<PAGE> 1
================================================================================
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): JULY 8, 1997
---------------------
CAPSTAR BROADCASTING PARTNERS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<C> <C> <C>
DELAWARE 333-25683 75-2672663
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Incorporation) Identification Number)
600 CONGRESS AVENUE 78701
SUITE 1400 (Zip code)
AUSTIN, TEXAS
(Address of principal
executive offices)
</TABLE>
Registrant's telephone number, including area code: (512) 404-6840
NOT APPLICABLE
(former address if changed since last report)
================================================================================
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(B) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") is based on the audited historical financial statements
of the Company and its predecessor (Commodore Media, Inc.), Osborn
Communications, Inc. ("Osborn"), GulfStar Communications, Inc. ("GulfStar"),
Benchmark Communications Radio Limited Partnership ("Benchmark"), Madison Radio
Group ("Madison"), Community Pacific Broadcasting Company L.P. ("Community
Pacific"), Patterson Broadcasting, Inc. and subsidiaries ("Patterson"), Ameron
Broadcasting, Inc. ("Ameron"), Knight Quality Stations ("Knight Quality"), Quass
Broadcasting Company ("Quass") and Mountain Lakes Broadcasting, L.L.C.
("Mountain Lakes") and, in each case, their related notes. Certain capitalized
terms used in this Current Report are defined herein under the caption "Glossary
of Certain Terms."
The pro forma statement of operations for the year ended December 31, 1996,
and for the three months ended March 31, 1997 and 1996 have been prepared to
illustrate the effects of: (i) the Commodore Acquisition; (ii) the Completed
Transactions, including the Financing; and (iii) the Pending Transactions and
the anticipated financing thereof, as if each had occurred on January 1, 1996.
The pro forma balance sheet as of March 31, 1997, has been prepared as if any
such transaction not yet consummated on that date had occurred on that date. The
Pro Forma Financial Information and accompanying notes should be read in
conjunction with the financial statements and other financial information
pertaining to the Company, Commodore, Osborn, GulfStar, Benchmark, Madison,
Community Pacific, Patterson, Ameron, Knight Quality, Quass and Mountain Lakes.
The unaudited pro forma adjustments are based upon available information
and certain assumptions that the Company believes are reasonable. The Company
anticipates that it will fund the Pending Acquisitions with indebtedness, rather
than capital stock, to the fullest extent then permitted under the debt
incurrence covenants contained, or to be contained, in (i) the Certificate of
Designation, (ii) the Notes Indenture, (iii) the New Capstar Radio Indenture,
(iv) the indenture to which the Company will be a party if the Senior
Exchangeable Preferred Stock is exchanged for debentures of the Company pursuant
to the terms of the Certificate of Designation (the "Exchange Indenture"), (v)
the Existing Capstar Radio Indenture (the Existing Capstar Radio Indenture, the
Notes Indenture, the New Capstar Radio Indenture, and the Exchange Indenture,
the "Indentures"), and (vi) the Credit Facility. As a result, the Company
expects the actual amount of indebtedness incurred in connection with the
Pending Transactions to exceed the amount in the Pro Forma Financial
Information. The Pro Forma Financial Information is not necessarily indicative
of either future results of operations or the results that might have been
achieved if such transactions had been consummated on the indicated dates.
All acquisitions, except for the GulfStar Transaction, given effect in the
Pro Forma Financial Information are accounted for using the purchase method of
accounting. The aggregate purchase price of each such transaction is 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 for transactions closed or
to be closed after April 1, 1997. The final allocation of the purchase price is
contingent upon the receipt of final appraisals of the acquired assets and the
revision of other estimates; however, the allocation is not expected to differ
materially from the preliminary allocation. The GulfStar Transaction is
accounted for at historical cost, on a basis similar to a pooling of interests,
as the Company and GulfStar were under common control prior to the GulfStar
Transaction.
For the purpose of the pro forma statement of operations for the year ended
December 31, 1996 and for the three months ended March 31, 1997 and 1996, (i)
"Completed Transactions Combined" collectively refers to the historical results
of operations of the entities and stations acquired or sold in the Completed
Transactions, excluding the Commodore Acquisition, and (ii) "Pending
Transactions Combined" collectively refers to the results of operations of the
entities and stations to be acquired or sold in the Pending Transactions.
1
<PAGE> 3
For the purpose of the pro forma balance sheet as of March 31, 1997, (i)
"Completed Transactions Combined" collectively refers to the historical balance
sheets of the entities and stations acquired or sold in the Completed
Transactions, excluding the Commodore Acquisition and the Osborn Acquisition,
and (ii) "Pending Transactions Combined" collectively refers to the historical
balance sheets of the entities and stations to be acquired or sold in the
Pending Transactions.
As used in the Pro Forma Financial Information, (i) "Company Combined"
presents unaudited pro forma financial data for the Company, including its
predecessor, Commodore, (ii) "Pro Forma for Completed Transactions and the
Financing" gives effect to the Completed Transactions and the financing thereof,
including the Financing and (iii) "Pro Forma" gives effect to each of the
foregoing transactions, the Pending Transactions, and the anticipated financing
thereof.
The following tables present a summary of the Pro Forma Financial
Information included on the following pages.
<TABLE>
<CAPTION>
PRO FORMA FOR COMPLETED TRANSACTIONS AND THE FINANCING
----------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED ------------------ TWELVE MONTHS ENDED
DECEMBER 31, 1996 1996 1997 MARCH 31, 1997
----------------- ------- ------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net revenue....................... $189,840 $38,852 $39,487 $190,475
Station operating expenses........ 137,665 30,512 30,606 137,759
Depreciation and amortization..... 25,745 6,435 6,435 25,745
Corporate expenses................ 8,269 2,087 2,680 8,862
Other operating expenses.......... 9,800 2,454 2,469 9,815
Operating income (loss)........... 8,361 (2,636) (2,703) 8,294
Interest expense.................. 50,252 12,565 12,565 50,252
Net income (loss)................. (22,040) (8,450) (9,633) (23,223)
OTHER DATA:
Broadcast cash flow(1)............ $ 52,175 $ 8,340 $ 8,881 $ 52,716
Broadcast cash flow margin(1)..... 27.5% 21.5% 22.5% 27.7%
EBITDA(2)......................... $ 43,906 $ 6,253 $ 6,201 $ 43,854
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED -------------------- TWELVE MONTHS ENDED
DECEMBER 31, 1996 1996 1997 MARCH 31, 1997
----------------- -------- -------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net revenue....................... $294,531 $ 61,144 $ 63,172 $296,559
Station operating expenses........ 214,098 48,760 49,100 214,438
Depreciation and amortization..... 40,469 10,116 10,116 40,469
Corporate expenses................ 13,430 3,134 4,285 14,581
Other operating expenses.......... 9,912 2,451 2,704 10,165
Operating income (loss)........... 16,622 (3,317) (3,033) 16,906
Interest expense.................. 65,128 16,284 16,284 65,128
Net income (loss)................. (27,877) (12,179) (13,610) (29,308)
OTHER DATA:
Broadcast cash flow(1)............ $ 80,433 $ 12,384 $ 14,072 $ 82,121(3)
Broadcast cash flow margin(1)..... 27.3% 20.3% 22.3% 27.7%
EBITDA(2)......................... $ 67,003 $ 9,250 $ 9,787 $ 67,540(3)
Deficiency of earnings to fixed
charges(4)..................... 46,711 17,252 19,311 48,770
</TABLE>
- ---------------
(1) Broadcast cash flow consists of operating income before depreciation,
amortization, corporate expenses and other operating expenses. Although
broadcast cash flow is not a measure of performance calculated in accordance
with GAAP, management believes that it is useful to an investor in
evaluating the Company because it is a measure widely used in the
broadcasting industry to evaluate a radio company's operating performance.
See "Glossary of Certain Terms."
(2) EBITDA consists of operating income before depreciation, amortization and
other operating expenses. Although EBITDA is not a measure of performance
calculated in accordance with GAAP, management believes that it is useful to
an investor in evaluating the Company because it is a measure widely used in
the broadcasting industry to evaluate a radio company's operating
performance. See "Glossary of Certain Terms."
2
<PAGE> 4
(3) The pro forma financial results exclude the effects of estimated cost
savings resulting from the Completed Transactions and the Pending
Acquisitions. On a pro forma basis, assuming the consummation of the
aforementioned transactions, including related cost savings as if they had
occurred on January 1, 1996, broadcast cash flow and EBITDA would have been
$93.9 million and $85.0 million, respectively, for the twelve-month period
ended March 31, 1997. The Company expects to realize approximately $11.8
million of estimated cost savings resulting from the elimination of
redundant operating expenses arising from such transactions, including
elimination of certain management positions, the consolidation of facilities
and new rates associated with revised vendor contracts and savings related
to automation of certain station operations. In addition, the Company
expects to realize approximately $5.7 million of cost savings, on a pro
forma basis, resulting from the elimination of certain corporate overhead
functions, net of increased costs associated with the implementation of the
Company's corporate management structure. Corporate cost savings reflect the
expected level of annual corporate expenditures arising from such
transactions. The Company anticipates that corporate expenses will increase
upon consummation of additional acquisitions. There can be no assurances
that any operating or corporate cost savings will be achieved.
(4) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges, and "fixed charges" consist of interest,
amortization of deferred financing costs and the component of rental expense
believed by management to be representative of the interest factor thereon.
Preferred stock dividends and accretion are included in fixed charges where
appropriate.
3
<PAGE> 5
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
ADJUSTMENTS PRO FORMA FOR THE
FOR THE FOR THE PENDING
COMPLETED COMPLETED TRANSACTIONS
COMPLETED TRANSACTIONS TRANSACTIONS PENDING AND THE
THE COMPANY TRANSACTIONS AND THE AND THE TRANSACTIONS RELATED
COMBINED(A) COMBINED(B) FINANCING FINANCING COMBINED(F) FINANCING PRO FORMA
----------- ------------ ------------ ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............... $13,847 25,640 $ -- $ 39,487 $23,685 $ -- $ 63,172
Station operating
expenses................ 10,356 20,250 -- 30,606 18,494 -- 49,100
Depreciation and
amortization............ 2,389 2,888 1,158(C) 6,435 2,580 1,101(C) 10,116
Corporate expenses........ 1,424 1,256 -- 2,680 1,605 -- 4,285
Other operating
expenses................ -- 2,469 -- 2,469 235 -- 2,704
------- ------- -------- -------- ------- -------- --------
Operating income
(loss)............... (322) (1,223) (1,158) (2,703) 771 (1,101) (3,033)
Interest expense.......... 6,532 3,268 2,765(D) 12,565 3,028 691(G) 16,284
Gain (loss) on sale of
assets.................. -- 5,348 -- 5,348 6 -- 5,354
Increase in fair value of
redeemable warrants..... -- -- -- -- 5,882 (5,882)(H) --
Other (income) expense.... (27) (260) -- (287) (66) -- (353)
------- ------- -------- -------- ------- -------- --------
Income (loss) before
provision for income
taxes................ (6,827) 1,117 (3,923) (9,633) (8,067) 4,090 (13,610)
Provision (benefit) for
income taxes............ 46 (68) 22(E) -- (2,807) 2,807(E) --
------- ------- -------- -------- ------- -------- --------
Net income (loss)......... $(6,873) $ 1,185 $ (3,945) $ (9,633) $(5,260) $ 1,283 (13,610)
======= ======= ======== ======== ======= ========
Dividends and accretion on
preferred
stock(I)................ 3,450
--------
Loss applicable to common
shares.................. $(17,060)
========
Deficiency of earnings to
fixed charges
and preferred stock
dividends and
accretion(J)............ $ 19,311
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
4
<PAGE> 6
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE PRO FORMA
COMMODORE COMPLETED FOR
ACQUISITION TRANSACTIONS COMPLETED
AND THE COMPLETED COMBINATION TRANSACTIONS PENDING
THE COMPANY RELATED TRANSACTIONS AND THE AND THE TRANSACTIONS
COMBINED(K) FINANCING COMBINED(M) FINANCING FINANCING COMBINED(O)
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............................. $ 9,103 $ -- $29,749 $ -- 38,852 $22,292
Station operating expenses.............. 6,862 -- 23,650 -- 30,512 18,248
Depreciation and amortization........... 480 1,336(C) 3,372 1,247(C) 6,435 2,039
Corporate expenses...................... 466 -- 1,621 -- 2,087 1,047
Other operating (income) expenses....... -- -- 273 2,181(N) 2,454 (3)
------- ------- ------- ------- ------- -------
Operating income (loss)............... 1,295 (1,336) 833 (3,428) (2,636) 961
Interest expense........................ 2,452 5,052(L) 2,273 2,788(D) 12,565 2,080
Gain (loss) on sale of assets........... -- -- 6,876 -- 6,876 530
Other (income) expense.................. 52 -- 73 -- 125 (141)
------- ------- ------- ------- ------- -------
Income (loss) before provision for
income taxes....................... (1,209) (6,388) 5,363 (6,216) (8,450) (448)
Provision (benefit) for income taxes.... 27 (27)(E) 660 (660)(E) -- 29
------- ------- ------- ------- ------- -------
Net income (loss)....................... $(1,236) $(6,361) $ 4,703 $(5,556) $(8,450) $ (477)
======= ======= ======= ======= ======= =======
Dividends and accretion on preferred
stock(I)..............................
Loss applicable to common shares........
Deficiency of earnings to fixed charges
and preferred stock dividends and
accretion(J)..........................
<CAPTION>
ADJUSTMENTS
FOR THE
PENDING
TRANSACTIONS
AND THE
RELATED
FINANCING PRO FORMA
------------ ---------
<S> <C> <C>
Net revenue............................. $ -- $ 61,144
Station operating expenses.............. -- 48,760
Depreciation and amortization........... 1,642(C) 10,116
Corporate expenses...................... -- 3,134
Other operating (income) expenses....... -- 2,451
-------- --------
Operating income (loss)............... (1,642) (3,317)
Interest expense........................ 1,639(G) 16,284
Gain (loss) on sale of assets........... -- 7,406
Other (income) expense.................. -- (16)
-------- --------
Income (loss) before provision for
income taxes....................... (3,281) (12,179)
Provision (benefit) for income taxes.... (29)(E) --
-------- --------
Net income (loss)....................... $ (3,252) (12,179)
========
Dividends and accretion on preferred
stock(I).............................. 3,073
--------
Loss applicable to common shares........ $(15,252)
========
Deficiency of earnings to fixed charges
and preferred stock dividends and
accretion(J).......................... $ 17,252
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
5
<PAGE> 7
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE ADJUSTMENTS PRO FORMA
COMMODORE FOR THE FOR
ACQUISITION COMPLETED COMPLETED
AND THE COMPLETED TRANSACTIONS TRANSACTIONS PENDING
THE COMPANY RELATED TRANSACTIONS AND THE AND THE TRANSACTIONS
COMBINED(P) FINANCING COMBINED(R) FINANCING FINANCING COMBINED(S)
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue................................. $ 44,473 $ -- $145,367 $ -- $189,840 $104,691
Station operating expenses.................. 29,798 -- 107,867 -- 137,665 76,433
Depreciation and amortization............... 3,489 3,774(C) 13,610 4,872(C) 25,745 9,654
Corporate expenses.......................... 2,358 -- 5,911 -- 8,269 5,161
Other operating expenses.................... 14,578 (13,834)(Q) 6,875 2,181(N) 9,800 112
-------- -------- -------- -------- -------- --------
Operating income (loss)................... (5,750) 10,060 11,104 (7,053) 8,361 13,331
Interest expense............................ 13,896 16,115(L) 10,639 9,602(D) 50,252 10,169
Gain (loss) on sale of assets............... -- -- 23,155 -- 23,155 496
Increase in fair value of redeemable
warrants.................................. -- -- -- -- -- 5,499
Other (income) expense...................... 1,824 -- 292 -- 2,116 (282)
-------- -------- -------- -------- -------- --------
Income (loss) before provision for income
taxes................................... (21,470) (6,055) 23,328 (16,655) (20,852) (1,559)
Provision (benefit) for income taxes........ 133 (133)(E) 2,059 (2,059)(E) -- (2,039)
-------- -------- -------- -------- -------- --------
Income (loss) before extraordinary item... (21,603) (5,922) 21,269 (14,596) (20,852) 480
Extraordinary item, loss on early
extinguishment of debt.................... -- -- 1,188 -- 1,188 --
-------- -------- -------- -------- -------- --------
Net income (loss)........................... $(21,603) $ (5,922) $ 20,081 $(14,596) $(22,040) $ 480
======== ======== ======== ======== ======== ========
Dividends and accretion on preferred
stock(I)..................................
Loss applicable to common shares............
Deficiency of earnings to fixed charges and
preferred stock dividends and
accretion (J).............................
<CAPTION>
ADJUSTMENTS
FOR THE
PENDING
TRANSACTIONS
AND THE
RELATED
FINANCING PRO FORMA
------------ ---------
<S> <C> <C>
Net revenue................................. $ -- $294,531
Station operating expenses.................. -- 214,098
Depreciation and amortization............... 5,070(C) 40,469
Corporate expenses.......................... -- 13,430
Other operating expenses.................... -- 9,912
------- --------
Operating income (loss)................... (5,070) 16,622
Interest expense............................ 4,707(G) 65,128
Gain (loss) on sale of assets............... -- 23,651
Increase in fair value of redeemable
warrants.................................. (5,499)(H) --
Other (income) expense...................... -- 1,834
------- --------
Income (loss) before provision for income
taxes................................... (4,278) (26,689)
Provision (benefit) for income taxes........ 2,039(E) --
------- --------
Income (loss) before extraordinary item... (6,317) (26,689)
Extraordinary item, loss on early
extinguishment of debt.................... -- 1,188
------- --------
Net income (loss)........................... $(6,317) (27,877)
=======
Dividends and accretion on preferred
stock(I).................................. 12,843
--------
Loss applicable to common shares............ $(40,720)
========
Deficiency of earnings to fixed charges and
preferred stock dividends and
accretion (J)............................. $ 46,711
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
6
<PAGE> 8
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE FOR
COMPLETED COMPLETED
TRANSACTIONS TRANSACTIONS PENDING
COMPLETED AND THE AND THE TRANSACTIONS
THE COMPANY TRANSACTIONS(T) FINANCING FINANCING COMBINED(FF)
----------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ 13,025 $ 11,123 $ (571)(U) $ 9,137 $ 5,128
(14,440)(V)
Accounts receivable, net.............. 13,051 16,253 (2,648)(U) 26,656 18,202
Prepaid expenses and other............ 17,142 3,250 (699)(U) 19,363 3,213
(330)(W)
-------- -------- -------- -------- --------
Total current assets............ 43,218 30,626 (18,688) 55,156 26,543
Property and equipment, net............. 41,991 38,514 13,478(U) 93,983 33,489
Intangible and other assets, net........ 358,891 152,695 165,434(U) 685,552 160,623
(550)(X)
(396)(U)
11,750(Y)
(2,272)(Z)
-------- -------- -------- -------- --------
Total assets.................... $444,100 $221,835 $168,756 $834,691 $220,655
======== ======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued
expenses............................ $ 15,490 $ 11,096 $ (1,300)(U) $ 25,286 $ 9,856
Current portion of long-term debt..... -- 16,272 (16,272)(U) -- 9,476
-------- -------- -------- -------- --------
Total current liabilities....... 15,490 27,368 (17,572) 25,286 19,332
Long-term debt, less current
portion(PP)........................... 229,955 125,732 (43,172)(U) 429,167 111,375
(82,560)(Z)
199,212(AA)
60,000(BB)
(60,000)(BB)
Other long-term liabilities............. 57,757 6,047 2,340(U) 66,144 290
-------- -------- -------- -------- --------
Total liabilities............... 303,202 159,147 58,248 520,597 130,997
Senior exchangeable preferred
stock(PP)............................. -- -- 94,750(CC) 94,750 --
Redeemable preferred stock.............. -- 23,081 (23,081)(DD) -- 20,747
Redeemable warrants..................... -- -- -- -- 17,803
Stockholders' equity (deficit).......... 140,898 39,607 (37,970)(U) 219,344 51,108
750(BB)
(750)(BB)
84,500(EE)
(2,272)(Z)
(5,419)(DD)
-------- -------- -------- -------- --------
Total liabilities and
stockholders' equity.......... $444,100 $221,835 $168,756 $834,691 $220,655
======== ======== ======== ======== ========
<CAPTION>
ADJUSTMENTS
FOR THE
PENDING
TRANSACTIONS
AND THE
RELATED
FINANCING PRO FORMA
------------ ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ (3,896)(GG) $ 1,837
(8,532)(HH)
Accounts receivable, net.............. (5,724)(GG) 38,810
(324)(II)
Prepaid expenses and other............ (1,918)(GG) 7,152
(6)(II)
(13,500)(JJ)
--------- ----------
Total current assets............ (33,900) 47,799
Property and equipment, net............. 18,785(GG) 145,917
(340)(II)
Intangible and other assets, net........ 244,669(GG) 1,085,959
(435)(II)
(4,375)(GG)
(75)(KK)
--------- ----------
Total assets.................... $ 224,329 $1,279,675
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued
expenses............................ $ (5,945)(GG) $ 28,975
(222)(II)
Current portion of long-term debt..... (9,476)(LL) --
--------- ----------
Total current liabilities....... (15,643) 28,975
Long-term debt, less current
portion(PP)........................... (111,375)(LL) 615,113
185,946(MM)
Other long-term liabilities............. 43,116(GG) 109,549
(1)(II)
--------- ----------
Total liabilities............... 102,043 753,637
Senior exchangeable preferred
stock(PP)............................. 94,750
Redeemable preferred stock.............. (20,747)(NN) --
Redeemable warrants..................... (17,803)(NN) --
Stockholders' equity (deficit).......... (51,108)(OO) 431,288
(882)(II)
221,217(MM)
(8,391)(NN)
--------- ----------
Total liabilities and
stockholders' equity.......... $ 224,329 $1,279,675
========= ==========
</TABLE>
See Accompanying Notes to Pro Forma Financial Information.
7
<PAGE> 9
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(A) The schedule below gives effect to the historical acquisitions of the
Company consummated prior to March 31, 1997 for the period from January 1,
1997 through March 31, 1997.
THE COMPANY
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
HISTORICAL
ACQUISITIONS THE
THE BY THE COMPANY
COMPANY COMPANY(2) COMBINED
------- ------------ --------
<S> <C> <C> <C>
Net revenue.......................................... $14,107 $(260) $13,847
Station operating expenses........................... 10,356 -- 10,356
Depreciation and amortization........................ 2,389 -- 2,389
Corporate expenses................................... 1,424 -- 1,424
Other operating expenses............................. -- -- --
------- ----- -------
Operating income.................................. (62) (260) (322)
Interest expense..................................... 6,792 (260) 6,532
Gain (loss) on sale of assets........................ -- -- --
Other (income) expense............................... (27) -- (27)
------- ----- -------
Income (loss) before provision for income taxes... (6,827) -- (6,827)
Provision (benefit) for income taxes................. 46 -- 46
------- ----- -------
Income (loss) before extraordinary loss........... (6,873) -- (6,873)
Extraordinary loss on early extinguishment of debt... 598 (598)(3) --
------- ----- -------
Net income (loss)................................. $(7,471) $ 598 $(6,873)
======= ===== =======
Deficiency of earnings to fixed charges(1)........... $ 6,827
</TABLE>
- ---------------
(1) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component
of rental expense believed by management to be representative of the
interest factor thereon.
(2) The column gives effect to the LMA fees related to the Community
Pacific Acquisition.
(3) The adjustment reflects the elimination of an extraordinary loss
related to the extinguishment of the Company's former credit facility
in connection with the Osborn Acquisition during the pro forma period.
8
<PAGE> 10
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(B) The schedule below gives effect to the following for the period from
January 1, 1997 through March 31, 1997: (i) the historical acquisitions
and dispositions of the indicated entities consummated prior to March 31,
1997 and (ii) the acquisitions and dispositions of the indicated entities
which were pending at March 31, 1997 and were consummated prior to the
date of this current report.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER
HISTORICAL COMPLETED
HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS
OSBORN(1) GULFSTAR BENCHMARK PACIFIC COMBINED(2)
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Net revenue..................................... $3,577 $10,995 $ 6,444 $1,681 $2,098
Station operating expenses...................... 2,937 7,948 5,338 1,311 1,974
Depreciation and amortization................... 418 1,001 1,336 350 (217)
Corporate expenses.............................. 268 518 265 197 8
Other operating expenses........................ -- 2,469 -- -- --
------ ------- ------- ------ ------
Operating income (loss)....................... (46) (941) (495) (177) 333
Interest expense................................ 385 1,846 937 238 (138)
Gain (loss) on sale of assets................... 5,348 -- -- -- --
Other (income) expense.......................... (212) (36) (61) 2 47
------ ------- ------- ------ ------
Income (loss) before provision for income
taxes...................................... 5,129 (2,751) (1,371) (417) 424
Provision (benefit) for income taxes............ 32 (102) -- -- 2
------ ------- ------- ------ ------
Net income (loss)............................. $5,097 $(2,649) $(1,371) $ (417) $ 422
====== ======= ======= ====== ======
<CAPTION>
ADJUSTMENTS
FOR COMPLETED
HISTORICAL TRANSACTIONS
TRANSACTIONS(3) COMBINED
--------------- ------------
<S> <C> <C>
Net revenue..................................... $845 $25,640
Station operating expenses...................... 742 20,250
Depreciation and amortization................... -- 2,888
Corporate expenses.............................. -- 1,256
Other operating expenses........................ -- 2,469
---- -------
Operating income (loss)....................... 103 (1,223)
Interest expense................................ -- 3,268
Gain (loss) on sale of assets................... -- 5,348
Other (income) expense.......................... -- (260)
---- -------
Income (loss) before provision for income
taxes...................................... 103 1,117
Provision (benefit) for income taxes............ -- (68)
---- -------
Net income (loss)............................. $103 $ 1,185
==== =======
</TABLE>
- ---------------
(1) The column represents the consolidated results of operations of
Osborn from January 1, 1997 through February 20, 1997, the date of
the Osborn Acquisition.
(2) The column represents the historical combined operating results of
the following entities and stations which were acquired or sold prior
to the date of this current report: (i) Stephens Radio, acquired by
GulfStar prior to the GulfStar Transaction; (ii) Space Coast,
Cavalier, McForhun and Livingston, all acquired by the Company; (iii)
WESC-AM/FM and WFNQ-FM, all sold by Benchmark prior to the Benchmark
Acquisition; (iv) WMCZ-FM, WMHS-FM and WZHT-FM, all acquired by
Benchmark prior to the Benchmark Acquisition; (v) the stations
acquired in the Osborn Add-on Acquisitions; and (vi) the stations
sold in the Osborn Ft. Myers Disposition.
(3) The adjustments give effect to the historical operating results
and/or LMA or JSA expense and/or revenue of the following stations
which were acquired prior to March 31, 1997: (i) WYNU-FM and WTXT-FM,
both acquired by Osborn; (ii) WSCQ-FM, WFMX-FM and WSIC-AM, all
acquired by Benchmark; (iii) KTRA-FM, KKFG-FM, KDAG-FM and KCQL-AM,
all acquired by GulfStar; and (iv) the stations acquired in the
Osborn Add-on Acquisitions.
9
<PAGE> 11
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(C) 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 expense
resulting from the allocation of the purchase price of the acquired
stations including an increase in property and equipment, FCC licenses,
and intangible assets to their estimated fair market value and the
recording of goodwill associated with the acquisitions. Goodwill and FCC
licenses are being amortized over 40 years.
(D) The adjustment reflects interest expense associated with (i) the Existing
Capstar Radio Notes, (ii) the Notes, (iii) the New Capstar Radio Notes,
(iv) the Credit Facility, and (v) the amortization of deferred financing
fees associated with the Notes, the New Capstar Radio Notes and the Credit
Facility, net of interest expense related to the existing indebtedness of
the companies included within the Completed Transactions Combined and the
Company. Deferred financing fees are amortized over the term of the
related debt.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, -----------------
1996 1996 1997
------------ ------- -------
<S> <C> <C> <C>
Existing Capstar Radio Notes........................... $ 8,878 $ 2,220 $ 2,220
Notes.................................................. 20,261 5,065 5,065
New Capstar Radio Notes................................ 18,427 4,607 4,607
-------- ------- -------
Interest expense before amortization of deferred
financing fees....................................... 47,566 11,892 11,892
Amortization of deferred financing fees................ 2,686 673 673
-------- ------- -------
Pro forma interest expense........................... 50,252 12,565 12,565
Pro forma interest expense for the Company and
Commodore............................................ (30,011) (7,504) --
Historical interest expense for the Company............ -- -- (6,532)
Historical interest expense for the Completed
Transactions Combined................................ (10,639) (2,273) (3,268)
-------- ------- -------
Net adjustment....................................... $ 9,602 $ 2,788 $ 2,765
======== ======= =======
</TABLE>
(E) The adjustment reflects the elimination of historical income tax expense
(benefit) as the Company would have generated a taxable loss during the
pro forma period.
10
<PAGE> 12
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(F) The columns represent the combined income statements for the period from
January 1, 1997 through March 31, 1997 of the acquisitions and
dispositions of the Company which were pending at March 31, 1997 and have
not been consummated as of the date of this current report.
PENDING TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER
HISTORICAL PENDING PENDING
HISTORICAL HISTORICAL KNIGHT HISTORICAL HISTORICAL TRANSACTIONS TRANSACTIONS
MADISON PATTERSON QUALITY AMERON QUASS COMBINED(1) COMBINED
---------- ---------- ---------- ---------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue.................. $2,028 $10,727 $3,663 $1,856 $921 $4,490 $23,685
Station operating expenses... 1,246 8,319 2,965 1,616 689 3,659 18,494
Depreciation and
amortization............... 376 1,162 206 167 73 596 2,580
Corporate expenses........... 47 1,151 371 -- -- 36 1,605
Other operating expenses..... -- 233 -- -- 2 -- 235
------ ------- ------ ------ ---- ------ -------
Operating income (loss).... 359 (138) 121 73 157 199 771
Interest expense............. 348 1,716 165 218 86 495 3,028
Gain (loss) on sale of
assets..................... -- -- 6 -- -- -- 6
Increase in fair value of
redeemable warrants........ -- 5,882 -- -- -- -- 5,882
Other (income) expense....... -- (3) (36) 5 -- (32) (66)
------ ------- ------ ------ ---- ------ -------
Income (loss) before
provision for income
taxes................... 11 (7,733) (2) (150) 71 (264) (8,067)
Provision (benefit) for
income taxes............... -- (2,861) 24 -- 30 -- (2,807)
------ ------- ------ ------ ---- ------ -------
Net income (loss).......... $ 11 $(4,872) $ (26) $ (150) $ 41 $ (264) $(5,260)
====== ======= ====== ====== ==== ====== =======
</TABLE>
---------------------
(1) The column represents the historical combined operating results of the
following entities and stations to be acquired or sold subsequent to
the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM, and
WQFN-FM, all pending acquisitions of Patterson; (ii) Emerald City,
COMCO, Commonwealth, WRIS, Griffith, Grant, the stations to be
acquired in the SFX Exchange, American General, KLAW, KJEM, and
Booneville, all pending acquisitions of the Company; and (iii)
WTAW-FM, KTSR-FM, and KAGG-FM, all pending dispositions of the
Company.
11
<PAGE> 13
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(G) The adjustment reflects interest expense associated with (i) the Existing
Capstar Radio Notes, (ii) the Notes, (iii) the New Capstar Radio Notes,
(iv) the Credit Facility and (v) the amortization of deferred financing
fees associated with the Notes, the New Capstar Radio Notes and the Credit
Facility, all net of interest expense related to the existing indebtedness
of the companies included within the Pending Transactions Combined and the
Company. Deferred financing fees are amortized over the term of the related
debt.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, --------------------
1996 1996 1997
------------ -------- --------
<S> <C> <C> <C>
Existing Capstar Radio Notes........................ $ 8,878 $ 2,220 $ 2,220
Notes............................................... 20,261 5,065 5,065
New Capstar Radio Notes............................. 18,427 4,607 4,607
The Credit Facility at 8.0%......................... 14,876 3,719 3,719
-------- -------- --------
Interest expense before amortization of deferred
financing
fees.............................................. 62,442 15,611 15,611
Amortization of deferred financing fees............. 2,686 673 673
-------- -------- --------
Pro forma interest expense........................ 65,128 16,284 16,284
Pro forma interest expense for the Completed
Transactions...................................... (50,252) (12,565) (12,565)
Historical interest expense for the Pending
Transactions Combined............................. (10,169) (2,080) (3,028)
-------- -------- --------
Net adjustment.................................... $ 4,707 $ 1,639 $ 691
======== ======== ========
</TABLE>
(H) The adjustment reflects the elimination of the increase in fair value of
the redeemable warrants as the warrants will be repurchased in connection
with the Patterson Acquisition.
(I) The adjustment reflects the dividends and accretion on the Senior
Exchangeable Preferred Stock.
(J) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component of
rental expense believed by management to be representative of the interest
factor thereon. Preferred stock dividends and accretion are included in
fixed charges where appropriate.
12
<PAGE> 14
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(K) The schedule below gives effect to the historical acquisitions of the
Company's predecessor, Commodore, consummated prior to March 31, 1997 for
the period from January 1, 1996 through March 31, 1996.
THE COMPANY
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
THE HISTORICAL
THE ACQUISITIONS BY THE COMPANY
COMPANY(1) COMMODORE(3) COMBINED
---------- --------------- -----------
<S> <C> <C> <C>
Net revenue................................... $ 7,416 $1,687 $ 9,103
Station operating expenses.................... 5,375 1,487 6,862
Depreciation and amortization................. 480 -- 480
Corporate expenses............................ 466 -- 466
Other operating expenses...................... -- -- --
------- ------ -------
Operating income (loss)..................... 1,095 200 1,295
Interest expense.............................. 2,452 -- 2,452
Gain (loss) on sale of assets................. -- -- --
Other (income) expense........................ 52 -- 52
------- ------ -------
Income (loss) before provision for income
taxes.................................... (1,409) 200 (1,209)
Provision (benefit) for income taxes.......... 27 -- 27
------- ------ -------
Net income (loss)........................... $(1,436) $ 200 $(1,236)
======= ====== =======
Deficiency of earnings to fixed charges(2).... $ 1,409
</TABLE>
- ---------------
(1) The column represents the results of operations of the Company's
predecessor, Commodore, from January 1, 1996 through March 31, 1996.
(2) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component
of rental expense believed by management to be representative of the
interest factor thereon.
(3) The column gives effect to the historical operating results and LMA
and JSA revenue and expense of the following stations acquired by the
Commodore: the stations acquired in the Huntington Acquisition (as
defined), WKHL-FM, WSTC-AM, WAVW-FM, WBBE-FM, WAXE-AM, WAXB-FM,
WZZN-FM and WPUT-AM.
(L) The adjustment reflects interest expense associated with (i) the Existing
Capstar Radio Notes, (ii) the Notes, and (iii) the amortization of
deferred financing fees associated with the Notes, net of interest expense
related to the existing indebtedness of the Company and Commodore.
Deferred financing fees are amortized over the term of the related debt.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1996
----------------- --------------------
<S> <C> <C>
Existing Capstar Radio Notes....................... $ 8,878 $ 2,220
Notes.............................................. 20,261 5,065
------- -------
Interest expense before amortization of deferred
financing fees................................... 29,139 7,285
Amortization of deferred financing fees............ 872 219
------- -------
Pro forma interest expense....................... 30,011 7,504
Historical interest expense for the Company........ (5,035) --
Historical interest expense for Commodore.......... (8,861) (2,452)
------- -------
Net adjustment..................................... $16,115 $ 5,052
======= =======
</TABLE>
13
<PAGE> 15
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(M) The schedule below gives effect to the following for the period from
January 1, 1996 through March 31, 1996: (i) the historical acquisitions
and dispositions of the indicated entities consummated prior to March 31,
1997; and (ii) the acquisitions and dispositions of the indicated entities
which were pending at March 31, 1997 and were consummated prior to the
date of this current report.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER ADJUSTMENTS
HISTORICAL COMPLETED FOR COMPLETED
HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS HISTORICAL TRANSACTIONS
OSBORN GULFSTAR BENCHMARK PACIFIC COMBINED(1) TRANSACTIONS(2) COMBINED
---------- ---------- ---------- ---------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue......... $6,852 $4,595 $ 6,217 $2,403 $3,046 $6,636 $29,749
Station operating
expenses.......... 5,868 3,604 4,964 2,025 2,285 4,904 23,650
Depreciation and
amortization...... 1,211 677 1,330 329 (175) -- 3,372
Corporate
expenses.......... 457 171 819 166 8 -- 1,621
Other operating
expenses.......... -- 273 -- -- -- -- 273
------ ------ ------- ------ ------ ------ -------
Operating income
(loss).......... (684) (130) (896) (117) 928 1,732 833
Interest expense.... 635 851 646 216 (75) -- 2,273
Gain (loss) on sale
of assets......... 6,874 -- -- -- 2 -- 6,876
Other (income)
expense........... 93 (4) (58) 50 (8) -- 73
------ ------ ------- ------ ------ ------ -------
Income (loss)
before provision
for income
taxes........... 5,462 (977) (1,484) (383) 1,013 1,732 5,363
Provision (benefit)
for income
taxes............. 851 (191) -- -- -- -- 660
------ ------ ------- ------ ------ ------ -------
Net income
(loss).......... $4,611 $ (786) $(1,484) $ (383) $1,013 $1,732 $ 4,703
====== ====== ======= ====== ====== ====== =======
</TABLE>
- ---------------
(1) The column represents the historical combined operating results of
the following entities and stations which were acquired or sold prior
to the date of this current report: (i) Stephens Radio, KWHN-AM,
KMAG-FM, KLLI-FM and KYGL-FM, all acquired by GulfStar prior to the
GulfStar Transaction; (ii) Space Coast, Cavalier, McForhun and
Livingston, all acquired by the Company; (iii) the stations acquired
in the Osborn Add-on Acquisitions; (iv) WESC-AM/FM and WFNQ-FM, all
sold by Benchmark prior to the Benchmark Acquisition; (iv) WMCZ-FM,
WMHS-FM and WZHT-FM, all acquired by Benchmark prior to the Benchmark
Acquisition; and (v) the stations sold in the Osborn Ft. Myers
Disposition.
(2) The adjustments give effect to the historical operating results
and/or LMA or JSA expense and/or revenue of the following stations
which were acquired or sold prior to March 31, 1997: (i) WKWK-FM,
WRIR-FM, WGEW-FM, WEEL-FM, WBBD-AM, WYNU-FM and WTXT-FM, all acquired
by Osborn prior to the Osborn Acquisition; (ii) WWRD-FM, WNDR-AM,
WNTQ-FM, WFXK-FM, WAYV-FM, and WFKS-FM, all sold by Osborn prior to
the Osborn Acquisition; (iii) KRYS-AM/FM, KMXR-FM, KNCN-FM, KEZA-FM,
KKIX-FM, KKZQ-FM, KIIZ-FM, KLFX-FM, KFMX-FM, KKAM-AM, KRLB-FM,
KZII-FM, KFYO-AM, KBRQ-FM, KKTK-AM, WACO-FM, KCKR-FM, KWTX-AM/FM,
KTRA-FM, KKFG-FM, KDAG-FM, and KCQL-AM, all acquired by GulfStar;
(iv) KLTX-AM, sold by GulfStar; (v) WJMI-FM, WOAD-FM, WKXI-FM/AM,
WSCQ-FM, WFMX-FM, WSIC-AM, KRMD-AM/FM and WJMZ-FM, all acquired by
Benchmark; and (vi) WLTY-FM, WTAR-AM and WKOC-FM, all sold by
Benchmark.
(N) The adjustment collectively gives effect to the warrants issued to R.
Steven Hicks in connection with the financing of the Commodore Acquisition,
the Osborn Acquisition and the GulfStar Transaction.
14
<PAGE> 16
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(O) The column represents the combined income statements for the period from
January 1, 1996 through March 31, 1996 of the acquisitions and dispositions
of the Company which were pending at March 31, 1997 and have not been
consummated as of the date of this current report.
PENDING TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
HISTORICAL POINT HISTORICAL KNIGHT HISTORICAL HISTORICAL
MIDCONTINENT COMMUNICATIONS PATTERSON QUALITY AMERON QUASS
------------ -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue..................... $ 735 $ 950 $6,097 $3,757 $1,602 $894
Station operating expenses...... 794 684 5,144 2,949 1,461 708
Depreciation and amortization... 108 382 522 259 165 69
Corporate expenses.............. -- 52 576 371 -- --
Other operating income.......... -- -- -- -- -- (3)
----- ----- ------ ------ ------ ----
Operating income (loss)....... (167) (168) (145) 178 (24) 120
Interest expense................ -- 260 821 174 221 103
Gain (loss) on sale of assets... -- -- -- 530 -- --
Other (income) expense.......... (17) -- (55) (19) (11) (7)
----- ----- ------ ------ ------ ----
Income (loss) before provision
for income taxes........... (150) (428) (911) 553 (234) 24
Provision (benefit) for income
taxes......................... (51) -- -- 69 -- 11
----- ----- ------ ------ ------ ----
Net income (loss)............. $ (99) $(428) $ (911) $ 484 $ (234) $ 13
===== ===== ====== ====== ====== ====
<CAPTION>
OTHER
PENDING ADJUSTMENTS FOR PENDING
TRANSACTIONS HISTORICAL TRANSACTIONS
COMBINED(1) TRANSACTIONS(2) COMBINED
------------ --------------- ------------
<S> <C> <C> <C>
Net revenue..................... $4,396 $3,861 $22,292
Station operating expenses...... 3,665 2,843 18,248
Depreciation and amortization... 534 -- 2,039
Corporate expenses.............. 48 1,047
Other operating income.......... -- (3)
------ ------ -------
Operating income (loss)....... 149 1,018 961
Interest expense................ 501 2,080
Gain (loss) on sale of assets... -- -- 530
Other (income) expense.......... (32) -- (141)
------ ------ -------
Income (loss) before provision
for income taxes........... (320) 1,018 (448)
Provision (benefit) for income
taxes......................... -- -- 29
------ ------ -------
Net income (loss)............. $ (320) $1,018 $ (477)
====== ====== =======
</TABLE>
- ---------------
(1) The column represents the historical combined operating results of
the following entities and stations to be acquired or sold subsequent
to the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM,
and WQFN-FM, all pending acquisitions of Patterson; and (ii) Emerald
City, COMCO, Commonwealth, WRIS, Griffith, Grant, the stations to be
acquired in the SFX Exchange, Noalmark, American General, KLAW, KJEM
and Booneville, all pending acquisitions of the Company.
(2) The adjustments give effect to the historical operating results
and/or LMA or JSA expense and/or revenue of the following stations:
WNNK-FM, WTCY-AM, WXBM-FM, WWSF-FM, WSOK-AM, WLVH-FM, WAEV-FM,
KIKI-FM/AM, KKLV-FM, KHVH-AM, WFMB-FM/AM, WCVS-FM, KCBL-AM, KBOS-FM
and KTHT-FM, all purchased by Patterson prior to March 31, 1997.
15
<PAGE> 17
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(P) The schedule below gives effect to the historical acquisitions of the
Company's predecessor, Commodore, consummated prior to March 31, 1997 for
the period from January 1, 1996 through December 31, 1996.
THE COMPANY
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
HISTORICAL
THE HISTORICAL ACQUISITIONS BY THE COMPANY
COMPANY(1) COMMODORE(3) COMMODORE(4) COMBINED
---------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Net revenue......................... $10,303 $ 31,957 $2,213 $ 44,473
Station operating expenses.......... 6,283 21,291 2,224 29,798
Depreciation and amortization....... 1,331 2,158 -- 3,489
Corporate expenses.................. 601 1,757 -- 2,358
Other operating expenses............ 744 13,834 -- 14,578
------- -------- ------ --------
Operating income (loss)........... 1,344 (7,083) (11) (5,750)
Interest expense.................... 5,035 8,861 -- 13,896
Gain (loss) on sale of assets....... -- -- -- --
Other (income) expense.............. 65 1,759 -- 1,824
------- -------- ------ --------
Income (loss) before provision for
income taxes................... (3,756) (17,703) (11) (21,470)
Provision (benefit) for income
taxes............................. -- 133 -- 133
------- -------- ------ --------
Net income (loss)................. $(3,756) $(17,836) $ (11) $(21,603)
======= ======== ====== ========
Deficiency of earnings to fixed
charges(2)........................ $ 3,756
</TABLE>
- ---------------
(1) The column represents the consolidated result of operations of the
Company and its predecessor, Commodore, from October 17, 1996 through
December 31, 1996.
(2) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component
of rental expense believed by management to be representative of the
interest factor thereon.
(3) The column represents the consolidated results of operations of
Commodore from January 1, 1996 through October 16, 1996, the date of
the Commodore Acquisition.
(4) The column gives effect to the historical operating results and LMA or
JSA revenue and expense of the following stations acquired by
Commodore: the stations acquired in the Huntington Acquisition,
WKHL-FM, WSTC-AM, WAVW-FM, WBBE-FM, WAXE-AM, WAXB-FM, WZZN-FM and
WPUT-AM.
(Q) The adjustment reflects the elimination of (i) merger related compensation
expenses and (ii) other expenses related to the acquisition of Commodore
by the Company, including costs related to the abandoned initial public
offering of Commodore. These expenses were recognized by Commodore in
connection with the acquisition.
16
<PAGE> 18
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(R) The schedule below gives effect to the following for the period from
January 1, 1996 through December 31, 1996: (i) the historical acquisitions
and dispositions of the indicated entities consummated prior to March 31,
1997, and (ii) the acquisitions and dispositions of the indicated entities
which were pending at March 31, 1997 and were consummated prior to the
date of this current report.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER ADJUSTMENTS
HISTORICAL COMPLETED FOR COMPLETED
HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS HISTORICAL TRANSACTIONS
OSBORN GULFSTAR BENCHMARK PACIFIC COMBINED(1) TRANSACTIONS(2) COMBINED
---------- ---------- ---------- ---------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue......... $37,215 $32,563 $27,255 $11,199 $12,742 $24,393 $145,367
Station operating
expenses.......... 28,823 24,299 21,253 8,916 8,142 16,434 107,867
Depreciation and
amortization...... 4,756 2,810 5,320 1,416 (692) -- 13,610
Corporate
expenses.......... 1,850 1,923 1,513 760 (135) -- 5,911
Other operating
expenses.......... 1,200 5,432 -- -- 243 -- 6,875
------- ------- ------- ------- ------- ------- --------
Operating income
(loss).......... 586 (1,901) (831) 107 5,184 7,959 11,104
Interest expense.... 2,202 4,604 3,384 933 (484) -- 10,639
Gain (loss) on sale
of assets......... 13,522 -- 9,612 (11) 32 -- 23,155
Other (income)
expense........... 291 829 (679) 8 (157) -- 292
------- ------- ------- ------- ------- ------- --------
Income (loss)
before provision
for income
taxes........... 11,615 (7,334) 6,076 (845) 5,857 7,959 23,328
Provision (benefit)
for income
taxes............. 2,379 (322) -- -- 2 -- 2,059
------- ------- ------- ------- ------- ------- --------
Income (loss)
before
extraordinary
item............ 9,236 (7,012) 6,076 (845) 5,855 7,959 21,269
Extraordinary item,
loss on early
extinguishment of
debt.............. -- 1,188 -- -- -- -- 1,188
------- ------- ------- ------- ------- ------- --------
Net income........ $ 9,236 $(8,200) $ 6,076 $ (845) $ 5,855 $ 7,959 $ 20,081
======= ======= ======= ======= ======= ======= ========
</TABLE>
- ---------------
(1) The column represents the historical combined operating results of
the following entities and stations which were acquired or sold
prior to the date of this current report: (i) Stephens Radio,
KWHN-AM, KMAG-FM, KLLI-FM and KYGL-FM, all acquired by GulfStar
prior to the GulfStar Transaction; (ii) Space Coast, Cavalier,
McForhun and Livingston, all acquired by the Company; (iii) the
stations acquired in the Osborn Add-on Acquisitions; (iv)
WESC-AM/FM and WFNQ-FM, all sold by Benchmark prior to the
Benchmark Acquisition; (v) WMCZ-FM, WMHS-FM and WZHT-FM, all
acquired by Benchmark prior to the Benchmark Acquisition; and (vi)
the stations sold in the Osborn Ft. Myers Disposition.
(2) The adjustments give effect to the historical operating results
and/or LMA or JSA expense and/or revenue of the following stations
which were acquired or sold prior to March 31, 1997: (i) WKWK-FM,
WRIR-FM, WEGW-FM, WEEL-FM, WBBD-AM, WYNU-FM and WTXT-FM, all
acquired by Osborn; (ii) WWRD-FM, WNDR-AM, WNTQ-FM, WFXK-FM,
WAYV-FM, and WFKS-FM, all sold by Osborn; (iii) KRYS-AM/FM,
KMXR-FM, KNCN-FM, KEZA-FM, KKIX-FM, KKZQ-FM, KIIZ-FM, KLFX-FM,
KLTX-FM, KFMX-FM, KKAM-AM, KRLB-FM, KZII-FM, KFYO-AM, KBRQ-FM,
KKTK-AM, WACO-FM, KCKR-FM, KWTX-AM/FM, KTRA-FM, KKFG-FM, KDAG-FM,
and KCQL-AM, all acquired by GulfStar; (iv) KLTX-AM, sold by
GulfStar; (v) WJMI-FM, WOAD-FM, WKXI-FM/AM, WSCQ-FM, WFMX-FM,
WSIC-AM, KRMD-AM/FM and WJMZ-FM, all acquired by Benchmark; and
(vi) WLTY-FM, WTAR-AM and WKOC-FM, all sold by Benchmark.
17
<PAGE> 19
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(S) The column represents the combined income statements for the period from
January 1, 1996 through December 31, 1996 of the acquisitions and
dispositions which were pending at March 31, 1997 and have not been
consummated as of the date of this current report.
PENDING TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
HISTORICAL POINT HISTORICAL KNIGHT HISTORICAL HISTORICAL
MIDCONTINENT COMMUNICATIONS PATTERSON QUALITY AMERON QUASS
------------ -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue................... $3,446 $5,601 $41,369 $16,597 $8,131 $4,037
Station operating expenses.... 2,555 3,430 30,225 12,812 5,858 3,273
Depreciation and
amortization................ 405 1,538 3,537 1,005 663 293
Corporate expenses............ -- 179 2,624 2,084 -- --
Other operating (income)
expenses.................... -- -- 143 -- -- (31)
------ ------ ------- ------- ------ ------
Operating income (loss)..... 486 454 4,840 696 1,610 502
Interest expense.............. -- 1,071 5,052 710 843 428
Gain (loss) on sale of
assets...................... -- -- -- 568 -- --
Increase in fair value of
redeemable warrants......... -- -- 5,499 -- -- --
Other (income) expense........ (69) (8) (37) (60) 76 (26)
------ ------ ------- ------- ------ ------
Income (loss) before
provision for income
taxes..................... 555 (609) (5,674) 614 691 100
Provision (benefit) for income
taxes....................... 189 -- (2,344) 77 -- 39
------ ------ ------- ------- ------ ------
Net income (loss)........... $ 366 $ (609) $(3,330) $ 537 $ 691 $ 61
====== ====== ======= ======= ====== ======
<CAPTION>
OTHER
PENDING ADJUSTMENTS FOR PENDING
TRANSACTIONS HISTORICAL TRANSACTIONS
COMBINED(1) TRANSACTIONS(2) COMBINED
------------ --------------- ------------
<S> <C> <C> <C>
Net revenue................... $18,098 $7,412 $104,691
Station operating expenses.... 13,434 4,846 76,433
Depreciation and
amortization................ 2,213 -- 9,654
Corporate expenses............ 274 -- 5,161
Other operating (income)
expenses.................... -- -- 112
------- ------ --------
Operating income (loss)..... 2,177 2,566 13,331
Interest expense.............. 2,065 -- 10,169
Gain (loss) on sale of
assets...................... (72) -- 496
Increase in fair value of
redeemable warrants......... -- -- 5,499
Other (income) expense........ (158) -- (282)
------- ------ --------
Income (loss) before
provision for income
taxes..................... 198 2,566 (1,559)
Provision (benefit) for income
taxes....................... -- -- (2,039)
------- ------ --------
Net income (loss)........... $ 198 $2,566 $ 480
======= ====== ========
</TABLE>
- ---------------
(1) The column represents the historical combined operating results of
the following entities and stations to be acquired or sold subsequent
to the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM,
and WQFN-FM, all pending acquisitions of Patterson; (ii) Emerald
City, COMCO, Commonwealth, WRIS, Griffith, Grant, the stations be
acquired in the SFX Exchange, Noalmark, American General, KLAW, KJEM,
and Booneville, all pending acquisitions of the Company; and (iii)
WTAW-AM, KTSR-FM and KAGG-FM, all pending dispositions of the
Company.
(2) The adjustments give effect to the historical operating results
and/or LMA or JSA expense and/or revenue of the following stations:
WNNK-FM, WTCY-AM, WXBM-FM, WWSF-FM, WSOK-AM, WLVH-FM, WAEV-FM,
KIKI-FM/AM, KKLV-FM, KHVH-AM, WFMB-FM/AM, WCVS-FM, KCBL-AM, KBOS-FM,
and KTHT-FM, all purchased by Patterson prior to March 31, 1997.
18
<PAGE> 20
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(T) The schedule below gives effect to the acquisitions and dispositions of
the companies acquired in the Completed Transactions which were
consummated prior to the date of this current report.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER
HISTORICAL COMPLETED COMPLETED
HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS TRANSACTIONS
GULFSTAR BENCHMARK PACIFIC COMBINED(1) COMBINED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 5,979 $ 4,021 $ 331 $ 792 $ 11,123
Accounts receivable, net......................... 8,232 4,563 745 2,713 16,253
Prepaid expenses and other....................... 1,536 1,232 145 337 3,250
-------- ------- ------- ------- --------
Total current assets..................... 15,747 9,816 1,221 3,842 30,626
Property and equipment, net........................ 17,485 14,055 3,806 3,168 38,514
Intangible and other assets, net................... 84,805 46,221 12,696 8,973 152,695
-------- ------- ------- ------- --------
Total assets............................. $118,037 $70,092 $17,723 $15,983 $221,835
======== ======= ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses...... $ 4,819 $ 4,112 $ 330 $ 1,835 $ 11,096
Current portion of long-term debt................ 214 14,223 1,438 397 16,272
-------- ------- ------- ------- --------
Total current liabilities................ 5,033 18,335 1,768 2,232 27,368
Long-term debt, less current portion............... 82,346 29,849 8,337 5,200 125,732
Other long-term liabilities........................ 5,940 56 -- 51 6,047
-------- ------- ------- ------- --------
Total liabilities........................ 93,319 48,240 10,105 7,483 159,147
Redeemable preferred stock......................... 23,081 -- -- -- 23,081
Stockholders' equity............................... 1,637 21,852 7,618 8,500 39,607
-------- ------- ------- ------- --------
Total liabilities and stockholders'
equity................................. $118,037 $70,092 $17,723 $15,983 $221,835
======== ======= ======= ======= ========
</TABLE>
- ---------------
(1) The column represents the historical combined balance sheets of (i)
the stations in the Osborn Add-On Acquisitions and the Osborn Ft.
Myers Disposition; (ii) Stephens Radio, KWHN-AM, KMAG-FM, KLLI-FM and
KYGL-FM, all acquired by GulfStar prior to the GulfStar Transaction;
(iii) Space Coast, Cavalier, McForhun and Livingston, all acquired by
the Company; and (iv) WMCZ-FM, WMHS-FM and WZHT-FM all acquired by
Benchmark prior to the Benchmark Acquisition.
19
<PAGE> 21
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(U) The adjustments reflect (i) the assumption of $2,391 in liabilities in
connection with the Completed Transactions, (ii) the acquisition of
GulfStar, which is accounted for at historical cost on a basis similar to
a pooling of interests, and (iii) the elimination of the historical equity
of the Completed Transactions, excluding the equity of GulfStar of
$24,718, and the allocation of the purchase prices, net of the proceeds
from the Osborn Ft. Myers Disposition, of the Completed Transactions to
the assets acquired and liabilities assumed resulting in an adjustment to
property and equipment and FCC licenses to their estimated fair market
values and the recording of goodwill associated with the acquisitions as
follows:
<TABLE>
<CAPTION>
ALLOCATION OF
PURCHASE
PRICES AND CARRYING
GULFSTAR AT VALUE OF
HISTORICAL COMPLETED
COST TRANSACTIONS ADJUSTMENTS
------------- ------------ -----------
<S> <C> <C> <C>
Cash and cash equivalents........................ $ 10,552 $ 11,123 $ (571)
Accounts receivable, net......................... 13,605 16,253 (2,648)
Prepaid expenses and other....................... 2,551 3,250 (699)
Property and equipment, net...................... 51,992 38,514 13,478
Intangible and other assets, net................. 315,461 150,027 165,434
Deferred financing............................... 2,272 2,668 (396)
Accounts payable and other accrued expenses...... (9,796) (11,096) (1,300)
Long-term debt, including the current portion.... (82,560) (142,004) (59,444)
Other long-term liabilities...................... (8,387) (6,047) 2,340
Stockholders' equity............................. (24,718) (62,688) (37,970)
--------
Total purchase prices and deferred financing
charges................................... $270,972
========
</TABLE>
(V) The adjustment reflects the excess cash used in connection with the
Completed Transactions.
(W) The adjustment reflects $330 placed in escrow as security for Benchmark's
obligation to consummate the acquisition of WESC-AM/FM and WFNQ-FM located
in Greenville, South Carolina, and the use of the deposit to pay a portion
of the purchase price in connection with the related acquisition.
(X) The adjustment reflects $550 placed in escrow as security for the
Company's obligation to consummate the Osborn Huntsville Acquisition,
which was subsequently used to pay a portion of the purchase price in
connection with the related acquisition.
(Y) The adjustment reflects the estimated deferred financing costs of $7,750
and $4,000 associated with the Capstar Radio Notes Offering and the Credit
Facility, respectively.
(Z) The adjustments reflect the repayment of current borrowings of GulfStar of
$82,560, including repayment of indebtedness under the GulfStar credit
facility, and the write-off of $2,272 of related deferred financing costs
which resulted in an extraordinary charge in the period the repayment was
made.
(AA) The adjustment reflects proceeds of $199,212 from the Capstar Radio Notes
Offering.
20
<PAGE> 22
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(BB) As part of the Benchmark Acquisition, the Fund III Acquisition Sub entered
into a senior credit agreement (the "Acquisition Sub Credit Agreement")
with Bankers Trust Company to borrow up to $62,000, of which approximately
$60,000 of the proceeds were loaned to Benchmark to enable Benchmark to
consummate four separate acquisitions of radio station properties and for
certain other purposes of Benchmark. The Company unconditionally guaranteed
all of the Fund III Acquisition Sub's indebtedness under the Acquisition
Sub Credit Agreement. Simultaneously with the Benchmark Acquisition, the
Fund III Acquisition Sub was merged with a subsidiary of Capstar
Broadcasting and the Acquisition Sub Credit Agreement was repaid (the
"Repayment"). In connection with the Repayment, Capstar Broadcasting issued
$750 of Class C Common Stock to HM Fund III in consideration of HM Fund
III's agreement to purchase the obligations owing to Bankers Trust Company
under the Acquisition Sub Credit Agreement and the Company recorded an
extraordinary charge of $750.
The related pro forma adjustments are as follows:
<TABLE>
<S> <C>
Guarantee of loans to Benchmark under the Acquisition Sub
Credit Agreement.......................................... $ 60,000
Repayment of indebtedness under the Acquisition Sub Credit
Agreement in connection with the Benchmark Acquisition.... (60,000)
Issuance of Common Stock in connection with the Company's
guarantee................................................. 750
Extraordinary charge........................................ (750)
</TABLE>
(CC) The adjustment reflects the net proceeds from the Preferred Stock Offering
of $94,750, net of fees and expenses of $5,250.
(DD) The adjustment reflects the elimination of the redeemable preferred stock
of GulfStar which was redeemed in connection with the GulfStar Transaction.
GulfStar recognized a loss on the Preferred Stock Redemption of $5,419
which represents the difference between the carrying value and the
liquidation preference of the preferred stock.
(EE) The adjustment reflects (i) the Hicks Muse GulfStar Equity Investment of
$75,000 in connection with the GulfStar Transaction, (ii) the common equity
investment of $2,100 by Joseph L. Mathias, IV, a former partner of
Benchmark, in connection with the Benchmark Acquisition, (iii) the Capstar
BT Equity Investment of $11,100, and (iv) the fees and expenses incurred in
connection with the GulfStar Merger, which were expensed in the period in
which the GulfStar Merger was consummated.
21
<PAGE> 23
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(FF) The column represents the combined balance sheets as of March 31, 1997 of
the acquisitions which were pending as of the date of this Prospectus.
PENDING TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER
PENDING
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL ACQUISITIONS
MADISON PATTERSON KNIGHT QUALITY AMERON QUASS COMBINED(1)
---------- ---------- -------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 348 $ 1,177 $ 2,498 $ 90 $ 55 $ 960
Accounts receivable, net.............. 1,415 8,171 2,631 1,405 536 4,044
Prepaid expenses and other............ 132 1,889 385 206 64 537
-------- -------- ------- ------- ------ -------
Total current assets.......... 1,895 11,237 5,514 1,701 655 5,541
Property and equipment, net............. 2,739 19,114 4,784 1,917 1,182 3,753
Intangible and other assets, net........ 12,852 118,088 676 13,006 2,373 13,628
-------- -------- ------- ------- ------ -------
Total assets.................. $ 17,486 $148,439 $10,974 $16,624 $4,210 $22,922
======== ======== ======= ======= ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued
expenses........................... $ 790 $ 3,742 $ 1,219 $ 761 $ 169 $ 3,175
Current portion of long-term debt..... 250 -- 848 5,200 250 2,928
-------- -------- ------- ------- ------ -------
Total current liabilities..... 1,040 3,742 2,067 5,961 419 6,103
Long-term debt, less current portion.... 13,250 66,500 7,773 4,563 3,418 15,871
Other long-term liabilities............. -- 87 -- -- 203 --
-------- -------- ------- ------- ------ -------
Total liabilities............. 14,290 70,329 9,840 10,524 4,040 21,974
Redeemable preferred stock.............. -- 20,747 -- -- -- --
Redeemable warrants..................... -- 17,803 -- -- -- --
Stockholders' equity.................... 3,196 39,560 1,134 6,100 170 948
-------- -------- ------- ------- ------ -------
Total liabilities and
stockholders' equity........ $ 17,486 $148,439 $10,974 $16,624 $4,210 $22,922
======== ======== ======= ======= ====== =======
<CAPTION>
PENDING
TRANSACTIONS
COMBINED
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 5,128
Accounts receivable, net.............. 18,202
Prepaid expenses and other............ 3,213
--------
Total current assets.......... 26,543
Property and equipment, net............. 33,489
Intangible and other assets, net........ 160,623
--------
Total assets.................. $220,655
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued
expenses........................... $ 9,856
Current portion of long-term debt..... 9,476
--------
Total current liabilities..... 19,332
Long-term debt, less current portion.... 111,375
Other long-term liabilities............. 290
--------
Total liabilities............. 130,997
Redeemable preferred stock.............. 20,747
Redeemable warrants..................... 17,803
Stockholders' equity.................... 51,108
--------
Total liabilities and
stockholders' equity........ $220,655
========
</TABLE>
- ---------------
(1) The columns represents the historical combined balance sheets of (i)
WMEZ-FM, KRDU-FM, KJOI-FM and WQFN-FM, all pending acquisitions of
Patterson; and (ii) Emerald City, COMCO, Commonwealth, WRIS,
Griffith, Grant, American General, Booneville, Noalmark, KLAW and
KJEM, all pending acquisitions of the Company.
22
<PAGE> 24
(GG) The adjustment reflects (i) the assumption of $2,086 in liabilities in
connection with the Pending Transactions and (ii) the allocation of the
purchase prices of the Pending Transactions to the assets acquired and
liabilities assumed resulting in an adjustment to property and equipment
and FCC licenses to their estimated fair market values and the recording of
goodwill associated with the acquisitions as follows:
<TABLE>
<CAPTION>
CARRYING
ALLOCATION OF VALUE OF
PURCHASE PENDING
PRICES TRANSACTIONS ADJUSTMENTS
------------- ------------ -----------
<S> <C> <C> <C>
Cash and cash equivalents............................ $ 1,232 $ 5,128 $ (3,896)
Accounts receivable, net............................. 12,478 18,202 (5,724)
Prepaid expenses and other........................... 1,295 3,213 (1,918)
Property and equipment, net.......................... 52,274 33,489 18,785
Intangible and other assets, net..................... 400,917 156,248 244,669
Deferred financing................................... -- 4,375 (4,375)
Accounts payable and other accrued expenses.......... (3,911) (9,856) (5,945)
Other long-term liabilities.......................... (43,406) (290) 43,116
--------
Total purchase prices........................... $420,879
========
</TABLE>
(HH) The adjustment reflects the excess cash used in connection with the Pending
Transactions.
(II) The adjustments reflect the disposition of WTAW-AM, KTSR-FM and KAGG-FM
located in Bryan, Texas.
(JJ) The adjustment reflects the elimination of the outstanding loan balance of
$13,500 to Emerald City which will be repaid in connection with the
Emerald City Acquisition.
(KK) The adjustment reflects $75 placed in escrow as security for the Company's
obligation to consummate the Emerald City Acquisition, which will be used
to pay a portion of the expenses in connection with the related
acquisition.
(LL) The adjustment reflects the elimination of the historical debt of the
entities to be acquired in the Pending Transactions of $120,851, including
the current portion of $9,476.
(MM) The adjustments reflect borrowings of $185,946 under the Credit Facility
with an annual interest rate of 8.0% and an equity contribution of
$221,217, including the commitment by HM Fund III and its affiliates to
invest up to an additional $50,000, in connection with the financing of the
Pending Transactions.
(NN) The adjustment reflects the purchase and subsequent retirement of the
redeemable preferred stock of $20,747 and redeemable warrants of $17,803 in
connection with the Patterson Acquisition. As a result of the redemption,
Patterson will recognize a loss of $8,391 which represents the difference
between the carrying value and the liquidation preference on the preferred
stock.
(OO) The adjustment reflects the net effect of the elimination of the historical
equity of the entities to be acquired in the Pending Transactions, based on
the purchase method of accounting, of $51,108.
(PP) The pro forma amounts reflect the effects of the exchange offers for the
Notes, the New Capstar Radio Notes and the Senior Exchangeable Preferred
Stock.
23
<PAGE> 25
GLOSSARY OF CERTAIN TERMS
"Ameron Acquisition" means the Company's pending acquisition of
substantially all of the assets of Ameron Broadcasting, Inc. ("Ameron"), used or
useful in the operation of radio stations WMJJ-FM and WERC-AM in Birmingham,
Alabama and radio station WOWC-FM in Jasper, Alabama.
"Benchmark Acquisition" means the completed acquisitions of, and mergers of
directly and indirectly wholly-owned subsidiaries of HM Fund III with, Benchmark
Communications Radio Limited Partnership, L.P. and certain of its subsidiary
partnerships (collectively, "Benchmark").
"broadcast cash flow" consists of operating income before depreciation,
amortization, corporate and other compensation expenses. Although broadcast cash
flow is not a measure of performance calculated in accordance with generally
accepted accounting principles ("GAAP"), management believes that it is useful
to an investor in evaluating the Company because it is a measure widely used in
the broadcast industry to evaluate a radio company's operating performance.
However, broadcast cash flow should not be considered in isolation or as a
substitute for net income, cash flows from operating activities and other income
or cash flow statement data prepared in accordance with GAAP as a measure of
liquidity or profitability.
"broadcast cash flow margin" represents the percentage of net revenue which
is attributable to broadcast cash flow.
"Capstar Broadcasting" means Capstar Broadcasting Corporation.
"Capstar BT Equity Investment" means the purchase by Capstar BT Partners,
L.P. of certain shares of Class B Common Stock for $11.1 million in cash
concurrently with consummation of the GulfStar Merger.
"Capstar Radio" means Capstar Radio Broadcasting Partners, Inc.
"Capstar Radio Notes Offering" means Capstar Radio's private placement of
the New Capstar Radio Notes.
"Cavalier Acquisition" means the Company's completed acquisition of
substantially all of the assets of Cavalier Communications, L.P. ("Cavalier").
"Certificate of Designation" means the Certificate of Designation that
governs the Senior Exchangeable Preferred Stock.
"COMCO Acquisition" means the Company's pending acquisition of
substantially all of the assets of COMCO Broadcasting, Inc. ("COMCO").
"Commodore Acquisition" means the Company's completed acquisition of
Commodore.
"Commonwealth Acquisition" means the Company's pending acquisition of
substantially all of the assets of Commonwealth Broadcasting of Arizona, L.L.C.
("Commonwealth").
"Community Pacific Acquisition" means the Company's completed acquisition
of substantially all of the assets of Community Pacific Broadcasting Company
L.P. ("Community Pacific").
"Company" means, unless the context otherwise requires, Capstar
Broadcasting Partners, Inc. and its subsidiaries.
"Completed Transactions" collectively refers to the Commodore Acquisition,
the Osborn Transactions, the Space Coast Acquisitions, the GulfStar Transaction,
the Community Pacific Acquisition, the Cavalier Acquisition, the Benchmark
Acquisition, the GulfStar -- McForhun Acquisition, and the GulfStar --
Livingston Acquisition.
"Credit Facility" means that certain amended and restated credit facility
between the Company, Capstar Radio, Bankers Trust Company, as administrative
agent, and the other parties thereto.
"EBITDA" consists of operating income before depreciation, amortization and
other expenses. Although EBITDA is not a measure of performance calculated in
accordance with GAAP, management believes that it is useful to an investor in
evaluating the Company because it is a measure widely used in the broadcast
24
<PAGE> 26
industry to evaluate a radio company's operating performance. However, EBITDA
should not be considered in isolation or as a substitute for net income, cash
flows from operating activities and other income or cash flow statement data
prepared in accordance with GAAP as a measure of liquidity or profitability.
"Emerald City Acquisition" means the Company's pending acquisition of
substantially all of the assets of Emerald City Radio Partners, L.P. ("Emerald
City") used or held for use in connection with station WNOK-FM in the Columbia,
South Carolina market.
"Existing Capstar Radio Indenture" means that certain indenture, between
Capstar Radio, the guarantors named therein and IBJ Schroder Bank & Trust
Company in connection with the Existing Capstar Radio Notes.
"Existing Capstar Radio Notes" refers to Capstar Radio's 13 1/4% Senior
Subordinated Notes due 2003.
"Financing" collectively refers to the Preferred Stock Offering, the Hicks
Muse GulfStar Equity Investment, the Capstar BT Equity Investment and the
Capstar Radio Notes Offering.
"Grant Acquisition" means the Company's pending acquisition of
substantially all of the assets of Grant Communications Company ("Grant") used
or useful in the operation of radio station WZBQ-FM in the Tuscaloosa, Alabama
market.
"Griffith Acquisition" means the Company's pending acquisition of
substantially all of the assets of Griffith Communications Corporation
("Griffith") used or useful in the operation of radio stations WTAK-FM, WXQW-FM
and WWXQ-FM in the Huntsville, Alabama market.
"GulfStar" means, prior to the GulfStar Merger, GulfStar Communications,
Inc. and, from and after the GulfStar Merger, the surviving corporation in the
GulfStar Merger.
"GulfStar Merger" means the merger of GulfStar with and into a subsidiary
of Capstar Broadcasting, pursuant to which the subsidiary was the surviving
corporation and was named GulfStar Communications, Inc.
"GulfStar Transaction" means the GulfStar Merger and Capstar Broadcasting's
contribution of GulfStar through the Company to Capstar Radio upon completion of
the GulfStar Merger.
"GulfStar -- American General Acquisition" means the Company's pending
acquisition of substantially all of the assets of American General Media
("American General") used or useful in the operation of radio station KKCL-FM in
the Lubbock, Texas market.
"GulfStar -- Booneville Acquisition" means the Company's pending
acquisition of substantially all of the assets of Booneville Broadcasting
Company and Oklahoma Communications Company (collectively, "Booneville") used or
useful in the operation of radio station KZBB-FM in the Ft. Smith, Arkansas
market.
"GulfStar -- Bryan Disposition" means the Company's pending sale of Bryan
Broadcasting Operating Company, a wholly owned subsidiary that owns three FM
stations in Bryan, Texas.
"GulfStar -- KJEM Acquisition Option" means the Company's option to acquire
substantially all of the assets of KJEM-FM, Inc. ("KJEM") used or useful in the
operation of radio station KJEM-FM in the Seligman, Missouri market.
"GulfStar -- KLAW Acquisition" means the Company's pending acquisition of
substantially all of the assets of KLAW Broadcasting, Inc. ("KLAW") used or
useful in the operation of radio stations KLAW-FM and KZCD-FM, which serves the
Lawton, Oklahoma market.
"GulfStar -- Livingston Acquisition" means the Company's completed
acquisition of substantially all of the assets Livingston Communications, Inc.
("Livingston") used or useful in the operation of radio station WBIU-AM in the
Denham Springs, Louisiana market.
25
<PAGE> 27
"GulfStar -- McForhun Acquisition" means the Company's completed
acquisition of substantially all of the assets of McForhun, Inc. ("McForhun")
used or useful in the operation of radio station KRVE-FM in the Brusly,
Louisiana market.
"GulfStar -- Noalmark Acquisition" means the Company's option to purchase
substantially all of the assets of Noalmark Broadcasting Corp. ("Noalmark") used
or held for use in the operation of radio stations KKTX-FM and KKTX-AM, which
serve the Longview, Texas market.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.
"Hicks Muse GulfStar Equity Investment" means the purchase by an affiliate
of Hicks Muse of certain shares of Class C Common Stock for $75.0 million in
cash concurrently with consummation of the GulfStar Merger.
"HM Fund III" means Hicks, Muse, Tate & Furst Equity Fund III, L.P.
"Huntington Acquisition" collectively refers to certain defined assets of
radio stations WKEE-FM and WKEE-AM in Huntington, West Virginia; WZZW-AM and
WFXN-FM in Milton, West Virginia; WBVB-FM in Coal Grove, Ohio; and WIRO-AM and
WMLV-FM in Ironton, Ohio, acquired by the Company.
"JSA" refers to a joint sales agreement, whereby a station licensee
obtains, for a fee, the right to sell substantially all of the commercial
advertising on a separately-owned and licensed station. JSAs take varying forms.
A JSA, unlike an LMA, normally does not involve programming.
"Knight Quality Acquisition" means the Company's pending acquisition of
substantially all of the assets of Knight Radio, Inc., Knight Communications
Corporation and Knight Broadcasting of New Hampshire, Inc. (collectively,
"Knight Quality") used or useful in the operations of eight radio stations owned
and operated by Knight Quality.
"LMA" refers to a local marketing agreement, whereby a radio station
outsources the management of certain limited functions of its operations. LMAs
take varying forms; however, the FCC requires that, in all cases, the licensee
maintain independent control over the programming and operations of the station.
"Madison Acquisition" means the Company's pending acquisition of
substantially all of the assets of The Madison Radio Group ("Madison") which is
comprised of the stations formerly owned by Midcontinent Broadcasting Co. of
Wisconsin, Inc. and Point Communication Limited Partnership.
"New Capstar Radio Indenture" means that certain indenture, dated June 17,
1997, between the Company and U.S. Trust Company of Texas, N.A. in connection
with the New Capstar Radio Notes.
"New Capstar Radio Notes" means Capstar Radio's 9 1/4% Senior Subordinated
Notes due 2007.
"Notes" means the Company's 12 3/4% Senior Discount Notes due 2009.
"Notes Indenture" means that certain indenture, dated February 20, 1997
between the Company and U.S. Trust Company of Texas, N.A. in connection with the
Notes.
"Osborn Acquisition" means the Company's completed acquisition of Osborn
Communications, Inc.
"Osborn Add-on Acquisitions" means the Company's completed acquisitions of
(i) all of the issued and outstanding capital stock of Dixie Broadcasting, Inc.
and Radio WBHP, Inc. (the "Osborn Huntsville Acquisition") and (ii)
substantially all of the assets of Taylor Communications Corporation ("Taylor")
utilized in the operations of Taylor's stations in the Tuscaloosa, Alabama
market (the "Osborn Tuscaloosa Acquisition").
"Osborn Ft. Myers Disposition" means Osborn's completed disposition of
substantially all of the assets used or held for use in connection with the
business and operations of Osborn's stations in the Port Charlotte and Ft.
Myers, Florida markets.
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"Patterson Acquisition" means the Company's pending acquisition of all of
the outstanding capital stock of Patterson Broadcasting, Inc. ("Patterson").
"Pending Acquisitions" collectively refers to the Ameron Acquisition, the
COMCO Acquisition, the Commonwealth Acquisition, the Emerald City Acquisition,
the Grant Acquisition, the Griffith Acquisition, the Knight Quality Acquisition,
the Madison Acquisition, the Patterson Acquisition, the Quass Acquisition, the
SFX Exchange, the WRIS Acquisition, the GulfStar -- American General
Acquisition, the GulfStar -- Booneville Acquisition, the GulfStar -- Noalmark
Acquisition, the GulfStar -- KJEM Acquisition and the GulfStar -- KLAW
Acquisition.
"Pending Transactions" collectively refers to the Pending Acquisitions and
the GulfStar -- Bryan Disposition.
"Quass Acquisition" means the Company's pending acquisition of all of the
outstanding capital stock of Quass Broadcasting Company ("Quass").
"SFX Exchange" means the Company's pending exchange of substantially all of
the assets used or useful in the operation of three radio stations that will be
owned by the Company upon completion of the Benchmark Acquisition in the
Greenville, South Carolina market for substantially all of the assets used or
useful in the operation of four radio stations owned by SFX in Wichita, Kansas
and Daytona Beach, Florida.
"Space Coast Acquisitions" collectively refers to the Company's completed
acquisitions of substantially all of the assets of EZY Com, Inc., City
Broadcasting Co., Inc., and Roper Broadcasting, Inc.
"WRIS Acquisition" means the Company's pending acquisition of substantially
all of the assets of WRIS, Inc. ("WRIS").
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPSTAR BROADCASTING PARTNERS, INC.
(Registrant)
By:/s/ WILLIAM S. BANOWSKY, JR.
----------------------------------
Name: William S. Banowsky, Jr.
Title: Executive Vice President
and General Counsel
Date: August 19, 1997
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