SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File No. 1-13674
Katz Media Group, Inc.
(Exact name of registered as specified in its charter)
Delaware 13-3779269
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
125 West 55th Street, New York, New York 10019
(212) 424-6000
Securities registered pursuant to Section 12( b ) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
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Common Stock, $.01 par value The American Stock Exchange
Securities registered pursuant to Section 12( g ) of the Act: - None
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 such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. [X]
Based on the closing sales price on March 20, 1997, the aggregate market
value of the Common Stock held by non-affiliates of the Registrant was
approximately $35 million.
At March 20, 1997 - 13,492,396 shares of the Registrant's common stock were
outstanding.
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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, in the City of New
York, State of New York on March 27, 1997.
Katz Media Group, Inc.
/S/ RICHARD E. VENDIG
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By: Richard E. Vendig
Senior Vice President
Chief Financial & Administrative Officer,
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Thomas F. Olson
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Thomas F. Olson President, Chief Executive Officer March 27, 1997
and Director
/s/ James E. Beloyianis
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James E. Beloyianis Vice President, Secretary and Director March 27, 1997
/s/ Richard E. Vendig
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Richard E. Vendig Senior Vice President, Chief Financial & March 27, 1997
Administrative Officer, Treasurer
(Principal Financial and Accounting
Officer)
/s/ Stuart O. Olds
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Stuart O. Olds Vice President, Assistant Secretary March 27, 1997
and Director
/s/ L. Donald Robinson
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L. Donald Robinson Vice President March 27, 1997
/s/ Thompson Dean
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Thompson Dean Chairman of the Board of Directors March 27, 1997
27
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NAME TITLE DATE
---- ----- ----
/s/ Michael Connelly
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Michael Connelly Director March 27, 1997
/s/ Thomas J. Barry
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Thomas J. Barry Director March 27, 1997
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Steven J. Gilbert Director March 27, 1997
/s/ Bob Marbut
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Bob Marbut Director March 27, 1997
/s/ David M. Wittels
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David M. Wittels Director March 27, 1997
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KATZ MEDIA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's Omitted, Except Share and Per Share Information)--(Continued)
Range of exercise prices
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$6-$10 $11-18 Total
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Options Outstanding
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Number outstanding 1,192,865 338,325 1,531,190
Weighted average remaining
contractual life, in years 8.5 8.4 8.5
Weighted average exercise price $6.71 $16.04 $8.77
Options Exercisable
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Number exercisable 231,139 107,530 338,669
Weighted average exercise price $6.00 $16.11 $9.21
Of those options outstanding but not exercisable at December 31, 1996,
476,228 relate to the performance options described above.
1996 Restricted Stock Grant Plan
On December 12, 1995, the Board of Directors adopted the 1996 Restricted
Stock Grant Plan (the "1996 Restricted Plan"). Currently shares held in treasury
are available for grant under this plan which may be increased from time to time
at the discretion of the Board of Directors. Effective January 2, 1996 the
Compensation Committee of the Board of Directors awarded 18,750 shares of
restricted stock under the 1996 Restricted Plan to certain key executives. The
market price of the Company's common stock on the date of grant was $17 5/8. The
restrictions on such shares lapse ratably, over a three year period. As such
restrictions lapse, compensation expense will be recognized representing the
fair market value of the Company's common stock on the date of grant. During
1996, $110 of compensation expense was recognized.
5. LONG-TERM DEBT
The composition of long-term debt at December 31, 1996 and 1995 is as
follows:
1996 1995
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10 1/2 % Senior Subordinated Notes due 2007 $100,000 $ --
New Credit Agreement....................... 117,500 --
Old Credit Agreement....................... -- 80,000
12 3/4 % Senior Subordinated Notes due 2002 122 99,530
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$217,622 $179,530
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In December 1996 the Company consummated the Refinancing. As a part
thereof, the Company, through its subsidiary KMC; (i) entered into the New
Credit Agreement with an affiliate of DLJMB acting as arranger and syndication
agent, (ii) issued the New Notes, (iii) repurchased $97,700 aggregate principal
amount of the Old Notes for $109,900 including approximately $11,900 of premium,
consent fees and transaction costs and (iv) repaid the outstanding balances
under the Old Credit Agreement and Interim Facility aggregating $100,100 and
terminated the Old Credit Agreement and Interim Facility.
Under the terms of the New Credit Agreement, certain lenders provide the
Company with a secured revolving credit line and term loan facility of up to
$180,000, consisting of Tranche A term loans of up to $60,000, Tranche B term
loans of up to $40,000 and revolving loans of up to $80,000. Interest rates on
the loans are determined from time to time based on KMC's choice of formulas,
plus a margin. The amount of the margin varies depending on the Company's ratio
of total debt to earnings before interest, taxes, depreciation, amortization and
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KATZ MEDIA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's Omitted, Except Share and Per Share Information)--(Continued)
certain other non cash charges, as defined ("EBITDA"). Interest rates on the
Tranche B term loans initially carry a higher margin than the Tranche A and
revolving credit loans. At December 31, 1996, the weighted average interest
rates for the Tranche A, Tranche B and revolving credit loans were 7.6%, 7.9%,
and 7.6%, respectively. Under the New Credit Agreement, KMC must pay a variable
quarterly commitment fee dependent on a leverage ratio, as defined, currently
3/8% per annum on its average daily unused amount. The New Credit Agreement is
secured by (i) all of the stock of KMC's domestic subsidiaries and 65% of the
stock of KMC's foreign subsidiaries, (ii) substantially all of the assets of the
subsidiaries of KMC and (iii) all of the stock of KMC held by Services. In
addition, Services and all of the domestic subsidiaries have guaranteed payment
of all borrowings under the New Credit Agreement.
At December 31, 1996, amounts outstanding under the Tranche A, Tranche B
and revolving credit loans were $60 million, $40 million, and $17.5 million,
respectively. Under the New Credit Agreement, KMC is required to make principle
payments commencing in 1997 through December, 2004. Under the New Credit
Agreement, mandatory reductions in the committed amounts are $400 in 1997, $400
in 1998, $6,400 in 1999, $8,150 in 2000, $15,025 in 2001, $22,775 in 2002,
$32,350 in 2003 and $32,000 on the final maturity of the New Credit Agreement in
2004. As the Company should have sufficient availability under the New Credit
Agreement, the 1997 mandatory reduction amount ($400) is classified as long term
debt. Drawings under the New Credit Agreement are limited based on the
requirement to maintain a total debt to EBITDA ratio of not more than 5.5 to 1.
At December 31, 1996, an aggregate of $62,500 was available for additional
borrowing under the New Credit Agreement of which approximately $22,500 was
immediately available with the remaining $40,000 becoming available in the
future subject to the achievement of certain financial ratios and compliance
with certain other conditions. The New Credit Agreement contains certain
restrictions and limitations, including limitations on the payment of cash
dividends and similar restricted payments, other than a certain amount of
payments to be used to finance possible repurchases by the Company of its common
stock. In addition, the New Credit Agreement also requires KMC to maintain
certain ratios related to interest, debt outstanding and restricted payments (as
defined).
The New Notes issued as part of the Refinancing are $100,000 face value 10
1/2% Senior Subordinated Notes due January 15, 2007 and are unsecured
obligations of KMC. Payment of principle and interest is guaranteed by all
present and future domestic subsidiaries of KMC and the New Notes are
subordinate to the obligations under the New Credit Agreement. Interest on the
New Notes is payable semiannually. The New Notes are governed by an indenture
which provides for, among other things, certain covenants including limitations
on KMC's ability to incur additional debt, make restricted investments and pay
dividends, other than a certain amount of payments to be used to finance the
possible repurchase by the Company of its common stock.
The New Notes are redeemable at the option of KMC after January 15, 2002,
at a redemption price equal to specified percentages of the principal amount
thereof (ranging from approximately 105% in 2002 declining to 100% in 2006) plus
accrued interest and liquidated damages (as defined). At anytime prior to
January 15, 2000, KMC may redeem up to 35% in aggregate principal amount of the
Notes with the proceeds of an offering of equity or other securities of KMC,
Services or the Company at a redemption price of approximately 110%, provided
that at least 65% of the original aggregate principal amount remains outstanding
immediately after such redemption. Upon the occurrence of a change in control,
as defined, the holders of the New Notes have the right to require KMC to
repurchase all or any part of such holders New Notes at a price of 101% plus
accrued interest.
In September 1996, the Company, through a subsidiary as borrower, entered
into the Interim Facility with a group of lenders. The Interim Facility provided
for borrowings of up to $35,000 and had a maturity date of March 31, 1998.
Borrowings under the Interim Facility bore interest at various rates. The
Company borrowed $5,600 under the Interim Facility. In connection with the
Refinancing, all amounts outstanding under the Interim Facility were repaid in
full and the Interim Facility was terminated. Upon the early extinguishment of
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KATZ MEDIA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's Omitted, Except Share and Per Share Information)--(Continued)
the Interim Facility, the Company recorded an extraordinary charge of $315, net
of a related tax benefit of $214, which represents the write-off of unamortized
debt issuance costs relating to the Interim Facility.
The Old Notes are unsecured obligations of KMC that are guaranteed by all
the subsidiaries of KMC. The Old Notes are subordinated in right of payment to
the New Notes and New Credit Agreement. The Old Notes bear interest at the rate
of 12 3/4 % per annum, payable semiannually. The Old Notes are redeemable at the
option of KMC after November 15, 1997, at a redemption price equal to specified
percentages of the principal amount thereof (ranging from approximately 106% in
1997 declining to 100% in 2000) plus accrued interest. In connection with the
Refinancing, the Company amended the indenture covering the Old Notes which
eliminated certain restrictions on the ability of the Company to incur
additional debt, pay dividends or make other restricted payments or investments,
other than a certain amount of payments to finance the possible repurchase by
KMG of its common stock. As a result of the December 1996 Refinancing, the
Company recorded an extraordinary charge of $6,678, net of a related tax benefit
of $4,646.
Scheduled maturities of long-term debt maturing over the next five years are
as follows:
Year Ended December 31,
1997................................................................$ 400
1998................................................................ 400
1999................................................................ 6,400
2000................................................................ 8,150
2001................................................................ 15,025
Thereafter.......................................................... 187,247
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$217,622
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In connection with the 1994 Acquisition, the Company entered into the Old
Credit Agreement with an affiliate of DLJMB. On September 9, 1994 this facility
was amended with unaffiliated banks. In December 1995 the Old Credit Agreement
was amended to provide for quarterly mandatory reductions in the commitment
amount of funds available beginning January 1, 1998 rather than currently (see
below). In addition, certain other terms were modified, including interest
rates. Such amendments constituted a significant modification of the Old Credit
Agreement. Accordingly, the Company wrote off as an extraordinary charge
deferred financing costs aggregating $800 net of an income tax benefit of $600,
at an effective tax rate of 41%. Borrowings under the Old Credit Agreement bear
interest at different rates. The rates varied based on the Company's ratio of
debt to EBITDA (as defined). The weighted average interest rate at December 31,
1995 was 7.6%. The Old Credit Agreement was fully repaid from the proceeds of
the Refinancing.
6. EMPLOYEE BENEFIT PLANS
Savings and Profit Sharing Plan
The Company has two defined contribution retirement plans, The Katz Media
Corporation Savings and Profit Sharing Plan and the Seltel, Inc. Profit Sharing
Plan. Both plans are profit sharing plans under Section 401(a) of the Internal
Revenue Code of 1986 (the "Code") that include a "cash or deferred arrangement"
under Section 401(k) of the Code and together cover substantially all employees
of the Company with greater than six months of service. Both plans provide for
the Company to match a percentage of a participant's contribution up to a stated
maximum percentage of an employee's salary. Amounts charged to operating
expenses approximated $900, $800, $500 and $500 for both plans for the years
ended December 31, 1996 and 1995, the period August 12, 1994 through December
31, 1994 and the period January 1, 1994 through August 11, 1994, respectively.
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