<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 6, 1999
(May 4, 1999)
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
Item 2 ACQUISITION OF ASSETS
On May 4, 1999, the Clear Channel Communications, Inc., a Texas corporation
(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. 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 now exercisable
for approximately 3.4 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 our
common stock. The Company refinanced $850 million of Jacor's long term debt at
the closing of the merger using the Company's credit facility. This acquisition
is being accounted for as a purchase with resulting goodwill of approximately
$5.6 billion being amortized over 25 years on a straight-line basis. This
purchase price allocation is preliminary and the results of operations of Jacor
will be included in the Company's financial statements beginning May 1, 1999.
<PAGE> 3
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,726 $ 20,051
Accounts receivable, less allowance for
doubtful accounts of $8,407 in 1999
and $8,303 in 1998 173,538 201,466
Prepaid expenses and other 39,719 32,796
---------- ----------
Total current assets 227,983 254,313
Property and equipment, net 293,753 281,049
Intangible assets, net 2,818,653 2,749,348
Other assets 120,725 135,998
---------- ----------
Total assets $3,461,114 $3,420,708
========== ==========
LIABILITIES
Current liabilities:
Current portion long-term debt $ 35,000 $ 35,000
Accounts payable, accrued expenses
and other current liabilities 153,466 128,400
---------- ----------
Total current liabilities 188,466 163,400
Long-term debt 1,279,584 1,289,574
Liquid Yield Option Notes 308,169 306,202
Deferred tax liability 345,478 345,478
Other liabilities 114,880 112,988
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, authorized and unissued
4,000,000 shares -- --
Common stock, no par value, $0.01 per share
stated value; authorized 100,000,000
shares, issued and outstanding shares:
51,340,273 in 1999 and 51,184,217 in 1998 513 512
Additional paid-in capital 1,129,326 1,124,057
Common stock warrants 30,599 30,819
Accumulated other comprehensive income -- 25,428
Retained earnings 64,099 22,250
---------- ----------
Total shareholders' equity 1,224,537 1,203,066
---------- ----------
Total liabilities and
shareholders' equity $3,461,114 $3,420,708
========== ==========
</TABLE>
The accompanying notes are an integral
part of the condensed consolidated financial statements.
<PAGE> 4
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
for the three months ended March 31, 1999 and 1998
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Broadcast revenue $ 219,714 $ 159,192
Less agency commissions 25,051 17,164
---------- ----------
Net revenue 194,663 142,028
Broadcast operating expenses 139,756 107,353
Depreciation and amortization 35,023 27,450
Corporate general and
administrative expenses 5,629 3,644
---------- ----------
Operating income 14,255 3,581
Interest expense (29,909) (23,958)
Gain on sale of assets 83,476 --
Other (expense) income, net (173) 2,479
---------- ----------
Income (loss) before income taxes 67,649 (17,898)
Income tax (expense) benefit (25,800) 11,000
---------- ----------
Net income (loss) 41,849 (6,898)
---------- ----------
Other comprehensive income (loss) before tax:
Reclassification adjustment for
gains included in net income,
net of taxes (25,428) --
---------- ----------
Comprehensive income (loss) $ 16,421 $ (6,898)
========== ==========
Basic net income (loss)
per common share $ .82 $ (.14)
========== ==========
Diluted net income (loss)
per common share $ .70 $ (.14)
========== ==========
Number of common shares used
in Basic calculation 51,303 48,419
========== ==========
Number of common shares used
in Diluted calculation 62,261 48,419
========== ==========
</TABLE>
The accompanying notes are an integral part
of the condensed consolidated financial statements.
<PAGE> 5
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1999 and 1998
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 46,022 $ 19,391
---------- ----------
Cash flows from investing activities:
Capital expenditures (7,713) (4,795)
Cash paid for acquisitions (114,628) (34,485)
Deposits on broadcast stations (7,656) (23,783)
Proceeds from sale of investments 85,502 --
---------- ----------
Net cash used by investing activities (44,495) (63,063)
---------- ----------
Cash flows from financing activities:
Issuance of long-term debt 105,000 149,539
Common stock proceeds, net of issuance costs 3,148 244,939
Issuance of Liquid Yield Option Notes -- 166,950
Repayment of long-term debt (115,000) (197,500)
Payment of finance costs -- (7,403)
Other -- 1,862
---------- ----------
Net cash (used) provided by financing
activities (6,852) 358,387
---------- ----------
Net (decrease) increase in cash and
cash equivalents (5,325) 314,715
Cash and cash equivalents at
beginning of period 20,051 28,724
---------- ----------
Cash and cash equivalents at end of period $ 14,726 $ 343,439
========== ==========
Supplemental schedule of non-cash investing
and financing activities:
Fair value of assets exchanged, net of cash -- $ 70,000
Liabilities assumed in acquisitions -- 2,687
</TABLE>
The accompanying notes are an integral part
of the condensed consolidated financial statements.
<PAGE> 6
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The December 31, 1998 condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. The
financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Although certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, the
Company believes that the disclosures are adequate to make the
information presented not misleading and reflect all adjustments
(consisting only of normal recurring adjustments) which are necessary
for a fair presentation of results of operations for such periods.
Results for interim periods may not be indicative of results for the
full year. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial
statements for the year ended December 31, 1998 and the notes thereto.
2. CLEAR CHANNEL MERGER
On October 8, 1998 the Company entered into a definitive merger
agreement with Clear Channel Communications, Inc. ("Clear Channel") for
a tax-free, stock for stock transaction (the "Merger" or the "Clear
Channel Merger"). The Company and Clear Channel expect to consummate
the Merger at the close of business May 4, 1999 or shortly thereafter.
Pursuant to terms of the agreement, each share of Jacor common stock
will be exchanged for 1.1573151 shares of Clear Channel common stock
assuming a close on May 4, 1999.
Upon consummation of the Merger, a change in control event will have
occurred with respect to covenants in the Company's credit facility,
liquid yield option notes and each outstanding issue of the senior
subordinated notes. Such change in control would give the credit
facility lenders the right to require repayment of amounts borrowed
under the facility, and require the Company to offer repayment of the
senior subordinated notes at 101% of the principal amount and the
liquid yield option notes at their issue price plus accrued original
issue discount at such date.
As a result of the Merger, all options and stock appreciation rights
for Jacor common stock not vested at the effective time of the Merger
become fully vested and exercisable one day before the effective time
of the Merger. Clear Channel will assume all of these options and stock
appreciation rights on the same terms and conditions as were applicable
prior to the effective time of the Merger. The holders may exercise
such options and stock appreciation rights for or with respect to
shares of Clear Channel common stock at an exercise price adjusted to
reflect the exchange ratio of the Merger.
In August 1998, the Company entered into an advisory agreement with
Equity Group Investments, Inc. ("EGI"), an affiliate of the Company's
largest stockholder, the Zell/Chilmark Fund L.P., whereby the Company
agreed to pay EGI a fee equal to .75% of the equity value of the
Company, as defined in the advisory agreement, on any change in control
event.
<PAGE> 7
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS
COMPLETED RADIO STATION ACQUISITIONS
January Transactions
The Company acquired KEZY-FM and KORG-AM in Anaheim, California from ML
Media Partners for $30.1 million in cash, of which $3.0 million was
placed in escrow in 1998.
The Company acquired KBKB-AM and KBKB-FM in Ft. Madison, Iowa from
Talley Broadcasting for approximately $0.9 million in cash.
The Company acquired KBET-AM in Los Angeles, California from Saddleback
Broadcasting for $3.0 million in cash, of which $0.3 million was placed
in escrow in 1998.
The Company acquired the stock of WTTF, Inc., owner of WTTF-AM and
WTTF-FM in Tiffin, Ohio for $2.4 million in cash, of which
approximately $0.1 million was placed in escrow in 1998.
The Company acquired KZSF-FM in San Francisco, California from KZSF
Broadcasting for $16.5 million in cash, of which $0.8 million was
placed in escrow in 1998.
February Transactions
The Company acquired KFYR-AM and KYYY-FM in Bismarck, North Dakota from
Meyers Broadcasting for $4.8 million in cash, of which approximately
$0.5 million was placed in escrow in 1998.
The Company acquired WIKX-FM, WCCF-AM, and WCVU-FM in Punta Gorda,
Florida from Intermart Broadcasting for approximately $7.8 million in
cash, of which $0.4 million was placed in escrow in 1998.
The Company acquired KVKI-FM, KRUF-FM, KITT-FM, KEEL-AM and KWKH-AM in
Shreveport, Louisiana from Progressive Broadcasting for $24.0 million
in cash, of which $2.3 million was placed in escrow in 1998.
<PAGE> 8
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
March Transactions
The Company acquired WDFM-FM and low-powered television station WDFM in
Defiance, Ohio from Lankenau Media Network for $4.0 million in cash.
The Company acquired WKST-AM and WKST-FM in New Castle, Pennsylvania
from Great Scott Broadcasting for $2.5 million in cash.
The Company acquired WKBN-AM and WKBN-FM in Youngstown, Ohio from WKBN
Broadcasting for $11.0 million in cash, of which approximately $2.6
million was placed in escrow in 1997.
The Company acquired KLLP-FM (formerly KRSS-FM) in Pocatello, Idaho
from CSN International for approximately $0.8 million in cash, of which
approximately $0.1 million was placed in escrow in 1998.
The Company acquired KCKC-AM in San Bernadino, California from All Pro
Broadcasting for $3.0 million in cash, of which approximately $0.2
million was placed in escrow in 1998.
The Company acquired WBEX-AM in Chillicothe, Ohio from Secret
Communications for $0.1 million in cash.
Pro Forma Results of Operations
The Company's 1999 completed acquisitions both individually and in the
aggregate are immaterial to the Company's results of operations.
Assuming the Company's significant acquisitions in 1998 were completed
as of January 1, 1998, unaudited pro forma consolidated results of
operations would have been as follows (in thousands except per share
amounts):
<TABLE>
<CAPTION>
Pro forma (Unaudited)
Three Months Ended
March 31,
1998
---------------------
<S> <C>
Net revenue $ 162,453
Loss before extraordinary items $ (7,375)
Diluted loss per common share
before extraordinary items $ (0.14)
</TABLE>
These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had
been consummated on the indicated dates.
RADIO STATION ACQUISITIONS AND DISPOSITIONS COMPLETED SUBSEQUENT TO
MARCH 31, 1999
The Company completed the acquisitions of four radio stations in two
new broadcast areas and one existing broadcast area for $4.4 million in
cash, of which approximately $0.2 million was placed in escrow in 1998.
The Company completed the disposition of one radio station for $5.0
million in cash.
<PAGE> 9
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS AND DISPOSITIONS, Continued
PENDING RADIO STATION ACQUISITIONS AND DISPOSITIONS
The Company has entered into agreements to purchase the FCC licenses
and substantially all of the broadcast assets of 15 radio stations in
six of the Company's existing broadcast areas and three new broadcast
areas for approximately $166.6 million in cash, of which approximately
$9.4 million has been placed in escrow. The Company has also entered
into agreements to exchange the FCC licenses and substantially all of
the broadcast assets of six radio stations in two broadcast areas,
valued at approximately $103.0 million.
4. SUBSIDIARY GUARANTORS
The Company's 10 1/8% Notes, 9 3/4% Notes, 8 3/4% Notes, and 8% Notes
(the "Notes") are obligations of JCC, and are jointly and severally,
fully and unconditionally guaranteed on a senior subordinated basis by
Jacor and by all of the Company's subsidiaries (the "Subsidiary
Guarantors"). JCC is a wholly-owned subsidiary of Jacor and the
Subsidiary Guarantors are wholly-owned subsidiaries of JCC. Separate
financial statements of JCC and each of the Subsidiary Guarantors are
not presented because Jacor believes that such information would not be
material to investors. The direct and indirect non-guarantor
subsidiaries of Jacor are inconsequential, both individually and in the
aggregate. Additionally, there are no current restrictions on the
ability of the Subsidiary Guarantors to make distributions to JCC,
except to the extent provided by law generally. JCC's credit facility
and the terms of the indentures governing the Notes do restrict the
ability of JCC and of the Subsidiary Guarantors to make distributions
to the Registrant.
Summarized financial information with respect to Jacor, JCC and with
respect to the Subsidiary Guarantors on a combined basis as of March
31, 1999 and for the three months ended March 31, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
Jacor JCC
------------------------- ---------------------------
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Statement
Data (in thousands):
Net revenue -- -- -- --
Equity in earnings
of subsidiaries $ (5,951) $ (5,484) $ (5,696) $ (6,463)
Operating loss (12,127) (9,398) (5,696) (6,463)
Income (loss) before
extraordinary items 41,849 (6,898) (5,951) (5,484)
Net income (loss) 41,849 (6,898) (5,951) (5,484)
Balance Sheet Data
(in thousands):
Current assets $ 4,011 $ 21,243
Non-current assets 1,670,913 2,969,982
Current liabilities 43,071 19,980
Non-current
liabilities 407,317 2,304,017
Shareholders' equity 1,224,536 667,228
</TABLE>
<PAGE> 10
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSIDIARY GUARANTORS, Continued
<TABLE>
<CAPTION>
Jacor JCC
------------------------- ---------------------------
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statement of Cash
Flow Data (in thousands):
Operating activities $ (5,900) $ (3,644) $ 330 $ 2,670
Investing activities 84,653 (1,274) (122,284) (58,268)
Financing activities (78,753) 167,076 116,629 200,057
Net change in cash and
cash equivalents -- 162,158 (5,325) 144,459
Cash and cash equivalents
at beginning of period -- (613) 20,051 29,337
Cash and cash equivalents
at end of period -- 161,545 14,726 173,796
</TABLE>
<TABLE>
<CAPTION>
Combined
Subsidiary Guarantors
-------------------------
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Operating Statement
Data (in thousands):
Net revenue $ 194,663 $ 142,664
Equity in earnings
of subsidiaries -- --
Operating income 20,431 7,495
Loss before
extraordinary items (5,696) (6,463)
Net loss (5,696) (6,463)
Balance Sheet Data
(in thousands):
Current assets $ 202,729
Non-current assets 3,258,385
Current liabilities 90,416
Non-current
liabilities 2,146,162
Shareholders' equity 1,224,536
Statement of Cash Flow
Data (in thousands):
Operating activities $ 51,592 $ 20,365
Investing activities (6,864) (3,521)
Financing activities (44,728) (8,746)
Net change in cash and
cash equivalents -- 8,098
Cash and cash equivalents
at beginning of period -- --
Cash and cash equivalents
at end of period -- 8,098
</TABLE>
<PAGE> 11
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share ("EPS") computations for
income before extraordinary items for the three months ended March 31,
1999 and 1998 (in thousands except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended
------------------
1999 1998
<S> <C> <C>
Net income (loss) for basic EPS $41,849 $ (6,898)
LYONs interest expense, net of tax 1,906 --
------- --------
Net income (loss) for diluted EPS $43,755 $ (6,898)
======= ========
Weighted average
shares - basic 51,303 48,419
Effect of dilutive securities:
Stock options 1,661 --
Warrants 2,817 --
LYONs 6,097 --
Other 383 --
------- --------
Weighted average
shares - diluted 62,261 48,419
======= ========
Net income (loss) per common share:
Basic $ 0.82 $ (0.14)
Diluted $ 0.70 $ (0.14)
</TABLE>
The Company's 1996 Liquid Yield Option Notes and 1998 Liquid Yield
Option Notes (collectively, the "LYONs") can be converted into
approximately 6.1 million shares of common stock at the option of the
holder. Assuming conversion of the LYONs for the three months ended
March 31, 1998 would result in a decrease in the diluted net loss per
share amount, therefore the LYONs are not included in the computation
of diluted EPS.
<PAGE> 12
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION
The Company operates in a single reportable segment, radio, which
derives its revenue from the sale of commercial broadcast inventory.
The radio segment includes all of the Company's radio stations owned or
operated and Premiere, a radio syndication business. The Company also
aggregates into the category "other", one television station and
several broadcast related businesses that provide market research,
traffic reporting and satellite connectivity. Intersegment sales
consist primarily of license fees for syndicated programming and
broadcast services provided to the Company's radio stations.
Intersegment revenues are recorded at market value.
No single customer provides more than 10% of the Company's revenues,
and the Company derives less than 10% of its revenues from markets
outside of the U.S.
"Broadcast cash flow" means operating income before depreciation and
amortization and corporate general and administrative expenses. The
Company's management believes that broadcast cash flow is helpful in
understanding cash flow generated from its broadcasting in comparing
operating performance of the Company's broadcast entities to other
broadcast companies. Broadcast cash flow is also a key factor in the
Company's assessment of performance. Broadcast cash flow should not be
considered an alternative to net income or operating income as an
indicator of the Company's overall performance.
Financial information for the Company's business segment is as follows
(in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1999 RADIO OTHER CORPORATE ELIMINATIONS CONSOLIDATED
----- ----- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 182,801 $ 14,290 -- $ (2,428) $ 194,663
Broadcast operating expenses 129,731 12,648 $ (250) (2,373) 139,756
Broadcast cash flow 53,070 1,642 250 (55) 54,907
Corporate expenses -- -- 5,629 -- 5,629
Depreciation 6,346 915 183 -- 7,444
Amortization 26,076 1,164 342 (3) 27,579
Operating income (loss) 20,648 (437) (5,904) (52) 14,255
Capital expenditures 6,624 240 849 -- 7,713
Radio station and other
acquisitions 122,284 -- -- -- 122,284
Total assets 3,050,576 257,504 177,485 (24,451) 3,461,114
</TABLE>
<PAGE> 13
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION, Continued
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1998 RADIO OTHER CORPORATE ELIMINATIONS CONSOLIDATED
----- ----- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenue $ 127,746 $ 15,335 -- $ (1,053) $ 142,028
Broadcast operating expenses 96,417 11,989 -- (1,053) 107,353
Broadcast cash flow 31,329 3,346 -- -- 34,675
Corporate expenses -- -- $ 3,644 -- 3,644
Depreciation 4,610 838 288 -- 5,736
Amortization 20,394 991 329 -- 21,714
Operating income (loss) 6,325 1,517 (4,261) -- 3,581
Capital expenditures 2,582 939 1,274 -- 4,795
Radio station and other
acquisitions 58,268 -- -- -- 58,268
Total assets 2,301,709 198,826 467,858 (3,354) 2,965,039
</TABLE>
<PAGE> 14
(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 has accounted
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, 1998 and for the three months ended March 31, 1999 give
effect to the merger as if it had occurred on January 1, 1998 and 1999,
respectively. The unaudited pro forma combined condensed balance sheet at March
31, 1999 gives effect to the merger as if it occurred on March 31, 1999.
The unaudited pro forma combined condensed statement of operations for the
year ended December 31, 1998 was prepared based upon the historical statement of
operations of Clear Channel, adjusted to reflect the merger with Universal
Outdoor Holding, Inc. ("Universal"), and the acquisition of More Group, Plc
("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 Communications ("Nationwide") as if such
acquisition had occurred on January 1, 1998 ("1998 Jacor Pro Forma"). The
unaudited pro forma combined condensed statement of operations for the three
months ended March 31, 1999 was prepared based upon the historical statement of
operations of Clear Channel and the historical statement of operations of Jacor.
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.
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> 15
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
MARCH 31, 1999
<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.................... $ 30,290 $ 14,726 $ -- $ 45,016
Accounts receivable, net..................... 279,994 173,538 -- 453,532
Other current assets......................... 93,705 39,719 -- 133,424
------------ ------------ ------------ ------------
Total Current Assets................... 403,989 227,983 -- 631,972
Property, plant & equipment, net............... 1,934,200 293,753 -- 2,227,953
Intangible assets:
Contract valuations.......................... 386,813 400,674 -- 787,487
Licenses and goodwill........................ 4,253,564 2,628,377 2,951,677 9,833,618
Other intangible assets...................... 94,361 -- 94,361
------------ ------------ ------------ ------------
4,734,738 3,029,051 2,951,677 10,715,466
Less accumulated amortization.................. (369,351) (210,398) 210,398 (369,351)
------------ ------------ ------------ ------------
4,365,387 2,818,653 3,162,075 10,346,115
Other assets:
Notes receivable............................. 56,612 -- 56,612
Investments in and advances to,
nonconsolidated affiliates................. 337,668 -- 337,668
Other assets................................. 117,727 120,725 -- 238,452
Other investments............................ 274,488 -- 274,488
------------ ------------ ------------ ------------
TOTAL ASSETS........................... $ 7,490,071 $ 3,461,114 $ 3,162,075 $ 14,113,260
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................ $ 237,462 $ 153,466 $ -- $ 390,928
Current portion of long-term debt............ 27,023 35,000 -- 62,023
------------ ------------ ------------ ------------
Total Current Liabilities.............. 264,485 188,466 -- 452,951
Long-term debt................................. 2,260,694 1,279,584 50,000 3,590,278
Deferred income taxes.......................... 364,247 345,478 -- 709,725
Other long-term liabilities.................... 72,141 114,880 -- 187,021
Liquid yield options notes..................... -- 308,169 179,901 488,070
Minority interest.............................. 22,637 -- -- 22,637
Shareholders' equity:
Preferred stock.............................. -- -- -- --
Common stock................................. 26,618 513 5,428 32,559
Additional paid-in capital................... 4,165,879 1,129,326 2,986,958 8,282,163
Common stock warrants........................ -- 30,599 3,887 34,486
Retained earnings............................ 210,926 64,099 (64,099) 210,926
Other........................................ (22,727) -- -- (22,727)
Unrealized gain on investments............... 125,171 -- -- 125,171
Cost of shares held in treasury.............. -- -- -- --
------------ ------------ ------------ ------------
Total Shareholders' Equity............. 4,505,867 1,224,537 2,932,174 8,662,578
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................... $ 7,490,071 $ 3,461,114 $ 3,162,075 $ 14,113,260
============ ============ ============ ============
</TABLE>
<PAGE> 16
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 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.......................... $ 1,550,906 $ 813,280 $ -- $ 2,364,186
Operating expenses................... 908,918 539,294 -- 1,448,212
Depreciation and amortization........ 355,473 130,300 121,639 607,412
Corporate expenses................... 44,950 21,090 -- 66,040
----------- ----------- ----------- -----------
Operating income (loss).............. 241,565 122,596 (121,639) 242,522
Interest expense..................... 174,992 121,797 2,930 299,719
Other income (expense) -- net........ 3,211 19,802 -- 23,013
----------- ----------- ----------- -----------
Income (loss) before income taxes.... 69,784 20,601 (124,569) (34,184)
Income tax (expense) benefit......... (68,926) (24,275) 1,172 (92,029)
----------- ----------- ----------- -----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates......................... 858 (3,674) (123,397) (126,213)
Equity in earnings of
nonconsolidated affiliates......... 8,091 -- -- 8,091
----------- ----------- ----------- -----------
Net income (loss) before
extraordinary items................ $ 8,949 $ (3,674) $ (123,397) $ (118,122)
=========== =========== =========== ===========
Net income (loss) before
extraordinary items per common
share:
Basic.............................. $ 0.04 $ (0.39)
=========== ===========
Diluted............................ $ 0.04 $ (0.39)
=========== ===========
</TABLE>
<PAGE> 17
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
CLEAR CHANNEL
PRO FORMA AND JACOR
CLEAR CHANNEL JACOR MERGER PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT MERGER
------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Net revenue.......................... $ 376,787 $ 194,663 $ $ 571,450
Operating expenses................... 244,822 139,756 384,578
Depreciation and amortization........ 110,648 35,023 28,222 173,893
Corporate expenses................... 12,447 5,629 18,076
----------- ----------- ----------- -----------
Operating income (loss).............. 8,870 14,255 (28,222) (5,097)
Interest expense..................... 31,832 29,909 695 62,436
Other income (expense) -- net........ 10,919 83,303 94,222
----------- ----------- ----------- -----------
Income (loss) before income taxes.... (12,043) 67,649 (28,917) 26,689
Income tax (expense) benefit......... (2,889) (25,800) 278 (28,411)
----------- ----------- ----------- -----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates......................... (14,932) 41,849 (28,639) (1,722)
Equity in earnings of
nonconsolidated affiliates......... 2,196 -- 2,196
----------- ----------- ----------- -----------
Net income (loss) before
extraordinary items................ $ (12,736) $ 41,849 $ (28,639) $ 474
=========== =========== =========== ===========
Net income (loss) before
extraordinary items per common
share:
Basic.............................. $ (0.05) $ 0.00
=========== ===========
Diluted............................ $ (0.05) $ 0.00
=========== ===========
</TABLE>
<PAGE> 18
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)............ 51,333,942
Exchange ratio ............................................. 1.1573151
-------------
Clear Channel's common stock to be issued in the merger (in
whole shares)............................................. 59,409,546
Estimated value per share................................... X $ 69.00
-------------
$ 4,099,259
Estimated value of common stock options..................... 22,966
Estimated transaction costs................................. 50,000
-------------
Total estimated purchase price.................... $ 4,172,225
=============
</TABLE>
For purpose of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $ 4,172,225
Plus -- estimated fair value of LYONs notes in excess of
carrying value............................................ 179,901
Plus -- estimated fair value of Jacor common stock warrants
in excess of carrying value............................... 3,887
Less -- Jacor's net assets exchanged in the merger at
March 31, 1999 adjusted for the elimination of
existing net licenses and goodwill of $2,417,979.......... (1,224,041)
-----------
Estimated excess purchase price (allocated to licenses and
goodwill)................................................. $ 5,580,054
===========
</TABLE>
The estimated excess purchase price allocated to licenses and goodwill of
$5,580,054 will be amortized over a 25 year period using the straight line
method which will result in annual goodwill amortization of $223,202.
<PAGE> 19
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS, CONTINUED
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
$308.2 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 $174.5 million.
The unaudited pro forma combined condensed financial statements of
operations excludes the effect of any divestiture of stations, which were
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.
The pro forma merger adjustments at March 31, 1999 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(a) Increase in goodwill and licenses equal to the excess
purchase price of the merger.............................. $2,951,677
(b) Decrease in accumulated amortization resulting from the
elimination of Jacor's existing accumulated amortization
on goodwill............................................... 210,398
(c) Increases in long-term debt resulting from estimated
merger expenses........................................... 50,000
(d) Record liquid yield option notes at estimated fair value.... 179,901
(e) Increase common stock to account for Clear Channel common
stock given in the merger at $0.10 par value.............. 5,428
(f) Increase additional paid-in capital to account for Clear
Channel common stock given in the merger at $69.00 per
share less $0.10 par value ($2,963,992) plus the value of
Jacor stock options included in the Merger ($22,966)...... 2,986,958
(g) Record common stock warrants at estimated fair value........ 3,887
(h) Eliminate Jacor's existing retained earnings balance........ (64,099)
</TABLE>
The pro forma merger adjustment for the three months ended March 31, 1999
and the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C> <C>
(i) 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.......................... $ (28,222) $ 121,639
(j) Increase in interest expense associated with the
increased long-term debt resulting from the
estimated merger expenses of $50,000................. (695) (2,930)
(k) Decrease in income tax expense associated with the tax
effect of the additional interest expense referenced
in note (j) at Clear Channel's effective tax rate
of 40%............................................... 278 1,172
</TABLE>
<PAGE> 20
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>
(IN THOUSANDS)
-------------------------
3/31/99 12/31/98
------- --------
<S> <C> <C>
Basic
Clear Channel pro forma weighted average shares
outstanding............................................... 265,850 245,572
Jacor pro forma weighted average shares outstanding......... 51,303 50,389
Increase weighted average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the exchange ratio of 1.1573151................. 8,106 8,847
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 325,259 304,808
======= =======
Diluted
Clear Channel pro forma weighted average shares
outstanding............................................... 280,918 258,635
Jacor pro forma weighted average shares outstanding......... 62,261 54,565
Increase weighted average common stock outstanding to
account for Clear Channel common stock given in the merger
and to account for the dilution effect of Jacor's common
stock warrants, employee stock options and other dilutive
shares have on the Company at the exchange ratio of
1.1573151................................................. 9,830 9,504
------- -------
Clear Channel and Jacor Pro Forma Merger.................... 353,009 322,704
======= =======
</TABLE>
<PAGE> 21
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
1998
CLEAR CLEAR
CHANNEL UNIVERSAL PRO FORMA MORE PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENT(1) HISTORICAL ADJUSTMENT(2) PRO FORMA
---------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue......................... $1,350,940 $55,292 $ -- $144,674 $ -- $1,550,906
Operating expenses.................. 767,265 30,826 -- 110,827 -- 908,918
Depreciation and amortization....... 304,972 15,517 7,720 15,699 11,565 355,473
Noncash compensation expense........ -- 106 (106) 3,476 (3,476) --
Corporate expenses.................. 37,825 1,414 -- 5,711 -- 44,950
-------- ------- ------- -------- -------- ----------
Operating income (loss)............. 240,878 7,429 (7,614) 8,961 (8,089) 241,565
Interest expense.................... 135,766 13,159 -- 3,715 22,352 174,992
Other income (expense) -- net....... 12,810 (23) -- (9,576) -- 3,211
-------- ------- ------- -------- -------- ----------
Income (loss) before income taxes... 117,922 (5,753) (7,614) (4,330) (30,441) 69,784
Income tax (expense) benefit........ (72,353) -- -- (3,301) 6,728 (68,926)
-------- ------- ------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates........................ 45,569 (5,753) (7,614) (7,631) (23,713) 858
Equity in earnings (loss) of non-
consolidated affiliates........... 8,462 -- -- (371) -- 8,091
-------- ------- ------- -------- -------- ----------
Net income (loss)................... $ 54,031 $(5,753) $(7,614) $ (8,002) $(23,713) $ 8,949
======== ======= ======= ======== ======== ==========
Net income per common share:
Basic............................. $ 0.23 $ 0.04
======== ==========
Diluted........................... $ 0.22 $ 0.04
======== ==========
</TABLE>
<PAGE> 22
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, CONTINUED
UNIVERSAL MERGER
(1) The pro forma merger adjustments for the year ended December 31, 1998
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(a) Increase in amortization expense resulting from the
additional goodwill created by the merger. ........... $(7,720)
(b) Decrease in noncash compensation to reverse the effect
of Financial Accounting Standards Board Statement
No. 123 ("FAS 123") from the statement of operations as the
Company elected to follow Accounting Principles Board
Opinion Number 25("APB 25") for earnings presentation and
implemented FAS 123 for footnote disclosure only. .... 106
</TABLE>
MORE ACQUISITION
(2) 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, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
------------------
<S> <C> <C>
(c) Increase in amortization expense resulting from the
additional goodwill created by the acquisition. ...... $(11,565)
(d) 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
(e) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 5.78% for 1998. ..................... (22,352)
(f) The tax effect of adjustment (d) at the 1998 UK
statutory rate of 31.5% offset by the tax benefit of
adjustment (e) at Clear Channel's federal U.S. tax
rate in 1998 of 35%. ................................. 6,728
</TABLE>
<PAGE> 23
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 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................ $754,468 $50,171 $ -- $ 8,641(e) $813,280
Broadcast operating
expenses................. 497,861 39,623 (738)(a) 2,548(e)(g) 539,294
Depreciation and
amortization............. 120,392 5,044 299(a) 4,565(b) 130,300
Corporate general and
administrative
expenses................. 19,684 1,406 -- --(g) 21,090
-------- ------- ----- -------- --------
Operating income (loss).... 116,531 4,098 439 1,528 122,596
Interest expense, net...... 107,295 (452) -- 14,954(c) 121,797
Gain on sale of radio
stations................. 10,896 -- -- -- 10,896
Other income (expense),
net...................... 8,910 (4) -- -- 8,906
-------- ------- ----- -------- --------
Income (loss) before income
taxes and extraordinary
items.................... 29,042 4,546 439 (13,426) 20,601
Income tax (expense)
credit................... (28,100) (1,546) -- 5,371(d) (24,275)
-------- ------- ----- -------- --------
Income (loss) before
extraordinary items...... $ 942 $ 3,000 $ 439 $ (8,055) $ (3,674)
======== ======= ===== ======== ========
Income (loss) per common
share:
Basic.................... $ 0.02 $ (0.08)(f)
======== ========
Diluted.................. $ 0.02 $ (0.08)(f)
======== ========
</TABLE>
<PAGE> 24
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) 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.
(b) 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.
(c) 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.
(d) To provide for the tax effect of pro forma adjustments using an assumed
rate of 40%.
(e) Additional revenues and expenses related to Nationwide Stations from July
1, 1998 to the date of acquisition consummation, net of elimination of the
results for the divestiture of two San Diego stations.
(f) The pro forma weighted average shares outstanding includes all shares
outstanding as of December 31, 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.
(g) 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>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative..... $1,406
Benefit plan expenses.................... 1,741
Commissions.............................. 413
Promotion and programming................ 1,527
Personnel reductions..................... 1,955
Other.................................... 732
------
TOTAL.......................... 7,774
Income Taxes............................. 3,110
------
TOTAL, net of taxes............ $4,664
======
</TABLE>
(c) Index to Exhibits
NONE
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 hereunto duly authorized.
Clear Channel Communications, Inc.
Date May 6, 1999 By /s/ HERBERT W. HILL, JR.
Herbert W. Hill, Jr.
Senior Vice President/
Chief Accounting Officer
