FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12404
JACOR COMMUNICATIONS, INC.
A Delaware Corporation Employer
Identification
No. 31-0978313
50 East RiverCenter Blvd.
12TH Floor
Covington, KY 41011
Telephone (606) 655-2267
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months
(or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past ninety days.
Yes X No
At April 29, 1999, 51,646,400 shares of common stock were
outstanding.
<PAGE>
JACOR COMMUNICATIONS, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of March 31, 1999 and December 31,
1998 3
Condensed Consolidated Statements of
Operations and Comprehensive Income
for the three months ended March 31, 1999
and 1998 4
Condensed Consolidated Statements of
Cash Flows for the three months ended
March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 14
PART II. Other Information
Item 6. - Exhibits and Reports on Form 8-K 22
Signatures 23
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,726 $ 20,051
Accounts receivable, less allowance for
doubtful accounts of $8,407 in 1999
and $8,303 in 1998 173,538 201,466
Prepaid expenses and other 39,719 32,796
Total current assets 227,983 254,313
Property and equipment, net 293,753 281,049
Intangible assets, net 2,818,653 2,749,348
Other assets 120,725 135,998
Total assets $ 3,461,114 $3,420,708
LIABILITIES
Current liabilities:
Current portion long-term debt $ 35,000 $ 35,000
Accounts payable, accrued expenses
and other current liabilities 153,466 128,400
Total current liabilities 188,466 163,400
Long-term debt 1,279,584 1,289,574
Liquid Yield Option Notes 308,169 306,202
Deferred tax liability 345,478 345,478
Other liabilities 114,880 112,988
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:
51,340,273 in 1999 and 51,184,217 in 1998 513 512
Additional paid-in capital 1,129,326 1,124,057
Common stock warrants 30,599 30,819
Accumulated other comprehensive income - 25,428
Retained earnings 64,099 22,250
Total shareholders' equity 1,224,537 1,203,066
Total liabilities and
shareholders' equity $ 3,461,114 $3,420,708
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the three months ended March 31, 1999 and 1998
(in thousands, except per share data)
(UNAUDITED)
<CAPTION>
1999 1998
<S> <C> <C>
Broadcast revenue $219,714 $159,192
Less agency commissions 25,051 17,164
Net revenue 194,663 142,028
Broadcast operating expenses 139,756 107,353
Depreciation and amortization 35,023 27,450
Corporate general and
administrative expenses 5,629 3,644
Operating income 14,255 3,581
Interest expense (29,909) (23,958)
Gain on sale of assets 83,476 -
Other (expense) income, net (173) 2,479
Income (loss) before income taxes 67,649 (17,898)
Income tax (expense) benefit (25,800) 11,000
Net income (loss) 41,849 (6,898)
Other comprehensive income
(loss) before tax:
Reclassification adjustment for
gains included in net income,
net of taxes (25,428) -
Comprehensive income (loss) $ 16,421 $(6,898)
Basic net income (loss)
per common share $ .82 $(.14)
Diluted net income (loss)
per common share $ .70 $(.14)
Number of common shares used
in Basic calculation 51,303 48,419
Number of common shares used
in Diluted calculation 62,261 48,419
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1999 and 1998
(in thousands)
(UNAUDITED)
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 46,022 $19,391
Cash flows from investing activities:
Capital expenditures (7,713) (4,795)
Cash paid for acquisitions (114,628) (34,485)
Deposits on broadcast stations (7,656) (23,783)
Proceeds from sale of investments 85,502 -
Net cash used by investing activities (44,495) (63,063)
Cash flows from financing activities:
Issuance of long-term debt 105,000 149,539
Common stock proceeds, net of issuance costs 3,148 244,939
Issuance of Liquid Yield Option Notes - 166,950
Repayment of long-term debt (115,000) (197,500)
Payment of finance costs - (7,403)
Other - 1,862
Net cash (used) provided by financing
activities (6,852) 358,387
Net (decrease) increase in cash and
cash equivalents (5,325) 314,715
Cash and cash equivalents at
beginning of period 20,051 28,724
Cash and cash equivalents at end of period $ 14,726 $ 343,439
Supplemental schedule of non-cash investing
and financing activities:
Fair value of assets exchanged, net of cash - $ 70,000
Liabilities assumed in acquisitions - 2,687
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The December 31, 1998 condensed consolidated balance sheet data
was derived from audited financial statements, but does not
include all disclosures required by generally accepted
accounting principles. The financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, the Company believes that the disclosures are
adequate to make the information presented not misleading and
reflect all adjustments (consisting only of normal recurring
adjustments) which are necessary for a fair presentation of
results of operations for such periods. Results for interim
periods may not be indicative of results for the full year. It
is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated
financial statements for the year ended December 31, 1998 and
the notes thereto.
2. CLEAR CHANNEL MERGER
On October 8, 1998 the Company entered into a definitive merger
agreement with Clear Channel Communications, Inc. ("Clear
Channel") for a tax-free, stock for stock transaction (the
"Merger" or the "Clear Channel Merger").
The Company and Clear Channel expect to consummate the Merger
at the close of business May 4, 1999 or shortly thereafter.
Pursuant to terms of the agreement, each share of Jacor common
stock will be exchanged for 1.1573151 shares of Clear Channel
common stock assuming a close on May 4, 1999.
Upon consummation of the Merger, a change in control event will
have occurred with respect to covenants in the Company's credit
facility, liquid yield option notes and each outstanding issue
of the senior subordinated notes. Such change in control would
give the credit facility lenders the right to require repayment
of amounts borrowed under the facility, and require the Company
to offer repayment of the senior subordinated notes at 101% of
the principal amount and the liquid yield option notes at their
issue price plus accrued original issue discount at such date.
As a result of the Merger, all options and stock appreciation
rights for Jacor common stock not vested at the effective time
of the Merger become fully vested and exercisable one day
before the effective time of the Merger. Clear Channel will
assume all of these options and stock appreciation rights on
the same terms and conditions as were applicable prior to the
effective time of the Merger. The holders may exercise such
options and stock appreciation rights for or with respect to
shares of Clear Channel common stock at an exercise price
adjusted to reflect the exchange ratio of the Merger.
In August 1998, the Company entered into an advisory agreement
with Equity Group Investments, Inc. ("EGI"), an affiliate of
the Company's largest stockholder, the Zell/Chilmark Fund L.P.,
whereby the Company agreed to pay EGI a fee equal to .75% of
the equity value of the Company, as defined in the advisory
agreement, on any change in control event.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS
Completed Radio Station Acquisitions
January Transactions
The Company acquired KEZY-FM and KORG-AM in Anaheim, California
from ML Media Partners for $30.1 million in cash, of which $3.0
million was placed in escrow in 1998.
The Company acquired KBKB-AM and KBKB-FM in Ft. Madison, Iowa
from Talley Broadcasting for approximately $0.9 million in
cash.
The Company acquired KBET-AM in Los Angeles, California from
Saddleback Broadcasting for $3.0 million in cash, of which $0.3
million was placed in escrow in 1998.
The Company acquired the stock of WTTF, Inc., owner of WTTF-AM
and WTTF-FM in Tiffin, Ohio for $2.4 million in cash, of which
approximately $0.1 million was placed in escrow in 1998.
The Company acquired KZSF-FM in San Francisco, California from
KZSF Broadcasting for $16.5 million in cash, of which $0.8
million was placed in escrow in 1998.
February Transactions
The Company acquired KFYR-AM and KYYY-FM in Bismarck, North
Dakota from Meyers Broadcasting for $4.8 million in cash, of
which approximately $0.5 million was placed in escrow in 1998.
The Company acquired WIKX-FM, WCCF-AM, and WCVU-FM in Punta
Gorda, Florida from Intermart Broadcasting for approximately
$7.8 million in cash, of which $0.4 million was placed in
escrow in 1998.
The Company acquired KVKI-FM, KRUF-FM, KITT-FM, KEEL-AM and
KWKH-AM in Shreveport, Louisiana from Progressive Broadcasting
for $24.0 million in cash, of which $2.3 million was placed in
escrow in 1998.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
March Transactions
The Company acquired WDFM-FM and low-powered television station
WDFM in Defiance, Ohio from Lankenau Media Network for $4.0
million in cash.
The Company acquired WKST-AM and WKST-FM in New Castle,
Pennsylvania from Great Scott Broadcasting for $2.5 million in
cash.
The Company acquired WKBN-AM and WKBN-FM in Youngstown, Ohio
from WKBN Broadcasting for $11.0 million in cash, of which
approximately $2.6 million was placed in escrow in 1997.
The Company acquired KLLP-FM (formerly KRSS-FM) in Pocatello,
Idaho from CSN International for approximately $0.8 million in
cash, of which approximately $0.1 million was placed in escrow
in 1998.
The Company acquired KCKC-AM in San Bernadino, California from
All Pro Broadcasting for $3.0 million in cash, of which
approximately $0.2 million was placed in escrow in 1998.
The Company acquired WBEX-AM in Chillicothe, Ohio from Secret
Communications for $0.1 million in cash.
Pro Forma Results of Operations
The Company's 1999 completed acquisitions both individually and
in the aggregate are immaterial to the Company's results of
operations. Assuming the Company's significant acquisitions in
1998 were completed as of January 1, 1998, unaudited pro forma
consolidated results of operations would have been as follows
(in thousands except per share amounts):
Pro forma (Unaudited)
Three Months Ended
March 31,
1998
Net revenue $ 162,453
Loss before extraordinary items $ (7,375)
Diluted loss per common share
before extraordinary items $ (0.14)
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.
Radio Station Acquisitions and Dispositions Completed
Subsequent to March 31, 1999
The Company completed the acquisitions of four radio stations
in two new broadcast areas and one existing broadcast area for
$4.4 million in cash, of which approximately $0.2 million was
placed in escrow in 1998.
The Company completed the disposition of one radio station for
$5.0 million in cash.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
Pending Radio Station Acquisitions and Dispositions
The Company has entered into agreements to purchase the FCC
licenses and substantially all of the broadcast assets of 15
radio stations in six of the Company's existing broadcast areas
and three new broadcast areas for approximately $166.6 million
in cash, of which approximately $9.4 million has been placed in
escrow. The Company has also entered into agreements to
exchange the FCC licenses and substantially all of the
broadcast assets of six radio stations in two broadcast areas,
valued at approximately $103.0 million.
4. SUBSIDIARY GUARANTORS
The Company's 10 1/8% Notes, 9 3/4% Notes, 8 3/4% Notes, and 8%
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 is a wholly-
owned subsidiary of Jacor and the Subsidiary Guarantors are
wholly-owned subsidiaries of JCC. 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, JCC and
with respect to the Subsidiary Guarantors on a combined basis
as of March 31, 1999 and for the three months ended March 31,
1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Jacor ____ JCC__ _____
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue - - - -
Equity in earnings
of subsidiaries $ (5,951) $ (5,484) $ (5,696) $ (6,463)
Operating loss (12,127) (9,398) (5,696) (6,463)
Income (loss) before
extraordinary items 41,849 (6,898) (5,951) (5,484)
Net income (loss) 41,849 (6,898) (5,951) (5,484)
Balance Sheet Data
(in thousands):
Current assets $ 4,011 $ 21,243
Non-current assets 1,670,913 2,969,982
Current liabilities 43,071 19,980
Non-current
liabilities 407,317 2,304,017
Shareholders' equity 1,224,536 667,228
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSIDIARY GUARANTORS, Continued
<TABLE>
<CAPTION>
Jacor ___ ___ JCC__ _____
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Statement of Cash
Flow Data (in thousands):
Operating activities $ (5,900) $ (3,644) $ 330 $ 2,670
Investing activities 84,653 (1,274) (122,284) (58,268)
Financing activities (78,753) 167,076 116,629 200,057
Net change in cash and
cash equivalents - 162,158 (5,325) 144,459
Cash and cash equivalents
at beginning of period - (613) 20,051 29,337
Cash and cash equivalents
at end of period - 161,545 14,726 173,796
</TABLE>
Combined
Subsidiary Guarantors
March 31, March 31,
1999 1998
Operating Statement
Data (in thousands):
Net revenue $ 194,663 $ 142,664
Equity in earnings
of subsidiaries - -
Operating income 20,431 7,495
Loss before
extraordinary items (5,696) (6,463)
Net loss (5,696) (6,463)
Balance Sheet Data
(in thousands):
Current assets $ 202,729
Non-current assets 3,258,385
Current liabilities 90,416
Non-current
liabilities 2,146,162
Shareholders' equity 1,224,536
Statement of Cash Flow
Data (in thousands):
Operating activities $ 51,592 $ 20,365
Investing activities (6,864) (3,521)
Financing activities (44,728) (8,746)
Net change in cash and
cash equivalents - 8,098
Cash and cash equivalents
at beginning of period - -
Cash and cash equivalents
at end of period - 8,098
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. 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
three months ended March 31, 1999 and 1998 (in thousands
except per share amounts):
Three Months Ended
1999 1998
Net income (loss) for basic EPS $41,849 $ (6,898)
LYONs interest expense, net of tax 1,906 -
Net income (loss) for diluted EPS $43,755 $ (6,898)
Weighted average
shares - basic 51,303 48,419
Effect of dilutive securities:
Stock options 1,661 -
Warrants 2,817 -
LYONs 6,097 -
Other 383 -
Weighted average
shares - diluted 62,261 48,419
Net income (loss) per common share:
Basic $ 0.82 $ (0.14)
Diluted $ 0.70 $ (0.14)
The Company's 1996 Liquid Yield Option Notes and 1998 Liquid
Yield Option Notes (collectively, the "LYONs") can be
converted into approximately 6.1 million shares of common
stock at the option of the holder. Assuming conversion of
the LYONs for the three months ended March 31, 1998 would
result in a decrease in the diluted net loss per share
amount, therefore the LYONs are not included in the
computation of diluted EPS.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION
The Company operates in a single reportable segment, radio,
which derives its revenue from the sale of commercial
broadcast inventory. The radio segment includes all of the
Company's radio stations owned or operated and Premiere, a
radio syndication business. The Company also aggregates
into the category "other", one television station and
several broadcast related businesses that provide market
research, traffic reporting and satellite connectivity.
Intersegment sales consist primarily of license fees for
syndicated programming and broadcast services provided to
the Company's radio stations. Intersegment revenues are
recorded at market value.
No single customer provides more than 10% of the Company's
revenues, and the Company derives less than 10% of its
revenues from markets outside of the U.S.
"Broadcast cash flow" means operating income before
depreciation and amortization and corporate general and
administrative expenses. The Company's management believes
that broadcast cash flow is helpful in understanding cash
flow generated from its broadcasting in comparing operating
performance of the Company's broadcast entities to other
broadcast companies. Broadcast cash flow is also a key
factor in the Company's assessment of performance.
Broadcast cash flow should not be considered an alternative
to net income or operating income as an indicator of the
Company's overall performance.
Financial information for the Company's business segment is
as follows (in thousands):
<TABLE>
<CAPTION>
Quarter ended March 31, 1999 Radio Other Corporate Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 182,801 $ 14,290 - $ (2,428) $ 194,663
Broadcast operating expenses 129,731 12,648 $ (250) (2,373) 139,756
Broadcast cash flow 53,070 1,642 250 (55) 54,907
Corporate expenses - - 5,629 - 5,629
Depreciation 6,346 915 183 - 7,444
Amortization 26,076 1,164 342 (3) 27,579
Operating income (loss) 20,648 (437) (5,904) (52) 14,255
Capital expenditures 6,624 240 849 - 7,713
Radio station and other
acquisitions 122,284 - - - 122,284
Total assets 3,050,576 257,504 177,485 (24,451) 3,461,114
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION, Continued
<TABLE>
<CAPTION>
Quarter ended March 31, 1998 Radio Other Corporate Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 127,746 $ 15,335 - $ (1,053) $ 142,028
Broadcast operating expenses 96,417 11,989 - (1,053) 107,353
Broadcast cash flow 31,329 3,346 - - 34,675
Corporate expenses - - $ 3,644 - 3,644
Depreciation 4,610 838 288 - 5,736
Amortization 20,394 991 329 - 21,714
Operating income (loss) 6,325 1,517 (4,261) - 3,581
Capital expenditures 2,582 939 1,274 - 4,795
Radio station and other
acquisitions 58,268 - - - 58,268
Total assets 2,301,709 198,826 467,858 (3,354) 2,965,039
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
GENERAL
The following discussion should be read in conjunction with the
financial statements beginning on page 3.
This report includes certain forward-looking statements within the
meaning of Section 27A of the Securities Act. When used in this
report, the words "believes," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties. Actual
results in the future could differ materially from those described in
the forward-looking statements as a result of the matters discussed in
this report generally. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements that may be made to reflect any future events or
circumstances.
LIQUIDITY AND CAPITAL RESOURCES
CLEAR CHANNEL MERGER
On October 8, 1998 the Company entered into a definitive merger
agreement with Clear Channel Communications, Inc. ("Clear Channel")
for a tax-free, stock for stock transaction (the "Merger" or the
"Clear Channel Merger"). The Company and Clear Channel expect to
consummate the Merger at the close of business May 4, 1999 or shortly
thereafter. Pursuant to terms of the agreement, each share of Jacor
common stock will be exchanged for 1.1573151 shares of Clear Channel
common stock assuming a close on May 4, 1999.
Upon consummation of the Merger, a change in control event will have
occurred with respect to the Company's credit facility, liquid yield
option notes and the senior subordinated notes. Such change in
control would give the credit facility lenders the right to require
repayment of amounts borrowed under the facility, and require the
Company to offer repayment of the senior subordinated notes at 101% of
the principal amount and the liquid yield option notes at their issue
price plus accrued original issue discount at such date.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
As a result of the Merger, all options and stock appreciation rights
for Jacor common stock not vested at the effective time of the Merger
become fully vested and exercisable one day before the effective time
of the Merger. Clear Channel will assume all of these options and
stock appreciation rights on the same terms and conditions as were
applicable prior to the effective time of the Merger. The holders may
exercise such options and stock appreciation rights for or with
respect to shares of Clear Channel common stock at an exercise price
adjusted to reflect the exchange ratio of the Merger.
Additionally, the Merger will result in each holder of the Company's
common stock warrants becoming entitled to exercise such warrants for
shares of Clear Channel common stock instead of Jacor common stock.
Upon the exercise of such warrants after the Merger, the holders of
such warrants will receive that number of shares of Clear Channel
common stock that the holder would have received if he or she had
exercised such warrants for shares of Jacor common stock immediately
prior to the effective time of the Merger, as adjusted to reflect the
exchange ratio of the Merger.
Financing Activities
Cash used by financing activities for the first three months of 1999
was $6.8 million compared to $358.4 million provided by financing
activities for the first three months of 1998.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Credit Facilities
The Company has a $1.15 billion credit facility (the "Credit
Facility") with a syndicate of banks and other financial institutions.
The Credit Facility provides loans to the Company in two components:
(i) a reducing revolving credit facility (the "Revolving Credit
Facility") of up to $750 million under which the aggregate commitments
will reduce on a semi-annual basis commencing in June 2000; and (ii) a
$400 million amortizing term loan (the "Term Loan")that would reduce
on a semi-annual basis commencing in December 1999. The Term Loan and
the Revolving Credit Facility expire on December 31, 2004. Amounts
repaid or prepaid under the Term Loan may not be reborrowed. The
Credit Facility bears interest at a rate that fluctuates, with an
applicable margin ranging from 0.00% 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 April 29, 1999, the
average interest rate on Credit Facility borrowings was 7.75%. 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.
As of April 29, 1999, the Company had $400 million of outstanding
indebtedness under the Term Loan, $450 million of outstanding
indebtedness under the Revolving Credit Facility, and available
borrowings of $300 million.
Investing Activities
Cash flows used for investing activities were $44.5 million for the
first three months of 1999 as compared to $63.1 million for the first
three months of 1998. The variations from year to year are related to
station acquisition activity, as described below.
Completed Acquisitions
During the first quarter of 1999, the Company acquired the stock of
one and the assets of 25 radio stations and one low-power television
station in four of the Company's existing broadcast areas and ten new
broadcast areas for cash consideration of approximately $110.8
million, of which approximately $10.2 million was placed in escrow in
1997 and 1998. These acquisitions were funded through borrowings
under the Credit Facility.
Acquisitions and Dispositions Completed Subsequent to March 31, 1999
The Company completed the acquisitions of four radio stations in two
new broadcast areas and one existing broadcast area for $4.4 million
in cash, of which approximately $0.2 million was placed in escrow in
1998.
The Company completed the disposition of one radio station for $5.0
million in cash.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Pending Radio Station Acquisitions and Dispositions
The Company has entered into agreements to purchase the FCC licenses
and substantially all of the broadcast assets of 15 radio stations in
six of the Company's existing broadcast areas and three new broadcast
areas for approximately $166.6 million in cash, of which approximately
$9.4 million has been placed in escrow. The Company has also entered
into agreements to exchange the FCC licenses and substantially all of
the broadcast assets of six radio stations in two broadcast areas,
valued at approximately $103.0 million.
The Company expects all financing of its pending acquisitions will be
provided by Clear Channel. In the event that the Clear Channel Merger
would not be consummated as expected, the Company will have available
borrowings under the Revolving Credit Facility to fund all
acquisitions.
Capital Expenditures
The Company had capital expenditures of $7.7 million and $4.8 million
for the three months ended March 31, 1999 and 1998, respectively. The
Company's capital expenditures consist primarily of broadcasting
equipment, tower upgrades, and purchases related to the Company's plan
to replace and upgrade business, programming, and connectivity
technology.
Operating Activities
For the three months ended March 31, 1999, cash flow provided by
operating activities was $46.0 million, as compared to $19.4 million
for the three months ended March 31, 1998. The change is primarily
due to an increase in operating income related to acquisitions.
RESULTS OF OPERATIONS
The Company operates in one reportable segment - Radio. At March 31,
1999, the radio segment includes 240 radio stations in 67 broadcast
areas and Premiere. Substantially all revenues of each broadcast area
and Premiere is generated from the sale of commercial broadcast
inventory. Aggregated segments included in the caption "other"
includes one television station and various broadcast related
businesses that provide services such as market research, satellite
connectivity and traffic reporting.
The Company's management evaluates each broadcast area's performance
based on operating income before corporate expenses, interest expense,
income taxes, gains or losses and miscellaneous expenses. Specific
industry related performance measures also reviewed by management
include "Broadcast Cash Flow", which excludes depreciation and
amortization from the operating income measurement defined above.
Intersegment sales consist primarily of license fees for syndicated
programming and other broadcast services provided to the Company's
radio stations. Intersegment revenues are recorded at market rates.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Financial information for the Company's segments is as follows (in
thousands):
Favorable
(Unfavorable)
For the quarter ended March 31, 1999 Change 1998
Net revenues:
Radio $ 182,801 43.1% $ 127,746
Other 11,862 (16.9%) 14,282
Total net revenues $ 194,663 37.1% $ 142,028
Broadcast operating expenses:
Radio $ 129,731 (34.6%) $ 96,417
Other 10,025 8.3% 10,936
Total broadcast operating expenses $ 139,756 (30.2%) $ 107,353
Broadcast cash flow:
Radio $ 53,070 69.4% $ 31,329
Other 1,837 (45.1%) 3,346
Total broadcast cash flow $ 54,907 58.3% $ 34,675
Depreciation & amortization:
Radio $ 32,422 (29.7%) $ 25,004
Other 2,076 (13.5%) 1,829
Corporate 525 14.9% 617
Total depreciation & amortization $ 35,023 (27.6%) $ 27,450
Operating income (loss) before
Corporate general and
administrative expense:
Radio $ 20,648 226.5% $ 6,325
Other (239) (115.8%) 1,517
Corporate (525) 14.9% (617)
Subtotal 19,884 175.2% 7,225
Corporate general and administrative
expense: (5,629) (54.5%) (3,644)
Net operating income $ 14,255 298.1% $ 3,581
Other Consolidated Statements of
Operations Data:
Interest expense $ (29,909) (24.8%) $ (23,958)
Gain on sale of assets $ 83,476 - $ -
Income tax (expense) benefit $ (25,800) (334.5%) $ 11,000
Net income (loss) $ 41,849 706.7% $ (6,898)
Other Consolidated Financial
Statement Data:
Capital expenditures $ 7,713 60.9% $ 4,795
Radio station and other
acquisitions $ 114,628 232.4% $ 34,485
Total assets $3,461,114 16.7% $2,965,039
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES, Continued
Discussion of Radio Segment Financial Statement Changes
The increase in net revenue from 1998 to 1999 is due primarily to
revenue generated at those properties owned or operated during 1999,
but not during the comparable 1998 period. On a "same station" basis -
reflecting results from stations operated since January 1, 1998 -
broadcast revenue increased $19.7 million or 12.8%, from $154.5
million in 1998 to $174.2 million in 1999. The increase is due in
part to favorable ratings and a strong advertising environment.
The increase in radio broadcast operating expenses from 1998 to 1999
is due primarily to expenses incurred at those properties owned or
operated during 1999 but not during the comparable 1998 period. "Same
station" broadcast expenses increased by $6.1 million or 5.9% from
$104.2 million in 1998 to $110.3 million in 1999. The increases
between years was the result of increased payroll, programming and
selling costs.
Depreciation and amortization expense increased from 1998 to 1999 due
to acquisitions made during 1998 and the first three months of 1999.
Operating income increased from 1998 to 1999 as a result of the
acquisitions made throughout 1998 and 1999, and to a lesser extent,
increases in "same station" operating performance.
Discussion of Other Statement of Operations Data
Interest expense increased from 1998 to 1999 due to increases in
outstanding debt incurred in connection with the Company's
acquisitions.
The gain on sale of assets in 1999 resulted primarily from the sale of
an investment in a marketable equity security.
Income tax expense for the first quarter of 1999 was $25.8 million,
compared to income tax benefit of $11.0 million for the first quarter
of 1998. Excluding the effect of the Company's gain on sale of
investments, the effective tax rate for the first quarter of 1999 was
lower than that for the comparable 1998 period due to higher pre-tax
earnings estimated for the 1999 year.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
Year 2000 Computer System Compliance
The year 2000 issue (Y2K) is the result of computer programs written
with date sensitive codes that contain two digits (rather than four)
to define the year. As the year 2000 approaches, certain computer
systems may be unable to accurately process certain date-based
information as the program may interpret the year 2000 as 1900. In
connection with this date change, the Company's management has
developed a formal, enterprise-wide strategic plan to ensure that
computer systems are Y2K compliant. The Company's compliance plan has
four phases consisting of awareness, assessment, remediation and
testing. The Company is in various stages of completing each phase as
a result of its continued growth through acquisitions.
The Company has substantially completed the Y2K assessment phase of
its computer, broadcast and environmental systems, redundant power
systems and other critical systems including: (i) digital audio
systems (ii) traffic scheduling and billing systems (iii) accounting
and financial reporting systems, and (iv) local and wide area
networking infrastructure. Various insignificant systems and other
immaterial acquisitions are still in the assessment phase, which will
be completed throughout the second quarter of 1999. The Company has
also completed formal communication with all of its key business
partners to identify their exposure to the year 2000 issue. Key
business partners include local and national advertisers, suppliers of
communications services, financial institutions and suppliers of
utilities. This part of the assessment has targeted external risks
related to Y2K and is still in process and will be completed by the
end of the second quarter of 1999. External risks identified through
the assessment phase include loss of power and communication links
that are not subject to the Company's control. The Company is in the
process of developing power and communications contingency plans for
each broadcast area. This is expected to be completed by the fourth
quarter of 1999.
The remediation phase is approximately 75% complete for critical
systems within the Company's control. Activities in this phase
include the actual repair, replacement, or upgrade of the Company's
systems based on the findings of the assessment phase. Systems still
in the remediation phase include various traffic systems and
transmission equipment; however, the Company has identified and
decided on Y2K compliant versions to upgrade or replace existing
hardware and software. This remediation process for critical systems
will be completed by the end of the second quarter of 1999. Other non-
critical systems are also in the remediation phase and will not
require the expenditure of significant resources. Remediation of
these systems will be completed after the critical systems by the end
of the third quarter of 1999.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, Continued
The final project phase, the testing phase, will include the actual
testing of the enhanced and upgraded systems and will be completed by
the end of the third quarter of 1999. This process includes internal
and external user review and confirmation, as well as unit testing and
integration testing with other systems interfaces. Certain critical
systems have already been successfully tested after remediation, and
such remediation can be applied to other systems where needed. Based
on the Company's knowledge of its critical systems and other certified
Y2K compliant industry specific software (i.e., traffic systems)
significant contingency planning for such systems is not anticipated
to be needed, but will be developed in a timely manner, if necessary.
The Company anticipates minimal business disruption from both external
and internal factors. However, possible risks include, but are not
limited to, loss of power and communication links which are not
subject to the Company's control. The Company believes that its Y2K
compliance issues will be resolved on a timely basis and that any
related costs will not have a material impact on the Company's
operations, cash flows, or financial condition of future periods. The
costs incurred in the assessment phase are primarily internal costs,
which have been expensed as incurred and are immaterial. Internal
costs will continue to be expensed as incurred and will not be
significantly greater than those incurred in 1998. Costs in the
remediation phase include replacement of certain computer hardware and
software, are not expected to be material and are included in the
capital expenditures of the Company.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description Page
10.1(+) Jacor Communications, Inc. Deferred Compensation
Plan dated June 1, 1998 24
27 Financial Data Schedule 37
__ _________
(+) Management Contracts and Compensatory Arrangements.
(b) Reports on Form 8-K
The following Form 8-K/A was filed during the first quarter
of 1999:
Form 8-K/A dated February 23, 1999. This Form 8-K/A was
filed to amend Nationwide Communications, Inc.'s year-end
audited financial information and unaudited pro forma
financial information for the year ended December 31, 1997.
Jacor's acquisition of Nationwide was previously reported in
its Form 8-Ks filed on November 4, 1997 and January 5, 1998,
as amended on January 20, 1998, April 30, 1998 and August
14, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(Registrant)
DATED: May 4, 1999 BY /s/ R. Christopher Weber
R. Christopher Weber,
Senior Vice President and
Chief Financial Officer
<PAGE>
Exhibit 10.1
JACOR COMMUNICATIONS, INC.
DEFERRED COMPENSATION PLAN
(Effective as of June 1, 1998)
<PAGE>
JACOR COMMUNICATIONS, INC.
DEFERRED COMPENSATION PLAN
INTRODUCTION
Jacor Communications, Inc. recognizes the unique qualifications of its
executive officers and the valuable services they provide and desires to
establish a plan to provide an incentive for executive officers to defer
compensation. This Plan is intended to be an unfunded arrangement
maintained by Jacor Communications, Inc. established for the purpose of
providing deferred compensation primarily for a select group of management
or highly compensated employees as described in sections 201(2), 301(a)(3),
and 401(a)(1) of ERISA.
Jacor Communications, Inc. hereby adopts the Jacor Communications,
Inc. Deferred Compensation Plan effective June 1, 1998 as hereinafter
provided. The rights of any person whose status as an employee of the
Company has terminated shall be determined pursuant to the Plan as in
effect on the date such employee terminates, unless a subsequently adopted
provision of the Plan is made specifically applicable to such person.
ARTICLE I
DEFINITIONS
1.1 "Accrued Benefit" means the total of the Participant's Deferred
Compensation Account and Matching Contribution Account.
1.2 "Beneficiary" means the person or entity who is entitled to receive
the distribution, if any, payable under the Plan upon a Covered Employee's
death. Each Covered Employee may designate a Beneficiary in a writing
filed with the Company on a form satisfactory to the Committee. Any
designation of a Beneficiary filed for purposes of the Plan may be revoked
at any time and another designation may be made by the Covered Employee
without the consent of any person.
1.3 "Board" means the Board of Directors of the Company, as constituted
from time to time. Such Board of Directors may authorize any committee of
the Board or any other person or committee to act on its behalf with
respect to matters described in the Plan that require Board action.
1.4 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and regulations relating thereto.
<PAGE>
1.5 "Committee" means the committee appointed by the Board to administer
the Plan pursuant to Article VII herein.
1.6 "Company" means Jacor Communications, Inc., a Delaware corporation, or
any successor thereto, including any successor to substantially all of its
assets that adopts and assumes the Plan at the time of transfer.
1.7 "Compensation" means, with respect to a Plan Year, the total amount of
base salary and wages paid by the Company to a Covered Employee or which
would otherwise be paid but for a deferral election under this Plan, under
the Retirement Plan, or under a plan subject to section 125 of the Code.
1.8 "Compensation Limit" means, with respect to any Plan Year, the
applicable compensation limitation set forth in section 401(a)(17) of the
Code (as adjusted as provided therein), or any corresponding successor
provision.
1.9 "Covered Employee" means any executive officer of the Company who has
Retirement Plan Earnings in excess of the Compensation Limit.
1.10 "Deferred Compensation Account" means the account to be established by
the Company as a book reserve on behalf of each Participant to reflect the
amounts deferred by a Participant under Article II, as adjusted by earnings
(or losses) under Article IV.
1.11 "Deferred Compensation Agreement" means the form described in Article
II of the Plan.
1.12 "Effective Date" means June 1, 1998.
1.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.14 "Investment Funds" mean such investment funds that the Committee may,
in its discretion, make available in determining the earnings (or losses)
on a Participant's Accrued Benefit under Article IV.
1.15 "Matching Contribution Account" means the account to be established by
the Company as a book reserve on behalf of each Participant to reflect the
matching contributions by the Company on behalf of the Participant under
Article III, as adjusted by earnings (or losses) under Article IV. The
Committee may determine that the segregated accounting for matching
contributions is not necessary, in which event, all matching contributions
will be accounted for as part of the Participant's Deferred Compensation
Account and all references herein to a Matching Contribution Account will
be deemed to be a reference to the Participant's Deferred Compensation
Account.
<PAGE>
1.16 "Participant" means a Covered Employee (or the Beneficiary of any
deceased Covered Employee) entitled to any Accrued Benefit under the Plan.
1.17 "Plan" means the Jacor Communications, Inc. Deferred Compensation Plan
as set forth in this document, and as may be amended hereafter.
1.18 "Plan Year" means initially the period beginning on the Effective Date
and ending on December 31, 1998, and thereafter means the calendar year.
1.19 "Retirement Plan" means the Jacor Communications, Inc. Retirement Plan
as in effect on the Effective Date and as subsequently amended, or any
successor or replacement plan for such Retirement Plan.
1.20 "Retirement Plan Earnings" means the Covered Employee's earnings for
benefit accrual purposes under the Retirement Plan, as defined therein, but
without giving effect to the Compensation Limit.
1.21 "Retirement Plan Match" means, with respect to any plan year of the
Retirement Plan, the maximum amount of matching contributions that could be
made by the Company to the Retirement Plan on behalf of a Covered Employee,
taking into account the rate of match, the percentage of compensation
deferred that generates a match, and the Compensation Limit.
1.22 "Trust" means the trust established by the Jacor Communications, Inc.
Rabbi Trust Agreement between the Company and Smith Barney Private Trust
Company, or any successor thereto under the terms of such Trust Agreement.
<PAGE>
ARTICLE II
DEFERRAL ELECTIONS
2.1 General. For each Plan Year, a Covered Employee may elect to have a
portion of his Compensation in excess of the Compensation Limit (expressed
as a specified dollar amount or a whole percentage of his Compensation in
excess of the Compensation Limit) deferred and credited to his Deferred
Compensation Account by entering into a Deferred Compensation Agreement in
the manner provided in Section 2.2.
A Covered Employee who elects to have a portion of his Compensation in
excess of the Compensation Limit deferred and credited to his Deferred
Compensation Account shall be required, as a condition to participation in
the Plan during such Plan Year, to elect to make the maximum before-tax
contributions to the Retirement Plan permitted under the terms of the
Retirement Plan and the Code.
2.2 Deferred Compensation Agreement. A Covered Employee desiring to
exercise an election under Section 2.1 shall file with the Company a
Deferred Compensation Agreement in such form as the Committee may
prescribe. Such election may not be changed during the Plan Year; provided
however, at any time during the Plan Year such Covered Employee may
discontinue deferrals by revoking his election for the remainder of the
Plan Year. A Deferred Compensation Agreement shall be authorization to the
Company to defer a portion of the Covered Employee's Compensation in excess
of the Compensation Limit and shall provide that his Compensation be
reduced by equal amounts for each payroll period during the Plan Year or in
such other manner as permitted by the Committee.
2.3 Time of Election. A Covered Employee's Deferred Compensation
Agreement must be delivered to the Employer prior to the beginning of each
Plan Year by such date as the Committee shall specify. Notwithstanding the
foregoing, for the 1998 Plan Year only, a Covered Employee may deliver his
Deferred Compensation Agreement to the Company at any time before June 1,
1998, to be effective only with respect to Compensation earned on or after
June 1, 1998.
An employee of the Company who becomes a Covered Employee during a
Plan Year and who wishes to enter into a Deferred Compensation Agreement
must deliver the Deferred Compensation Agreement to the Company within the
30-day period following the day he becomes a Covered Employee, but only
with respect to Compensation earned after the date such Deferred
Compensation Agreement is delivered to the Company.
<PAGE>
2.4 Commencement of Deferrals. A Deferred Compensation Agreement shall be
effective for
the entire Plan Year to which it relates, but only with respect to
Compensation of the Covered Employee earned for services rendered after the
election is made in accordance with Sections 2.2 and 2.3.
2.5 Contribution to Trust. Assets equal in value to the Compensation
otherwise payable to the Covered Employee during the Plan Year, but
deferred in accordance with Section 2.2, shall be paid to the Trust no
later than 60 days after the end of the Plan Year to which the deferral
relates.
ARTICLE III
COMPANY MATCHING CONTRIBUTIONS
3.1 General. For each Plan Year that a Covered Employee elects to have a
portion of his Compensation in excess of the Compensation Limit deferred
under Article II, the Company shall credit a matching contribution to the
Covered Employee's Matching Contribution Account in the amount provided in
Section 3.2.
3.2 Matching Contribution Rate. The matching contribution shall be
calculated by reference to the Covered Employee's Compensation deferrals
for the Plan Year pursuant to Article II. The matching contribution with
respect to any Covered Employee for each Plan Year shall be the lesser of
(a) 50% of the Covered Employee's deferral for such Plan Year, or (b) 50%
of 6% of the Covered Employee's Compensation for such Plan Year reduced by
the Retirement Plan Match for the Plan Year. Matching contributions under
this Section 3.2 shall be calculated and credited to the Covered Employee's
Matching Contribution Account on the same periodic basis as Compensation is
reduced for the Covered Employee's Compensation deferrals under Section
2.2.
3.3 Contribution to Trust. Assets equal in value to the matching
contributions accrued by all Covered Employees during the Plan Year in
accordance with Section 3.2 shall be paid to the Trust no later than 60
days after the end of the Plan Year to which the matching contributions
relate.
<PAGE>
ARTICLE IV
EARNINGS ON ACCRUED BENEFIT
4.1 General. The Accrued Benefit of each Participant shall be credited
with an additional amount of hypothetical earnings (or losses) determined
under this Article IV.
4.2 Investment Elections. Each Participant shall elect the manner in
which his Accrued Benefit is to be credited with earnings (and losses) by
designating how the Accrued Benefit is to be invested on a hypothetical
basis from among the Investment Funds. Such an election shall be made in
writing, on a form provided by the Committee, and delivered to the Company
prior to the beginning of each Plan Year by such date as the Committee
shall determine. An investment election shall be effective for the entire
Plan Year to which it relates unless modified by the Participant during the
Plan Year. Such modifications may be made periodically on the same basis
as participant investment elections under the Retirement Plan may be
modified.
If a Participant fails to make and deliver an election for the
following Plan Year by the date as determined by the Committee, then his
Accrued Benefit shall continue to be invested in the manner provided under
the investment election most recently in effect.
4.3 Trust Investments. Nothing contained herein shall be deemed to allow
any Participant to direct how the assets of the Trust are invested. Such
investments are governed by the terms of the Trust.
ARTICLE V
VESTING OF ACCRUED BENEFIT
Each Participant shall at all times be fully vested in his entire
Accrued Benefit.
<PAGE>
ARTICLE VI
DISTRIBUTION OF PLAN BENEFITS
6.1 Distributable Events. A Covered Employee's Accrued Benefit shall
become distributable upon the Covered Employee's separation from service
with the Company due to his retirement, death, or other termination of
employment.
6.2 Commencement of Payment. Upon a separation from service described in
Section 6.1, the Accrued Benefit of a Covered Employee shall be determined
as of the last day of the calendar quarter in which the separation from
service occurs and shall commence to be paid no later than the end of the
next calendar quarter.
6.3 Form of Payment. Subject to Section 6.4, upon a separation from
service described in Section 6.1, a Covered Employee's Accrued Benefit
shall be paid in cash in a single lump sum unless the Covered Employee has
previously made an election to be paid in up to 5 annual installments
commencing as of when the Accrued Benefit would otherwise be paid in a lump
sum. Any election to receive installment payments shall be subject to the
following:
(a) An election to receive installment payments must be made no
later than a date that is one year prior to when the Accrued Benefit would
otherwise be paid in a lump sum;
(b) Each installment shall be calculated by dividing the Accrued
Benefit on the last day of the calendar quarter in which the separation
from service occurs (and each anniversary of that date as needed) by the
number of the remaining installments to be paid;
(c) Until all installments have been paid, the balance of the
Accrued Benefit shall continue to be credited with earnings (and losses) in
accordance with Article IV; and
(d) If the Covered Employee dies while receiving installment
payments, the remaining Accrued Benefit shall be paid to the Beneficiary of
the Covered Employee in cash in a single lump sum.
6.4 Death of Covered Employee. Upon the death of a Covered Employee, his
Accrued Benefit shall be payable to the Covered Employee's Beneficiary in
cash in a single lump sum.
<PAGE>
6.5 Hardship Distributions. Subject to the approval of the Committee, a
Covered Employee may withdraw all or a portion of his Accrued Benefit in
the event of a hardship. A request for a hardship distribution shall be
made in a writing filed with the Company on a form satisfactory to the
Committee. A hardship distribution shall only be made in the event of an
unforeseeable emergency that would result in a severe financial hardship to
the Covered Employee if the distribution were not permitted. Withdrawals
of amounts because of an unforeseeable emergency shall only be permitted to
the extent reasonably needed to satisfy the emergency need. Any such
withdrawal shall be paid in a single lump sum.
For purposes of this Section 6.5, an unforeseeable emergency is a
severe financial hardship to the Covered Employee resulting from a sudden
and unexpected illness or accident of the Covered Employee or of a
dependent (as defined in section 152(a) of the Code) of the Covered
Employee, loss of the Covered Employee's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Covered Employee.
The Committee shall determine whether the circumstances presented by
the Covered Employee constitute an unforeseeable emergency. Such
circumstances and the Committee's determination will depend upon the facts
of each case, but, in any case, payment may not be made to the extent that
such hardship is or may be relieved: (a) through reimbursement or
compensation by insurance, (b) by liquidation of the Covered Employee's
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardship, or (c) by cessation of his elective deferrals
under this Plan.
ARTICLE VII
ADMINISTRATION
7.1 The Committee. The Plan shall be administered by the Committee
consisting of not less two directors who shall be appointed from time to
time by, and shall serve at the discretion of, the Board.
7.2 Authority of the Committee. Subject to the provisions of the Plan,
the Committee shall have full power to construe and interpret the Plan and
to establish, amend or waive rules and regulations for its administration.
<PAGE>
7.3 Delegation of Certain Responsibilities. The Committee may, in its
sole discretion, delegate to an officer or officers of the Company the
administration of the Plan under this Article VII; provided however, that
no such delegation by the Committee shall be made with respect to the
administration of the Plan as it affects such officer or officers and
provided further that the Committee may not delegate its authority to
correct errors, omissions or inconsistencies in the Plan.
7.4 Procedures of the Committee. All determinations of the Committee
shall be made by not
less than a majority of its members present at the meeting (in person or
otherwise) at which a quorum is present. A majority of the entire
Committee shall constitute a quorum for the transaction of business. Any
action required or permitted to be taken at a meeting of the Committee may
be taken without a meeting if a unanimous written consent, which sets for
the action, is signed by each member of the Committee and filed with the
minutes for proceedings of the Committee. Service on the Committee shall
constitute service as a director of the Company so that members of the
Committee shall be entitled to indemnification, limitation of liability and
reimbursement of expenses with respect to their services as members of the
Committee to the same extent that they are entitled under the Company's
Certificate of Incorporation and Delaware law for their services as
directors of the Company.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 General. A Participant who believes that his Accrued Benefit has not
paid in full ("claimant") shall file such objection on the form prescribed
for such purpose with the Committee.
8.2 Denials. The Committee shall review such filing and provide a notice
of the decision regarding such filing to the claimant within a reasonable
period of time after receipt of the notice by the Committee.
8.3 Notice. Any claimant whose objection to a payment of his Accrued
Benefit is denied shall be furnished written notice setting forth:
(a) the specific reason or reasons for the denial;
(b) specific reference to the pertinent provision of the Plan upon
which the denial is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the objection; and
(d) an explanation of the claims review procedure under the Plan.
<PAGE>
8.4 Appeals Procedure. In order that a claimant may appeal a denial of
his objection to the amount of his Accrued Benefit, the claimant or the
claimant's duly authorized representative may:
(a) request a review by written application to the Committee, or its
designate, no later than sixty (60) days after receipt by the
claimant of written notification of denial of his objection;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
8.5 Review. A decision on review of a denied objection shall be made not
later than thirty (30) days after receipt of a request for review, unless
special circumstances require an extension of time for processing, in which
case a decision shall be rendered within a reasonable period of time, but
not later than sixty (60) days after receipt of a request for review. The
decision on review shall be in writing and shall include the specific
reason(s) for the decision and the specific reference(s) to the pertinent
provisions of the Plan on which the decision is based.
ARTICLE IX
AMENDMENT OR TERMINATION
9.1 Amendment or Termination. The Plan may be amended in whole or in part
from time to time, or terminated, by action of the Board. Such termination
and any such amendment shall be binding on the Company and each
Participant. Notice of such amendment or termination shall be given in
writing to each Participant.
9.2 Effect of Amendment or Termination. No amendment or termination of
the Plan shall directly or indirectly (1) reduce the value of a
Participant's Accrued Benefit, or (2) change the form or timing of the
payment of a Participant's Accrued Benefit with respect to contributions
made prior to the date of the amendment or termination.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.1 No Funding or Interest in Assets. The Plan shall at all times be
entirely unfunded and, except for the provisions relating to the transfer
of assets to the Trust, no provision shall at any time be made with respect
to segregating any assets of the Company for payment of any benefits
hereunder. No Participant shall acquire any property interest in the
assets of the Company or of the Trust, their rights being limited to
receiving from the Company deferred payments as set forth in this Plan and
these rights are conditioned upon continued compliance with the terms and
conditions of this Plan.
To the extent that any Participant acquires a right to receive
benefits under this Plan, such right shall be no greater than the right of
any unsecured general creditor of the Company. Consistent with the
foregoing, the Company has established the Trust and the obligations of the
Company under the Plan shall be reduced to reflect the value of any payment
of benefits from the Trust.
10.2 Assignment or Alienation. Except as required by law, no right of a
Participant to receive payments under this Plan shall be subject to
transfer, anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation or to execution, attachment,
levy or similar process or assignment by operation of law and any attempt,
voluntary or involuntary, to effect any such action shall be null and void
and of no effect.
10.3 Affect on Retirement Plan. Any benefit under the Retirement Plan
shall be paid solely in accordance with the terms and conditions of the
Retirement Plan and nothing in this Plan shall operate or be construed in
any way to modify, amend or affect the terms and provisions of the
Retirement Plan.
10.4 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by any person that the assets of an Company or the
Trust will be sufficient to pay any benefit hereunder.
10.5 No Enlargement of Rights. No Participant shall have any right to a
benefit under the Plan except in accordance with the terms of the Plan.
Establishment of the Plan shall not be construed to give any Covered
Employee the right to be retained in the service of the Company.
10.6 Construction. This Plan shall be construed under the laws of the
State of Delaware. Article and Section headings are for convenience only
and shall not be considered as part of the terms and provisions of the
Plan. Words in the masculine gender shall include the feminine, and the
singular shall include the plural, and vice versa, unless qualified by the
context.
10.7 Withholding of Taxes. The Company shall withhold from any amounts
payable under the Plan, all federal, state, and local taxes that the
Company determines is legally required.
<PAGE>
10.8 Binding on Successors, Purchasers, Transferees and Assignees. The
Plan shall be binding upon any successor or successors of the Company
whether by merger, consolidation, or otherwise.
IN WITNESS WHEREOF, Jacor Communications, Inc. has caused this Plan to
be adopted and executed by its duly authorized officer as of this _____ day
of _____________, 1998.
JACOR COMMUNICATIONS, INC.
By: ____________________________
Title: ___________________________
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<PERIOD-END> MAR-31-1999
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