<PAGE> 1
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-51957
PROSPECTUS SUPPLEMENT TO PROSPECTUS
DATED MAY 5, 1998
<TABLE>
<S> <C> <C>
15,000,000 SHARES
CLEAR CHANNEL COMMUNICATIONS, INC.
[LOGO] COMMON STOCK
</TABLE>
---------------------
We are offering 15,000,000 shares of common stock. The common stock trades on
the New York Stock Exchange under the symbol "CCU." On December 17, 1998, the
last reported sale price of the common stock on the New York Stock Exchange was
$48.375 per share.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-10 OF THIS PROSPECTUS SUPPLEMENT TO READ
ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE COMMON
STOCK.
<TABLE>
<CAPTION>
PER
SHARE TOTAL
------- ------------
<S> <C> <C>
Public Offering Price....................................... $48.375 $725,625,000
Underwriting Discount....................................... $ 1.405 $ 21,075,000
Proceeds, before expenses, to Clear Channel................. $46.970 $704,550,000
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
We intend to grant an option for the purchase of an additional 2,250,000 shares
of common stock to the underwriters to cover over-allotments.
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment at the offices of BT
Alex. Brown Incorporated, Baltimore, Maryland on December 23, 1998.
---------------------
BT ALEX. BROWN MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
ING BARING FURMAN SELZ LLC
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
---------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 17, 1998.
<PAGE> 2
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties, and assumptions
about Clear Channel, including, among other things:
- the impact of general economic conditions in the U.S. and in other
countries in which we currently do business, such as the United Kingdom,
Australia, New Zealand, Mexico and certain other European and Asian
countries;
- competition and general conditions in our broadcasting and outdoor
advertising industries;
- availability of acquisitions on favorable terms, and our success at
completing and integrating them, including the Jacor merger;
- fluctuations in exchange rates and currency values;
- capital expenditure requirements;
- legislative or regulatory requirements, including the policies of the
Federal Communications Commission, the Federal Trade Commission and the
U.S. Department of Justice;
- interest rates;
- taxes; and
- access to capital markets.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or other
factors. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus supplement and the
accompanying prospectus might not occur as currently contemplated.
---------------------
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not, and the underwriters
have not, authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not, and the underwriters are not, making an offer to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
supplement is accurate as of the date on the front cover of this prospectus
supplement only. Our business, financial condition, results of operations and
prospects may have changed since that date.
S-2
<PAGE> 3
SUMMARY
This summary may not contain all of the information that may be important
to you. You should read this entire prospectus supplement and the accompanying
prospectus, including the financial data and related notes, and the information
incorporated by reference herein, before making an investment decision. The
terms "Clear Channel" and "we" as used in this prospectus supplement refer to
Clear Channel Communications, Inc. and its consolidated subsidiaries, except
where it is made clear that such term means only the parent company. All
information set forth in this prospectus supplement has been adjusted to reflect
five-for-four stock splits effected in February 1993 and February 1994, and
two-for-one stock splits effected in November 1995, December 1996 and July 1998.
Unless otherwise noted, the information in this prospectus supplement assumes no
exercise by the underwriters of their option to purchase an additional 2,250,000
shares of common stock.
CLEAR CHANNEL
Clear Channel is a diversified media company with two primary lines of
business: broadcasting (radio and television) and outdoor advertising. As of
September 30, 1998, we owned, programmed or sold airtime for 202 domestic radio
stations and 20 domestic television stations and we were the world's largest
outdoor advertising company based on total advertising display inventory of
approximately 274,000 display faces.
During the nine months ended September 30, 1998, we derived approximately
51% of our net revenue from broadcasting operations and approximately 49% from
outdoor advertising operations. The revenue composition would have been
approximately 62% from broadcasting and 38% from outdoor advertising if we had
completed the acquisitions of Jacor Communications, Inc., More Group Plc, and
Universal Outdoor Holdings, Inc., as described below in "Recent Developments,"
as of January 1, 1998. See "Recent Developments" and "Unaudited Pro Forma
Combined Condensed Financial Statements."
- BROADCASTING
RADIO. As of September 30, 1998, we owned or programmed 136 FM and 66 AM
radio stations in 42 domestic markets. We currently own or program radio
stations located principally in the South, Southeast, Southwest, Northeast and
Midwest. These radio stations employ a wide variety of programming formats, such
as News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. We also
currently operate radio networks serving Oklahoma, Texas, Iowa, Kentucky,
Virginia, Alabama, Tennessee, Florida and Pennsylvania. In addition, we
currently own the following interests in other radio broadcasting companies:
- a 50% equity interest in the Australian Radio Network Pty., Ltd., which
operates radio stations in Australia;
- a 33% equity interest in New Zealand Radio Network, which operates radio
stations in New Zealand;
- a 29% non-voting equity interest in Heftel Broadcasting Corporation (Nasdaq:
HBCCA), the leading domestic Spanish-language radio broadcaster;
- a 40% equity interest in Grupo Acir Communicaciones, S.A. de C.V., one of
the largest radio broadcasters in Mexico; and
- a 50% equity interest in Radio Bonton, a.s., which owns an FM radio station
in the Czech Republic.
TELEVISION. As of September 30, 1998, we owned or programmed 20 television
stations in 11 domestic markets, located principally in the South, Southeast,
Northeast and Midwest. These television stations are affiliated with various
television networks, including the FOX television network, the UPN television
network, the ABC television network, the NBC television network and the CBS
television network. The primary sources of programming for our ABC, NBC and CBS
affiliated television stations are their respective networks, which produce and
distribute programming in exchange for each station's commitment to air the
programming at specified times and for commercial announcement time during the
programming. We supply the majority of programming to our FOX and UPN affiliates
by selecting and purchasing syndicated television programs.
S-3
<PAGE> 4
- OUTDOOR ADVERTISING
We are the world's largest outdoor advertising company based on our total
display inventory of approximately 274,000 advertising display faces, including
approximately 5,800 display faces operated under license management agreements.
We currently provide outdoor advertising services in over 35 markets throughout
the United States. We have additional operations or equity investments in 22
other countries.
Our principal executive offices are located at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
COMPANY STRATEGY
Since our inception, we have focused on helping our clients distribute
their marketing messages in the most efficient ways possible. We believe that
our ultimate success is measured by how well we assist our clients in selling
their products and services. To this end we have assembled a variety of media
assets designed to provide the most efficient and cost-effective ways for our
clients to reach consumers. These assets are comprised of broadcasting assets
(both radio and television) and outdoor advertising displays. In the past we
have combined these assets with the talent and motivation of our entrepreneurial
personnel to create strong internal growth. We plan to continue this effort in
order to serve our advertisers, our listeners and viewers, and our equity and
debt stakeholders.
In the past, a portion of our growth has been achieved through the
acquisition of additional assets within the broadcasting and outdoor advertising
lines of business. We have found that the addition of assets to our portfolio
gives our clients more flexibility in the distribution of their messages, and
therefore allows us to provide these clients with a higher level of service. In
addition, given our experience in the industries in which we operate, we are
often able to improve the operations of assets we acquire, thus further
enhancing the value they have as an advertising venue, as well as the value
those assets hold for our stakeholders. We evaluate potential acquisitions based
on the returns they can potentially provide on invested capital by themselves,
as well as the positive effects they might have on our existing business.
Additionally, we seek to create situations in which we own more than one
type of medium in the same market. Aside from the provision of added flexibility
to our clients, this "cross-ownership" allows us ancillary benefits, such as the
use of otherwise vacant outdoor advertising space to promote our broadcasting
assets, or the sharing of on-air talent across radio and television assets.
These are only two examples of the benefits of cross-ownership, but there are
others as well.
Our management believes that growth within the "out-of-home" advertising
segment (predominantly radio and outdoor advertising) will be strong in coming
years. We feel the increasing commute times to which Americans are subjected is
one factor supporting such growth. In addition, we believe that "in-home" media,
including broadcast television, cable and the Internet, increasingly compete
against one another for advertising revenues in the home. Therefore, we have
dramatically expanded the "out-of-home" aspects of our business recently by
entering the outdoor advertising industry and continuing our growth, both
internal and external, in the radio business.
The prudent use of financial leverage has always been at the core of our
acquisition strategy and we believe this allows us to pay lower interest rates
than many of our competitors. This prudent use of leverage has historically
given us added flexibility as we seek ways to deploy our capital in new
investments.
Also core to our investment approach has been the pursuit of attractive
business models, which we believe best serve our stakeholders. We think that the
combination of historically stable revenue growth within the industries in which
we operate, coupled with a fixed expense structure and minimal requirements for
ongoing capital expenditures, give us an excellent forum in which to generate
free cash flow and provide value to Clear Channel's investors. We intend to
continue this creation of value.
S-4
<PAGE> 5
BROADCAST STRATEGY. Our broadcast strategy entails the ongoing operation of
existing stations as well as the acquisition of under-performing stations on
favorable terms for the purpose of improving their performance. Our management
seeks to improve performance of these stations through effective programming,
reduction of costs and aggressive promotion, marketing and sales. We emphasize
direct sales to local customers rather than through advertising agencies and
other intermediaries. We believe that this focus enables our stations to achieve
market revenue shares exceeding their audience shares.
We believe that clustering broadcasting assets together in markets leads to
substantial operating advantages. We attempt to cluster radio stations in each
of our principal markets because we believe that we can offer advertisers more
attractive packages of advertising options if we control a larger share of the
total advertising inventory in a particular market. We also believe that by
clustering we can operate our stations with more highly skilled local management
teams and eliminate duplicative operating and overhead expenses. We believe that
owning multiple broadcasting stations in a market allows us to provide a more
diverse programming selection for our listeners and a more efficient means for
our advertisers to reach those listeners.
OUTDOOR ADVERTISING STRATEGY. Our outdoor advertising strategy involves
expanding our market presence in the outdoor advertising business and improving
our operating results by applying the following principles:
- managing the advertising rates and occupancy levels of our displays to
maximize revenues;
- attracting new categories of advertisers to the outdoor medium through
significant investments in sales, marketing, creative and research
services;
- increasing focus on local advertising sales;
- constructing new displays and upgrading our existing displays;
- taking advantage of technological advances which increase sales force
productivity, production department efficiency, and quality of product;
- acquiring additional displays in our existing markets; and
- expanding into additional markets where we already have a broadcasting
presence as well as into the country's largest media markets and their
surrounding regional areas.
To support our broadcasting and outdoor operating strategies, we have
decentralized our operating structure in order to place authority, autonomy and
accountability at the market level and to provide local management with the
tools necessary to oversee sales, product development, administration and
production and to identify possible acquisition candidates. We also maintain
fully-staffed sales and marketing offices in New York, which service national
advertising accounts and support our local sales force in each market. We
believe that one of our strongest competitive advantages is our unique blend of
highly experienced corporate and local market management.
RECENT DEVELOPMENTS
JACOR MERGER
On October 8, 1998, we entered into an agreement with Jacor Communications,
Inc. ("Jacor") to combine the two companies by merging Jacor with and into one
of our wholly-owned subsidiaries. We structured the merger as a stock-for-stock
transaction. Each share of Jacor common stock will convert into a number of
shares of our common stock to be determined by a formula based upon the average
closing price of our common stock during the 25 trading days ending two trading
days prior to the closing of the merger. Based on the closing price of our
common stock on the date of the Jacor merger agreement and assuming that no
additional shares of Jacor common stock are issued before the completion of the
merger, we will issue approximately 71.5 million shares of our common stock in
the merger to the shareholders of Jacor. See "The Jacor Merger" in this
prospectus supplement.
S-5
<PAGE> 6
In addition, in connection with the Jacor merger, we will assume
approximately $1.23 billion of Jacor's long-term debt, as well as Jacor's Liquid
Yield Option Notes (the "Jacor LYONs") having an accreted value of approximately
$302 million. See "Risk Factors -- Financial Leverage." At October 7, 1998,
Jacor had operations in 55 U.S. markets, including approximately 230 radio
stations and one television station. See "The Jacor Merger -- Business of
Jacor."
We will not complete the Jacor merger before the closing of this offering,
if at all. Numerous conditions must be satisfied before the completion of the
merger, including the receipt of regulatory approvals and shareholder approvals
from the shareholders of both companies and the completion of a review of the
merger by the federal and state antitrust authorities. Individuals who purchase
our common stock in this offering may or may not be entitled to vote on matters
relating to the Jacor merger depending on when we set the record date.
The sale of our common stock in this offering is not conditioned on the
completion of the proposed merger with Jacor.
MORE GROUP ACQUISITION
On August 6, 1998, we completed our acquisition of More Group Plc, an
outdoor advertising company organized under the laws of the United Kingdom
("More Group"). Through a series of transactions beginning in May 1998, we
purchased all the outstanding stock of More Group for an aggregate of
approximately $757.9 million. In addition, we assumed approximately $137.7
million in long-term debt from More Group. At the completion of the acquisition,
More Group's operations and joint ventures included approximately 119,000
outdoor advertising display faces in 22 countries.
UNIVERSAL OUTDOOR ACQUISITION
On April 1, 1998, we completed our acquisition of Universal Outdoor
Holdings, Inc. ("Universal") for approximately 19.3 million shares of our common
stock. At the time of the acquisition of Universal, Universal's operations
included approximately 34,000 outdoor advertising display faces in 23 major
metropolitan markets, predominantly in the Midwest, Northeast and Southeast. We
assumed approximately $564 million of Universal's long-term debt.
OTHER COMPLETED AND PENDING ACQUISITIONS
From September 30, 1998 through November 30, 1998, we completed the
acquisition of two additional radio stations in two markets for approximately
$2.8 million and completed the acquisition of approximately 475 additional
display faces in 16 markets for approximately $52.2 million.
At November 30, 1998, in addition to the pending merger with Jacor, we had
entered into definitive agreements to purchase two additional radio stations in
two markets for approximately $0.4 million and the exchange of one radio
station. We also have an agreement to acquire Dame Media, Inc. ("Dame Media") in
exchange for shares of our common stock. Dame Media's operations include 21
radio stations in 5 markets. If the acquisition of Dame Media had been completed
on December 7, 1998, approximately one million additional shares of our common
stock would have been issued. In addition, we have entered into two definitive
agreements to purchase, directly or indirectly, approximately 304 display faces
for approximately $17.5 million.
We frequently evaluate strategic opportunities both within and outside our
existing lines of business and from time to time enter into letters of intent.
Although we have no definitive agreements with respect to significant
acquisitions not set forth in this prospectus supplement, we expect from time to
time to pursue additional acquisitions and may decide to dispose of certain
businesses. Such acquisitions or dispositions could be material.
S-6
<PAGE> 7
THE OFFERING
Common Stock offered....... 15,000,000 shares
Shares outstanding after
this Offering.............. 263,585,928 shares(1)
Use of Proceeds............ We intend to use the net proceeds of the offering
to repay indebtedness under Clear Channel's
domestic revolving credit facility.
Risk Factors............... See "Risk Factors" beginning on page S-10 for a
discussion of factors you should carefully consider
before deciding to invest in the common stock.
New York Stock Exchange
symbol................... CCU
- ---------------
(1) Excludes approximately 1,043,000 shares of common stock issuable upon the
completion of the acquisition of Dame Media, approximately 71.5 million
shares of common stock issuable upon the completion of the merger with
Jacor, assuming an exchange ratio of 1.4 (not including shares issuable in
connection with the Jacor stock units, warrants and LYONs), approximately
5.2 million shares of common stock issuable upon the exercise of options
held by Jacor shareholders which will become exercisable for common stock
after the completion of the merger with Jacor, assuming such exchange ratio,
approximately 3.9 million shares of common stock currently issuable upon
exercise of options to purchase shares of common stock at prices ranging
from $2.08 to $42.00 per share, approximately 220,000 shares of common stock
issuable pursuant to phantom stock plan obligations assumed by us as part of
the acquisition of 93% of the outstanding capital stock of Eller Media
Corporation ("Eller Media"), and approximately 1.9 million shares of the
common stock issuable upon exercise of the right of the holders of the
minority interest stake in Eller Media to require us to acquire such
minority interest stake.
S-7
<PAGE> 8
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following sets forth summary historical and pro forma financial data
for the three years ended December 31, 1997 and the nine months ended September
30, 1997 and 1998. Acquisitions and dispositions significantly impact the
comparability of the historical consolidated financial data reflected in this
financial data. The results of interim periods are not necessarily indicative of
results for the entire fiscal year. This information is only a summary and you
should read the information presented below in conjunction with our Consolidated
Financial Statements and the Notes thereto incorporated by reference into this
prospectus supplement, and the Unaudited Pro Forma Combined Condensed Financial
Statements included elsewhere in this prospectus supplement, each of which
qualify the information presented below in its entirety.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------- ---------------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
----------- -----------
1995 1996 1997 1997(1) 1997 1998 1998(1)
-------- -------- -------- ----------- -------- -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(2):
Net revenue.......................... $250,059 $351,739 $697,068 $1,924,827 $469,176 $909,555 $1,698,705
Operating expenses................... 137,504 198,332 394,404 1,185,097 266,542 517,562 1,051,157
Depreciation and amortization........ 33,769 45,790 114,207 475,341 80,216 201,422 396,190
-------- -------- -------- ---------- -------- -------- ----------
Operating income before corporate
expenses........................... 78,786 107,617 188,457 264,389 122,418 190,571 251,358
Corporate expenses................... 7,414 8,527 20,883 44,768 13,699 25,739 45,916
-------- -------- -------- ---------- -------- -------- ----------
Operating income..................... 71,372 99,090 167,574 219,621 108,719 164,832 205,442
Interest expense..................... 20,752 30,080 75,076 292,496 51,804 94,555 182,569
Other income (expense)............... (803) 2,230 11,579 12,247 7,641 13,416 14,545
-------- -------- -------- ---------- -------- -------- ----------
Income (loss) before income taxes.... 49,817 71,240 104,077 (60,628) 64,556 83,693 37,418
Income taxes......................... 20,292 28,386 47,116 44,347 31,642 48,766 73,329
-------- -------- -------- ---------- -------- -------- ----------
Income (loss) before equity income
(loss) of nonconsolidated
affiliates......................... 29,525 42,854 56,961 (104,975) 32,914 34,927 (35,911)
Equity in net income (loss) of
nonconsolidated affiliates......... 2,489 (5,158) 6,615 6,029 8,387 10,063 9,692
-------- -------- -------- ---------- -------- -------- ----------
Net income (loss).................... $ 32,014 $ 37,696 $ 63,576 $ (98,946) $ 41,301 $ 44,990 $ (26,219)
======== ======== ======== ========== ======== ======== ==========
Net income per common share:(3)
Basic.............................. $ 0.23 $ 0.26 $ 0.36 $ (0.33) $ 0.24 $ 0.19 $ (0.08)
======== ======== ======== ========== ======== ======== ==========
Diluted............................ $ 0.23 $ 0.26 $ 0.34 $ (0.33) $ 0.23 $ 0.19 $ (0.08)
======== ======== ======== ========== ======== ======== ==========
OTHER DATA:
After tax cash flow(4)............... $ 71,140 $107,318 $213,445 $ 412,057 $137,106 $283,933 $ 407,492
======== ======== ======== ========== ======== ======== ==========
After tax cash flow per common
share(3)(5):
Basic.............................. $ 0.52 $ 0.73 $ 1.21 $ 1.36 $ 0.80 $ 1.21 $ 1.24
======== ======== ======== ========== ======== ======== ==========
Diluted............................ $ 0.51 $ 0.72 $ 1.17 $ 1.32 $ 0.78 $ 1.16 $ 1.17
======== ======== ======== ========== ======== ======== ==========
EBITDA(6)............................ $106,827 $141,952 $299,975 $ 713,238 $204,963 $389,733 $ 625,869
======== ======== ======== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------------
PRO FORMA
AS ADJUSTED
-----------
1997 1998 1998(1)
-------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 35,178 $ 48,192 $ 39,776
Total assets........................... 92,700 7,261,285 12,308,241
Long-term debt, net of current(7)...... 503,947 2,980,849 3,505,864
Shareholders' equity................... 302,420 3,763,702 7,312,943
</TABLE>
Notes
on following page
S-8
<PAGE> 9
(1) As adjusted to reflect the offering, and to give effect to the Jacor merger
and certain completed acquisitions of Clear Channel and Jacor as if those
transactions had occurred on January 1, 1997 and January 1, 1998, as
appropriate, as more fully set forth in the "Unaudited Pro Forma Combined
Condensed Financial Statements" presented in this prospectus supplement.
(2) The comparability of results of operations and balance sheet data is
affected by acquisitions consummated in each of the periods presented.
(3) Adjusted to reflect two-for-one stock splits in November 1995, December 1996
and July 1998.
(4) Defined as net income before extraordinary items plus depreciation,
amortization of intangibles (including that of non-consolidated affiliates)
and deferred taxes. After-tax cash flow is not presented as a measure of
operating results and does not purport to represent cash provided by
operating activities. After-tax cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
(5) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(6) Defined as net income before interest expense, income taxes and depreciation
and amortization. EBITDA is not a calculation based upon generally accepted
accounting principles; however, the amounts included in the EBITDA
calculation are derived from amounts included in the Statement of
Operations. In addition, EBITDA should not be considered as an alternative
to net income or operating income, as an indicator of operating performance,
or as an alternative to operating cash flows as a measure of liquidity.
(7) Includes $575 million aggregate principal amount of 2 5/8% senior
convertible notes due April 1, 2003 issued by Clear Channel on March 30,
1998.
S-9
<PAGE> 10
RISK FACTORS
Investing in the common stock will provide you with an equity ownership
interest in Clear Channel. As a shareholder of Clear Channel, you may be subject
to risks inherent in our business. The performance of your shares will reflect
the performance of our business relative to, among other things, the
competition, general economic and market conditions and industry conditions. The
value of your investment may increase or decline and could result in a loss. You
should carefully consider the following factors as well as other information
contained in this prospectus supplement and the accompanying prospectus before
deciding to invest in shares of the common stock.
PRO FORMA LOSSES
On a pro forma basis, giving effect to the acquisitions we have completed
in 1998, we had a loss for the nine months ended September 30, 1998, and for the
year ended December 31, 1997. In addition, if the Jacor merger had been
consummated, the pro forma losses during these periods would have been
substantially greater than they were on a pro forma basis as of September 30,
1998. We expect such losses to continue. See "Unaudited Pro Forma Combined
Condensed Financial Statements."
JACOR MERGER
Numerous conditions must be satisfied before the Jacor merger can occur.
Among others, the conditions include the receipt of approval from the
shareholders of both companies, the receipt of regulatory approvals under the
federal communications laws and the completion of a review of the merger by the
federal and state antitrust authorities. On December 3, 1998, we received a
second request for additional information and materials from the Department of
Justice. Governmental authorities will require the combined enterprise to divest
assets or submit to various operating restrictions before granting the
authorizations and approvals necessary to complete the merger or as a condition
to refraining from blocking the merger. Such divestitures may be material and
could have a material adverse effect on the results of operations following the
merger. It is possible that the completion of any such divestiture will be
completed at a price below fair market value and that the reinvestment of the
proceeds or exchange of assets therefrom will not produce for the combined
enterprise either an operating profit at the same level as the divested product
lines or a commensurate rate of return on the amount of its investment. Any
operating restrictions imposed could adversely affect our value. Therefore, we
may not complete the merger with Jacor in a timely manner or on the terms
described in this prospectus supplement, if at all. See "The Jacor Merger."
POSSIBLE DIFFICULTIES IN COMBINING CLEAR CHANNEL AND JACOR
The Jacor merger, if completed, will combine two companies that previously
operated independently. Following the merger, we intend to integrate some Jacor
operations into our own operations. However, we may not successfully combine the
operations of Jacor with our own operations. Any unexpected delays or costs of
combining the two companies could adversely affect Clear Channel. Moreover, the
outstanding debt of Jacor, to the extent it remains outstanding, contains
restrictive covenants which may limit our ability to integrate the separate
operations of Jacor, and would place greater limitations on our ability to
manage Jacor than we are currently subject to under the terms of our other
outstanding debt. Additionally, the operations, management and personnel of the
two companies may not be compatible. Following the merger with Jacor, we may
experience the loss of key personnel.
NEED TO DEVELOP "STICK" PROPERTIES
Part of Jacor's business strategy has been to improve the broadcast cash
flow and ratings of its "stick" properties (i.e., properties with insignificant
broadcast cash flow and/or insignificant ratings). In evaluating acquisition
opportunities, Jacor sought out stick properties because Jacor believed that
such radio stations provide the potential for the greatest improvement in
broadcast cash flow. Typically, Jacor will make a substantial investment in a
stick property to improve its programming operations and/or signal.
S-10
<PAGE> 11
Approximately one-half of Jacor's portfolio of radio stations currently
represent stick properties. We can give no assurance that Jacor, or the combined
company following the merger, will be successful in improving the performance of
its stick properties, notwithstanding that it may incur substantial costs in
implementing this aspect of its business strategy.
SIGNIFICANT SHAREHOLDERS; POSSIBLE FUTURE SALES
The two principal shareholders of Clear Channel, L. Lowry Mays, Chairman,
Chief Executive Officer and a director of Clear Channel, and B. J. McCombs, a
director of Clear Channel, beneficially own approximately 18.4% of the
outstanding shares of common stock (17.3% assuming completion of this offering
and 13.6% assuming completion of this offering, the Jacor merger closing when
the exchange ratio is 1.4 and no other issuances of common stock). Clear Channel
and Messrs. Mays and McCombs are parties to a buy-sell agreement restricting the
disposition of shares of the common stock owned by them. Following the Jacor
merger and this offering, Samuel Zell and certain of his affiliates who entered
into a voting agreement, and are Jacor shareholders, will own approximately 6.0%
of our common stock assuming the Jacor merger closes when the exchange ratio is
1.4. As a result, Messrs. Mays and McCombs, and those Zell shareholders
following the Jacor merger, may be able to exert significant influence over the
outcome of elections of our directors and other matters requiring the vote or
consent of our shareholders. Those shareholders and other shareholders who
acquired our common stock in previous acquisitions have the ability to sell a
substantial amount of our common stock, and such sales could adversely affect
the price of our stock. In addition, those shareholders have the ability to sell
substantial amounts of common stock without filing a registration statement with
the Securities and Exchange Commission (the "SEC"). In connection with the Jacor
merger, we have granted those Zell shareholders certain registration rights. See
"The Jacor Merger."
FINANCIAL LEVERAGE
At September 30, 1998, we had borrowings under our credit facility and
other long-term debt outstanding of approximately $2.98 billion (including
convertible debt of $575 million) and shareholders' equity of $3.76 billion. At
September 30, 1998, Jacor had total outstanding indebtedness of approximately
$1.23 billion, of which $539.6 million was comprised of various public debt
instruments (the "Jacor Notes"). This number excludes the Jacor LYONs which have
an aggregate accreted value of approximately $302 million. Jacor's credit
facility will become payable as a result of the merger. The merger will also
trigger the change in control provisions of the Jacor Notes and the Jacor LYONs.
We must offer to purchase the outstanding Jacor Notes for consideration equal to
101% of the principal amount thereof, plus any accrued and unpaid interest. We
must also offer to purchase the outstanding Jacor LYONs for consideration equal
to the issue price plus accrued original issue discount through the date set for
the purchase of the LYONs. In the event that the holders put all of the Jacor
Notes and Jacor LYONs to us, there can be no assurance that we would have the
funds available to satisfy such obligations. The holders of the Jacor Notes and
Jacor LYONs are not required to put these securities to us. If we were to
attempt to repurchase all Jacor Notes and Jacor LYONs not tendered to us in
connection with the change in control provisions of the governing indentures,
the holders of those securities may require us to pay a substantial premium
above the principal amount or issue price. Therefore, such indebtedness may
continue to be outstanding following the merger until their final maturity
dates, which fall at various times between 2006 and 2018.
If all or part of the Jacor indebtedness remains outstanding after the
merger, the terms of such indebtedness may restrict the ability of Jacor's
subsidiaries to make funds available to Jacor and Clear Channel in the form of
dividends, loans, advances or otherwise. Among other things, much of Jacor's
indebtedness is "high yield" indebtedness and restricts Jacor and its
subsidiaries from incurring additional indebtedness, selling assets or stock,
engaging in asset swaps, mergers or consolidations and entering into
transactions with affiliates. The covenants for this type of indebtedness are
more restrictive than those contained in our public indebtedness. In addition,
if Jacor's credit facility remains in place, we will be subject to a number of
financial covenants, including interest coverage, debt service coverage and a
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maximum ratio of debt to earnings before other expenses (income), interest
expenses, taxes, depreciation and amortization. Accordingly, Jacor's
indebtedness which remains outstanding after the merger may:
- cause us to incur substantial interest expense and principal repayment
obligations,
- limit our ability to obtain additional debt financing,
- result in increased vulnerability to adverse general economic and
industry conditions,
- make it more difficult for us to combine our operations with Jacor, and
- place more restrictions on our ability to manage Jacor than we currently
face in the management of the rest of our business.
We have borrowed and expect to continue to borrow to finance acquisitions
of broadcasting and outdoor advertising properties, as well as for other
purposes. We may borrow up to $2 billion under our domestic credit facility at
floating rates (currently LIBOR plus 0.50%). As of November 30, 1998, we have
borrowed approximately $1.65 billion under our domestic credit facility. We
expect to finance any future acquisitions of broadcasting and outdoor
advertising properties from increased borrowings under our credit facility,
other debt or equity financings and cash flow from operations. See "-- Risk of
Acquisition Strategy; Significant Capital Requirements" and "Use of Proceeds."
We use a significant portion of our operating income for debt service. Our
leverage could make us vulnerable to an increase in interest rates or a downturn
in the operating performance of our broadcast properties or outdoor advertising
properties or a decline in general economic conditions. Our credit facility
contains numerous restrictions, including limitations on capital expenditures,
the incurrence of additional indebtedness, payment of cash dividends, and
requirements to maintain certain financial ratios.
RISK OF ACQUISITION STRATEGY; SIGNIFICANT CAPITAL REQUIREMENTS
We intend to continue to make acquisitions of broadcasting companies and
assets, outdoor advertising companies, individual outdoor advertising display
faces, or other assets that we believe will assist our customers in marketing
their products and services. We routinely review potential acquisitions. It is
likely that we will continue to experience significant growth in the future. As
a result, we will be required to manage a rapidly expanding and significantly
larger portfolio of broadcasting and outdoor advertising properties. Our
acquisition strategy involves numerous other risks, including difficulties in
the integration of operations and systems, the diversion of management's
attention from other business concerns and the potential loss of key employees
of acquired companies or stations. Future acquisitions may not benefit us.
We will face stiff competition from other broadcasting and outdoor
advertising companies for acquisition opportunities. If the prices sought by
sellers of these companies rise, we may find fewer acceptable acquisition
opportunities. In addition, the purchase price of possible acquisitions could
require additional debt or equity financing on our part. We cannot assure you
that we will obtain the needed financing or that we will obtain such financing
on attractive terms. See "-- Financial Leverage." Additional indebtedness could
increase our leverage and make us more vulnerable to economic downturns and may
limit our ability to withstand competitive pressures. Additional equity
financing could result in dilution to our shareholders. We cannot assure you
that we will have sufficient capital resources to complete acquisitions, that we
can complete acquisitions on terms acceptable to us or that we can successfully
integrate the operations of acquired companies with our operations.
We frequently evaluate strategic opportunities both within and outside our
existing lines of business and from time to time enter into letters of intent.
We expect from time to time to pursue additional acquisitions and may decide to
dispose of certain businesses. Such acquisitions or dispositions could be
material.
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INTENSE COMPETITION
Our two lines of business are in highly competitive industries. Our
broadcasting (radio and television stations) and outdoor advertising properties
compete for audiences and advertising revenues with other radio and television
stations and outdoor advertising companies, as well as with other media, such as
newspapers, magazines, cable television, yellow pages, the Internet, and direct
mail, within their respective markets. Audience ratings and market shares are
subject to change, which could have an adverse effect on our revenues in that
market. Other variables that could affect our financial performance include
economic conditions, both general and relative to the broadcasting and outdoor
advertising industries; shifts in population and other demographics; the level
of competition for advertising dollars; fluctuations in operating costs;
technological changes and innovations; changes in labor conditions; and changes
in governmental regulations and policies and actions of federal regulatory
bodies. Although we believe that each of our business lines is able to compete
effectively in its respective markets, we may not be able to maintain or
increase our current audience ratings or advertising revenues.
INTERNATIONAL BUSINESS RISKS AND EXCHANGE RATE RISKS
For the nine months ended September 30, 1998, we derived approximately 8%
of our revenues from international radio and outdoor operations in Europe, Asia,
Mexico, Australia and New Zealand (not including our equity investments in
Australian Radio Network Pty, Ltd. and New Zealand Radio Network), and a portion
of our assets are invested overseas. The risks of doing business in foreign
countries include potential adverse changes in the diplomatic relations of
foreign countries with the United States, hostility from local populations, the
adverse effect of currency exchange controls, restrictions on the withdrawal of
foreign investment and earnings, government policies against businesses owned by
foreigners, expropriations of property, the potential instability of foreign
governments and the risk of insurrections. These risks could result in losses
against which we are not insured. Our international operations also are subject
to economic uncertainties, including risks of renegotiation or modification of
existing agreements with governmental authorities, foreign exchange restrictions
and changes in taxation structure. In addition, we may also incur currency
translation losses due to changes in the values of foreign currencies and in the
value of the U.S. dollar. We cannot predict the effect of exchange rate
fluctuations upon future operating results.
RESTRICTIONS ON TOBACCO ADVERTISING; ALCOHOL ADVERTISING
The major U.S. tobacco companies that are defendants in numerous class
action suits throughout the country recently reached an out-of-court settlement
with 46 states that includes a ban on outdoor advertising of tobacco products.
The settlement agreement was finalized on November 23, 1998, but must be
ratified by the courts in each of the 46 states participating in the settlement.
In addition to the mass settlement, the tobacco industry previously had come to
terms with the remaining four states individually. The terms of such individual
settlements also included bans on outdoor advertising of tobacco products. For
the nine months ended September 30, 1998, approximately 4% of our revenues came
from the outdoor advertising of tobacco products.
In addition to the settlement agreements, state and local governments are
also regulating the outdoor advertising of alcohol and tobacco products. For
example, several states and cities have laws restricting tobacco billboard
advertising near schools and other locations frequented by children. Some cities
have proposed even broader restrictions, including complete bans on outdoor
tobacco advertising on billboards, kiosks, and private business window displays.
It is possible that state and local governments may propose or pass similar
ordinances to limit outdoor advertising of alcohol and other products or
services in the future. Legislation regulating tobacco and alcohol advertising
has also been introduced in a number of European countries in which we conduct
business, and could have a similar impact.
The effect of these regulations, potential legislation and settlement
agreements on our business and operations could be material. The elimination of
billboard advertising by the tobacco industry will cause a reduction in our
direct revenues from such advertisers and may simultaneously increase the
available space
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on the existing inventory of billboards in the outdoor advertising industry.
This industry-wide increase in space may in turn result in a lowering of outdoor
advertising rates in our outdoor advertising markets or limit the ability of
industry participants to increase rates for some period of time.
Any regulatory changes or further settlement agreements restricting the
ability to utilize outdoor advertising for alcohol or tobacco products could
have a material adverse effect on us.
GOVERNMENT REGULATION
Broadcasting. The federal government extensively regulates the domestic
broadcasting industry. All issuances, renewals, assignments and transfers of
control of broadcasting station operating licenses require the approval of the
Federal Communications Commission ("FCC"). In addition, the federal
communications laws limit the number of broadcasting properties we may own in a
particular area. The Telecommunications Act of 1996 relaxed the FCC's multiple
ownership limits and created significant new opportunities for broadcasting
companies, but it also created uncertainty about the implementation of these
laws and some issues remain unresolved. For example, the FCC is considering
changes to its "one-to-a-market" rule and other policies and rules that could
affect the application of the local radio ownership limits. Under the
"one-to-a-market" rule, a party may not have attributable interests in radio
stations and a television station in the same market unless a waiver is granted
by the FCC. We have been granted temporary waivers of the "one-to-a-market" rule
in markets in which we currently operate both radio and television stations.
These temporary waivers are subject to the outcome of pending rulemaking
proceedings dealing with possible revisions to the "one-to-a-market" rule. There
can be no assurance that these temporary waivers will be made permanent. If they
are not made permanent, we could be required to sell some or all of the stations
in that market. Moreover, similar issues could arise in the future in connection
with potential acquisitions.
Our broadcasting business depends upon maintaining broadcasting licenses
issued by the FCC. The FCC issues these licenses for a maximum term of eight
years. Although it is rare for the FCC to deny a renewal application, our future
renewal applications may not be approved, or any renewals may include conditions
that could adversely affect our operations. Moreover, governmental regulations
and policies may change over time, and these changes may have a material impact
on us. For example, the FCC currently is considering revising its policy
regarding television local marketing agreements. It is unclear whether we will
be able to program stations under our existing agreements for the remainder of
their current terms, extend these agreements, or enter into new local marketing
agreements in other markets in which we own or operate television stations. If
our local marketing agreements are not allowed to continue or to be extended, we
could be required to cease operating those television stations which we
currently operate pursuant to such local marketing agreements and to begin
programming those television stations that we own which are currently programmed
by third parties pursuant to such local marketing agreements.
Outdoor Advertising. The outdoor advertising industry is subject to
governmental regulation at the federal, state and local level. Federal law,
principally the Highway Beautification Act of 1965, encourages states, by
threatening to withhold federal appropriations for the construction and
improvement of highways within such states, to implement legislation to restrict
billboards located within 660 feet of, or visible from, highways except in
commercial or industrial areas. Every state has implemented regulations at least
as restrictive as the Highway Beautification Act, including a ban on the
construction of new billboards along federally-aided highways and the removal of
any illegal signs on these highways at the owner's expense and without any
compensation. The Highway Beautification Act and related state laws require
compensation whenever governmental authorities require the owners to remove
legally erected billboards from federally-aided highways.
States and local jurisdictions have, in some cases, passed additional
regulations on the construction, repair, upgrading, height, size and location
of, and, in some instances, content of advertising copy being displayed on
outdoor advertising structures adjacent to federally-aided highways and to other
thoroughfares. These regulations, usually municipal building, sign or zoning
ordinances, specify minimum standards for the height, size and location of
billboards. In some cases, the construction of new billboards or
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relocation of existing billboards is banned. Some jurisdictions also have
restricted the ability to enlarge or upgrade existing billboards, such as
converting from wood to steel or from non-illuminated to illuminated structures.
From time to time governmental authorities order the removal of billboards by
the exercise of eminent domain.
Some jurisdictions have also adopted amortization of billboards in varying
forms. Amortization permits the billboard owner to operate its billboard as a
non-conforming use for a specified period of time, after which it must remove or
otherwise conform its billboards to the applicable regulations at its own cost
without any compensation. Amortization and other regulations requiring the
removal of billboards without compensation have been subject to litigation in
state and federal courts and cases have reached differing conclusions as to the
constitutionality of these regulations. We have agreed to remove some billboards
in Jacksonville, Florida. Some local jurisdictions within our existing markets
(Tampa, Houston and San Francisco) have adopted amortization ordinances. The
Houston ordinance has been the subject of litigation for over five years and is
currently not being enforced. Absent a settlement, the constitutionality of the
Houston ordinance and other legal challenges to its application will probably be
tried in 1999. The Tampa ordinance is also currently the subject of litigation.
We believe that our operations will not be materially affected by either of
these ordinances even if they are enforced. The San Francisco amortization
ordinances have not materially affected our operations since our signs conform
to effective ordinances and state law currently prevents new ordinances which do
not compensate companies for signs they are forced to remove. We cannot assure
you that we will be successful in negotiating acceptable arrangements in
circumstances in which our displays are subject to removal or amortization, and
what effect, if any, such regulations may have on our operations.
In addition, we cannot predict what additional regulations may be imposed
on outdoor advertising in the future. Legislation regulating the content of
billboard advertisements and additional billboard restrictions have been
introduced in Congress from time to time in the past. Changes in laws and
regulations affecting outdoor advertising at any level of government could have
a material adverse effect on us. Our outdoor advertising operations outside the
United States are subject to the laws of the foreign jurisdictions in which we
operate. Changes in laws and regulations affecting outdoor advertising in these
jurisdictions could have a material adverse effect on us.
Antitrust. Our growth strategy involves the acquisition of additional radio
and television stations and other outdoor advertising properties. Many of these
acquisitions will require antitrust review by the Federal Trade Commission (the
"FTC") and the Department of Justice. Following the passage of the
Telecommunications Act of 1996, the Department of Justice has become more
aggressive in reviewing proposed acquisitions of radio stations, particularly in
instances where the proposed acquiror already owns one or more radio station
properties in a particular market and is seeking to acquire another radio
station in the same market. The Department of Justice has, in some cases,
obtained consent decrees requiring radio station divestitures in a particular
market based on allegations that acquisitions would lead to unacceptable
concentration levels. The FCC has also been more aggressive in independently
examining issues of market concentration when considering radio station
acquisitions. The FCC has delayed its approval of several pending radio station
purchases by various parties because of market concentration concerns. Moreover,
in recent months the FCC has followed an informal policy of giving specific
public notice of its intention to conduct additional ownership concentration
analysis, and soliciting public comment on "the issue of concentration and its
effect on competition and diversity," with respect to certain applications for
consent to radio station acquisitions based on advertising revenue shares or
other criteria. The FCC has given such specific public notice regarding several
Jacor radio stations located in areas where we own radio stations. The
Department of Justice has also been active in reviewing proposed acquisitions of
outdoor advertising properties. The Department of Justice, the FTC or the FCC
could seek to restructure aspects of the merger with Jacor or bar us from
acquiring additional radio or television stations or outdoor advertising
properties in any market where we already have a significant position. In
addition, if we acquire international broadcasting properties, such acquisitions
will be subject to the antitrust laws of foreign jurisdictions, including laws
in some jurisdictions that limit the concentration of ownership of broadcasting
businesses or restrict foreign entities from owning such businesses.
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Environmental. As the owner or operator of various real properties and
facilities, we are subject to various federal, state and local environmental
laws and regulations. Historically, we have not incurred significant
expenditures to comply with these laws. However, following the merger, we may be
required to make significant expenditures to comply with these laws.
SIGNIFICANT COSTS OF NEW TECHNOLOGIES
We may incur material costs to convert to new technologies in our
broadcasting business. The FCC is considering ways to introduce new technologies
to the radio broadcasting industry, including satellite and terrestrial delivery
of digital audio broadcasting and the standardization of available technologies
which significantly enhance the sound quality of AM and FM broadcasts. New media
technologies that are being developed or introduced include the delivery of
audio programming by cable television systems, over the Internet, by digital
audio broadcasting ("DAB") and by satellite digital audio radio service
("SDARS"). DAB and SDARS provide for the delivery by terrestrial and satellite
means, respectively, of multiple new, high-quality audio programming formats to
local and national audiences. DAB technology may be used in the future by radio
stations either on existing or alternate broadcasting frequencies or on new
frequency bands. If the radio industry were to implement any of these or other
new technologies, we would likely incur increased expenses to install, operate
and service the technology, or be at a competitive disadvantage for having
failed to do so. We are unable to predict the effect any such new technologies
will have on us. In addition, in certain segments of our outdoor advertising
business, there is increasing competitive pressure to employ more advanced
technology in advertising displays, which could involve significant costs.
On April 3, 1997, the FCC announced that it had adopted rules that will
allow television broadcasters to provide digital television to consumers. The
FCC also adopted a table of allotments for digital television, which provided
eligible existing broadcasters with a second channel on which to provide digital
television service. On February 23, 1998, in response to numerous petitions for
reconsideration, the FCC announced its adoption of orders affirming, with some
modifications, the FCC's April 3, 1997 decisions. The allotment plan is based on
the use of a "core" digital television spectrum between channels 2-51.
Ultimately, the FCC plans to recover the channels currently used for analog
broadcasting and will decide at a later date the use of the spectrum ultimately
recovered. The FCC will allow television broadcasters to use their channels
according to their best business judgment. Such uses can include multiple
standard definition program channels, data transfer, subscription video,
interactive materials, and audio signals, although the FCC will require
broadcasters to provide a free digital video programming service that is at
least comparable to today's analog service. The FCC will also require
broadcasters to pay a fee of 5% of gross revenues received from ancillary or
supplementary services for which viewers are charged a subscription fee. The FCC
will not require broadcasters to air "high definition" programming or,
initially, to simulcast their analog programming on the digital channel. The FCC
is requiring affiliates of ABC, CBS, NBC and FOX in the top 10 television
markets to be on the air with a digital signal by May 1, 1999. The FCC is
requiring affiliates of those networks in markets 11-30 to be on the air with a
digital signal by November 1, 1999, and the remaining commercial broadcasters by
May 1, 2002. The FCC has stated that broadcasters will remain public trustees
and that it will begin proceedings to determine the extent of broadcasters'
future public interest obligations. The most contentious issue yet to be
resolved is the extent to which cable systems will be required to carry
broadcasters' new digital channels. The FCC is currently considering a myriad of
options, ranging from an immediate cable carriage requirement to no requirement
at all. We will incur considerable expense in the conversion to digital
television and are unable to predict the extent or timing of consumer demand for
any such digital television services.
DEPENDENCE ON KEY PERSONNEL
Our business is dependent upon the performance of key employees, including
L. Lowry Mays, our Chief Executive Officer, and other executive officers. We
also employ or independently contract with on-air personalities and hosts of
syndicated radio programs with significant loyal audiences in their respective
markets. Although we have entered into long-term agreements with some of our key
on-air
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talent and program hosts, we cannot assure you that all such on-air
personalities will remain with us or will retain our audiences.
RISKS RELATED TO THE YEAR 2000 ISSUE
We are exposed to the risk that the year 2000 issue ("Y2K") could cause
system failures or miscalculations in our broadcast, outdoor and corporate
locations which could cause disruptions of operations, including, among other
things, a temporary inability to produce broadcast signals, process financial
transactions, or engage in similar normal business activities. As a result, we
determined that we will be required to modify or replace portions of our
software and hardware so that those systems will properly utilize dates beyond
December 31, 1999. We presently believe that with modifications or replacements
of existing software and hardware, the Y2K issue can be mitigated. If such
modifications and replacements are not made, or are not completed on time, the
Y2K issue could have a material impact on our operations. While we believe that
our efforts will provide reasonable assurance that material disruptions will not
occur due to internal failure, the possibility of interruption still exists in
the event that the information systems of our significant vendors ("external
agents") are not Y2K compliant. The inability of external agents to complete
their Y2K resolution process in a timely fashion could materially impact Clear
Channel. The effect of non-compliance by external agents is not determinable. In
addition, disruptions in the economy generally resulting from the Y2K issues
could also materially adversely affect Clear Channel. We could be subject to
litigation for computer system failures, equipment shutdowns or failures to
properly date business records, for example. The amount of potential liability
and lost revenue cannot be reasonably estimated at this time. To date, the
amounts incurred and expensed for developing and carrying out the plans to
complete the Y2K modifications have not had a material effect on our operations.
We currently plan to complete our Y2K modifications, including testing, by July
1, 1999. The total remaining cost for addressing Y2K is not expected to be
material to our operations.
DILUTION
The price to the public in this offering is substantially higher than the
net tangible book value per share of common stock. Purchasers of the common
stock in this offering will therefore incur immediate dilution in net tangible
book value per share of common stock. As of September 30, 1998, after giving
effect to the Jacor merger, we had an adjusted consolidated deficit in net
tangible book value of approximately $2.33 billion, or $7.28 per share of common
stock. After giving effect to the Jacor merger and other pending transactions
and the sale of 15 million shares of common stock offered by this prospectus
supplement at the offering price of $48.375 per share, after deducting
underwriting discounts and commissions and estimated offering expenses, Clear
Channel's adjusted consolidated deficit in net tangible book value at December
17, 1998, would have been $1.6 billion, or $4.85 per share of common stock. This
represents an immediate increase in net tangible book value of $2.43 per share
to existing shareholders, and investors purchasing shares of common stock in
this offering will incur immediate and substantial dilution of $54.97 per share
following the offering based on the purchase price per share to such investors.
"Dilution" per share represents the difference between the price per share to be
paid by the new investors and the pro forma consolidated net tangible book value
per share following the offering.
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USE OF PROCEEDS
Our net proceeds from this offering are approximately $704.1 million
($809.7 million if the underwriters' over-allotment option is exercised in full)
at the offering price of $48.375 per share, after deducting the underwriting
discount and estimated offering expenses that we will have paid. We will use the
net proceeds to repay borrowings outstanding under our domestic credit facility.
As of December 17, 1998, approximately $1.67 billion in borrowings was
outstanding under our domestic credit facility and the effective interest rate
thereon was approximately 5.74%. Borrowings under this credit facility, which
must be paid in full by June 2005, currently bear interest as of the date of
this prospectus supplement at a floating rate based on the LIBOR plus 0.50%.
Previous borrowings under this credit facility were used to fund recent
acquisitions and to refinance certain of the indebtedness assumed by us in
connection with these acquisitions. See "Unaudited Pro Forma Combined Condensed
Financial Statements." Upon repayment of such borrowings, the amount repaid will
become immediately available to us for re-borrowing under this credit facility.
We expect that amounts available for re-borrowing under this credit facility as
a result of the application of the net proceeds of this offering will be used to
finance acquisitions. The purchase price of, and the debt assumed in, future
acquisitions effected in connection with the implementation of our acquisition
strategy are expected to be financed from borrowings under this credit facility,
other debt or equity financings and cash flow from operations.
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COMMON STOCK PRICE RANGE AND DIVIDENDS
The common stock trades on the NYSE under the symbol "CCU." The table below
sets forth, for the calendar quarters indicated, the reported high and low sale
prices of the common stock as reported on the NYSE. The prices set forth in the
table have been adjusted to reflect two-for-one stock splits in July 1998 and
December 1996.
<TABLE>
<CAPTION>
CLEAR CHANNEL
COMMON STOCK
MARKET PRICE
------------------
HIGH LOW
------ ------
<S> <C> <C>
1996
First Quarter............................................. $14.57 $10.25
Second Quarter............................................ 21.50 13.50
Third Quarter............................................. 22.28 18.28
Fourth Quarter............................................ 22.19 15.50
1997
First Quarter............................................. 24.81 17.13
Second Quarter............................................ 31.69 21.38
Third Quarter............................................. 34.38 29.31
Fourth Quarter............................................ 39.72 30.00
1998
First Quarter............................................. 50.03 36.72
Second Quarter............................................ 54.56 44.06
Third Quarter............................................. 61.75 40.38
Fourth Quarter (through December 17, 1998)................ 50.94 36.13
</TABLE>
On December 17, 1998, the closing price per share of the common stock was
$48.375. We urge potential investors to obtain current market quotations before
making any decision with respect to an investment in the common stock.
We intend to retain future earnings for use in our business, and we do not
anticipate paying any dividends on the common stock in the foreseeable future.
Our domestic credit facility limits our ability to pay dividends, other than
dividends payable wholly in capital stock of Clear Channel.
On December 17, 1998, there were approximately 626 holders of record of
Clear Channel common stock.
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CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of Clear Channel as of September 30, 1998, as adjusted to give
effect to the sale of the 15,000,000 shares of common stock offered in this
prospectus supplement.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------------------------
AS PRO FORMA
ACTUAL ADJUSTED(1) AS ADJUSTED(2)
---------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt...................... $ 4,049 $ 4,049 $ 4,049
========== ========== ===========
Credit Facility -- domestic(2)......................... $1,626,600 $ 922,550 $ 922,550
Credit Facility -- international....................... 123,962 123,962 123,962
7.25% Debentures due October 15, 2027.................. 300,000 300,000 300,000
6.25% Senior notes due June 15, 2008................... 125,000 125,000 125,000
6.875% Senior debentures due June 15, 2018............. 175,000 175,000 175,000
2.625% Convertible debentures.......................... 575,000 575,000 575,000
Other long-term debt................................... 55,287 55,287 55,287
Jacor long-term debt(3)................................ -- -- 1,585,595
Shareholders' equity:
Class A Preferred Stock, $1.00 par value, 2,000,000
shares authorized, no shares issued or outstanding... -- -- --
Class B Preferred Stock, $1.00 par value, 8,000,000
shares authorized, no shares issued or outstanding... -- -- --
Common Stock, $.10 par value, 600,000,000 shares
authorized, 248,454,892 shares issued and outstanding
(263,454,892 shares as adjusted)..................... 24,856 26,356 33,506
Additional paid-in capital............................. 3,322,268 4,024,818 6,820,288
Common stock warrants.................................. -- -- 42,571
Retained earnings...................................... 214,621 214,621 214,621
Other equity........................................... 49,288 49,288 49,288
Unrealized gain on investments......................... 154,642 154,642 154,642
Cost of shares (104,278) held in treasury.............. (1,973) (1,973) (1,973)
---------- ---------- -----------
Total shareholders' equity................... 3,763,702 4,467,752 7,312,943
---------- ---------- -----------
Total capitalization......................... $6,744,551 $6,744,551 $11,175,337
========== ========== ===========
</TABLE>
- ---------------
(1) As adjusted to give effect to this offering and the application of the net
proceeds of approximately $704.1 million at the offering price of $48.375
per share.
(2) As adjusted to reflect the offering, and to give effect to the Jacor merger
and certain completed acquisitions of Clear Channel and Jacor as if those
transactions had occurred on January 1, 1997 and January 1, 1998, as
appropriate, as more fully set forth in the "Unaudited Pro Forma Combined
Condensed Financial Statements" presented in this prospectus supplement.
(3) We may incur additional indebtedness of up to approximately $1.53 billion
(including the Jacor LYONs with an accreted value $302 million) in
connection with the merger with Jacor. See "Risk Factors -- Financial
Leverage" and "Jacor Merger." All other transactions closed since September
30, 1998 or pending transactions, individually or in the aggregate, are not
expected to be material to our financial position.
S-20
<PAGE> 21
THE JACOR MERGER
The description of the proposed merger with Jacor contained in this
prospectus supplement is not complete. To understand the terms of the merger
fully and for a more complete description, you should read the merger agreement
and the detailed disclosure in our Current Report on Form 8-K filed with the SEC
on October 9, 1998, as amended on December 9, 1998.
GENERAL
As of October 7, 1998, Jacor was the second largest radio group in the
United States in terms of number of radio stations, the third largest radio
group in the nation as measured by revenue, and the country's third largest
provider of syndicated radio programming. As of such date, Jacor owned, had
under contract to own, programmed or sold airtime for 230 radio stations and one
television station in an aggregate of 55 U.S. markets. Jacor also produces more
than 50 syndicated programs and provides services for more than 4,000 radio
stations, which programs include the top three rated radio programs in the
United States.
THE JACOR MERGER AGREEMENT
On October 8, 1998, we entered into a merger agreement with Jacor. Pursuant
to the merger agreement, Jacor will merge with and into a wholly-owned
subsidiary of Clear Channel which will survive as a wholly-owned subsidiary of
Clear Channel. Outstanding shares of Jacor common stock will convert into our
common stock based on an exchange ratio described in the merger agreement. The
exchange ratio will be determined by a formula based upon the average closing
price of our common stock during the 25 consecutive trading days ending on the
second trading day before completion of the merger. Assuming an exchange ratio
of 1.4 shares of our common stock for each share of Jacor common stock, which is
based on the closing price of our common stock on the date of the merger
agreement, and that no additional shares of Jacor common stock are issued before
the completion of the merger, we will issue approximately 71.5 million shares of
our common stock in the merger to the shareholders of Jacor. Certain
shareholders of Jacor and Clear Channel have agreed to vote their shares in
favor of the Jacor merger at their shareholder meetings.
REGISTRATION RIGHTS AGREEMENT
In connection with the merger agreement, we entered into a registration
rights agreement with certain shareholders of Jacor who, on the date of such
agreement, held an aggregate of approximately 27.0% of the outstanding shares of
Jacor common stock. As a result of the registration rights agreement, we may be
required to file registration statements with the SEC to register for resale our
common stock received by such Jacor stockholders in the merger.
CONDITIONS TO THE JACOR MERGER
The completion of the Jacor merger cannot occur until the satisfaction of
numerous conditions, including the following:
- the receipt of approvals from our shareholders and the shareholders of
Jacor;
- the absence of any law or court order prohibiting the merger;
- receipt of regulatory approvals under the federal communications laws and
the completion of the review of the merger by the federal and state
antitrust authorities; and
- receipt of an opinion of each of our legal counsel that the merger will
be tax-free to Jacor and its common shareholders.
Some conditions may be waived by the company entitled to assert the
condition.
S-21
<PAGE> 22
REQUIRED REGULATORY APPROVALS
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
prohibits us from completing the Jacor merger until after we have furnished
information and materials to the Department of Justice and the FTC and we have
waited the required period of time. The Department of Justice or the FTC has the
authority to challenge the merger on antitrust grounds before or after we
complete the merger. On December 3, 1998, we received a second request for
additional information and materials from the Department of Justice.
Some governmental authorities may seek conditions on the merger before
granting approval. We cannot predict whether we will obtain the required
regulatory approvals within the time frame in the merger agreement or on
conditions that would not be detrimental to Clear Channel.
TERMINATION
We can agree with Jacor to terminate the merger agreement at any time
without completing the merger. In addition, either company can individually
terminate the merger agreement if:
- the merger is not completed by October 8, 1999;
- the stockholders of either company fail to approve the merger;
- a law or court order permanently prohibits the merger; or
- the other party breaches a representation or warranty it made in the
merger agreement or fails to comply with its obligation under the merger
agreement.
Furthermore, we can terminate the merger agreement if the Jacor board of
directors withdraws or adversely modifies its recommendation of the merger
proposal to the Jacor stockholders, recommends an acquisition proposal made by a
third party, or fails to call or hold the Jacor stockholders' meeting because of
such an acquisition proposal. Jacor can terminate the merger agreement if a
third party makes an acquisition proposal and the Jacor board of directors
determines that the proposal is financially superior to the merger. Jacor can
also terminate the merger agreement if the average closing price of our common
stock is less than or equal to $37.50 per share during any 25 consecutive
trading day period commencing after October 8, 1998. In certain circumstances
Jacor would be required to pay us a $115 million break-up fee upon a
termination.
BUSINESS OF JACOR
As of October 7, 1998, Jacor was the second largest radio group in the
United States in terms of number of radio stations, the third largest radio
group in the nation as measured by revenue, and the country's third largest
provider of syndicated radio programming. As of such date, Jacor owned,
operated, represented and/or entered into agreements to acquire 230 radio
stations and one television station in an aggregate of 55 U.S. markets. Jacor
also produces more than 50 syndicated programs and services for more than 4,000
radio stations, which programs include Rush Limbaugh, The Dr. Laura Schlessinger
Show and Dr. Dean Edell, the top three rated radio programs in the United
States.
The following table sets forth certain selected information with regard to
each of Jacor's 78 AM and 149 FM radio stations which it owned or programmed, or
for which it sold airtime, as of October 7, 1998. Excluded from the following
table are the one AM and two FM Mexican radio stations to which Jacor provides
programming and sells airtime under exclusive sales agency arrangements.
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
- ------ -------- -------- -----
<S> <C> <C> <C>
ARIZONA
Phoenix.................................................... -- 2 2
CALIFORNIA
Antelope Valley............................................ 1(a) 2(a) 3
Los Angeles/Thousand Oaks.................................. 3 2 5
</TABLE>
S-22
<PAGE> 23
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
- ------ -------- -------- -----
<S> <C> <C> <C>
Riverside.................................................. 2(b) -- 2
San Diego(c)............................................... 3 5 8
San Francisco.............................................. -- 2(b) 2
San Jose................................................... -- 3 3
Santa Barbara.............................................. 2 3 5
Santa Clarita.............................................. 1(a) -- 1
COLORADO
Denver..................................................... 3 5 8
Ft. Collins-Greeley........................................ 2 2 4
FLORIDA
Jacksonville............................................... 2 3 5
Punta Gorda................................................ 1 2 3
Sarasota................................................... 2 4(d) 6
Tampa/St. Petersburg....................................... 2 5 7(e)
GEORGIA
Atlanta.................................................... 1 4(b) 5
IDAHO
Boise...................................................... 2 4 6
Idaho Falls/Pocatello...................................... 2 3 5
Twin Falls................................................. 1 2 3
IOWA
Cedar Rapids............................................... 2 2 4
Des Moines................................................. 1 2 3
Ft. Madison/Burlington..................................... 2 2 4
KENTUCKY
Lexington.................................................. 2 4 6
Louisville................................................. 1 5(f) 6(e)
LOUISIANA
Shreveport................................................. 2 3 5
MARYLAND
Baltimore.................................................. 2 1 3
MISSOURI
St. Louis.................................................. 1 5 6
NEVADA
Las Vegas.................................................. -- 4 4
NEW YORK
Rochester.................................................. 2 5 7
NORTH DAKOTA
Bismark.................................................... 1 1 2
OHIO
Chillicothe................................................ 2(b) 1 3
Cincinnati................................................. 4(g) 4(b) 8
Cleveland.................................................. 1 4 5
Columbus................................................... 2 3 5
Dayton..................................................... 1 5 6
Findlay.................................................... -- 2 2
Greenville................................................. -- 1 1
Lima....................................................... 1 3 4
Marion..................................................... 1 2 3
Sandusky................................................... 1 2 3
</TABLE>
S-23
<PAGE> 24
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
- ------ -------- -------- -----
<S> <C> <C> <C>
Springfield................................................ 1 -- 1
Toledo..................................................... 2 3 5
Washington Court House..................................... 1 1 2
Youngstown................................................. 2(b) 3(b) 5
OREGON
Albany/Corvallis........................................... 2 2 4
Medford.................................................... 1 4 5
Portland................................................... 2 3(d) 5
PENNSYLVANIA
Pittsburgh................................................. 1 -- 1
SOUTH CAROLINA
Charleston................................................. -- 4 4
TEXAS
Dallas..................................................... -- 2 2
Houston.................................................... -- 3 3
UTAH
Salt Lake City............................................. 3(b) 4(b) 7
WASHINGTON
Centralia.................................................. 1(a) 1(a) 2
WYOMING
Casper..................................................... 2(d) 1 3
Cheyenne................................................... 1 4(b) 5
-- --- ---
Total............................................ 78 149 227
== === ===
</TABLE>
- -------------------------
(a) Jacor provides programming and sells airtime pursuant to a local marketing
agreement (FCC license not owned by Jacor) for these stations.
(b) Includes one station for which Jacor provides programming and sells airtime
pursuant to a local marketing agreement (FCC license not owned by Jacor).
(c) Jacor also provides, under exclusive sales agency arrangements, programming
to and sells airtime for one additional AM and two additional FM Mexican
radio stations.
(d) Includes one station currently under construction which is not yet
operating.
(e) Includes one AM station in Tampa, Florida, and one AM and four FM stations
in Louisville, Kentucky that are proposed to be divested in connection with
the Jacor merger.
(f) Includes one station for which Jacor sells airtime pursuant to a joint
sales agreement (FCC license not owned by Jacor).
(g) Includes two stations for which Jacor provides programming and sells
airtime pursuant to a local marketing agreement (FCC license not owned by
Jacor).
Jacor also owns a television station, WKRC-TV, in Cincinnati. WKRC-TV is an
affiliate of CBS.
Additionally, Jacor and its wholly owned subsidiary, Premiere Radio
Networks, Inc., together form the third largest provider of syndicated radio
programming in the country. Jacor syndicates the nation's leading radio talk
shows, including Rush Limbaugh, The Dr. Laura Schlessinger Show, Dr. Dean Edell
and Art Bell's overnight programs, Dreamland and Coast to Coast. Jacor also owns
NSN Network Services, Ltd., a satellite systems integration company that
provides design, communications technology and support to establish and maintain
global satellite connectivity to companies worldwide.
S-24
<PAGE> 25
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the offering and application of the net proceeds therefrom as set
forth in "Use of Proceeds" and the merger with Jacor (collectively, the
"Transactions"). For accounting purposes Clear Channel will account for the
merger as a purchase of Jacor; accordingly, the net assets of Jacor have been
adjusted to their estimated fair values based upon a preliminary purchase price
allocation.
The unaudited pro forma combined condensed statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998 give
effect to the Transactions as if they had occurred on January 1, 1997 and
January 1, 1998, respectively. The unaudited pro forma combined condensed
balance sheet at September 30, 1998 gives effect to the Transactions as if they
had occurred on September 30, 1998.
The unaudited pro forma combined condensed statement of operations for the
year ended December 31, 1997 was prepared based upon the historical statement of
operations of Clear Channel, adjusted to reflect the acquisitions of 93% of the
outstanding capital stock of Eller Media, the radio assets and certain outdoor
advertising assets of Paxson Communications Corp., all of the outstanding
capital stock of More Group and the merger with Universal, as if such
acquisitions and merger had occurred on January 1, 1997 ("1997 Clear Channel Pro
Forma"), and based upon the historical statement of operations of Jacor adjusted
to reflect the acquisition of the assets of 17 radio stations from Nationwide
Communications, Inc., The EFM Companies, and Premiere Radio Networks, Inc., as
if such acquisitions had occurred on January 1, 1997 ("1997 Jacor Pro Forma").
The unaudited pro forma combined condensed statement of operations for the nine
months ended September 30, 1998 was prepared based upon the historical statement
of operations of Clear Channel, adjusted to reflect the merger with Universal
and the acquisition of More Group as if such merger and acquisition had occurred
on January 1, 1998 ("1998 Clear Channel Pro Forma"), and based upon the
historical statement of operations of Jacor adjusted to reflect the acquisition
of the assets of 17 radio stations from Nationwide as if such acquisition had
occurred on January 1, 1998 ("1998 Jacor Pro Forma"). The unaudited pro forma
combined condensed balance sheet was prepared based upon the historical balance
sheet of Clear Channel and the historical balance sheet of Jacor. Certain
amounts in Jacor's financial statements have been reclassified to conform to our
presentation.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements of Jacor and Clear
Channel incorporated herein by reference.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the actual results of operations or financial position
that would have occurred had the Jacor merger and the other acquisitions of
Clear Channel and Jacor described above occurred on the dates indicated nor are
they necessarily indicative of future operating results or financial position.
S-25
<PAGE> 26
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
SEPTEMBER 30, 1998
ASSETS
<TABLE>
<CAPTION>
CLEAR CHANNEL
AS ADJUSTED
CLEAR CLEAR PRO FORMA AND JACOR
CHANNEL THE CHANNEL JACOR MERGER PRO FORMA
HISTORICAL OFFERING AS ADJUSTED HISTORICAL ADJUSTMENT MERGER
---------- --------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........... $ 48,192 $ (500) $ 47,692 $ 42,084 $ (50,000) $ 39,776
Accounts receivable, net............ 287,067 -- 287,067 198,327 -- 485,394
Other current assets................ 65,603 -- 65,603 29,385 -- 94,988
---------- --------- ---------- ---------- ---------- -----------
Total Current Assets.......... 400,862 (500) 400,362 269,796 (50,000) 620,158
Property, plant & equipment, net...... 1,713,449 -- 1,713,449 260,212 -- 1,973,661
Intangible assets:
Contract valuations................. 275,211 -- 275,211 360,000 -- 635,211
Licenses and goodwill............... 4,362,111 -- 4,362,111 2,508,450 1,613,629 8,484,190
Other intangible assets............. 74,552 -- 74,552 -- -- 74,552
---------- --------- ---------- ---------- ---------- -----------
4,711,874 -- 4,711,874 2,868,450 1,613,629 9,193,953
Less accumulated amortization......... (254,869) -- (254,869) (156,159) 156,159 (254,869)
---------- --------- ---------- ---------- ---------- -----------
4,457,005 -- 4,457,005 2,712,291 1,769,788 8,939,084
Other assets:
Notes receivable.................... 53,675 -- 53,675 -- -- 53,675
Investments in and advances to,
nonconsolidated affiliates........ 346,215 -- 346,215 -- -- 346,215
Other assets........................ 41,189 -- 41,189 85,369 -- 126,558
Other investments................... 248,890 -- 248,890 -- -- 248,890
---------- --------- ---------- ---------- ---------- -----------
TOTAL ASSETS.................. $7,261,285 $ (500) $7,260,785 $3,327,668 $1,719,788 $12,308,241
========== ========= ========== ========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities..... $ 238,166 $ -- $ 238,166 $ 137,958 $ -- $ 376,124
Current portion of long-term debt... 4,049 -- 4,049 -- -- 4,049
---------- --------- ---------- ---------- ---------- -----------
Total Current Liabilities..... 242,215 -- 242,215 137,958 -- 380,173
Long-term debt........................ 2,980,849 (704,550) 2,276,299 1,229,565 -- 3,505,864
Deferred income taxes................. 163,104 -- 163,104 358,995 -- 522,099
Other long-term liabilities........... 92,913 -- 92,913 119,717 -- 212,630
Liquid yield options notes............ -- -- -- 302,400 53,630 356,030
Minority interest..................... 18,502 -- 18,502 -- -- 18,502
Shareholders' equity:
Preferred stock..................... -- -- -- -- -- --
Common stock........................ 24,856 1,500 26,356 511 6,639 33,506
Additional paid-in capital.......... 3,322,268 702,550 4,024,818 1,114,520 1,680,950 6,820,288
Common stock warrants............... -- -- -- 31,500 11,071 42,571
Retained earnings................... 214,621 -- 214,621 19,871 (19,871) 214,621
Other............................... 49,288 -- 49,288 -- -- 49,288
Unrealized gain on investments...... 154,642 -- 154,642 12,631 (12,631) 154,642
Cost of shares held in treasury..... (1,973) -- (1,973) -- -- (1,973)
---------- --------- ---------- ---------- ---------- -----------
Total Shareholders' Equity.... 3,763,702 704,050 4,467,752 1,179,033 1,666,158 7,312,943
---------- --------- ---------- ---------- ---------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS'
EQUITY...................... $7,261,285 $ (500) $7,260,785 $3,327,668 $1,719,788 $12,308,241
========== ========= ========== ========== ========== ===========
</TABLE>
S-26
<PAGE> 27
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR
CHANNEL
AS ADJUSTED
1997 CLEAR 1997 PRO FORMA AND JACOR
CLEAR CHANNEL THE CHANNEL JACOR MERGER PRO FORMA
PRO FORMA OFFERING AS ADJUSTED PRO FORMA ADJUSTMENT MERGER
------------- -------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue........................... $1,273,983 $ -- $1,273,983 $650,844 $ -- $1,924,827
Operating expenses.................... 749,796 -- 749,796 435,301 -- 1,185,097
Depreciation and amortization......... 289,689 -- 289,689 102,887 82,765 475,341
Corporate expenses.................... 30,675 -- 30,675 14,093 -- 44,768
---------- -------- ---------- -------- -------- ----------
Operating income (loss)............... 203,823 -- 203,823 98,563 (82,765) 219,621
Interest expense...................... 218,437 (43,651) 174,786 117,710 -- 292,496
Other income (expense) -- net......... 187 -- 187 12,060 -- 12,247
---------- -------- ---------- -------- -------- ----------
Income (loss) before income taxes..... (14,427) 43,651 29,224 (7,087) (82,765) (60,628)
Income taxes.......................... 25,791 17,460 43,251 1,096 -- 44,347
---------- -------- ---------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.......................... (40,218) 26,191 (14,027) (8,183) (82,765) (104,975)
Equity in earnings of nonconsolidated
affiliates.......................... 6,029 -- 6,029 -- -- 6,029
---------- -------- ---------- -------- -------- ----------
Net income (loss) before extraordinary
items............................... $ (34,189) $ 26,191 $ (7,998) $ (8,183) $(82,765) $ (98,946)
========== ======== ========== ======== ======== ==========
Net income (loss) before extraordinary
items per common share:
Basic............................... $ (0.16) $ (0.03) $ (0.33)
========== ========== ==========
Diluted............................. $ (0.17) $ (0.05) $ (0.33)
========== ========== ==========
Other Data:
After tax cash flow(1)................ $ 291,162 $ 26,191 $ 317,353 $ 94,704 $ -- $ 412,057
========== ======== ========== ======== ======== ==========
After tax cash flow per common share--
diluted(2).......................... $ 1.29 $ 1.32 $ 1.32
========== ========== ==========
</TABLE>
- ---------------
(1) After-tax cash flow is defined as net income (loss) before extraordinary
items plus depreciation, amortization of intangibles (including that of
nonconsolidated affiliates) and deferred taxes. After-tax cash flow is not
presented as a measure of operating results and does not purport to
represent cash provided by operating activities. After-tax cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(2) After-tax cash flow per share is defined as after-tax cash flow divided by
weighted average common shares and common share equivalents outstanding
assuming dilution.
S-27
<PAGE> 28
CLEAR CHANNEL AND JACOR
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CLEAR
CHANNEL
AS ADJUSTED
1998 CLEAR 1998 PRO FORMA AND JACOR
CLEAR CHANNEL THE CHANNEL JACOR MERGER PRO FORMA
PRO FORMA OFFERING AS ADJUSTED PRO FORMA ADJUSTMENT MERGER
------------- -------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue........................... $1,109,521 $ -- $1,109,521 $589,184 $ -- $ 1,698,705
Operating expenses.................... 659,215 -- 659,215 391,942 -- 1,051,157
Depreciation and amortization......... 251,923 -- 251,923 97,352 46,915 396,190
Corporate expenses.................... 32,864 -- 32,864 13,052 -- 45,916
---------- -------- ----------- -------- -------- -----------
Operating income (loss)............... 165,519 -- 165,519 86,838 (46,915) 205,442
Interest expense...................... 133,781 (31,682) 102,099 80,470 -- 182,569
Other income (expense) -- net......... 3,817 -- 3,817 10,728 -- 14,545
---------- -------- ----------- -------- -------- -----------
Income (loss) before income taxes..... 35,555 31,682 67,237 17,096 (46,915) 37,418
Income taxes.......................... 45,339 9,505 54,844 18,485 -- 73,329
---------- -------- ----------- -------- -------- -----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates.......................... (9,784) 22,177 12,393 (1,389) (46,915) (35,911)
Equity in earnings of nonconsolidated
affiliates.......................... 9,692 -- 9,692 -- -- 9,692
---------- -------- ----------- -------- -------- -----------
Net income (loss) before extraordinary
items............................... $ (92) $ 22,177 $ 22,085 $ (1,389) $(46,915) $ (26,219)
========== ======== =========== ======== ======== ===========
Net income (loss) before extraordinary
items per common share:
Basic............................... $ (0.00) $ 0.09 $ (0.08)
========== =========== ===========
Diluted............................. $ (0.00) $ 0.09 $ (0.08)
========== =========== ===========
Other Data:
After tax cash flow(1)................ $ 289,352 $ 22,177 $ 311,529 $ 95,963 $ -- $ 407,492
========== ======== =========== ======== ======== ===========
After tax cash flow per common share--
diluted(2).......................... $ 1.13 $ 1.15 $ 1.17
========== =========== ===========
</TABLE>
- ---------------
(1) After-tax cash flow is defined as net income (loss) before extraordinary
items plus depreciation, amortization of intangibles (including that of
nonconsolidated affiliates) and deferred taxes. After-tax cash flow is not
presented as a measure of operating results and does not purport to
represent cash provided by operating activities. After-tax cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(2) After-tax cash flow per share is defined as after-tax cash flow divided by
weighted average common shares and common share equivalents outstanding
assuming dilution.
S-28
<PAGE> 29
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The pro forma offering adjustments at September 30, 1998 and for the year
ended December 31, 1997 and the nine months ended September 30, 1998 are as
follows:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
INCREASE (DECREASE)
---------------------
<S> <C> <C>
(a) Decrease in cash and cash equivalents resulting from
estimated transaction expenses. $ (500)
(b) Decrease in long term debt for the use of proceeds. (704,550)
(c) Increase in common stock to account for Clear Channel's
common stock issued in the offering at $0.10 par value. 1,500
(d) Increase in additional paid-in capital to account for Clear
Channel's common stock issued in the offering at net
proceeds less $0.10 par value. 702,550
</TABLE>
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C> <C>
(e) Decrease in interest expense to account for the savings
associated with the reduction of long-term debt using
Clear Channel's average interest rate on its revolving
credit facility of 6.2% for the twelve months ended
December 31, 1997 and 6% for the nine months ended
September 30, 1998. $ 43,651 $31,682
(f) Increase in income taxes resulting from the interest
expense saving described in note (e). (17,460) (9,505)
</TABLE>
Basic and diluted pro forma share information is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
BASIC
Clear Channel pro forma weighted average shares
outstanding 218,810 244,079
Additional common shares issued in the offering 15,000 15,000
------- -------
Clear Channel as adjusted 233,810 259,079
======= =======
DILUTED
Clear Channel pro forma weighted average shares
outstanding 225,486 256,534
Additional common shares issued in the offering 15,000 15,000
------- -------
Clear Channel as adjusted 240,486 271,534
======= =======
</TABLE>
S-29
<PAGE> 30
CLEAR CHANNEL AND JACOR
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Clear Channel and Jacor unaudited pro forma combined condensed financial
statements reflect the merger, accounted for as a purchase, as follows:
<TABLE>
<S> <C>
Jacor common stock outstanding (in whole shares)............ 51,073,198
Exchange ratio (based on the estimated value per share of
$38.7054(1)).............................................. 1.40
-----------
Clear Channel's common stock to be issued in the merger (in
whole shares)............................................. 71,502,477
Estimated value per share................................... X $38.7054
-----------
$ 2,767,532
Estimated value of common stock options..................... 35,088
Estimated transaction costs................................. 50,000
-----------
Total estimated purchase price.................... $ 2,852,620
===========
</TABLE>
- ---------------
(1) The estimated value per share of $38.7054 is calculated using the seven day
average of the market closing price from three days prior to three days
following the signing of the merger agreement.
For purpose of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $ 2,852,620
Plus -- estimated fair value of LYONs notes in excess of
carrying value............................................ 53,630
Plus -- estimated fair value of Jacor common stock warrants
in excess of carrying value............................... 11,071
Plus -- Jacor's accumulated deficit in net assets exchanged
in the merger at September 30, 1998 adjusted for the
elimination of existing net licenses and goodwill of
$2,352,291................................................ 1,204,758
-----------
Estimated excess purchase price (allocated to licenses and
goodwill)................................................. $ 4,122,079
===========
</TABLE>
The estimated excess purchase price allocated to licenses and goodwill of
$4,122,079 will be amortized over a 25 year period using the straight line
method.
The unaudited pro forma combined condensed financial statements of
operations excludes the effect of any divestiture of stations, which may be
required for regulatory approval, as we intend the funds received from any
divestiture to be reinvested in acquisitions of similar stations in other
markets. Neither Clear Channel nor Jacor anticipates that any required
divestitures will be significant. The unaudited pro forma combined condensed
financial statements of operations also excludes the effect of retired or
refinanced debt as any retirement or refinancing of debt will not occur at or
prior to the closing of the merger.
S-30
<PAGE> 31
The pro forma merger adjustments at September 30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(a) Decrease in cash and cash equivalents resulting from
estimated merger expenses................................... $ (50,000)
(b) Increase in goodwill and licenses equal to the excess
purchase price of the merger................................ 1,613,629
(c) Decrease in accumulated amortization resulting from the
elimination of Jacor's existing accumulated amortization on
goodwill.................................................... 156,159
(d) Record liquid yield option notes at estimated fair value.... 53,630
(e) Increase common stock to account for Clear Channel common
stock given in the merger at $0.10 par value................ 6,639
(f) Increase in additional paid-in capital to account for Clear
Channel common stock given in the merger at $38.7054 per
share less $0.10 par value ($1,645,862) plus the value of
Jacor stock options included in the Merger ($35,088)........ 1,680,950
(g) Record common stock warrants at estimated fair value........ 11,071
(h) Eliminate Jacor's existing retained earnings balance........ (19,871)
(i) Eliminate Jacor's existing unrealized gain on investments
balance..................................................... (12,631)
</TABLE>
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C> <C>
(j) Increase in amortization expense resulting
from the additional goodwill created by the
merger and a change in the life of goodwill
amortization from 40 years (Jacor's policy) to
25 years (Clear Channel's policy). This
amortization expense results in a permanent
difference and will not be deductible for
federal income tax purposes................... $(82,765) $(46,915)
</TABLE>
Pro forma basic and diluted share information is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
BASIC:
Clear Channel as adjusted weighted average shares
outstanding............................................... 233,810 259,079
Jacor as adjusted weighted average shares outstanding....... 49,348 50,133
Increase weighted average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the exchange ratio of 1.40, (51,073 (LOGO)
.40)...................................................... 20,429 20,429
------- -------
Clear Channel as adjusted and Jacor Pro Forma Merger........ 303,587 329,641
======= =======
DILUTED:
Clear Channel as adjusted weighted average shares
outstanding............................................... 240,486 271,534
Jacor pro forma weighted average shares outstanding......... 51,051 54,347
Increase weighted average common stock outstanding to
account for Clear Channel common stock given in the merger
and to account for the dilution effect Jacor's common
stock warrants, employee stock options and other dilutive
shares have on Clear Channel at the exchange ratio of
1.40, (52,776 (LOGO) .40) and (55,287 (LOGO) .40),
respectively.............................................. 21,110 22,115
------- -------
Clear Channel as adjusted and Jacor Pro Forma Merger........ 312,647 347,996
======= =======
</TABLE>
S-31
<PAGE> 32
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLEAR CHANNEL ELLER MEDIA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT(1)
------------- ----------- -------------
<S> <C> <C> <C>
Net revenue................................................ $697,068 $56,642 $ --
Operating expenses......................................... 394,404 33,804 --
Depreciation and amortization.............................. 114,207 10,547 5,974
Noncash compensation expense............................... -- -- --
Corporate expenses......................................... 20,883 2,318 --
-------- ------- -------
Operating income (loss).................................... 167,574 9,973 (5,974)
Interest expense........................................... 75,076 8,565 2,518
Other income (expense) -- net.............................. 11,579 (4,082) --
-------- ------- -------
Income (loss) before income taxes.......................... 104,077 (2,674) (8,492)
Income tax (benefit)....................................... 47,116 3 (1,315)
-------- ------- -------
Income (loss) before equity in earnings of nonconsolidated
affiliates............................................... 56,961 (2,677) (7,177)
Equity in earnings (loss) of non-consolidated affiliates... 6,615 -- --
-------- ------- -------
Net income (loss).......................................... $ 63,576 $(2,677) $(7,177)
======== ======= =======
Net income (loss) per common share:
Basic.................................................... $ 0.36
========
Diluted.................................................. $ 0.34
========
</TABLE>
S-32
<PAGE> 33
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997
PAXSON PRO FORMA UNIVERSAL PRO FORMA MORE GROUP PRO FORMA CLEAR CHANNEL
HISTORICAL ADJUSTMENT(2) HISTORICAL ADJUSTMENT(3) HISTORICAL ADJUSTMENT(4) PRO FORMA
- ---------- ------------- ---------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$78,104 $ -- $209,639 $ -- $232,530 $ -- $1,273,983
63,362 (1,246) 101,613 -- 157,859 -- 749,796
12,101 9,377 59,977 30,881 23,592 23,033 289,689
-- -- 8,289 (8,289) 1,327 (1,327) --
4,059 (4,059) -- -- 7,474 -- 30,675
------- -------- -------- -------- -------- -------- ----------
(1,418) (4,072) 39,760 (22,592) 42,278 (21,706) 203,823
1,370 29,276 46,400 -- 4,383 50,849 218,437
(1,034) -- (2,621) -- (3,655) -- 187
------- -------- -------- -------- -------- -------- ----------
(3,822) (33,348) (9,261) (22,592) 34,240 (72,555) (14,427)
-- (13,339) -- -- 10,705 (17,379) 25,791
------- -------- -------- -------- -------- -------- ----------
(3,822) (20,009) (9,261) (22,592) 23,535 (55,176) (40,218)
-- -- -- -- (586) -- 6,029
------- -------- -------- -------- -------- -------- ----------
$(3,822) $(20,009) $ (9,261) $(22,592) $ 22,949 $(55,176) $ (34,189)
======= ======== ======== ======== ======== ======== ==========
$ (0.16)
==========
$ (0.17)
==========
</TABLE>
S-33
<PAGE> 34
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
1998
CLEAR CLEAR
CHANNEL UNIVERSAL PRO FORMA MORE GROUP PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENT(5) HISTORICAL ADJUSTMENT(6) PRO FORMA
---------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................... $909,555 $55,292 $ -- $144,674 $ -- $1,109,521
Operating expenses............. 517,562 30,826 -- 110,827 -- 659,215
Depreciation and
amortization................. 201,422 15,517 7,720 15,699 11,565 251,923
Noncash compensation expense... -- 106 (106) 3,476 (3,476) --
Corporate expenses............. 25,739 1,414 -- 5,711 -- 32,864
-------- ------- ------- -------- -------- ----------
Operating income (loss)........ 164,832 7,429 (7,614) 8,961 (8,089) 165,519
Interest expense............... 94,555 13,159 -- 3,715 22,352 133,781
Other income
(expense) -- net............. 13,416 (23) -- (9,576) -- 3,817
-------- ------- ------- -------- -------- ----------
Income (loss) before income
taxes........................ 83,693 (5,753) (7,614) (4,330) (30,441) 35,555
Income tax (benefit)........... 48,766 -- -- 3,301 (6,728) 45,339
-------- ------- ------- -------- -------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates................... 34,927 (5,753) (7,614) (7,631) (23,713) (9,784)
Equity in net income (loss) of
non-consolidated
affiliates................... 10,063 -- -- (371) -- 9,692
-------- ------- ------- -------- -------- ----------
Net income (loss).............. $ 44,990 $(5,753) $(7,614) $ (8,002) $(23,713) $ (92)
======== ======= ======= ======== ======== ==========
Net income (loss) per common
share:
Basic........................ $ 0.19 $ (0.00)
======== ==========
Diluted...................... $ 0.19 $ (0.00)
======== ==========
</TABLE>
S-34
<PAGE> 35
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
ELLER MEDIA ACQUISITION
(1) Represents the pro forma effect of the acquisition of Eller Media
assuming it was acquired January 1, 1997:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(a) Increase in amortization of goodwill of $5,205 resulting
from the additional goodwill created by the acquisition
and a decrease in amortizable life from 40 years (Eller
Media) to 25 years (Clear Channel) and additional
depreciation of $769 related to the adjustment of fixed
assets to fair value.................................... $ (5,974)
(b) Increase in interest expense due to a higher amount of
average debt outstanding, which was partially offset by
a lower average interest rate (6% average rate for Clear
Channel and 8.8% for Eller Media during the first three
months of 1997)......................................... (2,518)
(c) Tax effect of the above adjustments to depreciation and
interest expense at Clear Channel's effective federal
and state tax rate of 40%............................... 1,315
</TABLE>
PAXSON ACQUISITION
(2) Represents the pro forma effect of the Paxson acquisition assuming it
was acquired January 1, 1997:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(d) Elimination of option plan compensation expense
resulting from the elimination of the plan.............. $ 1,246
(e) Increase in amortization expense resulting from the
additional goodwill created by the acquisition.......... (9,377)
(f) Elimination of corporate general and administrative
expenses resulting from the elimination of the Paxson
corporate office........................................ 4,059
(g) Increase in interest expense (at an average interest
rate of 6.5% for the first nine months of 1997) due to
additional borrowing on Clear Channel's facility to
finance the acquisition cost............................ (29,276)
(h) Tax effect of the above adjustment at Clear Channel's
effective federal and state tax rate of 40%............. 13,339
</TABLE>
S-35
<PAGE> 36
UNIVERSAL MERGER
(3) The pro forma merger adjustments for the year ended December 31, 1997
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(i) Increase in amortization expense resulting from the
additional goodwill created by the merger................... $(30,881)
(j) Decrease in Noncash compensation to reverse the effect of
Financial Accounting Standards Board Statement No. 123 ("FAS
123") from the statement of operations as Clear Channel
elected to follow Accounting Principles Board Opinion Number
25 ("APB 25") for earnings presentation and implemented FAS
123 for footnote disclosure only............................ 8,289
</TABLE>
MORE GROUP ACQUISITION
(4) The pro forma adjustments for the year ended December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(k) Increase in amortization expense resulting from the
additional goodwill created by the acquisition.............. $(23,033)
(l) Decrease in Noncash compensation to reverse the effect of
FAS 123 from the statement of operations as Clear Channel
elected to follow APB 25 for earnings presentation and
implemented FAS 123 for footnote disclosure only............ 1,327
(m) Increase in interest expense due to financing the
acquisition price of More Group at Clear Channel's average
interest rate of 6.62% for 1997............................. (50,849)
(n) The tax effect of adjustment (l) at the 1997 UK statutory
rate of 31.5% offset by the tax benefit of adjustment (m) at
Clear Channel's federal U.S. tax rate in 1997 of 35%........ 17,379
</TABLE>
UNIVERSAL MERGER
(5) The pro forma merger adjustments for the nine months ended September
30, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(o) Increase in amortization expense resulting from the
additional goodwill created by the merger................... $ (7,720)
(p) Decrease in Noncash compensation to reverse the effect of
FAS 123 from the statement of operations as the Company
elected to follow APB 25 for earnings presentation and
implemented FAS 123 for footnote disclosure only............ 106
</TABLE>
S-36
<PAGE> 37
MORE GROUP ACQUISITION
(6) The pro forma adjustments for the nine months ended September 30, 1998
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(q) Increase in amortization expense resulting from the
additional goodwill created by the acquisition.............. $(11,565)
(r) Decrease in Noncash compensation to reverse the effect of
FAS 123 from the statement of operations as Clear Channel
elected to follow APB 25 for earnings presentation and
implemented FAS 123 for footnote disclosure only............ 3,476
(s) Increase in interest expense due to financing the
acquisition price of More Group at Clear Channel's average
interest rate of 6.62% for 1997............................. (22,352)
(t) The tax effect of adjustment (r) at the 1998 UK statutory
rate of 31.5% offset by the tax benefit of adjustment (s) at
Clear Channel's federal U.S. tax rate in 1998 of 35%........ 6,728
</TABLE>
S-37
<PAGE> 38
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OTHER NATIONWIDE'S
ACQUISITIONS ACQUISITION ACQUISITION 1997
JACOR PRO FORMA HISTORICAL PRO FORMA PRO FORMA JACOR
HISTORICAL ADJUSTMENTS NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------ ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenue......................... $530,574 $25,321(a) $ 97,997 $ 565(e) $ (3,613)(h) $650,844
Broadcast operating expenses........ 356,783 16,760(a) 81,958 723(e) (20,923)(h) 435,301
Depreciation and amortization....... 78,485 8,182(a) 10,129 2,084(e) 4,007(i) 102,887
Corporate general and administrative
expenses.......................... 14,093 -- 3,623 -- (3,623)(h) 14,093
-------- ------- -------- -------- -------- --------
Operating income (loss)............. 81,213 379 2,287 (2,242) 16,926 98,563
Interest expense, net............... 80,008 9,303(b) 4,616 3,197(e) 20,586(j) 117,710
Gain on sale of radio stations...... 11,135 -- 44,132 (44,132)(f) -- 11,135
Other income (expense), net......... 664 298(c) (37) -- -- 925
-------- ------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary items........... 13,004 (8,626) 41,764 (49,571) (3,660) (7,087)
Income tax (expense) credit......... (9,600) 4,358(d) (14,309) 16,992(g) 1,464(k) (1,096)
-------- ------- -------- -------- -------- --------
Income (loss) before extraordinary
items............................. $ 3,404 $(4,268) $ 27,455 $(32,579) $ (2,196) $ (8,183)
======== ======= ======== ======== ======== ========
Income (loss) per common share:
Basic............................. $ 0.08 $ (0.16)
======== ========
Diluted........................... $ 0.08 $ (0.16)
======== ========
</TABLE>
S-38
<PAGE> 39
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
HISTORICAL
NATIONWIDE NATIONWIDE'S
SIX MONTHS ACQUISITION ACQUISITION 1998
JACOR ENDED PRO FORMA PRO FORMA JACOR
HISTORICAL JUNE 30, 1998 ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue..................................... $530,372 $50,171 $ -- $ 8,641(l) $589,184
Broadcast operating expenses.................... 356,877 39,623 (738)(e) (3,820)(l) 391,942
Depreciation and amortization................... 87,444 5,044 299(e) 4,565(i) 97,352
Corporate general and administrative expenses... 13,052 1,406 -- (1,406) 13,052
-------- ------- ----- ------- --------
Operating income (loss)......................... 72,999 4,098 439 9,302 86,838
Interest expense, net........................... 65,968 (452) -- 14,954(j) 80,470
Gain on sale of radio stations.................. 10,896 -- -- -- 10,896
Other income (expense), net..................... (164) (4) -- -- (168)
-------- ------- ----- ------- --------
Income (loss) before income taxes and
extraordinary items........................... 17,763 4,546 439 (5,652) 17,096
Income tax (expense) credit..................... (19,200) (1,546) -- 2,261(k) (18,485)
-------- ------- ----- ------- --------
Income (loss) before extraordinary items........ $ (1,437) $ 3,000 $ 439 $(3,391) $ (1,389)
======== ======= ===== ======= ========
Income (loss) per common share:
Basic......................................... $ (0.03) $ (0.03)(m)
======== ========
Diluted....................................... $ (0.03) $ (0.03)(m)
======== ========
</TABLE>
S-39
<PAGE> 40
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) These adjustments for the following acquisitions reflect additional
revenues and expenses for the period January 1, 1997 to the acquisition
consummation date. Depreciation and amortization expense adjustments
reflect Jacor's purchase cost of the assets acquired.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND
REVENUE EXPENSES AMORTIZATION
------- --------- ------------
<S> <C> <C> <C>
Premiere Radio Networks, Inc. (completed June 1997)......... $14,130 $ 9,276 $4,348
EFM Companies (completed April 1997)........................ 11,191 7,484 3,834
------- ------- ------
TOTAL............................................. $25,321 $16,760 $8,182
======= ======= ======
</TABLE>
(b) The adjustment represents additional interest expense associated with
Jacor's borrowings under its credit facility and the issuance of various
debt securities in 1997. The assumed weighted average interest rate
associated with the borrowings is 7.9%.
(c) The adjustment represents miscellaneous income generated by Premiere for
periods prior to the acquisition.
(d) To provide for the tax effect of pro forma adjustments. The acquisition
adjustments described in Note (a) include non-deductible goodwill
amortization estimated to be approximately $1,350 for the year ended
December 31, 1997.
(e) The adjustments represent additional revenues and expenses, net of the
elimination of time brokerage agreement fees, related primarily to
Nationwide's acquisitions of radio stations in the Dallas, Phoenix and San
Diego broadcast areas. Nationwide has operated a majority of the stations
acquired in 1997 under local marketing agreements since January 1, 1997,
therefore a significant amount of the revenues and operating expenses
related to these stations are included in Nationwide's historical
financial statements for the year ended December 31, 1997. The adjustments
for the six months ended June 30, 1998 represent the elimination of time
brokerage agreement fees and additional depreciation and amortization
expenses resulting from the allocation of Nationwide's purchase price of
KXGL in San Diego.
(f) The adjustment represents elimination of Nationwide's gain on the sale and
exchange of certain radio stations in 1997.
(g) To provide for the tax effect of Nationwide's pro forma adjustments
relating to its 1997 acquisitions and divestitures at statutory rates.
(h) To eliminate the results for the divestiture of two San Diego stations and
estimated expense savings described below. Expense savings will result
from the elimination of redundant broadcast operating expenses arising
from the operation of multiple stations in broadcast areas, changes in
benefit plan and compensation structures to conform with Jacor's and the
elimination of Nationwide's corporate office function.
S-40
<PAGE> 41
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative........................ 3,623
Benefit Plan expenses....................................... 2,850
Commissions................................................. 675
Promotion and programming................................... 2,500
Personnel reductions........................................ 3,200
Other....................................................... 1,200
-------
TOTAL............................................. $14,048
=======
</TABLE>
(i) The adjustment reflects the additional depreciation and amortization
expense resulting from the allocation of Jacor's purchase price to the
assets acquired including an increase in property and equipment and
identifiable intangible assets to their estimated fair market values.
(j) The adjustment reflects additional interest expense related to additional
borrowings under Jacor's credit facility, its 8% Notes due 2010 and its
4 3/4% LYONs offering completed during February of 1998 to finance, in
part, the acquisition of Nationwide.
(k) To provide for the tax effect of pro forma adjustments using an assumed
rate of 40%.
(l) To reflect the revenues and broadcast operating expenses of the Nationwide
stations for the period July 1, 1998 to the completion of the transaction
on August 10, 1998, net of the elimination of results for the divestiture
of two San Diego stations. The adjustment to broadcast operating expenses
is also net of projected expense savings as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1998
------------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative........................ $1,406
Benefit Plan expenses....................................... 1,741
Commissions................................................. 413
Promotion and programming................................... 1,527
Personnel reductions........................................ 1,955
Other....................................................... 732
------
TOTAL............................................. $7,774
======
</TABLE>
(m) The pro forma weighted average shares outstanding includes all shares
outstanding as of September 30, 1998. The pro forma weighted averages
shares outstanding of Jacor do not reflect any outstanding options and
warrants or the assumed conversion of the LYONs as they are antidilutive.
S-41
<PAGE> 42
BUSINESS
We are the world's largest out-of-home advertising company and the nation's
third largest radio station company in terms of radio stations. Our operations
consist of two principal lines of business -- broadcasting (radio and
television) and outdoor advertising. The broadcasting operations include both
stations for which we are the licensee and stations for which we program and/or
sell air time under local marketing agreements or joint sales agreements. We
also operate radio networks. Our outdoor advertising operations include both
advertising display faces which we own or which we manage under license
management agreements.
BROADCASTING
Radio
The following table sets forth certain selected information with regard to
each of our 66 AM and 136 FM radio stations that we owned or programmed, or for
which we sold airtime, as of September 30, 1998.
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
- ------ -------- -------- -----
<S> <C> <C> <C>
ALABAMA
Mobile...................................................... 2 5(a) 7
ARKANSAS
Little Rock................................................. -- 5 5
CALIFORNIA
Monterey.................................................... 2 4 6
CONNECTICUT
New Haven................................................... 2 1 3
FLORIDA
Daytona Beach............................................... -- 1 1
Florida Keys................................................ 1(b) 5 6
Ft. Myers/Naples............................................ 1 4 5
Jacksonville................................................ 2 4 6(c)
Miami/Ft. Lauderdale........................................ 2 5 7
Orlando..................................................... 2 4 6
Panama City................................................. 1 4 5
Pensacola................................................... -- 2(a) 2
Tallahassee................................................. 1 4 5
Tampa/St. Petersburg........................................ 3 5 8(c)
West Palm Beach............................................. 3(a) 4 7
KENTUCKY
Louisville.................................................. 3 5 8
LOUISIANA
New Orleans................................................. 2 5 7
MASSACHUSETTS
Springfield................................................. 1 1 2
MICHIGAN
Grand Rapids................................................ 2 4 6
MISSISSIPPI
Jackson..................................................... 2 2 4
NEW YORK
Albany...................................................... 1 3 4
</TABLE>
S-42
<PAGE> 43
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
- ------ -------- -------- -----
<S> <C> <C> <C>
NORTH CAROLINA
Greensboro.................................................. 2 2 4
Raleigh..................................................... 1 4 5
OHIO
Cleveland................................................... 1 2 3(c)
Dayton...................................................... 1 2 3(c)
OKLAHOMA
Oklahoma City............................................... 3(b) 4 7
Tulsa....................................................... 2(b) 4(d) 6
PENNSYLVANIA
Allentown................................................... 1 1 2
Lancaster................................................... 1 1 2
Reading..................................................... 1 1 2
RHODE ISLAND
Providence.................................................. -- 2 2
SOUTH CAROLINA
Columbia.................................................... 1 3 4
Greenville.................................................. 1 3 4
TENNESSEE
Cookeville.................................................. 2 2 4
Memphis..................................................... 3 4 7
TEXAS
Austin...................................................... 1 3 4
El Paso..................................................... 2 3 5
Houston..................................................... 3(e) 4(b) 7
San Antonio................................................. 3(b) 4(b) 7
VIRGINIA
Norfolk..................................................... -- 4 4
Richmond.................................................... 3 3 6
WISCONSIN
Milwaukee................................................... 1 3 4
-- --- ---
Total............................................. 66 136 202
== === ===
</TABLE>
- ---------------
(a) Includes one station for which we sell airtime pursuant to a joint sales
agreement (FCC license not owned by Clear Channel).
(b) Includes one station programmed pursuant to a local marketing agreement
(FCC license not owned by Clear Channel).
(c) Includes one AM and one FM station in Jacksonville, Florida, two AM and
four FM stations in Tampa/St. Petersburg, Florida, one AM and two FM
stations in Cleveland, Ohio, and one AM and two FM stations in Dayton,
Ohio, proposed to be divested in connection with the Jacor merger.
(d) Includes two stations programmed pursuant to a local marketing agreement
(FCC licenses not owned by Clear Channel).
(e) Includes two stations that are owned by CCC-Houston AM, Ltd., in which we
own an 80% interest.
We also own the Kentucky News Network based in Louisville, Kentucky, the
Virginia News Network based in Richmond, Virginia, the Oklahoma News Network
based in Oklahoma City, Oklahoma, the Voice of Southwest Agriculture Network
based in San Angelo, Texas, the Clear Channel Sports Network
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<PAGE> 44
based both in College Station, Texas, and Des Moines, Iowa, the Alabama Radio
Network based in Birmingham, Alabama, the Tennessee Radio Network based in
Nashville, Tennessee, the University of Miami Sports Network based in Miami,
Florida, the Florida Radio Network based in Maitland, Florida, the University of
Florida Sports Network based in Gainesville, Florida and Orlando, Florida, and
the Penn State Sports Network based in West Palm Beach, Florida.
TELEVISION
The following table sets forth certain selected information with regard to
each of our 18 television stations and two satellite stations that we owned or
programmed as of September 30, 1998.
<TABLE>
<CAPTION>
NETWORK
MARKET AFFILIATION
- ------ -----------
<S> <C>
ALBANY/SCHENECTADY/TROY, NEW YORK
WXXA-TV..................................................... FOX
HARRISBURG/LEBANON/LANCASTER/YORK, PENNSYLVANIA
WHP-TV...................................................... CBS
WLYH-TV(a).................................................. UPN
JACKSONVILLE, FLORIDA
WAWS-TV..................................................... FOX
WTEV-TV(a).................................................. UPN
LITTLE ROCK, ARKANSAS
KLRT-TV..................................................... FOX
KASN-TV(a).................................................. UPN
MEMPHIS, TENNESSEE
WPTY-TV..................................................... ABC
WLMT-TV(a).................................................. UPN
MINNEAPOLIS, MINNESOTA
WFTC-TV..................................................... FOX
MOBILE, ALABAMA/PENSACOLA, FLORIDA
WPMI-TV..................................................... NBC
WJTC-TV(a).................................................. UPN
PROVIDENCE/NEW BEDFORD, RHODE ISLAND
WPRI-TV..................................................... CBS
WNAC-TV(a).................................................. FOX
HOISINGTON, KANSAS
KBDK-TV(c)(d)............................................... n/a
TUCSON, ARIZONA
KTTU-TV(b).................................................. UPN
TULSA, OKLAHOMA
KOKI-TV..................................................... FOX
KTFO-TV(a).................................................. UPN
WICHITA, KANSAS
KSAS-TV..................................................... FOX
SALINA, KANSAS
KAAS-TV(c).................................................. FOX
</TABLE>
- ---------------
(a) Station programmed pursuant to a local marketing agreement (FCC license not
owned by Clear Channel).
(b) Station programmed by another party pursuant to a local marketing
agreement.
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<PAGE> 45
(c) Satellite station of KSAS-TV in Wichita, Kansas.
(d) We hold a construction permit for this station (station not on the air).
OUTDOOR ADVERTISING
The following table sets forth certain selected information with regard to
each of our outdoor advertising display faces as of September 30, 1998.
<TABLE>
<CAPTION>
TOTAL
DISPLAY
MARKET FACES(A)
- ------ --------
<S> <C>
DOMESTIC:
Arizona..................................................... 1,806
California.................................................. 17,390
Delaware.................................................... 1,085
Florida..................................................... 9,461
Georgia..................................................... 2,088
Illinois.................................................... 7,284
Indiana..................................................... 1,385
Iowa........................................................ 646
Maryland.................................................... 3,025
Minnesota................................................... 1,735
New York.................................................... 1,112
Ohio........................................................ 2,264
Pennsylvania................................................ 2,659
South Carolina.............................................. 1,234
Tennessee................................................... 3,970
Texas....................................................... 14,654
Wisconsin................................................... 1,666
Other Out-of-Home........................................... 9,750
Union Pacific Southern Pacific(b)........................... 5,783
INTERNATIONAL:
Great Britain............................................... 42,693
Ireland..................................................... 4,875
Belgium..................................................... 3,230
France...................................................... 4,446
Taiwan...................................................... 450
Nordic...................................................... 45,552
Canada...................................................... 55
Small Transit Displays(c)................................... 83,832
-------
Total............................................. 274,130
=======
</TABLE>
- ---------------
(a) Domestic display faces primarily include 20 foot x60 foot bulletins, 14
foot x 48 foot bulletins, 12 foot x 25 foot Premier Panels(TM), 25 foot
x 25 foot Premier Plus Panels(TM), 12 foot x 25 foot 30-sheet posters, 6
foot x 12 foot 8-sheet posters, and various transit displays. International
display faces include street furniture, various large transit displays and
billboards of various sizes.
(b) Represents licenses managed under Union Pacific Southern Pacific License
Management Agreement.
(c) Represents small display faces on the interior and exterior of various
public transportation vehicles.
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<PAGE> 46
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-8330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at http://www.sec.gov.
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below, for whom BT Alex. Brown Incorporated and Merrill Lynch, Pierce, Fenner &
Smith Incorporated are acting as joint book runners, and the underwriters named
below have severally agreed to purchase from us the number of shares of common
stock set forth beside their names below at the public offering price less the
underwriting discount and commissions set forth on the cover page of this
prospectus supplement.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
BT Alex. Brown Incorporated................................. 2,136,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 2,136,000
Credit Suisse First Boston Corporation...................... 1,266,000
Goldman, Sachs & Co. ....................................... 1,266,000
ING Baring Furman Selz LLC.................................. 1,266,000
Lehman Brothers Inc. ....................................... 1,266,000
Morgan Stanley & Co. Incorporated........................... 1,266,000
NationsBanc Montgomery Securities LLC....................... 1,266,000
PaineWebber Incorporated ................................... 600,000
Salomon Smith Barney Inc. .................................. 1,266,000
Schroder & Co. Inc. ........................................ 1,266,000
----------
Total............................................. 15,000,000
==========
</TABLE>
The obligation of the underwriters to purchase the common stock is subject
to the terms and conditions set forth in the underwriting agreement. The
underwriting agreement requires the underwriters to purchase all shares of the
common stock offered by this prospectus supplement, if any of such shares are
purchased.
The underwriters have advised us that they propose to offer the shares of
common stock to the public at the public offering price of $48.375 per share and
to certain dealers at the public offering price less a concession not in excess
of $0.84 per share. The underwriters may allow, and such dealers may reallow, a
concession not in excess of $0.10 per share to certain other dealers. The
underwriters may change the public offering price after the common stock is
released for sale to the public.
We have granted to the underwriters an option, exercisable not later than
30 days after the date of this prospectus supplement, to purchase up to
2,250,000 additional shares of common stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
prospectus supplement. To the extent that the underwriters exercise such option,
each of the underwriters will have a firm commitment to purchase approximately
the same percentage of the overallotment that the number of shares of common
stock to be purchased by it shown in the above table bears to 15,000,000, and we
will be obligated, pursuant to the option, to sell such shares to the
underwriters. The underwriters may exercise such option only to cover
overallotments made in connection with the sale of common stock offered pursuant
to this prospectus supplement. If purchased, the underwriters will offer such
additional shares on the same terms as those in which the 15,000,000 shares are
being offered.
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<PAGE> 47
We have agreed to indemnify the underwriters with respect to certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
To facilitate the offering of the common stock, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price of
the common stock. Specifically, the underwriters may overallot shares of the
common stock in connection with this offering, thereby creating a short position
in the underwriters' account. A short position results when an underwriter sells
more shares of common stock than such underwriter committed to purchase.
Additionally, to cover such overallotments or to stabilize the market price of
the common stock, the underwriters may bid for, and purchase, shares of the
common stock at a level above that which might otherwise prevail in the open
market. The underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The underwriters
also may reclaim selling concessions allowed to an underwriter or dealer, if the
underwriters repurchase shares distributed by that underwriter or dealer.
Clear Channel and Messrs. L. Lowry Mays and B.J. McCombs have agreed that
they will not, directly or indirectly, offer, sell or otherwise dispose of, any
equity securities of Clear Channel or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, equity securities of
Clear Channel (other than employee stock options granted by Clear Channel in the
ordinary course of business) for a period of 30 days after the date of this
prospectus supplement without the prior written consent of BT Alex. Brown
Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The underwriters and their respective affiliates may be customers of,
lenders to, engage in transactions with, and perform services for us and our
subsidiaries in the ordinary course of business.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 1997
and 1996, and for each of the three years in the period ended December 31, 1997,
incorporated by reference herein and the financial statement schedule
incorporated by reference herein and included in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 1997, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
incorporated by reference elsewhere herein which, as to the years 1996 and 1997,
are based in part on the reports of KPMG and KPMG Peat Marwick LLP,
respectively, independent auditors. The financial statements referred to above
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.
The consolidated financial statements incorporated in this prospectus
supplement by reference to the audited financial statements of Universal Outdoor
Holdings, Inc. as of December 31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997, included in Clear Channel's Current
Report on Form 8-K dated March 12, 1998, as amended by Form 8-K/A filed on March
23, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The 1996 consolidated financial statements of Australian Radio Network Pty.
Ltd. not separately presented in Clear Channel's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, have been audited by KPMG, independent
auditors, as set forth in their report dated March 4, 1997 included in Clear
Channel's Annual Report on Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference. Such report referred to above is incorporated
herein by reference in reliance upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Heftel Broadcasting Corporation
and subsidiaries as of and for the year ended December 31, 1997 (not separately
presented in Clear Channel's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997), are incorporated by reference herein in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
and upon the authority of that Firm as experts in accounting and auditing.
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<PAGE> 48
The financial statements incorporated in this prospectus supplement by
reference to the audited historical financial statements of Paxson Radio (a
division of Paxson Communications Corporation) for the year ended December 31,
1996 included in Clear Channel's Current Report on Form 8-K dated December 22,
1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of Eller Media as of December 31,
1996 and 1995 and for the year ended December 31, 1996 and for the period from
August 18, 1995 through December 31, 1995, together with the consolidated
financial statements of PMG Holdings, Inc. and subsidiaries and the combined
financial statements of Eller Investment Company, Inc. for the period from
January 1, 1995 to August 17, 1995, incorporated by reference in this prospectus
supplement are included in Clear Channel's Current Report on Form 8-K, filed on
April 17, 1997, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The combined financial statements of Eller Investment Company, Inc. as of
and for the year ended December 31, 1994, incorporated by reference in this
prospectus supplement are included in Clear Channel's Current Report on Form
8-K, filed April 17, 1997, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of More Group Plc. as of December 31,
1997 and for the year ended December 31, 1997, included in Clear Channel's
Current Report on Form 8-K/A dated September 4, 1998, have been audited by Price
Waterhouse Chartered Accountants and Registered Auditors, London, England and
are incorporated by reference herein in reliance upon the report of said firm as
experts in auditing and accounting.
The consolidated balance sheets of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1997 and 1996 and the consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997 incorporated by reference in this prospectus
supplement, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the common stock offered hereby will be passed upon for
Clear Channel by our special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(a partnership including professional corporations), San Antonio, Texas, and for
the underwriters by Cravath, Swaine & Moore, New York, New York. Alan D. Feld,
the sole shareholder of a professional corporation which is a partner of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., is a director of Clear Channel and owns
approximately 181,000 shares of common stock (including presently exercisable
nonqualified options to acquire approximately 105,000 shares).
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<PAGE> 49
Clear Channel Communications, Inc. Logo
PROSPECTUS
$1,500,000,000
CLEAR CHANNEL COMMUNICATIONS, INC.
DEBT SECURITIES, JUNIOR SUBORDINATED DEBT SECURITIES,
PREFERRED STOCK, COMMON STOCK, WARRANTS,
STOCK PURCHASE CONTRACTS, AND STOCK PURCHASE UNITS
CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
PREFERRED SECURITIES, GUARANTEED TO THE EXTENT SET FORTH HEREIN
BY CLEAR CHANNEL COMMUNICATIONS, INC.
Clear Channel Communications, Inc., a Texas corporation (the "Company"), may
issue from time to time, together or separately, (i) unsecured senior debt
securities (the "Senior Debt Securities"), (ii) unsecured subordinated debt
securities (the "Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities"), (iii) unsecured junior subordinated
debt securities ("Junior Subordinated Debt Securities"); (iv) warrants to
purchase Debt Securities or Junior Subordinated Debt Securities (the "Debt
Warrants"), (v) shares of preferred stock, par value $1.00 per share, of the
Company (the "Preferred Stock"), (vi) warrants to purchase shares of Preferred
Stock (the "Preferred Stock Warrants"), (vii) shares of common stock, par value
$.10 per share, of the Company (the "Common Stock"), (viii) warrants to purchase
shares of Common Stock (the "Common Stock Warrants"), (ix) stock purchase
contracts ("Stock Purchase Contracts") to purchase Common Stock or Preferred
Stock and (x) stock purchase units ("Stock Purchase Units"), each representing
ownership of a Stock Purchase Contract and Debt Securities, Junior Subordinated
Debt Securities, debt obligations of the United States of America or agencies or
instrumentalities thereof ("U.S. Obligations"), or Preferred Securities (as
defined below), securing the holder's obligation to purchase Common Stock or
Preferred Stock under the Stock Purchase Contract, or any combination of the
foregoing, either individually or as units consisting of one or more of the
foregoing in amounts, at prices and on terms to be determined by market
conditions at the time of offering. The Debt Warrants, Preferred Stock Warrants
and Common Stock Warrants are referred to herein collectively as the "Warrants",
and the Debt Securities, the Junior Subordinated Debt Securities, Preferred
Stock, Common Stock, the Warrants, Stock Purchase Contracts and Stock Purchase
Units are referred to herein collectively as the "Company Securities".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ADDITIONAL INFORMATION REGARDING THE SECURITIES IS SET FORTH ON THE INSIDE FRONT
COVER.
FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE "GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS" ON PAGE 6.
CCCI Capital Trust I, CCCI Capital Trust II and CCCI Capital Trust III
(each, a "CCCI Trust" and collectively, the "CCCI Trusts"), each a statutory
business trust formed under Delaware law, may offer, from time to time,
preferred securities (the "Preferred Securities") with the payment of
distributions and payments on liquidation or redemption of the Preferred
Securities issued by each such CCCI Trust guaranteed on a subordinated basis by
the Company to the extent described herein and in an accompanying prospectus
supplement (the "Guarantees"). The Company will be the owner of the trust
interests represented by common securities (the "Common Securities") to be
issued by each CCCI Trust. Unless indicated otherwise in a prospectus
supplement, each CCCI Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Junior Subordinated Debt
Securities. The Company Securities and the Preferred Securities are referred to
herein collectively as the "Offered Securities".
The Offered Securities may be issued in one or more series or issuances and
will be limited to $1,500,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt Securities
or Junior Subordinated Debt Securities are issued for one or more foreign
currencies or currency units). The Offered Securities may be sold for U.S.
dollars, or any foreign currency or currencies or currency units, and the
principal of, any premium on, and any interest on, the Debt Securities or Junior
Subordinated Debt Securities may be payable in U.S. dollars, or any foreign
currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series, in amounts, at prices and on terms to be
determined at or prior to the time of sale. The sale of other securities under
the Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Offered Securities which may be sold hereunder.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, (i) in
the case of Debt Securities or Junior Subordinated Debt Securities, the specific
designation, aggregate principal amount, ranking as senior or subordinated debt,
authorized denomination, initial offering price, maturity (which may be fixed or
extendible), premium (if any), interest rate (which may be fixed or floating),
time of and method of calculating the payment of interest, if any, the currency
in which principal, premium, if any, and interest, if any, are payable, any
exchangeability, conversion, redemption or sinking fund terms, the right of the
Company, if any, to defer payment or interest on the Junior Subordinated Debt
Securities and the maximum length of such deferral period, put options, if any,
public offering price, and other specific terms; (ii) in the case of Preferred
Stock or Preferred Securities, the designation, number of shares, liquidation
preference per share, initial public offering price, dividend or distribution
rate (or method of calculation thereof), dates on which dividends or
distributions shall be payable and dates from which dividends or distributions
shall accrue, any redemption or sinking fund provisions, any voting rights, any
conversion or exchange provisions, and any other rights, preferences,
privileges, limitations or restrictions relating to the Preferred Stock or
Preferred Securities of a specific series and the terms upon which the proceeds
of the sale of the Preferred Securities will be used to purchase a specific
series of Junior Subordinated Debt Securities of the Company; (iii) in the case
of Common Stock, the number of shares, public offering price and the terms of
the offering and sale thereof; (iv) in the case of Warrants, the number and
terms thereof, the designation and description of the Common Stock, Preferred
Stock, Debt Securities, Junior Subordinated Debt Securities, or Preferred
Securities issuable thereunder, the number of securities issuable upon exercise,
the exercise price, the terms of the offering and sale thereof and, where
applicable, the duration and detachability thereof; (v) in the case of Stock
Purchase Contracts, the designation and number of shares of Common Stock or
Preferred Stock issuable thereunder, the purchase price of the Common Stock or
Preferred Stock, the date or dates on which the Common Stock or Preferred Stock
is required to be purchased by the holders of the Stock Purchase Contracts, any
periodic payments required to be made by the Company to the holders of the Stock
Purchase Contracts or vice versa, and the terms of the offering and sale
thereof; (vi) in the case of Stock Purchase Units, the specific terms of the
Stock Purchase Contracts and any Preferred Stock, Debt Securities, Junior
Subordinated Debt Securities, U.S. Obligations or Preferred Securities securing
the holder's obligation to purchase the Preferred Stock or Common Stock under
the Stock Purchase Contracts, and the terms of the offering and sale thereof;
and (vii) in the case of all Offered Securities, whether such Offered Securities
will be offered separately or as a unit with other Offered Securities. The
Prospectus Supplement will also contain information, where applicable, about
certain federal income tax considerations relating to, and any listing on a
securities exchange of, the Offered Securities covered by the Prospectus
Supplement.
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company or the CCCI Trusts or any dealers or
underwriters are involved in the sale of the Offered Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable agent's commission, dealer's purchase price or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Company or the CCCI Trusts from
such sale will be the purchase price less such commission in the case of an
agent, the purchase price in the case of a dealer, or the public offering price
less such discount in the case of an underwriter and less, in each case, other
applicable issuance expenses. See "Plan of Distribution".
---------------------
THE DATE OF THIS PROSPECTUS IS MAY 5, 1998.
<PAGE> 50
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBT SECURITIES,
INCLUDING STABILIZING AND SYNDICATE COVERING TRANSACTIONS. THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES. SEE "PLAN OF
DISTRIBUTION".
2
<PAGE> 51
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxies and information statements and other information regarding
registrants (including the Company) that file electronically. In addition,
reports, proxy statements and other information concerning the Company can be
inspected and copied at the offices of the New York Stock Exchange, Inc.
("NYSE"), 20 Broad Street, New York, New York 10005, on which the Common Stock
of the Company (symbol: "CCU") is listed.
No separate financial statements of the CCCI Trusts have been included or
incorporated by reference herein. Neither the CCCI Trusts nor the Company
considers such financial statements material to holders of Preferred Securities
because (i) all of the voting securities of each CCCI Trust will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) no CCCI Trust has independent operations but rather each exists for
the purpose of issuing securities representing undivided beneficial interests in
the assets of such CCCI Trust and investing the proceeds thereof in Junior
Subordinated Debt Securities, and (iii) the obligations of the CCCI Trusts under
the Preferred Securities are fully and unconditionally guaranteed on a
subordinated basis by the Company to the extent set forth herein. See "The CCCI
Trusts" and "Description of Guarantees." Upon the granting of relief by the
Commission pursuant to SAB 53, the Company intends to provide only abbreviated
information concerning the CCCI Trusts in the Company's Exchange Act reports.
The Company and the CCCI Trusts have filed with the Commission a joint
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company, the CCCI Trusts and the securities
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
into this Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
2. The Company's Current Report on Form 8-K filed April 10, 1998.
3. The Company's Current Report on Form 8-K filed March 12, 1998, as
amended by Form 8-K/A filed on March 23, 1998.
4. The Company's Current Report on Form 8-K filed December 22, 1997.
5. The Company's Current Report on Form 8-K filed April 17, 1997.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of the Offered Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference
3
<PAGE> 52
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. To the extent that any proxy statement is
incorporated by reference herein, such incorporation shall not include any
information contained in such proxy statement which is not, pursuant to the
Commission's rules, deemed to be "filed" with the Commission or subject to the
liabilities of Section 18 of the Exchange Act.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits, unless such exhibits are specifically incorporated
by reference). Requests for such copies should be directed to Houston Lane,
Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio,
Texas 78216 (telephone: (210) 822-2828).
THE COMPANY
The Company, which began operations in 1974, is a diversified media company
in three primary lines of business: radio, television, and outdoor advertising.
In addition, the Company owns a 50% equity interest in the Australian Radio
Network Pty. Ltd., which operates radio stations in Australia, a one-third
equity interest in New Zealand Radio Network which operates radio stations in
New Zealand, a 28.7% non-voting equity interest in Heftel Broadcasting
Corporation (Nasdaq: HBCCA), a Spanish-language broadcaster which operates radio
stations in domestic markets; a 40% equity interest in Grupo Acir
Communicaciones, S.A. de C.V., one of the largest radio broadcasters in Mexico
owning or programming through affiliations 164 radio stations serving 72 markets
in Mexico; and a 50% equity interest in Radio Bonton, a.s., which owns an FM
radio station in the Czech Republic.
The radio stations currently owned or programmed by the Company are located
principally in the South, Southeast, Northeast and Midwest. These radio stations
employ a wide variety of programming formats, such as News/Talk/Sports, Country,
Adult Contemporary, Urban and Album Rock. The television stations currently
owned or programmed by the Company are located in the South, Southeast,
Northeast and Midwest. These television stations are typically affiliated with
one of the television networks, including the FOX television network, the UPN
television network, the ABC television network, the NBC television network, or
the CBS television network. Additionally, the Company operates radio networks
serving Oklahoma, Texas, Iowa, Kentucky, Virginia, Alabama, Tennessee, Florida
and Pennsylvania. The Company's outdoor advertising properties are located
primarily in the South, Southeast, Midwest, and West.
The Company has its principal executive offices at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
THE CCCI TRUSTS
Each of CCCI Capital Trust I, CCCI Capital Trust II and CCCI Capital Trust
III is a statutory business trust formed under Delaware law pursuant to (i) a
separate Declaration of Trust executed by the Company, as depositor for such
CCCI Trust, and the Trustees (as defined herein) of such trust and (ii) the
filing of a certificate of trust with the Delaware Secretary of State. The
declarations will be amended and restated in their entirety (each as so amended
and restated, a "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus is a part and will be
qualified as Indentures under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Unless an accompanying Prospectus Supplement provides
otherwise, each CCCI Trust exists for the sole purposes of (i) issuing the
Preferred Securities, (ii) investing the gross proceeds of the sale of the
Preferred Securities in a specific series of Junior Subordinated Debt
Securities, and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities will be owned by the Company.
The Common Securities will rank pari passu, and payments will be made thereon
pro rata, with the Preferred Securities, except that upon the occurrence and
continuance of an event of default under the applicable Declaration, the rights
of the holders of the applicable Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the applicable Preferred
Securities. The Company will acquire Common Securities having an aggregate
liquidation amount equal to a minimum of 1% of the total capital of each CCCI
Trust. Each CCCI Trust will have a term of at least 20 but not more than 50
years, but may terminate earlier as provided in the applicable Declaration. Each
CCCI Trust's business and affairs will be conducted by the Trustees. The holder
of the Common Securities will
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<PAGE> 53
be entitled to appoint, remove or replace any of, or increase or reduce the
number of, the Trustees of each CCCI Trust. The duties and obligations of the
Trustees shall be governed by the Declaration of such CCCI Trust. At least one
of the Trustees of each CCCI Trust will be a person who is an employee or
officer of or who is affiliated with the Company (a "Regular Trustee"). One
Trustee of each CCCI Trust will be a financial institution that is not
affiliated with the Company, which shall act as property trustee and as
indenture trustee for the purposes of the Trust Indenture Act, pursuant to the
terms set forth in a Prospectus Supplement (the "Property Trustee"). In
addition, unless the Property Trustee maintains a principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
one Trustee of each CCCI Trust will be a legal entity having a principal place
of business in, or an individual resident of, the State of Delaware (the
"Delaware Trustee"). The Company will pay all fees and expenses related to each
CCCI Trust and the offering of the Preferred Securities. Unless otherwise set
forth in the Prospectus Supplement, the Property Trustee will be The Bank of New
York, and the Delaware Trustee will be The Bank of New York (Delaware). The
office of the Delaware Trustee in the State of Delaware is 100 White Clay
Center, Newark, Delaware 19711. The principal place of business of each CCCI
Trust is c/o Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600,
San Antonio, Texas 78216 (telephone: (210) 822-2828).
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ------------------------------------
1997 1996 1995 1994 1993
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
2.32 3.63 3.32 5.54 3.81
</TABLE>
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed on a total enterprise basis. Earnings represent
income from continuing operations before income taxes less equity in
undistributed net income (loss) of unconsolidated affiliates plus fixed charges.
Fixed charges represent interest, amortization of debt discount and expense, and
the estimated interest portion of rental charges. The Company had no Preferred
Stock outstanding and paid no dividends thereon for any period presented.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities offered hereby will be used for general
corporate purposes, including repayment of borrowings, working capital, capital
expenditures, stock repurchase programs and acquisitions. Unless otherwise
specified in the Prospectus Supplement, each CCCI Trust will use all proceeds
received from the sale of Preferred Securities to purchase Junior Subordinated
Debt Securities of the Company. Additional information on the use of net
proceeds from the sale of the Offered Securities offered hereby may be set forth
in the Prospectus Supplement relating to such Offered Securities.
HOLDING COMPANY STRUCTURE
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries and majority-owned partnerships. The Company's
rights and the rights of its creditors, including holders of Debt Securities or
Junior Subordinated Debt Securities, to participate in the distribution of
assets of any person in which the Company owns an equity interest (including any
subsidiary and majority-owned partnerships) upon such person's liquidation or
reorganization will be subject to prior claims of such person's creditors,
including trade creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such person (in which case the claims of
the Company would still be subject to the prior claims of any secured creditor
or such person and of any holder of indebtedness of such person that is senior
to that held by the Company). Accordingly, the holder of Debt Securities or
Junior Subordinated Debt Securities may be deemed to be effectively subordinated
to such claims.
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<PAGE> 54
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS
The Company may offer shares of Common Stock, Preferred Stock, Debt
Securities, Junior Subordinated Debt Securities, Warrants, Stock Purchase
Contracts, Stock Purchase Units, or any combination of the foregoing either
individually or as units consisting of one or more Securities under this
Prospectus. Each CCCI Trust may offer Preferred Securities under this
Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A
HIGH DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT
RELATING TO SUCH SECURITY. IN ADDITION, CERTAIN RISK FACTORS, IF ANY, RELATING
TO THE COMPANY'S BUSINESS WILL BE SET FORTH IN A PROSPECTUS SUPPLEMENT.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
and the extent, if any, to which such general provisions may apply to any series
of Debt Securities will be described in the Prospectus Supplement relating to
such series.
Senior Debt Securities may be issued, from time to time, in one or more
series under an Indenture (the "Senior Indenture"), between the Company and The
Bank of New York, as trustee, or such other trustee as shall be named in a
Prospectus Supplement (the "Senior Trustee"). The form of Senior Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Subordinated Debt Securities may be issued, from time to time, in one or
more series under an indenture (the "Subordinated Indenture") between the
Company and The Bank of New York or such other trustee as shall be named in a
Prospectus Supplement (the "Subordinated Trustee"). The form of Subordinated
Indenture is filed as an Exhibit to the Registration Statement of which this
Prospectus is a part. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures," and the Senior Trustee
and the Subordinated Trustee are sometimes referred to collectively as the "Debt
Trustees." None of the Indentures will limit the amount of Debt Securities that
may be issued hereunder, and each Indenture will provide that Debt Securities
may be issued thereunder up to an aggregate principal amount authorized from
time to time by the Company and may be payable in any currency or currency unit
designated by the Company or in amounts determined by reference to an index. The
following statements are subject to the detailed provisions of the Indentures.
Wherever any particular provisions of the Indentures or terms defined therein
are referred to, such provisions and terms are incorporated by reference as a
part of the statements made herein and such statements are qualified in their
entirety by such references, including the definitions therein of certain terms.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Indentures.
GENERAL
The Senior Debt Securities will be unsecured and will rank equally and
ratably with other unsecured and unsubordinated debt of the Company, unless the
Company shall be required to secure the Senior Debt Securities as described
below under " -- Senior Debt Securities." The obligations of the Company
pursuant to any Subordinated Debt Securities will be subordinate in right of
payment to all Senior Indebtedness of the Company with respect to such
Subordinated Debt Securities, and will be described in an accompanying
Prospectus Supplement. Debt Securities will be issued from time to time and
offered on terms determined by market conditions at the time of sale.
The Debt Securities may be issued in one or more series with the same or
various maturities, at par, at a premium, or at a discount. Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates will be sold at a discount (which may be substantial) from their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such substantially discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities offered hereby: (i) the designation, aggregate principal
amount and authorized denominations of such Debt Securities; (ii) the percentage
of their principal amount at which such Debt Securities will be issued; (iii)
the date or dates on
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<PAGE> 55
which the Debt Securities will mature (which may be fixed or extendible); (iv)
the rate or rates (which may be fixed or floating) per annum at which the Debt
Securities will bear interest, if any, or the method of determining such rate or
rates; (v) the date or dates on which any such interest will be payable, the
date or dates on which payment of any such interest will commence and the
Regular Record Dates for such Interest Payment Dates; (vi) the terms of any
mandatory or optional redemption (including any provisions for any sinking,
purchase or other analogous fund) or repayment option; (vii) the currency,
currencies or currency units for which the Debt Securities may be purchased and
the currency, currencies or currency units in which the principal thereof, any
premium thereon and any interest thereon may be payable; (viii) if the currency,
currencies or currency units for which the Debt Securities may be purchased or
in which the principal thereof, any premium thereon and any interest thereon may
be payable is at the election of the Company or the purchaser, the manner in
which such election may be made; (ix) if the amount of payments on the Debt
Securities is determined with reference to an index based on one or more
currencies or currency units, changes in the price of one or more securities or
changes in the price of one or more commodities, the manner in which such
amounts may be determined; (x) the extent to which any of the Debt Securities
will be issuable in temporary or permanent global form, or the manner in which
any interest payable on a temporary or permanent Global Security will be paid;
(xi) the terms and conditions upon which the Debt Securities may be convertible
into or exchanged for Common Stock, Preferred Stock, or indebtedness or other
securities of any kind of the Company; (xii) information with respect to book-
entry procedures, if any; (xiii) a discussion of certain federal income tax,
accounting and other special considerations, procedures and limitations with
respect to the Debt Securities; and (xiv) any other specific terms of the Debt
Securities not inconsistent with the applicable Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or any
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, federal
income tax consequences, specific terms and other information with respect to
such issue of Debt Securities and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement, the principal of,
any premium on, and any interest on the Debt Securities will be payable, and the
Debt Securities will be transferable, at the Corporate Trust Office of the
applicable Debt Trustee in New York, New York, provided that payment of
interest, if any, may be made at the option of the Company by check mailed on or
before the payment date, first class mail, to the address of the person entitled
thereto as it appears on the registry books of the Company or its agent.
Unless otherwise specified in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form and in denominations of
$1,000 and any integral multiple thereof. No service charge will be made for any
transfer or exchange of any Debt Securities, but the Company may, except in
certain specified cases not involving any transfer, require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Unless otherwise set forth in the Prospectus Supplement, interest on
outstanding Debt Securities will be paid to holders of record on the date which
is 15 days immediately prior to the date such interest is to be paid.
The Company's rights and the rights of its creditors (including holders of
Debt Securities) to participate in any distribution of assets of any subsidiary
of the Company upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the subsidiary
may be recognized. The operations of the Company are conducted through its
subsidiaries and, therefore, the Company is dependent upon the earnings and cash
flow of its subsidiaries to meet its obligations, including obligations under
the Debt Securities. The Debt Securities will be effectively subordinated to all
indebtedness of the Company's subsidiaries.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such
7
<PAGE> 56
Depositary or another nominee of such Depositary or by the Depositary or any
nominee of such Depositary to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of any such
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the applicable Indenture governing such Debt
Securities.
Payments of principal of, any premium on, and any interest on, individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. Neither the Company, the applicable Debt Trustee for such Debt
Securities, any Paying Agent, nor the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name". Such payments will be
the responsibility of such participants.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in such
event, will issue individual Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company, the
applicable Debt Trustee and the Depositary for such Global Security, receive
individual Debt
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<PAGE> 57
Securities of such series in exchange for such beneficial interests, subject to
any limitations described in the Prospectus Supplement relating to such Debt
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery of individual Debt Securities of
the series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name.
Individual Debt Securities of such series so issued will be issued in
denominations, unless otherwise specified by the Company, of $1,000 and integral
multiples thereof.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Each Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) the successor corporation
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by a supplemental indenture the due and punctual payment of the principal
of, any premium on, and any interest on, all the outstanding Debt Securities and
the performance of every covenant in the applicable Indenture on the part of the
Company to be performed or observed; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) the Company shall have delivered to the applicable Debt
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with the foregoing provisions relating to such transaction. In
case of any such consolidation, merger, conveyance or transfer, such successor
corporation will succeed to and be substituted for the Company as obligor on the
Debt Securities, with the same effect as if it had been named in the applicable
Indenture as the Company. Other than the restrictions on Mortgages described
below, the Indentures and the Debt Securities do not contain any covenants or
other provisions designed to protect holders of Debt Securities in the event of
a highly leveraged transaction involving the Company or any Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of Debt Securities, an Event of Default is defined in each
Indenture as (i) default for 30 days in payment of any interest on the Debt
Securities of such series, or, in the case of the Subordinated Debt Indenture,
for a period of 90 days; (ii) default in payment of principal of or any premium
on the Debt Securities of such series at maturity; (iii) default in payment of
any sinking or purchase fund or analogous obligation, if any, on the Debt
Securities of such series; (iv) default by the Company in the performance of any
other covenant or warranty contained in the applicable Indenture for the benefit
of such series which shall not have been remedied for a period of 90 days after
notice is given as specified in the applicable Indenture; and (v) certain events
of bankruptcy, insolvency and reorganization of the Company.
A default under other indebtedness of the Company will not be a default
under the Indentures and a default under one series of Debt Securities will not
necessarily be a default under another series.
Each Indenture provides that (i) if an Event of Default described in clause
(i), (ii), (iii) or (iv) above (if the Event of Default under clause (iv) is
with respect to less than all series of Debt Securities then outstanding) shall
have occurred and be continuing with respect to any series, either the
applicable Debt Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities of such series then outstanding (each
such series acting as a separate class) may declare the principal (or, in the
case of Original Issue Discount Securities, the portion thereof specified in the
terms thereof) of all outstanding Debt Securities of such series and the
interest accrued thereon, if any, to be due and payable immediately and (ii) if
an Event of Default described in clause (iv) or (v) above (if the Event of
Default under clause (iv) is with respect to all series of Debt Securities then
outstanding) shall have occurred and be continuing, either the applicable Debt
Trustee or the holders of at least 25% in aggregate principal amount of all Debt
Securities then outstanding (treated as one class) may declare the principal
(or, in the case of Original Issue Discount Securities, the portion thereof
specified in the terms thereof) of all Debt Securities then outstanding and the
interest accrued thereon, if any, to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past defaults (except
for defaults in the payment of principal of, any premium on, or any interest on,
such Debt Securities and in compliance with
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<PAGE> 58
certain covenants) may be waived by the holders of a majority in aggregate
principal amount of the Debt Securities of such series then outstanding.
Under each Indenture the applicable Debt Trustee must give to the holders
of each series of Debt Securities notice of all uncured defaults known to it
with respect to such series within 90 days after such a default occurs (the term
"default" to include the events specified above without notice or grace periods,
except that in the case of any default of the type described in clause (iv)
above, no such notice shall be given until at least 90 days after the occurrence
thereof); provided that, except in the case of default in the payment of
principal of, any premium on, or any interest on, any of the Debt Securities, or
default in the payment of any sinking or purchase fund installment or analogous
obligations, the applicable Debt Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of the Debt Securities of such series.
No holder of any Debt Securities of any series may institute any action
under either Indenture unless (i) such holder shall have given the Debt Trustee
thereunder written notice of a continuing Event of Default with respect to such
series, (ii) the holders of not less than 25% in aggregate principal amount of
the Debt Securities of such series then outstanding shall have requested the
Debt Trustee thereunder to institute proceedings in respect of such Event of
Default, (iii) such holder or holders shall have offered the Debt Trustee
thereunder such reasonable indemnity as such Debt Trustee may require, (iv) the
Debt Trustee thereunder shall have failed to institute an action for 60 days
thereafter and (v) no inconsistent direction shall have been given to the Debt
Trustee thereunder during such 60-day period by the holders of a majority in
aggregate principal amount of Debt Securities of such series then outstanding.
The holders of a majority in aggregate principal amount of the Debt
Securities of any series affected and then outstanding will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Debt
Trustee or exercising any trust or power conferred on such Debt Trustee with
respect to such series of Debt Securities. Each Indenture provides that, in case
an Event of Default shall occur and be continuing, the Debt Trustee thereunder,
in exercising its rights and powers under such Indenture, will be required to
use the degree of care of a prudent person in the conduct of such person's own
affairs. Each Indenture further provides that the Debt Trustee thereunder shall
not be required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under such Indenture unless it
has reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is reasonably assured to it.
The Company must furnish to the Debt Trustees within 120 days after the end
of each fiscal year a statement signed by one of certain officers of the Company
to the effect that a review of the activities of the Company during such year
and of its performance under the applicable Indenture and the terms of the Debt
Securities has been made, and, to the best of the knowledge of the signatories
based on such review, the Company has complied with all conditions and covenants
of such Indenture through such year or, if the Company is in default, specifying
such default.
If any Debt Securities are denominated in a coin or currency other than
that of the United States, then for the purposes of determining whether the
holders of the requisite principal amount of Debt Securities have taken any
action as herein described, the principal amount of such Debt Securities shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of the spot rate of exchange into United
States dollars for the currency in which such Debt Securities are denominated
(as evidenced to the applicable Debt Trustee by an Officers' Certificate) as of
the date the taking of such action by the holders of such requisite principal
amount is evidenced to the applicable Debt Trustee as provided in the respective
Indenture.
If any Debt Securities are Original Issue Discount Securities, then for the
purposes of determining whether the holders of the requisite principal amount of
Debt Securities have taken any action herein described, the principal amount of
such Debt Securities shall be deemed to be the portion of such principal amount
that would be due and payable at the time of the taking of such action upon a
declaration of acceleration of maturity thereof.
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MODIFICATION OF THE INDENTURES
The Indentures provide that the Company and the applicable Debt Trustee
may, without the consent of any holders of Debt Securities, enter into
supplemental indentures for the purposes, among other things, of adding to the
Company's covenants, adding additional Events of Default, establishing the form
or terms of any series of Debt Securities or curing ambiguities or
inconsistencies in such Indenture or making other provisions.
With certain exceptions, the applicable Indenture or the rights of the
holders of the Debt Securities may be modified by the Company and the applicable
Debt Trustee with the consent of the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected by such
modification then outstanding, but no such modification may be made without the
consent of the holder of each outstanding Debt Security affected thereby which
would (i) change the maturity of any payment of principal of, or any premium on,
or any installment of interest on any Debt Security, or reduce the principal
amount thereof or the interest or any premium thereon, or change the method of
computing the amount of principal thereof or interest thereon on any date or
change any place of payment where, or the coin or currency in which, any Debt
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the maturity
thereof (or, in the case of redemption or repayment, on or after the redemption
date or the repayment date, as the case may be), (ii) reduce the percentage in
principal amount of the outstanding Debt Securities of any series, the consent
of whose holders is required for any such modification, or the consent of whose
holders is required for any waiver of compliance with certain provisions of the
applicable Indenture or certain defaults thereunder and their consequences
provided for in such Indenture, or (iii) modify any of the provisions of certain
Sections of the applicable Indenture, including the provisions summarized in
this paragraph, except to increase any such percentage or to provide that
certain other provisions of such Indenture cannot be modified or waived without
the consent of the holder of each outstanding Debt Security affected thereby.
SATISFACTION AND DISCHARGE OF THE INDENTURES; DEFEASANCE
The Indentures shall generally cease to be of any further effect with
respect to a series of Debt Securities if (i) the Company has delivered to the
applicable Debt Trustee for cancellation all Debt Securities of such series
(with certain limited exceptions) or (ii) all Debt Securities of such series not
theretofore delivered to the applicable Debt Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year, and the Company
shall have deposited with the applicable Debt Trustee as trust funds the entire
amount sufficient (in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
applicable Debt Trustee) without consideration of any reinvestment and after
payment of all taxes or other charges and assessments in respect thereof payable
by the applicable Debt Trustee to pay at maturity or upon redemption all such
Debt Securities, no default with respect to the Debt Securities has occurred and
is continuing on the date of such deposit, such deposit does not result in a
breach or violation of, or constitute a default under, the applicable Indenture
or any other agreement or instrument to which the Company is a party and the
Company delivered an officers' certificate and an opinion of counsel each
stating that such conditions have been complied with (and if, in either case,
the Company shall also pay or cause to be paid all other sums payable under the
applicable Indenture by the Company).
In addition, the Company shall have a "legal defeasance option" (pursuant
to which it may terminate, with respect to the Debt Securities of a particular
series, all of its obligations under such Debt Securities and the applicable
Indenture with respect to such Debt Securities) and a "covenant defeasance
option" (pursuant to which it may terminate, with respect to the Debt Securities
of a particular series, its obligations with respect to such Debt Securities
under certain specified covenants contained in the applicable Indenture). If the
Company exercises its legal defeasance option with respect to a series of Debt
Securities, payment of such Debt Securities may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option with
respect to a series of Debt Securities, payment of such Debt Securities may not
be accelerated because of an Event of Default related to the specified
covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Debt Securities of a series only if (i)
the Company irrevocably deposits in trust with the applicable Debt Trustee
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cash or U.S. Government Obligations (as defined in the applicable Indenture) for
the payment of principal, premium, if any, and interest with respect to such
Debt Securities to maturity or redemption, as the case may be, (ii) the Company
delivers to the applicable Debt Trustee a certificate from a nationally
recognized firm of independent public accountants expressing their opinion that
the payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium, if any, and interest when due with
respect to all the Debt Securities of such series to maturity or redemption, as
the case may be, (iii) 91 days pass after the deposit is made and during the
91-day period no default described in clause (v) under "-- Events of Default,
Waiver and Notice Thereof; Debt Securities in Foreign Currencies" above with
respect to the Company occurs that is continuing at the end of such period, (iv)
no Default has occurred and is continuing on the date of such deposit and after
giving effect thereto, (v) the deposit does not constitute a default under any
other agreement binding on the Company, (vi) the Company delivers to the
applicable Debt Trustee an opinion of counsel to the effect that the trust
resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940, (vii) the Company
shall have delivered to the applicable Debt Trustee an opinion of counsel
addressing certain federal income tax matters relating to the defeasance, and
(viii) the Company delivers to the applicable Debt Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent to the defeasance and discharge of the Debt Securities of such series
as contemplated by the applicable Indenture have been complied with.
The applicable Debt Trustee shall hold in trust cash or U.S. Government
Obligations deposited with it as described above and shall apply the deposited
cash and the proceeds from deposited U.S. Government Obligations to the payment
of principal, premium, if any, and interest with respect to the Debt Securities
of the defeased series.
CONCERNING THE DEBT TRUSTEES
The Debt Trustee for the Senior Debt Securities and the Debt Trustee for
the Subordinated Debt Securities will be identified in the relevant Prospectus
Supplement. In certain instances, the Company or the holders of a majority of
the then outstanding principal amount of the Debt Securities issued under an
indenture may remove the Debt Trustee and appoint a successor Debt Trustee. The
Debt Trustee may become the owner or pledgee of any of the Debt Securities with
the same rights, subject to certain conflict of interest restrictions, it would
have if it were not the Debt Trustee. The Debt Trustee and any successor trustee
must be a corporation organized and doing business as a commercial bank or trust
company under the laws of the United States or of any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to examination by federal or
state authority. From time to time and subject to applicable law relating to
conflicts of interest, the Debt Trustee may also serve as trustee under other
indentures relating to Debt Securities issued by the Company or affiliated
companies and may engage in commercial transactions with the Company and
affiliated companies. The initial Debt Trustee under each Indenture is The Bank
of New York, who currently serves as the transfer agent and registrar for the
Common Stock and is a lender to the Company under the Company's Amended and
Restated Credit Agreement dated April 10, 1997.
SENIOR DEBT SECURITIES
In addition to the provisions previously described herein and applicable to
all Debt Securities, the following description of the Senior Debt Securities
summarizes certain general terms and provisions of the Senior Debt Securities to
which any Prospectus Supplement may relate. The particular terms of the Senior
Debt Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to any series of Senior Debt Securities
will be described in the Prospectus Supplement relating thereto.
Ranking of Senior Debt Securities
Unless otherwise specified in a Prospectus Supplement for a particular
series of Debt Securities, all series of Senior Debt Securities will be senior
indebtedness of the Company and will be direct, unsecured obligations of the
Company, ranking on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The
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Company is a holding company and the Debt Securities will be effectively
subordinated to all existing and future liabilities, including indebtedness, of
the Company's subsidiaries. See "Holding Company Structure."
Covenants of the Company
The Senior Indenture contains the covenants summarized below, which will be
applicable (unless waived or amended) so long as any of the Senior Debt
Securities are outstanding, unless stated otherwise in the Prospectus
Supplement.
Limitation on Mortgages. The Company will not, nor will it permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist (i) any
Mortgage upon any stock or indebtedness of any Restricted Subsidiary,
whether owned on the date of the Senior Indenture or thereafter acquired,
to secure any Debt of the Company or any other person (other than the
Senior Debt Securities), or (ii) any Mortgage upon any Principal Property,
whether owned or leased on the date of the Senior Indenture, or thereafter
acquired, to secure any Debt of the Company or any other person (other than
the Senior Debt Securities), without in any such case making effective
provision whereby all the outstanding Senior Debt Securities shall be
directly secured equally and ratably with such Debt. There will be excluded
from this restriction any Mortgage upon stock or indebtedness of a
corporation existing at the time such corporation becomes a Subsidiary or
at the time stock or indebtedness of a Subsidiary is acquired and any
extension, renewal or replacement of any such Mortgage; provided, however,
that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension, renewal
or replacement; and provided further, that such Mortgage shall be limited
to all or such part of the stock or indebtedness which secured the Mortgage
so extended, renewed or replaced.
There will be excluded from the restriction referred to in the next
preceding paragraph the following Mortgages (the Mortgages set forth in the
following clauses (i) through (viii) the "Permitted Mortgages"): (i) any
Mortgage upon property owned or leased by a corporation existing at the
time such corporation becomes a Restricted Subsidiary, (ii) any Mortgage
upon property existing at the time of the acquisition thereof or to secure
payment of any part of the purchase price thereof or any Debt incurred to
finance the purchase thereof, (iii) any Mortgage upon property to secure
any part of the cost of development, construction, alteration, repair or
improvement of such property, or Debt incurred to finance such cost, (iv)
any Mortgage securing Debt of a Restricted Subsidiary owing to the Company
or to another Restricted Subsidiary, (v) any Mortgage existing on the date
of the Senior Indenture, (vi) any Mortgage on property of the Company or a
Restricted Subsidiary in favor of the United States of America or any State
or political subdivision thereof, or in favor of any other country or any
political subdivision thereof, to secure payment pursuant to any contract
or statute or to secure any indebtedness incurred for the purpose of
financing all or part of the purchase price or the cost of construction or
improvement of the property subject to such Mortgage, (vii) any Mortgage on
any property subsequently acquired by the Company or any Restricted
Subsidiary, contemporaneously with such acquisition or within 120 days
thereafter, to secure or provide for the payment of any part of the
purchase price of such property, or any Mortgage assumed by the Company or
any Restricted Subsidiary upon any property subsequently acquired by the
Company or any Restricted Subsidiary which were existing at the time of
such acquisition, provided that the amount of any Indebtedness secured by
any such Mortgage created or assumed does not exceed the cost to the
Company or Restricted Subsidiary, as the case may be, of the property
covered by such Mortgage, and (viii) any extension, renewal or replacement,
in whole or in part, of any Mortgage referred to in the foregoing clauses
(i) through (vii); provided, however, that the principal amount of Debt
secured thereby shall not exceed the principal amount of Debt so secured at
the time of such extension, renewal or replacement; and provided, further,
that such Mortgage shall be limited to all or such part of the property
which secured the Mortgage so extended, renewed or replaced.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any
Mortgage upon any Principal Property without equally and ratably securing
the Senior Debt Securities if the aggregate amount of all Debt then
outstanding secured by such Mortgage and all similar Mortgages does not
exceed 15% of the total consolidated shareholders' equity (including
Preferred Stock) of the Company as shown on the audited consolidated
balance sheet contained in
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the latest annual report to shareholders of the Company; provided that Debt
secured by Permitted Mortgages shall not be included in the amount of such
secured Debt.
Sale and Leaseback Transactions. The Company will not, nor will it
permit any Restricted Subsidiary to, enter into any arrangement with any
person providing for the leasing by the Company or a Restricted Subsidiary
as lessee of any Principal Property (except for temporary leases for a
term, including renewals, of not more than three years), which property has
been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such person (herein referred to as a "Sale-Leaseback
Transaction"), unless (i) such Sale-Leaseback Transaction occurs within 120
days from the date of acquisition of such Principal Property or the date of
the completion of construction or commencement of full operations on such
Principal Property, whichever is later, or (ii) the Company, within 120
days after such Sale-Leaseback Transaction, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other
than Funded Debt of the Company which by its terms or the terms of the
instrument pursuant to which it was issued is subordinate in right of
payment to the Senior Debt Securities) an amount not less than the net
proceeds of the sale of such Principal Property. Notwithstanding the
foregoing provisions, the Company may, and may permit any Restricted
Subsidiary to, effect any Sale-Leaseback Transaction involving any
Principal Property, provided that the net sale proceeds from such
Sale-Leaseback Transaction, together with all Debt secured by Mortgages
other than Permitted Mortgages, does not exceed 15% of the total
consolidated shareholders' equity of the Company as shown on the audited
consolidated balance sheet contained in the latest annual report to
shareholders of the Company.
Definitions
For the purposes of the description of the Senior Debt Securities:
"Debt" means indebtedness for money borrowed.
"Funded Debt" of any person means all indebtedness for borrowed money
created, incurred, assumed or guaranteed in any manner by such person, and all
indebtedness, contingent or otherwise, incurred or assumed by such person in
connection with the acquisition of any business, property or asset, which in
each case matures more than one year after, or which by its terms is renewable
or extendible or payable out of the proceeds of similar indebtedness incurred
pursuant to the terms of any revolving credit agreement or any similar agreement
at the option of such person for a period ending more than one year after the
date as of which Funded Debt is being determined; provided, however, that Funded
Debt shall not include (i) any indebtedness for the payment, redemption or
satisfaction of which money (or evidences of indebtedness, if permitted under
the instrument creating or evidencing such indebtedness) in the necessary amount
shall have been irrevocably deposited in trust with a trustee or proper
depository either on or before the maturity or redemption date thereof or (ii)
any indebtedness of such person to any of its Subsidiaries or of any Subsidiary
to such person or any other Subsidiary or (iii) any indebtedness incurred in
connection with the financing of operating, construction or acquisition
projects, provided that the recourse for such indebtedness is limited to the
assets of such projects.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means any radio broadcasting, television broadcasting
or outdoor advertising property located in the United States owned or leased by
the Company or any subsidiary, unless, in the opinion of the Board of Directors
of the Company, any of such properties are not in the aggregate of material
importance to the total business conducted by the Company and its Subsidiaries
as an entirety.
"Restricted Subsidiary" means each Subsidiary as of the date of the
Indenture and each Subsidiary thereafter created or acquired, unless expressly
excluded by resolution of the Board of Directors of the Company before, or
within 120 days following, such creation or acquisition.
"Subsidiary", when used with respect to the Company, means any corporation
of which a majority of the outstanding voting stock is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or both.
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SUBORDINATED DEBT SECURITIES
In addition to the provisions previously described herein and applicable to
all Debt Securities, the following description of the Subordinated Debt
Securities summarizes certain general terms and provisions of the Subordinated
Debt Securities to which any Prospectus Supplement may relate. The particular
terms of the Subordinated Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which such general provisions may apply to any series
of Subordinated Debt Securities will be described in the Prospectus Supplement
relating thereto.
Ranking of Subordinated Debt Securities
The Subordinated Debt Securities will be subordinated in right of payment
to certain other indebtedness of the Company to the extent set forth in the
applicable Prospectus Supplement.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and pari passu
with the Company's trade creditors. No payment on account of principal of,
premium, if any, or interest on the Subordinated Debt Securities and no
acquisition of, or payment on account of any sinking fund for, the Subordinated
Debt Securities may be made unless full payment of amounts then due for
principal, premium, if any, and interest then due on all Senior Indebtedness by
reason of the maturity thereof (by lapse of time, acceleration or otherwise) has
been made or duly provided for in cash or in a manner satisfactory to the
holders of such Senior Indebtedness. In addition, the Subordinated Indenture
provides that if a default has occurred giving the holders of such Senior
Indebtedness the right to accelerate the maturity thereof, or an event has
occurred which, with the giving of notice, or lapse of time, or both, would
constitute such an event of default, then unless and until such event shall have
been cured or waived or shall have ceased to exist, no payment on account of
principal, premium, if any, or interest on the Subordinated Debt Securities and
no acquisition of, or payment on account of a sinking fund for, the Subordinated
Debt Securities may be made. The Company shall give prompt written notice to the
Subordinated Trustee of any default under any Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been issued. The
Subordinated Indenture provisions described in this paragraph, however, do not
prevent the Company from making a sinking fund payment with Subordinated Debt
Securities acquired prior to the maturity of Senior Indebtedness or, in the case
of default, prior to such default and notice thereof. Upon any distribution of
its assets in connection with any dissolution, liquidation or reorganization of
the Company, all Senior Indebtedness must be paid in full before the holders of
the Subordinated Debt Securities are entitled to any payments whatsoever. As a
result of these subordination provisions, in the event of the Company's
insolvency, holders of the Subordinated Debt Securities may recover ratably less
than senior creditors of the Company.
For purposes of the description of the Subordinated Debt Securities, the
term "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Subordinated Indenture or thereafter incurred or created (i) indebtedness of the
Company for money borrowed by the Company (including purchase money obligations
with an original maturity in excess of one year) or evidenced by securities
(other than the Subordinated Debt Securities or Junior Subordinated Debt
Securities), notes, bankers' acceptances or other corporate debt securities or
similar instruments issued by the Company; (ii) obligations with respect to
letters of credit; (iii) indebtedness of the Company constituting a guarantee of
indebtedness of others of the type referred to in the preceding clauses (i) and
(ii); or (iv) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii) and (iii) unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness or such renewal, extension or
refunding thereof is not superior in right of payment to the Subordinated Debt
Securities.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description of the terms of the Junior Subordinated Debt
Securities summarizes certain general terms and provisions of the Junior
Subordinated Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Junior Subordinated Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
may apply to any series of Junior Subordinated Debt Securities will be described
in the Prospectus Supplement relating thereto.
Junior Subordinated Debt Securities may be issued from time to time in one
or more series under an Indenture (the "Junior Subordinated Indenture") between
the Company and The Bank of New York or such other trustee as may be named in a
Prospectus Supplement (the "Junior Subordinated Indenture Trustee"). The form of
Junior Subordinated Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following description
summarizes the material terms of the Junior Subordinated Indenture and is
qualified in its entirety by reference to the Junior Subordinated Indenture and
the Trust Indenture Act. Whenever particular provisions or defined terms in the
Junior Subordinated Indenture are referred to herein, such provisions or defined
terms are incorporated by reference herein.
GENERAL
The Junior Subordinated Debt Securities will be unsecured, junior
subordinated obligations of the Company. The Junior Subordinated Indenture does
not limit the amount of additional indebtedness the Company or any of its
subsidiaries may incur. Since the Company is a holding company, the Company's
rights and the rights of its creditors, including the holders of Junior
Subordinated Debt Securities, to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that the Company may
itself be a creditor with recognized claims against the subsidiary.
The Junior Subordinated Indenture does not limit the aggregate principal
amount of indebtedness which may be issued thereunder and provides that Junior
Subordinated Debt Securities may be issued thereunder from time to time in one
or more series. The Junior Subordinated Debt Securities are issuable in one or
more series pursuant to a board resolution or an indenture supplemental to the
Junior Subordinated Indenture.
In the event Junior Subordinated Debt Securities are issued to a CCCI Trust
or a Trustee of such CCCI Trust in connection with the issuance of Preferred
Securities by such CCCI Trust, such Junior Subordinated Debt Securities
subsequently may be distributed pro rata to the holders of such Preferred
Securities in connection with the dissolution of such CCCI Trust upon the
occurrence of certain events described in the applicable Prospectus Supplement.
Only one series of Junior Subordinated Debt Securities will be issued to a CCCI
Trust or a Trustee of such CCCI Trust in connection with the issuance of
Preferred Securities by such CCCI Trust.
Reference is made to the Prospectus Supplement for the following terms of
the series of Junior Subordinated Debt Securities being offered hereby (to the
extent such terms are applicable to the Junior Subordinated Debt Securities):
(i) the specific designation of such Junior Subordinated Debt Securities,
aggregate principal amount and purchase price; (ii) any limit on the aggregate
principal amount of such Junior Subordinated Debt Securities; (iii) the date or
dates on which the principal of such Junior Subordinated Debt Securities is
payable and the right, if any, to extend such date or dates; (iv) the rate or
rates at which such Junior Subordinated Debt Securities will bear interest or
the method of calculating such rate or rates, if any; (v) the date or dates from
which such interest shall accrue, the interest payment dates on which such
interest will be payable or the manner of determination of such interest payment
dates and the record dates for the determination of holders to whom interest is
payable on any such interest payment dates; (vi) the right, if any, to extend
the interest payment periods and the duration of such extension; (vii) the
period or periods within which, the price or prices at which, and the terms and
conditions upon which, such Junior Subordinated Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (viii) the obligation, if
any, of the Company to redeem or purchase such Junior Subordinated Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of the holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which, such Junior
Subordinated Debt Securities shall be redeemed or purchased, in whole or part,
pursuant to such obligation; (ix) any applicable federal income tax
consequences, including whether and under what circumstances
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the Company will pay additional amounts on the Junior Subordinated Debt
Securities held by a person who is not a U.S. person in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Company will have the option to redeem such Junior Subordinated Debt Securities
rather than pay such additional amounts; (x) the form of such Junior
Subordinated Debt Securities; (xi) if other than denominations of $25 or any
integral multiple thereof, the denominations in which such Junior Subordinated
Debt Securities shall be issuable; (xii) any and all other terms with respect to
such series, including any modification of or additions to the events of default
or covenants provided for with respect to the Junior Subordinated Debt
Securities, and any terms which may be required by or advisable under applicable
laws or regulations not inconsistent with the Junior Subordinated Indenture;
(xiii) the terms and conditions upon which the Junior Subordinated Debt
Securities may be convertible into or exchanged for Common Stock, Preferred
Stock, Preferred Securities, or indebtedness or other securities of any kind of
the Company; and (xiv) whether such Junior Subordinated Debt Securities are
issuable as a global security, and in such case, the identity of the depositary.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issued in United States dollars in fully
registered form without coupons in denominations of $25 or integral multiples
thereof. No service charge will be made for any transfer or exchange of any
Junior Subordinated Debt Securities, but the Company may, except in certain
specified cases not involving any transfer, require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Unless otherwise set forth in the Prospectus Supplement, interest on outstanding
Junior Subordinated Debt Securities will be paid to holders of record on the
date which is 15 days immediately prior to the date such interest is to be paid.
Junior Subordinated Debt Securities may bear interest at a fixed rate or a
floating rate. Junior Subordinated Debt Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing market
rate will be sold at a discount below their stated principal amount. Special
federal income tax considerations applicable to any such discounted Junior
Subordinated Debt Securities or to certain Junior Subordinated Debt Securities
issued at par which are treated as having been issued at a discount for federal
income tax purposes will be described in the applicable Prospectus Supplement.
GLOBAL SECURITIES
If any Junior Subordinated Debt Securities of a series are represented by
one or more Global Securities, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such Global Security may exchange such interests for Junior Subordinated
Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of, and any premium and interest on,
a Global Security will be payable in the manner described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debt Securities to be represented by
a Global Security will be described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any person, unless (i) the
successor corporation shall be a corporation organized and existing under the
laws of the United States or any State thereof or the District of Columbia, and
shall expressly assume by a supplemental indenture the due and punctual payment
of the principal of, any premium on, and any interest on, all the outstanding
Junior Subordinated Debt Securities and the performance of every covenant in the
Junior Subordinated Indenture on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and (iii) the
Company shall have delivered to the applicable Junior Subordinated Indenture
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with the foregoing
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provisions relating to such transaction. In case of any such consolidation,
merger, conveyance or transfer, such successor corporation will succeed to and
be substituted for the Company as obligor on the Junior Subordinated Debt
Securities, with the same effect as if it had been named in the Junior
Subordinated Indenture as the Company. The Junior Subordinated Indentures and
the Junior Subordinated Debt Securities do not contain any covenants or other
provisions designed to protect holders of Junior Subordinated Debt Securities in
the event of a highly leveraged transaction involving the Company or any
Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; JUNIOR SUBORDINATED DEBT
SECURITIES IN FOREIGN CURRENCIES
As to any series of Junior Subordinated Debt Securities, an Event of
Default is defined in each Junior Subordinated Indenture as (i) default for 90
days in payment of any interest on the Junior Subordinated Debt Securities of
such series (subject to the deferral of any due date in the case of an Extension
Period); (ii) default in payment of principal of or any premium on the Junior
Subordinated Debt Securities of such series at maturity; (iii) default in
payment of any sinking or purchase fund or analogous obligation, if any, on the
Junior Subordinated Debt Securities of such series; (iv) default by the Company
in the performance, or breach, of any other covenant or warranty contained in
the Junior Subordinated Indenture for the benefit of such series which shall not
have been remedied for a period of 90 days after notice is given as specified in
the Junior Subordinated Indenture; and (v) certain events of bankruptcy,
insolvency and reorganization of the Company.
A default under other indebtedness of the Company will not be a default
under the Junior Subordinated Indentures and a default under one series of Debt
Securities or Junior Subordinated Debt Securities will not necessarily be a
default under another series.
The Junior Subordinated Indenture provides that (i) if an Event of Default
described in clause (i), (ii), (iii) or (iv) above (if the Event of Default
under clause (iv) above is with respect to less than all series of Junior
Subordinated Debt Securities outstanding) shall have occurred and be continuing
with respect to any series, either the Junior Subordinated Indenture Trustee or
the holders of not less than 25% in aggregate principal amount of the Junior
Subordinated Debt Securities of such series then outstanding (each such series
acting as a separate class) may declare the principal (or, in the case of
Original Issue Discount Securities, the portion thereof specified in the terms
thereof) of all outstanding Junior Subordinated Debt Securities of such series
and the interest accrued thereon, if any, to be due and payable immediately, and
(ii) if an Event of Default described in clause (iv) or (v) above (if the Event
of Default under clause (iv) above is with respect to all series of Junior
Subordinated Debt Securities then outstanding) shall have occurred and be
continuing, either the Junior Subordinated Indenture Trustee or the holders of
at least 25% in aggregate principal amount of all Junior Subordinated Debt
Securities then outstanding (treated as one class) may declare the principal
(or, in the case of Original Issue Discount Securities, the portion thereof
specified in the terms thereof) of all Junior Subordinated Debt Securities then
outstanding and the interest accrued thereon, if any, to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults (except for defaults in the payment of principal of, any premium
on, or any interest on, such Junior Subordinated Debt Securities and in
compliance with certain covenants) may be waived by the holders of a majority in
aggregate principal amount of the Junior Subordinated Debt Securities of such
series then outstanding (subject to, in the case of any series of Junior
Subordinated Debt Securities held as trust assets of a CCCI Trust and with
respect to which a Security Exchange has not theretofore occurred, such consent
of the holders of the Preferred Securities and the Common Securities of such
CCCI Trust as may be required under the Declaration of Trust of such CCCI
Trust).
"Security Exchange" when used with respect to the Securities of any series
which are held as trust assets of a CCCI Trust pursuant to the Declaration of
Trust of such CCCI Trust means the distribution of the Securities of such series
by such CCCI Trust in exchange for the Preferred Securities and the Common
Securities of such CCCI Trust in dissolution of such CCCI Trust pursuant to the
Declaration of Trust of such CCCI Trust.
Under the Junior Subordinated Indenture the Junior Subordinated Indenture
Trustee must give to the holders of each series of Junior Subordinated Debt
Securities notice of all uncured defaults known to it with respect to such
series within 90 days after such a default occurs (the term "default" to include
the events specified above without notice or grace periods, except that in the
case of any default of the type described in clause (d) above, no such notice
shall be given until at least 90 days after the occurrence thereof); provided
that, except in the case of
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default in the payment of principal of, any premium on, or any interest on, any
of the Junior Subordinated Debt Securities, or default in the payment of any
sinking or purchase fund installment or analogous obligations, the applicable
Junior Subordinated Indenture Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of the Junior Subordinated Debt Securities of such
series.
No holder of any Junior Subordinated Debt Securities of any series may
institute any action under the Junior Subordinated Indenture unless (i) such
holder shall have given the Junior Subordinated Indenture Trustee thereunder
written notice of a continuing Event of Default with respect to such series,
(ii) the holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debt Securities of such series then outstanding shall have
requested the Junior Subordinated Indenture Trustee thereunder to institute
proceedings in respect of such Event of Default, (iii) such holder or holders
shall have offered the Junior Subordinated Indenture Trustee thereunder such
reasonable indemnity as such Junior Subordinated Indenture Trustee may require,
(iv) the Junior Subordinated Indenture Trustee thereunder shall have failed to
institute an action for 60 days thereafter and (v) no inconsistent direction
shall have been given to the Junior Subordinated Indenture Trustee thereunder
during such 60-day period by the holders of a majority in aggregate principal
amount of Junior Subordinated Debt Securities of such series then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust).
The holders of a majority in aggregate principal amount of the Junior
Subordinated Debt Securities of any series affected and then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust) will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Junior
Subordinated Indenture Trustee or exercising any trust or power conferred on
such Junior Subordinated Indenture Trustee with respect to such series of Junior
Subordinated Debt Securities. The Junior Subordinated Indenture provides that,
in case an Event of Default shall occur and be continuing, the Junior
Subordinated Indenture Trustee thereunder, in exercising its rights and powers
under such Junior Subordinated Indenture, will be required to use the degree of
care of a prudent person in the conduct of such person's own affairs. Each
Junior Subordinated Indenture further provides that the Junior Subordinated
Indenture Trustee thereunder shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties under such Junior Subordinated Indenture unless it has reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is reasonably assured to it.
The Company must furnish to the Junior Subordinated Indenture Trustee
within 120 days after the end of each fiscal year a statement signed by one of
certain officers of the Company to the effect that a review of the activities of
the Company during such year and of its performance under the Junior
Subordinated Indenture and the terms of the Junior Subordinated Debt Securities
has been made, and, to the best of the knowledge of the signatories based on
such review, the Company has complied with all conditions and covenants of such
Junior Subordinated Indenture through such year or, if the Company is in
default, specifying such default.
If any Junior Subordinated Debt Securities are denominated in a coin or
currency other than that of the United States, then for the purposes of
determining whether the holders of the requisite principal amount of Junior
Subordinated Debt Securities have taken any action as herein described, the
principal amount of such Junior Subordinated Debt Securities shall be deemed to
be that amount of United States dollars that could be obtained for such
principal amount on the basis of the spot rate of exchange into United States
dollars for the currency in which such Junior Subordinated Debt Securities are
denominated (as evidenced to the applicable Junior Subordinated Indenture by an
Officers' Certificate) as of the date the taking of such action by the holders
of such requisite principal amount is evidenced to the applicable Junior
Subordinated Indenture as provided in the respective Junior Subordinated
Indenture.
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If any Junior Subordinated Debt Securities are Original Issue Discount
Securities, then for the purposes of determining whether the holders of the
requisite principal amount of Junior Subordinated Debt Securities have taken any
action herein described, the principal amount of such Junior Subordinated Debt
Securities shall be deemed to be the portion of such principal amount that would
be due and payable at the time of the taking of such action upon a declaration
of acceleration of maturity thereof.
MODIFICATION OF THE JUNIOR SUBORDINATED INDENTURE
The Junior Subordinated Indenture provides that the Company and the Junior
Subordinated Indenture Trustee may, without the consent of any holders of Junior
Subordinated Debt Securities, enter into supplemental indentures for the
purposes, among other things, of adding to the Company's covenants, adding
additional Junior Subordinated Indenture Events of Default, establishing the
form or terms of any series of Junior Subordinated Debt Securities or curing
ambiguities or inconsistencies in the Junior Subordinated Indenture or making
other provisions.
With certain exceptions, the Junior Subordinated Indenture or the rights of
the holders of the Junior Subordinated Debt Securities may be modified by the
Company and the Junior Subordinated Indenture Trustee with the consent of the
holders of a majority in aggregate principal amount of the Junior Subordinated
Debt Securities of each series affected by such modification then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust), but no such
modification may be made without the consent of the holder of each outstanding
Junior Subordinated Debt Security affected thereby (subject to, in the case of
any series of Junior Subordinated Debt Securities held as trust assets of a CCCI
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of the holders of the Preferred Securities and the Common
Securities of such CCCI Trust as may be required under the Declaration of Trust
of such CCCI Trust) which would (i) change the maturity of any payment of
principal of, or any premium on, or any installment of interest on any Junior
Subordinated Debt Security, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of computing the amount of
principal thereof or interest thereon on any date or change any place of payment
where, or the coin or currency in which, any Junior Subordinated Debt Security
or any premium or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the maturity thereof
(or, in the case of redemption or repayment, on or after the redemption date or
the repayment date, as the case may be), (ii) reduce the percentage in principal
amount of the outstanding Junior Subordinated Debt Securities of any series, the
consent of whose holders is required for any such modification, or the consent
of whose holders is required for any waiver of compliance with certain
provisions of the Junior Subordinated Indenture or certain defaults thereunder
and their consequences provided for in such Indenture, or (iii) modify any of
the provisions of certain Sections of the Junior Subordinated Indenture,
including the provisions summarized in this paragraph, except to increase any
such percentage or to provide that certain other provisions of the Junior
Subordinated Indenture cannot be modified or waived without the consent of the
holder of each outstanding Junior Subordinated Debt Security affected thereby.
SATISFACTION AND DISCHARGE OF THE JUNIOR SUBORDINATED INDENTURE; DEFEASANCE
The Junior Subordinated Indenture shall generally cease to be of any
further effect with respect to a series of Junior Subordinated Debt Securities
if (i) the Company has delivered to the Junior Subordinated Indenture Trustee
for cancellation all Junior Subordinated Debt Securities of such series (with
certain limited exceptions) or (ii) all Junior Subordinated Debt Securities of
such series not theretofore delivered to the Junior Subordinated Indenture
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year, and the Company shall have deposited with the Junior
Subordinated Indenture Trustee as trust funds the entire amount sufficient (in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Junior
Subordinated Indenture Trustee) without consideration of any reinvestment and
after payment of all taxes or other charges and assessments in respect thereof
payable by the Junior Subordinated Indenture Trustee to
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pay at maturity or upon redemption all such Junior Subordinated Debt Securities,
no default with respect to the Junior Subordinated Debt Securities has occurred
and is continuing on the date of such deposit, such deposit does not result in a
breach or violation of, or constitute a default under, the Junior Subordinated
Indenture or any other agreement or instrument to which the Company is a party
and the Company delivered an officers' certificate and an opinion of counsel
each stating that such conditions have been complied with (and if, in either
case, the Company shall also pay or cause to be paid all other sums payable
under the Junior Subordinated Indenture by the Company).
In addition, the Company shall have a "legal defeasance option" (pursuant
to which it may terminate, with respect to the Junior Subordinated Debt
Securities of a particular series, all of its obligations under such Junior
Subordinated Debt Securities and the Junior Subordinated Indenture with respect
to such Junior Subordinated Debt Securities) and a "covenant defeasance option"
(pursuant to which it may terminate, with respect to the Junior Subordinated
Debt Securities of a particular series, its obligations with respect to such
Junior Subordinated Debt Securities under certain specified covenants contained
in the Junior Subordinated Indenture). If the Company exercises its legal
defeasance option with respect to a series of Junior Subordinated Debt
Securities, payment of such Junior Subordinated Debt Securities may not be
accelerated because of an Event of Default. If the Company exercises its
covenant defeasance option with respect to a series of Junior Subordinated Debt
Securities, payment of such Junior Subordinated Debt Securities may not be
accelerated because of an Event of Default related to the specified covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Junior Subordinated Debt Securities of a
series only if (i) the Company irrevocably deposits in trust with the Junior
Subordinated Indenture Trustee cash or U.S. Government Obligations (as defined
in the Junior Subordinated Indenture) for the payment of principal, premium, if
any, and interest with respect to such Junior Subordinated Debt Securities to
maturity or redemption, as the case may be, (ii) the Company delivers to the
Junior Subordinated Indenture Trustee a certificate from a nationally recognized
firm of independent public accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium, if any, and interest when due with
respect to all the Junior Subordinated Debt Securities of such series to
maturity or redemption, as the case may be, (iii) 91 days pass after the deposit
is made and during the 91-day period no default described in clause (v) under
"-- Events of Default, Waiver and Notice Thereof; Junior Subordinated Debt
Securities in Foreign Currencies" above with respect to the Company occurs that
is continuing at the end of such period, (iv) no Default has occurred and is
continuing on the date of such deposit and after giving effect thereto, (v) the
deposit does not constitute a default under any other agreement binding on the
Company, (vi) the Company delivers to the Junior Subordinated Indenture Trustee
an opinion of counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940, (vii) the Company shall have delivered to
the Junior Subordinated Indenture Trustee an opinion of counsel addressing
certain federal income tax matters relating to the defeasance, and (viii) the
Company delivers to the Junior Subordinated Indenture Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent to the defeasance and discharge of the Junior Subordinated Debt
Securities of such series as contemplated by the Junior Subordinated Indenture
have been complied with.
The Junior Subordinated Indenture Trustee shall hold in trust cash or U.S.
Government Obligations deposited with it as described above and shall apply the
deposited cash and the proceeds from deposited U.S. Government Obligations to
the payment of principal, premium, if any, and interest with respect to the
Junior Subordinated Debt Securities of the defeased series.
CONCERNING THE JUNIOR SUBORDINATED INDENTURE TRUSTEE
The Junior Subordinated Indenture Trustee for the Junior Subordinated Debt
Securities will be identified in the relevant Prospectus Supplement. In certain
instances, the Company or the holders of a majority of the then outstanding
principal amount of the Junior Subordinated Debt Securities issued under an
Junior Subordinated Indenture may remove the Junior Subordinated Indenture
Trustee and appoint a successor Junior Subordinated Indenture Trustee. The
Junior Subordinated Indenture Trustee may become the owner or pledgee of any of
the
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Junior Subordinated Debt Securities with the same rights, subject to certain
conflict of interest restrictions, it would have if it were not the Junior
Subordinated Indenture Trustee. The Junior Subordinated Indenture Trustee and
any successor trustee must be a corporation organized and doing business as a
commercial bank or trust company under the laws of the United States or of any
state thereof, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and subject to
examination by federal or state authority. From time to time and subject to
applicable law relating to conflicts of interest, the Junior Subordinated
Indenture Trustee may also serve as trustee under other indentures relating to
Debt Securities or Junior Subordinated Debt Securities issued by the Company or
affiliated companies and may engage in commercial transactions with the Company
and affiliated companies. Initially, the Junior Subordinated Indenture Trustee
is The Bank of New York, who currently serves as the transfer agent and
registrar for the Common Stock and is a lender to the Company under the
Company's Amended and Restated Credit Agreement dated April 10, 1997.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If Junior Subordinated Debt Securities are issued to a CCCI Trust in
connection with the issuance of Preferred Securities by such CCCI Trust, the
Company covenants in the Junior Subordinated Indenture that, so long as the
Preferred Securities of such CCCI Trust remain outstanding, the Company will not
declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any Common Stock or
Preferred Stock or make any guarantee payments with respect thereto if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
(as defined herein) or other payment obligations under the related Guarantee,
(ii) there shall have occurred any Junior Subordinated Indenture Event of
Default with respect to such Junior Subordinated Debt Securities, or (iii) in
the event that Junior Subordinated Debt Securities are issued to the applicable
CCCI Trust in connection with the issuance of Preferred Securities by such CCCI
Trust, the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the terms of the Junior Subordinated Debt
Securities and such period, or any extension thereof, is continuing; provided,
however, that the foregoing restrictions shall not apply to (a) dividends,
redemptions, purchases, acquisitions, distributions or payments made by the
Company by way of issuance of shares of its capital stock, (b) any declaration
of a dividend under a shareholder rights plan or in connection with the
implementation of a shareholder rights plan, the issuance of capital stock of
the Company under a shareholder rights plan or the redemption or repurchase of
any such right distributed pursuant to a shareholder rights plan, (c) payments
of accrued dividends by the Company upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (d) cash payments made by the Company in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (e) payments under the Guarantees, or
(f) purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees, or related to the issuance of Common Stock or rights under a dividend
reinvestment and stock purchase plan. In addition, if Junior Subordinated Debt
Securities are issued to a CCCI Trust in connection with the issuance of
Preferred Securities by such CCCI Trust, for so long as the Preferred Securities
of such CCCI Trust remain outstanding, the Company has agreed (1) to remain the
sole direct or indirect owner of all the outstanding Common Securities issued by
such CCCI Trust and not to cause or permit such Common Securities to be
transferred except to the extent permitted by the Declaration of such CCCI
Trust; provided that any permitted successor of the Company under the Junior
Subordinated Indenture may succeed to the Company's ownership of such Common
Securities, (2) to comply fully with all its obligations and agreements under
such Declaration and (3) not to take any action which would cause such CCCI
Trust to cease to be treated as a grantor trust for federal income tax purposes,
except in connection with a distribution of Junior Subordinated Debt Securities.
SUBORDINATION
The Junior Subordinated Debt Securities will be subordinated and junior in
right of payment to certain other indebtedness of the Company to the extent set
forth in the applicable Prospectus Supplement.
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The payment of the principal of, premium, if any, and interest on the
Junior Subordinated Debt Securities will be subordinated in right of payment to
the prior payment in full of all Senior Indebtedness of the Company and pari
passu with the Company's trade creditors. No payment on account of principal of,
premium, if any, or interest on the Junior Subordinated Debt Securities and no
acquisition of, or payment on account of any sinking fund for, the Junior
Subordinated Debt Securities may be made unless full payment of amounts then due
for principal, premium, if any, and interest then due on all Senior Indebtedness
by reason of the maturity thereof (by lapse of time, acceleration or otherwise)
has been made or duly provided for in cash or in a manner satisfactory to the
holders of such Senior Indebtedness. In addition, the Junior Subordinated
Indenture provides that if a default has occurred giving the holders of such
Senior Indebtedness the right to accelerate the maturity thereof, or an event
has occurred which, with the giving of notice, or lapse of time, or both, would
constitute such an event of default, then unless and until such event shall have
been cured or waived or shall have ceased to exist, no payment on account of
principal, premium, if any, or interest on the Junior Subordinated Debt
Securities and no acquisition of, or payment on account of a sinking fund for,
the Junior Subordinated Debt Securities may be made. The Company shall give
prompt written notice to the Junior Subordinated Indenture Trustee of any
default under any Senior Indebtedness or under any agreement pursuant to which
Senior Indebtedness may have been issued. The Junior Subordinated Indenture
provisions described in this paragraph, however, do not prevent the Company from
making a sinking fund payment with Junior Subordinated Debt Securities acquired
prior to the maturity of Senior Indebtedness or, in the case of default, prior
to such default and notice thereof. Upon any distribution of its assets in
connection with any dissolution, liquidation or reorganization of the Company,
all Senior Indebtedness must be paid in full before the holders of the Junior
Subordinated Debt Securities are entitled to any payments whatsoever. As a
result of these subordination provisions, in the event of the Company's
insolvency, holders of the Junior Subordinated Debt Securities may recover
ratably less than senior creditors of the Company.
For purposes of the description of the Junior Subordinated Debt Securities,
the term "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Junior Subordinated Indenture or thereafter incurred or created, (i)
indebtedness of the Company for money borrowed by the Company (including
purchase money obligations with an original maturity in excess of one year) or
evidenced by securities (other than the Junior Subordinated Debt Securities),
notes, bankers' acceptances or other corporate debt securities or similar
instruments issued by the Company; (ii) obligations with respect to letters of
credit; (iii) indebtedness of the Company constituting a guarantee of
indebtedness of others of the type referred to in the preceding clauses (i) and
(ii); or (iv) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii) and (iii) unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness or such renewal, extension or
refunding thereof is not superior in right of payment to the Junior Subordinated
Debt Securities.
DESCRIPTION OF PREFERRED STOCK
The Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
privileges and qualifications thereof without any further vote or action by the
shareholders. The Board of Directors has submitted a proposal to the
shareholders to approve an amendment to the Company's Articles of Incorporation
to increase the authorized number of shares of Preferred Stock from 2,000,000
shares to 10,000,000 shares. The issuance of Preferred Stock could decrease the
amount of earnings and assets available for distribution to holders of Common
Stock, and adversely affect the rights and powers, including voting rights, of
such holders and may have the effect of delaying, deferring or preventing a
change in control of the Company. No shares of Preferred Stock have ever been
issued. The particular terms of any series of Preferred Stock will be described
in the applicable Prospectus Supplement.
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DESCRIPTION OF COMMON STOCK
The Board of Directors has the authority to issue up to 150,000,000 shares
of Common Stock. As of May 15, 1998, 123,914,756 shares of Common Stock were
outstanding. The Board of Directors has submitted a proposal to the shareholders
to approve an amendment to the Company's Restated Articles of Incorporation to
increase the authorized number of shares of Common Stock from 150,000,000 shares
to 600,000,000 shares. Holders of Common Stock are entitled to one vote per
share on all matters submitted to a vote of shareholders of the Company and to
ratably receive dividends, if any, as may be declared from time to time by the
Board of Directors from funds legally available therefor, subject to the payment
of any preferential dividends declared with respect to any Preferred Stock that
from time to time may be outstanding. Upon liquidation, dissolution or winding
up of the Company, holders of Common Stock are entitled to share ratably in any
assets available for distribution to shareholders after payment of all
obligations of the Company, subject to the rights to receive preferential
distributions of the holders of any shares of Preferred Stock then outstanding.
Shareholders do not have cumulative voting rights or preemptive or other
rights to acquire or subscribe to additional, unissued or treasury shares. The
shares of Common Stock currently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance thereof, validly issued, fully paid and
nonassessable.
REPURCHASE AGREEMENT
In May 1977, the Company and its then shareholders, including L. Lowry Mays
and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of the outstanding shares of Common Stock owned by
L. Lowry Mays and B.J. McCombs and their heirs, legal representatives,
successors and assigns (collectively, the "Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party desires to dispose
of his shares, other than by disposition by will or intestacy or through gifts
to such Restricted Party's spouse or children, such shares must be offered for a
period of 30 days to the Company. Any shares not purchased by the Company must
then be offered for a period of 30 days to the other Restricted Parties. If all
of the offered shares are not purchased by the Company or the other Restricted
Parties, the Restricted Party offering his shares may sell them to a Third Party
during a period of 90 days thereafter at a price and on terms not more favorable
than those offered to the Company and the other Restricted Parties. In addition,
a Restricted Party may not individually or in concert with others sell any
shares so as to deliver voting control to a Third Party without providing in any
such sale that all Restricted Parties will be offered the same price and terms
for their shares. The Repurchase Agreement will continue in effect following the
Offering and may preserve the control of the present principal shareholders.
TEXAS BUSINESS COMBINATION LAW
The Company will be governed by the provisions of the Texas Business
Combination Law, Part 13 of the Texas Business Corporation Act, which takes
effect on September 1, 1997. In general, the law prohibits a Texas "issuing
public corporation" from engaging in a "business combination" with an
"affiliated shareholder," or an affiliate or associate thereof, for a period of
three years after the date of the transaction in which the person became an
affiliate shareholder, unless the business combination is approved in a
prescribed manner. "Business combinations" include mergers, asset sales and
other transactions resulting in a financial benefit to the affiliated
shareholder. An "affiliated shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 20% or more of
the corporation's voting stock. The applicability of the Texas Business
Combination Law to the Company may have an anti-takeover effect.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act of
1934 on ownership of Common Stock by aliens, the Company's bylaws were amended
effective December 31, 1983 to provide that (i) not more than one-fifth of the
shares outstanding shall at any time be owned of record, or voted, by or for the
account of aliens, their representatives, a foreign government or a corporation
organized under the laws of a foreign country, (ii) the Company shall not be
owned or controlled directly or indirectly by any other corporation of which any
officer or more than one-fourth of the directors are aliens or of which more
than one-fourth of the shares are
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owned of record or voted by aliens, (iii) no person who is an alien may be
elected or serve as an officer or director of the Company, and (iv) if the stock
records of the Company shall at any time reflect one-fifth ownership, no
transfers of additional shares to aliens shall be made and, if it shall
thereafter be found that any such additional shares are in fact held by or for
the account of an alien, such shares shall not be entitled to vote, to receive
dividends or to have any other rights. The holder of such shares will be
required to transfer them to a United States citizen or to the Company. This
restriction will be applicable to the shares of Common Stock offered hereby and
to the issuance or transfer of such shares after the date of this Prospectus.
The Company's stock certificates may bear a legend setting forth this
restriction. Since the bylaws were amended, the Communications Act of 1934 has
been revised to remove the limitations on alien officers and directors.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities or
Junior Subordinated Debt Securities, or shares of Preferred Stock or Common
Stock. Warrants may be issued independently or together with any Debt
Securities, Junior Subordinated Debt Securities, or shares of Preferred Stock or
Common Stock offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities, Junior Subordinated Debt Securities, or
shares of Preferred Stock or Common Stock. The Warrants are to be issued under
Warrant Agreements to be entered into between the Company and The Bank of New
York, as Warrant Agent, or such other bank or trust company as is named in the
Prospectus Supplement relating to the particular issue of Warrants (the "Warrant
Agent"). The Warrant Agent will act solely as an agent of the Company in
connection with the Warrants and will not assume any obligation or relationship
of agency or trust for or with any holders of Warrants or beneficial owners of
Warrants. The following summaries of certain provisions of the form of Warrant
Agreement and Warrants do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
applicable Warrant Agreement and the Warrants.
GENERAL
If Warrants are offered, the Prospectus Supplement will describe the terms
of the Warrants, including the following: (i) the offering price; (ii) the
currency, currencies or currency units for which Warrants may be purchased;
(iii) the designation, aggregate principal amount, currency, currencies or
currency units and terms of the Debt Securities or Junior Subordinated Debt
Securities purchasable upon exercise of the Debt Warrants and the price at which
such Debt Securities or Junior Subordinated Debt Securities may be purchased
upon such exercise; (iv) the designation, number of shares and terms of the
Preferred Stock purchasable upon exercise of the Preferred Stock Warrants and
the price at which such shares of Preferred Stock may be purchased upon such
exercise; (v) the designation, number of shares and terms of the Common Stock
purchasable upon exercise of the Common Stock Warrants and the price at which
such shares of Common Stock may be purchased upon such exercise; (vi) if
applicable, the designation and terms of the Debt Securities, Junior
Subordinated Debt Securities, Preferred Stock or Common Stock with which the
Warrants are issued and the number of Warrants issued with each such Debt
Security, Junior Subordinated Debt Security or share of Preferred Stock or
Common Stock; (vii) if applicable, the date on and after which the Warrants and
the related Debt Securities, Junior Subordinated Debt Securities, Preferred
Stock or Common Stock will be separately transferable; (viii) the date on which
the right to exercise the Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire; (ix) whether the Warrants will be
issued in registered or bearer form; (x) a discussion of certain federal income
tax, accounting and other special considerations, procedures and limitations
relating to the Warrants; and (xi) any other terms of the Warrants.
Warrants may be exchanged for new Warrants of different denominations, may
(if in registered form) be presented for registration of transfer, and may be
exercised at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Before the exercise of their Warrants,
holders of Warrants will not have any of the rights of holders of the Debt
Securities, Junior Subordinated Debt Securities or shares of Preferred Stock or
Common Stock purchasable upon such exercise, including the right to receive
payments of principal of, any premium on, or any interest on, the Debt
Securities or Junior Subordinated Debt Securities purchasable upon such exercise
or to enforce the covenants in the Indenture or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any
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applicable right to vote. If the Company maintains the ability to reduce the
exercise price of any Stock Warrant and such right is triggered, the Company
will comply with the federal securities laws, including Rule 13e-4 under the
Exchange Act, to the extent applicable.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Debt Securities or Junior Subordinated Debt Securities or such number of shares
of Preferred Stock or Common Stock at such exercise price as shall in each case
be set forth in, or calculable from, the Prospectus Supplement relating to the
Warrant. Warrants may be exercised at such times as are set forth in the
Prospectus Supplement relating to such Warrants. After the close of business on
the Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the certificate evidencing such Warrants
properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt Securities,
Junior Subordinated Debt Securities or shares of Preferred Stock or Common Stock
purchasable upon such exercise. The exercise price will be the price applicable
on the date of payment in full, as set forth in the Prospectus Supplement
relating to the Warrants. Upon receipt of such payment and the certificate
representing the Warrants to be exercised, properly completed and duly executed
at the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement, the Company will, as soon as practicable, issue
and deliver the Debt Securities, Junior Subordinated Debt Securities or shares
of Preferred Stock or Common Stock purchasable upon such exercise. If fewer than
all of the Warrants represented by such certificate are exercised, a new
certificate will be issued for the remaining amount of Warrants.
ADDITIONAL PROVISIONS
The exercise price payable and the number of shares of Common or Preferred
Stock purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including the issuance of a stock dividend to
holders of Common or Preferred Stock, respectively, or a combination,
subdivision or reclassification of Common or Preferred Stock, respectively. In
lieu of adjusting the number of shares of Common or Preferred Stock purchasable
upon exercise of each Stock Warrant, the Company may elect to adjust the number
of Stock Warrants. No adjustment in the number of shares purchasable upon
exercise of the Stock Warrants will be required until cumulative adjustments
require an adjustment of at least 1% thereof. The Company may, at its option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of Stock Warrants, but the Company will pay the cash value of any
fractional shares otherwise issuable. Notwithstanding the foregoing, in case of
any consolidation, merger, or sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, the holder of each outstanding
Stock Warrant shall have the right upon the exercise thereof to the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock or Preferred
Stock into which such Stock Warrants were exercisable immediately prior thereto.
NO RIGHTS AS SHAREHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as shareholders of the Company.
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DESCRIPTION OF STOCK PURCHASE
CONTRACTS AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, which are contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock or Preferred Stock at a
future date or dates. The price per share of Common Stock or Preferred Stock may
be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. Any such formula may include anti-dilution provisions to adjust the
number of shares issuable pursuant to Stock Purchase Contracts upon certain
events. The Stock Purchase Contracts may be issued separately or as a part of
Stock Purchase Units each representing ownership of a Stock Purchase Contract
and Debt Securities, U.S. Obligations or Preferred Securities securing the
holders' obligations to purchase the Common Stock or the Preferred Stock under
the Purchase Contracts.
Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include U.S. Obligations, unless a holder
of Stock Purchase Units settles its obligations under the Stock Purchase
Contracts early through the delivery of consideration to the Company or its
agent in the manner discussed below, the principal of such U.S. Obligations,
when paid at maturity, will automatically be applied to satisfy the holder's
obligation to purchase Common Stock or Preferred Stock under the Stock Purchase
Contracts.
Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include Debt Securities or Preferred
Securities, in the absence of any such early settlement or the election by a
holder to pay the consideration specified in the Stock Purchase Contracts, the
Debt Securities or Preferred Securities will automatically be presented to the
applicable CCCI Trust for redemption at 100% of face or liquidation value and
the CCCI Trust will present Junior Subordinated Debt Securities in an equal
principal amount to the Company for redemption at 100% of principal amount.
Amounts received in respect of such redemption will automatically be transferred
to the Company and applied to satisfy in full the holder's obligation to
purchase Common Stock or Preferred Stock under the Stock Purchase Contracts. The
Stock Purchase Contracts may require the Company to make periodic payments to
the holders of the Stock Purchase Units or vice versa, and such payments may be
unsecured or refunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
Except as otherwise described in the applicable Prospectus Supplement,
holders of Stock Purchase Units may be entitled to settle the underlying Stock
Purchase Contracts prior to the stated settlement date by surrendering the
certificate evidencing the Stock Purchase Units, accompanied by the payment due,
in such form and calculated pursuant to such formula as may be prescribed in the
Stock Purchase Contracts and described in the applicable Prospectus Supplement.
Upon early settlement, the holder would receive the number of shares of Common
Stock or Preferred Stock deliverable under such Stock Purchase Contracts,
subject to adjustment in certain cases. Holders of Stock Purchase Units may be
entitled to exchange their Stock Purchase Units together with appropriate
collateral, for separate Stock Purchase Contracts and Preferred Securities, Debt
Securities, Junior Subordinated Debt Securities or U.S. Obligations. In the
event of either such early settlement or exchange, the Preferred Securities,
Debt Securities, Junior Subordinated Debt Securities or debt obligations that
were pledged as security for the obligation of the holder to perform under the
Stock Purchase Contracts would be transferred to the holder free and clear of
the Company's security interest therein.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units including differences, if any, from
the term described above.
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DESCRIPTION OF PREFERRED SECURITIES
PREFERRED SECURITIES
Each CCCI Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each CCCI Trust authorizes the Regular Trustees of such CCCI
Trust to issue on behalf of such CCCI Trust one series of Preferred Securities.
Each Declaration will be qualified as an indenture under the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the related
Declaration or made part of such Declaration by the Trust Indenture Act.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a CCCI Trust for specific terms, including (i) the specific
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by such CCCI Trust, (iii) the annual distribution rate (or
method of calculation thereof) for Preferred Securities issued by such CCCI
Trust, the date or dates upon which such distributions shall be payable and the
record date or dates for the payment of such distributions, (iv) whether
distributions on Preferred Securities issued by such CCCI Trust shall be
cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by such CCCI Trust
shall be cumulative, (v) the amount or amounts which shall be paid out of the
assets of such CCCI Trust to the holders of Preferred Securities of such CCCI
Trust upon voluntary or involuntary liquidation, dissolution, winding-up or
termination of such CCCI Trust, (vi) the obligation or right, if any, of such
CCCI Trust to purchase or redeem Preferred Securities issued by such CCCI Trust
and the price or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities issued by such CCCI Trust
shall or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such CCCI Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the approval by
the holders of Preferred Securities, or of Preferred Securities issued by one or
more CCCI Trusts, or of both, as a condition to specified actions or amendments
to the Declaration of such CCCI Trust, (viii) the terms and conditions upon
which the Preferred Securities may be convertible into or exchanged for Common
Stock, Preferred Stock, Debt Securities, Junior Subordinated Debt Securities, or
indebtedness or other securities of any kind of the Company; and (ix) any other
relevant rights, preferences, privileges, limitations or restrictions of
Preferred Securities issued by such CCCI Trust consistent with the Declaration
of such CCCI Trust or with applicable law. All Preferred Securities offered
hereby will be guaranteed by the Company as and to the extent set forth below
under "Description of the Guarantees." Certain federal income tax considerations
applicable to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each CCCI Trust
will issue one series of Common Securities. The Declaration of each CCCI Trust
authorizes the Regular Trustees of such CCCI Trust to issue on behalf of such
CCCI Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Common Securities issued by a CCCI
Trust will be substantially identical to the terms of the Preferred Securities
issued by such CCCI Trust and the Common Securities will rank pari passu and
payments will be made thereon on a pro rata basis with the Preferred Securities
except that, if a Declaration Event of Default occurs and is continuing, the
rights of the holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and maturity will be
subordinated to the rights of the holders of such Preferred Securities. Except
in certain limited circumstances, the Common Securities issued by a CCCI Trust
will also carry the right to vote and to appoint, remove or replace any of the
Trustees of such CCCI Trust. All the Common Securities of a CCCI Trust will be
directly or indirectly owned by the Company.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities primarily
because (i) the aggregate principal amount of Junior Subordinated Debt
Securities held as trust assets will be equal to the sum of the aggregate stated
liquidation amount of the Preferred Securities; and (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debt Securities will
match the distribution rate and distribution and other payment dates for the
Preferred Securities.
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If an Event of Default with respect to the Declaration of any CCCI Trust
occurs and is continuing, then the holders of Preferred Securities of such CCCI
Trust would rely on the enforcement by the Property Trustee of its rights as a
holder of the Junior Subordinated Debt Securities deposited in such CCCI Trust
against the Company. In addition, the holders of a majority in liquidation
amount of such Preferred Securities will have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under such Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of such
Junior Subordinated Debt Securities. If the Property Trustee fails to enforce
its rights under such Junior Subordinated Debt Securities deposited in such CCCI
Trust, any holder of such Preferred Securities may, to the extent permitted by
applicable law, after a period of 60 days has elapsed from such holder's written
request, institute a legal proceeding against the Company to enforce the
Property Trustee's rights under such Junior Subordinated Debt Securities without
first instituting any legal proceeding against the Property Trustee or any other
person or entity. If an Event of Default with respect to the Declaration of any
CCCI Trust occurs and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Junior Subordinated
Debt Securities on the date such interest or principal is otherwise payable (or
in the case of redemption, on the redemption date), then a holder of Preferred
Securities of such CCCI Trust may also directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on such
Junior Subordinated Debt Securities having a principal amount equal to the
aggregate liquidation amount of such Preferred Securities held by such holder (a
"Direct Action") on or after the respective due date specified in such Junior
Subordinated Debt Securities without first (i) directing the Property Trustee to
enforce the terms of such Junior Subordinated Debt Securities or (ii)
instituting a legal proceeding against the Company to enforce the Property
Trustee's rights under such Junior Subordinated Debt Securities. In connection
with such Direct Action, the Company will be subrogated to the rights of such
holder of such Preferred Securities under such Declaration to the extent of any
payment made by the Company to such holder of such Preferred Securities in such
Direct Action. The holders of Preferred Securities of a CCCI Trust will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities unless the Property Trustee first fails to
do so.
Certain federal income tax considerations applicable to an investment in
Preferred Securities will be described in the Prospectus Supplement relating
thereto.
The Property Trustee and its affiliates provide customary commercial
banking services to the Company and certain of its subsidiaries and participate
in various financing agreements of the Company in the ordinary course of their
business. Initially, the Property Trustee is The Bank of New York, who currently
serves as the transfer agent and registrar for the Common Stock and is a lender
to the Company under the Company's Amended and Restated Credit Agreement dated
April 10, 1997.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders
from time to time of Preferred Securities of a CCCI Trust. Each Preferred
Security Guarantee will be separately qualified under the Trust Indenture Act
and will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto (the "Guarantee Trustee"), for the benefit of
holders of the Preferred Securities of the applicable CCCI Trust. The terms of
each Guarantee will be those set forth in such Guarantee and those made part of
such Guarantee by the Trust Indenture Act. This description summarizes the
material terms of the Guarantees and is qualified in its entirety by reference
to the form of Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Preferred Securities issued by the applicable CCCI Trust, the
Guarantee Payments (as defined herein), to the extent not paid by such CCCI
Trust, regardless of any defense, right of set-off or counterclaim that such
CCCI Trust may have or assert. The following distributions and other
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payments with respect to Preferred Securities issued by a CCCI Trust to the
extent not made or paid by such CCCI Trust (the "Guarantee Payments"), will be
subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions on such Preferred Securities, but only if and to the extent that
in each case the Company has made a payment to the Property Trustee of interest
on the Junior Subordinated Debt Securities, (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption, with respect to
any Preferred Securities called for redemption by such CCCI Trust, but only if
and to the extent that in each case the Company has made a payment to the
Property Trustee of interest or principal on the Junior Subordinated Debt
Securities deposited in such CCCI Trust as trust assets, and (iii) upon a
voluntary or involuntary liquidation, dissolution, winding-up or termination of
such CCCI Trust (other than in connection with the distribution of such Junior
Subordinated Debt Securities to the holders of such Preferred Securities or the
redemption of all such Preferred Securities upon the maturity or redemption of
such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Preferred
Securities to the date of payment, to the extent such CCCI Trust has funds
available therefor, and (b) the amount of assets of such CCCI Trust remaining
available for distribution to holders of such Preferred Securities upon
liquidation of such CCCI Trust. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of the applicable Preferred Securities or by causing the
applicable CCCI Trust to pay such amounts to such holders.
The Guarantee is a full and unconditional guarantee from the time of
issuance of the applicable Preferred Securities, but the Guarantee covers
distributions and other payments on such Preferred Securities only if and to the
extent that the Company has made a payment to the Property Trustee of interest
or principal on the Junior Subordinated Debt Securities deposited in the
applicable CCCI Trust as trust assets. If the Company does not make interest or
principal payments on the Junior Subordinated Debt Securities deposited in the
applicable CCCI Trust as trust assets, the Property Trust will not make
distributions on the Preferred Securities of such CCCI Trust and the CCCI Trust
will not have funds available therefor.
The Company's obligations under the Declaration for each CCCI Trust, the
Guarantee issued with respect to Preferred Securities issued by such CCCI Trust,
the Junior Subordinated Debt Securities purchased by such CCCI Trust and the
Junior Subordinated Indenture in the aggregate will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities issued by such CCCI Trust.
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by the applicable CCCI Trust remain outstanding, the Company
will not declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any Common Stock or
Preferred Stock or make any guarantee payment with respect thereto, if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
or other payment obligations under such Guarantee, (ii) there shall have
occurred any Event of Default under the related Declaration or (iii) in the
event that Junior Subordinated Debt Securities are issued to the applicable CCCI
Trust in connection with the issuance of Preferred Securities by such CCCI
Trust, the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the terms of the Junior Subordinated Debt
Securities and such period, or any extension thereof, is continuing; provided,
however, that the foregoing restrictions shall not apply to (a) dividends,
redemptions, purchases, acquisitions, distributions or payments made by the
Company by way of issuance of shares of its capital stock, (b) any declaration
of a dividend under a shareholder rights plan or in connection with the
implementation of a shareholder rights plan, the issuance of capital stock of
the Company under a shareholder rights plan or the redemption or repurchase of
any such right distributed pursuant to a shareholder rights plan, (c) payments
of accrued dividends by the Company upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (d) cash payments made by the Company in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (e) payments under the Guarantees, or
(f) purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees, or related to the issuance of Common Stock
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or rights under a dividend reinvestment and stock purchase plan. In addition, so
long as any Preferred Securities of a CCCI Trust remain outstanding, the Company
has agreed (1) to remain the sole direct or indirect owner of all the
outstanding Common Securities issued by such CCCI Trust and not to cause or
permit such Common Securities to be transferred except to the extent permitted
by the Declaration of such CCCI Trust, provided that any permitted successor of
the Company under the Junior Subordinated Indenture may succeed to the Company's
ownership of such Common Securities, and (2) to use reasonable efforts to cause
such CCCI Trust to continue to be treated as a grantor trust for federal income
tax purposes, except in connection with a distribution of Junior Subordinated
Debt Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the applicable Preferred Securities (in which case no consent will
be required), each Guarantee may be amended only with the prior approval of the
holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities issued by the applicable CCCI Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be set
forth in an accompanying Prospectus Supplement. All guarantees and agreements
contained in a Guarantee shall bind the successors, assignees, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities of the applicable CCCI Trust then
outstanding. Except in connection with a consolidation, merger, conveyance, or
transfer of assets involving the Company that is permitted under the Junior
Subordinated Indenture, the Company may not assign its obligations under any
Guarantee.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect as to
the Preferred Securities issued by the applicable CCCI Trust upon full payment
of the redemption price of all Preferred Securities of such CCCI Trust, or upon
distribution of the Junior Subordinated Debt Securities to the holders of the
Preferred Securities of such CCCI Trust in exchange for all the Preferred
Securities issued by such CCCI Trust, or upon full payment of the amounts
payable upon liquidation of such CCCI Trust. Notwithstanding the foregoing, each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable
CCCI Trust must restore payment of any sums paid under such Preferred Securities
or such Guarantee.
STATUS OF THE GUARANTEES
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other indebtedness,
liabilities and obligations of the Company and any guarantees, endorsements or
other contingent obligations of the Company in respect of such indebtedness,
liabilities or obligations, including the Junior Subordinated Debt Securities,
except those made pari passu or subordinate by their terms, and (ii) senior to
all capital stock now or hereafter issued by the Company and to any guarantee
now or hereafter entered into by the Company in respect of any of its capital
stock. The Company's obligations under each Guarantee will rank pari passu with
each other Guarantee. Because the Company is a holding company, the Company's
obligations under each Guarantee are also effectively subordinated to all
existing and future liabilities, including trade payables, of the Company's
subsidiaries, except to the extent that the Company is a creditor of the
subsidiaries recognized as such. Each Declaration provides that each holder of
Preferred Securities issued by the applicable CCCI Trust, by acceptance thereof,
agrees to the subordination provisions and other terms of the related Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first instituting
a legal proceeding against any other person or entity). Each Guarantee will be
deposited with the Guarantee Trustee, to be held for the benefit of the holders
of the Preferred Securities issued by the applicable CCCI Trust. The Guarantee
Trustee shall enforce such Guarantee on behalf of the holders of such Preferred
Securities. The holders of not less than a majority in aggregate liquidation
amount of the Preferred Securities issued by the applicable CCCI Trust have the
right to direct the time, method and place of conducting any
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proceeding for any remedy available in respect of the related Guarantee,
including the giving of directions to the Guarantee Trustee. If the Guarantee
Trustee fails to enforce a Guarantee as above provided, any holder of Preferred
Securities issued by the applicable CCCI Trust may institute a legal proceeding
directly against the Company to enforce its rights under such Guarantee, without
first instituting a legal proceeding against the applicable CCCI Trust, or any
other person or entity. Notwithstanding the foregoing, if the Company has failed
to make a Guarantee Payment, a holder of Preferred Securities may directly
institute a proceeding against the Company for enforcement of such holder's
right to receive payment under the Guarantee. The Company waives any right or
remedy to require that any action be brought first against a CCCI Trust or any
other person or entity before proceeding directly against the Company.
MISCELLANEOUS
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each Guarantee and as to any default in such performance. The Company is
required to file annually with the Guarantee Trustee an officer's certificate as
to the Company's compliance with all conditions to be complied with by it under
each Guarantee.
The Guarantee Trustee, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the applicable
Guarantee and, after default with respect to a Guarantee, shall exercise the
same degree of care as a prudent individual would exercise under the
circumstances in the conduct of his or her own affairs. Subject to such
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by a Preferred Securities Guarantee at the request of any
holder of Preferred Securities unless it is offered reasonable security and
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
ERISA MATTERS
The Company and its affiliates may each be considered a "party in interest"
(within the meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) or a "disqualified person" (within the meaning of Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code")) with respect
to many employee benefit plans ("Plans") that are subject to ERISA. The purchase
of Offered Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which the Company or any
affiliate of the Company is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Offered
Securities are acquired pursuant to and in accordance with an applicable
exemption. Any pension or other employee benefit plan proposing to acquire any
Offered Securities should consult with its counsel.
PLAN OF DISTRIBUTION
The Company or the CCCI Trusts may sell the Offered Securities offered
hereby (i) through underwriters or dealers, (ii) through agents, (iii) directly
to purchasers, or (iv) through a combination of any such methods of sale. Any
such underwriter, dealer or agent may be deemed to be an underwriter within the
meaning of the Securities Act. The Prospectus Supplement relating to the Offered
Securities will set forth their offering terms, including the name or names of
any underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company or the CCCI Trusts from such sale,
any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents, any initial public offering
price, any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers, and any securities exchanges on which the Offered
Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities
will be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such
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prevailing market prices, or at negotiated prices. The Offered Securities may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters or directly by one or more of such firms. Unless
otherwise set forth in the Prospectus Supplement, the obligations of
underwriters or dealers to purchase the Offered Securities will be subject to
certain conditions precedent and the underwriters or dealers will be obligated
to purchase all the Offered Securities if any are purchased. Any public offering
price and any discounts or concessions allowed or reallowed or paid by
underwriters or dealers to other dealers may be changed from time to time.
Offered Securities may be sold directly by the Company or the CCCI Trusts
or through agents designated by the Company or the CCCI Trusts from time to
time. Any agent involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by the Company or the CCCI Trusts to such agent will be set forth, in
the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If so indicated in the Prospectus Supplement, the Company or the CCCI
Trusts will authorize underwriters, dealers or agents to solicit offers by
certain specified institutions to purchase Offered Securities from the Company
or the CCCI Trusts at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject to
any conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts. The underwriters and other persons soliciting such contracts will
have no responsibility for the validity or performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company or the CCCI Trusts to indemnification by the Company or
the CCCI Trusts against certain civil liabilities, including liabilities under
the Securities Act, or to contribution by the Company or the CCCI Trusts to
payments they may be required to make in respect thereof. The terms and
conditions of such indemnification will be described in an applicable Prospectus
Supplement. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, the Company or the CCCI Trusts in
the ordinary course of business.
Each series of Offered Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Offered Securities are sold
by the Company or the CCCI Trusts for public offering and sale may make a market
in such Offered Securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for any Offered
Securities.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may
over-allot shares of the Common Stock in connection an offering of Common Stock,
thereby creating a short position in the underwriters' account. Syndicate
covering transactions involve purchases of the Debt Securities or Junior
Subordinated Debt Securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Stabilizing and syndicate
covering transactions may cause the price of the Debt Securities or Junior
Subordinated Debt Securities to be higher than it would otherwise be in the
absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
LEGAL OPINIONS
The validity of the Company Securities will be passed upon for the Company
by its special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a partnership
including professional corporations), San Antonio, Texas. Certain matters of
Delaware Law relating to the validity of the Preferred Securities will be passed
upon for the Company and the CCCI Trusts by Morris, Nichols, Arsht & Tunnell,
Wilmington, Delaware, special Delaware counsel to the Company and the CCCI
Trusts. The validity of the Offered Securities will be passed upon for the
underwriters, dealers or agents, if any, by Cravath, Swaine & Moore, New York,
New York. Alan D. Feld, the sole shareholder of a professional corporation which
is a partner of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of the
Company and owns approximately 90,000 shares of Common Stock (including
presently exercisable nonqualified options to acquire approximately 51,000
shares).
33
<PAGE> 82
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the audited financial statements of Universal Outdoor Holdings,
Inc. as of December 31, 1997 and 1996 and for each of the three years in the
period ended December 31, 1997, included in the Company's Current Report on Form
8-K dated March 12, 1998, as amended by Form 8-K/A filed on March 23, 1998, have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of the Company incorporated by
reference and the financial statement schedule included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included or incorporated by reference herein which, as to the years 1996 and
1997, are based in part on the reports of KPMG and KPMG Peat Marwick LLP,
respectively, independent auditors. The financial statements referred to above
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.
The 1996 consolidated financial statements of Australian Radio Network Pty.
Ltd. not separately presented in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, have been audited by KPMG, independent
auditors, as set forth in their report dated March 4, 1997 included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference. Such report referred to above is incorporated
herein by reference in reliance upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Heftel Broadcasting Corporation
and subsidiaries as of and for the year ended December 31, 1997 (not separately
presented in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997), are incorporated by reference herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants, and
upon the authority of that Firm as experts in accounting and auditing.
The financial statements incorporated in this Prospectus by reference to
the audited historical financial statements of Paxson Radio (a division of
Paxson Communications Corporation) for the year ended December 31, 1996 included
in the Company's Current Report on Form 8-K dated December 22, 1997 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Eller Media as of December 31,
1996 and 1995 and for the year ended December 31, 1996 and for the period from
August 18, 1995 through December 31, 1995, together with the consolidated
financial statements of PMG Holdings, Inc. and subsidiaries and the combined
financial statements of Eller Investment Company, Inc. for the period from
January 1, 1995 to August 17, 1995, incorporated by reference in this prospectus
and elsewhere in the Registration Statement are included in the Company's
Current Report on Form 8-K, filed on April 17, 1997, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The combined financial statements of Eller Investment Company, Inc. as of
and for the year ended December 31, 1994, incorporated by reference in this
prospectus and elsewhere in the Registration Statement are included in the
Company's Current Report on Form 8-K, filed April 17, 1997, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said reports.
34
<PAGE> 83
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY CLEAR CHANNEL OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Forward-Looking Statements................. S-2
Summary.................................... S-3
Risk Factors............................... S-10
Use of Proceeds............................ S-18
Common Stock Price Range and Dividends..... S-19
Capitalization............................. S-20
The Jacor Merger........................... S-21
Unaudited Pro Forma Combined Condensed
Financial Statements..................... S-25
Business................................... S-42
Available Information...................... S-46
Underwriting............................... S-46
Experts.................................... S-47
Legal Opinions............................. S-48
PROSPECTUS
Available Information...................... 3
Incorporation of Certain Documents by
Reference................................ 3
The Company................................ 4
The CCCI Trusts............................ 4
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............ 5
Use of Proceeds............................ 5
Holding Company Structure.................. 5
General Description of Securities and Risk
Factors.................................. 6
Description of Debt Securities............. 6
Description of Junior Subordinated Debt
Securities............................... 16
Description of Preferred Stock............. 23
Description of Common Stock................ 24
Description of Warrants.................... 25
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 27
Description of Preferred Securities........ 28
Description of Guarantees.................. 29
ERISA Matters.............................. 32
Plan of Distribution....................... 32
Legal Opinions............................. 33
Experts.................................... 34
</TABLE>
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15,000,000 SHARES
CLEAR CHANNEL LOGO
CLEAR CHANNEL
COMMUNICATIONS, INC.
COMMON STOCK
PROSPECTUS SUPPLEMENT
BT ALEX. BROWN
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
ING BARING FURMAN SELZ LLC
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
DECEMBER 17, 1998
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