<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 15, 1999
------------------------
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
-------------------------------------------
(Exact Name of Registrant as
Specified in Charter)
333-32259
---------
(Commission File No.)
75-2451687
----------
(IRS Employer
Identification No.)
Delaware
--------
(State or Other Jurisdiction
of Incorporation)
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, Texas 75201
-------------------
(Address of Principal
Executive Offices)
(214) 922-8700
--------------
(Registrant's telephone
number, including area code)
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.
On September 15, 1999, Chancellor Media Corporation of Los Angeles("CMCLA"), an
indirect wholly-owned subsidiary of AMFM Inc. (formerly Chancellor Media
Corporation) consummated the sale of all of the outstanding common stock of
Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor
Corporation, which together held all of AMFM Inc.'s assets used in its outdoor
advertising business, to Lamar Advertising Company ("Lamar"). Under the terms of
the stock purchase agreement and related agreements, CMCLA received cash
proceeds of $700.0 million, subject to a net working capital adjustment, and
26,227,273 shares of Lamar Class A common stock, par value $.01 per share. The
sales price was determined by AMFM through arms-length negotiations with Lamar.
2
<PAGE> 3
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
7(a) Financial Statements of Businesses Acquired
The historical financial statements for Lamar Advertising Company as of
December 31, 1998 and 1997 and for the years ended December 31, 1998
and 1997, the two months ended December 31, 1996 and the year ended
October 31, 1996 have been previously filed by AMFM Inc. pursuant to
AMFM Inc.'s Registration Statement on Form S-4, as amended (Reg. No.
333-80173) and thus, pursuant to General Instruction B.3 of Form 8-K,
are not required to be reported again in the Current Report on Form
8-K. The unaudited financial statements for Lamar Advertising Company
as of June 30, 1999 and for the six months ended June 30, 1999 and 1998
are filed herewith beginning on page F-1.
7(b) Unaudited Pro Forma Financial Information
Unaudited pro forma financial information required pursuant to Article
11 of Regulation S-X as of June 30, 1999 and for the year ended
December 31, 1998 and the six months ended June 30, 1999 is filed
herewith beginning on page P-1.
7(c) Exhibits
2.57(a) -- Stock Purchase Agreement, dated as of June 1, 1999, by
and between Lamar Advertising Company and Chancellor
Media Corporation of Los Angeles.
2.58(a) -- Subscription Agreement, dated as of June 1, 1999,
by and between Lamar Advertising Company and
Chancellor Media Corporation of Los Angeles.
2.59(a) -- Voting Agreement, dated as of June 1, 1999, by and
among Lamar Advertising Company, Chancellor Media
Corporation of Los Angeles and Reilly Family
Limited Partnership.
2.61(b) -- Second Amended and Restated Stock Purchase Agreement
dated as of August 11, 1999 by and among Lamar
Advertising Company, Lamar Media Corp., Chancellor
Mezzanine Holdings Corporation and Chancellor Media
Corporation of Los Angeles.
2.62(b) -- Registration Rights Agreement dated as of
August 11, 1999 among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles and
Chancellor Mezzanine Holdings Corporation.
2.63(b) -- Stockholders Agreement dated as of August 11, 1999
among Lamar Advertising Company and certain of its
stockholders.
2.64(b) -- Second Amended and Restated Voting Agreement, dated as
of August 11, 1999, among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles, Chancellor
Mezzanine Holdings Corporation and Reilly Family
Limited Partnership.
- ---------------------------
(a) Incorporated by reference to Exhibits 2.1, 2.2 and 2.3 to the Current
Report on Form 8-K of Chancellor Media Corporation, filed on
June 8, 1999.
(b) Incorporated by reference to the Quarterly Report on Form 10-Q of AMFM
Inc. for the quarterly period ending June 30, 1999.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Chancellor Media Corporation of Los Angeles has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Chancellor Media Corporation of Los Angeles
By: /s/ W. Schuyler Hansen
--------------------------
W. Schuyler Hansen
Senior Vice President and
Chief Accounting Officer
Date: September 29, 1999
4
<PAGE> 5
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 4,249 $ 128,597
Receivables
Trade accounts, net 45,534 39,681
Affiliates, related parties
and employees 564 378
Other 495 321
---------- ----------
Net receivables 46,593 40,380
Prepaid expenses 13,321 12,346
Other current assets 2,327 1,736
---------- ----------
Total current assets 66,490 183,059
---------- ----------
Property, plant and equipment 723,828 661,324
Less accumulated depreciation
and amortization (177,700) (153,972)
---------- ----------
Net property, plant and equipment 546,128 507,352
---------- ----------
Intangible assets 781,217 705,934
Receivables - noncurrent 3,632 1,972
Other assets 13,467 15,060
---------- ----------
Total assets 1,410,934 1,413,377
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 4,325 4,258
Accrued expenses 25,870 25,912
Current maturities of long-term
debt 4,078 49,079
Deferred income 8,261 9,589
---------- ----------
Total current liabilities 42,534 88,838
Long-term debt 885,306 827,453
Deferred tax liability 21,848 25,613
Deferred income 1,283 1,293
Other liabilities 4,833 3,401
---------- ----------
Total liabilities 955,804 946,598
---------- ----------
(continued)
</TABLE>
F-1
<PAGE> 6
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
<S> <C> <C>
STOCKHOLDERS' EQUITY
Class A preferred stock, par value $638, $63.80 cumulative dividends,
authorized 10,000 shares; 5,719.49 shares issued and outstanding at June
30, 1999, and December 31, 1998, respectively 3,649 3,649
Class A common stock, $.001 par value, authorized 125,000,000 shares; issued
and outstanding 43,568,340 shares and 43,392,876 shares at June 30, 1999,
and December 31, 1998, respectively 44 43
Class B common stock, $.001 par value, authorized 37,500,000 shares; issued and
outstanding 17,699,997 shares at June 30, 1999, and December 31, 1998 18 18
Additional paid in capital 509,952 505,644
Accumulated deficit (58,533) (42,575)
----------- -----------
Stockholders' equity 455,130 466,779
----------- -----------
Total liabilities and
stockholders' equity $ 1,410,934 1,413,377
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F-2
<PAGE> 7
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues $ 97,809 $ 69,675 $ 183,575 $ 128,072
- ------------ ------------ ------------ ------------ ------------
Operating expenses
Direct advertising expenses 30,481 21,609 60,245 42,439
Selling, general and administrative expenses 20,754 15,008 40,853 28,224
Depreciation and amortization 32,652 19,491 64,213 37,096
------------ ------------ ------------ ------------
83,887 56,108 165,311 107,759
------------ ------------ ------------ ------------
Operating income 13,922 13,567 18,264 20,313
------------ ------------ ------------ ------------
Other expense (income)
Interest income (269) (129) (955) (236)
Interest expense 18,234 13,915 36,379 27,241
(Gain) loss on disposition of assets (141) 709 (477) 392
------------ ------------ ------------ ------------
17,824 14,495 34,947 27,397
------------ ------------ ------------ ------------
Loss before income taxes and cumulative effect
of a change in accounting principle (3,902) (928) (16,683) (7,084)
Income tax expense (benefit) 1,076 142 (1,766) (1,423)
------------ ------------ ------------ ------------
Loss before cumulative effect of a change
in accounting principle (4,978) (1,070) (14,917) (5,661)
------------ ------------ ------------ ------------
Cumulative effect of a change in accounting
principle -- -- (767) --
------------ ------------ ------------ ------------
Net loss (4,978) (1,070) (15,684) (5,661)
Preferred stock dividends 183 183 274 274
------------ ------------ ------------ ------------
Net loss applicable to common stock (5,161) (1,253) (15,958) (5,935)
------------ ============ ============ ============
Loss before cumulative effect of a change in
accounting principle per common share -
basic and diluted $ (.08) $ (.02) $ (.25) $ (.12)
============ ============ ============ ============
Cumulative effect of a change in accounting
principle, net of tax, per common share -
basic and diluted $(--) $(--) $ (.01) $(--)
============ ============ ============ ============
Net loss per common share - basic $ (.08) $ (.02) $ (.26) $ (.12)
============ ============ ============ ============
Net loss per common share - diluted $ (.08) $ (.02) $ (.26) $ (.12)
============ ============ ============ ============
Weighted average common shares outstanding 61,227,406 48,802,640 61,185,610 48,080,862
Incremental common shares from dilutive stock
options -- -- -- --
------------ ------------ ------------ ------------
Weighted average common shares assuming dilution 61,227,406 48,802,640 61,185,610 48,080,862
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE> 8
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net loss applicable to common
stock $ (5,161) $ (1,253) $(15,958) $ (5,935)
Other comprehensive income (loss) unrealized
loss on investment securities (net
of deferred tax benefit of $0 and $84
for the three months ended June 30,
1999 and 1998, respectively and $0 and
$217 for the six months ended June 30, 1999
and 1998, respectively.) -- (137) -- 354
-------- -------- -------- --------
Comprehensive Income (loss) $ (5,161) $ (1,390) $(15,958) $ (5,581)
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE> 9
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (15,684) $ (5,661)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 64,213 37,096
(Gain) loss on disposition of assets (477) 392
Deferred taxes (4,469) (654)
Provision for doubtful accounts 500 703
Changes in operating assets and liabilities:
Decrease (Increase) in:
Receivables (6,945) (1,042)
Prepaid expenses (150) (295)
Income taxes refundable 1,086 (1,854)
Other assets (63) (1,214)
Increase (Decrease) in:
Trade accounts payable 67 200
Accrued expenses (4,441) (1,420)
Other liabilities 36 (167)
Deferred income (1,373) (853)
--------- ---------
Net cash provided by operating
activities 32,300 25,231
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (1,590) (280)
Acquisition of new markets (138,297) (187,175)
Capital expenditures (30,274) (24,260)
Proceeds from disposition of assets 1,602 1,289
--------- ---------
Net cash used in investing activities (168,559) (210,426)
(continued)
</TABLE>
F-5
<PAGE> 10
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 2,194 179,929
Principal payments on long-term debt (47,009) (2,341)
Proceeds from issuance of notes payable -- 70
Net borrowings under credit agreements 57,000 7,000
Dividends (274) (274)
--------- ---------
Net cash provided by financing activities 11,911 184,384
Net decrease in cash and cash equivalents (124,348) (811)
Cash and cash equivalents at beginning
of period 128,597 7,246
--------- ---------
Cash and cash equivalents at end of
period 4,249 6,435
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 36,196 $ 27,100
========= =========
Cash paid for state and
federal income taxes $ 1,485 $ 872
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE> 11
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the Company's
financial position and results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K.
Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per
Share." The calculations of basic earnings per share exclude any dilutive effect
of stock options, while diluted earnings per share includes the dilutive effect
of stock options. Antidilutive shares of 555,558, 611,296, 579,170 and 623,742
for the three month periods ended June 30, 1999 and 1998 and six month periods
ended June 30, 1999 and 1998 respectively have been excluded from the
calculations of diluted earnings per share.
Certain amounts in the prior year's consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net earnings.
New Accounting Pronouncements
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998, and requires that the costs of start-up
activities, including organizational costs, be expensed as incurred. The effect
of SOP 98-5 is recorded as a cumulative effect of a change in accounting
principle as described in Accounting Principles Board Opinion No. 20
"Accounting Changes".
F-7
<PAGE> 12
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
2. Acquisitions
On January 5, 1999, the Company purchased all of the outdoor advertising assets
of American Displays, Inc. for a cash purchase price of approximately $14,500.
On February 1, 1999, the company purchased all of the outdoor advertising
assets of KJS, LLC for a cash purchase price of $40,500.
On April 1, 1999, the Company purchased all of the assets of Frank Hardie, Inc.
for a cash purchase price of approximately $20,300.
On June 1, 1999, the Company purchased the assets of Vivid, Inc. for a cash
purchase price of approximately $22,100.
During the six months ended June 30, 1999, the company completed 30 additional
acquisitions of outdoor advertising and transit assets for an aggregate cash
purchase price of approximately $42,100 and the issuance of 13,023 shares of
Class A common stock valued at approximately $500.
Each of these acquisitions were accounted for under the purchase method of
accounting, and, accordingly, the accompanying financial statements include the
results of operations of each acquired entity from the date of acquisition. The
purchase price has been allocated to assets acquired and liabilities assumed
based on fair market value at the dates of acquisition. The following is a
summary of the allocation of the purchase price in the above transactions.
<TABLE>
<CAPTION>
Property
Current Plant & Customer Other Current Long-term
Assets Equipment Goodwill Lists Assets Liabilities Liabilities
-------- --------- -------- -------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
American Displays 87 899 10,532 3,227 50 (284) --
KJS, LLC 46 9,468 30,543 4,479 10 (2,079) (1,921)
Frank Hardie 187 6,595 10,451 3,620 10 (525) --
Vivid, Inc. 357 8,402 9,830 4,055 30 (593)
Other 189 11,301 28,713 4,810 165 (1,103) (1,549)
------ ------ ------ ------ ------ ------- ------
866 36,665 90,069 20,191 265 (4,584) (3,470)
====== ====== ====== ====== ====== ====== ======
</TABLE>
F-8
<PAGE> 13
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Summarized below are certain unaudited pro forma statements of operations data
for the six months ended June 30, 1999 and June 30, 1998 as if each of the
above acquisitions and the acquisitions occurring in 1998, which were fully
described in the Company's December 31, 1998 Annual Report on Form 10-K, had
been consummated as of January 1, 1998. This pro forma information does not
purport to represent what the Company's results of operations actually would
have been had such transactions occurred on the date specified or to project
the Company's results of operations for any future periods.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues, net $ 98,541 $ 91,047 $ 188,072 $ 173,915
Net loss applicable to
common stock (5,450) (7,173) (17,034) (18,630)
Net loss per common share - basic (.09) (.15) (.28) (.39)
Net loss per common share - diluted (.09) (.15) (.28) (.39)
</TABLE>
In addition, on June 1, 1999, the Company agreed to purchase the outdoor
advertising business of Chancellor Media Outdoor Corporation for $700,000 in
cash and 26,227,273 shares of the Company's Class A Common Stock. The
acquisition is subject to antitrust review by the Department of Justice and the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976. The completion of the acquisition is also subject to approval by the
Company's stockholders of the issuance of the shares of Class A common stock as
proposed in the acquisition, lender approvals, and the satisfaction of other
customary closing conditions. Accordingly, the Company cannot be sure whether
or when the Chancellor Outdoor acquisition will be completed. The Reilly Family
Limited Partnership, which is controlled by Kevin P. Reilly, Jr., Chief
Executive Officer of the Company and holds more than 80% of the Company
stockholder voting power, has agreed to vote in favor of the transaction. Lamar
expects to fund the cash portion of the purchase price with bank loans under a
new credit facility which it expects to put in place prior to closing.
3. New Bank Credit Facility
On June 15, 1999, the Company received a commitment from The Chase Manhattan
Bank to replace its existing bank credit facility with a new bank credit
facility under which The Chase Manhattan Bank will serve as administrative
agent. The new $1,000,000 bank credit facility consists of (1) a $350,000
revolving bank credit facility and (2) a $650,000 term facility with two
tranches, a $450,000 Term A facility and a $200,000 Term facility. As a result
of the holding company reorganization completed on July 20, 1999 and explained
in footnote 5, the existing bank credit facility and the new bank credit
facility will be obligations of Lamar Media Corp. and not Lamar Advertising
Company.
F-9
<PAGE> 14
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
4. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company's direct or indirect
wholly-owned subsidiaries that have guaranteed the Company's obligations with
respect to its publicly issued notes (collectively, the "Guarantors") are not
included herein because the Guarantors are jointly and severally liable under
the guarantees, and the aggregate assets, liabilities, earnings and equity of
the Guarantors are substantially equivalent to the assets, liabilities,
earnings and equity of the Company on a consolidated basis. Summarized
financial information for Missouri Logos, a Partnership, a 66 2/3% owned
subsidiary of the Company and the only subsidiary of the Company that is not a
Guarantor, is set forth below:
<TABLE>
<CAPTION>
Balance Sheet Information: June 30, 1999 December 31, 1998
------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets 391 248
Total assets 439 297
Total liabilities 10 7
Venturers' equity 429 290
</TABLE>
<TABLE>
<CAPTION>
Income Statement Information: Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues 258 237 532 501
Net income 106 137 320 299
</TABLE>
5. Subsequent Events
On July 16, 1999, the Board of Directors amended the Preferred Stock of the
Corporation by establishing 5,720 shares of the 1,000,000 shares of previously
undesignated Preferred Stock, par value .001 to be designated "Series AA
Preferred Stock". The previously issued Class A Preferred Stock par value $638
was exchanged for the new Series AA Preferred Stock.
On July 20, 1999, the Company reorganized into a new holding company structure.
As a result of this reorganization (1) the former Lamar Advertising Company
became a wholly owned subsidiary of a newly formed holding company, (2) the
name of the former Lamar Advertising Company was changed to Lamar Media Corp.,
(3) the name of the new holding company became Lamar Advertising Company, (4)
the outstanding shares of capital stock of the former Lamar Advertising
Company, including the Class A common stock, were automatically converted, on a
share for share basis, into identical shares of capital stock of the new
holding company and (5) the Class A common stock of the new holding company
commenced trading on the Nasdaq National Market under the symbol "LAMR" instead
of the Class A common stock of the former Lamar Advertising Company. In
addition, following the holding company reorganization, substantially all of
the former Lamar Advertising Company's debt obligations, including the bank
credit facility and other long-term debt remained the
F-10
<PAGE> 15
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
obligations of Lamar Media Corp. Under Delaware law, the reorganization did not
require the approval of the stockholders of the former Lamar Advertising
Company. The purpose of the reorganization was to provide Lamar Advertising
Company with a more flexible capital structure and to enhance its financing
options. The business operations of the former Lamar Advertising Company and its
subsidiaries will not change as a result of the reorganization. Stockholders do
not need to take any action since their existing stock certificates represent
shares of the new holding company.
On August 10, 1999, the Company completed an offering of $250,000 5 1/4%
convertible notes. The proceeds of approximately $243,000 of the convertible
notes were used to pay down existing bank debt. The convertible notes were
issued by the new holding company, Lamar Advertising Company.
F-11
<PAGE> 16
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information of Chancellor Media
Corporation Of Los Angeles Inc. (together with its subsidiaries, "CMCLA" or the
"Company") reflects the combination of consolidated historical financial data of
the Company and each of the significant radio transactions completed by the
Company during 1998 and 1999 and the disposition of the Company's outdoor
advertising division. The outdoor advertising division commenced operations in
July 1998 with the acquisition of Martin Media L.P., Martin & MacFarlane, Inc.
and certain affiliated companies ("Martin") and further expanded its outdoor
presence with the acquisition of the outdoor advertising division of Whiteco
Industries, Inc. ("Whiteco") in December 1998 and other outdoor acquisitions.
The unaudited pro forma balance sheet data at June 30, 1999 presents adjustments
for the significant transactions completed subsequent to June 30, 1999 as if
each such transaction had occurred at June 30, 1999. The unaudited pro forma
statement of operations data for the year ended December 31, 1998 and for the
six months ended June 30, 1999 excludes extraordinary items and presents
adjustments for (a) the sale of the Company's outdoor advertising division to
Lamar Advertising Company (the "Lamar Transaction"), (b) the acquisition of
KKFR-FM and KFYI-AM in Phoenix from The Broadcast Group, Inc. (the "Phoenix
Acquisition") and (c) the disposition of WMVP-AM in Chicago to ABC, Inc., as if
each such transaction occurred on January 1, 1998. Pro forma adjustments
relating to the acquisitions of Martin and Whiteco have not been included in the
pro forma financial statements due to the sale of the Company's outdoor
advertising division.
The purchase method of accounting has been used in the preparation of the
unaudited pro forma financial information. Under this method of accounting, the
aggregate purchase price is allocated to assets acquired and liabilities assumed
based on their estimated fair values. For purposes of the unaudited pro forma
financial information, the purchase prices of the assets acquired have been
allocated based primarily on publicly available information or information
furnished by management of the acquired assets. The final allocation of the
respective purchase prices of the assets acquired are determined a reasonable
time after consummation of such transactions and are based on a complete
evaluation of the assets acquired and liabilities assumed. Accordingly, the
information presented herein may differ from the final purchase price
allocation; however, such allocations are not expected to differ materially from
the preliminary amounts.
In the opinion of the Company's management, all adjustments have been made
that are necessary to present fairly the pro forma data.
The unaudited pro forma financial information should be read in conjunction
with the respective financial statements and related notes thereto of the
Company which have previously been reported. The unaudited pro forma financial
information is presented for illustrative purposes only and is not necessarily
indicative of the results of operations or financial position that would have
been achieved had the transactions reflected therein been consummated as of the
dates indicated, or of the results of operations or financial positions for any
future periods or dates.
P-1
<PAGE> 17
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA BALANCE SHEET
AT JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA COMPANY AS ADJUSTMENTS
ADJUSTMENTS ADJUSTED FOR THE
COMPANY FOR THE FOR THE OTHER
HISTORICAL LAMAR LAMAR COMPLETED
AT 6/30/99 TRANSACTION(1) TRANSACTION TRANSACTION(2)
---------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets.............................. $ 481,304 $ (54,411) $ 426,893 $ --
Property and equipment, net................. 1,365,438 (1,173,743) 191,695 4,840
Intangible assets, net...................... 5,194,552 (504,426) 4,690,126 85,160
Equity investment in affiliate.............. -- 1,127,389 1,127,389 --
Other assets, net........................... 361,218 (6,410) 354,808 --
---------- ----------- ----------- --------
Total assets........................ $7,402,512 $ (611,601) $ 6,790,911 $ 90,000
========== =========== =========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accounts payable and accrued expenses....... $ 221,902 $ (20,119) $ 201,783 $ --
Long-term debt.............................. 4,420,000 (680,000) 3,740,000 90,000
Deferred tax liabilities.................... 446,860 (32,132) 414,728 --
Other liabilities........................... 49,402 (1,753) 47,649 --
---------- ----------- ----------- --------
Total liabilities................... 5,138,164 (734,004) 4,404,160 90,000
Redeemable preferred stock.................. -- -- -- --
STOCKHOLDER'S EQUITY:
Common stock................................ 1 -- 1 --
Additional paid-in capital.................. 2,665,921 -- 2,665,921 --
Accumulated deficit......................... (401,574) 122,403 (279,171) --
---------- ----------- ----------- --------
Total stockholder's equity.......... 2,264,348 122,403 2,386,751 --
---------- ----------- ----------- --------
Total liabilities and stockholder's
equity............................ $7,402,512 $ (611,601) $ 6,790,911 $ 90,000
========== =========== =========== ========
<CAPTION>
COMPANY
PRO FORMA
-----------
<S> <C>
ASSETS:
Current assets.............................. $ 426,893
Property and equipment, net................. 196,535
Intangible assets, net...................... 4,775,286
Equity investment in affiliate.............. 1,127,389
Other assets, net........................... 354,808
-----------
Total assets........................ $ 6,880,911
===========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accounts payable and accrued expenses....... $ 201,783
Long-term debt.............................. 3,830,000
Deferred tax liabilities.................... 414,728
Other liabilities........................... 47,649
-----------
Total liabilities................... 4,494,160
STOCKHOLDER'S EQUITY:
Common stock................................ 1
Additional paid-in capital.................. 2,665,921
Accumulated deficit......................... (279,171)
-----------
Total stockholder's equity.......... 2,386,751
-----------
Total liabilities and stockholder's
equity............................ $ 6,880,911
===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-2
<PAGE> 18
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMPANY
PRO FORMA AS ADJUSTED
LAMAR ADJUSTMENTS FOR FOR THE
YEAR ENDED COMPANY TRANSACTION THE LAMAR LAMAR
DECEMBER 31, 1998 HISTORICAL(3) HISTORICAL(4) TRANSACTION TRANSACTION
- ----------------- -------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Gross revenues ...................... $ 1,440,357 $ (52,750) $ -- $ 1,387,607
Less: agency commissions ............ (166,501) 5,145 -- (161,356)
------------ ---------- ---------- -----------
Net revenues ........................ 1,273,856 (47,605) -- 1,226,251
Operating expenses excluding
depreciation and amortization ...... 682,061 (23,505) -- 658,556
Depreciation and amortization ....... 446,338 (25,990) -- 420,348
Corporate general and
administrative ..................... 36,722 (1,981) -- 34,741
Merger, nonrecurring and systems
development expense ................ 63,661 -- -- 63,661
------------ ---------- ---------- -----------
Operating income (loss) ............. 45,074 3,871 -- 48,945
Interest expense .................... 217,136 (105) 45,819 (5) 262,850
Interest income ..................... (15,650) -- -- (15,650)
Gain on disposition of assets ....... (123,845) -- -- (123,845)
Gain on disposition of
representation contracts ........... (32,198) -- -- (32,198)
Other (income) expense .............. (3,221) 156 -- (3,065)
------------ ---------- ---------- -----------
Other (income) expense, net ......... 42,222 51 45,819 88,092
------------ ---------- ---------- -----------
Income (loss) before income
taxes .............................. 2,852 3,820 (45,819) (39,147)
Income tax expense (benefit) ........ 33,751 (345) (16,037) (6) 17,369
------------ ---------- ---------- -----------
Income (loss) before equity in
net loss of affiliate............... (30,899) 4,165 (29,782) (56,516)
Equity in net loss of affiliate...... -- -- (82,797) (7) (82,797)
------------ ---------- ---------- -----------
Income (loss)........................ (30,899) 4,165 (112,579) (139,313)
Preferred stock dividends ........... 17,601 -- -- 17,601
------------ ---------- ---------- -----------
Income (loss) attributable to common
stock .............................. $ (48,500) $ 4,165 $ (112,579) $ (156,914)
============ ========== ========== ===========
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
YEAR ENDED OTHER COMPLETED COMPANY
DECEMBER 31, 1998 TRANSACTIONS (8) PRO FORMA
- ----------------- ---------------- ------------
<S> <C> <C>
Gross revenues ...................... $ 522 $ 1,388,129
Less: agency commissions ............ (108) (161,464)
--------------- ------------
Net revenues ........................ 414 1,226,665
Operating expenses excluding
depreciation and amortization ...... (7,122) 651,434
Depreciation and amortization ....... 5,170 425,518
Corporate general and
administrative ..................... -- 34,741
Merger, nonrecurring and systems
development expense ................ -- 63,661
--------------- ------------
Operating income (loss) ............. 2,366 51,311
Interest expense .................... 4,830 267,680
Interest income ..................... -- (15,650)
Gain on disposition of assets ....... -- (123,845)
Gain on disposition of
representation contracts ........... -- (32,198)
Other (income) expense .............. -- (3,065)
--------------- ------------
Other (income) expense, net ......... 4,830 92,922
--------------- ------------
Income (loss) before income
taxes .............................. (2,464) (41,611)
Income tax expense (benefit) ........ (862) 16,507
--------------- ------------
Income (loss) before equity in
net loss of affiliate............... (1,602) (58,118)
Equity in net loss of affiliate...... -- (82,797)
--------------- ------------
Income (loss)........................ (1,602) (140,915)
Preferred stock dividends ........... -- 17,601
--------------- ------------
Income (loss) attributable to common
stock .............................. $ (1,602) $ (158,516)
=============== ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-3
<PAGE> 19
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA COMPANY
ADJUSTMENTS AS ADJUSTED
LAMAR FOR THE FOR THE
SIX MONTHS ENDED COMPANY TRANSACTION LAMAR LAMAR
JUNE 30, 1999 HISTORICAL(3) HISTORICAL(4) TRANSACTION TRANSACTION
- ------------------ ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Gross revenues .............................. $ 884,843 $ (120,107) $ -- $ 764,736
Less: agency commissions .................... (100,432) 9,218 -- (91,214)
------------ ------------ ------------ ------------
Net revenues ................................ 784,411 (110,889) -- 673,522
Operating expenses excluding depreciation
and amortization ........................... 427,768 (58,734) -- 369,034
Depreciation and amortization ............... 292,883 (63,527) -- 229,356
Corporate general and administrative ........ 30,612 (5,884) -- 24,728
Merger, nonrecurring and systems
development expense ........................ 16,344 -- -- 16,344
------------ ------------ ------------ ------------
Operating income (loss) ..................... 16,804 17,256 -- 34,060
Interest expense ............................ 181,379 (126) (23,974) (5) 157,279
Interest income ............................. (9,268) -- -- (9,268)
Gain on disposition of assets ............... (12,406) -- -- (12,406)
Gain on disposition of representation
contracts .................................. (8,853) -- -- (8,853)
Other (income) expense....................... 200 (69) -- 131
------------ ------------ ------------ ------------
Other (income) expense net .................. 151,052 (195) (23,974) 126,883
------------ ------------ ------------ ------------
Income (loss) before income taxes ........... (134,248) 17,451 23,974 (92,823)
Income tax expense (benefit) ................ (24,190) 4,823 8,391 (6) (10,976)
------------ ------------ ------------ ------------
Income (loss) before equity in net loss of
affiliate .................................. (110,058) 12,628 15,583 (81,847)
Equity in net loss of affiliate ............. -- -- (42,058) (7) (42,058)
------------ ------------ ------------ ------------
Income (loss) ............................... (110,058) 12,628 (26,475) (123,905)
Preferred stock dividends ................... -- -- -- --
------------ ------------ ------------ ------------
Income (loss) attributable to common
stock ...................................... $ (110,058) $ 12,628 $ (26,475) $ (123,905)
============ ============ ============ ============
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
SIX MONTHS ENDED OTHER COMPLETED COMPANY
JUNE 30, 1999 TRANSACTIONS(8) PRO FORMA
- ----------------- --------------- -----------
<S> <C>
Gross revenues .............................. $ (705) $ 764,031
Less: agency commissions .................... -- (91,214)
------------ -----------
Net revenues ................................ (705) 672,817
Operating expenses excluding depreciation
and amortization ........................... (116) 368,918
Depreciation and amortization ............... 2,839 232,195
Corporate general and administrative ........ -- 24,728
Merger, nonrecurring and systems
development expense ........................ -- 16,344
------------ -----------
Operating income (loss) ..................... (3,428) 30,632
Interest expense ............................ 2,717 159,996
Interest income ............................. -- (9,268)
Gain on disposition of assets ............... -- (12,406)
Gain on disposition of representation
contracts .................................. -- (8,853)
Other (income) expense....................... -- 131
------------ -----------
Other (income) expense net .................. 2,717 129,600
------------ -----------
Income (loss) before income taxes ........... (6,145) (98,968)
Income tax expense (benefit) ................ (2,151) (13,127)
------------ -----------
Income (loss) before equity in net loss of
affiliate ................................. (3,994) (85,841)
Equity in net loss of affiliate ............. -- (42,058)
------------ -----------
Income (loss) ............................... (3,994) (127,899)
Preferred stock dividends ................... -- --
------------ -----------
Income (loss) attributable to common
stock ...... ............................... $ (3,994) $ (127,899)
============ ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-4
<PAGE> 20
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
ADJUSTMENTS TO THE UNAUDITED PRO FORMA BALANCE SHEET RELATED TO THE LAMAR
TRANSACTION
(1) Reflects the Lamar Transaction as follows:
<TABLE>
<CAPTION>
SALES PRICE ALLOCATION
-----------------------------------------------------------------------------------------------------------
PROPERTY
NET AND INTANGIBLE DEFERRED
CASH CURRENT EQUIPMENT, ASSETS, INVESTMENT OTHER CURRENT TAX OTHER
PROCEEDS ASSETS NET NET IN AFFILIATE ASSETS LIABILITIES LIABILITIES LIABILITIES
--------- -------- ----------- ---------- ------------ ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lamar
Transaction(a)... $(680,000) $(54,411) $(1,173,743) $(504,426) $1,127,389 $(6,410) $20,119 $32,132 $1,753
<CAPTION>
SALES FINANCING
PRICE -----------
ALLOCATION DECREASE
----------- IN
ACCUMULATED LONG-TERM
DEFICIT DEBT
----------- -----------
<S> <C>
Lamar
Transaction(a)... $(122,403) $(680,000)
</TABLE>
(a) On September 15, 1999, the Company consummated the sale of its outdoor
advertising business to Lamar Advertising Company ("Lamar") in exchange for
$700,000 in cash, subject to a working capital adjustment, and 26,227,273
shares of Lamar's class A common stock. For purposes of the unaudited pro
forma condensed combined financial statements, the fair market value of the
Lamar common stock to be received is calculated by using $46.063 per share
which is based on the closing market price of Lamar common stock on
September 15, 1999. The aggregate sales price is summarized below:
<TABLE>
<S> <C>
Cash to be received............................................. $ 700,000
Less estimated transaction costs................................ (20,000)
----------
Net cash proceeds............................................... 680,000
Estimated fair value of common stock to be issued by Lamar to
AMFM (26,227,273 shares @ $46.063 per share).................... 1,208,094
----------
Aggregate sales price........................................... $1,888,094
==========
</TABLE>
The amount allocated to accumulated deficit represents the estimated gain
on the disposition of $269,017 net of deferred portion of the gain of
$80,705 and taxes of $65,909. The Company's interest in Lamar will be
accounted for under the equity method of accounting and is valued for
purposes of the unaudited pro forma condensed combined financial statements
at $1,127,389. The Company's estimated cost basis of the investment in
Lamar of $1,208,094 exceeded the Company's underlying equity in the net
assets of Lamar by $787,457, which the Company will amortize on a
straight-line basis over a period of 15 years.
P-5
<PAGE> 21
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE OTHER COMPLETED TRANSACTION
(2) On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix
from The Broadcast Group, Inc. for $90,000 in cash plus various other
direct acquisition costs. Reflects the Phoenix Acquisition as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION FINANCING
------------------------------------ ----------
PROPERTY INCREASE
AND INTANGIBLE IN
PURCHASE EQUIPMENT, ASSETS, LONG-TERM
PRICE NET NET(a) DEBT
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Phoenix Acquisition... $90,000 $4,840 $85,160 $90,000
</TABLE>
- -------------------------
(a) The Company has allocated the intangible assets to broadcast licenses with
an estimated average life of 15 years.
P-6
<PAGE> 22
(3) The Company began operating KKFR-FM and KFYI-AM in Phoenix under a time
brokerage agreement effective November 5, 1998. Therefore, the results of
operations of KKFR-FM and KFYI-AM are included in the Company's historical
operations subsequent to this date during 1998 and for the six months ended
June 30, 1999.
The Company entered into a time brokerage agreement to sell substantially
all of the broadcast time of WMVP-AM in Chicago effective September 10,
1998. Therefore, substantially all of the results of operations of WMVP-AM
are excluded from the Company's historical operations subsequent to this
date during 1998 and for the six months ended June 30, 1999.
(4) On September 15, 1999, the Company consummated the sale of its outdoor
advertising business to Lamar in exchange for net proceeds of $680,000 in
cash, subject to a working capital adjustment, and 26,227,273 shares of
Lamar's class A common stock. This adjustment removes the historical
results of operations of the Company's outdoor advertising business.
(5) Reflects the increase to interest expense of $45,819 for the year ended
December 31, 1998 and the decrease to interest expense of $23,974 for the
six months ended June 30, 1999 in connection with the additional bank
borrowings related to the outdoor advertising acquisitions completed during
1998 and 1999 and the elimination of debt related to the proceeds of
$680,000 from the Lamar Transaction.
(6) Reflects the tax effect of the pro forma adjustment.
(7) The adjustment to reflect the Company's 30.0% equity interest in Lamar and
amortization of the investment basis in excess of underlying equity in the
net assets of Lamar over an estimated life of 15 years is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------ ---------------
<S> <C> <C>
Lamar historical net loss applicable to common stock..................... $ (12,255) $ (15,958)
Pro forma adjustments for significant acquisitions completed by Lamar
during 1998 ........................................................ (19,640) --
Pro forma adjustments to reflect the pending acquisition by
Lamar of the Company's outdoor business............................. (69,104) (36,740)
--------- ---------
Lamar pro forma net loss applicable to common stockholders............... (100,999) (52,698)
CMCLA equity interest.................................................... 30.0% 30.0%
--------- ---------
Equity in pro forma net loss of Lamar.................................... (30,300) (15,809)
Amortization of investment basis in excess of underlying
equity in the net assets of Lamar................................... (52,497) (26,249)
--------- ---------
Total equity in net loss of affiliate.................................... $ (82,797) $ (42,058)
========= =========
</TABLE>
The Lamar pro forma net loss applicable to common stockholders was
estimated by the Company based on information obtained from publicly
filed financial statements. These estimates including the allocation of
purchase price are preliminary and subject to change.
P-7
<PAGE> 23
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
RELATED TO THE OTHER COMPLETED TRANSACTIONS
(8) The condensed combined statement of operations for the other completed
transactions for the year ended December 31, 1998 and for the six months
ended June 30, 1999 are summarized below:
<TABLE>
<CAPTION>
THE
CHICAGO BROADCAST PRO FORMA
DISPOSITION GROUP, INC. ADJUSTMENTS FOR COMPANY OTHER
YEAR ENDED HISTORICAL HISTORICAL THE OTHER COMPLETED COMPLETED
DECEMBER 31, 1998 1/1-12/31 (a) 1/1-12/31 (b) TRANSACTIONS TRANSACTIONS
- ----------------- ------------ ------------ ------------------- ------------
<S> <C> <C> <C> <C>
Gross revenues .............................. $ (11,530) $ 13,101 $ (1,049)(c) $ 522
Less: agency commissions .................... 1,221 (1,329) -- (108)
------------ ----------- ------------ ------------
Net revenues ................................ (10,309) 11,772 (1,049) 414
Operating expenses excluding
depreciation and amortization ............. (13,271) 6,149 -- (7,122)
Depreciation and amortization ............... (592) 188 5,574 (d) 5,170
Corporate general and
administrative ............................ -- -- -- --
------------ ----------- ------------ ------------
Operating income (loss) ..................... 3,554 5,435 (6,623) 2,366
Interest expense ............................ -- 332 4,498 (e) 4,830
Interest income ............................. -- -- -- --
Other (income) expense ...................... -- -- -- --
------------ ----------- ------------ ------------
Income (loss) before income
taxes ..................................... 3,554 5,103 (11,121) (2,464)
Income tax expense .......................... -- 1,850 (2,712)(f) (862)
Dividends and accretion on
preferred stock of subsidiary ............. -- -- -- --
------------ ----------- ------------ ------------
Net income (loss) ........................... 3,554 3,253 (8,409) (1,602)
Preferred stock dividends ................... -- -- -- --
------------ ----------- ------------ ------------
Income (loss) attributable to
common stock ...... ....................... $ 3,554 $ 3,253 $ (8,409) $ (1,602)
============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
CHICAGO PRO FORMA
DISPOSITION ADJUSTMENTS
SIX MONTHS ENDED HISTORICAL FOR THE OTHER COMPANY OTHER
JUNE 30, 1999 1/1-4/16 (a) COMPLETED TRANSACTIONS COMPLETED TRANSACTIONS
- ------------------ ------------ ---------------------- ----------------------
<S> <C> <C> <C>
Gross revenues .................................. $ (705) $ -- $ (705)
Less: agency commissions ........................ -- -- --
--------- ---------- ---------
Net revenues .................................... (705) -- (705)
Operating expenses excluding depreciation and
amortization .................................. (116) -- (116)
Depreciation and amortization ................... -- 2,839 (d) 2,839
--------- ---------- ---------
Operating income (loss) ......................... (589) (2,839) (3,428)
Interest expense ................................ -- 2,717 (e) 2,717
--------- ---------- ---------
Income (loss) before income taxes ............... (589) (5,556) (6,145)
Income tax expense .............................. -- (2,151)(f) (2,151)
--------- ---------- ---------
Net income (loss) ............................... (589) (3,405) (3,994)
Preferred stock dividends ....................... -- -- --
--------- ---------- ---------
Income (loss) attributable to common
stock ......................................... $ (589) $ (3,405) $ (3,994)
========= ========== =========
</TABLE>
- ---------------
(a) On April 16, 1999, the Company sold WMVP-AM in Chicago to ABC, Inc. for
$21,000 in cash. The Company entered into a time brokerage agreement to
sell substantially all of the broadcast time of WMVP-AM effective September
10, 1998.
(b) On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix from
The Broadcast Group, Inc. for $90,000 in cash. The Company began operating
KKFR-FM and KFYI-AM under a time brokerage agreement effective
November 5, 1998.
(c) Reflects the elimination of revenue related to the time brokerage agreement
between The Broadcast Group Inc. and the Company. The Company began
operating KKFR-FM and KFYI-AM in Phoenix under the time brokerage agreement
effective November 5, 1998.
P-8
<PAGE> 24
(d) Reflects incremental amortization related to the assets acquired in the
Phoenix Acquisition and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1998 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix Acquisition........... 1/1-12/31 $85,160 $5,677 $103 $5,574
======= ====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
SIX MONTHS ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
JUNE 30, 1999 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix Acquisition........... 1/1-6/30 $85,160 $2,839 $-- $2,839
======= ====== === ======
</TABLE>
- -------------------------
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the acquisition was not
completed.
Historical depreciation expense for the Phoenix Acquisition is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.
(e) Reflects the adjustment to interest expense as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1998 1999
------------ ------------
<S> <C> <C>
Additional bank borrowings related to other completed
transactions............................................ $ 69,000 $ 69,000
-------- --------
Interest expense at 7.0%.................................... 4,830 2,415
Less: historical interest expense recognized
subsequent to the completed transaction................. -- 302
-------- --------
Incremental interest expense................................ 4,830 2,717
Less: historical interest expense recognized
by the acquired company................................. (332) --
-------- --------
Net increase in interest expense............................ $ 4,498 $ 2,717
======== ========
</TABLE>
(f) Reflects the tax effect of the pro forma adjustments.
P-9
