-----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, WVtiTzI6ZhboI32VGPBqMn6rEEDeZjgONIVdKSiAVpeiibT5OO86oMaoA8UCrd+f 12agtP4vJwVJJdYSc5/Ekg== 0000921530-96-000026.txt : 19960814 0000921530-96-000026.hdr.sgml : 19960814 ACCESSION NUMBER: 0000921530-96-000026 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATZ MEDIA CORP CENTRAL INDEX KEY: 0000864363 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 133563605 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24214 FILM NUMBER: 96611153 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 FORMER COMPANY: FORMER CONFORMED NAME: KATZ CORP /DE DATE OF NAME CHANGE: 19940531 10-Q/A 1 KATZ MEDIA CORPORATION'S 10Q AMENDMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 Commission File Number 0-24214 Katz Media Corporation (Exact name of registrant as specified in its charter) Delaware 13-3563605 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 125 West 55th Street, New York, New York 10019 (Address of principal executive offices - Zip Code) (212) 424-6000 (Registrant's telephone number including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]* The Registrant does not have any equity securities registered under the Securities Act of 1933, as amended. All outstanding shares of Common Stock of the Registrant are held indirectly by the Registrant's ultimate parent company, Katz Media Group, Inc. *This document is being filed voluntarily. INDEX PAGE Item 1 - Financial Statements Consolidated Balance Sheets...................................... 2 Consolidated Statements of Operations............................ 3 Consolidated Statements of Cash Flows............................ 4 Notes to Consolidated Financial Statements....................... 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........... 6-8 Part II Other Information Item 1 - Legal Proceedings........................................... 9 Signatures........................................................... 9 Financial Data Schedule............................................. 10 1
KATZ MEDIA CORPORATION CONSOLIDATED BALANCE SHEETS (000's Omitted, Except Share and Per Share Information) June 30, December 31, -------- ------------ 1996 1995 ---- ---- (Unaudited) (Note) Assets Current assets: Cash and cash equivalents........................................$ 2,228 $ 228 Accounts receivable, net of allowance for doubtful accounts of $1,300........................................................... 64,015 61,345 Deferred costs on purchases of station representation contracts 16,894 13,096 Prepaid expenses and other current assets .................... 1,287 869 ----------- ---------- Total current assets...................................... 84,424 75,538 ----------- ---------- Fixed assets, net................................................... 15,051 12,437 Deferred income taxes............................................... 9,122 9,122 Deferred costs on purchases of station representation contracts..... 60,005 39,602 Intangible assets, net.............................................. 81,496 82, 08 Other assets, net .................................................. 15,433 17,106 ---------- ---------- Total assets.............................................. $ 265,531 $ 236,513 ---------- ---------- ---------- ---------- Liabilities and Stockholder's Deficit Current liabilities: Accounts payable and accrued liabilities........................$ 44,415 $ 38,049 Deferred income on sales of station representation contracts.... 13,002 10,700 Income taxes payable.......................................... 5,729 5,242 ----------- ---------- Total current liabilities................................. 63,146 53,991 ----------- ---------- Deferred income on sales of station representation contracts........ 2,333 3,589 Long-term debt...................................................... 192,090 179,530 Other liabilities, principally deferred rent and representation contracts payable................................................... 39,810 33,263 Commitments and contingencies....................................... __ __ Stockholder's deficit Common stock, $.01 par value, 100 shares authorized issued and outstanding......................................................... __ __ Paid-in-capital.................................................. 9,742 9,742 Carryover basis adjustment....................................... (14,405) (14,405) Accumulated deficit.............................................. (27,185) (29,197) ----------- ---------- Total stockholder's deficit................................ (31,848) (33,860) ----------- ---------- Total liabilities and stockholder's deficit $ 265,531 $ 236,513 ----------- ---------- ----------- ---------- Note: The consolidated balance sheet at December 31, 1995 has been derived from audited financial statements at that date. The accompanying notes are an integral part of these consolidated financial statements. 2
KATZ MEDIA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (000's Omitted) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ----------------- 1996 1995 1996 1995 -------- -------- -------- -------- Operating revenues, net.............. $ 47,971 $ 50,324 $ 86,334 $ 89,433 ---------- --------- --------- --------- Operating expenses:.................. Salaries and related costs........... 25,691 26,890 49,361 51,001 Selling, general and administrative.. 9,876 9,287 19,466 18,732 Depreciation and amortization........ 1,469 710 3,148 4,456 ---------- --------- --------- --------- Total operating expenses........ 37,036 36,887 71,975 74,189 ---------- --------- --------- --------- Operating income................ 10,935 13,437 14,359 15,244 ---------- --------- --------- --------- Other expense (income):.............. Interest expense..................... 5,212 5,162 10,342 10,274 Interest (income).................... (21) (28) (50) (67) ---------- --------- --------- --------- Total other expense, net........ 5,191 5,134 10,292 10,207 ---------- --------- --------- --------- Income before income tax provision......................... 5,744 8,303 4,067 5,037 Income tax provision................. 2,952 4,484 2,055 2,720 ---------- --------- --------- ---------- Net income ................... $2,792 $3,819 $2,012 $2,317 ---------- --------- --------- ---------- ---------- --------- --------- ---------- The accompanying notes are an integral part of these consolidated financial statements. 3
KATZ MEDIA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (000's omitted) (Unaudited) Six Months Ended June 30, 1996 1995 ------------------ Cash flows from operating activities: Net income (loss) before adjustments................. $2,012 $2,317 ---------- ---------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization.................... 3,148 4,456 Amortization of debt issuance costs.............. 208 407 Deferred rent.................................... 790 601 Changes in assets and liabilities: (Increase) decrease in accounts receivable...... (876) 4,037 Increase in deferred tax asset.................. __ 2,578 (Increase) in other assets...................... (966) (1,206) Increase (decrease) in accounts payable and accrued liabilities................................ 690 (3,132) Increase (decrease) in income taxes payable...... 487 (20) Other, net....................................... (948) (1,211) ---------- ---------- Total adjustments.................................... 2,533 6,510 ---------- ---------- Net cash provided by operating activities............ 4,545 8,827 ---------- ---------- Cash flows from investing activities: Capital expenditures.............................. (4,106) (1,374) Payments received on sales of station representation contracts 9,677 9,686 Payments made on purchases of station representation contracts (20,676) (14,165) Investment in cable joint venture................. __ (7,029) ---------- ---------- Net cash (used in) investing activities......... (15,105) (12,882) Cash flows from financing activities: Additional Paid-in Capital........................... __ 2,800 Credit facilities borrowing.......................... 36,000 31,000 Credit facilities repayments......................... (21,700) (29,000) Retirement of 12 3/4% Senior Subordinated Notes...... (1,740) (840) ---------- ---------- Net cash provided by financing activities........ 12,560 3,960 ---------- ---------- Net increase (decrease) in cash and cash equivalents... 2,000 (95) Cash and cash equivalents, beginning of period......... 228 109 ---------- ---------- Cash and cash equivalents, end of period................$ 2,228 $ 14 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these consolidated financial statements. 4 KATZ MEDIA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Due to the seasonality of the business of Katz Media Corporation, Inc. (the "Company"), operating results for the six month period ended June 30, 1996, are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated 1995 financial statements and footnotes thereto included in the Company's Form 10-K filed April 5, 1996 (File No. 0-24214). 2. EARNINGS PER COMMON SHARE Earnings per share information is not presented as the Company is a wholly owned subsidiary of its ultimate parent company, Katz Media Group, Inc. 5 KATZ MEDIA CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General - ------- The following discussion is based upon and should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included elsewhere herein. The net operating revenues of the Company are derived from commissions on the sale of national spot advertising air time for radio and television clients. Commission rates are negotiated and set forth in the client's individual representation contracts. The key to the Company's success is the maintenance of its current representation contracts with client stations and the acquisition of new representation contracts. The primary operating expenses of the Company are employee salaries, rents, commission-related payments to employees, data processing expenses, and depreciation and amortization. The Company's financial results have been impacted by three significant factors: (i) trends in advertising expenditures, (ii) buyouts of station representation contracts and changes in ownership of client stations and (iii) acquisitions of representation firms. The effect of these factors on the Company's financial condition and results of operations have varied from period to period. This quarterly report on Form 10-Q contains forward looking statements that involve risks and uncertainties, including those associated with the effect of national and regional economic conditions, the ability of the Company to obtain new clients and retain existing clients, changes in ownership of client stations and client stations of the Company's competitors, other developments at clients of the Company, the ability of the Company to realize cost reductions from its cost containment efforts, and developments from recent changes in the regulatory environment for its clients. Business - -------- The Company operates as a single segment business and is the only full service media representation firm in the United States serving multiple types of electronic media, with leading market shares in the representation of radio and television stations and cable systems. During the second quarter of 1996 the Company's percentage composition of gross billings (representing the aggregate dollar amount of advertising placed on client stations or systems) by broadcast media was as follows: 62.1% for television; 31.9% for radio; and 6.0% for cable and international (on a 100% owned basis). Gross billings during the second quarter of 1996 compared to second quarter 1995 decreased 10.3% for television primarily reflecting the July 1995 United Television stations transfer discussed below, increased 18.6% for radio and increased 5.4% for cable and international (on a 100% owned basis) generally as a result of new client additions. The composition of gross billings by broadcast media during the second quarter of 1995 was 68.0% for television, 26.5% for radio, and 5.5% for cable and international (on a 100% owned basis). Results of Operations - Three Months Ended June 30, 1996 - -------------------------------------------------------- Net operating revenues for the second quarter of 1996 totaled $48.0 million, a decrease of approximately $2.4 million, or approximately 4.7%, compared to net operating revenues of $50.3 million for the second quarter of 1995. This decrease reflects (i) the slower 1996 second quarter pacings as compared to those achieved during the 1995 second quarter as well as (ii) the July 1995 transfer of United Television, Inc. stations ($1.7 million of operating revenues in the 1995 second quarter) to a new representation firm in which the company will receive a profit distribution rather than report revenues and associated expenses. 6 Operating expenses, excluding depreciation and amortization, decreased by approximately $.6 million to $35.6 million for the second quarter of 1996 from $36.2 million for the second quarter of 1995. Salaries and related costs decreased by $1.2 million when compared to the second quarter of 1995, primarily attributable to decreased compensation resulting from decreased operating revenues. Selling, general and administrative increased by $.6 million when compared to the second quarter of 1995 attributed mostly to the start up of a sixth radio company. Operating expenses excluding depreciation and amortization, as a percentage of net operating revenues, increased from 71.9% in the second quarter of 1995 to 74.1% in the second quarter of 1996 primarily as a result of the slightly lower operating revenue figures described above. Depreciation and amortization overall increased by $.8 million, or 107%, for the second quarter of 1996 compared to the second quarter of 1995, primarily due to the relatively higher amounts of amortization of representation contracts acquired in 1996. Operating income for the second quarter of 1996 decreased by $2.5 million compared to the second quarter of 1995 as a result of the operating components discussed above. Interest expense, net, remained relatively constant at $5.2 million for the second quarter of 1996 and 1995. Income before income tax provision totaled $5.7 million for the second quarter of 1996, compared to income of $8.3 million for the second quarter of 1995. This result was primarily due to the components listed above. The difference between the effective tax rate of 51% compared to the U.S. statutory rate of 35% in the second quarter of 1996 is primarily attributable to goodwill amortization, other nondeductible expenses and state income taxes. EBITDA for the second quarter of 1996 decreased $1.7 million or 11.8% to $12.7 million as compared to $14.4 million for the second quarter of 1995. This decrease is primarily attributable to the stronger revenue pacing in the second quarter of 1995 as compared to the second quarter 1996 discussed above. The EBITDA margin decreased from 28.6% in the second quarter of 1995 to 26.8% in the second quarter of 1996. Results of Operations - Six Months Ended June 30, 1996 - ------------------------------------------------------ Net operating revenues for the first six months of 1996 totaled $86.3 million, a decrease of approximately $3.1 million, or approximately 3.5%, compared to net operating revenues of $89.4 million for the first six months of 1995. This decrease reflects (i) the slower 1996 first half pacings as compared to those achieved during the 1995 first half and (ii) the July 1995 transfer of United Television, Inc. stations ($3.2 million of operating revenues in the first half of 1995) to a new representation firm in which the company will receive a profit distribution rather than report revenue and associated expenses. Operating expenses, excluding depreciation and amortization, decreased from $69.7 million for the first six months of 1995 to $68.8 million for the first six months of 1996, a decrease of $.9 million or 1.3%. This decrease was primarily attributable to decreased compensation, resulting from decreased operating revenue, offset by costs associated with the start up of a sixth radio company. Depreciation and amortization decreased by $1.3 million, or 29.4% for the first six months of 1996 compared to the first six months of 1995, due to the lower amounts of amortization expense related to non-compete agreements recorded in the first six months of 1996 as compared to the first six months of 1995, offset by relatively higher amounts of amortization for representation contracts acquired in 1996. Operating income for the first six months of 1996 decreased by $.9 million compared to the first six months of 1995 as a result of the components discussed above. Interest expense, net, remained relatively constant at $10.3 million for the first half of 1996 and 1995. 7 Income before income tax provision totaled $4.1 million for the first six months of 1996, compared to $5.0 million for the comparable period of 1995. This result was primarily due to the components listed above. The difference between the effective tax rate of 51% compared to the U.S. statutory rate of 35% in the second quarter of 1996 is primarily attributable to permanent differences between book and taxable income related to goodwill amortization, other nondeductible expenses and state income taxes. EBITDA for the first six months of 1996 decreased $2.0 million or 9.8% to $18.3 million as compared to $20.3 million for the first half of 1995. This decrease is primarily attributed to the stronger revenue pacings in the first half of 1995 as compared to the first half of 1996 as discussed above. The EBITDA margin decreased from 22.7% in the first six months of 1995 to 21.2% in the first half of 1996. Liquidity and Capital Resources - ------------------------------- The Company's working capital requirements have been primarily provided by operations. It is expected that the Company's primary sources of financing for its future business activities will continue to be from operations plus borrowings under the Katz Media Corporation's Revolving Credit Agreement. The Company continuously seeks opportunities to acquire additional representation contracts on attractive terms, and at the same time looks to maintain its current client roster. In addition, the recent changes in ownership of broadcast properties have fueled changes in client engagements among independent media representation firms. These changes and the Company's ability to acquire and maintain representation contracts can cause fluctuations in the Company's revenues and cash flows from period to period. Cash provided by operating activities in 1996 as compared to 1995 decreased $4.3 million. This decrease in cash provided by operating activities is primarily due to reduced operating results in the first six months of 1996 compared to the first six months of 1995 and the net change in working capital accounts. Net cash used in investing activities during 1996 aggregated $15.1 million, an increase of $2.2 million compared to net cash used in investing activities during 1995 of $12.9 million. This increase in cash used in investing activities was mainly a result of the $7.0 million investment in the Cable Joint Venture which occured in the first quarter of 1995, offset by the net increase of purchases of station representation contracts of $6.5 million and capital expenditures over the first six months of 1995 of $2.7 million. Overall cash flows from financing activities provided $12.6 million during 1996 versus $4.0 million during 1995. The increase in cash provided by financing activities is primarily due to increased borrowings under the Credit Agreement to satisfy current working capital requirements, partially offset by $1.7 million spent in the first quarter of 1996 to repurchase a portion of the 12 3/4% Senior Subordinated Notes due 2002. The Company has approximately $1.4 million available on its revolving credit facility as of July 24, 1996. 8 PART II Other Information ----------------- Item 1 - Legal Proceedings The Company, from time to time, is involved in litigation brought by former employees and other litigation incidental to the conduct of its business. The Company is not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on the Company. There are no reportable items under Part II, Items 2-6. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 13, 1996 KATZ MEDIA CORPORATION By: /S/ THOMAS F. OLSON By: /S/ RICHARD E. VENDIG ________________________ ______________________ Thomas F. Olson Richard E. Vendig President and Senior Vice President Chief Executive Officer Chief Financial & and Director Administrative Officer, Treasurer 9 EX-99.A 2 FINANCIAL DATA SCHEDULE EXHIBIT 27 FINANCIAL DATA SCHEDULE The schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. (Multiplier of 1,000) Period Type 6 months Fiscal Year end December 31, 1996 Period Start January 1, 1996 Period End June 30, 1996 Cash 2,228 Securities 0 Receivables 64,015 Allowances 1,300 Inventory 0 Current Assets 84,424 PP&E 15,051 Depreciation 3,148 Total Assets 265,531 Current Liabilities 63,146 Bonds 0 Preferred Mandatory 0 Preferred 0 Common 0 Other-Stockholder's Deficit (31,848) Total Liabilities and Deficit 265,531 Sales 86,334 Total Revenues 86,334 CGS 71,975 Total Costs 71,975 Other Expense (Income) (50) Loss Provision 0 Interest Expense 10,342 Pretax Income 4,067 Income Tax Provision (Benefit) 2,055 Continuing Income 2,012 Discontinued 0 Extraordinary 0 Changes 0 Net Income 2,012 EPS Primary N/A EPS Diluted N/A 10 -----END PRIVACY-ENHANCED MESSAGE-----