<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
FOR THE QUARTER ENDED MARCH 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the Transition period from to
Commission file number 0-24516
HEFTEL BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 99-0113417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6767 West Tropicana Avenue 89103
Las Vegas, Nevada (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 367-3322
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.001 Par Value
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 filing requirements
for 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 practical date.
<TABLE>
<CAPTION>
Class Outstanding at May 9, 1996
- - ----- --------------------------
<S> <C>
Class A Common Stock, $.001 Par Value 6,336,610 shares
Class B Common Stock, $.001 Par Value 4,579,763 shares (includes 810,587 shares held as treasury stock)
</TABLE>
<PAGE> 2
HEFTEL BROADCASTING CORPORATION
March 31, 1996
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements (Unaudited) 3
Condensed Consolidated Balance Sheets as of March 31, 1996
and September 30, 1995 3
Condensed Consolidated Statements of Operations for the Three Months
and Six Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
------------- -------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 4,292,479 $ 5,404,310
Accounts receivable, net 16,867,458 15,501,811
Other current assets 4,526,729 4,601,377
------------- -------------
Total current assets 25,686,666 25,507,498
Property and equipment, at cost 25,916,790 17,580,114
Less accumulated depreciation and amortization (6,063,421) (5,335,151)
------------- -------------
19,853,369 12,244,963
Intangible assets 131,395,925 114,895,925
Less accumulated amortization (6,939,545) (5,643,246)
------------- -------------
124,456,380 109,252,679
Other non-current assets 10,770,048 4,632,144
------------- -------------
Total assets $ 180,766,463 $ 151,637,284
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,809,649 $ 795,758
Accounts payable and accrued expenses 8,178,146 8,906,469
Amounts payable to officers and stockholders 778,770 838,241
------------- -------------
Total current liabilities 14,766,565 10,540,468
Long-term debt and other obligations, less current portion 121,866,725 97,515,661
Stockholders' equity (Notes 2, 5 and 6):
Series A Preferred Stock, cumulative, $.001 par value 336 336
Undesignated series preferred stock, $.001 par value -- --
Class A Common Stock, $.001 par value 6,237 6,192
Class B Common Stock, $.001 par value 4,680 4,680
Other stockholders' equity, net 44,121,920 43,569,947
------------- -------------
Total stockholders' equity 44,133,173 43,581,155
------------- -------------
Total liabilities and stockholders' equity $ 180,766,463 $ 151,637,284
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
NOTE: The balance sheet at September 30, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
3
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
--------------------------------- ---------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues $ 16,267,837 $ 13,619,371 $ 34,613,642 $ 31,021,385
Operating expenses 14,772,568 13,025,249 29,721,173 26,789,720
------------ ------------ ------------ ------------
Operating income 1,495,269 594,122 4,892,469 4,231,665
Other expense:
Interest expense, net (2,392,274) (1,242,553) (4,734,214) (2,361,248)
Other, net (74,652) 10,545 (206,717) (220,736)
------------ ------------ ------------ ------------
(2,466,926) (1,232,008) (4,940,931) (2,581,984)
------------ ------------ ------------ ------------
Income (loss) before minority
interest and provision for
income taxes (971,657) (637,886) (48,462) 1,649,681
Minority interest -- (232,925) -- (1,077,032)
Provision for income taxes -- 22,000 (65,000) (53,000)
------------ ------------ ------------ ------------
Net income (loss) $ (971,657) $ (848,811) $ (113,462) $ 519,649
============ ============ ============ ============
Net income (loss) per common
and common equivalent share $(0.10) $(0.08) $(0.01) $0.04
====== ====== ====== =====
Weighted average common
shares outstanding 10,103,324 10,780,171 10,417,833 10,504,405
========== ========== ============ ==========
</TABLE>
See notes to condensed consolidated financial
statements.
4
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31
1996 1995
---------------------------------
(UNAUDITED)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 811,190 $ 1,230,603
INVESTING ACTIVITIES:
Purchases of property and equipment (6,837,426) (1,418,537)
Payments relating to pending and completed
business acquisitions (17,881,783) (4,256,692)
------------ ------------
Net cash used in investing activities (24,719,209) (5,675,229)
FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreement 28,459,267 5,000,000
Payment of debt issue cost (5,157,833) --
Repayment of long-term debt (593,562) (287,703)
Net change in amounts due to/from
officers and stockholders 115,166 (673,094)
Redemption of Preferred Stock -- (1,960,290)
Payment of cumulative Preferred Stock dividends (26,850) (2,610,045)
------------ ------------
Net cash provided by (used in) financing activities 22,796,188 (531,132)
------------ ------------
Net decrease in cash (1,118,831) (4,975,758)
Cash at beginning of period 5,404,310 10,218,911
------------ ------------
Cash at end of period $ 4,292,479 $ 5,243,153
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ended September 30, 1996. For further information, refer
to the consolidated financial statements and footnotes thereto included in
Heftel Broadcasting Corporation's Annual Report on Form 10-K for the year ended
September 30, 1995.
Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common and common equivalent shares (if
dilutive) outstanding during each period. For purposes of this computation,
cumulative preferred stock dividends are deducted from net income (loss) during
each period in which preferred stock is outstanding, although preferred stock
dividends may not have been actually declared or paid during these periods.
2. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
------------ -------------
<S> <C> <C>
Stockholders' equity (Notes 5 and 6):
Series A Preferred Stock, cumulative, $.001 par value,
2,600,000 shares authorized, 335,634 issued and outstanding at
March 31, 1996 and September 30, 1995
Liquidation preference of $342,347 at March 31, 1996
($355,772 at September 30, 1995) $ 336 $ 336
Undesignated series preferred stock, $.001 par value, 2,400,000
shares authorized, none issued or outstanding -- --
Class A Common Stock, $.001 par value, 30,000,000 shares
authorized, 6,236,610 issued and outstanding at March 31, 1996
and September 30, 1995 6,237 6,192
Class B Common Stock, $.001 par value, 7,000,000 shares
authorized, 4,679,763 issued and outstanding at March 31, 1996
and September 30, 1995 4,680 4,680
Additional paid-in capital 96,385,554 95,693,269
Accumulated deficit (43,979,847) (43,839,535)
Less treasury stock at cost, 810,587 shares (4,019,735) (4,019,735)
Notes receivable from stockholders related to purchase of stock (4,264,052) (4,264,052)
------------ ------------
Net stockholders' equity $ 44,133,173 $ 43,581,155
============ ============
</TABLE>
6
<PAGE> 7
3. STATION ACQUISITION
On March 25, 1996, the Company acquired the assets of radio station
WPAT-AM, which serves the New York City market for approximately $19.5 million.
The acquisition was financed through additional borrowings under the Company's
Credit Agreement.
4. LONG-TERM DEBT
On January 10, 1996, the Company borrowed $1.5 million under its Credit
Agreement and issued a $1.5 million promissory note in connection with the
acquisition of real property in Miami on which an AM transmitting tower is
located.
On March 13, 1996, the Company completed an Amended and Restated Credit
Agreement with its lender resulting in an increase to the total credit
facilities from $100 million to $175 million and the commencement of principal
payments was deferred until December 31, 1996. Other terms of the amended Credit
Agreement remained substantially the same. The principal maturities of long-term
debt as of March 31, 1996 and September 30, 1995 reflect the maturities provided
for under the Amended and Restated Credit Agreement. On March 25, 1996, the
Company borrowed an additional $20 million under the Credit Agreement. The
proceeds were used to fund the acquisition of the assets of WPAT-AM in New York.
5. STOCKHOLDERS' EQUITY
In December 1995, the Company issued an aggregate of 519,339 stock
options to various employees of the Company under its Stock Option Plan. The
exercise price ranged from $15.25 to $15.50 per share, the market price at the
date of issuance. The options vest over a period ranging from two to three
years.
On January 2, 1996 the Company issued 44,811 shares of common stock to
one of the parties to the acquisition of WLXX-AM in Chicago in accordance with
the terms of the purchase agreement.
In March 1996, the Company's board of directors approved the payment of
cumulative dividends through December 31, 1995 on the outstanding Series A
Preferred Stock. Such dividend payment totaled $26,851.
6. SUBSEQUENT EVENTS
In April 1996, the Company's board of directors approved the payment of
cumulative dividends from January 1, 1996 through March 31, 1996 on the
outstanding Series A Preferred Stock. Such dividend payment totaled $6,713.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 TO THREE MONTHS ENDED MARCH 31,
1995
During fiscal 1995, the Company completed several radio station
acquisitions. Due to the financial effects of these transactions, the results of
operations for the three months ended March 31, 1996 reflect the operations of
more radio stations than the results of operations for the three months ended
March 31, 1995. Consequently, the financial condition and results of operations
for these two periods are not entirely comparable.
Net revenues increased by $2.6 million, or 19.4%, to $16.3 million in
the three months ended March 31, 1996 from $13.6 million in the same quarter of
1995. Operating expenses increased by $1.7 million, or 13.4%, to $14.8 million
in the three months ended March 31, 1996 from $13.0 million in the same period
of 1995. The increases in net revenues and operating expenses over the same
period of 1996 are due primarily to the results of operations of additional
radio stations acquired during fiscal 1995.
Interest expense, net of interest income, increased by $1.2 million, or
92.5%, to $2.4 million in the three months ended March 31, 1996 from $1.2
million in the same period of 1995 primarily as a result of increased borrowings
of $62.3 million, or 95.2%, over the same period of the prior year. The proceeds
of borrowings were used primarily for business acquisitions and certain capital
expenditures.
For the three months ended March 31, 1996, a net loss of $972,000 was
incurred compared to a net loss of $849,000 in the same period of 1995. The
increase is due primarily to increases in interest expenses over prior year
amounts.
COMPARISON OF SIX MONTHS ENDED MARCH 31, 1996 TO SIX MONTHS ENDED MARCH 31, 1995
During fiscal 1995, the Company completed several radio station
acquisitions. Due to the financial effects of these transactions, the results of
operations for the six months ended March 31, 1996 reflect the operations of
more radio stations than the results of operations for the six months ended
March 31, 1995. Consequently, the financial condition and results of operations
for these two periods are not entirely comparable.
Net revenues increased by $3.6 million, or 11.6%, to $34.6 million in
the six months ended March 31, 1996 from $31.0 million in the same period of
1995. Operating expenses increased by $2.9 million, or 10.9%, to $29.7 million
in the six months ended March 31, 1996 from $26.8 million in the same period of
1995. The increases in net revenues and operating expenses over the same period
of 1996 are due primarily to the results of operations of additional radio
stations acquired during fiscal 1995.
Interest expense, net of interest income, increased by $2.4 million, or
100.5%, to $4.7 million in the six months ended March 31, 1996 from $2.4 million
in the same period of 1995 primarily as a result of increased borrowings over
the same period of the prior year. The proceeds of borrowings were used
primarily for business acquisitions and certain capital expenditures.
For the six months ended March 31, 1996, a net loss of $113,000 was
incurred compared to net income of $520,000 in the same period of 1995. The
decrease in net income is due primarily to increases in promotional expenses
over prior year amounts resulting from format changes at two of the Company's
Miami radio stations and interest expense resulting from increased borrowings.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended
March 31, 1996 was $811,000 as compared to net cash provided of $1.2 million for
the same period in 1995. Generally, capital expenditures are financed from cash
generated from operations and long-term borrowings. In January 1996, the Company
borrowed $1.5 million under its Credit Agreement. The proceeds were used to fund
the acquisition of real property in Miami on which an AM transmitting tower is
located. As of March 31, 1996, the Company had $121.5 million outstanding under
its $175 million Credit Agreement. Borrowings under the Credit Agreement bear
interest at a floating rate based on either (i) the agent bank's Eurodollar rate
plus an incremental rate, or (ii) the higher of the agent bank's prime rate plus
an incremental rate or the federal funds rate plus an incremental rate.
On March 13, 1996, the Company completed an Amended and Restated Credit
Agreement with its lender resulting in an increase to the total credit
facilities from $100 million to $175 million and the commencement of principal
payments was deferred until December 31, 1996. Other terms of the amended Credit
Agreement remained substantially the same. The principal maturities of long-term
debt as of March 31, 1996 and September 30, 1995 reflect the maturities provided
for under the Amended and Restated Credit Agreement. On March 25, 1996, the
Company borrowed an additional $20 million under the Credit Agreement. The
proceeds were used to fund the acquisition of the assets of WPAT-AM in New York.
Available cash on hand plus cash provided by operations were sufficient
to pay interest due under the Credit Agreement and fund certain capital
expenditures during the three months ended March 31, 1996. The Company believes
it will have sufficient cash flow to finance its operations and satisfy its debt
service requirements. The Company regularly reviews potential acquisitions of
additional radio stations. Any future acquisitions are expected to be financed
through additional borrowings under the Credit Agreement and/or cash provided by
operations.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included herein.
(11) Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K
During the six months ended March 31, 1996, the Company filed a report
on Form 8-K dated March 27, 1996, relating to the Amended and Restated Credit
Agreement with the Chase Manhattan Bank and to the acquisition of the assets of
radio station WPAT-AM in New York.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 9th day of May,
1996.
HEFTEL BROADCASTING CORPORATION
By: /s/ H. Carl Parmer
-----------------------------
H. Carl Parmer, President and
Co-Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ H. Carl Parmer President, Co-Chief Executive Officer May 9, 1996
- - --------------------------- and Director
H. Carl Parmer
/s/ John T. Kendrick Senior Vice President, Chief Financial Officer May 9, 1996
- - --------------------------- and Secretary (principal accounting officer)
John T. Kendrick
</TABLE>
10
<PAGE> 1
Exhibit 11
COMPUTATIONS OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended March 31 Six Months Ended March 31
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY
Weighted average shares outstanding 10,103,324 10,780,171 10,417,833 10,331,016
Net effect of dilutive stock options - based
on the treasury stock method using
average market price -- -- -- 173,389
------------ ------------ ------------ ------------
Total 10,103,324 10,780,171 10,417,833 10,504,405
============ ============ ============ ============
Net income (loss) $ (971,657) $ (848,811) $ (113,462) $ 519,649
Subtract $0.08 cumulative preferred stock dividends (6,713) (6,713) (13,425) (59,165)
------------ ------------ ------------ ------------
Total $ (978,370) $ (855,524) $ (126,887) $ 460,484
============ ============ ============ ============
Per share amount ($0.10) ($0.08) ($0.01) $0.04
====== ====== ====== =====
FULLY DILUTED (NOTES 1 AND 2)
Weighted average shares outstanding 10,331,016
Net effect of dilutive stock options - based
on the treasury stock method using the
period-end market price, if higher than
the average market price 171,709
------------
Total 10,502,725
============
Net income 519,649
Subtract $0.08 cumulative preferred stock dividends (59,165)
------------
Total 460,484
============
Per share amount $0.04
=====
</TABLE>
- - ----------
Notes
(1) For the three month period ended March 31, 1996 and 1995, and for the six
month period ended March 31, 1996, a net loss was incurred, therefore the
effect of common stock equivalents is anti-dilutive under both the
primary and fully diluted stock computations.
(2) For the six month period ended March 31, 1995, under the treasury stock
method, the period-end market price is less than the average market price
during the period, therefore the effect is anti-dilutive. However, the
per share amount is the same under both the primary and fully-dilutive
computations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS AND CASH FLOW FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 4,292,479
<SECURITIES> 0
<RECEIVABLES> 16,867,458
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,686,666
<PP&E> 25,916,790
<DEPRECIATION> 6,063,421
<TOTAL-ASSETS> 180,766,463
<CURRENT-LIABILITIES> 14,766,565
<BONDS> 121,866,725
0
336
<COMMON> 10,917
<OTHER-SE> 44,121,920
<TOTAL-LIABILITY-AND-EQUITY> 180,766,463
<SALES> 0
<TOTAL-REVENUES> 34,613,642
<CGS> 0
<TOTAL-COSTS> 29,721,173
<OTHER-EXPENSES> 206,717
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,734,214
<INCOME-PRETAX> (48,462)
<INCOME-TAX> 65,000
<INCOME-CONTINUING> (113,462)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (113,462)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
