-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VZVqX4oOu3t5ZiDvozR0hi9FZNO0lQW9uTKFn1rF9amyBVIyeLjzvSH6HANz03QE aoj+qo9NB9SHi8RmiDKKRg== 0000702808-94-000013.txt : 19940803 0000702808-94-000013.hdr.sgml : 19940803 ACCESSION NUMBER: 0000702808-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACOR COMMUNICATIONS INC CENTRAL INDEX KEY: 0000702808 STANDARD INDUSTRIAL CLASSIFICATION: 4832 IRS NUMBER: 310978313 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12404 FILM NUMBER: 94541053 BUSINESS ADDRESS: STREET 1: 1300 PNC CENTER STREET 2: 201 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5136211300 10-Q 1 FORM 10-Q 6/30/94 FORM 10-Q 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 June 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-12404 JACOR COMMUNICATIONS, INC. An Ohio Corporation Employer Identification No. 31-0978313 1300 PNC Center 201 East Fifth Street Cincinnati, Ohio 45202 Telephone (513) 621-1300 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 twelve 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 ninety days. Yes X No At July 29, 1994, 19,588,789 shares of common stock were outstanding. JACOR COMMUNICATIONS, INC. INDEX Page Number PART I. Financial Information Item 1. - Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1994 and December 31, 1993 3 Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 1994 and 1993 4 Condensed Consolidated Statements of Shareholders' Equity (Deficit) for the six months ended June 30, 1994 and 1993 5 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1994 and 1993 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 19 PART II. Other Information Item 4. - Submission of Matters to Vote of Security Holders 25 Item 6. - Exhibits and Reports on Form 8-K 26 Signatures 27 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1994 1993 (UNAUDITED) (AUDITED) ASSETS Current assets: Cash and cash equivalents $ 22,402,017 $ 28,617,599 Accounts receivable, less allowance for doubtful accounts of $1,338,000 in 1994 and $1,082,000 in 1993 24,275,463 19,449,289 Other current assets 3,453,701 1,997,149 Total current assets 50,131,181 50,064,037 Property and equipment, net 21,356,803 23,072,887 Intangible assets, net 90,757,773 84,991,361 Other assets 5,941,342 1,780,244 Total assets $168,187,099 $159,908,529 LIABILITIES Current liabilities: Accounts payable $ 3,362,857 $ 2,011,460 Accrued payroll 2,421,359 3,218,239 Accrued interest 4,375 Accrued federal, state and local income tax 3,561,436 2,025,485 Other current liabilities 3,265,923 4,145,722 Total current liabilities 12,611,575 11,405,281 Other liabilities 3,976,353 190,057 Deferred tax liability 8,513,744 7,900,000 Total liabilities 25,101,672 19,495,338 SHAREHOLDERS' EQUITY Common stock, no par value, $.10 per share stated value 1,958,876 1,949,982 Additional paid-in capital 137,144,001 136,634,368 Common stock warrants 390,290 390,397 Retained earnings 3,592,260 1,438,444 Total shareholders' equity 143,085,427 140,413,191 Total liabilities and shareholders' equity $168,187,099 $159,908,529 The accompanying notes are an integral part of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three months and six months ended June 30, 1994 and 1993 (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 1994 1993 1994 1993 Broadcast revenue $33,588,971 $27,703,851 $55,631,688 $44,602,079 Less agency commissions 3,578,752 3,007,585 5,839,440 4,822,979 Net revenue 30,010,219 24,696,266 49,792,248 39,779,100 Broadcast operating expenses 22,231,623 18,772,175 39,422,894 32,547,752 Depreciation and amortization 2,487,786 2,442,032 4,715,768 4,686,428 Corporate general and administrative expenses 926,298 920,858 1,808,237 1,707,051 Operating income 4,364,512 2,561,201 3,845,349 837,869 Interest expense (136,928) (617,795) (290,474) (1,746,060) Other income, net 257,675 48,126 510,941 91,622 Income (loss) before income taxes 4,485,259 1,991,532 4,065,816 (816,569) Income tax (expense) benefit (2,111,000) (1,255,800) (1,912,000) 485,200 Net income (loss) $ 2,374,259 $ 735,732 $ 2,153,816 $ (331,369) Net income (loss) per common share $ .11 $ .05 $ .10 $ (.03) Number of common shares used in per share computations 21,371,111 13,748,758 21,475,091 11,253,673 The accompanying notes are an integral part of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) for the six months ended June 30, 1994 and 1993
Common Stock Preferred Stock Shares Stated Value Shares Par Value - - ----------------------------------------------------------------------------- Balances, December 31, 1992 428,015 $ 42,802 683,181 $ 68,318 To give effect to the Restructuring and to the application of push-down accounting 8,710,655 871,065 (683,181) (68,318) - - ------------------------------------------------------------------------------ Balances, January 1, 1993 9,138,670 913,867 -0- -0- Issuance of Common Stock 3,484,321 348,432 Retirement of Treasury Stock (46,586) (4,659) Issuance of Common Stock- 1993 Rights Offering 345,476 34,548 Issuance of Common Stock- Directors subscription 80,000 8,000 Exercise of Warrants 614 61 Net loss - - ------------------------------------------------------------------------------ Balances, June 30, 1993 13,002,495 $1,300,249 -0- -0- ============================================================================== Balances, December 31, 1993 19,499,812 $1,949,982 -0- $ -0- Exercise of Stock Options 88,310 8,831 Other 635 63 Net income - - ------------------------------------------------------------------------------ Balances, June 30, 1994 19,588,757 $1,958,876 -0- $ -0- ============================================================================== The accompanying notes are an integral part of the condensed consolidated financial statements.
Additional Common Paid-In Capital Stock Common Preferred Warrants - - ------------------------------------------------------------------------------ Balances, December 31, 1992 $19,497,537 $ 5,263,929 $ 895,800 To give effect to the Restructuring and to the application of push-down accounting 36,994,455 (5,263,929) (492,995) - - ------------------------------------------------------------------------------ Balances, January 1, 1993 56,491,992 -0- 402,805 Issuance of Common Stock 19,651,571 Retirement of Treasury Stock (6,923,254) Issuance of Common Stock- 1993 Rights Offering 1,703,542 Issuance of Common Stock- Directors subscription 451,200 Exercise of Warrants 5,158 (123) Net loss - - ------------------------------------------------------------------------------ Balances, June 30, 1993 $71,380,209 $ -0- $ 402,682 ============================================================================== Balances, December 31, 1993 $136,634,368 $ -0- $ 390,397 Exercise of Stock Options 498,068 Other 11,565 (107) Net income - - ------------------------------------------------------------------------------ Balances, June 30, 1994 $137,144,001 $ -0- $ 390,290 ==============================================================================
Retained Earnings Treasury Stock (Deficit) Shares Amount Total - - ------------------------------------------------------------------------------ Balances, December 31, 1992 $(69,680,819) 46,586 $(6,927,913) $(50,840,346) To give effect to the Restructuring and to the application of push-down accounting 69,680,819 101,721,097 - - ------------------------------------------------------------------------------ Balances, January 1, 1993 -0- 46,586 (6,927,913) 50,880,751 Issuance of Common Stock 20,000,003 Retirement of Treasury Stock (46,586) 6,927,913 Issuance of Common Stock- 1993 Rights Offering 1,738,090 Issuance of Common Stock- Directors subscription 459,200 Exercise of Warrants 5,096 Net loss (331,369) (331,369) -- - - ---------------------------------------------------------------------------- Balances, June 30, 1993 $ (331,369) -0- $ -0- $ 72,751,771 ============================================================================== Balances, December 31, 1993 $ 1,438,444 -0- $ -0- $140,413,191 Exercise of Stock Options 506,899 Other 11,521 Net income 2,153,816 2,153,816 - - ------------------------------------------------------------------------------ Balances, June 30, 1994 $ 3,592,260 -0- $ -0- $143,085,427 ==============================================================================
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the six months ended June 30, 1994 and 1993 (UNAUDITED)
1994 1993 Cash flows from operating activities: Net income (loss) $ 2,153,816 $ (331,369) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation 1,238,623 1,057,265 Amortization of intangibles 3,477,145 3,563,541 Provision for losses on accounts and notes receivable 512,388 418,498 Decrease in deferred tax liability (251,300) Refinancing fees (1,994,801) Other (339,840) (192,240) Change in current assets and current liabilities net of effects of acquisitions and disposals: Increase in accounts receivable (4,516,464) (4,909,959) Increase (decrease) in other current assets (736,559) 887,392 Increase (decrease) in accounts payable 995,141 (106,241) Increase (decrease) in accrued payroll, accrued interest and other current liabilities 308,060 (637,391) Net cash provided (used) by operating activities 2,841,010 (2,245,305) Cash flows from investing activities: Payments received on notes receivable 950,000 12,500 Capital expenditures (866,429) (846,331) Cash paid for acquisitions (7,688,038) (3,691,020) Net proceeds from the sale of assets 1,919,189 Loans originated and other (3,870,005) (21,969) Net cash used by investing activities (9,555,283) (4,546,820) Cash flows from financing activities: Proceeds from issuance of long-term debt 48,000,000 Proceeds from issuance of common stock 518,420 20,119,856 Collection of stock subscriptions receivable 5,740,000 Reduction in long-term debt (73,386,692) Payment of restructuring expenses (19,729) (4,890,930) Net cash provided (used) by financing activities 498,691 (4,417,766) Net decrease in cash and cash equivalents (6,215,582) (11,209,891) Cash and cash equivalents at beginning of period 28,617,599 12,429,574 Cash and cash equivalents at end of period $ 22,402,017 $ 1,219,683 The accompanying notes are an integral part of the condensed consolidated financial statements.
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. FINANCIAL STATEMENTS The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of results of operations for such periods. Results for interim periods may not be indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the consolidated financial statements for the year ended December 31, 1993 and the notes thereto. 2. RESTRUCTURING AND CHANGE IN CONTROL On January 11, 1993, the Company completed a recapitalization plan that substantially modified its debt and capital structure (the "Restructuring"). Such Restructuring was accounted for as if it had been completed January 1, 1993. The Restructuring consisted of the following five basic parts: (1) An infusion of equity by Zell/Chilmark Fund L.P. (hereinafter, "Zell/Chilmark") by way of a merger (the "Merger") of a corporation wholly owned by Zell/Chilmark with and into the Company, which resulted in an equity restructuring of the Company, including: (i) the conversion of every share of the Company's common stock outstanding prior to the Merger into 0.0423618 shares of a new class of capital stock, the Class A Common Stock (the "New Class A Common Stock"), and warrants ("Warrants") to purchase 0.1611234 additional shares of a new class of non- voting common stock, the Class B Common Stock (the "New Class B Common Stock"); (ii) the conversion of every share of the Company's preferred stock outstanding prior to the Merger, together with any accumulated and unpaid dividends thereon, into 0.2026505 shares of New Class B Common Stock, and Warrants to purchase 0.7707796 shares of New Class B Common Stock; (iii) the distribution of cash, at the rate of $5.74 per share and $0.20 per Warrant, in lieu of New Common Stock and Warrants to those shareholders of record who so elected, and to all holders in lieu of any fractional shares of New Common Stock or fractional Warrants; and (iv) the issuance to Zell/Chilmark of 1,032,060 shares of New Class B Common Stock and 593,255 Warrants to purchase that number of shares of New Class B Common Stock. (2) A concurrent issuance of equity securities by the Company in exchange for the cancellation of approximately $81,500,000 of debt held by the Company's senior lenders and various subordinated creditors; (3) The sale to Zell/Chilmark of most of the equity securities issued in exchange for such cancellation of debt and Zell/Chilmark's reoffer of Warrants acquired by Zell/Chilmark under the Restructuring to those senior lenders who retained equity securities; (4) The offering of rights (the "Rights") to (i) Zell/Chilmark, (ii) the Company's creditors who retained New Common Stock acquired in the Restructuring and (iii) other holders of New Common Stock who were also shareholders on November 27, 1992, to acquire in the aggregate 1,000,000 shares of New Common Stock at a price of $5.74 per share; and (5) An increase in the authorized capital stock to 44,000,000 shares and the reservation of 1,519,218 shares of New Common Stock for issuance after the Restructuring pursuant to a proposed new management stock option plan ("Management Options"). As a result of the Company's restructuring and merger, the Company's Amended and Restated Articles of Incorporation were amended to (i) increase the authorized capital shares of the Company to 44,000,000, (ii) authorize two classes of no par value common stock, designated the "New Class A Common Stock" and the "New Class B Common Stock", each with 20,000,000 shares authorized for the class, (collectively, the "New Common Stock"), and (iii) create two classes of no par value preferred stock, designated the "New Class A Preferred Stock" and the "New Class B Preferred Stock", each with 2,000,000 shares authorized (collectively, the "New Preferred Stock"). No New Preferred Stock has been issued. Upon the grant by the Federal Communications Commission ("FCC") on April 23, 1993 of approval of a transfer of control of the Company to Zell/Chilmark, the New Class B Common Stock automatically converted into Class A Common Stock, the Class A Common Stock was designated "Common Stock" and shares formerly authorized as Class B Common Stock were added to increase the authorized shares of such Common Stock to 40,000,000 shares. The dilution to those who were shareholders prior to the Restructuring and the resultant impact of the Restructuring on the Company's common stock ownership are as follows: Equity Distribution After Restructuring (1)
Common Stock Received Common Stock Pursuant to Common Purchase the 1992 Shares Warrants Rights Percent Received Received Offering Primary(2) Diluted(3) Zell/Chilmark 7,288,931 657,668 983,344 91.44% 80.74% Senior Creditors 402,431 -0- -0- 4.45% 3.64% Other Creditors 10,000 30,710 -0- 0.11% 0.37% Preferred Shareholders prior to the Restructuring 6,416 38,355 -0- 0.07% 0.40% Common Shareholders prior to the Restructuring 338,505 1,287,501 16,656 3.93% 14.85% 8,046,283 2,014,234 1,000,000 100.00% 100.00%
[FN] (1) Does not give effect to (a) the 3,484,321 shares of Common Stock issued to Zell/Chilmark in March 1993 as part of a refinancing; (b) the 964,006 shares of Common Stock issued to Zell/Chilmark in July 1993 for the purchase of radio station KAZY(FM); or (c) the sale of 5,462,500 shares of Common Stock by the Company in November 1993 through a public offering. (2) Before exercise of Warrants and Management Options. (3) After giving effect to the exercise of Warrants but not Management Options. 3. BASIS OF PRESENTATION The Company implemented the Restructuring described in Note 2 using the push-down method of accounting as if the Restructuring was consummated on January 1, 1993. Push-down accounting is a procedure whereby subsidiaries use their parent companies' purchase accounting principles in preparing their financial statements. In accordance with the push-down method of accounting, the Company's net assets were restated generally at current replacement value, the restructured debts were stated at amounts supported by the underlying documents and the accumulated deficit was adjusted to a zero balance. Coincident with the implementation of the aforementioned push- down accounting, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Such change resulted in the establishment of a deferred income tax liability of approximately $6,500,000. A reconciliation of the Company's historical shareholders' deficit as of December 31, 1992 with shareholders' equity at January 1, 1993 as reflected in the accompanying Condensed Consolidated Statement of Shareholders' Equity for the six months ended June 30, 1993 is set forth below. Such reconciliation gives effect to the Restructuring and to the application of push-down accounting. ($000) (UNAUDITED)
Additional Redeemable Paid-In Common Convertible Capital, Additional Common Dividends Stock Preferred Preferred Common Paid-In Stock Transaction Payable Warrants Stock Stock Stock Capital Warrants Balances, December 31, 1992 $ 1,030 $ 487 $ 68 $ 5,264 $ 43 $ 19,497 $ 896 Adjustments: Exchange of redeemable common stock warrants for New Common Stock (487) 2 485 Exchange of old common stock for New Common (43) Stock 43 Issuance of New Common Stock to Zell/Chilmark 87 4,913 Issuance of New Common Stock in Rights Offering 100 5,640 Issuance of New Common Stock to creditors 665 37,499 Cancellation of common stock warrants 896 (896)
Additional Redeemable Paid-In Common Convertible Capital Additional Common Dividends Stock Preferred Preferred Common Paid-In Stock Transaction Payable Warrants Stock Stock Stock Capital Warrants Issuance of New Common Stock to preferred shareholders and others and other preferred stock purchases (1,030) (68) (5,264) 17 6,202 Issuance of New Common Stock Warrants (387) 403* Costs of issuance of New Common Stock and Rights Offering (1,125) Forgiveness of indebtedness Equity effects of push-down accounting: Adjustment of net asset carrying values 10,064 Restructuring costs Elimination of accumulated deficit (27,193) Net adjustments (1,030) (487) (68) (5,264) 871 36,994 (493) Balances, January 1, 1993 $ 0 $ 0 $ 0 $ 0 $ 914 $ 56,491 $ 403
[FN] * Includes 79,275 Warrants at $0.20 each issued in connection with cancellation of indebtedness.
Accumulated Treasury Transaction Deficit Stock Balances, December 31, 1992 $ (69,681) $(6,928) Pro Forma Adjustments: Exchange of redeemable common stock warrants for New Common Stock Exchange of current old common stock for New Common Stock Issuance of New Common Stock to Zell/Chilmark Issuance of New Common Stock in Rights Offering Issuance of New Common Stock to creditors Cancellation of common stock warrants
ACCUMULATED TREASURY TRANSACTION DEFICIT STOCK Issuance of New Common Stock to preferred shareholders and others and other preferred stock purchases Issuance of New Common Stock Warrants Costs of issuance of New Common Stock and Rights Offering Forgiveness of indebtedness 47,031 Equity effects of push-down accounting: Adjustment of net asset carrying values Restructuring costs (4,543) Elimination of accumulated deficit 27,193 Net adjustments 69,681 0 Balances, January 1, 1993 $ 0 $(6,928)
All common share and per share data included in the financial statements and footnotes have been restated to reflect the conversion of every share of the Company's common stock outstanding prior to the Merger into 0.0423618 shares of new common stock as discussed above. The conversion was accounted for as a reverse stock split. The New Common Stock was recorded at its stated value of $0.10 per share. The difference between the stated value of common stock and the New Common Stock was credited to additional paid-in capital, common. The basis for the application of push-down accounting is set forth below. The financial statements only include the resulting revaluations pursuant to Zell/Chilmark's 91.44% ownership of the Company. There were no revaluations recorded for the minority interest ownership of the Company. The allocation of consideration given for the purchase of 91.44% of the Company by Zell/Chilmark is as follows: 8,272,276 Common Shares at $5.74 per share $ 47,483,000 629,117 new common stock Warrants at $0.20 per Warrant 126,000 New debt obligations 62,345,000 Assumption of certain current liabilities 14,918,000 Assumption of other liabilities 6,130,000 $131,002,000 Current assets $ 33,146,000 Property and equipment 19,845,000 Intangible assets (primarily FCC licenses) 76,577,000 Notes receivable and other assets 1,434,000 $131,002,000 4. PER SHARE DATA Income per share for the six months ended June 30, 1994 and for the three months ended June 30, 1994 and 1993 is based on the weighted average number of common shares outstanding and gives effect to both dilutive stock options and dilutive stock purchase warrants during the period. Fully diluted earnings per share is not presented since it approximates primary earnings per share. The loss per common share for the six-month period ended June 30, 1993 is based on the weighted average number of shares of common stock outstanding. The Company's common stock equivalents were anti-dilutive for this period and, therefore, were not included in the computation. 5. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. Income taxes aggregating $773,300 were paid during the six months ended June 30, 1994. There were no income taxes paid during the six months ended June 30, 1993. Interest paid was $255,000 (attributable to the annual commitment fee payable quarterly on the credit facility) and $2,027,000 for the six months ended June 30, 1994 and 1993, respectively. The effect of barter transactions has been eliminated. The condensed consolidated statement of cash flows for the six months ended June 30, 1993 reflects the changes in balance sheet accounts as of January 1, 1993, the date the restructuring was recorded. 6. ACQUISITIONS In March 1994, a subsidiary of the Company entered into an agreement to acquire the assets of radio station WIMJ(FM) in Cincinnati, Ohio for $9,500,000. The asset purchase is subject to FCC approval and the satisfaction of certain other conditions. Pending consummation of the transaction, the Company's subsidiary has entered into a Local Marketing Agreement which began April 7, 1994, and will expire on the purchase date. The acquisition of WIMJ(FM) is not expected to have a material effect on the Company's operations. 7. DEBT AGREEMENTS There was no debt outstanding at June 30, 1994 and December 31, 1993. Following completion of the Restructuring in January 1993 (see Note 2), the Company refinanced its senior debt in March 1993 (the "Refinancing") with a new group of lenders under a new credit facility described below. With the completion of the Refinancing, the Company's senior debt was reduced from $69,000,000 to $45,000,000. As part of this Refinancing, the Company raised $20,000,000 of additional equity from the issuance of 3,484,321 shares of Common Stock at $5.74 per share through a private placement to Zell/Chilmark. This $20,000,000, together with available cash, funded the reduction of the Company's senior debt. With the Refinancing, the Company entered into a new Credit Agreement (the "New Credit Agreement") in March 1993 with a group of lenders agented by Banque Paribas, with The First National Bank of Boston and Continental Bank N.A. acting as co-agents. In November 1993 the Company entered into the First Amendment to the New Credit Agreement (the "Amended Credit Agreement"). The Amended Credit Agreement provides for a senior secured reducing revolving credit facility with a commitment of $45,000,000 that expires on December 31, 2000 (the "Revolver") and a senior secured acquisition facility with a commitment of $55,000,000 that expires on September 30, 1996 (the "Acquisition Facility"). Both facilities are available for acquisitions permitted under conditions set forth in the Amended Credit Agreement. The indebtedness of the Company under the two facilities is collateralized by liens on substantially all of the assets of the Company and its operating subsidiaries and by a pledge of the operating subsidiaries' stock, and is guaranteed by those subsidiaries. The Amended Credit Agreement requires quarterly reductions of the Revolver commitments under the Amended Credit Agreement, and, under certain circumstances, requires mandatory prepayments of any outstanding loans and further commitment reductions under the Amended Credit Agreement. The Amended Credit Agreement contains restrictions pertaining to maintenance of financial ratios, capital expenditures, payment of dividends on distributions of capital stock and incurrence of additional indebtedness. Interest under the Amended Credit Agreement is payable, at the option of the Company, at alternative rates equal to the Eurodollar rate plus 1.25% to 2.25% or the base rate announced by Banque Paribas plus 0.25% to 1.25%. The spreads over the Eurodollar rate and such base rate vary from time to time, depending upon the Company's financial leverage. The Company will pay quarterly commitment fees equal to 1/2% per annum on the aggregate unused portion of the aggregate commitment on both facilities. The Company also is required to pay certain other fees to the agent and the lenders for the administration of the facilities and the use of the Acquisition Facility. In accordance with the terms of the New Credit Agreement, the Company entered into an interest rate protection agreement in March 1993 on the notional amount of $22,500,000 for a three year term. This agreement provides protection against the rise in the three-month LIBOR interest rate beyond a level of 7.25%. The current three- month LIBOR interest rate is 4.81%. Unaudited pro forma results of operations, assuming the Refinancing together with the Zell/Chilmark private placement occurred on the first day of the period shown below, are as follows (dollars in thousands, except per share amounts):
For the Six Months Ended June 30, 1993 Historical Refinancing Total Pro As Reported Adjustment Forma Broadcast revenue $ 44,602 $ 44,602 Less agency commissions 4,823 4,823 Net revenue 39,779 39,779 Broadcast operating expenses 32,548 32,548 Depreciation and amortization 4,686 4,686 Corporate general and administrative expenses 1,707 1,707 Operating income 838 838 Interest expense (1,746) $ 621 (a) (1,125) Other income, net 92 92 Loss before income tax (816) 621 (195) Income tax (expense) benefit 485 (248)(b) 237 Net income (loss) $ (331) $ 373 $ 42 Net income (loss) per common share $ (.03) $ .00 Number of common shares used in per share calculation 11,254 1,323 (c) 12,577
Adjustments to the unaudited pro forma results of operations are explained as follows: (a) To reflect the elimination of the interest associated with the restructuring debt facility and record the interest associated with the new refinancing debt facility as follows: Restructuring debt interest included in historical statements $ (1,746) Interest on new refinancing debt facility ($45,000,000 x 5%) 1,125 Pro forma adjustment $ (621) (b) To provide for the tax effect of pro forma adjustments using an estimated statutory rate of 40%. (c) To provide for the change in the weighted average outstanding common shares. 8. RELATED PARTY TRANSACTIONS In 1991, the Company sold the stock of its research subsidiary, Critical Mass Media, Inc. ("CMM"), to Randy Michaels, a then officer who has since become the current president of the Company. Effective January 1, 1994, a subsidiary of the Company and a corporation wholly owned by Mr. Michaels formed a limited partnership (the "Partnership") in a transaction whereby the Partnership now owns all of the CMM stock and Mr. Michaels' corporation owns a 95% limited partnership interest in the Partnership. The Company's subsidiary obtained a 5% general partnership interest in exchange for its contribution of approximately $126,000 cash to the Partnership and is now the sole manager of the Partnership's business. In connection with the formation of the Partnership, the Company agreed that Mr. Michaels' corporation has the right between January 1, 1999 and January 1, 2000 to put its limited partnership interest to the Partnership's general partner in exchange for 300,000 shares of Common Stock. If the put is not exercised by January 1, 2000, the general partner has the right to call the limited partnership interest prior to 2001 in exchange for 300,000 shares of Common Stock. In addition, if certain events occur prior to January 1, 1999 including without limitation, Mr. Michaels' termination as President of the general partner, a reduction of Mr. Michaels' annual base salary by more than 10%, or generally any transaction by which any person or group other than Zell/Chilmark shall become the owner of more than 30% of the outstanding voting securities of the Company or Zell/Chilmark fails to have its designees constitute at least a majority of the members of the general partner's Board of Directors, then Mr. Michaels' corporation will have the right to either (a) purchase the Company's general partnership interest at a price generally equal to the balance of the partnership capital account, or (b) sell its limited partnership interest to the general partner in exchange for 300,000 shares of Common Stock. The transaction has been accounted for as a purchase, and the Partnership has been included in the condensed consolidated financial statements. 9. INCOME TAXES Income tax expense for the six months ended June 30, 1994 and for the three months ended June 30, 1994 and 1993 is based on the estimated annual effective tax rate inclusive of federal, state and local taxes. The effective income tax rate differs from the expected statutory rate primarily due to the effect of certain state and local taxes and non- deductible goodwill amortization. Income tax benefit for the six months ended June 30, 1993 recognizes the tax benefit of the interim operating loss based on the estimated annual effective tax rate inclusive of federal, state and local taxes. The effective income tax rate differs from the expected statutory rate primarily due to the effect of certain state and local taxes and non- deductible goodwill amortization. 10. CAPITAL STOCK Warrants During the six months ended June 30, 1994, 538 warrants were exercised. Stock Options During the six months ended June 30, 1994, 88,310 options were exercised. In addition, options to purchase 10,000 shares were granted during this same period. The options vest 30% per year for the first two years after issuance and 20% per year for each of the next two years thereafter. The exercise price of the options that vested upon grant is $13.50 per share, and the options that subsequently vest on each anniversary of the grant date have an exercise price 4% greater than the options that vested in the previous year. Once an option vests, the exercise price for that option is fixed for the remaining term of the option. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company began 1994 with no outstanding debt and $28.6 million in cash and cash equivalents. The Company used the net proceeds (approximately $60 million) from the public offering during the fourth quarter of 1993 to repay all of its indebtedness and the remaining net proceeds (in the form of cash and cash equivalents) are available to finance acquisitions of radio groups and/or radio stations and for general corporate purposes. In conjunction with the public offering, the Company also entered into the First Amendment to the Credit Agreement (the "Amended Credit Agreement"). The Amended Credit Agreement provides for a senior secured reducing revolving credit facility with a commitment of $45 million ($43.9 million at June 30, 1994 - see following paragraph) that expires on December 31, 2000 (the "Revolver") and a senior secured acquisition facility with a commitment of $55 million (the "Acquisition Facility") that expires on September 30, 1996. The Amended Credit Agreement contains restrictive covenants, and the indebtedness thereunder is collateralized by liens on substantially all of the assets of the Company and its operating subsidiaries and by a pledge of the operating subsidiaries' stock. The indebtedness under the Amended Credit Agreement is guaranteed by those subsidiaries. Both facilities may be used for acquisitions permitted under conditions set forth in the Amended Credit Agreement. Interest under the Amended Credit Agreement is payable, at the option of the Company, at alternative rates equal to the Eurodollar rate plus 1.25% to 2.25% or the base rate announced by Banque Paribas plus 0.25% to 1.25%. The Amended Credit Agreement requires that the commitment under the Revolver be reduced in the quarter commencing January 1, 1994 (reduced by $1.1 million as of June 30, 1994), and continuing quarterly thereafter. After the Acquisition Facility commitment terminates on September 30, 1996, the Amended Credit Agreement requires 17 equal quarterly amortization payments. The Amended Credit Agreement further requires that, with certain exceptions, the Company prepay the loans and reduce the commitments under the Amended Credit Agreement with excess cash flow and the net proceeds from certain sales of assets and capital stock. The Company entered into an interest rate protection agreement in March 1993 on a notional amount of $22.5 million for a three-year term for a cost of $0.1 million. This agreement provided protection against the rise in the three-month LIBOR interest rate beyond a level of 7.25%. The current three-month LIBOR interest rate is 4.81%. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued LIQUIDITY AND CAPITAL RESOURCES, Continued During the six months ended June 30, 1994, the Company, through its subsidiaries, made acquisitions, loans and capital expenditures of approximately $12.1 million. The Company expects to make acquisitions, loans and capital expenditures in the range of $31.0 million to $36.0 million for the year ended December 31, 1994. The Company has been authorized by its Board of Directors to purchase up to one million shares of its common stock from time- to-time in open-market or negotiated transactions. As of June 30, 1994 the Company had not acquired any shares under this authorization. Management believes that its existing cash balances, cash generated from operations and the availability of borrowings under the Amended Credit Agreement will be sufficient to meet its liquidity and capital needs for the foreseeable future, under existing market conditions. CASH FLOW Cash flows provided (used) by operating activities, inclusive of working capital were $2.8 million and ($2.2) million for the first six months of 1994 and 1993, respectively. The net cash provided of $2.8 million for the first six months of 1994 results primarily from the net income of $2.2 million generated during that period. The use of cash in the first six months of 1993 was primarily due to $2.0 million paid in refinancing fees. Cash flows used by investing activities were ($9.6) million and ($4.5) million for the first six months of 1994 and 1993, respectively, as a result of payments made for acquisitions, loans and capital expenditures. The 1994 amount is net of $2.8 million of payments received on notes and from the sale of assets. Cash flows used by financing activities were ($4.4) million during the first six months of 1993 principally due to the refinancing of the Company's senior debt net of the issuance of additional common stock and the payment of restructuring expenses. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS THE SIX MONTHS ENDED JUNE 30, 1994 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1993 Broadcast revenue for the first six months of 1994 was $55.6 million, an increase of $11.0 million or 24.7% from $44.6 million during the first six months of 1993. This increase resulted from an increase in advertising rates in both local and national advertising, an increase in revenue generated from sports broadcasting and from the revenue generated at those properties owned or operated during the first six months of 1994 but not during the comparable 1993 period. On a "same station" basis - reflecting results from stations operated in the first six months of both 1994 and 1993 - broadcast revenue for the 1994 period was $52.0 million, an increase of $8.1 million or 18.5% from $43.9 million for the 1993 period. Agency commissions for the first six months of 1994 were $5.8 million, an increase of $1.0 million or 21.1% from $4.8 million during the first six months of 1993 due to the increase in broadcast revenue. Agency commissions increased at a lesser rate than broadcast revenue due to a greater proportion of direct sales. Broadcast operating expenses for the first six months of 1994 were $39.4 million, an increase of $6.9 million or 21.1% from $32.5 million during the first six months of 1993. These expenses increased as a result of an increase in broadcast rights' fees for Major League Baseball games, expenses incurred at those properties owned or operated during the first six months of 1994 but not during the comparable 1993 period and, to a lesser extent, increased selling and other payroll costs and programming costs. On a "same station" basis, broadcast operating expenses for the 1994 period were $35.7 million, an increase of $3.8 million or 11.9% from $32.0 million for the 1993 period. Station operating income excluding depreciation and amortization for the six months ended June 30, 1994 was $10.4 million, an increase of $3.2 million or 43.4% from $7.2 million for the six months ended June 30, 1993. On a "same station" basis, station operating income excluding depreciation and amortization for the 1994 period was $10.5 million, an increase of $3.4 million or 48.2% from $7.1 million for the 1993 period. Depreciation and amortization for the first six months of 1994 and 1993 was $4.7 million. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS THE SIX MONTHS ENDED JUNE 30, 1994 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1993, Continued Operating income for the first six months of 1994 was $3.8 million, an increase of $3.0 million or 458.9% from an operating income of $0.8 million during the first six months of 1993. Interest expense for the first six months of 1994 was $0.3 million, a decrease of $1.4 million or 83.4% from $1.7 million during the first six months of 1993. Interest expense declined due to the reduction in outstanding debt. Net income for the first six months of 1994 was $2.4 million, compared to a net loss of $0.3 million reported by the Company for the first six months of 1993. The 1993 period includes a $0.5 million tax benefit recognized on the interim operating loss based on the estimated annual effective tax rate while the 1994 period includes a $1.9 million tax expense. THE THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1993 Broadcast revenue for the second quarter of 1994 was $33.6 million, an increase of $5.9 million or 21.2% from $27.7 million during the second quarter of 1993. This increase resulted from an increase in advertising rates in both local and national advertising, an increase in revenue generated from sports broadcasting and from the revenue generated at those properties owned or operated during the 1994 second quarter but not during the comparable 1993 period. On a "same station" basis - reflecting results from stations operated in the second quarter of both 1994 and 1993 - broadcast revenue for the 1994 period was $31.6 million, an increase of $4.2 million or 15.5% from $27.3 million for the 1993 period. Agency commissions for the second quarter of 1994 were $3.6 million, an increase of $0.6 million or 19.0% from $3.0 million during the second quarter of 1993 due to the increase in broadcast revenue. Agency commissions increased at a lesser rate than broadcast revenue due to a greater proportion of direct sales. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS THE THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1993, Continued Broadcast operating expenses for the second quarter of 1994 were $22.4 million, an increase of $3.6 million or 18.4% from $18.8 million during the second quarter of 1993. These expenses increased as a result of an increase in broadcast rights' fees for Major League Baseball games, expenses incurred at those properties owned or operated during the 1994 second quarter but not during the comparable 1993 period and, to a lesser extent, increased selling and other payroll costs and programming costs. On a "same station" basis, broadcast operating expenses for the 1994 period were $20.0 million, an increase of $1.5 million or 8.1% from $18.5 million for the 1993 period. Station operating income excluding depreciation and amortization for the three months ended June 30, 1994 was $7.8 million, an increase of $1.9 million or 31.3% from the $5.9 million for the three months ended June 30, 1993. On a "same station" basis, station operating income excluding depreciation and amortization for the 1994 period was $8.1 million, an increase of $2.2 million or 38.4% from $5.9 million for the 1993 period. Depreciation and amortization for the second quarter of 1994 and 1993 was $2.5 million and $2.4 million, respectively. Operating income for the second quarter of 1994 was $4.4 million, an increase of $1.8 million or 70.4% from operating income of $2.6 million during the second quarter of 1993. Interest expense for the second quarter of 1994 was $0.1 million, a decrease of $0.5 million or 77.8% from $0.6 million during the second quarter of 1993. Interest expense declined due to the reduction in outstanding debt. Net income for the second quarter of 1994 was $2.4 million, compared to net income of $0.7 million reported by the Company for the second quarter of 1993. The 1993 period includes income tax expense of $1.3 million while the 1994 period includes $2.1 million of income tax expense. The income tax expense for each period is based on the estimated annual effective tax rate. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued RESULTS OF OPERATIONS OTHER Although the Company has significant net operating loss carryforwards for federal and other tax purposes, the Company's ability to use such losses to reduce its taxable income is severely limited because of the Restructuring. Further, as a result of the Restructuring, the net operating loss carryforwards and other tax attributes (including the tax basis in assets) will be reduced or eliminated, except to the extent the Company is permitted to apply the stock for debt exception provided under section 108 of the Internal Revenue Code (the "Code"). As a result of changes to the Code in 1993, the Company will be able to amortize certain of its costs in the purchase of broadcasting assets, particularly goodwill, on a more favorable basis than was previously the case. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The Annual Meeting of Shareholders was held on May 18, 1994. At such meeting the shareholders were asked to vote upon (1) a proposed amendment to the Company's Amended and Restated Articles of Incorporation and (2) a proposed amendment to the Company's Amended and Restated Code of Regulations. The specific matters voted upon and the results of the voting were as follows: (1) The proposal to amend the Company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock of the Company from 40,000,000 to 100,000,000: Shares Voted "FOR" 16,746,936 (85.5%) Shares Voted "AGAINST" 430,536 Shares "ABSTAINING" 2,334 (2) The proposal to amend the Company's Amended and Restated Code of Regulations to increase the maximum allowable number of Directors of the Company from nine (9) to fifteen (15). Shares Voted "FOR" 16,396,041 (85.5%) Shares Voted "AGAINST" 782,159 Shares "ABSTAINING" 1,606 Each proposal received more than the requisite two-thirds approval of the Company's outstanding shares of common stock and was thereby adopted. The amendment to the Company's Amended and Restated Code of Regulations was effective immediately upon shareholder approval. The amendment to the Company's Amended and Restated Articles of Incorporation will be effective upon filing a certificate of amendment with the Ohio Secretary of State. That filing will be made when the Company identifies a specific use for the additional authorized shares. The Company's shareholders also re-elected the eight incumbent Directors of the Company to serve for an additional one year term expiring at the 1995 Annual Meeting of Shareholders. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION, Continued Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Number Description Page 3 Amended and Restated Code of Regulations of the Company (as last amended May 18, 1994) 28 11 Statement re computation of consolidated income (loss) per common share 39 99 Press Release dated July 28, 1994 40 (b) Reports on Form 8-K None SIGNATURES 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. JACOR COMMUNICATIONS, INC. (Registrant) DATED: July 29, 1994 BY /s/ R. Christopher Weber R. Christopher Weber, Senior Vice President and Chief Financial Officer EXHIBIT 3 AMENDED AND RESTATED CODE OF REGULATIONS OF JACOR COMMUNICATIONS, INC. (As last amended May 18, 1994) ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the Shareholders of this corporation shall be held at any time within five months after the close of the fiscal year of the corporation. Section 2. Special Meetings. Special meetings of the Shareholders may be called at any time by the Chairman of the Board, the President, a majority of the Board of Directors acting with or without a meeting, or the holder or holders of ten percent of all shares outstanding and entitled to vote thereat. Calls for special meetings shall specify the time, place and object or objects thereof, and, unless all Shareholders entitled to vote thereat agree otherwise, no business other than that specified in the call therefor shall be considered at any such meeting. Section 3. Place of Meetings. Annual and special meetings of Shareholders shall be held at the principal office of the corporation in the City of Cincinnati, Ohio, or at any other reasonably convenient location, either within or without the State of Ohio, to be designated by the Board of Directors. Section 4. Notice of Meetings. Unless waived, a written notice of each annual or special meeting of the Shareholders, stating the date, the hour, the place, and the purpose or purposes thereof, shall be served upon or mailed to each Shareholder of record entitled to vote at such meetings not more than sixty days nor less than ten days before any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the Shareholder at his address as the same appears on the books of the corporation. All notices with respect to any shares of record in the name of two or more persons may be given to that person who is named first on the books of the corporation, with such notice being effective as to all the holders of record of such shares. Every person who by operation of law, transfer, or otherwise shall become entitled to any share or right or interest therein, shall be bound by every notice with respect to such share which, prior to his name and address being entered upon the books of the corporation as the registered holder of such share, may have been given to the person in whose name such share appeared of record. Section 5. Waiver of Notice. Any Shareholder entitled to notice, either before or after any meeting, may waive any notice required to be given by law or under these Regulations, and whenever all of the Shareholders entitled to vote shall meet in person or by proxy and consent in writing to the holding of a meeting, such meeting shall be valid for all purposes without call or notice, and at such meeting any action may be taken. Section 6. Quorum. The presence, at any Shareholders' meeting, in person or by proxy, of holders of record of a majority of the amount of the authorized, issued, and outstanding stock entitled to vote thereat shall be necessary to constitute a quorum. Section 7. Proxies. Any Shareholder entitled to vote at a meeting of the Shareholders may be represented and voted thereat by proxy, appointed by an instrument in writing, subscribed by the Shareholder, or by his duly authorized attorney, and submitted to the Secretary at or before such meeting. Section 8. Voting. At all meetings of the Shareholders, only such persons shall be entitled to vote as are: (a) Authorized to vote and who appear as Shareholders upon the books of the corporation for ten days prior to such meeting; or (b) Authorized to vote in accordance with the proxy provisions of Article I, Section 7. Section 9. Order of Business. At all Shareholders' meetings, the order of business shall be as follows: (a) Call to order by the President. (b) Presentation of proof of due calling of the meeting, the certificate of the Secretary or the affidavit of the person who mailed the notice being conclusive proof of service in that mode. (c) Execution of any and all waivers of notice. (d) Presentation and examination of proxies. (e) Reading and settlement of the minutes of the previous meeting. (f) Reports of Officers and Committees. (g) If the annual meeting, or a meeting called for that purpose, the election of Directors. (h) Unfinished business. (i) New business. (j) Adjournment. This order may be changed by the affirmative vote of the majority of the Shareholders present. Section 10. Action Without Meeting. Any action which may be taken at any meeting of Shareholders may be taken without a meeting if authorized by a writing signed by all of the holders of shares who would be entitled to notice of a meeting held for such purpose. ARTICLE II BOARD OF DIRECTORS Section 1. Number of Directors. The number of Directors shall be five (5) unless changed as provided in this paragraph. The number of Directors may be increased from time to time by the Board of Directors to a maximum of fifteen (15) and decreased from time to time to a minimum of five (5) without further amendment of these regulations upon the adoption of a resolution offered for that purpose at any regular or special meeting of the Board of Directors pursuant to the vote of a majority of Directors in office at the time of the meeting. In addition, the Board of Directors may, pursuant to the vote of a majority of the Directors in office at the time of the meeting, fill any Director's position that is created by an increase in the number of Directors. No reduction in the number of Directors shall have the effect of removing from office any Director prior to the expiration of his term in office. Section 2. Election of Directors. Except as provided in Article II, Section 1, the election of the Directors shall be held at the annual meeting of the Shareholders, or at a special meeting called for that purpose. At each and every election of Directors, each holder of common shares entitled to vote shall have the right to vote either in person or by proxy the number of common shares owned by him for as many persons as there are Directors to be elected, or, may cumulate his common shares and give one candidate as many votes as are equal to the product of the number of Directors to be elected multiplied by the number of shares of his common stock, or distribute them on the same principle among as many candidates as he thinks fit. Section 3. Term of Office. Except as provided in Article II, Section 1, Directors shall hold office until the next annual Shareholders' meeting succeeding their election and until their successors are elected and qualified. Section 4. Compensation. The Board of Directors, by the affirmative vote of a majority of the Directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all Directors for services to the corporation as Directors, officers, or otherwise, and to establish a fixed sum for expenses of attendance at each meeting, regular or special. Section 5. Vacancies. Any vacancy in the Board of Directors resulting from death, resignation, removal or disqualification, may be filled by a majority vote of the remaining Directors, and each person so elected shall be Director until his successor is elected by the Shareholders. A resignation from the Board of Directors shall be deemed to take effect upon its receipt by the Secretary unless some other time is specified therein. Section 6. Removal. All the Directors, or all the Directors of a particular class, or any individual Director may be removed from office, without assigning any cause, by the vote of the holders of record of two-thirds of the amount of authorized, issued, and outstanding stock which is entitled to elect the Director of that class, provided that no individual Director shall be removed by an amount which would be unable to prevent his election to the Board, pursuant to the cumulative voting rights in Article II, Section 2. Section 7. Meetings. (a) Annual Meetings. An annual meeting of the Directors of this corporation shall be held immediately following the adjournment of each annual Shareholders' meeting if all of the Directors can be duly notified for such meeting. If the annual meeting is not so held, it shall be held at a time within the next thirty days. If held thereafter, however, the validity of such meeting shall not be questioned by reason of the late holding thereof. (b) Special Meetings. Special meetings of the Board of Directors may be called by the President. Upon written request to the President by at least two Directors, the President shall call a meeting at the time requested by said Directors. In all cases, however, not less than seven nor more than thirty days notice of the special meeting must be given to all Directors. (c) Place of Meetings. All meetings of the Board of Directors shall be held at the principal office of the corporation in the City of Cincinnati, Ohio, or at such other reasonably convenient location, either within or without the State of Ohio, as the Board may designate from time to time and as may be specified in the notice thereof. (d) Notice of Meetings. Written notice of an annual or special meeting of the Board of Directors shall be served upon or mailed by registered or certified mail, return receipt requested, to each Director by the Secretary at least seven days prior to such meeting. If mailed, notice is given when deposited in the United States mail, and it shall be addressed to each Director at his respective residence or usual place of business. Every such notice shall state the time and place of the meeting, but need not state the purposes thereof. Notice of any meeting of the Board need not be given to any Director, however, if waived by him in writing, whether before or after such meeting be held, or if he shall be present at such meeting, and any meeting of the Board shall be a valid meeting for all purposes without notice thereof having been given if all Directors shall be present thereat. (e) Quorum. The presence of a majority of all Directors in office at the time of the meeting shall be necessary to constitute a quorum at that meeting. Section 8. Duties and Authority. (a) General Powers. It shall be the duty of the Directors, acting as a Board, to exercise general supervision over the affairs of the corporation, to fix, define, and limit the powers and duties of all officers, to direct and advise all officers, to cause financial reports to be prepared, and to declare dividends and order the same paid at such times as they may determine, and as the net earnings and conditions of the business warrant. All such actions shall require approval of a majority of the Directors then in office. Any business dealing of any nature for which said majority approval is not obtained shall be the individual responsibility of the particular officer or Director, and the corporation, its Shareholders, other officers and/or Directors shall be in no way responsible to the violating officer and/or Director, or to third parties for any liability arising out of that business dealing. When approval of the Board of Directors has been given to a particular transaction or undertaking, the Board of Directors may then delegate to officers, employees, or agents the authority to complete such transaction or undertaking. (b) Inspection of Books. The Board of Directors shall, subject to the laws of the state of incorporation, determine the conditions and regulations under which books and accounts of this corporation, or any of them, shall be open to the inspection of the Shareholders of this corporation. (c) Election of Officers. At the annual meeting of the Board of Directors in each year, and at any special meetings held for that purpose, the Board of Directors shall elect officers of the corporation by a majority vote of the Directors then in office and designate and appoint such subordinate officers and employees as it shall determine. (d) Executive Committee. The Board of Directors, by resolution adopted by a majority of the Directors then in office, may designate three or more Directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the management of the corporation, provided such committee shall not have the authority of the Board of Directors in reference to amending the articles of incorporation, adopting a plan of merger or adopting a plan of consolidation with another corporation or corporations, recommending to the Shareholders the sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all of the property and assets of the corporation if not made in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, amending, altering, or repealing the regulations of the corporation, electing or removing officers of the corporation or members of the executive committee, fixing the compensation of any member of the executive committee, declaring dividends or amending, altering, or repealing any resolution of the Board of Directors which by its terms provides that is shall not be amended, altered, or repealed by the executive committee. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. (e) Other Committees. The Board of Directors, by resolution adopted by a majority of the Directors then in office, may designate other committees consisting of not less than two Directors, except as otherwise required by law. Committees consisting of two Directors will not have the authority of the Board of Directors, but may make recommendations to the Board of Directors and may exercise such powers as shall be conferred or authorized by resolution of the Board. A majority of any such committee may determine its action and fix the time and place of its meetings unless the Board of Directors shall otherwise provide. The Board of Directors, by such affirmative vote, shall have power at any time to change the powers and members of any such committees, to fill vacancies, and to dispose of any such committee. ARTICLE III OFFICERS Section 1. Composition. The officers of this corporation shall be a President, a Secretary, and a Treasurer. The corporation may also have a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers and assistant officers as the Board of Directors may determine. The President and Chairman of the Board shall be chosen from among the members of the Board of Directors. Section 2. Term of Office. The officers shall hold office for the term of one year and until their successors are elected and qualified; provided, however, that the officers elected at the first meeting of the first Board of Directors shall hold office until the next annual election of officers, as provided by these Regulations. Any officer may be removed with or without cause upon the two-thirds vote of the Directors then in office, unless contrary to the terms of an employment contract. A vacancy in any office, however created, shall be filled by the Board of Directors. Any two or more offices may be held by the same person. Section 3. Duties. (a) Chairman of the Board. The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may be prescribed by the Board of Directors. (b) President. The President shall be an active executive officer of the corporation and shall perform such duties as shall be designated from time to time by the Board of Directors. In any event he shall preside at all meetings of the Shareholders and, in the absence of, or if a Chairman of the Board shall not have been elected, shall also preside at meetings of the Board of Directors. He shall have authority to sign all certificates for shares. He shall have authority to sign all deeds, mortgages, bonds, contracts, notes and other instruments requiring his signature if: (i) at the express direction of the Board of Directors and (ii) with the countersignature of the Secretary, or of any other officer expressly authorized to do so. He shall further have all the powers and duties prescribed by the General Corporation Law and such others as the Board of Directors may, from time to time, assign to him. (c) Vice President. The Vice President, if one be elected, shall perform such duties as are conferred upon him by these Regulations, or as may from time to time be assigned to him by the Board of Directors. At the request of the President, or in his absence or disability, the Vice President, designated by the President (or in the absence of such designation, the Vice President designated by the Board), shall perform all the duties of the President, and when so acting, shall have all the powers of the President. The authority of the Vice President to sign in the name of the corporation all certificates for shares and authorized deeds, mortgages, bonds, contracts, notes and other instruments shall be coordinated with like authority of the President. (d) Secretary. The Secretary shall keep the minutes of all proceedings of the Board of Directors and of the Shareholders and make a proper record of the same, which shall be attested by him. He shall give notice of meetings of Shareholders and Directors. He shall keep such books as may be required by the Board of Directors, shall take charge of the seal and stock book of the corporation, and shall issue and attest all certificates of stock. He shall have authority to sign all deeds, mortgages, bonds, contracts, notes and other instruments requiring his signature if: (i) at the express direction of the Board of Directors and (ii) with the countersignature of the President, or of any other officer expressly authorized to do so. He shall further have all the powers and duties prescribed by the General Corporation Law and such others as the Board of Directors may, from time to time, assign to him. (e) Treasurer. The Treasurer shall have the custody of the funds and securities of the corporation which may come into his hands and shall do with the same as may be ordered by the Board of Directors. When necessary or proper, he may endorse for collection on behalf of the corporation checks, notes, and other similar obligations. All corporate funds disbursed shall be by check and must be signed by the President or Treasurer of the corporation. The Treasurer shall deposit the funds of the corporation to its credit in such banks and depositories as the Board of Directors may from time to time designate. He shall submit to the annual meeting of the Shareholders a statement of the financial conditions of the corporation and whenever thereto required by the Board of Directors, shall make and render a statement of his accounts and such other statements as may be required by the Board of Directors. He shall keep in books of the corporation full and accurate accounts of all monies received and paid by him for account of the corporation. He shall perform such other duties as may from time to time be assigned by the Board of Directors to him. (f) Assistant and Subordinate Officers. The Board of Directors may appoint such assistant and subordinate officers as it may deem desirable. Each such officer shall hold office during the pleasure of the Board of Directors and perform such duties as the Board of Directors may prescribe. The Board of Directors may from time to time authorize any officer to appoint and remove subordinate officers, to prescribe their authority and duties, and to fix their compensation. (g) Delegation of Duties. In the absence of any officer of the corporation, or for any other reason the Board of Directors may deem sufficient, the Board may delegate the powers or duties of such officer to any other officer, Director, or other qualified person the Board may select. ARTICLE IV STOCK Section 1. Form. Each certificate for the shares of stock of the corporation shall bear a distinguishing number, the signature of the President and Secretary, and such recitals as may be required by law. The certificates for shares shall be of such tenor and design as the Directors may adopt, and the tenor and design thereof may be changed from time to time by the Board. Section 2. Issuance and Transfer. Certificates evidencing ownership of the shares of stock of the corporation shall be issued to those entitled to them by transfer or otherwise. They shall be issued respectively in numerical order and a full record of books shall be kept for that purpose. No issue or transfer of stock shall be made except on the books of the corporation, under signature of the President, of the Secretary, and of the holder of record of stock, or his agent or attorney, thereunto duly constituted, and no transfer of stock shall be made except upon the production and delivery to the corporation of the certificate of the holder. Upon the return of said certificate of the holder, the Secretary shall cancel it and paste or attach the same to the proper stub in the stock book from which it was originally detached. No certificate of stock shall be transferred so long as the holder thereof, whether legally or equitably, shall be indebted to the corporation, and the corporation shall have a first and paramount lien upon all stock of any holder who may be indebted to the corporation. ARTICLE V SEAL The Board of Directors may, but need not, adopt, use, and thereafter alter, a corporate seal. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES Section 1. Right to Indemnification. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including all appeals by reason of the fact that he is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan, to the fullest extent permissible under applicable law. Section 2. Nonexclusiveness; Heirs. The indemnification provided by this Article shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification as a matter of law or under the Articles of Incorporation, these regulations, any agreement, vote of shareholders or disinterested directors, any insurance purchased by the corporation, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, trustee, officer or employee and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 3. Purchase of Insurance. The corporation may purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any person who is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer or employee of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article. Section 4. Effectiveness. Neither the amendment nor repeal of this Article nor the adoption of any provision of the Articles of Incorporation or these Regulations or of any statute inconsistent with this Article shall eliminate or reduce the effect of this Article in respect of any acts or omissions occurring prior to such amendment, repeal or adoption of an inconsistent provision. ARTICLE VII AMENDMENT This Code of Regulations may be amended or new regulations adopted only upon the written assent of the holders of record of two-thirds of the issued capital stock of the corporation entitled to vote. ARTICLE VIII CONTROL SHARE ACQUISITIONS Section 1701.831 of the Ohio Revised Code does not apply to "control share acquisitions" (as defined therein) of shares of the Company. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES EXHIBIT 11 Computation of Consolidated Income (Loss) Per Common Share for the three months and six months ended June 30, 1994 and 1993
Three Months Ended Six Months Ended June 30 June 30 1994 1993 1994 1993 Income (loss) for primary and fully diluted computation: Income (loss) $2,374,259 $ 735,732 $2,153,816 $ (331,369) Primary (1): Weighted average common shares and all other dilutive securities: Common stock 19,581,945 12,587,436 19,555,281 11,253,673 Stock purchase warrants 755,470 474,665 844,297 (2) Stock options 733,696 686,657 775,513 (2) Contingently issuable common shares 300,000 300,000 21,371,111 13,748,758 21,475,091 11,253,673 Primary income (loss) per common share $ .11 $ .05 $ .10 $ (.03)
[FN] NOTES: 1. Fully diluted earnings per share is not presented since it approximates primary income per share. 2. The effect on primary and fully diluted loss per share of outstanding common stock equivalents was antidilutive. EXHIBIT 99 Contact: Chris Weber 513/621-1300 or Kirk Brewer 312/466-4096 JACOR REPORTS SIGNIFICANT IMPROVEMENTS IN BROADCAST CASH FLOW CINCINNATI, JULY 28 - Jacor Communications, Inc. (NASDAQ: JCOR), owner and operator of radio stations in six U.S. markets, today reported a 43-percent increase in broadcast cash flow during the six months ended June 30, 1994, and a 31-percent increase in broadcast cash flow for the second quarter of 1994. Jacor's broadcast cash flow for the 1994 six-month period rose 43 percent to $10.4 million from $7.2 million in the same six-month period of 1993. Second quarter broadcast cash flow rose 31 percent to $7.8 million in 1994 from $5.9 million in the same quarter of 1993. Net revenues for the six-month period rose 25 percent to $49.8 million from $39.8 million in the 1993 period. Second quarter 1994 net revenues rose 22 percent to $30.0 million from $24.7 million in the 1993 period. On a "same station" basis - reflecting results from stations operated in the first six months of both 1994 and 1993 - Jacor's broadcast cash flow rose 48 percent to $10.5 million for the first six months of 1994 from $7.1 million in the same period last year. Broadcast cash flow on a "same station" basis for the second quarter of 1994 rose 38 percent to $8.1 million from $5.8 million for the second quarter of 1993. The company reported net income of $2.2 million or 10 cents per share, during the first six months of 1994. Results for the same period last year reflected a net loss of $0.3 million, or 3 cents per share. Net income for the second quarter of 1994 was $2.4 million or 11 cents per share, an increase of 222 percent from the net income of $0.7 million or 5 cents per share reported by the Company for the second quarter of 1993. Jacor Communications, Inc., headquartered in Cincinnati, is the nation's ninth largest radio group. The Company plans to pursue growth through continued acquisitions of complementary stations in its existing markets, and radio groups or individual stations with significant presence in the top 25 markets. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three months and six months ended June 30, 1994 and 1993 (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 1994 1993 1994 1993 Broadcast revenue $33,588,971 $27,703,851 $ 55,631,688 $44,602,079 Less agency commissions 3,578,752 3,007,585 5,839,440 4,822,979 Net revenue 30,010,219 24,696,266 49,792,248 39,779,100 Broadcast operating expenses 22,231,623 18,772,175 39,422,894 32,547,752 Broadcast cash flow (1) 7,778,596 5,924,091 10,369,354 7,231,348 Depreciation and amortization 2,487,786 2,442,032 4,715,768 4,686,428 Corporate general and administrative expenses 926,298 920,858 1,808,237 1,707,051 Operating income 4,364,512 2,561,201 3,845,349 837,869 Interest expense (136,928) (617,795) (290,474) (1,746,060) Other income, net 257,675 48,126 510,941 91,622 Income (loss) before income taxes 4,485,259 1,991,532 4,065,816 (816,569) Income tax (expense) benefit (2,111,000) (1,255,800) (1,912,000) 485,200 Net income (loss) $ 2,374,259 $ 735,732 $ 2,153,816 $ (331,369) Net income (loss) per common share $ .11 $ .05 $ .10 $ (.03) Number of common shares used in per share computations 21,371,111 13,748,758 21,475,091 11,253,673
[FN] (1) Operating income before depreciation and amortization and corporate general and administrative expenses. -----END PRIVACY-ENHANCED MESSAGE-----