<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 23, 1999
(December 8, 1997)
Clear Channel Communications, Inc.
(Exact name of registrant as specified in its charter)
Texas
(State of Incorporation)
1-9645 74-1787536
(Commission File Number) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(210) 822-2828
(Address and telephone number of principal executive offices)
<PAGE> 2
Clear Channel Communications, Inc.
Form 8-K/A
Item 5 OTHER EVENTS.
On December 22, 1997, 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.
1
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(b) Pro forma financial information:
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition of Paxson Radio, herein after referred to as
("the Acquisition"). For accounting purposes the Acquisition has been accounted
for as a purchase of Paxson Radio by the Company; accordingly the assets of
Paxson Radio have been adjusted to their estimated fair values based upon a
preliminary purchase price allocation.
The unaudited pro forma condensed consolidated statements of operations for the
nine months ended September 30, 1997 and for the year ended December 31, 1996
give effect to the Acquisition as if it had occurred at the beginning of each
period presented. The unaudited pro forma condensed consolidated balance sheet
at September 30, 1997 gives effect to the Acquisition as if it occurred on
September 30, 1997.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements of The Company as
filed in the Company's Annual Report on Form 10-K for the year ended December
31, 1996, and the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and the historical financial statements of Paxson Radio
included under Item 7 (a).
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the actual results of operations or financial
position that would have occurred had the Acquisition and transactions of The
Company and Paxson Radio occurred on the dates indicated nor are they
necessarily indicative of future operating results or financial position.
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<PAGE> 4
CLEAR CHANNEL COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
September 30, 1997
<TABLE>
<CAPTION>
Clear Channel and
Clear Channel Paxson Radio Pro Forma Paxson Radio
Historical Historical Adjustment (1) Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 35,178 $ -- $ -- $ 35,178
Accounts receivable, net 126,756 17,927 -- 144,683
Film rights - current 16,124 -- -- 16,124
Other current assets -- 1,356 (1,356) --
----------- ----------- ----------- -----------
Total Current Assets 178,058 19,283 (1,356) 195,985
Property, plant & equipment, net 667,831 53,846 -- 721,677
Intangible assets:
Network affiliation agreements 33,727 -- -- 33,727
Licenses and goodwill 1,601,062 240,078 317,149 2,158,289
Covenants not-to-compete 24,592 -- -- 24,592
Other intangible assets 13,002 -- -- 13,002
----------- ----------- ----------- -----------
1,672,383 240,078 317,149 2,229,610
Less accumulated amortization (120,198) (32,642) 32,642 (120,198)
----------- ----------- ----------- -----------
1,552,185 207,436 349,791 2,109,412
Other assets:
Deferred tax asset 10,520 -- -- 10,520
Film rights - noncurrent, net
of accumulated amortization 16,182 -- -- 16,182
Equity investments in, and advances
to, nonconsolidated affiliates 273,326 -- -- 273,326
Other assets 65,760 1,828 (1,828) 65,760
Other investments 27,343 2,960 (2,960) 27,343
----------- ----------- ----------- -----------
TOTAL ASSETS $ 2,791,205 $ 285,353 $ 343,647 $ 3,420,205
=========== =========== =========== ===========
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Clear Channel and
Clear Channel Paxson Radio Pro Forma Paxson Radio
Historical Historical Adjustment (1) Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable $ 12,877 $ 3,272 $ (3,272) $ 12,877
Accrued interest 2,037 24 (24) 2,037
Accrued expenses 37,523 -- -- 37,523
Accrued income and other taxes 3,742 -- -- 3,742
Deferred income 1,380 -- -- 1,380
Current portion of long-term debt 13,067 160 (160) 13,067
Current portion of film rights liability 16,989 -- -- 16,989
Payable due to Paxson Corp. -- 22,911 (22,911) --
----------- ----------- ----------- -----------
Total Current Liabilities 87,615 26,367 (26,367) 87,615
Long-term debt 897,588 275 628,725 1,526,588
Film rights liability 17,857 -- -- 17,857
Deferred income taxes 15,840 -- -- 15,840
Deferred income - long-term 10,075 -- -- 10,075
Other liabilities 43,241 -- -- 43,241
Minority interest 21,113 -- -- 21,113
Shareholders' equity:
Preferred stock -- -- -- --
Common stock 9,809 -- -- 9,809
Additional paid-in capital 1,540,072 -- -- 1,540,072
Retained earnings 147,356 -- -- 147,356
Divisional equity -- 258,711 (258,711) --
Other 1,226 -- -- 1,226
Cost of shares held in treasury (587) -- -- (587)
----------- ----------- ----------- -----------
Total Shareholders' Equity 1,697,876 258,711 (258,711) 1,697,876
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,791,205 $ 285,353 $ 343,647 $ 3,420,205
=========== =========== =========== ===========
</TABLE>
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<PAGE> 6
CLEAR CHANNEL COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(In thousands, except per share data)
Year ended December 31, 1996
<TABLE>
<CAPTION>
Clear Channel
Clear Channel Eller Media Pro Forma Eller Media
Historical Historical Adjustment(2) Pro Forma
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net revenue $ 351,739 $ 237,032 -- $ 588,771
Operating expenses 198,332 141,839 -- 340,171
Depreciation and amortization 45,790 40,269 23,895 109,954
Corporate general and admin expense 8,527 10,204 -- 18,731
--------- --------- -------- ---------
Operating income (loss) 99,090 44,720 (23,895) 119,915
Interest expense 30,080 35,626 10,071 75,777
Other income (expense) 2,230 (6,721) -- (4,491)
--------- --------- -------- ---------
Income (loss) before income taxes 71,240 2,373 (33,966) 39,647
Income tax (expense) benefit (28,386) (977) 5,259 (24,104)
--------- --------- -------- ---------
Income (loss) before equity in net
income (loss) of, and other income
from, nonconsolidated affiliates 42,854 1,396 (28,707) 15,543
Equity in net income (loss) of, and
other income from, nonconsolidated
affiliates (5,158) -- -- (5,158)
--------- --------- -------- ---------
Income (loss) from continuing
operations $ 37,696 $ 1,396 $(28,707) $ 10,385
========= ========= ======== =========
Income (loss) from continuing
operations per common share $ .50 $ .13
Weighted average common
and common share
equivalents outstanding 74,649 7,835 82,484
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Clear Channel,
Eller Media and
Paxson Radio Pro Forma Paxson Radio
Historical Adjustment(4) Pro Forma
--------- --------- ---------
<S> <C> <C> <C>
Net revenue $ 81,710 $ -- $ 670,481
Operating expenses 69,415 (1,782) 407,804
Depreciation and amortization 10,203 17,037 137,194
Corporate general and admin expense 5,155 -- 23,886
--------- --------- ---------
Operating income (loss) (3,063) (15,255) 101,597
Interest expense 1,999 36,999 114,775
Other income (expense) 163 -- (4,328)
--------- --------- ---------
Income (loss) before income taxes (4,899) (52,254) (17,506)
Income tax (expense) benefit -- 20,902 (3,202)
--------- --------- ---------
Income (loss) before equity in net
income (loss) of, and other income
from, nonconsolidated affiliates (4,899) (31,352) (20,708)
Equity in net income (loss) of, and
other income from, nonconsolidated
affiliates -- -- (5,158)
--------- --------- ---------
Income (loss) from continuing
operations $ (4,899) $ (31,352) $ (25,866)
========= ========= =========
Income (loss) from continuing
operations per common share $ (.31)
=========
Weighted average common
and common share
equivalents outstanding 82,484
=========
</TABLE>
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<PAGE> 7
Nine Months ended September 30, 1997
<TABLE>
<CAPTION>
Clear Channel
Clear Channel Eller Media Pro Forma Eller Media
Historical Historical Adjustment(3) Pro Forma
--------- -------- -------- ---------
<S> <C> <C> <C>
Net revenue $ 469,176 $ 56,642 -- $ 525,818
Operating expenses 266,542 33,804 -- 300,346
Depreciation and amortization 80,216 10,547 $ 5,974 96,737
Corporate general and admin. expense 13,699 2,318 -- 16,017
--------- -------- -------- ---------
Operating income (loss) 108,719 9,973 (5,974) 112,718
Interest expense 51,804 8,565 2,518 62,887
Other income (expense) 7,641 (4,082) -- 3,559
--------- -------- -------- ---------
Income (loss) before income taxes 64,556 (2,674) (8,492) 53,390
Income tax (expense) benefit (31,642) (3) 1,315 (30,330)
--------- -------- -------- ---------
Income (loss) before equity in net
income (loss) of,and other income
from, nonconsolidated affiliates 32,914 (2,677) (7,177) 23,060
Equity in net income(loss) of, and
other income from, nonconsol-
idated affiliates 8,388 -- -- 8,388
--------- -------- -------- ---------
Income (loss) from continuing
operations $ 41,302 $ (2,677) $ (7,177) $ 31,448
========= ======== ======== =========
Income (loss) from continuing
operations per common share $ .47 $ .35
========= =========
Weighted average common
and common share
equivalents outstanding 87,564 3,303 90,867
========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Clear Channel
Eller Media and
Paxson Radio Pro Forma Paxson Radio
Historical Adjustment(5) Pro Forma
-------- -------- ---------
<S> <C> <C> <C>
Net revenue $ 78,104 $ -- $ 603,922
Operating expenses 63,362 (1,246) 362,462
Depreciation and amortization 12,101 9,377 118,215
Corporate general and admin. expense 4,059 -- 20,076
-------- -------- ---------
Operating income (loss) (1,418) (8,131) 103,169
Interest expense 1,370 29,276 93,533
Other income (expense) (1,034) -- 2,525
-------- -------- ---------
Income (loss) before income taxes (3,822) (37,407) 12,161
Income tax (expense) benefit -- 14,963 (15,367)
-------- -------- ---------
Income (loss) before equity in net
income (loss) of,and other income
from, nonconsolidated affiliates (3,822) (22,444) (3,206)
Equity in net income(loss) of, and
other income from, nonconsol-
idated affiliates -- -- 8,388
-------- -------- ---------
Income (loss) from continuing
operations $ (3,822) $(22,444) $ 5,182
======== ======== =========
Income (loss) from continuing
operations per common share $ .06
=========
Weighted average common
and common share
equivalents outstanding 90,867
=========
</TABLE>
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CLEAR CHANNEL
NOTES TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Represents the pro forma effect of the acquisition of Paxson Radio.
Adjustments to reflect the application of the purchase method of
accounting and the payment of the related consideration as if the
acquisition had been consummated September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Increase
(Decrease)
----------
<S> <C>
Other current assets $ (1,356)
Licenses and goodwill 317,149
Accumulated amortization 32,642
Other assets (1,828)
Other investments (2,960)
Accounts payable (3,272)
Accrued interest (24)
Current portion of long-term debt (160)
Payable due to Paxson Corp. (22,911)
Long-term debt 628,725
Divisional equity (258,711)
</TABLE>
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CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
ELLER MEDIA ACQUISITION
YEAR ENDED DECEMBER 31, 1996
(2) Represents the pro forma effect of the acquisition of Eller Media assuming
it was acquired January 1, 1996.
<TABLE>
<CAPTION>
Increase
(Decrease)
Income
(in Thousands)
-------------
<S> <C>
(a) Increase in amortization of goodwill of $20,818 resulting from the
additional goodwill created by the acquisition and a decrease in
amortizable life from 40 years (Eller Media) to 25 years (Clear
Channel) and additional depreciation of $3,077 related to the
adjustment of fixed assets to fair value. $(23,895)
(b) Increase in interest expense due to a higher amount of average debt
outstanding which was partially offset by a lower average interest rate
(6.2% average rate for Clear Channel and 8.8% for Eller Media in 1996). (10,071)
(c) Tax effect of the above adjustments to depreciation and interest expense
at Clear Channel's effective tax rate of 40% 5,259
(d) Increase in weighted average common and common share equivalents
outstanding resulting from the issuance of shares of Clear Channel's
common stock and the issuance of options to purchase shares of Clear
Channel's common stock to shareholders of Eller Media to effect the
acquisition. 7,835
</TABLE>
Clear Channel granted to the former Eller Media stockholders certain demand and
piggyback registration rights relating to the shares of common stock received by
them. The holders of the approximately 7% of the outstanding capital stock of
Eller Media, not purchased by Clear Channel, have the right to put such stock to
Clear Channel for 1,081,469 shares of Clear Channel's common stock until April
10, 2002. From and after April 10, 2004, Clear Channel will have the right to
call in this minority interest stake in Eller Media for 1,081,469 shares of its
common stock. If such right would have been exercised on April 10, 1997, Clear
Channel would have issued additional shares of its common stock with an
aggregate value of $48.5 million (assuming a price of $44.8625 per share) and
recorded a corresponding increase in goodwill. The annual amortization of
goodwill associated therewith would decrease Clear Channel's net income by $1.9
million or $.02 per share; however such would have no effect on after tax cash
flow. A $1 per share change in the market price of Clear Channel's common stock
would cause a $1.1 million change in goodwill.
The pro forma statement of operations excludes the effect of nonrecurring
charges related to the acquisition.
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<PAGE> 10
NINE MONTHS ENDED SEPTEMBER 30, 1997
(3) Represents the pro forma effect of the acquisition of Eller Media assuming
it was acquired January 1, 1997.
<TABLE>
<CAPTION>
Increase
(Decrease)
Income
(in Thousands)
------------
<S> <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 Media) 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 Media 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 tax rate of 40% 1,315
(d) Increase in weighted average common and common share equivalents
outstanding resulting from the issuance of shares of Clear Channel's
common stock and the issuance of options to purchase shares of Clear
Channel's common stock to shareholders of Eller Media to effect the
acquisition. 3,303
</TABLE>
PAXSON RADIO ACQUISITION
YEAR ENDED DECEMBER 31, 1996
(4) Represents the pro forma effect of the acquisition of Paxson Radio
assuming it was acquired January 1, 1996
<TABLE>
<CAPTION>
Increase
(Decrease)
Income
(in Thousands)
------------
<S> <C>
(a) Elimination of option plan compensation expense resulting from the elimination
of the plan. 1,782
(b) Increase in amortization expense resulting from the additional goodwill created
by the acquisition. $(17,037)
(c) Increase in interest expense (at an average interest rate of 6.2% in
1996) due to additional borrowing on the Company's credit facility to
finance the acquisition cost. (36,999)
(d) Tax effect of the above adjustments at the Company's effective tax rate of 40% 18,840
(e) This pro forma does not include certain benefits Clear Channel believes it will
achieve through the discontinuance of a corporate headquarters operating solely
for the Paxson Radio stations. Paxson Radio's historical statement of operations
for the year ended December 31, 1996 includes $5,155, $3,093 net of tax, of
expenses as the allocation of corporate expense. Clear Channel does not
expect to incur these expenses relating to the Paxson Radio stations
subsequent to the acquisition.
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1997
(5) Represents the pro forma effect of the acquisition of Paxson assuming it
was acquired January 1, 1997
<TABLE>
<CAPTION>
Increase
(Decrease)
Income
(in Thousands)
------------
<S> <C>
(a) Elimination of option plan compensation expense resulting from the elimination
of the plan. 1,246
(b) Increase in amortization expense resulting from the additional goodwill created
by the acquisition. $(9,377)
(c) Increase in interest expense (at an average interest rate of 6.5% for the first
nine months of 1997) due to additional borrowing on the Company's credit facility
to finance the acquisition cost. (29,276)
(d) Tax effect of the above adjustments at the Company's effective tax rate of 40% 13,339
(e) This pro forma does not include certain benefits Clear Channel believes it will
achieve through the discontinuance of a corporate headquarters operating solely
for the Paxson Radio stations. Paxson Radio's historical statement of operations
for the nine months ended September 30, 1997 includes $4,059, $2,435 net of tax, of
expenses as the allocation of corporate expense. Clear Channel does not expect to
incur these expenses relating to the Paxson Radio stations subsequent to the
acquisition.
</TABLE>
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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
