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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
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)
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Clear Channel Communications, Inc.
Form 8-K/A
Item 5 OTHER EVENTS
On March 12, 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.
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Item 7.(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 the Merger will be accounted for
as a purchase of Universal by the Company; accordingly the net assets of
Universal 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 give effect to the Merger as if it had occurred at
January 1, 1997. The unaudited pro forma combined condensed balance sheet at
December 31, 1997 gives effect to the Merger as if it occurred on December 31,
1997.
The unaudited pro forma combined condensed statements of operations were
prepared based upon the historical statement of operations of the Company
adjusted to reflect the acquisition of Eller Media and the Paxson Radio
Acquisition as if such acquisitions had occurred at January 1, 1997 (Clear
Channel Pro Forma) and the historical statement of operations of Universal. The
unaudited pro forma combined condensed balance sheet was prepared based upon the
historical balance sheets of the Company and Universal.
The unaudited pro forma combined condensed financial statements do not give
effect to any potential divestitures or regulatory costs that may be imposed by
a Governmental entity as a condition for their approval of the Merger.
The unaudited pro forma combined condensed financial statements should be read
in conjunction with the historical financial statements of the Company and
Universal included herein.
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 by
the Company and Universal occurred on the dates indicated nor are they
necessarily indicative of future operating results or financial position.
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CLEAR CHANNEL AND UNIVERSAL
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Clear Channel
Pro Forma and Universal
Clear Channel Universal Merger Pro Forma
Historical Historical Adjustments Merger
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 24,657 $ 89 $ (15,000) $ 9,746
Accounts receivable, net 155,962 35,876 -- 191,838
Film rights - current 14,826 -- -- 14,826
Other current assets 3,202 14,802 -- 18,004
----------- ----------- ----------- -----------
Total Current Assets 198,647 50,767 (15,000) 234,414
Property, plant & equipment, net 746,284 622,179 -- 1,368,463
Intangible assets:
Network affiliation agreements 33,727 -- -- 33,727
Licenses and goodwill 2,175,944 260,504 902,290 3,338,738
Covenants not-to-compete 24,892 9,084 -- 33,976
Other intangible assets 19,593 -- -- 19,593
----------- ----------- ----------- -----------
2,254,156 269,588 902,290 3,426,034
Less accumulated amortization (141,066) (20,103) 18,213 (142,956)
----------- ----------- ----------- -----------
2,113,090 249,485 920,503 3,283,078
Other assets:
Notes receivable 35,373 -- -- 35,373
Film rights 14,171 -- -- 14,171
Investments in and advances
to, nonconsolidated affiliates 266,691 -- -- 266,691
Other assets 30,122 18,417 -- 48,539
Other investments 51,259 -- -- 51,259
----------- ----------- ----------- -----------
TOTAL ASSETS $ 3,455,637 $ 940,848 $ 905,503 $ 5,301,988
=========== =========== =========== ===========
LIABILITIES
Current liabilities:
Accounts payable $ 11,904 $ 5,512 $ -- $ 17,416
Accrued interest 9,950 -- -- 9,950
Accrued expenses 34,489 27,177 -- 61,666
Deferred income 1,340 -- -- 1,340
Current portion of long-term debt 13,294 12,374 -- 25,668
Current portion of film rights liability 15,875 -- -- 15,875
----------- ----------- ----------- -----------
Total Current Liabilities 86,852 45,063 -- 131,915
Long-term debt 1,540,421 507,600 -- 2,048,021
Film rights liability 15,551 -- -- 15,551
Deferred income taxes 10,114 91,830 -- 101,944
Deferred income - long-term 9,750 -- -- 9,750
Other long-term liabilities 25,378 -- -- 25,378
Minority interest 20,787 -- -- 20,787
Shareholders' equity:
Preferred stock -- -- -- --
Common stock 9,823 268 1,661 11,752
Additional paid-in capital 1,541,865 374,129 825,800 2,741,794
Retained earnings/
(accumulated deficit) 169,631 (87,541) 87,541 169,631
Other 2,398 9,499 (9,499) 2,398
Unrealized gain on investments 23,754 -- -- 23,754
Cost of shares held in treasury (687) -- -- (687)
----------- ----------- ----------- -----------
Total Shareholders' Equity 1,746,784 296,355 905,503 2,948,642
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,455,637 $ 940,848 $ 905,503 $ 5,301,988
=========== =========== =========== ===========
</TABLE>
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CLEAR CHANNEL AND UNIVERSAL
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENT OF OPERATIONS
(In thousands, except per share data)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Clear Channel
Pro Forma and Universal
Clear Channel Universal Merger Pro Forma
Pro Forma Historical Adjustments Merger
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenue $ 831,814 $ 209,639 $ -- $ 1,041,453
Operating expenses 490,324 101,613 -- 591,937
Depreciation and amortization 152,206 59,977 30,881 243,064
Noncash compensation for
incentive options -- 8,289 (8,289) --
Corporate expenses 27,260 -- -- 27,260
----------- ----------- ----------- -----------
Operating income (loss) 162,024 39,760 (22,592) 179,192
Interest expense 116,805 46,400 -- 163,205
Other income (expense) - net 6,463 (2,621) -- 3,842
----------- ----------- ----------- -----------
Income (loss) before income taxes 51,682 (9,261) (22,592) 19,829
Income tax (expense) benefit (30,841) -- -- (30,841)
----------- ----------- ----------- -----------
Income before equity in earnings
(loss) of nonconsolidated affiliates 20,841 (9,261) (22,592) (11,012)
Equity in earnings (loss) of
nonconsolidated affiliates 6,615 -- -- 6,615
----------- ----------- ----------- -----------
Net income (loss) $ 27,456 $ (9,261) $ (22,592) $ (4,397)
=========== =========== =========== ===========
Net income (loss) per common share:
Basic $ .30 $ (0.04)
=========== ===========
Diluted $ .26 $ (0.07)
=========== ===========
</TABLE>
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CLEAR CHANNEL AND UNIVERSAL
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The Company and Universal unaudited pro forma combined condensed financial
statements reflect the Merger, accounted for as a purchase, as follows (In
thousands, except per share amounts):
<TABLE>
<S> <C>
Universal Common Stock outstanding at December 31, 1997 adjusted
to reflect the exercise of all outstanding options and warrants 28,787,442
Exchange ratio .67
------------
Shares of the Company's Common Stock assumed to be issued in connection
with the Merger 19,287,586
Estimated value per share x $62.3125
------------
$ 1,201,858
Estimated transaction costs 15,000
------------
Total estimated purchase price $ 1,216,858
============
</TABLE>
For purpose of these statements the total estimated purchase price was allocated
as follows:
<TABLE>
<S> <C>
Total estimated purchase price $ 1,216,858
Universal's net assets at December 31,1997 adjusted for the
elimination of existing goodwill of $242,291 54,064
------------
Estimated excess purchase price (allocated to goodwill) $ 1,162,794
============
</TABLE>
The estimated excess purchase price allocated to goodwill of $1,162,794 will be
amortized over a 25 year period using the straight line method which will result
in annual goodwill amortization of $46,512.
The pro forma merger adjustments at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Increase (Decrease)
In Thousands
------------
<S> <C>
Cash and cash equivalents $ (15,000)
Licenses and goodwill 902,290
Common stock 1,661
Additional paid-in capital 825,800
Retained earnings (accumulated deficit) 87,541
Other shareholders' equity (9,499)
</TABLE>
The pro forma merger adjustments for the year ended December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Increase (Decrease)
Income
In Thousands
------------
<S> <C>
Depreciation and amortization $ (30,881)
Noncash compensation for incentive options 8,289
</TABLE>
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CLEAR CHANNEL
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(In thousands, except per share data)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Clear Channel Paxson
Clear Channel Eller Media Pro Forma Eller Media Radio Pro Forma Clear Channel
Historical Historical Adjustment(1) Pro Forma Historical Adjustment(2) Pro Forma
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $ 697,068 $ 56,642 -- $ 753,710 $ 78,104 $ -- $ 831,814
Operating expenses 394,404 33,804 -- 428,208 63,362 (1,246) 490,324
Depreciation and amortization 114,207 10,547 $ 5,974 130,728 12,101 9,377 152,206
Corporate expenses 20,883 2,318 -- 23,201 4,059 -- 27,260
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 167,574 9,973 (5,974) 171,573 (1,418) (8,131) 162,024
Interest expense 75,076 8,565 2,518 86,159 1,370 29,276 116,805
Other income (expense) - net 11,579 (4,082) -- 7,497 (1,034) -- 6,463
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes 104,077 (2,674) (8,492) 92,911 (3,822) (37,407) 51,682
Income tax (expense) benefit (47,116) (3) 1,315 (45,804) -- 14,963 (30,841)
--------- --------- --------- --------- --------- --------- ---------
Income before equity in earnings
(loss) of nonconsolidated affiliates 56,961 (2,677) (7,177) 47,107 (3,822) (22,444) 20,841
Equity in earnings (loss) of non-
consolidated affiliates 6,615 -- -- 6,615 -- -- 6,615
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 63,576 $ (2,677) $ (7,177) $ 53,722 $ (3,822) $ (22,444) $ 27,456
========= ========= ========= ========= ========= ========= =========
Net income (loss) per common share:
Basic $ .72 $ .60 $ .30
========= ========= =========
Diluted $ .67 $ .54 $ .26
========= ========= =========
</TABLE>
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CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, 1997
ELLER MEDIA ACQUISITION
(1) 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 $(5,974)
goodwill created by the acquisition and a decrease in amortizable life from 40
years (Eller Media) to 25 years (The Company) and additional depreciation of $769
related to the adjustment of fixed assets to fair value.
(b) Increase in interest expense due to a higher amount of average debt outstanding (2,518)
which was partially offset by a lower average interest rate (6% average rate for
The Company and 8.8% for Eller Media during the first three months of 1997).
(c) Tax effect of the above adjustments to depreciation and interest expense at The 1,315
Company's estimated effective tax rate of 40%
</TABLE>
PAXSON RADIO ACQUISITION
(2) Represents the pro forma effect of the acquisition of Paxson Radio
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 $ 1,246
the plan.
(b) Increase in amortization expense resulting from the additional goodwill created (9,377)
by the acquisition.
</TABLE>
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<TABLE>
<S> <C>
(c) Increase in interest expense (at an average interest rate of 6.5% for the first (29,276)
nine months of 1997) due to additional borrowing on the Company's credit facility
to finance the acquisition cost.
(d) Tax effect of the above adjustment at the Company's estimated 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 year ended December 31, 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
