FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999 Commission file number 1-9645
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1787539
(State of Incorporation) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216-6940
(210) 822-2828
(Address and telephone number
of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __x__ No _____
Indicate the number of shares outstanding of each class of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 12, 1999
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Common Stock, $.10 par value 337,627,207
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
Page No.
- - - - - -
Part I -- Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at June 30, 1999 and December 31, 1998 3
Consolidated Statements of Operations for the six and three months
ended June 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II -- Other Information
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and reports on Form 8-K 18
(a) Exhibits
(b) Reports on Form 8-K
Signatures 19
Index to Exhibits 20
<PAGE>
PART I
Item 1. UNAUDITED FINANCIAL STATEMENTS
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands of dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited) (*)
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 66,402 $ 36,498
Income tax receivable 4,040 --
Accounts receivable, less allowance of $25,317 at June 30,
1999 and $13,508 at December 31, 1998 544,471 307,372
Other current assets 145,071 66,090
--------------- -----------------
Total Current Assets 759,984 409,960
Property, Plant and Equipment
Land, buildings and improvements 268,931 158,089
Structures and site leases 1,742,804 1,627,704
Transmitter and studio equipment 410,632 235,099
Furniture and other equipment 150,394 101,681
Construction in progress 102,774 52,038
----------------- ------------------
2,675,535 2,174,611
Less accumulated depreciation (351,404) (258,824)
----------------- -----------------
2,324,131 1,915,787
Intangible Assets
Contracts 694,379 393,748
Licenses and goodwill 11,298,832 4,223,432
Other intangible assets 76,744 89,577
------------------ -----------------
12,069,955 4,706,757
Less accumulated amortization (458,687) (315,275)
----------------- ----------------
11,611,268 4,391,482
Other Assets
Restricted cash 142,061 --
Notes receivable 53,675 53,675
Investments in, and advances to, nonconsolidated affiliates 335,819 324,835
Other assets 329,197 109,269
Other investments 272,031 334,910
---------------- ----------------
Total Assets $ 15,828,166 $ 7,539,918
============= ==============
* From audited financial statements
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands of dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited) (*)
Current Liabilities
<S> <C> <C>
Accounts payable and accrued expenses $ 566,311 $ 209,173
Accrued interest 15,988 13,168
Accrued income taxes -- 4,554
Current portion of long-term debt 28,541 7,964
Other current liabilities 22,380 23,285
----------------- -----------------
Total Current Liabilities 633,220 258,144
Long-term debt 3,493,808 2,323,643
Liquid Yield Option Notes 492,705 --
Deferred income taxes 1,303,038 383,564
Other long-term liabilities 198,095 75,533
Minority interest 85,754 15,605
Shareholders' Equity
Common stock 33,655 26,370
Additional paid-in capital 9,143,003 4,067,297
Common stock warrants 57,935 --
Retained earnings 317,427 223,662
Other (48,743) 6,888
Unrealized gain on investments 118,640 161,185
Cost of shares held in treasury (371) (1,973)
------------------- ------------------
Total shareholders' equity 9,621,546 4,483,429
--------------- ---------------
Total Liabilities and
Shareholders' Equity $ 15,828,166 $ 7,539,918
============= ==============
* From audited financial statements
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Gross revenue $ 1,117,737 $ 590,810 $ 696,130 $ 360,961
Less: agency commissions 123,259 67,140 78,439 40,933
------------- -------------- -------------- --------------
Net revenue 994,478 523,670 617,691 320,028
Operating expenses 601,371 289,342 356,549 165,568
Depreciation and amortization 265,027 113,440 154,379 70,428
Corporate expenses 28,331 13,779 15,884 7,870
-------------- -------------- -------------- ---------------
Operating income 99,749 107,109 90,879 76,162
Interest expense 78,842 53,733 47,010 28,032
Gain on sale of stations 136,925 - 136,925 -
Other income (expense) - net 14,967 10,198 4,048 7,403
-------------- -------------- --------------- ---------------
Income before income taxes 172,799 63,574 184,842 55,533
Income taxes 82,852 36,619 79,962 32,360
-------------- -------------- -------------- --------------
Income before equity in earnings
of nonconsolidated affiliates 89,947 26,955 104,880 23,173
Equity in earnings of nonconsolidated affiliates 3,817 6,533 1,620 4,736
--------------- --------------- --------------- ---------------
Net income 93,764 33,488 106,500 27,909
Other comprehensive income, net of tax:
Foreign currency translation adjustments 52,946) -- (25,954) --
Unrealized gains on securities:
Unrealized holding gain (loss) arising
during period (27,640) 18,850 840 10,151
Less: reclassification adjustment for gains
included in net income (14,905) (12,228) (7,371) (10,444)
--------------- --------------- ---------------- ---------------
Comprehensive income (loss) $ (1,727) $ 40,110 $ 74,015 $ 27,616
================ ============== =============== ================
Net income per common share:
Basic $ .33 $ .15 $ .35 $ .11
================= ================= ================= ================
Diluted $ .32 $ .14 $ .33 $ .11
================= ================= ================= ================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 93,764 $ 33,488
Reconciling Items:
Depreciation 106,747 49,954
Amortization of intangibles 158,280 63,485
Deferred taxes 59,514 9,342
Amortization of film rights 8,514 8,409
Amortization of deferred financing charges 1,863 --
Payments on film liabilities (8,395) (8,961)
(Recognition) deferral of deferred income 6,284 (690)
(Gain) loss on disposal of assets (139,268) 389
Gain on sale of other investments (22,930) (18,812)
Equity in earnings of nonconsolidated affiliates (570) (3,549)
Payments from (to) nonconsolidated affiliates, net 8,010 1,399
Decrease minority interest (308) (3)
Changes in operating assets and liabilities:
(Increase) decrease accounts receivable (45,184) (18,515)
(Decrease) increase accounts payable, accrued expenses and other (84,602) 25
Increase (decrease) accrued interest 2,820 3,669
Increase (decrease) accrued income and other taxes (9,173) 19,874
---------------- --------------
Net cash provided by operating activities 135,366 139,504
</TABLE>
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE RECONCILING NET INCOME TO NET CASH
FLOWS PROVIDED BY OPERATING ACTIVITIES
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1999 1998
Cash flows from investing activities:
<S> <C> <C>
Increase in restricted cash $ (142,061) $ --
Decrease in notes receivable - net -- 35,373
Increase in investments in and advances to
nonconsolidated affiliates - net (9,183) (57,697)
Purchases of investments (8,582) (17,193)
Proceeds from sale of investments 29,659 25,768
Purchases of property, plant and equipment (75,932) (27,775)
Proceeds from disposal of assets 207,294 3,626
Acquisition of broadcasting assets (32,743) (168,247)
Acquisition of outdoor assets (401,597) (864,847)
Increase in other intangible assets (4,869) (8,278)
(Increase) decrease in other-net (6,349) (3,722)
---------------- ----------------
Net cash used in investing activities (444,363) (1,082,992)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,352,453 1,694,813
Payments on long-term debt (1,576,362) (1,864,151)
Payments of current maturities of long-term debt (2,054) (131)
Proceeds from exercise of stock options 51,948 3,415
Proceeds from issuance of common stock 512,916 577,250
Proceeds from issuance of convertible debt -- 566,009
------------------- --------------
Net cash provided by financing activities 338,901 977,205
Net increase in cash and cash equivalents 29,904 33,717
Cash and cash equivalents at beginning of period 36,498 24,657
--------------- ---------------
Cash and cash equivalents at end of period $ 66,402 $ 58,374
============== ==============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by Clear Channel
Communications, Inc. (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC") and, in the opinion of
management, include all adjustments (consisting only of normal recurring
accruals and adjustments necessary for adoption of new accounting standards)
necessary to present fairly the results of the interim periods shown. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. Management
believes that the disclosures made are adequate to make the information
presented not misleading. The results for the interim periods are not
necessarily indicative of results for the full year. The financial statements
contained herein should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1998 Annual Report on
Form 10-K.
The consolidated financial statements include the accounts of the Company and
its subsidiaries, the majority of which are wholly-owned. Investments in
companies in which the Company owns 20 percent to 50 percent of the voting
common stock or otherwise exercises significant influence over operating and
financial policies of the company are accounted for under the equity method. All
significant intercompany transactions are eliminated in the consolidation
process. All share, stock price and stock option amounts shown in the financial
statements and related footnote disclosures have been restated to reflect the
two-for-one stock split distributed on July 28, 1998 to stockholders of record
on July 21, 1998. Certain reclassifications have been made to the 1998
consolidated financial statements to conform to the 1999 presentation.
Note 2: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 Accounting for Derivative Instruments and
Hedging Activities. Statement 133 establishes new rules for the recognition and
measurement of derivatives and hedging activities. Statement 133 is amended by
Statement 137 Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, and is effective for
years beginning after June 15, 2000. The Company plans to adopt this statement
in fiscal year 2001. Management does not believe adoption of this statement will
materially impact the Company's financial position or results of operations.
Note 3: RECENT DEVELOPMENTS
On May 4, 1999, the Company closed its merger with Jacor Communications, Inc.
("Jacor"). Pursuant to the terms of the agreement, each share of Jacor common
stock was exchanged for 1.1573151 shares of the Company's common stock or
approximately 60.9 million shares valued at $4.2 billion. In addition, the
Company assumed approximately $1.4 billion of Jacor's long-term debt, as well as
Jacor's Liquid Yield Option Notes with an accreted value of approximately $309.4
million. Jacor options and stock appreciation rights outstanding at the time of
the merger are exercisable for approximately 3.7 million shares of the Company's
common stock. In addition, Jacor common stock purchase warrants and Liquid Yield
Option Notes are exercisable or convertible into approximately 12.6 million
shares of the Company's common stock. The Company refinanced $852.5 million of
Jacor's long-term debt at the closing of the merger using the Company's credit
facility. Subsequent to the merger, the Company tendered an additional $22.1
million of Jacor's long-term debt. This merger has been accounted for as a
purchase with resulting goodwill of approximately $2.8 billion, which is being
amortized over 25 years on a straight-line basis. This purchase price allocation
is preliminary pending completion of appraisals and other fair value analysis of
assets and liabilities. The results of operations of Jacor have been included in
the Company's financial statements beginning May 4, 1999.
Included in the purchase price of Jacor is $83 million of restricted cash
related to the disposition of Jacor assets in connection with the merger. In
addition, the Company swapped assets valued at $35 million in a transaction with
a third party in order to comply with governmental directives regarding the
Jacor merger. The Company also divested certain assets in connection with the
Jacor merger and governmental directives resulting in a gain on sale of stations
of $136.9 million and an increase in income tax expense (at the Company's
statutory rate of 38%) of $52.0 million in the second quarter of 1999. The
Company anticipates deferring the majority of this tax expense based on its
ability to replace the stations sold with qualified assets. The proceeds from
divestitures are being held in restricted trusts until suitable replacement
properties are identified. The following table details the reconciliation of
divestiture and acquisition activity in the restricted trust accounts.
<PAGE>
In thousands of dollars
Restricted cash resulting from Clear Channel divestitures $ 201,500
Restricted cash purchased in Jacor Merger 83,000
Restricted cash used in acquisitions (143,000)
Other changes to restricted cash 561
-------------
Restricted cash balance at June 30, 1999 $ 142,061
On June 11, 1999 the Company acquired a 50.5% equity interest in Dauphin OTA,
("Dauphin") a French company engaged in outdoor advertising, for approximately
$246 million. On June 24, 1999 the Company launched a tender offer for the
remaining shares outstanding. Dauphin's operations include approximately 103,000
outdoor advertising display faces in France, Spain, Italy, and Belgium. This
acquisition is being accounted for as a purchase with resulting goodwill of
approximately $266 million, which is being amortized over 25 years on a
straight-line basis. As of June 30, 1999, a preliminary purchase price
allocation for Dauphin was included in the Company's accounts resulting in a
$57.4 million addition to minority interest for the 49.5% of shares not
purchased as of June 30, 1999. The purchase price allocation is preliminary
pending completion of appraisals and other fair value analysis of assets and
liabilities. The Company consolidated the assets and liabilities of Dauphin as
of June 30, 1999 and will begin consolidating the results of operations July 1,
1999.
The results of operations for the six month periods ending June 30, 1999 and
1998 include the operations of Universal Outdoor Holding, Inc. ("Universal"),
More Group Plc. ("More Group"), and Jacor from the respective dates of
acquisition or merger as appropriate. Assuming the mergers and the acquisitions
of Universal, More Group, and Jacor had occurred at January 1, 1998, unaudited
pro forma consolidated results of operations for the six months ended June 30,
1999 and 1998 would have been as follows:
Pro Forma (Unaudited)
Six Months Ended June 30
In thousands, except per share data
1999 1998
---- ----
Net revenue $ 1,266,125 $ 1,049,500
Net income (loss) $ 97,913 $ (62,662)
Net income (loss) per share:
Basic $ .30 $ (.21)
Diluted $ .29 $ (.20)
The pro forma information above is presented in response to applicable
accounting rules relating to business acquisitions and is not necessarily
indicative of the actual results that would have been achieved had the mergers
and acquisitions of Universal, More Group, and Jacor occurred at the beginning
of 1998, nor is it indicative of future results of operations. The Company had
other acquisitions during the first half of 1999 and during 1998, the effects of
which, individually and in the aggregate, were not material to the Company's
consolidated financial position or results of operations.
<PAGE>
On January 21, 1999 the Company completed an equity offering of 1,725,000 shares
of common stock. The net proceeds to the Company of $80.2 million were used to
reduce the outstanding balance on the Company's credit facility.
To facilitate possible future acquisitions as well as public offerings, the
Company filed a registration statement on Form S-3 on April 12, 1999 covering a
combined $2 billion of debt securities, junior subordinated debt securities,
preferred stock, common stock, warrants, stock purchase contracts and stock
purchase units (the "shelf registration statement"). The shelf registration
statement also covers preferred securities that may be issued from time to time
by the Company's three Delaware statutory business trusts and guarantees of such
preferred securities by the Company.
On May 20, 1999 and June 23, 1999 the Company completed equity offerings of
4,997,457 shares and 1,325,300 shares of common stock, respectively. The net
proceeds to the Company of $342.6 million and $90.1 million were used to reduce
the outstanding balance on the Company's credit facility.
Note 4 SEGMENT DATA
In thousands of dollars
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------- --------- --------- --------
Net revenue
<S> <C> <C> <C> <C>
Broadcasting $ 499,336 $ 302,977 $ 347,763 $ 168,623
Outdoor 495,142 220,693 269,928 151,405
------------- ------------- ------------- -------------
Consolidated $ 994,478 $ 523,670 $ 617,691 $ 320,028
Operating expenses
Broadcasting $ 298,940 $ 179,761 $ 200,627 $ 93,047
Outdoor 302,431 109,581 155,922 72,521
------------- ------------- ------------- --------------
Consolidated $ 601,371 $ 289,342 $ 356,549 $ 165,568
Depreciation and Amortization
Broadcasting $ 105,754 $ 52,447 $ 77,769 $ 27,275
Outdoor 159,273 60,993 76,610 43,153
------------- -------------- -------------- --------------
Consolidated $ 265,027 $ 113,440 $ 154,379 $ 70,428
Operating income
Broadcasting $ 78,426 $ 62,466 $ 59,452 $ 43,654
Outdoor 21,323 44,643 31,427 32,508
-------------- -------------- -------------- --------------
Consolidated $ 99,749 $ 107,109 $ 90,879 $ 76,162
Total identifiable assets
Broadcasting $10,925,713 $ 4,218,004 $10,925,713 $ 4,218,004
Outdoor 4,902,453 2,626,888 4,902,453 2,626,888
------------- ------------- ------------- -------------
Consolidated $15,828,166 $ 6,844,892 $15,828,166 $ 6,844,892
</TABLE>
Net revenue of $173,975 and $96,806 for the six and three months ended June 30,
1999, respectively, and identifiable assets of $1,643,391 and $942,030 as of
June 30, 1999 and 1998, respectively are included in the data above and are
derived from the Company's foreign operations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Comparison of Three and Six Months Ended June 30, 1999 to Three and Six Months
Ended June 30, 1998.
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Six Months As-Reported Pro Forma Three Months As-Reported Pro Forma
Ended June 30, % Increase % Increase Ended June 30, % Increase % Increase
Consolidated 1999 1998 (Decrease) (Decrease) 1999 1998 (Decrease) (Decrease)
------------ ---- ---- ---------- ---------- ---- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue $994,478 $523,670 89.9 % 20.6 % $617,691 $320,028 93.0% 18.0%
Operating expenses 601,371 289,342 107.8 % 20.4 % 356,549 165,568 115.3% 16.8%
Depreciation and
amortization 265,027 113,440 133.6 % 29.6 % 154,379 70,428 119.2% 21.7%
Operating income 99,749 107,109 (6.9)% (4.0)% 90,879 76,162 19.3% 11.8%
Interest expense 78,842 53,733 46.7 % 47,010 28,032 67.7%
Net income 93,764 33,488 180.0 % 106,500 27,909 281.6%
Net income per share:
Basic $ 33 $ .15 120.0 % $ .35 $ .11 218.2%
Diluted $ .32 $ .14 128.6 % $ .33 $ .11 200.0%
</TABLE>
The majority of the growth in the "as reported" net revenue and operating
expenses for the six months and three months ended June 30, 1999 was due to the
acquisitions of, Universal Outdoor Holding, Inc. ("Universal") in April of 1998,
More Group Plc ("More Group") in July 1998, and Jacor Communications, Inc.
("Jacor") in May 1999. In addition, 6 radio stations and 138,787 outdoor display
faces were purchased during the first six months of 1999, the effects of which,
individually and in the aggregate, were not material to the Company's
consolidated financial position or results of operations.
The majority of the increase in "as reported" depreciation and amortization was
primarily due to the acquisition of the tangible and intangible assets
associated with the purchase of the above-mentioned business combinations. The
majority of the decrease in operating income for the six months ended June 30
was primarily due to the increase in depreciation and amortization expense
resulting from the aforementioned business combinations. The majority of the
increase in operating income for the three months ended June 30 was due to
improved operations during the second quarter for both the broadcasting and
outdoor segments, which was partially offset by an increase in depreciation and
amortization. Interest expense increased primarily due to an increase in the
average amount of debt outstanding, which resulted from the above-mentioned
business combinations. The majority of the increase in net income was due to a
$136.9 million gain realized on the sale of stations the Company was required to
divest by governmental directives regarding the Jacor merger.
Pro forma presentation referred to above assumes the acquisition and/or merger
of Universal, More Group, and Jacor occurred on January 1, 1998. Pro forma net
revenue increased due to improved advertising rates in the broadcasting segment.
In addition, improved occupancy, increased advertising rates and other less
significant acquisitions within the outdoor segment also contributed to the
increase in pro forma net revenue. Pro forma operating expenses increased
primarily from the incremental selling costs related to the additional revenues.
The majority of the increase in pro forma operating income for the three months
ended June 30 was due to improved operations during the second quarter within
both the broadcasting and outdoor segments.
Liquidity and Capital Resources
The major sources of capital for the Company have been cash flow from
operations, advances on its revolving long-term line of credit (the "credit
facility"), and funds provided by various stock, convertible and other bond
offerings, and other borrowings. As of June 30, 1999 and December 31, 1998, the
Company had the following debt outstanding:
<PAGE>
(In millions of dollars)
June 30, 1999 December 31, 1998
Credit facility - domestic $ 1,658.8 $ 1,007.5
Credit facility - international 108.6 103.7
Senior convertible notes 575.0 575.0
Liquid Yield Option Notes 492.7 --
Long-term bonds 1,147.9 600.0
Other borrowings 32.1 45.4
---------- ----------
Total $ 4,015.1 $ 2,331.6
========== ==========
In addition, the Company had $66.4 million in unrestricted cash and cash
equivalents on hand at June 30, 1999. The Company also had $142.1 million in
restricted cash on hand at June 30, 1999. This cash is restricted for use in
connection with the acquisition of replacement properties as a result of the
Jacor merger.
On April 12, 1999 the Company filed a registration statement on Form S-3
covering a combined $2 billion of debt securities, junior subordinated debt
securities, preferred stock, common stock, warrants, stock purchase contracts
and stock purchase units (the "shelf registration statement"). The shelf
registration statement also covers preferred securities that may be issued from
time to time by the Company's three Delaware statutory business trusts and
guarantees of such preferred securities by the Company.
Credit Facility:
Domestic: The Company has a revolving credit facility for $2 billion, of which
$1.7 billion is outstanding and, taking into account other letters of credit,
$300 million is available for future borrowings. The credit facility converts
into a reducing revolving line of credit on the last business day of September
2000, with quarterly repayment of the outstanding principal balance to begin the
last business day of September 2000 and continue during the subsequent five year
period, with the entire balance to be repaid by the last business day of June
2005. During the first six months of the year, the Company made principal
payments on the credit facility totaling $132 million and drew down $303
million.
On August 11, 1999 the Company entered into a 364-day multi-currency revolving
credit facility for $1 billion. This credit facility matures on August 10, 2000
at which time the Company has the option to convert this facility to a four year
term loan. This credit facility allows for borrowings in various foreign
currencies, which the Company intends to use to hedge net assets in those
currencies.
International: The Company has a(pound)100 million, or approximately $157.6
million, revolving credit facility with a group of international banks. This
international credit facility allows for borrowings in various foreign
currencies, which are used to hedge net assets in those currencies. At June 30,
1999, approximately $49.0 million, was available for future borrowings and
$108.6 million, was outstanding. This credit facility converts into a reducing
revolving facility on January 10, 2000 with annual payments of(pound)19 million
due in 2000 and 2001. The credit facility expires on January 10, 2002. At June
30, 1999, interest rates varied from 3.1% to 8.0%.
Equity Offerings:
On January 21, 1999 the Company completed an equity offering of 1,725,000 shares
of common stock. The net proceeds to the Company of $80.2 million were used to
reduce the outstanding balance on the Company's credit facility.
On May 20, 1999 and June 23, 1999 the Company completed equity offerings of
4,997,457 shares and 1,325,300 shares of common stock, respectively. The net
proceeds to the Company of $342.7 million and $90.1 million were used to reduce
the outstanding balance on the Company's credit facility.
Liquid Yield Option Notes: The Company assumed Liquid Yield Option Notes
("LYONs") as a part of the merger with Jacor. The Company assumed 43/4% LYONs
due 2018 and 51/2% LYONs due 2011 with fair values of $272.4 million and $220.3
million, respectively at June 30, 1999. Each LYON has a principal amount at
maturity of $1,000 and is convertible, at the option of the holder, at any time
on or prior to maturity, into the Company's common stock at a conversion rate of
7.227 and 15.522 for the 2018 and 2011 issues, respectively.
<PAGE>
Long Term Bonds:
The Company has various bond issues outstanding. In addition, the Company
assumed several issues of senior subordinated notes as part of the merger with
Jacor, which are summarized as follows:
In millions of dollars
<TABLE>
<CAPTION>
Interest
Bond Issue Interest Rate Face Value Fair Value Maturity Date Payment Terms
---------- ------------- ---------- ---------- ------------- -------------
Assumed in Jacor Merger:
<S> <C> <C> <C> <C> <C>
Senior subordinated notes 10.125% $ 100.0 $ 107.0 6/15/06 Semi-annual
Senior subordinated notes 9.750% 170.0 182.4 12/15/06 Semi-annual
Senior subordinated notes 8.750% 150.0 156.2 6/15/07 Semi-annual
Senior subordinated notes 8.000% 119.6 124.5 2/15/10 Semi-annual
</TABLE>
Subsequent to the merger with Jacor, the Company tendered $22.1 million of the
senior subordinated notes.
Other:
During the first six months of 1999, in addition to the merger with Jacor, the
Company purchased the broadcasting assets of 6 radio stations in 4 markets for
$145.5 million, and acquired approximately 113 additional outdoor display faces
in 11 domestic markets and 138,787 additional outdoor display faces in 12
international markets for a total of $401.6 million. In addition, the Company
purchased capital equipment totaling $75.9 million.
Future acquisitions of broadcasting stations, outdoor advertising facilities and
other media-related properties affected in connection with the implementation of
the Company's acquisition strategy are expected to be financed from increased
borrowings under the credit facility, additional public equity and debt
offerings and cash flow from operations. The Company believes that cash flow
from operations as well as the proceeds from securities offerings made by the
Company from time to time will be sufficient to make all required future
interest and principal payments on the credit facility, senior convertible notes
and bonds, and will be sufficient to fund all anticipated capital expenditures.
The ratio of earnings to fixed charges is as follows:
6 Months ended
June 30, Year Ended
- -------------------- ----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
- ---- ---- ---- ---- ---- ---- ----
3.06 2.15 1.83 2.32 3.63 3.32 5.54
The ratio of earnings to fixed charges has been computed on a total enterprise
basis. Earnings represent income from continuing operations before income taxes
less equity in undistributed net income (loss) of unconsolidated affiliates plus
fixed charges. Fixed charges represent interest, amortization of debt discount
and expense, and the estimated interest portion of rental charges. The Company
had no Preferred Stock outstanding and paid no dividends thereon for any period
presented.
Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could cause a system failure or miscalculations in the Company's
broadcasting, outdoor and corporate locations which could cause disruptions of
operations, including, among other things, a temporary inability to produce
broadcast signals, process financial transactions, or engage in similar normal
business activities.
<PAGE>
Based on recent system evaluations, surveys, and on-site inventories, the
Company determined that it would be required to modify or replace portions of
its software and certain hardware so that those systems will properly utilize
dates beyond December 31, 1999. The Company presently believes that with
modifications or replacements of existing software and certain hardware, the
Year 2000 issue can be mitigated. If such modifications and replacements are not
made, or are not completed in time, the Year 2000 issue could have a material
impact on the Company's operations.
The Year 2000 issue involves the identification and assessment of the existing
problem, plan of remediation, as well as a testing and implementation plan. To
date, the Company has substantially completed the identification and assessment
process, with the following significant financial and operational components
identified as being affected by the Year 2000 issue:
Computer hardware running critical financial accounting and information system
software that is not capable of recognizing a four-digit code for the applicable
year.
Advertising inventory management software responsible for managing, scheduling
and billing customer's broadcasting and outdoor advertising purchases.
Broadcasting studio equipment and software necessary to deliver radio and
television programming.
Significant non-technical systems and equipment that may contain
microcontrollers which are not Year 2000 compliant.
The Company has instituted the following remediation plan to address the Year
2000 issues:
A computer hardware replacement plan for computers running essential broadcast,
operational and financial software applications with Year 2000 compatible
computers has been instituted. As of June 30, 1999 approximately 70% of all
essential computers related to broadcast or studio equipment were Year 2000
compatible. Approximately 95% of all essential financial based computers were
Year 2000 compliant. The Company anticipates this replacement plan to be 100%
complete by the end of October 1999.
Software upgrades or replacement with advertising inventory management software
which is Year 2000 compliant have been planned, are in process, or have been
completed as of June 30, 1999. The Company has received assurances from its
software vendors, with a few minor exceptions, that supply its advertising
inventory management software that their software is Year 2000 compliant. For
these non-compliant vendors, the Company will install inventory management
software from a compliant vendor by the end of October 1999. Approximately 96%
of the broadcasting properties had Year 2000 compliant advertising inventory
management software as of June 30, 1999. All of the outdoor advertising
inventory management software is currently being upgraded and is targeted for
Year 2000 compliance by the end of October 1999.
The Company has received assurances from its software vendors that supply
broadcasting digital automation systems that the software used by the Company is
currently compliant or has upgrades currently available that are compliant.
Broadcast software and studio equipment was considered to be 70% compliant as of
June 30, 1999 and is anticipated to be 100% compliant by the end of October
1999.
Financial accounting software for the broadcasting segment has been replaced and
is Year 2000 compliant. Financial accounting software for the outdoor segment
has been upgraded to be Year 2000 compliant.
While the Company believes its efforts will provide reasonable assurance that
material disruptions will not occur due to internal failure, the possibility of
interruption still exists.
The Company is currently querying other significant vendors that do not share
information systems with it (external agents). To date, the Company is not aware
of any external agent with a Year 2000 issue that would materially impact its
results of operations, liquidity, or capital resources. However, the Company has
no means of ensuring that external agents will be Year 2000 ready. The inability
of external agents to complete their Year 2000 resolution process in a timely
fashion could materially impact the Company. The effect of non-compliance by
external agents is not determinable.
<PAGE>
In the ordinary course of business, the Company has acquired or plans to acquire
a significant amount of Year 2000 compliant hardware and software. These
purchases are part of specific operational and financial system enhancements
with completion dates during 1998 and early 1999 that were planned without
specific regard to the Year 2000 issue. These system enhancements resolve many
Year 2000 problems and have not been delayed as a result of any additional
efforts addressing the Year 2000 issue. Accordingly, these costs have not been
included as part of the costs of Year 2000 remediation. However, there are
several hardware and software expenditures that have been or will be incurred to
specifically remediate Year 2000 non-compliance. Incremental hardware and
software costs that the Company has attributed to the Year 2000 issue are
estimated at $3,250,000 plus or minus 10%. Of this cost, approximately 20% will
be expensed as modification or upgrade costs with the remaining costs being
capitalized as new hardware or software. As of June 30, 1999, approximately
$465,000 has been charged to expense and $2,250,000 capitalized as a result of
expenditures. Sources of funds for these expenditures will be supplied through
cash flow generated from operations and/or available borrowings from the
Company's credit facility. The Company's accounting policy is to expense costs
incurred due to maintenance, modification or upgrade costs and to capitalize the
cost of new hardware and software.
The Company believes it has an effective program in place to resolve the Year
2000 issue in a timely manner. As noted above, the Company has not yet completed
all necessary phases of the Year 2000 program. In the event that the Company
does not complete any additional phases, it could experience disruptions in its
operations, including among other things, a temporary inability to produce
broadcast signals, process financial transactions, or engage in similar normal
business activities. In addition, disruptions in the economy generally resulting
from the Year 2000 issues could also materially adversely affect the Company.
The Company could be subject to litigation for computer systems failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated.
The Company has contingency plans for certain critical applications in sites
deemed significant to operations. These contingency plans involve, among other
actions, manual work around for on-air and financial systems, a store of Year
2000 compliant computers available for rapid deployment, backup generators at
key broadcast and transmitter sites and staffing strategies to affect such
contingency plans.
Risks Regarding Forward Looking Statements
Except for the historical information, this report contains various
"forward-looking statements" which represent the Company's expectations or
beliefs concerning future events, including the future levels of cash flow from
operations. The Company cautions that these forward-looking statements involve a
number of risks and uncertainties and are subject to many variables which could
have an adverse effect upon the Company's financial performance. These variables
include economic conditions, the ability of the Company to integrate the
operations of Universal, More Group, Jacor, and Dauphin, shifts in population
and other demographics, level of competition for advertising dollars,
fluctuations in operating costs, technological changes and innovations, changes
in labor conditions, changes in governmental regulations and policies, effects
from the Year 2000 issue and certain other factors set forth in the Company's
SEC filings. Actual results in the future could differ materially from those
described in the forward-looking statements.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
At June 30, 1999, approximately 43.8% of the Company's long-term debt bears
interest at variable rates. Accordingly, the Company's earnings and after tax
cash flow are affected by changes in interest rates. Assuming the current level
of borrowings at variable rates and assuming a two percentage point change in
the first six months of 1999 average interest rate under these borrowings, it is
estimated that the Company's first six months of 1999 interest expense would
have changed by $17.7 million and that the Company's first six months of 1999
net income would have changed by $11.5 million. In the event of an adverse
change in interest rates, management would likely take actions to further
mitigate its exposure. However, due to the uncertainty of the actions that would
be taken and their possible effects, this analysis assumes no such actions.
Further this analysis does not consider the effects of the change in the level
of overall economic activity that could exist in such an environment.
The Company currently hedges a portion of its outstanding debt with interest
rate swap agreements that effectively fix the interest at rates from 4.5% to
8.0% on $1.1 billion of its current borrowings. These agreements expire from
October 1999 to December 2000. The fair value of these agreements at June 30,
1999 and settlements of interest during the first six months of 1999 were not
material.
Equity Price Risk
The carrying value of the Company's available-for-sale equity securities is
affected by changes in their quoted market prices. It is estimated that a 20%
change in the market prices of these securities would change their carrying
value at June 30, 1999 by $53.6 million.
Foreign Currency
The Company has operations in 32 countries throughout Europe and Asia. All
foreign operations are measured in their local currencies. As a result, the
Company's financial results could be affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in the foreign
markets in which the Company has operations. To mitigate a portion of the
exposure to risk of currency fluctuations throughout Europe and Asia to the
British pound, the Company has a natural hedge through borrowings in some other
currencies. This hedge position is reviewed monthly. The Company maintains no
derivative instruments to mitigate the exposure to translation and/or
transaction risk. However, this does not preclude the adoption of specific
hedging strategies in the future. The Company's foreign operations reported a
loss of $29.2 million for the first six months of 1999. It is estimated that a
5% change in the value of the U.S. dollar to the British pound would change net
income for the first six months of 1999 by $1.5 million.
<PAGE>
Part II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
An annual meeting of shareholders of the Company was held on April 27, 1999. L.
Lowry Mays, Karl Eller, Mark P. Mays, Randall T. Mays, Alan D. Feld, B. J.
McCombs, Theodore H. Strauss and John H. Williams were elected as directors of
the Company, each to hold office until the next annual meeting of shareholders
or until his successor has been elected and qualified, subject to earlier
resignation and removal. The shareholders approved an amendment to the Company's
Articles of Incorporation increasing the number of authorized shares of Common
Stock from 600 million to 900 million. The shareholders approved the selection
of Ernst & Young LLP as independent auditors for the year ending December 31,
1999.
The results of voting at the annual meeting of the shareholders were as follows:
Proposal No. 1
(Election of Directors)
Nominee For Withheld
L. Lowry Mays 233,725,333 3,748,514
Karl Eller 232,897,303 4,576,544
Mark P. Mays 233,732,404 3,741,443
Randall T. Mays 233,731,809 3,742,038
Alan D. Feld 233,735,365 3,738,482
B.J. McCombs 233,716,121 3,757,726
Theodore H. Strauss 234,141,356 3,332,491
John H. Williams 234,169,755 3,304,092
Proposal No. 2
(Amendment of the Articles of Incorporation to
Increase Common Stock to 900 million)
For Withhold/Against Exceptions/Abstain
228,912,855 8,157,486 403,506
Proposal No. 3
(Selection of Ernst & Young LLP as Independent Auditors for the year
ending December 31, 1999)
For Withhold/Against Exceptions/Abstain
237,091,572 16,276 365,999
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on Page 14
(b) Reports on Form 8-K
Filing Date Items Reported Financial Statements Reported
8-K/A 4/12/99 Item 5. Pro forma Pro forma statements 12/31/98
financial statements
assuming the merger
with Jacor had
occurred on 1/1/98.
8-K 5/7/99 Item 2. Business Pro forma statements 3/31/99
acquisition of
Jacor on 5/4/99.
8-K 6/23/99 Item 2. Business None, the required information
acquisition of under item 7(a) and 7(b) will
Dauphin on 6/11/99. be filed within 75 days of the
event date.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLEAR CHANNEL COMMUNICATIONS, INC.
August 13, 1999 /s/ Herbert W. Hill, Jr.
Herbert W. Hill, Jr.
Senior Vice President and
Chief Reporting Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
Number
2.1 Agreement and Plan of Merger dated as of October 8, 1998, as amended on
November 11, 1998, among Clear Channel Communications, Inc., CCU Merger
Sub, Inc. and Jacor Communications, Inc. (incorporated by reference to
Annex A to the Company's Registration Statement on Form S-4 (Reg. No.
333-72839) dated February 23, 1999).
3.1 Current Articles of Incorporation of the Company (incorporated by reference
to the exhibits of the Company's Registration Statement on Form S-3 (Reg.
No. 333-33371) dated September 9, 1997).
3.2 Second Amended and Restated Bylaws of the Company (incorporated by
reference to the exhibits of the Company's Registration Statement on Form
S-3 (Reg. No. 333-33371) dated September 9, 1997).
3.3 Amendment to the Company's Articles of Incorporation (incorporated by
reference to the exhibits to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998).
3.4 Second Amendment to the Company's Articles of Incorporation (incorporated
by reference to the exhibits to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999).
4.1 Buy-Sell Agreement by and between Clear Channel Communications, Inc., L.
Lowry Mays, B. J. McCombs, John M. Schaefer and John W. Barger, dated May
31, 1977 (incorporated by reference to the exhibits of the Company's
Registration Statement on Form S-1 (Reg. No. 33-289161) dated April 19,
1984).
4.2 Third Amended and Restated Credit Agreement by and among Clear Channel
Communications, Inc., NationsBank of Texas, N.A., as administrative lender,
the First National Bank of Boston, as documentation agent, the Bank of
Montreal and Toronto Dominion (Texas), Inc., as co-syndication agents, and
certain other lenders dated April 10, 1997 (the "Credit Facility")
(incorporated by reference to the exhibits of the Company's Amendment No. 1
to the Registration Statement on Form S-3 (Reg. No. 333-25497) dated May 9,
1997).
4.3 Senior Indenture dated October 1, 1997, by and between Clear Channel
Communications, Inc. and The Bank of New York as Trustee (incorporated by
reference to exhibit 4.2 of the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997).
4.4 First Supplemental Indenture dated March 30, 1998 to Senior Indenture dated
October 1, 1997, by and between the Company and The Bank of New York, as
Trustee (incorporated by reference to the exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).
4.5 Second Supplemental Indenture dated June 16, 1998 to Senior Indenture dated
October 1, 1997, by and between Clear Channel Communications, Inc. and the
Bank of New York, as Trustee (incorporated by reference to the exhibits to
the Company's Current Report on Form 8-K dated August 27, 1998).
4.6 Third Supplemental Indenture dated June 16, 1998 to Senior Indenture dated
October 1, 1997, by and between Clear Channel Communications, Inc. and the
Bank of New York, as Trustee (incorporated by reference to the exhibits to
the Company's Current Report on Form 8-K dated August 27, 1998).
4.7 Credit Agreement by and among Clear Channel Communications, Inc., Bank of
America, N.A. as administrative agent, BankBoston, N.A. as documentation
agent, the Bank of Montreal and Chase Manhattan Bank, as co-syndication
agents, and certain other lenders dated August 11, 1999.
11 Statement re: Computation of Per Share Earnings.
12 Statement re: Computation of Ratios.
27.1 Financial Data Schedule at June 30, 1999
27.2 Financial Data Schedule at June 30, 1998 (incorporated by reference to
exhibit 27 of the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998).
Draft of 9 August 1999
CREDIT AGREEMENT
AMONG
CLEAR CHANNEL COMMUNICATIONS, INC.
CERTAIN LENDERS
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
BANKBOSTON, N.A., AS DOCUMENTATION AGENT,
[BANK OF MONTREAL, AS CO-SYNDICATION AGENT],
AND
THE CHASE MANHATTAN BANK, AS CO-SYNDICATION AGENT
-------------------------
BANC OF AMERICA SECURITIES LLC, AS LEAD ARRANGER
AUGUST ___, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1Definitions
Section 1.1 Defined Terms.............................................1
Section 1.2 Amendments and Renewals..................................21
Section 1.3 Construction.............................................21
ARTICLE 2Advances
Section 2.1 The Advances.............................................21
Section 2.2 Manner of Borrowing and Disbursement.....................23
Section 2.3 Interest.................................................28
Section 2.4 Fees.....................................................30
Section 2.5 Prepayment...............................................30
Section 2.6 Reduction and Change of Commitment.......................31
Section 2.7 Non-Receipt of Funds by the Administrative Agent.........32
Section 2.8 Payment of Principal of Advances.........................32
Section 2.9 Reimbursement............................................33
Section 2.10 Manner of Payment........................................33
Section 2.11 Lending Offices..........................................34
Section 2.12 Sharing of Payments......................................34
Section 2.13 Calculation of Offshore Dollar Rate and Approved Offshore
Currency Rate............................................35
Section 2.14 Booking Loans............................................35
Section 2.15 Taxes....................................................35
Section 2.16 Conversion Option........................................38
ARTICLE 3Conditions Precedent
Section 3.1 Conditions Precedent to Closing and the Initial Advance..38
Section 3.2 Conditions Precedent to All Advances.....................40
ARTICLE 4Representations and Warranties
Section 4.1 Representations and Warranties...........................41
Section 4.2 Survival of Representations and Warranties, etc..........47
ARTICLE 5General Covenants
Section 5.1 Preservation of Existence and Similar Matters............48
Section 5.2 Business; Compliance with Applicable Law.................48
Section 5.3 Maintenance of Properties................................48
Section 5.4 Accounting Methods and Financial Records.................48
Section 5.5 Insurance................................................48
Section 5.6 Payment of Taxes and Claims..............................49
<PAGE>
Section 5.7 Visits and Inspections...................................49
Section 5.8 Payment of Indebtedness..................................49
Section 5.9 Use of Proceeds..........................................49
Section 5.10 Indemnity................................................49
Section 5.11 Environmental Law Compliance.............................50
Section 5.12 Conversion of Unrestricted Subsidiaries..................51
Section 5.13 Ownership of Subsidiaries................................52
Section 5.14 Year 2000 Compliance.....................................52
ARTICLE 6Information Covenants
Section 6.1 Quarterly Financial Statements and Information..........52
Section 6.2 Annual Financial Statements and Information;
Certificate of No Default...............................53
Section 6.3 Compliance Certificates.................................53
Section 6.4 Copies of Other Reports and Notices.....................53
Section 6.5 Notice of Litigation, Default and Other Matters.........55
Section 6.6 ERISA Reporting Requirements............................55
ARTICLE 7Negative Covenants
Section 7.1 Indebtedness............................................56
Section 7.2 Liens...................................................58
Section 7.3 Investments.............................................58
Section 7.4 Amendment and Waiver....................................59
Section 7.5 Liquidation, Disposition or Acquisition of Assets,
Merger, New Subsidiaries................................59
Section 7.6 Guaranties..............................................60
Section 7.7 Dividends...............................................60
Section 7.8 Affiliate Transactions..................................60
Section 7.9 Compliance with ERISA...................................61
Section 7.10 Leverage Ratio..........................................61
Section 7.11 Fixed Charges Coverage Ratio............................61
Section 7.12 Sale and Leaseback......................................61
Section 7.13 Sale or Discount of Receivables.........................61
Section 7.14 Business of Clear Channel Television Licenses, Inc.
and Clear Channel Radio Licenses, Inc. and
Clear Channel Metroplex Licenses, Inc...................62
Section 7.15 Subordinated Debt.......................................62
Section 7.16 Other Agreements........................................62
ARTICLE 8Default
Section 8.1 Events of Default.......................................62
Section 8.2 Remedies................................................66
ARTICLE 9Changes in Circumstances
Section 9.1 Offshore Basis Determination Inadequate.................66
Section 9.2 Illegality..............................................67
Section 9.3 Increased Costs.........................................67
<PAGE>
Section 9.4 Emu Changes.............................................68
Section 9.5 Effect On Base Rate Advances............................69
Section 9.6 Capital Adequacy........................................69
ARTICLE 10Agreement Among Lenders
Section 10.1 Agreement Among Lenders.................................70
Section 10.2 Lender Credit Decision..................................72
Section 10.3 Benefits of Article.....................................72
ARTICLE 11Miscellaneous
Section 11.1 Notices.................................................73
Section 11.2 Expenses................................................74
Section 11.3 Waivers.................................................74
Section 11.4 Determination by the Lenders Conclusive and Binding.....74
Section 11.5 Set-Off.................................................75
Section 11.6 Assignment..............................................77
Section 11.8 Severability............................................77
Section 11.9 Interest and Charges....................................77
Section 11.10 Headings................................................78
Section 11.11 Amendment and Waiver....................................78
Section 11.12 Exception to Covenants..................................78
Section 11.13 Credit Agreement Governs................................78
Section 11.14 Conversion of Currencies................................78
Section 11.15 GOVERNING LAW...........................................79
Section 11.16 WAIVER OF JURY TRIAL....................................79
Section 11.17 ENTIRE AGREEMENT........................................79
<PAGE>
Schedules and Exhibits
Schedule 1: Offshore Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation
Schedule 4: Licenses, Permits and Other Authorizations
Schedule 5: Existing Guaranties
Schedule 6: Subsidiaries
Schedule 7: Existing Investments
Schedule 8: Existing Indebtedness
Schedule 9: Material Adverse Changes
Schedule 10: Specified Percentages
Schedule 11: Existing Letters of Credit
Exhibit A: Revolving Credit Note
Exhibit B: Bid Rate Note
Exhibit C: Compliance Certificate
Exhibit D: Assignment and Acceptance
Exhibit E: Bid Rate Advance Request
Exhibit F: Confirmation of Bid
Exhibit G: Invitation to Bid
Exhibit H: Notice of Acceptance of Bid
Exhibit I: Swing Line Note
Exhibit J: Notice of Borrowing
Exhibit K: Notice of Continuation/Conversion
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of August ___, 1999, among CLEAR
CHANNEL COMMUNICATIONS, INC., a Texas corporation ("Borrower"), the Lenders from
time to time party hereto, BANK OF AMERICA, N.A., a national banking
association, as administrative agent for the Lenders, BANKBOSTON, N.A., as
Documentation Agent, [BANK OF MONTREAL], as Co-Syndication Agent and THE CHASE
MANHATTAN BANK, as Co-Syndication Agent.
BACKGROUND
The Borrower, the Administrative Agent and certain lenders entered into
that certain Credit Agreement dated as of April 10, 1997, in the maximum
principal amount of $2,000,000,000 (as amended from time to time, the "Primary
Credit Agreement").
The Borrower has requested that the Administrative Agent and the
Lenders provide a 364 day short term facility in an aggregate principal amount
of up to $1,000,000,000.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Defined Terms. For purposes of this Agreement:
"ARN" means the Australian Radio Network Limited, PTY, an Australian
propriety company, 50% of whose Capital Stock is owned by the Borrower.
"Additional Costs" has the meaning set forth in Section 9.6 hereof.
"Administrative Agent" means Bank of America, N.A., a national banking
association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Advance" means a Revolving Credit Advance, a Bid Rate Advance or a
Swing Line Advance and "Advances" means Revolving Credit Advances, Bid Rate
Advances and Swing Line Advances.
"Affiliate" means any Person that directly or indirectly through one or
more Subsidiaries Controls, or is Controlled By or Under Common Control with,
the Borrower.
<PAGE>
"Affiliation Agreements" means all affiliation agreements of the
Borrower and each Subsidiary with Fox Broadcasting.
"Agreement" means this Credit Agreement, as amended or renewed from
time to time.
"Agreement Currency" has the meaning specified in Section 11.14 hereof.
"Agreement Date" means the date of this Agreement.
"Applicable Currency" means, as to any particular payment or Advance,
Dollars or the Approved Offshore Currency in which it is denominated or is
payable.
"Applicable Environmental Laws" means applicable federal, state or
local laws, rules and regulations pertaining to health or the environment,
including without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (as amended from time to time, "CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended from time to time,
"RCRA"), the Texas Water Code, and the Texas Solid Waste Disposal Act.
"Applicable Fee Percentage" means, on any date, the applicable per
annum percentage set forth below based upon the Borrower's Index Debt Rating on
such date:
Applicability Offshore Basis
Category 1
BBB- or higher by S&P; or 0.125
Baa3 or higher by Moody's
Category 2
BB+ by S&P; or 0.200
Ba1 by Moody's
Category 3
BB or lower by S&P; or 0.225
Ba2 or lower by Moody's
<PAGE>
For purposes of the foregoing, (a) if neither Moody's nor S&P shall have in
effect an Index Debt Rating, then both such rating agencies will be deemed to
have established ratings for Index Debt Rating in Category 3; (b) if only one of
Moody's and S&P shall have in effect an Index Debt Rating, the Borrower and the
Lenders will negotiate in good faith to agree upon another rating agency to be
substituted by an amendment to this Agreement for the rating agency which shall
not have an Index Debt Rating in effect, and pending the effectiveness of such
amendment the Applicable Fee Percentage will be determined by reference to the
available Index Debt Rating; (c) if the Index Debt Rating established or deemed
to have been established by Moody's and S&P shall fall within different
Categories, the Applicable Fee Percentage shall be determined by reference to
the superior (or numerically lower) Category; provided, however, if the
difference in the Index Debt Ratings established by Moody's and S&P shall be
more than one Category, the Applicable Fee Percentage shall be determined by
reference to the Category which is one Category below the superior (or
numerically lower) Category; and (d) if any Index Debt Rating established or
deemed to have been established by Moody's or S&P shall be changed (other than
as a result of a change in the rating system of either Moody's or S&P), such
change shall be effective as of the date on which such change is first announced
by the rating agency making such change. Each change in the Applicable Fee
Percentage shall apply to all Advances during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of either Moody's
or S&P shall change prior to the Maturity Date, the Borrower and the Lenders
shall negotiate in good faith to amend the references to specific ratings in
this definition to reflect such changed rating system.
"Applicable Law" shall mean (a) in respect of any Person, all
provisions of laws of tribunals applicable to such Person, and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party and (b) in respect of contracts made or performed
in the State of Texas, "Applicable Law" also means the laws of the United States
of America, including, without limiting the foregoing, 12 USC Sections 85 and
86, as amended to the date hereof and as the same may be amended at any time and
from time to time hereafter, and any other statute of the United States of
America now or at any time hereafter prescribing the maximum rates of interest
on loans and extensions of credit, and the laws of the State of Texas,
including, without limitation, Article 5069-1H, Title 79, Revised Civil Statutes
of Texas, 1925, ("Art. 1H"), as amended, if applicable, and if Art. 1H is not
applicable, Article 5069-1D, Title 79, Revised Civil Statutes of Texas, 1925,
("Art. 1D"), as amended, and any other statute of the State of Texas now or at
any time hereafter prescribing maximum rates of interest on loans and extensions
of credit; provided however, that Chapter 346 of the Texas Finance Code does not
apply to this Agreement or Advances hereunder.
"Applicable Lender" has the meaning specified in Section 11.14 hereof.
"Applicable Margin" means, on any date, the applicable per annum
percentage set forth below based upon the Borrower's Index Debt Rating on such
date:
<PAGE>
Applicability Offshore Percentage
Category 1
BBB or higher by S&P; or 0.500
Baa2 or higher by Moody's
Category 2
BBB- by S&P; or 0.625
Baa3 by Moody's
Category 3
BB+ by S&P; or 1.000
Ba1 by Moody's
Category 4
BB or lower by S&P; or 1.375
Ba2 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P shall have in
effect an Index Debt Rating, then both such rating agencies will be deemed to
have established ratings for Index Debt Rating in Category 4; (b) if only one of
Moody's and S&P shall have in effect an Index Debt Rating, the Borrower and the
Lenders will negotiate in good faith to agree upon another rating agency to be
substituted by an amendment to this Agreement for the rating agency which shall
not have an Index Debt Rating in effect, and pending the effectiveness of such
amendment the Applicable Margin will be determined by reference to the available
Index Debt Rating; (c) if the Index Debt Rating established or deemed to have
been established by Moody's and S&P shall fall within different Categories, the
Applicable Margin shall be determined by reference to the superior (or
numerically lower) Category; provided, however, if the difference in the Index
Debt Ratings established by Moody's and S&P shall be more than one Category, the
Applicable Margin shall be determined by reference to the Category which is one
Category below the superior (or numerically lower) Category; and (d) if any
Index Debt Rating established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the date on which
such change is first announced by the rating agency making such change. Each
change in the Applicable Margin shall apply to all Offshore Advances that are
outstanding at any time during the period commencing on the effective date of
such change and ending on the date immediately preceding the effective date of
the next such change. If the rating system of either Moody's or S&P shall change
prior to the Maturity Date, the Borrower and the Lenders shall negotiate in good
faith to amend the references to specific ratings in this definition to reflect
such changed rating system.
<PAGE>
"Approved Offshore Currency" means (a) with respect to Revolving Credit
Advances and Bid Rate Advances, the Euro, and lawful currency of Switzerland,
England and Australia, provided that with respect to Revolving Credit Advances
in the opinion of all Lenders, in their sole discretion, such currency is at
such time freely traded in the offshore interbank foreign exchange markets and
is freely transferable and freely convertible into Dollars and (b) with respect
to Swing Line Advances, the lawful currency of Mexico, Denmark, Norway, Sweden,
Turkey, New Zealand, Singapore, Taiwan, Thailand and Hong Kong, provided that in
the opinion of the Swing Line Lenders, in their sole discretion, such currency
is at such time freely traded in the offshore interbank foreign exchange markets
and is freely transferable and freely convertible into Dollars.
"Approved Offshore Currency Advance" means an Advance denominated in an
Approved Offshore Currency.
"Approved Offshore Currency Lending Office" means the address of each
Lender specified on Schedule 1 attached hereto as its Approved Offshore Currency
Lending Office.
"Approved Offshore Currency Payment Office" means the addresses of the
Administrative Agent specified on Schedule 1 attached hereto.
"Approved Offshore Currency Rate" means, for any Offshore Advance to be
made in an Approved Offshore Currency for any Interest Period therefor, the
interest rate per annum (rounded upward to the nearest 1/100th of one percent)
determined by the Administrative Agent at approximately 11:00 a.m. (London
time), on the date which is two Business Days before the first day of such
Interest Period to be the offered quotations that appear on Telerate Screen
3740, 3750 and 3751 for deposits in the applicable Approved Offshore Currency in
the applicable Interbank Market for such Approved Offshore Currency for a length
of time approximately equal to the Interest Period for the Approved Offshore
Currency Advance sought by the Borrower. If at least two such offered quotations
appear on Telerate Screen 3740, 3750 and 3751, the Approved Offshore Currency
Rate shall be the arithmetic mean (rounded upward to the nearest 1/100th of one
percent) of such offered quotations, as determined by the Administrative Agent.
If Telerate Screen 3740, 3750 and 3751 is not available or has been
discontinued, the Approved Offshore Currency Rate shall be the rate per annum
that the Administrative Agent determines to be the arithmetic mean (rounded as
aforesaid) of the per annum rates of interest at which deposits in the
applicable Approved Offshore Currency in an amount approximately equal to the
principal amount of, and for a length of time approximately equal to the
Interest Period for, the Offshore Advance sought by the Borrower are offered to
the Administrative Agent in immediately available funds in the applicable
Interbank Market for such Approved Offshore Currency, on the date which is two
Business Days prior to the first day of an Interest Period.
"Art. 1D" shall mean Article 5069-1D, Title 79, Revised Civil Statutes
of Texas, 1925, as amended.
<PAGE>
"Art. 1H" shall mean Article 5069-1H, Title 79, Revised Civil Statutes
of Texas, 1925, as amended.
"Assignment Agreement" has the meaning ascribed thereto in Section 11.6
hereof.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances hereunder.
"Bank of America Guaranty" means the Guaranty in favor of Bank of
America, N.A. (formerly known as NationsBank, N.A.) on behalf of RDS
Broadcasting, Inc. in the amount of $9,575,000.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
Basis.
"Base Rate Revolving Credit Advance" means any Revolving Credit Advance
bearing interest at the Base Rate Basis.
"Base Rate Swing Line Advance" means any Swing Line Advance bearing
interest at the Base Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the lesser of (a) the Highest Lawful Rate on such day, or (b) the higher of
(i) the sum of (A) 0.50% plus (B) the Federal Funds Rate on such day or (ii) the
Prime Rate on such day. The Base Rate Basis shall be adjusted automatically as
of the opening of business on the effective date of each change in the Prime
Rate or Federal Funds Rate, as the case may be, to account for such change.
"Bid Rate Advance" means an Advance the interest rate on which is
determined by agreement between the Borrower and the Lender making such Advance
pursuant to Section 2.1(c) hereof.
"Bid Rate Advance Request" means any certificate signed by an
Authorized Signatory requesting Bid Rate Advances hereunder, which certificate
shall be substantially in the form of Exhibit E hereto.
"Bid Rate Borrowing" means a Borrowing comprised of Bid Rate Advances.
"Bid Rate Note" means each promissory note of the Borrower evidencing
Bid Rate Advances, substantially in the form of Exhibit B hereto, together with
any extension, renewal or amendment thereof or substitution therefor.
"Borrower" means Clear Channel Communications, Inc., a Texas
corporation.
<PAGE>
"Borrowing" means either a Revolvind Credit Borrowing, a Swing Line or
a Bid Rate Borrowing.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or Dallas, Texas are authorized or
required by Law to close, and, if the applicable Business Day relates to:
(a) an Offshore Advance denominated in Dollars, any such day on which
dealings are carried on in the applicable offshore Dollar market;
(b) with respect to the Euro, any such day which is:
(i) for payments or purchases of the Euro, a TARGET Business
Day; and
(ii) for all other purposes, including without limitation the
giving and receiving of notices hereunder, a TARGET Business Day on
which banks are generally open for business in London, Frankfurt and in
any other principal financial center as the Administrative Agent may
from time to time determine for this purpose; and
(c) an Offshore Advance denominated in any other Approved Offshore
Currency, a day on which commercial banks are open for foreign exchange business
in London, England, and on which dealings in the relevant Approved Offshore
Currency are carried on in the applicable offshore foreign exchange interbank
market in which disbursement of or payment in such Approved Offshore Currency
will be made or received hereunder.
"Calculation Date" means (i) the last Business Day of each fiscal
quarter, or (ii) if a Default or an Event of Default has occurred, at the
discretion of the Administrative Agent or the Determining Lenders.
"Capital Expenditures" means expenditures for the purchase of tangible
assets of long-term use which are capitalized in accordance with GAAP; provided,
however, Capital Expenditures shall not include assets acquired through trade
without any expenditure of cash, such trade capital expenditures not to exceed
$10,000,000 in aggregate value per year, such valuation to be determined using
the lesser of the fair market value of assets received or the value of air-time
run in exchange for the assets received.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and each class of partnership interests
(including, without limitation, general, limited and preference units) in any
Person that is a partnership.
<PAGE>
"Capitalized Lease Obligations" means that portion of any obligation of
the Borrower or any Restricted Subsidiary as lessee under a lease which at the
time would be required to be capitalized on a balance sheet prepared in
accordance with GAAP.
"CCC-Houston" means CCC-Houston AM, Ltd., a Texas limited partnership
and a Subsidiary of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means $1,000,000,000, as reduced from time to time
pursuant to Section 2.6 hereof.
"Communications Act" means, collectively, the Communications Act of
1934, as amended and the rules and regulations promulgated thereunder, as from
time to time in effect.
"Confirmation of Bid" means any certificate executed by an Authorized
Signatory confirming the terms of its Bid Rate Advance, which certificate shall
be in substantially the form of Exhibit E hereto.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that (a) in the event that no one
Person owns more than 50% of the outstanding Capital Stock of a corporation or
entity, any Person which beneficially owns, directly or, by contract or law,
indirectly, 10% or more (in number of votes) of the securities having ordinary
voting power for the election of directors (or other managing authority) of such
corporation or entity shall be conclusively presumed to control such corporation
or entity or (b) in the event that one Person owns greater than 50% of the
outstanding Capital Stock of a corporation or entity, any Person which
beneficially owns, directly or, by contract or law, indirectly, greater than 20%
or more (in number of votes) of the securities having ordinary voting power for
the election of directors (or other managing authority) of such corporation or
entity shall be conclusively presumed to control such corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code; provided, however, that the Subsidiaries of the Borrower shall be
deemed to be members of the Borrower's Controlled Group, and the Borrower and
any other entities (whether incorporated or not incorporated) which are under
common Control with the Borrower and which, together with the Borrower, are
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code,
shall be deemed to be members of the Borrower's Controlled Group on and after
the Agreement Date.
<PAGE>
"Conversion Date" means the date which is 364 days after the Agreement
Date and with respect to which the Borrower has exercised the Conversion Option.
"Conversion Option" means that option to be exercised by the Borrower
on the Option Date in accordance with Section 2.16 hereof to convert the
Commitment to a term loan.
"Debtor Relief Law" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief law affecting the rights of creditors generally from time to time
in effect.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the Base Rate Basis
plus two percent.
"Determining Lenders" means, on any date of determination, any
combination of the Lenders having at least 51% of the aggregate amount of the
Revolving Credit Advances then outstanding; provided, however, that if there are
no Revolving Credit Advances outstanding hereunder, "Determining Lenders" shall
mean any combination of Lenders whose Specified Percentages aggregate at least
51%.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a dividend paid solely in shares of the common stock of
such Person) on, or the making of any distribution, loan, advance or investment
to or in any holder of, any shares of Capital Stock of such Person (other than
salaries and bonuses paid in the ordinary course of business), or (b) any
purchase, redemption, or other acquisition or retirement for value of any shares
of Capital Stock of such Person; provided, however, that the acquisition of
shares of Capital Stock of such Person for the purpose of acquiring a Subsidiary
(whether by merger, consolidation, asset acquisition, stock acquisition, or
otherwise) shall not be deemed a Dividend if (a) such shares are used as a
portion or all of the purchase price for the acquisition of a Subsidiary within
a period of ninety days from the date the initial shares of such Capital Stock
were acquired and (b) such Person shall have given the Administrative Agent
prior written notice of its intention to acquire such Capital Stock for the
purpose of acquiring a Subsidiary.
"Dollar Advance" means an Advance denominated in Dollars.
"Dollar Equivalent" means (a) in relation to any amount denominated in
Dollars, the amount thereof and (b) in relation to an amount denominated in an
Approved Offshore Currency, the amount of such Dollars required to purchase the
relevant stated amount of Approved Offshore Currency at the Exchange Rate on the
date of determination. For the purposes of this Agreement, unless otherwise
expressly stated herein, the Dollar Equivalent principal amount of any Advance
shall be determined on the date on which the Notice of Borrowing is received
with respect thereto, provided, however, that the Notice of Borrowing is
received by 10 a.m., Dallas, Texas time, at least three days prior to the
requested Borrowing, and shall be recalculated on each Calculation Date and on
the date on which a Notice of Continuation/Conversion is received with respect
thereto.
<PAGE>
"Dollar Equivalent Excess" has the meaning specified in Section 2.5(b)
hereof.
"Eligible Assignee" means (a) a Lender, (ii) an Affiliate of a Lender,
and (iii) any other Person approved by the Administrative Agent and, unless an
Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 11.6 hereof, the Borrower, such approval not
to be unreasonably withheld or delayed by the Borrower or the Administrative
Agent and such approval to be deemed given by the Borrower if no objection is
received by the assigning Lender and the Administrative Agent from the Borrower
within two Business Days after notice of such proposed assignment has been
provided by the assigning Lender to the Borrower; provided, however, that
neither the Borrower nor any of its Affiliates shall qualify as an Eligible
Assignee.
"Eller" means Eller Media Corporation, a Delaware corporation, formerly
known as EMC Group, Inc., formerly Eller Media Company.
"Emu" means Economic and Monetary Union as contemplated in the Treaty.
"Emu Legislation" means (a) the Treaty and (b) legislative measures of
the European Council for the introduction of, changeover to, or operation of,
the Euro, in each case as amended or supplemented from time to time.
"Equity" means shares of Capital Stock, or options, warrants or any
other right to subscribe for or otherwise acquire Capital Stock, of the Borrower
or any Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries,
(a) a Reportable Event (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under regulations issued under Section
4043 of ERISA), (b) the withdrawal of any such Person or any member of its
Controlled Group from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice
of intent to terminate under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) the failure to make required
contributions which could result in the imposition of a lien under Section 412
of the Code or Section 302 of ERISA, or (f) any other event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan
or the imposition of any liability under Title IV of ERISA other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
<PAGE>
"Euro" means the single currency of Participating Member States
introduced in accordance with the provisions of Article 109(l)4 of the Treaty
and, in respect of all payments to be made under this Agreement in euros, means
immediately available, freely transferable funds.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Exchange Rate" means with respect to any Approved Offshore Currency on
a particular date, the rate at which such Approved Offshore Currency may be
exchanged into Dollars, as set forth on such date on the Reuters currency page
for exchanges of Dollars into such Approved Offshore Currency. In the event that
such rate does not appear on any Reuters currency page, the Exchange Rate with
respect to such Approved Offshore Currency shall be determined by reference to
such other publicly available service for displaying exchange rates as may be
agreed upon by the Administrative Agent and the Borrower or, in the absence of
such agreement, such Exchange Rate shall instead be the arithmetic mean of the
spot rates of exchange for the Administrative Agent and two other money center
banks in the interbank market where the foreign currency exchange operations of
the Administrative Agent and such two other money center banks in respect of
such Approved Offshore Currency are then being conducted, at or about 10:00 a.m.
local time in the offices of such money center banks, at such date for the
purchase of Dollars with such Approved Offshore Currency, for delivery two
Business Days later; provided, however, that if at the time of any such
determination, for any reason, no such spot rate is being quoted by the
Administrative Agent, the Administrative Agent may use any reasonable method it
deems applicable to determine its respective spot rate, and such determination
shall be prima facie evidence of such rate.
"Existing Letters of Credit" means those certain letters of credit more
specifically described on Schedule 11 hereto.
"FCC" means the Federal Communications Commission, or any governmental
agency succeeding to the functions thereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
<PAGE>
"Fixed Charges" means, for the Borrower and its Restricted Subsidiaries
on a consolidated basis determined in accordance with GAAP, for the four most
recently ended fiscal quarters preceding any date of determination, an amount
equal to the sum of (a) all payments of principal, interest, fees and other
amounts paid on all Indebtedness, plus (b) all payments under Capitalized Lease
Obligations, plus (c) all Capital Expenditures, plus (d) cash expenditures for
the payment of taxes, plus (e) all Dividends paid.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Guaranty" or "Guaranteed", as applied to an obligation, means and
includes (a) a guaranty, direct or indirect, in any manner, of any part or all
of such obligation, and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit.
"HBC" means Hispanic Broadcasting Corporation, a Delaware corporation.
"Highest Lawful Rate" shall mean at the particular time in question the
maximum rate of interest which, under Applicable Law, any Lender is then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, any Lender is permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower. For purposes of determining the Highest Lawful Rate under Applicable
Law, the indicated rate ceiling shall be (a) the weekly ceiling described in and
computed in accordance with the provisions of Art. 1H, or (b) either the
annualized ceiling or quarterly ceiling computed pursuant to Section .008 of
Art. 1D; provided, however, that at any time the weekly ceiling, the annualized
ceiling or the quarterly ceiling, as applicable, shall be less than 18% per
annum or more than 24% per annum, the provisions of Sections .009(a), .009(b) or
.009(c) of said Art. 1D shall control for purposes of such determination, as
applicable.
"Indebtedness" means, with respect to any Person, (a) all items, except
items of partners' equity or of Capital Stock or of surplus or of general
contingency or deferred tax reserves, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person, (b) all obligations secured by any Lien on any
property or asset owned by such Person, whether or not the obligation secured
thereby shall have been assumed, (c) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations of such Person
with respect to leases constituting part of a sale and leaseback arrangement,
all Guaranties, all obligations under interest rate swap agreements or similar
hedge agreements, all indebtedness for borrowed money (excluding, for purposes
of calculation of financial covenants only, indebtedness evidenced by
Intercompany Notes), and all reimbursement obligations with respect to
outstanding letters of credit, and (d) any "withdrawal liability" of the
Borrower or any Subsidiary, as such term is defined under Part I of Subtitle E
of Title IV of ERISA.
<PAGE>
"Indemnified Matters" has the meaning ascribed to it in Section 5.10(a)
hereof.
"Indemnitees" has the meaning ascribed to it in Section 5.10(a) hereof.
"Index Debt Rating" means the rating available to the Borrower's
senior, unsecured, non-credit-enhanced long term indebtedness for borrowed money
("Index Debt").
"Institutional Debt" means Indebtedness for borrowed money which may be
raised by the Borrower in the private placement or public debt markets.
"Intercompany Notes" means those notes payable to the Borrower or any
Subsidiary from any Subsidiary evidencing loans or advances made by the Borrower
or any Subsidiary to such Subsidiary.
"Interest Period" means for (a) any Offshore Advance, the period
beginning on the day the Advance is made and ending one, two, or three months
thereafter (as the Borrower shall select), and (b) any Bid Rate Advance, for
Offshore Bid Rate Advances, the period commencing on the date of such Advance
and ending one, two, three or six months thereafter, as the Borrower may elect,
and (c) any Swing Line Advances, the period commencing on the date of such
Advance and ending not less than 3 calendar days nor more than 90 days
thereafter.
Notwithstanding the foregoing, if (i) any Interest Period would end on
a day which shall not be a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless, with respect to Offshore Loans only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) no Interest Period may be selected for any Borrowing that ends later than
the Maturity Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, Capital Stock or other securities of any other Person,
or any direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business) or capital contribution to, or investment in any
other Person, including without limitation the incurrence or sufferance of
Indebtedness or accounts receivable of any other Person that are not current
assets or do not arise in the ordinary course of business.
<PAGE>
"Invitation to Bid" means any certificate executed by the
Administrative Agent notifying each Lender of the Borrower's Bid Rate Advance
Request, which certificate shall be in substantially the form of Exhibit G
hereto.
"Jacor Bond Debt and Option Notes" means those 10 and 1/8% Senior
Subordinated Notes due 2006, 9 and 3/4% Senior Subordinated Notes due 2006, 8
and 3/4% Senior Subordinated Notes due 2007 and 8% Senior Subordinated Notes due
2010, Liquid Yield Option Notes due 2011 and those Liquid Yield Option Notes due
2018, in each case issued by Jacor Communications Company, Jacor Communications,
Inc. or a predecessor.
"Judgment Currency" has the meaning specified in Section 11.14 hereof.
"Lender" means each financial institution or fund shown on the
signature pages hereof so long as such financial institution or fund maintains a
Commitment or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Assignee that hereafter becomes
party hereto pursuant to Section 11.6 hereof or as a result of an amendment to
this Agreement.
"Leverage Ratio" means, for any date of determination, the ratio of
Total Debt as of the date of determination to Operating Cash Flow for the four
most recently ended fiscal quarters preceding such date of determination.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other
encumbrance of any kind in respect of such property, whether or not choate,
vested or perfected.
"Loan Documents" means this Agreement, the Revolving Credit Notes, the
Bid Rate Notes, the Swing Line Notes, fee letters, and any other document or
agreement executed or delivered from time to time by the Borrower, any
Subsidiary or any other Person in connection herewith or as security for the
Obligations.
"Local Marketing Agreement" means any time brokerage agreements, local
market affiliation agreements or related or similar agreements entered into
between the Borrower or any Subsidiary and any other Person, as any of the above
may be amended, substituted, replaced or modified.
"Margin" means, as to any Offshore Bid Rate Advance, the margin
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) quoted by any Lender offering an Offshore Bid Rate
Advance pursuant to Section 2.2(h)(iii) hereof to be added or subtracted from
the Approved Offshore Currency Rate or the Offshore Dollar Rate, as the case may
be, to determine the interest rate applicable to such Advance.
<PAGE>
"Material Adverse Effect" means any act or circumstance or event that
(a) causes a Default, or (b) otherwise could reasonably be expected to be
material and adverse to the business, consolidated assets, liabilities,
financial condition, results of operations or prospects of the Borrower and its
Restricted Subsidiaries, together taken as a whole.
"Maturity Date" means the earlier of (i) August ___, 2000 (unless the
Commitment is converted to a term loan pursuant to Section 2.16 hereof in which
case such date shall be August ___, 2004) or (ii) the termination of the
Commitment pursuant to Section 8.2.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations.
"Moody's" means Moody's Investors Services, Inc.
"More Group" means the More Group Plc, a company incorporated in
England (number 309019) of 33 Golden Square, London, W1R 3PA.
"More Group Credit Facility" means those certain unsecured
multi-currency credit facilities among Barclays Bank Plc, Bank of Scotland, A1B
Group Plc, Svenska Handelsbank AB, Skandinaviska Enskilda Banken AB, The Chase
Manhattan Bank (as Lenders, as such Lenders may be replaced from time to time)
and More Group, as parent, borrower and guarantor.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"Necessary Authorization" means any license, permit, consent, approval
or authorization from, or any filing or registration with, any governmental or
other regulatory authority (including without limitation the FCC) necessary or
appropriate to enable the Borrower or any Subsidiary to maintain and operate its
business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
disposition of any asset by any Person or the issuance of Institutional Debt or
Equity by any Person (other than the net cash proceeds from the consolidation of
any Restricted Subsidiary with another Restricted Subsidiary), the aggregate
amount of cash received by such Person in connection with such transaction minus
reasonable fees, costs and expenses and related taxes.
<PAGE>
"Notice of Acceptance of Bid" means any certificate signed by an
Authorized Signatory of the Borrower accepting Bid Rate Advances, which
certificate shall be in substantially the form of Exhibit H hereto.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(d) hereof.
"NRNZ" means NRNZ Holdings, Limited, a New Zealand corporation of which
33 1/3% of the outstanding Capital Stock is owned by the Borrower.
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent) of the Borrower or any Subsidiary to the
Lenders under the Loan Documents, as they may be amended from time to time, and
(b) all obligations of the Borrower or any Subsidiary for losses, damages,
expenses or any other liabilities of any kind that any Lender may suffer by
reason of a breach by the Borrower or any Subsidiary of any obligation, covenant
or undertaking with respect to any Loan Document.
"Offshore Advance" means any Advance which the Borrower requests to be
made as an Offshore Advance or which is reborrowed as an Offshore Advance, in
accordance with the provisions of Section 2.2 hereof.
"Offshore Basis" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the Offshore Dollar
Rate or Approved Offshore Currency Rate, as applicable, plus the Applicable
Margin. The Offshore Basis shall be subject to and adjusted to account for
premiums assessed by each Lender for reserve or deposit requirements, which are
payable directly to each Lender. Once determined, the Offshore Basis shall
remain unchanged during the applicable Interest Period.
"Offshore Bid Rate" means a rate per annum equal to (a) the Offshore
Dollar Rate or Approved Offshore Currency Rate, as the case may be, plus or
minus (b) the Margin.
"Offshore Bid Rate Advance" means any Bid Rate Advance which bears
interest at an Offshore Rate.
"Offshore Lending Office" means, with respect to a Lender, the office
designated as its Offshore Lending Office for Dollar Advances on Schedule 1
attached hereto, and such other office of the Lender or any of its affiliates
hereafter designated by notice to the Borrower and the Administrative Agent.
"Offshore Dollar Rate" shall mean, for any Offshore Advance to be made
in Dollars for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest one-one hundredth (1/100th) of one percent
(1%)) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in United States dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period. If for any reason such rate is not available, the term
"Offshore Dollar Rate" shall mean, for any Offshore Advance to be made in
Dollars for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest one-one hundredth (1/100th) of one percent (1%))
appearing on Reuters Screen LIBO page as the London interbank offered rate for
deposits in United States dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
<PAGE>
"Operating Cash Flow" means, for any period, determined in accordance
with GAAP on a consolidated basis for the Borrower and its Restricted
Subsidiaries, the sum of (a) pre-tax net income (excluding therefrom (i) any
items of extraordinary gain, including net gains on the sale of assets other
than asset sales in the ordinary course of business, and (ii) any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense,
depreciation and amortization (including amortization of film contracts),
deferred and other non-cash expenses, and minus (c) cash payments made or
scheduled to be made with respect to film contracts. Operating Cash Flow shall
be adjusted to exclude (i) any extraordinary non-cash items deducted from or
included in the calculation of pre-tax net income and (ii) without duplication,
any accrued but not paid income or loss from Investments. For purpose of
calculation of Operating Cash Flow with respect to assets not owned at all times
during the four fiscal quarters preceding the date of determination of Operating
Cash Flow there shall be (i) included in Operating Cash Flow the Operating Cash
Flow of any assets acquired during any of such four fiscal quarters for the
twelve month period preceding the date of determination, and (ii) excluded from
Operating Cash Flow the Operating Cash Flow of any assets disposed of during any
of such four fiscal quarters for the twelve month period preceding the date of
determination; provided, however, that if any Subsidiary becomes a Restricted
Subsidiary after the Agreement Date and the Borrower shall directly or
indirectly own less than 90% of such Subsidiary's Capital Stock, or with respect
to Eller and its subsidiaries, Borrower shall directly or indirectly own less
than 88% of such Capital Stock, then for purposes of the calculation of
Operating Cash Flow, the Borrower shall only include a percentage of such
Subsidiary's operating cash flow equal to the Borrower's percentage ownership of
the Capital Stock of such Subsidiary.
"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP, with an
initial or remaining noncancellable lease term in excess of one year.
"Option Date" means the date which is 364 days after the Agreement
Date.
"Participant" has the meaning ascribed to it in Section 11.6(c) hereof.
<PAGE>
"Participating Member State" means each country which from time to time
becomes a Participating Member State as described in Emu Legislation.
"Participation" has the meaning ascribed to it in Section 11.6(c)
hereof.
"Payment Date" means the last day of the Interest Period for any
Offshore Advance, Bid Rate Advance or Swing Line Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
any Lien in favor of the Lenders to secure the Obligations hereunder;
(i) Liens on real estate for real estate taxes not yet delinquent, (ii)
Liens created by lease agreements to secure the payments of rental amounts and
other sums not yet due thereunder, (iii) Liens on leasehold interests created by
the lessor in favor of any mortgagee of the leased premises, and (iv) Liens for
taxes, assessments, governmental charges, levies or claims that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on such Person's books, but only so
long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
Easements, right-of-way, restrictions and other similar encumbrances on
the use of real property which do not interfere with the ordinary conduct of the
business of such Person;
Liens created to secure the purchase price of tangible personal
property acquired by such Person or created to secure Indebtedness permitted by
Section 7.1(d) hereof in an amount not to exceed $25,000,000 in the aggregate,
which is incurred solely for the purpose of financing the acquisition of such
assets and incurred at the time of acquisition, so long as each such Lien shall
at all times be confined solely to the asset or assets so acquired (and proceeds
thereof), and refinancings thereof so long as any such Lien remains solely on
the asset or assets acquired and the amount of Indebtedness related thereto is
not increased;
<PAGE>
Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established adequate reserves for such
judgments or awards, (ii) such judgments or awards shall be fully insured and
the insurer shall not have denied coverage, or (iii) such judgments or awards
shall have been bonded to the satisfaction of the Determining Lenders; and
Any Liens existing on the Agreement Date which are described on
Schedule 2 hereto, and Liens resulting from the refinancing of the related
Indebtedness, provided that the Indebtedness secured thereby shall not be
increased and the Liens shall not cover additional assets of the Borrower.
"Person" means an individual, corporation, partnership, trust or
unincorporated organization, limited liability company, or a government or any
agency or political subdivision thereof.
"Plan" means an employee pension benefit plan as defined in Section
3(2) of ERISA (including a Multiemployer Plan) that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
and is maintained for the employees of the Borrower, its Subsidiaries or any
member of their Controlled Group.
"Primary Credit Agreement" has the meaning ascribed thereto in the
"Background" section of this Agreement.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Administrative Agent from time to time as its reference rate
for the determination of interest rates for loans of varying maturities in
United States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Administrative Agent as
its "prime rate;" it being understood that such rate may not be the lowest rate
of interest charged by the Administrative Agent.
"Pro-Forma Debt Service" means, as of any date of determination,
determined in accordance with GAAP for the Borrower and its Restricted
Subsidiaries on a consolidated basis, the sum (without duplication) of (a) all
payments of principal, interest, fees and other amounts scheduled to be paid on
all Indebtedness during the succeeding four fiscal quarters (assuming for any
Indebtedness subject to a floating interest rate, an interest rate equal to the
applicable rate in effect on the date of determination), plus (b) without
duplication, all rentals and other amounts (excluding insurance premiums and
property taxes) scheduled to be paid under all Capitalized Lease Obligations
during the succeeding four fiscal quarters, plus (c) all debt discount and
expense scheduled to be amortized during the succeeding four fiscal quarters.
"Quarterly Date" means March 31, June 30, September 30 and December 31,
beginning September 30, 1999.
<PAGE>
"Refinancing Advance" means any Offshore Advance which is used to pay
the principal amount (or any portion thereof) of an Offshore Advance at the end
of its Interest Period and which, after giving effect to such application, does
not result in an increase in the aggregate amount of outstanding Offshore
Advances at the time of the Refinancing Advance.
"Regulatory Modification" has the meaning set forth in Section 9.6
hereof.
"Regulatory Modification Retroactive Effective Date" has the meaning
set forth in Section 9.6 hereof.
"Regulatory Modification Set Date" has the meaning set forth in Section
9.6 hereof.
"Release Date" means the date on which the notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitment has been terminated.
"Reportable Event" has the meaning set forth in Title IV of ERISA.
"Reset Date" means the first Business Day following the relevant
Calculation Date.
"Restricted Subsidiary" means any Subsidiary of Borrower which is not
an Unrestricted Subsidiary together with ARN and NRNZ.
"Revolving Credit Advance" means an Advance made pursuant to Section
2.1(a) hereof.
"Revolving Credit Borrowing" means a Borrowing consisting of Revolving
Credit Advances.
"Revolving Credit Note" means any promissory note of the Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal or amendment thereof or
substitution therefor.
"Solvent" means, as of any date of determination, with respect to any
Person, that on such date such Person is not "insolvent" (as that term is
defined in section 101 of the Bankruptcy Reform Act of 1978, as amended from
time to time and any successor statute), (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (c) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute an unreasonably
small capital.
"S&P" means Standard & Poor's Ratings Services, a Division of
The McGraw-Hill, Inc., a New York corporation.
<PAGE>
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 10, or if applicable, specified in its
most recent Assignment Agreement.
"Subordinated Debt" means any Institutional Debt of the Borrower or any
of its Subsidiaries which shall have been and continues to be validly and
effectively subordinated to the prior payment in full of the Obligations on
terms and documentation approved in writing by the Determining Lenders.
"Subsidiary" means (a) any corporation of which 50% or more of the
outstanding stock (other than directors' qualifying shares) having ordinary
voting power to elect a majority of its board of directors, regardless of the
existence at the time of a right of the holders of any class of securities of
such corporation to exercise such voting power by reason of the happening of any
contingency, is at the time owned by the Borrower, directly or through one or
more intermediaries, and (b) any other entity which is Controlled or then
capable of being Controlled by the Borrower, directly or through one or more
intermediaries, whether a Restricted Subsidiary or Unrestricted Subsidiary.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(b)
hereof.
"Swing Line Bank" means (a) Bank of America, N.A. and any successor
thereto in accordance with Section 10.1(b) hereof and (b) in the event of an
increase in the Swing Line Facility Borrowing Limit, any Lender which agrees to
fund Swing Line Advances in excess of the initial Swing Line Facility Borrowing
Limit.
"Swing Line Borrowing" means a Borrowing comprised of Swing Line
Advances.
"Swing Line Facility Borrowing Limit" means (a) initially, $75,000,000
and (b) in the event the Commitment is at any time in excess of $500,000,000,
provided that a Lender reasonably acceptable to the Administrative Agent has
agreed to fund Swing Line Advances in excess of the initial Swing Line Facility
Borrowing Limit, the sum of (i) $75,000,000 plus (ii) an amount equal to the
product of (A) 15% multiplied by (B) the remainder of the Commitment minus
$500,000,000.
"Swing Line Note" means the promissory note of the Borrower payable to
the order of each Swing Line Bank evidencing Swing Line Advances hereunder,
substantially in the form of Exhibit I hereto, together with any extension,
renewal or amendment thereof or substitution therefor.
<PAGE>
"TARGET Business Day" means a day when TARGET (Trans-European Automated
Real-time Gross settlement Express Transfer system), or any successor thereto,
is scheduled to be open for business.
"Termination Event" means, with respect to the Borrower, any of its
Subsidiaries or any Plan, (a) a Reportable Event, (b) the withdrawal from a Plan
during a Plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, (d) the institution of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan or appoint a trustee to administer a Plan, (e)
the failure to comply with the minimum funding requirements of ERISA with
respect to any Plan, or (f) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan.
"Total Debt" means, as of any date of determination, determined for the
Borrower and its Restricted Subsidiaries on a consolidated basis, the sum
(without duplication) of (a) all principal and interest owing under the Loan
Documents, (b) all Indebtedness evidenced by a promissory note or otherwise
representing borrowed money, (c) all Capitalized Lease Obligations and (d) all
Guaranties.
"Treaty" means the Treaty establishing the European Economic Community,
being the Treaty of Rome of March 25, 1957 as amended by the single European Act
1986 and the Maastricht Treaty (which was signed on February 7, 1992 and came
into force on November 1, 1993) as amended, varied or supplemented from time to
time.
"Type" means any type of Advance determined with respect to the
interest option applicable thereto, i.e., an Offshore Advance, a Base Rate
Advance or an Offshore Bid Rate Advance.
"Unrestricted Subsidiary" means those Subsidiaries designated as
Unrestricted Subsidiaries on Schedule 6, any entity acquired as an Investment
after the Agreement Date unless such Investment is designated as a Restricted
Subsidiary by Borrower prior to the completion of such Investment, or by
complying with the terms and provisions of Section 5.12(a) hereof. An
Unrestricted Subsidiary may become a Restricted Subsidiary and subject to the
provisions hereof by Borrower's designation thereof in accordance with the terms
and provisions of Section 5.12(b), as applicable.
"Weighted Average Life to Maturity" means, as of the date of
determination, with respect to any debt instrument, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal payment of
such debt instrument by the amount of such principal payment by (ii) the sum of
all such principal payments.
<PAGE>
"Year 2000 Compliant" has the meaning specified in Section 4.1(x)
hereto.
Amendments and Renewals. Each definition of an agreement in this
Article 1 shall include such agreement as amended to date, and as amended or
renewed from time to time in accordance with its terms, but only with the prior
written consent of the Determining Lenders.
Construction. The terms defined in this Article 1 (except as otherwise
expressly provided in this Agreement) for all purposes shall have the meanings
set forth in Section 1.1 hereof, and the singular shall include the plural, and
vice versa, unless otherwise specifically required by the context. All
accounting terms used in this Agreement which are not otherwise defined herein
shall be construed in accordance with GAAP on a consolidated basis for the
Borrower and its Subsidiaries, unless otherwise expressly stated herein. To the
extent that a material change in GAAP occurs after the Agreement Date, the
Borrower and Lenders agree to negotiate in good faith to effect conforming
changes to the financial covenants set forth in Article 7 hereof.
ARTICLE 2
Advances
The Advances.
Revolving Credit Advances. Each Lender severally agrees, upon the terms
and subject to the conditions of this Agreement, to make Revolving Credit
Advances to the Borrower in Dollars and Approved Offshore Currencies from time
to time up to and including the Option Date in an aggregate amount not to exceed
its Specified Percentage of the Commitment less its Specified Percentage of the
Swing Line Advances then outstanding (assuming compliance with all conditions to
drawing) for the purposes set forth in Section 5.9 hereof. On the Conversion
Date, all Revolving Credit Advances outstanding on the Conversion Date shall
convert to a term loan in the amount of the Revolving Credit Advances
outstanding on the Conversion Date and such term loan shall be due and payable
in one payment on the Maturity Date. Subject to the terms and conditions of this
Agreement, until the Option Date, Advances may be repaid and then reborrowed.
Any Revolving Credit Advance shall, at the option of the Borrower as provided in
Section 2.2 hereof (and, in the case of Offshore Advances, subject to
availability and to the provisions of Article 9 hereof), be made as a Base Rate
Advance or an Offshore Advance; provided that there shall not be outstanding to
any Lender, at any one time, more than ten Offshore Advances. Notwithstanding
any provision in any Loan Document to the contrary, in no event shall the
Lenders be required to make Revolving Credit Advances if after giving effect to
the making of such Advances the Dollar Equivalent principal amount of all
outstanding Revolving Credit Advances, Bid Rate Advances and Swing Line Advances
plus the principal amount of Indebtedness guaranteed by the Borrower pursuant to
the Bank of America Guaranty would exceed the Commitment. On the Maturity Date
unless sooner paid as provided herein, the outstanding Revolving Credit Advances
shall be repaid in full. After the Conversion Date, no Revolving Credit Advances
will be available except Refinancing Advances.
<PAGE>
Swing Line Advances. The Borrower may request the appropriate Swing
Line Bank to make, and the appropriate Swing Line Bank shall make, on the terms
and conditions hereinafter set forth, Swing Line Advances in Dollars and in
Approved Offshore Currencies to the Borrower from time to time on any Business
Day up to and including the Option Date in an aggregate principal Dollar
Equivalent amount not to exceed at any time with respect to both Swing Line
Banks the lesser of (a) the Swing Line Facility Borrowing Limit and (b) an
amount equal to the remainder of the Commitment minus the aggregate principal
Dollar Equivalent amount of Revolving Credit Advances and Bid Rate Advances then
outstanding and the principal amount of Indebtedness guaranteed by the Borrower
pursuant to the Bank of America Guaranty. Each Swing Line Advance shall be in an
amount not less than the Dollar Equivalent of $100,000. Subject to the terms
hereof, Swing Line Advances may be repaid and then reborrowed.
Bid Rate Advances. Each Lender may, in its sole discretion, and on the
terms and conditions set forth in this Agreement, make Bid Rate Advances to the
Borrower from time to time in Dollars or in Approved Offshore Currencies up to
and including the Option Date in an aggregate amount not in excess of the
difference between (i) the Commitment minus (ii) the sum of (A) the aggregate
principal Dollar Equivalent amount of all Revolving Credit Advances, Swing Line
Advances and other Bid Rate Advances then outstanding plus (B) the principal
amount of Indebtedness guaranteed by the Borrower pursuant to the Bank of
America Guaranty. Notwithstanding anything in the preceding sentence to the
contrary, outstanding Bid Rate Advances may not exceed the Dollar Equivalent of
$150,000,000 in the aggregate at any time. Bid Rate Advances may bear interest
at the Offshore Bid Rate. Each Offshore Bid Rate Advance shall be for a term of
1, 2, or 3 months. Each Bid Rate Advance Borrowing shall be in an aggregate
principal amount which is at least $5,000,000 and which is an integral multiple
of $1,000,000 in excess thereof (or the Dollar Equivalent of each such amount),
and each Bid Rate Advance by a Lender shall be in a principal amount which is at
least $1,000,000 and which is an integral multiple of $1,000,000 in excess
thereof (or the Dollar Equivalent of each such amount). No Lender shall have any
obligation to make Bid Rate Advances and the Borrower shall have no obligation
to accept an offer for Bid Rate Advances.
Manner of Borrowing and Disbursement.
Base Rate Advances. In the case of Base Rate Advances (other than Swing
Line Advances), the Borrower, through an Authorized Signatory, shall give the
Administrative Agent at least one Business Days' irrevocable written notice, or
irrevocable telephonic notice followed immediately by written notice in
substantially the form of Exhibit J hereto (a "Notice of Borrowing") (provided,
however, that the Borrower's failure to confirm any telephonic notice in writing
shall not invalidate any notice so given), of its intention to borrow or
reborrow a Base Rate Advance hereunder. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required. Such
Notice of Borrowing shall specify the requested funding date, which shall be a
Business Day, and the amount of the proposed aggregate Base Rate Advances to be
made by Lenders.
<PAGE>
Offshore Advances. In the case of Offshore Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' (or four Business Days', if such Advance is to be made in
an Approved Offshore Currency) irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice pursuant to a Notice of
Borrowing (provided, however, that the Borrower's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), of its
intention to borrow or reborrow an Offshore Advance hereunder. Notice shall be
given to the Administrative Agent prior to 10:00 a.m., Dallas, Texas time, in
order for such Business Day to count toward the minimum number of Business Days
required. Offshore Advances shall in all cases be subject to availability and to
Article 9 hereof. For Offshore Advances, the Notice of Borrowing shall specify
the requested funding date, which shall be a Business Day whether such Advance
is to be made in Dollars or in an Approved Offshore Currency and specifying such
Approved Offshore Currency, the amount of the proposed aggregate Offshore
Advances to be made by Lenders and the Interest Period selected by the Borrower,
provided that no such Interest Period shall extend past the Maturity Date or
prohibit or impair the Borrower's ability to comply with Section 2.8 hereof.
Swing Line Advances. In the case of Swing Line Advances, the Borrower,
through an Authorized Signatory, shall give the appropriate Swing Line Bank and
the Administrative Agent at least four Business Days before the date of any
proposed Swing Line Advance irrevocable telephonic notice (provided, however,
(i) the Borrower shall deliver written notice at least once a week confirming
the telephonic notices given by the Borrower with respect to Swing Line Advances
during the immediately preceding week and (ii) that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow or reborrow a Swing Line Advance. Such Notice
of Borrowing shall specify (i) the requested funding date, which shall be a
Business Day, (ii) the amount of the proposed Swing Line Advance, (iii) if the
Swing Line Advance is not in Dollars, the Approved Offshore Currency for such
Swing Line Advance and (iv) the maturity date of the proposed Swing Line
Advance.
Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof, the
Borrower shall have the option (i) to convert at any time all or any part of the
outstanding (A) Base Rate Advances to Offshore Advances or (B) Offshore Advances
to Base Rate Advances or (ii) upon expiration of any Interest Period applicable
to an Offshore Advance, to continue all or any portion of such Offshore Advance
equal to $500,000 and integral multiples of $100,000 (or the Dollar Equivalent
of each such amount) in excess of that amount as an Offshore Advance and the
succeeding Interest Period(s) of such continued Offshore Advance shall commence
on the last day of the Interest Period of the Offshore Advance to be continued;
provided, however, (a) Offshore Advances may not be made as Base Rate Advances,
(b) Offshore Advances may only be continued in the same currency as the original
Borrowing, (c) the Dollar Equivalent of any Offshore Advance that is continued
shall be recalculated as of the date of the continuation and (d) notwithstanding
anything in this Agreement to the contrary, no outstanding Advance may be
continued as, or converted into, an Offshore Advance when any Default or Event
of Default has occurred and is continuing. At least three Business Days (or four
Business Days prior to a proposed conversion to an Offshore Advance in an
Approved Offshore Currency) prior to a proposed conversion/continuation date,
the Borrower, through an Authorized Signatory, shall give the Administrative
Agent irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice in substantially the form of Exhibit K hereto (a
"Notice of Continuation/Conversion") (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), stating (i) the proposed conversion/continuation date (which
shall be a Business Day), (ii) the amount of the Advance to be
converted/continued, (iii) in the case of a conversion to, or a continuation of,
an Offshore Advance, the requested Interest Period, (iv) in the case of a
conversion of a Base Rate Advance to an Offshore Advance or continuation of an
Offshore Advance, stating that no Default or Event of Default has occurred and
is continuing, and (v) whether such Advance to be converted/continued is to be
made in Dollars or an Approved Offshore Currency, and specifying such Approved
Offshore Currency. If the Borrower, through an Authorized Signatory, shall fail
to give any notice in accordance with this Section 2.2(d), the Borrower shall be
deemed irrevocably to have requested that such Offshore Advance be converted to
a Base Rate Advance in the same principal amount. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
<PAGE>
Minimum Amounts. The aggregate amount of Base Rate Advances to be made
by the Lenders on any day shall be in a principal amount which is at least
$1,000,000 and which is an integral multiple of $100,000; provided, however,
that such amount may equal the unused amount of the Commitment. The aggregate
amount of Offshore Advances having the same Interest Period and to be made by
the Lenders on any day shall be in a principal amount which is at least
$5,000,000 and which is an integral multiple of $100,000 (or the Dollar
Equivalent of each such amount on the date of such Advance).
Notice and Disbursement. The Administrative Agent shall promptly notify
the Lenders of each notice received from the Borrower pursuant to this Section.
If such notice from the Borrower designated an Approved Offshore Currency, the
Administrative Agent shall promptly notify the Borrower and the Lenders of the
Dollar Equivalent thereof. Failure of the Borrower to give any notice in
accordance with Section 2.2(d) hereof shall result in a repayment of any
existing Offshore Advance on the applicable Payment Date by a Refinancing
Advance which is a Base Rate Advance. Each Lender shall, not later than noon,
Dallas, Texas time, on the date of any Revolving Credit Advance that is not a
Refinancing Advance, deliver to the Administrative Agent, at its address set
forth herein, such Lender's Specified Percentage of such Revolving Credit
Advance in immediately available funds in accordance with the Administrative
Agent's instructions, except that if such Advance is denominated in an Approved
Offshore Currency, each Lender shall make available its funds at such office as
the Administrative Agent has previously specified in a notice to each Lender, in
such funds as are then customary for the settlement of international
transactions in the applicable Approved Offshore Currency and as customary and
as specified by the Administrative Agent and no later than such local time as is
necessary for such funds to be received and transferred. Prior to 2:00 p.m.,
Dallas, Texas time, on the date of any Revolving Credit Advance hereunder, the
Administrative Agent shall, subject to satisfaction of the conditions set forth
in Article 3, disburse the amounts made available to the Administrative Agent by
the Lenders by (i) transferring such amounts by wire transfer pursuant to the
Borrower's instructions, or (ii) in the absence of such instructions, crediting
such amounts to the account of the Borrower maintained with the Administrative
Agent. All Revolving Credit Advances shall be made by each Lender according to
its Specified Percentage. No Lender shall be relieved of its obligation to fund
its Specified Percentage of any Revolving Credit Advance notwithstanding the
fact that at any time the aggregate outstanding principal amount of all Bid Rate
Advances made by such Lender exceed its Specified Percentage of the Commitment.
<PAGE>
Swing Line Advances. After confirming with the Administrative Agent the
availability of funds under the Commitment, the Swing Line Bank shall, not later
than 2:00 p.m., Dallas, Texas time, on the date of any Swing Line Advance,
deliver to the Administrative Agent at its address set forth herein, the amount
of such Swing Line Advance in immediately available funds in accordance with the
Administrative Agent's instructions. Prior to 2:30 p.m., Dallas, Texas time, on
the date of any Swing Line Advance, the Administrative Agent shall, subject to
the conditions set forth in Article 3, disburse the amount made available to the
Administrative Agent by the Swing Line Bank by (i) transferring such amounts by
wire transfer pursuant to the Borrower's instruction or (ii) in the absence of
such instructions, crediting such amounts to the account of the Borrower
maintained with the Administrative Agent. Forthwith upon demand by the Swing
Line Bank at any
EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE
In thousands of dollars, except per share data
Six months ended
June 30,
1999 1998
Numerator:
Net income (loss) $ 93,764 $ 33,488
Effect of dilutive securities:
Eller put/call option agreement (2,334) (2,229)
Convertible debt 5,687 2,453
Numerator for net income per
common share - diluted $ 97,117 $ 33,712
Denominator:
Weighted average common shares 287,012 222,708
Effect of dilutive securities:
Employee stock options 5,129 4,316
Eller put/call option agreement 1,693 2,042
Convertible debt 9,282 4,666
Denominator for net income
per common share - diluted 303,116 233,732
Net income (loss) per common share:
Basic $ .33 $ .15
Diluted $ .32 $ .14
EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
6 months ended
June 30, Year Ended
1999 1998 1998 1997 1996 1995 1994
Income (loss) before income
<S> <C> <C> <C> <C> <C> <C> <C>
taxes 172,799 63,574 117,922 104,077 71,240 49,817 36,396
Dividends and other received from
nonconsolidated affiliates 10,539 4,010 9,168 4,624 10,430 1,432 0
Total 183,338 67,584 127,090 108,701 81,670 51,249 36,396
Fixed Charges
Interest expense 78,842 53,733 135,766 75,076 30,080 20,752 7,669
Amortization of loan fees 649 923 2,220 1,451 506 1,004 82
Interest portion of rentals 9,627 4,033 16,044 6,120 424 361 262
Total fixed charges 89,118 58,689 154,030 82,647 31,010 22,117 8,013
Preferred stock dividends
Tax effect of preferred dividends 0 0 0 0 0 0 0
After tax preferred dividends 0 0 0 0 0 0 0
Total fixed charges and
preferred dividends 89,118 58,689 154,030 82,647 31,010 22,117 8,013
Total earnings available for
payment of fixed charges 272,456 126,273 281,120 191,348 112,680 73,366 44,409
Ratio of earnings to fixed
Charges 3.06 2.15 1.83 2.32 3.63 3.32 5.54
Rental fees and charges 120,333 50,417 200,550 76,500 5,299 4,510 3,273
Interest rate 8% 8% 8% 8% 8% 8% 8%
</TABLE>
EXHIBIT 27.1 - FINANCIAL DATA SCHEDULE
FISCAL-YEAR-END DEC-31-1999
PERIOD-END JUNE-30-1999
CASH 66401980
SECURITIES 0
RECEIVABLES 569787259
ALLOWANCES 25316268
INVENTORY 0
CURRENT-ASSETS 902045640
PP&E 2675534548
DEPRECEATION 351403649
TOTAL-ASSETS 15828165358
CURRENT-LIABILITIES 633220292
BONDS 1722944000
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 33654578
OTHER-SE 9587890566
TOTAL-LIABILITY-AND-EQUITY 15828165358
SALES 0
TOTAL-REVENUES 994477932
CGS 0
TOTAL-COSTS 601370756
OTHER-EXPENSES 13364113
LOSS-PROVISION 0
INTEREST-EXPENSE 78842277
INCOME-PRETAX 172798904
INCOME-TAX 82851582
INCOME-CONTINUING 93764449
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME 93764449
EPS-BASIC .33
EPS-DILUTED .32
