<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT
---------------------
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 29, 1998
---------------------
CAPSTAR BROADCASTING PARTNERS, INC.
(Exact name of registrants as specified in their charters)
<TABLE>
<S> <C> <C>
DELAWARE 333-25683 75-2672663
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
600 CONGRESS AVENUE, 78701
SUITE 1400 (Zip code)
AUSTIN, TEXAS
(Address of principal
executive offices)
</TABLE>
Registrant's telephone number, including area code: (512) 340-7800
NOT APPLICABLE
(former name and former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
The registrant, Capstar Broadcasting Partners, Inc. (the "Company"), hereby
amends Item 7 of its Current Report on Form 8-K, dated June 12, 1998, to include
the required pro forma financial information which was impracticable to provide
at the time the Form 8-K was initially filed.
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, Osborn, Benchmark, Madison, Community Pacific, Ameron, Patterson
and SFX (each as defined in "Glossary of Certain Terms" beginning on page G-1
hereof).
The pro forma statements of operations for the year ended December 31, 1997
and the three months ended March 31, 1997 and 1998 have been prepared to
illustrate the effects of (i) the Completed Transactions and the Other Equity
Transactions, (ii) the SFX Transactions and (iii) the Financing and the
application of the net proceeds therefrom, as if each had occurred on January 1,
1997. The pro forma balance sheet as of March 31, 1998 has been prepared as if
any such transaction not yet consummated on that date had occurred on that date.
The unaudited pro forma adjustments are based upon available information and
certain assumptions that the Company believes are reasonable. 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 the acquisition of GulfStar, given effect in the
Pro Forma Financial Information are accounted for using the purchase method of
accounting. The aggregate purchase price of each 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 to be
closed subsequent to March 31, 1998. 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 acquisition of GulfStar
was accounted for at historical cost, on a basis similar to a pooling of
interests, as the Company and GulfStar were under common control.
1
<PAGE> 3
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE FOR THE ADJUSTMENTS
COMPLETED COMPLETED FOR THE
TRANSACTIONS TRANSACTIONS SFX
COMPLETED AND THE AND THE SFX TRANSACTIONS
TRANSACTIONS OTHER EQUITY OTHER EQUITY TRANSACTIONS AND THE
THE COMPANY COMBINED(A) TRANSACTIONS TRANSACTIONS COMBINED(H) FINANCING
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue................... $ 175,445 $119,479 $ -- $294,924 $275,070 $ --
Station operating expenses.... 122,135 89,324 -- 211,459 142,617 --
Depreciation and
amortization................ 26,415 11,770 9,363(B) 47,548 35,378 41,733(B)
Corporate expenses............ 14,221 8,439 -- 22,660 6,837 --
LMA fees...................... 2,519 -- (2,519)(C) -- -- --
Non-cash compensation
expense..................... 10,575 -- -- 10,575 624 --
Other operating expenses...... -- -- -- -- 20,174 (3,821)(I)
----------- -------- -------- -------- -------- --------
Operating income (loss)..... (420) 9,946 (6,844) 2,682 69,440 (37,912)
Interest expense.............. 47,012 15,735 (19,623)(D) 43,124 64,998 52,119(J)
Gain (loss) on sale of
assets...................... (908) 5,214 -- 4,306 -- --
Increase in fair value of
redeemable warrants......... -- (2,022) 2,022(E) -- -- --
Other (income) expense........ 910 (2,483) -- (1,573) (3,886) --
----------- -------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes..................... (49,250) (114) 14,801 (34,563) 8,328 (90,031)
Provision (benefit) for income
taxes....................... (11,992) 1,818 5,624(F) (4,550) 810 (34,212)(F)
Dividends, accretion and
redemption of preferred
stock of subsidiary......... -- -- -- -- -- 13,654(K)
----------- -------- -------- -------- -------- --------
Net income (loss) from
continuing operations....... (37,258) (1,932) 9,177 (30,013) 7,518 (69,473)
Redeemable preferred stock
dividends and accretion..... 13,631 -- (7,071)(G) 6,560 38,510 (38,510)(K)
----------- -------- -------- -------- -------- --------
Net loss from continuing
operations applicable to
common stockholders......... $ (50,899) $ (1,932) $ 16,248 $(36,573) $(30,992) $(30,963)
=========== ======== ======== ======== ======== ========
<CAPTION>
PRO FORMA
FOR THE
SFX
TRANSACTIONS
AND THE
FINANCING
------------
<S> <C>
Net revenue................... $ 569,994
Station operating expenses.... 354,076
Depreciation and
amortization................ 124,659
Corporate expenses............ 29,497
LMA fees...................... --
Non-cash compensation
expense..................... 11,199
Other operating expenses...... 16,353
-----------
Operating income (loss)..... 34,210
Interest expense.............. 160,241
Gain (loss) on sale of
assets...................... 4,306
Increase in fair value of
redeemable warrants......... --
Other (income) expense........ (5,459)
-----------
Income (loss) before
provision for income
taxes..................... (116,266)
Provision (benefit) for income
taxes....................... (37,952)
Dividends, accretion and
redemption of preferred
stock of subsidiary......... 13,654
-----------
Net income (loss) from
continuing operations....... (91,968)
Redeemable preferred stock
dividends and accretion..... 6,560
-----------
Net loss from continuing
operations applicable to
common stockholders......... $ (98,528)
===========
</TABLE>
See accompanying notes to pro forma financial information.
2
<PAGE> 4
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE FOR THE ADJUSTMENTS
COMPLETED COMPLETED FOR THE
TRANSACTIONS TRANSACTIONS SFX
COMPLETED AND THE AND THE SFX TRANSACTIONS
TRANSACTIONS OTHER EQUITY OTHER EQUITY TRANSACTIONS AND THE
THE COMPANY COMBINED(M) TRANSACTIONS TRANSACTIONS COMBINED(N) FINANCING
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................... $ 25,102 $35,430 $ -- $ 60,532 $57,821 $ --
Station operating expenses..... 18,304 30,124 -- 48,428 31,993 --
Depreciation and
amortization................. 3,725 3,971 4,177(B) 11,873 6,628 12,650(B)
Corporate expenses............. 1,942 1,947 -- 3,889 1,035 --
LMA fees....................... 683 -- (683)(C) -- -- --
Non-cash compensation
expense...................... 2,469 -- -- 2,469 156 --
Other operating expenses....... -- -- -- -- -- --
----------- ------- ------- -------- ------- --------
Operating income (loss)...... (2,021) (612) (3,494) (6,127) 18,009 (12,650)
Interest expense............... 7,955 4,147 (1,320)(D) 10,782 9,502 19,778(J)
Gain (loss) on sale of
assets....................... -- 5,356 -- 5,356 -- --
Increase in fair value of
redeemable warrants.......... -- (5,882) 5,882(E) -- -- --
Other (income) expense......... (63) (278) -- (341) (1,387) --
----------- ------- ------- -------- ------- --------
Income (loss) before
provision for income
taxes...................... (9,913) (5,007) 3,708 (11,212) 9,894 (32,428)
Provision (benefit) for income
taxes........................ (2,308) (2,789) 1,409(F) (3,688) 285 (12,323)(F)
Dividends, accretion and
redemption of preferred stock
of subsidiary................ -- -- -- -- -- 2,722(K)
----------- ------- ------- -------- ------- --------
Net income (loss) from
continuing operations........ (7,605) (2,218) 2,299 (7,524) 9,609 (22,827)
Redeemable preferred stock
dividends and accretion...... 794 -- (794)(G) -- 7,952 (7,952)(K)
----------- ------- ------- -------- ------- --------
Net income (loss) from
continuing operations
applicable to common
stockholders................. $ (8,399) $(2,218) $ 3,093 $ (7,524) $ 1,657 $(14,875)
=========== ======= ======= ======== ======= ========
<CAPTION>
PRO FORMA
FOR THE
SFX
TRANSACTIONS
AND THE
FINANCING
------------
<S> <C>
Net revenue.................... $ 118,353
Station operating expenses..... 80,421
Depreciation and
amortization................. 31,151
Corporate expenses............. 4,924
LMA fees....................... --
Non-cash compensation
expense...................... 2,625
Other operating expenses....... --
-----------
Operating income (loss)...... (768)
Interest expense............... 40,062
Gain (loss) on sale of
assets....................... 5,356
Increase in fair value of
redeemable warrants.......... --
Other (income) expense......... (1,728)
-----------
Income (loss) before
provision for income
taxes...................... (33,746)
Provision (benefit) for income
taxes........................ (15,726)
Dividends, accretion and
redemption of preferred stock
of subsidiary................ 2,722
-----------
Net income (loss) from
continuing operations........ (20,742)
Redeemable preferred stock
dividends and accretion...... --
-----------
Net income (loss) from
continuing operations
applicable to common
stockholders................. $ (20,742)
===========
</TABLE>
See accompanying notes to pro forma financial information.
3
<PAGE> 5
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE FOR THE ADJUSTMENTS PRO FORMA
COMPLETED COMPLETED FOR THE FOR THE
TRANSACTIONS TRANSACTIONS SFX SFX
COMPLETED AND THE AND THE SFX TRANSACTIONS TRANSACTIONS
TRANSACTIONS OTHER EQUITY OTHER EQUITY TRANSACTIONS AND THE AND THE
THE COMPANY COMBINED(O) TRANSACTIONS TRANSACTIONS COMBINED(P) FINANCING FINANCING
----------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............... $ 64,075 $ 3,701 $ -- $ 67,776 $ 58,699 $ -- $ 126,475
Station operating
expenses................ 47,760 2,607 -- 50,367 30,260 -- 80,627
Depreciation and
amortization............ 11,032 312 529(B) 11,873 8,369 10,909(B) 31,151
Corporate expenses........ 3,664 126 -- 3,790 1,569 -- 5,359
LMA fees.................. 1,871 -- (1,871)(C) -- -- -- --
Non-cash compensation
expense................. 15,793 -- -- 15,793 138 15,931
Other operating
expenses................ -- -- -- -- 24,974 (19,739)(I) 5,235
----------- ------- ------- -------- -------- -------- ----------
Operating income
(loss)................ (16,045) 656 1,342 (14,047) (6,611) 8,830 (11,828)
Interest expense.......... 15,897 648 (5,763)(D) 10,782 19,186 10,094(J) 40,062
Other (income) expense.... (320) 3,126 -- 2,806 (328) -- 2,478
----------- ------- ------- -------- -------- -------- ----------
Income (loss) before
provision for income
taxes................. (31,622) (3,118) 7,105 (27,635) (25,469) (1,264) (54,368)
Provision (benefit) for
income taxes............ (4,962) -- 2,700(F) (2,262) 210 (480)(F) (2,532)
Dividends, accretion and
redemption of preferred
stock of subsidiary..... -- -- -- -- -- 3,866(K) 3,866
----------- ------- ------- -------- -------- -------- ----------
Net income (loss) from
continuing operations... (26,660) (3,118) 4,405 (25,373) (25,679) (4,650) (55,702)
Redeemable preferred stock
dividends and
accretion............... 3,052 -- -- 3,052 10,350 (10,350)(K) 3,052
----------- ------- ------- -------- -------- -------- ----------
Net income (loss) from
continuing operations
applicable to common
stockholders............ $ (29,712) $(3,118) $ 4,405 $(28,425) $(36,029) $ 5,700 $ (58,754)
=========== ======= ======= ======== ======== ======== ==========
</TABLE>
See accompanying notes to pro forma financial information.
4
<PAGE> 6
CAPSTAR BROADCASTING PARTNERS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE FOR THE ADJUSTMENTS
COMPLETED COMPLETED FOR THE
TRANSACTIONS TRANSACTIONS SFX
COMPLETED AND THE AND THE SFX TRANSACTIONS
TRANSACTIONS OTHER EQUITY OTHER EQUITY TRANSACTIONS AND THE
THE COMPANY COMBINED(Q) TRANSACTIONS TRANSACTIONS COMBINED(X) FINANCING
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ 216,374 $ 1,664 $ (1,664)(R) $ 182,476 $ 38,532 $ (68)(Y)
(33,898)(S) (215,940)(S)
Accounts receivable, net.............. 53,806 3,553 (3,173)(R) 54,186 65,675 (1,228)(Y)
Prepaid expenses and other............ 5,296 3,433 (3,433)(R) 5,296 167,511 (38,342)(Y)
---------- -------- -------- ---------- ---------- ----------
Total current assets............ 275,476 8,650 (42,168) 241,958 271,718 (255,578)
Property and equipment, net............. 134,622 (1,123) 5,908(R) 139,407 67,781 20,517(Y)
Intangible and other assets, net........ 1,186,597 (12,073) 26,980(R) 1,201,504 931,536 1,614,815(Y)
9,750(AA)
---------- -------- -------- ---------- ---------- ----------
Total assets.................... $1,596,695 $ (4,546) $ (9,280) $1,582,869 $1,271,035 $1,389,504
========== ======== ======== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued
expenses............................ $ 37,636 $ 1,395 $ (1,395)(R) $ 34,896 $ 179,806 $ (545)(Y)
(2,740)(U) (6,208)(BB)
Current portion of long-term debt..... 82,598 2,793 (2,793)(U) 1,634 617 --
(80,964)(U)
---------- -------- -------- ---------- ---------- ----------
Total current liabilities....... 120,234 4,188 (87,892) 36,530 180,423 (6,753)
Long-term debt, less current portion.... 377,127 5,016 (5,016)(U) 377,127 763,985 (467,000)(BB)
31,820(Y)
811,762(CC)
Other long-term liabilities............. 236,691 -- (2,107)(V) 234,584 77,781 445,016(Y)
---------- -------- -------- ---------- ---------- ----------
Total liabilities............... 734,052 9,204 (95,015) 648,241 1,022,189 814,845
Redeemable preferred stock.............. 104,545 -- -- 104,545 376,615 (146,209)(DD)
(115,203)(DD)
10,266(Y)
Minority interest....................... -- -- -- -- 56,200 (56,200)(Y)
Stockholders' equity (deficit).......... 758,098 (13,750) 13,750(W) 830,083 (183,969) 183,969(EE)
87,174(W) 552,536(FF)
(4,689)(V) (4,500)(Z)
(10,500)(T) 150,000(CC)
---------- -------- -------- ---------- ---------- ----------
Total liabilities and
stockholders' equity.......... $1,596,695 $ (4,546) $ (9,280) $1,582,869 $1,271,035 $1,389,504
========== ======== ======== ========== ========== ==========
<CAPTION>
PRO FORMA
FOR THE
SFX
TRANSACTIONS
AND THE
FINANCING
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ 5,000
Accounts receivable, net.............. 118,633
Prepaid expenses and other............ 134,465
----------
Total current assets............ 258,098
Property and equipment, net............. 227,705
Intangible and other assets, net........ 3,757,605
----------
Total assets.................... $4,243,408
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued
expenses............................ $ 207,949
Current portion of long-term debt..... 2,251
----------
Total current liabilities....... 210,200
Long-term debt, less current portion.... 1,517,694
Other long-term liabilities............. 757,381
----------
Total liabilities............... 2,485,275
Redeemable preferred stock.............. 230,014
Minority interest....................... --
Stockholders' equity (deficit).......... 1,528,119
----------
Total liabilities and
stockholders' equity.......... $4,243,408
==========
</TABLE>
See accompanying notes to pro forma financial information.
5
<PAGE> 7
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(A) The schedule below gives effect to the following for the period from
January 1, 1997 through December 31, 1997: (i) acquisitions by the Company
completed prior to March 31, 1998; (ii) the historical acquisitions and
dispositions of the indicated entities consummated prior to March 31,
1998; and (iii) the acquisitions and dispositions of the indicated
entities which were pending at March 31, 1998 and will be consummated
prior to the consummation of the SFX Acquisition.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL COMMUNITY HISTORICAL HISTORICAL HISTORICAL HISTORICAL
OSBORN(1) PACIFIC(2) BENCHMARK(3) MADISON(4) AMERON(5) PATTERSON
---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................................. $3,577 $2,458 $19,566 $4,130 $6,095 $53,053
Station operating expenses................... 2,937 1,315 12,956 2,588 4,352 37,334
Depreciation and amortization................ 418 713 3,657 752 506 5,273
Corporate expenses........................... 268 373 348 75 -- 4,946
------ ------ ------- ------ ------ -------
Operating income (loss).................... (46) 57 2,605 715 1,237 5,500
Interest expense............................. 385 469 4,689 686 659 7,574
Gain (loss) on sale of assets................ 5,348 -- -- -- -- --
Increase in fair value of redeemable
warrants................................... -- -- -- -- -- (2,022)
Other (income) expense....................... (212) 3 (64) -- 147 50
------ ------ ------- ------ ------ -------
Income (loss) before provision for income
taxes.................................... 5,129 (415) (2,020) 29 431 (4,146)
Provision (benefit) for income taxes......... 32 -- -- -- -- 1,704
------ ------ ------- ------ ------ -------
Net income (loss) from continuing
operations............................... $5,097 $ (415) $(2,020) $ 29 $ 431 $(5,850)
====== ====== ======= ====== ====== =======
<CAPTION>
ADJUSTMENTS OTHER
FOR COMPLETED COMPLETED
HISTORICAL TRANSACTIONS TRANSACTIONS
TRANSACTIONS(6) COMBINED(7) COMBINED
--------------- ------------ ------------
<S> <C> <C> <C>
Net revenue.................................. $5,357 $25,243 $119,479
Station operating expenses................... 3,011 24,831 89,324
Depreciation and amortization................ -- 451 11,770
Corporate expenses........................... -- 2,429 8,439
------ ------- --------
Operating income (loss).................... 2,346 (2,468) 9,946
Interest expense............................. -- 1,273 15,735
Gain (loss) on sale of assets................ -- (134) 5,214
Increase in fair value of redeemable
warrants................................... -- -- (2,022)
Other (income) expense....................... -- (2,407) (2,483)
------ ------- --------
Income (loss) before provision for income
taxes.................................... 2,346 (1,468) (114)
Provision (benefit) for income taxes......... -- 82 1,818
------ ------- --------
Net income (loss) from continuing
operations............................... $2,346 $(1,550) $ (1,932)
====== ======= ========
</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 results of operations of Community Pacific
from January 1, 1997 through June 30, 1997, prior to the date of the
Community Pacific Acquisition.
(3) The column represents the results of operations of Benchmark from
January 1, 1997 through June 30, 1997, prior to the date of the
Benchmark Acquisition.
(4) The column represents the results of operations of Madison from
January 2, 1997 through June 30, 1997, prior to the date of the
Madison Acquisition.
(5) The column represents the results of operations of Ameron from January
1, 1997 through September 30, 1997, prior to the date of the Ameron
Acquisition.
(6) 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 December 31, 1997: WYNU-FM, WTXT-FM,
WSCQ-FM, WZHT-FM, WMCZ-FM, KTRA-FM, KCQL-AM, KDAG-FM, KKFG-FM,
WMEZ-FM, KRDU-AM, KJOI-FM and WQFN-FM.
(7) The column represents the historical results of operations for the
following transactions which will be consummated prior to the
consummation of the SFX Acquisition: (i) the Knight, Quass, COMCO,
Osborn Tuscaloosa, Osborn Huntsville, Space Coast, WRIS, Cavalier,
Griffith, Emerald City, American General, Booneville, KJEM, McForhun,
Livingston, KLAW, Grant, East Penn, WRIS, KOSO, Commonwealth, KDOS,
Prophet Systems and the Reynolds Acquisitions, (ii) Americom
Acquisition, (iii) Americom Disposition and (iv) Wilmington, Osborn
Ft. Myers, Bryan, Allentown, Jackson, Westchester, Dayton,
Salisbury-Ocean City (this disposition actually will be consummated
shortly after the consummation of the SFX Acquisition) and KASH
Dispositions.
6
<PAGE> 8
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(B) 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.
(C) The adjustment reflects the elimination of LMA fees paid by the Company
attributable certain acquisitions consummated prior to the Offering.
(D) The adjustment reflects interest expense associated with (i) the 9 1/4%
Capstar Notes, (ii) the 12 3/4% Capstar Notes, (iii) other indebtedness of
the Company and (iv) the amortization of deferred financing fees
associated with the 9 1/4% Capstar Notes, the 12 3/4% Capstar Notes and
the Capstar Credit Facility, net of interest expense related to the
existing indebtedness of the Company and the companies included within
Completed Transactions Combined. Deferred financing fees are amortized
over the term of the related debt.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -------------------
1997 1997 1998
------------ ------- --------
<S> <C> <C> <C>
9 1/4% Capstar Notes...................................... $ 18,430 $ 4,608 $ 4,608
12 3/4% Capstar Notes..................................... 21,962 5,491 5,491
Other indebtedness........................................ 561 140 140
-------- ------- --------
Interest expense before amortization of deferred financing
fees.................................................... 40,953 10,239 10,239
Amortization of deferred financing fees................... 2,171 543 543
-------- ------- --------
Pro forma interest expense.............................. 43,124 10,782 10,782
Historical interest expense for the Company............... (47,012) (7,955) (15,897)
Historical interest expense for Completed Transactions
Combined................................................ (15,735) (4,147) (648)
-------- ------- --------
Net adjustment.......................................... $(19,623) $(1,320) $ (5,763)
======== ======= ========
</TABLE>
A 1/8% change in the weighted average interest rate on total indebtedness
would result in a $471 change in interest expense for the year ended
December 31, 1997 and a $118 change for the three months ended March 31,
1997 and 1998.
(E) The adjustment reflects the elimination of the increase in the fair value
of the redeemable warrants which were repurchased in connection with the
Patterson Acquisition. The increase in the fair value of the warrants was
determined based upon the sales price of Patterson Broadcasting, Inc. to
Capstar Broadcasting Corporation in January 1998.
(F) The adjustment reflects the tax effect of the pro forma adjustments at the
Company's statutory tax rate of 38% for the periods presented. The pro
forma tax benefit is primarily the result of the reversal of temporary
differences related to the difference in the carrying amounts of FCC
licenses for financial reporting purposes and the amounts used for income
tax purposes. The deferred tax liability resulting from the temporary
differences, which have arisen out of the Company's various purchase
business combinations, has been recognized in connection with the purchase
accounting for the related acquisitions. The Company has not recorded a
valuation allowance for its pro forma tax benefit as it believes that, in
accordance with Financial Accounting Standards Board Statement No. 109, on
a pro forma basis, it is more likely than not to have adequate future
taxable income to utilize its deferred tax assets.
(G) The adjustment reflects the elimination of the redeemable preferred stock
redeemed in connection with the GulfStar Acquisition.
7
<PAGE> 9
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(H) The column represents the combined income statements for the year ended
December 31, 1997 of the transactions which (i) SFX completed prior to
March 31, 1998, (ii) were pending at March 31, 1998 and have been
consummated by SFX prior to the consummation of the SFX Acquisition and
(iii) were pending at March 31, 1998 and will close subsequent to the
consummation of the SFX Acquisition in connection with the SFX
Transactions.
SFX TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
SFX SFX
HISTORICAL PENDING SFX
HISTORICAL TRANSACTIONS TRANSACTIONS CHANCELLOR TRANSACTIONS
SFX(1) COMBINED(2) COMBINED(3) EXCHANGE(4)(5) COMBINED
---------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue............................. $270,364 $16,552 $(61,271) $49,425 $275,070
Station operating expenses.............. 167,063 14,042 (38,488) -- 142,617
Depreciation and amortization........... 38,232 -- (2,854) -- 35,378
Corporate expenses...................... 6,837 -- -- -- 6,837
Non-cash compensation expense........... 624 -- -- -- 624
Other operating expenses................ 20,174 -- -- -- 20,174
-------- ------- -------- ------- --------
Operating income (loss)............ 37,434 2,510 (19,929) 49,425 69,440
Interest expense........................ 64,506 -- 492 -- 64,998
Other (income) expense.................. (2,821) -- (1,065) -- (3,886)
-------- ------- -------- ------- --------
Income (loss) before provision for
income taxes..................... (24,251) 2,510 (19,356) 49,425 8,328
Provision for income taxes.............. 810 -- -- -- 810
-------- ------- -------- ------- --------
Net income (loss) from continuing
operations....................... (25,061) 2,510 (19,356) 49,425 7,518
Redeemable preferred stock dividends and
accretion............................. 38,510 -- -- -- 38,510
-------- ------- -------- ------- --------
Net income (loss) from continuing
operations applicable to common
stockholders..................... $(63,571) $ 2,510 $(19,356) $49,425 $(30,992)
======== ======= ======== ======= ========
</TABLE>
- ---------------
(1) Excludes the results of operations of SFX Entertainment, Inc. ("SFX
Entertainment") which were classified as income from operations to be
distributed to shareholders, net of taxes in the historical financial
statements of SFX. SFX Entertainment was distributed to certain of the
SFX stockholders (the "Spin-Off"), which was consummated in April
1998. Consequently, SFX Entertainment will not be acquired by the
Company in the SFX Transactions.
(2) The adjustments represent the combined historical results of
operations of the following station acquisitions and dispositions
completed by SFX prior to the consummation of the SFX Acquisition:
WPYX-FM, WHFS-FM, KTXQ-FM, KRRW-FM, WDSY-FM, WRFX-FM, WWYZ-FM,
WISN-AM, WLTQ-FM, WVGO-FM, WLEE-FM, WKHK-FM, WBZU-FM, WFBQ-FM, WRZX-FM
and WNDE-AM.
(3) The adjustments reflect the combined historical operating results of
(i) the following pending acquisitions, dispositions and LMAs in
connection with the SFX Transactions: Nashville, Austin, Jacksonville,
Greenville, Upper Fairfield, Daytona Beach-WGNE, Houston-KODA, Long
Island, Houston-KKPN, and the stations included in the Chancellor
Exchange Agreement and (ii) stations WJDX-FM and WTAE-AM, which the
Company will sell after the consummation of the SFX Acquisition to
comply with the consent decree executed by the Company and SFX (the
"SFX Consent Decree").
(4) The adjustment represents the LMA revenue attributable to the ten SFX
stations to be sold to Chancellor Media in connection with the
Chancellor Exchange Agreement. Chancellor Media will provide services
to ten SFX stations in the Dallas, Houston, San Diego and Pittsburgh
markets under separate LMAs until such stations are exchanged.
(5) The historical interest expense, depreciation and amortization of the
stations to be sold to Chancellor Media pursuant to the Chancellor
Exchange Agreement have been eliminated from the pro forma financial
statements as described in footnote 3, above. In accordance with the
Company's policy, since the Company's ownership costs, comprised of
interest expense, depreciation and amortization, exceed the LMA
revenue for these stations, the entire LMA fee described by footnote 4
above, has been recognized. This column does not give effect to pro
forma interest expense, depreciation and amortization as a result of
the foregoing transactions. Note B to the pro forma financial
statements describes the aggregate adjustment to depreciation and
amortization based upon the purchase accounting for the SFX
Transactions and includes depreciation and amortization related to the
stations included in the Chancellor Exchange Agreement. Note J to the
pro forma financial statements describes the aggregate adjustment to
interest expense based upon the financing of the SFX Transactions and
includes interest expense related to the stations included in the
Chancellor Exchange Agreement.
8
<PAGE> 10
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(I) The adjustment reflects the elimination of non-recurring
transaction-related charges of $3.8 million and $3.1 million in the year
ended December 31, 1997 and the three months ended March 31, 1998,
respectively, recorded by SFX in connection with the SFX Acquisition and
the Spin-Off. These charges consist primarily of legal, accounting and
regulatory fees. In addition, the adjustment reflects the elimination of
$16.6 million relating to the consent solicitations from the holders of
the 10 3/4% SFX Notes and 12 5/8% SFX Preferred Stock in connection with
the Spin-Off in the three months ended March 31, 1998. The Spin-Off was
consummated in April 1998.
(J) The adjustment reflects interest expense associated with (i) the 9 1/4%
Capstar Notes, (ii) the 12 3/4% Capstar Notes, (iii) the Capstar Credit
Facility, (iv) the 10 3/4% SFX Notes, (v) other indebtedness of the
Company and SFX and (vi) amortization of deferred financing fees
associated with the 9 1/4% Capstar Notes, the 12 3/4% Capstar Notes, the
Capstar Credit Facility and the 10 3/4% SFX Notes, all net of interest
expense related to the existing indebtedness of the Company, the companies
included within the Completed Transactions Combined and the SFX
Transactions. Deferred financing fees are amortized over the term of the
related debt.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, --------------------
1997 1997 1998
------------ -------- --------
<S> <C> <C> <C>
9 1/4% Capstar Notes..................................... $ 18,430 $ 4,608 $ 4,608
12 3/4% Capstar Notes.................................... 21,962 5,491 5,491
Capstar Credit Facility at 9 3/4%........................ 79,147 19,787 19,787
10 3/4% SFX Notes........................................ 31,820 7,955 7,955
Other indebtedness....................................... 663 166 166
-------- -------- --------
Interest expense before amortization of deferred
financing fees......................................... 152,022 38,007 38,007
Amortization of deferred financing fees.................. 8,219 2,055 2,055
-------- -------- --------
Pro forma interest expense............................. 160,241 40,062 40,062
Pro forma interest expense for the Completed Transactions
Combined............................................... (43,124) (10,782) (10,782)
Historical interest expense for the SFX Transactions
Combined............................................... (64,998) (9,502) (19,186)
-------- -------- --------
Net adjustment......................................... $ 52,119 $ 19,778 $ 10,094
======== ======== ========
</TABLE>
A 1/8% change in the weighted average interest rate on total indebtedness
would result in a $2,065 change in interest expense for the year ended
December 31, 1997 and a $516 change for the three months ended March 31,
1997 and 1998.
(K) The adjustment reflects the elimination and reclassification of a portion
of the redeemable preferred stock dividends and accretion due to the SFX
Acquisition and redemption of $115,203 of the 12 5/8% SFX Preferred Stock.
(L) Not used.
9
<PAGE> 11
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, 1997 through March 31, 1997: (i) acquisitions by the Company
completed prior to March 31, 1998; (ii) the historical acquisitions and
dispositions of the indicated entities consummated prior to March 31,
1998; and (iii) the acquisitions and dispositions of the indicated
entities which were pending at March 31, 1998 and will be consummated
prior to the consummation of the SFX Acquisition.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL COMMUNITY HISTORICAL HISTORICAL HISTORICAL HISTORICAL
OSBORN(1) PACIFIC(2) BENCHMARK(3) MADISON(4) AMERON(5) PATTERSON
---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................................. $3,577 $1,681 $ 6,444 $2,028 $1,856 $10,727
Station operating expenses................... 2,937 1,311 5,338 1,246 1,616 8,552
Depreciation and amortization................ 418 350 1,336 376 167 1,162
Corporate expenses........................... 268 197 265 47 -- 1,151
------ ------ ------- ------ ------ -------
Operating income (loss).................... (46) (177) (495) 359 73 (138)
Interest expense............................. 385 238 937 348 218 1,716
Gain (loss) on sale of assets................ 5,348 -- -- -- -- --
Increase in fair value of redeemable
warrants................................... -- -- -- -- -- (5,882)
Other (income) expense....................... (212) 2 (61) -- 5 (3)
------ ------ ------- ------ ------ -------
Income (loss) before provision for income
taxes.................................... 5,129 (417) (1,371) 11 (150) (7,733)
Provision (benefit) for income taxes......... 32 -- -- -- -- (2,861)
------ ------ ------- ------ ------ -------
Net income (loss) from continuing
operations............................... $5,097 $ (417) $(1,371) $ 11 $ (150) $(4,872)
====== ====== ======= ====== ====== =======
<CAPTION>
ADJUSTMENTS OTHER
FOR COMPLETED COMPLETED
HISTORICAL TRANSACTIONS TRANSACTIONS
TRANSACTIONS(6) COMBINED(7) COMBINED
--------------- ------------ ------------
<S> <C> <C> <C>
Net revenue.................................. $2,117 $ 7,000 $ 35,430
Station operating expenses................... 1,601 7,523 30,124
Depreciation and amortization................ -- 162 3,971
Corporate expenses........................... -- 19 1,947
------ ------- --------
Operating income (loss).................... 516 (704) (612)
Interest expense............................. -- 305 4,147
Gain (loss) on sale of assets................ -- 8 5,356
Increase in fair value of redeemable
warrants................................... -- -- (5,882)
Other (income) expense....................... -- (9) (278)
------ ------- --------
Income (loss) before provision for income
taxes.................................... 516 (992) (5,007)
Provision (benefit) for income taxes......... -- 40 (2,789)
------ ------- --------
Net income (loss) from continuing
operations............................... $ 516 $(1,032) $ (2,218)
====== ======= ========
</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 results of operations of Community Pacific
from January 1, 1997 through March 31, 1997, prior to the date of the
Community Pacific Acquisition.
(3) The column represents the combined results of operations of Benchmark
from January 1, 1997 through March 31, 1997, prior to the date of the
Benchmark Acquisition.
(4) The column represents the results of operations of Madison from
January 2, 1997 through March 31, 1997, prior to the date of the
Madison Acquisition.
(5) The column represents the results of operations of Ameron from January
1, 1997 through March 31, 1997, prior to the date of the Ameron
Acquisition.
(6) 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 December 31, 1997: WYNU-FM, WTXT-FM,
WSCQ-FM, WZHT-FM, WMCZ-FM, KTRA-FM, KCQL-AM, KDAG-FM, KKFG-FM,
WMEZ-FM, KRDU-AM, KJOI-FM and WQFN-FM.
(7) The column represents the historical results of operations for the
following transactions which will be consummated prior to the
consummation of the SFX Acquisition: (i) the Knight, Quass, COMCO,
Osborn Tuscaloosa, Osborn Huntsville, Space Coast, WRIS, Cavalier,
Griffith, Emerald City, American General, Booneville, KJEM, McForhun,
Livingston, KLAW, Grant, East Penn, KOSO, Commonwealth, KDOS, Prophet
Systems and the Reynolds Acquisitions,(ii) Americom Acquisition, (iii)
Americom Disposition and (iv) Wilmington, Osborn Ft. Myers, Bryan,
Allentown, Jackson, Westchester, Dayton, Salisbury-Ocean City (this
disposition actually will be consummated shortly after the
consummation of the SFX Acquisition) and KASH Dispositions.
10
<PAGE> 12
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(N) The column represents the combined income statements for the three months
ended March 31, 1997 of the transactions which (i) SFX completed prior to
March 31, 1998, (ii) were pending at March 31, 1998 and have been
consummated by SFX prior to the consummation of the SFX Acquisition and
(iii) were pending at March 31, 1998 and will close subsequent to the
consummation of the SFX Acquisition in connection with the SFX Transactions.
SFX TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
SFX SFX
HISTORICAL PENDING SFX
HISTORICAL TRANSACTIONS TRANSACTIONS CHANCELLOR TRANSACTIONS
SFX(1) COMBINED(2) COMBINED(3) EXCHANGE(4)(5) COMBINED
------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue............................. $ 44,991 $ 8,401 $(7,927) $12,356 $57,821
Station operating expenses.............. 29,916 6,488 (4,411) -- 31,993
Depreciation and amortization........... 7,485 204 (1,061) -- 6,628
Corporate expenses...................... 1,035 -- -- -- 1,035
Non-cash compensation expense........... 156 -- -- -- 156
Other operating expenses................ -- -- -- -- --
--------- ------- ------- ------- -------
Operating income (loss)............ 6,399 1,709 (2,455) 12,356 18,009
Interest expense........................ 12,712 -- (3,210) -- 9,502
Other (income) expense.................. (1,654) 246 21 -- (1,387)
--------- ------- ------- ------- -------
Income (loss) before provision for
income taxes..................... (4,659) 1,463 734 12,356 9,894
Provision for income taxes.............. 285 -- -- -- 285
--------- ------- ------- ------- -------
Income (loss) from continuing
operations....................... (4,944) 1,463 734 12,356 9,609
Redeemable preferred stock dividends and
accretion............................. 7,952 -- -- -- 7,952
--------- ------- ------- ------- -------
Net income (loss) from continuing
operations applicable to common
stockholders..................... $ (12,896) $ 1,463 $ 734 $12,356 $ 1,657
========= ======= ======= ======= =======
</TABLE>
- ---------------
(1) Excludes the results of operations of SFX Entertainment which were
classified as income from operations to be distributed to shareholders, net
of taxes in the historical financial statements of SFX. SFX Entertainment
was distributed to certain of the SFX stockholders in the Spin-Off, which
was consummated in April 1998. Consequently, SFX Entertainment will not be
acquired by the Company in the SFX Transactions.
(2) The adjustments represent the combined historical results of operations of
the following station acquisitions and dispositions completed by SFX prior
to the consummation of the SFX Acquisition: WPYX-FM, WHFS-FM, KTXQ-FM,
KRRW-FM, WRFX-FM, WWYZ-FM, WISN-AM, WLTQ-FM, WVGO-FM, WLEE-FM, WKHK-FM,
WBZU-FM, WFBQ-FM, WRZX-FM and WNDE-AM.
(3) The adjustments reflect the combined historical operating results of (i) the
following pending acquisitions, dispositions and LMAs in connection with the
SFX Transactions: Nashville, Austin, Jacksonville, Greenville, Upper
Fairfield, Daytona Beach-WGNE, Houston-KODA, Long Island, Houston-KKPN, and
the stations included in the Chancellor Exchange Agreement and (ii) stations
WJDX-FM and WTAE-AM, which the Company will sell after the consummation of
the SFX Acquisition to comply with the SFX Consent Decree.
(4) The adjustment represents the LMA revenue attributable to the ten SFX
stations to be sold to Chancellor Media in connection with the Chancellor
Exchange Agreement. Chancellor Media will provide services to ten SFX
stations in the Dallas, Houston, San Diego and Pittsburgh markets under
separate LMAs until such stations are exchanged.
(5) The historical interest expense, depreciation and amortization of the
stations to be sold to Chancellor Media pursuant to the Chancellor Exchange
Agreement have been eliminated from the pro forma financial statements as
described in footnote 3, above. In accordance with the Company's policy,
since the Company's ownership costs, comprised of interest expense,
depreciation and amortization, exceed the LMA revenue for these stations,
the entire LMA fee described by footnote 4 above, has been recognized. This
column does not give effect to pro forma interest expense, depreciation and
amortization as a result of the foregoing transactions. Note B to the pro
forma financial statements describes the aggregate adjustment to
depreciation and amortization based upon the purchase accounting for the SFX
Transactions and includes depreciation and amortization related to the
stations included in the Chancellor Exchange. Note J to the pro forma
financial statements describes the aggregate adjustment to interest expense
based upon the financing of the SFX Transactions and includes interest
expense related to the stations included in the Chancellor Exchange.
11
<PAGE> 13
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(O) The schedule below gives effect to the following for the period from
January 1, 1998 through March 31, 1998: (i) acquisitions by the Company
completed prior to March 31, 1998; (ii) the historical acquisitions and
dispositions of the indicated entities consummated prior to March 31,
1998; and (iii) the acquisitions and dispositions of the indicated
entities which were pending at March 31, 1998 and will be consummated
prior to the consummation of the SFX Acquisition.
COMPLETED TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
OTHER
COMPLETED COMPLETED
HISTORICAL TRANSACTIONS TRANSACTIONS
PATTERSON(1) COMBINED(2) COMBINED
------------ ------------ ------------
<S> <C> <C> <C>
Net revenue...................................... $ 3,503 $ 198 $ 3,701
Station operating expenses....................... 2,523 84 2,607
Depreciation and amortization.................... 497 (185) 312
Corporate expenses............................... 171 (45) 126
------- ------- -------
Operating income (loss)........................ 312 344 656
Interest expense................................. 645 3 648
Other (income) expense........................... 3,163 (37) 3,126
------- ------- -------
Net income (loss) from continuing operations... $(3,496) $ 378 $(3,118)
======= ======= =======
</TABLE>
- ---------------
(1) The column represents the results of operations of Patterson from
January 1, 1998 through January 29, 1998, the date of the Patterson
Acquisition.
(2) The column represents the historical results of operations for the
following transactions which will be consummated prior to the
consummation of the SFX Acquisition: (i) the Quass, Commonwealth,
KDOS, Prophet Systems and the Reynolds Acquisitions, (ii) Americom
Disposition and (iii) Allentown, Jackson, Westchester, Dayton and
Salisbury-Ocean City (this disposition actually will be consummated
shortly after the consummation of the SFX Acquisition)
Dispositions.
12
<PAGE> 14
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(P) The column represents the combined income statements for the three months
ended March 31, 1998 of the transactions which (i) SFX completed during
the period, (ii) were pending at March 31, 1998 and have been consummated
by SFX prior to the consummation of the SFX Acquisition and (iii) were
pending at March 31, 1998 and will close subsequent to the consummation
of the SFX Acquisition in connection with the SFX Transactions.
SFX TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
SFX
PENDING SFX
HISTORICAL TRANSACTIONS CHANCELLOR TRANSACTIONS
SFX(1) COMBINED(2) EXCHANGE(3)(4) COMBINED
---------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Net revenue............................. $ 65,751 $(19,408) $12,356 $ 58,699
Station operating expenses.............. 44,636 (14,376) -- 30,260
Depreciation and amortization........... 10,653 (2,284) -- 8,369
Corporate expenses...................... 1,569 -- -- 1,569
Non-cash compensation expense........... 138 -- -- 138
Other operating expenses................ 24,974 -- -- 24,974
-------- -------- ------- --------
Operating income (loss)............ (16,219) (2,748) 12,356 (6,611)
Interest expense........................ 19,190 (4) -- 19,186
Other (income) expense.................. (202) (126) -- (328)
-------- -------- ------- --------
Income (loss) before provision for
income taxes..................... (35,207) (2,618) 12,356 (25,469)
Provision for income taxes.............. 210 -- -- 210
-------- -------- ------- --------
Income (loss) from continuing
operations....................... (35,417) (2,618) 12,356 (25,679)
Redeemable preferred stock dividends and
accretion............................. 10,350 -- -- 10,350
-------- -------- ------- --------
Net income (loss) from continuing
operations applicable to common
stockholders..................... $(45,767) $ (2,618) $12,356 $(36,029)
======== ======== ======= ========
</TABLE>
- ---------------
(1) Excludes the results of operations of SFX Entertainment which were
classified as income from operations to be distributed to
shareholders, net of taxes in the historical financial statements
of SFX. SFX Entertainment was distributed to certain of the SFX
stockholders in the Spin-Off which was consummated in April 1998.
Consequently, SFX Entertainment will not be acquired by the Company
in the SFX Transactions.
(2) The adjustments reflect the combined historical operating results
of (i) the following pending acquisitions, dispositions and LMAs in
connection with the SFX Transactions: Nashville, Austin,
Jacksonville, Greenville, Upper Fairfield, Daytona Beach-WGNE,
Houston-KODA, Long Island, Houston-KKPN and the stations included
in the Chancellor Exchange Agreement and (ii) stations WJDX-FM and
WTAE-AM, which the Company will sell after the consummation of the
SFX Acquisition to comply with the SFX Consent Decree.
(3) The adjustment represents the LMA revenue attributable to the ten
SFX stations to be sold to Chancellor Media in connection with the
Chancellor Exchange Agreement. Chancellor Media will provide
services to ten SFX stations in the Dallas, Houston, San Diego and
Pittsburgh markets under separate LMAs until such stations are
exchanged.
(4) The historical interest expense, depreciation and amortization of
the stations to be sold to Chancellor Media pursuant to the
Chancellor Exchange Agreement have been eliminated from the pro
forma financial statements as described in footnote 2, above. In
accordance with the Company's policy, since the Company's ownership
costs, comprised of interest expense, depreciation and
amortization, exceed the LMA revenue for these stations, the entire
LMA fee described by footnote 3 above, has been recognized. This
column does not give effect to pro forma interest expense,
depreciation and amortization as a result of the foregoing
transactions. Note B to the pro forma financial statements
describes the aggregate adjustment to depreciation and amortization
based upon the purchase accounting for the SFX Transactions and
includes depreciation and amortization related to the stations
included in the Chancellor Exchange Agreement. Note J to the pro
forma financial statements describes the aggregate adjustment to
interest expense based upon the financing of the SFX Transactions
and includes interest expense related to the stations included in
the Chancellor Exchange Agreement.
(Q) The column represents the combined balance sheets as of March 31, 1998 of
the acquisitions and dispositions of the Company which will be
consummated subsequent to March 31, 1998, but prior to the date of the
consummation of the SFX Acquisition, including: Grant Acquisition, KOSO
Acquisition, KDOS Acquisition, Prophet Systems Acquisition, Americom
Acquisition, Westchester Disposition, Americom Disposition and
Salisbury-Ocean City Disposition (this disposition actually will be
consummated shortly after the consummation of the SFX Acquisition).
13
<PAGE> 15
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(R) The adjustments reflect the allocation of the purchase prices, net of the
proceeds from the stations disposed of in connection with the Completed
Transactions, of the Completed Transactions, to the assets acquired and
liabilities assumed resulting in adjustments to property and equipment and
FCC licenses to their estimated fair values and the recording of goodwill
associated with the acquisitions as follows:
<TABLE>
<CAPTION>
ALLOCATION OF CARRYING
PURCHASE PRICES(1)(2) VALUE ADJUSTMENTS
--------------------- -------- -----------
<S> <C> <C> <C>
Cash and cash equivalents.................... $ -- $ 1,664 $(1,664)
Accounts receivable, net..................... 380 3,553 (3,173)
Prepaid expenses and other................... -- 3,433 (3,433)
Property and equipment, net.................. 4,785 (1,123) 5,908
Intangible and other assets, net............. 14,907 (12,073) 26,980
Accounts payable and other accrued
expenses................................... -- (1,395) (1,395)
-------
Total purchase prices................... $20,072
=======
</TABLE>
- ---------------
(1) Included in the allocation of purchase prices to the intangibles and
other assets acquired, approximately $12,671 relates to FCC licenses
and $2,236 relates to goodwill.
(2) The significant components of the Company's deferred tax assets and
liabilities on a pro forma basis after giving effect to the Completed
Transactions as of March 31, 1998 are as follows:
<TABLE>
<S> <C>
Deferred tax liabilities:
Property and equipment basis differences and related
depreciation............................................ $ 2,094
FCC licenses and other intangible asset basis differences
and related amortization................................ 289,603
--------
Total deferred tax liabilities...................... 291,697
Deferred tax assets:
Miscellaneous............................................. 4,307
Unamortized discount of long-term debt.................... 10,589
Net operating loss carryforwards.......................... 42,660
--------
Total deferred tax assets........................... 57,556
Valuation allowance for deferred tax assets............... --
--------
Net deferred tax asset.............................. 57,556
--------
Net deferred tax liability.......................... $234,141
========
</TABLE>
(S) Adjustments represent available cash which will be used in connection with
the SFX Transactions.
(T) The adjustment represents the dividend due to Capstar Broadcasting Corp.
issued in connection with the Westchester Disposition of $10,500.
(U) The adjustments reflect (i) the completion of the April 1998 tender offer
of the 13 1/4% Capstar Notes of $80,964, including accrued interest of
$2,740, and (ii) the elimination of the historical debt of the stations
acquired in the Completed Transactions of $7,809, including the current
portion of $2,793.
(V) The adjustment reflects the extraordinary charge on the early
extinguishment of debt of $4,689, net of tax benefit of $2,107, related to
the purchase of the 13 1/4% Capstar Notes in the period the refinancing
occurred.
(W) The adjustments reflect (i) the net effect of the elimination of the
historical deficit of $13,750 of the Completed Transactions, based on the
purchase method of accounting, (ii) an equity investment in April 1998 by
Hicks Muse of $50,000, (iii) equity investments by Capstar BT Partners,
L.P. in April 1998 and Gerry House of $26,674 and $500, respectively, and
(iv) Class A Common Stock of Capstar Broadcasting to be issued sometime
after the Offering in connection with the Prophet Systems Acquisition
valued at $10,000 (based upon the issuance of 285,714 shares of Class A
Common Stock of Capstar Broadcasting with a deemed value of $35.00 per
share).
14
<PAGE> 16
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(X) The column represents the combined balance sheets as of March 31, 1998 of
SFX and the acquisitions and dispositions which will be completed in
connection with the SFX Transactions.
SFX TRANSACTIONS COMBINED
<TABLE>
<CAPTION>
SFX SFX
HISTORICAL PENDING TRANSACTIONS
SFX(1) TRANSACTIONS(2) COMBINED
---------- --------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 38,464 $ 68 $ 38,532
Accounts receivable, net................. 64,447 1,228 65,675
Prepaid expenses and other............... 167,437 74 167,511
---------- --------- ----------
Total current assets............. 270,348 1,370 271,718
Property and equipment, net................ 75,296 (7,515) 67,781
Intangible and other assets, net(3)........ 1,048,251 (116,715) 931,536
---------- --------- ----------
Total assets..................... $1,393,895 $(122,860) $1,271,035
========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued
expenses.............................. $ 179,261 $ 545 $ 179,806
Current portion of long-term debt........ 617 -- 617
---------- --------- ----------
Total current liabilities........ 179,878 545 180,423
Long-term debt, less current portion....... 763,985 -- 763,985
Other long-term liabilities................ 77,781 -- 77,781
---------- --------- ----------
Total liabilities................ 1,021,644 545 1,022,189
Redeemable preferred stock................. 376,615 -- 376,615
Minority interest.......................... 56,200 -- 56,200
Stockholders' deficit...................... (60,564) (123,405) (183,969)
---------- --------- ----------
Total liabilities and
stockholders' equity........... $1,393,895 $(122,860) $1,271,035
========== ========= ==========
</TABLE>
- ---------------
(1) In connection with the SFX Transaction, a portion of the 10 3/4% SFX Notes
and the 11 3/8% SFX Notes will remain outstanding. Neither the Company, nor
any of its subsidiaries, excluding SFX and its subsidiaries, will guarantee
the aforementioned notes.
(2) The column reflects the combined balance sheets of (i) the following
entities to be acquired or sold in connection with the SFX Transactions:
Nashville, Austin, Jacksonville, Greenville, Upper Fairfield, Daytona
Beach-WGNE, Houston-KODA, Long Island and Houston-KKPN and (ii) stations
WJDX-FM and WTAE-AM, which the Company will sell after the consummation of
the SFX Acquisition to comply with the SFX Consent Decree.
(3) Historical intangible and other assets, net includes the $11,454 of net
assets of SFX Entertainment which were classified in the historical
financial statements of SFX as net assets to be distributed to
shareholders. These assets were distributed in the Spin-Off in April of
1998 and no value has been assigned to the SFX Entertainment assets in the
purchase accounting for the SFX Transactions described in pro forma note Y.
15
<PAGE> 17
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(Y) The adjustment reflects (i) the increase of $31,820 in carrying value of
the 10 3/4% SFX Notes to their estimated fair value of $327,820, (ii) the
increase of $10,266 in carrying value of the 12 5/8% SFX Preferred Stock
to their estimated fair value of $125,469, and (iii) the allocation of the
purchase prices, net of the proceeds from the stations disposed of in
connection with the SFX Transactions, of the SFX Transactions to the
assets acquired and liabilities assumed resulting in adjustments to
property and equipment and FCC licenses to their estimated fair values and
the recording of goodwill associated with the acquisitions as follows:
<TABLE>
<CAPTION>
ALLOCATION OF CARRYING
PURCHASE PRICES(1)(2) VALUE ADJUSTMENTS
--------------------- --------- -----------
<S> <C> <C> <C>
Cash and cash equivalents.................... $ 38,464 $ 38,532 $ (68)
Accounts receivable, net..................... 64,447 65,675 (1,228)
Prepaid expenses and other................... 129,169 167,511 (38,342)
Property and equipment, net.................. 88,298 67,781 20,517
Intangible and other assets, net(3).......... 2,546,351 931,536 1,614,815
Accounts payable and other accrued
expenses................................... (179,261) (179,806) (545)
Other long-term liabilities.................. (522,797) (77,781) 445,016
Minority interest............................ -- (56,200) (56,200)
----------
Total purchase prices.............. $2,164,671
==========
</TABLE>
--------------------
(1) Of the allocation of purchase prices to the intangibles and other
assets acquired, approximately $1,877,872 relates to FCC licenses and
$668,479 relates to goodwill. In connection with the allocation of
$1,877,872 to FCC licenses, the Company recorded an additional
deferred tax liability of $445,016 to other long-term liabilities.
(2) The significant components of the Company's deferred tax assets and
liabilities on a pro forma basis after giving effect to the SFX
Transactions as of March 31, 1998 are as follows:
<TABLE>
<S> <C>
Deferred tax liabilities:
Property and equipment basis differences and related
depreciation............................................ $ 2,778
FCC licenses and other intangible asset basis differences
and related amortization................................ 869,313
--------
Total deferred tax liabilities...................... 872,091
Deferred tax assets:
Miscellaneous............................................. 37,939
Unamortized discount of long-term debt.................... 10,589
Net operating loss carryforwards.......................... 66,625
--------
Total deferred tax assets........................... 115,153
Valuation allowance for deferred tax assets............... --
--------
Net deferred tax asset.............................. 115,153
--------
Net deferred tax liability.......................... $756,938
========
</TABLE>
(3) In connection with the SFX Transactions, no value has been assigned to
the net assets of SFX Entertainment which were distributed to certain
of the SFX stockholders in the Spin-Off in April of 1998. Prior to the
SFX Transactions, the net assets of SFX Entertainment of $11,454 were
classified in the historical financial statements of SFX as net assets
to be distributed to shareholders. This amount is included in
intangible and other assets, net in the table above.
(Z) The adjustment represents the dividend due to Capstar Broadcasting Corp.
issued in connection with the Upper Fairfield Disposition of $4,500.
(AA) The adjustment represents the estimated deferred financing costs of $9,750
incurred in connection with the Capstar Credit Facility.
(BB) The adjustments reflect (i) the redemption of $154,000 aggregate principal
amount of the 10 3/4% SFX Notes and the payment of related accrued
interest of $6,208 and (ii) the repayment of borrowings under the SFX's
credit facility of $313,000. A portion of the 10 3/4% SFX Notes and the
11 3/8% SFX Notes will remain outstanding. Neither the Company, nor any of
its subsidiaries, excluding SFX and its subsidiaries, will guarantee the
aforementioned notes.
16
<PAGE> 18
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(CC) The adjustments reflect (i) borrowings by Capstar Broadcasting Corp. of
$150,000 under the Chancellor Note and (ii) borrowings of $811,762 under
the Capstar Credit Facility with a weighted average annual interest rate
of 9 3/4%.
(DD) The adjustment reflects (i) the purchase and cancellation of SFX's Series
B Redeemable Preferred Stock, Series C Redeemable Preferred Stock, and
Series D Cumulative Convertible Exchangeable Preferred Stock with a
carrying value of $146,209 in connection with the SFX Acquisition and (ii)
the redemption of the 12 5/8% SFX Preferred Stock with a carrying value of
$115,203 in connection with the Financing.
(EE) The adjustment reflects the net effect of the elimination of the
historical deficit of $183,969 of the SFX Transactions based on the
purchase method of accounting.
(FF) The adjustment reflects proceeds of $552,536 from the Offering, net of
estimated fees and expenses. As of June 30, 1998, the net proceeds
recorded from the Offering is $551,308.
17
<PAGE> 19
GLOSSARY OF CERTAIN TERMS
"9 1/4% Capstar Notes" means $200.0 million in aggregate principal amount
of Capstar Radio's 9 1/4% Senior Subordinated Notes due 2007.
"9 1/4% Capstar Notes Indenture" means the indenture governing the 9 1/4%
Capstar Notes.
"10 3/4% SFX Notes" means $450.0 million in aggregate principal amount of
SFX's 10 3/4% Senior Subordinated Notes due 2006.
"10 3/4% SFX Notes Indenture" means the indenture governing the 10 3/4% SFX
Notes.
"11 3/8% SFX Notes" means $566,000 in aggregate principal amount of SFX's
11 3/8% Senior Subordinated Notes due 2000.
"11 3/8% SFX Notes Indenture" means the indenture governing the 11 3/8% SFX
Notes.
"12% Capstar Partners Exchange Debentures" means the Company's 12%
Subordinated Exchange Debentures due 2009.
"12% Capstar Partners Exchange Indenture" means the indenture governing the
12% Capstar Partners Exchange Debentures.
"12% Capstar Partners Preferred Stock" means up to 10,000,000 shares of
preferred stock, $.01 par value per share, of the Company.
"12 3/4% Capstar Notes" means $277.0 million in aggregate principal amount
at maturity of the Company's 12 3/4% Senior Discount Notes due 2009.
"12 3/4% Capstar Notes Indenture" means the indenture governing the 12 3/4%
Capstar Notes.
"12 5/8% SFX Exchange Debentures" means SFX's 12 5/8% Subordinated Exchange
Debentures due 2009.
"12 5/8% SFX Exchange Indenture" means the indenture governing the 12 5/8%
SFX Exchange Debentures.
"12 5/8% SFX Preferred Stock" means up to 2,250,000 shares of Series E
Cumulative preferred stock, $.01 par value per share, of SFX.
"13 1/4% Capstar Notes" means $76.8 million in accreted principal amount of
Capstar Radio 13 1/4% senior subordinated notes.
"Allentown Disposition" means the disposition of radio stations WODS-FM and
WEEX-AM serving the Easton, Pennsylvania market to Clear Channel.
"American General Acquisition" means the acquisition of radio station
KKCL-FM from American General Media of Texas, Inc. serving the Lubbock, Texas
market.
"Americom Acquisition" means the acquisition from Americom II and Americom
Las Vegas Limited Partnership of four radio stations (three FM and one AM)
serving the Fresno, California market, three of which were acquired for cash and
one of which was acquired in consideration for the disposition of three radio
stations (two FM and one AM) of the Company.
"Americom Disposition" means the disposition of three radio stations (two
FM and one AM) serving the Reno, Nevada market to Americom Las Vegas Limited
Partnership.
"Ameron" means radio stations WMJJ-FM and WERC-AM in Birmingham, Alabama
and radio station WOWC-FM serving the Jasper, Alabama market.
"Ameron Acquisition" means the acquisition of radio stations WMJJ-FM and
WERC-AM in Birmingham, Alabama and radio station WOWC-FM from Ameron
Broadcasting, Inc. serving the Jasper, Alabama market.
"Austin Acquisition" means the pending acquisition of radio stations
KVET-AM, KASE-FM and KVET-FM from Butler Broadcasting Company, Ltd. serving the
Austin, Texas market.
G-1
<PAGE> 20
"Benchmark" means Benchmark Communications Radio Limited Partnership L.P.
"Benchmark Acquisition" means the 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.
"Big Chief Acquisition" means the Company's pending acquisition of radio
stations KTCS-FM/AM from Big Chief Broadcasting Co. serving the Fort Smith,
Arkansas market.
"Booneville Acquisition" means the acquisition of radio station KZBB-FM
from Booneville Broadcasting Company and Oklahoma Communications Company serving
the Ft. Smith, Arkansas market.
"Bryan Disposition" means the disposition of substantially all of its
assets used or useful in the operation of two of the Company's radio stations in
the College Station, Texas market.
"Burlington Acquisition" means the Company's pending acquisition of radio
stations WXPS-FM and WCPV-FM in Vergennes, Vermont and Essex, New York,
respectively, and the assumption of a local marketing agreement to provide
programming for radio station WEAV-AM in Plattsburgh, New York.
"Capstar Broadcasting" means Capstar Broadcasting Corporation, a Delaware
corporation and parent of the Company.
"Capstar Credit Facility" means that certain credit agreement to be entered
into among Capstar Radio, as the borrower, the Company and Capstar Broadcasting,
as the guarantors, and the financial institutions party thereto, as more fully
described in "Description of Indebtedness -- Capstar Credit Facility."
"Capstar Partners Certificate of Designation" means the certificate of
designation governing the 12% Capstar Partners Preferred Stock.
"Capstar Radio" means Capstar Radio Broadcasting Partners, Inc., a Delaware
corporation and a direct subsidiary of the Company.
"Cavalier Acquisition" means the acquisition of substantially all of the
assets of Cavalier Communications, L.P.
"Champion Acquisition" means the Company's pending acquisition from
Champion Broadcasting Corporation, et al of radio stations KCDQ-FM, KCHX-FM and
KMRK-FM serving the Midland, Texas market; KMML-FM, KBUY-FM, KNSY-FM and KIXZ-AM
serving the Amarillo, Texas market; and KRRV-FM, KKST-FM, KZMZ-FM and KDBS-AM
serving the Alexandria, Louisiana market.
"Chancellor Exchange Agreement" means that certain letter agreement dated
as of February 20, 1998, as amended, between Chancellor Media Corporation of Los
Angeles and Capstar Broadcasting.
"Chancellor Loan" means the amount the Company expects to borrow on the
Chancellor Note, under the Chancellor Exchange Agreement.
"Chancellor Media" means Chancellor Media Corporation, a Delaware
corporation.
"Chancellor Note" a note that evidences Capstar Broadcasting's borrowing of
$150 million from Chancellor Media, which bears interest at a rate of 12% per
annum (subject to increase in certain circumstances), payable quarterly, of
which 1/6 shall, at the Capstar Broadcasting's option, either be payable in cash
or added to the principal amount of such note.
"Class Act Acquisition" means the Company's pending acquisition of KTBQ-FM
and KSFA-AM from Class Act of Texas, Inc. serving the Nacogdoches, Texas market.
"COMCO Acquisition" means the acquisition of substantially all of the
assets of COMCO Broadcasting, Inc.
"Commodore Acquisition" means the acquisition of Commodore Media, Inc.
G-2
<PAGE> 21
"Commonwealth Acquisition" means the acquisition of substantially all of
the assets of Commonwealth Broadcasting of Arizona, L.L.C.
"Communications Act" means the Communications Act of 1934, as amended.
"Community Pacific" means Community Pacific Broadcasting Company L.P.
"Community Pacific Acquisition" means the acquisition of substantially all
of the assets of Community Pacific Broadcasting Company L.P.
"Company" means Capstar Broadcasting Partners, Inc. and its subsidiaries
after giving effect to the consummation of the SFX Transactions, unless the
context otherwise requires.
"Completed Acquisitions" means the American General Acquisition, the
Americom Acquisition, the Ameron Acquisition, the Benchmark Acquisition, the
Booneville Acquisition, the Cavalier Acquisition, the COMCO Acquisition, the
Commodore Acquisition, the Commonwealth Acquisition, the Community Pacific
Acquisition, the East Penn Acquisition, the Emerald City Acquisition, the Grant
Acquisition, the Griffith Acquisition, the GulfStar Acquisition, the KDOS
Acquisition, the KJEM Acquisition, the KLAW Acquisition, the Knight Acquisition,
the KOSO Acquisition, the Livingston Acquisition, the Madison Acquisition, the
McForhun Acquisition, the Osborn Acquisition, the Osborn Huntsville Acquisition,
the Osborn Tuscaloosa Acquisition, the Patterson Acquisition, the Quass
Acquisition, the Reynolds Acquisition, the Space Coast Acquisition, the WRIS
Acquisition and the Prophet Systems Acquisition.
"Completed Dispositions" means the Allentown Disposition, the Americom
Disposition, the Bryan Disposition, the Dayton Disposition, the Jackson
Disposition, the KASH Disposition, the Osborn Ft. Myers Disposition, the
Salisbury-Ocean City Disposition, the Westchester Disposition and the Wilmington
Disposition.
"Completed Transactions" means the Completed Acquisitions and the Completed
Dispositions.
"Dayton Disposition" means the disposition of radio station WING-FM serving
the Dayton, Ohio market.
"Daytona Beach-WGNE Disposition" means the Company's pending disposition of
radio station WGNE-FM serving the Daytona Beach, Florida market.
"East Penn Acquisition" means the acquisition of radio station WKAP-AM from
East Penn Broadcasting, Inc. serving the Allentown, Pennsylvania market.
"Emerald City Acquisition" means the acquisition of radio station WNOK-FM
from Emerald City Radio Partners, L.P. serving the Columbia, South Carolina
market.
"Fairbanks Acquisition" means the Company's pending acquisition of radio
station KUAB-FM from the University of Alaska Fairbanks serving the Fairbanks,
Alaska market.
"FCC" means the United States Federal Communications Commission.
"Financing" means, collectively, (i) the Offering, (ii) cash on hand, (iii)
the proceeds from the sale of certain radio stations, (iv) borrowings of $150
million from Chancellor Media Corporation, and (v) borrowings under the Capstar
Credit Facility of $811.4 million.
"GAAP" means generally accepted accounting principles.
"Gibbons Acquisition" means the Company's pending acquisition of all of the
common stock of Jim Gibbons Radio, Inc., a Maryland corporation, and Jim Gibbons
Radio, Inc., a Virginia corporation, which own and operate four radio stations
(two FM and two AM) serving the Frederick, Maryland and Roanoke, Virginia.
"Grant Acquisition" means the acquisition of radio station WZBQ-FM from
Grant Radio Group serving the Tuscaloosa, Alabama market.
G-3
<PAGE> 22
"Greenville Disposition" means the Company's pending disposition of radio
stations WESC-FM, WESC-AM, WTPT-FM and WJMZ-FM serving the Greenville, South
Carolina market.
"Griffith Acquisition" means the acquisition of radio stations WTAK-FM,
WXQW-FM and WWXQ-FM from Griffith Communications Corporation serving the
Huntsville, Alabama market.
"GulfStar Acquisition" means the merger of GulfStar with and into a
subsidiary of the Company, pursuant to which the subsidiary was the surviving
corporation and was named GulfStar Communications, Inc.
"Houston-KKPN Disposition" means the Company's pending disposition of radio
station KKPN-FM serving the Houston, Texas market.
"Houston-KODA Disposition" means the Company's pending disposition of radio
station KODA-FM serving the Houston, Texas market.
"Indentures" means the 9 1/4% Capstar Notes Indenture, the 10 3/4% SFX
Notes Indenture, 11 3/8% SFX Notes Indenture, 12% Capstar Partners Exchange
Indenture, the 12 3/4% Capstar Notes Indenture and the 12 5/8% SFX Exchange
Indenture.
"Jackson Disposition" means the disposition of radio stations WJMI-FM,
WOAD-FM, WKXI-FM and WKXI-AM serving the Jackson, Mississippi market.
"Jacksonville Acquisition" means the Company's pending acquisition of radio
stations WAPE-FM and WFYV-FM serving the Jacksonville, Florida market.
"JSA" means joint sales agreement.
"KASH Disposition" means the disposition of radio station KASH-AM serving
the Anchorage, Alaska market to Chinook Concert Broadcasters, Inc.
"KATQ Acquisition" means the Company's pending acquisition of KTFS-AM and
KTWN-FM from KATQ Radio, Inc. serving the Texarkana, Texas and Texarkana,
Arkansas market.
"KDOS Acquisition" means the acquisition of radio stations KSAB-FM and
KUNO-AM from KDOS, Inc. serving the Corpus Christi, Texas market.
"KJEM Acquisition" means the acquisition of KJEM-FM.
"KLAW Acquisition" means the acquisition of radio stations KLAW-FM and
KZCD-FM from KLAW Broadcasting, Inc. serving the Lawton, Oklahoma market.
"Knight Acquisition" means the acquisition of substantially all of the
assets of Knight Radio, Inc., Knight Broadcasting of New Hampshire, Inc. and
Knight Communications Corp.
"KOSO Acquisition" means the acquisition of radio station KOSO-FM from
KOSO, Inc. serving the Patterson, California market.
"KRNA Acquisition" means the Company's pending acquisition of radio station
KRNA-FM from KRNA, Inc. serving the Iowa City, Iowa market.
"Livingston Acquisition" means the acquisition of radio station WBIU-AM
from Livingston Communications, Inc. serving the Denham Springs, Louisiana
market.
"LMA" means local marketing agreement.
"Long Island Disposition" means the Company's pending disposition of radio
stations WBLI-FM, WBAB-FM, WGBB-AM and WHFM-FM serving the Long Island, New York
market.
"Madison" means the Madison Radio Group which is comprised of the stations
formerly owned by Midcontinent Broadcasting Co. of Wisconsin, Inc. and Point
Communications Limited Partnership.
G-4
<PAGE> 23
"Madison Acquisition" means the acquisition of substantially all of the
assets of The Madison Radio Group which is comprised of the stations formerly
owned by Midcontinent Broadcasting Co. of Wisconsin, Inc. and Point
Communications Limited Partnership.
"McForhun Acquisition" means the acquisition of radio station KRVE-FM from
McForhun, Inc. serving the Brusly, Louisiana market.
"Nashville Acquisition" means SFX's acquisition of radio stations WJZC-FM,
WLAC-FM and WLAC-AM from Sinclair Broadcasting Group serving the Nashville,
Tennessee market.
"Noalmark Acquisition" means the Company's option to acquire radio stations
KKTX-FM and KKTX-AM from Noalmark Broadcasting Corporation serving the Longview,
Texas market.
"Notes" means the 9 1/4% Capstar Notes, the 10 3/4% SFX Notes, 11 3/8% SFX
Notes, 12% Capstar Partners Exchange Debentures, the 12 3/4% Capstar Notes and
the 12 5/8% SFX Exchange Debentures.
"Offering" means the Capstar Broadcasting's offering of 31,000,000 shares
of its Class A common stock, par value $0.01 per share.
"Osborn" means Osborn Communications Corporation.
"Osborn Acquisition" means the acquisition of Osborn Communications
Corporation.
"Osborn Ft. Myers Disposition" means the 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.
"Osborn Huntsville Acquisition" means the acquisition of Dixie
Broadcasting, Inc. and Radio WBHP, Inc.
"Osborn Tuscaloosa Acquisition" means the acquisition of Taylor
Communications Corporation.
"Other Equity Transactions" means (i) the Completed Transactions and
(ii)(A) an equity investment by Hicks Muse, (B) an equity investment by Capstar
BT Partners, L.P., (C) a stock subscription receivable from Gerry House and (D)
the completed tender offer for the 13 1/4% Capstar Notes.
"Patterson" means Patterson Broadcasting, Inc.
"Patterson Acquisition" means the acquisition of all of the outstanding
capital stock of Patterson Broadcasting, Inc.
"Pending Acquisitions" means the Burlington Acquisition, the Champion
Acquisition, the Class Act Acquisition, the Fairbanks Acquisition, the KRNA
Acquisition, the Noalmark Acquisition, the Portsmouth Acquisition and the
Shreveport-KMJJ Acquisition.
"Portsmouth Acquisition" means the Company's pending acquisition of radio
stations WSRI-FM, WZNN-AM, WERZ-FM and WMYF-AM from American Radio Systems
serving the Portsmouth-Dover-Rochester, New York.
"Prophet Systems Acquisition" means the acquisition of substantially all of
the assets of Prophet Systems, Inc.
"Quass Acquisition" means the acquisition of all of the outstanding capital
stock of Quass Broadcasting Company.
"Reynolds Acquisition" means the acquisition of radio station WMHS-FM from
Joan K. Reynolds, d/b/a Brantley Broadcast Associates serving the Birmingham,
Alabama market.
"Salisbury-Ocean City Disposition" means the pending disposition of radio
stations WWFG-FM and WOSC-FM serving the Salisbury-Ocean City, Maryland market,
which will close after the SFX Acquisition.
"SFX" means SFX Broadcasting, Inc.
G-5
<PAGE> 24
"SFX Acquisition" means the Company's pending acquisition of SFX
Broadcasting, Inc.
"SFX Certificate of Designation" means the certificate of designation
governing the 12 5/8% SFX Preferred Stock.
"SFX Jackson/Biloxi Acquisition" means the Company's pending acquisition of
six radio stations (five FM and one AM) from SFX serving the Jackson and Biloxi,
Mississippi markets.
"SFX Related Transactions" means (i) the programming of ten SFX stations
by, and the eventual sale of such stations to, Chancellor Media pursuant to the
Chancellor Exchange Agreement; (ii) the Austin Acquisition, the Jacksonville
Acquisition, the Nashville Acquisition, the Daytona Beach-WGNE Disposition, the
Greenville Disposition, the Houston-KKPN Disposition, the Houston-KODA
Disposition, the Long Island Disposition and the Upper Fairfield Disposition;
and (iii) the sale of SFX stations WTAE-AM and WJDX-FM after the consummation of
the SFX Acquisition.
"SFX Transactions" means the SFX Acquisition and the SFX Related
Transactions.
"Shreveport-KMJJ Acquisition" means the pending acquisition of radio
station KMJJ-FM from SunGroup, Inc, et. al. serving the Shreveport, Louisiana
market.
"Space Coast Acquisition" collectively refers to the acquisitions of
substantially all of the assets of EZY Com, Inc., City Broadcasting Co., Inc.,
and Roper Broadcasting, Inc.
"Upper Fairfield Disposition" means the pending conveyance of radio
stations WKRI-FM, WAXB-FM, WPUT-AM and WINE-AM serving the Fairfield County,
Connecticut market to a limited liability company in exchange for a 30%
non-voting membership interest in such limited liability company. Pending FCC
approval, the stations will be placed in trust shortly before the consummation
of the SFX Acquisition.
"Westchester Disposition" means the conveyance of radio stations WFAS-FM,
WFAS-AM and WZZN-FM serving the Westchester-Putnam Counties, New York market to
a limited liability company in exchange for a 30% non-voting membership interest
in such limited liability company.
"Wilmington Disposition" means the conveyance of radio station WJBR-FM
serving the Wilmington, Delaware market to a limited liability company in
exchange for a 30% non-voting membership interest in such limited liability
company.
"WRIS Acquisition" means the acquisition of WJLM-FM from WRIS, Inc. serving
the Salem, Virginia market.
G-6
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
CAPSTAR BROADCASTING PARTNERS, INC.
(Registrant)
By: /s/ PAUL D. STONE
------------------------------------
Name: Paul D. Stone
Title: Executive Vice President
Date: August 12, 1998
