-----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, D7GogVcS9SPSf1H/taKJVqYirzDZp712OvyAXbYvriZoP1gb5bRrXqnbVaozofoR KM1pGHvd+BCzYbOqFmhbyA== 0000921530-97-000107.txt : 19970530 0000921530-97-000107.hdr.sgml : 19970530 ACCESSION NUMBER: 0000921530-97-000107 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970529 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: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619 FILM NUMBER: 97616016 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 FORMER COMPANY: FORMER CONFORMED NAME: KATZ CORP /DE DATE OF NAME CHANGE: 19940531 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PAYROLL CO INC CENTRAL INDEX KEY: 0001037467 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-08 FILM NUMBER: 97616017 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATZ CABLE CORP CENTRAL INDEX KEY: 0001037468 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-07 FILM NUMBER: 97616018 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SELTEL INC CENTRAL INDEX KEY: 0001037469 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-06 FILM NUMBER: 97616019 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTMAN RADIO SALES INC CENTRAL INDEX KEY: 0001037470 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-05 FILM NUMBER: 97616020 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHRISTAL RADIO SALES INC CENTRAL INDEX KEY: 0001037471 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-04 FILM NUMBER: 97616021 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANNER RADIO SALES INC CENTRAL INDEX KEY: 0001037472 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-03 FILM NUMBER: 97616022 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATZ MILLENNIUM MARKETING INC CENTRAL INDEX KEY: 0001037473 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-02 FILM NUMBER: 97616023 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATZ COMMUNICATIONS INC CENTRAL INDEX KEY: 0001037474 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-20619-01 FILM NUMBER: 97616024 BUSINESS ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124246000 MAIL ADDRESS: STREET 1: 125 WEST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 424B3 1 PROSPECTUS SUPPLEMENT RE KATZ MEDIA CORP Prospectus Supplement filed pursuant to Rule 424(b)(3) Registration No. 333-20619 Katz Media Corporation Prospectus Supplement dated May 28, 1997 to Prospectus dated April 15, 1997 $100,000,000 10 1/2% Series B Senior Subordinated Notes due 2007 This Prospectus Supplement dated May 28, 1997 to the Prospectus dated April 15, 1997 of Katz Media Corporation (the "Company") relating to $100,000,000 10 1/2% Series B Senior Subordinated Notes due 2007 of the Company and the guarantees thereon by each of Katz Communications, Inc., Katz Millennium Marketing Inc., Banner Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The National Payroll Company, Inc., hereby supplements the Prospectus dated April 15, 1997 by including the information set forth in the attached Quarterly Report on Form 10-Q for the period ended March 31, 1997 of the Company. 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 March 31, 1997 Commission File Number 0-24214 Katz Media Corporation (Formerly Katz Capital Corporation) (Exact name of registrant as specified in its charter) Delaware 13-3779266 (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 [X] No [ ] 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. 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......................... 5-11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 12-14 Part II Other Information Item 1 - Legal Proceedings.............................................. 14 - ------ Signatures.............................................................. 15 Financial Data Schedule................................................. 16 1
KATZ MEDIA CORPORATION CONSOLIDATED BALANCE SHEETS (000's Omitted, Except Share and Per Share Information) March 31, December 31, --------- ------------ 1997 1996 ---- ---- (Unaudited) (Note) Assets Current assets: Cash and cash equivalents........................................ $ 3,614 $ 3,027 Accounts receivable, net of allowance for doubtful accounts of $1,300.......................................................... 58,081 68,884 Deferred costs on purchases of station representation contracts.. 22,277 21,428 Prepaid expenses and other current assets........................ 1,320 1,293 --------- ---------- Total current assets...................................... 85,292 94,632 --------- ---------- Fixed assets, net................................................... 15,289 15,740 Deferred income taxes............................................... 2,091 -- Deferred costs on purchases of station representation contracts..... 83,164 74,399 Intangible assets, net.............................................. 216,904 218,808 Other assets, net .................................................. 36,848 34,121 --------- ---------- Total assets.............................................. $ 439,588 $ 437,700 --------- ---------- --------- ---------- Liabilities and Stockholder's Equity Current liabilities: Accounts payable and accrued liabilities........................ $ 47,362 $ 45,447 Deferred income on sales of station representation contracts 13,020 14,548 Income taxes payable............................................ -- 1,811 --------- ---------- Total current liabilities................................. 60,382 61,806 --------- ---------- Deferred income on sales of station representation contracts........ 5,868 4,787 Deferred income taxes payable....................................... 1,568 1,568 Long-term debt...................................................... 215,122 217,622 Other liabilities, principally deferred rent and representation contracts payable................................................ 52,416 47,207 Commitments and contingencies....................................... -- -- Stockholder's equity Common stock, $.01 par value, 100 shares authorized issued and outstanding...................................................... -- -- Paid-in-capital.................................................. 128,784 128,785 Carryover basis adjustment....................................... (20,047) (20,047) Accumulated deficit.............................................. (4,505) (4,028) --------- ---------- Total stockholder's equity................................ 104,232 104,710 --------- ---------- Total liabilities and stockholders' equity................. $ 439,588 $ 437,700 --------- ---------- --------- ---------- Note: The consolidated balance sheet at December 31, 1996 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, Except Share and Per Share Information) Three Months Ended March 31, -------------------------- 1997 1996 -------- -------- (Unaudited) (Unaudited) Operating revenues, net.......................................... $ 37,238 $ 38,282 ------- -------- Operating expenses: Salaries and related costs....................................... 23,912 24,034 Selling, general and administrative.............................. 10,046 9,590 Depreciation and amortization.................................... 2,367 3,010 ------- -------- Total operating expenses.................................... 36,325 36,634 ------- -------- Operating income............................................ 913 1,648 ------- -------- Other expense (income): Interest expense................................................. 5,401 5,025 Interest (income)................................................ (92) (29) ------- -------- Total other expense, net.................................... 5,309 4,996 ------- -------- Loss before income tax benefit................................... (4,396) (3,348) Income tax benefit............................................... (3,919) (2,133) ------- -------- Net loss ................................................. ($477) ($1,215) ------- -------- ------- -------- The accompanying notes are an integral part of these consolidated financial statements. 3
KATZ MEDIA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (000's Omitted, Except Share and Per Share Information) Three Months Ended March 31, -------------------------- 1997 1996 -------- -------- (Unaudited) (Unaudited) Cash flows from operating activities: Net loss before adjustments.................................... ($477) ($1,215) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization............................... 2,367 3,010 Amortization of debt issuance costs............................ 143 -- Deferred rent.................................................. 312 435 Non-cash compensation expense stock options................. -- 364 Non-cash 401K contribution.................................. 363 -- Changes in assets and liabilities: Decrease in accounts receivable............................. 8,763 1,885 (Increase) in deferred income tax .......................... (2,091) -- (Increase) decrease in other assets......................... (2,005) 462 Increase in accounts payable and accrued liabilities...... 917 2,132 Decrease in income taxes payable........................... (1,811) (2,975) Decrease in other liabilities.............................. (637) (451) Other, net................................................. (518) (201) --------- --------- Total adjustments........................................... 5,803 4,661 --------- --------- Net cash provided by operating activities.................. 5,326 3,446 --------- --------- Cash flows from investing activities: Capital expenditures........................................ (453) (2,297) Payments received on sales of station representation contracts................................................. 7,922 4,788 Payments made on purchases of station representation contracts.................................................. (9,708) (12,111) --------- --------- Net cash (used in) investing activities.................... (2,239) (9,620) --------- --------- Cash flows from financing activities: Credit facilities borrowing................................. 15,000 21,000 Credit facilities repayments................................ (17,500) (12,000) Repurchase of old notes..................................... -- (1,740) --------- --------- Net cash (used in) provided by financing activities......... (2,500) 7,260 --------- --------- Net increase in cash and cash equivalents........................ 587 1,086 Cash and cash equivalents, beginning of period 3,027 228 --------- --------- Cash and cash equivalents, end of period......................... $ 3,614 $ 1,314 --------- --------- --------- --------- The accompanying notes are an integral part of these consolidated financial statements. 4
KATZ MEDIA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (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 three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated 1996 financial statements and footnotes thereto included in the Company's Form 10-K filed March 31, 1997. 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. 3. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS The following condensed consolidating financial statements for the quarters ended March 31, 1997 and 1996 present the financial position, the results of operations and cash flows for the Company (carrying any investments in guarantor and non-guarantor subsidiaries under the equity method), guarantor subsidiaries of the Company and non-guarantor subsidiaries of the Company, and the eliminations necessary to arrive at the information for the Company on a consolidated basis. 5
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) March 31, 1997 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Assets Current Assets: Cash and cash equivalents............. $ -- $ 3,614 $ -- $ -- $ 3,614 Accounts receivable, net.............. -- 57,886 195 -- 58,081 Deferred costs on purchases of station representation contracts.............. -- 22,277 -- -- 22,277 Prepaid expenses and other current assets.............................. -- 1,320 -- -- 1,320 -------- ---------- ------- ---------- -------- Total current assets................ -- 85,097 195 -- 85,292 -------- ---------- ------- ---------- -------- Fixed assets, net...................... -- 15,005 284 -- 15,289 Deferred income taxes.................. -- 2,091 -- -- 2,091 Deferred costs on purchases of station representation contracts.............. -- 83,164 -- -- 83,164 Equity investment in affiliates........ 134,561 -- -- (134,561) -- Due from affiliate..................... 166,545 -- -- (166,545) -- Intangible assets, net................. -- 216,466 438 -- 216,904 Other assets, net...................... 23,300 13,392 156 -- 36,848 -------- ---------- ------- ---------- -------- Total assets........................ $324,406 $ 415,215 $ 1,073 ($301,106) $439,588 -------- ---------- ------- ---------- -------- -------- ---------- ------- ---------- -------- Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued liabilities$ 5,052 $ 41,391 $ 919 $ -- $ 47,362 Deferred income on sales of station representation contracts............. -- 13,020 -- -- 13,020 Income taxes payable................. -- -- -- -- -- -------- ---------- ------- ---------- -------- Total current liabilities........... 5,052 54,411 919 -- 60,382 -------- ---------- ------- ---------- -------- Deferred income on sales of station representation contracts.............. -- 5,868 -- -- 5,868 Deferred income taxes payable.......... -- 1,568 -- -- 1,568 Long-term debt......................... 215,122 -- -- -- 215,122 Due to affiliate....................... -- 166,545 -- (166,545) -- Other liabilities...................... -- 51,549 867 -- 52,416 Stockholders' equity:.................. Common stock.......................... -- -- 1 (1) -- Paid-in-capital....................... 128,784 96,610 989 (97,599) 128,784 Carryover basis adjustment............ (20,047) -- -- -- (20,047) (Accumulated deficit) retained earnings (4,505) 38,664 (1,703) (36,961) (4,505) -------- ---------- ------- ---------- -------- Total stockholders' equity.......... 104,232 135,274 (713) (134,561) 104,232 -------- ---------- ------- ---------- -------- Total liabilities and stockholders' equity............................ $324,406 $ 415,215 $ 1,073 ($301,106) $439,588 -------- ---------- ------- ---------- -------- -------- ---------- ------- ---------- -------- 6
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) December 31, 1996 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Assets Current Assets: Cash and cash equivalents............. $ -- $ 3,027 $ -- $ -- $ 3,027 Accounts receivable, net.............. -- 67,859 1,025 -- 68,884 Deferred costs on purchases of station representation contracts.............. -- 21,428 -- -- 21,428 Prepaid expenses and other current assets -- 1,293 -- -- 1,293 -------- -------- -------- ----------- --------- Total current assets................ -- 93,607 1,025 -- 94,632 -------- -------- -------- ----------- --------- Fixed assets, net...................... -- 15,412 328 -- 15,740 Deferred income taxes.................. -- -- -- -- -- Deferred costs on purchases of station representation contracts.............. -- 74,399 -- -- 74,399 Equity investment in affiliates........ 131,851 -- -- (131,851) -- Due from affiliate..................... 168,356 -- -- (168,356) -- Intangible assets, net................. -- 218,370 438 -- 218,808 Other assets, net...................... 22,783 11,180 158 -- 34,121 -------- -------- -------- ----------- --------- Total assets........................ $322,990 $412,968 $ 1,949 $ (300,207) $437,700 -------- -------- -------- ----------- --------- -------- -------- -------- ----------- --------- Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued liabilities$ 658 $ 42,935 $ 1,854 $ -- $ 45,447 Deferred income on sales of station representation contracts............. -- 14,548 -- -- 14,548 Income taxes payable.................. -- 1,811 -- -- 1,811 -------- -------- -------- ----------- --------- Total current liabilities........... 658 59,294 1,854 -- 61,806 -------- -------- -------- ----------- --------- Deferred income on sales of station representation contracts.............. -- 4,787 -- -- 4,787 Deferred income taxes payable.......... -- 1,568 -- -- 1,568 Long-term debt......................... 217,622 -- -- -- 217,622 Due to affiliate....................... -- 168,356 -- (168,356) -- Other liabilities...................... -- 46,650 557 -- 47,207 Stockholders' equity:.................. Common stock.......................... -- -- 1 (1) -- Paid-in-capital....................... 128,785 96,610 989 (97,599) 128,785 Carryover basis adjustment............ (20,047) -- -- -- (20,047) (Accumulated deficit) retained earnings (4,028) 35,703 (1,452) (34,251) (4,028) -------- -------- -------- ----------- --------- Total stockholders' equity.......... 104,710 132,313 (462) (131,851) 104,710 -------- -------- -------- ----------- --------- Total liabilities and stockholders' equity............................ $322,990 $412,968 $ 1,949 $ (300,207) $ 437,700 -------- -------- -------- ----------- --------- -------- -------- -------- ----------- --------- 7
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) Three Months Ended March 31, 1997 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Operating revenues, net................ $ -- $ 36,796 $ 442 $ -- $ 37,238 -------- --------- ---------- ---------- ------------ Operating expenses: Salaries and related costs............ -- 23,446 466 -- 23,912 Selling, general and administrative... -- 9,846 200 -- 10,046 Depreciation and amortization......... -- 2,340 27 -- 2,367 -------- --------- ---------- ---------- ------------ Total operating expenses............... -- 35,632 693 -- 36,325 -------- --------- ---------- ---------- ------------ Operating income (loss)............... -- 1,164 (251) -- 913 Other expense (income): Interest expense...................... 5,401 -- -- -- 5,401 Interest (income)..................... (92) -- -- -- (92) -------- --------- ---------- ---------- ------------ Total other expense, net.............. 5,309 -- -- -- 5,309 -------- --------- ---------- ---------- ------------ (Loss) income before income tax (benefit) (5,309) 1,164 (251) -- (4,396) Income tax (benefit).................. (2,122) (1,797) -- -- (3,919) Equity in earnings of affiliates, net of taxes......................... 2,710 -- -- (2,710) -- -------- --------- ---------- ---------- ------------ Net (loss) income.................... ($477) $ 2,961 ($251) ($2,710) ($477) -------- --------- ---------- ---------- ------------ -------- --------- ---------- ---------- ------------ 8
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) Three Months Ended March 31, 1996 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Operating revenues, net................ $ -- $ 37,117 $ 1,165 $ -- $ 38,282 --------- --------- --------- ------- --------- Operating expenses: Salaries and related costs............ -- 23,266 768 -- 24,034 Selling, general and administrative... -- 9,252 338 -- 9,590 Depreciation and amortization......... -- 2,984 26 -- 3,010 --------- --------- --------- ------- --------- Total operating expenses............... -- 35,502 1,132 -- 36,634 --------- --------- --------- ------- --------- Operating income....................... -- 1,615 33 -- 1,648 Other expense (income): Interest expense...................... 5,025 -- -- -- 5,025 Interest (income)..................... -- (27) (2) -- (29) --------- --------- --------- ------- --------- Total other expense, net............... 5,025 (27) (2) -- 4,996 --------- --------- --------- ------- --------- (Loss) income before income tax (benefit) provision........................... (5,025) 1,642 35 -- (3,348) Income tax (benefit) provision........ (3,179) 1,046 -- -- (2,133) Equity in earnings of affiliates, net of taxes......................... 631 -- -- (631) -- --------- --------- --------- ------- --------- Net (loss) income...................... ($1,215) $ 596 $ 35 ($631) ($1,215) --------- --------- --------- ------- --------- --------- --------- --------- ------- --------- 9
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) Three Months Ended March 31, 1997 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Net cash (used in) provided by operating activities............................ ($986) $ 6,312 $ -- $ -- $ 5,326 --------- -------- -------- ---------- ---------- Investing Activities: Capital expenditures................. -- (453) -- -- (453) Payments received on sales of station representation contracts.............. -- 7,922 -- -- 7,922 Payments made on purchases of station representation contracts.............. -- (9,708) -- -- (9,708) --------- -------- -------- ---------- ---------- Net cash (used in) investing activities -- (2,239) -- -- (2,239) --------- -------- -------- ---------- ---------- Financing Activities: Credit facilities borrowings.......... 15,000 -- -- -- 15,000 Credit facilities repayments.......... (17,500) -- -- -- (17,500) (Increase) decrease in due (to) from affiliate............................. 3,486 (3,486) -- -- -- --------- -------- -------- ---------- ---------- Net cash provided by (used in) financing activities............................ 986 (3,486) -- -- (2,500) --------- -------- -------- ---------- ---------- Net (decrease) increase in cash........ -- 587 -- -- 587 Cash and cash equivalents, beginning of period................................ -- 3,027 -- -- 3,027 --------- -------- -------- ---------- ---------- Cash and cash equivalents, end of period $ -- $ 3,614 $ -- $ -- $ 3,614 --------- -------- -------- ---------- ---------- --------- -------- -------- ---------- ---------- 10
KATZ MEDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (000's Omitted, Except Share and Per Share Information) Three Months Ended March 31, 1996 --------------------------------------------------------------- The The Non- Company Company Guarantors Guarantors Eliminations Consolidated ------- ---------- ---------- ------------ ------------ Net cash (used in) provided by operating activities............................ ($2,108) $ 5,535 $ 19 $ -- $ 3,446 ---------- -------- -------- --------- ---------- Investing Activities: Capital expenditures.................. -- (2,297) -- -- (2,297) Payments received on sales of station representation contracts.............. -- 4,788 -- -- 4,788 Payments made on purchases of station representation contracts.............. -- (12,111) -- -- (12,111) ---------- -------- -------- --------- ---------- Net cash (used in) investing activities -- (9,620) -- -- (9,620) ---------- -------- -------- --------- ---------- Financing Activities: Credit facilities borrowings.......... 21,000 -- -- -- 21,000 Credit facilities repayments.......... (12,000) -- -- -- (12,000) Increase (decrease) in due (to) from affiliate............................. (5,152) 5,152 -- -- -- Repurchase of old notes............... (1,740) -- -- -- (1,740) ---------- -------- -------- --------- ---------- Net cash provided by financing activities............................ 2,108 5,152 -- -- 7,260 ---------- -------- -------- --------- ---------- Net increase (decrease) in cash........ -- 1,067 19 -- 1,086 Cash and cash equivalents, beginning of period................................ -- 187 41 -- 228 ---------- -------- -------- --------- ---------- Cash and cash equivalents, end of period................................ $ -- $ 1,254 $ 60 $ -- $ 1,314 ---------- -------- -------- --------- ---------- ---------- -------- -------- --------- ---------- 11
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 (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, which represent the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of national and regional economic conditions, the levels of advertising on the Company's stations, 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. Background of the Company - ------------------------- The Company is a wholly-owned indirect subsidiary of Katz Media Group, Inc. ("KMG"). The Company is the survivor of a merger (the "KCC Merger") between Katz Capital Corporation ("KCC") and the company formerly known as Katz Media Corporation, its wholly-owned subsidiary. The survivor of the KCC Merger, Katz Capital Corporation, subsequently changed its name to Katz Media Corporation. Business - -------- The Company operates as a single segment business and is the only full service media representation firm in the United States serving all types of broadcast media, with leading market shares in the representation of radio and television stations and through NCC (a 50% owned joint venture) cable systems. During the first quarter of 1997, 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: 58.6% for television; 34.9% for radio; and 6.5% for cable (on a 100% owned basis), interactive/Internet and international. Gross billings during the first quarter of 1997 as compared with the first quarter of 1996 decreased 10.7% for television and increased 19.0% for radio and 3.6% for cable (on a 100% owned basis), internet/Interactive and international. The composition of gross billings by broadcast media during the first quarter of 1996 aggregated 64.7% for television, 29.2% for radio, and 6.1% for cable (on a 100% owned basis), interactive/Internet and international. Results of Operations - Three Months Ended March 31, 1997 - --------------------------------------------------------- Net operating revenues for the first quarter of 1997 totaled $37.2 million, a decrease of approximately $1.0 million, or approximately 2.7%, compared with net operating revenues of $38.3 million for the first quarter of 1996. This decrease primarily reflects the consolidation of station ownership, primarily in the second half of 1996 which led to net client losses and declines in gross billings in television, offset in part by net client gains and increases in gross billings in radio. 12 Operating expenses, excluding depreciation and amortization, increased approximately $0.3 million, or 1.0%, from $33.6 million in the first quarter of 1996 to $33.9 million in the first quarter of 1997. Salaries and related costs decreased by approximately $0.1 million as compared to the first quarter of 1996. Selling, general and administrative expenses increased by approximately $0.4 million as compared with the first quarter of 1996, primarily due to increased information technology costs. Operating expenses, excluding depreciation and amortization, as a percentage of net operating revenues, increased from 88% in the first quarter of 1996 to 91% in the first quarter of 1997. The Company is exploring ways to reduce operating costs. Depreciation and amortization overall decreased by $0.6 million, or 21.4%, for the first quarter of 1997 compared with the first quarter of 1996, primarily due to the effect of increased amortization of income on contracts sold over amortization on acquired contracts and as a result of deferred non-competition costs becoming fully amortized in 1996. Operating income for the first quarter of 1997 decreased by $0.7 million compared with the first quarter of 1996 as a result of the operating components discussed above. Interest expense, net, increased by $0.3 million for the first quarter of 1997 as compared with the first quarter of 1996, primarily due to increased borrowings and $0.1 million in amortization of debt issuance costs recorded in the first quarter of 1997 associated with the Company's December 1996 refinancing. Loss before income tax benefit totaled $4.4 million for the first quarter of 1997, compared with a loss of $3.3 million for the first quarter of 1996. This was primarily due to the components listed above. The difference between the effective tax rate of 89.2% compared with the U.S. statutory rate of 35% is primarily attributable to goodwill amortization, other nondeductible expenses and state income taxes. Liquidity and Capital Resources - -------------------------------- Cash provided by operating activities in the first three months of 1997 as compared with the first three months of 1996 increased $1.9 million. This increase in cash provided by operating activities is primarily due to improvements in the collection of accounts receivable, offset partially by decreases in current and deferred income tax liabilities as well as net changes in the other operating assets and liabilities. Net cash used in investing activities during the first three months of 1997 aggregated $2.2 million, a decrease of $7.4 million compared with $9.6 million during the first three months of 1996. This decrease in cash used in investing activities results primarily from net decreases of $5.5 million of cash used for net purchases of station representation contracts and $1.8 million of reduced capital expenditures. Overall cash flows used in financing activities during the first three months of 1997 aggregated $2.5 million compared with net cash provided by financing activities in the first three months of 1996 totalling $7.3 million. This decrease in cash used in financing activities is primarily attributable to a net reduction in amounts outstanding under the Company's credit facilities of $2.5 million in the first three months of 1997 compared with net borrowings of $9.0 million in the first three months of 1996 as well as having repurchased $1.7 million in 12 3/4% Senior Subordinated Notes due 2002 also occurring in the first three months of 1996. 13 The following table reconciles operating income to EBITDA for the periods indicated:
Three Months Ended March 31, ------------------ 1997 1996 ---- ---- Operating income............................................... $ 913 $1,648 Depreciation and amortization.................................. 2,367 3,010 Non-cash rent expense.......................................... 312 435 Non-cash 401K contribution..................................... 363 -- Stock option compensation charge............................... -- 364 Other non-cash charges......................................... -- 51 ------ ------ $3,955 $5,508 ------ ------ ------ ------
EBITDA for the first quarter of 1997 decreased approximately $1.5 million, or 28.2% to $4.0 million as compared with $5.5 million for the first quarter of 1996. This decrease is primarily attributable to lower operating revenues and increased operating expenses, excluding depreciation and amortization, described above. As a result, the EBITDA margin decreased from 14.4% in the first quarter of 1996 to 10.6% in the first quarter of 1997. 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. The Company's working capital requirements have been primarily provided by operations and borrowings under its credit facilities. 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 Company's New Credit Agreement and that these sources are sufficient to meet the Company's working capital requirements. 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. 14 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: May 14, 1997 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 and Director Chief Financial & Administrative Officer, Treasurer 15 -----END PRIVACY-ENHANCED MESSAGE-----