FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
A Delaware Corporation Employer Identification No. 31-0978313
50 East RiverCenter Blvd. 12th Floor Telephone (606) 655-2267
Covington, Kentucky 41011
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Common Stock Purchase Warrants expiring September 18, 2001
Common Stock Purchase Warrants expiring February 27, 2002
Liquid Yield Option Notes due 2011
Liquid Yield Option Notes due 2018
Other securities for which reports are submitted pursuant to
Section 15(d) of the Act: 10 1/8% Senior Subordinated Notes due 2006
9 3/4% Senior Subordinated Notes due 2006
8 3/4% Senior Subordinated Notes due 2007
8% Senior Subordinated Notes due 2010
Indicate by check mark whether the Registrant, Jacor
Communications, Inc., (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter
period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
ninety days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by
nonaffiliates of Registrant as of March 2, 1998 was $2,052,536,556.
The number of common shares outstanding as of March 2, 1998 was
50,757,782.
There are 95 pages in this document.
The index of exhibits appears on page 80.
Documents incorporated by Reference:
Portions of Registrant's definitive Proxy Statement to be filed
during April 1998 in connection with the Annual Meeting of
Shareholders presently scheduled to be held on May 20, 1998 are
incorporated by reference into Part III of this Form 10-K.
<PAGE>
Item 8. Financial Statements and Supplementary Data
Page
Report of Independent Accountants 44
Consolidated Balance Sheets: December 31, 1997 and 1996 45
Consolidated Statements of Operations:
Years ended December 31, 1997, 1996 and 1995 46
Consolidated Statements of Shareholders' Equity:
Years ended December 31, 1997, 1996 and 1995 47
Consolidated Statements of Cash Flows:
Years ended December 31, 1997, 1996 and 1995 49
Notes to Consolidated Financial Statements 51
Quarterly Financial Data 74
PART III
The information required by the following items will be included
in Jacor Communications, Inc.'s definitive Proxy Statement which
will be provided within 120 days after the end of the
Registrant's fiscal year:
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying consolidated balance sheets of
Jacor Communications, Inc. and Subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Jacor Communications, Inc. and Subsidiaries
as of December 31, 1997 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
February 11, 1998
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(In thousands, except share amounts)
<CAPTION>
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 28,724 $ 78,137
Accounts receivable, less allowance for
doubtful accounts of $6,195 in 1997
and $3,950 in 1996 135,073 79,502
Prepaid expenses and other 33,790 8,963
Total current assets 197,587 166,602
Property and equipment, net 206,809 131,488
Intangible assets, net 2,128,718 1,290,172
Other assets 68,764 116,680
Total assets $ 2,601,878 $ 1,704,942
LIABILITIES
Current liabilities:
Accounts payable $ 17,294 $ 12,600
Accrued expenses and other 68,971 30,774
Accrued payroll 15,246 7,562
Accrued income taxes 16,738 4,596
Total current liabilities 118,249 55,532
Long-term debt 987,500 670,000
Liquid Yield Option Notes 125,300 118,682
Deferred tax liability 338,867 264,878
Other liabilities 115,611 108,914
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred Stock, authorized and unissued
4,000,000 shares - -
Common Stock, no par value, $0.01 per share
stated value; authorized 100,000,000
shares, issued and outstanding shares:
45,689,677 in 1997 and 31,287,221 in 1996 457 313
Additional paid-in capital 863,086 432,721
Common stock warrants 31,500 26,500
Unrealized gain on investments - 2,042
Retained earnings 21,308 25,360
Total shareholders' equity 916,351 486,936
Total liabilities and
shareholders' equity $ 2,601,878 $ 1,704,942
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1997, 1996 and 1995
(In thousands, except per share amounts)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Broadcast revenue $ 595,229 $ 250,461 $ 133,103
Less agency commissions 64,655 26,700 14,212
Net revenue 530,574 223,761 118,891
Broadcast operating expenses 356,783 151,065 87,290
Depreciation and amortization 78,485 23,404 9,483
Corporate general and
administrative expenses 14,093 9,932 3,501
Operating income 81,213 39,360 18,617
Interest expense (82,315) (32,244) (1,444)
Gain on sale of assets 11,135 2,539 -
Other income, net 2,971 5,716 1,092
Income before
income taxes and
extraordinary loss 13,004 15,371 18,265
Income tax expense (9,600) (7,300) (7,300)
Income before
extraordinary loss 3,404 8,071 10,965
Extraordinary loss, net
of income tax benefit (7,456) (2,966) -
Net (loss) income $ (4,052) $ 5,105 $ 10,965
Basic net (loss) income
per common share:
Before extraordinary loss $ .08 $ .32 $ .58
Extraordinary loss (.18) (.12) -
Net (loss) income
per common share $(.10) $ .20 $ .58
Diluted net (loss) income
per common share:
Before extraordinary loss $ .08 $ .30 $ .53
Extraordinary loss (.18) (.11) -
Net (loss) income
per common share $(.10) $ .19 $ .53
Number of common shares used
in Basic calculation 40,460 25,433 18,908
Number of common shares used
in Diluted calculation 42,163 26,442 20,532
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
<CAPTION>
Common Stock Additional Common Unrealized
Shares Stated Paid-In Stock Gain on Retained
Value Capital Warrants Investments Earnings Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31,
1994 19,590 $196 $139,168 $390 - $9,290 $149,044
Purchase and
retirement
of stock (1,515) (15) (21,679) - - - (21,694)
Employee stock
purchases 44 1 474 - - - 475
Exercise of
stock options 28 - 195 - - - 195
Other 10 - 90 (2) - - 88
Net income - - - - - 10,965 10,965
- ---------------------------------------------------------------------------------------------
Balances,
December 31,
1995 18,157 182 118,248 388 - 20,255 139,073
Common stock
offering 11,250 113 301,636 - - - 301,749
Employee stock
purchases 48 - 672 - - - 672
Exercise of
stock options 106 1 650 - - - 651
Conversion of
warrants 1,726 17 14,704 (374) - - 14,347
Purchase of
warrants - - (5,080) (14) - - (5,094)
Issuance of
warrants - - - 26,500 - - 26,500
Unrealized gain
on investments - - - - $2,042 - 2,042
Stock related
compensation - - 1,891 - - - 1,891
Net income - - - - - 5,105 5,105
- ---------------------------------------------------------------------------------------------
Balances,
December 31,
1996 31,287 $313 $432,721 $26,500 $ 2,042 $25,360 $486,936
- ---------------------------------------------------------------------------------------------
(Continued)
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
(Continued)
<CAPTION>
Common Stock Additional Common Unrealized
Shares Stated Paid-In Stock Gain on Retained
Value Capital Warrants Investments Earnings Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31,
1996 31,287 $313 $432,721 $26,500 $ 2,042 $25,360 $486,936
Common stock
offering 8,321 83 246,079 - - - 246,162
Stock issued for
Acquisitions 5,774 58 179,370 - - - 179,428
Employee stock
purchases 87 1 2,137 - - - 2,138
Exercise of
stock options 220 2 3,030 - - - 3,032
Issuance of
warrants - - - 5,000 - - 5,000
Sale of
investments - - - - (2,042) - (2,042)
Other - - (251) - - - (251)
Net loss - - - - - (4,052) (4,052)
- ---------------------------------------------------------------------------------------------
Balances,
December 31,
1997 45,689 $457 $863,086 $31,500 - $21,308 $916,351
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (4,052) $ 5,105 $10,965
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation 17,836 7,661 3,251
Amortization of intangible assets 60,649 15,743 6,232
Extraordinary loss 7,456 2,966 -
Non-cash interest expense 6,618 4,327 -
Provision for bad debts
and other 1,155 1,870 1,374
Deferred income taxes (6,648) (233) (560)
Gain on sale of assets (11,135) (2,539) -
Changes in operating assets and
liabilities, net of effects
of acquisitions and disposals:
Accounts receivable (37,495) (18,626) (2,344)
Prepaid expense and other assets (9,637) (4,076) 1,029
Accounts payable 4,694 10,054 (424)
Accrued expenses and other
liabilities 26,599 2,655 1,102
Net cash provided by
operating activities 56,040 24,907 20,625
(Continued)
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
(Continued)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from investing activities:
Capital expenditures $ (19,980) $ (11,852) $(4,969)
Cash paid for acquisitions (680,206) (826,302) (34,008)
Deposits on broadcast stations (51,410) (23,608) -
Purchase of intangible assets - - (15,536)
Proceeds from sale of assets 93,263 6,595 -
Loans originated and other - (4,097) (9,827)
Net cash used by investing
activities (658,333) (859,264) (64,340)
Cash flows from financing activities:
Issuance of long-term debt 627,700 973,000 45,500
Issuance of common stock 246,161 316,726 758
Repayment of long-term debt (310,200) (471,600) -
Payment of financing costs (13,659) (27,435) -
Stock options exercised 2,272 - -
Issuance of LYONs - 115,172 -
Purchase of common stock - - (21,694)
Other 606 (806) (387)
Net cash provided by
financing activities 552,880 905,057 24,177
Net (decrease) increase in cash
and cash equivalents (49,413) 70,700 (19,538)
Cash and cash equivalents at
beginning of year 78,137 7,437 26,975
Cash and cash equivalents at
end of year $ 28,724 $ 78,137 $ 7,437
Supplemental disclosures of cash
flow information:
Cash paid for:
Interest $ 72,191 $ 5,300 $ 1,400
Income taxes $ 5,383 $ 4,992 $ 6,662
Supplemental schedule of non-cash
investing and financing activities:
Fair value of assets exchanged $ 120,000 $ 170,000 -
Liabilities assumed in acquisitions $ 120,325 $ 296,187 -
The accompanying notes are an integral
part of the consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
Description of Business
As of December 31, 1997 the Company owned and/or operated
159 radio stations and one television station in 39
broadcast areas throughout the United States. The Company
also engages in businesses complementary to its radio and
television stations, including producing and distributing
syndicated programs, traffic reporting services for radio
and television, and research services.
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Jacor Communications, Inc. and its
subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Revenues
Revenues for commercial broadcasting advertisements are
recognized when the commercial is broadcast. Revenues from
syndicated program fees are recognized over the term of the
contracts.
Barter Transactions
Barter transactions are reported at the estimated fair value
of the product or service received. Revenue from barter
transactions (advertising provided in exchange for goods and
services) is recognized as income when advertisements are
broadcast, and merchandise or services received are charged
to expense when received or used. If merchandise or
services are received prior to the broadcast of the
advertising, a liability (deferred barter revenue) is
recorded. If the advertising is broadcast before the
receipt of the goods or services, a receivable is recorded.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows,
the Company considers all highly liquid investments with an
original maturity of three months or less, when purchased,
to be cash equivalents. The effect of barter transactions
has been eliminated.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company
to concentrations of credit risk consist principally of
temporary cash investments and accounts receivable.
Concentrations of credit risk with respect to accounts
receivable are limited due to the large number of customers
comprising the Company's customer base and their dispersion
across many different geographic areas of the country.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, Continued
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation; depreciation is provided on the straight-line
basis over the estimated useful lives of the assets as
follows:
Land improvements 20 Years
Buildings 25 Years
Equipment 3 to 20 Years
Furniture and fixtures 5 to 12 Years
Leasehold improvements Life of lease
Intangible Assets
Intangible assets are stated at cost less accumulated
amortization; amortization is provided principally on the
straight-line basis over the following lives:
Broadcasting licenses 40 Years
Goodwill 40 Years
Contracts and other
intellectual property 3 to 25 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 goodwill and licenses will not be
recoverable, as determined based on the undiscounted cash
flows of the entity over the remaining amortization period,
the carrying value of the goodwill and licenses will be
reduced accordingly.
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 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.
Fair Value of Financial Instruments
The fair value of the Company's publicly traded debt is
based on quoted market prices. It was not practicable to
estimate the fair value of borrowings under the Company's
Credit Facility since there is no liquid market for this
debt.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, Continued
Earnings Per Share
Basic earnings per share equals net earnings divided by the
weighted average number of common shares outstanding.
Diluted earnings per share equals net earnings divided by
the weighted average number of common shares outstanding
after giving effect to other dilutive securities.
Earnings per share calculations have been made in compliance
with Statement on Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"). SFAS 128 became
effective for the fourth quarter of 1997 calculations.
Prior year calculations have been restated to reflect the
adoption of SFAS 128.
Stock Based Compensation Plans
The Company accounts for its employee and director stock
based compensation plans in accordance with APB Opinion No.
25. The Company has elected not to adopt the cost
recognition provisions of Statement of Financial Accounting
Standards No. 123, ("SFAS 123") "Accounting for Stock Based
Compensation". The Company follows only the disclosure
provisions of SFAS 123 as permitted by the statement.
Reclassifications
Certain prior year amounts have been reclassed to conform to
1997 presentation. These changes had no impact on
previously reported results of operations or shareholders'
equity.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS
Completed 1997 Radio Station Acquisitions and Dispositions
During 1997, the Company completed acquisitions of 86 radio
stations in 33 broadcast areas for a purchase price
consisting of (i) $344.4 million in cash, of which $26.1
million was placed in escrow in 1996, (ii) the issuance of
approximately 4.3 million shares of common stock valued at
$126.8 million, and (iii) the issuance of warrants to
acquire 500,000 shares of common stock at $40 per share
valued at $5.0 million. As a result of the acquisitions,
approximately $49.8 million in goodwill was recorded by the
Company, representing acquisition costs in excess of the
fair value of identifiable tangible and intangible assets
acquired.
The Company also completed three separate like-kind
exchanges of broadcast properties, exchanging five stations
and net cash of $11.0 million, of which $3.6 million was
placed in escrow in 1996, for nine stations. The Company
sold one station in San Diego, California for $6.0 million
and one station in Lexington, Kentucky for $3.5 million.
Completed 1997 Broadcasting Services Acquisitions
In June 1997, the Company acquired by merger a company that
produces syndicated network radio programs and services
which it distributes in exchange for commercial broadcast
time that it resold to national advertisers. The total
consideration paid by the Company including payment for
certain Premiere Radio Networks, Inc. ("Premiere") warrants
and stock options, was $189.8 million, consisting of $138.8
million in cash and the issuance of 1,416,886 shares of
common stock. Approximately $104.0 million in goodwill was
recorded by the Company in conjunction with the acquisition.
In April 1997, the Company acquired substantially all of the
assets relating to the broadcast distribution and related
print and electronic media publishing businesses of Radio-
Active Media (formerly EFM Media Management), for $50.0
million in cash. Additionally, in October 1997,the Company
acquired the rights to The Dr. Laura Schlessinger Show from
Synergy Broadcasting, Inc. and the assets of Multiverse
Networks, L.L.C., a network radio sales representation firm
for $71.5 million in cash.
The Company completed the acquisition of two additional
broadcasting service companies for a purchase price of
approximately $29.0 million.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
Completed 1996 Radio Station Acquisitions and Exchanges
In 1996, the Company effected the following transactions:
acquired 36 radio stations and two television stations in 14
broadcast areas; acquired the right to provide programming
to and sell air time for two radio stations in one broadcast
area; exchanged via like-kind exchange one television
station for 6 radio stations in two existing broadcast areas
and one new broadcast area, and; financed the purchase of a
40% interest in a newly formed, limited liability company.
For the above transactions, the Company paid approximately
$974.0 million in cash.
All of the above acquisitions have been accounted for as
purchases. The excess cost over the fair value of net
assets acquired is being amortized over 40 years. The
results of operations of the acquired businesses are
included in the Company's financial statements since the
respective dates of acquisition. Assuming each of the 1997
and 1996 acquisitions had taken place at the beginning of
1996 and 1997, unaudited pro forma consolidated results of
operations would have been as follows:
Pro Forma (Unaudited)
Year Ended December 31,
1997 1996
Net revenue $ 591,093 $ 542,089
Net income (loss) before
extraordinary loss 403 (12,614)
Diluted income (loss) per common share $.01 ($.28)
These unaudited pro forma amounts do not purport to be
indicative of the results that might have occurred if the
foregoing transactions had been consummated on the indicated dates.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
Radio Station Acquisitions Completed Subsequent to December 31, 1997
The Company completed the purchase of eight radio stations
in three existing broadcast areas and one new broadcast area
for $25.5 million in cash, and completed a like-kind
exchange of six radio stations in one broadcast area for
four radio stations in one broadcast area.
Broadcasting Services Acquisitions Completed Subsequent to
December 31, 1997
The Company acquired two radio broadcasting service
companies for $3.1 million in cash, plus additional
contingent consideration of up to $1.6 million payable over
three years.
Pending Acquisitions and Dispositions
In December 1997 the Company entered into a binding
agreement to purchase the assets of Nationwide
Communications, Inc.'s 17 radio stations (the "Nationwide
Transaction") for $620.0 million, of which $30.0 million was
placed in escrow in 1997. The stations are located in
Dallas, Houston, Minneapolis, Phoenix, Baltimore, San Diego,
Cleveland and Columbus. The Company anticipates this
transaction will close in the second quarter of 1998. The
Company has signed a letter of intent to sell two radio
stations in the San Diego broadcast area for $65.2 million
upon the consummation of the Nationwide Transaction.
In January 1998, the Company entered into a binding
agreement to acquire all of the stock of Chancellor
Broadcasting Co., syndicator of Art Bell's national network
radio programs, Talk Radio Network, Inc., syndicator of 17
radio programs, and radio station KOPE-FM in Medford,
Oregon, for approximately $9.0 million.
In February 1998, the Company entered into a binding
agreement with Smith Broadcasting, Inc. to purchase a
construction permit for a new FM radio station in Vancouver,
Washington for approximately $20.7 million in cash, all of
which was paid in escrow in 1998.
The Company has entered into agreements to purchase FCC
licenses and substantially all of the broadcast assets of 14
stations in nine of the Company's existing broadcast areas
and in two new broadcast areas for a total purchase price of
approximately $68.1 million in cash, of which $12.0 million
has already been paid in escrow through December 31, 1997,
and to exchange the assets of one station for another
station in one broadcast area. The Company has also entered
into agreements to sell the FCC licenses and substantially
all of the broadcast assets of two radio stations in one
broadcast area for approximately $0.2 million in cash.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. SUBSEQUENT OFFERINGS
In February 1998, the Company completed offerings of debt
and equity securities, as described below.
The Company completed an offering of 5,073,000 shares of
Common Stock at $50.50 per share net of underwriting
discounts of $2.02 per share (the "Stock Offering"). Net
proceeds to the Company from the Stock Offering were
approximately $245.9 million.
The Company issued $120.0 million in aggregate principal
amount at maturity of 8% Senior Subordinated Notes (the "8%
Notes") due 2010. Net proceeds to the Company were $117.1
million.
The Company issued 4 3/4% Liquid Yield Option Notes due 2018
in the aggregate principal amount at maturity of $426.9
million. Each 1998 LYON had an issue price of $391.06 and a
principal amount at maturity of $1,000. The 1998 LYONs are
convertible, at the option of the holder, at any time on or
prior to maturity, into Common Stock at a conversion rate of
6.245 shares per each 1998 LYON, for an aggregate of
approximately 2.7 million shares of common stock. Net
proceeds from the issuance of the 1998 LYONs were $161.9
million.
A portion of the net proceeds from the above transactions
was used to pay off the Revolving Credit Facility. The
remainder will be used to fund the pending acquisitions, and
are currently held in short-term, highly liquid securities.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and 1996 consist
of the following (in thousands):
1997 1996
Land and land improvements $ 21,128 $ 14,269
Buildings 26,077 20,249
Equipment 162,885 97,491
Furniture and fixtures 19,919 7,524
Leasehold improvements 8,006 5,872
238,015 145,405
Less accumulated depreciation (31,206) (13,917)
$206,809 $131,488
5. INTANGIBLE ASSETS
Intangible assets at December 31, 1997 and 1996 consist of
the following (in thousands):
1997 1996
Broadcasting licenses $1,465,020 $ 987,953
Goodwill 404,684 250,884
Contracts and other
intellectual assets 355,668 86,489
2,225,372 1,325,326
Less accumulated amortization (96,654) (35,154)
$2,128,718 $1,290,172
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. OTHER ASSETS
The Company's other assets at December 31, 1997 and 1996
consist of the following (in thousands):
December 31, December 31,
1997 1996
News Corp Warrants $ - $ 39,800
Acquisition escrows 51,410 30,804
Marketable securities - 13,965
Other 17,354 32,111
$ 68,764 $116,680
In February 1997, the Company sold its investment in the
News Corp Warrants for $44.5 million in cash and recorded a
pretax gain of $4.7 million.
In May 1997, the Company sold its investment in Paxson
Communications Corporation stock for $20.3 million in cash
and recorded a pretax gain of $6.1 million.
<PAGE>
JACOR COMMUNICATIONS,INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT
The Company's debt obligations at December 31, 1997 and 1996
consist of the following (in thousands):
1997 1996
Credit Facility borrowings........ $567,500 $400,000
10 1/8% Senior Subordinated Notes,
due 2006....................... 100,000 100,000
9 3/4% Senior Subordinated Notes,
due 2006....................... 170,000 170,000
8 3/4% Senior Subordinated Notes,
due 2007....................... 150,000 -
$987,500 $670,000
New Credit Facility
In September 1997, the Company, through Jacor Communications
Company ("JCC"), entered into a new $1.15 billion credit
facility (the "Credit Facility") with a syndicate of banks
and other financial institutions. The Credit Facility
replaces the Company's previous credit facility entered into
in June 1996, as amended. The Credit Facility increased the
Company's borrowing capacity by $400 million and consists of
two components: (i) a revolving credit facility of up to
$750 million with a mandatory commitment reduction of $50.0
million on June 30, 2000 continuing semi-annually through
June 2003, and a final maturity date of December 31, 2004;
and (ii) a term loan of up to $400 million with a scheduled
reduction of $35.0 million on December 31, 1999 with
increasing semi-annual reductions thereafter and a final
maturity date of December 31, 2004. At December 31, 1997,
the outstanding balance of the term loan was $400.0 million.
Amounts repaid or prepaid under the Term Loan may not be
reborrowed.
The loans under the Credit Facility are guaranteed by each
of the Company's direct and indirect subsidiaries other than
certain immaterial subsidiaries. JCC's obligations under
the Credit Facility are secured by a first priority lien on
the capital stock of the Company's subsidiaries, an
assignment of all intercompany debt and of certain time
brokerage agreements, and by the guarantee of JCC's parent
company, Jacor Communications Inc. ("Jacor").
The Credit Facility bears interest at a rate that fluctuates
with an applicable margin, with a minimum applicable margin
to a maximum of 1.75%, based on the Company's ratio of total
debt to earnings before interest, taxes, depreciation and
amortization for the four consecutive fiscal quarters then
most recently ended (the "Leverage Ratio"), plus a bank base
rate or a Eurodollar base rate, as applicable. At December
31, 1997, the average interest rate on Credit Facility
borrowings was 6.60%. The Company pays interest on the
unused portion of the Revolving Credit Facility at a rate
ranging from 0.250% to 0.375% per annum, based on the
Company's Leverage Ratio.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
The Credit Facility contains covenants and provisions that
restrict, among other things, the Company's ability to: (i)
incur additional indebtedness; (ii) incur liens on its
property; (iii) make investments and advances; (iv) enter
into guarantees and other contingent obligations; (v) merge
or consolidate with or acquire another person or engage in
other fundamental changes; (vi) engage in certain sales of
assets; (vii) engage in certain transactions with
affiliates; and (viii) make restricted junior payments. The
Credit Facility also requires the satisfaction of certain
financial performance criteria (including a consolidated
interest coverage ratio, a debt-to-operating cash flow ratio
and a consolidated operating cash flow available for fixed
charges ratio) and the repayment of loans under the Credit
Facility with proceeds of certain sales of assets and debt
issuances.
In 1997 and 1996, the Company recognized extraordinary
losses of approximately $7.5 million and $3.0 million,
respectively, net of income tax credit, related to the write
off of debt financing costs due to significant amendments to
the Company's Credit Facility.
10 1/8% Senior Subordinated Notes Due 2006
Interest on the 10 1/8% Senior Subordinated Notes (the "10
1/8% Notes") is payable semi-annually. The 10 1/8% Notes
will be redeemable at the option of the Company, in whole or
in part, at any time on or after June 15, 2001. The
redemption prices commence at 105.063% and are reduced by
1.688% annually until June 15, 2004 when the redemption
price is 100%. At December 31, 1997, the market value of
the 10 1/8% Notes exceeded carrying value by approximately
$8.6 million. At December 31, 1996 the market value of the
10 1/8% Notes exceeded carrying value by approximately $3.0
million.
9 3/4% Senior Subordinated Notes Due 2006
Interest on the 9 3/4% Senior Subordinated Notes (the "9
3/4% Notes") is payable semi-annually. The 9 3/4% Notes
will be redeemable at the option of the Company, in whole or
part, at any time on or after December 15, 2001. The
redemption prices commence at 104.875% and are reduced by
1.625% annually until December 15, 2004 when the redemption
price is 100%. At December 31, 1997, the market value of
the 9 3/4% Notes exceeded carrying value by approximately
$12.1 million. At December 31, 1996 the market value of the
9 3/4% Notes exceeded carrying value by approximately $3.4
million.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
8 3/4% Senior Subordinated Notes Due 2007
In June 1997, the Company completed an offering of $150
million of its 8 3/4% Senior Subordinated Notes (the "8 3/4%
Notes"). The 8 3/4% Notes will mature on June 15, 2007.
Interest on the 8 3/4% Notes is payable semi-annually on
June 15 and December 15 of each year, commencing on December
15, 1997. The 8 3/4% Notes will be redeemable at the option
of the Company, in whole or in part, at anytime on or after
June 15, 2002. The redemption prices commence at 104.375%
and are reduced by 1.458% annually until June 15, 2005 when
the redemption price is 100%. At December 31, 1997 the
market value of the 8 3/4% Notes exceeded carrying value by
approximately $3.8 million.
The 10 1/8% Notes, 9 3/4% Notes and 8 3/4% Notes (the
"Notes") are obligations of JCC, and are jointly and
severally, fully and unconditionally guaranteed on a senior
subordinated basis by Jacor and by all of the Company's
subsidiaries (the "Subsidiary Guarantors"). JCC and each of
the Subsidiary Guarantors are wholly owned direct or
indirect subsidiaries of Jacor. Separate financial
statements of JCC and each of the Subsidiary Guarantors are
not presented because Jacor believes that such information
would not be material to investors. The direct and indirect
non-guarantor subsidiaries of Jacor are inconsequential,
both individually and in the aggregate. Additionally, there
are no current restrictions on the ability of the Subsidiary
Guarantors to make distributions to JCC, except to the
extent provided by law generally. JCC's credit facility and
the terms of the indentures governing the Notes do restrict
the ability of JCC and of the Subsidiary Guarantors to make
distributions to the Registrant.
Summarized financial information with respect to Jacor and
with respect to the Subsidiary Guarantors on a combined
basis as of December 31, 1997, 1996 and 1995 and for each of
the three years in the period ended December 31, 1997; and
with respect to JCC as of December 31, 1997 and 1996 and for
the year ended December 31, 1997 and for the period from
June 6, 1996 to December 31, 1996 is as follows:
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
<CAPTION>
Jacor _______JCC_______
1997 1996 1995 1997 1996
<S> <C> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue - - - - -
Equity in earnings
of subsidiaries $ (1,958) $10,237 $ 10,965 $ 3,191 $11,864
Operating (loss)
income (15,387) 305 10,965 3,191 11,864
(Loss) income before
extraordinary items (4,052) 5,105 10,965 5,498 13,203
Net (loss) income (4,052) 5,105 10,965 (1,958) 10,237
Balance Sheet Data
(in thousands):
Current assets $ 1,316 $ 1,538 $ 41,203 $ 75,626
Non-current assets 1,165,970 722,918 2,122,648 1,615,504
Current liabilities 28,853 16,253 13,184 9,975
Non-current
liabilities 222,082 221,267 1,478,765 1,056,348
Shareholders' equity 916,351 486,936 671,902 273,384
</TABLE>
<TABLE>
Combined
Subsidiary Guarantors
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue $ 530,574 $223,761 $118,891
Equity in earnings
of subsidiaries - - -
Operating income 95,306 49,292 18,617
Income before
extraordinary items 3,191 11,864 18,617
Net income 3,191 11,864 10,965
Balance Sheet Data
(in thousands):
Current assets $ 155,068 $ 89,438
Non-current assets 2,446,810 1,615,504
Current liabilities 76,212 29,304
Non-current
liabilities 1,609,315 1,188,702
Shareholders' equity 916,351 486,936
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. LIQUID YIELD OPTION NOTES
In June 1996, the Company issued 5 1/2% Liquid Yield Option
Notes ("LYONs") due 2011 in the aggregate principal amount
at maturity of $259.9 million. Each LYON had an issue price
of $443.14 and a principal amount at maturity of $1,000. At
December 31, 1997 the accreted value of the LYONs was $125.3
million which included $6.6 million of interest accreted
during 1997. At December 31, 1996 the accreted value of the
LYONs was $118.7 million which included $3.5 million of
interest accreted during 1996.
Each LYON is convertible, at the option of the holder, at
any time on or prior to maturity, into Common Stock at a
conversion rate of 13.412 shares per LYON.
The LYONs are not redeemable by the Company prior to June
12, 2001. Thereafter, the LYONs are redeemable for cash at
any time at the option of the Company, in whole or in part,
at redemption prices equal to the issue price plus accrued
original issue discount to the date of redemption.
The LYONs will be purchased by the Company, at the option of
the holder, on June 12, 2001 and June 12, 2006, for a
purchase price of $581.25 and $762.39 (representing issue
price plus accrued original issue discount to each date),
respectively, representing a 5 1/2% yield per annum to the
holder on such date. The Company, at its option, may elect
to pay the purchase price on any such purchase date in cash
or common stock, or any combination thereof.
At December 31, 1997, the market value of the LYONs exceeded
the carrying value by approximately $64.4 million. At
December 31, 1996, the market value of the LYONs was less
than the carrying value by approximately $3.0 million.
9. CAPITAL STOCK
Warrants
In connection with a 1997 acquisition, the Company issued
warrants to acquire 500,000 shares of common stock with an
exercise price of $40 per share. The warrants expire in
February 2002.
In connection with a 1996 acquisition, the Company issued
warrants to acquire 4,400,000 shares of common stock with an
exercise price of $28 per share. The warrants expire in
September 2001.
In connection with a 1996 Stock Offering, the Company
determined that it would convert the 1,983,605 outstanding
1993 Warrants into the right to receive the Fair Market
Value (as defined) calculated to be $19.70 per Warrant.
Prior to the conversion, the Company issued 1,726,004 shares
of Common Stock with proceeds aggregating approximately
$14.3 million upon exercise of such warrants by the holders.
The Company used approximately $5.1 million of these
proceeds to fund the conversion of the remaining 1993
Warrants presented for redemption.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS
1993 Stock Option Plan
Under the Company's 1993 stock option plan (the "1993
Plan"), options to acquire up to 2,769,218 shares of common
stock can be granted to directors, officers and key
employees at no less than the fair market value of the
underlying stock on the date of grant. The 1993 Plan
permits the granting of non-qualified stock options
(NQSOs)as well as incentive stock options(ISOs). Between
25% and 30% of the options vest on the date of grant and
between 20% and 30% vest on each of the next three
anniversaries of the grant date. Options expire 10 years
after grant and the plan will terminate no later than
February 7, 2003. At December 31, 1997, 618 shares were
available for grant.
1997 Long-Term Incentive Stock Plan
In April 1997, the Board of Directors of the Company adopted
the 1997 Long-Term Incentive Stock Plan ("the Long-Term
Plan"). The Long-Term Plan authorizes the issuance of up to
1,800,000 shares of Common Stock pursuant to the grant or
exercise of stock options, including NQSOs and ISOs,
restricted stock, stock appreciation rights (SARs), and
certain other instruments to executive officers and other
key employees, subject to board approval and certain other
restrictions. Stock options may not be granted at less than
the fair market value of the underlying stock on the date of
grant. Twenty-five percent of the options vest on the date
of the grant and 25% vest on each of the next three
anniversaries of the grant date. Options expire 10 years
after grant. At December 31, 1997, 1,166,312 shares were
available for grant.
1997 Non-Employee Directors Stock Plan and Stock Purchase Plan
In April 1997, the Board of Directors of the Company adopted
the 1997 Non-Employee Directors Stock Plan (the "Directors
Stock Plan"). The Directors Stock Plan authorizes the
issuance of up to 350,000 shares of
Jacor Common Stock pursuant to the grant or exercise of
NQSOs, SARs, restricted stock and other performance
instruments. Stock options may not be granted at less than
the fair market value of the underlying stock on the date of
grant. Twenty-five percent of the options vest on the date
of the grant and 25% vest on each of the next three
anniversaries of the grant date. Options expire 10 years
after grant. At December 31, 1997, 310,000 shares were
available for grant. Also, the Company adopted a stock
purchase plan for its non-employee directors authorizing the
issuance of up to 150,000 shares of Jacor common stock.
Stock may be purchased at a 15% discount from fair value and
purchases are limited to $100,000 per director in a calendar
year.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
Information pertaining to the plans for the years ended
December 31, 1995, 1996 and 1997 is as follows:
Number of Weighted Average
Shares Exercise Price
1995:
Outstanding at beginning of year.. 1,351,310 $ 6.16
Granted........................... 245,000 $14.61
Exercised......................... (27,790) $ 5.81
Outstanding at end of year........ 1,568,520 $ 7.52
Exercisable at end of year........ 1,093,340 $ 6.57
Available for grant at end of year 1,092,618
1996:
Outstanding at beginning of year.. 1,568,520 $ 7.52
Granted........................... 594,500 $23.63
Exercised......................... (106,410) $ 6.10
Outstanding at end of year........ 2,056,610 $12.26
Exercisable at end of year........ 1,507,000 $ 8.68
Available for grant at end of year 523,118
1997:
Outstanding at beginning of year.. 2,056,610 $12.26
Granted........................... 1,196,188 $24.92
Exercised......................... (212,679) $11.61
Surrendered....................... (15,490) $26.71
Outstanding at end of year........ 3,024,629 $17.20
Exercisable at end of year........ 2,228,095 $13.72
Available for grant at end of year 1,476,930
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
The fair value of each stock option granted is estimated on
the date of grant using the Black-Sholes option-pricing
model with the following assumptions for grants in 1997,
1996 and 1995, respectively: risk-free interest rates are
different for each grant and range from 5.24% to 6.51%; the
expected lives of options are 5 years; and volatility of
approximately 35% for all grants. A summary of the fair
value of options granted in 1997, 1996 and 1995 follows:
1997 1996 1995
Weighted-average fair value of
options granted at-the-money $12.26 $ 9.42 $ 5.70
Weighted-average fair value of
options granted at a premium - $ 8.46 $ 5.33
Weighted-average fair value of
options granted at a discount $28.15 - -
Weighted-average fair value of all
options granted during the year $16.29 $ 9.07 $ 5.44
The options granted at a discount in 1997 were related to
approximately 304,000 options outstanding to purchase
Premiere common stock, which were converted to equivalent
Jacor NQSOs at the time of the merger.
The following table summarizes information about stock
options outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Weighted Weighted Weighted
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/97 Life Price at 12/31/97 Price
<S> <C> <C> <C> <C> <C>
$5.74 to $9.65 1,239,865 5.44 $ 6.29 1,239,865 $ 6.29
$12.70 to $19.96 356,641 7.91 $15.94 299,341 $15.89
$21.25 to $30.66 1,379,123 9.02 $26.53 676,638 $25.84
$37.25 to $45.94 49,000 9.56 $39.57 12,250 $39.80
$ 5.74 to $45.94 3,024,629 7.43 $17.20 2,228,095 $13.72
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
Employee Stock Purchase Plan
Under the 1995 Employee Stock Purchase Plan, the Company is
authorized to issue up to 700,000 shares of common stock to its
full-time and part-time employees, all of whom are eligible to
participate. Under the terms of the Plan, employees can choose
each year to have up to 10 percent of their annual base earnings
withheld to purchase the Company's common stock. The purchase
price of the stock is 85% of the lower of its beginning-of-period
or end-of-period market price. Under the Plan, the Company sold
74,767 shares for approximately $23.27 per share and 12,376 shares
for approximately $32.19 per share in 1997, 47,232 shares for
$14.24 per share in 1996 and 43,785 shares for $10.84 per share in
1995. The fair market value of the right to acquire common stock
under the Stock Purchase Plan was $8.40 per share granted on
January 1 and $9.80 per share granted on July 1 in 1997, $4.81 per
share in 1996 and $3.71 per share in 1995.
Had the compensation cost for the Company's stock-based
compensation plans been determined consistent with SFAS 123, the
Company's net income (loss) and net income (loss) per common share
for 1997, 1996 and 1995 would approximate amounts below (in
thousands, except per share amounts):
1997 1996 1995
Net (loss)income:
As reported $ (4,052) $ 5,105 $10,965
Pro forma $(10,691) $ 3,826 $10,398
Diluted net (loss)income per
common share:
As reported $ (0.10) $ 0.19 $ 0.52
Pro forma $ (0.25) $ 0.14 $ 0.50
In 1996, the Company recorded compensation expense of
approximately $1.9 million related to stock units issued to
officers and directors and stock options issued to non-employees
of the Company. The expense related to the stock units was equal
to the fair value of the stock for which the units can be
converted into on the date of grant. The fair value of the
options was determined using the Black-Sholes option pricing model
and the following assumptions: risk-free interest rate of 5.79%;
expected life of 5 years; and volatility of approximately 35%.
The options were 100% vested on the date of grant.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCOME TAXES
Income tax expense for the years ended December 31, 1997, 1996 and
1995 is summarized as follows (in thousands):
Federal State Total
1997:
Current $13,200 $ 3,000 $16,200
Deferred (5,400) (1,200) (6,600)
7,800 1,800 9,600
Tax benefit from
extraordinary loss (4,000) (900) (4,900)
$ 3,800 $ 900 $ 4,700
1996:
Current $ 6,185 $1,348 $7,533
Deferred (185) (48) (233)
6,000 1,300 7,300
Tax benefit from
extraordinary loss (1,631) (346) (1,977)
$ 4,369 $ 954 $5,323
1995:
Current $ 6,600 $1,260 $7,860
Deferred (500) (60) (560)
$ 6,100 $1,200 $7,300
The provisions for income tax differ from the amount computed by
applying the statutory federal income tax rate due to the
following:
1997 1996 1995
Federal income tax at
the statutory rate $ 5,173 $ 5,627 $ 6,393
Amortization not deductible 3,449 1,262 606
State income taxes, net of any
current federal income tax
benefit 589 620 780
Other 389 (209) (479)
$ 9,600 $ 7,300 $ 7,300
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCOME TAXES, continued
The tax effects of the significant temporary differences which
comprise the deferred tax liability at December 31, 1997, 1996 and
1995 are as follows:
1997 1996 1995
Deferred tax assets:
Accrued expenses and
reserves $ (7,479) $(11,104) $(1,992)
Net operating loss
carryforwards (11,461) (12,000) -
Other (4,047) (2,098) (142)
(22,987) (25,202) (2,134)
Deferred tax liabilities:
Property and equipment 35,614 32,427 12,208
Intangibles 326,240 257,653 (1,457)
361,854 290,080 10,751
Net liability $338,867 $264,878 $ 8,617
At December 31, 1997 the Company had net operating loss
carryforwards of $28,653. The loss carryforwards expire in the
years 2008 through 2011 if not used.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES
Lease and Contractual Obligations
The Company and its subsidiaries lease certain land and facilities
used in their operations. The Company also has various employment
agreements with broadcast personalities that provide base
compensation. Future minimum payments under leases and employment
agreements as of December 31, 1997 are payable as follows (in
thousands):
1998 $18,122
1999 15,674
2000 11,328
2001 7,538
2002 4,799
Thereafter 9,980
$67,441
Rental expense was approximately $8,010, $3,996 and $3,471 for the
years ended December 31, 1997, 1996 and 1995, respectively.
Legal Proceedings
From time to time, the Company becomes involved in various claims
and lawsuits that are incidental to its business. In the opinion
of the Company's management, there are no material legal
proceedings pending against the Company.
13. RETIREMENT PLAN
The Company maintains a defined contribution retirement plan
covering substantially all employees who have met eligibility
requirements. The Company matches participating employee
contributions at a rate of 50% of the employee's first 4%
contributed, up to $160,000 of annual compensation. Total expense
related to this plan was $1,977,052, $756,618 and $334,253 in
1997, 1996 and 1995, respectively.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. EARNINGS PER SHARE
The following is a reconciliation of the numerators and
denominators of the basic and diluted Earnings Per Share ("EPS")
computations for income before extraordinary items for the years
ended December 31, as follows (in thousands except per share
amounts):
1997 1996 1995
Net income before
extraordinary item $ 3,404 $ 8,071 $10,965
Weighted average
shares - basic 40,460 25,433 18,908
Effect of dilutive
securities:
Stock options 996 658 413
Warrants 357 - 911
Other 350 351 300
Weighted average
shares - diluted 42,163 26,442 20,532
Basic EPS $ .08 $ .32 $ .58
Diluted EPS $ .08 $ .30 $ .53
The Company's LYONs can be converted into approximately 3.5
million shares of Jacor common stock at the option of the holder.
Assuming conversion of the LYONs as of January 1, 1997 and 1996
would result in an increase in per share amounts before
extraordinary items, therefore, the LYONs are not included in the
computation of diluted EPS.
In February 1998, the Company completed an offering of 5.1 million
shares of common stock and Liquid Yield Option Notes which can be
converted into approximately 2.7 million shares of common stock at
the option of the holder.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income". SFAS 130 requires the reporting
of comprehensive income in financial statements by all entities
that provide a full set of financial statements. The term
"comprehensive income" describes the total of all components of
comprehensive income including net income. The statement only
deals with reporting and display issues. It does not consider
recognition or measurement issues. The Company will implement
SFAS 130 in the first quarter of 1998.
Also in June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 ("SFAS 131")
"Disclosures about Segments of an Enterprise and Related
Information". SFAS 131 provides accounting guidance for reporting
information about operating segments in annual financial
statements and requires such enterprises to report selected
information about operating segments in interim financial reports.
The statement uses a "management approach" to identify operating
segments and provides specific criteria for operating segments.
SFAS 131 is effective for the year ended December 31, 1998 and
will be required for interim periods in 1999. The Company is
currently evaluating the impact SFAS 131 will have on its
financial statements, if any.
<PAGE>
<TABLE>
Supplementary Data
Quarterly Financial Data
for the years ended December 31, 1997 and 1996 (Unaudited)
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
1997
Net revenue $ 88,828 $ 135,553 $ 144,560 $ 161,633 $ 530,574
Operating income 5,392 24,179 25,520 26,122 81,213
Net (loss) income before
extraordinary loss (2,584) 4,145 483 1,360 3,404
Net (loss) income (8,140) 4,145 (1,417) 1,360 (4,052)
Basic net (loss)
income per
common share: (1)(2)
Before extraordinary
loss (0.08) 0.ll 0.01 0.03 0.08
Extraordinary loss (0.17) 0.00 (0.04) 0.00 (0.18)
Basic net (loss)
income per
common share (0.25) 0.11 (0.03) 0.03 (0.10)
Diluted net (loss) income
per common share: (1)(2)
Before extraordinary
loss (0.08) 0.10 0.01 0.03 0.08
Extraordinary loss (0.17) 0.00 (0.04) 0.00 (0.18)
Diluted net (loss)
income per
common share (0.25) 0.10 (0.03) 0.03 (0.10)
</TABLE>
<PAGE>
<TABLE>
Quarterly Financial Data
for the years ended December 31, 1997 and 1996 (Unaudited), Continued
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
1996
Net revenue $ 30,074 $ 43,120 $ 54,326 $ 96,241 $223,761
Operating income 2,544 9,372 9,229 18,215 39,360
Net income before
extraordinary loss 1,842 3,761 2,100 368 8,071
Net income 891 3,761 85 368 5,105
Basic net income per
common share: (1)(2)
Before extraordinary
loss 0.10 0.18 0.07 0.01 0.32
Extraordinary loss (0.05) 0.00 (0.06) 0.00 (0.12)
Basic net income per
common share 0.05 0.18 0.01 0.01 0.20
Diluted net income per
common share: (1)(2)
Before extraordinary
loss 0.09 0.17 0.06 0.01 0.30
Extraordinary loss (0.05) 0.00 (0.06) 0.00 (0.11)
Diluted net income
per common share 0.04 0.17 0.00 0.01 0.19
<FN>
NOTES:
(1) Earnings per share calculations have been made in accordance with
Statement on Financial Accounting Standards No. 128 "Earnings
Per Share",("SFAS 128"). SFAS 128 became effective for fourth
quarter 1997 calculations. Prior quarter and prior year
calculations have been restated to reflect the adoption of SFAS 128.
(2) The sum of the quarterly net income (loss) per share amounts does
not equal the annual amount reported as per share amounts are
computed independently for each quarter.
</TABLE>
