-----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, M7/2M7Fl0FKzCigCjVwiJMLMxNWp/EFb9BJJOyJg8K9GF5MsBTC1zoM73Lb35/Ej h40IoyS3OZqu09ywW6H5+Q== 0000950134-99-001261.txt : 19990224 0000950134-99-001261.hdr.sgml : 19990224 ACCESSION NUMBER: 0000950134-99-001261 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980625 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990223 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: 99548066 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 AMENDMENT NO. 1 TO FORM 8-K 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) February 23, 1999 (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. On September 4, 1998, the Company filed a current Report on Form 8-K/A to amend the July 10, 1998 filing with the information required under item 7 (a) and item 7 (b). On January 14, 1999 the Company filed a Current Report on Form 8-K/A to amend the July 10, 1998 filing with the purchase price information required in the notes to the pro forma information under item 7 (b). The Company is filing this amendment to adjust the pro forma information under item 7 (b). Item 7 FINANCIAL STATEMENTS AND EXHIBITS (b) Pro Forma Financial Information. 3 (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. 4 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 =========== =========== =========== ===========
5 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 =========== =========== =========== ===========
6 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 27,260 7,474 -- 34,734 ----------- ----------- ----------- ----------- Operating income (loss) 179,192 42,278 (21,706) 199,764 Interest expense 163,205 4,383 50,849 218,437 Other income (expense) - net 3,842 (3,655) -- 187 ----------- ----------- ----------- ----------- Income (loss) before income taxes 19,829 34,240 (72,555) (18,486) Income tax (expense) benefit (30,841) (10,705) 17,379 (24,167) ----------- ----------- ----------- ----------- Income before equity in earnings (loss) of nonconsolidated affiliates (11,012) 23,535 (55,176) (42,653) Equity in earnings (loss) of nonconsolidated affiliates 6,615 (586) -- 6,029 ----------- ----------- ----------- ----------- Net income (loss) $ (4,397) $ 22,949 $ (55,176) $ (36,624) =========== =========== =========== =========== Net income (loss) per common share: Basic $ (0.04) $ (0.33) =========== =========== Diluted $ (0.07) $ (0.36) =========== ===========
7 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%.
8 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 =========== =========== =========== ===========
9 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 =========== =========== =========== ===========
10 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 -- 27,260 -- -- 27,260 ----------- ----------- ----------- ----------- ----------- Operating income (loss) (8,131) 162,024 39,760 (22,592) 179,192 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 (37,407) 51,682 (9,261) (22,592) 19,829 Income tax (expense) benefit 14,963 (30,841) -- -- (30,841) ----------- ----------- ----------- ----------- ----------- Income before equity in earnings (loss) of nonconsolidated affiliates (22,444) 20,841 (9,261) (22,592) (11,012) Equity in earnings (loss) of non- consolidated affiliates -- 6,615 -- -- 6,615 ----------- ----------- ----------- ----------- ----------- Net income (loss) $ (22,444) $ 27,456 $ (9,261) $ (22,592) $ (4,397) =========== =========== =========== =========== =========== Net income (loss) per common share: Basic $ .30 $ (.04) =========== =========== Diluted $ .26 $ (.07) =========== ===========
11 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.
12 (c) 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. (d) Tax effect of the above adjustment at the Company's effective federal and 13,339 state tax rate of 40%. (e) This pro forma does not include certain benefits Clear Channel believes it will achieve through the discontinuance of a corporate headquarters operating solely for the Paxson Radio stations. Paxson Radio's historical statement of operations for the year ended December 31, 1997 includes $4,059, $2,435 net of tax, of expenses as the allocation of corporate expense. Clear Channel has not incurred these expenses relating to the Paxson Radio stations since the completion of this acquisition in December 1997.
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
13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Clear Channel Communications, Inc. Date: February 23, 1999 By: /s/ HERBERT W. HILL, JR. ------------------------------ Herbert W. Hill, Jr. Senior Vice President and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----