FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
A Delaware Corporation Employer
Identification
No. 31-0978313
50 East RiverCenter Blvd.
12TH Floor
Covington, KY 41011
Telephone (606) 655-2267
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days.
Yes X No
At November 5, 1997, 45,564,401 shares of common stock were
outstanding.
<PAGE>
JACOR COMMUNICATIONS, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of September 30, 1997 and December
31, 1996 3
Condensed Consolidated Statements of
Operations for the three months and
nine months ended September 30, 1997
and 1996 4
Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II. Other Information
Item 6. - Exhibits and Reports on Form 8-K 17
Signatures 20
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<TABLE>
JACOR COMMUNICATIONS, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)
<CAPTION>
September 30, December 31,
1997 1996
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,779 $ 78,137
Accounts receivable, less allowance for
doubtful accounts of $5,436 in 1997
and $3,950 in 1996 118,500 79,502
Prepaid expenses and other current assets 32,417 8,963
Total current assets 169,696 166,602
Property and equipment, net 175,567 131,488
Intangible assets, net 2,003,526 1,290,172
Other assets 57,743 116,680
Total assets $ 2,406,532 $ 1,704,942
LIABILITIES
Current liabilities:
Accounts payable, accrued
expenses and other
current liabilities $ 86,504 $ 55,532
Total current liabilities 86,504 55,532
Long-term debt 834,500 670,000
5 1/2% Liquid Yield Option Notes 123,619 118,682
Other liabilities 114,927 108,914
Deferred tax liability 334,549 264,878
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred Stock, authorized and unissued
4,000,000 shares - -
Common Stock, $0.01 per share par
value; authorized 100,000,000
shares, issued and outstanding
shares:
45,564,401 in 1997 and 31,287,221 in 1996 455 313
Additional paid-in capital 860,530 432,721
Common stock warrants 31,500 26,500
Unrealized gain on investments - 2,042
Retained earnings 19,948 25,360
Total shareholders' equity 912,433 486,936
Total liabilities and
shareholders' equity $ 2,406,532 $ 1,704,942
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
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<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and nine months ended September 30, 1997 and 1996
(In thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Broadcast revenue $ 161,733 $ 60,143 $ 413,689 $ 142,176
Less agency commissions 17,173 5,817 44,748 14,656
Net revenue 144,560 54,326 368,941 127,520
Broadcast operating expenses 93,734 38,273 251,513 91,694
Depreciation and amortization 21,900 5,166 53,097 10,601
Corporate general and
administrative expenses 3,406 1,658 9,240 4,080
Operating income 25,520 9,229 55,091 21,145
Interest expense (20,951) (6,844) (60,081) (13,397)
Gain on sale of radio stations - - 10,801 2,539
Other income, net 214 3,160 2,733 4,701
Income before income taxes
and extraordinary loss 4,783 5,545 8,544 14,988
Income taxes 4,300 3,445 6,500 7,285
Income before
extraordinary loss 483 2,100 2,044 7,703
Extraordinary loss, net of
income tax credit (1,900) (2,015) (7,456) (2,966)
Net (loss) income $ (1,417) $ 85 $ (5,412) $ 4,737
NET (LOSS) INCOME PER COMMON SHARE:
Before extraordinary loss $ 0.01 $ 0.06 $ 0.05 $ 0.31
Extraordinary loss (0.04) (0.06) (0.18) (0.12)
Net (loss) income per
common share $(0.03) $ 0.00 $(0.13) $ 0.19
Number of common shares used
in per share computations 49,113 33,303 41,647 24,880
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
(In thousands)
(UNAUDITED)
<CAPTION>
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net cash provided by operating activities $ 31,109 $ 17,656
Cash flows from investing activities:
Deposits paid on broadcast properties (26,225) -
Capital expenditures (12,485) (7,506)
Cash paid for acquisitions (542,074) (827,941)
Proceeds from sale of investments 73,813 -
Proceeds from sale of radio stations 19,450 6,595
Loans originated and other - (7,147)
Net cash used by investing activities (487,521) (835,999)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 324,700 703,000
Proceeds from issuance of 8 3/4% Notes 150,000 -
Proceeds from issuance of LYONs - 115,172
Proceeds from issuance of common stock 246,154 317,109
Repayment of long-term debt (310,200) (248,500)
Payment of finance costs (13,927) (21,342)
Other 327 (1,712)
Net cash provided by financing
activities 397,054 863,727
Net (decrease) increase in cash and
cash equivalents (59,358) 45,384
Cash and cash equivalents at
beginning of period 78,137 7,437
Cash and cash equivalents at end of period $ 18,779 $ 52,821
Supplemental schedule of non-cash investing
and financing activities:
Common stock issued in acquisitions $ 179,428 $ -
Warrants issued in acquisitions 5,000 26,500
Liabilities assumed in acquisitions 36,851 233,135
Fair value of assets exchanged, net of cash 104,000 -
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The December 31, 1996 condensed consolidated balance sheet
data was derived from audited financial statements, but does
not include all disclosures required by generally accepted
accounting principles. The financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted
pursuant to such rules and regulations, the Company believes
that the disclosures 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. Results for interim periods may not be
indicative of results for the full year. It is suggested
that these financial statements be read in conjunction with
the consolidated financial statements for the year ended
December 31, 1996 and the notes thereto.
2. ACQUISITIONS AND DISPOSITIONS
Completed Radio Station Acquisitions and Dispositions
First Six Months Transactions
In the first six months of 1997, the Company completed
acquisitions of 52 stations in 20 broadcast areas for a
purchase price consisting of (i) $225.8 million in cash, of
which $26.1 million was placed in escrow in 1996, (ii) the
issuance of approximately 3.55 million shares of common
stock valued at $105.9 million, and (iii) the issuance of
warrants to acquire 500,000 shares of common stock at $40
per share valued at $5.0 million.
The Company also completed three separate like-kind
exchanges of broadcast properties, exchanging five stations
and $27.0 million in cash, of which $3.6 million was placed
in escrow in 1996, for nine stations and $16.0 million in
cash. The Company sold one station in San Diego, California
for $6.0 million.
July Transactions
The Company acquired WLTF-FM and WTAM-AM in Cleveland, Ohio
from Secret Communications, Inc. for approximately $45.0
million consisting of 750,000 shares of Jacor common stock
valued at approximately $21.0 million as of the signing of
the agreement and cash of approximately $24.0 million.
The Company acquired WXZZ-FM and WTKT-AM in Georgetown, Kentucky
and WKQQ-FM in Lexington, Kentucky for $24.0 million in cash
from Village Communications, Inc.
The Company acquired WLEC-AM and WCPZ-FM in Sandusky, Ohio for
$7.7 million in cash from Erie Broadcasting II, Inc.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
The Company acquired WLKT-FM in Lexington, Kentucky for $5.1
million in cash from Newport Communications L.L.C., BRC
Media Management, Inc., James E. Champlin and Martin F.
Beck.
The Company acquired KBKK-FM in Spanish Fork, Utah for approximately
$4.5 million in cash from Garcia Broadcasting, L.L.C.
August Transactions
The Company acquired WITS-AM and WYMR-FM in Sebring, Florida
for approximately $0.7 million in cash from Outback
Broadcasters, Inc.
The Company acquired KMXN-AM in Santa Rosa, California for
approximately $0.1 million in cash from Cardinal Communications, Inc.
The Company disposed of WXZZ-FM in Lexington, Kentucky for
approximately $3.5 million in cash.
September Transactions
The Company acquired KAHS-AM in Thousand Oaks, California
for approximately $0.4 million in cash from Buenaventura
Communications, Inc.
The Company acquired WCBW-FM in St. Louis, Missouri for
$13.2 million in cash from Continental Broadcasting Group, Inc.
Completed Broadcasting Services Acquisitions
In the first nine months of 1997, the Company completed
acquisitions of four broadcasting services companies for a
purchase price consisting of (i) $216.5 million in cash, and
(ii) the issuance of approximately 1.48 million shares of
common stock valued at $52.7 million.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
All of the above acquisitions have been accounted for as
purchases. The excess cost over the fair value of net
assets acquired is being amortized over 40 years. The
results of operations of the acquired businesses are
included in the Company's financial statements since the
respective dates of acquisition. Assuming the first nine
months acquisitions in 1997 and all of the 1996 acquisitions
had taken place at the beginning of 1996, unaudited pro
forma consolidated results of operations would have been as
follows (in thousands except per share amounts):
Pro forma (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Net revenue $145,348 $136,173 $414,480 $386,383
Net income (loss) before
extraordinary items $ 1,531 $ (1,130) $ 2,387 $ (7,812)
Net (loss) income $ (369) $ (3,145) $ (5,069) $(10,778)
Net income (loss)
per common share before
extraordinary items $ 0.03 $ (0.02) $ 0.05 $ (0.17)
Net (loss) income per
common share $ (0.01) $ (0.07) $ (0.10) $ (0.24)
Recently Completed Acquisitions Subsequent to September 30, 1997
The Company acquired KXIC-AM and KKRQ-FM in Iowa City, Iowa for $8.0
million in cash from Iowa City Broadcasting Company, Inc. and
Thomas E. Ingstad.
The Company acquired KIGN-FM, KOLZ-FM, KGAB-AM and KLEN-FM
in Cheyenne and Orchard Valley, Wyoming for $5.5 million in
cash from Magic City Media.
The Company acquired WNCD-FM and WNIO-AM in Niles, Ohio
through a purchase of the outstanding stock of WN
Broadcasting Corp. for $3.4 million in cash.
The Company acquired the rights to The Dr. Laura
Schlessinger Show from Synergy Broadcasting, Inc. and the
assets of Multiverse Networks, L.L.C., one of the nation's
top network radio sales representation firms and the outside
sales representation arm of The Dr. Laura Schlessinger Show,
for $71.5 million in cash.
Pending Radio Station Acquisitions and Dispositions
In June 1997, the Company entered into a binding agreement
with American Radio Systems, Inc. whereby Jacor will
exchange the assets of WDAF-AM, KYYS-FM, KUDL-FM, and KMXV-
FM in Kansas City, Missouri for the assets of WMMX-FM, WTUE-
FM, WLQT-FM, WXEG-FM, WBTT-FM, and WONE-AM in Dayton, Ohio.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
In August 1997, the Company entered into a binding
agreement with Trumper Communications, Inc., whereby Jacor
will exchange the assets of KBKK-FM in Spanish Fork, Utah for the
assets of KISN-AM in Salt Lake City, Utah.
In October 1997, the Company entered into a letter of intent
to purchase the assets of Nationwide Communications, Inc.'s
17 radio stations for $620.0 million (the "Nationwide
Transaction"). The stations are located in Dallas, Houston,
Minneapolis, Phoenix, Baltimore, San Diego, Cleveland and
Columbus. The Company anticipates this transaction will
close in the second quarter of 1998.
The Company has also entered into agreements to purchase FCC
licenses and substantially all of the broadcast assets of 27
stations in seven of the Company's existing broadcast areas
and in five new broadcast areas for a total purchase price
of $99.2 million, of which $26.8 million has already been
paid in escrow.
3. ISSUANCE OF COMMON STOCK
In May 1997, the Company completed an offering of 6,650,000
shares of common stock at $31.00 per share net of
underwriting discounts of $1.31 per share (the "Offering").
The over-allotment option was also exercised by the
underwriters resulting in the issuance of an additional
997,500 shares. Net proceeds to the Company from the
Offering were approximately $226.0 million. Concurrently
with the Offering, the Company issued 673,628 shares of
common stock for $20.0 million to affiliated designees of
the Company's largest shareholder, The Zell/Chilmark Fund
L.P.
4. ISSUANCE OF SUBORDINATED NOTES
In June 1997, the Company issued $150.0 million of 8 3/4%
Senior Subordinated Notes (the "Notes") in a private
placement offering. In connection with the Notes Offering
the Company entered into a registration rights agreement,
which will require the Company within 180 days to exchange
the Notes for identical notes registered with the Securities
and Exchange Commission. Net proceeds to the Company were
$147.0 million. The Notes will mature on June 15, 2007.
Interest on the Notes is payable semi-annually. The Notes
will be redeemable at the option of the Company, in whole or
in part, at any time on or after June 15, 2002. The
redemption prices commence at 104.375% and are reduced by
1.458% annually until June 15, 2005 when the redemption
price is 100%.
The Notes are general, unsecured obligations of the Company
subordinated in right of payment to all senior debt of the
Company including the Credit Facility. The Notes are
jointly and severally, fully and unconditionally guaranteed
on a senior subordinated basis by Jacor and substantially
all subsidiaries of Jacor (the "Subsidiary Guarantors"). JCC
and each of the Subsidiary Guarantors are wholly owned
direct or indirect subsidiaries of Jacor. Separate
financial statements of JCC and each of the Subsidiary
Guarantors are not presented because Jacor believes that
such information would not be material to investors.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. ISSUANCE OF SUBORDINATED NOTES, Continued
The indenture contains certain covenants which impose
certain limitations and restrictions on the ability of the
Company to incur additional indebtedness, pay dividends or
make other distributions, make certain loans and
investments, apply the proceeds of asset sales (and
use the proceeds thereof), create liens, enter into certain
transactions with affiliates, merge, consolidate or transfer
substantially all its assets and make investments in
unrestricted subsidiaries.
5. LONG-TERM DEBT
New Credit Facility
In September 1997, the Company entered into a new $1.15
billion credit facility (the "Credit Facility") with a
syndicate of banks and other financial institutions. The
Credit Facility replaces the June 1996 Credit Facility,
giving the Company an additional $400 million in borrowing
capacity, and consists of two components: (i) a revolving
credit facility of up to $750 million with a mandatory
commitment reduction of $50.0 million on June 30, 2000
continuing semi-annually through June 2003, and a final
maturity date of December 31, 2004; and (ii) a term loan of
up to $400 million with a scheduled reduction of $35.0
million on December 31, 1999 with increasing semi-annual
reductions thereafter and a final maturity date of December
31, 2004. At September 30, 1997, the outstanding balance of
the term loan was $400.0 million.
The Credit Facility is collateralized by a first priority
perfected pledge of all capital stock owned by the Company
and loans under the Credit Facility are guaranteed by the
Company and each of the Company's direct and indirect
subsidiaries. The Company's obligations with respect to the
Credit Facility and each guarantor's obligations with
respect to the related guaranty are collateralized by
substantially all of their respective assets, and, in the
case of the Company's subsidiaries, capital stock.
During the first nine months of 1997 the Company recognized
an extraordinary loss of approximately $7.5 million, net of
income tax credit, related to the write-off of debt
financing costs.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". The Company will implement the
Statement in the fourth quarter 1997.
Diluted Earnings Per Share, as defined by the Statement, is
expected to approximate the Company's fully diluted Earnings
Per Share, as currently calculated. The Company will also
be required to present basic earnings per share, which will
be calculated using the weighted average shares of common
stock outstanding for the reporting period without giving
effect to outstanding options, warrants or other potentially
dilutive securities.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
GENERAL
The following discussion should be read in conjunction with the
financial statements beginning on page 3.
In the following analysis, management discusses station operating
income excluding depreciation and amortization. Station
operating income excluding depreciation and amortization should
not be considered in isolation from, or as a substitute for,
operating income, net income or cash flow and other consolidated
income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of the
Company's profitability or liquidity. Although this measure of
performance is not calculated in accordance with generally
accepted accounting principles, it is widely used in the
broadcasting industry as a measure of a company's operating
performance because it assists in comparing station performance
on a consistent basis across companies without regard to
depreciation and amortization, which can vary significantly
depending on accounting methods (particularly where acquisitions
are involved) or non-operating factors such as historical cost
bases. Station operating income excluding depreciation and
amortization also excludes the effect of corporate general and
administrative expenses, which generally do not relate directly
to station performance.
This Report includes certain forward-looking statements within
the meaning of Section 27A of the Securities Act. When used in
this Report, the words "believes," "anticipates," "expects" and
similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and
uncertainties. Actual results in the future could differ
materially from those described in the forward-looking statements
as a result of the matters discussed in this Report generally.
The Company undertakes no obligation to publicly release the
result of any revisions to these forwardlooking statements that
may be made to reflect any future events or circumstances.
LIQUIDITY AND CAPITAL RESOURCES
Completed Acquisitions and Dispositions
In the first nine months of 1997, the Company completed
acquisitions of: 66 radio stations in 26 different broadcast
areas; substantially all of the assets relating to the broadcast
distribution and related print and electronic media publishing
businesses of EFM Media; the assets of NSN Network Services, a
leading provider of satellite and network services for the radio
broadcasting industry; the assets of Airwatch Communications,
Inc. and Airtraffic Communications, Inc.; and effected a merger
with Premiere Radio Networks, Inc. These acquisitions required
cash consideration in the aggregate of approximately $571.9
million, of which approximately $29.8 million was placed in
escrow in 1996. The acquisitions were funded through: (i) net
proceeds of $246.2 million from a common stock offering, (ii) net
proceeds of $147.0 million from the issuance of 8 3/4% notes, (iii)
borrowings under the Credit Facility, and (iv) proceeds of
approximately $93.3 million from the sale of certain investments
and two radio stations.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Recently Completed Acquisitions Subsequent to September 30, 1997
In October 1997, the Company completed acquisitions of eight
radio stations in three broadcast areas for aggregate cash
consideration of approximately $16.9 million. Additionally, the
Company acquired the rights to The Dr. Laura Schlessinger Show
from Synergy Broadcasting, Inc. and the assets of Multiverse
Networks, L.L.C., one of the nation's top network radio sales
representation firms and the outside sales representation arm of
The Dr. Laura Schlessinger Show, for $71.5 million in cash. The
acquisitions were funded from borrowings under the Credit
Facility.
Pending Acquisitions and Dispositions
In October 1997, the Company entered into a letter of intent to
purchase the assets of Nationwide Communications, Inc.'s 17 radio
stations for $620.0 million. The stations are located in Dallas,
Houston, Minneapolis, Phoenix, Baltimore, San Diego, Cleveland
and Columbus. The Company anticipates this transaction will
close in the second quarter of 1998.
The Company has also entered into agreements to purchase FCC
licenses and substantially all of the broadcast assets of 27
stations in seven of the Company's existing broadcast areas and
in five new broadcast areas for a total purchase price of $99.2
million, of which $26.8 million has already been paid in escrow
through November 5, 1997.
Pending Acquisition Financing
As of November 5, 1997, the Company had $517.5 million of
outstanding indebtedness under the Credit Facility, which
includes all borrowings used to fund the recently completed
transactions, and available borrowings of $632.5 million. The
Company will finance its pending acquisitions from a combination
of one or more of the following sources: utilizing available
borrowings under the Credit Facility; the Company's working
capital; and/or proceeds that may be raised through private
and/or public offerings of additional equity and/or debt
securities of the Company, some of which could be sold to the
Company's existing security holders including without limitation
the Zell/Chilmark Fund L.P. or its affiliates or designees. The
Company has not made any definitive decisions as to which of
these funding sources will be utilized nor as to the relative
amounts that may be obtained from such sources. Additionally,
the Company anticipates that there will be certain dispositions
of radio stations related to the Nationwide Transaction, although
no such dispositions have yet been determined.
Credit Facilities and Other
In September 1997, a new Credit Facility replaced the June 1996
Credit Facility, resulting in expanded availability of up to
$1.15 billion. The interest rate pricing on the Credit Facility
has been reduced to reflect the Company's improved capitalization
and current market terms. The Credit Facility provides loans to
the Company in two components: (i) a reducing revolving credit
facility of up to $750.0 million under which the aggregate
commitments would reduce on a semi-annual basis commencing in
June 2000; and (ii) a $400.0 million amortizing term loan that
would reduce on a semi-annual basis commencing in December 1999.
Year to date, through November 1, 1997, the average interest rate
on Credit Facility borrowings was 7.68%.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
The issuance of additional debt would negatively impact the
Company's debt-toequity ratio and its results of operations and
cash flows due to higher amounts of interest expense. Any
issuance of additional equity would lessen this impact.
RESULTS OF OPERATIONS
The Nine Months Ended September 30, 1997 Compared to the Nine
Months Ended September 30, 1996
Broadcast revenue for the first nine months of 1997 was $413.7
million, an increase of $271.5 million or 190.9% from $142.2
million during the first nine months of 1996. This increase
resulted primarily from the revenue generated at those properties
owned or operated during the first nine months of 1997 but not
during the comparable 1996 period. On a "same station" basis -
reflecting results from stations operated in the first nine months
of both 1997 and 1996 - broadcast revenue for 1997 was $125.4 million,
an increase of $14.1 million or 12.7% from $111.3 million for 1996. This
increase resulted primarily from the growing benefits of the
Company's strategy of radio station clustering and a strong
advertising environment.
Agency commissions for the first nine months of 1997 were $44.7
million, an increase of $30.0 million or 204.1% from $14.7
million during the first nine months of 1996 due to the increase
in broadcast revenue. On a "same station" basis, agency
commissions for the first nine months of 1997 were $13.4 million,
an increase of $1.9 million or 16.5% from $11.5 million for 1996
due to the increase in broadcast revenue.
Broadcast operating expenses for the first nine months of 1997
were $251.5 million, an increase of $159.8 million or 174.3% from
$91.7 million during the first nine months of 1996. These
expenses increased primarily as a result of expenses incurred at
those properties owned or operated during the first nine months
of 1997 but not during the comparable 1996 period. On a "same
station" basis, broadcast operating expenses for the first nine
months of 1997 were $79.4 million, an increase of $7.2 million or
10.0% from $72.2 million for the first nine months of 1996. This
increase resulted primarily from increased selling costs.
Depreciation and amortization for the first nine months of 1997
and 1996 was $53.1 million and $10.6 million, respectively. This
increase was due to acquisitions in 1996 and the first nine
months of 1997.
Operating income for the first nine months of 1997 was $55.1
million, an increase of $34.0 million or 161.1% from an operating
income of $21.1 million for the first nine months of 1996.
Interest expense in the first nine months of 1997 was $60.1
million, an increase of $46.7 million from $13.4 million in the
first nine months of 1996. Interest expense increased due to an
increase in outstanding debt that was incurred in connection with
acquisitions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
The gain on the sale of assets in 1997 resulted from the sale of
the Company's investment in News Corp. Warrants in February 1997
and in Paxson Communications Corporation ("Paxson") stock in May,
1997. The gain on the sale of assets in 1996 resulted from the
sale of two FM radio stations in Knoxville.
Income tax expense was $6.5 million for the first nine months of
1997 and income tax expense for the first nine months of 1996 was
$7.3 million. The effective tax rate increased in the first nine
months of 1997 due to an increase in non-deductible goodwill
resulting from acquisitions.
In the first nine months of 1997 the Company recognized an
extraordinary loss of approximately $7.5 million, net of income
tax credit, related to the write off of debt financing costs. In
the first nine months of 1996, the Company recognized an
extraordinary loss of approximately $3.0 million, net of income
tax credit, related to the write off of debt financing costs.
Net loss for the first nine months of 1997 was $5.4 million,
compared to net income of $4.7 million reported by the Company
for the first nine months of 1996.
The Three Months Ended September 30, 1997 Compared to the Three
Months Ended September 30, 1996
Broadcast revenue for the third quarter of 1997 was $161.7
million, an increase of $101.6 million or 169.1% from $60.1
million during the third quarter of 1996. This increase resulted
primarily from the revenue generated at those properties owned or
operated during the third quarter of 1997 but not during the
comparable 1996 period. On a "same station" basis reflecting
results from stations operated in the third quarter of both 1997
and 1996 - broadcast revenue for 1997 was $45.3 million, an
increase of $4.4 million or 10.8% from $40.9 million for 1996.
This increase resulted primarily from the growing benefits of the
Company's strategy of radio station clustering and a strong
advertising environment.
Agency commissions for the third quarter of 1997 were $17.2
million, an increase of $11.4 million or 196.6% from $5.8 million
during the third quarter of 1996 due to the increase in broadcast
revenue. On a "same station" basis, agency commissions for the
third quarter of 1997 were $5.1 million, an increase of $0.9
million or 21.4% from $4.2 million for 1996 due to the increase
in broadcast revenue.
Broadcast operating expenses for the third quarter of 1997 were
$93.7 million, an increase of $55.4 million or 144.6% from $38.3
million during the third quarter of 1996. These expenses
increased primarily as a result of expenses incurred at those
properties owned or operated during the third quarter of 1997 but
not during the comparable 1996 period. On a "same station"
basis, broadcast operating expenses for the third quarter of 1997
were $27.7 million, an increase of $1.7 million or 6.5% from
$26.0 million for the third quarter of 1996. This increase
resulted primarily from increased selling costs.
Depreciation and amortization for the third quarter of 1997 and
1996 was $21.9 million and $5.2 million, respectively. This
increase was due to the acquisitions in the last six months of
1996 and the first nine months of 1997.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Operating income for the third quarter of 1997 was $25.5 million,
an increase of $16.3 million or 177.2% from an operating income
of $9.2 million for the third quarter of 1996.
Interest expense in the third quarter of 1997 was $21.0 million,
an increase of $14.2 million from $6.8 million in the third
quarter of 1996. Interest expense increased due to an increase
in outstanding debt that was incurred in connection with
acquisitions.
Income tax expense was $4.3 million for the third quarter of 1997
and income tax expense for the third quarter of 1996 was $3.4
million. The effective tax rate increased in the third quarter
of 1997 due to an increase in nondeductible goodwill resulting
from acquisitions.
In the third quarter of 1997 the Company recognized an
extraordinary loss of approximately $1.9 million, net of income
tax credit, related to the writeoff of debt financing costs. In
the third quarter of 1996 the Company recognized an extraordinary
loss of approximately $2.0 million, net of income tax credit,
related to the write-off of debt financing costs.
Net loss for the third quarter of 1997 was $1.4 million, compared
to net income of $0.1 million reported by the Company for the
third quarter of 1996.
CASH FLOWS
Cash flows provided by operating activities, inclusive of working
capital, were $31.1 million and $17.7 million for the nine months
ended September 30, 1997 and 1996, respectively. Cash flows
provided by operating activities for the first nine months of
1997 resulted primarily from the add-back of $59.4 million of non-
cash expenses together with the add-back of $7.5 million for the
extraordinary loss net of $(10.8) million from the gain on sale
of assets together with the $(19.6) million net change in working
capital to a net loss of $(5.4) million for the period. Cash
flows provided by operating activities for the comparable 1996
period resulted primarily from the addback of $13.8 million of
non-cash expenses together with the add-back of $3.0 million for
the extraordinary loss, net of $(2.5) million from the gain on
sale of radio stations, other costs of $(0.2) million and $(1.1)
million net change in working capital to net income of $4.7
million for the period.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CASH FLOWS, Continued
Cash flows used by investing activities were $(487.5) million and
$(836.0) million for the nine months ended September 30, 1997 and
1996, respectively. Investing activities included capital
expenditures of $(12.5) million and $(7.5) million for the first
nine months of 1997 and 1996, respectively. Investing activities
during the first three quarters of 1997 resulted primarily from
the acquisition of broadcast properties of $(542.1) million and
payment of escrow deposits of $(26.2) million, partially offset
by the proceeds from the sale of the News Corp. Warrants, Paxson
stock, and Australia's Wonderland investment of $73.8 million.
Additionally, investing activities for the first three quarters
of 1997 is net of $16.0 million of the proceeds from the like-
kind exchange of WKRQ-FM in Cincinnati, Ohio for WVOR-FM, WHAM-AM
and WHTK-AM in Rochester, New York, and proceeds from the sale of
WXZZ-FM in Lexington, Kentucky of $3.5 million. Investing
activities during the first three quarters of 1996 included
expenditures of $(827.9) million and $(7.2) million for
acquisitions, and loans made to Noble and in connection with the
Company's JSAs and other, respectively. Additionally, investing
activities for the 1996 period is net of $6.6 million of proceeds
from the sale of radio stations WMYU-FM and WWST-FM in Knoxville.
Cash flows provided by financing activities were $397.1 million
and $863.7 million for the nine months ended September 30, 1997
and 1996, respectively. Cash flows provided by financing
activities during the first three quarters of 1997 resulted
primarily from $150.0 million in proceeds from the issuance of 8
3/4% Senior Subordinated Notes, $247.9 million from the issuance
of common stock, and $14.5 million of net borrowings under the
credit facility, partially offset by payment of finance costs of
$(13.9) million and other of $(1.4) million. Cash flows provided
by financing activities during the first nine months of 1996
resulted primarily from the $454.5 million in net borrowings
under the former credit facility, together with $115.2 million in
proceeds from the issuance of Liquid Yield Option Notes, $317.1
million from the issuance of common stock, $(21.3) million of
paid finance costs, and $(1.8) million of other costs.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Number Description Page
4.1 Effectiveness Agreement dated as of September 16,
1997 among Jacor Communications Company ("JCC"),
the Lenders named therein (the "Lenders"),
the Chase Manhattan Bank, as Administrative
Agent, Banque Paribas, as Documentation
Agent, and Bank of America Illinois, as
Syndication Agent (omitting schedules and
exhibits not deemed material). Incorporated
by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated September 30,1997. *
4.2 Credit Agreement dated as of June 12, 1996 as
Amended and Restated as of February 14, 1997
and as Further Amended and Restated as of
September 16, 1997 among JCC, the
Lenders, Bank of America National
Trust and Savings Association (as
successor by merger to Bank of
America Illinois), as Syndication
Agent, Banque Paribas, as
Documentation Agent, and the Chase
Manhattan Bank, as Administrative
Agent (omitting schedules and
exhibits not deemed
material)(included as Exhibit A to
Effectiveness Agreement) ("Restated
Credit Agreement"). Incorporated by
reference to Exhibit 4.2 to the Company's Current
Report on Form 8-K dated September 30, 1997. *
4.3 Parent Guarranty dated as of June 12, 1996 and as
Amended and Restated as of September 16, 1997, by
the Company in favor or The Chase Manhattan
Bank, as Administrative Agent for the Agents,
the Lenders and any Interest Rate Hedge
Providers (each as defined in the Restated Credit
Agreement). Incorporated by reference to Exhibit 4.3
to the Company's Current Report on Form 8-K dated
September 30, 1997. *
4.4 Reaffirmation Agreement dated as of September 16,
1997 between The Chase Manhattan Bank, as
Administrative Agent for the benefit of the
Agents, the Issuing Banks, the Lenders and
any Interest Rate Hedge Providers (each as
defined in the Restated Credit Agreement),
the Company, JCC and each subsidiary of JCC.
Incorporated by reference to Exhibit 4.4 to
the Company's Current Report on Form 8-K dated
September 30, 1997. *
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Number Description Page
4.5 First Supplemental Indenture Dated as of
September 16, 1997 (Supplemental to Indenture
Dated as of June 12, 1996) between JCC, the
Company and First Trust National Association
for JCC's 10 1/8% Senior Subordinated Notes
due 2006 and Jacor's Guaranty thereof.
Incorporated by reference to Exhibit 4.5 to
the Company's Current Report on Form 8-K
dated September 30, 1997. *
4.6 First Supplemental Indenture Dated as of
September 16, 1997 (Supplemental to Indenture
Dated as of December 17, 1996) between JCC,
the Company, the Subsidiary Guarantors named
therein, and The Bank of New York for JCC's 9
3/4% Senior Subordinated Notes due 2006 and the
Company's and the Subsidiary Guarantors'
Guaranty thereof. Incorporated by reference
to Exhibit 4.6 to the Company's Current Report
on Form 8-K dated September 30, 1997. *
4.7 First Supplemental Indenture Dated as of
September 16, 1997 (Supplemental to Indenture
Dated as of June 17, 1997) between JCC, the
Company, the Subsidiary Guarantors named
therein, and The Bank of New York for JCC's 8
3/4% Senior Subordinated Notes due 2007 and
Jacor's and the Subsidiary Guarantors' Guaranty
thereof. Incorporated by reference to Exhibit 4.7 to
the Company's Current Report on Form 8-K
dated September 30, 1997. *
11 Computation of Consolidated Income (Loss) Per
Common Share 21
27 Financial Data Schedule 22
[FN]
* Incorporated by reference.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
(b) Reports on Form 8-K
The following Forms 8-K were filed during the third
quarter of 1997:
1. Form 8-K dated August 29, 1997. This Form 8-K described the
Company's interest in acquiring American Radio Systems.
2. Form 8-K dated September 30, 1997. This Form 8-K
described the Company's amendment and restatment of its existing
Credit Facility. This Form 8-K also described the
Company's agreement to acquire the rights to the Dr.
Laura Schlessinger Show from Synergy Broadcasting, Inc.
and the assets of Multiverse Networks, L.L.C. for $71.5
million as well as Company transactions involving the
acquisition and disposition of radio stations.
In addition, the following Form 8-K was filed during the
fourth quarter of 1997:
1. Form 8-K dated November 4, 1997. This Form 8-K
described the Company's signing of a letter of intent to purchase
the assets of 17 radio stations from Nationwide
Communications, Inc. and its affiliated entities for a
purchase price of $620.0 million as well as Company
transactions involving the acquisition and disposition
of radio stations.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(Registrant)
DATED: November 12, 1997 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President
and Chief Financial Officer
<PAGE>
<TABLE>
EXHIBIT 11
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Computation of Consolidated Income Per Common Share
for the three months and nine months ended September 30, 1997
and 1996 (In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Income (loss) for primary and
fully diluted computation:
Income before extraordinary item $ 483 $2,100 $ 2,044 $ 7,703
(Loss) income $ (1,417) $ 85 $(5,412) $ 4,737
Primary (1.):
Weighted average common shares
and all other dilutive
securities:
Common stock 45,362 31,250 39,007 23,499
Stock options, Citicasters
warrants and Regent warrants 3,451 1,753 2,340 1,081
Contingently issuable
common shares 300 300 300 300
49,113 33,303 41,647 24,880
Primary (loss) income per
common share:
Before extraordinary loss $ 0.01 $ 0.06 $ 0.05 $ 0.31
Net (loss) income $ (0.03) $ 0.00 $(0.13) $ 0.19
<FN>
NOTES:
1. Fully diluted earnings per share is not presented
since it approximates primary income per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,779
<SECURITIES> 0
<RECEIVABLES> 123,936
<ALLOWANCES> 5,436
<INVENTORY> 0
<CURRENT-ASSETS> 169,696
<PP&E> 201,783
<DEPRECIATION> 26,216
<TOTAL-ASSETS> 2,406,532
<CURRENT-LIABILITIES> 86,504
<BONDS> 958,119
<COMMON> 455
0
0
<OTHER-SE> 911,978
<TOTAL-LIABILITY-AND-EQUITY> 2,406,532
<SALES> 0
<TOTAL-REVENUES> 413,689
<CGS> 0
<TOTAL-COSTS> 296,261
<OTHER-EXPENSES> 62,337
<LOSS-PROVISION> 1,367
<INTEREST-EXPENSE> 60,081
<INCOME-PRETAX> 8,544
<INCOME-TAX> 6,500
<INCOME-CONTINUING> 2,044
<DISCONTINUED> 0
<EXTRAORDINARY> 7,456
<CHANGES> 0
<NET-INCOME> (5,412)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
