FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996 Commission file number 1-9645
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 200 Concord Plaza, Suite 600
(State of Incorporation) San Antonio, Texas 78216-6940
(210) 822-2828
74-1787539 (Address and telephone number
(I.R.S. Employer of principal executive offices)
Identification No.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 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 the number of shares outstanding of each class of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at May 2, 1996
- ---------------------------- ---------------------------
Common Stock, $.10 par value 34,592,012
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
Part I Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at March 31, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the three
months ended March 31, 1996 and 1995 6
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 7
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II Other Information
Item 6. Exhibits and reports on Form 8-K 11
(a) Exhibits
(b) Reports on Form 8-K
Signatures 12
Index to Exhibits 13
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
(Unaudited) (*)
Current Assets
Cash and cash equivalents $12,006,072 $5,391,104
Accounts receivable, less
allowance of
$4,664,527 in 1996
and $3,809,529 in
1995 45,325,220 52,920,450
Film rights -
current 11,339,550 12,173,527
__________ __________
Total Current Assets 68,670,842 70,485,081
Property, Plant and Equipment
Land 8,234,746 7,821,899
Buildings 17,215,536 17,068,026
Transmitter and studio
equipment 112,545,653 109,517,279
Furniture and other equipment 14,864,445 13,996,987
Leasehold improvements 4,688,670 4,560,289
Construction in progress 7,662,040 5,079,864
__________ __________
165,211,090 158,044,344
Less accumulated depreciation 62,224,139 58,159,152
__________ ___________
102,986,951 99,885,192
Intangible Assets
Leases 1,455,000 1,455,000
Network affiliation agreements 23,422,904 23,422,904
Licenses and goodwill 322,681,868 286,406,955
Covenants not-to-compete 22,971,932 22,871,932
Other intangible assets 4,522,082 4,361,987
__________ ___________
375,053,786 338,518,778
Less accumulated amortization 56,861,604 52,192,327
__________ ___________
318,192,182 286,326,451
Other
Film rights 13,641,420 15,968,502
Equity investments in, and advances
to, nonconsolidated affiliates 81,710,876 81,911,343
Other assets 8,381,403 7,021,531
Other investments 1,394,794 1,412,704
___________ _________
Total Assets $594,978,468 $563,010,804
=========== ===========
* From audited financial statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
1996 1995
(Unaudited) (*)
---------- ----------
Current Liabilities
Accounts payable $ 6,185,729 $ 5,314,716
Accrued interest 1,541,619 508,271
Accrued expenses 5,021,847 7,760,002
Accrued income and other taxes 3,025,073 5,906,580
Current portion of long-term
debt 3,405,757 3,406,297
Current portion of film rights
liability 11,868,064 13,109,024
____________ ___________
Total Current Liabilities 31,048,089 36,004,890
Long-Term Debt 366,568,506 334,163,729
Film Rights Liability 15,089,939 17,143,812
Deferred Income Taxes 5,552,835 5,552,835
Minority Interests 6,447,148 6,432,903
Shareholders' Equity
Common Stock 3,460,544 3,459,269
Additional paid-in capital 91,488,823 91,433,138
Retained earnings 74,597,520 68,359,190
Other 896,062 632,036
Cost of shares held in treasury (170,998) (170,998)
___________ ___________
Total Shareholders Equity 170,271,951 163,712,635
___________ ___________
Total Liabilities and
Shareholders equity $594,978,468 $563,010,804
=========== ===========
* From audited financial statements
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
Gross broadcasting
revenue $70,139,925 $ 58,646,216
Less agency commissions (7,931,480) (6,788,524)
Net broadcasting revenue 62,208,445 51,857,692
Station operating expenses 38,230,252 33,181,977
Depreciation and amortization 8,755,025 8,399,455
__________ __________
Station operating income 15,223,168 10,276,260
Corporate general and
administrative expenses 1,673,571 1,530,324
__________ __________
Operating income 13,549,597 8,745,936
Interest expense (5,423,837) (4,447,973)
Other income 205,815 258,580
Equity in net income of, and
other income from,
nonconsolidated affiliates 875,070 --
__________ __________
Income before income taxes 9,206,645 4,556,543
Income taxes 2,968,316 1,877,377
__________ __________
Net income $ 6,238,329 $ 2,679,166
========== ==========
Net income per common share $ .18 $ .08
========== ==========
Weighted average common shares and
common share equivalents
outstanding 35,204,642 35,039,024
========== ==========
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
1996 1995
---- ----
Net Cash From Operating
Activities $20,097,965 $14,047,201
Cash flows from investing activities:
Decrease in restricted cash -- 38,500,000
Purchase of broadcasting assets (41,050,000) (65,300,000)
Proceeds from disposal of
broadcasting assets 2,100 365,950
Decrease in equity investments in and
advances to nonconsolidated
affiliates-net 464,493 --
Decrease in other investments 17,910 4,367,606
Purchases of property, plant and
equipment (3,872,976) (908,274)
Proceeds from disposals of property,
plant and equipment --
(Increase) in other intangible
assets (160,095) (164,296)
(Increase) in other-net (1,345,627) (133,358)
___________ ____________
Net cash (used in) investing
activities (45,944,195) (23,272,372)
Cash flows from financing activities:
Proceeds of long-term debt 37,500,000 26,800,000
Payments on long-term debt (5,000,000) (13,900,000)
Payments of current maturities (95,763) (90,931)
Exercise of stock options 56,961 74,792
___________ ___________
Net cash provided by financing
activities 32,461,198 12,883,861
___________ ___________
Net increase in cash 6,614,968 3,658,690
Cash at beginning of year 5,391,104 6,817,595
__________ __________
Cash at end of period $12,006,072 $10,476,285
========== ==========
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE RECONCILING EARNINGS TO NET CASH
FLOW FROM OPERATING ACTIVITIES
(UNAUDITED)
Three months ended
March 31,
-------------------
1996 1995
Net income $ 6,238,329 $ 2,679,166
Reconciling items:
Depreciation 4,085,742 3,715,354
Amortization of intangibles 4,669,283 4,684,016
Amortization of film rights 3,366,712 2,756,648
Payments on film rights (3,502,109) (2,895,900)
(Gain) loss on disposal of assets 1,548 (317,739)
Changes in operating assets and liabilities:
Decrease accounts receivable 9,013,761 6,335,662
Increase(decrease) accounts
payable 811,013 (720,146)
Increase accrued interest 1,033,348 16,671
(Decrease) accrued expenses (2,738,155) (825,098)
(Decrease) accrued income
and other taxes (2,881,507) (1,581,433)
__________ __________
Net cash from operating
activities $20,097,965 $14,047,201
========== ==========
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS
The consolidated financial statements have been prepared
by Clear Channel Communications, Inc. ("Corporation") pursuant to
the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, include all
adjustments (consisting only of normal recurring accruals and
adjustments necessary for adoption of new accounting standards)
necessary to present fairly the results of the interim periods
shown. Certain information and footnote disclosures, normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the
information presented not misleading. The results for the
interim periods are not necessarily indicative of results for the
full year. The financial statements contained herein should be
read in conjunction with the consolidated financial statements
and notes thereto included in the Corporation's 1995 Annual
Report.
The consolidated financial statements include the accounts
of the Corporation and its subsidiaries, the majority of which
are wholly-owned investments in companies in which the
Corporation owns 20 percent to 50 percent of the voting common
stock or otherwise exercises significant influence over operating
and financial policies of the company are accounted for under the
equity method. All significant intercompany transactions are
eliminated in the consolidation process. Certain
reclassifications have been made to the 1995 consolidated
financial statements to conform with the 1996 presentation.
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Comparison of Three Months Ended March 31, 1996 to Three Months
Ended March 31, 1995
Consolidated net broadcasting revenue for the three
months ended March 31, 1996 increased 20% to $62,208,000 from
$51,858,000 for the same quarter of 1995. Station operating
expenses increased 15% to $38,230,000 from $33,182,000.
Depreciation and amortization increased 4% from $8,399,000 to
$8,755,000 in the first quarter of 1996. Station operating
income increased $4,947,000 or 48% to $15,223,000, compared to
$10,276,000 for the first quarter of 1995. Interest expense
increased 22% from $4,448,000 to $5,424,000 in the first quarter
of 1996. Net income increased 133% from $2,679,000, or $.08 per
share to $6,238,000, or $.18 per share.
The majority of the growth in net broadcasting revenue
and operating expenses was due to the improved operating results
of the Company s radio stations in Houston and television
stations in Memphis and Little Rock and the acquisitions of the
broadcasting assets of WOOD-AM/FM and WBCT-FM in Grand Rapids, MI
on February 14, 1996, the purchase of the broadcasting assets of
WLYH-TV in Lancaster/Lebanon, PA and the broadcasting assets and
the license of the Harrisburg, PA CBS-affiliate, WHP-TV, on
October 31, 1995, the purchase of the broadcasting assets of
WNFT-TV in Jacksonville, FL. The majority of the increase in
depreciation and amortization was due to the above-mentioned
acquisitions. Interest expense increased primarily due to an
increase in the average amount of debt outstanding -- which
resulted from the above-mentioned acquisitions, the purchase in
May 1995 of a 50% interest in the Australian Radio Network
( ARN ) and the purchase in May 1995 of a 21.5% interest in
Heftel Broadcasting ( Heftel ).
The investments in ARN and Heftel are accounted for under
the equity method; together they contributed $875,070 to net
earnings in the first quarter of 1996. The majority of the
increase in net income also was primarily due to the factors
stated above, but was partially offset by an increase of $143,000
in corporate-related expenses.
Liquidity and Capital Resources
The major sources of capital for the Company have
historically been cash flow from operations, advances on its
long-term line of credit facility (the "credit facility") and
funds supplied by the Company's initial stock offering in April
1984 and subsequent stock offerings in July 1991 and October
1993. As of March 31, 1996, the Company had $357,500,000
outstanding under the $600,000,000 credit facility, a total of
$12,000,000 in guarantees to third parties, and a $7,000,000
letter of credit, leaving $223,500,000 available for future
borrowings under the credit facility. In addition, the Company
had $12,474,000 in other debt and $12,006,000 in unrestricted
cash and cash equivalents on hand at March 31, 1996. The Company
is currently in discussions with its Administrative Lender to increase
its revolving credit facility.
During the first three months of the year, the Company made
principal payments on the credit facility totaling $5,000,000 and
purchased capital equipment totaling $3,873,000. In addition,
the Company purchased the broadcasting assets of WOOD-AM/FM and
WBCT-FM in Grand Rapids, MI, for approximately $43,050,000 before
final prorations. This acquisition was financed by the Company s
credit facility and cash flow from operations.
Subsequent to March 31, 1996, the Company purchased US Radio,
Inc., which owns and operates 16 radio stations, for
approximately $142,500,000 and entered into a letter of intent to
purchase the broadcasting assets of WCUZ-AM/FM in Grand Rapids,
MI and KQLL-AM/FM and KOAS-FM in Tulsa, OK for approximately
$15,400,000, WTVR-AM/FM in Richmond, VA for approximately
$18,000,000 and a one-third interest in Radio New Zealand, which
owns and operates 40 radio stations in New Zealand for
approximately $20,500,000. The Company anticipates using the
credit facility to fund these acquisitions. After giving effect
to the above-mentioned transactions, subsequent to March 31,
1996, the Company will have $553,900,000 outstanding under the
credit facility and $24,600,000 available for future borrowings.
Finally, the Company entered into a letter of intent to
purchase WPRI-TV in Providence, RI for approximately $68,000,000
and Radio Equity Partners, which owns and operates 19 radio
stations for approximately $240,000,000. The Company anticipates
consummating these transactions in the third quarter and
expanding its credit facility and to use cash flow from
operations to fund these acquisitions.
The credit facility will convert to a reducing revolving line
of credit on the last business day of September 1998, with
quarterly repayment of the outstanding principal balance to begin
the last business day of December 1998 and continue during the
subsequent five year period, with the entire balance to be repaid
by the last business day of September 2003.
The Company believes that cash flow from operations will be
sufficient to make all required future interest and principal
payments on the credit facility and will be sufficient to fund
all anticipated capital expenditures.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on Page 12
(b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Date May 15, 1996 L. Lowry Mays
_________________________________________________
(L. Lowry Mays - President
and Chief Executive Officer)
(Duly Authorized Officer)
Date May 15, 1996 Herbert W. Hill, Jr.
________________________________________________
(Herbert W. Hill, Jr. -
Vice President and
Principal Financial
Officer)
<PAGE>
Index to Exhibits
(a) 3.1 -- Articles of Incorporation, as amended, of
Registrant
(m) 3.11 -- Articles of Amendment to the Articles of
Incorporation of Clear Channel Communications,
Inc.
(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.
(a)10.1 -- Incentive Stock Option Plan of Clear Channel
Communications, Inc. as of January 1, 1984.
(b)10.2 -- Television Asset Purchase Agreement dated January
27, 1992, by and between Chase Broadcasting of
Memphis, Inc. and Clear Channel Television, Inc.
(b)10.3 -- Radio Asset Purchase Agreement dated January 31,
1992, by and between Noble Broadcasting of
Connecticut, Inc. and Clear Channel Radio, Inc.
(b)10.4 -- 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.
(c)10.5 -- Radio Asset Purchase Agreement dated December 23,
1992, by and between Inter-Urban Broadcasting of
New Orleans Partnership and Snowden Broadcasting,
Inc.
(d)10.6 -- Television Asset Purchase Agreement dated August
19, 1993, by and between Television Marketing
Group of Memphis, Inc. and Clear Channel
Television, Inc.
(e)10.7 -- Radio Asset Purchase Agreement April 1, 1993, by
and Capital Broadcasting of Virginia, Inc. and
Clear Channel Radio, Inc.
(f)10.8 -- Television Asset Purchase Agreement dated August
31, 1993, by and between Nationwide
Communications, Inc. and Clear Channel
Television, Inc.
(g)10.9 -- Radio Asset Merger Agreement dated March 22, 1994,
by and between Metroplex Communications, Inc. and
Clear Channel Radio, Inc.
(h)10.10 -- Radio Partnership Interest Purchase Agreement
dated April 5, 1994, by and between Cook Inlet
Communications, Inc. and WCC Associates and Clear
Channel Radio, Inc.
(i)10.11 -- Television Asset Purchase Agreement September
12,1994, by and between Heritage Broadcasting
Company of New York, Inc. and Clear Channel
Television, Inc. and Clear Channel Television
Licenses, Inc.
(j)10.12 -- Radio Asset Purchase Agreement dated November
17,1994, by and between Noble Broadcast of
Houston, Inc. and Clear Channel Radio, Inc.
(k)10.13 -- Australian Radio Network Shareholders Agreement
dated February, 1995, by and between APN
Broadcasting Investments Pty Ltd, Australian
Provincial Newspapers Holdings Limited, APN
Broadcasting Pty Ltd and Clear Channel Radio, Inc.
and Clear Channel Communications, Inc.
(l)10.14 -- $600,000,000 Amended and Restated Credit Agreement
Among Clear Channel Communications, Inc., Certain
Lenders, and NationsBank of Texas, N.A., as
Administrative Lender, dated October 19, 1995.
(m)10.15 -- Clear Channel Communications, Inc. 1994 Incentive
Stock Option Plan.
(m)10.16 -- Clear Channel Communications, Inc. 1994
Nonqualified Stock Option Plan.
(m)10.17 -- Clear Channel Communications, Inc. Directors'
Nonqualified Stock Option Plan.
(m)10.18 -- Option Agreement for Officer
(n)10.19 -- Employment Agreement between Clear Channel
Communications, Inc. and L. Lowry Mays
(a) -- Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1(Reg. No.
289161) dated April 19, 1984.
(b) -- Incorporated by reference to the Registrant's Form 8-K
dated July 14, 1992.
(c) -- Incorporated by reference to the Registrant's Form 10-Q
dated May 12, 1993.
(d) -- Incorporated by reference to the Registrant's Form 8-K
dated September 2, 1993.
(e) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 1, 1993.
(f) -- Incorporated by reference to the Registrant's Form 8-K
dated October 27, 1993.
(g) -- Incorporated by reference to the Registrant's Form 8-K
dated October 26, 1994.
(h) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14 1994.
(i) -- Incorporated by reference to the Registrant's Form 8-K
dated December 14, 1994.
(j) -- Incorporated by reference to the Registrant's Form 8-K
dated January 13, 1995.
(k) -- Incorporated by reference to the Registrant's Form 8-K
dated May 26, 1995.
(l) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14, 1995.
(m) -- Incorporated by reference to the Registrant's Form S-8
dated November 20, 1995.
(n) -- Incorporated by reference to the Registrant's Form 10-K
dated March 29, 1996.
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<PERIOD-END> MAR-31-1996
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