<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 27, 1997
EVERGREEN MEDIA CORPORATION
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<C> <C>
DELAWARE 75-2247099
(State or Other Jurisdiction of (IRS Employer
Incorporation) Identification No.)
</TABLE>
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> 2
ITEM 5. Other Events
On May 27, 1997, Evergreen Media Corporation (the "Company") completed the
Unaudited Pro Forma Financial Statements which are filed with this Current
Report on Form 8-K. The Company deems the Unaudited Pro Forma Financial
Statements to be of importance to its security holders.
The following Unaudited Pro Forma Financial Statements are filed with this
report:
<TABLE>
<S> <C>
Unaudited Pro Forma Condensed Combined
Balance Sheet at March 31, 1997....... P-1
Unaudited Pro Forma Condensed Combined
Statement of Operations for the year
ended December 31, 1996............... P-2
Unaudited Pro Forma Condensed Combined
Statement of Operations for the three
months ended March 31, 1997........... P-3
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements......... P-4
</TABLE>
A Glossary of capitalized terms used in the Unaudited Pro Forma Financial
Statements is set forth at page G-1 of this Current Report on Form 8-K.
The unaudited pro forma condensed combined financial statements are
presented using the purchase method of accounting for all acquisitions and
reflect (i) the combination of consolidated historical financial data of the
Company, Chancellor, each of the stations acquired in the Completed Evergreen
Transactions and the Completed Chancellor Transactions and each of the stations
to be acquired by the Company in the Pending Evergreen Acquisitions or
Chancellor in the Pending Chancellor Acquisitions and (ii) the elimination of
the consolidated historical data of the stations sold by the Company and
Chancellor in the Completed Evergreen Dispositions and the Completed Chancellor
Dispositions and stations to be sold or swapped by the Company or Chancellor in
the Pending Evergreen Dispositions and the Pending Chancellor Dispositions. The
unaudited pro forma condensed combined balance sheet data at March 31, 1997
presents adjustments for those Completed Transactions consummated since such
date, the Pending Transactions and the Financing Transactions as if each such
transaction had occurred at March 31, 1997. The unaudited pro forma condensed
combined statement of operations data for the twelve months ended December 31,
1996 and the three months ended March 31, 1997 present adjustments for the
following transactions as if each had occurred on January 1, 1996: (i) the
Completed Transactions, (ii) the 1996 Equity Offering, (iii) the 1996 Preferred
Stock Conversion (iv) the Chancellor Offerings, (v) the Pending Transactions and
(vi) the Financing Transactions. No adjustments are presented to the unaudited
pro forma condensed combined balance sheet data or the unaudited pro forma
condensed combined statement of operations data in respect of the Douglas AM
Dispositions, which, in the opinion of the Company's management, is not material
to such presentations either individually or in the aggregate. The unaudited pro
forma condensed combined financial statements assume that the over-allotment
option that the Company expects to grant in the Offering is not exercised.
The purchase method of accounting has been used in the preparation of the
unaudited pro forma condensed combined financial statements. Under this method
of accounting, the aggregate purchase price is allocated to assets acquired and
liabilities assumed based on their estimated fair values. For purposes of the
unaudited pro forma condensed combined financial statements, the purchase prices
of the stations acquired and to be acquired in the Completed Evergreen
Transactions, the Pending Evergreen Transactions and the Chancellor Merger
(including the Completed Chancellor Transactions and Pending Chancellor
Transactions) have been allocated based primarily on information furnished by
management of the acquired stations. The final allocation of the respective
purchase prices of the stations acquired and to be acquired in the Completed
Evergreen Transactions, the Pending Evergreen Transactions and the Chancellor
Merger (including the stations acquired and to be acquired in the Completed
Chancellor Transactions and the Pending Chancellor Transactions) are determined
a reasonable time after consummation of such transactions and are based on a
complete evaluation of the assets acquired and liabilities assumed. Accordingly,
the information presented herein may differ from the final purchase price
allocation.
In the opinion of the Company's management, all adjustments have been made
that are necessary to present fairly the pro forma data.
<PAGE> 3
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
7(C) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
(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
and Evergreen Media/ Pyramid Corporation 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).
(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 Systems 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
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) 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 exhibits
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
("Parent"), and Evergreen Media Corporation of Chicago, a
Delaware corporation ("Buyer").
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
(p)2.22 -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation 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 contents 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. and Evergreen Media Corporation.
(q)2.26 -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
(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 schedules 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.
(r)2.30 -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & Furst 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 Trustees 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, Chancellor 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 the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (see table of contents for list of
omitted schedules).
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
(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 as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
(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).
</TABLE>
(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 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 April 1, 1997.
<PAGE> 6
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 28, 1997
<PAGE> 7
EVERGREEN MEDIA CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA COMPANY PRO PRO FORMA
COMPANY AS ADJUSTMENTS FORMA AS ADJUSTMENTS CHANCELLOR AS
ADJUSTED FOR FOR THE ADJUSTED FOR FOR THE ADJUSTED FOR
1997 COMPLETED PENDING THE PENDING PENDING THE PENDING
EVERGREEN EVERGREEN EVERGREEN CHANCELLOR CHANCELLOR CHANCELLOR
TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS HISTORICAL TRANSACTIONS TRANSACTIONS
--------------- ------------ ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets................... $ 90,327 $ 12,841(2) $ 103,168 $ 61,279 $ 11,412(3) $ 72,691
Property and equipment, net...... 61,795 8,418(2) 70,213 68,180 6,030(3) 74,210
Assets held for sale............. 50,000 (50,000)(2) -- -- -- --
Intangible assets, net........... 1,206,319 780,082(2) 1,986,401 978,094 461,290(3) 1,439,384
Other assets..................... 69,741 (51,250)(2) 18,491 68,170 (53,750)(3) 13,643
(777)(6)
---------- -------- ---------- ---------- -------- ----------
Total assets................... $1,478,182 $700,091 $2,178,273 $1,175,723 $424,205 $1,599,928
========== ======== ========== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Liabilities
Current portion of long-term
debt........................... $ -- $ -- $ -- $ 12,500 $(12,500)(4) $ --
Other current liabilities........ 22,144 3,620(2) 25,764 23,693 4,185(3) 27,878
---------- -------- ---------- ---------- -------- ----------
Total current liabilities...... 22,144 3,620 25,764 36,193 (8,315) 27,878
Long-term debt, excluding current
portion........................ 828,875 429,825(2) 1,258,700 524,121 420,797(3) 969,918
12,500(4)
69,000(5)
(60,000)(5)
3,500(6)
Deferred tax liabilities
(assets)....................... 84,098 23,326(2) 107,424 373 (3,600)(5) (4,938)
(1,711)(6)
Other liabilities................ 823 -- 823 786 -- 786
---------- -------- ---------- ---------- -------- ----------
Total liabilities.......... 935,940 456,771 1,392,711 561,473 432,171 993,644
Redeemable preferred stock....... -- -- -- 414,175 -- 414,175
STOCKHOLDERS' EQUITY:
Preferred stock.................. -- 200,000(2) 200,000 -- -- --
Common stock..................... 422 -- 422 189 -- 189
Additional paid in capital....... 662,625 -- 662,625 246,442 0 246,442
Accumulated deficit.............. (120,805) 43,320(2) (77,485) (45,518) (5,400)(5) (53,484)
(2,566)(6)
Treasury stock................... -- -- -- (1,038) -- (1,038)
---------- -------- ---------- ---------- -------- ----------
Total stockholders' equity..... 542,242 243,320 785,562 200,075 (7,966) 192,109
---------- -------- ---------- ---------- -------- ----------
Total liabilities and
stockholders' equity......... $1,478,182 $700,091 $2,178,273 $1,175,723 $424,205 $1,599,928
========== ======== ========== ========== ======== ==========
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE COMPANY
CHANCELLOR PRO FORMA
MERGER COMBINED
----------- ----------
<S> <C> <C>
ASSETS:
Current assets................... $ -- $ 175,859
Property and equipment, net...... -- 144,423
Assets held for sale............. -- --
Intangible assets, net........... 425,083(7) 4,132,358
281,490(8)
Other assets..................... -- 32,134
-------- ----------
Total assets................... $706,573 $4,484,774
======== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Liabilities
Current portion of long-term
debt........................... $ -- $ --
Other current liabilities........ -- 53,642
-------- ----------
Total current liabilities...... -- 53,642
Long-term debt, excluding current
portion........................ 28,000(7) 2,256,618
Deferred tax liabilities
(assets)....................... 281,490(8) 383,976
Other liabilities................ -- 1,609
-------- ----------
Total liabilities.......... 309,490 2,695,845
Redeemable preferred stock....... 16,482(7) 430,657
STOCKHOLDERS' EQUITY:
Preferred stock.................. -- 200,000
Common stock..................... (16)(7) 595
Additional paid in capital....... 326,095(7) 1,235,162
Accumulated deficit.............. 53,484(7) (77,485)
Treasury stock................... 1,038(7) --
-------- ----------
Total stockholders' equity..... 380,601 1,358,272
-------- ----------
Total liabilities and
stockholders' equity......... $706,573 $4,484,774
======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-1
<PAGE> 8
EVERGREEN MEDIA CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY AS PRO FORMA CHANCELLOR AS
ADJUSTED FOR PENDING ADJUSTMENTS FOR ADJUSTED FOR
COMPLETED EVERGREEN PENDING COMPANY COMPLETED
EVERGREEN TRANSACTIONS EVERGREEN PRO FORMA CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS(9) HISTORICAL(10) TRANSACTIONS AS ADJUSTED TRANSACTIONS(16)
- ---------------------------------------- --------------- -------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Gross revenues.......................... $395,787 $82,468 $ -- $478,255 $276,459
Less: agency commissions................ (50,779) (12,216) -- (62,995) (35,020)
-------- ------- -------- -------- --------
Net revenues............................ 345,008 70,252 -- 415,260 241,439
Station operating expenses excluding
depreciation and amortization......... 202,346 27,533 -- 229,879 151,843
Depreciation and amortization........... 128,862 (1,345) 50,620(11) 178,137 35,432
Corporate general and administrative
expenses.............................. 7,797 1,411 (1,100)(12) 8,108 5,354
Stock option compensation............... -- -- -- -- 3,800
-------- ------- -------- -------- --------
Operating income (loss)................. 6,003 42,653 (49,520) (864) 45,010
Interest expense........................ 60,164 -- 34,062(13) 94,226 47,159
Other (income) expense.................. (618) 459 -- (159) (148)
-------- ------- -------- -------- --------
Income (loss) before income taxes....... (53,543) 42,194 (83,582) (94,931) (2,001)
Income tax expense (benefit)............ (13,135) 9,699 (23,185)(14) (26,621) 3,200
Dividends and accretion on preferred
stock of subsidiary................... -- -- -- -- 38,400
-------- ------- -------- -------- --------
Net income (loss)....................... (40,408) 32,495 (60,397) (68,310) (43,601)
Preferred stock dividends............... -- -- 12,000(15) 12,000 7,700
-------- ------- -------- -------- --------
Income (loss) attributable to common
stockholders.......................... $(40,408) $32,495 $(72,397) $(80,310) $(51,301)
======== ======= ======== ======== ========
Loss per common share................... ($ 0.96) ($ 1.91)
======== ========
Weighted average common shares
outstanding........................... 42,155 42,155
OTHER FINANCIAL DATA:
Broadcast cash flow..................... $142,662 $42,719 $ -- $185,381 $ 89,596
<CAPTION>
PRO FORMA
PENDING ADJUSTMENTS FOR PRO FORMA
CHANCELLOR PENDING CHANCELLOR ADJUSTMENTS FOR COMPANY
TRANSACTIONS CHANCELLOR PRO FORMA THE CHANCELLOR PRO FORMA
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(17) TRANSACTIONS AS ADJUSTED MERGER COMBINED
- ---------------------------------------- -------------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Gross revenues.......................... $57,789 $ (1,963)(18) $332,285 $ -- $ 810,540
Less: agency commissions................ (9,152) -- (44,172) -- (107,167)
------- -------- -------- --------- ---------
Net revenues............................ 48,637 (1,963) 288,113 -- 703,373
Station operating expenses excluding
depreciation and amortization......... 24,562 (4,000)(18) 172,405 -- 402,284
Depreciation and amortization........... 6,427 5,803(19) 47,662 104,989(23) 330,788
Corporate general and administrative
expenses.............................. 2,347 (1,807)(20) 5,894 (1,408)(24) 12,594
Stock option compensation............... -- -- 3,800 -- 3,800
------- -------- -------- --------- ---------
Operating income (loss)................. 15,301 (1,959) 58,352 (103,581) (46,093)
Interest expense........................ 6,374 27,155(21) 80,688 (12,201)(26) 162,713
Other (income) expense.................. -- -- (148) -- (307)
------- -------- -------- --------- ---------
Income (loss) before income taxes....... 8,927 (29,114) (22,188) (91,380) (208,499)
Income tax expense (benefit)............ 4,422 (12,497)(22) (4,875) (27,772)(27) (59,268)
Dividends and accretion on preferred
stock of subsidiary................... -- -- 38,400 -- 38,400
------- -------- -------- --------- ---------
Net income (loss)....................... 4,505 (16,617) (55,713) (63,608) (187,631)
Preferred stock dividends............... -- -- 7,700 -- 19,700
------- -------- -------- --------- ---------
Income (loss) attributable to common
stockholders.......................... $ 4,505 $(16,617) $(63,413) $ (63,608) $(207,331)
======= ======== ======== ========= =========
Loss per common share................... $ (3.49)
=========
Weighted average common shares
outstanding........................... 17,259(7) 59,414
OTHER FINANCIAL DATA:
Broadcast cash flow..................... $24,075 $ 2,037 $115,708 $ -- $ 301,089
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-2
<PAGE> 9
EVERGREEN MEDIA CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY AS PRO FORMA CHANCELLOR AS
ADJUSTED FOR PENDING ADJUSTMENTS ADJUSTED FOR
COMPLETED EVERGREEN FOR COMPANY COMPLETED
EVERGREEN TRANSACTIONS THE PENDING PRO FORMA CHANCELLOR
TRANSACTIONS(9) HISTORICAL(10) TRANSACTIONS AS ADJUSTED TRANSACTIONS(16)
--------------- -------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues.......................... $ 95,920 $22,598 $ -- $118,518 $ 65,832
Less: agency commissions................ (12,195) (2,971) -- (15,166) (8,007)
-------- ------- -------- -------- --------
Net revenues............................ 83,725 19,627 -- 103,352 57,825
Station operating expenses excluding
depreciation and amortization......... 54,302 7,850 -- 62,152 38,828
Depreciation and amortization........... 31,123 (771) 13,266(11) 43,618 8,862
Corporate general and administrative
expenses.............................. 2,330 306 (232)(12) 2,404 1,712
Merger expense.......................... -- -- -- -- 2,056
Stock option compensation............... -- -- -- -- 950
-------- ------- -------- -------- --------
Operating income (loss)................. (4,030) 12,242 (13,034) (4,822) 5,417
Interest expense, net................... 13,969 -- 8,033(13) 22,002 11,740
Other (income) expense.................. (108) -- -- (108) (1,632)
-------- ------- -------- -------- --------
Income (loss) before income taxes....... (17,891) 12,242 (21,067) (26,716) (4,691)
Income tax expense (benefit)............ (4,860) 2,816 (5,169)(14) (7,213) (876)
Dividends and accretion on preferred
stock of subsidiary................... -- -- -- -- 9,639
-------- ------- -------- -------- --------
Net income (loss)....................... (13,031) 9,426 (15,898) (19,503) (13,454)
Preferred stock dividends............... -- -- 3,000(15) 3,000 1,925
-------- ------- -------- -------- --------
Income (loss) attributable to common
stockholders.......................... $(13,031) $ 9,426 $(18,898) $(22,503) $(15,379)
======== ======= ======== ======== ========
Loss per common share................... $ (0.31) $ (0.53)
======== ========
Weighted average common shares
outstanding........................... 42,188 42,188
======== ========
OTHER FINANCIAL DATA:
Broadcast cash flow..................... $ 29,423 $11,777 $ -- $ 41,200 $ 18,997
<CAPTION>
PRO FORMA
PENDING ADJUSTMENTS FOR PRO FORMA
CHANCELLOR PENDING CHANCELLOR ADJUSTMENTS FOR COMPANY
TRANSACTIONS CHANCELLOR PRO FORMA THE CHANCELLOR PRO FORMA
HISTORICAL(17) TRANSACTIONS AS ADJUSTED MERGER COMBINED
-------------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues.......................... $11,867 $ (1,070)(18) $ 76,629 $ -- $195,147
Less: agency commissions................ (1,960) -- (9,967) -- (25,133)
------- -------- -------- -------- --------
Net revenues............................ 9,907 (1,070) 66,662 -- 170,014
Station operating expenses excluding
depreciation and amortization......... 5,111 (1,541)(18) 42,398 -- 104,550
Depreciation and amortization........... 1,078 1,526(19) 11,466 26,618(23) 81,702
Corporate general and administrative
expenses.............................. 239 (176)(20) 1,775 (418)(24) 3,761
Merger expense.......................... -- -- 2,056 (2,056)(25) --
Stock option compensation............... -- -- 950 -- 950
------- -------- -------- -------- --------
Operating income (loss)................. 3,479 (879) 8,017 (24,144) (20,949)
Interest expense, net................... 1,594 6,788(21) 20,122 (1,446)(26) 40,678
Other (income) expense.................. -- -- (1,632) -- (1,740)
------- -------- -------- -------- --------
Income (loss) before income taxes....... 1,885 (7,667) (10,473) (22,698) (59,887)
Income tax expense (benefit)............ 788 (3,101)(22) (3,189) (5,767)(27) (16,169)
Dividends and accretion on preferred
stock of subsidiary................... -- -- 9,639 -- 9,639
------- -------- -------- -------- --------
Net income (loss)....................... 1,097 (4,566) (16,923) (16,931) (53,357)
Preferred stock dividends............... -- -- 1,925 -- 4,925
------- -------- -------- -------- --------
Income (loss) attributable to common
stockholders.......................... $ 1,097 $ (4,566) $(18,848) $(16,931) $(58,282)
======= ======== ======== ======== ========
Loss per common share................... $ (0.98)
========
Weighted average common shares
outstanding........................... 17,259(7) 59,447
======== ========
OTHER FINANCIAL DATA:
Broadcast cash flow..................... $ 4,796 $ 471 $ 24,264 $ -- $ 65,464
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-3
<PAGE> 10
ADJUSTMENTS TO THE COMPANY'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED
TO THE 1997 COMPLETED EVERGREEN TRANSACTIONS COMPLETED AFTER MARCH 31, 1997
(1) The historical balance sheet of the Company at March 31, 1997 and the pro
forma adjustments related to the 1997 Completed Evergreen Transactions that
were completed after March 31, 1997 is summarized below:
<TABLE>
<CAPTION>
ADJUSTMENTS COMPANY AS
FOR ADJUSTED FOR
COMPANY 1997 COMPLETED 1997 COMPLETED
HISTORICAL EVERGREEN EVERGREEN
AT 3/31/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 90,327 $ -- $ 90,327
Property and equipment, net.................. 51,356 10,439(a) 61,795
Assets held for sale......................... 50,000 50,000
Intangible assets, net....................... 928,440 277,879(a) 1,206,319
Other assets................................. 66,532 3,209(b) 69,741
---------- -------- -----------
Total assets.............................. $1,186,655 $291,527 $ 1,478,182
========== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Current portion of long-term debt............ $ -- $ -- $ --
Other current liabilities.................... 22,144 -- 22,144
---------- -------- -----------
Total current liabilities................. 22,144 -- 22,144
Long-term debt, excluding current portion...... 535,375 283,500(a) 828,875
10,000(b)
Deferred tax liabilities....................... 84,789 1,686(a) 84,098
(2,377)(b)
Other liabilities.............................. 823 -- 823
---------- -------- -----------
Total liabilities......................... 643,131 292,809 935,940
Stockholders' equity:
Common stock................................. 422 -- 422
Additional paid-in capital................... 662,625 -- 662,625
Accumulated deficit.......................... (119,523) 3,132(a) (120,805)
(4,414)(b)
---------- -------- -----------
Total stockholders' equity................ 543,524 (1,282) 542,242
---------- -------- -----------
Total liabilities and stockholders'
equity.................................. $1,186,655 $291,527 $ 1,478,182
========== ======== ===========
</TABLE>
(a) Reflects the 1997 Completed Evergreen Transactions that were completed
after March 31, 1997 as follows:
<TABLE>
<CAPTION>
PROPERTY AND DEFERRED INCREASE IN
1997 COMPLETED PURCHASE EQUIPMENT, INTANGIBLE TAX ACCUMULATED LONG-TERM
EVERGREEN TRANSACTIONS PRICE NET(I) ASSETS, NET(I) LIABILITIES DEFICIT DEBT
---------------------- -------- ------------ -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
WJLB-FM/WMXD-FM(ii)............... $168,000 $ 2,441 $165,559 $ -- $ -- $168,000
WWRC-AM(iii)...................... 22,500 5,692 16,808 -- -- 22,500
WDAS-FM/AM(iv).................... 103,000 3,000 100,000 -- -- 103,000
WNKS-FM(v)........................ (10,000) (694) (4,488) (1,686) (3,132) (10,000)
WUSL-FM/WIOQ-FM(vi)............... -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
Total $283,500 $10,439 $277,879 $(1,686) $(3,132) $283,500
======== ======= ======== ======= ======= ========
</TABLE>
- ---------------
(i) The amounts allocated to net property and equipment and net
intangible assets are based upon preliminary appraisals of the
assets acquired.
(ii) On April 1, 1997, the Company acquired, in the Secret/Detroit
Acquisition, WJLB-FM and WMXD-FM in Detroit for $168,000 in cash.
P-4
<PAGE> 11
(iii) On April 3, 1997, the Company swapped, in the Greater Media
Exchange, WQRS-FM in Detroit (which the Company acquired on April
3, 1997 for $32,000 in cash) in exchange for WWRC-AM in
Washington, D.C. and $9,500 in cash. The net purchase price to the
Company of WWRC-AM was therefore $22,500.
(iv) On May 1, 1997, the Company acquired, in the Beasley Acquisition,
WDAS-FM/AM in Philadelphia for $103,000 in cash.
(v) On May 15, 1997, the Company sold, in the EZ Sale, WNKS-FM in
Charlotte for $10,000 in cash and recognized a gain of $3,132, net
of taxes of $1,686.
(vi) On May 15, 1997, the Company exchanged, in the EZ Exchange, 5 of
its 6 stations in the Charlotte market (WPEG-FM, WBAV-FM/AM,
WRFX-FM and WFNZ-AM) for WUSL-FM and WIOQ-FM in Philadelphia.
(b) On April 25, 1997, EMCLA entered into the Senior Credit Facility,
which amended and restated its prior senior credit facility. The
Senior Credit Facility provides for a $500,000 term loan facility
and a revolving loan facility of up to $1,250,000. Reflects (i) the
adjustment to write-off the unamortized balance of deferred loan
fees of $4,414 (net of a tax benefit of $2,377) at March 31, 1997
as an extraordinary item and (ii) the adjustment to record
estimated new loan fees of $10,000 to be incurred in connection
with the refinancing of the Senior Credit Facility and financed
through additional bank borrowings under the Senior Credit
Facility. The deferred loan fees will be amortized ratably over the
term of the Senior Credit Facility.
P-5
<PAGE> 12
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING EVERGREEN TRANSACTIONS
(2) Reflects the Pending Evergreen Transactions as follows:
<TABLE>
<CAPTION>
PROPERTY
PURCHASE/ AND ASSETS
PENDING EVERGREEN TRANSACTIONS (SALES) CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT DEFERRED TAX
AT MARCH 31, 1997 PRICE ASSETS NET(A) FOR SALE ASSETS, NET LIABILITIES LIABILITIES(B)
- ------------------------------ --------- ------- ---------- -------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
WFLN-FM(d)..................... $ 37,750 $ -- $ 660 $ -- $ 37,090 $ -- $ --
WFLN-FM(d)..................... (41,800) -- (660) -- (37,090) -- (1,417)
WEJM-FM/AM(e).................. (22,250) -- (1,687) -- (6,348) -- (4,975)
WPNT-FM(f)..................... 73,750 -- 626 -- 73,124 -- --
WPNT-FM(f)..................... (75,000) -- (626) -- (73,124) -- (438)
WLUP-FM(g)..................... (80,000) -- (483) -- (33,597) -- (16,072)
KDFC-FM(h)..................... (50,000) -- -- (50,000) -- -- --
San Francisco -- 107.7(i)...... (44,000) -- (989) -- (41,800) -- (424)
Evergreen Viacom
Acquisition(j)............... 610,625 12,841 6,092 68,000 527,312 (3,620) --
WJZW-FM(k)..................... (68,000) -- -- (68,000) -- -- --
Gannett(l)..................... 340,000 -- 5,485 -- 334,515 -- --
-------- ------- ------- -------- -------- ------- --------
$681,075 $12,841 $ 8,418 $(50,000) $780,082 $(3,620) $(23,326)
======== ======= ======= ======== ======== ======= ========
<CAPTION>
(INCREASE) INCREASE
DECREASE (DECREASE) IN INCREASE IN
PENDING EVERGREEN TRANSACTIONS ACCUMULATED IN OTHER LONG-TERM PREFERRED
AT MARCH 31, 1997 DEFICIT(C) ASSETS DEBT STOCK
- ------------------------------ ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
WFLN-FM(d)..................... $ -- $ -- $ 37,750 $ --
WFLN-FM(d)..................... (2,633) -- (41,800) --
WEJM-FM/AM(e).................. (9,240) -- (22,250) --
WPNT-FM(f)..................... -- 5,500 68,250 --
WPNT-FM(f)..................... (812) -- (75,000) --
WLUP-FM(g)..................... (29,848) -- (80,000) --
KDFC-FM(h)..................... -- -- (50,000) --
San Francisco -- 107.7(i)...... (787) -- (44,000) --
Evergreen Viacom
Acquisition(j)............... -- 45,750 364,875 200,000
WJZW-FM(k)..................... -- -- (68,000) --
Gannett(l)..................... -- -- 340,000 --
-------- ------- -------- --------
$(43,320) $51,250 $429,825 $200,000
======== ======= ======== ========
</TABLE>
P-6
<PAGE> 13
(a) The Company has assumed that historical balances of net property and
equipment to be acquired approximate fair value for the preliminary
allocation of the purchase price. Such amounts are based primarily on
information provided by management of the respective stations to be acquired
in the Pending Evergreen Transactions.
(b) Represents the tax effect upon consummation of the transaction.
(c) Represents the gain on sale, net of tax, upon consummation of the
transaction.
(d)On August 12, 1996, the Company entered into an agreement to acquire, in the
Secret/Philadelphia Acquisition, WFLN-FM in Philadelphia for $37,750 in cash.
On April 4, 1997, the Company entered into an agreement to sell, in the
Greater Media Disposition, WFLN-FM in Philadelphia for $41,800 in cash.
(e) On February 19, 1997, the Company entered into an agreement to sell, in the
Crawford Disposition, WEJM-FM in Chicago for $14,750 in cash. On March 19,
1997, the Company entered into an agreement to sell, in the Douglas Chicago
Disposition, WEJM-AM in Chicago for $7,500 in cash.
(f) On July 15, 1996, the Company entered into an agreement to acquire, in the
Century Acquisition, WPNT-FM in Chicago for $73,750 in cash. On April 10,
1997, the Company entered into an agreement to sell, in the Bonneville
Dispositions, WPNT-FM in Chicago for $75,000 in cash. The $5,500 decrease in
other assets represents $5,000 in funds paid to the seller in exchange for
the option to purchase the station and $500 in escrow funds which were
classified as other assets at March 31, 1997.
(g)On April 10, 1997, the Company entered into an agreement to sell, in the
Bonneville Dispositions, WLUP-FM in Chicago for $80,000 in cash.
(h) On April 10, 1997, the Company entered into an agreement to sell, in the
Bonneville Dispositions, KDFC-FM in San Francisco for $50,000 in cash. The
assets of KDFC-FM are classified as assets held for sale at March 31, 1997
in connection with the purchase price allocation of the acquisition of
KKSF-FM/KDFC-FM/AM on January 31, 1997 and no gain or loss will be
recognized by the Company upon consummation of the KDFC-FM sale.
(i) On April 8, 1997, the Company entered into an agreement to sell, in the San
Francisco Frequency Disposition, the San Francisco 107.7 MHz FM dial
position and transmission facility and the call letters from Chancellor's
KSAN-FM in San Francisco for $44,000 in cash.
(j) On February 19, 1997, the Company and Chancellor entered into the Viacom
Joint Purchase Agreement whereby in the event the Viacom Acquisition occurs
prior to the consummation of the Chancellor Merger, the Company will
purchase 6 of the 10 Viacom stations in the Evergreen Viacom Acquisition for
$595,000 plus working capital ($10,125 at March 31, 1997) and estimated
acquisition costs of $5,500 for an aggregate purchase price of $610,625. The
stations to be acquired by the Company in the Evergreen Viacom Acquisition
include WAXQ-FM and WLTW-FM in New York and WMZQ-FM, WZHF-AM, WJZW-FM and
WBZS-AM in Washington, D.C. The assets of WJZW-FM in Washington, D.C. are
classified as assets held for sale in connection with the purchase price
allocation of the Evergreen Viacom Acquisition (see (k) below). The
Evergreen Viacom Acquisition is expected to be financed with (i) a private
placement of $200,000 liquidation amount of the Company's Convertible
Preferred Stock for estimated net proceeds of $192,000; (ii) additional bank
borrowings under the Senior Credit Facility of $364,875 and (iii) $53,750 in
escrow funds paid by the Company on February 19, 1997 and classified as
other assets at March 31, 1997. The net decrease in other assets of $45,750
reflects the decrease in other assets of $53,750 for the use of escrow funds
offset by an increase in other assets to record the estimated issuance costs
of the Convertible Preferred Stock of $8,000.
(k) On April 11, 1997, the Company entered into an agreement to sell, in the
ABC/Washington Disposition, WJZW-FM in Washington (to be acquired as part of
the Evergreen Viacom Acquisition) for $68,000 in cash. The assets of WJZW-FM
are classified as assets held for sale in connection with the purchase price
allocation of the Evergreen Viacom Acquisition and no gain or loss will be
recognized by the Company upon consummation of the sale.
(l)On April 4, 1997, the Company entered into an agreement to acquire, in the
Gannett Acquisition, 5 radio stations in 3 major markets from P&S, including
WGCI-FM/AM in Chicago, KHKS-FM in Dallas, and
P-7
<PAGE> 14
KKBQ-FM/AM in Houston for $340,000. The pro forma combined financial
statements assume that the transaction will close by December 26, 1997 and
that no upward adjustment in the purchase price will occur.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING CHANCELLOR TRANSACTIONS
(3) Reflects the Pending Chancellor Transactions as follows:
<TABLE>
<CAPTION>
DECREASE INCREASE
PURCHASE/ PROPERTY AND ASSETS IN (DECREASE) IN
PENDING CHANCELLOR (SALES) CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT OTHER LONG-TERM
TRANSACTIONS PRICE ASSETS NET FOR SALE ASSETS, NET LIABILITIES ASSETS DEBT
------------------ --------- ------- ------------ -------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBAB-FM, WBLI-FM, WBGG-AM,
WHFM-FM(a)............... $11,000 $ -- $1,494 $ -- $ 9,506 $ -- $ -- $ 11,000
Chancellor Viacom
Acquisition(b)........... 500,547 11,412 4,536 37,000 451,784 (4,185) 53,750 446,797
WDRQ-FM(c)................. (37,000) -- -- (37,000) -- -- -- (37,000)
-------- ------- ------ -------- -------- ------- ------- --------
Total.............. $474,547 $11,412 $6,030 $ -- $461,290 $(4,185) $53,750 $420,797
======== ======= ====== ======== ======== ======= ======= ========
</TABLE>
- ---------------
(a) On July 1, 1996, Chancellor entered into an agreement to exchange, in the
SFX Exchange, WAPE-FM and WFYV-FM in Jacksonville, Florida (which were
acquired as part of the Omni Acquisition on February 13, 1997, see 16(e)
below), and $11,000 in cash for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in
Long Island. The amounts allocated to net property and equipment and net
intangible assets are based upon preliminary appraisals of the assets to be
acquired.
(b) On February 19, 1997, Chancellor and the Company entered into the Viacom
Joint Purchase Agreement whereby in the event the Viacom Acquisition occurs
prior to the consummation of the Chancellor Merger, Chancellor will be
required to purchase 4 of the 10 Viacom stations in the Chancellor Viacom
Acquisition for $480,000 plus working capital ($7,547 at March 31, 1997) and
estimated acquisition costs of $13,000 for an aggregate purchase price of
$500,547. The stations to be acquired by Chancellor include KYSR-FM and
KIBB-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in Detroit. The
assets of WDRQ-FM are classified as assets held for sale in connection with
the purchase price allocation of the Chancellor Viacom Acquisition (see (c)
below). The Chancellor Viacom Acquisition will be financed through (i)
additional bank borrowings of $276,797 under the Chancellor Restated Credit
Agreement (see (4) below); (ii) escrow funds of $53,750 paid by Chancellor
on February 19, 1997 and classified as other assets at March 31, 1997 and
(iii) Chancellor's borrowings under the Chancellor Interim Financing for
estimated net proceeds of $170,000 (estimated costs of $1,700 related to the
Chancellor Interim Financing will be financed through working capital).
Chancellor has assumed that historical balances of net property and
equipment approximate fair value for the preliminary allocation of the
purchase price. Such amounts are based primarily on information provided by
the management of Viacom.
(c) On April 11, 1997, Chancellor entered into an agreement to sell, in the
ABC/Detroit Disposition, WDRQ-FM in Detroit (to be acquired as part of the
Chancellor Viacom Acquisition) for $37,000 in cash. The assets of WDRQ-FM
are classified as assets held for sale in connection with the purchase price
allocation of the Chancellor Viacom Acquisition and no gain or loss will be
recognized by Chancellor upon consummation of the sale.
(4) In connection with the Chancellor Viacom Acquisition, Chancellor expects to
refinance the Existing Chancellor Credit Agreement (when and as amended, the
"CRBC Restated Credit Agreement"). The CRBC Restated Credit Agreement is
expected to provide for a $400,000 term loan facility and a $350,000
revolving loan facility. Reflects the $12,500 adjustment to decrease current
maturities of long-term debt under the CRBC Restated Credit Agreement to $0.
(5) Reflects an extraordinary charge of $5,400 for estimated early call premiums
and fees of $9,000 (less a tax benefit of $3,600) to be incurred in
connection with the redemption of Chancellor's 12.5% Senior
P-8
<PAGE> 15
Subordinated Notes ($60,000 principal amount). The redemption will be
financed through additional borrowings of $69,000 under the CRBC Restated
Credit Agreement.
(6) Reflects (i) the adjustment to write-off the unamortized balance of deferred
loan fees of $2,566 (net of a tax benefit of $1,711) at March 31, 1997
related to the Chancellor 12.5% Senior Subordinated Notes and the Existing
CRBC Credit Agreement as an extraordinary item and (ii) the adjustment to
record estimated new loan fees of $3,500 to be incurred in connection with
the CRBC Restated Credit Agreement and financed through additional bank
borrowings under such agreement.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE CHANCELLOR MERGER
(7) Chancellor Merger Purchase Price Information. In connection with the
Chancellor Merger, each outstanding share of Chancellor common stock will be
converted into the right to receive 0.9091 shares of Evergreen's New Common
Stock. For purposes of the unaudited pro forma condensed combined financial
statements, the fair market value of Evergreen's New Common Stock is
calculated by using $31.00 per share which is based on the market price of
Evergreen's Class A Common Stock on and around the announcement date of the
Chancellor Merger on February 19, 1997. The aggregate purchase price is
summarized below:
<TABLE>
<S> <C>
EXCHANGE OF CHANCELLOR COMMON STOCK:
Shares of Chancellor Common Stock outstanding............... 18,985,122
Exchange ratio.............................................. .9091
----------
Shares of New Common Stock to be issued in connection with
the Chancellor Merger..................................... 17,259,374
==========
AGGREGATE PURCHASE PRICE:
Estimated fair value of New Common Stock to be issued in
connection with the Chancellor Merger (17,259,374 shares @
$31.00 per share)......................................... $ 535,041
Chancellor debt and equity assumed at fair values:
Long-term debt outstanding:
Revolving Loan......................................... 199,918
Term Loan.............................................. 400,000
CRBC 9 3/8% Notes...................................... 200,000
Chancellor Interim Financing........................... 170,000
Total long-term debt outstanding.......................... 969,918
12 1/4% Preferred Stock................................... 114,670
12% Preferred Stock....................................... 204,533
7% Convertible Preferred Stock............................ 111,454
Stock options issued by Chancellor........................ 37,669
Financial advisors, legal, accounting and other professional
fees...................................................... 28,000
----------
Aggregate purchase price.................................... $2,001,285
==========
</TABLE>
P-9
<PAGE> 16
To record the aggregate purchase price of the Chancellor Merger and
eliminate certain Chancellor historical balances as follows:
<TABLE>
<CAPTION>
ELIMINATION
OF CHANCELLOR
PURCHASE HISTORICAL CHANCELLOR
PRICE BALANCES MERGER NET
ALLOCATION AS ADJUSTED FINANCING ADJUSTMENT
---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Current assets........................ $ 72,691 $ (72,691) $ -- $ --
Property and equipment, net........... 74,210 (74,210) -- --
Intangible assets..................... 1,864,467 (1,439,384) -- 425,083
Other assets.......................... 13,643 (13,643) -- --
Current liabilities................... (27,878) 27,878 -- --
Long-term debt........................ -- 969,918 (997,918)(a) (28,000)
Deferred tax liabilities (assets)..... 4,938 (4,938) -- --
Other liabilities..................... (786) 786 -- --
Redeemable preferred stock............ -- 414,175 (430,657)(b) (16,482)
Common stock.......................... -- 189 (173)(c) 16
Additional paid-in capital............ -- 246,442 (572,537)(d) (326,095)
Accumulated deficit................... -- (53,484) -- (53,484)
Treasury stock........................ -- (1,038)(e) -- (1,038)
---------- ----------- ----------- ---------
Aggregate Purchase Price.............. $2,001,285 $ -- $(2,001,285) $ --
========== =========== =========== =========
</TABLE>
- ---------------
(a) Reflects the adjustment to record debt assumed or incurred by the Company
including (i) Chancellor's long-term debt of $969,918 and (ii) additional
bank borrowings of $28,000 required to finance estimated financial advisors,
legal, accounting and other professional fees.
(b) Reflects the adjustment to record the estimated fair value of redeemable
preferred stock to be issued (a) by EMCLA in exchange for (i) CRBC's 12 1/4%
Preferred Stock of $114,670 (including accrued and unpaid dividends of
$14,670) and (ii) CRBC's 12% Preferred Stock of $204,533 (including accrued
and unpaid dividends of $4,533) and (b) by Evergreen in exchange for
Chancellor's 7% Convertible Preferred Stock of $111,454 (including accrued
and unpaid dividends of $1,454).
(c) Reflects 17,259,374 shares of the New Common Stock at a par value of $0.01
to be issued in connection with the Chancellor Merger.
(d) Reflects additional paid-in capital of $534,868 related to 17,259,374 shares
of the New Common Stock to be issued in connection with the Chancellor
Merger and the fair value of stock options assumed by the Company of
$37,669. The $37,669 fair value of the Chancellor stock options was
estimated using the Black-Scholes option pricing model and the Chancellor
Merger exchange ratio of .9091 applied to Chancellor's outstanding options
and exercise prices. At March 31, 1997, Chancellor had 1,928,900 options
outstanding with exercise prices ranging from $7.50 to $36.75.
(e) Reflects the elimination of Chancellor's treasury stock which will be
cancelled and retired upon consummation of the Chancellor Merger.
(8) To record a $281,490 deferred tax liability related to the difference
between the financial statement carrying amount and the tax basis of
Chancellor acquired assets.
P-10
<PAGE> 17
THE COMPANY'S HISTORICAL CONDENSED COMBINED STATEMENTS OF OPERATIONS AND
ADJUSTMENTS RELATED TO THE COMPLETED EVERGREEN TRANSACTIONS
(9) The Company's historical condensed combined statement of operations for the
year ended December 31, 1996 and the three months ended March 31, 1997 and
pro forma adjustments related to the Completed Evergreen Transactions are
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
--------------------------------------------------------------------
WWRC-AM WWWW-FM/
PYRAMID KYLD-FM WGAY-FM WEDR-FM WDFN-AM
COMPANY HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
COMPLETED EVERGREEN TRANSACTIONS HISTORICAL 1-1/1-17(A) 1/1-4/30(B) 1/1-6/17(C) 1/1-10/18(D) 1/1-2/14(E)
-------------------------------- ---------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues.......................... $337,405 $2,144 $ 2,308 $ 3,264 $ 7,933 $ 839
Less: agency commissions................ (43,555) (216) (363) (409) (1,066) (102)
-------- ------ ------- ------- ------- -----
Net revenues............................ 293,850 1,928 1,945 2,855 6,867 737
Station operating expenses excluding
depreciation and amortization......... 174,344 1,489 1,885 3,493 2,933 815
Depreciation and amortization........... 93,749 502 749 314 29 45
Corporate general and administrative
expenses.............................. 7,797 123 256 477 1,401 --
-------- ------ ------- ------- ------- -----
Operating income (loss)................. 17,960 (186) (945) (1,429) 2,504 (123)
Interest expense........................ 37,527 343 1,094 -- -- --
Other (income) expense.................. (477) (5) (97) 5 (15) --
-------- ------ ------- ------- ------- -----
Income (loss) before income taxes....... (19,090) (524) (1,942) (1,434) 2,519 (123)
Income tax expense (benefit)............ (2,896) -- -- (453) -- --
-------- ------ ------- ------- ------- -----
Net income (loss)....................... (16,194) (524) (1,942) (981) 2,519 (123)
Preferred stock dividends............... 3,820 -- -- -- -- --
-------- ------ ------- ------- ------- -----
Income (loss) attributable to common
stockholders.......................... $(20,014) $ (524) $(1,942) $ (981) $ 2,519 $(123)
======== ====== ======= ======= ======= =====
Income (loss) per common share.......... $ (0.66)
========
Weighted average common shares
outstanding(p)........................ 30,207
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $119,506 $ 439 $ 60 $ (638) $ 3,934 $ (78)
<CAPTION>
ACQUISITIONS DISPOSITIONS
-------------------------------------------------------- ---------------------------
WPEG-FM
WBAV-FM/AM
KKSF-FM/ WJLB-FM/ WUSL-FM WRFX-FM
KDFC-FM/AM WMXD-FM WDAS-FM/AM WIOQ-FM WFNZ-FM WNKS-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
COMPLETED EVERGREEN TRANSACTIONS 1/1-10/31(F) 1/1-8/31(G) 1/1-12/31(H) 1/1-12/31(I) 1/1-12/31(I) 1/1-12/31(J)
-------------------------------- ------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues.......................... $13,646 $15,408 $16,809 $20,152 $(20,818) $ (3,303)
Less: agency commissions................ (1,746) (1,881) (2,142) (2,369) 2,733 337
------- ------- ------- ------- -------- --------
Net revenues............................ 11,900 13,527 14,667 17,783 (18,085) (2,966)
Station operating expenses excluding
depreciation and amortization......... 6,358 5,721 7,759 9,519 (9,509) (2,461)
Depreciation and amortization........... 2,351 2,415 2,763 -- -- (548)
Corporate general and administrative
expenses.............................. -- 1,005 620 533 -- --
------- ------- ------- ------- -------- --------
Operating income (loss)................. 3,191 4,386 3,525 7,731 (8,576) 43
Interest expense........................ 429 1,406 79 2,245 -- --
Other (income) expense.................. (48) -- (39) 58 -- --
------- ------- ------- ------- -------- --------
Income (loss) before income taxes....... 2,810 2,980 3,485 5,428 (8,576) 43
Income tax expense (benefit)............ -- 180 -- -- -- --
------- ------- ------- ------- -------- --------
Net income (loss)....................... 2,810 2,800 3,485 5,428 (8,576) 43
Preferred stock dividends............... -- -- -- -- -- --
------- ------- ------- ------- -------- --------
Income (loss) attributable to common
stockholders.......................... $ 2,810 $2,800 $ 3,485 $ 5,428 $ (8,576) $ 43
======= ======= ======= ======= ======== ========
Income (loss) per common share..........
Weighted average common shares
outstanding(p)........................
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $ 5,542 $7,806 $ 6,908 $ 8,264 $ (8,576) $ (505)
<CAPTION>
COMPANY AS
ADJUSTED FOR
COMPLETED
PRO FORMA EVERGREEN
COMPLETED EVERGREEN TRANSACTIONS ADJUSTMENTS TRANSACTIONS
-------------------------------- ----------- ------------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues.......................... $ -- $395,787
Less: agency commissions................ -- (50,779)
-------- --------
Net revenues............................ -- 345,008
Station operating expenses excluding
depreciation and amortization......... -- 202,346
Depreciation and amortization........... 26,493(k) 128,862
Corporate general and administrative
expenses.............................. (4,415)(l) 7,797
-------- --------
Operating income (loss)................. (22,078) 6,003
Interest expense........................ 17,041(m) 60,164
Other (income) expense.................. -- (618)
-------- --------
Income (loss) before income taxes....... (39,119) (53,543)
Income tax expense (benefit)............ (9,966)(n) (13,135)
-------- --------
Net income (loss)....................... (29,153) (40,408)
Preferred stock dividends............... (3,820)(o) --
-------- --------
Income (loss) attributable to common
stockholders.......................... $(25,333) $(40,408)
======== ========
Income (loss) per common share.......... $ (0.96)
========
Weighted average common shares
outstanding(p)........................ 11,948 42,155
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $ -- $142,662
</TABLE>
P-11
<PAGE> 18
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- -------------------------
WPEG-FM
WBAV-FM/AM COMPANY AS
WUSL-FM WRFX-FM ADJUSTED FOR
WDAS-FM/AM WIOQ-FM WFNZ-FM WNKS-FM COMPLETED
COMPANY HISTORICAL HISTORICAL HISTORICAL HISTORICAL PRO FORMA EVERGREEN
COMPLETED EVERGREEN TRANSACTIONS HISTORICAL 1/1-3/31(H) 1/1-3/31(I) 1/1-3/31(I) 1/1-3/31(J) ADJUSTMENTS TRANSACTIONS
- -------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues.................. $93,812 $3,471 $4,376 $(4,932) $(807) $ -- $ 95,920
Less: agency commissions........ (11,915) (471) (530) 638 83 -- (12,195)
------- ------ ------ ------- ----- ------- --------
Net revenues.................... 81,897 3,000 3,846 (4,294) (724) -- 83,725
Station operating expenses
excluding depreciation and
amortization.................. 52,984 1,931 2,367 (2,346) (634) -- 54,302
Depreciation and amortization... 26,015 657 -- -- (141) 4,592(k) 31,123
Corporate general and
administrative expenses....... 2,330 128 94 -- -- (222)(l) 2,330
------- ------ ------ ------- ----- ------- --------
Operating income (loss)......... 568 284 1,385 (1,948) 51 (4,370) (4,030)
Interest expense................ 8,053 14 660 -- -- 5,242(m) 13,969
Other (income) expense.......... (165) 57 -- -- -- (108)
------- ------ ------ ------- ----- ------- --------
Income (loss) before income
taxes......................... (7,320) 213 725 (1,948) 51 (9,612) (17,891)
Income tax expense (benefit).... (1,309) -- -- -- -- (3,551)(n) (4,860)
------- ------ ------ ------- ----- ------- --------
Income (loss) attributable to
common stock.................. $(6,011) $ 213 $ 725 $(1,948) $ 51 $(6,061) $(13,031)
======= ====== ====== ======= ===== ======= ========
Income (loss) per common
share....................... $ (0.14) $ (0.31)
======= ========
Weighted average common shares
outstanding................. 42,188 42,188
======= ========
OTHER FINANCIAL DATA:
Broadcast cash flow............. $28,913 $1,069 $1,479 $(1,948) $ (90) $ -- $ 29,423
======= ====== ====== ======= ===== ======= ========
</TABLE>
- ---------------
(a) On January 17, 1996, the Company acquired Pyramid Communications, Inc.
("Pyramid"), a radio broadcasting company with 12 radio stations (9 FM and 3
AM) in five markets (Chicago, Philadelphia, Boston, Charlotte, and Buffalo)
(the "Pyramid Acquisition"). The total purchase price, including acquisition
costs, allocated to net assets acquired was approximately $316,343 of which
$315,000 was financed through additional borrowings under the Company's
prior senior credit facility. The historical financial data of Pyramid for
the period of January 1, 1996 to January 17, 1996 excludes the combined net
losses of approximately $60 for WHTT-FM, WHTT-AM and WSJZ-FM in Buffalo (the
"Buffalo Transactions") which were sold in 1996 for $32,000 in cash.
(b) On August 14, 1996, the Company acquired KYLD-FM in San Francisco for
$44,000 in cash. The Company had previously been operating KYLD-FM under a
time brokerage agreement since May 1, 1996.
(c) On November 26, 1996, the Company exchanged WKLB-FM in Boston (which the
Company acquired on May 3, 1996 for $34,000 in cash) for WGAY-FM in
Washington, D.C. On April 3, 1997, the Company exchanged, in the Greater
Media Exchange, WQRS-FM in Detroit (which the Company acquired on April 3,
1997 for $32,000 in cash) for WWRC-AM in Washington, D.C. and $9,500 in
cash. The Company had previously been operating WGAY-FM and WWRC-AM under
time brokerage agreements since June 17, 1996.
(d) On October 18, 1996, the Company acquired WEDR-FM in Miami for $65,000 in
cash.
(e) On January 31, 1997, the Company acquired, in the WWWW/WDFN Acquisition,
WWWW-FM and WDFN-AM in Detroit from Chancellor for $30,000 in cash (of which
$1,500 was paid as escrow funds in January 1996). 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.
(f) On January 31, 1997, the Company acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash (of which
$10,000 was paid as escrow funds in November 1996). The Company had
previously been operating the stations under a time brokerage agreement
since November 1, 1996.
(g) On April 1, 1997, the Company acquired, in the Secret/Detroit Acquisition,
WJLB-FM and WMXD-FM in Detroit for $168,000 in cash. The Company had
previously been operating the stations under a time brokerage agreement
since September 1, 1996.
P-12
<PAGE> 19
(h) On May 1, 1997, the Company acquired, in the Beasley Acquisition, WDAS-FM/AM
in Philadelphia for $103,000 in cash.
(i) On May 15, 1997, the Company exchanged, in the EZ Exchange, 5 of its 6
stations in the Charlotte market (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM)
for WUSL-FM and WIOQ-FM in Philadelphia.
(j) On May 15, 1997, the Company sold, in the EZ Sale, WNKS-FM in Charlotte for
$10,000 in cash.
(k) Reflects incremental amortization related to the Completed Evergreen
Transactions and is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
-------------------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Pyramid Acquisition (ii).......... 1/1-1/17 $325,871 $ 1,026 $ 409 $ 617
KYLD-FM........................... 1/1-8/14 43,659 1,811 640 1,171
WEDR-FM........................... 1/1-10/18 63,757 3,400 -- 3,400
WGAY-FM........................... 1/1-11/26 32,538 1,964 -- 1,964
WWWW-FM/WDFN-AM................... 1/1-12/31 26,590 1,773 7 1,766
KKSF-FM/KDFC-AM (iii)............. 1/1-12/31 63,500 4,233 868 3,365
WJLB-FM/WMXD-FM................... 1/1-12/31 165,559 11,037 2,145 8,892
WWRC-AM........................... 1/1-12/31 16,808 1,121 -- 1,121
WDAS-FM/AM........................ 1/1-12/31 100,000 6,667 2,470 4,197
-------- ------- ------ -------
Total................... $838,282 $33,032 $6,539 $26,493
======== ======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
THREE MONTHS ENDED MARCH 31, 1997 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
WWWW-FM/WDFN-AM................... 1/1-1/31 $ 26,590 $ 148 $ -- $ 148
KKSF-FM/KDFC-AM (iii)............. 1/1-1/31 63,500 353 -- 353
WJLB-FM/WMXD-FM................... 1/1-3/31 165,559 2,759 -- 2,759
WWRC-AM........................... 1/1-3/31 16,808 280 -- 280
WDAS-FM/AM........................ 1/1-3/31 100,000 1,667 615 1,052
-------- ------- ------ -------
Total................... $372,457 $ 5,207 $ 615 $ 4,592
======== ======= ====== =======
</TABLE>
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the station was not owned by the
Company.
(ii) Intangible assets for the Pyramid Acquisition of $325,871 includes
$61,218 resulting from the recognition of deferred tax liabilities and
excludes approximately $29,915 of the purchase price allocated to the
Buffalo Stations which were sold during the year ended December 31,
1996.
(iii) Intangible assets for KKSF-FM and KDFC-AM excludes approximately
$50,000 of the purchase price allocated to KDFC-FM which has been
classified as assets held for sale.
Historical depreciation expense of the Completed Evergreen Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(l) Reflects the elimination of estimated duplicate corporate expenses of $4,415
for the year ended December 31, 1996 and $222 for the three months ended
March 31, 1997 related to the Completed Evergreen Transactions.
P-13
<PAGE> 20
(m) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Evergreen Transactions, the 1996 Offering and
the amendment and restatement of the Company's senior credit agreement:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions............................ $895,500 $427,000
Completed Dispositions............................ (42,000) (10,000)
New Loan Fees..................................... 10,000 10,000
-------- --------
Total additional bank borrowings.................... $863,500 $427,000
======== ========
Interest expense at 7.0%............................ $ 37,640 $ 5,916
Less: historical interest expense................... (5,596) (674)
-------- --------
Net increase in interest expense.................... 32,044 5,242
Reduction in interest expense on bank debt related
to the application of net proceeds of the 1996
Equity Offering of $264,236 at 7.0% for the period
January 1, 1996 to October 22, 1996............... (15,003) --
-------- --------
Total adjustment for net increase in interest
expense........................................... $ 17,041 $ 5,242
======== ========
</TABLE>
(n) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(o) Reflects the elimination of historical preferred stock dividends of $3,820
for the year ended December 31, 1996 assuming the conversion of 1,608,297
shares of the Company's Convertible Preferred Stock into 5,025,916 shares
of the Company's Class A Common Stock and the redemption of the remaining
1,703 shares of Convertible Preferred Stock occurred January 1, 1996.
(p) The pro forma combined loss per common share data is computed by dividing
pro forma loss attributable to common stockholders by the weighted average
common shares assumed to be outstanding. A summary of shares used in the
pro forma combined loss per common share calculation follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Historical weighted average shares outstanding...... 30,207 42,188
Incremental weighted average shares relating to:
Issuance of 9,000,000 shares of Class A Common
Stock on October 17, 1996...................... 7,325 --
1996 Preferred Stock Conversion................... 4,623 --
------- ------
Total incremental weighted average shares........... 11,948 --
------- ------
Shares used in the pro forma combined earnings per
share calculation................................. 42,155 42,188
======= ======
</TABLE>
P-14
<PAGE> 21
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
Related to the Pending Evergreen Transactions
(10) The detail of the historical financial data of the stations to be
acquired or disposed of in the Pending Evergreen Transactions for the
year ended December 31, 1996 and the three months ended March 31, 1997
has been obtained from the historical financial statements of the
respective stations and is summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------- ---------------------------------------------------------
EVERGREEN
VIACOM WEJM-
ACQUISITION GANNETT WFLN-FM FM/AM WLUP-FM KDFC-FM
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996(A) 1/1-12/31(B) 1/1-12/31(C) 9/1-12/31(D) 1/1-12/31(E) 1/1-12/31(F) 1/1-12/31(G)
------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues........................ $ 67,926 $52,028 $(1,455) $(2,690) $(17,024) $(5,138)
Less: agency commissions.............. (10,493) (6,819) 159 293 2,332 643
-------- ------- ------- ------- -------- -------
Net revenues.......................... 57,433 45,209 (1,296) (2,397) (14,692) (4,495)
Station operating expenses excluding
depreciation and amortization....... 26,598 25,031 (725) (2,217) (11,697) (2,300)
Depreciation and amortization......... 6,267 1,760 (800) (1,719) (1,585) (853)
Corporate general and administrative
expenses............................ 1,617 -- -- -- -- --
-------- ------- ------- ------- -------- -------
Operating income (loss)............... 22,951 18,418 229 1,539 (1,410) (1,342)
Interest expense...................... -- -- -- -- -- --
Other (income) expense................ 459....... -- -- -- -- --
-------- ------- ------- ------- -------- -------
Income (loss) before income taxes..... 22,492 18,418 229 1,539 (1,410) (1,342)
Income tax expense (benefit).......... 10,612.... -- -- -- -- --
-------- ------- ------- ------- -------- -------
Net income (loss)..................... $ 11,880 $18,418 $ 229 $ 1,539 $ (1,410) $(1,342)
======== ======= ======= ======= ======== =======
OTHER FINANCIAL DATA:
Broadcast Cash Flow................... $ 30,835 $20,178 $ (571) $ (180) $ (2,995) $(2,195)
<CAPTION>
DISPOSITIONS
-------------------------------------------
TOTAL
SAN FRANCISCO PENDING
107.7 WJZW-FM EVERGREEN
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996(A) 1/1-12/31(H) 1/1-12/31(I) HISTORICAL
------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
Gross revenues........................ $(2,736) $(8,443) $ 82,468
Less: agency commissions.............. 358 1,311 (12,216)
------- ------- --------
Net revenues.......................... (2,378) (7,132) 70,252
Station operating expenses excluding
depreciation and amortization....... (3,159) (3,998) 27,533
Depreciation and amortization......... (3,826) (589) (1,345)
Corporate general and administrative
expenses............................ -- (206) 1,411
------- ------- --------
Operating income (loss)............... 4,607 (2,339) 42,653
Interest expense...................... -- -- --
Other (income) expense................ -- -- 459
------- ------- --------
Income (loss) before income taxes..... 4,607 (2,339) 42,194
Income tax expense (benefit).......... -- (913) 9,699
------- ------- --------
Net income (loss)..................... $ 4,607 $(1,426) $ 32,495
======= ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow................... $ 781 $(3,134) $ 42,719
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- -----------------------------------------------------
EVERGREEN
VIACOM WEJM-
ACQUISITION GANNETT WFLN-FM FM/AM WLUP-FM KDFC-FM
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
THREE MONTHS ENDED MARCH 31, 1997(A) 1/1-3/31(B) 1/1-3/31(C) 1/1-3/31(D) 1/1-3/31(E) 1/1-3/31(F) 1/1-3/31(G)
------------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues......................... $ 17,027 $ 12,392 $ (908) $(572) $(2,762) $(278)
Less: agency commissions............... (2,788) (1,082) 93 57 355 26
-------- -------- ------ ----- ------- -----
Net revenues........................... 14,239 11,310 (815) (515) (2,407) (252)
Station operating expenses excluding
depreciation and amortization........ 6,917 6,908 (539) (524) (2,894) (224)
Depreciation and amortization.......... 1,101 435 (600) (235) (385) --
Corporate general and administrative
expenses............................. 341 -- -- -- -- --
-------- -------- ------ ----- ------- -----
Operating income (loss)................ 5,880 3,967 324 244 872 (28)
Interest expense....................... -- -- -- -- -- --
Other (income) expense................. -- -- -- -- -- --
-------- -------- ------ ----- ------- -----
Net income (loss)...................... 5,880 3,967 324 244 872 (28)
Income tax expense..................... 2,946 -- -- -- -- --
-------- -------- ------ ----- ------- -----
Net income (loss)...................... $ 2,934 $ 3,967 $ 324 $ 244 $ 872 $ (28)
======== ======== ====== ===== ======= =====
OTHER FINANCIAL DATA
Broadcast Cash Flow.................... $ 7,322 $ 4,402 $ (276) $ 9 $ 487 $ (28)
<CAPTION>
DISPOSITIONS
---------------------------
TOTAL
SAN FRANCISCO PENDING
107.7 WJZW-FM EVERGREEN
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL TRANSACTIONS
THREE MONTHS ENDED MARCH 31, 1997(A) 1/1-3/31(H) 1/1-3/31(I) HISTORICAL
------------------------------------ ------------- ----------- ------------
<S> <C> <C> <C>
Gross revenues......................... $ (574) ($1,727) $22,598
Less: agency commissions............... 72 296 (2,971)
------ ------- -------
Net revenues........................... (502) (1,431) 19,627
Station operating expenses excluding
depreciation and amortization........ (868) (926) 7,850
Depreciation and amortization.......... (949) (138) (771)
Corporate general and administrative
expenses............................. -- (35) 306
------ ------- -------
Operating income (loss)................ 1,315 (332) 12,242
Interest expense....................... -- -- --
Other (income) expense................. -- -- --
------ ------- -------
Net income (loss)...................... 1,315 (332) 12,242
Income tax expense..................... -- (130) 2,816
------ ------- -------
Net income (loss)...................... $1,315 $(202) $ 9,426
====== ======= =======
OTHER FINANCIAL DATA
Broadcast Cash Flow.................... $ 366 $(505) $11,777
</TABLE>
P-15
<PAGE> 22
- ---------------
(a) On July 15, 1996, the Company entered into an agreement to acquire, in the
Century Acquisition, WPNT-FM in Chicago for $73,750 in cash of which $5,500
was paid as escrow funds in July 1996. On April 10, 1997, the Company
entered into an agreement to sell, in the Bonneville Dispositions, WPNT-FM
in Chicago for $75,000 in cash. The results of operations of WPNT are
excluded as the acquisition and disposition is deemed to have occurred on
January 1, 1996.
(b) On February 19, 1997, the Company and Chancellor entered into the Viacom
Joint Purchase Agreement whereby in the event the Viacom Acquisition occurs
prior to the consummation of the Merger, the Company will purchase 6 of the
10 Viacom stations in the Evergreen Viacom Acquisition for $595,000 plus
working capital ($10,125 at March 31, 1997) and estimated acquisition costs
of $5,500 for an aggregate purchase price of $610,625. The stations to be
acquired by the Company in the Evergreen Viacom Acquisition include WAXQ-FM
and WLTW-FM in New York and WMZQ-FM, WZHF-AM, WJZW-FM and WBZS-AM in
Washington, D.C. The Viacom results of operations reflect the financial
performance of WAXQ-FM for six months of the year that the station was
operated by Viacom (July 1, 1996 to December 31, 1996) combined with net
income of $851 for the first half of the year when the station was under
prior ownership.
(c) On April 4, 1997, the Company entered into an agreement to acquire, in the
Gannett Acquisition, 5 radio stations in 3 major markets from P&S including
WGCI-FM/AM in Chicago, KHKS-FM in Dallas, and KKBQ-FM/AM in Houston
("Gannett") for $340,000 in cash.
(d) On August 12, 1996, the Company entered into an agreement to acquire, in the
Secret/Philadelphia Acquisition, WFLN-FM in Philadelphia for $37,750 in
cash. On April 8, 1997, the Company entered into an agreement to sell, in
the Greater Media Disposition, WFLN-FM in Philadelphia for $41,800 in cash.
The Company has been operating WFLN-FM under a time brokerage agreement
since September 1, 1996.
(e) On February 19, 1997, the Company entered into an agreement to sell, in the
Crawford Disposition, WEJM-FM in Chicago for $14,750 in cash. On March 19,
1997, the Company entered into an agreement to sell, in the Douglas Chicago
Disposition, WEJM-AM in Chicago for $7,500 in cash.
(f) On April 10, 1997, the Company entered into an agreement to sell, in the
Bonneville Dispositions, WLUP-FM in Chicago for $80,000 in cash.
(g) On January 31, 1997, the Company acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash. The Company
had previously been operating KKSF-FM and KDFC-FM/AM under a time brokerage
agreement since November 1, 1996. On April 10, 1997, the Company entered
into an agreement to sell KDFC-FM in San Francisco for $50,000 in cash. 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.
Accordingly, KDFC-FM net income of approximately $304 for the period
February 1, 1997 through March 31, 1997 has been excluded from the Company's
historical condensed statement of operations. Therefore, the KDFC-FM
condensed statement of operations includes results of operations for January
1, 1997 through January 31, 1997 (the time brokerage agreement holding
period in 1997) for the three months ended March 31, 1997.
(h) On April 8,1997, the Company entered into an agreement to sell, in the San
Francisco Frequency Disposition, the San Francisco 107.7 MHz FM dial
position and transmission facility and the call letters from Chancellor's
KSAN-FM in San Francisco for $44,000 in cash.
(i) On April 11, 1997, the Company entered into an agreement to sell, in the
ABC/Washington Disposition, WJZW-FM in Washington (to be acquired as part of
the Evergreen Viacom Acquisition) for $68,000 in cash.
P-16
<PAGE> 23
(11) Reflects incremental amortization related to the assets acquired in the
Pending Evergreen Transactions (see notes 2(j) and 2(l)) and is based on
the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Amortization expense on $861,827 additional
intangible assets amortized on a straight-line
basis over a 15 year period........................ $57,455 $14,364
Less: historical amortization expense................ (6,835) (1,098)
------- -------
Adjustment for net increase in amortization
expense............................................ $50,620 $13,266
======= =======
</TABLE>
Historical depreciation expense of the Pending Evergreen Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(12) Reflects the elimination of estimated duplicate corporate expenses of
$1,100 for the year ended December 31, 1996 and $232 for the three months
ended March 31, 1997 related to the Pending Evergreen Transactions.
(13) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Evergreen Transactions:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions............................... $ 870,125 $ 864,625(a)
Pending Dispositions............................... (381,050) (381,050)
--------- ---------
Total additional bank borrowings..................... $ 489,075 $ 483,575
========= =========
Interest expense on additional bank borrowings at
7.0%............................................... $ 34,062 $ 8,033
========= =========
</TABLE>
(a) The additional bank borrowings of $864,625 for the three months ended
March 31, 1997 does not include borrowings of $5,500 to finance the
escrow deposits for WPNT-FM as these borrowings were outstanding at
December 31, 1996 and are therefore included in historical interest
expense for the three months ended March 31, 1997.
(14) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(15) Reflects assumed dividends on the Convertible Preferred Stock of $12,000
for the year ended December 31, 1996 and $3,000 for the three months ended
March 31, 1997.
P-17
<PAGE> 24
ADJUSTMENTS TO CHANCELLOR'S HISTORICAL CONDENSED COMBINED STATEMENT OF
OPERATIONS RELATED TO THE COMPLETED CHANCELLOR TRANSACTIONS
(16) Chancellor's historical condensed combined statement of operations for the
year ended December 31, 1996 and the three months ended March 31, 1997 and
pro forma adjustments related to the Completed Chancellor Transactions is
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
------------------------------------------------------------------------------------
KIMN-FM/ KOOL-FM
SHAMROCK KALC-FM COLFAX HISTORICAL SUNDANCE
COMPLETED CHANCELLOR TRANSACTIONS CHANCELLOR HISTORICAL HISTORICAL HISTORICAL 1/1- HISTORICAL
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(A) 1/1-2/14(B) 1/1-12/31(C) 1/1-12/31(D) 3/31(D) 1/1-9/12(D)
--------------------------------- ------------- ----------- ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.......................... $203,188 $ 9,698 $2,010 $51,745 $1,665 $13,844
Less: agency commissions................ (24,787) (1,234) (259) (6,626) (234) (1,740)
-------- ------- ------ ------- ------- -------
Net revenues............................ 178,401 8,464 1,751 45,119 1,431 12,104
Station operating expenses excluding
depreciation and amortization......... 111,210 7,762 1,523 28,584 852 7,678
Depreciation and amortization........... 20,877 595 511 4,494 229 1,242
Corporate general and administrative
expenses.............................. 4,845 2,215 -- -- -- --
Stock option compensation............... 3,800 -- -- -- -- --
-------- ------- ------ ------- ------- -------
Operating income (loss)................. 37,669 (2,108) (283) 12,041 350 3,184
Interest expense........................ 35,704 1,380 -- 4,369 299 --
Other (income) expense.................. 68 49 312 (179) -- 25
-------- ------- ------ ------- ------- -------
Income (loss) before income taxes....... 1,897 (3,537) (595) 7,851 51 3,159
Income tax expense (benefit)............ 4,612 -- -- -- -- --
Dividends and accretion on preferred
stock of subsidiary................... 11,557 -- -- -- -- --
-------- ------- ------ ------- ------- -------
Net income (loss)....................... (14,272) (3,537) (595) 7,851 51 3,159
Preferred stock dividends............... -- -- -- -- -- --
-------- ------- ------ ------- ------- -------
Income (loss) attributable to common
stockholders.......................... $(14,272) $(3,537) $ (595) $ 7,851 $ 51 $ 3,159
======== ======= ====== ======= ======= =======
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $ 67,191 $ 702 $ 228 $16,535 $ 579 $ 4,426
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------ ---------------------------------------- PRO FORMA
WMIL-FM/ ADJUSTMENTS
KSTE-FM WWWW-FM/ KTBZ-FM WOKY-AM FOR THE
OMNI HISTORICAL WDFN-AM HISTORICAL HISTORICAL COMPLETED
COMPLETED CHANCELLOR TRANSACTIONS HISTORICAL 1/1- HISTORICAL 1/1- 1/1- CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 1/1-6/30(E) 7/31(F) 1/1-2/14(G) 2/14(C) 12/31(H) TRANSACTIONS
--------------------------------- ----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.......................... $8,710 $1,411 $(839) $ (399) $(9,552) ($ 5,022)(i)
Less: agency commissions................ (1,211) (149) 102 48 1,070 --
------ ------ ----- ------- ------- --------
Net revenues............................ 7,499 1,262 (737) (351) (8,482) (5,022)
Station operating expenses excluding
depreciation and amortization......... 4,985 1,244 (815) (521) (4,896) (5,763)(i)
Depreciation and amortization........... 1,458 375 (45) (42) (539) 7,831(j)
(1,554)(k)
Corporate general and administrative
expenses.............................. -- -- -- -- -- (1,706)(l)
Stock option compensation............... -- -- -- -- -- --
------ ------ ----- ------- ------- --------
Operating income (loss)................. 1,056 (357) 123 212 (3,047) (3,830)
Interest expense........................ -- -- -- -- -- 5,407(m)
Other (income) expense.................. (404) -- -- -- (19) --
------ ------ ----- ------- ------- --------
Income (loss) before income taxes....... 1,460 (357) 123 212 (3,028) (9,237)
Income tax expense (benefit)............ -- -- -- -- -- (1,412)(n)
Dividends and accretion on preferred
stock of subsidiary................... -- -- -- -- -- 26,843(o)
------ ------ ----- ------- ------- --------
Net income (loss)....................... 1,460 (357) 123 212 (3,028) (34,668)
Preferred stock dividends............... -- -- -- -- -- 7,700(p)
------ ------ ----- ------- ------- --------
Income (loss) attributable to common
stockholders.......................... $1,460 $ (357) $ 123 $ 212 $(3,028) $(42,368)
====== ====== ===== ======= ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $2,514 $ 18 $ 78 $ 170 $(3,586) $ 741
<CAPTION>
CHANCELLOR AS
ADJUSTED FOR
COMPLETED
COMPLETED CHANCELLOR TRANSACTIONS CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS
--------------------------------- -------------
<S> <C>
Gross revenues.......................... $276,459
Less: agency commissions................ (35,020)
--------
Net revenues............................ 241,439
Station operating expenses excluding
depreciation and amortization......... 151,843
Depreciation and amortization........... 35,432
Corporate general and administrative
expenses.............................. 5,354
Stock option compensation............... 3,800
--------
Operating income (loss)................. 45,010
Interest expense........................ 47,159
Other (income) expense.................. (148)
--------
Income (loss) before income taxes....... (2,001)
Income tax expense (benefit)............ 3,200
Dividends and accretion on preferred
stock of subsidiary................... 38,400
--------
Net income (loss)....................... (43,601)
Preferred stock dividends............... 7,700
--------
Income (loss) attributable to common
stockholders.......................... $(51,301)
========
OTHER FINANCIAL DATA:
Broadcast Cash Flow..................... $ 89,596
</TABLE>
P-18
<PAGE> 25
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS CHANCELLOR AS
FOR THE ADJUSTED FOR
COLFAX COMPLETED COMPLETED
COMPLETED CHANCELLOR TRANSACTIONS CHANCELLOR HISTORICAL CHANCELLOR CHANCELLOR
THREE MONTHS ENDED MARCH 31, 1997(A) HISTORICAL 1/1 - 1/23(D) TRANSACTIONS TRANSACTIONS
------------------------------------ ---------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Gross revenues............................ $ 63,477 $3,183 $ (828)(i) $ 65,832
Less: agency commissions.................. (7,623) (384) -- (8,007)
-------- ------ ------- --------
Net revenues.............................. 55,854 2,799 (828) 57,825
Station operating expenses excluding
depreciation and amortization........... 38,187 1,872 (1,231)(i) 38,828
Depreciation and amortization............. 8,109 -- 835(j) 8,862
(82)(k)
Corporate general and administrative
expenses................................ 1,712 -- -- 1,712
Merger expense............................ 2,056 -- 2,056
Stock option compensation................. 950 -- -- 950
-------- ------ ------- --------
Operating income (loss)................... 4,840 927 (350) 5,417
Interest expense.......................... 11,420 320(m) 11,740
Other (income) expense.................... (1,632) -- (1,632)
-------- ------ ------- --------
Income (loss) before income taxes......... (4,948) 927 (670) (4,691)
Income tax expense (benefit).............. (400) (476)(n) (876)
Dividends and accretion on preferred stock
of subsidiary........................... 8,135 -- 1,504(o) 9,639
-------- ------ ------- --------
Net income (loss)......................... (12,683) 927 (1,698) (13,454)
Preferred stock dividends................. 1,454 -- 471(p) 1,925
-------- ------ ------- --------
Income (loss) attributable to common
stockholders............................ $(14,137) $ 927 $(2,169) $(15,379)
======== ====== ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow....................... $ 17,667 $ 927 $ 403 $ 18,997
</TABLE>
- ---------------
(a) On November 22, 1996, Chancellor acquired WKYN-AM in Cincinnati for $1,400
in cash. Chancellor had been previously operating WKYN-AM under a time
brokerage agreement since January 1, 1996. Therefore, Chancellor's
historical results of operations for the year ended December 31, 1996 and
the three months ended March 31, 1997 include the results of operations of
WKYN-AM.
(b) On February 14, 1996, Chancellor acquired Shamrock Broadcasting, Inc., a
radio broadcasting company with 19 radio stations (11 FM and 8 AM) located
in 10 markets (Los Angeles, New York, San Francisco, Houston, Atlanta,
Detroit, Denver, Minneapolis-St. Paul, Phoenix and Pittsburgh). The total
purchase price, including acquisition costs, allocated to net assets
acquired was approximately $408,000.
(c) On July 31, 1996, Chancellor exchanged KTBZ-FM in Houston (which was
acquired on February 14, 1996 as part of the Shamrock Acquisition) and
$5,600 in cash for KIMN-FM and KALC-FM in Denver. Chancellor had previously
entered into a time brokerage agreement to sell substantially all of the
broadcast time of KTBZ-FM effective February 14, 1996. In addition,
Chancellor had been previously operating KIMN-FM and KALC-FM under a time
brokerage agreement since April 1, 1996.
(d) On January 23, 1997, Chancellor acquired Colfax Communications, a radio
broadcasting company, with 12 radio stations (8 FM and 4 AM) located in 4
markets (Minneapolis-St. Paul, Phoenix, Washington, D.C. and Milwaukee
markets). The total purchase price, including acquisition costs, allocated
to net assets acquired was approximately $383,700. The Colfax Acquisition
was financed through (i) a private placement by CRBC of $200,000 of 12%
Preferred Stock for net proceeds of $191,817; (ii) a private placement by
Chancellor of $110,000 of 7% Convertible Preferred Stock for net proceeds of
$105,546; (iii) additional bank borrowings under the Existing CRBC Credit
Agreement of $65,937 and (iv) $20,400 in escrow funds. The historical
financial data of Colfax for the year ended December 31, 1996 excludes the
combined net income of approximately $224 for KLTB-FM, KARO-FM and
P-19
<PAGE> 26
KIDO-AM in Boise, Idaho which Chancellor did not acquire as part of the
Colfax Acquisition. The Colfax historical condensed statement of operations
for the year ended December 31, 1996, does not include the results of
operations of the following: (i) KOOL-FM for the period January 1, 1996 to
March 31, 1996 and (ii) WMIL-FM and WOKY-AM in Milwaukee and KZON-FM,
KISO-AM, KYOT-FM and KOY-AM in Phoenix which were owned and operated by
Sundance Broadcasting, Inc. ("Sundance") for the period January 1, 1996 to
September 12, 1996. On March 31, 1997, Chancellor sold WMIL-FM and WOKY-AM
in Milwaukee for $41,253 in cash. The assets of WMIL-FM and WOKY-AM are
classified as assets held for sale in connection with the purchase price
allocation of the Colfax Acquisition. Accordingly, WMIL-FM and WOKY-AM net
income of approximately $41 for the period January 23, 1997 through March
31, 1997 has been excluded from the Colfax historical condensed statement of
operations for the three months ended March 31, 1997.
(e) On February 13, 1997, Chancellor acquired substantially all of the assets
and assumed certain liabilities of the OmniAmerica Group including 8 radio
stations (7 FM and 1 AM) located in 3 markets (Orlando, West Palm Beach and
Jacksonville). The total purchase price, including acquisition costs,
allocated to net assets acquired was approximately $181,046. The Omni
Acquisition was financed through (i) additional bank borrowings under the
Existing CRBC Credit Agreement of $166,046 and (ii) the issuance of 555,556
shares of Chancellor's Class A Common Stock valued at $15,000 or $27.00 per
share. Prior to the consummation of the Omni Acquisition, Chancellor had
entered into an agreement to operate the stations under a time brokerage
agreement effective July 1, 1996. Additionally, prior to consummation of the
West Palm Beach Exchange (see (f) below) on March 28, 1997 and the SFX
Exchange (see note 17(a)), Chancellor entered into time brokerage agreements
to sell substantially all of the broadcast time of WEAT-FM/AM and WOLL-FM in
West Palm Beach and WAPE-FM and WFYV-FM in Jacksonville effective July 1,
1996. The historical financial data of Omni for the period January 1, 1996
to June 30, 1996 represents the results of operations for the Orlando
stations (WOMX-FM, WXXL-FM and WJHM-FM). The results of operations for
WEAT-FM/AM and WOLL-FM in West Palm Beach and WAPE-FM and WFYV-FM in
Jacksonville are not included as the acquisition and disposition of these
stations is deemed to have occurred on January 1, 1996.
(f) On March 28, 1997, Chancellor exchanged, in the West Palm Beach Exchange,
WEAT-FM/AM and WOLL-FM in West Palm Beach, Florida, which were acquired as
part of the Omni Acquisition, for KSTE-FM in Sacramento and $33,000 in cash.
Chancellor had previously been operating KSTE-FM under a time brokerage
agreement since August 1, 1996.
(g) On January 31, 1997, Chancellor sold, in the WWWW/WDFN Disposition, WWWW-FM
and WDFN-AM in Detroit, which were acquired on February 14, 1996 as part of
the Shamrock Acquisition, to the Company for $30,000 in cash. Prior to the
completion of the sale, Chancellor had entered into a joint sales agreement
effective February 14, 1996 and a time brokerage agreement effective April
1, 1996 to sell substantially all of the broadcast time of WWWW-FM and
WDFN-AM to the Company pending the completion of the sale.
(h) On March 31, 1997, Chancellor sold, in the Milwaukee Disposition, WMIL-FM
and WOKY-AM in Milwaukee, which were acquired as part of the Colfax
Acquisition on January 23, 1997, for $41,253 million in cash.
(i) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
COMPLETED CHANCELLOR TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 MARKET PERIOD REVENUE EXPENSE
--------------------------------- --------------- ---------- ------- -------
<S> <C> <C> <C> <C>
WWWW-FM/WDFN-AM........................... Detroit 2/14-12/31 $(2,937) $ (598)
KTBZ-FM................................... Houston 2/14-7/31 (1,113) (265)
WOMX-FM, WXXL-FM, WJHM-FM................. Orlando 7/1-12/31 -- (3,900)
WEAT-FM/AM, WOLL-FM....................... West Palm Beach 7/1-12/31 (972) (1,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........... $(5,022) $(5,763)
======= =======
</TABLE>
P-20
<PAGE> 27
<TABLE>
<CAPTION>
COMPLETED CHANCELLOR TRANSACTIONS
THREE MONTHS ENDED MARCH 31, 1997 MARKET PERIOD REVENUE EXPENSE
--------------------------------- --------------- -------- ------- -------
<S> <C> <C> <C> <C>
WWWW-FM/WDFN-AM.............................. Detroit 1/1-1/31 $(235) $ (16)
WOMX-FM, WXXL-FM, WJHM-FM.................... Orlando 1/1-2/13 -- (911)
WEAT-FM/AM, WOLL-FM.......................... West Palm Beach 1/1-3/28 (593) (304)
----- -------
Total adjustment for decrease in gross revenues and expenses............ $(828) $(1,231)
===== =======
</TABLE>
Gross revenues of the Completed Chancellor Transactions exclude any time
brokerage agreement payments received from Chancellor.
(j) Reflects incremental amortization related to the Completed Chancellor
Transactions and is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD ASSETS, NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Shamrock............................ 1/1-2/14 $361,425 $ 1,104 $ 393 $ 711
KIMN-FM/KALC-FM..................... 1/1-3/31 8,285 52 341 (289)
Omni................................ 1/1-12/31 171,837 4,296 161 4,135
Colfax.............................. 1/1-12/31 317,894 7,947 3,861 4,086
KSTE-FM............................. 1/1-12/31 (32,475) (812) -- (812)
-------- ------- ------ ------
Total............................................. $826,966 $12,587 $4,756 $7,831
======== ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
THREE MONTHS ENDED MARCH 31, 1997 PERIOD ASSETS, NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Omni................................ 1/1-2/13 $171,837 $ 525 $ -- $ 525
Colfax.............................. 1/1-1/23 317,894 508 -- 508
KSTE-FM............................. 1/1-3/28 (32,475) (198) -- (198)
-------- ----- ------ -----
Total............................... $457,256 $ 835 $ -- $ 835
======== ===== ====== =====
</TABLE>
- ---------------
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 40 year life by Chancellor. In connection with
purchase accounting for the Chancellor Merger, intangible assets will
be amortized over an estimated average life of 15 years in accordance
with the Company's accounting policies and procedures.
Historical depreciation expense of the Completed Chancellor Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(k) Reflects the elimination of disposed stations' historical depreciation and
amortization expense of $1,554 for the year ended December 31, 1996 (KTBZ-FM
of $642 and WWWW-FM/WDFN-AM of $912 for the period of February 14, 1996 to
December 31, 1996) and $82 for the three months ended March 31, 1997
(WWWW-FM/WDFN-AM for the period of January 1, 1997 to January 31, 1997)
recognized by Chancellor during the time brokerage agreement holding period.
(l) Reflects the elimination of estimated duplicate corporate expenses of $1,706
for the year ended December 31, 1996 related to the Completed Chancellor
Transactions.
(m) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Chancellor Transactions, the February 1996 and
August 1996 equity offerings of Chancellor, the issuance
P-21
<PAGE> 28
of the CRBC 12 1/4% Preferred Stock, and the refinancing of the Existing
CRBC Credit Agreement on January 23, 1997:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.............................. $ 667,383 $ 231,983
Completed Dispositions.............................. (104,253) (104,253)
New Loan Fees....................................... 2,874 2,874
--------- ---------
Total additional bank borrowings...................... $ 566,004 $ 130,604
========= =========
Interest expense at 7.5%.............................. $ 14,834 $ 320
Less: historical interest expense..................... (6,048) --
--------- ---------
Net increase in interest expense...................... 8,786 320
Reduction in interest expense on bank debt related to
the application of net proceeds of the following:
February 1996 Offering proceeds of $155,475 for the
period January 1, 1996 to February 14, 1996 at
7.5%............................................. (1,425) --
August 1996 Offering proceeds of $23,050 for the
period January 1, 1996 to August 9, 1996 at
7.5%............................................. (1,052) --
12 1/4% Preferred Stock proceeds of $96,171 for the
period January 1, 1996 to February 14, 1996 at
7.5%............................................. (902) --
--------- ---------
Total decrease in interest expense.................... (3,379) --
--------- ---------
Total adjustment for net increase in interest
expense............................................. $ 5,407 $ 320
========= =========
</TABLE>
(n) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income taxes
for historical and pro forma adjustment amounts.
(o) Reflects incremental dividends and accretion on preferred stock of
subsidiaries as follows:
<TABLE>
<CAPTION>
THREE MONTHS
DATE OF YEAR ENDED ENDED
ISSUANCE DECEMBER 31, 1996 MARCH 31, 1997
----------------- ----------------- --------------
<S> <C> <C> <C>
12 1/4% Preferred Stock................. February 26, 1996 $ 1,441 $ --
12% Preferred Stock..................... January 23, 1997 25,402 1,504
------- ------
Total dividends and accretion........... $26,843 $1,504
======= ======
</TABLE>
(p) Reflects incremental dividends on 7% Convertible Preferred Stock (issued on
January 23, 1997) of $7,700 for the year ended December 31, 1996 and $471
for the three months ended March 31, 1997.
P-22
<PAGE> 29
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE PENDING CHANCELLOR TRANSACTIONS
(17) The detail of the historical financial data of the stations to be acquired
in the Pending Chancellor Transactions for the year ended December 31, 1996
and the three months ended March 31, 1997 has been obtained from the
historical financial statements of the respective companies and is
summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 THREE MONTHS ENDED
----------------------------------------- MARCH 31, 1997
WBAB-FM ------------------
WBLI-FM CHANCELLOR CHANCELLOR
WGBB-AM VIACOM PENDING VIACOM
WHFM-FM ACQUISITION CHANCELLOR ACQUISITION
HISTORICAL HISTORICAL TRANSACTIONS HISTORICAL
PENDING CHANCELLOR TRANSACTIONS 1/1-6/30(A) 1/1-12/31(B) HISTORICAL 1/1-3/31(B)
- --------------------------------------- ----------- ------------ ------------ ------------------
<S> <C> <C> <C> <C>
Gross revenues......................... $5,726 $52,063 $57,789 $11,867
Less: agency commissions............... (619) (8,533) $(9,152) (1,960)
------- ------- ------- -------
Net revenues........................... 5,107 43,530 48,637 9,907
Station operating expenses excluding
depreciation and amortization........ 3,676 20,886 24,562 5,111
Depreciation and amortization.......... 2,141 4,286 6,427 1,078
Corporate general and administrative
expenses............................. 1,024 1,323 2,347 239
------- ------- ------- -------
Operating income (loss)................ (1,734) 17,035 15,301 3,479
Interest expense....................... -- 6,374 6,374 1,594
------- ------- ------- -------
Net income (loss)...................... (1,734) 10,661 8,927 1,885
Income tax expense..................... -- 4,422 4,422 788
------- ------- ------- -------
Net income (loss)...................... $(1,734) $ 6,239 $ 4,505 $ 1,097
======= ======= ======= =======
OTHER FINANCIAL DATA:..................
Broadcast Cash Flow.................... $1,431 $22,644 $24,075 $ 4,796
</TABLE>
- ---------------
(a) On July 1, 1996, Chancellor entered into an agreement to exchange, in the
SFX Exchange, WAPE-FM and WFYV-FM in Jacksonville, Florida (which were
acquired as part of the Omni Acquisition) (see note 16(e)), and $11,000 in
cash for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in Long Island.
(b) On February 19, 1997, Chancellor and the Company entered into the Viacom
Joint Purchase Agreement whereby in the event the Viacom Acquisition occurs
prior to the consummation of the Chancellor Merger, Chancellor will be
required to purchase 4 of the 10 Viacom stations in the Chancellor Viacom
Acquisition for $480,000 plus working capital ($7,547 at March 31, 1997) and
estimated acquisition costs of $13,000 for an aggregate purchase price of
$500,547. The stations to be acquired by Chancellor in the Chancellor Viacom
Acquisition include KYSR-FM and KIBB-FM in Los Angeles, WLIT-FM in Chicago
and WDRQ-FM in Detroit. On April 14, 1997, Chancellor entered into an
agreement to sell WDRQ-FM in Detroit (to be acquired as part of the
Chancellor Viacom Acquisition) for $37,000 in cash; consequently, only the
results of operations of the Viacom Stations in Los Angeles and Chicago have
been given effect in the Pro Forma Financial Statements.
(18) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
PENDING CHANCELLOR TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 MARKET PERIOD REVENUE EXPENSE
------------------------------- ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM............................................ Jacksonville 7/1-12/31 $(1,963) $(2,000)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.......................... Long Island 7/1-12/31 -- (2,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........................ $(1,963) $(4,000)
======= =======
</TABLE>
P-23
<PAGE> 30
<TABLE>
<CAPTION>
PENDING CHANCELLOR TRANSACTIONS
- ------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1997 MARKET PERIOD REVENUE EXPENSE
--------------------------------- ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM............................................ Jacksonville 1/1-3/31 $(1,070) $ (541)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.......................... Long Island 1/1-3/31 -- (1,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........................ $(1,070) $(1,541)
======= =======
</TABLE>
(19) Reflects incremental amortization related to the Pending Chancellor
Transactions (see note 3) and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ------------------
<S> <C> <C>
Amortization expense on $461,290
additional intangible assets amortized
on a straight-line basis over a period
of 40 years........................... $11,533 $ 2,883
Less: Historical amortization expense... (5,730) (1,357)
------- -------
Adjustment for net increase in
amortization expense.................. $ 5,803 $ 1,526
======= =======
</TABLE>
Historical depreciation expense, of the Pending Chancellor Transactions,
is assumed to approximate depreciation expense on a pro forma basis.
Actual depreciation and amortization may differ based upon final
purchase price allocations.
(20) Reflects the elimination of estimated duplicate corporate expenses of
$1,807 for the year ended December 31, 1996 and $176 for the three
months ended March 31, 1997 related to the Pending Chancellor
Transactions.
(21) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Chancellor Transactions and the refinancing
of CRBC's bank borrowings under the CRBC Restated Credit Agreement:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ------------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions.................. $511,547 $511,547
Pending Dispositions.................. (37,000) (37,000)
Loan Fees............................. 3,500 3,500
-------- --------
Total additional bank borrowings........ $478,047 $478,047
======== ========
Interest expense on additional bank
borrowings at 7.5%.................... $ 35,854 $ 8,963
Less: historical interest expense of the
stations being acquired in the Pending
Chancellor Transactions............... (6,374) (1,594)
-------- --------
Net increase in interest expense........ 29,480 7,369
Reduction in interest expense resulting
from the redemption of CRBC's 12.5%
Subordinated Notes of $60,000......... (7,500) (1,875)
Interest expense on $69,000 additional
bank borrowings at 7.5% related to the
redemption of CRBC's 12.5%
Subordinated Notes.................... 5,175 1,294
-------- --------
Total adjustment for net increase in
interest expense...................... $ 27,155 $ 6,788
======== ========
</TABLE>
P-24
<PAGE> 31
(22) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE CHANCELLOR MERGER
(23) Reflects incremental amortization related to the Chancellor Merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Amortization expense on $2,145,957 additional
intangible assets, which includes $1,864,467 of
intangible assets and $281,490 resulting from the
recognition of deferred tax liabilities, amortized
on a straight-line basis over a period of 15
years............................................. $143,064 $35,766
Less: Historical amortization expense............... (38,075) (9,148)
-------- -------
Adjustment for net increase in amortization
expense........................................... $104,989 $26,618
======== =======
</TABLE>
Historical depreciation expense, of Chancellor, is assumed to approximate
depreciation expense on a pro forma basis. Actual depreciation and
amortization may differ based upon final purchase price allocations.
(24) Reflects the elimination of estimated duplicate corporate expenses of
$1,408 for the year ended December 31, 1996 and $418 for the three months
ended March 31, 1997 related to the Chancellor Merger.
(25) Reflects the elimination of merger expenses of $2,056 for the three months
ended March 31, 1997 incurred by Chancellor in connection with the
Chancellor Merger.
(26) Reflects the adjustment to interest expense in connection with the
consummation of the Chancellor Merger:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Interest expense on additional bank borrowings
related to estimated financial advisors, legal,
accounting and other professional fees of $28,000
at 7.0%........................................... $ 1,960 $ 490
Reduction in interest expense related to the
application of the 7.0% interest rate to the
Company's bank debt prior to the refinancing of
the Senior Credit Facility and to CRBC's bank debt
prior to consummation of the Chancellor Merger.... (14,161) (1,936)
-------- -------
Net decrease in interest expense.................... $(12,201) $(1,446)
======== =======
</TABLE>
(27) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
P-25
<PAGE> 32
GLOSSARY
"7% Convertible Preferred Stock" refers to the 7% Convertible Preferred
Stock of Chancellor, which will be exchanged for shares of preferred stock of
Evergreen with substantially identical rights and preferences upon consummation
of the Chancellor Merger.
"12% Preferred Stock" refers to the 12% Exchangeable Preferred Stock of
CRBC, which will be exchanged for shares of preferred stock of EMCLA with
substantially identical rights and preferences upon consummation of the
Chancellor Merger.
"12 1/4% Preferred Stock" refers to the 12 1/4% Senior Cumulative
Exchangeable Preferred Stock of CRBC, which will be exchanged for shares of
preferred stock of EMCLA with substantially identical rights and preferences
upon consummation of the Chancellor Merger.
"1996 Equity Offering" refers to the sale by the Company on October 17,
1996 of 9,000,000 shares of its Class A Common Stock, par value $.01 per share,
in a public offering that resulted in net proceeds of approximately $264.2
million.
"1996 Preferred Stock Conversion" refers to the conversion by the Company
of 1,608,297 shares of its previously outstanding convertible preferred stock
into 5,025,916 shares of Class A Common Stock and the redemption of the
remaining 1,703 shares of its previously outstanding convertible preferred
stock.
"ABC/Detroit Disposition" refers to the pending sale by Chancellor of
WDRQ-FM in Detroit to ABC for $37.0 million in cash.
"ABC/Washington Disposition" refers to the pending sale by the Company of
WJZW-FM in Washington, D.C. to ABC for $68.0 million in cash.
"Beasley" refers to Beasley Broadcasting.
"Beasley Acquisition" refers to the acquisition by the Company on May 1,
1997 from Beasley of WDAS-FM/AM in Philadelphia for $103.0 million in cash.
"Bonneville Dispositions" refers to the pending sale by the Company of
WLUP-FM in Chicago, KDFC-FM in San Francisco and WPNT-FM in Chicago to
Bonneville International Corporation for $205.0 million in cash.
"Century Acquisition" refers to the pending acquisition by the Company of
WPNT-FM in Chicago from Century for $73.8 million.
"Chancellor" refers to Chancellor Broadcasting Company and its
subsidiaries.
"Chancellor Merger" refers to the pending merger of Chancellor with and
into EMHC and of CRBC with and into EMCLA.
"Chancellor Offerings" refers to various equity offerings by Chancellor and
CRBC in 1996 and 1997 which resulted in aggregate net proceeds to Chancellor and
CRBC of approximately $572.1 million.
"Chancellor Viacom Acquisition" refers to the pending acquisition by
Chancellor from Viacom of the subsidiaries of Viacom that own and operate
KYSR-FM and KIBB-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in Detroit.
"Colfax Acquisition" refers to the acquisition by Chancellor on January 23,
1997 of Colfax Communications for approximately $383.7 million.
"Company" refers to Evergreen Media Corporation and its subsidiaries.
"Completed Evergreen Dispositions" refers to (i) the disposition by the
Company of WKLB-FM in Framingham, Massachusetts on November 26, 1996 as part of
the exchange of WKLB-FM for WGAY-FM in Washington, D.C., (ii) the dispositions
on July 19, 1996 and August 1, 1996 of WHTT-FM/AM and WSJZ-FM in Buffalo,
respectively, (iii) the disposition contemplated by the Greater Media Exchange,
(iv) the dispositions contemplated by the EZ Exchange and (v) the EZ Sale.
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<PAGE> 33
"Completed Evergreen Transactions" refers to (i) the acquisition by the
Company on January 17, 1996 of Pyramid Communications, Inc. for approximately
$316.3 million, (ii) the acquisition by the Company on August 14, 1996 of
KYLD-FM in San Francisco for $44.0 million in cash, (iii) the exchange by the
Company on November 26, 1996 of WKLB-FM for WGAY-FM, (iv) the acquisition by the
Company on October 18, 1996 of WEDR-FM in Miami for $65.0 million in cash, (v)
the dispositions on July 19, 1996 and August 1, 1996 of WHTT-FM/AM and WSJZ-FM
in Buffalo, respectively, (vi) the Secret/Detroit Acquisition, (vii) the Greater
Media Exchange, (viii) the Beasley Acquisition, (ix) the WWWW/WDFN Acquisition,
(x) the KKSF/KDFC Acquisition and (xi) the EZ Transaction.
"Completed Chancellor Dispositions" refers to (i) the disposition
contemplated by the Houston/Denver Exchange, (ii) the WWWW/WDFN Disposition,
(iii) the Milwaukee Disposition and (iv) the dispositions contemplated by the
West Palm Beach Exchange.
"Completed Chancellor Transactions" refers to (i) the Shamrock Acquisition,
(ii) the Houston/Denver Exchange, (iii) the Colfax Acquisition, (iv) the Omni
Acquisition, (v) the WWWW/WDFN Disposition, (vi) the Milwaukee Disposition and
(vii) the West Palm Beach Exchange.
"Completed Transactions" refers to the Completed Evergreen Transactions and
the Completed Chancellor Transactions.
"Convertible Preferred Stock" refers to the Company's Convertible
Exchangeable Preferred Stock, par value $.01 per share, which the Company is
currently offering pursuant to Rule 144A under the Securities Act of 1933, as
amended.
"Crawford Disposition" refers to the pending sale by the Company of WEJM-FM
in Chicago to affiliates of Crawford Broadcasting for $14.75 million in cash.
"CRBC" refers to Chancellor Radio Broadcasting Company, a subsidiary of
Chancellor.
"CRBC Restated Credit Agreement" refers to the amended and restated credit
agreement of CRBC which the Company has been informed will be entered into in
connection with the Chancellor Viacom Acquisition and which will provide a
commitment of up to $750.0 million.
"Douglas" refers to affiliates of Douglas Broadcasting.
"Douglas Chicago Disposition" refers to the pending sale by the Company of
WEJM-AM in Chicago to Douglas for $7.5 million in cash.
"Douglas AM Dispositions" refers to the pending sale by the Company of
KDFC-AM in San Francisco and WBZS-AM and WZHF-AM in Washington, D.C. to Douglas
for $18.0 million, payable in the form of a promissory note.
"EMCLA" refers to Evergreen Media Corporation of Los Angeles.
"EMHC" refers to Evergreen Mezzanine Holdings Corporation.
"Evergreen" refers to Evergreen Media Corporation.
"Evergreen Viacom Acquisition" refers to the acquisition by the Company
from Viacom of the subsidiaries of Viacom that own and operate WLTW-FM and
WAXQ-FM in New York and WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington,
D.C.
"Existing CRBC Credit Agreement" refers to the existing senior credit
facility of CRBC.
"EZ" refers to EZ Communications, Inc.
"EZ Exchange" refers to the exchange on May 15, 1997 by the Company of
WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM in Charlotte to EZ in return for
WIOQ-FM and WUSL-FM in Philadelphia.
"EZ Sale" refers to the sale on May 15, 1997 by the Company of WNKS-FM in
Charlotte to EZ for $10.0 million in cash.
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<PAGE> 34
"EZ Transaction" refers to the EZ Sale and EZ Exchange.
"Financing Transactions" refers to the Offering and borrowings by the
Company under the Senior Credit Facility in order to finance the Evergreen
Viacom Acquisition and the other Pending Transactions.
"Gannett" refers to Gannett Co., Inc.
"Gannett Acquisition" refers to the pending acquisition by the Company from
a subsidiary of Gannett of WGCI-FM/AM in Chicago, KKBQ-FM/AM in Houston and
KHKS-FM in Dallas, for an aggregate purchase price of $340.0 million in cash.
"Greater Media" refers to affiliates of Greater Media Radio, Inc.
"Greater Media Disposition" refers to the pending sale by the Company of
WFLN-FM in Philadelphia to Greater Media for $41.8 million in cash.
"Greater Media Exchange" refers to the exchange on April 3, 1997 by the
Company of WQRS-FM in Detroit to Greater Media in return for WWRC-AM in
Washington, D.C. and $9.5 million in cash.
"Houston/Denver Exchange" refers to the exchange by Chancellor on July 31,
1996 of KTBZ-FM and $5.6 million in cash for KIMN-FM and KALC-FM in Denver.
"KKSF/KDFC Acquisition" refers to the acquisition by the Company on January
31, 1997 of KKSF-FM and KDFC-FM/AM in San Francisco for $115.0 million in cash
"Milwaukee Disposition" refers to the disposition on March 31, 1997 by
Chancellor of WMIL-FM and WOKY-AM in Milwaukee for $41.3 million in cash.
"New Common Stock" refers to the Common Stock, par value $.01 per share,
that the Company expects will be issued upon consummation of the Chancellor
Merger.
"Offering" refers to the offering that the Company is currently pursuing of
its Convertible Preferred Stock pursuant to Rule 144A under the Securities Act
of 1933, as amended (the "Act"). The Offering will not be registered under the
Act, and the securities offered may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
"Omni Acquisition" refers to the acquisition by Chancellor on February 13,
1997 of three FM stations in Orlando, two FM stations and one AM station in West
Palm Beach and two FM stations in Jacksonville from Omni America Group for
$166.0 million in cash and common stock of Chancellor valued at $15.0 million.
"P & S" refers to Pacific and Southern Company, Inc., a subsidiary of
Gannett.
"Pending Chancellor Acquisitions" refers to the Chancellor Viacom
Acquisition and the acquisitions contemplated by the SFX Exchange.
"Pending Chancellor Dispositions" refers to the dispositions contemplated
by the SFX Exchange and the ABC/Detroit Disposition.
"Pending Chancellor Transactions" refers to the Pending Chancellor
Acquisitions and the Pending Chancellor Dispositions.
"Pending Evergreen Acquisitions" refers to the Evergreen Viacom
Acquisition, the Century Acquisition, the Secret/Philadelphia Acquisition and
the Gannett Acquisition.
"Pending Evergreen Dispositions" refers to the Crawford Disposition, the
Douglas Chicago Disposition, the Greater Media Disposition, the San Francisco
Frequency Disposition, the Bonneville Dispositions, the ABC/Washington
Disposition and the Douglas AM Dispositions.
"Pending Evergreen Transactions" refers to the Pending Evergreen
Dispositions and the Pending Evergreen Acquisitions.
"Pending Transactions" refers to the Pending Evergreen Transactions, the
Pending Chancellor Transactions and the Chancellor Merger.
G-3
<PAGE> 35
"San Francisco Frequency Disposition" refers to the pending sale by the
Company to Susquehanna Radio Corp. of the FCC authorizations and certain
transmission equipment currently used in the operation of KYLD-FM for $44.0
million in cash.
"Secret" refers to Secret Communications, L.P.
"Secret/Detroit Acquisition" refers to the acquisition by the Company on
April 1, 1997 of WMXD-FM and WJLB-FM in Detroit from Secret for $168.0 million
in cash.
"Secret/Philadelphia Acquisition" refers to the pending acquisition by the
Company of WFLN-FM in Philadelphia from Secret for $37.8 million in cash.
"Senior Credit Facility" refers to the amended and restated senior loan
agreement of EMCLA dated April 25, 1997.
"SFX Exchange" refers to the pending exchange by Chancellor of WAPE-FM and
WFYV-FM in Jacksonville and $11.0 million for WBAB-FM, WBLI-FM, WHFM-FM and
WGBB-AM in Nassau-Suffolk (Long Island).
"Shamrock Acquisition" refers to the acquisition by Chancellor on February
14, 1996 of Shamrock Broadcasting, Inc. for approximately $408.0 million.
"Viacom Acquisition" refers to the Evergreen Viacom Acquisition and the
Chancellor Viacom Acquisition
"Viacom Joint Purchase Agreement" refers to the joint purchase agreement,
dated February 19, 1997, among Evergreen, EMCLA, Chancellor and CRBC that will
govern certain aspects of the Viacom Acquisition as between Evergreen, EMCLA,
Chancellor and CRBC.
"West Palm Beach Exchange" refers to the exchange by Chancellor on March
28, 1997 of WEAT-FM/AM and WOLL-FM in West Palm Beach for KSTE-FM in Sacramento
and $33.0 million in cash.
"WWWW/WDFN Acquisition" refers to the acquisition by the Company on January
31, 1997 of WWWW-FM and WDFN-AM in Detroit from Chancellor for $30.0 million in
cash.
"WWWW/WDFN Disposition" refers to the sale by Chancellor on January 31,
1997 of WWWW-FM and WDFN-AM in Detroit to the Company for $30.0 million in cash.
G-4
