SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following
items, financial statements, exhibits or other portions of its
current report on Form 8-K as set forth in the pages attached
hereto:
Item 7.(a) Financial Statements
Item 7.(b) Pro forma Financial Statements
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, there unto duly
authorized.
Clear Channel Communications, Inc.
Date_______________ By__________________________
Herbert W. Hill, Jr.
Vice President/Controller and
Principal Financial Officer
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES AND KMJQ-FM AND KYOK-AM
The following pro forma condensed consolidated statements of earnings for the
years ended December 31, 1994 and December 31, 1993 give effect to the
acquisition of substantially all the operating assets of radio station KMJQ-
FM and KYOK-AM in Houston, Texas. The pro forma information is based on the
historical results of operations of KMJQ-FM and KYOK-AM and Clear Channel
Communications, Inc. and subsidiaries giving effect to the transaction under
the purchase method of accounting and the assumptions and adjustments in the
accompanying notes to the pro forma condensed consolidated statements of
earnings.
The pro forma statements have been prepared by Clear Channel Communications,
Inc. based upon the historical summary of selected revenue and expenses of
KMJQ-FM and KYOK-AM included elsewhere herein. These pro forma statements
may not be indicative of the results that actually would have occurred if the
acquisition had been in effect on the dates indicated or which may be
obtained in the future. The pro forma statements should be read in
conjunction with the audited financial statements for years ended December
25, 1994 and December 26, 1993 of Noble Broadcast of Houston, Inc. a wholly
owned subsidiary of Noble Broadcast Group, Inc.
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES AND KMJQ-FM
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE
YEAR ENDED DECEMBER 31, 1993 (IN THOUSANDS EXCEPT PER SHARE DATA)
Clear Channel Communications, Inc. ("CCC")
Year Ended December 31, 1993
Increase
KYOK-AM (Decrease)
CCC KMJQ-FM Income Pro
Hist. Hist. forma Adj.
__(1)__ __(2)__ __(3)__ Pro forma
Gross broadcasting revenue $135,680 $ 9,816 $145,496
Net broadcasting revenue 118,183 8,522 126,705
Operating expenses (79,454) (6,831) (86,285)
Depreciation and amort. (17,448) (1,692) $ 82 (19,058)
------ ----- ---- -------
Operating income (loss) 21,281 (1) 82 21,362
Interest expense (5,390) (2,211) 209 (7,392)
Other income (expense) (196) 3,147 (3,224) (273)
------ ----- ----- ------
Income before income taxes 15,695 935 (2,933) 13,697
Income tax expense (6,572) 699 (5,873)
------ ----- ---- ------
Net income (loss) $ 9,123 $ 935 $(2,234) $ 7,824
===== ===== ===== ======
Per common share:
Net income $ 0.59 $ 0.50
==== ====
Weighted average common
shares outstanding 15,550 15,550
====== ======
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES AND K
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE
YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS EXCEPT PER SHARE DATA)
Clear Channel Communications, Inc. ("CCC")
Year Ended December 31, 1994
Increase
KYOK-AM (Decrease)
CCC KMJQ-FM Income Pro
Hist. Hist. forma Adj.
__(4)__ __(5)__ __(6)__ Pro forma
Gross broadcasting revenue $ 200,695 $11,312 $ 212,007
Net broadcasting revenue 173,109 9,843 182,952
Operating expenses (105,537) (14,714) 7,615 (112,636)
Depreciation and amort. (24,668) (1,750) $ 188 (26,230)
------ ------ ---- -------
Operating income (loss) 42,904 (6,621) 7,803 44,086
Interest expense (7,669) (3,102) 907 (9,864)
Other income (expense) 1,161 (202) 959
------ ------ ----- ------
Income (loss)
before income taxes 36,396 (9,925) 8,710 35,181
Income tax benefit (expense) (14,387) 425 (13,962)
------ ------ ---- ------
Net income (loss) $ 22,009 $(9,925) $9,135 $ 21,219
===== ====== ===== ======
Per common share:
Net income $ 1.27 $ 1.22
==== ====
Weighted average common
shares outstanding 17,331 17,331
====== ======
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS
Year ended December 31, 1993
(1) Historical Condensed Consolidated Statement of Earnings for Clear
Channel Communications, Inc. and Subsidiaries.
(2) Historical results of operations of KMJQ-FM and KYOK-AM acquired on
January 1, 1995.
(3) Represents the pro forma effect of the acquisitions Increase
assuming they were acquired at January 1, 1993. (Decrease)
Income
In Thousands
(A) Decrease in depreciation (97) and increase in
amortization (15) resulting from a write down
of fixed assets acquired and a write up of
intangible assets acquired. 82
(B) Decrease in interest expense due to a lower amount of
average debt outstanding and a lower average interest
rate. 209
(C) Decrease in other income realized upon forgiveness
of debt. (3,224)
(D) Tax effect of the above adjustments, along with KMJQ-FM
and KYOK-AM historical financial information at the federal
statutory tax rate effective for 1993 (35%). 699
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS
Year ended December 31, 1994
(4) Historical Condensed Consolidated Statement of Earnings for Clear
Channel Communications, Inc. and Subsidiaries.
(5) Historical results of operations of KMJQ-FM and KYOK-AM acquired on
January 1, 1995.
(6) Represents the pro forma effect of the acquisitions Increase
assuming they were acquired at January 1, 1994. (Decrease)
Income
In Thousands
(A) Decrease in depreciation (202) and increase in
amortization (14) resulting from a write down of
fixed assets acquired and a write up of intangible
assets acquired. 188
(B) Decrease in interest expense due to a lower amount of
average debt outstanding and a lower average interest
rate. 907
(C) Decrease in other expense realized upon a write down of
goodwill. 7,615
(D) Tax effect of the above adjustments, along with KMJQ-FM and
KYOK-AM historical financial information at the federal
statutory tax rate effective for 1994 (35%). 425
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
(IN THOUSANDS)
December 31, 1994
------------------------------------------------
Increase
KYOK-AM (Decrease)
CCC KMJQ-FM Income Pro
Hist. Hist. forma Adj.
(7) (8) (9) Pro forma
Current Assets
Cash $ 6,818 100 $ (100)* $ 6,818
Accounts receivable
(net) 38,280 2,136 (836) 39,580
Film rights - current 8,847 8,847
Other current assets 73 352 425
------ ----- ------
Total Current Assets 53,945 2,309 55,670
Property, plant and equipment 128,941 700 556 130,197
Less accumulated depreciation 43,623 (202) 43,421
------- ----- -------
85,318 700 86,776
Film rights - non current 12,654 12,654
Restricted cash 38,500 1,500 (1,500)* 38,500
Intangible assets (net) 207,617 35,547 383 243,547
Investments 5,562 5,562
Other assets 7,998 192 (192)* 7,998
$411,594 $40,248 $450,707
======= ====== =======
* Asset not acquired by Clear Channel Communications, Inc.
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
Increase
KYOK-AM (Decrease)
CCC KMJQ-FM Income Pro
Hist. Hist. forma Adj.
(7) (8) (9) Pro forma
Current Liabilities
Accounts payable $ 5,687 $ 376 $ (376)* $ 5,687
Accrued expenses 4,670 2,591 (3,498)* 3,763
Accrued income and other taxes 3,309 3,309
Current portion of film right
liabilities 9,429 9,429
Current portion of long-term
debt 4,584 61,537 (61,537)* 4,584
------ ------ ------
Total Current Liabilities 27,679 64,504 26,772
Long term debt 238,204 38,500 276,704
Film right liabilities 12,579 12,579
Deferred income taxes 2,599 2,599
Shareholders' equity
Common Stock 1,723 1,723
Additional paid-in capital 92,535 92,535
Retained earnings (deficit) 36,346 (24,256) 25,776* 37,866
Less cost of shares held in
treasury (71) (71)
------- ------ -------
130,533 (24,356) 132,053
$411,594 $40,248 $450,707
======= ===== =======
*Liability or equity not acquired by Clear Channel Communications, Inc.
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Note 1: Business Acquisition
On January 1, 1995, the Company purchased substantially all of the
operating assets of KMJQ-FM and KYOK-AM in Houston, Texas from Noble
Broadcast of Houston, Inc., a Delaware corporation, for approximately $38.5
million. The transaction has been accounted for as a purchase, and the
accounts of KMJQ-FM and KYOK-AM have been included in the accompanying
financial statements as of December 31, 1994. The fair value assigned to
assets acquired is as follows:
In Thousands
Property, Plant & Equipment $ 1,256
Licenses and other intangible assets 35,944
Accounts Receivable 1,300
-------
$38,500
======
The unaudited pro forma consolidated statements of earnings for the years
ended December 31, 1993 and December 31, 1994 assumes the purchase occurred
on January 1, 1993 and January 1, 1994, respectively. The results are as
follows:
Year Ended Year Ended
December 31, 1993 December 31, 1994
(In thousands except per share)
Revenues $145,496 $212,007
Net income 7,824 21,219
Earnings per share .50 1.22
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(7) Historical Condensed Consolidated Balance Sheet for Clear Channel
Communications, Inc. and Subsidiaries as of December 31, 1994.
(8) Historical Condensed Balance Sheet of KMJQ-FM as of December 31,
1994, acquired on January 1, 1995.
(9) Under purchase accounting, certain KMJQ-FM and KYOK-AM assets and
liabilities are required to be adjusted to their estimated fair
value. The estimated fair value adjustments have been determined by
Clear Channel Communications, Inc. based upon independent appraisals
performed at the date of acquisition. The following are the pro
forma adjustments made to reflect KMJQ-FM and KYOK-AM fair values as
of December 31, 1994.
Increase
(Decrease)
Description In Thousands
Cash $ (100)*
Accounts receivable, net (836)
Other current assets 352
Property, plant and equipment 556
Accumulated depreciation (202)
Restricted cash (1,500)*
Intangible assets 383
Other assets (192)*
Accounts payable (376)*
Accrued expenses (3,498)*
Current portion of long-term debt (61,537)*
Long-term debt 38,500
Retained earnings 25,776*
* Asset, Liability or equity not acquired by Clear Channel Communications,
Inc.
Noble Broadcast of
Houston, Inc.
(A wholly-owned subsidiary of
Noble Broadcast Group, Inc.)
Report and Financial Statements
December 25, 1994 and December 26, 1993
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
Noble Broadcast Group, Inc. and
Clear Channel Communications, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of cash flows and of changes in subsidiary deficit present
fairly, in all material respects, the financial position of Noble Broadcast
of Houston, Inc. (a wholly-owned subsidiary of Noble Broadcast Group, Inc.)
at December 25, 1994 and December 26, 1993, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
As discussed in Note 1, on December 31, 1994, substantially all of the non-
cash assets and certain liabilities of KYOK-AM and KMJQ-FM, which were
owned and operated by Noble Broadcast of Houston, Inc., were sold to Clear
Channel Radio Licenses, Inc. and Clear Channel Radio, Inc.
PRICE WATERHOUSE LLP
San Diego, California
March 10, 1995
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Balance Sheet
- -----------------------------------------------------------------
December 25, December 26,
1994 1993
Assets
Current assets:
Cash $ 100,000 $ 45,000
Accounts receivable,
less allowance for
doubtful accounts of
$43,000 and $68,000 2,136,000 1,869,000
Prepaid expenses 73,000 28,000
Restricted cash 1,500,000 -
----------- -----------
Total current assets 3,809,000 1,942,000
Property, plant
and equipment 700,000 962,000
Intangible assets, less accumulated
amortization of $8,820,000
and $7,421,000 35,547,000 44,561,000
Other assets 192,000 1,847,000
----------- -----------
$40,248,000 $49,312,000
=========== ===========
Liabilities and Subsidiary Deficit
Current liabilities:
Accounts payable $ 376,000 $ 26,000
Accrued interest 2,187,000 1,352,000
Accrued liabilities 404,000 302,000
Share of parent unamortized
carrying value of
subordinated debt-current
portion 4,649,000 367,000
Share of parent long-term
debt-current portion 56,888,000 562,000
----------- -----------
Total current
liabilities 64,504,000 2,609,000
Commitments (Note 6)
Share of parent long-term debt - 55,634,000
Share of parent unamortized
carrying value of
subordinated debt - 4,659,000
Subsidiary deficit (24,256,000) (13,590,000)
------------ ------------
$40,248,000 $49,312,000
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Statement of Operations
- ---------------------------------------------------------------------------
For the years ended
----------------------------
December 25, December 26,
1994 1993
Sales:
Local and national $10,933,000 $ 9,628,000
Trade and other 379,000 188,000
----------- -----------
11,312,000 9,816,000
Less: agency commissions 1,469,000 1,294,000
----------- -----------
Net sales 9,843,000 8,522,000
----------- -----------
Expenses:
Technical 284,000 249,000
Programming 3,079,000 2,652,000
Selling 1,828,000 1,697,000
Station general and administrative 1,404,000 1,752,000
Corporate general & administrative 504,000 481,000
Depreciation and amortization 1,750,000 1,692,000
Write-down of goodwill 7,615,000 -
----------- -----------
16,464,000 8,523,000
----------- -----------
Loss from operations (6,621,000) (1,000)
Share of parent's debt restructuring costs - (77,000)
Share of parent's interest expense (3,102,000) (2,211,000)
Other expense (202,000) -
------------ ------------
Loss before extraordinary item (9,925,000) (2,289,000)
Share of parent's extraordinary
gain on forgiveness of debt - 3,224,000
------------ -----------
Net income (loss) $(9,925,000) $ 935,000
============= ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Statement of Cash Flows
- ---------------------------------------------------------------------------
For the years ended
----------------------------------------
December 25, December 26,
1994 1993
Cash from operating activities:
Net income (loss) $(9,925,000) $ 935,000
Adjustments to reconcile net income
(loss) to net
cash provided by operating activities:
Depreciation and goodwill
amortization 1,750,000 1,692,000
Amortization of subordinated
debt carrying value (377,000) (363,000)
Amortization of debt issue
costs 49,000 49,000
Interest expense added to
long-term debt 692,000 774,000
Share of parent debt
restructuring costs - 77,000
Extraordinary gain on
debt forgiveness - (3,224,000)
Write down of goodwill 7,615,000 -
Changes in assets and liabilities
Accounts receivable (267,000) 157,000
Prepaid expenses (45,000) 165,000
Other assets 106,000 (21,000)
Accounts payable 350,000 (67,000)
Accrued interest 835,000 767,000
Accrued liabilities 102,000 (69,000)
------------ ------------
Net cash provided by
operating activities 885,000 872,000
------------ ------------
Cash from investing activities:
Acquisition of property, plant
and equipment (89,000) (131,000)
------------ ------------
Net cash (used in)
investing activities (89,000) (131,000)
------------ ------------
Cash from financing activities:
Increase in intercompany
receivable (741,000) (947,000)
Net cash (used in) financing
activities (741,000) (947,000)
Net increase (decrease) in cash 55,000 (206,000)
Cash at beginning of period 45,000 251,000
----------- -----------
Cash at end of period $ 100,000 $ 45,000
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Statement of Changes in Subsidiary Deficit
- ---------------------------------------------------------------------------
Subsidiary Deficit
Balance at December 27, 1992 $(13,578,000)
Net income 935,000
Change in intercompany receivable (947,000)
-------------
Balance at December 26, 1993 (13,590,000)
Net loss (9,925,000)
Change in intercompany receivable (741,000)
-------------
Balance at December 25, 1994 $(24,256,000)
=============
The accompanying notes are an integral part of the financial statements.
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
NOTE 1 - THE COMPANY
Noble Broadcast of Houston, Inc. ("NBH") is a wholly owned subsidiary of
Noble Broadcast Group, Inc. (the "Company" or "NBG"), a privately held
Delaware corporation. NBH owned and operated radio stations KMJQ-FM and
KYOK-AM. NBH also provided marketing for KHYS-FM through a time brokerage
agreement with Clear Channel Communications, Inc. (Note 6). The radio
stations serve the Houston, Texas area.
On December 31, 1994, NBH and NBG entered into an agreement to sell
substantially all of the non-cash assets and certain liabilities of KMJQ-FM
and KYOK-AM, to Clear Channel Radio Licenses, Inc. and Clear Channel Radio,
Inc., wholly-owned subsidiaries of Clear Channel Communications, Inc.
(collectively referred to as "Clear Channel") for $38,500,000. On December
19, 1994, the Federal Communications Commission approved the transfer of
the licenses of KMJQ-FM and KYOK-AM to Clear Channel.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation
The financial statements of NBH reflect the specifically identifiable
assets, liabilities, revenues and expenses of NBH as well as certain
allocations of the Company's long-term debt and allocations of various
corporate general and administrative expenses. Management believes such
allocations to be reasonable, however, the allocated costs may not be
indicative of costs of NBH on a stand alone basis. Allocations are
summarized as follows:
Debt: NBH was allocated its share of the Company's long-term debt based
on the financed purchase price of NBH, adjusted proportionally for
changes in the Company's long-term debt. All other debt related costs
including debt issuance costs, interest expense, accrued interest and
the unamortized carrying value of subordinated debt have been allocated
using the same basis.
Corporate general and administrative costs: Corporate general and
administrative costs have been allocated to NBH based on both the
percentage of NBH's net revenues to total net revenues of the Company
and the number of radio stations operated by NBH compared to the total
number of radio stations operated by the Company.
Fiscal Year
The Company's fiscal year ends on the last Sunday of December to coincide
with the standard broadcast year.<PAGE>
Noble Broadcast Group of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
Trade Agreements
As is common in the industry, NBH has trade agreements with certain of its
advertisers whereby NBH exchanges advertising time for goods and services.
The revenue from these trade agreements is recorded as advertising time is
run, at the estimated fair market values of the goods or services received.
Corresponding amounts are charged to expense when the goods or services are
utilized, or are capitalized as assets and amortized, as appropriate.
Trade sales for the years ended December 25, 1994 and December 26, 1993
were $298,000 and $159,000, respectively; trade expenses for those years
were $206,000 and $207,000, respectively.
Property, Plant and Equipment
Purchases of property, plant and equipment, including additions and
improvements and expenditures for repairs that significantly add to
productivity or extend the economic lives of the assets, are capitalized at
cost and depreciated using the straight-line method over their estimated
useful lives as follows:
Technical and office equipment 7 years
Building and building improvements 10 years
Furniture and fixtures 10 years
Automobiles 3 years
Maintenance and repairs are expensed as incurred.
Intangible Assets
Intangible assets represents the aggregate excess purchase cost over the
fair market value of radio station net assets acquired. Intangible assets
are being amortized using the straight-line method primarily over a period
of 40 years and are stated at the lower of cost or net realizable value.
NBH determines net realizable value based on analysis of anticipated future
cash flows. In conjunction with the sale of assets to Clear Channel
Communications at December 31, 1994, NBH wrote down intangible assets by
$7,615,000.
NOTE 3 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
December 25, 1994 December 26, 1993
Accrued liabilities is comprised of:
Accrued salaries, wages and
commissions $ 260,000 $ 128,000
Other 144,000 174,000
---------- ----------
$ 404,000 $ 302,000
========== ==========
Property, plant and equipment is comprised of:
Technical and office
equipment $ 1,956,000 $ 1,917,000
Land 100,000 100,000
Building and building
improvements 366,000 362,000
Furniture and fixtures 230,000 229,000
Automobiles 103,000 93,000
----------- -----------
2,755,000 2,701,000
Less accumulated depreciation
and amortization (2,055,000) (1,739,000)
------------ ------------
$ 700,000 $ 962,000
=========== ===========
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
Net interest expense is comprised of: For the years ended
----------------------------------
December 25, December 26,
1994 1993
Interest expense $3,430,000 $2,525,000
Amortization of share of parent
debt issue costs 49,000 49,000
Change in share of parent unamortized
carrying value of subordinated debt (377,000) (363,000)
----------- -----------
$3,102,000 $2,211,000
========== ==========
NOTE 4 - LONG-TERM DEBT
The long-term debt of the Company has been allocated to NBH as described in
Note 2 and is comprised of senior, subordinated and convertible
subordinated debt instruments. These debt instruments bear interest at
varying rates which ranged from five percent to nine percent as of
December 25, 1994. The convertible subordinated debt is convertible into
common stock of NBG under certain circumstances. The Company's long-term
debt contains certain financial and other covenants and restrictions. The
senior debt is secured by all voting capital stock of NBH and other
subsidiaries of NBG. The Company has reached agreement with its lenders
whereby the Company is required to repay the entirety of its debt and to
repurchase the lenders' equity positions by April 30, 1995. Therefore, the
debt is classified as current as of December 25, 1994.
Long-term debt has been allocated on a basis consistent with the terms of a
restructuring agreement effective December 27, 1991. No gain on
restructuring has been reported for financial reporting purposes, pursuant
to the provisions of Statement of Financial Accounting Standards No. 15.
The excess of the carrying amount of the subordinated debt instruments
prior to the restructuring over the principal amount of the newly issued
subordinated and convertible subordinated notes has been presented in the
balance sheet as unamortized carrying value of subordinated debt and is
being amortized against interest expense.
The Company recognized an extraordinary gain on forgiveness of debt during
the year ended December 26, 1993, based on the terms of the restructuring
agreement, whereby the Company's lenders forgave a portion of the debt
outstanding. NBH's portion of the Company's forgiveness of debt was
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
allocated as described in Note 2.
NBH's share of interest paid during the years ended December 25, 1994 and
December 26, 1993 aggregated approximately $1,994,000 and $1,265,000,
respectively.
NOTE 5 - INCOME TAXES
NBH adopted Statement of Financial Accounting Standards ("SFAS") No. 109 on
a prospective basis, effective January 1, 1993. SFAS 109 requires
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial
statements or tax returns. Under the SFAS 109 asset and liability method,
deferred tax assets and liabilities are determined based upon the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year(s) in which the
differences are expected to reverse. Deferred taxes have been computed
based on the assumption that NBH is a separate tax payer.
The components of deferred income taxes are as follows:
December 25, December 26,
1994 1993
Deferred tax assets:
Net operating loss carryforwards $ 8,252,000 $ 6,678,000
Book and tax amortization differences 3,559,000 3,304,000
Accrued liabilities and reserves 17,000 35,000
------------ ------------
$ 11,828,000 $ 10,017,000
Deferred tax liabilities:
Book and tax depreciation differences (182,000) (2,268,000)
------------ ------------
Net deferred tax assets 11,646,000 7,749,000
Valuation allowance (11,646,000) (7,749,000)
------------- -------------
$ - $ -
============= =============
At December 25, 1994, NBH had federal net operating losses of approximately
$20,248,000 for tax reporting purposes. Additionally, NBH had net
operating losses of approximately $10,142,000 for Texas income tax
purposes. The federal net operating losses for tax purposes expire between
<PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
2003 and 2009. The Texas net operating losses for tax purposes expire
between 1995 and 1999. Any such future benefit from such net operating
loss carryforwards will accrue solely to NBH and will provide no benefit to
the Company or Clear Channel. The provision for income taxes and the net
operating loss carryforwards are based on the assumption that NBH is a
separate tax payer.
NBH recognized no tax expense or benefits in 1994 and 1993 due to
historical losses.
In certain circumstances, as specified in the Internal Revenue Code, a 50
percent or more ownership change by certain combinations of NBH's
stockholders during any three year period would result in limitations on
NBH's ability to utilize its net operating loss carryforwards.
NOTE 6 - COMMITMENTS
Lease Commitments
NBH incurred total rental expenses of $291,000 and $237,000 in 1994 and
1993, respectively, under operating leases for facilities and equipment.
Future annual rental commitments expected under such at December 25, 1994
are as follows:
1995 $ 272,000
1996 273,000
1997 273,000
1998 271,000
1999 260,000
Thereafter 853,000
----------
$2,202,000
==========
In conjunction with its acquisition of the assets of KMJQ-FM and KYOK-AM,
Clear Channel assumed the operating leases of NBH.
Time Brokerage Agreement
NBH provided marketing for KHYS-FM through a time brokerage agreement with
Clear Channel Communications, Inc. This agreement allowed NBH to purchase
a specified amount of broadcast time per week in exchange for the rights to
all advertising revenues. Under the agreement, NBH incurred programming
rights and other expenses of $1,887,000 and $1,450,000 during 1994 and
1993, respectively. <PAGE>
Noble Broadcast of Houston, Inc.
(A wholly-owned subsidiary of Noble Broadcast Group, Inc.)
Notes to Financial Statements
- ---------------------------------------------------------------------------
As of December 25, 1994, NBH's future annual payments under the agreement
were as follows:
1995 $1,183,000
1996 1,200,000
1997 1,200,000
----------
$3,583,000
==========
As a result of NBH's sale of KYOK-AM and KMJQ-FM to Clear Channel, the time
brokerage agreement commitment was terminated effective December 31, 1994,
and related restricted cash of $1,500,000 was released to NBH.
Litigation
NBH is a party to various legal actions. In the opinion of management, after
reviewing the information which is currently available with respect to these
matters, and consulting with NBH's legal counsel, any liability which may
ultimately be incurred will not materially affect the financial position or
results of operations of NBH.
