<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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 JUNE 30, 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
Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
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.
Class Outstanding at August 12, 1996
- ----- ------------------------------
Class A Common Stock, $.001 Par Value 11,547,731 shares
Class B Common Stock, $.001 Par Value 810,587 shares (shares held
as treasury stock)
<PAGE> 2
HEFTEL BROADCASTING CORPORATION
June 30, 1996
INDEX
<TABLE>
<S> <C> <C>
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited) 3
Condensed Consolidated Balance Sheets as of June 30, 1996
and September 30, 1995 3
Condensed Consolidated Statements of Operations for the Three Months
and Nine Months Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 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 9
PART II OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
----------- -------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,900,401 $ 5,404,310
Accounts receivable, net 19,090,032 15,501,811
Other current assets 3,842,719 4,601,377
------------ ------------
Total current assets 26,833,152 25,507,498
Property and equipment, at cost 26,380,785 17,580,114
Less accumulated depreciation and amortization (6,522,096) (5,335,151)
------------ ------------
19,858,689 12,244,963
Intangible assets 131,395,925 114,895,925
Less accumulated amortization (7,894,640) (5,643,246)
------------ ------------
123,501,285 109,252,679
Other non-current assets 10,290,177 4,632,144
------------ ------------
Total assets $180,483,303 $151,637,284
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 726,688 $ 795,758
Accounts payable and accrued expenses 8,477,520 8,906,469
Amounts payable to officers and stockholders 641,355 838,241
------------ ------------
Total current liabilities 9,845,563 10,540,468
Long-term debt and other obligations, less current portion 126,861,265 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 6,824 6,192
Class B Common Stock, $.001 par value 4,167 4,680
Other stockholders' equity, net 43,765,148 43,569,947
------------ ------------
Total stockholders' equity 43,776,475 43,581,155
------------ ------------
Total liabilities and stockholders' equity $180,483,303 $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 JUNE 30, NINE MONTHS ENDED JUNE 30,
------------------------------ ----------------------------
1996 1995 1996 1995
------------------------------ ----------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues $19,900,061 $16,629,786 $53,053,497 $46,643,810
Operating expenses 15,943,343 12,314,335 43,096,469 37,271,695
----------- ----------- ----------- -----------
Operating income 3,956,718 4,315,451 9,957,028 9,372,115
Other expense:
Interest expense, net (3,201,298) (1,350,497) (7,935,512) (3,711,745)
Other expense, net (including
cost relating to unconsummated
acquisitions) (1,117,862) (140,889) (1,324,579) (361,625)
----------- ----------- ----------- -----------
(4,319,160) (1,491,386) (9,260,091) (4,073,370)
----------- ----------- ----------- -----------
Income (loss) before minority
interest and provision for
income taxes (362,442) 2,824,065 696,937 5,298,745
Minority interest -- (351,305) -- (1,428,337)
Provision for income taxes -- -- (65,000) (53,000)
----------- ----------- ----------- -----------
Net income (loss) from continuing
operations (362,442) 2,472,760 631,937 3,817,408
Discontinued operations:
Loss on discontinued operations
of CRC (500,326) 689,601 (1,608,167) (135,398)
----------- ----------- ----------- -----------
Net income (loss) $ (862,768) $ 3,162,361 $ (976,230) $ 3,682,010
=========== =========== =========== ===========
Net income (loss) per common
and common equivalent share
from continuing operations $(0.04) $ 0.22 $ 0.06 $0.34
====== ====== ====== =====
Net income (loss) per common
and common equivalent share $(0.09) $ 0.29 $(0.10) $0.33
====== ====== ====== =====
Weighted average common
shares outstanding 10,143,397 10,969,623 10,326,354 10,898,156
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30
------------------------------
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 674,642 $ 3,653,546
INVESTING ACTIVITIES:
Purchases of property and equipment (3,825,926) (2,919,443)
Payments relating to pending and completed
business acquisitions (21,341,051) (5,559,708)
------------- ------------
Net cash used in investing activities (25,166,977) (8,479,151)
FINANCING ACTIVITIES:
Proceeds from borrowings under credit agreement 28,459,267 15,475,000
Payment of debt issue cost (5,199,877) --
Repayment of long-term debt (681,983) (504,243)
Net change in amounts due to/from
officers and stockholders (68,200) (552,501)
Proceeds from exercise of stock options and warrants 512,782 --
Redemption of Preferred Stock -- (1,960,290)
Payment of cumulative Preferred Stock dividends (33,563) (2,861,308)
------------- ------------
Net cash provided by financing activities 22,988,426 9,596,658
------------- ------------
Net increase/(decrease) in cash (1,503,909) 4,771,053
Cash at beginning of period 5,404,310 10,218,911
------------- ------------
Cash at end of period $ 3,900,401 $ 14,989,964
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
5
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 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 nine month
period ended June 30, 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>
JUNE 30, 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 June 30, 1996 and September 30, 1995
Liquidation preference of $342,347 at June 30, 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, 6,823,518 issued and outstanding at June 30, 1996
(6,191,799 at September 30, 1995) 6,824 6,192
Class B Common Stock, $.001 par value, 7,000,000 shares
authorized, 4,167,116 issued and outstanding at June 30, 1996
(4,679,763 at September 30, 1995) 4,167 4,680
Additional paid-in capital 96,898,263 95,693,269
Accumulated deficit (44,849,328) (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 $ 43,776,475 $ 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. 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. Subsequent to June 30, 1996, the Company entered into a credit agreement
with a new lender (Note 6).
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 and April 1996, the Company's board of directors approved the
payment of cumulative dividends through December 31, 1995, and through March
31, 1996, respectively, on the outstanding Series A Preferred Stock. Such
dividend payments totaled $26,851 and $6,713, respectively.
In April 1996, the Company's board of directors also approved the
payment of cumulative dividends from April 1, 1996 through June 30, 1996 on the
outstanding Series A Preferred Stock. Such dividend payment totaled $6,713 and
was paid in July 1996.
Subsequent to June 30, 1996, the Company redeemed all of the Series A
Preferred Stock outstanding and paid cumulative dividends through the
redemption date (Note 6).
6. SUBSEQUENT EVENTS
Change in Control of Company
On August 5, 1996, Clear Channel Radio, Inc., a wholly owned subsidiary of
Clear Channel Communications, Inc. (Clear Channel), completed a stock purchase
and tender offer of the Company's Class A and B Common Stock for $23 per share.
The consummation of these transactions, as more fully described below,
increases Clear Channel's investment in the Company from a previously owned 21%
interest to 62%. Clear Channel is a diversified radio and television
broadcasting company.
7
<PAGE> 8
Pursuant to a Stockholder Purchase Agreement dated June 1, 1996 between Clear
Channel and Mr. Cecil Heftel, former Chairman and Co-Chief Executive Officer,
Mr. Carl Parmer, former President and Co-Chief Executive officer and members of
the Heftel family, Clear Channel acquired 160,000 shares of the Company's Class
A Common Stock and 3,356,529 shares of the Company's Class B Common Stock on
August 5, 1996 (each share of Class B Common Stock converts automatically into
one share of Class A Common Stock upon sale). An additional 1,156,017 shares
of Class A Common Stock were acquired by Clear Channel upon the exercise of
stock options and warrants held by the selling stockholders.
Under a separate Tender Offer Agreement dated June 1, 1996 between the Company
and Clear Channel, Clear Channel also acquired 231,776 shares of the Company's
Class A Common Stock, of which an aggregate of 199,167 shares were tendered by
employees of the Company upon the exercise of their stock options on August 5,
1996. Additional shares of Class A Common Stock were tendered to Clear Channel
by public shareholders.
On September 9, 1996, the Company's Board of Directors approved a plan to
discontinue the operations of the radio network owned by the Company's
wholly-owned subsidiary Spanish Coast-to-Coast, d.b.a. Cadena Radio Centro
(CRC) effective August 5, 1996. Consequently, the accompanying condensed
consolidated statements of operations have been restated to reflect the effects
of the discontinued operations of CRC for each of the periods presented.
Refinanced Credit Agreement
On August 5, 1996, concurrent with the completion of the transactions described
above, the Company borrowed $135 million under a Credit Agreement with a new
lender which provides a total credit facility of $155 million. The proceeds
were used to retire all of the outstanding debt under the Company's existing
credit agreement and to pay certain non-compete and employment contract
settlements plus certain transaction and other costs relating to the
stockholder purchase agreement and tender offer. The terms, covenants and
conditions of the new credit agreement are similar to those under the former
credit agreement, except that the entire principal balance outstanding plus
unpaid interest is due in January 1998. The principal maturities of long-term
debt as of June 30, 1996 reflect the terms of the new Credit Agreement.
As a result of and in connection with the completion of the transactions
described in the preceding paragraphs, the Company estimates it will have
certain one-time charges during the quarter ended September 30, 1996 of
approximately $45 million, before tax benefits, which are expected to be
minimal. Such charges relate primarily to the payment of employment contract
settlements with former senior executives, the write-off of unamortized
financing costs relating to the retired debt, and transaction and other
restructuring costs.
Proposed Merger Plan
On July 10, 1996, Clear Channel issued a press release announcing its plans to
submit to the Company's board of directors a proposal and plan to have the
Company acquire Tichenor Media Systems, Inc. Tichenor, is a Dallas-based
Spanish language broadcaster with twenty radio stations in six markets. Under
the terms of the merger plan, Tichenor shareholders would exchange their
capital stock for approximately 5.68 million shares of the Company's Class A
Common Stock plus approximately $3.2 million in cash. The completion of this
acquisition is subject to approval by the board of directors and shareholders
of the Company and Tichenor, and by the Federal Trade Commission and Federal
Communications Commission.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1996 TO THREE MONTHS ENDED JUNE 30,
1995
Net revenues increased by $3.3 million, or 19.9%, to $19.9 million in
the three months ended June 30, 1996 from $16.6 million in the same quarter of
1995. Operating expenses increased by $3.6 million, or 29.3%, to $15.9 million
in the three months ended June 30, 1996 from $12.3 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, and to increases in programming and
promotion expenses resulting from programming changes in the Miami market.
Interest expense, net of interest income, increased by $1.9 million,
or 137%, to $3.2 million in the three months ended June 30, 1996 from $1.4
million in the same period of 1995 primarily as a result of increased
borrowings of $50.6 million, or 65.8%, over the same period of the prior year.
The proceeds of borrowings were used primarily for business acquisitions and
certain capital expenditures.
On September 9, 1996, the Company's Board of Directors approved a plan
to discontinue the operations of the radio network owned by the Company's
wholly-owned subsidiary Spanish Coast-to-Coast, d.b.a. Cadena Radio Centro
(CRC) effective August 5, 1996. Consequently, the accompanying condensed
consolidated statements of operations have been restated to reflect the effects
of the discontinued operations of CRC for each of the periods presented. The
losses from discontinued operations increased $1,190,000 to $500,000 in the
three months ended June 30, 1996 from income of $690,000 in the same period of
1995 primarily as a result of continuing softness of network revenue.
For the three months ended June 30, 1996, a net loss of $863,000 was
incurred compared to net income of $3.2 million in the same period of 1995.
The net loss as compared to net income over prior year is due primarily to the
increase in interest expense, increased programming and promotional expense and
an increase in expenses relating to unconsummated business acquisitions. See
Note 6 to accompanying Condensed Consolidated Financial Statements.
COMPARISON OF NINE MONTHS ENDED JUNE 30, 1996 TO NINE MONTHS ENDED JUNE 30,
1995
Net revenues increased by $6.4 million, or 13.7%, to $53.0 million in
the nine months ended June 30, 1996 from $46.6 million in the same period of
1995. Operating expenses increased by $5.8 million, or 15.6%, to $43.1 million
in the nine months ended June 30, 1996 from $37.3 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 and to increases in programming and
promotion expenses resulting from programming changes in the Miami market.
Interest expense, net of interest income, increased by $4.2 million,
or 113.8%, to $7.9 million in the nine months ended June 30, 1996 from $3.7
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.
On September 9, 1996, the Company's Board of Directors approved a plan
to discontinue the operations of the radio network owned by the Company's
wholly-owned subsidiary Spanish Coast-to-Coast, dba Cadena Radio Centro (CRC)
effective August 5, 1996. Consequently, the accompanying condensed
consolidated statements of operations have been restated to reflect the effects
of the discontinued operations of CRC for each of the periods presented. The
losses from discontinued operations increased by $1,473,000
9
<PAGE> 10
to $1,608,000 in the nine months ended June 30, 1996 from $135,000 in the same
period of 1995 primarily as a result of continuing softness of network revenue.
For the nine months ended June 30, 1996, a net loss of $976,000 was
incurred compared to net income of $3.7 million 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. See Note 6 to accompanying Condensed Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended
June 30, 1996 was $675,000 compared to net cash provided of $3.7 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 to fund 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. On March 25, 1996, the
Company borrowed an additional $20 million under the Credit Agreement to fund
the acquisition of the assets of WPAT-AM in New York. As of June 30, 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 August 5, 1996, the Company borrowed $135 million under a Credit
Agreement with a new lender which provides a total credit facility of $155
million. The proceeds were used to retire all of the outstanding debt under
the Company's existing credit agreement and to pay certain non-compete and
employment contract settlements, and certain transaction and other costs
relating to the stockholder purchase agreement and tender offer agreements
described in Note 6 to the Condensed Consolidated Financial Statements. The
terms, covenants and conditions of the new credit agreement are similar to
those under the former credit agreement, except that the entire principal
balance outstanding plus unpaid interest is due in January 1998. The principal
maturities of long-term debt as of June 30, 1996 reflect the terms of the new
credit agreement.
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 nine months ended June 30, 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.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Change in Control of Company
On August 5, 1996, Clear Channel Radio, Inc., a wholly owned subsidiary of
Clear Channel Communications, Inc. (Clear Channel), completed a stock purchase
and tender offer of the Company's Class A and B Common Stock for $23 per share.
The consummation of these transactions, as more fully described in Note 6 to
the Condensed Consolidated Financial Statements, increases Clear Channel's
investment in the Company from a previously owned 21% interest to 62%. Clear
Channel is a diversified radio and television broadcasting company.
In connection with the change in control of the Company described above, the
following new directors and officers were elected:
<TABLE>
<S> <C>
L. Lowry Mays Director, President and Chief Executive Officer
Ernesto Cruz Director
B.J. McCombs Director
James M. Raines Director
John H. Williams Director
Mark P. Mays Senior Vice President
John T. Kendrick Senior Vice President, Chief Financial Officer and
Assistant Secretary
Kenneth E. Wyker Vice President for Legal Affairs and Secretary
Herbert W. Hill Vice President and Controller
Randall T. Mays Vice President and Treasurer
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included herein.
2.1 Tender Offer Agreement, dated June 1, 1996, between the Company and
Clear Channel Radio, Inc. ("Clear Channel") (incorporated herein by
reference to Exhibit 99(c)(1) of Clear Channel's Schedule 14D-1 filed
on June 7, 1996).
2.2 Amendment No. 1 to Tender Offer Agreement, dated June 6, 1996
(incorporated herein by reference to Exhibit 99(c)(9) of Clear
Channel's Schedule 14D-1 filed on June 7, 1996).
2.3 Amendment No. 2 to Tender Offer Agreement, dated June 20, 1996
(incorporated by reference to Exhibit (c)(3) of the Company's Schedule
14D-9 dated June 20, 1996).
2.4 Confidentiality Letter Agreement dated May 31, 1996, between the
Company and Clear Channel (incorporated herein by reference to Exhibit
99(c)(12) of Clear Channel's Schedule 14D-1 filed on June 7, 1996).
11
<PAGE> 12
10.1 Agreement Not To Compete, dated June 1, 1996, between the Company and
Carl Parmer (incorporated herein by reference to Exhibit 99(c)(4) of
Clear Channel's Schedule 14D-1 filed on June 7, 1996).
10.2 Agreement Not To Compete, dated June 1, 1996, between the Company and
Cecil Heftel (incorporated herein by reference to Exhibit 99 (c)(3) of
Clear Channel's Schedule 14D-1 filed on June 7, 1996).
10.3 Settlement Agreement, dated June 1, 1996, between the Company and Carl
Parmer (incorporated herein by reference to Exhibit 99 (c)(6) of Clear
Channel's Schedule 14D-1 filed on June 7, 1996).
10.4 Settlement Agreement, dated June 1, 1996, between the Company and
Cecil Heftel (incorporated herein by reference to Exhibit 99 (c)(5) of
Clear Channel's Schedule 14D-1 filed on June 7, 1996).
10.5 Amendment No. 1 to Employment Agreement dated May 31, 1996, between
KTNQ/KLVE, Inc. and Richard Heftel.
11.0 Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K
During the quarter ended June 30, 1996, the Company filed the
following reports on Form 8-K:
(1) 8-K dated June 14, 1996 and
(2) 8-K dated June 20, 1996.
12
<PAGE> 13
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 4th day of
November, 1996.
HEFTEL BROADCASTING CORPORATION
By: /s/ L. Lowry Mays
-------------------------------------
L. Lowry Mays, President and
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.
Signature Title Date
- --------- ----- ----
/s/ L. Lowry Mays President, Chief November 4, 1996
- -------------------------- Executive Officer
L. Lowry Mays and Director
/s/ John T. Kendrick Senior Vice President November 4, 1996
- -------------------------- and Chief Financial
John T. Kendrick Officer (principal
accounting officer)
13
<PAGE> 1
Exhibit 10.5
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is
made and entered into on May 31, 1996, by and between KTNQ/KLVE, INC., a
California corporation ("Employer") and RICHARD HEFTEL, an individual
("Executive"), with reference to the following facts:
A. Employer and Executive entered into an Employment
Agreement dated January 31, 1994 (the "Agreement").
B. The parties now desire to amend the Agreement on the
terms and conditions contained herein.
The parties hereto hereby agree as follows:
1. Exhibit A of the Agreement is deleted in its entirety
and replaced by Exhibit A attached hereto.
2. Section 10.3 of the Agreement is deleted in its
entirety and replaced by the following Section 10.3:
"10.3 Should Employer terminate this Agreement for reasons
other than those specified in Section 10.1 herein, Executive shall be entitled
to the present value of all of the remaining Base Salary and Cash Incentive
Compensation payable hereunder for the full remainder of the Term of this
Agreement, to be paid in a single sum. For purposes of calculating Cash
Incentive Compensation, it shall be assumed that the difference between actual
Broadcast Cash Flow and Projected Broadcast Cash Flow (as defined in Exhibit
"A") for each fiscal year and the Four Month Period (as defined in Exhibit "A")
shall equal the difference between the actual Broadcast Cash Flow and the
Projected Broadcast Cash Flow for the fiscal year of the Employer ending
immediately preceding the date of termination and it shall be assumed each
quarterly bonus would be earned only if such bonus was earned for the quarter
immediately preceding the date of termination. The present value calculation
shall assume interest at the prime rate (as published in the Wall Street
Journal) for the first business day of the month in which the termination is
effective."
<PAGE> 2
3. The first sentence of Section 11.1.2 is amended by
adding "and any unpaid Cash Incentive Compensation for quarters preceding the
quarter in which such termination becomes effective," immediately after
"effective," and before "but shall".
4. Clause (b) of Section 13.2 is deleted in its entirety
and replaced by the following new clause (b):
"(b) unpaid Cash Incentive Compensation for years and
quarters preceding the date of death and the Cash Incentive Compensation (both
the yearly and quarterly bonuses) for the year of death pro-rated through the
date of death, and"
5. Except as amended hereby, the Agreement remains
unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
on the date first above written.
KTNQ/KLVE, INC.
By: /s/ John Kendrick
---------------------------------
Name: John Kendrick
Title: Senior Vice President and
Chief Financial Officer
/s/ Richard Heftel
------------------------------------
RICHARD HEFTEL
-2-
<PAGE> 3
EXHIBIT A
Cash Incentive Compensation
(a) If for a fiscal year of the Employer through the year ending
September 30, 2000 or if for the four month period beginning October 1, 2000
and ending January 31, 2001 (the "Four Month Period"), the Broadcast Cash Flow
of the Employer equals or exceeds the Projected Broadcast Cash Flow, the
Executive shall receive a bonus of $50,000 plus an amount equal to 5% of the
difference between the actual Broadcast Cash Flow and Projected Broadcast Cash
Flow. For purposes hereof, Broadcast Cash Flow shall mean operating income,
excluding depreciation and amortization, from all stations owned by the
Employer for which Executive serves as the general manager. For purposes
hereof the "Projected Broadcast Cash Flow" for each fiscal year is as follows:
<TABLE>
<CAPTION>
Fiscal Year Projected Broadcast
Ending September 30 Cash Flow
------------------- -------------------
<S> <C>
1996 14,555,000
1997 15,283,000
1998 16,047,000
1999 16,849,000
2000 17,691,000
</TABLE>
For the Four Month Period, Projected Broadcast Cash Flow is $5,733,333. If
Executive's employment is terminated under Section 10.1 prior to September 30,
2000 and the termination date is other than the last day of a fiscal year,
Executive will be entitled to a pro rated bonus (based on the number of full
months elapsed in the fiscal year) for the portion of the year preceding the
termination date if the Projected Broadcast Cash Flow for the fiscal year in
which the termination occurs is met through the end of the month next preceding
the termination date. If Executive's employment is terminated during, but
prior to the end of, the Four Month Period, Executive will be entitled to a
pro-rated bonus (based on the number of days elapsed in the Four Month Period)
for the portion of the Four Month Period preceding the termination date if the
Projected Broadcast Cash Flow for the Four Month Period is met through the day
immediately preceding the date of termination.
-3-
<PAGE> 4
(b) For each quarter in which any station owned by
Employer is ranked No. 1 in the ratings published by Arbitron in the audience
twelve years of age and older, Monday through Sunday, 6:00 a.m. to midnight
(the "Category"), Employer shall pay to Executive a bonus of $12,500.
(c) For each quarter in which any station owned by
Employer is the highest ranked Spanish language radio station in the Category
and such station has a two point or greater lead over the next highest ranked
Spanish language radio station in the Category based on the ratings published
by Arbitron, Employer shall pay to Executive a bonus of $12,500.
(d) The bonuses for each fiscal year set forth in
paragraph (a) of this Exhibit shall be paid not later than 60 days after the
end of the Employer's fiscal year, or if the bonus is for a part of the year,
not later than 60 days after the end of the last month taken into account in
determining whether the Projected Broadcast Cash Flow is met. The quarterly
bonuses set forth in paragraphs (b) and (c) of this Exhibit shall be paid
within 15 days after the Arbitron ratings are published. Notwithstanding the
foregoing, the bonus for the Four Month Period shall be paid by March 31, 2001.
-4-
<PAGE> 1
Exhibit 11
COMPUTATIONS OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended June 30 Nine Months Ended June 30
-------------------------- -----------------------------
1996 1995 1996 1995
------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average shares outstanding 10,143,397 10,060,975 10,326,354 9,993,576
Net effect of dilutive stock options - based
on the treasury stock method using
average market price -- 908,648 -- 904,580
------------ ----------- ------------- -------------
Total 10,143,397 10,969,623 10,326,354 10,898,156
============ =========== ============= =============
Net income (loss) from continuing operations $ (362,442) $ 2,472,760 $ 631,937 $ 3,817,408
Subtract $0.08 cumulative preferred
stock dividends (6,713) (6,713) (20,138) (65,878)
------------ ----------- ------------- -------------
Subtotal (369,155) 2,466,047 611,799 3,751,530
Discontinued operations (500,326) 689,601 (1,608,167) (135,398)
------------ ----------- ------------- -------------
Total $ (869,481) $ 3,155,648 $ (996,368) $ 3,616,132
============ =========== ============= =============
Net income (loss) per share from
continuing operations ($0.04) $0.22 $ 0.06 $0.34
====== ===== ====== =====
Net income (loss) per share ($0.09) $0.29 ($0.10) $0.33
====== ===== ====== =====
FULLY DILUTED (NOTES 1 AND 2)
Weighted average shares outstanding 10,060,975 9,993,576
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 939,536 929,729
----------- -------------
Total 11,000,511 10,923,305
=========== =============
Net income (loss) from continuing operations $ 2,472,760 $ 3,817,408
Subtract $0.08 cumulative preferred stock dividends (6,713) (65,878)
----------- -------------
Subtotal 2,466,047 3,751,530
Discontinued operations 689,601 (135,398)
----------- -------------
Total $ 3,155,648 $ 3,616,132
=========== =============
Net income (loss) per share from continuing operations $0.22 $0.34
===== =====
Net income (loss) per share $0.29 $0.33
===== =====
</TABLE>
Notes
(1) For the three month period ended June 30, 1996 and 1995, and for the
nine month period ended June 30, 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 nine month period ended June 30, 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 share amount is the same under both the primary
and fully-dilutive computations.
