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 June 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 August 1, 1997, 44,794,654 shares of common stock were outstanding.
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JACOR COMMUNICATIONS, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 1997 and December 31,
1996 3
Condensed Consolidated Statements of
Operations for the three months and
six months ended June 30, 1997
and 1996 4
Condensed Consolidated Statements of
Cash Flows for the six months ended
June 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 12
PART II. Other Information
Item 2. - Changes in Securities 19
Item 4. - Submission of Matters to Vote of
Security Holders 19
Item 6. - Exhibits and Reports on Form 8-K 21
Signatures 23
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<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)
<CAPTION>
June 30, December 31,
1997 1996
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29,965 $ 78,137
Accounts receivable, less allowance for
doubtful accounts of $5,006 in 1997
and $3,950 in 1996 112,117 79,502
Prepaid expenses and other current assets 27,394 8,963
Total current assets 169,476 166,602
Property and equipment, net 174,733 131,488
Intangible assets, net 1,888,850 1,290,172
Other assets 56,695 116,680
Total assets $ 2,289,754 $ 1,704,942
LIABILITIES
Current liabilities:
Accounts payable, accrued
expenses and other
current liabilities $ 88,882 $ 55,532
Long-term debt, current portion 8,500 -
Total current liabilities 97,382 55,532
Long-term debt, net of current portion 762,300 670,000
5 1/2% Liquid Yield Option Notes 121,947 118,682
Other liabilities 110,903 108,914
Deferred tax liability 305,207 264,878
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:
44,714,461 in 1997 and 31,287,221 in 1996 447 313
Additional paid-in capital 838,703 432,721
Common stock warrants 31,500 26,500
Unrealized gain on investments - 2,042
Retained earnings 21,365 25,360
Total shareholders' equity 892,015 486,936
Total liabilities and
shareholders' equity $ 2,289,754 $ 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 six months ended June 30, 1997 and 1996
(in thousands, except per share data)
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Broadcast revenue $ 151,803 $ 48,461 $ 251,956 $ 82,033
Less agency commissions 16,250 5,341 27,575 8,839
Net revenue 135,553 43,120 224,381 73,194
Broadcast operating expenses 90,474 29,551 157,779 53,421
Depreciation and amortization 17,828 2,915 31,197 5,435
Corporate general and
administrative expenses 3,072 1,283 5,834 2,422
Operating income 24,179 9,371 29,571 11,916
Interest expense (22,211) (4,343) (39,387) (6,553)
Gain on sale of assets 6,106 - 10,801 2,539
Other income, net 2,371 1,314 2,776 1,541
Income before income taxes
and extraordinary loss 10,445 6,342 3,761 9,443
Income tax expense (6,300) (2,581) (2,200) (3,840)
Income before
extraordinary loss 4,145 3,761 1,561 5,603
Extraordinary loss, net
of income tax benefit - - (5,556) (951)
Net income (loss) $ 4,145 $ 3,761 $ (3,995) $ 4,652
Net income (loss) per
common share:
Before extraordinary loss $ 0.10 $ 0.17 $ 0.04 $ 0.27
Extraordinary loss - - (0.15) (0.05)
Net income (loss)
per common share $ 0.10 $ 0.17 $(0.11) $ 0.22
Number of common shares used
in per share computations 40,686 22,362 37,460 20,866
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 CASH FLOWS
for the six months ended June 30, 1997 and 1996
(in thousands)
(UNAUDITED)
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 4,829 $ 2,829
Cash flows from investing activities:
Deposits paid on broadcast properties (22,900) -
Capital expenditures (6,057) (5,071)
Cash paid for acquisitions (456,014) (66,435)
Proceeds from sale of investments 73,813 -
Proceeds from sale of radio stations 16,000 6,595
Purchase of Noble warrant - (52,775)
Loans made in conjunction with acquisitions - (42,215)
Other - (2,642)
Net cash used by investing activities (395,158) (162,543)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 261,000 303,000
Proceeds from issuance of 8 3/4% Notes 150,000 -
Proceeds from issuance of LYONs - 115,172
Proceeds from issuance of common stock 247,054 317,110
Repayment of long-term debt (310,200) (248,500)
Repurchase of warrants - (1,379)
Payment of finance costs (6,484) (13,497)
Other 787 (100)
Net cash provided by financing activities 342,157 471,806
Net (decrease) increase in cash and
cash equivalents (48,172) 312,092
Cash and cash equivalents at
beginning of period 78,137 7,437
Cash and cash equivalents at end of period $ 29,965 $319,529
Supplemental schedule of non-cash investing
and financing activities:
Common stock issued in acquisitions $158,475 $ -
Warrants issued in acquisitions 5,000 -
Liabilities assumed in acquisitions 36,851 -
Fair value of assets exchanged, net of
cash received 165,000 -
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 Quarter Transactions
In the first quarter of 1997, the Company completed acquisitions of 25
stations in 10 broadcast areas for a purchase price consisting of (i)
$133.5 million in cash, of which $5.9 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.
April Transactions
The Company acquired KBGO-FM in Las Vegas, Nevada for $3.0 million in cash
from Broadcast Associates, Inc.
The Company acquired WIOT-FM and WCWA-FM in Toledo, Ohio for $13.0 million
in cash from Enterprise Media of Toledo, L.P., all of which was placed in
escrow in 1996.
The Company acquired WLRS-FM in Louisville, Kentucky for $5.1 million in
cash from James E. Champlin.
The Company acquired WNVE-FM in South Bristol, New York for $5.5 million
in cash from The Great Lakes Wireless Talking Machine, LLP.
The Company completed a like-kind exchange of Jacor's assets of WKRQ-FM,
in Cincinnati, Ohio for the assets of WVOR-FM, WHAM-AM and WHTK-AM, in
Rochester, New York, and $16.0 million in cash, with American Radio
Systems Corporation and American Radio Systems License Corp.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
The Company completed a like-kind exchange of Jacor's two radio stations
in Phoenix, Arizona, KSLX-AM and KSLX-FM, for two Nationwide
Communications, Inc. radio stations in San Diego, California, KGB-FM and
KPOP-AM.
The Company acquired WJCM-AM in Sebring, Florida for $0.2 million in cash
from Rumbaut Management, Inc. and First Union National Bank of Florida,
N.A., all of which was placed in escrow in 1996.
May Transactions
The Company acquired WAZU-FM (formerly WAHC-FM) in Circleville, Ohio and
WHQK-FM (formerly WAKS-FM) in Marysville, Ohio for $8.3 million in cash
from Tel Lease, Inc., of which $0.4 million was placed in escrow in 1996.
The Company acquired WSPB-AM, WSRZ-FM and WYNF-FM in Sarasota, Florida for
$12.9 million in cash from New Wave Communications, L.P. and New Wave
Broadcasting, Inc., of which $3.0 million was placed in escrow in 1996.
The Company acquired WLOC-AM and WMCC-FM in Munfordville, Kentucky for
$0.3 million in cash from James E. Champlin.
The Company acquired (i) WIMA-AM and WIMT-FM in Lima, Ohio, (ii) WBUK-FM
in Ft. Shawnee, Ohio, and (iii) the construction permit for WLVZ-FM,
licensed to St. Mary's, Ohio, for $6.5 million in cash from Lima
Broadcasting Co.
The Company acquired KOTK-AM in Portland, Oregon, for $8.3 million in cash
from EXCL Communications, Inc. and Portland Radio, Inc.
The Company acquired WMAX-FM in Irondequoit, New York, WHMX-FM in
Canadaigua, New York, and WRCD-FM in Honeoye Falls, New York for $7.0
million in cash from Auburn Cablevision, Inc.
The Company acquired KQSB-AM and KTYD-FM in Santa Barbara, California and
KSBL-FM in Carpinteria, California for $15.0 million in cash from
Criterion Media Group, Inc.
June Transactions
The Company completed a like-kind exchange of the assets of Jacor's two
radio stations in Sacramento, California, KSEG-FM and KRXQ-FM, and $27.0
million for KOGO-AM, KCBQ-AM, KIOZ-FM, and KKLQ-FM in San Diego,
California, of which $3.7 million was placed in escrow in 1996.
The Company acquired KGLL-FM in Greeley, Colorado from Duchossois
Communications Company of Colorado and KCOL-AM and KPAW-FM in Ft. Collins,
Colorado from University Broadcasting Company, LLP, for $7.2 million in
cash, of which $3.6 million was placed in escrow in 1996.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
Completed Broadcasting Services Acquisitions
In April 1997, the Company acquired substantially all of the assets
relating to the broadcast distribution and related print and electronic
media publishing businesses of Radio-Active Media (formerly EFM Media
Management), for $50.0 million in cash.
In April 1997, Jacor purchased the assets of NSN Network Services, a
leading provider of satellite and network services for the radio
broadcasting industry, for $11.0 million, consisting of approximately $9.3
million in cash and 59,540 shares of Jacor common stock, valued at $1.7
million.
Also in April 1997, the Company acquired the assets of Airwatch
Communications, Inc. and Airtraffic Communications, Inc. for $18.0 million
in cash.
In June 1997, the Company acquired all the outstanding common stock of
Premiere Radio Networks, Inc. for approximately $190.1 million,
consisting of approximately 1.42 million shares of Jacor common stock
valued at $51.0 million and cash of approximately $139.2 million.
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 six 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 Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Net revenue $144,225 $132,309 $260,963 $240,363
Net income (loss) before
extraordinary items $ 5,742 $ 705 $ (123) $ (8,512)
Net income (loss)
per common share before
extraordinary items $ 0.12 $ 0.02 $ (0.01) $ (0.19)
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JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS AND DISPOSITIONS, Continued
Recently Completed Acquisitions and Dispositions Subsequent to
June 30, 1997
The Company acquired WLEC-AM and WCPZ-FM in Sandusky, Ohio for $7.7
million in cash.
The Company acquired WLKT-FM in Lexington, Kentucky for $5.1 million in
cash.
The Company acquired WKQQ-FM in Lexington, Kentucky and WXZZ-FM and WTKT-
AM in Georgetown, Kentucky for $24.0 million in cash.
The Company acquired WLTF-FM and WTAM-AM in Cleveland, Ohio for
approximately $45.0 million, consisting of approximately $24.0 million in
cash and 750,000 shares of Jacor common stock valued at approximately
$21.0 million.
The Company acquired KBKK-FM in Spanish Fork, Utah for $4.5 million in
cash.
Pending 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.
The Company has also entered into agreements to purchase FCC licenses and
substantially all of the broadcast assets of 25 stations in twelve
broadcast areas for a total purchase price of $64.1 million, of which
$24.5 million has already been paid in escrow.
In addition, the Company entered into agreements to sell the FCC licenses
and substantially all of the broadcast assets of four radio stations in
three broadcast areas for total gross proceeds of $23.0 million.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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
$227.0 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 _% 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.
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.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. 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.
LIQUIDITY AND CAPITAL RESOURCES
Completed Acquisitions and Dispositions
In the first six months of 1997, the Company completed acquisitions of: 60
radio stations in 20 different broadcast areas; substantially all of the assets
relating to the broadcast distribution and related print and electronic media
publishing businesses of Radio-Active 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; all the outstanding common stock of
Premiere Radio Networks, Inc. These acquisitions required cash consideration
in the aggregate of approximately $456.0 million excluding approximately $29.8
million which was placed in escrow in 1996. The acquisitions were funded
through: (i) net proceeds of $247.1 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 $89.8
million from the sale of certain investments and a radio station.
Additionally, the Company reduced the Credit Facility by $49.2 million with
excess cash on hand.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Recently Completed Acquisitions and Dispositions Subsequent to
June 30, 1997
In July 1997, and through August 11, 1997, the Company completed acquisitions
of 9 radio stations in 4 broadcast areas for aggregate cash consideration of
approximately $65.3 million, of which approximately $1.2 million was placed in
escrow in 1996. The acquisitions were funded primarily from borrowings under
the Credit Facility.
Pending Acquisitions and Dispositions
The Company has also entered into agreements to purchase FCC licenses and
substantially all of the broadcast assets of 25 stations in twelve broadcast
areas for a total purchase price of $64.1 million, of which $24.5 million has
already been paid in escrow.
In addition the Company entered into an agreement to sell the FCC licenses and
substantially all of the broadcast assets of four radio stations in three
broadcast areas for total gross proceeds of $23.0 million.
Pending Acquisition Financing
As of August 11, 1997, the Company had $406.8 million of outstanding
indebtedness under the Credit Facility, which includes all borrowings used to
fund the recently completed transactions, and available borrowings of $320.0
million. The Company will finance the pending acquisitions utilizing available
borrowings under the Credit Facility. The Company estimates, after completion
of all the pending acquisitions and dispositions, outstanding borrowings under
the Credit Facility will be approximately $423.4 million. The Company believes
that various additional sources are also available to fund future acquisitions.
Such sources include the issuance of additional equity and or debt securities
of the Company.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Credit Facilities and Other
In February 1997, the Credit Facility was amended resulting in expanded
availability of up to $750.0 million. The Credit Facility provides loans to
Jacor in three components: (i) a reducing revolving credit facility of up to
$450.0 million under which the aggregate commitments would reduce on a semi-
annual basis commencing in June 1999; (ii) a $200.0 million amortizing term
loan that would reduce on a semi-annual basis commencing in December 1997, of
which $15.5 million was paid down in June 1997; and (iii) a $100.0 million
amortizing term loan that would reduce on a semi-annual basis commencing in
December 1998, of which $7.7 million was paid down in June 1997. As of August
1, 1997, the average interest rate on Credit Facility borrowings was 7.75%.
In June 1997, Jacor entered into negotiations to expand the availability under
the Credit Facility from $750.0 million up to $1.15 billion. There can be no
assurance that availability under the Credit Facility will be increased.
The issuance of additional debt would negatively impact the Company's debt-to-
equity ratio and its results of operations and cash flows due to higher amounts
of interest expense. Any issuance of additional equity would soften this
impact to some extent.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
The Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30,
1996
Broadcast revenue for the first six months of 1997 was $252.0 million, an
increase of $170.0 million or 207.3% from $82.0 million during the first six
months of 1996. This increase resulted primarily from the revenue generated at
those properties owned or operated during the first six months of 1997 but not
during the comparable 1996 period. On a "same station" basis - reflecting
results from stations operated in the first six months of both 1997 and 1996 -
broadcast revenue for 1997 was $80.3 million, an increase of $9.3 million or
13.1% from $71.0 million for 1996. This increase resulted from an increase in
advertising rates in both local and national advertising.
Agency commissions for the first six months of 1997 were $27.6 million, an
increase of $18.8 million or 213.6% from $8.8 million during the first quarter
of 1996 due to the increase in broadcast revenue.
Broadcast operating expenses for the first six months of 1997 were $157.8
million, an increase of $104.4 million or 195.5% from $53.4 million during the
first six months of 1996. These expenses increased primarily as a result of
expenses incurred at those properties owned or operated during the first six
months of 1997 but not during the comparable 1996 period. On a "same station"
basis, broadcast operating expenses for the first six months of 1997 were $51.0
million, an increase of $4.8 million or 10.4% from $46.2 million for the first
six months of 1996. This increase resulted from increased selling, payroll and
programming costs.
Depreciation and amortization for the first six months of 1997 and 1996 was
$31.2 million and $5.4 million, respectively. This increase was due primarily
to increased amortization expenses resulting from acquisitions in 1996 and the
first six months of 1997.
Operating income for the first six months of 1997 was $29.6 million, an
increase of $17.7 million or 148.7% from an operating income of $11.9 million
for the first six months of 1996.
Interest expense in the first six months of 1997 was $39.4 million, an increase
of $32.8 from $6.6 million in the first six months of 1996. Interest expense
increased due to an increase in outstanding debt that was incurred in
connection with acquisitions.
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 $2.2 million for the first six months of 1997 and income
tax expense for the first six months of 1996 was $3.8 million. The effective
tax rate increased in the first six months of 1997 due to an increase in non-
deductible goodwill resulting from acquisitions.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
In the first six months of 1997 the Company recognized an extraordinary loss of
approximately $5.6 million related to the write off of debt financing costs.
Also, in the first six months of 1996, the Company recognized an extraordinary
loss of approximately $1.0 million related to the write off of debt financing
costs.
Net loss for the first six months of 1997 was $4.0 million, compared to net
income of $4.7 million reported by the Company for the first six months of
1996.
The Three Months Ended June 30, 1997 Compared to the Three Months Ended
June 30, 1996
Broadcast revenue for the second quarter of 1997 was $151.8 million, an
increase of $103.3 million or 213.0% from $48.5 million during the second
quarter of 1996. This increase resulted primarily from the revenue generated
at those properties owned or operated during the second quarter of 1997 but not
during the comparable 1996 period. On a "same station" basis - reflecting
results from stations operated in the second quarter of both 1997 and 1996 -
broadcast revenue for 1997 was $44.8 million, an increase of $4.6 million or
11.4% from $40.2 million for 1996. This increase resulted from an increase in
advertising rates in both local and national advertising.
Agency commissions for the second quarter of 1997 were $16.3 million, an
increase of $11.0 million or 207.5% from $5.3 million during the second quarter
of 1996 due to the increase in broadcast revenue.
Broadcast operating expenses for the second quarter of 1997 were $90.5 million,
an increase of $60.9 million or 205.7% from $29.6 million during the second
quarter of 1996. These expenses increased primarily as a result of expenses
incurred at those properties owned or operated during the second quarter of
1997 but not during the comparable 1996 period. On a "same station" basis,
broadcast operating expenses for the second quarter of 1997 were $26.7 million,
an increase of $2.2 million or 9.0% from $24.5 million for the second quarter
of 1996. This increase resulted from increased selling, payroll and
programming costs.
Depreciation and amortization for the second quarter of 1997 and 1996 was $17.8
million and $2.9 million, respectively. This increase was due to the
acquisitions in 1996 and the first two quarters of 1997.
Operating income for the second quarter of 1997 was $24.2 million, an increase
of $14.8 million or 157.4% from an operating income of $9.4 million for the
second quarter of 1996.
Interest expense in the second quarter of 1997 was $22.2 million, an increase
of $17.9 million from $4.3 million in the second quarter 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 the second quarter of 1997 resulted from the
sale of the Paxson stock in May 1997.
Income tax expense was $6.3 million for the second quarter of 1997 and income
tax expense for the second quarter of 1996 was $2.6 million. The effective tax
rate increased in the second quarter of 1997 due to an increase in non-
deductible goodwill resulting from acquisitions.
Net income for the second quarter of 1997 was $4.1 million, compared to net
income of $3.8 million reported by the Company for the second quarter of 1996.
CASH FLOWS
Cash flows provided by operating activities, inclusive of working capital, were
$4.8 million and $2.8 million for the six months ended June 30, 1997 and 1996,
respectively. Cash flows provided by operating activities for the first six
months of 1997 resulted primarily from the add-back of $35.4 million of non-
cash expenses together with the add-back of $5.6 million for the extraordinary
loss net of $(10.8) million from the gain on sale of assets together with the
$(21.4) million net change in working capital to a net loss of $(4.0) million
for the period. Cash flows provided by operating activities for the comparable
1996 period resulted primarily from the add-back of $6.5 million of non-cash
expenses together with the add-back of $0.9 million for the extraordinary loss,
net of $(2.5) million from the gain on sale of radio stations and $(6.8)
million net change in working capital to net income of $4.7 million for the
period.
Cash flows used by investing activities were $(395.2) million and $(162.5)
million for the six months ended June 30, 1997 and 1996, respectively.
Investing activities include capital expenditures of $(6.1) million and $(5.1)
million for the first six months of 1997 and 1996, respectively. Investing
activities during the first two quarters of 1997 resulted primarily from the
acquisition of broadcast properties of $(456.0) million and payment of escrow
deposits of $(22.9) 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 two 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. Investing activities during the first two quarters of 1996 include
expenditures of $(66.4) million, $(52.8) million, $(42.2) million and $(2.6)
million, respectively, for acquisitions, the purchase of the Noble warrant,
loans made to Noble and in connection with the Company's JSAs and other.
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.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Cash flows provided by financing activities were $342.2 million and $471.8
million for the six months ended June 30, 1997 and 1996, respectively. Cash
flows provided by financing activities during the first two quarters of 1997
resulted primarily from $150.0 million in proceeds from the issuance of 8 3/4%
Senior Subordinated Notes and $247.1 million from the issuance of common stock,
partially offset by net repayments under the credit facility of $(49.2)
million, payment of finance costs of $(6.5) million and other of $0.8 million.
Cash flows provided by financing activities during the first six months of 1996
resulted primarily from the $54.5 million in net borrowings under the former
credit facility, together with $115.2 million in proceeds from the issuance of
Liquid Yield Option Notes and $317.1 million from the issuance of common stock,
net of $(1.4) million for the repurchase of warrants and $(13.6) million of
paid finance costs.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 2. Changes in Securities
(c) On April 7, 1997, the Company issued 59,540 shares of its common stock in
connection with its purchase of the assets of NSN Network Services (NSN). Such
shares were issued to the owners of NSN in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended. The Company believes that such exemption was available based on the
private nature of the transaction negotiated between the Company and the owners
of NSN, the absence of any general solicitation, the limited nature of the
direct offering and the lack of involvement by underwriters and/or placement
agents, and the small number of persons who received the shares. The Company
valued the shares issued at approximately $1.7 million at the time of issuance.
In addition to the shares issued, the Company also paid cash for the acquired
assets in the amount of approximately $9.3 million.
Item 4. Submission of Matters to Vote of Security Holders
The Jacor Communications, Inc. Annual Meeting of Shareholders was held on May
28, 1997. At such meeting the shareholders were asked to vote upon (1) the
election of directors, (2) a proposal to approve the Company's Amended and
Restated 1995 Employee Stock Purchase Plan, (3) a proposal to approve the
Company's 1997 Long-Term Incentive Stock Plan, (4) a proposal to approve the
Company's 1997 Short-Term Incentive Stock Plan, (5) a proposal to approve the
Company's 1997 Director Stock Purchase Plan, and (6) a proposal to approve the
Company's 1997 Non-Employee Directors Stock Plan.
The specific matters voted upon and the results of the voting were as follows:
(1) The Company's ten incumbent directors were re-elected to serve for an
additional one year term expiring at the Company's 1998 Annual Meeting of
Stockholders. The directors were elected as follows:
Shares Voted Shares
Name of Director "FOR" Withheld
John W. Alexander 30,740,276 116,505
Peter C.B. Bynoe 30,737,438 119,343
Rod F. Dammeyer 30,740,276 116,505
F. Philip Handy 30,738,398 118,383
Marc Lasry 30,739,976 116,805
Robert L. Lawrence 30,740,276 116,505
Randy Michaels 30,740,170 116,611
Sheli Z. Rosenberg 30,739,966 116,815
Maggie Wilderotter 30,739,391 117,390
Samuel Zell 30,740,275 116,506
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
(2) The proposal to approve the Company's Amended and Restated 1995
Employee Stock Purchase Plan, including the issuance of up to
an additional 500,000 shares of common stock thereunder:
Shares Voted "FOR" 29,772,988 (85.3%)
Shares Voted "AGAINST" 51,241
Shares "ABSTAINING" 10,283
(3) The proposal to approve the Company's 1997 Long-Term Incentive Stock
Plan, including the issuance of up to 1,800,000 shares of common stock
thereunder:
Shares Voted "FOR" 20,415,480 (58.5%)
Shares Voted "AGAINST" 9,409,046
Shares "ABSTAINING" 9,986
(4) The proposal to approve the Company's 1997 Short-Term Incentive Plan,
designed to take into account Section 162(m) of the Internal Revenue
Code, as amended:
Shares Voted "FOR" 28,345,442 (81.2%)
Shares Voted "AGAINST" 1,519,136
Shares "ABSTAINING" 10,092
(5) The proposal to approve the Company's 1997 Non-Employee Directors
Stock Purchase Plan, including the issuance of up to 150,000 shares
of common stock thereunder:
Shares Voted "FOR" 29,623,528 (84.9%)
Shares Voted "AGAINST" 200,628
Shares "ABSTAINING" 10,302
(6) The proposal to approve the Company's 1997 Non-Employee Directors
Stock Plan, including the issuance of up to 350,000 shares of common
stock thereunder:
Shares Voted "FOR" 21,655,453 (62.0%)
Shares Voted "AGAINST" 8,167,985
Shares "ABSTAINING" 11,074
Each proposal received more than the required votes necessary for approval by
the Company's outstanding shares of common stock entitled to vote at the Annual
Meeting and was thereby adopted.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Number Description Page
11 Computation of Consolidated Income (Loss) Per
Common Share 24
27 Financial Data Schedule 25
(b) Reports on Form 8-K
1. Form 8-K dated April 8, 1997. This Form 8-K described an
agreement reached by the Company to acquire Premiere Radio Networks,
Inc. ("Premiere").
2. Form 8-K(A) dated May 2, 1997. This Form 8-K(A) amended the
Company's Form 8-K filed with the Commission on March 21, 1997 and
included the unaudited pro forma financial information required in
connection with the Company's acquisition of EFM Media Management,
Inc., EFM Publishing, Inc. and Pam Media, Inc.
3. Form 8-K(A) dated May 2, 1997. This Form 8-K(A) amended the
Company's Form 8-K filed with the Commission on April 8, 1997 and
included the audited historical financial statements and unaudited
pro forma financial information required in connection with the
Company's acquisition of Premiere Radio Networks, Inc.
4. Form 8-K dated May 5, 1997. This Form 8-K described the
Company's filing of a preliminary prospectus supplement with the
Commission relating to the Company's proposed offer for sale of
common stock in an underwritten public offering pursuant to the
Company's shelf registration statement.
5. Form 8-K dated May 16, 1997. This Form 8-K described the
Company's filing of its definitive prospectus supplements relating to
the offer for sale of 6,650,000 shares of common stock in an
underwritten public offering and the offer for sale of 673,628 shares
of common stock to affiliated designees of Equity Group Investments,
Inc., an affiliate of Zell/Chilmark Fund, L.P., the Company's largest
stockholder.
6. Form 8-K dated June 12, 1997. This Form 8-K described the offer
for sale of $150.0 million of ten year senior subordinated debt at 8
3/4% by the Company's wholly owned subsidiary, Jacor Communications
Company ("JCC"), in accordance with Rule 144A promulgated under the
Securities Act of 1933, as amended.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
(b) Reports on Form 8-K, Continued
7. Form 8-K(A) dated June 26, 1997. This Form 8-K(A) amended the
Company's Form 8-K filed with the Commission on June 12, 1997 and
related to the completion of JCC's offering of its 8 3/4% senior
subordinated notes.
8. Form 8-K(A) dated June 26, 1997. This Form 8-K(A) amended the
Company's Form 8-K filed with the Commission on June 12, 1997 and
related to the completion of the Company's acquisition of Premiere
Radio Networks, Inc.
<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: August 14, 1997 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
EXHIBIT 11
Computation of Consolidated Income Per Common Share
for the three months and six months ended June 30, 1997 and 1996
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Income for primary and
fully diluted computation:
Income before extraordinary item $ 4,145 $ 3,761 $ 1,561 $ 5,603
Income (loss) $ 4,145 $ 3,761 $ (3,995) $ 4,652
Primary (1):
Weighted average common shares
and dilutive common stock
equivalents:
Common stock outstanding 38,968 20,978 35,791 19,581
Stock purchase warrants - - - -
Stock options 1,418 1,084 1,369 985
Contingently issuable
common shares 300 300 300 300
40,686 22,362 37,460 20,866
Primary (loss) income
per common share:
Before extraordinary loss $0.10 $0.17 $ 0.04 $ 0.27
Extraordinary loss - - (0.15) (0.05)
$0.10 $0.17 $(0.11) $ 0.22
<FN>
NOTES:
1. Fully diluted income (loss) per share is not presented since it
approximates primary income (loss) per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 29,965
<SECURITIES> 0
<RECEIVABLES> 117,123
<ALLOWANCES> 5,006
<INVENTORY> 0
<CURRENT-ASSETS> 169,476
<PP&E> 196,141
<DEPRECIATION> 21,408
<TOTAL-ASSETS> 2,289,754
<CURRENT-LIABILITIES> 97,382
<BONDS> 884,247
<COMMON> 447
0
0
<OTHER-SE> 891,568
<TOTAL-LIABILITY-AND-EQUITY> 2,289,754
<SALES> 0
<TOTAL-REVENUES> 251,956
<CGS> 0
<TOTAL-COSTS> 185,354
<OTHER-EXPENSES> 37,031
<LOSS-PROVISION> 937
<INTEREST-EXPENSE> 39,387
<INCOME-PRETAX> 3,761
<INCOME-TAX> 2,200
<INCOME-CONTINUING> 1,561
<DISCONTINUED> 0
<EXTRAORDINARY> (5,556)
<CHANGES> 0
<NET-INCOME> (3,995)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
