<PAGE> 1
COX RADIO, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information for the year
ended December 31, 1999 has been derived from (i) the historical consolidated
financial statements of Cox Radio, Inc. included in Cox Radio's Annual Report on
Form 10-K/A dated March 20, 2000; (ii) the historical combined statements of
revenues and direct operating expenses of WEDR-FM Miami, Florida; WFOX-FM
Atlanta, Georgia; WAPE-FM Jacksonville, Florida; WFYV-FM Jacksonville, Florida;
WKQL-FM Jacksonville, Florida; WMXQ-FM Jacksonville, Florida; WOKV-AM
Jacksonville, Florida; WBWL-AM Jacksonville, Florida; WPLR-FM New Haven,
Connecticut; WKHL-FM Stamford-Norwalk, Connecticut; WSTC-AM Stamford-Norwalk,
Connecticut; WEFX-FM Stamford-Norwalk, Connecticut; and WNLK-AM
Stamford-Norwalk, Connecticut (which we refer to collectively as the "AMFM Radio
Stations") included in Item 7 of Cox Radio's Current Report on Form 8-K dated
August 30, 1999; (iii) the historical combined statements of revenues and direct
operating expenses of KKBQ-FM Houston, Texas and KLDE-FM Houston, Texas (which
we refer to collectively as the "Clear Channel Houston Radio Stations") included
in Item 7 of this Current Report on Form 8-K; (iv) the historical combined
statements of revenues and direct operating expenses of WKHK-FM Richmond,
Virginia; WMXB-FM Richmond, Virginia; and WKLR-FM Richmond, Virginia while under
the ownership of Capstar Broadcasting Corporation (which we refer to
collectively as the "Clear Channel Richmond Capstar Radio Stations") included in
Item 7 of this Current Report on Form 8-K and (v) the historical combined
statements of revenues and direct operating expenses of WKHK-FM Richmond,
Virginia; WMXB-FM Richmond, Virginia; and WKLR-FM Richmond, Virginia while under
the ownership of AMFM Inc. (which we refer to collectively as the "Clear Channel
Richmond AMFM Radio Stations") included in Item 7 of this Current Report on Form
8-K. The financial information for KKTL-FM Houston, Texas; KTBZ-FM Houston,
Texas; and WTVR-AM (subsequently named WVBB-AM) Richmond, Virginia (which we
refer to collectively as the "Clear Channel Assets") has not been presented
since Cox Radio has determined that such assets do not constitute businesses
under Rule 11-01(d) of Regulation S-X. Cox Radio does not believe that there is
any continuity of operations before and after the acquisition since we did not
acquire the revenue stream, customer base, employees, or management of these
stations.
The following unaudited pro forma combined financial information as of and for
the six months ended June 30, 2000 has been derived from (i) the unaudited
historical consolidated financial statements of Cox Radio, Inc. included in Cox
Radio's Quarterly Report on Form 10-Q dated August 8, 2000; (ii) the unaudited
historical combined statement of assets acquired and the unaudited historical
combined statement of direct operating expenses of the AMFM Radio Stations
included in Item 7 of this Current Report on Form 8-K; (iii) the unaudited
historical combined statement of assets acquired and the unaudited historical
combined statement of revenues and direct operating expenses of the Clear
Channel Houston Radio Stations included in Item 7 of this Current Report on Form
8-K and (iv) the unaudited historical combined statement of assets acquired and
the unaudited historical combined statement of revenues and direct operating
expenses of the Clear Channel AMFM Richmond Radio Stations included in Item 7 of
this Current Report on Form 8-K.
On August 30, 1999, Cox Radio agreed to acquire the plant and equipment,
intangible assets, and FCC broadcast licenses of the AMFM Radio Stations in
exchange for the plant and equipment, intangible assets, and FCC broadcast
licenses of KFI-AM and KOST-FM in Los Angeles, California and approximately $3
million in cash. Effective October 1, 1999, Cox Radio began operating the AMFM
Radio Stations pursuant to a Time Brokerage Agreement and AMFM began operating
KFI-AM and KOST-AM pursuant to a Time Brokerage Agreement. Since Cox Radio
operated the AMFM Radio Stations , beginning October 1,1999, the net revenues
and direct operating expenses, excluding, depreciation and amortization, have
been excluded from the results of operations of the AMFM Radio Stations and
included in the results of operations of Cox Radio. Since AMFM operated KFI-AM
and KOST-FM beginning October 1, 1999, the net revenues and direct operating
expenses, excluding depreciation and amortization, have been excluded from the
results of operations of Cox Radio and included in the results of operations of
AMFM Inc. Cox Radio consummated this transaction on August 25, 2000.
<PAGE> 2
On March 3, 2000, Cox Radio entered into an agreement to acquire the plant and
equipment, intangible assets, and FCC broadcast licenses of the Clear Channel
Richmond AMFM Radio Stations, the Clear Channel Houston Radio Stations and the
Clear Channel Assets (which we refer to collectively as the "Clear Channel Radio
Stations") for consideration of approximately $380 million. Cox Radio
consummated this transaction on August 30, 2000.
The unaudited pro forma combined statements of operations for the year ended
December 31, 1999 and for the six months ended June 30, 2000 have been presented
as if the exchange of the plant and equipment, intangible assets and FCC
broadcast licenses of KFI-AM Los Angeles, California and KOST-FM Los Angeles,
California for the plant and equipment, intangible assets and FCC broadcast
licenses of the AMFM Radio Stations and the acquisition of the plant and
equipment, intangible assets, and FCC broadcast licenses of the Clear Channel
Radio Stations (collectively referred to herein as the "Transactions") had been
consummated on January 1, 1999. The unaudited pro forma combined balance sheet
as of June 30, 2000 has been presented as if the Transactions had been
consummated on that date.
The unaudited pro forma combined financial information gives effect to the
Transactions under the purchase method of accounting for business combinations
and is based upon the assumptions and adjustments described in the accompanying
notes to the unaudited pro forma combined financial information presented on the
following pages. A final determination of required purchase accounting
adjustments, including the allocation of the purchase price to the assets
acquired and liabilities assumed based on their respective fair values, has not
yet been made. Accordingly, the purchase accounting adjustments made in
connection with the development of the unaudited pro forma combined financial
information are preliminary and have been made solely for purposes of developing
such unaudited pro forma combined financial information. Upon determination of
the final fair values of certain assets and liabilities, the actual financial
position and results of operations may differ from the unaudited pro forma
combined amounts reflected herein because of a variety of factors, including
availability of additional information, changes in values not currently
identified and changes in operating results between the dates of the unaudited
pro forma combined financial information and the date on which such final fair
values are determined. However, the Company does not expect that such final
determination will have a material impact on its financial position or results
of operations.
The pro forma adjustments do not reflect any operating efficiencies and cost
savings that Cox Radio may achieve with respect to the combined entities. The
pro forma adjustments do not include any adjustments to historical revenues for
any future price changes nor any adjustments to operating, marketing and general
and administrative expenses for any future operating changes.
The unaudited pro forma combined results are not necessarily indicative of the
financial position or operating results that would have occurred had the
Transactions been consummated on June 30, 2000, or at the beginning of the
periods ended June 30, 2000 and December 31, 1999, for which such acquisition
has been given effect. In addition, the unaudited pro forma combined results are
not necessarily indicative of the combined results of future operations.
<PAGE> 3
Cox Radio, Inc.
Unaudited Proforma Combined Balance Sheet
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Clear
Clear Channel
Channel Richmond
AMFM Houston AMFM Clear
Radio Radio Radio Channel Pro Forma Cox Radio
Cox Radio Stations Stations Stations Assets Adjustments Pro Forma
--------- ----------- ----------- ----------- ----------- ----------- -----------
(1) (1) (1) (1) (1) (1) (1)
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents .... $ 13,589 $ -- $ -- $ -- $ -- $ (3,000) (2) $ 10,589
Restricted cash .............. 76,699 -- -- -- -- -- 76,699
Accounts and notes receivable,
less allowance
for doubtful accounts ..... 83,385 -- -- -- -- -- 83,385
Prepaid expenses and other
current assets .............. 5,007 -- -- -- -- -- 5,007
Amounts due from Cox
Enterprises Inc. ............ 92,809 -- -- -- -- -- 92,839
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total current assets .... 271,519 -- -- -- -- (3,000) 268,519
Plant and equipment, net ..... 58,086 15,329 4,655 3,775 1,006 (3,893)(2) 81,248
(2,290)(2)
Intangible assets, net ....... 804,652 334,140 167,131 77,339 51,308 (334,140)(2) 1,603,924
456,381 (2)
(28,309)(2)
(295,778)(3)
371,864 (3)
(664)(2)
Other assets ................. 26,168 -- -- -- -- -- 26,168
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets ............. $ 1,160,425 $ 349,469 $ 171,786 $ 81,114 $ 52,314 $ 164,751 $ 1,979,859
=========== =========== =========== =========== =========== =========== ===========
CURRENT LIABILITIES:
Accounts payable and
accrued expenses ........... $ 30,875 $ -- $ -- $ -- $ -- $ -- $ 30,875
Income taxes payable ......... 6,613 -- -- -- -- 800 (2) 7,413
Other current liabilities .... 1,653 -- -- -- -- -- 1,653
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total current liabilities 39,141 -- -- -- -- 800 39,941
Notes payable ................ 200,125 -- -- -- -- 1,000 (3) 582,425
381,300 (3)
Deferred income taxes ........ 148,005 -- -- -- -- 175,195 (2) 322,536
(664)(2)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities ....... 387,271 -- -- -- -- 557,631 944,902
----------- ----------- ----------- ----------- ----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock .............. -- -- -- -- -- -- --
Class A common stock ......... 13,402 -- -- -- -- -- 13,402
Class B common stock ......... 19,382 -- -- -- -- -- 19,382
Additional paid-in capital ... 609,151
Retained earnings ............ 132,870 349,469 171,786 81,114 52,314 (349,469)(2) 394,673
470,000 (2)
(175,195)(2)
(800)(2)
(3,893)(2)
(28,309)(2)
(305,214)(3)
Less: Class A common
stock in treasury ........... (1,651) -- -- -- -- -- (1,651)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total shareholders'
equity ................. 773,154 349,469 171,786 81,114 52,314 (392,880) 1,034,957
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders equity .... $1,160,425 $ 349,469 $ 171,786 $ 81,114 $ 52,314 $ 164,751 $ 1,979,859
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to unaudited pro forma combined balance sheet.
<PAGE> 4
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Balance Sheet
June 30, 2000
(In Thousands)
(1) Represents the historical amounts of (i) Cox Radio, Inc. as reflected
in Cox Radio's second quarter Form 10-Q dated August 8, 2000; (ii) the
AMFM Radio Stations, the Clear Channel Houston Radio Stations and the
Clear Channel Richmond AMFM Stations as reflected in Item 7 of this
Current Report on Form 8-K of Cox Radio, Inc. and (iii) the Clear
Channel Assets.
AMFM RADIO STATIONS
(2) On August 30, 1999, Cox Radio agreed to acquire the plant and
equipment, intangible assets, and FCC broadcast rights of the AMFM
Radio Stations in exchange for the plant and equipment, intangible
assets, and FCC broadcast licenses of KFI-AM and KOST-FM in Los
Angeles, California and approximately $3 million in cash. Effective
October 1, 1999, Cox Radio began operating the AMFM Radio Stations
pursuant to a Time Brokerage Agreement. Cox Radio consummated this
transaction on August 25, 2000.
Accordingly, the following adjustment reflects the exchange of the
plant and equipment, intangible assets, and FCC broadcast licenses of
KFI-AM and KOST-FM (herein collectively referred to as "KFI-AM and
KOST-AM") and the payment of $3 million in cash consideration for the
plant and equipment, intangible assets and FCC broadcast licenses of
the AMFM Radio Stations and the application of the purchase accounting
method in accordance with APB Opinion No. 16, "Business Combinations":
<TABLE>
<CAPTION>
<S> <C>
Estimated fair value of the AMFM Radio Stations based on a preliminary appraisal ................... $ 473,000
Preliminary estimate of direct acquisition costs funded through borrowings under Cox Radio's
revolving credit facilities......................................................................... 1,000
--------------
Total adjusted purchase price ..................................................................... $ 474,000
Allocation of total adjusted purchase price as follows:
Preliminary estimate of the fair value of the AMFM Radio Stations' plant and
equipment based on preliminary appraisal ........................................................ 17,619
--------------
Preliminary estimate of excess of purchase price over tangible assets acquired
attributed to FCC licenses (Amortizable life of 40 years) .......................................... $ 456,381
==============
Calculation of incremental property, plant, and equipment based on preliminary appraisal:
Preliminary estimate of the fair value of the AMFM Radio Stations' plant and
equipment based on preliminary appraisal ........................................................ $ 17,619
Historical property, plant, and equipment of AMFM Radio Stations ................................... (15,329)
--------------
Incremental property, plant and equipment........................................................... $ 2,290
==============
In addition, the pro forma adjustments reflect the following:
Elimination of the historical plant and equipment of KFI-AM and KOST-FM ............................ $ (3,893)
Elimination of the historical intangible assets of KFI-AM and KOST-FM .............................. (28,309)
Elimination of the historical deferred income tax liabilities of KFI-AM and KOST-FM ................ (664)
Elimination of the historical intangible assets of the AMFM Radio Stations ......................... (334,140)
Elimination of the historical equity accounts of the AMFM Radio Stations ........................... (349,469)
Cash consideration paid to AMFM Inc. upon exchange ................................................. (3,000)
Preliminary estimate of current income taxes payable related to the pre-tax gain on
exchange of KFI-AM and KOST-FM for the AMFM Radio Stations ....................................... 800
Preliminary estimate of deferred income taxes payable related to the pre-tax gain on
exchange of KFI-AM and KOST-FM for the AMFM Radio Stations ....................................... $ 175,195
</TABLE>
<PAGE> 5
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Balance Sheet
June 30, 2000
(In Thousands)
The unaudited pro forma combined statement of operations does not include the
estimated net after-tax gain upon the exchange of KFI-AM and KOST-FM for the
AMFM Radio Stations as follows:
<TABLE>
<CAPTION>
<S> <C>
Estimated value of the AMFM Radio Stations, net of cash consideration paid to
AMFM Inc. ........................................................................................ $ 470,000
Less: Net book value of the plant and equipment, intangible assets, and FCC broadcast
licenses of KFI-AM and KOST-FM ................................................................... (32,202)
--------------
Preliminary estimate of pre-tax gain on the exchange ............................................... 437,798
Statutory income tax rate .......................................................................... 40.2%
--------------
Preliminary estimated income tax effect of the exchange ............................................ 175,995
--------------
Preliminary estimate of net after-tax gain on the exchange ......................................... $ 261,803
==============
</TABLE>
CLEAR CHANNEL RADIO STATIONS AND ASSETS
(3) On March 3, 2000, Cox Radio entered into an agreement to acquire the
plant and equipment, intangible assets, and FCC broadcast licenses of
the Clear Channel Houston Radio Stations, Clear Channel Richmond AMFM
Radio Stations, and Clear Channel Assets for consideration of $380
million. Cox Radio closed this transaction on August 30, 2000.
Accordingly, the following adjustment reflects the acquisition of the
Clear Channel Radio Stations and the application of the purchase
accounting method in accordance with APB Opinion No. 16:
<TABLE>
<CAPTION>
<S> <C>
Cash purchase price funded through borrowings under Cox Radio's revolving credit facilities ........ $ 380,000
Preliminary estimate of direct acquisition costs funded through borrowings under Cox Radio's
revolving credit facilities....................................................................... 1,300
--------------
Total adjusted purchase price... ................................................................... 381,300
Allocation of total adjusted purchase price as follows:
Preliminary estimate of the fair value , which approximates book value, of the plant and equipment of:
Clear Channel Houston Radio Stations ............................................................... 4,655
Clear Channel Richmond AMFM Radio Stations ......................................................... 3,775
Clear Channel Assets .............................................................................. 1,006
--------------
Preliminary estimate of excess of purchase price over tangible assets acquired
attributed to FCC licenses (Amortizable life of 40 years) .......................................... $ 371,864
==============
In addition, the pro forma adjustments reflect the following:
Elimination of the historical intangible assets of the Clear Channel Radio Stations ..................
Clear Channel Houston Radio Stations ............................................................... $ (167,131)
Clear Channel Richmond AMFM Radio Stations ......................................................... (77,339)
Clear Channel Assets .............................................................................. (51,308)
--------------
Total historical intangible assets ................................................................. $ (295,778)
==============
Elimination of the historical equity accounts of the Clear Channel Radio Stations:
Clear Channel Houston Radio Stations ............................................................... (171,786)
Clear Channel Richmond AMFM Radio Stations ......................................................... (81,114)
Clear Channel Assets .............................................................................. (52,314)
==============
Total historical equity accounts ................................................................... $ (305,214)
==============
</TABLE>
<PAGE> 6
COX RADIO, INC.
Unaudited Pro Forma Consolidated Statements of Operations
Six Months Ended June 30, 2000
(In Thousands except per share data)
<TABLE>
<CAPTION>
Clear
Clear Channel
Channel Richmond
AMFM Houston AMFM
Cox Radio Radio Radio Pro Forma Cox Radio
Radio Stations Stations Stations Adjustments Pro Forma
--------- --------- --------- --------- ----------- ---------
(1) (1) (1) (1)
<S> <C> <C> <C> <C> <C> <C>
Net revenues .................... $ 171,547 $ -- $ 14,050 $ 6,526 $ -- $ 192,123
Costs and expenses:
Operating ................... 37,795 -- 1,655 914 -- 40,364
Selling, general and
administrative ............. 69,178 -- 5,753 2,804 -- 77,735
Corporate general and
administrative ............. 5,979 -- -- -- -- 5,979
Depreciation and amortization 15,055 13,456 6,618 3,193 (185)(2) 40,601
(178)(3)
1,528 (4)
951 (8)
164 (5)
Gain on sales of assets ..... (58) -- -- -- -- (58)
Gain on sales of radio
stations ................... (45,353) -- -- -- -- (45,353)
--------- --------- --------- --------- --------- ---------
Operating income (loss) ........ 88,951 (13,456) 24 (385) (2,116) 72,855
Interest expense, net .......... (12,434) -- -- -- (35)(6) (25,929)
(13,460)(9)
Non-cash mark-to-market
unrealized gain ............... 2,172 -- -- -- 2,172
Other expenses - net ........... (344) -- -- -- -- (344)
--------- --------- --------- --------- --------- ---------
Income (loss) before income
taxes ......................... 78,345 (13,456) 24 (385) (15,611) 48,753
Income tax expense (benefit) ... 32,010 -- -- (4,861)(7) 21,211
(5,938)(10)
Net income (loss) .............. $ 46,335 $ (13,456) $ 24 $ (385) $ (4,812) $ 27,543
========= ========= ========= ========= ========= =========
Net income per common share:
Basic .......................... $ 0.53 $ 0.32
========= =========
Diluted ........................ $ 0.53 $ 0.31
========= =========
Weighted average common shares
outstanding:
Basic .......................... 87,120 87,120
========= =========
Diluted ........................ 87,806 87,806
========= =========
</TABLE>
See notes to unaudited pro forma combined statement of operations.
<PAGE> 7
Cox Radio, Inc.
Notes to Unaudited Pro Forma Combined Statement of Operations
Period Ended June 30, 2000
(In Thousands)
(1) Represents the historical amounts of (i) Cox Radio, Inc. as reflected
in Cox Radio's second quarter Form 10-Q dated August 8, 2000; (ii) the
AMFM Radio Stations, the Clear Channel Houston Radio Stations and the
Clear Channel Richmond AMFM Stations as reflected in Item 7 of this
Current Report on Form 8-K of Cox Radio, Inc.
AMFM Radio Stations
Effective October 1, 1999, AMFM began operating KFI-AM and KOST-FM
pursuant to a Time Borokerage Agreement. Since AMFM legally owned the
operatins of KFI-AM and KOST-FM, beginning Octoebr 1, 1999, the net
revenues and direct operating expenses, excluding depreciaiton and
amortization, have been excluded from the results of operations of Cox
Radio.
(2) To eliminate actual depreciation expense related to the KFI-AM and
KOST-FM plant and equipment for the six months ended June 30, 2000
(3) To eliminate actual amortization expense related to the KFI-AM and
KOST-FM intangibles for the six months ended June 30, 2000
(4) To record incremental amortization expense on intangibles assets
related to the exchange of KFI-AM and KOST-FM for the AMFM Radio
Stations as follows:
<TABLE>
<CAPTION>
<S> <C>
Preliminary estimate of excess of purchase price over tangible assets acquired ............... $ 456,381
Historical intangible assets of the AMFM Radio Stations ...................................... (334,140)
---------
Incremental intangible assets attributed to FCC licenses ..................................... 122,241
Amortization period .......................................................................... 40
---------
Incremental annual amortization expense ..................................................... 3,056
Divided by 2 ................................................................................. 2
---------
Incremental amortization expense for the six-months ended June 30, 2000 ...................... $ 1,528
=========
</TABLE>
(5) To record incremental depreciation expense on property, plant, and
equipment related to the exchange of KFI-AM and KOST-FM for the AMFM
Radio Stations as follows:
<TABLE>
<CAPTION>
<S> <C>
Preliminary estimate of the fair value of the AMFM Radio Stations' plant and
equipment based on preliminary appraisal .................................................. $ 17,619
Historical property, plant, and equipment of AMFM Radio Stations .............................. (15,329)
---------
Incremental property, plant and equipment .................................................... 2,290
Depreciation period .......................................................................... 7
---------
Incremental annual depreciation expense ..................................................... 327
Divided by 2 ................................................................................. 2
---------
Incremental depreciation expense for the six-months ended June 30, 2000 ...................... $ 164
=========
</TABLE>
(6) To record incremental interest expense on borrowings to fund the
estimated direct acquisition costs related to the exchange of KFI-AM
and KOST-FM for the AMFM Radio Stations using an incremental borrowing
rate of 7.06%, based on Cox Radio's borrowing rate under its revolving
credit facilities as of June 30, 2000 as follows:
<TABLE>
<CAPTION>
<S> <C>
Estimated borrowings ........................................................................... $ 1,000
Incremental borrowing rate ..................................................................... 7.06%
---------
Incremental annual interest expense .......................................................... 71
Divided by 2 ................................................................................... 2
---------
Incremental interest expense for the six-months ended June 30, 2000 ............................ $ 35
=========
</TABLE>
<PAGE> 8
A 1/8% increase or decrease in the incremental borrowing rate would not
have a material impact on incremental interest expense.
(7) To record the effect on income taxes related to pro forma adjustments 2
through 6 using a statutory income tax rate of 40.2% as follows:
<TABLE>
<CAPTION>
<S> <C>
Historical loss before income taxes of AMFM Radio Stations while under
ownership of AMFM Inc.: $ (13,456)
Net pro forma adjustments to the statement of operations .................................. 1,364
---------
(12,092)
Statutory income tax rate ................................................................. 40.2%
---------
Preliminary estimate of income tax benefit ................................................ $ (4,861)
=========
</TABLE>
CLEAR CHANNEL RADIO STATISTICS
(8) To record incremental amortization expense related to the intangible
assets arising from the acquisition of the Clear Channel Radio
Stations, net of the amount of amortization expense previously recorded
in the historical financial statements of the Clear Channel Houston
Radio Stations, Clear Channel Richmond AMFM Radio Stations, and the
Clear Channel Assets as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of purchase price over tangible assets acquired ..................................... $ 371,864
Elimination of historical intangible assets:
Clear Channel Houston Radio Stations ....................................................... (167,131)
Clear Channel Richmond AMFM Radio Stations ................................................. (77,339)
Clear Channel Assets ...................................................................... (51,308)
---------
Incremental intangible assets attributed to FCC licenses ................................... 76,086
Amortization period ........................................................................ 40
---------
Incremental annual amortization expense ................................................... 1,902
Divided by 2 ............................................................................... 2
---------
Incremental amortization expense for the six-months ended June 30, 2000 .................... $ 951
=========
</TABLE>
(9) To record incremental interest expense on borrowings to fund the
estimated purchase price, including the direct acquisition costs,
related to the Clear Channel Houston Radio Stations, Clear Channel
Richmond Capstar Radio Stations, Clear Channel Richmond AMFM Radio
Stations, and the Clear Channel Assets Acquired, exchange using an
incremental borrowing rate of 7.06%, based on Cox Radio's borrowing
rate under its revolving credit facilities as of June 30, 2000, as
follows:
<TABLE>
<CAPTION>
<S> <C>
Estimated borrowings for purchase price, including direct acquisition costs ................ $ 381,300
Incremental borrowing rate ................................................................. 7.06%
---------
Incremental annual interest expense ........................................................ $ 26,920
Divided by 2 ............................................................................... 2
---------
Incremental interest expense for the six-months ended June 30, 2000 ........................ $ 13,460
=========
</TABLE>
A 1/8% increase or decrease in the incremental borrowing rate would not
have a material impact on incremental interest expense.
(10) To record the effect on income taxes related to pro forma adjustments 8
and 9 using a statutory income tax rate of 40.2%, as follows:
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
Historical income (loss) before income taxes of the Clear Channel Radio Stations:
Clear Channel Houston Radio Stations ...................................................... $ 24
Clear Channel Richmond AMFM Radio Stations ................................................ (385)
---------
$ (361)
Net pro forma adjustments to the statement of operations .................................. (14,411)
---------
(14,772)
Effective income tax rate ................................................................. 40.2%
---------
Preliminary estimate of income tax expense ................................................ $ (5,938)
=========
</TABLE>
<PAGE> 10
Cox Radio, Inc.
Unaudited Proforma Combined Statement of Operations
Year ended December 31, 1999
(in thousands except per share data)
<TABLE>
<CAPTION>
Clear Channel Clear Channel
AMFM Capstar Houston Richmond Capstar
Cox Radio Radio Stations Radio Stations Radio Stations Radio Stations
--------- -------------- ------------------- -------------- ----------------
(1) (1) (1) (1) (1)
<S> <C> <C> <C> <C> <C>
Net revenues..........................$ 300,494 $ 29,352 $ 18,226 $ 28,833 $ 6,167
Costs and expense:
Operating............................ 68,923 4,270 3,461 3,456 931
Selling, general and administrative... 114,996 9,281 7,854 11,872 2,559
Corporate general and administrative.. 10,038 -
Depreciation and amoritzation......... 29,112 17,915 2,666 13,736 1,307
Gain on sales of radio stations........ (40,509) - -
-------- -------- -------- ------- --------
Operating income (loss)............... 117,934 (2,114) 4,245 (231) 1,370
Interest expense...................... (22,760) - -
Other expense-net..................... (348) - -
-------- -------- -------- ------------ --------
Income (loss) before income taxes..... 94,826 (2,114) 4,245 (231) 1,370
Income tax expense (benefit).......... 39,566 - -
------- -------- -------- ------------ --------
Net income (loss)..................... $55,260 $ (2,114) $ 4,245 $ (231) $ 1,370
======= ========= ======== ============ ========
Net income per common share:
Basic............................ $ 0.64
======
Diluted.......................... $ 0.64
======
Weighted average common shares outstanding:
Basic............................ 86,127
======
Diluted.......................... 86,637
======
</TABLE>
<TABLE>
<CAPTION>
Clear Channel
Richmond AMFM Pro Forma Cox Radio
Radio Stations Adjustments Pro Forma
-------------- ----------- ---------
<S> <C> <C> <C>
(1)
Net revenues.......................... $ 6,400 $(42,551)(2) $346,921
Costs and expense:
Operating............................ 848 (8,014)(2) 73,875
Selling, general and administrative... 2,622 (9,150)(2) 140,034
Corporate general and administrative.. -- 10,038
Depreciation and amoritzation......... 2,739 (400)(3) 72,003
(357)(4)
3,056 (5)
1,902 (9)
327 (6)
Gain on sales of radio stations........ (40,509)
-------- -------- --------
Operating income (loss)............... 191 (29,915) 91,480
Interest expense...................... (71)(7) (49,751)
(26,920)(10)
Other expense-net..................... - (348)
-------- ------- --------
Income (loss) before income taxes..... 191 (56,906) 41,381
Income tax expense (benefit).......... (10,433)(8) 18,081
(11,052)(11)
------- -------- --------
Net income (loss)..................... $ 191 $ (35,421) $ 23,300
======= ========= ========
Net income per common share:
Basic............................ $ 0.27
======
Diluted.......................... $ 0.27
======
Weighted average common shares outstanding:
Basic............................ 86,127
======
Diluted.......................... 86,637
======
</TABLE>
See notes to unaudited proforma combined statement of operations
<PAGE> 11
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1999
(In Thousands)
(1) Represents the historical amounts of (i) Cox Radio, Inc., as reflected in
Cox Radio's Annual Report on Form 10-K/A dated March 20, 2000; (ii) the
AMFM Radio Stations during the year ended December 31, 1999 while under
ownership of AMFM Inc. and during the year ended December 31, 1999 while
under ownership of Capstar Broadcasting Corporation, as reflected in Item
7 of the Current Report on Form 8-K of Cox Radio, Inc. dated August 30,
1999, and (iii) the Clear Channel Houston Radio Stations, the Clear
Channel Richmond AMFM Radio Stations and the Clear Channel Richmond
Capstar Stations as reflected in Item 7 of this Current Report on Form
8-K of Cox Radio, Inc.
AMFM RADIO STATIONS
(2) To eliminate revenues and direct operating expenses related to KFI-AM and
KOST-FM for the year ended December 31, 1999.
(3) To eliminate actual depreciation expense related to the KFI-AM and KOST-FM
plant and equipment for the year ended December 31, 1999.
(4) To eliminate actual amortization expense related to the KFI-AM and KOST-FM
intangible assets for the year ended December 31, 1999.
(5) To record incremental amortization expense on intangibles assets related
to the exchange of KFI-AM and KOST-FM for the AMFM Radio Stations as
follows:
<TABLE>
<S> <C>
Preliminary estimate of excess of purchase price over tangible
assets acquired .......................................... $ 456,381
Historical intangible assets of the AMFM Radio Stations ...... (334,140)
----------
Incremental intangible assets attributed to FCC licenses ...... 122,241
Amortization period ........................................... 40
----------
Incremental amortization expense .............................. $ 3,056
==========
</TABLE>
(6) To record incremental depreciation expense on property, plant, and
equipment related to the exchange of KFI-AM and KOST-FM for the AMFM Radio
Stations as follows:
<TABLE>
<S> <C>
Preliminary estimate of the fair value of the AMFM Radio
Stations' plant and equipment based on preliminary
appraisal ................................................. $ 17,619
Historical property, plant, and equipment of AMFM Radio
Stations .................................................. (15,329)
----------
Incremental property, plant and equipment ..................... 2,290
Depreciation period ........................................... 7
----------
Incremental depreciation expense .............................. $ 327
==========
</TABLE>
(7) To record incremental interest expense on borrowings to fund the estimated
direct acquisition costs related to the exchange of KFI-AM and KOST-FM for
the AMFM Radio Stations using an incremental borrowing rate of 7.06%,
based on Cox Radio's borrowing rate under its revolving credit facilities
as of June 30, 2000, as follows:
<TABLE>
<S> <C>
Estimated borrowings .......................................... $ 1,000
Incremental borrowing rate .................................... 7.06%
----------
Incremental interest expense .................................. $ 71
==========
</TABLE>
A 1/8% increase or decrease in the incremental borrowing rate would not
have a material impact on incremental interest expense.
<PAGE> 12
(8) To record the effect on income taxes related to pro forma adjustments
2 through 7 using a statutory income tax rate of 40.2% as follows:
<TABLE>
<S> <C>
Historical income (loss) before income taxes of AMFM Radio
Stations while under ownership of:
AMFM Inc. ..................................................... $ (2,114)
Capstar Broadcasting Corporation .............................. 4,245
Net pro forma adjustments to the statement of operations ...... (28,084)
---------
(25,953)
Statutory income tax rate ..................................... 40.2%
---------
Preliminary estimate of income tax benefit .................... $ (10,433)
=========
</TABLE>
CLEAR CHANNEL RADIO STATIONS
(9) To record incremental amortization expense related to the intangible
assets arising from the acquisition of the Clear Channel Radio Stations,
net of the amount of amortization expense previously recorded in the
historical financial statements of the Clear Channel Houston Radio
Stations, and the Clear Channel Richmond AMFM Radio Stations as follows:
<TABLE>
<S> <C>
Excess of purchase price over tangible assets acquired ........ $ 371,864
Elimination of historical intangible assets of:
Clear Channel Houston Radio Stations ....................... (167,131)
Clear Channel Richmond AMFM Radio Stations ................. (77,339)
Clear Channel Assets ....................................... (51,308)
----------
Incremental intangible assets attributed to FCC licenses ...... 76,086
Amortization period ........................................... 40
----------
Incremental amortization expense .............................. $ 1,902
==========
</TABLE>
(10) To record incremental interest expense on borrowings to fund the estimated
purchase price, including the direct acquisition costs, related to the
Clear Channel Radio Stations using an incremental borrowing rate of 7.06%,
based on Cox Radio's borrowing rate under its revolving credit facilities
as of June 30, 2000, as follows:
<TABLE>
<S> <C>
Estimated borrowings for purchase price, including direct
acquisition costs .......................................... $ 381,300
Incremental borrowing rate .................................... 7.06%
----------
Incremental interest expense .................................. $ 26,920
==========
</TABLE>
A 1/8% increase or decrease in the incremental borrowing rate would
result in an increase or decrease of incremental interest expense of
approximately $476.
(11) To record the effect on income taxes related to pro forma adjustments 9
and 10 using a statutory income tax rate of 40.2%, as follows:
<TABLE>
<S> <C>
Historical income (loss) before income taxes of the Clear
Channel Radio Stations
Clear Channel Houston Radio Stations ....................... $ (231)
Clear Channel Richmond AMFM Radio Stations ................. 191
Clear Channel Richmond Capstar Stations .................... 1,370
Net pro forma adjustments to the statement of operations ...... (28,822)
---------
(27,492)
Effective income tax rate ..................................... 40.2%
---------
Preliminary estimate of income tax benefit .................... $ (11,052)
=========
</TABLE>
