UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------------------------------
For the fiscal year ended December 31, 1994
Commission file number 1-9645
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1787539
(State of Incorporation) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (210) 822-2828
_____________________________________
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of Exchange on which registered
Common Stock $.10 par value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
_____________________________________
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 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes __x__ No _____
_____________________________________
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [x]
_____________________________________
As of March 1, 1995, 17,263,064 shares of Clear Channel
Communications, Inc. Common Stock were outstanding including 6,298
held in treasury, and the aggregate market value (based upon the
last reported sale price on the New York Stock Exchange on February
28, 1994) of the shares of Common Stock held by non-affiliates was
approximately $576,978,000. (For purposes of calculating the
preceding amount only, all directors and executive officers of the
registrant are assumed to be affiliates.)
_____________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by
reference in the Parts of this report indicated below:
Items 5, 6, 7 and 8 of Part II and portions of Item 14 of Part
IV -- Clear Channel Communications, Inc.'s 1994 Annual Report to
Shareholders. ("Annual Report")
Portions of Items 10, 11, 12 and 13 of Part III -- Definitive
Proxy Statement of Clear Channel Communications, Inc. relating to
its 1995 Annual Meeting of Shareholders to be held on April 20,
1995.
Part I
Item 1. Business
Clear Channel Communications, Inc. ("the Company") was
incorporated under the laws of the State of Texas in 1974 as the
successor to a radio broadcasting company which began operations in
1972. The Company is a diversified broadcasting company which at
year end owned and operated 33 radio and nine television stations
for which it is the licensee. In addition, the Company operates
seven radio and four television stations under time sales, time
brokerage or local marketing agreements. All of these properties
are located in 21 different markets in 15 states.
At December 31, 1994, the Company owned the licenses to 14 AM
and 19 FM radio stations located principally in the South,
Southwest and in the Northeast. These radio stations employ a wide
variety of programming formats, such as News/Talk/Sports, Country,
Adult Contemporary, Urban and Album Rock. The Company's nine
licensed television stations are located in the South, Southwest,
New York and in Minnesota. Eight of these television stations are
affiliated with the Fox television network, and the ninth is an
independent station. Additionally, the Company operates four radio
networks, one of which provides news coverage in Oklahoma, one of
which provides sports coverage in Oklahoma, Texas and Iowa, one of
which provides news, sports and information to radio stations
throughout Kentucky and one of which provides news, sports and
information to radio stations throughout Virginia. In 1994, the
Company derived approximately 54% of its net broadcasting revenue
from radio operations and approximately 46% from television
operations.
The Company's strategy is to identify and acquire
under-performing stations on favorable terms and to utilize
management's extensive operating experience to improve the
performance of such stations through effective programming,
reduction of costs and aggressive promotion, marketing and sales.
From 1989 to 1991, growth has been generated primarily from the
acquisition of television stations, as well as operating
improvements at existing broadcasting properties. From 1992
through 1994, growth was generated primarily from the acquisition
of radio stations and WFTC-TV in Minneapolis, MN as well as
operating improvements at existing broadcasting properties. The
Company continues to seek opportunities for expansion through the
acquisition of attractive broadcasting and other media-related
properties.
The Company believes that one of its most important assets is
its experienced management team. General managers are responsible
for the day-to-day operations of their respective stations. The
Company believes that the autonomy of its station management
enables it to attract top quality managers capable of implementing
the Company's aggressive marketing strategy and reacting to
competition in the local markets. Most general managers have stock
options to purchase the Common Stock of the Company. As an
additional incentive, a portion of each manager's compensation is
related to the performance of the station or stations for which
he/she is responsible.
The major costs associated with radio and television
broadcasting are related to personnel and programming. In an
effort to monitor these costs, corporate management routinely
reviews staffing levels and programming costs. Combined with the
centralized accounting functions, this monitoring enables the
Company to effectively control expenses. Corporate management also
advises local station managers on programming and other broad
policy matters and is responsible for long-range planning,
allocating resources and financial reporting and controls.
Recent Developments
Effective January 1, 1995, the Company acquired the
broadcasting assets of KMJQ-FM and KYOK-AM in Houston, Texas for
approximately $38.5 million and immediately divested itself of
KYOK-AM, as well as KHYS-FM and KALO-AM to comply with Federal
Communications Commission ("FCC") regulations. In addition,
effective January 1, 1995 the Company acquired an 80% interest in
a partnership, which owns and operates KPRC-AM and KSEV-AM in
Houston, Texas for approximately $26.8 million. Financing for both
of these transactions was provided by the existing credit facility.
During March, the Company entered into a definitive agreement
to acquire a 50% interest in a newly created entity, Australian
Radio Network, for approximately $75 million subject to approval
from the Australian Foreign Investment Review Board. An Australian
based company will retain the remaining 50% interest. This entity
will own and operate nine radio stations in six different markets,
including the three largest markets in Australia: Sydney,
Melbourne and Brisbane. In addition, the entity will own
Australia's largest radio representation firm.
Employees
At January 1, 1995, the Company had approximately 1,549
employees: 1,117 in radio operations, 410 in television operations
and 22 in corporate activities.
Industry Segments
Information relating to the industry segments of the
Company's operations for 1994, 1993 and 1992 is included on page 30
of the Company's Annual Report and hereby is incorporated by
reference.
<PAGE>
Radio Broadcasting
The following table sets forth certain selected information with regard
to each of Clear Channel Communications, Inc.'s 14 AM and 19 FM radio
stations for which it owns the FCC license at year end.
Expiration
Date of (2) Date of FCC Power
Station/Location Acquisition Network License Frequency (Watts)
WOAI-AM
San Antonio, TX Jun. 1975 ABC,CBS,TSN 8/1/97 1200 KHZ 50,000
KAJA-FM
San Antonio, TX Mar. 1972 8/1/97 97.3 MHZ 100,000
KAKC-AM
Tulsa, OK Oct. 1973 SMN,ONN 6/1/97 1300 KHZ 5,000(1)
KMOD-FM
Tulsa, OK Oct. 1973 ONN 6/1/97 97.5 MHZ 100,000
KALO-AM Beaumont (4)
Port Arthur, TX Jan. 1978 USRN,SBN 8/1/97 1250 KHZ 5,000(1)
KHYS-FM Houston (4)
Port Arthur, TX Jan. 1978 USRN,ABC 8/1/97 98.5 MHZ 100,000
KPEZ-FM
Austin, TX Jul. 1982 8/1/97 102.3 MHZ 50,000
KTOK-AM
Oklahoma City, OK Oct. 1984 ABC,ONN 6/1/97 1000 KHZ 5,000
KJYO-FM
Oklahoma City, OK Oct. 1984 ABC 6/1/97 102.7 MHZ 100,000
WODT-AM
New Orleans, LA Oct. 1984 ABC,SEN 6/1/96 1280 KHZ 5,000
WQUE-FM
New Orleans, LA Oct. 1984 6/1/96 93.3 MHZ 100,000
WELI-AM
New Haven, CT Oct. 1984 ABC 4/1/98 960 KHZ 5,000
WHAS-AM
Louisville, KY Sep. 1986 ABC 8/1/96 840 KHZ 50,000
WAMZ-FM
Louisville, KY Sep. 1986 8/1/96 97.5 MHZ 100,000
WKCI-FM
New Haven, CT May 1992 4/1/98 101.3 MHZ 50,000
WRVA-AM
Richmond, VA Jul. 1992 CBS 10/1/95 1140 KHZ 50,000
WRVQ-FM
Richmond, VA Jul. 1992 10/1/95 94.5 MHZ 100,000
WRBQ-AM
Tampa, FL Jul. 1992 ABC,SMN 2/1/96 1380 KHZ 5,000
WRBQ-FM
Tampa, FL Jul. 1992 ABC 2/1/96 104.7 MHZ 100,000
WAVZ-AM
New Haven, CT Dec. 1992 ABC,USRN 4/1/98 1300 KHZ 1,000
KQXT-FM
San Antonio, TX Jan. 1993 8/1/97 101.9 MHZ 100,000
KHFI-FM
Austin, TX Feb. 1993 8/1/97 96.7 MHZ 100,000
KTKR-AM
San Antonio, TX Jul. 1993 ABC,NBC,W1/M 8/1/97 760 KHZ 5,000
WRVH-AM
Richmond, VA Sep. 1993 W1/M 10/1/95 910 KHZ 5,000
WRXL-FM
Richmond, VA Sep. 1993 10/1/95 102.1 MHZ 100,000
KEBC-FM
Oklahoma City, OK Jan. 1994 6/1/97 94.7 MHZ 100,000
WBGG-FM
Miami, FL Mar. 1994 2/1/96 105.9 MHZ 100,000
KBXX-FM
Houston, TX Aug. 1994 W1/U 8/1/97 97.9 MHZ 100,000
WHYI-FM
Miami, FL Oct. 1994 2/1/96 100.7 MHZ 100,000
WMTX-AM (3)
Tampa, FL Oct. 1994 2/1/96 1040 KHZ 3,600
WMTX-FM
Tampa, FL Oct. 1994 2/1/96 95.7 MHZ 100,000
WERE-AM
Cleveland, OH Oct. 1994 CNN,W1/M 10/1/96 1300 KHZ 5,000
WNCX-FM
Cleveland, OH Oct. 1994 ABC 10/1/96 98.5 MHZ 100,000
(1) 5,000 watts during the day and 1,000 watts at night
(2) TSN- Texas State Network, ONN-Oklahoma News Network, USRN-U.S. Radio
Network, SMN-Satellite Music Network, SBN-Sheridan Broadcast Network,
W1/U-Westwood One/Unistar, W1/M-Westwood One/Mutual, SEN-Sports
Entertainment Network
(3) 3,600 watts during the day and 420 at night
(4) Station was sold effective January 1, 1995
In addition, at year end the Company had joint sales agreements with KSJL-FM
San Antonio, TX; KEYI-FM and KFON-AM Austin, TX; WKJK-FM Louisville, KY;
WYLD-AM/FM New Orleans, LA and WENZ-FM Cleveland, OH to market and sell the
advertising time.
<PAGE>
The Company's radio stations employ various formats for their
programming. A station's format is important in determining the
size and characteristics of its listening audience. Advertising
rates charged by a radio station are based primarily on the
station's ability to attract audiences having certain demographic
characteristics in the market area which advertisers want to reach,
as well as the number of stations competing in the market.
Advertisers often tailor their advertisements to appeal to selected
population or demographic segments. The Company pays the cost of
producing the programming for each station. Generally, the Company
designs formats for its own stations, but has also used outside
consultants and program syndicators for program material.
Most of the Company's radio revenue is generated from the
sale of local advertising. Additional revenue is generated from
the sale of national advertising, network compensation payments,
barter and other miscellaneous transactions. The Company has
focused its sales effort on selling directly to local advertisers,
while seeking to minimize sales through outside representatives,
including advertising agencies. Direct contact with its customers
has aided the Company's sales personnel in developing long-standing
customer relationships, which the Company believes are a
competitive advantage. The Company's sales personnel are paid on
a commission basis, which emphasizes this direct local focus. The
Company believes that this focus has enabled some of its stations
to achieve market revenue shares exceeding their audience shares
during 1994. Each of the Company's radio stations also engages
independent sales representatives to assist it in obtaining
national advertising. The representatives obtain advertising
through national advertising agencies and receive a commission from
Clear Channel based on the Company's gross revenue from the
advertising obtained.
<PAGE>
Television Broadcasting
The following table sets forth certain selected information with regard
to each of the Company's nine television stations it owns and operates.
Expiration
Date of Date of FCC Power
Station/Location Acquisition Network License Channel (Watts)
WPMI-TV
Mobile, AL Dec. 1988 FOX 4/1/97 15 5,000,000
KOKI-TV
Tulsa, Ok Dec. 1989 FOX 6/1/98 23 3,260,000
WAWS-TV
Jacksonville, FL. Sep. 1989 FOX 2/1/97 30 2,789,000
KTTU-TV
Tucson, AZ Feb. 1989 Independent 10/1/98 18 2,500,000
KSAS-TV
Wichita, KS Aug. 1990 FOX 6/1/98 24 3,310,000
WPTY-TV
Memphis, TN Apr. 1992 FOX 8/1/97 24 3,003,000
WFTC-TV
Minneapolis, MN Oct. 1993 FOX 4/1/97 29 5,000,000
KLRT-TV
Little Rock, AR Feb. 1994 FOX 6/1/96 16 5,000,000
WXXA-TV
Albany, NY Dec. 1994 FOX 6/1/98 23 3,020,000
In addition, at year end, the Company had joint sales or local marketing
agreements with WJTC-TV Mobile, AL; KTFO-TV Tulsa, OK; WLMT-TV Memphis, TN
and KASN-TV Little Rock, AR.
<PAGE>
The Company purchases the broadcast rights for the majority of
its television programming from various syndicators. The Company
competes with other television stations within each market for
these broadcast rights. These programming costs have declined in
the past five years and are expected to continue to decline in the
foreseeable future due to the decrease in the number of stations in
the Company's markets competing for the same programming. In
addition, the Company believes the quantity of attractive
programming available today is and for the foreseeable future, will
be greater than in previous years. The improved programming allows
the station to make fewer program changes. Moreover, the expansion
of the Fox television network's programming has reduced the need
for the Company to obtain outside programming.
The other source of programming for the Company's Fox
affiliates is the Fox television network, which produces and
distributes up to 34 hours of programming (15 hours of prime time)
per week plus up to seven hours of NFC football each Sunday from
September through January in exchange for each station's commitment
to air the programming at specified times and for commercial
announcement time during the programming. Generally, during 1994,
the Company's Fox affiliates attracted the largest audience in each
of their respective markets, except for those stations affiliated
with ABC, CBS and NBC. Based on the 1994 season, the average
audience share for the Company's Fox programming on four of its Fox
affiliated stations exceeded the national rating average for all
Fox affiliates.
The Fox television network commenced operations in October
1986. During this period, Fox has developed a network of
approximately 156 affiliates and Fox programming is currently
available in more than 95% of the households in the United States.
The amount of programming provided by Fox to its affiliates has
increased from a total of five hours on two nights per week in July
1987 to 34 hours on seven nights per week (including 15 hours of
prime time programming) currently, plus NFC from September through
January. The contract with the NFC expires in January 1998. Fox
programming represents approximately 21% of the stations current
programming and is intended to appeal primarily to a target
audience of 18 to 49 year old adults.
Each Fox contract currently runs for a five year term expiring
in 1998 except for WXXA-TV in Albany, NY which expires in 1999 and
may be renewed by Fox or the Company. Based on the performance of
its Fox affiliated stations to date, the Company expects it will
continue to be able to renew its Fox contracts, although no
assurances in this regard can be given. However, Fox has advised
the Company that it has acquired control of the ABC affiliate in
Memphis, TN and the NBC affiliate in Mobile, AL vis-a-vis a debt
arrangement with the licensee. It is probable that within the next
two years the FOX affiliation will change in these markets. Should
this occur, the Company anticipates switching to one of the other
major network affiliations, however no assurance can be given at
this time that the Company will be able to affiliate with one of
the other networks.
Revenue is generated primarily from the sale of local and
national advertising, as well as from fees received from the Fox
television network. Advertising rates depend primarily on the
quantitative and qualitative characteristics of the audience the
Company can deliver to the advertiser. Local advertising is sold
by the Company's sales personnel, while national advertising is
sold by independent national sales representatives.
Revenue
The Company's revenue is seasonal, with the fourth quarter
generating the highest level of revenue and the first quarter
generating the lowest. The fourth quarter generally reflects
higher advertising in preparation for the holiday season and, in
the case of radio, the effect of political advertising in election
years.
The Company's broadcasting results are dependent on a number
of factors, including the general strength of the economy,
population growth, ability to provide popular programming, relative
efficiency of radio and television broadcasting compared to other
advertising media, signal strength, technological capabilities and
developments and governmental regulations and policies.
Competition
Clear Channel's radio and television stations compete for
audience share and advertising revenue directly with other radio
and television stations within their broadcast areas. Competition
among radio and television stations is based primarily on program
content, which is significantly affected by network affiliation and
by local programming activities. Other factors that affect a
station's competitive position include its authorized power,
terrain, assigned frequency, audience characteristics, local
program acceptance and the number and characteristics of other
stations in the market area. The Company's radio and television
stations are located in highly competitive markets. In the radio
broadcasting industry, moreover, it is not uncommon for radio
stations outside of a market area to broadcast at sufficient
strength to gain a share of the audience in adjacent areas. Many
of the stations with which the Company competes are owned or
operated by national or regional companies with substantially
greater financial and other resources than the Company. Other
media, including network television, cable television, newspapers,
magazines, direct mail coupons and billboard advertising, also
compete with the Company for advertising revenue.
The Company believes it competes favorably against other
stations because of its management skill and experience, the
ability of the Company to generate at least revenue equal to its
market share, and for television stations, the Fox network
affiliation and local program acceptance.
The following tables show the number of competitors and the relative
market size and population of each market served by the Company's radio and
television stations for which it owns the FCC license at year end:
RADIO
Station 1994 # of
and Market Stations Population
Market Rank in Market (in thousands)
WHAS-AM/WAMZ-FM 48 21 840
(Louisville, KY)
WOAI-AM/KAJA-FM 34 27 1,167
KQXT-FM/KTKR-AM
(San Antonio, TX)
WODT-AM/WQUE-FM 38 26 1,030
(New Orleans, LA)
KTOK-AM/KJYO-FM/KEBC-FM 51 18 823
(Oklahoma City, OK)
KAKC-AM/KMOD-FM 60 22 642
(Tulsa, OK)
KHYS-FM/KBXX-FM 9 35 3,294
(Houston/Port Arthur, TX)
KALO (1) 118 20 288
(Beaumont/Port Arthur, TX)
KPEZ-FM/KHFI-FM 54 29 785
(Austin, TX)
WELI-AM/WKCI-FM/WAVZ-AM 92 27 388
(New Haven, CT)
WHYI-FM/WBGG-FM 11 36 2,843
(Miami/Ft. Lauderdale, FL)
WNCX-FM/WERE-AM 22 26 1,766
(Cleveland, OH)
WRVA-AM/WRVQ-FM 56 23 766
WRVH-AM/WRXL-FM
(Richmond, VA)
WRBQ-AM/FM,WMTX-AM/FM 21 26 1,864
(Tampa, FL)
Source: American Radio Fall 1994 Report
(1) Company estimates
TELEVISION
(1)
Station 1994 # of 1994
and Market Stations Households
Market Rank in Market (in thousands)
KOKI-TV 59 6 463
(Tulsa, OK)
WAWS-TV 55 5 488
(Jacksonville, FL)
WPMI-TV 61 5 433
(Mobile, AL/Pensacola, FL)
WPTY-TV 42 6 606
(Memphis, TN)
KSAS-TV 62 4 426
(Wichita, KS)
KTTU-TV 81 6 334
(Tucson, AZ)
WFTC-TV 14 6 1,411
(Minneapolis, MN)
KLRT-TV 58 5 472
(Little Rock, AR)
WXXA-TV 52 5 514
(Albany, NY)
Source: 1994 ADI Market Rankings based on A.C. Nielsen estimates of U.S
Television Households
(1) Company estimate
<PAGE>
Markets
The Company's radio stations are located in cities which have
experienced substantial growth in population and household income
from 1984 to 1994.
Key components of the San Antonio and Austin economies include
U.S. military installations, federal and state government offices,
educational and research institutions, tourism, oil and gas and
ranching. The economies of San Antonio and Austin have benefitted
from their selection in recent years as sites for microelectronic
and data processing research and development. In addition, San
Antonio is a regional center for banking.
Beaumont-Port Arthur is the site of significant petrochemical
and refining facilities. In addition, other important components
of its economy include shipping and heavy industry.
Houston relies on the petrochemical industry with
diversification in biotechnology and computer manufacturing.
Tulsa and Oklahoma City are the headquarters of several major
corporations, as well as a number of banks and educational
institutions, and are a regional center of oil and gas activity.
The foundations of the New Orleans economy include tourism,
shipping and a stalwart oil and gas industry, although a number of
high-tech industries are rapidly expanding in this market. The New
Orleans Central Business District ranks among the nine southern
Central Business Districts in overall market strength, growth,
economic improvement and retail indicators.
New Haven's economy is diversified and includes elements of
distribution of health care, higher education, light industry,
banking and import and export trade.
The diversity of the Louisville market includes the
manufacturing of chemicals, electrical appliances, farm equipment,
synthetic rubber, foods and beverages, tobacco and motor vehicles.
Agricultural and mineral interests in the surrounding area provide
stable commerce in livestock, grain, tobacco, fruits and
vegetables, coal, oil, natural gas and lumber.
As a centrally located state capital, the Richmond economy
benefits from a sizeable government presence, as well as the very
significant banking, educational, medical, and industrial sectors.
In addition, Richmond is home to no less than 5 Fortune 500
companies.
The Tampa-St. Petersburg market has a diverse economic base
including industries such as phosphate, shipping, citrus, tobacco,
tourism and electronics. The area is home of two universities and
an Air Force base.
Mobile, Alabama/Pensacola, Florida has a diverse economy with
major naval facilities, tourism and manufacturing providing stable
and steady market growth.
KTTU-TV is in the very competitive market of Tucson, Arizona.
Key components of the Tucson economy are winter tourism, U.S.
military, and high technology manufacturers.
Jacksonville, Florida has a diverse economy based on financial
and information services, military and manufacturing.
Wichita, Kansas has a strong economy based on aircraft and
aeronautics. Other key components include service and agriculture.
Memphis is known as the "Distribution Center of America" due
to a large amount of goods shipped through the city via air, rail
and truck. It is the headquarters for one of the world's largest
air shipping companies. Other key components include tourism and
the higher educational sector.
Minneapolis/St. Paul is the home of fifteen industrial
companies on the 1992 FORTUNE 500 list which ranks it behind only
New York, Chicago and Houston for the most headquarters in the
United States. The metropolitan area has a strong and diversified
business base, including companies involved in manufacturing, super
computers, electronics, medical instruments, milling, machine
manufacturing, food processing and graphic arts.
Albany, NY is the state capital of New York and has long been
a seat of commerce and government. Major employers include
government, services, and technology companies. Albany is at the
center of one of the nations largest, most affluent consumer
markets - the northeast. Within a 250 mile radius lies the major
metropolitan areas of New York City, Philadelphia, Boston and
Montreal.
Major components of the Miami/Ft. Lauderdale market are
tourism, agriculture, services and international banking and trade.
Three ports serve this market making it the largest cruise ship
destination point in the United States and the third largest in the
world.
Little Rock, AR is the largest metropolitan area in the state.
Major employers include medicine, service industries, government
and manufacturing. In addition, Little Rock is home of the largest
C-130 aircraft training and airlift facilities in the world.
Major components of the Cleveland economy include
manufacturing, services, government and retail trade. The Port of
Cleveland is the largest overseas general cargo port on Lake Erie
and the third largest port on the Great Lakes which serves over 50
countries.
Federal Regulation of Television & Radio Broadcasting
Existing Regulation. Television and radio broadcasting is
subject to the jurisdiction of the FCC under the Communications Act
of 1934, as amended (the "Communications Act"). The Communications
Act prohibits the operation of television or radio broadcasting
stations except under a license issued by the FCC, and empowers the
FCC, among other things, to issue, revoke and modify broadcasting
licenses, determine the location of stations, regulate the
equipment used by stations, adopt regulations to carry out the
provisions of the Communications Act, and impose penalties for
violation of such regulations. The Communications Act prohibits
the assignment of a license or the transfer of control of a
licensee without prior approval of the FCC.
License Grant and Renewal. Television and radio broadcasting
licenses are generally granted or renewed for a period of five and
seven years, respectively, but may be renewed for a shorter period,
upon a finding by the FCC that the "public interest, convenience,
and necessity" would be served thereby. At the time an application
is made for renewal of a license, parties in interest may file
petitions to deny. Such parties, as well as members of the public,
may comment upon the service the station has provided during the
preceding license term and urge denial of the application. At the
same time, any person may file a competing application for
authority to operate the station and replace the incumbent
licensee.
In the vast majority of cases, broadcast licenses are
renewed by the FCC even when petitions to deny or competing
applications are filed. The Company has pending before the FCC
applications seeking renewal of the licenses for WPMI-TV, Mobile,
Alabama, and KTTU-TV, Tucson, Arizona. The license renewal
application for WPMI-TV drew a petition to deny which alleged
non-compliance with the FCC's equal employment opportunity
policies. The petition was subsequently withdrawn by the
petitioner. The license renewal applications for KTTU-TV disclosed
a number of instances in which KTTU had exceeded the FCC's
limitations governing the number of commercial announcements which
can appear during programming directed primarily at children. The
Company's other stations come up for license renewal at various
times in the future.
Multiple Ownership Restrictions. The FCC has promulgated
rules that limit the ability of individuals and entities to own or
have an ownership interest above a certain level (an "attributable"
interest) in broadcast stations, as well as other mass media
entities. All officers and directors of a licensee, as well as
stockholders who own five percent or more of the outstanding voting
stock of a licensee (either directly or indirectly), will generally
be deemed to have an "attributable" interest. Certain
institutional investors who exert no control or influence over a
licensee may own up to ten percent of such outstanding voting stock
before attribution occurs. Under FCC regulations, debt
instruments, non-voting stock, certain limited partnership
interests and voting stock held by non-majority stockholders in
cases in which there is a single majority stockholder are generally
not subject to attribution. The FCC has initiated an inquiry into
liberalizing several of these attribution standards and modifying
others. It is unlikely that this inquiry will be concluded before
the second half of 1995, and there can be no assurance that any of
these standards will be changed. The FCC's cross-interest policy,
which precludes an individual or entity from having a "meaningful"
but not "attributable" interest in one media property and an
"attributable" interest in a broadcast, cable, or newspaper
property in the same area, may be invoked in circumstances to reach
interests not expressly covered by the multiple ownership rules.
The FCC's multiple ownership rules include limits on the
number of radio and television stations that may be owned both on
a national and a local basis. On a national basis, the rules
generally limit any individual or entity from having an
attributable interest in more than 12 television stations.
Moreover, the aggregate audience reach of the co-owned television
stations may not exceed 25% of all U.S. households. An individual
may hold an attributable interest in up to 14 television stations
(or stations with a combined audience of 30% of all U.S.
households) if at least two of the stations are controlled by a
member of an ethnic minority.
In 1992, the FCC adopted substantial changes to its
restrictions on the ownership of radio stations. The new rules
allow a single entity to control as many as twenty AMs and twenty
FMs. As to ownership within a given market, the maximum varies
depending on the number of radio stations within the market. In
markets with fewer than fifteen stations, a single entity may
control three stations (no more than two of which can be FM),
provided that the combination represents less than fifty percent of
the stations in the market. In contrast, in markets with fifteen
or more radio stations, a single entity may control as many as two
AM and two FM stations, provided that the combined audience share
of the stations does not exceed twenty-five percent.
Also in 1992, the FCC placed limitations on local marketing
agreements ("LMAs") through which the licensee of one radio station
provides programming for another licensee's station in the same
market. Stations operating in the same service (e.g., where both
stations are FM) and in the same market are prohibited from
simulcasting more than twenty-five percent of their programming.
Moreover, in determining the number of stations a single entity may
control, an entity programming a station pursuant to an LMA is
required, under certain circumstances, to count that station toward
its national ownership maximum.
The FCC also limits the common ownership of broadcast stations
with overlapping service areas, combined local ownership of a
newspaper and a broadcast station, and combined local ownership of
a cable television system and a television station. FCC rules
currently allow an entity to have an attributable interest in only
one television station in a market (the "one-to-a-market rule").
However, the Company has applied for and obtained a waiver of this
restriction to permit common ownership of radio and television
facilities in Wichita, Kansas.
In January 1995, the FCC issued a Further Notice of Proposed
Rulemaking in order to seek additional comment in an outstanding
rulemaking proceeding in which it had proposed to modify both its
national and local limits on television ownership. On the national
level, the FCC seeks comment on whether to increase both the number
of stations and the permissible audience reach of stations in which
a single entity may have an attributable interest. At the local
level, the FCC asks whether it should narrow the geographic scope
of its duopoly rules, which currently prohibit a single entity from
owning two television stations with overlapping Grade B signal
contours (which typically range from 50 to 70 miles in radius).
The FCC asks whether the standard should be set at the Grade A
signal contours (which typically range from 30 to 45 miles in
radius) and whether it should allow common ownership of two TV
stations in the same market under limited circumstances. The FCC
also seeks comment on whether to relax or eliminate the
one-to-a-market rule, which generally restricts common ownership of
a television and radio station in the same market. In addition,
the Commission seeks comment on issues of control and attribution
with respect to local marketing agreements ("LMAs") entered into by
television stations.
Also, in January 1995, the FCC issued a Notice of Proposed
Rulemaking concerning its broadcast attribution rules. Among the
issues on which comment is sought are (i) whether to change the
voting stock attribution benchmarks from five percent to ten
percent and, for passive investors, from ten percent to twenty
percent; (ii) whether there are any circumstances in which
non-voting stock interests, which are currently considered
non-attributable, should be considered attributable; (iii) whether
the FCC should eliminate its single majority shareholder exception
(pursuant to which voting interests in excess of five percent are
not considered cognizable if a single majority shareholder owns
more than fifty percent of the voting stock); (iv) whether to relax
insulation standards for business development companies and other
widely-held limited partnerships; (v) how to treat limited
liability companies and other new business forms for attribution
purposes; (vi) whether to eliminate or codify the cross-interest
policy; and (vii) whether to adopt a new policy which would
consider whether multiple "cross interests" or other significant
business relationships (such as time brokerage agreements, debt
relationships, or holdings of nonattributable interests), which
individually do not raise concerns, raise issues with respect to
diversity and competition.
In addition, Congress is considering legislation to modify the
FCC's multiple ownership rules. Legislation under consideration in
the Senate proposes the total repeal of all such rules.
The Company is unable to predict what, if any, changes the FCC
or Congress may order to the FCC's multiple ownership or
attribution rules or the effect, if any, on the Company or its
activities should the rules be changed. The Company does not
anticipate that these proceedings will be concluded until late 1995
at the earliest. Expansion of the Company's broadcast operations
in particular areas and nationwide will continue to be subject to
the FCC's ownership rules and any changes the agency may adopt.
Alien Ownership Restrictions. The Communications Act restricts
the ability of foreign entities or individuals to own or hold
interests in broadcast licenses. Foreign governments,
representatives of foreign governments, non-citizens,
representatives of non-citizens, and corporations or partnerships
organized under the laws of a foreign nation are barred from
holding broadcast licenses. Non-citizens, collectively, may
directly or indirectly own up to twenty percent of the capital
stock of a licensee, but are prohibited from serving as officers or
directors of such licensee. In addition, a broadcast license may
not be granted to or held by any corporation that is controlled,
directly or indirectly, by any other corporation that has a non-
citizen as an officer, more than one-fourth of whose directors are
non-citizens, or more than one-fourth of whose capital stock is
owned or voted by non-citizens or their representatives, by foreign
governments or their representatives, or by non-U.S. corporations,
if the FCC finds that the public interest will be served by the
refusal or revocation of such license. The Company has been advised
that the FCC staff has interpreted this provision of the
Communications Act to require an affirmative public interest
finding before a broadcast license may be granted to or held by any
such corporation and the FCC has made such an affirmative finding
only in limited circumstances. The Company, which serves as a
holding company for its license subsidiaries, therefore may be
restricted from having (i) more than one-fourth of its stock owned
directly or indirectly by non-citizens, foreign governments or
foreign corporations; (ii) an officer who is a non-citizen; and
(iii) more than one-fourth of its Board of Directors consisting of
non-citizens.
Congress is currently considering legislation which proposes
to liberalize the alien ownership restrictions contained in the
Communications Act. The Company is unable to predict what, if any,
changes Congress may make to the alien ownership restrictions or
the effect thereof upon the Company.
The 1992 Cable Act. On October 5, 1992, Congress enacted the
Cable Television Protection and Competition Act of 1992 (The "1992
Cable Act"). The FCC through its rules and regulations began
implementing the requirements of the 1992 Cable Act in 1993, and
final implementation proceedings remain pending regarding certain
of the rules and regulations previously adopted. Certain statutory
provisions, such as signal carriage, retransmission consent, and
equal employment opportunity requirements, have a direct effect on
television broadcasting. Other changes are focused exclusively on
the regulation of cable television but can still be expected to
have an indirect effect on the Company because of the competition
between over-the-air television stations and cable systems.
The signal carriage, or "must carry," provisions of the 1992
Cable Act require cable operators to carry the signals of local
commercial and non-commercial television stations and certain low
power television stations. Systems with 12 or fewer usable
activated channels and more than 300 subscribers must carry the
signals of at least three local commercial television stations. A
cable system with more than 12 usable activated channels,
regardless of the number of subscribers, must carry the signals of
all local commercial television stations, up to one-third of the
aggregate number of usable activated channels of such system.
The 1992 Cable Act also includes a retransmission consent
provision that prohibits cable operators and other multi-channel
video programming distributors from carrying broadcast stations
without obtaining their consent in certain circumstances.
The must carry and retransmission consent provisions are
related in that a local television broadcaster, on a cable
system-by-cable system basis, must make a choice once every three
years whether or not to proceed under the must carry rules or to
waive that right to mandatory, but uncompensated, carriage and
negotiate a grant of retransmission consent to permit the cable
system to carry the station's signal, in most cases in exchange for
some form of consideration from the cable operator. Cable systems
must obtain retransmission consent to carry all distant commercial
stations other than "super stations" delivered via satellite.
Under rules adopted to implement these must carry and
retransmission consent provisions, local television stations were
required to make an initial election of must carry or
retransmission consent by June 17, 1993. Stations that failed to
elect were deemed to have elected carriage under the must carry
provisions. Other issues addressed in the FCC rules were market
designations, the scope of retransmission consent, and procedural
requirements for implementing the signal carriage provisions.
On April 8, 1993, a special three-judge panel of the U.S.
District Court for the District of Columbia upheld the
constitutionality of the must carry provisions of the 1992 Cable
Act. However, on June 27, 1994, the U.S. Supreme Court, in a 5-4
decision, vacated the lower court's judgment and remanded the case
to the District Court for further proceedings. Although the
Supreme Court found the must carry rules to be content-neutral and
supported by legitimate governmental interests under appropriate
constitutional tests, it also found that genuine issues of material
fact still remained that must be resolved in a more detailed
evidentiary record. As a result, a final determination of the
constitutionality of the must carry rules must now await a further
fact-finding proceeding before the District Court and, most likely,
another appeal to the Supreme Court of a new District Court
decision. In the meantime, however, the FCC's new must carry
regulations implementing the 1992 Cable Act remain in effect.
The 1992 Cable Act also codified the FCC's basic equal
employment opportunity ("EEO") rules and the use of certain EEO
reporting forms currently filed by radio and television broadcast
stations. In addition, pursuant to the Act's requirements, the FCC
has adopted new rules providing for a review of the EEO performance
of each radio and television station at the mid-point of its
license term (in addition to renewal time). Such a review will
give the FCC an opportunity to evaluate whether the licensee is in
compliance with the FCC's processing criteria and notify the
licensee of any deficiency in its employment profile.
Advanced Television Service. The FCC also has begun to adopt
rules for implementing advanced television service ("ATV"),
including high definition television ("HDTV"), in the United
States. Implementation of ATV service will improve the technical
quality of television. The FCC has decided that it will set aside
specific new channel allotments for ATV service. Initial
eligibility for these channels will be limited to existing
television licensees and permittees authorized as of October 1991.
These entities will be allowed three years to apply for the new
channels. This three-year period and the other procedural
deadlines that the FCC has established will be measured from the
effective date of the FCC's adoption of a new technical standard
for ATV, once the FCC takes that action, or from the effective date
of a proposed new Table of Allotments for ATV channels, whichever
date is later. This start date is expected to be mid-1996.
Broadcasters who receive a construction permit for an ATV channel
will be required to construct their ATV facilities within six years
of the start date. The FCC also has adopted new rules for phasing
in ATV service. Under the FCC's plan, each television station
would be able to continue to provide conventional television
service on its regular channel until advanced television service
has become the prevalent medium, at which time (currently thought
to be 15 years from the start date) television broadcasters would
be required to surrender their conventional television licenses.
In late 1992, the FCC proposed broad objectives intended to govern
the ATV channel allotment process and also proposed specific
criteria to be used in allotting ATV channels as well as a
preliminary ATV Table of Allotments. These proposals are still
pending. All of the FCC's decisions to date are expected to be
reviewed by the agency in 1995.
Telecommunications legislation may affect the implementation
of ATV. At least one bill under consideration by Congress would
encourage the FCC to give broadcasters some flexibility in the use
of their new channel assignments for HDTV and other services. If
broadcasters were to utilize new technologies to put broadcast
frequencies to non-broadcast uses, then broadcasters might increase
their revenues, although they also might subject themselves to
spectrum use fees assessed by the FCC. In addition, broadcasters
might be afforded some flexibility to offer multi-program services
of non-ATV quality during some parts of the day. The benefits and
costs of such services are not clear.
If the FCC were to adopt a standard for ATV service that is
inferior to the signal quality provided by competing video delivery
technologies, if any, such action could have a negative impact on
the audience and revenues for television stations. Implementation
of ATV service will impose additional equipment costs (a minimum of
approximately $1.5 million per station for start-up) on television
stations providing the new service. While the Company believes the
FCC will authorize ATV service in the U.S. by mid-1996, the Company
cannot predict precisely when such authorization might be issued or
the effect such authorization might have on the Company's business.
Digital Audio Radio Service. The FCC is also considering
alternative systems for the delivery of digital audio radio service
("DARS"). DARS systems could permit delivery of audio signals with
fidelity comparable to compact discs. The FCC has before it a
proposed spectrum allocation for satellite DARS and several
applications for satellite DARS licenses. The FCC has also
undertaken an inquiry into the terrestrial broadcast of DARS
signals which addresses, among other things, the need for spectrum
outside the existing FM band. The Company cannot predict the
outcome of these proceedings or the impact thereof upon its
business.
Video Dialtone Regulation. Recent actions by the FCC,
Congress, and the courts all presage significant future involvement
in the provision of video services by telephone companies. The
Company cannot predict either the timing or the extent of such
involvement. The FCC has already approved several applications to
construct and operate a "video dialtone" system and has granted, in
part, the first tariff filed to govern the rates and terms of a
"video dialtone" offering. "Video dialtone" is defined by the FCC
as the provision of a basic common carrier platform to multiple
video programmers on a non-discriminatory basis. If a local
telephone company provides such a basic platform, it also may
provide enhanced and unregulated services related to the provision
of video programming.
Existing law prohibits a local telephone company from
providing video programming directly to subscribers in its
telephone service area. A series of recent U.S. district court
decision in Alabama, the District of Columbia, Illinois,
Washington, and Virginia have declared unconstitutional and have
enjoined the Communications Act's ban on direct provision of video
programming by a telephone company in its local service area. The
U.S. Courts of Appeals for the Fourth and Ninth Circuits have
affirmed the district court rulings brought before them on appeal.
Both the House and the Senate are in the process of drafting bills
that are expected to address cable/telephone company
cross-ownership issues. Two leading Senate proposals, not yet
introduced as bills, contemplate a relatively permissive framework
for entry by the telephone companies into cable. It is expected
that bills will be formally introduced late this year. The Company
cannot predict the outcome of these legislative efforts.
Direct Broadcast Satellite Systems. The FCC has authorized
the provision of programming directly to home subscribers through
direct broadcast satellites ("DBS"). On December 17, 1993, Hughes
Communications Galaxy ("Hughes"), an affiliate of the General
Motors Company, and United States Satellite Broadcasting Company
("USSB") jointly launched a new high-powered satellite with 16
transponders, from which they can provide DBS service to the entire
country. In June 1994, Hughes and USSB initiated DBS service, and
in August 1994 they launched a second satellite which is now
operational. In December 1994, two DBS permitees, EchoStar
Satellite Corporation and Directsat Corporation, merged their DBS
authorizations. Service from these permittees is expected to
commence in 1995. In addition, Advanced Communications Corporation
has applied for authority to assign its DBS authorizations to TEMPO
DBS, Inc. which plans to initiate service in 1996. The other
parties that hold authorizations to provide DBS service have not
launched their proposed satellites. The Company cannot predict the
impact of this new service upon its business.
Proposed Legislation and Regulation. Congress and the FCC
currently have under consideration, and may in the future adopt,
new laws, regulations and policies regarding a wide variety of
matters which could, directly or indirectly, affect the operation
and ownership of the Company's broadcast properties. In addition
to the proposed changes noted above, such matters include, for
example, the license renewal process, particularly the weight to be
given to the expectancy of renewal for an incumbent broadcast
licensee, the criteria to be applied in deciding contested renewal
applications, spectrum use fees, political advertising rates,
potential advertising restrictions on the advertising of certain
products (e.g., beer and wine), the rules and policies to be
applied in enforcing the FCC's equal employment opportunity
regulations, reinstitution of the Fairness Doctrine, the standards
to govern evaluation of television programming directed toward
children, violent and indecent programming, and elimination or
modification of the prime time access rule. Other matters that
could affect the Company's broadcast properties include
technological innovations and developments generally affecting
competition in the mass communications industry, such as the recent
initiation of direct broadcast satellite service, and the continued
establishment of wireless cable systems and low power television
stations.
The FCC is presently seeking comment on its policies designed
to increase minority ownership of mass media facilities. At the
same time, the recent announcement of a sale of cable properties
involving a minority tax certificate with potential large tax
consequences has prompted Congress to consider whether the minority
tax certificate program should be modified or eliminated. As of
March 15, 1995, the House and the Senate Finance Committee had
taken action intended to eliminate the program. The Company cannot
predict whether the FCC or Congress ultimately will take any action
to modify or rescind the minority tax certificate program.
Pending License Applications
At year end, the Company had filed with the FCC for the transfer
of the licenses of radio station WYLD-FM in New Orleans, LA. This
was granted in March 1995. In addition, the Company has filed with
the FCC the following applications for additional licenses in the
markets indicated:
Market Type of License
Des Moines, Iowa FM
To date, the FCC has not acted upon any of the pending license
applications the Company has filed.
ITEM 2. Properties
The following table sets forth certain information describing the
general character of the Company's properties:
Owned or Approximate
Metropolitan Area Leased_ Size____
San Antonio, Texas
Corporate headquarters L 7,500'
WOAI, KTKR, KQXT & KAJA
studios and offices L 15,000'
Site for WOAI tower and transmitter O 13 acres
Site for WOAI microwave relay L -
Site for KTKR tower and transmitter O 52 acres
Site for KAJA tower L -
Site for KAJA transmitter L 300'
Site for KQXT transmitter L -
Site of former WOAI tower O 23 acres
Tulsa, Oklahoma
KMOD & KAKC studios and offices L 5,000'
Site for KAKC tower and transmitter L 24 acres
Site for KMOD tower and transmitter L -
KOKI and KTFO studios and offices L 14,000'
Site for KOKI tower and transmitter O 45 acres
Beaumont/Port Arthur, Texas
KALO studios and offices O 3,500'
Site for KALO tower and transmitter O 22 acres
Houston, Texas
KHYS studios and offices L 6,328'
Site for KHYS tower and transmitter O 32 acres
KBXX studios and offices L 5,500'
Site for KBXX tower and transmitter L -
Austin, Texas
KHFI & KPEZ studios and offices L 9,500'
Site for KHFI tower and transmitter L -
Site for KPEZ tower and transmitter L -
Oklahoma City, Oklahoma
KTOK, KJYO, KEBC & ONN studios and offices L 13,000'
Site for KTOK tower and transmitter O 100 acres
Site for KJYO tower and transmitter L -
Site for KEBC tower and transmitter L -
New Orleans, Louisiana
WYLD, WODT & WQUE studios and offices O 15,000'
Site for WODT tower and transmitter L 22 acres
Site for WQUE tower and transmitter L -
Site for WYLD-FM tower and transmitter L -
Site for WYLD-AM tower and transmitter L -
Site for standby WODT tower and transmitter O 30 acres
New Haven, Connecticut
WELI, WAVZ & WKCI studios and office O 9,600'
Site for WELI tower and transmitter O 30 acres
WKCI & WAVZ former studios and offices O 4,200'
Site for WKCI tower and transmitter L -
Site for WAVZ tower and transmitter O 4,200'
Louisville, Kentucky
WHAS, WAMZ and KSN studios and offices L 12,500'
Site for WHAS tower and transmitter O 104 acres
Site for WAMZ tower and transmitter O 14 acres
Richmond, Virginia
WRVA, WRVH & VNN studios and offices O 18,000'
Site for WRVQ & WRVA towers and transmitters O 126 acres
WRVQ & WRXL studios and offices O 8,750'
Site for WRXL & WRVH towers O 15 acres
Site for WRXL & WRVH transmitters O 2,500'
Tampa, Florida
WRBQ-AM/FM studios and offices L 11,000'
Site for WRBQ-AM tower and transmitter O 5 acres
Site for WRBQ-FM tower and transmitter L -
WMTX-AM/FM studios and offices L 9,000'
Site for WMTX-AM tower and transmitter L -
Site for WMTX-FM tower and transmitter L -
Miami/Ft. Lauderdale, Florida
WHYI & WBGG studios and offices L 12,500'
Site for WHYI tower and transmitter L -
Site for WBGG tower and transmitter L -
Cleveland, Ohio
WNCX and WERE studios and offices L 10,500'
Site for WERE & WNCX tower and transmitters O 38 acres
Mobile, Alabama
WPMI & WJTC studios and offices O 18,800'
Site for WPMI tower and transmitter O 10 acres
WPMI sales office (Pensacola, Florida) L 2,900'
Jacksonville, Florida
WAWS studios and offices O 10,000'
Site for WAWS tower and transmitter L 1.6 acres
co-located
Tucson, Arizona
KTTU General offices L 300'
Wichita, Kansas
KSAS studio and offices L 10,000'
Site for KSAS tower and transmitter (Cold.) O 2,000'
Site for KSAS tower and transmitter (Salina) L -
Memphis, Tennessee
WPTY studio and offices O 15,000'
WLMT studio and offices L 7,000'
Site for WPTY tower and transmitter L -
Site for WLMT tower and transmitter O 33 acres
Minneapolis, Minnesota
WFTC studio and offices L 19,200'
Site for WFTC tower and transmitter L -
Albany, New York
WXXA studio and offices L 15,000'
Site for WXXA tower and transmitter L -
Little Rock, Arkansas
KLRT & KASN studio and offices O 19,000'
Site for KLRT tower and transmitter L -
ITEM 3. Legal Proceedings
The Company from time to time becomes involved in various
claims and lawsuits incidental to its business, including
defamation actions. In the opinion of management, after
consultation with counsel, any ultimate liability arising out of
currently pending claims and lawsuits will not have a material
effect on the financial condition or operations of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
in the fourth quarter of fiscal year 1994.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information required by Item 5 is incorporated by reference
to the information set forth on page 31 of the Company's Annual
Report. Presently, the Company expects to retain its earnings for
the development and expansion of its business and does not
anticipate paying any dividends in 1995. However, any future
decision by the Board of Directors to pay cash dividends will
depend, among other factors, on the Company's earnings, financial
position, capital requirements and loan covenant restrictions.
The Company's current bank credit agreement allows for the
payment of dividends subject to certain loan covenant restrictions.
There are no restrictions on dividends payable wholly in capital
stock of the Company.
ITEM 6. Selected Financial Data
The information required by Item 6 is incorporated by
reference to the information set forth under the caption "Selected
Financial Data" on page 32 of the Company's Annual Report.
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 is incorporated by
reference to the information set forth under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 14 through 16 of the Company's
Annual Report.
ITEM 8. Financial Statements and Supplementary Data
The information required by Item 8 and the Report of
Independent Auditors is incorporated by reference to pages 17
through 31 of the Company's Annual Report.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not Applicable
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information required by Item 10 with respect to the directors and
nominees for election to the Board of Directors of the Company is
incorporated by reference to the information set forth under the caption
"Election of Directors", page 3 and 4 of the Company's Definitive Proxy
Statement dated March 15, 1995.
The following information is submitted with respect to the executive
officers of the Company as of year end.
Age on
December 31, Officer
Name 1994 Position Since
L. Lowry Mays 59 President/Chief Executive Officer 1972
Herbert W. Hill, Jr. 35 Vice President/Controller 1989
Mark P. Mays 31 Senior-Vice President/Operations 1989
Randall T. Mays 29 Vice President/Treasurer 1993
Kenneth E. Wyker 33 Vice President Legal Affairs 1993
James D. Smith 45 Regional Vice President, Oklahoma 1985
Stanley M. Shields 64 Vice President GM WELI-AM 1985
Earnest James 50 Vice President GM WYLD, WODT-AM &
WQUE-FM 1992
Stan Webb 51 Vice President GM KHFI KPEZ FM 1978
Robert T. Cohen 37 Vice President GM KAJA & KQXT FM 1990
Robert R. Scherer 53 Vice President GM WAMZ-FM, WHAS-AM 1986
Jere T. West 44 Vice President GM ONN 1987
Bill Hill 62 Vice President & Director of Trades 1987
Dave Ross 44 Vice President GM WHYI-FM, WBGG-FM 1994
Elizabeth Kocurek 43 Vice President GM WOAI & KTKR AM 1994
Jon Pinch 46 Vice President GM WMTX-AM/FM 1994
Miles Chandler 48 Vice President GM KJYO-FM, KEBC-FM
& KTOK-AM 1990
Faith Zila 41 Vice President GM WKCI-FM,WAVZ-AM 1992
Walt Tiburski 47 Vice President GM WNCX-FM, WERE-AM 1994
Carl McNeill 43 Vice President GM WRVA & WRNL AM 1992
Linda Forem 42 Vice President GM WRVQ & WRXL FM 1993
David Manning 43 Vice President GM WRBQ-AM/FM 1993
Carl Hamilton 43 Vice President GM KBXX-FM 1994
J. Daniel Sullivan 43 President Clear Channel Television 1988
Andy Comegys 39 Vice President GM WPMI-TV 1994
Josh McGraw 44 Vice President GM WAWS-TV 1991
William A. Riordan 37 Vice President GM WFTC-TV 1990
Hal Capron 50 Vice President GM KOKI-TV 1993
Steve Spendlove 39 Vice President GM KSAS-TV 1993
David D'Antuono 35 Vice President GM WXXA-TV 1991
Jack Peck 38 Vice President GM WPTY-TV 1992
Jerry Whitener 53 Vice President GM KLRT-TV 1994
John Binkley 51 President Clear Channel Productions 1994
<PAGE>
The officers named above serve until the next Board of
Directors meeting immediately following the Annual Meeting of
Shareholders.
Mr. L. Mays is the founder of the Company and has been the
President and Chief Executive Officer of the Company and its
predecessor since 1972. He has been a director of the Company
since its inception.
Mr. H. Hill has been the Vice President/Controller of the
Company since January, 1989. He has been the Principal Financial
Officer of the Company since June 1991.
Mr. M. Mays has been Senior Vice President of Operations since
1993, prior thereto he was Vice President and Treasurer of the
Company for the remainder of the relevant five year period.
Mr. R. Mays, prior to his election as an officer in 1993, was
an associate for Goldman Sachs. Prior thereto he was a graduate
student at Harvard University for the remainder of the relevant
five year period.
Mr. K. Wyker, prior to his election as an officer in 1993, was
Corporate Counsel at Greater Media for the remainder of the
relevant five year period.
Mr. J. Smith has been an officer of the Company and Regional
Vice President of Oklahoma for the relevant five year period.
Currently, he is serving as General Manager of KMOD-FM and KAKC-AM.
Mr. S. Shields has been an officer of the Company serving as
General Manager of WELI-AM for the relevant five year period. Mr.
Shields retired in January 1995.
Mr. E. James, prior to his election as an officer in 1994, was
a loan officer for the small business administration disaster loan
program, prior thereto Mr. James was a business and radio broadcast
consultant for the remainder of the relevant five year period.
Mr. S. Webb has been a Vice President and an officer of the
Company since 1978. During the previous five years, Mr. Webb has
served as Vice President and General Manager of KAJA-FM, KHFI-FM
and KPEZ-FM.
Mr. R. Cohen has been a Vice President and an officer of the
Company since 1990. He has served as General Manager of KAJA-FM
and KQXT-FM for the relevant five year period.
Mr. R. Scherer has been a Vice President and officer of the
Company for the relevant five year period serving as General
Manager of WHAS-AM, WAMZ-FM and the Kentucky State Network.
Mr. J. West has been a Vice President and officer of the
Company for the relevant five year period serving as General
Manager of the Oklahoma News Network.
Mr. B. Hill has been a Vice President and officer of the
Company for the relevant five year period. Currently, he is
serving in the capacity of Director of Corporate Trades.
Mr. D. Ross, prior to his election as an officer of the
Company in 1994, was Executive Vice President and General Manager
of WHYI-FM under Metroplex Communications, Inc. for the remainder
of the relevant five year period.
Ms. E. Kocurek, prior to her election as an officer of the
Company in 1994, was employed as General Sales Manager of WOAI-AM
for the remainder of the relevant five year period.
Mr. J. Pinch, prior to his election as an officer of the
Company in 1994, was employed as General Manager of WMTX-AM/FM
under Metroplex Communications, Inc. for the remainder of the
relevant five year period.
Mr. M. Chandler has been a Vice President and an officer of
the Company for the relevant five year period. Currently, he is
General Manager of KTOK-AM, KJYO-FM and KEBC-FM.
Ms. F. Zila, prior to her election as an officer of the
Company in 1992, was employed as General Manager of WKCI-FM and
WAVZ-AM for the remainder of the relevant five year period.
Mr. W. Tiburski, prior to his election as an officer of the
Company in 1994, was employed as General Manager of WNCX-FM and
WENZ-AM, prior thereto he owned and operated his own broadcasting
brokerage and consulting firm for the remainder of the relevant
five year period.
Mr. C. McNeill, prior to his election as an officer of the
Company in 1992, was employed as the General Sales Manager of
WRVA-AM for the remainder of the relevant five year period.
Ms. L. Forem, prior to her election as an officer of the
Company in 1993, was employed as General Sales Manager of WRVQ-FM
for the remaining portion of the relevant five year period.
Mr. D. Manning, prior to his election as an officer of the
Company in 1993, was President of Five Star Communications,
prior thereto he was Chief Operations Officer for Capstar
Communications for the remainder of the relevant five year period.
Mr. C. Hamilton, prior to his election as an officer of the
Company in 1994, was employed as the Vice President and General
Manager of KBXX-FM for the remainder of the relevant five year
period.
Mr. D. Sullivan has been an officer of the Company and
President of Clear Channel Television for the relevant five year
period.
Mr. A. Comegys, prior to his election as an officer of the
Company in 1994, was the General Sales Manager for WFTC-TV from
October 1993 to November 1994, prior thereto he was General Sales
Manager of WAWS-TV for the remainder of the relevant five year
period.
Mr. J. McGraw, prior to his election as an officer of the
Company in 1991, was employed as the Vice President and General
Manager of WPXC-TV in Portland, Maine for the remainder of the
relevant five year period.
Mr. W. Riordan has been an officer of the Company for the
relevant five year period. Mr. Riordan served as General Manager
of KSAS-TV from 1990 to 1993. Currently, he is General Manager of
WFTC-TV.
Mr. H. Capron, prior to his election as an officer of the
Company in 1993, was the General Sales Manager for KOKI-TV from
August 1991 to February 1993, prior thereto he was General Sales
Manager of KOFY-TV in San Francisco, California for the remainder
of the relevant five year period.
Mr. S. Spendlove, prior to his election as an officer of the
Company in 1993, was the General Sales Manager of KSAS-TV from May
1992 through September 1993, prior thereto Mr. Spendlove was
employed by KICU-TV in San Jose, California as the National Sales
Manager for the remainder of the relevant five year period.
Mr. D. D'Antuono, prior to his election as an officer of the
Company in 1992, served as General Sales Manager for WPMI-TV for
the remainder of the relevant five year period. Currently, he is
General Manager of WXXA-TV.
Mr. J. Peck, prior to his election as an officer of the
Company in 1992, was employed as General Sales Manager for WPTY-TV
for the remainder of the relevant five year period.
Mr. J. Whitener, prior to his election as an officer of the
Company in 1994, was employed as General Manager for KLRT-TV since
August of 1991, prior thereto Mr. Whitener was the General Sales
Manager of KOKI-TV for the remainder of the relevant five year
period.
Mr. J. Binkley, prior to his election as an officer of the
Company in 1994, was President and CEO of B&G Communications, Inc.
for the remainder of the relevant five year period.
There is no family relationship between any of the executive
officers of the Company except that Mark P. Mays, Senior Vice
President Operations, and Randall T. Mays, Vice President and
Treasurer, are the sons of the President and Chief Executive
Officer, L. Lowry Mays.
ITEM 11. Executive Compensation
The information required by Item 11 is incorporated by
reference to the information set forth under the caption "Executive
Compensation" on pages 5 through 8 of the Company's Definitive
Proxy Statement dated March 15, 1995. Cash Compensation excludes
personal benefits and other forms of non-cash compensation, the
aggregate value of which did not exceed the lesser of $25,000 or
10% of the cash compensation shown for each officer. Directors who
are not also officers of the Company receive $5,000 for each
meeting of the Board of Directors they attend and are reimbursed
for travel expenses. Those Board members on the Compensation
Committee receive $500 for each meeting they attend.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by Item 12 is incorporated by
reference to the Company's Definitive Proxy Statement dated March
15, 1995 on pages 2 through 4. Except as described therein, no
other individual owns 5% or more of the outstanding Common Stock.
ITEM 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated by
reference to the Company's Definitive Proxy Statement dated March
15, 1995 on pages 13 and 14.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)1 Financial Statements. The following consolidated
financial statements are incorporated by reference
to the Registrant's Annual Report on pages 17 through 31.
Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1994 and
1993.
Consolidated Statements of Earnings for the Years Ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended December 31, 1994, 1993 and
1992.
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992.
Notes to Consolidated Financial Statements
(a)2 Financial Statement Schedules. The following financial
statement schedules for the years ended December 31, 1994, 1993 and
1992 are filed as part of this report and should be read in
conjunction with the financial statements.
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for doubtful accounts
Charges
Balance at to Costs, Write-off Balance
Beginning Expenses of Accounts at end of
Description of period and other Receivable Period
--------------------- ---------- --------- ------------ ----------
$1,512,703(1)
1,094,093
Year ended ----------
December 31, 1992 $689,919 $2,606,796 $1,517,403 $1,779,312
======== ========== ========== ==========
$1,639,545(1)
1,224,460
Year ended ----------
December 31, 1993 $1,779,312 $2,864,005 $1,616,532 $3,026,785
========== ========== ========== ==========
$ 442,490(1)
1,394,535
Year ended ----------
December 31, 1994 $3,026,785 $1,837,025 $1,746,314 $3,117,496
========== ========== ========== ==========
(1) Allowance on accounts receivable acquired in acquisitions net of deletion
related to dispositions.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Accumulated Amortization of Intangibles
Charges
Balance at to Costs, Balance
Beginning Expenses at end of
Description of period and other Deletions(1) Period
--------------------- ---------- --------- ------------ ----------
Year ended
December 31, 1992 $10,168,405 $5,702,131 $72,517 $15,798,019
=========== ========== ======= ===========
Year ended
December 31, 1993 $15,798,019 $8,230,280 - $24,028,299
=========== ========== ======= ===========
Year ended
December 31, 1994 $24,028,299 $12,029,436 $2,195,935 $33,861,800
=========== =========== ========== ===========
(1) Related to disposition of stations and fully amortized intangible
assets.
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
<PAGE>
(a)3 Exhibits. Refer to (c) below.
(b) Reports on Form 8-K. A report on form 8-K dated December 14,
1994 was filed during the fourth quarter of 1994 with respect to
the acquisition of substantially all of the television broadcasting
assets of WXXA-TV in Albany, NY on December 1, 1994. The
television station were previously operated by Heritage
Broadcasting, Inc. and therefore separate financial statements of
the station were not available. Audited balance sheets for the
year ended December 31, 1993 and proforma condensed statements of
consolidated operations for the year ended December 31, 1993, as
well as the unaudited interim statement of operations as of
September 30, 1994 were filed as an amendment to this 8-K on Form
8-KA dated February 12, 1995.
(c) Exhibits
(a) 3.1 -- Articles of Incorporation, as amended, of Registrant
(a) 3.2 -- Amended and Restated Bylaws of Registrant
(a) 4 -- Buy-Sell Agreement among Clear Channel Communications,
Inc., L. Lowry Mays, B. J. McCombs, John M. Schaefer
and John W. Barger dated May 31, 1977.
(i) 4.1 -- Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., The Signatory Banks Hereto, and
The Bank of New York, as Agent.
4.3 -- Amendment No. 1, dated as of August 25, 1986, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., The Signatory Banks thereto and
The Bank of New York as Agent.
(i) 4.4 -- Amended and Restated Credit Agreement by and among
Clear Channel Television, Inc., NCNB Texas National
Bank, Texas Commerce Bank and NCNB Texas National Bank
as administrative lender.
(i) 4.5 -- Amendment No. 2, dated as of December 31, 1986, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., the Signatory Banks thereto and
The Bank of New York, as Agent, as amended by Amendment
No. 1, dated as of August 25, 1986.
(i) 4.6 -- Amendment No. 3, dated as of December 27, 1988, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., the Signatory Banks and The Bank
of New York, as Agent, as amended by Amendment No. 1,
dated as of August 25, 1986, and Amendment No. 2, dated
as of December 31, 1986.
(i) 4.7 -- Amendment No. 4, dated as of December 31, 1988, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., the Signatory Banks and The Bank
of New York, as Agent, as amended by Amendment No. 1,
dated as of August 25, 1986, Amendment No. 2, dated as
of December 31, 1986, and Amendment No. 3, dated as of
December 27, 1988.
(i) 4.8 -- Amendment No. 5, dated as of July 14, 1989, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., the Signatory Banks thereto and
The Bank of New York, as Agent, as amended by Amendment
No. 1, dated as of August 25, 1986, Amendment No. 2,
dated as of December 31, 1986, Amendment No. 3, dated
as of December 27, 1988, and Amendment No. 4, dated as
of December 31, 1988.
(i) 4.9 -- Amendment No. 6 and Waiver No. 1, dated as of September
30, 1989, to the Revolving Credit and Term Loan
Agreement, dated as of October 1, 1984, by and among
Clear Channel Communications, Inc. The Signatory Banks
thereto and The Bank of New York, as Agent, as amended
by Amendment No. 1, dated as of August 25, 1986,
Amendment No. 2, dated as of December 31, 1986,
Amendment No. 3, dated as of December 27, 1988,
Amendment No. 4, dated as of December 31, 1988, and
Amendment No. 5, dated as of July 14, 1989.
(i) 4.10 -- Amendment No. 7, dated as of March 31, 1990, to the
Revolving Credit and Term Loan Agreement, dated as of
October 1, 1984, by and among Clear Channel
Communications, Inc., The Signatory Banks thereto and
The Bank of New York, as Agent, amended by Amendment
No. 1, dated as of August 25, 1986, Amendment No. 2,
dated as of December 31, 1986, Amendment No. 3, dated
as of December 27, 1988, Amendment No. 4, dated as of
December 31, 1988, Amendment No. 5, dated as of July
14, 1989, and Amendment No. 6 and Waiver No. 1, dated
as of September 30, 1989.
(a)10.16 -- Incentive Stock Option Plan of Clear Channel
Communications, Inc. dated as of January 1, 1984.
(c)10.18 -- Radio Asset Purchase Agreement dated June 9, 1986, by
and between WHAS, Inc. and Clear Channel
Communications, Inc.
(c)10.19 -- Letter from George N. Gill, dated September 1, 1986,
amending the Radio Asset Purchase Agreement dated June
9, 1986, by and between WHAS, Inc. and Clear Channel
Communications, Inc.
(d)10.20 -- Television Asset Purchase Agreement dated December 30,
1988, by and between Michigan Energy, Inc. and Clear
Channel Television, Inc.
(f)10.22 -- Television Asset Purchase Agreement dated January 31,
1989, as amended by and between the Roman Catholic
Diocese of Tucson and Clear Channel Television, Inc.
(g)10.23 -- Television Asset Purchase Agreement dated August 25,
1989, by and between Malrite of Jacksonville, Inc. and
Clear Channel Television, Inc.
(h)10.25 -- Television Asset Purchase Agreement dated July 31,
1990, by and between Channel 24, Ltd., Debtor in
Possession and Clear Channel Television, Inc.
(i)10.26 -- Station Affiliation Agreement between Fox Broadcasting
Company and Clear Channel Television, Inc. for the
carriage of programming over WPMI-TV, Mobile, Alabama,
dated June 13, 1989.
(i)10.27 -- Station Affiliation Agreement between Fox Broadcasting
Company and Clear Channel Television, Inc. for the
carriage of programming over WAWS-TV, Jacksonville,
Florida, dated August 16, 1989.
(i)10.28 -- Station Affiliation Agreement between Fox Broadcasting
Company and Clear Channel Television, Inc. for the
carriage of programming over KOKI-TV, Tulsa, Oklahoma,
dated December 28, 1989.
(i)10.29 -- Station Affiliation Agreement between Fox Broadcasting
Company and Clear Channel Television, Inc. for the
carriage of programming over KSAS-TV, Wichita, Kansas,
dated July 10, 1989.
(j)10.30 -- Television Asset Purchase Agreement dated January 27,
1992, by and between Chase Broadcasting of Memphis,
Inc. and Clear Channel Television, Inc.
(j)10.31 -- Radio Asset Purchase Agreement dated January 31, 1992,
by and between Noble Broadcasting of Connecticut, Inc.
and Clear Channel Radio, Inc.
(j)10.32 -- Radio Asset Purchase Agreement dated April 19, 1992, by
and between Edens Broadcasting, Inc. and Clear Channel
Radio, Inc.
(k)10.33 -- Radio Asset Purchase Agreement dated January 31, 1993,
by and between KHFI Venture, LTD. and Clear Channel
Radio, Inc.
(l)10.34 -- Radio Asset Purchase Agreement dated December 28, 1992,
by and between Westinghouse Broadcasting Company, Inc.
and Clear Channel Radio, Inc.
(l)10.35 -- Radio Asset Purchase Agreement dated December 23, 1992,
by and between Inter-Urban Broadcasting of New Orleans
Partnership and Snowden Broadcasting, Inc.
(m)10.36 -- Television Asset Purchase Agreement dated August 19,
1993, by and between Television Marketing Group of
Memphis, Inc. and Clear Channel Television, Inc.
(n)10.37 -- Radio Asset Purchase Agreement April 1, 1993, by and
Capital Broadcasting of Virginia, Inc. and Clear
Channel Radio, Inc.
(o)10.38 -- Television Asset Purchase Agreement dated August 31,
1993, by and between Nationwide Communications, Inc.
and Clear Channel Television, Inc.
(p)10.39 -- Radio Asset Merger Agreement dated March 22, 1994, by
and between Metroplex Communications, Inc. and Clear
Channel Radio, Inc.
(q)10.40 -- Radio Partnership Interest Purchase Agreement dated
April 5, 1994, by and between Cook Inlet
Communications, Inc. and WCC Associates and Clear
Channel Radio, Inc.
(r)10.41 -- Television Asset Purchase Agreement September 12, 1994,
by and between Heritage Broadcasting Company of New
York, Inc. and Clear Channel Television, Inc.
(s)10.42 -- Radio Asset Purchase Agreement dated November 17, 1994,
by and between Noble Broadcast of Houston, Inc. and
Clear Channel Radio, Inc.
13.1 -- Annual Report to Shareholders for Fiscal Year Ended
December 31, 1994.
21 -- Subsidiaries of the Registrant.
23 -- Consent of Independent Auditors.
27 -- Financial Data Schedule
(a) -- Incorporated by reference to the similarly numbered
exhibits of the Company's Registration Statement on
Form S-1 (Reg. No. 2-89161) dated April 19, 1984.
(b) -- Incorporated by reference to the Registrant's Form 8-K
dated October 15, 1984.
(c) -- Incorporated by reference to the Registrant's Form 8-K
dated September 10, 1986.
(d) -- Incorporated by reference to the Registrant's Form 8-K
dated January 11, 1989
(e) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14, 1989
(f) -- Incorporated by reference to Registrant's Form 10-Q
dated March 31, 1989.
(g) -- Incorporated by reference to the Registrant's Form 8-K
dated October 11, 1989
(h) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 7, 1990.
(i) -- Incorporated by reference to the Company's registration
statement on Form S-2 dated July 30, 1991.
(j) -- Incorporated by reference to the Registrant's Form 8-K
dated July 14, 1992.
(k) -- Incorporated by reference to the Registrant's Form 8-K
dated March 23, 1993.
(l) -- Incorporated by reference to the Registrant's Form 10-Q
dated May 12, 1993.
(m) -- Incorporated by reference to the Registrant's Form 8-K
dated September 2, 1993.
(n) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 1, 1993.
(o) -- Incorporated by reference to the Registrant's Form 8-K
dated October 27, 1993.
(p) -- Incorporated by reference to the Registrant's Form 8-K
dated October 26, 1994.
(q) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14 1994.
(r) -- Incorporated by reference to the Registrant's Form 8-K
dated December 14, 1994.
(s) -- Incorporated by reference to the Registrant's Form 8-K
dated January 13, 1995.
EXHIBIT 21
Subsidiaries of Registrant, Clear Channel Communications, Inc.
Name State of Incorporation
---- ----------------------
Clear Channel Communications of Memphis, Inc. Texas
Clear Channel Television, Inc. Nevada
Clear Channel Radio, Inc. Nevada
Clear Channel Television Licenses, Inc. Nevada
Clear Channel Radio Licenses, Inc. Nevada
Clear Channel Management, Inc. Delaware
Snowden Broadcasting of New Orleans, L.C. Texas
Clear Channel Metroplex, Inc. Nevada
Clear Channel Metroplex Licenses, Inc. Nevada
Clear Channel Holdings, Inc. Nevada
Clear Channel Productions, Inc. Nevada
CCC-Houston AM LTD Texas
CCR Houston-Nevada, Inc. Nevada
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned on March
30, 1995, thereunto duly authorized.
Clear Channel Communications, Inc.
(Registrant)
By L. Lowry Mays
------------------------
L. Lowry Mays, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the date
indicated.
Signature Title Date
L. Lowry Mays President and Director March 30, 1995
-------------------- --------------
L. Lowry Mays (Chief Executive Officer)
Herbert W. Hill, Jr. Vice President/Controller March 30, 1995
-------------------- --------------
Herbert W. Hill, Jr. (Principal Financial Officer)
B. J. McCombs Director March 30, 1995
-------------------- --------------
B. J. McCombs
Alan D. Feld Director March 30, 1995
-------------------- --------------
Alan D. Feld
Theodore H. Strauss Director March 30, 1995
--------------------- --------------
Theodore H. Strauss
John H. Williams Director March 30, 1995
--------------------- --------------
John H. Williams
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Clear Channel Communications, Inc. of our report
dated February 17, 1995, included in the 1994 Annual Report to
Shareholders of Clear Channel Communications, Inc.
Our audits also included the financial statement schedules of Clear
Channel Communications, Inc. listed in Item 14(a). These schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information
set forth therein.
We also consent to the incorporation by reference in the
Registration Statements (Form S-8) pertaining to the 1984 Incentive
Stock Option Plan of Clear Channel Communications, Inc. (No. 33-
14193) and the Clear Channel Communications, Inc. Nonqualified
Stock Option Plan (No. 33-59772) of our report dated February 17,
1995, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement
schedules included in this Annual Report (Form 10-K) for the year
ended December 31, 1994.
ERNST & YOUNG LLP
San Antonio, Texas
March 30, 1995
ACCOMPLISHMENTS OF 1994
Record Sales
Achieved record sales of $200,695,000, an increase of 48 percent
compared to sales of $135,680,000 in 1993.
Record After Tax Cash Flow
Generated more than $46,866,000 in after tax cash flow, bettering
by 76 percent 1993's record of $26,638,000.
Record After Tax Cash Flow Per Share
Reported after tax cash flow per share of $2.70, an increase of 58
percent over the $1.71 reported in 1993.
Record Operating Profits at the Station Level
Earned $72,673,000 in station operating income before depreciation
and amortization, up 72 percent from $42,193,000 in 1993.
Expanded Corporate Credit
Expanded the Company's overall revolving line of credit to $350
million for acquisitions and development purposes.
NYSE Listing
Applied for and obtained listing of Clear Channel Communications,
Inc. Common Stock on the New York Stock Exchange; traded under the
symbol CCU.
Radio Acquisitions
Acquired stations KBXX-FM, KMJQ-FM, KPRC-AM and KSEV-AM in Houston,
Texas; WNCX-FM and WERE-AM in Cleveland, Ohio; KEBC-FM in Oklahoma
City, Oklahoma; WBGG-FM and WHYI-FM in Miami, Florida; and WMTX-
AM/FM in Tampa, Florida.
Television Acquisitions
Boosted to nine the Company's TV stations with the purchase of
WXXA-TV, the Fox affiliate in Albany, New York and KLRT-TV, the Fox
Affiliate in Little Rock, Arkansas.
Strengthened Management
Strengthened management at all levels and updated the Company's
strategic plan.
Financial Highlights
In Thousands Except Per
Share Amounts 1994 1993 % Change
-------------------------- -------- -------- -----
Gross broadcasting revenue $200,695 $135,680 +48
Station operating income before
depreciation, amortization
and corporate expenses 72,673 42,193 +72
Operating income 42,904 21,282 +102
Net income 22,009 9,123 +141
Net income per share 1.27 .59 +115
After tax cash flow (1) 46,866 26,638 +76
After tax cash flow per
share (1) 2.70 1.71 +58
(1) Defined as net income plus depreciation, amortization
(excluding film rights) and deferred taxes.<PAGE>
Financial Highlights
1994 1993 1992 1991 1990
Gross Revenue
(in millions) $200.7 $135.7 $94.5 $74.1 $69.6
Station Operating Income
(before depreciation
and amortization in
millions) 72.7 42.2 28.7 19.4 16.8
After Tax Cash Flow(1)
(in millions) 46.9 26.6 17.1 9.3 6.8
After Tax Cash Flow(1)
(per share) 2.70 1.71 1.16 .72 .59
(1) Defined as net income plus depreciation, amortization
(excluding film rights) and deferred taxes.
<PAGE>
LETTER TO THE SHAREHOLDERS
Dear Fellow Shareholders:
Nineteen ninety-four was the most successful year in your Company's
history. Financial results again achieved record levels in our core
businesses of radio and television broadcasting. Gross revenue
reached $200,695,000, up 48 percent compared to 1993. After tax
cash flow increased 76 percent from $26,638,000 to $46,866,000.
Station operating income before depreciation and amortization rose
72 percent to $72,673,000. After tax cash flow per share increased
from $1.71 to $2.70, a 58 percent gain. Net income increased 141
percent to $22,009,000, or $1.27 per share, compared to $9,123,000,
or $.59 per share.
Both the radio and the television divisions contributed to this
strong performance. Radio gross revenue increased 32 percent in
1994 compared to 1993, while station operating income before
depreciation and amortization increased 64 percent versus the same
period a year ago. Television gross revenue increased 71 percent in
1994, while station operating income before depreciation and
amortization increased 79 percent compared to 1993. These increases
were characterized by improved results at our stations, in addition
to new station acquisitions.
Radio
The year was marked by significant investments in radio, with our
principal focus being to take advantage of the new duopoly rules.
Generally, these rules allow ownership of a maximum of two AM and
two FM stations in the same market. Strategic investments
included:
HOUSTON - The Company added to its presence in the Houston
market in 1994 through a series of acquisitions and divestitures.
The initial step was the acquisition of KBXX-FM on August 15, 1994
for $21 million. The Company then acquired KMJQ-FM and KYOK-AM for
approximately $38.5 million and immediately divested itself of
KYOK-AM, as well as KHYS-FM and KALO-AM, all effective on January
1, 1995, to comply with Federal Communications Commission (FCC)
ownership regulations. In addition, effective January 1, 1995 the
Company acquired an 80% interest in a partnership, which owns and
operates KPRC-AM and KSEV-AM, for $26.8 million. This partnership
is managed by the Company. Management believes that Houston is
poised for strong growth and the Company is well positioned to take
advantage of this growth.
MIAMI - The Company made two acquisitions in Miami during
1994. The first was the purchase of WAXY-FM (now WBGG-FM) on March
9 for approximately $14 million. In October, the Company completed
its merger with Metroplex Communications, Inc. ("Metroplex") in a
transaction valued at approximately $48 million. WHYI-FM was one
of the five stations included in the merger. WBGG-FM, rejuvenated
after a successful format change to rock oldies, is now paired with
WHYI-FM. Both stations are poised for an excellent 1995.
TAMPA - As part of the Metroplex merger, the Company added the
successful WMTX-AM/FM combo to our stations WRBQ-AM/FM. The
synergy provided by this acquisition will make your Company an even
more powerful force in Tampa radio.
CLEVELAND - Long recognized as the "Home of Rock-n-Roll," the
Company, through the Metroplex merger, entered Cleveland with the
acquisition of WNCX-FM and WERE-AM. In addition, the Company
entered into a long-term joint sales agreement with WENZ-FM, whose
modern rock format complements WNCX-FM's classic rock format.
OKLAHOMA CITY - Effective January 1, 1994, the Company
expanded its ownership in Oklahoma City with the acquisition of
KEBC-FM for $7.5 million. This brings our investment to two FMs,
one AM, a news and agriculture network and two college sports
networks based in this market.
All of these acquisitions were quickly phased into our
operations contributing to the success of the radio division. Our
latest duopoly will be in New Orleans, where the Company is waiting
to transfer the remaining interest in WYLD-FM from Snowden
Broadcasting of New Orleans, L.C. WYLD-FM will complement WQUE-FM
and WODT-AM (formerly WQUE-AM) already owned by the Company, in New
Orleans. After the addition of the strategic investments above,
the Company will own a total of 20 FM and 15 AM stations in 12
markets and has created duopoly positions in each of its radio
markets where it is permitted by FCC regulations.
Television
1994 marked the first year in which Fox affiliates began
broadcasting National Football League (NFL) games. As anticipated,
the association with the NFL has led to rating increases in most of
our Fox markets and has promoted the wider acceptance of Fox as a
national network. Throughout 1994 we continued to focus on
increased profitability and attractive acquisitions. Strategic
investments included:
LITTLE ROCK - In 1994, the Company loaned Clear Channel
Television of Little Rock (CCTLR) $18.9 million to retire
indebtedness and exercised its option to acquire the remaining 51%
of CCTLR for a nominal amount. CCTLR owned and operated KLRT-TV,
the Fox affiliate in Little Rock, and marketed the commercial
advertising time for KASN-TV, the independent television station
serving Little Rock.
ALBANY - On December 1, the Company acquired WXXA-TV, the Fox
affiliate in Albany, for $25.5 million. The acquisition further
diversified the Company's television investments into the northeast
and the Company is pleased and excited to enter this New York
market.
These investments have been phased in and contributed
significantly to our operations. The Albany addition brings our
television ownership to eight Fox affiliates and one independent
station in nine markets. The Company is enthusiastic about the
future of broadcast television and hopeful that the FCC and
Congress will continue their discussions regarding relaxation of
the ownership rules and take action in the near future.
Diversification
In 1987, 27 percent of the Company's total revenue was
generated from two radio stations in Louisville. In addition, the
Company had 15 profit centers. Since that time, the Company has
strategically diversified into many markets and numerous operating
units. In 1994, Clear Channel's largest revenue market was
Minneapolis with ten percent of total revenue and the Company grew
to 59 profit centers. We believe this diversification is one of
the greatest strengths of the Company and one of the primary
reasons why it continues to exhibit strong growth in earnings and
is able to access capital at extremely attractive rates relative to
the industry.
Access to Capital
During the year, the Company renegotiated and expanded its
credit facility to a $350 million eight year revolving line of
credit. This new credit facility will allow Clear Channel to
continue to evaluate and act upon acquisition opportunities in both
radio and television that meet our stringent investment criteria
and which we believe will enhance your shareholder value.
New York Stock Exchange
Since November 4, 1994, your stock has been trading on the New
York Stock Exchange, the world's largest market for publicly held
investments. The Company has been publicly owned for ten years and
has spent the past seven years on the American Stock Exchange. It
is our hope that the move will bring greater visibility and
liquidity to your investment.
Our People
Our business is people oriented, and the exceptional caliber
of Clear Channel's 1,700 employees is the most important reason for
our success. In our decentralized environment, it is not the
people at the corporate headquarters who run our 59 profit centers,
but the on-site managers who are charged with increasing the
revenue and earnings of the Company. They are the backbone and key
to our business.
The Company's ability to consistently improve its performance
is due directly to the outstanding performance of these employees.
Clear Channel boasts the highest quality management team at the
station level in the industry. In turn, these managers attract and
retain excellent employees.
Future
Clear Channel continues to devote significant attention to
long-term planning. We remain committed to decentralized,
flexible, entrepreneurial business units that place emphasis on
simplifying structures and procedures while maintaining sound
centralized financial management. In 1995 your Company will seek
to increase the performance of its existing properties as well as
look for strategic acquisitions that meet its stringent investments
criteria. We look forward to a prosperous 1995.
L. Lowry Mays
President and Chief Executive Officer
March 1, 1995
Picture of L. Lowry Mays
<PAGE>
January
Acquires KEBC-FM in Oklahoma City, giving Clear Channel three
stations in that market
February
Five-for-four stock split
Acquires remaining interest in KLRT-TV in Little Rock, AR
March
Boosts station lineup to 17 FM, 14 AM and eight TV stations with
acquisition of WAXY-FM in Miami, FL (now WBGG-FM )
April
Reports first quarter gross revenue of $39 million, up 62 percent
from same period one year ago; after tax cash flow is up 94
percent to $7.5 million (44 cents per share)
May
Completes sale of four stations in smaller markets to position
Clear Channel for acquisition of KBXX-FM in Houston and merger with
Metroplex
June
Earns 69 cents per share in after tax cash flow during second
quarter, up 64 percent from the same period a year ago
July
Completes negotiation to acquire KBXX-FM in Houston, TX the initial
step in solidifying Clear Channel's presence in one of Texas'
largest markets with four stations
August
Negotiated expansion of revolving credit facility to $350 million
which was finalized in September.
September
Generates third quarter gross broadcasting revenues of $47.6
million up 48 percent; after tax cash flow increases 84 percent to
$11.6 million (67 cents per share)
October
Completes merger with Metroplex Communications
November
Begins trading on New York Stock Exchange under the symbol of CCU
Purchases Fox affiliate WXXA-TV in Albany, NY
December
Hits highest mark in after tax cash flow, $2.70 per share; gross
broadcast revenues topped $200 million, up 48 percent
January, 1995
Finalizes Houston acquisition strategy by closing KPRC, KSEV and
KMJQ; while concurrently divesting KYOK, KHYS and KALO
<PAGE>
THE HISTORY OF CLEAR CHANNEL COMMUNICATIONS
Clear Channel Communications, Inc. traces its history to the 1920s
and beyond, back to the early years of radio. Radio as we know it
today emerged from the explosion of scientific activity of newly
industrialized European and American societies; it sprang from the
far-fetched dreams of scores of scientists, inventors, publishers,
theorists and entrepreneurs. The medium made its debut as a
novelty at the world's fair of 1908. It would later awaken society
with the power of its signal. Thanks to a 1910 Congressional
mandate requiring ship-to-shore radio equipment to be installed on
all government and commercial carriers, shipwrecked passengers were
able to be lifted from the North Atlantic in 1912, by other ships
answering the sinking Titanic's distress radio call.
The indispensable nature of radio continues to be central to our
modern civil defense system; the protocol of specially designated
"clear channel" stations across the nation, transmitting at a high
frequency band reserved to provide communication during times of
emergency, is still fully operational. Clear Channel
Communications, Inc. is justly proud of the role its three namesake
"clear channel" stations in Louisville, San Antonio, and Richmond
serve in the disaster alert system and military readiness.
The pioneers of radio cultivated an open field of possibilities;
entrepreneurs like Credo Harris and Robert Worth Bingham could
build a transmitter in Kentucky for just $10,500 in 1922 (an
investment of $100,000 in 1994 dollars) and establish the roots of
a broadcasting operation. Newspaper publishers, approaching the
peak years of the urban daily papers, realized that a listening
audience could be added to their existing reading audiences through
the growing medium of radio, expanding the horizons of publishing
beyond print. And radio could deliver something the newspaper could
not: live entertainment.
City folk and farmers alike fell in love with radio. Jack Benny's
off-key violin, Enrico Caruso's matchless tenor, the somber news
from Normandy Beach and Jackie Robinson's first home run in the
majors--radio brought them all into the American parlor. As a
programming medium, it transcended its vaudeville roots to achieve
concert hall stature, helping it to become a principal engine of
modern marketing. It knit the nation together, following the lights
of rural electrification into the heartland. In time, an AM radio
was a standard feature in the dashboard of all new model cars;
thus, radio travelled by automobile into the suburbs with its
growing audience, adding FM along the way. But, while sending
signals further and carrying more diverse formats with each
approaching year, radio could still deliver a local message and
support regional advertising. This principle continues to be a
hallmark of Clear Channel's customer service and market development
strategy.
Radio remained strong, even as the commercial viability of
television expanded into the 1950s. Since then, radio has continued
to enhance its liaison with its audience. Just as listeners of
Clear Channel's heritage station wrva in Richmond gathered around
their home sets in 1927 to hear the station's live coverage of the
ticker-tape parade for Charles Lindbergh, office workers in 1995
tuned directly into the courtroom for the murder trial of O.J.
Simpson on both radio and television.
By the time the Philips Company had delivered one million
television sets in the early 1960s, radio had shaped the basic
framework of programming, news coverage and commercial sponsorship
after which television broadcast would be patterned. As the post-
war American and world economies boomed, television blossomed as a
programming medium and led the advertising industry in marketshare.
The television industry flourished as an entertainment medium.
Americans developed a passionate appetite for news and programming.
Television invited us to laugh at ourselves with Abbott and
Costello, meet the Beatles with Ed Sullivan and walk on the moon
with American astronauts. It gave generations of children Big Bird,
Mr. Rogers and Bugs Bunny. The television industry wrapped the
diverse mix of popular culture, motion pictures, entertainment,
news and advertising into a cohesive package, and delivered it to
millions of homes a day by 1994.
At its present pervasive scope, television is simultaneously a
mirror of, and influence on, what viewers think, eat, vote, and
buy. And television, especially when effectively combined with
radio advertising, is a formidable marketing tool for local,
regional, and national advertisers. At Clear Channel, we believe
both radio and television can be cost-effective media for our
advertisers, one complementing the other in a two-pronged strategy.
Characterized by a need for greater flexibility, faster response to
market trends and more accurate targeting of advertising dollars,
the economic climate of the second half of the century dictated the
need for refinement of strategies and delivery of the advertiser's
message to targeted market segments. Commencing the ongoing process
of reinventing itself, broadcast in the 1970s was once again a wide
open field, ripe for change.In this atmosphere of flux and shifting
balances, San Antonio investment banker L. Lowry Mays and regional
automotive retailer B.J. "Red" McCombs combined entrepreneurial
forces to capitalize on the potential of the evolving broadcast
technology, namely the expansion of fm transmission. Taking a risk
on the underutilized fm band, Mays and McCombs purchased San
Antonio's KEEZ-FM (now KAJA) in 1972, taking the first step toward
building what has become a major, well-diversified, publicly traded
communications corporation.
In 1975, the partners acquired WOAI-AM in San Antonio, Texas, a
respected station broadcasting popular music and reporting
agricultural and local news. WOAI-AM, part of the nation's
emergency broadcast network and the only class 1-A station at the
time, brought the company its "Clear Channel" name. After the $1.5
million acquisition, station executives fine-tuned WOAI's format to
news-talk, added sports reporting and increased its emphasis on
local news. Then as today, WOAI's news and sports coverage
consistently receives accolades and national and state awards.
Expanding into Texas and Oklahoma, Clear Channel added stations
KMOD-FM and KAKC-AM in Tulsa, Oklahoma in 1973, and KPEZ-FM in
Austin, Texas in July 1982.
With an Initial Public Offering in 1984, Clear Channel attracted
equity capital to fuel growth, adding stations in New Orleans,
Louisiana; New Haven, Connecticut and Oklahoma City, Oklahoma. In
addition, the Company purchased its first news and agricultural
network, the Oklahoma News Network.
In 1986 Clear Channel acquired two landmark stations in Louisville,
Kentucky: WHAS-AM and WAMZ-FM. WHAS, a news and adult contemporary
format, became the Company's second "clear channel" station, and
both stations accounted for 27% of total broadcast revenues during
the first full year (1987) they were part of the Clear Channel
portfolio.
Starting with its early purchases, Clear Channel executives
developed innovative operating strategies for their stations.
Station management places a strong emphasis on direct local sales,
working one-on-one with customers to craft promotional strategies
that Clear Channel customers can use to improve their company's
bottom line. This common-sense approach allows customers to measure
their results immediately and provides more control and stability
for advertising revenues.
Clear Channel remains resilient in the face of competitive and
fast-changing trends in the advertising industry. Radio continues
as a strong advertising venue, reaching almost 80 percent of the
American population on a daily basis (96 percent on a weekly
basis). On average, listeners spend three hours and 20 minutes a
day tuned to radio programs.
Clear Channel's sound operational strategies have enhanced its
ability to attract investment capital. Since becoming a public
company in 1984, Clear Channel executives have successfully raised
capital for expansion and acquisition purposes, helping the Company
reach its position as one of the largest owners of radio properties
and Fox-affiliated television stations.
The Company entered the television market at a time when the cost
to acquire radio stations moved above levels at which Clear Channel
executives believed they could invest at and still deliver
satisfactory rates of return for their shareholders. Thus, with
Clear Channel's 1988 purchase of television station WPMI-TV (which
serves the Mobile, Alabama and Pensacola, Florida markets), the
Company redirected its growth into television broadcasting. In
1994, the Company added its ninth television property with the
recent purchase of WXXA-TV in Albany, New York.
Television has grown well beyond the familiar three networks of its
first decades. The Fox Network, taking its place among the major
networks, has brought Clear Channel the benefits of improved
ratings, seven nights of programming, excellent name recognition
and broadcast rights for attractive sponsorship opportunities such
as the National Football Conference games. The result has been the
efficient coupling of increased advertising rates with reduced
programming costs for our stations.
As the Federal Communications Commission (FCC) has increased
ownership levels for broadcast properties, Clear Channel
consistently has moved to capitalize on economies of scale,
creating potent market thrust. The addition of strategically
aligned broadcast facilities and local marketing and time sales
agreements gives the Company an advantage in developing market-
specific opportunities for our advertising customers.
Clear Channel has capitalized on the expanded ownership of radio
and television stations to enhance its competitive position in
virtually every market in which it operates. With recent
acquisitions and strategic alliances, Clear Channel now has a
strong market presence in Albany, Austin, Cleveland, Houston,
Jacksonville, Little Rock, Louisville, Memphis, Miami/Ft.
Lauderdale, Minneapolis, Mobile/Pensacola, New Haven, New Orleans,
Oklahoma City, Richmond, San Antonio, Tampa, Tulsa, and Wichita.
In a complex confluence of rapid technological advances, a changing
political climate, and the forces of economic change, the
telecommunications, broadcast and entertainment industries are
vying for increasingly overlapping marketshares of products and
services. As with any other major industry, the future of
broadcasting belongs to companies who will respond to change
quickly and with assertiveness to better serve their customers. For
example: the FCC is reviewing its "one-to-a-market" rule in
television ownership. In addition, the FCC and Congress are
reviewing significant increases in ownership limits in both radio
and television. A favorable change in these guidelines could
dramatically improve the broadcast landscape.
With a focus on the challenges and opportunities presented by
technological developments, Clear Channel is empowered to act
decisively. The Company's debt levels remain conservative, and bank
credit available for acquisitions has been expanded to $350 million
from $150 million. In November of 1994, Clear Channel
Communications' stock began trading on the New York Stock Exchange
under the symbol CCU. Each year Clear Channel has broken its
previous year's gross revenues, and at the end of 1994 had grown to
more than $200 million in annual revenues generated through 35
radio stations, 9 television stations, four networks, multiple
sports broadcasting contracts and various time sales and local
marketing agreements.
Throughout its history, Clear Channel Communications, Inc. has been
driven by one solid standard: To help its customers sell their
products and services. Our unique level of emphasis on generating
results for our customers, many of whom enjoy decades-long
relationships with individual stations, sharply focuses our
energies towards maintaining the quality of our shared future.
Targeting and reaching this goal is our earnest wish and a welcome
challenge.
Picture of the Alamo in San Antonio, Texas
"News of the fall of the Alamo in 1836 would take 36 days to
reach New York, in sharp contrast to the instantaneous
newsmaking we experience today."
Picture of typical American commuters
"When Americans moved to Suburbia, marketers quickly realized
the potential offered daily by the newly mobile but "captive"
commuter audience."
Picture of the Statue of Liberty
"When she arrived in 1886, it was possible to ship the 40-ton
Statue of Liberty across the Atlantic--but not to send a
wireless message."
Picture of Steve Young
"1994 began Fox Network's coverage of NFL season games. This
year's NFC Championship game on Fox was the highest rated
championship game in history."
Picture of station personnel giving Red Cross a donation
"Each station is intimately involved in its local community.
Our commitment to our service areas is matched only by our
commitment to providing results for our customers."
Picture of Bart Simpson
"The Simpsons stormed onto television in 1988, leading the
charge for the new Fox network."
Picture of Man in Space
"New technology leads the way to expanded earning
possibilities."
Picture of WMTX remote broadcast equipment
"WMTX-FM and AM join the Clear Channel Family."<PAGE>
A Timeline In History
1860
1861-65: Lincoln
1864
Britisher James C. Maxwell develops the
theory of electromagnetism
1861-65: Lincoln
1865-69: Johnson
1869-77: Grant
1880
1877-81: Hayes
1881-81: Garfield
1881-85: Arthur
1884
Inventor Thomas Edison develops a system
of wireless communication between moving
trains and railway stations
1885-89: Cleveland
1887
German Heinrich Hertz demonstrates rapid
variations in electrical current (radio
waves) can be projected into space
1889-93: Harrison
1893-97: Cleveland
1895
Italian Gugliermo Marconi secures first
patent for telegraphing without wires
1900
1901
1897-01: McKinley
1901
Banner headlines "Wireless spans the
ocean" trumpet Marconi's achievement:
Morse code "s" is sent from England to
Newfoundland by wireless telegraph
1905
1901-09: Roosevelt
1904
British scientist John Ambrose Fleming
invents vacuum tube (later refined by
Canadian Reginald Fessender and American
Lee DeForest)
1908
DeForest broadcasts recorded music from
Eiffel Tower for reception 500 miles
away
1910
1909-13: Taft
1910
Congress passes law requiring passenger
ships to have radio equipment and
operators
1912
More than 700 passengers aboard U.S.S.
Titanic saved after wireless call for
help
1915
1913-21: Wilson
1919
Radio Corporation of America founded to
buy Marconi's American assets, cross-
licensing with General Electric and
Westinghouse
1920
1920
A research engineer and business executive
open first commercially licensed station,
KDKA, which broadcasts returns of Harding-
Cox presidential election
1921
1921-23: Harding
1922
1922
WEAF (now WNBC) in New York broadcasts 10-
minute show for Long Island real estate
company, first sponsored programming in
the nation
1922
G.A.C. Halff signs on WOAI-AM, San
Antonio, TX, a 500-watt transmitter
broadcasting on 1190 AM band
1922
WHAS-AM Louisville, KY signs on July 18
1923
1923-29: Coolidge
1924
1925
1925
WOAI increases power to 1000 watts, and
airs first commercial spot
1925
Heritage stations WRVA-AM, Richmond, VA
and KPRC-AM, Houston, TX sign on the air
1926
1926
Sept: RCA forms National Broadcasting Co.
to handle its broadcasting, forming NBC
Red and NBC Blue networks (government
later forces NBC to sell Blue in 1943,
becoming American Broadcasting Co. in
1945)
1927
1927
January: Columbia Broadcasting Service
(CBS) organized
1927
KTOK-AM, Oklahoma City, OK signs on
January
1927
Radio Act of 1927 establishes radio
airwaves as property of U.S. citizens, to
be regulated by Federal Radio Commission
1928
1929
1929-33: Hoover
WOAI increases power to legal limit of
50,000 watts, making it the most powerful
station in South Texas
1930
1933-45: Roosevelt
1935
WELI-AM, New Haven, CT signs on
1937
Seventeen experimental TV stations are in
operation
1937
WRVH-Richmond, VA signs on
1938
Orson Welles' Mercury Theater makes its
War of the Worlds broadcast
1940
1941
FCC authorizes FM radio, opening band in
1945; also authorizes black and white TV
frequencies (4700 sets in New York)
1945-53: Truman
WOAI changed to AM 1200 as part of the
emergency clear channel system
1948
Milton (Mr. Television) Berle becomes
Master of Ceremonies of The Texaco Star
Theater
1948
WNCX-Cleveland, OH signs on
1948
WMTX-Tampa, FL signs on
1949
WRXL-Richmond, VA signs on
1949
WERE-Cleveland, OH signs on
1950
The Journal Co. of Milwaukee goes on-air
with WTMJ-TV, an NBC affiliate in
Milwaukee, the first commercial TV
operation
1953-61: Eisenhower
1954
WRBQ-Tampa, FL signs on
1959
KMOD-Tulsa, OK signs on
CBS receives FCC approval for color TV
FCC issues Sixth Report and Order which
establishes TV channels 2-13 on VHF and
14-83 on UHF
1960
1961-63: Kennedy
1961
KJYO-Oklahoma City, OK signs on
First televised presidential debate,
between Richard M. Nixon and John F.
Kennedy
1963-69: Johnson
1967
KEBC-Oklahoma City, OK signs on
1969-73: Nixon
1970
1972
L. Lowry Mays and B.J. "Red" McCombs team
up to purchase KEEZ-FM, now KAJA-FM
1973-77: Ford
1975
Clear Channel Communications, Inc.
purchases WOAI for $1.5 million, changing
its pop music and news format to news-
talk/sports radio
1976
All in the Family drops from televisions
first-place spot after a six-year run
1977-81: Carter
1980
1981-89: Reagan
1984
Company creates a sports division that
owns rights to broadcast college football
games
1984
Company issues stock and begins trading
under symbol CLCH; IPO price adjusted for
splits and dividends - $2.11 per share,
April
1984
Five stations and the Oklahoma News
Network added to the fold, September
Purchases WHAS-AM and WAMZ-FM in
Louisville; WHAS becomes the second "clear
channel" station and both contribute
almost 17 percent of total revenues to
parent by 1990
Fox Network begins airing
Company adds first television station to
lineup, buying WPMI-TV in Mobile, AL, an
affiliate of the Fox System
1989-93: Bush
1990
1992
FCC changes rule on radio ownership,
increasing levels from 12 to 18 for FM and
AM stations
1992
Four more Fox affiliates come into the
fold; WAWS-TV, Jacksonville, FL; KOKI-TV,
Tulsa, OK; WPTY-TV, Memphis, TN; and KSAS-
TV, Wichita, KS
1993: Clinton
1993
Company adds WFTC-TV in Minneapolis, MN
1994
Begins trading on the New York Stock
Exchange under the symbol CCU
FCC expands station ownership levels to 20
FM and 20 AM<PAGE>
CLEAR CHANNEL CREED
We are in the business of selling goods and services for our
advertising customers. Our service is a partnership to that end. In
doing so we believe maximizing the satisfaction of our customers is
our most important concern as a means of warranting their continued
loyalty.
We believe
* in providing superior value to customers through high
quality, technologically advanced, fairly priced services
designed to meet customer needs better than all
alternatives.
* Clear Channel people are our most important asset, making
the critical difference in how we perform and what
separates us from our competitors.
* we have an obligation for the well-being of the
communities in which we work. We further believe the
future of the broadcasting industry is closely tied to
public service and the standards we set will be measured
critically by the communities we serve and the regulators
who license us.
We believe excellence is the standard we seek to achieve by
encouraging and nourishing:
* Respect for the individual.
* Honest, open communication.
* Individual development and satisfaction.
* A sense of ownership in Clear Channel's success.
* Participation, cooperation and teamwork.
* Creativity, innovation and initiative.
* Prudent risk-taking.
* Recognition and rewards for achievement.
We believe success is measured by:
* Achieving leadership in the markets we serve.
* Developing our own people to form the building
blocks of our internal growth and expansion.
* Maintaining the highest standards of ethics and
integrity in every action we take and in
everything we do.
We believe the ultimate measure of our success is to provide a
superior value to our stockholders, balancing near term and long
term objectives.
<PAGE>
INVESTMENT HIGHLIGHTS
Five Year Cumulative Return
(Assumes $1,000 invested in Clear Channel Stock December 31, 1989)
1989 $ 1,000
1990 1,099
1991 1,461
1992 2,634
1993 7,434
1994 10,253
Performance Graph
Indexed Yearly Stock Price Close
Prices Adjusted for Stock Splits and Dividends
(December 31, 1989 = 1.00)
Clear Channel Paul Kagan Associates
Communications S&P 500 Broadcast Index
1989 1.0 1.0 1.0
1990 1.1 0.93 0.78
1991 1.46 1.18 0.76
1992 2.63 1.23 0.92
1993 7.43 1.32 1.23
1994 10.25 1.3 1.36
<PAGE>
REVENUE BY MARKET
Market Percent of Revenue
Minneapolis 9.9%
Memphis 9.4%
Tulsa 8.7%
Louisville 8.4%
San Antonio 8.3%
Richmond 7.6%
Oklahoma City 6.0%
Jacksonville 5.8%
Mobile/Pensacola 5.1%
Tampa 4.2%
New Orleans 4.2%
Wichita 4.0%
Austin 4.0%
New Haven 3.9%
Little Rock 3.8%
Houston 2.6%
Miami/Ft. Lauderdale 1.6%
Other 1.4%
Cleveland 1.1%
<PAGE>
OUR FAMILY TREE
WOAI-AM San Antonio, TX
News/Talk/Sports 1200 AM
KQXT-FM San Antonio, TX
Adult Contemporary 101.9 FM
KTKR-AM San Antonio, TX
News/Talk/Sports 760 AM
KAJA-FM San Antonio, TX
Country 97.3 FM
KSJL-FM* San Antonio, TX
Adult Urban 96.1 FM
KPRC-AM# Houston, TX
News/Talk/Sports 950 AM
KSEV-AM# Houston, TX
News/Talk/Sports 700 AM
KMJQ-FM Houston, TX
Adult Urban 102.1 FM
KBXX-FM Houston, TX
Urban Contemporary 97.9 FM
KHYS-FM* Houston, TX
Jazz 98.5 FM
KPEZ-FM Austin, TX
Classic Rock 102.3 FM
KHFI-FM Austin, TX
Contemporary Hits 96.7 FM
KEYI-FM* Austin, TX
Oldies 103.5 FM
KFON-AM* Austin, TX
News/Talk 1490 AM
WKCI-FM New Haven, CT
Contemporary Hits 101.3 FM
WAVZ-AM New Haven, CT
News/Talk/Sports 1300 AM
WELI-AM New Haven, CT
News/Adult Contemporary 960 AM
KAKC-AM Tulsa, OK
News/Sports/Oldies 1300 AM
KMOD-FM Tulsa, OK
Album Oriented Rock 97.5 FM
KTOK-AM Oklahoma City, OK
News/Talk/Sports 1000 AM
KEBC-FM Oklahoma City, OK
Country 94.7 FM
KJYO-FM Oklahoma City, OK
Contemporary Hits 102.7 FM
WHAS-AM Louisville, KY
News/Adult Contemporary 840 AM
WAMZ-FM Louisville, KY
Country 97.5 FM
WKJK-FM* Louisville, KY
Traditional Country 98.9 FM
WMTX-AM Tampa, FL
Adult Contemporary 1040 AM
WMTX-FM Tampa, FL
Adult Contemporary 95.7 FM
WRBQ-AM Tampa, FL
Adult Urban 1380 AM
WRBQ-FM Tampa, FL
Country 104.7 FM
WHYI-FM Miami, FL
Contemporary Hits 100.7 FM
WBGG-FM Miami, FL
Rock Oldies 105.9 FM
WRVA-AM Richmond, VA
News/Talk/Sports 1140 AM
WRVH-AM Richmond, VA
News/Talk/Sports 910 AM
WRVQ-FM Richmond, VA
Contemporary Hits 94.5 FM
WRXL-FM Richmond, VA
Album Oriented Rock 102.1 FM
WODT-AM New Orleans, LA
Sports/News/Talk 1280 AM
WQUE-FM New Orleans, LA
Urban Contemporary 93.3 FM
WYLD-AM* New Orleans, LA
Gospel 940 AM
WYLD-FM* New Orleans, LA
Adult Urban 98.5 FM
WNCX-FM Cleveland, OH
Classic Rock 98.5 FM
WERE-AM Cleveland, OH
News/Talk 1300 AM
WENZ-FM* Cleveland, OH
Modern Rock 107.9 FM
Kentucky News Network Louisville, KY
News/Agriculture Network
Virginia News Network Richmond, VA
News/Agriculture Network
Oklahoma News Network Oklahoma City, OK
News/Agriculture Network
Clear Channel Sports Oklahoma City, OK
College Station, TX
Des Moines, IA
WPMI-TV Mobile, AL; Pensacola, FL
FOX TV-15
WJTC-TV* Mobile, AL; Pensacola, FL
UPN TV-44
KTTU-TV Tucson, AZ
Independent TV-18
WAWS-TV Jacksonville, FL
FOX TV-30
KOKI-TV Tulsa, OK
FOX TV-23
KTFO-TV+ Tuls, OK
UPN TV-41
KSAS-TV Wichita, KS
FOX TV-24
WPTY-TV Memphis, TN
FOX TV-24
WLMT-TV+ Memphis, TN
UPN TV-30
KLRT-TV Little Rock, AR
FOX TV-16
KASN-TV* Little Rock, AR
UPN TV-38
WXXA-TV Albany, NY
FOX TV-23
WFTC-TV Minneapolis, MN
FOX TV-29
* Joint Sales Agreements (not owned or programmed by Clear Channel
Communications)
# 80% owned by Clear Channel Communications
+ Local Marketing Agreement (not owned by Clear Channel
Communications)
Picture of United States map with all Clear Channel stations and
network locations.
Legend
------
Star Corporate Headquarters
Circle Radio Stations
Square Television Stations
Diamond Networks
Triangle Joint Sales Agreements
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Comparison of 1994 vs 1993
Consolidated net broadcasting revenue in 1994 increased 46% to
$173,109,000 from $118,183,000. Station operating expenses in 1994
increased 32% to $100,437,000, compared to $75,990,000 for 1993.
Station operating income before depreciation and amortization in
1994 increased to $72,673,000 from $42,193,000 or 72%.
Depreciation and amortization increased 41% to $24,669,000 from
$17,447,000. Interest expense increased to $7,669,000 from
$5,390,000 or 42%. Other income (expense) increased to $1,161,000
from $(196,000). Net income was $22,009,000 for 1994 compared to
$9,123,000 for 1993. Income tax expense in 1994 was $14,387,000
reflecting an annual average effective rate of 40%, as compared to
$6,572,000, a 42% effective rate in 1993.
The majority of the increase in net broadcasting revenue was due to
the additional revenue associated with the acquisitions of radio
and television stations acquired in 1994 and the inclusion of a
full year of operations for those stations acquired in 1993. These
stations are as follows:
Network or
Purchase Date Station Location
January 14, 1994 KEBC-FM Oklahoma City, OK
February 28, 1994 KLRT-TV Little Rock, AR
February 28, 1994 KASN-TV* Little Rock, AR
March 9, 1994 WAXY-FM Miami, FL
August 15, 1994 KBXX-FM Houston, TX
October 12, 1994 Metroplex
Communications, Miami/Ft. Lauderdale, FL
Inc. Tampa, FL & Cleveland, OH
November 1, 1994 WENZ-FM* Cleveland, OH
December 1, 1994 WXXA-TV Albany, NY
February 1, 1993 KQXT-FM San Antonio, TX
March 9, 1993 KHFI-FM Austin, TX
March 25, 1993 WYLD-AM/FM* New Orleans, LA
July 1, 1993 KSJL-AM San Antonio, TX
August 19, 1993 WLMT-TV* Memphis, TN
September 15, 1993 WRXL-FM Richmond, VA
September 15, 1993 WRNL-AM Richmond, VA
September 15, 1993 Virginia Network Richmond, VA
October 13, 1993 KITN-TV Minneapolis, MN
November 3, 1993 KTFO-TV* Tulsa, OK
*The Company operates these stations under time sales or time
brokerage agreements and does not own the FCC licenses.
Station operating expenses rose due to the increase in selling
expenses associated with this revenue increase and the additional
operating expenses associated with the above acquisitions. The
major cause of the increase in depreciation and amortization was
due to the acquisition of tangible and intangible assets
associated with the purchases of the above mentioned stations. The
majority of the increase in interest expense was due to an increase
in the average amount of debt outstanding and an increase in the
average interest rate from 5.2% to 5.7%.
Income tax expense was up due to the increase in earnings, while
the average effective rate was down due to the drop in the amount
of nondeductible goodwill as a percentage of earnings.
Net income rose for the above stated reasons, but was partially
offset by a $1,636,000 increase in corporate related expenses
warranted by the increase in current business activity.
Radio
Net broadcasting revenue in 1994 increased 31% to $94,098,000 from
$71,605,000. Station operating expenses increased 19% to
$62,383,000 compared to $52,254,000 for 1993. Station operating
income before depreciation and amortization in 1994 increased to
$31,714,000 from $19,351,000 or 64%. Depreciation and amortization
increased 35% to $12,324,000 from $9,114,000. Station operating
income increased 89% to $19,390,000 in 1994 from $10,237,000 in
1993.
The majority of the increase in net broadcasting revenue, station
operating expenses and depreciation and amortization was due to the
acquisition of the radio stations and the network referred to
above. The increase in station operating income was primarily due
to the inclusion of the operating results of the above stated radio
and network acquisitions. At year end, the Company owned 19 FM and
14 AM FCC licenses. The maximum number of radio FCC licenses
allowed under current ownership rules is 20 for each. Based on the
acquisitions and disposals subsequent to year end as well as the
pending license transfer of WYLD-FM, the Company will hold 20 FM
licenses and 15 AM licenses.
Television
Net broadcasting revenue in 1994 increased 70% to $79,012,000 from
$46,577,000. Station operating expenses in 1994 increased 60% to
$38,054,000 compared to $23,736,000 for 1993. Station operating
income before depreciation and amortization in 1994 increased to
$40,958,000 from $22,842,000 or 79%. Depreciation and amortization
increased 48% to $12,344,000 from $8,333,000. Station operating
income increased 97% to $28,614,000 in 1994 from $14,508,000 in
1993.
The majority of the increase in net broadcasting revenue was due to
the inclusion of the above mentioned television acquisitions in
1994 and 1993. Station operating expenses rose due to the increase
in selling expenses associated with this revenue increase as well
as the additional operating expenses of the new stations. The
major cause of the increase in depreciation and amortization was
due to the acquisition of tangible and intangible assets associated
with the purchases of the above mentioned television stations. At
year end, the Company owned 9 television FCC licenses. The maximum
number of television FCC licenses allowed under current ownership
rules is 12.
Comparison of 1993 vs 1992
Consolidated net broadcasting revenue in 1993 increased 44% to
$118,183,000 from $82,205,000. Station operating expenses in 1993
increased 42% to $75,990,000 compared to $53,532,000 for 1992.
Station operating income before depreciation and amortization in
1993 increased to $42,193,000 from $28,672,000 or 47%. Depreciation
and amortization increased 42% to $17,447,000 from $12,253,000.
Interest expense increased to $5,390,000 from $4,739,000 or 14%.
Other expense decreased from $1,217,000 to $196,000. Net income
was $9,123,000 in 1993 compared to $4,293,000 in 1992. Income tax
expense in 1993 was $6,572,000 reflecting an annual average
effective rate of 42%, as compared to $3,282,000, which resulted in
a 43% effective rate in 1992.
The majority of the increase in net broadcasting revenue was due to
the additional revenue associated with the radio and television
stations acquired in 1993 and the inclusion of a full year of
operations for those stations acquired in 1992. These stations are
as follows:
Network or
Purchase Date Station Location
February 1, 1993 KQXT-FM San Antonio, TX
March 9, 1993 KHFI-FM Austin, TX
March 25, 1993 WYLD-AM/FM* New Orleans, LA
July 1, 1993 KSJL-AM San Antonio, TX
August 19, 1993 WLMT-TV* Memphis, TN
September 15, 1993 WRXL-FM Richmond, VA
September 15, 1993 WRNL-AM Richmond, VA
September 15, 1993 Virginia Network Richmond, VA
October 13, 1993 KITN-TV Minneapolis, MN
November 3, 1993 KTFO-TV* Tulsa, OK
January 31, 1992 Kentucky Network Louisville, KY
April 1, 1992 WPTY-TV Memphis, TN
May 6, 1992 WKCI-FM New Haven, CT
May 6, 1992 WAVZ-AM New Haven, CT
June 26, 1992 KEYN-FM Wichita, KS
June 26, 1992 KQAM-AM Wichita, KS
July 1, 1992 WRVA-AM Richmond, VA
July 1, 1992 WRVQ-FM Richmond, VA
July 1, 1992 WRBQ-AM/FM Tampa, FL
*The Company operates these stations under time sales or time
brokerage agreements and does not own the FCC licenses.
Station operating expenses rose due to the increase in selling
expenses associated with this revenue increase and the additional
operating expenses associated with the above acquisitions. The
major cause of the increase in depreciation and amortization was
due to the acquisition of tangible and intangible assets associated
with the purchases of the above mentioned stations. The majority of
the increase in interest expense was due to an increase in the
average amount of debt outstanding, which was partially offset with
a reduction in the average interest rate from 5.9% to 5.2%.
Income tax expense was up due to the increase in earnings, while
the average effective rate was down due to the drop in the amount
of nondeductible goodwill as a percentage of earnings.
Net income rose for the above stated reasons, but was partially
offset by a $574,000 increase in corporate related expenses
warranted by the current and future business activity.
Radio
Net broadcasting revenue in 1993 increased 45% to $71,605,000 from
$49,220,000. Station operating expenses increased 46% to
$52,254,000 compared to $35,838,000 for 1992. Station operating
income before depreciation and amortization in 1993 increased to
$19,351,000 from $13,382,000 or 45%. Depreciation and amortization
increased 58% to $9,114,000 from $5,774,000. Station operating
income increased to $10,237,000 in 1993 compared to $7,609,000 for
1992, an increase of 35%.
The majority of the increase in net broadcasting revenue, station
operating expenses and depreciation and amortization was due to the
acquisition of the radio stations and the networks referred to
above.
Television
Net broadcasting revenue in 1993 increased 41% to $46,577,000 from
$32,984,000. Station operating expenses in 1993 increased 34% to
$23,736,000 compared to $17,695,000 for 1992. Station operating
income before depreciation and amortization in 1993 increased to
$22,842,000 from $15,290,000 or 49%. Depreciation and amortization
increased 29% to $8,333,000 from $6,479,000. Station operating
income increased to $14,508,000 in 1993 compared to $8,811,000 in
1992, an increase of 65%.
The majority of the increase in net broadcasting revenue was due to
the inclusion of the above mentioned television acquisitions in
1993 and 1992. Station operating expenses rose due to the increase
in selling expenses associated with this revenue increase as well
as the additional operating expenses of the new stations. The
major cause of the increase in depreciation and amortization was
due to the acquisition of tangible and intangible assets associated
with purchases of the above mentioned television stations.
Liquidity and Capital Resources
The major sources of capital for the Company have historically been
cash flow from operations, proceeds of long-term debt, as well as
funds provided by the initial stock offering in 1984 and subsequent
stock offerings in July 1991 and October 1993. Historically, cash
flow has exceeded earnings by a significant amount due to the high
amortization and depreciation associated with the broadcasting
industry.
On September 30, 1994, the Company refinanced its credit facility
into a new $350,000,000 credit facility. This facility converts
into a reducing revolver on June 30, 1996, which will be paid out
over the subsequent six year period. During 1994, the Company made
cash payments of $127,427,000 to purchase broadcasting assets
(radio and television stations), made principal payments on the
credit facility totaling $25,800,000 and purchased capital
equipment totaling $5,747,000. At year end, the Company borrowed
$38,500,000 to purchase KMJQ- FM and KYOK-AM which was effective
January 1, 1995. This transaction has been recorded as restricted
cash as of year end with a corresponding increase in borrowings
under the credit facility. In addition, shortly after year end the
Company borrowed $26,800,000 under its credit facility in
connection with its acquisition of KPRC-AM and KSEV-AM.
After giving effect to the above mentioned transactions, the
Company had $254,000,000 outstanding under its credit facility,
with $81,000,000 available for future borrowings. Interest rates
on these borrowings adjusts every 30 days. Based on the outstanding
debt under the credit facility at the beginning of 1995, a 1%
increase in interest rates would result in a net after tax charge
to the Company's earnings of approximately $1,651,000. In addition,
other notes payable amounting to $15,589,000 were outstanding at
year end. The Company had $6,818,000 in cash and cash equivalents
at year end.
The Company expects that cash flow from operations in 1995 will be
sufficient to make all required interest and principal payments on
the credit facility.
Capital Expenditures and Program Commitments
Capital outlays are expected to increase very little in 1995,
reflective only of the growth in the number of radio and television
stations. As the operator of thirteen television stations and one
sports network, the Company will continue to enter into programming
commitments to purchase the broadcast rights to various feature
films, syndicated shows, sports events and other programming.
Total commitments at December 31, 1994 were $16,318,000. These
commitments were not available for television or radio broadcast at
year end, but are expected to become available over the next five
years, at which time they will be recorded. Most commitments are
then payable over a period not exceeding five years.
The Company anticipates paying for these program commitments and
capital outlays with cash generated from operations. It
anticipates funding any subsequent radio and television station
acquisitions with the existing credit facility and cash generated
from operations.
Inflation
Inflation has affected the Company's performance in terms of higher
costs for wages, salaries and equipment. Although the exact impact
of inflation is not determinable, the Company believes it has
offset these higher costs by increasing the effective advertising
rates of most of its radio and television stations.
<PAGE>
Management's Report on Financial Statements
The consolidated financial statements and notes related thereto
were prepared by and are the responsibility of management. The
consolidated financial statements and related notes were prepared
in conformity with generally accepted accounting principles and
include amounts based upon management's best estimates and
judgments.
It is management's objective to ensure the integrity and
objectivity of its financial data through systems of internal
controls designed to provide reasonable assurance that all
transactions are properly recorded in the Company's books and
records, that assets are safeguarded from unauthorized use and that
financial records are reliable to serve as a basis for preparation
of financial statements.
The consolidated financial statements have been audited by our
independent auditors, Ernst & Young L.L.P., to the extent required
by generally accepted auditing standards and accordingly, they have
expressed their professional opinion on the consolidated financial
statements in their report included herein.
The Board of Directors meets with management periodically to
satisfy itself that they are properly discharging their
responsibilities. The independent auditors meet with the Audit
Committee of The Board without management present, to discuss the
results of their audit and the quality of financial reporting and
internal accounting controls.
L. Lowry Mays
President and Chief Executive Officer
Herbert W. Hill, Jr.
Vice President/Controller
<PAGE>
Report of Ernst & Young, L.L.P.,
Independent Auditors
Shareholders and Board of Directors
Clear Channel Communications, Inc.
We have audited the accompanying consolidated balance sheets of
Clear Channel Communications, Inc. and Subsidiaries as of December
31, 1994 and 1993, and the related consolidated statements of
earnings, changes in shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Clear Channel Communications, Inc. and
Subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.
As discussed in Note F to the financial statements, in 1993 the
Company changed its method of accounting for income taxes.
Ernst & Young L.L.P.
San Antonio, Texas
February 17, 1995
<PAGE>
CONSOLIDATED BALANCE SHEETS
Assets
December 31,
---------------------------
1994 1993
------------ ------------
Current Assets
Cash and cash equivalents $ 6,817,595 $ 5,516,850
Accounts receivable,
less allowance of $3,117,496 in
1994 and $3,026,785 in 1993 38,280,518 24,843,046
Film rights current 8,847,262 7,830,657
------------ ------------
Total Current Assets 53,945,375 38,190,553
Property, Plant and Equipment
Land 6,409,013 5,621,701
Buildings 10,642,563 9,235,884
Transmitter and studio equipment 93,530,635 72,134,406
Furniture and other equipment 13,514,125 11,094,300
Leasehold improvements 4,059,725 2,017,622
Construction in progress 784,850 216,896
------------ ------------
128,940,911 100,320,809
Less accumulated depreciation 43,623,032 32,571,094
------------ ------------
85,317,879 67,749,715
Intangible Assets
Leases 1,455,000 1,933,000
Fox Network Affiliation agreements 20,484,904 17,392,904
Licenses and goodwill 194,408,601 85,152,468
Covenants not-to-compete 22,271,938 21,125,000
Other intangible assets 2,858,436 1,919,255
------------ ------------
241,478,879 127,522,627
Less accumulated amortization 33,861,800 24,028,299
------------ ------------
207,617,079 103,494,328
Other
Restricted cash 38,500,000
Film rights - noncurrent 12,653,817 12,425,316
Other assets 7,998,036 4,604,114
Investments 5,561,839 1,112,515
------------ ------------
$411,594,025 $227,576,541
============ ============
<PAGE>
Liabilities and Shareholders' Equity
December 31,
--------------------------
1994 1993
------------ ------------
Current Liabilities
Accounts payable $ 5,686,835 $ 4,435,858
Accrued interest 741,490 255,769
Accrued expenses 3,928,738 3,987,737
Accrued income and other taxes 3,308,586 2,028,998
Current portion of long-term debt 4,584,335 7,160,793
Current portion of film rights liability 9,428,591 8,255,383
------------ ------------
Total Current Liabilities 27,678,575 26,124,538
Long-Term Debt 238,204,386 87,814,847
Film Rights Liability 12,578,636 11,727,941
Deferred Income Taxes 2,599,223 3,566,469
Shareholders' Equity
Preferred Stock, par value $1.00 per share,
authorized 2,000,000 shares, no shares
issued and outstanding
Common Stock, par value $.10 per share,
authorized 20,000,000 shares, issued
and outstanding 17,230,409 shares
in 1994 and 17,150,753 in 1993 1,723,041 1,715,076
Additional paid-in capital 92,535,139 84,635,233
Retained earnings 36,345,575 14,336,079
Cost of shares (5,082 in 1994 and 173,346
in 1993) held in treasury (70,550) (2,343,642)
------------ ------------
130,533,205 98,342,746
------------ ------------
$411,594,025 $227,576,541
============ ============
See Notes to Consolidated Financial Statements
<TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
Year Ended December 31,
------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Gross broadcasting revenue $200,694,908 $135,680,023 $ 94,471,583
Less: Agency and national representative
commissions 27,585,534 17,497,384 12,266,728
------------ ------------ ------------
Net broadcasting revenue 173,109,374 118,182,639 82,204,855
Station operating expenses 100,436,858 75,990,031 53,532,458
Depreciation and amortization 24,668,540 17,447,262 12,252,721
------------ ------------ ------------
Station operating income 48,003,976 24,745,346 16,419,676
Corporate general and administrative
expenses 5,099,834 3,463,523 2,889,590
------------ ------------ ------------
Operating income 42,904,142 21,281,823 13,530,086
Interest expense 7,669,000 5,389,691 4,738,789
Other income (expense) - net 1,161,456 (196,482) (1,216,596)
------------ ------------ ------------
Income before income taxes 36,396,598 15,695,650 7,574,701
Income taxes 14,387,102 6,572,434 3,281,502
------------ ------------ ------------
Net income $ 22,009,496 $ 9,123,216 $ 4,293,199
============ ============ ============
Net income per common share $ 1.27 $ .59 $ .29
============ ============ ============
Weighted average common and common share
equivalents outstanding 17,331,453 15,550,261 14,829,751
============ ============ ============
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
Additional
Common paid-in Retained Treasury
stock capital earnings stock Total
--------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at January 1,
1992 $ 916,239 $22,950,821 $ 919,664 $24,786,724
Net income for year 4,293,199 4,293,199
Exercise of
stock options 42,735 4,275,753 4,318,488
Stock split effected
in the form of
a dividend 239,718 (239,718)
Receipt of treasury
stock $(2,343,642) $(2,343,642)
---------- ------------ ----------- ----------- -----------
Balances at
December 31, 1992 1,198,692 26,986,856 5,212,863 (2,343,642) 31,054,769
Net income for year 9,123,216 9,123,216
Exercise of
stock options 869 89,028 89,897
Stock split effected
in the form of
a dividend 343,015 (343,015)
Proceeds from issuance of
1,725,000 shares of
Common Stock 172,500 57,902,364 58,074,864
---------- ----------- ----------- ----------- -----------
Balances at
December 31, 1993 1,715,076 84,635,233 14,336,079 (2,343,642) 98,342,746
Net income for year 22,009,496 22,009,496
Exercise of stock
options 1,168 2,805,735 (27,440) 2,779,463
Issuance of 119,048 shares
of Common Stock to acquire
minority interest in a consolidated
subsidiary 1,891,968 1,609,532 3,501,500
Issuance of 117,975 shares of
Common Stock for a business
acquisition 6,797 3,202,203 691,000 3,900,000
---------- ----------- ------------- ----------- -----------
Balances at
December 31, 1994 $1,723,041 $92,535,139 $36,345,575 $ (70,550) $130,533,205
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1994 1993 1992
------------- ------------ ------------
<S> <C> <C> <C>
Net Cash Flow From Operating Activities $ 41,131,501 $ 27,780,463 $ 17,545,607
Cash Flows From Investing Activities:
(Increase) in investments (4,135,718) (525,068) (138,943)
(Increase) in restricted cash (38,500,000)
Purchases of property, plant and
equipment (5,747,166) (2,691,743) (6,116,946)
Proceeds from disposals of property,
plant and equipment 130,047 109,175 22,500
Proceeds from disposal of
broadcasting assets 2,025,000
Acquisition of broadcasting
assets (127,427,369) (68,231,275) (57,343,709)
Acquisition of minority interest
in consolidated subsidiary (4,000,000)
(Increase) in other intangible assets (1,160,990) (333,050) (508,516)
(Increase) in other - net (1,094,531) (2,427,534) (1,488,457)
------------- ----------- -----------
Net cash (used in) investing activities (179,910,727) (74,099,495) (65,574,071)
Cash Flows From Financing Activities:
Proceeds of long-term debt 165,100,000 63,400,000 106,186,480
Payments on long-term debt (25,800,000) (72,500,000) (58,050,000)
Payments on short-term debt and
current maturities (1,999,492) (18,954) (1,126,039)
Exercise of stock options 2,779,463 89,897 43,083
Proceeds from issuance of Common Stock 58,074,864
------------- ----------- ------------
Net cash provided by financing activities 140,079,971 49,045,807 47,053,524
------------- ----------- ------------
Net increase (decrease) in cash 1,300,745 2,726,775 (974,940)
------------- ----------- ------------
Cash at beginning of year 5,516,850 2,790,075 3,765,015
------------- ----------- ------------
Cash at end of year $ 6,817,595 $ 5,516,850 $ 2,790,075
============= =========== ============
</TABLE>
<TABLE>
<PAGE>
Schedule Reconciling Earnings To
Net Cash From Operating Activities: Year Ended December 31,
<CAPTION>
-------------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net income $22,009,496 $ 9,123,216 $ 4,293,199
Reconciling Items:
Depreciation 12,639,104 9,216,982 6,550,590
Amortization of intangibles 12,029,436 8,230,280 5,702,131
Deferred taxes 188,059 68,001 600,932
Amortization of film rights 9,857,530 5,935,921 5,053,041
Payments on film liabilities (10,037,749) (6,195,072) (5,267,040)
(Gain) loss on disposal of assets (598,863) 7,943 222,962
Changes in operating assets and liabilities:
(Increase) accounts receivable (8,408,540) (6,667,872) (1,241,182)
Decrease federal income tax receivable 1,936,146 630,834
Increase accounts payable 1,151,467 1,751,352 707,564
Increase (decrease) accrued interest 485,721 (203,634) 127,612
Increase (decrease) accrued expenses (221,855) 2,548,202 234,936
Increase (decrease) accrued
income and other taxes 2,037,695 2,028,998 (69,972)
----------- ----------- -----------
Net cash from operating activities $41,131,501 $27,780,463 $17,545,607
=========== =========== ===========
Acquisitions:
1994 1993 1992
-------------------------- ----------------------------- --------------------------------
KEBC-FM, WAXY-FM, KLRT-TV, KQXT-FM, KHFI-FM, WYLD AM/FM, Kentucky State Network, WPTY-TV,
KASN-TV, KBXX-FM WLMT-TV, WRXL-FM, WRNL-AM WKCI-FM, WAVZ-AM, KEYN-FM, KQAM-AM
Metroplex Communications, Inc. Virginia News Network, KITN-TV WRVA-AM, WRVQ-FM and WRBQ AM/FM
WENZ-FM and WXXA-TV and KTFO-TV
1994 1993 1992
------------ ----------- -----------
Property, plant and equipment $ 26,385,571 $26,392,219 $21,535,065
Accounts receivable 5,334,476 2,466,089 2,602,229
Licenses, goodwill and other assets, net of
liabilities assumed 110,119,896 46,448,607 33,206,415
------------ ----------- -----------
141,839,943 75,306,915 57,343,709
Less:
Seller financing (7,075,640)
Notes payable assumed (10,512,574)
Common Stock issued (3,900,000)
----------- ----------- -----------
Cash paid on acquisitions $127,427,369 $68,231,275 $57,343,709
============ =========== ===========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Summary of Significant Accounting Policies
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company
and its subsidiaries, substantially all of which are wholly-owned.
Significant intercompany accounts have been eliminated in consolidation.
Certain amounts in prior years have been reclassified to conform to the
1994 presentation.
Property, Plant and Equipment:
Property, plant and equipment are stated at cost. Depreciation is
computed principally by the straight-line method at rates which, in the
opinion of management, are adequate to allocate the cost of such assets
over their estimated useful lives, which are as follows:
Buildings - 10 to 30 years
Transmitter and studio equipment - 7 to 15 years
Furniture and other equipment - 5 to 10 years
Leasehold improvements - generally life of lease
Expenditures for maintenance and repairs are charged to operations as
incurred, whereas expenditures for renewal and betterments are
capitalized.
Intangible Assets:
Intangible assets are stated at cost and are being amortized by the
straight-line method. For the years prior to 1993, excess cost over the
fair value of net assets acquired (goodwill) and certain licenses are
being amortized between 25 and 40 years. All goodwill and licenses
acquired subsequent to 1992 are being amortized over 25 years. The
carrying value of goodwill and licenses is reviewed if the facts and
circumstances suggest that it may be impaired. If this review indicates
that goodwill and licenses will not be recoverable, as determined based
on the undiscounted cash flows of the entity acquired over the remaining
amortization period, the carrying value of the goodwill and licenses will
be reduced accordingly. Amortization of licenses and goodwill was
$4,481,660, $1,976,972 and $1,496,579 in 1994, 1993 and 1992,
respectively.
Covenants not-to-compete are amortized over the respective lives of the
agreements. The Fox Network Affiliation agreements are being amortized
over 10 years. Leases are amortized over the remaining lease terms.
The periods of amortization are evaluated annually to determine whether
circumstances warrant revision.
Film Rights:
The capitalized costs of film rights are recorded when the license period
begins and the film rights are available for use. The rights are
amortized using the straight-line method based on the number of showings
or license periods.
Unamortized film rights are classified as current or noncurrent based on
estimated usage. Amortization of film rights is included in station
operating expenses.
Barter Transactions:
Revenue from barter transactions is recognized when advertisements are
broadcast, while merchandise or services are charged to expense when
received or used.
Income Taxes:
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 Accounting for Income Taxes ("SFAS 109").
Under SFAS 109, income taxes for financial reporting purposes are
determined using the liability method. Under this method, deferred tax
assets and liabilities are determined based on differences between
financial reporting bases and tax bases of assets and liabilities, and
are measured using the enacted tax rates expected to apply to taxable
income in the periods in which the deferred tax asset or liability is
expected to be realized or settled. Prior to the adoption of SFAS 109,
income tax expense was determined using the deferred method prescribed by
APB 11. Among other changes, SFAS 109 changes the recognition and
measurement criteria for deferred tax assets. As permitted under the new
rules, prior years' financial statements have not been restated. The
cumulative effect of adopting SFAS 109 as of January 1, 1993 was not
material.
Cash and Cash Equivalents:
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Financial Instruments:
The carrying amounts of the Company's financial instruments approximate
their fair value.
Note B - Long-Term Debt
Long-term debt at December 31, 1994 and 1993 consisted of the following:
December 31,
--------------------------
1994 1993
----------- -----------
Revolving credit to banks,
two years interest only through
June 1996, payable quarterly,
rate based upon prime, LIBOR or
CD rate, at Company's discretion,
6.75% at December 31, 1994;
principal to be paid in full by 2002;
$122.8 million remains undrawn
at December 31, 1994, secured by
100% of the Common Stock of the
Company's wholly-owned
subsidiaries(1) $227,200,000 $ 87,900,000
Note payable to third party,
interest and principal payments of
$3,000,000 due annually through
1996, 6% interest rate, guaranteed
by a subsidiary 5,188,847 7,075,640
Note payable to third parties,
interest payable quarterly,
principal due in 1999, 5.25%
interest rate, unsecured 2,700,000
Other long-term debt 7,699,874
------------ -----------
242,788,721 94,975,640
Less current portion 4,584,335 7,160,793
------------ -----------
$238,204,386 $87,814,847
============ ===========
(1) On June 30, 1996, the credit converts to a reducing revolver with
quarterly principal payments beginning September 30, 1996 of $6,816,000
increasing to $9,996,800 on March 31, 1998 through maturity. Of the
$122.8 million undrawn at December 31, 1994, $7.0 million is unavailable
due to a letter of credit outstanding, $6.0 million is unavailable due to
the note payable to third party (including interest) described above and
$2.0 million is unable due to a guarantee described in Note J. This
leaves $107.8 million available for future borrowings under the line.
The Company's current loan agreement with banks contains certain
covenants which, among other matters, the payment of cash dividends.
Maturities of long-term debt at December 31, 1994 are as follows:
1995 $ 4,584,335
1996 16,787,427
1997 34,577,352
1998 41,167,441
1999 45,704,166
2000 and thereafter 99,968,000
------------
$242,788,721
============
Interest paid in 1994, 1993 and 1992 amounted to $7,183,279, $5,593,325
and $4,611,177, respectively.
Note C - Commitments
The Company leases its office space and certain broadcasting facilities
and equipment under long-term operating leases. Some of the lease
agreements contain renewal options and annual rental escalation clauses
(generally tied to the consumer price index or a maximum of 5%), as well
as provisions for the payment of utilities and maintenance by the
Company. As of December 31, 1994, the Company's future minimum rental
commitments, under noncancelable lease agreements with terms in excess of
one year, consist of the following:
1995 $ 2,708,366
1996 2,128,446
1997 1,772,793
1998 1,382,704
1999 1,043,557
2000 and thereafter 7,333,464
------------
$ 16,369,330
============
Rent expense charged to operations for 1994, 1993 and 1992 was
$3,272,870, $2,344,385 and $1,684,137, respectively.
As part of the acquisitions of KLRT-TV and WXXA-TV in 1994, and WLMT-TV,
KITN-TV and KTFO-TV in 1993, the Company assumed certain film rights
liabilities of $3,324,286 and $10,049,205, respectively. In addition, as
part of the ongoing operation of television stations, the Company entered
into additional film rights commitments totaling $8,605,577, $5,345,403
and $5,662,881 for 1994, 1993 and 1992, respectively. These commitments
and related film assets are recorded on the earliest date the rights are
available for telecast. At December 31, 1994, the future payments on
these liabilities are as follows:
1995 $ 9,428,591
1996 6,311,209
1997 4,437,162
1998 1,637,844
1999 182,323
2000 and thereafter 10,098
-----------
$22,007,227
===========
Commitments of additional film license agreements in the amount of
$13,497,839 have been executed. However, they are not included in the
above amounts because the programs were not available for telecast as of
December 31, 1994. In addition, commitments for sports rights have been
executed in the amount of $2,820,000 for future radio and television
broadcast of football and basketball games.
Note D - Stock Splits and Dividends
In February 1994, 1993 and 1992, the Board of Directors authorized five-
for-four stock splits in the form of 25 percent stock dividends
distributed on February 22, 1994, February 19, 1993, and March 31, 1992,
respectively, to stockholders of record on February 15, 1994, February
12, 1993 and March 2, 1992, respectively. The stock splits were recorded
retroactively to the prior year. A total of 3,430,150; 2,397,177 and
1,832,478 shares, respectively, were issued in connection with the 1994,
1993 and 1992 stock splits. Fractional shares were paid in cash based on
the closing price on the record date. All share, per share, stock price
and stock option amounts have been restated to reflect the stock splits.
Note E - Business Acquisitions
During 1994, 1993 and 1992, the Company acquired substantially all the
broadcasting assets of the following radio stations, television stations
and news and agricultural networks which were all funded with bank
financing and cash flows from operations:
Purchase Network or Purchase
Date Station Location Price
---------- ----------- ---------------- ---------
1994 Acquisitions
-----------------
January 14 KEBC-FM Oklahoma City, OK $ 7,500,000
February 28** KLRT-TV
KASN-TV* Little Rock, AR 18,280,000
March 9 WAXY-FM Miami, FL 14,000,000
August 15 KBXX-FM Houston,TX 21,000,000
October 12 Metroplex*** Miami/
Communications, Ft. Lauderdale, FL
Inc. Tampa, FL
Cleveland, OH 48,394,000
November 1 WENZ-FM* Cleveland, OH 6,000,000
December 1 WXXA-TV Albany, NY 25,500,000
1993 Acquisitions
-----------------
February 1 KQXT-FM San Antonio, TX 8,200,000
March 9 KHFI-FM Austin, TX 3,500,000
March 25 WYLD-AM/FM* New Orleans, LA 7,731,000
July 1 KSJL-AM San Antonio, TX 1,000,000
August 19 WLMT-TV* Memphis, TN 7,600,000
September 15 WRXL-FM
WRNL-AM
Virginia Network Richmond, VA 9,500,000
October 13 KITN-TV Minneapolis, MN 35,076,000
November 3 KTFO-TV* Tulsa, OK 2,700,000
1992 Acquisitions
-----------------
January 31 Kentucky Network Louisville, KY 1,530,000
April 1 WPTY-TV Memphis, TN 21,741,000
May 6 WKCI-FM
WAVZ-AM New Haven, CT 14,000,000
June 26 KEYN-FM
KQAM-AM Wichita, KS 1,550,000
July 1 WRVA-AM
WRVQ-FM Richmond, VA
WRBQ-AM/FM Tampa, FL 18,523,000
* The Company operates these stations under time sales or time
brokerage agreements and does not own the FCC licenses.
** The Company exercised its option to acquire these stations as
discussed in Note J. The purchase price does not reflect acquisition of
deferred tax assets, see Note F.
*** The Company issued 67,975 shares of Common Stock and released 50,000
shares of treasury stock in conjunction with this purchase. The purchase
price does not reflect acquisition of deferred tax assets, see Note F.
The results of operations for 1994, 1993 and 1992 include the operations
of each station from the respective dates of acquisition, except for
WRXL-FM, WRNL-AM and the Virginia Network, where the results of
operations were included since April 1, 1993, via a time brokerage
agreement. Assuming each of the acquisitions had taken place at the
beginning of 1992, unaudited pro forma consolidated results of operations
would have been as follows:
Pro Forma (Unaudited)
Year Ended December 31,
(in thousands)
except per share amounts
--------------------------------------------
1994 1993 1992
--------- -------- --------
Net broadcasting
revenue $199,992 $169,811 $156,522
Net income (loss) 18,738 12,175 (4,909)
Net income (loss)
per share 1.08 .78 (.33)
The above pro forma information is presented in response to applicable
accounting rules relating to business acquisitions and is not necessarily
indicative of the actual results that would have been achieved had each
of the stations been acquired at the beginning of 1992, nor is it
indicative of future results of operations.
During 1994, the Company sold substantially all the broadcasting assets
of four radio stations. KEYN-FM and KQAM-AM, Wichita, KS, were sold for
$2,000,000 in cash to a third party; while KORA-FM and KTAM-AM,
Bryan/College Station, TX, were sold to a former employee for $25,000 in
cash and $2,200,000 in notes receivable. These transactions resulted in a
net gain of approximately $700,000 which is included in other income. Net
assets and operations of these four radio stations were not significant.
Note F - Income Taxes
Significant components of the provision for income taxes are as follows:
Deferred
Liability Method Method
--------------------------- ----------
1994 1993 1992
----------- ---------- ----------
Current - federal $12,068,573 $5,519,762 $2,323,440
Deferred 188,059 68,001 600,932
State 2,130,470 984,671 357,130
----------- ---------- ----------
Total $14,387,102 $6,572,434 $3,281,502
=========== ========== ==========
Significant components of the Company's deferred tax liabilities and
assets as of December 31, 1994 and 1993 are as follows:
1994 1993
---------- ----------
Deferred tax liabilities:
Tax over book depreciation $6,887,492 $5,083,288
Film amortization 747,854 606,796
Other 362,495 249,201
---------- ----------
Total deferred tax liabilities 7,997,841 5,939,285
Deferred tax assets:
Gain on sale of assets 342,008 193,990
Book over tax amortization 2,726,763 1,782,334
Deferred income 197,603 366,559
NOL carryforwards 1,933,980
Other 198,264 29,933
---------- ----------
Total deferred tax assets 5,398,618 2,372,816
Net deferred tax liabilities $ 2,599,223 $3,566,469
=========== ==========
The 1994 amounts include $1,155,305 of net deferred tax assets
established in purchase business transactions.
The components of the provision for deferred income taxes for the year
ended December 31, 1992 is as follows:
1992
--------
Tax over book depreciation $216,066
Gain on sale of assets (8,403)
Bad debts 131,060
Film amortization 154,280
Book over tax amortization (185,598)
Compensation related to options 293,527
--------
$600,932
========
<TABLE>
<PAGE>
The reconciliation of income tax attributable to continuing operations computed at the U.S.
federal statutory tax rates to income tax expense is:
<CAPTION>
Liability Method Deferred Method
----------------------------------------- -----------------
1994 1993 1992
------------------ --------------- ------------------
Amount Percent Amount Percent Amount Percent
----------- --- ----------- --- ---------- ---
<S> <C> <C> <C> <C> <C> <C>
Income tax expense
at statutory rates $12,738,809 35% $5,493,477 35% $2,575,398 34%
State income taxes, net
of federal tax benefit 1,384,806 4% 640,036 4% 235,706 3%
Amortization of
nondeductible goodwill 461,261 1% 318,395 2% 446,106 6%
Other, net (197,774) 120,526 1% 24,292
----------- ---------- ----------
$14,387,102 40% $6,572,434 42% $3,281,502 43%
=========== === ========== === ========== ===
</TABLE>
<PAGE>
Income taxes paid in 1994, 1993 and 1992 amounted to $13,107,514,
$3,900,337 and $2,205,500, respectively. Federal income tax refunds
received in 1993 and 1992 amounted to $1,639,245 and $431,441,
respectively.
The Company acquired certain net operating loss carryforwards in
conjunction with its purchase of KLRT/KASN-TV and Metroplex
Communications, Inc. At December 31, 1994, the remaining carryforwards
were $4,899,320 and $626,337, respectively, which expire in the years
1997 through 2008.
Note G - Stock Options
At December 31, 1994, the Company had options outstanding to purchase
414,252 shares of its Common Stock and has reserved an additional 631,715
shares of its Common Stock for future options. A summary of the Company's
various option plans is as follows:
1984 Stock Option Plan
The Company's 1984 Stock Option Plan (1984 Plan) expired on December 31,
1993. Options previously granted will continue to be outstanding. The
shares under the 1984 Plan were granted to officers and key employees at
no less than 100% of the fair market value of the underlying stock on the
date of the grant. Options granted under the 1984 Plan were granted for
a term not exceeding five years and terminate in the event the employee
terminates their employment with the Company. The outstanding options
are adjusted to reflect stock dividends, stock splits, etc. (anti-
dilutive provisions).
As of January 1, 1994, there were 228,771 options outstanding under the
1984 Plan (including the retroactive treatment of the 1994 stock split in
the amount of 45,324 shares). In addition there were no unoptioned
shares available for granting.
During 1994, no options were granted, while 11,800 optioned shares were
exercised at prices ranging from $3.78 to $4.65 and 9,375 were released.
During February 1994, the Board authorized a five-for-four stock split
which resulted in additional options of 45,324 being granted pursuant to
the anti-dilutive provisions of the 1984 Plan.
As of December 31, 1994, there were no unoptioned shares available, as
the 1984 Plan expired on December 31, 1993. However, there were 207,596
options outstanding with exercise prices ranging from $3.97 to $25.50,
vesting dates ranging from February 6, 1993 to August 16, 1996 and
expiration dates ranging from February 6, 1995 to August 16, 1998.
1994 Stock Option Plan
Effective February 2, 1994, the Company adopted the 1994 Incentive Stock
Option Plan (1994 Plan) under which options to acquire up to 375,000
shares of Common Stock may be granted. The shares under this plan are
granted to officers and key employees at no less than 100% of the fair
market value of the underlying stock on the date of the grant. Options
granted under the 1994 Plan are granted for a term not exceeding five
years and terminate in the event the employee terminates their employment
with the Company. The outstanding options are adjusted to reflect stock
dividends, stock splits, etc. (anti-dilutive provisions).
During 1994, 26,678 options were granted under the 1994 Plan. In
addition, the Board authorized a five-for-four stock split which resulted
in additional options of 4,107 being granted pursuant to the anti-
dilutive provisions of the 1994 Plan.
As of December 31, 1994, there were 344,215 unoptioned shares and 30,785
options outstanding with exercise prices ranging from $32.30 to $51.13,
vesting dates ranging from February 2, 1997 to December 15, 1997 and
expiration dates ranging from February 2, 1999 to December 15, 1999.
1994 Non-Qualified Stock Option Plan
Effective February 2, 1994, the Company adopted the 1994 Non-Qualified
Stock Option Plan (1994 N.Q. Plan) under which options to acquire up to
375,000 shares of Common Stock may be granted. The shares under this plan
are granted to officers, directors of the Company and employees at
exercise prices determined by the Compensation Committee on the date of
the grant. Options granted under the 1994 N.Q. Plan are granted for a
term not exceeding ten years and terminate in the event the employee
terminates their employment, or the director his relationship with the
Company. The outstanding options are adjusted to reflect stock
dividends, stock splits, etc. (anti-dilutive provisions).
On February 2, 1994, the Company issued options to an officer and
director of the Company to purchase 62,000 shares and to the directors of
the Company to purchase 25,000 shares of the Company's Common Stock at an
exercise price of $32.30, which was equal to the fair market value of the
stock at the date of grant. The options to the officer and director are
exercisable immediately, while the directors vest 20% per year. Both
expire on February 2, 2004. None of the options have been exercised.
Other Stock Options
During December 1992, an officer and director of the Company exercised
all of his 419,523 non-qualified stock options, at an average exercise
price of $5.59. The exercise price was paid with 173,346 shares of the
Company's Common Stock owned by the officer and director (after giving
effect to the February 1993 and 1994 stock splits). A portion of these
shares are held in Treasury by the Company at December 31, 1994. This
transaction resulted in a federal income tax benefit to the Company of
$2,216,386, part of which was recorded as a credit to additional paid-in
capital and the remainder to deferred taxes.
During 1993, the Company issued options to an officer and director of the
Company to purchase 57,121 shares of the Company's Common Stock at an
exercise price of $16.90, which was equal to the fair market value of the
stock at the date of grant.
In February 1993, the Company granted options to the Board of Directors
to purchase 31,250 shares of the Company's Common Stock at an exercise
price of $16.64. The options vest 20% per year and do not have an
expiration date.
In February 1991, Clear Channel Television, Inc. (CCT), a wholly-owned
subsidiary of the Company, adopted the 1991 Non-Qualified Stock Option
Plan, which authorized the granting of options to purchase 50,000 shares
of its Common Stock. In February 1993, CCT elected to discontinue the
granting of options pursuant to this plan. At December 31, 1994, there
were 9,500 options outstanding exercisable on January 1, 1999. In
addition, in January 1994 an officer of CCT exercised his options to
purchase 100,000 shares of CCT's Common Stock at $1.00 per share. This
resulted in an income tax benefit of approximately $2.8 million which was
recorded as an increase in additional paid-in capital. In July 1994, the
Board of Directors approved the purchase of the 100,000 shares. As
consideration, the Company paid $4,000,000 in cash and issued 119,048
shares of the Company's Common Stock held in Treasury with an estimated
value of approximately $3.5 million. The Company recorded this
transaction as an acquisition of minority interest in CCT with the
resulting excess cost allocated to goodwill.
Note H - Employee Benefit Plan
Effective March 1, 1987, the Company adopted the Clear Channel
Communications, Inc., 401(K) Savings Plan for the purpose of providing
retirement benefits for substantially all employees.
Contributions to the Plan are made both by the employees and the Company.
The Company matches 35% of the first 5% of an employee's deferred
compensation to a maximum of $9,240 per year. Company-matched
contributions vest to the employees based upon their number of years of
service to the Company.
Contributions to this Plan of $398,369, $292,814 and $202,557 were
charged to expense for 1994, 1993 and 1992, respectively.
The Company does not offer or provide post-retirement health-care
benefits to any of its employees.
Note I - Subsequent Events
Effective January 1, 1995, the Company purchased the broadcasting assets
of KMJQ-FM and KYOK-AM in Houston, TX, for $38.5 million. On December 31,
1994, the Company borrowed this $38.5 million which is reflected in the
accompanying consolidated balance sheet as an increase in long-term debt
and restricted cash. On January 5, 1995, the Company sold KYOK-AM and
KHYS-FM in Houston, TX and KALO-AM in Beaumont/Port Arthur, TX for $2.475
million, $10.0 million and $450,000, respectively, to a third party, of
which $350,000 was in cash and the remainder in notes receivable. The net
assets and operations of these stations were not significant
Effective January 1, 1995, the Company also purchased an 80% interest in
the broadcasting assets of KPRC-AM and KSEV-AM in Houston, TX, for cash
in the amount of $26.8 million. Financing was provided by the existing
credit facility.
Note J - Investments
During February 1994, the Company exercised its option to acquire the
remaining 51% of the Common Stock of its 49% owned previously
unconsolidated subsidiary, Clear Channel Television of Little Rock, Inc.
(CCTLR) for a nominal amount of $510 from an officer and director. The
Company loaned CCTLR $18,900,000 in order that CCTLR could settle its
obligation with its principal creditor, and upon consummation of these
transactions, the Company began consolidating CCTLR on March 1, 1994.
CCTLR owned and operated KLRT-TV and operated KASN-TV, both in Little
Rock, AR. The total assets of this subsidiary amounted to $17,146,000,
while current and long-term liabilities amounted to $21,883,000, leaving
a deficiency of assets of $5,240,000.
During 1994, 1993 and 1992, the Company provided approximately
$2,200,000, $2,600,000 and $6,000,000, respectively, in financing to
third parties which was used to effect the acquisition of radio and
television broadcasting operations. The financing provided in 1994 and
1993 was in the form of a loan to former employees, secured by the
broadcasting assets of certain radio stations. The financing provided by
the Company in 1992 was in the form of a $3,500,000 asset purchase and
lease-back arrangement, a $2,000,000 guarantee of bank borrowings and the
balance in a working capital loan, all of which are collateralized by
substantially all of the third party's assets. The Company has no voting
or equity interest in these entities. The Company is accounting for
these transactions in a manner similar to the equity method, the effect
of which was not significant for the years ended December 31, 1994, 1993
or 1992. Total amount due the Company at December 31, 1994 under these
arrangements amounted to $5,294,000 and is included in other assets.
Note K - Contingencies
From time to time, claims are made and lawsuits are filed against the
Company, arising out of the ordinary business of the Company. In the
opinion of the Company's management, liabilities, if any, arising from
these actions are either covered by insurance, adequately reserved for by
the Company or otherwise would not have a material adverse effect on the
financial condition of the Company.
<TABLE>
<PAGE>
Note L - Segment Data
The Company consists of two principal business segments. At year end, the radio segment included
thirty-three stations for which the Company is the licensee and six stations operated under time
sales or time brokerage agreements; all of which operate in twelve different markets. The radio
segment also operates four networks. At year end, the television segment included nine television
stations for which the Company is the licensee and four stations which are operated under time
sales or time brokerage agreements; all of which operate in nine different markets. Substantially
all revenues represent income from unaffiliated companies.
<CAPTION>
Selected financial information for these segments is presented below:
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Radio
Net broadcasting revenue $ 94,097,668 $ 71,605,141 $ 49,220,401
Station operating expenses 62,383,246 52,254,074 35,837,906
Depreciation 5,664,700 4,605,256 2,927,721
Amortization of intangibles 6,659,726 4,508,583 2,846,056
------------ ------------ ------------
Station operating income $ 19,389,996 $ 10,237,228 $ 7,608,718
============ ============ ============
Total identifiable assets $244,296,718 $114,684,055 $ 81,385,177
============ ============ ============
Capital expenditures $ 1,888,787 $ 1,616,617 $ 2,676,681
============ ============ ============
Television
Net broadcasting revenue $ 79,011,706 $ 46,577,498 $ 32,984,454
Station operating expenses 38,053,612 23,735,957 17,694,552
Depreciation 6,974,404 4,611,726 3,622,869
Amortization of intangibles 5,369,710 3,721,697 2,856,075
------------ ------------ ------------
Station operating income $ 28,613,980 $ 14,508,118 $ 8,810,958
============ ============ ============
Total identifiable assets $167,297,307 $112,892,486 $ 65,607,794
============ ============ ============
Capital expenditures $ 3,858,379 $ 1,075,126 $ 3,440,265
============ ============ ============
Consolidated
Net broadcasting revenue $173,109,374 $118,182,639 $ 82,204,855
Station operating expenses 100,436,858 75,990,031 53,532,458
Depreciation 12,639,104 9,216,982 6,550,590
Amortization of intangibles 12,029,436 8,230,280 5,702,131
------------ ------------ ------------
Station operating income $ 48,003,976 $ 24,745,346 $ 16,419,676
============ ============ ============
Total identifiable assets $411,594,025 $227,576,541 $146,992,971
============ ============ ============
Capital expenditures $ 5,747,166 $ 2,691,743 $ 6,116,946
============ ============ ============
</TABLE>
<TABLE>
<PAGE>
Note M - Quarterly Results of Operations (Unaudited)
<CAPTION>
March 31 June 30 September 30 December 31
----------------------- ------------------------ ----------------------- -----------------------
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross broadcasting
revenue $38,871,413 $24,021,113 $48,110,302 $31,548,701 $47,573,068 $32,227,891 $66,140,125 $47,882,318
Net broadcasting
revenue 33,917,189 20,997,199 41,444,716 27,391,362 41,009,946 27,964,827 56,737,523 41,829,251
Station operating
expenses 22,020,153 14,620,432 23,690,102 17,449,976 23,767,486 17,893,926 30,959,117 26,025,697
Depreciation and
amortization 5,479,616 3,767,887 5,785,149 4,095,238 6,189,146 4,266,795 7,214,629 5,317,342
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Station operating
income 6,417,420 2,608,880 11,969,465 5,846,148 11,053,314 5,804,106 18,563,777 10,486,212
Corporate expenses 1,231,337 699,933 1,061,724 797,491 1,092,338 689,094 1,714,435 1,277,005
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income 5,186,083 1,908,947 10,907,741 5,048,657 9,960,976 5,115,012 16,849,342 9,209,207
Interest expense (1,203,843) (1,315,424) (1,712,075) (1,283,766) (1,845,578) (1,391,395) (2,907,504) (1,399,106)
Other income (expense) (455,943) (253,112) 697,066 180,166 650,064 94,719 270,269 (218,255)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income
taxes 3,526,297 340,411 9,892,732 3,945,057 8,765,462 3,818,336 14,212,107 7,591,846
Income taxes 1,479,348 221,155 3,821,243 1,788,385 3,342,051 1,780,088 5,744,460 2,782,806
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 2,046,949 $ 119,256 $ 6,071,489 $ 2,156,672 $ 5,423,411 $ 2,038,248 $ 8,467,647 $ 4,809,040
=========== =========== =========== =========== =========== =========== =========== ===========
Net income per common
share(1) $ .12 $ .01 $ .35 $ .14 $ .31 $ .14 $ .49 $ .28
=========== =========== =========== =========== =========== =========== =========== ===========
Weighted average common and
common share equivalents
outstanding (1) 17,204,689 14,927,778 17,212,944 14,958,984 17,338,220 15,022,894 17,491,963 17,078,046
=========== =========== =========== =========== =========== =========== =========== ===========
Stock price: (1)
High $ 40.375 $ 19.600 $ 39.125 $ 21.700 $ 52.000 $ 30.900 $ 51.750 $ 36.900
Low 31.700 12.960 32.375 17.200 36.125 21.000 41.250 28.600
The Company's Common Stock was traded on the American Stock Exchange from January 1 to November 4 under the symbol CCU.
Subsequent thereto, the stock was traded on the New York Stock Exchange under the symbol CCU. There were approximately 3,500
shareholders of record as of March 1, 1995.
(1) Adjusted for five-for-four stock split declared by Board of Directors in February 1994.
(2) 1993 barter transactions were recorded in the fourth quarter of 1993; however, the effect was immaterial for the year.
1994 barter transactions were recorded on a quarterly basis.
</TABLE>
<TABLE>
<PAGE>
SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31,
1994(5) 1993(4) 1992(3) 1991 1990(2)
------- ------- ------- ------- -------
(In thousands, except per-share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Gross broadcasting
revenue $200,695 $135,680 $94,472 $74,142 $69,645
Net broadcasting
revenue 173,109 118,183 82,205 64,384 60,311
Station operating
expenses 100,437 75,990 53,532 44,981 43,533
Depreciation and
amortization 24,668 17,447 12,253 7,641 6,596
-------- -------- ------- ------- -------
Station operating
income 48,004 24,746 16,420 11,762 10,182
Corporate general and
administrative
expenses 5,100 3,464 2,890 2,403 1,818
-------- -------- ------- ------- ------
Operating income 42,904 21,282 13,530 9,359 8,364
-------- -------- ------- ------- ------
Interest expense (7,669) (5,390) (4,739) (5,371) (7,982)
Other income
(expense) 1,161 (196) (1,217) (1,483) (387)
-------- -------- ------- ------- ------
Income (loss) before income
taxes 36,396 15,696 7,574 2,505 (5)
Income taxes 14,387 6,573 3,281 1,379 345
-------- -------- ------- ------- ------
Net income (loss) $ 22,009 $ 9,123 $ 4,293 $ 1,126 $ (350)
======== ======== ======= ======= ======
Net income (loss) per
common share (1) $ 1.27 $ .59 $ .29 $ .09 $ (.03)
======== ======== ======= ======= ======
Weighted average common
and common share
equivalents
outstanding (1) 17,331 15,550 14,830 12,988 11,498
======== ======== ======= ======= =======
<PAGE>
Cash dividends
per share (1) - - - - -
======== ======== ======= ======= ========
Balance Sheet Data:
Current assets $53,945 $38,191 $24,844 $20,521 $20,605
Property, plant and
equipment - net 85,318 67,750 48,017 27,169 33,484
Total assets 411,594 227,577 146,993 92,450 101,684
Current liabilities 27,679 26,125 10,073 9,960 8,942
Long-term debt, net
of current
maturities 238,204 87,815 97,000 48,110 80,946
Shareholders' equity 130,533 98,343 31,055 24,787 2,745
(1) In February 1994, 1993 and 1992, the Company declared and paid five-for-four stock splits.
In May 1990, the Company had a three-for-two stock split. All per-share amounts and dividends
have been adjusted to reflect the stock splits.
(2) Includes five months' results of operations of KSAS-TV, acquired in 1990.
(3) Includes eleven months' results of operations of the Kentucky Network, nine months' results
of operations of WPTY-TV, eight months' results of operations of radio stations WKCI-FM and
WAVZ-AM and six months' results of operations of radio stations KEYN-FM, KQAM-AM, WRVA-AM,
WRVQ-FM and WRBQ-AM/FM, all acquired in 1992.
(4) Includes eleven months' results of operations of KQXT-FM, ten months' results of operations
of KHFI-FM, nine months' results of operations of WYLD-AM/FM, WRXL-FM, WRNL-AM and
the Virginia News Network, six months' results of operations of KSJL-AM, four and one-half
months' results of operations of WLMT-TV, three months' results of operations of KITN-TV and two
months' results of operations of KTFO-TV, all acquired in 1993.
(5) Includes twelve months' results of operations of KEBC-FM, ten months' results of operations
of WAXY-FM and KLRT-TV, four and one-half months' results of operations of KBXX-FM, two and one-
half months' results of operations of Metroplex Communications, Inc., two months' results of
operations of WENZ-FM and one month's results of operations of WXXA-TV, all acquired in 1994.<PAGE>
CORPORATE INFORMATION
</TABLE>
Corporate Officers
L. Lowry Mays
President/Chief Executive Officer
Mark P. Mays
Senior Vice President/Operations
Herbert W. Hill, Jr.
Vice President/Controller
Randall T. Mays
Vice President/Treasurer
Kenneth E. Wyker
Vice President for Legal Affairs
Board of Directors
L. Lowry Mays
President/Chief Executive Officer
Alan D. Feld
Partner: Akin Gump Strauss Hauer and Feld
Red McCombs
Private Investor
Theodore H. Strauss*
Senior Managing Director: Bear Stearns & Co., Inc.
John H. Williams
Senior Vice President: Kemper Securities, Inc.
*member of the audit committee
Radio
James D. Smith
Regional Vice President
Oklahoma
Miles Chandler
Vice President,
Oklahoma City
Robert T. Cohen
Vice President,
San Antonio
Linda Forem
Vice President,
Richmond
Carl Hamilton
Vice President,
Houston
Ernest Jackson
Vice President,
Houston
Earnest James
Vice President,
New Orleans
Betty Kocurek
Vice President,
San Antonio
David Manning
Vice President,
Tampa
Carl McNeill
Vice President,
Richmond
Dan Patrick
Vice President,
Houston
Jonathan Pinch
Vice President,
Tampa
David Ross
Vice President,
Miami
Robert R. Scherer
Vice President,
Louisville
Walt Tiburski
Vice President,
Cleveland
Stan Webb
Vice President,
Austin
J. Tim West
Vice President,
Oklahoma City
Faith Zila
Vice President,
New Haven
Television
J. Daniel Sullivan
President/Chief Operating Officer,
Nashville
David D'Antuono
Vice President,
Albany
Hal Capron
Vice President,
Tulsa
Andy Comegys
Vice President,
Mobile/Pensacola
Jack Jacobson
General Manager
Tucson
Josh McGraw
Vice President,
Jacksonville
Jack Peck
Vice President,
Memphis
W. Ripperton Riordan
Vice President,
Minneapolis
Steve Spendlove
Vice President,
Wichita
Jerry Whitener
Vice President,
Little Rock
Productions
John Binkley
President,
Vancouver
Transfer Agent and Registrar:
Bank of New York
101 Barclay Street
22 Floor West
New York, NY 10286
Independent Auditors:
Ernst & Young
San Antonio, Texas
Form 10-K Annual Report
A copy of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission may be obtained without charge upon
written request to:
Herbert W. Hill, Jr.
Vice President
Clear Channel Communications, Inc.
P.O. Box 659512
San Antonio, Texas 78265-9512
Annual Meeting of Shareholders
The annual meeting of shareholders will be held at 200 Concord Plaza on
the 5th floor in the Conference Room, San Antonio, Texas, on Tuesday,
April 20, 1995, at 11 A.M.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 6,818
<SECURITIES> 0
<RECEIVABLES> 41,398
<ALLOWANCES> 3,117
<INVENTORY> 0
<CURRENT-ASSETS> 53,945
<PP&E> 128,941
<DEPRECIATION> 43,623
<TOTAL-ASSETS> 411,594
<CURRENT-LIABILITIES> 27,679
<BONDS> 238,204
<COMMON> 1,723
0
0
<OTHER-SE> 128,810
<TOTAL-LIABILITY-AND-EQUITY> 411,594
<SALES> 0
<TOTAL-REVENUES> 173,109
<CGS> 0
<TOTAL-COSTS> 100,437
<OTHER-EXPENSES> 24,669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,669
<INCOME-PRETAX> 36,397
<INCOME-TAX> 14,387
<INCOME-CONTINUING> 22,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,009
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
