-----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, TNsQQSivbjDDUtp66A0usi2O0df3ZO4sVXc96aIbxzlCKKYq0YOu7sGTWzLXsqu9 alXABTUAhDMIrVSszFyePw== 0000739708-96-000009.txt : 19960517 0000739708-96-000009.hdr.sgml : 19960517 ACCESSION NUMBER: 0000739708-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAR CHANNEL COMMUNICATIONS INC CENTRAL INDEX KEY: 0000739708 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 741787539 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09645 FILM NUMBER: 96566669 BUSINESS ADDRESS: STREET 1: 200 CONCORD PLAZA STREET 2: SUITE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 BUSINESS PHONE: 2108222828 MAIL ADDRESS: STREET 2: 200 CONCORD PLAZA SUITE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1996 Commission file number 1-9645 CLEAR CHANNEL COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Texas 200 Concord Plaza, Suite 600 (State of Incorporation) San Antonio, Texas 78216-6940 (210) 822-2828 74-1787539 (Address and telephone number (I.R.S. Employer of principal executive offices) Identification No.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __x__ No _____ Indicate the number of shares outstanding of each class of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 2, 1996 - ---------------------------- --------------------------- Common Stock, $.10 par value 34,592,012 CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES INDEX Page No. -------- Part I Financial Information Item 1. Unaudited Financial Statements Consolidated Balance Sheets at March 31, 1996 and December 31, 1995 3 Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995 6 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 7 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II Other Information Item 6. Exhibits and reports on Form 8-K 11 (a) Exhibits (b) Reports on Form 8-K Signatures 12 Index to Exhibits 13 CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 (Unaudited) (*) Current Assets Cash and cash equivalents $12,006,072 $5,391,104 Accounts receivable, less allowance of $4,664,527 in 1996 and $3,809,529 in 1995 45,325,220 52,920,450 Film rights - current 11,339,550 12,173,527 __________ __________ Total Current Assets 68,670,842 70,485,081 Property, Plant and Equipment Land 8,234,746 7,821,899 Buildings 17,215,536 17,068,026 Transmitter and studio equipment 112,545,653 109,517,279 Furniture and other equipment 14,864,445 13,996,987 Leasehold improvements 4,688,670 4,560,289 Construction in progress 7,662,040 5,079,864 __________ __________ 165,211,090 158,044,344 Less accumulated depreciation 62,224,139 58,159,152 __________ ___________ 102,986,951 99,885,192 Intangible Assets Leases 1,455,000 1,455,000 Network affiliation agreements 23,422,904 23,422,904 Licenses and goodwill 322,681,868 286,406,955 Covenants not-to-compete 22,971,932 22,871,932 Other intangible assets 4,522,082 4,361,987 __________ ___________ 375,053,786 338,518,778 Less accumulated amortization 56,861,604 52,192,327 __________ ___________ 318,192,182 286,326,451 Other Film rights 13,641,420 15,968,502 Equity investments in, and advances to, nonconsolidated affiliates 81,710,876 81,911,343 Other assets 8,381,403 7,021,531 Other investments 1,394,794 1,412,704 ___________ _________ Total Assets $594,978,468 $563,010,804 =========== =========== * From audited financial statements CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, December 31, 1996 1995 (Unaudited) (*) ---------- ---------- Current Liabilities Accounts payable $ 6,185,729 $ 5,314,716 Accrued interest 1,541,619 508,271 Accrued expenses 5,021,847 7,760,002 Accrued income and other taxes 3,025,073 5,906,580 Current portion of long-term debt 3,405,757 3,406,297 Current portion of film rights liability 11,868,064 13,109,024 ____________ ___________ Total Current Liabilities 31,048,089 36,004,890 Long-Term Debt 366,568,506 334,163,729 Film Rights Liability 15,089,939 17,143,812 Deferred Income Taxes 5,552,835 5,552,835 Minority Interests 6,447,148 6,432,903 Shareholders' Equity Common Stock 3,460,544 3,459,269 Additional paid-in capital 91,488,823 91,433,138 Retained earnings 74,597,520 68,359,190 Other 896,062 632,036 Cost of shares held in treasury (170,998) (170,998) ___________ ___________ Total Shareholders Equity 170,271,951 163,712,635 ___________ ___________ Total Liabilities and Shareholders equity $594,978,468 $563,010,804 =========== =========== * From audited financial statements See Notes to Consolidated Financial Statements CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED Three Months Ended March 31, -------------------- 1996 1995 ---- ---- Gross broadcasting revenue $70,139,925 $ 58,646,216 Less agency commissions (7,931,480) (6,788,524) Net broadcasting revenue 62,208,445 51,857,692 Station operating expenses 38,230,252 33,181,977 Depreciation and amortization 8,755,025 8,399,455 __________ __________ Station operating income 15,223,168 10,276,260 Corporate general and administrative expenses 1,673,571 1,530,324 __________ __________ Operating income 13,549,597 8,745,936 Interest expense (5,423,837) (4,447,973) Other income 205,815 258,580 Equity in net income of, and other income from, nonconsolidated affiliates 875,070 -- __________ __________ Income before income taxes 9,206,645 4,556,543 Income taxes 2,968,316 1,877,377 __________ __________ Net income $ 6,238,329 $ 2,679,166 ========== ========== Net income per common share $ .18 $ .08 ========== ========== Weighted average common shares and common share equivalents outstanding 35,204,642 35,039,024 ========== ========== See Notes to Consolidated Financial Statements CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, ----------------------- 1996 1995 ---- ---- Net Cash From Operating Activities $20,097,965 $14,047,201 Cash flows from investing activities: Decrease in restricted cash -- 38,500,000 Purchase of broadcasting assets (41,050,000) (65,300,000) Proceeds from disposal of broadcasting assets 2,100 365,950 Decrease in equity investments in and advances to nonconsolidated affiliates-net 464,493 -- Decrease in other investments 17,910 4,367,606 Purchases of property, plant and equipment (3,872,976) (908,274) Proceeds from disposals of property, plant and equipment -- (Increase) in other intangible assets (160,095) (164,296) (Increase) in other-net (1,345,627) (133,358) ___________ ____________ Net cash (used in) investing activities (45,944,195) (23,272,372) Cash flows from financing activities: Proceeds of long-term debt 37,500,000 26,800,000 Payments on long-term debt (5,000,000) (13,900,000) Payments of current maturities (95,763) (90,931) Exercise of stock options 56,961 74,792 ___________ ___________ Net cash provided by financing activities 32,461,198 12,883,861 ___________ ___________ Net increase in cash 6,614,968 3,658,690 Cash at beginning of year 5,391,104 6,817,595 __________ __________ Cash at end of period $12,006,072 $10,476,285 ========== ========== CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES SCHEDULE RECONCILING EARNINGS TO NET CASH FLOW FROM OPERATING ACTIVITIES (UNAUDITED) Three months ended March 31, ------------------- 1996 1995 Net income $ 6,238,329 $ 2,679,166 Reconciling items: Depreciation 4,085,742 3,715,354 Amortization of intangibles 4,669,283 4,684,016 Amortization of film rights 3,366,712 2,756,648 Payments on film rights (3,502,109) (2,895,900) (Gain) loss on disposal of assets 1,548 (317,739) Changes in operating assets and liabilities: Decrease accounts receivable 9,013,761 6,335,662 Increase(decrease) accounts payable 811,013 (720,146) Increase accrued interest 1,033,348 16,671 (Decrease) accrued expenses (2,738,155) (825,098) (Decrease) accrued income and other taxes (2,881,507) (1,581,433) __________ __________ Net cash from operating activities $20,097,965 $14,047,201 ========== ========== See Notes to Consolidated Financial Statements CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS The consolidated financial statements have been prepared by Clear Channel Communications, Inc. ("Corporation") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals and adjustments necessary for adoption of new accounting standards) necessary to present fairly the results of the interim periods shown. 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 SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for the interim periods are not necessarily indicative of results for the full year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's 1995 Annual Report. The consolidated financial statements include the accounts of the Corporation and its subsidiaries, the majority of which are wholly-owned investments in companies in which the Corporation owns 20 percent to 50 percent of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process. Certain reclassifications have been made to the 1995 consolidated financial statements to conform with the 1996 presentation. CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Comparison of Three Months Ended March 31, 1996 to Three Months Ended March 31, 1995 Consolidated net broadcasting revenue for the three months ended March 31, 1996 increased 20% to $62,208,000 from $51,858,000 for the same quarter of 1995. Station operating expenses increased 15% to $38,230,000 from $33,182,000. Depreciation and amortization increased 4% from $8,399,000 to $8,755,000 in the first quarter of 1996. Station operating income increased $4,947,000 or 48% to $15,223,000, compared to $10,276,000 for the first quarter of 1995. Interest expense increased 22% from $4,448,000 to $5,424,000 in the first quarter of 1996. Net income increased 133% from $2,679,000, or $.08 per share to $6,238,000, or $.18 per share. The majority of the growth in net broadcasting revenue and operating expenses was due to the improved operating results of the Company s radio stations in Houston and television stations in Memphis and Little Rock and the acquisitions of the broadcasting assets of WOOD-AM/FM and WBCT-FM in Grand Rapids, MI on February 14, 1996, the purchase of the broadcasting assets of WLYH-TV in Lancaster/Lebanon, PA and the broadcasting assets and the license of the Harrisburg, PA CBS-affiliate, WHP-TV, on October 31, 1995, the purchase of the broadcasting assets of WNFT-TV in Jacksonville, FL. The majority of the increase in depreciation and amortization was due to the above-mentioned acquisitions. Interest expense increased primarily due to an increase in the average amount of debt outstanding -- which resulted from the above-mentioned acquisitions, the purchase in May 1995 of a 50% interest in the Australian Radio Network ( ARN ) and the purchase in May 1995 of a 21.5% interest in Heftel Broadcasting ( Heftel ). The investments in ARN and Heftel are accounted for under the equity method; together they contributed $875,070 to net earnings in the first quarter of 1996. The majority of the increase in net income also was primarily due to the factors stated above, but was partially offset by an increase of $143,000 in corporate-related expenses. Liquidity and Capital Resources The major sources of capital for the Company have historically been cash flow from operations, advances on its long-term line of credit facility (the "credit facility") and funds supplied by the Company's initial stock offering in April 1984 and subsequent stock offerings in July 1991 and October 1993. As of March 31, 1996, the Company had $357,500,000 outstanding under the $600,000,000 credit facility, a total of $12,000,000 in guarantees to third parties, and a $7,000,000 letter of credit, leaving $223,500,000 available for future borrowings under the credit facility. In addition, the Company had $12,474,000 in other debt and $12,006,000 in unrestricted cash and cash equivalents on hand at March 31, 1996. The Company is currently in discussions with its Administrative Lender to increase its revolving credit facility. During the first three months of the year, the Company made principal payments on the credit facility totaling $5,000,000 and purchased capital equipment totaling $3,873,000. In addition, the Company purchased the broadcasting assets of WOOD-AM/FM and WBCT-FM in Grand Rapids, MI, for approximately $43,050,000 before final prorations. This acquisition was financed by the Company s credit facility and cash flow from operations. Subsequent to March 31, 1996, the Company purchased US Radio, Inc., which owns and operates 16 radio stations, for approximately $142,500,000 and entered into a letter of intent to purchase the broadcasting assets of WCUZ-AM/FM in Grand Rapids, MI and KQLL-AM/FM and KOAS-FM in Tulsa, OK for approximately $15,400,000, WTVR-AM/FM in Richmond, VA for approximately $18,000,000 and a one-third interest in Radio New Zealand, which owns and operates 40 radio stations in New Zealand for approximately $20,500,000. The Company anticipates using the credit facility to fund these acquisitions. After giving effect to the above-mentioned transactions, subsequent to March 31, 1996, the Company will have $553,900,000 outstanding under the credit facility and $24,600,000 available for future borrowings. Finally, the Company entered into a letter of intent to purchase WPRI-TV in Providence, RI for approximately $68,000,000 and Radio Equity Partners, which owns and operates 19 radio stations for approximately $240,000,000. The Company anticipates consummating these transactions in the third quarter and expanding its credit facility and to use cash flow from operations to fund these acquisitions. The credit facility will convert to a reducing revolving line of credit on the last business day of September 1998, with quarterly repayment of the outstanding principal balance to begin the last business day of December 1998 and continue during the subsequent five year period, with the entire balance to be repaid by the last business day of September 2003. The Company believes that cash flow from operations will be sufficient to make all required future interest and principal payments on the credit facility and will be sufficient to fund all anticipated capital expenditures. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index on Page 12 (b) Reports on Form 8-K NONE 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 thereunto duly authorized. Date May 15, 1996 L. Lowry Mays _________________________________________________ (L. Lowry Mays - President and Chief Executive Officer) (Duly Authorized Officer) Date May 15, 1996 Herbert W. Hill, Jr. ________________________________________________ (Herbert W. Hill, Jr. - Vice President and Principal Financial Officer) Index to Exhibits (a) 3.1 -- Articles of Incorporation, as amended, of Registrant (m) 3.11 -- Articles of Amendment to the Articles of Incorporation of Clear Channel Communications, Inc. (a) 4 -- Buy-Sell Agreement among Clear Channel Communications, Inc., L. Lowry Mays, B. J. McCombs, John M. Schaefer and John W. Barger dated May 31, 1977. (a)10.1 -- Incentive Stock Option Plan of Clear Channel Communications, Inc. as of January 1, 1984. (b)10.2 -- Television Asset Purchase Agreement dated January 27, 1992, by and between Chase Broadcasting of Memphis, Inc. and Clear Channel Television, Inc. (b)10.3 -- Radio Asset Purchase Agreement dated January 31, 1992, by and between Noble Broadcasting of Connecticut, Inc. and Clear Channel Radio, Inc. (b)10.4 -- Radio Asset Purchase Agreement dated April 19, 1992, by and between Edens Broadcasting, Inc. and Clear Channel Radio, Inc. (k)10.33 -- Radio Asset Purchase Agreement dated January 31, 1993, by and between KHFI Venture, LTD. and Clear Channel Radio, Inc. (l)10.34 -- Radio Asset Purchase Agreement dated December 28, 1992, by and between Westinghouse Broadcasting Company, Inc. and Clear Channel Radio, Inc. (c)10.5 -- Radio Asset Purchase Agreement dated December 23, 1992, by and between Inter-Urban Broadcasting of New Orleans Partnership and Snowden Broadcasting, Inc. (d)10.6 -- Television Asset Purchase Agreement dated August 19, 1993, by and between Television Marketing Group of Memphis, Inc. and Clear Channel Television, Inc. (e)10.7 -- Radio Asset Purchase Agreement April 1, 1993, by and Capital Broadcasting of Virginia, Inc. and Clear Channel Radio, Inc. (f)10.8 -- Television Asset Purchase Agreement dated August 31, 1993, by and between Nationwide Communications, Inc. and Clear Channel Television, Inc. (g)10.9 -- Radio Asset Merger Agreement dated March 22, 1994, by and between Metroplex Communications, Inc. and Clear Channel Radio, Inc. (h)10.10 -- Radio Partnership Interest Purchase Agreement dated April 5, 1994, by and between Cook Inlet Communications, Inc. and WCC Associates and Clear Channel Radio, Inc. (i)10.11 -- Television Asset Purchase Agreement September 12,1994, by and between Heritage Broadcasting Company of New York, Inc. and Clear Channel Television, Inc. and Clear Channel Television Licenses, Inc. (j)10.12 -- Radio Asset Purchase Agreement dated November 17,1994, by and between Noble Broadcast of Houston, Inc. and Clear Channel Radio, Inc. (k)10.13 -- Australian Radio Network Shareholders Agreement dated February, 1995, by and between APN Broadcasting Investments Pty Ltd, Australian Provincial Newspapers Holdings Limited, APN Broadcasting Pty Ltd and Clear Channel Radio, Inc. and Clear Channel Communications, Inc. (l)10.14 -- $600,000,000 Amended and Restated Credit Agreement Among Clear Channel Communications, Inc., Certain Lenders, and NationsBank of Texas, N.A., as Administrative Lender, dated October 19, 1995. (m)10.15 -- Clear Channel Communications, Inc. 1994 Incentive Stock Option Plan. (m)10.16 -- Clear Channel Communications, Inc. 1994 Nonqualified Stock Option Plan. (m)10.17 -- Clear Channel Communications, Inc. Directors' Nonqualified Stock Option Plan. (m)10.18 -- Option Agreement for Officer (n)10.19 -- Employment Agreement between Clear Channel Communications, Inc. and L. Lowry Mays (a) -- Incorporated by reference to the exhibits of the Company's Registration Statement on Form S-1(Reg. No. 289161) dated April 19, 1984. (b) -- Incorporated by reference to the Registrant's Form 8-K dated July 14, 1992. (c) -- Incorporated by reference to the Registrant's Form 10-Q dated May 12, 1993. (d) -- Incorporated by reference to the Registrant's Form 8-K dated September 2, 1993. (e) -- Incorporated by reference to the Registrant's Form 10-Q dated November 1, 1993. (f) -- Incorporated by reference to the Registrant's Form 8-K dated October 27, 1993. (g) -- Incorporated by reference to the Registrant's Form 8-K dated October 26, 1994. (h) -- Incorporated by reference to the Registrant's Form 10-Q dated November 14 1994. (i) -- Incorporated by reference to the Registrant's Form 8-K dated December 14, 1994. (j) -- Incorporated by reference to the Registrant's Form 8-K dated January 13, 1995. (k) -- Incorporated by reference to the Registrant's Form 8-K dated May 26, 1995. (l) -- Incorporated by reference to the Registrant's Form 10-Q dated November 14, 1995. (m) -- Incorporated by reference to the Registrant's Form S-8 dated November 20, 1995. (n) -- Incorporated by reference to the Registrant's Form 10-K dated March 29, 1996. EX-27 2
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 12,006 0 49,990 4,665 0 68,671 165,211 62,224 594,978 31,048 366,569 3,461 0 0 166,811 594,978 0 62,208 0 38,230 8,755 0 5,424 9,207 2,968 6,238 0 0 0 6,238 0.18 0.18
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