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 June 30, 1997 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 78216-6940
(210) 822-2828
(Address and telephone number
of principal executive offices)
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 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 August 11, 1997
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Common Stock, $.10 par value 90,047,777
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
Page No.
- - - - - - -
Part I -- Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three and six months
ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II -- Other Information
Item 2. Changes in Securities 14
Item 4. Submission of Matters to Vote of Security Holders 14
Item 6. Exhibits and reports on Form 8-K 15
(a) Exhibits
(b) Reports on Form 8-K
Signatures 15
Index to Exhibits 16
<PAGE>
PART I
Item 1. UNAUDITED FINANCIAL STATEMENTS
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
(Unaudited) (*)
---------------- ---------------
Current Assets
Cash and cash equivalents $29,119,531 $16,700,752
Income tax receivable --- 3,092,693
Accounts receivable, less allowance of
$10,459,690 at June 30, 1997 and
$6,066,794 at December 31, 1996 126,855,310 79,182,580
Film rights - current 10,153,942 14,187,640
---------- ----------
Total Current Assets 166,128,783 113,163,665
Property, Plant and Equipment
Land 22,188,947 12,235,273
Buildings 34,400,514 28,992,708
Transmitter and studio equipment 164,056,119 153,254,927
Furniture and other equipment 37,634,331 21,163,668
Leasehold improvements 5,405,260 5,322,365
Structures and site leases 437,576,036 ---
Construction in progress 38,377,153 4,284,361
---------- ----------
739,638,360 225,253,302
Less accumulated depreciation (100,459,924) (77,415,597)
---------- ----------
639,178,436 147,837,705
Intangible Assets
Network affiliation agreements 33,726,904 33,726,904
Licenses and goodwill 1,503,398,320 764,233,345
Covenants not-to-compete 22,991,932 22,991,932
Other intangible assets 12,395,663 8,711,977
---------- ----------
1,572,512,819 829,664,158
Less accumulated amortization (103,899,479) (78,645,708)
-------------- -------------
1,468,613,340 751,018,450
Other Assets
Deferred tax asset 10,520,498 ---
Notes receivable - long-term --- 52,750,000
Film rights - net 10,633,957 13,436,589
Equity investments in, and advances
to, nonconsolidated affiliates 272,327,131 230,659,734
Other assets 26,411,144 10,807,633
Other investments 29,316,138 5,037,310
--------------- ---------------
Total Assets $2,623,129,427 $1,324,711,086
========== ==========
* From audited financial statements
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31,
1997 1996
(Unaudited) (*)
---------------- ---------------
Current Liabilities
Accounts payable $14,786,944 $9,864,401
Accrued interest 4,014,965 6,272,193
Accrued expenses 39,209,918 8,235,966
Income and other taxes 2,176,082 ---
Deferred income - current 1,420,000 1,300,000
Current portion of long-term debt 3,168,543 1,479,327
Current portion of film rights liability 12,725,828 16,309,787
-------------- -------------
Total Current Liabilities 77,502,280 43,461,674
Long-term debt 1,275,948,600 725,131,618
Film rights liability 10,739,237 13,797,015
Deferred income taxes 14,039,624 11,283,303
Deferred income - long-term 10,400,000 11,250,000
Other long-term liabilities 37,902,451 ---
Minority interests 21,133,074 6,356,885
Shareholders' Equity
Common Stock 9,007,086 7,699,207
Additional paid-in capital 1,037,071,282 398,621,825
Retained earnings 128,747,343 106,054,794
Other 1,225,763 1,225,763
Cost of shares held in treasury (587,313) (170,998)
--------------- --------------
Total shareholders' equity 1,175,464,161 513,430,591
--------------- --------------
Total Liabilities and
Shareholders' Equity $2,623,129,427 $1,324,711,086
========== ==========
* From audited financial statements
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C> <C> <C> <C>
Gross revenue $323,030,922 $162,546,416 $212,200,062 $92,406,491
Less agency commissions (37,963,001) (18,969,700) (25,421,337) (11,038,220)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net revenue 285,067,921 143,576,716 186,778,725 81,368,271
Operating expenses 166,732,384 81,992,351 103,677,323 43,762,099
Depreciation and amortization 48,670,295 19,342,559 32,724,316 10,587,534
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Operating income before corporate expenses 69,665,242 42,241,806 50,377,086 27,018,638
Corporate general and administrative expenses 7,870,872 3,477,582 5,017,026 1,804,011
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Operating income 61,794,370 38,764,224 45,360,060 25,214,627
Interest expense (32,314,583) (11,745,309) (21,268,093) (6,321,472)
Other income (expense) 5,198,956 186,457 (1,059,836) (19,358)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Income before income taxes 34,678,743 27,205,372 23,032,131 18,873,797
Income taxes (17,306,649) (10,166,070) (12,344,805) (7,356,060)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Income before equity in net income of,
and other income from, nonconsolidated
affiliates 17,372,094 17,039,302 10,687,326 11,517,737
Equity in net income of, and other income
from, nonconsolidated affiliates 5,320,455 1,747,174 4,406,370 1,030,410
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net income $22,692,549 $18,786,476 $15,093,696 $12,548,147
=========== =========== =========== ===========
Net income per common share $ .27 $ .26 $ .17 $ .17
============ ============ ============ ===========
Weighted average common and common
share equivalents outstanding 84,509,529 71,180,458 89,459,459 71,839,402
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30, June 30,
- - - - - - - - - - - - - - -
Net Cash Flows Provided By
Operating Activities $66,082,701 $43,104,940
Cash flows from investing activities:
Decrease in notes receivable 52,750,000 ---
Purchase of broadcasting assets (91,765,585) (207,122,692)
Purchase of outdoor assets (766,039,250) ---
Proceeds from disposal of broadcasting
assets 267,461 14,108
(Increase) decrease in equity investments
in and advances to nonconsolidated
affiliates-net (37,340,668) 876,417
(Increase) in other investments (24,278,828) (477,479)
Purchases of property, plant and equipment (12,688,769) (8,688,114)
(Increase) in other intangible assets (3,683,686) (389,105)
(Increase) decrease in other-net 2,364,260 (7,105,746)
-------------- ---------------
Net cash flows used in
investing activities (880,415,065) (222,892,611)
Cash flows from financing activities:
Proceeds from issuance of common stock 288,443,456 283,342,500
Payments on short-term debt (685,778) (179,534)
Payments on long-term debt (346,650,000) (301,100,000)
Exercise of stock options 2,209,800 105,336
Proceeds from long-term debt 883,433,665 204,525,000
------------- --------------
Net cash flows provided by
financing activities 826,751,143 186,693,302
--------------- --------------
Net increase in cash 12,418,779 6,905,631
Cash at beginning of period 16,700,752 5,391,104
--------------- ---------------
Cash at end of period $29,119,531 $12,296,735
========== ==========
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE RECONCILING NET INCOME TO NET CASH
FLOWS PROVIDED BY OPERATING ACTIVITIES
(UNAUDITED)
Six Months Ended
June 30, June 30,
1997 1996
- - - - - - - - - - - - - -
Net income $22,692,549 $18,786,476
Reconciling items:
Depreciation 23,416,526 9,316,408
Amortization of 25,253,770 10,026,151
Amortization of film rights 8,132,292 6,627,659
Payments on film rights (8,445,921) (6,860,044)
Recognition of deferred income (730,000) ---
Deferred taxes 2,756,321 ---
(Gain)loss on disposal of assets 467,148 (19,557)
Equity in net income of nonconsolidated
affiliates (4,326,729) ---
Changes in operating assets and liabilities:
(Increase) accounts receivable (6,577,562) (170,262)
(Decrease) increase accounts payable 1,145,822 (348,202)
(Decrease) increase accrued interest (2,336,560) 980,587
Increase (decrease) accrued expenses (311,666) 580,861
Increase accrued income and other taxes 5,268,775 4,184,863
(Decrease) other liabilities (51,459) ---
(Decrease) minority interest (270,605) ---
---------- ----------
Net cash flows provided by
operating activities $66,082,701 $43,104,940
========== ==========
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. (the "Company") 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 Company's 1996 Annual
Report.
The consolidated financial statements include the accounts of the
Company and its subsidiaries, the majority of which are wholly-owned.
Investments in companies in which the Company 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 1996
consolidated financial statements to conform with the 1997 presentation.
Note 2: RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted (but may
not be adopted early) for fiscal years ending after December 15, 1997, which is
applicable to the Company's fiscal year ended December 31, 1997. The impact is
expected to result in an immaterial change in earnings per share.
Also in February 1997, the Financial Accounting Standards Board issued
Statement No. 129, Disclosure of Information about Capital Structure, which is
effective for fiscal years ending after December 15, 1997. Statement 129
requires an explanation, in summary form within the financial statements, of the
pertinent rights and privileges and characteristics of the Company's various
outstanding securities.
Note 3: RECENT DEVELOPMENTS
The Company's affiliate, Heftel Broadcasting Corporation ("Heftel"), of
which the Company owned 63.2% of the outstanding common stock, merged with
Tichenor Media System, Inc. ("Tichenor") in February 1997 (the "Tichenor
Merger") by issuing to Tichenor shareholders approximately 5.6 million shares of
Heftel class A common stock. In the Tichenor Merger, all of the shares of Heftel
class A common stock owned by the Company were converted into shares of
convertible nonvoting Class B common stock of Heftel in order to comply with the
cross-interest policy of the Federal Communications Commission. Heftel also
completed in February an equity offering of 4.8 million shares of its class A
common stock (the "Heftel Offering"). In conjunction with the Heftel Offering,
the Company sold 350,000 shares of Heftel class A common stock that it owned,
resulting in a gain on sale of investment securities of approximately $6.2
million. The sale of these 350,000 shares, together with the effects of the
Tichenor merger and the Heftel Offering, decreased the Company's total ownership
in Heftel to approximately 32.3% of Heftel's outstanding common stock.
On April 10, 1997, the Company acquired approximately ninety-three percent (93%)
of the stock of Eller Media Corporation ("Eller"). Eller's operations include
approximately 50,000 outdoor advertising display faces in 15 major metropolitan
markets. As consideration for the stock acquired, the Company paid cash of
approximately $329 million and issued Common Stock of the Company in the
aggregate value of approximately $298 million. In addition, the Company issued
options on the Company's, Common Stock with an aggregate value of approximately
$51 million in connection with the assumption of Ellers outstanding stock
options. In addition, the Company assumed approximately $417 million of Eller
long-term debt, which was refinanced at the closing date using the Company's
credit facility. This acquisition is being accounted for as a purchase with
resulting goodwill of approximately $655 million which is being amortized over
25 years on a straight line basis. This purchase price allocation is preliminary
and the results of operations are included in the Companys financial statements
since April 1, 1997.
The results of operations for the six month periods ending June 30, 1997 and
1996 include the operations of Eller from the respective date of acquisition.
Assuming the acquisition had occurred at January 1, 1996, unaudited pro forma
consolidated results of operations would have been as follows:
Pro Forma (Unaudited)
Six Months Ended June 30
in thousands (except per share amounts)
1997 1996
---- ----
Net broadcasting revenue $341,710 $306,123
Net income $ 20,016 $ 28,340
Net income per share $ .23 $ .36
The pro forma information above 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 1996, nor is it indicative of future
results of operations.
During June the Company entered into a letter of intent to purchase the radio
broadcasting and outdoor advertising assets of Paxson Communications Corporation
(Paxson), including assets currently under contract to Paxson. The Company will
acquire the assets of Paxsons 46 radio stations, 6 radio networks, and
approximately 350 outdoor display faces. The purchase price for these assets is
approximately $590 million (plus up to $55 million in contingency payments based
on performance), not including pending acquisitions. The purchase price for the
pending acquisitions of 2 FM and 2 AM stations in West Palm Beach is
approximately $25 million. The transaction is subject to the completion of
Definitive Asset Purchase Agreements, the approval of the Federal Communications
Commission and approval under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
To facilitate the Eller acquisition and possible future acquisitions including
Paxson, the Company and its lenders amended the Companys credit facility on
April 10, 1997 to increase the total amount available under the line of credit
from $1.04 billion to $1.75 billion. On August 11, 1997, the Company filed a
shelf registration statement on Form S-3 covering a combined $1.5 billion of
debt securities, preferred shares, warrants, third party warrants, stock
purchase contracts, stock purchase units and common stock. The shelf also covers
preferred securities which may be issued from time to time by the Companys
three Delaware statutory business trusts and guaranteed by Clear Channel.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Comparison of Three and Six Months Ended June 30, 1997 to Three and Six Months
Ended June 30, 1996.
Consolidated net revenue for the three months ended June 30, 1997 increased 130%
to $186,779,000 from $81,368,000 for the same quarter of 1996. Operating
expenses increased 137% to $103,677,000 from $43,762,000. Depreciation and
amortization increased 209% to $32,724,000 in the second quarter of 1997 from
$10,588,000 in the second quarter of 1996. Operating income increased 80% to
$45,360,000 compared to $25,215,000 for the second quarter of 1996. Interest
expense increased 236% to $21,268,000 from $6,321,000 in the second quarter of
1996. Equity in net income from nonconsolidated affiliates increased to
$4,406,000 in the second quarter of 1997 from $1,030,000 in the second quarter
of 1996. Net income increased 20% to $15,094,000 or $.17 per share from
$12,548,000 or $.17 per share.
Consolidated net revenue for the six months ended June 30, 1997 increased 99% to
$285,068,000 from $143,577,000 for the same period in 1996. Operating expenses
increased 103% to $166,732,000 from $81,992,000. Depreciation and amortization
increased 152% to $48,670,000 from $19,343,000. Operating income increased 59%
to $61,794,000 compared to $38,764,000 for the first six months of 1996.
Interest expense increased 175% to $32,315,000 from $11,745,000. Other income
increased to $5,199,000 from $186,000. Equity in net income from nonconsolidated
affiliates increased to $5,320,000 in the first six months of 1997 from
$1,747,000 for the comparable period in 1996. Net income increased 21% to
$22,693,000 or $.27 per share from $18,786,000 or $.26 per share in 1996.
The majority of the growth in net revenue and operating expenses for both the
quarter and the six months ended June 30, 1997 was due to the acquisition of 93%
of the outstanding Common Stock of Eller on April 10, 1997 and the acquisition
of the following radio and television stations during 1996 and the first six
months of 1997:
Acquisition Date Network or Station Location
1996 Acquisitions
February 14, 1996 WOOD-AM/FM, WBCT-FM Grand Rapids, MI
May 15, 1996 US Radio, Inc.(USR)
KHEY-AM/FM, KPRR-FM El Paso, TX
KJOJ-FM, KJOJ-AM Houston, TX
KMJX-FM, KDDK-FM Little Rock, AR
WHRK-FM, WDIA-AM Memphis, TN
WKKV-FM Milwaukee, WI
WJCD-FM, WOWI-FM Norfolk, VA
WQOK-FM, WZZU-FM Raleigh, NC
WRAW-AM, WRFY-FM Reading, PA
May 31, 1996 WENZ-FM Cleveland, OH
June 1, 1996 WTVR-AM/FM Richmond, VA
July 1, 1996 WPRI-TV Providence, RI
WNAC-TV Providence, RI
August 1, 1996 KEYI-FM, KFON-AM Austin, TX
August 1, 1996 Radio Equity
Partners, LP (REP)
WARQ-FM, WWDM-FM Columbia, SC
WXRM-FM, WCKT-FM Ft. Myers/Naples, FL
WSJS-AM, WTQR-FM,
WXRA-FM Greensboro, NC
WNOE-FM, KLJZ-FM
(now KKND-FM) New Orleans, LA
WHYN-AM/FM Springfield, MA
KXXY-AM (now KEBC-AM),
KXXY-FM, KTST-FM Oklahoma City, OK
October 1, 1996 WHKW-AM (now WKJK-AM),
WWKY-AM, WTFX-FM Louisville, KY
WSVY-FM Norfolk, VA
October 11, 1996 WCUZ-AM/FM Grand Rapids, MI
November 27, 1996 WMYK-FM Norfolk, VA
December 3, 1996 Radio Equity
Partners, LP (REP)
WRXQ-FM, WEGR-FM,
WREC-AM Memphis, TN
WWBB-FM, WWRX-FM Providence, RI
December 16, 1996 KJMS-FM, KWAM-AM Memphis, TN
1997 Acquisitions
January 31, 1997 WZZU-FM Fuquay-Varina (Raleigh), NC
January 31, 1997 WQMF-FM Jeffersonville, IN (Louisville, KY)
February 5, 1997 KHOM-FM Houma (New Orleans), LA
February 5, 1997 KJOJ-AM Conroe (Houston), TX
February 28, 1997 WVTI-FM Holland (Grand Rapids), MI
March 14, 1997 WQBK-AM/FM,
WQBJ-FM, WXCR-FM (1) Albany, NY
March 31, 1997 WMIL-FM, WOKY-AM Milwaukee, WI
April 10, 1997 WKII-AM, WFSN-FM and WOLZ-FM FT. Meyers, FL
(1) These stations were purchased by the Company's 80%-owned subsidiary, Radio
Enterprises, Inc.
The majority of the increase in depreciation and amortization was primarily due
to the acquisition of the tangible and intangible assets associated with the
purchase of Eller and the above-mentioned radio and television acquisitions.
Interest expense increased primarily due to an increase in the average amount of
debt outstanding -- which resulted from the above-mentioned acquisitions, the
Company's funding in 1996 of the acquisition by Australian Radio Network ("ARN")
of additional radio stations and the Company's purchase in August 1996 of an
additional 41.8% interest in Heftel, which brought the Company's temporary
controlling interest in Heftel to 63.2%. Other income for the six months
increased because of the sale of 350,000 shares of Class A common stock of
Heftel by the Company in the first quarter of 1997, which resulted in a $6.2
million gain. The majority of the increase in net income also was primarily due
to the factors stated above, but was partially offset by an increase in
corporate-related expenses.
Liquidity and Capital Resources
The major sources of capital for the Company have historically been cash flow
from operations and proceeds of long-term borrowing under the Company's bank
credit facilities, together with the funds supplied by the Company's initial
stock offering in April 1984 and subsequent stock offerings in July 1991,
October 1993, June 1996 and May 1997. As of June 30, 1997, the Company had
$1,253,150,000 outstanding under its $1,750,000,000 revolving long-term line of
credit facility, a total of $9,575,000 in a guaranty to a third party, and
$17,494,000 in letters of credit, leaving $469,781,000 available for future
borrowings under the credit facility. In addition, the Company had $29,120,000
in unrestricted cash and cash equivalents on hand at June 30, 1997.
Funding for the radio stations, the cash portion of the purchase price of Eller,
the additional billboard faces and the refinancing of the $417,000,000 long-term
debt in the acquisition of Eller was provided by cash flow from operations and
the Company's credit facility as amended on April 10, 1997 to increase the total
amount available from $1,040,000,000 to $1,750,000,000. The credit facility will
convert to a reducing revolving line of credit on the last business day of June
2000, with quarterly reduction of the outstanding commitment to begin the last
business day of September 2000 and continue during the subsequent five year
period, with the entire balance to be repaid by the last business day of
September 2005. The Company believes that cash flow from operations as well as
the proceeds from securities offerings made by the Company from time to time
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.
On May 14, 1997 the Company completed its offering of 5,093,790 shares of Common
Stock. The net proceeds to the Company was $288,443,000, which was used to pay
down the outstanding balance under the credit facility.
Future acquisitions of radio and televisions stations and other media-related
properties, including the acquisitions of certain radio stations from Paxson,
effected in connection with the implementation of the Company's acquisition
strategy are expected to be financed from increased borrowings under the credit
facility, debt or equity financings under the Companys $1.5 billion shelf
registration statement filed August 11, 1997, other financing techniques, and
cash from operations.
During the first six months of the year, the Company made principal payments on
the credit facility totaling $346,926,000 and purchased capital equipment
totaling $12,689,000. In addition, the Company purchased the following radio
broadcasting and outdoor assets:
RADIO
WZZU-FM Fuquay-Varina (Raleigh), NC January 31, 1997 $ 6,582,000
WQMF-FM Jeffersonville, IN
(Louisville, KY) January 31, 1997 $13,500,000
KHOM-FM Houma (New Orleans), LA February 5, 1997 $ 6,854,000
KJOJ-AM Conroe (Houston), TX February 5, 1997 $ 984,000
WVTI-FM Holland (Grand Rapids), MI February 28, 1997 $ 4,100,000
WQBK-AM/FM, WQBJ-FM,
WXCR-FM (1) Albany, NY March 14, 1997 $ 7,500,000
WMIL-FM
WOKY-AM Milwaukee, WI March 31, 1997 $41,246,000
WKII-AM, WSFN-FM
WOLZ-FM FT. Meyers, FL April 10, 1997 $11,000,000
(1) The broadcasting assets of these stations were purchased by the Company's
80%-owned subsidiary, Radio Enterprises, Inc.
OUTDOOR
During the second quarter, the Company acquired approximately 93% of the
outstanding stock of Eller for total consideration of approximately
$678,000,000, consisting of approximately $329,000,000 in cash and 6,643,637
shares of the Company's Common Stock (approximately $298,000,000 in Common Stock
based on a price per share of $44.8625) and issued options on the Company's
Common Stock with an aggregate value of approximately $51,000,000. The Company
also assumed $417,000,000 of long-term debt from Eller and immediately
refinanced that long-term debt using the credit facility. Also, during the
second quarter the Company purchased additional billboard faces in several
markets for approximately $20,000,000.
Risks Regarding Forward Looking Statements
Except for the historical information, this report contains various
"forward-looking statements" which represent the Company's expectations or
beliefs concerning future events, including the future levels of cash flow from
operations. The Company cautions that these forward-looking statements involve a
number of risks and uncertainties and are subject to many variables which could
have an adverse effect upon the Company's financial performance. These variables
include economic conditions, the ability of the Company to integrate the
operations of Eller and Paxson, shifts in population and other demographics,
level of competition for advertising dollars, fluctuations in operating costs,
technological changes and innovations, changes in labor conditions, changes in
governmental regulations and policies, and certain other factors set forth in
the Company's SEC filings. Actual results in the future could differ materially
from those described in the forward-looking statements.
<PAGE>
Part II -- OTHER INFORMATION
Item 2. Changes in Securities
On April 10, 1997, the Company issued 6,643,636 unregistered shares of its
Common Stock (approximately $298 million in Common Stock based on a price of
approximately $44.8625 per share) to certain stockholders and option holders of
Eller as part of a $627 million transaction to acquire approximately 93% of the
then outstanding stock of Eller (the "Eller Media Acquisition"). On May 14,
1997, 5,906,210 shares of the Common Stock issued in connection with the Eller
Media Acquisition were sold in a registered public offering pursuant to a demand
registration.
The Company relied upon Section 4(2) of the Securities Act of 1933, as amended
(the "Act"), for an exemption to the Act's registration requirements for
transactions by an issuer not involving any public offering. The issuance of the
Company's Common Stock in connection with the Eller Media Acquisition
constituted a transaction by the issuer not involving a public offering.
Item 4. Submission of Matters to a Vote of Security Holders
An annual meeting of shareholders of the Company was held on April 29, 1997. L.
Lowry Mays, B. J. McCombs, Alan D. Feld, Theodore H. Strauss, and John H.
Williams were elected as directors of the Company, each to hold office until the
next annual meeting of shareholders or until his successor has been elected and
qualified, subject to earlier resignation and removal. The shareholders also
approved the selection of Ernst & Young LLP as independent auditors for the year
ending December 31, 1997. Additionally, the shareholders approved an amendment
to the Company's Articles of Incorporation increasing the authorized number of
shares of Common Stock from 100,000,000 to 150,000,000.
The results of voting at the annual meeting of the shareholders were as follows:
Proposal No. 1
(Election of Directors)
Nominee For Withheld/Against Exceptions/Abstain
L. Lowry Mays 69,631,868 631,996 460,472
B. J. McCombs 69,631,868 631,996 460,472
Alan D. Feld 69,631,868 631,996 460,472
Theodore H. Strauss 69,631,868 631,996 460,472
John H. Williams 69,631,868 631,996 460,472
Proposal No. 2
(Selection of Independent Auditors)
For Withheld/Against Exceptions/Abstain
70,711,856 2,478 10,002
Proposal No. 3
(Amendment to the Company's Articles of Incorporation)
For Withheld/Against Exceptions/Abstain
70,237,678 421,833 64,825
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on Page 16
(b) Reports on Form 8-K
A report on Form 8-K dated April 17, 1997 was filed with respect to the
Registrant's acquisition of approximately 93% of the common stock of Eller Media
Corporation (Eller). Audited and unaudited financial statements of Eller were
included in this filing and consisted of audited balance sheets and related
statements of operations and cash flows for the years ended December 31, 1996,
1995, 1994 and unaudited balance sheets and statements of operations for the
three months ended March 31, 1997.
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.
CLEAR CHANNEL COMMUNICATIONS, INC.
Date August 13, 1997 /s/ L. Lowry Mays
L. Lowry Mays - Chairman and
Chief Executive Officer
Date August 13, 1997 /s/ Herbert W. Hill, Jr
Herbert. W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer
<PAGE>
Index to Exhibits
(u)3.1 -- Current Articles of Incorporation of Registrant
(u)3.2 -- Second 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.
(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)10.5 -- Radio Asset Purchase Agreement dated January 31, 1993, by and
between KHFI Venture, LTD. and Clear Channel Radio, Inc.
(l)10.6 -- Radio Asset Purchase Agreement dated December 28, 1992, by and
between Westinghouse Broadcasting Company, Inc. and Clear
Channel Radio, Inc.
(c)10.7 -- Radio Asset Purchase Agreement dated December 23, 1992, by and
between Inter-Urban Broadcasting of New Orleans Partnership and
Snowden Broadcasting, Inc.
(d)10.8 -- Television Asset Purchase Agreement dated August 19, 1993, by
and between Television Marketing Group of Memphis, Inc. and
Clear Channel Television, Inc.
(e)10.9 -- Radio Asset Purchase Agreement April 1, 1993, by and Capital
Broadcasting of Virginia, Inc. and Clear Channel Radio, Inc.
(f)10.10 -- Television Asset Purchase Agreement dated August 31, 1993, by
and between Nationwide Communications, Inc. and Clear Channel
Television, Inc.
(g)10.11 -- Radio Asset Merger Agreement dated March 22, 1994, by and
between Metroplex Communications, Inc. and Clear Channel Radio,
Inc.
(h)10.12 -- 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)10.13 -- Television Asset Purchase Agreement dated 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)10.14 -- Radio Asset Purchase Agreement dated November 17, 1994, by and
between Noble Broadcast of Houston, Inc. and Clear Channel
Radio, Inc.
(k)10.15 -- 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.
(m)10.16 -- Clear Channel Communications, Inc. 1994 Incentive Stock Option
Plan.
(m)10.17 -- Clear Channel Communications, Inc. 1994 Nonqualified Stock
Option Plan.
(m)10.18 -- Clear Channel Communications, Inc. Directors' Nonqualified Stock
Option Plan.
(m)10.19 -- Option Agreement for Officer
(s) 10.20 -- Employment Agreement between Clear Channel Communications, Inc.
and L. Lowry Mays
(n) 10.21 -- Stock Purchase Agreement dated as of March 4, 1996 by and among
US Radio Stations, L.P., Blackstone USR Capital Partners L.P.,
Blackstone USR Offshore Capital Partners L.P., Blackstone Family
Investment Partnership II L.P., BCP Radio L.P., BCP Offshore
Radio L.P., US Radio Inc., Clear Channel Communications of
Memphis, Inc. and Clear Channel Communications, Inc.
(o) 10-22 -- Asset Purchase Agreement, dated as of May 9, 1996, by
and among REP New England G.P., REP Southeast G.P., REP Ft.
Myers G.P., REP Rhode Island G.P., REP Florida G.P., REP WHYN
G.P., REP WWBB G.P.,S.E. Licensee G.P., REP WCKT G.P. and RI
Licensee G.P., Radio Station Management, Inc., Clear Channel
Radio, Inc., and Clear Channel Radio Licenses, Inc.
(p)10.23 -- Tender Offer between Clear Channel Radio, Inc. and Heftel
Broadcasting Corporation dated June 1, 1996
(p)10.24 -- Stock Purchase Agreement between Clear Channel Radio, Inc.
and Certain Shareholders of Heftel Broadcasting Corporation
dated June 1, 1996.
(q)10.25 -- Agreement and Plan of Merger Between Clear Channel
Communications, Inc. ("PARENT") and Tichenor Media System,
Inc. ("TICHENOR") dated July 9, 1996
(r)10.26 -- Stock Purchase Agreement By and Among Clear Channel
Communications, Inc., Eller Media Corporation and the
Stockholders of Eller Media Corporation Dated February 25, 1997.
(s)10.27 -- Amendment to Stock Purchase Agreement By and Among Clear
Channel Communications, Inc., Eller Media Corporation and the
Stockholders of Eller Media Corporation Dated April 10, 1997.
(s)10.28 -- Registration Rights Agreement By and Among Clear Channel
Communications, Inc. and the Stockholders of Eller Media
Corporation Dated April 10, 1997.
(s)10.29 -- Escrow Agreement By and Among Clear Channel Communications,
Inc., Paul Meyer ("Stockholder Representative"), EM Holdings
LLC, and Chase Trust Company of California, Dated April 10,
1997.
(s)10.30 -- Stockholders Agreement By and Among Eller Media Corporation,
Clear Channel Communications, Inc. and EM Holdings LLC, Dated
April 9, 1997.
(t)10.31 -- Third Amended and Restated Credit Agreement by and among
Clear Channel Communications, Inc., NationsBank of Texas, N.A.,
as administrative lender, the First National Bank of Boston, as
documentation agent, the Bank of Montreal and Toronto Dominion
(Texas), Inc., as co-syndication agents, and certain other
lenders dated April 10, 1997.
27 -- Financial Data Schedule
<PAGE>
(a) -- Incorporated by reference to the exhibits of the Registrant'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 8-K dated
May 4, 1996.
(o) -- Incorporated by reference to the Registrant's Form 8-K dated
June 5, 1996.
(p) -- Incorporated by reference to the Registrant's Form S-3 dated
June 14, 1996.
(q) -- Incorporated by reference to Heftel Broadcasting Corporation's
Amendment 2 to Form SC 14D1/A dated July 9, 1996.
(r) -- Incorporated by reference to the Registrant's Form 10-K dated
March 31, 1997.
(s) -- Incorporated by reference to the Registrant's Form 8-K dated
April 17, 1997.
(t) -- Incorporated by reference to the Registrant's Amendment No. 1 to
Form S-3 Reg. No. 333-25497 dated May 9, 1997.
(u) -- Incorporated by reference to the Registrant's Registration Statement
on Form S-3 Reg. No. 333-33371 dated August 11, 1997.
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