-----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, PqE9GGfDbwQE+2pxDl5DBEkCC5UcXMEwG85xo8ymAdnwrt/c3Anl70xpDd/l2c5T n9ze5Lt0sm17QLsdAXp2LA== 0000950148-97-000381.txt : 19970222 0000950148-97-000381.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950148-97-000381 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEFTEL BROADCASTING CORP CENTRAL INDEX KEY: 0000922503 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 990113417 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24516 FILM NUMBER: 97533790 BUSINESS ADDRESS: STREET 1: 6767 WEST TROPICANA AVE CITY: LAS VEGAS STATE: NV ZIP: 89603 BUSINESS PHONE: 7023673322 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTER ENDED DECEMBER 31, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from to Commission file number 0-24516 HEFTEL BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) Delaware 99-0113417 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6767 West Tropicana Avenue, Suite 102 89103 Las Vegas, Nevada (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (702) 367-3322 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock, $.001 Par Value 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 filing requirements for the past 90 days. Yes [x] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Class Outstanding at February 13, 1997 - ----- -------------------------------- Class A Common Stock, $.001 Par Value 16,377,731 shares Class B Common Stock, $.001 Par Value None
2 HEFTEL BROADCASTING CORPORATION December 31, 1996 INDEX PART I FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets as of December 31, 1996 and September 30, 1996 3 Condensed Consolidated Statements of Income for the Three Months Ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30, 1996 1996 -------------------------------- (UNAUDITED) (NOTE) ASSETS Current assets: Cash and cash equivalents $ 4,787,652 $ 5,131,960 Accounts receivable, net 16,995,571 17,015,323 Other current assets 631,791 1,012,232 ------------- ------------ Total current assets 22,415,014 23,159,515 Property and equipment, at cost 27,256,294 26,855,898 Less accumulated depreciation and amortization (7,590,009) (7,019,970) ------------ ------------ 19,666,285 19,835,928 Intangible assets 130,365,925 130,365,925 Less accumulated amortization (9,773,591) (8,624,020) ------------ ------------ 120,592,334 121,741,905 Other non-current assets 1,051,462 1,013,778 ------------ ------------ Total assets $ 163,725,095 $ 165,751,126 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,860,237 $ 1,859,301 Accounts payable and accrued expenses 12,194,922 14,131,858 ---------- ---------- Total current liabilities 14,055,159 15,991,159 Long-term debt and other obligations, less current portion 135,504,232 137,658,578 Stockholders' equity (Note 4): Series A Preferred Stock, cumulative, $.001 par value -- -- Undesignated series preferred stock, $.001 par value -- -- Class A Common Stock, $.001 par value 11,548 11,548 Class B Common Stock, $.001 par value -- -- Other stockholders' equity 14,154,156 12,089,841 ----------- ----------- Total stockholders' equity 14,165,704 12,101,389 ----------- ----------- Total liabilities and stockholders' equity $ 163,725,095 $ 165,751,126 ============= =============
See notes to condensed consolidated financial statements. NOTE: The balance sheet at September 30, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 3 4 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31, ----------------------------- 1996 1995 ----------------------------- (UNAUDITED) Net revenues $ 18,308,968 $ 17,457,686 Operating expenses 13,322,115 13,616,443 ------------ ------------ Operating income 4,986,853 3,841,243 Other income (expense): Interest expense, net (2,840,582) (2,350,438) Other, net 18,044 (123,567) ------------ ------------ (2,822,538) (2,474,005) ------------ ------------ Income before provision for income taxes 2,164,315 1,367,238 Provision for income taxes (100,000) (65,000) ------------ ------------ Income from continuing operations 2,064,315 1,302,238 Loss on discontinued operations - CRC -- (444,043) ------------ ------------ Net income $ 2,064,315 $ 858,195 ============ ============ Income from continuing operations per common and common equivalent share $0.18 $0.12 ============ ============ Net income per common and common equivalent share $0.18 $0.08 ============ ============ Weighted average common shares outstanding 11,547,731 10,732,342 ============ ============
See notes to condensed consolidated financial statements. 4 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31 ------------------------------- 1996 1995 ------------------------------- (UNAUDITED) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,607,182 $ 757,613 INVESTING ACTIVITIES: Purchases of property and equipment (400,396) (926,538) Payments relating to pending and business acquisitions and stock offering (397,684) (1,916,001) -------------- -------------- Net cash used in investing activities (798,080) (2,842,539) FINANCING ACTIVITIES: Advances from officers and stockholders -- 491,485 Repayment of long-term debt (2,153,410) (394,473) -------------- -------------- Net cash (used in) provided by financing activities (2,153,410) 97,012 -------------- -------------- Net decrease in cash (344,308) (1,987,914) Cash and cash equivalents at beginning of period 5,131,960 5,404,310 -------------- -------------- Cash and cash equivalents at end of period $ 4,787,652 $ 3,416,396 ============== ==============
See notes to condensed consolidated financial statements. 5 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) December 31, 1996 1. BASIS OF PRESENTATION The accompanying unaudited condensed 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. Operating results for the three month period ended December 31, 1996 are not necessarily indicative of the results that may be expected for the year ended September 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in Heftel Broadcasting Corporation's Annual Report on Form 10-K/A for the year ended September 30, 1996. Net income per common share is computed by dividing net income by the weighted average number of common and common equivalent shares (if dilutive) outstanding during each period. For purposes of this computation, cumulative preferred stock dividends, if any, are deducted from net income during each period in which preferred stock is outstanding, whether or not preferred stock dividends have been actually declared or paid during these periods. 2. RECLASSIFICATIONS/DISCONTINUED OPERATIONS On September 9, 1996, the Company's Board of Directors approved a plan to discontinue the operations of the radio network owned by the Company's wholly owned subsidiary Spanish Coast-to-Coast, Ltd., d.b.a. Cadena Radio Cento (CRC) effective August 5, 1996. Consequently, the accompanying condensed consolidated statement of income for the quarter ended December 31, 1995 reflects the effect of the discontinued operations of CRC. 3. LONG-TERM DEBT On January 21, 1997, the Company received a commitment letter from new lenders to obtain a new credit facility totaling $300 million (New Credit Facility). The terms of the New Credit Facility are expected to be comparable to the existing credit agreement except that principal payments commence in September 1999. Completion of the New Credit Facility is subject to the closing of the previously announced merger with Tichenor Media System, Inc. (Tichenor) and certain other conditions. On February 4, 1997, the Company borrowed $10 million under its credit agreement to fund the payment required under an option agreement to purchase the assets of radio station KSCA-FM serving the Los Angeles market (Note 6). On February 12, 1997, the entire principal balance outstanding under the credit agreement was repaid with proceeds from the Company's secondary public stock offering (Note 6). 6 7 4. STOCKHOLDERS' EQUITY
DECEMBER 31, SEPTEMBER 30, 1996 1996 -------------- -------------- Stockholders' equity : Series A Preferred Stock, cumulative, $.001 par value, 2,600,000 shares authorized, none issued or outstanding $ - $ -- Undesignated series preferred stock, $.001 par value, 2,400,000 shares authorized, none issued or outstanding -- -- Class A Common Stock, $.001 par value, 30,000,000 shares authorized, 11,547,731 issued and outstanding at December 31, 1996 and September 30, 1996 11,548 11,548 Class B Common Stock, $.001 par value, 7,000,000 shares authorized, none issued or outstanding -- -- Additional paid-in capital 102,578,149 102,578,149 Accumulated deficit (88,423,993) (90,488,308) -------------- -------------- Total stockholders' equity $ 14,165,704 $ 12,101,389 ============== ==============
On February 10, 1997, the Company completed its secondary public stock offering selling an additional 4,830,000 shares of its Class A Common Stock for $36.80 per share, after underwriters discount (Note 6). 5. STATION LOCAL MARKETING AGREEMENT On December 1, 1996, the Company and Tichenor entered into a Local Marketing Agreement (LMA) whereby Tichenor commenced programming radio station WLXX-AM in Chicago, owned by the Company. The LMA will be terminated upon consummation of the merger with Tichener. 6. SUBSEQUENT EVENTS STATION PURCHASE OPTION / TIME BROKERAGE AGREEMENT In exchange for an initial payment of $10 million made on February 4, 1997, the Company acquired from Golden West Broadcasters, a California corporation ("Golden West"), an option to purchase all of the assets used or held for use in connection with the operation of radio station KSCA-FM, which serves the Los Angeles market (Option Agreement). The Company borrowed the $10 million under its credit agreement. The option is exercisable upon the death of Gene Autry. The option has an initial term which expires on December 30, 1997, however the term may be renewed for additional one year terms provided the Company pays to Golden West an additional $3 million on or before the expiration date for the one-year option period then in effect. If the sale of the KSCA assets is not consummated, Golden West is obligated to refund to the Company a portion of the option payments only under certain circumstances. If the purchase of the KSCA assets is completed, the option payments will be credited against the purchase price. If the option is exercised, the purchase price for the KSCA assets will be the greater of (a) $112.5 million, or (b) the sum of (I) $105 million, plus (ii) an amount equal to $13,698.63 per day during the term of the time brokerage agreement for KSCA to which the Company is a party. The Company commenced programming KSCA under such time brokerage agreement on February 5, 1997. 7 8 SECONDARY PUBLIC OFFERING On February 10, 1997, the Company completed its secondary public stock offering selling an additional 4,830,000 shares of its Class A Common Stock for $36.80 per share, after underwriters discount. The net proceeds of the offering were approximately $177.2 million, $142.5 million of which were used to repay the entire outstanding principal balance under the Company's credit agreement. The balance of the proceeds will be used to repay long-term debt of Tichenor, if the Tichenor merger is consummated. The Tichenor merger is scheduled to close mid February, 1997. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1996 TO THREE MONTHS ENDED DECEMBER 31, 1995 On September 9, 1996, the Company's Board of Directors approved a plan to discontinue the operations of the radio network owned by the Company's wholly owned subsidiary Spanish Coast-to-Coast, Ltd., d.b.a. Cadena Radio Cento (CRC) effective August 5, 1996. Consequently, the accompanying condensed consolidated statement of income for the quarter ended December 31, 1995 reflects the effect of the discontinued operations of CRC. On December 1, 1996, the Company and Tichenor entered into a Local Marketing Agreement (LMA) whereby Tichenor commenced programming radio station WLXX-AM in Chicago, owned by the Company. This LMA will be terminated upon the consummation of the merger with Tichenor. Net revenues increased by $851,000, or 4.9%, to $18.3 million in the quarter ended December 31, 1996 from $17.5 million in the same quarter of 1995. Operating expenses decreased by $294,000, or 2.2%, to $13.2 million in the three months ended December 31, 1996 from $13.6 million in the same period of 1995. Operating expenses decreased during the quarter ended December 31, 1996 as compared to the same period of 1995 due primarily to a decrease in promotional expenses. Interest expense, net of interest income, increased by $499,000, or 21.3%, to $2.8 million in the three months ended December 31, 1996 from $2.3 million in the same period of 1995 primarily as a result of increased borrowings of $37.9 million, or 38.8%, over the same period of the prior year. The increase in interest expense was offset in part by a lower average interest rate during the quarter ended December 31, 1996 as compared to the same quarter of 1995. Net income increased by $1.2 million, or 140.5%, to $2.1 million in the quarter ended December 31, 1996 as compared to net income of $858,000 in the same quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the quarter ended December 31, 1996 was $2.6 million as compared to $758,000 for the same period in 1995. Generally, capital expenditures are financed from cash generated from operations and long-term borrowings. As of December 31, 1996, the Company had $133 million outstanding under its $155 million credit agreement. On February 12, 1997, the entire outstanding balance under the credit agreement of $142.5 million was repaid with proceeds from the Company's secondary public offering (Note 6). Borrowings under the credit agreement bear interest at varying rates based on quoted market prices. On January 21, 1997, the Company received a commitment letter from new lenders to obtain a new credit facility totaling $300 million. The terms of the New Credit Facility are expected to be comparable to the existing credit agreement except that principal payments commence in September 1999. Completion of the New Credit Facility is subject to the closing of the previously announced merger with Tichenor and certain other conditions. On February 4, 1997, the Company borrowed $10 million under its credit agreement to fund the payment required by the Option Agreement described in Note 6. The Option Agreement expires on December 30, 1997 and may be renewed for additional one-year periods upon payment of an additional $3 million. The $10 million payment and any additional $3 million payments will be applied to the purchase 9 10 price of the assets of KSCA-FM upon consummation. On February 10, 1997, the Company completed its secondary public stock offering selling an additional 4,830,000 shares of its Class A Common Stock for $36.80 per share, after underwriters discount. The net proceeds of the offering were approximately $177.2 million, $142.5 million of which was subsequently used to repay the entire outstanding principal balance under the Company's credit agreement. The balance of the proceeds will be used to repay long-term debt of Tichenor, if the Tichenor merger is consummated. The Tichenor merger is scheduled to close mid February, 1997. Available cash on hand plus cash provided by operations were sufficient to pay interest due under the credit agreement and fund certain capital expenditures during the quarter ended December 31, 1996. The Company believes it will have sufficient cash flow to finance its operations and satisfy its debt service requirements. The Company regularly reviews potential acquisitions of additional radio stations. Any future acquisitions are expected to be financed through additional borrowings under the New Credit Facility and/or cash provided by operations. 10 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are included herein. 2.1 Option Agreement, dated as of December 23, 1996, among Clear Channel Radio, Inc. ("Clear Channel"), Golden West Broadcasters ("GWB"), and Gene Autry and Stanley B. Schneider, as co-trustees of the Autry Survivor's Trust, with Exhibits (Schedules omitted) (incorporated by reference to Exhibit 2.5.14 to the Registrant's Registration Statement on Form S-3, as amended (Reg. No. 333-14207)). 2.2 Time Brokerage Agreement, dated as of December 23, 1996, between GWB and Clear Channel (Exhibits omitted) (incorporated by reference to Exhibit 2.5.15) to the Registrant's Registration Statement on Form S-3, as amended (Reg. No. 333-14207)). 2.3 Assignment and Assumption Agreement, dated as of January 2, 1997, among the Registrant, Clear Channel and Tichenor Media System, Inc. (incorporated by reference to Exhibit 2.5.16 to the Registrant's Registration Statement on Form S-3, as amended (Reg. No. 333-14207)). 3.1 Restated Articles of Incorporation (1). 3.2 Amended and Restated Bylaws of the Registrant (1). 11 Statement re: Computation of Per Share Earnings (b) Reports on Form 8-K During the quarter ended December 31, 1996, the Company did not file any reports on Form 8-K. __________________ Registrant agrees to furnish supplementally a copy of any omitted schedules or Exhibits to the Commission upon request. (1) Incorporated by reference to the identically numbered Exhibit to the Company's Registration Statement on Form S-1, as amended (Reg. No. 33-78370). 11 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this 13th day of February, 1997. HEFTEL BROADCASTING CORPORATION By: /s/ L. Lowry Mays ------------------------------- L. Lowry Mays, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ L. Lowry Mays President, Chief Executive Officer February 13, 1997 - ----------------------------- and Director L. Lowry Mays /s/ John T. Kendrick Senior Vice President, Chief Financial Officer February 13, 1997 - ----------------------------- and Assistant Secretary (principal accounting John T. Kendrick officer)
12 EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11 Computation of Per Share Earnings (Unaudited)
Three Months Ended December 31, 1996 1995 Primary Weighted average shares outstanding 11,547,731 9,900,975 Net effect of dilutive stock options - based on the treasury stock method using average market price -- 831,367 --------------- --------------- Total 11,547,731 10,732,342 =============== =============== Income from continuing operations $ 2,064,315 $ 1,302,238 Subtract $0.08 cumulative preferred stock dividends -- (6,713) Subtotal 2,064,315 1,295,525 Discontinued operations - CRC -- (444,043) --------------- --------------- Net income $ 2,064,315 $ 851,482 =============== =============== Income per share from continuing operations $ 0.18 $ 0.12 =============== =============== Net income per share $ 0.18 $ 0.08 =============== =============== Fully Diluted (Notes 1 and 2) Weighted average shares outstanding 9,900,975 Net effect of dilutive stock options - based on the treasury stock method using the period-end market price, if higher than the average market price 830,765 --------------- Total 10,731,740 =============== Net income from continuing operations $ 1,302,238 Subtract $0.08 cumulative preferred stock dividends (6,713) Subtotal 1,295,525 Discontinued operations - CRC (444,043) Total $ 851,482 =============== Income per share from continuing operations $ 0.12 =============== Net income per share $ 0.08 ===============
Notes: (1) For the three month period ended December 31, 1996 there were no common stock equivalents, therefore the fully diluted computation is not applicable. (2) For the three month period ended December 31, 1995, under the treasury stock method, the period-end market price is less than the average market price during the period, therefore the effect is anti-dilutive. However, the per share amount is the same under both the primary and fully-dilutive computations. EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 OCT-01-1996 DEC-31-1996 4,787,652 0 16,995,571 0 0 22,415,014 27,256,294 7,590,009 163,725,095 14,055,159 0 0 0 11,548 14,154,156 163,725,095 18,308,968 18,308,968 0 13,322,115 0 0 2,840,582 2,164,315 (100,000) 2,064,315 0 0 0 2,064,315 0.18 0
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