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 18, 1997
JACOR COMMUNICATIONS, INC.
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-12404 31-0978313
(Commission File No.) (IRS Employer Identification No.)
50 East RiverCenter Boulevard
12th Floor
Covington, KY 41017
(606) 655-2267
Item 2. Acquisition or Disposition of Assets
As previously reported, on March 18, 1997, Jacor
Communications Company ("JCC"), a wholly owned subsidiary of
Jacor Communications, Inc. (the "Company"), and EFM Programming,
Inc. ("Buyer"), a wholly owned subsidiary of JCC, entered into an
Asset Purchase Agreement (the "Acquisition Agreement") with EFM
Media Management, Inc., EFM Publishing, Inc., Pam Media, Inc.
(collectively, the "Sellers") and certain shareholders of the
Sellers. The description of that transaction is set forth in
more detail in the Registrant's initial Form 8-K filed with the
Securities and Exchange Commission on March 21, 1997.
Item 7. Financial Statements and Exhibits
Page
(a) Financial Statements of Businesses Acquired.
Report of Independent Accountants 4
Financial Statements:
Combined Balance Sheets as of December 31, 1995
and 1996 5
Combined Statements of Operations for the years
ended December 31, 1994, 1995 and 1996 6
Combined Statements of Changes in Retained Earnings
for the years ended December 31, 1994, 1995
and 1996 7
Combined Statements of Cash Flows for the years
ended December 31, 1994, 1995 and 1996 8
Notes to Financial Statements 9-13
(b) Pro Forma Financial Information.
The pro forma financial information required to be filed by
the Company as part of this Form 8-K require substantial effort
on behalf of the Company and Sellers and has not yet been
finalized on the date of this report. The Company will file such
pro forma financial statements by amendment to this Form 8-K no
later than May 21, 1997.
(c) Exhibits
2.1 Asset Purchase Agreement dated as of March 17, 1997 among
Jacor Communications Company ("JCC"), EFM Programming, Inc.
("Buyer"), and EFM Media Management, Inc., EFM Publishing,
Inc., Pam Media, Inc. (collectively, the "Sellers") and
certain shareholders of the Sellers (omitting schedules and
exhibits not deemed material). *
23.1 Consent of Independent Accountants
99.1 Press Release dated March 18, 1997. *
* Previously filed.
SIGNATURES
Pursuant to the requirements of the Securities and 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.
March 26, 1997 By: R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying combined balance sheets of EFM
Media Management, Inc., EFM Publishing, Inc., and PAM Media,
Inc., (the "Combined EFM Companies") as of December 31, 1995 and
1996 and related combined statements of operations, changes in
retained earnings and cash flows for the years ended December 31,
1994, 1995 and 1996. These financial statements are the
responsibility of the Combined EFM Companies' 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 principlees used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the combined financial
position of the Combined EFM Companies as of December 31, 1995
and 1996 and the combined results of their operations and their
cash flows for the years ended December 31, 1994, 1995 and 1996,
in conformity with generally accepted accounting principles.
Cincinnati, Ohio
February 28, 1997
<TABLE>
THE COMBINED EFM COMPANIES
COMBINED BALANCE SHEETS
as of December 31
<CAPTION>
1995 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,325,273 $ 4,867,943
Accounts receivable 4,785,339 2,219,874
Investment securities 5,564,434 5,894,380
Prepaid expenses 1,553,205 1,292,591
Other 30,896 95,760
Total current assets 15,259,147 14,370,578
Property and equipment, net 175,592 153,173
Other 33,165 33,109
Total assets $15,467,904 $14,556,830
Current liabilities:
Accounts payable and accrued liabilities $ 4,617,956 $ 4,739,223
Deferred income 8,436,506 6,415,585
Total current liabilities 13,054,462 11,154,808
Deferred income 2,380,006 3,321,642
Total liabilities 15,434,468 14,476,450
Commitments and contingencies
Shareholders' equity:
Common stock 2,020 2,020
Retained earnings 10,234 51,798
Net unrealized gain on investment
securities 21,182 26,562
Total shareholders' equity 33,436 80,380
Total liabilities and
shareholders' equity $15,467,904 $14,556,830
The accompanying notes are an integral part of the combined
financial statements.
</TABLE>
<TABLE>
THE COMBINED EFM COMPANIES
COMBINED STATEMENTS OF OPERATIONS
for the years ended December 31
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Net revenue $45,169,563 $46,930,790 $47,356,777
Operating expenses 29,246,898 29,520,679 29,537,668
Depreciation 78,261 85,799 83,626
Corporate general and
administrative expenses:
Executive compensation 12,282,821 11,596,958 12,028,181
Other 1,459,798 1,632,610 1,617,205
Operating income 2,101,785 4,094,744 4,090,097
Other income, net 353,836 445,779 487,662
Net income $ 2,455,621 $ 4,540,523 $ 4,577,759
The accompanying notes are an integral part of the combined
financial statements.
</TABLE>
<TABLE>
THE COMBINED EFM COMPANIES
COMBINED STATEMENT OF CHANGES IN
RETAINED EARNINGS
for the years ended December 31
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Balance, beginning of year $ (10,225) $ (30,289) $ 10,234
Net income 2,455,621 4,540,523 4,577,759
Distributions to shareholders (2,475,685) (4,500,000) (4,536,195)
Balance, end of year $ (30,289) $ 10,234 $ 51,798
The accompanying notes are an integral part of the combined
financial statements.
</TABLE>
<TABLE>
THE COMBINED EFM COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
for the years ended December 31
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Cash flow from operating adtivities:
Net income $2,455,621 $4,540,523 $4,577,759
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 78,261 85,799 83,626
Changes in operating assets
and liabilities:
Accounts receivable 270,875 (2,220,218) 2,565,465
Prepaid expenses (386,359) 558,744 260,614
Accounts payable and
accrued liabilities 4,415,637 (1,283,298) 121,267
Deferred income 1,838,311 (1,739,085) (1,079,285)
Other (4,815) 120,559 (24,638)
Net cash provided by operating
activities 8,667,531 63,024 6,504,808
Cash flows from investing activities:
Capital expenditures (188,679) (31,878) (61,207)
Purchases of investments (2,997,894) (7,058,791) (5,746,293)
Proceeds from sales of investments 2,941,219 6,488,880 5,421,727
Net cash used in investing activities (245,354) (601,789) (385,773)
Cash flow from financing activities:
Distributions to shareholders (2,475,685) (4,500,000) (4,536,195)
Advances to shareholders (65,515) 83,435 (40,170)
Net cash used in financing activities (2,541,200) (4,416,565) (4,576,365)
Net increase (decrease) in cash
and cash equivalents 5,880,977 (4,955,330) 1,542,670
Cash and cash equivalents at
beginning of year 2,399,626 8,280,603 3,325,273
Cash and cash equivalents at
end of year $8,280,603 $3,325,273 $4,867,943
The accompanying notes are an integral part of the combined
financial statements.
</TABLE>
THE COMBINED EFM COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. Description of Business: The accompanying combined
financial
statements include the operations of EFM Publishing,
Inc. ("EFM Publishing"), EFM Media Management, Inc.
("EFM Media"), and PAM Media, Inc. ("PAM Media"),
(collectively the "Combined EFM Companies"). The
Combined EFM Companies produce two nationally
syndicated radio talk shows and a nationally published
newsletter. All significant intercompany accounts and
transactions have been eliminated.
b. Cash and Cash Equivalents: The Combined EFM Companies
consider
all highly liquid investments purchased with an
original maturity of less than three months to be cash
equivalents.
c. Property and Equipment: Property and equipment are
stated at
cost less accumulated depreciation; depreciation is
provided by accelerated methods over the estimated
useful lives of five and seven years.
d. Investment Securities: Investment in debt securities
are
considered available for sale and carried at fair
value, based on quoted market prices. Unrealized gains
and losses are reported as a separate component of
stockholders' equity until realized.
e. Revenues: Broadcast revenues consist of commercial
broadcasting
advertisements, net of agency commissions, and
syndication fees from radio stations. Advertising
revenues are recognized when the commercial is
broadcast. Syndication fees received in advance are
recorded as deferred revenue and recognized over the
length of the agreement. Publishing revenue for
subscription payments received in advance is recognized
over the average length of all subscriptions.
f. Advertising Costs: Direct-response advertising is
capitalized
and amortized over its expected period of future
benefits. Direct-response advertising consists of
television and radio advertisements, renewal notices
sent to current newsletter subscribers and direct mail
notices sent to former subscribers. The capitalized
costs of the advertising are amortized over
approximately one year.
Advertising expense for 1994, 1995 and 1996 was
approximately $4,563,000, $3,508,000 and $3,122,000,
respectively.
g. Concentrations of Credit Risk: Financial instruments
which
potentially subject the Combined EFM Companies to
concentrations of credit risk consist principally of
accounts receivable. Concentrations of credit risk
associated with accounts receivable are limited due to
the large number of customers comprising the Combined
EFM Companies' customer base.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, Continued
h. Use of Estimates: The preparation of financial
statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that effect the reported amounts of assets
and liabilities, and disclosure of contingent assets
and liabilities, at the dates of the financial
statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results
could differ from those estimates.
i. Income Taxes: The Combined EFM Companies have elected
to be
taxed as an "S" corporation under the Internal Revenue
Code and New York State tax law. Accordingly, only the
appropriate state and local income and franchise taxes
have been provided for in the accompanying financial
statements.
2. SUBSEQUENT EVENT:
In March 1997, the Combined EFM Companies entered into an
asset purchase agreement with Jacor Communications, Inc.
("Jacor"), for the sale of all operating assets of the
Combined EFM Companies.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1995 and 1996
consists of the following:
1995 1996
Computer equipment $ 224,997 $ 273,457
Furniture and fixtures 173,439 176,483
Other equipment - 9,703
398,436 459,643
Less accumulated depreciation (222,844) (306,470)
$ 175,592 $ 153,173
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
4. INVESTMENT SECURITIES:
A summary of the investment securities held by the Combined
EFM Companies at December 31, 1995 and 1996 is as follows:
December 31, 1995
Gross Gross
Estimated Unrealized Unrealized
Fair Value Gains Losses
U.S. Treasury Securities $ 3,030,670 $ 35,934 $
Corporate Bonds 1,957,611 1,425 1,195
Bond Funds 576,153 14,982
$ 5,564,434 $ 37,359 $ 16,177
December 31, 1996
Gross Gross
Estimated Unrealized Unrealized
Fair Value Gains Losses
U.S. Treasury Securities $ 2,506,719 $ 11,373 $ 8,182
Corporate Bonds 2,515,159 1,271 1,876
Bond Funds 872,502 23,976
$ 5,894,380 $ 36,620 $ 10,058
Contractual maturities of debt securities at December 31,
1996 are as follows:
Due in: 1997 $ 2,503,857
1998 695,059
1999 248,400
2000 1,065,952
2001 1,257,186
Thereafter 123,926
$ 5,894,380
Net realized losses from the sale of investment securities
in 1994, 1995 and 1996 were $731, $28,738 and $16,101,
respectively.
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
5. CAPITAL STOCK AND RELATED PARTY TRANSACTION:
The shares of the Combined EFM Companies are owned or
controlled by a sole shareholder and spouse. The following
table sets forth the capitalization of the companies as of
December 31, 1995 and 1996.
Issued and
Authorized Outstanding Par Value
EFM Media 200 100 $ 1,000
EFM Publishing 200 100 $ 1,000
PAM Media 20,000 20 $ 20
EFM Media and PAM Media granted options to two senior
executives to purchase approximately 35 and 5 unissued
shares of EFM Media and PAM Media, respectively. The
exercise price is equal to the book value of such shares
based upon the most recent annual financial statements of
the respective companies. The options expire ten years from
the date of grant, and may be exercised at any time during
that period.
6. COMMITMENTS AND CONTINGENCIES:
a. Lease and Employment Agreement Obligations: The
Combined EFM
Companies lease facilities used in their operations
under noncancelable operating leases. The Combined EFM
Companies also have various employment agreements with
certain radio personalities and the writer of its
newsletter requiring minimum payments. Future minimum
payments under lease and employment agreements are as
follows:
1997 $ 881,846
1998 955,021
1999 81,140
Total commitments $1,918,007
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
6. COMMITMENTS AND CONTINGENCIES, Continued
b. Legal Proceedings: The Combined EFM Companies are
party to
various legal proceedings. In the opinion of
management, the ultimate resolution of such proceedings
will not have a significant effect on the financial
position or results of operations of the Combined EFM
Companies.
c. Talent Fee Arrangements: The Combined EFM Companies
have entered
into agreements with their on-air radio personalities
whereby the personalities receive compensation based
upon formulas defined within the agreements. In
addition, the Combined EFM Companies have entered into
an agreement with the writer of the newsletter whereby
the writer and one additional party are entitled to
receive a percentage of revenues less certain expenses,
as defined within the agreement.
7. RETIREMENT PLAN:
EFM Media maintains a defined contribution retirement plan
covering substandially all employees who have met
eligibility requirements. Employer contributions are made
solely at the discretion of the employer; however, no such
contributions have ever been made.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Jacor Communications, Inc. on Forms S-8 (File No.
33-65126, File No. 33-10329 and File No. 33-56385) and on Forms S-
3 (File No. 33-53612 and File No. 333-06639) of our report dated
February 28, 1997, on our audits of the combined financial
statements of the Combined EFM Companies as of December 31, 1995
and 1996 and for the years ended December 31, 1994, 1995 and
1996, which report is included in this Current Report on Form 8-
K.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
March 25, 1997
