<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition period from ______ to ________
Commission file number 0-20065
PREMIERE RADIO NETWORKS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
IRS Employer Identification No.: 95-4083971
15260 Ventura Boulevard, Suite 500, Los Angeles, California 91403-5339
(Address of principal executive offices, including ZIP code)
(818)377-5300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Class Number of Shares Outstanding
- ----- ----------------------------
Common Stock, $0.01 par value At May 13, 1996 3,507,082
Class A Common Stock, $0.01 par value At May 13, 1996 4,003,154
Transitional Small Business disclosure format (check one): Yes [ ] No [x]
<PAGE>
PREMIERE RADIO NETWORKS, INC.
March 31, 1996
INDEX
PART I- FINANCIAL INFORMATION Page Number
Item 1. Condensed Consolidated Financial Statements
Index 2
Condensed Consolidated Balance Sheets at March 31, 1996 (Unaudited)
and December 31, 1995 3
Condensed Consolidated Income Statements for the three months ended
March 31, 1996 and 1995 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and 1995 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements 6 -7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8 - 12
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
2
<PAGE>
PREMIERE RADIO NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . $ 26,654,331 $ 5,432,088
Accounts receivable, net . . . . . . . . . . . . . . . 4,833,118 4,086,623
Notes receivable from officer/employees . . . . . . . . 93,058 282,279
Recoverable income taxes. . . . . . . . . . . . . . . . 32,952 250,952
Deferred income taxes . . . . . . . . . . . . . . . . . 549,000 549,000
Prepaid expenses and other assets . . . . . . . . . . . 689,139 1,375,805
---------- ----------
Total current assets . . . . . . . . . . . . . 32,851,598 11,976,747
Notes receivable from officer/employees. . . . . . . . . . 654,143 845,000
Property and equipment, net. . . . . . . . . . . . . . . . 2,071,985 1,797,337
Acquired program library and program networks, net . . . . 1,617,036 1,699,971
Intellectual property, net . . . . . . . . . . . . . . . . 4,819,907 4,858,749
Debt issuance costs, net . . . . . . . . . . . . . . . . . 2,127,852 2,143,729
Other assets . . . . . . . . . . . . . . . . . . . . . . . 716,039 711,968
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . $ 44,858,560 $ 24,033,501
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses . . . . . . . . . $ 1,740,362 $ 1,729,919
Accrued payroll, bonuses and retirement plan
contribution . . . . . . . . . . . . . . . . . . . . 571,465 905,468
Income taxes payable. . . . . . . . . . . . . . . . . . 18,021 25,022
Deferred revenue. . . . . . . . . . . . . . . . . . . . -- 83,326
Current portion of note payable . . . . . . . . . . . . 376,667 400,000
---------- ----------
Total current liabilities . . . . . . . . . . . 2,706,515 3,143,735
Note payable to bank, less current portion . . . . . . . . -- 1,467,455
Due to related party . . . . . . . . . . . . . . . . . . . 120,000 120,000
Stockholders'equity
Common stock. . . . . . . . . . . . . . . . . . . . . . 35,068 36,417
Class A common stock. . . . . . . . . . . . . . . . . . 40,030 --
Additional paid-in-capital. . . . . . . . . . . . . . . 33,778,068 11,752,595
Retained earnings . . . . . . . . . . . . . . . . . . . 8,178,879 7,513,299
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . 42,032,045 19,302,311
---------- ----------
Total liabilities and stockholders' equity . . . . . $44,858,560 $24,033,501
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
PREMIERE RADIO NETWORKS, INC.
CONDENSED CONSOLIDATED
INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Revenue:
Gross revenue. . . . . . . . . . . . . . . . . . . . . . $ 5,549,130 $ 4,235,936
Less: agency commissions . . . . . . . . . . . . . . . . 672,200 489,094
----------- -----------
Net operating revenue. . . . . . . . . . . . . . . . . . . 4,876,930 3,746,842
Operating expenses:
Production, programming and
promotions . . . . . . . . . . . . . . . . . . . . . . 1,669,827 1,284,360
Selling, general and
administrative . . . . . . . . . . . . . . . . . . . . 2,373,827 1,753,189
----------- -----------
Total operating expenses. . . . . . . . . . . . 4,043,654 3,037,549
----------- -----------
Operating income . . . . . . . . . . . . . . . . . . . . . 833,276 709,293
Other income and expenses:
Gain on sale of radio station. . . . . . . . . . . . . . -- 387,423
Interest income (expense), net . . . . . . . . . . . . . 258,457 (42,328)
Other income, net. . . . . . . . . . . . . . . . . . . . 11,770 10,791
----------- -----------
Income before minority interest and
income taxes 1,103,503 1,065,179
Minority interest in loss of joint venture . . . . . . . . 9,077 --
----------- -----------
Income before income taxes . . . . . . . . . . . . . . . . 1,112,580 1,065,179
Provision for income taxes . . . . . . . . . . . . . . . . 447,000 435,000
----------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 665,580 $ 630,179
----------- -----------
----------- -----------
Earnings per share . . . . . . . . . . . . . . . . . . . . $ 0.08 $ 0.13
----------- -----------
Weighted average shares outstanding. . . . . . . . . . . . 8,926,935 4,722,735
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
PREMIERE RADIO NETWORKS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 665,580 $ 630,179
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of radio station assets. . . . . . . . . . -- (387,423)
Gain on sale of fixed assets. . . . . . . . . . . . . . (11,770) (12,636)
Depreciation and amortization . . . . . . . . . . . . . 411,629 263,521
(Decrease) increase in allowance for doubtful accounts. (107,000) 5,000
Deferred compensation . . . . . . . . . . . . . . . . . -- 27,082
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . (639,495) 445,430
Income taxes. . . . . . . . . . . . . . . . . . . . . 210,999 244,045
Prepaid expenses and other current assets . . . . . . 686,666 (116,277)
Notes receivable from officer/employees . . . . . . . 380,078 (3,708)
Other assets. . . . . . . . . . . . . . . . . . . . . 26,406 44,038
Accounts payable and accrued liabilities . . . . . . (360,004) (254,609)
Deferred income . . . . . . . . . . . . . . . . . . . ( 83,326) (133,126)
------- -------
Net cash provided by operating activities. . . . . . . . . 1,179,763 751,516
INVESTING ACTIVITIES
Acquisition of property and equipment. . . . . . . . . . . (441,674) (121,006)
Acquisition of intangible assets . . . . . . . . . . . . . (100,000) --
Net proceeds from sale of radio station assets . . . . . . -- 5,239,929
Net proceeds from sale of property and equipment . . . . . 20,000 --
Purchase of marketable securities, net . . . . . . . . . . -- (13,569)
------- ---------
Net cash (used in) provided by investing activities. . . . (521,674) 5,105,354
FINANCING ACTIVITIES
Repayment of note payable to officer . . . . . . . . . . . -- (750,000)
Repayment of borrowings. . . . . . . . . . . . . . . . . . (1,500,000) (2,662,500)
Net proceeds from issuance of Class A common stock . . . . 22,031,304 --
Exercise of stock options. . . . . . . . . . . . . . . . . 32,850 36,575
------ ------
Net cash provided by (used in) financing activities. . . . 20,564,154 (3,375,925)
---------- ---------
Increase in cash and cash equivalents. . . . . . . . . . . 21,222,243 2,480,945
Cash and cash equivalents at beginning of period . . . . . 5,432,088 2,371,314
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . $ 26,654,331 $ 4,852,259
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE>
PREMIERE RADIO NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Premiere
Radio Networks, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Article 10 of Regulation S-B.
Accordingly, the financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company's management, all
adjustments (consisting only of normal, recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1996 is not necessarily indicative of the
results that may be expected for the year ended December 31, 1996.
It is suggested that the accompanying unaudited condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1995.
NOTE 2. EARNINGS PER SHARE
Earnings per share are based upon the combined weighted average number of
shares outstanding during each interim period which include, where appropriate,
the assumed exercise of dilutive stock options and warrants to purchase common
stock. In computing earnings per share for the three months ended March 31,
1996, the Company utilized the modified treasury stock method which assumes the
exercise of all outstanding options and warrants to purchase common stock, and
the use of the assumed proceeds thereof to purchase up to a maximum of 20% of
the then outstanding common stock of the Company. Excess proceeds derived from
the assumed purchase of such shares are assumed to be utilized to first reduce
the outstanding balances of notes payable and second for investment in short
term, cash equivalent marketable securities. As a result, for purposes of
determining earnings per share, net income is adjusted for the hypothetical
reduction in interest expense ($7,911 for the three months ended March 31, 1996)
and for the hypothetical income related to the assumed investment in marketable
securities ($1,933 for the three months ended March 31, 1996), such adjustments
being made net of income taxes. Earnings per share for the three month period
ended March 31, 1995 was computed under the treasury stock method. Under the
treasury stock method, the Company reduces the assumed number of common shares
issued from the exercise of stock options and warrants to purchase common stock
by the number of treasury shares assumed to be purchased from the proceeds of
such dilutive securities by utilizing the average market price of the Company's
common stock.
Earnings per share are based upon 8,926,935 and 4,722,735 weighted average
number of shares outstanding for the three months ended March 31, 1996 and 1995,
respectively. (See Note 3, "Stockholders' Equity--Stock Offering and Stock
Dividend")
6
<PAGE>
PREMIERE RADIO NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. STOCKHOLDERS' EQUITY--STOCK OFFERING AND STOCK DIVIDEND
On January 25, 1996 the Company completed the sale of 1,500,000 shares of
Class A Common Stock (of which 1,360,000 shares were sold by the Company, and
140,000 shares by certain management shareholders of the Company which the
management shareholders had obtained through exchanging 140,000 shares of Common
Stock for 140,000 shares of Class A Common Stock) at $18.25 per share pursuant
to a public offering (the "Offering") and received net proceeds of approximately
$22,031,000 (net of underwriting discounts, commissions and expenses). In
connection with the Offering, the Company paid Archon Communications Inc.
("Archon") fees of $200,000.
On March 13, 1996 the Company declared a one-for-two stock dividend,
effected in the form of a three-for-two stock split, of Class A Common Stock
which was paid on April 1, 1996 to all holders of the Company's Common Stock and
Class A Common Stock on the March 22, 1996 record date for such dividend. Per
share earnings in each of the foregoing interim periods have been adjusted to
reflect the stock dividend.
7
<PAGE>
PREMIERE RADIO NETWORKS, INC.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company is an independent creator, producer and distributor of
innovative comedy, entertainment and music related programs, and a supplier of
research and other services for the radio industry. Founded in 1987, the
Company's wide array of syndicated programs and research and other services are
utilized by more than 4,600 independently owned radio station affiliates located
in virtually every major market in the United States.
The Company presently produces and distributes 30 syndicated programs and
services which it distributes to radio station affiliates in exchange for
commercial broadcast time. The group of radio stations which contracts with the
Company to broadcast a particular program or utilize one of its services
constitutes a "radio network." The Company derives a significant portion of its
revenues from selling the commercial broadcast time on its radio station
affiliates to advertisers desiring national coverage.
The Company also derives a portion of its revenues by acting as an
exclusive sales representative for third-party network radio program and service
producers and distributors.
This discussion should be read in conjunction with the financial
statements, related notes and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995.
As a result of the Company's growth in its representation of third party
program producers and service providers; its prior acquisitions of Mediabase,
Inc., the program networks from Olympia Networks of Missouri, Inc., and
Broadcast Results Group, Inc.; and its acquisition and divestiture of radio
station KZDG-FM ("KZDG"), period-to-period results of operations may not be
comparable, and the results of operations for the three months ended March 31,
1996 may not be indicative of results for any future period.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
OPERATING REVENUES. Gross revenues for the three months ended March 31,
1996 and 1995 were $5.5 and $4.2 million, respectively, representing an increase
of $1.3 million, or 31.0%. Net operating revenues increased $1.1 million, or
30.2% from $3.8 million for the three months ended March 31, 1995, to
$4.9 million for the three months ended March 31, 1996. These increases are
principally due to increased gross advertising revenues related to network
programs and services of $1.2 million ($1.0 million net revenues). The
increased advertising revenues resulted from the growth in established
programming, the launch of new programming and the continued growth in the
Company's Mediabase research services.
8
<PAGE>
PREMIERE RADIO NETWORKS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
PRODUCTION, PROGRAMMING AND PROMOTIONS EXPENSES. Production, programming
and promotions expenses for the three months ended March 31, 1996 and 1995 were
$1.7 million and $1.3 million, respectively, representing an increase of $0.4
million or 30.0%. The increase in production, programming and promotions
expenses in absolute dollars was principally due to increased costs associated
with the production of new programs and services, production costs associated
with the operations of the Company's Broadcast Results Group ("BRG") division
which was acquired in September 1995, and increased program distribution costs
associated with the expansion of the Company's radio station affiliates, which
were offset, in part, by decreased promotions expenses. As a percentage of net
operating revenues, production, programming and promotions expenses remained
relatively flat at 34.2% and 34.3% for the three months ended March 31, 1996 and
1995, respectively, representing a decrease as a percentage of net operating
revenues of 0.1%.
As the Company expands its programming and services, the Company's income
may, from time to time, be adversely affected because the initial expenses
associated with such new programming and services are typically expensed in the
quarter in which incurred.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended March 31, 1996 and 1995 were
$2.4 and $1.8 million, respectively, representing an increase of $0.6 million or
35.4%. As a percentage of net operating revenues, selling, general and
administrative expenses were 48.7% and 46.8% during the three months ended
March 31, 1996 and 1995, respectively, representing an increase as a percentage
of net operating revenues of 1.9%. The increase in selling, general and
administrative expenses, both in absolute dollars and as a percentage of net
operating revenues is principally due to the Company's expansion of its sales
and marketing efforts related to the launch of new programs and services of $0.5
million, and increased amortization expenses related to acquisitions of
intellectual properties and an acquired program network aggregating
$0.1 million.
OPERATING INCOME. Operating income for the three months ended March 31,
1996 was $0.8 million, an increase of $0.1 million, or 17.5% over the same three
month period in 1995. The increased operating income was principally due to
increased net advertising revenues resulting from the growth in established
programming, the launch of new programming and the continued growth in the
Company's Mediabase research services.
OTHER INCOME. Other income for the three months ended March 31, 1996 was
$0.3 million, a decrease of $0.1 million versus the same period in 1995. Other
income for the three months ended March 31, 1996 included increased net interest
income (expense) of $0.3 million attributable to the Company's investment of the
net proceeds derived from the Offering in short-term, cash equivalent marketable
securities and lower overall outstanding indebtedness. Other income for the
three months ended March 31, 1995 includes a one-time gain on the sale of KZDG
of $0.4 million. See "Liquidity and Capital Resources."
9
<PAGE>
PREMIERE RADIO NETWORKS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
INCOME TAXES. The provision for income taxes for the three months ended
March 31, 1996 and 1995 was $0.4 million and $0.4 million, respectively. The
estimated effective tax rate utilized by the Company for the three months ended
March 31, 1996 was 40.2%, while the estimated effective tax rate for the three
months ended March 31, 1995 was 40.8%.
NET INCOME AND EARNINGS PER SHARE. Net income for the three months ended
March 31, 1996 and 1995 was $0.7 million, or $0.08 per share and $0.6 million,
or $0.13 per share, respectively. The increased net income for the three months
ended March 31, 1996 was principally due to increased operating income.
Earnings per share, which includes the dilutive effects of options and warrants
to purchase Common Stock, are based upon 8,926,935 and 4,722,735 shares for the
three months ended March 31, 1996 and 1995, respectively.
On March 13, 1996 the Company declared a one-for-two stock dividend,
effected in the form of a three-for-two stock split, of Class A Common Stock
which was paid on April 1, 1996 to all holders of the Company's Common Stock and
Class A Common Stock on the March 22, 1996 record date for such dividend. Per
share earnings in each of the foregoing interim periods have been adjusted to
reflect the stock dividend.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its cash flow requirements through
cash flows generated from operations and financing activities.
Net cash provided by operating activities for the three months ended
March 31, 1996 and 1995 was $1.2 million and $0.8 million, respectively. The
increased cash flows from operations during the 1996 interim period was
principally due to lower prepaid expenses and other current assets, and payments
received or settlements of notes receivable from officers/employees; offset, in
part, by increased accounts receivable associated with the Company's revenue
growth.
Net cash (used in) provided by investing activities for the three months
ended March 31, 1996 and 1995 was $(0.5) million and $5.1 million, respectively.
The decrease in net cash (used in) provided by investing activities during the
1996 interim period is attributable to the proceeds generated from the sale of
KZDG during the three months ended March 31, 1995.
Net cash provided by (used in) financing activities for the three months
ended March 31, 1996 and 1995 were $20.6 million and $(3.4) million,
respectively. Net cash provided by (used in) financing activities during the
1996 interim period increased principally due to proceeds generated from the
sale of Class A Common Stock in connection with the Offering.
The Company's working capital at March 31, 1996 was $30.1 million as
compared to $8.8 million at December 31, 1995. This increase in working capital
was primarily attributable to an increase in cash and cash equivalents resulting
from the sale of Class A Common Stock during the three months ended March 31,
1996.
10
<PAGE>
PREMIERE RADIO NETWORKS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
During 1993 the Company entered into an agreement (as subsequently amended)
with Bank of America NT&SA (the "Bank") whereby the Company obtained a
$2.0 million line of credit and a term loan. During January 1996, the Company
repaid the amounts then outstanding under its term loan with the Bank. At
March 31, 1996 no monies were outstanding under the line of credit. The line of
credit bears interest at the Bank's Reference Rate plus 0.25% and expires on
May 15, 1996. In light of the net proceeds derived from the Offering, during
April 1996 the Company canceled the line of credit.
On July 28, 1995, the Company, Archon and certain management stockholders
entered into a Commitment Agreement pursuant to which Archon agreed to purchase
up to $10.8 million principal amount of Debentures and 1,080,000 Class A
Warrants upon the Company's call at any time until October 28, 1996, including
707,000 Class A Warrants which are issuable to Archon whether or not the Company
exercises its call rights with respect to the Debentures.
The Company has recorded, as debt issuance costs, the value of the 707,000
Class A Warrants issuable to Archon whether or not the Debentures are issued as
well as certain legal, professional and other costs directly related to the
Debentures. The Company intends to amortize such debt issuance costs over the
term the Debentures are outstanding. However, should the Company not call on
Archon to purchase all of the Debentures by October 28, 1996, the Company will
write off any unamortized debt issuance costs related to the 707,000 Class A
Warrants and other unamortized debt issuance costs, which would result in a
one-time earnings charge during 1996 of up to approximately $2.0 million. The
Company's management continues to review potential sources of less costly forms
of financing. Should such less costly forms of financing become available, the
Company would be less likely to exercise its call rights with respect to the
Debentures. The Company's management has made no determination as to whether or
not, or to what extent, it will exercise its call rights on the Debentures. The
Company will continue to pay Archon a facility fee of 0.3% of the unused
commitment for each quarter during which the commitment is outstanding ($32,400
per quarter, assuming none of the commitment is called).
In connection with the acquisition of BRG, the Company issued a
non-interest bearing note in the face amount of $412,500 due in January 1997. In
addition, the Company has entered into a commitment to acquire the licenses for
three additional production music libraries from affiliates of BRG for a
purchase price that will be based on a specified formula.
On January 25, 1996, the Company completed the sale of 1,500,000 shares (of
which 1,360,000 shares were sold by the Company, and 140,000 shares by certain
management shareholders of the Company which the management shareholders had
obtained through exchanging 140,000 shares of Common Stock for 140,000 shares of
Class A Common Stock)) of its Class A Common Stock at $18.25 per share pursuant
to the Offering and received net proceeds (net of underwriting discounts,
commissions and expenses) of approximately $22.0 million.
Management believes that the net proceeds from the sale of the Offering
together with operating revenues, and Archon's commitment to purchase
Debentures, will be sufficient to fund the Company's
11
<PAGE>
PREMIERE RADIO NETWORKS, INC.
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
working capital requirements through December 31, 1996.
SEASONALITY
As is standard in the network radio industry, the Company's revenues have
historically been highest in the second and third quarters and lowest in the
first and fourth quarters. Other than sales commissions paid to the Company's
sales personnel, costs do not vary significantly with respect to the seasonal
fluctuation of revenues.
12
<PAGE>
PREMIERE RADIO NETWORKS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be a party to various legal actions and
complaints arising in the ordinary course of business. In the opinion of the
Company's management, the litigation in which it currently is a party is not
material to the financial condition or results of operations of the Company.
ITEM 6(a). EXHIBITS
11. Computation of Per Share Earnings*
ITEM 6(b). REPORTS ON FORM 8-K
None.
- -----------------------
* Exhibit has been filed herewith.
13
<PAGE>
PREMIERE RADIO NETWORKS, INC.
SIGNATURE(S)
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIERE RADIO NETWORKS, INC. (REGISTRANT)
By /s/ Stephen C. Lehman Date: May 13, 1996
--------------------------------- ------------
Stephen C. Lehman
Chairman of the Board, President
and Chief Executive Officer
By: /s/ Daniel M. Yukelson Date: May 13, 1996
--------------------------------- ------------
Daniel M. Yukelson
Vice President/Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<PAGE>
PREMIERE RADIO NETWORKS, INC.
EXHIBIT 11
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, March 31,
------------------- -------------------
Primary Fully Diluted
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding. . . . . . . . . . . . . . 6,928,396 4,521,288 6,928,396 4,521,288
Net effect of dilutive stock options and warrants. . . . . . . 1,998,539 201,447 2,063,232 255,538
--------- --------- --------- ---------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,926,935 4,722,735 8,991,628 4,776,826
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 665,579 $ 630,179 $ 665,579 $ 630,179
Reduction in interest expense resulting from the assumed
exercise of stock options and warrants to purchase
common stock and the assumed reduction of outstanding
notes payable, net of income taxes. . . . . . . . . . . . . 7,911 -- -- --
Increase in interest income resulting from the assumed
exercise of stock options and warrants to purchase common
stock and the assumed investment in short-term, cash
equivalent marketable securities, net of income taxes . . . 1,933 -- -- --
------- -------- -------- --------
Net income, as adjusted. . . . . . . . . . . . . . . . . . . . $ 675,423 $630,179 $665,579 $630,179
------- -------- -------- --------
------- -------- -------- --------
Per share amount . . . . . . . . . . . . . . . . . . . . . . . $0.08 $0.13 $0.07 $0.13
----- ----- ----- -------
----- ----- ----- -------
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 26,654,331
<SECURITIES> 0
<RECEIVABLES> 4,833,118
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,851,598
<PP&E> 2,071,985
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,858,560
<CURRENT-LIABILITIES> 2,706,515
<BONDS> 0
0
0
<COMMON> 75,098
<OTHER-SE> 41,956,947
<TOTAL-LIABILITY-AND-EQUITY> 44,858,560
<SALES> 0
<TOTAL-REVENUES> 4,876,930
<CGS> 0
<TOTAL-COSTS> 4,043,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (258,457)
<INCOME-PRETAX> 1,112,580
<INCOME-TAX> 447,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 665,580
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0
</TABLE>
