-----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, V1Ds0TcQyjfjjM7zSjPNM9Zplk8Hc0hIbfSjq6D/a/T8Qm1Pb7kQ1f35Jn0nLJfZ mk9luhllX+4rUiAiXx51BQ== 0000950129-98-003816.txt : 19980907 0000950129-98-003816.hdr.sgml : 19980907 ACCESSION NUMBER: 0000950129-98-003816 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980904 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980904 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAR CHANNEL COMMUNICATIONS INC CENTRAL INDEX KEY: 0000739708 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 741787536 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09645 FILM NUMBER: 98704860 BUSINESS ADDRESS: STREET 1: 200 CONCORD PLAZA STREET 2: STE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 BUSINESS PHONE: 2108222828 MAIL ADDRESS: STREET 1: 200 CONCORD PLAZA SUITE 600 STREET 2: 200 CONCORD PLAZA SUITE 600 CITY: SAN ANTONIO STATE: TX ZIP: 78216 8-K/A 1 CLEAR CHANNEL COMMUNICATIONS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 4, 1998 (June 25, 1998) Clear Channel Communications, Inc. (Exact name of registrant as specified in its charter) Texas (State of Incorporation) 1-9645 74-1787536 (Commission File Number) (I.R.S. Employer Identification No.) 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 (210) 822-2828 (Address and telephone number of principal executive offices) 2 Clear Channel Communications, Inc. Form 8-K/A Item 5 OTHER EVENTS. On July 10, 1998, Clear Channel Communications, Inc., a Texas corporation (the Company), filed a current report on Form 8-K. The Company is filing this amendment to include information required under item 7 (a) and item 7 (b). Item 7 FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired. 3 More Group Plc. Financial Statements and reconciliation to US GAAP Year ended 31 December 1997 4 Index 2 Report of Independent Auditors 3 Consolidated profit and loss account 4 Balance sheet 5 Consolidated cash flow statement 6 Statement of total recognised gains and losses and reconciliation of movements in shareholders' funds 7 Accounting policies 9 Notes to the accounts 1 5 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and the Shareholders of More Group Plc We have audited the accompanying consolidated balance sheet of More Group Plc and its subsidiary undertakings (together, "the Group") as of 31 December 1997 and the related consolidated profit and loss account, and statements of cash flows and total recognised gains and losses for the year then ended all expressed in pounds sterling. These financial statements are the responsibility of the Company's Directors. Our responsibility is to express an opinion on these financial statements on the basis of our audit. We conducted our audit in accordance with generally accepted auditing standards in the United Kingdom, which are substantially the same as auditing standards generally accepted in the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects the financial position of the Group as of 31 December 1997 and the consolidated profit and cash flows for the year then ended in accordance with generally accepted accounting principles in the United Kingdom. Accounting principles generally accepted in the United Kingdom vary in certain important respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of consolidated shareholders' equity as at 31 December 1997 expressed in pounds sterling and consolidated net profit for the year then ended also expressed in pounds sterling to the extent summarised in note 29 to the financial statements. /s/ PRICE WATERHOUSE Price Waterhouse Chartered Accountants and Registered Auditors London, England 5 March 1998 (except as to the information presented in Note 29, for which the date is 13 August 1998) 2 6 Consolidated profit and loss account For the year ended 31st December
1997 Notes (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Turnover Group and share of joint ventures 145,649 Less: share of joint ventures (1,250) Continuing operations: Ongoing 141,626 Acquisitions in 1997 2,773 - -------------------------------------------------------------------------------------------------------------------------- Group turnover 1 144,399 - -------------------------------------------------------------------------------------------------------------------------- Operating profit Continuing operations: Ongoing 28,427 Acquisitions in 1997 250 - -------------------------------------------------------------------------------------------------------------------------- Group operating profit 28,677 Share of operating profit/(loss) in: Joint ventures (481) Associated undertakings 62 - -------------------------------------------------------------------------------------------------------------------------- Total operating profit 1, 3 28,258 Restructuring and closure costs on termination of operations (2,305) Less: 1996 provision 2,305 Loss on termination of operations -- - -------------------------------------------------------------------------------------------------------------------------- Profit on ordinary activities before interest 28,258 Net interest payable 6 (2,722) - -------------------------------------------------------------------------------------------------------------------------- Profit on ordinary activities before taxation 25,536 Taxation 7 (7,555) - -------------------------------------------------------------------------------------------------------------------------- Profit after taxation 17,981 Equity minority interests 34 - -------------------------------------------------------------------------------------------------------------------------- Profit for the financial year 18,015 Dividends 8 (6,827) - -------------------------------------------------------------------------------------------------------------------------- Retained profit for the financial year 18 11,188 - -------------------------------------------------------------------------------------------------------------------------- Earnings per 10 pence Ordinary share 9 43.3p Dividends per 10 pence Ordinary share 8 16.4p - --------------------------------------------------------------------------------------------------------------------------
3 7 Balance sheet At 31st December
1997 Notes (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Fixed assets Tangible assets 10 70,322 - -------------------------------------------------------------------------------------------------------------------------- Investments Investments in joint ventures Share of gross assets 3,016 Share of gross liabilities (2,631) 385 Investments in associates 429 Trade and other investments 287 - -------------------------------------------------------------------------------------------------------------------------- 11 1,101 - -------------------------------------------------------------------------------------------------------------------------- 71,423 - -------------------------------------------------------------------------------------------------------------------------- Current assets Stocks 12 4,048 Debtors 13 39,826 Cash and deposits 21,216 - -------------------------------------------------------------------------------------------------------------------------- 65,090 Creditors - amounts falling due within one year 14 (52,325) - -------------------------------------------------------------------------------------------------------------------------- Net current assets/(liabilities) 12,765 - -------------------------------------------------------------------------------------------------------------------------- Total assets less current liabilities 84,188 Creditors - amounts falling due after one year 15 (57,710) Provisions for liabilities and charges 16 (1,969) - -------------------------------------------------------------------------------------------------------------------------- Net assets 24,509 - -------------------------------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 17 4,163 Reserves 18 19,319 - -------------------------------------------------------------------------------------------------------------------------- Equity shareholders' funds 23,482 Equity minority interests 1,027 - -------------------------------------------------------------------------------------------------------------------------- 24,509 - --------------------------------------------------------------------------------------------------------------------------
4 8 Consolidated cash flow statement For the year ended 31st December
1997 Notes (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Cash flow from operating activities 22 38,343 Returns on investments and servicing of finance 23 (2,470) Taxation (3,991) - -------------------------------------------------------------------------------------------------------------------------- Free cash flow 31,882 Capital expenditure 23 (21,007) Acquisitions and disposals 23 (9,037) Equity dividends paid (6,365) - -------------------------------------------------------------------------------------------------------------------------- Cash flow before use of liquid resources and financing (4,527) Management of liquid resources 23 (1,982) Financing: Issue of shares 23 353 Increase in debt 23 19,858 20,211 - -------------------------------------------------------------------------------------------------------------------------- Increase in cash in the year 13,702 - -------------------------------------------------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt Increase in cash in the year 13,702 Cash flow from increase in debt (19,858) Cash flow from management of liquid resources 1,982 - -------------------------------------------------------------------------------------------------------------------------- Change in net debt resulting from cash flows (4,174) Loans acquired with subsidiary undertakings (10) Translation difference 1,702 - -------------------------------------------------------------------------------------------------------------------------- Movement in net debt in the year (2,482) Net debt at 1st January (34,089) - -------------------------------------------------------------------------------------------------------------------------- Net debt at 31st December 24 (36,571) - --------------------------------------------------------------------------------------------------------------------------
5 9 Statement of total recognised gains and losses For the year ended 31st December
1997 (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Profit for the financial year 18,015 Exchange adjustments on foreign currency net investments (291) - -------------------------------------------------------------------------------------------------------------------------- Total recognised gains 17,724 - --------------------------------------------------------------------------------------------------------------------------
There is no material difference between the reported profits for 1997 and the result for the year restated on an historical cost basis. Reconciliation of movements in shareholders' funds For the year ended 31st December
1997 (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Total recognised gains 17,724 Dividends (6,827) Ordinary shares issued in the year 113 Adjustment to goodwill written off in respect of gain on sale of joint venture (note 19) 3,824 Goodwill written off (note 19) (10,459) - -------------------------------------------------------------------------------------------------------------------------- Net addition to shareholders' funds 4,375 Opening shareholders' funds 19,107 - -------------------------------------------------------------------------------------------------------------------------- Closing shareholders' funds 23,482 - --------------------------------------------------------------------------------------------------------------------------
6 10 Accounting policies Accounting convention The accounts are prepared under the historical cost convention, as modified by the revaluation of certain fixed assets, and in accordance with applicable accounting standards. Basis of consolidation The consolidated accounts comprise the accounts of More Group Plc and all of its subsidiary undertakings for the year ended 31st December 1997. The consolidated profit and loss account includes the results of subsidiary undertakings acquired during the year from their effective dates of acquisition. A subsidiary undertaking is an entity in which the Group has a long term investment and controls a majority of the voting rights or exercises a dominant influence, or which is managed on a unified basis with another subsidiary undertaking. A joint venture is an entity in which the Group has a long term investment and which is jointly controlled by the Group and at least one other party. Joint ventures are included in the consolidated profit and loss account and balance sheet using the gross equity method. An associated undertaking is an entity in which the Group has a long term investment and is in a position to exercise significant influence. The Group's share of profits less losses of associated undertakings is included in the consolidated profit and loss account. The consolidated balance sheet includes, as an investment, the Group's share of net assets of associated undertakings at acquisition plus the Group's share of retained profits. Accounting for acquisitions On acquisition, fair values are attributed to the net assets acquired. Adjustments are also made to bring the accounting policies of businesses acquired into alignment with those of the Group. The difference between the fair value of the consideration paid and the fair value of the net assets acquired is treated as goodwill and taken to reserves in the year of acquisition. Tangible fixed assets Costs relating to advertising structures are shown at historical cost and are depreciated on a straight line basis over periods from two to 15 years, dependent upon the estimated useful lives of the assets concerned. Costs represent materials, direct labour and appropriate overheads. The cost or valuation of other fixed assets is written off in equal annual instalments over their expected useful lives as follows:
Period (years) ----------------------------------------- Freehold buildings 50 Leasehold properties Period of lease Plant and machinery 2-10 Motor vehicles 4 Fixtures and fittings 3-10 -----------------------------------------
Investments in subsidiary undertakings Investments in subsidiary undertakings are stated at Directors' valuation equal to their net assets at the end of the financial year, including acquisition goodwill where appropriate. Differences between cost and valuation are taken to the revaluation reserve. Stocks Stocks are stated at the lower of cost and net realisable value. Cost represents materials, direct labour and appropriate production overheads. Deferred taxation Deferred taxation is provided on differences arising from the inclusion of income and expenditure in taxation computations in periods different from those in which they are included in the accounts except where the tax reduction or increase is expected to continue for the foreseeable future. 7 11 Foreign exchange The trading results of foreign subsidiary undertakings are translated at the average exchange rate for the year, and their net assets are translated at the rate of exchange ruling at the balance sheet date. Differences on exchange arising from the translation of the opening balance sheets of, or investments in, foreign subsidiary undertakings are offset against exchange differences arising on related foreign currency borrowings and are taken directly to reserves. Other exchange differences are reflected in the profit and loss account. Pension costs Retirement benefits to employees in the Group are funded by contributions from group companies and employees. The cost of providing retirement benefits is charged against profits over the expected service lives of employees in accordance with the recommendations of consulting actuaries. Lease commitments Assets purchased under hire purchase agreements and finance lease contracts are capitalised at their fair value with the related commitments shown under liabilities. Operating lease commitments are provided for in the accounts at the time the rental liabilities arise. Research and development Research and development expenditure is written off in the year in which it is incurred. Turnover Turnover is represented by gross billings net of agents' commissions and excludes value added tax and transactions between group undertakings. 8 12 (FOR A DESCRIPTION OF THE GROUP'S ACCOUNTING POLICIES PLEASE SEE PAGES 7 AND 8) 1 Segmental information The Group's only class of business is outdoor advertising. The geographical analysis by origin and destination is as follows:
1997 1997 1997 Turnover Operating profit Net assets (pound)000 (pound)000 (pound)000 - ----------------------------------------------------------------------------------------------------------------------- Great Britain 78,547 17,506 45,753 Ireland 10,473 2,057 7,910 Belgium 11,094 1,531 1,600 France 10,375 429 4,912 Nordic Region 32,284 8,113 13,539 Asia Pacific 1,746 (757) 3,581 USA 1,130 (621) 322 - ----------------------------------------------------------------------------------------------------------------------- 145,649 28,258 77,617 Less: Share of joint ventures (1,250) - ----------------------------------------------------------------------------------------------------------------------- Group turnover 144,399 - ----------------------------------------------------------------------------------------------------------------------- Net interest payable (2,722) - ----------------------------------------------------------------------------------------------------------------------- Profit before taxation 25,536 - ----------------------------------------------------------------------------------------------------------------------- Unallocated net liabilities (16,537) - ----------------------------------------------------------------------------------------------------------------------- Capital employed 61,080 Net debt (36,571) - ----------------------------------------------------------------------------------------------------------------------- Net assets 24,509 - -----------------------------------------------------------------------------------------------------------------------
The geographical analysis of net assets shows operating net assets which, in the opinion of the Directors, represent the best estimate of net asset utilisation. Operating net assets exclude net debt, taxation, dividends, deferred consideration, pension fund prepayment and provisions for liabilities and charges. 2 Operating costs
1997 (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Cost of sales Continuing operations: Ongoing 71,372 Acquisitions in 1997 1,603 - -------------------------------------------------------------------------------------------------------------------------- 72,975 - -------------------------------------------------------------------------------------------------------------------------- Administrative expenses Continuing operations: Ongoing 41,827 Acquisitions in 1997 920 - -------------------------------------------------------------------------------------------------------------------------- 42,747 - -------------------------------------------------------------------------------------------------------------------------- 115,722 - --------------------------------------------------------------------------------------------------------------------------
9 13 3 Operating profit
1997 (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Operating profit is stated after charging: Group employment costs (note 5) 27,369 Depreciation of tangible fixed assets 10,850 Loss on disposal of tangible fixed assets 2,460 Auditors' remuneration 279 Remuneration to UK Auditor for non-audit work 152 Research and development 1,334 Leasing charges - Operating (land and buildings) 1,772 - Operating (other) 2,702 - -------------------------------------------------------------------------------------------------------------------------- The audit fee for the Company included within the Group fee was (pound)39,000. The loss on disposal of tangible fixed assets principally relates to accelerated depreciation on assets taken out of service. 4 Remuneration of Directors 1997 (pound)000 - -------------------------------------------------------------------------------------------------------------------------- Salaries, fees and taxable benefits 762 Performance related pay 171 Consultancy fees 31 Company pension contribution to defined contribution schemes 88 Compensation for termination of service contract 141 - -------------------------------------------------------------------------------------------------------------------------- 1,193 - --------------------------------------------------------------------------------------------------------------------------
Emoluments for Directors are summarised in the following table:
Performance Pension Salary and fees Taxable benefits related pay contributions Total - ------------------------------------------------------------------------------------------------------------- 1997 1997 1997 1997 1997 (pound)000 (pound)000 (pound)000 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------- Non-Executive Chairman F W Knight 47 - - - 47 Executive Directors R G Parry 270 14 102 45 431 C V Slevin 160 16 33 12 221 B P Turnbull 130 8 36 31 205 P A Hall (resigned 22nd May 1997) 37 4 - - 41 Non-Executive Directors J F B Hunter 22 - - - 22 J Bullock (appointed 1st January 1997) 21 - - - 21 K J Guerra (appointed 1st January 1997) 21 - - - 21 The Lord Lane of Horsell (resigned 24th April 1997) 10 - - - 10 P H Kent (resigned 24th April 1997) 2 - - - 2 - ------------------------------------------------------------------------------------------------------------- 720 42 171 88 1,021 - -------------------------------------------------------------------------------------------------------------
10 14 4 Remuneration of Directors continued In addition to the above: (a) Mr P H Kent had an interest in a contract with the Company through his own consultancy, Peter Kent & Associates. This provided the Group with marketing and public relations consultancy services. The cost of these consultancy services for the period ended 24th April 1997, when he resigned from the Board, was (pound)30,980. (b) Mr P A Hall received (pound)141,000 compensation for termination of service contract. (c) Mr R G Parry participates in a Long Term Incentive Scheme, which consisted of two three year Plans as at 31st December 1997. The first Plan ("the 1996 Plan") covers the financial years 1996 to 1998. The second Plan ("the 1997 Plan") covers the financial years 1997 to 1999. The amount due to Mr R G Parry under each Plan will depend on the percentage increase in the share price of the Company over the period of that Plan compared to the percentage increase in the FT-SE Mid 250 index ("the Index") over the same period. The maximum amount due under each Plan, if the percentage increase in the Company's share price were at least twice the percentage increase in the Index, would be: (i) for the 1996 Plan, a cash amount equal to 130 per cent of his 1998 basic salary (ii) for the 1997 Plan, a cash amount equal to 62.5 per cent of his 1999 basic salary and, in each case, an allocation of Ordinary shares in the Company of equivalent value. Directors' pension arrangements Directors' pension benefits relating to defined contribution schemes are disclosed in the table above. In addition, Mr C V Slevin, Mr B P Turnbull and Mr P A Hall are members of the More Group defined benefit scheme. Details of their defined benefit pension provisions are shown below.
Directors' Additional Total pension contributions pension earned to Age at during earned during 31st December 31st December the year the year 1997 Director 1997 (pound)000 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- C V Slevin 58 13 12 55 B P Turnbull 53 10 6 19 P A Hall* 54 3 3 33 - -------------------------------------------------------------------------------------------------------------------------
*For PA Hall, the information in the table relates to the period prior to his resignation on 22nd May 1997. Directors' contributions are those paid or payable by the Director under the terms of the More Group Plc Retirement Benefits Scheme, and exclude Additional Voluntary Contributions. Additional pension earned during the year excludes any increase for inflation. Total pension earned is the amount which would be paid annually on retirement at age 60 based on service to 31st December 1997 or earlier resignation. Post retirement pensions are increased annually by 3 per cent. Following death in retirement, a spouse's pension equal to two-thirds of the Director's pension is payable. Directors' share options Details of Ordinary shares of 10 pence each over which Directors held options during the year are shown below:
Number of options - ------------------------------------------------------------------------------------------------------------------------- At Granted At Earliest 1st Jan during 31st Dec Exercise exercise Expiry Director 1997 year 1997 price (p) date date - ------------------------------------------------------------------------------------------------------------------------- R G Parry 202,920 - 202,920 473 11th Oct 1998 10th Oct 2005 3,731 - 3,731 462 1st Dec 2000 31st May 2001 C V Slevin 101,460 - 101,460 370 29th Sept 1997 28th Sept 2004 16,233 - 16,233 616 10th May 1999 9th May 2003 B P Turnbull 4,393 - 4,393 392 24th June 1999 23rd Dec 1999 5,396 - 5,396 556 16th April 1999 15th April 2006 27,597 - 27,597 616 10th May 1999 9th May 2003 - 6,240 6,240 641 25th Mar 2000 24th Mar 2004 - ------------------------------------------------------------------------------------------------------------------------- 361,730 6,240 367,970 - -------------------------------------------------------------------------------------------------------------------------
No options were exercised by any Directors during the year. 11 15 4 Remuneration of Directors continued Options by exercise price
Number of options - ------------------------------------------------------------------------------------------------------------------------- At Granted At 1st Jan during 31st Dec Exercise Scheme 1997 year 1997 price (p) - ------------------------------------------------------------------------------------------------------------------------- 1994 Approved Executive Share Option Scheme 101,460 - 101,460 370 202,920 - 202,920 473 5,396 - 5,396 556 1996 Unapproved Executive Share Option Scheme 43,830 43,830 616 - 6,240 6,240 641 Savings Related Share Option Scheme 4,393 - 4,393 392 3,731 - 3,731 462 - ------------------------------------------------------------------------------------------------------------------------- 361,730 6,240 367,970 - -------------------------------------------------------------------------------------------------------------------------
Market price The market price of the Ordinary shares at the close of business on 31st December 1997 was 753 pence. The lowest and highest price of the shares in the year were 554 pence and 770 pence respectively. 5 Employee information
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Group employment costs - all employees including Executive Directors: Wages and salaries 22,731 Social security costs 3,776 Pension costs (note 27) 862 - ------------------------------------------------------------------------------------------------------------------------- 27,369 - ------------------------------------------------------------------------------------------------------------------------- 1997 Number - ------------------------------------------------------------------------------------------------------------------------- The average number of persons employed by the Group during the year, including Executive Directors, is analysed below by function: Production and maintenance 483 Sales and marketing 188 Development 76 Operations 107 Administration and regional management 177 - ------------------------------------------------------------------------------------------------------------------------- 1,031 - ------------------------------------------------------------------------------------------------------------------------- 6 Net interest payable 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Interest payable on bank overdrafts and other loans wholly repayable within five years 3,252 Interest receivable (530) - ------------------------------------------------------------------------------------------------------------------------- 2,722 - ------------------------------------------------------------------------------------------------------------------------- 7 Taxation 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- United Kingdom corporation tax at 31.5 per cent 5,224 Deferred taxation 1,445 Overseas taxation 826 Adjustments to prior years 46 Tax on share of profits of associated undertakings 14 - ------------------------------------------------------------------------------------------------------------------------- 7,555 - -------------------------------------------------------------------------------------------------------------------------
12 16 8 Dividends
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- The following dividends have been paid or declared in the year: Paid: Interim dividend of 3.9 pence on Ordinary shares (paid 10th November 1997) 1,623 Declared: Second interim dividend of 12.5 pence on Ordinary shares (payable 14th April 1998) 5,204 - ------------------------------------------------------------------------------------------------------------------------- 6,827 - -------------------------------------------------------------------------------------------------------------------------
9 Earnings per 10 pence Ordinary share The calculation of earnings per share is based on earnings of (pound)18,015,000 being the consolidated protax, minority interests and, in 1996 Preference dividends, and the weighted average of 41,603,121 Ordinary shares of 10 pence each in issue during the year. No material dilution of earnings per share would arise if all outstanding share options were exercised. 10 Tangible fixed assets
Freehold Motor vehicles, land and Leasehold plant and Advertising buildings properties equipment structures Total The Group (pound)000 (pound)000 (pound)000 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Cost or valuation at 1st January 1997 6,128 1,948 10,811 85,647 104,534 Exchange adjustments (154) (59) (234) (3,522) (3,969) Additions 21 496 3,025 17,612 21,154 Acquisitions of subsidiary undertakings 105 4 94 613 816 Disposals (101) (34) (227) (5,840) (6,202) - ------------------------------------------------------------------------------------------------------------------------- Cost or valuation at 31st December 1997 5,999 2,355 13,469 94,510 116,333 - ------------------------------------------------------------------------------------------------------------------------- At 31st December 1997 At cost 2,071 2,320 13,469 94,510 112,370 At valuation 3,928 35 - - 3,963 - ------------------------------------------------------------------------------------------------------------------------- 5,999 2,355 13,469 94,510 116,333 - ------------------------------------------------------------------------------------------------------------------------- Accumulated depreciation at 1st January 1997 776 740 7,108 31,342 39,966 Exchange adjustments (76) (28) (129) (1,163) (1,396) Depreciation for the year 57 128 1,528 9,137 10,850 Disposals (1) (21) (149) (3,238) (3,409) - ------------------------------------------------------------------------------------------------------------------------- Accumulated depreciation at 31st December 1997 756 819 8,358 36,078 46,011 - ------------------------------------------------------------------------------------------------------------------------- Net book value at 31st December 1997 5,243 1,536 5,111 58,432 70,322 - -------------------------------------------------------------------------------------------------------------------------
Leasehold properties are all leased for periods of less than 50 years with the exception of those shown at valuation which are for periods of more than 50 years. The net book value of assets held under finance leases at 31st December 1997 was (pound)36,000. Freehold land and buildings and leasehold properties shown at valuation were valued in 1989. If all freehold and leasehold properties which are included above at cost or valuation had been included at cost, the resulting total amounts for those categories would have been as follows:
Freehold Leasehold 1997 1997 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Cost 2,598 2,320 Depreciation (665) (882) - ------------------------------------------------------------------------------------------------------------------------- 1,933 1,438 - -------------------------------------------------------------------------------------------------------------------------
13 17 11 Investments
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Investments at 1st January 791 Exchange adjustments (165) Disposals (619) Additions 1,527 Retained losses of joint ventures (481) Retained profits of associated undertakings 48 - ------------------------------------------------------------------------------------------------------------------------- Investments at 31st December 1,101 - ------------------------------------------------------------------------------------------------------------------------- Investments comprise Trade investments 286 Cost of shares in joint ventures 904 Retained losses of joint ventures (519) Cost of shares in associated undertakings 356 Retained profits of associated undertakings 73 Other quoted investments at cost 1 - ------------------------------------------------------------------------------------------------------------------------- 1,101 - -------------------------------------------------------------------------------------------------------------------------
At 31st December 1997, except where indicated, the Company held, directly or indirectly through a wholly owned intermediate holding company, 100 per cent of the issued share capital of the following operating companies. The principal activity of these companies is outdoor advertising. Only principal operating subsidiary undertakings, joint ventures and associated undertakings are shown below. A list of all subsidiary undertakings, joint ventures and associated undertakings is attached to the More Group Plc annual return to be filed with the Registrar of Companies.
Country of incorporation and operation - ------------------------------------------------------------------------------------------------------------------------- More Group UK Limited United Kingdom Allied Outdoor Advertising Limited United Kingdom The Canton Property Investment Company Limited United Kingdom The Kildoon Property Company Limited United Kingdom More Group NI Limited United Kingdom More Group Ireland Limited Republic of Ireland Nitelites (Ireland) Limited (60%) Republic of Ireland** More Group France SA France More Group Belgium SA Belgium Publifer SA (50%) Belgium SAPE Belgium SA Belgium More Group (Taiwan) Limited Taiwan More Group Norge AS Norway More Group Sverige AB Sweden Wennergren-Williams Outdoor Media AB Sweden* More Group Danmark A/S (97%) Denmark** Aras A/S (97%) Denmark** Expoplakat AS (40%) Estonia Adshel Inc (87.5%) USA Adshel Street Furniture Pty Limited (50%) Australia Capital City Posters Pte Ltd (30%) Singapore Master & More Co., Ltd (31.9%) Thailand - -------------------------------------------------------------------------------------------------------------------------
* Wennergren-Williams Outdoor Media AB also has operations in the Baltic States. ** The minority interests of 40 per cent in Nitelites (Ireland) Limited and 3 per cent in More Group Danmark A/S (and its subsidiary Aras A/S) were purchased on 30th January 1998 and 1st February 1998 respectively. 14 18 12 Stocks
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Raw materials 4,048 - ------------------------------------------------------------------------------------------------------------------------- 13 Debtors 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Due within one year Trade debtors 24,950 Amounts owed by joint ventures 1,993 Other debtors 4,963 Prepayments and accrued income 5,523 - ------------------------------------------------------------------------------------------------------------------------- 37,429 - ------------------------------------------------------------------------------------------------------------------------- Due after one year Other debtors 1,881 Prepayments and accrued income 516 - ------------------------------------------------------------------------------------------------------------------------- 2,397 - ------------------------------------------------------------------------------------------------------------------------- 39,826 - ------------------------------------------------------------------------------------------------------------------------- 14 Creditors - amounts falling due within one year 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Bank loans 404 Overdrafts 2,337 Trade creditors 9,763 Bills of exchange payable 432 Corporation tax 7,931 Other taxation and social security 4,740 Other creditors 4,846 Accruals and deferred income 16,653 Obligations under finance leases 15 Dividends proposed 5,204 - ------------------------------------------------------------------------------------------------------------------------- 52,325 - ------------------------------------------------------------------------------------------------------------------------- 15 Creditors - amounts falling due after one year 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Bank loans 54,486 12 per cent unsecured debenture stock 2009 95 Bills of exchange payable 10 Other creditors 3,111 Obligations under finance leases repayable between one and five years 8 - ------------------------------------------------------------------------------------------------------------------------- 57,710 - ------------------------------------------------------------------------------------------------------------------------- Bank loans are repayable as follows: Between two and five years 54,486 - ------------------------------------------------------------------------------------------------------------------------- 54,486 - ------------------------------------------------------------------------------------------------------------------------- There are no charges on the assets of any group undertakings.
15 19 16 Provisions for liabilities and charges
Amount Total provided potential 1997 1997 The Group (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Deferred taxation Capital allowances in excess of depreciation 1,770 5,958 Pension costs 277 277 Overseas tax losses (54) (475) Other timing differences (24) (308) - ------------------------------------------------------------------------------------------------------------------------- Deferred tax balance 1,969 5,452 - ------------------------------------------------------------------------------------------------------------------------- The movement in the deferred tax provision is as follows: 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Balance at 1st January 555 Exchange adjustments (31) Charged to the profit and loss account 1,445 - ------------------------------------------------------------------------------------------------------------------------- Balance at 31st December 1,969 - -------------------------------------------------------------------------------------------------------------------------
No provision has been made for taxation that would arise in the event of the foreign subsidiary undertakings distributing the balance of their reserves as there is currently no intention to remit such amounts to the UK. No provision has been made for potential taxation liabilities which might arise in the event of disposal of properties revalued in the books since the Directors are of the opinion that any gain which might arise would qualify for roll-over relief. 17 Called up share capital
Issued Authorised and fully paid 1997 1997 (pound)000 (pound)000 - --------------------------------------------------------------------------------------------------------------------------- Ordinary shares of 10 pence each at 31st December 6,000 4,163 - --------------------------------------------------------------------------------------------------------------------------- Allotments during the year 1997 1997 Number (pound)000 - --------------------------------------------------------------------------------------------------------------------------- Ordinary shares in issue at 1st January 41,593,142 4,159 Issued under 1984 Approved Executive Share Option Scheme 14,650 1 Issued under 1994 Approved Executive Share Option Scheme 15,219 2 Issued under Savings Related Share Option Scheme 11,500 1 - --------------------------------------------------------------------------------------------------------------------------- Ordinary shares in issue at 31st December 41,634,511 4,163 - --------------------------------------------------------------------------------------------------------------------------- Contingent rights to the allotment of shares 1997 Number - --------------------------------------------------------------------------------------------------------------------------- Options over Ordinary shares outstanding at 1st January 756,474 New options granted during the year 435,365 Options exercised during the year (41,369) Options lapsed during the year (2,520) - --------------------------------------------------------------------------------------------------------------------------- Options over Ordinary shares outstanding at 31st December 1,147,950 - ---------------------------------------------------------------------------------------------------------------------------
16 20 17 Called up share capital continued Options outstanding The following options over Ordinary shares, which were outstanding at 31st December 1997 under the 1984 Approved Executive Share Option Scheme, the 1994 Approved Executive Share Option Scheme, the 1996 Unapproved Executive Share Option Scheme and the Savings Related Share Option Scheme, are exercisable between three and ten years after the date of grant:
Number of Ordinary shares Price (p) - ------------------------------------------------------------------------------------------------------------------------- Date granted: 9th March 1992 21,159 239 14th April 1993 25,190 246 4th May 1994 15,598 392 29th September 1994 101,460 370 11th October 1995 202,920 473 27th October 1995 16,316 462 16th April 1996 104,304 556 10th May 1996 225,638 616 25th March 1997 332,282 641 3rd October 1997 103,083 710 - ------------------------------------------------------------------------------------------------------------------------- 1,147,950 - -------------------------------------------------------------------------------------------------------------------------
18 Reserves
Profit and loss Revaluation Share premium Legal account reserve account reserve Total The Group (pound)000 (pound)000 (pound)000 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Reserves at 1st January 1997* (51,227) 2,961 62,675 539 14,948 Retained profit for the year 11,188 - - - 11,188 Exchange adjustments (291) - - - (291) Transfers (299) - - 299 - Realised gain on sale of property 19 (19) - - - Premium on shares issued during the year - - 109 - 109 Adjustment to goodwill written off in respect of gain on sale of joint venture (note 20) 3,824 - - - 3,824 Goodwill written off (note 20) (10,459) - - - (10,459) - ------------------------------------------------------------------------------------------------------------------------- Reserves at 31st December 1997 (47,245) 2,942 62,784 838 19,319 - -------------------------------------------------------------------------------------------------------------------------
* Reflects reclassification of reserve amounts from those previously reported. Exchange gains amounting to (pound)1,757,000 arising in respect of foreign currency borrowings have been offset against exchange losses within the Group's reserves. The accumulated goodwill written off against the Group's profit and loss reserves at 31st December 1997 was (pound)85,297,000. 17 21 19 Acquisitions 1997 acquisitions During the year, the Group acquired Aras A/S, SAPE Belgium SA and a 50 per cent interest in Publifer SA which has also been consolidated in the Group accounts. The book values and fair values of the net assets of these undertakings immediately prior to acquisition, in aggregate, were as follows:
Accounting policy Provisional Book value Revaluations adjustments fair value (pound)000 (pound)000 (pound)000 (pound)000 - ---------------------------------------------------------------------------------------------------------------------------- Tangible fixed assets 1,142 (174)(a) (152)(b) 816 Current assets 3,155 - - 3,155 Cash less bank loans 1,653 - - 1,653 Creditors due within one year (2,766) - - (2,766) - ---------------------------------------------------------------------------------------------------------------------------- Total net assets 3,184 (174) (152) 2,858 - ---------------------------------------------------------------------------------------------------------------------------- Share of net assets acquired 1,880 - ---------------------------------------------------------------------------------------------------------------------------- Total consideration 6,863 Provisional fair value of net assets acquired (as above) (1,880) - ---------------------------------------------------------------------------------------------------------------------------- Total goodwill on acquisition 4,983 Goodwill absorbed by minority interests (116) - ---------------------------------------------------------------------------------------------------------------------------- Goodwill attributable to the Group 4,867 - ----------------------------------------------------------------------------------------------------------------------------
The consideration was satisfied in the form of cash. Notes (a) This item represents accelerated depreciation on fixed assets whose estimated economic lives have been shortened. (b) Intangible assets held on the acquired undertakings' balance sheets have been written off to reserves in accordance with the Group's accounting policy. Goodwill written off to reserves in the year is made up as follows:
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Goodwill on acquisitions (as above) 4,867 Goodwill on purchase of interest in Adshel Street Furniture Pty Limited 3,483 Goodwill on purchase of minority interests 2,109 - ------------------------------------------------------------------------------------------------------------------------- Total goodwill written off to reserves (note 18) 10,459 - -------------------------------------------------------------------------------------------------------------------------
1996 acquisitions In 1997, the Group realised a gain of (pound)3,824,000 on the sale of its 50 per cent interest in Saga Plakatreklame AS, acquired in 1996 as part of the acquisition of Wennergren-Williams, to its joint venture partner Fram Management AS following a decision by that partner to seek a dissolution of the partnership. In February 1998, the Group agreed to acquire the entire outdoor advertising business of Fram Management AS including the business of Saga Plakatreklame AS. In accordance with accounting standard FRS 7, the gain has been recorded as a fair value adjustment to the net assets of Wennergren-Williams at acquisition date resulting in a corresponding reduction of (pound)3,824,000 in goodwill written off to reserves. 18 22 20 Contingent liabilities The Company has granted in respect of the financial year ended 31st December 1997, irrevocable guarantees of the liabilities of More Group Ireland Limited and More O'Ferrall Ireland Limited, which companies have availed themselves of the exemption provided by Section 17 of the Irish Companies (Amendment) Act, 1986. 21 Lease commitments
The Group had the following annual anticipated commitments under operating leases as at 31st December 1997: Land and buildings Other commitments - ------------------------------------------------------------------------------------------------------------------------- 1997 1997 (pound)000 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Operating leases which expire: Within one year 18 261 Between two and five years 101 1,800 After five years 1,703 6 - ------------------------------------------------------------------------------------------------------------------------- Payments to be made during next year 1,822 2,067 - ------------------------------------------------------------------------------------------------------------------------- 22 Reconciliation of operating profit to operating cash flows 1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Operating profit 28,258 Depreciation charge 10,850 Loss on disposal of tangible fixed assets 2,460 Share of profit of associated undertakings (62) Share of loss of joint ventures 481 Cash flow on termination of operations (1,674) Increase in stocks (412) Increase in debtors (3,931) Increase in creditors 2,373 - ------------------------------------------------------------------------------------------------------------------------- Net cash inflow from operating activities 38,343 - -------------------------------------------------------------------------------------------------------------------------
19 23 23 Analysis of cash flows for headings summarised in the cash flow statement
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Returns on investments and servicing of finance Interest received 491 Interest paid (2,925) Dividends paid to minority interests (32) Interest element of finance lease rental payments (4) - ------------------------------------------------------------------------------------------------------------------------- Net cash outflow for returns on investments and servicing of finance (2,470) - ------------------------------------------------------------------------------------------------------------------------- Capital expenditure Purchase of tangible fixed assets (21,340) Receipts from the sale of tangible fixed assets 333 - ------------------------------------------------------------------------------------------------------------------------- Net cash outflow for capital expenditure (21,007) - ------------------------------------------------------------------------------------------------------------------------- Acquisitions and disposals Purchase of subsidiary undertakings (6,863) Purchase of outstanding minority interests (2,661) Payment of deferred consideration (609) Net cash acquired with subsidiary undertakings 1,663 Investments in associated undertakings and joint ventures (4,724) Sale of associated undertaking 4,443 Purchase of other investments (286) - ------------------------------------------------------------------------------------------------------------------------- Net cash outflow for acquisitions and disposals (9,037) - ------------------------------------------------------------------------------------------------------------------------- Management of liquid resources Increase in bills of exchange payable 151 Cash placed on short term deposit (2,133) - ------------------------------------------------------------------------------------------------------------------------- Net cash outflow from management of liquid resources (1,982) - ------------------------------------------------------------------------------------------------------------------------- Financing Issue of Ordinary share capital 113 Issue of minority shares in subsidiary undertaking 240 - ------------------------------------------------------------------------------------------------------------------------- Net cash inflow from issue of share capital 353 - ------------------------------------------------------------------------------------------------------------------------- Debt due within one year: increase in short term borrowings 394 Debt due beyond a year: new unsecured loans 19,508 redemption of debenture stock (24) Capital element of finance lease rental payments (20) - ------------------------------------------------------------------------------------------------------------------------- Net cash inflow from increase in debt 19,858 - ------------------------------------------------------------------------------------------------------------------------- Net cash inflow from financing 20,211 - -------------------------------------------------------------------------------------------------------------------------
20 24 24 Analysis of net debt
At Acquisitions At 1st January Cash (excl. cash Exchange 31st December 1997 flow and overdrafts) movement 1997 (pound)000 (pound)000 (pound)000 (pound)000 (pound)000 - ----------------------------------------------------------------------------------------------------------------- Cash 6,681 12,657 - (501) 18,837 Overdrafts (3,545) 1,045 - 163 (2,337) - ----------------------------------------------------------------------------------------------------------------- 3,136 13,702 - (338) 16,500 - ----------------------------------------------------------------------------------------------------------------- Debt due within one year - (394) (10) - (404) Debt due after one year (37,141) (19,484) - 2,044 (54,581) Finance leases (43) 20 - - (23) - ----------------------------------------------------------------------------------------------------------------- (37,184) (19,858) (10) 2,044 (55,008) - ----------------------------------------------------------------------------------------------------------------- Deposits 286 2,133 - (40) 2,379 Bills of exchange (327) (151) - 36 (442) - ----------------------------------------------------------------------------------------------------------------- (41) 1,982 - (4) 1,937 - ----------------------------------------------------------------------------------------------------------------- (34,089) (4,174) (10) 1,702 (36,571) - -----------------------------------------------------------------------------------------------------------------
25 Subsequent events In January 1998, the Group completed the acquisition of the whole of the issued share capital of CSC of Washington D.C. Inc. for (pound)6.9 million in cash. In February 1998, the Group agreed to acquire the entire outdoor advertising business of Fram Management AS for a guaranteed consideration of (pound)21.1 million. Additional consideration not exceeding (pound)5.9 million may be payable after two years depending on the future profitability of the business acquired. On 5th March 1998, the Board announced an offer on behalf of Clear Channel Communications, Inc to purchase the entire issued and to be issued share capital of the Company for (pound)446 million in cash (including payment of the second interim Ordinary dividend). 26 Related party transactions As at 31st December 1997, the Group had made loans of (pound)2.0 million to Adshel Street Furniture Pty Limited, its 50 per cent Australian joint venture. Details of the principal subsidiary and associated undertakings are shown in note 11. In accordance with accounting standard FRS 8, transactions or balances between Group entities that have been eliminated on consolidation are not reported. Details of Directors' remuneration and transactions with Directors are set out in note 4. 27 Pensions Defined benefit scheme The Group's principal defined benefit scheme is operated for certain United Kingdom and Republic of Ireland employees and provides benefits based on final pensionable salary. The assets of the scheme are held in trust in an independently managed fund and are therefore completely separate from the assets of the Group. The pension scheme is independently advised and its accounts are independently audited. Amounts are charged to the profit and loss account so as to spread the cost of pensions over employees' expected working lives. These amounts are determined by a qualified actuary on the basis of triennial valuations using the projected unit method. The most recent actuarial valuation of the pension scheme was at 1st January 1995. The actuarial assumptions which have the most significant effects on the results of the valuation are those relating to the rate of return on investments and the rates of increase in salaries and pensions. It was assumed that: 1 the existing assets be valued by discounting projected future income from the underlying investments, allowing for 9 per cent per annum growth in the income; 2 the salaries increase by 7 per cent per annum; 3 the present and future pensions increase at the rate of 3 per cent per annum; 4 the projected liabilities and assets be discounted at 9 per cent per annum. The members' contributions during the year were at an average of 4.5 per cent of pensionable salary. The Group contributions were nil. As at the date of the last actuarial valuation, the assessed market value of the scheme's assets was (pound)7,079,000 which was sufficient to cover 134 per cent of the benefits that had accrued to members, after allowing for expected future increases in earnings. An amount of (pound)839,000 is included in prepayments, which represents the recognition of the pension surplus at 1st January 1989 adjusted for the subsequent regular costs, notional interest and amortisation of the surplus. The additional surplus arising at 1st January 1995 is being amortised over the employees' expected working lives. An actuarial valuation of the pension scheme as at 1st January 1998 is currently in progress. 21 25 27 Pensions continued Defined contribution schemes The Group also operates defined contribution pension schemes for certain United Kingdom employees. The only other defined contributions schemes within the Group are operated by third parties for certain employees of foreign subsidiary undertakings. Contributions to these schemes are charged to the profit and loss account as they arise. Pension charge for the year
1997 (pound)000 - ------------------------------------------------------------------------------------------------------------------------- Defined benefit scheme 225 Defined contribution schemes 637 - ------------------------------------------------------------------------------------------------------------------------- 862 - -------------------------------------------------------------------------------------------------------------------------
The 1997 defined benefit charge is stated after crediting notional interest of (pound)102,000 and surplus amortisation of (pound)26,000 and charging regular cost of (pound)353,000. Other retirement benefit costs Certain current and former Directors are provided with post retirement medical insurance. The method of accounting for these benefits is on a basis similar to that used for pension obligations. The actuarial valuation of past service liabilities is being provided by an increased annual charge of (pound)24,000 per annum over six years. The principal assumption used is that medical costs will rise at 9 per cent per annum. 28 Companies Act 1985 The Consolidated Financial Statements do not constitute "statutory accounts" within the meaning of the Companies Act 1985 of Great Britain for the period presented. Statutory accounts for the year ended 31 December 1997 have been filed with the United Kingdom's Registrar of Companies. The auditors have reported on these accounts. Their reports were unqualified and did not contain statements under Section 237 (2) or (3) of that Act. These Consolidated Financial Statements exclude certain parent company statements and other information required by the Companies' Act 1985. However, they include all material disclosures required by generally accepted accounting principles in the United Kingdom including those Companies Act 1985 disclosures relating to the profit and loss account and balance sheet items. 22 26 29 Differences between US and UK Accounting Policies More Group Plc prepares its audited financial statements in accordance with accounting principles generally accepted in the United Kingdom (UK GAAP). Such principles vary in significant respects from those generally accepted in the United States (US GAAP). The following tables summarise the significant adjustments to consolidated attributable profit (net income under US GAAP) and shareholders' funds (shareholders' equity under US GAAP) which would result from the application of US GAAP instead of UK GAAP.
1997 Reconciliation of net income Reference (pound)'000 - ---------------------------------------------------------------------------------------------------------------------------- Attributable Profit (UK GAAP)* 18,015 Amortisation of goodwill (a) (3,809) Earnings in equity accounted joint ventures (b) 56 Pension costs (c) 227 Revaluation of property - depreciation (e) 9 Stock-based compensation (f) (824) Re-structuring costs (g) (259) Movement in value of financial instruments (h) (71) Deferred tax: Application of full liability method (d) 897 Tax effect of US GAAP adjustments (d) 10 - ---------------------------------------------------------------------------------------------------------------------------- Approximate net income (US GAAP) 14,251 - ---------------------------------------------------------------------------------------------------------------------------- Basic Earnings per share (US GAAP) (j) 0.34 Diluted Earnings per share (US GAAP) (j) 0.34 Reconciliation of shareholders' equity Reference (pound)'000 - ---------------------------------------------------------------------------------------------------------------------------- Shareholders' funds (UK GAAP)* 23,482 Goodwill (a) 80,314 Accumulated amortisation of goodwill (a) (6,415) Investments in joint ventures (b) 3,539 Pension costs (c) 787 Revaluation of property (e) (2,942) Accumulated depreciation on revalued assets (e) 102 Dividend payable (i) 5,204 Financial instruments (h) (71) Deferred tax: Application of full liability method (d) (1,061) Tax effect of US GAAP adjustments (d) (246) - ---------------------------------------------------------------------------------------------------------------------------- Approximate shareholders' equity (US GAAP) 102,693 - ----------------------------------------------------------------------------------------------------------------------------
* Figures as per the 1997 audited accounts 23 27 The significant differences applicable to More Group Plc's financial statements are summarised below. (a) Goodwill Under UK GAAP goodwill arising on acquisitions of subsidiary and associated undertakings is either capitalised and amortised through income over its expected life (with a maximum of 20 years) or charged directly against reserves in the year of acquisition. The Group has charged goodwill directly against reserves. In the event of subsequent disposal, any goodwill previously charged directly against reserves is written back and is reflected in the profit or loss on disposal. Under US GAAP goodwill is capitalised and amortised through income over the estimated period of benefit and is written off when judged to be irrecoverable. Goodwill written off against reserves under UK GAAP has been reinstated and is being amortised over 20 years. (b) Investment in joint ventures Under UK GAAP the excess of purchase price over the book value of net assets related to investments in joint ventures accounted for under the equity method is classified as goodwill and taken directly to reserves. Income in joint ventures is based upon the UK GAAP results. Under US GAAP the excess of purchase price over the book value of net assets related to investments in joint ventures accounted for under the equity method is capitalised as part of investments in joint ventures and amortised over the estimated period of benefit (in this case 20 years). The share in income of joint ventures is based upon results determined under US GAAP. (c) Pension costs Under UK GAAP pension fund assets are assessed actuarially at the present value of the expected future investment income, consistent with UK Statement of Standard Accounting Practice (SSAP) 24. Most liabilities are discounted at a long-term interest cost and most variations from regular cost are expressed as a percentage of payroll and spread over the average remaining service lives of current employees. For US GAAP purposes, Statement of Financial Accounting Standards (SFAS) No 87, "Employers Accounting for Pensions", was effectively adopted as of 1 January 1997 with the transition asset being amortised over the remaining service life of the current employees. On 1 January 1997 there was a surplus in the pension scheme of (pound)3.1 million. At that time the expected average remaining service life was fifteen years. On adoption, eight years after the date specified by SFAS No. 87, 8/15 of the deficit was reflected directly in opening equity at January 1, date of adoption , under US GAAP. The remaining 7/15 is being amortised over seven years. (d) Deferred tax Under UK GAAP deferred taxation is provided on major differences arising from the inclusion of income and expenditure in taxation computations in periods different from those in which they are included in the accounts to the extent that it is believed they will reverse in the future. Under SFAS No 109, deferred tax is provided for on a full liability method. Deferred tax assets or liabilities are recognised for differences between the financial and tax basis of assets and liabilities. A deferred tax asset will be recognised on overseas tax losses when it is considered that these are more likely than not to give rise to a future tax benefit. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realised. (e) Revaluation of property Under UK GAAP property is carried either at original cost or at subsequent valuation less related depreciation, calculated on the revalued amount where applicable. Revaluation surpluses are taken directly to shareholders' funds, while deficits below cost, less any related depreciation, are included in attributable profit. Depreciation is charged on the cost or revalued amount over the estimated useful life. Under US GAAP upward revaluations of property are not permitted. The historical cost of property is depreciated over the estimated useful life. (f) Stock-based compensation Under UK GAAP the Group does not recognise compensation under its stock option schemes as options are granted at exercise prices equal to the market price on the date of grant, irrespective of any performance criteria. Under US GAAP compensation expense associated with shares issued through stock option schemes, which include performance related criteria, is recognised as the difference between the quoted market price of the stock and the exercise price of the option, on a variable basis through to the measurement date (the date on which the performance criteria are fulfilled). Compensation costs, as determined above, are charged to expense over the period in which the related service is provided. For fixed plans, compensation cost for stock options is measured as the excess, if any, of the quoted market price at the measurement date over the exercise price. 24 28 (g) Restructuring costs Under UK GAAP restructuring costs are provided for in the period in which a demonstrable commitment to incur the costs is made. Under US GAAP items must meet specific criteria (as outlined in EITF 94 - 3) to be classified as restructuring or exit costs. Costs which do not qualify are recognised as liabilities when an obligation exists to pay cash or otherwise sacrifice assets and are classified as an operating expense of the business in the period in which such obligations are incurred. (h) Financial instruments Under UK GAAP contracts entered into for the purpose of hedging the company's overall exposure to interest rate fluctuations, which are undertaken at no cash cost to the company are reflected, where effective, as an adjustment to interest expense. Under US GAAP financial instruments which are used to reduce exposure to financial risk, but which do not qualify as hedges of firm commitments, are carried at market value. Related gains or losses are recognised through the income statement as changes in the market value of the hedge contract occur. (i) Dividend payable Under UK GAAP dividends declared after the period end are accrued, and recorded in the period to which they relate. Under US GAAP dividends are recorded in the period in which they are formally declared and approved by the shareholders. (j) Earnings per share (EPS) Under UK GAAP Basic EPS is calculated based on income available to Ordinary shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS is disclosed where such amount differs from Basic EPS by 5% or more. Under US GAAP EPS is calculated in accordance with the provisions of SFAS 128. Basic EPS is calculated based on income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS, which is also calculated similarly under UK and US GAAP, considers the effect of issuing all potentially dilutive common shares. Diluted EPS is required to be disclosed irrespective of the significance of the difference from Basic EPS. (k) Cash flow information Under UK GAAP cash flows are presented for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, equity dividends paid, and management of liquid resources and financing. Under US GAAP cash flows are classified as resulting from operating, investing, and financing activities. Changes in the balances of overdrafts are classified within financing activities. Under UK GAAP cash flows represent movements on cash in hand and deposits repayable on demand, less overdrafts repayable on demand. Under US GAAP the cashflow statement shows movements in cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under this definition. A consolidated statement of cash flow is set out below in accordance with the classification requirements and definition of cash under US GAAP.
1997 Summary of US GAAP cash flow (pound)'000 - ------------------------------------------------------------------ -------------------------------------------------------- Cash provided by operating activities 31,914 Cash used in investing activities (32,026) Cash provided by financing activities 12,769 Effect of exchange rate changes on cash (501) - ------------------------------------------------------------------ --------------------------------------------------------- Net increase in cash and cash equivalents 12,156 Cash and cash equivalents at the beginning of the year 6,681 - ------------------------------------------------------------------ --------------------------------------------------------- Cash and cash equivalents at the end of the year 18,837 - ------------------------------------------------------------------ ---------------------------------------------------------
25 29 (b) Pro Forma Financial Information. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma combined condensed financial statements give effect to the acquisition of More Group Plc. ("More") by the Company. For accounting purposes, the Company will account for the acquisition as a purchase; accordingly the net assets of More have been adjusted to their estimated fair values based upon a preliminary purchase price allocation. The unaudited pro forma combined condensed statement of operations for the year ended December 31, 1997 gives effect to the acquisition as if it had occurred on January 1, 1997. The unaudited pro forma combined condensed balance sheet at December 31, 1997 gives effect to the acquisition as if it had occurred on December 31, 1997. The unaudited pro forma combined condensed statement of operations was prepared based upon the historical statement of operations of the Company, adjusted to reflect the acquisitions of Eller Media, Inc. ("Eller") and Paxson Radio ("Paxson") and the merger with Universal Outdoor Holdings, Inc. ("Universal") as if such acquisitions and merger had occurred on January 1, 1997 ("Clear Channel Pro Forma"), and based upon the historical statement of operations of More adjusted to conform with U.S. Generally Accepted Accounting Principles. The unaudited pro forma combined condensed balance sheet was prepared based upon the historical balance sheet of the Company adjusted to reflect the merger with Universal as if such merger had occurred on December 31, 1997 and the historical balance sheet of More adjusted to conform with U.S. Generally Accepted Accounting Principles. Certain amounts in More's financial statements have been reclassified to conform to the Company's 1997 presentation. The unaudited pro forma combined condensed financial statements should be read in conjunction with the historical financial statements of More included herein and the historical financial statements of the Company. The unaudited pro forma combined condensed financial statements are not necessarily indicative of the actual results of operations or financial position that would have occurred had the acquisition and the above described acquisitions and merger and transactions of the Company and More occurred on the dates indicated nor are they necessarily indicative of future operating results or financial position. 30 CLEAR CHANNEL AND MORE UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (Dollars in thousands) December 31, 1997
Clear Channel Clear Channel More Pro Forma and More Pro Forma Historical Adjustment Pro Forma --------- ---------- ---------- --------- ASSETS Current assets: Cash and cash equivalents $ 9,746 $ 35,023 $ (8,590) $ 36,179 Accounts receivable, net 191,838 41,187 -- 233,025 Film rights - current 14,826 -- -- 14,826 Other current assets 18,004 6,683 -- 24,687 ----------- ----------- ----------- ----------- Total Current Assets 234,414 82,893 (8,590) 308,717 Property, plant & equipment, net 1,368,463 111,399 -- 1,479,862 Intangible assets: Network affiliation agreements 33,727 -- -- 33,727 Licenses and goodwill 3,338,738 132,582 596,581 4,067,901 Covenants not-to-compete 33,976 -- -- 33,976 Other intangible assets 19,593 -- -- 19,593 ----------- ----------- ----------- ----------- 3,426,034 132,582 596,581 4,155,197 Less accumulated amortization (142,956) (10,590) 10,590 (142,956) ----------- ----------- ----------- ----------- 3,283,078 121,992 607,171 4,012,241 Other assets: Notes receivable 35,373 -- -- 35,373 Film rights 14,171 -- -- 14,171 Investments in, and advances to, nonconsolidated affiliates 266,691 10,481 -- 277,172 Other assets 48,539 22,566 -- 71,105 Other investments 51,259 472 -- 51,731 ----------- ----------- ----------- ----------- TOTAL ASSETS $ 5,301,988 $ 349,803 $ 598,581 $ 6,250,372 =========== =========== =========== ===========
31 CLEAR CHANNEL AND MORE UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (Dollars in thousands) December 31, 1997
Clear Channel Clear Channel More Pro Forma and More Pro Forma Historical Adjustment Pro Forma --------- ---------- ---------- --------- LIABILITIES Current liabilities: Accounts payable $ 17,416 $ 33,449 $ -- $ 50,865 Accrued interest 9,950 459 -- 10,409 Accrued expenses 61,666 20,793 -- 82,459 Deferred income 1,340 6,238 -- 7,578 Short-term debt -- 7,607 -- 7,607 Current portion of long-term debt 25,668 -- -- 25,668 Current portion of film rights liability 15,875 -- -- 15,875 Income tax liability -- 13,094 -- 13,094 ----------- ----------- ----------- ----------- Total Current Liabilities 131,915 81,640 -- 213,555 Long-term debt 2,048,021 90,612 768,107 2,906,740 Film rights liability 15,551 -- -- 15,551 Deferred income taxes 101,944 5,406 -- 107,350 Deferred income - long-term 9,750 -- -- 9,750 Other long-term liabilities 25,378 924 -- 26,302 Minority interest 20,787 1,695 -- 22,482 Shareholders' equity: Preferred stock -- -- -- -- Common stock 11,752 6,872 (6,872) 11,752 Additional paid-in capital 2,741,794 103,801 (103,801) 2,741,794 Retained earnings 169,631 55,398 (55,398) 169,631 Other 2,398 3,455 (3,455) 2,398 Unrealized gain on investments 23,754 -- -- 23,754 Cost of shares held in treasury (687) -- -- (687) ----------- ----------- ----------- ----------- Total Shareholders' Equity 2,948,642 169,526 (169,526) 2,948,642 ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,301,988 $ 349,803 $ 598,581 $ 6,250,372 =========== =========== =========== ===========
32 CLEAR CHANNEL AND MORE UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (In thousands, except per share data) Year ended December 31, 1997
Clear Channel Clear Channel More Pro Forma and More Pro Forma Historical Adjustment Pro Forma --------- ---------- ---------- --------- Net revenue $ 1,041,453 $ 232,530 $ -- $ 1,273,983 Operating expenses 591,937 157,859 -- 749,796 Depreciation and amortization 243,064 23,592 23,033 289,689 Noncash compensation expense -- 1,327 (1,327) -- Corporate expenses 23,201 7,474 -- 30,675 ----------- ----------- ----------- ----------- Operating income (loss) 183,251 42,278 (21,706) 203,823 Interest expense 163,205 4,383 50,849 218,437 Other income (expense) - net 3,842 (3,655) -- 187 ----------- ----------- ----------- ----------- Income (loss) before income taxes 23,888 34,240 (72,555) (14,427) Income tax (expense) benefit (32,465) (10,705) 17,379 (25,791) ----------- ----------- ----------- ----------- Income before equity in earnings (loss) of nonconsolidated affiliates (8,577) 23,535 (55,176) (40,218) Equity in earnings (loss) of nonconsolidated affiliates 6,615 (586) -- 6,029 ----------- ----------- ----------- ----------- Net income (loss) $ (1,962) $ 22,949 $ (55,176) $ (34,189) =========== =========== =========== =========== Net income (loss) per common share: Basic $ (0.02) $ (0.31) =========== =========== Diluted $ (0.05) $ (0.33) =========== =========== Other Data: After-tax cash flow (1) $ 276,764 $ 47,868 $ (33,470) $ 291,162 =========== =========== =========== =========== After-tax cash flow per common share - Diluted (2) $ 2.45 $ 2.58 =========== ===========
(1) After-tax cash flow is defined as net income (loss) before unusual items plus depreciation, amortization of intangibles (including nonconsolidated affiliates) and deferred tax. After-tax cash flow is not presented as a measure of operating results and does not purport to represent cash provided by operating activities. After-tax cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. (2) After-tax cash flow per share is defined as after-tax cash flow divided by weighted average common shares and common share equivalents outstanding assuming dilution. 33 CLEAR CHANNEL AND MORE NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (In thousands of dollars) The pro forma adjustments at December 31, 1997 are as follows:
Increase (Decrease) ---------- (a) Decrease in Cash and cash equivalents due to the estimated acquisition expenses. $ (8,590) (b) Increase in Licenses and goodwill due to the additional goodwill created as a 596,581 result of the acquisition of $729,163 offset by the elimination of existing goodwill of $132,582. (c) Decrease in Accumulated amortization to eliminate the existing accumulated 10,590 amortization related to the $132,582 of goodwill that was eliminated. (d) Increase in Long-term debt due to additional borrowing to fund the acquisition 768,107 cost. (e) Decrease in Common stock due to the elimination of More's shareholder's equity. (6,872) (f) Decrease in Additional paid-in capital due to the elimination of More's (103,801) shareholder's equity. (g) Decrease in Retained earnings due to the elimination of More's shareholder's (55,398) equity. (h) Decrease in Other due to the elimination of More's shareholder's equity. (3,455)
The pro forma adjustments for the year ended December 31, 1997 are as follows:
Increase (Decrease) ---------- Income (i) Increase in amortization expense resulting from the additional goodwill created $ (23,033) by the acquisition. (j) Decrease in Noncash compensation to reverse the effect of Financial Accounting 1,327 Standards Board Statement No. 123 ("FAS 123") from the statement of operations as the Company elected to follow Accounting Principles Board Opinion Number 25 ("APB 25") for earnings presentation and implemented FAS 123 for footnote disclosure only.
(k) Increase in interest expense due to financing the acquisition price of More at (50,849) the Company's average interest rate of 6.62% for 1997. (l) The tax effect of adjustment (j) at the 1997 UK statutory rate of 31.5% offset by 17,379 the tax benefit of adjustment (k) at the Company's federal U.S. tax rate in 1997 of 35%.
34 CLEAR CHANNEL UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (Dollars in thousands) December 31, 1997
Clear Channel Universal Pro Forma Clear Channel Historical Historical Adjustment (3) Pro Forma ---------- ---------- ------------- --------- ASSETS Current assets: Cash and cash equivalents $ 24,657 $ 89 $ (15,000) $ 9,746 Accounts receivable, net 155,962 35,876 -- 191,838 Film rights - current 14,826 -- -- 14,826 Other current assets 3,202 14,802 -- 18,004 ----------- ----------- ----------- ----------- Total Current Assets 198,647 50,767 (15,000) 234,414 Property, plant & equipment, net 746,284 622,179 -- 1,368,463 Intangible assets: Network affiliation agreements 33,727 -- -- 33,727 Licenses and goodwill 2,175,944 260,504 902,290 3,338,738 Covenants not-to-compete 24,892 9,084 -- 33,976 Other intangible assets 19,593 -- -- 19,593 ----------- ----------- ----------- ----------- 2,254,156 269,588 902,290 3,426,034 Less accumulated amortization (141,066) (20,103) 18,213 (142,956) ----------- ----------- ----------- ----------- 2,113,090 249,485 920,503 3,283,078 Other assets: Notes receivable 35,373 -- -- 35,373 Film rights 14,171 -- -- 14,171 Investments in, and advances to, nonconsolidated affiliates 266,691 -- -- 266,691 Other assets 30,122 18,417 -- 48,539 Other investments 51,259 -- -- 51,259 ----------- ----------- ----------- ----------- TOTAL ASSETS $ 3,455,637 $ 940,848 $ 905,503 $ 5,301,988 =========== =========== =========== ===========
35 CLEAR CHANNEL UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (Dollars in thousands) December 31, 1997
Clear Channel Universal Pro Forma Clear Channel Historical Historical Adjustment (3) Pro Forma ---------- ---------- ------------- --------- LIABILITIES Current liabilities: Accounts payable $ 11,904 $ 5,512 $ -- $ 17,416 Accrued interest 9,950 -- -- 9,950 Accrued expenses 34,489 27,177 -- 61,666 Deferred income 1,340 -- -- 1,340 Current portion of long-term debt 13,294 12,374 -- 25,668 Current portion of film rights liability 15,875 -- -- 15,875 ----------- ----------- ----------- ----------- Total Current Liabilities 86,852 45,063 -- 131,915 Long-term debt 1,540,421 507,600 -- 2,048,021 Film rights liability 15,551 -- -- 15,551 Deferred income taxes 10,114 91,830 -- 101,944 Deferred income - long-term 9,750 -- -- 9,750 Other long-term liabilities 25,378 -- -- 25,378 Minority interest 20,787 -- -- 20,787 Shareholders' equity: Preferred stock -- -- -- -- Common stock 9,823 268 1,661 11,752 Additional paid-in capital 1,541,865 374,129 825,800 2,741,794 Retained earnings/ (accumulated deficit) 169,631 (87,541) 87,541 169,631 Other 2,398 9,499 (9,499) 2,398 Unrealized gain on investments 23,754 -- -- 23,754 Cost of shares held in treasury (687) -- -- (687) ----------- ----------- ----------- ----------- Total Shareholders' Equity 1,746,784 296,355 905,503 2,948,642 ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,455,637 $ 940,848 $ 905,503 $ 5,301,988 =========== =========== =========== ===========
36 CLEAR CHANNEL UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data) Year ended December 31, 1997
Clear Channel/ Clear Channel Eller Pro Forma Eller Paxson Historical Historical Adjustment (1) Pro Forma Historical ---------- ---------- -------------- --------- ---------- Net revenue $ 697,068 $ 56,642 $ -- $ 753,710 $ 78,104 Operating expenses 394,404 33,804 -- 428,208 63,362 Depreciation and amortization 114,207 10,547 5,974 130,728 12,101 Noncash compensation expense -- -- -- -- -- Corporate expenses 20,883 2,318 -- 23,201 4,059 ----------- ----------- ----------- ----------- ----------- Operating income (loss) 167,574 9,973 (5,974) 171,573 (1,418) Interest expense 75,076 8,565 2,518 86,159 1,370 Other income (expense) - net 11,579 (4,082) -- 7,497 (1,034) ----------- ----------- ----------- ----------- ----------- Income (loss) before income taxes 104,077 (2,674) (8,492) 92,911 (3,822) Income tax (expense) benefit (47,116) (3) 1,315 (45,804) -- ----------- ----------- ----------- ----------- ----------- Income before equity in earnings (loss) of nonconsolidated affiliates 56,961 (2,677) (7,177) 47,107 (3,822) Equity in earnings (loss) of non- consolidated affiliates 6,615 -- -- 6,615 -- ----------- ----------- ----------- ----------- ----------- Net income (loss) $ 63,576 $ (2,677) $ (7,177) $ 53,722 $ (3,822) =========== =========== =========== =========== =========== Net income (loss) per common share: Basic $ .72 $ .60 =========== ========== Diluted $ .67 $ .54 =========== ========== Clear Channel/ Pro Forma Eller/Paxson Universal Pro Forma Clear Channel Adjustment (2) Pro Forma Historical Adjustment (3) Pro Forma -------------- --------- ---------- -------------- --------- Net revenue $ -- $ 831,814 $ 209,639 $ -- $ 1,041,453 Operating expenses (1,246) 490,324 101,613 -- 591,937 Depreciation and amortization 9,377 152,206 59,977 30,881 243,064 Noncash compensation expense -- -- 8,289 (8,289) -- Corporate expenses (4,059) 23,201 -- -- 23,201 ----------- ----------- ----------- ----------- ----------- Operating income (loss) (4,072) 166,083 39,760 (22,592) 183,251 Interest expense 29,276 116,805 46,400 -- 163,205 Other income (expense) - net -- 6,463 (2,621) -- 3,842 ----------- ----------- ----------- ----------- ----------- Income (loss) before income taxes (33,348) 55,741 (9,261) (22,592) 23,888 Income tax (expense) benefit 13,339 (32,465) -- -- (32,465) ----------- ----------- ----------- ----------- ----------- Income before equity in earnings (loss) of nonconsolidated affiliates (20,009) 23,276 (9,261) (22,592) (8,577) Equity in earnings (loss) of non- consolidated affiliates -- 6,615 -- -- 6,615 ----------- ----------- ----------- ----------- ----------- Net income (loss) $ (20,009) $ 29,891 $ (9,261) $ (22,592) $ (1,962) =========== =========== =========== =========== =========== Net income (loss) per common share: Basic $ .33 $ (.02) =========== =========== Diluted $ .28 $ (.05) =========== ===========
37 CLEAR CHANNEL NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year ended December 31, 1997 ELLER ACQUISITION (1) Represents the pro forma effect of the acquisition of Eller assuming it was acquired January 1, 1997.
Increase (Decrease) Income ------ (a) Increase in amortization of goodwill of $5,205 resulting from the additional $ (5,974) goodwill created by the acquisition and a decrease in amortizable life from 40 years (Eller) to 25 years (the Company) and additional depreciation of $769 related to the adjustment of fixed assets to fair value. (b) Increase in interest expense due to a higher amount of average debt (2,518) outstanding, which was partially offset by a lower average interest rate (6% average rate for the Company and 8.8% for Eller during the first three months of 1997). (c) Tax effect of the above adjustments to depreciation and interest expense at 1,315 the Company's effective federal and state tax rate of 40%.
PAXSON ACQUISITION (2) Represents the pro forma effect of the Paxson acquisition assuming it was acquired January 1, 1997.
Increase (Decrease) Income ------ (a) Elimination of option plan compensation expense resulting from the elimination $ 1,246 of the plan. (b) Increase in amortization expense resulting from the additional goodwill (9,377) created by the acquisition. (c) Elimination of corporate general and administrative expenses resulting from 4,059 the elimination of the Paxson corporate office.
38 (d) Increase in interest expense (at an average interest rate of 6.5% for the (29,276) first nine months of 1997) due to additional borrowing on the Company's credit facility to finance the acquisition cost. (e) Tax effect of the above adjustment at the Company's effective federal and 13,339 state tax rate of 40%.
UNIVERSAL MERGER (3) Represents the pro forma effect of the merger with Universal assuming it had occurred on January 1, 1997. The Company and Universal unaudited pro forma combined condensed financial statements reflect the merger, accounted for as a purchase, as follows: Universal Common Stock outstanding at December 31, 1997 adjusted to reflect the exercise of all outstanding options and warrants 28,787,442 Exchange ratio .67 ----------- The Company's Common Stock assumed to be issued in connection with the Merger 19,287,586 Estimated value per share x $62.3125 $ 1,201,858 Estimated transaction costs 15,000 Total estimated purchase price $ 1,216,858 =========== For purpose of these statements, the total estimated purchase price was allocated as follows: Total estimated purchase price $ 1,216,858 Universal's net assets at December 31,1997 adjusted for the elimination of existing goodwill of $242,291 54,064 Estimated excess purchase price (allocated to goodwill) $ 1,162,794 ===========
The estimated excess purchase price allocated to goodwill of $1,162,794 will be amortized over a 25-year period using the straight line method, which will result in annual goodwill amortization of $46,512. The pro forma merger adjustments at December 31, 1997 are as follows:
Increase (Decrease) ------------------ Cash and cash equivalents $ (15,000) Licenses and goodwill 902,290 Accumulated Amortization 18,213 Common stock 1,661 Additional paid-in capital 825,800 Retained earnings (accumulated deficit) 87,541 Other shareholders' equity (9,499)
The pro forma merger adjustments for the year ended December 31, 1997 are as follows:
Increase (Decrease) Income ------ Depreciation and amortization $ (30,881) Noncash compensation for incentive options 8,289
39 (c) Index to Exhibits 23 Consent of Price Waterhouse (Filed herewith.) 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. Clear Channel Communications, Inc. Date September 4, 1998 By /s/ ERBERT W. HILL, JR. Herbert W. Hill, Jr. Senior Vice President/ Chief Accounting Officer EXHIBIT INDEX 23 Consent of Price Waterhouse (Filed herewith.) EX-23 2 CONSENT OF PRICE WATERHOUSE 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (No. 333-51957) and Form S-4 (No. 333-57987) and in the Registration Statements on Form S-8 (Nos. 33-64463, 333-29717, and 333-61883) of Clear Channel Communications, Inc. of our report dated 5 March 1998 (except as to the information presented in Note 29, for which the date is 13 August 1998) relating to the consolidated financial statements of More Group Plc. appearing in this Current Report on Form 8-K/A dated 4 September 1998. /s/ PRICE WATERHOUSE Price Waterhouse Chartered Accountants and Registered Auditors London, England September 4, 1998 -----END PRIVACY-ENHANCED MESSAGE-----