<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
(June 25, 1998)
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 July 10, 1998, Clear Channel Communications, Inc., a Texas corporation (the
Company), filed a Current Report on Form 8-K. On September 4, 1998, the Company
filed a current Report on Form 8-K/A to amend the July 10, 1998 filing with the
information required under item 7 (a) and item 7 (b). On January 14, 1999 the
Company filed a Current Report on Form 8-K/A to amend the July 10, 1998 filing
with the purchase price information required in the notes to the pro forma
information under item 7 (b). 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.
<PAGE> 3
(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 acquisition of More Group Plc. ("More") by the Company. For
accounting purposes, the Company will account for the acquisition as a purchase;
accordingly the net assets of More have been adjusted to their estimated fair
values based upon a preliminary purchase price allocation.
The unaudited pro forma combined condensed statement of operations for the year
ended December 31, 1997 gives effect to the acquisition as if it had occurred on
January 1, 1997. The unaudited pro forma combined condensed balance sheet at
December 31, 1997 gives effect to the acquisition as if it had occurred on
December 31, 1997.
The unaudited pro forma combined condensed statement of operations was prepared
based upon the historical statement of operations of the Company, adjusted to
reflect the acquisitions of Eller Media, Inc. ("Eller") and Paxson Radio
("Paxson") and the merger with Universal Outdoor Holdings, Inc. ("Universal") as
if such acquisitions and merger had occurred on January 1, 1997 ("Clear Channel
Pro Forma"), and based upon the historical statement of operations of More
adjusted to conform with U.S. Generally Accepted Accounting Principles. The
unaudited pro forma combined condensed balance sheet was prepared based upon the
historical balance sheet of the Company adjusted to reflect the merger with
Universal as if such merger had occurred on December 31, 1997 and the historical
balance sheet of More adjusted to conform with U.S. Generally Accepted
Accounting Principles. Certain amounts in More's financial statements have been
reclassified to conform to the Company's 1997 presentation.
The unaudited pro forma combined condensed financial statements should be read
in conjunction with the historical financial statements of More included herein
and the historical financial statements of the Company.
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 acquisition and the above described
acquisitions and merger and transactions of the Company and More occurred on the
dates indicated nor are they necessarily indicative of future operating results
or financial position.
<PAGE> 4
CLEAR CHANNEL AND MORE
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Clear Channel
Clear Channel More Pro Forma and More
Pro Forma Historical Adjustment Pro Forma
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,746 $ 35,023 $ (8,590) $ 36,179
Accounts receivable, net 191,838 41,187 -- 233,025
Film rights - current 14,826 -- -- 14,826
Other current assets 18,004 6,683 -- 24,687
----------- ----------- ----------- -----------
Total Current Assets 234,414 82,893 (8,590) 308,717
Property, plant & equipment, net 1,368,463 111,399 -- 1,479,862
Intangible assets:
Network affiliation agreements 33,727 -- -- 33,727
Licenses and goodwill 3,338,738 132,582 596,581 4,067,901
Covenants not-to-compete 33,976 -- -- 33,976
Other intangible assets 19,593 -- -- 19,593
----------- ----------- ----------- -----------
3,426,034 132,582 596,581 4,155,197
Less accumulated amortization (142,956) (10,590) 10,590 (142,956)
----------- ----------- ----------- -----------
3,283,078 121,992 607,171 4,012,241
Other assets:
Notes receivable 35,373 -- -- 35,373
Film rights 14,171 -- -- 14,171
Investments in, and advances
to, nonconsolidated affiliates 266,691 10,481 -- 277,172
Other assets 48,539 22,566 -- 71,105
Other investments 51,259 472 -- 51,731
----------- ----------- ----------- -----------
TOTAL ASSETS $ 5,301,988 $ 349,803 $ 598,581 $ 6,250,372
=========== =========== =========== ===========
</TABLE>
<PAGE> 5
CLEAR CHANNEL AND MORE
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Clear Channel
Clear Channel More Pro Forma and More
Pro Forma Historical Adjustment Pro Forma
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable $ 17,416 $ 33,449 $ -- $ 50,865
Accrued interest 9,950 459 -- 10,409
Accrued expenses 61,666 20,793 -- 82,459
Deferred income 1,340 6,238 -- 7,578
Short-term debt -- 7,607 -- 7,607
Current portion of long-term debt 25,668 -- -- 25,668
Current portion of film rights liability 15,875 -- -- 15,875
Income tax liability -- 13,094 -- 13,094
----------- ----------- ----------- -----------
Total Current Liabilities 131,915 81,640 -- 213,555
Long-term debt 2,048,021 90,612 768,107 2,906,740
Film rights liability 15,551 -- -- 15,551
Deferred income taxes 101,944 5,406 -- 107,350
Deferred income - long-term 9,750 -- -- 9,750
Other long-term liabilities 25,378 924 -- 26,302
Minority interest 20,787 1,695 -- 22,482
Shareholders' equity:
Preferred stock -- -- -- --
Common stock 11,752 6,872 (6,872) 11,752
Additional paid-in capital 2,741,794 103,801 (103,801) 2,741,794
Retained earnings 169,631 55,398 (55,398) 169,631
Other 2,398 3,455 (3,455) 2,398
Unrealized gain on investments 23,754 -- -- 23,754
Cost of shares held in treasury (687) -- -- (687)
----------- ----------- ----------- -----------
Total Shareholders' Equity 2,948,642 169,526 (169,526) 2,948,642
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 5,301,988 $ 349,803 $ 598,581 $ 6,250,372
=========== =========== =========== ===========
</TABLE>
<PAGE> 6
CLEAR CHANNEL AND MORE
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENT OF OPERATIONS
(In thousands, except per share data)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Clear Channel
Clear Channel More Pro Forma and More
Pro Forma Historical Adjustment Pro Forma
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net revenue $ 1,041,453 $ 232,530 $ -- $ 1,273,983
Operating expenses 591,937 157,859 -- 749,796
Depreciation and amortization 243,064 23,592 23,033 289,689
Noncash compensation expense -- 1,327 (1,327) --
Corporate expenses 27,260 7,474 -- 34,734
----------- ----------- ----------- -----------
Operating income (loss) 179,192 42,278 (21,706) 199,764
Interest expense 163,205 4,383 50,849 218,437
Other income (expense) - net 3,842 (3,655) -- 187
----------- ----------- ----------- -----------
Income (loss) before income taxes 19,829 34,240 (72,555) (18,486)
Income tax (expense) benefit (30,841) (10,705) 17,379 (24,167)
----------- ----------- ----------- -----------
Income before equity in earnings
(loss) of nonconsolidated affiliates (11,012) 23,535 (55,176) (42,653)
Equity in earnings (loss) of
nonconsolidated affiliates 6,615 (586) -- 6,029
----------- ----------- ----------- -----------
Net income (loss) $ (4,397) $ 22,949 $ (55,176) $ (36,624)
=========== =========== =========== ===========
Net income (loss) per common share:
Basic $ (0.04) $ (0.33)
=========== ===========
Diluted $ (0.07) $ (0.36)
=========== ===========
</TABLE>
<PAGE> 7
CLEAR CHANNEL AND MORE
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(In thousands of dollars)
The pro forma adjustments at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Increase
(Decrease)
----------
<S> <C> <C>
(a) Decrease in Cash and cash equivalents due to the estimated acquisition expenses. $ (8,590)
(b) Increase in Licenses and goodwill due to the additional goodwill created as a 596,581
result of the acquisition of $729,163 offset by the elimination of existing
goodwill of $132,582.
(c) Decrease in Accumulated amortization to eliminate the existing accumulated 10,590
amortization related to the $132,582 of goodwill that was eliminated.
(d) Increase in Long-term debt due to additional borrowing to fund the acquisition 768,107
cost.
(e) Decrease in Common stock due to the elimination of More's shareholder's equity. (6,872)
(f) Decrease in Additional paid-in capital due to the elimination of More's (103,801)
shareholder's equity.
(g) Decrease in Retained earnings due to the elimination of More's shareholder's (55,398)
equity.
(h) Decrease in Other due to the elimination of More's shareholder's equity. (3,455)
</TABLE>
The pro forma adjustments for the year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Increase
(Decrease)
----------
Income
<S> <C> <C>
(i) Increase in amortization expense resulting from the additional goodwill created $ (23,033)
by the acquisition.
(j) Decrease in Noncash compensation to reverse the effect of Financial Accounting 1,327
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.
</TABLE>
<TABLE>
<S> <C> <C>
(k) Increase in interest expense due to financing the acquisition price of More at (50,849)
the Company's average interest rate of 6.62% for 1997.
(l) The tax effect of adjustment (j) at the 1997 UK statutory rate of 31.5% offset by 17,379
the tax benefit of adjustment (k) at the Company's federal U.S. tax rate in 1997
of 35%.
</TABLE>
<PAGE> 8
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Clear Channel Universal Pro Forma Clear Channel
Historical Historical Adjustment (3) Pro Forma
---------- ---------- ------------- ---------
<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
=========== =========== =========== ===========
</TABLE>
<PAGE> 9
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Clear Channel Universal Pro Forma Clear Channel
Historical Historical Adjustment (3) Pro Forma
---------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
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>
<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/
Clear Channel Eller Pro Forma Eller Paxson
Historical Historical Adjustment (1) Pro Forma Historical
---------- ---------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net revenue $ 697,068 $ 56,642 $ -- $ 753,710 $ 78,104
Operating expenses 394,404 33,804 -- 428,208 63,362
Depreciation and amortization 114,207 10,547 5,974 130,728 12,101
Noncash compensation expense -- -- -- -- --
Corporate expenses 20,883 2,318 -- 23,201 4,059
----------- ----------- ----------- ----------- -----------
Operating income (loss) 167,574 9,973 (5,974) 171,573 (1,418)
Interest expense 75,076 8,565 2,518 86,159 1,370
Other income (expense) - net 11,579 (4,082) -- 7,497 (1,034)
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes 104,077 (2,674) (8,492) 92,911 (3,822)
Income tax (expense) benefit (47,116) (3) 1,315 (45,804) --
----------- ----------- ----------- ----------- -----------
Income before equity in earnings
(loss) of nonconsolidated affiliates 56,961 (2,677) (7,177) 47,107 (3,822)
Equity in earnings (loss) of non-
consolidated affiliates 6,615 -- -- 6,615 --
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 63,576 $ (2,677) $ (7,177) $ 53,722 $ (3,822)
=========== =========== =========== =========== ===========
Net income (loss) per common share:
Basic $ .72 $ .60
=========== ==========
Diluted $ .67 $ .54
=========== ==========
<CAPTION>
Clear Channel/
Pro Forma Eller/Paxson Universal Pro Forma Clear Channel
Adjustment (2) Pro Forma Historical Adjustment (3) Pro Forma
-------------- --------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue $ -- $ 831,814 $ 209,639 $ -- $ 1,041,453
Operating expenses (1,246) 490,324 101,613 -- 591,937
Depreciation and amortization 9,377 152,206 59,977 30,881 243,064
Noncash compensation expense -- -- 8,289 (8,289) --
Corporate expenses -- 27,260 -- -- 27,260
----------- ----------- ----------- ----------- -----------
Operating income (loss) (8,131) 162,024 39,760 (22,592) 179,192
Interest expense 29,276 116,805 46,400 -- 163,205
Other income (expense) - net -- 6,463 (2,621) -- 3,842
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes (37,407) 51,682 (9,261) (22,592) 19,829
Income tax (expense) benefit 14,963 (30,841) -- -- (30,841)
----------- ----------- ----------- ----------- -----------
Income before equity in earnings
(loss) of nonconsolidated affiliates (22,444) 20,841 (9,261) (22,592) (11,012)
Equity in earnings (loss) of non-
consolidated affiliates -- 6,615 -- -- 6,615
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (22,444) $ 27,456 $ (9,261) $ (22,592) $ (4,397)
=========== =========== =========== =========== ===========
Net income (loss) per common share:
Basic $ .30 $ (.04)
=========== ===========
Diluted $ .26 $ (.07)
=========== ===========
</TABLE>
<PAGE> 11
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
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)
Income
------
<S> <C> <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) 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 (2,518)
outstanding, which was partially offset by a lower average interest rate (6%
average rate for the Company and 8.8% for Eller during the first three months
of 1997).
(c) Tax effect of the above adjustments to depreciation and interest expense at 1,315
the Company's effective federal and state tax rate of 40%.
</TABLE>
PAXSON ACQUISITION
(2) Represents the pro forma effect of the Paxson acquisition assuming it was
acquired January 1, 1997.
<TABLE>
<CAPTION>
Increase
(Decrease)
Income
------
<S> <C> <C>
(a) Elimination of option plan compensation expense resulting from the elimination $ 1,246
of the plan.
(b) Increase in amortization expense resulting from the additional goodwill (9,377)
created by the acquisition.
</TABLE>
<PAGE> 12
<TABLE>
<S> <C> <C>
(c) Increase in interest expense (at an average interest rate of 6.5% for the (29,276)
first 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 effective federal and 13,339
state tax rate of 40%.
(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 has not incurred these expenses
relating to the Paxson Radio stations since the completion of this
acquisition in December 1997.
</TABLE>
UNIVERSAL MERGER
(3) Represents the pro forma effect of the merger with Universal assuming
it had occurred on January 1, 1997.
The Company and Universal unaudited pro forma combined condensed financial
statements reflect the merger, accounted for as a purchase, as follows:
<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
-----------
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
===========
For purpose of these statements, the total estimated purchase price was
allocated as follows:
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)
------------------
<S> <C>
Cash and cash equivalents $ (15,000)
Licenses and goodwill 902,290
Accumulated Amortization 18,213
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
------
<S> <C>
Depreciation and amortization $ (30,881)
Noncash compensation for incentive options 8,289
</TABLE>
<PAGE> 13
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
