<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported):
December 9, 1998
(December 9, 1998)
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 1-9645 74-1787536
(State or other jurisdiction (Commission File Number) (IRS Employer
incorporation) Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (210) 822-2828
<PAGE> 2
ITEM 5. OTHER EVENTS.
On October 8, 1998, Clear Channel Communications, Inc., a Texas
corporation (the "Company"), Jacor Communications, Inc., a Delaware corporation
("Jacor"), and CCU Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which Jacor will be merged (the "Merger")
with and into Sub, with Sub surviving the Merger and continuing its operations
as a wholly-owned subsidiary of the Company. The Merger will be a tax-free,
stock-for-stock transaction.
Upon the terms and subject to the conditions set forth in the Merger
Agreement, upon consummation of the Merger, each share of Jacor common stock
will be converted into the right to receive the Company's common stock, based
upon the average closing price of the Company's common stock during the 25
consecutive trading days ending on the second trading day prior to the closing
date, as follows:
<TABLE>
<CAPTION>
Average Closing Price Conversion
Of the Company's Stock Number
---------------------- ------------------------------
<S> <C>
Less than or equal to $42.86 1.40
Above $42.86 but less than or equal to $44.44 1.40 to 1.35 ($60.00 in value)
Above $44.44 but less than $50.00 1.35
</TABLE>
If the average closing price is $50.00 or more, the conversion number
will be calculated as the quotient obtained by dividing (A) $67.50 plus the
product of $0.675 and the amount by which the average closing price exceeds
$50.00, by (B) the average closing price. Based upon the closing price of the
Clear Channel common stock of $37.00 on Wednesday, October 7, 1998, the merger
is valued at approximately $4.4 billion
Consummation of the Merger is subject to numerous conditions, including
the receipt of all regulatory approvals and stockholder approvals by both
companies' shareholders.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Jacor Communications, Inc.
We have audited the accompanying consolidated balance sheets of Jacor
Communications, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Jacor
Communications, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
February 11, 1998
<PAGE> 4
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(In thousands, except share amounts)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 28,724 $ 78,137
Accounts receivable, less allowance for
doubtful accounts of $6,195 in 1997
and $3,950 in 1996 135,073 79,502
Prepaid expenses and other 33,790 8,963
Total current assets 197,587 166,602
---------- ----------
Property and equipment, net 206,809 131,488
Intangible assets, net 2,128,718 1,290,172
Other assets 68,764 116,680
---------- ----------
Total assets $2,601,878 $1,704,942
========== ==========
LIABILITIES
Current liabilities:
Accounts payable $ 17,294 $ 12,600
Accrued expenses and other 68,971 30,774
Accrued payroll 15,246 7,562
Accrued income taxes 16,738 4,596
---------- ----------
Total current liabilities 118,249 55,532
Long-term debt 987,500 670,000
Liquid Yield Option Notes 125,300 118,682
Deferred tax liability 338,867 264,878
Other liabilities 115,611 108,914
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred Stock, authorized and unissued
4,000,000 shares -- --
Common Stock, no par value, $0.01 per share
stated value; authorized 100,000,000
shares, issued and outstanding shares:
45,689,677 in 1997 and 31,287,221 in 1996 457 313
Additional paid-in capital 863,086 432,721
Common stock warrants 31,500 26,500
Unrealized gain on investments -- 2,042
Retained earnings 21,308 25,360
---------- ----------
Total shareholders' equity 916,351 486,936
---------- ----------
Total liabilities and
shareholders' equity $2,601,878 $1,704,942
========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE> 5
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1997, 1996 and 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Broadcast revenue $ 595,229 $ 250,461 $ 133,103
Less agency commissions 64,655 26,700 14,212
--------- --------- ---------
Net revenue 530,574 223,761 118,891
Broadcast operating expenses 356,783 151,065 87,290
Depreciation and amortization 78,485 23,404 9,483
Corporate general and
administrative expenses 14,093 9,932 3,501
--------- --------- ---------
Operating income 81,213 39,360 18,617
Interest expense (82,315) (32,244) (1,444)
Gain on sale of assets 11,135 2,539 --
Other income, net 2,971 5,716 1,092
--------- --------- ---------
Income before
income taxes and
extraordinary loss 13,004 15,371 18,265
Income tax expense (9,600) (7,300) (7,300)
--------- --------- ---------
Income before
extraordinary loss 3,404 8,071 10,965
Extraordinary loss, net
of income tax benefit (7,456) (2,966) --
--------- --------- ---------
Net (loss) income $ (4,052) $ 5,105 $ 10,965
========= ========= =========
Basic net (loss) income
per common share:
Before extraordinary loss $ .08 $ .32 $ .58
Extraordinary loss (.18) (.12) --
--------- --------- ---------
Net (loss) income
per common share $ (.10) $ .20 $ .58
========= ========= =========
Diluted net (loss) income
per common share:
Before extraordinary loss $ .08 $ .30 $ .53
Extraordinary loss (.18) (.11) --
--------- --------- ---------
Net (loss) income
per common share $ (.10) $ .19 $ .53
========= ========= =========
Number of common shares used
in Basic calculation 40,460 25,433 18,908
========= ========= =========
Number of common shares used
in Diluted calculation 42,163 26,442 20,532
========= ========= =========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE> 6
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
Common Stock
---------------- Additional Common Unrealized
Shares Stated Paid-In Stock Gain on Retained
Value Capital Warrants Investments Earnings Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31, 1994 19,590 $ 196 $139,168 $ 390 -- $ 9,290 $ 149,044
Purchase and
retirement of stock (1,515) (15) (21,679) -- -- -- (21,694)
Employee stock
purchases 44 1 474 -- -- -- 475
Exercise of
stock options 28 -- 195 -- -- -- 195
Other 10 -- 90 (2) -- -- 88
Net income -- -- -- -- -- 10,965 10,965
- -------------------------------------------------------------------------------------------------------------
Balances,
December 31, 1995 18,157 182 118,248 388 -- 20,255 139,073
Common stock
offering 11,250 113 301,636 -- -- -- 301,749
Employee stock
purchases 48 -- 672 -- -- -- 672
Exercise of
stock options 106 1 650 -- -- -- 651
Conversion of
warrants 1,726 17 14,704 (374) -- -- 14,347
Purchase of
warrants -- -- (5,080) (14) -- -- (5,094)
Issuance of
warrants -- -- -- 26,500 -- -- 26,500
Unrealized gain
on investments -- -- -- -- $ 2,042 -- 2,042
Stock related
compensation -- -- 1,891 -- -- -- 1,891
Net income -- -- -- -- -- 5,105 5,105
- -------------------------------------------------------------------------------------------------------------
Balances,
December 31, 1996 31,287 $ 313 $ 432,721 $ 26,500 $ 2,042 $ 25,360 $ 486,936
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 7
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
(Continued)
<TABLE>
<CAPTION>
Common Stock
---------------- Additional Common Unrealized
Shares Stated Paid-In Stock Gain on Retained
Value Capital Warrants Investments Earnings Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31, 1996 31,287 $ 313 $ 432,721 $ 26,500 $ 2,042 $ 25,360 $486,936
Common stock offering 8,321 83 246,079 -- -- -- 246,162
Stock issued for Acquisitions 5,774 58 179,370 -- -- -- 179,428
Employee stock purchases 87 1 2,137 -- -- -- 2,138
Exercise of stock options 220 2 3,030 -- -- -- 3,032
Issuance of warrants -- -- -- 5,000 -- -- 5,000
Sale of investments -- -- -- -- (2,042) -- (2,042)
Other -- -- (251) -- -- -- (251)
Net loss -- -- -- -- -- (4,052) (4,052)
- --------------------------------------------------------------------------------------------------------------------
Balances,
December 31, 1997 45,689 $ 457 $ 863,086 $ 31,500 -- $ 21,308 $916,351
====================================================================================================================
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 8
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (4,052) $ 5,105 $ 10,965
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation 17,836 7,661 3,251
Amortization of intangible assets 60,649 15,743 6,232
Extraordinary loss 7,456 2,966 --
Non-cash interest expense 6,618 4,327 --
Provision for bad debts
and other 1,155 1,870 1,374
Deferred income taxes (6,648) (233) (560)
Gain on sale of assets (11,135) (2,539) --
Changes in operating assets and
liabilities, net of effects
of acquisitions and disposals:
Accounts receivable (37,495) (18,626) (2,344)
Prepaid expense and other assets (9,637) (4,076) 1,029
Accounts payable 4,694 10,054 (424)
Accrued expenses and other
liabilities 26,599 2,655 1,102
-------- -------- --------
Net cash provided by
operating activities 56,040 24,907 20,625
-------- -------- --------
</TABLE>
(Continued)
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE> 9
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
(In thousands)
(Continued)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from investing activities:
Capital expenditures $ (19,980) $ (11,852) $ (4,969)
Cash paid for acquisitions (680,206) (826,302) (34,008)
Deposits on broadcast stations (51,410) (23,608) --
Purchase of intangible assets -- -- (15,536)
Proceeds from sale of assets 93,263 6,595 --
Loans originated and other -- (4,097) (9,827)
--------- --------- ---------
Net cash used by investing
activities (658,333) (859,264) (64,340)
--------- --------- ---------
Cash flows from financing activities:
Issuance of long-term debt 627,700 973,000 45,500
Issuance of common stock 246,161 316,726 758
Repayment of long-term debt (310,200) (471,600) --
Payment of financing costs (13,659) (27,435) --
Stock options exercised 2,272 -- --
Issuance of LYONs -- 115,172 --
Purchase of common stock -- -- (21,694)
Other 606 (806) (387)
--------- --------- ---------
Net cash provided by
financing activities 552,880 905,057 24,177
--------- --------- ---------
Net (decrease) increase in cash
and cash equivalents (49,413) 70,700 (19,538)
Cash and cash equivalents at
beginning of year 78,137 7,437 26,975
--------- --------- ---------
Cash and cash equivalents at
end of year $ 28,724 $ 78,137 $ 7,437
========= ========= =========
Supplemental disclosures of cash
flow information:
Cash paid for:
Interest $ 72,191 $ 5,300 $ 1,400
Income taxes $ 5,383 $ 4,992 $ 6,662
Supplemental schedule of non-cash
investing and financing activities:
Fair value of assets exchanged $ 120,000 $ 170,000 --
Liabilities assumed in acquisitions $ 120,325 $ 296,187 --
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE> 10
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
Description of Business
As of December 31, 1997 the Company owned and/or operated 159 radio
stations and one television station in 39 broadcast areas throughout
the United States. The Company also engages in businesses complementary
to its radio and television stations, including producing and
distributing syndicated programs, traffic reporting services for radio
and television, and research services.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Jacor Communications, Inc. and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Revenues
Revenues for commercial broadcasting advertisements are recognized when
the commercial is broadcast. Revenues from syndicated program fees are
recognized over the term of the contracts.
Barter Transactions
Barter transactions are reported at the estimated fair value of the
product or service received. Revenue from barter transactions
(advertising provided in exchange for goods and services) is recognized
as income when advertisements are broadcast, and merchandise or
services received are charged to expense when received or used. If
merchandise or services are received prior to the broadcast of the
advertising, a liability (deferred barter revenue) is recorded. If the
advertising is broadcast before the receipt of the goods or services, a
receivable is recorded.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with an original maturity of
three months or less, when purchased, to be cash equivalents. The
effect of barter transactions has been eliminated.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and accounts receivable. Concentrations of credit risk with
respect to accounts receivable are limited due to the large number of
customers comprising the Company's customer base and their dispersion
across many different geographic areas of the country.
<PAGE> 11
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, Continued
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation; depreciation is provided on the straight-line basis over
the estimated useful lives of the assets as follows:
Land improvements 20 Years
Buildings 25 Years
Equipment 3 to 20 Years
Furniture and fixtures 5 to 12 Years
Leasehold improvements Life of lease
Intangible Assets
Intangible assets are stated at cost less accumulated amortization;
amortization is provided principally on the straight-line basis over
the following lives:
Broadcasting licenses 40 Years
Goodwill 40 Years
Contracts and other
intellectual property 3 to 25 Years
The carrying value of intangible assets is reviewed by the Company when
events or circumstances suggest that the recoverability of an asset may
be impaired. If this review indicates that goodwill and licenses will
not be recoverable, as determined based on the undiscounted cash flows
of the entity over the remaining amortization period, the carrying
value of the goodwill and licenses will be reduced accordingly.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities, at
the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Fair Value of Financial Instruments
The fair value of the Company's publicly traded debt is based on quoted
market prices. It was not practicable to estimate the fair value of
borrowings under the Company's Credit Facility since there is no liquid
market for this debt.
<PAGE> 12
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, Continued
Earnings Per Share
Basic earnings per share equals net earnings divided by the weighted
average number of common shares outstanding. Diluted earnings per share
equals net earnings divided by the weighted average number of common
shares outstanding after giving effect to other dilutive securities.
Earnings per share calculations have been made in compliance with
Statement on Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). SFAS 128 became effective for the fourth quarter
of 1997 calculations. Prior year calculations have been restated to
reflect the adoption of SFAS 128.
Stock Based Compensation Plans
The Company accounts for its employee and director stock based
compensation plans in accordance with APB Opinion No. 25. The Company
has elected not to adopt the cost recognition provisions of Statement
of Financial Accounting Standards No. 123, ("SFAS 123") "Accounting for
Stock Based Compensation". The Company follows only the disclosure
provisions of SFAS 123 as permitted by the statement.
Reclassifications
Certain prior year amounts have been reclassed to conform to 1997
presentation. These changes had no impact on previously reported
results of operations or shareholders' equity.
<PAGE> 13
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS
COMPLETED 1997 RADIO STATION ACQUISITIONS AND DISPOSITIONS
During 1997, the Company completed acquisitions of 86 radio stations in
33 broadcast areas for a purchase price consisting of (i) $344.4
million in cash, of which $26.1 million was placed in escrow in 1996,
(ii) the issuance of approximately 4.3 million shares of common stock
valued at $126.8 million, and (iii) the issuance of warrants to acquire
500,000 shares of common stock at $40 per share valued at $5.0 million.
As a result of the acquisitions, approximately $49.8 million in
goodwill was recorded by the Company, representing acquisition costs in
excess of the fair value of identifiable tangible and intangible assets
acquired.
The Company also completed three separate like-kind exchanges of
broadcast properties, exchanging five stations and net cash of $11.0
million, of which $3.6 million was placed in escrow in 1996, for nine
stations. The Company sold one station in San Diego, California for
$6.0 million and one station in Lexington, Kentucky for $3.5 million.
Completed 1997 Broadcasting Services Acquisitions
In June 1997, the Company acquired by merger a company that produces
syndicated network radio programs and services which it distributes in
exchange for commercial broadcast time that it resold to national
advertisers. The total consideration paid by the Company including
payment for certain Premiere Radio Networks, Inc. ("Premiere") warrants
and stock options, was $189.8 million, consisting of $138.8 million in
cash and the issuance of 1,416,886 shares of common stock.
Approximately $104.0 million in goodwill was recorded by the Company in
conjunction with the acquisition.
In April 1997, the Company acquired substantially all of the assets
relating to the broadcast distribution and related print and electronic
media publishing businesses of Radio-Active Media (formerly EFM Media
Management), for $50.0 million in cash. Additionally, in October
1997,the Company acquired the rights to The Dr. Laura Schlessinger Show
from Synergy Broadcasting, Inc. and the assets of Multiverse Networks,
L.L.C., a network radio sales representation firm for $71.5 million in
cash.
The Company completed the acquisition of two additional broadcasting
service companies for a purchase price of approximately $29.0 million.
<PAGE> 14
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
COMPLETED 1996 RADIO STATION ACQUISITIONS AND EXCHANGES
In 1996, the Company effected the following transactions: acquired 36
radio stations and two television stations in 14 broadcast areas;
acquired the right to provide programming to and sell air time for two
radio stations in one broadcast area; exchanged via like-kind exchange
one television station for 6 radio stations in two existing broadcast
areas and one new broadcast area, and; financed the purchase of a 40%
interest in a newly formed, limited liability company. For the above
transactions, the Company paid approximately $974.0 million in cash.
All of the above acquisitions have been accounted for as purchases. The
excess cost over the fair value of net assets acquired is being
amortized over 40 years. The results of operations of the acquired
businesses are included in the Company's financial statements since the
respective dates of acquisition. Assuming each of the 1997 and 1996
acquisitions had taken place at the beginning of 1996 and 1997,
unaudited pro forma consolidated results of operations would have been
as follows:
<TABLE>
<CAPTION>
Pro Forma (Unaudited)
Year Ended December 31,
1997 1996
-------- --------
<S> <C> <C>
Net revenue $591,093 $542,089
Net income (loss) before
extraordinary loss 403 (12,614)
Diluted income (loss) per common share $ .01 $ (.28)
</TABLE>
These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had
been consummated on the indicated dates.
<PAGE> 15
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACQUISITIONS, Continued
RADIO STATION ACQUISITIONS COMPLETED SUBSEQUENT TO DECEMBER 31, 1997
The Company completed the purchase of eight radio stations in three
existing broadcast areas and one new broadcast area for $25.5 million
in cash, and completed a like-kind exchange of six radio stations in
one broadcast area for four radio stations in one broadcast area.
BROADCASTING SERVICES ACQUISITIONS COMPLETED SUBSEQUENT TO DECEMBER 31,
1997
The Company acquired two radio broadcasting service companies for $3.1
million in cash, plus additional contingent consideration of up to $1.6
million payable over three years.
Pending Acquisitions and Dispositions
In December 1997 the Company entered into a binding agreement to
purchase the assets of Nationwide Communications, Inc.'s 17 radio
stations (the "Nationwide Transaction") for $620.0 million, of which
$30.0 million was placed in escrow in 1997. The stations are located in
Dallas, Houston, Minneapolis, Phoenix, Baltimore, San Diego, Cleveland
and Columbus. The Company anticipates this transaction will close in
the second quarter of 1998. The Company has signed a letter of intent
to sell two radio stations in the San Diego broadcast area for $65.2
million upon the consummation of the Nationwide Transaction.
In January 1998, the Company entered into a binding agreement to
acquire all of the stock of Chancellor Broadcasting Co., syndicator of
Art Bell's national network radio programs, Talk Radio Network, Inc.,
syndicator of 17 radio programs, and radio station KOPE-FM in Medford,
Oregon, for approximately $9.0 million.
IN FEBRUARY 1998, THE COMPANY ENTERED INTO A BINDING AGREEMENT WITH
SMITH BROADCASTING, INC. TO PURCHASE A CONSTRUCTION PERMIT FOR A NEW FM
RADIO STATION IN VANCOUVER, WASHINGTON FOR APPROXIMATELY $20.7 MILLION
IN CASH, ALL OF WHICH WAS PAID IN ESCROW IN 1998.
THE COMPANY HAS ENTERED INTO AGREEMENTS TO PURCHASE FCC LICENSES AND
SUBSTANTIALLY ALL OF THE BROADCAST ASSETS OF 14 STATIONS IN NINE OF THE
COMPANY'S EXISTING BROADCAST AREAS AND IN TWO NEW BROADCAST AREAS FOR A
TOTAL PURCHASE PRICE OF APPROXIMATELY $68.1 MILLION IN CASH, OF WHICH
$12.0 MILLION HAS ALREADY BEEN PAID IN ESCROW THROUGH DECEMBER 31,
1997, AND TO EXCHANGE THE ASSETS OF ONE STATION FOR ANOTHER STATION IN
ONE BROADCAST AREA. THE COMPANY HAS ALSO ENTERED INTO AGREEMENTS TO
SELL THE FCC LICENSES AND SUBSTANTIALLY ALL OF THE BROADCAST ASSETS OF
TWO RADIO STATIONS IN ONE BROADCAST AREA FOR APPROXIMATELY $0.2 MILLION
IN CASH.
<PAGE> 16
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. SUBSEQUENT OFFERINGS
In February 1998, the Company completed offerings of debt and equity
securities, as described below.
The Company completed an offering of 5,073,000 shares of Common Stock
at $50.50 per share net of underwriting discounts of $2.02 per share
(the "Stock Offering"). Net proceeds to the Company from the Stock
Offering were approximately $245.9 million.
The Company issued $120.0 million in aggregate principal amount at
maturity of 8% Senior Subordinated Notes (the "8% Notes") due 2010. Net
proceeds to the Company were $117.1 million.
The Company issued 4 3/4% Liquid Yield Option Notes due 2018 in the
aggregate principal amount at maturity of $426.9 million. Each 1998
LYON had an issue price of $391.06 and a principal amount at maturity
of $1,000. The 1998 LYONs are convertible, at the option of the holder,
at any time on or prior to maturity, into Common Stock at a conversion
rate of 6.245 shares per each 1998 LYON, for an aggregate of
approximately 2.7 million shares of common stock. Net proceeds from the
issuance of the 1998 LYONs were $161.9 million.
A portion of the net proceeds from the above transactions was used to
pay off the Revolving Credit Facility. The remainder will be used to
fund the pending acquisitions, and are currently held in short-term,
highly liquid securities.
<PAGE> 17
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and 1996 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land and land improvements $ 21,128 $ 14,269
Buildings 26,077 20,249
Equipment 162,885 97,491
Furniture and fixtures 19,919 7,524
Leasehold improvements 8,006 5,872
--------- ---------
238,015 145,405
Less accumulated depreciation (31,206) (13,917)
--------- ---------
$ 206,809 $ 131,488
========= =========
</TABLE>
5. INTANGIBLE ASSETS
Intangible assets at December 31, 1997 and 1996 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Broadcasting licenses $ 1,465,020 $ 987,953
Goodwill 404,684 250,884
Contracts and other
intellectual assets 355,668 86,489
----------- -----------
2,225,372 1,325,326
Less accumulated amortization (96,654) (35,154)
----------- -----------
$ 2,128,718 $ 1,290,172
=========== ===========
</TABLE>
<PAGE> 18
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. OTHER ASSETS
The Company's other assets at December 31, 1997 and 1996 consist of the
following (in thousands):
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
News Corp Warrants $ -- $ 39,800
Acquisition escrows 51,410 30,804
Marketable securities -- 13,965
Other 17,354 32,111
-------- --------
$ 68,764 $116,680
======== ========
</TABLE>
In February 1997, the Company sold its investment in the News Corp
Warrants for $44.5 million in cash and recorded a pretax gain of $4.7
million.
In May 1997, the Company sold its investment in Paxson Communications
Corporation stock for $20.3 million in cash and recorded a pretax gain
of $6.1 million.
<PAGE> 19
JACOR COMMUNICATIONS,INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT
The Company's debt obligations at December 31, 1997 and 1996 consist of
the following (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Credit Facility borrowings ............ $567,500 $400,000
10 1/8% Senior Subordinated Notes,
due 2006 ........................... 100,000 100,000
9 3/4% Senior Subordinated Notes,
due 2006 ........................... 170,000 170,000
8 3/4% Senior Subordinated Notes,
due 2007 ........................... 150,000 --
-------- --------
$987,500 $670,000
======== ========
</TABLE>
New Credit Facility
In September 1997, the Company, through Jacor Communications Company
("JCC"), entered into a new $1.15 billion credit facility (the "Credit
Facility") with a syndicate of banks and other financial institutions.
The Credit Facility replaces the Company's previous credit facility
entered into in June 1996, as amended. The Credit Facility increased
the Company's borrowing capacity by $400 million and consists of two
components: (i) a revolving credit facility of up to $750 million with
a mandatory commitment reduction of $50.0 million on June 30, 2000
continuing semi-annually through June 2003, and a final maturity date
of December 31, 2004; and (ii) a term loan of up to $400 million with a
scheduled reduction of $35.0 million on December 31, 1999 with
increasing semi-annual reductions thereafter and a final maturity date
of December 31, 2004. At December 31, 1997, the outstanding balance of
the term loan was $400.0 million. Amounts repaid or prepaid under the
Term Loan may not be reborrowed.
The loans under the Credit Facility are guaranteed by each of the
Company's direct and indirect subsidiaries other than certain
immaterial subsidiaries. JCC's obligations under the Credit Facility
are secured by a first priority lien on the capital stock of the
Company's subsidiaries, an assignment of all intercompany debt and of
certain time brokerage agreements, and by the guarantee of JCC's parent
company, Jacor Communications Inc. ("Jacor").
The Credit Facility bears interest at a rate that fluctuates with an
applicable margin, with a minimum applicable margin to a maximum of
1.75%, based on the Company's ratio of total debt to earnings before
interest, taxes, depreciation and amortization for the four consecutive
fiscal quarters then most recently ended (the "Leverage Ratio"), plus a
bank base rate or a Eurodollar base rate, as applicable. At December
31, 1997, the average interest rate on Credit Facility borrowings was
6.60%. The Company pays interest on the unused portion of the Revolving
Credit Facility at a rate ranging from 0.250% to 0.375% per annum,
based on the Company's Leverage Ratio.
<PAGE> 20
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
The Credit Facility contains covenants and provisions that restrict,
among other things, the Company's ability to: (i) incur additional
indebtedness; (ii) incur liens on its property; (iii) make investments
and advances; (iv) enter into guarantees and other contingent
obligations; (v) merge or consolidate with or acquire another person or
engage in other fundamental changes; (vi) engage in certain sales of
assets; (vii) engage in certain transactions with affiliates; and
(viii) make restricted junior payments. The Credit Facility also
requires the satisfaction of certain financial performance criteria
(including a consolidated interest coverage ratio, a debt-to-operating
cash flow ratio and a consolidated operating cash flow available for
fixed charges ratio) and the repayment of loans under the Credit
Facility with proceeds of certain sales of assets and debt issuances.
In 1997 and 1996, the Company recognized extraordinary losses of
approximately $7.5 million and $3.0 million, respectively, net of
income tax credit, related to the write off of debt financing costs due
to significant amendments to the Company's Credit Facility.
10 1/8% Senior Subordinated Notes Due 2006
Interest on the 10 1/8% Senior Subordinated Notes (the "10 1/8% Notes")
is payable semi-annually. The 10 1/8% Notes will be redeemable at the
option of the Company, in whole or in part, at any time on or after
June 15, 2001. The redemption prices commence at 105.063% and are
reduced by 1.688% annually until June 15, 2004 when the redemption
price is 100%. At December 31, 1997, the market value of the 10 1/8%
Notes exceeded carrying value by approximately $8.6 million. At
December 31, 1996 the market value of the 10 1/8% Notes exceeded
carrying value by approximately $3.0 million.
9 3/4% Senior Subordinated Notes Due 2006
Interest on the 9 3/4% Senior Subordinated Notes (the "9 3/4% Notes")
is payable semi-annually. The 9 3/4% Notes will be redeemable at the
option of the Company, in whole or part, at any time on or after
December 15, 2001. The redemption prices commence at 104.875% and are
reduced by 1.625% annually until December 15, 2004 when the redemption
price is 100%. At December 31, 1997, the market value of the 9 3/4%
Notes exceeded carrying value by approximately $12.1 million. At
December 31, 1996 the market value of the 9 3/4% Notes exceeded
carrying value by approximately $3.4 million.
<PAGE> 21
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
8 3/4% Senior Subordinated Notes Due 2007
IN JUNE 1997, THE COMPANY COMPLETED AN OFFERING OF $150 MILLION OF ITS
8 3/4% SENIOR SUBORDINATED NOTES (THE "8 3/4% NOTES"). THE 8 3/4%
NOTES WILL MATURE ON JUNE 15, 2007. INTEREST ON THE 8 3/4% NOTES IS
PAYABLE SEMI-ANNUALLY ON JUNE 15 AND DECEMBER 15 OF EACH YEAR,
COMMENCING ON DECEMBER 15, 1997. THE 8 3/4% NOTES WILL BE REDEEMABLE
AT THE OPTION OF THE COMPANY, IN WHOLE OR IN PART, AT ANYTIME ON OR
AFTER JUNE 15, 2002. THE REDEMPTION PRICES COMMENCE AT 104.375% AND ARE
REDUCED BY 1.458% ANNUALLY UNTIL JUNE 15, 2005 WHEN THE REDEMPTION
PRICE IS 100%. AT DECEMBER 31, 1997 THE MARKET VALUE OF THE 8 3/4%
NOTES EXCEEDED CARRYING VALUE BY APPROXIMATELY $3.8 MILLION.
The 10 1/8% Notes, 9 3/4% Notes and 8 3/4% Notes (the "Notes") are
obligations of JCC, and are jointly and severally, fully and
unconditionally guaranteed on a senior subordinated basis by Jacor and
by all of the Company's subsidiaries (the "Subsidiary Guarantors"). JCC
and each of the Subsidiary Guarantors are wholly owned direct or
indirect subsidiaries of Jacor. Separate financial statements of JCC
and each of the Subsidiary Guarantors are not presented because Jacor
believes that such information would not be material to investors. The
direct and indirect non-guarantor subsidiaries of Jacor are
inconsequential, both individually and in the aggregate. Additionally,
there are no current restrictions on the ability of the Subsidiary
Guarantors to make distributions to JCC, except to the extent provided
by law generally. JCC's credit facility and the terms of the indentures
governing the Notes do restrict the ability of JCC and of the
Subsidiary Guarantors to make distributions to the Registrant.
Summarized financial information with respect to Jacor and with respect
to the Subsidiary Guarantors on a combined basis as of December 31,
1997, 1996 and 1995 and for each of the three years in the period ended
December 31, 1997; and with respect to JCC as of December 31, 1997 and
1996 and for the year ended December 31, 1997 and for the period from
June 6, 1996 to December 31, 1996 is as follows:
<PAGE> 22
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT, Continued
<TABLE>
<CAPTION>
Jacor JCC
---------------------------- --------------------------------------------
1997 1996 1995 1997 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue -- -- -- -- --
Equity in earnings
of subsidiaries $ (1,958) $ 10,237 $ 10,965 $ 3,191 $ 11,864
Operating (loss)
income (15,387) 305 10,965 3,191 11,864
(Loss) income before
extraordinary items (4,052) 5,105 10,965 5,498 13,203
Net (loss) income (4,052) 5,105 10,965 (1,958) 10,237
Balance Sheet Data
(in thousands):
Current assets $ 1,316 $ 1,538 $ 41,203 $ 75,626
Non-current assets 1,165,970 722,918 2,122,648 1,615,504
Current liabilities 28,853 16,253 13,184 9,975
Non-current
liabilities 222,082 221,267 1,478,765 1,056,348
Shareholders' equity 916,351 486,936 671,902 273,384
</TABLE>
<TABLE>
<CAPTION>
Combined
Subsidiary Guarantors
---------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue $ 530,574 $ 223,761 $ 118,891
Equity in earnings
of subsidiaries -- -- --
Operating income 95,306 49,292 18,617
Income before
extraordinary items 3,191 11,864 18,617
Net income 3,191 11,864 10,965
Balance Sheet Data
(in thousands):
Current assets $ 155,068 $ 89,438
Non-current assets 2,446,810 1,615,504
Current liabilities 76,212 29,304
Non-current
liabilities 1,609,315 1,188,702
Shareholders' equity 916,351 486,936
</TABLE>
<PAGE> 23
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. LIQUID YIELD OPTION NOTES
In June 1996, the Company issued 5 1/2% Liquid Yield Option Notes
("LYONs") due 2011 in the aggregate principal amount at maturity of
$259.9 million. Each LYON had an issue price of $443.14 and a principal
amount at maturity of $1,000. At December 31, 1997 the accreted value
of the LYONs was $125.3 million which included $6.6 million of interest
accreted during 1997. At December 31, 1996 the accreted value of the
LYONs was $118.7 million which included $3.5 million of interest
accreted during 1996.
Each LYON is convertible, at the option of the holder, at any time on
or prior to maturity, into Common Stock at a conversion rate of 13.412
shares per LYON.
The LYONs are not redeemable by the Company prior to June 12, 2001.
Thereafter, the LYONs are redeemable for cash at any time at the option
of the Company, in whole or in part, at redemption prices equal to the
issue price plus accrued original issue discount to the date of
redemption.
The LYONs will be purchased by the Company, at the option of the
holder, on June 12, 2001 and June 12, 2006, for a purchase price of
$581.25 and $762.39 (representing issue price plus accrued original
issue discount to each date), respectively, representing a 5 1/2% yield
per annum to the holder on such date. The Company, at its option, may
elect to pay the purchase price on any such purchase date in cash or
common stock, or any combination thereof.
At December 31, 1997, the market value of the LYONs exceeded the
carrying value by approximately $64.4 million. At December 31, 1996,
the market value of the LYONs was less than the carrying value by
approximately $3.0 million.
9. CAPITAL STOCK
Warrants
In connection with a 1997 acquisition, the Company issued warrants to
acquire 500,000 shares of common stock with an exercise price of $40
per share. The warrants expire in February 2002.
In connection with a 1996 acquisition, the Company issued warrants to
acquire 4,400,000 shares of common stock with an exercise price of $28
per share. The warrants expire in September 2001.
In connection with a 1996 Stock Offering, the Company determined that
it would convert the 1,983,605 outstanding 1993 Warrants into the right
to receive the Fair Market Value (as defined) calculated to be $19.70
per Warrant. Prior to the conversion, the Company issued 1,726,004
shares of Common Stock with proceeds aggregating approximately $14.3
million upon exercise of such warrants by the holders. The Company used
approximately $5.1 million of these proceeds to fund the conversion of
the remaining 1993 Warrants presented for redemption.
<PAGE> 24
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS
1993 Stock Option Plan
Under the Company's 1993 stock option plan (the "1993 Plan"), options
to acquire up to 2,769,218 shares of common stock can be granted to
directors, officers and key employees at no less than the fair market
value of the underlying stock on the date of grant. The 1993 Plan
permits the granting of non-qualified stock options (NQSOs)as well as
incentive stock options(ISOs). Between 25% and 30% of the options vest
on the date of grant and between 20% and 30% vest on each of the next
three anniversaries of the grant date. Options expire 10 years after
grant and the plan will terminate no later than February 7, 2003. At
December 31, 1997, 618 shares were available for grant.
1997 Long-Term Incentive Stock Plan
In April 1997, the Board of Directors of the Company adopted the 1997
Long-Term Incentive Stock Plan ("the Long-Term Plan"). The Long-Term
Plan authorizes the issuance of up to 1,800,000 shares of Common Stock
pursuant to the grant or exercise of stock options, including NQSOs and
ISOs, restricted stock, stock appreciation rights (SARs), and certain
other instruments to executive officers and other key employees,
subject to board approval and certain other restrictions. Stock options
may not be granted at less than the fair market value of the underlying
stock on the date of grant. Twenty-five percent of the options vest on
the date of the grant and 25% vest on each of the next three
anniversaries of the grant date. Options expire 10 years after grant.
At December 31, 1997, 1,166,312 shares were available for grant.
1997 Non-Employee Directors Stock Plan and Stock Purchase Plan
In April 1997, the Board of Directors of the Company adopted the 1997
Non-Employee Directors Stock Plan (the "Directors Stock Plan"). The
Directors Stock Plan authorizes the issuance of up to 350,000 shares of
Jacor Common Stock pursuant to the grant or exercise of NQSOs, SARs,
restricted stock and other performance instruments. Stock options may
not be granted at less than the fair market value of the underlying
stock on the date of grant. Twenty-five percent of the options vest on
the date of the grant and 25% vest on each of the next three
anniversaries of the grant date. Options expire 10 years after grant.
At December 31, 1997, 310,000 shares were available for grant. Also,
the Company adopted a stock purchase plan for its non-employee
directors authorizing the issuance of up to 150,000 shares of Jacor
common stock. Stock may be purchased at a 15% discount from fair value
and purchases are limited to $100,000 per director in a calendar year.
<PAGE> 25
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
Information pertaining to the plans for the years ended December 31,
1995, 1996 and 1997 is as follows:
<TABLE>
<CAPTION>
Number of Weighted Average
Shares Exercise Price
--------- ----------------
<S> <C> <C>
1995:
Outstanding at beginning of year ...... 1,351,310 $ 6.16
Granted ............................... 245,000 $ 14.61
Exercised ............................. (27,790) $ 5.81
Outstanding at end of year ............ 1,568,520 $ 7.52
Exercisable at end of year ............ 1,093,340 $ 6.57
Available for grant at end of year .... 1,092,618
1996:
Outstanding at beginning of year ...... 1,568,520 $ 7.52
Granted ............................... 594,500 $ 23.63
Exercised ............................. (106,410) $ 6.10
Outstanding at end of year ............ 2,056,610 $ 12.26
Exercisable at end of year ............ 1,507,000 $ 8.68
Available for grant at end of year .... 523,118
1997:
Outstanding at beginning of year ...... 2,056,610 $ 12.26
Granted ............................... 1,196,188 $ 24.92
Exercised ............................. (212,679) $ 11.61
Surrendered ........................... (15,490) $ 26.71
Outstanding at end of year ............ 3,024,629 $ 17.20
Exercisable at end of year ............ 2,228,095 $ 13.72
Available for grant at end of year .... 1,476,930
</TABLE>
<PAGE> 26
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
The fair value of each stock option granted is estimated on the date of
grant using the Black-Sholes option-pricing model with the following
assumptions for grants in 1997, 1996 and 1995, respectively: risk-free
interest rates are different for each grant and range from 5.24% to
6.51%; the expected lives of options are 5 years; and volatility of
approximately 35% for all grants. A summary of the fair value of
options granted in 1997, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Weighted-average fair value of
options granted at-the-money $ 12.26 $ 9.42 $ 5.70
Weighted-average fair value of
options granted at a premium -- $ 8.46 $ 5.33
Weighted-average fair value of
options granted at a discount $ 28.15 -- --
Weighted-average fair value of all
options granted during the year $ 16.29 $ 9.07 $ 5.44
</TABLE>
The options granted at a discount in 1997 were related to approximately
304,000 options outstanding to purchase Premiere common stock, which
were converted to equivalent Jacor NQSOs at the time of the merger.
The following table summarizes information about stock options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------- -------------------
Weighted Weighted Weighted
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/97 Life Price at 12/31/97 Price
- ---------------- ----------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$5.74 to $9.65 1,239,865 5.44 $ 6.29 1,239,865 $ 6.29
$12.70 to $19.96 356,641 7.91 $ 15.94 299,341 $ 15.89
$21.25 to $30.66 1,379,123 9.02 $ 26.53 676,638 $ 25.84
$37.25 to $45.94 49,000 9.56 $ 39.57 12,250 $ 39.80
- ---------------- ----------- --------- -------- ----------- --------
$ 5.74 to $45.94 3,024,629 7.43 $ 17.20 2,228,095 $ 13.72
</TABLE>
<PAGE> 27
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. STOCK BASED COMPENSATION PLANS, Continued
Employee Stock Purchase Plan
Under the 1995 Employee Stock Purchase Plan, the Company is authorized
to issue up to 700,000 shares of common stock to its full-time and
part-time employees, all of whom are eligible to participate. Under the
terms of the Plan, employees can choose each year to have up to 10
percent of their annual base earnings withheld to purchase the
Company's common stock. The purchase price of the stock is 85% of the
lower of its beginning-of-period or end-of-period market price. Under
the Plan, the Company sold 74,767 shares for approximately $23.27 per
share and 12,376 shares for approximately $32.19 per share in 1997,
47,232 shares for $14.24 per share in 1996 and 43,785 shares for $10.84
per share in 1995. The fair market value of the right to acquire common
stock under the Stock Purchase Plan was $8.40 per share granted on
January 1 and $9.80 per share granted on July 1 in 1997, $4.81 per
share in 1996 and $3.71 per share in 1995.
Had the compensation cost for the Company's stock-based compensation
plans been determined consistent with SFAS 123, the Company's net
income (loss) and net income (loss) per common share for 1997, 1996 and
1995 would approximate amounts below (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net (loss)income:
As reported $ (4,052) $ 5,105 $ 10,965
Pro forma $(10,691) $ 3,826 $ 10,398
Diluted net (loss)income
per common share:
As reported $ (0.10) $ 0.19 $ 0.52
Pro forma $ (0.25) $ 0.14 $ 0.50
</TABLE>
In 1996, the Company recorded compensation expense of approximately
$1.9 million related to stock units issued to officers and directors
and stock options issued to non-employees of the Company. The expense
related to the stock units was equal to the fair value of the stock for
which the units can be converted into on the date of grant. The fair
value of the options was determined using the Black-Sholes option
pricing model and the following assumptions: risk-free interest rate of
5.79%; expected life of 5 years; and volatility of approximately 35%.
The options were 100% vested on the date of grant.
<PAGE> 28
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCOME TAXES
Income tax expense for the years ended December 31, 1997, 1996 and 1995
is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Federal State Total
-------- -------- --------
<S> <C> <C> <C>
1997:
Current $ 13,200 $ 3,000 $ 16,200
Deferred (5,400) (1,200) (6,600)
-------- -------- --------
7,800 1,800 9,600
Tax benefit from
extraordinary loss (4,000) (900) (4,900)
-------- -------- --------
$ 3,800 $ 900 $ 4,700
======== ======== ========
1996:
Current $ 6,185 $ 1,348 $ 7,533
Deferred (185) (48) (233)
-------- -------- --------
6,000 1,300 7,300
Tax benefit from
extraordinary loss (1,631) (346) (1,977)
-------- -------- --------
$ 4,369 $ 954 $ 5,323
======== ======== ========
1995:
Current $ 6,600 $ 1,260 $ 7,860
Deferred (500) (60) (560)
-------- -------- --------
$ 6,100 $ 1,200 $ 7,300
======== ======== ========
</TABLE>
The provisions for income tax differ from the amount computed by
applying the statutory federal income tax rate due to the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Federal income tax at
the statutory rate $ 5,173 $ 5,627 $ 6,393
Amortization not deductible 3,449 1,262 606
State income taxes, net of any
current federal income tax
benefit 589 620 780
Other 389 (209) (479)
-------- -------- --------
$ 9,600 $ 7,300 $ 7,300
======== ======== ========
</TABLE>
<PAGE> 29
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCOME TAXES, continued
The tax effects of the significant temporary differences which comprise
the deferred tax liability at December 31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Deferred tax assets:
Accrued expenses and
reserves $ (7,479) $ (11,104) $ (1,992)
Net operating loss
carryforwards (11,461) (12,000) --
Other (4,047) (2,098) (142)
--------- --------- ---------
(22,987) (25,202) (2,134)
Deferred tax liabilities:
Property and equipment 35,614 32,427 12,208
Intangibles 326,240 257,653 (1,457)
--------- --------- ---------
361,854 290,080 10,751
Net liability $ 338,867 $ 264,878 $ 8,617
========= ========= =========
</TABLE>
At December 31, 1997 the Company had net operating loss carryforwards
of $28,653. The loss carryforwards expire in the years 2008 through
2011 if not used.
<PAGE> 30
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES
Lease and Contractual Obligations
The Company and its subsidiaries lease certain land and facilities used
in their operations. The Company also has various employment agreements
with broadcast personalities that provide base compensation. Future
minimum payments under leases and employment agreements as of December
31, 1997 are payable as follows (in thousands):
<TABLE>
<S> <C>
1998 $18,122
1999 15,674
2000 11,328
2001 7,538
2002 4,799
Thereafter 9,980
-------
$67,441
=======
</TABLE>
Rental expense was approximately $8,010, $3,996 and $3,471 for the
years ended December 31, 1997, 1996 and 1995, respectively.
Legal Proceedings
From time to time, the Company becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of the
Company's management, there are no material legal proceedings pending
against the Company.
13. RETIREMENT PLAN
The Company maintains a defined contribution retirement plan covering
substantially all employees who have met eligibility requirements. The
Company matches participating employee contributions at a rate of 50%
of the employee's first 4% contributed, up to $160,000 of annual
compensation. Total expense related to this plan was $1,977,052,
$756,618 and $334,253 in 1997, 1996 and 1995, respectively.
<PAGE> 31
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted Earnings Per Share ("EPS") computations for
income before extraordinary items for the years ended December 31, as
follows (in thousands except per share amounts):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net income before
extraordinary item $ 3,404 $ 8,071 $ 10,965
Weighted average
shares - basic 40,460 25,433 18,908
Effect of dilutive
securities:
Stock options 996 658 413
Warrants 357 -- 911
Other 350 351 300
-------- -------- --------
Weighted average
shares - diluted 42,163 26,442 20,532
======== ======== ========
Basic EPS $ .08 $ .32 $ .58
Diluted EPS $ .08 $ .30 $ .53
</TABLE>
The Company's LYONs can be converted into approximately 3.5 million
shares of Jacor common stock at the option of the holder. Assuming
conversion of the LYONs as of January 1, 1997 and 1996 would result in
an increase in per share amounts before extraordinary items, therefore,
the LYONs are not included in the computation of diluted EPS.
In February 1998, the Company completed an offering of 5.1 million
shares of common stock and Liquid Yield Option Notes which can be
converted into approximately 2.7 million shares of common stock at the
option of the holder.
<PAGE> 32
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income". SFAS 130 requires the reporting of comprehensive
income in financial statements by all entities that provide a full set
of financial statements. The term "comprehensive income" describes the
total of all components of comprehensive income including net income.
The statement only deals with reporting and display issues. It does not
consider recognition or measurement issues. The Company will implement
SFAS 130 in the first quarter of 1998.
Also in June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 ("SFAS 131")
"Disclosures about Segments of an Enterprise and Related Information".
SFAS 131 provides accounting guidance for reporting information about
operating segments in annual financial statements and requires such
enterprises to report selected information about operating segments in
interim financial reports. The statement uses a "management approach"
to identify operating segments and provides specific criteria for
operating segments. SFAS 131 is effective for the year ended December
31, 1998 and will be required for interim periods in 1999. The Company
is currently evaluating the impact SFAS 131 will have on its financial
statements, if any.
<PAGE> 33
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 42,084 $ 28,724
Accounts receivable, less allowance for
doubtful accounts of $8,115 in 1998
and $6,195 in 1997 198,327 135,073
Prepaid expenses and other 29,385 33,790
----------- -----------
Total current assets 269,796 197,587
Property and equipment, net 260,212 206,809
Intangible assets, net 2,712,291 2,128,718
Other assets 85,369 68,764
----------- -----------
Total assets $ 3,327,668 $ 2,601,878
=========== ===========
LIABILITIES
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities $ 137,958 $ 118,249
----------- -----------
Total current liabilities 137,958 118,249
Long-term debt 1,229,565 987,500
Liquid Yield Option Notes 302,400 125,300
Deferred tax liability 358,995 338,867
Other liabilities 119,717 115,611
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, authorized and unissued
4,000,000 shares -- --
Common stock, $0.01 par value; authorized
100,000,000 shares, issued and outstanding
shares: 51,051,484 in 1998 and 45,689,677
in 1997 511 457
Additional paid-in capital 1,114,520 863,086
Common stock warrants 31,500 31,500
Accumulated other comprehensive income 12,631 --
Retained earnings 19,871 21,308
----------- -----------
Total shareholders' equity 1,179,033 916,351
----------- -----------
Total liabilities and
shareholders' equity $ 3,327,668 $ 2,601,878
=========== ===========
</TABLE>
The accompanying notes are an integral
part of the condensed consolidated financial statements.
<PAGE> 34
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the three months and nine months ended September 30, 1998 and 1997
(In thousands, except per share amounts)
(UNAUDITED)
----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Broadcast revenue $ 230,951 $ 161,733 $ 597,244 $ 413,689
Less agency commissions 26,443 17,173 66,872 44,748
--------- --------- --------- ---------
Net revenue 204,508 144,560 530,372 368,941
Broadcast operating expenses 128,777 93,734 356,877 251,513
Depreciation and amortization 31,161 21,900 87,444 53,097
Corporate general and
administrative expenses 4,878 3,406 13,052 9,240
--------- --------- --------- ---------
Operating income 39,692 25,520 72,999 55,091
Interest expense (27,526) (20,951) (76,563) (60,081)
Gain on sale and exchange of
radio stations and investments 10,896 -- 10,896 10,801
Other income, net 1,677 214 10,431 2,733
--------- --------- --------- ---------
Income before income taxes
and extraordinary loss 24,739 4,783 17,763 8,544
Income taxes 24,300 4,300 19,200 6,500
--------- --------- --------- ---------
Income (loss) before
extraordinary loss 439 483 (1,437) 2,044
Extraordinary loss, net of
income tax credit -- (1,900) -- (7,456)
--------- --------- --------- ---------
Net income (loss) $ 439 $ (1,417) $ (1,437) $ (5,412)
--------- --------- --------- ---------
Other comprehensive income,
net of tax:
Unrealized gains on securities 21,052 -- 21,052 --
Income tax expense related to
items of other comprehensive
income (8,421) -- (8,421) --
--------- --------- --------- ---------
Other comprehensive income,
net of tax 12,631 -- 12,631 --
--------- --------- --------- ---------
Comprehensive income (loss) $ 13,070 $ (1,417) $ 11,194 $ (5,412)
========= ========= ========= =========
</TABLE>
(Continued)
<PAGE> 35
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the three months and nine months ended September 30, 1998 and 1997
(in thousands, except per share amounts)
(UNAUDITED)
----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic income (loss) per
common share:
Before extraordinary loss $ 0.01 $ 0.01 $ (0.03) $ 0.05
Extraordinary loss -- (0.04) -- (0.19)
---------- ---------- ---------- ----------
Net income (loss) per
common share $ 0.01 $ (0.03) $ (0.03) $ (0.14)
========== ========== ========== ==========
Number of common shares used
in basic calculation 50,999 45,361 50,133 39,007
========== ========== ========== ==========
Diluted income (loss) per
common share:
Before extraordinary loss $ 0.01 $ 0.01 $ (0.03) $ 0.05
Extraordinary loss -- (0.04) -- (0.18)
---------- ---------- ---------- ----------
Net income (loss) per
common share $ 0.01 $ (0.03) $ (0.03) $ (0.13)
========== ========== ========== ==========
Number of common shares used
in diluted calculation 55,287 48,415 50,133 41,071
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of the condensed consolidated financial statements.
<PAGE> 36
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1998 and 1997
(In thousands)
(UNAUDITED)
----------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 64,601 $ 31,109
--------- ---------
Cash flows from investing activities:
Deposits paid on broadcast properties (11,209) (26,225)
Capital expenditures (23,354) (12,485)
Cash paid for acquisitions (671,442) (542,074)
Proceeds from sale of investments -- 73,813
Proceeds from sale and exchange of
radio stations 10,400 19,450
Advances and other (4,500) --
--------- ---------
Net cash used by investing activities (700,105) (487,521)
--------- ---------
Cash flows from financing activities:
Issuance of long-term debt 439,539 474,700
Issuance of LYONs 166,950 --
Issuance of common stock 248,371 246,154
Repayment of long-term debt (197,500) (310,200)
Payment of finance costs (8,496) (13,927)
Other -- 327
--------- ---------
Net cash provided by financing
activities 648,864 397,054
--------- ---------
Net increase (decrease) in cash and
cash equivalents 13,360 (59,358)
Cash and cash equivalents at
beginning of period 28,724 78,137
--------- ---------
Cash and cash equivalents at end of period $ 42,084 $ 18,779
========= =========
Supplemental schedule of non-cash investing
and financing activities:
Common stock issued in acquisitions $ -- $ 179,428
Warrants issued in acquisitions -- 5,000
Liabilities assumed in acquisitions 2,687 36,851
Fair value of assets exchanged, net of cash 265,150 104,000
</TABLE>
The accompanying notes are an integral part
of the condensed consolidated financial statements.
<PAGE> 37
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The December 31, 1997 condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. The
financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Although 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 rules and regulations, the
Company believes that the disclosures are adequate to make the
information presented not misleading and reflect all adjustments
(consisting only of normal recurring adjustments) which are necessary
for a fair presentation of results of operations for such periods.
Results for interim periods may not be indicative of results for the
full year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements for the year
ended December 31, 1997 and the notes thereto.
2. SUBSEQUENT EVENT
On October 8, 1998 the Company entered into a definitive merger
agreement with Clear Channel Communications, Inc. ("Clear Channel") for
a tax-free, stock for stock transaction (the "Merger"). Upon
consummation of the Merger, each outstanding share of Jacor common
stock will be converted into Clear Channel common stock, based upon the
average closing price of Clear Channel common stock during the
twenty-five consecutive trading days ending on the second trading day
prior to the closing date, as follows:
<TABLE>
<CAPTION>
AVERAGE CLOSING PRICE OF CLEAR CHANNEL STOCK CONVERSION RATIO
<S> <C>
Less than or equal to $42.86........................... 1.400
Above $42.86 but less than or equal to $44.44.......... 1.400 to 1.350
Above $44.44 but less than $50.00...................... 1.350
</TABLE>
If the average closing price is $50.00 or more, the Conversion Ratio
will be calculated as the quotient obtained by dividing (A) $67.50 plus
the product of $.675 and the amount by which the average closing price
exceeds $50.00, by (B) the average closing price. If the average
closing price is less than or equal to $37.50, the Merger agreement may
be terminated by the Company, upon notice to Clear Channel, on one of
the two trading days prior to the closing date.
Completion of the Merger is conditioned on, among other things,
stockholder approval and receipt of Federal Communications Commission
and other regulatory approvals. The Company expects to consummate the
Merger by September 30, 1999.
Upon consummation of the Merger, a change in control event will have
occurred with respect to covenants in the Company's credit facility,
liquid yield option notes and each outstanding issue of the senior
subordinated notes. Such change in control would give the credit
facility lenders the right to require repayment of amounts borrowed
under the facility, and require the Company to offer repayment of the
senior subordinated notes at 101% of the principal amount and the
liquid yield option notes at their issue price plus accrued original
issue discount at such date.
<PAGE> 38
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. SUBSEQUENT EVENT, Continued
In August 1998, the Company entered into an advisory agreement with
Equity Group Investments, Inc. ("EGI"), an affiliate of the Company's
largest stockholder, the Zell Chilmark Fund L.P., whereby the Company
agreed to pay EGI a fee equal to .75% of the equity value of the
Company, as defined in the advisory agreement, on any change in control
event. The Zell Chilmark Fund L.P. has entered into a voting agreement
pursuant to which it agreed to vote its shares in favor of the proposal
to approve the Merger.
3. ACQUISITIONS AND DISPOSITIONS
COMPLETED RADIO STATION ACQUISITIONS AND DISPOSITIONS
FIRST SIX MONTHS TRANSACTIONS
In the first six months of 1998, the Company completed the following:
acquisitions of 16 radio stations in four existing and five new
broadcast areas for a purchase price of approximately $61.6 million in
cash, of which approximately $17.3 million was placed in escrow in
1997. The company also disposed of three stations in two broadcast
areas for approximately $0.3 million in cash and completed a like-kind
exchange of broadcast properties, exchanging four stations in Kansas
City, Missouri for six stations in Dayton, Ohio, valued at $70.0
million. The exchange values approximated the carrying values of such
stations, therefore no gain or loss was recorded on the exchange.
NATIONWIDE RELATED TRANSACTIONS
In August 1998, the Company completed the acquisition of substantially
all broadcast related assets of Nationwide Communications Inc.
("Nationwide") for total cash consideration of approximately $555
million, of which $30.0 million was placed in escrow in 1997, plus
acquisition costs. Simultaneously with the Nationwide acquisition, but
in separate transactions, the Company effected the exchange and sale of
certain radio stations in order to satisfy antitrust concerns raised by
the Department of Justice in connection with the Nationwide
acquisition. For financial reporting purposes, the Company recorded the
exchange of eight radio stations as sale transactions, receiving
non-cash consideration in the form of nine radio stations with
aggregate fair values of $195 million. Additionally, one other radio
station was sold for $10.1 million in cash. The Company recorded net
pre-tax gains of $10.9 million, which was measured by the difference
between the fair value of the radio stations exchanged or sold and the
carrying value of the properties. The Company believes that such
transactions qualify as a tax-deferred like-kind exchange, therefore,
the income tax expense of $14 million associated with the gains is
included in the deferred component of income tax expense. The radio
stations received in the exchange transactions were recorded as
purchase transactions at their respective fair values. The following
radio stations were included in the transactions:
<PAGE> 39
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
<TABLE>
<CAPTION>
STATIONS STATIONS RECEIVED
PURCHASED FROM EXCHANGED IN EXCHANGE
NATIONWIDE OR SOLD TRANSACTION
<S> <C> <C>
WCOL-FM, WFII-AM, WLVQ-FM, WAZU-FM, WMJI-FM, WMMS-FM
WNCI-FM (Columbus, OH) WHOK-FM (Columbus, OH) (Cleveland)
WPOC-FM (Baltimore) WKNR-FM (Cleveland) KUFX-FM (Fremont, CA)
WGAR-FM (Cleveland) KSGS-AM, KMJZ-FM WOCT-FM, WCAO-AM
(Minneapolis) (Baltimore)
KDMX-FM, KEGL-FM KKLQ-FM, KJQY-FM KLOU-FM, KSD-FM
(Dallas) (San Diego) (St. Louis)
KHMX-FM, KTBZ-FM KOME-FM
(Houston) (San Jose, CA)
KSGS-AM, KMJZ WTAE-FM (Pittsburgh)
(Minneapolis)
KGLQ-FM, KZZP-FM
(Phoenix)
KMCG-FM, KXGL-FM
(San Diego)
</TABLE>
JULY TRANSACTIONS
The Company acquired KIST-FM (formerly KLDZ-FM) in Santa Barbara,
California from James F. McKeon and Christine Perry for $1.5 million in
cash.
The Company acquired KFJO-FM (formerly KZWC-FM) in Walnut Creek,
California from KZWC Broadcasting, Inc. for $4.5 million in cash.
AUGUST TRANSACTIONS
The Company acquired KSJO-FM in San Jose, California from American
Radio Systems for $30.0 million in cash, of which $1.5 million was
placed in escrow in 1997.
The Company acquired KRWQ-FM, KMED-AM, KZZE-FM, and KKJJ-FM in Medford,
Oregon from Hill Radio, Inc., Crater Broadcasting Company, Pro
Promotions, Inc. and Ashland Broadcasting LLC, respectively, for $12.5
million in cash.
The Company acquired the stock of KOPE Radio, Inc., owner of KOPE-FM in
Medford, Oregon for approximately $0.5 million in cash.
<PAGE> 40
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
The Company acquired the intellectual property of KQOL-FM in Las Vegas,
Nevada from Centennial Broadcasting, LLC and Centennial Broadcasting
License, LLC for $3.0 million in cash.
The Company acquired KDIF-AM in Riverside, California from Hispanic
Radio Broadcasters for $2.7 million in cash.
The Company acquired WHEL-FM in Helen, Georgia from Southeast Radio
Company, Inc. for $3.0 million in cash.
The Company acquired the stock of Tsunami Communications, Inc.
("Tsunami"), owner of KTCL-FM in Fort Collins, Colorado and KIIX-AM in
Wellington, Colorado, for $0.5 million in cash and the assumption of
approximately $5.9 million in debt owed by Tsunami to a wholly-owned
subsidiary of the Company.
SEPTEMBER TRANSACTIONS
The Company acquired WLSN-FM in Greenville, Ohio from Treaty City
Broadcasting for $3.4 million in cash.
The Company acquired the stock of M3X, Inc., owner of KRKT-AM and
KRKT-FM in Albany, Oregon for approximately $3.8 million in cash.
COMPLETED BROADCASTING SERVICES ACQUISITIONS
In the first nine months of 1998, the Company completed acquisitions of
two broadcasting service companies and the assets of three other
broadcasting service companies for a purchase price of approximately
$12.7 million in cash, a note payable of approximately $0.8 million,
plus additional contingent consideration of up to $1.6 million payable
over three years.
The above acquisitions and all 1997 acquisitions have been accounted
for as purchases. The excess cost over the fair value of net assets
acquired is being amortized over 40 years. The results of operations of
the acquired businesses are included in the Company's financial
statements since the respective dates of acquisition. Assuming the
above acquisitions had taken place at the beginning of 1997, unaudited
pro forma consolidated results of operations would have been as follows
(in thousands except per share amounts):
<TABLE>
<CAPTION>
Pro forma (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------------ ----------------
<S> <C> <C> <C> <C>
Net revenue $ 216,472 $ 181,449 $ 598,315 $ 517,171
Income (loss) before
extraordinary items $ 1,207 $ 159 $ 751 $ (6,670)
Diluted income (loss) per
common share before
extraordinary items $ 0.02 $ 0.00 $ 0.01 $ (0.13)
</TABLE>
<PAGE> 41
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had
been consummated on the indicated dates.
PENDING RADIO STATION ACQUISITIONS AND DISPOSITIONS
The Company has entered into agreements to purchase the stock of one
and acquire the assets of 40 radio stations in 14 new markets and seven
existing markets for approximately $156.1 million in cash, of which
approximately $11.3 million has been placed in escrow, to exchange the
assets of one station for another station in the same broadcast area,
and to dispose of three stations in one market for approximately $0.7
million in cash.
4. ISSUANCE OF COMMON STOCK
In February 1998, the Company completed an offering of 4,560,000 shares
of common stock at $50.50 per share net of underwriting discounts of
$2.02 per share (the "Offering"). The over-allotment option was also
exercised by the underwriters resulting in the issuance of an
additional 513,000 shares. Net proceeds to the Company from the
Offering were approximately $244.9 million.
5. ISSUANCE OF SUBORDINATED NOTES
In February 1998, the Company issued 8% Senior Subordinated Notes (the
"8% Notes") in the aggregate principal amount at maturity of $120.0
million. Net proceeds to the Company were $117.1 million. The 8% Notes
will mature on February 15, 2010. Interest on the 8% Notes is payable
semi-annually. The 8% Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after February 15,
2003. The redemption prices commence at 104.00% and are reduced by .80%
annually until February 15, 2008 when the redemption price is 100%.
The 8% Notes and the previously issued 10 1/8% Notes, 9 3/4% Notes, and
8 3/4% Notes (collectively the "Notes") are obligations of Jacor
Communications Company ("JCC"), and are jointly and severally, fully
and unconditionally guaranteed on a senior subordinated basis by Jacor
and by all of the Company's subsidiaries (the "Subsidiary Guarantors").
JCC and the Subsidiary Guarantors constitute all of the wholly owned
direct or indirect subsidiaries of Jacor and JCC, and JCC is the sole
direct subsidiary of Jacor. Separate financial statements of JCC and
each of the Subsidiary Guarantors are not presented because Jacor
believes that such information would not be material to investors. The
direct and indirect non-guarantor subsidiaries of Jacor are
inconsequential, both individually and in the aggregate. Additionally,
there are no current restrictions on the ability of the Subsidiary
Guarantors to make distributions to JCC, except to the extent provided
by law generally. JCC's credit facility and the terms of the indentures
governing the Notes do restrict the ability of JCC and of the
Subsidiary Guarantors to make distributions to the Registrant.
<PAGE> 42
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. ISSUANCE OF SUBORDINATED NOTES, Continued
The indentures contain certain covenants which impose certain
limitations and restrictions on the ability of the Company to incur
additional indebtedness, pay dividends or make other distributions,
make certain loans and investments, apply the proceeds of asset sales
(and use the proceeds thereof), create liens, enter into certain
transactions with affiliates, merge, consolidate or transfer
substantially all its assets and make investments in unrestricted
subsidiaries.
Summarized financial information with respect to Jacor, JCC and with
respect to the Subsidiary Guarantors on a combined basis as of
September 30, 1998 and for the nine months ended September 30, 1998 and
1997 is as follows:
<TABLE>
<CAPTION>
Jacor JCC
-------------------------------- ------------------------------
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue -- -- -- --
Equity in earnings
of subsidiaries $ 5,498 $ (5,560) $ 2,692 $ 1,251
Operating (loss) income (8,101) (15,601) 2,692 1,251
(Loss) income before
extraordinary items (1,437) (5,412) 5,498 1,896
Net (loss) income (1,437) (5,412) 5,498 (5,560)
Balance Sheet Data
(in thousands):
Current assets $ 1,408 $ 38,470
Non-current assets 1,620,200 2,823,444
Current liabilities 43,404 21,509
Non-current
liabilities 399,171 2,168,058
Shareholders' equity 1,179,033 672,347
</TABLE>
<PAGE> 43
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. ISSUANCE OF SUBORDINATED NOTES, Continued
<TABLE>
<CAPTION>
Combined
Subsidiary Guarantors
-------------------------------
September 30, September 30,
1998 1997
---- ----
<S> <C> <C>
Operating Statement
Data (in thousands):
Net revenue $ 530,372 $ 368,941
Equity in earnings
of subsidiaries -- --
Operating income 86,598 65,132
Income before
extraordinary items 2,692 1,251
Net income 2,692 1,251
Balance Sheet Data
(in thousands):
Current assets $ 229,918
Non-current assets 3,058,125
Current liabilities 73,045
Non-current
liabilities 2,035,965
Shareholders' equity 1,179,033
</TABLE>
6. LIQUID YIELD OPTION NOTES
In February 1998, the Company issued 4 3/4% Liquid Yield Option Notes
due 2018 (the "1998 LYONs") in the aggregate principal amount at
maturity of $426.9 million. Each 1998 LYON had an issue price of
$391.06 and a principal amount at maturity of $1,000.00. The 1998 LYONs
are convertible, at the option of the holder, at any time on or prior
to maturity, into common stock at a conversion rate of 6.245 shares per
each 1998 LYON, for an aggregate of approximately 2.7 million shares of
common stock. Net proceeds from the issuance of the 1998 LYONs were
$161.9 million.
7. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share ("EPS") computations for
income before extraordinary items for the three months and nine months
ended September 30, 1998 and 1997 (in thousands except per share
amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------- --------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Income (loss) before
extraordinary loss $ 439 $ 483 $ (1,437) $ 2,044
======== ======== ======== ========
Weighted average
shares - basic 50,999 45,361 50,133 39,007
Effect of dilutive
securities:
Stock options 1,505 1,124 - 942
Warrants 2,398 1,579 - 771
Other 385 351 - 351
-------- -------- -------- --------
Weighted average
shares - diluted 55,287 48,415 50,133 41,071
======== ======== ======== ========
Basic EPS $ 0.01 $ 0.01 $ (0.03) $ 0.05
Diluted EPS $ 0.01 $ 0.01 $ (0.03) $ 0.05
</TABLE>
<PAGE> 44
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. EARNINGS PER SHARE, Continued
The Company's 1996 Liquid Yield Option Notes and 1998 LYONs
(collectively, the "LYONs") can be converted into approximately 6.2
million shares of common stock at the option of the holder. Assuming
conversion of the LYONs for the three and nine months ended September
30, 1998 and 1997 would result in an increase in per share amounts,
therefore the LYONs are not included in the computation of diluted EPS.
8. INVESTMENTS
In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", the Company classifies investments in
equity securities as available for sale and carries the investments at
fair value, based on quoted market prices. The net unrealized gains or
losses are reported within shareholders' equity, net of income taxes.
Realized gains and losses are recorded based on the specific
identification method.
The following table summarizes the Company's securities:
<TABLE>
<CAPTION>
Unrealized Unrealized Fair
Cost Gains Losses Value
---- ---------- ---------- -----
<S> <C> <C> <C> <C>
Corporate Equity
Securities $ 2,804,084 $ 21,773,972 $ (722,173) $ 21,051,799
</TABLE>
The unrealized gain reported in shareholders' equity is net of
$8,420,720 of income taxes computed using statutory rates.
9. RECENT PRONOUNCEMENTS
In the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income." SFAS 130 requires the reporting of comprehensive
income in financial statements by all entities that provide a full set
of financial statements. The term "comprehensive income" describes the
total of all components of comprehensive income including net income.
The statement only deals with reporting and display issues. It does not
consider recognition or measurement issues.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information."
SFAS 131 provides accounting guidance for reporting information about
operating segments in annual financial statements and requires such
enterprises to report selected information about operating segments in
interim financial reports. The statement uses a "management approach"
to identify operating segments and provides specific criteria for
operating segments. SFAS 131 is effective for the year ended December
31, 1998 and will be required for interim periods in 1999. The Company
is currently evaluating the impact SFAS 131 will have on its financial
statements, if any.
<PAGE> 45
In June 1998, the FASB issued Statement No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". SFAS
133 requires that an entity recognize all derivatives as either assets
or liabilities in the balance sheet and measure such instruments at
fair value. The statement is effective for fiscal quarters of fiscal
years beginning after June 15, 1999. The Company currently has no
derivative instruments or hedging activities.
<PAGE> 46
(b) Pro forma financial information
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger. For accounting purposes Clear Channel will account
for the merger as a purchase of Jacor; accordingly the net assets of Jacor have
been adjusted to their estimated fair values based upon a preliminary purchase
price allocation.
The unaudited pro forma combined condensed statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998 give
effect to the merger as if it had occurred on January 1, 1997 and January 1,
1998, respectively. The unaudited pro forma combined condensed balance sheet at
September 30, 1998 gives effect to the merger as if it occurred on September 30,
1998.
The unaudited pro forma combined condensed statement of operations for the
year ended December 31, 1997 was prepared based upon the historical statement of
operations of Clear Channel, adjusted to reflect the acquisitions of 93% of the
outstanding capital stock of Eller, the radio assets and certain outdoor
advertising assets of Paxson, all of the outstanding capital stock of More and
the merger with Universal, as if such acquisitions and merger had occurred on
January 1, 1997 ("1997 Clear Channel Pro Forma"), and based upon the historical
statement of operations of Jacor adjusted to reflect the acquisition of the
assets of 17 radio stations from Nationwide, The EFM Companies, and Premiere, as
if such acquisitions had occurred on January 1, 1997 ("1997 Jacor Pro Forma").
The unaudited pro forma combined condensed statement of operations for the nine
months ended September 30, 1998 was prepared based upon the historical statement
of operations of Clear Channel, adjusted to reflect the merger with Universal
and the acquisition of More as if such merger and acquisition had occurred on
January 1, 1998 ("1998 Clear Channel Pro Forma"), and based upon the historical
statement of operations of Jacor adjusted to reflect the acquisition of the
assets of 17 radio stations from Nationwide as if such acquisition had occurred
on January 1, 1998 ("1998 Jacor Pro Forma"). The unaudited pro forma combined
condensed balance sheet was prepared based upon the historical balance sheet of
Clear Channel and the historical balance sheet of Jacor. Certain amounts in
Jacor's financial statements have been reclassified to conform to Clear
Channel's presentation.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements of Jacor and Clear
Channel incorporated herein by reference.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the actual results of operations or financial position
that would have occurred had the merger and the above described acquisitions and
merger transactions of Clear Channel and Jacor occurred on the dates indicated
nor are they necessarily indicative of future operating results or financial
position.
<PAGE> 47
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CLEAR CHANNEL
PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT MERGER
------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 48,192 $ 42,084 $ (50,000) $ 40,276
Accounts receivable, net..................... 287,067 198,327 -- 485,394
Other current assets......................... 65,603 29,385 -- 94,988
---------- ---------- ---------- -----------
Total Current Assets................... 400,862 269,796 (50,000) 620,658
Property, plant & equipment, net............... 1,713,449 260,212 -- 1,973,661
Intangible assets:
Contract valuations.......................... 275,211 360,000 -- 635,211
Licenses and goodwill........................ 4,362,111 2,508,450 1,613,629 8,484,190
Other intangible assets...................... 74,552 -- -- 74,552
---------- ---------- ---------- -----------
4,711,874 2,868,450 1,613,629 9,193,953
Less accumulated amortization.................. (254,869) (156,159) 156,159 (254,869)
---------- ---------- ---------- -----------
4,457,005 2,712,291 1,769,788 8,939,084
Other assets:
Notes receivable............................. 53,675 -- -- 53,675
Investments in and advances to,
nonconsolidated affiliates................. 346,215 -- -- 346,215
Other assets................................. 41,189 85,369 -- 126,558
Other investments............................ 248,890 -- -- 248,890
---------- ---------- ---------- -----------
TOTAL ASSETS........................... $7,261,285 $3,327,668 $1,719,788 $12,308,741
========== ========== ========== ===========
LIABILITIES
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................ $ 238,166 $ 137,958 $ -- $ 376,124
Current portion of long-term debt............ 4,049 -- -- 4,049
---------- ---------- ---------- -----------
Total Current Liabilities.............. 242,215 137,958 -- 380,173
Long-term debt................................. 2,405,849 1,229,565 -- 3,635,414
Deferred income taxes.......................... 163,104 358,995 -- 522,099
Other long-term liabilities.................... 92,913 119,717 -- 212,630
Convertible debt............................... 575,000 -- -- 575,000
Liquid yield options notes..................... -- 302,400 53,630 356,030
Minority interest.............................. 18,502 -- -- 18,502
Shareholders' equity:
Preferred stock.............................. -- -- -- --
Common stock................................. 24,856 511 6,639 32,006
Additional paid-in capital................... 3,322,268 1,114,520 1,680,950 6,117,738
Common stock warrants........................ -- 31,500 11,071 42,571
Retained earnings............................ 214,621 19,871 (19,871) 214,621
Other........................................ 49,288 -- -- 49,288
Unrealized gain on investments............... 154,642 12,631 (12,631) 154,642
Cost of shares held in treasury.............. (1,973) -- -- (1,973)
---------- ---------- ---------- -----------
Total Shareholders' Equity............. 3,763,702 1,179,033 1,666,158 6,608,893
---------- ---------- ---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................... $7,261,285 $3,327,668 $1,719,788 $12,308,741
========== ========== ========== ===========
</TABLE>
<PAGE> 48
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR CHANNEL
1997 1997 PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENT MERGER
------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Net revenue.......................... $1,273,983 $650,844 $ -- $1,924,827
Operating expenses................... 749,796 435,301 -- 1,185,097
Depreciation and amortization........ 289,689 102,887 82,765 475,341
Corporate expenses................... 30,675 14,093 -- 44,768
---------- -------- -------- ----------
Operating income (loss).............. 203,823 98,563 (82,765) 219,621
Interest expense..................... 218,437 117,710 -- 336,147
Other income (expense) -- net........ 187 12,060 -- 12,247
---------- -------- -------- ----------
Income (loss) before income taxes.... (14,427) (7,087) (82,765) (104,279)
Income tax (expense) benefit......... (25,791) (1,096) -- (26,887)
---------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates......................... (40,218) (8,183) (82,765) (131,166)
Equity in earnings (loss) of
nonconsolidated affiliates......... 6,029 -- -- 6,029
---------- -------- -------- ----------
Net income (loss) before
extraordinary items................ $ (34,189) $ (8,183) $(82,765) $ (125,137)
========== ======== ======== ==========
Net income (loss) before
extraordinary items per common
share:
Basic.............................. $ (.16) $ (.43)
========== ==========
Diluted............................ $ (.17) $ (.43)
========== ==========
Other Data:
After tax cash flow(1)............... $ 291,162 $ 94,704 $ -- $ 385,866
========== ======== ======== ==========
After tax cash flow per common
share -- diluted(2)................ $ 1.29 $ 1.30
========== ==========
</TABLE>
- -------------------------
(1) After-tax cash flow is defined as net income (loss) before unusual items
plus depreciation, amortization of intangibles (including nonconsolidated
affiliates) and deferred taxes. After-tax cash flow is not presented as a
measure of operating results and does not purport to represent cash provided
by operating activities. After-tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
(2) After-tax cash flow per share is defined as after-tax cash flow divided by
weighted average common shares and common share equivalents outstanding
assuming dilution.
<PAGE> 49
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CLEAR CHANNEL
1998 1998 PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENT MERGER
------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Net revenue....................... $1,109,521 $589,184 $ -- $1,698,705
Operating expenses................ 659,215 391,942 -- 1,051,157
Depreciation and amortization..... 251,923 97,352 46,915 396,190
Corporate expenses................ 32,864 13,052 -- 45,916
---------- -------- -------- ----------
Operating income (loss)........... 165,519 86,838 (46,915) 205,442
Interest expense.................. 133,781 80,470 -- 214,251
Other income (expense) -- net..... 3,817 10,728 -- 14,545
---------- -------- -------- ----------
Income (loss) before income
taxes........................... 35,555 17,096 (46,915) 5,736
Income tax (expense) benefit...... (45,339) (18,485) -- (63,824)
---------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates...................... (9,784) (1,389) (46,915) (58,088)
Equity in earnings (loss) of
nonconsolidated affiliates...... 9,692 -- -- 9,692
---------- -------- -------- ----------
Net income (loss) before
extraordinary items............. $ (92) $ (1,389) $(46,915) $ (48,396)
========== ======== ======== ==========
Net income (loss) before
extraordinary items per common
share:
Basic........................... $ (.00) $ (.15)
========== ==========
Diluted......................... $ (.00) $ (.14)
========== ==========
Other Data:
After tax cash flow(1)............ $ 289,352 $ 95,963 $ -- $ 385,315
========== ======== ======== ==========
After tax cash flow per common
share -- diluted(2)............. $ 1.13 $ 1.16
========== ==========
</TABLE>
- -------------------------
(1) After-tax cash flow is defined as net income (loss) before unusual items
plus depreciation, amortization of intangibles (including nonconsolidated
affiliates) and deferred taxes. After-tax cash flow is not presented as a
measure of operating results and does not purport to represent cash provided
by operating activities. After-tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
(2) After-tax cash flow per share is defined as after-tax cash flow divided by
weighted average common shares and common share equivalents outstanding
assuming dilution.
<PAGE> 50
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Clear Channel and Jacor unaudited pro forma combined condensed financial
statements reflect the merger, accounted for as a purchase, as follows:
<TABLE>
<S> <C>
Jacor common stock outstanding (in whole shares)............ 51,073,198
Exchange ratio (based on the estimated value per share of
$38.7054(1)).............................................. 1.40
-------------
Clear Channel's common stock to be issued in the merger (in
whole shares)............................................. 71,502,477
Estimated value per share................................... X $ 38.7054
-------------
$ 2,767,532
Estimated value of common stock options..................... 35,088
Estimated transaction costs................................. 50,000
-------------
Total estimated purchase price.................... $ 2,852,620
=============
</TABLE>
(1) The estimated value per share of $38.7054 is calculated using the seven day
average of the market closing price from three days prior to three days
following the signing of the merger agreement.
For purpose of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $ 2,852,620
Plus -- estimated fair value of LYONs notes in excess of
carrying value............................................ 53,630
Plus -- estimated fair value of Jacor common stock warrants
in excess of carrying value............................... 11,071
Less -- Jacor's net assets exchanged in the merger at
September 30, 1998 adjusted for the elimination of
existing net licenses and goodwill of $2,352,291.......... (1,204,758)
-----------
Estimated excess purchase price (allocated to licenses and
goodwill)................................................. $ 4,122,079
===========
</TABLE>
The estimated excess purchase price allocated to licenses and goodwill of
$4,122,079 will be amortized over a 25 year period using the straight line
method which will result in annual goodwill amortization of $164,883.
The unaudited pro forma combined condensed financial statements of
operations excludes the effect of any divestiture of stations, which may be
required for regulatory approval, as Clear Channel intends the funds received
from any divestiture to be reinvested in acquisitions of similar stations in
other markets. Neither Clear Channel nor Jacor anticipates that any required
divestitures will be significant. The unaudited pro forma combined condensed
financial statements of operations also excludes the effect of retired or
refinanced debt as any retirement or refinancing of debt will not occur at or
prior to the closing of the merger.
<PAGE> 51
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
The pro forma merger adjustments at September 30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(a) Decrease in cash and cash equivalents resulting from
estimated merger expenses................................. $ (50,000)
(b) Increase in goodwill and licenses equal to the excess
purchase price of the merger.............................. 1,613,629
(c) Decrease in accumulated amortization resulting from the
elimination of Jacor's existing accumulated amortization
on goodwill............................................... 156,159
(d) Record liquid yield option notes at estimated fair value.... 53,630
(e) Increase common stock to account for Clear Channel common
stock given in the merger at $0.10 par value.............. 6,639
(f) Increase additional paid-in capital to account for Clear
Channel common stock given in the merger at $38.7054 per
share less $0.10 par value ($1,645,862) plus the value of
Jacor stock options included in the Merger ($35,088)...... 1,680,950
(g) Record common stock warrants at estimated fair value........ 11,071
(h) Eliminate Jacor's existing retained earnings balance........ (19,871)
(i) Eliminate Jacor's existing unrealized gain on investments
balance................................................... (12,631)
</TABLE>
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
-------------------
12/31/97 9/30/98
-------- --------
<S> <C> <C> <C>
(j) Increase in amortization expense resulting from the
additional goodwill created by the merger and a
change in the life of goodwill amortization from 40
years (Jacor's policy) to 25 years (Clear Channel's
policy). This amortization expense results in a
permanent difference and will not be deductible for
federal income tax purposes........................ $(82,765) $(46,915)
</TABLE>
<PAGE> 52
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
Pro forma basic and diluted share information is as follows:
<TABLE>
<CAPTION>
12/31/97 9/30/98
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Basic
Clear Channel pro forma weighted average shares
outstanding............................................... 218,810 244,079
Jacor pro forma weighted average shares outstanding......... 49,348 50,133
Increase weighted average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the exchange ratio of 1.40, (51,073 X .40)...... 20,429 20,429
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 288,587 314,641
======= =======
Diluted
Clear Channel pro forma weighted average shares
outstanding............................................... 225,486 256,534
Jacor pro forma weighted average shares outstanding......... 51,051 54,347
Increase weighted average common stock outstanding to
account for Clear Channel common stock given in the merger
and to account for the dilution effect Jacor's common
stock warrants, employee stock options and other dilutive
shares have on the Company at the exchange ratio of 1.40,
(52,776 X .40) and (55,287 X .40), respectively........... 21,110 22,115
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 297,647 332,996
======= =======
</TABLE>
<PAGE> 53
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR CHANNEL ELLER PRO FORMA PAXSON PRO FORMA UNIVERSAL
HISTORICAL HISTORICAL ADJUSTMENT(1) HISTORICAL ADJUSTMENT(2) HISTORICAL
------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................... $697,068 $56,642 $ -- $78,104 $ -- $209,639
Operating expenses............. 394,404 33,804 -- 63,362 (1,246) 101,613
Depreciation and
amortization.................. 114,207 10,547 5,974 12,101 9,377 59,977
Noncash compensation expense... -- -- -- -- -- 8,289
Corporate expenses............. 20,883 2,318 -- 4,059 (4,059) --
-------- ------- ------- ------- -------- --------
Operating income (loss)........ 167,574 9,973 (5,974) (1,418) (4,072) 39,760
Interest expense............... 75,076 8,565 2,518 1,370 29,276 46,400
Other income
(expense) -- net.............. 11,579 (4,082) -- (1,034) -- (2,621)
-------- ------- ------- ------- -------- --------
Income (loss) before income
taxes......................... 104,077 (2,674) (8,492) (3,822) (33,348) (9,261)
Income tax (expense) benefit... (47,116) (3) 1,315 -- 13,339 --
-------- ------- ------- ------- -------- --------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.................... 56,961 (2,677) (7,177) (3,822) (20,009) (9,261)
Equity in earnings (loss) of
non-consolidated affiliates... 6,615 -- -- -- -- --
-------- ------- ------- ------- -------- --------
Net income (loss).............. $ 63,576 $(2,677) $(7,177) $(3,822) $(20,009) $ (9,261)
======== ======= ======= ======= ======== ========
Net income (loss) per common
share:
Basic......................... $ .36
========
Diluted....................... $ .33
========
<CAPTION>
1997
PRO FORMA MORE PRO FORMA CLEAR CHANNEL
ADJUSTMENT(3) HISTORICAL ADJUSTMENT(4) PRO FORMA
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue.................... $ -- $232,530 $ -- $1,273,983
Operating expenses............. -- 157,859 -- 749,796
Depreciation and
amortization.................. 30,881 23,592 23,033 289,689
Noncash compensation expense... (8,289) 1,327 (1,327) --
Corporate expenses............. -- 7,474 -- 30,675
-------- -------- -------- ----------
Operating income (loss)........ (22,592) 42,278 (21,706) 203,823
Interest expense............... -- 4,383 50,849 218,437
Other income
(expense) -- net.............. -- (3,655) -- 187
-------- -------- -------- ----------
Income (loss) before income
taxes......................... (22,592) 34,240 (72,555) (14,427)
Income tax (expense) benefit... -- (10,705) 17,379 (25,791)
-------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.................... (22,592) 23,535 (55,176) (40,218)
Equity in earnings (loss) of
non-consolidated affiliates... -- (586) -- 6,029
-------- -------- -------- ----------
Net income (loss).............. $(22,592) $ 22,949 $(55,176) (34,189)
======== ======== ======== ==========
Net income (loss) per common
share:
Basic......................... $ (.16)
==========
Diluted....................... $ (.17)
==========
</TABLE>
<PAGE> 54
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
1998
CLEAR CLEAR
CHANNEL UNIVERSAL PRO FORMA MORE PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENT(5) HISTORICAL ADJUSTMENT(6) PRO FORMA
---------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue......................... $909,555 $55,292 $ -- $144,674 $ -- $1,109,521
Operating expenses.................. 517,562 30,826 -- 110,827 -- 659,215
Depreciation and amortization....... 201,422 15,517 7,720 15,699 11,565 251,923
Noncash compensation expense........ -- 106 (106) 3,476 (3,476) --
Corporate expenses.................. 25,739 1,414 -- 5,711 -- 32,864
-------- ------- ------- -------- -------- ----------
Operating income (loss)............. 164,832 7,429 (7,614) 8,961 (8,089) 165,519
Interest expense.................... 94,555 13,159 -- 3,715 22,352 133,781
Other income (expense) -- net....... 13,416 (23) -- (9,576) -- 3,817
-------- ------- ------- -------- -------- ----------
Income (loss) before income taxes... 83,693 (5,753) (7,614) (4,330) (30,441) 35,555
Income tax (expense) benefit........ (48,766) -- -- (3,301) 6,728 (45,339)
-------- ------- ------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates........................ 34,927 (5,753) (7,614) (7,631) (23,713) (9,784)
Equity in earnings (loss) of non-
consolidated affiliates........... 10,063 -- -- (371) -- 9,692
-------- ------- ------- -------- -------- ----------
Net income (loss)................... $ 44,990 $(5,753) $(7,614) $ (8,002) $(23,713) $ (92)
======== ======= ======= ======== ======== ==========
Net income (loss) per common share:
Basic............................. $ .19 $ (.00)
======== ==========
Diluted........................... $ .19 $ (.00)
======== ==========
</TABLE>
<PAGE> 55
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
ELLER ACQUISITION
(1) Represents the pro forma effect of the acquisition of Eller assuming it
was acquired January 1, 1997.
<TABLE>
<CAPTION>
INCREASE(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(a) Increase in amortization of goodwill of $5,205 resulting
from the additional goodwill created by the
acquisition and a decrease in amortizable life from 40
years (Eller) to 25 years (Clear Channel) and
additional depreciation of $769 related to the
adjustment of fixed assets to fair value. ............ $(5,974)
(b) Increase in interest expense due to a higher amount of
average debt outstanding, which was partially offset
by a lower average interest rate (6% average rate for
Clear Channel and 8.8% for Eller during the first
three months of 1997). ............................... (2,518)
(c) Tax effect of the above adjustments to depreciation and
interest expense at Clear Channel's effective federal
and state tax rate of 40%. ........................... 1,315
</TABLE>
PAXSON ACQUISITION
(2) Represents the pro forma effect of the Paxson acquisition assuming it
was acquired January 1, 1997.
<TABLE>
<CAPTION>
INCREASE(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(d) Elimination of option plan compensation expense
resulting from the elimination of the plan............ $ 1,246
(e) Increase in amortization expense resulting from the
additional goodwill created by the acquisition........ (9,377)
(f) Elimination of corporate general and administrative
expenses resulting from the elimination of the Paxson
corporate
office................................................ 4,059
(g) Increase in interest expense (at an average interest
rate of 6.5% for the first nine months of 1997) due to
additional borrowing on Clear Channel's facility to
finance the acquisition cost.......................... (29,276)
(h) Tax effect of the above adjustment at Clear Channel's
effective federal and state tax rate of 40%. ......... 13,339
</TABLE>
<PAGE> 56
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, CONTINUED
UNIVERSAL MERGER
(3) The pro forma merger adjustments for the year ended December 31, 1997
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(i) Increase in amortization expense resulting from the
additional goodwill created by the merger............. $(30,881)
(j) Decrease in Noncash compensation to reverse the effect
of Financial Accounting Standards Board Statement No.
123 ("FAS 123") from the statement of operations as
Clear Channel elected to follow Accounting Principles
Board Opinion Number 25 ("APB 25") for earnings
presentation and implemented FAS 123 for footnote
disclosure only....................................... 8,289
</TABLE>
MORE ACQUISITION
(4) The pro forma adjustments for the year ended December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(k) Increase in amortization expense resulting from the
additional goodwill created by the acquisition. ...... $(23,033)
(l) Decrease in Noncash compensation to reverse the effect
of FAS 123 from the statement of operations as Clear
Channel elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 1,327
(m) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 6.62% for 1997. ..................... (50,849)
(n) The tax effect of adjustment (l) at the 1997 UK
statutory rate of 31.5% offset by the tax benefit of
adjustment (m) at Clear Channel's federal U.S. tax
rate in 1997 of 35%. ................................. 17,379
</TABLE>
<PAGE> 57
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, CONTINUED
UNIVERSAL MERGER
(5) The pro forma merger adjustments for the nine months ended September
30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(o) Increase in amortization expense resulting from the
additional goodwill created by the merger. ........... $(7,720)
(p) Decrease in Noncash compensation to reverse the effect
of FAS 123 from the statement of operations as the
Company elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 106
</TABLE>
MORE ACQUISITION
(6) The pro forma adjustments for the nine months ended September 30, 1998
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(q) Increase in amortization expense resulting from the
additional goodwill created by the acquisition. ...... $(11,565)
(r) Decrease in Noncash compensation to reverse the effect
of FAS 123 from the statement of operations as Clear
Channel elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 3,476
(s) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 6.62% for 1997. ..................... (22,352)
(t) The tax effect of adjustment (r) at the 1998 UK
statutory rate of 31.5% offset by the tax benefit of
adjustment (s) at Clear Channel's federal U.S. tax
rate in 1998 of 35%. ................................. 6,728
</TABLE>
<PAGE> 58
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OTHER JACOR
ACQUISITIONS OTHER NATIONWIDE ACQUISITION 1997
JACOR PRO FORMA ACQUISITIONS HISTORICAL PRO FORMA PRO FORMA JACOR
HISTORICAL ADJUSTMENTS PRO FORMA NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------ ------------ ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue...................... $530,574 $25,321(a) $555,895 $ 97,997 $ 565(e) $ (3,613)(h) $ 650,844
Broadcast operating expenses..... 356,783 16,760(a) 373,543 81,958 723(e) (20,923)(h) 435,301
Depreciation and amortization.... 78,485 8,182(a) 86,667 10,129 2,084(e) 4,007(i) 102,887
Corporate general and
administrative expenses........ 14,093 -- 14,093 3,623 -- (3,623)(h) 14,093
-------- ------- -------- -------- -------- -------- ---------
Operating income (loss).......... 81,213 379 81,592 2,287 (2,242) 16,926 98,563
Interest expense, net............ (80,008) (9,303)(b) (89,311) (4,616) (3,197)(e) (20,586)(j) (117,710)
Gain on sale of radio stations... 11,135 -- 11,135 44,132 (44,132)(f) -- 11,135
Other income (expense), net...... 664 298(c) 962 (37) -- -- 925
-------- ------- -------- -------- -------- -------- ---------
Income (loss) before income taxes
and extraordinary items........ 13,004 (8,626) 4,378 41,764 (49,571) (3,660) (7,087)
Income tax (expense) credit...... (9,600) 4,358(d) (5,242) (14,309) 16,992(g) 1,464(k) (1,096)
-------- ------- -------- -------- -------- -------- ---------
Income (loss) before
extraordinary items............ $ 3,404 $(4,268) $ (864) $ 27,455 $(32,579) $ (2,196) $ (8,183)
======== ======= ======== ======== ======== ======== =========
Income (loss) per common share:
Basic.......................... $ .08 $ (.16)
======== =========
Diluted........................ $ .08 $ (.16)
======== =========
</TABLE>
<PAGE> 59
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
HISTORICAL
NATIONWIDE
SIX MONTHS NATIONWIDE ACQUISITION 1998
JACOR ENDED PRO FORMA PRO FORMA JACOR
HISTORICAL JUNE 30, 1998 ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue................... $530,372 $50,171 $ -- $ 8,641(l) $589,184
Broadcast operating
expenses.................... 356,877 39,623 (738)(e) (3,820)(l) 391,942
Depreciation and
amortization................ 87,444 5,044 299(e) 4,565(i) 97,352
Corporate general and
administrative expenses..... 13,052 1,406 -- (1,406) 13,052
-------- ------- ----- -------- --------
Operating income (loss)....... 72,999 4,098 439 9,302 86,838
Interest expense, net......... (65,968) 452 -- (14,954)(j) (80,470)
Gain on sale of radio
stations.................... 10,896 -- -- -- 10,896
Other income (expense), net... (164) (4) -- -- (168)
-------- ------- ----- -------- --------
Income (loss) before income
taxes and extraordinary
items....................... 17,763 4,546 439 (5,652) 17,096
Income tax (expense) credit... (19,200) (1,546) -- 2,261(k) (18,485)
-------- ------- ----- -------- --------
Income (loss) before
extraordinary items......... $ (1,437) $ 3,000 $ 439 $ (3,391) $ (1,389)
======== ======= ===== ======== ========
Income (loss) per common
share:
Basic....................... $ (.03) $ (.03)(m)
======== ========
Diluted..................... $ (.03) $ (.03)(m)
======== ========
</TABLE>
<PAGE> 60
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) These adjustments for the following acquisitions reflect additional
revenues and expenses for the period January 1, 1997 to the acquisition
consummation date. Depreciation and amortization expense adjustments
reflect Jacor's purchase cost of the assets acquired.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND
REVENUE EXPENSES AMORTIZATION
------- --------- ------------
<S> <C> <C> <C>
Premiere Radio Networks, Inc. (completed June
1997)........................................ $14,130 $ 9,276 $4,348
EFM Companies (completed April 1997)........... 11,191 7,484 3,834
------- ------- ------
TOTAL................................ $25,321 $16,760 $8,182
======= ======= ======
</TABLE>
(b) The adjustment represents additional interest expense associated with
Jacor's borrowings under its credit facility and the issuance of various
debt securities in 1997. The assumed weighted average interest rate
associated with the borrowings is 7.9%.
(c) The adjustment represents miscellaneous income generated by Premiere for
periods prior to the acquisition.
(d) To provide for the tax effect of pro forma adjustments. The acquisition
adjustments described in Note (a) include non-deductible goodwill
amortization estimated to be approximately $1,350 for the year ended
December 31, 1997.
(e) The adjustments represent additional revenues and expenses, net of the
elimination of time brokerage agreement fees, related primarily to
Nationwide's acquisitions of radio stations in the Dallas, Phoenix and San
Diego broadcast areas. Nationwide has operated a majority of the stations
acquired in 1997 under local marketing agreements since January 1, 1997,
therefore a significant amount of the revenues and operating expenses
related to these stations are included in Nationwide's historical financial
statements for the year ended December 31, 1997. The adjustments for the
six months ended June 30, 1998 represent the elimination of time brokerage
agreement fees and additional depreciation and amortization expenses
resulting from the allocation of Nationwide's purchase price of KXGL in San
Diego.
(f) The adjustment represents elimination of Nationwide's gain on the sale and
exchange of certain radio stations in 1997.
(g) To provide for the tax effect of Nationwide's pro forma adjustments
relating to its 1997 acquisitions and divestitures at statutory rates.
(h) To eliminate the results for the divestiture of two San Diego stations and
estimated expense savings described below. Expense savings will result from
the elimination of redundant broadcast operating expenses arising from the
operation of multiple stations
<PAGE> 61
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, CONTINUED
in broadcast areas, changes in benefit plan and compensation structures to
conform with Jacor's and the elimination of Nationwide's corporate office
function.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative...................... 3,623
Benefit Plan expenses..................................... 2,850
Commissions............................................... 675
Promotion and programming................................. 2,500
Personnel reductions...................................... 3,200
Other..................................................... 1,200
-------
TOTAL........................................... $14,048
=======
</TABLE>
(i) The adjustment reflects the additional depreciation and amortization
expense resulting from the allocation of Jacor's purchase price to the
assets acquired including an increase in property and equipment and
identifiable intangible assets to their estimated fair market values.
(j) The adjustment reflects additional interest expense related to additional
borrowings under Jacor's credit facility, its 8% Notes and its 4 3/4%
Liquid Yield Option Notes offering completed during February of 1998 to
finance, in part, the acquisition of Nationwide.
(k) To provide for the tax effect of pro forma adjustments using an assumed
rate of 40%.
(l) To reflect the revenues and broadcast operating expenses of the Nationwide
stations for the period July 1, 1998 to the completion of the transaction
on August 10, 1998, net of the elimination of results for the divestiture
of two San Diego stations. The adjustment to broadcast operating expenses
is also net of projected expense savings as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1998
------------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative..................... $1,406
Benefit Plan expenses.................................... 1,741
Commissions.............................................. 413
Promotion and programming................................ 1,527
Personnel reductions..................................... 1,955
Other.................................................... 732
------
TOTAL.......................................... $7,774
======
</TABLE>
<PAGE> 62
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, CONTINUED
(m) The pro forma weighted average shares outstanding includes all shares
outstanding as of September 30, 1998. The pro forma weighted averages
shares outstanding of Jacor do not reflect any outstanding options and
warrants or the assumed conversion of the LYON's as they are antidilutive.
<PAGE> 63
Item 7.
(c) Index to Exhibits
23 Consent of PricewaterhouseCoopers LLP. (Filed herewith)
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Clear Channel Communications, Inc.
Date: December 9, 1998 By: /s/ HERBERT W. HILL, JR.
---------------------------
Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer
<PAGE> 65
Index to Exhibits
23 Consent of PricewaterhouseCoopers LLP. (Filed herewith)
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Clear Channel Communications, Inc. on Form S-3 (File No. 333-51957), on Form
S-4 (File No. 333-57987) and on Forms S-8 (File No.'s 33-64463, 333-29717, and
333-61883) of our report dated February 11, 1998 on our audits of the
consolidated financial statements of Jacor Communications, Inc. as of December
31, 1997 and 1996 and for each of the three years in the period ended December
31, 1997, which report is included in Clear Channel Communications, Inc.'s
Current Report on Form 8-K dated December 9, 1998.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
December 8, 1998
