-----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, EejgjZZrrzoObh6PNHFoMkV3Xtqc6HHb/UZhiXsWi/hV4NJ+VUnBuP9Qojd2J9ag C64K0dFAjb5d7/H5xFVpCA== 0000950134-99-001262.txt : 19990224 0000950134-99-001262.hdr.sgml : 19990224 ACCESSION NUMBER: 0000950134-99-001262 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981209 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: 99548069 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, DC 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 (December 9, 1998) CLEAR CHANNEL COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Texas 1-9645 74-1787536 (State or other jurisdiction (Commission File Number) (IRS Employer incorporation) Identification No.) 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (210) 822-2828 2 Item 5. OTHER ITEMS On December 9, 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 adjust the pro forma information under item 7(b). Item 7. FINANCIAL STATEMENTS AND EXHIBITS (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 merger. For accounting purposes Clear Channel will account for the merger as a purchase of Jacor; accordingly the net assets of Jacor have been adjusted to their estimated fair values based upon a preliminary purchase price allocation. The unaudited pro forma combined condensed statements of operations for the year ended December 31, 1997 and the nine months ended September 30, 1998 give effect to the merger as if it had occurred on January 1, 1997 and January 1, 1998, respectively. The unaudited pro forma combined condensed balance sheet at September 30, 1998 gives effect to the merger as if it occurred on September 30, 1998. The unaudited pro forma combined condensed statement of operations for the year ended December 31, 1997 was prepared based upon the historical statement of operations of Clear Channel, adjusted to reflect the acquisitions of 93% of the outstanding capital stock of Eller, the radio assets and certain outdoor advertising assets of Paxson, all of the outstanding capital stock of More and the merger with Universal, as if such acquisitions and merger had occurred on January 1, 1997 ("1997 Clear Channel Pro Forma"), and based upon the historical statement of operations of Jacor adjusted to reflect the acquisition of the assets of 17 radio stations from Nationwide, The EFM Companies, and Premiere, as if such acquisitions had occurred on January 1, 1997 ("1997 Jacor Pro Forma"). The unaudited pro forma combined condensed statement of operations for the nine months ended September 30, 1998 was prepared based upon the historical statement of operations of Clear Channel, adjusted to reflect the merger with Universal and the acquisition of More as if such merger and acquisition had occurred on January 1, 1998 ("1998 Clear Channel Pro Forma"), and based upon the historical statement of operations of Jacor adjusted to reflect the acquisition of the assets of 17 radio stations from Nationwide as if such acquisition had occurred on January 1, 1998 ("1998 Jacor Pro Forma"). The unaudited pro forma combined condensed balance sheet was prepared based upon the historical balance sheet of Clear Channel and the historical balance sheet of Jacor. Certain amounts in Jacor's financial statements have been reclassified to conform to Clear Channel's presentation. The unaudited pro forma combined condensed financial statements should be read in conjunction with the historical financial statements of Jacor and Clear Channel incorporated herein by reference. 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 merger and the above described acquisitions and merger transactions of Clear Channel and Jacor occurred on the dates indicated nor are they necessarily indicative of future operating results or financial position. 3 CLEAR CHANNEL AND JACOR UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (IN THOUSANDS OF DOLLARS) SEPTEMBER 30, 1998
CLEAR CHANNEL PRO FORMA AND JACOR CLEAR CHANNEL JACOR MERGER PRO FORMA HISTORICAL HISTORICAL ADJUSTMENT MERGER ------------- ---------- ---------- ------------- ASSETS Current assets: Cash and cash equivalents.................... $ 48,192 $ 42,084 $ (50,000) $ 40,276 Accounts receivable, net..................... 287,067 198,327 -- 485,394 Other current assets......................... 65,603 29,385 -- 94,988 ---------- ---------- ---------- ----------- Total Current Assets................... 400,862 269,796 (50,000) 620,658 Property, plant & equipment, net............... 1,713,449 260,212 -- 1,973,661 Intangible assets: Contract valuations.......................... 275,211 360,000 -- 635,211 Licenses and goodwill........................ 4,362,111 2,508,450 1,613,629 8,484,190 Other intangible assets...................... 74,552 -- -- 74,552 ---------- ---------- ---------- ----------- 4,711,874 2,868,450 1,613,629 9,193,953 Less accumulated amortization.................. (254,869) (156,159) 156,159 (254,869) ---------- ---------- ---------- ----------- 4,457,005 2,712,291 1,769,788 8,939,084 Other assets: Notes receivable............................. 53,675 -- -- 53,675 Investments in and advances to, nonconsolidated affiliates................. 346,215 -- -- 346,215 Other assets................................. 41,189 85,369 -- 126,558 Other investments............................ 248,890 -- -- 248,890 ---------- ---------- ---------- ----------- TOTAL ASSETS........................... $7,261,285 $3,327,668 $1,719,788 $12,308,741 ========== ========== ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable, accrued expenses and other current liabilities........................ $ 238,166 $ 137,958 $ -- $ 376,124 Current portion of long-term debt............ 4,049 -- -- 4,049 ---------- ---------- ---------- ----------- Total Current Liabilities.............. 242,215 137,958 -- 380,173 Long-term debt................................. 2,980,849 1,229,565 -- 4,210,414 Deferred income taxes.......................... 163,104 358,995 -- 522,099 Other long-term liabilities.................... 92,913 119,717 -- 212,630 Liquid yield options notes..................... -- 302,400 53,630 356,030 Minority interest.............................. 18,502 -- -- 18,502 Shareholders' equity: Preferred stock.............................. -- -- -- -- Common stock................................. 24,856 511 6,639 32,006 Additional paid-in capital................... 3,322,268 1,114,520 1,680,950 6,117,738 Common stock warrants........................ -- 31,500 11,071 42,571 Retained earnings............................ 214,621 19,871 (19,871) 214,621 Other........................................ 49,288 -- -- 49,288 Unrealized gain on investments............... 154,642 12,631 (12,631) 154,642 Cost of shares held in treasury.............. (1,973) -- -- (1,973) ---------- ---------- ---------- ----------- Total Shareholders' Equity............. 3,763,702 1,179,033 1,666,158 6,608,893 ---------- ---------- ---------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................... $7,261,285 $3,327,668 $1,719,788 $12,308,741 ========== ========== ========== ===========
83 4 CLEAR CHANNEL AND JACOR UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, 1997
CLEAR CHANNEL 1997 1997 PRO FORMA AND JACOR CLEAR CHANNEL JACOR MERGER PRO FORMA PRO FORMA PRO FORMA ADJUSTMENT MERGER ------------- --------- ---------- ------------- Net revenue.......................... $1,273,983 $650,844 $ -- $1,924,827 Operating expenses................... 749,796 445,726 -- 1,195,522 Depreciation and amortization........ 289,689 102,887 82,765 475,341 Corporate expenses................... 34,734 17,716 -- 52,450 ---------- -------- -------- ---------- Operating income (loss).............. 199,764 84,515 (82,765) 260,514 Interest expense..................... 218,437 117,710 -- 336,147 Other income (expense) -- net........ 187 12,060 -- 12,247 ---------- -------- -------- ---------- Income (loss) before income taxes.... (18,486) (21,135) (82,765) (122,386) Income tax (expense) benefit......... (24,167) 4,526 -- (19,644) ---------- -------- -------- ---------- Income (loss) before equity in earnings of nonconsolidated affiliates......................... (42,653) (16,612) (82,765) (142,030) Equity in earnings (loss) of nonconsolidated affiliates......... 6,029 -- -- 6,029 ---------- -------- -------- ---------- Net income (loss) before extraordinary items................ $ (36,624) $(16,612) $(82,765) $ (136,001) ========== ======== ======== ========== Net income (loss) before extraordinary items per common share: Basic.............................. $ (.17) $ (.47) ========== ========== Diluted............................ $ (.18) $ (.47) ========== ==========
84 5 CLEAR CHANNEL AND JACOR UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) NINE MONTHS ENDED SEPTEMBER 30, 1998
CLEAR CHANNEL 1998 1998 PRO FORMA AND JACOR CLEAR CHANNEL JACOR MERGER PRO FORMA PRO FORMA PRO FORMA ADJUSTMENT MERGER ------------- --------- ---------- ------------- Net revenue....................... $1,109,521 $589,184 $ -- $1,698,705 Operating expenses................ 659,215 398,310 -- 1,057,525 Depreciation and amortization..... 251,923 97,352 46,915 396,190 Corporate expenses................ 32,864 14,458 -- 47,322 ---------- -------- -------- ---------- Operating income (loss)........... 165,519 79,064 (46,915) 197,668 Interest expense.................. 133,781 80,470 -- 214,251 Other income (expense) -- net..... 3,817 10,728 -- 14,545 ---------- -------- -------- ---------- Income (loss) before income taxes........................... 35,555 9,322 (46,915) (2,038) Income tax (expense) benefit...... (45,339) (15,375) -- (60,714) ---------- -------- -------- ---------- Income (loss) before equity in earnings of nonconsolidated affiliates...................... (9,784) (6,053) (46,915) (62,752) Equity in earnings (loss) of nonconsolidated affiliates...... 9,692 -- -- 9,692 ---------- -------- -------- ---------- Net income (loss) before extraordinary items............. $ (92) $ (6,053) $(46,915) $ (53,060) ========== ======== ======== ========== Net income (loss) before extraordinary items per common share: Basic........................... $ (.00) $ (.17) ========== ========== Diluted......................... $ (.00) $ (.17) ========== ==========
85 6 CLEAR CHANNEL AND JACOR NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) Clear Channel and Jacor unaudited pro forma combined condensed financial statements reflect the merger, accounted for as a purchase, as follows: Jacor common stock outstanding (in whole shares)............ 51,073,198 Exchange ratio (based on the estimated value per share of $38.7054)................................................. 1.40 ------------- Clear Channel's common stock to be issued in the merger (in whole shares)............................................. 71,502,477 Estimated value per share................................... X $ 38.7054 ------------- $ 2,767,532 Estimated value of common stock options..................... 35,088 Estimated transaction costs................................. 50,000 ------------- Total estimated purchase price.................... $ 2,852,620 =============
For purpose of these statements the total estimated purchase price was allocated as follows: Total estimated purchase price.............................. $ 2,852,620 Plus -- estimated fair value of LYONs notes in excess of carrying value............................................ 53,630 Plus -- estimated fair value of Jacor common stock warrants in excess of carrying value............................... 11,071 Less -- Jacor's net assets exchanged in the merger at September 30, 1998 adjusted for the elimination of existing net licenses and goodwill of $2,352,291.......... (1,204,758) ----------- Estimated excess purchase price (allocated to licenses and goodwill)................................................. $ 4,122,079 ===========
The estimated excess purchase price allocated to licenses and goodwill of $4,122,079 will be amortized over a 25 year period using the straight line method which will result in annual goodwill amortization of $164,883. This pro forma is based on the maximum exchange ratio of 1.4 shares of Clear Channel common shares per each share of Jacor common shares. As the exchange ratio is variable, based on the moving average market price of Clear Channel's common stock, the following analysis gives effect to a range of possible pro forma results for selected items based on market prices varying from $45.00 to $60.00 per share. 86 7 CLEAR CHANNEL AND JACOR NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS, CONTINUED
WEIGHTED AVERAGE NET LOSS PER COMMON SHARES COMMON SHARE ------------------ TOTAL ASSETS NET LOSS BASIC & DILUTED BASIC DILUTED ------------ --------- --------------- ------- ------- (IN THOUSANDS) At and for the year ended December 31, 1997 Price of Clear Channel Stock: $45.00 n/a(1) $(138,433) $(0.48) 286,034 295,009 ========= ====== ======= ======= $50.00 n/a(1) $(152,223) $(0.53) 286,034 295,009 ========= ====== ======= ======= $55.00 n/a(1) $(158,981) $(0.56) 282,900 291,770 ========= ====== ======= ======= $60.00 n/a(1) $(165,763) $(0.59) 280,288 289,071 ========= ====== ======= ======= At and for the nine months ended September 30, 1998 Price of Clear Channel Stock: $45.00 $12,641,133 $ (58,368) $(0.19) 312,088 330,232 =========== ========= ====== ======= ======= $50.00 $12,985,877 $ (68,710) $(0.22) 312,088 330,232 =========== ========= ====== ======= ======= $55.00 $13,154,844 $ (73,779) $(0.24) 308,954 326,839 =========== ========= ====== ======= ======= $60.00 $13,324,380 $ (78,866) $(0.26) 306,342 324,012 =========== ========= ====== ======= =======
- ------------------------- (1) This information is not presented since a pro forma balance sheet of December 31, 1997 is not required. The unaudited pro forma combined condensed balance sheet is based on the assumption that Jacor's debt holders will accept the transfer of debt to Clear Channel. However, Clear Channel must offer to purchase all outstanding senior subordinated notes at 101% of the principal amount. Clear Channel must also offer to purchase all liquid yield option notes at their accreted value of $302,400 million. It is unlikely that the debt holders will accept Clear Channel's offer, as the fair value of this debt is greater than the required offer. If all of Jacor's debt holders would accept Clear Channel's offer, the pro forma total debt balance would decrease by $48.2 million. The unaudited pro forma combined condensed financial statements of operations excludes the effect of any divestiture of stations, which may be required for regulatory approval, as Clear Channel intends the funds received from any divestiture to be reinvested in acquisitions of similar stations in other markets. Neither Clear Channel nor Jacor anticipates that any required divestitures will be significant. The unaudited pro forma combined condensed financial statements of operations also excludes the effect of retired or refinanced debt as any retirement or refinancing of debt will not occur at or prior to the closing of the merger. These pro forma statements are contingent on the approval of the merger by the stockholders of Clear Channel and Jacor. If the merger agreement is terminated under certain circumstances, Jacor must pay Clear Channel a fee of $115 million as a result of such termination. Also, see "Terms of the Merger Agreement -- Termination Fee" for related matters in the event this merger is terminated. 87 8 CLEAR CHANNEL AND JACOR NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS, CONTINUED The pro forma merger adjustments at September 30, 1998 are as follows:
INCREASE (DECREASE) ---------- (a) Decrease in cash and cash equivalents resulting from estimated merger expenses................................. $ (50,000) (b) Increase in goodwill and licenses equal to the excess purchase price of the merger.............................. 1,613,629 (c) Decrease in accumulated amortization resulting from the elimination of Jacor's existing accumulated amortization on goodwill............................................... 156,159 (d) Record liquid yield option notes at estimated fair value.... 53,630 (e) Increase common stock to account for Clear Channel common stock given in the merger at $0.10 par value.............. 6,639 (f) Increase additional paid-in capital to account for Clear Channel common stock given in the merger at $38.7054 per share less $0.10 par value ($1,645,862) plus the value of Jacor stock options included in the Merger ($35,088)...... 1,680,950 (g) Record common stock warrants at estimated fair value........ 11,071 (h) Eliminate Jacor's existing retained earnings balance........ (19,871) (i) Eliminate Jacor's existing unrealized gain on investments balance................................................... (12,631)
INCREASE (DECREASE) TO INCOME ------------------- 12/31/97 9/30/98 -------- -------- (j) Increase in amortization expense resulting from the additional goodwill created by the merger and a change in the life of goodwill amortization from 40 years (Jacor's policy) to 25 years (Clear Channel's policy). This amortization expense results in a permanent difference and will not be deductible for federal income tax purposes........................ $(82,765) $(46,915)
88 9 CLEAR CHANNEL AND JACOR NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS, CONTINUED Pro forma basic and diluted share information is as follows:
12/31/97 9/30/98 -------- ------- (IN THOUSANDS) Basic Clear Channel pro forma weighted average shares outstanding............................................... 218,810 244,079 Jacor pro forma weighted average shares outstanding......... 49,348 50,133 Increase weighted average common stock outstanding to account for Clear Channel's common stock given in the merger at the exchange ratio of 1.40, (51,073 X .40)...... 20,429 20,429 ------- ------- Clear Channel and Jacor Pro Forma Merger.................... 288,587 314,641 ======= ======= Diluted Clear Channel pro forma weighted average shares outstanding............................................... 225,486 256,534 Jacor pro forma weighted average shares outstanding......... 51,051 54,347 Increase weighted average common stock outstanding to account for Clear Channel common stock given in the merger and to account for the dilution effect Jacor's common stock warrants, employee stock options and other dilutive shares have on the Company at the exchange ratio of 1.40, (52,776 X .40) and (55,287 X .40), respectively........... 21,110 22,115 ------- ------- Clear Channel and Jacor Pro Forma Merger.................... 297,647 332,996 ======= =======
89 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 ELLER PRO FORMA PAXSON PRO FORMA UNIVERSAL HISTORICAL HISTORICAL ADJUSTMENT(1) HISTORICAL ADJUSTMENT(2) HISTORICAL ------------- ---------- ------------- ---------- ------------- ---------- Net revenue.................... $697,068 $56,642 $ -- $78,104 $ -- $209,639 Operating expenses............. 394,404 33,804 -- 63,362 (1,246) 101,613 Depreciation and amortization.................. 114,207 10,547 5,974 12,101 9,377 59,977 Noncash compensation expense... -- -- -- -- -- 8,289 Corporate expenses............. 20,883 2,318 -- 4,059 -- -- -------- ------- ------- ------- -------- -------- Operating income (loss)........ 167,574 9,973 (5,974) (1,418) (8,131) 39,760 Interest expense............... 75,076 8,565 2,518 1,370 29,276 46,400 Other income (expense) -- net.............. 11,579 (4,082) -- (1,034) -- (2,621) -------- ------- ------- ------- -------- -------- Income (loss) before income taxes......................... 104,077 (2,674) (8,492) (3,822) (37,407) (9,261) Income tax (expense) benefit... (47,116) (3) 1,315 -- 14,963 -- -------- ------- ------- ------- -------- -------- Income (loss) before equity in earnings of nonconsolidated affiliates.................... 56,961 (2,677) (7,177) (3,822) (22,444) (9,261) Equity in earnings (loss) of non-consolidated affiliates... 6,615 -- -- -- -- -- -------- ------- ------- ------- -------- -------- Net income (loss).............. $ 63,576 $(2,677) $(7,177) $(3,822) $(22,444) $ (9,261) ======== ======= ======= ======= ======== ======== Net income (loss) per common share: Basic......................... $ .36 ======== Diluted....................... $ .34 ======== 1997 PRO FORMA MORE PRO FORMA CLEAR CHANNEL ADJUSTMENT(3) HISTORICAL ADJUSTMENT(4) PRO FORMA ------------- ---------- ------------- ------------- Net revenue.................... $ -- $232,530 $ -- $1,273,983 Operating expenses............. -- 157,859 -- 749,796 Depreciation and amortization.................. 30,881 23,592 23,033 289,689 Noncash compensation expense... (8,289) 1,327 (1,327) -- Corporate expenses............. -- 7,474 -- 34,734 -------- -------- -------- ---------- Operating income (loss)........ (22,592) 42,278 (21,706) 199,764 Interest expense............... -- 4,383 50,849 218,437 Other income (expense) -- net.............. -- (3,655) -- 187 -------- -------- -------- ---------- Income (loss) before income taxes......................... (22,592) 34,240 (72,555) (18,486) Income tax (expense) benefit... -- (10,705) 17,379 (24,167) -------- -------- -------- ---------- Income (loss) before equity in earnings of nonconsolidated affiliates.................... (22,592) 23,535 (55,176) (42,653) Equity in earnings (loss) of non-consolidated affiliates... -- (586) -- 6,029 -------- -------- -------- ---------- Net income (loss).............. $(22,592) $ 22,949 $(55,176) (36,624) ======== ======== ======== ========== Net income (loss) per common share: Basic......................... $ (.17) ========== Diluted....................... $ (.18) ==========
90 11 CLEAR CHANNEL UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) NINE MONTHS ENDED SEPTEMBER 30, 1998
1998 CLEAR CLEAR CHANNEL UNIVERSAL PRO FORMA MORE PRO FORMA CHANNEL HISTORICAL HISTORICAL ADJUSTMENT(5) HISTORICAL ADJUSTMENT(6) PRO FORMA ---------- ---------- ------------- ---------- ------------- ---------- Net revenue......................... $909,555 $55,292 $ -- $144,674 $ -- $1,109,521 Operating expenses.................. 517,562 30,826 -- 110,827 -- 659,215 Depreciation and amortization....... 201,422 15,517 7,720 15,699 11,565 251,923 Noncash compensation expense........ -- 106 (106) 3,476 (3,476) -- Corporate expenses.................. 25,739 1,414 -- 5,711 -- 32,864 -------- ------- ------- -------- -------- ---------- Operating income (loss)............. 164,832 7,429 (7,614) 8,961 (8,089) 165,519 Interest expense.................... 94,555 13,159 -- 3,715 22,352 133,781 Other income (expense) -- net....... 13,416 (23) -- (9,576) -- 3,817 -------- ------- ------- -------- -------- ---------- Income (loss) before income taxes... 83,693 (5,753) (7,614) (4,330) (30,441) 35,555 Income tax (expense) benefit........ (48,766) -- -- (3,301) 6,728 (45,339) -------- ------- ------- -------- -------- ---------- Income (loss) before equity in earnings of nonconsolidated affiliates........................ 34,927 (5,753) (7,614) (7,631) (23,713) (9,784) Equity in earnings (loss) of non- consolidated affiliates........... 10,063 -- -- (371) -- 9,692 -------- ------- ------- -------- -------- ---------- Net income (loss)................... $ 44,990 $(5,753) $(7,614) $ (8,002) $(23,713) $ (92) ======== ======= ======= ======== ======== ========== Net income (loss) per common share: Basic............................. $ .19 $ (.00) ======== ========== Diluted........................... $ .19 $ (.00) ======== ==========
91 12 CLEAR CHANNEL NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) 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) IN INCOME ------------------ (a) Increase in amortization of goodwill of $5,205 resulting from the additional goodwill created by the acquisition and a decrease in amortizable life from 40 years (Eller) to 25 years (Clear Channel) and additional depreciation of $769 related to the adjustment of fixed assets to fair value. ............ $(5,974) (b) Increase in interest expense due to a higher amount of average debt outstanding, which was partially offset by a lower average interest rate (6% average rate for Clear Channel and 8.8% for Eller during the first three months of 1997). ............................... (2,518) (c) Tax effect of the above adjustments to depreciation and interest expense at Clear Channel's effective federal and state tax rate of 40%. ........................... 1,315
PAXSON ACQUISITION (2) Represents the pro forma effect of the Paxson acquisition assuming it was acquired January 1, 1997.
INCREASE(DECREASE) IN INCOME ------------------ (d) Elimination of option plan compensation expense resulting from the elimination of the plan............ $ 1,246 (e) Increase in amortization expense resulting from the additional goodwill created by the acquisition........ (9,377) (f) Increase in interest expense (at an average interest rate of 6.5% for the first nine months of 1997) due to additional borrowing on Clear Channel's facility to finance the acquisition cost.......................... (29,276) (g) Tax effect of the above adjustment at Clear Channel's effective federal and state tax rate of 40%. ......... 13,339 (h) This pro forma does not include certain benefits Clear Channel believes it achieved through the discontinuance of a corporate headquarters operating solely for the Paxson radio stations. Paxson's historical statement of operations for the year ended December 31, 1997 includes $4,059, $2,435 net of taxes, 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.
92 13 CLEAR CHANNEL NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED UNIVERSAL MERGER (3) The pro forma merger adjustments for the year ended December 31, 1997 are as follows:
INCREASE (DECREASE) IN INCOME ------------------ (i) Increase in amortization expense resulting from the additional goodwill created by the merger............. $(30,881) (j) Decrease in noncash compensation to reverse the effect of Financial Accounting Standards Board Statement No. 123 ("FAS 123") from the statement of operations as Clear Channel elected to follow Accounting Principles Board Opinion Number 25 ("APB 25") for earnings presentation and implemented FAS 123 for footnote disclosure only....................................... 8,289
MORE ACQUISITION (4) More is headquartered in London. Accordingly, More's financial statements are reported in British Pounds. The statement of operations was translated into US Dollars using the average exchange rate for the period and the balance sheet was translated into US Dollars using the exchange rate at the end of the period. The pro forma adjustments for the year ended December 31, 1997 are as follows:
INCREASE (DECREASE) IN INCOME ------------------ (k) Increase in amortization expense resulting from the additional goodwill created by the acquisition. ...... $(23,033) (l) Decrease in noncash compensation to reverse the effect of FAS 123 from the statement of operations as Clear Channel elected to follow APB 25 for earnings presentation and implemented FAS 123 for footnote disclosure only. ..................................... 1,327 (m) Increase in interest expense due to financing the acquisition price of More at Clear Channel's average interest rate of 6.62% for 1997. ..................... (50,849) (n) The tax effect of adjustment (l) at the 1997 UK statutory rate of 31.5% offset by the tax benefit of adjustment (m) at Clear Channel's federal U.S. tax rate in 1997 of 35%. ................................. 17,379
93 14 CLEAR CHANNEL NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED UNIVERSAL MERGER (5) The pro forma merger adjustments for the nine months ended September 30, 1998 are as follows:
INCREASE (DECREASE) IN INCOME ------------------ (o) Increase in amortization expense resulting from the additional goodwill created by the merger. ........... $(7,720) (p) Decrease in Noncash compensation to reverse the effect of FAS 123 from the statement of operations as the Company elected to follow APB 25 for earnings presentation and implemented FAS 123 for footnote disclosure only. ..................................... 106
MORE ACQUISITION (6) More is headquartered in London. Accordingly, More's financial statements are reported in British Pounds. The statement of operations was translated into US Dollars using the average exchange rate for the period and the balance sheet was translated into US Dollars using the exchange rate at the end of the period. The pro forma adjustments for the nine months ended September 30, 1998 are as follows:
INCREASE (DECREASE) IN INCOME ------------------ (q) Increase in amortization expense resulting from the additional goodwill created by the acquisition. ...... $(11,565) (r) Decrease in noncash compensation to reverse the effect of FAS 123 from the statement of operations as Clear Channel elected to follow APB 25 for earnings presentation and implemented FAS 123 for footnote disclosure only. ..................................... 3,476 (s) Increase in interest expense due to financing the acquisition price of More at Clear Channel's average interest rate of 6.62% for 1997. ..................... (22,352) (t) The tax effect of adjustment (r) at the 1998 UK statutory rate of 31.5% offset by the tax benefit of adjustment (s) at Clear Channel's federal U.S. tax rate in 1998 of 35%. ................................. 6,728
94 15 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, 1997
OTHER ACQUISITIONS NATIONWIDE ACQUISITION 1997 JACOR PRO FORMA HISTORICAL PRO FORMA PRO FORMA JACOR HISTORICAL ADJUSTMENTS NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA ---------- ------------ ---------- ----------- ----------- --------- Net revenue.................................. $530,574 $25,321(a) $ 97,997 $ 565(e) $ (3,613)(h) $ 650,844 Broadcast operating expenses................. 356,783 16,760(a) 81,958 723(e) (10,498)(h)(n) 445,726 Depreciation and amortization................ 78,485 8,182(a) 10,129 2,084(e) 4,007(i) 102,887 Corporate general and administrative expenses................................... 14,093 -- 3,623 -- --(n) 17,716 -------- ------- -------- -------- -------- --------- Operating income (loss)...................... 81,213 379 2,287 (2,242) 2,878 84,515 Interest expense, net........................ 80,008 9,303(b) 4,616 3,197(e) 20,586(j) 117,710 Gain on sale of radio stations............... 11,135 -- 44,132 (44,132)(f) -- 11,135 Other income (expense), net.................. 664 298(c) (37) -- -- 925 -------- ------- -------- -------- -------- --------- Income (loss) before income taxes and extraordinary items...................................... 13,004 (8,626) 41,766 (49,571) (17,708) (21,135) Income tax (expense) credit.................. (9,600) 4,358(d) (14,310) 16,992(g) 7,083(k) 4,523 -------- ------- -------- -------- -------- --------- Income (loss) before extraordinary items..... $ 3,404 $(4,268) $ 27,456 $(32,579) $(10,625) $ (16,612) ======== ======= ======== ======== ======== ========= Income (loss) per common share: Basic...................................... $ .08 $ (.33) ======== ========= Diluted.................................... $ .08 $ (.33) ======== =========
95 16 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) NINE MONTHS ENDED SEPTEMBER 30, 1998
HISTORICAL NATIONWIDE SIX MONTHS NATIONWIDE ACQUISITION 1998 JACOR ENDED PRO FORMA PRO FORMA JACOR HISTORICAL JUNE 30, 1998 ADJUSTMENTS ADJUSTMENTS PRO FORMA ---------- ------------- ----------- ----------- --------- Net revenue................ $530,372 $50,171 $ -- $ 8,641(l) $589,184 Broadcast operating expenses................. 356,877 39,623 (738)(e) 2,548(l)(n) 398,310 Depreciation and amortization............. 87,444 5,044 299(e) 4,565(i) 97,352 Corporate general and administrative expenses................. 13,052 1,406 -- --(n) 14,458 -------- ------- ----- -------- -------- Operating income (loss).... 72,999 4,098 439 1,528 79,064 Interest expense, net...... 65,968 (452) -- 14,954(j) 80,470 Gain on sale of radio stations................. 10,896 -- -- -- 10,896 Other income (expense), net...................... (164) (4) -- -- (168) -------- ------- ----- -------- -------- Income (loss) before income taxes and extraordinary items.................... 17,763 4,546 439 (13,426) 9,322 Income tax (expense) credit................... (19,200) (1,546) -- 5,371(k) (15,375) -------- ------- ----- -------- -------- Income (loss) before extraordinary items...... $ (1,437) $ 3,000 $ 439 $ (8,055) $ (6,053) ======== ======= ===== ======== ======== Income (loss) per common share: Basic.................... $ (.03) $ (.12)(m) ======== ======== Diluted.................. $ (.03) $ (.12)(m) ======== ========
96 17 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) (a) These adjustments for the following acquisitions reflect additional revenues and expenses for the period January 1, 1997 to the acquisition consummation date. Depreciation and amortization expense adjustments reflect Jacor's purchase cost of the assets acquired.
YEAR ENDED DECEMBER 31, 1997 ---------------------------------- BROADCAST DEPRECIATION NET OPERATING AND REVENUE EXPENSES AMORTIZATION ------- --------- ------------ Premiere Radio Networks, Inc. (completed June 1997)........................................ $14,130 $ 9,276 $4,348 EFM Companies (completed April 1997)........... 11,191 7,484 3,834 ------- ------- ------ TOTAL................................ $25,321 $16,760 $8,182 ======= ======= ======
(b) The adjustment represents additional interest expense associated with Jacor's borrowings under its credit facility and the issuance of various debt securities in 1997. The assumed weighted average interest rate associated with the borrowings is 7.9%. (c) The adjustment represents miscellaneous income generated by Premiere for periods prior to the acquisition. (d) To provide for the tax effect of pro forma adjustments. The acquisition adjustments described in Note (a) include non-deductible goodwill amortization estimated to be approximately $1,350 for the year ended December 31, 1997. (e) The adjustments represent additional revenues and expenses, net of the elimination of time brokerage agreement fees, related primarily to Nationwide's acquisitions of radio stations in the Dallas, Phoenix and San Diego broadcast areas. Nationwide has operated a majority of the stations acquired in 1997 under local marketing agreements since January 1, 1997, therefore a significant amount of the revenues and operating expenses related to these stations are included in Nationwide's historical financial statements for the year ended December 31, 1997. The adjustments for the six months ended June 30, 1998 represent the elimination of time brokerage agreement fees and additional depreciation and amortization expenses resulting from the allocation of Nationwide's purchase price of KXGL in San Diego. (f) The adjustment represents elimination of Nationwide's gain on the sale and exchange of certain radio stations in 1997. (g) To provide for the tax effect of Nationwide's pro forma adjustments relating to its 1997 acquisitions and divestitures at statutory rates. (h) To eliminate the results for the divestiture of two San Diego stations. (i) The adjustment reflects the additional depreciation and amortization expense resulting from the allocation of Jacor's purchase price to the assets acquired including an increase in property and equipment and identifiable intangible assets to their estimated fair market values. 97 18 JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (j) The adjustment reflects additional interest expense related to additional borrowings under Jacor's credit facility, its 8% Notes and its 4 3/4% Liquid Yield Option Notes offering completed during February of 1998 to finance, in part, the acquisition of Nationwide. (k) To provide for the tax effect of pro forma adjustments using an assumed rate of 40%. (l) To eliminate the results for the divestiture of two San Diego stations. (m) The pro forma weighted average shares outstanding includes all shares outstanding as of September 30, 1998. The pro forma weighted averages shares outstanding of Jacor do not reflect any outstanding options and warrants or the assumed conversion of the LYON's as they are antidilutive. (n) The Company has experienced and anticipates continuing to experience significant expense savings, which are not reflected in the pro forma statements of operations, resulting from the elimination of redundant broadcast operating expenses arising from the operation of multiple stations in broadcast areas, changes in benefit plan and compensation structures to conform with Jacor's and the elimination of Nationwide's corporate office function.
NINE MONTHS YEAR ENDED ENDED DECEMBER 31, 1997 SEPTEMBER 30, 1998 ----------------- ------------------ ESTIMATED EXPENSE SAVINGS Corporate general and administrative..... $ 3,623 $1,406 Benefit plan expenses.................... 2,850 1,741 Commissions.............................. 675 413 Promotion and programming................ 2,500 1,527 Personnel reductions..................... 3,200 1,955 Other.................................... 1,200 732 ------- ------ TOTAL.......................... 14,048 7,774 Income Taxes............................. 5,619 3,110 ------- ------ TOTAL, net of taxes............ $ 8,429 $4,664 ======= ======
98 19 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-----