<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported):
February 23, 1999
(December 9, 1998)
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 1-9645 74-1787536
(State or other jurisdiction (Commission File Number) (IRS Employer
incorporation) Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (210) 822-2828
<PAGE> 2
Item 5. OTHER ITEMS
On December 9, 1998, Clear Channel Communications, Inc., a Texas
corporation (the Company), filed a Current Report on Form 8-K. The Company is
filing this amendment to adjust the pro forma information under item 7(b).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger. For accounting purposes Clear Channel will account
for the merger as a purchase of Jacor; accordingly the net assets of Jacor have
been adjusted to their estimated fair values based upon a preliminary purchase
price allocation.
The unaudited pro forma combined condensed statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998 give
effect to the merger as if it had occurred on January 1, 1997 and January 1,
1998, respectively. The unaudited pro forma combined condensed balance sheet at
September 30, 1998 gives effect to the merger as if it occurred on September 30,
1998.
The unaudited pro forma combined condensed statement of operations for the
year ended December 31, 1997 was prepared based upon the historical statement of
operations of Clear Channel, adjusted to reflect the acquisitions of 93% of the
outstanding capital stock of Eller, the radio assets and certain outdoor
advertising assets of Paxson, all of the outstanding capital stock of More and
the merger with Universal, as if such acquisitions and merger had occurred on
January 1, 1997 ("1997 Clear Channel Pro Forma"), and based upon the historical
statement of operations of Jacor adjusted to reflect the acquisition of the
assets of 17 radio stations from Nationwide, The EFM Companies, and Premiere, as
if such acquisitions had occurred on January 1, 1997 ("1997 Jacor Pro Forma").
The unaudited pro forma combined condensed statement of operations for the nine
months ended September 30, 1998 was prepared based upon the historical statement
of operations of Clear Channel, adjusted to reflect the merger with Universal
and the acquisition of More as if such merger and acquisition had occurred on
January 1, 1998 ("1998 Clear Channel Pro Forma"), and based upon the historical
statement of operations of Jacor adjusted to reflect the acquisition of the
assets of 17 radio stations from Nationwide as if such acquisition had occurred
on January 1, 1998 ("1998 Jacor Pro Forma"). The unaudited pro forma combined
condensed balance sheet was prepared based upon the historical balance sheet of
Clear Channel and the historical balance sheet of Jacor. Certain amounts in
Jacor's financial statements have been reclassified to conform to Clear
Channel's presentation.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements of Jacor and Clear
Channel incorporated herein by reference.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the actual results of operations or financial position
that would have occurred had the merger and the above described acquisitions and
merger transactions of Clear Channel and Jacor occurred on the dates indicated
nor are they necessarily indicative of future operating results or financial
position.
<PAGE> 3
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CLEAR CHANNEL
PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT MERGER
------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 48,192 $ 42,084 $ (50,000) $ 40,276
Accounts receivable, net..................... 287,067 198,327 -- 485,394
Other current assets......................... 65,603 29,385 -- 94,988
---------- ---------- ---------- -----------
Total Current Assets................... 400,862 269,796 (50,000) 620,658
Property, plant & equipment, net............... 1,713,449 260,212 -- 1,973,661
Intangible assets:
Contract valuations.......................... 275,211 360,000 -- 635,211
Licenses and goodwill........................ 4,362,111 2,508,450 1,613,629 8,484,190
Other intangible assets...................... 74,552 -- -- 74,552
---------- ---------- ---------- -----------
4,711,874 2,868,450 1,613,629 9,193,953
Less accumulated amortization.................. (254,869) (156,159) 156,159 (254,869)
---------- ---------- ---------- -----------
4,457,005 2,712,291 1,769,788 8,939,084
Other assets:
Notes receivable............................. 53,675 -- -- 53,675
Investments in and advances to,
nonconsolidated affiliates................. 346,215 -- -- 346,215
Other assets................................. 41,189 85,369 -- 126,558
Other investments............................ 248,890 -- -- 248,890
---------- ---------- ---------- -----------
TOTAL ASSETS........................... $7,261,285 $3,327,668 $1,719,788 $12,308,741
========== ========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................ $ 238,166 $ 137,958 $ -- $ 376,124
Current portion of long-term debt............ 4,049 -- -- 4,049
---------- ---------- ---------- -----------
Total Current Liabilities.............. 242,215 137,958 -- 380,173
Long-term debt................................. 2,980,849 1,229,565 -- 4,210,414
Deferred income taxes.......................... 163,104 358,995 -- 522,099
Other long-term liabilities.................... 92,913 119,717 -- 212,630
Liquid yield options notes..................... -- 302,400 53,630 356,030
Minority interest.............................. 18,502 -- -- 18,502
Shareholders' equity:
Preferred stock.............................. -- -- -- --
Common stock................................. 24,856 511 6,639 32,006
Additional paid-in capital................... 3,322,268 1,114,520 1,680,950 6,117,738
Common stock warrants........................ -- 31,500 11,071 42,571
Retained earnings............................ 214,621 19,871 (19,871) 214,621
Other........................................ 49,288 -- -- 49,288
Unrealized gain on investments............... 154,642 12,631 (12,631) 154,642
Cost of shares held in treasury.............. (1,973) -- -- (1,973)
---------- ---------- ---------- -----------
Total Shareholders' Equity............. 3,763,702 1,179,033 1,666,158 6,608,893
---------- ---------- ---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................... $7,261,285 $3,327,668 $1,719,788 $12,308,741
========== ========== ========== ===========
</TABLE>
83
<PAGE> 4
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR CHANNEL
1997 1997 PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENT MERGER
------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Net revenue.......................... $1,273,983 $650,844 $ -- $1,924,827
Operating expenses................... 749,796 445,726 -- 1,195,522
Depreciation and amortization........ 289,689 102,887 82,765 475,341
Corporate expenses................... 34,734 17,716 -- 52,450
---------- -------- -------- ----------
Operating income (loss).............. 199,764 84,515 (82,765) 260,514
Interest expense..................... 218,437 117,710 -- 336,147
Other income (expense) -- net........ 187 12,060 -- 12,247
---------- -------- -------- ----------
Income (loss) before income taxes.... (18,486) (21,135) (82,765) (122,386)
Income tax (expense) benefit......... (24,167) 4,526 -- (19,644)
---------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates......................... (42,653) (16,612) (82,765) (142,030)
Equity in earnings (loss) of
nonconsolidated affiliates......... 6,029 -- -- 6,029
---------- -------- -------- ----------
Net income (loss) before
extraordinary items................ $ (36,624) $(16,612) $(82,765) $ (136,001)
========== ======== ======== ==========
Net income (loss) before
extraordinary items per common
share:
Basic.............................. $ (.17) $ (.47)
========== ==========
Diluted............................ $ (.18) $ (.47)
========== ==========
</TABLE>
84
<PAGE> 5
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CLEAR CHANNEL
1998 1998 PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENT MERGER
------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Net revenue....................... $1,109,521 $589,184 $ -- $1,698,705
Operating expenses................ 659,215 398,310 -- 1,057,525
Depreciation and amortization..... 251,923 97,352 46,915 396,190
Corporate expenses................ 32,864 14,458 -- 47,322
---------- -------- -------- ----------
Operating income (loss)........... 165,519 79,064 (46,915) 197,668
Interest expense.................. 133,781 80,470 -- 214,251
Other income (expense) -- net..... 3,817 10,728 -- 14,545
---------- -------- -------- ----------
Income (loss) before income
taxes........................... 35,555 9,322 (46,915) (2,038)
Income tax (expense) benefit...... (45,339) (15,375) -- (60,714)
---------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates...................... (9,784) (6,053) (46,915) (62,752)
Equity in earnings (loss) of
nonconsolidated affiliates...... 9,692 -- -- 9,692
---------- -------- -------- ----------
Net income (loss) before
extraordinary items............. $ (92) $ (6,053) $(46,915) $ (53,060)
========== ======== ======== ==========
Net income (loss) before
extraordinary items per common
share:
Basic........................... $ (.00) $ (.17)
========== ==========
Diluted......................... $ (.00) $ (.17)
========== ==========
</TABLE>
85
<PAGE> 6
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Clear Channel and Jacor unaudited pro forma combined condensed financial
statements reflect the merger, accounted for as a purchase, as follows:
<TABLE>
<S> <C>
Jacor common stock outstanding (in whole shares)............ 51,073,198
Exchange ratio (based on the estimated value per share of
$38.7054)................................................. 1.40
-------------
Clear Channel's common stock to be issued in the merger (in
whole shares)............................................. 71,502,477
Estimated value per share................................... X $ 38.7054
-------------
$ 2,767,532
Estimated value of common stock options..................... 35,088
Estimated transaction costs................................. 50,000
-------------
Total estimated purchase price.................... $ 2,852,620
=============
</TABLE>
For purpose of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $ 2,852,620
Plus -- estimated fair value of LYONs notes in excess of
carrying value............................................ 53,630
Plus -- estimated fair value of Jacor common stock warrants
in excess of carrying value............................... 11,071
Less -- Jacor's net assets exchanged in the merger at
September 30, 1998 adjusted for the elimination of
existing net licenses and goodwill of $2,352,291.......... (1,204,758)
-----------
Estimated excess purchase price (allocated to licenses and
goodwill)................................................. $ 4,122,079
===========
</TABLE>
The estimated excess purchase price allocated to licenses and goodwill of
$4,122,079 will be amortized over a 25 year period using the straight line
method which will result in annual goodwill amortization of $164,883.
This pro forma is based on the maximum exchange ratio of 1.4 shares of
Clear Channel common shares per each share of Jacor common shares. As the
exchange ratio is variable, based on the moving average market price of Clear
Channel's common stock, the following analysis gives effect to a range of
possible pro forma results for selected items based on market prices varying
from $45.00 to $60.00 per share.
86
<PAGE> 7
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NET LOSS PER COMMON SHARES
COMMON SHARE ------------------
TOTAL ASSETS NET LOSS BASIC & DILUTED BASIC DILUTED
------------ --------- --------------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
At and for the year ended December 31, 1997
Price of Clear Channel Stock:
$45.00 n/a(1) $(138,433) $(0.48) 286,034 295,009
========= ====== ======= =======
$50.00 n/a(1) $(152,223) $(0.53) 286,034 295,009
========= ====== ======= =======
$55.00 n/a(1) $(158,981) $(0.56) 282,900 291,770
========= ====== ======= =======
$60.00 n/a(1) $(165,763) $(0.59) 280,288 289,071
========= ====== ======= =======
At and for the nine months ended September 30, 1998
Price of Clear Channel Stock:
$45.00 $12,641,133 $ (58,368) $(0.19) 312,088 330,232
=========== ========= ====== ======= =======
$50.00 $12,985,877 $ (68,710) $(0.22) 312,088 330,232
=========== ========= ====== ======= =======
$55.00 $13,154,844 $ (73,779) $(0.24) 308,954 326,839
=========== ========= ====== ======= =======
$60.00 $13,324,380 $ (78,866) $(0.26) 306,342 324,012
=========== ========= ====== ======= =======
</TABLE>
- -------------------------
(1) This information is not presented since a pro forma balance sheet of
December 31, 1997 is not required.
The unaudited pro forma combined condensed balance sheet is based on the
assumption that Jacor's debt holders will accept the transfer of debt to Clear
Channel. However, Clear Channel must offer to purchase all outstanding senior
subordinated notes at 101% of the principal amount. Clear Channel must also
offer to purchase all liquid yield option notes at their accreted value of
$302,400 million. It is unlikely that the debt holders will accept Clear
Channel's offer, as the fair value of this debt is greater than the required
offer. If all of Jacor's debt holders would accept Clear Channel's offer, the
pro forma total debt balance would decrease by $48.2 million.
The unaudited pro forma combined condensed financial statements of
operations excludes the effect of any divestiture of stations, which may be
required for regulatory approval, as Clear Channel intends the funds received
from any divestiture to be reinvested in acquisitions of similar stations in
other markets. Neither Clear Channel nor Jacor anticipates that any required
divestitures will be significant. The unaudited pro forma combined condensed
financial statements of operations also excludes the effect of retired or
refinanced debt as any retirement or refinancing of debt will not occur at or
prior to the closing of the merger.
These pro forma statements are contingent on the approval of the merger by
the stockholders of Clear Channel and Jacor. If the merger agreement is
terminated under certain circumstances, Jacor must pay Clear Channel a fee of
$115 million as a result of such termination. Also, see "Terms of the Merger
Agreement -- Termination Fee" for related matters in the event this merger is
terminated.
87
<PAGE> 8
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
The pro forma merger adjustments at September 30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(a) Decrease in cash and cash equivalents resulting from
estimated merger expenses................................. $ (50,000)
(b) Increase in goodwill and licenses equal to the excess
purchase price of the merger.............................. 1,613,629
(c) Decrease in accumulated amortization resulting from the
elimination of Jacor's existing accumulated amortization
on goodwill............................................... 156,159
(d) Record liquid yield option notes at estimated fair value.... 53,630
(e) Increase common stock to account for Clear Channel common
stock given in the merger at $0.10 par value.............. 6,639
(f) Increase additional paid-in capital to account for Clear
Channel common stock given in the merger at $38.7054 per
share less $0.10 par value ($1,645,862) plus the value of
Jacor stock options included in the Merger ($35,088)...... 1,680,950
(g) Record common stock warrants at estimated fair value........ 11,071
(h) Eliminate Jacor's existing retained earnings balance........ (19,871)
(i) Eliminate Jacor's existing unrealized gain on investments
balance................................................... (12,631)
</TABLE>
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
-------------------
12/31/97 9/30/98
-------- --------
<S> <C> <C> <C>
(j) Increase in amortization expense resulting from the
additional goodwill created by the merger and a
change in the life of goodwill amortization from 40
years (Jacor's policy) to 25 years (Clear Channel's
policy). This amortization expense results in a
permanent difference and will not be deductible for
federal income tax purposes........................ $(82,765) $(46,915)
</TABLE>
88
<PAGE> 9
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
Pro forma basic and diluted share information is as follows:
<TABLE>
<CAPTION>
12/31/97 9/30/98
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Basic
Clear Channel pro forma weighted average shares
outstanding............................................... 218,810 244,079
Jacor pro forma weighted average shares outstanding......... 49,348 50,133
Increase weighted average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the exchange ratio of 1.40, (51,073 X .40)...... 20,429 20,429
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 288,587 314,641
======= =======
Diluted
Clear Channel pro forma weighted average shares
outstanding............................................... 225,486 256,534
Jacor pro forma weighted average shares outstanding......... 51,051 54,347
Increase weighted average common stock outstanding to
account for Clear Channel common stock given in the merger
and to account for the dilution effect Jacor's common
stock warrants, employee stock options and other dilutive
shares have on the Company at the exchange ratio of 1.40,
(52,776 X .40) and (55,287 X .40), respectively........... 21,110 22,115
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 297,647 332,996
======= =======
</TABLE>
89
<PAGE> 10
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR CHANNEL ELLER PRO FORMA PAXSON PRO FORMA UNIVERSAL
HISTORICAL HISTORICAL ADJUSTMENT(1) HISTORICAL ADJUSTMENT(2) HISTORICAL
------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................... $697,068 $56,642 $ -- $78,104 $ -- $209,639
Operating expenses............. 394,404 33,804 -- 63,362 (1,246) 101,613
Depreciation and
amortization.................. 114,207 10,547 5,974 12,101 9,377 59,977
Noncash compensation expense... -- -- -- -- -- 8,289
Corporate expenses............. 20,883 2,318 -- 4,059 -- --
-------- ------- ------- ------- -------- --------
Operating income (loss)........ 167,574 9,973 (5,974) (1,418) (8,131) 39,760
Interest expense............... 75,076 8,565 2,518 1,370 29,276 46,400
Other income
(expense) -- net.............. 11,579 (4,082) -- (1,034) -- (2,621)
-------- ------- ------- ------- -------- --------
Income (loss) before income
taxes......................... 104,077 (2,674) (8,492) (3,822) (37,407) (9,261)
Income tax (expense) benefit... (47,116) (3) 1,315 -- 14,963 --
-------- ------- ------- ------- -------- --------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.................... 56,961 (2,677) (7,177) (3,822) (22,444) (9,261)
Equity in earnings (loss) of
non-consolidated affiliates... 6,615 -- -- -- -- --
-------- ------- ------- ------- -------- --------
Net income (loss).............. $ 63,576 $(2,677) $(7,177) $(3,822) $(22,444) $ (9,261)
======== ======= ======= ======= ======== ========
Net income (loss) per common
share:
Basic......................... $ .36
========
Diluted....................... $ .34
========
<CAPTION>
1997
PRO FORMA MORE PRO FORMA CLEAR CHANNEL
ADJUSTMENT(3) HISTORICAL ADJUSTMENT(4) PRO FORMA
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue.................... $ -- $232,530 $ -- $1,273,983
Operating expenses............. -- 157,859 -- 749,796
Depreciation and
amortization.................. 30,881 23,592 23,033 289,689
Noncash compensation expense... (8,289) 1,327 (1,327) --
Corporate expenses............. -- 7,474 -- 34,734
-------- -------- -------- ----------
Operating income (loss)........ (22,592) 42,278 (21,706) 199,764
Interest expense............... -- 4,383 50,849 218,437
Other income
(expense) -- net.............. -- (3,655) -- 187
-------- -------- -------- ----------
Income (loss) before income
taxes......................... (22,592) 34,240 (72,555) (18,486)
Income tax (expense) benefit... -- (10,705) 17,379 (24,167)
-------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.................... (22,592) 23,535 (55,176) (42,653)
Equity in earnings (loss) of
non-consolidated affiliates... -- (586) -- 6,029
-------- -------- -------- ----------
Net income (loss).............. $(22,592) $ 22,949 $(55,176) (36,624)
======== ======== ======== ==========
Net income (loss) per common
share:
Basic......................... $ (.17)
==========
Diluted....................... $ (.18)
==========
</TABLE>
90
<PAGE> 11
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
1998
CLEAR CLEAR
CHANNEL UNIVERSAL PRO FORMA MORE PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENT(5) HISTORICAL ADJUSTMENT(6) PRO FORMA
---------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue......................... $909,555 $55,292 $ -- $144,674 $ -- $1,109,521
Operating expenses.................. 517,562 30,826 -- 110,827 -- 659,215
Depreciation and amortization....... 201,422 15,517 7,720 15,699 11,565 251,923
Noncash compensation expense........ -- 106 (106) 3,476 (3,476) --
Corporate expenses.................. 25,739 1,414 -- 5,711 -- 32,864
-------- ------- ------- -------- -------- ----------
Operating income (loss)............. 164,832 7,429 (7,614) 8,961 (8,089) 165,519
Interest expense.................... 94,555 13,159 -- 3,715 22,352 133,781
Other income (expense) -- net....... 13,416 (23) -- (9,576) -- 3,817
-------- ------- ------- -------- -------- ----------
Income (loss) before income taxes... 83,693 (5,753) (7,614) (4,330) (30,441) 35,555
Income tax (expense) benefit........ (48,766) -- -- (3,301) 6,728 (45,339)
-------- ------- ------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates........................ 34,927 (5,753) (7,614) (7,631) (23,713) (9,784)
Equity in earnings (loss) of non-
consolidated affiliates........... 10,063 -- -- (371) -- 9,692
-------- ------- ------- -------- -------- ----------
Net income (loss)................... $ 44,990 $(5,753) $(7,614) $ (8,002) $(23,713) $ (92)
======== ======= ======= ======== ======== ==========
Net income (loss) per common share:
Basic............................. $ .19 $ (.00)
======== ==========
Diluted........................... $ .19 $ (.00)
======== ==========
</TABLE>
91
<PAGE> 12
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
ELLER ACQUISITION
(1) Represents the pro forma effect of the acquisition of Eller assuming it
was acquired January 1, 1997.
<TABLE>
<CAPTION>
INCREASE(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(a) Increase in amortization of goodwill of $5,205 resulting
from the additional goodwill created by the
acquisition and a decrease in amortizable life from 40
years (Eller) to 25 years (Clear Channel) and
additional depreciation of $769 related to the
adjustment of fixed assets to fair value. ............ $(5,974)
(b) Increase in interest expense due to a higher amount of
average debt outstanding, which was partially offset
by a lower average interest rate (6% average rate for
Clear Channel and 8.8% for Eller during the first
three months of 1997). ............................... (2,518)
(c) Tax effect of the above adjustments to depreciation and
interest expense at Clear Channel's effective federal
and state tax rate of 40%. ........................... 1,315
</TABLE>
PAXSON ACQUISITION
(2) Represents the pro forma effect of the Paxson acquisition assuming it
was acquired January 1, 1997.
<TABLE>
<CAPTION>
INCREASE(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(d) Elimination of option plan compensation expense
resulting from the elimination of the plan............ $ 1,246
(e) Increase in amortization expense resulting from the
additional goodwill created by the acquisition........ (9,377)
(f) Increase in interest expense (at an average interest
rate of 6.5% for the first nine months of 1997) due to
additional borrowing on Clear Channel's facility to
finance the acquisition cost.......................... (29,276)
(g) Tax effect of the above adjustment at Clear Channel's
effective federal and state tax rate of 40%. ......... 13,339
(h) This pro forma does not include certain benefits Clear
Channel believes it achieved through the
discontinuance of a corporate headquarters operating
solely for the Paxson radio stations. Paxson's
historical statement of operations for the year ended
December 31, 1997 includes $4,059, $2,435 net of
taxes, of expenses as the allocation of corporate
expense. Clear Channel has not incurred these expenses
relating to the Paxson radio stations since the
completion of this acquisition in December 1997.
</TABLE>
92
<PAGE> 13
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, CONTINUED
UNIVERSAL MERGER
(3) The pro forma merger adjustments for the year ended December 31, 1997
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(i) Increase in amortization expense resulting from the
additional goodwill created by the merger............. $(30,881)
(j) Decrease in noncash compensation to reverse the effect
of Financial Accounting Standards Board Statement No.
123 ("FAS 123") from the statement of operations as
Clear Channel elected to follow Accounting Principles
Board Opinion Number 25 ("APB 25") for earnings
presentation and implemented FAS 123 for footnote
disclosure only....................................... 8,289
</TABLE>
MORE ACQUISITION
(4) More is headquartered in London. Accordingly, More's financial
statements are reported in British Pounds. The statement of operations
was translated into US Dollars using the average exchange rate for the
period and the balance sheet was translated into US Dollars using the
exchange rate at the end of the period. The pro forma adjustments for
the year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(k) Increase in amortization expense resulting from the
additional goodwill created by the acquisition. ...... $(23,033)
(l) Decrease in noncash compensation to reverse the effect
of FAS 123 from the statement of operations as Clear
Channel elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 1,327
(m) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 6.62% for 1997. ..................... (50,849)
(n) The tax effect of adjustment (l) at the 1997 UK
statutory rate of 31.5% offset by the tax benefit of
adjustment (m) at Clear Channel's federal U.S. tax
rate in 1997 of 35%. ................................. 17,379
</TABLE>
93
<PAGE> 14
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, CONTINUED
UNIVERSAL MERGER
(5) The pro forma merger adjustments for the nine months ended September
30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(o) Increase in amortization expense resulting from the
additional goodwill created by the merger. ........... $(7,720)
(p) Decrease in Noncash compensation to reverse the effect
of FAS 123 from the statement of operations as the
Company elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 106
</TABLE>
MORE ACQUISITION
(6) More is headquartered in London. Accordingly, More's financial
statements are reported in British Pounds. The statement of operations
was translated into US Dollars using the average exchange rate for the
period and the balance sheet was translated into US Dollars using the
exchange rate at the end of the period. The pro forma adjustments for
the nine months ended September 30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(q) Increase in amortization expense resulting from the
additional goodwill created by the acquisition. ...... $(11,565)
(r) Decrease in noncash compensation to reverse the effect
of FAS 123 from the statement of operations as Clear
Channel elected to follow APB 25 for earnings
presentation and implemented FAS 123 for footnote
disclosure only. ..................................... 3,476
(s) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 6.62% for 1997. ..................... (22,352)
(t) The tax effect of adjustment (r) at the 1998 UK
statutory rate of 31.5% offset by the tax benefit of
adjustment (s) at Clear Channel's federal U.S. tax
rate in 1998 of 35%. ................................. 6,728
</TABLE>
94
<PAGE> 15
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OTHER
ACQUISITIONS NATIONWIDE ACQUISITION 1997
JACOR PRO FORMA HISTORICAL PRO FORMA PRO FORMA JACOR
HISTORICAL ADJUSTMENTS NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------ ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................................. $530,574 $25,321(a) $ 97,997 $ 565(e) $ (3,613)(h) $ 650,844
Broadcast operating expenses................. 356,783 16,760(a) 81,958 723(e) (10,498)(h)(n) 445,726
Depreciation and amortization................ 78,485 8,182(a) 10,129 2,084(e) 4,007(i) 102,887
Corporate general and administrative
expenses................................... 14,093 -- 3,623 -- --(n) 17,716
-------- ------- -------- -------- -------- ---------
Operating income (loss)...................... 81,213 379 2,287 (2,242) 2,878 84,515
Interest expense, net........................ 80,008 9,303(b) 4,616 3,197(e) 20,586(j) 117,710
Gain on sale of radio stations............... 11,135 -- 44,132 (44,132)(f) -- 11,135
Other income (expense), net.................. 664 298(c) (37) -- -- 925
-------- ------- -------- -------- -------- ---------
Income (loss) before income taxes and
extraordinary
items...................................... 13,004 (8,626) 41,766 (49,571) (17,708) (21,135)
Income tax (expense) credit.................. (9,600) 4,358(d) (14,310) 16,992(g) 7,083(k) 4,523
-------- ------- -------- -------- -------- ---------
Income (loss) before extraordinary items..... $ 3,404 $(4,268) $ 27,456 $(32,579) $(10,625) $ (16,612)
======== ======= ======== ======== ======== =========
Income (loss) per common share:
Basic...................................... $ .08 $ (.33)
======== =========
Diluted.................................... $ .08 $ (.33)
======== =========
</TABLE>
95
<PAGE> 16
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
HISTORICAL
NATIONWIDE
SIX MONTHS NATIONWIDE ACQUISITION 1998
JACOR ENDED PRO FORMA PRO FORMA JACOR
HISTORICAL JUNE 30, 1998 ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue................ $530,372 $50,171 $ -- $ 8,641(l) $589,184
Broadcast operating
expenses................. 356,877 39,623 (738)(e) 2,548(l)(n) 398,310
Depreciation and
amortization............. 87,444 5,044 299(e) 4,565(i) 97,352
Corporate general and
administrative
expenses................. 13,052 1,406 -- --(n) 14,458
-------- ------- ----- -------- --------
Operating income (loss).... 72,999 4,098 439 1,528 79,064
Interest expense, net...... 65,968 (452) -- 14,954(j) 80,470
Gain on sale of radio
stations................. 10,896 -- -- -- 10,896
Other income (expense),
net...................... (164) (4) -- -- (168)
-------- ------- ----- -------- --------
Income (loss) before income
taxes and extraordinary
items.................... 17,763 4,546 439 (13,426) 9,322
Income tax (expense)
credit................... (19,200) (1,546) -- 5,371(k) (15,375)
-------- ------- ----- -------- --------
Income (loss) before
extraordinary items...... $ (1,437) $ 3,000 $ 439 $ (8,055) $ (6,053)
======== ======= ===== ======== ========
Income (loss) per common
share:
Basic.................... $ (.03) $ (.12)(m)
======== ========
Diluted.................. $ (.03) $ (.12)(m)
======== ========
</TABLE>
96
<PAGE> 17
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) These adjustments for the following acquisitions reflect additional
revenues and expenses for the period January 1, 1997 to the acquisition
consummation date. Depreciation and amortization expense adjustments
reflect Jacor's purchase cost of the assets acquired.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND
REVENUE EXPENSES AMORTIZATION
------- --------- ------------
<S> <C> <C> <C>
Premiere Radio Networks, Inc. (completed June
1997)........................................ $14,130 $ 9,276 $4,348
EFM Companies (completed April 1997)........... 11,191 7,484 3,834
------- ------- ------
TOTAL................................ $25,321 $16,760 $8,182
======= ======= ======
</TABLE>
(b) The adjustment represents additional interest expense associated with
Jacor's borrowings under its credit facility and the issuance of various
debt securities in 1997. The assumed weighted average interest rate
associated with the borrowings is 7.9%.
(c) The adjustment represents miscellaneous income generated by Premiere for
periods prior to the acquisition.
(d) To provide for the tax effect of pro forma adjustments. The acquisition
adjustments described in Note (a) include non-deductible goodwill
amortization estimated to be approximately $1,350 for the year ended
December 31, 1997.
(e) The adjustments represent additional revenues and expenses, net of the
elimination of time brokerage agreement fees, related primarily to
Nationwide's acquisitions of radio stations in the Dallas, Phoenix and San
Diego broadcast areas. Nationwide has operated a majority of the stations
acquired in 1997 under local marketing agreements since January 1, 1997,
therefore a significant amount of the revenues and operating expenses
related to these stations are included in Nationwide's historical financial
statements for the year ended December 31, 1997. The adjustments for the
six months ended June 30, 1998 represent the elimination of time brokerage
agreement fees and additional depreciation and amortization expenses
resulting from the allocation of Nationwide's purchase price of KXGL in San
Diego.
(f) The adjustment represents elimination of Nationwide's gain on the sale and
exchange of certain radio stations in 1997.
(g) To provide for the tax effect of Nationwide's pro forma adjustments
relating to its 1997 acquisitions and divestitures at statutory rates.
(h) To eliminate the results for the divestiture of two San Diego stations.
(i) The adjustment reflects the additional depreciation and amortization
expense resulting from the allocation of Jacor's purchase price to the
assets acquired including an increase in property and equipment and
identifiable intangible assets to their estimated fair market values.
97
<PAGE> 18
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, CONTINUED
(j) The adjustment reflects additional interest expense related to additional
borrowings under Jacor's credit facility, its 8% Notes and its 4 3/4%
Liquid Yield Option Notes offering completed during February of 1998 to
finance, in part, the acquisition of Nationwide.
(k) To provide for the tax effect of pro forma adjustments using an assumed
rate of 40%.
(l) To eliminate the results for the divestiture of two San Diego stations.
(m) The pro forma weighted average shares outstanding includes all shares
outstanding as of September 30, 1998. The pro forma weighted averages
shares outstanding of Jacor do not reflect any outstanding options and
warrants or the assumed conversion of the LYON's as they are antidilutive.
(n) The Company has experienced and anticipates continuing to experience
significant expense savings, which are not reflected in the pro forma
statements of operations, resulting from the elimination of redundant
broadcast operating expenses arising from the operation of multiple
stations in broadcast areas, changes in benefit plan and compensation
structures to conform with Jacor's and the elimination of Nationwide's
corporate office function.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
<S> <C> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative..... $ 3,623 $1,406
Benefit plan expenses.................... 2,850 1,741
Commissions.............................. 675 413
Promotion and programming................ 2,500 1,527
Personnel reductions..................... 3,200 1,955
Other.................................... 1,200 732
------- ------
TOTAL.......................... 14,048 7,774
Income Taxes............................. 5,619 3,110
------- ------
TOTAL, net of taxes............ $ 8,429 $4,664
======= ======
</TABLE>
98
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Clear Channel Communications, Inc.
Date: February 23, 1999 By: /s/ HERBERT W. HILL, JR.
------------------------------
Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer