FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 wholly owned subsidiary of Clear Channel Communications, Inc.)
A Delaware Corporation Employer
Identification
No. 74-2916308
50 East RiverCenter Blvd.
12TH Floor
Covington, KY 41011
Telephone (606) 655-2267
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past ninety days.
Yes X No
At August 13, 1999, 1 share of common stock was outstanding.
<PAGE>
JACOR COMMUNICATIONS, INC.
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of
Operations and Comprehensive Income
for the period from May 5, 1999 through
June 30, 1999, the period from
April 1, 1999 through May 4, 1999, and
the three months ended June 30, 1998 4
Condensed Consolidated Statements of
Operations and Comprehensive Income
for the period from May 5, 1999 through
June 30, 1999, the period from
January 1, 1999 through May 4, 1999,
and the six months ended June 30, 1998 5
Condensed Consolidated Statements of
Cash Flows for the period from May 5, 1999
through June 30, 1999, the period from
January 1, 1999 through May 4, 1999,
and the six months ended June 30, 1998 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 17
PART II. Other Information
Item 6. - Exhibits and Reports on Form 8-K 27
Signatures 28
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
<CAPTION>
Predecessor
June 30, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,505 $ 20,051
Accounts receivable, less allowance
for doubtful accounts of $9,050
at June 30, 1999 and $8,303 at
December 31, 1998 210,722 201,466
Prepaid expenses and other 34,261 32,796
Total current assets 264,488 254,313
Property and equipment, net 308,151 281,049
Intangible assets, net 6,771,602 2,749,348
Other assets 185,700 135,998
Total assets $ 7,529,941 $ 3,420,708
LIABILITIES
Current liabilities:
Current portion long-term debt $ - $ 35,000
Accounts payable, accrued expenses
and other current liabilities 221,537 128,400
Total current liabilities 221,537 163,400
Due to Clear Channel 832,480 -
Long-term debt 547,944 1,289,574
Liquid Yield Option Notes 492,705 306,202
Deferred tax liability 888,660 345,478
Other liabilities 112,542 112,988
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:
1 in 1999 and 51,184,217 in 1998 - 512
Additional paid-in capital 4,382,377 1,124,057
Common stock warrants 57,935 30,819
Accumulated other comprehensive income - 25,428
Retained earnings (6,239) 22,250
Total shareholders' equity 4,434,073 1,203,066
Total liabilities and
shareholders' equity $ 7,529,941 $ 3,420,708
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the period from May 5, 1999 through June 30, 1999, the period from
April 1, 1999 through May 4, 1999, and the three months ended June 30, 1998
(in thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Predecessor
May 5, 1999 April 1, 1999 Three Months
through through ended
June 30, 1999 May 4, 1999 June 30, 1998
<S> <C> <C> <C>
Broadcast revenue $ 192,788 $ 87,110 $ 207,101
Less agency commissions 22,709 10,126 23,265
Net revenue 170,079 76,984 183,836
Broadcast operating expenses 99,978 52,321 120,747
Depreciation and amortization 51,462 11,928 28,833
Corporate general and
administrative expenses 2,766 1,744 4,530
Operating income 15,873 10,991 29,726
Interest expense (19,525) (9,822) (25,079)
Gain on sale of assets - 46,909 -
Other (expense) income, net (1,387) 10 6,275
(Loss) income before income
taxes (5,039) 48,088 10,922
Income tax expense (1,200) (26,500) (5,900)
Net (loss) income (6,239) 21,588 5,022
Comprehensive (loss) income $ (6,239) $ 21,588 $ 5,022
Basic net income per
common share $ 0.42 $ 0.10
Diluted net income per
common share $ 0.36 $ 0.09
Number of common shares used
in Basic calculation 51,345 50,895
Number of common shares used
in Diluted calculation 61,962 54,892
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the period from May 5, 1999 through June 30, 1999, the period from
January 1, 1999 through May 4, 1999, and the six months ended June 30, 1998
(in thousands, except per share amounts)
(UNAUDITED)
<CAPTION>
Predecessor
May 5, 1999 January 1, 1999 Six Months
through through ended
June 30, 1999 May 4, 1999 June 30, 1998
<S> <C> <C> <C>
Broadcast revenue $ 192,788 $ 306,824 $ 366,293
Less agency commissions 22,709 35,177 40,429
Net revenue 170,079 271,647 325,864
Broadcast operating expenses 99,978 192,077 228,100
Depreciation and amortization 51,462 46,951 56,283
Corporate general and
administrative expenses 2,766 7,373 8,174
Operating income 15,873 25,246 33,307
Interest expense (19,525) (39,731) (49,037)
Gain on sale of assets - 130,385 -
Other (expense) income, net (1,387) (163) 8,754
(Loss) income before income
taxes (5,039) 115,737 (6,976)
Income tax (expense) benefit (1,200) (52,300) 5,100
Net (loss) income (6,239) 63,437 (1,876)
Other comprehensive (loss)
income before tax:
Reclassification adjustment
for gains included in net
income, net of taxes - (25,428) -
Comprehensive (loss) income $ (6,239) $ 38,009 $ (1,876)
Basic net income (loss)
per common share $ 1.24 $(0.04)
Diluted net income (loss)
per common share $ 1.07 $(0.04)
Number of common shares used
in Basic calculation 51,299 49,696
Number of common shares used
in Diluted calculation 61,916 49,696
The accompanying notes are an integral
part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the period from May 5, 1999 through June 30, 1999, the period from
January 1, 1999 through May 4, 1999, and the six months ended June 30, 1998
(in thousands)
(UNAUDITED)
<CAPTION>
Predecessor
May 5, 1999 January 1, 1999 Six Months
through through Ended
June 30, 1999 May 4, 1999 June 30, 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net cash (used) provided by operating
activities $ (2,022) $ 46,698 $ 14,521
Cash flows from investing activities:
Deposits on broadcast properties and other (13,361) (7,656) (4,730)
Capital expenditures (1,552) (12,540) (13,160)
Cash paid for acquisitions - (127,311) (68,578)
Proceeds from sale of investments - 87,605 -
Proceeds from sale of broadcast properties - 5,017 -
Net cash used by investing activities (14,913) (54,885) (86,468)
Cash flows from financing activities:
Issuance of long-term debt - 180,000 149,539
Issuance of LYONs - - 166,950
Common stock proceeds, net of issuance costs - 19,232 247,412
Repayment of long-term debt (872,136) (115,000) (197,500)
Payment of finance costs - - (8,336)
Advances to Clear Channel (35,000) - -
Advances from Clear Channel 847,480 - -
Net cash (used) provided by financing
activities (59,656) 84,232 358,065
Net (decrease) increase in cash and
cash equivalents (76,591) 76,045 286,118
Cash and cash equivalents at
beginning of period 96,096 20,051 28,724
Cash and cash equivalents at end of period $ 19,505 $ 96,096 $314,842
Supplemental schedule of non-cash investing
and financing activities:
Liabilities assumed in acquisitions $ - $ - $ 2,687
Fair value of assets exchanged,
net of cash - 20,000 70,000
The accompanying notes are an integral part
of the condensed consolidated financial statements.
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
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 consummated the Merger at the
close of business May 4, 1999. Pursuant to terms of the
agreement, each share of Jacor common stock was exchanged
for 1.1573151 shares of Clear Channel common stock. Upon
conclusion of the Merger, Clear Channel became the sole
shareholder of the Company, owning one outstanding share of
Jacor common stock.
Clear Channel accounted for its acquisition of the Company
as a purchase and purchase accounting adjustments, including
goodwill, have been pushed down and reflected in the
consolidated financial statements of the Company subsequent
to May 4, 1999. The consolidated financial statements of
the Company for the periods ended before May 5, 1999, were
prepared using the Company's historical basis of accounting
and are designated as "Predecessor." The comparability of
operating results for the Predecessor and the periods
encompassing push down accounting are affected by the
purchase accounting adjustments including the amortization
of goodwill over a period of 25 years.
The process of determining the fair value of assets and
liabilities at the Merger date is continuing, and the final
result awaits resolution of income tax and other
contingencies and finalization of certain preliminary
estimates. The following table summarizes the preliminary
changes made to the accounts of the Company as of May 5,
1999 as a result of applying push down accounting:
Adjustments
(in thousands)
Current assets $ (50,000)
Goodwill and other intangible assets 4,023,799
Total assets $3,973,799
Current liabilities $ 35,000
Long-term debt (603,837)
Other liabilities 1,366,932
Shareholders' equity 3,175,704
Total liabilities and equity $3,973,799
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. CLEAR CHANNEL MERGER, Continued
Upon consummation of the Merger, a change in control event
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 gave the credit facility lenders the right to
require repayment of amounts borrowed under the facility,
and required 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. Approximately $22.1
million of senior subordinated notes were tendered in
connection with the repayment offer.
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 became fully vested and
exercisable one day before the effective time of the Merger.
Clear Channel assumed 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 shareholder, 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. As a result of the Merger, EGI received a
fee of approximately $38.2 million.
3. ACQUISITIONS AND DISPOSITIONS
Completed Radio Station Acquisitions and Dispositions
First Quarter Transactions
In the first three months of 1999, the Company acquired the
stock of one and the assets of 25 radio stations and one low-
powered television station in four of the Company's existing
broadcast areas and ten new broadcast areas for a purchase
price of approximately $110.8 million in cash, of which
approximately $10.2 million was placed in escrow in 1998 and
1997.
April Transactions
The Company acquired WCOH-AM in Newnan, Georgia, WXMY-AM and
WZLG-FM in Hogansville, Georgia, and WMKJ-FM in Peachtree
City, Georgia from MetroSouth Communications, City of Homes
Radio, LLC and Radio LaGrange, LLC for $4.4 million in cash,
of which $0.2 million was placed in escrow in 1998.
The Company sold WEAE-AM in Pittsburgh, Pennsylvania for
$5.0 million in cash.
The Company exchanged WLRS-FM, WDJX-FM and WFIA-AM in
Louisville, Kentucky for an aggregate purchase price of
$24.0 million, all of which has been placed in escrow with a
qualified intermediary in anticipation of subsequent radio
station acquisitions which would result in the exchange
being treated as a tax-deferred like-kind exchange.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
May Transactions
The Company exchanged WSFR-FM in Louisville, Kentucky for
WBBS-FM in Syracuse, New York. The exchange was valued at
$20.0 million and is being treated as a tax-deferred like-
kind exchange.
The Company exchanged WVEZ-FM in Louisville, Kentucky and
WDUV-FM in Tampa, Florida. These exchanges were valued at
an aggregate purchase price of $59.0 million, all of which
has been placed in escrow with a qualified intermediary in
anticipation of subsequent radio station acquisitions which
would result in the exchange being treated as a tax-deferred
like-kind exchange.
June Transactions
The Company acquired WBZY-AM in New Castle, Pennsylvania
from WBZY Radio Sam, Robert L. McCracken and Samuel M.
Shirey for approximately $0.8 million in cash.
The Company acquired WMBL-AM in Morehead City, North
Carolina from Ashley L. Mosley for approximately $0.2
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 Six Months Ended
June 30, June 30,
1998 1998
Net revenue $ 203,996 $ 368,380
Income (loss) before
extraordinary items $ 4,460 $ (3,230)
Diluted income (loss) per common
share before extraordinary items $ 0.08 $ (0.06)
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.
Pending Radio Station Acquisitions
The Company has entered into agreements to purchase the
stock of one and the FCC licenses and substantially all of
the broadcast assets of 11 radio stations in four of the
Company's existing broadcast areas and two new broadcast
areas for approximately $18.8 million in cash, of which
approximately $2.7 million has been placed in escrow.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSIDIARY GUARANTORS
The Company's 10 1/8% senior subordinated notes, 9 3/4%
senior subordinated notes, 8 3/4% senior subordinated notes,
and 8% senior subordinated notes (the "Notes") are
obligations of Jacor Communications Company ("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. 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 June 30, 1999 and for the period from May 5,
1999 through June 30, 1999, the period from January 1, 1999
through May 4, 1999, and the six months ended June 30, 1998
is as follows:
JACOR
Predecessor
May 5, 1999 January 1, 1999 Six Months
through through Ended
June 30, 1999 May 4, 1999 June 30, 1998
Operating Statement
Data (in thousands):
Net revenue - - -
Equity in earnings
of subsidiaries $ (556) $ (955) $ 445
Operating loss (3,869) (10,928) (8,276)
(Loss) income before
extraordinary items (6,239) 63,437 (1,876)
Net (loss) income (6,239) 63,437 (1,876)
Balance Sheet Data
(in thousands):
Current assets $ 2,337
Non-current assets 5,829,305
Current liabilities 837,277
Non-current
liabilities 589,442
Shareholders' equity 4,404,923
Statement of Cash
Flow Data (in thousands):
Operating activities $ (3,242) $ (7,711) $ (8,314)
Investing activities (200) 92,222 (490)
Financing activities 3,442 (84,511) 170,685
Net change in cash and
cash equivalents - - 161,881
Cash and cash equivalents
at beginning of period - - (613)
Cash and cash equivalents
at end of period - - 161,268
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSIDIARY GUARANTORS, Continued
JCC
Predecessor
May 5, 1999 January 1, 1999 Six Months
through through Ended
June 30, 1999 May 4, 1999 June 30, 1998
Operating Statement
Data (in thousands):
Net revenue - - -
Equity in earnings
of subsidiaries $ (439) $ (2,031) $ (1,909)
Operating loss (439) (2,031) (1,909)
(Loss) income before
extraordinary items (556) (955) 445
Net (loss) income (556) (955) 445
Balance Sheet Data
(in thousands):
Current assets $ 24,412
Non-current assets 6,368,288
Current liabilities 14,530
Non-current
liabilities 1,973,247
Shareholders' equity 4,404,923
Statement of Cash
Flow Data (in thousands):
Operating activities $ 260 $ 821 $ 8,654
Investing activities (13,361) (134,967) (73,308)
Financing activities (63,490) 210,190 188,891
Net change in cash and
cash equivalents (76,591) 76,045 124,237
Cash and cash equivalents
at beginning of period 96,096 20,051 29,337
Cash and cash equivalents
at end of period 19,505 96,096 153,574
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSIDIARY GUARANTORS, Continued
COMBINED SUBSIDIARY GUARANTORS
Predecessor
May 5, 1999 January 1, 1999 Six Months
through through Ended
June 30, 1999 May 4, 1999 June 30, 1998
Operating Statement
Data (in thousands):
Net revenue $ 170,079 $ 271,647 $ 325,864
Equity in earnings
of subsidiaries - - -
Operating income 19,186 35,220 42,028
Loss before
extraordinary items (439) (2,031) (1,909)
Net loss (439) (2,031) (1,909)
Balance Sheet Data
(in thousands):
Current assets $ 237,739
Non-current assets 7,335,649
Current liabilities 252,210
Non-current
liabilities 2,916,255
Shareholders' equity 4,404,923
Statement of Cash
Flow Data (in thousands):
Operating activities $ 959 $ 53,588 $ 14,182
Investing activities (1,352) (12,140) (12,670)
Financing activities 393 (41,448) (1,512)
Net change in cash and
cash equivalents - - -
Cash and cash equivalents
at beginning of period - - -
Cash and cash equivalents
at end of period - - -
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
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 the period from April 1, 1999 through May
4, 1999, the period from January 1, 1999 through May 4,
1999, and the three months and six months ended June 30,
1998 (in thousands except per share amounts):
<TABLE>
<CAPTION>
April 1, Three January 1, Six
1999 Months 1999 Months
through Ended through Ended
May 4, 1999 1998 May 4, 1999 1998
<S> <C> <C> <C> <C>
Net income (loss) for basic EPS $21,588 $ 5,022 $63,437 $(1,876)
LYONs interest expense, net of tax 780 - 2,686 -
Net income (loss) for diluted EPS $22,368 $ 5,022 $66,123 $(1,876)
Weighted average
shares - basic 51,345 50,895 51,299 49,696
Effect of dilutive securities:
Stock options 1,661 1,256 1,661 -
Warrants 2,817 2,363 2,817 -
LYONs 6,097 - 6,097 -
Other 42 378 42 -
Weighted average
shares - diluted 61,962 54,892 61,916 49,696
Net income (loss) per common share:
Basic $ .42 $ .10 1.24 $ (0.04)
Diluted $ .36 $ .09 1.07 $ (0.04)
</TABLE>
Earnings per share is not presented subsequent to May 4,
1999. At the date of the Merger all of the outstanding
stock of the Company was converted into Clear Channel common
stock rendering the calculation not meaningful.
Prior to the Merger, the Company's 1996 Liquid Yield Option
Notes and 1998 Liquid Yield Option Notes (collectively, the
"LYONs") could 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 and six
months ended June 30, 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. Due to the
Merger, the LYONs are now convertible into shares of Clear
Channel common stock at the Merger conversion ratio.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
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>
Period from May 5, 1999 Radio Other Corporate Eliminations Consolidated
through June 30, 1999
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 141,011 $ 30,536 - $ (1,468) $ 170,079
Broadcast operating expenses 76,136 25,301 - (1,459) 99,978
Broadcast cash flow 64,875 5,235 - (9) 70,101
Corporate expenses - - $ 2,766 - 2,766
Depreciation 3,548 606 186 - 4,340
Amortization 45,852 744 532 (6) 47,122
Operating income (loss) 15,475 3,885 (3,484) (3) 15,873
Capital expenditures 683 844 25 - 1,552
Radio station and other
acquisitions 13,361 - - - 13,361
Total assets 7,048,147 259,786 246,635 (24,627) 7,529,941
Period from April 1, 1999 through
May 4, 1999 (Predecessor)
Net broadcast revenue $ 82,972 $ 3,160 $ (8,414) $ (734) $ 76,984
Broadcast operating expenses 55,078 2,952 (4,812) (897) 52,321
Broadcast cash flow 27,894 208 (3,602) 163 24,663
Corporate expenses - - 1,744 - 1,744
Depreciation 2,758 75 (83) - 2,750
Amortization 9,413 91 (325) (1) 9,178
Operating income (loss) 15,723 42 (4,938) 164 10,991
Capital expenditures 4,074 725 28 - 4,827
Radio station and other
acquisitions 12,683 - - - 12,683
Total assets 3,015,497 257,738 352,676 (24,627) 3,601,284
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION, Continued
<TABLE>
<CAPTION>
Quarter ended June 30, 1998 Radio Other Corporate Eliminations Consolidated
(Predecessor)
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 168,417 $ 16,472 - $ (1,053) $ 183,836
Broadcast operating expenses 108,823 12,977 - (1,053) 120,747
Broadcast cash flow 59,594 3,495 - - 63,089
Corporate expenses - - $ 4,530 - 4,530
Depreciation 5,138 847 276 - 6,261
Amortization 20,511 992 1,069 - 22,572
Operating income (loss) 33,945 1,656 (5,875) - 29,726
Capital expenditures 7,202 442 721 - 8,365
Radio station and other
acquisitions 15,040 - - - 15,040
Total assets 2,289,640 238,599 446,177 (3,354) 2,971,062
Period from January 1, 1999 through
May 4, 1999 (Predecessor)
Net broadcast revenue $ 265,773 $ 17,450 $ (8,414) $ (3,162) $ 271,647
Broadcast operating expenses 184,809 15,600 (5,062) (3,270) 192,077
Broadcast cash flow 80,964 1,850 (3,352) 108 79,570
Corporate expenses - - 7,373 - 7,373
Depreciation 9,104 990 100 - 10,194
Amortization 35,489 1,255 17 (4) 36,757
Operating income (loss) 36,371 (395) (10,842) 112 25,246
Capital expenditures 10,698 965 877 - 12,540
Radio station and other
acquisitions 134,967 - - - 134,967
Total assets 3,015,497 257,738 352,676 (24,627) 3,601,284
Six Months ended
June 30, 1998 (Predecessor)
Net broadcast revenue $ 296,163 $ 31,807 - $ (2,106) $ 325,864
Broadcast operating expenses 205,240 24,966 - (2,106) 228,100
Broadcast cash flow 90,923 6,841 - - 97,764
Corporate expenses - - $ 8,174 - 8,174
Depreciation 9,748 1,685 564 - 11,997
Amortization 40,905 1,983 1,398 - 44,286
Operating income (loss) 40,270 3,173 (10,136) - 33,307
Capital expenditures 9,784 1,381 1,995 - 13,160
Radio station and other
acquisitions 73,308 - - - 73,308
Total assets 2,289,640 238,599 446,177 (3,354) 2,971,062
</TABLE>
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT
Credit Facility
At the date of the Merger, the Company's credit facility,
consisting of $450.0 million of outstanding debt under a
revolving credit facility and $400.0 million of outstanding
debt under a term loan, along with accrued interest, was
paid in full by Clear Channel.
Senior Subordinated Notes
Due to the change in control, provisions in the Company's 10
1/8% senior subordinated notes, 9 _% senior subordinated
notes, 8 _% senior subordinated notes and 8% senior
subordinated notes (the "Notes") required the Company to
offer repayment of the Notes at 101% of the principal
amount. As of June 30, 1999, approximately $22.1 million in
Notes were tendered for repayment and were paid by Clear
Channel.
8. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133
Accounting for Derivative Instruments and Hedging
Activities. Statement 133 establishes new rules for the
recognition and measurement of derivatives and hedging
activities. Statement 133 is amended by Statement 137
Accounting for Derivative Instruments and Hedging Activities
- Deferral of the Effective Date of FASB Statement No. 133,
and is effective for years beginning after June 15, 2000.
The Company plans to adopt this statement in fiscal year
2001. Management does not believe adoption of this
statement will materially impact the Company's financial
position or results of operations.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
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 consummated the Merger at the close of business May 4,
1999. Pursuant to terms of the agreement, each share of Jacor
common stock was exchanged for 1.1573151 shares of Clear Channel
common stock. Upon conclusion of the Merger, Clear Channel
became the sole shareholder of the Company, owning one
outstanding share of Jacor common stock.
Upon consummation of the Merger, a change in control event
occurred with respect to the Company's credit facility, liquid
yield option notes and the senior subordinated notes. Such
change in control gave the credit facility lenders the right to
require repayment of amounts borrowed under the facility, and
required 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 became fully vested and exercisable one day before the
effective time of the Merger. Clear Channel assumed 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.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
LIQUIDITY AND CAPITAL RESOURCES, Continued
Additionally, the Merger resulted 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 provided by financing activities for the first six months of
1999 was $24.6 million compared to $358.1 million provided by
financing activities for the first six months of 1998. The
decrease is due to the issuance of the 8% Senior Subordinated
Notes, 1998 LYONs and equity offering that occurred during the
first six months in 1998. Additionally, during the first six
months of 1999 the outstanding debt under the Company's credit
facility and $22.1 million of the Company's senior subordinated
notes were paid by Clear Channel and replaced with an
intercompany payable.
Investing Activities
Cash flows used for investing activities were $69.8 million for
the first six months of 1999 as compared to $86.5 million for the
first six months of 1998. The variations from year to year are
primarily related to station acquisition activity, as described
below.
Completed Acquisitions
During the first six months of 1999, the Company acquired the
stock of one and the assets of 31 radio stations and one low-
powered television station in four of the Company's existing
broadcast areas and 15 new broadcast areas for cash consideration
of approximately $116.3 million, of which approximately $10.4
million was placed in escrow in 1997 and 1998. These
acquisitions were funded primarily through borrowings under the
Company's credit facility, which was paid in full by Clear
Channel at the date of the Merger.
Pending Radio Station Acquisitions and Dispositions
The Company has entered into agreements to purchase the stock of
one and the FCC licenses and substantially all of the broadcast
assets of 11 radio stations in four of the Company's existing
broadcast areas and two new broadcast areas for approximately
$18.8 million in cash, of which approximately $2.7 million has
been placed in escrow. The Company expects all financing of its
pending acquisitions will be provided by cash flows from
operating activities.
Capital Expenditures
The Company had capital expenditures of $14.1 million and $13.2
million for the six months ended June 30, 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.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
LIQUIDITY AND CAPITAL RESOURCES, Continued
Operating Activities
For the six months ended June 30, 1999, cash flow provided by
operating activities was $44.7 million, as compared to $14.5
million for the six months ended June 30, 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 June
30, 1999, the radio segment includes 240 radio stations in 71
broadcast areas and Premiere Radio Networks, Inc. ("Premiere"), a
radio syndication business. 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
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
Financial information for the Company's segments is as follows
(in thousands):
Favorable
(Unfavorable)
For the quarter ended June 30, 1999 Change 1998
Net revenues:
Radio $ 223,983 33.0% $ 168,417
Other 23,080 49.7% 15,419
Total net revenues $ 247,063 34.4% $ 183,836
Broadcast operating expenses:
Radio $ 131,214 (20.6%) $ 108,823
Other 21,085 (76.8%) 11,924
Total broadcast operating expenses $ 152,299 (26.1%) $ 120,747
Broadcast cash flow:
Radio $ 92,769 55.7% $ 59,594
Other 1,995 (42.9%) 3,495
Total broadcast cash flow $ 94,764 50.2% $ 63,089
Depreciation & amortization:
Radio $ 61,571 (140.1%) $ 25,649
Other 1,509 17.9% 1,839
Corporate 310 77.0% 1,345
Total depreciation & amortization $ 63,390 (119.9%) $ 28,833
Operating income (loss) before
Corporate general and
administrative expense:
Radio $ 31,198 (8.1%) $ 33,945
Other 486 (70.7%) 1,656
Corporate (310) 77.0% (1,345)
Subtotal 31,374 (8.4%) 34,256
Corporate general and administrative
expense: (4,510) 0.4% (4,530)
Net operating income $ 26,864 (9.6%) $ 29,726
Other Consolidated Statements of
Operations Data:
Interest expense $ (29,347) (17.0%) $ (25,079)
Gain on sale of assets $ 46,909 - -
Income tax expense $ (27,700) (369.5%) $ (5,900)
Net income (loss) $ 15,349 205.6% $ 5,022
Other Consolidated Financial
Statement Data:
Capital expenditures $ 6,379 (23.7%) $ 8,365
Radio station and other
acquisitions $ 26,044 (23.6%) $ 34,093
Total assets $7,529,941 153.4% $ 2,971,062
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
Favorable
(Unfavorable)
For the six months ended June 30, 1999 Change 1998
Net revenues:
Radio $ 406,784 37.4% $ 296,163
Other 34,942 17.6% 29,701
Total net revenues $ 441,726 35.6% $ 325,864
Broadcast operating expenses:
Radio $ 260,777 (27.1%) $ 205,240
Other 31,278 (36.8%) 22,860
Total broadcast operating expenses $ 292,055 (28.0%) $ 228,100
Broadcast cash flow:
Radio $ 146,007 60.6% $ 90,923
Other 3,664 (46.4%) 6,841
Total broadcast cash flow $ 149,671 53.1% $ 97,764
Depreciation & amortization:
Radio $ 93,993 (85.6%) $ 50,653
Other 3,585 2.3% 3,668
Corporate 835 (57.4%) 1,962
Total depreciation & amortization $ 98,413 (74.9%) $ 56,283
Operating income (loss) before
Corporate general and
administrative expense:
Radio $ 52,014 29.2% $ 40,270
Other 79 (97.5%) 3,173
Corporate (835) 57.4% (1,962)
Subtotal 51,258 23.6% 41,481
Corporate general and administrative
expense: (10,139) (24.0%) (8,174)
Net operating income $ 41,119 23.5% $ 33,307
Other Consolidated Statements of
Operations Data:
Interest expense $ (59,256) (20.8%) $ (49,037)
Gain on sale of assets $ 130,385 - -
Income tax (expense) benefit $ (53,500) (1149.0%) $ 5,100
Net income (loss) $ 57,198 3148.9% $ (1,876)
Other Consolidated Financial
Statement Data:
Capital expenditures $ 14,092 7.1% $ 13,160
Radio station and other
acquisitions $ 148,328 116.3% $ 68,578
Total assets $7,529,941 153.4% $2,971,062
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
Discussion of Radio Segment Financial Statement Changes for the Quarters
ended June 30, 1999 and 1998
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
$20.4 million or 11.9%, from $170.6 million in 1998 to $191.0 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 $5.8 million or 5.1% from $112.6 million in 1998 to
$118.4 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 primarily
due to the increase in intangible assets associated with the Clear Channel
Merger, and also due to acquisitions made during 1998 and the first six
months
of 1999.
Operating income decreased from 1998 to 1999 as a result of the increase in
amortization expense associated with the Clear Channel Merger.
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 from the disposal of radio
stations in Tampa, Florida and Louisville, Kentucky.
Income tax expense for the second quarter of 1999 increased compared to the
second quarter of 1998 due primarily to the gains from the sale of radio
stations.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
Discussion of Radio Segment Financial Statement Changes for the Six Months
ended June 30, 1999 and 1998
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
$35.4 million or 11.6%, from $306.5 million in 1998 to $341.9 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 $10.9 million or 5.1% from $215.5 million in 1998 to
$226.4 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 primarily
due to the increase in intangible assets associated with the Clear Channel
Merger, and also due to acquisitions made during 1998 and the first six
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 from the sale of an investment
in a marketable equity security and the recognition of gains on the
disposal of radio stations in Tampa, Florida and Louisville, Kentucky.
Income tax expense for the first six months of 1999 increased compared to
an income tax benefit for the first six months of 1998. The increase is
primarily related to the gain on the sale of assets in 1999.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
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 Y2K issue involves the identification and assessment of the existing
problem, plan of remediation, as well as a testing and implementation plan.
To date, the Company has substantially completed the identification and
assessment process, with the following significant financial and
operational components identified as being affected by the Y2K issue:
Computer hardware running critical financial accounting and
information system software that is not capable of recognizing a four-digit
code for the applicable year.
Advertising inventory management software responsible for managing,
scheduling and billing customer's broadcasting and outdoor advertising
purchases.
Broadcasting studio equipment and software necessary to deliver radio
and television programming.
Significant non-technical systems and equipment that may contain
microcontrollers which are not Y2K compliant.
The Company has instituted the following remediation plan to address the
Y2K issues:
A computer hardware replacement plan for computers running essential
broadcast, operational and financial software applications with Y2K
compatible computers has been instituted. As of June 30, 1999
approximately 80% of all essential computers related to broadcast or studio
equipment are Y2K compatible. Substantially all of the essential financial
based computers are Y2K compliant. The Company anticipates this
replacement plan to be complete by the end of October 1999.
Software upgrades or replacement with advertising inventory management
software which is Y2K compliant have been planned, are in process, or have
been completed as of June 30, 1999. The Company has received assurances
from its software vendors, with a few minor exceptions, that supply its
advertising inventory management software that their software is Y2K
compliant. For these non-compliant vendors, the Company will install
inventory management software from a compliant vendor by the end of the
third quarter of 1999. Substantially all of the broadcasting properties
have Y2K compliant advertising inventory management software as of June 30,
1999.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
The Company has received assurances from its software vendors that supply
broadcasting digital automation systems that the software used by the
Company is currently compliant or has upgrades currently available that are
compliant. Broadcast software and studio equipment is considered to be 80%
compliant as of June 30, 1999 and is anticipated to be 100% compliant by
the end of October 1999.
Financial accounting software has been replaced and is Y2K compliant.
The Company believes its remediation plan will provide reasonable assurance
that material disruptions will not occur due to internal failure, however
the possibility of some interruption still exists.
The final phase of the strategic plan, 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.
The Company is currently querying other significant vendors that do not
share information systems with it (external agents). To date, the Company
is not aware of any external agent with a Y2K issue that would materially
impact its results of operations, liquidity, or capital resources.
However, the Company has no means of ensuring that external agents will be
Y2K ready. The inability of external agents to complete their Y2K
resolution process in a timely fashion could materially impact the Company.
The effect of non-compliance by external agents is not determinable. In
addition, disruptions in the economy generally resulting from the Y2K
issues could also materially adversely affect the Company. The Company
could be subject to litigation for computer systems failures, equipment
shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated.
The Company has contingency plans for certain critical applications in
sites deemed significant to operations. These contingency plans involve,
among other actions, manual work around for on-air and financial systems, a
store of Y2K compliant computers available for rapid deployment, backup
generators at key broadcast and transmitter sites and staffing strategies
to affect such contingency plans.
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. 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
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
RESULTS OF OPERATIONS, Continued
Recent Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 Accounting for Derivative
Instruments and Hedging Activities. Statement 133 establishes new rules for
the recognition and measurement of derivatives and hedging activities.
Statement 133 is amended by Statement 137 Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133, and is effective for years beginning after June 15,
2000. The Company plans to adopt this statement in fiscal year 2001.
Management does not believe adoption of this statement will materially
impact the Company's financial position or results of operations.
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
(A wholly owned subsidiary of Clear Channel Communications, Inc.)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description Page
27 Financial Data Schedule 29
__ _________
(b) Reports on Form 8-K
The following 8-K was filed during the second quarter of 1999:
Form 8-K dated May 26, 1999. This Form 8-K was filed to report
that the Company is the successor registrant to the former
Jacor Communications, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JACOR COMMUNICATIONS, INC.
(A wholly owned subsidiary of
Clear Channel Communications, Inc.)
(Registrant)
DATED: August 16, 1999 BY /s/ Randall T. Mays
Randall T. Mays,
Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,505
<SECURITIES> 0
<RECEIVABLES> 219,772
<ALLOWANCES> 9,050
<INVENTORY> 0
<CURRENT-ASSETS> 264,488
<PP&E> 312,491
<DEPRECIATION> 4,340
<TOTAL-ASSETS> 7,529,941
<CURRENT-LIABILITIES> 221,537
<BONDS> 1,040,649
0
0
<COMMON> 0
<OTHER-SE> 4,434,073
<TOTAL-LIABILITY-AND-EQUITY> 7,529,941
<SALES> 0
<TOTAL-REVENUES> 499,612
<CGS> 0
<TOTAL-COSTS> 349,941
<OTHER-EXPENSES> 108,552
<LOSS-PROVISION> 747
<INTEREST-EXPENSE> 59,256
<INCOME-PRETAX> 110,698
<INCOME-TAX> 53,500
<INCOME-CONTINUING> 57,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,198
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
