<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File
March 31, 1997 Number 0-215-70
Evergreen Media Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2247099
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
433 East Las Colinas Boulevard, Suite 1130, Irving, Texas 75039
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(972) 869-9020
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 39,108,285 shares of Class A
Common Stock and 3,114,066 shares of Class B Common Stock as of April 30, 1997.
<PAGE>
EVERGREEN MEDIA CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
Consolidated Statements of Operations (unaudited)
Consolidated Statements of Cash Flows (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II.
Item 1. Legal Proceedings
Item 2. Other Information
Item 6. Exhibits and Reports on Form 8-K
<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,
1996 1997
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,060 $ 5,269
Accounts receivable, net 85,159 79,139
Prepaid expenses and other assets 6,352 5,919
---------- ----------
Total current assets 94,571 90,327
Assets held for sale -- 50,000
Property and equipment, net 48,193 51,356
Intangible assets, net 853,643 928,440
Other assets 24,552 66,532
---------- ----------
$1,020,959 $1,186,655
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
------------ ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 26,366 $ 21,992
Current portion of long-term debt 26,500 -
Other current liabilities 284 152
---------- ----------
Total current liabilities 53,150 22,144
Long-term debt, excluding current portion 331,500 535,375
Deferred tax liability 86,098 84,789
Other liabilities 800 823
---------- ----------
Total liabilities 471,548 643,131
---------- ----------
Stockholders' equity:
Class A common stock, $.01 par value.
Authorized 75,000,000 shares; issued and outstanding
39,038,848 shares in 1996 and 39,108,285 in 1997 390 391
Class B common stock, $.01 par value.
Authorized 4,500,000 shares; issued and outstanding
3,116,066 shares in 1996 and 3,114,066 in 1997 31 31
Paid-in capital 662,502 662,625
Accumulated deficit (113,512) (119,523)
---------- ----------
Total stockholders' equity 549,411 543,524
---------- ----------
$1,020,959 $1,186,655
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<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,
1996 1997
---------- ----------
<S> <C> <C>
Gross revenues $ 60,782 $ 93,812
Less agency commissions 7,411 11,915
----------- -----------
Net revenues 53,371 81,897
----------- -----------
Station operating expenses excluding depreciation
and amortization 37,426 52,984
Depreciation and amortization 22,676 26,015
Corporate general and administrative expenses 1,492 2,330
----------- -----------
Operating expenses 61,594 81,329
----------- -----------
Operating income (loss) (8,223) 568
----------- -----------
Nonoperating expenses (income):
Interest expense, net 8,973 7,888
----------- -----------
Nonoperating expenses, net 8,973 7,888
----------- -----------
Loss before income taxes (17,196) (7,320)
Income tax benefit 2,923 1,309
----------- -----------
Net loss (14,273) (6,011)
Preferred stock dividends (1,208) -
----------- -----------
Net loss attributable to common stockholders $ (15,481) $ (6,011)
=========== ===========
Loss per common share $ (0.55) $ (0.14)
=========== ===========
Weighted average common shares outstanding 28,056,000 42,188,000
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (14,273) $ (6,011)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 1,784 2,419
Amortization of goodwill, intangible
assets and other assets 20,892 23,596
Provisions for doubtful accounts 677 1,254
Deferred income tax benefit (2,923) (1,309)
Changes in certain assets and liabilities
net of effects of acquisitions:
Accounts receivable 9,771 4,766
Prepaid expenses and other current assets (713) 433
Accounts payable and accrued expenses (383) (5,911)
Other assets (80) (19)
Other liabilities 108 23
--------- ---------
Net cash provided by operating activities 14,860 19,241
--------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired (314,826) (83,500)
Assets held for sale -- (50,000)
Escrow deposits on pending acquisitions -- (53,750)
Capital expenditures (344) (672)
Other (336) (6,461)
--------- ---------
Net cash used by investing activities (315,506) (194,383)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 319,750 192,250
Principal payments on long-term debt (10,750) (14,875)
Payments on other liabilities (95) (132)
Proceeds from issuance of common stock 320 124
Dividend payments on preferred stock (1,208) --
Payments for debt issuance costs (3,585) (16)
--------- ---------
Net cash provided by financing activities 304,432 177,351
--------- ---------
Increase (decrease) in cash and cash equivalents 3,786 2,209
Cash and cash equivalents at beginning of period 3,430 3,060
--------- ---------
Cash and cash equivalents at end of period $ 7,216 $ 5,269
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<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, 1996.
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 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
and per share data (other than authorized share data) contained in the
accompanying financial statements have been retroactively adjusted to give
effect to the stock dividend.
Loss per common share is based on the weighted average number of common
shares outstanding during the periods after giving retroactive effect to the
stock split. Stock options and warrants are not included in the calculation as
their effect would be antidilutive.
2. Acquisitions, Dispositions, and Financings
------------------------------------------
1996 COMPLETED TRANSACTIONS
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 in cash.
On May 3, 1996, the Company acquired WKLB-FM in Boston for $34.0 million
in cash plus various other direct acquisition costs. On November 26, 1996, the
Company exchanged WKLB-FM in Boston (now known as WROR-FM) for WGAY-FM in
Washington, D.C. The Company had previously been operating WGAY-FM under a time
brokerage agreement and selling substantially all of the broadcast time of WKLB-
FM under a time brokerage agreement, in each case since June 17, 1996, pending
completion of the exchange.
On July 19, 1996, the Company sold WHTT-FM and WHTT-AM in Buffalo for
$19.5 million in cash, and on August 1, 1996, the Company sold WSJZ-FM in
Buffalo for $12.5 million in cash (collectively, the "Buffalo Stations"). The
assets of the Buffalo Stations were classified as assets held for sale in the
Pyramid Acquisition and no gain or loss was recognized by the Company upon
consummation of the sales. The Company had previously
<PAGE>
entered into time brokerage agreements (effective April 15, 1996 for WSJZ-FM
and April 25, 1996 for WHTT-FM and WHTT-AM) to sell substantially all of the
broadcast time of these stations pending completion of the sales.
On August 14, 1996, the Company acquired KYLD-FM in San Francisco for
$44.0 million in cash plus various other direct acquisition costs. The Company
had previously been operating KYLD-FM under a time brokerage agreement since May
1, 1996.
On October 17, 1996, the Company completed a secondary public offering
of 9,000,000 shares of its Class A Common Stock (the "1996 Offering"). The net
proceeds of approximately $264.2 million were used to reduce borrowings under
the Company's senior credit facility.
On October 18, 1996, the Company acquired WEDR-FM in Miami for $65.0
million in cash plus various other direct acquisition costs.
1997 COMPLETED TRANSACTIONS
On January 31, 1997, the Company acquired WWWW-FM and WDFN-AM in Detroit
for $30.0 million in cash plus various other direct acquisition costs. The
Company had previously provided certain sales and promotional functions to WWWW-
FM and WDFN-AM under a joint sales agreement since February 14, 1996 and
subsequently operated the stations under a time brokerage agreement since April
1, 1996.
On January 31, 1997, the Company acquired KKSF-FM and KDFC-FM/AM in San
Francisco for $115.0 million in cash plus various other direct acquisition
costs. The Company had previously been operating KKSF-FM and KDFC-FM/AM under a
time brokerage agreement since November 1, 1996.
On April 1, 1997, the Company acquired WJLB-FM and WMXD-FM in Detroit
for $168.0 million in cash plus various other direct acquisition costs. The
Company had previously been operating WJLB-FM and WMXD-FM under time brokerage
agreements since September 1, 1996.
On April 3, 1997, the Company swapped WQRS-FM in Detroit (which the
Company acquired on April 3, 1997 for $32.0 million in cash), in exchange for
WWRC-AM in Washington, D.C. and $9.5 million in cash. The net purchase price to
the Company of WWRC-AM was therefore $22.5 million. The Company had previously
been operating WWRC-AM under a time brokerage agreement since June 17, 1996.
On April 25, 1997, the Company amended and restated its senior credit
facility with a group of commercial banks (the "Senior Credit Facility"), which,
among other things, increased the total commitment thereunder to $1.75 billion.
Upon consummation of the Chancellor Merger (discussed below), it is expected
that the total commitment under the Senior Credit Facility will be increased to
$2.50 billion. In connection with the amendment and restatement of the Senior
Credit Facility, on April 25, 1997, the Company repaid all amounts outstanding
under its 11.59% Senior Secured Notes due 1999.
On May 1, 1997, the Company acquired WDAS-FM/AM in Philadelphia for
$103.0 million in cash plus various other direct acquisition costs.
PENDING TRANSACTIONS
On July 15, 1996, the Company entered into an agreement to acquire WPNT-
FM in Chicago from affiliates of Century Broadcasting Company for $73.75 million
in cash (including $5.0 million already paid by the Company for an option to
purchase the station and $0.5 million paid by the Company in escrow) (the
"Century Acquisition"). The Century Acquisition, expected to close in the second
quarter of 1997, will be financed through borrowings under the Senior Credit
Facility. On April 10, 1997, the Company entered into an agreement to sell WPNT-
FM in Chicago to Bonneville International Corporation ("Bonneville") for $75.0
million in cash (discussed below).
<PAGE>
On August 12, 1996, the Company entered into an agreement to acquire
WFLN-FM in Philadelphia from Secret Communications, L.P. ("Secret") for $37.75
million in cash (the "Secret/Philadelphia Acquisition"). The Company also
entered into an agreement to operate WFLN-FM under a time brokerage agreement
effective September 1, 1996. The Secret/Philadelphia Acquisition, expected to
close in the second or third quarter of 1997, will be financed through
borrowings under the Senior Credit Facility. On April 4, 1997, the Company
entered into an agreement to sell WFLN-FM in Philadelphia to affiliates of
Greater Media, Inc. ("Greater Media") for $41.8 million in cash (the "Greater
Media Disposition"). On May 1, 1997, the Company assigned its time brokerage
agreement to operate WFLN-FM to Greater Media. The disposition of WFLN-FM is
expected to close in the second or third quarter of 1997.
On December 5, 1996, the Company agreed to swap five of its six stations
in the Charlotte, N.C. market (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM), which
were acquired as part of the BPI Acquisition and the Pyramid Acquisition, to EZ
Communications, Inc. ("EZ") for WIOQ-FM and WUSL-FM in Philadelphia (the "EZ
Exchange"). As part of this transaction, the Company also agreed to sell its
sixth radio station in Charlotte, WNKS-FM, to EZ for $10.0 million in cash (the
"EZ Sale" and, collectively with the EZ Exchange, the "EZ Transaction"). The EZ
Transaction is expected to close in the second quarter of 1997.
On February 18, 1997, the Company entered into an agreement to sell
WEJM-FM in Chicago for $14.75 million in cash to affiliates of Crawford
Broadcasting (the "Crawford Disposition"). On March 13, 1997, the Company
transferred WEJM-FM to an independent operating trust (the "WEJM Trust") pending
consummation of the disposition. The WEJM Trust permits the Company to retain
its economic interest in WEJM-FM, but no control, and allows the Company to
maintain compliance with the FCC's multiple ownership limitations in Chicago
upon consummation of the Century Acquisition. The Crawford Disposition is
expected to close in the second quarter of 1997. On March 19, 1997, the Company
entered into an agreement to sell WEJM-AM in Chicago for $7.5 million in cash to
affiliates of Douglas Broadcasting (the "Douglas Disposition"). The Douglas
Disposition is expected to close in the third or fourth quarter of 1997.
On February 16, 1997, the Company entered into a stock purchase
agreement (the "Viacom Stock Purchase Agreement") with Viacom International,
Inc. ("Viacom"), whereby the Company agreed to acquire all of the issued and
outstanding capital stock of certain subsidiaries of Viacom (the "Viacom
Subsidiaries") for an aggregate purchase price of $1.075 billion, plus working
capital, in cash. The Viacom Subsidiaries own and operate ten radio stations in
the Los Angeles, New York, Chicago, Washington, D.C. and Detroit markets.
On February 19, 1997, the Company entered into an agreement (the
"Chancellor Merger Agreement") with Chancellor Broadcasting Company
(''Chancellor'') and Chancellor Radio Broadcasting Company, a direct operating
subsidiary of Chancellor ("CRBC"), pursuant to which Chancellor and CRBC will be
merged with and into the Company in a stock-for-stock transaction, with the
Company remaining as the surviving corporation (the "Chancellor Merger").
Assuming the consummation of transactions of Chancellor and CRBC pending as of
March 31, 1997, Chancellor and CRBC will own and operate 51 radio stations (34
FM and 17 AM) in fourteen markets. Upon consummation of the Chancellor Merger,
the Company will be renamed "Chancellor Media Corporation." The Company expects
that the Chancellor Merger will be completed in the third or fourth quarter of
1997.
In connection with the Chancellor Merger Agreement, on February 19,
1997, the Company, Chancellor and CRBC entered into a joint purchase agreement
(the "Viacom Joint Purchase Agreement") that governs certain aspects of the
acquisition of the Viacom Subsidiaries as between Chancellor, CRBC and the
Company. Pursuant to the Viacom Joint Purchase Agreement, the Company and CRBC
each paid $53.75 million to Viacom to satisfy the obligation of the Company
under the Viacom Stock Purchase Agreement to pay a deposit of 10% of the
purchase price, which deposit is non-refundable except under certain limited
circumstances (the "Company Deposit" and the "CRBC Deposit," respectively). In
the event that consummation of the Viacom Stock Purchase Agreement occurs prior
to consummation of the Chancellor Merger Agreement, CRBC will be required to
purchase the Viacom Subsidiaries that own and operate the stations in Los
Angeles, Chicago and Detroit for $480.0 million, plus working capital, in cash,
including the CRBC Deposit (the "Chancellor Viacom Acquisition") and the
<PAGE>
Company will be required to purchase the Viacom Subsidiaries that own and
operate the stations in New York and Washington, D.C. for $595.0 million, plus
working capital, in cash, including the Company Deposit (the "Evergreen Viacom
Acquisition"). In the event that consummation of the Viacom Stock Purchase
Agreement occurs after the consummation of the transaction with Chancellor, the
surviving corporation will acquire all of the Viacom Subsidiaries. The Evergreen
Viacom Acquisition, expected to close during the second quarter of 1997, will be
financed through borrowings under the Senior Credit Facility, together with
other sources of debt and equity capital which the Company is currently
pursuing. The Company is currently discussing a variety of financing
alternatives with various parties, but, as of the date hereof, the Company has
not made any firm decision about whether to raise debt or equity financing or
some combination thereof.
On April 4, 1997, the Company entered into an agreement to acquire WGCI-
FM/AM in Chicago, KHKS-FM in Dallas, and KKBQ-FM/AM in Houston from Pacific and
Southern Company, Inc., a subsidiary of Gannett Co., Inc. ("P&S"), for $340.0
million in cash, subject to an upward adjustment of up to $10.0 million
depending on the timing of the consummation of the transactions (the "Gannett
Acquisition"). On April 10, 1997, the Company issued letters of credit for the
benefit of P&S in the aggregate amount of $34.0 million to secure the Company's
obligations. The Gannett Acquisition, expected to close in the third or fourth
quarter of 1997, is expected to be financed with borrowings under the Senior
Credit Facility.
On April 9, 1997, the Company entered into an agreement to sell the FCC
authorizations and transmission equipment currently used in the operation of
KYLD-FM in San Francisco to Susquehanna Radio Corp. ("Susquehanna") for $44.0
million in cash (the "San Francisco Frequency Disposition"). Simultaneously
therewith, CRBC entered into an agreement to sell to Susquehanna the call
letters "KSAN-FM," which are currently used by CRBC in San Francisco. Upon
consummation of the San Francisco Frequency Disposition, the Company intends to
operate KYLD-FM on the frequency currently assigned to KSAN-FM. The Company
expects that the San Francisco Frequency Disposition will be completed in the
second or third quarter of 1997.
On April 10, 1997, the Company entered into agreement to sell WPNT-FM in
Chicago (previously discussed), WLUP-FM in Chicago for $80.0 million in cash,
and KDFC-FM in San Francisco for $50.0 million in cash to Bonneville
(collectively, the "Bonneville Dispositions"). The assets of KDFC-FM are
classified as assets held for sale in connection with the purchase price
allocation of the acquisition of KKSF-FM/KDFC-FM/AM and no gain or loss will be
recognized by the Company upon consummation of the sale of KDFC-FM. The Company
expects that the Bonneville Dispositions will be completed in the second or
third quarter of 1997.
On April 11, 1997, the Company entered into an agreement to sell WJZW-FM
in Washington, D.C., which the Company will acquire in the Evergreen Viacom
Acquisition, for $68.0 million in cash (the "ABC/Washington Disposition"). The
Company expects that the disposition of WJZW-FM will be completed in the second
or third quarter of 1997.
Consummation of each of the transactions discussed above is subject to
various conditions, including approval from the FCC and the expiration or early
termination of any waiting period required under the HSR Act. The Company
believes that such conditions will be satisfied in the ordinary course, but
there can be no assurance that this will be the case.
Summary of Net Assets Acquired
- ------------------------------
The Pyramid Acquisition and the acquisitions of WKLB-FM, KYLD-FM, WEDR-
FM, WWWW-FM, WDFN-AM, KKSF-FM and KDFC-FM/AM 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.
<PAGE>
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
Three
Year Ended Months Ended
December 31, March 31,
1996 1997
------------ ------------
<S> <C> <C>
Working capital, including cash of $1,011 in 1996 $ 11,218 $ --
Property and equipment 11,519 4,910
Assets held for sale 32,000 50,000
Intangible assets 465,824 90,090
Deferred tax liability (61,218) --
-------- --------
$459,343 $145,000
======== ========
</TABLE>
The consolidated condensed results of operations data for the three months ended
March 31, 1997 and 1996, as if the Pyramid Acquisition and the acquisitions of
WKLB-FM, KYLD-FM, WEDR-FM, WWWW-FM, WDFN-AM, KKSF-FM, KDFC-FM/AM and WDAS-FM/AM,
the 1996 Offering and preferred stock conversion and redemption, had occurred at
January 1, 1996, follow:
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1997
--------------------------
<S> <C> <C>
Net revenues $ 70,472 $ 87,278
Operating income (loss) (11,989) (6,038)
Net loss (19,804) (18,151)
Net loss per common share $ (0.47) $ (0.43)
</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 1996, nor are they indicative of
future 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
GENERAL
- -------
Since the Company's acquisition in May of 1995 of Broadcasting Partners,
Inc. (``BPI''), an eleven-station radio broadcasting group owning eight stations
in the nation's ten largest radio markets (the ``BPI Acquisition''), the Company
has engaged in an acquisition strategy concentrating on expanding the Company's
presence in the nation's largest radio markets. Implementation of this
acquisition strategy was significantly accelerated in 1996 and to date in 1997
due to passage of the Telecommunications Act of 1996 and the associated
relaxation of national and local ownership limits. For a discussion of the
various transactions completed and agreements entered into since January 1, 1996
as part of the Company's acquisition strategy, see the Notes to the Consolidated
Financial Statements contained in this Quarterly Report on Form 10-Q.
Consummation of the Pending Transactions (including the Chancellor Merger, the
Viacom Stock Purchase Agreement and the Gannett Acquisition) will add 22
stations in the Company's current markets, and 41 stations in 10 markets not
currently served by the Company. The Company's station portfolio will expand to
include a total of 12 radio station clusters of four or five FM stations
("superduopolies"), with seven in the 12 largest radio markets - Los Angeles,
New York, Chicago, San Francisco, Philadelphia, Washington, D.C. and Detroit -
and five in other large markets - Denver, Minneapolis-St. Paul, Phoenix, Orlando
and Nassau-Suffolk (Long Island).
The Company's results of operations from period to period have not
historically been comparable because of the impact of the various station
acquisitions and dispositions that the Company has completed. The chart below
summarizes the acquisitions and dispositions that the Company has completed
since January 1, 1996 through March 31, 1997:
<TABLE>
<CAPTION>
DATE OF NUMBER OF COST (PROCEEDS)
TRANSACTION TRANSACTION STATIONS MARKET(S) (IN THOUSANDS)
----------- ----------- --------- --------- --------------
<S> <C> <C> <C> <C>
Pyramid Acquisition 1/96 9 FM Chicago, Philadelphia, Boston $316,343
3 FM Charlotte, Buffalo
Acquisition 5/96 1 FM Boston $ 34,000
Disposition 8/96 1 FM Buffalo ($ 12,500)
Disposition 8/96 1 FM Buffalo ($ 19,500)
1 AM
Acquisition 8/96 1 FM San Francisco $ 44,000
Acquisition 10/96 1 FM Miami $ 65,000
Exchange 11/96 1 FM in return Exchanged Boston for Washington, N/A
for 1 FM D.C.
Acquisition 1/97 1 FM Detroit $ 30,000
1 AM
Acquisition 1/97 2 FM San Francisco $115,000
1 AM
</TABLE>
In the following analysis, management discusses the broadcast cash flow
of its radio station group. The performance of a radio station group is
customarily measured by its ability to generate broadcast cash flow. The two
components of broadcast cash flow are gross revenues (net of agency commissions)
and operating expenses (excluding depreciation and amortization and corporate
general and administrative expense). The primary source of revenues is the sale
of broadcasting time for advertising. The Company's most significant operating
expenses for purposes of the computation of broadcast cash flow are employee
salaries and commissions, programming expenses, and advertising and promotion
expenses. The Company strives to control these expenses by working
<PAGE>
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the Company's first
calendar quarter generally produces the lowest revenues, and the fourth quarter
generally produces the highest revenues.
Data on broadcast cash flow, although not calculated in accordance with
generally accepted accounting principles, is widely used in the broadcast
industry as a measure of a company's operating performance. Nevertheless, this
measure should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is calculated
in accordance with generally accepted accounting principles. Broadcast cash flow
does not take into account the Company's debt service requirements and other
commitments and, accordingly, broadcast cash flow is not necessarily indicative
of amounts that may be available for dividends, reinvestment in the Company's
business or other discretionary uses.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED
MARCH 31, 1996
The Company's results of operations for the three months ended March 31,
1997 are not comparable to the results of operations for the three months ended
March 31, 1996 due to the impact of the various station acquisitions and
dispositions discussed elsewhere in this Quarterly Report on Form 10-Q and in
the table above.
Net revenues for the three months ended March 31, 1997 increased 53.4%
to $81.9 million compared to $53.4 million for the three months ended March 31,
1997. Station operating expenses excluding depreciation and amortization for the
first quarter of 1997 increased 41.6% to $53.0 million compared to $37.4 million
for the same quarter in 1996. Station operating income excluding depreciation
and amortization and corporate, general and administrative expense (broadcast
cash flow) for the first quarter of 1997 increased 81.3% to $28.9 million
compared to $15.9 million for the same quarter in 1996. The increase in net
revenues, station operating expenses, and broadcast cash flow was primarily
attributable to the impact of the various station acquisitions, dispositions,
and time brokerage agreements discussed above, in addition to the overall net
operational improvements realized by the Company's radio stations.
Depreciation and amortization for the first quarter of 1997 increased
14.7% to $26.0 million compared to $22.7 million for the same period in 1996.
The increase represents additional depreciation and amortization due to the
impact of the recent acquisitions, offset by decreases due to certain
intangibles which became fully amortized in 1996 and 1997.
Corporate general and administrative expenses for the first quarter of
1997 increased 56.2% to $2.3 million compared to $1.5 million for the same
period in 1996. The increase is due to the growth of the Company, and related
increase in properties and staff, primarily due to the recent acquisitions.
As a result of the above factors, the Company realized $0.6 million of
operating income for the first quarter of 1997 compared to an operating loss of
$8.2 million for the first quarter of 1996.
Interest expense, net for the first quarter of 1997 decreased 12.0% to
$7.9 million compared to $9.0 million for the same period in 1996. The net
decrease in interest expense, net was primarily due to the repayment of
borrowings under the revolving portion of the Senior Credit Facility of
approximately $264.2 million from the net proceeds of the 1996 Offering and an
overall decrease in the Company's borrowings rates, offset by additional bank
borrowings of approximately $254.5 million, together with the net proceeds of
$19.5 million from the sale of WHTT-FM/AM in Buffalo on July 19, 1996 and $12.5
million from the sale of WSJZ-FM in Buffalo on August 1, 1996, that were used to
finance the acquisitions of WKLB-FM, KYLD-FM, WEDR-FM, WWWW-FM, WDFN-AM, KKSF-FM
and KDFC-FM/AM during 1996 and the first quarter of 1997.
<PAGE>
The income tax benefit for the three months ended March 31, 1997 is
comprised of current federal and state income tax expense and a deferred federal
income tax benefit.
Dividends paid on the Company's preferred stock were $1.2 million for
the first quarter of 1996. There were no dividends paid for the three months
ended March 31, 1997 due to the conversion of a total of 1,608,297 shares of the
Company's Convertible Exchangeable Preferred Stock into a total of 5,025,916
shares of Class A Common Stock and the redemption by the Company of the
remaining 1,703 shares during 1996.
As a result of the above factors, the Company incurred a $6.0 million
net loss attributable to common stock for the first quarter of 1997 compared to
a $15.5 million net loss for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has generated sufficient cash flow from
operations to finance its existing operational requirements and debt service
requirements, and the Company anticipates that this will continue to be the
case. The Company historically has used the proceeds of bank debt and public
equity offerings, supplemented by cash flow from operations not required to fund
operational requirements and debt service, to fund implementation of its
acquisition strategy.
The total cash financing required to consummate the Century Acquisition,
the Secret/Philadelphia Acquisition, the Evergreen Viacom Acquisition and the
Gannett Acquisition is expected to be $1.047 billion (excluding payments to be
made for working capital under the Evergreen Viacom Acquisition and a possible
upward adjustment of $10.0 million for the Gannett Acquisition). Of this amount,
approximately $59.3 million has already been advanced by the Company in the form
of escrow deposits or other upfront payments. In addition, the Company expects
to receive $391.1 million in cash from the completion of its pending
dispositions. Accordingly, the Company will require at least $596.6 million in
additional financing to consummate the Secret/Philadelphia Acquisition, the
Evergreen Viacom Acquisition and the Gannett Acquisition. The Company
anticipates that it will obtain this additional financing through borrowings
under the Senior Credit Facility and from other sources of debt and/or equity
capital that the Company is currently pursuing.
On April 25, 1997, the Company entered into the Senior Credit Facility
which amended and restated its prior senior credit facility. Under the amended
agreement, the Company established a $1.25 billion revolving facility (the
``Revolving Loan Facility'') and a $500.0 million term loan facility (the "Term
Loan Facility"). Upon consummation of the Chancellor Merger, the commitments
under the Senior Credit Facility are expected to be increased by at least $750.0
million and, as discussed below, the Company will borrow an amount sufficient to
repay outstanding borrowings of CRBC under its senior credit agreement. The
capital stock of the subsidiaries of the Company are pledged to secure
performance of the Company's obligations under the Senior Credit Facility. At
May 1, 1997, the Company had drawn $500.0 million of the Term Loan Facility and
$338.5 million of the Revolving Loan Facility. Required principal repayments of
amounts outstanding under the Term Loan Facility and commitment reductions under
the Revolving Loan Facility commence on September 30, 2000. The Company's
ability to make additional borrowings under the Senior Credit Facility is
subject to compliance with certain financial ratios and other conditions set
forth in the Senior Credit Facility. Assuming certain conditions specified in
the Senior Credit Facility are satisfied and assuming there are no other
defaults under the Senior Credit Facility, the Senior Credit Facility contains
certain provisions which will relax certain financial ratios with which the
Company is required to comply during the period commencing on the date that the
Evergreen Viacom Acquisition is consummated and ending on the earlier of (i)
June 30, 1998, (ii) any deadline that may be established by the FCC for the
consummation of any station dispositions that must be made by the Company in
order to comply with the FCC's multiple ownership rules as a result of the
Company's acquisitions which were pending as of April 25, 1997 and (iii) the
consummation of the Chancellor Merger or such earlier date that the Company has
incurred subordinated indebtedness with restrictions on leverage that are
effectively more restrictive than those set forth in the Senior Credit Facility
during the relaxation period.
<PAGE>
Upon consummation of the Chancellor Merger, the Company will be required
to assume or refinance existing debt and preferred stock of Chancellor and CRBC.
The Company has been informed that CRBC is currently negotiating (i) an
amendment to its current senior credit agreement and (ii) other possible sources
of debt and/or equity capital, in each case in order to finance the Chancellor
Viacom Acquisition. The Company expects to repay all amounts outstanding under
CRBC's senior credit agreement upon consummation of the Chancellor Merger. In
addition to debt service requirements under the Senior Credit Facility, the
Company will be required to pay interest on CRBC's 9 3/8% Senior Subordinated
Notes due 2004, which the Company will assume upon consummation of the
Chancellor Merger. CRBC's 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock and CRBC's 12% Exchangeable Preferred Stock, in exchange for
which the Company will issue substantially identical securities upon
consummation of the Chancellor Merger, will not require the payment of cash
dividends through May 14, 2001 and January 14, 2002, respectively, although in
lieu of paying cash dividends prior to such dates the Company may issue
additional shares of such preferred stock or incur additional accretion.
Chancellor's 7% Convertible Preferred Stock, in exchange for which the Company
will issue substantially identical securities upon consummation of the
Chancellor Merger, will require cash dividends by the Company of $7.7 million
per year.
Pursuant to the Senior Credit Facility, the Company is required to enter
into interest hedging agreements that result in the fixing or placing a cap on
the Company's floating rate debt so that not less than 50% of the principal
amount of total debt outstanding has a fixed or capped rate.
FORWARD LOOKING STATEMENTS
When used in the preceding and following discussion, the words
"expects," "anticipates" and similar expressions are intended to identify
forward looking statements. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
expressed in any of the forward looking statements. Such risks and uncertainties
include, but are not limited to, industry-wide market factors and regulatory
developments affecting the Company's operations and the acquisitions and
dispositions of broadcast properties described elsewhere herein.
RECENTLY-ISSUED ACCOUNTING PRINCIPLES
In June 1996, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 125, "Transfers of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). SFAS No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. The provisions of SFAS No. 125 are
generally effective for transactions occurring after December 31, 1996. The
adoption of SFAS No. 125 is not expected to have a material impact on the
Company's financial statements.
PART II
ITEM 1. - LEGAL PROCEEDINGS
- ---------------------------
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-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 $2.6 million 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 $45.0
<PAGE>
million. 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 and this order has been affirmed on appeal. On May 17,
1996, after the close of discovery, the Company filed a motion for summary
judgment, seeking the dismissal of the remaining claims in the original
complaint. On July 1, 1996, Plaintiffs moved for leave to amend their complaint
in order to add claims for breach of the covenant of good faith and fair
dealing, tortious interference with business advantage and prima facia tort. In
the proposed amended complaint, Plaintiffs seek compensatory and punitive
damages in excess of $25.0 million. On March 13, 1997, the Court denied the
Company's motion for summary judgment, allowed Plaintiffs' request to amend the
complaint to add a claim for breach of the covenant of good faith and fair
dealing and denied Plaintiffs' request to amend the complaint to add claims for
tortious interference with business advantage and prima facia tort. 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 or results of
operations.
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
NO.
- ---
(f) 2.9 Plan of Recognization and Merger by and between Evergreen Media
Corporation an Broadcasting Partners, Inc., dated on January 31,
1995, as amended, including the Form of Registration Rights
Agreement among MLGA Fund I, L.P., MLGA Fund II, L.P. MLGA/BPI
Partners I, L., P., MLGAL Partners, Limited Partnership and
Evergreen Media Corporation (see table of contents for a list of
omitted schedules).
(g)2.9A Agreement dated as of January 31, 1995 among Evergreen Media
Corporation, Broadcasting Partners, Inc., the holders of the shares
of capital stock of Broadcasting Partners, Inc. an Scott K.
Ginsburg, holder of shares of capital stock of Evergreen Media
Corporation.
(f)2.10 Plan and Agreement of Merger among Evergreen Media Partners
Corporation, Evergreen Media Corporation and Broadcasting Partners,
Inc., dated as of April 12, 1995.
(h)2.11 Agreement and Plan of Merger by and among Pyramid Communications,
Inc., Evergreen Media Corporation and Evergreen Media/Pyramid
Corporation dated as of July 14, 1995 (see table of contents for
list of omitted exhibits and schedules).
(i)2.11A Amendment to Plan and Agreement of Merger by and among Pyramid
Communications Inc., Evergreen Media Corporation and Evergreen
Media/Pyramid Corporation dated September 7, 1995.
(i)2.11B Amendment to Plan and Agreement of Merger by and among Pyramid
Communications Inc., Evergreen Media Corporation an Evergreen
Media/Pyramid Corportion dated January 11, 1996.
(j)2.12 Purchase Agreement between Fairbanks Communications, Inc. and
Evergreen Media Corporation dated October 12, 1995 (see table of
contents for list of omitted exhibits and schedules).
<PAGE>
(n)2.13 Option Agreement dated as of January 9, 1996 between Chancellor
Broadcasting Company and Evergreen Media Corporation (including
Form of Advertising Brokerage Agreement and Form of Asset Purchase
Agreement).
(o)2.14 Asset Purchase Agreement dated April 4, 1996 between American
Radio System Corporation and Evergreen Media Corporation of Buffalo
(see table of contents for list of omitted exhibits and schedules).
(o)2.15 Asset Purchase Agreement dated April 11, 1996 between Mercury Radio
Communications, L.P. and Evergreen Media Corporation of Los Angeles,
Evergreen Media/Pyramid Holding Corporation, WHTT (AM) License Corp.
(see table of contents for list of omitted exhibits and schedules).
(o)2.16 Asset Purchase Agreement dated April 19, 1996 between Crescent
Communications L.P. and Evergreen Media Corporation of Los Angeles
(see table of contents for list of omitted exhibits and schedules).
(p)2.17 Asset Purchase Agreement dated June 13, 1996 between Evergreen Media
Corporation of Los Angeles and Greater Washington Radio, Inc. (see
table of contents for list of omitted exhibits and schedules).
(p)2.18 Asset Exchange Agreement dated June 13, 1996 among Evergreen Media
Corporation of Los Angeles, Evergreen Media Corporation of the Bay
State, WKLB License Corp., Greater Media Radio, Inc. and Greater
Washington Radio, Inc. (see table of contents for list of omitted
exhibit and schedules).
(p)2.19 Purchase Agreement dated June 27, 1996 between WEDR, Inc., Seller
and Evergreen Media Corporation of Los Angeles, Buyer. (See table of
contents for list of omitted schedules.)
(p)2.20 Time Brokerage Agreement dated July 10, 1996 by and between
Evergreen Media Corporation of Detroit, as Licensee, and Kidstar
Interactive Media, Incorporated, as Time Broker.
(p)2.21 Asset Purchase Agreement dated July 15, 1996 by and among Century
Chicago Broadcasting L.P., an Illinois limited partnership,
("Seller"), Century Broadcasting Corporation, a Delaware Corporation
("Century"), Evergreen Media Corporation of Los Angeles a Delaware
Corporation ("Buyer").
(p)2.22 Asset Purchase Agreement dated August 12, 1996 by and among
Chancellor Broadcasting Company, Shamrock Broadcasting, Inc. and
Evergreen Media Corportion of the Great Lakes.
(p)2.23 Asset Purchase Agreement dated as of August 12, 1996 between Secret
Communications Limited Partnership and Evergreen Media Corporation
of Los Angeles (WQRS-FM). (See table of content for list of omitted
exhibits and schedules.)
(p)2.24 Asset Purchase Agreement dated as of August 12, 1996 between Secret
Communications Limited Partnership and Evergreen Media Corporation
of Los Angeles. (See table of contents for list of omitted
schedules)
(q)2.25 Letter of intent dated August 27, 1996 between EZ Communications,
Inc. Evergreen Media Corporation.
(q)2.26 Asset Purchase Agreement dated Septembeer 19, 1996 between
Beasley-FM Acquisition Corp. WDAS License Limited Partnership and
Evergreen Media Corporation of Los Angeles.
<PAGE>
(q)2.27 Asset Purchase Agreement dated September 19, 1996 between The Brown
Organization and Evergreen Media Corporation of Los Angeles.
(r)2.28 Stock Purchase Agreement by and between Viacom International, Inc.
and Evergreen Media Corporation of Los Angeles, dated February 16,
1997 (See table of contents for omitted schedule and exhibits).
(r)2.29 Agreement and Plan of Merger, by and among Evergreen Media
Corporation, Chancellor Broadcasting Company and Chancellor Radio
Broadcasting Company, dated as of February 19, 1997.
<PAGE>
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
NO.
- ---
(r)2.30 Stockholders Agreement, by and among Chancellor Broadcasting
Company, Evergreen Media Corporation, Scott K. Ginsbury
(individually and as custodian for certain shares held by his
children), HM2/Chancellor, L.P., Hicks, Muse, Tate & First Equity
Fund II, L.P., HM2/HMW, L.P. The Chancellor Business Trust, HM2/
HMD Sacramento GP, L.P., Thomas O. Hicks, as Trustee of the
William Cree Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as
Trustee of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks 1984 Trust,
Thomas O. Hicks, as Trustee of the Mack Hardin Hicks 1984 Trust,
Thomas O. Hicks, as Trustee of Robert Bradley Hicks 1984 Trust,
Thomas O. Hicks, as Trustee of the Thomas O. Hicks, Jr. 1984 Trust,
Thomas O. Hicks, and H. Rand Reynolds, as Trustee for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of February 19,
1997.
(r)2.31 Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Evergreen Media Corporation of Los Angeles,
and Evergreen Media Corporation, dated as of February 19, 1997.
(s)2.32 Asset Exchange Agreement, by and among EZ Communications, Inc.,
Professional Broadcasting Incorporated, EZ Philadelphia, Inc.,
Evergreen Media Corporation of Los Angeles, Evergreen Media
Corporation of Charlotte, Evergreen Media Corporation of the East,
Evergreen Media Corporation of Carolinaland, WBAV/WBAV-FM/WPEG
License Corp. and WRFX License Corp., dated as of December 5, 1996
(See table of contents for list of omitted schedules).
(s)2.33 Asset Purchase Agreement, by and among EZ Communications, Inc.,
Professional Broadcasting Incorporated, EZ Charlotte, Inc.,
Evergreen Media Corporation of Los Angeles, Evergreen Media
Corporation of Los Angeles, Evergreen Media Corporation of the East
and Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of omitted
schedules).
(t)2.34 Asset Purchase Agreement by and between Pacific and Southern
Company, Inc. and Evergreen Media Corporation of Los Angeles (re:
WGCI-AM and WGCI-FM), dated as of April 4, 1997 (see table of
contents for list of omitted schedules and exhibits).
(t)2.35 Asset Purchase Agreement by and between Pacific and Southern
Company, Inc. and Evergreen Media Corporation of Los Angeles (re:
KKBQ-AM and KKBQ-FM), dated as of April 4, 1997 (see table of
contents for list of omitted schedules and exhibits).
(t)2.36 Asset Purchase Agreement by and between Pacific and Southern
Company, Inc. and Evergreen Media Corporation of Los Angeles (re:
KHKS-FM), dated s of April 4, 1997 (see table of contents for
list of omitted schedules and exhibits).
(a)3.1A Restated Certificate of Incorporation of Evergreen Media
Corporation, dated November 6, 1992.
(k)3.1B Certificate of Amendment of Restated Certificate of Incorporation of
Evergreen Media Corporation.
(a)3.2 Restated Bylaws of Evergreen Media Corporation.
(a)4.1 Specimen Class A Common Stock certificate.
(i)4.8 Amended and Restated Loan Agreement dated as of January 17, 1996
among Evergreen Media Corporation of Los Angeles, the financial
institutions whose names appear as Lenders of the signature pages
thereof (the "Lenders"), The Toronto Dominion Bank, The Bank of
New York and NationsBank of Texas, N.A., as Arranging Agents, The
Bank of New York, as Syndication Agent, NationsBank of Texas, N.A.,
as Documentation Agent, and Toronto Dominion (Texas), Inc. an
Administrative Agent for the Lenders together with certain
collateral documents attached thereto all exhibits, including
Assignment of Partnership Interests, Borrower's Pledge Agreement,
Parent Company Guarantee, Security Agreement, Stock Pledge
Agreement, Subsidiary Guarantee, Subsidiary Pledge Agreement and
Subsidiary Security Agreement.
(o)4.8A First Amendment to Loan Agreement, dated May 8, 1996, between the
Company, the Banks, the Co-Agents and the Agent.
(i)4.9 Amended and Restated Note Purchase Agreement dated as of January 17,
1996 among Evergreen Media Corporation of Los Angeles and Teachers
Insurance and Annuity Association of America.
(t)4.10 Second Amended and Restated Loan Agreement dated as of April 25,
1997 among Evergreen Media Corporation of Los Angeles, the financial
institutions whose names appear as Lenders on the signature pages
thereof (the "Lenders"), Toronto Dominion Securities, Inc., as
Arranging Agent, The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and Union Bank of
California, as Co-Documentation Agents, and Toronto Dominion (Texas)
Inc., as Administrative Agent for the Lenders, together with certain
collateral documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust Interests,
Borrower's Pledge Agreement, Parent Company Guaranty, Stock Pledge
Agreement, Subsidiary Guaranty and Subsidiary Pledge Agreement (see
table of contents for list of omitted schedules and exhibits).
(f)10.23 Evergreen Media Corporation Stock Option Plan for Non-employee
Directors.
**(n)10.24 Employment Agreement dated November 28, 1995 by and between
Evergreen Media Corporation and Matthew E. Devine.
**(n)10.25 Employment Agreement dated November 28, 1995 by and between
Evergreen Media Corporation and James de Castro.
**(n)10.26 Employment Agreement dated February 9, 1996 by and between
Evergreen Media Corporation and Kenneth J. O'Keefe.
**(o)10.27 Employment Agreement dated April 15, 1996 by and between
Evergreen Media Corporation and Scott K. Ginsburg, as amended.
**(o)10.28 1995 Stock Option Plan for executive officers and key employees of
Evergreen Media Corporation.
**(s)10.29 Memorandum of Agreement, dated February 19, 1997, between Evergreen
Media Corporation and Scott K. Ginsburg, as agreed and acknowledged
by Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company.
<PAGE>
*27 Financial Data Schedule
* Filed herewith.
** Management contract or compensatory arrangement.
(a) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-1, as amended (Reg.
No. 33-60036).
(f) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-4, as amended (Reg.
No. 33-89838).
(g) Incorporated by reference to Exhibit No. 4.8 to the Company's
Registration Statement on Form S-4, as amended (Reg. No. 33-89838).
(h) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated July 14, 1995.
(i) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-Q for the quarterly period
ending September 30, 1995.
(k) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-1, as amended (Reg.
No. 33-69752).
(n) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-K for the fiscal year ended December 31,
1995.
(o) Incorporated by reference to the identically numbered exhibit to the
Company's report on Form 10-Q for the quarterly period ending
March 31, 1996.
(p) Incorporated by reference to the identically numbered exhibit to the
Company's report on Form 10-Q for the quarterly period ended June 30,
1996.
(q) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).
(r) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated February 16, 1997.
(s) Incorporated by reference to the identically numbered exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
(t) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated May 9, 1997.
(b) Reports on Form 8-K
1. Form 8-K, dated February 16, 1997, reporting certain events
related to the execution of the Viacom Stock Purchase
Agreement (incorporated by reference as Exhibit 2.28 hereto)
and the execution of the Chancellor Merger Agreement
(incorporated by reference as Exhibit 2.29 hereto).
2. Form 8-K, dated May 9, 1997, reporting certain events related
to the execution of the agreements contemplated by the
Gannett Acquisition (incorporated by reference as Exhibits
2.34, 2.35 and 2.36 hereto), the Senior Credit Facility
(incorporated by reference as Exhibit 4.10 hereto), and the
consummation of other transactions previously described.
<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: May 14, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/97
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-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,269
<SECURITIES> 0
<RECEIVABLES> 82,608
<ALLOWANCES> 3,469
<INVENTORY> 0
<CURRENT-ASSETS> 90,327
<PP&E> 80,954
<DEPRECIATION> 29,598
<TOTAL-ASSETS> 1,186,655
<CURRENT-LIABILITIES> 22,144
<BONDS> 535,575
0
0
<COMMON> 422
<OTHER-SE> 543,102
<TOTAL-LIABILITY-AND-EQUITY> 1,186,655
<SALES> 81,897
<TOTAL-REVENUES> 81,897
<CGS> 11,915
<TOTAL-COSTS> 81,329
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,888
<INCOME-PRETAX> (7,320)
<INCOME-TAX> (1,309)
<INCOME-CONTINUING> (6,011)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,011)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
