<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-42028, 333-42028-01,
333-42028-02, 333-42028-03
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 28, 2000)
$1,500,000,000
[CLEAR CHANNEL LOGO]
CLEAR CHANNEL COMMUNICATIONS, INC.
---------------------
$750,000,000 7.25% SENIOR NOTES DUE 2003
$750,000,000 7.65% SENIOR NOTES DUE 2010
---------------------
We are offering $750,000,000 of 7.25% senior notes due 2003 and
$750,000,000 of 7.65% senior notes due 2010. The 7.25% notes will mature on
September 15, 2003 and the 7.65% notes will mature on September 15, 2010. We
will pay interest on both series of the notes on March 15 and September 15 of
each year. The first interest payment on the notes will be made on March 15,
2001. We may redeem the 7.65% notes, in whole or in part, at the redemption
price described in this prospectus supplement. We may not redeem the 7.25%
notes.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS
PROSPECTUS SUPPLEMENT OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INVESTING IN THE NOTES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION
ENTITLED "RISK FACTORS" BEGINNING ON PAGE S-10 OF THIS PROSPECTUS SUPPLEMENT.
<TABLE>
<CAPTION>
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PROCEEDS, BEFORE
PRICE TO UNDERWRITING EXPENSES, TO
PUBLIC(1) DISCOUNT CLEAR CHANNEL(1)
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<S> <C> <C> <C>
Per 7.25% Note................................ 99.959% 0.35% 99.609%
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Total......................................... $749,692,500 $2,625,000 $747,067,500
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Per 7.65% Note................................ 99.661% 0.65% 99.011%
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Total......................................... $747,457,500 $4,875,000 $742,582,500
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</TABLE>
(1) Plus accrued interest, if any, from September 12, 2000.
Delivery of the notes in book entry form only will be made on or about
September 12, 2000.
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CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
SALOMON SMITH BARNEY
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BANC OF AMERICA SECURITIES LLC CHASE SECURITIES INC.
FLEET SECURITIES, INC. MERRILL LYNCH & CO.
The date of this prospectus supplement is September 7, 2000.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
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PAGE
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<S> <C>
Cautionary Statement Regarding Forward-Looking Statements... S-3
Business.................................................... S-4
Capitalization.............................................. S-8
Ratio of Earnings to Fixed Charges.......................... S-9
Use of Proceeds............................................. S-9
Risk Factors................................................ S-10
Selected Historical Financial Data.......................... S-17
Description of the Notes.................................... S-19
Certain Federal Income Tax Considerations................... S-23
Underwriting................................................ S-26
Notice to Canadian Residents................................ S-28
Where You Can Find More Information......................... S-29
Experts..................................................... S-29
Legal Opinions.............................................. S-30
Unaudited Pro Forma Combined Condensed Consolidated
Financial Statements...................................... P-1
PROSPECTUS
Where You Can Find More Information......................... 3
About This Prospectus....................................... 4
Clear Channel Communications, Inc. ......................... 4
Recent Developments......................................... 6
The Clear Channel Trusts.................................... 8
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 9
Use of Proceeds............................................. 9
Holding Company Structure................................... 10
General Description of Securities and Risk Factors.......... 10
Description of Senior and Subordinated Debt Securities...... 10
Description of Junior Subordinated Debt Securities.......... 21
Description of Preferred Stock.............................. 30
Description of Common Stock................................. 30
Description of Warrants..................................... 32
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 34
Description of Preferred Securities......................... 35
Description of Guarantees................................... 37
ERISA Matters............................................... 40
Plan of Distribution........................................ 40
Legal Opinions.............................................. 42
Experts..................................................... 42
</TABLE>
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains 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 us, 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, outdoor
advertising and entertainment industries;
- fluctuations in exchange rates and currency values;
- capital expenditure requirements;
- legislative or regulatory requirements, including the policies of the
Federal Communications Commission, the U.S. Department of Justice and the
Federal Trade Commission with respect to the conduct of our business and
the consummation of future or pending acquisitions;
- interest rates;
- taxes;
- access to capital markets;
- additional risks referenced in our filings with the SEC;
- the integration of our business with those of our recently acquired
companies; and
- the effect of leverage on our financial position and earnings.
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 document 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 operation and
prospects may have changed since that date.
S-3
<PAGE> 4
BUSINESS
We are a global leader in the out-of-home advertising industry reaching
local, national and international consumers through a complementary portfolio of
radio stations, radio broadcast networks, outdoor advertising displays,
television stations, a media representation business and a growing presence on
the Internet. We are comprised of three business segments: broadcasting, outdoor
advertising and entertainment. Following the completion of our merger with AMFM
Inc., as of August 31, 2000, we owned, programmed or sold airtime for
approximately 930 domestic radio stations and two radio stations in Denmark. In
addition, we owned or programmed 24 domestic television stations. We are one of
the world's largest outdoor advertising companies based on our total domestic
and international advertising display inventory. Through our recent acquisition
of SFX Entertainment, Inc., we are also now one of the world's largest
diversified promoters, producers and venue operators for live entertainment
events. We were incorporated in Texas in 1974. Our principal executive offices
are located at 200 East Basse Road, San Antonio, Texas 78209 (telephone:
210-822-2828).
Our broadcasting segment includes both radio and television stations for
which we are the licensee and radio and television stations which we program or
for which we sell air time under local marketing agreements or joint sales
agreements. Our broadcasting segment also operates radio networks and produces
syndicated programming. Our outdoor advertising segment includes advertising
display faces which we own or operate under lease management agreements. Our
entertainment segment includes the promotion and production of live
entertainment events and operation of live entertainment venues. Our
entertainment segment also includes a sports marketing and management company.
A brief description of each of our primary lines of business and the
recently completed mergers with AMFM and SFX follows.
BROADCASTING
As of August 31, 2000, we owned, programmed, or sold airtime for
approximately 930 domestic radio stations, two international radio stations, 20
domestic television stations and four satellite television stations. Our radio
stations employ a wide variety of programming formats, such as News/Talk/Sports,
Country, Adult Contemporary, Urban and Rock. We own two international radio
stations located in Denmark that broadcast Adult Contemporary and Oldies formats
to the Copenhagen market and one cable audio channel that reaches most of
Denmark. We also provide programming to and sell airtime under exclusive sales
agency agreements for three radio stations in Mexico. In addition, we also
operate several radio networks and produce more than 50 syndicated programs and
services for more than 4,000 radio stations. Our syndicated programs include
Rush Limbaugh, The Dr. Laura Schlessinger Show, Dr. Dean Edell, American Top 40
with Casey Kasem and Rockline. In addition, we currently own the following
interests in radio broadcasting or music distribution 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 26% non-voting equity interest in Hispanic Broadcasting Corporation, a
leading domestic Spanish-language radio broadcaster;
- a 22.9% equity interest in Muzak Holdings, LLC, a music distribution
company;
- a 40% equity interest in Grupo Acir Communicaciones, S.A. de C.V., one of
the largest radio broadcasters in Mexico;
- a 50% equity interest in Radio 1, which owns seven radio stations in
Norway;
- a 50% equity interest in Radio Bonton, a.s., which owns an FM radio
station in the Czech Republic; and
- a 32% equity interest in JAZZ FM plc, which owns two radio stations in
England.
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<PAGE> 5
Our television stations are affiliated with various television networks,
including FOX, UPN, ABC, NBC and CBS. 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.
OUTDOOR ADVERTISING
As of August 31, 2000, we owned approximately 750,000 advertising display
faces, and operated approximately 5,900 display faces under license management
agreements. We currently provide outdoor advertising services in over 50
domestic markets and over 35 international markets. Domestic display faces
include billboards of various sizes and various small display faces on the
interior and exterior of various public transportation vehicles and taxi cabs.
International display faces include street furniture, transit displays and
billboards of various sizes. Additionally, we currently own the following
interests in outdoor advertising companies:
- a 50% equity interest in Hainan White Horse Advertising Media Investment
Co. Ltd., which operates street furniture displays in China;
- a 50% equity interest in Sirocco International SA, which is developing a
new 8 square meter format network and obtaining concessions for 2 square
meter format panels in France;
- a 50% equity interest in Adshel Street Furniture Pty., Limited, which
operates street furniture displays in Australia and New Zealand;
- a 30% equity interest in Capital City Posters Pty., Ltd, which operates
street furniture and billboard displays in Singapore;
- a 50% equity interest in Buspak, which operates bus and tram displays in
Hong Kong; and
- a 31.9% equity interest in Master & More Co., Ltd, which operates
billboard displays in Thailand.
ENTERTAINMENT
As a result of our recent merger with SFX, we are one of the world's
largest diversified promoters, producers and venue operators for live
entertainment events. In addition, we are a leading fully integrated sports
marketing and management company specializing in the representation of sports
athletes and broadcasters, integrated event management, and television
programming, production and marketing consulting services. We operate one of the
largest network of venues used principally for music concerts and other live
entertainment events in the United States, with 92 venues in 31 of the top 50
markets and nine venues principally used for theatrical presentations, primarily
in the United Kingdom. Through our large number of venues and our presence in
each of the markets that we serve, we are able to provide integrated promotion,
production and venue operation and event management services for a broad variety
of live entertainment events.
AMFM MERGER
On August 30, 2000, we closed our merger with AMFM Inc. Pursuant to the
terms of the merger agreement, each share of AMFM common stock was exchanged for
0.94 shares of our common stock. Approximately 205.4 million shares of our
common stock were issued in the AMFM merger. We also indirectly assumed or
refinanced AMFM's outstanding debt. At June 30, 2000, AMFM had a total
outstanding indebtedness of approximately $5.7 billion, a portion of which has
since been repaid with the proceeds of radio station divestitures required to
gain regulatory approval for the merger. Additionally, all options and warrants
to purchase AMFM common stock outstanding at the effective time of the merger
became exercisable, subject to applicable vesting, for approximately 25.5
million shares of our common stock.
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<PAGE> 6
At the time of the AMFM merger, AMFM owned, programmed or sold airtime for
414 radio stations. AMFM also owned Katz Media, a full-service media
representation firm. In addition, AMFM owned an approximate 30% equity interest
in Lamar Advertising Company.
To obtain clearance from the United States Department of Justice, Clear
Channel and AMFM agreed to sell 99 radio stations in 27 markets. Before
consummating our merger with AMFM, Clear Channel and AMFM completed the sale of
85 of these stations. The remaining 14 stations, which are located in five
markets, will be sold pursuant to a consent decree filed by the DOJ on August
29, 2000. Under the terms of the consent decree, we have 150 days from August
29th to complete the sales of these 14 stations. In addition to the requirement
that we sell the remaining 14 stations, for the next ten years, the consent
decree requires that we provide the DOJ with advance notice of certain
transactions in the five markets and refrain from reacquiring any of the
stations (24 in total) we sold in the five markets to obtain DOJ clearance.
In addition, we agreed in the consent decree to sell AMFM's approximately
30% equity stake in Lamar by December 31, 2002. Furthermore, the consent decree
requires that our investment must be passive while we continue to hold any part
of this stake in Lamar. The consent decree requires, among other things, that we
shall not (i) elect, nominate or appoint directors of Lamar, (ii) participate as
a board member or otherwise in any Lamar board meeting or on any committees,
(iii) exercise any veto rights with respect to the business of Lamar, or (iv)
obtain non-public financial or business information with respect to Lamar. The
consent decree also prohibits our acquiring additional shares of Lamar, except
in a transaction that requires a filing under the federal antitrust laws.
In connection with the AMFM merger agreement, we entered into a
registration rights agreement with certain shareholders of AMFM. 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
AMFM shareholders in the AMFM merger.
SFX MERGER
On August 1, 2000, we closed our merger with SFX Entertainment, Inc.
Pursuant to the terms of the merger agreement, each share of SFX Class A common
stock was exchanged for 0.6 shares of our common stock and each share of SFX
Class B common stock was exchanged for one share of our common stock.
Approximately 39.1 million shares of our common stock were issued in the SFX
merger. We also indirectly assumed or refinanced SFX's outstanding debt. At June
30, 2000, SFX had total outstanding indebtedness of approximately $1.4 billion.
Additionally, all options and warrants to purchase SFX common stock outstanding
at the effective time of the merger became exercisable for approximately 6.5
million shares of our common stock.
A number of lawsuits were filed by holders of SFX Class A common stock
alleging, among other things, that the difference in consideration for the Class
A and Class B shares constituted unfair consideration to the Class B holders and
that the SFX board breached its fiduciary duties and that we aided and abetted
the actions of the SFX board. On August 29, 2000, a settlement that resulted in
a modification of the consideration payable to SFX shareholders in the merger
was approved by the court. Under the settlement, the defendants will pay to the
holders of the SFX Class A common stock an aggregate of $34.5 million, payable
in either cash or our common stock, at the option of the defendants, less the
amount of $5.175 million awarded to plaintiffs' counsel by the court.
At the time of the SFX merger, SFX was one of the world's largest
diversified promoters, producers and venue operators for live entertainment
events. In addition, SFX was a leading fully integrated sports marketing and
management company specializing in the representation of sports athletes and
broadcasters, integrated event management, television programming and production
and marketing consulting services. SFX also operated the largest network of
venues used principally for music concerts and other live entertainment events
in the United States, with 92 venues in 31 of the top 50 markets. These venues
include 17 amphitheaters in the top 10 markets and nine venues principally used
for theatrical
S-6
<PAGE> 7
presentations. In addition, SFX owned or operated 28 international venues used
primarily for theatrical presentations, principally in the United Kingdom.
In connection with the SFX merger agreement, we entered into a registration
rights agreement with Mr. Robert F. X. Sillerman, the Executive Chairman of the
Board and a shareholder of SFX, granting Mr. Sillerman and his transferees
certain piggyback registration rights with respect to any or all of the shares
of our common stock issued to Mr. Sillerman in the SFX merger.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth the current portion of our long-term debt
and our capitalization as of June 30, 2000, and as adjusted to give effect to
the sale of the $1.5 billion aggregate principal amount of the notes offered by
this prospectus supplement.
<TABLE>
<CAPTION>
JUNE 30, 2000
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PRO FORMA
AS
ACTUAL PRO FORMA(1) ADJUSTED(2)
----------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt:.................... $ 30,510 $ 44,901 $ 44,901
=========== =========== ===========
Credit facility -- domestic........................... $ 1,040,000 $ 213,597 $ 83,566
Credit facility -- multi-currency..................... 537,240 537,240 537,240
Credit facility -- international...................... 96,683 96,683 96,683
7.25% Senior notes due September 15, 2003............. -- -- 750,000
7.65% Senior notes due September 15, 2010............. -- -- 750,000
Floating rate senior notes dues June 15, 2002......... 250,000 250,000 250,000
7.875% Senior notes due June 15, 2005................. 750,000 750,000 750,000
7.25% Debentures due October 15, 2027................. 300,000 300,000 300,000
6.625% 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
1.50% Convertible notes due December 1, 2002.......... 1,000,000 1,000,000 1,000,000
2.625% Convertible notes due April 1, 2003............ 575,000 575,000 575,000
Other long-term debt.................................. 57,466 57,466 57,466
Jacor LYONs........................................... 493,879 493,879 493,879
SFX Debt.............................................. -- 1,475,362 1,475,362
AMFM Debt............................................. -- 4,348,462 2,989,343
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, 1,500,000,000 shares
authorized, 338,967,402 actual shares issued and
outstanding......................................... 33,897 58,112 58,112
Additional paid-in capital............................ 9,231,175 29,255,996 29,255,996
Common stock warrants................................. 250,583 250,583 250,583
Retained earnings..................................... 287,966 750,183 750,183
Other equity.......................................... 2,304 2,304 2,304
Other comprehensive income............................ 295,317 262,131 262,131
Cost of shares (12,829) held in treasury.............. (934) (934) (934)
----------- ----------- -----------
Total shareholders' equity..................... 10,100,308 30,578,375 30,578,375
----------- ----------- -----------
Total capitalization........................ $15,500,576 $40,976,064 $40,986,914
=========== =========== ===========
</TABLE>
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(1) As adjusted to give effect to the AMFM and SFX mergers as if those mergers
had occurred on June 30, 2000 as more fully set forth in the "Unaudited Pro
Forma Combined Condensed Financial Statements" presented in this prospectus
supplement beginning on page P-1.
(2) As adjusted to give effect to the AMFM and SFX mergers as if those mergers
had occurred on June 30, 2000 as more fully set forth in the "Unaudited Pro
Forma Combined Condensed Financial Statements" presented in this prospectus
supplement beginning on page P-1 and also as adjusted to give effect to this
offering and the application of the net proceeds of approximately
$1,489,150. No adjustment is made to reflect any payment pursuant to
outstanding change of control offers of AMFM or SFX's outstanding public
indebtedness. See "Use of Proceeds".
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<PAGE> 9
RATIOS OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes (which excludes extraordinary items and the
cumulative effects of accounting changes) and fixed charges by fixed charges.
"Fixed charges" consist of interest on debt and that portion of rental expense
deemed to be representative of interest.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -----------
1999 1998 1997 1996 1995 2000 1999
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<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............. 2.04 1.83 2.32 3.63 3.32 1.25 3.06
</TABLE>
USE OF PROCEEDS
Our net proceeds from this offering are estimated to be approximately
$1.489 billion 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. Our domestic or
multi-currency credit facilities will be used to redeem all of AMFM's
outstanding 9% Subordinated Notes due 2008, 9.25% Subordinated Notes due 2007,
12% Exchange Debentures due 2009 and 12.75% Senior Discount Notes due 2009. We
will also use our domestic or multi-currency credit facilities to pay any of the
outstanding publicly traded indebtedness of AMFM and SFX put to us by the
holders of such indebtedness pursuant to outstanding change of control offers.
As of August 31, 2000, a total of approximately $2.2 billion in borrowings was
outstanding under our domestic or multi-currency credit facilities. Such
borrowings were incurred in connection with acquisitions of radio and other
media related properties, including the refinancing of acquired company
indebtedness, as well as for general corporate purposes. As of August 31, 2000,
the effective interest rate on our $2 billion domestic credit facility was LIBOR
plus 0.40% and the effective rate of interest on our $3 billion multi-currency
facility was LIBOR, or an applicable offshore currency rate, plus 0.625%.
Borrowings under our $2 billion credit facility must be paid in full by June 30,
2005, the final maturity date, with quarterly commitment reductions beginning
September 30, 2000. With respect to our $3 billion multi-currency credit
facility, $1.5 billion of such facility must be paid in full by August 29, 2001,
and the remaining $1.5 billion of such facility must be paid in full by August
29, 2005. Upon repayment of such borrowings, the amounts repaid will become
immediately available to us for re-borrowing under our credit facilities,
subject to applicable commitment reductions. We expect that amounts available
for re-borrowing under our domestic credit facility as a result of the
application of the net proceeds of this offering, together with additional
amounts that become available for borrowing under either the domestic or
multi-currency credit facilities, may be used to finance acquisitions or
refinance debt assumed by us in connection with acquisitions. Future
acquisitions of radio and television stations and other media-related and
live-entertainment properties effected in connection with the implementation of
our acquisition strategy are expected to be financed from increased borrowings
under these credit facilities, other debt or equity financings and cash flow
from operations.
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<PAGE> 10
RISK FACTORS
Investing in our securities involves a high degree of risk. You should
carefully consider the risks and uncertainties described below and the other
information in this prospectus supplement and the prospectus and in the
documents incorporated by reference before deciding whether to purchase our
securities.
WE HAVE LOSSES AND PRO FORMA LOSSES
On a pro forma basis, after giving effect to the acquisitions we completed
in 1999, we had a loss of $0.15 per share for the year ended December 31, 1999.
In addition, if the mergers with AMFM and SFX had been completed at the
beginning of this period, the pro forma losses during the period would have been
substantially greater at $1.09 per share. Because of the substantial
amortization of goodwill related to the merger and prior acquisitions, we expect
these losses to continue. See "Unaudited Pro Forma Combined Condensed
Consolidated Financial Statements."
WE MAY EXPERIENCE DIFFICULTIES IN COMBINING CLEAR CHANNEL, AMFM AND SFX
Our mergers with AMFM and SFX combine companies that previously operated
independently. We intend to integrate some AMFM and SFX operations into our own
operations. However, we may not successfully combine their operations with our
own operations. Any unexpected delays or costs of combining these companies
could adversely affect us. In particular, SFX is engaged in a line of business
that is new to us, and we may encounter difficulties or obstacles to integrating
our businesses. Moreover, the outstanding debt of AMFM and SFX, to the extent it
remains outstanding, contains restrictive covenants which may limit our ability
to integrate the separate operations of AMFM or SFX, as the case may be.
Additionally, the operations, management and personnel of these companies may
not be compatible. Following either of these mergers, we may experience the loss
of key personnel.
WE HAVE INCREASED OUR DEBT DUE TO THE AMFM AND SFX MERGERS
Following the AMFM and SFX mergers, our debt obligations significantly
increased. At June 30, 2000, we had borrowings under our credit facilities and
other long term debt outstanding of approximately $5.4 billion. At June 30,
2000, we had shareholder's equity of $10.1 billion. At June 30, 2000, AMFM had
total outstanding indebtedness of approximately $5.7 billion, a portion of which
has since been repaid with the proceeds of radio station divestitures required
to gain regulatory approval for the merger. At June 30, 2000, SFX had total
outstanding indebtedness of approximately $1.4 billion. At August 31, 2000,
Clear Channel, including AMFM and SFX, had approximately $10.1 billion of
combined total outstanding indebtedness. We expect to continue to borrow funds
to finance acquisitions of broadcasting, outdoor advertising and entertainment
properties, as well as for other purposes. Our debt obligations could increase
substantially because of the debt levels of companies that we may acquire in the
future. Effective upon the August 30, 2000 merger with AMFM, AMFM's $3.2 billion
credit facility was repaid in its entirety and terminated. Concurrently, we
repaid and replaced our $1.0 billion 364-day multi-currency facility with a $3.0
billion five-year multi-currency facility. Borrowings under our $3.0 billion
credit facility are at a floating rate, which at August 31, 2000 was equal to
dollar LIBOR or an appropriate offshore currency rate, plus a margin of 0.625%.
Borrowings under our existing $2.0 billion domestic credit facility are at a
floating rate, which at August 31, 2000 was equal to dollar LIBOR plus 0.40%. As
of August 31, 2000 we had borrowed approximately $236.8 million, of which $186.8
million or L129.1 million was denominated in British pounds, under our $3.0
billion multi-currency credit facility and $2.0 billion under our $2.0 billion
domestic credit facility.
Such a large amount of indebtedness could have negative consequences for
us, including without limitation the following:
- limitations on our ability to obtain financing in the future;
- much of our cash flow will be dedicated to interest obligations and
unavailable for other purposes;
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<PAGE> 11
- the high level of indebtedness limits our flexibility to deal with
changing economic, business and competitive conditions; and
- the high level of indebtedness could make us more vulnerable to an
increase in interest rates, a downturn in our operating performance or a
decline in general economic conditions.
The failure to comply with the covenants in the agreements governing the
terms of us or SFX or AMFM could be an event of default and could accelerate the
payment obligations and, in some cases, could affect other obligations with
cross-default and cross-acceleration provisions.
WE MAY NEED TO REPAY OR REDEEM AMFM AND SFX INDEBTEDNESS AFTER THE MERGERS
At June 30, 2000, AMFM had total consolidated outstanding indebtedness of
approximately $5.7 billion, including senior and subordinated notes in the
aggregate principal amount of $2.9 billion, a portion of which has since been
repaid with the proceeds of radio station divestitures required to gain
regulatory approval for the merger. During the fourth quarter of 1999 and
through June 30, 2000, subsidiaries of AMFM issued approximately $268.6 million
in aggregate principal amount of subordinated notes in exchange for their
outstanding preferred stock and purchased approximately $599.8 million of its
outstanding subordinated notes with borrowings under AMFM's credit facility.
AMFM's credit facility was refinanced and terminated as a result of the AMFM
merger. The AMFM merger triggered the change in control provisions of AMFM's
senior and subordinated notes. We have exercised our redemption rights for
AMFM's outstanding 9% Subordinated Notes due 2008, 9.25% Subordinated Notes due
2007, 12% Exchange Debentures due 2009 and 12.75% Senior Discount Notes due
2009. We have offered to purchase the remaining outstanding AMFM notes and
debentures for consideration equal to 101% of the principal amount, plus any
accrued and unpaid interest. If the holders require that we purchase all or a
substantial portion of the AMFM notes, although we currently have sufficient
funds available it is possible that at such time we may not have the funds
available to satisfy such obligations.
At June 30, 2000, SFX had total consolidated outstanding indebtedness of
approximately $1.4 billion, including publicly held indebtedness in the
aggregate principal amount of $550.0 million. SFX's credit facility was
refinanced and terminated as a result of the SFX merger. The SFX merger
triggered the change in control provisions of SFX's publicly held indebtedness.
We have offered to purchase the outstanding SFX notes for consideration equal to
101% of the principal amount, plus any accrued and unpaid interest. If the
holders require that we purchase all or a substantial portion of the SFX notes,
although we currently have sufficient funds available it is possible that at
such time we may not have the funds available to satisfy such obligations.
OUR OPERATIONS MAY BE RESTRICTED BY AMFM INDEBTEDNESS AND SFX INDEBTEDNESS
If all or part of AMFM's or SFX's indebtedness remains outstanding because
either the AMFM or SFX debtholders do not accept our mandatory offers to
purchase such indebtedness or we do not otherwise purchase such indebtedness,
the terms of such indebtedness may restrict the ability of AMFM and its
subsidiaries or SFX and its subsidiaries to make funds available to us in the
form of dividends, loans, advances or otherwise. Much of AMFM's and SFX's
indebtedness is high-yield indebtedness and restricts them from incurring
additional indebtedness, repaying other debt, repurchasing or redeeming capital
stock, selling assets or stock, making certain investments or acquisitions,
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. Accordingly,
the AMFM and SFX indebtedness which remains outstanding following the two
mergers may continue to:
- cause us to incur substantial consolidated interest expense and principal
repayment obligations;
- limit our ability to obtain additional debt financing;
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- make it more difficult for us to combine our operations with AMFM and
SFX; and
- place more restrictions on our ability to manage AMFM and SFX than we
currently face in the management of the rest of its business.
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
employ or independently contract with several 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
executive officers, key on-air talent and program hosts to protect their
interests in those relationships, we can give no assurance that all of these key
employees will remain with us or will retain their audiences.
EXTENSIVE GOVERNMENT REGULATION MAY LIMIT OUR OPERATIONS
BROADCASTING. The federal government extensively regulates the domestic
broadcasting industry, and any changes in the current regulatory scheme could
significantly affect us. Our broadcasting business depends upon maintaining
broadcasting licenses issued by the FCC for maximum terms of eight years.
Renewals of broadcasting licenses can be attained only through the FCC's grant
of appropriate applications. Although the FCC rarely denies a renewal
application, the FCC could deny future renewal applications. Such a denial could
adversely affect our operations.
The federal communications laws limit the number of broadcasting properties
we may own in a particular area. While the Telecommunications Act of 1996
relaxed the FCC's multiple ownership limits, any subsequent modifications that
tighten those limits could adversely affect us by making it impossible for us to
complete potential acquisitions or requiring us to divest stations we have
already acquired. For instance, the FCC has recently adopted modified rules that
in some cases permit a company to own fewer radio stations than allowed by the
Telecommunications Act of 1996 in markets or geographical areas where the
company also owns television stations. These modified rules could eventually
require us to divest radio stations we currently own in markets or areas where
we also own television stations. Additionally, the FCC is considering adopting
new or revised rules that may further limit the number of radio stations a
company may own in local markets. Such rules, if adopted, could limit our
ability to make future radio acquisitions.
Moreover, changes in governmental regulations and policies may have a
material impact upon us. For example, we currently provide programming to
several television stations we do not own and receive programming from other
parties for certain television stations we do own. These programming
arrangements are made through contracts known as local marketing agreements. The
FCC has recently revised its rules and policies regarding television local
marketing agreements. These revisions will restrict our ability to enter into
television local marketing agreements in the future, and may eventually require
us to terminate our programming arrangements under existing local marketing
agreements. Additionally, the FCC has recently adopted rules which under certain
circumstances will subject previously nonattributable debt and equity interests
in communications media to the FCC's multiple ownership restrictions. These new
rules may limit our ability to expand our media holdings.
ANTITRUST. Additional acquisitions by us of radio and television stations
and outdoor advertising properties as well as live entertainment operations or
entities may require review by foreign antitrust agencies under the antitrust
laws of foreign jurisdictions and will require antitrust review by the federal
antitrust agencies, and we can give no assurances that the DOJ or the Federal
Trade Commission or foreign antitrust agencies will not seek to bar us from
acquiring additional radio or television stations, outdoor advertising or
entertainment properties in any market where we already have a significant
position. Following the passage of the Telecommunications Act of 1996, the DOJ
has become more aggressive in reviewing proposed acquisitions of radio stations,
particularly in instances where the proposed acquirer already owns one or more
radio station properties in a particular market and seeks to acquire another
radio station in the same market. The DOJ has, in some cases, obtained consent
decrees requiring radio station
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divestitures in a particular market based on allegations that acquisitions would
lead to unacceptable concentration levels. The DOJ also actively reviews
proposed acquisitions of outdoor advertising properties. In addition, the
antitrust laws of foreign jurisdictions will apply if we acquire international
broadcasting properties.
ENVIRONMENTAL. As the owner or operator of various real properties and
facilities, especially in our outdoor advertising operations and SFX's venue
operations, we must comply with various federal, state and local environmental
laws and regulations. Such laws and regulations impose operating requirements
and potential property cleanup liabilities in connection with fuel storage for
our outdoor advertising operations. In addition, zoning and noise level
restrictions may affect, among other things, the hours of operations of SFX's
venue operations. Our broadcasting operations, as well as those of AMFM, also
are subject to operating requirements and potential personal injury and property
damage claims relating to radio frequency emissions from our transmission
towers. Although we have not incurred significant expenditures to comply with
these laws and regulations, additional environmental laws or requirements which
may come into effect in the future, or a violation of existing laws, could
require the combined company to incur significant costs.
GOVERNMENT REGULATION OF OUTDOOR ADVERTISING MAY ADVERSELY AFFECT OUR OUTDOOR
ADVERTISING OPERATIONS
The outdoor advertising industry is subject to extensive governmental
regulation at the federal, state and local level and compliance with existing
and future regulations could have a significant financial impact on us. Federal
law, principally the Highway Beautification Act of 1965, encourages 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.
States and local jurisdictions have, in some cases, passed additional
regulations on the construction, size, location and, in some instances,
advertising content of outdoor advertising structures adjacent to
federally-aided highways and other thoroughfares. From time to time governmental
authorities order the removal of billboards by the exercise of eminent domain
and certain jurisdictions have also adopted amortization of billboards in
varying forms. Amortization permits the billboard owner to operate its billboard
only 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. We have agreed to remove certain billboards
in Jacksonville, Florida. Furthermore, Tampa, Houston and San Francisco, which
are municipalities within our existing markets, have adopted amortization
ordinances. We can give no assurance 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 are unable to 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, including
laws of the foreign jurisdictions in which we operate, could have a material
adverse effect on us.
CHANGES IN RESTRICTIONS ON OUTDOOR TOBACCO ADVERTISING AND ALCOHOL ADVERTISING
MAY POSE RISKS
Regulations, legislation and recent settlement agreements related to
outdoor tobacco advertising could have a material adverse effect on us. 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
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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.
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.
In a few jurisdictions, restrictions on tobacco billboard advertising have
prompted Constitutional challenges with mixed results in court. It is possible
that state and local governments may propose or pass similar ordinances to limit
outdoor advertising of alcohol, tobacco and other products or services in the
future, and that there may be court challenges to such restrictions. 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 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 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 or limit the ability of
industry participants to increase rates for some period of time. For the year
ended December 31, 1999, approximately 1.5% of our revenues came from the
outdoor advertising of tobacco products.
OUR INTERNATIONAL OPERATIONS HAVE ADDED RISKS
Doing business in foreign countries carries with it risks that are not
found in doing business in the United States. We currently derive a portion of
our revenues from international radio and outdoor operations in Europe, Asia,
Mexico, Australia and New Zealand. Following the SFX merger, we have
significantly expanded our international operations. The risks of doing business
in foreign countries which could result in losses against which we are not
insured include:
- exposure to local economic conditions;
- 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;
- the risk of insurrections;
- risks of renegotiation or modification of existing agreements with
governmental authorities;
- foreign exchange restrictions;
- withholding and other taxes on remittance and other payments by
subsidiaries; and
- changes in taxation structure.
EXCHANGE RATES MAY CAUSE FUTURE LOSSES IN OUR INTERNATIONAL OPERATIONS
Because we own assets overseas and derive revenues from our international
operations, we may 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.
To
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reduce our exposure to the risk of international currency fluctuations, we
maintain a natural hedge by incurring amounts of debt in each currency
approximately equivalent to our net assets in each such currency. We review this
hedge position monthly. We currently maintain no derivative instruments to
reduce the exposure to translation and/or transaction risk but may adopt other
hedging strategies in the future.
OUR ACQUISITION STRATEGY COULD POSE RISKS
OPERATIONAL RISKS. We intend to grow through the acquisition of
broadcasting companies and assets, outdoor advertising companies, individual
outdoor advertising display faces, live entertainment assets and other assets
that we believe will assist our customers in marketing their products and
services. Our acquisition strategy involves numerous risks, including:
- certain of such acquisitions may prove unprofitable and fail to generate
anticipated cash flows;
- to successfully manage a rapidly expanding and significantly larger
portfolio of broadcasting and outdoor advertising properties, as well as
the live entertainment business, we may need to recruit additional senior
management and expand corporate infrastructure;
- entry into markets and geographic areas where we have limited or no
experience;
- we may encounter difficulties in the integration of operations and
systems;
- management's attention may be diverted from other business concerns; and
- we may lose key employees of acquired companies or stations.
We frequently evaluate strategic opportunities both within and outside our
existing lines of business. We expect from time to time to pursue additional
acquisitions and may decide to dispose of certain businesses. These acquisitions
or dispositions could be material.
CAPITAL REQUIREMENTS NECESSARY FOR ADDITIONAL ACQUISITIONS. We will face
stiff competition from other broadcasting, outdoor advertising and live
entertainment companies for acquisition opportunities. If the prices sought by
sellers of these companies continue to 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
can give no assurance that we will obtain the needed financing or that we will
obtain such financing on attractive terms. 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 FACE INTENSE COMPETITION IN OUR BROADCASTING, OUTDOOR ADVERTISING AND LIVE
ENTERTAINMENT BUSINESSES
Our three existing business segments are in highly competitive industries,
and we may not be able to maintain or increase our current audience ratings and
advertising revenues. Our 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, direct mail and the
Internet 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
industry;
- shifts in population and other demographics;
- the level of competition for advertising dollars;
- fluctuations in operating costs;
- technological changes and innovations;
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- changes in labor conditions; and
- changes in governmental regulations and policies and actions of federal
regulatory bodies.
As a participant in the live entertainment industry, our ability to
generate revenues will be highly sensitive to rapidly changing public tastes and
will be dependent on the availability of popular performers and events. Since
SFX relies on unrelated parties to create and perform live entertainment
content, any lack of availability of popular musical artists, touring Broadway
shows, specialized motor sports talent and other performers could limit the
combined company's ability to generate revenues. In addition, SFX requires
access to venues to generate revenues from live entertainment events. SFX
operates a number of its live entertainment venues under leasing or booking
agreements. Our long-term success will depend in part on our ability to renew
these agreements when they expire or end. We may be unable to renew these
agreements on acceptable terms or at all, and may be unable to obtain favorable
agreements with new venues.
NEW TECHNOLOGIES MAY AFFECT OUR BROADCASTING OPERATIONS
The FCC has approved and is considering ways to introduce new technologies
to the radio broadcast industry, including satellite and terrestrial delivery of
digital audio broadcasting and the standardization of available technologies
which significantly enhance the sound quality of radio broadcasts. We are unable
to predict the effect that these technologies will have on our broadcasting
operations, but the capital expenditures necessary to implement these
technologies could be substantial. Additionally, the FCC has established a low
power FM broadcast service. Low power FM stations may serve as additional
competition to our radio operations in some or all of our markets, and could
cause interference to the signals of one or more of our stations. In addition,
Internet "streaming" of audio and video programming may serve as more
competition to our broadcasting operations in some or all of our markets.
We also face risks in implementing the conversion of our television
stations to digital television, which the FCC has ordered and for which it has
established a timetable. 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. Moreover, the FCC may impose
additional public service obligations on television broadcasters in return for
their use of digital television spectrum. This could add to our operational
costs. The most contentious issue yet to be resolved is the extent to which
cable systems will be required to carry broadcasters' new digital channels. Our
television stations are highly dependent on their carriage by cable systems in
the areas they serve. Thus, FCC rules that impose no or limited obligations on
cable systems to carry the digital television signals of television broadcast
stations in their local markets could adversely affect our television
operations.
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SELECTED HISTORICAL FINANCIAL DATA
The following sets forth our selected historical financial data for the
five years ended December 31, 1999 and for the six months ended June 30, 1999
and 2000. The financial data for the six month periods ended June 30, 1999 and
2000 are derived from unaudited financial statements. The unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
which we consider necessary for a fair presentation of the financial position
and the results of operations for these periods. Operating results for the six
months ended June 30, 2000 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 2000. The information
set forth below does not reflect the consummation of the AMFM or SFX mergers.
For more financial information concerning the AMFM and SFX mergers, see the
"Unaudited Pro Forma Combined Condensed Financial Statements" presented later in
this prospectus supplement.
Acquisitions and dispositions significantly impact the comparability of the
historical consolidated financial data reflected in this financial data. 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 into this document by reference, which qualify the
information presented below in its entirety.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- ---------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- ---------- ---------- -------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.......................... $250,059 $351,739 $697,068 $1,350,940 $2,678,160 $994,478 $1,748,414
Operating expenses................... 137,504 198,332 394,404 767,265 1,632,115 601,371 1,082,690
Depreciation and amortization........ 33,769 45,790 114,207 304,972 722,233 265,027 448,741
Corporate expenses................... 7,414 8,527 20,883 37,825 70,146 28,331 52,445
-------- -------- -------- ---------- ---------- -------- ----------
Operating income..................... 71,372 99,090 167,574 240,878 253,666 99,749 164,538
Interest expense..................... 20,752 30,080 75,076 135,766 192,321 78,842 125,460
Gain on sale of stations............. -- -- -- -- 138,659 136,925 --
Other income (expense)............... (803) 2,230 11,579 12,810 20,209 14,967 1,624
-------- -------- -------- ---------- ---------- -------- ----------
Income (loss) before income taxes,
equity in net income of
consolidated affiliates and
extraordinary item................. 49,817 71,240 104,077 117,922 220,213 172,799 40,702
Income taxes......................... 20,292 28,386 47,116 72,353 150,635 82,852 58,472
-------- -------- -------- ---------- ---------- -------- ----------
Income (loss) before equity in net
income of nonconsolidated
affiliates and extraordinary
items.............................. 29,525 42,854 56,961 45,569 69,578 89,947 (17,770)
Equity in net income of
nonconsolidated affiliates......... 2,489 (5,158) 6,615 8,462 16,077 3,817 9,603
-------- -------- -------- ---------- ---------- -------- ----------
Income (loss) before extraordinary
item............................... 32,014 37,696 63,576 54,031 85,655
Extraordinary item................... -- -- -- -- (13,185) -- --
-------- -------- -------- ---------- ---------- -------- ----------
Net income (loss).................... $ 32,014 $ 37,696 $ 63,576 $ 54,031 $ 72,470 $ 93,764 $ (8,167)
======== ======== ======== ========== ========== ======== ==========
Net income (loss) per common
share:(1)
Income (loss) before extraordinary
item -- Basic.................... $ .23 $ .26 $ 0.36 $ 0.23 $ 0.27 $ 0.33 $ (0.02)
Extraordinary item................. -- -- -- -- (0.04) -- --
-------- -------- -------- ---------- ---------- -------- ----------
Net income (loss)
Basic............................ $ .23 $ .26 $ 0.36 $ 0.23 $ 0.23 $ 0.33 $ (0.02)
======== ======== ======== ========== ========== ======== ==========
Income (loss) before extraordinary
item
Diluted.......................... $ .23 $ .25 $ 0.33 $ 0.22 $ 0.26 $ 0.32 $ (0.02)
Extraordinary item................. -- -- -- -- (0.04) -- --
-------- -------- -------- ---------- ---------- -------- ----------
Net income (loss)
Diluted.......................... $ .23 $ .25 $ 0.33 $ 0.22 $ 0.22 $ 0.32 $ (0.02)
======== ======== ======== ========== ========== ======== ==========
</TABLE>
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<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------- JUNE 30,
1995 1996 1997 1998 1999 2000
-------- ---------- ---------- ---------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 5,391 $ 16,701 $ 24,657 $ 36,498 $ 76,724 $ 56,893
Total assets............................... 563,011 1,324,711 3,455,637 7,539,918 16,821,512 17,648,060
Long-term debt, net of current(2).......... 334,164 725,132 1,540,421 2,323,643 4,093,543 4,875,879
Stockholder's equity....................... 163,713 513,431 1,746,784 4,483,429 10,084,037 10,100,308
</TABLE>
---------------
(1) Adjusted to reflect the effect of two-for-one stock splits distributed in
July 1998, December 1996 and November 1995.
(2) Includes $575 million aggregate principal amount of 2.625% senior
convertible notes due April 1, 2003 issued on March 30, 1998 and $1 billion
aggregate principal amount of 1.50% senior convertible notes due December 1,
2002 issued on November 24, 1999.
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DESCRIPTION OF THE NOTES
Each of the two series of notes offered by this prospectus supplement are a
series of "senior debt securities" which are described in the accompanying
prospectus. This description supplements the description of the general terms
and provisions of the debt securities found in the accompanying prospectus.
The notes will be issued under an indenture, dated as of October 1, 1997,
as supplemented by supplemental indentures from time to time (collectively, the
"Indenture"), between Clear Channel and The Bank of New York, as debt trustee.
The Indenture contains:
- provisions limiting our ability to consolidate with or merge into any
other corporation or convey or transfer substantially all of our
properties and assets,
- limitations on mortgages on radio broadcasting, television broadcasting,
outdoor advertising or live entertainment property, and
- limitations on sale and leaseback transactions.
See "Description of Senior and Subordinated Debt Securities -- Consolidation,
Merger, Conveyance or Transfer" and "Description of Senior and Subordinated Debt
Securities -- Senior Debt Securities -- Covenants" in the accompanying
prospectus.
Capitalized terms used and not otherwise defined below or elsewhere in this
prospectus supplement or the accompanying prospectus are used with the
respective meanings given thereto in the Indenture. Any reference to the "notes"
contained in this prospectus supplement refers to both the 7.25% notes and the
7.65% notes unless the context indicates otherwise.
GENERAL
The 7.25% notes will initially be limited to $750,000,000 aggregate
principal amount. The 7.65% notes will initially be limited to $750,000,000
aggregate principal amount. The notes will be our senior unsecured general
obligations, and rank on a parity with all of our other unsecured and
unsubordinated indebtedness.
The 7.25% notes are initially being offered in the principal amount of
$750,000,000 and the 7.65% notes are initially being offered in the principal
amount of $750,000,000. We may, without the consent of the holders, increase
such principal amounts in the future, on the same terms and conditions and with
the same CUSIP numbers as the 7.25% notes or the 7.65% notes being offered
hereby.
Principal of, and premium, if any, and interest on the notes will be
payable and transfers of the notes will be registrable at our office or agency
in the Borough of Manhattan, The City of New York, and transfers of the notes
will also be registrable at any of our other offices or agencies as we may
maintain for that purpose. In addition, payment of interest may be made, at our
option, by check mailed to the address of the person entitled thereto as shown
on the security register. The notes are to be in denominations of $1,000 or any
integral multiple thereof. No service charge will be made for any registration
of transfer or exchange of notes, except for any tax or other governmental
charge that may be imposed in connection therewith.
THE 7.25% NOTES
Each 7.25% note will bear interest from September 12, 2000, or if interest
has already been paid, from the date it was most recently paid, to, but
excluding, September 15, 2003 at 7.25% per annum, payable semiannually on March
15 and September 15 of each year, commencing March 15, 2001, to the person in
whose name the note is registered, subject to certain exceptions as provided in
the Indenture, at the close of business on March 1 and September 1, as the case
may be, immediately preceding such March 15 or September 15. These notes will
mature on September 15, 2003, and are not subject to any sinking fund provision.
Interest on the 7.25% notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
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THE 7.65% NOTES
Each 7.65% note will bear interest from September 12, 2000, or if interest
has already been paid, from the date it was most recently paid, to, but
excluding, September 15, 2010 at 7.65% per annum, payable semiannually on March
15 and September 15 of each year, commencing March 15, 2001, to the person in
whose name the note is registered, subject to certain exceptions as provided in
the Indenture, at the close of business on March 1 and September 1, as the case
may be, immediately preceding such March 15 or September 15. These notes will
mature on September 15, 2010, and are not subject to any sinking fund provision.
Interest on the 7.65% notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
OPTIONAL REDEMPTION
The 7.25% Notes
We may not redeem the 7.25% notes.
The 7.65% Notes
The 7.65% notes will be redeemable as a whole at any time or in part from
time to time, at our option, at a redemption price equal to the greater of
(i) 100% of the principal amount of the notes of that series being
redeemed, or
(ii) the sum of the present values of the remaining scheduled payments
of principal and interest on the notes of that series being redeemed from
the redemption date to the maturity date discounted to the redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined below) plus 35 basis points
plus, in either case, any interest accrued but not paid to the date of
redemption.
"Treasury Rate" means, with respect to any redemption date for a series of
notes,
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the maturity date for a series of notes, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will
be determined and the Treasury Rate shall be interpolated or extrapolated
from those yields on a straight line basis, rounding to the nearest month)
or
(ii) if the release referred to in (i) (or any successor release) is
not published during the week preceding the calculation date or does not
contain the yields referred to above, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price
for that redemption date.
The Treasury Rate will be calculated on the third Business Day preceding
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an "Independent Investment Banker" as having a maturity comparable
to the remaining term of the series of notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the series of notes. "Independent Investment
Banker" means one of the Reference Treasury Dealers appointed by the debt
trustee after consultation with us.
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"Comparable Treasury Price" means with respect to any redemption date for a
series of notes,
(i) the average of four Reference Treasury Dealer Quotations (as
defined below) for the redemption date, after excluding the highest and
lowest of those Reference Treasury Dealer Quotations, or
(ii) if the debt trustee obtains fewer than four Reference Treasury
Dealer Quotations, the average of all quotations obtained.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc. and two other primary U.S. government
securities dealers in New York City (each, a "Primary Treasury Dealer")
appointed by the debt trustee in consultation with us. If any Reference Treasury
Dealer ceases to be a Primary Treasury Dealer, we will substitute another
Primary Treasury Dealer for that dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the debt trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by that Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding the redemption date.
Notice of any redemption will be mailed at least 30 days but no more than
60 days before the redemption date to each holder of notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portions of the
notes called for redemption.
GLOBAL SECURITIES
The notes will be issued in the form of one or more global securities that
will be deposited with, or on behalf of the depositary, the Depositary Trust
Company. Interests in the global securities will be issued only in denominations
of $1,000 or integral multiples thereof. Unless and until it is exchanged in
whole or in part for notes in definitive form, a global security may not be
transferred except as a whole to a nominee of the depositary for the global
security, or by a nominee of the depositary to the depositary or another nominee
of the depositary, or by the depositary or any nominee to a successor depositary
or a nominee of the successor depositary.
BOOK-ENTRY SYSTEM
Initially, the notes will be registered in the name of Cede & Co., the
nominee of the depositary. Accordingly, beneficial interests in the notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the depositary and its participants.
The depositary has advised us and the underwriters as follows: the
depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
United States Securities Exchange Act of 1934, as amended. The depositary holds
securities that its participants ("Direct Participants") deposit with the
depositary. The depositary also eliminates the need for physical movement of
securities certificates by facilitating the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in the Direct
Participants' accounts. Direct Participants include securities brokers and
dealers, including the underwriters, banks, trust companies, clearing
corporations, and certain other organizations. The depositary is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the depositary's book-entry system is also available to
others such as securities brokers and dealers, banks and trust companies
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that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to the depositary and its Direct and Indirect Participants are on
file with the United States Securities and Exchange Commission.
The depositary advises that its established procedures provide that:
- upon our issuance of the notes, the depositary will credit the accounts
of Direct and Indirect Participants designated by the underwriters with
the principal amounts of the notes purchased by the underwriters, and
- ownership of interests in the global securities will be shown on, and the
transfer of the ownership will be effected only through, records
maintained by the depositary, the Direct Participants and the Indirect
Participants.
The laws of some states require that certain persons take physical delivery in
definitive form of securities which they own. Consequently, the ability to
transfer beneficial interest in the global securities is limited to such extent.
So long as a nominee of the depositary is the registered owner of the
global securities, the nominee for all purposes will be considered the sole
owner or holder of the global securities under the Indenture. Except as provided
below, owners of beneficial interests in the global securities will not be
entitled to have notes registered in their names, will not receive or be
entitled to receive physical delivery of notes in definitive form and will not
be considered the owners or holders thereof under the Indenture.
Neither we, the debt trustee, any paying agent nor the registrar will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
securities, or for maintaining, supervising or reviewing any records relating to
those beneficial ownership interests.
Principal and interest payments on the notes registered in the name of the
depositary's nominee will be made in immediately available funds to the
depositary's nominee as the registered owner of the global securities. Under the
terms of the notes, we and the debt trustee will treat the persons in whose
names the notes are registered as the owners of those notes for the purpose of
receiving payment of principal and interest on those notes and for all other
purposes whatsoever. Therefore, neither we, the debt trustee nor any paying
agent has any direct responsibility or liability for the payment of principal or
interest on the notes to owners of beneficial interests in the global
securities. The depositary has advised us and the debt trustee that its current
practice is upon receipt of any payment of principal or interest, to credit
Direct Participants' accounts on the payment date in accordance with their
respective holdings of beneficial interests in the global securities as shown on
the depositary's records, unless the depositary has reason to believe that it
will not receive payment on the payment date. Payments by Direct and Indirect
Participants to owners of beneficial interests in the global securities will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of the Direct and Indirect
Participants and not of the depositary, the debt trustee or us, subject to any
statutory requirements that may be in effect from time to time. Payment of
principal and interest to the depositary is our responsibility or the
responsibility of the debt trustee, disbursement of those payments to the owners
of beneficial interests in the global securities shall be the responsibility of
the depositary and Direct and Indirect Participants.
Notes represented by a global security will be exchangeable for notes in
definitive form of like tenor as the global security in denominations of $1,000
and in any greater amount that is an integral multiple if the depositary
notifies us that it is unwilling or unable to continue as depositary for the
global security or if at any time the depositary ceases to be a clearing agency
registered under applicable law and a successor depositary is not appointed by
us within 90 days or we in our discretion at any time determine not to require
all of the notes to be represented by a global security and notify the debt
trustee thereof. Any notes that are exchangeable pursuant to the preceding
sentence are exchangeable for notes issuable in authorized denominations and
registered in such names as the depositary shall direct. Subject to the
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<PAGE> 23
foregoing, a global security is not exchangeable, except for a global security
or global securities of the same aggregate denominations to be registered in the
name of the depositary or its nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. So long as the depositary continues to make same day settlement
available to us, all payments of principal and interest on the notes will be
made by us in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issues is
generally settled in clearing-house or next-day funds. In contrast, the
depositary will facilitate same day settlement for trading in the notes until
maturity, and secondary market trading activity in the notes will therefore be
required by the depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
GOVERNING LAW
The Indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax consequences arising from the purchase, ownership and disposition of the
notes. This discussion is based on existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury regulations promulgated
thereunder, judicial decisions and administrative rulings, all of which are
subject to change or alternative construction, possibly with retroactive effect.
This summary does not discuss other United States federal taxes (such as federal
estate and gift taxes) or any state, local or foreign tax considerations, nor
does it purport to address all United States federal income tax consequences
applicable to all categories of investors, some of which may be subject to
special rules, such as life insurance companies, tax-exempt organizations,
dealers in securities or currency, banks or other financial institutions,
investors whose functional currency is not the U.S. dollar, or investors that
hold the notes as part of a hedge, straddle or conversion transaction. In
addition, this summary applies only to holders that purchase notes in the
initial offering and that hold the notes as "capital assets" within the meaning
of Section 1221 of the Code. We will not seek a ruling from the Internal Revenue
Service (the "IRS") with regard to the United States federal income tax
treatment relating to an investment in the notes and, therefore, there can be no
assurance that the IRS will agree with the conclusions set forth below.
For purposes of this summary, the term "U.S. Holder" means a beneficial
owner of a note that is
- a citizen or resident of the United States,
- a corporation or other entity taxable as a corporation created or
organized in or under the laws of the United States or any political
subdivision thereof,
- an estate the income of which is subject to United States federal income
taxation regardless of its source, and
- a trust if
- a U.S. court is able to exercise primary supervision over the trust's
administration, and
- one or more U.S. fiduciaries have the authority to control all of the
trust's substantial decisions.
The term "Non-U.S. Holder" shall mean the beneficial owner of a note other
than a U.S. Holder.
PERSONS CONSIDERING THE PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL
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<PAGE> 24
TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION, TO THEIR PARTICULAR SITUATIONS. THIS SUMMARY DOES NOT PURPORT TO
ADDRESS ALL ASPECTS OF FEDERAL, STATE, LOCAL OR FOREIGN TAXATION THAT MAY BE
RELEVANT TO AN INVESTOR'S DECISION TO PURCHASE THE NOTES.
TAXATION OF U.S. HOLDERS
PAYMENTS OF INTEREST. The payment of stated interest on the notes will be
taxable to a U.S. Holder as ordinary interest income at the time it accrues or
is received in accordance with the holder's usual method of accounting for
federal income tax purposes.
DISPOSITION OF NOTES. A U.S. Holder of a note generally will recognize
capital gain or loss upon the sale, exchange, retirement or other disposition of
the note measured by the difference between
- the amount realized (except to the extent the amount is attributable to
accrued interest income, which will generally be taxable as ordinary
income), and
- the U.S. Holder's tax basis in the note.
The gain or loss on the disposition will be long-term capital gain or loss if
the note has been held for more than one year at the time of the disposition.
TAXATION OF NON-U.S. HOLDERS
PAYMENTS OF INTEREST. Except as explained in the discussion of backup
withholding below, any payment of stated interest on a note by us or any paying
agent to a Non-U.S. Holder will qualify for the "portfolio interest exemption"
and, therefore, will not be subject to United States federal income tax or
withholding tax, provided that the interest income is not taxable as effectively
connected with a United States trade or business of the Non-U.S. Holder and
provided that the Non-U.S. Holder
- does not actually or constructively own 10% or more of the combined
voting power of all classes of our stock entitled to vote,
- is not a controlled foreign corporation related to us actually or
constructively through stock ownership,
- is not a bank receiving interest on a loan entered into in the ordinary
course of business, and
- either provides a Form W-8 or Form W-8 BEN signed under penalties of
perjury that includes its name and address and certifies as to its
non-United States status in compliance with applicable law and
regulations, or deposits the note with a securities clearing
organization, bank or financial institution that holds customers'
securities in the ordinary course of its trade or business and which
holds the note and provides a statement to us or our agent under
penalties of perjury in which it certifies that a Form W-8 or Form W-8
BEN has been received by it from the Non-U.S. Holder or another financial
institution and furnishes us or our agent with a copy thereof. This
procedure will change on January 1, 2001. We suggest you consult your own
tax advisor about the specific method for satisfying this requirement
after December 31, 2000.
DISPOSITION OF NOTES. A Non-U.S. Holder of the notes generally will not be
subject to United States federal income tax or withholding tax on any gain
realized on the sale, exchange, retirement or other disposition of the note,
unless
- the gain is effectively connected with a United States trade or business
of the Non-U.S. Holder,
- in the case of a Non-U.S. Holder who is an individual, the holder is
present in the United States for a period or periods aggregating 183 days
or more during the taxable year of the disposition, and
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either the holder has a "tax home" in the United States or the
disposition is attributable to an office or other fixed place of business
maintained by the holder in the United States,
- the Non-U.S. Holder is subject to tax pursuant to the provisions of the
Code applicable to certain United States expatriates, or
- we are or have been a United States real property holding corporation (as
defined in the Code) at any time during the shorter of the 5 year period
ending on the date of disposition or the Non-U.S. Holder's holding
period.
We do not believe that we are, or are likely to become, a United States
real property holding corporation.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS. Under current United States federal income tax law, U.S.
Holders of the notes will be subject to information reporting and, under certain
circumstances, may be subject to "backup withholding" at the rate of 31% in
respect of payments of principal, interest and dividends (actual or
constructive) made to, and the proceeds of disposition of the notes by, certain
noncorporate, not otherwise exempt U.S. Holders. Generally, the backup
withholding rules will not apply to a U.S. Holder if:
- assuming a U.S. Holder holds its notes through a broker or other
securities intermediary, the intermediary provides information to the IRS
concerning interest and disposition proceeds on the U.S. Holder's notes,
and
- a U.S. Holder provides the intermediary with its Taxpayer Identification
Number for its use in reporting information to the IRS. If the U.S.
Holder is an individual, this is its social security number. U.S. Holders
are also required to comply with other IRS requirements concerning
information reporting.
Backup withholding will not apply with respect to payments made to certain
U.S. Holders of the notes, including payments to certain exempt recipients (such
as corporations and exempt organizations). The amount of backup withholding from
a payment to a holder will be allowed as a credit against the holder's United
States federal income tax liability and may entitle the holder to a refund
provided the required information is furnished to the IRS.
NON-U.S. HOLDERS. Payments made on the notes and proceeds from the sale of
the notes generally may be subject to a backup withholding tax of 31% or to
information reporting requirements if the payee fails to certify that the holder
is a Non-U.S. Holder or if we or our paying agent have actual knowledge that the
payee is a United States person.
The payment of the proceeds on the disposition of the notes to or through
the United States office of a United States or foreign broker will be subject to
information reporting and backup withholding unless the owner provides the
certification described above or otherwise establishes an exemption. The
proceeds of the disposition by a Non-U.S. Holder of the notes to or through a
foreign office of a broker will not be subject to backup withholding. However,
if such broker is a United States person, a controlled foreign corporation for
United States tax purposes, or a foreign person 50% or more of whose gross
income from all sources for certain periods is from activities that are
effectively connected with a United States trade or business, information
reporting will apply unless such broker has documentary evidence of the owner's
foreign status and has no actual knowledge to the contrary or unless the owner
otherwise establishes an exemption. Both backup withholding and information
reporting will apply to the proceeds from such disposition if the broker has
actual knowledge that the payee is a U.S. Holder.
Recently adopted Treasury regulations, which generally are effective for
payments made after December 31, 2000, subject to certain transition rules,
alter the foregoing rules in certain respects. We strongly urge you to consult
your own tax advisor concerning these changes.
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<PAGE> 26
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below in which they have severally agreed to purchase from us the principal
amount of the notes set forth opposite their names.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF 7.25% NOTES OF 7.65% NOTES
----------- ---------------- ----------------
<S> <C> <C>
Credit Suisse First Boston Corporation...................... $187,500,000 $187,500,000
Deutsche Bank Securities Inc. .............................. 187,500,000 187,500,000
Salomon Smith Barney Inc. .................................. 187,500,000 187,500,000
Banc of America Securities LLC.............................. 46,875,000 46,875,000
Chase Securities Inc. ...................................... 46,875,000 46,875,000
Fleet Securities, Inc. ..................................... 46,875,000 46,875,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 46,875,000 46,875,000
------------ ------------
Total.......................................... $750,000,000 $750,000,000
============ ============
</TABLE>
The obligation of the underwriters to purchase the notes is subject to the
terms and conditions set forth in the underwriting agreement. The underwriting
agreement requires the underwriters to purchase all the notes offered by this
prospectus supplement, if any of such notes are purchased.
We have agreed to indemnify the underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in respect of these
liabilities.
COMMISSIONS AND DISCOUNTS
The underwriters have advised us that they propose initially to offer the
7.25% notes directly to the public at the public offering price set forth on the
cover page of this prospectus supplement and to certain other dealers at such
prices less a concession not in excess of 0.20% of the principal amount of the
7.25% notes. The underwriters may allow, and such dealers may reallow, a
concession not in excess of 0.125% per note to certain other dealers. The
underwriters may change the public offering price after the notes are released
for sale to the public.
The underwriters have advised us that they propose initially to offer the
7.65% notes directly to the public at the public offering price set forth on the
cover page of this prospectus supplement and to certain other dealers at such
prices less a concession not in excess of 0.40% of the principal amount of the
7.65% notes. The underwriters may allow, and such dealers may reallow, a
concession not in excess of 0.250% per note to certain other dealers. The
underwriters may change the public offering price after the notes are released
for sale to the public.
The following table sets forth the public offering price and all discounts
and commissions to be allowed to the underwriters.
<TABLE>
<CAPTION>
PER 7.25% NOTES PER 7.65% NOTES
--------------- ---------------
<S> <C> <C>
Public offering price................................... $999.59 $996.61
Underwriting discount................................... $ 3.50 $ 6.50
------- -------
Proceeds, before expenses, to Clear Channel............. $996.09 $990.11
======= =======
</TABLE>
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
In connection with this offering, the underwriters may purchase and sell
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater principal
amount of notes than they are required to purchase in this offering. Stabilizing
transactions consist of certain bids or purchases
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<PAGE> 27
made for the purpose of preventing or retarding a decline in the market price of
the notes while the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased notes sold by
or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. In
addition, neither any of the underwriters nor we make any representation that
the underwriters will engage in the transactions discussed above. In addition,
such transactions, once commenced, may be discontinued by the underwriters at
any time. These transactions may be effected in the over-the-counter market or
otherwise.
CERTAIN RELATIONSHIPS AND ARRANGEMENTS
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. Certain of the underwriters
were advisors to us or to AMFM or SFX in connection with AMFM and SFX mergers,
for which they have received certain fees.
More than 10% of the net proceeds of this offering, not including any
underwriting compensation, will be used to repay indebtedness outstanding under
our domestic credit facilities. Affiliates of Credit Suisse First Boston
Corporation, Banc of America Securities LLC, Chase Securities Inc., Deutsche
Bank Securities Inc., Fleet Securities, Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Smith Barney Inc. are lenders under our domestic
credit facilities and are affiliates of members of the National Association of
Securities Dealers, Inc. who will participate in this offering. Accordingly,
this offering is being made in compliance with NASD Rule 2710(c)(8). See "Use of
Proceeds."
The affiliates of Credit Suisse First Boston Corporation, Banc of America
Securities LLC, Chase Securities Inc., Deutsche Bank Securities Inc., Fleet
Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Smith Barney Inc. who are lenders under our credit facilities had no involvement
in determining whether or when to distribute the notes under this offering or
the terms of this offering. The underwriters will not receive any benefit from
this offering other than their respective portion of the underwriting discount
described in this prospectus supplement.
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<PAGE> 28
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of notes are effected. Accordingly, any resale of the notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of notes in Canada who receives a purchase confirmation will
be deemed to represent to us and the dealer from whom such purchase confirmation
is received that (i) such purchaser is entitled under applicable provincial
securities laws to purchase such notes without the benefit of a prospectus
qualified under such securities laws, (ii) where required by law, that such
purchaser is purchasing as principal and not as agent, and (iii) such purchaser
has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgement against the issuer or such persons in Canada
or to enforce a judgement obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from us. Only one such report must be filed in
respect of notes acquired on the same date and under the same prospectus
exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of notes should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the notes in
their particular circumstances and with respect to the eligibility of the notes
for investment by the purchaser under relevant Canadian legislation.
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<PAGE> 29
WHERE YOU CAN FIND MORE 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-0330 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.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
and the financial statement schedule appearing in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 1999, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference which are based in part on the
reports of KPMG LLP, independent auditors, as to each of the three years in the
period ended December 31, 1999. Such consolidated 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 of SFX at December 31, 1999 and 1998,
and for each of the three years in the period ended December 31, 1999 and the
related financial statement schedule appearing in SFX's Annual Report on Form
10-K/A for the year ended December 31, 1999, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated by reference herein. Such consolidated financial statements and
schedule referred to above are incorporated herein by reference in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998 incorporated into this document by reference
to Clear Channel's Current Report on Form 8-K dated December 9, 1998, as amended
by Form 8-K/A filed on February 23, 1999 and Form 8-K/A dated April 12, 1999,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997 incorporated into this document by reference
to Clear Channel's Current Report on Form 8-K dated December 9, 1998, as amended
by Form 8-K/A filed on February 23, 1999 and Form 8-K/A dated April 12, 1999,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of AMFM Inc. and Subsidiaries
(formerly Chancellor Media Corporation) as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 incorporated into
this document by reference to the Current Report on Form 8-K of Clear Channel
Communications, Inc., dated June 14, 2000, 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 Capstar Broadcasting Corporation
and Subsidiaries as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 incorporated into this document by
reference to the Current Report on Form 8-K of Clear Channel Communications,
Inc., dated November 18, 1999, 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.
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LEGAL OPINIONS
The validity of the notes 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 as of
August 31, 2000, owns approximately 138,500 shares of our common stock
(including presently exercisable options to acquire approximately 122,500
shares). Vernon E. Jordan, Jr., of counsel to Akin, Gump, Strauss, Hauer & Feld,
L.L.P., is also a director of Clear Channel. As of March 10, 2000, Mr. Jordan
held options exercisable to acquire approximately 33,500 shares of AMFM common
stock. Following the completion of the AMFM merger on August 30, 2000, such
options held by Mr. Jordan were assumed by Clear Channel and became exercisable
for approximately 31,500 shares of our common stock.
S-30
<PAGE> 31
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed consolidated financial
statements give effect to the Merger. For accounting purposes, Clear Channel has
accounted for the Merger as a purchase of AMFM; accordingly, the net assets of
AMFM have been adjusted to their estimated fair values based upon a preliminary
purchase price allocation.
The unaudited pro forma combined condensed consolidated balance sheet at
June 30, 2000 gives effect to the Merger as if it occurred on June 30, 2000. The
unaudited pro forma combined condensed consolidated statements of operations for
the year ended December 31, 1999 and six months ended June 30, 2000 gives effect
to the Merger as if it had occurred on January 1, 1999.
The unaudited pro forma combined condensed consolidated balance sheet was
prepared based upon the historical balance sheet of Clear Channel adjusted to
reflect the merger with SFX Entertainment, Inc. as if such merger had occurred
on June 30, 2000 and the historical balance sheet of AMFM, adjusted for certain
transactions, as if such transactions had occurred on June 30, 2000. The
unaudited pro forma combined condensed consolidated statements of operations for
year ended December 31, 1999 and for the six months ended June 30, 2000 were
prepared based upon the historical statements of operations of Clear Channel,
adjusted to reflect the mergers with Jacor Communications, Inc. and SFX
Entertainment, Inc. as if such mergers had occurred on January 1, 1999 ("Clear
Channel Pro Forma"), and the historical statements of operations of AMFM,
adjusted to reflect the disposition of AMFM's outdoor advertising business to
Lamar Advertising Company, the merger with Capstar Broadcasting Corporation, the
acquisition of KKFR-FM and KFYI-AM from The Broadcast Group, Inc., the
disposition of WMVP-AM to ABC, Inc., the change in the accounting for AMFM's
approximate 30% ownership (11% voting) in Lamar from the equity method to the
cost method due to the discontinuance of any and all control over the operations
of Lamar per the consent decree entered into by AMFM and Clear Channel and
certain financing transactions as if such transactions had occurred on January
1, 1999 ("AMFM Pro Forma"). Additionally, both the Clear Channel pro forma
financial statements and the AMFM pro forma financial statements have been
adjusted for the divestitures of 99 radio stations in markets where the combined
AMFM and Clear Channel radio stations exceed the number necessary to obtain
regulatory approvals for the Merger. Certain amounts in the AMFM pro forma
financial statements have been reclassified to conform to Clear Channel's
presentation.
The unaudited pro forma combined condensed consolidated financial
statements should be read in conjunction with the historical financial
statements of AMFM and Clear Channel.
The unaudited pro forma combined condensed consolidated financial
statements are not necessarily indicative of the actual results of operations or
financial position that would have occurred had the Merger and the above
described acquisitions, dispositions, financing and merger transactions of Clear
Channel and AMFM occurred on the dates indicated nor are they necessarily
indicative of future operating results or financial position.
P-1
<PAGE> 32
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
AT JUNE 30, 2000
ASSETS
<TABLE>
<CAPTION>
CLEAR CHANNEL
PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
PRO FORMA DIVESTITURES(A) PRO FORMA DIVESTITURES(B) ADJUSTMENTS(C) MERGER
------------- --------------- ----------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents..... $ 223,279 $ -- $ 76,900 $ -- $ -- $ 300,179
Accounts receivable, net...... 1,031,085 -- 547,935 -- -- 1,579,020
Other current assets.......... 288,073 -- 61,802 175,067 -- 524,942
----------- --------- ----------- ----------- ----------- -----------
Total Current Assets.... 1,542,437 -- 686,637 175,067 -- 2,404,141
Property, plant & equipment,
net........................... 3,446,636 (19,866) 445,171 (63,377) -- 3,808,564
Intangible assets, net:......... 16,093,410 (365,684) 9,896,518 (1,416,310) 15,558,870 39,766,804
Other assets:
Restricted cash............... -- -- -- -- -- --
Notes receivable.............. 143,130 -- -- -- -- 143,130
Equity investments in and
advances to, nonconsolidated
affiliates.................. 460,518 -- 11,978 -- -- 472,496
Other assets.................. 385,103 -- 239,028 -- (59,857) 564,274
Other investments............. 797,463 -- 1,046,176 -- 89,727 1,933,366
----------- --------- ----------- ----------- ----------- -----------
TOTAL ASSETS............ $22,868,697 $(385,550) $12,325,508 $(1,304,620) $15,588,740 $49,092,775
=========== ========= =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued
expenses and other current
liabilities................. $ 1,262,404 $ -- $ 277,494 $ -- $ -- $ 1,539,898
Current portion of long-term
debt........................ 44,901 -- -- -- -- 44,901
----------- --------- ----------- ----------- ----------- -----------
Total Current
Liabilities........... 1,307,305 -- 277,494 -- -- 1,584,799
Long-term debt.................. 6,336,850 (826,403) 5,742,027 (1,886,993) 493,428 9,858,909
Liquid Yield Options Notes...... 493,879 -- -- -- -- 493,879
Deferred income taxes........... 1,369,874 (21,364) 1,599,901 (214,158) 3,590,508 6,324,761
Other long-term liabilities..... 158,877 -- 49,052 -- -- 207,929
Minority interest............... 25,805 -- 3,192 -- -- 28,997
Temporary equity................ 15,126 -- -- -- -- 15,126
Shareholders' Equity:
Common stock.................. 37,797 -- 2,176 -- 18,139 58,112
Additional paid-in capital.... 12,321,134 -- 5,390,844 -- 11,544,018 29,255,996
Common stock warrants......... 250,583 -- -- -- -- 250,583
Retained earnings (accumulated
deficit).................... 287,966 462,217 (739,178) 796,531 (57,353) 750,183
Other comprehensive income.... 262,131 -- -- -- -- 262,131
Other......................... 2,304 -- -- -- -- 2,304
Cost of shares held in
treasury.................... (934) -- -- -- -- (934)
----------- --------- ----------- ----------- ----------- -----------
Total Shareholders'
Equity................ 13,160,981 462,217 4,653,842 796,531 11,504,804 30,578,375
----------- --------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS'
EQUITY................ $22,868,697 $(385,550) $12,325,508 $(1,304,620) $15,588,740 $49,092,775
=========== ========= =========== =========== =========== ===========
</TABLE>
P-2
<PAGE> 33
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
CLEAR CHANNEL
1999 PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
PRO FORMA DIVESTITURES(D) PRO FORMA DIVESTITURES(E) ADJUSTMENTS(F) MERGER
------------- --------------- ---------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue................... $4,625,822 $ (95,967) $2,136,449 $(269,411) $ (19,547) $6,377,346
Operating expenses............ 3,312,269 (48,315) 1,166,792 (148,153) (13,156) 4,269,437
Depreciation and
amortization................ 1,039,747 (8,140) 839,493 (115,134) 262,982 2,018,948
Noncash compensation
expense..................... 7,250 -- 26,727 -- -- 33,977
Merger and nonrecurring
costs....................... -- -- 83,453 -- (5,475) 77,978
Corporate expenses............ 96,043 -- 64,750 -- -- 160,793
---------- --------- ---------- --------- --------- ----------
Operating income (loss)....... 170,513 (39,512) (44,766) (6,124) (263,898) (183,787)
Interest expense.............. 328,140 (45,569) 503,887 (146,242) (11,053) 629,163
Gain on disposition of
assets...................... 2,494 -- 12,289 -- -- 14,783
Gain on disposition of
representation contracts.... -- -- 18,173 -- -- 18,173
Other income (expense)........ 26,623 -- 1,250 -- -- 27,873
---------- --------- ---------- --------- --------- ----------
Income (loss) before income
taxes, equity in earnings
(loss) of nonconsolidated
affiliates and extraordinary
item........................ (128,510) 6,057 (516,941) 140,118 (252,845) (752,121)
Income tax (expense)
benefit..................... (89,256) 1,190 132,840 (17,840) 74,748 101,682
---------- --------- ---------- --------- --------- ----------
Income before equity in
earnings (loss) of
nonconsolidated affiliates
and extraordinary
item........................ (217,766) 7,247 (384,101) 122,278 (178,097) (650,439)
Equity in earnings (loss) of
nonconsolidated
affiliates.................. 20,980 -- (7,087) -- -- 13,893
---------- --------- ---------- --------- --------- ----------
Net income (loss) before
extraordinary item.......... $ (196,786) $ 7,247 $(391,188) $ 122,278 $(178,097) $ (636,546)
========== ========= ========== ========= ========= ==========
Net income (loss) before
extraordinary item per
common share:
Basic....................... $ (0.52) $ (1.09)
========== ==========
Diluted..................... $ (0.52) $ (1.09)
========== ==========
</TABLE>
P-3
<PAGE> 34
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
CLEAR CHANNEL
2000 PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
PRO FORMA DIVESTITURES(D) PRO FORMA DIVESTITURES(E) ADJUSTMENTS(F) MERGER
------------- --------------- ---------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue................... 2,775,339 (48,640) $1,159,171 $(139,275) (181,919) $3,564,676
Operating expenses............ 2,027,320 (23,305) 626,573 (75,239) (179,281) 2,376,068
Depreciation and
amortization................ 579,080 (6,669) 435,485 (55,771) 135,472 1,087,597
Noncash compensation
expense..................... -- -- 35,835 -- -- 35,835
Merger and nonrecurring
costs....................... 95,566 -- 18,946 -- -- 114,512
Corporate expenses............ 66,115 -- 29,312 -- -- 95,427
---------- -------- ---------- --------- --------- ----------
Operating income (loss)....... 7,258 (18,666) 13,020 (8,265) (138,110) (144,763)
Interest expense.............. 196,035 (18,831) 242,718 (73,121) (10,599) 336,202
Gain on disposition of
assets...................... -- -- 31,104 -- -- 31,104
Gain on disposition of
representation contracts.... -- -- 16,989 -- -- 16,989
Other income (expense)........ 5,597 -- 1,128 -- -- 6,725
---------- -------- ---------- --------- --------- ----------
Income (loss) before income
taxes, equity in earnings
(loss) of nonconsolidated
affiliates and extraordinary
item........................ (183,180) 165 (180,477) 64,856 (127,511) (426,147)
Income tax (expense)
benefit..................... (64,135) (550) 20,136 (8,731) 37,193 (16,087)
---------- -------- ---------- --------- --------- ----------
Income before equity in
earnings (loss) of
nonconsolidated affiliates
and extraordinary
item........................ (247,315) (385) (160,341) 56,125 (90,318) (442,234)
Equity in earnings (loss) of
nonconsolidated
affiliates.................. 10,557 -- (6,382) -- -- 4,175
---------- -------- ---------- --------- --------- ----------
Net income (loss) before
extraordinary item.......... $ (236,758) $ (385) $(166,723) $ 56,125 $ (90,318) $ (438,059)
========== ======== ========== ========= ========= ==========
Net income (loss) before
extraordinary item per
common share:
Basic....................... $ (0.63) $ (0.75)
========== ==========
Diluted..................... $ (0.63) $ (0.75)
========== ==========
</TABLE>
P-4
<PAGE> 35
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Clear Channel and AMFM unaudited pro forma combined condensed consolidated
financial statements reflect the Merger, accounted for as a purchase, as
follows:
<TABLE>
<S> <C>
AMFM common shares outstanding.............................. 216,113,446
------------
Share conversion number..................................... 0.94
------------
Clear Channel's common stock to be issued in the merger..... 203,146,639
Estimated value per share (based on the average price
between September 29, 1999 and October 6, 1999)........... $ 77.3229
------------
$ 15,707,887
Estimated value of common stock options and other equity.... 1,247,289
Estimated transaction costs................................. 250,000
------------
Total estimated purchase price.................... $ 17,205,176
============
</TABLE>
For purposes of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $17,205,176
Plus -- deferred tax liability.............................. 3,590,508
Plus -- estimated fair value of long-term debt in excess of
carrying value, net of deferred loan fees................. 303,285
Less -- estimated fair value adjustment to cost
investment................................................ 89,727
Less -- AMFM net assets at June 30, 2000.................... 5,450,373
Plus -- elimination of AMFM's existing net licenses and
goodwill.................................................. 8,480,208
-----------
Estimated purchase price allocated to licenses and
goodwill.................................................. $24,039,077
===========
</TABLE>
The estimated purchase price allocated to licenses and goodwill of
$24,039,077 will be amortized over a 25 year period using the straight-line
method, which will result in annual licenses and goodwill amortization of
$961,563.
Clear Channel is required to refinance certain outstanding AMFM long-term
debt.
The unaudited pro forma combined condensed consolidated balance sheet is
based on the assumption that AMFM's debt holders will not tender their debt
securities based on a change of control of AMFM, although Clear Channel must
offer to tender all of AMFM's senior notes and notes at prices ranging from 100%
to 101% of the principal amount of the notes. It is expected that the debt
holders will not accept Clear Channel's tender offer, as the fair value of this
debt is greater than the required offer at the time of the offer.
P-5
<PAGE> 36
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(A) Clear Channel Divestitures
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(1) Decrease in property, plant and equipment, net of
accumulated depreciation.................................... $ (19,866)
(2) Decrease in intangible assets, net.......................... (365,684)
(3) Decrease in long-term debt resulting from the use of net
proceeds.................................................... (826,403)
(4) Decrease in deferred income taxes........................... (21,364)
(5) Increase in retained earnings resulting from the gain on the
sale of stations, net of tax at Clear Channel's assumed tax
rate of 40%................................................. 462,217
</TABLE>
(B) AMFM Divestitures
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
-----------
<S> <C> <C>
(6) Increase in other current assets due to a reclassification
of assets transferred to trust.............................. $ 175,067
(7) Decrease in property, plant and equipment, net of
accumulated depreciation.................................... (63,377)
(8) Decrease in intangible assets, net.......................... (1,416,310)
(9) Decrease in long-term debt resulting from the use of net
proceeds.................................................... (1,886,993)
(10) Decrease in deferred income taxes........................... (214,158)
(11) Increase in retained earnings resulting from the gain on the
sale of stations, net of tax at AMFM's assumed tax rate of
39%......................................................... 796,531
</TABLE>
(C) The pro forma merger adjustments at June 30, 2000 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
-----------
<S> <C> <C>
(12) Increase in intangible assets, net equal to the excess
purchase price of the merger and the elimination of AMFM's
existing accumulated amortization on goodwill............... $15,558,870
(13) Decrease in other assets due to the elimination of AMFM
deferred loan fees.......................................... (59,857)
(14) Increase in other investments due to the mark-up to fair
value of AMFM's investments................................. 89,727
(15) Increase in long-term debt resulting from mark-up to fair
value and estimated merger expenses......................... 493,428
(16) Increase in deferred income tax due to fair value write-up
of FCC licenses............................................. 3,590,508
(17) Increase in common stock to account for Clear Channel common
stock given in the merger at $0.10 par value................ 18,139
(18) Increase in additional paid-in capital to account for Clear
Channel common stock given in the merger at $77.3229 per
share less $0.10 par value ($15,687,573) plus the value of
AMFM stock options included in the merger ($1,247,289) less
AMFM's pro forma additional paid-in capital balance
($5,390,844)................................................ 11,544,018
(19) Decrease in retained earnings to eliminate AMFM's existing
pro forma retained earnings balance......................... (57,353)
</TABLE>
P-6
<PAGE> 37
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma adjustments for the year ended December 31, 1999 and for the
six months ended June 30, 2000 relating to the sale of radio stations Clear
Channel and AMFM divested, are as follows:
(D) Clear Channel Divestitures
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
---------------------
12/31/99 6/30/00
--------- ---------
<S> <C> <C> <C>
(20) Decrease in revenue.................................... $ (95,967) $ (48,640)
(21) Decrease in operating expenses......................... 48,315 23,305
(22) Decrease in depreciation and amortization, of which
$3,083 and $1,541 for 12/31/99 and 6/30/00,
respectively results in a permanent difference and will
not be deducted for federal income tax purposes........ 8,140 6,669
(23) Decrease in interest expense associated with the
reduction of long-term debt resulting from the use of
net proceeds........................................... 45,569 18,831
(24) Change in income tax expense associated with the tax
effect of adjustments (20) through (23) at Clear
Channel's assumed tax rate of 40%...................... 1,190 (550)
</TABLE>
(E) AMFM Divestitures
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
---------------------
12/31/99 6/30/00
--------- ---------
<S> <C> <C> <C>
(25) Decrease in revenue................................... $(269,411) $(139,275)
(26) Decrease in operating expenses........................ 148,153 75,239
(27) Decrease in depreciation and amortization, of which
$94,376 and $42,468 for 12/31/99 and 6/30/00,
respectively, results in a permanent difference and
will not be deducted for federal income tax
purposes.............................................. 115,134 55,771
(28) Decrease in interest expense associated with the
reduction of long-term debt resulting from the use of
net proceeds.......................................... 146,242 73,121
(29) Increase in income tax expense associated with the tax
effect of adjustments (25) through (28) at AMFM's
assumed tax rate of 39%............................... (17,840) (8,731)
</TABLE>
P-7
<PAGE> 38
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(F) The pro forma merger adjustments for the year ended December 31, 1999
and for the six months ended June 30, 2000 are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
---------------------
12/31/99 6/30/00
--------- ---------
<S> <C> <C> <C>
(30) Decrease in revenue due to the elimination of services
AMFM provided to Clear Channel and services Clear
Channel provided to AMFM................................ $ (19,547) $(181,919)
(31) Decrease in operating expense due to the elimination of
services AMFM provided to Clear Channel and services
Clear Channel provided to AMFM of $19,547 and $181,919
for 12/31/99 and 6/30/00, respectively, partially offset
by the increase in operating expense resulting from
change in classification for start-up and development
costs of ($6,391 and $2,638 for 12/31/99 and 6/30/00
respectively) from treatment as depreciation expense and
as merger and non-recurring costs (AMFM's policy) to
treatment as operating expense (Clear Channel's
policy)................................................. 13,156 179,281
(32) Increase in amortization expense resulting from the
additional licenses and goodwill created by the merger
and a change in the life of licenses and goodwill
amortization from 15 years (AMFM's policy) to 25 years
(Clear Channel's policy). $65,975 and $34,528 for
12/31/99 and 6/30/00 respectively results in a permanent
difference and will not be deductible for federal income
tax purposes. This is partially offset by the decrease
in amortization expense resulting from the change of
classification of start-up and development costs of
($916 and $2,638 for 12/31/99 and 6/30/00 respectively)
from treatment as depreciation expense (AMFM's policy)
to treatment as operating expense (Clear Channel's
policy)................................................. (262,982) (135,472)
(33) Decrease in merger and non-recurring costs resulting
from the change in classification for start-up and
development costs from treatment as merger and
non-recurring costs (AMFM's policy) to treatment as
operating expense (Clear Channel's policy).............. 5,475 --
(34) Change in interest expense associated with the increased
long-term debt resulting from the estimated merger
expenses of $250,000.................................... 11,053 10,599
(35) Decrease in income tax expense associated with the tax
effect of the adjustments in note (32) and (34) at Clear
Channel's assumed tax rate of 40%....................... 74,748 37,193
</TABLE>
P-8
<PAGE> 39
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pro forma basic and diluted share information is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------
12/31/99 6/30/00
-------- -------
<S> <C> <C>
Basic:
Clear Channel pro forma weighted-average shares
outstanding............................................ 379,251 377,872
AMFM pro forma weighted-average shares outstanding........ 215,223 216,748
Decrease weighted-average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the share conversion number of 0.94.......... (11,959) (13,601)
------- -------
Clear Channel and AMFM Pro Forma merger weighted-average
shares outstanding..................................... 582,515 581,019
======= =======
Diluted:
Clear Channel pro forma weighted-average shares
outstanding............................................ 399,153 384,788
AMFM pro forma weighted-average shares outstanding........ 222,433 224,816
Decrease weighted-average common stock outstanding to
account for Clear Channel's common stock given in the
merger and to account for the dilution effect AMFM's
common stock warrants, employee stock options and other
dilutive shares have on the Company at the share
conversion number of 0.94.............................. (13,262) (13,359)
------- -------
Clear Channel and AMFM Pro Forma merger weighted-average
shares outstanding..................................... 608,324 596,245
======= =======
</TABLE>
P-9
<PAGE> 40
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
AT JUNE 30, 2000
ASSETS
<TABLE>
<CAPTION>
CLEAR CHANNEL SFX PRO FORMA CLEAR CHANNEL
HISTORICAL HISTORICAL ADJUSTMENTS(A) PRO FORMA
------------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents....................... $ 56,893 $ 236,386 $ (70,000) $ 223,279
Accounts receivable, net........................ 844,366 186,719 -- 1,031,085
Other current assets............................ 143,313 144,760 -- 288,073
----------- ---------- ---------- -----------
Total Current Assets.................... 1,044,572 567,865 (70,000) 1,542,437
Property, plant & equipment, net.................. 2,736,889 709,747 -- 3,446,636
Intangible assets, net............................ 12,077,337 1,589,865 2,426,208 16,093,410
Other assets:
Restricted cash................................. -- -- -- --
Notes receivable................................ 129,675 13,455 -- 143,130
Equity investments in, and advances to,
nonconsolidated affiliates................... 386,918 95,070 (21,470) 460,518
Other assets.................................... 339,269 92,437 (46,603) 385,103
Other investments............................... 933,400 -- (135,937) 797,463
----------- ---------- ---------- -----------
TOTAL ASSETS............................ $17,648,060 $3,068,439 $2,152,198 $22,868,697
=========== ========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other
current liabilities.......................... $ 661,055 $ 601,349 $ -- $ 1,262,404
Current portion of long-term debt............... 30,510 14,391 -- 44,901
----------- ---------- ---------- -----------
Total Current Liabilities............... 691,565 615,740 -- 1,307,305
Long-term debt.................................... 4,875,879 1,406,933 54,038 6,336,850
Liquid Yield Options Notes........................ 493,879 -- -- 493,879
Deferred income taxes............................. 1,340,070 47,674 (17,870) 1,369,874
Other long-term liabilities....................... 129,256 29,621 -- 158,877
Minority interest................................. 17,103 8,702 -- 25,805
Temporary equity.................................. -- 15,126 -- 15,126
Shareholders' Equity:
Common stock.................................... 33,897 664 3,236 37,797
Additional paid-in capital...................... 9,231,175 1,298,926 1,791,033 12,321,134
Common stock warrants........................... 250,583 -- -- 250,583
Retained earnings (accumulated deficit)......... 287,966 (347,048) 347,048 287,966
Other comprehensive income...................... 295,317 -- (33,186) 262,131
Other........................................... 2,304 (2,041) 2,041 2,304
Cost of shares held in treasury................. (934) (5,858) 5,858 (934)
----------- ---------- ---------- -----------
Total Shareholders' Equity.............. 10,100,308 944,643 2,116,030 13,160,981
----------- ---------- ---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY................................ $17,648,060 $3,068,439 $2,152,198 $22,868,697
=========== ========== ========== ===========
</TABLE>
P-10
<PAGE> 41
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
JACOR
HISTORICAL
CLEAR 1/1 TO 1999 CLEAR
CHANNEL SFX PRO FORMA 5/4 PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENTS(B) 1999 ADJUSTMENTS(C) PRO FORMA
---------- ---------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................... $2,678,160 $1,684,355 $ (8,340) $271,647 $ -- $4,625,822
Operating expenses............. 1,632,115 1,478,813 9,264 192,077 -- 3,312,269
Depreciation and
amortization................. 722,233 142,583 80,104 46,951 47,876 1,039,747
Noncash compensation expense... -- 7,250 -- -- -- 7,250
Merger and nonrecurring
costs........................ -- -- -- -- -- --
Corporate expenses............. 70,146 18,524 -- 7,373 -- 96,043
---------- ---------- --------- -------- --------- ----------
Operating income (loss)........ 253,666 37,185 (97,708) 25,246 (47,876) 170,513
Interest expense............... 192,321 100,825 (5,664) 39,731 927 328,140
Gain on disposition of
assets....................... 138,659 760 -- 130,385 (267,310) 2,494
Gain on disposition of
representation contracts..... -- -- -- -- -- --
Other income
(expense) -- net............. 20,209 6,577 -- (163) -- 26,623
---------- ---------- --------- -------- --------- ----------
Income (loss) before income
taxes, equity in earnings
(loss) of nonconsolidated
affiliates and extraordinary
item......................... 220,213 (56,303) (92,044) 115,737 (316,113) (128,510)
Income tax (expense) benefit... (150,635) (1,597) (2,266) (52,300) 117,542 (89,256)
---------- ---------- --------- -------- --------- ----------
Income (loss) before equity in
earnings of nonconsolidated
affiliates and extraordinary
item......................... 69,578 (57,900) (94,310) 63,437 (198,571) (217,766)
Equity in earnings of
nonconsolidated affiliates... 16,077 -- 4,903 -- -- 20,980
---------- ---------- --------- -------- --------- ----------
Net income (loss) before
extraordinary item........... $ 85,655 $ (57,900) $ (89,407) $ 63,437 $(198,571) (196,786)
========== ========== ========= ======== ========= ==========
Net income (loss) before
extraordinary item per common
share:
Basic........................ $ 0.27 $ (0.52)
========== ==========
Diluted...................... $ 0.26 $ (0.52)
========== ==========
</TABLE>
P-11
<PAGE> 42
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
2000
CLEAR CLEAR
CHANNEL SFX PRO FORMA CHANNEL
HISTORICAL HISTORICAL ADJUSTMENTS(B) PRO FORMA
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Net revenue............................................ $1,748,414 $1,034,175 $ (7,250) $2,775,339
Operating expenses..................................... 1,082,690 945,662 (1,032) 2,027,320
Depreciation and amortization.......................... 448,741 97,220 33,119 579,080
Noncash compensation expense........................... -- -- -- --
Merger, nonrecurring & sys. dev. expenses.............. -- 108,566 (13,000) 95,566
Corporate expenses..................................... 52,445 13,670 -- 66,115
---------- ---------- -------- ----------
Operating income (loss)................................ 164,538 (130,943) (26,337) 7,258
Interest expense....................................... 125,460 73,983 (3,408) 196,035
Gain on disposition of assets.......................... -- -- -- --
Gain on disposition of representation contracts........ -- -- -- --
Other income (expense) -- net.......................... 1,624 3,973 -- 5,597
---------- ---------- -------- ----------
Income (loss) before income taxes, equity in earnings
(loss) of nonconsolidated affiliates and
extraordinary item................................... 40,702 (200,953) (22,929) (183,180)
Income tax (expense) benefit........................... (58,472) (4,300) (1,363) (64,135)
---------- ---------- -------- ----------
Income before equity in earnings
Income (loss) before equity in earnings (loss) of
nonconsolidated affiliates and extraordinary item.... (17,770) (205,253) (24,292) (247,315)
Equity in earnings of nonconsolidated affiliates....... 9,603 -- 954 10,557
---------- ---------- -------- ----------
Net income (loss) before extraordinary item............ $ (8,167) $ (205,253) $(23,338) $ (236,758)
========== ========== ======== ==========
Net income (loss) before extraordinary item, per common
share:
Basic................................................ $ (0.02) $ (0.63)
========== ==========
Diluted.............................................. $ (0.02) $ (0.63)
========== ==========
</TABLE>
P-12
<PAGE> 43
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
SFX MERGER
Clear Channel and SFX unaudited pro forma combined condensed consolidated
financial statements reflect the merger with SFX, accounted for as a purchase,
as follows:
<TABLE>
<S> <C>
SFX Class A common shares outstanding less shares held in
treasury.................................................. 63,759,456
Less: Class A shares held by Clear Channel.................. (3,000,000)
-----------
Adjusted Class A common stock outstanding................... 60,759,456
Share conversion number..................................... 0.60
-----------
Clear Channel's common stock to be issued to Class A
holders................................................... 36,455,674
SFX Class B common shares outstanding (1:1 conversion)...... 2,545,557
-----------
Total Clear Channel common stock to be issued in the
merger.................................................... 39,001,231
Estimated value per share (based on the average price
between February 23, 2000 and March 2, 2000).............. $ 74.0089
-----------
$ 2,886,438
Estimated value of common stock options and other equity.... 207,421
Historical cost of SFX common shares held by Clear
Channel................................................... 84,881
Estimated transaction costs................................. 70,000
-----------
Total estimated purchase price.................... $ 3,248,740
===========
</TABLE>
For purposes of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $3,248,740
Plus -- estimated fair value of long-term debt in excess of
carrying value, net of deferred loan fees................. 100,641
Less -- SFX net assets at June 30, 2000..................... 944,643
Plus -- Historical cost of SFX investment not purchased..... 21,470
Plus -- elimination of SFX's existing net goodwill and other
intangible assets......................................... 1,589,865
----------
Estimated purchase price allocated to goodwill and other
intangible assets......................................... $4,016,073
==========
</TABLE>
The estimated purchase price allocated to goodwill and other intangible
assets of $4,016,073 will be amortized over a 20 year period using the
straight-line method, which will result in annual amortization of $200,804.
Clear Channel was required to refinance certain outstanding SFX long-term
debt.
P-13
<PAGE> 44
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(A) The pro forma merger adjustments at June 30, 2000 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(1) Decrease in cash resulting from estimated merger expenses
including a $34.5 million settlement of SFX shareholder
suits....................................................... $ (70,000)
(2) Increase in intangible assets, net equal to the excess
purchase price of the merger and the elimination of SFX's
pre-existing intangible assets.............................. 2,426,208
(3) Decrease in equity investment in, and advances to,
nonconsolidated affiliates resulting from the elimination of
SFX investments not purchased............................... (21,470)
(4) Decrease in other assets resulting from the elimination of
SFX deferred loan fees...................................... (46,603)
(5) Decrease in other investments resulting from the elimination
of Clear Channel's investment in SFX common stock........... (135,937)
(6) Increase in long-term debt resulting from the mark-up of
SFX's debt to fair value in excess of carrying value........ 54,038
(7) Decrease in deferred income taxes resulting from the
elimination of deferred tax on unrealized gain related to
Clear Channel's investment in SFX common stock.............. (17,870)
(8) Increase in common stock to account for Clear Channel common
stock given in the merger, net of SFX's outstanding shares,
at $0.10 par value.......................................... 3,236
(9) Increase in additional paid-in capital to account for Clear
Channel common stock given in the merger at $74.0089 per
share less $0.10 par value plus the value of SFX stock
options included in the merger less SFX's additional paid-in
capital balance............................................. 1,791,033
(10) Increase in retained earnings (accumulated deficit) to
eliminate SFX's existing accumulated deficit balance........ 347,048
(11) Decrease in other comprehensive income resulting from the
elimination of Clear Channel's unrealized gain on their
investment in SFX common stock.............................. (33,186)
(12) Increase in other equity resulting from the elimination of
SFX's deferred compensation................................. 2,041
(13) Increase in cost of shares held in treasury resulting from
the cancelation of SFX's shares held in treasury............ 5,858
</TABLE>
P-14
<PAGE> 45
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(B) The pro forma merger adjustments for the year ended December 31, 1999 and
for the six months ended June 30, 2000 are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
--------------------
12/31/99 6/30/00
--------- --------
<S> <C> <C> <C>
(14) Decrease in revenue due to the elimination of services
SFX provided to Clear Channel and services Clear Channel
provided to SFX and the reclassification of earnings from
equity method investments out of net revenue (SFX's
policy) into equity in earnings of nonconsolidated
affiliates (Clear Channel's policy)...................... $ (8,340) $ (7,250)
(15) Change in operating expense due to the elimination of
services SFX provided to Clear Channel and services Clear
Channel provided to SFX of $3,437 and $6,296 for 12/31/99
and 6/30/00, respectively, offset by the increase in
operating expenses resulting from change in
classification of integration and start-up costs of
$12,701 and $5,264 for 12/31/99 and 6/30/00,
respectively, from treatment as depreciation expense
(SFX's policy) to treatment as operating expense (Clear
Channel's policy)........................................ (9,264) 1,032
(16) Increase in amortization expense resulting from the
additional goodwill created by the merger, other
intangible assets acquired in the merger and a change in
the life of intangible assets amortization from an
average of 15 years (SFX's policy) to an average of 20
years (Clear Channel's policy) of $92,805 and $38,383 for
12/31/99 and 6/30/00, respectively, partially offset by
the reclassification of $12,701 and $5,264 for 12/31/99
and 6/30/00, respectively, from depreciation expense to
operating expense........................................ (80,104) (33,119)
(17) Decrease in merger and non-recurring costs due to the
elimination of direct merger related expenses............ -- 13,000
(18) Decrease in interest expense resulting from the
amortization of premium on long-term debt resulting from
the mark-up to fair value................................ 5,664 3,408
(19) Increase in income tax expense associated with the tax
effect of adjustment (16) at Clear Channel's assumed tax
rate of 40%.............................................. (2,266) (1,363)
(20) Increase in equity in earnings (loss) of nonconsolidated
affiliates resulting from the reclassification of
earnings from equity method investments out of revenue
(SFX's policy) into equity in earnings of nonconsolidated
affiliates (Clear Channel's policy)...................... 4,903 954
</TABLE>
P-15
<PAGE> 46
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
JACOR MERGER
The Jacor acquisition pro forma adjustments exclude the effect of any
divestiture of stations, which were required for regulatory approval, as Clear
Channel utilized funds received from divestitures to be reinvested in
acquisitions of similar stations in other markets.
(C) The pro forma merger adjustments for the year ended December 31, 1999
are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
-------------------
<S> <C> <C>
(21) 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.......................... $ (47,876)
(22) Increase in interest expense associated with the
increased long-term debt resulting from the estimated
merger expenses of $50,000........................... (927)
(23) Decrease in gain on disposition of assets as this
gain is associated directly with the merger of Jacor
and is a non-recurring item.......................... (267,310)
(24) Decrease in income tax expense associated with the
tax effect of adjustments (22) and (23) at Clear
Channel's assumed tax rate of 40%.................... 117,542
</TABLE>
P-16
<PAGE> 47
AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 2000
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
AMFM PRO FORMA AMFM
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 76,900 $ -- $ 76,900
Accounts receivable, net........................ 547,935 -- 547,935
Other current assets............................ 61,802 -- 61,802
----------- ----------- -----------
Total current assets.................... 686,637 -- 686,637
Property and equipment, net....................... 445,171 -- 445,171
Intangible assets, net............................ 9,896,518 -- 9,896,518
Other assets:
Investment in nonconsolidated affiliates........ 1,058,154 (1,046,176)(1) 11,978
Other assets.................................... 239,028 1,046,176(1) 1,285,204
----------- ----------- -----------
TOTAL ASSETS............................ $12,325,508 $ -- $12,325,508
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........... $ 277,494 $ -- $ 277,494
Long-term debt.................................... 5,742,027 -- 5,742,027
Deferred tax liabilities.......................... 1,628,643 (28,742)(2) 1,599,901
Other liabilities................................. 49,052 -- 49,052
Minority interest................................. 3,192 -- 3,192
Stockholders' equity:
Common stock.................................... 2,176 -- 2,176
Additional paid-in capital...................... 5,308,725 82,119(2) 5,390,844
Accumulated deficit............................. (685,801) (53,377)(2) (739,178)
----------- ----------- -----------
Total stockholders' equity.............. 4,625,100 28,742 4,653,842
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................ $12,325,508 $ -- $12,325,508
=========== =========== ===========
</TABLE>
P-17
<PAGE> 48
AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR AS PRO FORMA
ADJUSTMENTS ADJUSTED FOR ADJUSTMENTS
LAMAR FOR THE THE COMPLETED FOR THE
AMFM TRANSACTION LAMAR CAPSTAR CAPSTAR
HISTORICAL(3) HISTORICAL(4) TRANSACTION TRANSACTIONS(8) MERGER
------------- ------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues.................... $1,977,888 $(156,627) $ -- $ 347,290 $(31,397)(9)
Operating expenses.............. 1,048,711 (84,583) -- 207,001 (4,221)(9)
Depreciation and amortization... 732,233 (94,062) -- 78,338 (26,832)(9)
146,977(10)
Noncash compensation expense.... 6,443 -- -- 20,284 --
Merger and non-recurring
costs......................... 81,829 (2,154) -- 51,288 (47,510)(11)
Corporate expenses.............. 57,559 (6,835) -- 14,026 --
---------- --------- --------- --------- --------
Operating income (loss)......... 51,113 31,007 -- (23,647) (99,811)
Interest expense................ 426,681 (171) (36,128)(5) 90,075 (9,650)(9)
1,406(12)
Interest income................. 10,644 -- -- 302 (9,650)(9)
Gain on disposition of assets... 221,312 947 (209,970)(6) -- --
Gain on disposition of
representation contracts...... 18,173 -- -- -- --
Other income (expense).......... -- -- -- (46) --
---------- --------- --------- --------- --------
Income (loss) before income
taxes......................... (125,439) 32,125 (173,842) (113,466) (101,217)
Income tax (expense) benefit.... 6,391 (8,867) 60,845(7) 26,759 35,426(13)
Dividends and accretion on
preferred stock of
subsidiaries.................. 11,846 -- -- 17,390 --
---------- --------- --------- --------- --------
Income (loss) before equity in
net loss of nonconsolidated
affiliates.................... (130,894) 23,258 (112,997) (104,097) (65,791)
Equity in net loss of
nonconsolidated affiliates.... (27,651) -- -- (2,444) --
---------- --------- --------- --------- --------
Net income (loss)............... (158,545) 23,258 (112,997) (106,541) (65,791)
Preferred stock dividends....... 15,936 -- -- -- --
---------- --------- --------- --------- --------
Income (loss) attributable to
common stockholders........... $ (174,481) $ 23,258 $(112,997) $(106,541) $(65,791)
========== ========= ========= ========= ========
Basic and diluted loss per
common share.................. $ (1.01)
==========
Weighted-average common shares
outstanding(20)............... 172,967 28,464
========== ========
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE OTHER
OTHER COMPLETED PRO FORMA AMFM
TRANSACTIONS(14) ADJUSTMENTS PRO FORMA
---------------- ----------- ----------
<S> <C> <C> <C>
Net revenues.................... $ (705) $ -- $2,136,449
Operating expenses.............. (116) -- 1,166,792
Depreciation and amortization... 2,839 -- 839,493
Noncash compensation expense.... -- -- 26,727
Merger and non-recurring
costs......................... -- -- 83,453
Corporate expenses.............. -- -- 64,750
------- -------- ----------
Operating income (loss)......... (3,428) -- (44,766)
Interest expense................ 3,009 28,665(15) 503,887
Interest income................. -- -- 1,296
Gain on disposition of assets... -- -- 12,289
Gain on disposition of
representation contracts...... -- -- 18,173
Other income (expense).......... -- -- (46)
------- -------- ----------
Income (loss) before income
taxes......................... (6,437) (28,665) (516,941)
Income tax (expense) benefit.... 2,253 10,033(16) 132,840
Dividends and accretion on
preferred stock of
subsidiaries.................. -- (29,236)(17) --
------- -------- ----------
Income (loss) before equity in
net loss of nonconsolidated
affiliates.................... (4,184) 10,604 (384,101)
Equity in net loss of
nonconsolidated affiliates.... -- 23,008(18) (7,087)
------- -------- ----------
Net income (loss)............... (4,184) 33,612 (391,188)
Preferred stock dividends....... -- (15,936)(19) --
------- -------- ----------
Income (loss) attributable to
common stockholders........... $(4,184) $ 49,548 $ (391,188)
======= ======== ==========
Basic and diluted loss per
common share.................. $ (1.82)
==========
Weighted-average common shares
outstanding(20)............... 13,792 215,223
======== ==========
</TABLE>
P-18
<PAGE> 49
AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
OTHER
AMFM PRO FORMA AMFM
HISTORICAL(5) ADJUSTMENTS PRO FORMA
------------- ----------- ----------
<S> <C> <C> <C>
Net revenues................................................ $1,159,171 $ -- $1,159,171
Operating expenses.......................................... 626,573 -- 626,573
Depreciation and amortization............................... 435,485 -- 435,485
Noncash compensation expense................................ 35,835 -- 35,835
Merger and non-recurring costs.............................. 18,946 -- 18,946
Corporate expenses.......................................... 29,312 -- 29,312
---------- ------- ----------
Operating income (loss)..................................... 13,020 -- 13,020
Interest expense............................................ 243,805 (1,087)(15) 242,718
Interest income............................................. 1,128 -- 1,128
Gain on disposition of assets............................... 31,104 -- 31,104
Gain on disposition of representation contracts............. 16,989 -- 16,989
---------- ------- ----------
Income (loss) before income taxes........................... (181,564) 1,087 (180,477)
Income tax (expense) benefit................................ 20,516 (380)(16) 20,136
Credit on preferred stock of subsidiary..................... 3,310 (3,310)(17) --
---------- ------- ----------
Income (loss) before equity in net loss of nonconsolidated
affiliates................................................ (157,738) (2,603) (160,341)
Equity in net loss of nonconsolidated affiliates............ (47,089) 40,707(18) (6,382)
---------- ------- ----------
Net income (loss)........................................... (204,827) 38,104 (166,723)
Preferred stock dividends................................... 321 (321)(19) --
---------- ------- ----------
Income (loss) attributable to common stockholders........... (205,148) 38,425 (166,723)
========== ======= ==========
Basic and diluted loss per common share..................... (0.95) (0.77)
========== ==========
Weighted-average common shares outstanding(22).............. 216,113 635 216,748
========== ======= ==========
</TABLE>
P-19
<PAGE> 50
AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS OF DOLLARS)
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE
SHEET
(1) As a condition for approval from the Department of Justice for the
merger with Clear Channel, AMFM is prohibited from exercising any
governance rights over Lamar. Since AMFM may no longer exercise
significant influence over the operations of Lamar, AMFM's investment
in Lamar will be accounted for using the cost method instead of the
equity method subsequent to the merger date. This adjustment
reclassifies AMFM's investment in Lamar from an equity method
investment to a cost method investment.
(2) Reflects the adjustments to record (1) estimated stock option
compensation expense of $38,064, net of a tax benefit of $20,497,
relating to certain executive stock options which became exercisable
upon the Clear Channel merger and (2) estimated charges of $15,313, net
of a tax benefit of $8,245, related to amendments made to AMFM's stock
option plans on July 5, 2000 to provide that all unvested options will
accelerate and vest for employees terminated as a result of the Clear
Channel merger.
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(3) AMFM began operating KKFR-FM and KFYI-AM in Phoenix under a time
brokerage agreement effective November 5, 1998. Therefore, the results
of operations of KKFR-FM and KFYI-AM are included in AMFM's historical
operations for the year ended December 31, 1999.
AMFM entered into a time brokerage agreement to sell substantially all
of the broadcast time of WMVP-AM in Chicago effective September 10,
1998. Therefore, substantially all of the results of operations of
WMVP-AM are excluded from AMFM's historical operations for the year
ended December 31, 1999.
(4) On September 15, 1999, AMFM completed the sale to Lamar of all of the
outstanding common stock of the subsidiaries which held all of AMFM's
assets used in its outdoor advertising business. AMFM received net cash
proceeds of approximately $700,000 and 26,227,273 shares of class A
common stock, par value $.01 per share, of Lamar. This adjustment
removes the historical results of operations of AMFM's outdoor
advertising business.
(5) Reflects the net decrease in interest expense of $36,128 for the year
ended December 31, 1999 in connection with the additional bank
borrowings related to the outdoor advertising acquisitions completed
during 1999 and the paydown of debt resulting from the net proceeds of
$700,000 received from Lamar.
(6) Reflects the elimination of the nonrecurring gain of $209,970 incurred
in connection with AMFM's sale of its outdoor advertising business.
(7) Reflects the tax effect of the pro forma adjustments.
P-20
<PAGE> 51
AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
ADJUSTMENTS TO CAPSTAR'S HISTORICAL CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
(8) Capstar's historical condensed consolidated statement of operations for
the period from January 1 to July 13, 1999 and pro forma adjustments
are summarized below:
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1 CAPSTAR PRO FORMA CAPSTAR
TO JULY 13, 1999 HISTORICAL ADJUSTMENTS PRO FORMA
--------------------- ---------- ----------- ---------
<S> <C> <C> <C>
Net revenues.................................... $ 347,290 $ -- $ 347,290
Operating expenses.............................. 207,001 -- 207,001
Depreciation and amortization................... 78,338 -- 78,338
Noncash compensation expense.................... 20,284 -- 20,284
LMA fees........................................ 387 (387)(A) --
Merger and non-recurring costs.................. 51,288 -- 51,288
Corporate expenses.............................. 14,026 -- 14,026
--------- ----- ---------
Operating income................................ (24,034) 387 (23,647)
Interest expense................................ 90,075 -- 90,075
Interest income................................. 302 -- 302
Other income (expense).......................... (46) -- (46)
--------- ----- ---------
Income (loss) before income taxes............... (113,853) 387 (113,466)
Income tax (expense) benefit.................... 26,894 (135)(B) 26,759
Dividends and accretion on preferred stock of
subsidiary.................................... 17,390 -- 17,390
--------- ----- ---------
Income (loss) before equity in net loss of
nonconsolidated affiliates.................... (104,349) 252 (104,097)
Equity in net loss of nonconsolidated
affiliates.................................... (2,444) -- (2,444)
--------- ----- ---------
Income (loss) attributable to common
stockholders.................................. $(106,793) $ 252 $(106,541)
========= ===== =========
</TABLE>
---------------
(A) Reflects the elimination of $387 of time brokerage (LMA) fees paid by
Capstar for the period from January 1 to July 13, 1999 related to acquired
radio stations that were previously operated under time brokerage
agreements.
(B) Reflects the tax effect of the pro forma adjustments.
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS RELATED TO THE CAPSTAR MERGER
(9) Reflects the elimination of intercompany transactions between AMFM and
Capstar for AMFM's media representation services provided to Capstar,
Capstar's participation in The AMFM Radio Networks, fees paid by AMFM
to Capstar under time brokerage (LMA) agreements and interest on
Capstar's note payable to AMFM of $150,000 for the period from January
1 to July 13, 1999.
P-21
<PAGE> 52
AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
(10) Reflects incremental amortization related to the Capstar merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1 TO
JULY 13, 1999
-------------
<S> <C>
Amortization expense on $5,892,486 of intangible assets..... $210,602
Less: historical amortization expense....................... (63,625)
--------
Adjustment for net increase in amortization expense......... $146,977
========
</TABLE>
Historical depreciation expense of Capstar as adjusted for the completed
Capstar transactions is assumed to approximate depreciation expense on a
pro forma basis.
(11) Reflects the elimination of financial advisory and other expenses of
Capstar in connection with the Capstar merger of $47,510 for the
period from January 1 to July 13, 1999.
(12) Reflects the adjustment to record interest expense of $1,406 for the
year ended December 31, 1999 on additional bank borrowings related to
estimated financial advisors, legal, accounting and other professional
fees incurred by AMFM and Capstar.
(13) Reflects the tax effect of the pro forma adjustments.
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS RELATED TO THE OTHER COMPLETED TRANSACTIONS
On April 16, 1999, AMFM sold WMVP-AM in Chicago to ABC, Inc. for $21,000 in
cash. AMFM entered into a time brokerage agreement to sell substantially all of
the broadcast time of WMVP-AM effective September 10, 1998.
On July 1, 1999, AMFM acquired KKFR-FM and KFYI-AM in Phoenix from The
Broadcast Group, Inc. for $90,000 in cash. AMFM began operating KKFR-FM and
KFYI-AM under a time brokerage agreement effective November 5, 1998.
(14) The combined condensed statement of operations for the other completed
transactions for the year ended December 31, 1999 is summarized below:
<TABLE>
<CAPTION>
CHICAGO PRO FORMA
DISPOSITION ADJUSTMENTS FOR OTHER
YEAR ENDED HISTORICAL THE OTHER COMPLETED COMPLETED
DECEMBER 31, 1999 1/1-4/16 TRANSACTIONS TRANSACTIONS
----------------- ----------- ------------------- ------------
<S> <C> <C> <C>
Net revenues................................ $(705) $ -- $ (705)
Operating expenses.......................... (116) -- (116)
Depreciation and amortization............... -- 2,839(a) 2,839
----- ------- -------
Operating income (loss)..................... (589) (2,839) (3,428)
Interest expense............................ -- 3,009(b) 3,009
----- ------- -------
Income (loss) before income taxes........... (589) (5,848) (6,437)
Income tax (expense) benefit................ -- 2,253(c) 2,253
----- ------- -------
Income (loss)............................... $(589) $(3,595) $(4,184)
===== ======= =======
</TABLE>
P-22
<PAGE> 53
AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
(a) Reflects incremental amortization related to the assets acquired in the
Phoenix acquisition and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1999 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
----------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix acquisition......... 1/1-7/1 $85,160 $2,839 $ -- $2,839
</TABLE>
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the acquisition was not
completed.
Historical depreciation expense for the Phoenix acquisition is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.
(b) Reflects the adjustment to interest expense as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Additional bank borrowings related to other completed
transactions.............................................. $69,000
-------
Interest expense at 7.75%................................... 5,348
Less: historical interest expense recognized subsequent to
the completed transaction................................. 2,339
-------
Net increase in interest expense............................ $ 3,009
=======
</TABLE>
(c) Reflects the tax effect of the pro forma adjustments.
(15) Reflects (i) the net decrease in interest expense resulting from the
November 19, 1999 refinancing of the existing credit agreements of two
of AMFM's subsidiaries into a single new credit agreement with an
estimated average interest rate of 7.75%, (ii) the net decrease in
interest expense related to the purchase of $293,641 of aggregate
principal amount of AMFM's 10 3/4% Senior Subordinated Notes due 2006
and estimated fees and expenses pursuant to a tender offer which was
completed on November 12, 1999, funded with borrowings under the
credit agreement, (iii) the net decrease in interest expense related
to the purchase of $200,000 of aggregate principal amount of AMFM's
9 3/8% Senior Subordinated Notes due 2004 and estimated fees and
expenses which was completed on February 15, 2000, funded with
borrowings under the credit agreement, (iv) the net decrease in
interest expense related to the purchase of $99,400 aggregate
principal amount of AMFM's 10 1/2% Senior Subordinated Notes due 2007
and estimated fees and expenses which was completed on June 2, 2000,
funded with borrowings under the credit agreement, (v) the net
increase in interest expense related to the exchange of the 12 5/8%
Series E Cumulative Exchangeable Preferred Stock of AMFM for 12 5/8%
Senior Subordinated Exchange Debentures due 2006 on November 23, 1999
and (vi) the net increase in interest expense related to the exchange
of the 12% Senior Exchangeable Preferred Stock of AMFM for 12%
Subordinated Exchange Debentures due 2009 completed effective January
1, 2000.
(16) Reflects the tax effect of the pro forma adjustments.
(17) Reflects the elimination of 1999 dividends and credit on exchange of
preferred stock of subsidiary for the six months ended June 30, 2000
related to the exchange of the 12 5/8% Series E Cumulative
Exchangeable Preferred Stock of AMFM for 12 5/8% Senior Subordinated
Exchange Debentures due 2006 completed on November 23, 1999 and the
exchange of the 12%
P-23
<PAGE> 54
AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
Senior Exchangeable Preferred Stock of AMFM for 12% Subordinated
Exchange Debentures due 2009 completed effective January 1, 2000.
(18) As a condition for approval of the merger with Clear Channel from the
Department of Justice, AMFM is prohibited from exercising any
governance rights over Lamar. Since AMFM may no longer exercise
significant influence over the operations of Lamar, AMFM's investment
in Lamar will be accounted for using the cost method instead of the
equity method subsequent to the merger date. This adjustment removes
the historical equity in losses of Lamar of $23,008 for the year ended
December 31, 1999 and $40,707 for the six months ended June 30, 2000.
(19) Reflects the elimination of preferred stock dividends related to (i)
the conversion of AMFM's $3.00 Convertible Exchangeable Preferred
Stock to AMFM common stock on August 24, 1999, pursuant to a notice of
redemption issued to holders and (ii) the conversion of AMFM's 7%
Convertible Preferred Stock to AMFM common stock on January 19, 2000
pursuant to a notice of redemption issued to holders.
(20) The pro forma combined loss per common share data is computed by
dividing pro forma loss attributable to common stockholders by the
weighted-average common shares assumed to be outstanding. A summary of
shares used in the pro forma combined loss per common share
calculation follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Historical weighted-average shares
outstanding................................ 172,967 216,113
Incremental weighted-average shares relating
to:
53,553,966 shares of common stock issued in
connection with the Capstar merger on
July 13, 1999........................... 28,464 --
11,979,800 shares of common stock issued
upon the conversion of AMFM's $3.00
Convertible Exchangeable Preferred Stock
on August 24, 1999...................... 7,713 --
6,079,088 shares of common stock issued
upon the conversion of AMFM's 7%
Convertible Preferred Stock on January
19, 2000................................ 6,079 635
------- -------
Shares used in the pro forma combined
earnings per share calculation............. 215,223 216,748
======= =======
</TABLE>
P-24
<PAGE> 55
Filed Pursuant to Rule 424(b)(3)
Registration Nos. 333-42028,
333-42028-01,333-42028-02
333-42028-03
PROSPECTUS
$3,000,000,000
CLEAR CHANNEL COMMUNICATIONS, INC.
CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
We will offer and sell, from time to time, in one or more offerings, the
debt and equity securities described in this prospectus. The total offering
price of these securities, in the aggregate, will not exceed $3.0 billion. We
will provide the specific terms of these securities in supplements to this
prospectus. You should carefully read this prospectus and the supplements before
you decide to invest in any of these securities.
CLEAR CHANNEL COMMUNICATIONS, INC.
We will offer and sell, from time to time, in one or more offerings:
- common stock
- debt securities
- junior subordinated debt securities
- preferred stock
- warrants
- stock purchase contracts
- stock purchase units
- guarantees
The stock purchase contracts will require a purchaser to buy a specific
amount of common stock or preferred stock, and they will obligate Clear Channel
to pay the purchasers specific fees. The stock purchase units will include these
stock purchase contracts and debt securities, junior subordinated debt
securities, debt obligations of the United States of America or its agencies or
instrumentalities, or preferred securities issued by CCCI Capital Trusts I, II
and III. The guarantees will be full, unconditional guarantees of the Clear
Channel Trusts' obligation to distribute specific amounts of cash to the holders
of Clear Channel Trust preferred securities.
THE CLEAR CHANNEL TRUSTS
The CCCI Capital Trusts I, II and III are each Delaware business trusts
that will offer and sell preferred securities, from time to time in one or more
offerings. Each Clear Channel Trust will use all of the proceeds from the sale
of its preferred securities to buy junior subordinated debt securities of Clear
Channel. The Clear Channel Trusts will receive cash payments from the junior
subordinated debt securities, and each trust will distribute these payments to
the holders of its preferred and common securities. Clear Channel will own all
of the common securities of the Clear Channel Trusts.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE "GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS" ON PAGE 10.
The date of this prospectus is July 28, 2000.
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 3
About This Prospectus....................................... 4
Clear Channel Communications, Inc........................... 4
Recent Developments......................................... 6
The Clear Channel Trusts.................................... 8
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 9
Use of Proceeds............................................. 9
Holding Company Structure................................... 10
General Description of Securities and Risk Factors.......... 10
Description of Senior and Subordinated Debt Securities...... 10
Description of Junior Subordinated Debt Securities.......... 21
Description of Preferred Stock.............................. 30
Description of Common Stock................................. 30
Description of Warrants..................................... 32
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 34
Description of Preferred Securities......................... 35
Description of Guarantees................................... 37
ERISA Matters............................................... 40
Plan of Distribution........................................ 40
Legal Opinions.............................................. 42
Experts..................................................... 42
</TABLE>
2
<PAGE> 57
EXPLANATORY NOTE
When we refer to Clear Channel in this prospectus, we are referring to
Clear Channel Communications, Inc. When we refer to the Clear Channel Trusts in
this prospectus, we are referring to the CCCI Capital Trusts. When the word "we"
"our" or "us" is used in this prospectus, we are referring to both Clear Channel
and the Clear Channel Trusts together.
WHERE YOU CAN FIND MORE INFORMATION
Clear Channel files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements, or other information Clear Channel files with
the SEC at its public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549, 7 World Trade Center, Suite 1300, New York, New York 10048; and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Clear
Channel's filings are also available to the public on the internet, through a
database maintained by the SEC at http://www.sec.gov. In addition, you can
inspect and copy Clear Channel's reports, proxy statements and other information
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, on which the common stock is listed.
We filed a registration statement on Form S-3 to register with the SEC the
securities described in this prospectus. This prospectus is part of that
registration statement. As permitted by SEC rules, this prospectus does not
contain all the information contained in the registration statement or the
exhibits to the registration statement. You may refer to the registration
statement and accompanying exhibits for more information about us and our
securities.
The SEC allows us to "incorporate by reference" into this document the
information Clear Channel filed with it. This means that we can disclose
important business, financial and other information to you by referring you to
other documents separately filed with the SEC. All information incorporated by
reference is part of this document, unless and until that information is updated
and superseded by the information contained in this document or any information
incorporated later.
We incorporate by reference the documents listed below:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, as
amended by Form 10-Q/A filed May 16, 2000.
3. Current Report on Form 8-K filed June 14, 2000.
4. Current Report on Form 8-K filed May 11, 2000.
5. Current Report on Form 8-K filed February 29, 2000.
6. Portions of the Current Report on Form 8-K filed November 19, 1999
relating to the consolidated financial statements of Capstar
Broadcasting Corporation and Subsidiaries and the report of
Pricewaterhouse Coopers LLP dated February 26, 1999, except as to Note
3, which is as of March 15, 1999 (pgs. 56-104 of said Form 8-K).
7. Current Report on Form 8-K filed May 7, 1999.
8. Current Report on Form 8-K filed December 10, 1998, as amended by Form
8-K/A filed February 23, 1999 and Form 8-K/A filed April 12, 1999.
We also incorporate by reference all future filings we make with the SEC
between the date of this document and the date upon which we sell all the
securities we offer with this document.
You may obtain copies of filings referred to above at no cost by contacting
us at the following address: Corporate Secretary, Clear Channel Communications,
Inc., 200 East Basse Road, San Antonio, Texas 78209, telephone: (210) 822-2828.
3
<PAGE> 58
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement that we filed
with the SEC. By using a shelf registration statement, we may sell, from time to
time, in one or more offerings, any combination of the securities described in
this prospectus. The total dollar amount of the securities we sell through these
offerings will not exceed $3.0 billion.
This prospectus only provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that contains specific information about the terms of the
securities. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
This prospectus does not contain separate financial statements for the
Clear Channel Trusts. We do not believe these financial statements would be
useful since each trust is a direct or indirect wholly-owned subsidiary of Clear
Channel, and we file consolidated financial information under the Exchange Act.
The Clear Channel Trusts will not have any independent function other than to
issue common and preferred securities and to purchase junior subordinated debt
securities of Clear Channel. Clear Channel will provide a full, unconditional
guarantee of each trust's obligations under their respective common and
preferred securities.
You should rely only on the information contained or incorporated by
reference in this prospectus and the prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We will not make an offer to sell these securities in any state where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus, as well as the information we previously filed with the SEC
and incorporated by reference into this prospectus, is accurate only as of the
date of the documents containing the information.
CLEAR CHANNEL COMMUNICATIONS, INC.
Clear Channel is a diversified media company composed of two business
segments: broadcasting and outdoor advertising. As of December 31, 1999, Clear
Channel owned, programmed or sold airtime for 507 radio stations in the United
States and two radio stations in Denmark. In addition, Clear Channel owned or
programmed 24 television stations in the United States. Clear Channel is also
one of the world's largest outdoor advertising companies based on our total
domestic and international advertising display inventory. Clear Channel was
incorporated in Texas in 1974.
During the year ended December 31, 1999, Clear Channel derived
approximately 53% of its net revenue from broadcasting operations and
approximately 47% from outdoor advertising operations. Its broadcasting segment
includes both radio and television stations for which we are the licensee and
radio and television stations which we program or sell airtime under local
marketing agreements or joint sales agreements. Its broadcasting segment also
operates radio networks and produces syndicated programming. Its outdoor
advertising segment includes advertising display faces which we own or operate
under lease management agreements.
Clear Channel currently has a merger pending with AMFM Inc., the second
largest radio company in the United States in terms of radio stations. Upon
completion of the AMFM merger, Clear Channel will be one of the world's largest
out-of-home media companies reaching local, national and international consumers
through a complementary portfolio of radio stations, radio broadcast networks,
outdoor advertising displays, television stations, a media representation
business and a growing presence in Internet operations. See "Recent
Developments -- AMFM Merger." In addition to the pending AMFM merger, Clear
Channel also currently has a merger pending with SFX Entertainment, Inc., one of
the world's largest diversified promoters, producers and venue operators for
live entertainment events. See "Recent Developments -- SFX Merger." The
information below does not reflect the consummation of the AMFM or SFX mergers.
4
<PAGE> 59
Our principal executive offices are located at 200 East Basse Road, San
Antonio, Texas 78209 (telephone: 210-822-2828).
A brief description of each of Clear Channel's primary lines of business
follows.
BROADCASTING
As of December 31, 1999, Clear Channel owned, programmed, or sold airtime
for 507 domestic radio stations, two international radio stations, 20 domestic
television stations and four satellite television stations. Its radio stations
employ a wide variety of programming formats, such as News/Talk/Sports, Country,
Adult Contemporary, Urban and Rock. Clear Channel owns two international radio
stations located in Denmark and broadcast Adult Contemporary and Oldies formats
to the Copenhagen market and one cable audio channel that reaches most of
Denmark. Clear Channel also provides programming to and sells airtime under
exclusive sales agency agreements for three radio stations in Mexico. In
addition, Clear Channel operates several radio networks and produce more than 50
syndicated programs and services for more than 4,000 radio stations. Its
syndicated programs include Rush Limbaugh, The Dr. Laura Schlessinger Show and
Dr. Dean Edell. In addition, Clear Channel currently owns the following
interests in 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 26% non-voting equity interest in Hispanic Broadcasting Corporation, a
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;
- a 50% equity interest in Radio 1, which owns seven radio stations in
Norway;
- a 50% equity interest in Radio Bonton, a.s., which owns an FM radio
station in the Czech Republic; and
- a 32% equity interest in JAZZ FM plc, which owns two radio stations in
England.
Clear Channel's television stations are affiliated with various television
networks, including FOX, UPN, ABC, NBC and CBS. The primary sources of
programming for its 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. Clear Channel supplies the
majority of programming to its FOX and UPN affiliates by selecting and
purchasing syndicated television programs.
OUTDOOR ADVERTISING
As of December 31, 1999, Clear Channel owned a total of 549,257 advertising
display faces, and operated 5,900 display faces under license management
agreements. Clear Channel currently provides outdoor advertising services in
over 43 domestic markets and over 23 international markets. Domestic display
faces include billboards of various sizes and various small display faces on the
interior and exterior of various public transportation vehicles. International
display faces include street furniture, transit displays and billboards of
various sizes. Clear Channel also operates numerous smaller displays such as
cube displays in retail malls and convenience store window displays.
Additionally, Clear Channel currently owns the following interests in outdoor
advertising companies:
- a 50% equity interest in Hainan White Horse Advertising Media Investment
Co. Ltd., which operates street furniture displays in China;
5
<PAGE> 60
- a 50% equity interest in Sirocco International SA, which is developing a
new 8 square meter format network and obtaining concessions for 2 square
meter format panels in France;
- a 50% equity interest in Adshel Street Furniture Pty., Limited, which
operates street furniture displays in Australia and New Zealand;
- a 30% equity interest in Capital City Posters Pty., Ltd, which operates
street furniture and billboard displays in Singapore;
- a 50% equity interest in Buspak, which operates bus and tram displays in
Hong Kong; and
- a 31.9% equity interest in Master & More Co., Ltd, which operates
billboard displays in Thailand.
RECENT DEVELOPMENTS
AMFM MERGER
On October 2, 1999, Clear Channel entered into an agreement with AMFM Inc.
(NYSE: AFM) to merge one of its wholly-owned subsidiaries with and into AMFM.
Clear Channel structured the merger as a tax-free, stock-for-stock transaction.
Each share of AMFM common stock will convert into 0.94 shares of Clear Channel
common stock on a fixed exchange basis, valuing the merger as of October 2, 1999
at approximately $17.1 billion, plus the assumption of AMFM's debt of
approximately $5.8 billion as of March 31, 2000. Based on the number of shares
outstanding as of December 31, 1999, and assuming that no additional shares of
AMFM common stock are issued before the completion of the merger (other than
shares contemplated as of December 31, 1999 to be issued in connection with the
conversion of AMFM's convertible preferred stock) Clear Channel will issue
approximately 203.6 million shares of its common stock in the merger to the
shareholders of AMFM. Clear Channel will assume all options and warrants to
purchase AMFM common stock outstanding at the effective time of the merger,
whether or not then exercisable, and each of these AMFM options and warrants
will become an option or warrant to acquire Clear Channel common stock on the
same terms and conditions as were applicable prior to the merger. Clear Channel
will register with the SEC and reserve for issuance a sufficient number of
shares of its common stock for delivery upon the exercise of the AMFM options
assumed by it in the merger.
AMFM is a large national radio broadcasting and related media company with
operations in radio broadcasting, media representation and the Internet, which
as of December 31, 1999, consisted of:
- a radio station portfolio that, assuming completion of announced
transactions, consisted of 456 radio stations (330 FM and 126 AM) in 102
markets throughout the continental United States and Puerto Rico,
including 12 stations operated under time brokerage or joint sales
agreements which allow AMFM to program another person's station and sell
the advertising;
- Katz Media, a full-service media representation firm that sells national
spot advertising time for its clients in the radio and television
industries primarily throughout the United States and for AMFM's
portfolio of radio stations; and
- AMFM's Internet initiative which focuses on developing AMFM's Internet
web sites, streaming online broadcasts of AMFM's on-air programming and
other media, and promoting emerging Internet and new media concerns.
In addition, AMFM owns an approximate 30% equity interest in Lamar
Advertising Company, one of the largest owners and operators of outdoor
advertising structures in the United States, which Clear Channel currently
contemplates it will be required to divest in order to obtain regulatory
approval of the AMFM merger. Clear Channel currently contemplates that the FCC
and antitrust regulatory agencies will require it and AMFM to divest between 110
and 115 radio stations in the aggregate to obtain approval of the AMFM merger.
6
<PAGE> 61
In connection with the AMFM merger agreement, Clear Channel entered into a
registration rights agreement with certain shareholders of AMFM. As a result of
the registration rights agreement, Clear Channel may be required to file
registration statements with the SEC to register for resale our common stock
received by such AMFM shareholders in the AMFM merger.
AMFM and Clear Channel can jointly agree to terminate the merger agreement
at any time without completing the merger, even after obtaining shareholder
approval. In addition, each company can terminate the merger agreement under
certain other conditions. AMFM must pay Clear Channel a termination fee of $700
million plus reasonably documented expenses up to $25 million if the merger
agreement terminates under specified conditions. Similarly, Clear Channel must
pay AMFM a termination fee of $1 billion plus reasonably documented expenses up
to $25 million if the merger agreement terminates under specified conditions.
Clear Channel will not complete the AMFM merger before the filing of this
prospectus, if at all. Numerous conditions must be satisfied before the
completion of the AMFM merger, including the receipt of regulatory approvals and
the completion of a review of the merger by the U.S. federal and state antitrust
authorities.
The description of the proposed merger with AMFM contained in this
prospectus 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 5, 1999.
SFX MERGER
In February 2000, Clear Channel entered into a merger agreement with SFX
Entertainment, Inc. (NYSE: SFX). SFX is one of the world's largest diversified
promoters, producers and venue operators for live entertainment events. Clear
Channel structured the merger as a tax-free, stock-for-stock transaction. SFX
Class A shareholders will receive 0.6 shares of Clear Channel common stock for
each SFX share, and SFX Class B shareholders will receive one share of Clear
Channel common stock for each SFX share, on a fixed exchange basis, valuing the
merger as of February 28, 2000 at approximately $3.2 billion, plus the
assumption of SFX's debt of approximately $1.4 billion as of March 31, 2000. A
number of lawsuits were filed by holders of SFX Class A common stock alleging,
among other things, that the difference in consideration for the Class A and
Class B shares constitutes unfair consideration to the Class B holders and that
the SFX board breached its fiduciary duties and that Clear Channel aided and
abetted the actions of the SFX board. On May 12, 2000, SFX and counsel to the
plaintiffs in the shareholder litigation entered into a memorandum of
understanding regarding a proposed settlement that would result in a
modification of the consideration payable to SFX shareholders in the merger.
Under the proposed settlement, the defendants would pay to the holders of the
SFX Class A common stock an aggregate of $34.5 million, payable in either cash
or our common stock, at the option of the defendants, less the amount of fees
and expenses awarded to plaintiffs' counsel by the court.
SFX is the world's largest diversified promoter, producer and venue
operator for live entertainment events. In addition, SFX is a leading fully
integrated sports marketing and management company specializing in the
representation of sports athletes and broadcasters, integrated event management,
television programming and production and marketing consulting services. SFX
operates the largest network of venues used principally for music concerts and
other live entertainment events in the United States, with 92 venues in 31 of
the top 50 markets. These venues include 17 amphitheaters in the top 10 markets
and nine venues principally used for theatrical presentations. In addition, SFX
owns or operates 28 international venues used primarily for theatrical
presentations, principally in the United Kingdom.
Through its large number of venues and strong presence in each of the
markets it serves, SFX is able to provide integrated promotion, production and
venue operation and event management services for a broad variety of live
entertainment events. During 1999, SFX and the companies it acquired during 1999
promoted or produced over 23,000 events, including more than 7,800 music
concerts, 13,300 theatrical
7
<PAGE> 62
shows, 1,400 family entertainment shows and 500 specialized sport events. Nearly
60 million people attended these events.
Based on the number of shares outstanding as of March 31, 2000, and
assuming that no additional shares of SFX common stock are issued before the
completion of the SFX merger, Clear Channel will issue approximately 39.0
million shares of its common stock in the merger to the shareholders of SFX.
Each outstanding option or warrant to purchase shares of SFX common stock and
each SFX stock appreciation right outstanding at the effective time of the SFX
merger, whether or not then exercisable, shall vest immediately upon the closing
of the merger and shall be assumed by Clear Channel, and each such option and
warrant will constitute solely an option to acquire Clear Channel common stock
on the same terms and conditions as were applicable prior to the merger. Clear
Channel will register with the SEC and reserve for issuance a sufficient number
of shares of its common stock for delivery upon the exercise of the SFX options
and warrants assumed by Clear Channel in the SFX merger.
In connection with the SFX merger agreement, Clear Channel entered into a
registration rights agreement with Mr. Robert F. X. Sillerman, the Executive
Chairman of the Board and a shareholder of SFX, granting Mr. Sillerman and his
transferees certain piggyback registration rights with respect to any or all of
the shares of Clear Channel common stock issued to Mr. Sillerman in the SFX
merger.
SFX and Clear Channel can jointly agree to terminate the merger agreement
at any time without completing the merger. In addition, each company can
terminate the merger agreement under certain other conditions. SFX must pay
Clear Channel a termination fee of $100 million plus reasonably documented
expenses up to $20 million if the merger agreement terminates under specified
conditions.
The completion of the merger is subject to the vote of SFX's shareholders
and other closing conditions. Clear Channel will not complete the SFX merger
before the filing of this prospectus, and Clear Channel cannot otherwise give
any assurance as to whether the SFX merger will be consummated in a timely
manner or on the terms described herein, if at all. Numerous conditions must be
satisfied before the completion of the SFX merger, including the receipt of
shareholder approval from the shareholders of SFX.
The description of the proposed merger with SFX contained in this
prospectus is not complete. To understand the terms of the merger fully and for
a more complete description, you should read the merger agreement, as amended,
and the detailed disclosure in our registration statement on Form S-4 filed with
the SEC on June 5, 2000.
THE CLEAR CHANNEL TRUSTS
Each Clear Channel Trust is a statutory business trust formed under
Delaware law pursuant to a separate declaration of trust executed by Clear
Channel, as depositor for the Clear Channel Trust, and the trustees of the
trust, and the filing of a certificate of trust with the Delaware Secretary of
State. The declarations of trust will be amended and restated in their entirety
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. Unless the accompanying prospectus supplement
provides otherwise, each Clear Channel Trust exists for the sole purposes of
- issuing its preferred securities,
- investing the gross proceeds of the sale of its preferred securities in
junior subordinated debt securities of Clear Channel, and
- engaging in only those other activities necessary or incidental thereto.
All of each Clear Channel Trusts' common securities will be owned by Clear
Channel. The common securities will rank equally with the preferred securities
and payments on the common securities will be made on a pro rata basis with the
preferred securities. However, upon the occurrence and continuance of an event
of default under the applicable amended and restated declaration of trust, the
rights of the
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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. Clear Channel will acquire common securities having an aggregate
liquidation amount equal to a minimum of 1% of the total capital of each Clear
Channel Trust.
Each Clear Channel Trust will have a term of at least 20 but not more than
50 years, but may terminate earlier as provided in the applicable amended and
restated declaration of trust. Each Clear Channel Trust's business and affairs
will be conducted by the trustees. Clear Channel will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the trustees of
each Clear Channel Trust. The duties and obligations of the trustees will be
governed by the amended and restated declaration of trust of each Clear Channel
Trust. At least one of the trustees of each Clear Channel Trust will be a person
who is an employee or officer of or who is affiliated with Clear Channel. One
trustee of each Clear Channel Trust will be a financial institution that is not
affiliated with Clear Channel, which will 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. 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 Clear
Channel Trust will be a legal entity having a principal place of business in, or
an individual resident of, the State of Delaware. Clear Channel will pay all
fees and expenses related to each Clear Channel Trust and the offering of the
preferred securities. Unless otherwise set forth in a 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 Clear Channel Trust is c/o Clear Channel
Communications, Inc., 200 East Basse Road, San Antonio, Texas 78209, telephone:
(210) 822-2828.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for Clear Channel.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------- ------------
1999 1998 1997 1996 1995 2000 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
2.04 1.83 2.32 3.63 3.32 0.50 0.68
</TABLE>
For the three month periods ended March 31, 2000 and 1999, fixed charges
exceeded earnings before income taxes and fixed charges by $36.3 million and
$12.0 million, respectively.
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 or 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. Clear Channel had
no preferred stock outstanding and paid no cash dividends for any period
presented.
USE OF PROCEEDS
Unless indicated otherwise in a prospectus supplement, Clear Channel
expects to use the net proceeds from the sale of its securities for general
corporate purposes, including repayment of borrowings, working capital, capital
expenditures, stock repurchase programs and acquisitions. Unless otherwise
specified in the accompanying prospectus supplement, each Clear Channel Trust
will use all proceeds received from the sale of its preferred securities to
purchase junior subordinated debt securities of Clear Channel.
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HOLDING COMPANY STRUCTURE
Clear Channel is a holding company and its assets consist primarily of
investments in its subsidiaries and majority-owned partnerships. Clear Channel'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 Clear Channel owns an equity interest will be
subject to prior claims of the person's creditors upon the person's liquidation
or reorganization. However, Clear Channel may itself be a creditor with
recognized claims against this person, but claims of Clear Channel would still
be subject to the prior claims of any secured creditor of this person and of any
holder of indebtedness of this person that is senior to that held by Clear
Channel. Accordingly, the holder of debt securities or junior subordinated debt
securities may be deemed to be effectively subordinated to those claims.
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS
Clear Channel may offer shares of common stock or preferred stock, debt
securities, junior subordinated debt securities, warrants, stock purchase
contracts, stock purchase units, or any combination of them either individually
or as units consisting of one or more securities under this prospectus. Each
Clear Channel Trust may offer preferred securities under this prospectus.
THE SECURITIES TO BE OFFERED MAY INVOLVE A HIGH DEGREE OF RISK. THE RISKS
WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT RELATING TO THE SECURITY. IN
ADDITION, THE RISK FACTORS, IF ANY, RELATING TO CLEAR CHANNEL'S BUSINESS WILL BE
SET FORTH IN A PROSPECTUS SUPPLEMENT.
DESCRIPTION OF SENIOR AND SUBORDINATED DEBT SECURITIES
The following description of Clear Channel's senior and subordinated debt
securities summarizes the general terms and provisions of its debt securities to
which any prospectus supplement may relate. We will describe the specific terms
of Clear Channel's debt securities and the extent, if any, to which the general
provisions summarized below may apply to any series of its debt securities in
the prospectus supplement relating to the series. In this prospectus, "debt
securities" will be used to refer to senior and subordinated debt securities,
but not to junior subordinated debt securities.
Clear Channel may issue its senior debt securities from time to time, in
one or more series under a senior indenture, between Clear Channel and The Bank
of New York, as senior trustee, or another senior trustee named in a prospectus
supplement. The form of senior indenture is filed as an exhibit to the
registration statement. Clear Channel may issue its subordinated debt securities
from time to time, in one or more series under a subordinated indenture, between
Clear Channel and The Bank of New York, as subordinated trustee, or another
subordinated trustee named in a prospectus supplement. The form of subordinated
indenture is filed as an exhibit to the registration statement. Together the
senior indenture and the subordinated indenture are called the indentures, and
together the senior trustee and the subordinated trustee are called the debt
trustees. None of the indentures will limit the amount of debt securities that
may be issued. The applicable indenture will provide that debt securities may be
issued up to an aggregate principal amount authorized by Clear Channel and may
be payable in any currency or currency unit designated by it or in amounts
determined by reference to an index.
GENERAL
The senior debt securities will be unsecured and will rank equally with
Clear Channel's other unsecured and unsubordinated debt, unless Clear Channel is
required to secure the senior debt securities as described below under
"-- Senior Debt Securities." Clear Channel's obligations under any subordinated
debt securities will be subordinate in right of payment to all of its senior
indebtedness, and will be described in an accompanying prospectus supplement.
Clear Channel will issue debt securities from time to time and offer its debt
securities on terms determined by market conditions at the time of sale.
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Clear Channel may issue its debt securities 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. We will describe the federal
income tax consequences and other special considerations applicable to any
substantially discounted debt securities in the related prospectus supplement.
You should refer to the prospectus supplement for the following terms of
the debt securities offered hereby:
- the designation, aggregate principal amount and authorized denominations
of the debt securities;
- the percentage of the principal amount at which Clear Channel will issue
the debt securities;
- the date or dates on which the debt securities will mature;
- the annual interest rate or rates of the debt securities, or the method
of determining the rate or rates;
- the date or dates on which any interest will be payable, the date or
dates on which payment of any interest will commence and the regular
record dates for the interest payment dates;
- the terms of any mandatory or optional redemption, including any
provisions for any sinking, purchase or other similar funds, or repayment
options;
- the currency, currencies or currency units for which the debt securities
may be purchased and in which the principal, any premium and any interest
may be payable;
- if the currency, currencies or currency units for which the debt
securities may be purchased or in which the principal, any premium and
any interest may be payable is at Clear Channel's election or the
purchaser's election, the manner in which the election may be made;
- if the amount of payments on the debt securities is determined by an
index based on one or more currencies or currency units, or changes in
the price of one or more securities or commodities, the manner in which
the amounts may be determined;
- the extent to which any of the debt securities will be issuable in
temporary or permanent global form, and the manner in which any interest
payable on a temporary or permanent global security will be paid;
- 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;
- information with respect to book-entry procedures, if any;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations with respect to the debt
securities; and
- any other specific terms of the debt securities not inconsistent with the
applicable indenture.
If Clear Channel sells any of the debt securities for one or more foreign
currencies or foreign currency units or if the principal of, premium, if any, or
interest on any series of debt securities will be payable in one or more foreign
currencies or foreign currency units, it will describe the restrictions,
elections, federal income tax consequences, specific terms and other information
with respect to the issue of debt securities and the currencies or currency
units in the related prospectus supplement.
Unless specified otherwise in a prospectus supplement, the principal of,
premium on, and 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. However, Clear Channel may make payment of
interest at its option by check mailed on or before the payment date to the
address of the person entitled to the interest payment as it appears on the
registry books of Clear Channel or its agents.
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Unless specified otherwise in a prospectus supplement, Clear Channel will
issue the debt securities only in fully registered form and in denominations of
$1,000 and any integral multiple of $1,000. No service charge will be made for
any transfer or exchange of any debt securities, but Clear Channel may, except
in specific cases not involving any transfer, require payment of a sufficient
amount to cover any tax or other governmental charge payable in connection with
the transfer or exchange. Unless we specify otherwise in the prospectus
supplement, Clear Channel will pay interest on outstanding debt securities to
holders of record on the date 15 days immediately prior to the date the interest
is to be paid.
Clear Channel's rights and the rights of its creditors, including holders
of debt securities, to participate in any distribution of assets of any of Clear
Channel subsidiary upon its liquidation or reorganization or otherwise is
subject to the prior claims of creditors of the subsidiary, except to the extent
that Clear Channel's claims as a creditor of the subsidiary may be recognized.
Clear Channel's operations are conducted through its subsidiaries and,
therefore, Clear Channel 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 Clear Channel's subsidiaries.
GLOBAL SECURITIES
Clear Channel may issue debt securities of a series in whole or in part in
the form of one or more global securities and will deposit them with or on
behalf of a depositary identified in the prospectus supplement relating to that
series. Clear Channel may issue global securities 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
the global security to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any nominee of the depositary to a successor or any nominee.
The specific terms of the depositary arrangement relating to a series of
debt securities will be described in the prospectus supplement relating to that
series. It is anticipated that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit on its book entry registration and transfer
system the principal amounts of the individual debt securities represented by
the global security to the accounts of persons that have accounts with the
depositary. The accounts will be designated by the dealers, underwriters or
agents with respect to the debt securities or by Clear Channel if the debt
securities are offered and sold directly by it. Ownership of beneficial
interests in a global security will be limited to persons that have accounts
with the applicable depositary participants or persons that hold interests
through participants. Ownership of beneficial interests in the 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 purchasers of securities take physical
delivery of the securities in definitive form. These limits and 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 the global security, the depositary or the nominee will be
considered the sole owner or holder of the debt securities represented by the
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 the global security registered in their names;
- not receive or be entitled to receive physical delivery of any debt
security of that series in definitive form;
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<PAGE> 67
- not be considered the owners or holders thereof under the applicable
indenture governing the 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
registered owner of the global security representing the debt securities.
Neither Clear Channel, the applicable debt trustee for the debt securities, any
Paying Agent, nor the Security Registrar for the debt securities will have any
responsibility or liability for the records relating to or payments made on
account of beneficial ownership interests of the global security for the debt
securities or for maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
Clear Channel 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 the debt securities,
will immediately credit participants' accounts with payments in amounts
proportionate to their beneficial interests in the principal amount of the
global security for the debt securities as shown on the records of the
depositary or its nominee. Clear Channel also expects that payments by
participants to owners of beneficial interests in the global security held
through the 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." The payments will be the
responsibility of those 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 Clear Channel within 90 days, Clear Channel will issue individual
debt securities of that series in exchange for the global security representing
that series of debt securities. In addition, Clear Channel may at any time and
in its sole discretion, subject to any limitations described in the prospectus
supplement relating to the debt securities, determine not to have any debt
securities of a series represented by one or more global securities. In that
event, Clear Channel will issue individual debt securities of that series in
exchange for the global security or Securities representing that series of debt
securities. Further, if Clear Channel 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 that series may, on terms acceptable to Clear
Channel, the applicable debt trustee and the depositary for such global
security, receive individual debt securities of that series in exchange for the
beneficial interests, subject to any limitations described in the prospectus
supplement relating to the 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 the global security
equal in principal amount to the beneficial interest and to have the debt
securities registered in its name. Individual debt securities of the series so
issued will be issued in denominations, unless otherwise specified by Clear
Channel, of $1,000 and integral multiples of $1,000.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Each indenture prohibits Clear Channel's consolidation with or merger into
any other corporation or the transfer of Clear Channel's properties and assets
to any person, unless:
- the successor corporation is organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and
expressly assumes by a supplemental indenture the punctual payment of the
principal of, premium on and interest on, all the outstanding debt
securities and the performance of every covenant in the applicable
indenture to be performed or observed on Clear Channel's part;
- immediately after giving effect to the transaction, no event of default
has happened and is continuing; and
- Clear Channel has delivered to the applicable debt trustee an officers'
certificate and an opinion of counsel, each stating that the
consolidation, merger, conveyance or transfer and the supplemental
indenture comply with the foregoing provisions relating to the
transaction.
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In case of any consolidation, merger, conveyance or transfer, the successor
corporation will succeed to and be substituted for Clear Channel as obligor on
the debt securities, with the same effect as if it had been named as Clear
Channel in the applicable indenture. Unless otherwise specified in a prospectus
supplement, 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 Clear Channel or any Subsidiary (defined
below).
EVENTS OF DEFAULT; WAIVER AND NOTICE OF DEFAULT; DEBT SECURITIES IN FOREIGN
CURRENCIES
An event of default when used in an indenture will mean any of the
following as to any series of debt securities:
- default for 30 days in payment of any interest, or, in the case of the
subordinated indenture, for a period of 90 days;
- default in payment of principal of or any premium at maturity;
- default in payment of any sinking or purchase fund or similar obligation;
- default by Clear Channel in the performance of any other covenant or
warranty contained in the applicable indenture for the benefit of that
series which has not been remedied for a period of 90 days after notice
is given; or
- events of Clear Channel's bankruptcy, insolvency and reorganization.
A default under Clear Channel's other indebtedness 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 if an event of default described in the first
four bullet points above, if the event of default under the fourth bullet point
is with respect to less than all series of debt securities then outstanding, has
occurred and is 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 the series then outstanding, each series acting as a
separate class, may declare the principal or, in the case of original issue
discount securities, the portion specified in the terms thereof, of all
outstanding debt securities of the series and the accrued interest to be due and
payable immediately. Each indenture further provides that if an event of default
described in the fourth or fifth bullet points above, if the event of default
under the fourth bullet point is with respect to all series of debt securities
then outstanding, has occurred and is 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 specified in the
terms thereof, of all debt securities then outstanding and the accrued interest
to be due and payable immediately. However, upon certain conditions the
declarations may be annulled and past defaults, except for defaults in the
payment of principal of, premium on, or interest on, the debt securities and in
compliance with certain covenants, may be waived by the holders of a majority in
aggregate principal amount of the debt securities of the series then
outstanding.
Under each indenture the applicable debt trustee must give notice to the
holders of each series of debt securities of all uncured defaults known to it
with respect to that series within 90 days after a default occurs. The term
"default" includes the events specified above without notice or grace periods.
However, in the case of any default of the type described in the fourth bullet
point above, no notice may be given until at least 90 days after the occurrence
of the event. The debt trustee will be protected in withholding notice if it in
good faith determines that the withholding of notice is in the interests of the
holders of the debt securities, except in the case of default in the payment of
principal of, premium on, or interest on, any of the debt securities, or default
in the payment of any sinking or purchase fund installment or analogous
obligations.
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No holder of any debt securities of any series may institute any action
under either indenture unless:
- the holder has given the debt trustee written notice of a continuing
event of default with respect to that series;
- the holders of not less than 25% in aggregate principal amount of the
debt securities of the series then outstanding have requested the debt
trustee to institute proceedings in respect of the event of default;
- the holder or holders have offered the debt trustee reasonable indemnity
as the debt trustee may require;
- the debt trustee has failed to institute an action for 60 days; and
- no inconsistent direction has been given to the debt trustee during the
60-day period by the holders of a majority in aggregate principal amount
of debt securities of the 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 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 the debt trustee with respect to a series of
debt securities. Each indenture provides that if an event of default occurs and
is continuing, the debt trustee will be required to use the degree of care of a
prudent person in the conduct of that person's own affairs in exercising its
rights and powers under the indenture. Each indenture further provides that the
debt trustee will not be required to expend or risk its own funds in the
performance of any of its duties under the indenture unless it has reasonable
grounds for believing that repayment of the funds or adequate indemnity against
the risk or liability is reasonably assured to it.
Clear Channel must furnish to the debt trustees within 120 days after the
end of each fiscal year a statement signed by one of its officers to the effect
that a review of its activities during the 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 the review, Clear Channel
has complied with all conditions and covenants of the indenture through the year
or, if Clear Channel is in default, specifying the default.
To determine whether the holders of the requisite principal amount of debt
securities have taken action as described above when the debt securities are
denominated in a foreign currency, the principal amount of the debt securities
will be deemed to be that amount of United States dollars that could be obtained
for the principal amount based on the applicable spot rate of exchange as of the
date the action is taken as evidenced to the debt trustee as provided in the
indenture.
To determine whether the holders of the requisite principal amount of debt
securities have taken action as described above when the debt securities are
original issue discount securities, the principal amount of the debt securities
will be deemed to be the portion of the principal amount that would be due and
payable at the time the action is taken upon a declaration of acceleration of
maturity.
MODIFICATION OF THE INDENTURES
The indentures provide that Clear Channel 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 Clear Channel's covenants;
- adding additional events of default;
- establishing the form or terms of any series of debt securities; or
- curing ambiguities or inconsistencies in the indenture or making other
provisions.
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With specific exceptions, the applicable indenture or the rights of the
holders of the debt securities may be modified by Clear Channel 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 the
modification then outstanding, but no modification may be made without the
consent of the holder of each outstanding debt security affected which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any debt security;
- reduce the principal amount of or the interest or any premium on any debt
security;
- change the method of computing the amount of principal of or interest on
any date;
- change any place of payment where, or the currency in which, any debt
security or any premium or interest is payable;
- impair the right to sue for the enforcement of any 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;
- reduce the percentage in principal amount of the outstanding debt
securities of any series where the consent of the holders is required for
any modification, or the consent of the holders is required for any
waiver of compliance with provisions of the applicable indenture or
specific defaults and their consequences provided for in the indenture;
or
- modify any of the provisions of specific sections of the applicable
indenture, including the provisions summarized in this section, except to
increase any percentage or to provide that other provisions of the
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 will generally cease to be of any further effect with
respect to a series of debt securities if Clear Channel delivers all debt
securities of that series, with limited exceptions, for cancellation to the
applicable debt trustee or all debt securities of that series not previously
delivered for cancellation to the applicable debt trustee have become due and
payable or will become due and payable or called for redemption within one year,
and Clear Channel has deposited with the applicable debt trustee as trust funds
the entire amount sufficient to pay at maturity or upon redemption all the debt
securities, no default with respect to the debt securities has occurred and is
continuing on the date of the deposit, and the deposit does not result in a
breach or violation of, or default under, the applicable indenture or any other
agreement or instrument to which Clear Channel is a party.
Clear Channel has a "legal defeasance option" under which it may terminate,
with respect to the debt securities of a particular series, all of its
obligations under the debt securities and the applicable indenture. In addition,
Clear Channel has a "covenant defeasance option" under which it may terminate,
with respect to the debt securities of a particular series, Clear Channel's
obligations with respect to the debt securities under specified covenants
contained in the applicable indenture. If Clear Channel exercises its legal
defeasance option with respect to a series of debt securities, payment of the
debt securities may not be accelerated because of an event of default. If Clear
Channel exercises its covenant defeasance option with respect to a series of
debt securities, payment of the debt securities may not be accelerated because
of an event of default related to the specified covenants.
Clear Channel may exercise its legal defeasance option or its covenant
defeasance option with respect to the debt securities of a series only if:
- Clear Channel deposits in trust with the applicable debt trustee cash or
debt obligations of the United States of America or its agencies or
instrumentalities for the payment of principal, premium and interest with
respect to the debt securities to maturity or redemption;
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- Clear Channel 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 will
provide cash sufficient to pay the principal, premium, and interest when
due with respect to all the debt securities of that series to maturity or
redemption;
- 91 days pass after the deposit is made and during the 91-day period no
default described in the fifth bullet point under "-- Events of Default,
Waiver and Notice Of Default; Debt Securities in Foreign Currencies"
above with respect to Clear Channel occurs that is continuing at the end
of the period,
- no default has occurred and is continuing on the date of the deposit;
- the deposit does not constitute a default under any other agreement
binding on Clear Channel;
- Clear Channel delivers to the applicable debt trustee an opinion of
counsel to the effect that the trust resulting from the deposit does not
constitute a regulated investment company under the Investment Company
Act of 1940;
- Clear Channel has delivered to the applicable debt trustee an opinion of
counsel addressing specific federal income tax matters relating to the
defeasance; and
- Clear Channel delivers to the applicable debt trustee an officers'
certificate and an opinion of counsel stating that all conditions to the
defeasance and discharge of the debt securities of that series have been
complied with.
The applicable debt trustee will hold in trust cash or debt obligations of
the United States of America or its agencies or instrumentalities deposited with
it as described above and will apply the deposited cash and the proceeds from
deposited debt obligations of the United States of America or its agencies or
instrumentalities to the payment of principal, premium, and interest with
respect to the debt securities of the defeased series.
CONCERNING THE DEBT TRUSTEES
Clear Channel will identify the debt trustee for the senior debt securities
and the debt trustee for the subordinated debt securities in the relevant
prospectus supplement. In specific instances, Clear Channel 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 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 those 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. 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 Clear Channel or its affiliated
companies and may engage in commercial transactions with Clear Channel and its
affiliated companies. The initial debt trustee under each indenture is The Bank
of New York, who currently serves as Clear Channel's transfer agent and
registrar for the common stock and is a lender to Clear Channel under its credit
facility.
SENIOR DEBT SECURITIES
In addition to the provisions previously described in this prospectus and
applicable to all debt securities, the following description of Clear Channel's
senior debt securities summarizes the general terms and provisions of its senior
debt securities to which any prospectus supplement may relate. Clear Channel
will describe the specific terms of the senior debt securities offered by any
prospectus supplement and the extent, if any, to which the general provisions
summarized below may apply to any series of its senior debt securities in the
prospectus supplement relating to that series.
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Ranking of Senior Debt Securities
Unless we specify otherwise in a prospectus supplement for a particular
series of debt securities, all series of senior debt securities will be Clear
Channel's senior indebtedness and will be direct, unsecured obligations of Clear
Channel ranking equally with all of Clear Channel's other unsecured and
unsubordinated indebtedness. Because Clear Channel is a holding company, the
debt securities will be effectively subordinated to all existing and future
liabilities, including indebtedness, of Clear Channel's subsidiaries. See
"Holding Company Structure."
Covenants
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. Clear Channel will not, nor will it permit any
Restricted Subsidiary to create, assume or incur
- any Mortgage on any stock or indebtedness of any Restricted Subsidiary to
secure any Debt of Clear Channel or any other person, other than the
senior debt securities; or
- any Mortgage on any Principal Property to secure any Debt of Clear
Channel or any other person, other than the senior debt securities,
without making provision for all the outstanding senior debt securities to be
secured equally with the Debt.
Any Mortgage on stock or indebtedness of a corporation existing at the time
a corporation becomes a Subsidiary or at the time stock or indebtedness of a
Subsidiary is acquired, and, with specific exceptions, any extension, renewal or
replacement of any Mortgage, will generally be excluded from this restriction.
The following permitted mortgages will be excluded from the restriction
referred to in the preceding paragraph:
- any Mortgage on property owned or leased by a corporation existing at the
time the corporation becomes a Restricted Subsidiary;
- any Mortgage on property existing at the time of its acquisition or to
secure payment of any part of the purchase price thereof or any Debt
incurred to finance the purchase thereof;
- any Mortgage on property to secure any part of the cost of development,
construction, alteration, repair or improvement of the property, or Debt
incurred to finance the cost;
- any Mortgage securing Debt of a Restricted Subsidiary owing to Clear
Channel or to another Restricted Subsidiary;
- any Mortgage existing on the date of the senior indenture;
- any Mortgage on Clear Channel's property or property of 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 the Mortgage;
- any Mortgage on any property subsequently acquired by Clear Channel or
any Restricted Subsidiary, concurrently with the acquisition or within
120 days, to secure or provide for the payment of any part of the
purchase price of the property, or any Mortgage assumed by Clear Channel
or any Restricted Subsidiary on any property subsequently acquired by
Clear Channel or any Restricted Subsidiary which was existing at the time
of the acquisition, provided that the amount of any Indebtedness secured
by any Mortgage created or assumed does not exceed the cost to Clear
Channel or any Restricted Subsidiary of the property covered by the
Mortgage; and
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- any extension, renewal or replacement of any Mortgage referred to in the
previous seven bullet points, provided that the principal amount of Debt
secured thereby may not exceed the principal amount of Debt so secured at
the time of the extension, renewal or replacement, and provided that the
Mortgage must be limited to all or part of the property which secured the
Mortgage so extended, renewed or replaced.
Notwithstanding the above, Clear Channel may, and may permit any Restricted
Subsidiary to, create, assume or incur any Mortgage on any Principal Property
without equally securing the senior debt securities if the aggregate amount of
all Debt then outstanding secured by the Mortgage and all similar Mortgages does
not exceed 15% of Clear Channel's total consolidated shareholders' equity,
including preferred stock, as shown on the audited consolidated balance sheet
contained in its latest annual report to shareholders. However, Debt secured by
Permitted Mortgages will not be included in the amount of the secured Debt.
Sale and Leaseback Transactions. Clear Channel will not, nor will it permit
any Restricted Subsidiary to, enter into any sale-leaseback transaction
providing for the leasing by Clear Channel or a Restricted Subsidiary of any
Principal Property, except for temporary leases for a term of not more than
three years, which has been or is to be sold or transferred by Clear Channel or
the Restricted Subsidiary to the person, unless:
- the sale-leaseback transaction occurs within the later of 120 days from
the date of acquisition of the Principal Property or the date of the
completion of construction or commencement of full operations on the
Principal Property, or
- within 120 days after the sale-leaseback transaction, Clear Channel
applies or causes to be applied to the retirement of its Funded Debt or
the Funded Debt of any Subsidiary, other than its Funded Debt which is
subordinate in right of payment to the senior debt securities, an amount
not less than the net proceeds of the sale of the Principal Property.
Notwithstanding the above provisions, Clear Channel may, and may permit any
Restricted Subsidiary to, effect any sale-leaseback transaction involving any
Principal Property, provided that the net sale proceeds from the sale-leaseback
transaction, together with all Debt secured by Mortgages other than Permitted
Mortgages, does not exceed 15% of Clear Channel's total consolidated
shareholders' equity as shown on the audited consolidated balance sheet
contained in Clear Channel's latest annual report to shareholders.
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 the person, and all
indebtedness incurred or assumed by the person in connection with the
acquisition of any business, property or asset, which in each case matures more
than one year after, or which 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 the person for a
period ending more than one year after the date as of which Funded Debt is being
determined. However, Funded Debt does not include:
- any indebtedness for the payment, redemption or satisfaction of which
money, or evidences of indebtedness, if permitted under the instrument
creating or evidencing the indebtedness, in the necessary amount has been
irrevocably deposited in trust with a trustee or proper depository either
on or before the maturity or redemption date thereof;
- any indebtedness of the person to any of its Subsidiaries or of any
Subsidiary to the person or any other Subsidiary; or
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- any indebtedness incurred in connection with the financing of operating,
construction or acquisition projects, provided that the recourse for the
indebtedness is limited to the assets of the projects.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means any radio broadcasting, television broadcasting,
outdoor advertising or live entertainment property located in the United States
owned or leased by Clear Channel or any of its subsidiaries, unless, in the
opinion of Clear Channel's Board of Directors, any of the properties are not in
the aggregate of material importance to the total business conducted by Clear
Channel and its Subsidiaries as an entirety.
"Restricted Subsidiary" means each Subsidiary as of the date of the
indenture and each Subsidiary created or acquired after the date of the
indenture, unless expressly excluded by resolution of Clear Channel's Board of
Directors before, or within 120 days following, the creation or acquisition.
"Subsidiary", when used with respect to Clear Channel, means any
corporation of which a majority of the outstanding voting stock is owned,
directly or indirectly, by Clear Channel or by one or more other Subsidiaries,
or both.
SUBORDINATED DEBT SECURITIES
In addition to the provisions previously described in this prospectus and
applicable to all debt securities, the following description of Clear Channel's
subordinated debt securities summarizes the general terms and provisions of its
subordinated debt securities to which any prospectus supplement may relate. We
will describe the specific terms of Clear Channel's subordinated debt securities
offered by any prospectus supplement and the extent, if any, to which the
general provisions summarized below may apply to any series of subordinated debt
securities in the prospectus supplement relating to that series.
Ranking of Subordinated Debt Securities
The subordinated debt securities will be subordinated in right of payment
to Clear Channel's other indebtedness 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 of Clear Channel's senior indebtedness and equally
with its trade creditors. Clear Channel may not make payment of principal of,
premium, if any, or interest on the subordinated debt securities and may not
acquire or make payment on account of any sinking fund for, the subordinated
debt securities 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 has been made or duly provided for in cash or in a manner
satisfactory to the holders of the senior indebtedness. In addition, the
subordinated indenture provides that if a default has occurred giving the
holders of the senior indebtedness the right to accelerate the maturity of that
senior indebtedness, or an event has occurred which, with the giving of notice,
or lapse of time, or both, would constitute an event of default, then unless and
until that event has been cured or waived or has ceased to exist, no payment 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. Clear Channel will 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 Clear Channel 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 the default and notice thereof. Upon any distribution of
assets in connection with Clear Channel's dissolution, liquidation or
reorganization, 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 Clear Channel's
insolvency, holders of the subordinated debt securities may recover ratably less
than Clear Channel's senior creditors.
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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 incurred or created after the execution:
- Clear Channel's indebtedness for money borrowed by it, 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 Clear Channel;
- obligations with respect to letters of credit;
- Clear Channel's indebtedness constituting a guarantee of indebtedness of
others of the type referred to in the preceding two bullet points; or
- renewals, extensions or refundings of any of the indebtedness referred to
in the preceding three bullet points 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, the indebtedness or the
renewal, extension or refunding thereof is not superior in right of
payment to the subordinated debt securities.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description of Clear Channel's junior subordinated debt
securities summarizes the general terms and provisions of its junior
subordinated debt securities to which any prospectus supplement may relate.
Clear Channel will describe the specific terms of the junior subordinated debt
securities and the extent, if any, to which the general provisions summarized
below may apply to any series of its junior subordinated debt securities in the
prospectus supplement relating to that series.
Clear Channel may issue its junior subordinated debt securities from time
to time, in one or more series under a junior subordinated indenture, between
Clear Channel and The Bank of New York, as junior subordinated trustee, or
another junior subordinated trustee named in a prospectus supplement. The form
of junior subordinated indenture is filed as an exhibit to the registration
statement.
GENERAL
The junior subordinated debt securities will be unsecured, junior
subordinated obligations of Clear Channel. The junior subordinated indenture
does not limit the amount of additional indebtedness Clear Channel or any of its
subsidiaries may incur. Since Clear Channel is a holding company, Clear
Channel'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 Clear
Channel 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. Clear Channel will issue junior subordinated debt
securities from time to time and offer its junior subordinated debt securities
on terms determined by market conditions at the time of sale.
In the event junior subordinated debt securities are issued to a Clear
Channel Trust or a trustee of a Clear Channel Trust in connection with the
issuance of preferred securities by that Clear Channel Trust, the junior
subordinated debt securities subsequently may be distributed pro rata to the
holders of the preferred securities in connection with the dissolution of the
Clear Channel Trust upon the occurrence of the events described in the
applicable prospectus supplement. Only one series of junior subordinated debt
securities will be issued to a Clear Channel Trust or a trustee of a Clear
Channel Trust in connection with the issuance of preferred securities by that
Clear Channel Trust.
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You should refer to the applicable prospectus supplement for the following
terms of the junior subordinated debt securities offered hereby:
- the designation, aggregate principal amount and authorized denominations
of the junior subordinated debt securities;
- any limit on the aggregate principal amount of the junior subordinated
debt securities;
- the date or dates on which the junior subordinated debt securities will
mature;
- the annual interest rate or rates of the junior subordinated debt
securities, or the method of determining the rate or rates;
- the date or dates on which any interest will be payable, the date or
dates on which payment of any interest will commence and the regular
record dates for the interest payment dates;
- the terms of any mandatory or optional redemption, including any
provisions for any sinking, purchase or other similar funds or repayment
options;
- the currency, currencies or currency units for which the junior
subordinated debt securities may be purchased and the currency,
currencies or currency units in which the principal, any premium and any
interest may be payable;
- if the currency, currencies or currency units for which the junior
subordinated debt securities may be purchased or in which the principal,
any premium and any interest may be payable is at Clear Channel's
election or the purchaser's election, the manner in which the election
may be made;
- if the amount of payments on the junior subordinated debt securities is
determined by 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 the amounts may be
determined;
- the extent to which any of the junior subordinated 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;
- the terms and conditions upon which the junior subordinated debt
securities may be convertible into or exchanged for common stock,
preferred stock, or indebtedness or other securities of any kind;
- information with respect to book-entry procedures, if any;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations with respect to the junior
subordinated debt securities; and
- any other specific terms of the junior subordinated debt securities not
inconsistent with the junior subordinated indenture.
If Clear Channel sells any of the junior subordinated debt securities for
one or more foreign currencies or foreign currency units or if the principal of,
premium, if any, or interest on any series of junior subordinated debt
securities will be payable in one or more foreign currencies or foreign currency
units, we will describe the restrictions, elections, federal income tax
consequences, specific terms and other information with respect to the issue of
junior subordinated debt securities and the currencies or currency units in the
applicable prospectus supplement.
Unless specified otherwise in the prospectus supplement, the principal of,
premium on, and interest on the junior subordinated debt securities will be
payable, and the junior subordinated debt securities will be transferable, at
the Corporate Trust Office of the junior subordinated indenture trustee in New
York, New York. However, Clear Channel may make payment of interest at its
option by check mailed on or before the payment date to the address of the
person entitled to the interest payment as it appears on the registry books of
Clear Channel or its agents.
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Unless specified otherwise in the prospectus supplement, Clear Channel will
issue the junior subordinated debt securities only in fully registered form and
in denominations of $1,000 and any integral multiple of $1,000. No service
charge will be made for any transfer or exchange of any junior subordinated debt
securities, but Clear Channel may, except in specific cases not involving any
transfer, require payment of a sufficient amount to cover any tax or other
governmental charge payable in connection with the transfer or exchange. Unless
specified otherwise in the prospectus supplement, Clear Channel will pay
interest on outstanding junior subordinated debt securities to holders of record
on the date 15 days immediately prior to the date the interest is to be paid.
GLOBAL SECURITIES
Clear Channel may issue junior subordinated debt securities of a series 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 identified in the prospectus
supplement relating to that series. Clear Channel may issue global securities
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 junior
subordinated debt securities represented thereby, a global security may not be
transferred except as a whole by the depositary for the global security to a
nominee of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or by the depositary or any nominee of the
depositary to a successor or any nominee.
The specific terms of the depositary arrangement relating to a series of
junior subordinated debt securities will be described in the prospectus
supplement relating to that series.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The junior subordinated indenture prohibits Clear Channel's consolidation
with or merger into any other corporation or the transfer of its properties and
assets to any person, unless:
- the successor corporation is organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and
expressly assumes by a supplemental indenture the punctual payment of the
principal of, premium on and interest on, all the outstanding junior
subordinated debt securities and the performance of every covenant in the
junior subordinated indenture to be performed or observed on Clear
Channel's part;
- immediately after giving effect to the transaction, no event of default
has happened and is continuing; and
- Clear Channel has delivered to the junior subordinated indenture trustee
an officers' certificate and an opinion of counsel, each stating that the
consolidation, merger, conveyance or transfer and the supplemental
indenture comply with the foregoing provisions relating to the
transaction.
In case of any consolidation, merger, conveyance or transfer, the successor
corporation will succeed to and be substituted for Clear Channel as obligor on
the junior subordinated debt securities, with the same effect as if it had been
named as Clear Channel in the junior subordinated indenture. Other than the
restrictions on Mortgages described below, the junior subordinated indenture 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 Clear Channel or any
Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE OF DEFAULT; JUNIOR SUBORDINATED DEBT
SECURITIES IN FOREIGN CURRENCIES
An event of default when used in a junior subordinated indenture will mean
any of the following as to any series of junior subordinated debt securities:
- default for 90 days in payment of any interest on the junior subordinated
debt securities;
- default in payment of principal or any premium at maturity;
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- default in payment of any sinking or purchase fund or similar obligation;
- default by Clear Channel in the performance of any other covenant or
warranty contained in the junior subordinated indenture for the benefit
of that series which has not been remedied for a period of 90 days after
notice is given; or
- events of Clear Channel's bankruptcy, insolvency and reorganization.
A default under Clear Channel's other indebtedness will not be a default
under the junior subordinated indenture and a default under one series of junior
subordinated debt securities will not necessarily be a default under another
series.
The junior subordinated indenture provides that if an event of default
described in the first four bullet points above, if the event of default under
the fourth bullet point is with respect to less than all series of junior
subordinated debt securities then outstanding, has occurred and is 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 the series then outstanding, each series acting
as a separate class, may declare the principal or, in the case of original issue
discount securities, the portion specified in the terms thereof, of all
outstanding junior subordinated debt securities of that series and the accrued
interest to be due and payable immediately. The junior subordinated indenture
further provides that if an event of default described in the fourth or fifth
bullet points above, if the event of default under the fourth bullet point is
with respect to all series of junior subordinated debt securities then
outstanding, has occurred and is continuing, either the junior subordinated debt
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 specified in the terms thereof, of all junior subordinated debt
securities then outstanding and the accrued interest to be due and payable
immediately. However, upon certain conditions the declarations may be annulled
and past defaults, except for defaults in the payment of principal of, premium
on, or interest on, the 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 that series then
outstanding, subject to the consent of the holders of the preferred securities
and the common securities of any Clear Channel Trust as required by it
declaration of trust in the event that the junior subordinated debt securities
are held as assets of the Clear Channel Trust prior to a security exchange.
When used with respect to the junior subordinated debt securities which are
held as trust assets of a Clear Channel Trust pursuant to the declaration of
trust of the Clear Channel Trust, the term security exchange means the
distribution of the junior subordinated debt securities held by the Clear
Channel Trust in exchange for the preferred securities and the common securities
of the Clear Channel Trust in dissolution of the Clear Channel Trust pursuant to
the declaration of trust of the Clear Channel Trust.
Under the junior subordinated indenture the junior subordinated indenture
trustee must give notice to the holders of each series of junior subordinated
debt securities of all uncured defaults known to it with respect to that series
within 90 days after a default occurs. The term "default" includes the events
specified above without notice or grace periods. However, in the case of any
default of the type described in the fourth bullet point above, no notice may be
given until at least 90 days after the occurrence of the event. The junior
subordinated debt trustee will be protected in withholding notice if it in good
faith determines that the withholding of notice is in the interests of the
holders of the junior subordinated debt securities, except in the case of
default in the payment of principal of, premium on, or interest on, any of the
junior subordinated debt securities, or default in the payment of any sinking or
purchase fund installment or analogous obligations.
No holder of any junior subordinated debt securities of any series may
institute any action under either indenture unless:
- the holder has given the junior subordinated indenture trustee written
notice of a continuing event of default with respect to that series;
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- the holders of not less than 25% in aggregate principal amount of the
junior subordinated debt securities of that series then outstanding have
requested the junior subordinated indenture trustee to institute
proceedings in respect of the event of default;
- the holder or holders have offered the junior subordinated indenture
trustee reasonable indemnity as the trustee may require;
- the junior subordinated indenture trustee has failed to institute an
action for 60 days after the notice, request and indemnity have been made
as described above; and
- no inconsistent direction has been given to the junior subordinated
indenture trustee during the 60-day period by the holders of a majority
in aggregate principal amount of junior subordinated debt securities of
the series then outstanding, subject to the consent of the holders of the
preferred securities and the common securities of any Clear Channel Trust
as required by it declaration of trust in the event that the junior
subordinated debt securities are held as assets of the Clear Channel
Trust prior to a security exchange.
The holders of a majority in aggregate principal amount of the junior
subordinated debt securities of any series affected and then outstanding,
subject to the consent of the holders of the preferred securities and the common
securities of any Clear Channel Trust as required by its declaration of trust in
the event that the junior subordinated debt securities are held as assets of the
Clear Channel Trust prior to a security exchange, will have the right, subject
to limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the junior subordinated indenture trustee
or exercising any trust or power conferred on the junior subordinated indenture
trustee with respect to the series of junior subordinated debt securities. The
junior subordinated indenture provides that if an event of default occurs and is
continuing, the junior subordinated indenture trustee will be required to use
the degree of care of a prudent person in the conduct of the person's own
affairs in exercising its rights and powers under the indenture. The junior
subordinated indenture further provides that the junior subordinated indenture
trustee will not be required to expend or risk its own funds in the performance
of any of its duties under the indenture unless it has reasonable grounds for
believing that repayment of the funds or adequate indemnity against the risk or
liability is reasonably assured to it.
Clear Channel must furnish to the junior subordinated indenture trustees
within 120 days after the end of each fiscal year a statement signed by one of
its officers to the effect that a review of its activities during the 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 the review, Clear Channel has complied
with all conditions and covenants of the indenture through the year or, if Clear
Channel is in default, specifying the default.
If any junior subordinated debt securities are denominated in a 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 described in this prospectus, the
principal amount of the junior subordinated debt securities will be deemed to be
that amount of United States dollars that could be obtained for the principal
amount on the basis of the spot rate of exchange into United States dollars for
the currency in which the junior subordinated debt securities are denominated as
of the date the taking of the action by the holders of the requisite principal
amount is evidenced to the junior subordinated indenture trustee as provided in
the junior subordinated indenture.
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 described in this prospectus, the principal amount of the junior
subordinated debt securities will be deemed to be the portion of the principal
amount that would be due and payable at the time of the taking of the action
upon a declaration of acceleration of maturity thereof.
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MODIFICATION OF THE JUNIOR SUBORDINATED INDENTURE
The junior subordinated indenture provides that Clear Channel 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 Clear Channel's covenants, adding
additional events of default, establishing the form or terms of any series of
junior subordinated debt securities or curing ambiguities or inconsistencies in
the indenture or making other provisions.
With specific exceptions, the junior subordinated indenture or the rights
of the holders of the junior subordinated debt securities may be modified by
Clear Channel 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 the modification then
outstanding, subject to the consent of the holders of the preferred securities
and the common securities of any Clear Channel Trust as required by its
declaration of trust in the event that the junior subordinated debt securities
are held as assets of the Clear Channel Trust prior to a security exchange, but
no modification may be made without the consent of the holder of each
outstanding junior subordinated debt security affected, subject to the consent
of the holders of the preferred securities and the common securities of any
Clear Channel Trust as required by its declaration of trust in the event that
the junior subordinated debt securities are held as assets of the Clear Channel
Trust prior to a security exchange, which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any junior subordinated debt security;
- reduce the principal amount of or the interest or any premium on any
junior subordinated debt security;
- change the method of computing the amount of principal of or interest on
any date;
- change any place of payment where, or the currency in which, any junior
subordinated debt security or any premium or interest is payable;
- impair the right to sue for the enforcement of any 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;
- reduce the percentage in principal amount of the outstanding junior
subordinated debt securities of any series where the consent of the
holders is required for any modification, or the consent of the holders
is required for any waiver of compliance with the provisions of the
junior subordinated indenture or specific defaults and their consequences
provided for in the indenture; or
- modify any of the provisions of specific sections of the junior
subordinated indenture, including the provisions summarized in this
section, except to increase any percentage or to provide that other
provisions of the indenture cannot be modified or waived without the
consent of the holder of each outstanding debt security affected thereby.
SATISFACTION AND DISCHARGE OF THE JUNIOR SUBORDINATED INDENTURE; DEFEASANCE
The junior subordinated indenture will generally cease to be of any further
effect with respect to a series of junior subordinated debt securities if Clear
Channel delivers all junior subordinated debt securities of that series, with
limited exceptions, for cancellation to the junior subordinated indenture
trustee or all junior subordinated debt securities of that series not previously
delivered for cancellation to the junior subordinated indenture trustee have
become due and payable or will become due and payable or called for redemption
within one year, and Clear Channel has deposited with the junior subordinated
indenture trustee as trust funds the entire amount sufficient to pay at maturity
or upon redemption all the junior subordinated debt securities, no default with
respect to the junior subordinated debt securities has occurred and is
continuing on the date of the deposit, and the deposit does not result in a
breach or violation of, or default under, the junior subordinated indenture or
any other agreement or instrument to which Clear Channel is a party.
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Clear Channel has a "legal defeasance option" under which it may terminate,
with respect to the junior subordinated debt securities of a particular series,
all of its obligations under the junior subordinated debt securities and the
junior subordinated indenture. In addition, Clear Channel has a "covenant
defeasance option" under which it may terminate, with respect to the junior
subordinated debt securities of a particular series, its obligations with
respect to the junior subordinated debt securities under specified covenants
contained in the junior subordinated indenture. If Clear Channel exercises its
legal defeasance option with respect to a series of junior subordinated debt
securities, payment of the junior subordinated debt securities may not be
accelerated because of an event of default. If Clear Channel exercises its
covenant defeasance option with respect to a series of junior subordinated debt
securities, payment of the junior subordinated debt securities may not be
accelerated because of an event of default related to the specified covenants.
Clear Channel may exercise its legal defeasance option or its covenant
defeasance option with respect to the junior subordinated debt securities of a
series only if:
- Clear Channel deposits in trust with the junior subordinated indenture
trustee cash or debt obligations of the United States of America or its
agencies or instrumentalities for the payment of principal, premium and
interest with respect to the junior subordinated debt securities to
maturity or redemption;
- Clear Channel 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 will provide cash sufficient to pay the principal,
premium, and interest when due with respect to all the junior
subordinated debt securities of that series to maturity or redemption;
- 91 days pass after the deposit is made and during the 91-day period no
default described in the fifth bullet point under "-- Events of Default,
Waiver and Notice of Default; Junior Subordinated Debt Securities in
Foreign Currencies" above with respect to Clear Channel occurs that is
continuing at the end of the period,
- no default has occurred and is continuing on the date of the deposit;
- the deposit does not constitute a default under any other agreement
binding on Clear Channel;
- Clear Channel delivers to the junior subordinated indenture trustee an
opinion of counsel to the effect that the trust resulting from the
deposit does not constitute a regulated investment company under the
Investment Company Act of 1940;
- Clear Channel has delivered to the junior subordinated indenture trustee
an opinion of counsel addressing specific federal income tax matters
relating to the defeasance; and
- Clear Channel delivers to the junior subordinated indenture trustee an
officers' certificate and an opinion of counsel stating that all
conditions to the defeasance and discharge of the junior subordinated
debt securities of that series have been complied with.
The junior subordinated indenture trustee will hold in trust cash or debt
obligations of the United States of America or its agencies or instrumentalities
deposited with it as described above and will apply the deposited cash and the
proceeds from deposited debt obligations of the United States of America or its
agencies or instrumentalities to the payment of principal, premium, 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 specific
instances, Clear Channel or the holders of a majority of the then outstanding
principal amount of the junior subordinated debt securities issued under an
indenture may remove the junior subordinated indenture trustee and appoint a
successor junior subordinated
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indenture trustee. The junior subordinated indenture trustee may become the
owner or pledgee of any of the junior subordinated debt securities with the same
rights, subject to 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 those 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. 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 Clear Channel
or its affiliated companies and may engage in commercial transactions with Clear
Channel and its affiliated companies. The initial junior subordinated indenture
trustee under the junior subordinated indenture is The Bank of New York, who
currently serves as Clear Channel's transfer agent and registrar for the common
stock and is a lender to Clear Channel under its credit facility.
CERTAIN COVENANTS OF CLEAR CHANNEL APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If junior subordinated debt securities are issued to a Clear Channel Trust
in connection with the issuance of preferred securities by the Clear Channel
Trust, Clear Channel covenants in the junior subordinated indenture that, so
long as the preferred securities of the Clear Channel Trust remain outstanding,
Clear Channel 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 the time
- Clear Channel is in default with respect to its guarantee payments or
other payment obligations under the related guarantee;
- an event of default with respect to the junior subordinated debt
securities has occurred; or
- in the event that junior subordinated debt securities are issued to the
applicable Clear Channel Trust in connection with the issuance of
preferred securities by the Clear Channel Trust, Clear Channel has given
notice of its election to defer payments of interest on the junior
subordinated debt securities by extending the interest payment period as
provided in the terms of the junior subordinated debt securities and the
period, or any extension thereof, is continuing.
However, the foregoing restrictions will not apply to
- dividends, redemptions, purchases, acquisitions, distributions or
payments made by Clear Channel by way of issuance of shares of its
capital stock;
- any declaration of a dividend under a shareholder rights plan or in
connection with the implementation of a shareholder rights plan, the
issuance of Clear Channel's capital stock under a shareholder rights plan
or the redemption or repurchase of any right distributed pursuant to a
shareholder rights plan;
- payments of accrued dividends by Clear Channel upon the redemption,
exchange or conversion of any preferred stock as may be outstanding from
time to time in accordance with the terms of the preferred stock;
- cash payments made by Clear Channel 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
the preferred stock;
- payments under the guarantees; or
- purchases of common stock related to the issuance of common stock or
rights under any of Clear Channel'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.
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In addition, if junior subordinated debt securities are issued to a Clear
Channel Trust in connection with the issuance of preferred securities by the
Clear Channel Trust, for so long as the preferred securities of the Clear
Channel Trust remain outstanding, Clear Channel has agreed
- to remain the sole direct or indirect owner of all the outstanding common
securities issued by the Clear Channel Trust and not to cause or permit
the common securities to be transferred except to the extent permitted by
the declaration of the Clear Channel Trust; provided that any of Clear
Channel's permitted successors under the junior subordinated indenture
may succeed to its ownership of the common securities;
- to comply fully with all its obligations and agreements under the
declaration; and
- not to take any action which would cause the Clear Channel 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 Clear Channel's other indebtedness to the extent set forth
in the applicable prospectus supplement.
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 of Clear Channel's senior indebtedness and will
rank equally with its 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 the senior indebtedness. In addition, the junior subordinated
indenture provides that if a default has occurred giving the holders of the
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 an event of default, then unless and until that event has been cured
or waived or has 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. Clear Channel will 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 Clear Channel 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 the default and
notice thereof. Upon any distribution of Clear Channel's assets in connection
with its dissolution, liquidation or reorganization, 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 Clear Channel's insolvency, holders of
the junior subordinated debt securities may recover ratably less than Clear
Channel's senior creditors.
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 incurred or created after the execution
- Clear Channel's indebtedness for money borrowed by it, including purchase
money obligations with an original maturity in excess of one year, or
evidenced by securities, notes, bankers' acceptances or other corporate
debt securities or similar instruments issued by Clear Channel other than
the junior subordinated debt securities;
- obligations with respect to letters of credit;
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- Clear Channel's indebtedness constituting a guarantee of indebtedness of
others of the type referred to in the preceding two bullet points; or
- renewals, extensions or refundings of any of the indebtedness referred to
in the preceding three bullet points 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, the indebtedness or the
renewal, extension or refunding thereof is not superior in right of
payment to the junior subordinated debt securities.
DESCRIPTION OF PREFERRED STOCK
Clear Channel's board of directors may issue up to 2,000,000 shares of
Class A preferred stock and up to 8,000,000 shares of Class B preferred stock.
Either class of preferred stock may be issued in one or more series, and the
rights, preferences, privileges and qualifications of the preferred stock may be
fixed by the board of directors without any further vote or action by the
shareholders. However, shares of Class B preferred stock will not be entitled to
more than one vote per share when the shares are voted as a class with common
shareholders. In addition, the board of directors and management of Clear
Channel have undertaken not to issue, without prior shareholder approval, Class
B preferred stock
- for any defensive or anti-takeover purpose;
- to implement any shareholders' rights plan; or
- with features intended to make any attempted acquisition of Clear Channel
more difficult or costly.
However, the restrictions do not apply to the 2,000,000 shares of Class A
preferred stock which are currently authorized.
The issuance of either class of preferred stock could decrease the amount
of earnings and assets available for distribution to common shareholders. In
addition, the issuance of either class of preferred stock could adversely affect
the rights and powers, including voting rights, of common shareholders and may
have the effect of delaying, deferring or preventing a change in control of
Clear Channel. No shares of either class of preferred stock have ever been
issued. The particular terms of any series of preferred stock will be described
in the applicable prospectus supplement.
DESCRIPTION OF COMMON STOCK
Clear Channel's board of directors has the authority to issue up to
1,500,000,000 shares of common stock. As of March 31, 2000, 338,609,503 shares
of common stock were outstanding. Common shareholders are entitled to one vote
per share on all matters submitted to a vote of shareholders. In addition common
stockholders may receive dividends, if any, on a pro rata basis that may be
declared from time to time by the board of directors from legally available
funds. However, the payment of any dividends on shares of common stock would be
subject to the payment of any preferential dividends on any preferred stock that
may be outstanding. Upon liquidation, dissolution or winding up of Clear
Channel, common shareholders are entitled to share ratably in any assets
available for distribution to shareholders after payment of all Clear Channel's
obligations and all preferential distributions payable of the holders of any
shares of preferred stock then outstanding.
Common 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, Clear Channel and several of its shareholders at the time,
including L. Lowry Mays and B.J. McCombs, entered into a Buy-Sell Agreement
restricting the disposition of the outstanding shares
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of common stock owned by L. Lowry Mays and B.J. McCombs and their heirs, legal
representatives, successors and assigns. The Buy-Sell Agreement provides that in
the event that L. Lowry Mays, B.J. McCombs or their heirs, legal
representatives, successors and assigns desire to dispose of their shares, other
than by disposition by will or intestacy or through gifts to the party's spouse
or children, the shares must be offered for a period of 30 days to Clear
Channel. Any shares not purchased by Clear Channel must then be offered for a
period of 30 days to the other parties to the Buy-Sell Agreement. If all of the
offered shares are not purchased by Clear Channel or the other parties to the
Buy-Sell Agreement, the party offering his shares may sell them to a third party
during the following 90-day period at a price and on terms not more favorable
than those offered to Clear Channel and the other parties. In addition, L. Lowry
Mays, B.J. McCombs or their heirs, legal representatives, successors and assigns
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 sale that all parties
to the Buy-Sell Agreement will be offered the same price and terms for their
shares. The Buy-Sell Agreement will continue in effect following any offering
under this prospectus and may preserve the control of the present principal
shareholders.
TEXAS BUSINESS COMBINATION LAW
Clear Channel is governed by the provisions of the Texas Business
Corporation Act. The act imposes a special voting requirement for the approval
of specific business combinations and related party transactions between public
corporations and affiliated stockholders unless the board of directors of the
corporation approves the transaction or the acquisition of shares by the
affiliated stockholder prior to the affiliate stockholders becoming an
affiliated stockholder. The act prohibits specific mergers, sales of assets,
reclassifications and other transactions between stockholders beneficially
owning 20% or more of the outstanding stock of a Texas public corporation for a
period of three years following the stockholder acquiring shares representing
20% or more of the corporation's voting power unless two-thirds of the
unaffiliated stockholders approve the transaction at a meeting held no earlier
than six months after the stockholder acquires that ownership. A vote of
stockholders is not necessary if the board of directors approves the transaction
or approves the purchase of shares by the affiliated stockholder before the
affiliated stockholder acquires beneficial ownership of 20% of the shares, or if
the affiliated stockholder was an affiliated stockholder before December 31,
1996, and continued as such through the date of the transaction.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act of
1934 on ownership of common stock by aliens, Clear Channel's bylaws were amended
effective December 31, 1983 to provide that
- not more than one-fifth of the shares outstanding will 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;
- Clear Channel will 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
owned of record or voted by aliens;
- no person who is an alien may be elected or serve as an officer or
director of Clear Channel; and
- if the stock records of Clear Channel at any time reflect one-fifth alien
ownership, no transfers of additional shares to aliens will be made and,
if it is found that any additional shares are in fact held by or for the
account of an alien, the shares will not be entitled to vote, to receive
dividends or to have any other rights.
An alien owning shares in excess of one-fifth of the total number of
outstanding shares will be required to transfer them to a United States citizen
or to Clear Channel. This restriction will be applicable to any shares of common
stock offered under this prospectus and to the issuance or transfer of the
shares
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after the date of this prospectus. Clear Channel's stock certificates may bear a
legend setting forth this restriction. Since the bylaws were amended, the
Communications Act has been revised to remove the limitations on alien officers
and directors.
DESCRIPTION OF WARRANTS
Clear Channel 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 the 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 Clear Channel 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 will act solely as an agent of Clear Channel 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.
GENERAL
If warrants are offered, the prospectus supplement will describe the terms
of the warrants, including the following:
- the offering price;
- the currency, currencies or currency units for which warrants may be
purchased;
- 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 the debt securities or junior subordinated debt securities
may be purchased upon such exercise;
- the designation, number of shares and terms of the preferred stock
purchasable upon exercise of the preferred stock warrants and the price
at which the shares of preferred stock may be purchased upon such
exercise;
- the designation, number of shares and terms of the common stock
purchasable upon exercise of the common stock warrants and the price at
which the shares of common stock may be purchased upon such exercise;
- 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 debt
security, junior subordinated debt security or share of preferred stock
or common stock;
- 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;
- the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
- whether the warrants will be issued in registered or bearer form;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations relating to the warrants; and
- 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
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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 various securities purchasable upon the 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
the exercise or to enforce the covenants in the indenture or the junior
subordinated indenture or to receive payments of dividends, if any, on the
preferred stock or common stock purchasable upon the exercise or to exercise any
applicable right to vote. If Clear Channel maintains the ability to reduce the
exercise price of any stock warrant and the right is triggered, it will comply
with the federal securities laws, including Rule 13e-4 under the Exchange Act of
1934, to the extent applicable.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase a principal amount of debt
securities or junior subordinated debt securities or a number of shares of
preferred stock or common stock at the exercise price as will in each case be
set forth in, or calculable from, the prospectus supplement relating to the
warrant. Warrants may be exercised at the times that are set forth in the
prospectus supplement relating to the warrants. After the close of business on
the date on which the warrant expires, or any later date to which Clear Channel
may extend the expiration date, unexercised warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in a prospectus supplement relating thereto, warrants may be exercised by
delivery to the warrant agent of the certificate evidencing the 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 the 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 the 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, Clear Channel 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 the exercise. If fewer than
all of the warrants represented by a 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 specific 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, Clear Channel 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. Clear Channel may, at its option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of stock warrants, but Clear Channel will pay the cash value of any
fractional shares otherwise issuable. In case of any consolidation, merger, or
sale or conveyance of the property of Clear Channel as an entirety or
substantially as an entirety, the holder of each outstanding stock warrant will
have the right upon the exercise 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 the stock
warrants were exercisable immediately prior thereto.
NO RIGHTS AS SHAREHOLDERS
Holders of stock warrants will not be entitled, by virtue of being the
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
Clear Channel's directors or any other matter, or to exercise any rights
whatsoever as its shareholders.
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DESCRIPTION OF STOCK PURCHASE
CONTRACTS AND STOCK PURCHASE UNITS
Clear Channel may issue stock purchase contracts. Stock purchase contracts
are contracts obligating holders to purchase from Clear Channel, and Clear
Channel 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. The formulas may include anti-dilution provisions to
adjust the number of shares issuable under the stock purchase contracts upon
events that would otherwise dilute the interests of the holders. 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,
junior subordinated debt securities, debt obligations of the United States of
America or its agencies or instrumentalities, or preferred securities securing
the holders' obligations to purchase the common stock or the preferred stock
under the stock purchase contracts.
When stock purchase units include debt obligations of the United States of
America or its agencies or instrumentalities, the principal of the debt
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 unless the holder of the units settles its obligations under
the stock purchase contracts early through the delivery of consideration to
Clear Channel or its agent in the manner discussed below.
When stock purchase units include junior subordinated debt securities or
preferred securities, the junior subordinated debt securities or preferred
securities will automatically be presented to the applicable Clear Channel Trust
for redemption at 100% of face or liquidation value and the Clear Channel Trust
will present junior subordinated debt securities in an equal principal amount to
Clear Channel for redemption at 100% of principal amount unless there is an
early settlement or the holder elects to pay the consideration specified in the
stock purchase contracts. Amounts received in respect of the redemption will
automatically be transferred to Clear Channel 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 Clear Channel to
make periodic payments to the holders of the stock purchase units or vice versa,
and the payments may be unsecured or refunded on some basis. The stock purchase
contracts may require holders to secure their obligations in a specified manner.
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 any form and calculated pursuant to any 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 the stock purchase contracts, subject
to adjustment in specific 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 debt obligations of the United States of
America or its agencies or instrumentalities. In the event of either an 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 Clear Channel's security
interest.
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
Each Clear Channel 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 trust under which each Clear Channel Trust
is formed will be replaced by an amended and restated declaration of trust,
which will authorize the regular trustees of the Clear Channel Trust to issue on
behalf of the Clear Channel Trust one series of preferred securities. Each
amended and restated declaration of trust will be qualified as an indenture
under the Trust Indenture Act. The preferred securities will have terms,
including distributions, redemption, voting, liquidation rights and other
preferred, deferred or other special rights or restrictions as will be set forth
in the related amended and restated declaration of trust or made part of the
declaration by the Trust Indenture Act. Reference is made to any prospectus
supplement relating to the preferred securities of a Clear Channel Trust for
specific terms, including
- the specific designation of the preferred securities;
- the number of preferred securities issued by the Clear Channel Trust;
- the annual distribution rate, or method of calculation of the rate, for
preferred securities issued by the Clear Channel Trust, the date or dates
upon which the distributions will be payable and the record date or dates
for the payment of the distributions;
- whether distributions on preferred securities issued by the Clear Channel
Trust will be cumulative, and, in the case of preferred securities having
cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on preferred
securities issued by the Clear Channel Trust will be cumulative;
- the amount or amounts which will be paid out of the assets of the Clear
Channel Trust to the holders of preferred securities of the Clear Channel
Trust upon voluntary or involuntary liquidation, dissolution, winding-up
or termination of the Clear Channel Trust;
- the obligation or right, if any, of the Clear Channel Trust to purchase
or redeem preferred securities issued by the Clear Channel 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 the Clear
Channel Trust will or may be purchased or redeemed, in whole or in part,
pursuant to an obligation or right;
- the voting rights, if any, of preferred securities issued by the Clear
Channel 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 Clear Channel Trusts, or of both, as a condition to specified
actions or amendments to the declaration of the Clear Channel Trust;
- 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 Clear Channel; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of preferred securities issued by the Clear Channel Trust
consistent with the declaration of the Clear Channel Trust or with
applicable law.
All preferred securities offered hereby will be guaranteed by Clear Channel
as and to the extent set forth below under "Description of the Guarantees."
Federal income tax considerations applicable to any offering of preferred
securities will be described in the applicable prospectus supplement.
In connection with the issuance of preferred securities, each Clear Channel
Trust will issue one series of common securities. The amended and restated
declaration of each Clear Channel Trust will authorize the regular trustees of
the Clear Channel Trust to issue one series of common securities having terms
including distributions, redemption, voting, liquidation rights or restrictions
as set forth in the amended and restated declaration. The terms of the common
securities issued by a Clear Channel Trust will be
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substantially identical to the terms of the preferred securities issued by the
Clear Channel Trust. The common securities will rank equally with the preferred
securities and payments on the common securities will be made on a pro rata
basis with the preferred securities. However, if an event of default under the
amended and restated declaration of trust occurs and is continuing, the rights
of the holders of the 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 the preferred securities. Generally, the common
securities issued by a Clear Channel Trust will also carry the right to vote and
to appoint, remove or replace any of the trustees of the Clear Channel Trust.
All the common securities of a Clear Channel Trust will be owned by Clear
Channel or its subsidiary.
As long as payments of interest and other payments are made when due on the
junior subordinated debt securities, the payments will be sufficient to cover
distributions and other payments due on the preferred securities primarily
because 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 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.
If an event of default with respect to the amended and restated declaration
of any Clear Channel Trust occurs and is continuing, then the holders of
preferred securities of the Clear Channel Trust would rely on the enforcement by
the property trustee of its rights as a holder of the junior subordinated debt
securities deposited in the Clear Channel Trust against Clear Channel. In
addition, the holders of a majority in liquidation amount of the 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 power conferred upon the property trustee under the
amended and restated declaration of trust, including the right to direct the
property trustee to exercise the remedies available to it as a holder of the
junior subordinated debt securities. If the property trustee fails to enforce
its rights under the junior subordinated debt securities deposited in the Clear
Channel Trust, any holder of the preferred securities may, to the extent
permitted by applicable law, after a period of 60 days has elapsed from the
holder's written request, institute a legal proceeding against Clear Channel to
enforce the property trustee's rights under the 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 amended and restated declaration of any Clear Channel Trust occurs and is
continuing and the event is attributable to the failure of Clear Channel to pay
interest or principal on the junior subordinated debt securities on the date the
interest or principal is otherwise payable, or in the case of redemption, on the
redemption date, then a holder of preferred securities of the Clear Channel
Trust may also directly institute a proceeding for enforcement of payment to the
holder of the principal of or interest on the junior subordinated debt
securities having a principal amount equal to the aggregate liquidation amount
of the preferred securities held by the holder on or after the respective due
date specified in the junior subordinated debt securities without first
directing the property trustee to enforce the terms of the junior subordinated
debt securities or instituting a legal proceeding against Clear Channel to
enforce the property trustee's rights under the junior subordinated debt
securities. In connection with a direct action, the rights of Clear Channel will
be substituted for the rights of the holder of the preferred securities under
the amended and restated declaration of trust to the extent of any payment made
by Clear Channel to the holder of the preferred securities in a direct action.
The holders of preferred securities of a Clear Channel 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.
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 may provide customary commercial
banking services to Clear Channel and its subsidiaries and participate in
various financing agreements of Clear Channel in the ordinary course of their
business. Initially, the property trustee is The Bank of New York, who currently
serves as Clear Channel's transfer agent and registrar for the common stock and
is a lender to Clear Channel under its credit facility.
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DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantees that
will be executed and delivered from time to time by Clear Channel for the
benefit of the holders of preferred securities of a Clear Channel 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 guarantee trustee with respect to the guarantee, for the benefit of holders
of the preferred securities of the applicable Clear Channel Trust. The terms of
each guarantee will be set forth in the guarantee or made part of the guarantee
by the Trust Indenture Act.
GENERAL
Pursuant to each guarantee, Clear Channel will irrevocably and
unconditionally agree, to the extent set forth in the guarantee, to pay in full,
to the holders of the preferred securities issued by the applicable Clear
Channel Trust, the guarantee payments, to the extent not paid by the Clear
Channel Trust, regardless of any defense, right of set-off or counterclaim that
the Clear Channel Trust may have or assert. The following distributions and
other payments with respect to preferred securities issued by a Clear Channel
Trust to the extent not made or paid by the Clear Channel Trust, will be subject
to the guarantee without duplication:
- any accrued and unpaid distributions on the preferred securities, but
only to the extent that in each case Clear Channel has made a payment to
the property trustee of interest on the junior subordinated debt
securities;
- the redemption price, including all accrued and unpaid distributions to
the date of redemption, with respect to any preferred securities called
for redemption by the Clear Channel Trust, but only to the extent that in
each case Clear Channel has made a payment to the property trustee of
interest or principal on the junior subordinated debt securities
deposited in the Clear Channel Trust as trust assets; and
- upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Clear Channel Trust, other than in connection with the
distribution of related junior subordinated debt securities to the
holders of the preferred securities or the redemption of all the
preferred securities upon the maturity or redemption of the junior
subordinated debt securities, the lesser of
(1) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of payment, to
the extent the Clear Channel Trust has funds available, and
(2) the amount of assets of the Clear Channel Trust remaining available
for distribution to holders of the preferred securities upon
liquidation of the Clear Channel Trust.
Clear Channel's obligation to make a guarantee payment may be satisfied by
direct payment of the required amounts by Clear Channel to the holders of the
applicable preferred securities or by causing the applicable Clear Channel Trust
to pay the amounts to the 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 the preferred securities only if and to the
extent that Clear Channel has made a payment to the property trustee of interest
or principal on the junior subordinated debt securities deposited in the
applicable Clear Channel Trust as trust assets. If Clear Channel does not make
interest or principal payments on the junior subordinated debt securities
deposited in the applicable Clear Channel Trust as trust assets, the property
trustee will not make distributions on the preferred securities of the Clear
Channel Trust and the Clear Channel Trust will not have the necessary funds
available to make these payments.
Clear Channel's obligations under the declaration for each Clear Channel
Trust, the guarantee issued with respect to preferred securities issued by the
Clear Channel Trust, the junior subordinated debt securities purchased by the
Clear Channel Trust and the junior subordinated indenture in the aggregate
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will provide a full and unconditional guarantee on a subordinated basis by Clear
Channel of payments due on the preferred securities issued by the Clear Channel
Trust.
CERTAIN COVENANTS OF CLEAR CHANNEL
In each guarantee, Clear Channel will covenant that, so long as any
preferred securities issued by the applicable Clear Channel Trust remain
outstanding, Clear Channel 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
to these amounts, if at the time
- Clear Channel will be in default with respect to its guarantee payments
or other payment obligations under the guarantee;
- any event of default under the related amended and restated declaration
of trust has occurred; or
- in the event that junior subordinated debt securities are issued to the
applicable Clear Channel Trust in connection with the issuance of
preferred securities by the Clear Channel Trust, Clear Channel has given
notice of its election to defer payments of interest on the junior
subordinated debt securities by extending the interest payment period as
provided in the terms of the junior subordinated debt securities and the
period, or any extension thereof, is continuing.
However, the foregoing restrictions will not apply to
- dividends, redemptions, purchases, acquisitions, distributions or
payments made by Clear Channel by way of issuance of shares of its
capital stock;
- 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 Clear Channel under a shareholder rights
plan or the redemption or repurchase of any right distributed pursuant to
a shareholder rights plan;
- payments of accrued dividends by Clear Channel upon the redemption,
exchange or conversion of any preferred stock as may be outstanding from
time to time in accordance with the terms of the preferred stock;
- cash payments made by Clear Channel 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
the preferred stock;
- payments under the guarantees; or
- purchases of common stock related to the issuance of common stock or
rights under any of Clear Channel'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, so long as any preferred securities of a Clear Channel Trust
remain outstanding, Clear Channel has agreed to remain the sole direct or
indirect owner of all the outstanding common securities issued by the Clear
Channel Trust and not to cause or permit the common securities to be transferred
except to the extent permitted by the declaration of the Clear Channel Trust,
provided that any permitted successor of Clear Channel under the junior
subordinated indenture may succeed to Clear Channel's ownership of the common
securities, and to use reasonable efforts to cause the Clear Channel 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
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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 Clear Channel
Trust. The manner of obtaining any such approval of holders of the preferred
securities will be set forth in an accompanying prospectus supplement. All
guarantees and agreements contained in a guarantee will bind the successors,
assignees, receivers, trustees and representatives of Clear Channel and will
inure to the benefit of the holders of the preferred securities of the
applicable Clear Channel Trust then outstanding. Except in connection with a
consolidation, merger, conveyance, or transfer of assets involving Clear Channel
that is permitted under the junior subordinated indenture, Clear Channel 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 Clear Channel Trust upon full
payment of the redemption price of all preferred securities of the Clear Channel
Trust, or upon distribution of the junior subordinated debt securities to the
holders of the preferred securities of the Clear Channel Trust in exchange for
all the preferred securities issued by the Clear Channel Trust, or upon full
payment of the amounts payable upon liquidation of the Clear Channel Trust.
Nevertheless, 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 Clear Channel Trust must restore payment of
any sums paid under the preferred securities or the guarantee.
STATUS OF THE GUARANTEES
Clear Channel's obligations to make the guarantee payments to the extent
set forth in the applicable guarantee will constitute an unsecured obligation of
Clear Channel and will rank subordinate and junior in right of payment to all
other indebtedness, liabilities and obligations of Clear Channel and any
guarantees, endorsements or other contingent obligations of Clear Channel,
except those made on an equal basis or subordinate by their terms, and senior to
all capital stock issued by Clear Channel and to any guarantee entered into by
Clear Channel in respect of any of its capital stock. Clear Channel's
obligations under each guarantee will rank equally with each other guarantee.
Because Clear Channel is a holding company, Clear Channel's obligations under
each guarantee are also effectively subordinated to all existing and future
liabilities, including trade payables, of Clear Channel's subsidiaries, except
to the extent that Clear Channel is a creditor of the subsidiaries recognized as
such. Each amended and restated declaration of trust will provide that each
holder of preferred securities issued by the applicable Clear Channel Trust, by
acceptance thereof, agrees to the subordination provisions and other terms of
the related guarantee.
The guaranteed party may institute a legal proceeding directly against
Clear Channel to enforce its rights under a 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 Clear Channel Trust. The
guarantee trustee will enforce the guarantee on behalf of the holders of the
preferred securities. The holders of not less than a majority in aggregate
liquidation amount of the preferred securities issued by the applicable Clear
Channel Trust have the right to direct the time, method and place of conducting
any 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 Clear Channel Trust may institute a legal
proceeding directly against Clear Channel to enforce its rights under the
guarantee, without first instituting a legal proceeding against the applicable
Clear Channel Trust, or any other person or entity. However, if Clear Channel
has failed to make a guarantee payment, a holder of preferred securities may
directly institute a proceeding against Clear Channel for enforcement of the
holder's right to receive payment under the guarantee. Clear Channel waives any
right or remedy to require that any action be brought first against a Clear
Channel Trust or any other person or entity before proceeding directly against
Clear Channel.
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MISCELLANEOUS
Clear Channel will be required to provide annually to the guarantee trustee
a statement as to the performance by Clear Channel of its obligations under each
guarantee and as to any default in the performance. Clear Channel is required to
file annually with the guarantee trustee an officer's certificate as to Clear
Channel'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 those duties as are specifically set forth in the applicable
guarantee and, after default with respect to a guarantee, will 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 that 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
Clear Channel and its affiliates may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act or a
"disqualified person" within the meaning of Section 4975 of the Internal Revenue
Code with respect to many employee benefit plans that are subject to ERISA. The
purchase of any securities offered by this prospectus by a plan that is subject
to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Internal Revenue Code, including
individual retirement arrangements and other plans described in Section
4975(e)(1), and with respect to which Clear Channel or any affiliate of Clear
Channel is a service provider, a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Internal Revenue Code, unless the securities offered by this prospectus are
acquired pursuant to and in accordance with an applicable exemption. Any pension
or other employee benefit plan proposing to acquire any securities offered by
this prospectus should consult with its counsel.
PLAN OF DISTRIBUTION
Clear Channel or the Clear Channel Trusts may sell the securities offered
by this prospectus
- through underwriters or dealers;
- through agents;
- directly to purchasers; or
- through a combination of any such methods of sale.
Any underwriter, dealer or agent may be deemed to be an underwriter within
the meaning of the Securities Act of 1933. The prospectus supplement relating to
the securities offered by this prospectus will set forth
- their offering terms, including the name or names of any underwriters,
dealers or agents;
- the purchase price of the securities offered by this prospectus;
- the proceeds to Clear Channel or the Clear Channel Trusts from the 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 securities offered by this
prospectus may be listed.
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If underwriters or dealers are used in the sale, the securities offered by
this prospectus 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;
- at market prices prevailing at the time of sale;
- at prices related to the prevailing market prices; or
- at negotiated prices.
The securities offered by this prospectus may be offered to the public
either through underwriting syndicates represented by one or more managing
underwriters or directly by one or more of those firms. Unless otherwise set
forth in the prospectus supplement, the obligations of underwriters or dealers
to purchase the securities offered by this prospectus will be subject to
specific conditions precedent and the underwriters or dealers will be obligated
to purchase all the securities offered by this prospectus 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.
The securities offered by this prospectus may be sold directly by Clear
Channel or the Clear Channel Trusts or through agents designated by Clear
Channel or the Clear Channel Trusts. Any agent involved in the offer or sale of
the securities offered by this prospectus in respect of which this prospectus is
delivered will be named, and any commissions payable by Clear Channel or the
Clear Channel Trusts to the agent will be set forth, in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any agent
will be acting on a best efforts basis for the period of its appointment.
If so indicated in the prospectus supplement, Clear Channel or the Clear
Channel Trusts will authorize underwriters, dealers or agents to solicit offers
by specific institutions to purchase securities offered by this prospectus from
Clear Channel or the Clear Channel 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. The 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
the contracts. The underwriters and other persons soliciting the contracts will
have no responsibility for the validity or performance of any of the contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with Clear Channel or the Clear Channel Trusts to indemnification by Clear
Channel or the Clear Channel Trusts against civil liabilities, including
liabilities under the Securities Act, or to contribution by Clear Channel or the
Clear Channel Trusts to payments they may be required to make in respect
thereof. The terms and conditions of the 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, Clear
Channel or the Clear Channel Trusts in the ordinary course of business.
Each series of securities offered by this prospectus may be a new issue of
securities with no established trading market. Any underwriters to whom
securities offered by this prospectus are sold by Clear Channel or the Clear
Channel Trusts for public offering and sale may make a market in the securities
offered by this prospectus, but the 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 securities
offered by this prospectus.
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
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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 those transactions. These
transactions, if commenced, may be discontinued at any time.
LEGAL OPINIONS
The validity of the securities will be passed upon for Clear Channel by its
special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, Texas.
However, matters of Delaware law relating to the validity of the preferred
securities will be passed upon for Clear Channel and the Clear Channel Trusts by
Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, special Delaware counsel
to Clear Channel and the Clear Channel Trusts. The validity of the 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 Clear Channel and, as of May 31, 2000, owned
approximately 138,500 shares of common stock, including presently exercisable
options to acquire approximately 122,500 shares.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
and the financial statement schedule appearing in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 1999, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference which, as to each of the three
years in the period ended December 31, 1999, are based in part on the reports of
KPMG LLP, independent auditors. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports given on the
authority of such firms as experts in accounting and auditing.
The consolidated financial statements of SFX at December 31, 1999 and 1998,
and for each of the three years in the period ended December 31, 1999 and the
related financial statement schedule appearing in Clear Channel Communications,
Inc.'s Current Report on Form 8-K dated June 14, 2000, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated by reference herein. Such consolidated
financial statements and schedule referred to above are incorporated herein by
reference in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998 incorporated into this document by reference
to Clear Channel's Current Report on Form 8-K dated December 10, 1998, as
amended by Form 8-K/A filed on February 23, 1999 and Form 8-K/A dated April 12,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997 incorporated into this document by reference
to Clear Channel's Current Report on Form 8-K dated December 10, 1998, as
amended by Form 8-K/A filed on February 23, 1999 and Form 8-K/A dated April 12,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of AMFM Inc. and Subsidiaries
(formerly Chancellor Media Corporation) as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 incorporated into
this document by reference to the Current Report on Form 8-K of Clear Channel
Communications, Inc., dated June 14, 2000, 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.
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The consolidated financial statements of Capstar Broadcasting Corporation
and Subsidiaries as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 incorporated into this document by
reference to the Current Report on Form 8-K of Clear Channel Communications,
Inc., dated November 18, 1999, 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.
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<TABLE>
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[CLEAR
CHANNEL CLEAR CHANNEL COMMUNICATIONS, INC.
LOGO]
</TABLE>
