 37,159 9,719 (z) 95,742
Intangible assets. . . . . . . . . . . . . . . . . . . 314,256 331,258 681,015 (z) 1,323,229
(3,300)(aa)
Deferred charges and other assets. . . . . . . . . . . 16,116 14,549 30,665
---------- ---------- ---------- ----------
Total assets . . . . . . . . . . . . . . $426,094 $426,728 $722,734 $1,575,556
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities . . . . . . . . . . . . . . . . . . $26,094 $12,983 $39,077
Broadcast program right fees
payable . . . . . . . . . . . . . . . . . . . . 4,645 4,645
---------- ---------- ----------
Total current liabilities. . . . . . . . . . 26,094 17,628 43,722
Broadcast program right fees
payable, less current portion. . . . . . . . . . . . 2,212 2,212
Long-term debt, net of current
maturities . . . . . . . . . . . . . . . . . . . . . 198,625 148,532 $277,843 (y) 625,000
LYONs . . . . . . . . . . . . . . . . . . . . . . 100,000 (y) 100,000
Other liabilities. . . . . . . . . . . . . . . . . . . 61,000 99,022 151,000 (z) 311,022
Shareholders' equity:
Common stock. . . . . . . . . . . . . . . . . . . 1,824 200 (200)(x) 2,949
1,125 (bb)
Additional paid-in capital . . . . . . . . . 117,102 82,948 (82,948)(x) 418,602
301,500 (bb)
Common stock warrants. . . . . . . . . . . . 388 53,900 (cc) 54,288
Retained earnings. . . . . . . . . . . . . . 21,061 76,186 (76,186)(x) 17,761
. . . . . . . . . . . . . . . . . . . . . . (3,300)(aa)
---------- ---------- ---------- ----------
Total shareholders' equity . . . . . . . . . . . . . . 140,375 159,334 193,891 493,600
---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity. . . . . . . . . . . . . . $426,094 $426,728 $722,734 $1,575,556
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
35
<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 (u). 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 its February 1996 Credit Facility to finance the
Noble acquisition and refinance existing outstanding borrowings. The assumed
interest rate is 7.3%, which represents the current rate as of May 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
for the year ended December 31, 1995 and $325 for the three months ended
March 31, 1996.
36
<PAGE>
(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) Adjustments to reclassify miscellaneous broadcast operating expenses to
conform with Jacor's presentation.
(j) The adjustments reflect $5,110 and $1,278 of cost savings for the year
ended December 31, 1995 and the three months ended March 31, 1996,
respectively, 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 as follows:
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- --------------
Programming and promotion . . . . . . . $2,220 $555
News. . . . . . . . . . . . . . . . . . 970 243
Technical and engineering . . . . . . . 360 90
General and administrative. . . . . . . 1,560 390
----------------- --------------
$5,110 $1,278
----------------- --------------
----------------- --------------
(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 (z).
Goodwill is amortized over 40 years.
(l) The adjustments represent $3,368 and $842 of corporate overhead savings
for the year ended December 31, 1995 and the three months ended March 31,
1996, respectively, for the elimination of redundant management costs and
other expenses resulting from the combination with Citicasters.
(m) Represents the adjustment to interest expense associated with the
Company's Senior Subordinated Notes to be sold in June 1996 (the "Notes"), the
Citicasters outstanding 9 3/4% Senior Subordinated Notes (the "Citicasters
Notes"), the Company's liquid yield option notes to be sold in June 1996 (the
"LYONs") and borrowings under the June 1996 Credit Facility with an assumed
blended rate of 8.336%. The adjustment reflects additional interest expense on
borrowings necessary to complete the Merger, and to refinance outstanding
borrowings under the Existing Credit Facility incurred 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 (y) for composition of
borrowings.
37
<PAGE>
(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
$9,540 for the year ended December 31, 1995 and $2,385 for three months ended
March 31, 1996.
(o) The pro forma weighted average shares outstanding includes all shares of
Common Stock outstanding prior to the Offering and shares to be issued in this
Offering. The pro forma weighted average shares of Jacor do not reflect any
options and warrants outstanding prior to the Offering or warrants to be
issued to the Citicasters shareholders to consummate the Merger, as they are
antidilutive. The LYONs are not common stock equivalents and are therefore,
excluded from the computation.
(p) These adjustments reflect additional revenues and expenses for Jacor's
February 1996 acquisition of Noble's operating assets in San Diego, net of the
elimination of revenues and expenses for radio stations WMYU-FM and WWST-FM in
Knoxville, which were sold in February 1996.
(q) The adjustment reflects the elimination of the gain on the sale of radio
stations WMYU-FM and WWST-FM in Knoxville, which were sold in February 1996
for $6,500.
(r) These adjustments represent the elimination of revenues, operating
expenses and the related gain from the sale of the San Diego operating assets
in February 1996. See note (u).
(s) The adjustment represents corporate overhead savings from the
elimination of redundant management costs and other expenses resulting from
the combination of the Jacor and Noble entities.
(t) The adjustment represents the elimination of non-recurring expenses
directly associated with the sale of Citicasters to Jacor.
(u) The adjustment represents the allocation of the remaining purchase price
of Noble and the portion of the Noble Acquisition already funded, including
the Noble warrant in the amount of $54,275, to the estimated fair value of the
assets acquired and liabilities assumed, and the recording of goodwill
associated with the acquisition. In February 1996, Jacor completed the
acquisition of Noble's operating assets in San Diego and certain assets
related to the Mexican properties for $50,800 and recorded the transaction as
a purchase.
ESTIMATED FAIR
MARKET VALUE
--------------
Property and equipment. . . . . . . . . . . . . . $9,650
Intangible assets . . . . . . . . . . . . . . . . 148,974
Cash. . . . . . . . . . . . . . . . . . . . . . . 592
Accounts receivable . . . . . . . . . . . . . . . 3,239
Prepaid expenses and other current assets . . . . 3,377
Deferred charges and other assets . . . . . . . . 1,289
Accounts payable, accrued liabilities and other .
current liabilities . . . . . . . . . . . . . . (11,493)
Other liabilities . . . . . . . . . . . . . . . . (46,228)
--------------
$109,400
--------------
--------------
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<PAGE>
(v) The adjustment represents the net additional borrowings to complete the
Noble Acquisition as follows:
Historical Jacor debt . . . . . . . . . . . . . . $183,500
Historical Noble debt . . . . . . . . . . . . . . 40,000
Loan receivable from Noble. . . . . . . . . . . . (40,000)
Pro forma adjustment. . . . . . . . . . . . . . . 15,125
--------
Assumed borrowings after Noble Acquisition. . . . $198,625
--------
--------
(w) 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.
(x) The adjustment reflects the elimination of historical stockholders'
equity, as the Noble Acquisition will be accounted for as a purchase.
(y) The pro forma adjustment represents the net additional borrowings
required to complete the Citicasters Merger as follows:
Historical Citicasters debt . . . . . . . . . . . $148,532
Jacor/Noble pro forma debt. . . . . . . . . . . . 198,625
Pro forma adjustments, including a $2,468 fair
market value adjustment for Citicasters debt . . 377,843
--------
Assumed borrowings after Acquisitions . . . . . . $725,000
--------
--------
The assumed borrowings after the Acquisitions are as follows:
Borrowings under the June 1996 Credit Facility. . $400,000
Issuance of the LYONs . . . . . . . . . . . . . . 100,000
Issuance of the Notes . . . . . . . . . . . . . . 100,000
Citicasters Notes . . . . . . . . . . . . . . . . 125,000
--------
$725,000
--------
--------
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<PAGE>
(z) The adjustments represent the allocation of the purchase price of
Citicasters to the estimated fair value of the assets acquired and
liabilities assumed, and the recording of goodwill associated with the Merger
as follows:
ESTIMATED FAIR
MARKET VALUE
--------------
Property and equipment. . . . . . . . . . . . . . $46,878
Intangible assets . . . . . . . . . . . . . . . . 1,012,273
Cash. . . . . . . . . . . . . . . . . . . . . . . 6,238
Accounts receivable . . . . . . . . . . . . . . . 27,835
Broadcast program rights. . . . . . . . . . . . . 7,002
Prepaid expenses and other current assets . . . . 2,687
Deferred charges and other assets . . . . . . . . 14,549
Accounts payable, accrued liabilities and other
current liabilities . . . . . . . . . . . . . . (12,983)
Broadcast program rights fees payable . . . . . . (6,857)
Other liabilities . . . . . . . . . . . . . . . . (250,022)
Long-term debt. . . . . . . . . . . . . . . . . . (151,000)
------------
$696,600
------------
------------
The purchase price is summarized as follows:
Pro forma borrowings. . . . . . . . . . . . . . . $375,375
Merger Warrants issued. . . . . . . . . . . . . . 53,900
Common Stock issued . . . . . . . . . . . . . . . 302,625
Excess cash . . . . . . . . . . . . . . . . . . . (35,300)
------------
$696,600
------------
------------
(aa) Adjustment to write-off deferred financing costs for the February 1996
Credit Facility anticipated to be refinanced in connection with the
Citicasters Merger.
(bb) Adjustment represents assumed proceeds of 315,000 from the Company's
1996 Common Stock Offering, net of offering costs estimated to be 12,375.
(Offering costs include a $1,000 financial advisory fee.)
(cc) 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.
40
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our report dated February 23, 1996 with respect to
the financial statements of Citicasters Inc. and Subsidiaries, which reports are
included in this Current Report on Form 8-K of Jacor Communications, Inc.
ERNST & YOUNG LLP
Cincinnati, Ohio
November 19, 1996
