<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K(A)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: October 23, 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 41011
(606) 655-2267
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
In December 1997, Citicasters Co., an indirect wholly-owned subsidiary
of Jacor Communications, Inc. (the "Company"), signed an Agreement of Sale to
acquire the assets of 17 radio stations from Nationwide Communications, Inc.
("NCI") and its affiliated entities for a purchase price of approximately
$620 million in cash.
Jacor has previously reported on this transaction in its Form 8-Ks
filed by the Company on November 4, 1997 and January 5, 1998, as amended on
January 20, 1998. The Company had previously filed audited financial
information and unaudited pro forma financial information regarding this
transaction for the nine-month period ending September 30, 1997. This
amendment is being filed to include NCI's year end audited financial
information and unaudited pro forma financial information for the year ended
December 31, 1997.
Item 5. OTHER EVENTS
As of March 17, 1998, in connection with the acquisition of the rights
to the Art Bell national network radio programs, the Company acquired two
new, indirect wholly-owned subsidiaries: Talk Radio Network, Inc., an Oregon
corporation ("Talk Radio"), and Chancellor Broadcasting Co., Inc., an Oregon
corporation ("Chancellor"). The financial statements of these two new
subsidiaries were not required to be filed pursuant to Item 2 or Item 7 of
Form 8-K because neither of these acquisitions were significant to the
Company. However, as required by the terms of the Company's various
indentures relating to its outstanding senior subordinated notes, Talk Radio
and Chancellor now have become guarantors of such debt. Because audited
financial statements for these subsidiary guarantors have not been previously
included in the Company's consolidated financial statements, the Company is
filing the financial statements included in Item 7 of this Form 8-K so that
such financial statements may be incorporated by reference into any
registration statements filed by the Company and its subsidiaries pursuant to
the Securities Act of 1933, as amended, pertaining to debt securities and the
guarantees thereof. It is currently anticipated that Talk Radio and
Chancellor will be co-registrants on any such registration statements.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
(i) Nationwide Communications, Inc.
Independent Auditors' Report
Combined Balance Sheets as of December 31, 1997 and
December 31, 1996.
2
<PAGE>
Combined Statements of Earnings for the years ended December 31,
1997 and December 31, 1996.
Combined Statements of Stockholders' Equity for the years
ended December 31, 1997 and December 31, 1996.
Combined Statements of Cash Flows for the years ended December
31, 1997 and December 31, 1996.
Notes to Combined Financial Statements
(ii) Talk Radio Network, Inc., Chancellor Broadcasting Co. Inc. and
Broadcast Communications, Inc.
Report of Independent Accountants
Combined Balance Sheets as of September 30, 1997 and December
31, 1996 and 1995.
Combined Statements of Income for the nine months ended
September 30, 1997 and for the years ended December 31, 1996 and
1995.
Combined Statements of Shareholders' Equity for the nine months
ended September 30, 1997 and for the years ended December 31,
1996 and 1995.
Combined Statements of Cash Flows for the nine months ended
September 30, 1997 and for the years ended December 31, 1996 and
1995.
Notes to Combined Financial Statements
(b) Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the years ended December 31, 1997 and 1996.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1997.
3
<PAGE>
Notes to Unaudited Pro Forma Financial Information.
(c) Exhibits
2.1 Agreement of Sale dated December 19, 1997 by and between
Nationwide Mutual Insurance Company, Employers Insurance of
Wausau, Nationwide Communications, Inc., San Diego Lotus Corp.,
The Beak and Wire Corporation, Citicasters Co. and Jacor
Communications Company (omitting schedules and exhibits not
deemed material).*
23.1 Consent of Coopers & Lybrand L.L.P.
99.1 Press Release dated October 13, 1997.*
99.2 Press Release dated October 23, 1997.*
99.3 Press Release dated October 27, 1997.*
* Previously filed.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JACOR COMMUNICATIONS, INC.
April 30, 1998 By: /s/ R. Christopher Weber
-----------------------------------
R. Christopher Weber, Senior Vice President
and Chief Financial Officer
4
<PAGE>
Item 7(a)(i)
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of
Nationwide Mutual Insurance Company)
-------------------------------------
Combined Financial Statements
December 31, 1997, 1996 and 1995
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Mutual Insurance Company:
We have audited the accompanying combined balance sheets of Nationwide
Communications as of December 31, 1997 and 1996, and the related combined
statements of earnings, division equity, and cash flows for each of the years in
the three-year period ended December 31, 1997. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall combined financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide
Communications as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Columbus, Ohio
February 13, 1998
<PAGE>
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Combined Balance Sheets
December 31, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1997 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,668,615 47,223,751
Short-term investments, at amortized cost - 74,990,903
Accounts receivable, net of allowance for doubtful accounts of
$816,225 and $716,940 at December 31, 1997 and 1996 22,968,263 17,573,992
Notes receivable, current portion 933,759 931,278
Deferred income taxes 954,498 1,179,967
Assets held for sale 44,667,939 8,868,376
Prepaid expenses 1,394,414 1,471,765
-------------- -------------
Total current assets 79,587,488 152,240,032
Property and equipment, net 17,989,092 8,254,028
Broadcast licenses and other intangibles, net 251,416,085 90,107,979
Notes receivable, excluding current portion 5,299,035 5,765,856
Other assets 2,312,384 3,025,813
-------------- -------------
Total assets $ 356,604,084 259,393,708
-------------- -------------
-------------- -------------
Liabilities and Division Equity
-------------------------------
Current liabilities:
Advances from Parent
92,000,000 -
Accounts payable 2,379,691 1,166,614
Accrued compensation and benefits 2,904,529 2,506,395
Accrued expenses and other current liabilities 1,379,641 1,403,751
Accrued interest - 200,278
Accrued professional fees 1,487,186 641,882
Accrued property and sales tax 211,493 359,005
Income taxes payable 3,676,000 1,968,891
-------------- -------------
Total current liabilities 104,038,540 8,246,816
-------------- -------------
Long-term debt 500,000 40,500,000
Deferred compensation 2,526,921 2,098,705
Accrued retirement benefits 2,881,540 2,892,414
Deferred income taxes 15,282,171 1,172,512
-------------- -------------
Total liabilities 125,229,172 54,910,447
-------------- -------------
Division equity:
4% noncumulative preferred stock of $50 par value per share; redeem-
able at par. Authorized, issued, and outstanding 20,000 shares in
1996 - 1,000,000
Common stock, without par value. Authorized 15,000 shares in 1996;
issued and outstanding 14,750 shares at stated value in 1996 - 14,750
Paid-in capital 12,510,000 11,495,250
Contributed capital for combined radio station 22,500,000 22,500,000
Retained earnings 196,364,912 169,473,261
-------------- -------------
Total division equity 231,374,912 204,483,261
-------------- -------------
Total liabilities and division equity $ 356,604,084 259,393,708
-------------- -------------
-------------- -------------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Combined Statements of Earnings
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Broadcast revenues $ 112,989,674 85,276,016 73,217,793
Less agency commissions 14,992,344 11,516,477 10,181,081
------------- ------------- -------------
Net revenues 97,997,330 73,759,539 63,036,712
Broadcast operating expenses 81,958,359 57,517,065 44,996,017
Depreciation and amortization 10,129,833 7,356,348 5,603,704
Corporate general and administrative expenses 3,622,630 4,361,458 3,934,394
------------- ------------- -------------
Operating income 2,286,508 4,524,668 8,502,597
------------- ------------- -------------
Interest income 1,727,143 7,256,973 9,562,334
Interest expense (6,344,815) (2,883,337) (3,134,887)
Gain on sale of radio stations and other properties 44,131,625 5,947,951 5,126,403
Other expense, net (36,541) (484,901) (128,874)
------------- ------------- -------------
Nonoperating income, net 39,477,412 9,836,686 11,424,976
------------- ------------- -------------
Income before taxes and
extraordinary item 41,763,920 14,361,354 19,927,573
Income tax expense 14,308,834 5,309,885 7,072,231
------------- ------------- -------------
Income before extraordinary item 27,455,086 9,051,469 12,855,342
Extraordinary item, net of applicable income taxes of
$303,388 (563,435) - -
------------- ------------- -------------
Net income $ 26,891,651 9,051,469 12,855,342
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Combined Statements of Division Equity
<TABLE>
<CAPTION>
4% noncumulative Contributed
preferred stock Common stock capital for Total
------------------ ---------------- Paid-in combined Retained division
Shares Amount Shares Amount capital radio station earnings equity
------ ------ ------ ------ ------- ------------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 20,000 $1,000,000 14,750 $14,750 11,495,250 $ - $147,646,450 $160,156,450
Dividends paid--
preferred stock - - - - - - (40,000) (40,000)
Net income - - - - - - 12,855,342 12,855,342
------- ---------- ------- ------- ---------- ---------- ----------- -----------
Balances at
December 31, 1995 20,000 1,000,000 14,750 14,750 11,495,250 - 160,461,792 172,971,792
Dividends paid--
preferred stock - - - - - - (40,000) (40,000)
Contributed capital for
combined radio
station - - - - - 22,500,000 - 22,500,000
Net income - - - - - - 9,051,469 9,051,469
------- ---------- ------- ------- ---------- ---------- ----------- -----------
Balances at
December 31, 1996 20,000 1,000,000 14,750 14,750 11,495,250 22,500,000 169,473,261 204,483,261
Reclassification of
preferred and common
stock to paid-in capital
as a result of change
from subsidiary to a
division (20,000) (1,000,000) (14,750) (14,750) 1,014,750 - - -
Net income - - - - - - 26,891,651 26,891,651
------- ---------- ------- ------- ---------- ---------- ----------- -----------
Balances at
December 31, 1997 - $ - - $ - $12,510,000 $22,500,000 $196,364,912 $231,374,912
------- ---------- ------- ------- ---------- ---------- ----------- -----------
------- ---------- ------- ------- ---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Combined Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 26,891,651 9,051,469 12,855,342
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 10,129,833 7,356,348 5,603,704
Loss on sale of property and equipment 35,540 100,995 28,310
Net gain on sale of radio stations and other properties (44,131,625) (5,947,951) (5,126,403)
Provision for doubtful accounts receivable 99,285 273,526 106,579
Deferred income taxes 14,335,128 (1,936,915) (403,088)
Changes in assets and liabilities, net of effects of acquisitions and
disposals:
Accounts receivable (5,493,556) (2,181,725) (2,345,109)
Prepaid expenses and other assets (337,191) (2,524,774) (1,403,917)
Accounts payable (126,924) 383,037 (660,744)
Accrued expenses and other liabilities 1,095,148 1,536,048 (316,643)
Income taxes payable 1,707,109 912,525 (44,877,594)
------------ ------------ -----------
Net cash provided (used) by operating activities 4,204,398 7,022,583 (36,539,563)
------------ ------------ -----------
Cash flows from investing activities:
Acquisition of radio stations (166,294,524) (23,349,989) -
Proceeds from sale of radio stations and other properties 2,600,000 10,558,450 15,500,000
Proceeds from collection of notes receivable 1,000,000 4,000,000 4,012,942
Additions to property and equipment (6,644,908) (2,965,878) (2,977,258)
Proceeds from sale of property and equipment 54,898 177,717 15,363
Proceeds from maturity of investments 75,000,000 5,085,480 19,917,096
------------ ------------ -----------
Net cash (used) provided by investing activities (94,284,534) (6,494,220) 36,468,143
------------ ------------ -----------
Cash flows from financing activities:
Debt issuance costs paid (475,000) - (281,877)
Advances from Parent 92,000,000 - -
Borrowings under long-term debt 98,000,000 - 1,702,940
Repayments of long-term debt (138,000,000) - -
Dividends paid - (40,000) (40,000)
------------ ------------ -----------
Net cash provided (used) by financing activities 51,525,000 (40,000) 1,381,063
------------ ------------ -----------
Net (decrease) increase in cash and cash equivalents (38,555,136) 488,363 1,309,643
Cash and cash equivalents at beginning of period 47,223,751 46,735,388 45,425,745
------------ ------------ -----------
Cash and cash equivalents at end of period $ 8,668,615 47,223,751 46,735,388
------------ ------------ -----------
------------ ------------ -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Net cash paid (refunds received) for income taxes $ (1,733,401) 6,334,674 52,352,913
------------ ------------ -----------
------------ ------------ -----------
Cash paid for interest $ 5,783,227 2,831,913 2,727,060
------------ ------------ -----------
------------ ------------ -----------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of assets exchanged $ 53,000,000 - -
------------ ------------ -----------
------------ ------------ -----------
Assets acquired from capital contribution from affiliated company $ - 22,500,000 -
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Nationwide Communications (the Company) reflects the broadcast
operations of Nationwide Mutual Insurance Company (the Parent).
These operations include commercial radio stations in various
geographic regions across the United States, primarily in the top
twenty-five radio revenue markets.
(b) BASIS OF PRESENTATION
The combined financial statements include the accounts related to the
operation of the Parent's commercial radio stations. The majority
of these operations were in Nationwide Communications, Inc. (NCI),
a wholly owned subsidiary of the Parent. In December 1997, all
employees, assets and liabilities of NCI were transferred to the
Parent and NCI became a division of the Parent.
The Company's financial statements also include the results of
operations of KXGL-FM, a station owned by an affiliated company
(San Diego Lotus Corporation) controlled by the Parent, as the
station is operated and controlled by the Company under a time
brokerage agreement. Due to related ownership and control of the
station, all significant accounts related to the station have been
combined with NCI's financial statements for financial reporting
purposes.
(c) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents. Cash and cash equivalents consist of cash with the
Parent, money market funds and cash in banks. Cash with the
Parent is invested in various financial instruments and is
available upon demand to the Company.
(d) REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements
to local and national advertisers. Revenue is recognized when the
commercial announcements are broadcast.
Fees received or paid pursuant to various time brokerage agreements
are recognized as revenue or expense, respectively, in accordance
with the terms of the agreements.
(Continued)
<PAGE>
2
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(e) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of equipment
is computed using an accelerated method. The Company uses the
straight-line method for all buildings and leasehold improvements.
The useful lives of property and equipment are as follows:
<TABLE>
<S> <C>
Building and improvements. . . . . . . .31.5 years
Leasehold improvements . . . . . . . . .31.5 years
Equipment. . . . . . . . . . . . . . 3 to 20 years
</TABLE>
(f) INTANGIBLE ASSETS
Intangible assets consist primarily of broadcast licenses. The
Company amortizes intangible assets using the straight-line
method over the estimated useful lives ranging from 5 to 40
years. The carrying value of intangible assets is reviewed by
the Company when events or circumstances suggest that the
recoverability of an asset may be impaired. If this review
indicates that the intangible assets will not be recoverable, as
determined based on the undiscounted cash flows of the station
over the remaining amortization period, the carrying value will
be reduced accordingly.
(g) MARKETABLE SECURITIES
All marketable debt securities are classified as held to maturity as
the Company has the ability and it is management's intent to hold
them until maturity. In accordance with SFAS No. 115, marketable
securities held to maturity are stated at amortized cost. All
marketable securities matured during 1997.
(h) INCOME TAXES
The Company files a consolidated federal income tax return with the
Parent. The Company calculates income taxes on a separate
company basis in accordance with a tax sharing agreement with the
Parent.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period the change occurred.
(i) PENSION AND OTHER POSTRETIREMENT PLANS
The Company participates in a multiemployer defined benefit pension
plan and a multiemployer life and health care plan covering
substantially all employees achieving certain levels of service.
The cost of these programs is being funded currently.
The Company also participates in two multiemployer supplemental
nonqualified defined benefit plans. The net periodic costs are
recognized as employees render the services necessary to earn the
retirement benefits.
(Continued)
<PAGE>
3
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(j) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reporting of revenues
and expenses during the reporting period to prepare these
financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those
estimates.
(2) ACQUISITIONS AND DISPOSITIONS
(a) COMPLETED TRANSACTIONS
In January 1995, the Company sold the assets of its cable system in
Houston for cash of $15 million and an unsecured note for
$6 million due January 2001. This note was discounted to
$3,474,341 using an effective interest rate of 8.5%. A pretax
gain of $4.9 million was recorded on this sale.
In April 1996, the Company entered into an agreement to exchange the
assets of WOMX-FM in Orlando and $43.5 million for the assets of
WMJI-FM and WMMS-FM in Cleveland. Pending the completion of the
exchange, the Company entered into a time brokerage agreement
which allowed the Company to operate WMJI-FM and WMMS-FM (and
relinquish day-to-day operations of WOMX-FM) from July 1996 to
the February 1997 closing. The assets of WOMX-FM totaling
$2,742,696 are classified as "Assets held for sale" on the
December 31, 1996 balance sheet. The transaction was completed
in February 1997. The Company recorded a pre-tax gain on the
exchange of approximately $23 million.
In May 1996, the Company acquired the common stock of San Diego Lotus
Corporation for $23 million with the purpose of simultaneously
transferring the stock to an affiliated company for $23 million.
Governmental restrictions delayed the actual transfer of the
stock to the affiliated company until September 1996.
Simultaneously with the transfer, the Company entered into a time
brokerage agreement for $1.125 million per year which allows the
Company to operate KFSD-FM, owned by San Diego Lotus Corporation.
KFSD-FM call letters were changed to KXGL-FM in 1997. All
significant accounts related to KXGL-FM have been combined in the
accompanying financial statements.
In June 1996, the Company purchased the assets of KMJZ-FM and KSGS-AM
in Minneapolis for $22 million.
(Continued)
<PAGE>
4
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
In June 1996, the Company entered into an agreement to exchange the
assets of KISW-FM in Seattle and $12.5 million for the assets of
KTBZ-FM in Houston. Pending the completion of the exchange, the
Company entered into a time brokerage agreement which allowed the
Company to operate KTBZ-FM (and relinquish day to day operations
of KISW-FM) from June 1996 to the May 1997 closing. The assets
of KISW-FM totaling $6,125,680 are classified as "Assets held for
sale" on the December 31, 1996 balance sheet. The transaction was
completed in May 1997. The Company recorded a pre-tax gain on
the exchange of approximately $21 million.
In July 1996, the Company sold the assets of KLUC-FM and KXNO-AM in
Las Vegas for $10.6 million. A pretax gain of approximately
$5.9 million was recorded on the sale.
In September 1996, the Company entered into an agreement to purchase
the assets of KUPR-FM and KCEO-AM San Diego for $32 million. The
transaction was completed in April 1997. Pending the completion
of this acquisition, the Company entered into a time brokerage
agreement which allowed the Company to operate KUPR-FM and
KCEO-AM. The Company sold KCEO-AM in June 1997 for $2.6 million.
No gain or loss was realized on the sale. KUPR-FM's call letters
were changed to KMCG-FM in 1997.
In February 1997, the Company entered into an agreement to purchase
the assets of KHTC-FM in Phoenix for $34 million. The
transaction was completed in June 1997. Pending the completion
of this acquisition, the Company entered into a time brokerage
agreement which allowed the Company to operate KHTC-FM from
March 1, 1997 through the completion of the transaction.
KHTC-FM's call letters were changed in 1997 to KGLQ-FM.
The acquisitions completed in 1997 and 1996 have been accounted for by
the purchase method of accounting. The purchase price has been
allocated to the assets acquired based on their fair values at
the date of acquisition. The excess of the purchase price over
the estimated fair values of the net tangible assets acquired has
been recorded as broadcast licenses. The results of operations
of the acquired businesses are included in the Company's
financial statements since the respective dates of acquisitions.
Assuming each of the above acquisitions and dispositions had taken
place at the beginning of 1996 and removing the effects of all
gains and losses from these transactions, unaudited pro forma
combined results of operations would have been as follows:
<TABLE>
<CAPTION>
Pro forma (unaudited)
--------------------------
December 31,
1997 1996
---- ----
<S> <C> <C>
Net revenue $ 98,562,362 86,818,631
Net loss (3,007,167) (2,981,098)
</TABLE>
(Continued)
<PAGE>
5
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(b) PENDING AS OF DECEMBER 31, 1997
In August 1996, the Company entered into an agreement to purchase the
assets of KGB-FM and KPOP-AM in San Diego for $44.2 million. The
Company then signed agreements to exchange KGB-FM and KPOP-AM in
San Diego for KSLX-FM and KSLX-AM in Phoenix and, following that
closing, exchange the Phoenix stations for KEGL-FM in Dallas.
The acquisition of the San Diego stations was completed in
January 1997. The Company operated KGB-FM and KPOP-AM under a
time brokerage agreement from August 1996 to the January 1997
closing. In April 1997, the exchange of the San Diego and
Phoenix stations was completed. The Phoenix-Dallas exchange is
pending FCC approval of the renewal of the KEGL-FM license. In
the meantime, the Company has entered into a time brokerage
agreement which allows the Company to operate KEGL-FM (and
relinquish day to day operations of the Phoenix stations). The
assets of the Phoenix stations totaling $44,667,939 are
classified as "Assets held for sale" on the December 31, 1997
balance sheet. The Company does not anticipate recognizing a
gain on this transaction.
After the completion of these transactions, the Company will own
and/or operate the following stations:
<TABLE>
<CAPTION>
Station Location
------- --------
<S> <C>
KDMX-FM Dallas, Texas
KEGL-FM
KHMX-FM Houston, Texas
KTBZ-FM
KMJZ-FM Minneapolis, Minnesota
KSGS-AM
KXGL-FM San Diego, California
KMCG-FM
KZZP-FM Phoenix, Arizona
KGLQ-FM
WPOC-FM Baltimore, Maryland
WMJI-FM Cleveland, Ohio
WMMS-FM
WGAR-FM
WNCI-FM Columbus, Ohio
WCOL-FM
WFII-AM
</TABLE>
(Continued)
<PAGE>
6
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(c) TIME BROKERAGE AGREEMENT FEES
The Company has included $2,244,000 and $634,000 of time brokerage
agreement revenue in gross broadcast revenues for the years ended
December 31, 1997 and 1996, respectively. Broadcast operating
expenses include $5,099,000 and $4,942,000 of time brokerage
agreement expense for the years ended December 31, 1997 and 1996,
respectively. There were no time brokerage agreements in 1995.
(3) NOTES RECEIVABLE
A summary of notes receivable at December 31 follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
$6 million note receivable net of discounts of $1,576,561
and $1,936,407 at December 31, 1997 and 1996,
respectively; due January 2001 discounted at 8.5% $ 4,423,439 4,063,593
$5 million note receivable net of discounts of $190,645 and
$366,459 at December 31, 1997 and 1996, respectively;
$1 million installments due November 1995 to 1999;
discounted at 8% 1,809,355 2,633,541
----------- -----------
6,232,794 6,697,134
Less current portion (933,759) (931,278)
----------- -----------
$ 5,299,035 5,765,856
----------- -----------
----------- -----------
</TABLE>
(4) PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31 follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Land $ 597,111 471,462
Building and improvements 1,029,072 806,475
Leasehold improvements 3,465,956 1,264,883
Equipment 23,455,659 13,728,965
Construction in process 87,584 669,684
---------- ----------
28,635,382 16,941,469
Accumulated depreciation (10,646,290) (8,687,441)
---------- ----------
Property and equipment, net $ 17,989,092 8,254,028
---------- ----------
---------- ----------
</TABLE>
Depreciation expense was $3,067,834, $2,184,554 and $1,673,843 for the years
ended December 31, 1997, 1996 and 1995, respectively.
(Continued)
<PAGE>
7
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(5) BROADCAST LICENSES AND OTHER INTANGIBLES
A summary of broadcast licenses and other intangibles at December 31
follows:
<TABLE>
<CAPTION>
Useful life 1997 1996
----------- ---- ----
<S> <C> <C> <C>
Broadcast licenses 40 Years $ 217,348,705 48,978,599
Broadcast licenses 15-25 Years 56,035,276 56,035,276
Other intangibles 5-20 Years 5,993,898 5,993,898
------------- -------------
279,377,879 111,007,773
Accumulated amortization (27,961,794) (20,899,794)
------------- -------------
Net intangible assets $ 251,416,085 90,107,979
------------- -------------
------------- -------------
</TABLE>
Amortization expense was $7,061,999, $5,171,794, and $3,929,861 for the
years ended December 31, 1997, 1996 and 1995, respectively.
(6) LONG-TERM DEBT
A summary of long-term debt at December 31 follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Notes payable to banks under Credit Agreement (6.625% at
December 31, 1996); notes mature March 31, 2004
$ - 40,000,000
Note payable to bank, variable interest rate based on prime (8.5%
at December 31, 1997 and 1996); principal due December 31,
2001 500,000 500,000
--------- ------------
Total debt $ 500,000 40,500,000
--------- ------------
--------- ------------
</TABLE>
In April 1997, the Company entered into a new facility (Credit Agreement).
The Credit Agreement was with a syndicate of banks and had a capacity
of $105 million.
NCI was required under terms of its Credit Agreement to obtain interest
rate protection of 50% of the commitment amount ($52.5 million).
During 1997, the Company entered into five-year interest rate swap
agreements in order to obtain the required protection. The swaps
effectively change a portion of the Company's interest rate exposure
from a variable rate to a fixed rate.
As part of the liquidation of NCI, the Company paid off its existing long-
term debt and canceled its related swap agreements with the proceeds
from advances from the Parent in December 1997. In connection with
the extinguishment, the Company recognized an extraordinary loss of
approximately $866,000 which includes loss on the extinguishment of
debt and early termination fees related to the interest rate swaps.
(Continued)
<PAGE>
8
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(7) INCOME TAXES
A summary of income tax expense at December 31 follows:
<TABLE>
<CAPTION>
Federal State Total
------- ----- -----
<S> <C> <C> <C>
December 31, 1997:
Current $ 109,000 (135,294) (26,294)
Deferred 14,486,000 (150,872) 14,335,128
----------- ----------- -----------
$ 14,595,000 (286,166) 14,308,834
----------- ----------- -----------
----------- ----------- -----------
December 31, 1996:
Current $ 6,191,800 1,055,000 7,246,800
Deferred (1,623,915) (313,000) (1,936,915)
----------- ----------- -----------
$ 4,567,885 742,000 5,309,885
----------- ----------- -----------
----------- ----------- -----------
December 31, 1995:
Current $ 6,900,000 575,319 7,475,319
Deferred (216,788) (186,300) (403,088)
----------- ----------- -----------
$ 6,683,212 389,019 7,072,231
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The actual expense differs from the expected expense as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Expected tax expense computed at 35% $ 14,617,372 5,026,474 6,974,651
State income tax expense (benefit), net
of federal tax benefit (185,689) 482,300 252,863
Amortization of intangibles 238,876 70,741 106,329
Gain on sale of nonamortizable
intangibles (901,626) (411,584) (172,581)
Other, net 539,901 141,954 (89,031)
------------ ------------ ------------
$ 14,308,834 5,309,885 7,072,231
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
(Continued)
<PAGE>
9
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 285,679 301,115
Accrued expenses 128,982 145,186
Accrued income taxes 701,250 790,117
Deferred compensation 884,072 881,456
Accrued retirement benefits 1,008,889 1,214,814
------------ ------------
Total gross deferred tax asset 3,008,872 3,332,688
------------ ------------
Deferred tax liabilities:
Investments and other assets (153,474) (168,216)
Property and equipment (121,093) (382,383)
Intangibles (16,900,565) (2,718,183)
Prepaid expenses and other assets (161,413) (56,451)
------------ ------------
Total gross deferred tax
liabilities (17,336,545) (3,325,233)
------------ ------------
Net deferred tax assets
(liabilities) $ (14,327,673) 7,455
------------ ------------
------------ ------------
</TABLE>
The Company believes the existing deductible temporary differences will
reverse during periods in which the Company generates net taxable
earnings. The Company has considered the above factors in concluding
that it is more likely than not that the Company will realize the
benefits of existing deferred tax assets.
The IRS has begun an examination of the Parent's consolidated 1993, 1994
and 1995 federal income tax returns. The outcome of this examination
is not presently determinable; however, in the opinion of management,
the effects, if any, of this examination are not expected to be
material to the Company's combined financial statements.
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value for cash, short-term investments, accounts receivable,
the current portion of notes receivable and current liabilities
approximates their respective fair values because of the short
maturity of these instruments. The fair value of notes receivable
($5,299,035 at December 31, 1997 excluding the current portion) is
calculated by discounting scheduled cash flows through maturity using
the current rates. The carrying value for these notes at December 31,
1997 approximated fair value at that date.
(Continued)
<PAGE>
10
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(9) PENSION PLANS
The Company is a participant, together with other affiliated companies, in
a pension plan covering all employees who have completed at least
1,000 hours of service within a twelve month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last
ten years of service. The Company funds pension costs accrued for all
employees as directed by the Parent.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire
cost of the enhanced benefit was borne by the Parent and certain of
its property and casualty insurance company affiliates.
Pension cost (benefits) charged to operations by the Company during the
years ended December 31, 1997, 1996 and 1995 were $(478,000),
$(519,000), and $151,000, respectively.
The Company's net prepaid (accrued) pension expense as of December 31, 1997
and 1996 was $254,000 and $(213,000), respectively. Accrued pension
expense at December 31, 1996 is included in accrued expenses and other
current liabilities.
The Company also participates, together with certain affiliated companies,
in two nonqualified unfunded defined-benefit pension plans covering
directors and certain key executives. The Company's pension expense
for these plans was $375,000, $413,000 and $542,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. Accrued post
retirement expense for these plans is $2,881,540 and $2,892,414 at
December 31, 1997 and 1996, respectively.
(10) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to the defined benefit pension plans, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life
and health care benefits generally available to full time employees
who have attained age 55 and have accumulated 15 years of service with
the Company after reaching age 40. Postretirement health care benefit
contributions are adjusted annually and contain cost-sharing features
such as deductibles and coinsurance. In addition, there are caps on
the Company's portion of the per-participant cost of the
postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of Nationwide Life Insurance Company.
(Continued)
<PAGE>
11
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
The Company had prepaid accrued postretirement benefits as of December 31,
1997 and 1996 of $207,000 and $134,000, respectively. The net
periodic postretirement cost (benefit) for the years ended
December 31, 1997, 1996 and 1995 was $(71,000), $13,000 and
$(128,000), respectively.
(11) SAVINGS PLAN
The Company is a participant in the Nationwide Insurance Enterprise 401(k)
savings plan which covers substantially all employees. Employee
contributions to the plan are matched by the Company at the rate of
70% of the first 2% of pay and 40% of the next 4% of pay contributed
to the plan. The Company's contribution expense for the years ended
December 31, 1997, 1996 and 1995 was approximately $385,447, $284,000
and $328,000, respectively.
(12) COMMITMENTS AND CONTINGENCIES
(a) LEASES
The Company has operating leases for certain land and facilities used
in their operations with initial or remaining lease terms in
excess of one year. Future minimum lease payments under these
leases as of December 31, 1997 are:
<TABLE>
<CAPTION>
Years ended:
<S> <C>
1998 3,367,298
1999 3,207,915
2000 3,139,186
2001 2,739,192
2002 2,157,040
2003 and years thereafter 6,457,139
------------
Total minimum lease payments $ 21,067,770
------------
------------
</TABLE>
Total rent expense was $3,418,000, $1,770,000 and $1,630,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.
(b) LEGAL PROCEEDINGS
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a
material adverse effect on the Company's financial position,
results of operations or liquidity.
(Continued)
<PAGE>
12
NATIONWIDE COMMUNICATIONS
(Broadcast Operations of Nationwide Mutual Insurance Company)
Notes to Combined Financial Statements, Continued
(13) OTHER MATTERS
On December 19, 1997, the Company signed an agreement with Citicasters Co.,
a wholly owned subsidiary of Jacor Communications, Inc., to sell
substantially all of the radio station assets (exclusive of cash, cash
equivalents, accounts receivable and notes receivable) for
$591 million. In the same agreement, Jacor also agreed to purchase
the radio station assets of San Diego Lotus Corporation, an affiliate
of the Company, for $29 million. These transactions are expected to
be finalized in 1998.
<PAGE>
Item 7(a)(ii)
TALK RADIO NETWORK, INC.,
CHANCELLOR BROADCASTING CO., INC. AND
BROADCAST COMMUNICATIONS, INC.
<PAGE>
C O N T E N T S
PAGE(S)
REPORT OF INDEPENDENT ACCOUNTANTS 1
COMBINED FINANCIAL STATEMENTS
Balance Sheets as of September 30, 1997 and December 31,
1996 and 1995 2
Statements of Income for the nine months ended September 30,
1997 and for the years ended December 31, 1996 and 1995 3
Statements of Shareholders' Equity for the nine months ended
September 30, 1997 and for the years ended December 31,
1996 and 1995 4
Statements of Cash Flows for the nine months ended September 30,
1997 and for the years ended December 31, 1996 and 1995 5
Notes to Combined Financial Statements 6-12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Talk Radio Network, Inc., Chancellor
Broadcasting Co., Inc. and Broadcast
Communications, Inc.:
We have audited the accompanying combined balance sheets of Talk Radio Network,
Inc. and Chancellor Broadcasting Co., Inc. as of September 30, 1997, the
combined balance sheets of Talk Radio Network, Inc., Chancellor Broadcasting
Co., Inc. and Broadcast Communications, Inc. as of December 31, 1996 and 1995,
and the related combined statements of income, shareholders' equity and cash
flows for the nine months ended September 30, 1997 and for the years
ended December 31, 1996 and 1995. These financial statements are the
responsibility of the 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 principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Talk Radio Network,
Inc. and Chancellor Broadcasting Co., Inc. as of September 30, 1997, of Talk
Radio Network, Inc., Chancellor Broadcasting Co., Inc. and Broadcast
Communications, Inc. as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the nine months ended September 30, 1997 and
for the years ended December 31, 1996 and 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Eugene, Oregon
December 19, 1997
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $998,379 $1,103,659 $426,732
Accounts receivable 146,758 74,714 132,946
Pro form income taxes receivable 9,964
------------- ------------ ------------
Total current assets 1,145,137 1,178,373 569,642
Fixed assets, net 568,419 586,171 327,882
Intangible assets, net 103,549 111,048 121,069
------------- ------------ ------------
Total assets $1,817,105 $1,875,592 $1,018,593
------------- ------------ ------------
------------- ------------ ------------
LIABILITIES
Current liabilities:
Accounts payable and accrued
expenses $299,364 $252,710 $335,014
Deferred subscription revenue 175,705 163,779 175,961
Customer deposits 29,313 61,006 31,854
Pro forma income taxes 230,548 239,585
Current portion of notes payable 38,471 53,506 40,406
Current portion of capitalized
lease obligations 12,257 11,461 15,740
------------- ------------ ------------
Total current liabilities 785,658 782,047 598,975
Notes payable, less current portion 366,686 637,242 513,337
Capitalized lease obligations, less
current portion 7,857 18,328 29,789
------------- ------------ ------------
Total liabilities 1,160,201 1,437,617 1,142,101
------------- ------------ ------------
Commitments and contingencies (Note 5)
SHAREHOLDERS' EQUITY
Talk Radio Network, Inc. common stock,
no par value; 100,000 shares
authorized, 10,000 shares issued and
outstanding 10,000 10,000 10,000
Chancellor Broadcasting Co., Inc.
common stock, no par value; 10,000
shares authorized, issued and
outstanding 1,241 1,241 1,241
Broadcast Communications, Inc. common
stock, no par value; 10,000 shares
authorized, 8,000 shares issued and
outstanding in 1996 and 1995 700 700
Additional paid-in capital 37,825 37,825 37,825
Retained earnings (deficit) 607,838 388,209 (173,274)
------------- ------------ ------------
Total shareholders' equity 656,904 437,975 (123,508)
------------- ------------ ------------
Total liabilities and
shareholders' equity $1,817,105 $1,875,592 $1,018,593
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEARS ENDED
MONTHS ENDED -------------------------
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Operating revenues:
Advertising $2,847,612 $2,662,652 $1,783,844
Subscription and merchandising 762,204 789,704 515,740
------------- ------------ ------------
3,609,816 3,452,356 2,299,584
------------- ------------ ------------
Operating expenses:
Production and programming 1,149,868 627,621 577,313
Newsletter and merchandise 123,383 193,682 125,168
General and administrative 1,282,388 1,561,907 1,135,327
Depreciation and amortization 69,723 87,800 54,292
------------- ------------ ------------
2,625,362 2,471,010 1,892,100
------------- ------------ ------------
Net operating income 984,454 981,346 407,484
Other income (expenses):
Interest income 16,863 10,249 3,407
Interest expense (30,814) (56,590) (51,414)
Other 3,029 800 6,883
------------- ------------ ------------
Income before provision for
pro forma income taxes 973,532 935,805 366,360
Provision for pro forma income taxes 389,413 374,322 146,544
------------- ------------ ------------
Net income $584,119 $561,483 $219,816
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
for the nine months ended September 30, 1997 and
for the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
CHANCELLOR BROADCAST
TALK RADIO NETWORK, BROADCASTING, INC. COMMUNICATIONS,
INC. COMMON STOCK COMMON STOCK INC. COMMON STOCK
--------------------- --------------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ -------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1995 10,000 $ 10,000 10,000 $ 1,241 8,000 $ 700
Net income
------ -------- ------ ------- ------ -------
Balances, December 31, 1995 10,000 10,000 10,000 1,241 8,000 700
Net income
------ -------- ------ ------- ------ -------
Balances, December 31, 1996 10,000 10,000 10,000 1,241 8,000 700
Cancellation of outstanding capital
and deficit of BCC (Note 2) (8,000) (700)
Dividend paid to related-party
shareholders (Note 2)
Net income
------ -------- ------ ------- ------ -------
Balances, September 30, 1997 10,000 $ 10,000 10,000 $ 1,241 0 $ 0
------ -------- ------ ------- ------ -------
------ -------- ------ ------- ------ -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
COMBINED
--------------------------
ADDITIONAL RETAINED TOTAL
PAID-IN EARNINGS SHAREHOLDERS'
CAPITAL (DEFICIT) EQUITY
---------- --------- -------------
<S> <C> <C>
$37,825 $(393,090) $(343,324)
219,816 219,816
---------- --------- -------------
37,825 (173,274) (123,508)
561,483 561,483
---------- --------- -------------
37,825 388,209 437,975
122,765 122,065
(487,255) (487,255)
584,119 584,119
---------- --------- -------------
$37,825 $607,838 $656,904
---------- --------- -------------
---------- --------- -------------
</TABLE>
5
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEARS ENDED
MONTHS ENDED --------------------------------
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
Cash flows from operating activities:
Net income $584,119 $561,483 $219,816
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 69,723 87,800 54,292
Gain on sale of assets (800)
Pro forma income taxes (9,037) 249,549 (9,964)
Changes in operating assets and liabilities:
Accounts receivable (72,044) 58,232 (72,808)
Accounts payable and accrued liabilities 46,654 (82,304) 202,013
Deferred subscription revenue 11,926 (12,182) (7,656)
Customer deposits (31,693) 29,152 31,854
Other (11,336)
------------- ------------ ------------
Net cash provided by operating activities 599,648 890,930 406,211
------------- ------------ ------------
Cash flows used in investing activities:
Acquisition of furniture and equipment (44,472) (345,331) (206,035)
Proceeds from sale of assets 10,063
Cancellation of BCC equity (Note 2) 122,065
------------- ------------ ------------
Net cash provided by (used in) investing
activities 77,593 (335,268) (206,035)
------------- ------------ ------------
Cash flows from financing activities:
Payments on notes due to shareholder (215,596) (23,129) (26,429)
Borrowings on notes payable 25,903 185,772 65,000
Payments on notes payable (95,898) (25,638) (28,476)
Payments on capitalized lease obligations (9,675) (15,740) (13,707)
Related-party dividend (Note 2) (487,255)
------------- ------------ ------------
Net cash provided by (used in) financing
activities (782,521) 121,265 (3,612)
------------- ------------ ------------
Increase (decrease) in cash and cash equivalents (105,280) 676,927 196,564
Cash and cash equivalents, beginning of period 1,103,659 426,732 230,168
------------- ------------ ------------
Cash and cash equivalents, end of period $ 998,379 $ 1,103,659 $ 426,732
------------- ------------ ------------
------------- ------------ ------------
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for:
Interest $30,814 $56,590 $51,414
Income taxes 353,096 267,100 14,275
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITY:
Assets acquired through capital leases $28,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1997 and December 31, 1996 and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION: Talk Radio Network, Inc. ("TRN") and Chancellor
Broadcasting Co., Inc. ("CBC") were formed in 1993 as Subchapter C
corporations. TRN and CBC are independent creators, producers and
distributors of syndicated network radio programs and distributors of
related merchandising rights. CBC is 66% owned by TRN.
Broadcast Communications, Inc. ("BCC") was formed in 1986 as a Subchapter C
corporation. BCC owns and operates an independent radio station in Central
Point, Oregon. BCC was acquired by CBC in 1997, and its then outstanding
shares were cancelled. In 1995, BCC changed its name from Medford Judeo
Christian Outreach, Inc.
TRN, CBC and BCC derive a substantial portion of their revenues from the
sale of commercial radio broadcast time to national and local advertisers.
Each of TRN, CBC and BCC are owned or controlled either directly or
indirectly by a nonprofit corporation. Collectively, TRN, CBC and BCC are
referred to as the "Companies".
The combined financial statements include the accounts of TRN and CBC for
the nine months ended September 30, 1997. For the years ended December 31,
1996 and 1995, the combined financial statements include the accounts of
TRN, CBC and BCC. All material intercompany transactions and accounts have
been eliminated in the combined financial statements.
REVENUE RECOGNITION: Revenue from the sale of commercial broadcast time to
advertisers is recognized when the commercials are broadcast. Newsletter
subscription revenues are recorded as deferred revenue and recognized on a
straight-line basis over the term of the underlying subscriptions.
Merchandising revenues are recognized when the merchandise is shipped.
CONCENTRATION OF RISK: The Companies' revenues and accounts receivable
primarily relate to advertising of products and services both on a national
basis with respect to syndicated network radio programming and on a local
basis with respect to the Central Point, Oregon radio station. Credit is
extended to customers based upon an evaluation of the customer's financial
condition and generally collateral is not required. Credit losses are
provided for in the financial statements and consistently have been within
management's expectations.
PRODUCTION AND PROGRAMMING COSTS: Production and programming costs are
expensed in the period in which they occur. The Companies do not
capitalize costs associated with production and distribution of internally
developed programs, as the estimated future revenues from the programs are
considered immaterial. Costs related to programs not broadcast as of the
balance sheet dates are insignificant.
Continued
7
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTE TO COMBINED FINANCIAL STATEMENTS, Continued
September 30, 1997 and December 31, 1996 and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued:
ADVERTISING COSTS: Advertising costs are expensed in the period in which
they occur. General and administrative expenses include advertising costs
of $10,414, $3,538 and $2,853 in 1997, 1996 and 1995, respectively.
CASH: Cash consists of demand deposits and money market accounts with
regional banks. At times, balances may exceed amounts insured by the
Federal Deposit Insurance Corporation.
FIXED ASSETS: Land, buildings, furniture and equipment are stated at cost.
Depreciation and amortization are computed by the double-declining balance
and straight-line methods over the estimated useful lives of the related
assets, which are five to seven years. Maintenance and repairs are
expensed as incurred. The cost and related accumulated depreciation of
assets sold or retired are removed from the accounts and the resulting gain
or loss is included in current income.
PRO FORMA INCOME TAXES: The combined financial statements consist of
corporate entities which file separate income tax returns on the cash basis
and on differing year ends. Therefore, pro forma income taxes have been
calculated at the estimated effective rate of 40% on the pre-tax profits
for the periods.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INTANGIBLE ASSETS: Intangible assets are stated at cost and primarily
consist of a network radio program purchased by CBC in 1993.
The network radio program is being amortized using the straight-line method
over the duration of the related program's rights, including an extension
of 7 additional years.
Accumulated amortization is $42,342, $34,843 and $25,052 as of September
30, 1997, December 31, 1996 and December 31, 1995, respectively.
8
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTE TO COMBINED FINANCIAL STATEMENTS, Continued
September 30, 1997 and December 31, 1996 and 1995
2. PURCHASE OF BCC:
In April 1997, CBC purchased BCC for $500,000 from related-party
shareholders. The assets acquired and liabilities assumed by CBC were
recorded at BCC's historical cost. The amounts paid to the related-party
shareholders for BCC, in excess of historical cost, have been reflected in
the combined financial statements as a related-party dividend.
3. FIXED ASSETS:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Land $191,596 $191,596 $62,569
Buildings and improvements 141,285 140,165 43,359
Furniture and equipment 464,498 450,725 340,491
------------- ------------ ------------
797,379 782,486 446,419
Less accumulated depreciation 228,960 196,315 118,537
------------- ------------ ------------
$568,419 $586,171 $327,882
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
9
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTE TO COMBINED FINANCIAL STATEMENTS, Continued
September 30, 1997 and December 31, 1996 and 1995
4. LONG-TERM DEBT:
Notes payable with third parties consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Notes payable to a controlling
shareholder, interest at 6% to 8%,
due at various dates through 2008 $ 204,067 $ 419,663 $ 442,792
Mortgage loan payable to a trust,
collateralized by real property, monthly
payments of $1,631 including interest
at 10.25%, due December 2006 117,055 122,521
Mortgage loan payable to a trust,
collateralized by real property, monthly
payments of $223 including interest
at 7% per annum, due October 2042 37,240 37,325
Equipment loan, collateralized by radio
equipment, monthly payments of $1,166
including interest at 8.5%, due June 1999 22,297 31,054 41,898
Equipment loan, collateralized by
satellite up-link equipment, interest
at 8.5% per annum 63,330 64,585
Other 24,498 16,855 4,468
------------- ------------ ------------
405,157 690,748 553,743
Less current portion 38,471 53,506 40,406
------------- ------------ ------------
$ 366,686 $ 637,242 $ 513,337
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
The principal payments on long-term debt for the years ending after September
30, 1997 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 38,471
1999 36,971
2000 29,933
2001 32,489
2002 32,887
Thereafter 234,406
--------
$405,157
--------
--------
</TABLE>
Continued
10
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTE TO COMBINED FINANCIAL STATEMENTS, Continued
September 30, 1997 and December 31, 1996 and 1995
4. LONG-TERM DEBT, Continued:
The Companies lease certain equipment under agreements which are classified
as capital leases. At September 30, 1997, the agreements require monthly
aggregate payments of $1,515, including interest. The lease agreements
expire between May 1998 and June 2000. Most of these equipment leases have
purchase options at the end of the original lease term. Leased capital
assets included in fixed assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Total minimum lease payments $30,934 $44,573 $65,639
Less amount representing interest 10,820 14,784 20,110
------------- ------------ ------------
Capital lease obligations 20,114 29,789 45,529
Less current maturities 12,257 11,461 15,740
------------- ------------ ------------
Long-term portion $7,857 $18,328 $29,789
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
5. COMMITMENTS AND CONTINGENCIES:
The Companies lease their office, radio station, and radio towers under
operating leases expiring at various dates through June 2006. Renewal
options are available on certain of these leases. Rental expense under
operating leases was $14,880, $17,040 and $25,440 during the nine months
ended September 30, 1997 and during the years ended December 31, 1996 and
1995, respectively.
The Companies have talent and programming agreements with various
individuals and organizations. Some of these agreements are
month-to-month, while others are for extended periods, expiring from
February 1998 to May 2004. The most significant agreement is with an
individual who receives a percentage of net sales of radio programs and
program related merchandise, as defined, and additional compensation of
$100,000 per year through April 2004.
Approximate future minimum commitment and lease payments under
noncancelable operating leases and contracts at September 30, 1997 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending:
1998 $ 552,000
1999 420,000
2000 334,000
2001 295,000
2002 178,000
Thereafter 436,000
----------
$2,215,000
----------
----------
</TABLE>
11
<PAGE>
TALK RADIO NETWORK, INC, CHANCELLOR BROADCASTING CO.,
INC. AND BROADCAST COMMUNICATIONS, INC.
NOTE TO COMBINED FINANCIAL STATEMENTS, Continued
September 30, 1997 and December 31, 1996 and 1995
6. RELATED PARTIES:
Transactions with related parties of common ownership and control are as
follows:
a. Lease agreements with a controlling shareholder of TRN with respect to
the Companies' office, radio station and the main radio tower (see
Note 5).
b. Loans payable to a controlling shareholder of the Companies (see
Note 4).
c. Purchase of BCC from related-party shareholders (see Note 2).
d. CBC donated $50,000, $30,000 and $10,000 in 1997, 1996 and 1995,
respectively, to the controlling nonprofit organization.
7. SUBSEQUENT EVENT (Unaudited):
Effective January 1998, the shareholders of the Companies entered into
definitive agreements pursuant to which they shall sell 100% of the
Companies to Premiere Radio Networks, Inc. for approximately $9 million in
cash.
12
<PAGE>
ITEM 7(b)
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information, which is based
on the historical financial statements of Jacor and Nationwide, has been
prepared to illustrate the effects of the acquisitions and related financings
described below.
The unaudited pro forma condensed consolidated statement of operations
for year ended December 31, 1997 gives effect to the following transactions
and related financings as if such transactions and financings had been
completed January 1, 1997: (i) the Nationwide Acquisition and (ii) other
acquisitions completed during 1997 or pending as of December 31, 1997. The
pro forma condensed consolidated balance sheet as of December 31, 1997 has
been prepared as if the following transactions and related financings had
been completed on December 31, 1997: (i) the Nationwide Acquisition and
(ii) the other acquisitions pending as of December 31, 1997.
The Nationwide acquisition and all other pending acquisitions will be
accounted for using the purchase method of accounting. The total purchase
costs of the Nationwide acquisition and all other pending acquisitions will
be allocated to the tangible and intangible assets and liabilities acquired
based upon their respective fair values. The allocation of the aggregate
purchase price reflected in the Unaudited Pro Forma Financial Information is
preliminary. The final allocation of the purchase price will be contingent
upon the receipt of final appraisals of the acquired assets. The Unaudited
Pro Forma Financial Information is not necessarily indicative of either future
results of operations or the results that might have occurred if the
foregoing transactions had been consummated on the indicated dates.
The Unaudited Pro Forma Financial Information should be read in conjunction
with Jacor's Consolidated Financial Statements and notes thereto included in
Jacor's Annual Report on Form 10-K and Nationwide's Combined Financial
Statements and notes thereto included in this Current Report on Form 8-K(A).
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Other Jacor
Acquisition Other Nationwide Acquisition Total
Historical Pro Forma Acquisitions Historical Pro Forma Pro Forma Combined
Jacor Adjustments Pro Forma Nationwide Adjustments Adjustments Pro Forma
---------- ------------ ------------ ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $530,574 $74,452 (a) $605,026 $ 97,997 $ 565 (e) (3,613) (h) $699,975
Broadcast operating expenses 356,783 49,559 (a) 406,342 81,958 (2,132) (e) (20,923) (h) 465,245
Depreciation and amortization 76,485 24,947 (a) 103,432 10,130 2,084 (e) 4,007 (i) 119,653
Corporate general and
administrative expenses 14,093 - 14,093 3,623 (3,623) (h) 14,093
- 0
--------- -------- --------- --------- ---------- --------- ---------
Operating income 81,213 (54) 81,159 2,286 613 16,926 100,984
Interest expense, net (80,008) (9,303) (b) (89,311) (4,617) (3,197) (e) (20,586) (j) (117,710)
Gain on sale of radio stations 11,135 - 11,135 44,132 (44,132) (f) 11,135
Other income (expense), net 664 298 (c) 962 (37) 925
--------- -------- --------- --------- ---------- --------- ---------
Income (loss) before
Income taxes and
extraordinary items 13,004 (9,059) 3,945 41,764 (46,716) (3,659) (4,667)
--------- -------- --------- --------- ---------- --------- ---------
Income tax (expense) credit (9,600) 4,531 (d) (5,069) (14,309) 15,992 (g) 1,464 (k) (1,922)
--------- -------- --------- --------- ---------- --------- ---------
Income (loss) before
extraordinary items $ 3,404 ($4,528) ($1,124) $27,455 ($30,724) ($2,196) ($6,589)
--------- -------- --------- --------- ---------- --------- ---------
--------- -------- --------- --------- ---------- --------- ---------
Diluted income (loss)
per common share $ 0.08 ($0.13)
Number of common shares
used in per share
computations 42,163 50,763
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Other Jacor
Acquisition Other Nationwide Disposal
Historical Pro Forma Acquisitions Station of Pro Forma
Jacor Adjustments Pro Forma Acquisition San Diego Combined
---------- ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash $ 28,724 $ 28,724 $ 28,724
Accounts Receivable 135,073 135,073 135,073
Prepaid Expenses and Other
Current Assets 33,790 33,790 33,790
---------- ---------- ---------- ---------- ---------- ----------
Total Current Assets 197,587 197,587 197,587
Property and Equipment 206,809 $ 9,100 (m) 215,909 $ 28,000 (p) $ (2,000) (r) 241,909
Intangible Assets 2,128,718 59,375 (m) 2,188,093 604,000 (p) (63,000) (r) 2,729,093
Other Assets 68,764 (10,410) (n) 58,354 58,354
---------- ---------- ---------- ---------- ---------- ----------
Total Assets $2,601,878 $58,065 $2,659,943 $632,000 ($65,000) $3,226,943
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Current Liabilities:
Accounts Payable, Accrued
Liabilities and Other
Current Liabilities 118,249 118,249 118,249
---------- ---------- ---------- ---------- ---------- ----------
Total Current Liabilities 118,249 118,249 118,249
Long-term debt 987,500 58,065 (o) 1,045,565 224,150 (q) (65,000) (q) 1,204,725
Liquid Yield Option Notes 125,300 125,300 166,950 (q) 292,250
Other Liabilities 115,611 115,611 115,611
Deferred tax liability 338,867 338,867 338,867
Shareholders' Equity:
Common Stock 457 457 51 (q) 508
Additional Paid-In Capital 863,086 863,086 240,839 (q) 1,103,925
Common Stock Warrants 31,500 31,500 31,500
Retained Earnings 21,308 21,308 21,308
---------- ---------- ---------- ---------- ---------- ----------
Total Shareholders' Equity 916,351 916,351 240,890 1,157,241
Total Liabilities and ---------- ---------- ---------- ---------- ---------- ----------
Shareholders' Equity $2,601,878 $58,065 $2,659,943 $632,000 ($65,000) $3,226,943
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) These adjustments reflect additional revenues and expenses related to the
following acquisitions and other individually immaterial acquisitions
completed during 1997 or pending as of December 31, 1997 (collectively, the
"Other Acquisitions").
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
------------------------------------------
Broadcast Depreciation
Net Operating and
Revenue Expenses Amortization
------- ---------- ------------
<S> <C> <C> <C>
Regent (completed February 1997)................. $ --- $ 233 $ 1,061
Premiere (completed June 1997) .................. 14,130 9,276 4,347
EFM Companies (completed April 1997)............. 11,191 7,484 3,834
Synergy Broadcasting (completed October 1997).... 12,714 4,643 7,321
Other (various).................................. 36,417 27,473 8,384
------- -------- ----------
Total....................................... $74,452 $49,559 $24,947
------- -------- ----------
------- -------- ----------
</TABLE>
(b) The adjustment represents additional interest expense associated with
Jacor's borrowings under the Credit Facility and the issuance of various
debt securities in 1997. The assumed weighted average interest rate
associated with the borrowings is 7.9%.
(c) The adjustment represents miscellaneous income generated primarily by
Premiere for periods prior to the acquisition.
(d) To provide for the tax effect of pro forma adjustments. The acquisition
adjustments described in Note (a) include non-deductible goodwill
amortization estimated to be approximately $1,350 for the year ended
December 31, 1997.
(e) The adjustments represent additional revenues and expenses, net of the
elimination of time brokerage agreement fees, related primarily to
Nationwide's acquisitions of radio stations in the Dallas, Phoenix
and San Diego broadcast areas. Nationwide has operated a majority of the
stations acquired in 1997 under local marketing agreements since
January 1, 1997, therefore a significant amount of the revenues and
operating expenses related to these stations are included in Nationwide's
historical financial statements for the year ended December 31, 1997.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(f) The adjustment represents elimination of Nationwide's gain on the sale and
exchange of certain radio stations in 1997.
(g) To provide for the tax effect of Nationwide's pro forma adjustments
relating to its 1997 acquisitions and divestitures at statutory rates.
(h) The adjustments represent revenue and expense eliminations from the assumed
divestitures of two San Diego stations (see Note(r)) and projected expense
savings of 14,048 for the year ended December 31, 1997, respectively.
Expense savings will result from the elimination of redundant broadcast
operating expenses arising from the operation of multiple stations in
broadcast areas, changes in benefit plan and compensation structures to
conform with Jacor's and the elimination of Nationwide's corporate office
function. Estimated savings are as follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Corporate general and administrative................... $ 3,623
Benefit Plan expenses.................................. 2,850
Commissions............................................ 675
Promotion and programing............................... 2,500
Personnel reductions................................... 3,200
Other.................................................. 1,200
--------
$ 14,048
--------
--------
</TABLE>
(i) The adjustment reflects the additional depreciation and amortization
expense resulting from the allocation of Jacor's purchase price to the
assets acquired including an increase in property and equipment and
identifiable intangible assets to their estimated fair market values.
(j) The adjustment reflects additional interest expense related to additional
borrowings under the Credit Facility, the 8% Notes and the 4 3/4% LYONs
Offering completed during February 1998 to finance, in part, the
acquisition of Nationwide.
(k) To provide for the tax effect of pro forma adjustments.
(l) The pro forma weighted average shares outstanding includes all shares
outstanding as of December 31, 1997 and the 5.073 million shares
issued in the February 1998 Common Stock Offering. The pro forma weighted
average shares outstanding of Jacor do not reflect any outstanding options
and warrants as they are antidilutive. The LYONs are not common stock
equivalents and are, therefore, excluded from the computation.
(m) The adjustments represent the allocation of Jacor's purchase price for the
Other Acquisitions to the estimated fair value of the assets acquired and
certain liabilities assumed.
(n) The adjustment represents the application of funded escrow deposits to the
purchase price of the Other Acquisitions.
(o) The adjustment represents incremental Credit Facility borrowings to finance
the Other Acquisitions.
(p) The adjustment represents the allocation of Jacor's purchase price for
Nationwide, including estimated expenses of $12,000, to the estimated fair
value of the assets acquired and the recording of goodwill associated with
the acquisition.
<PAGE>
(q) The adjustment represents the assumed proceeds from the February 1998
Common Stock offering, 4 3/4% LYONs offering, 8% Notes offering and
incremental borrowings under the Credit Facility to finance the
acquisition of Nationwide's radio stations. The estimated sale price for
two San Diego stations is $65,000 (see Note (r)).
<TABLE>
<CAPTION>
<S> <C>
Common Stock Offering (net proceeds).................. $240,890
Notes Offering ....................................... 119,539
LYONs Offering ....................................... 166,950
Credit Facility borrowings ........................... 104,621
Credit Facility repayments ........................... (65,000)
--------
$567,000
--------
--------
</TABLE>
(r) Upon completion of the Nationwide Acquisition, Jacor's station ownership in
the San Diego broadcast area would exceed FCC ownership limits. The
adjustment assumes Jacor will divest two radio stations currently operating
in the San Diego broadcast area. The sale price is management's estimate
based on currently available information.
<PAGE>
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.'s 33-65126,
33-10329, 33-56385, 33-61719, 333-28587, 333-28371, 333-28399, 333-28401, and
333-28363) and on Forms S-3 (File No.'s 333-21419 and 333-06639) of our
report dated December 19, 1997 on our audits of the combined financial
statements of Talk Radio Network, Inc. and Chancellor Broadcasting Co., Inc.
as of September 30, 1997 and for the nine months ended September 30, 1997,
and the combined financial statements of Talk Radio Network, Inc., Chancellor
Broadcasting Co.,Inc. and Broadcast Communications, Inc. as of December 31,
1996 and 1995 and for each of the years in the period ended December 31,
1996, which report is included in this Current Report on Form 8-K(A).
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
April 30, 1998
