-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QJDxqo4z/v7MfWn/zllVf2hHN9/cQN4fgMJ/UMZxv8mBXuCvGKuepN0yyiGmsNFo cbbBFj1sYx4k+PadA7pPZg== 0000912057-96-029914.txt : 19961223 0000912057-96-029914.hdr.sgml : 19961223 ACCESSION NUMBER: 0000912057-96-029914 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961009 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961220 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACOR COMMUNICATIONS INC CENTRAL INDEX KEY: 0000702808 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 310978313 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12404 FILM NUMBER: 96684411 BUSINESS ADDRESS: STREET 1: 1300 PNC CENTER STREET 2: 201 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5136211300 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K(A) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report: October 9, 1996 JACOR COMMUNICATIONS, INC. DELAWARE (State or Other Jurisdiction of Incorporation) 0-12404 31-0978313 (Commission File No.) (IRS Employer Identification No.) 50 East RiverCenter Boulevard 12th Floor Covington, Kentucky 41011 (606) 655-2267 Item 2. Acquisition or Disposition of Assets As previously reported, Jacor Communications, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Regent Communications, Inc. ("Regent"). Pursuant to the terms of the Merger Agreement, Regent will merge with and into the Company (the "Merger"). After consummation of the Merger, the radio stations operated by Regent subsidiaries will be operated by indirect subsidiaries of the Company. Regent owns, operates or represents 20 radio stations in five U.S. markets: Kansas City, Salt Lake City, Las Vegas, Louisville and Charleston, S.C. On November 22, 1996, the waiting period with respect to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. On December 1, 1996, a subsidiary of the Company commenced serving as time broker for the Regent stations pursuant to time brokerage agreements. On December 13, the Federal Communications Commission granted its initial approval with respect to the Merger. However, the completion of the Merger remains subject to various other conditions and a definitive closing date has not yet been scheduled. Item 5. Other Events On December 17, 1996, the Company's wholly owned subsidiary, Jacor Communications Company ("JCC") publicly issued $170.0 million in aggregate principal amount of its 9 3/4% Senior Subordinated Notes due 2006. In addition, in December 1996 the Company relocated its principal executive offices to 50 East RiverCenter Boulevard, 12th Floor, Covington, Kentucky 41011, (606) 655-2267. Item 7. Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired. Report of Independent Accountants Financial Statements: Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996. Consolidated Statements of Operations for the years ended December 31, 1994 and 1995 and for the nine month periods ended September 30, 1995 (unaudited) and 1996. Consolidated Statements of Shareholders' Equity for the years ended December 31, 1994 and 1995 and for the nine month period ended September 30, 1996. Consolidated Statements of Cash Flows for the years ended December 31, 1994 and 1995 and the nine month periods ended September 30, 1995 (unaudited) and 1996. Notes to Consolidated Financial Statements. 2 (b) Unaudited Pro Forma Financial Information. Unaudired Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 1995 and the nine month period ended September 30, 1996. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996. Notes to Unaudited Pro Forma Financial Information. Pro Forma Adjustments (c) Exhibits 2.1 Agreement and Plan of Merger dated as of October 8, 1996 ("Merger Agreement") between Jacor Communications, Inc. and Regent Communications, Inc. (omitting schedules and exhibits not deemed material).* 2.2 Form of Warrant Agreement between Jacor Communications, Inc. and KeyCorp Shareholder Services, Inc., as warrant agent (included as Exhibit B to Merger Agreement).* 2.3 Escrow Agreement dated as of October 8, 1996 among Jacor Communications, Inc., Regent Communications, Inc. and PNC Bank, as escrow agent (included as Exhibit H to Merger Agreement).* 2.4 Registration Rights Agreement dated as of October 8, 1996 among Jacor Communications and the parties listed in Schedule I thereto (included as Exhibit I to Merger Agreement).* 23.1 Consent of Coopers & Lybrand L.L.P. 99.1 Press Release dated October 9, 1996.* *Previously filed upon the initial filing of the Form 8-K relating to the Merger dated October 23, 1996. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. JACOR COMMUNICATIONS, INC. December 20, 1996 By: /s/ R. Christopher Weber ------------------------------------- R. Christopher Weber, Senior Vice President and Chief Financial Officer 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors Regent Communications, Inc. We have audited the accompanying consolidated balance sheets of Regent Communications, Inc. and Subsidiaries as of December 31, 1995 and September 30, 1996 and the related consolidated statements of operations, shareholders' equity, and cash flows for the years ended December 31, 1994 and 1995 and for the nine month period ended September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Regent Communications, Inc. and Subsidiaries as of December 31, 1995 and September 30, 1996, and the consolidated results of their operations and their cash flows for the years ended December 31, 1994 and 1995 and for the nine month period ended September 30, 1996, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P Cincinnati, Ohio November 8, 1996 1 REGENT COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS
ASSETS DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------ ------------- Current assets: Cash and cash equivalents $ 2,787,337 $ 1,236,952 Accounts receivable, less allowance for doubtful accounts of $290,800 in 1995 and $474,400 in 1996 5,420,081 6,353,396 Other current assets 252,120 319,213 ----------- ----------- Total current assets 8,459,538 7,909,561 Property and equipment, net 10,156,229 9,709,828 Intangible assets, net 59,565,917 61,597,501 Note receivable 200,000 200,000 ----------- ----------- Total assets $ 78,381,684 $ 79,416,890 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 513,929 $ 2,038,216 Accounts payable 2,122,129 1,440,351 Accrued expenses 2,194,637 3,799,542 ----------- ----------- Total current liabilities 4,830,695 7,278,109 Long-term debt 32,136,071 29,514,284 ----------- ----------- Total liabilities 36,966,766 36,792,393 ----------- ----------- Commitments and contingencies Shareholders' equity: 1993 Series convertible preferred stock, $.01 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding 10,000 10,000 1994 Series convertible preferred stock, $.01 par value: 2,000,000 shares authorized: 1,337,907 shares issued and outstanding 13,379 13,379 1995 Series convertible preferred stock, $.01 par value; 1,500,000 shares authorized; 1,399,554 and 1,436,287 shares issued and outstanding at December 31, 1995 and September 30, 1996, respectively 13,996 14,363 Class A common stock, $.01 par value; 5,000,000 shares authorized; 50,000 shares issued and outstanding 500 500 Class B common stock, $.01 par value; 150,000 shares authorized Additional paid-in capital 47,752,128 48,298,756 Deficit (5,975,085) (5,462,501) Shareholder notes receivable (400,000) (250,000) ----------- ----------- Total shareholders' equity 41,414,918 42,624,497 ----------- ----------- Total liabilities and shareholders' equity $ 78,381,684 $ 79,416,890 ----------- ----------- ----------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 2 REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTH PERIOD ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------- -------------------------- 1995 1994 1995 (UNAUDITED) 1996 ---------- ----------- ----------- ---------- Broadcast revenue $ 8,354,070 $ 19,604,948 $ 12,107,992 $ 26,237,925 Less agency commissions 1,029,153 2,348,183 1,467,379 3,039,514 ---------- ----------- ----------- ---------- Net revenue 7,324,917 17,256,765 10,640,613 23,198,411 Broadcast operating expenses 7,736,618 14,660,414 9,457,652 19,069,612 Depreciation and amortization 1,124,669 3,315,899 1,689,404 4,226,001 Time brokerage agreement termination expense 125,000 Corporate general and administrative expenses 669,849 740,337 481,854 1,176,861 ---------- ----------- ----------- ---------- Operating loss (2,331,219) (1,459,885) (988,297) (1,274,063) Interest expense, net 355,417 1,398,914 856,494 2,273,581 Gain on sale of radio station and format 4,436,915 Other expense (376,687) ---------- ----------- ----------- ---------- (Loss) income before extraordinary item (2,686,636) (2,858,799) (1,844,791) 512,584 Extraordinary loss on early retirement of debt 125,844 227,752 ---------- ----------- ----------- ---------- Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584 ---------- ----------- ----------- ---------- ---------- ----------- ----------- ---------- Loss applicable to common shares: Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584 Preferred stock dividend requirements (826,936) (2,080,997) (1,620,725) (2,507,964) ---------- ----------- ----------- ---------- Loss applicable to common shares $ (3,639,416) $ (5,167,548) $ (3,465,516) $ (1,995,380) ---------- ----------- ----------- ---------- ---------- ----------- ----------- ---------- Loss per common share: Before extraordinary item $ (70.27) $ (98.79) $ (69.31) $ (39.91) Extraordinary item (2.52) (4.56) - - ---------- ----------- ----------- ---------- Loss per common share $ (72.79) $ (103.35) $ (69.31) $ (39.91) ---------- ----------- ----------- ---------- ---------- ----------- ----------- ---------- Number of common shares used in per share calculation 50,000 50,000 50,000 50,000 ---------- ----------- ----------- ---------- ---------- ----------- ----------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 3 REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
1993 SERIES 1994 SERIES 1995 SERIES PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK ------------------- ------------------ ------------------- CLASS A COMMON STOCK SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ------- --------- -------- -------- -------- -------- -------- Balances, December 31, 1993 $ 500 200,000 $ 2,000 Issuance of preferred stock at $10 per share in March and April 1994 800,000 8,000 Issuance of preferred stock at $12.50 per share in August 1994, net of issuance costs of $53,746 606,000 $ 6,060 Issuance of preferred stock at $12.50 per share for a station acquisition 245,907 2,459 Shareholder note receivable Preferred stock subscription at $12.50 per share Net loss ------ --------- ------- -------- -------- ----------- -------- Balances, December 31, 1994 500 1,000,000 10,000 851,907 8,519 Issuance of preferred stock at $12.50 per share for a station acquisition 40,000 400 Issuance of preferred stock at $12.50 per share in May 1995 446,000 4,460 Issuance of preferred stock at $15.00 per share in October 1995, net of issuance costs of $123,408 1,399,554 $ 13,996 Net loss ------ --------- ------- --------- -------- ----------- -------- Balances, December 31, 1995 500 1,000,000 10,000 1,337,907 13,379 1,399,554 13,996 Issuance of preferred stock at $15.00 per share in July 1996, net of stock issuance costs of $4,000 36,733 367 Shareholder note receivable Payments of shareholder notes receivable Net income ------ --------- ------- --------- -------- ----------- -------- Balances, September 30, 1996 $ 500 1,000,000 $10,000 1,337,907 $ 13,379 1,436,287 $ 14,363 ------ --------- ------- --------- -------- ----------- -------- ------ --------- ------- --------- -------- ----------- -------- PREFERRED STOCK SUBSCRIPTION ------------------- SHARE- ADDITIONAL HOLDER PAID-IN NOTES SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL ---------- ----------- ------------ ------------ ------------ ------------ Balances, December 31, 1993 800,000 $ 8,000,000 $ 2,247,500 $ (76,054) $10,173,946 Issuance of preferred stock at $10 per share in March and April 1994 (800,000) (8,000,000) 7,992,000 Issuance of preferred stock at $12.50 per share in August 1994, net of issuance costs of $53,746 7,515,194 7,521,254 Issuance of preferred stock at $12.50 per share for a station acquisition 3,071,388 3,073,847 Shareholder note receivable $(400,000) (400,000) Preferred stock subscription at $12.50 per share 446,000 5,575,000 5,575,000 Net loss (2,812,480) (2,812,480) -------- ----------- ----------- ----------- --------- ----------- Balances, December 31, 1994 446,000 5,575,000 20,826,082 (2,888,534) (400,000) 23,131,567 Issuance of preferred stock at $12.50 per share for a station acquisition 499,600 500,000 Issuance of preferred stock at $12.50 per share in May 1995 (446,000) (5,575,000) 5,570,540 Issuance of preferred stock at $15.00 per share in October 1995, net of issuance costs of $123,408 20,855,906 20,869,902 Net loss (3,086,551) (3,086,551) -------- ----------- ----------- ----------- --------- ----------- Balances, December 31, 1995 - - 47,752,128 (5,975,085) (400,000) 41,414,918 Issuance of preferred stock at $15.00 per share in July 1996, net of stock issuance costs of $4,000 546,628 546,995 Shareholder note receivable (550,000) (550,000) Payments of shareholder notes receivable 700,000 700,000 Net income 512,584 512,584 -------- ----------- ----------- ----------- --------- ----------- Balances, September 30, 1996 - $ - $48,298,756 $(5,462,501) $(250,000) $42,624,497 -------- ----------- ----------- ----------- --------- ----------- -------- ----------- ----------- ----------- --------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 4 REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTH PERIOD ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------- -------------------------- 1995 1994 1995 (UNAUDITED) 1996 ------------ ------------- ----------- ---------- Cash flows from operating activities: Net (loss) income $ (2,812,480) $ (3,086,551) $ (1,844,791) $ 512,584 Adjustments to reconcile net (loss) income to net cash used in operating activities: Extraordinary loss on early retirement of debt 125,844 227,752 Depreciation 292,945 855,601 461,140 805,809 Amortization of intangibles 831,724 2,460,298 1,228,264 3,420,192 Net barter expense (revenue) 30,469 (19,960) (22,869) 7,592 Debt prepayment costs (128,890) Gain on sale of station (4,236,915) Gain on sale of format (200,000) Loss on disposal of assets 4,675 Changes in operating assets and liabilities, net of acquisitions and disposition: Accounts receivable (2,067,146) (2,627,327) (533,395) (870,209) Prepaid expenses and other current assets (106,572) (137,799) (126,745) (67,092) Accounts payable 269,069 1,203,919 (191,235) (791,027) Accrued expenses 785,646 1,037,936 290,476 1,160,587 ------------ ------------- ---------- ---------- Net cash used in operating activities (2,650,501) (215,021) (739,155) (253,804) ------------ ------------- ---------- ---------- Cash flows from investing activities: Cash paid for station acquisitions (26,908,750) (34,537,858) (11,859,555) (11,432,241) Capital expenditures (634,595) (1,016,599) (758,511) (1,364,762) Proceeds from disposal of assets 88,956 11,1442,786 Proceeds from sale of station format 1,000,000 Payments related to change in station format (327,878) ------------ ------------- ---------- ---------- Net cash used in investing activities (27,543,345) (35,465,501) (12,618,066) (682,095) ------------ ------------- ---------- ---------- Cash flows from financing activities: Proceeds from the issuance of preferred stock 15,121,253 26,444,902 16,825,000 296,995 Note receivable (200,000) (200,000) 400,000 Payments on long-term debt (16,451,335) (8,420,121) (2,097,500) Proceeds from the issuance of long-term debt 13,349,749 30,751,586 5,519,206 1,000,000 Other financing costs (269,374) (2,133,116) (278,954) (213,981) ------------ ------------- ---------- ---------- Net cash provided by (used in) financing activities 28,201,628 38,412,037 13,445,131 (614,486) ------------ ------------- ---------- ---------- Net (decrease) increase in cash and cash equivalents (1,992,218) 2,731,515 87,910 (1,550,385) Cash and cash equivalents, beginning of period 2,048,040 55,822 55,822 2,787,337 ------------ ------------- ---------- ---------- Cash and cash equivalents, end of period $ 55,822 $ 2,787,337 $ 143,732 $1,236,952 ------------ ------------- ---------- ---------- ------------ ------------- ---------- ----------
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 5 REGENT COMMUNICATIONS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUBSEQUENT EVENTS: On October 9, 1996 Regent Communications, Inc. (the "Company") and Jacor Communications, Inc., ("Jacor"), entered into a merger agreement by which Jacor will acquire the Company. In exchange for all of the outstanding stock of the Company, Jacor will issue 3.55 million shares of Jacor common stock, warrants to purchase 500,000 shares of Jacor's common stock at an exercise price of $40 per share and assume up to $64 million of the Company's debt, subject to adjustment pursuant to terms of the merger agreement. In the event that the value of Jacor's common stock to be received by the Company's shareholders is less than $116.0 million at Jacor's option: (a) Jacor may make up the difference by the delivery of additional shares of common stock equal to that difference; (b) pay the difference in cash; or (c) pay all of the merger consideration in cash. The Company has also entered into a time brokerage agreement with Jacor such that Jacor will commence operating the Company's stations upon the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In addition, Jacor has committed to provide the Company with a $2,000,000 line of credit, accruing interest at 12% per annum, the proceeds of which shall be used to ensure compliance with the Credit Agreement (see Note 8) while the time brokerage agreement is in effect. The holders of more than a majority of the outstanding shares of the Company's capital stock delivered to the Company irrevocable written consents approving the merger agreement. The closing of the transaction is conditioned on, among other things, receipt of Federal Communications Commission and other regulatory approvals. In connection with the merger agreement, the Company entered into a Limited Consent and Agreement to the Credit Agreement, (the "Consent") whereby the Company's senior lenders approved the merger. Pursuant to the Consent, all of the Company's debt obligations outstanding under the Credit Agreement must be paid in full prior to or concurrent with the consummation of the merger agreement. If the merger agreement terminates for any reason, or if the time brokerage agreement is in effect after October 9, 1997, the Company will be required to prepay the debt outstanding under the Credit Agreement in an amount not less than the greatest of (a) $10,000,000; (b) an amount sufficient when applied to prepay the debt to reduce the Consolidated Total Debt Ratio to not more than 4:0 to 1:0; or (c) the aggregate amount of all payments received by the Company from any person due to the termination of the merger agreement. In October 1996, the Company acquired substantially all of the assets of WVEZ(FM) in Louisville, Kentucky for $12,163,000 in cash. In November 1996, the Company acquired substantially all of the assets of radio station KZHT(FM) in Salt Lake City, Utah for $5,000,000 in cash. The Company also purchased all of the stock of Bountiful Broadcasting, Inc., owner of KURR(FM) in Salt Lake City, Utah, for $6,000,000 in cash. In addition, the Company sold radio stations WHKW(AM) in Louisville, Kentucky and KKDD(AM) in Las Vegas, Nevada for $1,000,000 and $600,000, respectively, in cash. 6 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 2. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS: a. ORGANIZATION: The Company, a Delaware corporation, owns and/or operates radio stations located in Louisville, Kentucky; Las Vegas, Nevada; Kansas City, Missouri; Salt Lake City, Utah; and Charleston, South Carolina. b. BASIS OF PRESENTATION: The accompanying consolidated financial statements include the accounts of Regent Communications, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The consolidated statements of operations and cash flows for the nine month period ended September 30, 1995, included herein, have been prepared by the Company, without audit. The Company believes that the disclosures presented herein with respect to the unaudited period 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. c. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast. d. BARTER TRANSACTIONS: Revenue from barter transactions (advertising provided in exchange for goods and services) is recognized as income when advertisements are broadcast, and merchandise or services received are charged to expense when received or used. If merchandise or services are received prior to the broadcast of the advertising, a liability (deferred barter revenue) is recorded. If advertising is broadcast before the receipt of the goods or services, a receivable is recorded. e. CONSOLIDATED STATEMENTS OF CASH FLOWS: For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. Interest paid for the years ended December 31, 1994 and 1995 and for the nine month periods ended September 30, 1995 and 1996 was $315,814, $1,071,551, $915,960 and $1,899,461, respectively. f. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The credit risk is limited due to the large number of customers comprising the Company's customer base and their dispersion across several different geographic areas of the country. g. PROPERTY AND EQUIPMENT: Property and equipment are stated at cost and depreciated on the straight-line basis over the estimated useful lives of the assets as follows: Land improvements 20 years Buildings 40 years Equipment 4-13 years Furniture and fixtures 10 years Leasehold Improvements Life of Lease 7 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 2. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, CONTINUED: h. INTANGIBLE ASSETS: Intangible assets are stated at cost and amortized on the straight-line basis over the following lives: Broadcast intangibles and goodwill 15 years Other intangibles 5 to 7 years The carrying value of intangible assets is reviewed by the Company when events or circumstances suggest that the recoverability of an asset may be impaired. If this review indicates that goodwill and licenses will not be recoverable, as determined based on the undiscounted cash flows of the entity over the remaining amortization period, the carrying value of the goodwill and licenses will be reduced accordingly. i. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. j. INCOME TAXES: Income taxes are provided based on the asset and liability method of accounting pursuant to Statement of Financial Accounting Standards (SFAS) 109, "Accounting for Income Taxes". Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. k. PER SHARE DATA: Loss per common share for the years ended December 31, 1994 and 1995 and for the nine month periods ended September 30, 1995 and 1996 is based on the weighted average number of common shares outstanding and gives consideration to the dividend requirements of the convertible preferred stock. The Company's common stock options and convertible preferred stock were anti-dilutive and, therefore, were not included in the computation. 3. STATION TRANSACTIONS: In April 1994, the Company acquired substantially all of the assets of radio station WLQT(FM) in Dayton, Ohio for $5,500,000 in cash. In May 1994, the Company acquired substantially all of the assets of radio stations WDJX(FM) and WHKW(AM), each of which is located in Louisville, Kentucky for $5,500,000 in cash. Pursuant to the WDJX(FM) purchase agreement, the Company was assigned a time brokerage agreement with respect to radio station WSJW(FM) in Louisville, Kentucky. 8 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 3. STATION TRANSACTIONS, CONTINUED: In July 1994, the Company entered into an advertising sales agreement with KBGO(FM) located in Las Vegas, Nevada. The advertising sales agreement was changed to a time brokerage agreement during 1996. In August 1994, the Company acquired substantially all of the assets of radio station WDOL(FM) in Dayton, Ohio for $1,500,000 in cash and a $650,000 subordinated promissory note. A time brokerage agreement effective May 1, 1994 with WDOL(FM) was terminated upon completion of the purchase. In August 1994, the Company acquired all of the stock of Wescom Holdings, Inc., owner of radio station KSNE(FM) in Las Vegas, Nevada in exchange for the issuance of 245,907 shares of the 1994 series of convertible preferred stock (see Note 6) valued at approximately $3,073,000 and $2,677,000 in cash. In September 1994, the Company acquired substantially all of the assets of radio station WSFR(FM) in Corydon, Indiana for $2,600,000 in cash. A time brokerage agreement effective May 1, 1994 with WSFR(FM) was terminated upon completion of the purchase. In October 1994, the Company acquired substantially all of the assets of radio stations KFMS(FM) and KKDD(AM) located in Las Vegas, Nevada for $5,750,000 in cash and a $2,000,000 subordinated promissory note. A time brokerage agreement with KFMS(FM) and KKDD(AM) effective July 1, 1994 was terminated upon completion of the purchase. In January 1995, the Company purchased substantially all of the assets of radio station WFIA(AM) in Louisville, Kentucky for $500,000. The consideration for this purchase was 40,000 shares of the 1994 series convertible preferred stock. In October 1995, the Company acquired radio stations KUDL(FM) and KMXV(FM) in Kansas City, Missouri and KALL(AM), KODJ(FM) and KKAT(FM) in Salt Lake City, Utah for $33,950,000 in cash and a $5,000,000 subordinated seller note. The Company also entered into an advertising sales agreement with KBKK(FM) in Salt Lake City, Utah. In April 1996, the Company sold substantially all of the assets (excluding cash and accounts receivable) of WLQT(FM) and WDOL(FM) in Dayton, Ohio for $12,000,000 in cash. In April 1996, the Company acquired radio stations WEZL(FM) and WXLY(FM) in Charleston, South Carolina for $11,050,000 in cash. All of the above acquisitions have been accounted for as purchases. The excess cost over the fair value of net assets acquired is being amortized over 15 years. The results of operations of the acquired businesses are included in the Company's financial statements since the respective dates of acquisition. Assuming each of the 1995 and 1996 acquisitions and 1996 disposition had taken place at the beginning of 1995, unaudited pro forma consolidated results of operations would have been as follows: 9 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 3. STATION TRANSACTIONS, CONTINUED: NINE MONTH YEAR ENDED PERIOD ENDED DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------- --------------- Net broadcasting revenue $ 27,720,848 $ 23,309,275 Net loss (4,976,017) (3,669,547) Net loss per share (166.32) (123.55) During May 1996, the Company sold the intellectual assets of WHKW(FM) in Louisville, Kentucky for $1,000,000 in cash. In July 1996, the Company entered into an agreement to purchase all of the outstanding stock of Southwest Radio Las Vegas, Inc., owner of KWNR(FM) in Las Vegas, Nevada, for $9,000,000 in cash and 480,000 shares of a new series of convertible preferred stock. Pursuant to the merger agreement with Jacor, the Company assigned all of its rights under this agreement to Jacor. 4. PROPERTY AND EQUIPMENT: Property and equipment consist of the following: DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------- --------------- Land and land improvements $ 380,993 $ 783,342 Buildings 112,215 423,285 Equipment 9,981,902 7,997,251 Furniture and fixtures 388,460 848,562 Leasehold improvements 436,441 1,224,826 ------------- ------------ 11,300,011 11,277,266 Less accumulated depreciation (1,143,782) (1,567,438) ------------- ------------ $ 10,156,229 $ 9,709,828 ------------- ------------ ------------- ------------ 10 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 5. INTANGIBLE ASSETS: Intangible assets consist of the following: DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------- --------------- Broadcast intangibles and goodwill $ 60,423,164 $ 64,821,432 Other 2,409,266 2,602,405 ------------- ------------ 62,832,430 67,423,837 Less accumulated amortization (3,266,513) (5,826,336) ------------- ------------ $ 59,565,917 $ 61,597,501 ------------- ------------ ------------- ------------ 6. CAPITAL STOCK: The Company's Amended Certificate of Incorporation authorizes 5,000,000 shares of the Company's Class A common stock, 150,000 shares of Class B common stock, 4,500,000 shares of preferred stock and designates 1,500,000 shares as the 1995 Series Convertible Preferred Stock ("1995 Series"), 2,000,000 shares as the 1994 Series Convertible Preferred Stock ("1994 Series") and 1,000,000 shares as the 1993 Series Convertible Preferred Stock ("1993 Series"). The preferred shares have the same voting rights as common stock and may be converted into one share of Class A common stock. The 1993 Series, 1994 Series, and 1995 Series have equal rights for the payment of dividends and the distribution of assets and rights upon liquidation, dissolution or winding up of the Company. The stated value of the 1993 Series, 1994 Series, and 1995 Series is $10 per share, $12.50 per share and $15 per share, respectively. Upon any liquidation of the Company, no distribution shall be made (a) to the holders of stock ranking junior to the convertible preferred stock unless the holders of the convertible preferred stock have received the stated value per share, plus an amount equal to all unpaid dividends or (b) to the holders of stock ranking on a parity with the convertible preferred stock, except distributions made ratably on the convertible preferred and all other such parity stock. Dividends accrue on the 1993 Series, 1994 Series, and 1995 Series at a cumulative annual rate of $.70, $.875, and $1.05 per share, respectively. Undeclared dividends in arrears amounted to $2,933,750 at December 31, 1995 and $5,450,000 at September 30, 1996. The Company may redeem the convertible preferred stock at the stated value, plus an amount equal to all unpaid dividends to the date of redemption, whether or not declared. 11 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 6. CAPITAL STOCK, CONTINUED: During 1995, the Company adopted the Regent Communications, Inc. 1995 Employee Stock Option Plan ("Plan"). Under the Plan, options to acquire up to 200,000 shares of Class A common stock can be granted to officers and key employees at no less than the fair market value of the stock on the date of grant. The Plan permits the granting of non-qualified stock options as well as incentive stock options. Options are exercisable in five equal annual installments commencing on the second anniversary of the date of grant. The Plan will terminate no later than September 19, 2004. Information pertaining to the Plan for the year ended December 31, 1995 and the nine month period ended September 30, 1996 is as follows: NUMBER OF SHARES OPTION PRICE --------- ------------ 1995: Outstanding at beginning of year - Granted 59,500 $ 10 Exercised - Surrendered (8,000) Outstanding at end of year 51,500 $ 10 Exercisable at end of year - Available for grant at end of year 148,500 1996: Outstanding at beginning of year 51,500 $ 10 Granted 61,000 $ 15 Exercised - Surrendered 20,000 $ 10 -15 Outstanding at end of year 92,500 $ 10 -15 Exercisable at end of year - Available for grant at September 30, 1996 107,500 In 1995, a key employee of the Company was granted options to purchase 100,000 shares of Class A stock at a price of $15 per share. Options vest in five equal annual installments and the full grant may be exercised five years after the date of grant. Options to purchase 50,000 shares of Class A common stock at $10 per share any time after September 1, 1996 and before September 1, 1999 and options to purchase 50,000 shares of Class B stock at $.011 per share on October 1, 2003 have been granted to the Company's president. If certain performance criteria are met, the options to purchase Class B shares may be exercised in 1997. 12 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 7. INCOME TAXES: The Company recorded no income tax expense or benefit for the years ended December 31, 1994 and 1995 and for the nine month periods ended September 30, 1995 and September 30, 1996. The provisions for income tax differs from the amount computed by applying the statutory federal income tax rate due to the following: NINE MONTH YEAR ENDED YEAR ENDED PERIOD ENDED DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1994 1995 1996 ------------ ------------ ------------- Federal income taxes benefit (expense) at the statutory rate $ 984,368 $ 1,080,293 $ (179,404) Amortization not deductible (33,776) (108,484) (80,213) Other (12,243) (18,256) (13,951) Change in valuation allowance (938,349) (953,553) 273,568 ------------ ------------ ------------- $ 0 $ 0 $ 0 ------------ ------------ ------------- ------------ ------------ ------------- Components of the Company's deferred tax assets and liabilities are as follows: DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------ ------------- Deferred tax assets: Net operating loss carryforward $ 2,065,000 $ 3,045,000 Intangible assets 77,237 111,670 Allowance for doubtful accounts 101,782 166,038 Other 76,333 ------------ ------------- 2,244,019 3,399,041 Deferred tax liabilities: Property and equipment 235,672 1,744,747 Other 89,857 9,372 ------------ ------------- 325,529 1,754,119 Valuation allowance (1,918,490) (1,644,922) ------------ ------------- Net $ 0 $ O ------------ ------------- ------------ ------------- 13 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 7. INCOME TAXES, CONTINUED: The Company has cumulative tax loss carryforwards of approximately $5,900,000 and $8,700,000 at December 31, 1995 and September 30, 1996, respectively. The loss carryforwards will expire in the years 2008 through 2011. 8. LONG-TERM DEBT: Long-term debt consists of the following: DECEMBER 31, SEPTEMBER 30, 1995 1996 ------------ ------------- Variable rate Term Loan (7.875% and 8.117% at December 31, 1995 and September 30, 1996, respectively) $ 25,000,000 $ 24,000,000 7.5% Seller Note 650,000 552,500 Variable rate Subordinated Seller Note 2,000,000 2,000,000 11.0% Subordinated Seller Note 5,000,000 5,000,000 ------------ ------------- 32,650,000 31,552,500 Less current maturities (513,929) (2,038,216) ------------ ------------- Total long-term debt $ 32,136,071 $ 29,514,284 ------------ ------------- ------------ ------------- Future maturities of long-term debt at September 30, 1996 are as follows: 1996 (three months) $ 403,929 1997 2,455,716 1998 3,585,716 1999 4,635,716 2000 10,871,423 Thereafter 9,600,000 14 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 8. LONG-TERM DEBT, CONTINUED: On October 25, 1995, the Company entered into a $65,000,000 credit agreement, subsequently amended (the "Credit Agreement"), comprised of a $25,000,000 Term Loan and a $40,000,000 Revolving Loan Commitment. The Company made a $1,000,000 prepayment of the Term Loan in May 1996 and is required to make quarterly payments of $300,000 on the Term Loan beginning December 31, 1996 that increase quarterly beginning December 31, 1997 through September 30, 2002. The Revolving Loan Commitment will be reduced on December 31, 1996 by $62,500 and will be reduced by increasing quarterly amounts thereafter through September 30, 2002. Loans under the Credit Agreement bear interest at the option of the Company at a rate equal to either (i) a base rate, defined as the higher of US prime rate and the overnight Federal Funds rate plus 1/2 of 1% per annum, plus the applicable margin (as defined below) or (ii) the adjusted London interbank offered rate ("LIBOR") plus the applicable margin. Applicable margin means a percentage per annum determined by reference to the consolidated total debt ratio, ranging from 3/4% to 2.00% for base rate advances and from 1.75% to 3.00% for LIBOR rate advances. The applicable margin for the Credit Agreement is adjusted each quarter to the extent required. At December 31, 1995 and September 30, 1996, the applicable margin was 2.00% and 2.25%, respectively, for the Company's LIBOR rate advance. The Company is required to pay commitment fees equal to 1/2% per annum on the aggregate unused portion of the aggregate commitment on the Term Loan and the Revolving Loan Commitment. The Company may prepay the Credit Agreement at any time without premium or penalty. Indebtedness under the Credit Agreement 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 Credit Agreement contains restrictions pertaining to, among other things, the maintenance of certain financial ratios, capital expenditures, payment of dividends and incurrence of additional indebtedness. Restrictions pertaining to financial ratios include maintenance of total debt (as defined) to adjusted operating cash flow (as defined) less than 6.00 to 1 for the quarter ended September 30, 1996. Such ratio will be reduced to 4.5 to 1 at December 31, 1997 and 3.5 to 1 beginning September 30, 1998 and thereafter. In connection with the Credit Agreement, the Company recorded an extraordinary loss on the early retirement of debt in the amount of $227,752 for the year ended December 31, 1995. The Company entered into an interest rate protection agreement as required by the Credit Agreement on the notional amount of $25,000,000 for a three year period ending October 30, 1998. This agreement provides protection against the rise in the LIBOR rate beyond a level of 7%. The agreement requires the Company to make quarterly payments of $18,631 which are recognized as a component of interest expense. 15 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 8. LONG-TERM DEBT, CONTINUED: In 1995, in connection with the acquisition of stations, the Company issued to the seller a subordinated promissory note for $5,000,000. The note bears interest at a fixed rate of 11% and requires annual payments of principal and interest beginning no earlier than March 31, 1997, subject to borrowing availability under the Credit Agreement. A key employee of the Company holds a 5% interest in the note. In 1994, in connection with a station acquisition, the company issued to the seller a subordinated promissory note, as amended, for $650,000. The note bears interest at a fixed rate of 7.5% and requires quarterly interest payments until February 28, 1997. Quarterly principal payments of $32,500 began on February 1, 1996, with the final principal payment due February 28, 1997. In 1994, in connection with a station acquisition, the Company issued to the seller a subordinated promissory note for $2,000,000. The note bears interest at the prime rate plus 2%, however, the rate will not be less than 8% nor more than 10.5%. Principal payments are due in quarterly installments of $71,428 beginning November 1996 until December 31, 2000, at which time all outstanding principal is due and payable. Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair values of the Company's long-term debt and interest rate protection agreement approximate current carrying value. 9. EMPLOYMENT AGREEMENTS: The Company has employment agreements with its president and its chief operating officer, which provide, among other things, base salary and an incentive cash bonus determined at the discretion of the board of directors. In the event employment of the president is terminated prior to expiration of this agreement, all shares of the Company common stock held by the president shall be repurchased by the Company at fair market value. 10. EMPLOYEE BENEFIT PLAN: During 1994, the Company adopted a 401 (k) plan which covers all eligible employees. The Company may make a matching contribution in any year at the discretion of the board of directors. Company contributions to the plan were $6,205 and $34,655 for the years ended December 31, 1994 and 1995 and $26,590 and $58,300 for the nine month periods ended September 30, 1995 and September 30, 1996, respectively. 16 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 11. RELATED PARTY TRANSACTIONS: A director of the Company is associated with a private investment firm that rendered financial advisory services in connection with the Credit Facility and the 1995 Series offering. For such services, the company paid $266,665 in cash and issued 8,889 shares of the 1995 Series of preferred stock. In August 1994, the Company received a promissory note for $400,000 from the Company's president for the purchase of 32,000 shares of the 1994 Series of preferred stock. The note bears interest at the prime rate and was paid in full during 1996. The Company incurred fees in connection with the organization of the Company and subsequent stock offerings for services provided by a private investment firm owned by two of the Company's directors. Total fees for these services were $20,000 in 1994. The firm also provided financial advisory services to the Company for $40,000 per year in 1994 and 1995 and $30,000 for the nine month periods ended September 30, 1995 and 1996. 12. COMMITMENTS AND CONTINGENCIES: The Company and its subsidiaries lease certain land and facilities used in their operations. Future minimum rentals under all noncancelable operating leases as of September 30, 1996 are payable as follows: 1996 (three months) $ 224,261 1997 953,594 1998 776,427 1999 628,209 2000 583,566 Thereafter 2,370,636 Rental expense was approximately $837,000 and $1,039,000 for the years ended December 31, 1994 and 1995 and $692,000 and $1,341,000 for the nine month periods ended September 30, 1995 and 1996, respectively, including payments under time brokerage agreements and joint sales agreements. 17 NOTES TO FINANCIAL STATEMENTS, CONTINUED: 13. BARTER TRANSACTIONS: For the years ended December 31, 1994 and 1995 and for the nine month periods ended September 30, 1995 and 1996, barter revenue was approximately $537,000, $1,150,000, $761,000 and $897,000, respectively and barter expense was approximately $567,000 $1,131,000, $738,000 and $905,000, respectively. Included in accounts receivable and accounts payable in the consolidated balance sheet at December 31, 1995 and September 30, 1996 are barter accounts receivable (merchandise or services due the Company) of approximately $413,000 and $476,000 and barter accounts payable (air time due supplier of merchandise or service) of approximately $419,000 and $529,000, respectively. 18 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET as of September 30, 1996 (in thousands)
Jacor/Noble/ (1) (1) Citicasters/Gannett Regent Acquisition Total Combined Regent Proforma Proforma Combined Pro Forma Historical Adjustments Adjustments Pro Forma --------- ---------- ----------- ----------- --------- ASSETS Current assets: Cash and cash equivalents $52,821 $1,237 - - $54,058 Accounts receivable 70,782 6,353 350 - 77,485 Other current assets 12,897 319 (10) - 13,206 ----------- -------- -------- --------- ----------- Total current assets 136,500 7,909 340 - 144,749 Property and equipment, net 130,758 9,710 1,275 - 141,743 Intangible assets, net 1,351,931 61,597 34,145 108,262 1,555,935 Other assets 98,032 200 - - 98,232 ----------- -------- -------- --------- ----------- $1,717,221 $79,416 $35,760 $108,262 $1,940,659 ----------- -------- -------- --------- ----------- ----------- -------- -------- --------- ----------- LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable, accrued expenses and other current liabilities $51,898 $7,278 $530 - $59,706 ----------- -------- -------- --------- ----------- Total Current Liabilities 51,898 7,278 530 - 59,706 Long-term debt debt 626,250 29,514 34,486 19,484 709,734 5.5% Liquid Yield Option Notes 117,090 117,090 Deferred taxes and other liabilities 393,728 - - 30,630 424,358 ----------- -------- -------- --------- ----------- TOTAL LIABILITIES 1,188,966 36,792 35,016 50,114 1,310,888 Shareholders' equity: Common stock, $.01 par value including Additional paid-in capital 430,619 48,087 - 48,429 527,135 Common stock warrants 72,644 - - 5,000(2) 77,644 Retained earnings 24,992 (5,463) 744 4,719 24,992 ----------- -------- -------- --------- ----------- TOTAL SHAREHOLDER'S EQUITY 528,255 42,624 744 58,148 629,771 ----------- -------- -------- --------- ----------- $1,717,221 $79,416 $35,760 $108,262 $1,940,659 ----------- -------- -------- --------- ----------- ----------- -------- -------- --------- -----------
See accompanying notes to unaudited proforma condensed consolidated financial statements. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year ended December 31, 1995 (in thousands , except per share data)
Jacor/Noble/ (3) Citicasters/Gannett Regent Acquisition Total Combined Regent Proforma Proforma Combined Pro Forma Historical Adjustments Adjustments Pro Forma --------- ---------- ----------- ----------- --------- Net revenue $306,769 $17,257 $19,171 - $343,197 Broadcast operating expenses 203,247 14,660 13,020 - 230,927 Depreciation and amortization 46,053 3,316 4,278 (1,675)(4) 51,972 Corporate general and administrative expenses 6,655 740 563 (1,303)(5) 6,655 --------- -------- -------- ------- --------- Operating income 50,814 (1,459) 1,310 2,978 53,643 Interest expense (60,438) (1,399) (3,743) (1,328)(6) (66,908) Interest and investment income 870 - - - 870 Other income (expense), net (762) - - - (762) --------- -------- -------- ------- --------- Income (loss) before Income taxes and extraordinary items (9,516) (2,858) (2,433) 1,650 (13,157) Income tax (expense) credit (1,796) - - 1,150(7) (646) --------- -------- -------- ------- --------- Income (loss) before extraordinary items ($11,312) ($2,858) ($2,433) $2,800 ($13,803) --------- -------- -------- ------- --------- --------- -------- -------- ------- --------- Income per common share ($0.38) ($0.41) Number of common shares used in per share computations 30,158 33,708(8)
See accompanying notes to unaudited proforma condensed consolidated financial statements. JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Nine months ended September 30, 1996 (in thousands, except per share data)
Jacor/Noble/ (3) Citicasters/Gannett Regent Acquisition Total Combined Regent Proforma Proforma Combined Pro Forma Historical Adjustments Adjustments Pro Forma --------- ---------- ----------- ----------- --------- Net revenue $242,599 $23,198 $6,315 - $272,112 Broadcast operating expenses 167,432 19,069 4,054 - 190,555 Depreciation and amortization 34,648 4,226 1,483 (1,256)(4) 39,101 Corporate general and administrative expenses 5,559 1,177 - (1,177)(5) 5,559 -------- ------- -------- ------- -------- Operating income 34,960 (1,274) 778 2,433 36,897 Interest expense (44,845) (2,274) (1,582) (996)(6) (49,697) Interest and investment income 2,539 - - - 2,539 Other income (expense), net 348 4,060 (4,237) - 171 -------- ------- -------- ------- -------- Income (loss) before Income taxes and extraordinary items (6,998) 512 (5,041) 1,437 (10,090) Income tax (expense) credit 1,320 - - 1,000(7) 2,320 -------- ------- -------- ------- -------- Income (loss) before extraordinary items ($5,678) $512 ($5,041) $2,437 ($7,770) -------- ------- -------- ------- -------- -------- ------- -------- ------- -------- Income per common share ($0.23) ($0.27) Number of common shares used in per share computations 24,880 28,430(8)
See accompanying notes to unaudited proforma condensed consolidated financial statements. NOTES TO UNAUDITED PROFORMA FINANCIAL INFORMATION The unaudited pro forma financial information (the Pro Forma Financial information) is based on the historical financial statements of Jacor, Noble, Citicasters, selected Gannett Radio stations and Tampa television divestiture ("Gannett Swap Transaction") and Regent and has been prepared to illustrate the effects of the Regent Communications acquisition. Jacor completed the Noble, Citicasters and the Gannett Swap Transaction in 1996 and previously filed pro forma financial information related to those transactions. (1) The adjustments to record the allocation of the purchase price of Regent to the estimated fair value of the assets acquired and the liabilities assumed and the recording of goodwill associated with the acquisition as if it occurred on September 30, 1996 are as follows: Property and equipment $10,985 Contracts broadcasting licenses and other intangibles 204,004 Cash 1,237 Deferred charges and other assets 7,212 Long term debt issuance ($19,484) Long term debt assumed (64,000) 3.55 million shares of common stock issued (96,516) Common stock warrants (5,000) Deferred taxes (30,630) Other liabilities (7,808) 2) Adjustment represents the value assigned to the warrants to be issued to Regent shareholders in connection with the acquisition. The warrants will be exercisable for 500,000 shares of common stock at an exercise price of $40 per full share. 3) Reflects the 1995 and 1996 purchases and dispositions of radio properties by Regent as if they had occurred on January 1, 1995. 4) Represents the adjustment to amortization to reflect the amortization of intangibles related to the Regent acquisition over 40 years. 5) Represents the elimination of Regent corporate overhead for redundant costs. 6) Represents the adjustment to interest expense associated with the borrowings under a bank credit facility nessecary to complete the acquisition of Regent using an assumed rate of 8%. (7) To provide for the tax effect of pro forma adjustments using an estimated statutory rate of 40%. The acquisition pro forma adjustments include non- deductible amortization of goodwill. (8) Reflects the additional shares of Jacor common stock issued in the acquisition. PROFORMA ADJUSTMENTS 12/31/95 PURCHASE PRICE Purchase price 185,000 Debt assumed (64,000) 3.55 million shares @ 27 3/16 (96,516) Options (5,000) Shortfall in stock price (19,484) --------- 0 AMORTIZATION AND DEPRECIATION EXPENSE: PURCHASE PRICE ALLOCATION: Purchase price 185,000 PP&E purchased (10,985) Working capital purchased (641) --------- 173,374 Book value of intangibles (85,860) --------- 87,514 @35% 30,630 Total Intangibles 204,004 12/95 @40 years 5,100 Depreciation per Regent 819 --------- 5,919 09/95 @40 years 3,825 Depreciation per Regent 270 --------- 4,095 INTEREST EXPENSE 12/95 64 million @ 8% 5,120 19.5 million @ 8% 1,559 less committment fee 84.5 million @ 1/4% (209) --------- 6,470 09/96 64 million @ 8% 3,840 19.5 million @ 8% 1,169 less committment fee 0 84.5 million @ 1/4% (157) --------- 4,852 - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- PROFORMA TAX EFFECT - 12/31/95: Pretax earnings - acquisition adjustments 1,650 (2,433) (2,858) 30,630 / 40 yrs 766 --------- (2,875) @40% (1,150) 09/96 Pretax earnings - acquisition adjustments 1,437 (5,041) 512 30,630 / 40 yrs 574 --------- (2,517) @40% (1,007) EX-23.1 2 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Jacor Communications, Inc. on Form S-8 (File No. 33-65126, File No. 33-10329 and File No. 33-56385) and on Forms S-3 (File No. 33-53612 and File No. 333-06639) of our report dated November 8, 1996, on our audits of the consolidated financial statements of Regent Communications, Inc. as of December 31, 1995 and September 30, 1996 and for the years ended December 31, 1994 and 1995 and for the nine month period ended September 30, 1996, which report is included in this Current Report on Form 8-K. COOPERS & LYBRAND L.L.P. Cincinnati, Ohio December 19, 1996 -----END PRIVACY-ENHANCED MESSAGE-----