<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 3, 1996
-----------------
Evergreen Media Corporation
---------------------------
(Exact Name of Registrant as
Specified in Charter)
Delaware 75 2247099
- ------------------ --------------------
(State or Other (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
433 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
------------------------------
(Address of Principal
Executive Offices)
(972) 869-9020
------------------
(Registrant's telephone
number, including area code)
<PAGE>
ITEM 5. Other Events
------------
Financial Information for Evergreen Media Corporation
-----------------------------------------------------
On August 8, 1996 the Company declared a three-for-two split effected
in the form of a stock dividend payable on August 26, 1996 to shareholders of
record at the close of business on August 19, 1996. All share data contained in
the accompanying financial statements have been retroactively adjusted to give
effect to the stock dividend.
On May 15, 1996, the shareholders of the Company amended its
Certificate of Incorporation to increase the authorized shares of the Company
from 31,000,000 to 75,000,000.
The Company hereby provides the following information, not otherwise
called for by this form but of importance to securityholders, in regard to the
Company: (1) the Company's Consolidated Financial Statements as of December 31,
1994 and 1995 and for each of the years in the three year period ended December
31, 1995, included on pages A-1 to A-24 of this report and (2) the Company's
Consolidated Financial Statements as of March 31, 1996 and for the three month
period ended March 31, 1995 and 1996 (unaudited) on pages A-25 to B-32 of this
report.
ITEM 7. Financial Statements and Exhibits
---------------------------------
7 (c) Exhibits
--------------
(13.1) Evergreen Media Corporation Consolidated Financial Statements
as of December 31, 1994 and 1995 and for each of the years in
the three year period ended December 31, 1995 and Independent
Auditor's Report.
(13.1) Evergreen Media Corporation Consolidated Financial Statements
as of March 31, 1996 and for the three month periods ended March
31, 1995 and 1996.
(23.1) Consent of KPMG Peat Marwick LLP, independent accountants.
(27.1) Financial Data Schedule for the Company's Consolidated
Financial Statements for the year ended December 31, 1995.
(27.2) Financial Data Schedule for the Company's Consolidated
Financial Statements for the quarterly period ended March 31,
1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Evergreen Media Corporation
By: /s/ MATTHEW E. DEVINE
-----------------------
Matthew E. Devine
Chief Financial Officer
Date: September 18, 1996
<PAGE>
EXHIBIT 13.1
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements
Page
----
Independent Auditors' Report........................................... A-2
Consolidated Annual Financial Statements:
Consolidated Balance Sheets as of December 31, 1994 and 1995........... A-3
Consolidated Statements of Operations for each of the years in the
three-year period ended December 31, 1995......................... A-4
Consolidated Statements of Stockholders' Equity for each of
the years in the three-year period ended December 31, 1995........ A-5
Consolidated Statements of Cash Flows for each of the years in the
three-year period ended December 31, 1995......................... A-6
Notes to Consolidated Financial Statements............................. A-7
Consolidated Interim Financial Statements (unaudited):
Consolidated Balance Sheets as of December 31, 1995
and March 31, 1996 (unaudited).................................... A-25
Consolidated Statements of Operations for the three months ended
March 31, 1995 and 1996 (unaudited)............................... A-26
Consolidated Statements of Cash Flows for the three months ended
March 31, 1995 and 1996 (unaudited)............................... A-27
Notes to Consolidated Financial Statements............................. A-28
A-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Evergreen Media Corporation:
We have audited the accompanying consolidated financial statements of Evergreen
Media Corporation and subsidiaries as of December 31, 1994 and 1995 and for each
of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Evergreen Media
Corporation and subsidiaries as of December 31, 1994 and 1995, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Dallas, Texas
February 9, 1996, except for note 14(b),
which is as of February 14, 1996, and note 1(m),
which is as of August 8, 1996
A-2
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1995
(dollars in thousands, except for share data)
<TABLE>
<CAPTION>
Assets 1994 1995
------ ---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,216 $ 3,430
Accounts receivable, less
allowance for doubtful accounts
of $835 in 1994 and $2,000
in 1995 26,945 45,413
Prepaid expenses and other 2,223 2,146
-------- --------
Total current assets 30,384 50,989
Property and equipment, net (notes 3 29,021 37,839
and 10)
Intangible assets, net (note 4) 233,494 458,787
Other assets, net (note 5) 5,091 4,732
-------- --------
$297,990 $552,347
======== ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued $ 10,036 $ 15,892
expenses (note 6)
Current portion of long-term 4,000 4,000
debt (note 7)
Other current liabilities 396 541
-------- --------
Total current liabilities 14,432 20,433
Long-term debt, excluding current 170,000 197,000
portion (note 7)
Deferred tax liability (note 9) -- 29,233
Other liabilities 1,205 1,104
-------- --------
Total liabilities 185,637 247,770
-------- --------
Stockholders' equity (notes 1(m),
2 and 8):
Preferred stock. Authorized
6,000,000 shares; issued
1,610,000 shares of $3 Convertible
Exchangeable Preferred Stock in
1994 and 1995 80,500 80,500
Class A common stock, $.01 par
value. Authorized 75,000,000
shares; issued 9,959,384 shares
in 1994 and 24,929,529 shares
in 1995 100 249
Class B common stock, $.01 par
value. Authorized 4,500,000
shares; issued 3,148,316 shares
in 1994 and 3,116,066 shares
in 1995 31 31
Warrants 12,488 --
Paid-in capital 102,052 317,295
Accumulated deficit (82,818) (93,498)
-------- --------
Total stockholders' equity 112,353 304,577
Commitments and contingencies (notes 3,
6, 8, 10, 11 and 14) -------- --------
$297,990 $552,347
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
A-3
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1993, 1994 and 1995
(in thousands, except for per share data)
<TABLE>
<CAPTION>
1993 1994 1995
----------- ---------- -----------
<S> <C> <C> <C>
Gross revenues $106,813 $125,478 $186,365
Less agency commissions 13,309 15,962 23,434
-------- -------- --------
Net revenues 93,504 109,516 162,931
-------- -------- --------
Operating expenses:
Station operating expenses
excluding depreciation and
amortization 60,656 68,852 97,674
Depreciation and amortization 33,524 30,596 47,005
Corporate general and 2,378 2,672 4,475
administrative
Other nonrecurring costs
(note 8(d)) 7,002 -- --
-------- -------- --------
Operating expenses 103,560 102,120 149,154
-------- -------- --------
Operating income (loss) (10,056) 7,396 13,777
-------- -------- --------
Nonoperating income (expenses):
Interest expense (13,878) (13,809) (19,199)
Interest income 148 91 55
Gain on disposition of assets
(note 2) 3,392 6,991 --
Other expense, net (355) (630) (291)
-------- -------- --------
Nonoperating expenses, net (10,693) (7,357) (19,435)
-------- -------- --------
Income (loss) before income
taxes and extraordinary item (20,749) 39 (5,658)
Income tax expense (note 9) -- -- 192
-------- -------- --------
Income (loss) before
extraordinary item (20,749) 39 (5,850)
Extraordinary item - loss on extinguishment
of debt (note 7) -- (3,585) --
-------- -------- --------
Net loss (20,749) (3,546) (5,850)
Accretion of redeemable preferred stock
to mandatory redemption value,
including $17,506 relating to
early redemption (note 8(a)) (18,823) -- --
Preferred stock dividends (note 8(a)) (4,756) (4,830) (4,830)
-------- -------- --------
Net loss attributable to
common stockholders $(44,328) $ (8,376) $(10,680)
======== ======== ========
Loss per common share (notes 1(j), 1(m),
7 and 8(a)): $(4.48) $(.37) $(.52)
Before extraordinary item
Extraordinary item -- (.27) --
-------- -------- --------
Net loss $(4.48) $(.64) $(.52)
======== ======== ========
Weighted average common shares 9,890 13,002 20,721
outstanding ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
A-4
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1993, 1994 and 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Convertible Class A Common Class B Class C
Preferred stock Common stock Common stock Common stock
------------------------ ------------------ -------------------- --------------------
Shares Amount Shares Amount Shares Amount Shares Amount
--------- ------------- ---------- ------ ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1992 -- $ -- 1,811,483 $ 18 -- $ -- 3,168,941 $ 31
Issuance of Class A common
stock (note 8(b)) -- -- 6,037,500 60 -- -- -- --
Conversion of common stock
(note 8(b)) -- -- -- -- 3,168,941 31 (3,168,941) (31)
Reclassification of Class
A common stock and
Class B common stock
previously subject to
purchase obligation
(note 8(b)) -- -- 171,738 2 1,288,038 13 -- --
Conversion of Class B
common stock to Class A
common stock (note 8(b)) -- -- 1,288,038 13 (1,288,038) (13) -- --
Call of Class A common
stock warrants (note 8(c)) -- -- -- -- -- -- -- --
Grant of stock options
(note 8(d)) -- -- -- -- -- -- -- --
Redeemable preferred stock
dividends (note 8(a)) -- -- -- -- -- -- -- --
Accretion of redeemable
preferred stock to
mandatory redemption value
(note 8(a)) -- -- -- -- -- -- -- --
Issuance of convertible
preferred stock and
retirement of redeemable
preferred stock (note
8(a)) 1,610,000 80,500 -- -- -- -- -- --
Exercise of common stock
warrants (note 8(c)) -- -- 450,000 5 -- -- -- --
Convertible preferred
stock dividends (note
8(a)) -- -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- -- --
--------- ------------- ---------- ---- ---------- ------ ---------- ------
Balances at December 31,
1993 1,610,000 80,500 9,758,759 98 3,168,941 31 -- --
Conversion of common stock
(note 8(b)) -- -- 20,625 -- (20,625) -- -- --
Issuance costs for
convertible preferred
stock (note 8(a)) -- -- -- -- -- -- -- --
Exercise of common stock
options (note 8(d)) -- -- 180,000 2 -- -- -- --
Convertible preferred
stock dividends (note
8(a)) -- -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- -- --
--------- ------------- ---------- ---- ---------- ------ ---------- ------
Balances at December 31,
1994 1,610,000 80,500 9,959,384 100 3,148,316 31 -- --
Issuance of Class A common
stock in acquisition
(note 2(c)) -- -- 5,611,009 56 -- -- -- --
Issuance of Class A common
stock in public offering
(note 8(b)) -- -- 7,350,000 73 -- -- -- --
Exercise of common stock
warrants (note 8(c)) -- -- 1,951,386 20 -- -- -- --
Conversion of Class B
common stock to Class A
common stock (note 8(b)) -- -- 32,250 -- (32,250) -- -- --
Exercise of common stock
options (note 8(d)) -- -- 25,500 -- -- -- -- --
Convertible preferred
stock dividends (note
8(a)) -- -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- -- --
--------- ------------- ---------- ---- ---------- ------ ---------- ------
Balances at December 31,
1995 1,610,000 $80,500 24,929,529 $249 3,116,066 $ 31 -- $ --
========= ============= ========== ==== ========== ====== ========== ======
<CAPTION>
Total
Warrants Paid-in Accumulated stockholders'
(note 8(c)) capital deficit equity
------------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
Balances at December 31,
1992 $ 15,910 $ 19,059 $(32,113) $ 2,905
Issuance of Class A common
stock (note 8(b)) -- 58,684 -- 58,744
Conversion of common stock
(note 8(b)) -- -- -- --
Reclassification of Class A
common stock and Class B
common stock previously
subject to purchase
obligation (note 8(b)) -- 14,986 1,999 17,000
Conversion of Class B
common stock to Class A
common stock (note 8(b)) -- -- -- --
Call of Class A common
stock warrants (note 8(c)) (3,122) 3,122 -- --
Grant of stock options
(note 8(d)) -- 7,002 -- 7,002
Redeemable preferred stock
dividends (note 8(a)) -- -- (3,897) (3,897)
Accretion of redeemable
preferred stock to
mandatory redemption value
(note 8(a)) -- -- (18,823) (18,823)
Issuance of convertible
preferred stock and
retirement of redeemable
preferred stock (note 8(a)) -- (3,855) -- 76,645
Exercise of common stock
warrants (note 8(c)) (300) 3,295 -- 3,000
Convertible preferred
stock dividends (note
8(a)) -- -- (859) (859)
Net loss -- -- (20,749) (20,749)
------------ -------- -------- --------
Balances at December 31,
1993 12,488 102,293 (74,442) 120,968
Conversion of common stock
(note 8(b)) -- -- -- --
Issuance costs for
convertible preferred
stock (note 8(a)) -- (240) -- (240)
Exercise of common stock
options (note 8(d)) -- (1) -- 1
Convertible preferred
stock dividends (note
8(a)) -- -- (4,830) (4,830)
Net loss -- -- (3,546) (3,546)
------------ -------- -------- --------
Balances at December 31,
1994 12,488 102,052 (82,818) 112,353
Issuance of Class A common
stock in acquisition
(note 2(c)) -- 70,082 -- 70,138
Issuance of Class A common
stock in public offering
(note 8(b)) -- 132,648 -- 132,721
Exercise of common stock
warrants (note 8(c)) (12,488) 12,481 -- 13
Conversion of Class B
common stock to Class A
common stock (note 8(b)) -- -- -- --
Exercise of common stock
options (note 8(d)) -- 32 -- 32
Convertible preferred
stock dividends (note
8(a)) -- -- (4,830) (4,830)
Net loss -- -- (5,850) (5,850)
------------ -------- -------- --------
Balances at December 31,
1995 $ -- $317,295 $(93,498) $304,577
============ ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
A-5
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1993, 1994 and 1995
(in thousands)
<TABLE>
<CAPTION>
1993 1994 1995
---------- --------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(20,749) $ (3,546) $ (5,850)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 3,884 4,528 5,508
Amortization of goodwill,
intangible assets and
other assets 29,640 26,068 41,497
Loss on extinguishment of long-
term debt -- 3,585 --
Provision for doubtful accounts 501 754 904
Gain on disposition of assets (3,392) (6,991) --
Deferred income tax benefit -- -- (479)
Grant of stock options 7,002 -- --
Changes in certain assets and
liabilities, net of effects of
acquisitions:
Accounts receivable (1,550) (5,051) (6,628)
Prepaid expenses and other
current assets (78) 84 724
Accounts payable and
accrued expenses 810 1,194 4,405
Other assets 73 (724) (184)
Other liabilities (1,182) (21) 490
-------- -------- ---------
Net cash provided by
operating activities 14,959 19,880 40,387
-------- -------- ---------
Cash flows from investing activities:
Acquisitions, net of cash (88,058) (44,921) (188,004)
acquired
Capital expenditures (1,735) (5,227) (2,642)
Proceeds from sale of assets 17,453 19,101 --
Other (3,823) (1,881) (1,466)
-------- -------- ---------
Net cash used by investing
activities (76,163) (32,928) (192,112)
-------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 59,000 36,000 186,000
Principal payments on long-term debt (72,000) (14,000) (159,000)
Payments on other long-term liabilities (463) (645) (694)
Proceeds (costs) from issuance of common
stock, preferred stock and warrants 138,390 (240) 132,766
Dividends on preferred stock -- (4,830) (4,830)
Payments for debt issuance costs (58) (4,602) (303)
Redemption of redeemable preferred stock (62,826) -- --
-------- -------- ---------
Net cash provided by
financing activities 62,043 11,683 153,939
-------- -------- ---------
Increase (decrease) in cash and cash
equivalents 839 (1,365) 2,214
Cash and cash equivalents at beginning
of year 1,742 2,581 1,216
-------- -------- ---------
Cash and cash equivalents at end of year $ 2,581 $ 1,216 $ 3,430
======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
A-6
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Description of Business
-----------------------
Evergreen Media Corporation ("Evergreen") and its subsidiaries own
and operate commercial radio stations in various geographical regions
across the United States, primarily in the top ten radio revenue
markets.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Evergreen Media Corporation and its subsidiaries (collectively, the
"Company") all of which are wholly owned. All subsidiaries are
involved in the operation of commercial radio stations. Significant
intercompany balances and transactions have been eliminated in
consolidation.
(c) Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation of property
and equipment is computed using the straight-line method over the
estimated useful lives of the assets. Repair and maintenance costs
are charged to expense when incurred.
(d) Intangible Assets
-----------------
Intangible assets consist primarily of broadcast licenses, goodwill
and other identifiable intangible assets. The Company amortizes such
intangible assets using the straight-line method over estimated
useful lives ranging from 1 to 40 years. The Company continually
evaluates the propriety of the carrying amount of goodwill and other
intangible assets as well as the amortization period to determine
whether current events or circumstances warrant adjustments to the
carrying value and/or revised estimates of useful lives. This
evaluation consists of the projection of undiscounted operating
income before depreciation, amortization, nonrecurring charges and
interest for each of the Company's radio stations over the remaining
amortization periods of the related intangible assets. The
projections are based on a historical trend line of actual results
since the acquisitions of the respective stations adjusted for
expected changes in operating results. To the extent such projections
indicate that undiscounted operating income is not expected to be
adequate to recover the carrying amounts of the related intangible
assets, such carrying amounts are written down by charges to expense.
At this time, the Company believes that no significant impairment of
goodwill and other intangible assets has occurred and that no
reduction of the estimated useful lives is warranted.
A-7
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(e) Barter Transactions
-------------------
The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An
asset and liability is recorded at the fair market value of the goods
or services received. Barter revenue is recorded and the liability
relieved when commercials are broadcast and barter expense is
recorded and the asset relieved when goods or services are received
or used. Barter amounts are not significant to the Company's
consolidated financial statements.
(f) Income Taxes
------------
Deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each year end
based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable
earnings. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount more likely than not to be
realized. Income tax expense is the total of tax payable for the
period and the change during the period in deferred tax assets and
liabilities.
(g) Revenue Recognition
-------------------
Revenue is derived primarily from the sale of commercial
announcements to local and national advertisers. Revenue is
recognized as commercials are broadcast.
Fees received or paid pursuant to various time brokerage agreements
are recognized as gross revenues or amortized to expense,
respectively, over the term of the agreement using the straight-line
method.
(h) Statements of Cash Flows
------------------------
For purposes of the statements of cash flows, the Company considers
temporary cash investments purchased with original maturities of
three months or less to be cash equivalents.
The Company paid approximately $14,089,000, $12,852,000 and
$19,134,000 for interest in 1993, 1994 and 1995, respectively.
(i) Derivative Financial Instruments
--------------------------------
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used
to manage well-defined interest rate risks related to interest on the
Company's outstanding debt.
As interest rates change under interest rate swap and cap agreements,
the differential to be paid or received is recognized as an
adjustment to interest expense. The Company is not exposed to credit
loss as its interest rate swap agreements are with the participating
banks under the Company's senior credit facility.
A-8
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(j) Loss Per Common Share
---------------------
Loss per common share for 1993, 1994 and 1995 is calculated based on
the weighted average shares of common stock outstanding during each
year. Options and warrants are not included in the calculation as
their effect would be antidilutive.
(k) Disclosure of Certain Significant Risks and Uncertainties
---------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
In the opinion of management, credit risk with respect to trade
receivables is limited due to the large number of diversified
customers and the geographic diversification of the Company's
customer base. The Company performs ongoing credit evaluations of its
customers and believes that adequate allowances for any uncollectible
trade receivables are maintained. At December 31, 1994 and 1995, no
receivable from any customer exceeded 5% of stockholders' equity and
no customer accounted for more than 10% of net revenues in 1993, 1994
or 1995.
(l) Reclassifications
-----------------
Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the current year presentation.
(m) Stock Authorization and Stock Split
-----------------------------------
On May 15, 1996, the shareholders of the Company amended its
Certificate of Incorporation to increase the authorized shares of the
Company from 31,000,000 to 75,000,000. On August 8, 1996, the Company
declared a three-for-two stock split effected in the form of a stock
dividend payable on August 26, 1996 to shareholders of record at the
close of business on August 19, 1996. All share data contained in the
accompanying financial statements have been retroactively adjusted to
give effect to the increase in authorized shares and the stock
dividend.
A-9
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(2) Acquisitions and Dispositions
-----------------------------
(a) 1993 Acquisitions and Dispositions
----------------------------------
In May 1993, the Company acquired WFYV-FM in Jacksonville, Florida
for cash of approximately $7,868,000 (including $1,000,000 paid for a
noncompetition agreement). Pending the acquisition, the Company
entered into a time brokerage agreement which allowed the Company to
purchase substantially all of the broadcast time on radio station
WFYV-FM for the period from June 1992 to May 1993.
In June 1993, the Company acquired KTRH-AM and KLOL-FM in Houston,
Texas, for cash of approximately $50,407,000 (including $3,600,000
for the stations' accounts receivable and $2,000,000 for a
noncompetition agreement).
In July 1993, the Company entered into an agreement to acquire WWBZ-
FM (now WRCX-FM) in Chicago, Illinois for approximately $29,783,000
(including $1,600,000 for the station's accounts receivable and
$5,000,000 for a noncompetition agreement). The acquisition was
completed on December 27, 1993. Pending the acquisition, the Company
entered into a time brokerage agreement which allowed the Company to
purchase substantially all of the broadcast time on WWBZ-FM for the
period from July 1993 to December 1993.
In October 1992, the Company entered into a time brokerage agreement
to sell to a third party substantially all of the broadcast time on
radio station KSNN-FM in Dallas. On October 7, 1993, the Company sold
the station to this third party for approximately $10,511,000. The
Company recognized a gain of $4,053,000 on this transaction.
In October 1992, the Company entered into an agreement to sell radio
stations WKBQ-FM and KASP-AM in St. Louis for $7,000,000 in cash. The
Company also entered into a time brokerage agreement to sell
substantially all of the broadcast time of these stations pending
their sale. These two agreements were subject to the Company's
acquisition of these stations, which subsequently occurred on
November 6, 1992. The other party to the sales agreement could not
complete the purchase of the radio stations by June 30, 1993, as
required under the agreement. Accordingly, the Company terminated the
time brokerage agreement with the other party and operated the
stations in July and August 1993 prior to entering into a new time
brokerage and sales agreement with another unaffiliated third party
for cash consideration of $6,942,000. Upon completion of the sale of
these stations on December 22, 1993, the Company recognized a loss of
$687,000.
A-10
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(b) 1994 Acquisition and Dispositions
---------------------------------
In April 1994, the Company acquired radio station KIOI-FM in San
Francisco, California for cash consideration of approximately
$44,921,000. This acquisition was funded with proceeds received from
the sale of stations WAPE-FM and WFYV-FM in Jacksonville (which sale
closed in April 1994) and additional borrowings under the Company's
senior credit facility. The Company received proceeds of $19,500,000
less closing costs from the sale of WAPE-FM and WFYV-FM and
recognized a gain of $7,328,000 on such sale.
(c) 1995 Acquisition
----------------
In May 1995, the Company acquired Broadcasting Partners, Inc.
("BPI"), a publicly traded radio broadcasting company with seven FM
and four AM radio stations, eight of which are in the nation's ten
largest radio markets (the "BPI Acquisition").
The BPI Acquisition was effected through the merger of a wholly-owned
subsidiary of the Company with and into BPI, with BPI surviving the
merger as a wholly-owned subsidiary of the Company. The BPI
Acquisition included the conversion of each outstanding share of BPI
common stock into the right to receive $12.00 in cash and .69 shares
of the Company's Class A Common Stock, resulting in total cash
payments of $94,813,000 and the issuance of 5,611,009 shares of the
Company's Class A Common Stock valued at $12.50 per share. In
addition, the Company retired existing BPI debt of $81,926,000 and
incurred various other direct acquisition costs. The total purchase
price, including closing costs, allocated to net assets acquired was
approximately $258,634,000.
(d) Summary Combined Information
----------------------------
The acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements
include the results of operations of the acquired entities from the
dates of acquisition.
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------- --------- ----------
<S> <C> <C> <C>
Working capital, including cash of
$492 in 1995 $ 5,036 $ (79) $ 12,432
Property and equipment 10,316 1,762 11,684
Assets held for sale (note 2) 7,938 -- --
Intangible assets 64,768 43,238 264,650
Deferred tax liability -- -- (29,712)
Other liabilities -- -- (420)
------- ------- --------
$88,058 $44,921 $258,634
======= ======= ========
</TABLE>
(e) Pro forma Results of Operations (Unaudited)
-------------------------------------------
Consolidated condensed pro forma results of operations data for 1994
and 1995, as if the 1994 and 1995 acquisitions discussed above and
the 1995 common stock offering described in note 8 occurred at
the beginning of the respective years, follow:
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Net revenues $162,587 $181,990
Operating income 4,295 8,764
Net loss (5,577) (7,836)
Net loss per common share (.37) (.45)
</TABLE>
A-11
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(3) Property and Equipment
----------------------
Property and equipment consists of the following at December 31, 1994 and
1995:
<TABLE>
<CAPTION>
Estimated
useful life 1994 1995
----------------- --------- ---------
<S> <C> <C> <C>
Broadcast and other equipment 3 - 15 years $ 29,199 $ 36,428
Buildings and improvements 3 - 20 years 6,596 8,570
Furniture and fixtures 5 - 7 years 4,569 6,429
Land -- 3,402 6,524
-------- --------
43,766 57,951
Less accumulated depreciation 14,745 20,112
-------- --------
$ 29,021 $ 37,839
======== ========
</TABLE>
(4) Intangible Assets
-----------------
Intangible assets consist of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
Estimated
useful life 1994 1995
----------------- -------- --------
<S> <C> <C> <C>
Broadcast licenses 15-40 $ 89,649 $187,024
Goodwill 15-40 40,605 70,317
Other intangibles 1-40 173,487 291,203
-------- --------
303,741 548,544
Less accumulated amortization 70,247 89,757
-------- --------
$233,494 $458,787
======== ========
</TABLE>
In addition to broadcast licenses and goodwill, categories of other
intangible assets include: (i) premium advertising revenue base (the value
of the higher radio advertising revenues in certain of the Company's
markets as compared to other markets of similar population); (ii)
advertising client base (the value of the well-established advertising base
in place at the time of acquisition of certain stations); (iii) talent
contracts (the value of employment contracts between certain stations and
their key employees); (iv) fixed asset delivery premium (the benefit
expected from the Company's ability to operate fully constructed and
operational stations from the date of acquisition), and (v) premium
audience growth pattern (the value of expected above-average population
growth in a given market).
A-12
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(5) Other Assets
------------
Other assets consist of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
Estimated
useful life 1994 1995
----------- ------- -------
<S> <C> <C> <C>
Debt issuance costs 8 years $4,602 $4,905
Organizational costs 5 years 516 540
Other -- 346 334
------ ------
5,464 5,779
Less accumulated amortization 373 1,047
------ ------
$5,091 $4,732
====== ======
</TABLE>
During the years ended December 31, 1993, 1994 and 1995, the Company
recognized amortization of debt issuance costs of $728,000, $712,000 and
$631,000, respectively, which amounts are included in amortization expense
in the accompanying consolidated statements of operations.
(6) Accounts Payable and Accrued Expenses
-------------------------------------
Accounts payable and accrued expenses consist of the following at
December 31, 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
---------- ---------
<S> <C> <C>
Accounts payable $ 5,929 $ 9,591
Accrued payroll 1,663 3,080
Accrued interest 1,360 1,304
Accrued dividends 1,020 1,020
Other 64 897
-------- --------
$ 10,036 $ 15,892
======== ========
</TABLE>
(7) Long-term Debt
--------------
Long-term debt consists of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Senior Credit Facility (a) $156,000 $187,000
Senior Notes (b) 18,000 14,000
-------- --------
Total long-term debt 174,000 201,000
Less current portion 4,000 4,000
-------- --------
$170,000 $197,000
======== ========
</TABLE>
A-13
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(a) Senior Credit Facility
----------------------
On November 6, 1992, the Company entered into a variable rate loan
agreement with a group of banks providing for a $115,000,000 term
loan and a revolving loan of up to $55,000,000. On November 28, 1994,
amounts outstanding under this agreement were retired with borrowings
under a new senior credit facility (the "Senior Credit Facility")
which provided for a $150,000,000 term loan and a revolving loan of
up to $200,000,000. In connection with this debt restructuring, the
Company wrote off the unamortized balance of deferred debt issuance
costs of $3,585,000 as an extraordinary charge.
Borrowings under the Senior Credit Facility bear interest at a rate
based, at the option of the Company, on the participating banks'
prime rate or Eurodollar rate, plus an incremental rate. The blended
interest rate on the $150,000,000 loan outstanding under the term
loan was 6.97% at December 31, 1995 and was based on the Eurodollar
rate. The interest rates on $33,000,000 and $4,000,000 of advances
outstanding under the revolving loan were 7.19% and 8.625% at
December 31, 1995 and are based on the Eurodollar and prime rate,
respectively. At December 31, 1995, additional borrowings of
$163,000,000 were available to the Company under the revolving loan.
To reduce the impact of changes in interest rates on its floating
rate long-term debt, the Company entered into certain interest rate
swap agreements with the participating banks. At December 31, 1995,
interest rate swap agreements covering a notional balance of
$55,000,000 are outstanding. These outstanding swap agreements mature
during 1996 and 1997 and require the Company to pay a fixed rate of
5.8-5.87% while the counterparty pays a floating rate based on the
six-month London Interbank Borrowing Offered Rate ("LIBOR") plus an
incremental rate. In connection with the BPI merger, the Company
assumed interest rate cap agreements on $15,000,000 at a LIBOR rate
of 7%, $10,000,000 at a LIBOR rate of 8%, $10,000,000 at a LIBOR rate
of 7.5% and $10,000,000 at a LIBOR rate of 6%. These outstanding
interest rate cap agreements mature during 1996 and 1997. During the
years ended December 31, 1994 and 1995, the Company recognized
charges (income) under its interest rate swap and cap agreements of
$1,200,000 and $(275,000), respectively.
The Senior Credit Facility calls for outstanding borrowings to be
repaid in quarterly installments beginning on March 31, 1997, with
the final installment due on June 30, 2002. In addition to the
limitations and covenants discussed in (c) below, if the Company's
current controlling shareholder, President and Chief Financial
Officer fail to maintain at least 51%, on a combined basis, of the
voting power of the Company's common stock, an event of default would
occur under the Senior Credit Facility and
A-14
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
the lenders could declare all amounts outstanding thereunder due and
payable. The Company pays fees of 1/2% per annum on the aggregate
unused portion of the loan commitment, in addition to an annual
agent's fee.
(b) Senior Notes
------------
As partial financing for the acquisition of certain assets of a radio
station in 1989, the Company issued $20,000,000 of senior notes (the
"Senior Notes"). The Senior Notes bear interest at 11.59% per annum
payable quarterly and principal is due in equal quarterly
installments through May 1999. The fair value of the Company's Senior
Notes is estimated by discounting expected cash flows at the rates
currently offered to the Company for debt of similar maturities.
(c) Other
-----
The Senior Credit Facility and the Senior Notes each contain certain
financial and operational covenants and other restrictions with which
the Company must comply, including, among others, limitations on
capital expenditures, corporate overhead and the incurrence of
additional indebtedness, restrictions on the use of borrowings,
paying cash dividends and redeeming or repurchasing the Company's
capital stock, and requirements to maintain certain financial ratios,
including cash flow and debt service coverage (as defined). The
Senior Credit Facility also separately restricts the Company from
making certain acquisitions without the prior consent of the lenders.
If the Company increases its leverage beyond certain specified levels
in order to effect an acquisition, the Senior Notes require that the
Company prepay all principal and accrued interest thereunder,
together with a "make whole" premium equal to the amount of unearned
interest, based on current market rates, through the original
maturity date.
Substantially all of the Company's assets are pledged as security for
the Senior Credit Facility and Senior Notes under the loan
agreements. The obligations of the Company under the Senior Credit
Facility and Senior Notes rank pari passu.
A summary of the future maturities of long-term debt follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 4,000
1997 26,500
1998 26,500
1999 28,250
2000 30,000
Thereafter 85,750
--------
$201,000
========
</TABLE>
A-15
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(8) Stockholders' Equity
--------------------
(a) Redeemable and Convertible Preferred Stocks
-------------------------------------------
The Company has authorized 6,000,000 shares of preferred stock which
can be issued in series with varying preferences and conversion
features as determined by the Board of Directors of the Company.
In October 1993, the Company issued 1,610,000 shares of $3
Convertible Exchangeable Preferred Stock (the "Convertible Preferred
Stock") for net proceeds of approximately $76,645,000. The shares of
Convertible Preferred Stock are convertible at the option of the
holder at any time, unless previously redeemed or exchanged, into
shares of Class A Common Stock at $16 per share (equivalent to a
conversion rate of 3.1245 shares of Class A Common Stock per share of
Convertible Preferred Stock), subject to adjustment in certain
events. Upon the occurrence of a change in control (as defined),
holders will have special conversion rights; however, the Company, at
its option, may redeem such shares for cash prior to their
conversion. The liquidation preference of each share of Convertible
Preferred Stock is $50 plus accrued and unpaid dividends. Annual
dividends of $3 per share are cumulative and payable quarterly when,
as and if declared by the Board of Directors of the Company.
The Convertible Preferred Stock is redeemable, in whole or in part,
at the option of the Company, for cash at any time if the price of
the Class A Common Stock exceeds 200% of the conversion price for 20
out of any 30 consecutive trading days, and at any time after October
15, 1996, initially at $52.40 per share, declining ratably on October
15 of each year to a redemption price of $50 per share after
October 15, 2003, plus in each case accrued and unpaid dividends.
The Convertible Preferred Stock is exchangeable into 6% Convertible
Subordinated Debentures due 2008 (the "Exchange Debentures"), subject
to certain conditions, at the option of the Company, in whole but not
in part, on any dividend payment date commencing October 15, 1996, at
a rate of $50 principal amount of Exchange Debentures for each share
of Convertible Preferred Stock.
Upon receipt of the proceeds from issuance of the Convertible
Preferred Stock, the Company redeemed all outstanding shares of
Series A and Junior Exchangeable Redeemable Preferred Stock
(collectively, the "Redeemable Preferred Stock") at mandatory
redemption values plus accumulated dividends (approximately
$62,826,000) and repaid bank debt. The difference between the
estimated fair value
A-16
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
of the Redeemable Preferred Stock at issue date and the mandatory
redemption amount was being accreted by charges to accumulated
deficit using the interest method. Due to the early redemption of the
Redeemable Preferred Stock, the Company recognized a one-time
accretion charge of approximately $17,506,000 which increased loss
per common share for the year ended December 31, 1993 by $1.77.
(b) Common Stock
------------
The rights of holders of Class A and Class B Common Stock are
identical except for voting and conversion rights.
Holders of shares of common stock vote as a single class on all
matters submitted to a vote of the stockholders, with each share of
Class A Common Stock entitled to one vote and each share of Class B
Common Stock entitled to ten votes, except for (i) certain amendments
to the Certificate of Incorporation of the Company, (ii) proposed
"going private" transactions between the Company and the controlling
shareholder and (iii) as otherwise provided by law.
Each share of Class B Common Stock is convertible at the option of
the holder into one share of Class A Common Stock at any time. The
Class B Common Stock will convert automatically into Class A Common
Stock, and thereby lose its special voting rights, if such Class B
Common Stock is sold or otherwise transferred to any person or entity
other than certain specified affiliates of the current holder. During
1994 and 1995, the holder of the outstanding shares of Class B Common
Stock disposed of 20,625 and 32,250 shares of such stock, thereby
causing the shares sold to be converted to Class A Common Stock.
In May 1993, the Company issued 6,037,500 shares of its Class A
Common Stock in its initial public offering resulting in net proceeds
to the Company of approximately $58,744,000. These net proceeds were
used to fund the acquisitions of KTRH-AM and KLOL-FM in Houston,
Texas, and WFYV-FM in Jacksonville, Florida, as discussed in note 2.
Upon consummation of the initial public offering, all then
outstanding shares of previously issued Class B Common Stock were
exchanged for a like number of shares of Class A Common Stock, and
current outstanding shares of the Company's Class C Common Stock were
redesignated as shares of Class B Common Stock.
In May 1995, the Company issued 5,611,009 shares of Class A Common
Stock in connection with the BPI Acquisition.
A-17
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
In July 1995, the Company completed a secondary public offering of
8,287,500 shares of its Class A Common Stock. The Company issued and
sold 7,350,000 shares in the offering, while 937,500 shares were
issued and sold in connection with the exercise of certain warrants.
Furthermore, 1,013,886 shares were issued in the offering in
connection with the exercise of the remaining warrants outstanding
pursuant to the over-allotment option. The net proceeds to the
Company in connection with the offering of approximately $132.7
million were used to reduce borrowings under the revolving credit
portion of the Senior Credit Facility.
(c) Common Stock Purchase Warrants
------------------------------
In November 1992, the Company issued certain warrants which,
immediately prior to the consummation of the common stock offering in
July 1995, entitled holders to purchase an aggregate of 1,951,386
shares of Class A Common Stock at $.01 per share. These warrants were
assigned a value at date of issuance of $12,488,000. Such warrants
were exercised in connection with the common stock offering in July
1995.
(d) Stock Options
-------------
The Company has established the 1992, 1993 and 1995 Key Employee
Stock Option Plans (the "Employee Option Plans") which provide for
the issuance of stock options to officers and other key employees of
the Company and its subsidiaries. The Employee Option Plans make
available for issuance an aggregate of 1,957,500 shares of Class A
Common Stock. Options issued under the Employee Option Plans have
varying vesting periods as provided in separate stock option
agreements and generally carry an expiration date of ten years
subsequent to the date of issuance. In March 1993, the Company
granted 877,500 options under the 1992 Employee Option Plan at an
exercise price of $0.01 per share. The difference between the market
value of the Class A Common Stock at the date of grant and the
exercise price of $.01 per share ($7,002,000) was recognized as other
nonrecurring costs in the accompanying consolidated statement of
operations for the year ended December 31, 1993. Options issued under
the 1993 and 1995 Employee Option Plans are required to have exercise
prices equal to or in excess of the fair market value of the
Company's Class A Common Stock on the date of issuance.
In May 1995, the Company also established the Stock Option Plan for
Non-Employee Directors (the "Director Plan") which provides for the
issuance of stock options to non-employee directors of the Company.
The Director Plan makes available for issuance an aggregate of
225,000 shares of Class A Common Stock. Options issued under the
Director Plan have exercise prices equal to the fair market value of
the
A-18
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
Company's Class A Common Stock on the date of issuance, vest over
a three year period and have an expiration date of ten years
subsequent to the date of issuance.
In connection with the BPI Acquisition, the Company assumed
outstanding options to purchase 94,000 shares of BPI common stock
held by BPI employees. The Company currently expects that in
connection with this assumption, options to purchase approximately
97,500 shares of the Company's Class A Common Stock will vest and
become exercisable (subject to satisfaction of vesting conditions
through May 1996).
Following is a summary of activity in the option plans and agreements
discussed above for the years ended December 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Shares Option
under option price per share
------------- ---------------
<S> <C> <C>
Balance at December 31, 1992 -- --
Granted 877,500 $ .01
---------
Balance at December 31, 1993 877,500 $ .01
Granted 280,500 $ 10.67
Exercised (180,000) $ .01
---------
Balance at December 31, 1994 978,000 $ .01-10.67
Granted or assumed 413,138 $10.67-21.33
Exercised (25,500) $ .01-10.67
Cancelled (75,764) $10.67-12.33
---------
Balance at December 31, 1995 1,289,874 $ .01-21.33
=========
</TABLE>
At December 31, 1995, 945,000 options outstanding under the option
plan and agreements discussed above were exercisable and 842,264
shares were available for grant.
(9) Income Taxes
------------
The provision for income taxes for the year ended December 31, 1995 is
comprised of current federal and state taxes of $246,000 and $425,000,
respectively, and a deferred federal income tax benefit of $479,000.
The Company did not incur significant tax expense during the years ended
December 31, 1993 and 1994 as its operations did not generate taxable
income.
A-19
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
Total income tax expense (benefit) differed from the amount computed by
applying the U.S. federal statutory income tax rate of 35% to loss before
extraordinary item for the years ended December 31, 1993, 1994 and 1995 as
a result of the following:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax benefit $(7,055) $(1,172) $(1,980)
Amortization of goodwill 390 355 788
Net operating loss carryforwards for
which no tax benefit was recognized 6,644 760 923
State income taxes, net of federal
benefit -- -- 276
Other, net 21 57 185
------- ------- -------
$ -- $ -- $ 192
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1994
and 1995 are presented below:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 9,573 $ 18,748
Property and equipment and
intangibles, primarily due
to differences in
depreciation and amortization 3,133 --
Accrued compensation relating
to stock options 1,781 1,787
Other 20 649
-------- --------
Total gross deferred tax
assets 14,507 21,184
Less valuation allowance (14,458) --
-------- --------
Net deferred tax assets 49 21,184
Deferred tax liabilities:
Property and equipment and
intangibles, primarily
resulting from difference in
basis from BPI Acquisition -- (49,884)
Other (49) (533)
-------- --------
Net deferred tax liability $ -- $(29,233)
======== ========
</TABLE>
Deferred tax assets and liabilities are computed by applying the U.S.
federal income tax rate in effect to the gross amounts of temporary
differences and other tax attributes, such as net operating loss
carryforwards. Deferred tax assets and liabilities relating to state income
taxes are not material. The net change in the total valuation allowance for
the years ended December 31, 1994 and 1995 was $479,000 and $14,458,000,
respectively. As a result of the application of purchase accounting to the
BPI Acquisition in May 1995, the Company recognized deferred tax assets of
$15,380,000 which had not been recognized by the Company in previous
periods. Recognition of these assets effectively reduced goodwill resulting
from the BPI Acquisition by a corresponding amount.
A-20
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. The Company expects the deferred tax assets at December 31,
1995 to be realized as a result of the reversal during the carryforward
period of existing taxable temporary differences giving rise to deferred
tax liabilities, the generation of taxable income in the carryforward
period and the disposition of one or more of its stations.
At December 31, 1995, the Company has net operating loss carryforwards
available to offset future taxable income of approximately $53,600,000
which begin to expire in 2004. Approximately $32,478,000 of such net
operating loss carryforwards are subject to annual use limitations of up to
$2,800,000 per year.
(10) Operating Leases
----------------
The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from one
to ten years and require the Company to pay all executory costs such as
maintenance and insurance. Rental expense for operating leases (excluding
those with lease terms of one month or less that were not renewed) was
approximately $1,440,000, $2,193,000 and $3,073,000 during 1993, 1994 and
1995, respectively.
Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31,
1995 are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1996 $2,634
1997 2,049
1998 1,739
1999 1,800
2000 1,768
</TABLE>
(11) Commitments and Contingencies
-----------------------------
In August 1993, the Company terminated an agreement with Sagittarius
Broadcasting Company (an affiliate of Infinity Broadcasting Corporation)
and One Twelve, Inc. (collectively, the "Claimants" or the "Plaintiffs")
pursuant to which programming featuring radio personality Howard Stern was
broadcast on radio station WLUP-AM (now WMVP-
A-21
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
AM) in Chicago. The Claimants allege that termination of the agreement was
wrongful and have sued the Company in the Supreme Court of the State of New
York, County of New York (the "Court"). The agreement required payments to
the Claimants in the amount of $2,600,000 plus five percent of advertising
revenues generated by the programming over the three-year term of the
agreement. A total of approximately $680,000 was paid to the Claimants
pursuant to the agreement prior to termination. Claimants' complaint
alleged claims for breach of contract, indemnification, breach of fiduciary
duty and fraud. Plaintiffs' aggregate prayer for relief totaled
$45,000,000. On July 12, 1994, the Court granted the Company's motion to
dismiss Plaintiffs' claims for fraud and breach of fiduciary duty. On June
6, 1995, the Court denied the Plaintiff's motion for summary judgment on
their contract and indemnification claims. The Plaintiffs have appealed the
Court's June 6, 1995 ruling. Plaintiffs seek in excess of $10,000,000 on
their claims for breach of contract and indemnification. The Company
believes that it acted within its rights in terminating the agreement.
The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting
all such matters and believes that their ultimate resolution will not have
a material adverse effect on its consolidated financial position, results
of operations or cash flows.
The Company offers substantially all of its employees voluntary
participation in a 401(k) Plan. The Company may make discretionary
contributions to the plan; however, no such contributions were made by the
Company during 1993, 1994 or 1995.
In October 1995, the Company entered into an agreement with Fairbanks
Communications, Inc., pursuant to which the Company has agreed to acquire
WKLB-FM in Boston for approximately $34,000,000 in cash. The acquisition is
subject to certain conditions including consent of the Federal
Communications Commission ("FCC").
(12) Quarterly Financial Data (Unaudited)
------------------------------------
<TABLE>
<CAPTION>
Quarter ended
-------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------- ------------
<S> <C> <C> <C> <C>
1995:
Net revenues $25,413 $41,992 $47,772 $47,754
Operating income 919 6,613 1,812 4,433
Net loss (4,118) (759) (3,559) (2,244)
Net loss per share (.31) (.05) (.14) (.08)
</TABLE>
A-22
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1994:
Net revenues $22,094 $28,324 $29,369 $29,729
Operating income (loss) (1,763) 3,514 3,200 2,445
Income (loss) before extra-
ordinary item (4,879) 7,316 (700) (1,698)
Net income (loss) (4,879) 7,316 (700) (5,283)
Income (loss) per share before
extraordinary item:
Primary (.47) .39 (.15) (.22)
Fully diluted (.47) .35 (.15) (.22)
Net income (loss) per share:
Primary (.47) .39 (.15) (.49)
Fully diluted (.47) .35 (.15) (.49)
</TABLE>
Operating income (loss) is defined as net revenues less station operating
expenses, corporate general and administrative expenses, depreciation and
amortization and other nonrecurring costs.
The extraordinary loss recorded in the quarter ended December 31, 1994
relates to the early extinguishment of debt (see note 7).
Net loss per share for the years ended December 31, 1994 and 1995 differs
from the sum of net loss per share for the quarters during the respective
year due to the different periods used to calculate weighted average shares
outstanding.
(13) Fair Value of Financial Instruments
-----------------------------------
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments for which the estimated fair value
of the instrument differs significantly from its carrying amounts at
December 31, 1994 and 1995. The fair value of a financial instrument is
defined as the amount at which the instrument could be exchanged in a
current transaction between willing parties.
<TABLE>
<CAPTION>
1994 1995
-------------------- --------------------
Carrying Fair Carrying Fair
amount value amount value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest rate swaps $ 3 $ 750 $ -- $ 272
Long-term debt - Senior
Notes (18,000) (19,350) (14,000) (15,443)
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
Cash and cash equivalents, accounts receivable and accounts payable: The
carrying amount of these assets and liabilities approximates fair value
because of the short maturity of these instruments.
Interest rate swaps: The fair value of the interest rate swap and cap
contracts is estimated by obtaining quotations from brokers. The fair value
is an estimate of the amounts that the Company would receive (pay) at the
reporting date if the contracts were transferred to other parties or
canceled by the broker. The carrying amounts of receivables (payables)
under interest rate swaps and caps are included in accrued expenses in the
accompanying consolidated balance sheets.
Long-term debt: The fair values of the Company's Senior Notes are based on
discounted cash flows under the Senior Notes using interest rates currently
available to the Company for similar debt issues. As amounts outstanding
under the Company's Senior Credit Facility agreements bear interest at
current market rates, their carrying amounts approximate fair market value.
A-23
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(tables in thousands of dollars, except for per share data)
(14) Subsequent Events
-----------------
(a) Pyramid Acquisition
-------------------
On January 17, 1996, the Company acquired Pyramid Communications,
Inc. ("Pyramid"), a radio broadcasting company with nine FM and three
AM radio stations in five radio markets (Chicago, Philadelphia,
Boston, Charlotte and Buffalo) (the "Pyramid Acquisition"). The
Pyramid Acquisition was effected through the merger of a wholly-owned
subsidiary of the Company with and into Pyramid with Pyramid
surviving the merger as a wholly owned subsidiary of the Company. The
aggregate purchase price paid by the Company in connection with the
Pyramid Acquisition was $306.5 million in cash, plus an additional
payment of $9.0 million attributable to net working capital (other
than cash), which payment is subject to post closing adjustments, and
various other direct acquisition costs. Consolidated condensed pro
forma results of operations data for 1994 and 1995 as if the Pyramid
Acquisition, the BPI Acquisition discussed in note 2(c) and the
common stock offering discussed in note 8 occurred at the beginning
of the respective years, follow:
<TABLE>
<CAPTION>
1994 1995
---------- ----------
(unaudited)
<S> <C> <C>
Net revenues $221,593 $248,144
Operating loss (8,001) (1,717)
Net loss (33,035) (34,802)
Net loss per common share (1.35) (1.41)
</TABLE>
To effect the Pyramid Acquisition, the Company amended and restated
the Senior Credit Facility. The amended agreement dated January 17,
1996 permits the existing Senior Credit Facility as described in note
7 to remain in place while providing for an additional revolving loan
("New Revolving Loan") of up to $275,000,000. Repayments of the New
Revolving Loan are to be made at such time as the principal amount of
the New Revolving Loan exceeds the commitment. The New Revolving Loan
commitment reductions begin on March 31, 1998.
(b) Detroit Option Agreement
------------------------
Effective on February 14, 1996, the Company entered into the Detroit
Option Agreement with Chancellor Broadcasting ("Chancellor") pursuant
to which Chancellor granted the Company an option to buy from
Chancellor, and the Company granted Chancellor an option to sell to
the Company, WWWW-FM and WDFN-AM in Detroit, Michigan, for $30
million in cash. In addition, pursuant to the Detroit Option
Agreement, the Company and Chancellor entered into the Detroit joint
sales agreement ("JSA") pursuant to which Chancellor will outsource
to the Company for a two-year period certain sales and promotional
functions of the Detroit stations in exchange for an annual fee of
$2.6 million to be paid to Chancellor. The Company's option is
exercisable during the thirty-day period following the expiration of
the Detroit JSA, which occurs in February 1998. Chancellor may
exercise its option at any time prior to the expiration of the
Detroit JSA, provided that if Chancellor exercises its option, the
closing of the sale of the stations shall not take place prior to the
first anniversary of the expiration of the Detroit JSA.
A-24
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,430 $ 7,216
Accounts receivable, net 45,413 49,700
Prepaid expenses and other assets 2,146 3,704
-------- --------
Total current assets 50,989 60,620
Assets held for sale - 32,000
Property and equipment, net 37,839 44,871
Intangible assets, net 458,787 762,874
Other assets 4,732 8,535
-------- --------
$552,347 $908,900
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
A-25
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,892 $ 20,298
Current portion of long-term debt 4,000 9,625
Other current liabilities 541 541
-------- --------
Total current liabilities 20,433 30,464
-------- --------
Long-term debt, excluding current portion 197,000 500,375
Deferred tax liability 29,233 87,528
Other liabilities 1,104 1,117
-------- --------
Total liabilities 247,770 619,484
-------- --------
Stockholders' equity:
Convertible Preferred Stock.
Authorized 6,000,000 shares;
Issued and outstanding 1,610,000 shares
in 1995 and 1996. 80,500 80,500
Class A common stock, $.01 par value.
Authorized 75,000,000 shares; issued and
outstanding 24,929,529 shares in 1995 and
24,959,529 in 1996. 249 249
Class B common stock, $.01 par value.
Authorized 4,500,000 shares; issued and
outstanding 3,116,066 shares in 1995 and
in 1996. 31 31
Paid-in capital 317,295 317,615
Accumulated deficit (93,498) (108,979)
-------- --------
Total stockholders' equity 304,577 289,416
-------- --------
$552,347 $908,900
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
A-26
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1996
---------- -----------
<S> <C> <C>
Gross revenues $ 29,088 $ 60,782
Less agency commissions 3,675 7,411
---------- -----------
Net revenues 25,413 53,371
---------- -----------
Station operating expenses
excluding depreciation
and amortization 17,428 37,426
Depreciation and amortization 6,290 22,676
Corporate general and
administrative expenses 776 1,492
---------- -----------
Operating expenses 24,494 61,594
---------- -----------
Operating income (loss) 919 (8,223)
---------- -----------
Nonoperating expenses (income):
Interest expense 3,755 8,966
Interest income (14) -
Other expense, net 88 7
---------- -----------
Nonoperating expenses, net 3,829 8,973
---------- -----------
Loss before income taxes (2,910) (17,196)
Income tax benefit - 2,923
---------- -----------
Net loss (2,910) (14,273)
Preferred stock dividends (1,208) (1,208)
---------- -----------
Net loss attributable to
common stockholders $ (4,118) $ (15,481)
========== ===========
Loss per common share $ (0.31) $ (0.55)
========== ===========
Weighted average
common shares outstanding 13,107,000 28,056,000
========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
A-27
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,910) $ (14,273)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 1,183 1,784
Amortization of goodwill, intangible
assets and other assets 5,107 20,892
Provision for doubtful accounts 242 677
Deferred income tax benefit - (2,923)
Changes in certain assets and liabilities,
net of effects of acquisitions:
Accounts receivable 3,226 9,771
Prepaid expenses and other current assets (197) (713)
Accounts payable and accrued expenses (1,278) (383)
Other assets (208) (80)
Other liabilities (3) 108
------- ---------
Net cash provided by
operating activities 5,162 14,860
------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired - (314,826)
Capital expenditures (911) (344)
Other (540) (336)
------- ---------
Net cash used by investing activities (1,451) (315,506)
------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 319,750
Principal payments on long-term debt (3,000) (10,750)
Payments on other long-term liabilities (417) (95)
Proceeds from issuance of common stock - 320
Dividend payments on preferred stock (1,208) (1,208)
Payments for debt issuance costs (177) (3,585)
------- ---------
Net cash provided by (used in) financing
activities (4,802) 304,432
------- ---------
Increase (decrease) in cash and cash equivalents (1,091) 3,786
Cash and cash equivalents at beginning
of period 1,216 3,430
------- ---------
Cash and cash equivalents at end of
period $ 125 $ 7,216
======= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
A-28
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
---------------------
In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Evergreen Media Corporation and subsidiaries (the "Company") for
the periods presented.
Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany balances and transactions have been eliminated in consolidation.
On May 15, 1996, the shareholders of the Company amended its Certificate of
Incorporation to increase the authorized shares of the Company from 31,000,000
to 75,000,000. On August 8, 1996, the Company declared a three-for-two stock
split effected in the form of a stock dividend payable on August 26, 1996 to
shareholders of record at the close of business on August 19, 1996. All share
data contained in the accompanying financial statements have been retroactively
adjusted to give effect to the increase in authorized shares and the stock
dividend.
Loss per common share is based on the weighted average number of common
shares outstanding during the periods. Stock options and warrants are not
included in the calculation as their effect would be antidilutive.
The Company adopted the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" on
January 1, 1996. The adoption of this statement did not have a material effect
on the Company's financial position or results of operations.
2. Acquisitions, Dispositions, and Financings
------------------------------------------
In May 1995, the Company acquired Broadcasting Partners, Inc. ("BPI"), a
publicly traded radio broadcasting company with seven FM and four AM radio
stations, eight of which are in the nation's ten largest radio markets(the "BPI
Acquisition"). The BPI Acquisition was effected through the merger of a wholly-
owned subsidiary of the Company with and into BPI, with BPI surviving the merger
as a wholly-owned subsidiary of the Company. The BPI Acquisition included the
conversion of each outstanding share of BPI common stock into the right to
receive $12.00 in cash and .69 shares of the Company's Class A Common Stock,
resulting in total cash payments of $94.8 million and the issuance of 5,611,009
shares of the Company's Class A Common Stock valued at $12.50 per share. In
addition, the Company retired existing BPI debt of $81.9 million
A-29
<PAGE>
and incurred various other direct acquisition costs. The total purchase price,
including closing costs, allocated to net assets acquired was approximately
$258.6 million.
In July 1995, the Company completed a secondary public offering of
8,287,500 shares of its Class A Common Stock. The Company issued and sold
7,350,000 shares in the offering, while 937,500 shares were issued and sold in
connection with the exercise of certain warrants. Furthermore, 1,013,886 shares
were issued in the offering in connection with the exercise of the remaining
warrants outstanding pursuant to the over-allotment option. The net proceeds to
the Company in connection with the offering of approximately $132.7 million were
used to reduce borrowings under the revolving credit portion of the Senior
Credit Facility.
On January 17, 1996, the Company acquired Pyramid Communications, Inc.
("Pyramid"), a radio broadcasting company with nine FM and three AM radio
stations in five radio markets (Chicago, Philadelphia, Boston, Charlotte and
Buffalo) (the "Pyramid Acquisition"). The Pyramid Acquisition was effected
through the merger of a wholly-owned subsidiary of the Company with and into
Pyramid with Pyramid surviving the merger as a wholly-owned subsidiary of the
Company. The total purchase price, including closing costs, allocated to net
assets acquired was approximately $316.3 million.
Effective on February 14, 1996, the Company entered into the Detroit Option
Agreement with Chancellor Broadcasting ("Chancellor") pursuant to which
Chancellor granted the Company an option to buy from Chancellor, and the Company
granted Chancellor an option to sell to the Company, WWWW-FM and WDFN-AM in
Detroit, Michigan, for $30 million in cash. In addition, pursuant to the
Detroit Option Agreement, the Company and Chancellor entered into the Detroit
joint sales agreement ("JSA") pursuant to which Chancellor will outsource to
the Company for a two-year period certain sales and promotional functions of the
Detroit stations in exchange for an annual fee of $2.6 million to be paid to
Chancellor. Effective April 1, 1996, the JSA was converted into a time
brokerage agreement which will extend for the same time period as the previous
JSA. The Company's option is exercisable during the thirty-day period following
the expiration of the Detroit JSA, which occurs in February 1998. Chancellor
may exercise its option at any time prior to the expiration of the Detroit JSA,
provided that if Chancellor exercises its option, the closing of the sale of the
stations shall not take place prior to the first anniversary of the expiration
of the Detroit JSA.
The BPI Acquisition and the Pyramid Acquisition discussed above were
accounted for as purchases. Accordingly, the accompanying
A-30
<PAGE>
consolidated financial statements include the results of operations of the
acquired entities from the dates of acquisition.
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Working capital, including cash of
$492 in 1995 and $949 in 1996 $ 12,432 $ 16,837
Assets held for sale - 32,000
Property and equipment 11,684 8,472
Intangible assets 264,650 325,040
Deferred tax liability (29,712) (61,218)
Other liabilities (420) (4,788)
-------- --------
$258,634 $316,343
======== ========
</TABLE>
Pro forma Results of Operations (Unaudited)
- -------------------------------------------
Consolidated condensed pro forma results of operations data for the three months
ended March 31, 1995 and 1996, as if the 1995 common stock offering and the 1995
and 1996 acquisitions discussed above and the dispositions discussed in note 4,
"Other Events" occurred at January 1, 1995, follow:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Net revenues $ 51,657 $ 55,150
Operating income (9,175) (9,601)
Net loss (15,010) (14,968)
Net loss per common share (0.58) (0.57)
</TABLE>
The above pro forma results of operations are presented pursuant to
applicable accounting rules relating to business acquisitions and are not
necessarily indicative of the actual results that would have been achieved had
these transactions occurred at the beginning of 1995, nor are they indicative of
future results of operations. Pro forma adjustments for the April 1996 agreement
to acquire KYLD-FM in San Francisco and the May 1996 acquisition of WKLB-FM in
Boston are not presented as any adjustment would be immaterial to the
consolidated condensed pro forma results of operations.
3. Contingencies
-------------
The Company is involved in several lawsuits that are incidental to its
business. A discussion of certain of these lawsuits is contained in Part II,
Item 1, "Legal Proceedings", of this Form 10-Q. The Company believes that the
ultimate resolution of the lawsuits will not have a material effect on its
financial position or results of operations.
A-31
<PAGE>
4. Other Events
------------
In April 1996, the Company entered into agreements to sell Buffalo radio
stations WHTT-FM and WHTT-AM for $19.5 million in cash and WSJZ-FM for $12.5
million in cash in two separate transactions. The Company also entered into
time brokerage agreements to sell substantially all of the broadcast time of
these stations pending the completion of the sales. The aforementioned stations
were acquired in connection with the Pyramid Acquisition discussed in Note 2.
Accordingly, the assets of these stations have been classified as assets held
for sale at March 31, 1996 in connection with the purchase price allocation of
the Pyramid Acquisition, and no gain or loss will be recognized by the Company
upon consummation of the sales.
In April 1996, the Company entered into an agreement to acquire KYLD-FM in
San Francisco for $44 million in cash. The Company also entered into an
agreement to operate the station under a time brokerage agreement effective May
1, 1996 pending the completion of the purchase. The acquisition of KYLD-FM,
expected to close in the fall of 1996, will be financed through additional
borrowings under the Senior Credit Facility.
In May 1996, the Company acquired WKLB-FM in Boston for $34 million in cash
plus various other direct acquisition costs. The acquisition of WKLB-FM was
financed through additional borrowings of $33 million under the Senior Credit
Facility in addition to $1 million in escrow funds previously paid by the
Company.
In May 1996, the Company amended the Senior Credit Facility which resulted
in reducing the incremental rate applied to the participating banks' prime rate
or Eurodollar rate on borrowings under the Senior Credit Facility.
A-32
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Evergreen Media Corporation:
We consent to incorporation by reference in the Registration Statements on Form
S-3 (No. 33-93874) and Form S-8 (Nos. 33-83124 and 333-04379) of Evergreen Media
Corporation of our report dated February 9, 1996, except for note 14(b), which
is as of February 14, 1996, and note 1(m), which is as of August 8, 1996,
relating to the consolidated balance sheets of Evergreen Media Corporation and
subsidiaries as of December 31, 1994 and 1995 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of
the years in the three-year period ended December 31, 1995, which report
appears in the Form 8-K/A dated September 3, 1996 filed by Evergreen Media
Corporation.
KPMG Peat Marwick LLP
Dallas, Texas
September 18, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 12/31/95
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,430
<SECURITIES> 0
<RECEIVABLES> 47,413
<ALLOWANCES> 2,000
<INVENTORY> 0
<CURRENT-ASSETS> 50,989
<PP&E> 57,951
<DEPRECIATION> 20,112
<TOTAL-ASSETS> 552,347
<CURRENT-LIABILITIES> 20,433
<BONDS> 197,000
80,500
0
<COMMON> 280
<OTHER-SE> 223,797
<TOTAL-LIABILITY-AND-EQUITY> 552,347
<SALES> 162,931
<TOTAL-REVENUES> 162,931
<CGS> 23,431
<TOTAL-COSTS> 149,154
<OTHER-EXPENSES> (291)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,144
<INCOME-PRETAX> (5,658)
<INCOME-TAX> 192
<INCOME-CONTINUING> (5,850)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,680)
<EPS-PRIMARY> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/96
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,216
<SECURITIES> 0
<RECEIVABLES> 52,270
<ALLOWANCES> 2,570
<INVENTORY> 0
<CURRENT-ASSETS> 60,620
<PP&E> 66,522
<DEPRECIATION> 21,651
<TOTAL-ASSETS> 908,900
<CURRENT-LIABILITIES> 30,464
<BONDS> 500,375
80,500
0
<COMMON> 280
<OTHER-SE> 208,636
<TOTAL-LIABILITY-AND-EQUITY> 908,900
<SALES> 53,371
<TOTAL-REVENUES> 53,371
<CGS> 7,411
<TOTAL-COSTS> 61,594
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,966
<INCOME-PRETAX> (17,196)
<INCOME-TAX> (2,923)
<INCOME-CONTINUING> (14,273)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,481)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> (0.55)
</TABLE>
