<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 5, 1996
Clear Channel Communications, Inc.
(Exact name of registrant as specified in its charter)
Texas
(State of Incorporation)
1-9645 74-1787539
(Commission File Number) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(210) 822-2828
(Address and telephone number of principal executive offices)
<PAGE> 2
Clear Channel
Communications, Inc.
Form 8-K/A
Item 2.(a)
On August 5, 1996, Clear Channel Radio, Inc., a wholly owned subsidiary of
Clear Channel Communications, Inc. (the "Company") acquired a total of
5,141,022 shares of Common Stock of Heftel Broadcasting Corporation (Heftel)
via a tender offer (269,309 shares) and via a stock purchase agreement with
certain selling shareholders of Heftel (4,871,713 shares) for $23.00 per share,
net to seller in cash (collectively referred to as the "Tender Offer").
As a result of the Tender Offer, the Company now beneficially owns a total of
7,297,821 shares of Heftel Class A Common Stock, representing approximately
63.2% of the outstanding Heftel Class A Common Stock outstanding. There are no
longer any shares of Heftel Class B Common Stock outstanding.
Sources of funds utilized in completing the Tender Offer were provided
by the Company's revolving long-term line of credit facility by and between
NationsBank of Texas, N.A., as agent, and the Company.
Item 2.(b)
The assets represented by the stock purchased by registrant's
subsidiary were utilized by Heftel for the purposes of radio broadcasting.
Registrant intends to continue such use.
<PAGE> 3
Clear Channel
Communications, Inc.
Form 8-K/A
Item 7.(a)-l Historical Financial Statements
The historical financial statements of Heftel Broadcasting Corporation as of
and for the year ended September 30, 1995 and as of and for the quarters ended
June 30, 1995, December 31, 1995, March 31, 1996 and June 30, 1996 are hereby
incorporated by reference to the Form 8-K/A of Heftel Broadcasting Corporation
dated October 15, 1996.
Item 7.(b) Pro Forma Financial Information
As a result of the Tender Offer reported under Item 2 above, the Company now
beneficially owns a total of 7,297,821 shares of Heftel Class A Common Stock,
representing approximately 63.2% of the outstanding Heftel Class A Common Stock
outstanding.
The Company announced on July 9, 1996 its proposed merger (hereinafter referred
to as the "Tichenor Merger") of Heftel with Tichenor Media System, Inc.
(Tichenor), another Spanish-language broadcasting company, in which an
additional 5,689,878 shares of Heftel Class A Common Stock will be issued to
Tichenor shareholders to effect the Tichenor Merger (see the Company's Form 8-K
filed July 10, 1996). As a result, the Company's beneficial ownership interest
in the total number of shares of Heftel Common Stock outstanding will be
reduced to approximately 43%. Upon consummation of the Merger, the Company's
shares of Heftel Class A Common Stock will be converted to shares of Heftel
Nonvoting Common Stock, which will effectively eliminate the Company's voting
control of Heftel. Therefore, the Company's control of Heftel is temporary
because of the Merger and the Company will continue to account for its
investment in Heftel under the equity method. This is in accordance with FAS
94, which indicates that a majority-owned subsidiary shall not be consolidated
if control is likely to be temporary.
As such, the pro forma financial information for the year ended December 31,
1995 and for the six months ended June 30, 1996 presents the pro forma effect
on the Company's statements of earnings (via its "Equity in net income of, and
other income from, nonconsolidated affiliates") as if the Company's acquisition
of its total 63.2% interest in Heftel were consummated as a single transaction
on January 1, 1995. The pro forma condensed consolidated balance sheet as of
June 30, 1996 presents the pro forma effect of the Company's investment in
Heftel on the Company's balance sheet as of June 30, 1996 (via its "Equity
investments in, and advances to, nonconsolidated affiliates") as if the
acquisition had been consummated on June 30, 1996.
The unaudited pro forma condensed consolidated statements of operations do not
reflect the effects of certain one-time charges resulting from the
reorganization of Heftel upon the acquisition mentioned above. Such charges,
which have been omitted from the pro forma adjustments, include (i) employment
contract settlement payments plus certain other estimated severance costs, both
of which are related to the Tender Offer, in the aggregate amount of
approximately $21,000,000; (ii) the non-cash write-off of approximately
<PAGE> 4
$7,461,000 in unamortized deferred financing costs related to Heftel's former
credit agreement; (iii) approximately $8,100,000 relating to the discontinued
operations of Heftel's radio network operations (Cadena Radio Centro, or
"CRC"), of which $6,500,000 reflects non-cash charges resulting from the
write-off of goodwill; and (iv) approximately $3,723,000 in transaction costs
relating to the Tender Offer and estimated costs of $2,900,000 to dispose of
certain duplicate facilities.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Heftel acquisition Clear Channel/
Historical pro forma Heftel
Clear Channel adjustments combined pro forma
------------- ------------------ -----------------
(In thousands, except per share data)
<S> <C> <C> <C>
Net broadcast revenue $243,813 --- $243,813
Station operating expenses 131,258 --- 131,258
Depreciation and amortization 33,769 --- 33,769
Corporate general and
administrative expenses 7,414 --- 7,414
-------- -------- --------
STATION OPERATING INCOME 71,372 --- 71,372
Interest expense (20,752) (8,041)(a) (28,792)
Equity in net income of, and other
income from, nonconsolidated affiliates 2,927 2,150 (b)
(4,285)(c) 792
Other income (expense) (803) --- (803)
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 52,744 (10,176) 42,568
Income tax (expense)/benefit (20,730) 2,815 (d) (17,915)
-------- -------- --------
NET INCOME $ 32,014 $ (7,361) $ 24,653
======== ======== ========
Net income per common share $ 0.91 $ 0. 70
======== ========
Number of common shares
used in per share computations 35,100 35,100
======== ========
</TABLE>
<PAGE> 5
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Heftel acquisition Clear Channel/
Historical pro forma Heftel
Clear Channel adjustments combined pro forma
------------- ------------------ ------------------
(In thousands, except per share data)
<S> <C> <C> <C>
Net broadcast revenue $143,577 $143,577
Station operating expenses 81,992 81,992
Depreciation and amortization 19,343 --- 19,343
Corporate general and
administrative expenses 3,478 3,478
-------- -------- --------
STATION OPERATING INCOME 38,764 38,764
Interest expense (11,745) (3,606) (e) (15,351)
Equity in net income of, and other
income from, nonconsolidated affiliates 2,070 (215) (f)
(1,999) (g) (144)
Other income (expense) 186 --- 186
-------- -------- --------
INCOME BEFORE INCOME TAXES 29,275 (5,820) 23,455
Income tax (expense) / benefit (10,489) 1,262 (h) (9,227)
-------- -------- --------
NET INCOME $ 18,786 $ (4,558) $ 14,228
======== ======== ========
Net income per common share $ 0.53 $ 0.40
======== ========
Number of common shares
used in per share computations 35,590 35,590
======== ========
</TABLE>
<PAGE> 6
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
Heftel acquisition Clear Channel/
Historical pro forma Heftel
Clear Channel adjustments combined pro forma
------------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS
Current assets $ 82,694 $ --- $ 82,694
Property, plant and equipment net 114,556 --- 114,556
Intangible assets, net 459,974 --- 459,974
Equity investments in, and advances to, --- ---
nonconsolidated affiliates 81,299 118,244 (i) 199,543
Other assets 30,119 --- 30,119
-------- -------- --------
TOTAL ASSETS $768,642 $118,244 $886,886
======== ======== ========
LIABILITIES
Current liabilities $ 40,623 $ --- $ 40,623
Long-term debt 237,486 118,244 (i) 355,730
Other noncurrent liabilities 17,969 --- 17,969
Minority interest 6,353 --- 6,353
Shareholders' equity 466,211 --- 466,211
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $768,642 $118,244 $886,886
======== ======== ========
</TABLE>
<PAGE> 7
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
<TABLE>
<S> <C>
(a) TO ADJUST FOR THE INCREMENTAL INTEREST EXPENSE FOR ADDITIONAL BORROWINGS UNDER CCC'S REVOLVING CREDIT
FACILITY @ 6.8% AVERAGE RATE FOR 1995, PER ANNUAL REPORT) $118,244,000 BORROWED FOR AUGUST 5, 1996
ACQUISITION:
Amount borrowed for August 5, 1996 Heftel acquisition: 118,244
Times avge. interest rate (6.8% for the year ended December 31, 1995): 6.80%
--------
Equals incremental interest expense resulting from the transaction: 8,041
=====
(b) TO CALCULATE THE ADDITIONAL EQUITY IN EARNINGS OF, AND OTHER INCOME FROM, NONCONSOLIDATED AFFILIATES:
INCOME FROM CONTINUING OPERATIONS -- HEFTEL:
Net income from continuing operations
for the three months ended December 31, 1994: (1,768)
Net income from continuing operations
for the twelve months ended September 30, 1995: 4,319
Net income from continuing operations
for the three months ended December 31, 1995: 1,302
------
Net income from continuing operations
for the twelve months ended December 31, 1995: 3,853
Clear Channel's 63.2% interest 63.2%
--------
Clear Channel's pro forma equity in earnings
for the twelve months ended December 31, 1995: 2,435
Clear Channel's equity in earnings already recorded for
the period May 15, 1995 to December 31, 1995 (at 21.44%): 285
--------
Clear Channel's pro forma equity in earnings
for the twelve months ended December 31, 1995
to be included in the pro forma calculation: 2,150
======
(c) TO CALCULATE THE ADDITIONAL AMORTIZATION OF EXCESS COST RELATED TO CLEAR CHANNEL'S INVESTMENT IN HEFTEL:
Heftel equity balance at June 30, 1996: 43,776
Clear Channel interest in Heftel: 63.2%
------
Clear Channel's share of Heftel negative equity 27,666
Clear Channel's May 15,1995 investment in Heftel: (20,499)
Clear Channel's Aug. 5, 1996 investment in Heftel: (118,244)
--------
Excess cost to be amortized over 25 yrs. (111,077)
25 yrs. amortizable life, times # of qtrs. per year: 100
Number of qtrs included this period 4
--------
Annual amortization of excess cost (4,443)
Actual amortization already recorded by Clear Channel in 1995: 158
--------
Additional pro forma amortization of excess cost: 4,285
======
(d) TO CALCULATE THE INCOME TAX BENEFIT FROM THE INCREMENTAL INTEREST EXPENSE:
Incremental interest expense resulting from the transaction: 8,041
35% statutory rate: 35.0%
--------
Income tax benefit from incremental interest expense incurred since Jan. 1, 1995 2,815
======
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
(e) TO ADJUST FOR THE INCREMENTAL INTEREST EXPENSE FOR ADDITIONAL BORROWINGS UNDER CCC'S REVOLVING CREDIT
FACILITY @ 6.1% AVERAGE RATE FOR THE SIX MONTHS ENDED JUNE 30, 1996) $118,244,000 BORROWED FOR AUGUST 5, 1996
ACQUISITION OF SHARES:
Amount borrowed for August 5, 1996 Heftel acquisition: 118,244
Times avge. interest rate (6.1% for the six months ended June 30, 1996): 6.10%
Equals incremental interest expense resulting from the transaction: 3,606
========
(f) TO CALCULATE THE ADDITIONAL EQUITY IN EARNINGS OF, AND OTHER INCOME FROM, NONCONSOLIDATED AFFILIATES:
INCOME FROM CONTINUING OPERATIONS -- HEFTEL:
Net income from continuing operations
for the three months ended December 31, 1995: (1,302)
Net income from continuing operations
for the nine months ended June 30, 1996: 632
--------
Net income (loss) from continuing operations
for the six months ended June 30, 1996: (670)
Clear Channel's 63.2% interest 63.2%
--------
Clear Channel's pro forma equity in earnings (loss)
for the six months ended June 30, 1996: (423)
Clear Channel's equity in earnings already recorded for
the period January 1 to June 30, 1996 (at 21.4%): (208)
--------
Clear Channel's pro forma equity in earnings (loss)
for the six months ended June 30, 1996
to be included in the pro forma calculation: (215)
========
(g) TO CALCULATE THE ADDITIONAL AMORTIZATION OF EXCESS COST RELATED TO CLEAR CHANNEL'S INVESTMENT IN HEFTEL:
Heftel equity balance at June 30, 1996: 43,776
Clear Channel interest in Heftel: 63.2%
--------
Clear Channel's share of Heftel negative equity 27,666
Clear Channel's May 15, 1995 investment in Heftel: (20,499)
Clear Channel's August 5, 1996 investment in Heftel: (118,244)
--------
Excess cost to be amortized over 25 yrs. (111,077)
25 yrs. amortizable life, times # of qtrs. per year: 100
Number of qtrs included this period 2
--------
Annual amortization of excess cost (2,222)
Actual amortization already recorded in the six months ended 6/30/96: 223
--------
Additional pro forma amortization of excess cost: (1,999)
======
(h) TO CALCULATE THE INCOME TAX BENEFIT FROM THE INCREMENTAL INTEREST EXPENSE:
Incremental interest expense resulting from the transaction: 3,606
35% statutory rate: 35.0%
--------
Income tax benefit from incremental interest expense incurred since Jan. 1, 1995 1,262
======
(i) TO RECORD CLEAR CHANNEL'S INVESTMENT IN HEFTEL AS OF JUNE 30, 1996:
The entire purchase price for the additional shares of Heftel Class A Common Stock acquired
was funded by the Company's line of credit facility.
</TABLE>
<PAGE> 9
Item 7.(c)
See index to exhibits following "Signatures."
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 hereunto duly authorized.
Clear Channel Communications, Inc.
Date October 18, 1996 By /s/ L. Lowry Mays
------------------------------------
L. Lowry Mays, President
Date October 18, 1996 By /s/ Herbert W. Hill, Jr.
------------------------------------
Herbert W. Hill, Jr.
Vice President/Controller
and Principal Financial Officer
<PAGE> 10
CCR Houston-Nevada, Inc. Nevada
Clear Channel Real Estate Nevada
