<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------
Date of Report (Date of Earliest Event Reported): January 23, 1997
CHANCELLOR BROADCASTING COMPANY
- ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
- ---------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-27726 75-2538487
- ------------------------------ ------------------------------
(Commission File Number) (I.R.S. Employer
Identification No.)
12655 North Central Expressway
Suite 405
Dallas, Texas 75243
- --------------------------------------------- --------------------
(Address of Principal Executive Offices) (Zip Code)
(972) 239-6220
- ---------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- ---------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The following are (i) the combined financial statements of Colfax
Communications, Inc. Radio Group as of December 31, 1993, 1994 and 1995 and for
the years ended December 31, 1993, 1994 and 1995 and as of September 30,
1996 and for the nine-month periods ended September 30, 1995 and 1996 and (ii)
the combined statements of net assets of The Sundance Stations as of December
31, 1994 and 1995 and the related combined statements of revenues, direct
expenses and other income (expense), changes in net assets and cash flows for
the years ended December 31, 1994 and 1995 and the combined statements of
revenues, direct expenses and other income, changes in net assets and cash
flows for the nine months ended September 30, 1995 and period beginning
January 1, 1996 and ending September 11, 1996.
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Colfax Communications, Inc. Radio Group:
We have audited the accompanying combined balance sheets of the Colfax
Communications, Inc. Radio Group (the "Company") as of December 31, 1995, 1994,
and 1993, and the related combined statements of income (loss), changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1995. These combined financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of the Colfax
Communications, Inc. Radio Group as of December 31, 1995, 1994, and 1993, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Washington, D.C.,
September 24, 1996
<PAGE> 4
COLFAX COMMUNICATIONS, INC. RADIO GROUP
COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1993, 1994, AND 1995
CURRENT ASSETS
<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 194,905 $ 216,414 $ 682,672
Accounts receivable, net of allowance for doubtful
accounts of $0, $238,801 and $203,088, respectively . . 7,314,558 8,978,881 7,626,579
Prepaid expenses and other current assets . . . . . . . . 514,060 343,441 286,774
---------- ----------- -----------
Total current assets . . . . . . . . . . . . . . 8,023,523 9,538,736 8,596,025
Property and equipment at cost, net of depreciation . . . 10,087,042 9,608,603 8,675,724
Intangibles and other noncurrent assets at cost, net
of amortization . . . . . . . . . . . . . . . . . . . . 44,234,705 37,653,803 32,383,587
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . $62,345,270 $56,801,142 $49,655,336
=========== =========== ===========
Liabilities
Accounts payable and accrued expenses . . . . . . . . . . $ 3,174,794 $ 3,883,242 $ 3,224,139
Current maturities of long-term debt . . . . . . . . . . 800,000 900,000 -
----------- ----------- -----------
Total current liabilities . . . . . . . . . . . 3,974,794 4,783,242 3,224,139
Long-term debt . . . . . . . . . . . . . . . . . . . . . 8,000,000 7,100,000 39,225,000
----------- ----------- -----------
Total liabilities . . . . . . . . . . . . . . . 11,974,794 11,883,242 42,449,139
----------- ----------- -----------
Commitments (Note 8):
Partners' equity:
Radio Acquisition Associates . . . . . . . . . . . . . (2,464,398) (3,121,671) (2,783,226)
Equity Group Holdings . . . . . . . . . . . . . . . . . 52,305,936 47,558,478 9,888,902
Colfax Communications, Inc. . . . . . . . . . . . . . . 528,938 481,093 100,521
Class B Limited Partners . . . . . . . . . . . . . . . - - -
----------- ----------- -----------
Total partners' equity . . . . . . . . . . . . . 50,370,476 44,917,900 7,206,197
----------- ----------- -----------
Total liabilities and partners' equity . . . . . $62,345,270 $56,801,142 $49,655,336
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these balance sheets.
<PAGE> 5
COLFAX COMMUNICATIONS, INC. RADIO GROUP
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------ -------------
<S> <C> <C> <C>
Advertising revenues:
Local sponsors . . . . . . . . . . . . . . . . . . . . $17,070,501 $24,147,363 $23,425,588
National sponsors . . . . . . . . . . . . . . . . . . . 5,075,658 8,221,228 9,151,724
Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,507,337 2,090,737 1,910,483
----------- ----------- -----------
Gross advertising revenues . . . . . . . . . . . 23,653,496 34,459,328 34,487,795
Less -- Commissions . . . . . . . . . . . . . . . . . . . (2,788,198) (4,283,386) (4,345,062)
----------- ----------- -----------
Net advertising revenues . . . . . . . . . . . . 20,865,298 30,175,942 30,142,733
----------- ----------- -----------
Operating expenses:
Programming . . . . . . . . . . . . . . . . . . . . . . 8,348,699 9,604,067 5,461,691
Sales and advertising . . . . . . . . . . . . . . . . . 9,141,312 10,885,717 11,360,597
General and administrative . . . . . . . . . . . . . . 1,931,197 3,651,832 4,332,286
Engineering . . . . . . . . . . . . . . . . . . . . . . 812,347 1,084,282 1,014,375
Depreciation and amortization . . . . . . . . . . . . . 7,197,017 7,599,901 6,505,492
----------- ----------- -----------
Total operating expenses . . . . . . . . . . . . 27,430,572 32,825,799 28,674,441
----------- ----------- -----------
Income (loss) from operations . . . . . . . . . (6,565,274) (2,649,857) 1,468,292
Interest expense . . . . . . . . . . . . . . . . . . . . 524,368 531,387 655,795
Loss on dissolution of GRAD-H (Note 6) . . . . . . . . . 499,540 - -
Loss on sale of fixed assets . . . . . . . . . . . . . . - - 770,689
Other expense . . . . . . . . . . . . . . . . . . . . . . 299,179 75,364 -
----------- ----------- -----------
Net income (loss) . . . . . . . . . . . . . . . $(7,888,361) $(3,256,608) $ 41,808
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
COLFAX COMMUNICATIONS, INC. RADIO GROUP
COMBINED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
<TABLE>
<CAPTION>
Radio Colfax Equity Class B
Acquisition Comm., Group Limited
Associates Inc. Holdings Partners Total
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992 . . $(1,618,492) $ 93,136 $ 9,178,480 $ - $ 7,653,124
Capital contributions
from partners . . . . . . . - 527,767 52,248,758 - 52,776,525
Capital distributions
to partners . . . . . . . . (484,890) (16,763) (1,669,159) - (2,170,812)
Net income (loss) . . . . . . (361,016) (75,202) (7,452,143) - (7,888,361)
----------- --------- ------------ ------ ------------
Balance, December 31, 1993 . . (2,464,398) 528,938 52,305,936 - 50,370,476
Capital contributions
from partners . . . . . . . 368,281 60,023 5,949,744 - 6,378,048
Capital distributions
to partners . . . . . . . . (1,678,638) (68,618) (6,826,760) - (8,574,016)
Net income (loss) . . . . . . 653,084 (39,250) (3,870,442) - (3,256,608)
----------- --------- ------------ ------ ------------
Balance, December 31, 1994 . . (3,121,671) 481,093 47,558,478 - 44,917,900
Capital contributions
from partners . . . . . . . - 5,735 567,746 - 573,481
Capital distributions
to partners . . . . . . . . (1,031,464) (372,709) (36,922,819) - (38,326,992)
Net income (loss) . . . . . . 1,369,909 (13,598) (1,314,503) - 41,808
----------- --------- ------------ ------ ------------
Balance, December 31, 1995 . . $(2,783,226) $ 100,521 $ 9,888,902 $ - $ 7,206,197
=========== ========= ============ ====== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
Colfax Communications, INC. RADIO GROUP
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
--------------- ------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . $ (7,888,361) $(3,256,608) $ 41,808
Adjustment to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization . . . . . . . . . . 7,197,017 7,599,901 6,505,492
Loss on dissolution of GRAD-H . . . . . . . . . . 499,540 - -
Loss on asset disposal . . . . . . . . . . . . . - 57,398 770,689
Restructuring charge . . . . . . . . . . . . . . - - 737,729
Change in assets and liabilities:
Decrease (increase) in accounts
receivable . . . . . . . . . . . . . . . . . (3,071,525) (1,664,323) 1,352,302
Decrease (increase) in prepaid expenses
and other current assets . . . . . . . . . . (279,592) 170,619 56,667
(Decrease) increase in accounts payable and
accrued expenses . . . . . . . . . . . . . . 935,241 708,448 (1,396,832)
Decrease in accrued interest . . . . . . . . . (5,633) - -
------------ ----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . . . (2,613,313) 3,615,435 8,067,855
------------ ----------- -----------
Cash flows from investing activities:
Cash paid for acquisition of intangibles and
other noncurrent assets . . . . . . . . . . . . . (46,419,228) (12,944) (363,174)
Payments for additions to property and
equipment . . . . . . . . . . . . . . . . . . . . (1,067,289) (968,929) (823,737)
Disposal of fixed assets . . . . . . . . . . . . . - - 113,825
------------ ----------- -----------
Net cash used in investing activities . . (47,486,517) (981,873) (1,073,086)
------------ ----------- -----------
Cash flows from financing activities:
Repayment of note payable . . . . . . . . . . . . . (600,000) (800,000) (8,000,000)
Loan proceeds . . . . . . . . . . . . . . . . . . . - - 39,225,000
Capital contributions from partners . . . . . . . . 52,776,525 6,378,048 573,481
Capital distributions to partners . . . . . . . . . (2,170,812) (8,190,101) (38,326,992)
------------ ----------- -----------
Net cash (used in) provided by
financing activities . . . . . . . . 50,005,713 (2,612,053) (6,528,511)
------------ ----------- -----------
Net increase (decrease) in cash . . . . . . . . . . . (94,117) 21,509 466,258
Cash, beginning of period . . . . . . . . . . . . . . 289,022 194,905 216,414
------------ ----------- -----------
Cash, end of period . . . . . . . . . . . . . . . . . $ 194,905 $ 216,414 $ 682,672
============ =========== ===========
Supplemental disclosure of cash
flow information --
Cash paid during the year for interest . . . . . . $ 530,001 $ 514,213 $ 615,900
============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
COLFAX COMMUNICATIONS, INC. RADIO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993, 1994, AND 1995
1. BASIS OF PRESENTATION:
The accompanying financial statements include the radio station holdings
of Colfax Communications, Inc. ("Colfax"), a Maryland Corporation. Three of the
stations serve the Washington, D.C. market: WGMS-FM (classical format), WBIG-FM
(oldies format), and WTEM-AM (all-sports format). The remaining two stations,
WBOB-FM (country format) and KQQL-FM (oldies format), serve the Minneapolis-St.
Paul market. All five stations are owned by entities under the common control
of Colfax and its affiliates.
2. DESCRIPTION OF COLFAX COMMUNICATIONS, INC. RADIO GROUP:
Classical Acquisition Limited Partnership
Classical Acquisition Limited Partnership ("CALP") is a Maryland limited
partnership formed to acquire and operate radio stations WGMS-AM (currently
WTEM-AM) and WGMS-FM. Radio Acquisition Associates Limited Partnership, a
Maryland limited partnership, had a 98.04 percent general partner interest and
Equity Group Holdings, a District of Columbia general partnership, had a 1.96
percent limited partner interest in CALP prior to the admission of the Class B
Limited Partners as discussed below. Radio Acquisition Associates Limited
Partnership has Colfax as a one percent general partner and Equity Group
Holdings as a 99 percent limited partner.
Certain Class B Limited Partners were admitted to the partnership on
January 1, 1993 and on January 1, 1995. The Class B Limited Partners have a
13.25 percent interest in CALP and Equity Group Holdings' limited partnership
interest in CALP was reduced to 1.813 percent effective January 1, 1993. Radio
Acquisition Associates' Limited Partnership general partnership interest was
reduced to 90.687 percent and 84.937 percent effective January 1, 1993 and
January 1, 1995, respectively.
Radio 570 Limited Partnership
Radio 570 Limited Partnership ("Radio 570") is a Maryland limited
partnership formed on December 10, 1991, to operate radio station WTEM-AM
(formerly WGMS-AM). Radio 570 was formed by Colfax as the one percent general
partner and Equity Group Holdings as the 99 percent limited partner. WTEM began
broadcasting on May 24, 1992.
<PAGE> 9
Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. On September 15, 1995, a Class B Limited Partner was
redeemed of his partnership interest. At December 31, 1995, the Class B Limited
Partners have a 9.25 percent interest and Equity Group Holdings has a 89.75
percent interest.
Radio 100 Limited Partnership
Radio 100 Limited Partnership ("Radio 100") was formed on August 11, 1992,
to acquire and operate radio stations. Radio 100 was formed by Colfax as the
one percent general partner and Equity Group Holdings as the 99 percent limited
partner.
In 1993, Radio 100 completed its acquisition of two radio stations in
Minnesota for $25,500,000. WBOB-FM (formerly WCTSFM) and KQQL-FM began on-air
operations under Radio 100 ownership on May 7, 1993, and February 18, 1993,
respectively.
Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. The Class B Limited Partners have a 10.25 percent interest
and the Equity Group Holdings interest was reduced to 88.75 percent.
Radio 100 of Maryland Limited Partnership
Radio 100 of Maryland Limited Partnership ("Radio 100 of Maryland") was
formed on December 2, 1992 to acquire and operate radio stations. Radio 100 of
Maryland was formed by Colfax as the one percent general partner and Equity
Group Holdings as the 99 percent limited partner.
On June 3,1993, Radio 100 of Maryland acquired WBIG-FM (formerly WJZE-FM)
in Washington, D.C. for $19,500,000.
Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. On September 15, 1995, a Class B Limited Partner was
redeemed of his partnership interest. On October 1, 1995, a Class B Limited
Partner was admitted to the partnership. At December 31, 1995, the Class B
Limited Partners have a 11.25 percent interest and Equity Group Holdings has a
87.75 percent interest.
Partnership Allocations
The partnerships distribute cash from operations and allocate net profits
or losses to the partners, in general, in accordance with their stated
interests except that no partner shall receive any distribution from a
partnership until such time as the net invested capital of the general partner
and Class A Limited Partner have been distributed, along with a cumulative
priority return on the average net invested capital at an annual
<PAGE> 10
rate equal to the prime rate plus one quarter of one percent compounded
monthly.
In accordance with the Company's new debt agreement (described below)
distributions to partners may be permitted on a quarterly basis if certain
requirements are met.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accompanying financial statements are presented on the accrual basis
of accounting in accordance with generally accepted accounting principles.
Barter Transactions
The partnerships enter into barter transactions in which they provide
on-air advertising in exchange for goods and services. Revenues and expenses
from barter transactions are presented in the accompanying statement of
revenues and expenses based on the estimated fair market value of the goods or
services received. Barter revenue approximated $1,590,000, $1,870,000 and
$1,340,000 for the years ended December 31, 1995, 1994, and 1993, respectively;
while barter expense approximated $1,486,000, $1,520,000 and $1,370,000, for
the years ended December 31, 1995, 1994, and 1993, respectively.
Income Taxes
Provision for Federal and state income taxes has not been made in the
accompanying financial statements since the partnerships do not pay Federal and
state income taxes but rather allocate profits and losses to the partners for
inclusion in their respective income tax returns.
Buildings and Leasehold Improvements
Buildings and leasehold improvements are recorded at fair value at the
date of acquisition. Depreciation is recorded using the straight-line method
over 31.5 or 40 years.
Furniture, Fixtures and Equipment
Furniture, fixtures and equipment are recorded at fair value at the date
of acquisition. Depreciation is recorded using the straight-line method over
the estimated useful life of the assets, which is typically 5 to 7 years.
<PAGE> 11
Intangible Assets
Intangible assets are recorded at fair value at the date of acquisition.
Amortization is recorded over their useful fives. The estimated useful lives of
intangible assets as of December 31, 1995, are as follows:
<TABLE>
<CAPTION>
Useful Life
-----------
<S> <C>
FCC Licenses . . . . . . . . . . . . . . . . . . 7-25 years
Covenants Not to Compete . . . . . . . . . . . . 3 years
Employment Agreements . . . . . . . . . . . . . . 2 years
Organizational Costs . . . . . . . . . . . . . . 5 years
Start-up Costs . . . . . . . . . . . . . . . . . 5 years
</TABLE>
Land
Certain partners have contributed to Radio 570 a parcel of land in
Germantown, Maryland, which is being used as the site for a new array of
broadcasting towers. The land has been recorded at its original purchase price
plus costs related to preparing the land for its intended use.
Radio 100 of Maryland acquired a parcel of land and property in
Washington, D.C., through the purchase agreement with United Broadcasting
Company. This land was sold in February 1995. Radio 100 acquired a parcel of
land in Nowthen, Minnesota, through the purchase agreement with Trumper
Communication of Minnesota Limited Partnership. Both parcels of land were
recorded at their appraised value at acquisition.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Company adopted Statement of Financial Accounting Standard
("SFAS") No. 107, "Disclosure about Fair Value of Financial Instruments," which
requires disclosures of fair value information about financial instruments,
whether or not recognized in the balance sheet.
The carrying amount reported in the balance sheets for cash, accounts
receivable, accounts payable and accrued liabilities, approximate their fair
value due to the immediate or short-term maturity of such instruments. The
carrying amount reported for
<PAGE> 12
long-term debt approximates fair value due to the debt being priced at floating
rates (see Note 7 for additional information).
New Pronouncements
In March 1995, the FASB issued No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets and certain identifiable intangibles to be
disposed of are to be reported at the lower of carrying amount or fair value
less cost to sell. SFAS No. 121 requires adoption for fiscal years beginning
after December 15, 1995. In management's opinion, the application of SFAS No.
121 will not have a significant impact on the Company's financial statements.
4. PROPERTY AND EQUIPMENT:
The components of property and equipment at December 31, 1993, 1994, and
1995, are summarized below:
<TABLE>
Caption>
As of December 31,
-------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Land . . . . . . . . . . . . . . . . $ 2,233,341 $ 2,233,341 $ 1,901,663
Buildings . . . . . . . . . . . . . . 591,427 604,927 26,453
Construction in progress . . . . . . 1,894,049 201,404 27,232
Furniture, fixtures and equipment . . 5,582,139 7,690,841 8,520,853
Leasehold improvements . . . . . . . 489,328 522,806 816,031
----------- ----------- -----------
10,790,284 11,253,319 11,292,232
Less -- Accumulated depreciation . . (703,242) (1,644,716) (2,616,508)
----------- ----------- -----------
$10,087,042 $ 9,608,603 $ 8,675,724
=========== =========== ===========
</TABLE>
5. INTANGIBLES AND OTHER NONCURRENT ASSETS:
The components of FCC licenses and other noncurrent assets at December 31,
1993, 1994, and 1995, are summarized below:
<TABLE>
<CAPTION>
As of December 31,
-------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
FCC licenses . . . . . . . . . . . . $39,505,773 $39,505,773 $39,505,783
Covenants not to compete . . . . . . 9,993,147 8,493,147 8,493,147
Start-up and organizational costs . . 2,153,036 2,153,036 2,132,577
Other . . . . . . . . . . . . . . . . 1,870,832 1,891,395 958,245
----------- ----------- -----------
53,522,788 52,043,351 51,089,752
Less -- Accumulated amortization . . 9,288,083) (14,389,548) (18,706,165)
---------- ----------- -----------
$44,234,705 $37,653,803 $32,383,587
=========== =========== ===========
</TABLE>
<PAGE> 13
6. RELATED-PARTY TRANSACTIONS:
Each partnership is involved in certain transactions with other
partnerships in the radio group related to sharing of services and purchasing.
These transactions are settled on a current basis through adjustments to
partners' equity accounts.
On January 18, 1995, CALP and Radio 100 of Maryland each entered into a
ten-year agreement to lease tower space from Colfax Towers, Inc. The initial
annual rental payment was $30,000 for CALP and $36,000 for Radio 100 of
Maryland. Colfax Towers, Inc. is owned by the shareholders of Colfax
Communications, Inc.
Employees of Colfax perform activities on behalf of and oversee the
operations of the radio stations included in the radio group. Colfax does not
charge any fees to the radio stations for the performance of such services.
Corporate expenses of $1,354,296, $1,144,082 and $798,630 related to those
services are not included in the financial statements of the radio group for
the years ending December 31, 1995, 1994, and 1993, respectively. These amounts
include $148,000, $110,000 and $0, respectively, related to management
restructuring at certain radio stations. These corporate expenses were funded
directly by the owners of Colfax Communications, Inc.
CALP owned 100 percent of the stock of GRADH-104, Inc., an Ohio
corporation. On September 15, 1993, the stockholder and directors authorized
the dissolution of GRADH-104, Inc. The assets of GRADH-104 were distributed to
its shareholder and recorded at their fair market value at the time of
transfer.
7. LONG-TERM DEBT:
On December 27, 1995, CALP, Radio 570, Radio 100, and Radio 100 of
Maryland (collectively, the "Borrowers") entered into a $40 million revolving
loan agreement. At December 31, 1995, $39,225,000 was outstanding under this
agreement. The proceeds were allocated to each borrower on the basis of each
station's capital account as follows:
<TABLE>
<S> <C>
CALP........................................................ $ 7,378,243
Radio 570................................................... 4,140,078
Radio 100................................................... 16,878,782
Radio 100 of Maryland....................................... 10,827,897
-----------
$39,225,000
===========
</TABLE>
The proceeds were used to repay the indebtedness of CALP (described
below), to make certain permitted distributions to partners of the Borrowers,
and for working capital purposes in the operations of the Borrowers. Borrowings
under this agreement bear interest at floating rates equal to prime and/or
LIBOR (as defined in the loan agreement) plus an applicable margin
<PAGE> 14
determined by a leverage ratio. The expiration date of the loan agreement is
December 31, 2002. Under the loan agreement, the Borrowers are required to
maintain a specific leverage ratio and certain ratios pertaining to cash flow
coverage.
On March 31, 1992, CALP entered into a $10 million loan agreement. This
loan bore interest at a floating rate equal to prime plus 0.5 percent, LIBOR
plus 2.0 percent or the CD rate (as defined in the loan agreement) plus 2.0
percent, along with certain other interest rate options. As described above,
this loan was paid in full on December 27, 1995.
8. COMMITMENTS:
The Radio Group has entered into various contracts for exclusive radio
broadcasting rights and other programming. In addition, the partnerships lease
office space and have entered into various service contracts, including certain
personal service contracts. These broadcasting rights, leases and service
contracts expire over periods ranging from 1996 to 2012. The minimum future
commitments under these agreements, leases and service contracts are as
follows.
<TABLE>
<S> <C>
1996........................................................ $ 3,688,393
1997........................................................ 3,377,277
1998........................................................ 1,951,379
1999........................................................ 1,150,057
2000........................................................ 922,649
Thereafter.................................................. 1,950,932
-----------
$13,040,687
===========
</TABLE>
9. RESTRUCTURING CHARGES:
During 1995, the Radio Group incurred restructuring costs of $737,729 at
certain radio stations. These costs included severance and salary payments to
terminated employees of $357,563, costs related to hiring a new general manager
at one of the radio stations of $135,519 and costs related to a loss on space
vacated by one of the radio stations of $244,647.
10. SUBSEQUENT EVENTS:
Radio 94 of Phoenix Limited Partnership ("Radio 94") was formed on January
3, 1996, to acquire and operate radio stations. Radio 94 was formed by Colfax
as the one percent general partner and Equity Group Holdings as the 99 percent
limited partner. On April 1, 1996, Radio 94 acquired KOOL (AM and KOOL-FM in
Phoenix, Arizona for $35,000,000. Effective April 5, 1996, certain Class B
Limited Partners were admitted to the partnership. The Class B Limited Partners
have an 8.25 percent interest and the Equity Group Holdings interest was
reduced to 90.75 percent. In June 1996, Radio 94 entered into an asset purchase
agreement to sell KOOL (AM).
<PAGE> 15
Radio 95 of Phoenix Limited Partnership ("Radio 95") was formed on May 3,
1996, to acquire and operate radio stations. Radio 95 was formed by Colfax as
the one percent general partner and Equity Group Holdings as the 99 percent
limited partner. On September 12, 1996, Radio 95 acquired KYOT-FM, KZON-FM, KOY
(AM) and KISO (AM), each in Phoenix, Arizona; KIDO (AM) and KLTB (FM, each in
Boise, Idaho; KARO (FM) in Caldwell, Idaho; WMIL-FM in Waukesha, Wisconsin; and
WOKY (AM) in Milwaukee, Wisconsin for $95,000,000.
On August 24,1996, Chancellor Radio Broadcasting Company ("Chancellor") a
Delaware Corporation, purchased substantially all of the assets of CALP, Radio
570, Radio 100, Radio 100 of Maryland, Radio 94 (with the exception of KOOL
(AM)) and Radio 95 (with the exception of KIDO (AM, KLTB (FM) and KARO (FM) for
$365,000,000 through the execution of an Asset Purchase Agreement (the
"Agreement"). The Agreement stipulates that the purchase price for the assets
be allocated among the limited partnerships as follows:
<TABLE>
<S> <C>
CALP........................................................ $ 50,000,000
Radio 570................................................... 21,000,000
Radio 100................................................... 85,000,000
Radio 100 of Maryland....................................... 90,000,000
Radio 94.................................................... 30,000,000
Radio 95.................................................... 89,000,000
------------
$365,000,000
============
</TABLE>
<PAGE> 16
Colfax Communications, Inc. Radio Group
Unaudited Condensed Combined Balance Sheet
September 30, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
Current assets:
Cash $ 2,504
Accounts receivable, net 9,848
Prepaid expenses and other 646
Total current assets 12,998
Property and equipment, net 10,218
Intangibles and other assets, net 147,520
--------
Total assets $170,736
========
Current liabilities
Accounts payable and other accrued expenses $ 4,186
Total current liabilities 4,186
Long-term debt 57,950
--------
Total liabilities 62,136
Partners' equity 108,600
--------
Total liabilities and stockholders' equity $170,736
--------
</TABLE>
See Accompanying Notes to Condensed Financial Statements
<PAGE> 17
Colfax Communications, Inc. Radio Group
Unaudited Condensed Combined Statements of Operations
For the Nine Months Ended September 30, 1995 and 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1995 1996
------ ------
<S> <C> <C>
ADVERTISING REVENUES:
Local sponsors $18,134 $23,963
National sponsors 6,414 7,857
Other 247 358
------- -------
Gross advertising revenues 24,795 32,178
Less-Commissions (3,103) (4,032)
------- -------
Net advertising revenues 21,692 28,146
------- -------
OPERATING EXPENSES:
Programming 4,143 4,858
Sales and advertising 8,168 9,715
General and administrative 2,626 3,296
Engineering 741 815
Depreciation and amortization 5,084 3,933
------ ------
Operating income 930 5,529
------ ------
Interest expense 476 3,227
Other (income) expense 939 (120)
------- -------
Net income $ (485) $ 2,422
======= =======
</TABLE>
See Accompanying Notes to Condensed Financial Statements
<PAGE> 18
Colfax Communications, Inc. Radio Group
Unaudited Condensed Combined Cash Flows
For the Nine Months Ended September 30, 1995 and 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1995 1996
-------- --------
<S> <C> <C>
Cash flows form operating activities:
Net income (loss) $ (485) $ 2,422
Adjustments to reconcile net loss to net cash used in
operating activities-
Depreciation and amortization 5,084 3,933
Loss on asset disposal 771 --
Restructuring charge 738 --
Change in assets and liabilities
(increase) decrease in accounts receivable 1,095 (2,222)
(Increase) decrease in prepaid expenses and
other current assets (232) (360)
Increase (decrease) in accounts payable and
accrued expenses (2,213) 962
------- --------
Net cash provided by operating activities 4,758 4,735
------- --------
Cash flows from investing activities,
Cash paid for acquisition of intangibles and other
noncurrent assets (346) (124,559)
Payments for additions to property and equipment (824) (2,332)
Disposal of intangible assets -- 6,280
Disposal of fixed assets 113
------- --------
Net cash used in investing activities (1,057) (120,611)
------- --------
Cash flows from financing activities:
Repayment of note payable (675) --
Loan proceeds -- 18,725
Capital contributions from partners -- 98,972
Capital distributions to partners (3,184) --
------- --------
Net cash provided by (used in) financing
activities (3,859) 117,697
------- --------
Net increase (decrease) in cash (158) 1,821
------- --------
Cash, beginning of period 216 683
------- --------
Cash, end of period $ 58 $ 2,504
======= ========
</TABLE>
See Accompanying Notes to Condensed Financial Statements
<PAGE> 19
COLFAX COMMUNICATIONS, INC. RADIO GROUP
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
(dollars in thousands)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed combined financial statements of
Colfax Communications, Inc. Radio Group ("Colfax") 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. Interim results are not necessarily indicative of results for a full
year. The Unaudited Condensed Combined Financial Statements should be read in
conjunction with the audited financial statements of Colfax as of December 31,
1994 and 1995 and for each of the three years in the period ended December 31,
1995 and the accompanying notes thereto.
2. OTHER
Barter
For the nine months ended September 30, 1995 and 1996, barter revenue
approximated $1,114 and $1,334, respectively while barter expense approximated
$883 and $989, respectively.
Related-Party Transactions
Employees of Colfax Communications, Inc. perform activities on behalf of
and oversee the operations of the radio stations included in the radio group.
Colfax does not charge and fees to the radio stations for the performance of
such services. Corporate expenses of approximately $1.0 million related to
those services are not included in the financial statements of the radio group
for the nine months ended September 30, 1995 and 1996. These corporate expenses
were funded directly by the owners of Colfax Communications, Inc.
Acquisition
As a result of the sale of substantially all of the assets of Colfax to
Chancellor Broadcasting Company pro forma financial information for Colfax
after giving effect to these transactions has been omitted. Reference is made
to the Chancellor Broadcasting Company pro forma statements included in this
Form 8-K.
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Chancellor Broadcasting Company
We have audited the accompanying combined statements of net assets of The
Sundance Stations (a combination of six commonly owned radio stations)
(collectively, the "Stations"), as defined in Note 1, as of December 31, 1995
and 1994, and the related combined statements of revenues, direct expenses and
other income (expense), changes in net assets, and cash flows for each of the
two years in the period ended December 31, 1995. These financial statements are
the responsibility of the Stations' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined net assets of The Sundance Stations as of
December 31, 1995 and 1994, and their combined revenues, direct expenses and
other income (expense), changes in net assets and their cash flows for each of
the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
October 11, 1996
<PAGE> 21
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
COMBINED STATEMENTS OF NET ASSETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash...................................................... $ 132,621 $ 320,941
Accounts receivables, net of allowance for doubtful
accounts of $247,759 and $279,923 in 1994 and 1995,
respectively........................................... 2,645,530 2,856,776
Prepaid expenses and other current assets................. 43,733 159,729
Other receivables......................................... 18,878 94,080
----------- -----------
Total current assets.............................. 2,840,762 3,431,526
Property and equipment, net................................. 5,361,690 4,987,953
Intangible assets, net...................................... 4,608,735 3,245,584
Other....................................................... 29,090 24,839
----------- -----------
Total assets...................................... $12,840,277 $11,689,902
=========== ===========
LIABILITIES AND NET ASSETS
Commitments (Note 6)
Current liabilities:
Accounts payable.......................................... $ 584,835 $ 456,717
Accrued compensation...................................... 337,363 503,639
Other accrued liabilities................................. 272,873 359,205
----------- -----------
Total current liabilities......................... 1,195,071 1,319,561
Net assets.................................................. 11,645,206 10,370,341
----------- -----------
Total liabilities and net assets.................. $12,840,277 $11,689,902
=========== ===========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE> 22
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
COMBINED STATEMENTS OF REVENUES, DIRECT EXPENSES
AND OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED PERIOD ENDED
------------------------- SEPTEMBER 30, SEPTEMBER 11,
1994 1995 1995 1996
----------- ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Broadcasting revenues................... $15,287,899 $16,945,031 $12,265,852 $13,844,524
Less agency commissions................. 2,054,401 2,105,477 1,547,366 1,740,521
----------- ----------- ----------- -----------
Net revenues............................ 13,233,498 14,839,554 10,718,486 12,104,003
----------- ----------- ----------- -----------
Operating expenses:
Programming, technical and news....... 3,725,347 3,822,587 3,005,776 2,832,248
Sales and promotion................... 3,302,759 3,360,414 2,528,166 2,691,932
General and administrative............ 2,670,628 2,591,127 1,854,663 2,153,486
Depreciation and amortization......... 2,290,391 2,145,239 1,761,108 1,242,535
----------- ----------- ----------- -----------
Total operating expenses...... 11,989,125 11,919,367 9,149,713 8,920,201
----------- ----------- ----------- -----------
Other income (expense), net............. 30,860 (21,353) (17,600) (24,881)
----------- ----------- ----------- -----------
Excess of revenues over expenses........ $ 1,275,233 $ 2,898,834 $ 1,551,173 $ 3,158,921
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE> 23
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
COMBINED STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C>
Balance at January 1, 1994.................................. 13,782,447
Excess of revenues over expenses............................ 1,275,233
Distributions to owner...................................... (3,412,474)
-----------
Balance at December 31, 1994................................ 11,645,206
Excess of revenues over expenses............................ 2,898,834
Distributions to owner...................................... (4,173,699)
-----------
Balance at December 31, 1995................................ 10,390,341
Excess of revenues over expenses (unaudited)................ 3,158,921
Distributions to owner (unaudited).......................... (4,128,375)
-----------
Balance at September 11, 1996 (unaudited) (see Note 1)...... $ 9,400,887
===========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE> 24
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED PERIOD ENDED
------------------------- SEPTEMBER 30, SEPTEMBER 11,
1994 1995 1995 1996
----------- ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Excess of revenues over expenses.......... $ 1,275,233 $ 2,898,834 $ 1,551,173 $ 3,158,921
Adjustments to reconcile excess of
revenues over expenses to net cash
provided by operating activities:
Depreciation and amortization.......... 2,290,391 2,145,239 1,761,108 1,242,535
Changes in operating assets and
liabilities net of effects from
acquisition:
Accounts receivable.................. (363,820) (211,246) (273,641) (122,140)
Prepaid expenses and other current
assets............................ 137,493 (115,996) 180,118 (36,097)
Other receivables.................... (18,878) (75,202) 18,878 94,080
Accounts payable and accrued
liabilities....................... 243,213 128,118 32,882 (460,558)
----------- ----------- ----------- -----------
Net cash provided by operating
activities...................... 3,563,632 4,769,747 3,270,518 3,876,741
----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment....... (788,570) (511,894) (389,051) (92,998)
Dispositions of property and equipment.... 516,895 99,915 77,810 18,599
(Increase) decrease in other assets....... (15,885) 4,251 4,249 23,503
----------- ----------- ----------- -----------
Net cash used in investing
activities...................... (287,560) (407,728) (306,992) (50,896)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Capital distributions to owner............ (3,412,474) (4,173,699) (2,888,749) (4,128,375)
----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities............ (3,412,474) (4,173,699) (2,888,749) (4,128,375)
----------- ----------- ----------- -----------
Net increase (decrease) in cash............. (136,402) 188,320 74,777 (302,530)
Cash at beginning of period................. 269,023 132,621 132,621 320,941
----------- ----------- ----------- -----------
Cash at end of period....................... $ 132,621 $ 320,941 $ 207,398 $ 18,411
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE> 25
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND PERIOD ENDED SEPTEMBER 11, 1996)
1. ORGANIZATION AND BASIS OF PRESENTATION:
The accompanying combined financial statements include the accounts of six
commonly owned radio stations ("The Sundance Stations" or the "Stations") owned
and operated by Sundance Broadcasting Inc. ("Sundance"). The Stations were sold
by Sundance to an unrelated party effective September 12, 1996. The operating
results of the Stations are included in the combined financial statements
through September 11, 1996.
Two radio stations are located in Wisconsin and four radio stations are
located in Arizona.
In August of 1993, Sundance acquired two radio stations located in Phoenix
(KZON-FM and KISO-AM). The other four radio stations, WOKY-AM and WMIL-FM in
Milwaukee, and KYOT-FM and KOY-AM in Phoenix were purchased prior to 1993.
These financial statements include the historical cost bases of assets,
liabilities and operations of the Stations. All significant intercompany
accounts and transactions have been eliminated in combination. Corporate amounts
such as overhead, officer's salaries, and interest expense, which are not
directly attributable to radio station operations have been excluded from these
financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
On February 8, 1996, the President signed into law the Telecommunications
Act of 1996. Among other things, this legislation requires the Federal
Communications Commission (the "FCC") to relax its numerical restrictions on
local ownership and affords renewal applicants significant new protections from
competing applications for their broadcast licenses. The ultimate effect of this
legislation on the competitive environment is currently undeterminable.
Revenue Recognition
Broadcasting operations derive revenue primarily from the sale of program
time and commercial announcements to local, regional and national advertisers.
Revenue is recognized when the program and commercial announcements are
broadcast.
Barter Transactions
Barter transactions represent advertising time exchanged for promotional
items, advertising, supplies, equipment and services. Barter revenue is recorded
at the fair value of the goods or services received and is recognized in income
when the advertisements are broadcast. Goods or services are charged to expense
when received or used. Advertising time owed and goods or services due the
Stations are included in accounts payable and accounts receivable, respectively.
<PAGE> 26
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND PERIOD ENDED SEPTEMBER 11, 1996)
Cash and Cash Equivalents
The Stations maintain cash in demand deposits with financial institutions.
All highly liquid investments with an original maturity of less than three
months are considered cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Depreciation is determined by
using the straight-line method based upon the estimated useful lives of the
assets as follows:
<TABLE>
<S> <C>
Buildings................................................... 30 years
Broadcast equipment......................................... 5-25 years
Furniture, fixtures and equipment........................... 5-10 years
Building improvements....................................... 10-30 years
</TABLE>
Leasehold improvements are amortized over the shorter of their useful lives
or the terms of the related leases.
Intangible Assets
Intangible assets are stated at cost and are amortized on a straight-line
basis over their estimated useful lives as follows:
<TABLE>
<S> <C>
FCC licenses................................................ 10 years
Customer lists.............................................. 5 years
Covenants not to compete.................................... 3 years
Goodwill.................................................... 40 years
Other....................................................... 1-5 years
</TABLE>
The Stations evaluate intangible assets for potential impairment by
analyzing the operating results, trends and prospects of the Stations, as well
as by comparing them to their competitors. The Stations also take into
consideration recent acquisition patterns within the broadcast industry, the
impact of recently enacted or potential FCC rules and regulations and any other
events or circumstances which might indicate potential impairment.
Advertising Costs
The Stations incur various marketing and promotional costs to add and
maintain listenership. These costs are expensed as incurred or deferred and
amortized over the interim periods which they benefit and totaled approximately
$394,558 and $214,892 for the years ended December 31, 1994 and 1995,
respectively.
Concentration of Credit Risk
The Stations' revenue and accounts receivable primarily relate to
advertising of products and services within the radio stations' broadcast areas.
The Stations perform on-going credit evaluations of the customers' financial
condition and, generally, require no collateral from their customers.
<PAGE> 27
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND PERIOD ENDED SEPTEMBER 11, 1996)
Interim Financial Information
The combined statement of changes in net assets for the period ended
September 11, 1996; and the combined statements of revenues, direct expenses and
other income (expense), and cash flows for the periods ended September 11, 1996
and September 30, 1995 are unaudited. However, in the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included and are of a normal recurring nature. Interim results are not
necessarily indicative of results for a full year.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1994 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Land...................................................... $ 826,900 $ 826,900
Buildings................................................. 1,339,412 1,339,412
Broadcast equipment....................................... 3,302,907 3,495,094
Furniture, fixtures and equipment......................... 1,457,397 1,620,338
Building improvements..................................... 365,702 418,423
----------- -----------
7,292,318 7,700,167
Less accumulated depreciation............................. (1,930,628) (2,712,214)
----------- -----------
$ 5,361,690 $ 4,987,953
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1994 and 1995 was
$732,795, and $782,087, respectively.
4. INTANGIBLE ASSETS:
Intangible assets at December 31, 1994 and 1995 consist of the following:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
FCC licenses.............................................. $ 440,000 $ 440,000
Customer lists............................................ 2,842,000 2,842,000
Covenants not-to-compete.................................. 2,750,000 2,750,000
Goodwill.................................................. 1,656,889 1,656,889
Other..................................................... 273,639 273,639
----------- -----------
7,962,528 7,962,528
Less accumulated amortization............................. (3,353,793) (4,716,944)
----------- -----------
$ 4,608,735 $ 3,245,584
=========== ===========
</TABLE>
Amortization expense for the years ended December 31, 1994 and 1995 was
$1,557,596, and $1,363,152, respectively.
<PAGE> 28
THE SUNDANCE STATIONS
(A COMBINATION OF SIX COMMONLY OWNED RADIO STATIONS)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND PERIOD ENDED SEPTEMBER 11, 1996)
5. OTHER ACCRUED LIABILITIES:
Other accrued liabilities at December 31, 1994 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Accrued national rep commission............................. $ 68,237 $150,038
Accrued property tax........................................ 74,658 87,616
Accrued music license fees.................................. 68,757 51,470
Accrued other............................................... 61,221 70,081
-------- --------
Total............................................. $272,873 $359,205
======== ========
</TABLE>
6. COMMITMENTS:
The Stations lease certain transmitting tower facilities and a vehicle
under various operating leases. Rental expense under operating leases for the
years ended December 31, 1994 and 1995 was approximately $64,000, and $63,000,
respectively. At December 31, 1995, future minimum lease payments due under
operating leases with initial or remaining noncancelable lease terms in excess
of one year are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C> <C>
1996.............................................................. $106,787
1997.............................................................. 82,082
1998.............................................................. 69,585
1999.............................................................. 64,911
2000.............................................................. 25,836
Thereafter........................................................ 284,239
--------
Total minimum lease payments............................ $633,440
========
</TABLE>
In connection with the 1993 acquisition of the two radio stations located
in Arizona, Sundance entered into an employment agreement with an individual.
The term of this agreement is from January 1, 1994 to December 31, 1998. The
aggregate annual payments remaining under this agreement are as follows:
<TABLE>
<S> <C>
1996.............................................. $137,500
1997.............................................. 150,000
1998.............................................. 150,000
--------
$437,500
========
</TABLE>
7. PROFIT SHARING PLAN:
The employees of the Stations are included in a contributory, trusteed,
401(k) profit sharing plan covering all full-time employees who elect to
participate. Employer contributions are at the discretion of the plan sponsor's
Board of Directors. For the years ended December 31, 1994 and 1995, no plan
sponsor contributions were made to this plan. Employee contributions are 100%
vested.
<PAGE> 29
(b) Pro Forma Financial Information
The following unaudited pro forma financial information (referred to for
purposes of Item 7(b) as the "Pro Forma Financial Information") is based on the
historical financial statements of (i) the Company, (ii) KDWB-FM (acquired by
the Company in August 1995), (iii) Shamrock Broadcasting (acquired by the
Company in February 1996), (iv) KOOL-FM (acquired by Colfax in April 1996), (v)
KIMN-FM and KALC-FM (acquired by the Company in July 1996 and for which a
Houston station was exchanged), (vi) the stations acquired by Colfax from
Sundance in September 1996, (vii) WKYN-AM, (acquired by the Company in November
1996) and (viii) the Colfax Stations (acquired by the Company in January 1997),
two of which will be divested. Financial information for WKYN-AM is shown where
applicable in the Pro Forma Financial Information.
The pro forma condensed statements of operations for the year ended
December 31, 1995 and for the nine months ended September 30, 1995 and 1996
give effect to the consummation of the acquisition of KDWB-FM, Shamrock
Broadcasting, KOOL-FM, KIMN-FM and KALC-FM (for which a Houston station was
exchanged), WKYN-AM and the Colfax Stations (two of which will be divested)
and, in each case, the financing thereof, as if each such transaction had
occurred on January 1, 1995. The pro forma balance sheet as of September 30,
1996 has been prepared as if the acquisition of WKYN-AM and the Colfax Stations
and, in each case, the financing thereof, had occurred on that date. The Pro
Forma Financial Information is not necessarily indicative of either future
results of operations or the results that might have occurred if the foregoing
transactions had been consummated on the indicated dates.
The purchases of KDWB-FM, Shamrock Broadcasting and the Colfax Stations
were accounted for using the purchase method of accounting. The acquisition of
KIMN-FM and KALC-FM in exchange for a Houston station was accounted for using
the fair value of the Houston station and the additional cash consideration
paid. The total purchase costs of the acquisitions and exchanges will be
allocated to the tangible and intangible assets and liabilities acquired based
upon their respective fair values. The allocation of the aggregate purchase
price reflected in the Pro Forma Financial Information is preliminary. The
final allocation of the purchase price is contingent upon the receipt of final
appraisals of the acquired assets; however, such allocation is not expected to
differ materially from the preliminary allocation.
<PAGE> 30
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands)
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------------------
Shamrock KIMN-FM
Chancellor Broadcasting KDWB-FM KALC-FM Colfax Sundance KOOL-FM Adjustments Pro Forma
---------- ------------ ------- ------- -------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues . . . . . . . . $ 64,322 $94,605 $ 893 $7,205 $30,143 $14,840 $4,914 $ (540)(A) $212,257
(4,125)(B)
-------- ------- ----- ------ ------- ------- ------ -------- --------
Station operating
expenses . . . . . . . . . . 37,464 73,720 473 6,193 22,169 9,774 3,573 (540)(A) 137,353
(4,032)(B)
(11,441)(C)
Depreciation and
amortization . . . . . . . . 9,047 8,751 518 875 6,505 2,145 899 7,357 (D) 36,097
Corporate expenses . . . . . 1,816 3,139 - - - - - (955)(E) 4,000
Stock option
compensation expense . . . . 6,360 - - - - - - - 6,360
-------- ------- ----- ------ ------- ------- ------ -------- --------
Operating income (loss) . . 9,635 8,995 (98) 137 1,469 2,921 442 4,946 28,447
Interest expense . . . . . . 17,324 14,703 - - 656 - 1,162 7,789 (F) 41,634
Other (income) expense . . . 42 (78) 23 2 771 21 - - 781
-------- ------- ----- ------ ------- ------- ------ -------- --------
Income (loss) before
provision for income
taxes . . . . . . . . . . . (7,731) (5,630) (121) 135 42 2,900 (720) (2,842) (13,967)
Provision for income taxes . 3,800 (1,287) (93) - - - - 4,918 (G) 7,338
Dividends and accretion
on preferred stock
of subsidiary . . . . . . . . - - - - - - - 38,503 (H) 38,503
-------- ------- ----- ------ ------- ------- ------ -------- --------
Net income (loss) . . . . . (11,531) $(4,343) $ (28) $ 135 $ 42 $ 2,900 $ (720) $(46,263) (59,808)
======= ===== ====== ======= ======= ====== ========
Dividends and accretion
on preferred stock . . . . . - $ 7,000 (H) $ 7,000
-------- --------
Loss applicable to
common shares . . . . . . . . $(11,531) $(66,808)
======== ========
Deficiency of earnings to
fixed charges and preferred
stock dividends and
accretion . . . . . . . . . . $ 7,731 $ 89,805
Loss per common share (K) . . $ (1.30) $ (3.50)
Weighted average number of
shares outstanding (K) . . . 8,850,075 19,110,230
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
<PAGE> 31
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands)
Nine Months Ended September 30, 1995
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------------------
Shamrock KIMN-FM
Chancellor Broadcasting KDWB-FM KALC-FM Colfax Sundance KOOL-FM Adjustments Pro Forma
---------- ------------ ------- ------- -------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues . . . . . . . . $47,921 $69,630 $ 893 $5,210 $21,692 $10,718 $3,497 $ (540)(A) $155,792
(3,229)(B)
------- ------- ----- ------ ------- ------- ------ -------- --------
Station operating
expenses . . . . . . . . . . 28,120 55,413 473 4,519 15,678 7,389 2,838 (540)(A) 102,332
(3,312)(B)
(8,246)(C)
Depreciation and
amortization . . . . . . . . 6,708 6,549 518 699 5,084 1,761 657 5,096 (D) 27,072
Corporate expenses . . . . . 1,292 2,515 - - - - - (807)(E) 3,000
Stock option compensation
expense . . . . . . . . . . . 5,410 - - - - - - - 5,410
------- ------- ----- ------ ------- ------- ------ -------- --------
Operating income (loss) . . 6,391 5,153 (98) (8) 930 1,568 2 4,040 17,978
Interest expense . . . . . . 12,780 11,067 - - 476 - 876 6,178 (F) 31,377
Other (income) expense . . . 82 (169) 23 - 939 17 - - 892
------- ------- ----- ------ ------- ------- ------ -------- --------
Income (loss) before
provision for income
taxes . . . . . . . . . . . (6,471) (5,745) (121) (8) (485) 1,551 (874) (2,138) (14,291)
Provision for income
taxes . . . . . . . . . . . . 2,829 (1,798) (93) - - - - 4,565 (G) 5,503
Dividends and accretion
on preferred stock of
subsidiary . . . . . . . . . - - - - - - - 28,550 (H) 28,550
------- ------- ----- ------ ------- ------- ------ -------- --------
Net income (loss) . . . . . (9,300) $(3,947) $ (28) $ (8) $ (485) $ 1,551 $ (874) $(35,254) (48,345)
======= ===== ====== ======= ======= ====== ========
Dividends and accretion
on preferred stock . . . . . - $ 5,250 (H) $ 5,250
-------- --------
Loss applicable to
common shares . . . . . . . . $ (9,300) $(53,595)
======== ========
Deficiency of earnings to
fixed charges and preferred
stock dividends and
accretion . . . . . . . . . . $ 6,471 $ 70,625
Loss per common share (K) . . $ (1.05) $ (2.80)
Weighted average number of
shares outstanding (K) . . . 8,849,851 19,110,230
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
<PAGE> 32
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands)
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Historical
-----------------------------------------------------------
Shamrock KIMN-FM
Chancellor Broadcasting KALC-FM Colfax Sundance KOOL-FM Adjustments Pro Forma
---------- ------------ ------- -------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . $122,838 $ 8,464 $1,796 $28,146 $12,104 $1,431 $ (1,464)(B) $173,315
-------- ------- ------ ------- ------- ------ -------- --------
Station operating expenses . . . . . 74,922 7,762 1,617 18,684 7,678 852 (726)(B) 108,889
(1,900)(C)
Depreciation and amortization . . . . 17,704 595 511 3,933 1,242 229 3,129 (D) 27,343
Corporate expenses . . . . . . . . . 3,377 2,515 - - - - (2,292)(E) 3,300
Stock option compensation expense . . 2,850 - - - - - - 2,850
-------- ------- ------ ------- ------- ------ -------- --------
Operating income (loss) . . . . . . 23,985 (2,108) (332) 5,529 3,184 350 325 30,933
Interest expense . . . . . . . . . . 24,469 1,380 - 3,227 - 299 1,094 (F) 30,469
Other (income) expense . . . . . . . 130 49 (2,847) (120) 25 - - (2,763)
-------- ------- ------ ------- ------- ------ -------- --------
Income (loss) before
provision for income taxes . . . . (614) (3,537) 2,515 2,422 3,159 51 (769) 3,227
Provision for income taxes . . . . . 2,201 - - - - - 3,302 (G) 5,503
Dividends and accretion on
preferred stock of subsidiary . . . . 8,187 - - - - - 23,847 (H) 32,034
-------- ------- ------ ------- ------- ------ -------- --------
Net income (loss) before
extraordinary loss . . . . . . . . (11,002) (3,537) 2,515 2,422 3,159 51 (27,919) (34,311)
Extraordinary loss on early
extinguishment of debt . . . . . . . 5,609 - - - - - (5,609)(I) -
-------- ------- ------ ------- ------- ------ -------- --------
Net income(loss) (16,611) $(3,537) $2,515 $ 2,422 $ 3,159 $ 51 $(22,310) (34,311)
========= ======== ====== ======= ======= ====== ======== ========
Dividends and accretion on
preferred stock . . . . . . . . . . . - $ 5,250 (H) $ 5,250
Loss on repurchase of
preferred stock . . . . . . . . . . . 16,570 (16,570)(J) -
-------- --------
Loss applicable to common shares . . $(33,181) $(39,561)
======== ========
Deficiency of earnings to fixed
charges and preferred stock
dividends and accretion . . . . . . . $ 8,801 $ 58,914
Loss per common share (K) . . . . . . $ (2.06) $ (2.07)
Weighted average number of
shares outstanding (K) . . . . . . . 16,125,754 19,110,230
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
<PAGE> 33
UNAUDITED PRO FORMA BALANCE SHEET
September 30, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
Historical
-----------------------------
Chancellor Colfax Adjustments Pro Forma
-------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . $ 5,112 $ 2,504 $ - $ 7,616
Accounts receivable, net . . . . . . . . 42,172 9,848 - 52,020
Prepaid expenses and other . . . . . . . 1,955 646 - 2,601
-------- -------- --------- ----------
Total current assets . . . . . . . . . 49,239 12,998 - 62,237
Restricted Cash . . . . . . . . . . . . . . 20,000 - - 20,000
Property and equipment, net . . . . . . . . 49,082 10,218 21,682 (L) 80,982
Intangible and other assets, net . . . . . 586,863 147,520 (4,870)(M) 926,000
3,000 (M)
193,487 (L)
-------- -------- --------- ----------
Total assets . . . . . . . . . . . . . $705,184 $170,736 $ 213,299 $1,089,219
======== ======== ========= ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . 400 - 8,975 (M) 9,375
Accounts payable and other
accrued expenses . . . . . . . . . . . . 14,487 4,186 - 18,673
-------- -------- -------- ----------
Total current liabilities . . . . . . 14,887 4,186 8,975 28,048
-------- -------- -------- ----------
Long-term debt . . . . . . . . . . . . . . 364,708 57,950 (57,950) 451,952
87,244 (M)
Deferred tax liability . . . . . . . . . . 19,037 - - 19,037
Other . . . . . . . . . . . . . . . . . . . 821 - - 821
-------- -------- -------- ----------
Total liabilities . . . . . . . . . . 399,453 62,136 38,269 499,858
Senior exchangeable preferred stock . . . . 103,853 - - 103,853
Exchangeable preferred stock . . . . . . . - - 192,500 (N) 192,500
Stockholders' equity . . . . . . . . . . . 201,878 108,600 (4,870)(M) 293,008
(108,600)(O)
96,000 (N)
-------- -------- --------- ----------
Total liabilities and
stockholders' equity . . . . . . . . . $705,184 $170,736 $ 213,299 $1,089,219
======== ======== ========= ==========
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
<PAGE> 34
NOTES TO PRO FORMA FINANCIAL INFORMATION
(dollars in thousands)
(A) The adjustment represents the elimination of time brokerage fees paid by
the Company in 1995 to Midcontinent Radio of Minnesota, Inc. from February
1, 1995 to July 31, 1995 pursuant to an LMA relating to KDWB-FM.
(B) The adjustment represents the elimination of net revenues and station
operating expenses of the Houston station, which was exchanged for KIMN-FM
and KALC-FM in Denver in July 1996.
(C) The adjustment reflects cost savings resulting from the elimination of
redundant operating expenses arising from the combination of the Company
and Shamrock Broadcasting, including the elimination of certain station
management positions, the standardization of employee benefits and
compensation practices and the implementation of operating strategies
currently utilized by the Company's management. The pro forma cost savings
are summarized as follows:
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended September 30,
December 31, --------------------------------
1995 1995 1996
----------------- -------------- --------------
<S> <C> <C> <C>
Selling expenses . . . . . . . . . . . . . . . $ 3,135 $2,422 $ 523
Programming and technical . . . . . . . . . . . 2,297 1,610 383
Advertising and promotions . . . . . . . . . . 2,554 1,484 422
General and administrative . . . . . . . . . . 3,455 2,730 572
------- ------ ------
Total $11,441 $8,246 $1,900
======= ====== ======
</TABLE>
(D) The adjustment reflects (i) a change in depreciation and amortization
resulting from conforming the estimated useful lives of the acquired
stations and (ii) the additional depreciation and amortization expenses
resulting from the allocation of the purchase price of the acquired
stations, net of stations exchanged, including an increase in property and
equipment and intangible assets to their estimated fair market value and
the recording of goodwill associated with the acquisitions. Goodwill is
amortized over 40 years.
(E) The adjustment reflects cost savings anticipated to be achieved by
operating all of the stations under the Company's decentralized management
strategy and from the elimination of redundant management costs.
(F) The adjustment reflects the effect on interest expense of the change in
debt structure resulting from each pro forma event. Pro forma interest
reflects $200,000 of 9 3/8% Senior Subordinated Notes due 2004 and $60,000
of 12 1/2% Senior Subordinated Notes due 2004 and $200,327 of bank
financing, with an annual interest rate of approximately 7.7%.
<PAGE> 35
(G) The adjustment reflects the change in the provision for income taxes
resulting from the deferred tax liabilities generated during each period
from the respective acquisitions, offset by additional reversals of
book/tax basis differences of Shamrock Broadcasting during each period.
(H) The adjustment reflects the dividends and accretion on the 12 1/4% Series
A Senior Cumulative Exchangeable Preferred Stock due 2008, where not
already included, and the 12% Exchangeable Preferred Stock due 2009 and
the 7% Convertible Preferred Stock.
(I) The adjustment reflects the elimination of a non-recurring extraordinary
loss on early extinguishment of debt in connection with the refinancing of
the Company's term and revolving loan facilities in conjunction with the
acquisition Shamrock Broadcasting and a partial prepayment of the
Company's existing credit agreement in August 1996.
(J) The adjustment reflects the elimination of a non-recurring extraordinary
loss on repurchase of preferred stock, which was recognized in February
1996 in connection with the acquisition of Shamrock Broadcasting.
(K) Reflects the effect of the recapitalization of the number of shares
outstanding and the additional shares issued in 1996 in conjunction with
the Company's initial public offering of its Class A Common Stock.
(L) The adjustment reflects a preliminary allocation of the purchase price of
the acquisition of WKYN and the Colfax Stations to the assets being
acquired and liabilities being assumed resulting in an increase in
property and equipment and intangible assets to their estimated fair
values and the recording of goodwill associated with the transactions as
follows:
<PAGE> 36
<TABLE>
<S> <C>
Cash . . . . . . . . . . . . . . . . . . . . . $ 2,504
Accounts receivable, net . . . . . . . . . . . 9,848
Prepaid expenses and other . . . . . . . . . . 646
Property and equipment . . . . . . . . . . . . 31,900
Goodwill . . . . . . . . . . . . . . . . . . . 341,007
Accounts payable and other accrued expenses . . (4,186)
--------
Total $381,719
========
</TABLE>
(M) The adjustment reflects (i) borrowings under the Company's new $345
million credit agreement (the "New Credit Agreement") ($200,327) to
finance the acquisition of the Colfax Stations, (ii) additional deferred
financing costs associated with the New Credit Agreement ($3,000), (iii)
the repayment of the existing credit agreement ($105,108) and (iv) the
elimination of the Company's deferred financing costs associated with the
existing credit agreement ($4,870), which will be recognized as an
extraordinary loss in the period the refinancing occurs.
(N) The adjustment reflects the issuance of the 12% Exchangeable Preferred
Stock due 2009 ($192,500) and the sale of the 7% Convertible Preferred
Stock ($96,000), both net of related transaction costs.
(O) The adjustment reflects the elimination of the historical equity balances
of the stations being acquired.
(c) Exhibits
1.1 Asset Purchase Agreement dated as of August 24, 1996 by and
among Classical Acquisition Limited Partnership, Radio 100 of
Maryland Limited Partnership, Radio 100 Limited partnership,
Radio 570 Limited partnership, Radio 94 of Phoenix Limited
partnership, Radio 95 of Phoenix Limited Partnership and
Chancellor Radio Broadcasting Company*
1.2 Purchase Agreement dated as of January 17, 1997 among Chancellor
Broadcasting Company and Smith Barney Inc., Alex. Brown & Sons
Incorporated, BT Securities Corporation, Credit Suisse First
Boston Corporation and Goldman, Sachs & Co.***
4.1 Certificate of Designation for Chancellor Broadcasting Company's
7% Convertible Preferred Stock***
4.2 Registration Rights Agreement dated as of January 23, 1997 among
Chancellor Broadcasting Company and Smith Barney Inc., Alex.
Brown & Sons Incorporated, BT Securities Corporation, Credit
Suisse First Boston Corporation and Goldman, Sachs & Co.***
<PAGE> 37
4.3 Certificate of Designation for Chancellor Radio Broadcasting
Company's 12% Exchangeable Preferred Stock**
10.1 Purchase Agreement dated as of January 17, 1997 among Chancellor
Radio Broadcasting Company and BT Securities Corporation, Credit
Suisse First Boston Corporation, Goldman, Sachs & Co.,
NationsBanc Capital Markets, Inc. and Smith Barney Inc.**
10.2 Registration Rights Agreement dated as of January 23, 1997 among
Chancellor Radio Broadcasting Company, BT Securities
Corporation, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., NationsBanc Capital Markets, Inc. and Smith Barney
Inc.**
10.3 Indenture dated as of January 23, 1997 between Chancellor Radio
Broadcasting Company and U.S. Trust Company of Texas, N.A.**
99.1 Press release dated January 23, 1997***
- ----------------
* Incorporated by reference to Chancellor Radio Broadcasting Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
** Incorporated by reference to Chancellor Radio Broadcasting Company's
Current Report on Form 8-K dated January 23, 1997.
*** Previously filed in the Company's Current Report on Form 8-K dated January
23, 1997.
<PAGE> 38
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHANCELLOR BROADCASTING COMPANY
Date: April 28, 1997 By: /s/ JACQUES D. KERREST
-------------------------------------
Jacques D. Kerrest
Senior Vice President and
Chief Financial Officer
<PAGE> 39
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
1.1 Asset Purchase Agreement dated as of August 24, 1996 by and
among Classical Acquisition Limited Partnership, Radio 100 of
Maryland Limited Partnership, Radio 100 Limited partnership,
Radio 570 Limited partnership, Radio 94 of Phoenix Limited
partnership, Radio 95 of Phoenix Limited Partnership and
Chancellor Radio Broadcasting Company*
1.2 Purchase Agreement dated as of January 17, 1997 among Chancellor
Broadcasting Company and Smith Barney Inc., Alex. Brown & Sons
Incorporated, BT Securities Corporation, Credit Suisse First
Boston Corporation and Goldman, Sachs & Co.***
4.1 Certificate of Designation for Chancellor Broadcasting Company's
7% Convertible Preferred Stock***
4.2 Registration Rights Agreement dated as of January 23, 1997 among
Chancellor Broadcasting Company and Smith Barney Inc., Alex.
Brown & Sons Incorporated, BT Securities Corporation, Credit
Suisse First Boston Corporation and Goldman, Sachs & Co.***
4.3 Certificate of Designation for Chancellor Radio Broadcasting
Company's 12% Exchangeable Preferred Stock**
10.1 Purchase Agreement dated as of January 17, 1997 among Chancellor
Radio Broadcasting Company and BT Securities Corporation, Credit
Suisse First Boston Corporation, Goldman, Sachs & Co.,
NationsBanc Capital Markets, Inc. and Smith Barney Inc.**
10.2 Registration Rights Agreement dated as of January 23, 1997 among
Chancellor Radio Broadcasting Company, BT Securities
Corporation, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., NationsBanc Capital Markets, Inc. and Smith Barney
Inc.**
10.3 Indenture dated as of January 23, 1997 between Chancellor Radio
Broadcasting Company and U.S. Trust Company of Texas, N.A.**
99.1 Press Release dated January 23, 1997***
</TABLE>
- ----------------
* Incorporated by reference to Chancellor Radio Broadcasting Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
** Incorporated by reference to Chancellor Radio Broadcasting Company's
Current Report on Form 8-K dated January 23, 1997.
*** Previously filed with the Company's Current Report on Form 8-K dated
January 28, 1997.
